EXHIBIT 10.29
JOINT VENTURE AGREEMENT
between
LYNX Therapeutics Inc., 0000 Xxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx, 00000, XXX
(hereinafter referred to as "LYNX")
and
BASF Aktiengesellschaft, 00000 Xxxxxxxxxxxx, Xxxxxxx Xxxxxxxx of Germany
(hereinafter referred to as ,,BASF")
WHEREAS, LYNX and BASF own or control potentially complementary technologies and
expertises, and
WHEREAS, LYNX and BASF desire to have exploited certain complementary assets for
the purpose of evaluating the applicability of dynamic gene expression analyses
for the toxico-pharmacology of chemicals, for discovering novel drug targets and
drugs for unmet medical needs, and the development of production strains of
microorgnisms for fermentations, and
WHEREAS, LYNX can offer contract research and development by exploitation of its
various gene sequencing and identification platforms,
THEREFORE, LYNX and BASF are interested in forming an industrial collaboration
including a Joint Venture Company, which shall benefit both parties and hereby
agree as follows:
Article 1
Definitions
For purposes of this Agreement, the following terms shall have the meanings
indicated below.
1.1 A-GmbH (limited liability company) is a 100% subsidiary of BASF with a
nominal capital of DM 50,000 to be paid in cash. A-GmbH is formed under
the laws of the Federal Republic of Germany.
1.2 B-GmbH (limited liability company) is a 100% subsidiary of LYNX with a
nominal capital of DM 50,000 to be paid in cash. B-GmbH is formed under
the laws of the Federal Republic of Germany.
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1.3 Holding Company means individually A-GmbH or B-GmbH, Holding Companies
means collectively A-GmbH and B-GmbH.
1.4 Partner means individually BASF or LYNX, Partners means collectively
BASF and LYNX.
1.5 Massively Parallel Signature Sequencing or MPSS means the parallel
acquisition of at least [REDACT] contiguous bases (a "Signature
Sequence") from each of at least [REDACT] templates sampled from a
given cell culture or tissue cDNA library.
1.6 Massively Parallel Genomic Sequencing or MPGS means the acquisition of
deoxynucleotide sequences from the genome of an organism by proprietary
technologies based on LYNX intellectual property.
1.7 Massively Parallel Hybridization or MPH means the use of gridded solid
phase arrays of cloned cDNAs for the purpose of analyzing by nucleic
acid hybridization the levels of gene expression in tissue or cell
samples.
1.8 TET-Technology means a method for tetracycline or
tetracycline-derivative inducible or repressible gene regulation
operating via tetracycline repressors or derivatives or tetracycline
repressor or derivative fusion proteins to the extent BASF may make
such technology available to the Joint Venture Company contemplated in
this Agreement without having to make additional payments therefor.
1.9 Incyte Database means the database BASF may, according to the
Collaborative Agreement between BASF and Incyte dated June 27, 1996
(the Incyte Agreement), make available to the Joint Venture Company
contemplated in this Agreement without having to make additional
payments therefor.
Article 2
The Joint Venture Company
2.1 Formation
2.1.1 The Joint Venture Company (hereinafter referred to as the "JVC") shall
be established in the form of a stock corporation
(Aktiengesellschaft-AG) by the Holding Companies in accordance with the
laws applicable in the Federal Republic of Germany.
CONFIDENTIAL TREATMENT REQUESTED
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2.1.2 The corporate name of the JVC shall be "BASF-LYNX Bioscience AG".
2.1.3 Place of business and registered head office of the JVC shall be in
Heidelberg.
2.1.4 The JVC shall be established according to the Articles of Association
attached hereto as Annex 1.
2.2 Object
The JVC will apply collaboratively the technologies and knowledge made
available primarily by the Holding Companies for characterizing the
dynamics of gene expression and gene product (protein) activities. The
initial objectives shall be to
Evaluate the applicability of the "Dynamic Imaging" approach to
predicting the toxico-pharmacology of chemicals, and
Discover novel drug targets for intervening in diseases or disorders of
epilepsy, and
Develop production strains of microorganisms for fermentations, and
Generate dynamic gene expression databases from tissues and cells (e.
9. during development and aging) of interest to the JVC and its
potential customers, and
Develop, acquire and integrate the bioinformatics technologies for the
analyses, interpretation, storage and distribution of the databases
generated by the JVC.
Other objectives of the JVC can be defined by mutual agreement of the
Partners.
2.3 Share capital
2.3.1 The share capital of the JVC shall at the time of incorporation be DM
100,000 (Deutsche Xxxx: one hundred thousand), to be fully paid in cash
by AGmbH (DM 51,000) and B-GmbH (DM 49,000). The ratio of their
participation shall be 51:49 in favour of A-GmbH.
2.3.2 The nominal value of a share shall be DM 5 (Deutsche Xxxx: five). 3,000
shares (i.e. 15 (fifteen) percent of the share capital) shall be
preferred shares without / voting rights with a guaranteed minimum
dividend of 4 (four) percent, which are to be offered to the JVC's
employees and others according to the terms described in Article 4.
