EXECUTION COPY

Asset Purchase Agreement

Dated as of March 3, 2017
between
Concert Pharmaceuticals, Inc.,
as Seller
and
Vertex Pharmaceuticals (Europe) Limited,
as Buyer
and, solely for purposes of Section 10.14 herein,
Vertex Pharmaceuticals Incorporated,
as Guarantor

Americas 92425100
 
 

--------------------------------------------------------------------------------

Table of Contents
Page

 
Page
ARTICLE I ASSET PURCHASE
1
Section 1.01    Sale of Assets; Assumption of Liabilities    
1
Section 1.02    Consideration
4
Section 1.03    The Closing
5
Section 1.04    Consents to Assignment
6
Section 1.05    Further Assurances
6
 
 
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER
7
Section 2.01    Organization, Qualification and Corporate Power
7
Section 2.02    Title to Assets
7
Section 2.03    Authority
7
Section 2.04    No Subsidiaries
8
Section 2.05    Non‑Contravention; Consents
8
Section 2.06    Vote Required
8
Section 2.07    Absence of Certain Changes
8
Section 2.08    Real Property
9
Section 2.09    Intellectual Property
9
Section 2.10    Contracts
11
Section 2.11    Litigation
12
Section 2.12    Regulatory Matters
13
Section 2.13    Transferred Inventory
14
Section 2.14    Product Liability
14
Section 2.15    Compliance with Laws
14
Section 2.16    Compliance with Anti-Bribery Laws
15
Section 2.17    Brokers’ Fees
16
Section 2.18    Sufficiency of Assets
16
Section 2.19    Solvency
16
Section 2.20    Board Approval
16
Section 2.21    Information Supplied
16
Section 2.22    No Misrepresentation
17
Section 2.23    Disclaimer
17
 
 
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER
17
Section 3.01    Organization
17
Section 3.02    Authorization of Transaction
17
Section 3.03    Noncontravention; Consents
18
Section 3.04    Broker’s Fees
18
Section 3.05    Litigation
18
Section 3.06    Sufficiency of Funds
18
Section 3.07    Information Supplied
18

i

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Page

Section 3.08    Solvency
19
Section 3.09    Limited Representations
19
 
 
ARTICLE IV PRE‑CLOSING COVENANTS
19
Section 4.01    Operation of Business
19
Section 4.02    Access
20
Section 4.03    Governmental Approvals and Consents
21
Section 4.04    Notices of Certain Events
24
Section 4.05    Release of Encumbrances
24
Section 4.06    No Solicitation by Seller; Seller Board Recommendation
24
Section 4.07    Preparation of the Proxy Statement; Seller Stockholders’ Meeting
26
 
 
ARTICLE V CONDITIONS PRECEDENT TO CLOSING
28
Section 5.01    Conditions to the Obligations of Each Party
28
Section 5.02    Conditions to Obligations of Buyer
28
Section 5.03    Conditions to Obligations of Seller
29
 
 
ARTICLE VI INDEMNIFICATION
30
Section 6.01    Survival
30
Section 6.02    Indemnification by Seller
31
Section 6.03    Indemnification by Buyer
31
Section 6.04    Claims for Indemnification
32
Section 6.05    Limitations
34
Section 6.06    Manner of Payment
35
Section 6.07    Right of Setoff
35
Section 6.08    Adjustment to Purchase Price
35
Section 6.09    Release of the Escrow Account
35
 
 
ARTICLE VII TERMINATION
36
Section 7.01    Termination of Agreement
36
Section 7.02    Effect of Termination
37
 
 
ARTICLE VIII TAX MATTERS
39
Section 8.01    Certain Tax Matters
39
Section 8.02    Withholding Taxes
39
 
 
ARTICLE IX FURTHER AGREEMENTS
39
Section 9.01    Post‑Closing Information
39
Section 9.02    Wrong Pockets
39
Section 9.03    Use of Names
39
Section 9.04    Confidentiality
40
Section 9.05    Restrictive Covenants
40
Section 9.06    FDA Letters
41

ii

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Page

 
 
ARTICLE X MISCELLANEOUS
42
Section 10.01    Certain Definitions
42
Section 10.02    Terms Defined Elsewhere
49
Section 10.03    Press Releases and Announcements
51
Section 10.04    No Third Party Beneficiaries
51
Section 10.05    Entire Agreement
51
Section 10.06    Succession and Assignment
51
Section 10.07    Counterparts
52
Section 10.08    Notices
52
Section 10.09    Governing Law; Jurisdiction
53
Section 10.10    Amendments and Waivers
54
Section 10.11    Severability
54
Section 10.12    Expenses
54
Section 10.13    Specific Performance
54
Section 10.14    Guaranty
54
Section 10.15    Construction
55
Section 10.16    Waiver of Jury Trial
55

iii

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Page

EXHIBITS
Exhibit A
‑‑    Form of Assumption Agreement

Exhibit B
‑‑    Form of Bill of Sale

Exhibit C
‑‑    Form of IP Assignment Agreement

Exhibit D
‑‑    Form of Transition Services Agreement

Exhibit E-1
‑‑    Form of Seller FDA Letter

Exhibit E-2
‑‑    Form of Seller Orphan Designation Letter

Exhibit F-1
‑‑    Form of Buyer FDA Letter

Exhibit F-2
‑‑    Form of Buyer Orphan Designation Letter

Exhibit G
‑‑    Form of Escrow Agreement

iv

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of March 3,
2017 between Concert Pharmaceuticals, Inc., a Delaware corporation (“Seller”),
Vertex Pharmaceuticals (Europe) Limited, a U.K. limited company (“Buyer”), and,
solely for purposes of Section 10.14 herein, Vertex Pharmaceuticals
Incorporated, a Massachusetts corporation (“Guarantor”). Seller and Buyer are
sometimes referred to herein individually as a “Party” and together as the
“Parties.”
WHEREAS, Seller is a biopharmaceutical company engaged in the synthesis,
research and development of compounds as potential therapeutic products for
treating cystic fibrosis, including the generation of Intellectual Property
associated therewith (the “CF Enterprise”).
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, Seller desires to sell, convey, assign, transfer and deliver to
Buyer, and Buyer desires to purchase, acquire and accept from Seller, the
Acquired Assets (as defined below), and assume, pay, perform and discharge from
Seller certain Liabilities (as defined below) related to the Acquired Assets,
upon the terms and subject to the conditions set forth herein.
WHEREAS, Guarantor desires to guaranty certain obligations of Buyer hereunder.
WHEREAS, concurrently with the execution and delivery of this Agreement, Seller
and Buyer are entering into that certain Research and Testing Agreement (the
“Research and Testing Agreement”) dated as of the date hereof.
NOW, THEREFORE, in consideration of the respective representations, warranties,
covenants and agreements herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound, hereby agree as follows:

ARTICLE I
ASSET PURCHASE
Section 1.01    Sale of Assets; Assumption of Liabilities.
(a)    Transfer of Assets. On the terms and subject to the conditions of this
Agreement, at the Closing, Seller shall sell, convey, assign, transfer and
deliver to Buyer and its assignees under Section 10.06 hereof (collectively, the
“Buyer Group”), and Buyer shall, or shall cause the applicable member of the
Buyer Group to, purchase, acquire and accept assignment from Seller, all of
Seller’s right, title and interest in and to those assets used, planned for use
or held for use, in each case, in the ownership, operation or conduct of the CF
Enterprise as currently, and currently expected to be, owned, operated and
conducted (collectively, the “Acquired Assets”), free and clear of all
Encumbrances (other than Permitted Encumbrances), including the following:
(i)    all rights to Develop, Manufacture and Commercialize the Transferred
Products, including all rights and claims to all clinical study data, reports
and analyses to the extent related to the Transferred Products, including those
identified on Section 1.01(a)(i) of the Seller Disclosure Letter;
(ii)    all Intellectual Property related to the Transferred Products that
exists now or as of the Closing anywhere in the world, including: (A) all
Intellectual Property claiming any aspect of, or relating to Seller’s
Development, Manufacturing, and/or Commercialization activities in respect of
the Transferred Products on or before the Closing Date, including Transferred
Know-How; (B) any rights which an employee, consultant,

1

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

agent, inventor, author or third party is obligated by contract, statute or
otherwise to assign to Seller; (C) all rights of action arising from the
foregoing, including all claims for damages by reason of present, past and
future infringement, misappropriation, violation misuse or breach of contract in
respect of the foregoing; (D) present, past and future rights to sue and collect
damages or seek injunctive relief for any such infringement, misappropriation,
violation, misuse or breach; and (E) all income, royalties and any other
payments now and hereafter due and/or payable to Seller in respect of the
foregoing (collectively, the “Transferred IP”);
(iii)    all documentation or other tangible embodiments that comprise, embody,
disclose or describe the Transferred IP, including engineering drawings,
technical documentation, databases, spreadsheets, business records, inventors’
notebooks, invention disclosures, digital files, software code and patent,
trademark and copyright prosecution files, including any such files in the
custody of outside legal counsel (collectively, the “Transferred IP
Documentation”); provided, however, that (A) freedom-to-operate opinions of
counsel related to the Intellectual Property of Buyer, (B) minutes, consents,
resolutions and other materials prepared for or by the Seller Board and (C)
documentation and other tangible embodiments covered by the attorney-client
privilege associated with the Acquired Assets, including the transactions
contemplated by this Agreement, shall each be deemed an Excluded Asset and shall
remain with Seller;
(iv)    all rights, title and interest in the Contracts relating to the
Transferred Products or Transferred IP, including all Contracts that contain any
grant to Seller of any right relating to or under Intellectual Property rights
of any Person that is used or held for use by Seller in connection with the
Transferred Products, each of which is identified on Section 1.01(a)(iv) of the
Seller Disclosure Letter (the “Assigned IP Contracts”), and each other Contract
related to the Transferred Products, each of which is identified on Section
1.01(a)(iv) of the Seller Disclosure Letter (together with the Assigned IP
Contracts, the “Assigned Contracts”);
(v)    the Transferred Registrations related to the Transferred Products;
(vi)    other than the Transferred Registrations, all qualifications, permits,
registrations, clearances, applications, submissions, variances, exemptions,
filings, approvals and authorizations which relate primarily to the Transferred
Products (collectively, “Permits”), including those identified on Section
1.01(a)(vi) of the Seller Disclosure Letter (the “Transferred Permits”);
(vii)    copies of all customer and supplier lists, marketing studies,
consultant reports, books and records (financial, laboratory and otherwise),
files, invoices, billing records, distribution lists, manuals (in all cases, in
any form or medium), but excluding Tax Returns other than Tax Returns solely
related to the Acquired Assets, patient support and market research programs and
related databases, and all complaint files and adverse event files, in each
case, to the extent (1) related to the Transferred Products and (2) in Seller’s
or any of its Affiliates’ possession or under its control as of the Closing
Date;
(viii)    all Transferred Product Records, including Acquired Assets Regulatory
Filings, to the extent not covered by any of the foregoing;
(ix)    all third-party warranties, indemnities and guarantees relating to any
of the Acquired Assets or the Assumed Liabilities;

2

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(x)    all claims, defenses and rights of offset or counterclaim (at any time or
in any manner arising or existing, whether choate or inchoate, known or unknown,
contingent or non-contingent) relating to any of the Acquired Assets or the
Assumed Liabilities;
(xi)    all goodwill arising from, associated with or relating to the Acquired
Assets, including rights under any confidentiality Contracts executed by any
third party for the benefit of Seller in connection with the Acquired Assets;
(xii)    all Transferred Inventory; and
(xiii)    the Transferred Products.
Notwithstanding anything to the contrary in this Agreement, the Acquired Assets
shall not include any Excluded Assets.
(b)    Excluded Assets. It is expressly understood and agreed that “Excluded
Assets” means all assets, properties and rights of Seller other than the
Acquired Assets, including, but not limited to, those set forth on Section
1.01(b) of the Seller Disclosure Letter, the DCE Platform Know-How and the
Excluded Therapeutic Products. For the avoidance of doubt, all Transferred
Products shall be included in the Acquired Assets.
In the event of any inconsistency or conflict that may arise in the application
or interpretation of this definition or the definition of “Acquired Assets,” for
purposes of determining what is and is not an Excluded Asset or an Acquired
Asset, the explicit inclusion of an item on Section 1.01(b) of the Seller
Disclosure Letter shall take priority over any textual provision of this
definition that would otherwise operate to exclude such asset from the
definition of “Excluded Assets” or include such asset in the definition of
“Acquired Assets,” as applicable.
(c)    DCE Platform Know-How and Non-Exclusive License. Seller hereby grants to
Buyer, effective as of the Closing Date, a world-wide, non-exclusive, perpetual,
irrevocable, sublicensable, royalty-free, fully-paid license to DCE Platform
Know-How for the use in the Development, Manufacture and Commercialization of
the Transferred Products and other therapeutic products. Seller shall disclose
to Buyer DCE Platform Know-How that is necessary or useful for the ownership,
Development, Manufacture and Commercialization of the Transferred Products, and
shall have no further disclosure obligation under this Agreement with respect to
DCE Platform Know-How.
(d)    Assumed Liabilities. On the Closing Date, Buyer shall, or shall cause the
applicable member of the Buyer Group to, deliver to Seller one or more
assumption agreements in the form attached hereto as Exhibit A (the “Assumption
Agreements”), pursuant to which Buyer, or the applicable member of the Buyer
Group, on and as of the Closing Date, shall, among other things, assume and
agree to pay, perform and discharge when due only the following Liabilities
primarily relating to the Acquired Assets (the “Assumed Liabilities”), and Buyer
does not hereby assume or become obligated to pay or perform any other
Liabilities of Seller that arise out of or in respect of any of its operations
on or prior to the Closing, except for the following:
(i)    all Liabilities relating to, arising out of, based upon or resulting from
the use, ownership, possession or operation of the Acquired Assets by Buyer or
its Affiliates after the Closing;
(ii)    all Liabilities identified on Section 1.01(d) of the Seller Disclosure
Letter;

3

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(iii)    all Liabilities under the Assigned Contracts first arising in respect
of the period after the Closing (other than any Liability arising out of or
relating to a default or breach existing at, prior to, or as a consequence of
the Closing); and
(iv)    all Liabilities for Taxes attributable to a Post-Closing Tax Period.
(e)    Excluded Liabilities. It is expressly understood and agreed that,
notwithstanding anything to the contrary in this Agreement, Buyer shall not
assume, or cause to be assumed, or be deemed to have assumed or be liable or
responsible for any Liabilities (whether now existing or arising after the date
hereof) of Seller or any of its Affiliates relating to, arising out of, based
upon or resulting from the use, ownership, possession or operation of the
Acquired Assets by Seller or its Affiliates on or prior to the Closing,
including (i) those Liabilities set forth on Section 1.01(e) of the Seller
Disclosure Letter, (ii) any Indebtedness of Seller or any of its Affiliates,
(iii) any expenses incurred by, or for the benefit of, Seller or any of its
Affiliates in connection with the preparation, execution or consummation or
performance of the transactions contemplated by this Agreement and the Related
Agreements, including all legal, accounting, Tax advisory, investment banking
and other professional fees and expenses, and (iv) any Liability incurred in
connection with the open-label Phase 2 clinical trial of CTP-656 in Europe (such
Liabilities not assumed hereunder, the “Excluded Liabilities”) and the Excluded
Liabilities shall remain the sole obligation and responsibility of Seller.
In the event of any inconsistency or conflict that may arise in the application
or interpretation of this definition or the definition of “Assumed Liabilities,”
for purposes of determining what is and is not an Excluded Liability or an
Assumed Liability, the explicit inclusion of an item on Section 1.01(d) of the
Seller Disclosure Letter shall take priority over any textual provision of this
definition that would otherwise operate to exclude such Liability from the
definition of “Excluded Liabilities” or include such Liability in the definition
of “Assumed Liabilities,” as applicable.

Section 1.02    Consideration.
(a)    Upfront Consideration. On the terms, and subject to the conditions, set
forth in this Agreement, as partial consideration for the Acquired Assets, and
subject to the terms and conditions of this Agreement, at the Closing, Buyer
shall, or shall cause the applicable member of the Buyer Group to, (i) assume
the Assumed Liabilities, (ii) pay to Seller, by wire transfer of immediately
available funds, the Base Purchase Price, less the Escrow Amount, and (iii) pay
to the Escrow Agent the Escrow Amount.
(b)    Contingent Consideration. As additional consideration for the Acquired
Assets, Buyer shall pay to Seller, pursuant to this Section 1.02(b), the
contingent payment (each a “Contingent Payment”) set forth below based on the
achievement by or on behalf of Buyer or its Affiliates, licensees, sublicensees
or transferees of the corresponding Milestone Event set forth below. For the
avoidance of doubt, notwithstanding anything to the contrary in this Agreement,
a Contingent Payment shall be due and payable only once (and only one Contingent
Payment shall be payable with respect to each Milestone Event) and shall be paid
by Buyer to Seller promptly, but in no event later than forty‑five (45) calendar
days following the occurrence of the applicable Milestone Event by wire transfer
of immediately available funds to the account designated in writing by Seller to
Buyer.

4

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Milestone Event
Contingent Payment
Receipt of marketing approval from the FDA of a combination treatment regimen
for the treatment of patients with cystic fibrosis that contains CTP-656   

$50,000,000

 
 
Completion of a pricing and reimbursement agreement in the United Kingdom,
Germany or France with respect to a combination treatment regimen for the
treatment of patients with cystic fibrosis that contains CTP-656

$40,000,000

 
 

(c)    No Diligence Obligation. From and after the Closing, Buyer shall, in its
sole and absolute discretion, make all decisions with respect to the
Development, Manufacture and Commercialization of the Acquired Assets and shall
have no obligation to undertake any efforts to achieve the Milestone Events.

Section 1.03    The Closing.
(a)    Time and Location. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place at 9:00 a.m., New York City Time, at
the offices of White & Case LLP, 1155 Avenue of the Americas, New York, New York
10036-2787 as soon as possible but in no event later than the third (3rd)
Business Day following the satisfaction or waiver of the last of the conditions
set forth in Article V to be satisfied or (to the extent permitted) waived
(other than any such conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or (to the extent permitted) waiver of
such conditions at Closing), unless another time, date or place is agreed to in
writing by Seller and Buyer. The date on which the Closing actually occurs will
be the “Closing Date”.
(b)    Actions at the Closing. At the Closing:
(i)    Seller shall deliver (or cause to be delivered) to Buyer the various
certificates, instruments and documents required to be delivered under Section
5.02 not otherwise listed in this Section 1.03(b);
(ii)    Buyer shall deliver (or cause to be delivered) to Seller the various
certificates, instruments and documents required to be delivered under Section
5.03 not otherwise listed in this Section 1.03(b);
(iii)    Seller shall deliver (or cause to be delivered) to Buyer one or more
executed Bills of Sale in substantially the form attached hereto as Exhibit B
(collectively, the “Bill of Sale”);
(iv)    Seller shall deliver (or cause to be delivered) to Buyer executed
Intellectual Property Assignment Agreements, in substantially the form attached
hereto as Exhibit C (the “IP Assignment Agreements”);
(v)    Seller and Buyer shall deliver (or cause to be delivered) to the other
one or more executed Assumption Agreements and such other instruments as Seller
may reasonably request in order to effect the assignment to, and assumption by,
Buyer of certain of the Acquired Assets and the Assumed Liabilities;
(vi)    Seller shall deliver (or cause to be delivered) to Buyer the Transferred
Product Records;
(vii)    Seller and Buyer shall deliver (or cause to be delivered) to the other
an executed Transition Services Agreement in substantially the form attached
hereto as Exhibit D (the “Transition Services Agreement”);

5

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(viii)    Seller shall deliver (or cause to be delivered) such other
certificates, documents, instruments and writings as shall be reasonably
requested by Buyer to effectively vest in Buyer title in and to the Acquired
Assets, free and clear of all Encumbrances (other than Permitted Encumbrances),
in accordance with the provisions of this Agreement; and
(ix)    Buyer shall pay (or cause to be paid) (A) to Seller, the Base Purchase
Price, less the Escrow Amount and (B) to the Escrow Agent, the Escrow Amount, in
each case in accordance with Section 1.02(a).

Section 1.04    Consents to Assignment. Notwithstanding anything to the contrary
contained in this Agreement, if the sale, assignment, transfer, conveyance or
delivery or attempted sale, assignment, transfer, conveyance or delivery to
Buyer of any asset that would be an Acquired Asset is (a) prohibited by any
applicable Law or (b) would require any authorizations, approvals, consents or
waivers from a Third Party or Governmental Entity and such authorizations,
approvals, consents or waivers shall not have been obtained prior to the
Closing, then in either case the Closing shall proceed without the sale,
assignment, transfer, conveyance or delivery of such asset and this Agreement
shall not constitute an agreement for the sale, assignment, transfer, conveyance
or delivery of such asset; provided, that nothing in this Section 1.04 shall be
deemed to waive the rights of Buyer not to consummate the transactions
contemplated by this Agreement if the conditions to its obligations set forth in
Article V have not been satisfied. In the event that the Closing proceeds
without the sale, assignment, transfer, conveyance or delivery of any such
asset, then following the Closing, Seller shall use commercially reasonable
efforts to obtain promptly such authorizations, approvals, consents or waivers.
Pending such authorization, approval, consent or waiver, (i) Seller will comply
with the terms of, and will not amend, transfer, let lapse or terminate, its
rights with respect to the applicable asset without Buyer’s written consent,
such consent not to be unreasonably withheld, conditioned or delayed and (ii)
the Parties shall cooperate with each other in any mutually agreeable,
reasonable and lawful arrangements designed to provide to Buyer the benefits of
use of such asset, and to Seller the benefits, including any indemnities, that,
in each case, it would have obtained had the asset been conveyed to Buyer at the
Closing. To the extent that Buyer is provided the benefits pursuant to this
Section 1.04 of any Contract, Buyer shall (x) perform for the benefit of the
other parties thereto the obligations of Seller or any affiliate of Seller
thereunder and (y) satisfy any related Liabilities with respect to such Contract
that, but for the lack of an authorization, approval, consent or waiver to
assign such obligations or Liabilities to Buyer, would be Assumed Liabilities.
Once authorization, approval, consent or waiver for the sale, assignment,
transfer, conveyance or delivery of any such asset not sold, assigned,
transferred, conveyed or delivered at the Closing is obtained, Seller shall
promptly assign, transfer, convey and deliver such asset to Buyer at no
additional cost to Buyer.

