EXHIBIT 10.24
EXECUTION COPY
METABOLIC DISORDER COLLABORATION AGREEMENT
By and Between
BAYER CORPORATION
and
CURAGEN CORPORATION.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................................ 1
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Section 1.1 Definitions................................................................. 1
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Section 1.2 Additional Definitions...................................................... 13
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ARTICLE II METABOLIC PROGRAM; RESEARCH PLAN.......................................................... 14
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Section 2.1 Research Plan............................................................... 14
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Section 2.2 Metabolic Program - General................................................. 14
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Section 2.3 Technology Access........................................................... 16
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Section 2.4 Management of Metabolic Program............................................. 16
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Section 2.5 Qualified Target Production Phase........................................... 19
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Section 2.6 Target Screening Phase...................................................... 21
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Section 2.7 Strategic Project Phase..................................................... 22
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Section 2.8 Pre-Clinical Development Phase.............................................. 22
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Section 2.9 Clinical Development Phase.................................................. 23
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Section 2.10 Commercialization Phase..................................................... 23
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ARTICLE III BAYER AND CURAGEN RIGHTS AND OBLIGATIONS................................................. 23
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Section 3.1 License Grant with Respect to CuraGen Know-How and CuraGen Patent Rights.... 23
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Section 3.2 License Grant with Respect to Bayer Know-How and Bayer Patent Rights........ 24
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Section 3.3 Use of Configured Assays.................................................... 24
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Section 3.4 Retained Rights; Ownership.................................................. 24
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Section 3.5 CuraGen Co-Promotion Rights................................................. 24
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Section 3.6 Ownership Rights............................................................ 25
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Section 3.7 CuraGen Reversionary Rights................................................. 25
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ARTICLE IV FINANCIAL PROVISIONS...................................................................... 26
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Section 4.1 Costs of Metabolic Program.................................................. 26
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Section 4.2 Royalty Payments; Operating Income.......................................... 28
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Section 4.3 Income Statement Reports.................................................... 31
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Section 4.4 Royalty Reports............................................................. 32
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Section 4.5 Accounting.................................................................. 32
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Section 4.6 Currency and Method of Payments............................................. 33
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Section 4.7 Tax Withholding............................................................. 33
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Section 4.8 Blocked Payments............................................................ 33
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Section 4.9 Compassionate Use........................................................... 33
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Section 4.10 Accounting Terms............................................................ 33
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Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
i
ARTICLE V INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS............................ 34
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Section 5.1 Ownership................................................................... 34
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Section 5.2 Prosecution and Maintenance of Patent Rights................................ 34
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Section 5.3 Cooperation................................................................. 35
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Section 5.4 Third Party Infringement.................................................... 35
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Section 5.5 Third Party Intellectual Property........................................... 36
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ARTICLE VI CONFIDENTIALITY........................................................................... 37
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Section 6.1 Confidential Information.................................................... 37
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Section 6.2 Employee and Advisor Obligations............................................ 37
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Section 6.3 Term........................................................................ 38
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Section 6.4 Publications................................................................ 38
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ARTICLE VII REPRESENTATIONS AND WARRANTIES........................................................... 38
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Section 7.1 Due Organization............................................................ 38
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Section 7.2 Consents.................................................................... 38
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Section 7.3 Execution, Delivery and Performance......................................... 38
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Section 7.4 Legal, Valid and Binding Obligation......................................... 39
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Section 7.5 No Conflict................................................................. 39
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Section 7.6 Employee Obligations........................................................ 39
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Section 7.7 CuraGen Intellectual Property............................................... 39
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Section 7.8 Bayer Intellectual Property................................................. 41
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Section 7.9 Contracts................................................................... 42
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Section 7.10 No Material Admissions...................................................... 42
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Section 7.11 No Warranties............................................................... 42
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Section 7.12 Survival.................................................................... 42
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ARTICLE VIII COVENANTS............................................................................... 43
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Section 8.1 No New Restrictions - CuraGen............................................... 43
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Section 8.2 Exclusivity - CuraGen....................................................... 43
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Section 8.3 No Restrictions on Screening - Bayer........................................ 43
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Section 8.4 Partnership for Tax Purposes................................................ 43
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ARTICLE IX TERM AND TERMINATION...................................................................... 43
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Section 9.1 Term of the Agreement....................................................... 43
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Section 9.2 Termination For Material Breach............................................. 44
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Section 9.3 Termination Upon Change of Control.......................................... 44
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Section 9.4 No Effectiveness Upon HSR Denial or Termination of Stock Purchase Agreement. 44
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Section 9.5 Effect of Termination....................................................... 44
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Section 9.6 Survival.................................................................... 46
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Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
ii
ARTICLE X DISPUTE RESOLUTION......................................................................... 46
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Section 10.1 General..................................................................... 46
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Section 10.2 Independent Experts......................................................... 46
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Section 10.3 SUBMISSION TO JURISDICTION; SELECTION OF A FORUM; WAIVER OF TRIAL BY JURY... 46
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Section 10.4 Limitations of Remedies; Remedies Cumulative................................ 47
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Section 10.5 Specific Performance........................................................ 47
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ARTICLE XI MISCELLANEOUS PROVISIONS.................................................................. 48
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Section 11.1 Product Liability Indemnification........................................... 48
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Section 11.2 Section 365(n) of the Bankruptcy Code....................................... 48
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Section 11.3 Governing Law............................................................... 49
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Section 11.4 Assignment.................................................................. 49
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Section 11.5 Amendments.................................................................. 49
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Section 11.6 Notices..................................................................... 49
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Section 11.7 Exports..................................................................... 50
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Section 11.8 Force Majeure............................................................... 50
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Section 11.9 Public Announcements........................................................ 51
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Section 11.10 Independent Contractors..................................................... 51
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Section 11.11 No Strict Construction...................................................... 51
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Section 11.12 Headings.................................................................... 51
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Section 11.13 No Implied Waivers; Rights Cumulative....................................... 52
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Section 11.14 Severability................................................................ 52
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Section 11.15 Execution in Counterparts................................................... 52
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Section 11.16 HSR Filing.................................................................. 52
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EXHIBITS
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Exhibit A Bayer's Development Manual
Exhibit B Bayer's procedures for the Global Development Project Team
Exhibit C Research Plan
Exhibit D Bayer's Strategic Project Manual
Exhibit E CuraGen's technology access licenses
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
iii
METABOLIC DISORDER COLLABORATION AGREEMENT
THIS METABOLIC DISORDER COLLABORATION AGREEMENT (the "Agreement"), dated
this 12th day of January, 2001 (the "Execution Date"), is by and between Bayer
Corporation, a corporation organized and existing under the laws of the State of
Indiana and having an office at 000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxxxxxx 00000-
4175 ("Bayer"), which is a wholly-owned subsidiary of Xxxxx XX, a corporation
organized and existing under the laws of Germany and having its principal office
at D 00000 Xxxxxxxxxx, Xxxxxxx ("Xxxxx XX"), and CuraGen Corporation, a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at 000 Xxxx Xxxxx Drive, 11th floor, Xxx Xxxxx,
Xxxxxxxxxxx 00000 ("CuraGen").
INTRODUCTION
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1. CuraGen is engaged in the business of target discovery.
2. Bayer is in the business of discovering, developing and marketing
pharmaceuticals.
3. Xxxxx XX and CuraGen are parties to that certain Pharmacogenomics
Agreement ("Pharmacogenomics Agreement") of even date herewith to collaborate on
toxicogenomic and pharmacogenomic services for use in (a) the identification of
gene-based toxicity markers, development and operation of the toxicity assays,
the generation and maintenance of databases related to the impact of small
molecules on toxicity markers and toxicity marker association with specific
histopathologies, prediction of relative toxicity of Compounds; and (b) gene
expression profiling of animal and human cells in the presence of Compounds to
assess and predict their pharmacological effectiveness.
4. Xxxxx XX and CuraGen are parties to that certain Stock Purchase
Agreement of even date herewith wherein Xxxxx XX has agreed to make an $85
million dollar equity investment in CuraGen.
5. Bayer and CuraGen are interested in collaborating in the discovery and
development of targets and assays to identify, develop and commercialize small
molecule drugs for the treatment of metabolic disorders.
NOW, THEREFORE, CuraGen and Bayer agree as follows:
Article I
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Definitions
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Section 1.1 Definitions.
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When used in this Agreement, each of the following terms shall have the meanings
set forth in this Section 1.1:
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
"Affiliate" means any corporation, company, partnership, joint venture and/or
firm which controls, is controlled by, comes into control by during the Term, or
is under common control with a Party. For purposes of this definition,
"control" shall mean (a) in the case of corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the stock or shares having the
right to vote for the election of directors, and (b) in the case of non-
corporate entities, direct or indirect ownership of at least fifty percent (50%)
of the equity interest with the power to direct the management and policies of
such non-corporate entities.
"Annual Sales Volume" means total worldwide Net Sales of a Metabolic Program
Drug during a Contract Year.
"Bayer Know-How" means Know-How owned or otherwise controlled by Bayer or its
Affiliates, and in which Bayer or an Affiliate has a licensable or sublicensable
interest and which Bayer or an Affiliate can license to CuraGen, relating to (a)
Bayer's generic toxicogenomic database; (b) Bayer's drug discovery programs and
(c) Bayer's drug development program.
"Bayer Patent Rights" means a Patent Right owned or otherwise controlled by
Bayer or an Affiliate (singly or jointly with CuraGen) in which Bayer or an
Affiliate has a licensable or sublicensable interest and which Bayer or an
Affiliate can license to CuraGen, covering an invention that is part of the
Bayer Know-How.
"CFA" or "Collaborative Focus Area" means metabolic disorders, primarily obesity
and Type 2 diabetes.
"Change of Control" means (a) a merger or consolidation of a Party which results
in the voting securities of such Party outstanding immediately prior thereto
ceasing to represent at least forty percent (40%) of the combined voting power
of the surviving entity immediately after such merger or consolidation; (b) the
sale of all or substantially all of the assets of a Party (including a sale by
Bayer or Xxxxx XX of all or substantially all of the assets consisting of
Bayer's metabolic business); or (c) any "person", as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), together with any of such persons "affiliates" or "associates",
as such terms are used in the Exchange Act, becoming the beneficial owner of
forty percent (40%) or more of the combined voting power of the outstanding
securities of a Party (other than such Party, any trustee or other fiduciary
holding securities under an employee benefit plan of such Party or any
corporation owned directly or indirectly by the stockholders of such Party in
substantially the same proportion as their ownership of stock of such Party).
For purposes of this definition only, "Party" shall mean either CuraGen or Xxxxx
XX.
"Claim" means either: (a) a claim of an issued and unexpired patent which has
not been held permanently revoked, unenforceable or invalid by a decision of a
court or other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal, and which has not been admitted
to be invalid or unenforceable through reissue or disclaimer or otherwise; or
(b) a claim of a pending patent application which claim was filed and is being
prosecuted in good faith and has not been abandoned or finally disallowed
without the
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
2
possibility of appeal or refiling of the application; provided, however, that
such patent application shall not have been pending for more than five (5) years
unless it is the subject of an interference or its prosecution has been stayed
or suspended for reasons that are beyond the control of the owner of the patent
application containing such claim.
"Clinical Development Phase" means Phase I, Phase II, Phase III, NDA Phase and
Registration Phase.
"Combination Product" means any pharmaceutical product which comprises the
Metabolic Program Drug and other compounds having independent therapeutic
activity.
"Commercialization Phase" means the phase subsequent to a Development Compound's
initial NDA Approval.
"Compound" means a compound which interacts with a Qualified Target.
"Confidential Information" means all materials, Know-How or other information,
including, without limitation, proprietary information and materials (whether or
not patentable) regarding a Party's technology, products, business information
or objectives, which is designated as confidential in writing by the disclosing
Party, whether by letter or by the use of an appropriate stamp or legend, prior
to or at the time any such material, trade secret or other information is
disclosed by the disclosing Party to the other Party. Notwithstanding the
foregoing to the contrary, materials, Know-How or other information which is
orally, electronically or visually disclosed by a Party, or is disclosed in
writing without an appropriate letter, stamp or legend, shall constitute
Confidential Information of a Party (a) if the disclosing Party, within thirty
(30) days after such disclosure, delivers to the other Party a written document
or documents describing the materials, Know-How or other information and
referencing the place and date of such oral, visual, electronic or written
disclosure and the names of the persons to whom such disclosure was made, or (b)
such information is of the type that is customarily considered to be
confidential information by persons engaged in activities that are substantially
similar to the activities being engaged in by the Parties pursuant to this
Agreement.
"Configured Assay" means an assay embodying or based upon a QT that
[____________________________________________], as further defined in the
Research Plan.
"Contract Quarter" means the period beginning on the Effective Date and ending
on March 31, 2001, and each succeeding calendar quarter thereafter during the
Term.
"Contract Year" means the period beginning on the Effective Date and ending on
December 31, 2001 ("Contract Year 1"), and each succeeding twelve (12) month
period thereafter during the Term (referred to as the "Contract Year 2",
"Contract Year 3", etc.).
"Cost of Goods Sold" means the costs which are incurred by a Party or its
Affiliates attributable to the manufacture of a Metabolic Program Drug
determined in a manner consistent with the Commercialization Annual Budget
prepared by Bayer. Cost of Goods Sold shall exclude Development Costs,
Marketing Costs and Selling Costs.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
3
"Cost of Net Capital Invested" means the Net Capital Invested calculated at the
end of a Contract Quarter (i) divided by four (4) and (ii) multiplied by
[_________________________________].
"CuraGen Know-How" means Know-How owned or otherwise controlled by CuraGen or an
Affiliate, and in which CuraGen has a licensable or sublicensable interest and
which CuraGen or an Affiliate can license to Bayer, relating to (a) a QT, (b)
the use of a QT to discover and develop Metabolic Program Drugs, and (c) the
treatment of diseases and/or conditions with Metabolic Program Drugs that
interact with a QT.
"CuraGen Patent Rights" means a Patent Right owned or otherwise controlled by
CuraGen or an Affiliate (singly or jointly with Bayer), and in which CuraGen or
an Affiliate has a licensable or sublicensable interest, covering an invention
that is part of the CuraGen Know-How.
"CuraTools" means the suite of bioinformatics algorithms available in GeneScape
for genomic analysis.
"Designated Scientific Issue" means the following issues: whether (a) a Target
Candidate has met the criteria to qualify as a QT, including, but not limited
to, [_________________________________]; and (b) a QT is [____________________].
Notwithstanding the foregoing, it is hereby agreed that Designated Scientific
Issues shall not include any matters explicitly left to the discretion, consent
or approval of Bayer under this Agreement.
"Development Candidate" means a Compound designated by Bayer
[_____________________].
"Development Compound" means a Compound which is in the Pre-Clinical Development
Phase or Clinical Development Phase.
"Development Costs" means the costs incurred by a Party (or for its account by
an Affiliate or a Third Party) which are generally consistent with the
Development Annual Budget prepared by Bayer and are specifically attributable to
the development of a Development Compound. Development Costs shall include,
without limitation, (a) the cost of pre-clinical and clinical studies,
[_______________________________________________________________], (b) all
direct labor, benefits and payroll taxes and direct operating costs and supplies
(i.e. reagents) as well as appropriate allocations of supervisory,
bioinformatics and engineering labor, benefits and payroll taxes; facility
rental (or depreciation) and operating costs (i.e. electricity, heating,
maintenance, property taxes and insurance); capital equipment rental or
depreciation and maintenance costs; license fees, database subscription charges
and royalties; external grants and internal costs for monitoring; and
registration costs, all to the extent attributable to the development of a
Development Compound and (c) all costs incurred for marketing purposes of a
Development Compound prior to NDA Approval.
"Development Manual" means Bayer's procedures for developing Development
Compounds attached hereto as Exhibit A, as the same may be amended or
supplemented by Bayer from time to time.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
4
"DOJ" means the United States Department of Justice.
"DP" or "Decision Point" means as follows:
. [______________________________________________________________________].
. [______________________________________________________________________].
. [______________________________________________________________________].
. [______________________________________________________________________].
. [______________________________________________________________________].
"Effective Date" means the later of the HSR Clearance Date and the Closing Date
as defined in the Stock Purchase Agreement.
"Executive Officers" means the Head of Worldwide Pharmaceutical Research of
Bayer (or an executive of Bayer designated by Bayer) and the Chief Executive
Officer of CuraGen (or an officer of CuraGen designated by CuraGen).
