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CONFIDENTIAL — ATTORNEY WORK PRODUCT — PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Working Draft v.5 November 1, 2023

Circulated to Whitfield Graves LLP (Kenneth Pratt) for Review and Comment

C&H Matter Number: 1025-00006 Project Code Name: Project Coriander

AGREEMENT AND PLAN OF MERGER

by and between

PENTERRA PHARMACEUTICALS CORP., a Delaware corporation

and

CALISTON BIOSCIENCES, INC., a Delaware corporation

Dated as of ___, 2023

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of ___, 2023, is entered into by and between Penterra Pharmaceuticals Corp., a Delaware corporation ("Parent" or "Penterra"), and Caliston BioSciences, Inc., a Delaware corporation (the "Company" or "Caliston").

RECITALS

WHEREAS, Parent is a corporation duly organized and validly existing under the laws of the State of Delaware, publicly traded on the New York Stock Exchange (ticker symbol: PPHR), with its principal executive offices located at 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540 (EIN: 22-3847195; CIK: 0001587342);

WHEREAS, the Company is a corporation duly organized and validly existing under the laws of the State of Delaware, a privately held, clinical-stage biopharmaceutical company focused on the discovery and development of novel kinase inhibitors for solid tumors, with its principal office located at 88 Harbor Point Road, Cambridge, Massachusetts 02142 (EIN: 84-4219063), founded in 2017;

WHEREAS, the Board of Directors of Parent (the "Parent Board") has formed a special committee (the "Special Committee") comprised of three independent directors — Diane Prescott (Chair), James Okafor, and Dr. Helen Ng — to evaluate, negotiate, and make recommendations to the Parent Board regarding the proposed transaction contemplated hereby, which constitutes a related-party transaction given that Dr. Marcus Hale, Chairman of the Board and Chief Executive Officer of Parent, holds an approximately 28.5% equity interest in the Company;

WHEREAS, the Special Committee has been advised by independent legal counsel, Calderwood & Harkness LLP, and an independent financial advisor, Thorngate Partners LLC, and has conducted a thorough and independent review of the proposed transaction, including a market check;

WHEREAS, Thorngate Partners LLC has delivered to the Special Committee its written opinion, dated as of the date hereof, to the effect that, as of such date and based upon and subject to the assumptions, qualifications, limitations, and other matters set forth therein, the Merger Consideration (as defined herein) to be paid by Parent in the Merger is fair, from a financial point of view, to Parent;

WHEREAS, the Special Committee, after careful deliberation and consideration of the advice of its independent legal and financial advisors, has unanimously (a) determined that the Merger and this Agreement are advisable, fair to, and in the best interests of Parent and its stockholders (other than Dr. Marcus Hale, Angela Whitmore, and Raymond Tusk), (b) recommended that the Parent Board approve this Agreement and the transactions contemplated hereby, and (c) recommended that the Parent Board submit the issuance of Parent Shares to a vote of Parent's stockholders;

WHEREAS, the Parent Board, acting upon the unanimous recommendation of the Special Committee and with Dr. Marcus Hale, Angela Whitmore, and Raymond Tusk recused from all deliberations and abstaining from all votes relating to this Agreement and the transactions contemplated hereby, has (a) determined that the Merger and this Agreement are advisable, fair to, and in the best interests of Parent and its stockholders (other than the recused directors), (b) approved and adopted this Agreement and authorized the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, and (c) resolved to recommend that the stockholders of Parent approve the issuance of Parent Shares in connection with the Merger;

WHEREAS, the Board of Directors of the Company (the "Company Board") has (a) determined that the Merger and this Agreement are advisable, fair to, and in the best interests of the Company and its stockholders, (b) approved and adopted this Agreement and authorized the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (c) recommended that the stockholders of the Company adopt this Agreement and approve the Merger;

WHEREAS, the parties desire to effect a merger of the Company with and into Parent, with Parent as the surviving corporation, upon the terms and subject to the conditions set forth herein, pursuant to the Delaware General Corporation Law (the "DGCL"), including without limitation Sections 141(a), 144, and 251 thereof; and

WHEREAS, the parties intend that the Merger qualify as a merger within the meaning of Section 251 of the DGCL.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 — Definitions.

As used in this Agreement, the following terms shall have the meanings set forth below:

"Acquisition Proposal" means any inquiry, proposal, or offer from any Person (other than Parent or any of its Affiliates) relating to, in a single transaction or series of related transactions, (a) a merger, consolidation, business combination, recapitalization, liquidation, dissolution, or similar transaction involving the Company, (b) the issuance or sale of twenty percent (20%) or more of the equity securities of the Company, (c) the sale, lease, license, exchange, or other disposition of twenty percent (20%) or more of the consolidated assets of the Company (measured by fair market value), or (d) any other transaction the consummation of which would reasonably be expected to prevent or materially delay the consummation of the Merger.

"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the terms "controlling," "controlled by," and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

"Aggregate Equity Value" means Nine Hundred Twenty-Five Million Dollars ($925,000,000).

"Ancillary Agreements" means, collectively, the CVR Agreement, the Escrow Agreement, the Stockholder Support Agreement, the Voting and Recusal Agreement, the Non-Competition and Non-Solicitation Agreement, and the Stockholder Representative Agreement.

"Business Day" means any day that is not a Saturday, Sunday, or other day on which banks in New York, New York are authorized or required by law to be closed.

"Cancelled Shares" has the meaning set forth in Section 3.2.

"Cash Consideration" means Six Hundred Ninety-Three Million Seven Hundred Fifty Thousand Dollars ($693,750,000), being seventy-five percent (75%) of the Aggregate Equity Value.

"Caliston" or "Company" means Caliston BioSciences, Inc., a Delaware corporation.

"Certificate of Merger" means the certificate of merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger, substantially in the form attached hereto as Exhibit A.

"Change of Recommendation" means (a) with respect to the Company Board, the withdrawal, modification, or qualification, in a manner adverse to Parent, of the Company Board Recommendation, or (b) with respect to the Parent Board, the withdrawal, modification, or qualification, in a manner adverse to the Company, of the Parent Board Recommendation.

"Closing" means the consummation of the Merger.

"Closing Date" means the date on which the Closing occurs, as determined in accordance with Section 2.7.

"Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

"Company Board" means the Board of Directors of Caliston BioSciences, Inc.

"Company Board Recommendation" means the recommendation of the Company Board in favor of the adoption of this Agreement and the approval of the Merger by the stockholders of the Company.

"Company Common Stock" means the common stock of the Company, par value $0.001 per share.

"Company Material Adverse Effect" means any event, circumstance, change, effect, development, condition, or occurrence that, individually or in the aggregate with all other such events, circumstances, changes, effects, developments, conditions, or occurrences, (a) has had, or would reasonably be expected to have, a material adverse effect on the business, assets, liabilities, financial condition, or results of operations of the Company, taken as a whole, or (b) would reasonably be expected to prevent or materially delay the ability of the Company to consummate the Merger or to perform its material obligations under this Agreement; provided, however, that, for purposes of clause (a) of this definition, no event, circumstance, change, effect, development, condition, or occurrence to the extent arising out of or resulting from any of the following, either alone or in combination, shall be deemed to constitute, or shall be taken into account in determining whether there has been or would reasonably be expected to be, a Company Material Adverse Effect: (i) changes in general economic, financial, or market conditions (including changes in interest rates, credit markets, currency exchange rates, or prices of commodities) in the United States or any other jurisdiction; (ii) changes affecting the pharmaceutical or biotechnology industries generally; (iii) changes in applicable law (including any applicable DGCL provisions) or in GAAP or other applicable accounting standards, or the interpretation or enforcement thereof; (iv) acts of war, sabotage, terrorism, natural disasters, pandemics (including COVID-19 and any mutations or variants thereof), epidemics, or other force majeure events; (v) changes resulting from the announcement or pendency of this Agreement or the Merger (including any loss of or adverse change in the relationship of the Company with any of its employees, customers, suppliers, partners, or other business relationships); (vi) changes resulting from compliance by the Company with the terms of, or the taking of any action required or contemplated by, this Agreement; or (vii) any failure of the Company to meet any internal or external projections, forecasts, or estimates of revenue or earnings (it being understood that the underlying causes of such failure may be taken into account in determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded by the foregoing clauses (i) through (vi)); provided, further, that in the case of the foregoing clauses (i), (ii), (iii), and (iv), such events, circumstances, changes, effects, developments, conditions, or occurrences may be taken into account to the extent they have a disproportionate adverse effect on the Company relative to other similarly situated companies in the pharmaceutical and biotechnology industries.

"Company Stockholder Approval" means the approval and adoption of this Agreement and the Merger by the holders of a majority of the outstanding shares of Company Common Stock, obtained by written consent delivered in accordance with Section 228 of the DGCL.

"Company Termination Fee" means Twenty-Seven Million Seven Hundred Fifty Thousand Dollars ($27,750,000), being three percent (3.0%) of the Aggregate Equity Value.

"Confidentiality Agreement" means that certain Mutual Confidentiality and Non-Disclosure Agreement, dated as of April 17, 2023, by and between Parent and the Company.

"Contingent Value Right" or "CVR" means a contractual right to receive, upon achievement of the CVR Milestone on or before the CVR Milestone Deadline, a pro rata portion of the CVR Payment, as set forth in and subject to the terms and conditions of the CVR Agreement.

"CVR Agreement" means the Contingent Value Rights Agreement to be entered into at the Closing by and between Parent and Columnar Trust Services, Inc. (as CVR Trustee), for the benefit of the former holders of Company Common Stock, substantially in the form attached hereto as Exhibit B.

"CVR Milestone" means the approval by the FDA of a New Drug Application (NDA) or supplemental NDA for CLT-4019 for any indication on or before the CVR Milestone Deadline.

"CVR Milestone Deadline" means December 31, 2026.

"CVR Payment" means One Hundred Twenty-Five Million Dollars ($125,000,000), payable in cash upon achievement of the CVR Milestone on or before the CVR Milestone Deadline.

"CVR Trustee" means Columnar Trust Services, Inc., in its capacity as trustee under the CVR Agreement.

"DGCL" means the Delaware General Corporation Law, as amended from time to time.

"Dissenting Shares" has the meaning set forth in Section 3.4.

"Effective Time" means the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or such later time as may be agreed upon by the parties and specified in the Certificate of Merger in accordance with the DGCL.

