<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
________________
Commission File Number 0-23223
CURAGEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 06-1331400
State or other jurisdiction of (I.R.S. Employer
ncorporation or organization) Identification No.)
555 Long Wharf Drive, 11th Floor, New Haven, Connecticut 06511
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (203) 401-3330
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
The number of shares outstanding of the Registrant's Common Stock as of April
30, 1999 was 13,430,357.
<PAGE>
CURAGEN CORPORATION
FORM 10-Q
INDEX
PART I. Financial Information Page
----
Item 1. Financial Statements
Condensed Balance Sheets,
March 31, 1999 (unaudited) and December 31, 1998 3
Condensed Statements of Operations, for the Three
Months Ended March 31, 1999 and 1998 (unaudited) 4
Condensed Statements of Cash Flows, for the Three
Months Ended March 31, 1999 and 1998 (unaudited) 5
Notes to Condensed Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
PART II. Other Information
Item 2. Changes in Securities and Use of Proceeds 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit Index 12
<PAGE>
CURAGEN CORPORATION
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ -------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 33,841,099 $ 43,293,995
Grants receivable 426,970 600,241
Accounts receivable 28,796 10,400
Other current assets 1,800 1,150
Prepaid expenses 542,788 505,203
------------ -------------
Total current assets 34,841,453 44,410,989
Property and equipment, net 18,918,836 15,900,281
Notes receivable - related parties 90,000 93,500
Other assets 435,881 399,731
------------ -------------
Total assets $ 54,286,170 $ 60,804,501
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,961,405 $ 2,778,000
Accrued bonuses 535,874 841,386
Accrued expenses 561,025 480,450
Accrued payroll 275,805 324,924
Deferred revenue 4,916,667 4,875,000
Deferred rent 103,406 103,406
Current portion of obligations under capital leases 1,937,826 1,942,215
------------ -------------
Total current liabilities 12,292,008 11,345,381
------------ -------------
Long-term liabilities:
Deferred rent, net of current portion 170,643 196,494
Interest payable 21,000 21,000
Obligations under capital leases, net of current portion 6,242,421 6,766,433
------------ -------------
Total long-term liabilities 6,434,064 6,983,927
------------ -------------
Commitments and contingencies
Stockholders' equity:
Common Stock; $.01 par value, issued and outstanding shares
13,430,357 at March 31, 1999, and 13,316,757 at December 31, 1998 134,304 133,168
Additional paid-in capital 72,068,950 72,050,465
Accumulated deficit (36,146,435) (28,939,508)
Unamortized stock based compensation (496,721) (768,932)
------------ -------------
Total stockholders' equity 35,560,098 42,475,193
------------ -------------
Total liabilities and stockholders' equity $ 54,286,170 $ 60,804,501
============ =============
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
CURAGEN CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1999 1998
------------- ------------
<S> <C> <C>
Revenue:
Grant revenue $ 577,464 $ 989,572
Collaboration revenue 2,094,479 1,000,000
------------ ------------
Total revenue 2,671,943 1,989,572
------------ ------------
Operating expenses:
Grant research 380,611 672,153
Collaborative research and development 6,591,459 3,142,553
General and administrative 3,209,067 1,378,990
------------ ------------
Total operating expenses 10,181,137 5,193,696
------------ ------------
Loss from operations (7,509,194) (3,204,124)
Interest income, net 302,267 36,611
------------ ------------
Net loss (7,206,927) (3,167,513)
Preferred dividends - (508,435)
------------ ------------
Net loss attributable to common
stockholders ($7,206,927) ($3,675,948)
============ ============
Basic and diluted net loss per share
attributable to common stockholders ($0.54) ($0.40)
============ ============
Weighted average number of shares used
in computing basic and diluted net
loss per share attributable to
common stockholders 13,402,421 9,187,491
============ ============
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
CURAGEN CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1999 1998
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($7,206,927) ($3,167,513)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,322,647 578,988
Non-monetary compensation 84,751 170,401
Stock-based 401(k) Employer Plan Match 64,539 -
Changes in assets and liabilities:
Grants receivable 173,271 (485,347)
Accounts receivable (18,396) 166,750
Prepaid expenses (49,351) (394,702)
Other current assets 11,116 9,750
Other assets (56,650) (71,566)
Accounts payable 1,183,405 1,871,198
Accrued bonuses (305,512) -
Accrued expenses 80,575 (674,762)
Accrued payroll (49,119) -
Deferred revenue 41,667 625,000
Deferred rent (25,851) 54,102
-------------- -------------
Net cash used in operating activities (4,749,835) (1,317,701)
-------------- -------------
Cash flows from investing activities:
Acquisitions of property and equipment (4,320,703) (2,217,852)
Repayments from (Loans to) - related parties 3,500 (50,000)
-------------- -------------
Net cash used in investing activities (4,317,203) (2,267,852)
-------------- -------------
Cash flows from financing activities:
Payments on capital lease obligations (532,458) (385,351)
Proceeds from issuance of Common Stock - 45,499,980
Proceeds from exercise of employee stock options 146,600 34,380
Redemption of Series B Preferred Stock - (1,967,631)
Payments of stock issuance costs - (3,197,525)
-------------- -------------
Net cash (used in) provided by financing activities (385,858) 39,983,853
-------------- -------------
Net (decrease) increase in cash and cash equivalents (9,452,896) 36,398,300
Cash and cash equivalents, beginning of period 43,293,995 17,417,161
-------------- -------------
Cash and cash equivalents, end of period $ 33,841,099 $ 53,815,461
============== =============
Supplemental cash flow information:
Interest paid $ 248,931 $ 219,004
============== =============
Supplemental schedule of non-cash financing
transactions:
Obligations under capital leases - $51,533
============== =============
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE>
CURAGEN CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
Company's management, the accompanying unaudited condensed financial
statements include all adjustments, consisting of only normal recurring
accruals, necessary to present fairly the financial position, results of
operations and cash flows of the Company. Interim results are not
necessarily indicative of the results that may be expected for the entire
year.
The accompanying condensed financial statements should be read in
conjunction with the audited financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
2. Roche Collaboration
The Company signed a life sciences target discovery and pharmacogenomics
collaboration with F. Hoffmann-La Roche Ltd. and its affiliates,
Hoffmann-La Roche Inc. and Roche Vitamins Inc. effective March 1999. This
agreement outlines strategic partnerships with Roche and its affiliates and
is designed to evaluate existing product candidates, discover new drug
targets, and facilitate the development of drugs and diagnostic tests for
the purposes of improving human and animal health.
3. Recently Enacted Pronouncements
On March 4, 1998, the AICPA issued Statement of Position ("SOP") 98-1,
"Accounting for Costs of Computer Software Developed or Planned for
Internal Use". This SOP provides guidance on accounting for the costs of
computer software developed or obtained for internal use. This SOP requires
that the following costs be capitalized: 1) external direct costs of
materials and services incurred in developing or obtaining internal-use
computer software; 2) payroll and payroll-related costs for employees who
are directly associated with and devote time to the internal-use software
project (to the extent of time spent directly on the project); and 3)
interest costs. Computer software costs that are research and development
should be expensed as incurred. In addition, training costs should be
expensed as incurred. This statement is effective for financial statements
for fiscal years beginning after December 15, 1998, however, earlier
application is encouraged. The Company adopted this pronouncement effective
January 1, 1999 with no material effect on its financial position, or
results of operations.
6
<PAGE>
CURAGEN CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations as of March 31, 1999 and for the three month periods ended March 31,
1999 and 1998 should be read in conjunction with the sections of the Company's
audited financial statements and notes thereto as well as the Company's
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that are included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998.