"Exploratory Research Phase" means the phase consisting of the Qualified Target
Production Phase, Target Screening Phase and Lead Compound Evaluation Phase.
"First Commercial Sale" means, for each Metabolic Program Drug, the first
commercial sale in a country as part of a nationwide introduction by a Party,
its Affiliates or its Sublicensees to Third Parties. Sales for test marketing,
clinical trial purposes or compassionate or similar use shall not be considered
to constitute a First Commercial Sale.
"FDA" means the United States Food and Drug Administration or an equivalent
governmental agency in Europe or Japan.
"FTC" means the United States Federal Trade Commission.
"GeneCalling" means CuraGen's technology for analyzing differential gene
expression.
"GeneScape" means CuraGen's set of computer programs executable through a
standard internet browser (i.e. Netscape Communicator or Microsoft Internet
Explorer), including LIMS and CuraTools, and their user documentation, together
with all modifications made to such computer programs during the term of this
Agreement.
"Global Development Project Team" means the global development project team
created by Bayer for a Compound, the procedures for which are as set forth in
Exhibit B, as the same may be amended or supplemented by Bayer from time to
time.
"GPCR" means a G protein coupled receptor.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
5
"Hit" means a Small Molecule which interacts in an assay employing a QT to give
a designated effect.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (15 U.S.C. Sec. 18a), and the rules and regulations promulgated
thereunder.
"HSR Clearance Date" means the earlier of (a) the date on which the FTC shall
notify Bayer and CuraGen of early termination of the applicable waiting period
under the HSR Act or (b) the day after the date on which the applicable waiting
period under the HSR Act expires.
"HSR Filing" means filings by Bayer and CuraGen with the FTC and the Antitrust
Division of the DOJ of a Notification and Report Form for Certain Mergers and
Acquisitions (as that term is defined in the HSR Act) with respect to the
matters set forth in this Agreement, the Pharmacogenomics Agreement and the
Stock Purchase Agreement, together with all required documentary attachments
thereto.
"HTS" means high throughput screening.
"Improvement Rights" means a Party's entire right, title and interest in and to
(including without limitation any Claims claiming) such Party's Improvements.
"Improvements" means all patented inventions, trade secrets and Know-How solely
made, created, developed, conceived or reduced to practice by a Party and/or its
Affiliates pursuant to activities relating to this Agreement during the Term
that (i)(A) have application to the manufacture, use, development, import,
export and/or sale of a Metabolic Program Drug, and (B) are dominated by such
Party's Patent Rights or (ii) are actually used to manufacture, use or sell a
Metabolic Program Drug. A Party's Improvements shall exclude its interest in
any Joint Inventions.
"IND" means an investigational new drug application filed with the FDA.
"IRC" means [_________________________________________________________].
"IPDC" means [________________________________________________________].
"Joint Invention" means (A) all patentable inventions (i) jointly invented (as
determined in accordance with United States patent law) by Bayer (or its
Affiliates) and CuraGen (or its Affiliates) pursuant to their activities
relating to this Agreement during the Term, and (ii) covered by any Claim; and
(B) all Know-How that Bayer (or its Affiliates) and CuraGen (or its Affiliates)
jointly make, create, develop, discover, conceive or reduce to practice pursuant
to their activities relating to this Agreement during the Term other than those
in inventions described in (A).
"Knowledge" means the knowledge, after due and reasonable investigation, of any
officer of the Party.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
6
"Know-How" means any information, data and materials, including, without
limitation, biological materials, such as cell lines, RNA, DNA, DNA fragments,
organisms, Proteins, polypeptides, plasmids and vectors not covered by a Claim,
that are owned or otherwise controlled by a Party or an Affiliate of a Party or
jointly by the Parties and/or their respective Affiliates.
"Lead Compound Evaluation Phase" means the phase in which all work necessary to
produce and evaluate a potential lead compound occurs.
"Lead Structures" means Compounds identified in the Target Screening Phase of
the Metabolic Program that meet pre-defined criteria set forth in the Research
Plan, and the expansion series developed within a Strategic Project.
"LIMS" means laboratory information management system.
"Marketing Cost" means the costs incurred by a Party or its Affiliates which are
attributable to the promotion, advertising and marketing of a Metabolic Program
Drug determined in a manner consistent with such Party's standard practices.
Marketing Costs shall include without limitation all costs related to Phase IV
studies but shall exclude Cost of Goods Sold, Development Costs and Selling
Costs.
"Metabolic Program" means the collaboration by Bayer and CuraGen on the
discovery and development of Metabolic Program Drugs in the CFA based on the
Qualified Targets provided by CuraGen, carried out in accordance with the
Research Plan.
"Metabolic Program Drug" means any therapeutic agent, the active ingredient in
which is a Small Molecule that (a) is identified on the basis of its interaction
with a Qualified Target in a Small Molecule or other screening assay, or (b) is
designed or developed using medicinal chemistry, combinatorial chemistry,
rational design techniques or other techniques to interact with a Qualified
Target. The term "Metabolic Program Drug" shall include Non-CFA Products and,
except as expressly provided to the contrary in Section 2.2(f), shall not
include any pharmaceutical product in which the active ingredient is (i) a
natural Protein, (ii) a vaccine, (iii) any antibody (whether polyclonal or
monoclonal, multiple or single chain, whole or fragment), any soluble receptor,
or fusion protein and the nucleic acid encoding any of the foregoing or (iv) a
nucleic acid sequence encoding an expressed gene.
"Metabolic Program Project Team" means, as applicable, the Metabolic Program
Target Prosecution Team, the Metabolic Program Target Selection Team, the
Metabolic Program Strategic Project Team or the Global Development Project Team.
"MSC" means [________________________________________________________].
"NDA" means a new drug application submitted for a Development Compound or
Protein Product in the Metabolic Program to the FDA.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
7
"NDA Approval" means approval of a Development Compound or Protein Product in
the Metabolic Program by the FDA, including, where appropriate, price approval
necessary for commercialization in a country.
"NDA Phase" means the phase in which a NDA is submitted for a Development
Compound or Protein Product in the Metabolic Program to the FDA.
"Net Capital Invested" means the total of (i) inventories and trade receivables
minus trade payables plus (ii) fixed assets
[____________________________________________________].
"Net Sales" means with respect to a Metabolic Program Drug, the gross amount
invoiced by a Party, its Affiliates and/or its Sublicensees on sales of the
Metabolic Program Drug to Third Parties, less the following items:
Trade, cash and quantity discounts actually allowed and taken with respect
to such sales;
Tariffs, duties, excises, sales taxes or other taxes imposed upon and paid
directly with respect to the import, export, production, sale, delivery or
use of the Metabolic Program Drug (excluding national, state or local taxes
based on income);
Amounts repaid or credited by reason of rejections, defects, recalls, or
returns or because of chargebacks, refunds, rebates or retroactive price
reductions; and
An allowance for distribution expenses (such as freight, transportation and
insurance expenses) and any other customary deductions attributable to the
sale of a Metabolic Program Drug and determined in a manner consistent with
such Party's standard practices.
Such amounts shall be determined from the books and records of the applicable
Party, its Affiliates and/or its Sublicensees.
Sales of Metabolic Program Drugs between a Party and its Affiliates or
Sublicensees, or among such Affiliates and Sublicensees, shall not be considered
Net Sales, but in such cases the Royalty Payments or Operating Income shall be
calculated on the Net Sales by such Affiliates or Sublicensees to a Third Party
who is not a Sublicensee. The obligation to pay Royalty Payments is imposed
only once with respect to the same unit of a Metabolic Program Drug.
In the event the Metabolic Program Drug is sold as part of a Combination
Product, the Net Sales from the Combination Product, for the purposes of
determining Royalty Payments or Operating Income, shall be determined by
multiplying the Net Sales of the Combination Product (as defined in the standard
Net Sales definition), during the applicable reporting period, by the fraction,
A/A+B, where A is the average sale price of the Metabolic Program Drug when sold
separately in similar quantities in finished form and B is the average sale
price of the other compounds having independent therapeutic activity included in
the Combination Product when sold separately in similar quantities in finished
form, in each case in the same country as the Combination Product during the
applicable reporting period or, if sales of both the Metabolic
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
8
Program Drug and the other compounds having independent therapeutic activity did
not occur in such period, then in the most recent reporting period in which
sales of both occurred in the same country as the Combination Product. In the
event that such average sale price cannot be determined for both the Metabolic
Program Drug and all other compounds having independent therapeutic activity
included in the Combination Product, Net Sales for the purposes of determining
Royalty Payments or Operating Income shall be calculated by multiplying the Net
Sales of the Combination Product by the fraction of C/C+D where C is the fair
market value of the Metabolic Program Drug and D is the fair market value of all
other compounds having independent therapeutic activity included in the
Combination Product. In such event, the selling Party shall in good faith make a
determination of the respective fair market values of the Metabolic Program Drug
and all other compounds having independent therapeutic activity included in the
Combination Product, and shall notify the other Party of such determination and
provide the other Party with data to support such determination. The other Party
shall have the right to review such determination and supporting data, and to
notify the selling Party if it disagrees with such determination. If the other
Party does not agree with such determination and if the Parties are unable to
agree in good faith as to such respective fair market values, then such matter
shall be resolved in accordance with Article X.
"Non-CFA" means any human disease or condition that is not included within the
CFA.
"Novel Protein" means a nucleic acid sequence of the full length coding sequence
of the protein it encodes where such sequence is significantly different from
nucleic acid sequences in the Public Domain. The full length coding sequence
will only be considered "significantly different if:
[_________________________________________________________________________].
"Operating Income" means Net Sales (but excluding Net Sales of Sublicensees) of
a Party and its Affiliates plus any revenues from any single-country co-
marketing and outlicensing or sublicensing revenue from Third Parties minus (i)
Development Costs (A) for which a Party has opted out and (B) which are
associated with a line extension, new indication, new dosage, new formulation or
new delivery mechanism of a Metabolic Program Drug, (ii) Marketing Costs, (iii)
Cost of Goods Sold, (iv) Selling Costs, (v) Overhead Costs, (vi) Cost of Net
Capital Invested, and (vii) miscellaneous costs appearing in the
Commercialization Annual Budget attributable to the Operating Income Product.
"Operating Income Product" means a Metabolic Program Drug with respect to which
the Parties are sharing Operating Income.
"Overhead Costs" means all operating expenses incurred by a Party or its
Affiliates in support of the activities which are part of Cost of Goods Sold,
Marketing Costs and Selling Costs to the extent not already counted therein
determined in a manner consistent with such Party's standard practices. Cost
elements generally included are:
. direct labor wages, related payroll taxes and employee benefits
. indirect labor wages, related payroll taxes and employee benefits
. depreciation
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
9
. taxes, other than income, franchise and sales related taxes
. insurance
. rent
. repairs and maintenance
. supplies, scrap and inventory expenses
. utilities
. factory administration expenses
. other similar allocable cost elements of factory overhead
. allocation of general and administrative expenses attributable to the
Metabolic Program determined in a manner consistent with such Party's
standard practices; provided, however that general and administrative
expenses of other business units of such Party shall not be allocated.
"Party" means Bayer or CuraGen.
"Parties" means Bayer and CuraGen.
"Patent Right" means a patent or patent application and all divisions,
continuations, continuations-in-part, reissues, reexaminations, extensions,
supplementary protection certificates and foreign counterparts thereof that are
owned or otherwise controlled by a Party.
"PathCalling" means CuraGen's yeast two-hybrid system for identifying protein
interactions.
"Pharmacogenomics Agreement" means the Pharmacogenomics Agreement dated on the
date hereof by and between CuraGen and Xxxxx XX.
"Pharmacogenomic Services" means (i) services relating to gene expression
profiling of animal and human cells in the presence of compounds to assess and
predict their pharmacological effectiveness and (ii) genotyping to identify the
genetic variations (SNPs and haplotypes) that predict differential drug response
and toxicity.
"Phase I" means the development phase in which human clinical trials to
determine the safety of a Development Compound are conducted.
"Phase II" means the development phase in which human clinical trials to
initially determine the efficacy of a Development Compound are conducted.
"Phase III" means the development phase in which large-scale human clinical
trials to obtain data necessary for submission to obtain regulatory approval of
a Development Compound are conducted.
"Phase IV" means any human trials of a Metabolic Program Drug which are not
planned to be included in the NDA filing with the FDA but which are in support
of marketing activities.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
10
"Pre-Clinical Development Phase" means the pre-clinical development phase
commencing with the acceptance by Bayer of a pre-clinical Development Candidate
and ending at the decision to advance a Development Compound to Phase I.
"Predictive Toxicogenomic Screen" means processing a Compound through the
predictive toxicity assay developed in the set-up phase of the Pharmacogenomics
Agreement.
"Program Director" means the research executive appointed by each Party to serve
as such Party's principal coordinator and liaison for the Metabolic Program.
"Protein" means a compound composed of a variety of amino acids joined by amide
linkages, including allelic variants thereof and post-translationally modified
variants thereof (e.g., glycosylated Proteins); provided, however that a Protein
shall not include (a) any peptide that is comprised of [_______] or fewer amino
acids and (b) any antibody (whether polyclonal or monoclonal, multiple or single
chain, whole or fragment), any soluble receptor, or fusion protein and the
nucleic acid encoding any of the foregoing.
"Protein Product" means a product (i) that interacts with a QT (ii) that is
derived from a Protein and (iii) that is in pre-clinical or clinical development
or is being commercialized.
"Public Domain" as used with reference to a nucleic acid sequence, means that
such sequence has been made available to the general public in any manner,
including without limitation (a) in a published scientific paper, (b) in an
issued patent or a published patent application, or (c) in a public nucleic acid
or protein database (e.g., GenBank, DBEST, etc.).
"Qualified Target" or "QT" means
[_______________________________________________].
"Qualified Target Class" means the following:
[___________________________________________]. Bayer shall furnish to CuraGen
all essential information available to Bayer with respect to such signature
motifs.
"Registration Phase" means the development phase subsequent to the first NDA
filing for a Development Compound up to the Development Compound's initial NDA
Approval.
"Research Plan" means the research plan attached as Exhibit C to this Agreement,
as such plan may be updated or amended pursuant to Section 2.1.
"Research Phase" means the Exploratory Research Phase and the Strategic Project
Phase.
"Restricted Target" means a Target Candidate to which CuraGen is prevented from
granting to Bayer the exclusive right under CuraGen Know-How or CuraGen Patent
Rights to exploit Metabolic Program Drugs identified using such Target Candidate
for the treatment of human diseases and conditions in the CFA.
"Right of First Negotiation" means that if CuraGen or an Affiliate wishes to
transfer rights to a Protein, Protein Product, Qualified Target, Development
Candidate or Development Compound
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
11
to a Third Party, CuraGen shall notify Bayer (a "Proposed Transfer"). Within
[_____________] of receipt of such notice, Bayer shall notify CuraGen whether it
wishes to enter into negotiations with respect to such Proposed Transfer. If
Bayer does not respond within such [_____________] period, or if Bayer notifies
CuraGen that it will not exercise its Right of First Negotiation with respect to
such Proposed Transfer, CuraGen or its Affiliates shall have no further
obligation to Bayer with respect to such Proposed Transfer. If Bayer notifies
CuraGen that it is exercising its Right of First Negotiation, Bayer and CuraGen
or its Affiliate shall enter into good faith negotiations for a transfer of the
Protein, Protein Product, Qualified Target, Development Candidate or Development
Compound to Bayer, on terms and conditions mutually agreeable to the Parties.
CuraGen or an Affiliate shall not discuss, negotiate with, transfer, or grant
any license or other right to any Third Party until [_____________] have elapsed
since Bayer gave notice of its decision to exercise its Right of First
Negotiation with respect to such Proposed Transfer.
"Royalty Product" means a Metabolic Program Drug for which a Party is receiving
Royalty Payments.
"Screenable Qualified Target" or "Screenable QT" means a Qualified Target which
is amenable to a Configured Assay for HTS.
"Screening Term" means the period commencing on the Effective Date and ending
on the date Bayer has completed eighty (80) screens of Qualified Targets, unless
terminated earlier (y) by Bayer pursuant to Section 2.5(c) or (z) by CuraGen
pursuant to Section 2.5(d); provided, however that the Screening Term shall in
any event end on the [__________] anniversary of the Effective Date.
