Exhibit 10.1
SUPPLY AGREEMENT
     Agreement made as of the 1st day of July, 2008 (the “Agreement Date”),
between Altus Pharmaceuticals Inc., a Delaware corporation with its principal
office at 640 Memorial Drive, Cambridge, MA 01239, USA (“ALTUS”), and Sandoz
GmbH, a company organized under the laws of Austria with its principal office at
Biochemiestrasse 10, Kundl, AUSTRIA (“SANDOZ”).
     WHEREAS, ALTUS and SANDOZ have entered into a Purchase Agreement dated as
of February 25, 2008 (the “Purchase Agreement”) pursuant to which ALTUS has
purchased or has the right to purchase up to [*****] of human growth hormone for
use in the research and development of ALTU-238 by Altus, which Purchase
Agreement will expire on December 31, 2008; and
     WHEREAS ALTUS and SANDOZ desire to enter in to a long term supply
relationship under which SANDOZ delivers, and ALTUS purchases, human growth
hormone manufactured by SANDOZ (“HGH”) in accordance with the current applicable
European and US Good Manufacturing Practice standards (“cGMP”) for use as active
ingredient in the further development and commercialization of a pharmaceutical
comprising (hereinafter“ALTU-238”) by Altus, its Affiliates and future ALTU-238
product licensees, for the consideration set forth below, and subject to the
terms and conditions of this Agreement;
     NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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     1. Forecasts and Purchase Orders.
          1.1 General. To facilitate SANDOZ’ production planning process for
future orders under this Agreement, ALTUS agrees to submit [*****] rolling
forecasts and purchase orders, as set forth in this Section 1.
          1.2 Forecasts. Starting with a first forecast for the years [*****],
which forecast shall be provided to SANDOZ no later than [*****], ALTUS shall
provide a rolling [*****] forecast for the HGH requirements of ALTUS, its
Affiliates and its sublicensees for ALTU-238, for the next [*****] calendar
years on or before [*****] of each year. The [*****] of each forecast shall set
out the HGH requirements per calendar quarter, the [*****] year shall set out
the requirements for the respective entire calendar year. For the purposes of
this Agreement, “Affiliate” shall mean any corporation, company, Partnership,
joint venture and/or firm that controls, is controlled by, or is under common
control with a Person. For purposes of this definition, “control” means (a) in
the case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors, and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.
     1.3 Binding Effect of Forecasts. Any forecast which has been provided by
ALTUS and which has been accepted by SANDOZ in writing shall become binding on
the parties as follows:
     (a) With respect to the [*****] covered by any accepted forecast, ALTUS
shall be obliged to place orders for delivery of HGH in each calendar quarter at
the amounts set in the forecast for such calendar quarter, and SANDOZ shall be
obliged to accept any such orders which have been placed in accordance with
Section 1.4.
     (b) With respect to the [*****] covered by any accepted forecast, ALTUS
shall be
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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obliged to forecast at least [*****] of the amounts of HGH for such calendar
year in the subsequent forecast (in which such [*****] will become the [*****]
covered by such subsequent forecast).
     (c) The remaining [*****] of the forecasted amounts for the [*****], and
any forecasted amounts for the [*****] set out in any accepted forecast shall be
non-binding good-faith estimates of the requirements of HGH, and shall not
constitute any obligations on the parties to purchase or sell any amounts of HGH
whatsoever.
          1.4 Orders. Purchase orders for HGH (“Orders”) shall be submitted for
each calendar quarter at least [*****] prior to the beginning of such quarter in
which the ordered amounts of HGH shall be delivered. All Orders shall be
submitted in accordance with Exhibit B, and ALTUS shall not place Orders for
amounts of HGH in excess of the accepted forecasted amounts that have become
binding pursuant to Section 1.3 (a). No Order shall become binding unless
confirmed in writing by SANDOZ, provided that (i) SANDOZ shall accept all Orders
which have been placed in accordance with this Section 1.4, unless any payments
due for any previous Order are overdue. SANDOZ shall not have any obligation to
deliver any amounts of HGH in excess of the accepted forecasted amounts that
have become binding pursuant to Section 1.3 (a), provided that SANDOZ will try
to use its commercially reasonable efforts to accommodate such request if
possible.
     2. Terms of Delivery of HGH
               2.1 Delivery. Upon SANDOZ’s acceptance of an Order in accordance
with Section 1.3, SANDOZ shall sell, based on EXW (INCOTERM 2000) – [*****]
plant to ALTUS such quantities of HGH specified in each such Order. SANDOZ
agrees to deliver, subject to the terms of this Agreement, the quantities of HGH
set forth in such Order within the timeframes specified therein.
               2.2 Shipment. SANDOZ shall fill and deliver each Order
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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submitted under Section 1.3. SANDOZ shall include with each HGH shipment a
Certificate of Analysis, the form of which shall be defined in the quality
agreement provided for in Section 4.2, signed by a duly authorized
representative of SANDOZ, that certifies that such shipment conforms to the
specifications set forth on Exhibit A. The HGH shall be frozen and packaged for
shipment in appropriate amounts of dry ice and supplied by SANDOZ EXW (INCOTERM
2000) [*****] plant for delivery to ALTUS. Shipment shall be arranged by SANDOZ
on behalf of ALTUS utilizing a commercial carrier approved by ALTUS. All
packages shall contain a data logger to monitor package disposition during
shipping, and such information shall be accessible by both parties. Each
shipment shall be accompanied by a small scale satellite sample, the size and
configuration of which shall be agreed to by the parties in the quality
agreement, for use by ALTUS for release testing at ALTUS. The quality agreement
shall set forth customary shipping procedures, including without limitation,
[*****].
          2.3 Purchase Price. The purchase price (the “Purchase Price”) for HGH
for each Order shall be determined in accordance with the following table:

     
Calendar Year Cumulative Order Quantity
  Price Per [*****]
Up to [*****]
  [*****]
 
   
Exceeding [*****] up to [*****]
  [*****]
 
   
Exceeding [*****] up to [*****]
  [*****]
 
   
Exceeding [*****]
  [*****]

For example, if ALTUS orders [*****] in a calendar year in four Orders of equal
size in that year, the price payable for each Order will be as follows. The
price for Order 1 will be [*****] x [*****] or [*****]. The price for Order 2
will be ([*****] x [*****]) + ([*****] x [*****]) or [*****]. The price for
Order 3 will be ([*****] x [*****]) + ([*****] x [*****]) or [*****]. The price
for Order 4 will be ([*****] x [*****]) + ([*****] x [*****]) or [*****].
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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          In the event Altus Pharmaceuticals exercises its extension option for
calendar years 2013 and 2014 under Section 8.1, SANDOZ shall have the right to
increase the HGH purchase price for the extension period [*****], which increase
shall [*****].
          The Purchase Price for each shipment of HGH delivered under each Order
shall be payable and invoiced [*****] prior to [*****] and [*****] after
[*****]. The first invoice shall be dated no earlier than [*****] prior to
[*****], and the second invoice dated [*****]. Both invoices shall be payable in
30 days. The parties acknowledge and agree that if any HGH delivered by SANDOZ
does not conform to the specifications set forth in Exhibit A or was not
prepared under cGMP, and ALTUS, its designated Affiliate or its product
licensee, notifies SANDOZ of such non-conformity within [*****] after receipt
and provides supporting documentation (in each case, a “Non-Conforming
Shipment”), (i) SANDOZ shall immediately replace at SANDOZ’ expense the
Non-Conforming Shipment with conforming HGH, (ii) the cost of shipping and any
other costs associated with the supply of the replacement cGMP HGH will be borne
by SANDOZ and (iii) Altus shall only be obligated to pay for the replacement HGH
within 30 days from the date of its receipt thereof to the extent prior payment
has not been made for the Non-Conforming Shipment.
          In the event that the parties are unable to agree as to whether or not
a given shipment complies with the specifications set forth in Exhibit A, the
HGH in dispute will be submitted to an independent quality control laboratory
agreed upon by both parties. In the event that the independent quality control
laboratory finds that the shipment in question does not comply with such
specifications, such shipment shall be deemed a Non-Conforming Shipment and
shall be replaced in accordance with the prior paragraph. In the event that the
independent quality control laboratory finds that the shipment in question
complies with such specifications, such shipment shall be accepted by ALTUS and
shall be paid in accordance with the prior paragraph.
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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     3. Covenants by SANDOZ. SANDOZ hereby covenants that:
          3.1 Regulatory Cooperation. Upon ALTUS’ request and within [*****] of
such request, SANDOZ will provide ALTUS, its Affiliates or its ALTU-238 product
licensee with a written authorization (a “Letter of Authorisation”) to reference
the portions of Sandoz’ Drug Master File Type [*****]” with the U.S. Food and
Drug Administration (“FDA”) with respect to HGH delivered under this Agreement
for the ALTU-238 product. In the event that ALTUS, its Affiliates or its
ALTU-238 product licensee conducts a clinical trial or applies for a marketing
authorisation for ALTU-238 within the [*****]and [*****] and any competent
authority requires a similar Letter of Authorization, or additional information
related to HGH in this connection, SANDOZ will use [*****] efforts to assist
ALTUS through providing such Letter of Authorization and additional relevant
information to such authority, provided however that SANDOZ is not obliged to
disclose any such additional information if this would be to the detriment of
the reasonable business interests of SANDOZ. In the event ALTUS, its Affiliates
or its ALTU-238 product licensee requires similar information or cross-reference
rights in other countries approved by SANDOZ pursuant to Section 5.1, ALTUS