"Environmental Laws" means all applicable federal, state, and local laws, statutes, ordinances, regulations, rules, and orders relating to the protection of the environment, human health (as related to exposure to Hazardous Materials), or natural resources, including the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, and all analogous state and local laws.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

"Escrow Agent" means Greystone National Bank, N.A.

"Escrow Agreement" means the escrow agreement to be entered into at the Closing by and among Parent, the Stockholder Representative, and the Escrow Agent, substantially in the form attached hereto as Exhibit C.

"Escrow Amount" means Forty-Six Million Two Hundred Fifty Thousand Dollars ($46,250,000), being five percent (5%) of the Aggregate Equity Value.

"Escrow Period" means the period commencing on the Closing Date and ending on the date that is eighteen (18) months following the Closing Date.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

"FDA" means the United States Food and Drug Administration, or any successor agency thereto.

"Fraud" means, with respect to any party, an actual and intentional misrepresentation of a material fact in the representations and warranties of such party set forth in this Agreement, made with the knowledge that such representation was false when made, with the specific intent of inducing the other party to enter into this Agreement, and upon which the other party has actually and reasonably relied to its detriment.

"Fundamental Representations" means (a) with respect to the Company, the representations and warranties set forth in Sections 4.1 (Organization and Qualification), 4.2 (Capitalization), 4.3 (Authority; Binding Effect), 4.13 (Tax Matters), and 4.19 (Brokers and Finders), and (b) with respect to Parent, the representations and warranties set forth in Sections 5.1 (Organization and Qualification), 5.2 (Capitalization), 5.3 (Authority; Binding Effect), 5.9 (Issuance of Parent Shares), and 5.12 (Brokers and Finders).

"GAAP" means United States generally accepted accounting principles as in effect from time to time, consistently applied.

"Governmental Authority" means any federal, state, local, or foreign government or political subdivision thereof, or any agency, authority, bureau, commission, department, official, political subdivision, tribunal, or other instrumentality of any such government or political subdivision, or any self-regulatory organization, or any court of competent jurisdiction.

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

"Hazardous Materials" means any pollutants, contaminants, toxic or hazardous substances, materials, wastes, constituents, or chemicals that are regulated under any Environmental Law.

"Interested Party" means Dr. Marcus Hale, Chairman of the Board and Chief Executive Officer of Parent.

"Knowledge of the Company" means the actual knowledge, after reasonable inquiry of their respective direct reports, of each of Dr. Nadia Sorensen (Chief Executive Officer), Dr. Raj Malhotra (Chief Scientific Officer), and Dr. Evan Whitmore (Head of Clinical Development).

"Knowledge of Parent" means the actual knowledge, after reasonable inquiry of their respective direct reports, of each of Dr. Marcus Hale (Chairman and Chief Executive Officer), Priya Anand (Chief Financial Officer), and Lawrence Whittaker (General Counsel).

"Law" means any federal, state, local, or foreign law, statute, code, ordinance, regulation, rule, or order of any Governmental Authority.

"Lien" means any mortgage, pledge, security interest, encumbrance, lien, restriction on transfer, or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, or any lease in the nature thereof).

"Losses" means any and all losses, damages, liabilities, obligations, costs, fees, and expenses (including reasonable attorneys' fees and expenses), judgments, fines, penalties, interest, and amounts paid in settlement, in each case net of (a) any insurance proceeds actually received and (b) any tax benefits actually realized.

"Material Adverse Effect" means a Company Material Adverse Effect or a Parent Material Adverse Effect, as applicable.

"Maximum Transaction Value" means One Billion Fifty Million Dollars ($1,050,000,000), being the sum of the Aggregate Equity Value and the CVR Payment.

"Merger" means the merger of the Company with and into Parent, with Parent as the surviving corporation, pursuant to this Agreement and the DGCL.

"Merger Consideration" means the aggregate consideration to be received by holders of Company Common Stock in the Merger, consisting of the Cash Consideration, the Stock Consideration, and the CVRs. The "Per Share Merger Consideration" means the Per Share Cash Consideration, the Per Share Stock Consideration, and one (1) CVR per share of Company Common Stock.

"NYSE" means the New York Stock Exchange.

"Non-Competition and Non-Solicitation Agreement" means the Non-Competition and Non-Solicitation Agreement to be executed by Dr. Nadia Sorensen at or prior to the Closing, substantially in the form attached hereto as Exhibit F.

"Outside Date" means [___, 2024].

"Parent" or "Penterra" means Penterra Pharmaceuticals Corp., a Delaware corporation.

"Parent Board" means the Board of Directors of Penterra Pharmaceuticals Corp.

"Parent Board Recommendation" means the recommendation of the Parent Board (acting upon the recommendation of the Special Committee and with the recused directors abstaining) in favor of the approval of the issuance of Parent Shares by the stockholders of Parent.

"Parent Common Stock" means the common stock of Penterra Pharmaceuticals Corp., par value $0.01 per share, listed on the NYSE under the ticker symbol "PPHR."

"Parent Material Adverse Effect" means any event, circumstance, change, effect, development, condition, or occurrence that, individually or in the aggregate with all other such events, circumstances, changes, effects, developments, conditions, or occurrences, (a) has had, or would reasonably be expected to have, a material adverse effect on the business, assets, liabilities, financial condition, or results of operations of Parent and its Subsidiaries, taken as a whole, or (b) would reasonably be expected to prevent or materially delay the ability of Parent to consummate the Merger or to perform its material obligations under this Agreement; provided, however, that, for purposes of clause (a) of this definition, the same carve-outs as set forth in the definition of Company Material Adverse Effect (mutatis mutandis) shall apply.

"Parent Shares" means the shares of Parent Common Stock to be issued to former holders of Company Common Stock as Stock Consideration in connection with the Merger.

"Parent Stockholder Approval" means the approval of the issuance of Parent Shares by the holders of a majority of the votes cast at a duly convened meeting of the stockholders of Parent at which a quorum is present, as required under the applicable rules and regulations of the NYSE (including NYSE Listed Company Manual Section 312.03) for the issuance of more than one percent (1%) of the outstanding shares of Parent Common Stock.

"Per Share Cash Consideration" means the pro rata portion of the Cash Consideration payable in respect of each share of Company Common Stock outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares), calculated by dividing the Cash Consideration (less the Escrow Amount) by the total number of shares of Company Common Stock outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares).

"Per Share Stock Consideration" means the pro rata portion of the Stock Consideration payable in respect of each share of Company Common Stock outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares), expressed as a number of shares of Parent Common Stock, calculated by dividing the total number of Parent Shares to be issued by the total number of shares of Company Common Stock outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares).

"Permitted Liens" means (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings, (b) mechanics', carriers', workmen's, repairmen's, and other similar Liens arising in the ordinary course of business, (c) zoning, entitlement, conservation, and other similar land use and environmental regulations, and (d) other imperfections of title, easements, encumbrances, or restrictions that would not, individually or in the aggregate, reasonably be expected to be material.

"Person" means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or any other entity.

"Reverse Termination Fee" means Thirty-Two Million Three Hundred Seventy-Five Thousand Dollars ($32,375,000), being three and one-half percent (3.5%) of the Aggregate Equity Value.

"SEC" means the United States Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

"Special Committee" means the special committee of independent directors of the Parent Board, consisting of Diane Prescott (Chair), James Okafor, and Dr. Helen Ng.

"Stock Consideration" means Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000), being twenty-five percent (25%) of the Aggregate Equity Value, payable in newly issued shares of Parent Common Stock. The number of Parent Shares to be issued as Stock Consideration shall be calculated by dividing Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000) by the VWAP Reference Price, resulting in the issuance of Five Million Nine Hundred Three Thousand Four Hundred Ninety-Seven (5,903,497) shares of Parent Common Stock.

"Stockholder Representative" means Ridgeline Ventures, LP, acting through its Managing Partner, Ava Lindström.

"Stockholder Representative Agreement" means the Stockholder Representative Agreement to be entered into at the Closing, substantially in the form attached hereto as Exhibit G.

"Stockholder Support Agreement" means the Stockholder Support Agreement, dated as of the date hereof, by and among Parent and certain stockholders of the Company, substantially in the form attached hereto as Exhibit D.

"Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company, association, or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (b) if a partnership, limited liability company, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof.

"Superior Proposal" means a bona fide, unsolicited, written Acquisition Proposal (with the references to "twenty percent (20%)" in the definition of "Acquisition Proposal" being replaced with "fifty percent (50%)" for purposes of this definition) on terms that the Company Board determines in good faith, after consultation with its financial advisor and outside legal counsel, and taking into account all factors deemed relevant by the Company Board (including legal, financial, regulatory, timing, and other aspects of such proposal, and the identity of the Person making such proposal), would, if consummated in accordance with its terms, result in a transaction that is more favorable to the stockholders of the Company than the transactions contemplated by this Agreement (after giving effect to any adjustment or modification to the terms of this Agreement proposed by Parent in response thereto).

"Surviving Corporation" means Parent, as the surviving corporation in the Merger.

"Tax" or "Taxes" means (a) any and all federal, state, local, or foreign income, gross receipts, capital gains, franchise, alternative or add-on minimum, estimated, sales, use, goods and services, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profits, environmental, customs, duties, real property, special assessments, personal property, capital stock, social security, unemployment, disability, payroll, license, employee, or other taxes, charges, fees, levies, or assessments of any kind whatsoever, whether computed on a separate or combined, unitary, or consolidated basis or in any other manner, including any interest, penalties, or additions to tax or additional amounts in respect of the foregoing, and (b) any liability for amounts described in clause (a) as a result of being a member of a group, by contract, as a transferee or successor, or otherwise.

"Transfer Agent" means Columnar Trust Services, Inc.

"Voting and Recusal Agreement" means the Voting and Recusal Agreement, dated as of June 2, 2023, by and between Dr. Marcus Hale and Parent, substantially in the form attached hereto as Exhibit E.

"VWAP" means the volume weighted average price per share of Parent Common Stock on the NYSE, as reported by Crowne Albany Systems (or, if not reported by Crowne Albany Systems, by another authoritative source as reasonably agreed upon by the parties).

"VWAP Reference Date" means June 1, 2023.

"VWAP Reference Price" means Thirty-Nine Dollars and Seventeen Cents ($39.17) per share, being the thirty (30)-trading-day VWAP of Parent Common Stock on the NYSE ending on (and including) the VWAP Reference Date.

Section 1.2 — Interpretation Rules.

Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms "hereof," "herein," "hereby," "hereto," and derivative or similar words refer to this entire Agreement; (d) the terms "Article," "Section," "Schedule," "Exhibit," and "Recital" refer to the specified Article, Section, Schedule, Exhibit, or Recital of or to this Agreement unless otherwise specified; (e) the word "including" (and with correlative meaning "include" and "includes") means including without limiting the generality of any description preceding such term; (f) the word "or" shall be disjunctive but not exclusive; (g) references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto; (h) references to statutes shall include all regulations promulgated thereunder, and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting the statute or regulation; (i) the captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement; (j) references to "dollars" or "$" mean lawful money of the United States of America; (k) any reference to "days" means calendar days unless the term "Business Days" is used; (l) whenever this Agreement requires action within a specified number of days, the first day of such period shall be excluded and the last day shall be included; provided, however, that if the last day is not a Business Day, the period in question shall end on the next succeeding Business Day; and (m) references to a Person are also to its permitted successors and assigns.

ARTICLE II — THE MERGER

Section 2.1 — The Merger.

Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Section 251 of the DGCL, at the Effective Time, the Company shall be merged with and into Parent. As a result of the Merger, the separate corporate existence of the Company shall cease at the Effective Time, and Parent shall continue as the surviving corporation in the Merger (Parent, as the surviving corporation in the Merger, being sometimes hereinafter referred to as the "Surviving Corporation"). The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL.

Section 2.2 — Effective Time.

On the Closing Date, the parties shall cause the Certificate of Merger, in substantially the form attached hereto as Exhibit A, to be duly executed, acknowledged, and filed with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later date and time as may be mutually agreed upon by the parties and specified in the Certificate of Merger in accordance with the DGCL (such date and time being hereinafter referred to as the "Effective Time").

Section 2.3 — Effects of the Merger.

From and after the Effective Time, the Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL, including Section 259 thereof. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, the Surviving Corporation shall thereupon and thereafter possess all the rights, privileges, immunities, powers, and purposes of Parent and the Company, and all property, real, personal, and mixed, and all debts due on whatever account, including subscriptions for shares and all other choses in action, and all and every other interest of or belonging to or due to Parent and the Company shall be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed. The Surviving Corporation shall thenceforth be responsible and liable for all the liabilities and obligations of Parent and the Company, and any claim existing, or action or proceeding pending, by or against Parent or the Company may be prosecuted as if the Merger had not taken place, or the Surviving Corporation may be substituted in its place. Neither the rights of creditors nor any Liens upon the property of either Parent or the Company shall be impaired by the Merger.

Section 2.4 — Certificate of Incorporation of the Surviving Corporation.

At the Effective Time, the certificate of incorporation of Parent as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation, and no amendment to the certificate of incorporation of Parent shall be effected by virtue of the Merger, until duly amended in accordance with the DGCL and such certificate of incorporation.

Section 2.5 — Bylaws of the Surviving Corporation.

At the Effective Time, the bylaws of Parent as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation, until duly amended in accordance with the DGCL, the certificate of incorporation of the Surviving Corporation, and such bylaws.

Section 2.6 — Directors and Officers of the Surviving Corporation.

At and after the Effective Time, (a) the directors of Parent immediately prior to the Effective Time shall be and continue as the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until such director's successor is duly elected and qualified, or until such director's earlier death, resignation, or removal, and (b) the officers of Parent immediately prior to the Effective Time shall be and continue as the officers of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until such officer's successor is duly appointed and qualified, or until such officer's earlier death, resignation, or removal.

Section 2.7 — Closing.

Unless this Agreement shall have been terminated pursuant to Article VIII, and subject to the satisfaction or waiver of the conditions set forth in Article VII (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), the Closing shall take place at 10:00 a.m., Eastern Time, on the third (3rd) Business Day following the date on which the last of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived in accordance with this Agreement, or on such other date or at such other time and place as may be mutually agreed upon in writing by Parent (with the approval of the Special Committee) and the Company. The Closing shall occur remotely by the exchange of electronic signatures and documents via electronic mail or other electronic transmission, unless the parties mutually agree to another method.

ARTICLE III — MERGER CONSIDERATION; CONVERSION OF SHARES

Section 3.1 — Conversion of Company Common Stock.

At the Effective Time, by virtue of the Merger and without any action on the part of Parent, the Company, or any holder of any shares of Company Common Stock:

(a) Cash Consideration. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be converted into the right to receive the Per Share Cash Consideration, representing such share's pro rata portion of the Cash Consideration (being Six Hundred Ninety-Three Million Seven Hundred Fifty Thousand Dollars ($693,750,000)), subject to the Escrow Holdback set forth in Section 3.5 and applicable withholding pursuant to Section 3.7.

(b) Stock Consideration. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be converted into the right to receive the Per Share Stock Consideration, representing such share's pro rata portion of the Stock Consideration, consisting of an aggregate of Five Million Nine Hundred Three Thousand Four Hundred Ninety-Seven (5,903,497) newly issued shares of Parent Common Stock (valued at Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000) based on the VWAP Reference Price).

(c) Contingent Value Rights. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be converted into the right to receive one (1) CVR, representing a pro rata interest in the potential CVR Payment of One Hundred Twenty-Five Million Dollars ($125,000,000), upon the terms and subject to the conditions set forth in the CVR Agreement.

The Per Share Cash Consideration, the Per Share Stock Consideration, and one (1) CVR are collectively referred to herein as the "Per Share Merger Consideration." The Aggregate Equity Value payable at the Effective Time is Nine Hundred Twenty-Five Million Dollars ($925,000,000), which together with the CVR Payment (if earned) would result in a Maximum Transaction Value of One Billion Fifty Million Dollars ($1,050,000,000). At the Effective Time, all shares of Company Common Stock converted into the right to receive the Per Share Merger Consideration shall no longer be outstanding, shall automatically be cancelled and retired, and shall cease to exist, and each holder of a certificate (or book-entry shares) that immediately prior to the Effective Time represented any such shares shall thereafter cease to have any rights with respect to such shares, except the right to receive the Per Share Merger Consideration and any dividends or distributions to which such holder may be entitled pursuant to Section 3.6.

Section 3.2 — Cancellation of Parent-Owned Shares.

At the Effective Time, each share of Company Common Stock that is owned by Parent, the Surviving Corporation, or any direct or indirect wholly-owned Subsidiary of Parent or the Surviving Corporation immediately prior to the Effective Time (collectively, "Cancelled Shares") shall be automatically cancelled and retired without any conversion thereof and without any payment of consideration therefor, and no consideration shall be delivered in exchange for such cancellation and retirement.

Section 3.3 — Treatment of Company Options and Warrants.

(a) Company Options. At the Effective Time, each option to purchase shares of Company Common Stock (a "Company Option") that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, shall be treated as follows:

(i) If the per share exercise price of such Company Option is less than the Per Share Merger Consideration (valued for this purpose based on the Cash Consideration, Stock Consideration, and CVR at their respective fair market values, as determined in good faith by the Company Board prior to the Closing), such Company Option shall be cancelled and converted into the right to receive, in respect of each share of Company Common Stock subject to such Company Option, the excess of (A) the Per Share Merger Consideration over (B) the per share exercise price of such Company Option (calculated using a cashless exercise methodology).

(ii) If the per share exercise price of such Company Option is equal to or greater than the Per Share Merger Consideration (as valued in clause (i) above), such Company Option shall be cancelled without payment of any consideration therefor.

(b) Company Warrants. At the Effective Time, each warrant to purchase shares of Company Common Stock (a "Company Warrant") that is outstanding and unexercised immediately prior to the Effective Time shall be treated in the same manner as Company Options pursuant to Section 3.3(a) above, mutatis mutandis.

(c) Actions. Prior to the Effective Time, the Company shall take all actions necessary under the applicable Company equity incentive plans and award agreements to give effect to the transactions contemplated by this Section 3.3, including providing all required notices and obtaining all required consents.

Section 3.4 — Dissenting Shares.

Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by any holder who has not voted in favor of, or consented in writing to, the Merger and who is entitled to demand and has properly demanded appraisal for such shares in accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into the right to receive the Per Share Merger Consideration, but instead such holder shall be entitled to receive payment of the fair value of such shares in accordance with the provisions of Section 262 of the DGCL; provided, however, that if any such holder shall have failed to perfect, or shall have effectively withdrawn or lost the right to, appraisal under Section 262 of the DGCL, then the shares of Company Common Stock of such holder shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the Per Share Merger Consideration, without any interest thereon. The Company shall give Parent (a) prompt notice of any written demands for appraisal of any shares of Company Common Stock, attempted withdrawals of such demands, and any other instruments served pursuant to the DGCL relating to appraisal rights and received by the Company, and (b) the opportunity to direct all negotiations and proceedings with respect to any demands for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to any demands for appraisal, offer to settle, or settle any such demands, or agree to do any of the foregoing.

Section 3.5 — Escrow Holdback.

At the Closing, the Escrow Amount, being Forty-Six Million Two Hundred Fifty Thousand Dollars ($46,250,000), shall be withheld from the Cash Consideration otherwise payable to holders of Company Common Stock and shall be deposited by Parent with the Escrow Agent (Greystone National Bank, N.A.) pursuant to the Escrow Agreement, substantially in the form attached hereto as Exhibit C. The Escrow Amount shall be held and disbursed by the Escrow Agent in accordance with the terms of the Escrow Agreement and shall be available to satisfy claims for indemnification by Parent and the Surviving Corporation under Article IX during the Escrow Period (being eighteen (18) months following the Closing Date). Each former holder of Company Common Stock shall be deemed to have contributed to the Escrow Amount on a pro rata basis based on the number of shares of Company Common Stock held by such holder immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares). Any amounts remaining in the Escrow Account following the expiration of the Escrow Period (reduced by any amounts subject to then-pending and unresolved claims) shall be released to the Stockholder Representative for distribution to the former holders of Company Common Stock, in accordance with the terms of the Escrow Agreement.

Section 3.6 — Exchange Procedures.

(a) Exchange Agent. Prior to the Effective Time, Parent shall appoint Columnar Trust Services, Inc. as exchange agent (the "Exchange Agent") for the purpose of exchanging certificates (or evidence of book-entry shares) representing shares of Company Common Stock for the Per Share Merger Consideration. At or prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent, for the benefit of the holders of Company Common Stock, (i) the aggregate Cash Consideration (net of the Escrow Amount) in immediately available funds, (ii) evidence of the Parent Shares in book-entry form, and (iii) evidence of CVRs, in each case sufficient to pay the Per Share Merger Consideration in respect of all shares of Company Common Stock (other than Cancelled Shares and Dissenting Shares). All such cash, Parent Shares, and CVRs deposited with the Exchange Agent are hereinafter referred to as the "Exchange Fund."