"Selling Cost" means the costs which are incurred by a Party or its Affiliates
which are after the First Commercial Sale of a Metabolic Program Drug and which
are attributable to the sale of such Metabolic Program Drug determined in a
manner consistent with such Party's standard practices. Selling Costs shall
exclude Cost of Goods Sold, Development Costs and Marketing Costs.
"SeqCalling" means CuraGen's technology for identifying the mRNA transcripts in
a specific tissue.
"Small Molecule" means a compound that is non-peptidic or, if peptidic, is
comprised of no more than ten (10) amino acids, including, without limitation, a
compound that is a natural product or is developed using medicinal,
combinatorial, computational or other chemistry technologies.
"Stock Purchase Agreement" means the Stock Purchase Agreement between Xxxxx XX
and CuraGen dated as of the Execution Date.
"Strategic Project" means a project undertaken to work with the Lead Structures
[________________________________________________________].
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
12
"Strategic Project Phase" means the phase during which Bayer works with a Lead
Structure or Lead Structures
[________________________________________________________].
"Strategic Project Manual" means Bayer's publication "[______________________]"
attached hereto as Exhibit D, as the same may be amended or supplemented by
Bayer from time to time.
"Sublicensee" shall mean any Third Party to whom a sublicense has been validly
granted pursuant to this Agreement.
"Target Candidate" means any potential Qualified Target in CuraGen's database to
be submitted by CuraGen pursuant to Section 2.5 of this Agreement.
"Third Party" means any person who is not a Party or an Affiliate under this
Agreement.
"Toxicogenomic Reference Data" means the data generated by CuraGen in the set-up
phase of the Pharmacogenomics Agreement consisting of
[____________________________________].
"TRA" means Bayer's therapeutic research area.
"Unrecognized Protein" means a nucleic acid sequence of the full length coding
region where [__________] percent or more of the protein sequence is present in
the Public Domain but nevertheless is unrecognized because (a)
[____________________________________] is not already present in the Public
Domain (either because the Public Domain contains no annotation or where the
Program Directors agree that the Public Domain annotation is in error), and (b)
there is no documented annotation in the Public Domain relating the gene to the
CFA.
Section 1.2 Additional Definitions.
----------------------
Each of the following definitions is set forth in the section of this
Agreement indicated below:
Definitions Section
----------- -------
Agreement Preamble
Audited Party Section 4.5
Auditing Party Section 4.5
Bayer Preamble
Bayer Indemnified Parties Section 11.1(b)
Biological Materials Section 2.2(d)
Breaching Party Section 9.2
Commercialization Annual Budget Section 4.1(a)
Commercialization Reconciliation Section 4.1(a)
Compound Credit Section 4.1(b)
CuraGen Preamble
CuraGen Indemnified Parties Section 11.1(a)
Designated Inventions Section 5.3
Development Annual Budget Section 4.1(a)(iii)
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
13
Development Reconciliation Section 4.1(a)(iii)
Execution Date Preamble
Metabolic Program Strategic Project Team Section 2.4(d)
Metabolic Program Target Prosecution Team Section 2.4(c)
Metabolic Program Target Selection Team Section 2.4(b)
Non-Breaching Party Section 9.2
Non-CFA Product Section 2.2(b)
Overflow Date Section 4.1(b)(i)
Pharmacogenomic Project Agreement Preamble
Project Manager Section 2.4(e)
Proposed Transfer Section 3.7
Qualified Target Production Phase Section 2.5
Recovered Bayer Net Sales Section 5.4(a)
Recovered CuraGen Net Sales Section 5.4(a)
Royalty-Paying Party Section 4.4
Royalty Payment Section 4.2(a)
Royalty Recipient Section 4.4
Screened Qualified Target Section 2.5(a)
Strategic Project Leader Section 2.4(d)
Target Screening Phase Section 2.6(a)
Term Section 9.1
Article II
----------
Metabolic Program; Research Plan
--------------------------------
Section 2.1 Research Plan.
-------------
The Parties shall use commercially reasonable efforts to conduct the Metabolic
Program in accordance with the Research Plan. The Program Directors will review
the Research Plan on at least an annual basis and submit any proposed
modifications or updates to the Parties for their approval; provided, however
that any such modifications or updates shall not become effective until approved
by both Parties in writing. The Parties agree to review and consider any such
proposed modifications or updates on an expedited basis. Each Party agrees to
use commercially reasonable efforts to (i) undertake the responsibilities
assigned to such Party in the Research Plan, including, but not limited to, the
dedication of resources appropriate to such efforts and (ii) make available to
the other Party those resources set forth in the Research Plan.
Section 2.2 Metabolic Program - General.
---------------------------
(a) General. Each Party agrees to use commercially reasonable efforts to
carry out all work done in the course of the Metabolic Program in material
compliance with all applicable federal, state or local laws, regulations and
guidelines governing the conduct of such work, including, without limitation,
all applicable export and import control laws.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
14
(b) Non-CFA QTs, Compounds and Products. If a QT is used in a Non-CFA
indication and if a Compound identified in the Metabolic Program using such QT
is developed for a Non-CFA indication only (a "Non-CFA Product"), Bayer may at
its sole discretion perform research on or with such QT outside the CFA and
continue to develop such Non-CFA Product as a Metabolic Program Drug. In such
event, if Bayer offers CuraGen the opportunity to share Development Costs and
share the Operating Income or if CuraGen has identified the Non-CFA indication
by giving written notice to Bayer, CuraGen may, at its election exercised by
giving written notice to Bayer either within [___________] of Bayer's offer or
within [___________] of CuraGen's notice, as appropriate, share the Development
Costs relating to the Non-CFA Product as provided in Section 4.1(a)(ii) and
thereby receive a share of Operating Income as provided in Section 4.2(b) in
lieu of receiving Royalty Payments pursuant to Section 4.2(a); provided, however
that CuraGen's payment of the Development Costs associated with such Non-CFA
Product shall [_____________________________________________________]. If Bayer
does not offer CuraGen the opportunity to share Development Costs and share the
Operating Income or if CuraGen did not identify the non-CFA indication, then
CuraGen shall receive Royalty Payments pursuant to Section 4.2(a) with respect
to such Metabolic Program Drug without regard to the opt-out criteria in Section
4.1(b).
(c) CFA and Non-CFA Indication. If a Compound is developed for both a
Non-CFA indication and a CFA indication, the Compound shall be developed in the
Metabolic Program and deemed to be a Metabolic Program Drug. The Development
Costs associated with a Compound developed both for a Non-CFA indication and a
CFA indication shall count toward the calculation of CuraGen's [___________]
opt-out right under Section 4.1(b)(ii).
(d) Biological Materials. For the purposes of facilitating the conduct of
the Metabolic Program, each Party shall provide to the other Party, at its sole
expense, such animal or human tissues, cells, blood samples and other materials
("Biological Materials") specified from time to time in the Research Plan. The
Parties agree that: (i) all Biological Materials provided by one Party to the
other shall be used solely for research purposes in the Metabolic Program; (ii)
the Party providing such Biological Materials shall obtain (or cause its Third
Party collaborators to obtain or certify that they have obtained) all
appropriate and required consents from the source of such Biological Materials;
and (iii) Biological Materials provided by one Party to the other shall not be
made available by the receiving Party to any Third Party except pursuant to the
Metabolic Program or upon the prior written consent of the Party providing such
Biological Materials.
(e) Disclosure of CuraGen Know-How. During the Screening Term, CuraGen
(consistent with its applicable confidential disclosure obligations, if any)
shall promptly disclose to Bayer (i) all CuraGen know-how specified in the
Research Plan, and (ii) all CuraGen know-how not specified in the Research Plan
which CuraGen reasonably believes to be applicable to Target Candidates, QTs or
otherwise pertinent to the Metabolic Program. Without limiting the generality of
the foregoing, promptly following the Effective Date, the Program Directors
shall review CuraGen know-how in existence as of the Effective Date relevant to
the Metabolic Program to identify any potential Qualified Targets, with the
intention of placing all such Qualified Targets in the Metabolic Program.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
15
(f) Restrictions on CuraGen's Right to Develop Proteins. CuraGen may
develop and commercialize (either alone or with any Affiliate or Third Party)
any Proteins outside the Metabolic Program subject to the following conditions:
(i) During the Term, CuraGen shall have the obligation to promptly
report to Bayer that it is developing a Protein Product which
interacts with a QT which has been accepted into the Metabolic
Program.
(ii) During the Term, if (A) CuraGen discovers a Protein, (B)
CuraGen does not have a Protein Product relating to such
Protein in development and (C) Bayer has a Development Compound
that has received DP-1 approval and interacts with the same QT
as such Protein, then
[__________________________________________________________].
CuraGen shall receive 56% and Bayer shall receive 44% of the
Operating Income for such Protein Product.
(iii) During the Term, if, prior to the time CuraGen has filed an
NDA, it is determined that
[_____________________________________________]. CuraGen shall
receive 56% and Bayer shall receive 44% of the Operating Income
for such Protein Product.
[______________________________________________].
(iv) During the Term, if, prior to DP-1 approval for a Compound in
the Metabolic Program,
[_________________________________________].
(v) During the Term, [___________________________________________].
(vi) For purposes of clarity, it is hereby acknowledged and agreed
that nothing in this Section 2.2(f) is intended to restrict or
otherwise affect in any way CuraGen's right to develop and
commercialize antibodies (whether polyclonal or monoclonal,
multiple or single chain, whole or fragment), soluble
receptors, and fusion proteins and the nucleic acid encoding
any of the foregoing within or outside of the CFA.
Section 2.3 Technology Access.
-----------------
During the Term, CuraGen will provide Bayer and/or its Affiliates with GeneScape
access, including CuraTools and LIMS technology, to enable Bayer to view data
associated with the Metabolic Program. CuraGen will also provide Bayer with
access to CuraGen's proprietary GeneCalling and PathCalling experiments that are
part of the Metabolic Program and to the public genomic, EST and protein
databases maintained within GeneScape. Such access shall be granted pursuant to
the terms of the licenses set forth in Exhibit E attached hereto.
Section 2.4 Management of Metabolic Program.
-------------------------------
(a) Program Directors. Each of Bayer and CuraGen shall appoint at its
sole discretion a research scientist to serve as a Program Director for the
Metabolic Program who will be replaceable at the will of such Party. The Bayer
Metabolic Program Director will commit substantially all of his/her time to the
Program and will be in residence at CuraGen for the equivalent of at least six
(6) months of each year in order to facilitate close and direct collaboration.
The Bayer Metabolic Program Director will have access to the offices and
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
16
personnel of CuraGen to the extent necessary to facilitate close and direct
collaboration. The CuraGen Metabolic Program Director will commit substantially
all of his/her time to the Program. The CuraGen Metabolic Program Director will
have access to the offices and personnel of Bayer to the extent necessary to
facilitate close and direct collaboration. The Program Directors will jointly
oversee the conduct of the Metabolic Program and will be responsible for
recommending to the Parties any changes to the Metabolic Research Plan.
Additional individuals from both Parties will be involved as each Party
determines is appropriate. The Program Directors will work with the Metabolic
Program Project Teams described below to recommend the operational decisions
required to implement the Research Plan. The Program Directors shall oversee the
process of acceptance of Qualified Targets from CuraGen's metabolic disease
research program through analysis of data generated by such research, and of the
disease/therapeutic hypotheses of Target Candidates, and shall designate the
Qualified Targets based on recommendations of the Metabolic Program Target
Selection Team. To ensure that the process of selection is orderly and
efficient, the criteria for Qualified Target selection will be guided by the
definitions set forth in the Research Plan, unless such a Qualified Target is
otherwise approved by the Bayer Program Director. The Program Directors shall
provide jointly-prepared monthly spreadsheets to the Parties within
[_____________] days after the end of each calendar month and jointly-prepared
semi-annual reports within [_____________] after the end of each April and
October summarizing the information included in the monthly spreadsheets for
such calendar year. The formats for such spreadsheets and reports shall be
agreed upon by the Program Directors.
(b) Metabolic Program Target Selection Team. The Metabolic Program
Directors, in consultation with Bayer, will appoint a Metabolic Program Target
Selection Team, consisting of an equal number of representatives from both Bayer
and CuraGen. The Metabolic Program Target Selection Team will provide to the
Metabolic Program [_______________________________]. In addition to the
Metabolic Program Directors, Bayer and CuraGen will commit to the Metabolic
Program Target Selection Team [_______________________], and Bayer will commit
[_______________________________]. The composition and makeup of the team will
be reviewed yearly and recommendations for change will be made jointly by the
Program Directors as they deem necessary. CuraGen shall grant the Metabolic
Program Target Selection Team the technology access set forth in Section 2.3 for
the purposes of reviewing and selecting Qualified Targets and for any further
purposes of the Metabolic Program, as well as access to CuraGen personnel to
enable the Team to identify Target Candidates. The Metabolic Program Target
Selection Team will make recommendations to the Metabolic Program Directors
concerning Target Candidates and Qualified Targets that should move forward in
the program. The Bayer Metabolic Program Director shall decide which Target
Candidates and Qualified Targets shall move forward and shall so notify the
Metabolic Program Target Selection Team. The Metabolic Program Target Selection
Team will be responsible for the following:
(i) Determining which of the tissue banks at CuraGen and Bayer will
serve as resources for reagents
[________________________________________].
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
17
(ii) Recommending potential Qualified Targets to be investigated
further using CuraGen's technologies, information systems,
model systems, databases, and disease expertise to generate
Qualified Targets. The Metabolic Program Target Selection Team
will review such data, and as the program evolves, determine
whether to conduct extended studies.
(iii) Ensuring that the QTs are delivered as sequenced full-length
cDNA in vectors of Bayer's choice which shall be reasonably
acceptable to CuraGen.
(c) Metabolic Program Target Prosecution Teams. Bayer and CuraGen will
appoint two Metabolic Program Target Prosecution Teams, one for obesity and one
for diabetes, each of which shall consist of appropriate scientists from Bayer
and CuraGen. Each Metabolic Program Target Prosecution Team will be headed by a
Bayer representative, will include the Metabolic Program Directors from Bayer
and CuraGen and will report directly to the respective directors of diabetes and
obesity research at Bayer. Each Metabolic Program Target Prosecution Team will
be responsible for the following:
(i) after selection of each Qualified Target, preparing a detailed
target project plan;
(ii) managing the Exploratory Research Phase,
[_______________________];
(iii) before initiation of assay development, requesting CuraGen to
do SNP mining and allele frequency analysis of SNPs across
relevant disease populations approved by the Metabolic Program
Target Prosecution Team; and
(iv) through the Bayer and CuraGen Metabolic Program Directors,
directing CuraGen to conduct Predictive Toxicogenomics Screens
of Compounds derived from HTS and lead optimization.
Bayer in its sole discretion shall have the right to decide
whether or not to continue to attempt to screen a QT.
(d) Metabolic Program Strategic Project Team. Each Metabolic Program
Strategic Project Team will be chaired by a Bayer-approved leader ("Strategic
Project Leader"). The composition of each Metabolic Program Strategic Project
Team will vary as the Strategic Project proceeds and will be decided by the
Strategic Project Leader. Each Metabolic Program Strategic Project Team will be
composed of representatives of Bayer, the number of which will be determined by
Bayer in its discretion, and a minimum of two (2) representatives of CuraGen.
The duties and responsibilities of each Metabolic Program Strategic Project Team
shall be as set forth in the Strategic Project Manual. While CuraGen's
representatives to each Metabolic Program Strategic Project Team will have the
right to participate in all meetings of such Metabolic Program Strategic Project
Team, Bayer in its sole discretion shall have the right to make all decisions
relating to the Strategic Project Phase.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
18
(e) Global Development Project Team. Each Global Development Project Team
will be chaired by a Bayer-approved leader ("Project Manager"). The composition
of each Global Development Project Team will vary and will be decided by the
Project Manager. Each Global Development Project Team will be composed of
representatives of Bayer, the number of which will be determined by Bayer in its
discretion. During the Pre-Clinical Development Phase, Clinical Development
Phase and Commercialization Phase, CuraGen shall appoint two (2) representatives
to each Global Development Project Team relating to (i) Development Compounds in
connection with which CuraGen is participating in the Development Costs and (ii)
Metabolic Program Drugs in connection with which CuraGen has not opted out of
the Development Costs. CuraGen's representatives to such Global Development
Project Teams shall have the right to participate in all meetings of such Global
Development Project Teams and shall be provided with the opportunity to be
informed of and comment on the development, clinical, regulatory and marketing
activities related to the relevant Development Compounds or Metabolic Program
Drugs; provided, however that Bayer shall have the right to make all decisions
relating to such Global Development Project Teams and shall have the right to
make all decisions relating to such Development Compounds and Metabolic Program
Drugs. During the Clinical Development Phase and Commercialization Phase,
CuraGen shall be permitted to appoint one (1) representative to reside at Bayer,
at CuraGen's sole discretion, for at least six (6) months of each year.
