EXHIBIT 10.15
CuraGen Corporation has omitted from this Exhibit 10.15 portions of the
Agreement for which CuraGen Corporation has requested confidential treatment
from the Securities and Exchange commission. The portions of the Agreement for
which confidential treatment has been requested are marked with X's in brackets
and such confidential portions have been filed separately with the Securities
and Exchange Commission.
Execution Copy
RESEARCH AND OPTION AGREEMENT
This Research and Option Agreement ("Agreement") is made effective as of
November 20, 1997 ("Effective Date") by and between GENENTECH, INC., a Delaware
corporation having its principal business office at 0 XXX Xxx, Xxxxx Xxx
Xxxxxxxxx, XX 00000 ("GENENTECH"), and CURAGEN CORPORATION, a Delaware
corporation with its principal place of business at 000 Xxxx Xxxxx Xxxxx, 00xx
Xxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000 ("CURAGEN"). GENENTECH and CURAGEN are each
hereafter referred to individually as a "Party" and together as the "Parties".
WHEREAS, GENENTECH desires to have access to CURAGEN's genomics
technologies (including GeneScape(R), QEA/GeneCalling, MIM/PathCalling and all
additional services provided by CURAGEN) and to have CURAGEN apply such
technologies to certain GENENTECH Proprietary Material in order to expedite the
discovery of information which may lead to the development of novel
pharmaceutical products;
WHEREAS, GENENTECH and CURAGEN have previously collaborated on genomics
projects pursuant to the terms of that certain Research Services and Evaluation
Agreement dated June 12, 1996 and that certain Research and License Agreement
dated December 27, 1996 (together, the "Collaboration Agreements");
WHEREAS, GENENTECH and CURAGEN wish to initiate the performance of certain
additional research by GENENTECH and CURAGEN;
WHEREAS, GENENTECH wishes to obtain an option to evaluate and license the
inventions obtained or made by GENENTECH and/or CURAGEN in the performance of
the previous Collaboration Agreements and the performance of the research
pursuant to this Agreement, as well as an option to evaluate and license certain
other inventions of CURAGEN;
WHEREAS, CURAGEN wishes to retain rights to data and inventions made by
GENENTECH and CURAGEN hereunder and not licensed by GENENTECH;
WHEREAS, GENENTECH wishes to make an equity investment in CURAGEN Common
Stock in the amount of Five Million Dollars ($5,000,000), such investment to be
made in a private placement contemporaneously with the initial public offering
of CURAGEN's Common Stock;
WHEREAS, GENENTECH will also agree to loan CURAGEN up to Twenty-Six Million
Dollars ($26,000,000) on the terms and conditions as set forth herein; and
WHEREAS, GENENTECH and CURAGEN therefore agree to undertake the foregoing,
all under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Parties hereby agrees as follows:
1. DEFINITIONS
Whenever used in the Agreement with an initial capital letter, the terms
defined in this Section 1 shall have the meanings specified.
1.1 "AFFILIATE" shall mean any corporation, firm, limited liability
company, partnership or other entity which directly or indirectly controls or is
controlled by or is under common control with a Party to this Agreement.
"Control" means ownership, directly or through one or more Affiliates, of fifty
percent (50%) or more of the shares of stock entitled to vote for the election
of directors, in the case of a corporation, or fifty percent (50%) or more of
the equity interests in the case of any other type of legal entity, status as a
general partner in any partnership, or any other arrangement whereby a party
controls or has the right to control the Board of Directors or equivalent
governing body of a corporation or other entity.
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1.2 "CLONE" shall mean a segment of DNA representing a whole or partial
gene whose sequence or utility is determined from the analysis of one or more
Data Sets or from the Extended Research during the term of this Agreement.
1.3 "CURAGEN BACKGROUND INVENTIONS" shall mean all patent rights and
know-how of CURAGEN, other than those relating primarily to Inventions, which
CURAGEN has the right to license and which would be infringed by the activities
of GENENTECH permitted by this Agreement or by the development, manufacture,
use, sale or importation of a Licensed Product by GENENTECH; provided, however,
that CURAGEN Background Inventions shall expressly exclude (i) any patent rights
or know-how relating to Clones not licensed by GENENTECH pursuant to an executed
License Agreement and (ii) any patent rights or know-how arising from any
CURAGEN collaboration with a third party, except to the extent permitted
thereby.
1.4 "CURAGEN DATA" shall mean all information obtained by CURAGEN from
the processing of specified CURAGEN samples, including QC data, QEA/GeneCalling
data, MIM/PathCalling data, xxxxxxxx xxxx and any other information obtained or
generated by CURAGEN in the performance of a discrete CURAGEN Project outside
the performance of the Research Program.
1.5 "CURAGEN DATA SET" shall mean all CURAGEN Data resulting from a
discrete CURAGEN Project that CURAGEN can make exclusively available to
GENENTECH.
1.6 "CURAGEN PROJECT" shall mean a particular project undertaken by
CURAGEN on its own outside the Research Program to process and analyze a
specified set of samples which do not contain GENENTECH Proprietary Material,
and as to which CURAGEN is free to grant rights to GENENTECH hereunder.
1.7 "CURAGEN PROJECT INVENTION" shall mean any discovery, invention,
know-how or trade secret conceived or made by employees of CURAGEN in the
performance of a CURAGEN Project that results in CURAGEN Data that becomes part
of an Exclusive Data Set, that is based on, incorporates or makes material use
of the corresponding CURAGEN Data.
1.8 "CURAGEN PROJECT PATENT RIGHTS" shall mean Patent Rights containing a
claim or claims covering CURAGEN Project Inventions. CURAGEN Project Patent
Rights shall
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also include Patent Rights containing a claim or claims covering CURAGEN Project
Inventions exclusively licensed in by CURAGEN, with the right to sublicense, now
or in the future.
1.9 "CURAGEN PROJECT PROPRIETARY MATERIAL" shall mean all substances
made by CURAGEN in the performance of CURAGEN Projects, including mRNA pools.
CURAGEN Project Proprietary Material shall include, without limitation, QEA
fragments, MIM constructs and materials derived or constructed from QEA
fragments and MIM constructs, including, without limitation, fragment and full
length cDNA clones made by CURAGEN in the performance of a CURAGEN Project.
1.10 "CURAGEN ROYALTY PRODUCT" shall have the meaning set forth in Section
7.7.
1.11 "DATA SET," which may be either a Project Data Set or a CURAGEN Data
Set, shall mean all Project Data resulting from a discrete Research Project or
all CURAGEN Data resulting from a discrete CURAGEN Project, respectively.
1.12 "EXCLUSIVE DATA SET" shall mean any Project Data Set during the
corresponding Exclusive Evaluation Period as provided in Section 2.4.1 or any
CURAGEN Data Set during the corresponding Exclusive Evaluation Period as
provided in Section 2.5.2.
1.13 "EXCLUSIVE EVALUATION PERIOD" shall have the meaning set forth in
Section 2.4.1 or 2.5.2.
1.14 "EXTENDED RESEARCH" shall mean the research undertaken by CURAGEN
pursuant to Sections 2.4.1, 2.5.2 and/or 7.1.3 hereof.
1.15 "EXTENDED RESEARCH DATA" shall mean all information and results
obtained by CURAGEN from its performance of Extended Research.
1.16 "EXTENDED RESEARCH INVENTIONS" shall mean any discovery, invention,
know-how or trade secret conceived or made by employees of CURAGEN in the
performance of Extended Research, other than such discoveries, inventions, know-
how or trade secrets that are deemed to be defined as Research Project
Inventions pursuant to the terms of this Agreement or an executed License
Agreement.
1.17 "EXTENDED RESEARCH PATENT RIGHTS" shall mean all rights and interests
in and to issued patents and pending patent applications in any country,
including, but not limited to, all provisional applications, substitutions,
continuations, continuations-in-part (solely to the extent that the claims of
such continuations-in-part cover Extended Research Inventions), divisions, and
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renewals thereof, all letters patent granted thereon, and all reissues,
reexaminations and extensions thereof, whether owned now or hereafter, solely or
jointly by CURAGEN, and wherein at least one claim of such patent right covers
an Extended Research Invention.
1.18 "FTE" shall mean the equivalent of a full year of effort on a full
time basis of a researcher possessing skills and experience necessary to carry
out applicable tasks under the Research Program.
1.19 "GENENTECH PROPRIETARY MATERIAL" shall mean substances made by
GENENTECH or provided by GENENTECH to CURAGEN in the performance of the Research
Program, including without limitation (a) tissue samples provided by GENENTECH
to CURAGEN and (b) the nucleic acids and other substances actually contained in
such tissue samples, and (c) full length genes cloned by GENENTECH.
1.20 "GENESCAPE(R)" shall mean the web-based software and database product
for accessing and storing Data Sets generated through the application of
CURAGEN's QEA/GeneCalling and MIM/PathCalling technologies.
1.21 "INVENTION" shall mean either a CURAGEN Project Invention or a
Research Project Invention.
1.22 "KNOW-HOW INFORMATION" shall have the meaning set forth in Section
2.1.4(c).
1.23 "KNOW-HOW INFORMATION PRODUCT" shall have the meaning set forth in
Section 2.1.4(c).
1.24 "LICENSED CLONE" shall mean any Clone licensed by GENENTECH pursuant
to an executed License Agreement.
1.25 "LICENSED PRODUCT", as to each Clone, shall mean:
[XXXXX]
[XXXXX]
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[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
1.26 "LICENSE AGREEMENT" shall mean a license agreement in the form of
Appendix C attached hereto executed by the Parties upon exercise of any Option
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pursuant to Section 7.
1.27 "MIM/PATHCALLING" shall mean the technology employed by CURAGEN for
identifying protein-protein interactions from libraries of cDNAs.
1.28 "NET SALES" shall mean [XXXXX]
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[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
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[XXXXX]
1.29 "OPTIONED CLONE" shall have the meaning set forth in Section 7.1.
1.30 "OPTION PERIOD" shall have the meaning set forth in Section 7.3.
1.31 "PATENT COORDINATORS" shall mean a patent attorney or patent agent
representing CURAGEN and a patent attorney or patent agent representing
GENENTECH, as further described in Section 6.2.
1.32 "PATENT RIGHTS" means the rights and interests in and to issued
patents and pending patent applications in any country, including, but not
limited to, all provisional applications, substitutions, continuations,
continuations-in-part (solely to the extent claims of such continuations-in-part
cover Inventions) , divisions, and renewals, all letters patent granted thereon,
and all reissues, reexaminations and extensions thereof, whether owned now or
hereafter, solely or jointly by a Party, wherein at least one claim of such
patent right covers an Invention.
1.33 "PREVIOUSLY COMMITTED CLONE" shall mean any Clone which, at the
relevant time under Section 7.1.1, (a) is subject to a license or an option
previously granted by CURAGEN to any third party, or (b) a third party
collaborator of CURAGEN or subscriber to CURAGEN's GeneCalling or PathCalling
database has requested CURAGEN to full-length clone such Clone or has itself
commenced full-length cloning of such Clone and notified
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CURAGEN thereof, and provided that such third party still retains evaluation,
option or license rights to such Clone pursuant to the terms of a written
agreement with CURAGEN.
1.34 "PRIME RATE" shall mean the prime rate of interest as reported by
Citibank, N.A. In the event that Citibank, N.A. ceases to report such a rate,
the term "Prime Rate" shall mean the generally prevailing base corporate lending
rate of Fleet National Bank.
1.35 "PROJECT DATA" shall mean all information obtained by CURAGEN from the
processing of GENENTECH Proprietary Material in a particular Research Project,
including QC data, QEA/GeneCalling data, MIM/PathCalling data, xxxxxxxx xxxx and
any other information obtained or generated by CURAGEN in the performance of
each Research Project in the Research Program.
1.36 "PROJECT DATA SET" shall mean all Project Data resulting from a
discrete Research Project.
1.37 "QEA/GENECALLING" shall mean the software, database and other
technologies employed by CURAGEN for tagging and identifying the expression
level of specific gene fragments within a cDNA pool.
1.38 "RESEARCH COMMITTEE" or "RC" shall have the meaning set forth in
Section 2.2.1.
1.39 "RESEARCH PLAN" shall mean the written description of the Research
Program to be performed by CURAGEN and GENENTECH under this Agreement, as
further described in Section 2.1.3. The Research Plan may specify one or more
independent Research Projects.
1.40 "RESEARCH PROJECT" shall mean a particular project to process and
analyze a specified set of samples approved pursuant to Section 2.1.3. Each
individual Research Project shall involve the analysis of [XXXXX] samples,
unless otherwise agreed by the Parties.
1.41 "RESEARCH PROJECT INVENTION" shall mean any discovery, invention,
know-how or trade secret conceived or made (a) by employees of CURAGEN or
GENENTECH or jointly by employees of both in the performance of the Research
Program, (b) by GENENTECH employees in performing the specific following
activities utilizing any Data Set: (i) QEA and MIM data analysis, confirmation
of QEA or MIM data, fragment cloning and sequencing of a Clone, and (ii) full-
length cloning of a Clone, or (c) any discovery, invention, know-how or trade
secret deemed to be a Research Project Invention pursuant to the terms of this
Agreement or an
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executed License Agreement. Research Project Inventions shall not include
inventions conceived or made solely by GENENTECH outside of the Research Program
except as specifically set forth in (b) above.
1.42 "RESEARCH PROJECT PATENT RIGHTS" shall mean Patent Rights containing a
claim or claims covering Research Project Inventions.
1.43 "RESEARCH PROJECT PROPRIETARY MATERIAL" shall mean all substances made
by CURAGEN in the performance of the Research Program other than mRNA pools
extracted from GENENTECH Proprietary Material. Research Project Proprietary
Material shall include, without limitation, QEA fragments, MIM constructs and
materials derived or constructed from QEA fragments and MIM constructs,
including, without limitation, fragment and full length cDNA clones made by
CURAGEN in the performance of a Research Project.
1.44 "RESEARCH PROGRAM" shall mean the Research Projects to be performed by
CURAGEN and GENENTECH under this Agreement as described in the Research Plan and
amendments thereto.
1.45 "RESEARCH TERM" shall have the meaning set forth in Section 2.3.1.
1.46 "RETAINED GENE" shall have the meaning set forth in Section 7.7.
1.47 "TERM" shall have the meaning set forth in Section 8.1.
1.48 "TERRITORY" shall mean the world.
1.49 "VALID CLAIM(S)" shall mean an unexpired claim of any issued patent
within Patent Rights which has not been finally declared invalid or
unenforceable by a patent office or by a court or other body of competent
jurisdiction in any unappealed or unappealable decision and which has not been
lost through an interference or opposition proceeding.
2. RESEARCH PROGRAM
2.1 IMPLEMENTATION OF RESEARCH PROGRAM.
----------------------------------
2.1.1 Basic Provisions of Program.
---------------------------
(a) The objective of the Research Program will be to generate Project
Data Sets by performing Research Projects utilizing GENENTECH
Proprietary Material. CURAGEN and GENENTECH shall each use
commercially reasonable efforts to
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perform such tasks as are set forth in the Research Plan, including
the provision of such facilities, samples and materials (including
GENENTECH Proprietary Material), equipment and consultants as each
deems necessary to the achievement of such Research Plan. In carrying
out the Research Program, CURAGEN shall devote an average of at least
[XXXXX] FTEs per year to the Research Program over its five year
duration (the "Staffing Level") unless GENENTECH and CURAGEN have
agreed on an increase in the Staffing Level as provided in (b) below.
(b) GENENTECH may request an increase in the Staffing Level of up to
[XXXXX] additional FTEs per year to be devoted to the Research
Program, subject to the agreement of CURAGEN. CURAGEN will use
commercially reasonable efforts to increase the staffing level if
mutually agreed as promptly as practical. Once the Staffing Level is
increased, it may not be decreased [XXXXX] without the consent of
CURAGEN, which consent may be withheld at CURAGEN's sole discretion.
2.1.2 Collaborative Efforts and Reports.
---------------------------------
(a) The Parties agree that the successful execution of the Research
Program will require the collaborative use of both Parties' areas of
expertise. Each Party shall keep the RC fully informed about the
status of the portions of the Research Program they respectively
perform including, without limitation, summaries of their direct uses
of the Project Data itself for so long as GENENTECH shall have an
option to license such Project Data hereunder. CURAGEN shall promptly
provide GENENTECH with a description of Project Data Sets from
completed Research Projects. All information provided hereunder will
be treated as Confidential Information of the disclosing Party
pursuant to the provisions of Article 4.
(b) Scientists at CURAGEN and GENENTECH shall cooperate in the performance
of the Research Program and, subject to any confidentiality
obligations to third parties, shall exchange information and materials
as necessary to carry out the Research Program, subject to the
provisions of Section 4. Each Party will attempt
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to accommodate any reasonable request of the other Party to send or
receive personnel for purposes of collaborating or exchanging
information under the Research Program. Such visits and/or access will
have defined purposes and be scheduled in advance.
(c) CURAGEN will give written notice to GENENTECH and the RC promptly upon
completion of the Project Data Set from each Research Project.
"Completion" of a Project Data Set shall occur upon generation of all
completed QEA/GeneCalling data or MIM/PathCalling data from a Research
Project as contemplated by the Research Plan. Provision of access to
such data shall be promptly provided to GENENTECH through the
GeneScape(R) database.
(d) CURAGEN shall set up and maintain, throughout the Research Term, a
secure partition of its GeneScape(R) database and software for the
exclusive use of GENENTECH and CURAGEN solely for the purpose of
identifying genes from Exclusive Data Sets, and shall provide online
E-mail and telephone help during normal business hours in the use
thereof to GENENTECH. CURAGEN and GENENTECH shall jointly set up and
maintain a secure connection to said partition of the GeneScape(R)
database and software in order to give GENENTECH on-line access
thereto.
(e) GENENTECH will also receive, at its request, access to CURAGEN's
QEA/GeneCalling and MIM/PathCalling subscription databases and to
GeneTools pursuant to one or more subscription agreements to be
executed by the Parties with terms substantially as described in
Appendix E hereto. [XXXXX] Such subscription
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agreements may be terminated by GENENTECH at any time, without
affecting the Research Program, either in their entirety or with
respect to any database at GENENTECH's sole discretion upon three (3)
months prior written notice. GENENTECH shall have no rights to use the
GeneScape(R) database and software except as expressly set forth
herein or in an executed database subscription agreement.
(f) If, after receiving access to any Data Set under the terms of this
Agreement, GENENTECH becomes aware that analysis of such Data Set has
led GENENTECH to file a patent application on, or to full-length
sequence, any Clone whose sequence or utility was identified from such
Data Set, GENENTECH shall promptly notify the RC of such patent filing
or sequencing. Any full-length Clone sequenced by GENENTECH after the
identification of such Clone from a Data Set shall be a Research
Project Invention, unless at the time of such sequencing, such full-
length sequence: (i) is in the public domain, (ii) is in the
possession of GENENTECH (as can be documented by written or computer
records), or (iii) is independently developed by GENENTECH (as can be
documented by written or computer records). If CURAGEN becomes aware
that analysis of a Data Set during GENENTECH's Exclusive Evaluation
Period pertaining to such Data Set has led CURAGEN to file a patent
application on, or to full-length sequence, any Clone whose sequence
or utility was identified from such Data Set, CURAGEN shall promptly
notify the RC of such patent filing or sequencing, and any full-length
Clone sequenced by CURAGEN after the identification of such Clone from
a Data Set shall be deemed a Research Project Invention, unless at the
time of such sequencing, such full-length sequence: (i) is in the
public domain, (ii) is in the possession of CURAGEN (as can be
documented by written or computer records), or (iii) is independently
developed by CURAGEN (as can be documented by written or computer
records).
2.1.3 Research Plans.
--------------
The Research Plan for the [XXXXX] of the Research Program shall be agreed
upon by the Parties within [XXXXX] of the Effective Date and shall include the
initial
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Research Projects and plans to implement the installation of access to the
GeneScape(R) database and software for GENENTECH. Every [XXXXX] during the
Research Term or at any time on request of either GENENTECH or CURAGEN, the
Research Plan shall be updated by CURAGEN and GENENTECH to cover the next
[XXXXX] and shall be approved by the RC no later than thirty (30) days before
the end of each semi-annual period. The Research Plan shall set forth specific
Research Projects for the period covered by the Research Plan. For each Research
Project, the Research Plan will be deemed to include the following activities:
[XXXXX] GENENTECH shall not perform the activities specified in (i)-(iii) above
except as part of the Research Program, or as permitted in Section 2.4.3, in an
executed License Agreement, or in a subscription agreement. During any Exclusive
Evaluation Period for a Data Set, CURAGEN shall not utilize such Data Set in
performing the activities specified in (i)-(iii) except as part of the Research
Program. The RC will consider adjustments in the Research Plan at any time upon
the request of GENENTECH or CURAGEN. Notwithstanding the foregoing, no project
shall become a Research Project without the express consent of both GENENTECH
and CURAGEN; provided, however, that CURAGEN shall consent to any reasonable
proposed Research Project which is not substantially similar to a project that
is ongoing, planned internally solely by CURAGEN, the subject of active
negotiation with a third party or subject to a prior commitment to a third
party, all the above as evidenced by written or computer records, and which
would not violate a prior restriction under an agreement with a third party.
During the Research Term, once a Research Project becomes part of the Research
Plan, such Research Project will not be discontinued (unless such
discontinuation is approved by the RC) regardless of any other negotiations or
commitments with third parties.
2.1.4 Exclusivity.
-----------
(a) CURAGEN agrees that, commencing upon inclusion of a Research Project
in the Research Plan, and continuing through the duration of any
subsequent Exclusive Evaluation Period, CURAGEN shall not undertake to
perform a substantially similar research project with any third party.
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(b) CURAGEN agrees that during any Exclusive Evaluation Period, CURAGEN
will not grant access to any Exclusive Data Set to any other party and
that during any Option Period, CURAGEN shall not grant to any third
party rights to any Optioned Clone or to any Licensed Products related
to such Optioned Clone. In addition, CURAGEN shall not, during any
Exclusive Evaluation Period, grant a third party any rights to option
or to license a Clone contained in the corresponding Exclusive Data
Set (i) which GENENTECH has requested CURAGEN to full-length clone or
(ii) for which GENENTECH has commenced full-length cloning and
notified CURAGEN thereof, or to option or license Licensed Products
relating to such a Clone. Notwithstanding the provisions of Article 4,
upon the expiration of any Exclusive Evaluation Period for any
Exclusive Data Set, CURAGEN shall have the right, at its sole option,
to make such Data Set and, subject to the provisions of Section 2.4.4,
reasonable descriptions of the data contained therein available to
third parties or to put the Data Set and such descriptions in the
subscription portion of the GeneScape(R) database. CURAGEN may perform
research or collaborate with third parties and grant to third parties
the right to exploit the results of any such research or
collaborations without restriction other than as expressly provided in
this Agreement or in an executed License Agreement.
(c) CURAGEN acknowledges that during the Research Program GENENTECH may
obtain useful proprietary information from Research Projects, Project
Data, CURAGEN Projects, CURAGEN Data and CURAGEN's databases and other
information which is not covered by a Valid Claim of a Research
Project Patent Right or a CURAGEN Project Patent Right (collectively,
"Know-How Information"). Without limitation, Know-How Information may
include identification of pathways involved in diseases or protein-
protein interactions involved in diseases, which involvement was not
previously known by GENENTECH. GENENTECH shall have a right to use
Know-How Information for all purposes and CURAGEN hereby grants
GENENTECH a nonexclusive, worldwide, sublicensable license to use
Know-How Information for such
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purposes. In the event that GENENTECH or a Sublicensee develops a
product which is not covered by a Valid Claim of a Research Project
Patent Right, a Valid Claim of a CURAGEN Project Patent Right or a
Valid Claim of an Extended Research Patent Right and is not licensed
to GENENTECH under a License Agreement or an executed subscription
agreement, and which was discovered by GENENTECH or a Sublicensee
based directly and materially on its use of such Know-How Information
(a "Know-How Information Product"), GENENTECH shall pay to CURAGEN a
[XXXXX] on Net Sales of such Know-How Information Product. Without
limitation, GENENTECH's development of a product which has the
intended biological activity of modifying the outcome of a pathway by
binding to a protein or inhibiting protein function and such pathway
was directly identified in a Research Project, such product would be a
Know-How Information Product subject to the [XXXXX] set forth
above, provided that such pathway identification makes a direct and
material contribution to the development of such product.
Notwithstanding the above, the obligation above to pay a [XXXXX] to
CURAGEN on Net Sales of Know-How Information Products shall not apply
to GENENTECH if, at the time of receipt by GENENTECH from CURAGEN and
first use by GENENTECH in the discovery of such Know-How Information
Product, such Know-How Information: (i) was in the public domain; (ii)
was known to, or in the possession or control of, GENENTECH (as
demonstrated by its written or computer records); (iii) had already
been obtained by GENENTECH from sources independent of CURAGEN; or
(iv) was developed by GENENTECH independently of such Know-How
Information (as can be demonstrated by written or computer records).
The right contained in this paragraph does not include any license
under any patent claims owned or controlled in whole or in part by
CURAGEN.
(d) GENENTECH agrees that, until any such information is in the public
domain other than as a result of a disclosure by GENENTECH in
violation of this Agreement, an executed subscription agreement or an
executed License
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Agreement, or until GENENTECH discovers or obtains such information
independently of CURAGEN without use of CURAGEN Data Sets or
Inventions or knowledge thereof, GENENTECH will only utilize Project
Data, CURAGEN Data, CURAGEN Project Proprietary Material, Research
Project Proprietary Material, Inventions or Patent Rights as expressly
provided herein or in an executed License Agreement or executed
subscription agreement. CURAGEN agrees that CURAGEN will not utilize
any GENENTECH Proprietary Material, Project Data, Research Project
Proprietary Material, Research Project Inventions or Research Project
Patent Rights other than as expressly provided herein.
(e) Royalty payments due pursuant to subsection (c) above shall be made to
CURAGEN in United States Dollars quarterly within sixty (60) days
following the end of each calendar quarter for which royalties are
due. Each royalty payment shall be accompanied by a report
summarizing the total Net Sales for each Know-How Information Product
during the relevant three-month period and the calculation of
royalties, if any, due thereon pursuant to this Section 2.1.4. All
royalties shall be payable in full in the United States in United
States Dollars, regardless of the countries in which sales are made.
For the purpose of computing Net Sales for Know-How Information
Products sold in a currency other than United States dollars, such
currency shall be converted into United States dollars at the exchange
rate for buying U.S. dollars set forth in The Wall Street Journal for
-----------------------
the last business day of the calendar quarter.
(f) GENENTECH shall pay royalties with respect to each Know-How
Information Product on a country by country basis for a period of
[XXXXX] from the first commercial sale of such Know-How Information
Product in such country. Following such period, GENENTECH shall have a
fully paid-up, irrevocable license in such country to make, have made,
use, have used, sell, have sold, offer for sale, import and have
imported such Know-How Information Product in such country.
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(g) OVERDUE ROYALTIES. Royalties not paid within the time period set
-----------------
forth in this Section 2.1.4 shall bear interest at [XXXXX] accruing
monthly, from the due date until paid in full.
(h) RECORDS RETENTION. AUDITS. GENENTECH shall keep for [XXXXX] from the
date of each payment of royalties complete and accurate records of
sales by GENENTECH of each Know-How Information Product in sufficient
detail to allow the accruing royalties to be determined accurately.
CURAGEN shall have the right for a period of [XXXXX] after receiving
any report or statement with respect to royalties due and payable to
appoint an independent certified public accountant reasonably
acceptable to GENENTECH to inspect the relevant records of GENENTECH
to verify such report or statement. GENENTECH shall make its records
available for inspection by such independent certified public
accountant during regular business hours at such place or places where
such records are customarily kept, upon reasonable notice from
CURAGEN, solely to verify the accuracy of the reports and payments.
Such inspection right shall not be exercised more than once in any
calendar year nor more than once with respect to sales of any Know-How
Information Product in any given payment period. CURAGEN agrees to
hold in strict confidence all information concerning royalty payments
and reports, and all information learned in the course of any audit or
inspection, except to the extent necessary for CURAGEN to reveal such
information in order to enforce its rights under this Agreement or if
disclosure is required by law, regulation or judicial order. The
results of each inspection, if any, shall be binding on both Parties.
CURAGEN shall pay for such inspections, except that in the event there
is any upward adjustment in aggregate royalties payable for any year
shown by such inspection of more than [XXXXX] of the amount paid,
GENENTECH shall pay for such inspection.
2.1.5 Research License. CURAGEN hereby grants to GENENTECH a non-
----------------
exclusive license under CURAGEN Background Inventions and CURAGEN's interest in
any Inventions solely during the Term hereof and to the extent necessary to
allow GENENTECH to perform its
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obligations under the Research Program and to exercise the rights granted
herein, including without limitation, the evaluation hereunder of Research
Project Data, CURAGEN Data and Clones.
2.1.6 Software License. Any access granted to the GeneScape(R) database
----------------
and software hereunder, or any components thereof, is granted according to the
following terms:
The GeneScape(R) database, software and display screens are protected by
copyright, patent, trade secret and other intellectual property laws. CURAGEN
hereby grants to GENENTECH and its employees a non-exclusive non-transferable
license to access the GeneScape(R) database and software solely for the purposes
of and during the Term of this Agreement. GENENTECH shall access Project Data
Sets and CURAGEN Data Sets only through the GeneScape(R) database and software
provided by CURAGEN. GENENTECH shall not copy the GeneScape(R) database,
software or display screens except as occurs during the normal course of
CURAGEN-provided access. In particular, GENENTECH will not retain such normal
copies for a time not reasonably related to CURAGEN-provided access. GENENTECH
shall not reverse engineer, decompile, or disassemble the GeneScape(R) software
or display screens. The GeneScape(R) database and software embody trade secrets
of CURAGEN that are considered Confidential Information of CURAGEN and subject
to the provisions of Article 6 hereof.
2.2 RESEARCH COMMITTEE.
------------------
2.2.1 Establishment and Functions of the RC.
-------------------------------------
(a) CURAGEN and GENENTECH shall establish a "Research Committee" (the
"RC"). The RC will act on behalf of the two companies and will be
responsible for the planning and monitoring of the Research Program.
In particular, the activities of the RC shall include reviewing
progress in the Research Program and recommending necessary
adjustments to the Research Program, including any Research Project
substitutions deemed desirable based on results and on GENENTECH's
commercial interest, as the research and development progresses.
19
(b) In planning and monitoring the Research Program, the RC shall assign
tasks and responsibilities taking into account each Party's respective
specific capabilities and expertise in order in particular to avoid
duplication and enhance efficiency and synergies. The RC shall also
monitor the assignment of CURAGEN employees to the Research Program
and the allocation of such CURAGEN employees to specific Research
Projects.
2.2.2 RC Membership.
-------------
CURAGEN and GENENTECH each shall appoint, in their sole discretion, three
(3) members to the RC, which shall include a Co-Chair to be designated by
GENENTECH and a Co-Chair to be designated by CURAGEN. Substitutes or alternates
for the Co-Chairs or other RC members may be appointed at any time by notice in
writing to the other Party. The Parties may mutually agree to change the size
of the RC as long as there shall be an equal number of representatives of each
party on the RC. The initial Co-Chairs and other RC members shall be designated
by the parties upon execution of this Agreement. CURAGEN shall appoint a
Project Coordinator, who shall be reasonably satisfactory to GENENTECH, to serve
as the principal CURAGEN liaison with GENENTECH for the Research Program. Such
Project Coordinator will be one of CURAGEN's members of the RC.
2.2.3 Meetings.
--------
The RC shall meet once a year in New Haven, Connecticut, and once a year in
South San Francisco, California unless the Parties agree otherwise. Any
additional meetings shall be held at places and on dates selected by the Co-
Chairs of the RC. The RC shall also conduct two meetings a year by conference
call, or as otherwise agreed by the RC members. In addition, the RC may act
without a formal meeting by a written memorandum signed by the Co-Chairs of the
RC. Whenever any action by the RC is called for hereunder during a time period
in which the RC is not scheduled to meet, the Co-Chairs of the RC shall cause
the RC to take the action in the requested time period by calling a special
meeting, conference call or by action without a meeting. Subject to the
obligations set forth in Section 4, representatives of each Party, in addition
to the members of the RC, may attend RC meetings at the invitation of either
Party with the prior approval of the other Party, which shall not be
unreasonably withheld.
2.2.4 Minutes.
-------
20
The RC shall keep accurate minutes of its deliberations which record all
proposed decisions and all actions recommended or taken. Drafts of the minutes
shall be delivered to the Co-Chairs of the RC within twenty (20) days after the
meeting. The Party hosting the meeting shall be responsible for the preparation
and circulation of the draft minutes. Draft minutes shall be edited by the Co-
Chairs and shall be issued in final form only with their approval and agreement
as evidenced by their signatures on the minutes.