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2.3.3 According to its Articles of Association the JVC's shares shall be
registered shares that can be transferred only with the permission of
the Supervisory Board of the JVC (vinkulierte Namensaktien, * 68 11
Aktiengesetz).
2.4 Bodies of the JVC
2.4.1 In addition to the following bodies of the JVC required according to
the applicable laws of the Federal Republic of Germany for stock
corporations (Aktiengesetz)
(1) the Shareholders Meeting (Haul ptversammlung)
(2) the Executive Board (Vorstand)
(3) the Supervisory Board (Aufsichtsrat)
the JVC shall have
(4) an Advisory Board (Beirat) and
(5) a Scientific Advisory Board
The rules for the Executive Board, the Supervisory Board and the
Advisory Board are laid down in Annex 2.1 to 2.3.
2.4.2 Shareholders Meeting:
The Shareholders Meeting shall decide on the matters on which it has
exclusive competence according to the binding regulations under the
Stock Corporation Act - Aktiengesetz (presently listed in *1 1 9
Aktiengesetz) with the majority requirements stipulated in the
Aktiengesetz, unless otherwise provided in this Agreement. If the
Advisory Board has dealt with a matter which has to be decided by the
Shareholders Meeting, the Partners shall vote or cause their Holding.
Companies to vote in accordance with the decision or recommendation
made by the Advisory Board in that matter.
2.4.3 Executive Board:
Unless otherwise agreed by the Shareholders Meeting the Executive Board
shall consist of two members: the Chief Executive Officer (CEO) and the
Chief Scientific Officer (CSO). The members of the Executive Board are
appointed by the Supervisory Board which also determines the term of
their appointment. The regular term of their appointment shall be at
least one and not more than five years.
The Executive Board shall require the prior approval of the Advisory
Board for the following matters:
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a) the appointment of the upper management (i.e. senior scientists and
supervisory personnel) and the termination of contracts with the upper
management
b) granting of "Prokura"
c) major decisions concerning the use of the technology provided by
A-GmbH and B-GmbH or the Partners, major changes of the scientific
direction, focus, scope and business development or the commencement of
significant operations in new fields of technology;
d) the annual budget and the two year operating plan;
e) all contracts concerning an amount exceeding DM 250.000 or a term
exceeding two years or extending beyond December 31, 2001, whichever is
shorter;
f) the general terms and conditions of all employment-contracts and
benefits granted to employees;
g) all capital expenditures beyond DM 100.000 unless explicitly
approved by the Advisory Board as part of the budget under c) above;
h) the establishment and dissolution of branches;
i) the acquisition of companies or interests in them and the disposal
hereof;
j) the acquisition, disposal or mortgaging of real estate, rights
similar to real estate, and rights regarding real estate;
k) the issuing of loans and the taking of credits to the extent in
excess of the amounts specifically set forth in the budget approved by
the Advisory Board;
l) entering into license and/or collaboration contracts or any other
strategic alliances;
m) initiating or settling lawsuits.
2.4.4 Supervisory Board:
Unless otherwise resolved by the Shareholders Meeting the Supervisory
Board shall consist of three members to be elected by the Shareholders
Meeting with a 3/4 majority for a period ending with the Shareholders
Meeting voting on their discharge from responsibility ("Entlastung")
for the financial year in which they were elected.
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The appointment of members of the Executive Board and the determination
of their term of office by the Supervisory Board has to be unanimous;
provided, however, that either Partner may request a unanimous
resolution of the Supervisory Board to terminate a member of the
Executive Board after an appropriate grace period of attempted remedy
and a replacement proposal. The Partners shall then use their best
efforts to have a corresponding unanimous resolution of the Supervisory
Board taken as soon as reasonably possible.
2.4.5 Advisory Board:
The Advisory Board shall consist of four members. Each Partner may
appoint two members (which it may replace at its discretion by giving
written notice to the other Partner specifying the member to be
replaced, the identity of the successor and the effective date of such
replacement). The Executive Board reports on a regular basis to the
Chairman of the Advisory Board who shall keep the other members of the
Advisory Board informed.
The tasks and authority of the Advisory Board are:
(1) Recommendation to the Supervisory Board of the members of the
Executive Board to be appointed by the Supervisory Board which
recommendation has to be unanimous;
(2) The appointment of the members of the Scientific Advisory Board
(SAB); which appointment has to be unanimous;
(3) Review of annual performance of upper management;
(4) Decisions concerning the use of technology made available to the
JVC by the Holding Companies and/or the Partners, change of scientific
direction, focus and scope and business development, which decisions
shall require unanimity;
(5) Decision on approvals required by the Executive Board.
2.4.6 Scientific Advisory Board (SAB):
The SAB shall consist of five to seven members with staggered
appointments of up to three years. The members of the SAB shall be
prominent scientists to support the CSO in recruiting and assessing
suitable scientists and optimizing the JVC's R&D activities.
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2.5 Reporting and Accounting
The JVC shall establish an appropriate financial and cost accounting
system as well as a reporting system being in line with generally
accepted international standards and practices and the applicable legal
regulations in the Federal Republic of Germany as required by the
applicable reporting standards of the Holding Companies and/or the
Partners.