(f) Consensus Determinations; Dispute Resolution. The Metabolic Program
Target Selection Team and Metabolic Program Target Prosecution Teams will decide
matters appropriate to the scope of their responsibilities on a consensus basis.
If a matter cannot be resolved on a consensus basis, and the matter is not left
to Bayer's discretion, then it will be referred to the Metabolic Program
Directors for resolution. In the event that the Metabolic Program Directors are
unable to reach agreement on any matter, the issue will be referred for
resolution to an executive vice president of CuraGen and to the Bayer TRA head
for diabetes and obesity and, in the event of an inability of these individuals
to reach agreement, to the president of CuraGen and to the head of worldwide
pharmaceutical research at Bayer. If these two individuals are unable to resolve
the matter and the matter relates to a Designated Scientific Issue, the Parties
will resolve that matter through the use of an expedited mediation process, in
which the Parties first try to agree on a mutually acceptable scientist to serve
as the mediator. Failing mutual agreement on a single scientist, each Party will
appoint a scientist not affiliated with such Party and the two so selected will
pick a third unaffiliated scientist. The mediator(s) will review the disputed
matter on an expedited basis, considering the relevant data, standards
established by this Agreement and the Research Plan and relevant precedents. The
decision of the mediator(s) will be binding on the Parties. Notwithstanding the
foregoing, Bayer will retain the sole right to determine whether a Qualified
Target, Compound or Development Compound should continue to be developed.
Section 2.5 Qualified Target Production Phase.
---------------------------------
(a) General. During the Screening Term, CuraGen will use commercially
reasonable efforts to produce from its metabolic disease research program a
total of eighty (80) Qualified Targets which pass Bayer's high-throughput
screening ("Screened Qualified Targets").
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
19
All then-current technologies of CuraGen shall be brought to bear, including
without limitation CuraGen's GeneCalling, SeqCalling, and PathCalling
technologies utilizing disease models, drug response models, large scale data
mining (genomic, transcript and pathways) and human genetics. Each year over the
first [___________] Contract Years of the Screening Term, CuraGen will use
commercially reasonable efforts to produce from its metabolic disease research
program Screenable Qualified Targets, and in any event a minimum of
[___________] Screenable Qualified Targets in such Contract Year (the "Qualified
Target Production Phase"). After CuraGen produces a Target Candidate or a QT,
CuraGen shall promptly submit it to Bayer. No QT may be delivered by CuraGen to
Bayer if it is a Restricted Target unless agreed upon by Bayer. If CuraGen
delivers fewer than [___________] Screenable Qualified Targets in any such
Contract Year, it shall deliver additional Qualified Targets (above any amounts
due to be delivered in such Contract Year) in the following Contract Year until
the deficit has been filled. If CuraGen delivers more than [___________]
Screenable Qualified Targets in any of the first [___________] Contract Years,
then to the extent such excess is not credited to correct a delivery deficit in
the preceding Contract Year, the excess will be counted toward subsequent
Contract Years' minimums. Once eighty (80) Qualified Targets have been screened,
CuraGen may upon mutual agreement of the Parties continue to deliver Screenable
Qualified Targets but shall not be required to do so.
(b) Bayer's Right to Extend CuraGen's Obligation to Provide QTs. Bayer
shall have the option to require CuraGen to use commercially reasonable efforts
to produce a minimum of [___________] Screenable Qualified Targets in [_______]
if, at the end of[___________], Bayer has not completed eighty (80) screens of
Qualified Targets, such extension to continue until the earlier of (i) such time
as Bayer has completed eighty (80) screens of Qualified Targets or (ii) the end
of[___________]. Bayer shall exercise the foregoing option by providing written
notice of such extension to CuraGen no later than the end of [___________].
(c) Bayer's Right to End Screening Term. Bayer shall have the right to
terminate the Screening Term if (i) by the end of [___________] fewer than [__]
Screenable Qualified Targets have been provided to Bayer, (ii) by the end of
[___________] fewer than [__] Screenable Qualified Targets have been provided to
Bayer or (iii) by the end of [___________] fewer than [__] Screenable Qualified
Targets have been provided to Bayer. In order to exercise its right to terminate
under this subsection, Bayer shall provide written notice of such termination to
CuraGen within [_____] after the end of the applicable Contract Year, such
termination to be effective immediately upon provision of such notice.
Notwithstanding the termination of the Screening Term, the Metabolic Program
shall continue with respect to any Screened Qualified Targets.
(d) CuraGen's Right to End Screening Term.
CuraGen shall have the right to terminate the Screening Term if (i) by the end
of [___________] more than [__] Qualified Targets have been provided to Bayer
and by the end of [___________] fewer than [__] Qualified Targets have been
screened by Bayer, (ii) by the end of [___________] more than [__] Qualified
Targets have been provided to Bayer and by the end of [___________] fewer than
[__] Qualified Targets have been screened by Bayer or (iii) by the end of
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
20
[___________] more than [__] Qualified Targets have been provided to Bayer and
by the end of [___________] fewer than [__] Qualified Targets have been screened
by Bayer. CuraGen shall not be entitled to terminate the Screening Term if
Bayer has used commercially reasonable efforts to set up screens for the
Qualified Targets. In order to exercise its right to terminate under this
subsection, CuraGen shall provide written notice of such termination to Bayer
within [___________] after the end of the applicable [___________], such
termination to be effective immediately upon provision of such notice.
Notwithstanding the termination of the Screening Term, the Metabolic Program
shall continue with respect to any Screened Qualified Targets.
(e) Identification of Restrictions. CuraGen shall use commercially
reasonable efforts to identify at the earliest possible stage of the process of
reviewing Target Candidates the proprietary status of any gene sequence encoding
a Target Candidate (e.g., whether it is derived from public domain sources) as
well as any potential restrictions that would limit or otherwise affect Bayer's
right to exploit (i) QTs in all human diseases and conditions and (ii) Metabolic
Program Drugs identified or developed using the Qualified Targets, and CuraGen
shall promptly communicate their findings to Bayer. CuraGen will not
[______________________________].
(f) Patent Review. Until a Compound associated with a QT is in the Pre-
Clinical Development Phase, CuraGen shall use commercially reasonable efforts to
monitor patent issuances and patent applications of Third Parties relevant to
the associated QT and shall advise Bayer biweekly of the results of such
efforts. In addition, when a QT is delivered by CuraGen to Bayer, CuraGen shall
provide Bayer at that time with a written report relating to the following:
CuraGen Patent Rights covering the QT; agreements between a Third Party and
CuraGen or its Affiliates regarding the QT; and any patents or patent
applications of Third Parties relevant to the QT which are known to CuraGen.
(g) Returned Target. If, prior to a Compound being designated a
Development Compound, Bayer or CuraGen learns or discovers that the use of the
related Screened Qualified Target infringes one or more claims of an issued
patent in the country in which the use of such Screened Qualified Target is
expected to occur and such Screened Qualified Target has not reverted to CuraGen
pursuant to Section 3.7(c), then Bayer shall have the right to return such
Screened Qualified Target to CuraGen and that Screened Qualified Target shall no
longer count as a Screened Qualified Target which CuraGen is obligated to
deliver hereunder.
Section 2.6 Target Screening Phase.
----------------------
(a) General. Bayer shall use commercially reasonable efforts to express
the protein derived from the provided QTs, develop HTS Configured Assays and
screen the Qualified Targets against Bayer's compounds (the "Target Screening
Phase"). Assuming CuraGen delivers an adequate number of Qualified Targets,
Bayer will evaluate at least [______] Qualified Targets each [_____________] and
shall use commercially reasonable efforts to set up a screen for at least
[______] Qualified Targets each [_____________]. CuraGen shall perform
Predictive Toxicogenomic Screens and Pharmacogenomic Services as deemed
necessary by the Metabolic Program Target Prosecution Team or a Metabolic
Program Strategic Project Team. As deemed necessary by Bayer in its sole
discretion, Bayer will perform assays to assess the
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
21
effectiveness of Lead Structures. Before initiation of assay development,
CuraGen will, at the discretion of the Metabolic Program Target Selection Team
and at CuraGen's cost, perform SNP mining and allele frequency analysis of SNPs
of the Qualified Targets across relevant disease populations.
(b) Orphan GPCRs. If CuraGen identifies an orphan GPCR, Bayer and
CuraGen, at their discretion, will subject it to deorphaning strategies. If
Bayer generates a Configured Assay on the GPCR, such GPCR shall be deemed to be
a Screenable Qualified Target delivered by CuraGen to Bayer in the Contract Year
in which Bayer generated the Configured Assay.
(c) Selections of QTs. During the Screening Term, the Metabolic Program
Target Selection Team shall review the Target Candidates presented by CuraGen on
a continuing basis to identify those Qualified Targets which have the highest
potential to develop a Metabolic Program Drug. Bayer shall at its sole
discretion have the right to select as many QTs as it chooses to proceed to
screening, subject to Section 2.6(a).
(d) Hits and Lead Structures. Bayer shall use commercially reasonable
efforts to find Hits, advance the Hits to Lead Structures and advance the Lead
Structures to the Strategic Project Phase using the guidelines set forth in the
Strategic Project Manual.
Section 2.7 Strategic Project Phase.
-----------------------
(a) General.
(i) Lead Optimization. Bayer shall use commercially reasonable
efforts to advance the Lead Structures chosen in the
Exploratory Research Phase meeting the minimum criteria set
forth in the Strategic Project Manual (as modified by the
Research Plan) into Development Candidates.
(ii) Secondary Screening. Strategic Projects shall include, but
shall not be limited to,
[_________________________________________________].
(b) CuraGen Obligations. CuraGen shall provide additional GeneCalling
expression profiling, characterize the pharmacogenomic properties of the Lead
Structures in appropriate cellular, non-mammalian or animal disease models, and
provide additional pharmacogenomic validation for the Qualified Target in
appropriate human cellular models at each Metabolic Program Strategic Project
Team's discretion. At each Metabolic Program Strategic Project Team's
discretion, CuraGen shall provide at its cost Predictive Toxicogenomic Screens.
(c) Operation. The operation of Strategic Projects and the Strategic
Project Phase shall be governed by the Strategic Project Manual and the Research
Plan.
(d) Termination. Bayer may terminate a Strategic Project at any time and
in its sole discretion upon providing written notice of same to CuraGen.
Section 2.8 Pre-Clinical Development Phase.
------------------------------
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
22
(a) Bayer shall use commercially reasonable efforts during the Pre-
Clinical Development Phase to advance each Development Compound to Phase I using
the guidelines set forth in the Development Manual; provided, however that the
decision to advance any Development Compound to Phase I shall be up to Bayer in
its sole discretion.
(b) Bayer may end work on a Development Compound in the Pre-Clinical
Development Phase at any time and in its sole discretion upon providing written
notice of same to CuraGen.
Section 2.9 Clinical Development Phase.
--------------------------
(a) Bayer shall use commercially reasonable efforts during the Clinical
Development Phase to advance each Development Compound from Phase I through
the NDA Phase using the guidelines set forth in the Development Manual;
provided, however that the decision to advance any Development Compound to
any phase of the Clinical Development Phase shall be up to Bayer in its
sole discretion.
(b) Bayer may end work on a Development Compound in the Clinical
Development Phase at any time and in its sole discretion upon providing written
notice of same to CuraGen.
Section 2.10 Commercialization Phase.
-----------------------
Bayer shall use commercially reasonable efforts during the Commercialization
Phase to successfully market each Metabolic Program Drug; provided, however that
the decision how to market and whether to continue to market such Metabolic
Program Drug shall be up to Bayer in its sole discretion.
Article III
-----------
Bayer and CuraGen Rights and Obligations
----------------------------------------
Section 3.1 License Grant with Respect to CuraGen Know-How and CuraGen
----------------------------------------------------------
Patent Rights.
-------------
(a) License. Subject to the terms and conditions of this Agreement,
including without limitation, the financial obligations under Article IV,
CuraGen hereby grants to Bayer and its Affiliates during the Term, a worldwide,
exclusive license under CuraGen's rights to CuraGen Know-How and CuraGen Patent
Rights, (i) to research, develop, make and use the QTs delivered hereunder and
which have not reverted to CuraGen pursuant to Section 3.7 and (ii) to make,
have made, manufacture, produce, develop, market, import, export, use, have
used, offer for sale, sell and have sold Compounds, Development Compounds and
Metabolic Program Drugs.
(b) Sublicense Rights. Bayer and its Affiliates shall have the right to
grant sublicenses of licenses granted to it in Section 3.1(a) of this Agreement
to any Third Party; provided, however that Bayer shall ensure that each such
Sublicensee shall consent to be bound by the terms of this Agreement as a
Sublicensee and to the same extent as Bayer. Bayer agrees to inform CuraGen, in
confidence, of each sublicense granted, and any modification or termination
thereof, within [__________] after the modification, or termination of a
sublicense.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
23
Section 3.2 License Grant with Respect to Bayer Know-How and Bayer Patent
-------------------------------------------------------------
Rights.
------
(a) Research License. During the Screening Term, Bayer hereby grants to
CuraGen, a non-exclusive, royalty-free license, under Bayer Patent Rights
and Bayer Know-How, solely to the extent necessary for CuraGen to perform
its obligations under the Research Plan.
(b) Commercialization License. Subject to the terms and conditions of
this Agreement, during the Term, Bayer hereby grants to CuraGen and its
Affiliates a royalty-free, worldwide, exclusive license (i) to make, have made,
manufacture, produce, develop, market, import, export, use, have used, offer for
sale, sell and have sold any Target Candidates or Qualified Targets that have
reverted to CuraGen pursuant to Section 3.7 hereof and any Development Compounds
that have reverted to CuraGen pursuant to Section 3.7 hereof only for use in the
CFA and (ii) to use any Configured Assay owned by Bayer necessary or useful for
the license granted in (i) above pursuant to Section 3.7(c) and (d) for research
purposes only, such use to be subject to Section 3.3.
(c) Sublicense Rights for Commercialization License. CuraGen and its
Affiliates shall have the right to grant sublicenses of the license granted
to it in Section 3.2(b) of this Agreement to any Third Party; provided,
however that CuraGen shall ensure that each such Sublicensee shall consent
to be bound by the terms of this Agreement as a Sublicensee and to the same
extent as CuraGen. CuraGen agrees to inform Bayer, in confidence, of each
sublicense granted, and any modification or termination thereof, within
[__________] after the modification, or termination of a sublicense.
Section 3.3 Use of Configured Assays.
------------------------
Neither CuraGen nor its Affiliates shall, without the written consent of Bayer,
provide a Configured Assay owned by Bayer to any Third Party (other than a fee-
for-service screen provider) and CuraGen agrees that Configured Assays will only
be used to fulfill this Agreement and for no other purpose and further agrees
not to cause or permit reverse engineering of any Configured Assay.
Section 3.4 Retained Rights; Ownership.
--------------------------
(a) Bayer Retained Rights. All of Bayer's rights to Bayer Know-How and
Bayer Patent Rights not specifically licensed to CuraGen under this Agreement
and Bayer's rights to Compounds which are not specifically licensed to CuraGen
and are discovered by Bayer through the use of QTs under this Agreement, shall
be retained by Bayer.
(b) CuraGen Retained Rights. All of CuraGen's rights to CuraGen Know-How
and CuraGen Patent Rights which are not specifically licensed to Bayer under
this Agreement shall be retained by CuraGen.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
24
Section 3.5 CuraGen Co-Promotion Rights.
----------------------------
Promptly following the occurrence of a DP-5 approval with respect to any
Metabolic Program Drug, the Parties agree to enter into good faith negotiations
to conclude an agreement pursuant to which CuraGen will obtain rights to co-
promote such Metabolic Program Drug in the United States. Such agreement will
address relevant terms and conditions such as
[______________________________________]. In any event, Bayer shall pre-approve
and have sole authority to disapprove any Marketing Costs to be incurred by
CuraGen in connection with a Metabolic Program Drug.