2.2.5 Quorum; Voting; Decisions.
-------------------------
At each RC meeting, at least two (2) member(s) appointed by each Party
present in person or by telephone shall constitute a quorum and decisions shall
be made by majority vote. Each RC member shall have one vote on all matters
before the RC, provided that the member or members of each Party present at an
RC meeting shall have the authority to cast the votes of any of such Party's
members on the RC who are absent from the meeting. Notwithstanding the
foregoing, the objective of the Parties to this Agreement is that decisions of
the RC shall be made by consensus. However, except as otherwise set forth
herein, in the event that the RC is unable to resolve any matter before it as
set forth above, such matter shall be resolved by GENENTECH, taking into
reasonable consideration the best interests of both GENENTECH and CURAGEN.
Notwithstanding the foregoing, no project shall become a Research Project
without the express consent of both GENENTECH and CURAGEN; provided, however,
that CURAGEN shall consent to any reasonable proposed Research Project which is
not substantially similar to a project that is ongoing, planned internally
solely by CURAGEN, the subject of active negotiation with a third party or
subject to a prior commitment to a third party, all the above as evidenced by
written or computer records, and which would not violate a prior restriction
under an agreement with a third party.
2.2.6 Expenses.
--------
CURAGEN and GENENTECH shall each bear all expenses of their respective RC
members related to their participation on the RC and attendance at RC meetings.
2.2.7 Record Keeping.
--------------
Throughout the Term of this Agreement the Parties will maintain a list of
Research Projects and start dates and completion dates thereof, Exclusive Data
Sets, Exclusive Evaluation
21
Periods and extensions thereof, Option Periods and extensions thereof and
Optioned Clones. Such task shall be performed by the RC unless otherwise
mutually agreed by the Parties.
2.3 RESEARCH TERM.
-------------
2.3.1 Term of the Research Program.
----------------------------
The Research Program shall expire five (5) years after the Effective Date
unless extended as provided below or unless earlier terminated by either Party
by virtue of termination of the Research Program or this Agreement pursuant to
the provisions of Sections 2.3.3 or 2.3.4 and/or Article 8 (the "Research
Term").
2.3.2 Extension of the Research Program.
---------------------------------
The Research Term may be extended upon prior [XXXXX] written notice by
mutual agreement of the Parties on terms to be agreed upon between the Parties.
2.3.3 Termination of the Research Program.
-----------------------------------
(a) GENENTECH may terminate the Research Program at its sole discretion
effective upon the 18 month anniversary of the Effective Date by
giving written notice to CURAGEN within one (1) month prior to such
date and by: (i) paying CURAGEN up to [XXXXX] in cash within thirty
(30) days of giving CURAGEN such written notice of termination
and/or (ii) forgiving up to [XXXXX] of any outstanding balance under
the Loan pursuant to a written instrument delivered to CURAGEN
within thirty (30) days of giving CURAGEN such written notice of
termination, in any combination of (i) and (ii) such that the
combined payment and forgiveness amounts total [XXXXX]. In the event
that, as of one month following such termination date (the "Section
2.3.3(a) Balance Date"), the outstanding balance under the Loan is
less than [XXXXX] GENENTECH will forgive the amount of such
outstanding balance and may, in lieu of or in addition to paying
cash as specified in (i) above, elect to pay the balance of the
[XXXXX] by transferring back to CURAGEN within [XXXXX] of the
Section 2.3.3(a) Balance Date, shares of CURAGEN stock received by
GENENTECH pursuant to the terms of the Note at the value (as
determined
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pursuant to the terms of the Note) as of the Section 2.3.3(a)
Balance Date in an amount necessary to bring the combined
forgiveness, cash payment and payment in stock amounts to a total of
[XXXXX]. Any such early termination of the Research Program shall
automatically terminate any ongoing Exclusive Evaluation Periods
hereunder. In addition, all but [XXXXX] existing on the effective
date of such termination shall be terminated and GENENTECH may elect
which [XXXXX] shall survive upon notice given to CURAGEN prior to
termination. All of GENENTECH's rights under this Agreement with
respect to such [XXXXX] shall be unaffected by any such termination
and any License Agreement executed prior to any such termination
shall survive such termination.
(b) Provided that GENENTECH has elected to proceed under Section
2.3.4(a)(iii) on the third anniversary of the Effective Date,
GENENTECH may terminate the Research Program at its sole discretion
at any time after the third anniversary of the Effective Date upon
three (3) months prior written notice to CURAGEN. Any such early
termination of the Research Program shall not affect GENENTECH's
rights under any Exclusive Evaluation Periods or any Option Periods
then ongoing, any License Agreement executed between the Parties
prior to such termination or any Options that have been exercised
prior to such termination for which the License Agreement has not
yet been executed; provided, however, that any surviving Exclusive
Evaluation Periods shall not be extendible pursuant to Section
2.4.2.
2.3.4 Rights at Third and Fifth Anniversary
-------------------------------------
(a) Upon the third anniversary of the Effective Date, unless previously
terminated, GENENTECH shall have three choices for how to proceed
with respect to continuation or termination of the Research Program
and/or this Agreement:
(i) GENENTECH may, by written notice given within thirty (30) days
prior to such third anniversary date, terminate the Research
Program and this Agreement and all licenses granted pursuant to
any executed License
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Agreement and all Exclusive Evaluation Periods and Options
granted pursuant to this Agreement. No payment will be due
CURAGEN.
(ii) GENENTECH may terminate the Research Program by written notice
given within thirty (30) days prior to such third anniversary
date, but if GENENTECH: (x) pays CURAGEN up to [XXXXX] in
cash within 30 days of the third anniversary date and/or (y)
forgives up to [XXXXX] of any outstanding balance under the
Loan (as defined in Section 3.2 below) pursuant to a written
instrument delivered to CURAGEN within 30 days of such third
anniversary date, in any combination of (x) and (y) such that
the combined payment and forgiveness amounts total [XXXXX],
then GENENTECH's termination of the Research Program shall not
affect GENENTECH's rights under any Exclusive Evaluation
Periods or any Option Periods then ongoing, any License
Agreement executed between the Parties prior to such
termination, or any Options that have been exercised by
GENENTECH prior to such termination for which the License
Agreement has not yet been executed; provided, however, that
any such Exclusive Evaluation Periods shall not be extendible
pursuant to Section 2.4.2. In the event that, as of one month
following such termination date (the "Section 2.3.4(a)(ii)
Balance Date"), the outstanding balance under the Loan is less
than [XXXXX], GENENTECH will forgive the amount of such
outstanding balance and may, in lieu of or in addition to
paying cash as specified in (x) above, elect to pay the balance
of the [XXXXX] by transferring back to CURAGEN within [XXXXX]
[XXXXX] of the Section 2.3.4(a)(ii) Balance Date, shares of
CURAGEN stock received by GENENTECH pursuant to the terms of
the Note at the value (as determined pursuant to the terms of
the Note) as of the Section 2.3.4(a)(ii) Balance Date in an
amount necessary to bring the combined forgiveness, cash
payment and payment in stock amounts to a total of [XXXXX].
All provisions of this Agreement governing such Exclusive
Evaluation
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Periods, Option Periods, Options and related license rights
shall continue in full force and effect.
(iii) GENENTECH may continue with the Research Program and this
Agreement in their entirety and retain its rights in any
Exclusive Evaluation Periods and any Option Periods then
ongoing, any License Agreement executed between the parties
prior to such termination and any Options that have been
exercised by GENENTECH prior to such early termination for
which the License Agreement has not yet been executed. Under
this choice, GENENTECH shall: (x) pay CURAGEN up to [XXXXX]
in cash within 30 days of the third anniversary date and/or
(y) forgive up to [XXXXX] of any outstanding balance under
the Loan pursuant to a written instrument delivered to CURAGEN
within 30 days of such third anniversary date, in any
combination of (x) and (y) such that the combined payment and
forgiveness amounts total [XXXXX]. In the event that, as of
one month following such termination date (the "Section
2.3.4(a)(iii) Balance Date"), the outstanding balance under
the Loan is less than [XXXXX], GENENTECH will forgive the
amount of such outstanding balance and may, in lieu of or in
addition to paying cash as specified in (x) above, elect to
pay the balance of the [XXXXX] by transferring back to
CURAGEN within [XXXXX] of the Section 2.3.4(a)(iii)
Balance Date, shares of CURAGEN stock received by GENENTECH
pursuant to the terms of the Note at the value (as determined
pursuant to the terms of the Note) as of the Section
2.3.4(a)(iii) Balance Date in an amount necessary to bring the
combined forgiveness, cash payment and payment in stock
amounts to a total of [XXXXX]. Under this Section
2.3.4(a)(iii) only, the maximum principal amount on the Loan
shall increase to [XXXXX] as described in Section 3.2(a).
(b) In the event that the Research Program does not terminate as set
forth in Section 2.3.3 or Section 2.3.4(a)(i) or (ii), upon the
fifth anniversary of the Effective Date,
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Confidential Treatment Requested
the Research Program, this Agreement and all licenses to any
Licensed Clones optioned pursuant to Section 7.1 from an Exclusive
Data Set which was completed after the third anniversary of the
Effective Date and all licenses to any Licensed Clones licensed to
GENENTECH without an Option from any such Exclusive Data Set
completed after the third anniversary of the Effective Date, shall
terminate as of such fifth anniversary date unless GENENTECH: (i)
pays CURAGEN up to an additional [XXXXX] in cash within thirty (30)
days of such fifth anniversary date and/or (ii) forgives up to an
additional [XXXXX] of any outstanding balance under the Loan
pursuant to a written instrument delivered to CURAGEN within thirty
(30) days of such fifth anniversary date, in any combination of (i)
and (ii) such that the combined payment and forgiveness amounts
total an additional [XXXXX]. In the event that, as of such
termination date, the outstanding balance under the Loan is less
than [XXXXX], GENENTECH will forgive the amount of such outstanding
balance and may, in lieu of or in addition to paying cash as
specified in (i) above, elect to pay the balance of the [XXXXX] by
transferring back to CURAGEN within [XXXXX] of such termination
date, shares of CURAGEN stock received by GENENTECH pursuant to the
terms of the Note at the value (as determined pursuant to the terms
of the Note) as of such termination date in an amount necessary to
bring the combined forgiveness, cash payment and payment in stock
amounts to a total of [XXXXX]. Such termination shall not affect
GENENTECH's rights under any Exclusive Evaluation Period, Option
Period or License Agreement then ongoing which relates to a Data Set
completed prior to the third anniversary of the Effective Date, and
all provisions of this Agreement governing such Exclusive Evaluation
Periods, Option Periods, Options and related license rights shall
continue in full force and effect.
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2.3.5 Effect of Termination.
---------------------
(a) Upon any termination of the Research Program pursuant to Section
2.3.3 or 2.3.4, GENENTECH shall grant to CURAGEN a license as set
forth in Section 7.5 under GENENTECH's rights in Research Project
Patent Rights and Research Project Inventions to the extent not
previously granted to CURAGEN or not expressly retained by GENENTECH
pursuant to the terms of Sections 2.3.3 or 2.3.4 of this Agreement.
[XXXXX]
(b) Any termination of the Research Program under Section 2.3.3 or
Section 2.3.4 shall be without prejudice to the rights of either
Party against the other, then accruing or otherwise accrued under
this Agreement and upon any such termination, all remaining
GENENTECH Proprietary Material provided to CURAGEN under this
Agreement shall be returned to GENENTECH or destroyed, except as
provided in Section 7.5, and all remaining CURAGEN Project
Proprietary Material and Research Project Proprietary Material
provided to GENENTECH under this Agreement shall be returned to
CURAGEN or destroyed, except for any CURAGEN Project Proprietary
Material or Research Project Proprietary Material licensed pursuant
to an executed License Agreement or which is the subject of a
surviving Evaluation Period or Option.
2.4 PROJECT DATA EVALUATIONS.
------------------------
2.4.1 Exclusive Access. From the time at which a Research Project is
----------------
begun and continuing through a [XXXXX] which shall commence at the beginning of
the calendar quarter following the calendar quarter in which delivery of a
proper notice of a complete Project Data Set is made pursuant to Section
2.1.2(c) and access to such complete Project Data Set is given to GENENTECH (the
"Exclusive Evaluation Period"), GENENTECH shall have the right
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Confidential Treatment Requested
to use all Project Data, Research Project Inventions and Research Project
Material related to such Research Project to evaluate Clones and the proteins
encoded thereby and derived therefrom for potential licensing. During each
Exclusive Evaluation Period, CURAGEN (a) shall not use such Project Data Set
(which, during such Exclusive Evaluation Period shall be an Exclusive Data Set)
and related Research Project Proprietary Material for any purpose other than
conducting the Research Program hereunder and (b) shall keep such Project Data
Set and related Research Project Inventions and Research Project Proprietary
Material confidential and will not disclose or transfer the Project Data Set, or
related Research Project Inventions and Research Project Proprietary Material to
third parties by publication or otherwise, without the prior written consent of
GENENTECH. Notwithstanding the foregoing, CURAGEN shall have the right during
such Exclusive Evaluation Period to use, but not to transfer to third parties
(except pursuant to an agreement with a third party who has identified such
Clone independently of the Project Data), all Clones or the proteins derived
therefrom, outside of the Research Program as part of CURAGEN's libraries for
internal, general, non-directed research purposes (including, without
limitation, full length cloning, expression analysis, protein-protein
interactions and drug screening). For example, but without limitation, inclusion
of the Clone together with other clones in research to determine multiple
protein-protein interactions, or inclusion of the Clone together with other
clones in a screen against one or more molecules to determine inhibition would
be "non-directed" research, whereas activities associated with choosing a
specific Clone and conducting research to elucidate the biological activity of
such Clone (e.g., generating antibodies to the Clone, testing the Clone or
protein encoded thereby in preclinical models, enriching libraries with such
Clone to purposefully look for proteins which bind to such Clone) would be
considered "directed" research and CURAGEN shall not be permitted to perform
such activities under this Section 2.4.1. CURAGEN shall keep GENENTECH
reasonably informed of the results of any such research and patent applications
and patents relating to such research on a confidential and timely basis in
order to allow GENENTECH to make informed decisions regarding the exercise of
its option and license rights hereunder. All inventions conceived or made during
such research which relate to the Clone, the proteins derived therefrom
(including antibodies), homologs or mutants with substantially the same
biological activity as such Clone, or uses thereof, shall be deemed Research
Project Inventions subject to GENENTECH's option
28
rights for such Clone under Article 7. All other inventions from such research
shall be Extended Research Inventions and GENENTECH will have rights to such
Extended Research Inventions and Extended Research Patent Rights resulting
therefrom as provided in Article 7 hereof and in Section 2.3 of the License
Agreement attached hereto as Appendix C.
2.4.2 Extensions. GENENTECH may elect to extend the Exclusive Evaluation
----------
Period for any Project Data Set that has become an Exclusive Data Set, and all
rights thereunder, for an additional [XXXXX] by giving written notice to CURAGEN
and making a payment of [XXXXX] to CURAGEN prior to expiration of the initial
Exclusive Evaluation Period for such Project Data Set. An Exclusive Evaluation
Period will be automatically extended for up to [XXXXX] in order to allow the
completion of any reasonable requests for confirmation of data made by GENENTECH
during the primary [XXXXX] of such Exclusive Evaluation Period.
2.4.3 Non-exclusive Access. Following the expiration of the
--------------------
Exclusive Evaluation Period for a Project Data Set, GENENTECH shall continue to
have non-exclusive access to such Project Data Set solely through the
GeneScape(R) database and solely for the purpose of identifying Clones of
interest to GENENTECH in such Data Set, or to the extent otherwise set forth in
an executed subscription agreement. However, the preceding restriction shall
not apply to any information which becomes part of the public domain other than
as a result of a disclosure by GENENTECH in violation of this Agreement, an
executed License Agreement or an executed subscription agreement.
2.4.4. Data Annotations. Upon the expiration of the Exclusive Evaluation
----------------
Period for each Project Data Set, CURAGEN shall furnish to GENENTECH reasonable
descriptions of the Project Data Set to be included as annotations in the
GeneScape(R) database with the Project Data Set. GENENTECH shall have a period
of [XXXXX] to review such descriptions and advise CURAGEN of reasonable
objections. CURAGEN shall not include in the GeneScape(R) database any
descriptions, or portions thereof, to which GENENTECH reasonably objects.
CURAGEN shall not include any Confidential Information of GENENTECH (as defined
in Section 4.1 below) in any annotation.
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2.5 CURAGEN PROJECTS.
----------------
2.5.1 Access. GENENTECH shall have the option, for such reasonable period
------
or periods as CURAGEN may specify, to review specified proprietary CURAGEN Data
Sets and related CURAGEN Project Inventions, which are offered by CURAGEN in its
sole discretion to GENENTECH for review and to request exclusive access thereto.
Such option shall be exercisable as set forth in Section 2.5.2 below.
2.5.2 Exclusive Evaluation Option. Subject to any rights which CURAGEN
---------------------------
may grant or have granted to third parties, GENENTECH may request at any time
during the time period specified by CURAGEN (as described in Section 2.5.1) that
it receive exclusive access to any CURAGEN Data Set offered to GENENTECH
pursuant to Section 2.5.1. Such exclusive access to such CURAGEN Data Set shall
be granted to GENENTECH for an Exclusive Evaluation Period of [XXXXX] commencing
upon CURAGEN's receipt of written notice from GENENTECH and payment of an
exclusive evaluation fee of [XXXXX], unless GENENTECH is notified by CURAGEN at
any time prior to CURAGEN's receipt of GENENTECH's written notice that exclusive
access to such CURAGEN Data Set is no longer available as a result of CURAGEN's
agreements with third parties existing at the time of the request. During each
Exclusive Evaluation Period, CURAGEN (a) shall not use such CURAGEN Data Set
(which, during such Exclusive Evaluation Period shall be an Exclusive Data Set)
and related CURAGEN Project Proprietary Material for any purpose other than
conducting the Research Program hereunder and (b) shall keep such CURAGEN Data
Set and related CURAGEN Project Inventions and CURAGEN Project Proprietary
Material confidential and will not disclose or transfer the CURAGEN Data Set, or
related CURAGEN Project Inventions and CURAGEN Project Proprietary Material to
third parties by publication or otherwise, without the prior written consent of
GENENTECH. Notwithstanding the foregoing, CURAGEN shall have the right during
such Exclusive Evaluation Period to use, but not transfer to third parties
(except pursuant to an agreement with a third party who has identified such
Clone independently of the CURAGEN Data) all Clones or the proteins derived
therefrom, outside of the Research Program as part of CURAGEN's libraries for
internal, general, non-directed research purposes (including, without
limitation, full length cloning, protein-protein interactions and drug
screening). For example, but without limitation, inclusion of the Clone together
with other clones in research to
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determine multiple protein-protein interactions, or inclusion of the Clone
together with other clones in a screen against one or more molecules to
determine inhibition would be "non-directed" research, whereas activities
associated with choosing a specific Clone and conducting research to elucidate
the biological activity of such Clone (e.g., generating antibodies to the Clone,
testing the Clone or protein encoded thereby in preclinical models, enriching
libraries with such Clone to purposefully look for proteins which bind to such
Clone) would be considered "directed" research and CURAGEN shall not be
permitted to perform such activities under this Section 2.5.2. Such research
shall be Extended Research, and GENENTECH shall have rights to such Extended
Research and Extended Research Inventions and Extended Research Patent Rights
resulting therefrom as provided in Article 7 hereof and in Section 2.3 of the
License Agreement attached hereto as Appendix C. CURAGEN shall keep GENENTECH
----------
reasonably informed of the results of any such Extended Research and Extended
Research Patent Rights on a confidential and timely basis in order to allow
GENENTECH to make informed decisions regarding the exercise of its option and
license rights hereunder.
2.5.3 Extensions. GENENTECH may elect to extend the Exclusive Evaluation
----------
Period for any CURAGEN Data Set for an additional [XXXXX] by giving written
notice to CURAGEN and making a second payment of [XXXXX] to CURAGEN prior to
expiration of the initial Exclusive Evaluation Period for such CURAGEN Data Set.
An Exclusive Evaluation Period will be automatically extended for up to [XXXXX]
in order to allow the completion of any reasonable requests for confirmation of
data made by GENENTECH during the primary [XXXXX] period of such Exclusive
Evaluation Period. Following the expiration of the Exclusive Evaluation Period
for a CURAGEN Data Set, GENENTECH shall have no access to or right to use such
CURAGEN Data Set, other than as expressly permitted in an executed License
Agreement.
2.6 DATA FROM PREVIOUS PROJECTS. Pursuant to the Collaboration
---------------------------
Agreements, CURAGEN has generated the data sets listed on Appendix D hereto and
----------
has provided such data sets to GENENTECH. Notwithstanding any other provision
of the Collaboration Agreements between the Parties, such data sets shall be
deemed Project Data Sets for all purposes hereunder and shall be deemed
completed as of the date indicated for each data set on Appendix D. GENENTECH
----------
shall have exclusive access to all such Project Data Sets for Exclusive
Evaluation
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Periods commencing on such indicated completion dates and continuing as provided
in Section 2.4, and shall have evaluation and option rights as otherwise
provided for Project Data Sets herein.
3. FINANCIAL TERMS
3.1 EQUITY INVESTMENT. GENENTECH agrees to make an equity investment in
-----------------
CURAGEN in the amount of Five Million Dollars ($5,000,000), such investment to
be made in a transaction exempt from registration under the Securities Act of
1933 pursuant to the terms of a stock purchase agreement in substantially the
form of Appendix F hereto.
3.2 LOAN COMMITMENT. As partial consideration for rights granted
---------------
hereunder, GENENTECH hereby commits to the following:
(a) GENENTECH shall, subject to the terms set forth below, make funds
available to CURAGEN for general corporate purposes in the form of a
loan or loans to CURAGEN in an amount up to Twenty-One Million Dollars
($21,000,000.00) (the "Loan"). Unless this Agreement or the Research
Program has been terminated for any reason (except that in the event
of termination pursuant to Section 2.3.3(a) or 2.3.4(a), CURAGEN shall
be permitted to continue to draw down the Loan for a period of thirty
(30) days following any such notice of termination under Section
2.3.3(a) or Section 2.3.4(a)), and subject to the drawdown limits
discussed below, CURAGEN may, in such amounts and at such times as
CURAGEN, in its sole discretion, may determine, draw down the balance
of the Loan over a period of five (5) Loan Years (as defined below)
following the Effective Date. For the purposes of this section, a
"Loan Year" commences on the Effective Date or an anniversary thereof
and terminates twelve months later. GENENTECH shall not be obligated
to advance more than Nine Million Dollars ($9,000,000) in the first
Loan Year, or more than a total Sixteen Million Dollars ($16,000,000)
in the first two Loan Years or to advance any funds under the Loan at
any time during which an Event of Default (as defined in the Note) has
occurred and is continuing under the Note (defined below).
[XXXXX]
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[XXXXX] GENENTECH's obligation to advance any funds under the Loan
shall terminate upon the earlier to occur of (i) the last day of the
fifth Loan Year, (ii) CURAGEN's receipt of notice of termination or
the expiration of the Research Program or this Agreement, or (iii)
termination or the expiration of the Research Program or this
Agreement, except that in the event of termination pursuant to Section
2.3.3(a) or 2.3.4(a), CURAGEN shall be permitted to continue to draw
down the Loan for a period of thirty (30) days following notice of
such termination under Section 2.3.3(a) or Section 2.3.4(a).
Notwithstanding the foregoing, if GENENTECH has elected to continue
this Agreement pursuant to Section 2.3.4(a)(iii), the maximum
principal amount of the Loan will be increased to a total of Twenty-
Six Million Dollars ($26,000,000.00), and CURAGEN may thereafter draw
down the balance of such principal amount subject to the conditions
described above.
(b) On the Effective Date, CURAGEN shall execute and deliver to GENENTECH
an unsecured note, substantially in the form set forth in Appendix B
----------
attached hereto and made a part hereof (the "Note"), evidencing the
Loan. The schedule attached to the Note shall be revised each time
any amount is drawn down under the Loan and each time any amount is
repaid.
(c) In the event that CURAGEN makes any repayment hereunder in CURAGEN
Convertible Non-Voting Common Stock and CURAGEN is eligible to file a
registration statement on Form S-3 (or successor short form) at the
time of repayment, then within [XXXX] of the repayment date, CURAGEN
shall file a registration statement on Form S-3 covering the resale by
GENENTECH of the shares issuable upon conversion of any shares of
Convertible Non-Voting Common Stock so delivered to GENENTECH.
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3.3 ADDITIONAL RESEARCH FUNDING.
---------------------------
In partial consideration of the work to be done by CURAGEN in the Research
Program, GENENTECH will pay CURAGEN non-refundable research payments of [XXXXX]
[XXXXX] in the Staffing Level above [XXXXX] FTEs. Such payments will be made
quarterly in advance, commencing on the first day of any calendar quarter in
which the Staffing Level is to increase above [XXXXX], and on or before the
first day of each calendar quarter thereafter. [XXXXX] In the event that the
Staffing Level is to change during any calendar quarter, such payment shall be
pro-rated accordingly, if necessary, based on the above-specified level of
funding per FTE. GENENTECH will fund its own activities under the Research
Program.
3.4 ADDITIONAL ADVANCE.
------------------
Notwithstanding the provisions of Section 3.2(a), in the event that, during
the term of the Loan, CURAGEN completes a public offering of shares of CURAGEN
Common Stock after any portion of the Note has been converted to CURAGEN Series
F Preferred Stock (the "Conversion Shares") pursuant to Section 6 of the Note,
GENENTECH shall, upon the written request of CURAGEN received within thirty (30)
days of such event (the "Redemption Notice"), advance to CURAGEN, under the
terms of the Note and Section 3.2(a) hereof, the aggregate Redemption Price (as
defined in the Certificate of Designation for the Series F Preferred Stock) of
the Conversion Shares (the "Redemption Amount"). CURAGEN shall use the
Redemption Amount received from GENENTECH solely for the purpose of repurchasing
the Conversion Shares from GENENTECH. CURAGEN shall repurchase the Conversion
Shares, and GENENTECH shall sell and deliver the Conversion Shares to CURAGEN,
for a price equal to the Redemption Amount contemporaneously with the advance of
the Redemption Amount.
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4. TREATMENT OF CONFIDENTIAL INFORMATION
4.1 CONFIDENTIAL INFORMATION. During the course of the Research Program,
------------------------
or in discussions concerning Exclusive Data Sets, each Party may disclose to the
other proprietary technical, research and business information, including but
not limited to information contained in Data Sets (which Data Set information
shall be deemed Confidential Information of CURAGEN), (collectively,
"Confidential Information"). For a period of [XXXXX] after the receipt of any
such Confidential Information, except as expressly permitted hereunder, the
receiving Party shall keep confidential all such Confidential Information of the
other Party and will not disclose such Confidential Information of the other
Party to third parties by publication or otherwise. Each Party further agrees
not to use Confidential Information of the other Party for any purpose other
than conducting or evaluating research hereunder, evaluating and analyzing Data
Sets or exercising any rights granted to it or reserved by it under this
Agreement. Notwithstanding the foregoing, it is understood and agreed that the
receiving Party's obligations of confidentiality and nonuse herein shall not
apply to any information which:
(a) is, at the time of disclosure by the disclosing Party hereunder, or
thereafter becomes, a part of the public domain or publicly known or
available through no fault or negligence of the receiving Party or any
of its Affiliates; or
(b) was otherwise in the receiving Party's lawful possession prior to
disclosure by the disclosing Party, as demonstrated by the receiving
Party's written records; or
(c) is lawfully disclosed to the receiving Party on a non-confidential
basis by a third party who is not in violation of an obligation of
confidentiality to the disclosing Party relative to such information.
Each Party may disclose the other Party's Confidential Information to the extent
reasonably necessary to comply with applicable government law or regulations,
provided that prompt notice of any such disclosure shall be given to the other
Party. Information disclosed other than in written or electronic form shall be
subject to the terms of this Section 4.1 only if confirmed in
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writing to other Party within thirty (30) days of initial disclosure and
specifying with particularity that Confidential Information disclosed other than
in written form which is subject to the provisions of this Section 4.1.
4.2 PUBLICATIONS. It is expected that each Party may wish to publish the
-------------
results of the research under this Agreement. In order to safeguard intellectual
property rights, the Party wishing to publish or otherwise publicly disclose the
results of its research hereunder shall first submit a draft of the proposed
manuscripts to the RC for each Party's review, comment and consideration of
appropriate patent action at least [XXXXX] prior to any submission for
publication or other public disclosure. Within [XXXXX] of receipt of the
prepublication materials, the RC will advise the Party seeking publication as to
whether a patent application will be prepared and filed or whether trade secret
protection should be pursued and, if so, the RC will, in cooperation with both
parties, determine the appropriate timing and content of any such publications.
CURAGEN shall have the right to reasonably withhold consent for publications
based primarily upon CURAGEN Projects. CURAGEN shall also have the right to
reasonably withhold consent for publication of QEA/GeneCalling or
MIM/PathCalling data. Each Party shall have the right to reasonably withhold
consent for publication of its own Confidential Information provided to the
other Party hereunder. Consent to all other publications regarding Clones shall
be governed by the RC as indicated above in this Section.
4.3 PRESS RELEASE AND REGULATORY FILINGS. The Parties shall mutually
-------------------------------------
agree on a press release announcing the execution of this Agreement and on any
confidential treatment request to be filed with the Securities and Exchange
Commission with respect to this Agreement. Once any such written statement is
approved for disclosure by both Parties, either Party may make subsequent public
disclosures of the contents of such statement without the further approval of
the other Party. Neither Party shall make any disclosure of the terms of this
Agreement except as required by applicable law or as set forth above without the
prior written consent of the other Party.
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5. INTELLECTUAL PROPERTY RIGHTS
5.1 GENENTECH PROPRIETARY MATERIAL. mRNA pools extracted by CURAGEN from
------------------------------
a GENENTECH Proprietary Material in the performance of the Research Program and
full-length genes cloned by GENENTECH using any Clone shall be GENENTECH
Proprietary Material. All other substances made by CURAGEN in the performance
of the Research Program shall be Research Project Proprietary Material and all
other substances made by GENENTECH shall be GENENTECH Proprietary Material.
Except as provided in Section 7.5 or in an executed License Agreement, GENENTECH
Proprietary Material shall remain the property of GENENTECH, and CURAGEN shall
use such GENENTECH Proprietary Material only for the purpose of conducting the
Research Program hereunder or as otherwise permitted herein, and shall not
transfer GENENTECH Proprietary Material to any other person or entity.
5.2 CURAGEN PROJECT PROPRIETARY MATERIAL AND RESEARCH PROJECT PROPRIETARY
---------------------------------------------------------------------
MATERIAL.
--------
(a) CURAGEN Project Proprietary Material shall remain the property of
CURAGEN and GENENTECH shall use such CURAGEN Project Proprietary
Material only for purposes relating to performance of the Research
Program, evaluation of the CURAGEN Data, the exercise of the option
provided in Section 7.1, or pursuant to the terms of an executed
License Agreement. GENENTECH shall not transfer CURAGEN Project
Proprietary Material to any other person or entity except in
connection with rights granted to GENENTECH pursuant to an executed
License Agreement. CURAGEN shall not transfer to any third party or
otherwise use CURAGEN Project Proprietary Material during an Exclusive
Evaluation Period or Option Period except as otherwise permitted
herein.
(b) Research Project Proprietary Material shall remain the property of
CURAGEN and GENENTECH shall use such Research Project Proprietary
Material only for purposes relating to performance of the Research
Program, evaluation of the Project Data, the exercise of the option
provided in Section 7.1, or pursuant to the terms of an executed
License Agreement. GENENTECH shall not transfer
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Research Project Proprietary Material to any other person or entity
except in connection with rights granted to GENENTECH pursuant to an
executed License Agreement. CURAGEN shall not transfer to any third
party or otherwise use Research Project Proprietary Material during an
Exclusive Evaluation Period or Option Period except as otherwise
permitted herein.
5.3 INVENTIONS. Each Party shall promptly disclose to the other Party all
-----------
Inventions. During the term of any Exclusive Evaluation Period or relevant
Option Period, CURAGEN shall not use Research Project Inventions, Project Data,
CURAGEN Project Inventions or CURAGEN Data to support patent filings made by
CURAGEN outside the Research Program without GENENTECH's express prior written
consent. GENENTECH shall not at any time use Research Project Inventions,
Project Data, CURAGEN Project Inventions or CURAGEN Data to support patent
filings made by GENENTECH outside the Research Program except to the extent that
such filings relate to Licensed Clones or corresponding Licensed Products.