shall notify SANDOZ of such requirement, and SANDOZ shall provide [*****]
assistance to ALTUS to provide such information or cross-reference rights for
such country. ALTUS shall reimburse SANDOZ for the reasonable costs incurred in
providing such assistance in accordance with Section 4.3 at a rate of [*****]
per [*****] ([*****] per [*****]).
          3.2 Inspections. SANDOZ agrees to allow ALTUS, or its designated
Affiliate or product licensee, to inspect SANDOZ’ HGH manufacturing facility
[*****] and limited to [*****] for [*****], unless circumstances reasonably
require otherwise (e.g, a “for cause” audit based on unexpected release results
or cGMP failures) on a case by case basis, and to cooperate with requests from
the FDA and other regulatory authorities relating to the HGH sold to ALTUS
hereunder. The parties shall mutually agree in good faith on the appropriate
scope and timing of any audit or audits initiated by ALTUS. Only employees of
ALTUS, its Affiliates or ALTU-238 product licensees
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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shall conduct where ALTUS, its Affiliates or its ALTU-238 have the staffing to
conduct such audit(s); provided however, that ALTUS, its Affiliates or its
ALTU-238 product licensee may utilize a specific consultant or consultant(s)
where staffing circumstances so require. The use of such consultant or
consultant(s) shall be subject to the prior review and approval of SANDOZ, which
may be conditioned by SANDOZ on the agreement by such consultant or consultants
to SANDOZ’ customary confidentiality agreement terms.
          In the event inspections or audits are required more than [*****], and
exceed [*****] in duration, SANDOZ will invoice ALTUS for its additional
expenses in supporting such audits or inspections at the rate of [*****];
provided that such audit or inspection is not attributable to or the result of a
breach of the warranty set for in Section 4.2.
          3.3 Regulatory Notices. SANDOZ shall keep ALTUS informed of any
regulatory notices or warning letters relating to the manufacture of HGH
received from any national regulatory authorities in [*****] and shall keep
ALTUS informed on the status of such issues. For the avoidance of doubt, SANDOZ
shall have no obligation to provide ALTUS with any correspondence or other
communication with the authorities.
          3.4 Available Capacity. SANDOZ agrees to allocate sufficient
manufacturing capacity for HGH consistent with the forecasts furnished by ALTUS
and accepted by SANDOZ. In the event a production run fails, SANDOZ shall use
[*****] to promptly initiate a replacement production batch by prolonging the
campaign in the event it is unable to fulfill then current forecasts from its
available HGH inventory.
     4. Representations and Warranties
          4.1 Ownership of the HGH. SANDOZ represents and warrants that with
respect to any HGH supplied to ALTUS hereunder, SANDOZ is the true and lawful
owner of such HGH, and SANDOZ has the right to sell and transfer to ALTUS good
and
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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clear title to such HGH.
          4.2 Conformance With Specifications and Regulatory Requirements. The
HGH supplied hereunder shall (i) at the time of delivery conform to the
specifications set forth in Exhibit A and any Certificate of Analysis which
accompanies such shipment through the product expiration date for such shipment.
Shelf life for HGH manufactured and shipped under this Agreement shall, at the
time of delivery, not be shorter than [*****] at [*****] storage, (ii) shall
have been manufactured in accordance with cGMP requirements, and in compliance
with all applicable laws, rules and regulations, and (iii) at the time of
delivery conform to the product characteristics and manufacturing procedures set
forth in the DMF.
SANDOZ warrants that the HGH delivered hereunder has not been adulterated or
misbranded within the meaning set forth in Federal Food, Drug, and Cosmetic Act
(FDCA) or any state or local law or regulation substantially similar to FDCA.
SANDOZ further warrants that any cGMP HGH supplied hereunder will conform to the
specifications set forth in Exhibit A upon release by SANDOZ.