Overview
CuraGen Corporation (the "Company" or "CuraGen") is a biotechnology company
focusing on the application of genomics to the systematic discovery of genes,
biological pathways and drug candidates in order to accelerate the discovery and
development of the next generation of therapeutic, agricultural and diagnostic
products. The Company was incorporated in November 1991 and, until March 1993,
was engaged primarily in organizational activities, research and development of
the Company's technology, grant preparation and obtaining financing. The
Company has incurred losses since inception, principally as a result of research
and development and general and administrative expenses in support of its
operations. As of March 31, 1999, the Company had an accumulated deficit of
$36,146,435. The Company anticipates incurring additional losses over at least
the next several years as it expands its internal and collaborative gene
discovery efforts, continues development of its technology and expands its
operations. The Company expects that losses will fluctuate from quarter to
quarter and that such fluctuations may be substantial.
Results of Operations
Three Months Ended March 31, 1999 and 1998
Revenue. Revenue for the three months ended March 31, 1999 was $2,671,943, an
increase of $682,371, or 34%, compared to $1,989,572 for the three months ended
March 31, 1998. The increase was largely due to additional collaboration revenue
recorded during the period, under the Company's arrangements with Pioneer Hi-
Bred International, Inc. ("Pioneer") and Glaxo Wellcome, Inc. ("Glaxo"), offset
by a decrease in grant revenue due to the completion of two federal grants
during the first quarter of 1998. The Company expects future revenues will
continue to increase as additional collaborative arrangements are signed.
Operating Expenses. Grant research expenses for the three months ended March
31, 1999 of $380,611 represented a decrease of $291,542, or 43%, compared to
$672,153 for the three months ended March 31, 1998. The decrease in grant
research expenses was primarily attributable to the completion of two federal
grants during the first quarter of 1998, thereby decreasing the costs incurred
by the Company in support of these grants. As a result of the completion of
various federal grants, the Company foresees a continued decline in grant
research expenses in future periods, unless additional grant awards are
received.
Collaborative research and development expenses for the three months ended March
31, 1999 were $6,591,459, compared to $3,142,553 for the three months ended
March 31, 1998. The increase of $3,448,906, or 110%, for the three months ended
March 31, 1999 was primarily attributable to the Company's obligation under
existing collaborations to fulfill research requirements, which resulted in
increased purchases of laboratory supplies, increased equipment depreciation and
facilities expenses, and additional personnel costs. Future collaborative
research and development expenses are expected to increase as additional
personnel are hired and research and development facilities are expanded to
accommodate the Company's additional collaborations and internal research.
General and administrative expenses for the three months ended March 31, 1999
increased 133% to $3,209,067 as compared to $1,378,990 for the three months
ended March 31, 1998. The increase was primarily attributable to the expansion
of administration facilities, increased payroll costs and the incurrence of
related depreciation expense and legal expenses in support of developing the
Company's intellectual property portfolios. Over the next several years, the
Company anticipates that percentage increases in general and administrative
expenses will be proportionate to percentage increases in grant research and
collaborative research and development expenses.
7
<PAGE>
Interest Income, Net. Net interest income for the three months ended March 31,
1999 of $302,267 increased $265,656, or 726%, compared to $36,611 for the first
three months of 1998. The increase was primarily due to gross interest received
on larger cash and cash equivalent balances held by the Company as a result of
the Company's receipt of proceeds from its initial public offering and
concurrent private placements of securities in March 1998.
Net Loss Attributable to Common Stockholders. For the three months ended March
31, 1999, the Company reported a net loss attributable to common stockholders of
$7,206,927 or $0.54 per share as compared to $3,675,948 or $0.40 per share in
1998. Since inception, the Company has incurred operating losses, and as of
March 31, 1999, had an accumulated deficit of $36,146,435 and therefore, has not
paid any federal income taxes. Realization of deferred tax assets is dependent
on future earnings, if any, the timing and amount of which are uncertain.
Accordingly, valuation allowances in amounts equal to the deferred income tax
assets have been established to reflect these uncertainties in all periods
presented.
Liquidity and Capital Resources
As of March 31, 1999, the Company had approximately $34.0 million in cash and
cash equivalents, compared to approximately $43.0 million as of December 31,
1998. This decrease represents the utilization of funds for the purchase of
laboratory and office equipment and leasehold improvements, as well as payment
for laboratory facilities, supplies and payroll costs to support internal and
collaborative research processes. The Company has financed its operations since
inception primarily through its initial public offering of Common Stock, private
placements of equity securities, government grants, collaborative research and
development agreements and capital leases. As of March 31, 1999, the Company
had recognized $24,109,072 of cumulative sponsored research revenues from
government grants and collaborative research agreements. To date, inflation has
not had a material effect on the Company's business.
The Company's investing activities have consisted primarily of acquisitions of
equipment and expenditures for leasehold improvements. At March 31, 1999, the
Company's gross investment in equipment, computers and leasehold improvements
since inception was $24,421,106. At March 31, 1999, equipment with a gross book
value of $10,853,053 secures the Company's equipment financing facility for
equipment and tenant improvements in support of the laboratory expansions at the
New Haven, Connecticut, Branford, Connecticut and Alachua, Florida locations.
The Company had a material commitment for capital expenditures of approximately
$1.5 million at March 31, 1999, consisting of machinery and equipment in support
of its SeqCalling(TM) and GeneCalling(R) research processes.
Net cash used in operating activities was $4,749,835 for the three months ended
March 31, 1999, compared to $1,317,701 for the same period ended March 31, 1998.
Cash outflows for the three months ended March 31, 1999 included acquisitions of
property and equipment and payments on capital lease obligations, while cash
inflows primarily included proceeds from common stock option activity.
At March 31, 1999, the Company had federal and Connecticut net operating loss
carryforwards for income tax purposes of approximately $35,400,000. Federal net
operating loss carryforwards expire beginning in 2008, and Connecticut net
operating loss carryforwards began expiring in 1998. The Company also has
federal and Connecticut research and development tax credit carryforwards for
income tax purposes of approximately $1,900,000 and $2,900,000, respectively at
March 31, 1999.
Year 2000 Compliance
The "Year 2000 Problem" arose because many existing computer programs use only
the last two digits to refer to a year. Therefore, these computer programs may
recognize a year that ends in "00" as the Year 1900 rather than the Year 2000.
This could result in a significant disruption of operations and an inability to
process certain transactions.
Strategic Plan
Early in 1998, upon going public, the Company assessed its internal computer
systems. It was determined that, because its computer applications use four
digits to identify a year in the field date, the Company was in fact internally
compliant with Year 2000 requirements. However, the Company has developed a
strategic plan to estimate the potential risks related to third parties, with
which it has relationships, including third parties that provide non-information
technology systems to the Company. The third parties include financial
institutions,
8
<PAGE>
vendors, payroll service providers, collaborative partners, utility companies
and granting agencies. If any of these third parties encounter Year 2000
problems, it could potentially have a significant outcome on the ability of the
Company to effectively continue its normal daily operations.
The initial stage, which is still being completed by the Company, has included
distribution of inquiry letters to its most significant third parties, followed
by internal evaluation of the responses received. As of April 30, 1999,
responses to approximately 75% of the inquiry letters were received. Several of
those responses require follow-up to obtain further clarification of third party
internal assessments. During the second quarter of 1999, the Company will
directly contact those third parties that have not yet responded to the inquiry
letters.
Upon learning that certain third parties are not Year 2000 compliant, the
Company may be required to manually process transactions, delay vendor payments,
and/or issue manual checks to employees in place of direct deposits. These
processes, if necessary, would be a part of the second stage - implementation,
in which the Company would correct and/or replace any vendors or vendor software
that is not Year 2000 compliant, as soon as is feasible.
Costs
There have been no historical costs incurred to date by the Company related to
Year 2000 compliance. Although the Company originally expected to complete the
initial stage by the end of the first quarter of 1999, due to the delay in
receiving complete responses from third parties, the Company now expects to
complete the initial stage of the Year 2000 Strategic Plan by August 1999.
While the Company cannot predict what impact the Year 2000 problem may have on
third parties, it does not currently believe that it will incur material costs
in the implementation stage of resolving potential Year 2000 problems of third
parties with whom it electronically interacts.