Except as set forth in Sections 5.1 and 5.2, (i) all Research Project
Inventions, and Research Project Patent Rights shall be owned jointly by CURAGEN
and GENENTECH; and (ii) all CURAGEN Project Inventions and CURAGEN Project
Patent Rights shall be owned by CURAGEN. Inventorship of Patent Rights shall be
agreed upon in good faith by the Parties prior to the filing of each new patent
application in accordance with applicable law. The rights and interests of
CURAGEN and GENENTECH in Inventions shall be subject to the provisions of
Article 7.
6. PROVISIONS CONCERNING THE FILING, PROSECUTION AND
MAINTENANCE OF PATENT RIGHTS
6.1 APPLICABILITY. The provisions of this Section 6 shall be applicable
-------------
to all Inventions and Patent Rights unless and until (i) they become subject to
a License Agreement, whereupon the License Agreement will govern the rights of
the parties with respect to the subject matter thereof, or (ii) the relevant
Research Project is completed and the relevant Exclusive Evaluation Period
expires and the relevant Option Period, if any, expires, whereupon this Section
6 shall cease to apply with respect to Inventions and Patent Rights relating to
such Research Project or License Agreement.
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6.2 PATENT FILING.
-------------
(a) CURAGEN shall have the responsibility to prepare, file, prosecute,
obtain and maintain U.S. and foreign patent applications and patents
on Inventions at its sole expense. Initial patent filings shall be
made in the form of a regular CFR Rule 1.51 U.S. Priority patent
application or a provisional application, as determined by the Patent
Coordinators. The Patent Coordinators for each Party will be
designated by such Party from time to time. Patent applications will
be perfected by making, as soon as available, an ATCC deposit of at
least such Clone(s) as reasonably agreed by the Patent Coordinators,
and by making any subsequent application filings necessary to perfect
U.S. or foreign priority patent rights in the countries of Europe that
are members of the European Patent Organization, Japan, Canada, Mexico
and at least such other countries as mutually agreed by the Parties.
GENENTECH agrees to provide reasonable and timely assistance and
cooperation to CURAGEN to facilitate such filing, prosecution and
maintenance, including without limitation, the execution of
appropriate powers of attorney. CURAGEN agrees that any such
preparation, filing, prosecution and maintenance shall be conducted
diligently and in a timely fashion. GENENTECH shall be kept fully
informed by CURAGEN of the progress of all patent filings and
prosecution hereunder and shall be provided with copies of all
material documents pertaining thereto including, without limitation,
information regarding inventorship, sequences and sequence listings,
serial numbers, filing dates, foreign filing licenses and copies of
patent applications, until the end of the Exclusive Evaluation Period,
and for any Invention which becomes subject to an Option, until the
end of the Option Period. GENENTECH shall be given the opportunity,
whenever practical, to review and comment in advance on any patent
filings or other correspondence with the patent office during such
periods and CURAGEN shall use reasonable efforts to incorporate any
comments provided by GENENTECH. CURAGEN shall pursue its priority to
claims on Inventions by filing all necessary interferences and
opposition papers, motions and the like.
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Any proposed interference settlement agreement relating to Inventions
subject to potential Option by GENENTECH hereunder will be reviewed by
the RC.
(b) If CURAGEN is unable to file patent applications as set forth in
Section 6.2(a) on a timely basis despite diligent efforts concerning
Inventions made regarding Clones where the majority of the sequencing
of such Clones has taken place at GENENTECH, GENENTECH shall have the
option to prepare, file, prosecute, obtain and maintain patent
applications and patents on Inventions in the same manner as described
in Section 6.2(a) above at any time for any such Inventions by giving
written notice thereof to GENENTECH. Following the receipt of such
notice and the election of such option by GENENTECH, GENENTECH shall
have the right to prepare, file, prosecute, obtain and maintain the
patent application(s) and patent(s) identified in the notice, at its
sole expense, on behalf of the owner of the Invention, subject to the
rights granted herein, until the end of the Exclusive Evaluation
Period, and for any Invention which becomes subject to an Option,
until the end of the Option Period. CURAGEN shall be given the
opportunity to review and comment in advance on any patent filings or
other correspondence with the patent office during such periods and
GENENTECH shall use reasonable efforts to incorporate any comments
provided by CURAGEN.
(c) The Parties shall mutually agree before permitting any patent
application or patent within Patent Rights to lapse as well as before
authorizing any amendment to any patent application or patent within
Patent Rights that would irrevocably limit the lawful scope of the
Patent Rights, until the end of the Exclusive Evaluation Period, and
for any Invention which becomes subject to an option, until the end of
the Option Period.
(d) No Party shall have any obligation under this Agreement to pay any
fees or costs: (i) for bringing a lawsuit or other action to enforce
any of the Patent Rights against an actual or suspected infringement
or (ii) for any other Party to obtain for its own benefit independent
business or legal advice concerning any of the Patent Rights.
40
6.3 NOTICE OF INFRINGEMENT. If either Party learns of any infringement
----------------------
or threatened infringement by a third party of the patents within Patent Rights,
such Party shall promptly notify the other Party and shall provide such other
Party with available evidence of such infringement.
6.4 INFRINGEMENT. CURAGEN shall have all rights, at its own expense, to
------------
bring suit (or other appropriate legal action) against any actual or suspected
infringement of the Patent Rights except as may be provided in a License
Agreement executed by the Parties.
6.5 COOPERATION. Each Party shall execute all papers and perform such
-----------
other acts as may be reasonably required to file and prosecute any patent
applications as provided in Section 6.2 and to maintain any infringement suit
brought in accordance with Section 6.4 above (including giving legal consent for
bringing such suit, and agreeing to be named as a plaintiff or otherwise joined
in such suit), and at its option and expense, may be represented in such suit by
counsel of its choice.
7. OPTION TO GENENTECH
7.1 OPTION GRANT.
------------
7.1.1 Option. Subject to rights third parties have obtained by virtue of
------
access to other CURAGEN Data Sets, data sets resulting from written agreements
between CURAGEN and third parties, or the subscription portion of the
GeneScape(R) database prior to GENENTECH's election, CURAGEN hereby grants to
GENENTECH the right to elect an exclusive option (the "Option") to license all
Inventions and know-how relating to any Clone whose sequence or utility is
determined in whole or in part by GENENTECH or CURAGEN from the use of an
Exclusive Data Set or which is identified by GENENTECH pursuant to the rights
granted in Section 2.4.3, and which is not a Previously Committed Clone. Such
Option shall give GENENTECH the right to obtain, at GENENTECH's sole discretion
and as further described in the License Agreement, either (a) subject to the
rights reserved by CURAGEN in Section 7.1.3 hereof, an exclusive license to the
Clone specified in GENENTECH's notice of exercise (the "Optioned Clone") and to
all Research Project Patent Rights, CURAGEN Project Patent Rights, Inventions,
Extended Research Inventions, Extended Research Patent Rights and know-how to
the extent that they relate to such Optioned Clone or Licensed Products related
to such Optioned
41
Clone, to develop, make, have made, use, have used, sell, offer for sale, have
sold, import and have imported any and all products, in the Territory, for any
and all human uses; (b) a non-exclusive license to the Optioned Clone under all
Research Project Patent Rights, CURAGEN Project Patent Rights, Inventions and
know-how, to the extent that they relate to such Optioned Clone, solely for use
of the Optioned Clone or the protein encoded thereby as a reagent for
discovering or developing Licensed Products and to develop, make, have made,
use, have used, sell, offer for sale, have sold, import and have imported
Licensed Products; or (c) subject to the rights reserved by CURAGEN in Section
7.1.3 hereof, an exclusive license to all Research Project Patent Rights,
CURAGEN Project Patent Rights, Inventions, Extended Research Inventions,
Extended Research Patent Rights and know-how to the extent that they relate to a
"known" Optioned Clone or Licensed Products related to such Optioned Clone, to
develop, make, have made, use, have used, sell, offer for sale, have sold,
import and have imported any and all products, in the Territory, for any and all
human uses. Such Option shall be exercisable at any time during the Option
Period specified in Section 7.3. If any Previously Committed Clone is or becomes
available for licensing by GENENTECH on an exclusive or non-exclusive basis,
CURAGEN shall so notify GENENTECH and GENENTECH shall have the right to obtain
an option to license any available rights on the terms set forth in the form of
License Agreement attached hereto as Appendix C.
7.1.2 Option Election.
---------------
Such Option shall be elected by GENENTECH by giving written notice to
CURAGEN within the Exclusive Evaluation Period for such Exclusive Data Set,
which shall specify in detail the Optioned Clone to be included within the terms
of any such Option and which shall be accompanied by the payment of any Option
Fee as specified in Section 7.2. Each Optioned Clone, and the term of the
corresponding Option Period, shall be listed on Appendix A hereto from time to
----------
time. Notwithstanding the foregoing, GENENTECH may request such an Option from
Project Data Sets after expiration of the Exclusive Evaluation Period, which
Option shall be granted by CURAGEN upon payment of the Option Fee specified in
Section 7.2, unless prohibited by written agreements with third parties.
7.1.3 Reservation of Rights. Notwithstanding the foregoing, during any
---------------------
Option Period, CURAGEN shall retain for itself the right to use, but not to
transfer to third parties (except
42
pursuant to an agreement with a third party who has identified such Optioned
Clone independently of the related Data Set) the Optioned Clone or the protein
derived therefrom outside of the Research Program as part of CURAGEN's libraries
for internal, general, non-directed research purposes (including, without
limitation, full length cloning, expression analysis, protein-protein
interactions and drug screening). For example, but without limitation, inclusion
of the Clone together with other clones in research to determine multiple
protein-protein interactions, or inclusion of the Clone together with other
clones in a screen against one or more molecules to determine inhibition would
be "non-directed" research, whereas activities associated with choosing a
specific Clone and conducting research to elucidate the biological activity of
such Clone (e.g., generating antibodies to the Clone, testing the Clone or
protein encoded thereby in preclinical models, enriching libraries with such
Clone to purposefully look for proteins which bind to such Clone) would be
considered "directed" research and CURAGEN shall not be permitted to perform
such activities under this Section 7.1.3. All inventions conceived or made
during such research which relate to any Clone whose sequence or utility is
determined from the analysis of a Project Data Set, the proteins derived
therefrom (including antibodies), homologs or mutants with substantially the
same biological activity as such Clone, or uses thereof, shall be deemed
Research Project Inventions if licensed by GENENTECH. All other inventions from
such research shall be Extended Research Inventions and GENENTECH will have
rights to such Extended Research Inventions and Extended Research Patent Rights
resulting therefrom as provided in this Article 7 and in Section 2.3 of the
License Agreement attached hereto as Appendix C. CURAGEN shall keep GENENTECH
reasonably informed of the results of any such research using an Optioned Clone
and patent applications and patents relating to such research on a timely basis
in order to allow GENENTECH to make informed decisions regarding the exercise of
its option and license rights hereunder.
7.2 OPTION FEE. An Option Fee of [XXXXX] per Optioned Clone shall be due
----------
upon the election of an Option with respect to any Clone from any Exclusive Data
Set; provided, however, that [XXXXX]
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7.3 OPTION PERIOD. Each Option shall remain in effect for a period of
-------------
[XXXXX] from receipt by CURAGEN of GENENTECH's written notice of its election of
such Option and payment of any required Option Fee (the "Option Period");
provided, however, that any Option Period may be extended for one additional
[XXXXX] period upon payment by GENENTECH of an additional [XXXXX] per Optioned
Clone.
7.4 OPTION EXERCISE. During each Option Period, upon notice to CURAGEN
---------------
and upon payment of the corresponding license fee, GENENTECH shall have the
right to receive a license to the Optioned Clone under the terms and conditions
set forth in an executed License Agreement and CURAGEN shall grant such license
to GENENTECH. The license fee for a license described in Section 7.1.1, clause
(a) shall be [XXXXX] and the license fee for a license described in Section
7.1.1, clause (b) or (c), shall be [XXXXX]. The License Agreement shall be
executed in substantially the form attached hereto upon exercise of the first
Option and shall be amended from time to time in accordance with the terms
hereof and thereof as additional Options are exercised.
7.5 REVERSION OF RIGHTS. CURAGEN shall retain all rights to all Project
-------------------
Data, CURAGEN Data, Extended Research Data, CURAGEN Project Proprietary
Material, Research Project Proprietary Material, Inventions, Extended Research
Inventions, Patent Rights and Extended Research Patent Rights not expressly
granted to GENENTECH hereunder. Upon expiration of any Exclusive Evaluation
Period for any Research Project or CURAGEN Project CURAGEN shall recover and
retain, with respect to Clones whose sequence or utility was determined from
such project and that are not optioned by GENENTECH, all of CURAGEN's rights to
the corresponding Exclusive Data Set, Extended Research Data, CURAGEN Project
Proprietary Material or Research Project Proprietary Material and corresponding
Inventions, Extended Research Inventions, Patent Rights and Extended Research
Patent rights thereon, other than such rights granted to GENENTECH as provided
in Sections 2.1.4(c), 2.4.3 or 7.1.2 or, with respect to Optioned Clones,
Section 2.1.5. In the event that upon the expiration of any Option Period any
corresponding Option has not been exercised by GENENTECH, all of CURAGEN's
rights in the corresponding Optioned Clone and related Project Data, CURAGEN
Data, Extended Research Data, CURAGEN Project Proprietary Material, Research
Project Proprietary Material, Inventions, Extended Research Inventions, Patent
Rights and Extended Research Patent Rights
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thereon shall revert to CURAGEN, other than such rights granted to GENENTECH as
provided in Sections 2.1.4(c), 2.4.3 or 7.1.2, or with respect to Optioned
Clones, Section 2.1.5. Notwithstanding the foregoing, nothing contained in this
Section 7.5 shall be deemed to limit any rights of GENENTECH expressly provided
in an executed License Agreement. In addition, GENENTECH shall (a) upon the
expiration of each Exclusive Evaluation Period, without any further action on
its part, be deemed to have granted to CURAGEN an exclusive (except for uses by
GENENTECH permitted in Sections 2.1.4(c), 2.4.3 and 7.1.2) license, with the
right to sublicense, for all purposes under GENENTECH's rights in Research
Project Inventions and Research Project Patent Rights relating to any Clone
whose sequence or utility was determined in whole or in part from the use of the
corresponding Data Set and which is not the subject of any Option or License
Agreement and (b) upon the expiration of each Option Period, without any further
action on its part, be deemed to have granted to CURAGEN a license as set forth
in (a) above with respect to each Optioned Clone for which an Option has not
been exercised. Such licenses from GENENTECH to CURAGEN shall be [XXXX]. Upon
the request of CURAGEN, GENENTECH shall provide to CURAGEN available GENENTECH
Proprietary Material which is a full-length gene cloned by GENENTECH using any
Clone described in (a) above and which is not contained in a proprietary vector.
For the avoidance of doubt, CURAGEN shall have no rights to any patents or
patent applications of GENENTECH which relate to inventions (including
inventions related to Clones) made outside the Research Program and CURAGEN
shall only have exclusive rights to Research Project Inventions and Research
Project Patent Rights as expressly provided herein.
7.6 NO OTHER RIGHTS. No rights to Data Sets or Clones under Patent
---------------
Rights, Inventions, Extended Research Patent Rights or Extended Research
Inventions are granted to GENENTECH hereunder except as expressly set forth
herein or in an executed License Agreement. CURAGEN shall receive no rights to
Data Sets or Clones under GENENTECH's interests in Research Project Patent
Rights or Research Project Inventions except as expressly set forth herein or in
an executed License Agreement.
7.7 [XXXX].
------
[XXXX].
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[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
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[XXXX]
[XXXX]
[XXXX]
[XXXX]
[XXXX]
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[XXXX]
[XXXX]
[XXXX]
[XXXX]
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[XXXX]
8. TERM AND TERMINATION
8.1 TERM. The term of this Agreement shall be for the duration of the
----
Research Term plus the length of all surviving Exclusive Evaluation Periods and
any permitted extensions thereof and the length of all surviving Option Periods
and any permitted extensions thereof or until the date on which GENENTECH no
longer has access to Project Data Sets hereunder, whichever is later (the
"Term").
8.2 TERMINATION.
-----------
(a) This Agreement, the Research Program, and the rights granted herein
may be terminated by either Party upon any breach by the other Party
of any material obligation or condition, effective fifteen (15) days
after giving written notice to the other Party of such termination in
the case of a payment breach and sixty (60) days after giving written
notice to the other Party of such termination in the case
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of any other breach, which notice shall describe such breach in
reasonable detail. The foregoing notwithstanding, if the default or
breach is cured or shown to be non-existent within the aforesaid
fifteen (15) or sixty (60) day period, the notice shall be deemed
automatically withdrawn and of no effect.
(b) If either Party files for protection under bankruptcy laws, makes an
assignment for the benefit of creditors, appoints or suffers
appointment of a receiver or trustee over its property, files a
petition under any bankruptcy or insolvency act or has any such
petition filed against it which is not discharged within sixty (60)
days of the filing thereof, then the other party may terminate the
Research Program and this Agreement effective upon giving written
notice to such Party.
8.3 TERMINATION AFTER INJUNCTION. In addition to the rights set forth in
----------------------------
Section 8.2, GENENTECH may terminate the Research Program effective thirty (30)
days after giving written notice to CURAGEN in the event that a final non-
appealable injunction is entered against CURAGEN by a court of competent
jurisdiction the effect of which is to enjoin CURAGEN from utilizing its
proprietary genomics technologies such that it is substantially unable to
perform the Research Program. Any such termination shall not affect GENENTECH's
rights hereunder with respect to any Exclusive Evaluation Period or Option
Period then ongoing, or any License Agreement executed by the Parties prior to
such termination. Upon any such termination the Note shall become due in
accordance with its terms.
8.4 ADDITIONAL EFFECTS OF TERMINATION.
---------------------------------
(a) Upon termination of this Agreement by a Party pursuant to Section
8.2(a) due to a payment breach by the other Party with respect to
payments due on a specific product pursuant to Section 2.1.4(c) and
(e) or Section 7.7. hereof (but not any other breach), all relevant
rights and licenses granted by such terminating Party to the breaching
Party under such Section regarding the specific product shall
immediately and automatically terminate and revert to the terminating
Party, subject to the breaching Party's right to sell any remaining
quantities of product remaining in its inventories as of the date of
termination.
(b) Upon termination of this Agreement by a Party pursuant to Section
8.2(a) due to a breach other than a payment breach covered by Section
8.4(a), the Research
50
Program shall end. If CURAGEN is the terminating Party, all Exclusive
Evaluation Periods and all Option Periods shall terminate, but all
License Agreements previously executed shall continue. If GENENTECH is
the terminating Party, all of GENENTECH's rights under Exclusive
Evaluation Periods, Option Periods and License Agreements then ongoing
shall continue in accordance with their terms, and the Note shall
become due in accordance with its terms.
(c) Documentation. At the request of the terminating Party, the breaching
-------------
Party shall execute and deliver such bills of sale, assignments and
licenses and other documents as may be necessary to fully vest in the
non-breaching Party all right, title and interest to which it is
entitled as aforesaid pursuant to this Section 8.4.
(d) Payment Obligations. The breaching Party shall have no obligation to
-------------------
make any payment to the terminating Party that has not accrued prior
to the effective date of such termination except for royalties on
remaining inventory, but shall remain liable for all obligations
accruing prior to termination.
8.5 REMEDIES. If either Party shall fail to perform or observe or
--------
otherwise breaches any of its material obligations under this Agreement, in
addition to any right to terminate this Agreement, the non-defaulting Party may
elect to obtain other relief and remedies available under law.
8.6 SURVIVING PROVISIONS. Notwithstanding any provision herein to the
--------------------
contrary, the rights and obligations set forth in Sections 2.1.6, 2.3.5, 3.2,
3.4, Articles 4, 5, and 6, and Sections 7.5, 8.4 and 8.6, and Article 9 hereof,
as well as any rights and obligations otherwise accrued, shall survive the
expiration of the Term or any termination of this Agreement. In addition, the
rights and obligations set forth in Sections 2.1.4 (c)-(h) and Section 7.7 shall
survive the expiration or termination of this Agreement, unless otherwise
terminated as specified in Section 8.4 above, and the rights and obligations
with respect to ongoing Exclusive Evaluation Periods and Option Periods shall
survive as described elsewhere in this Agreement.
51
9. MISCELLANEOUS
9.1 CURAGEN REPRESENTATIONS AND COVENANTS. CURAGEN represents and
-------------------------------------
warrants that: (a) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly authorized by
all appropriate CURAGEN corporate action; (b) CURAGEN is under no obligation
which is inconsistent with this Agreement; (c) CURAGEN employees are
contractually bound to assign all rights in inventions and know-how arising from
their employment to CURAGEN; (d) there are no adverse proceedings claims or
actions pending, or to the best of CURAGEN's knowledge, threatened relating to
CURAGEN's genomics technologies, including without limitation, GeneScape,
QEA/GeneCalling, MIM/PathCalling and all additional services to be provided by
CURAGEN to GENENTECH hereunder, and at the time of disclosure and access thereof
to GENENTECH, to the best of CURAGEN's knowledge, CURAGEN shall have the full
right and legal capacity to disclose and provide access to such CURAGEN genomics
technologies to GENENTECH and to itself use such technologies to perform its
obligations under this Agreement without violating the rights of third parties;
and (e) CURAGEN has the full right and legal capacity to grant the rights to
GENENTECH pursuant to Article 7 without violating the rights of any third party.
CURAGEN covenants that it will not enter into any agreement with any third party
that is inconsistent with the terms of this Agreement. Subject to CURAGEN's
obligation not to enter into any agreement that is inconsistent with the terms
of this Agreement, CURAGEN shall use commercially reasonable efforts to obtain,
at its sole cost, any rights, licenses, approvals or permissions related to its
genomics technology and know-how that are required, now or in the future, to
carry out its obligations to conduct the Research Projects hereunder and to
provide its services and genomics technologies to GENENTECH hereunder and to
grant GENENTECH the intellectual property rights under Article 7 above. Nothing
in this Agreement shall be interpreted as obligating either Party to
commercialize technology made hereunder or to perform any additional work beyond
that set forth in the Research Plan.
9.2 GENENTECH REPRESENTATIONS. GENENTECH represents and warrants that:
-------------------------
(a) the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all appropriate
GENENTECH corporate
52
action; (b) GENENTECH is under no obligation which is inconsistent with this
Agreement, and (c) GENENTECH has the full right and legal capacity to grant the
rights to CURAGEN pursuant to Article 7 without violating the rights of any
third party. Nothing in this Agreement shall be interpreted as obligating either
Party to commercialize technology made hereunder or to perform any additional
work beyond that set forth in the Research Plan.
9.3 NO WARRANTIES.
-------------
(a) Nothing in this Agreement is or shall be construed as:
(i) a warranty or representation by CURAGEN or GENENTECH as to
the validity or scope of any application or patent within
the Patent Rights;
(ii) a warranty or representation that anything made, used, sold
or otherwise disposed of under any license granted pursuant
to this Agreement is or will be free from infringement of
patents, copyrights, and other rights of third parties.
(b) Except as expressly set forth in this Agreement, NEITHER PARTY MAKES
ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF NON-
INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS, OR
ANY OTHER EXPRESS OR IMPLIED WARRANTIES.
9.4 LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
---------
OTHERWISE, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF
THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL
OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
TECHNOLOGY OR SERVICES.
9.5 NOTICES. Any notices, requests, deliveries, approvals or consents
-------
required or permitted to be given under this Agreement to GENENTECH or CURAGEN
shall be in writing
53
and shall be personally delivered or sent by telecopy (with written confirmation
to follow via United States first class mail), overnight courier providing
evidence of receipt or certified mail, return receipt requested, postage
prepaid, in each case to the respective address specified below (or to such
address as may be specified in writing to the other Party hereto):
CURAGEN: 000 Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Vice President, Business Development
Telecopy: (000) 000-0000
GENENTECH: 0 XXX Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attn: Corporate Secretary
Telecopy: (000) 000-0000
Such notices shall be deemed to have been sufficiently given on: (a) the
date sent if delivered in person or transmitted by telecopy, (b) the next
business day after dispatch in the case of overnight courier or (c) five (5)
business days after deposit in the U.S. mail in the case of certified mail.
9.6 GOVERNING LAW. This Agreement will be construed, interpreted and
-------------
applied in accordance with the laws of the State of New York (excluding its body
of law controlling conflicts of law).
9.7 LIMITATIONS. Except as set forth elsewhere in this Agreement, neither
-----------
Party grants to the other Party any right or license to any of its intellectual
property.
9.8 ENTIRE AGREEMENT. This is the entire Agreement between the Parties
----------------
with respect to the subject matter hereof and supersedes all prior agreements
between the Parties with respect to the subject matter hereof. No modification
shall be effective unless in writing with specific reference to this Agreement
and signed by the Parties.
9.9 WAIVER. The terms or conditions of this Agreement may be waived only
------
by a written instrument executed by the Party waiving compliance. The failure
of either Party at any time or times to require performance of any provision
hereof shall in no manner affect its rights at a later time to enforce the same.
No waiver by either Party of any condition or term shall be deemed as a
continuing waiver of such condition or term or of another condition or term.
54
9.10 HEADINGS. Section and subsection headings are inserted for
--------
convenience of reference only and do not form part of this Agreement.
9.11 ASSIGNMENT. This Agreement may not be assigned by either Party
----------
without the consent of the other, except that each Party may, without such
consent, assign this Agreement and the rights, obligations and interests of such
Party, in whole or in part, to any of its wholly-owned subsidiaries, to any
purchaser of all or substantially all of its assets in the line of business to
which this Agreement pertains, or of all of its capital stock, or to any
successor corporation resulting from any merger or consolidation of such Party
with or into such corporation.
9.12 FORCE MAJEURE. Neither Party shall be liable for failure of or delay
-------------
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such Party. In event
of such force majeure, the Party affected thereby shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
9.13 CONSTRUCTION. The Parties hereto acknowledge and agree that: (i)
------------
each Party and its counsel reviewed and negotiated the terms and provisions of
this Agreement and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against the
drafting Party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all Parties hereto and not in a favor of or against any Party, regardless
of which Party was generally responsible for the preparation of this Agreement.
9.14 SEVERABILITY. If any provision(s) of this Agreement are or become
------------
invalid, are ruled illegal by any court of competent jurisdiction or are deemed
unenforceable under then current applicable law from time to time in effect
during the Term hereof, it is the intention of the Parties that the remainder of
this Agreement shall not be affected thereby provided that a Party's rights
under this Agreement are not materially affected. The Parties hereto covenant
and agree to renegotiate any such term, covenant or application thereof in good
faith in order to provide a reasonably acceptable alternative to the term,
covenant or condition of this Agreement or the application thereof that is
invalid, illegal or unenforceable, it being the intent of the Parties that the
basic purposes of this Agreement are to be effectuated.
55
9.15 STATUS. Nothing in this Agreement is intended or shall be deemed to
------
constitute a partner, agency, employer-employee, or joint venture relationship
between the Parties.
9.16 INDEMNIFICATION.
---------------
(a) GENENTECH shall indemnify, defend and hold harmless CURAGEN, its
Affiliates and their respective directors, officers, employees, and
agents and their respective successors, heirs and assigns (the
"CURAGEN Indemnitees"), against any liability, damage, loss or expense
(including reasonable attorneys' fees and expenses of litigation)
incurred by or imposed upon the CURAGEN Indemnitees, or any of them,
in connection with any claims, suits, actions, demands or judgments
("Claims") of third parties, for personal injury and product liability
matters (except in cases where such Claims result from a willful
material breach of this Agreement or the gross negligence or willful
misconduct on the part of a CURAGEN Indemnitee or are the subject
matter of CURAGEN's indemnification of GENENTECH as set forth in
Section 9.16(b)) arising out of the performance of the Research
Program by GENENTECH or arising out of or relating to any actions of
GENENTECH or any Affiliate, licensee, sublicensee, distributor agent
of GENENTECH in the development, testing, production, manufacture,
promotion, import, sale or use by any person of any Know-How
Information Product manufactured or sold by GENENTECH or by an
Affiliate, licensee, sublicensee, distributor or agent of GENENTECH.
(b) CURAGEN shall indemnify, defend and hold harmless GENENTECH, its
Affiliates and their respective directors, officers, employees, and
agents and their respective successors, heirs and assigns (the
"GENENTECH Indemnitees"), against any liability, damage, loss or
expense (including reasonable attorneys' fees and expenses of
litigation) incurred by or imposed upon the GENENTECH Indemnitees, or
any of them, in connection with any Claims of third parties, for
personal injury matters and product liability matters (except to the
extent such Claims result from a material breach of this Agreement or
the gross negligence or willful misconduct on the part of GENENTECH or
are the subject matter of GENENTECH's indemnification of CURAGEN as
set forth in Section 9.16(a))
56
arising out of the performance of the Research Program by CURAGEN or
arising out of or relating to any actions of CURAGEN or any Affiliate,
licensee, sublicensee, distributor agent of CURAGEN in the
development, testing, production, manufacture, promotion, import, sale
or use by any person of any product manufactured or sold by CURAGEN or
by an Affiliate, licensee, sublicensee, distributor or agent of
CURAGEN.
(c) GENENTECH's obligation to indemnify, defend and hold the CURAGEN
Indemnitees harmless pursuant to Section 9.16(a), and CURAGEN's
obligation to indemnify, defend and hold the GENENTECH Indemnitees
harmless pursuant to Section 9.16(b), are conditioned on the
indemnified Party: (i) providing written notice to the indemnifying
Party of any Claim arising out of the indemnified activities promptly
after the indemnified Party has knowledge of such Claim, (ii)
permitting the indemnifying Party to assume, at its discretion, sole
and full control of the investigation, preparation, defense, trial and
settlement in connection with such Claim, (iii) assisting and
cooperating with the indemnifying Party, at the indemnifying Party's
reasonable expense, in the investigation of, preparation for and
defense of any such Claim, and (iv) not compromising, negotiating or
settling such Claim without the indemnifying Party's prior written
consent.
9.17 COUNTERPARTS.
------------
This Agreement may be executed in any number of 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.
57
IN WITNESS WHEREOF, the Parties have this Agreement to be by their duly
authorized representation in two (2) originals.
GENENTECH, INC. CURAGEN CORPORATION
By: /s/ By: /s/
--------------------------- ---------------------------------
Title: _______________________ Title: EXECUTIVE VICE PRESIDENT
------------------------------
58
APPENDIX A
----------
OPTIONED CLONES
00
XXXXXXXX X
----------
NOTE
60
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH IT IS CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND NEITHER MAY BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS SUCH SECURITIES HAVE BEEN REGISTERED UNDER THE ACT AND SUCH
LAWS OR REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED AND
AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER IS FURNISHED TO THE BORROWER
TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
PROMISSORY NOTE
UP TO $26,000,000.00 __________, 1997
FOR VALUE RECEIVED, the undersigned, CURAGEN CORPORATION (the "Borrower"),
having an address of 000 Xxxx Xxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxx, Xxxxxxxxxxx
00000, hereby promises to pay to GENENTECH, INC. (the "Lender"), having an
address at 0 XXX Xxx, Xxxxx Xxx Xxxxxxxxx, XX 00000 , the principal sum of up
to
TWENTY SIX MILLION DOLLARS ($26,000,000)
or such lesser sum which may from time to time be advanced pursuant to the terms
of the section of the Research and Option Agreement dated November 20, 1997
between the Borrower and the Lender (the "Agreement") entitled "Section 3.2-Loan
Commitment", together with interest thereon in accordance with the terms hereof.
Capitalized terms used herein and not defined herein have the meanings assigned
to them in the Agreement.
1. Payments
--------
(a) The Borrower shall pay the accrued interest and principal balance
of this Note, which represents the Loan, in full within [XXXXX]
of the last day of the fifth Loan Year (the "Maturity Date"),
subject to the extension of the Maturity Date pursuant to Section
1(c) below.
(b) This Note may be prepaid by the Borrower at any time, subject to
Section 1(c) below, without premium or penalty.