2.6 Inspection of Books
Each Holding Company and/or Partner is entitled during normal business
hours to inspect or have inspected the books and accounts of the JVC at
its own expense preferably through its internal auditing department.
2.7 Business Year
The business year of the JVC shall be the calendar year.
Article 3
Sale or Transfer of Shares
3.1 If a Partner desires to transfer shares in A-GmbH or B-GmbH or have its
Holding Company transfer shares of the JVC, during the first five years
after their establishment he needs the approval of the other Partner,
being at the discretion of the other Partner.
3.2 After the five-year-term all or portion of the shares in the JVC and/or
a majority interest in the Holding Company may be transferred, provided
that the transferor first delivers to the other Partner a written offer
to sell such shares to the other Partner or its Holding Company at a
price and on terms described in such written offer.
3.2.1 If such offer is not accepted within [REDACT] months after receipt
thereof, the transferor shall be free to sell the offered shares in the
JVC to a third party at the same or a higher price and the same or less
favourable terms as offered to the other Partner or its Holding
Company.
CONFIDENTIAL TREATMENT REQUESTED
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3.2.2 If such shares are to be offered to a third party at a lower price or
on more favourable terms as offered to the other Partner or its Holding
Company, the transferor must first offer the shares to the other
Partner or its Holding Company again at such lower price and more
favourable terms; provided that, the other Partner has to accept this
new offer within [REDACT] days after receipt thereof. Any offer to a
third party which is not consummated within [REDACT] months after the
end of the period within which the other Partner or its Holding Company
could have accepted such offer must be withdrawn and the shares
reoffered to the other Partner or its Holding Company by the transferor
in accordance with this sub-section 3.2.2.
3.3 Unless otherwise agreed between the Parties, shares in the JVC may only
be transferred to a third party (except to employees of the JVC or as
part of ordinary trading in a stock exchange) if such third party is
bound to the terms of this Agreement.
Article 4
JVC Shares held by Employees and Others
4.1 Object: In order to best incentivize the JVC's employees, members of
the Executive Board and the Scientific Advisory Board and certain other
collaborators (e.g. consultants), the Partners regard it as desirable
that a substantial interest in the JVC (not exceeding 15 percent
unless otherwise agreed by the Partners) be held by such persons.
4.2 The Partners therefore agree to have made available a sufficient number
of preferred shares for the purpose described in Article 4.1, either
from the preferred shares held by them (in proportion to their interest
in the JVC) or by respective capital increase(s).
4.3 Terms of offer to the JVC's employees (to be incorporated in the
JVC's employees' employment contracts):
4.3.1 The price of the offered shares shall be established by the Advisory
Board in advance for every calendar year.
4.3.2 Within the first five years of employment the transfer of the shares
shall not be permitted.
4.3.3 If the employment terminates before the end of the five-year period,
the JVC has the right to acquire the shares at the price established
by the Advisory Board according to 4.3.1.
CONFIDENTIAL TREATMENT REQUESTED
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4.3.4 After five years of employment the shares may be transferred with a
right of first refusal for the JVC at market price or, in the absence
of a market price according to a procedure comparable in substance to
the provisions of Article 3.2.
4.4 The terms of offer for other persons than the JVC's employees shall be
established by the Advisory Board from case to case.
Article 5
Operation of the JVC
5.1 During the first five years after the incorporation of the JVC AGmbH
will fund the JVC's Research and Development Activities ("R&D") with up
to DM 50,000,000 (Deutsche Xxxx: fifty million) according to the terms
of the Technology License and Development Agreement attached as Annex 3
and upon request of LYNX, BASF shall cause A-GmbH to make available to
the JVC
Non-exclusive right to use the TET-technology, and Access to the Incyte
Database, and
Non-exclusive right to use its toxocological database, and
Non-exclusive right to use its future technologies relevant to the
object of the JVC
and, in this case, the relevant provisions of the Technology License
and Development Agreement attached as Annex 3 shall apply. However,
neither the JVC nor A-GmbH shall be entitled to claim the above
technology respectively from A-GmbH or BASF.
5.2 During the first five years after the incorporation of the JVC BGmbH
will permit the use of the MPSS-technology as well as the use of the
bio-information systems and of further LYNX-technology related to the
purpose of the Joint Venture free of charge and BGmbH will further
grant to the JVC
Non-exclusive right to use its current gene technologies, informatics,
patents, trade secrets and know-how relevant to the object of the JVC,
Non-exclusive right to use its future gene technologies, informatics,
patents, trade secrets and know-how (e. g. MPGS, MPH) relevant to the
object of the JVC,
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Providing, maintaining and updating of the operating MPSSinstruments,
hardware and software for data generation, collection and analysis at
LYNX's costs as needed,
Non-exclusive right to use bio-informatics systems to simulate and
analyse dynamic patterns of gene expression,
Non-exclusive right to use LYNX's CNS database that exists as of the
Effective Date and
Non-exclusive right to use LYNX's phosphoramidate oligonucleotide
technology for validation relevant to the object of the JVC
all according to the terms of the Technology License and Development
Agreement attached as Annex 3.