(b) Letter of Transmittal. As promptly as practicable after the Effective Time, but in any event within five (5) Business Days following the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of Company Common Stock as of immediately prior to the Effective Time (other than holders of Cancelled Shares) (i) a letter of transmittal in customary form (which shall specify that delivery shall be effected, and risk of loss and title to the certificates (or book-entry shares) shall pass, only upon proper delivery of the certificates (or confirmation of book-entry transfer) to the Exchange Agent), and (ii) instructions for use in effecting the surrender of the certificates (or book-entry shares) in exchange for the Per Share Merger Consideration.

(c) Exchange of Certificates. Upon surrender of a certificate (or confirmation of book-entry transfer) for cancellation to the Exchange Agent, together with a duly completed and validly executed letter of transmittal and such other documents as may be reasonably required by the Exchange Agent, the holder of such certificate (or book-entry shares) shall be entitled to receive in exchange therefor (i) the Per Share Cash Consideration (less such holder's pro rata share of the Escrow Amount) payable in respect of the shares of Company Common Stock formerly represented by such certificate (or book-entry shares), by wire transfer, check, or other means, as provided in the letter of transmittal, (ii) the Per Share Stock Consideration in respect of such shares, evidenced by book-entry, and (iii) one (1) CVR per share, and the certificate (or book-entry shares) so surrendered shall forthwith be cancelled. No interest shall be paid or accrue on any cash payable upon surrender of any certificate (or book-entry shares).

(d) Undelivered Merger Consideration. Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains undistributed to former holders of Company Common Stock for twelve (12) months after the Effective Time shall be delivered to the Surviving Corporation upon demand, and any former holders of Company Common Stock who have not theretofore complied with this Section 3.6 shall thereafter look only to the Surviving Corporation for payment of the Per Share Merger Consideration to which they are entitled.

(e) No Liability. None of Parent, the Company, the Surviving Corporation, the Exchange Agent, or any other Person shall be liable to any former holder of Company Common Stock for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat, or similar law.

(f) Lost, Stolen, or Destroyed Certificates. In the event that any certificate representing shares of Company Common Stock has been lost, stolen, or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen, or destroyed certificate, upon the making of an affidavit of that fact by the holder thereof, such holder's Per Share Merger Consideration; provided, however, that Parent may, in its reasonable discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate to deliver a bond in such sum as Parent may reasonably direct as indemnity against any claim that may be made against the Exchange Agent, Parent, or the Surviving Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.

Section 3.7 — Withholding Rights.

Each of Parent, the Surviving Corporation, the Exchange Agent, and the Escrow Agent shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of Company Common Stock such amounts as may be required to be deducted and withheld under the Code, or under any applicable provision of state, local, or foreign Tax law, with respect to the making of such payment. To the extent that amounts are so deducted and withheld and remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. Parent shall use commercially reasonable efforts to provide reasonable advance notice to the affected Person of any anticipated withholding (other than any withholding required under Section 1445 of the Code or as a result of a failure to provide a duly completed Form W-9 or applicable Form W-8) and shall cooperate in good faith with such Person to minimize or eliminate such withholding to the extent permitted by applicable law.

Section 3.8 — No Fractional Shares.

No certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon the conversion of shares of Company Common Stock pursuant to Section 3.1, and no such fractional share interests shall entitle the owner thereof to vote or to any rights of a holder of Parent Common Stock. In lieu of the issuance of any fractional share of Parent Common Stock, each holder of shares of Company Common Stock who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock shall receive, upon surrender of such holder's certificate (or book-entry shares) as provided in Section 3.6, a cash payment (without interest) representing such holder's proportionate interest in the net proceeds from the sale by the Exchange Agent, on behalf of all such holders, of the aggregate fractional shares of Parent Common Stock to which such holders would otherwise have been collectively entitled, or, at the election of Parent, a cash payment calculated by multiplying such fractional share interest by the VWAP Reference Price of Thirty-Nine Dollars and Seventeen Cents ($39.17).

Section 3.9 — Stock Consideration Calculation.

The Stock Consideration shall be calculated as Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000) divided by the VWAP Reference Price of Thirty-Nine Dollars and Seventeen Cents ($39.17) per share (being the thirty (30)-trading-day VWAP of Parent Common Stock on the NYSE ending on (and including) June 1, 2023), resulting in the issuance of Five Million Nine Hundred Three Thousand Four Hundred Ninety-Seven (5,903,497) shares of Parent Common Stock. The number of Parent Shares to be issued hereunder is a fixed number and shall not be adjusted for any change in the market price of Parent Common Stock between the date hereof and the Closing Date. [Note to Draft: This is a fixed exchange ratio approach based on a fixed VWAP. The draft does not include a collar mechanism providing for adjustment in the event of significant price movements of Parent Common Stock between signing and closing. This point is subject to further negotiation between the parties.]

Section 3.10 — Contingent Value Rights.

(a) CVR Agreement. At the Effective Time, Parent shall execute and deliver the CVR Agreement with Columnar Trust Services, Inc. (as CVR Trustee), substantially in the form attached hereto as Exhibit B, for the benefit of the former holders of Company Common Stock (other than holders of Cancelled Shares and Dissenting Shares).

(b) CVR Payment. The CVR Payment of One Hundred Twenty-Five Million Dollars ($125,000,000) shall be payable in cash to the former holders of Company Common Stock, on a pro rata basis, upon the achievement of the CVR Milestone (FDA approval of CLT-4019) on or before the CVR Milestone Deadline of December 31, 2026, in accordance with and subject to the terms and conditions of the CVR Agreement.

(c) Transferability. The CVRs shall not be transferable except (i) upon death of a holder by will or intestacy, (ii) pursuant to a court order, (iii) by operation of law (including by consolidation or merger of a holder that is an entity), or (iv) in the case of CVRs held in nominee name, from a nominee to a beneficial owner and vice versa. The CVRs shall not be listed on any securities exchange or quotation system.

(d) Unsecured Obligations. The CVRs shall be unsecured contractual obligations of Parent and shall rank pari passu with all other unsecured and unsubordinated obligations of Parent. The CVRs shall not represent an equity or ownership interest in Parent or in any other Person.

(e) Further Terms. The rights, duties, and obligations of Parent, the CVR Trustee, and the holders of CVRs shall be as set forth in the CVR Agreement, and the summary of the CVR Agreement set forth in this Section 3.10 is qualified in its entirety by reference to the CVR Agreement. In the event of any conflict between the terms of this Agreement and the terms of the CVR Agreement with respect to the CVRs, the terms of the CVR Agreement shall control.

ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the disclosure schedules delivered by the Company to Parent concurrently with the execution and delivery of this Agreement (the "Company Disclosure Schedules"), the Company hereby represents and warrants to Parent as follows:

Section 4.1 — Organization and Qualification.

The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The registered agent of the Company in the State of Delaware is Pemberton Industries, located at 251 Little Falls Drive, Wilmington, Delaware 19808. The principal office of the Company is located at 88 Harbor Point Road, Cambridge, Massachusetts 02142. The Company has all requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company has heretofore made available to Parent true, complete, and correct copies of its certificate of incorporation and bylaws, each as amended to date and currently in effect.

Section 4.2 — Capitalization.

(a) The authorized capital stock of the Company consists of shares of Company Common Stock and such series of preferred stock as are set forth on Schedule 4.2. As of the date hereof, the outstanding shares of Company Common Stock, on a fully diluted basis, are owned as follows:

(b) All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid, and nonassessable, and were issued in compliance with all applicable federal and state securities laws. There are no outstanding or authorized options, warrants, convertible securities, stock appreciation rights, phantom stock plans, stock-based performance units, or other rights, agreements, arrangements, or commitments relating to the capital stock of the Company or obligating the Company to issue or sell any shares of its capital stock or other equity interest, except as set forth on Schedule 4.2.

(c) As of the date hereof, the Company has raised an aggregate of approximately Three Hundred Forty-Seven Million Dollars ($347,000,000) in equity capital across Seed, Series A, Series B, and Series C financing rounds. The most recent financing round was the Series C, which closed in October 2021 at a post-money valuation of Six Hundred Eighty Million Dollars ($680,000,000). The complete capitalization of the Company, including all outstanding options, warrants, and convertible securities, is set forth on Schedule 4.2.

(d) There are no outstanding contractual obligations of the Company to repurchase, redeem, or otherwise acquire any shares of Company Common Stock or any other equity interest in the Company. There are no outstanding obligations of the Company to provide funds to, or make any investment in, any other Person.

Section 4.3 — Authority; Binding Effect.

The Company has all requisite corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it is or will be a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby, including the Merger, subject only to obtaining the Company Stockholder Approval (which may be obtained by written consent of the holders of a majority of the outstanding shares of Company Common Stock delivered in accordance with Section 228 of the DGCL). The execution, delivery, and performance of this Agreement and each such Ancillary Agreement, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by the Company Board by resolutions duly adopted at a meeting duly called and held. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution, and delivery by Parent, constitutes a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) (collectively, the "Enforceability Exceptions").

Section 4.4 — No Conflicts; Consents.