(c) Payments made pursuant to paragraph (a) or (b) shall be paid in
cash, or, at any time after the last day of the first Loan Year,
at the option of Borrower, subject to Section 7 of this Note, in
shares of Convertible Non-Voting Common Stock, $.01 par value per
share (the "Non-Voting Common Stock"), of the Borrower, valued at
the then Fair Market Value of CuraGen Common Stock (as defined
below) having the rights, preferences and privileges set forth in
the form of the Restated Certificate of Incorporation attached
hereto as Exhibit 1. The Borrower may prepay any amounts due
---------
under this Note, upon written notice to the Lender specifying the
prepayment date, in shares of Non-Voting Common Stock at any time
after the last day of the first Loan Year as long as the Lender's
Beneficial Ownership (as defined below) is less than 10% prior to
such prepayment. In the event that the Borrower proposes a
prepayment by issuing shares of Non-Voting Common Stock under
this Note at a time when the Lender's Beneficial Ownership is
equal to or exceeds 10%, the Lender may request in writing that
the Borrower refrain from issuing
-2-
Confidential Treatment Requested
additional shares of Non-Voting Common Stock until the earliest
to occur of (i) two (2) years from the date of the issuance which
caused the Lender's Beneficial Ownership to be equal to or exceed
10% (the "Additional Issuance Date"), (ii) the date which is
thirty (30) days from the date on which Lender's Beneficial
Ownership falls below 10% and (iii) the Maturity Date; provided,
that, in the event that the Additional Issuance Date occurs after
the last day of the third Loan Year and prior to the Maturity
Date, then the Lender may, at its option, extend the Maturity
Date to a date two (2) years from the Additional Issuance Date.
As used in this Note (i) the term "Beneficial Ownership" shall
have the meaning set forth in Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "1934 Act") and (ii) the term "Fair
Market Value of CuraGen Common Stock" shall mean the average of
the closing prices of the Borrower's Common Stock as reported by
the Nasdaq Stock Market or, if not traded on the Nasdaq Stock
Market, by such other principal securities exchange on which the
Borrower's shares of Common Stock are traded, as applicable, over
the 20 trading days preceding the date on which a payment is made
by issuance of Non-Voting Common Stock. Notwithstanding the
foregoing, at any time prior to the date on which CuraGen Common
Stock is first registered under the 1934 Act, any payments made
pursuant to paragraph (a) or (b) above shall be paid in cash, or
at the option of the Borrower, in shares of a new series of
Preferred Stock, $.01 par value per share (the "Preferred
Stock"), of the Borrower having substantially the same rights,
preferences and privileges as the Borrower's Series A Preferred
Stock (other than with respect to (i) the applicable conversion
rate, (ii) those certain adjustments to the
-3-
applicable conversion rate set forth in Section 5(c)(ii) of
Exhibit A of the Restated Certificate of Incorporation of the
Borrower dated June 24, 1997 and (iii) voting rights), valued at
the price at which the Borrower sold shares of Preferred Stock in
the round of equity financing immediately preceding such
prepayment date raising in excess of $3,000,000 from investors
not involved in a collaborative relationship with the Borrower
(the "Preferred Stock Value"). Delivery of any shares of Non-
Voting Common Stock or Preferred Stock shall take place no later
than five (5) days after the repayment date and shall be subject
to execution by the parties of an agreement containing customary
representations and provisions to comply with Federal and state
securities laws, as mutually agreed by the parties.
2. Interest
--------
Interest shall accrue on the outstanding principal balance hereunder at a
rate per annum equal to [XXXXX]. As used herein, the term [XXXXX]. The
applicable rate of interest for this Note shall be adjusted quarterly according
to [XXXXX]. Interest shall accrue and be compounded quarterly commencing on the
three-month anniversary of the date of the first advance under the Loan and
shall continue to accrue and be compounded every calendar quarter thereafter
until all amounts due hereunder have been paid in full.
-4-
Confidential Treatment Requested
3. Recording of Advances, Repayments and Conversions
-------------------------------------------------
The advances described in the Agreement and made by the Lender to the
Borrower, and all repayments made on the account of principal hereof and all
conversions of the principal hereof and accrued interest hereon into shares of
the Borrower's capital stock shall be recorded by the Lender on the Schedule
attached hereto which is a part of this Note; provided, however, that the
failure of the Lender so to record on this Note (or any error in recording on
this Note) shall not affect the Borrower's obligations hereunder.
4. Subordination
-------------
This Note shall be subordinated to [XXXXX]
5. Acceleration and Conversion if Borrower is Public
-------------------------------------------------
If at any time after the date that CuraGen Common Stock is first registered
under the 1934 Act, the Market Capitalization of the Borrower is, [XXXXX], the
Borrower shall promptly give written notice (to be delivered by hand or
facsimile transmission) of such occurrence to the Lender. The Lender may, at its
option exercisable at any time within fifteen (15) business days of the receipt
of such notice from the
-5-
Confidential Treatment Requested
Borrower (the "Acceleration Option"), declare all amounts owed hereunder
immediately due and payable by giving the Borrower written notice of such
declaration. Within fifteen (15) days of the Borrower's receipt of the Lender's
notice of exercise of the Acceleration Option, the Borrower shall make repayment
in full of the outstanding principal balance and accrued interest of this Note
in cash, or, at the option of the Borrower and subject to Section 7 of this
Note, in shares of Non-Voting Common Stock valued at the then Fair Market Value
of CuraGen Common Stock. For purposes hereof, (i) the Borrower's "Market
Capitalization" shall be equal to an amount determined by multiplying the number
of shares of the Borrower's Common Stock and Non-Voting Common Stock outstanding
on any Trading Day by the average of the closing prices of the Borrower's Common
Stock as reported by the Nasdaq Stock Market or, if not traded on the Nasdaq
Stock Market, by such other principal securities exchange on which shares are
traded, as applicable, over the twenty (20) trading days preceding such date;
and (ii) "Trading Days" shall mean days when trading is available on the Nasdaq
Stock Market or on the principal securities exchange on which the Borrower's
Common Stock may be traded.
If the Borrower does not repay this Note in full upon exercise by the
Lender of the Acceleration Option in accordance with the preceding paragraph,
the entire unpaid principal amount of the Note and all unpaid accrued interest
hereon shall automatically be converted into shares of Non-Voting Common Stock
on the sixteenth day after Borrower's receipt of notice of the exercise by the
Lender of the Acceleration Option (such date, the "Automatic Conversion Date"),
subject to Section 7 of this Note. Notwithstanding the foregoing limitation,
Lender reserves the right to convert the remaining loan balance into shares of
Non-Voting Common Stock in excess of the 19.8% limitation provided in Section 7
of this Note. The number of shares of Non-Voting Common Stock into which this
Note shall be converted shall be determined by dividing the sum of the aggregate
unpaid principal amount of this Note and the unpaid accrued
-6-
interest hereon on the Automatic Conversion Date by the Fair Market Value of
CuraGen Common Stock on the Automatic Conversion Date.
If this Note is automatically converted as provided above, written notice
thereof shall be delivered by the Borrower to the Lender, which notice shall
specify the Automatic Conversion Date, the Fair Market Value of CuraGen Common
Stock on the Automatic Conversion Date, the unpaid principal amount of and
unpaid accrued interest on the Note converted and, if such conversion is of the
Note in full, calling upon such Lender to surrender to the Borrower, in the
manner and at the place designated, the originally-executed Note. Upon any such
conversion of this Note in full, the Lender shall surrender this Note, duly
endorsed, at the principal executive office of the Borrower. At its expense, the
Borrower shall, as soon as practicable thereafter, issue and deliver to the
Lender at such principal office a certificate or certificates for the number of
shares of Non-Voting Common Stock to which the Lender shall be entitled upon
such conversion. Any conversion of this Note hereunder shall be deemed to have
been made at the close of business, California time, on the applicable
Conversion Date, and at and after such time the Lender shall be treated for all
purposes as the record holder of such shares of Non-Voting Common Stock.
Upon payment of this Note in full, the Borrower shall be forever released
from all its obligations and liabilities under this Note.
The Borrower shall at all times reserve and keep available for issuance out
of its authorized but unissued shares of Non-Voting Common Stock such number of
shares as shall from time to time be sufficient to effect the conversion of the
Note into shares of Non-Voting Common Stock, and if such reserve shall not be
sufficient to effect the conversion of the entire outstanding principal amount
of and accrued interest on this Note, without limitation of such other remedies
as shall be available to the Lender, the Borrower will use commercially
reasonable efforts to take such corporate actions as may, in the opinion of its
counsel, be
-7-
necessary to increase its authorized but unissued shares of Non-Voting Common
Stock. In addition, the Borrower shall at all times reserve and keep available
for issuance out of its authorized but unissued shares of Common Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of the shares of Non-Voting Common Stock into Common
Stock, and if such reserve shall not be sufficient to effect the conversion of
the shares of Non-Voting Common Stock, without limitation of such other remedies
as shall be available to the Lender, the Borrower will use its commercially
reasonable efforts to take such corporate actions as may, in the opinion of
counsel, be necessary to increase its authorized but not outstanding shares of
Common Stock to such number of shares as shall be sufficient for such purposes.
6. Conversion to Preferred Stock if Borrower is not Public
-------------------------------------------------------
If at any time prior to the date on which CuraGen's Common Stock is first
registered under the 1934 Act, the ratio (the "Ratio") of [XXXXX] then (A) the
Borrower shall promptly provide written notice thereof to the Lender and (B)
subject to Section 7 of this Note, the Lender may, by written notice to the
Borrower (the "Series F Conversion Notice"), convert that portion of the
indebtedness represented by this Note into shares of Series F Non-Voting
Convertible Preferred Stock, $.01 par value per share (the "Series F Preferred
Stock"), of the Borrower as may be necessary to increase the Ratio to [XXXXX]
at a conversion price equal to one (1) share of Series F Preferred Stock
-8-
Confidential Treatment Requested
for each $100 of outstanding principal and accrued interest surrendered for
conversion. The Series F Preferred Stock shall have the rights, preferences and
privileges as set forth in the form of Certificate of Designation attached
hereto as Exhibit 2.
---------
Upon any such conversion of this Note in full, the Lender shall surrender
this Note, duly endorsed, at the principal executive office of the Borrower. At
its expense, the Borrower shall, as soon as practicable thereafter, issue and
deliver to the Lender at such principal office a certificate or certificates for
the number of shares of Series F Preferred Stock to which the Lender shall be
entitled upon such full or partial conversion. Any conversion of this Note under
this Section 6 shall be deemed to have been made at the close of business,
California time, on the Series F Conversion Date (as defined below), and at and
after such times the Lender shall be treated for all purposes as the record
holder of such shares of Series F Preferred Stock. As used herein, the term
"Series F Conversion Date" shall mean the date on which the Certificate of
Designation establishing the Series F Preferred Stock has been accepted for
filing by the Delaware Secretary of State.
The Borrower shall at all times after the Series F Conversion Date reserve
and keep available for issuance out of its authorized but unissued shares of
Series F Preferred Stock such number of shares of Series F Preferred Stock as
shall be sufficient to effect the conversion of the Note into shares of Series F
Preferred Stock, and if at any time such reserve shall not be sufficient to
effect the conversion of the entire outstanding principal amount of, and accrued
interest on, this Note, without limitation of such other remedies as shall be
available to the Lender, the Borrower will use commercially reasonable efforts
to take such corporate actions as may, in the opinion of counsel, be necessary
to increase its authorized but unissued shares of Series F Preferred Stock. The
Borrower shall at all times after the Series F Conversion Date reserve and keep
available for issuance out of its authorized but unissued shares of Common Stock
such number of shares as shall from time to time be sufficient to effect the
conversion of
-9-
the outstanding shares of Series F Preferred Stock into shares of Common Stock,
and if such reserve shall not be sufficient to effect the conversion of the
aggregate number of shares of Series F Preferred Stock then outstanding plus
accrued dividends thereon, without limitation of such other remedies as shall be
available to the Lender, the Borrower will use commercially reasonable efforts
to take such corporate actions as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock.
7. Limitation on Conversion of Principal and Interest
--------------------------------------------------
If the payment or conversion of any indebtedness represented by this Note
into shares of Non-Voting Common Stock, Preferred Stock or Series F Preferred
Stock would cause the Lender's Percentage Interest (as defined below) to exceed
19.8%, the Lender may, by written notice to the Borrower, require the Borrower
to make that portion of such conversion or payment in cash as is necessary to
reduce the Lender's Percentage Interest to less than 19.8%. If, at any time
during the term of this Note, the Lender's Percentage Interest (as defined
below) exceeds 19.8%, the Lender may, upon written notice to the Borrower,
require the Borrower to repurchase that number of shares of Non-Voting Common
Stock, Preferred Stock or Series F Preferred Stock, at the Borrower's option, as
is necessary to maintain the Lender's Percentage Interest at less than 19.8%.
The price of such repurchase shall be equal to (i) the Fair Market Value of
CuraGen Common Stock, with respect to a repurchase of Non-Voting Common Stock,
(ii) the Preferred Stock Value with respect to a repurchase of Preferred Stock
or (iii) $100 per share with respect to a repurchase of Series F Preferred
Stock. As used herein the term "Lender's Percentage Interest" shall mean the
result obtained by dividing (i) the aggregate amount of shares
of the capital stock of the Borrower held by the Lender with present voting
privileges plus the aggregate amount of shares of Non-Voting Common Stock held
by the Lender by (ii) the
-10-
aggregate amount of then outstanding shares of the capital stock of the Borrower
whose holders have present voting privileges plus the aggregate amount of then
outstanding shares of Non-Voting Common Stock held by holders other than the
Lender.
8. Adjustments in Event of Reclassification or Reorganization
----------------------------------------------------------
In the event the Borrower reclassifies its Common Stock or consolidates
with or merges into another person or otherwise reorganizes its capital
structure or conveys or transfers all or substantially all of its assets (each,
a "Reorganization Event"), then and in each such event, the shares of Non-Voting
Common Stock, Preferred Stock or Series F Preferred Stock issued under this Note
shall be convertible into the kind and amount of shares of stock and other
securities and property that were receivable by a holder of Common Stock upon
such Reorganization Event.
9. Events of Default
-----------------
Subject to Section 4 hereof, the Lender may declare the entire unpaid
principal amount of, and all accrued but unpaid interest on, this Note,
immediately due and payable, effective upon written notice to the Borrower, if
any of the following events shall occur (individually an "Event of Default"):
(i) Payment of Note. Default in the payment of this Note when due.
---------------
(ii) Bankruptcy, Insolvency, etc. Commenced by the Borrower. If the
------------------------------------------------------
Borrower:
-11-
(a) shall commence any proceeding in bankruptcy or seek
reorganization, arrangement, readjustment of its debts, dissolution,
liquidation, winding-up, composition or any other relief under the
United States Bankruptcy Act, as amended, or under any other
insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law, of
any jurisdiction, domestic or foreign, now or hereafter existing;
(b) shall admit its inability to pay its debts as they mature
in any petition or pleading in connection with any such proceeding;
(c) shall apply for, or, in writing, consent to or acquiesce
in, an appointment of a receiver, conservator, trustee or similar
officer for it or for all or substantially all of its assets;
(d) shall make a general assignment for the benefit of
creditors; or
(e) shall admit in writing its inability to pay its debts as
they mature.
(iii) Bankruptcy, Insolvency, etc. Commenced Against the Borrower.
-----------------------------------------------------------
If any proceedings are commenced or any other action is taken
against the Borrower in bankruptcy or seeking reorganization,
arrangement, readjustment of its debts, dissolution,
liquidation, winding-up, composition or any other relief under
the United States Bankruptcy Act, as amended, or under any
other insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other
-12-
similar act or law, of any jurisdiction, domestic or foreign,
now or hereafter existing, or a receiver, conservator, trustee
or similar officer for the Borrower or for all or substantially
all of its assets is appointed; and in each such case, such
event continues for sixty (60) days undismissed, unbounded and
undischarged.
(iv) Certain Terminations of the Agreement. Termination of the
-------------------------------------
Agreement by the Lender in accordance with Section 8.2(a) or
Section 8.3 of the Agreement.
10. Any notice required or permitted under this Note shall be given in
writing and in accordance with Section 9.5 of the Agreement.
11. If any action at law or in equity is necessary to enforce or interpret
the terms of this Note, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and necessary disbursements to any other relief to which
such party may be entitled.
12. The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note. No failure on the part of the Lender in
exercising any right or remedy hereunder, and no single, partial or delayed
exercise by the Lender of any right or remedy shall preclude the full and timely
exercise by the Lender at any time of any right or remedy of the Lender
hereunder without notice. No course of dealing or other conduct, no oral
agreement or representation made by the Lender or usage of trade shall operate
as a waiver of any right or remedy of the Lender. This Note and the Agreement
contain the entire agreement between the parties with respect to the subject
matter hereof, and supersedes every course of
-13-
dealing, other conduct, oral agreement or representation previously made by the
Lender. In the event that any court of competent jurisdiction shall determine
that any provision, or portion thereof, contained in this Note shall be
unenforceable in any respect, then such provision shall be deemed limited to the
extent that such court deems it enforceable, and the remaining provisions of
this Note shall nevertheless remain in full force and effect.
13. None of the terms or provisions of this Note may be excluded,
modified, or amended except by a written instrument duly executed on behalf of
both the Borrower and the Lender expressly referring hereto and setting forth
the provision so excluded, modified or amended. No waiver or forbearance of any
of the rights and remedies of the Lender hereunder shall be effective unless
made specifically in a writing signed by the Lender, and any such waiver or
forbearance shall be effective only in the specific instance and for the
specific purpose for which given.
14. This Note is the "Note" referred to in the Agreement and is entitled
to all of the rights and benefits referred to therein.
15. This Note is delivered to the Lender at its principal office in South
San Francisco, California, shall be governed by, and construed and enforced in
accordance with, the laws of the state of California, without regard to its
principles of conflicts of laws.
-14-
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by its
duly authorized officer as of the date first above written.
Witness: CURAGEN CORPORATION
_________________________________ by:________________________________
(Signature)
___________________________________
(Print or type name)
its:_______________________________
(Title or Capacity)
-15-
SCHEDULE TO PROMISSORY NOTE
DATED ___________, 1997
FROM CURAGEN CORPORATION
TO GENENTECH, INC.
IN THE AMOUNT OF UP TO $26,000,000
Amount Amount Amount CuraGen Genentech
Date Drawn Repaid Converted Acknowledgement Acknowledgement
---- ----- ------ --------- --------------- ---------------
-16-
EXHIBIT 1
---------
RESTATED
CERTIFICATE OF INCORPORATION
OF
CURAGEN CORPORATION
Adopted in accordance with the
provisions of Sections 242 and 245
of the General Corporation Law of the State of Delaware
-------------------------------------------------------
CuraGen Corporation, a Delaware corporation, hereby certifies as follows:
1. The name of the corporation is CuraGen Corporation. The date of the
filing of its original Certificate of Incorporation with the Secretary of State
of the State of Delaware was November 22, 1991.
2. This Restated Certificate of Incorporation amends and restates the
provisions of the Certificate of Incorporation of said corporation and was duly
adopted pursuant to resolutions adopted by the Board of Directors and
Stockholders of the corporation in accordance with the provisions of Sections
242 and 245 of the General Corporation Law of the State of Delaware (the
"Delaware General Corporation Law"). In lieu of a meeting and vote of the
Stockholders, the holders of the necessary number of shares of the corporation's
capital stock have given written consent to said amendment and restatement in
accordance with the provisions of Section 228 of the Delaware General
Corporation Law, and said written consent was filed with the corporation and
notice thereof has been given to those Stockholders who have not consented in
writing.
3. The text of the Certificate of Incorporation is hereby amended and
restated to read in its entirety as follows:
FIRST: The name of the corporation is CuraGen Corporation (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 0000 Xxxxxx Xxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle;
and the name of the registered agent of the Corporation in the State of Delaware
is The Xxxxxxxx-Xxxx Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity or carry on any business for which corporations may be organized under
the Delaware General Corporation Law or any successor statue.
FOURTH:
A. Designation and Number of Shares.
--------------------------------
The total number of shares of all classes of stock which the Corporation
shall have the authority to issue is 58,000,000 shares, consisting of 50,000,000
shares of common stock, par value $.01 per share (the "Common Stock"), 3,000,000
shares of non-voting common stock, par value $.01 per share (the "Non-Voting
Common Stock"), and 5,000,000 shares of Preferred Stock, par value $.01 per
share (the "Preferred Stock").
Each share of common stock, par value $.01 per share, of the Corporation
issued and outstanding at the time and date that this Restated Certificate of
Incorporation becomes effective (the "Effective Time") is hereby reclassified
and changed, without any action on the part of the holders of any such common
stock or on the part of the Corporation, into one share of fully paid and
nonassessable Common Stock, and each person holding of record any shares of such
common stock issued and outstanding at the Effective Time shall be entitled to
receive, upon the surrender of certificates evidencing such shares to the
Corporation, one or more certificates to evidence the number of shares of Common
Stock into which such shares of common stock have been reclassified.
A statement of the designations of the different classes of stock of the
Corporation and of the powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, and of the authority conferred upon the
Board of Directors to fix by resolution or resolutions any of the foregoing in
connection with the creation of one or more series of Preferred Stock and the
limitation of variations between or among such series, is set forth below in
this Article FOURTH.
B. Preferred Stock
---------------
1. Shares of Preferred Stock may be issued in one or more series at
such time or times and for such consideration as the Board of Directors may
determine. All shares of any one series shall be of equal rank and identical in
all respects.
2. Authority is hereby expressly granted to the Board of Directors to
fix from time to time, by resolution or resolutions providing for the
establishment and/or issuance of any series of Preferred Stock, the designation
of such series and the powers, preferences and rights of the shares of such
series, and the qualifications, limitations or restrictions thereof, including,
without limitation, the following:
(a) The distinctive designation and number of shares comprising such
series, which number may (except where otherwise provided by the Board of
Directors in creating such series) be increased or decreased (but not below
the number of shares then outstanding) from time to time by action of the
Board of Directors;
(b) The rate of dividends, if any, on the shares of that series,
whether dividends shall be (i) non-cumulative, (ii) cumulative to the
extent earned or (iii) cumulative (and, if cumulative, from which date or
dates), whether dividends shall be payable in cash, property or rights, or
in shares of the Corporation's capital stock, and the relative rights of
priority, if any, of payment of dividends on shares of that series over
shares of any other series or class;
(c) Whether the shares of that series shall be redeemable and, if so,
the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share
payable in case of redemption (which amount may vary under different
conditions and at different redemption dates) or the property or rights,
including securities of any other corporation, payable in case of
redemption;
(d) Whether the series shall have a sinking fund for the redemption
or purchase of shares of that series and, if so, the terms and amounts
payable into such sinking fund;
(e) The rights to which the holders of the shares of that series
shall be entitled in the event of the voluntary or involuntary liquidation,
dissolution or winding-up of the
2
Corporation, and the relative rights of priority, if any, of payment of
shares of that series in any such event;
(f) Whether the shares of that series shall be convertible into or
exchangeable for shares of stock of any other class or any other series
and, if so, the terms and conditions of such conversion or exchange,
including the rate or rates of conversion or exchange, the date or dates
upon or after which they shall be convertible or exchangeable, the period
or periods during which they shall be convertible or exchangeable, the
event or events upon or after which they shall be convertible or
exchangeable or at whose option they shall be convertible or exchangeable,
and the method (if any) of adjusting the rates of conversion or exchange in
the event of a stock split, stock dividend, combination of shares or
similar event;
(g) Whether the issuance of any additional shares of such series, or
of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such additional
shares of such series or shares of such other series;
(h) Whether or not the shares of that series shall have voting
rights, the extent of such voting rights on specified matters or on all
matters, the number of votes to which the holder of a share of such series
shall be entitled in respect of such share, whether such series shall vote
generally with the Common Stock on all matters or (either generally or upon
the occurrence of specified circumstances) shall vote separately as a class
or with other series of Preferred Stock; and
(i) Any other preferences, privileges and powers and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions of such series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of this
Restated Certificate of Incorporation and to the full extent now or
hereafter permitted by the Delaware General Corporation Law.
C. Common Stock and Non-Voting Common Stock.
----------------------------------------
The Common Stock and the Non-Voting Common Stock shall be identical in all
respects and shall have equal rights and privileges, except as otherwise
expressly provided herein. The relative powers, preferences, rights,
qualifications, limitations and restrictions of the shares of the Common Stock
and the Non-Voting Common Stock are as follows:
1. Dividends. The holders of record of Common Stock and the Non-Voting
---------
Common Stock shall be entitled to receive, when, if and as declared by the Board
of Directors, such dividends of cash, property or stock of the Corporation as
the Board of Directors shall from time to time declare, subject to the following
rights and restrictions and the rights and restrictions set forth in paragraph
(C)(2) of this Article FOURTH:
(a) No cash dividends shall be declared and paid on the Common Stock
unless at the same time an equal cash dividend is declared and paid, per
share, on the Non-Voting Common Stock. No cash dividends shall be declared
and paid on the Non-Voting Common Stock unless at the same time an equal
cash dividend is declared and paid, per share, on the Common Stock.
3
(b) No dividend of property (including capital stock of the
Corporation) shall be declared and paid on the Common Stock unless a
dividend of an equal amount of the same property has also been declared and
paid, per share, on the Non-Voting Common Stock. No dividend of property
(including capital stock of the Corporation) shall be declared and paid on
the Non-Voting Common Stock unless a dividend of an equal amount of the
same property has also been declared and paid, per share, on the Common
Stock.
2. Stock Subdivisions and Combinations. The Corporation shall not
-----------------------------------
subdivide or combine shares Common Stock by stock split, stock dividend,
reclassification, reorganization or otherwise without at the same time making a
proportionate subdivision or combination of the Non-Voting Common Stock. The
Corporation shall not subdivide or combine shares of Non-Voting Common Stock by
stock split, stock dividend, reclassification, reorganization or otherwise
without at the same time making a proportionate subdivision or combination of
the Common Stock.
3. Liquidation. In the event of any liquidation, dissolution or
-----------
winding up of the Corporation, whether voluntary or involuntary, after payment
or provision for payment of the debts and other liabilities of the Corporation
and the amounts to which the holders of any Preferred Stock shall be entitled,
the holders of Common Stock and Non-Voting Common Stock shall be entitled
(together as one class) to share ratably in the remaining assets of the
Corporation.
4. Voting. The holders of the Common Stock are entitled to one vote
------
for each share held. Except as provided under the Delaware General Corporation
Law, the holders of the Non-Voting Common Stock are not entitled to vote. There
shall be no cumulative voting.
5. Conversion of Non-Voting Common Stock.
--------------------------------------
(a) Optional Conversion. Each share of Non-Voting Common Stock shall
be convertible, at the option of the holder thereof, at any time and from
time to time, into shares of Common Stock at the rate of one share of
Common Stock for each share of Non-Voting Common Stock by surrendering the
certificate or certificates for such shares of Non-Voting Common Stock,
together with written notice that such holder elects to convert all or any
portion of the shares of Non-Voting Common Stock represented by such
certificate or certificates, to the office of the transfer agent (which
shall be the principal office of the Corporation if it serves as its own
transfer agent). Such notice shall state the names of the nominees, if any,
in which such holder wishes the certificate or certificates for the shares
of Common Stock to be issued. The date of receipt of such certificates and
notice by the transfer agent (or by the Corporation if it serves as its own
transfer agent) shall be the conversion date. The Corporation shall, as
soon as practicable after such conversion date, issue and deliver at such
office to such holder of Non-Voting Common Stock, or to its nominees, a
certificate or certificates for the number of shares of Common Stock to
which such holder shall be entitled, together with cash in lieu of any
fraction of a share.
(b) Automatic Conversion. (i) Except as provided in paragraph
--------------------
5(b)(ii), upon the transfer of beneficial ownership of any shares of Non-
Voting Common Stock, such shares shall automatically, with no further
action being required by any party to such transfer or otherwise, be
converted into shares of Common Stock at the rate of one share of Common
Stock for each share of Non-Voting Common Stock.
(ii) The provisions of paragraph 5(b)(i) shall not apply, and Non-
Voting Common Stock shall be issued to a transferee of Non-Voting Common
Stock upon the transfer of
4
beneficial ownership of any shares thereof, if such transfer is made to (i)
a majority- owned subsidiary of Genentech, Inc., a Delaware corporation
("Genentech"), (ii) a corporation ("Genentech Parent") of which Genentech
is a wholly owned subsidiary or (iii) a wholly owned subsidiary of
Genentech Parent (in any such case, a "qualifying transfer"); provided that
--------
if such transfer is made to a wholly owned subsidiary of Genentech or of
Genentech Parent, as the case may be, and such wholly owned subsidiary
ceases to be a wholly owned subsidiary of Genentech or of Genentech Parent,
as the case may be, then such shares shall automatically, with no further
action being required by any party, be converted into shares of Common
Stock at the rate of one share of Common Stock for each share of Non-Voting
Common Stock. Upon any qualifying transfer, the transferor shall provide
written certification to the transfer agent for the Common Stock and Non-
Voting Common Stock of such facts which constitute such transfer as a
"qualifying transfer" and, absent prima facie evidence that such
certification is false, the Corporation or any transfer agent shall accept
such certification as being correct and shall not be required to conduct
any investigation with respect thereto.
(c) The Corporation shall reserve and keep available out of its
authorized but unissued Common Stock such number of shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Non-Voting Common Stock.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by statute or by this Restated
Certificate of Incorporation or the By-Laws of the Corporation as in effect from
time to time, the directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written ballot
unless the By-Laws so provide.
C. Any action required or permitted to be taken by the stockholders of the
Corporation may be effected only at a duly called annual or special meeting of
stockholders of the Corporation and not by written consent.
SEVENTH: A. Subject to the rights of the holders of shares of any series
of Preferred Stock then outstanding to elect additional directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the Board of Directors.
B. On or prior to the Effective Time, the Board of Directors of the
Corporation shall divide the directors into three classes, as nearly equal in
number as reasonably possible, with the term of office of the first class to
expire at the 1998 annual meeting of stockholders or any special meeting in lieu
thereof, the term of office of the second class to expire at the 1999 annual
meeting of stockholders or any special meeting in lieu thereof, and the term of
office of the third class to expire
5
at the 2000 annual meeting of stockholders or any special meeting in lieu
thereof. At each annual meeting of stockholders or special meeting in lieu
thereof following such initial classification, directors elected to succeed
those directors whose terms expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders or special meeting
in lieu thereof after their election and until their successors are duly elected
and qualified.
C. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office even though less than a quorum, or by a sole remaining director.
In the event of any increase or decrease in the authorized number of directors,
(i) each director then serving as such shall nevertheless continue as a director
of the class of which he is a member until the expiration of his current term or
his prior death, retirement, removal or resignation and (ii) the newly created
or eliminated directorships resulting from such increase or decrease shall if
reasonably possible be apportioned by the Board of Directors among the three
classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent reasonably possible,
consistent with the foregoing rule, any newly created directorships shall be
added to those classes whose terms of office are to expire at the latest dates
following such allocation and newly eliminated directorships shall be subtracted
from those classes whose terms of office are to expire at the earliest dates
following such allocation, unless otherwise provided for from time to time by
resolution adopted by a majority of the directors then in office, although less
than a quorum. In the event of a vacancy in the Board of Directors, the
remaining directors, except as otherwise provided by law, may exercise the
powers of the full Board of Directors until the vacancy is filled.
D. Advance notice of stockholder nominations for the election of directors
and of business to be brought by stockholders before any meeting of the
stockholders of the Corporation shall be given in the manner provided in the By-
Laws of the Corporation.
E. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any director, or the entire Board of Directors, may be removed
from office at any time only for cause. A director may be removed for cause only
after a reasonable notice and opportunity to be heard before the body proposing
to remove him.
EIGHTH: The Board of Directors is expressly empowered to adopt, amend or
repeal By-Laws of the Corporation. Any adoption, amendment or repeal of the By-
Laws of the Corporation by the Board of Directors shall require the approval of
a majority of the Board of Directors. The stockholders shall also have power to
adopt, amend or repeal the By-Laws of the Corporation; provided, that, in
--------
addition to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Restated Certificate of Incorporation,
the affirmative vote of the holders of at least seventy percent (70%) of the
voting power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required for the stockholders to adopt,
amend or repeal any provision of the By-Laws of the Corporation.
NINTH: A. To the fullest extent permitted by the Delaware General
Corporation Law as the same now exists or may hereafter be amended, the
Corporation shall indemnify, and advance expenses to, its directors, officers
and any person who is or was serving at the request of the Corporation as a
director, officer, trustee, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, if such person was or is
made a party to or is
6
threatened to be made a party to or is otherwise involved (including, without
limitation, as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director or officer of the Corporation or is or was serving
at the request of the Corporation as a director, officer, trustee, employee or
agent of another corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan;
provided, that except with respect to proceedings to enforce rights to
--------
indemnification or as is otherwise required by law, the By-Laws of the
Corporation may provide that the Corporation shall not be required to indemnify,
and advance expenses to, any director, officer or other person in connection
with a proceeding (or part thereof) initiated by such director, officer or other
person, unless such proceeding (or part thereof) was authorized by the Board of
Directors. The Corporation, by action of its Board of Directors, may provide
indemnification or advance expenses to employees and other agents of the
Corporation or other persons only on such terms and conditions and to the extent
determined by the Board of Directors in its sole and absolute discretion.