5.3 After the exhaustion of the initial financial and, if requested by
LYNX, 5-year technology commitment by A-GmbH and of the 5-year
technology commitment by B-GmbH, the Holding Companies or the Partners
will fund or cause to be funded the continued activities of the JVC, if
this is necessary to enable the JVC to acquire and/or retain the
necessary resources and technologies for the future success. This
financing will be according to the Partners'/A- and BGmbH's ratio of
participation in the share capital of JVC. The decision about further
financing will have to be made unanimously by the Holding Companies or
the Partners. If further financing is agreed upon, it has to be used to
buy the necessary equipment and technologies (as for example from BASF
and LYNX).
5.4 BASF and LYNX shall make available to their respective Holding Company
the technologies necessary to enable A-GmbH and B-GmbH to fulfill their
functions under Articles 5.1 and 5.2.
5.5 The Holding Companies on the one side and the JVC on the other side
shall conclude the Technology License and Development Agreement
attached as Annex 3 according to which the JVC conducts R&D in projects
defined by the Holding Companies who get coexclusive title to all
results (except,pSept the JVC's right to continue using such results
for its further R&D activities)
5.6 The JVC will reserve [REDACT] of its MPSS technology capacity for
academic collaborations directly relevant to the charge and projects of
the JVC.
5.7 Neither of the Partners nor any of their affiliates (i.e. companies
controlling, controlled by or under common control with a Partner,
where "control" shall mean ownership of more than 50 (fifty) percent of
the voting rights) shall cooperate with third parties with regard to
the subject of R&D projects undertaken by the JVC.
CONFIDENTIAL TREATMENT REQUESTED
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Article 6
Exploitation of the R&D Results
6.1 Prior to the merger contemplated in Article 7, the R&D results shall be
commercially exploited pursuant to the terms of the JV Operating
Agreement attached hereto as Annex 4.
6.2 After the merger the JVC's R&D results shall be commercially exploited
as follows:
(1) The JVC's Executive Board or a Partner makes a written proposal to
the Advisory Board that a particular target or other JVC's R&D result
is ready for commercialization or commercial exploitation (the
"Marketable Results") and the Advisory Board shall inform the Partners
or the other Partner hereof.
(2) BASF shall have [REDACT] days, after receipt of the proposal under
(1) to make an Offer to license the Marketable Results. For the
purposes of this Article 6.2, an "Offer" shall mean a full written
proposal to exclusively license with a right to sublicense the
Marketable Results on a worldwide basis for the purposes of
researching, developing and marketing products, comprising, based on,
or discovered using the Marketable Results, including due diligence
obligations, initial license payments, milestones and milestone
payments, royalties, and other terms common to comparable technology
licenses.
(3) If BASF does not make an Offer within the [REDACT] day period, LYNX
shall have an additional [REDACT] days thereafter to make an Offer as
defined above.
(4) Upon receipt of an Offer under (2) or (3) (the "First Offer") the
Advisory Board shall have [REDACT] days to unanimously accept such
First Offer. If the First Offer is not accepted within [REDACT] days,
the First Offer shall be deemed to have been rejected.
(5) If the First Offer is rejected under (4) the Partner that did not
make the First Offer shall have [REDACT] days from the date of the
rejection to make or obtain from a third party an Offer superior to the
rejected offer in some material respect (the "Second" Offer").
(6) If a Second Offer is made within the [REDACT] day period, the
Partner who made the First Offer may submit a new Offer within [REDACT]
days of receipt of the Second Offer (the "Third Offer").
(7) The Advisory Board must accept the best Offer resulting from the
above process, taking into account all material terms and
circumstances.
CONFIDENTIAL TREATMENT REQUESTED
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(8) If and to the extent that milestone payments, royalties or similar
payments become payable to third parties due to the commercialization
or exploitation of Marketable Results, such payments shall be borne by
the JVC.
6.3 A- and B-GmbH, or after the merger contemplated in Article 7, the JVC
shall upon request of LYNX sell the exclusive access to LYNX to JVC's
databases derived from normal, developing, differentiating and/or aging
tissues and cells, and improvements in LYNX's bioinformatics systems.
The terms and conditions of such sale shall be determined by A- and
BGmbH or, after the merger contemplated in Aricle 7, the JVC, based on
the cost of LYNX of acquiring comparable data. Such databases and
improvements in bioinformatics systems shall not be disclosed by A- and
B-GmbH or the JVC to any third party other than LYNX.
Article 7
Merger
7.1 After the JVC has provided to A- and B-GmbH Results which are sold for
projected revenues of more than [REDACT] million DM or generate actual
revenues to A- and B-GmbH sufficient to cover more than [REDACT] of the
JVC's expenses but not before December 31, 2001 the Partners envisage
to merge Aand B-GmbH into the JVC in order to consolidate the assets
and activities of the JVC and the Holding Companies.
7.2 The merger described in 7.1 above as well as a possible public offering
shall require explicit unanimous decisions of the Partners.