The execution, delivery, and performance of this Agreement and each of the Ancillary Agreements by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby, do not and will not (a) conflict with or violate the certificate of incorporation or bylaws of the Company, (b) assuming that the consents and approvals referred to in this Section 4.4 are duly obtained, conflict with or violate in any material respect any Law applicable to the Company or by which any of its properties or assets is bound, or (c) result in a breach of, constitute a default (or an event which with notice or lapse of time or both would become a default) under, give rise to any right of termination, cancellation, or acceleration under, or result in the creation of any Lien on any property or asset of the Company under, any contract, agreement, indenture, note, bond, mortgage, license, lease, or other instrument to which the Company is a party or by which its properties or assets are bound, except, in the case of clauses (b) and (c), for such conflicts, violations, breaches, defaults, or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. No consent, approval, authorization, order, or filing with, or notice to, any Governmental Authority is required on the part of the Company in connection with the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, except for (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (ii) the filing of a notification and report form under the HSR Act and the expiration or early termination of the applicable waiting period thereunder, and (iii) such filings with the SEC as may be required in connection with the issuance of Parent Shares or as may otherwise be required under th

CONFIDENTIAL — ATTORNEY WORK PRODUCT — PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Working Draft v.5 November 1, 2023
Circulated to Whitfield Graves LLP (Kenneth Pratt) for Review and Comment
C&H Matter Number: 1025-00006 Project Code Name: Project Coriander
AGREEMENT AND PLAN OF MERGER
by and between
PENTERRA PHARMACEUTICALS CORP., a Delaware corporation
and
CALISTON BIOSCIENCES, INC., a Delaware corporation
Dated as of ___, 2023
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of ___, 2023, is entered into by and between Penterra Pharmaceuticals Corp., a Delaware corporation ("Parent" or "Penterra"), and Caliston BioSciences, Inc., a Delaware corporation (the "Company" or "Caliston").
RECITALS
WHEREAS, Parent is a corporation duly organized and validly existing under the laws of the State of Delaware, publicly traded on the New York Stock Exchange (ticker symbol: PPHR), with its principal executive offices located at 400 Innovation Drive, Suite 1200, Princeton, New Jersey 08540 (EIN: 22-3847195; CIK: 0001587342);
WHEREAS, the Company is a corporation duly organized and validly existing under the laws of the State of Delaware, a privately held, clinical-stage biopharmaceutical company focused on the discovery and development of novel kinase inhibitors for solid tumors, with its principal office located at 88 Harbor Point Road, Cambridge, Massachusetts 02142 (EIN: 84-4219063), founded in 2017;
WHEREAS, the Board of Directors of Parent (the "Parent Board") has formed a special committee (the "Special Committee") comprised of three independent directors — Diane Prescott (Chair), James Okafor, and Dr. Helen Ng — to evaluate, negotiate, and make recommendations to the Parent Board regarding the proposed transaction contemplated hereby, which constitutes a related-party transaction given that Dr. Marcus Hale, Chairman of the Board and Chief Executive Officer of Parent, holds an approximately 28.5% equity interest in the Company;
WHEREAS, the Special Committee has been advised by independent legal counsel, Calderwood & Harkness LLP, and an independent financial advisor, Thorngate Partners LLC, and has conducted a thorough and independent review of the proposed transaction, including a market check;
WHEREAS, Thorngate Partners LLC has delivered to the Special Committee its written opinion, dated as of the date hereof, to the effect that, as of such date and based upon and subject to the assumptions, qualifications, limitations, and other matters set forth therein, the Merger Consideration (as defined herein) to be paid by Parent in the Merger is fair, from a financial point of view, to Parent;
WHEREAS, the Special Committee, after careful deliberation and consideration of the advice of its independent legal and financial advisors, has unanimously (a) determined that the Merger and this Agreement are advisable, fair to, and in the best interests of Parent and its stockholders (other than Dr. Marcus Hale, Angela Whitmore, and Raymond Tusk), (b) recommended that the Parent Board approve this Agreement and the transactions contemplated hereby, and (c) recommended that the Parent Board submit the issuance of Parent Shares to a vote of Parent's stockholders;
WHEREAS, the Parent Board, acting upon the unanimous recommendation of the Special Committee and with Dr. Marcus Hale, Angela Whitmore, and Raymond Tusk recused from all deliberations and abstaining from all votes relating to this Agreement and the transactions contemplated hereby, has (a) determined that the Merger and this Agreement are advisable, fair to, and in the best interests of Parent and its stockholders (other than the recused directors), (b) approved and adopted this Agreement and authorized the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, and (c) resolved to recommend that the stockholders of Parent approve the issuance of Parent Shares in connection with the Merger;
WHEREAS, the Board of Directors of the Company (the "Company Board") has (a) determined that the Merger and this Agreement are advisable, fair to, and in the best interests of the Company and its stockholders, (b) approved and adopted this Agreement and authorized the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (c) recommended that the stockholders of the Company adopt this Agreement and approve the Merger;
WHEREAS, the parties desire to effect a merger of the Company with and into Parent, with Parent as the surviving corporation, upon the terms and subject to the conditions set forth herein, pursuant to the Delaware General Corporation Law (the "DGCL"), including without limitation Sections 141(a), 144, and 251 thereof; and
WHEREAS, the parties intend that the Merger qualify as a merger within the meaning of Section 251 of the DGCL.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Definitions.
As used in this Agreement, the following terms shall have the meanings set forth below:
"Acquisition Proposal" means any inquiry, proposal, or offer from any Person (other than Parent or any of its Affiliates) relating to, in a single transaction or series of related transactions, (a) a merger, consolidation, business combination, recapitalization, liquidation, dissolution, or similar transaction involving the Company, (b) the issuance or sale of twenty percent (20%) or more of the equity securities of the Company, (c) the sale, lease, license, exchange, or other disposition of twenty percent (20%) or more of the consolidated assets of the Company (measured by fair market value), or (d) any other transaction the consummation of which would reasonably be expected to prevent or materially delay the consummation of the Merger.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the terms "controlling," "controlled by," and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Aggregate Equity Value" means Nine Hundred Twenty-Five Million Dollars ($925,000,000).
"Ancillary Agreements" means, collectively, the CVR Agreement, the Escrow Agreement, the Stockholder Support Agreement, the Voting and Recusal Agreement, the Non-Competition and Non-Solicitation Agreement, and the Stockholder Representative Agreement.
"Business Day" means any day that is not a Saturday, Sunday, or other day on which banks in New York, New York are authorized or required by law to be closed.
"Cancelled Shares" has the meaning set forth in Section 3.2.
"Cash Consideration" means Six Hundred Ninety-Three Million Seven Hundred Fifty Thousand Dollars ($693,750,000), being seventy-five percent (75%) of the Aggregate Equity Value.
"Caliston" or "Company" means Caliston BioSciences, Inc., a Delaware corporation.
"Certificate of Merger" means the certificate of merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger, substantially in the form attached hereto as Exhibit A.
"Change of Recommendation" means (a) with respect to the Company Board, the withdrawal, modification, or qualification, in a manner adverse to Parent, of the Company Board Recommendation, or (b) with respect to the Parent Board, the withdrawal, modification, or qualification, in a manner adverse to the Company, of the Parent Board Recommendation.
"Closing" means the consummation of the Merger.
"Closing Date" means the date on which the Closing occurs, as determined in accordance with Section 2.7.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
"Company Board" means the Board of Directors of Caliston BioSciences, Inc.
"Company Board Recommendation" means the recommendation of the Company Board in favor of the adoption of this Agreement and the approval of the Merger by the stockholders of the Company.
"Company Common Stock" means the common stock of the Company, par value $0.001 per share.
"Company Material Adverse Effect" means any event, circumstance, change, effect, development, condition, or occurrence that, individually or in the aggregate with all other such events, circumstances, changes, effects, developments, conditions, or occurrences, (a) has had, or would reasonably be expected to have, a material adverse effect on the business, assets, liabilities, financial condition, or results of operations of the Company, taken as a whole, or (b) would reasonably be expected to prevent or materially delay the ability of the Company to consummate the Merger or to perform its material obligations under this Agreement; provided, however, that, for purposes of clause (a) of this definition, no event, circumstance, change, effect, development, condition, or occurrence to the extent arising out of or resulting from any of the following, either alone or in combination, shall be deemed to constitute, or shall be taken into account in determining whether there has been or would reasonably be expected to be, a Company Material Adverse Effect: (i) changes in general economic, financial, or market conditions (including changes in interest rates, credit markets, currency exchange rates, or prices of commodities) in the United States or any other jurisdiction; (ii) changes affecting the pharmaceutical or biotechnology industries generally; (iii) changes in applicable law (including any applicable DGCL provisions) or in GAAP or other applicable accounting standards, or the interpretation or enforcement thereof; (iv) acts of war, sabotage, terrorism, natural disasters, pandemics (including COVID-19 and any mutations or variants thereof), epidemics, or other force majeure events; (v) changes resulting from the announcement or pendency of this Agreement or the Merger (including any loss of or adverse change in the relationship of the Company with any of its employees, customers, suppliers, partners, or other business relationships); (vi) changes resulting from compliance by the Company with the terms of, or the taking of any action required or contemplated by, this Agreement; or (vii) any failure of the Company to meet any internal or external projections, forecasts, or estimates of revenue or earnings (it being understood that the underlying causes of such failure may be taken into account in determining whether a Company Material Adverse Effect has occurred to the extent not otherwise excluded by the foregoing clauses (i) through (vi)); provided, further, that in the case of the foregoing clauses (i), (ii), (iii), and (iv), such events, circumstances, changes, effects, developments, conditions, or occurrences may be taken into account to the extent they have a disproportionate adverse effect on the Company relative to other similarly situated companies in the pharmaceutical and biotechnology industries.
"Company Stockholder Approval" means the approval and adoption of this Agreement and the Merger by the holders of a majority of the outstanding shares of Company Common Stock, obtained by written consent delivered in accordance with Section 228 of the DGCL.
"Company Termination Fee" means Twenty-Seven Million Seven Hundred Fifty Thousand Dollars ($27,750,000), being three percent (3.0%) of the Aggregate Equity Value.
"Confidentiality Agreement" means that certain Mutual Confidentiality and Non-Disclosure Agreement, dated as of April 17, 2023, by and between Parent and the Company.
"Contingent Value Right" or "CVR" means a contractual right to receive, upon achievement of the CVR Milestone on or before the CVR Milestone Deadline, a pro rata portion of the CVR Payment, as set forth in and subject to the terms and conditions of the CVR Agreement.
"CVR Agreement" means the Contingent Value Rights Agreement to be entered into at the Closing by and between Parent and Columnar Trust Services, Inc. (as CVR Trustee), for the benefit of the former holders of Company Common Stock, substantially in the form attached hereto as Exhibit B.
"CVR Milestone" means the approval by the FDA of a New Drug Application (NDA) or supplemental NDA for CLT-4019 for any indication on or before the CVR Milestone Deadline.
"CVR Milestone Deadline" means December 31, 2026.