B. The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article NINTH shall not be deemed exclusive of any other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office.
C. The Corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, trustee, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under this
Article NINTH.
D. The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article NINTH shall, unless otherwise specified when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person. The indemnification and rights to
advancement of expenses that may have been provided to an employee or agent of
the Corporation by action of the Board of Directors, pursuant to the last
sentence of paragraph 1 of this Article NINTH, shall, unless otherwise specified
when authorized or ratified, continue as to a person who has ceased to be an
employee or agent of the Corporation and shall inure to the benefit of the
heirs, executors and administrators of such person, after the time such person
has ceased to be an employee or agent of the Corporation, only on such terms and
conditions and to the extent determined by the Board of Directors in its sole
discretion. No repeal or amendment of this Article NINTH shall adversely affect
any rights of any person pursuant to this Article NINTH which existed at the
time of such repeal or amendment with respect to acts or omissions occurring
prior to such repeal or amendment.
TENTH: No director shall be personally liable to the Corporation or its
stockholders for any monetary damages for breaches of fiduciary duty as a
director, notwithstanding any provision of law imposing such liability; provided
that this provision shall not eliminate or limit the liability of a director, to
the extent that such liability is imposed by applicable law, (i) for any breach
of the director's duty of loyalty to the Corporation or its stockholders; (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) under
7
Section 174 or successor provisions of the Delaware General Corporation Law; or
(iv) for any transaction from which the director derived an improper personal
benefit. This provision shall not eliminate or limit the liability of a director
for any act or omission if such elimination or limitation is prohibited by the
Delaware General Corporation Law. No amendment to or repeal of this provision
shall apply to or have any effect on the liability or alleged liability of any
director for or with respect to any acts or omissions of such director occurring
prior to such amendment or repeal. If the Delaware General Corporation Law is
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
ELEVENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Restated Certificate of Incorporation in the manner
prescribed by the Delaware General Corporation Law and all rights conferred upon
stockholders are granted subject to this reservation; provided that, in addition
--------
to the vote of the holders of any class or series of stock of the Corporation
required by law or by this Restated Certificate of Incorporation, the
affirmative vote of the holders of shares of voting stock of the Corporation
representing at least seventy percent (70%) of the voting power of all of the
then outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to (i) reduce or eliminate the number of authorized shares of Common
Stock or Non-Voting Common Stock or the number of authorized shares of Preferred
Stock set forth in Article FOURTH or (ii) amend or repeal, or adopt any
provision inconsistent with, Articles SIXTH, SEVENTH, EIGHTH, NINTH, TENTH, and
this Article ELEVENTH of this Amended and Restated Certificate of Incorporation.
TWELFTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of the Delaware General Corporation Law or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of the Delaware General
Corporation Law, order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of this Corporation, as the case
may be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
[THIS SPACE INTENTIONALLY LEFT BLANK]
8
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by its Chairman of the Board of Directors, President and Chief Executive
Officer this _______ day of __________ 1997.
CURAGEN CORPORATION
By:_________________________________________
Xxxxxxxx X. Xxxxxxxx, Ph.D.
Its Chairman of the Board, President
and Chief Executive Officer
9
EXHIBIT 2
---------
CERTIFICATE OF DESIGNATION, PREFERENCES, AND RIGHTS OF
SERIES F NON-VOTING CONVERTIBLE PREFERRED STOCK
OF
CURAGEN CORPORATION
CURAGEN CORPORATION, a Delaware corporation (the "Company"), DOES HEREBY
CERTIFY:
That, pursuant to authority conferred on the Board of Directors of the
Company by the Certificate of Incorporation of the Company and pursuant to the
provisions of Section 151 of Title 8 of the Delaware Code, said Board of
Directors, by the affirmative vote of at least a majority of its members,
adopted a resolution providing for the powers, designation, preferences and
relative, participating, optional or other rights, and qualifications,
limitations or restrictions thereof, of __________ (____________) shares of the
Company's Preferred Stock, par value $.01 per share, which resolution is as
follows:
"RESOLVED: That pursuant to the authority granted to and vested in
--------
the Board of Directors of this Company in accordance with the
provisions of its Restated Certificate of Incorporation, as
amended, the Board of Directors hereby designates a series of
Preferred Stock of the Company, par value $.01 per share (the
"Preferred Stock"), consisting of _________ (______________)
shares of the authorized, unissued Preferred Stock of the
Company, as the Series F Non-Voting Convertible Preferred Stock
(the "Series F Preferred"), and hereby fixes such designation
and number of shares, and the powers, preferences and relative,
participating, optional or other rights, and qualifications,
limitations and restrictions thereof, as set forth below, and
that the officers of the Company, and each acting singly, are
hereby authorized, empowered and directed to execute and file
with the Secretary of State of the State of Delaware a
Certificate of Designation, Preferences and Rights of Series F
Non-Voting Convertible Preferred Stock, as the officer or
officers shall deem necessary and advisable to carry out the
purposes of this resolution."
Series F Preferred. The powers, preferences, and relative, participating,
------------------
optional or other rights, and qualifications, limitations and restrictions
thereof, with respect to the Series F Preferred, par value $.01 per share, are
as follows:
1. Designation and Amount. The shares of such series shall be designated
----------------------
as "Series F Non-Voting Convertible Preferred Stock" (the "Series F Preferred"),
and the number of shares constituting the Series F Preferred shall be
__________________(____________).
2. Dividends. Subject to the provisions of law and this Certificate of
---------
Incorporation, the holders of shares of Series F Preferred shall be entitled to
receive, out of funds legally available therefor, in preference to the holders
of Series A Convertible Preferred Stock (the "Series A Preferred"), Series B
Redeemable Preferred Stock (the "Series B Preferred"), Series C Convertible
Preferred Stock (the "Series C Preferred"), Series D Convertible Preferred Stock
(the "Series D Preferred") and Series E Preferred Stock (the "Series E
Preferred"), and any other class or series of the capital stock of the Company
ranking junior to the Series F Preferred Stock as to the payment of dividends,
quarterly dividends equal to the Series F Dividend Rate (as hereinafter
defined), payable when and as declared by the Board of Directors, and, whether
or not declared, with respect to liquidation under Section 4(a), conversion
under Section 5(a) or redemption under Section 6(a). Such dividends shall accrue
and be cumulative from the date of issuance of each share of Series F Preferred
Stock, whether or not declared. As used herein, the term "Series F Dividend
Rate" shall mean that dividend rate as is equal to (i) the prime rate of
interest as reported from time to time by Citibank, N.A. (or, if Citibank, N.A.
ceases to report such rate, the generally prevailing base lending rate of Fleet
National Bank) (ii) plus one percent (1%).
3. Voting Rights. Except as otherwise provided by the Delaware General
-------------
Corporation Law, the holders of shares of Series F Preferred shall not be
entitled to vote in, or to receive notice of, any meeting of the stockholders of
the Company.
4. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) In the event of the voluntary or involuntary liquidation, dissolution
or winding up of the Company, or in the event of its insolvency, before any
distribution or payment is made to any holders of any shares of the Common Stock
or any other class or series of capital stock of the Company designated to be
junior to the Series A Preferred, the Series B Preferred, the Series C
Preferred, the Series D Preferred, the Series E Preferred and the Series F
Preferred and subject to the liquidation rights and preferences of any class or
series of capital stock of the Company designated to be senior to, or on parity
with, the Series A Preferred, the Series B Preferred, the Series C Preferred,
the Series D Preferred the Series E Preferred and the Series F Preferred, the
holders of outstanding shares of the Series A Preferred, the Series B Preferred,
the Series C Preferred, the Series D Preferred, the Series E Preferred and the
Series F Preferred shall be entitled to have set apart for them, or to be paid
first out of the assets of the Company available for distribution to holders of
the Company's capital stock of all classes, an amount in cash equal to (i) $5.86
per share of Series A Preferred and Series C Preferred, plus all declared but
unpaid dividends, (ii) $10.00 per share of Series B Preferred, plus all accrued
but unpaid dividends, whether or not declared, on the Series B Preferred, (iii)
$7.50 per share of Series D Preferred, plus all declared but unpaid dividends,
(iv) $10.00 per share of the Series E Preferred, plus all accrued but unpaid
dividends, whether or not declared and (v) $100.00 per share of the Series F
Preferred, plus all accrued but unpaid dividends, whether or not declared (and
in all instances specified in (i), (ii), (iii), (iv) and (v) subject to
equitable adjustment in the event of any stock dividend, stock split,
2
combination reorganization, recapitalization or other similar event affecting
such shares). If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the assets of the Company available for distribution
to stockholders shall be insufficient to set aside for or to pay such amounts to
the holders of shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred, the Series E Preferred and Series F Preferred the
total amount of the Company's assets which is available to be paid to
stockholders of the Company shall be distributed ratably among the holders of
the Series A Preferred, the Series B Preferred, the Series C Preferred, the
Series D Preferred, the Series E Preferred and the Series F Preferred in
proportion to their preferential liquidation amounts as specified above, subject
to the liquidation rights and preferences of any other class or series of
capital stock of the Company designated to be senior to, or on a parity with,
the Series A Preferred, the Series B Preferred, the Series C Preferred, the
Series D Preferred, the Series E Preferred and the Series F Preferred, and no
distribution shall be made to or set apart for the holders of Common Stock or
any other class or series of capital stock of the Company which at such time is
junior to the Series A Preferred, the Series B Preferred, the Series C
Preferred, the Series D Preferred, the Series E Preferred and the Series F
Preferred as to liquidation rights and preferences. If the assets of the Company
available for distribution to stockholders exceed such amounts, the balance of
such assets shall be paid to or set aside for payment ratably among the holders
of any class or series of capital stock of the Company designated to be junior
to the Series A Preferred, the Series B Preferred, the Series C Preferred, the
Series D Preferred, the Series E Preferred and the Series F Preferred in
accordance with their relative rights and preferences, and thereafter, to the
holders of Common Stock.
(b) The merger or consolidation of the Company into or with another
corporation, or the sale or other conveyance of all or substantially all of the
assets of the Company to another entity, shall be deemed, at the option of any
holder of shares of Series F Preferred, a liquidation, dissolution or winding up
of the Company for purposes of this Section 4 as to such holder.
5. Conversion.
----------
(a) Subject to the terms and conditions of this Section 5, at any time
after the issuance of the Series F Preferred, the holder of each share of Series
F Preferred shall have the right, at such holder's option, to convert any such
shares of Series F Preferred into such number of fully paid and non-assessable
shares of Common Stock of the Company as is determined by dividing the Series F
Issue Price (as defined below) by the Conversion Price (as defined below). Such
option to convert shares of Series F Preferred into shares of Common Stock may
be exercised as to all or any portion of such shares of Series F Preferred by,
and only by, giving written notice to the Company at its principal office that
the holder elects to convert a stated number of shares of Series F Preferred
into Common Stock and by surrendering for such purpose to the Company at its
principal office the certificate representing such shares of Series F Preferred,
duly endorsed or accompanied by proper instruments to evidence the conversion
election. At the time of such surrender, the persons exercising such option to
convert shall be deemed to be the holders of the shares of Common Stock issuable
upon such conversion, notwithstanding that the stock transfer books of the
Company may
3
then be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to such person. All rights with respect to
the Series F Preferred so converted (other than the right to receive declared or
accrued (whether or not declared) but unpaid dividends thereon which may, at the
option of the Company, be paid in additional shares of Common Stock) will then
terminate. As promptly as practicable after the receipt of the written notice
referred to in the preceding paragraph and surrender of the certificate or
certificates for the share or shares of Series F Preferred to be converted, the
Company shall issue and deliver, or cause to be issued and delivered, to the
holder of the shares being converted, a certificate or certificates registered
in the holder's name or designee, for the number of whole shares of Common Stock
issuable upon the conversion of such share or shares of Series F Preferred. In
case the number of shares of Series F Preferred represented by the certificate
or certificates surrendered for conversion pursuant to this Section 5 exceeds
the number of shares converted, the Company shall, upon such conversion, execute
and deliver to the holder at the expense of the Company a new certificate or
certificates for the number of shares of Series F Preferred represented by the
certificate or certificates surrendered which are not to be converted. As used
herein, the "Series F Issue Price" shall mean $100 per share and the term
"Conversion Price" shall mean the fair market value of the shares of Common
Stock of the Company at the time of conversion, determined as follows: if the
shares of Common Stock are traded on the Nasdaq Stock Market the average of the
closing prices as reported by the Nasdaq Stock Market or, if not traded on the
Nasdaq Stock Market, by such other principal securities exchange on which the
shares are traded, as applicable, over the twenty (20) days preceding the date
on which conversion will be made or, if not traded on any other exchange, the
price per share which the Company could obtain from a willing buyer for shares
of Common Stock sold by the Company, as determined in good faith by the Board of
Directors of the Company.
(b) Capital Reorganization, Merger or Sale of Assets. If at any time or
------------------------------------------------
from time to time there shall be a capital reorganization of the Common Stock or
a consolidation or merger of the Company, or a sale of all or substantially all
of the assets of the Company (a "Reorganization"), then, as a part of and as a
condition to such Reorganization, provision shall be made so that the holders of
shares of the Series F Preferred shall thereafter be entitled to receive upon
conversion of the shares of the Series F Preferred the same kind and amount of
stock or other securities or property (including cash) of the Company, or of the
successor corporation resulting from such Reorganization, to which such holder
would have been entitled if such holder had converted its shares of the Series F
Preferred immediately prior to the effective time of such Reorganization. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 5 to the end that the provisions of this Section 5
(including adjustment of the Conversion Price then in effect and the number of
shares of Common Stock or other securities issuable upon conversion of the
shares of the Series F Preferred) shall be applicable after such Reorganization
in as nearly equivalent manner as may be reasonably practicable. In the case of
a transaction to which both this Subsection 5(b) and Subsection 4(b) hereof
apply, the holders of at least a majority of the outstanding shares of the
Series F Preferred upon the occurrence of a Reorganization shall have the option
to elect treatment either under this Subsection 5(b) or under Subsection 4(b)
hereof, notice of which election shall be given in writing to the Company not
less than fifteen (15) business days
4
prior to the effective date of such Reorganization or not less than fifteen (15)
days after the Company has given notice to the holders of the Series F Preferred
Stock of such Reorganization, whichever is later. If no such election is timely
made, the provisions of Subsection 4(b) and not of this Subsection 5(b) shall
apply.
(c) Certain Provisions Regarding Conversion.
---------------------------------------
(i) No Fractional Shares. The number of shares of Common Stock issuable
--------------------
upon conversion of any shares of Series F Preferred shall be rounded to the
nearest whole number, and no fractional shares of Common Stock, and no payment
in lieu thereof, shall be issued upon any such conversion.
(ii) Common Stock Reserved. The Company shall at all times reserve and
---------------------
keep available out of its authorized but unissued Common Stock the full number
of shares of Common Stock deliverable upon the conversion of all then
outstanding shares of Series F Preferred.
(iii) Status of Converted or Unissued Series F Preferred. Shares of Series
--------------------------------------------------
F Preferred that have been issued and reacquired in any manner, including upon
conversion of such shares, shall (upon compliance with any applicable provisions
of the laws of the State of Delaware) have the status of authorized and unissued
shares of the Company's Preferred Stock, par value $.01 per share, undesignated
as to series and may be redesignated and reissued as part of any series of the
Preferred Stock.
(iv) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the number of shares receivable pursuant to this
Section 5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series F Preferred a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Company shall, upon the written request at any time of any holder of
Series F Preferred, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, and (ii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of each series of Series F
Preferred.
6. (a) Redemption. The Company may, at any time after the date of
----------
its Initial Public Offering (as defined below) redeem from each holder of Series
F Preferred, at a price equal to the Series F Issue Price, plus any accrued but
unpaid dividends thereon, whether or not declared (the "Redemption Price"), one
hundred percent (100%) of the shares of Series F Preferred held by such holder
on such date. The Company will provide each holder of Series F Preferred with a
written request setting forth its desire to redeem shares of Series F Preferred.
Upon issuance of any such redemption request, the Company will become obligated
to redeem at the time of redemption specified therein (the "Redemption Date")
all shares of Series F Preferred specified therein. In case
5
less than all shares of Series F Preferred represented by any certificate are
redeemed in any redemption pursuant to this Section 6, a new certificate will be
issued representing the unredeemed shares of Series F Preferred without cost to
the holder thereof. As used herein, the term "Initial Public Offering" shall
mean a firm commitment underwritten public offering of the Common Stock of the
Company pursuant to a registration statement filed with and declared effective
by the Securities and Exchange Commission under the Securities Act of 1933, as
amended.
(b) Status of Redeemed Shares. Unless there shall have been a default
-------------------------
in payment of the Redemption Price, no shares of redeemed Series F Preferred
shall be entitled to any dividends accrued after the Redemption Date, and on
such Redemption Date all rights of the holder of such redeemed shares as a
stockholder of the Company by reason of the ownership of such shares will cease,
except the right to receive the Redemption Price of such shares, without
interest, plus any declared or accrued (whether or not declared) unpaid
dividends accruing prior to the Redemption Date upon presentation and surrender
of the certificate representing such shares, and such redeemed shares will not
from and after such Redemption Date be deemed to be outstanding.
7. No Impairment. The Company shall not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company but shall at all
times in good faith assist in the carrying out of all the provisions of this
Certificate of Designation and in the taking of all such action as may be
necessary or appropriate in order to protect the rights and preferences of the
holders of Series F Preferred against impairment in accordance with this
Certificate of Designation and the Delaware General Corporation Law.
8. Certain Amendments to the Company's Certificate of Incorporation.
----------------------------------------------------------------
So long as any shares of Series F Preferred Stock shall be outstanding, the
Company shall not, without first obtaining the affirmative vote or written
consent of the holders of a majority of the outstanding shares of Series F
Preferred Stock, voting separately as a class, amend or repeal any provision of,
or add any provision to, the Company's Certificate of Incorporation, including
any amendment, repeal or addition to the Company's Certificate or Incorporation
effected through a merger, if such action would adversely affect or change the
preferences, rights, privileges or powers of the Series F Preferred Stock, or
increase or decrease (other than by conversion) the total number of authorized
shares of Series F Preferred Stock.
6
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
to be signed by its President and Chief Executive Officer this ____day of ____,
____.
CURAGEN CORPORATION
By:________________________________
Xxxxxxxx X. Xxxxxxxx, Ph.D.
President and Chief
Executive Officer
7
APPENDIX C
----------
FORM OF LICENSE AGREEMENT
LICENSE AGREEMENT
This License Agreement ("Agreement") is made effective as of
_______________ ("Effective Date") by and between GENENTECH, INC., a Delaware
corporation having its principal business office at 0 XXX Xxx, Xxxxx Xxx
Xxxxxxxxx, XX 00000 ("GENENTECH"), and CURAGEN CORPORATION, a Delaware
corporation with its principal place of business at 000 Xxxx Xxxxx Xxxxx, 00xx
Xxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000 ("CURAGEN"). GENENTECH and CURAGEN are each
hereafter referred to individually as a "Party" and together as the "Parties".
WHEREAS, GENENTECH wishes to obtain a license to certain inventions made or
owned by CURAGEN as provided in that certain Research and Option Agreement
between the Parties hereto dated as of November 20, 1997 which is attached
hereto (the "Research Agreement");
WHEREAS, CURAGEN has agreed to provide such license under the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Parties hereby agrees as follows:
1. DEFINITIONS
Whenever used in the Agreement with an initial capital letter, the terms
defined in this Section 1 shall have the meanings specified.
1.1 "AFFILIATE" shall mean any corporation, firm, limited liability
company, partnership or other entity which directly or indirectly controls or is
controlled by or is under common control with a Party to this Agreement.
"Control" means ownership, directly or through one or more Affiliates, of fifty
percent (50%) or more of the shares of stock entitled to vote for
the election of directors, in the case of a corporation, or fifty percent (50%)
or more of the equity interests in the case of any other type of legal entity,
status as a general partner in any partnership, or any other arrangement whereby
a Party controls or has the right to control the Board of Directors or
equivalent governing body of a corporation or other entity.
1.2 "CLONE" shall mean a segment of DNA representing a whole or partial
gene whose sequence or utility is determined from the analysis of one or more
Data Sets or from the Extended Research during the Term of the Research
Agreement.
1.3 "CURAGEN BACKGROUND INVENTIONS" shall mean all patent rights and know-
how of CURAGEN, other than those relating primarily to Inventions, which CURAGEN
has the right to license and which would be infringed by, or is reasonably
necessary for, the development, manufacture, use, sale or importation of any
product developed by GENENTECH pursuant to the licenses granted hereunder;
provided, however, that CURAGEN Background Inventions shall expressly exclude:
(i) any patent rights and know-how relating to Clones not licensed by GENENTECH
pursuant to this Agreement and (ii) any patent rights or know-how arising from
any CURAGEN collaboration with a third party, except to the extent permitted
thereby.
1.4 "CURAGEN DATA" shall mean, with respect to a Licensed Clone, all
information pertaining to such Licensed Clone obtained from the processing of
specified CURAGEN samples, including QC data. QEA/GeneCalling data,
MIM/PathCalling data, xxxxxxxx xxxx and any other information obtained or
generated by CURAGEN in the performance of the CURAGEN Project relating to such
Licensed Clone.
1.5 "CURAGEN DATA SET" shall mean all CURAGEN Data resulting from a
discrete CURAGEN Project that CURAGEN can make exclusively available to
GENENTECH.
1.6 "CURAGEN PROJECT" shall mean a particular project undertaken by
CURAGEN on its own outside the Research Program to process and analyze a
specified set of samples which do not contain GENENTECH Proprietary Material,
and as to which CURAGEN is free to grant rights to GENENTECH hereunder.
2
1.7 "CURAGEN PROJECT INVENTION" shall mean any discovery, invention, know-
how or trade secret conceived or made by employees of CURAGEN (i) in the
performance of a CURAGEN Project that results in CURAGEN Data that becomes part
of an Exclusive Data Set, that is based on, incorporates or makes material use
of the corresponding CURAGEN Data or (ii) relating to a Lead generated outside
of the Extended Research.
1.8 "CURAGEN PROJECT PATENT RIGHTS" shall mean Patent Rights containing a
claim or claims covering CURAGEN Project Inventions. CURAGEN Project Patent
Rights shall also include Patent Rights containing a claim or claims covering
CURAGEN Project Inventions exclusively licensed in by CURAGEN, with the right to
sublicense, now or in the future.
1.9 "CURAGEN PROJECT PROPRIETARY MATERIAL" shall mean, with respect to a
Licensed Clone, all substances made by CURAGEN in the performance of the CURAGEN
Project relating to such Licensed Clone, including mRNA pools. CURAGEN Project
Proprietary Material shall include, without limitation, QEA fragments, MIM
constructs and materials derived or constructed from QEA fragments and MIM
constructs, including, without limitation, fragment and full length cDNA clones
made by CURAGEN.
1.10 "DATA SET," which may be either a Project Data Set or a CURAGEN Data
Set, with respect to a Licensed Clone, shall mean all Project Data resulting
from the discrete Research Project relating to the Licensed Clone or all CURAGEN
Data resulting from the discrete CURAGEN Project relating to the Licensed Clone,
respectively.
1.11 "EXCLUSIVE DATA SET" shall mean any Project Data Set during the
corresponding Exclusive Evaluation Period as provided in Section 2.4 of the
Research Agreement or any CURAGEN Data Set during the corresponding Exclusive
Evaluation Period as provided in Section 2.5.2 of the Research Agreement.
1.12 "EXCLUSIVE EVALUATION PERIOD" shall have the meaning set forth in
Section 2.4 or 2.5.2 of the Research Agreement.
1.13 "EXTENDED LICENSE PATENT RIGHTS" shall have the meaning set forth in
Section 2.3.
3
1.14 "EXTENDED RESEARCH" shall mean, as to each Licensed Clone, the
research undertaken by CURAGEN before or after the Effective Date hereof
pursuant to Sections 2.4.1, 2.5.2 and/or 7.1.3 of the Research Agreement
relating to or using such Licensed Clone.
1.15 "EXTENDED RESEARCH DATA" shall mean all information and results
obtained by CURAGEN from its performance of Extended Research.
1.16 "EXTENDED RESEARCH INVENTIONS" shall mean any discovery, invention,
know-how or trade secret conceived or made by employees of CURAGEN in the
performance of Extended Research, other than such discoveries, inventions,
know-how or trade secrets that are deemed to be defined as Research Project
Inventions pursuant to the terms of the Research Agreement or this Agreement.
1.17 "EXTENDED RESEARCH PATENT RIGHTS" shall mean all rights and interests
in and to issued patents and pending patent applications in any country,
including, but not limited to, all provisional applications, substitutions,
continuations, continuations-in-part (solely to the extent that the claims of
such continuations-in-part cover Extended Research Inventions), divisions, and
renewals thereof, all letters patent granted thereon, and all reissues,
reexaminations and extensions thereof, whether owned now or hereafter solely or
jointly by CURAGEN, and wherein at least one claim of such patent right covers
an Extended Research Invention, and including, without limitation, those
Extended Research Patent Rights listed on Schedule I attached hereto.
1.18 "GENESCAPE"(R) shall mean the web-based software and database product
for accessing and storing Data Sets generated through the application of
CURAGEN's QEA/GeneCalling and MIM/PathCalling.
1.19 "INVENTION," as to each Licensed Clone, shall mean CURAGEN Project
Inventions and Research Project Inventions relating to the Licensed Clone.
1.20 "KNOW- HOW" shall mean: (a) as to each Licensed Clone, all unpatented
Project Data, Research Project Inventions, CURAGEN Data and CURAGEN Project
Inventions relating to such Licensed Clone; (b) as to each Lead, all unpatented
information, inventions, discoveries
4
and trade secrets relating to the Lead; and (c) as to Extended Research using a
Licensed Clone, all unpatented Extended Research Data and all Extended Research
Inventions relating thereto.
1.21 "LEAD" shall mean, as to each Licensed Clone, a small molecule which
was discovered or developed to bind to a protein or inhibit protein function,
and which was developed directly and materially from the use of a Licensed Clone
or the protein encoded thereby by CURAGEN outside of the Research Program prior
to the point in time at which the Clone became a Licensed Clone, including,
without limitation, in the course of the Extended Research.
1.22 "LICENSED CLONE" shall have the meaning set forth in Section 2.1.
1.23 "LICENSED PRODUCT," as to each Licensed Clone, shall mean:
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
5
Confidential Treatment Requested
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
1.24 "MIM/PATHCALLING" shall mean the technology employed by CURAGEN for
identifying protein-protein interactions from libraries of cDNAs.
1.25 "NET SALES" shall mean [XXXXX]
[XXXXX]
6
Confidential Treatment Requested
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
7
Confidential Treatment Requested
[XXXXX]
1.26 "OPTIONED CLONE" shall have the meaning set forth in Section 7.1 of
the Research Agreement.
1.27 "PATENT COORDINATORS" shall mean a patent attorney or patent agent
representing CURAGEN and a patent attorney or patent agent representing
GENENTECH, as further described in Section 5.1.
1.28 "PATENT RIGHTS" shall mean, as to each Licensed Clone, all rights and
interests in and to issued patents and pending patent applications in any
country, including, but not limited to, all provisional applications,
substitutions, continuations, continuations-in-part (solely to the extent that
the claims of such continuations-in-part cover Research Project Inventions or
CURAGEN Project Inventions), divisions, and renewals thereof, all letters patent
granted thereon, and all reissues, reexaminations and extensions thereof,
whether owned now or hereafter, solely or jointly by a Party, and wherein at
least one claim of such patent right covers an Invention, and including, without
limitation, those Patent Rights listed on Schedule I attached hereto.
1.29 "PRIME RATE" shall mean the prime rate of interest as reported by
Citibank, N.A. In the event that Citibank, N.A. ceases to report such a rate,
the term "Prime Rate" shall mean the generally prevailing base corporate lending
rate of Fleet National Bank.
1.30 "PROJECT DATA" shall mean all information obtained from the processing
of GENENTECH Proprietary Material in a particular Research Project, including QC
data, expression data, xxxxxxxx xxxx and any other information obtained or
generated by CURAGEN in the performance of the Research Project relating to such
Licensed Clone.
1.31 "PROJECT DATA SET" shall mean all Project Data resulting from a
discrete Research Project.
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1.32 "QEA/GENECALLING" shall mean the technology employed by CURAGEN for
tagging and identifying the expression level of specific gene fragments within a
cDNA pool.
1.33 "RESEARCH PROGRAM" shall mean the Research Projects to be performed by
CURAGEN and GENENTECH under the Research Agreement.
1.34 "RESEARCH PROJECT" shall mean a particular project to process and
analyze a specified set of samples under the Research Agreement.
1.35 "RESEARCH PROJECT INVENTION" shall mean any discovery, invention,
know-how or trade secret conceived or made: (a) by employees of CURAGEN or
GENENTECH or jointly by employees of both in the performance of the Research
Program, (b) by GENENTECH employees in performing the following specific
activities utilizing any Data Set: (i) QEA or MIM data analysis, confirmation
of QEA or MIM data, fragment cloning and sequencing of a Clone, and (ii) full-
length cloning of a Clone, or (c) any discovery, invention, know-how or trade
secret deemed to be a Research Project Invention pursuant to the terms of the
Research Agreement or this Agreement. Research Project Inventions shall not
include inventions conceived or made solely by GENENTECH outside of the Research
Program, except as specifically set forth in (b) above.
1.36 "RESEARCH PROJECT PATENT RIGHTS" shall mean Patent Rights containing a
claim or claims covering Research Project Inventions.
1.37 "RESEARCH PROJECT PROPRIETARY MATERIAL" shall mean, with respect to a
Licensed Clone, all substances made by CURAGEN in the performance of the
Research Project relating to such Licensed Clone other than mRNA pools extracted
from GENENTECH Proprietary Material. Research Project Proprietary Material
shall include, without limitation, QEA fragments, MIM constructs and materials
derived or constructed from QEA fragments and MIM constructs, including, without
limitation, fragment and full length cDNA clones made by CURAGEN.
9
1.38 "SUBLICENSEE" shall mean any non-Affiliate third party sublicensed by
GENENTECH under the license granted to GENENTECH hereunder, to make, have made,
use, have used, offer to sell, sell, have sold, import or have imported any
Licensed Product.
1.39 "TERM" shall have the meaning set forth in Section 3.10.
1.40 "TERRITORY" shall mean the world.
1.41 "VALID CLAIM(S)" shall mean an unexpired claim of any issued patent
within Patent Rights or Extended License Patent Rights which has not been
finally declared invalid or unenforceable by a patent office or by a court or
other body of competent jurisdiction in any unappealed or unappealable decision
and which has not been lost through an interference or opposition proceeding.
2. LICENSE GRANT
2.1 LICENSE GRANT. Upon exercise of an Option pursuant to Section 7.4 of
-------------
the Research Agreement for any Optioned Clone, GENENTECH shall elect one of the
types of licenses set forth below. The Parties shall indicate such election and
complete the information for such Optioned Clone on Schedule I attached hereto
and incorporated herein, and sign such Schedule I. Such Optioned Clone shall
thereafter be deemed a Licensed Clone. With respect to the license types set
forth in (a) and (b) below, GENENTECH shall also indicate on Schedule I its
election , if any, to obtain an exclusive license hereunder to CURAGEN's rights
and interests in any Lead relating to such Licensed Clone.
(a) For each Licensed Clone and corresponding Lead(s) listed on Schedule I
for which this Section 2.1(a) exclusive license is elected, subject to
the rights reserved to CURAGEN in Section 2.5 below, CURAGEN hereby
grants to GENENTECH an exclusive license (even as to CURAGEN) in the
Territory, to develop, make, have made, use, have used, sell, have
sold, offer for sale, import and have imported any and all products
for any and all human uses, under: (x) all Patent
10
Rights, Inventions, Know-How, CURAGEN Project Proprietary Material and
Research Project Proprietary Material that pertain to such Licensed
Clone, related Licensed Products and the uses thereof, including but
not limited to Patent Rights claiming whole or partial sequences or
utility; and (y) all Patent Rights and Know-How of CURAGEN which
CURAGEN has the right to license to GENENTECH relating to Leads
discovered or developed using such Licensed Clone or the protein
encoded thereby as a target, and which GENENTECH has elected to
license. Such license shall be for the Term specified in Section 3.10,
unless terminated as set forth in this Agreement.