7.3 In the case of a merger of the Holding Companies into the JVC the
Partners shall procure that their respective Holding Company has no
obligations or liabilities other than those resulting from activities
fully covered by joint approval and decisions of A- and BGmbH and each
Partner shall, in respect of its respective Holding Company, indemnify
and hold harmless the other Partner accordingly.
In the case of such merger the Holding Companies shall each have
assets, as shown by an audited balance sheet, at least equal to the
respective nominal capital and the Partners undertake to pay any
shortfall in cash to their respective Holding Company prior to a
merger. In order to avoid an evaluation of the R&D results owned by the
Holding Companies, the Partners shall, in the case of such merger waive
or cause their Holding Companies and the JVC to waive the merger report
pursuant to ss. 8 (3) Umwandlungsgesetz.
CONFIDENTIAL TREATMENT REQUESTED
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Article 8
Secrecy
The Partners and the Holding Companies agree and shall cause the JVC to agree
not to use any know-how, technical or commercial information related to the
technologies made available by the Partners for purposes other than those of
this Agreement and not to disclose such know-how, technical and commercial
information to third parties. The foregoing secrecy obligation shall not apply
to know-how, technical and commercial information which was in the public domain
or was in the recipient's possession at the time of disclosure to it, is
acquired by it after the disclosure from third parties without restriction on
disclose it or becomes public knowledge without no fault of the recipient or has
to be disclosed according to applicable legal regulations. The Partners and the
Holding Companies shall impose on its relevant directors and employees, as far
as legally possible, a corresponding obligation.
Article 9
Conflict Resolution
9.1 In the event that LYNX and BASF cannot reach agreement on any matter
pursuant to this Agreement, the matter will be referred to further
review, discussion and resolution between a senior officer of each BASF
and LYNX (the "Decision-Makers"). The Decision-Makers will attempt in
good faith to resolve the matter in dispute for a period of [REDACT]
days. If no successful resolution of the dispute has been mutually
agreed to, the dispute will be settled according to the arbitration
procedures of Sections 9.2 and 9.3 of this Agreement.
9.2 Any controversy arising which cannot be resolved pursuant to Section
9.1 of this Agreement will be submitted to arbitration pursuant to the
Arbitration Rules of the Deutsche Institution fur
Schiedsgerichtsbarkeit e.V., then in effect, by three arbitrators
knowledgeable as to pharmaceutical industry standards. The place of
arbitration shall be Heidelberg, Germany. The arbitrators will be
appointed by mutual agreement of the Decision-Makers within thirty (30)
days of the filing of an arbitration claim. In the event the
Decision-Makers fail to mutually agree to the arbitrators, three
qualified arbitrators will be appointed by the Deutsche Institution fur
Schiedsgerichtsbarkeit. The arbitrators will be instructed to consider,
in making any determination, the customary practices in the
biotechnology and pharmaceutical industry to the extent such practices
exist. The language of the arbitration shall be English.
CONFIDENTIAL TREATMENT REQUESTED
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9.3 The arbitrators will be instructed to issue detailed written findings
of fact and law. The arbitrators will be authorized to provided for
interim and final injunctive relief and the parties acknowledge and
agree that such arbitration will be the sole forum for such interim and
final injunctive relief. The arbitrators will have the right but not
the obligation to award to the prevailing party the cost of resolving
any dispute regarding this Agreement or the formation, breach,
enforcement or performance hereof, including any reasonable fees of
attorneys, accountants and expert witnesses incurred by the prevailing
party. Punitive damages will not be recoverable in any arbitration
initiated pursuant to this Agreement. Judgement upon the award rendered
by the arbitrators may be entered in any court having jurisdiction
thereof.
Article 10
Duration
The JVC shall be established for an unlimited period. This Agreement
shall continue in force for as long as the JVC is in corporate
existence and the Partners remain as direct or indirect shareholders
thereof.
Article 11
Effective Date
This Agreement shall become effective by being signed by both Partners
(the "Effective Date").
Article 12
Miscellaneous
12.1 Any amendment, modification or supplement to this Agreement or its
Annexes shall be void unless it is made by written documents duly
signed by the Partners.
12.2 In the event that any of the provisions of this Agreement or its
Annexes are invalid because they are inconsistent with the applicable
laws this shall in no manner affect the validity of the other
provisions of this Agreement or its Annexes. The Partners hereto shall
be obliged to replace such invalid provisions by new provisions having
similar economic effects.
12.3 This Agreement and any rights and obligations hereunder shall not be
assigned either whole or in part by either Partner hereto without the
prior written approval of the other Partner which shall not be
unreasonably withheld.
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12.4 This Agreement shall be governed by, and construed in accordance with
the laws of the Federal Republic of Germany.
12.5 Each Partner shall pay its own legal, accounting and other expenses
incident to the preparation, negotiation and execution of this
Agreement and the consummation of its obligations hereunder.
Ludwigshafen, October 23, 1996
LYNX Therapeutics Inc. BASF Aktiengesellschaft
/s/ Xxx Xxxxx X.X. Xxxxxxxx-Xxxxxx
--------------------------------- ---------------------------------
/s/ Xxxxx X. Xxxxxx, Xx. Xxxxxx Xxxxxxx
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Annex 1
Articles of Association
Chapter 1
General Provisions
Article 1 - Name and Registered Office
1. The name of the company is ....
2. The registered office of the company is at Heidelberg,
Article 2 - Objects of the Company
1. Object of the company is the research and development as well as the
exploitation of the results in the field of bio-technology.