Section 3.6 Ownership Rights.
----------------
(a) CuraGen Ownership. CuraGen owns and shall continue to own all Target
Candidates and Qualified Targets.
(b) Bayer Ownership. Bayer owns and shall continue to own all Development
Candidates, Development Compounds and Metabolic Program Drugs. Bayer in
its sole discretion shall have the right to sublicense to Third Parties any
Development Compounds or Metabolic Program Drugs that have not reverted to
CuraGen pursuant to Section 3.7 hereof.
Section 3.7 CuraGen Reversionary Rights.
---------------------------
(a) In the event that any Target Candidate is not accepted as a Qualified
Target on or before [__________] from the date such Target Candidate is
presented to the Program Directors for review in accordance with Section 2.2(e)
hereof, all rights to such Target Candidate shall revert to CuraGen.
(b) At the end of the Screening Term, rights to unscreened Qualified
Targets will revert to CuraGen; provided, however that no unscreened Qualified
Target will revert to CuraGen until Bayer has had at least [__________] to set
up a screen for such Qualified Target, unless the Screening Term has been
terminated pursuant to Section 2.5(d), in which case rights to such Qualified
Targets shall immediately revert to CuraGen.
(c) In the event Bayer does not advance a Compound to the Strategic
Project Phase within [______________] of having screened the relevant Qualified
Target (or [______________] if the Qualified Target has non-CFA indications),
rights to such Qualified Target shall revert to CuraGen. Each Party shall
promptly disclose to the other Party new evidence suggesting that a Screened
Qualified Target which has reverted to CuraGen might be efficaciously advanced
to the Strategic Project Phase. If Bayer subsequently notifies CuraGen that
Bayer wishes to advance any Screened Qualified Target that has reverted to
CuraGen to the Strategic Project Phase
[________________________________________________________].
(d) If Bayer (i) discontinues a Strategic Project and discontinues all
work with respect to the relevant Qualified Target or (ii) abandons a
Development Candidate for all indications, CuraGen shall have rights to the
relevant Qualified Target but not the related Compounds, subject to the
conditions set forth in this subsection. If CuraGen has partially funded
Development Costs with respect to a Development Compound and Bayer has decided
to abandon such Development Compound for other than toxicological or adverse
event reasons, then Bayer
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
25
shall provide CuraGen with an exclusive license to the Development Compound only
for use in the CFA, and Bayer will also provide all existing essential data and
information related to the Development Compound necessary for an IND, subject to
the conditions set forth herein; provided, however that
[_________________________________________________________]. Bayer shall use
commercially reasonable efforts to promptly file a relevant patent application.
If Bayer abandons a Development Compound for toxicological or adverse event
reasons and CuraGen identifies a subset of a population for which Bayer would
not have abandoned the Development Compound for toxicological or adverse event
reasons and Bayer agrees that it would not have abandoned the Development
Compound for such subset of a population for toxicological or adverse event
reasons but rather for some other reason, Bayer shall grant CuraGen the license
set forth in the preceding sentence; provided, however that the license shall be
limited to such subset of a population. If CuraGen, an Affiliate of CuraGen or a
Third Party develops the Development Compound, Bayer shall have the right to
Royalty Payments or the right to receive a share of the Operating Income as set
forth in Section 4.2. Each Party shall promptly disclose to the other Party new
evidence suggesting that a Development Compound which has reverted to CuraGen
could be further developed in the Metabolic Program. If Bayer subsequently
notifies CuraGen that Bayer wishes to develop the Development Compound and
CuraGen or an Affiliate has not transferred the Qualified Target or Development
Compound to a Third Party, rights of the Qualified Target and Development
Compound shall revert to Bayer under the Metabolic Program and shall remain with
Bayer unless subsequently abandoned by Bayer; in such event, CuraGen shall
provide Bayer with all existing essential data and information relating to the
Development Compound. If Bayer exercises this right, Bayer shall reimburse
CuraGen [_____] of the Development Costs CuraGen has incurred with respect to
such Development Compound until the date Bayer exercised its right. CuraGen or
an Affiliate shall offer Bayer a Right of First Negotiation before transferring
any rights to a Qualified Target or Development Compound to a Third Party.
Article IV
----------
Financial Provisions
--------------------
Section 4.1 Costs of Metabolic Program.
--------------------------
(a) Generally.
(i) All costs and expenses of the Metabolic Program relating to
the Qualified Target Production Phase
[______________________________________].
(ii) All costs and expenses of the Metabolic Program relating to
the Target Screening Phase and the Strategic Project Phase
[______________________________________].
(iii) All Development Costs of the Metabolic Program relating to the
Pre-Clinical Development Phase, Clinical Development Phase and
Commercialization Phase
[_____________________________________].
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
26
(iv) Each Contract Year, Bayer shall set an annual budget for the
Development Costs for the Pre-Clinical Development Phase,
Clinical Development Phase and Commercialization Phase of the
Metabolic Program for those Compounds for which CuraGen has not
opted out (the "Development Annual Budget"). Bayer shall
receive input from CuraGen when setting the Development Annual
Budget; provided, however that the Development Annual Budget
shall be at Bayer's sole discretion. Each calendar month during
such Contract Year, within [________] of the end of such
calendar month CuraGen shall remit payment to Bayer for
CuraGen's share of such Development Costs based on the
Development Annual Budget. Each Contract Quarter during such
Contract Year, within [____________] of the end of such
Contract Quarter Bayer shall prepare and provide to CuraGen an
accounting of Bayer's actual Pre-Clinical Development Phase,
Clinical Development Phase and Commercialization Phase
Development Costs for those Compounds for which CuraGen has not
opted out ("Development Reconciliation"). Within
[_____________] of the preparation of the Development
Reconciliation, CuraGen shall remit payment to Bayer or Bayer
shall remit payment to CuraGen an amount equal to the
difference between CuraGen's share of the Development Annual
Budget and the Development Reconciliation for such Contract
Quarter.
(b) CuraGen Opt-Out.
(i) On or after the date that CuraGen has incurred [____________]
in Development Costs in the Metabolic Program (excluding
Development Costs which are associated with a line extension,
new indication, new dosage, new formulation or new delivery
mechanism of a Metabolic Program Drug and any other Development
Costs expressly excluded in this Agreement) (the "Overflow
Date"), Bayer shall send CuraGen written notice thereof. Within
[____________] of CuraGen's receipt of such notice from Bayer,
CuraGen at its sole discretion may, by written notice to Bayer,
opt not to share the Development Costs for certain or all of
the Development Compounds which are in the Pre-Clinical
Development Phase or the Clinical Development Phase as of the
Overflow Date; provided, however that CuraGen shall pay the
Development Costs for such Development Compounds to complete
the specific phase the Development Compounds are in as of the
Overflow Date. For each Metabolic Program Drug developed from
the Development Compound for which CuraGen has opted not to
share additional Development Costs, CuraGen shall share the
Operating Income for any Metabolic Program Drug developed from
such Development Compound in accordance with Section 4.2, and
CuraGen shall not have a further opportunity to share the
Development Costs for such Development Compounds. For any
Compound entering the Pre-Clinical Development Phase after the
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
27
Overflow Date, then within [____________] of such Compound
entering the Pre-Clinical Development Phase, CuraGen at its
sole discretion may, by written notice to Bayer, opt out of
the Development Costs associated with such Compound. For each
Metabolic Program Drug developed from each such Compound for
which CuraGen has opted not to share Development Costs,
CuraGen shall receive Royalty Payments in accordance with
Section 4.2, and CuraGen shall not have a further opportunity
to share Development Costs on such Compound.
(ii) Subject to other provisions in this Agreement, including
without limitation Section 4.1(b)(i) above, each Contract
Year, CuraGen shall be obligated to participate in the
Development Costs associated with [___________] Compounds
entering the Pre-Clinical Development Phase. CuraGen may at
any time voluntarily accept more than [_____] Compounds in
such Contract Year. Beginning in [____________] and ending in
[____________], if in any Contract Year Bayer advances fewer
than [__________] Compounds to the Pre-Clinical Development
Phase, then the difference between [_________] and the number
of Compounds actually advanced by Bayer shall be applied to
the number of Compounds CuraGen is obligated to accept in
subsequent Contract Years (the "Compound Credits"). Such
Compound Credits shall be cumulative for each Contract Year
beginning in [____________]. The number of Compound Credits
shall be reduced (but not below zero) each Contract year by
the number of Compounds advanced by Bayer in excess
[_________]. If more than [_____] Compounds have entered the
Pre-Clinical Development Phase in a Contract Year and the
excess over [__________] Compounds exceeds the number of
Compound Credits, CuraGen at its sole discretion may, by
giving written notice to Bayer, elect not to pay the Pre-
Clinical Development Phase Development Costs and subsequent
Development Costs associated with any or all of the excess
Compounds entering the Pre-Clinical Development Phase in such
Contract Year, in which case CuraGen shall receive Royalty
Payments pursuant to Section 4.2 for any Metabolic Program
Drugs developed from such Compounds.
(iii) If CuraGen is not participating in the development of a Non-
CFA Product pursuant to Section 2.2(b), then CuraGen shall
have no further obligation to pay any Development Costs for
such Non-CFA Product. If CuraGen is not so participating, then
for each Metabolic Program Drug developed from such Non-CFA
Product, CuraGen shall receive Royalty Payments pursuant to
Section 4.2 for any such Metabolic Program Drugs.
Section 4.2 Royalty Payments; Operating Income.
----------------------------------
(a) Royalty Payments.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
28
If Bayer or an Affiliate markets a Metabolic Program Drug and CuraGen did not
fund any of the Development Costs with respect thereto, then CuraGen shall be
entitled to Royalty Payments with respect to such drug. If CuraGen or an
Affiliate markets a Metabolic Program Drug and CuraGen received reversionary
rights pursuant to (i) Section 3.7(c) or (d) in connection with the related
Qualified Target or (ii) Section 3.7(d) in connection with the related
Development Compound before Bayer completed the Pre-Clinical Development Phase,
then Bayer shall be entitled to Royalty Payments with respect to such drug. As
used in this Agreement, "Royalty Payments" means the following:
. [___]% of the first $[_______] of Annual Sales Volume
. [___]% of the next $[_______] of Annual Sales Volume up to $[_______]
. [___]% of the next $[_______] of Annual Sales Volume up to $[_______]
. [___]% of the next $[_______] of Annual Sales Volume up to $[_______]
. [___]% of the next $[_______] of Annual Sales Volume up to $[_______]
. [___]% of Annual Sales Volume over $[_______]
Royalty Payments will be owed from the date of the First Commercial Sale of
a Royalty Product in a given country and continuing with respect to Net Sales of
such Royalty Product sold in such country for a period of [_______]; provided,
however, that such obligations to make the Royalty Payments shall continue for
an additional period not to exceed [_______] following the [__________________]
the date of such First Commercial Sale with respect to a Royalty Product that
contains an active ingredient, the use or sale of which is covered by a Patent
Right in such country that precludes the use or sale of such active ingredient
by others in such country.
With respect to any Metabolic Program Drug for which a Party is receiving
Royalty Payments, the other Party will be entitled to 100% of the Operating
Income.
For purposes of determining the Annual Sales Volume category in which a
given increment of Net Sales falls, all Net Sales of such Metabolic Program Drug
in all countries during the given Contract Year shall be aggregated. The
royalty rates set forth above shall apply to increments of Net Sales for all
Royalty Products on a product-by-product basis according to the Annual Sales
Volume categories in which such increments fall during any given Contract Year.
For purposes of this Section 4.2, line extensions, new formulations and
Combination Products in which the same active ingredient is present shall be the
same Metabolic Program Drug as the original Metabolic Program Drug.
(b) Operating Income.
(i) If CuraGen opted out of the Development Costs relating to a
Development Compound after completion of
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
29
(A) the Pre-Clinical Development Phase in accordance with
Section 4.1(b) above, then
[____________________________________] the Operating
Income from each Metabolic Program Drug developed from
such Development Compound.
(B) Phase I in accordance with Section 4.1(b) above, then
[____________________________________] the Operating
Income from each Metabolic Program Drug developed from
such Development Compound.
(C) Phase II in accordance with Section 4.1(b) above, then
[____________________________________] the Operating
Income from each Metabolic Program Drug developed from
such Development Compound.
(D) Phase III in accordance with Section 4.1(b) above, then
[____________________________________] the Operating
Income from each Metabolic Program Drug developed from
such Compound.
(ii) If Bayer is developing a Development Compound associated with
a Qualified Target and CuraGen has not opted out of the
Development Costs relating to such Development Compound, then
Bayer shall receive 56% and CuraGen shall receive 44% of the
Operating Income from each Metabolic Program Drug developed
from such Development Compound.
(iii) If CuraGen receives reversionary rights pursuant to Section
3.7(c) relating to a Development Compound and Bayer abandoned
such Development Compound after completion of
(A) the Pre-Clinical Development Phase, then
[_____________________________________] the Operating
Income from each Metabolic Program Drug developed from
such Compound.
(B) Phase I, then [____________________________________] the
Operating Income from each Metabolic Program Drug
developed from such Compound.
(C) Phase II, then [_____________________________________]
the Operating Income from each Metabolic Program Drug
developed from such Compound.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
30
(D) Phase III, then [_____________________________________]
the Operating Income from each Metabolic Program Drug
developed from such Compound.
(iv) The Parties will share any Operating Income losses for an
Operating Income Product (whether or not a Party has opted out
of the Development Costs of such Operating Income Product) to
the same extent that the Parties share the Operating Income if
the Operating Income is positive.
(v) If the cumulative Operating Income losses for an Operating
Income Product exceed $[________], then CuraGen in its sole
discretion may elect to have Bayer pay a specific dollar amount
or all of CuraGen's subsequent share of the Operating Income
losses for such Operating Income Product [________] of the end
of the relevant Contract Quarter by giving written notice of
same to Bayer. In such event, for each $[________] so paid by
Bayer on behalf of CuraGen, CuraGen's share of the Operating
Income for such Operating Income Product shall be permanently
reduced [________] and Bayer's share of the Operating Income
for such Operating Income Product shall be permanently
increased [________]. At such time as CuraGen's share of the
Operating Income would [_______________], then for such
Operating Income Product, Bayer shall [____________________].
(c) Notwithstanding Section 4.2(a) and Section 4.2(b), if either Party
sublicenses the development of a Compound to a Third Party before the
Commercialization Phase and the other Party would otherwise have been entitled
to Royalty Payments or Operating Income from the sale of any Metabolic Program
Drug derived from such Compound, then the Development Costs of the sublicensing
Party which are in excess of the Development Costs shared with the other Party
shall be repaid from any revenue derived from such sublicense and, once such
amounts are repaid, the sublicensing Party shall receive [_____] of any revenue
derived from such sublicense and the other Party shall receive [_____] of such
revenue. In such case, the other Party shall not be entitled to a Royalty
Payment or a share of the Operating Income in connection with such Metabolic
Program Drug.
Section 4.3 Income Statement Reports.
------------------------
Each Contract Year, Bayer shall set an annual budget for the anticipated
revenues and costs for each Operating Income Product (the "Commercialization
Annual Budget"). Bayer shall receive input from CuraGen when setting the
Commercialization Annual Budget; provided, however that the Commercialization
Annual Budget shall be at Bayer's sole discretion. The budget shall be prepared
in accordance with Bayer's internal budgetary principles. Each Contract Quarter
during such Contract Year, within [________] days of the end of such Contract
Quarter CuraGen shall remit payment to Bayer or Bayer shall remit payment to
CuraGen for CuraGen's share of the Operating Income for each Operating Income
Product based on the Commercialization Annual Budget. Within [________] of the
end of such Contract Quarter, Bayer and CuraGen
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
31
shall each prepare a pro forma income statement showing all revenues and costs
for each Operating Income Product under the Party's control ("Commercialization
Reconciliation"). Within [_________] of the preparation of the Commercialization
Reconciliation, CuraGen shall remit payment to Bayer or Bayer shall remit
payment to CuraGen the difference between CuraGen's share of the
Commercialization Annual Budget and the Commercialization Reconciliation for
such Contract Quarter.
Section 4.4 Royalty Reports.