(b) For each Licensed Clone and corresponding Lead(s) listed on Schedule I
for which this Section 2.1(b) exclusive license is elected and which
were "known" by third parties prior to the exercise of the
corresponding Option as determined pursuant to subsection (d) below,
subject to the rights reserved to CURAGEN in Section 2.5 below,
CURAGEN hereby grants to GENENTECH an exclusive license (even as to
CURAGEN) in the Territory, to develop, make, have made, use, have
used, sell, have sold, offer for sale, import and have imported any
and all products for any and all human uses, under: (x) all Patent
Rights, Inventions, Know-How, CURAGEN Project Proprietary Material and
Research Project Proprietary Material that pertain to such Licensed
Clone, related Licensed Products and the uses thereof, including but
not limited to Patent Rights claiming whole or partial sequences or
utility; and (y) all Patent Rights and Know-How of CURAGEN which
CURAGEN has the right to license to GENENTECH relating to Leads
discovered or developed using the Licensed Clone or the protein
encoded thereby as a target, and which GENENTECH has elected to
license. Such license shall be for the Term specified in Section
3.10, unless terminated as set forth in this Agreement.
(c) For each Licensed Clone listed on Schedule I for which this Section
2.1(c) non-exclusive license is elected and for Licensed Products
related to such Licensed Clone that are discovered or developed by
GENENTECH, CURAGEN hereby
11
grants to GENENTECH a non-exclusive license in the Territory to use
such Licensed Clone or the protein encoded thereby as a reagent for
discovering or developing Licensed Products and to develop, make, have
made, use, have used, sell, have sold, offer for sale, import and have
imported Licensed Products for any and all human uses, under all
Patent Rights, Inventions, Know-How, Research Project Proprietary
Materials and CURAGEN Project Proprietary Materials pertaining to such
Licensed Clone, related Licensed Products and the uses thereof,
including but not limited to Patent Rights claiming whole or partial
sequences or utility. Such license shall be for the Term specified in
Section 3.10, unless terminated as set forth in this Agreement.
(d) The Parties shall mutually agree in good faith on whether any Licensed
Clone is "known" by third parties prior to the exercise of an Option,
based primarily on the availability of whole or substantially whole
coding domains substantially the same as such Licensed Clone in
publicly available literature, patent applications or databases or on
knowledge of such information by GENENTECH as evidenced by written or
computer records. Licensed Clones which are "known" only as a result
of either a previous Research Project or a CURAGEN Project from which
GENENTECH received access to an Exclusive Data Set from which the
Licensed Clone was optioned, and are not "known" to third parties or
to GENENTECH other than through any public disclosure of research
results related to such Research Project or CURAGEN Project, shall not
be deemed "known" for the purposes hereof.
2.2 NON-EXCLUSIVE LICENSE. CURAGEN hereby grants to GENENTECH a non-
---------------------
exclusive license, coterminous with each license grant in Section 2.1, under
CURAGEN Background Inventions solely to the extent necessary to allow GENENTECH
to practice the license granted in Section 2.1 and for no other purpose.
2.3 EXTENDED LICENSE. Any license granted to GENENTECH under Section
----------------
2.1(a) or (b) shall also include, with respect to each Licensed Clone and
corresponding Lead(s) listed on
12
Schedule I, an exclusive license under the know-how, patents and patent
applications set forth below to the extent CURAGEN has the right to grant such
license (an "Extended License"); provided, however, that GENENTECH may elect, at
its sole discretion, not to accept a license under any Extended License Patent
Rights (as defined below), such election to be made within sixty (60) days of
the license grant to the corresponding Licensed Clone, or within sixty (60) days
of CURAGEN's notice to GENENTECH of the filing of any patent application within
Extended License Patent Rights for patent applications filed after execution of
this Agreement with respect to the relevant Licensed Clone:
(a) Any patents or patent applications (including all provisional
applications, substitutions, continuations, continuations-in-part, divisions and
renewals thereof, all letters patent granted thereon, and all reissues,
reexaminations and extensions thereof) owned by CURAGEN that result from any
activities other than the Research Program (x) that are not Extended Research
Patent Rights and do not arise from CURAGEN's exercise of its rights under
Section 2.5 hereof but claim any Licensed Product relating to such Licensed
Clone, provided that CURAGEN is not utilizing the invention or inventions
claimed in such patent or application in a preclinical or clinical development
project being actively planned or conducted by CURAGEN (alone or in
collaboration with any third party) on the date such Licensed Clone was optioned
by GENENTECH pursuant to the Research Agreement as evidenced by written or
computer records; or (y) that are Extended Research Patent Rights arising from
the use of such Licensed Clone ((x) and (y) collectively, the "Extended License
Patent Rights"); and
(b) Know-How as described in Section 1.20(c).
2.4 DUE DILIGENCE. GENENTECH agrees to use commercially reasonable
-------------
efforts in pursuing research and development of at least one Licensed Product
based upon each Licensed Clone in a manner similar to other products in research
and development at GENENTECH at a similar development stage and of similar
commercial value. If GENENTECH ceases to use such commercially reasonable
efforts for a commercially unreasonable period of time with respect to at least
one Licensed Product for any Licensed Clone, CURAGEN shall have the right to
terminate the license granted to GENENTECH hereunder with respect to such
Licensed Clone
13
only, provided that: (a) CURAGEN refunds to GENENTECH on the effective date of
such termination all licensing and milestone payments which have previously been
paid to CURAGEN hereunder for such Licensed Clone and (b) that CURAGEN pays to
GENENTECH royalties on Net Sales of Licensed Products based upon such Licensed
Clone that are sold by CURAGEN, its Affiliates and its sublicensees under the
same royalty rates and terms as are set forth in Section 7.7 of the Research
Agreement. Such termination by CURAGEN shall be effective sixty (60) days after
giving GENENTECH written notice of such termination, describing the lack of
diligence and shall have the consequences set forth in Section 6.2. The
foregoing notwithstanding, if such breach of diligence is shown to be non-
existent within the aforesaid sixty (60) day period, CURAGEN'S notice shall be
deemed automatically withdrawn and of no effect.
2.5 RESERVATION OF RIGHTS. Notwithstanding anything in this Agreement to
---------------------
the contrary, CURAGEN hereby retains for itself the right to use each Licensed
Clone and the protein encoded thereby for CURAGEN's internal, general, non-
directed, research purposes (including, without limitation, full-length cloning,
expression analysis, protein-protein interactions and drug screening). For
example, but without limitation, inclusion of the Licensed Clone together with
other clones in research to determine multiple protein-protein interactions, or
inclusion of the Licensed Clone together with other clones in a screen against
one or more molecules to determine inhibition would be "non-directed" research,
whereas activities associated with choosing a specific Licensed Clone and
working to elucidate the biological activity of such Licensed Clone (e.g.,
generating antibodies to the Licensed Clone, testing the Licensed Clone or
protein encoded thereby in preclinical models, enriching libraries with such
Licensed Clone to purposefully look for proteins which bind to such Licensed
Clone) would be considered "directed" research and CURAGEN would not be
permitted to perform such activities under this Section 2.5. CURAGEN shall
promptly report to GENENTECH a summary of all such research results. Any
inventions conceived or made during such research which relate to the sequence
or utility of the Licensed Clone, the proteins derived therefrom (including
antibodies), homologs and mutants with substantially the same biological
activity as such Licensed Clone or protein, or antibodies or small molecules
which interact with such Licensed
14
Clone or protein or homolog or mutant thereof, shall be deemed Research Project
Inventions and shall be subject to the licenses granted pursuant to Section
2.1(a) or (b) hereof, without payment of any additional license or option fee by
GENENTECH. With respect to all other inventions resulting from such research, in
the event that such Licensed Clone is subject to an exclusive license hereunder,
CURAGEN shall, prior to disclosure to any other party, offer all such inventions
and related research results to GENENTECH as a CURAGEN Project pursuant to the
provisions of Section 2.5 of the Research Agreement for an initial Exclusive
Evaluation Period of ninety (90) days, which shall be granted to GENENTECH upon
its request at no additional fee. Extensions of such Exclusive Evaluation
Period, Options, extensions of Options and the exercise of Options shall be
governed by Section 2.5 and Article 7 of the Research Agreement. Notwithstanding
any other provisions of this Agreement or the Research Agreement, any such
inventions which are ultimately licensed by GENENTECH after exercise of the
above-granted rights pursuant to Section 2.5 and Article 7 of the Research
Agreement relating to research performed under Section 2.5 of this Agreement
shall be deemed Research Project Inventions for all purposes under this License
Agreement, including, without limitation, the determination of royalties.
2.6 SUBLICENSES. GENENTECH shall have the right to grant sublicenses to
-----------
all or any portion of its rights under any license granted herein to any
Affiliate or Sublicensee, provided, however, that GENENTECH shall remain
obligated to ensure payment of royalty and milestone obligations as set forth in
Article 3.
3. CONSIDERATION
3.1 LICENSE FEES. Upon exercise of an Option pursuant to Section 7.1.2 of
------------
the Research Agreement for any Optioned Clone and execution of Schedule I by the
Parties with respect to such Optioned Clone and corresponding Lead(s), GENENTECH
shall pay to CURAGEN a license fee as set forth below:
LICENSE TYPE $ (THOUSANDS)
------------ -------------
[XXXXX]
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[XXXXX]
[XXXXX]
3.2 MILESTONE PAYMENTS FOR THERAPEUTIC OR PROPHYLACTIC PRODUCTS.
-----------------------------------------------------------
3.2.1 Milestone Payments under Exclusive License. GENENTECH shall
------------------------------------------
make the following milestone payments to CURAGEN for each therapeutic or
prophylactic Licensed Product covered by an exclusive license under Section
2.1(a):
(a) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee files the first Investigational New Drug
application (or foreign equivalent) with the FDA (or equivalent
foreign regulatory agency) for the Licensed Product ("IND");
(b) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee commences the first Phase III or Phase II/III
clinical trial in any country for the Licensed Product;
(c) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee submits the first Biologics License
Application, Product License Application, New Drug Application or
other application for approval to sell the Licensed Product to the FDA
(or equivalent foreign regulatory agency) for the Licensed Product;
(d) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee receives FDA approval of the Licensed Product
for commercial sale in the United States;
(e) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee first receives all required regulatory
approval to commence sales of the Licensed Product in Germany, France,
Italy, Spain, the United Kingdom or Japan; and
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(f) [XXXXX] within forty-five (45) days following the end of the first
calendar year in which Net Sales of such Licensed Product exceed
[XXXXX].
3.2.2 Milestone Payments under Exclusive License. GENENTECH shall
------------------------------------------
make the following milestone payments to CURAGEN for each therapeutic or
prophylactic Licensed Product covered by an exclusive license under Section
2.1(b) but only in the event that a therapeutic or prophylactic use for such
Licensed Product is a Research Project Invention, a Curagen Research Project
Invention or an Extended Research Invention licensed hereunder:
(a) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee files the first Investigational New Drug
application (or foreign equivalent) with the FDA (or equivalent
foreign regulatory agency) for the Licensed Product for a use covered
by the exclusive licenses granted herein ("IND");
(b) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee commences the first Phase III or Phase II/III
clinical trial in any country for the Licensed Product for a use
covered by the exclusive licenses granted herein;
(c) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee submits the first Biologics License
Application, Product License Application, New Drug Application or
other application for approval to sell the Licensed Product to the FDA
(or equivalent foreign regulatory agency) for the Licensed Product for
a use covered by the exclusive licenses granted herein;
(d) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee receives FDA approval of the Licensed Product
for commercial sale for a use covered by the exclusive licenses
granted herein;
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(e) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee first receives approval to commence sales of
the Licensed Product for a use covered by the exclusive licenses
granted herein in Germany, France, Italy, Spain, the United Kingdom or
Japan; and
(f) [XXXXX] within forty-five (45) days following the end of the first
calendar year in which Net Sales of such Licensed Product for a use
covered by the exclusive licenses granted herein exceed [XXXXX].
3.2.3 Milestone Payments under Non-exclusive License. GENENTECH
----------------------------------------------
shall make the following milestone payments to CURAGEN for each therapeutic or
prophylactic Licensed Product covered by a non-exclusive license under Section
2.1(c):
(a) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee files the first Investigational New Drug
application (or foreign equivalent) with the FDA (or equivalent
foreign regulatory agency) for the Licensed Product ("IND");
(b) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee commences the first Phase III or Phase II/III
clinical trial in any country for the Licensed Product;
(c) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee submits the first Biologics License
Application, Product License Application, NDA or other application for
approval to sell the Licensed Product to the FDA (or equivalent
foreign regulatory agency) for the Licensed Product;
(d) [XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee receives FDA (or equivalent foreign
regulatory agency) approval of the Licensed Product for commercial
sale; and
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(e) [XXXXX] within thirty (30) days following the end of the first
calendar year in which Net Sales of such Licensed Product exceed
[XXXXX].
3.3 MILESTONE PAYMENTS FOR DIAGNOSTIC PRODUCTS. GENENTECH shall make the
------------------------------------------
following milestone payment to CURAGEN for each Licensed Product described in
Subsection (h) of the definition of Licensed Products covered by an exclusive
license under Section 2.1(a) or 2.1(b):
[XXXXX] within thirty (30) days following the date GENENTECH or an
Affiliate or Sublicensee receives FDA (or equivalent foreign
regulatory agency) approval of the Licensed Product for commercial
sale.
3.4 ROYALTIES ON LICENSED PRODUCTS LICENSED EXCLUSIVELY TO GENENTECH AND
--------------------------------------------------------------------
COVERED SOLELY BY RESEARCH PROJECT PATENT RIGHTS. GENENTECH shall pay to
------------------------------------------------
CURAGEN a royalty on Net Sales of Licensed Products in those countries where the
manufacture, use, importation or sale of such Licensed Product by a third party
(i) would infringe a Valid Claim of a Research Project Patent Right and (ii)
would not infringe a Valid Claim of an Extended License Patent Right or a
CURAGEN Project Patent Right, as follows:
[XXXXX]
[XXXXX]
[XXXXX]
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(d) Royalties due to CURAGEN pursuant to subsections (a), (b) and (c)
above for a given Licensed Product may be reduced by [XXXXX] of any
royalties paid to third parties by GENENTECH, its Affiliates or
Sublicensees on net sales of such Licensed Product that are required
in order to allow GENENTECH, its Affiliates or Sublicensees to
manufacture, use or sell such Licensed Product; provided, however,
that such reductions shall in no event reduce the royalty for such
Licensed Product payable pursuant to such subsection by more than
[XXXXX].
3.5 ROYALTIES ON LICENSED PRODUCTS LICENSED EXCLUSIVELY TO GENENTECH AND
--------------------------------------------------------------------
COVERED BY RESEARCH PROJECT PATENT RIGHTS AND CURAGEN PROJECT PATENT RIGHTS OR
------------------------------------------------------------------------------
EXTENDED LICENSE PATENT RIGHTS. GENENTECH shall pay to CURAGEN a royalty on Net
------------------------------
Sales of Licensed Products in those countries where the manufacture, use,
importation or sale of such Licensed Product by a third party (i) would infringe
a Valid Claim of a Research Project Patent Right and (ii) would infringe a Valid
Claim of an Extended License Patent Right or a CURAGEN Project Patent Right, as
follows:
(a) If the Licensed Product is as described in subsections (a)-(c) or (e)
of the definition of Licensed Product, the royalty rate on Net Sales
of such Licensed Product shall be as follows:
[XXXXX]
[XXXXX]
[XXXXX]
(b) If the Licensed Product is as described in subsections (d) or (f) of
the definition of Licensed Product, or is a product as described in
subsection (g) of the definition of Licensed Product and is not
discovered from material use of a Lead by GENENTECH, its Affiliates or
Sublicensees, the royalty rate on Net Sales of such Licensed Product
shall be:
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[XXXXX]
[XXXXX]
[XXXXX]
(c) If the Licensed Product is as described in subsection (g) of the
definition of Licensed Product and is discovered from the material use
by GENENTECH, its Affiliates or Sublicensees of a Lead identified by
CURAGEN and provided to GENENTECH pursuant to an exclusive license
granted pursuant to the provisions of Section 2.1(a) or (b), the
royalty rate on Net Sales of such Licensed Product shall be:
[XXXXX]
[XXXXX]
[XXXXX]
(d) If the Licensed Product is as described in subsections (h) or (i) of
the definition of Licensed Product, the royalty rate on Net Sales of
such Licensed Product shall be [XXXXX].
(e) Royalties due to CURAGEN pursuant to subsections (a), (b) , (c) and
(d) above for a given Licensed Product may be reduced by [XXXXX] of
any royalties paid to third parties by GENENTECH, its Affiliates or
Sublicensees on net sales of such Licensed Product that are required
in order to allow GENENTECH, its Affiliates or Sublicensees to
manufacture, use or sell such Licensed Product; provided, however,
that such reductions shall in no event reduce the royalty for such
Licensed Product payable pursuant to such subsection by more than
[XXXXX].
3.6 ROYALTIES ON LICENSED PRODUCTS LICENSED EXCLUSIVELY TO GENENTECH AND
--------------------------------------------------------------------
COVERED SOLELY BY CURAGEN PROJECT PATENT RIGHTS OR EXTENDED LICENSE PATENT
---------------------------------------------------------------------------
RIGHTS. GENENTECH shall pay to CURAGEN a royalty on Net Sales of Licensed
------
Products in those
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countries where the manufacture, use, importation or sale of such Licensed
Product by a third party (i) would not infringe a Valid Claim of a Research
Project Patent Right and (ii) would infringe a Valid Claim of an Extended
License Patent Right or a CURAGEN Project Patent Right, as follows:
(a) If the Licensed Product is as described in subsections (a)-(c) or (e)
of the definition of Licensed Product, the royalty rate on Net Sales
of such Licensed Product shall be as follows:
[XXXXX]
[XXXXX]
[XXXXX]
(b) If the Licensed Product is as described in subsections (d) or (f) of
the definition of Licensed Product, or is a product as described in
subsection (g) of the definition of Licensed Product and is not
discovered from material use of a Lead by GENENTECH, its Affiliates or
Sublicensees, the royalty rate on Net Sales of such Licensed Product
shall be:
[XXXXX]
[XXXXX]
[XXXXX]
(c) If the Licensed Product is as described in subsection (g) of the
definition of Licensed Product and is discovered from material use by
GENENTECH, its Affiliates or Sublicensees of a Lead identified by
CURAGEN and provided to GENENTECH pursuant to an exclusive license
granted pursuant to the provisions of Section 2.1(a) or (b), the
royalty rate on Net Sales of such Licensed Product shall be:
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[XXXXX]
[XXXXX]
[XXXXX]
(d) If the Licensed Product is as described in subsections (h) or (i) of
the definition of Licensed Product, the royalty rate on Net Sales of
such Licensed Product shall be [XXXXX].
(e) Royalties due to CURAGEN pursuant to subsections (a), (b), (c) and (d)
above for a given Licensed Product may be reduced by [XXXXX] of any
royalties paid to third parties by GENENTECH, its Affiliates or
Sublicensees on net sales of such Licensed Product that are required
in order to allow GENENTECH, its Affiliates or Sublicensees to
manufacture, use or sell such Licensed Product; provided, however,
that such reductions shall in no event reduce the royalty for such
Licensed Product payable pursuant to such subsection by more than
[XXXXX].
3.7 LICENSED PRODUCTS NON EXCLUSIVELY LICENSED TO GENENTECH OR EXCLUSIVELY
----------------------------------------------------------------------
LICENSED BUT NOT COVERED BY PATENT RIGHTS OR EXTENDED LICENSE PATENT RIGHTS.
----------------------------------------------------------------------------
For Licensed Products that are discovered under a license to GENENTECH pursuant
to Section 2.1(c) above, or that are licensed exclusively to GENENTECH hereunder
and are made, used or sold by GENENTECH, its Affiliates or Sublicensees, where
the manufacture, use, importation or sale of such Licensed Product by a third
party would not infringe a Valid Claim of any Patent Right or Extended License
Patent Right, GENENTECH shall pay to CURAGEN a royalty on Net Sales as follows:
(a) For Licensed Products as described in subsections (a)-(c) or (e) of
the definition of Licensed Product, the royalty rate on Net Sales of
such Licensed Product shall be [XXXXX].
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(b) For Licensed Products as described in subsections (d) or (f) of the
definition of Licensed Product or as described in subsection (g) of
the definition of Licensed Product which are not discovered from
material use of a Lead by GENENTECH, its Affiliates or Sublicensees,
the royalty rate on Net Sales of such Licensed Product shall be
[XXXXX].
(c) For Licensed Products as described in subsection (g) of the definition
of Licensed Product which are discovered from material use by
GENENTECH, its Affiliates or Sublicensees of a Lead, the royalty rate
on Net Sales of such Licensed Products shall be [XXXXX].
(d) For Licensed Products as described in subsections (h) or (i) of the
definition of Licensed Product, the royalty rate on Net Sales of such
Licensed Products shall be [XXXXX].
(e) Royalties due to CURAGEN pursuant to subsections (a), (b) , (c),
and (d) above for a given Licensed Product may be reduced by [XXXXX]
of any royalties paid to third parties by GENENTECH, its Affiliates or
Sublicensees on net sales of such Licensed Product that are required
in order to allow GENENTECH, its Affiliates or Sublicensees to
manufacture, use or sell such Licensed Product; provided, however,
that such reductions shall in no event reduce the royalty for such
Licensed Product payable pursuant to such subsection by more than
[XXXXX].
3.8 ONE ROYALTY. Only one royalty, calculated at the highest applicable
-----------
royalty rate hereunder, shall be payable to CURAGEN hereunder for each sale of a
Licensed Product, regardless of the number of patents, patent applications or
Valid Claims directed to or covering such Licensed Product.
3.9 PAYMENT TERMS.
-------------
(a) Royalty payments shall be made to CURAGEN in United States Dollars
quarterly within sixty (60) days following the end of each calendar
quarter for which
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royalties are due. Each royalty payment shall be accompanied by a
report summarizing the total Net Sales for each Licensed Product
during the relevant three-month period and the calculation of
royalties, if any, due thereon pursuant to this Article 3.
(b) All royalties shall be payable in full in the United States in United
States Dollars, regardless of the countries in which sales are made.
For the purpose of computing Net Sales for Licensed Products sold in a
currency other than United States dollars, such currency shall be
converted into United States dollars at the exchange rate for buying
U.S. dollars set forth in The Wall Street Journal for the last
-----------------------
business day of the calendar quarter.
3.10 ROYALTY TERM. GENENTECH shall pay royalties with respect to each
------------
Licensed Product on a country-by-country basis until [XXXXX]. The term of each
license under this Agreement (the "Term") shall commence upon execution of
Schedule I with respect thereto, and shall continue as long as any royalties are
due hereunder for Licensed Products under such license. Following such period,
unless the license pertaining to such Licensed Product has previously been
terminated, GENENTECH shall have a fully paid-up, irrevocable license in such
country under the Patent Rights, Extended License Patent Rights, Inventions,
Know-How and CURAGEN Background Inventions relating to the relevant Licensed
Clone, to make, have made, use, have used, sell, have sold, offer for sale,
import and have imported such Licensed Product in such country.
3.11 OVERDUE ROYALTIES. Royalties not paid within the time period set
-----------------
forth in this Article 3 shall bear interest at [XXXXX], accruing monthly, from
the due date until paid in full.
3.12 RECORDS RETENTION. AUDITS. GENENTECH, its Affiliates and
--------------------------
Sublicensees shall keep for [XXXXX] from the date of each payment of royalties
complete and accurate records
25
Confidential Treatment Requested
of sales by GENENTECH and its Affiliates and Sublicensees of each Licensed
Product in sufficient detail to allow the accruing royalties to be determined
accurately. CURAGEN shall have the right for a period of [XXXXX] after receiving
any report or statement with respect to royalties due and payable to appoint an
independent certified public accountant reasonably acceptable to GENENTECH to
inspect the relevant records of GENENTECH and its Affiliates and Sublicensees to
verify such report or statement. GENENTECH and its Affiliates and Sublicensees
shall each make its records available for inspection by such independent
certified public accountant during regular business hours at such place or
places where such records are customarily kept, upon reasonable notice from
CURAGEN, solely to verify the accuracy of the reports and payments. Such
inspection right shall not be exercised more than once in any calendar year nor
more than once with respect to sales of any Licensed Product in any given
payment period. CURAGEN agrees to hold in strict confidence all information
concerning royalty payments and reports, and all information learned in the
course of any audit or inspection, except to the extent necessary for CURAGEN to
reveal such information in order to enforce its rights under this Agreement or
if disclosure is required by law, regulation or judicial order. The results of
each inspection, if any, shall be binding on both Parties. CURAGEN shall pay for
such inspections, except that in the event there is any upward adjustment in
aggregate royalties payable for any year shown by such inspection of more than
[XXXXX] of the amount paid, GENENTECH shall pay for such inspection.
4. TREATMENT OF CONFIDENTIAL INFORMATION
4.1 CONFIDENTIAL INFORMATION. During the Term of this Agreement, each
------------------------
Party may disclose to the other proprietary technical, research and business
information (collectively, "Confidential Information"). For a period of [XXXXX]
after the receipt of any such Confidential Information, the receiving Party
shall keep confidential all such Confidential Information of the other Party and
will not disclose such Confidential Information of the other Party to third
parties by publication or otherwise. Each Party further agrees not to use
Confidential Information of the other Party for any purpose other than
exercising any rights granted to it or reserved by it under this Agreement.
Notwithstanding the foregoing, it is
26
Confidential Treatment Requested
understood and agreed that the receiving Party's obligations of confidentiality
and nonuse herein shall not apply to any information which:
(a) is, at the time of disclosure by the disclosing Party hereunder, or
thereafter becomes, a part of the public domain or publicly known or
available through no fault or negligence of the receiving Party or any
of its Affiliates; or
(b) was otherwise in the receiving Party's lawful possession prior to
disclosure by the disclosing Party, as demonstrated by the receiving
Party's written records; or
(c) is lawfully disclosed to the receiving Party on a non-confidential
basis by a third party who is not in violation of an obligation of
confidentiality to the disclosing Party relative to such information.
Each Party may disclose the other Party's Confidential Information to the extent
reasonably necessary to comply with applicable government laws or regulations,
provided that prompt notice of any such disclosure shall be given to the other
Party.
Information disclosed other than in written or electronic form shall be
subject to the terms of this Section 4.1 only if confirmed in writing to other
Party within thirty (30) days of initial disclosure and specifying with
particularity that Confidential Information disclosed other than in written form
which is subject to the provisions of this Section 4.1.
4.2 PRESS RELEASE AND REGULATORY FILINGS. The Parties shall mutually
-------------------------------------
agree on a press release announcing the execution of this Agreement and on any
confidential treatment request to be filed with the Securities and Exchange
Commission with respect to this Agreement. Neither Party shall make any
disclosure of the terms of this Agreement except as required by applicable law
or as set forth above without the prior written consent of the other Party.
Once any written statement is approved for disclosure by both Parties, either
Party may make subsequent public disclosures of the contents of such statement
without the further approval of the other Party.
27
5. PROVISIONS CONCERNING THE FILING, PROSECUTION AND
MAINTENANCE OF PATENT RIGHTS
5.1 PATENT FILING. During the Term of this Agreement, with respect to any
-------------
Patent Rights, Extended Patent Rights, Inventions or Extended Research
Inventions licensed hereunder:
(a) Upon granting an exclusive license to GENENTECH hereunder for a
Licensed Clone, Lead(s), Extended Research Invention or Extended
License Patent Right, CURAGEN and GENENTECH shall file requests for
CFR Rule 1.60 continuation patent applications in order to create
patent rights relating solely to Licensed Clones, Leads, Extended
Research Inventions and Extended License Patent Rights which are
exclusively licensed hereunder and not to other Clones or inventions.
CURAGEN shall cause such actions to be taken unless the Parties
reasonably agree that such actions are not feasible or desirable.
(b) GENENTECH shall have the right to prepare, file, prosecute, obtain and
maintain, at its expense, all Patent Rights and Extended License
Patent Rights relating solely to Licensed Clones or Licensed Products
relating to Licensed Clones or Leads which are exclusively licensed
hereunder. Initial patent filings shall be made in the form of a
regular CFR Rule 1.51 U.S. Priority patent application or a
provisional application, as determined by the Patent Coordinators. The
Patent Coordinators for each Party will be designated by such Party
from time to time. Patent applications will be perfected by making, as
soon as available, an ATCC deposit of Licensed Clone(s) and making any
subsequent application filings necessary to perfect U.S. or foreign
priority patent rights in the countries of Europe that are members of
the European Patent Organization, Japan, Canada, Mexico and at least
such other countries as mutually agreed by the Parties. CURAGEN agrees
to provide reasonable assistance and cooperation to GENENTECH to
facilitate such filing, prosecution and maintenance including, without
limitation, the execution of appropriate powers of attorney. GENENTECH
agrees that any such preparation, filing, prosecution and
28
maintenance shall be conducted diligently and in a timely fashion and
that CURAGEN shall be kept reasonably informed of the progress
thereof. Upon request GENENTECH will provide copies of the following
documents to CURAGEN: information regarding inventorship, sequences
and sequence listings, serial numbers, filing dates, foreign filing
licenses, copies of patent applications and official correspondence
with the patent office. CURAGEN shall, whenever practical, be given
the opportunity to review and comment in advance on any patent filings
or other correspondence with the patent office during such periods and
GENENTECH shall use reasonable efforts to incorporate any comments
provided by CURAGEN. GENENTECH shall, if warranted in its commercially
reasonable judgment, pursue its priority to claims on Inventions by
filing all necessary interferences and opposition papers, motions and
the like. GENENTECH shall conduct any interference proceeding in good
faith, applying its commercially reasonable efforts to prevail
therein. CURAGEN shall be given the opportunity to review and comment
upon any proposed settlement of an interference relating to Patent
Rights or Extended Patent Rights subject to license hereunder.
GENENTECH will consider CURAGEN's comments in good faith, but shall
have the right to enter into a good faith settlement of the
interference.
(c) Except as provided in (b) above, CURAGEN shall have the responsibility
to prepare, file, prosecute, obtain and maintain patent applications
and patents on Inventions and Extended Research Inventions licensed
hereunder, relating to the Licensed Clones and Leads which are
licensed hereunder at its sole expense. GENENTECH agrees to provide
reasonable assistance and cooperation to CURAGEN to facilitate such
filing, prosecution and maintenance. CURAGEN agrees that any such
preparation, filing, prosecution and maintenance shall be conducted as
outlined in subsection (b) above and shall be conducted with
reasonable diligence and that GENENTECH shall be kept fully informed
of the progress thereof and provided with copies of all material
documents pertaining thereto during the term of this Agreement.
GENENTECH shall, whenever
29
possible, be given the opportunity to review and comment in advance on
any patent filings or other correspondence with the patent office
during such periods and CURAGEN shall consider incorporating any
comments provided by GENENTECH in good faith.
(d) The Parties shall mutually agree before permitting any patent
application or patent within Patent Rights or Extended License Patent
Rights exclusively licensed hereunder to lapse as well as before
authorizing any amendment to any patent application or patent within
such Patent Rights or Extended License Patent Rights that would
irrevocably limit the lawful scope of the Patent Rights or Extended
License Patent Rights.
(e) Before GENENTECH elects to abandon its right to prepare, file,
prosecute, obtain and maintain patent applications and patents as
described in Section 5.1(b), it shall give at least thirty (30) days
prior written notice thereof to CURAGEN. Such notice shall
specifically identify the patent application(s) and/or patent(s) for
which GENENTECH wishes to relinquish such right. Following the receipt
of such notice, CURAGEN shall have the right to prepare, file,
prosecute, obtain and maintain the patent application(s) and patent(s)
identified in the notice, at its sole expense, and any such patents
and patent applications shall be removed from operation of this
Agreement. In addition, GENENTECH shall be deemed without any further
action to have granted to CURAGEN an exclusive, worldwide license
(including the right to grant sublicenses), under GENENTECH's
ownership interest in any such patents and applications to develop,
have developed, make, have made, use, have used, offer for sale, sell,
have sold, import and have imported any and all products in all fields
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX.
(f) No Party shall have any obligation under this Agreement to pay any
fees or costs: (i) for bringing a lawsuit or other action to enforce
any of the Patent Rights or Extended License Patent Rights against an
actual or suspected infringement or (ii)
Confidential Treatment Requested
30
for any other Party to obtain for its own benefit independent business
or legal advice concerning any of the Patent Rights or Extended
License Patent Rights.
5.2 NOTICE OF INFRINGEMENT. If, during the Term of this Agreement or the
----------------------
term of any license hereunder, either Party learns of any infringement by a
third party of the patents within Patent Rights or Extended License Patent
Rights exclusively licensed hereunder, such Party shall promptly notify the
other Party and shall provide such other Party with available evidence of such
infringement.