Section 1.05    Further Assurances. Subject to the terms and conditions hereof,
each of the Parties agrees to use commercially reasonable efforts to execute and
deliver, or cause to be executed and delivered, all documents and to take, or
cause to be taken, all actions that may be reasonably necessary or appropriate
to effectuate the provisions of this Agreement, provided, that all such actions
are in accordance with applicable Law. From time to time, whether at or after
the Closing, (i) Seller shall execute and deliver such further documents or
instruments of conveyance, transfer and assignment and take all such other
action as Buyer may reasonably require to more effectively convey, transfer and
assign to Buyer any and all ownership, right, title and interest in and to the
Acquired Assets, including executing documents or instruments necessary to
permit Buyer to record the transfer, conveyance and/or assignment of any and all
Transferred IP with any Governmental Entity and (ii) Buyer, and any other member
of the Buyer Group, will execute and deliver such further instruments and take
all such other action as Seller may reasonably require for such member of the
Buyer Group to assume the Assumed Liabilities.

6

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the disclosure schedule provided by Seller to Buyer prior
to the date hereof (the “Seller Disclosure Letter”), Seller hereby represents
and warrants to Buyer as of the date hereof and as of the Closing Date as
follows. The Seller Disclosure Letter shall be arranged in sections
corresponding to the Sections contained in this Article II. The disclosures in
any section of the Seller Disclosure Letter shall qualify other Sections in this
Article II only to the extent it is reasonably clear from a reading of the
disclosure that such disclosure is applicable to other Sections.

Section 2.01    Organization, Qualification and Corporate Power. Seller is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, with all requisite power and authority to own, lease
and operate its properties as presently owned, leased and operated and to carry
on its business as presently conducted. Seller is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
nature of the properties owned, leased or operated by it and the businesses
transacted by it require such licensing or qualification. Section 2.01 of the
Seller Disclosure Letter lists, as of the date hereof, all jurisdictions in
which the property owned, leased or operated by Seller, or the nature of the
business conducted by Seller makes such qualification necessary to the extent
such qualification relates to any Acquired Asset, except for such failures to be
so qualified that would not, individually or in the aggregate, have a Seller
Material Adverse Effect. Seller has made available to Buyer prior to the date
hereof copies of its organizational documents, in each case, as amended and in
full force and effect as of the date hereof.

Section 2.02    Title to Assets. Except as set forth on Section 2.02 of the
Seller Disclosure Letter, Seller has good, valid and marketable title to the
Acquired Assets, free and clear of any Encumbrances (other than Permitted
Encumbrances). Upon the sale, conveyance, transfer, assignment and delivery of
the Acquired Assets in accordance with this Agreement, Buyer will acquire good,
valid and marketable title to the Acquired Assets, free and clear of any
Encumbrances (other than Permitted Encumbrances). Seller has timely paid over to
the appropriate Governmental Entity all amounts required to be paid over under
all escheat and unclaimed property Laws and has substantially complied with all
escheat and unclaimed property Laws.

Section 2.03    Authority. Seller has all requisite corporate power and
authority to execute and deliver (or cause to be executed and delivered) this
Agreement, the Bill of Sale, the IP Assignment Agreements, the Transition
Services Agreement, the Research and Testing Agreement, the Seller FDA Letter,
the Seller Orphan Designation Letter and any other agreements, certificates or
documents to which Seller is (or will be as of the Closing) a party
(collectively, the “Related Agreements”) and to perform its obligations
hereunder and under each of the Related Agreements to which it is (or will be as
of the Closing) a party. The execution and delivery by Seller of this Agreement
and each of the Related Agreements to which it is (or will be as of the Closing)
a party and the performance by Seller of this Agreement and its obligations
hereunder and thereunder, and the consummation by Seller of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of Seller and, other than the Seller
Stockholder Approval, no other corporate or other proceedings or actions on the
part of Seller, its board of directors (the “Seller Board”) or stockholders are
necessary therefor. There are no appraisal or dissenters’ rights under
applicable Law that are applicable to the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby by
Seller. This Agreement has been, and each Related Agreement to which it is (or
will be at Closing) a party will be, duly and validly executed and delivered by
Seller and (assuming this Agreement and each of the Related Agreements to which
Buyer is (or will be at Closing) a party, constitutes the valid and binding
obligation of Buyer) constitutes (or will constitute) a valid and binding
obligation of Seller, enforceable against Seller in accordance with their

7

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

respective terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
Laws relating to or affecting the rights of creditors generally and by general
principles of equity.

Section 2.04    No Subsidiaries. Except for Concert Pharmaceuticals Securities
Corporation and Concert Pharma U.K. Ltd., Seller has no Subsidiaries.

Section 2.05    Non‑Contravention; Consents. Neither the execution, delivery or
performance of this Agreement by Seller or any of the Related Agreements to
which Seller is (or will be at Closing) a party, nor the consummation by Seller
of the transactions contemplated hereby or by the Related Agreements, will (with
or without the giving of notice or the lapse of time, or both):
(a)    conflict with or violate any provision of the charter or bylaws or other
organizational documents of Seller;
(b)    create any Encumbrance (other than a Permitted Encumbrance) upon any of
the Acquired Assets;
(c)    require on the part of Seller any filing with, notice to, exemption from,
or any Permit, authorization, consent or approval of, any Governmental Entity
with respect to the Acquired Assets, except for (i) compliance by Seller with
the applicable requirements of the Hart‑Scott‑Rodino Antitrust Improvements Act
of 1976 (the “HSR Act”) and any other applicable Antitrust Laws, (ii) the Seller
Orphan Designation Letter, (iii) the Seller FDA Letter and (iv) the filing of
the Proxy Statement with the SEC in preliminary and definitive forms;
(d)    subject to obtaining the Third Party consents or providing the notices
set forth on Section 5.02(h) of the Seller Disclosure Letter, conflict with,
violate or result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, require any notice, right of first offer or refusal, consent or
waiver under, or result in the loss of any right or privilege under, any
Assigned Contract, or other instrument to which Seller is a party or by which
any of the Acquired Assets are bound; or
(e)    conflict with or violate any Order or Law or other restriction of any
Governmental Entity applicable to Seller, any of the Acquired Assets or any of
the Assumed Liabilities,
except, in the case of clauses (b) through (e) above, for such conflicts,
breaches, defaults, consents, approvals, authorizations, declarations, filings
or notices which would not reasonably be expected to have a Seller Material
Adverse Effect.

Section 2.06    Vote Required. The Seller Stockholder Approval is the only vote
of the holders of any class or series of Seller’s capital stock necessary to
consummate the transactions contemplated hereby.

Section 2.07    Absence of Certain Changes. Since January 1, 2016, (a) Seller
has owned, developed and operated the Acquired Assets in the Ordinary Course of
the CF Enterprise, (b) there has not been any material damage, destruction or
other casualty loss with respect to any Acquired Asset, whether or not covered
by insurance and (c) there has not been any Effect that has had, or would
reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect. Without limiting the generality of the foregoing,
except for the transactions contemplated hereby, and except as set forth in
Section 4.01(b) Section 4.01(b)of the Seller Disclosure Letter, since January 1,
2016, Seller has not taken any action that, had it been taken after the date of
this Agreement, would be prohibited by the terms hereof.

8

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Section 2.08    Real Property. The Acquired Assets do not include any owned or
leased real property.

Section 2.09    Intellectual Property. (a)  Section 2.09(a)(i) of the Seller
Disclosure Letter sets forth a complete and correct list of all issued or
registered Transferred IP and applications for registration of Transferred IP
owned by Seller (“Registered Business IP”) and, specifying as to each such item,
as applicable, the owner(s), jurisdiction of registration or application, the
registration and/or application number and the date of registration and/or
application.
(b)    The Assigned IP Contracts represent all of the Contracts to which Seller
is party and that are related to the Transferred IP and no additional Contracts
are necessary or useful for the ownership, Development, Manufacture,
Commercialization and operation of the Acquired Assets as currently conducted.
(c)    Except as set forth on Section 2.09(c) of the Seller Disclosure Letter,
Seller is the sole owner of all the rights, title and interest in the
Transferred IP, free and clear of any and all claims, any requirement of any
past (if outstanding), present or future royalty, milestone or other contingent
payments, or Encumbrances (other than Permitted Encumbrances) to the Transferred
IP. Seller has not transferred ownership of, or granted any license or right to
use, or authorized the retention of any right or ownership interest in any
Transferred IP to any Person. No Third Party IP is included in or required to
exploit the Transferred IP as currently conducted or contemplated by Seller.
Seller does not hold any trademarks related to the Transferred Products and, to
the knowledge of Seller, there will be no impediment to Buyer’s use of the name
CTP-656. Seller is entitled to grant all rights that it purports to grant with
respect to the DCE Platform Know-How in Section 1.01(c).
(d)    The Transferred IP is sufficient for the conduct of the Development,
Manufacture and Commercialization of CTP-656 after the Closing in substantially
the same manner as conducted prior to the Closing and constitutes all the
rights, property and assets necessary to conduct in all material respects the
Development, Manufacturing and Commercialization activities as currently
conducted or contemplated by Seller.
(e)    The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
loss, forfeiture, termination, license, or impairment of, or give rise to any
obligation to transfer or to create, change or abolish, or limit, terminate, or
consent to the continued use by Buyer of any rights in any Transferred IP or
material Third Party IP.
(f)    Except as set forth on Section 2.09(f) of the Seller Disclosure Letter,
neither the use or practice of the Transferred IP relating to CTP-656 as
currently used or practiced in the Ordinary Course of the ownership, Development
and operation of the Acquired Assets infringes or misappropriates or otherwise
violates, nor the use or practice of the Transferred IP relating to CTP-656 as
used or practiced in the Ordinary Course infringed or misappropriated or
otherwise violated any rights, other than rights that would be infringed,
misappropriated or otherwise violated if ivacaftor were used or practiced in the
same manner as CTP-656, in Intellectual Property of any Third Party (“Third
Party IP”).
(g)    Except as set forth on Section 2.09(g) of the Seller Disclosure Letter,
(i) the use, Manufacture or Commercialization of CTP-656 does not and will not,
infringe, misappropriate or otherwise violate or conflict with any Third Party
IP, and (ii) no claim, action, investigation or proceeding by or before any
Governmental Entity is pending or, has been threatened claiming that the
Manufacture or Commercialization of the Transferred Products does or will
infringe, misappropriate or otherwise violate or conflict with Third Party IP.

9

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(h)    Except as set forth on Section 2.09(h) of the Seller Disclosure Letter,
no claim has been asserted in writing to or is pending against Seller or any of
its Affiliates and, to the knowledge of Seller, there have not been any
threatened claims or demands against Seller alleging that any aspect of the use
or practice of the Transferred IP or the ownership, Development, Manufacture,
Commercialization and operation of the Acquired Assets as currently conducted
infringes or misappropriates or would infringe the rights of others in or to any
Third Party IP, or challenging the validity, enforceability, right to use or
ownership of any Transferred IP.
(i)    Seller has not granted to any Third Party any license, ownership interest
or right or option to or for the use of or under the Transferred IP.
(j)    Except as set forth on Section 2.09(j) of the Seller Disclosure Letter,
there are no settlements, governmental consents or governmental contracts,
judgments or governmental orders entered into by Seller or imposed upon Seller
that restrict Seller’s rights to own or use any Transferred IP or permit any
Third Parties to use any Transferred IP.
(k)    Except as set forth on Section 2.09(k) of the Seller Disclosure Letter,
no Transferred IP was developed, in whole or in part (i) pursuant to or in
connection with the development of any professional, technical or industry
standard, (ii) under contract with or using the funding or resources of any
Governmental Entity, academic institution or other entity or (iii) under any
grants or other funding arrangements with Third Parties, including the Cystic
Fibrosis Foundation Therapeutics Incorporated. Except as set forth on Section
2.09(k) of the Seller Disclosure Letter, no current or former employee,
consultant or independent contractor of the Seller who was involved in, or who
contributed to, the creation or development of any Transferred IP, has performed
services for the government, a university, college, or other educational
institution, or a research center, during a period of time during which such
employee, consultant or independent contractor was also performing services for
Seller.
(l)    To the knowledge of Seller, there is no, nor has there been any,
infringement, misappropriation, or other violations by any Third Party of any
Transferred IP, and no such claims are pending or threatened by Seller against
any Person with respect to the Transferred IP.
(m)    Seller has taken commercially reasonable steps and precautions to protect
and maintain the Transferred IP, including to establish and preserve the
confidentiality, secrecy and ownership of all of the Transferred IP for which it
would be commercially reasonable to do so. No such Transferred IP has been
disclosed to any Person other than Seller’s Representatives who are bound by
confidentiality provisions and no employee, officer, director, consultant or
advisor of Seller is in violation of any material term of any employment
contract or any other Contract, or any restrictive covenant, relating to the
right to use confidential information of others.
(n)    Except as indicated in Section 2.09(n) of the Seller Disclosure Letter,
all Registered Business IP (i) has been duly maintained and has not been
cancelled, allowed to expire, surrendered, or abandoned, and payment of all
applicable maintenance fees for such Registered Business IP has been made and is
current, (ii) is registered and/or recorded in the name of Seller, is in full
force, has been duly applied for, prosecuted and registered in accordance with
applicable Laws (including disclosure to the United States Patent and Trademark
Office of all material prior art references); (iii) has no filings, payments or
similar actions that must be taken within 120 days of the date hereof for the
purposes of obtaining, maintaining, perfecting or renewing such registration of
Registered Business IP; (iv) has no unsatisfied past or outstanding maintenance
or renewal obligation; and (v) has not been and is not involved in any inter
partes review, opposition, cancellation, interference, reissue, reexamination or
other similar proceeding. All Registered Business IP is subsisting and, except
for any Registered Business IP that is a pending patent application, valid and
enforceable.

10

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(o)    Except as set forth on Section 2.09(o) of the Seller Disclosure Letter,
each Person who has or had access to any trade secrets or confidential
information contained in the Transferred IP is subject to a valid and binding
written agreement requiring such Person to keep such information confidential.
Each Person who has developed or is or was involved in the development of any
Transferred IP owned or purported to be owned by Seller has signed a valid and
binding agreement confirming that Seller owns such owned Transferred IP.
(p)    Except as set forth on Section 2.09(p) of the Seller Disclosure Letter,
Seller has secured valid written present assignments from all consultants and
employees who contributed to the creation or development of any Transferred IP
owned or purported to be owned by Seller and of the rights to such
contributions.
(q)    Section 2.09(q) of the Seller Disclosure Letter sets forth a list of the
Transferred Products and the Development status of each such Transferred
Product.

Section 2.10    Contracts. (a)  Section 2.10(a) of the Seller Disclosure Letter
sets forth a complete and correct list of each Contract to which Seller or any
of its Affiliates is a party that relates to the Acquired Assets and that is
(each, a “Material Contract”):
(i)    a Contract providing for payments by or to any Person in excess of
$100,000 over any twelve (12) month period;
(ii)    a Contract relating to any partnership, commercial collaboration or
joint venture or other agreement involving a sharing of profits, losses, costs
or Liabilities by Seller or any of its Affiliates with any other Person;
(iii)    a Contract with any Governmental Entity, other than any MTAs or CTAs;
(iv)    a Contract relating to the acquisition or disposition of any assets
outside the Ordinary Course, including any securities purchase agreements, asset
purchase agreements, merger agreements, business combination agreements and any
earn‑out or agreement for the deferred payment of purchase price entered into in
connection therewith;
(v)    an Assigned Contract;
(vi)    a Contract relating to the manufacture, storage, distribution or
commercialization of the Transferred Products;
(vii)    a Contract relating to the research or development of the Transferred
Products, excluding any NDAs, MTAs and CTAs;
(viii)    a Contract that is a confidentiality or non‑disclosure agreement,
other than those related to business development activities (“NDAs”), material
transfer (or other similar research) agreement (“MTAs”) or clinical trial
agreement (“CTAs”);
(ix)    a Contract relating to the testing, auditing or controlling of the
Transferred Products, including any pharmacovigilance Contracts and quality
Contracts;
(x)    a Contract that: (A) contains a covenant by Seller not to compete or
otherwise limits the freedom of Seller from engaging in the research, ownership,
operation, development, manufacture, distribution or commercialization of the
Transferred Products; (B) grants any rights of exclusivity to any Person; (C)
grants any right of first refusal, first offer, first negotiation or similar
preferential right; (D) grants any “most favored customer,”

11

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

“most favored supplier” or similar rights to any Person; or (E) contains a
“requirements” obligation requiring Seller to purchase a designated portion of
any type of material; or
(xi)    a Contract that is otherwise material to the Acquired Assets.
(b)    Each of the Material Contracts is in full force and effect and
constitutes a legal, valid and binding agreement of Seller, and to the knowledge
of Seller, each other party thereto, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar Laws of general application affecting or relating to the
enforcement of creditors’ rights generally, and subject to general principles of
equity. Neither Seller, nor, to the knowledge of Seller, any other party thereto
is (with or without notice or lapse of time, or both) in material breach or
default in the performance, observance or fulfillment of any obligation or
covenant contained in any Material Contract, nor does there exist any condition
which upon the passage of time or the giving of notice or both, would reasonably
be expected to cause such material violation of or material default under or
permit the termination or modification of, or acceleration of any obligation
under, any Material Contract. Seller has not given or received written or, to
the knowledge of Seller, oral notice to or from any Person relating to any such
actual or alleged, breach or default. Seller has not received any written or, to
the knowledge of Seller, oral notice from a Third Party stating that such Third
Party intends to terminate any Material Contract and Seller has not waived any
right under the Material Contracts. True and complete copies of all Material
Contracts including all schedules, exhibits, appendices, amendments,
modifications and waivers relating thereto have been made available to Buyer,
except to the extent such Material Contracts have been redacted to (i) enable
compliance with Laws relating to antitrust or the safeguarding of data privacy;
(ii) comply with confidentiality obligations owed to Third Parties; or (iii)
exclude information not related to the Acquired Assets.

Section 2.11    Litigation. There is not, and has never been, a claim,
complaint, action, suit, proceeding, hearing or investigation initiated or, to
the knowledge of Seller, threatened, before any Governmental Entity or arbitral
body relating to the Acquired Assets, Assumed Liabilities, the CF Enterprise,
this Agreement or the transactions contemplated hereby (but excluding any claim,
complaint, action, suit, proceeding, hearing or investigation solely relating to
any Excluded Assets and any sealed qui tam cases). There are no outstanding
Orders of any Governmental Entity or arbitral body affecting the Acquired
Assets, Assumed Liabilities, the CF Enterprise, this Agreement or the
transactions contemplated hereby. No product liability claims have been received
in writing by Seller and, to the knowledge of Seller, no such claims have been
threatened, in each case, with respect to the Transferred Products.