Risks
Once the initial stage of the Company's strategic plan is completed, the Company
will assess the potential risks associated with non-compliance of its external
third parties. While it is understood by the Company that the potential effect
on results of operations could be serious and could have a material adverse
affect on the Company's business or financial condition, at this time management
has not determined the entire potential level of risk.
Contingency Plan
At the present time, a contingency plan has not been developed. The Company
will continue to monitor the need for a contingency plan based on the results of
its Year 2000 compliance strategic plan.
Recently Enacted Pronouncements
On March 4, 1998, the AICPA issued Statement of Position ("SOP") 98-1,
"Accounting for Costs of Computer Software Developed or Planned for Internal
Use". See Note 3 of Notes to Condensed Financial Statements.
Certain Factors That May Affect Results of Operations
This report may contain forward-looking statements that are subject to certain
risks and uncertainties. These statements include statements regarding the
expected future levels of losses, potential quarterly fluctuations in the levels
of losses, the expected future increase in revenues and collaborative research
and development expenses, the expected future decrease in grant research
expenses, the anticipated increases in general and administrative expenses, as
well as the Company's Year 2000 readiness. Such statements are based on
management's current expectations and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. The Company cautions investors
that there can be no assurance that actual results or business conditions will
not differ materially from those projected or suggested in such forward-looking
statements as a result of various factors, including, but not limited to, the
following: the Company's early stage of development, technological uncertainty
and product development risks, uncertainty of additional funding, reliance on
research collaborations, competition, the Company's ability to protect its
patents and proprietary rights and uncertainties relating to commercialization
rights. For further information, refer to the more specific risks and
uncertainties discussed throughout this discussion and analysis.
9
<PAGE>
Part II - Other Information
Item 2. Changes in Securities and Use of Proceeds
In connection with the Company's initial public offering, the Company sold
3,275,000 shares of its Common Stock and received net offering proceeds of
$33,160,350. On March 17, 1998, the Securities and Exchange Commission declared
the Company's Registration Statement on Form S-1 (File No. 333-38051) effective.
The following table sets forth the Company's cumulative use of net offering
proceeds as of March 31, 1999:
<TABLE>
<S> <C>
Construction of plant, building and facilities $ 455,493
Purchase and installation of machinery and equipment 5,520,652
Purchase of Real Estate 0
Acquisition of other businesses 0
Repayment of indebtedness 1,967,631
Working Capital 12,726,601
Temporary Investments:
Cash and cash equivalents 12,489,973
All other purposes 0
</TABLE>
The foregoing use of net offering proceeds does not represent a material change
in the use of proceeds described in the Registration Statement.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 10.1* - Agreement, dated March 1999, by and among
the Registrant, F. Hoffmann-LaRoche Ltd., Roche Vitamins,
Inc. and Hoffmann-La Roche, Inc.
Exhibit 11 - Computation of Net Loss Per Share Attributable to
Common Stockholders
Exhibit 27 - Financial Data Schedule
_________________
* Confidential Treatment requested as to certain portions, which
portions are omitted and filed separately with the Commission.
B. Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended March 31,
1999.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 14, 1999 CuraGen Corporation
By: /s/ Jonathan M. Rothberg, Ph.D.
--------------------------------
Jonathan M. Rothberg, Ph.D.
Chief Executive Officer, President and
Chairman of the Board
By: /s/ David M. Wurzer
--------------------
David M. Wurzer
Executive Vice-President, Treasurer
and Chief Financial Officer, (principal
financial and accounting officer of the
registrant)
11
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CURAGEN CORPORATION
EXHIBIT INDEX
No.
---
10.1* Agreement, dated March 1999, by and among the Registrant, F.
Hoffmann-LaRoche Ltd., Roche Vitamins, Inc. and Hoffmann-La Roche, Inc.
11 Computation of Net Loss Per Share Attributable to Common Stockholders
27 Financial Data Schedule
______________
* Confidential Treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
<PAGE>
CuraGen Corporation has omitted from this Exhibit 10.1 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.
Exhibit 10.1
AGREEMENT
Agreement made as of the 1st day of January, 1999, ( "Effective Date"),
among Roche Vitamins Inc., a Delaware corporation, having its principal place of
business at 45 Waterview Boulevard, Parsippany, New Jersey 07054 ("RVI"),
Hoffmann-La Roche Inc., a New Jersey corporation having its principal place of
business at 340 Kingsland Street, Nutley, New Jersey ("HLR Inc."),
F.Hoffmann-LaRoche Ltd, a Swiss corporation having its principal place of
business at Grenzacherstrasse 124, CH-4070 Basel, Switzerland ("HLR Ltd"), (RVI,
HLR Inc. and HLR Ltd are sometimes collectively referred to as "ROCHE," and HLR
Inc. and HLR Ltd are sometimes collectively referred to as "HLR") and CuraGen
Corporation, a Delaware corporation, having its principal place of business at
555 Long Wharf Drive, 11th Floor, New Haven, Connecticut 06511 ("CURAGEN").
ARTICLE I - BACKGROUND
WHEREAS, CURAGEN has developed a comprehensive suite of functional
genomics technologies and processes (including SeqCalling(TM), GeneCalling(R)
and PathCalling(TM)); and bioinformatics software (including GeneScape(R) and
CuraTools(TM)) (collectively "Discovery Tools");
WHEREAS, ROCHE and CURAGEN wish to initiate a collaboration to use the
Discovery Tools in order to enable and expedite the discovery of information and
the development of novel animal and human health and diagnostic products (the
"Discovery Collaboration");
<PAGE>
WHEREAS, ROCHE wishes to obtain certain rights to inventions made in
the performance of the Discovery Collaboration pursuant to this Agreement;
NOW THEREFORE, in consideration of the foregoing premises, ROCHE and
CURAGEN agree to undertake the foregoing, under the terms and conditions set
forth in this Agreement.
ARTICLE II - DEFINITIONS
2.00 - Terms
Terms used in this Agreement (other than the names of parties and article
headings) that are set forth with an initial capital letter have the meanings
established for such terms in the succeeding paragraphs of this Article II, or
as otherwise specifically defined hereinafter.
2.01 - Adjusted Gross Sales
Shall mean gross sales of Roche Product by Roche or its Affiliates or
sublicensees to a Third Party or gross sales of a CURAGEN Human Health Product
by CURAGEN or its Affiliates or sublicensees to a Third Party, as the case may
be, less, in either case, deductions for returns (including withdrawals and
recalls), rebates (price reductions, including Medicaid and similar types of
rebates, such as chargebacks), volume (quantity) discounts, discounts granted at
the time of invoicing, sales taxes and other taxes to the extent such amounts
are included in gross sales (other than income or excise taxes, customs or
duties).
2.02 - Affiliate
Affiliate shall mean any person, 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" or "Controlled" 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
2
<PAGE>
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, or the
ability to cause the direction of the management or policies of a corporation or
other entity. The term Affiliate shall not include Genentech, Inc., located at
One DNA Way, South San Francisco, California and its subsidiaries.
2.03 - Animal Diagnostic Products
Shall mean products that are labeled or intended for use for diagnostic purposes
in animals, alone and in conjunction with Animal Nutrition and Health Products,
including for use in animal selection, disease identification, and/or
predisposition to disease identification, and treatment guidance and/or
monitoring as might be the case for Animal Nutrition and Health Products; or
strain identification and selection and/or process monitoring as might be the
case for Animal Nutrition and Health Products that are Microbial Products.
2.04 - Animal Nutrition and Health Products
Shall mean products that are [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
2.05 - Antibody
Shall mean an immunoglobulin molecule that has a specific amino acid sequence by
virtue of which it specifically interacts with a target antigen. Antibodies
shall include any naturally occurring or recombinant forms of such an
immunoglobulin including (a) chimeric or humanized constructs, (b) fragments of
such immunoglobulins containing functional binding or effector epitopes such as
F(ab)'s, F(ab)2, or single chain Fv's, or (c) fusion constructs including
antibodies or fragments of antibodies conjugated to other macromolecules or
antibody fragments, i.e., immunotoxins or bispecific antibodies.