5.3 INFRINGEMENT.
------------
(a) GENENTECH shall have the first right (but not the obligation), at its
own expense, to take appropriate action to enforce Patent Rights or
Extended License Patent Rights licensed exclusively to GENENTECH
hereunder in the event of any actual or suspected infringement of such
rights. GENENTECH may, in its sole judgment, institute suit against
any such infringer or alleged infringer and control and defend and
settle such suit in a manner consistent with the terms and provisions
hereof. If GENENTECH has not commenced reasonable action to enforce
such Patent Rights and Extended License Patent Rights, in the case of
significant infringement, or has ceased to pursue such action within
one hundred twenty (120) days after written notice from CURAGEN of the
infringement, which notice includes all of CURAGEN's then available
supporting evidence and a request by CURAGEN that action should be
taken against such alleged infringer, CURAGEN shall have the right
(but not the obligation), at its own expense, to bring suit against
such infringement. Any amount recovered, whether by judgment or
settlement, shall first be applied to reimburse the costs and expenses
(including attorneys' fees) of the Party bringing suit, and then to
reimburse the costs and expenses (including attorneys' fees), if any,
of the other Party and then to reimburse CURAGEN for any royalties
withheld by GENENTECH as provided in Section 5.3(b) below, which shall
be paid with interest as specified in Section 3.11. [XXXXX]
31
Confidential Treatment Requested
[XXXXX]
(b) In the event that GENENTECH brings any suit in any country as
permitted in Section 5.3(a) above with respect to a Material
Infringement as defined in (c) below, GENENTECH shall be entitled to
reduce royalties payable to CURAGEN hereunder with respect to Licensed
Products substantially similar to the product alleged to be infringing
the Patent Right(s) or Extended License Patent Right(s) which are the
subject of the suit in such country and for so long as a Material
Infringement exists, by [XXXXX] of the amounts otherwise due hereunder
with respect to such Licensed Products in such country.
(c) For purposes of this Section 5.3, a Material Infringement shall be
deemed to exist with respect to a Licensed Product on a country-by-
country basis when sales by a third party of allegedly infringing
products in such country reach a level of [XXXXX] or more of the
combined sales of such allegedly infringing product(s) and sales of
the Licensed Product in such country.
5.4 COOPERATION. Each Party shall execute all papers and perform such
-----------
other acts as may be reasonably required to cooperate with the Party bringing
any infringement suit brought in accordance with Section 5.3 above (including
giving legal consent for bringing such suit, and agreeing to be named as a
plaintiff or otherwise joined in such suit), and at its option and expense, may
be represented in such suit by counsel of its choice.
6. TERM AND TERMINATION
6.1. TERMINATION PROVISIONS.
----------------------
The Term of any license hereunder shall be as specified in Section 3.10,
unless terminated as set forth below:
(a) Any license hereunder with respect to any Licensed Clone and the
related Leads, Extended Research Inventions or Extended License Patent
Rights, may be
32
Confidential Treatment Requested
terminated by either Party upon any material breach by the other Party
of any material obligation or condition of such license, effective
thirty (30) days after giving written notice to the breaching Party of
such termination in the case of a payment breach and sixty (60) days
after giving written notice to the breaching Party of such termination
in the case of any other breach, which notice shall describe such
breach in reasonable detail; provided, however, that a breach of
Section 2.4 shall only give rise to the termination rights specified
therein. The foregoing notwithstanding, if the default or breach is
cured or shown to be non-existent within the aforesaid [XXXXX] day
period, the notice shall be deemed automatically withdrawn and of no
effect.
(b) If either Party files for protection under bankruptcy laws, makes an
assignment for the benefit of creditors, appoints or suffers
appointment of a receiver or trustee over its property, files a
petition under any bankruptcy or insolvency act or has any such
petition filed against it which is not discharged within sixty (60)
days of the filing thereof, then the other Party may terminate this
Agreement by notice to such Party.
(c) The licenses granted hereunder with respect to certain Licensed Clones
shall terminate as specified in Section 2.3.4 of the Research
Agreement without any requirement of further action by CURAGEN
hereunder.
6.2 EFFECT OF TERMINATION.
---------------------
(a) Upon termination of a license or licenses granted hereunder by CURAGEN
pursuant to Section 6.1(a), (b) or (c) or under Section 2.4 with
respect to any Licensed Clone, all relevant rights to such Licensed
Clone and the related Leads, Extended Research Inventions and Extended
License Patent Rights included in any such license(s) granted by
CURAGEN to GENENTECH hereunder under which GENENTECH is in breach
shall immediately and automatically revert to CURAGEN, subject to
GENENTECH's right to sell any remaining quantities of Licensed Product
remaining in its inventories as of the date of termination. All
33
Confidential Treatment Requested
remaining license rights granted to GENENTECH hereunder shall remain
in full force and effect. GENENTECH shall promptly transfer to
CURAGEN such Licensed Clones, Data Sets and CURAGEN Proprietary
Material in its possession without retaining any copies thereof, as
well as any full-length xxxxxxxx xxxx of such Licensed Clone(s). In
addition, upon any termination pursuant to Section 6.1(a) or (c) or
Section 2.4, GENENTECH shall be deemed without any further action to
have granted to CURAGEN an exclusive, worldwide, license (including
the right to grant sublicenses), under GENENTECH's ownership interest
in any Research Project Inventions and Research Project Patent Rights
covering or related to the relevant Licensed Clone(s) for which
GENENTECH's license rights have been terminated to develop, have
developed, make, have made, use, have used, offer for sale, sell, have
sold, import and have imported any and all products in all fields with
royalties payable only as set forth in Section 7.7 of the Research
Agreement.
(b) Documentation. At the request of CURAGEN, GENENTECH shall execute and
-------------
deliver such bills of sale, assignments and licenses and other
documents as may be necessary to fully vest in CURAGEN all right,
title and interest to which it is entitled as aforesaid pursuant to
this Section 6.2.
(c) Payment Obligations. GENENTECH shall have no obligation to make any
-------------------
milestone or royalty payment to CURAGEN that has not accrued prior to
the effective date of any termination, except for royalties due on
sales of remaining inventory, but shall remain liable for all
obligations accruing prior to termination.
(d) In the event of a material breach by CURAGEN of any material
obligation or condition under this Agreement relating to any license
hereunder with respect to any Licensed Clone, in lieu of terminating
this Agreement as provided in Section 6.1(a), GENENTECH may, effective
sixty (60) days after giving written notice to CURAGEN, which notice
shall describe such breach in reasonable detail, elect to maintain the
license to the Licensed Clone to which the breach relates with a
[XXXXX]
34
Confidential Treatment Requested
[XXXXX] reduction in the royalties otherwise due hereunder with
respect to Licensed Products relating to such Licensed Clone. The
foregoing notwithstanding, if the material breach is cured or shown to
be non-existent within the aforesaid sixty (60) day period, such
notice and election shall be deemed automatically withdrawn and of no
effect.
6.3 OTHER TERMINATION BY GENENTECH. GENENTECH may terminate this
-------------------------------
Agreement, or any license or licenses granted hereunder with respect to any
Licensed Clone(s), Lead(s) or Extended Research Inventions or Extended License
Patent Rights, and the related rights and obligations hereunder, in its sole
discretion at any time by giving written notice thereof to CURAGEN. Such
termination shall be effective fifteen (15) days following the date such notice
is received by CURAGEN and shall have all consequences as set forth in Section
6.2 above, but only with respect to such Licensed Clone or Lead, as if this
Agreement had been terminated pursuant to Section 6.1(a).
6.4 REMEDIES. If either Party shall fail to perform or observe or
---------
otherwise breaches any of its material obligations under this Agreement, in
addition to any right to terminate this Agreement, the non-defaulting Party may
elect to obtain other relief and remedies available under law.
6.5 SURVIVING PROVISIONS. Notwithstanding any provision herein to the
---------------------
contrary, the rights and obligations set forth in Sections 3.9, 3.11 and 3.12,
Article 4, Sections 6.2 and 6.4, and Article 7 hereof, as well as any rights and
obligations otherwise accrued, shall survive the expiration or termination of
this Agreement.
7. MISCELLANEOUS
7.1 CURAGEN REPRESENTATIONS. CURAGEN represents and warrants that: (a)
-----------------------
the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all appropriate
CURAGEN corporate action; (b) CURAGEN is under no obligation which is
inconsistent with this Agreement; and (c)
35
Confidential Treatment Requested
CURAGEN has the full right and legal capacity to grant the rights to GENENTECH
pursuant to Article 2 above without violating the rights of any third party.
7.2 GENENTECH REPRESENTATIONS. GENENTECH represents and warrants that:
-------------------------
(a) the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all appropriate
GENENTECH corporate action; and (b) GENENTECH is under no obligation which is
inconsistent with this Agreement.
7.3 NO WARRANTIES.
-------------
(a) Nothing in this Agreement is or shall be construed as:
(i) a warranty or representation by CURAGEN or GENENTECH as to the
validity or scope of any application or patent within the Patent
Rights;
(ii) a warranty or representation that anything made, used, sold or
otherwise disposed of under any license granted in this Agreement
is or will be free from infringement of patents, copyrights, and
other rights of third parties.
(b) Except as expressly set forth in this Agreement, NEITHER PARTY MAKES
ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE
DEVELOPMENT, MANUFACTURE, SALE, IMPORTATION OR USE OF THE LICENSED
PRODUCT(S) WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR
OTHER RIGHTS, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.
7.4 LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
---------
OTHERWISE, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF
THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL
OR EQUITABLE THEORY FOR (I) ANY
36
INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR (II)
COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES
7.5 NOTICES. Any notices, requests, deliveries, approvals or consents
-------
required or permitted to be given under this Agreement to GENENTECH or CURAGEN
shall be in writing and shall be personally delivered or sent by telecopy (with
written confirmation to follow via United States first class mail), overnight
courier providing evidence of receipt or certified mail, return receipt
requested, postage prepaid, in each case to the respective address specified
below (or to such address as may be specified in writing to the other Party
hereto):
CURAGEN: 000 Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Vice President, Business Development
Telecopy: (000) 000-0000
GENENTECH: 0 XXX Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attn: Corporate Secretary
Telecopy: (000) 000-0000
Such notices shall be deemed to have been sufficiently given on: (a) the
date sent if delivered in person or transmitted by telecopy, (b) the next
business day after dispatch in the case of overnight courier or (c) five (5)
business days after deposit in the U.S. mail in the case of certified mail.
7.6 GOVERNING LAW. This Agreement will be construed, interpreted and
-------------
applied in accordance with the laws of the State of New York (excluding its body
of law controlling conflicts of law).
7.7 LIMITATIONS. Except as set forth elsewhere in this Agreement, neither
-----------
Party grants to the other Party any right or license to any of its intellectual
property.
7.8 ENTIRE AGREEMENT. This is the entire Agreement between the Parties
----------------
with respect to the subject matter herein. No modification shall be effective
unless in writing and signed by the Parties.
37
7.9 WAIVER. The terms or conditions of this Agreement may be waived only
------
by a written instrument executed by the Party waiving compliance. The failure
of either Party at any time or times to require performance of any provision
hereof shall in no manner affect its rights at a later time to enforce the same.
No waiver by either Party of any condition or term shall be deemed as a
continuing waiver of such condition or term or of another condition or term.
7.10 HEADINGS. Section and subsection headings are inserted for
--------
convenience of reference only and do not form part of this Agreement.
7.11 ASSIGNMENT. This Agreement may not be assigned by either Party
----------
without the consent of the other, except that each Party may, without such
consent, assign this Agreement and the rights, obligations and interests of such
Party, in whole or in part, to any of its wholly-owned subsidiaries, to any
purchaser of all or substantially all of its assets in the line of business to
which this Agreement pertains, or of all of its capital stock, or to any
successor corporation resulting from any merger or consolidation of such Party
with or into such corporation.
7.12 FORCE MAJEURE. Neither Party shall be liable for failure of or delay
-------------
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such Party. In event
of such force majeure, the Party affected thereby shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
7.13 CONSTRUCTION. The Parties hereto acknowledge and agree that: (i)
------------
each Party and its counsel reviewed and negotiated the terms and provisions of
this Agreement and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against the
drafting Party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all Parties hereto and not in a favor of or against any Party, regardless
of which Party was generally responsible for the preparation of this Agreement.
7.14 SEVERABILITY. If any provision(s) of this Agreement are or become
------------
invalid, are ruled illegal by any court of competent jurisdiction or are deemed
unenforceable under then
38
current applicable law from time to time in effect during the Term hereof, it is
the intention of the Parties that the remainder of this Agreement shall not be
affected thereby provided that a Party's rights under this Agreement are not
materially affected. The Parties hereto covenant and agree to renegotiate any
such term, covenant or application thereof in good faith in order to provide a
reasonably acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid, illegal or unenforceable,
it being the intent of the Parties that the basic purposes of this Agreement are
to be effectuated.
7.15 STATUS. Nothing in this Agreement is intended or shall be deemed to
------
constitute a partner, agency, employer-employee, or joint venture relationship
between the Parties.
7.16 INDEMNIFICATION.
---------------
(a) GENENTECH shall indemnify, defend and hold harmless CURAGEN, its
Affiliates and their respective directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "CURAGEN Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the CURAGEN
Indemnitees, or any of them, in connection with any claims, suits, actions,
demands or judgments ("Claims") of third parties for personal injury and product
liability matters (except in cases where such Claims result from a willful
material breach of this Agreement or the gross negligence or willful misconduct
on the part of a CURAGEN Indemnitee) arising out of or relating to any actions
of GENENTECH or any Affiliate, licensee, sublicensee, distributor or agent of
GENENTECH in the development, testing, production, manufacture, promotion,
import, sale or use by any person of any Licensed Product manufactured or sold
by GENENTECH or by an Affiliate, licensee, sublicensee, distributor or agent of
GENENTECH.
(b) GENENTECH's obligation to indemnify, defend and hold the CURAGEN
Indemnitees harmless pursuant to Section 9.16(a) are conditioned on the
indemnified Party: (i) providing written notice to the indemnifying Party of
any Claim arising out of the indemnified activities promptly after the
indemnified Party has knowledge of such Claim, (ii) permitting the indemnifying
Party to assume, at its discretion, sole and full control of the investigation,
39
preparation, defense, trial and settlement in connection with such Claim, (iii)
assisting and cooperating with the indemnifying Party, at the indemnifying
Party's reasonable expense, in the investigation of, preparation for and defense
of any such Claim, and (iv) not compromising, negotiating or settling such Claim
without the indemnifying Party's prior written consent.
7.17 COUNTERPARTS.
------------
This Agreement may be executed in any number of 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.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representative in two (2) originals.
GENENTECH, INC. CURAGEN CORPORATION
By: ______________________________ By: ______________________________
Title: ___________________________ Title: ___________________________
40
SCHEDULE I
(To be completed for each Licensed Clone)
LICENSED CLONE:
---------------
TYPE OF LICENSE:
----------------
PROJECT DATA SET
----------------
OR
--
CURAGEN DATA SET
----------------
PERTAINING TO LICENSED CLONE:
-----------------------------
CURAGEN PROPRIETARY
-------------------
MATERIAL PERTAINING TO
----------------------
LICENSED CLONE:
---------------
CURAGEN PATENT RIGHTS
---------------------
PERTAINING TO LICENSED CLONE:
-----------------------------
RIGHTS UNDER
------------
EXTENDED LICENSE:
-----------------
Signed this ______ day of __________________, _____
CURAGEN CORPORATION
By: ______________________________________
Name:
Title:
GENENTECH, INC.
By: ______________________________________
Name:
Title:
41
APPENDIX D
----------
EXISTING DATA SETS
[XXXXX]
[XXXXX]
[XXXXX]
[XXXXX]
Confidential Treatment Requested
APPENDIX E
----------
TERMS OF SUBSCRIPTION AGREEMENTS
QEA/Gene Calling
----------------
Subscriber will receive secure access to CURAGEN's QEA/GeneCalling subscription
database through the GeneScape( data base and software. Access will be provided
for up to [XXXXX] users on equipment to be provided by Subscriber.
CURAGEN will support and maintain the software provided for such access and will
use commercially reasonable efforts to update and maintain the database and to
keep it reasonably available for use.
Options and Licenses to clones identified using the database shall be provided
on terms substantially similar to those contained in this Agreement and the
License Agreement.
MIM/Path Calling
----------------
Subscriber will receive access to the MIM/PathCalling database through the
GeneScape(R) data base and software. Access will be provided for up to [XXXXX]
users on equipment to be provided by Subscriber.
CURAGEN will support and maintain the software provided for such access and will
use commercially reasonable efforts to update and maintain the database and to
keep it reasonably available for use.
Options and Licenses to clones identified using the database shall be provided
on terms substantially similar to those contained in this Agreement and the
License Agreement.
GeneTools
---------
Pursuant to any subscription agreement as described above Subscriber will also
receive secure access to the GeneTools database through the GeneScape(R)
software. Access will be provided for up to [XXXXX] users on equipment to be
provided by Subscriber.
Confidential Treatment Requested
APPENDIX F
----------
STOCK PURCHASE AGREEMENT
CURAGEN CORPORATION
STOCK PURCHASE AGREEMENT
DATED AS OF ____________, 1997
CURAGEN CORPORATION
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is dated as of ___________, 1997 by and between CURAGEN
CORPORATION (the "Company"), a Delaware corporation with principal offices at
000 Xxxx Xxxxx Drive, 00/xx/ Xxxxx, Xxx Xxxxx, XX, 00000 and Genentech, Inc.
(the "Purchaser"), a Delaware corporation with principal offices at 0 XXX Xxx,
Xxxxx Xxx Xxxxxxxxx, XX 00000.
WHEREAS the Company wishes to obtain equity financing and the Purchaser is
willing, on the terms and conditions contained in this Agreement, to purchase
Shares of the Company.
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
parties agree as follows:
SECTION 1. Authorization of Sale of the Shares. The Company has authorized
------------------------------------
the sale to the Purchaser of that number of shares (the "Shares") of the Common
Stock, $.01 par value per share (the "Common Stock"), of the Company, as is
equal to the quotient obtained by dividing $5,000,000 by the Offering Price (as
defined below).
SECTION 2. Agreement to Sell and Purchase Shares. At the Closing (as
--------------------------------------
defined in Section 3), the Company will sell to the Purchaser, and the Purchaser
will buy from the Company, upon the terms and conditions hereinafter set forth,
the Shares, at a purchase price per Share equal to the Offering Price for an
aggregate purchase price of $5,000,000 (the "Purchase Price"). As used herein,
the term "Offering Price" shall mean the price per share of the shares of Common
Stock sold to the public in connection with the closing by the Company of its
initial public offering (the "Public Offering Closing") pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act").
SECTION 3. Closings.
--------
3.1 Delivery of the Shares at the Closing. The completion of the
--------------------------------------
purchase and sale of the Shares being purchased and sold pursuant to this
Agreement (the "Closing") shall occur at the offices of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 contemporaneously with the Public Offering Closing (the "Closing
Date"), or such other time and place as shall be agreed to by the Company and
the Purchaser. At the Closing, the Purchaser shall pay to the Company an amount
in cash or by wire transfer equal to the Purchase Price and the Company shall
deliver to the Purchaser one or more stock certificates representing the Shares
purchased by the Purchaser, each such certificate to be registered in the name
of the Purchaser. The Company's obligation to close the transaction shall be
subject to the following conditions, any of which may be waived by the Company:
(a) receipt by the Company of a certified or official bank check or checks or
wire transfer of funds in the full amount of the Purchase Price for the Shares
being purchased hereunder; (b) execution and delivery by the Purchaser of the
Registration Rights Agreement substantially in the form attached as Exhibit 1
---------
(the "Registration Rights Agreement"); and (c) the accuracy of the
representations and warranties made by the Purchaser and the fulfillment of
those undertakings of the Purchaser to be fulfilled prior to the Closing. The
Purchaser's obligation to close the transaction shall be subject to the
fulfillment of the following conditions: (a) the occurrence of the Public
Offering Closing, (b) the execution and delivery by the Company of the
Registration Rights Agreement; (c) the receipt by the Purchaser of an opinion of
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Company, in
form and substance reasonably satisfactory to the Purchaser; (d) the receipt by
the Purchaser of a certificate, signed by the Secretary of the Company, in the
form attached hereto as Exhibit 2, (e) the receipt by the Purchaser, of a
---------
certificate, dated as of the Closing Date, as to the good standing of the
Company in the state of Delaware, (f) the receipt by the Purchaser of a stock
certificate, representing the Shares, and (g) the accuracy of the
representations and warranties made by the Company herein as of the Closing as
though such representations and warranties had been made on and as of Closing
and the fulfillment of those undertakings of the Company to be fulfilled prior
to Closing, and Purchaser's receipt of a certificate executed by the Senior Vice
President of the Company in the form attached hereto as Exhibit 3 certifying as
---------
to the same. This Agreement and the Registration Rights Agreement are
collectively referred to herein as the "Transaction Documents".
3.2. Delivery of Preferred Shares at Subsequent Closing. In the event
---------------------------------------------------
that the Public Offering Closing does not occur on or before May 30, 1999, then
the Company may, at its option, sell to the Purchaser, and the Purchaser will
buy from the Company, on or before June 30, 1999 (the "Subsequent Closing
Date"), upon the terms and conditions hereinafter set forth, that number of
Preferred Shares (as defined below) of the Company as is equal to the quotient
obtained
2
by dividing $5,000,000 by the Private Placement Price (as defined below). As
used herein (i) the term "Preferred Shares" shall mean the shares of a new
series of Preferred Stock, $.01 par value per share (the "Preferred Stock"),
having substantially the same rights, preferences and privileges as the
Company's Series A Preferred Stock (other than with respect to (i) the
applicable conversion rate and (ii) those certain adjustments to the applicable
conversion rate set forth in Section 5(c)(ii) of Exhibit A of the Restated
Certificate of Incorporation of the Company dated June 24, 1997) and (ii) the
term "Private Placement Price" shall mean a price per share based upon the price
per share at which the Company sold shares of Preferred Stock in the round of
equity financing immediately preceding the Subsequent Closing Date raising in
excess of $3,000,000 from investors not involved in a collaborative relationship
with the Company. At the Subsequent Closing, the Purchaser shall pay to the
Company an amount in cash or by wire transfer equal to the Private Placement
Price and the Company shall deliver to the Purchaser one or more stock
certificates representing the Preferred Shares purchased by the Purchaser, each
such certificate to be registered in the name of the Purchaser. The Company's
obligation to close the transaction shall be subject to the following
conditions, any of which may be waived by the Company: (a) receipt by the
Company of a certified or official bank check or checks or wire transfer of
funds in the full amount of the Private Placement Price for the Preferred Shares
being purchased hereunder; (b) execution and delivery by the Purchaser of an
amendment to that certain Amended and Restated Registration Rights Agreement
dated as of March 27, 1997, as amended May 16, 1997 (the "Registration Rights
Amendment"); and (c) the accuracy of the representations and warranties made by
the Purchaser as of the Subsequent Closing Date and the fulfillment of those
undertakings of the Purchaser to be fulfilled prior to the Subsequent Closing.
The Purchaser's obligation to close the transaction shall be subject to the
fulfillment of the following conditions: (a) the execution and delivery by the
Company of the Registration Rights Amendment; (b) the receipt by the Purchaser
of an opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to
the Company, in form and substance reasonably satisfactory to the Purchaser; (c)
the receipt by the Purchaser of a certificate, signed by the Secretary of the
Company, in the form attached hereto as Exhibit 2; (d) the receipt by the
---------
Purchaser, of a certificate, dated as of the Subsequent Closing Date, as to the
good standing of the Company in the state of Delaware; (e) the receipt by the
Purchaser of a stock certificate, representing the Preferred Shares; and (f) the
accuracy of the representations and warranties made by the Company herein as of
the Subsequent Closing as though such representations and warranties had been
made on and as of Subsequent Closing and the fulfillment of those undertakings
of the
3
Company to be fulfilled prior to the Subsequent Closing, and Purchaser's receipt
of a certificate executed by the Senior Vice President of the Company in the
form attached hereto as Exhibit 3 certifying as to the same. Except as otherwise
---------
provided herein, any such sale of Preferred Shares shall be upon the same terms
and conditions as those contained herein for the Shares; provided that all
references in this Agreement to the "Closing" and the "Closing Date" shall mean
and refer to the "Subsequent Closing" and the "Subsequent Closing Date"; all
references in this Agreement (other than in Sections 1, 2 and 3) to the "Shares"
shall mean and refer to the "Preferred Shares" and all references to the
"Transaction Documents" in this Agreement shall mean and refer to this Agreement
and the Registration Rights Amendment.
SECTION 4. Representations, Warranties and Covenants of the Company. As
---------------------------------------------------------
used herein, "best knowledge" shall mean and include a) actual knowledge of any
officers or directors of the Company and b) that knowledge which a prudent
businessperson would have obtained in the management of his or her business
using due inquiry. The Company hereby represents and warrants to, and covenants
with, the Purchaser as follows:
4.1. Organization. The Company is duly organized, validly existing
-------------
and in good standing under the laws of the State of Delaware. The Company has
full corporate power and authority to own, operate and occupy its properties and
to conduct its business as presently conducted and is registered or qualified to
do business and in good standing in each jurisdiction in which it owns or leases
property or transacts business and where the failure to be so qualified would
have a material adverse effect upon the business, financial condition,
properties or operations of the Company. The Company owns and holds all of the
outstanding capital stock of Genescape, Inc. No other person has any rights to
acquire any interest (equity or otherwise) in Genescape, Inc. As of the date
hereof, Genescape has conducted no business or other activities (other than
activities related to its inception) and holds no assets. Other than Genescape,
Inc., the Company does not own, directly or indirectly, any interest in any
corporation, association, or other entity. The Company is not a participant in
any joint venture, partnership or similar arrangement. The Company has delivered
to the Purchaser an accurate and complete copy of its Certificate of
Incorporation and all Amendments thereto, including without limitation, all
Certificates of Designation filed with the Secretary of State of Delaware.
4.2. Due Authorization. The Company has all requisite corporate power
------------------
and authority to execute, deliver and perform its obligations under the
Transaction Documents, and the
4
Transaction Documents have been duly authorized and validly executed and
delivered by the Company and constitute legal, valid and binding agreements of
the Company enforceable against the Company in accordance with their terms.
4.3. Non-Contravention. The execution and delivery of the Transaction
------------------
Documents, the issuance and sale of the Shares to be sold by the Company
hereunder, the fulfillment of the terms of the Transaction Documents and the
consummation of the transactions contemplated by the Transaction Documents will
not conflict with or constitute a violation of, or default or give rise to any
benefits or an acceleration of any rights of any third party (with the passage
of time or otherwise) under, any material agreement or instrument to which the
Company is a party or by which it is bound or the charter, by-laws or other
organizational documents of the Company nor result in the creation or imposition
of any lien, encumbrance, claim, security interest or restriction whatsoever
upon any of the material properties or assets of the Company or an acceleration
of indebtedness pursuant to any obligation, agreement or condition contained in
any material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or instrument
to which the Company is a party or by which it is bound or to which any of the
property or assets of the Company is subject, nor conflict with, or result in a
violation of, any law, administrative regulation, ordinance or order of any
court or governmental agency, arbitration panel or authority applicable to the
Company. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body is required for the valid issuance and sale of the
Shares to be sold pursuant to the Agreement, other than such as have been or
will be made or obtained.
4.4. Capitalization. As of the date hereof, the Company has the total
---------------
authorized capitalization described on Schedule 4.4 attached hereto. The Shares
------------
to be sold pursuant to this Agreement have been duly authorized, and when issued
and paid for in accordance with the terms of this Agreement will be validly
issued, fully paid and non-assessable and free of restrictions on transfer,
other than restrictions on their transfer under the Transaction Documents and
under applicable state and federal securities laws. The outstanding shares of
capital stock of the Company have been duly and validly issued and are fully
paid and non-assessable. Except as set forth on Schedule 4.4, no options,
------------
warrants, puts, calls, commitments, convertible exchangeable securities, or
similar rights for issuance of new or additional securities exist with respect
to the Company.
5
Schedule 4.4 contains a true and complete list of each stockholder,
------------
warrantholder and optionholder of the Company as of the date hereof.
4.5 Contracts and Other Commitments. Except as disclosed on Schedule
-------------------------------- --------
4.5 the Company does not have any contract, agreement, lease, commitment, or
---
proposed transaction, written or oral, absolute or contingent, other than (i)
contracts for the purchase of goods, supplies and services that were entered
into in the ordinary course of business and that do not involve individually
more than $200,000, (ii) sales contracts entered into in the ordinary course of
business, and (iii) contracts terminable at will by the Company on no more than
thirty (30) days' notice without cost or liability to the Company and that do
not involve any employment or consulting arrangement and are not material to the
conduct of the Company's business. For the purpose of this paragraph, employment
and consulting contracts and contracts with labor unions, and license agreements
and any other agreements relating to the acquisition or disposition of the
Company's technology (other than standard end-user license agreements) shall not
be considered to be contracts entered into in the ordinary course of business.
4.6 Related-Party Transactions. No employee, officer, or director of
---------------------------
the Company or member of his or her immediate family is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them, except that the Company is obligated to pay
approximately $21,000 in interest that accrued on promissory notes issued in
1993 to members of the Xxxxxxxx family, which notes were converted into Common
Stock at the end of 1993. To the best of the Company's knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except
that employees, officers, or directors of the Company and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company. To the best of the Company's knowledge, no officer or director
or any member of their immediate families is, directly or indirectly, interested
in any material contract with the Company.
4.7 Registration Rights. Except as provided in the Registration
--------------------
Rights Agreement dated as of June 25, 1997 by and between the Company and a
certain stockholder, the Amended and Restated Registration Rights Agreement
dated as of March 27, 1997, by and among the Company and certain stockholders of
the Company, as amended, and as provided to Connecticut Innovations,
6
Incorporated and the holders of warrants to purchase 11,111 shares of Common
Stock in separate agreements, the Company is not obligated to register under the
Securities Act any of its presently outstanding securities or any of its
securities that may be subsequently issued.
4.8 Permits. The Company has all franchises, permits, licenses, and
--------
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses or other similar authority.
4.9 Compliance With Other Instruments. The Company is not in
----------------------------------
violation or default in any material respect of any provision of its Certificate
of Incorporation or Bylaws or in any material respect of any provision of any
mortgage, indenture, agreement, instrument, or contract to which it is a party
or by which it is bound or, to the best of its knowledge, of any federal or
state judgment, order, writ, decree, statute, rule, or regulation applicable to
the Company. The execution, delivery, and performance by the Company of the
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby will not result in any such violation or be in material
conflict with or constitute, with or without the passage of time or giving of
notice, either a material default under any such provision or an event that
results in the creation of any material lien, charge, or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture, or
non-renewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of its assets or
properties.
4.10 Litigation. There is no action, suit, proceeding, or
-----------
investigation, to the best of the Company's knowledge, pending or currently
threatened against the Company that questions the validity of the Transaction
Documents or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse change
in the assets, business, properties, prospects, or financial condition of the
Company, or in any material change in the current equity ownership of the
Company. The foregoing includes, without limitation, any action, suit,
proceeding, or investigation pending or currently threatened involving the prior
employment of any of the Company's employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of their former employers, their obligations under any agreements with prior
employers, or negotiations by the Company with potential backers
7
of, or investors in, the Company or its proposed business. The Company is not a
party to, or to the best of its knowledge, named in any order, writ, injunction,
judgment, or decree of any court, government agency, or instrumentality. There
is no action, suit, or proceeding by the Company currently pending or that the
Company currently intends to initiate.
4.11 Offering. Subject in part to the truth and accuracy of the
---------
Purchaser's representations set forth in Section 5.1 of this Agreement, the
offer, sale and issuance of the Shares as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
4.12 Title to Property and Assets; Leases. The Company owns no real
-------------------------------------
estate and leases facilities in Branford, Connecticut, New Haven, Connecticut
and Alachua, Florida. Except (i) as reflected in the Financial Statements (as
defined in paragraph 4.13), (ii) for liens for current taxes not yet delinquent,
(iii) for liens imposed by law and incurred in the ordinary course of business
for obligations not past due to carriers, warehousemen, laborers, materialmen
and the like, (iv) for liens in respect of pledges or deposits under workers'
compensation laws or similar legislation or (v) for minor defects in title, none
of which, individually or in the aggregate, materially interferes with the use
of such property, the Company owns its property and assets free and clear of all
mortgages, liens, claims, and encumbrances. With respect to the property and
assets it leases, the Company is in compliance with such leases and, to the best
of its knowledge, holds a valid leasehold interest free of any liens, claims, or
encumbrances, subject to clauses (i)-(v) above.