12

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Section 2.12    Regulatory Matters. (a)  Seller holds all Permits required under
the Federal Food, Drug and Cosmetic Act of 1938, as amended (the “FDCA”), the
Public Health Service Act of 1944, as amended (the “PHSA”), and the regulations
of the United States Food and Drug Administration (the “FDA”) promulgated
thereunder, and similar Laws of any other similar Governmental Entity (each a
“Regulatory Authority”) required in connection with the Acquired Assets,
including but not limited to the Seller’s Development, Manufacture, storage,
distribution, import, and export of the Transferred Products (the “Acquired
Assets Permits”). Seller is in compliance in all material respects with the
terms of the Acquired Assets Permits. Seller has timely filed all material
regulatory reports, schedules, statements, documents, filings, submissions,
forms, registrations, notices and other documents, together with any amendments
required to be made with respect thereto, that each was required to file with
any Regulatory Authority related to the Acquired Assets (“Acquired Assets
Regulatory Filings”), and has timely paid all Taxes, fees and assessments due
and payable in connection therewith. All such Acquired Assets Regulatory Filings
complied in all material respects with applicable Law. All such Acquired Assets
Regulatory Filings are included within the Acquired Assets.
(b)    All preclinical and clinical studies or tests conducted by or on behalf
of Seller related to the Acquired Assets have been conducted in compliance with
applicable Law, rules, Regulatory Authority guidance, including the provisions
of the FDA’s current good clinical practices regulations at 21 C.F.R. Parts 50,
54, 56 and 312 and the FDA’s current good laboratory practice regulations at 21
C.F.R. Part 58 and Laws and guidance restricting the use and disclosure of
personal information, including but not limited to, individually identifiable
health information. No clinical trial conducted by or on behalf of Seller has
been terminated or suspended prior to completion for safety or other
non-business reasons. Neither Seller nor, to the knowledge of Seller, any Third
Party on behalf of Seller, has received any notices (whether in writing or
otherwise) or other correspondence (including any warning letter, untitled
letter, 483 observations or similar notices) from the FDA, any other Regulatory
Authority or any institutional review board or ethics committee (i) requiring
the termination, suspension or material modification of any clinical or
pre-clinical studies or tests relating to the Transferred Products, or (ii)
claiming that the ownership, operation, research, development, manufacture or
use of the Acquired Assets is not in compliance with all applicable Laws, and,
there is no action, proceeding or suit pending or, to the knowledge of Seller,
threatened in writing (including any prosecution, injunction, seizure, civil
fine, suspension or recall) relating to the foregoing. Seller has informed Buyer
of all serious adverse drug reactions known to Seller and its Affiliates
relating to the Transferred Products or their use.
(c)    Seller has not (i) made an untrue statement of a material fact or
fraudulent statement to the FDA or any other Regulatory Authority, (ii) failed
to disclose a material fact required to be disclosed to the FDA or any other
Regulatory Authority or (iii) committed any other act, made any statement or
failed to make any statement, that (in any such case) establishes a reasonable
basis for the FDA to invoke its Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities Final Policy as set forth in Compliance Policy
Guide Sec. 120.100, in each case, related to the Acquired Assets. As of the date
of this Agreement, Seller is not the subject of any pending or threatened
investigation related to the Acquired Assets by the (x) FDA pursuant to its
Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities
Final Policy, or (y) any other Regulatory Authority. None of Seller or any of
its officers, employees, agents or clinical investigators has been suspended or
debarred or convicted of any crime or engaged in any conduct that would
reasonably be expected to result in (A) debarment under 21 U.S.C. § 335a or any
similar Law or (B) exclusion under 42 U.S.C. § 1320a-7 or any similar Law, in
each case, in connection with activities related to the Acquired Assets.
(d)    Seller’s Development, Manufacture, storage, distribution, import, and
export of the Transferred Products is, and at all times has been, in compliance
in all material respects with all applicable Laws.  There has not been any
replacement, “dear doctor” letter, investigator notice, safety notice, warning

13

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

letter, untitled letter, inspectional observation or other written notice of
action relating to an alleged lack of safety, efficacy, or regulatory compliance
of the Transferred Products (“Safety Notice”) conducted by or on behalf of
Seller or, to the knowledge of Seller, any Safety Notice conducted by or on
behalf of any Third Party.  To the knowledge of Seller, no event has occurred or
circumstance exists that (with or without notice or lapse of time) is reasonably
likely to give rise to any material actual, alleged, possible or potential
action to enjoin Development, Manufacture, storage, distribution, import or
export of any Transferred Products.  Seller has made available to Buyer copies
of material complaints and notices of alleged defect or adverse reaction with
respect to the Transferred Products that have been received in writing by
Seller.
(e)    Seller is not a party to any corporate integrity agreements, monitoring
agreements, consent decrees, settlement orders, or other similar written
agreements, in each case, entered into with or imposed by any Regulatory
Authority and related to the Acquired Assets.
(f)    Seller is, and has been, in compliance with (i) all federal, state and
local fraud and abuse laws, including the federal Anti-Kickback Statute (42
U.S.C. § 1320a-7(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.) and
the regulations promulgated pursuant to such statutes; (ii) the FDCA, (iii) the
Clinical Laboratory Improvement Amendments of 1988; (iv) the Health Insurance
Portability and Accountability Act of 1996, as amended by the Health Information
and Technology for Economic and Clinical Health Act, and the regulations
promulgated pursuant thereto; (v) the PHSA and the regulations of the FDA
promulgated thereunder; (vi) laws which are cause for exclusion from any federal
health care program; and (vii) applicable requirements under any Permit or Laws,
including applicable statutes and implementing regulations administered or
enforced by the FDA or other Regulatory Authority, including provisions of the
FDA’s current good manufacturing practice regulations at 21 C.F.R. Parts 210-211
and those relating to investigational use, premarket approval and applications
or abbreviated applications to market the Acquired Assets.
(g)    All reports, documents, claims and notices required to be filed,
maintained or furnished to the FDA or any other similar Regulatory Authority by
Seller with respect to the Transferred Products have been so filed, maintained
or furnished and were complete and correct in all material respects on the date
filed (or were corrected in or supplemented by a subsequent filing), except as
would not, individually or in the aggregate, reasonably be expected to
materially and adversely affect the Acquired Assets, taken together as a whole.

Section 2.13    Transferred Inventory. The Transferred Inventory has been
manufactured, handled, maintained, packaged and stored, as applicable, at all
times in compliance in all material respects with applicable Law. Section 2.13
of the Seller Disclosure Letter contains a complete and accurate list of the
Transferred Inventory, including the quantity of each component, and sets forth
the applicable shelf life for any active ingredients, and other raw materials
included in Transferred Inventory that have a shelf life.

Section 2.14    Product Liability. To the knowledge of Seller, there are no (i)
defects in design of CTP-656 which would reasonably be expected to adversely
affect performance or create a material risk of injury to persons or property or
(ii) citations, decisions, adjudications or statements by any Governmental
Entity or consent decrees stating that CTP-656 is defective or unsafe or fail to
meet any standards promulgated by any such Governmental Entity.

Section 2.15    Compliance with Laws. (a)  Seller is, and has been, with respect
to the CF Enterprise, Acquired Assets and Assumed Liabilities, in compliance in
all material respects with all applicable Laws. Seller is not a party to, nor is
subject to, non‑compliance proceedings or the provisions of any material Order
of any Governmental Entity. No notice, citation, summons or order has been
issued to Seller or any of its Affiliates, no complaint has been filed and
served, no penalty has been assessed and notice thereof given, and, to the
knowledge of Seller, no investigation or review is pending or, to the knowledge
of Seller,

14

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

threatened against Seller by any Governmental Entity with respect to any
alleged, actual, possible or potential violation, or failure to comply with by
Seller of any Law applicable to the CF Enterprise, Acquired Assets or Assumed
Liabilities.
(b)    Set forth on Section 2.15(b) of the Seller Disclosure Letter are all
Permits held by Seller that are required in connection with the ownership,
operation or Development of the Acquired Assets as currently owned, operated and
Developed, each of which is valid and in full force and effect, and none of such
Permits will lapse, terminate, expire or otherwise be impaired as a result of
the execution or delivery of this Agreement or the Related Agreements by Seller
or the consummation of the transactions contemplated hereby and thereby. Except
for the Transferred Permits, there are no Permits, whether written or oral,
necessary or required in connection with the ownership, operation or Development
of the Acquired Assets as currently owned, operated and Developed. No notice,
citation, summons or order has been issued, no complaint has been filed and
served, no penalty has been assessed and notice thereof given, and no
investigation or review is pending or, to the knowledge of Seller, threatened
against Seller by any Governmental Entity with respect to any alleged, actual,
possible or potential violation, failure to comply with, or failure to have, any
Permit required in connection with the Acquired Assets. No event has occurred or
circumstance exists that (with or without notice or lapse of time) is reasonably
likely to give rise to the loss of or refusal to renew the Transferred Permits.

Section 2.16    Compliance with Anti-Bribery Laws
(a)    Neither Seller nor any its Representatives or Affiliates, or any other
Person acting on behalf of Seller, has:
(i)    made, authorized, offered or promised to make any payment, gift or
transfer of anything of value, directly, indirectly or through a third party, to
or for the use or benefit of any Official for the purpose of (a) unlawfully
influencing any act, decision, or failure to act by an Official in his or her
official capacity; or (b) inducing such Official to use unlawfully his or her
influence with any Governmental Entity to affect any act or decision of the
Governmental Entity in order to obtain, retain, or direct business or secure an
improper advantage, in each case related to the Acquired Assets;
(ii)    made, authorized, offered or promised to make any payment, gift or
transfer of anything of value, directly, indirectly or through a third party, to
another individual in exchange for (or as a reward for) improper performance of
a relevant function or activity related to the Acquired Assets;
(iii)    requested, accepted or agreed to accept a financial or other advantage,
either directly or through a third party, in exchange for (or as a reward for)
improper performance of a relevant function or activity related to the Acquired
Assets; or
(iv)    made, authorized, offered or promised to make any unlawful bribe,
rebate, payoff, influence payment or kickback or has taken any other action
related to the Acquired Assets that would violate any Anti-Bribery Law binding
on such Person or in effect in any jurisdiction in which such action is taken.
(b)    Seller maintains books, records, and accounts that, in reasonable detail,
accurately and fairly reflect in all material respects its transactions and
dispositions of its assets, and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that:
(i)    its transactions related to the Acquired Assets are executed and its
funds are expended in accordance with its management’s authorization;

15

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(ii)    its transactions related to the Acquired Assets are recorded as
necessary to permit preparation of its financial statements in conformity with
GAAP; and
(iii)    access to the Acquired Assets is permitted in accordance with its
management’s authorization.
(c)    The ownership, Development, Manufacture, Commercialization and operation
of the Acquired Assets has been in compliance with all Anti-Bribery Laws to
which the ownership, Development, Manufacture, Commercialization and operation
of the Acquired Assets are subject, as applicable, and Seller has engaged only
in lawful business practices, in each case, in all material respects.

Section 2.17    Brokers’ Fees. No agent, broker, finder or investment banker
other than Aquilo Partners, L.P. is entitled to any brokerage, finder’s or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by, or on behalf of, Seller. Seller
is solely responsible for the fees and expenses of any such agent, broker,
finder or investment banker.

Section 2.18    Sufficiency of Assets. The Acquired Assets constitute a
conveyance to Buyer, free and clear of any Encumbrance, other than Permitted
Encumbrances, of all of the rights, property and assets that are owned, licensed
or controlled by Seller or any of its Affiliates as of the Closing Date and that
are necessary or useful for the ownership, Development, Manufacture,
Commercialization and operation of the CF Enterprise. None of the Excluded
Assets (including those set forth in Section 1.01(b) of the Seller Disclosure
Letter), other than the DCE Platform Know-How, are necessary or useful for the
ownership, Development, Manufacture, Commercialization and operation of the CF
Enterprise. Immediately after the Closing, no Person shall have any right, title
or interest in or right to use any of the Acquired Assets, other than Buyer.
Immediately after the Closing, Buyer will own all assets that are used, held for
use or necessary or useful for the ownership, Development, Manufacture,
Commercialization and operation of the CF Enterprise, free and clear of any
Encumbrance, other than Permitted Encumbrances.

Section 2.19    Solvency. Assuming satisfaction of the conditions to this
Agreement and after giving effect to the transactions contemplated hereby, the
assumption or retention (as applicable) of the Excluded Liabilities by Seller
and its Affiliates, payment of all amounts required to be paid in connection
with the consummation of the transactions contemplated hereby, and payment of
all related fees and expenses, Seller and its Affiliates (on a consolidated
basis) are not insolvent as of the Closing Date and the consummation of the
transactions contemplated hereby shall not render Seller insolvent. As used
herein, “insolvent” means the sum of Seller’s debts and other probable
Liabilities exceeds the present fair saleable value of Seller’s assets. Seller
has no current plans to file and prosecute a petition for relief under Chapter
11 or 7 of the United States Bankruptcy Code.

Section 2.20    Board Approval. The Seller Board, by resolutions duly adopted at
a meeting duly called and held and not subsequently rescinded or modified in any
way (the “Seller Board Approval”), has (i) declared that this Agreement and the
transactions contemplated hereby are advisable and in the best interests of
Seller and the stockholders of Seller, (ii) approved this Agreement and the
transactions contemplated hereby, (iii) recommended that the stockholders of
Seller approve this Agreement and the transactions contemplated hereby and (iv)
directed that this Agreement and the transactions contemplated hereunder be
submitted to Seller’s stockholders for their approval. No member of the Seller
Board has voted against any of the foregoing.

Section 2.21    Information Supplied. The information supplied by Seller for
inclusion in the Proxy Statement will not, as of the date the Proxy Statement is
first mailed to the stockholders of Seller, and at the time of the Seller
Special Meeting, contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light

16

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

of the circumstances under which they were made, not misleading. Notwithstanding
the foregoing sentence, Seller makes no representation or warranty with respect
to any information supplied by Buyer or any of its Representatives for inclusion
in the Proxy Statement. The Proxy Statement, when filed, will comply in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act.

Section 2.22    No Misrepresentation. To the knowledge of Seller, no
representation or warranty or other statement made by Seller in this Agreement,
the Seller Disclosure Letter, the certificates or documents delivered pursuant
to Section 1.03(b) or otherwise in connection with the contemplated transactions
contains any untrue statement or omits to state a material fact necessary to
make any of them, in light of the circumstances in which it was made, not
misleading. Seller does not have any knowledge of any fact related to the
Acquired Assets that would reasonably be expected to materially adversely affect
the assets, business, financial condition, or results of operations of the CF
Enterprise that has not been set forth in this Agreement or the Seller
Disclosure Letter.

Section 2.23    Disclaimer. Neither Seller nor any of its Affiliates or their
respective Representatives has made, or shall be deemed to have made, any
representation or warranty, express or implied, at law or in equity, in respect
of Seller, the CF Enterprise, the Acquired Assets or the Assumed Liabilities,
other than those expressly made by seller in this Article II, the certificate
delivered pursuant to Section 5.02(c) or in one of the Related Agreements.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of the
Closing Date that:

Section 3.01    Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation.

Section 3.02    Authorization of Transaction. Buyer has all requisite corporate
power and authority to execute and deliver (or cause to be executed and
delivered) this Agreement and each of the Related Agreements to which Buyer is
(or will be as of the Closing) a party and to perform its obligations hereunder
and under each of the Related Agreements to which it is (or will be as of the
Closing) a party. The execution and delivery by Buyer of this Agreement and each
of the Related Agreements to which it is (or will be as of the Closing) a party
and the performance by Buyer of this Agreement and its obligations hereunder and
thereunder, and the consummation by Buyer of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of Buyer and no other corporate or other
proceedings or actions on the part of Buyer, its board of directors or
stockholders are necessary therefor. This Agreement has been, and each Related
Agreement to which it is (or will be at Closing) a party will be, duly and
validly executed and delivered by Buyer and (assuming this Agreement and each of
the Related Agreements to which Seller is (or will be at Closing) a party,
constitutes the valid and binding obligation of Seller) constitutes (or will
constitute) a valid and binding obligation of Buyer, enforceable against Buyer
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar Laws relating to or affecting the rights of
creditors generally and by general principles of equity.

17

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Section 3.03    Noncontravention; Consents. Neither the execution, delivery or
performance of this Agreement by Buyer or any of the Related Agreements to which
Buyer is (or will be at Closing) a party, nor the consummation by Buyer of the
transactions contemplated hereby or by the Related Agreements, will (with or
without the giving of notice or the lapse of time, or both):
(a)    conflict with or violate any provision of the charter or bylaws or other
organizational documents of Buyer;
(b)    require on the part of Buyer any filing with, notice to, exemption from,
or any Permit, authorization, consent or approval of, any Governmental Entity
with respect to the Acquired Assets, except for (i) compliance by Buyer with the
applicable requirements of the HSR Act and any other applicable Antitrust Laws,
(ii) the Buyer Orphan Designation Letter, and (iii) the Buyer FDA Letter;
(c)    conflict with, violate or result in a breach of, constitute a default
under, result in the acceleration of, create in any party any right to
accelerate, terminate, modify or cancel, require any notice, right of first
offer or refusal, consent or waiver under, or result in the loss of any right or
privilege under, any Contract to which Buyer is a party or by which Buyer is
bound or to which any of its assets are subject, except which do not, and would
not reasonably be expected to, materially and adversely affect Buyer’s ability
to consummate the transactions contemplated hereby; or
(d)    conflict with or violate any Order or Law or other restriction of any
Governmental Entity applicable to Buyer or any of its properties or assets;
except, in the case of clauses (b) through (d) of this Section 3.03, for such
conflicts, breaches, defaults, consents, approvals, authorizations,
declarations, filings or notices which would reasonably be expected to have a
Buyer Material Adverse Effect.

Section 3.04    Broker’s Fees. No agent, broker, finder or investment banker is
entitled to any brokerage, finder’s or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by, or on behalf of, Buyer. Buyer is solely responsible for
the fees and expenses of any such agent, broker, finder or investment banker.

Section 3.05    Litigation. There is no claim, complaint, action, suit,
proceeding, hearing or investigation initiated, or, to the knowledge of Buyer,
threatened, before any Governmental Entity or arbitral body against Buyer (but
excluding any claim, complaint, action, suit, proceeding, hearing or
investigation relating to sealed qui tam cases) which would adversely affect
Buyer’s performance under this Agreement or any Related Agreement or the
consummation of the transactions contemplated by this Agreement or any Related
Agreement. There are no outstanding Orders of any Governmental Entity or
arbitral body against Buyer which would adversely affect Buyer’s performance
under this Agreement or any Related Agreement or the consummation of the
transactions contemplated by this Agreement or any Related Agreement.

Section 3.06    Sufficiency of Funds. As of the date hereof, Buyer has, and at
all times until the satisfaction of all of its obligations under this Agreement
will have, sufficient cash, available lines of credit or other sources of
immediately available funds on hand to enable it perform all of its obligations
under this Agreement.

Section 3.07    Information Supplied. The information supplied by Buyer for
inclusion in the Proxy Statement will not, as of the date the Proxy Statement is
first mailed to the stockholders of Seller, and at the time of the Seller
Special Meeting, contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing sentence, Buyer makes no
representation or warranty with respect to any information supplied by Seller or
any of its

18

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Representatives for inclusion in the Proxy Statement. The information supplied
by Buyer for inclusion in the Proxy Statement will comply in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act.

Section 3.08    Solvency. Assuming satisfaction of the conditions to this
Agreement and after giving effect to the transactions contemplated hereby, the
assumption or retention (as applicable) of the Assumed Liabilities by Buyer,
payment of all amounts required to be paid in connection with the consummation
of the transactions contemplated hereby, and payment of all related fees and
expenses, neither the Buyer nor the Guarantor will be insolvent as of the
Closing Date and the consummation of the transactions contemplated by this
Agreement and the Related Agreements shall not render Buyer or the Guarantor
insolvent. As used herein, “insolvent” means the sum of the debts and other
probable Liabilities of the Buyer exceeds the present fair saleable value of the
assets of the Buyer. Neither Buyer nor the Guarantor has current plans to file
and prosecute a petition for relief under Chapter 11 or 7 of the United States
Bankruptcy Code or any similar foreign Laws.

Section 3.09    Limited Representations. Buyer acknowledges, for itself and on
behalf of its Affiliates, that none of Seller, its Affiliates or their
respective Representatives or any other Person acting on their behalf has made
any representation or warranty regarding the CF Enterprise, the Acquired Assets,
the Assumed Liabilities or the transactions contemplated by this Agreement,
except as expressly set forth in Article II, the certificate delivered pursuant
to Section 5.02(c) or in one of the Related Agreements. Buyer acknowledges that,
to the extent provided by Seller, none of Seller, its Affiliates or their
respective Representatives thereof makes any representation or warranty with
respect to any estimates, projections, forecasts or business plans (including
the reasonableness of the assumptions underlying such estimates, projections,
forecasts or plans).

ARTICLE IV

PRE‑CLOSING COVENANTS

Section 4.01    Operation of Business.
(a)    Except as otherwise consented to in writing by Buyer, as set forth on
Section 4.01 of the Seller Disclosure Letter, the Research and Testing Agreement
or as required by applicable Law or Order, or as expressly contemplated by this
Agreement, during the period from the date of this Agreement until the Closing
Date or the date, if any, on which this Agreement is earlier validly terminated
pursuant to Section 7.01 (the “Pre‑Closing Period”), Seller shall:
(i)    use commercially reasonable efforts to preserve the CF Enterprise and
operate the Acquired Assets in the Ordinary Course; and
(ii)    not materially deviate from the planned re-stocking of Transferred
Inventory summarized on Section 4.01(a)(ii) of the Seller Disclosure Letter
unless such material deviation is the result of a circumstance outside of
Seller’s control and to which Seller did not contribute. Seller shall promptly
notify Buyer once it becomes aware of any actual or expected material deviation.

19

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(b)    Except (1) as set forth on Section 4.01(b) of the Seller Disclosure
Letter or as required by this Agreement, (2) as required by applicable Law or
Order, or (3) with the written consent of Buyer, such consent not to
unreasonably be withheld, conditioned or delayed, Seller shall not:
(i)    sell, lease, abandon or otherwise dispose of or permit any Encumbrance
(other than Permitted Encumbrances) on any Acquired Asset, except inventory in
the Ordinary Course;
(ii)    acquire any properties or assets that constitute Acquired Assets, either
tangible or intangible, other than in the Ordinary Course;
(iii)    (A) settle or commence any claim, complaint, action, suit, proceeding,
hearing or investigation; or (B) waive any claims or rights, in either case in a
manner that would constitute an Assumed Liability or with respect to the
Acquired Assets, except, after reasonable consultation with Buyer, claims or
rights relating to any Transaction Litigation that would not reasonably be
expected to impair or adversely affect the Acquired Assets;
(iv)     fail to pay in the Ordinary Course all payables and other Liabilities,
in each case, that would constitute Assumed Liabilities, when due;
(v)     (A) enter into, extend, modify, amend, terminate or renew or waive any
right or remedy under any Assigned Contract (or any Contract that would be an
Assigned Contract if entered into prior to the date hereof) or (B) knowingly
take, or fail to take, any action that would constitute a breach, violate the
terms, conditions or provisions of, or result in a default under, or give to
others any rights of termination, amendment, acceleration or cancellation of any
Assigned Contract;
(vi)    except as otherwise expressly permitted or required under this
Agreement, terminate or materially modify any ongoing clinical trial with
respect to the Transferred Products;
(vii)    take any action which would reasonably be likely to impair Buyer’s
rights in the Acquired Assets;
(viii)    fail to maintain material insurance policies currently maintained by
or on behalf of Seller or covering the Acquired Assets or the Assumed
Liabilities unless comparable replacement policies with substantially similar
coverage areas and amounts are procured;
(ix)    fail to comply with all Laws applicable to the Acquired Assets and the
Assumed Liabilities in all material respects;
(x)    terminate or fail to maintain or renew any Transferred Permits;
(xi)    dispose of or permit to lapse any Transferred IP; or
(xii)    enter into any agreement, or otherwise become obligated, to do any
action prohibited under clauses (i) – (xi) of this Section 4.01(b).