2. The company is authorised to establish branches both in Germany and
abroad and acquire undertakings the objectives of which are consistent
with and related to those under para. 1 hereof, both in Germany and
abroad or to acquire interests therein.
3. The company is authorised to all sorts of transactions that support the
above mentioned field of business.
Article 3 - Share Capital and Shares
1. The share capital amounts to 100.000 DM (in words: one hundred thousand
(Deutsche Xxxx).
2. The share capital is divided into 20.000 shares of 5 DM nominal value
each.
3. The shares shall be registered shares that can be transferred only with
the permission of the Supervisory Board of the company.
4. The company shall be entitled to issue dividend coupons and talons. The
form and contents of the share certificates and of the dividend coupons
and talons shall be determined by the Executive Board. One share
certificate may embody several shares.
Article 4 - Duration of Company, Financial Year
1. The duration of the company is not limited to a definite period.
2. The financial year is the calendar year.
Chapter 2
Organisation
A Executive Board
Article 5 - Composition, Rules of Procedure
1. The Executive Board shall consist of at least two members. The exact
number will be determined by the Supervisory Board.
2. The Supervisory Board shall lay down the Rules of Procedure for the
Executive Board.
Article 6 - Representation
The company is legally represented by two members of the Executive
Board jointly.
B Supervisory Board
Article 7 - Composition, Elections, Term of Office
1 The Supervisory Board shall consist of three members. Members of the
Supervisory Board have to be elected by the Shareholders Meeting with a
2/3 majority. Simultaneously substitute members may be elected with the
same majority, who take the place of any prematurely retired members in
the order determined in the election.
2. The members shall be elected for a period ending with the Shareholders
Meeting voting on their discharge from responsibility for the fourth
financial year after the beginning of their term of office. The
financial year in which the term of office begins shall not be taken
into account.
3. Elections for retired members not succeeded by a substitute member
shall be effective for the remainder of the term of office of the
member retired.
4. Any member of the Supervisory Board may, upon giving one month's notice
in writing, resign from office at any time.
Article 8 - Chairmanship
1. After being elected- by the ordinary Shareholders Meeting the
Supervisory Board shall elect from its members a chairman and one
deputy chairman for the term of its office in a meeting especially
invited for.
2. In the event of any of these offices becoming vacant, a by-election
shall take place for the remainder of the term of office of the member
retired.
3 Declarations shall be made by the chairman or. if impeded, by his
deputy on behalf of the Supervisory Board.
4. The Supervisory Board shall lay down its own Rules of Procedure
Article 9 - Authority
The Supervisory Board shall have the authority as provided by these Articles and
by binding legal requirements. Resolutions of the Supervisory Board shall
require a majority of the votes; the nomination of members of the Executive
Board has to be unanimous.
C Shareholders Meeting
Article 10 - Place and Notice
1. Shareholders Meetings shall take place at the registered office of the
company.
2. The Shareholders Meeting shall be called by the Executive Board.
3. The Shareholders Meeting shall be called with at least one month notice
prior to the day of the meeting. This shall not include the day on
which the notice is served and the final day for depositing shares.
Article 11 - Chairman of Shareholders Meeting
One member of the Supervisory Board, as a rule the chairman of the
Supervisory Board, shall be designated to chair the Shareholders
Meeting.
Article 12 - Authority
The Shareholders Meeting shall decide on those matters on which it has exclusive
competence according to the binding regulations under the Stock Corporation Act
(Aktiengesetz), presently listed in (delta)119 AktG.
Article 13 - Resolutions
1. The vote connected with each share corresponds to its nominal value.
2. Resolutions of the Shareholders Meeting shall require a majority of the
votes cast, unless a larger majority or further requirements are
specifically stipulated by law or by these Articles.
Chapter 3
Financial Statements, Annual Shareholders Meeting, Announcements
Article 14 - Financial Statements and Annual Shareholders Meeting
1. The Executive Board shall, in the first three months of any financial
year, prepare the financial statements and Management's Report for the
preceding financial year and submit the same to the auditor.
Immediately after receiving the auditors report the Executive Board
shall submit the financial statements, Management's Report, the
auditors report, and the proposal for the distribution of profit to the
Supervisory Board.
2. An Annual Shareholders Meeting shall be held within the first eight
months of each financial year.
3. The Shareholders Meeting shall decide in particular on the appointment
of the auditor, on the discharge from responsibility of the members of
the Executive Board and the Supervisory Board, on the appointment of
the
members of the Supervisory Board, and on the approval of the financial
statements where required by the law
Article 15 - Distribution of profit
The profit shown in the financial statements after depreciation,
deferred items provisions and reserves shall be distributed to the
shareholders, unless the Shareholders Meeting decide otherwise.
Article 16 - Announcements
Announcements by the Company shall be made in the German Federal
Gazette.