4.13 Financial Statements and Preliminary Financial Statements. The
----------------------------------------------------------
Company has delivered to the Purchaser its audited financial statements (balance
sheet and profit and loss statement, statement of stockholders' equity and
statement of cash flows including notes thereto) at December 31, 1994, 1995 and
1996 for the fiscal years then ended and its unaudited financial statements for
the nine-month period ended September 30, 1997 (the "Financial Statements"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and with each other. The Financial Statements fairly present the
financial condition and operating results of the Company as of the dates, and
for the periods, indicated therein. Except as set forth in the Financial
Statements, the Company has no material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to September 30, 1997 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
8
generally accepted accounting principles to be reflected in the Financial
Statements, which, in both cases, individually do not exceed $125,000, and in
the aggregate do not exceed $800,000, other than commitments set forth on
Schedule 4.13 . Except as disclosed in the Financial Statements, the Company is
-------------
not a guarantor or indemnitor of any indebtedness of any other person, firm, or
corporation. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with generally
accepted accounting principles.
4.14 Changes. To the best of the Company's knowledge, since September
--------
30, 1997, there has not been:
a) any change in the assets, liabilities, financial condition, business
prospects or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(c) any waiver or compromise by the Company of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(e) any material change to a material contract or arrangement by which the
Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or agreement with
any employee, officer, director or stockholder;
(g) any sale, assignment, or transfer of any patents, trademarks,
copyrights, trade secrets, or other intangible assets;
(h) any resignation or termination of employment of any key officer of the
Company; and the Company, to the best of its knowledge, does not know of the
impending resignation of termination of employment of any such officer;
(i) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
9
(j) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for the benefit of
its employees, officers, or directors, or any members of their immediate
families, other than travel advances and other advances made in the ordinary
course of its business;
(l) any declaration, setting aside, or payment or other distribution in
respect of any of the Company's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Company;
(m) to the best of the Company's knowledge, any other event or condition of
any character that might materially and adversely affect the business,
properties, prospects, or financial condition of the Company (as such business
is presently conducted and as it is proposed to be conducted); or
(n) any agreement or commitment by the Company to do any of the things
described in this paragraph 4.14.
4.15 Patents and Trademarks. The Company owns or possesses sufficient
-----------------------
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, and proprietary rights and processes
presently used by the Company in its business (the "CuraGen Intellectual
Property Rights"). To the best knowledge of the Company, the CuraGen
Intellectual Property Rights are the only intellectual property rights necessary
for its business as now conducted and as proposed to be conducted and, to the
best knowledge of the Company, do not conflict with, or infringe the rights of
others. The Company has provided to Purchaser a complete list of patents and
pending patent applications of the Company. Except for agreements with its own
employees or consultants, substantially in the form referenced in paragraph 4.18
below, there are no outstanding options, licenses, or agreements of any kind
relating to the foregoing, nor is the Company bound by or a party to any
options, licenses, or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, and proprietary rights and processes of any other person or entity.
The Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets, or
other proprietary rights or processes of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use
10
of such employee's best efforts to promote the interests of the Company or that
would conflict with the Company's business as proposed to be conducted. Neither
the execution nor delivery of this Agreement, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as proposed, will, to the best of the Company's knowledge,
conflict with or result in a breach of the terms, conditions, or provisions of,
or constitute a default under, any contract, covenant, or instrument under which
any of such employees is now obligated. The Company does not believe it is or
will be necessary to use any inventions of any of its employees (or persons it
currently intends to hire) made prior to their employment by the Company.
4.16 Manufacturing and Marketing Rights. The Company has not granted
-----------------------------------
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person or entity and is not bound by any agreement that affects the
Company's exclusive right to develop, manufacture, assemble, distribute, market,
or sell its products.
4.17 Employees: Employee Compensation. To the best of the Company's
---------------------------------
knowledge, there is no strike, or labor dispute or union organization activities
pending or threatened between it and its employees. None of the Company's
employees belongs to any union or collective bargaining unit. To the best of
its knowledge, the Company has complied in all material respects with all
applicable state and federal equal opportunity and other laws related to
employment. To the best of the Company's knowledge, no employee of the Company
is or will be in violation of any judgment, decree, or order, or any term of any
employment contract, patent disclosure agreement, or other contract or agreement
relating to the relationship of any such employee with the Company, or any other
party because of the nature of the business conducted or to be conducted by the
Company or to the use by the employee of his best efforts with respect to such
business. The Company is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement. The Company is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. Subject to general principles related to
wrongful termination of employees, the employment of each officer and employee
of the Company is terminable at the will of the Company.
11
4.18 Proprietary Information and Inventions Agreements. Each employee
--------------------------------------------------
and officer of the Company has executed an Employee Confidential Information and
Invention Agreement substantially in the form or forms which have been delivered
to counsel for the Purchaser. Each scientific consultant of the Company has
executed a confidentiality agreement with the Company.
4.19 Tax Returns, Payments, and Elections. The Company has filed all
-------------------------------------
tax returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith. The provision for
taxes of the Company as shown in the Financial Statements is adequate for taxes
due or accrued as of the date thereof. The Company has not elected pursuant to
the Internal Revenue Code of 1986, as amended ("Code"), to be treated as an S
corporation or a collapsible corporation pursuant to Section 1362(a) or Section
341(f) of the Code, nor has it made any other elections pursuant to the Code
(other than elections that relate solely to methods of accounting, depreciation,
or amortization) that would have a material effect on the business, properties,
prospects, or financial condition of the Company. The Company has never had any
tax deficiency proposed or assessed against it and has not executed any waiver
of any statute of limitations on the assessments or collection of any tax or
governmental charge. None of the Company's federal income tax returns and none
of its state income or franchise tax or sales or use tax returns has ever been
audited by governmental authorities. Since the date of the Financial Statements,
the Company has made adequate provisions on its books of account for all taxes,
assessments, and governmental charges with respect to its business, properties,
and operations for such period. The Company has withheld or collected from each
payment made to each of its employees, the amount of all taxes, including, but
not limited to, federal income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes required to be withheld or collected
therefrom, and has paid the same to the proper tax receiving officers or
authorized depositories.
4.20 Insurance. The Company has in full force and effect fire and
----------
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed. The Company has in full force and effect
term life insurance, payable to the Company, on the lives of each of Xxxxxxxx X.
Xxxxxxxx and Xxxxxxx X.Went in the amount of $1,000,000 each. The Company has in
full
12
force and effect products liability and errors and omissions insurance in
amounts customary for companies similarly situated.
4.21 Environmental and Safety Laws. To the best of its knowledge, the
------------------------------
Company is not in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law, or regulation.
4.22 Investigation. It shall be no defense to an action for breach of
--------------
this Agreement that the Purchaser or its agents have (or have not) made
investigations into the affairs of the Company or that the Company could not
have known of the misrepresentation or breach of warranty.
4.23 Disclosure. To the best of the Company's knowledge, neither this
-----------
Agreement nor any other written statements or certificates made or delivered in
connection herewith contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein not
misleading.
SECTION 5. Representations, Warranties and Covenants of the Purchaser.
-----------------------------------------------------------
5.1. The Purchaser represents and warrants to, and covenants with,
the Company, as of the date hereof and as of the Closing Date, that: (i) the
Purchaser is an "accredited investor" as defined in Regulation D under the
United States Securities Act of 1933, as amended (the "Securities Act"); and
also is knowledgeable and experienced in making investments in private placement
transactions such as the purchase of the Shares; (ii) the Purchaser is acquiring
the Shares set forth above for its own account for investment and with no
present intention of distributing any of such Shares except pursuant to an
effective registration statement under the Securities Act covering the sale, and
no arrangement or understanding exists with any other person regarding the
distribution of any of such Shares; (iii) the Purchaser will not, directly or
indirectly, voluntarily offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Shares except (a) in the event of an effective registration
statement under the Securities Act, (b) upon delivery of an opinion of counsel
(which shall be in form and substance reasonably satisfactory to the Company)
that such registration is not required, (c) in connection with a sale, transfer
or other disposition made pursuant to Section 144 of the Securities Act or (d)
to a wholly owned subsidiary of the Purchaser, in the case of (a), (c) and (d)
above, no opinion of counsel shall be required; and (iv) the Purchaser has had
an opportunity to
13
ask questions and receive answers from the management of the Company regarding
the Company, its business and the offering of the Shares.
5.2. The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into the Transaction Documents and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of the Transaction Documents, and (ii)
upon the execution and delivery of the Transaction Documents, such Transaction
Documents shall constitute valid and binding obligations of the Purchaser
enforceable in accordance with their terms.
5.3. The Purchaser acknowledges and understands that the Purchaser
must bear the economic risk of its investment in the Shares for an indefinite
period of time because the Shares have not been registered under the Securities
Act and, therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available. The
certificates representing the Shares issued to Purchaser will bear a legend in
substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN
OPINION OF COUNSEL (WHICH SHALL BE IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY) REASONABLY SATISFACTORY TO THE COMPANY
(WHICH MAY BE THE PURCHASER'S IN-HOUSE COUNSEL), THAT SUCH
REGISTRATION IS NOT REQUIRED, UNLESS SUCH SALE, TRANSFER OR OTHER
DISPOSITION IS MADE PURSUANT TO RULE 144 OF THE SECURITIES ACT, IN
WHICH CASE SUCH SALE, TRANSFER OR OTHER DISPOSITION MAY BE MADE AND NO
OPINION OF COUNSEL SHALL BE REQUIRED, OR EXCEPT AS OTHERWISE PERMITTED
UNDER A CERTAIN COMMON STOCK PURCHASE AGREEMENT DATED NOVEMBER __ 1997
BETWEEN THE COMPANY
14
AND THE ORIGINAL HOLDER, A COPY OF WHICH IS AVAILABLE UPON REQUEST
FROM THE COMPANY FOR INSPECTION.
The Company agrees to remove such legend from the certificates representing the
Shares issued to Purchaser at such time as such Shares may be legally sold under
Rule 144 (or any successor rule) without registration under the Securities Act,
at the request of the Purchaser and upon receipt from the Purchaser of an
opinion, which shall be in form and substance reasonably satisfactory to the
Company, of counsel reasonably satisfactory to the Company (which may be the
Purchaser's in-house counsel), that such legend may be removed.
The Purchaser agrees that any sale, transfer, pledge, hypothecation or
other disposition of the Shares shall be made in compliance with such legend.
SECTION 6. Survival of Representations, Warranties and Agreements.
-------------------------------------------------------
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein shall survive the execution of this Agreement, the delivery
to the Purchaser of the Shares being purchased, and the payment therefor.
SECTION 7. No Fee. The parties hereto hereby represent that there are no
-------
brokers or finders entitled to compensation in connection with the transactions
contemplated hereby.
SECTION 8. Notices. All notices, requests, consents and other
--------
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) if to the Company, to:
CuraGen Corporation
000 Xxxx Xxxxx Xxxxx, 00/xx/ Xxxxx
Xxx Xxxxx, XX 00000
Attention: Vice President of Business Development
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
15
(b) if to the Purchaser, to:
Genentech, Inc.
0 XXX Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attn: Corporate Secretary
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
SECTION 9. Changes. Any term of this Agreement may be amended or
--------
compliance therewith waived only with the written consent of both parties
hereto.
SECTION 10. Assignment. The rights and obligations under this Agreement
-----------
may not be assigned by either party hereto without the prior written consent of
the other party.
SECTION 11. Benefit. All statements, representations, warranties,
--------
covenants and agreements in this Agreement shall be binding on the parties
hereto and shall inure to the benefit of the respective successors and permitted
assigns of each party hereto. Nothing in this Agreement shall be construed to
create any rights or obligations except among the parties hereto, and no person
or entity shall be regarded as a third-party beneficiary of this Agreement.
SECTION 12. Expenses. Each of the parties hereto shall pay its own fees
---------
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 13. No Waiver; Cumulative Remedies. No failure or delay on the
-------------------------------
part of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude
16
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 14. Headings. The headings of the various sections of this
---------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 15. Transfer Taxes. CuraGen will reimburse the Purchaser for any
---------------
transfer taxes incurred in connection with the issuance of the Shares.
SECTION 16. Severability. In case any provision contained in this
-------------
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 17. Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with (a) the internal laws of the State of Delaware
without giving effect to principles of conflicts of law, and (b) United States
federal law.
SECTION 18. Counterparts. This Agreement may be executed in counterparts,
-------------
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered to
the other parties.
SECTION 19. Further Assurances. From and after the date of this Agreement,
-------------------
upon the request of the Purchaser or the Company, the Company and the Purchaser
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
17
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the __day of ________, 1997.
GENENTECH, INC.
By:_____________________________________
Name:
Title:
CURAGEN CORPORATION
By:____________________________________
Name:
Title:
18
EXHIBIT 1
---------
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of ______________, by and among CuraGen Corporation, a Delaware
corporation (the "Company") with principal offices at 000 Xxxx Xxxxx Xxxxx, 00xx
Xxxxx, Xxx Xxxxx, XX 00000 and Genentech, Inc., a Delaware corporation (the
"Stockholder") with principal offices at 0 XXX Xxx, Xxxxx Xxx Xxxxxxxxx, XX
00000.
RECITALS
WHEREAS, the Company has issued to the Stockholder _____________ shares of
its Common Stock, $.01 par value per share (the "Common Stock"), pursuant to a
Stock Purchase Agreement dated as of even date herewith (the "Purchase
Agreement"); and
WHEREAS, the Stockholder has agreed to advance to the Company a loan in the
aggregate principal amount of up to $26,000,000 which loan is evidenced by a
Promissory Note, dated ________________, (the "Note") and which may be repaid,
at the Company's option, in shares of Non-Voting Common Stock or which, under
certain circumstances, may be converted to shares of Series F Preferred Stock;
and
WHEREAS, among the conditions to the consummation of the transactions
contemplated by the Purchase Agreement is the execution and delivery of a
Registration Rights Agreement providing for the registration rights described
herein.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
herein contained the parties agree as follows:
AGREEMENT
1. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS
-------------------
As used in this Agreement, the following terms shall have the meanings set
forth below:
(a) "Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
(c) "Holder" shall mean the Stockholder and any transferee to whom the
registration rights conferred by this Agreement have been transferred in
compliance with Section 1.2 and Section 1.8 hereof.
(d) "Non Voting Common Stock" shall the shares of Non-Voting Common Stock
$.01 par value per share, of the Company issued to the Stockholder pursuant to
the terms of the Note.
(e) "Registrable Securities" shall mean (i) shares of Common Stock, (ii)
shares of Common Stock issued or issuable upon conversion of the Non-Voting
Common Stock or Series F Preferred Stock, and (iii) any shares of Common Stock
issued as a dividend or other distribution with respect to or in exchange for or
in replacement of the shares referenced in (i) or (ii) above; provided however,
that Registrable Securities shall not include any shares of Common Stock (i)
which have previously been registered or which have been sold to the public, or
which have been sold in a private transaction in which the transferor's rights
under this Agreement are not assigned, or (ii) with respect to which the
registration rights under this Agreement have terminated under Section 1.15 of
this Agreement.
(f) The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
(g) "Registration Expenses" shall mean all expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and expenses of any regular or special audits incident to or required by any
such registration, but shall not include Selling Expenses.
(h) "Restricted Securities" shall mean any Registrable Securities required
to bear the legends set forth in Section 1.2(b) hereof.
(i) "Rule 144" shall mean Rule 144 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(j) "Rule 145" shall mean Rule 145 as promulgated by the Commission under
the Securities Act as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the Commission.
(k) "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
(l) "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities and fees
2
and disbursements of counsel for any Holder (other than the fees and
disbursements of counsel included in Registration Expenses).
(m) "Series F Preferred Stock" shall mean shares of the Series F Non-Voting
Convertible Preferred Stock, $.01 par value per share, of the Company issued to
the Stockholder pursuant to the terms of the Note.
1.2 RESTRICTIONS ON TRANSFER
------------------------
(a) Each Holder agrees not to make any disposition of all or any portion of
the Registrable Securities unless and until (i) there is then in effect a
registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such registration
statement, (ii) the transferee has agreed in writing for the benefit of the
Company prior to such transfer, and as a condition thereof, delivers to the
Company a written instrument by which such transferee agrees to be bound by this
Section 1.2, provided and to the extent such Section is then applicable, and (A)
such Holder shall have notified the Company of the proposed disposition and
shall have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and (B) if requested by the Company, such
Holder shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such shares under the Securities Act or (iii) the disposition is made
pursuant to Rule 144. It is agreed that the Company will not require opinions
of counsel for transactions made pursuant to Rule 144.
Notwithstanding the provisions of 1.2(i), (ii) and (iii) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by a Holder which is (A) a partnership to its partners or retired partners (who
retire after the date hereof) in accordance with partnership interests, of (B)
to the Holder's family member or trust for the benefit of an individual Holder,
provided such transfer is without consideration and the transferee will be
subject to the terms of this Section 1.2 to the same extent as if he were an
original Holder hereunder.
(b) Each certificate representing Registrable Securities shall (unless
otherwise permitted by the provisions of this Agreement) be stamped or otherwise
imprinted with legends substantially similar to the following (in addition to
any legend required under applicable state securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT OR AN OPINION OF COUNSEL (WHICH SHALL BE IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE COMPANY) REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED, UNLESS SUCH SALE,
3
TRANSFER OR OTHER DISPOSITION IS MADE PURSUANT TO RULE 144 OF THE SECURITIES
ACT, IN WHICH CASE NO OPINION OF COUNSEL SHALL BE REQUIRED, OR EXCEPT AS
OTHERWISE PERMITTED UNDER A CERTAIN STOCK PURCHASE AGREEMENT DATED NOVEMBER__,
1997 AMONG THE COMPANY, THE ORIGINAL HOLDER AND OTHERS, A COPY OF WHICH IS
AVAILABLE UPON REQUEST FROM THE COMPANY FOR INSPECTION.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE REGISTRATION
RIGHTS AGREEMENT DATED NOVEMBER__, 1997, AS AMENDED, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY OR MAY BE AVAILABLE UPON
REQUEST.
(c) The Company shall be obligated to reissue promptly unlegended
Registrable Securities at the request of any Holder thereof if the Holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the Registrable
Securities proposed to be disposed of may lawfully be so disposed of without
registration, qualification or legend.
(d) Any legend endorsed on any Registrable Securities pursuant to
applicable state securities laws and any stop-transfer instructions with respect
to any Registrable Securities shall be removed upon receipt by the Company of an
order of the appropriate blue sky authority authorizing such removal.
1.3 REGISTRATION ON FORM S-3
------------------------
(a) After the effective date of the Company's initial public offering (the
"Offering Effective Date"), the Company shall use its best efforts to qualify
for registration on Form S-3 or any comparable or successor form or forms.
After the Company has qualified for the use of Form S-3, the Holder of
Registrable Securities shall have the right, at any time on or after the first
anniversary of the Offering Effective Date, to request registrations on Form S-3
(such request shall be in writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended methods of disposition
of such shares by such Holder); provided, however, that the Company shall not be
-------- -------
obligated to effect any such registration if (i) the Holder, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) on Form S-3 at an aggregate price to the public of less than $500,000;
(ii) in a given twelve-month period, the Company has effected two (2) such
registrations, (iii) it is to be effected more than ten (10) years after the
Offering Effective Date; or (iv) the Company shall have furnished to such Holder
a certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be materially
detrimental to the Company for such registration statement to be filed in the
near future and that it has, therefore, determined to defer the filing of such
registration statement, in which case the Company shall have the right to defer
such filing for a period of not more than one hundred eighty (180) days after
receipt of the request of the Holder; provided, that the Company shall not defer
--------
its obligation in this manner more than once in any twelve-month period.
4
(b) The Company shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 1.3:
(i) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;
(ii) After the Company has initiated ten (10) such registrations
for the Holder pursuant to this Section 1.3 (counting for these
purposes only registrations which have been declared or ordered
effective and pursuant to which securities have been sold and
registrations which have been withdrawn by the Holder as to which the
Holder have not elected to bear the Registration Expenses pursuant to
Section 1.5 hereof and would, absent such election, have been required
to bear such expenses);
(iii) During the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of filing of and
ending on a date one hundred eighty (180) days after the effective date
of, a Company-initiated registration, including a demand registration
initiated by the Company on behalf of any holder of demand registration
rights; provided that the Company is actively employing in good faith
all reasonable efforts to cause such registration statement to become
effective; or
(iv) If the Company shall have effected a registration pursuant
to Section 1.3(a) within one hundred eighty (180) days preceding the
Company's receipt of the Holder's request.
(c) Subject to the foregoing, upon delivery by the Holder of the notice
described in Section 1.3(a) above, the Company shall (i) promptly give written
notice of the proposed registration to all other Holders (if any) and (ii) as
soon as practicable, use its best efforts to effect such registration
(including, without limitation, filing post-effective amendments, appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with the Securities Act) as would permit or facilitate
the sale and distribution of all or such portion of such Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any other Holder joining in such request as are
specified in a written request received by the Company within twenty (20) days
after such written notice from the Company is mailed or delivered. The
registration statement filed pursuant to the request of the Holder may, subject
to the provisions of Sections 1.3(b) and 1.10 hereof, include other securities
of the Company with respect to which registration rights have been granted, and
may include securities of the Company being sold for the account of the Company.
5
(d) All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 1.3 hereof shall be borne by the
Company.
(e) If the registration requested pursuant to Section 1.3 is underwritten,
the rights of the Holder to registration pursuant to Section 1.3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. The Holder may elect to include in such underwriting
all or a part of its Registrable Securities. Notwithstanding the foregoing, the
Company shall not be obligated to register the Registrable Securities of any
Holder who fails promptly to provide to the Company such information as the
Company may reasonably request at the time to enable the Company to comply with
applicable laws or regulations or to facilitate preparation of the registration
statement.
(f) If the Company shall request inclusion in any registration pursuant to
Section 1.3 of securities being sold for its own account, or if other persons
shall request inclusion in any registration pursuant to Section 1.3, the Holder
shall offer to include such securities in the underwriting and may condition
such offer on their acceptance of the further applicable provisions of this
Section 1 (including Section 1.10). The Company shall (together with the Holder
and other persons proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters. Notwithstanding any other
provision of this Section 1.3, if the representative of the underwriters advises
the Holder in writing that marketing factors require a limitation on the number
of shares to be underwritten, the number of shares to be included in the
underwriting or registration shall be allocated as set forth in Section 1.10
hereof. If a person who has requested inclusion in such registration as
provided above does not agree to the terms of any such underwriting, such person
shall be excluded therefrom by written notice from the Company, the underwriter
or the Holder. Any Registrable Securities or other securities excluded shall
also be withdrawn from such registration. If shares are so withdrawn from the
registration and if the number of shares to be included in such registration was
previously reduced as a result of marketing factors pursuant to this Section
1.3(f), then the Company shall offer to all persons who have retained rights to
include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares so withdrawn, with such shares to be allocated among such persons
requesting additional inclusion in accordance with Section 1.10.
1.4 REGISTRATION PROCEDURES
-----------------------
In the case of each registration effected by the Company pursuant to
Section 1.3, the Company will keep each Holder advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, the Company will use its best efforts to:
(a) Keep such registration effective for a period of one hundred eighty
(180) days or until the Holder has completed the distribution described in the
registration statement relating thereto, whichever first occurs; provided,
--------
however, that such 180-day period shall be extended, if necessary, to keep the
-------
registration statement effective until all such Registrable Securities are
6
sold, provided that Rule 145, or any successor rule under the Securities Act,
permits an offering on a continuous or delayed basis, and provided further that
applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
that (I) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (II) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement;
(b) Prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) Furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Holder from time to time may reasonably request;
(d) Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that as thereafter delivered
to the purchasers of such shares such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant hereunder to
be listed on each securities exchange on which similar securities issued by the
Company are then listed;
(f) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant to such registration statement and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration; and
(g) Otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the first
month after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
7
1.5 INDEMNIFICATION
---------------
(a) The Company will indemnify each Holder, each of its officers, directors
and partners, legal counsel and accountants and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, with respect to
which registration, qualification, or compliance has been effected pursuant to
this Section 1, and each underwriter, if any, and each person who controls
within the meaning of Section 15 of the Securities Act any underwriter, against
all expenses, claims, losses, damages, and liabilities (or actions, proceedings,
or settlements in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular, or other document (including any related
registration statement, notification, or the like) incident to any such
registration, qualification, or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification, or compliance, and will
reimburse each such Holder, each of its officers, directors, partners, legal
counsel, and accountants and each person controlling such Holder, each such
underwriter, and each person who controls any such underwriter for any legal and
any other expenses reasonably incurred in connection with investigating and
defending or settling any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information furnished to the
Company by such Holder or underwriter specifically for use in the preparation
thereof. It is agreed that the indemnity agreement contained in this Section
1.5(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld).
(b) Each Holder will, if Registrable Securities held by him are included in
the securities as to which such registration, qualification, or compliance is
being effected, indemnify the Company, each of its directors, officers, legal
counsel, and accountants and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, each other such Holder, and each of their officers, directors,
and partners, and each person controlling such Holder, against all expenses,
claims, losses, damages and liabilities (or actions, proceedings, or settlements
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular, or other document (including any related registration statement,
notification, or the like) incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and such Holder,
directors, officers, partners, legal counsel, and accountants, persons,
underwriters, or control persons for any legal or any other expenses reasonably
incurred in connection with investigating and defending or settling any such
claim, loss, damage, liability, or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or
8
alleged omission) is made in such registration statement, prospectus, offering
circular, or other document in reliance upon and in conformity with written
information furnished to the Company by such Holder specifically for use in the
preparation thereof; provided, however, that the obligations of such Holder
hereunder shall not apply to amounts paid in settlement of any such claims,
losses, damages, or liabilities (or actions in respect thereof) if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld); and provided that in no event shall any indemnity
under this Section 1.5 exceed the net proceeds from the offering received by
such Holder.
(c) Each party entitled to indemnification under this Section 1.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1.5 to the extent such
failure is not prejudicial. No Indemnifying Party in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof, the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation and no Indemnified Party shall consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Indemnifying Party. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 1.5 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu to indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in
9
connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall
control.
1.6 INFORMATION BY HOLDER
---------------------
Each Holder of Registrable Securities shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification, or compliance
referred to in this Section 1, except to the extent that the furnishing of such
information would violate any law or any contractual arrangement. The Company
shall not be obligated to register the Registrable Securities of any Holder who
fails promptly to provide to the Company such information as the Company may
reasonably request at the time to enable the Company to comply with applicable
laws or regulations or to facilitate preparation of the registration statement,
including any information that the Holder fails to provide on the basis that
such information would violate any law or any contractual arrangement.
1.7 RULE 144 REPORTING
------------------
With a view to making available the benefits of certain rules and
regulations of the Commission that may permit the sale of the Restricted
Securities to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information regarding the Company available as
those terms are understood and defined in Rule 144 under the Securities Act, at
all times from and after ninety (90) days following the effective date of the
first registration under the Securities Act filed by the Company for an offering
of its securities to the general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
at any time after it has become subject to such reporting requirements;
(c) So long as a Holder owns any Restricted Securities, furnish to the
Holder forthwith upon written request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 (at any time from and
after ninety (90) days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.
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1.8 TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS
---------------------------------------------
The rights to cause the Company to register securities granted to a Holder
by the Company under this Section 1 may be transferred or assigned by a Holder
only to a transferee or assignee of not less than 50,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustments for
stock splits, stock dividends, reverse stock splits, and the like), provided
that the Company is given written notice at the time of said transfer or
assignment stating the name and address of the transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned, and, provided further, that the transferee or
assignee of such rights assumes the obligations of such Holder under this
Section 1 and prior to such transfer, as a condition thereof, delivers to the
Company a written instrument by which such transferee agrees to be bound by this
Agreement.
1.9 "MARKET STAND-OFF" AGREEMENT
----------------------------
If requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, a stockholder shall not sell or otherwise transfer
or dispose of any Common Stock (or other securities) of the Company held by such
stockholder (other than those included in the registration) during the one
hundred eighty (180) day period following the effective date of a registration
statement of the Company filed under the Securities Act, provided that:
(a) if the stockholder is not an "affiliate" (as defined under Rule 144) of
the Company nor does it hold beneficially or of record 10% or more of the
outstanding equity securities of the Company at the time a registration
statement is filed, then such agreement shall only apply to the first such
registration statement of the Company, including securities to be sold on its
behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company enter into similar
agreements.
The obligations described in this Section 1.9 shall not apply to a
registration relating solely to employee benefit plans on Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of said one hundred eighty (180) day period.
1.10 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS.
---------------------------------------------
From and after the date of this Agreement, the Company shall not, without
the prior written consent of the Holders of a majority of the outstanding
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company which would allow such holder or
prospective holder to include such securities in any registration filed under
Section 1.3 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of
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such securities will not reduce the amount of the Registrable Securities of the
Holders which are included.
1.11 ALLOCATION OF REGISTRATION OPPORTUNITIES
----------------------------------------
In any circumstance in which all of the Registrable Securities and other
shares of Common Stock of the Company (including shares of Common Stock issued
or issuable upon conversion of shares of any currently unissued series of
Preferred Stock of the Company) with registration rights (the "Other Shares")
requested to be included in a registration on behalf of the Holder or other
selling stockholders cannot be so included as a result of limitations of the
aggregate number of shares of Registrable Securities and Other Shares that may
be so included, the number of shares of Registrable Securities and Other Shares
that may be so included shall be allocated among the Holders requesting
inclusion of shares pro rata on the basis of the number of shares of Registrable
Securities and that would be held by such Holders, assuming conversion, that
such Holders had requested to be included in the registration.
No Holder shall have any right to take any action to restrain, enjoin, or
otherwise delay any registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 1.
1.12 TERMINATION OF REGISTRATION RIGHTS
----------------------------------
The right of any Holder to request registration or inclusion in any
registration pursuant to Section 1.3 shall terminate on such date after the
Offering Effective Date as all shares of Registrable Securities held or entitled
to be held upon conversion by such Holder may immediately be sold under Rule 144
during any ninety (90) day period.
2. MISCELLANEOUS
2.1 GOVERNING LAW
-------------
This Agreement shall be governed in all respects by the laws of the State
of Delaware, as if entered into by and between Delaware residents exclusively
for performance entirely within Delaware, and excluding that body of laws
pertaining to conflicts of laws.
2.2 SUCCESSORS AND ASSIGNS
----------------------
Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of and be binding upon the successors, assigns, heirs,
executors and administrators of the parties hereto.
2.3 ENTIRE AGREEMENT; AMENDMENT; WAIVER
-----------------------------------
This Agreement (including the Exhibits hereto) constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
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This Agreement supersedes any and all prior understandings as to the subject
matter of this Agreement. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated, except by a written instrument signed
by the Company and the Holders of at least fifty percent (50%) of the
Registrable Securities. Any such amendment, waiver, discharge or termination
shall be binding on all the Holders, but in no event shall the obligation of any
Holder hereunder be materially increased, except upon the written consent of
such Holder.
2.4 NOTICES, ETC.
-------------
All notices and other communications required or permitted hereunder shall
be in writing and shall be mailed by United States first class mail, postage
prepaid, or delivered personally by hand or nationally recognized courier
addressed (a) if to the Stockholder, at the address set forth on the first page
of this Agreement, or at such other address as such holder or permitted assignee
shall have furnished to the Company in writing, or (b) if to the Company, at 000
Xxxx Xxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxx XX 00000, or at such other address as
the Company shall have furnished to each holder in writing. All such notices and
other written communications shall be effective on the date of mailing or
delivery.
2.5 DELAYS OR OMISSIONS
-------------------
No delay or omission to exercise any right, power or remedy accruing to any
Holder, upon any breach or default of the Company under this Agreement shall
impair any such right, power or remedy of such Holder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default therefore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Holder of any breach or
default under this Agreement or any waiver on the part of any Holder of any
provisions or conditions of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
Holder, shall be cumulative and not alternative.
2.6 RIGHTS; SEPARABILITY
--------------------
Unless otherwise expressly provided herein, a Holder's rights hereunder are
several rights, not rights jointly held with any of the other Holders. In case
any provision of the Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
2.7 CONFIDENTIAL INFORMATION
------------------------
Each Holder acknowledges that the information received by them pursuant
hereto may be confidential and for its use only, and it will not use such
confidential information in violation of the Exchange Act or reproduce, disclose
or disseminate such information to any other person (other than its employees or
agents having a need to know the contents of such information, and
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its attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or such Holder is required to disclose such information by a
governmental body.
2.8 TITLES AND SUBTITLES
--------------------
The titles of the paragraphs and subparagraphs of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
2.9 COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement effective as of the day and year first above written.
CURAGEN CORPORATION
By _____________________________
Name:
Title:
GENENTECH, INC.
By _____________________________
Name:
Title:
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