Section 4.02    Access. During the Pre‑Closing Period, Seller shall keep Buyer
informed of all material developments relevant to the ownership, Development,
Manufacture, Commercialization and operation of the Acquired Assets and its
ability to consummate the transactions contemplated hereby, including with
respect to the items set forth on Section 4.02 of the Seller Disclosure Letter.
During the

20

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Pre‑Closing Period, subject to (a) compliance with applicable Laws and (b) any
established legal privilege, Seller shall permit (or cause to be permitted) the
Representatives of Buyer, at Buyer’s expense, to have reasonable access (at
reasonable times, on reasonable prior written notice and in a manner so as not
to unreasonably disrupt the normal business operations of Seller or its
Affiliates) to the premises, properties, financial and accounting records,
employees, Contracts, and other records and documents, of or pertaining to the
CF Enterprise, the Acquired Assets and the Assumed Liabilities, and such other
relevant information and materials as may be reasonably requested. Buyer
acknowledges that it remains bound by the amended and restated mutual
confidentiality agreement, dated August 5, 2016, entered into between Buyer and
Seller (the “Confidentiality Agreement”), provided that Buyer shall be
authorized to engage in discussions with, and disclose confidential information
(as defined in the Confidentiality Agreement) to, (i) Regulatory Authorities in
connection with its post-closing integration planning and (ii) such other
third-parties as may be required in connection with the conduct of activities
under the Research and Testing Agreement. Prior to the Closing, except as
contemplated by the Research and Testing Agreement, Buyer shall not, and shall
cause each member of the Buyer Group and their respective Representatives not
to, contact or communicate with the employees, customers and suppliers of Seller
or any of their respective Affiliates in connection with the transactions
contemplated by this Agreement without the prior written consent of Seller.

Section 4.03    Governmental Approvals and Consents.
(a)    Subject to the terms and conditions of this Agreement (including Section
4.03(f)), each Party will use commercially reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under this Agreement and applicable Laws to satisfy the
conditions to Closing set forth herein and consummate the transactions
contemplated hereby as soon as practicable after the date of this Agreement and
in any event no later than the Outside Date, including (x) preparing and filing,
in consultation with the other Party and as promptly as practicable and
advisable after the date of this Agreement, all documentation (A) to effect all
necessary applications, notices, petitions and other filings and (B) to obtain
all waiting period expirations or terminations, registrations, permits and
authorizations necessary or advisable to be obtained from any Governmental
Entity in order to consummate the transactions contemplated hereby and (y)
taking all steps as may be necessary to obtain all waiting period expirations or
terminations, registrations, permits and authorizations, including defending or
contesting any suit, action, legal proceeding or claim brought by a Third Party,
including any Governmental Entities, that would otherwise prevent or materially
impede, interfere with, hinder or delay the consummation of the transactions
contemplated hereby. In furtherance and not in limitation of the foregoing, each
Party agrees (i) to make all necessary applications, notices, petitions and
filings required (and thereafter make any other required submissions and respond
as promptly as practicable to any requests for additional information or
documentary material) with respect to this Agreement or the transactions
contemplated hereby with the Antitrust Division of the Department of Justice
(the “DOJ”) and the Federal Trade Commission (the “FTC”) on a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby as promptly as practicable, and in any event within ten (10)
Business Days after the execution of this Agreement (unless another date is
mutually agreed between the Parties), and any other Governmental Entity under
any other applicable Antitrust Law and (ii) to promptly determine whether any
other filings are required to be made with, and whether any other consents,
approvals, Permits or authorizations are required to be obtained from, any
Governmental Entity under any other applicable Law in connection with the
transactions contemplated hereby, and if so, to promptly prepare and file any
such filings and to seek any such other consents, approvals, permits or
authorizations (the filings described in the foregoing clauses (i) and (ii)
collectively, “Regulatory Filings”). All filing fees required in connection with
the Regulatory Filings shall be borne by Buyer.
(b)    In connection with, and without limiting, the efforts or the obligations
of the Parties under Section 4.03(a) but subject to Section 4.03(f), each of
Buyer and Seller shall, to the extent permitted

21

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

by applicable Law and not prohibited by the applicable Governmental Entity, (i)
cooperate and coordinate in all respects with the other in the making of
Regulatory Filings (including, to the extent permitted by applicable Law,
providing copies, or portions thereof, of all such documents to the non‑filing
Parties prior to filing and considering all reasonable additions, deletions or
changes suggested by the non‑filing Parties in connection therewith) and in
connection with resolving any investigation, request or other inquiry of any
Governmental Entity under any applicable Law with respect to any such filing,
(ii) supply the other Party and its counsel, as applicable, with any information
and reasonable assistance that may be required or reasonably requested in
connection with the making of such filings, including, within the time allowed
by the relevant Governmental Entity and under applicable Law, any additional or
supplemental information that may be required or reasonably requested by the
FTC, the DOJ and the relevant Governmental Entities in any applicable
jurisdiction in which any such filing is made under any other applicable Law and
(iii) use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, and to assist and cooperate with the
other Parties in doing, all things necessary, proper or advisable to obtain the
expiration or termination of the applicable waiting periods (and any extension
thereof) under the HSR Act or any other Antitrust Law (the “Antitrust
Approvals”), in each case as soon as practicable, and to avoid any impediment to
the consummation of the transactions contemplated hereby under any applicable
Law, including using commercially reasonable efforts to take all such action as
reasonably may be necessary to resolve such objections, if any, as the FTC, the
DOJ or any other Governmental Entity or Person may assert with respect to the
transactions contemplated hereby. Notwithstanding anything to the contrary in
this Section 4.03(b), none of Buyer, on the one hand, or Seller, on the other
hand, shall be required to agree to any term or take or refrain from taking any
action in connection with obtaining the Antitrust Approvals that is not
conditioned upon the consummation of the transactions contemplated hereby.
(c)    Each of Buyer, on the one hand, and Seller, on the other hand, shall, to
the extent practicable and unless prohibited by applicable Law or by the
applicable Governmental Entity, promptly inform the other of any material
communication from any Governmental Entity regarding any of the transactions
contemplated hereby in connection with any Regulatory Filings or investigations
with, by or before any Governmental Entity relating to this Agreement or the
transactions contemplated hereby, including any claims, complaints, actions,
suits, proceedings, hearings or investigations initiated by a private party. If
any Party or affiliate thereof shall receive a request for additional
information or documentary material from any Governmental Entity with respect to
a Regulatory Filing, then such Party shall, subject to Section 4.03(f), use its
commercially reasonable efforts to make, or cause to be made, as soon as
reasonably practicable, an appropriate response in compliance with such request.
In connection with and without limiting the foregoing, to the extent reasonably
practicable and unless prohibited by applicable Law or by the applicable
Governmental Entity, the Parties will (i) give each other reasonable advance
notice of all meetings with any Governmental Entity relating to the transactions
contemplated hereby, (ii) give each other an opportunity to participate in each
of such meetings, (iii) keep the other Party reasonably apprised with respect to
any material communications with any Governmental Entity regarding the
transactions contemplated hereby, (iv) cooperate in the filing of any analyses,
presentations, memoranda, briefs, arguments, opinions or other written
communications explaining or defending the transactions contemplated hereby,
articulating any regulatory or competitive argument or responding to requests or
objections made by any Governmental Entity, (v) provide each other with a
reasonable advance opportunity to review and comment upon, and consider in good
faith the views of the other with respect to, all material written
communications (including applications, analyses, presentations, memoranda,
briefs, arguments and opinions) with a Governmental Entity regarding the
transactions contemplated hereby and (vi) provide each other (or counsel of each
Party, as appropriate) with copies of all material written communications to or
from any Governmental Entity relating to the transactions contemplated hereby.
Any such disclosures, rights to participate or provisions of information by one
Party to the other may be made on a counsel‑only basis to the extent required
under applicable Law. It is acknowledged and agreed that, subject to the
provisions of this Section 4.03(c) and except where

22

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

prohibited by applicable Law, Buyer shall have sole responsibility for
determining strategy with respect to the Antitrust Approvals.
(d)    Buyer will not extend any waiting period under the HSR Act (by pull and
refile, or otherwise) or any other Antitrust Laws or enter into any agreement
with the FTC, the DOJ or any other Governmental Entity not to consummate the
transactions contemplated hereby, except with the prior written consent of
Seller. Neither Buyer nor Seller shall, nor shall they permit their respective
Subsidiaries to, acquire or agree to acquire any business, Person or division
thereof, or otherwise acquire or agree to acquire any assets, if the entering
into of a definitive agreement relating to, or the consummation of, such
acquisition could reasonably be expected to increase the risk of not obtaining
the applicable consent, clearance, approval, authorization or waiver under the
HSR Act or any Antitrust Law with respect to the transactions contemplated
hereby.
(e)    Subject to Section 4.03(f), each of Buyer and Seller shall use its
commercially reasonable efforts to obtain all of its respective consents,
waivers, authorizations and approvals of all Third Parties (other than
Governmental Entities, which are the subject of clauses (a)‑(d) above)
necessary, proper or advisable for the consummation of the transactions
contemplated hereby and to provide any notices to Third Parties required to be
provided by it prior to the Closing.
(f)    Nothing contained in this Section 4.03 or in any other provision of this
Agreement shall be construed as requiring Buyer to agree to any terms or
conditions as a condition to, or in connection with, obtaining any Antitrust
Approval that would (i) impose any limitations on Buyer’s ownership or operation
of all or any portion of the Acquired Assets or all or any portion of its or its
Subsidiaries’, businesses or assets, or compel Buyer or any of its Subsidiaries
to dispose of or hold separate all or any portion of the Acquired Assets or any
portion of its or its Subsidiaries’, businesses or assets, (ii) impose any
limitations on the ability of Buyer to acquire or hold or to exercise full
rights of ownership of the Acquired Assets, (iii) impose any obligations on
Buyer or any of its Subsidiaries in respect of or relating to Buyer’s or any of
its Subsidiaries’ facilities, operations, places of business, employment levels,
products or businesses, (iv) require Buyer or any of its Subsidiaries to make
any payments or (v) impose any other obligation, restriction, limitation,
qualification or other condition on Buyer or any of its Subsidiaries (other
than, with respect to clauses (iii), (iv) and (v), such terms or conditions as
are reasonable and relate to the Ordinary Course and that are imposed by a
Governmental Entity with power and authority to grant the Antitrust Approvals,
and which, individually or in the aggregate, do not competitively disadvantage
Buyer or any of its Subsidiaries) (any such term or condition in (i) through (v)
being referred to herein as a “Burdensome Term or Condition”).
(g)    Notwithstanding anything herein to the contrary, in no event shall Seller
or any of its Subsidiaries agree to any obligation, restriction, requirement,
limitation, qualification, condition, remedy or other action relating to the
Antitrust Approvals without the prior written consent of Buyer; provided, that
notwithstanding the foregoing (i) it is understood and agreed that any failure
by Seller to agree to any such obligation, restriction, requirement, limitation,
qualification, condition, remedy or other action by reason of Buyer’s
withholding its written consent from Seller to do so shall not constitute a
breach of this Section 4.03 by Seller and (ii) Buyer shall be required to
provide its written consent to Seller agreeing to any such obligation,
restriction, requirement, limitation, qualification, condition, remedy or other
action to the extent it would not, individually, or together with any other such
obligation, restriction, requirement, limitation, qualification, condition,
remedy or other action, impose a Burdensome Term or Condition.

23

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Section 4.04    Notices of Certain Events. During the Pre‑Closing Period, Seller
and Buyer shall promptly notify the other Party of any of the following after
gaining knowledge thereof:
(a)    any material actions, suits, claims or proceedings in connection with the
transactions contemplated by this Agreement commenced or threatened against
Seller relating to the Acquired Assets or the Assumed Liabilities, or Buyer, as
the case may be;
(b)    the occurrence or non-occurrence of any fact or event which would be
reasonably likely to cause any condition set forth in Article V of this
Agreement not to be satisfied;
(c)    the occurrence or existence of any fact, circumstance or event which
could result in any representation or warranty made by Seller in this Agreement
or any exhibit, schedule or certificate or delivered herewith, to be untrue or
inaccurate in any material respect;
(d)    any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(e)    any oral or written communication Seller receives from any Governmental
Entity with respect to the Acquired Assets, the Assumed Liabilities or the
transactions contemplated hereby;
(f)    the occurrence of any event, circumstance, development, state of facts,
occurrence, change or Effect which has had a Seller Material Adverse Effect or
the occurrence or non-occurrence of any event, circumstance, development, state
of facts, occurrence, change or effect which would reasonably be expected,
individually or in the aggregate to result in a Seller Material Adverse Effect;
and
(g)    any filings, payments or similar actions that must be taken within 120
days of the Closing Date for the purposes of obtaining, maintaining, perfecting
or renewing registration of Registered IP.
If Seller provides a notification pursuant to this Section 4.04(a), (b), (c),
(f) and (g) prior to the Closing, Seller shall also, by notice in accordance
with the terms of this Agreement, supplement or amend the Seller Disclosure
Letter (each, a “Supplement”), in order to correct any matter that first arises
after the date hereof which may constitute a breach of any representation,
warranty, agreement or covenant contained herein. If Buyer does not provide a
written termination notice pursuant to Section 7.01(h) within five (5) Business
Days after the expiration of the thirty (30) day cure period set forth in
Section 7.01(b), Buyer shall be deemed to have waived its rights (i) to
terminate this Agreement pursuant to Section 7.01(b) and (ii) to seek
indemnification from Seller in accordance with Section 6.02, in each case,
solely with respect to the subject matter of such Supplement.

Section 4.05    Release of Encumbrances. Seller shall take all actions required
of Seller to cause any Encumbrance, other than Permitted Encumbrances, on the
Acquired Assets to be terminated and released as of the Closing. For the
avoidance of doubt, nothing in this Section 4.05 modifies Seller’s obligation to
deliver the Acquired Assets free and clear of all Encumbrances, other than
Permitted Encumbrances.

Section 4.06    No Solicitation by Seller; Seller Board Recommendation.
(a)    During the Pre‑Closing Period, Seller shall not, and shall cause its
Subsidiaries and their respective Representatives not to, directly or
indirectly, solicit, initiate, knowingly encourage or knowingly facilitate, or
furnish or disclose non-public information in furtherance of, any inquiries that
would reasonably be expected to lead to, or the making of any proposal or offer
to implement, any Alternative Transaction, or negotiate or otherwise engage in
discussions with any Person (other than Buyer or its Representatives) with
respect to any Alternative Transaction, or approve, recommend or authorize any

24

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Alternative Transaction, or enter into any agreement, arrangement or
understanding with respect to any Alternative Transaction or requiring it to
abandon, terminate or fail to consummate the sale of the Acquired Assets in
accordance with the terms hereof; provided, that at any time prior to receipt of
the Seller Stockholder Approval (and in no event after receipt of the Seller
Stockholder Approval), Seller may furnish information or afford access to, and
negotiate or otherwise engage in discussions with, any Third Party who delivers
a bona fide written proposal for an Alternative Transaction that was not
solicited after the date of this Agreement or in violation of this Section 4.06,
if and so long as the Seller Board determines in good faith after consultation
with its outside legal counsel that failure to take such action would be
reasonably likely to be inconsistent with the Seller Board’s fiduciary duties
under Delaware Law and determines in good faith that such a proposal is, or
would reasonably be expected to lead to, a Superior Proposal.
(b)    During the Pre-Closing Period, Seller shall notify Buyer promptly (but in
any event within 24 hours) of any inquiries, proposals or offers received by, or
any discussions or negotiations sought to be initiated or continued with, Seller
or any of its Representatives, in each case relating to an Alternative
Transaction, indicating the name of such Person and providing to Buyer a summary
of the material terms of such proposal or offer for an Alternative Transaction.
Prior to providing any information or data to, or entering into any negotiations
or discussions with, any Person in connection with a proposal or offer for an
Alternative Transaction, Seller shall receive from such Person an executed
confidentiality agreement containing confidentiality terms and provisions at
least as restrictive as those contained in the Confidentiality Agreement (which
shall not preclude discussions or negotiations relating to the proposal or offer
from such Person and which shall not contain any exclusivity provision or other
term that would restrict, in any manner, Seller’s ability to consummate the
transactions contemplated by this Agreement). Seller agrees that it will keep
Buyer reasonably informed, on a reasonably prompt basis, of the status and
material terms of any such proposals or offers (including any material
developments) in respect of any such discussions or negotiations and that it
will deliver to Buyer a summary of any material changes to any such proposals or
offers and all nonpublic information being furnished to such Person not
previously provided to Buyer.
(c)    Seller agrees that it will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any Third Parties
conducted prior to the date of this Agreement with respect to any Alternative
Transaction (and promptly terminate all physical and electronic data room access
previously granted to any such Third Party) and will not terminate, amend,
modify or waive any provision of any confidentiality or standstill agreement to
which it is a party and shall enforce, to the fullest extent permitted under
applicable Law, the provisions of any such agreement.
(d)    Notwithstanding anything in this Section 4.06 or Section 4.07 to the
contrary, at any time prior to the receipt of the Seller Stockholder Approval
(and in no event after the receipt of the Seller Stockholder Approval), the
Seller Board may (i) effect a Seller Change of Recommendation in response to a
Seller Intervening Event or (ii) effect a Seller Change of Recommendation and,
subject to compliance with this Section 4.06 and Section 7.01(g), terminate this
Agreement in accordance with Section 7.01(g), following receipt of an
unsolicited bona fide written proposal for an Alternative Transaction after the
date of this Agreement, which the Seller Board determines in good faith by
resolution duly adopted after consultation with its outside legal counsel is a
Superior Proposal, in each case with respect to clauses (i) and (ii), if and
only if the Seller Board determines in good faith after consultation with its
outside legal counsel that such action would be reasonably likely to be
inconsistent with the Seller Board’s fiduciary duties under Delaware Law and
Seller has complied in all material respects with the applicable provisions of
this Section 4.06 with respect thereto. Prior to effecting a Seller Change of
Recommendation or Seller Change of Recommendation and termination of this
Agreement in accordance with Section 7.01(g) as provided above, Seller shall
provide Buyer with five (5) Business Days’ prior written notice (it being
understood and agreed that any amendment to the financial terms or any other
material term of such applicable Alternative Transaction or any change to the
material facts or circumstances relating to such Seller Intervening Event shall,
in each case, require a

25

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

new written notice and a new three (3) Business Day period commencing at the
time of such new notice) advising Buyer of Seller’s intention to effect a Seller
Change of Recommendation or Seller Change of Recommendation and termination of
this Agreement in accordance with Section 7.01(g) as provided above, and
specifying in reasonable detail (i) in the case of an Alternative Transaction,
the material terms and conditions of, and the identity of any Person proposing,
such Alternative Transaction or (ii) in the case of a Seller Intervening Event,
the material facts and circumstances relating to such Seller Intervening Event,
and that Seller shall, during such time and if requested by Buyer, engage in
good faith negotiations with Buyer (including by making its officers and its
legal advisors reasonably available to negotiate) to amend this Agreement (x)
such that the proposed Alternative Transaction would no longer constitute a
Superior Proposal or (y) in a manner that obviates the need to effect a Seller
Change of Recommendation, as applicable. The Parties agree that nothing in this
Section 4.06 shall in any way limit or otherwise affect Buyer’s right to
terminate this Agreement pursuant to Section 7.01(c) at such time as the
requirements of such subsection have been met. Any such Seller Change of
Recommendation shall not change the approval of this Agreement or any other
approval of the Seller Board in any respect that would have the effect of
causing any state corporate takeover statute or other similar statute to be
applicable to the transactions contemplated hereby. Notwithstanding any Seller
Change of Recommendation, if this Agreement is not otherwise terminated by
either Party in accordance with the terms hereof, this Agreement shall be
submitted to the stockholders of Seller at the Seller Special Meeting for the
purpose of voting on the authorization of this Agreement and the transactions
consummated hereby, and nothing contained herein, including any rights of Seller
to take certain actions pursuant to Section 4.06, shall be deemed to relieve
Seller of such obligation. Nothing contained in this Agreement shall prohibit
Seller from (A) complying with Rule 14a-9, Rule 14d-9 and Rule 14e-2(a)
promulgated under the Exchange Act; provided, that any such action made that
relates to an Alternative Transaction shall be deemed to be a Seller Change of
Recommendation unless the Seller Board recommends against the Alternative
Transaction and reaffirms the Seller Board Recommendation in connection with
such action, (B) making any disclosure to the stockholders of Seller if the
Seller Board determines in good faith, after consultation with its outside legal
counsel, that failure to take such action would be reasonably likely to be
inconsistent with the Seller Board’s fiduciary duties under Delaware Law or (C)
informing any Person of the existence of the provisions contained in this
Section 4.06; provided, however, that neither the Seller Board nor any committee
thereof shall, except as expressly permitted by this Section 4.06(d), effect any
Seller Change of Recommendation, it being understood that a “stop, look and
listen” communication to the stockholders of Seller pursuant to Rule 14d-9(f)
under the Exchange Act (or any similar communication to the stockholders of
Seller) shall not be deemed to be or constitute a Seller Change of
Recommendation.