2.06 - Completion
3
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With respect to a Discovery Project Data Set, Completion shall mean the date
upon which substantially all the electrophoresis data contemplated in the
associated Discovery Plan is (i) entered into GeneScape(TM) and (ii) made
available for viewing by HLR or RVI, as the case may be.
2.07 - Confidential Information
Shall have the meaning set forth in Article 6.00 and shall be interpreted in
accordance with the provisions of Article VI, below.
2.08 - CURAGEN Background Inventions
Shall mean all patent rights and know-how of CURAGEN which would be infringed by
ROCHE's making, having made, using , selling, offering for sale, or importing of
a ROCHE Product but for this Agreement. Specifically excluded from CURAGEN
Background Inventions are patent rights and know-how owned or controlled by
CURAGEN prior to ROCHE's request to license such patent rights and know-how and
which cover the making, using or selling of a product for which CURAGEN has
preclinical data prior to such time.
2.09 - CURAGEN Collaboration Intellectual Property Rights
Shall mean all intellectual property rights owned or controlled by CURAGEN,
including, but not limited to, patents, trademarks, copyrights, know-how and
trade secrets, that arise from CURAGEN's activities in the Discovery
Collaboration and/or relate to Discovery Project Inventions, including without
limitation, CURAGEN's rights and interest in Patent Rights.
2.10 - CURAGEN Human Health Products
Shall mean all Human Health Products that are not HLR Human Health Products,
provided that such products, or their discovery, development, production,
importation, use or sale, i) infringe a Valid Claim of the Patent Rights, and/or
ii) incorporate or make material use of any Discovery Project Data Set and/or
Discovery Project Inventions.
2.11 - CURAGEN Other Products
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Means all products that are not ROCHE Products or CURAGEN Human Health Products,
provided that such products, or their discovery, development, production,
importation, use or sale, i) infringe a Valid Claim of the Patent Rights, and/or
ii) incorporate or make material use of any Discovery Project Data Set and/or
Discovery Project Inventions.
2.12 - CURAGEN Product(s)
Shall mean the following products, provided that such products, or their
discovery, development, production, importation, use or sale, i) infringe a
Valid Claim of the Patent Rights, and/or ii) incorporate or make material use of
any Discovery Project Data Set and/or Discovery Project Inventions:
(a) CURAGEN Human Health Products
(b) CURAGEN Other Products
2.13 - CURAGEN Proprietary Material
Shall mean all substances made by CURAGEN in the performance of the Discovery
Collaboration other than nucleic acid pools extracted from ROCHE Proprietary
Material.
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2.14 - Discovery Collaboration
Shall mean the collection of Discovery Projects to be performed by the Parties
under this Agreement as described in the Discovery Plan and amendments thereto.
2.15 - Discovery Collaboration Term
Shall have the meaning set forth in Article 3.11.
2.16 - Discovery Plan
Shall mean the written description of the individual research to be performed by
CURAGEN and ROCHE and any of its Affiliates under an individual Discovery
Project, as presented in the form shown in GeneScape(R). Any such Discovery Plan
shall be attached hereto as an Addendum to this Agreement and shall include the
responsibilities of CURAGEN and ROCHE (or its Affiliates) in connection with
such Discovery Project as well as the estimated completion of same.
2.17 - Discovery Project
Shall mean (i) a particular project to process and analyze a specified set of
samples relevant to the discovery or development of a ROCHE Product, as
anticipated in a Discovery Plan; (ii) SeqCalling(TM) projects designed to
sequence genomic or cDNA relevant to the discovery or development of a ROCHE
Product; or (iii) any other project mutually agreed to by the Parties. An "RVI
Discovery Project" shall mean a Discovery Project [XXXXXXXXXXXXXXXXXXX] An "HLR
Discovery Project" shall mean a Discovery Project [XXXXXXXXXXXXXXXXX].
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2.18 - Discovery Project Data
Shall mean all data and any other information obtained or generated by CURAGEN
in the performance of a Discovery Project in the Discovery Collaboration.
2.19 - Discovery Project Data Set
Shall mean all Discovery Project Data resulting from a discrete Discovery
Project. An "RVI Discovery Project Data Set" shall mean a Discovery Project Data
Set resulting from an RVI Discovery Project. An "HLR Discovery Project Data Set"
shall mean a Discovery Project Data Set resulting from an HLR Discovery Project.
2.20 -Discovery Project Invention
Shall mean any Target or Optimization Panel discovered by or on behalf of a
party to this Agreement through the material use of any Discovery Project Data
Set and any other discovery, invention, know-how or trade secret conceived, made
or reduced to practice in the performance of the Discovery Collaboration by or
on behalf of a party to this Agreement, including any discovery, invention,
know-how or trade secret conceived, made or reduced to practice by employees of
CURAGEN or ROCHE (or an Affiliate of ROCHE), or jointly by employees of both, as
well as any non-employees working for ROCHE (or an Affiliate of ROCHE) on its
behalf or for CURAGEN on CURAGEN's behalf, in the performance of the Discovery
Collaboration.
2.21 - Discovery Tools
Shall have the meaning set forth in the first WHEREAS clause.
2.22 - Field
The field of this Discovery Collaboration shall be in the areas of Animal
Nutrition and Health Products, HLR Human Health Products, HLR Human Diagnostic
Products and Animal Diagnostic Products.
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2.23 - FTE
Is an acronym that stands for Full Time Equivalent, which shall mean the
equivalent of a full year of effort on a full time basis, i.e., approximately
[XXXXXXXXXXXXXXXXXX].
2.24 - HLR Human Diagnostic Products
Shall mean products that are labeled or intended for use for human in vitro
diagnostic purposes, provided that such products, or their discovery,
development, production, importation, use or sale, i) infringe a Valid Claim of
the Patent Rights arising from an HLR Discovery Project, and/or ii) incorporate
or make material use of any HLR Discovery Project Data Set and/or Discovery
Project Inventions arising from an HLR Discovery Project. For the purpose of
this Article, "diagnostic purposes" shall mean [XXXXXXXXXXXXXXXXXXXXXXXXX].
2.25 - HLR Human Health Products
Shall mean Human Health Products arising from an HLR Discovery Project in which
the active ingredient is a Small Molecule or Antibody, provided that such
products, or their discovery, development, production, importation, use or sale,
i) infringe a Valid Claim of the Patent Rights arising from an HLR Discovery
Project, and/or ii) incorporate or make material use of any HLR Discovery
Project Data Set and/or Discovery Project Inventions arising from an HLR
Discovery Project.
2.26 - HLR Human Products
Shall mean the following products, provided that such products, or their
discovery, development, production, importation, use or sale, i) infringe a
Valid Claim of the Patent Rights arising from an HLR Discovery Project, and/or
ii) incorporate or make direct and material use of any HLR Discovery Project
Data Set and/or Discovery Project Inventions arising from an HLR Discovery
Project:
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(a) HLR Human Health Products
(b) HLR Human Diagnostic Products
2.27 - Human Health Products
Shall mean products for the prevention, treatment or cure of a disease in
humans, utilizing any human therapeutic modalities [XXXXXXXXXXXXXXXXXXXXXXXX].
2.28 - IND
Shall mean an Investigational New Drug Application filed with the US FDA or an
equivalent application filed with the appropriate regulatory authorities of any
country seeking approval to commence human clinical trials of a HLR Human Health
Product.
2.29 - Lead Selection
Lead Selection for a Small Molecule is achieved when a [XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
Lead selection for an Antibody is achieved when [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
2.30 - License Term
Shall have the meaning set forth in Article 8.12.
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2.31 - LOI
Shall mean the Letter of Intent dated December 21, 1998, as amended by Letter
Agreement dated January 15, 1999, a copy of which is attached hereto as
Exhibit 1.
2.32 - Microbial Products
Shall mean products that are microbes (including, but not limited to bacteria,
viruses and bacteriophage) for use in animal care, production or processing or
that promote animal health and nutrition.