"CVR Payment" means One Hundred Twenty-Five Million Dollars ($125,000,000), payable in cash upon achievement of the CVR Milestone on or before the CVR Milestone Deadline.
"CVR Trustee" means Columnar Trust Services, Inc., in its capacity as trustee under the CVR Agreement.
"DGCL" means the Delaware General Corporation Law, as amended from time to time.
"Dissenting Shares" has the meaning set forth in Section 3.4.
"Effective Time" means the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or such later time as may be agreed upon by the parties and specified in the Certificate of Merger in accordance with the DGCL.
"Environmental Laws" means all applicable federal, state, and local laws, statutes, ordinances, regulations, rules, and orders relating to the protection of the environment, human health (as related to exposure to Hazardous Materials), or natural resources, including the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, and all analogous state and local laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
"Escrow Agent" means Greystone National Bank, N.A.
"Escrow Agreement" means the escrow agreement to be entered into at the Closing by and among Parent, the Stockholder Representative, and the Escrow Agent, substantially in the form attached hereto as Exhibit C.
"Escrow Amount" means Forty-Six Million Two Hundred Fifty Thousand Dollars ($46,250,000), being five percent (5%) of the Aggregate Equity Value.
"Escrow Period" means the period commencing on the Closing Date and ending on the date that is eighteen (18) months following the Closing Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"FDA" means the United States Food and Drug Administration, or any successor agency thereto.
"Fraud" means, with respect to any party, an actual and intentional misrepresentation of a material fact in the representations and warranties of such party set forth in this Agreement, made with the knowledge that such representation was false when made, with the specific intent of inducing the other party to enter into this Agreement, and upon which the other party has actually and reasonably relied to its detriment.
"Fundamental Representations" means (a) with respect to the Company, the representations and warranties set forth in Sections 4.1 (Organization and Qualification), 4.2 (Capitalization), 4.3 (Authority; Binding Effect), 4.13 (Tax Matters), and 4.19 (Brokers and Finders), and (b) with respect to Parent, the representations and warranties set forth in Sections 5.1 (Organization and Qualification), 5.2 (Capitalization), 5.3 (Authority; Binding Effect), 5.9 (Issuance of Parent Shares), and 5.12 (Brokers and Finders).
"GAAP" means United States generally accepted accounting principles as in effect from time to time, consistently applied.
"Governmental Authority" means any federal, state, local, or foreign government or political subdivision thereof, or any agency, authority, bureau, commission, department, official, political subdivision, tribunal, or other instrumentality of any such government or political subdivision, or any self-regulatory organization, or any court of competent jurisdiction.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Hazardous Materials" means any pollutants, contaminants, toxic or hazardous substances, materials, wastes, constituents, or chemicals that are regulated under any Environmental Law.
"Interested Party" means Dr. Marcus Hale, Chairman of the Board and Chief Executive Officer of Parent.
"Knowledge of the Company" means the actual knowledge, after reasonable inquiry of their respective direct reports, of each of Dr. Nadia Sorensen (Chief Executive Officer), Dr. Raj Malhotra (Chief Scientific Officer), and Dr. Evan Whitmore (Head of Clinical Development).
"Knowledge of Parent" means the actual knowledge, after reasonable inquiry of their respective direct reports, of each of Dr. Marcus Hale (Chairman and Chief Executive Officer), Priya Anand (Chief Financial Officer), and Lawrence Whittaker (General Counsel).
"Law" means any federal, state, local, or foreign law, statute, code, ordinance, regulation, rule, or order of any Governmental Authority.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien, restriction on transfer, or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, or any lease in the nature thereof).
"Losses" means any and all losses, damages, liabilities, obligations, costs, fees, and expenses (including reasonable attorneys' fees and expenses), judgments, fines, penalties, interest, and amounts paid in settlement, in each case net of (a) any insurance proceeds actually received and (b) any tax benefits actually realized.
"Material Adverse Effect" means a Company Material Adverse Effect or a Parent Material Adverse Effect, as applicable.
"Maximum Transaction Value" means One Billion Fifty Million Dollars ($1,050,000,000), being the sum of the Aggregate Equity Value and the CVR Payment.
"Merger" means the merger of the Company with and into Parent, with Parent as the surviving corporation, pursuant to this Agreement and the DGCL.
"Merger Consideration" means the aggregate consideration to be received by holders of Company Common Stock in the Merger, consisting of the Cash Consideration, the Stock Consideration, and the CVRs. The "Per Share Merger Consideration" means the Per Share Cash Consideration, the Per Share Stock Consideration, and one (1) CVR per share of Company Common Stock.
"NYSE" means the New York Stock Exchange.
"Non-Competition and Non-Solicitation Agreement" means the Non-Competition and Non-Solicitation Agreement to be executed by Dr. Nadia Sorensen at or prior to the Closing, substantially in the form attached hereto as Exhibit F.
"Outside Date" means [___, 2024].
"Parent" or "Penterra" means Penterra Pharmaceuticals Corp., a Delaware corporation.
"Parent Board" means the Board of Directors of Penterra Pharmaceuticals Corp.
"Parent Board Recommendation" means the recommendation of the Parent Board (acting upon the recommendation of the Special Committee and with the recused directors abstaining) in favor of the approval of the issuance of Parent Shares by the stockholders of Parent.
"Parent Common Stock" means the common stock of Penterra Pharmaceuticals Corp., par value $0.01 per share, listed on the NYSE under the ticker symbol "PPHR."
"Parent Material Adverse Effect" means any event, circumstance, change, effect, development, condition, or occurrence that, individually or in the aggregate with all other such events, circumstances, changes, effects, developments, conditions, or occurrences, (a) has had, or would reasonably be expected to have, a material adverse effect on the business, assets, liabilities, financial condition, or results of operations of Parent and its Subsidiaries, taken as a whole, or (b) would reasonably be expected to prevent or materially delay the ability of Parent to consummate the Merger or to perform its material obligations under this Agreement; provided, however, that, for purposes of clause (a) of this definition, the same carve-outs as set forth in the definition of Company Material Adverse Effect (mutatis mutandis) shall apply.
"Parent Shares" means the shares of Parent Common Stock to be issued to former holders of Company Common Stock as Stock Consideration in connection with the Merger.
"Parent Stockholder Approval" means the approval of the issuance of Parent Shares by the holders of a majority of the votes cast at a duly convened meeting of the stockholders of Parent at which a quorum is present, as required under the applicable rules and regulations of the NYSE (including NYSE Listed Company Manual Section 312.03) for the issuance of more than one percent (1%) of the outstanding shares of Parent Common Stock.
"Per Share Cash Consideration" means the pro rata portion of the Cash Consideration payable in respect of each share of Company Common Stock outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares), calculated by dividing the Cash Consideration (less the Escrow Amount) by the total number of shares of Company Common Stock outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares).
"Per Share Stock Consideration" means the pro rata portion of the Stock Consideration payable in respect of each share of Company Common Stock outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares), expressed as a number of shares of Parent Common Stock, calculated by dividing the total number of Parent Shares to be issued by the total number of shares of Company Common Stock outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares).
"Permitted Liens" means (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings, (b) mechanics', carriers', workmen's, repairmen's, and other similar Liens arising in the ordinary course of business, (c) zoning, entitlement, conservation, and other similar land use and environmental regulations, and (d) other imperfections of title, easements, encumbrances, or restrictions that would not, individually or in the aggregate, reasonably be expected to be material.
"Person" means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or any other entity.
"Reverse Termination Fee" means Thirty-Two Million Three Hundred Seventy-Five Thousand Dollars ($32,375,000), being three and one-half percent (3.5%) of the Aggregate Equity Value.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Special Committee" means the special committee of independent directors of the Parent Board, consisting of Diane Prescott (Chair), James Okafor, and Dr. Helen Ng.
"Stock Consideration" means Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000), being twenty-five percent (25%) of the Aggregate Equity Value, payable in newly issued shares of Parent Common Stock. The number of Parent Shares to be issued as Stock Consideration shall be calculated by dividing Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000) by the VWAP Reference Price, resulting in the issuance of Five Million Nine Hundred Three Thousand Four Hundred Ninety-Seven (5,903,497) shares of Parent Common Stock.
"Stockholder Representative" means Ridgeline Ventures, LP, acting through its Managing Partner, Ava Lindström.
"Stockholder Representative Agreement" means the Stockholder Representative Agreement to be entered into at the Closing, substantially in the form attached hereto as Exhibit G.
"Stockholder Support Agreement" means the Stockholder Support Agreement, dated as of the date hereof, by and among Parent and certain stockholders of the Company, substantially in the form attached hereto as Exhibit D.
"Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company, association, or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (b) if a partnership, limited liability company, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof.
"Superior Proposal" means a bona fide, unsolicited, written Acquisition Proposal (with the references to "twenty percent (20%)" in the definition of "Acquisition Proposal" being replaced with "fifty percent (50%)" for purposes of this definition) on terms that the Company Board determines in good faith, after consultation with its financial advisor and outside legal counsel, and taking into account all factors deemed relevant by the Company Board (including legal, financial, regulatory, timing, and other aspects of such proposal, and the identity of the Person making such proposal), would, if consummated in accordance with its terms, result in a transaction that is more favorable to the stockholders of the Company than the transactions contemplated by this Agreement (after giving effect to any adjustment or modification to the terms of this Agreement proposed by Parent in response thereto).
"Surviving Corporation" means Parent, as the surviving corporation in the Merger.
"Tax" or "Taxes" means (a) any and all federal, state, local, or foreign income, gross receipts, capital gains, franchise, alternative or add-on minimum, estimated, sales, use, goods and services, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profits, environmental, customs, duties, real property, special assessments, personal property, capital stock, social security, unemployment, disability, payroll, license, employee, or other taxes, charges, fees, levies, or assessments of any kind whatsoever, whether computed on a separate or combined, unitary, or consolidated basis or in any other manner, including any interest, penalties, or additions to tax or additional amounts in respect of the foregoing, and (b) any liability for amounts described in clause (a) as a result of being a member of a group, by contract, as a transferee or successor, or otherwise.
"Transfer Agent" means Columnar Trust Services, Inc.
"Voting and Recusal Agreement" means the Voting and Recusal Agreement, dated as of June 2, 2023, by and between Dr. Marcus Hale and Parent, substantially in the form attached hereto as Exhibit E.
"VWAP" means the volume weighted average price per share of Parent Common Stock on the NYSE, as reported by Crowne Albany Systems (or, if not reported by Crowne Albany Systems, by another authoritative source as reasonably agreed upon by the parties).
"VWAP Reference Date" means June 1, 2023.
"VWAP Reference Price" means Thirty-Nine Dollars and Seventeen Cents ($39.17) per share, being the thirty (30)-trading-day VWAP of Parent Common Stock on the NYSE ending on (and including) the VWAP Reference Date.
Section 1.2 — Interpretation Rules.
Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms "hereof," "herein," "hereby," "hereto," and derivative or similar words refer to this entire Agreement; (d) the terms "Article," "Section," "Schedule," "Exhibit," and "Recital" refer to the specified Article, Section, Schedule, Exhibit, or Recital of or to this Agreement unless otherwise specified; (e) the word "including" (and with correlative meaning "include" and "includes") means including without limiting the generality of any description preceding such term; (f) the word "or" shall be disjunctive but not exclusive; (g) references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto; (h) references to statutes shall include all regulations promulgated thereunder, and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting the statute or regulation; (i) the captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement; (j) references to "dollars" or "$" mean lawful money of the United States of America; (k) any reference to "days" means calendar days unless the term "Business Days" is used; (l) whenever this Agreement requires action within a specified number of days, the first day of such period shall be excluded and the last day shall be included; provided, however, that if the last day is not a Business Day, the period in question shall end on the next succeeding Business Day; and (m) references to a Person are also to its permitted successors and assigns.
ARTICLE II — THE MERGER
Section 2.1 — The Merger.
Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Section 251 of the DGCL, at the Effective Time, the Company shall be merged with and into Parent. As a result of the Merger, the separate corporate existence of the Company shall cease at the Effective Time, and Parent shall continue as the surviving corporation in the Merger (Parent, as the surviving corporation in the Merger, being sometimes hereinafter referred to as the "Surviving Corporation"). The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL.
Section 2.2 — Effective Time.
On the Closing Date, the parties shall cause the Certificate of Merger, in substantially the form attached hereto as Exhibit A, to be duly executed, acknowledged, and filed with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later date and time as may be mutually agreed upon by the parties and specified in the Certificate of Merger in accordance with the DGCL (such date and time being hereinafter referred to as the "Effective Time").
Section 2.3 — Effects of the Merger.
From and after the Effective Time, the Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL, including Section 259 thereof. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, the Surviving Corporation shall thereupon and thereafter possess all the rights, privileges, immunities, powers, and purposes of Parent and the Company, and all property, real, personal, and mixed, and all debts due on whatever account, including subscriptions for shares and all other choses in action, and all and every other interest of or belonging to or due to Parent and the Company shall be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed. The Surviving Corporation shall thenceforth be responsible and liable for all the liabilities and obligations of Parent and the Company, and any claim existing, or action or proceeding pending, by or against Parent or the Company may be prosecuted as if the Merger had not taken place, or the Surviving Corporation may be substituted in its place. Neither the rights of creditors nor any Liens upon the property of either Parent or the Company shall be impaired by the Merger.
Section 2.4 — Certificate of Incorporation of the Surviving Corporation.
At the Effective Time, the certificate of incorporation of Parent as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation, and no amendment to the certificate of incorporation of Parent shall be effected by virtue of the Merger, until duly amended in accordance with the DGCL and such certificate of incorporation.
Section 2.5 — Bylaws of the Surviving Corporation.
At the Effective Time, the bylaws of Parent as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation, until duly amended in accordance with the DGCL, the certificate of incorporation of the Surviving Corporation, and such bylaws.
Section 2.6 — Directors and Officers of the Surviving Corporation.
At and after the Effective Time, (a) the directors of Parent immediately prior to the Effective Time shall be and continue as the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until such director's successor is duly elected and qualified, or until such director's earlier death, resignation, or removal, and (b) the officers of Parent immediately prior to the Effective Time shall be and continue as the officers of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until such officer's successor is duly appointed and qualified, or until such officer's earlier death, resignation, or removal.
Section 2.7 — Closing.
Unless this Agreement shall have been terminated pursuant to Article VIII, and subject to the satisfaction or waiver of the conditions set forth in Article VII (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), the Closing shall take place at 10:00 a.m., Eastern Time, on the third (3rd) Business Day following the date on which the last of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived in accordance with this Agreement, or on such other date or at such other time and place as may be mutually agreed upon in writing by Parent (with the approval of the Special Committee) and the Company. The Closing shall occur remotely by the exchange of electronic signatures and documents via electronic mail or other electronic transmission, unless the parties mutually agree to another method.
ARTICLE III — MERGER CONSIDERATION; CONVERSION OF SHARES
Section 3.1 — Conversion of Company Common Stock.
At the Effective Time, by virtue of the Merger and without any action on the part of Parent, the Company, or any holder of any shares of Company Common Stock:
(a) Cash Consideration. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be converted into the right to receive the Per Share Cash Consideration, representing such share's pro rata portion of the Cash Consideration (being Six Hundred Ninety-Three Million Seven Hundred Fifty Thousand Dollars ($693,750,000)), subject to the Escrow Holdback set forth in Section 3.5 and applicable withholding pursuant to Section 3.7.
(b) Stock Consideration. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be converted into the right to receive the Per Share Stock Consideration, representing such share's pro rata portion of the Stock Consideration, consisting of an aggregate of Five Million Nine Hundred Three Thousand Four Hundred Ninety-Seven (5,903,497) newly issued shares of Parent Common Stock (valued at Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000) based on the VWAP Reference Price).
(c) Contingent Value Rights. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be converted into the right to receive one (1) CVR, representing a pro rata interest in the potential CVR Payment of One Hundred Twenty-Five Million Dollars ($125,000,000), upon the terms and subject to the conditions set forth in the CVR Agreement.
The Per Share Cash Consideration, the Per Share Stock Consideration, and one (1) CVR are collectively referred to herein as the "Per Share Merger Consideration." The Aggregate Equity Value payable at the Effective Time is Nine Hundred Twenty-Five Million Dollars ($925,000,000), which together with the CVR Payment (if earned) would result in a Maximum Transaction Value of One Billion Fifty Million Dollars ($1,050,000,000). At the Effective Time, all shares of Company Common Stock converted into the right to receive the Per Share Merger Consideration shall no longer be outstanding, shall automatically be cancelled and retired, and shall cease to exist, and each holder of a certificate (or book-entry shares) that immediately prior to the Effective Time represented any such shares shall thereafter cease to have any rights with respect to such shares, except the right to receive the Per Share Merger Consideration and any dividends or distributions to which such holder may be entitled pursuant to Section 3.6.
Section 3.2 — Cancellation of Parent-Owned Shares.
At the Effective Time, each share of Company Common Stock that is owned by Parent, the Surviving Corporation, or any direct or indirect wholly-owned Subsidiary of Parent or the Surviving Corporation immediately prior to the Effective Time (collectively, "Cancelled Shares") shall be automatically cancelled and retired without any conversion thereof and without any payment of consideration therefor, and no consideration shall be delivered in exchange for such cancellation and retirement.
Section 3.3 — Treatment of Company Options and Warrants.
(a) Company Options. At the Effective Time, each option to purchase shares of Company Common Stock (a "Company Option") that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, shall be treated as follows:
(i) If the per share exercise price of such Company Option is less than the Per Share Merger Consideration (valued for this purpose based on the Cash Consideration, Stock Consideration, and CVR at their respective fair market values, as determined in good faith by the Company Board prior to the Closing), such Company Option shall be cancelled and converted into the right to receive, in respect of each share of Company Common Stock subject to such Company Option, the excess of (A) the Per Share Merger Consideration over (B) the per share exercise price of such Company Option (calculated using a cashless exercise methodology).
(ii) If the per share exercise price of such Company Option is equal to or greater than the Per Share Merger Consideration (as valued in clause (i) above), such Company Option shall be cancelled without payment of any consideration therefor.
(b) Company Warrants. At the Effective Time, each warrant to purchase shares of Company Common Stock (a "Company Warrant") that is outstanding and unexercised immediately prior to the Effective Time shall be treated in the same manner as Company Options pursuant to Section 3.3(a) above, mutatis mutandis.
(c) Actions. Prior to the Effective Time, the Company shall take all actions necessary under the applicable Company equity incentive plans and award agreements to give effect to the transactions contemplated by this Section 3.3, including providing all required notices and obtaining all required consents.
Section 3.4 — Dissenting Shares.
Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by any holder who has not voted in favor of, or consented in writing to, the Merger and who is entitled to demand and has properly demanded appraisal for such shares in accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into the right to receive the Per Share Merger Consideration, but instead such holder shall be entitled to receive payment of the fair value of such shares in accordance with the provisions of Section 262 of the DGCL; provided, however, that if any such holder shall have failed to perfect, or shall have effectively withdrawn or lost the right to, appraisal under Section 262 of the DGCL, then the shares of Company Common Stock of such holder shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the Per Share Merger Consideration, without any interest thereon. The Company shall give Parent (a) prompt notice of any written demands for appraisal of any shares of Company Common Stock, attempted withdrawals of such demands, and any other instruments served pursuant to the DGCL relating to appraisal rights and received by the Company, and (b) the opportunity to direct all negotiations and proceedings with respect to any demands for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to any demands for appraisal, offer to settle, or settle any such demands, or agree to do any of the foregoing.
Section 3.5 — Escrow Holdback.
At the Closing, the Escrow Amount, being Forty-Six Million Two Hundred Fifty Thousand Dollars ($46,250,000), shall be withheld from the Cash Consideration otherwise payable to holders of Company Common Stock and shall be deposited by Parent with the Escrow Agent (Greystone National Bank, N.A.) pursuant to the Escrow Agreement, substantially in the form attached hereto as Exhibit C. The Escrow Amount shall be held and disbursed by the Escrow Agent in accordance with the terms of the Escrow Agreement and shall be available to satisfy claims for indemnification by Parent and the Surviving Corporation under Article IX during the Escrow Period (being eighteen (18) months following the Closing Date). Each former holder of Company Common Stock shall be deemed to have contributed to the Escrow Amount on a pro rata basis based on the number of shares of Company Common Stock held by such holder immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares). Any amounts remaining in the Escrow Account following the expiration of the Escrow Period (reduced by any amounts subject to then-pending and unresolved claims) shall be released to the Stockholder Representative for distribution to the former holders of Company Common Stock, in accordance with the terms of the Escrow Agreement.
Section 3.6 — Exchange Procedures.
(a) Exchange Agent. Prior to the Effective Time, Parent shall appoint Columnar Trust Services, Inc. as exchange agent (the "Exchange Agent") for the purpose of exchanging certificates (or evidence of book-entry shares) representing shares of Company Common Stock for the Per Share Merger Consideration. At or prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent, for the benefit of the holders of Company Common Stock, (i) the aggregate Cash Consideration (net of the Escrow Amount) in immediately available funds, (ii) evidence of the Parent Shares in book-entry form, and (iii) evidence of CVRs, in each case sufficient to pay the Per Share Merger Consideration in respect of all shares of Company Common Stock (other than Cancelled Shares and Dissenting Shares). All such cash, Parent Shares, and CVRs deposited with the Exchange Agent are hereinafter referred to as the "Exchange Fund."