Section 4.07    Preparation of the Proxy Statement; Seller Stockholders’
Meeting.
(a)    As promptly as reasonably practicable following the date of this
Agreement (but in any event, no more than twenty (20) days following the date of
this Agreement), Seller shall prepare and cause to be filed with the SEC the
Proxy Statement in preliminary form, in such form and substance as Seller shall
determine and providing Buyer with an opportunity to review (and Seller will
give reasonable and due consideration to all comments by Buyer) and in
compliance as to form in all material respects with the applicable provisions of
the Securities Act and the rules and regulations thereunder. Each of Seller and
Buyer shall furnish all information concerning itself, its Affiliates and the
holders of its Common Stock to the other and provide such other assistance as
may be reasonably requested by such other Party in connection with the
preparation, filing and distribution of the Proxy Statement. Seller shall
promptly notify Buyer upon the receipt of any comments from the SEC or any
request from the SEC for amendments or supplements to the Proxy Statement, and
shall, as promptly as reasonably practicable after receipt thereof, provide
Buyer with copies of all correspondence related to the Proxy Statement between
it and its Representatives, on one hand, and the SEC, on the other hand, and all
written comments with respect to the Proxy Statement received from the SEC, and
advise Buyer of any oral comments with respect to the Proxy Statement received
from the SEC. Seller shall respond as promptly as reasonably practicable to any
comments from the SEC with respect

26

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

to the Proxy Statement. Notwithstanding the foregoing, no filing of any
amendment or supplement to the Proxy Statement or response to any comments of
the SEC with respect to the Proxy Statement or any amendment or supplement
thereof shall be made by Seller without providing Buyer with an opportunity to
review (and Seller will give reasonable and due consideration to all comments by
Buyer), except to the extent such amendment, supplement or response are made in
connection with an Alternative Transaction as permitted by Section 4.06.
(b)    Without limiting the generality of the foregoing, the information
supplied or to be supplied by either Party for inclusion or incorporation by
reference in the Proxy Statement shall not, on the date the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to stockholders of
Seller, at the time of the Seller Special Meeting, or as of the Closing Date,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If, at any time prior to the Closing Date, any information relating
to Seller or Buyer, or any of their respective Affiliates, should be discovered
by Seller or Buyer that, in the reasonable judgment of Seller or Buyer, should
be set forth in an amendment of, or a supplement to, the Proxy Statement, so
that the Proxy Statement would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the Party
that discovers such information shall promptly notify the other Party, and
Seller and Buyer shall cooperate in the prompt filing with the SEC of any
necessary amendment of, or supplement to, the Proxy Statement and, to the extent
required by Law, in disseminating the information contained in such amendment or
supplement to stockholders of Seller. Nothing in this Section 4.07(b) shall
limit the obligations of any Party under Section 4.07(a). For purposes of this
Section 4.07, any information concerning or related to Seller or its Affiliates
or their respective Representatives will be deemed to have been provided by
Seller, and any information concerning or related to Buyer or its Affiliates or
their respective Representatives will be deemed to have been provided by Buyer.
(c)    Subject to the provisions of Section 4.06, Seller shall, in accordance
with applicable Law and Seller’s charter and bylaws, establish a record date
for, duly call, give notice of, convene and hold the Seller Special Meeting as
promptly as reasonably practicable after the date hereof, for the purpose of
obtaining the Seller Stockholder Approval; provided, that the Seller Special
Meeting shall occur no more than thirty (30) Business Days after the date that
the SEC has advised that it will not provide further comments on the Proxy
Statement (or the date on which the ten‑day period referred to in Rule 14a‑6
under the Exchange Act has expired without receipt of SEC comments or notice
from the SEC that it will provide comments). Subject to the provisions of
Section 4.06 and compliance with applicable Law, Seller shall, as promptly as
reasonably practicable on or after the date that the SEC has advised that it
will not provide further comments on the Proxy Statement (or the date on which
the ten‑day period referred to in Rule 14a‑6 under the Exchange Act has expired
without receipt of SEC comments or notice from the SEC that it will provide
comments) (but it any event no more than five (5) Business Days thereafter),
mail the Proxy Statement to the stockholders of Seller. Subject to the
provisions of Section 4.06, Seller (i) shall include in the Proxy Statement the
Seller Board Recommendation, (ii) shall use its reasonable best efforts to
solicit and obtain the Seller Stockholder Approval, and (iii) shall not
withhold, withdraw, amend, modify or qualify (or publicly propose to or publicly
state that it intends to withdraw, amend, modify or qualify) in any manner
adverse to Buyer the Seller Board Recommendation (it being understood that
publicly taking a neutral position or no position with respect to an Alternative
Transaction (other than a “stop, look and listen” communication to the
stockholders of Seller pursuant to Rule 14d-9(f) under the Exchange Act (or any
similar communication to the stockholders of Seller) shall be considered a
modification to the Seller Board Recommendation in a manner adverse to Buyer)
(collectively, a “Seller Change of Recommendation”), except to the extent
permitted by Section 4.06. Notwithstanding the foregoing provisions of this
Section 4.07(c), Seller shall be permitted to recess, adjourn, postpone or delay
the Seller Special Meeting without the prior consent of Buyer if and solely to
the extent

27

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

that: (i) there are holders of an insufficient number of Common Stock present or
represented by a proxy at the Seller Special Meeting to constitute a quorum at
the Seller Special Meeting, provided, that any such recesses, adjournments,
postponements or delays shall not cause the Seller Special Meeting to be
recessed, adjourned, postponed or delayed by more than fifteen (15) days after
the initial date established for the Seller Special Meeting; (ii) Seller has not
received proxies representing a sufficient number of Common Stock to obtain the
Seller Stockholder Approval, provided, that any such adjournments, postponements
or delays shall not cause the Seller Special Meeting to be adjourned, postponed
or delayed by more than more than fifteen (15) days after the initial date
established for the Seller Special Meeting; (iii) such adjournment,
postponement, delay or cancellation is required by applicable Law or a request
from the SEC or its staff; or (iv) in the good faith judgment of the Seller
Board (after consultation with its outside legal advisors), the failure to
adjourn, postpone or delay the Seller Special Meeting would be reasonably likely
to not allow sufficient time under applicable Laws for the distribution and
review of any required or appropriate supplement or amendment to the Proxy
Statement by Seller’s stockholders prior to the Seller Special Meeting as
then‑scheduled.

ARTICLE V

CONDITIONS PRECEDENT TO CLOSING

Section 5.01    Conditions to the Obligations of Each Party. The respective
obligations of Buyer and Seller to consummate the transactions contemplated
hereby are subject to the satisfaction or waiver (if permissible under
applicable Law) by Buyer or Seller, as appropriate, at or before the Closing
Date, of each of the following conditions:
(a)    the Seller Stockholder Approval shall have been obtained;
(b)    no Order, stipulation or injunction by any Governmental Entity of
competent jurisdiction shall be in effect which prevents, makes illegal, or
limits the consummation of any of the transactions contemplated by this
Agreement, and no action, suit or proceeding shall be pending by or before any
Governmental Entity of competent jurisdiction seeking an Order, stipulation or
injunction seeking to enjoin, restrain or otherwise prevent or prohibit the
consummation of, or limit, any of the transactions contemplated by this
Agreement;
(c)    no Law shall have been enacted, promulgated or deemed applicable to the
transactions contemplated hereby by any Governmental Entity that prevents the
consummation of such transactions or has the effect of making such consummation
thereof illegal or otherwise prohibiting, restraining or enjoining the
consummation of such transactions;
(d)    all waiting periods under the HSR Act and any other applicable Antitrust
Laws (and any extensions thereof) shall have been terminated or shall have
expired; and
(e)    the Escrow Agreement shall have been duly executed and delivered by the
Escrow Agent.

Section 5.02    Conditions to Obligations of Buyer. In addition to the
satisfaction or waiver, as applicable, of the conditions under Section 5.01, the
obligation of Buyer to consummate the transactions to be consummated at the
Closing is subject to the satisfaction (or waiver (if permissible under
applicable Law) in writing by Buyer) of the following conditions:
(a)    (i) each of the Fundamental Representations of Seller set forth in
Article II shall be true and correct (disregarding all qualifications and
exceptions as to materiality or Seller Material Adverse Effect contained
therein) in all material respects on and as of the date of this Agreement and on
and as of

28

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

the Closing Date (except with respect to representations and warranties that
address matters only as of a particular date, in which case, as of such other
date); and (ii) each of the representations and warranties of Seller set forth
in Article II (other than the Fundamental Representations) shall be true and
correct (disregarding all qualifications and exceptions as to materiality or
Seller Material Adverse Effect contained therein) on and as of the date of this
Agreement and on and as of the Closing Date (except with respect to
representations and warranties that address matters only as of a particular
date, in which case, as of such other date), except for failures of such
representations and warranties to be true and correct as to matters that would
not reasonably be expected to have a Seller Material Adverse Effect;
(b)    Seller shall have performed or complied in all material respects with the
agreements and covenants required to be performed or complied with by it under
this Agreement at or prior to the Closing;
(c)    Seller shall have delivered to Buyer a certificate, validly executed by a
duly authorized officer of Seller, dated as of the Closing Date, certifying that
each of the conditions specified in clauses (a), (b) and (h) of this Section
5.02 is satisfied;
(d)    Seller shall have delivered a certificate of non‑foreign status
satisfying the requirements of Treasury Regulation Section 1.1445‑2(b) in a form
reasonably acceptable to Buyer;
(e)    Seller shall have delivered to Buyer all other items listed in Section
1.03(b) not otherwise delivered under this Section 5.02;
(f)    Seller shall have delivered to Buyer letters from Seller to the FDA
transferring to Buyer or any of its designees ownership of (i) Investigational
New Drug Application # 12855 (and any additional applications with the FDA) in
substantially the form attached hereto as Exhibit E-1 (the “Seller FDA Letter”)
and (ii) the orphan drug designation of CTP-656 in substantially the form
attached hereto as Exhibit E-2 (the “Seller Orphan Designation Letter”);
(g)    Seller shall have delivered a counterpart to the Escrow Agreement, duly
executed by Seller;
(h)    All Third Party consents and notices set forth on Section 5.02(h) of the
Seller Disclosure Letter shall have been obtained or delivered, as applicable,
in form and substance reasonably satisfactory to Buyer;
(i)    Since the date of this Agreement, there shall not have occurred a Seller
Material Adverse Effect;
(j)    No Antitrust Approval shall, individually or in the aggregate, impose any
Burdensome Term or Condition; and
(k)    Seller shall have in its inventory, a minimum quantity of Transferred
Inventory with respect to CTP-656 Free Base equal to forty (40) kilograms.

Section 5.03    Conditions to Obligations of Seller. The obligation of Seller to
consummate (or cause to be consummated) the transactions to be consummated at
the Closing are subject to the satisfaction (or waiver in writing by Seller) of
the following conditions:
(a)    (i) each of the Fundamental Representations of Buyer set forth in Article
III shall be true and correct (disregarding all qualifications and exceptions as
to materiality or Buyer Material Adverse Effect contained therein) in all
material respects on and as of the date of this Agreement and on and as of the
Closing Date (except with respect to representations and warranties that address
matters only as of a particular date, in which case, as of such other date); and
(ii) each of the representations and warranties of

29

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Buyer set forth in Article III (other than the Fundamental Representations)
shall be true and correct (disregarding all qualifications and exceptions as to
materiality or Buyer Material Adverse Effect contained therein) on and as of the
date of this Agreement and on and as of the Closing Date (except with respect to
representations and warranties that address matters only as of a particular
date, in which case, as of such other date), except for failures of such
representations and warranties to be true and correct as to matters that would
not reasonably be expected to have a Buyer Material Adverse Effect;
(b)    Buyer shall have performed or complied with in all material respects its
agreements and covenants required to be performed or complied with by it under
this Agreement at or prior to the Closing;
(c)    Buyer shall have delivered to Seller a certificate, validly executed by a
duly authorized officer of Buyer, dated as of the Closing Date, certifying that
each of the conditions specified in clauses (a) and (b) of this Section 5.03 is
satisfied;
(d)    Buyer shall have delivered a counterpart to the Escrow Agreement, duly
executed by Buyer;
(e)    Buyer shall have delivered to Seller letters from Buyer or any of its
designees to the FDA accepting ownership of (i) Investigational New Drug
Application # 12855 (and any additional applications with the FDA) issued by the
FDA in substantially the form attached hereto as Exhibit F-1 (the “Buyer FDA
Letter”) and (ii) the orphan drug designation of CTP-656 in substantially the
form attached hereto as Exhibit F-2 (the “Buyer Orphan Designation Letter”); and
(f)    Buyer shall have delivered to Seller all other items listed in Section
1.03(b) not otherwise delivered under this Section 5.03.

ARTICLE VI

INDEMNIFICATION

Section 6.01    Survival.
(a)    Other than claims alleging fraud or willful or intentional misconduct or
breach of this Agreement, the representations and warranties of Seller and Buyer
set forth in this Agreement and the certificates delivered at Closing pursuant
to Sections 5.02(c) and 5.03(c) shall survive the Closing for a period of
eighteen (18) months from the Closing Date, other than for the representations
and warranties of Seller contained in Section 2.01 (Organization, Qualification
and Corporate Power), Section 2.02 (Title to Assets), Section 2.03
(Authority),Section 2.05 (Non-Contravention; Consents) and Section 2.17
(Brokers’ Fees), and of Buyer contained in Sections 3.01 (Organization), Section
3.02 (Authorization of Transaction) and Section 3.04 (Brokers’ Fees),
(collectively, the “Fundamental Representations”), which shall survive the
Closing until the date that is sixty (60) days after the expiration of the
applicable statute of limitations.
(b)    The covenants and agreements to be performed by or on behalf of a Party
prior to the Closing shall survive the Closing for a period of twenty four (24)
months from the Closing Date. The covenants or other agreements contained in
this Agreement that by their terms are to be performed by or on behalf of a
Party after the Closing shall survive until the date that such covenants and
agreements are fully performed.
(c)    No Person shall be liable for any claim for indemnification under this
Article VI unless a Claim Notice is delivered by the Person seeking
indemnification to the Person from whom indemnification is sought prior to the
expiration of the applicable survival period, in which case the representation,
warranty, covenant or agreement which is the subject of such claim shall
survive, to the extent

30

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

of the claims described in such Claim Notice only, until such claim is resolved,
whether or not the amount of the Damages resulting from such breach has been
finally determined at the time the notice is given.
(d)    The right of a Person to any remedy pursuant to this Article VI shall not
be affected by any investigation or examination conducted, or any knowledge
possessed or acquired (or capable of being possessed or acquired), by such
Person at any time concerning any circumstance, action, omission or event
relating to the accuracy or performance of any representation, warranty,
covenant or obligation.

Section 6.02    Indemnification by Seller. Subject to the terms and conditions
of this Article VI, from and after the Closing, Seller shall defend, indemnify
and hold harmless Buyer and its Subsidiaries and their respective officers,
directors, Affiliates, stockholders, members, partners and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
“Buyer Indemnified Parties”) in respect of any and all Damages incurred as a
result or arising out of:
(a)    any (i) breach of any representation or warranty of Seller in this
Agreement or the certificate of Seller delivered at the Closing pursuant to
Section 5.02(c) (without giving effect to any “Seller Material Adverse Effect”
or other materiality threshold or qualifier contained therein, except in the
case of the representation contained in Section 2.07(c)), or (ii) failure to
perform any covenant or agreement of Seller contained in this Agreement or the
Related Agreements;
(b)    Seller’s and its Affiliates’ failure, fully or timely, to pay, satisfy or
perform the Excluded Liabilities;
(c)    any Tax for which Seller is responsible pursuant to Section 8.01;
(d)    any Tax imposed on or relating to Acquired Assets that is attributable to
any Pre‑Closing Tax Period;
(e)    any failure by Seller, or claim by a creditor of Seller that Seller has
failed to comply with the provisions of any applicable bulk sales, bulk transfer
or similar Laws; or
(f)    all costs and Liabilities, including product Liability, associated with
the open-label Phase 2 clinical trial of CTP-656 in Europe, including all costs
associated with termination of such clinical trial.

Section 6.03    Indemnification by Buyer. Subject to the terms and conditions of
this Article VI, from and after the Closing, Buyer shall indemnify Seller and
its Subsidiaries and their respective officers, directors, Affiliates,
stockholders, members, partners and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the “Seller Indemnified Parties”)
in respect of, and hold the Seller Indemnified Parties harmless against, any and
all Damages incurred as a result or arising out of:
(a)    any (i) breach of any representation or warranty of Buyer contained in
Article III of this Agreement or the certificate of Buyer delivered at the
Closing pursuant to Section 5.03(c) (without giving effect to any “Buyer
Material Adverse Effect” or other materiality threshold or qualifier contained
therein), or (ii) failure to perform any covenant or agreement of Buyer
contained in this Agreement or the Related Agreements;
(b)    Buyer’s and its Affiliates’ failure, fully or timely, to pay, satisfy or
perform the Assumed Liabilities;
(c)    any Tax for which Buyer is responsible pursuant to Section 8.01; or

31

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(d)    any Tax imposed on or relating to Acquired Assets that is attributable to
any Post-Closing Tax Period.

Section 6.04    Claims for Indemnification.
(a)    Third Party Claims.
(i)    All claims for indemnification made under this Agreement resulting from,
related to or arising out of a Third Party claim, action, suit or proceeding (a
“Third Party Claim”) against an Indemnified Party shall be made in accordance
with the following procedures. A Person entitled to indemnification under this
Article VI (an “Indemnified Party”) shall give prompt written notification to
the Person from whom indemnification is sought (the “Indemnifying Party”) of the
commencement of any Third Party Claim for which indemnification may be sought
or, if earlier, upon the written assertion of any such Third Party Claim;
provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party of any
Liability hereunder, except to the extent that the Indemnifying Party has been
materially prejudiced thereby, and then only to such extent. Within twenty (20)
days after delivery of such notification, the Indemnifying Party may, upon
written notice thereof to the Indemnified Party, assume control of the defense
of such Third Party Claim, so long as prior to the Indemnifying Party assuming
control of such defense, it has provided reasonable assurance to the Indemnified
Party (A) of its financial ability to assume the cost of such Third Party Claim
and (B) that, as between the Indemnifying Party and the Indemnified Party, any
Damages related to such Third Party Claim shall be the responsibility of the
Indemnifying Party (subject to any applicable limitations provided in Section
6.05); provided, that the Indemnifying Party shall not be entitled to assume
control of such defense and shall pay the fees and expenses of counsel retained
by the Indemnified Party if (i) the Third Party Claim seeks an injunction or
other equitable or non-monetary relief, (ii) the maximum amount the Indemnified
Party would be entitled to recover under this Article VI in respect of such
Third Party Claim is anticipated to be more than the Cap, (iii) the Indemnified
Party has been advised in writing by its counsel that a reasonable likelihood
exists of a conflict of interest between the Indemnifying Party and the
Indemnified Party, and (iv) upon petition by the Indemnified Party, the
appropriate court rules that the Indemnifying Party failed or is failing to
vigorously prosecute or defend such Third Party Claim. If the Indemnifying Party
does not assume control of such defense in accordance with the terms hereof, the
Indemnified Party shall control such defense.
(ii)    The Party not controlling such defense may participate therein at its
own expense and may retain separate co‑counsel at its own expense; provided,
that if (A) the Indemnifying Party shall have failed, or is not entitled, to
assume the defense of such Third Party Claim in accordance with Section
6.04(a)(i), (B) the employment of such counsel has been specifically authorized
in writing by the Indemnifying Party, which authorization shall not be
unreasonably withheld, conditioned or delayed, or (C) the named parties to any
such action (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party and such Indemnified Party shall have been
advised in writing by such counsel that there may be one (1) or more legal
defenses available to the Indemnified Party which are not available to the
Indemnifying Party, or are available to the Indemnifying Party but the assertion
of which would be adverse to the interests of the Indemnified Party, the
reasonable fees and expenses of counsel to the Indemnified Party solely in
connection therewith shall be considered Damages for purposes of this Agreement;
provided, however,

32

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

that in no event shall the Indemnifying Party be responsible for the fees and
expenses of more than one (1) counsel for all Indemnified Parties. The Party
controlling such defense shall keep the other Party advised of the status of
such Third Party Claim and the defense thereof and shall consider
recommendations made by the other Party with respect thereto.
(iii)    The Indemnified Party shall not agree to any settlement of such Third
Party Claim without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, conditioned or delayed so long as
the Indemnifying Party is actively and diligently defending in good faith any
such Third Party Claim. The Indemnifying Party shall not agree to any settlement
of (y) such Third Party Claim that (A) does not include a complete and
unconditional release of the Indemnified Party from all Liability with respect
thereto, (B) has a finding or admission of any violation of Law or any violation
of the rights of any Person, (C) imposes any injunctive relief or other
restrictions of any kind or nature on any Indemnified Party or (D) imposes any
Liability on the Indemnified Party, or (z) any matters with respect to Taxes
that could reasonably be expected to adversely impact Buyer or the Acquired
Assets in any Post-Closing Tax Period, in each case without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. Each of the Indemnifying Party and the
Indemnified Party shall direct their respective counsel to reasonably cooperate
with the other.
(b)    Procedure for Other Claims. An Indemnified Party wishing to assert a
claim for indemnification under this Article VI which is not subject to Section
6.04(a) shall deliver to the Indemnifying Party a written notice (a “Claim
Notice”) which contains (i) a description and, if then known, the amount (the
“Claimed Amount”) of any Damages incurred by the Indemnified Party or the method
of computation of the amount of such claim of any Damages, (ii) a statement that
the Indemnified Party is entitled to indemnification under this Article VI and a
reasonable explanation of the basis therefor, and (iii) a demand for payment in
the amount of such Damages (including wire instructions if payment is requested
to be made by wire transfer). Within twenty (20) days after delivery of a Claim
Notice, the Indemnifying Party shall deliver to the Indemnified Party a written
response in which the Indemnifying Party shall (A) agree that the Indemnified
Party is entitled to receive all of the Claimed Amount (in which case, within
five (5) Business Days of such response, the Indemnifying Party shall, as
applicable, pay to the Indemnified Party by check or by wire transfer, or Seller
and Buyer shall deliver joint written instructions to the Escrow Agent to
release to the Indemnified Party from the Escrow Amount an amount equal to the
Claimed Amount to the bank account or accounts designated by the Indemnified
Party in a notice to the Indemnifying Party not less than two (2) Business Days
prior to such payment), (B) agree that the Indemnified Party is entitled to
receive part, but not all, of the Claimed Amount (the “Agreed Amount”) (in which
case, within five (5) Business Days of such response, the Indemnifying Party
shall, as applicable, pay to the Indemnified Party by check or by wire transfer,
or Seller and Buyer shall deliver joint written instructions to the Escrow Agent
to release to the Indemnified Party from the Escrow Amount an amount equal to
the Agreed Amount to the bank account or accounts designated by the Indemnified
Party in a notice to the Indemnifying Party not less than two (2) Business Days
prior to such payment), or (C) contest that the Indemnified Party is entitled to
receive any of the Claimed Amount including the reasons therefor. If the
Indemnifying Party in such response contests the payment of all or part of the
Claimed Amount, the Indemnifying Party and the Indemnified Party shall use
commercially reasonable efforts to resolve such dispute. If such dispute is not
resolved within sixty (60) days following the delivery by the Indemnifying Party
of such response, the Indemnifying Party and the Indemnified Party shall each
have the right to submit such dispute to a court of competent jurisdiction in
accordance with the provisions of Section 10.09.