2.33 -NADA
Shall mean a New Animal Drug Application filed with the US FDA or an equivalent
application filed with the appropriate regulatory authorities of any country
seeking authority to begin the sale of an Animal Nutrition and Health
Product.
2.34 - NDA
Shall mean a New Drug Application or Product License Application filed with the
US FDA or an equivalent application filed with the appropriate regulatory
authorities of any country seeking authority to begin the sale of an HLR Human
Health Product.
2.35 - Net Sales
(a) Shall mean, with respect to ROCHE Product(s), [XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
(b) Net Sales shall not include sales or transfers between ROCHE or
CURAGEN and its respective Affiliates or sublicensees, unless the ROCHE Products
or CURAGEN Human Health Products, as the case may be, are consumed by the
Affiliate or sublicensee.
For a ROCHE Product or a CURAGEN Human Health Product containing (a)
one or more pharmaceutically active ingredients which are ROCHE Product(s) or
CURAGEN Human Health Product(s) (a "Collaboration Product") and (b) one or more
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other pharmaceutically active ingredients which are not Collaboration Products
and which have independent therapeutic effect when administered separately from
the [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
If, after good faith negotiations (not to exceed ninety (90) days),
the parties cannot agree to an appropriate adjustment, Net Sales shall be equal
to [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
2.36 - Optimization Panel
Shall mean one or more genes [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
2.37 - Party or Parties
Shall mean ROCHE (including each of RVI and HLR) or CURAGEN or both, as
appropriate.
2.38 - Patent Rights
Means the rights and interests in and to issued patents and pending patent
applications without limitation to any country, including, but not limited to,
all provisional applications, substitutions, continuations, continuations-in-
part, divisions, and renewals, all letters patent granted thereon, and all
reissues, reexaminations and extensions thereof, and Supplemental Protection
Certificates relating thereto whether owned solely or jointly by a Party or
licensed in by a Party, with the right to grant sublicenses, now or in the
future, wherein the invention claimed in at least one claim of such patents or
patent applications arises from a Discovery Project Invention.
2.39 - ROCHE Background Inventions
Shall mean all patent rights and know-how of ROCHE which would be infringed by
CURAGEN's making, having made, using, selling, offering for sale, or importing
of a CURAGEN Product but for this Agreement. Specifically excluded from ROCHE
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Background Inventions are (i) patent rights and know-how owned or controlled by
ROCHE prior to CURAGEN's request to license such patent rights and know-how and
which cover the making, using or selling of a product for which ROCHE has
preclinical data prior to such time, and (ii) ROCHE's patent rights and know-how
for PCR technology.
2.40 -ROCHE Collaboration Intellectual Property Rights
Shall mean all intellectual property rights owned or controlled by ROCHE,
including, but not limited to, patents, trademarks, copyrights, know-how and
trade secrets, that arise from ROCHE's activities in the Discovery Collaboration
and/or relate to Discovery Project Inventions, including without limitation,
ROCHE's rights and interest in Patent Rights.
2.41 - ROCHE Product(s)
Shall mean, collectively, Animal Nutrition and Health Products, Animal
Diagnostic Products, HLR Human Health Products and HLR Human Diagnostic
Products, provided that such products, or their discovery, development,
production, importation, use or sale, i) infringe a Valid Claim of the Patent
Rights, and/or ii) incorporate or make material use of any Discovery Project
Data Set and/or Discovery Project Inventions.
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2.42 - ROCHE Proprietary Material
Shall mean samples provided by ROCHE to CURAGEN for the purpose of performing
the Discovery Collaboration and shall also be deemed to include the nucleic
acids and other substances actually contained in such samples.
2.43 - RVI Products
Shall mean the following products, provided that such products, or their
discovery, development, production, importation, use or sale, i) infringe a
Valid Claim of the Patent Rights, and/or ii) incorporate or make direct and
material use of any Discovery Project Data Set and/or Discovery Project
Inventions:
(a) Animal Diagnostic Products; and
(b) Animal Nutrition and Health Products.
2.44 - Small Molecule
Shall mean [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
2.45 - Steering Committee(s)
Shall mean one or both of the steering committees to be established as provided
in Article 3.05, as the context requires.
2.46 - Target
Shall mean any [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
2.47 - Territory
Shall mean all countries of the world.
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2.48 - Third Party
Shall mean any person, corporation, firm, limited liability company,
partnership, or other entity, which is not a Party or an Affiliate of a Party.
2.49 - Valid Claim(s)
Shall mean an unexpired claim of (i) 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, or (ii) any pending patent application within Patent
Rights which has not been finally rejected by a patent office of competent
jurisdiction in any unappealed or unappealable decision.
ARTICLE III - DISCOVERY COLLABORATION
3.00 - Basic Provisions of the Discovery Collaboration
(a) The objective of the Discovery Collaboration will be for the
Parties to perform Discovery Projects within the Field, which shall include
efforts by CURAGEN to generate Discovery Project Data Sets using the Discovery
Tools and the delivery of such Discovery Project Data Sets to RVI or HLR and the
analysis and use of such Discovery Project Data Sets by RVI or HLR and CURAGEN
to develop products.
(b) As of the Effective Date of this Agreement it is understood and
agreed that CURAGEN shall, unless otherwise mutually agreed, devote [XXXX] FTEs
[XXXX] FTEs shall be devoted to RVI Discovery Projects and [XXXX] to HLR
Discovery Projects) to the Discovery Collaboration for calendar year 1999
(including the period prior to the Effective Date when FTEs were utilized
pursuant to the LOI) and each calendar year thereafter. It is further understood
and agreed that ROCHE may, at any time during the initial term of this Agreement
increase the total number of FTE's to a [XXXXXXXXX] at the FTE rate set forth in
Article V hereinbelow. ROCHE may request such an increase in the number of FTE's
to be effective within ninety (90) days of such request. CURAGEN shall act
promptly to provide such increased FTE's.
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3.01 - Collaborative Efforts and Reports
(a) The Parties agree that the successful execution of the Discovery
Collaboration will require the collaborative use of both Parties' area of
expertise. The Parties shall keep the Steering Committee fully informed about
the status of the portions of the Discovery Collaboration they respectively
perform. In particular, without limitation, each Party shall furnish to the
Steering Committee quarterly written reports within thirty (30) days after the
end of each quarterly period, describing the progress of its activities in
reasonable detail, including (i) a summary of the progress of any ongoing
Discovery Projects, (ii) a summary of uses of Discovery Project Data, including
but not limited to ROCHE's (or any of its Affiliates) activities with regard to
transfer of any such Discovery Project Data to ROCHE's databases outside of the
GeneScape(R) database, and (iii) a description of Discovery Project Data Sets
from completed Discovery Projects. At any time, upon the reasonable request of
ROCHE (or any of its Affiliates), CURAGEN will provide an update of the status
of ongoing Discovery Projects to ROCHE (or any of its Affiliates).
(b) Scientists at CURAGEN and ROCHE shall cooperate in the performance
of the Discovery Collaboration and, subject to any confidentiality obligations
to third parties, shall exchange information and materials (including ROCHE
Proprietary Material) as necessary to carry out the Discovery Collaboration.
Each Party will attempt to accommodate any reasonable request of the other Party
to send or receive personnel for purposes of collaborating or exchanging
information under the Discovery Collaboration. Such visits and/or access will
have defined purposes and be scheduled in advance. Each Party will bear its own
travel and lodging costs related to such meetings.
(c) CURAGEN will give written notice to ROCHE and the Steering
Committee upon Completion of the Discovery Project Data Set from each Discovery
Project.
(d) CURAGEN shall set up and maintain, throughout the Discovery
Collaboration Term, a secure partition of its GeneScape(R) database and software
for use by ROCHE and CURAGEN exclusively for the purposes of performing the
Discovery Collaboration, and shall provide online electronic mail and telephone
help
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during normal business hours in New Haven, CT, in the use thereof to ROCHE.