Article 17 - Binding version
The German version of these Articles is the binding one.
Annex 2.1
Rules of Procedure of the Executive Board of the JVC
Article 1
Members of the Executive Board
Unless otherwise agreed by the Supervisory Board, the Executive Board shall
consist of two members:
- the Chief Executive Officer (CEO)
- the Chief Scientific Officer (CSO)
Section 2
Authority
(1) The Executive Board has the authority provided by the Stock Corporation
Act (Aktiengesetz). The prior approval of the Advisory Board is
required for the following matters:
a) the appointment of the upper management (i.e. senior scientists and
supervisory personnel) and the termination of contracts with the
upper management.
b) granting of "Prokura"
c) major decisions concerning the use of the technologies provided by
A-GmbH and B-GmbH or the Partners, major changes of the scientific
direction, focus, scope and business development or the commencement
of significant operations in new fields of technology including the
specific applications or use of MPSS by extra-mural third party
collaborators of the JVC;
d) the annual budget and the two year operating plan;
e) all contracts concerning an amount exceeding DM 250.000 or a term
exceeding two years or extending beyond December 31, 2001, whichever
is shorter;
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f) the general terms and conditions of all employment- contracts and
benefits granted to employees;
g) all capital expenditures beyond DM 100.000 unless explicitly
approved by the Advisory Board as part of the budget under d) above;
h) the establishment and dissolution of branches;
i) the acquisition of companies or interests in them and the disposal
hereof;
j) the acquisition, disposal or mortgaging of real estate, rights
similar to real estate, and rights regarding real estate;
k) the issuing of loans and the taking of credits to the extent in
excess of the amounts specifically set forth in the budget approved
by the Advisory Board;
l) entering into license and/or collaboration contracts or any other
strategic alliances;
m) initiating or settling lawsuits.
(2) The CEO reports on a regular basis to the chairman of the Advisory
Board.
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Section 3
Convocation/Decision
(1) The Executive Board shall meet whenever business so requires, at least
at two weeks intervals.
(2) Meetings shall be convened in the place determined by the CEO. The
individual items on the agenda shall be so specified that it is
possible to vote by correspondence.
(3) The Executive Board shall only constitute a quorum if, after all
members have been notified of the meeting, at least two of its members
participate in the resolution. Resolutions shall be passed unanimously.
If unanimity can't be reached, the CEO has to inform the chairman of
the Advisory Board. The decision will then be made by the Advisory
Board.
(4) The members of the Executive Board may, if prevented from attending a
meeting, arrange for their written votes to be given at the meeting of
the Executive Board by other members of the Executive Board.
(5) The CEO may cause a resolution of the Executive Board to be passed by
obtaining declarations in writing, provided, that such procedure shall
not be objected to by any member within a reasonable period of not more
than one week set by the CEO.
(6) Announcements shall be made by the CEO on behalf of the Executive
Board.
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Section 4
Minutes
Minutes of each meeting have to made and signed by the CEO and the secretary of
the corresponding meeting. A copy of the minutes has to be sent to all members
of the Executive Board. The minutes are considered to be approved if no member
of the meeting within a reasonable of not more than two weeks after the receipt
of the minutes objects by written notice.
Section 5
Amendments
Amendments of these Rules of Procedure shall require a resolution of the
Supervisory Board.
Annex 2.2
Rules of Procedure of the Supervisory Board of the JVC
Article 1
Members of the Supervisory Board
(1) The Supervisory Board shall consist of three members to be appointed by
the Shareholders Meeting with a 3/4 majority. Simultaneously substitute
members may be elected with the same majority who take the place of any
prematurely retired member in the order fixed in the election.
(2) The members shall be elected for a period ending with the Shareholders
Meeting voting on their discharge from responsibility (,,Entlastung")
for the financial year in which they were elected.
(3) After being elected by the ordinary Shareholders Meeting the
Supervisory Board shall for the term of its office in a meeting
especially invited for elect a chairman and one deputy chairman being
elected members of the Supervisory Board. In the event of any of these
offices becoming vacant, a by-election shall take place for the
remainder of the term of office of the member retired.
Article 2
Authority
The authority of the Supervisory Board shall be according to binding regulations
of the Stock Corporation Act (Aktiengesek) and to the Articles of Association,
as for example
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- the nomination and termination of members of the Executive Board;
- the control of the management of the company; and deciding on the
permission to transfer the shares of the company as stipulated in the
Articles of Association.
Article 3
Notices, conduct of business, quorum, voting
(1) The Supervisory Board shall meet whenever business so requires, at
least at six-months intervals.
(2) Meetings shall be convened in the place of such meeting determined by
the chairpersons. All meetings shall be convened by at least a
fortnights' notice in writing. The individual items on the agenda shall
be so specified that it is possible to vote by correspondence. In
urgent cases, the length of notice may be shortened.
(3) The Supervisory Board shall only constitute a quorum if, after all
members have been notified of the meeting, at least two of its members
participate in the resolution. Unless the law provides otherwise,
resolutions shall be passed by a majority of votes cast. The nomination
of members of the Executive Board by the Supervisory Board has to be
unanimous.