33

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Section 6.05    Limitations. (a)  Subject to Section 10.13, from and after the
Closing, the rights of the Indemnified Parties under this Article VI shall be
the sole and exclusive remedies of the Indemnified Parties with respect to
claims resulting from any breach of warranty or failure to perform any covenant
or agreement contained in this Agreement or any Related Agreement or otherwise
relating to the transactions that are the subject of this Agreement.
Notwithstanding the foregoing or anything in this Agreement to the contrary,
nothing contained in this Agreement shall relieve or limit the Liability of any
Party or any officer or director of such Party from any liability arising out of
or resulting from fraud or intentional or willful misconduct in connection with
the transactions contemplated by this Agreement or the Related Agreement, or in
connection with the delivery of any of the documents referred to herein or
therein.
(b)    Notwithstanding anything to the contrary contained in this Agreement,
each of the following limitations shall apply:
(i)    the aggregate liability of Seller for all Damages (y) under Section
6.02(a)(i) (other than in respect of fraud or intentional or willful misconduct
by Seller or in respect of any Fundamental Representation of Seller) shall not
exceed an amount equal to the Escrow Amount (the “Cap”); and (z) other than in
respect of fraud or intentional or willful misconduct by Seller, under Section
6.02(a) shall not exceed an amount equal to the sum of the Base Purchase Price
and any Contingent Payment paid pursuant to Section 1.02(b);
(ii)    a Buyer Indemnified Party shall have no right to indemnification under
Section 6.02(a)(i) (other than in respect of fraud or intentional or willful
misconduct by Seller or in respect of any Fundamental Representation of Seller,
in each case, as to which the limitation shall not apply) unless and until the
amount of Damages suffered by such Buyer Indemnified Party with respect to an
individual claim under such sections exceeds $50,000 (it being stated for the
avoidance of doubt that Damages arising from any potential indemnification
claims that arise out of or involve or relate to similar facts or are based on
related or similar occurrences, events or circumstances will be aggregated and
treated as an individual claim for this purpose) and the aggregate amount of
Damages suffered by such Buyer Indemnified Party under such section exceeds
$1,600,000 (the “Aggregate Threshold”), whereupon the Buyer Indemnified Parties
shall be indemnified for all Damages (including Damages up to the Aggregate
Threshold), subject to the limitations contained in Section 6.05(b)(i);
(iii)    the aggregate liability of Buyer for all Damages (y) under Section
6.03(a)(i) (other than on account of fraud or intentional or willful misconduct
by Buyer or in respect of any Fundamental Representation of Buyer) shall not
exceed an amount equal to the Cap; and (z) other than on account of fraud or
willful misconduct by Buyer, under Section 6.03(a) shall not exceed an amount
equal to the sum of the Base Purchase Price and any Contingent Payment paid
pursuant to Section 1.02(b); and
(iv)    a Seller Indemnified Party shall have no right to indemnification under
Section 6.03(a)(i) (other than on account fraud or intentional or willful
misconduct by Buyer or in respect of any Fundamental Representation of Buyer, in
each case, as to which the limitation shall not apply) unless and until the
amount of Damages suffered by such Seller Indemnified Party with respect to an
individual claim under such sections exceeds $50,000 (it being stated for the
avoidance of doubt that Damages arising from any potential indemnification
claims that arise out of or involve or relate to similar facts or are based on
related or similar occurrences, events or circumstances will be aggregated and
treated as an individual claim for this purpose) and the aggregate amount of
Damages suffered by such

34

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Seller Indemnified Party under such sections exceeds the Aggregate Threshold,
whereupon the Seller Indemnified Parties shall be indemnified for all Damages
(including Damages up to the Aggregate Threshold), subject to the limitations
contained in Section 6.05(b)(iii).
(c)    In no event shall any Indemnifying Party be responsible and liable under
this Article VI for special or punitive Damages, except to the extent that any
of the foregoing are awarded to a Third Party against any Indemnified Party in
circumstances in which such Indemnified Party is entitled to indemnification
hereunder. In no event shall any Indemnifying Party be responsible and liable
under this Article VI for indirect, consequential or incidental Damages except
to the extent that (i) such Damages are awarded to a Third Party against any
Indemnified Party in circumstances in which such Indemnified Party is entitled
to indemnification hereunder, or (ii) such Damages are a reasonably foreseeable
result of the event that gave rise thereto or the matter for which
indemnification is sought hereunder.
(d)    The amount of any Damages for which indemnification is provided under
this Article VI shall be computed net of any Third Party insurance proceeds
actually received by the Indemnified Party (net of any retroactive premium
adjustments and any other costs of collection), each Party agreeing (i) to use
commercially reasonable efforts to recover all available insurance proceeds and
(ii) to the extent any indemnity payment under this Agreement has been paid by
the Indemnifying Party to or on behalf of the Indemnified Party prior to the
receipt, directly or indirectly by the Indemnified Party of any net insurance
proceeds under Third Party insurance policies on account of such Damages which
duplicate, in whole or in part, the payment by the Indemnifying Party to or on
behalf of the Indemnified Party, the Indemnified Party shall remit to the
Indemnifying Party an amount equal to the amount of the net insurance proceeds
actually received by the Indemnified Party on account of such Damages which
duplicate, in whole or in part, the payment made by the Indemnifying Party to or
on behalf of the Indemnified Party. No Party shall be entitled to recover more
than once for the same Damages.

Section 6.06    Manner of Payment. Subject to the limitations set forth in
Section 6.05(b), any indemnification of Buyer pursuant to Section 6.02 shall be
effected (i) first, by release of funds held by the Escrow Agent with respect to
indemnification of Buyer pursuant to Section 6.02 for any Damages incurred up to
an amount equal to the Escrow Amount pursuant to the terms of the Escrow
Agreement and (ii) second, to the extent of any difference, by wire transfer of
immediately available funds from Seller to an account designated in writing by
Buyer. In the event any payment is to be made from the Escrow Account in
accordance with this Section 6.06, Seller and Buyer shall deliver joint written
instructions to the Escrow Agent to release to the Indemnified Party from the
Escrow Account the appropriate amount by wire transfer in immediately available
funds to the bank account or accounts designated by the Indemnified Party in a
notice to the Indemnifying Party not less than two (2) Business Days prior to
such payment.

Section 6.07    Right of Setoff. Upon notice to Seller specifying in reasonable
detail the basis therefor, Buyer may, at its sole discretion, set off any amount
to which it may be entitled under this Article VI that is the subject of a
final, non-appealable decision from a court of competent jurisdiction against
amounts otherwise payable pursuant to Section 1.02.

Section 6.08    Adjustment to Purchase Price. Any payment by Buyer or Seller, as
the case may be, pursuant to this Article VI shall be treated as an adjustment
to the Base Purchase Price for Tax purposes unless otherwise required by
applicable Law.

Section 6.09    Release of the Escrow Account. On the eighteen (18) month
anniversary of the Closing Date, to the extent the amount remaining in the
Escrow Account exceeds any amounts which are the subject of any unresolved or
unsatisfied claims for indemnifiable Damages pursuant to Section 6.02 that were
properly made on or prior to the eighteen (18) month anniversary of the Closing
Date in accordance with the provisions of this Article VI, Buyer and Seller
shall deliver to the Escrow Agent a joint written

35

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

instruction in accordance with the terms of the Escrow Agreement to the effect
that the Escrow Agent release any such excess amount to Seller as of such date.
To the extent any amounts are retained in the Escrow Account pursuant to the
immediately preceding sentence, Buyer and Seller shall instruct the Escrow Agent
to release such funds, following the resolution of each such claim, to Buyer or
to Seller in accordance with the resolution of the applicable claim, as
appropriate.

ARTICLE VII

TERMINATION

Section 7.01    Termination of Agreement. The Parties may terminate this
Agreement prior to the Closing as provided below:
(a)    by mutual written agreement of Seller and Buyer;
(b)    by Buyer if a breach of any representation or warranty or failure to
perform any covenant or agreement on the part of Seller set forth in this
Agreement shall have occurred that would cause any of the conditions set forth
in Section 5.02(a) or (b) not to be satisfied, and such breach is incapable of
being cured or not cured within thirty (30) days following Buyer’s delivery of
notice to Seller of such breach or failure to perform, provided, that Buyer may
terminate this Agreement pursuant to this Section 7.01(b) only if, at the time
of termination, Buyer is not in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement;
(c)    by Seller if a breach of any representation or warranty or failure to
perform any covenant or agreement on the part of Buyer set forth in this
Agreement shall have occurred that would cause any of the conditions set forth
in Section 5.03(a) or (b) not to be satisfied, and such breach is incapable of
being cured or not cured within thirty (30) days following Seller’s delivery of
notice to Buyer of such breach or failure to perform, provided, that Seller may
terminate this Agreement pursuant to this Section 7.01(c) only if, at the time
of termination, Seller is not in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement;
(d)    by Buyer, if the Seller Board (i) fails to make the Seller Board
Recommendation referred to in Section 4.06(d) or shall fail to include in the
Proxy Statement the Seller Board Recommendation, (ii) effects a Seller Change of
Recommendation, (iii) authorizes, approves or recommends to Seller’s
stockholders, or otherwise authorizes, approves or publicly recommends, an
Alternative Transaction or (iv) fails to publicly confirm the Seller Board
Recommendation within ten (10) Business Days after a written request (which
request must be reasonable under the circumstances) by Buyer that it do so
following Seller’s receipt of an Alternative Transaction;
(e)    by Buyer, if there shall have been a material breach by Seller of Section
4.06 or Section 4.07;
(f)    by Buyer or Seller by written notice to the other if;
(i)    the condition set forth in Section 5.01(b) or Section 5.01(c) is not
satisfied and the Order, stipulation or injunction giving rise to such
non-satisfaction has become final and non-appealable; provided, however, that
the right to terminate this Agreement pursuant to this Section 7.01(f)(i) shall
not be available to any party that has failed to perform fully its obligations
under this Agreement in any manner that shall have proximately caused or
resulted in the imposition of such Order, stipulation or injunction or the
failure of such Order, stipulation or injunction to be resisted, resolved or
lifted;

36

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

(i)    the Closing shall not have occurred on or before October 31, 2017 (the
“Outside Date”); provided, however, that no Party may terminate this Agreement
pursuant to this Section 7.01(f)(ii) if such Party’s material breach of any
representation, warranty, covenant or other obligation under this Agreement
shall have proximately caused or resulted in the Closing not having occurred on
or prior to the Outside Date; or
(ii)    the Seller Stockholder Approval is not obtained at the Seller Special
Meeting or at any adjournment or postponement thereof, in each case at which a
vote on such approval was taken; or
(g)    by Seller, provided, that it has complied with its obligations under
Section 4.06 and Section 4.07, at any time prior to obtaining the Seller
Stockholder Approval at the Seller Special Meeting or at any adjournment or
postponement thereof, in order to concurrently enter into a binding agreement
for an Alternative Transaction that constitutes a Superior Proposal, if prior to
or concurrently with such termination, Seller pays the Termination Fee (as
defined in Section 7.02(b)); or
(h)    by Buyer within five (5) Business Days following the cure period set
forth in Section 7.01(b) upon receipt by Buyer of a Supplement pursuant to
Section 4.04, if the Supplement gives rise to a breach that is not cured within
the cure period.

Section 7.02    Effect of Termination.
(a)    To terminate this Agreement as provided in Section 7.01 (except in the
case of termination pursuant to Section 7.01(a)), the terminating party shall
have given written notice to the other Party specifying the subsection of
Section 7.01 pursuant to which such termination is made, and this Agreement
shall forthwith become null and void and there will be no liability of any Party
(or any stockholder or Representative of such Party) to each other Party hereto,
except with respect to the Confidentiality Agreement, this Section 7.02, Section
9.04 and Article X; provided, that no such termination shall relieve any Party
from liability for any damages resulting from fraud or a willful breach of its
representations, warranties or covenants set forth in this Agreement prior to
such termination and any aggrieved Party will be entitled to all rights and
remedies under applicable Law or in equity.
(b)    Seller Termination Fee. (i) If this Agreement is terminated pursuant to:
(A)    Section 7.01(d) or Section 7.01(e);
(B)    Section 7.01(f)(ii) and (x) a vote of the stockholders of Seller
contemplated by this Agreement at the Seller Special Meeting to obtain the
Seller Stockholder Approval has not occurred and (y) a proposal with respect to
an Alternative Transaction shall have been publicly proposed or announced or
otherwise publicly disclosed and not withdrawn after the date of this Agreement
and prior to the date of termination of this Agreement;
(C)    Section 7.01(b) or Section 7.01(f)(iii), and, in either case, a proposal
with respect to an Alternative Transaction shall have been publicly proposed or
announced or otherwise publicly disclosed and not withdrawn after the date of
this Agreement and prior to the date of the Seller Special Meeting; or
(D)    Section 7.01(g);
then (x) in the case of a termination contemplated by Section 7.02(b)(i)(A),
Seller shall pay or cause to be paid to Buyer within two (2) Business Days
following the termination of this

37

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Agreement, a fee, by wire transfer in immediately available funds to an account
specified by Buyer, equal to $6,400,000 (the “Termination Fee”); (y) in the case
of termination contemplated by Section 7.02(b)(i)(D), Seller shall pay or cause
to be paid to Buyer the Termination Fee on the date of termination of this
Agreement; and (z) in the case of a termination contemplated by Section
7.02(b)(i)(B) or Section 7.02(b)(i)(C), if Seller, within twelve (12) months
after such termination either consummates an Alternative Transaction or enters
into a definitive agreement to implement an Alternative Transaction, Seller
shall pay to Buyer the Termination Fee simultaneously with such consummation or
entering into such definitive agreement, as the case may be. For purposes of
clause (z) of this Section 7.02(b)(i), each reference to “15%” in the definition
of “Alternative Transaction” shall be deemed to be a reference to “50%.”
(ii)    If Buyer or Seller terminates this Agreement pursuant to Section
7.01(f)(iii), then Seller shall reimburse Buyer, or cause Buyer to be
reimbursed, for Buyer’s reasonable, documented out‑of‑pocket expenses incurred
in connection with this Agreement and the transactions contemplated hereby,
provided, however, Seller’s aggregate liability under this Section 7.02(b)(ii)
shall not exceed an amount equal to $500,000.
(iii)    In no event shall Seller be obligated to pay the Termination Fee on
more than one occasion.
(c)    Seller acknowledges that (i) the agreements contained in this Section
7.02 are an integral part of the transactions contemplated by this Agreement and
that without this Section 7.02 Buyer would not have entered into this Agreement
and (ii) the Termination Fee is not a penalty, but rather is liquidated damages
in a reasonable amount that will compensate Buyer in the circumstances in which
the Termination Fee is payable for the efforts and resources expended and
opportunities foregone while negotiating this Agreement and in reliance on this
Agreement and on the expectation of the consummation of the transactions
contemplated hereby. If Seller fails to promptly pay any amount due pursuant to
this Section 7.02, Seller shall pay to Buyer all reasonable fees, costs and
expenses of enforcement (including reasonable attorney’s fees as well as
reasonable expenses incurred in connection with any action initiated by Buyer),
together with interest on the amount of the Termination Fee at the prime lending
rate as published in The Wall Street Journal, Eastern Edition, in effect on the
date such payment is required to be made.
(d)    If Seller becomes obligated to pay the Termination Fee pursuant to
Section 7.02(b), Buyer agrees that Buyer’s right to receive the Termination Fee
from Seller shall be Buyer’s sole and exclusive remedy against Seller, its
Subsidiaries, Affiliates and their respective Representatives and, upon payment
of the Termination Fee, neither Seller, its Subsidiaries, Affiliates nor their
respective Representatives shall have any Liability or obligation to Buyer
relating to or arising out of this Agreement or the transactions contemplated
hereby.
(e)    In the event that this Agreement is terminated (i) by either Buyer or
Seller pursuant to Section 7.01(f)(ii), and at the time of such termination any
of the conditions set forth in Section 5.01(b) or (c) (under conditions
attributable to one or more Antitrust Laws) or Section 5.01(d) shall not have
been satisfied or waived or (ii) by either Buyer or Seller pursuant to Section
7.01(f)(i) (under conditions attributable to one or more Antitrust Laws), and at
the time of such termination under either Section 7.01(f)(i) or Section
7.01(f)(ii), all conditions set forth in Article 5 other than those attributable
to Antitrust Laws have been satisfied or waived by the party or parties then
entitled to give such waiver (other than those conditions that by their terms
are to be satisfied as of the Closing, provided, that each such condition is
then capable of being satisfied), then Buyer shall reimburse Seller, or cause
Seller to be reimbursed, for Seller’s reasonable, documented out‑of‑pocket
expenses incurred in connection with this Agreement and the transactions

38

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

contemplated hereby, provided, however, that Buyer’s aggregate liability under
this Section 7.02(e) shall not exceed an amount equal to $500,000.

ARTICLE VIII
TAX MATTERS

Section 8.01    Certain Tax Matters. Buyer shall be responsible for the payment
of any transfer, sales, use, stamp, conveyance, value added, recording,
registration, documentary, filing and other non‑income Taxes and administrative
fees (including notary fees) arising in connection with the consummation of the
transactions contemplated by this Agreement (“Transfer Taxes”). Buyer shall, at
its own expense, timely file any Tax Return or other document with respect to
such Taxes or fees (and Seller shall cooperate with respect thereto as
necessary). Buyer and Seller shall use commercially reasonable efforts to
cooperate with each other to minimize any Transfer Taxes.

Section 8.02    Withholding Taxes. Each of Buyer and Escrow Agent shall be
entitled to deduct and withhold from any consideration payable or otherwise
deliverable to Seller or any other Person pursuant to this Agreement (including
the Contingent Payments, if any) all Taxes that Buyer or the Escrow Agent, as
the case may be, are required to deduct or withhold therefrom under any
applicable provision of Tax Law with respect to the making of such payment. All
such withheld amounts shall be treated as delivered to Seller; provided, that
Buyer or the Escrow Agent shall remit or cause to be remitted to the applicable
Governmental Entity the amounts withheld as required under any applicable
provision of Tax Law. Buyer shall, to the extent reasonable, notify Seller if
any such withholding is required.

ARTICLE IX
FURTHER AGREEMENTS

Section 9.01    Post‑Closing Information. After the Closing, Buyer shall respond
to reasonable, written requests for information and assistance by Seller in
connection with Seller completing the audit of its accounts and preparation of
its required federal, state and local Tax Returns.

Section 9.02    Wrong Pockets.  If either Buyer, on the one hand, or Seller, on
the other hand, becomes aware that any of the Acquired Assets has not been
transferred to Buyer or that any of the Excluded Assets has been transferred to
Buyer, Buyer or Seller, as applicable, shall promptly notify the other and the
Parties shall, as soon as reasonably practicable, ensure that such property is
transferred, with any necessary prior Third Party consent or approval, to (a)
Buyer, in the case of any Acquired Asset which was not transferred to Buyer at
the Closing; or (b) Seller, in the case of any Excluded Asset which was
transferred to Buyer at the Closing.

Section 9.03    Use of Names. After the Closing Date, Seller shall, and shall
cause its Affiliates to, cease to use the names set forth on Section 9.03 of the
Seller Disclosure Letter and any name confusingly similar thereto (collectively,
the “Restricted Names”) and any trademarks, trade names, trade dress, service
marks and logos that use or incorporate any Restricted Name. Seller agrees that
from and after the Closing, Seller shall not have any right, title, interest,
license or other right whatsoever in the Restricted Names. Seller shall, and
shall cause its Affiliates to, remove, strike over or obliterate all Restricted
Names and any trademarks, trade names, trade dress, service marks and logos that
use or incorporate any Restricted Name from the Excluded Assets (it being
understood that this requirement shall not apply to fair use of any Restricted
Name, including, but not limited to, in documents and materials kept as records
that are maintained for

39

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

internal use only and not publicly disseminated, or to be archived as such
records, for historical purposes or as required by applicable Law). Any use of
the Restricted Names by Seller as permitted in this Section 9.03 is subject to
its use of each Restricted Name in the same form and manner as, to the same
extent as (without an increase in extent or type of uses of each Restricted
Name) and subject to the same standards of quality that are in effect for each
Restricted Name as of the Closing Date. All goodwill arising from any such use
shall inure to the benefit of Buyer or an applicable Affiliate of Buyer owning
the Restricted Name so used. Seller shall not to use any Restricted Name in any
manner that may reflect negatively on such name and mark or on Buyer or any of
its Affiliates.

Section 9.04    Confidentiality.
(a)    From and after the date of this Agreement until the Closing, Buyer and
Seller each agree they will be bound by and comply with the obligations of the
Confidentiality Agreement. After the Closing Date, Buyer’s obligations with
respect to Confidential Material under the Confidentiality Agreement shall be
deemed to have been terminated by and the Confidentiality Agreement shall no
longer be binding upon Buyer.
(b)    Seller acknowledges that it is in possession of Confidential Material.
Seller shall, and shall cause each of its Affiliates and their respective
Representatives to, (i) treat confidentially and not disclose all or any portion
of such Confidential Material and use such Confidential Material solely for the
purpose of fulfilling its obligations under this Agreement and the Related
Agreements and for no other purpose, in each case, following the Closing Date
and (ii) from the date hereof and until the Closing Date, use Confidential
Material for the sole purpose of developing and operating the Acquired Assets in
the Ordinary Course and to consummate the transactions contemplated by this
Agreement. Seller acknowledges and agrees that such Confidential Material is
proprietary and confidential in nature and may be disclosed to its
Representatives only to the extent necessary for Seller to consummate the
transactions contemplated by this Agreement (it being understood that Seller
shall be responsible for any disclosure by any such Representative not permitted
by this Agreement). If, following the Closing Date, Seller or any of its
Affiliates or their respective Representatives are requested or required to
disclose (after Seller has used its commercially reasonable efforts to avoid
such disclosure and after promptly advising and consulting with Buyer about
Seller’s intention to make, and the proposed contents of, such disclosure) any
of the Confidential Material (whether by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar process), Seller
shall, or shall cause such Affiliate or Representative, to provide Buyer with
prompt written notice of such request so that Buyer may seek an appropriate
protective order or other appropriate remedy. At any time that such protective
order or remedy has not been obtained, Seller or such Affiliate or
Representative may disclose only that portion of the Confidential Material which
such Person is legally required to disclose or of which disclosure is required
to avoid sanction for contempt or any similar sanction, and Seller shall
exercise its commercially reasonable efforts to obtain assurance that
confidential treatment will be accorded to such Confidential Material so
disclosed. Seller further agrees that, from and after the Closing Date, Seller
and its Affiliates and Representatives, upon the request of Buyer, promptly will
deliver to Buyer all documents, or other tangible embodiments, constituting
Confidential Material or other information with respect to the Acquired Assets,
without retaining any copy thereof, and shall promptly destroy all other
information and documents constituting or containing Confidential Material;
provided, however, that Seller or its Representatives shall be permitted to
retain one archival copy of any Confidential Material for record purposes and to
evidence Seller’s compliance with this Agreement or applicable Law, and in
addition, nothing in this Agreement shall require the alteration, modification,
deletion or destruction of back-up tapes or other media made in the ordinary
course of business.