CURAGEN and ROCHE shall jointly set up and maintain a secure connection to said
partition of the GeneScape(R) database and software in order to give ROCHE on-
line access thereto. ROCHE shall have no rights to use the GeneScape(R) database
and software except as expressly set forth herein and shall have no rights to
provide access to the GeneScape(R) database and/or other CURAGEN software or
databases to Third Parties without the prior written consent of CURAGEN. In the
event the Parties agree that a dedicated line or lines is or are needed to
provide access, ROCHE shall be responsible for all costs associated therewith.
3.02 - Training
ROCHE will assign six ROCHE individuals to become "internal experts" on
the use of GeneScape(R) with the intent of having those individuals be the
primary contacts with CURAGEN and having those individuals be available to
provide internal training and support to ROCHE users. CURAGEN shall provide
training to such internal experts (in the same training program to the extent
reasonably practicable) in the amount that is commercially reasonable at no
additional cost to ROCHE. CURAGEN will also provide training at CURAGEN's
facilities to other ROCHE personnel involved in Discovery Projects upon request
of ROCHE, with the time involved in such training being charged against ROCHE's
FTE allocation.
3.03 - Discovery Plans
Projected Discovery Plans (semi-annual for HLR and annual for RVI) for
the Discovery Collaboration shall be agreed upon by the Parties no later than
thirty (30) days after the date of execution hereof and shall include the
initial Discovery Projects and plans to implement access to the GeneScape(R)
database and software for ROCHE. Periodically during the Discovery Collaboration
Term (no less than on a quarterly basis) or at any time on request of either
ROCHE or CURAGEN, the Discovery Plan shall be updated by the Parties, either
directly or through the Steering Committee, to reflect changes thereto as well
as progress made to date on such plan and such revised Discovery Plan shall be
approved by the Steering Committee no later than thirty (30) days following
their receipt thereof. Nothing in this Agreement shall be interpreted as
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<PAGE>
obligating ROCHE or CURAGEN to perform any additional work beyond that set forth
in any approved Discovery Plan.
3.04 - Exclusivity
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
3.05 - Steering Committee(s)
(a) Two Steering Committees, one for RVI Discovery Projects and one for
HLR Discovery Projects, will be established by the Parties as provided below and
will be responsible for the planning and monitoring of the Discovery
Collaboration. In particular, the activities of the Steering Committees shall
include:
(i) Approving Discovery Projects proposed by HLR or RVI and
their associated Discovery Plans and establishing prioritization criteria for
specific Discovery Projects, including explicit determination of proposed dates
for experimental initiation and Completion;
(ii) Monitoring workflow, including experimental sample
transfer, sample analysis and data quality control, database posting, data
analysis and summarization, software installation (access), training and
maintenance;
(iii) Monitoring of sample throughput, specific Discovery
Project and overall Discovery Collaboration progress;
(iv) Ensuring timely disclosure of Discovery Project
Inventions and the development and implementation of patenting strategies; and
(v) Assigning tasks and responsibilities taking into account
each Party's respective specific capabilities and expertise in order to avoid
duplication and enhance efficiency and synergies.
(b) In addition, during the Discovery Collaboration, XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
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XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXX].
3.06 - Composition of Steering Committees
Within thirty (30) days following the execution of this Agreement, a
separate Steering Committee shall be established for each of HLR and RVI. The
task of each Steering Committee will be to direct and monitor the scientific
activities to be conducted under the relevant part of the Discovery
Collaboration. Each Steering Committee shall be composed of an equal number (but
no more than three) representatives from each of CURAGEN and ROCHE. One
representative of ROCHE will chair each respective Steering Committee. Except as
set forth below, a Steering Committee member may delegate his/her duties to
another employee of his/her organization. Each Party shall have the right to
substitute their representatives at any time during the term of this Agreement
by providing written notice to the other Party. However, substitution should be
avoided whenever possible. Other employees of ROCHE or CURAGEN may attend
meetings of the Steering Committee as needed. These other members will not
participate in the decision process.
3.07 - Steering Committee Meetings
The Steering Committees shall meet at least monthly, with such meetings
to be held, alternately, in New Haven, Connecticut, and at ROCHE's facilities in
Nutley, New Jersey, unless the Parties agree otherwise. Meetings may also be
held by conference telephone or videoconference.
3.08 - Minutes of Steering Committee Meetings
Each Steering Committee shall keep accurate minutes of its
deliberations which shall include all proposed decisions and all actions
recommended or taken. Drafts of minutes shall be delivered to the members of
such Steering Committee within ten (10) days after any 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 Steering Committee
members and shall be issued in final form only with the approval and agreement
of the Steering Committee as evidenced by the signature on the minutes of a
designated representative of each of CURAGEN and ROCHE.
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3.09 - Quorum; Voting, Decisions
At each Steering Committee meeting, at least two (2) members appointed
by each Party present in person or by telephone shall constitute a quorum and
decisions shall be made by majority vote. Each Steering Committee member shall
have one vote on all matters before the Steering Committee provided that the
member or members of each Party present at a Steering Committee meeting shall
have the authority to cast the votes of any of such Party's members on the
Steering Committee who are absent from the meeting. Notwithstanding the
foregoing, the objective of the Parties to this Agreement is that decisions of
the Steering Committee shall be made by consensus. However, except as otherwise
set forth herein, in the event that a Steering Committee is unable to resolve
any matter before it as set forth above, other than a matter of the type
described in Article 3.05(b), such matter shall be resolved in good faith by the
RVI Director of Research, in the case of the RVI-CURAGEN Steering Committee, and
the Vice President of Preclinical Research & Development of HLR Inc., in the
case of the HLR-CURAGEN Steering Committee.
3.10 - Expenses
CURAGEN and ROCHE shall each bear all expenses of their respective
Steering Committee members related to their participation on the Steering
Committee and attendance at Steering Committee meetings.
3.11 - Discovery Collaboration Term
The initial term of the Discovery Collaboration hereunder shall be for
a period of two (2) years with an option to extend the same for [XXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX] by HLR or RVI or both, it being understood that
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
The term of the Discovery Collaboration, as extended pursuant to this Article,
is referred to herein as the "Discovery Collaboration Term."
3.12 - Conflict with Preexisting CURAGEN Projects
Both Parties acknowledge that certain proposed Discovery Projects may
be encumbered, due to a preexisting duty or obligation to third parties, in such
a way as to
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prevent or restrict CURAGEN's ability to fully perform its obligations
hereunder. ROCHE hereby agrees that CURAGEN may satisfy its obligations
hereunder with respect to any such proposed Discovery Project by submitting to
ROCHE a letter signed by an officer of CURAGEN certifying that such a proposed
Discovery Project is subject to a preexisting duty or obligation by CURAGEN to a
third party and cannot be undertaken because of such duty. CURAGEN represents
and warrants to ROCHE that there is no such preexisting duty or obligation with
respect to the Discovery Projects presented to CURAGEN prior to or upon the
execution of this Agreement.
ARTICLE IV - DATA ACCESS; SOFTWARE ACCESS AND LICENSE
4.00 - ROCHE's Access to Discovery Project Data Sets and Discovery Project
Inventions
(a) RVI Products. Subject to compliance with Article VIII, and subject
to CURAGEN's license and right of access as set forth in Article 4.01 and
Article IX, during the Discovery Collaboration Term and thereafter, RVI shall
have exclusive access to each RVI Discovery Project Data Set for the purpose of
discovering and developing RVI Products. In addition, for each RVI Discovery
Project Data Set, CURAGEN grants to RVI a fully paid, worldwide, sole and
exclusive license under the CURAGEN Collaboration Intellectual Property Rights
and CURAGEN Background Inventions during the Discovery Collaboration Term and
thereafter to use the Discovery Project Inventions related to such RVI Discovery
Project Data Set for the purpose of discovering and developing RVI Products. RVI
shall have the right to make RVI Discovery Project Data Sets available to Third
Parties for the purpose of discovering and developing RVI Products.
(b) HLR Human Products.