     Within [*****] of the [*****], the parties shall enter into a customary
quality agreement setting forth the respective quality assurance activities and
responsibilities of the parties associated with the manufacture, release,
transportation, handling, storage and acceptance of the HGH. The quality
agreement shall contain customary provisions providing for advance notices of
any changes to the specifications in Exhibit A or the DMF by SANDOZ, and shall
establish customary procedures that enable ALTUS, its Affiliates and ALTU-238
product licensees to update their respective ALTU-238 regulatory files to
incorporate such changes in advance of the effective time of such changes or
updates.
          4.3 No Implied Warranties. EXCEPT FOR THE WARRANTIES IN 4.1 AND 4.2
SANDOZ DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THE
HGH PROVIDED HEREUNDER, INCLUDING ALL
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
     5. Covenants by ALTUS. ALTUS here by covenants that:
          5.1 ALTUS will ensure that the HGH covered by this Agreement will only
be used in the development and commercialization of pharmaceutical products
within [*****]. In the event that ALTUS provides a written request to SANDOZ to
add additional countries to the scope of this Agreement, SANDOZ will consider
such request in good faith, provided that such extension of the geographical
scope shall require the prior written consent of SANDOZ. It is understood that
SANDOZ will only reject such additional country requests to the extent SANDOZ
reasonably determines that it would be to the detriment of the reasonable
business interests of SANDOZ to add such countries.
     5.2 ALTUS shall ensure that any HGH delivered by SANDOZ shall be marketed,
sold and otherwise used only in accordance with all current applicable laws,
regulations, guidelines and requirements of competent authorities, including
without limitation all applicable Good Clinical Practice standards.
     6. Indemnification; Limitation of Liability.
          6.1 By ALTUS. ALTUS shall indemnify and hold harmless SANDOZ, its
Affiliates and their respective employees, directors and officers, from and
against any and all liabilities or obligations, damages, losses, claims,
encumbrances, costs or expenses (including attorneys’ fees) (any or all of the
foregoing herein referred to as “Loss”) arising out of or based upon (i) the
gross negligence or willful misconduct or breach of this Agreement by ALTUS or
(ii) the handling, shipment, storage or use of the HGH delivered by SANDOZ under
this Agreement and of any products or other materials containing or derived from
such HGH, including without limitation any Loss
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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resulting from or based upon any product liability claims or any infringement of
third party’s rights, related to the handling, shipment, storage or use of HGH,
except to the extent any such Loss or Losses is/are caused by the gross
negligence, willful misconduct or breach of SANDOZ’ representations or
warranties to ALTUS hereunder, including, without limitation, those contained in
Section 4.1, 4.2 and 4.3 of this Agreement by SANDOZ.
          6.2 By SANDOZ. SANDOZ shall indemnify ALTUS and hold ALTUS harmless
from and against any and all Losses relating to or caused by the gross
negligence, willful misconduct or breach of SANDOZ’ representations or
warranties to ALTUS in 4.1, 4.2, and 4.3 hereunder, except to the extent any
such Loss or Losses is caused by the gross negligence, willful misconduct or
breach of ALTUS’ representations or warranties to SANDOZ hereunder.
          6.3 Procedure and Settlement. If a party intends to claim
indemnification under this Supply Agreement (“Indemnified Party”), it shall
promptly notify the other party (the “Indemnifying Party”) in writing of such
alleged Loss or Losses. The Indemnifying Party shall have the right to control
the defense thereof with counsel of its choice as long as such counsel is
reasonably acceptable to the Indemnified Party; provided, however, that any
Indemnified Party shall have the right to retain its own counsel at its own
expense for any reason. The Indemnified Party, its employees and agents, shall
reasonably cooperate with the Indemnifying Party and its legal representatives