---------------
Each Party owing payments for Royalty Products (the "Royalty-Paying Party")
shall deliver to the other Party (the "Royalty Recipient") within [__________]
after the end of each calendar quarter, reasonably detailed written accountings
of Net Sales of Royalty Products due to the Royalty Recipient, for such calendar
quarter (the "Royalty Report"). Such quarterly reports shall indicate Net Sales
on a country-by-country and product-by-product basis and the calculation of
royalties from such Net Sales. When a Royalty-Paying Party delivers such
accountings to the Royalty Recipient, the Royalty-Paying Party shall also
deliver all royalty payments due under Section 4.2 to the Royalty Recipient for
the calendar quarter.
Section 4.5 Accounting.
----------
No more frequently than once during each calendar year during the Term and for
[________] thereafter, each Party (the "Audited Party") shall permit the
independent auditors of the other Party (the "Auditing Party") to whom the
Audited Party has no reasonable objection and with reasonable notice at any time
during normal business hours, accompanied at all times by a representative of
the Audited Party, to inspect, audit and copy reasonable amounts of relevant
accounts and records of the Audited Party, its Affiliates and Sublicensees, for
the sole purpose of verifying the accuracy of the calculation of payments to the
Auditing Party pursuant to Article IV and the reports which accompanied them.
The independent auditors shall not disclose to the Auditing Party any
information other than information relating solely to the accuracy of the
accounting and payments made by the Audited Party pursuant to Article IV and
shall be subject to confidentiality obligations. If such audit determines that
payments are due to the Auditing Party, the Audited Party shall pay to the
Auditing Party any such additional amounts within thirty (30) days of the date
on which such auditor's written report is delivered to the Audited Party and the
Auditing Party, unless such audit report is disputed by the Audited Party, in
which case the dispute shall be resolved in accordance with Article X. If the
auditor determines that the Audited Party's payments are in excess of those
required under this Agreement, the Auditing Party shall remit the difference to
the Audited Party of such amount within thirty (30) days of the later date on
which such auditor's report is delivered to the Auditing Party and the Audited
Party, unless such audit report is disputed by the Auditing Party, in which case
the dispute shall be resolved in accordance with Article X. Any such inspection
of records shall be at the Auditing Party's expense unless such audit discloses
a deficiency in the payments made by the Audited Party (whether for itself or on
behalf of its Affiliates and Sublicensees) of more than five percent (5%) of the
payments made by the Audited Party, in which case the Audited Party shall bear
the cost of such audit.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
32
Section 4.6 Currency and Method of Payments.
-------------------------------
All payments under this Agreement shall be made in the United States in U.S.
dollars by transfer to such bank account as CuraGen or Bayer (as applicable) may
designate from time to time payable at such time as set forth in this Agreement
or, if such time is not explicitly specified, within thirty (30) days of notice
that such payments are due. With respect to amounts owed between the Parties,
any amounts payable shall be expressed by the Parties in U.S. Dollars calculated
in accordance with the billing Party's then-standard accounting principles
consistently applied.
Section 4.7 Tax Withholding.
---------------
The Parties shall use all reasonable and legal efforts to reduce tax withholding
on payments made to CuraGen and Bayer hereunder. Notwithstanding such efforts,
if a Party concludes that tax withholdings under the laws of any country are
required with respect to payments to the other Party, the Party shall withhold
the required amount and pay it to the appropriate governmental authority. In
such a case, the Party will promptly provide the other Party with original
receipts or other evidence reasonably desirable and sufficient to allow the
other Party to document such tax withholdings adequately for purposes of
claiming foreign tax credits and similar benefits.
Section 4.8 Blocked Payments.
----------------
In the event that, by reason of applicable laws or regulations in any country,
it becomes impossible or illegal for a Party or its Affiliates or Sublicensees,
to transfer, or have transferred on its behalf, royalties or other payments to
the other Party, such royalties or other payments shall be deposited in local
currency in the relevant country to the credit of the other Party in a
recognized banking institution designated by the other Party or, if none is
designated by the other Party within a period of thirty (30) days, in a
recognized banking institution selected by the Party or its Affiliates or
Sublicensees, as the case may be, and identified in a notice in writing given to
the other Party.
Section 4.9 Compassionate Use.
-----------------
Bayer may make Metabolic Program Drugs available non-commercially to patients on
compassionate use grounds. If Bayer makes Metabolic Program Drugs available on
such a basis, the Cost of Goods Sold associated with such drugs shall be
subtracted from the Operating Income calculated for such drug.
Section 4.10 Accounting Terms.
----------------
Except as otherwise expressly provided herein, all accounting terms used in this
Agreement shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered hereunder shall be
prepared (x) with respect to Bayer, in accordance with Bayer's and its
Affiliates' then-standard accounting principles consistently applied and (y)
with respect to CuraGen, in accordance with U.S. GAAP consistently applied.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
33
Article V
---------
Intellectual Property Ownership, Protection and Related Matters
---------------------------------------------------------------
Section 5.1 Ownership
---------
(a) Bayer acknowledges and agrees that CuraGen is and shall remain the
sole owner of the CuraGen Know How and the CuraGen Patent Rights and that
CuraGen shall be and remain the sole owner of the CuraGen Improvements and the
CuraGen Improvement Rights. Bayer further acknowledges and agrees that neither
Bayer nor any of its Affiliates shall have any rights in or to the CuraGen
Patent Rights, the CuraGen Know-How, the CuraGen Improvements, or the CuraGen
Improvement Rights, other than the rights specifically granted herein. CuraGen
acknowledges and agrees that Bayer is and shall remain the sole owner of the
Bayer Know How and the Bayer Patent Rights and that Bayer shall be and remain
the sole owner of the Bayer Improvements and the Bayer Improvement Rights.
CuraGen further acknowledges and agrees that neither CuraGen nor any of its
Affiliates shall have any rights in or to the Bayer Patent Rights, the Bayer
Know-How, the Bayer Improvements, or the Bayer Improvement Rights, other than
the rights specifically granted herein.
(b) Bayer shall own all Know-How and inventions made solely by its
employees in the course of the Metabolic Program, and CuraGen shall own all
Know-How and inventions made solely by its employees in the course of the
Metabolic Program. All inventions and Know-How jointly developed by employees of
Bayer and employees of CuraGen in the course of the Metabolic Program shall be
owned jointly on the basis of an undivided one-half interest by Bayer and
CuraGen, provided, however that either Party may sell, license or otherwise
transfer such jointly-owned invention without the consent of the other Party
only in a manner that is consistent with the licenses granted pursuant to this
Agreement and is otherwise consistent with this Agreement. The Parties shall not
be able to independently exploit a joint invention except with the consent of
both Parties. The determination of inventorship shall be made in accordance with
relevant U.S. patent laws. In the event of a dispute regarding inventorship or
the ownership of Know-How, if the Parties are unable to resolve the inventorship
dispute, mutually acceptable outside patent counsel not regularly employed by
either Party shall resolve such dispute.
Section 5.2 Prosecution and Maintenance of Patent Rights.
--------------------------------------------
(a) General. Except as otherwise provided in Section 5.2(b) and
Section 5.2(c), the responsibility for preparing, filing and prosecuting patent
applications and for maintaining patents (and for managing any interference,
opposition, or other similar proceedings relating to the foregoing) covering
inventions made in the course of the Metabolic Program shall be the
responsibility of the Party that makes said invention, provided, however that,
with respect to inventions made jointly by the Parties, one of the Parties shall
have such responsibility as determined by agreement of the Parties on a case-by-
case basis, in which case such Party shall act as a representative for the other
Party when preparing, filing and prosecuting patent applications and maintaining
patents (and managing any interference, opposition, or other similar proceedings
relating to the foregoing) covering the joint invention. All expenses incurred
by a Party in the performance of its obligations with respect to an invention
solely made by such Party
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
34
under this Section 5.2(a) shall be borne by such Party. If either Party elects
not to participate financially in the further prosecution or maintenance of any
Patent Right that covers a joint invention, such Party shall notify the other
Party of such election at least [__________] prior to the last available date
for action to preserve such Patent Right. If such other Party elects to continue
prosecution or maintenance, such Patent Right shall become the exclusive
property of such other Party and appropriate assignment documents shall be
executed. All expenses incurred in the performance of the obligations under this
Section 5.2(a) for joint inventions shall be shared equally between the Parties.
(b) QTs. CuraGen shall have the responsibility for preparing, filing and
prosecuting patent applications and for maintaining patents (and for managing
any interference, opposition, or other similar proceedings relating to the
foregoing) covering inventions pertaining to QTs. All expenses incurred by
CuraGen in the performance of its obligations under this Section 5.2(b) shall be
borne by CuraGen.
(c) Products. Bayer shall have the responsibility for preparing, filing
and prosecuting patent applications and for maintaining patents (and for
managing any interference, opposition, or other similar proceedings relating to
the foregoing) covering inventions pertaining to Metabolic Program Drugs. All
expenses incurred by Bayer in the performance of its obligations under this
Section 5.2(c) shall be borne by Bayer.
Section 5.3 Cooperation.
-----------
Each Party hereby agrees to (a) make its employees, agents and consultants
available to the other Party (or to the other Party's authorized attorneys,
agents or representatives), to the extent reasonably necessary to enable the
appropriate Party to prepare, file and prosecute patent applications and
maintain resulting patents that cover QTs and Metabolic Program Drugs (the
"Designated Inventions"), (b) cooperate, if necessary and appropriate, with the
other Party in gaining patent term extensions wherever applicable to Patent
Rights that cover Designated Inventions, (c) cooperate, if necessary and
appropriate, with the other Party in the protection of Patent Rights that cover
Designated Inventions and (d) with respect to inventions made jointly by the
Parties, make itself available for preparing, filing and prosecuting patent
applications and for maintaining patents (and for managing any interference,
opposition, or other similar proceedings relating to the foregoing) covering the
joint invention.
Section 5.4 Third Party Infringement.
------------------------
(a) Notice. Each Party shall give notice to the other of any suspected
infringement of or claims, notices, challenges, actions, or proceedings
relating to the validity or enforceability of any intellectual property
rights relating to Metabolic Program Drugs.
(b) Legal Proceedings. Bayer shall have the sole right to institute legal
proceedings against any Third Party believed to be infringing the intellectual
property rights relating to Metabolic Program Drugs, including, but not limited
to, CuraGen Know-How and CuraGen Patent Rights. All costs relating to such legal
proceedings shall be paid by Bayer and shall be
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
35
deducted from Net Sales for purposes of calculating Operating Income. Any
monetary recovery collected in excess of Bayer's costs shall be deemed Net Sales
(the "Recovered Bayer Net Sales") and, as such, shall contribute to the Annual
Sales Volume for applicable Metabolic Program Drugs, on a product-by-product
basis.
(c) Cooperation; Settlements. In the event that Bayer takes action
pursuant to subsection (b) above, CuraGen shall cooperate with Bayer to the
extent reasonably possible, including the joining of suit if necessary or
desirable. Bayer shall not settle or compromise any claim or proceeding relating
to CuraGen Know-How or CuraGen Patent Rights without the prior written consent
of CuraGen, such consent not to be unreasonably withheld, delayed or
conditioned.
Section 5.5 Third Party Intellectual Property.
---------------------------------
(a) Notice. In the event that a Party becomes aware of any claim that the
practice by Bayer of CuraGen Know-How or CuraGen Patent Rights that have been
licensed to Bayer pursuant to Section 3.1, or that the practice by CuraGen of
Bayer Know-How or Bayer Patent Rights that have been licensed to CuraGen
pursuant to Section 3.2, infringes the intellectual property rights of any Third
Party, such Party shall promptly notify the other Party.
(b) Action. Bayer shall defend the Parties against any claim by a Third
Party that the development, manufacture, use, sale, offer for sale, export or
import of the Metabolic Program Drugs infringes Third Party intellectual
property rights at Bayer's sole expense; provided, however that (1) in the event
CuraGen elects not to join such an action, it shall reimburse Bayer
[_______________] of Bayer's costs associated with the representation (such
costs to include reasonable attorney's fees) and (2) in the event the
development, manufacture, use, sale, offer for sale, export or import of the
Metabolic Program Drug infringes Third Party intellectual property rights
because the use of a Qualified Target infringes Third Party intellectual
property rights, CuraGen shall (y) pay all costs associated with the
representation (such costs to include reasonable attorney's fees) and all
damages and royalties either Party is or the Parties are ordered to pay to a
Third Party in connection with such claim and (z) shall have the right to
participate in the defense of such claim. If both Parties are participating in
such an action, each Party shall bear its own costs associated with the
representation in connection with such action and CuraGen shall not take any
position inconsistent with Bayer's position on such issues.
(c) Settlement. Neither Party shall settle any action pursuant to this
Section 5.5 without the other Party's consent, such consent not to be
unreasonably withheld, delayed, or conditioned.
(d) Damages. Subject to Section 5.5(b)(2), any damages that either Party
is or the Parties are ordered to pay to a Third Party in connection with an
action pursuant to Section 5.5(b) shall be borne equally by the Parties.
(e) Recoveries. Any recoveries on an action pursuant to Section 5.5(b)
shall go first to reimburse the expenses of the Parties in connection with such
action and next [______________].
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
36
Article VI
----------
Confidentiality
---------------
Section 6.1 Confidential Information.
------------------------
All Confidential Information disclosed by a Party to the other Party during the
term of this Agreement shall not be used by the receiving Party or its Affiliate
except in connection with the activities contemplated by this Agreement, shall
be maintained in confidence by the receiving Party and its Affiliates (except to
the extent reasonably necessary for regulatory approval of Metabolic Program
Drugs developed by Bayer or CuraGen or any of their respective Affiliates or for
the filing, prosecution and maintenance of Patent Rights), and shall not
otherwise be disclosed by the receiving Party and its Affiliates to any other
person, firm, or agency, governmental or private, without the prior written
consent of the disclosing Party, except to the extent that the Confidential
Information (as determined by competent documentation):
(a) was known or used by the receiving Party or an Affiliate prior to its
date of disclosure to the receiving Party; or
(b) either before or after the date of the disclosure to the receiving
Party or an Affiliate is lawfully disclosed to the receiving Party or an
Affiliate by sources other than the disclosing Party rightfully in possession of
the Confidential Information; or
(c) either before or after the date of the disclosure to the receiving
Party or an Affiliate becomes published or generally known to the public
(including information known to the public through the sale of products in the
ordinary course of business) through no fault or omission on the part of the
receiving Party, an Affiliate or its Sublicensee; or
(d) is independently developed by or for the receiving Party or an
Affiliate without reference to or reliance upon the Confidential Information; or
(e) is required to be disclosed by the receiving Party or an Affiliate to
comply with applicable laws, by governmental or judicial order, to defend or
prosecute litigation or to comply with governmental regulations; provided,
however that the receiving Party or the Affiliate provides prior written notice
of such disclosure to the disclosing Party and takes reasonable and lawful
actions to avoid and/or minimize the degree of such disclosure.
Section 6.2 Employee and Advisor Obligations.
--------------------------------
Bayer and CuraGen each agree that they shall provide Confidential Information
received from the other Party only to, their respective employees, consultants
and advisors, and to the employees, consultants and advisors of such Party's
Affiliates, who have a need to know and have an obligation to treat such
information and materials as confidential. Each employee of Bayer, CuraGen or
their respective Affiliates who participates in the Metabolic Program shall be
(1) required to acknowledge in writing that the provisions of this Article VI
shall be binding upon such employee or (2) as a condition to employment shall
have agreed to treat all information as confidential.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
37
Section 6.3 Term.
----
All obligations of confidentiality imposed under this Article VI shall expire
five (5) years following the Term of this Agreement.
Section 6.4 Publications.
------------
The Parties acknowledge that scientific lead time is a key element of the value
of the Metabolic Program and further agree that scientific publications must be
strictly monitored to prevent any adverse effect of the premature publication of
results of the Metabolic Program. Therefore, the Parties agree that each Party
must consent to the publication of any results of the Metabolic Program and may
withhold such consent at its sole discretion.
Article VII
-----------
Representations and Warranties
------------------------------
Section 7.1 Due Organization.
----------------
Bayer and CuraGen each represents and warrants to the other that it (i) is a
company duly organized, validly existing, and in good standing under the laws of
the States of Indiana and Delaware, respectively; (ii) is duly qualified as a
corporation and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, where the failure to be so qualified would have a material
adverse effect on its financial condition or its ability to perform its
obligations hereunder; (iii) has the requisite corporate power and authority and
the legal right to conduct its business as now conducted and hereafter
contemplated to be conducted; (iv) has all necessary licenses, permits,
consents, or approvals from or by, and has made all necessary notices to, all
governmental authorities having jurisdiction, to the extent required for such
ownership and operation; and (v) is in compliance with its certificate of
incorporation and by-laws.