Section 9.05    Restrictive Covenants. (a)  During the period beginning on the
Closing Date and ending on the fifth (5th) anniversary of the Closing Date (the
“Non‑Compete Period”), Seller covenants

40

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

and agrees not to, and shall cause its Affiliates not to, directly or indirectly
anywhere in the world, acquire or Develop, Manufacture or Commercialize any
compound or product or file any Intellectual Property related thereto, in each
case with the intention of treating cystic fibrosis, and shall not control,
advise, enable, provide services to, fund or guarantee the obligations of, any
Third Party engaged in, or planning to engage in, any of the foregoing.
Notwithstanding the foregoing, nothing in this Section 9.05 shall restrict,
place conditions on or impede Seller from the current or planned (each as of the
Closing Date) Development, Manufacturing, or Commercialization of any Excluded
Therapeutic Products.
(b)    During the period beginning on the date of this Agreement and ending on
the date that is twelve (12) months after the earlier of (i) termination of this
Agreement in accordance with its terms and (ii) the Closing Date, each of Buyer
and Seller shall not, and shall cause their respective Affiliates not to,
directly or indirectly, solicit for employment or employ or cause to leave the
employ of the other Party or any of its Affiliates, any employee of the other
Party or its Affiliates, without obtaining the prior written consent of the
other Party; provided that each Party may make general solicitations for
employment not specifically directed at the other Party or any of its Affiliates
or their respective employees and employ any person who responds to such
solicitations.
(c)    Seller shall instruct its officers and directors, and shall cause its
Affiliates to instruct their officers and directors, not to directly or
indirectly through any other Person (whether as an officer, manager, director,
employee, partner, consultant, holder of equity or debt investment, lender or in
any other manner or capacity), engage in conduct, oral or otherwise, that
disparages or damages or would reasonably be expected to disparage or damage any
of Buyer, its Affiliates or any of their respective current or former
Representatives, holders of equity or debt investments, lenders, businesses,
activities, operations or reputations.
(d)    As a material inducement to Buyer’s execution of this Agreement (without
such inducement Buyer would not have entered into this Agreement), Seller
acknowledges and agrees that the provisions of this Section 9.05 are reasonable
and necessary to protect the legitimate business interests of Buyer and its
acquisition of the Acquired Assets. Seller shall not contest that Buyer’s
remedies at law for any breach or threat of breach by Seller or any of its
Affiliates of the provisions of this Section 9.05 will be inadequate, and that
Buyer shall be entitled to an injunction or injunctions to prevent breaches or
threatened breaches of the provisions of this Section 9.05 and to enforce
specifically such terms and provisions, in addition to any other remedy to which
Buyer may be entitled at Law or equity, as well as the reasonable costs and
attorneys’ fees it incurs in enforcing the provisions contained in this Section
9.05. The covenants contained in this Section 9.05 are covenants independent of
any other provision of this Agreement or any other agreement between the Parties
hereunder, and the existence of any claim Seller may have against Buyer under
any other provision of this Agreement or otherwise, shall not constitute a
defense to the enforcement of the provisions contained in this Section 9.05.
Seller further agrees that should it violate any provisions contained in this
Section 9.05, the Non‑Compete Period shall extend for an additional time period
that is equal to the term of such violation so that Buyer is provided with the
full benefit of the restrictive period set forth in this Section 9.05.
(e)    If any of the provisions contained in this Section 9.05 shall for any
reason be held by a court of competent jurisdiction to be excessively broad as
to duration, scope, activity or subject, then such provision shall be construed
by limiting and reducing it with respect to such jurisdiction, only to the
extent necessary so as to be valid and enforceable to the extent compatible with
the applicable Law of such jurisdiction.

Section 9.06    FDA Letters. Promptly after the Closing (but in no event later
than two (2) Business Days following the Closing), Seller shall file, or cause
to be filed, with the FDA the Seller FDA Letter, the

41

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Buyer FDA Letter, the Seller Orphan Designation Letter and the Buyer Orphan
Designation Letter and shall provide an as‑filed copy of each such letter to
Buyer.

ARTICLE X

MISCELLANEOUS

Section 10.01    Certain Definitions. For the purposes of this Agreement, the
term:
“Affiliates” has the meaning set forth in Rule 12b‑2 of the Exchange Act.
“Alternative Transaction” means, whether or not proposed in writing, any of the
following events (in each case in a single transaction or series of related
transactions): (i) any sale, lease, contribution or other disposition, directly
or indirectly (including by way of merger, consolidation, share exchange, tender
offer, exchange offer, other business combination, partnership, joint venture,
sale of capital stock of or other equity interests in Subsidiaries or otherwise)
to any Third Party of (A) Acquired Assets (other than sales, dispositions or
transfers in the Ordinary Course), or (B) beneficial ownership of fifteen
percent (15%) or more of the combined voting securities of Seller or of any
resulting parent company of Seller (excluding voting securities acquired in open
market purchases), or (ii) any issuance, sale or other disposition, directly or
indirectly, to any Third Party (or the shareholders of any Third Party) of
securities (or options, rights or warrants to purchase, or securities
convertible into or exchangeable for, such securities) representing fifteen
percent (15%) or more of the combined voting securities of Seller (excluding
voting securities acquired in open market purchases), in each case other than
transactions contemplated by this Agreement.
“Anti-Bribery Law” means (i) the U.S. Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations issued thereunder, and (ii) any law,
rule, regulation, or other legally binding measure of any jurisdiction
including, without limitation, the OECD Convention on Combating Bribery of
Foreign Public Officials in International Business Transactions, or that
otherwise relates to bribery or corruption.
“Antitrust Laws” means the Sherman Act, 15 U.S.C. §§ 1-7, as amended; the
Clayton Act, 15 U.S.C. §§ 12-27, 29 U.S.C. §§ 52-53, as amended; the HSR Act;
the Federal Trade Commission Act, 15 U.S.C. § 41-58, as amended; and all other
Laws and Orders that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization, restraint of trade, or
lessening of competition through merger or acquisition.
“Base Purchase Price” means $160,000,000.
“Business Day” means any day that is not a Saturday or Sunday or a day on which
banking institutions located in New York, New York or Boston, Massachusetts are
required by Law to remain closed.
“Buyer Material Adverse Effect” means any Effect that is materially adverse to
the ability of Buyer to consummate the transactions contemplated by this
Agreement.
“Commercialize” or “Commercialization” means all activities related to
importing, storing, transporting, distributing, marketing, detailing, and
selling a medicinal product or any such use with a view to sale of a medicinal
product; and “Commercialization” shall be construed accordingly.
Commercialization shall not include Development or Manufacturing.
“Common Stock” means the common stock of Seller, par value $0.001 per share.
“Confidential Material” means all data and information (whether written or oral)
that is confidential, proprietary or is not otherwise generally available to the
public regarding the Acquired Assets or the Assumed Liabilities. 
Notwithstanding the foregoing, the restrictions set forth in Section 9.04 shall
not apply to data

42

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

or information (a)  that is or becomes generally available to the public, other
than as a result of disclosure by Seller, its Affiliates or their respective
Representatives in violation of this Agreement, (b) becomes available to Seller
its Affiliates or their respective Representatives from a Person other than a
member of the Buyer Group or their respective Representatives on a
non‑confidential basis, provided, that such Person was not bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Buyer Group or such Representatives with
respect to such materials or (c) to the extent not severable, that primarily
relates to the Excluded Assets and Excluded Liabilities.
“Contract” means any contract, agreement, license, sublicense, indenture,
instrument, commitment and any other legally binding agreement, whether written
or oral.
“Damage” or “Damages” means, without duplication, (a) any and all claims,
actions, causes of action, judgments, awards, penalties, Liabilities, losses,
costs or damages (of any kind including economic, consequential, special,
indirect, incidental, punitive, or exemplary losses, costs or damages, including
without limitation, lost profits ), including reasonable fees and expenses of
attorneys, accountants and other professional advisors, whether involving a
dispute solely between the parties hereto or otherwise, and (b) any losses or
costs incurred in investigating, defending or settling any claim, action or
cause of action described in clause (a).
“DCE Platform Know-How” means Seller’s Know-How, other than Transferred Know-How
that has specific application to the ownership, operation or conduct of the CF
Enterprise, to Develop, Manufacture or Commercialize deuterium-substituted
therapeutic agents, including Know-How to (i) assess compounds as suitable
targets for deuterium substitution; (ii) synthesize a wide range of chemical
compounds that incorporate deuterium selectively at specific positions and
accurately analyze deuterium content at those positions; (iii) optimize assays
to evaluate the metabolic stability and metabolite profile of deuterated
compounds; (iv) identify deuterated compounds that possess improved in vitro or
in vivo metabolic or pharmacokinetic properties relative to the corresponding
non-deuterated compound; (v) develop and apply bioanalytical methods to identify
and measure metabolites formed by the in vitro and in vivo metabolism of
deuterated compounds; (vi) understand how the effects of selective deuterium
substitution may translate from in vitro to in vivo systems and from non-human
models to humans, and how deuterium substitution affects individual and
population-based ADME parameters; (vii) manufacture, analyze, and formulate
deuterated compounds, including development of analytical methods for
determining level of deuterium incorporation; and (viii) sourcing deuterium
reagents, starting materials, and intermediates, and developing and utilizing a
supply chain of multiple vendors.
“Develop”, “Developed” or “Development” means all activities related to research
and development of a medicinal product including, all testing and studies
(non-clinical, preclinical and clinical), toxicology testing, pharmacology,
statistical analysis, and reporting, together with all other activities with
respect to the product useful for the preparation and submission of applications
or other filings to a Regulatory Authority to obtain Regulatory Approval for the
product and in support of obtaining Regulatory Approval. Development shall not
include Manufacturing or Commercialization.
“Effect” means any event, occurrence, change, development or effect.
“EMA” means the European Medicines Agency or any successor agency that is
responsible for reviewing applications seeking approval for the sale of
pharmaceuticals in the European Union.
“Encumbrance” means any charge, claim, condition, equitable interest, lien,
encumbrance, option, pledge, security interest, hypothecation, mortgage, right
of first refusal, or any restriction on use, voting, transfer, receipt of
income, right of set‑off, title retention, or exercise of any other attribute of
ownership.

43

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

“Escrow Agent” means Citibank, N.A.
“Escrow Agreement” means the Escrow Agreement to be entered into on the Closing
Date in substantially the form attached hereto as Exhibit G.
“Escrow Account” means the escrow account to be established and maintained
pursuant to the terms of the Escrow Agreement for the Escrow Amount.
“Escrow Amount” means, initially, $16,000,000, which amount shall be adjusted to
reflect any earnings thereon and any amounts released pursuant to the terms and
subject to the conditions set forth in this Agreement and the Escrow Agreement.
“Exchange Act” means the Securities Exchange Act of 1934.
“Excluded Therapeutic Product” means any product of Seller that is not a
Transferred Product, including compounds that are solely intended for use as a
treatment of antibacterial infections in patients with cystic fibrosis.
“GAAP” means generally accepted accounting principles in the United States.
“Governmental Entity” means any United States or non-United States federal,
state, provincial or local court, tribunal, arbitrator or arbitral body, the
United States Congress or other state or local legislative body, administrative
agency or commission or other governmental or regulatory agency or authority or
any securities exchange.
“Indebtedness” means, with respect to any Person, any principal, interest,
premiums or other obligations of such Person (excluding accrued expenses and
trade payables), whether or not contingent: (a) in respect of notes payable,
accrued interest payable or other obligations for borrowed money, whether
secured or unsecured; (b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof); (c) in respect of banker’s acceptances; (d) representing capital lease
obligations; (e) representing the balance deferred and unpaid of the purchase
price of any property or services; (f) representing any hedging obligations, if
and to the extent any of the preceding items (other than letters of credit and
hedging obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP; (g) in respect of accrued
bonuses owed to any employees of such Person with respect to the 2016 calendar
year; (h) any Liability of such Person in respect of banker’s acceptances or
letters of credit (but solely to the extent drawn and not paid), (i) all
prepayment premiums, penalties, costs and/or expenses related to any items of
Indebtedness of the type referred to in clauses (a) through (i) above that would
be required to be paid as a result of the transactions contemplated hereby or to
extinguish the Indebtedness as of immediately prior to the Closing or (j) direct
or indirect guarantees or other contingent Liabilities (including so called
“make-whole”, “take-or-pay” or “keep-well” agreements) with respect to any
indebtedness, obligation, claim or Liability of any other Person of a type
described in clauses (a) through (i) above. In addition, the term “Indebtedness”
includes all Indebtedness of others secured by a lien on any asset of the
specified Person (whether or not such Indebtedness is assumed by the specified
Person) and, to the extent not otherwise included, the guarantee by the
specified Person of any Indebtedness of any other Person.
“Intellectual Property” means any and all intellectual property rights or
similar proprietary rights and description throughout the world, whether
registered or unregistered, including all rights pertaining to or deriving from:
(a) Patents, inventions, invention disclosures, discoveries and improvements,
whether or not patentable; (b) trademarks, trade dress, service marks,
certification marks, logos, brands, slogans, design rights, names, corporate
names, trade names, Internet domain names, social media accounts and addresses
and other similar designations of source or origin, together with the goodwill
symbolized by any of the

44

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

foregoing; (c) copyrights and copyrightable subject matter; (d) rights in any
computer software or firmware (whether in source code, object code or other
form), algorithms, data files, databases, compilations and data technology
supporting the foregoing, and all documentation, including user manuals and
training materials, related to any of the foregoing; (e) trade secrets
(including those trade secrets defined in the Uniform Trade Secrets Act and
under corresponding foreign Law), and all other non‑public confidential or
proprietary information, Know‑How, clinical data, non‑clinical data,
pre‑clinical data, in‑vitro data, inventions, processes, formulae, models, and
methodologies, excluding Patents, and rights to limit the use or disclosure
thereof by any Person; and (f) all applications, registrations, and renewals for
the foregoing in any jurisdiction throughout the world.
“Know-How” means any know-how, trade secret, proprietary invention, discovery,
data, information, process, method, technique, material, technology, result or
other know-how, whether or not patentable, and all other non‑public confidential
or proprietary information.
“knowledge” means (i) with respect to Seller, the knowledge, within the scope of
his or her responsibility assuming reasonable inquiry of those employees known
to such persons to have specialized knowledge of the subject matter of the
representation and warranty, of the individuals listed in Section 10.01(a) of
the Seller Disclosure Letter and (ii) with respect to Buyer, the knowledge,
within the scope of his or her responsibility assuming reasonable inquiry of
those employees known to such persons to have specialized knowledge of the
subject matter of the representation and warranty, of the Chief Legal and
Administrative Officer.
“Law” means (i) any statute, code, rule, regulation, ordinance, rule of common
law, requirement or other pronouncement of any Governmental Entity having the
effect of law and (ii) any binding guidance document with regard to drug
approval requirements.
“Liability” means any debt, Indebtedness, obligation, Tax, duty or liability of
any nature (including known, unknown, fixed, absolute, disclosed, undisclosed,
matured, unmatured, accrued, unaccrued, asserted, unasserted, determined,
determinable, contingent, indirect, conditional, implied, vicarious, derivative,
joint, several or secondary liability), regardless of whether such debt,
Indebtedness, obligation, Tax, duty or liability would be required to be
disclosed on a balance sheet prepared in accordance with GAAP and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.
“Manufacture” or “Manufacturing” shall mean any and all activities related to
making, producing, processing, filling, finishing, packaging, labeling or
quality assurance testing and releasing of a medicinal product (or any
ingredient thereof). Manufacturing shall not include Development or
Commercialization.
“Milestone Event” means each of the events set forth in Section 1.02(b).
“Official” means any official, employee or representative of, or any other
person acting in an official capacity for or on behalf of, any (i) Governmental
Entity, including any entity owned or controlled thereby, (ii) political party,
party official or political candidate, or (iii) public international
organization.
“Orders” means all orders, rulings, judgments, settlements, arbitration awards
or decrees of any Governmental Entity (or any agreement entered into or any
administrative, judicial or arbitration award with any Governmental Entity).
“Ordinary Course” means the ordinary course of the ownership, operation,
Development, Manufacture and Commercialization of the Acquired Assets consistent
with past practice.
“Patents” means patents, including utility and design patents, patent
applications, including provisionals, non-provisionals, utility models and any
and all related national or international counterparts

45

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

thereto, including any divisional, continuation, continuation‑in‑part
applications, reissues, reexaminations, substitutions and extensions thereof
(including supplementary protection certificates, requests for, and grants of,
continued examination, post‑grant confirmations or amendments, counterparts
claiming priority from any of the foregoing; and any patents or patent
applications that claim priority to or from any of the foregoing) and all rights
associated with any of the foregoing, including the right to claim priority
arising from or related to any of the foregoing.
“Permitted Encumbrance” means: (i) Encumbrances for Taxes, assessments and
governmental charts or levies either not yet due and payable or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP; (ii) Encumbrances
incurred in the Ordinary Course for mechanics, carriers’, workmen’s,
warehouseman’s, repairmen’s, materialmen’s or other similar liens that are not
yet due and payable or that are being contested in good faith by appropriate
proceedings; and (iii) Encumbrances incurred in the Ordinary Course for pledges
and deposits to secure the performance of bids, trade Contracts, surety and
appeal bonds, performance bonds and other obligations of a similar nature, in
each case in the Ordinary Course.
“Permits” means any and all federal, state, local and foreign qualifications,
permits, registrations, clearances, certificates, rights, applications,
submissions, variances, exemptions, filings, approvals and authorizations from
Governmental Entities.
“Person” means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, association, unincorporated
organization, other form of entity, of whatever nature, or Governmental Entity.
“Post‑Closing Tax Period” means a Tax period that begins after the Closing Date
and the portion of a Straddle Period that begins after the Closing Date.
“Pre‑Closing Tax Period” means a Tax period that ends on or before the Closing
Date and the portion of a Straddle Period ending on and including the Closing
Date.
“Proxy Statement” means a proxy statement to be sent to the stockholders of
Seller (together with any amendments or supplements thereto) with respect to the
Seller Special Meeting.
“Regulatory Approval” means any and all registration, clearance, license permit,
approval, concession, variance, waiver, or other authorization of any national,
regional, state, or regulatory authority, department, bureau, commission,
council or other Governmental Entity that is necessary for any activities in
relation to or with a medicinal product in a given country, jurisdiction, or
region (including for the Development, Manufacture, supply, and
Commercialization of such medicinal product) in such country or jurisdiction.
“Regulatory Documentation” means with respect to any Transferred Products, the
regulatory documentation, or portion thereof, related to each such product,
including (as applicable) all applications for Transferred Registrations and
renewals thereof (including investigational new drug applications, orphan
designations, new drug applications, abbreviated new drug applications and
marketing authorization applications), and the safety reports, information on
adverse events, and copies of all correspondence, reports, or minutes with any
Governmental Entity, and all data submitted to Governmental Entities in
connection with Transferred Registrations, pricing studies, and documents
(including, without limitation, laboratory, clinical and pre‑clinical animal
study data) relating to the Transferred Registrations or to the subject matter
of the Transferred Registrations to the extent relating to the Transferred
Products. For the avoidance of doubt, Regulatory Documentation shall not include
laboratory notebooks, internal audit reports or batch records (other than those
batch records contained in Transferred Registrations).