in the investigation or defense of any Losses covered by this Section 6. The
failure to deliver written notice to the Indemnifying Party within a reasonable
time after the commencement of any such action, to the extent prejudicial to its
ability to defend such action, shall relieve the Indemnifying Party of any
obligation to the Indemnified Party hereunder. No compromise or settlement of
any third party suits, claims, actions, or demands may be effected by the
Indemnifying Party without the Indemnified Party’s written consent (which
consent shall not be unreasonably withheld or delayed), unless (i) there is no
finding or admission of any violation of law or any
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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violation of the rights of any person and no effect on any other claims that may
be made against the Indemnified Party, (ii) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party, and (iii) the
Indemnified Party’s rights under this Supply Agreement are not adversely
affected. Any settlement by the Indemnified Party without the prior written
consent of the Indemnifying Party shall relieve the Indemnifying Party of its
indemnification obligations under this Section 6.
          6.4 Limitation of Liability and Damages. SANDOZ shall have no
liability whatsoever with respect to any Losses resulting from any use of HGH
delivered by SANDOZ if such HGH (i) is not used in accordance with Section 5.2
or (ii) is used outside the scope of this Agreement. In no event shall either
party in any circumstances be liable to the other for any consequential or
indirect loss or damage or loss of profit of whatsoever nature, including damage
to goodwill, loss of market share, existing or prospective, or for any punitive
damages.
     7. Confidentiality. Each party shall during the term of this Agreement and
for [*****] thereafter keep strictly confidential information disclosed by the
other party under this Agreement, not disclose the information to any third
party (other than an Affiliate or contractor of ALTUS, an ALTU-238 product
licensee of ALTUS, or to a regulatory authority with jurisdiction over ALTUS’
ALTU-238 product, provided that such recipients are duly bound to preserve the
confidentiality of such information) without the prior written consent of the
other party and exclusively use such information for no other purpose than its
performance under this Agreement; however, the above provisions shall not apply
to any information which falls into any of the following exceptions:
     (a) information already in the public domain at the time of disclosure;
     (b) information which has become part of the public domain due to reasons
other than the fault of receiving party;
     (c) information already in the possession of receiving party at the time of
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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disclosure, which fact the receiving party shall prove by documentary evidence;
or
     (d) information disclosed to the receiving party by a third party
authorized to do so.
     If required, a receiving party may disclose Confidential Information to a
governmental authority or by order of a court of competent jurisdiction,
provided that the receiving party shall, if possible, promptly notify the
disclosing party in writing prior to such disclosure in order to enable the
disclosing party to take such action as it deems appropriate to obtain
confidential treatment for such disclosure and/or minimize the extent of such
disclosure.
     8. Term; Termination.
     8.1 Term; Right of First Refusal. This Agreement shall take effect as of
the Agreement Date and shall remain in effect for a fixed term until
December 31, 2012, unless extended until December 31, 2014 as provided for
below, or such later date as shall be mutually agreed upon by the parties. On or
before [*****], upon written request of ALTUS, SANDOZ agrees to extend the
Agreement for two years until December 31, 2014, provided that ALTUS’ right to
order HGH during the extended term is limited to a range of [*****] of HGH per
calendar year and provided further that Sandoz has not discontinued HGH
production. SANDOZ shall have the right to increase the HGH purchase price for