Section 7.2 Consents.
--------
Bayer and CuraGen each represents and warrants to the other that all necessary
consents, approvals and authorizations of all government authorities and other
persons required to be obtained by such Party in connection with the execution,
delivery and performance of this Agreement have been and shall be obtained,
except with respect to approvals required under the HSR Act.
Section 7.3 Execution, Delivery and Performance.
-----------------------------------
Bayer and CuraGen each represents and warrants to the other that the execution,
delivery and performance of this Agreement by such Party and all instruments and
documents to be delivered by such Party hereunder (i) are within the corporate
power of such Party; (ii) have been duly authorized by all necessary or proper
corporate action; (iii) do not conflict with any provision of the certificate of
incorporation or by-laws of such Party; (iv) will not violate any law or
regulation or any order or decree of any court of governmental instrumentality;
(v) will not
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
38
violate any terms of any indenture, mortgage, deed of trust, lease, agreement,
or other instrument to which such Party is a party or by which such Party or any
of its property is bound, which violation would have a material adverse effect
on its financial condition or on its ability to perform its obligations
hereunder; and (vi) do not require any filing or registration with or the
consent or approval of any governmental body, agency, authority or any other
Person, which has not been made or obtained previously, other than to the U.S.
Department of Justice with respect to the HSR Act, to the FDA.
Section 7.4 Legal, Valid and Binding Obligation.
-----------------------------------
Bayer and CuraGen each represents and warrants to the other that this Agreement
has been duly executed and delivered by such Party and constitutes a legal,
valid and binding obligation of such Party, enforceable against such Party in
accordance with its terms, except as such enforceability may be limited by
applicable insolvency and other laws affecting creditors' rights generally or by
the availability of equitable remedies.
Section 7.5 No Conflict.
-----------
Bayer and CuraGen each represents and warrants to the other that notwithstanding
anything to the contrary in this Agreement, the execution and delivery of this
Agreement, the performance of such Party's obligations hereunder and the conduct
of the Metabolic Program (a) do not conflict with or violate any requirement of
applicable laws or regulations and (b) do not and will not conflict with,
violate or breach or constitute a default or require any consent under, any
contractual obligations of such Party, except such consents as shall have been
obtained prior to the Effective Date.
Section 7.6 Employee Obligations.
--------------------
Bayer and CuraGen each represents and warrants to the other that all of its
employees, officers, and consultants have executed agreements or have existing
obligations under law requiring, in the case of employees and officers,
assignment to such Party of all inventions made during the course of and as the
result of their association with such Party and obligating the individual to
maintain as confidential such Party's Confidential Information as well as
confidential information of a Third Party which such Party may receive, to the
extent required to support such Party's obligations under this Agreement.
Section 7.7 CuraGen Intellectual Property.
-----------------------------
CuraGen represents and warrants to Bayer as follows:
(a) Ownership of CuraGen Patent Rights and CuraGen Know-How.
CuraGen owns the entire right, title and interest in or otherwise has the right
to use or license in accordance with the terms of this Agreement the CuraGen
Patent Rights and the CuraGen Know-How, and to CuraGen's Knowledge, no Third
Party (including any government) has any license, claim or other right or
interest in or to the CuraGen Patent Rights or the CuraGen Know-How.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
39
To CuraGen's Knowledge, the CuraGen Patent Rights and the CuraGen Know-How may
be exclusively licensed and sublicensed as hereunder provided, in the case of
the CuraGen Patent Rights and CuraGen Know-How without payment of any royalty,
fee or incurring any other obligation to any Third Party (except with respect to
any statutory march-in rights). To CuraGen's Knowledge, the conduct by CuraGen
of the Metabolic Program in accordance with the Research Plan does not and will
not infringe or conflict with the rights of any Third Party in respect of Know-
How or issued patents or published patent applications owned by such Third
Party.
(b) Validity and Enforceability of Patents.
The issued patents included in the CuraGen Patent Rights are valid and
enforceable to CuraGen's Knowledge.
(c) Investigation of Prior Art.
CuraGen has made all reasonable inquiries and has diligently conducted a
reasonably complete and thorough due diligence review and investigation of Third
Party intellectual property rights and prior art as part of CuraGen's
preparation and prosecution of the CuraGen Patent Rights, and has reviewed all
relevant information and prior art obtained or derived from such due diligence
review and investigation. CuraGen has disclosed all material prior art of which
it has Knowledge and other material information obtained or derived from such
due diligence review and investigation to Bayer as of the date hereof, in each
case to the full extent requested by Bayer.
(d) No Infringement of CuraGen Intellectual Property.
CuraGen has no Knowledge of any infringement of the CuraGen Patent Rights, or
any misappropriation of the CuraGen Know-How by any Third Party.
(e) Work-For-Hire.
To CuraGen's Knowledge, all of the research and development work performed in
connection with any of the CuraGen Know-How prior to the Effective Date was
performed solely under an obligation to assign to CuraGen or one of its
Affiliates, and was performed in accordance with applicable law and in
compliance with all applicable regulatory requirements, and all such rights have
been properly assigned to CuraGen, including any and all rights of CuraGen's
employees and the employees of CuraGen's Affiliates.
(f) No Claims or Suits Regarding CuraGen Intellectual Property.
There are no judicial, arbitral, regulatory or administrative proceedings or
investigations, claims, actions or suits relating to the CuraGen Patent Rights
or the CuraGen Know-How in any court or by or before any governmental body or
agency, including product liability or compliance with good manufacturing
practices or state or federal food and drug laws and, to CuraGen's
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
40
Knowledge, no such judicial, arbitral, regulatory or administrative proceedings
or investigations, actions or suits have been threatened against CuraGen or its
Affiliates.
Section 7.8 Bayer Intellectual Property.
---------------------------
Bayer represents and warrants to CuraGen as follows:
(a) Ownership of Patent Rights and Bayer Know-How.
Bayer owns the entire right, title and interest in or otherwise has the right to
use or license in accordance with the terms of this Agreement the Bayer Patent
Rights and the Bayer Know-How, and to Bayer's Knowledge, no Third Party
(including any government) has any license, claim or other right or interest in
or to the Bayer Patent Rights or the Bayer Know-How. To Bayer's Knowledge, the
Bayer Patent Rights and the Bayer Know-How may be exclusively licensed as
hereunder provided, in the case of the Bayer Patent Rights and Bayer Know-How
without payment of any royalty, fee or incurring any other obligation to any
Third Party (except with respect to any statutory march-in rights). To Bayer's
Knowledge, the conduct by Bayer of the Metabolic Program in accordance with the
Research Plan does not and will not infringe or conflict with the rights of any
Third Party in respect of Know-How or issued patents or published patent
applications owned by such Third Party.
(b) Validity and Enforceability of Patents.
The issued patents included in the Bayer Patent Rights are valid and enforceable
to Bayer's Knowledge.
(c) Investigation of Prior Art.
Bayer has made all reasonable inquiries and has diligently conducted a
reasonably complete and thorough due diligence review and investigation of Third
Party intellectual property rights and prior art as part of Bayer's preparation
and prosecution of the Bayer Patent Rights, and has reviewed all relevant
information and prior art obtained or derived from such due diligence review and
investigation. Bayer has disclosed all material prior art of which it has
Knowledge and other material information obtained or derived from such due
diligence review and investigation to CuraGen as of the date hereof, in each
case to the full extent requested by CuraGen.
(d) No Infringement of Bayer Intellectual Property.
Bayer has no Knowledge of any infringement of the Bayer Patent Rights, or any
misappropriation of the Bayer Know-How by any Third Party.
(e) Work-For-Hire.
To Bayer's Knowledge, all of the research and development work performed in
connection with any of the Bayer Know-How prior to the Effective Date was
performed solely under an
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
41
obligation to assign to Bayer or one of its Affiliates, and was performed in
accordance with applicable law and in compliance with all applicable regulatory
requirements, and all such rights have been properly assigned to Bayer,
including any and all rights of Bayer's employees and the employees of Bayer's
Affiliates.
(f) No Claims or Suits Regarding Bayer Intellectual Property.
There are no judicial, arbitral, regulatory or administrative proceedings or
investigations, claims, actions or suits relating to the Bayer Patent Rights or
the Bayer Know-How in any court or by or before any governmental body or agency,
including product liability or compliance with good manufacturing practices or
state or federal food and drug laws and, to Bayer's Knowledge, no such judicial,
arbitral, regulatory or administrative proceedings or investigations, actions or
suits have been threatened against Bayer or its Affiliates.
Section 7.9 Contracts.
---------
CuraGen represents and warrants to Bayer that it is not a party to any contract
that, if terminated, would materially adversely affect CuraGen's ability to
conduct the Metabolic Program in accordance with the Research Plan.
Section 7.10 No Material Admissions.
----------------------
Each of Bayer and CuraGen represents and warrants to the other that such Party
has not, up through and including the Effective Date, omitted to furnish to the
other Party with any information in its control or possession or of which it has
Knowledge concerning (a) its Patent Rights, (b) its Know-How, or (c) the
activities contemplated by this Agreement, which in such Party's opinion would
be material to the other Party's decision to enter into this Agreement and to
undertake the commitments and obligations set forth herein.
Section 7.11 No Warranties.
-------------
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PHARMACOGENOMICS AGREEMENT
OR IN THE STOCK PURCHASE AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS AND
EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND PARTICULARLY
(1) THAT PRODUCTS WILL BE SUCCESSFULLY DEVELOPED HEREUNDER, AND IF DEVELOPED,
WILL HAVE COMMERCIAL UTILITY OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AND (2) AS TO ANY BIOLOGICAL MATERIALS PROVIDED UNDER THIS AGREEMENT.
Section 7.12 Survival.
--------
The representations and warranties set forth in this Agreement are made as of
the date hereof and as of the Effective Date and shall survive the Effective
Date.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
42
Article VIII
------------
Covenants
---------
Section 8.1 No New Restrictions - CuraGen.
-----------------------------
CuraGen agrees that, from and after the Execution Date, it shall not enter into
any agreements, or transfer Know-How or any other assets to any of its
Affiliates, that would, in either case, restrict or limit its or Bayer's rights
or ability to conduct the Metabolic Program, as contemplated in the Research
Plan as of the Effective Date.
Section 8.2 Exclusivity - CuraGen.
---------------------
During the Screening Term, CuraGen shall not engage in a program with a Third
Party wherein it supplies, or assists any Third Party in supplying, Qualified
Targets to such Third Party, except with respect to Qualified Targets for which
CuraGen receives rights to develop under Section 3.7, in which case Bayer shall
have a Right of First Negotiation with respect to development of such Qualified
Target.
Section 8.3 No Restrictions on Screening - Bayer.
------------------------------------
During the Screening Term, Bayer agrees that Bayer shall not enter into an
agreement that would restrict or limit Bayer ability to screen [_______]
Qualified Targets each [___________].
Section 8.4 Partnership for U.S. Federal Income Tax Purpose.
-----------------------------------------------
The Parties agree and intend that the Metabolic Program shall be treated as a
partnership for U.S. federal income tax purpose. For that purpose, the Parties
agree to negotiate in good faith and to use commercially reasonable efforts to
enter into a mutually agreeable partnership agreement with respect to the
Metabolic Program on or prior to the Effective Date. This partnership
agreement, which shall include without limitation, provisions on the allocation
of partnership income, gain, loss, deduction or credit between the Parties,
shall be substantially identical to the economic terms and tax implications
contained in and resulting from this Agreement, with such changes as may be
necessary or desirable to reflect a partnership for tax purposes rather than a
contractual alliance. The Parties may agree to organize a separate state-law
entity for the partnership.
Article IX
----------
Term and Termination
--------------------
Section 9.1 Term of the Agreement.
---------------------
The Metabolic Program shall commence on the Effective Date and shall end at such
time as no Compounds are in the Pre-Clinical Development Phase and Clinical
Development Phase and there are no Metabolic Program Drugs generating Royalty
Payments or Operating Income, unless the Agreement is terminated earlier (y) by
Bayer or CuraGen pursuant to Section 9.2 or Section 9.3 or (z) pursuant to
Section 9.4 (the "Term").
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
43
Section 9.2 Termination For Material Breach.
-------------------------------
Upon any material breach of this Agreement by either Party (in such capacity,
the "Breaching Party"), the other Party (in such capacity, the "Non-Breaching
Party") may terminate this Agreement by providing [____________] written notice
to the Breaching Party, specifying the material breach. The termination shall
become effective at the end of the [____________] period unless (a) the
Breaching Party cures such breach during such [____________] period, or (b) if
such breach is not susceptible to cure within [____________] of the receipt of
written notice of the breach, the Breaching Party is diligently pursuing a cure
(unless such breach, by its nature, is incurable, in which case the Agreement
may be terminated immediately). The Parties shall use reasonable efforts to
work together to cure any breach. In the event of a dispute concerning whether
a material breach has occurred, such dispute shall be resolved in accordance
with the provisions of Article X, and the [_________] cure period specified
above shall be suspended during the period commencing upon the submission of
such dispute for resolution under Section 10.1 to the Executive Officers and
continuing until the resolution of such dispute under Section 10.1. Without
limiting the generality of the foregoing, material failure by CuraGen or Bayer
to maintain and make available adequate technical resources and personnel to
perform its obligations under the Metabolic Program in accordance with the
Research Plan shall be considered to be a material breach of this Agreement.
Section 9.3 Termination Upon Change of Control.
----------------------------------
If a Change of Control with respect to CuraGen occurs, Bayer may, at its sole
discretion, elect to terminate this Agreement by giving CuraGen written notice
within [____________] after such Change of Control, such termination to be
effective [____________] after provision of written notice of termination. If a
Change of Control with respect to Bayer occurs, CuraGen may, at its sole
discretion, elect to end the Screening Term by giving Bayer written notice
within [____________] after such Change of Control, such termination to be
effective upon Bayer's receipt of the written notice of termination; provided,
however, that notwithstanding the end of the Screening Term, the Metabolic
Program shall continue with respect to any QTs which have been screened.
Section 9.4 No Effectiveness Upon HSR Denial or Termination of Stock
--------------------------------------------------------
Purchase Agreement.
--------- --------
The Agreement shall not become effective (and accordingly shall immediately
terminate) in the event that (a) the FTC and/or the DOJ shall seek a preliminary
injunction under the HSR Act against CuraGen and Bayer to enjoin the transaction
contemplated by this Agreement and Bayer elects not to contest the FTC and/or
DOJ; (b) the HSR Clearance Date shall not have occurred on or prior to June 30,
2001; or (c) the Stock Purchase Agreement shall be terminated in accordance with
Section 7.1 of the Stock Purchase Agreement.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
44
Section 9.5 Effect of Termination.
---------------------
(a) General. In the event that this Agreement is terminated by either
Party pursuant to Section 9.1, (i) the licenses set forth in Section 3.1 and
Section 3.2 shall, except as provided below, survive such termination, subject
to continued compliance with obligations related to such licenses, such as the
royalty, operating income sharing and reporting provisions of Article IV and co-
promotion rights of Section 3.5; and (ii) all obligations under Article IV
accrued or owed as of the effective date of such termination shall remain
effective and shall be paid promptly, except as set forth in the subsections
below.
(b) Effect of Termination For Material Breach (Section 9.2).
(i) If this Agreement is terminated under Section 9.2 and CuraGen is
the Breaching Party, the licenses granted by Bayer to CuraGen and
its Affiliates under Section 3.2(a) and under Section 3.2(b)
(other than with respect to Development Compounds which reverted
to CuraGen pursuant to Section 3.7(d)) shall terminate as of the
effective date of such termination, and all sublicenses granted
by CuraGen or its Affiliates pursuant to Section 3.2(c) (other
than with respect to Development Compounds which reverted to
CuraGen pursuant to Section 3.7(d)) shall also terminate as of
such date. If the termination under Section 9.2 occurs because
CuraGen fails to pay the Development Costs which it owes for a
Development Compound, CuraGen shall only receive Royalty Payments
and not a share of the Operating Income for any Metabolic Program
Drug developed from such Development Compound.