(i) Subject to compliance with Article VIII, and subject to
CURAGEN's license and right of access as set forth in Article
4.01 and Article IX, for a period of one year beginning on the
first day of the calendar quarter following the calendar
quarter in which a particular HLR Discovery Project Data Set
reaches Completion, HLR shall have
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exclusive access to such HLR Discovery Project Data Set for the
purpose of discovering and developing HLR Human Products. In
addition, CURAGEN grants to HLR a fully paid, worldwide, sole
and exclusive license under the CURAGEN Collaboration
Intellectual Property Rights and CURAGEN Background Inventions
relating to such Discovery Project Data Set during such one
year period to use Discovery Project Inventions related to such
HLR Discovery Project Data Set for the purpose of discovering
and developing HLR Human Products.
(ii) HLR may (x) extend the exclusivity of the access and license
granted by Article 4.00(b)(i) for any HLR Discovery Project
Data Set and the Discovery Project Inventions related to such
HLR Discovery Project Data Set for both HLR Human Health
Products and HLR Human Diagnostic Products for up to two (2)
additional one-year periods by written notice to CURAGEN given
at least sixty (60) days prior to the end of the then current
year of exclusivity of such access and license and upon payment
with such notice of an extension fee of $250,000 for each year
of extension, or (y) extend the exclusivity of the access and
license granted by Article 4.00(b)(i) for any HLR Discovery
Project Data Set and the Discovery Project Inventions related
to such HLR Discovery Project Data Set for HLR Human Diagnostic
Products only for up to two (2) additional one-year periods by
written notice to CURAGEN given at least sixty (60) days prior
to the end of the then current year of exclusivity of such
access and license and upon payment with such notice of an
extension fee of $75,000 for each year of extension.
(iii) If at any time during the initial Discovery Collaboration Term
(or any extension thereof) while HLR has exclusive access to an
HLR Discovery Project Data Set under Article 4.00(b)(i) or
4.00(b)(ii)(x), HLR desires permanent sole and exclusive access
to such HLR Discovery Project Data Set for the purpose of
discovering and developing HLR Human Products, and a permanent
exclusive license
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under the CURAGEN Collaboration Intellectual Property Rights
and CURAGEN Background Inventions relating to such Discovery
Project Data Set to use Discovery Project Inventions related to
such HLR Discovery Project Data Set for the purpose of
discovering and developing HLR Human Products, and an exclusive
license pursuant to Article 8.00(c) for HLR Human Products
under CURAGEN Collaboration Intellectual Property Rights
arising from the specific HLR Discovery Project to which such
HLR Discovery Project Data Set relates, HLR shall give written
notice to CURAGEN, specifying the HLR Discovery Project Data
Set involved. Such notice shall be accompanied by payment of a
fee of One Million Dollars ($1,000,000) per HLR Discovery
Project Data Set. Upon receipt of such notice and payment by
CURAGEN, ROCHE's license under Article 8.00(c) shall become
effective for both HLR Human Health Products and HLR Human
Diagnostic Products for the CURAGEN Collaboration Intellectual
Property Rights arising from the specific HLR Discovery Project
to which such HLR Discovery Project Data Set relates and
ROCHE's access and license under Article 4.00(b) for the
specified HLR Discovery Project Data Set shall become permanent
for both HLR Human Health Products and HLR Human Diagnostic
Products. Should HLR elect not to exercise such option or take
an exclusive license to the above, upon expiration of the
exclusive period(s) HLR's access and rights under the licenses
under Articles 4.00(b) and 8.00(b) shall be non-exclusive as
set forth in Article 4.00(b)(v) and Article 8.00(b) without any
payment of the $1,000,000 exclusivity fees mentioned above.
(iv) Notwithstanding the provisions of Section 4.00(b)(iii), if at
any time during the initial Discovery Collaboration Term (or
any extension thereof) while HLR has exclusive access to an HLR
Discovery Project Data Set under Article 4.00(b)(i) or
4.00(b)(ii), HLR desires permanent sole and exclusive access to
such HLR Discovery Project Data Set for the purpose of
discovering and developing HLR Human
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<PAGE>
Diagnostic Products, and a permanent exclusive license under
the CURAGEN Collaboration Intellectual Property Rights and
CURAGEN Background Inventions relating to such Discovery
Project Data Set to use Discovery Project Inventions related to
such HLR Discovery Project Data Set for the purpose of
discovering and developing HLR Human Diagnostic Products and an
exclusive license pursuant to Article 8.00(d) for HLR Human
Diagnostic Products under CURAGEN Collaboration Intellectual
Property Rights arising from the specific HLR Discovery Project
to which such HLR Discovery Project Data Set relates, HLR shall
give written notice to CURAGEN, specifying the HLR Discovery
Project Data Set involved. Such notice shall be accompanied by
payment of a fee of One Hundred Fifty Thousand Dollars
($150,000) per HLR Discovery Project Data Set. Upon receipt of
such notice and payment by CURAGEN, ROCHE's license under
Article 8.00(d) shall become effective for HLR Human Diagnostic
Products for the CURAGEN Collaboration Intellectual Property
Rights arising from the specific HLR Discovery Project to which
such HLR Discovery Project Data Set relates and ROCHE's access
and license under Article 4.00(b) for the specified HLR
Discovery Project Data Set shall become permanent for HLR Human
Diagnostic Products. Should HLR elect not to exercise such
option or take an exclusive license to the above, upon
expiration of the exclusive period(s) HLR's access and rights
under the licenses under Articles 4.00(b) and 8.00(b) shall be
non-exclusive as set forth in Article 4.00(b)(v) and Article
8.00(b) without any payment of the $150,000 exclusivity fees
mentioned above.
(v) Upon expiration of the exclusivity of the access and license
for any HLR Discovery Project Data Set as set forth under this
Article 4.00(b), (i) HLR shall retain non-exclusive access to
such HLR Discovery Project Data Set, and (ii) CURAGEN shall, at
such time, be deemed to have granted to HLR a fully paid,
worldwide, non-exclusive license under the CURAGEN
Collaboration Intellectual Property Rights and
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<PAGE>
CURAGEN Background Inventions relating to such Discovery
Project Data Set to use the Discovery Project Inventions
related to such HLR Discovery Project Data Set for the purpose
of discovering and developing HLR Human Products.
(vi) HLR shall have the right to make HLR Discovery Project Data
Sets available to Third Parties for the purpose of discovering
and developing HLR Human Products.
(c) In the event ROCHE elects, or is required, to disclose any
Discovery Project Data or any Discovery Project Inventions to any third party,
ROCHE shall use commercially reasonable efforts to avoid any disclosures that
might compromise CURAGEN's intellectual property rights in such Discovery
Project Data or Discovery Project Inventions or CURAGEN's development or
commercialization of CURAGEN Products.
(d) HLR and RVI shall: (x) not use Discovery Project Data Sets for any
purpose other than as expressly provided for above; and (y) keep such Discovery
Project Data Sets and related Discovery Project Inventions confidential, except
as needed to apply for and maintain intellectual property protection and/or to
exercise the licenses granted pursuant to this Article 4.00 and Article 8.00,
including efforts relating to obtaining regulatory approval of the testing,
manufacture and/or sale of ROCHE Products.
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<PAGE>
4.01 - CURAGEN's Access to Discovery Project Data Sets
(a) Notwithstanding the exclusive rights granted to ROCHE pursuant to
Article 4.00, during the Discovery Collaboration Term and thereafter, CURAGEN
shall have exclusive access to the Discovery Project Data Sets for the purpose
of discovering and developing CURAGEN Products. In addition, ROCHE grants to
CURAGEN a fully paid, worldwide, sole and exclusive license to use all Discovery
Project Data Sets, the Discovery Project Data therein and related Discovery
Project Inventions for discovering and developing CURAGEN Products.