the extension period , as provided for in Section 2.3 above. In addition, in the
event ALTUS, its Affiliate or a product licensee of ALTU-238, seeks to enter
into a contract with a third party supplier of HGH during the four (4) year
period following the expiry of the initial term of this Agreement on
December 31, 2012, or, in the event of extension of the term for two years until
December 31, 2014, during the four (4) year period following expiry of such
extended term, ALTUS or the applicable Affiliate or product licensee shall
notify SANDOZ in writing of the opportunity. SANDOZ may notify ALTUS or the
applicable Affiliate or product licensee in writing within [*****] following
such notice of its election to make an offer to extend the agreement, or not to
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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extend the agreement. In the event SANDOZ elects not to make an extension offer
or fails to respond to such notice, ALTUS or the applicable Affiliate or product
licensee shall have the right to enter into a contract with a third party
supplier of HGH without further obligation to SANDOZ. In the event that SANDOZ
elects in such notice to make an extension offer, then SANDOZ’ response shall be
accompanied by an offer describing the terms of such extension in the form of an
amendment to this Agreement. ALTUS, or the applicable Affiliate or product
licensee shall have [*****] to accept or reject SANDOZ’ offer or otherwise reach
mutually agreeable terms with SANDOZ. In the event the parties are unable to
reach agreement within [*****], ALTUS or the applicable Affiliate or product
licensee shall have the right to enter into a contract with a third party
supplier of HGH on terms that are no more favorable, taken as a whole, than the
most favorable commercial terms offered by SANDOZ to ALTUS or the applicable
Affiliate or product licensee.
     8.2 Termination for Cause. Either party may terminate this Agreement upon
written notice in the event the other party shall have breached this Agreement,
including without limitation, a shortage of HGH supply under Section 3.4 that
delays duly forecasted shipments under duly placed Orders by more than [*****],
and failed to cure such breach or shipment delay within [*****] of receipt of
written notice thereof. In the event of such termination, the terminating party
shall have the right to cancel any Orders or binding forecasts outstanding on
the date of termination.
     8.3 Early Termination Upon Discontinuation of Development or
Commercialization. In the event that the development or commercialization of
ALTU-238 is discontinued by Altus, or its applicable Affiliates or ALTU-238
product licensees, ALTUS shall have the right to terminate this Agreement upon
[*****] written notice as well as any outstanding Orders and forecasts as of the
date of termination. In such event, SANDOZ shall [*****] to utilize or sell to
other customers HGH covered by such cancelled Orders or forecasts or otherwise
minimize its termination costs by curtailing production. To the extent that
SANDOZ is unable to utilize or sell such HGH or
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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otherwise reduce such termination costs, then ALTUS shall make a termination
payment to compensation SANDOZ for [*****] on such cancelled Orders. Such
payment shall be agreed to in good faith by the parties and shall not exceed the
[*****] of the [*****] on the date of termination.
     8.4 Early Termination for Convenience. Altus shall have the right to
terminate this Agreement for convenience by giving written notice on or before
[*****] and on or before [*****] of each subsequent calendar year and such
termination shall be effective on December 31 following such notice. All
outstanding Orders and forecasts for shipments of HGH on or after such
termination date shall be cancelled. Such notice shall be in lieu of placing a
forecast or order under Section 1.2 of the year in which such notice is given.
All Orders for shipments of HGH prior to December 31 of that year shall remain
in effect. In consideration thereof,
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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ALTUS shall pay SANDOZ a termination fee based on the following schedule:

          Termination Notice Date         (on or before)   Termination Fee  
Installments
[*****]
  [*****]   [*****] payable on or before [*****]
 
       
[*****]
  [*****]   [*****] payable on or before [*****]
 
       
[*****]
  [*****]   [*****] payable on or before [*****]
 
       
[*****]
  [*****]   Payable on or before [*****]

     In the event that ALTUS exercises the extension option under Section 8.1,
then ALTUS shall also have the right to terminate this Agreement for convenience
with respect to the extended term by giving written notice on or before [*****]
prior to each calendar year in the extended term and such termination shall be
effective on December 31 following such notice. In this case Altus shall pay the
full price for all outstanding HGH orders, and all forecasts of HGH shall be
cancelled. In addition, ALTUS shall pay SANDOZ a termination fee
     based on the following schedule:

          Termination Notice Date   Termination Fee   Installments
on or before [*****]
  [*****]   Payable on or before [*****]
 
       
between [*****] and [*****}
  [*****]   Payable on or before [*****]

Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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     8.5 Survival. Upon any termination or expiration of this Agreement under
Sections 8.1, 8.2, 8.3 or 8.4 neither party shall be relieved of any obligations
incurred prior to such termination (except to the extent expressly provided
otherwise under Section 8.2, 8.3 or 8.4) or expiration and the obligations of
the parties with respect to confidentiality, indemnification, governing law and
any other provision which by its nature is intended to survive any such
termination or expiration, shall survive and continue to be enforceable.
     9. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent by telex,
federal express or other international overnight courier service, registered or
certified mail, postage prepaid, addressed as follows or to such other address
of which the parties may have given notice:
To SANDOZ:
Sandoz GmbH
Biochemiestrasse 10
A- 6250 Kundl
AUSTRIA
Telecopier No.: 0043 5338 200 442
Attn: Head Biotech Cooperations
To ALTUS:
Altus Pharmaceuticals Inc.
640 Memorial Drive
Cambridge, MA 01239
USA
Telecopier No.: 001-617-299-2999
Attn: Vice President, Strategic Planning
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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With a copy to:
Altus Pharmaceuticals Inc.
640 Memorial Drive
Cambridge, MA 01239
USA
Telecopier No.: 001-617-299-2999
Attn: General Counsel
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally; or (b) three
business days after being sent, if sent by registered or certified mail; or
(c) two business days after being sent, if by internationally-recognized
overnight courier service.
     10. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
     11. Entire Agreement, Relationship to other Agreements, Amendments.
          11.1 Entire Agreement. This Agreement, the contemplated quality
agreement, and all Exhibits hereto, represent the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof.
Subject to Section 11.2, this Agreement shall supersede all prior oral and
written and all contemporaneous oral negotiations, commitments and
understandings between such parties other than the Purchase Agreement. This
Agreement shall not constitute any obligation of either party to enter into
agreements regarding purchase and supply of additional quantities of HGH.
          11.2 Relationship to other Agreements. This Agreement shall not modify
or other wise affect the Purchase Agreement, which shall remain in full force
and effect. Unless ALTUS has ordered the full amount of [*****] of HGH as
provided for in Section 1.1 of the Purchase Agreement, any Order of ALTUS for
HGH shall be deemed to be
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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

 

placed under, and shall be governed by the terms of, the Purchase Agreement.
Once Altus has ordered such amount of HGH, and further Orders for HGH shall be
deemed to be placed under, and governed by the terms of, this Agreement.
          Any Exhibits to this Agreement and the quality agreement shall be
included herein by reference and shall constitute an integral part of this
Agreement. In the event of any conflict between the terms and conditions of this
Agreement and the contents of the quality agreement or any Order, the terms and
conditions of this Agreement shall prevail.
          11.3 Amendments. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Parties.
     12. Expenses. Except as otherwise expressly provided herein, ALTUS and
SANDOZ shall each pay their own expenses in connection with this Agreement and
the transactions contemplated hereby.
     13. Governing Law; Arbitration.
          13.1 Governing Law. This Agreement shall be governed by and construed
for all purposes in accordance with the laws of the State of New York, USA
without regard to any choice of law principle that would dictate the application
of the law of another jurisdiction.
          13.2 Dispute Resolution. The Parties shall attempt in good faith to
resolve any dispute arising out of or relating to this Agreement promptly by
negotiation between executives who have authority to settle the controversy. Any
party may give the other party written notice of any dispute not resolved in the
normal course of business. Within thirty (30) days after delivery of the
disputing party’s notice, the executives of both Parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to attempt to resolve the dispute.
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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