(ii) If this Agreement is terminated under Section 9.2 and Bayer is
the Breaching Party, the license granted by CuraGen to Bayer and
its Affiliates under Section 3.1(a)(i) with respect to those QTs
from which a Compound, Development Compound or Metabolic Program
Drug have not been identified shall terminate as of the effective
date of such termination and all sublicenses granted by Bayer or
its Affiliates pursuant to Section 3.1(b) which relate to those
licenses under Section 3.1(a)(i) with respect to those QTs from
which a Compound, Development Compound or Metabolic Program Drug
have not been identified shall also terminate as of such date.
(c) Effect of Termination Upon Change in Control (Section 9.3). If this
Agreement is terminated under Section 9.3 by Bayer, Bayer may, at its election,
[__________________________________________________________________________ __].
(d) Effect of Termination Upon HSR Denial or Termination of Stock Purchase
Agreement (Section 9.4). Notwithstanding anything to the contrary in this
Agreement, in the event that this Agreement is terminated pursuant to Section
9.4, the licenses set forth in Section 3.1 and Section 3.2 shall automatically
terminate.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
45
Section 9.6 Survival.
--------
Upon expiration or termination of this Agreement for any reason, nothing in this
Agreement shall be construed to release either Party from any obligations that
matured prior to the effective date of expiration or termination; and the
following provisions shall expressly survive any such expiration or termination:
Article I, Section 3.1 (except as provided in Section 9.5), Section 3.2 (except
as provided in Section 9.5), Article IV, Article V, Article VI, Article VII,
Article VIII, Article IX, Article X and Article XI.
Article X
---------
Dispute Resolution
------------------
Section 10.1 General.
-------
Unless otherwise provided for in this Agreement, any controversy, claim or
dispute arising out of or relating to this Agreement shall be settled, if
possible, through good faith negotiations between the Parties. If, however, the
Parties are unable to settle such dispute after good faith negotiations, the
matter shall be referred to the Executive Officers to be resolved by negotiation
in good faith as soon as is practicable but in no event later than [___________]
after referral.
Section 10.2 Independent Experts.
-------------------
Each Executive Officer shall have the right to engage the services of any number
of independent experts in the field in question (each individual so engaged by
each Executive Officer to be reasonably acceptable to the other Executive
Officer in terms of independence and expertise and to be engaged under
obligations of confidentiality) to assist the Executive Officers in making a
joint determination in the best interests of the collaboration, and each
Executive Officer shall be obligated to consider in good faith the analyses and
opinions of any such independent experts engaged by either of them in making a
determination.
Section 10.3 SUBMISSION TO JURISDICTION; SELECTION OF A FORUM; WAIVER OF
----------------------------------------------------------
TRIAL BY JURY.
-------------
IF THE EXECUTIVE OFFICERS ARE UNABLE TO SETTLE THE DISPUTE AFTER GOOD FAITH
NEGOTIATION IN THE MANNER SET FORTH IN Section 2.4(f) WITHIN [____________] OF
REFERRAL OF THE DISPUTE TO THE EXECUTIVE OFFICERS, THEN EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT SHALL BRING ANY
ACTION OR PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT
(NOT INCLUDING A DESIGNATED SCIENTIFIC ISSUE), WHETHER IN TORT OR CONTRACT OR AT
LAW OR IN EQUITY, EXCLUSIVELY IN COURTS OF THE STATE OF DELAWARE AND OF THE
UNITED STATES IN DELAWARE (THE "CHOSEN COURTS") AND (A) IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (B) WAIVES ANY OBJECTION TO
LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
46
COURTS, (C) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN INCONVENIENT
FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO, (D) AGREES THAT SERVICE
OF PROCESS UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE
IF NOTICE IS GIVEN IN ACCORDANCE WITH THIS AGREEMENT AND (E) WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY SUCH ACTION
OR PROCEEDING. CURAGEN IRREVOCABLY DESIGNATES MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY AND POPEO, P.C., BOSTON, MASSACHUSETTS, ATTENTION: XXXXXXX X. XXXXXX AS
ITS AGENT AND ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF PROCESS AND
MAKING AN APPEARANCE ON ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING
ALL SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER JURISDICTION
OVER IT UPON THE CHOSEN COURTS AND CURAGEN STIPULATES THAT SUCH CONSENT AND
APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST. BAYER IRREVOCABLY
DESIGNATES XXXXXX, XXXXXX AND XXXXXXXXX, WASHINGTON, D.C., ATTENTION: XXXXXXX X.
XXXX AS ITS AGENT AND ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF PROCESS
IN MAKING AN APPEARANCE ON ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING
ALL SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER SUCH
JURISDICTION OVER IT UPON THE CHOSEN COURTS AND BAYER STIPULATES THAT SUCH
CONSENT AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
Section 10.4 Limitations of Remedies; Remedies Cumulative.
---------------------------------------------
(a) Neither Party hereto shall be liable to the other for consequential or
punitive damages claimed by such other Party resulting from such first Party's
breach of its obligations, agreements, representations or warranties hereunder;
provided, however that nothing in this Section 10.4 shall preclude any recovery
by an indemnified Party against an indemnifying Party for Third Party claims or
for fraud or willful misconduct.
(b) Any remedies in this Agreement shall be cumulative to any other
remedies which a Party may have.
Section 10.5 Specific Performance.
---------------------
Each of the Parties hereto acknowledges and agrees that the other Party will be
damaged irreparably if any of the provisions of this Agreement are not performed
in accordance with their specific terms or otherwise are breached. Accordingly,
each of the Parties agrees that the other Party shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in the manner set forth in Section 10.3, in addition to any
other remedy to which it may be entitled, in law or in equity. Each Party's
right to seek specific performance shall be in addition to, and not in lieu of,
any other rights and remedies that may be available hereunder or otherwise.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
47
Article XI
----------
Miscellaneous Provisions
------------------------
Section 11.1 Product Liability Indemnification.
---------------------------------
(a) Bayer. Bayer agrees to defend CuraGen and its Affiliates at its cost
and expense, and will indemnify and hold CuraGen and its Affiliates and their
respective directors, officers, employees and agents (the "CuraGen Indemnified
Parties") harmless from and against any losses, costs, damages, fees or expenses
arising out of any claim relating to (i) any breach by Bayer of any of its
representations, warranties or obligations pursuant to this Agreement or (ii)
personal, injury from the development, manufacture, use, sale or other
disposition of any product or service offered by Bayer and/or its licensees or
collaborators. In the event of any such claim against the CuraGen Indemnified
Parties by any Third Party, CuraGen shall promptly notify Bayer in writing of
the claim and Bayer shall manage and control, at its sole expense, the defense
of the claim and its settlement. The CuraGen Indemnified Parties shall cooperate
with Bayer and may, at their option and expense, be represented in any such
action or proceeding. Bayer shall not be liable for any litigation costs or
expenses incurred by the CuraGen Indemnified Parties without Bayer's prior
written authorization. In addition, Bayer shall, not be responsible for the
indemnification of any CuraGen Indemnified Party arising from any negligent or
intentional acts by such party, or as the result of any settlement or compromise
by the CuraGen Indemnified Parties without Bayer's prior written consent.
(b) CuraGen. CuraGen agrees to defend Bayer and its Affiliates at its
cost, and will indemnify and hold Bayer and its Affiliates and its respective
directors, officers, employees and agents (the "Bayer Indemnified Parties")
harmless from and against any losses, costs, damages, fees or expenses arising
out of any claim relating to (i) any breach by CuraGen of any of its
representations, warranties or obligations pursuant to this Agreement or (ii)
personal injury from the development, manufacture, use, sale or other
disposition of any product or service offered by CuraGen or its licensees or
collaborators. In the event of any claim against the Bayer Indemnified Parties
by, any Third Party, Bayer shall promptly notify CuraGen in writing of the claim
and CuraGen shall manage and control, at its sole expense, the defense of the
claim and its settlement. The Bayer Indemnified Parties shall cooperate with
CuraGen and may, at their option and expense, be represented in any such action
or proceeding. CuraGen shall not be liable for any litigation costs or expenses
incurred, by the Bayer Indemnified Parties without CuraGen's prior written
authorization. In addition, CuraGen shall not be responsible for the
indemnification of any Bayer Indemnified Party arising from any negligent or
intentional acts by such party, or as the result of any settlement or compromise
by the Bayer Indemnified Parties without CuraGen's prior written consent.
Section 11.2 Section 365(n) of the Bankruptcy Code.
-------------------------------------
All rights and licenses granted under or pursuant to any section of this
Agreement are, and shall otherwise be, deemed to be, for purposes of Section
365(n) of the Bankruptcy Code, licenses of rights to "intellectual property" as
defined under Section 101(35A) of the Bankruptcy Code. The Parties shall retain
and may fully exercise all of their respective rights and elections under the
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
48
Bankruptcy Code. Upon the bankruptcy of any Party, the non-bankrupt Party shall
further be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property, and such, if not already in its or
their possession, shall be promptly delivered to the non-bankrupt Party, unless
the bankrupt Party elects to continue, and continues, to perform all of its
obligations under this Agreement.
Section 11.3 Governing Law.
-------------
This Agreement shall be construed and the respective rights of the Parties
hereto determined according to the substantive laws of the State of Delaware
notwithstanding the provisions governing conflict of laws under such Delaware
law to the contrary and without giving effect to the United Nations Convention
on Contracts for the International Sale of Goods, the 1974 Convention on the
Limitation Period in the International Sale of Goods (the "1974 Convention") and
the Protocol amending the 1974 Convention, done at Vienna April 11, 1980, except
matters of intellectual property law which shall be determined in accordance
with the national intellectual property laws relevant to the intellectual
property in question.
Section 11.4 Assignment.
----------
Neither CuraGen nor Bayer may assign this Agreement in whole or in part without
the consent of the other, except if such assignment occurs in connection with
the sale or transfer of all or substantially all of the business and assets of
CuraGen, on the one hand, or Bayer, on the other, to which the subject matter of
this Agreement pertains. Notwithstanding the foregoing, any Party may assign
its rights (but not its obligations) pursuant to this Agreement in whole or in
part to an Affiliate of such Party.
Section 11.5 Amendments.
----------
This Agreement constitutes the entire agreement between the Parties with respect
to the subject matter hereof, and supersedes an previous arrangements with
respect to the subject matter hereof, whether written or oral. Any amendment or
modification to this Agreement shall be made in writing signed by both Parties.
Section 11.6 Notices.
-------
Notices to CuraGen shall be addressed to:
CuraGen Corporation
000 Xxxx Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Executive Vice President, Business Development
Facsimile No.: (000) 000-0000
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
49
Notices to Bayer shall be addressed to:
Bayer Corporation
000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxxxxxx 00000-0000
Attention: Legal Department
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx, Esq.
Facsimile No.: (000) 000-0000
Any Party may change its address by giving notice to the other Party in the
manner herein provided. Any notice required or provided for by the terms of
this Agreement shall be in writing and shall be (a) sent by registered or
certified mail, return receipt requested, postage prepaid, (b) sent via a
reputable overnight courier service, or (c) sent by facsimile transmission, in
each case properly addressed in accordance with the paragraph above. The
effective date of notice shall be the actual date of receipt by the Party
receiving the same.
Section 11.7 Exports.
-------
The Parties acknowledge that the export of technical data, materials or products
is subject to the exporting Party receiving any necessary export licenses and
that the Parties cannot be responsible for any delays attributable to export
controls that are beyond the reasonable control of either Party. Bayer and
CuraGen agree not to export or reexport, directly or indirectly, any
information, technical data, the direct product of such data, samples or
equipment received or generated under this Agreement in violation of any
governmental regulations that may be applicable. Bayer and CuraGen agree to
obtain similar covenants from their Affiliates, Sublicensees and contractors
with respect to the subject matter of this Section 11.7.
Section 11.8 Force Majeure.
-------------
No failure or omission by the Parties hereto in the performance of any
obligation of this Agreement shall be deemed a breach of this Agreement or
create any liability if the same shall arise from any cause or causes beyond the
control of the Parties, including, but not limited to, the following: acts of
God; acts or omissions of any government; any rules, regulations or orders
issued by any governmental authority or by any officer, department, agency or
instrumentality
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
50
thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection;
riot; and invasion and provided that such failure or omission resulting from one
of the above causes is cured as soon as is practicable after the occurrence of
one or more of the above-mentioned causes.
Section 11.9 Public Announcements.
--------------------
Any announcements or similar publicity with respect to the execution of this
Agreement shall be agreed upon between the Parties in advance of such
announcement. Each Party understands that this Agreement is likely to be of
significant interest to investors, analysts and others, and that either Party
therefore may make such public announcements with respect thereto. The Parties
agree that any such announcement will not contain confidential business or
technical information and, if disclosure of confidential business or technical
information is required by law or regulation, will make reasonable efforts to
minimize such disclosure and obtain confidential treatment for any such
information which is disclosed to a governmental agency or group. Each Party
agrees to provide to the other Party with a copy of any public announcement as
soon as reasonably practicable under the circumstances prior to its scheduled
release. Except under extraordinary circumstances, each Party shall provide the
other with an advance copy of any press release at least five (5) business days
prior to the scheduled disclosure. Each Party shall have the right to
expeditiously review and recommend changes to any announcement regarding this
Agreement or the subject matter of this Agreement; provided, however that such
right of review and recommendation shall only apply for the first time that
specific information is to be disclosed, and shall not apply to the subsequent
disclosure of substantially similar information that has previously been
disclosed. Except as otherwise required by law, the Party whose press release
has been reviewed shall remove any information the reviewing Party reasonably
deems to be inappropriate for disclosure.
Section 11.10 Independent Contractors.
-----------------------
It is understood and agreed that the relationship between the Parties hereunder
is that of independent contractors and that nothing in this Agreement shall be
construed as authorization for either CuraGen or Bayer to act as agent for the
other. Notwithstanding Section 8.4, nothing in this Agreement shall be deemed
to constitute a partnership or joint venture between the Parties. The Program
Directors and members of Metabolic Program Project Teams shall remain employees
of Bayer or CuraGen, as the case may be.
Section 11.11 No Strict Construction.
----------------------
This Agreement has been prepared jointly and shall not be strictly construed
against either Party.
Section 11.12 Headings.
--------
The captions or headings of the sections or other subdivisions hereof are
inserted only as a matter of convenience or for reference and shall have so
effect on the meaning of the provisions hereof.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
51
Section 11.13 No Implied Waivers; Rights Cumulative.
----------------------------------------
No failure on the part of CuraGen or Bayer to exercise, and no delay in
exercising, any right, power, remedy or privilege under this Agreement, or
provided by statute or at law or in equity or otherwise, shall impair, prejudice
or constitute a waiver of any such right, power, remedy or privilege or be
construed as a waiver of any breach of this Agreement or as an acquiescence
therein, nor shall any single or partial exercise of any such right, power,
remedy or privilege preclude any other or further exercise thereof or the
exercise of any other right, power, remedy or privilege.
Section 11.14 Severability.
------------
If any provision hereof should be held invalid, illegal or unenforceable in any
respect in any jurisdiction, then, to the fullest extent permitted by law, (a)
all other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the Parties as nearly as may be possible and (b) such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of such provision in any other jurisdiction. To the extent
permitted by applicable law, CuraGen and Bayer hereby waive any provision of law
that would render any provision hereof prohibited or unenforceable in any
respect.
Section 11.15 Execution in Counterparts.
-------------------------
This Agreement may be executed in, counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original, and all of
which counterparts, taken together, shall constitute one and the same
instrument.
Section 11.16 HSR Filing.
----------
As soon as practicable after the Execution Date, each of Bayer and CuraGen shall
promptly file any Notification and Report Forms and related materials that
either such Party may be required to file with the FTC and the DOJ under the HSR
Act, shall use its best efforts to obtain an early termination of the applicable
waiting period, and shall promptly make any further filings or information
submissions pursuant thereto, or responses to requests to additional information
thereunder, that may be necessary, proper or advisable.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
52
IN WITNESS WHEREOF, the Parties hereto have caused this Metabolic Disorder
Collaboration Agreement to be executed by their respective officers as of the
Execution Date.
BAYER CORPORATION
By: /s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
Title: Vice President, Research
CURAGEN CORPORATION
By: /s/ Xxxxx XxXxxx
----------------
Name: Xxxxx XxXxxx
Title: Executive Vice President
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company's application requesting
confidential Investment under Rule 406 of the Securities Act.
53