(4) The members of the Supervisory Board may, if prevented from attending a
meeting, arrange for their written votes to be cast at a meeting of a
Supervisory Board by other members of the Supervisory Board.
Page 3
(5) he chairman or, if impeded, his deputy may cause resolution of the
Supervisory Board to be passed by obtaining declarations in writing
provided that such procedure shall not be objected to by any member
within at reasonable period of not more than one week set by the
chairman or, if impeded, by his deputy.
(6) Announcements shall be made by the chairman or, if impeded, by his
deputy on behalf of the Supervisory Board.
Article 4
Minutes
Minutes of each meeting have to be made and signed by the chairman and the
secretary of the corresponding meeting. A copy of the minutes have to be sent to
all members of the Supervisory Board. The minutes are considered to be approved
if no member of the meeting within a reasonable time of not more than two weeks
after the receipt of the minutes object by written notice.
Annex 2.3
Rules of Procedure of the Advisory Board of the JVC
Section 1
Members of the Advisory Board
The Advisory Board shall consist of four members. A-GmbH and BGmbH (or their
successors) may appoint two members each (which they may replace at their
discretion).
Section 2
Authority of the Advisory Board
(1) The Advisory Board shall decide on its approval required for the
following actions of the Executive Board:
a) the appointment of the upper management (i.e. senior scientists and
supervisory personnel) and the termination of contracts with the
upper management
b) granting of "Prokura"
c) major decisions concerning the use of the technology provided by
A-GmbH and B-GmbH or the Partners, major changes of the scientific
direction, focus, scope and business development or the commencement
of significant operations in new fields of technology;
d) the annual budget and the two year operating plan;
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e) all contracts concerning an amount exceeding DM 250.000 or a term
exceeding two years or extending beyond December 31, 2001, whichever
is shorter;
f) the general terms and conditions of all employment-contracts and
benefits granted to employees.
g) all capital expenditures beyond DM 100.000 unless explicitly
approved by the Advisory Board as part of the budget under d) above;
h) the establishment and dissolution of branches;
i) the acquisition of companies or interests in them and the disposal
hereof;
j) the acquisition, disposal or mortgaging of real estate, rights
similar to real estate, and rights regarding real estate;
k) the issuing of loans and the taking of credits to the extent in
excess of the amounts specifically set forth in the budget approved
by the Advisory Board;
l) entering into license and/or collaboration contracts or any other
strategic alliances;
m) initiating or settling lawsuits.
(2) The Advisory Board shall recommend the members of the Executive Board
to be appointed by the Supervisory Board.
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(3) The Advisory Boards appoints the members of the Scientific Advisory
Board.
(4) The Advisory Board reviews the annual performance of the upper
management.
(5) The Advisory Board decides on the use of technology made available to
the JVC by the Holding Companies and/or the Partners, change of
scientific direction, focus and scope and business development.
(6) The Advisory Board decides in all matters where the Executive Board is
unable to reach unanimity.
(7) Decisions on the matters described in (1) (a), (c), (i), (l) and (m),
(2), (3) and (5) require unanimity.
Section 3
Chairmanship
(1) The Advisory Board has a chairperson and a deputy chairperson. The
office of the chairperson as well as the office of the deputy
chairperson shall rotate annually.
(2) The chairman of the Advisory Board shall keep the other members of the
Advisory Board informed on the reports received from the Executive
Board.
Section 4
Notices, Conduct of Business, Quorum, Voting
(1) The Advisory Board shall as a rule meet at three-months intervals. A
meeting of the Advisory Board shall furthermore be called whenever
requested by any shareholder holding more than 25 % of the shares.
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(2) Meetings of the Advisory Board shall be convened and the place of such
meetings determined by the chairman or, if impeded, by the deputy
chairman. All meetings shall be convened by at least a fortnight's
notice in writing. The individual items on the agenda shall be so
specified that it is possible to vote by correspondence. In urgent
cases, the length of notice may be shortened.
(3) The voting rights of the Advisory Board's members shall follow the
voting rights the shareholder they represent has in the Shareholders
Meeting.
(4) The Advisory Board shall only constitute a quorum if, after all members
have been notified of the meeting, at least one appointee of A- and
B-GmbH (or their successors) participates in the resolution. Unless
these Rules of Procedure provide otherwise, resolutions shall be passed
by a majority vote.
(5) The chairman or, if impeded, his deputy may cause a resolution of the
Advisory Board to be passed by obtaining votes in writing provided that
such procedure shall not be objected to by any member within a
reasonable period of not more than one week set by the chairman or if
impeded, by his deputy.
(6) Declarations shall be made by the chairman or, if impeded, by his
deputy on behalf of the Advisory Board.
(7) Minutes of each meeting have to be made and signed by the chairman and
the secretary of the corresponding meeting. A copy of the minutes has
to be sent to all members of the Advisory Board. The minutes are
considered to be approved if no member of the meeting within a
reasonable period of not more than one month after the receipt of the
minutes objects in writing.
Section 5
Amendments
Amendments of these Rules of Procedure shall require a unanimous resolution of
the Advisory Board.