46

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

“Representatives” means, when used with respect to Buyer or Seller, the
directors, officers, employees, consultants, financial advisors, accountants,
legal counsel, investment bankers, lenders and other agents, advisors and
representatives of Buyer or Seller, as applicable, and their respective
Subsidiaries.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Seller Board Recommendation” means the recommendation of the Seller Board that
the stockholders of Seller vote in favor of approval of the sale of the Acquired
Assets pursuant to this Agreement and the transaction contemplated hereby.
“Seller Intervening Event” means an Effect that affects or would reasonably be
expected to affect the Acquired Assets, taken as a whole, that (a) is material,
(b) was not known to the Seller Board as of the date of this Agreement (and
which could not have become known through any further reasonable investigation,
discussion, inquiry or negotiation with respect to any event, fact,
circumstance, development or occurrence known to Seller as of the date of this
Agreement), (c) becomes known to the Seller Board prior to obtaining the Seller
Stockholder Approval (d) does not relate to or involve any Alternative
Transaction and (e) is not the result of a material breach of this Agreement by
Seller.
“Seller Material Adverse Effect” means any Effect that is materially adverse to
(i) the ability of Seller to consummate the transactions contemplated by this
Agreement or (ii) the condition (financial or otherwise) or ownership, operation
or development of the Acquired Assets, taken as a whole; provided, however, that
a “Seller Material Adverse Effect” shall not include, either alone or in
combination, any Effect resulting from or arising out of (and the following will
not be taken into account when determining whether a “Seller Material Adverse
Effect” has occurred): (A) the announcement, pendency or consummation of this
Agreement or the transactions contemplated hereby, including the identity of, or
any facts or circumstances relating to, Buyer or any of its Affiliates to the
extent resulting from the public announcement of this Agreement or the pendency
of the transactions contemplated hereby; (B) any action taken by Seller at the
written request of Buyer or with Buyer’s written consent, or the failure of
Seller to take an action that Seller is specifically prohibited from taking by
the terms of this Agreement; (C) any event or occurrence generally affecting the
industries in which Seller operates relating to the Acquired Assets or in the
economy generally or other general business, financial or market conditions; (D)
changes affecting the national or international general economic, political,
legal or regulatory conditions; (E) changes in Laws after the date hereof
applicable to the Acquired Assets; or (F) national or international political
conditions or instability, including the engagement by the United States in
hostilities, whether or not pursuant to a declaration of emergency or war, or
the occurrence of any military or terrorist attack upon the United States or any
other nation, except, in each of clauses (C), (D), (E), or (F) above, to the
extent such Effects have a disproportionate impact on the Acquired Assets and
the Assumed Liabilities, taken as a whole, relative to other Persons owning
assets similar to the Acquired Assets, in the industry or markets in which
Seller operates.
“Seller Special Meeting” means the meeting of the holders of Common Stock for
the purpose of seeking the Seller Stockholder Approval, including any
postponement or adjournment thereof.
“Seller Stockholder Approval” means the affirmative vote of the holders of a
majority of the outstanding Common Stock entitled to vote upon the authorization
of this Agreement and the transactions contemplated hereby at the Seller Special
Meeting.
“Straddle Period” means a taxable period that begins before the Closing Date and
ends after the Closing Date

47

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

“Subsidiaries” means all those corporations, associations or other business
entities of which the entity in question (a) owns or controls a majority of the
outstanding equity securities either directly or through an unbroken chain of
entities as to each of which a majority of the outstanding equity securities is
owned directly or indirectly by its parent (provided, there shall not be
included any such entity the equity securities of which are owned or controlled
in a fiduciary capacity), (b) in the case of partnerships, serves as a general
partner, (c) in the case of a limited liability company, serves as a managing
member, or (d) otherwise has the ability to elect a majority of the directors,
trustees or managing members thereof.
“Superior Proposal” means any bona fide written proposal made to Seller by any
Third Party which did not result from a breach of Section 4.06 with respect to
any Alternative Transaction or any purchase or acquisition (a) involving the
Acquired Assets or more than 50% of the voting power of the Common Stock, (b)
that is on terms that the Seller Board determines in good faith (after
consultation with its financial advisors and outside legal counsel) would result
in a transaction that, if consummated, is more favorable to Seller’s
stockholders from a financial point of view than the transactions contemplated
by this Agreement (taking into account any proposal by Buyer to amend the terms
of this Agreement); (c) with respect to which the cash consideration and other
amounts (including costs associated with the proposed acquisition) payable at
closing are subject to fully committed financing from recognized financial
institutions; and (d) that is reasonably likely to receive all required
governmental approvals on a timely basis and otherwise reasonably capable of
being completed within a reasonable period of time on the terms proposed, taking
into account all financial, regulatory, legal and other aspects of such
proposal.
“Tax Returns” means all reports, returns, declarations, statements, forms or
other information required to be supplied to a Governmental Entity in connection
with Taxes, including amendments thereto.
“Taxes” means (a) all taxes, including income, gross receipts, capital gain, ad
valorem, value‑added, goods and services, excise, real property, personal
property, sales, use, transfer, withholding, employment and franchise taxes or
other similar charges imposed by the United States of America or any state,
local or foreign government, or any agency thereof, or other political
subdivision of the United States or any such government, and any interest,
penalties, assessments or additions to tax resulting from, attributable to or
incurred in connection with any tax or any contest or dispute thereof and (b)
any liability for any item described in clause (a) of another natural person,
corporation, limited liability company, association, partnership, not for profit
entity, other form of business, or Governmental Entity, whether by Contract
(other than any Contract entered into in the Ordinary Course the principal
purpose of which is not related to taxes) or express or implied agreement,
pursuant to any applicable Law, as a transferee or successor, or otherwise.
“Third Party” means any Person other than the Parties or any of their respective
Subsidiaries and Affiliates.
“Transaction Litigation” means any claim or legal proceeding (including any
class action or derivative litigation) not involving a Governmental Entity
asserted or commenced by, on behalf of or in the name of, against or otherwise
involving Seller and/or any of its directors or officers relating directly or
indirectly to this Agreement, the sale of the Acquired Assets or any of the
other transactions contemplated by this Agreement (including any such claim or
legal proceeding based on allegations that Seller’s entry into the Agreement or
the terms and conditions of the Agreement constituted a breach of the fiduciary
duties of Seller’s Board or any officer of Seller).
“Transferred Inventory” means all inventory of Transferred Products and
reference standards, retains and intermediates related thereto, ingredients and
any other raw materials, work‑in‑progress materials, package inserts, packaging
and labeling materials, supplies and other inventories used in the manufacturing
or production of any Transferred Products, but specifically excluding such
quantity of

48

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

CTP-656 as may be required by Seller prior to Closing in the Ordinary Course,
including material required for Seller to support and conduct its clinical
trials.
“Transferred Know-How” means Know-How (other than DCE Platform Know-How) that is
necessary or useful for the ownership, Development, Manufacture and
Commercialization of the CF Enterprise.
“Transferred Products” means (i) all deuterated ivacaftor, including the
deuterated form of ivacaftor having a chemical formula as set forth on Section
10.01(b) of the Seller Disclosure Letter, including the compound coded by Seller
as CTP-656, and (ii) any other compounds used, planned for use or held for use,
in each case, in the ownership, operation or conduct of the CF Enterprise
(including deuterated tezacaftor) as of the date hereof and the Closing Date, in
each of cases (i) and (ii), including any derivatives, combinations, or other
forms thereof; provided, that compounds that are (a) solely intended for use as
a treatment of antibacterial infections in patients with cystic fibrosis or (b)
listed on Section 10.01(c) of the Seller Disclosure Letter shall not be
considered Transferred Products.
“Transferred Product Records” (i) written records lab notebooks, accounts,
notes, reports, batch records and data, (ii) Regulatory Documentation, (iii)
Development data (of any kind) from discovery through to submission (raw data,
stability, validation, quality by design work), all analytical methods
development and validation, (iv) Manufacturing data (of any kind), batch
records, Manufacturing facility, quality control lab commissioning, validation
protocols, testing protocols, and reports, (v) facility and equipment detailed
drawings, all equipment maintenance and calibration data, and (vi) records
relating to the filing, prosecution, issuance, maintenance, enforcement or
defense of the Transferred IP, in the case of clauses (i) ‑ (vi) that are owned
or controlled by or otherwise in the possession of Seller as of the Closing Date
and related to the Transferred Products.
“Transferred Registrations” any and all Regulatory Approvals granted or issued
by, or applied for to a national, regional, state, or regulatory authority,
department, bureau, commission, council or other Governmental Entity for any
activities in relation to or with a medicinal product in a given country,
jurisdiction, or region (including for the Development, Manufacture, supply, and
Commercialization of such medicinal product).

Section 10.02    Terms Defined Elsewhere. The following terms are defined
elsewhere in this Agreement, as indicated below:
Acquired Assets
Section 1.01(a)
Acquired Assets Permits
Section 2.12(a)
Acquired Assets Regulatory Filings
Section 2.12(a)
Aggregate Threshold
Section 6.05(b)(ii)
Agreed Amount
Section 6.04(b)
Agreement
Preamble
Antitrust Approvals
Section 4.03(b)
Assigned Contracts
Section 1.01(a)(iv)
Assigned IP Contracts
Section 1.01(a)(iv)
Assumed Liabilities
Section 1.01(d)
Assumption Agreements
Section 1.01(d)
Bill of Sale
Section 1.03(b)(iii)
Burdensome Term or Condition
Section 4.03(f)

49

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Buyer
Preamble
Buyer FDA Letter
Section 5.03(e)
Buyer Group
Section 1.01(a)
Buyer Indemnified Parties
Section 6.02
Buyer Orphan Designation Letter
Section 5.03(e)
Cap
Section 6.05(b)(i)
CF Enterprise
Recitals
Claim Notice
Section 6.04(b)
Claimed Amount
Section 6.04(b)
Closing
Section 1.03(a)
Closing Date
Section 1.03(a)
Confidentiality Agreement
Section 4.02
Contingent Payment
Section 1.02(b)
CTAs
Section 2.10(a)(viii)
DOJ
Section 4.03(a)
Electronic Delivery
Section 10.07
Excluded Assets
Section 1.01(b)
Excluded Liabilities
Section 1.01(e)
FDA
Section 2.12(a)
FDCA
Section 2.12(a)
FTC
Section 4.03(a)
Fundamental Representations
Section 6.01(a)
Guarantor
Preamble
HSR Act
Section 2.05(c)
Indemnified Party
Section 6.04(a)
Indemnifying Party
Section 6.04(a)
IP Assignment Agreements
Section 1.03(b)(iv)
Material Contract
Section 2.10(a)
MTAs
Section 2.10(a)(viii)
NDAs
Section 2.10(a)(viii)
Non‑Compete Period
Section 9.05(a)
Outside Date
Section 7.01(f)(ii)
Parties
Preamble
Party
Preamble
PHSA
Section 2.12(a)
Pre‑Closing Period
Section 4.01(a)
Research and Testing Agreement
Recitals
Registered Business IP
Section 2.09(a)
Regulatory Authority
Section 2.12(a)
Regulatory Filings
Section 4.03(a)
Related Agreements
Section 2.03
Restricted Names
Section 9.02
Safety Notice
Section 2.12(d)

50

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Seller
Preamble
Seller Board
Section 2.03
Seller Board Approval
Section 2.20
Seller Change of Recommendation
Section 4.07(c)
Seller Disclosure Letter
Article II
Seller FDA Letter
Section 5.02(f)
Seller Indemnified Parties
Section 6.03
Seller Orphan Designation Letter
Section 5.02(f)
Supplement
Section 4.04
Termination Fee
Section 7.02(b)
Third Party Claim
Section 6.04(a)
Third Party IP
Section 2.09(f)
Transfer Taxes
Section 8.01(a)
Transferred IP
Section 1.01(a)(ii)
Transferred IP Documentation
Section 1.01(a)(iii)
Transferred Permits
Section 1.01(a)(vi)
Transition Services Agreement
Section 1.03(b)(vii)

Section 10.03    Press Releases and Announcements. Each Party shall consult with
the other Party and give the other Party a reasonable opportunity to comment on
such Party’s press release announcing the execution and delivery of this
Agreement. No Party shall issue (and each Party shall cause its Affiliates not
to issue) any press release or public disclosure relating to the subject matter
of this Agreement, or its terms, without the prior written approval of the other
Party; provided, however, that nothing in this Section 10.03 shall prevent any
Party from (a) making any public disclosure it believes in good faith is
required by Law, regulation or stock exchange rule (in which case the disclosing
Party shall use its commercially reasonable efforts to advise the other Party
prior to making disclosure and the other Party shall have the right to review
such press release or announcement prior to its publication) or (b) enforcing
its rights hereunder.

Section 10.04    No Third Party Beneficiaries. Except as provided by applicable
Law, this Agreement shall not confer any rights or remedies upon any Person
other than each Party and its respective successors and permitted assigns and,
to the extent specified herein, its respective Affiliates; provided, however,
that the provisions of Article VI and Article VII are intended for the benefit
of the entities and individuals specified therein and their respective legal
representatives, successors and assigns.

Section 10.05    Entire Agreement. This Agreement (including the documents
referred to herein), the Related Agreements, the Confidentiality Agreement and
the Escrow Agreement constitute the entire agreement between the Parties with
respect to the subject matters hereof and thereof and supersede all other prior
agreements (except that the Confidentiality Agreement shall be deemed amended
hereby so that until the termination of this Agreement in accordance with
Section 7.01, Buyer shall be permitted to take the actions contemplated by this
Agreement) and understandings, both written and oral, between the Parties or any
of them with respect to the subject matter hereof and thereof.

Section 10.06    Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by each of the Parties named
herein and its respective successors and permitted assigns. No Party may assign
either this Agreement or any of its rights, interests, or obligations hereunder
(whether by operation of Law or otherwise) without the prior written consent of
the other Party; provided, that (i) Seller may assign all of its rights and
obligations hereunder to any successor or assign of

51

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Seller’s business through the acquisition (whether by operation of Law or
otherwise) of more than 50% of the voting power of Common Stock and/or
substantially all of Seller’s assets and (ii) Buyer may assign the right to
acquire certain of the Acquired Assets to one or more of its Affiliates prior to
the Closing (provided, that in connection with any such assignment, Buyer shall
remain primarily liable for such assigned obligations); provided, however,
following the Closing, Buyer may assign and delegate, in whole or in part, its
rights and obligations hereunder to either (i) a wholly‑owned Subsidiary of
Buyer, (ii) an Affiliate under common control with Buyer or (iii) in connection
with the transfer by Buyer of all or substantially all of the Acquired Assets;
and provided, further, however, that no such assignment shall relieve Buyer of
any obligation or liability under this Agreement.

Section 10.07    Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument. This Agreement may be
executed and delivered by e‑mail of a .pdf, .tif, .jpeg or similar attachment
(“Electronic Delivery”), and any such counterparty delivered using Electronic
Delivery shall be treated in all manner and respects as an original executed
counterpart and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person.

Section 10.08    Notices. All written notices that are required or permitted
hereunder will be in writing and sufficient if delivered personally or sent by
nationally-recognized overnight courier, addressed as follows:
if to Buyer, to:
Vertex Pharmaceuticals Incorporated
Attention: Business Development
50 Northern Avenue
Boston, MA 02110

with a copy (which shall not constitute notice) to:

Vertex Pharmaceuticals Incorporated
Attention: Corporate Legal
50 Northern Avenue
Boston, MA 02110
Email: Legal_Notice@vrtx.com
and
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036

Attn: Daniel G. Dufner, Jr., Esq.
Michael A. Deyong, Esq.
Email:
If to Seller, to:
Concert Pharmaceuticals, Inc.
99 Hayden Avenue, Suite 500

52

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Lexington, MA 02421
Attn: Chief Executive Officer and General Counsel
Email:    rtung@concertpharma.com
rsilverman@concertpharma.com

with a copy (which shall not constitute notice) to:
Goodwin Procter LLP
100 Northern Ave
Boston, MA 02210

Attn:     John M. Mutkoski, Esq.
Andrew H. Goodman, Esq.
Email: JMutkoski@goodwinlaw.com
AGoodman@goodwinlaw.com

or to such other address as the Party to whom written notice is to be given may
have furnished to the other Party in writing in accordance herewith. Any such
written notice will be deemed to have been given and received by the other
Party: (a) when delivered if personally delivered; or (b) on receipt if sent by
overnight courier.

Section 10.09    Governing Law; Jurisdiction. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of Delaware, without
giving effect to conflicts of laws principles that would result in the
application of the Law of any other state. Each of the Parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, if
such court finds it lacks subject matter jurisdiction, the federal court of the
United States of America sitting in Delaware, and any appellate court from any
thereof, in any suit, action, legal proceeding or claim arising out of or
relating to this Agreement or the agreements delivered in connection herewith or
the transactions contemplated hereby or thereby or for recognition or
enforcement of any judgment relating thereto, and each of the Parties hereby
irrevocably and unconditionally (i) agrees not to commence any such suit,
action, legal proceeding or claim except in the Court of Chancery of the State
of Delaware, or, if such court finds it lacks subject matter jurisdiction, the
federal court of the United States of America sitting in Delaware, and any
appellate court from any thereof, (ii) agrees that any claim in respect of any
such suit, action, legal proceeding or claim may be heard and determined in the
Court of Chancery of the State of Delaware, or, if such court finds it lacks
subject matter jurisdiction, the federal court of the United States of America
sitting in Delaware, and any appellate court from any thereof, (iii) waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any such suit, action, legal
proceeding or claim in such courts and (iv) waives, to the fullest extent
permitted by Law, the defense of an inconvenient forum to the maintenance of
such suit, action, legal proceeding or claim in such courts. Each of the Parties
hereto (A) agrees that a final judgment in any such suit, action, legal
proceeding or claim shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law and
(B) waives any objection to the recognition and enforcement by a court in other
jurisdictions of any such final judgment. Each Party to this Agreement
irrevocably consents to service of process inside or outside the territorial
jurisdiction of the courts referred to in this Section 10.09 in the manner
provided for notices in Section 10.08. Nothing in this Agreement will affect the
right of any Party to this Agreement to serve process in any other manner
permitted by Law.

53

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Section 10.10    Amendments and Waivers. The Parties may mutually amend or waive
any provision of this Agreement at any time. No amendment or waiver of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by each of the Parties. No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence. No failure or delay by any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.

Section 10.11    Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the body making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.

Section 10.12    Expenses. Except as otherwise specifically provided to the
contrary in this Agreement or any of the Related Agreements, each of the Parties
shall bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby, whether or not the Closing takes place.

Section 10.13    Specific Performance. Each Party acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached or are threatened to be breached, and that money damages
or other legal remedies would not be an adequate remedy for any such damages. It
is accordingly agreed that prior to the valid termination of this Agreement in
accordance with Section 7.01, (i) the Parties shall be entitled to seek (in a
court of competent jurisdiction as set forth in Section 10.09) an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement (including Buyer’s obligation to
effect the Closing), without bond or other security being required, this being
in addition to any remedy to which they are entitled under this Agreement, and
(ii) the right of specific enforcement is an integral part of the transactions
contemplated by this Agreement and without that right, neither Seller nor Buyer
would have entered into this Agreement. Without limiting the generality of the
foregoing, it is explicitly agreed that Seller shall be entitled to an
injunction, specific performance or other equitable remedy to specifically
enforce Buyer’s obligation to effect the Closing on the terms and conditions set
forth herein in the event that all conditions in Sections 5.01 and 5.02 have
been satisfied (other than those conditions that by their nature are to be
satisfied by actions taken at the Closing, each of which is then capable of
being satisfied at a Closing on such date) at the time when the Closing would
have occurred but for the failure of Buyer to comply with its obligations to
effect the Closing pursuant to the terms of this Agreement. Each of Seller and
Buyer acknowledges and agrees that following a valid termination of this
Agreement in accordance with Section 7.01, each Party shall be entitled to seek
monetary damages for a willful or intentional breach of this Agreement in
accordance with Section 7.02(a).

Section 10.14    Guaranty. Guarantor irrevocably guarantees each and every
covenant and obligation of Buyer and the full and timely performance of Buyer’s
obligations under the provisions of this Agreement. This is a guaranty of
payment and performance, and not of collection, and Guarantor acknowledges and
agrees that this guaranty is full and unconditional, and no release or
extinguishments of

54

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

Buyer’s Liabilities (other than in accordance with the terms of this Agreement),
whether by decree in any bankruptcy proceeding or otherwise, will affect the
continuing validity and enforceability of this guaranty. Guarantor hereby
waives, for the benefit of Seller, (i) any right to require Seller as a
condition of payment or performance of Guarantor to proceed against Buyer or
pursue any other remedies whatsoever and (ii) to the fullest extent permitted by
Law, any defenses or benefits that may be derived from or afforded by Law that
limit the liability of or exonerate guarantors or sureties, except to the extent
that any such defense is available to Buyer. Guarantor understands that Seller
is relying on this guaranty in entering into this Agreement. Under no
circumstances shall the maximum amount payable by Guarantor hereunder for any
reason and under any legal theory in law or at equity exceed an amount equal to
the Base Purchase Price and any Contingent Payment that becomes payable pursuant
to Section 1.02(b).

Section 10.15    Construction. Except where expressly stated otherwise in this
Agreement, the following rules of interpretation apply to this Agreement: (a)
“either” and “or” are not exclusive and “include”, “includes” and “including”
are not limiting; (b) “hereof”, “hereto”, “hereby”, “herein” and “hereunder” and
words of similar import when used in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement; (c) the word “will”
shall be construed to have the same meaning as the word “shall”; (d) “extent” in
the phrase “to the extent” means the degree to which a subject or other thing
extends, and such phrase does not mean simply “if”; (e) definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms; (f) references to any Law, Contract, instrument or other document
shall mean such Law, Contract, instrument or other document as amended,
supplemented or otherwise modified from time to time, including by succession of
comparable successor Laws; (g) references to a person or entity are also to its
permitted successors and assigns; (h) references to an “Article”, “Section”,
“Exhibit”, “Annex” or “Schedule” refer to an Article or Section of, or an
Exhibit, Annex or Schedule to, this Agreement; (i) references to “$” or
otherwise to dollar amounts refer to the lawful currency of the United States;
(j) unless the context so requires, references to any Laws or specific
provisions of Laws shall include any rules, regulations and delegated
legislation issued thereunder; (k) references to any pronoun shall include the
corresponding masculine, feminine and neuter forms; (l) the table of contents
and headings set forth in this Agreement are for convenience of reference
purposes only and shall not affect or be deemed to affect in any way the meaning
or interpretation of this Agreement or any term or provision hereof; and (m)
references herein to “primarily” shall include “primarily” as well as any other
standard that reflects a majority or more of the matter addressed, including
“exclusively” or any similar term. Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless Business Days are
specified, and if any action is to be taken or given on or by a particular
calendar day, and such calendar day is not a Business Day, then such action may
be deferred until the next Business Day. The language used in this Agreement
shall be deemed to be the language chosen by the Parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against
either Party. The Parties agree that they have been represented by counsel
during the negotiation and execution of this Agreement and, therefore, waive the
application of any Law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
Party drafting such agreement or document.

Section 10.16    Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH AND THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES

55

Americas 92425100
 
 

 

--------------------------------------------------------------------------------

SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.16.
[Remainder of page intentionally left blank]

The Parties hereto have executed this Agreement as of the date first above
written.
CONCERT PHARMACEUTICALS, INC.
 
 
By:
/s/ Roger Tung
Name:
Roger Tung
Title:
President & CEO

VERTEX PHARMACEUTICALS (EUROPE) LIMITED
 
 
By:
/s/ Ian Smith
Name:
Ian Smith
Title:
Director

Solely with respect to Section 10.14 herein:
VERTEX PHARMACEUTICALS INCORPORATED
 
 
By:
/s/ Ian Smith
Name:
Ian Smith
Title:
Executive Vice President, Chief Operating Officer and Chief Financial Officer

56

Americas 92425100