(b) Letter of Transmittal. As promptly as practicable after the Effective Time, but in any event within five (5) Business Days following the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of Company Common Stock as of immediately prior to the Effective Time (other than holders of Cancelled Shares) (i) a letter of transmittal in customary form (which shall specify that delivery shall be effected, and risk of loss and title to the certificates (or book-entry shares) shall pass, only upon proper delivery of the certificates (or confirmation of book-entry transfer) to the Exchange Agent), and (ii) instructions for use in effecting the surrender of the certificates (or book-entry shares) in exchange for the Per Share Merger Consideration.
(c) Exchange of Certificates. Upon surrender of a certificate (or confirmation of book-entry transfer) for cancellation to the Exchange Agent, together with a duly completed and validly executed letter of transmittal and such other documents as may be reasonably required by the Exchange Agent, the holder of such certificate (or book-entry shares) shall be entitled to receive in exchange therefor (i) the Per Share Cash Consideration (less such holder's pro rata share of the Escrow Amount) payable in respect of the shares of Company Common Stock formerly represented by such certificate (or book-entry shares), by wire transfer, check, or other means, as provided in the letter of transmittal, (ii) the Per Share Stock Consideration in respect of such shares, evidenced by book-entry, and (iii) one (1) CVR per share, and the certificate (or book-entry shares) so surrendered shall forthwith be cancelled. No interest shall be paid or accrue on any cash payable upon surrender of any certificate (or book-entry shares).
(d) Undelivered Merger Consideration. Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains undistributed to former holders of Company Common Stock for twelve (12) months after the Effective Time shall be delivered to the Surviving Corporation upon demand, and any former holders of Company Common Stock who have not theretofore complied with this Section 3.6 shall thereafter look only to the Surviving Corporation for payment of the Per Share Merger Consideration to which they are entitled.
(e) No Liability. None of Parent, the Company, the Surviving Corporation, the Exchange Agent, or any other Person shall be liable to any former holder of Company Common Stock for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat, or similar law.
(f) Lost, Stolen, or Destroyed Certificates. In the event that any certificate representing shares of Company Common Stock has been lost, stolen, or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen, or destroyed certificate, upon the making of an affidavit of that fact by the holder thereof, such holder's Per Share Merger Consideration; provided, however, that Parent may, in its reasonable discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate to deliver a bond in such sum as Parent may reasonably direct as indemnity against any claim that may be made against the Exchange Agent, Parent, or the Surviving Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 3.7 — Withholding Rights.
Each of Parent, the Surviving Corporation, the Exchange Agent, and the Escrow Agent shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of Company Common Stock such amounts as may be required to be deducted and withheld under the Code, or under any applicable provision of state, local, or foreign Tax law, with respect to the making of such payment. To the extent that amounts are so deducted and withheld and remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. Parent shall use commercially reasonable efforts to provide reasonable advance notice to the affected Person of any anticipated withholding (other than any withholding required under Section 1445 of the Code or as a result of a failure to provide a duly completed Form W-9 or applicable Form W-8) and shall cooperate in good faith with such Person to minimize or eliminate such withholding to the extent permitted by applicable law.
Section 3.8 — No Fractional Shares.
No certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon the conversion of shares of Company Common Stock pursuant to Section 3.1, and no such fractional share interests shall entitle the owner thereof to vote or to any rights of a holder of Parent Common Stock. In lieu of the issuance of any fractional share of Parent Common Stock, each holder of shares of Company Common Stock who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock shall receive, upon surrender of such holder's certificate (or book-entry shares) as provided in Section 3.6, a cash payment (without interest) representing such holder's proportionate interest in the net proceeds from the sale by the Exchange Agent, on behalf of all such holders, of the aggregate fractional shares of Parent Common Stock to which such holders would otherwise have been collectively entitled, or, at the election of Parent, a cash payment calculated by multiplying such fractional share interest by the VWAP Reference Price of Thirty-Nine Dollars and Seventeen Cents ($39.17).
Section 3.9 — Stock Consideration Calculation.
The Stock Consideration shall be calculated as Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000) divided by the VWAP Reference Price of Thirty-Nine Dollars and Seventeen Cents ($39.17) per share (being the thirty (30)-trading-day VWAP of Parent Common Stock on the NYSE ending on (and including) June 1, 2023), resulting in the issuance of Five Million Nine Hundred Three Thousand Four Hundred Ninety-Seven (5,903,497) shares of Parent Common Stock. The number of Parent Shares to be issued hereunder is a fixed number and shall not be adjusted for any change in the market price of Parent Common Stock between the date hereof and the Closing Date. [Note to Draft: This is a fixed exchange ratio approach based on a fixed VWAP. The draft does not include a collar mechanism providing for adjustment in the event of significant price movements of Parent Common Stock between signing and closing. This point is subject to further negotiation between the parties.]
Section 3.10 — Contingent Value Rights.
(a) CVR Agreement. At the Effective Time, Parent shall execute and deliver the CVR Agreement with Columnar Trust Services, Inc. (as CVR Trustee), substantially in the form attached hereto as Exhibit B, for the benefit of the former holders of Company Common Stock (other than holders of Cancelled Shares and Dissenting Shares).
(b) CVR Payment. The CVR Payment of One Hundred Twenty-Five Million Dollars ($125,000,000) shall be payable in cash to the former holders of Company Common Stock, on a pro rata basis, upon the achievement of the CVR Milestone (FDA approval of CLT-4019) on or before the CVR Milestone Deadline of December 31, 2026, in accordance with and subject to the terms and conditions of the CVR Agreement.
(c) Transferability. The CVRs shall not be transferable except (i) upon death of a holder by will or intestacy, (ii) pursuant to a court order, (iii) by operation of law (including by consolidation or merger of a holder that is an entity), or (iv) in the case of CVRs held in nominee name, from a nominee to a beneficial owner and vice versa. The CVRs shall not be listed on any securities exchange or quotation system.
(d) Unsecured Obligations. The CVRs shall be unsecured contractual obligations of Parent and shall rank pari passu with all other unsecured and unsubordinated obligations of Parent. The CVRs shall not represent an equity or ownership interest in Parent or in any other Person.
(e) Further Terms. The rights, duties, and obligations of Parent, the CVR Trustee, and the holders of CVRs shall be as set forth in the CVR Agreement, and the summary of the CVR Agreement set forth in this Section 3.10 is qualified in its entirety by reference to the CVR Agreement. In the event of any conflict between the terms of this Agreement and the terms of the CVR Agreement with respect to the CVRs, the terms of the CVR Agreement shall control.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered by the Company to Parent concurrently with the execution and delivery of this Agreement (the "Company Disclosure Schedules"), the Company hereby represents and warrants to Parent as follows:
Section 4.1 — Organization and Qualification.
The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The registered agent of the Company in the State of Delaware is Pemberton Industries, located at 251 Little Falls Drive, Wilmington, Delaware 19808. The principal office of the Company is located at 88 Harbor Point Road, Cambridge, Massachusetts 02142. The Company has all requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as presently conducted. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company has heretofore made available to Parent true, complete, and correct copies of its certificate of incorporation and bylaws, each as amended to date and currently in effect.
Section 4.2 — Capitalization.
(a) The authorized capital stock of the Company consists of shares of Company Common Stock and such series of preferred stock as are set forth on Schedule 4.2. As of the date hereof, the outstanding shares of Company Common Stock, on a fully diluted basis, are owned as follows:
(b) All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid, and nonassessable, and were issued in compliance with all applicable federal and state securities laws. There are no outstanding or authorized options, warrants, convertible securities, stock appreciation rights, phantom stock plans, stock-based performance units, or other rights, agreements, arrangements, or commitments relating to the capital stock of the Company or obligating the Company to issue or sell any shares of its capital stock or other equity interest, except as set forth on Schedule 4.2.
(c) As of the date hereof, the Company has raised an aggregate of approximately Three Hundred Forty-Seven Million Dollars ($347,000,000) in equity capital across Seed, Series A, Series B, and Series C financing rounds. The most recent financing round was the Series C, which closed in October 2021 at a post-money valuation of Six Hundred Eighty Million Dollars ($680,000,000). The complete capitalization of the Company, including all outstanding options, warrants, and convertible securities, is set forth on Schedule 4.2.
(d) There are no outstanding contractual obligations of the Company to repurchase, redeem, or otherwise acquire any shares of Company Common Stock or any other equity interest in the Company. There are no outstanding obligations of the Company to provide funds to, or make any investment in, any other Person.
Section 4.3 — Authority; Binding Effect.
The Company has all requisite corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it is or will be a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby, including the Merger, subject only to obtaining the Company Stockholder Approval (which may be obtained by written consent of the holders of a majority of the outstanding shares of Company Common Stock delivered in accordance with Section 228 of the DGCL). The execution, delivery, and performance of this Agreement and each such Ancillary Agreement, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by the Company Board by resolutions duly adopted at a meeting duly called and held. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution, and delivery by Parent, constitutes a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) (collectively, the "Enforceability Exceptions").
Section 4.4 — No Conflicts; Consents.
The execution, delivery, and performance of this Agreement and each of the Ancillary Agreements by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby, do not and will not (a) conflict with or violate the certificate of incorporation or bylaws of the Company, (b) assuming that the consents and approvals referred to in this Section 4.4 are duly obtained, conflict with or violate in any material respect any Law applicable to the Company or by which any of its properties or assets is bound, or (c) result in a breach of, constitute a default (or an event which with notice or lapse of time or both would become a default) under, give rise to any right of termination, cancellation, or acceleration under, or result in the creation of any Lien on any property or asset of the Company under, any contract, agreement, indenture, note, bond, mortgage, license, lease, or other instrument to which the Company is a party or by which its properties or assets are bound, except, in the case of clauses (b) and (c), for such conflicts, violations, breaches, defaults, or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. No consent, approval, authorization, order, or filing with, or notice to, any Governmental Authority is required on the part of the Company in connection with the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, except for (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (ii) the filing of a notification and report form under the HSR Act and the expiration or early termination of the applicable waiting period thereunder, and (iii) such filings with the SEC as may be required in connection with the issuance of Parent Shares or as may otherwise be required under th

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