 

          13.3 Arbitration. Any dispute arising out of or relating to this
Agreement or the breach, termination or validity thereof which has not been
resolved by a non-binding procedure as provided in Section 13.2 above within
sixty (60) days of the initiation of such procedure, shall at the written
request of a party be settled by arbitration according to the Rules of
Arbitration and Conciliation of the International Chamber of Commerce in Paris
to be held in New York, USA in the English language.
          13.4 Judgments. Notwithstanding Section 13.1 above, the judgment upon
the award rendered by the arbitrators may be entered by any court having
jurisdiction thereof.
          13.5 Location. The place of arbitration shall be New York, NY. The
neutral organization designated to perform the functions specified in Rule 6 and
Rules 7.7(b), 7.8 and 7.9 shall be the CPR.
          13.6 Exclusivity. The procedures specified in this Section 13 shall be
the sole and exclusive procedures for the resolution of disputes between the
Parties arising out of or relating to this Agreement (except for specification
disputes which shall be resolved in accordance with Section 2.3); provided,
however, that a party, without prejudice to the above procedures, may seek a
preliminary injunction or other provisional judicial relief if in its sole
judgment such action is necessary to avoid irreparable damage or to preserve the
status quo. Despite such action the Parties will continue to participate in good
faith in the procedures specified in this Section 13.
          13.7 Statute of Limitations. All applicable statutes of limitation and
defenses based upon the passage of time shall be tolled while the procedures
specified in this Section 13 are pending. The Parties will take such action, if
any, required to effectuate such tolling.
          13.8 Continued Performance. Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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arising out of or relating to this Agreement, unless to do so would be
impossible or impracticable under the circumstances.
     14. Section Headings. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit, or restrict the contractual
obligations of the parties.
     15. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
     16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
     IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.

                  ALTUS PHARMACEUTICALS INC.       SANDOZ GMBH
 
               
By:

Name:
  /s/ Georges Gemayel
 

Georges Gemayel       By:

Name:   /s/ F. Nachtmann            /s/ E. Dolejsi
 

 Dr. F. Nachtmann          Dr. E. Dolejsi  
Title:
  President and Chief Executive Officer       Title:   Head Biotech Coop.
       Head Legal
 
               
Date:
  June 27, 2008       Date:   July 3, 3008

Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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

 

Exhibit A
HUMAN GROWTH HORMONE DRUG SUBSTANCE SPECIFICATIONS
The specifications for the HGH to be supplied by SANDOZ to ALTUS under this
Agreement are as follows:
[*****]
Storage and transport conditions: [*****]
The HGH shall have been manufactured in accordance with current good
manufacturing practices (“cGMP”) for pharmaceuticals as described in applicable
regulations promulgated by the U.S. Food and Drug Administrative, including
those set forth in 21 CFR Parts 210 and 211.
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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

 

Exhibit B
Order Schedule and Shipping Details
1. No order will be considered placed and no HGH will be shipped without ALTUS
submitting an Order for the HGH.
2. Each Order will set forth the delivery date for the ordered shipment, which
delivery date shall be during the applicable calendar quarter.
3. Unless otherwise specified in an Order and accepted by SANDOZ, all HGH
shipments shall be addressed to:
Altus Pharmaceuticals Inc.
Attn: Sujit Basu, Ph.D.
625 Putnam Ave.
Cambridge, MA 02139
USA
4. The Order will contain instructions as to how the shipment is to be labeled.
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

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

 

Exhibit C
Altus’ [*****] years nonbinding HGH purchase forecast

              Baseline Requirement   Higher Range

[*****]
Portions of this Exhibit are omitted and have been filed separately with the
Secretary of the
Commission pursuant to the Registrant’s application requesting confidential
treatment under
Rule 24b-2 of the Exchange Act

-23-