(b) During the period of exclusivity of ROCHE's access to any Discovery
Project Data Set pursuant to Article 4.00, CURAGEN shall: (x) not use such
Discovery Project Data Set for any purpose other than as provided for above; and
(y) keep such Discovery Project Data Set and related Discovery Project
Inventions confidential, except as needed to apply for and maintain intellectual
property protection and/or to exercise the licenses granted pursuant to this
Article 4.01 or Article IX, including efforts relating to obtaining regulatory
approval of the testing, manufacture and/or sale of CURAGEN Products.
(c) Subject to compliance by CURAGEN with Article IX and to ROCHE's
licenses and access rights under Article 4.00 and Article VIII, upon the
expiration of the period of exclusivity of ROCHE's access to any Discovery
Project Data Set pursuant to Article 4.00, CURAGEN shall have non-exclusive
access to such Discovery Project Data Set for any purpose. In addition, ROCHE
shall, at such time, be deemed to have granted to CURAGEN a fully paid,
worldwide, non-exclusive license to use such Discovery Project Data Set, the
Discovery Project Data therein and related Discovery Project Inventions for any
purpose, including without limitation, discovering and developing any product
and making such Discovery Project Data Set available to Third Parties.
(d) In the event CURAGEN elects, or is required, to disclose any
Discovery Project Data or Discovery Project Inventions to any third party,
CURAGEN shall use commercially reasonable efforts to avoid any disclosures that
might compromise ROCHE's intellectual property rights in such Discovery Project
Data or Discovery Project Inventions or ROCHE's development or commercialization
of ROCHE Products.
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<PAGE>
4.02 - Software License
Access to the software contained in the Discovery Tools hereunder, or
any components thereof, is hereby granted according to the following terms:
(a) Such software and display screens are protected by copyright,
patent, trade secret and other intellectual property laws, CURAGEN hereby grants
to ROCHE and its Affiliates a non-exclusive non-transferable license to access
such software solely for the purposes of performing the Discovery Collaboration
and during the Discovery Collaboration Term. ROCHE shall not copy such software
or display screens except as occurs during the normal course of CURAGEN-provided
access. ROCHE shall not reverse engineer, decompile or disassemble such software
or display screens. Such software embodies trade secrets of CURAGEN that are
considered Confidential Information of CURAGEN and subject to the
confidentiality provisions hereof.
(b) Any access to databases or other software of CURAGEN after the
expiration of the Discovery Collaboration Term shall be provided only pursuant
to written agreement of the Parties, unless otherwise provided herein.
ARTICLE V - FUNDING OF DISCOVERY COLLABORATION
5.00 - FTE Fees, Initial Term
In consideration of CURAGEN's performance of the Discovery
Collaboration, during the Discovery Collaboration Term, ROCHE will pay CURAGEN
an amount equal to [XXXXX] per FTE - up to a maximum of [XXXXXXX] during the
initial term hereof. (As mentioned hereinabove, ROCHE anticipates utilizing
[XXXXX] FTE's, as enumerated in Article 3.0(b) above during calendar year 1999,
resulting in a total payment for FTE's of [XXXXXXXXXXX]. This 1999 FTE payment
[XXXXXXXXXXXXXXXXXXXXXXXXX]. The remaining [XXXXXXXXXXXXXX] (as well as any
other FTE payment to be made hereunder) will be paid to CURAGEN
[XXXXXXXXXXXXXXXXXXXXXXXXX]. In this connection, it is understood that since
said FTE's will be allocated among RVI and HLR, CURAGEN will receive separate
payments from each such entity commensurate with the number of FTE's allocated
to said entity at any time during the relevant period. As such CURAGEN will keep
separate accountings on behalf of RVI and HLR (the keeping
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<PAGE>
of such separate accountings is in no way to be construed as requiring CURAGEN
to maintain separate bank accounts for each of RVI and HLR).
5.01 - FTE Throughput
Attached hereto as Exhibit 2 are the approximate anticipated annual
throughput specifications for GeneCalling(TM), PathCalling(TM) and
SeqCalling(TM) assuming an overall level of 20 FTEs for each of such
technologies. The Parties anticipate achieving throughput at approximately this
level, but acknowledge that actual results will depend on the actual projects
undertaken.
5.02 - Access Fees - Initial Term
In addition to the above FTE payments, ROCHE shall make a [XXXXXXXX] to
CURAGEN of [XXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. In addition, HLR and
RVI and their Affiliates shall have [XXXX] Rodent SeqCalling(TM) and
GeneCalling(TM) databases, and [XXXX] to the PathCalling(TM) database for the
purpose of discovering and developing ROCHE Products. Such access shall be
available during the initial two (2) year term hereof [XXXXXXXXXXXXX]. For
purposes hereof, XXXXXXXXXXXXXXXXXXXXXXXXXXX]. In addition, [XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX].
5.03 - Option Term FTE and DataBase Access Fees
In the event that either RVI or HLR, or both, elect to exercise their
option(s) to extend this Agreement for [XXXXXXXXXXXX] pursuant to Article 3.11,
not to exceed the above-mentioned [XXXXXXXXXX], during the period of extension
(i) the FTE fees shall be [XXXXXXXXXXXXXXXXXX] per FTE per year, and (ii) the
Combined Discovery Tool and Database access fee shall be [XXXXXXXXXXXXX] for the
first renewal term and no more than [XXXXXXXXXXXXXXXXXXX] for each renewal term
thereafter for RVI, and shall be [XXXXXXXXXXXXXXXXX] for HLR for the first
renewal term and [XXXXXXXXXXXXXXXXXXXXXXX] for HLR for each renewal term
thereafter. FTE fees shall continue to be payable [XXXXXX]. The Discovery Tool
access fee and Database access fee shall be payable on an [XXXXXXXXXXX] any such
renewal period.
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<PAGE>
ARTICLE VI - TREATMENT OF CONFIDENTIAL INFORMATION
6.00 - Confidential Information
During the course of the Discovery Collaboration each Party may
disclose to the other proprietary technical and business information. Such
information that is disclosed in writing and marked "Confidential" (or with
words of similar meaning), or which is disclosed orally with a subsequent
written designation of such oral information as confidential, within sixty (60)
days of the oral disclosure, is referred to herein as "Confidential
Information."
Except as expressly permitted hereunder, the receiving Party shall keep
confidential all 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 shall take reasonable steps to ensure that
all of its employees and consultants shall protect and use Confidential
Information of the other Party only in accordance with the terms hereof. Each
Party further agrees not to use Confidential Information of the other Party for
any purpose other than as expressly permitted hereunder. Such obligations of
confidentiality and non-use shall remain in effect for a period of ten (10)
years after the receipt of any such Confidential Information or, in the case of
Confidential Information related to a license granted pursuant to Article VIII
or IX, upon the termination or expiration of the relevant provisions of this
Agreement, whichever event is later. 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 relative to such information; or
28
<PAGE>
(c) is lawfully disclosed to the receiving Party or any of its
Affiliates 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; or
(d) was required by law to be disclosed; or
(e) was independently developed by the receiving Party or an Affiliate
without the use of any of the disclosing Party's Confidential Information; or
(f) is required to be disclosed by a governmental or judicial order.
6.01 - Publications
It is expected that each Party may wish to publish the results of its
research under this Agreement. Contributions by the other Party shall be
acknowledged in any publication by the publishing Party. 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 any
proposed manuscript to the appropriate Steering Committee for review, comment
and consideration of appropriate patent application preparation activity at
least sixty (60) days prior to any submission for publication or other public
disclosure. The Steering Committee 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. The Steering Committee will, in cooperation
with both Parties, determine the appropriate timing and content of any such
publications. The Steering Committee can, in its discretion, request that the
publishing Party delay publication for up to an additional sixty (60) days for
the purpose of preparation of an appropriate patent application(s). In addition,
any Party can require the deletion of Confidential Information of such Party
from any publication of another Party.
6.02 - Press Release and Regulatory Filings
The Parties shall mutually agree on a press release announcing the
execution of this Agreement. 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. Nothing in this Agreement shall be
29
<PAGE>
construed to prohibit either party from disclosing factual information or data
relating to this Agreement which may be required by law to be disclosed.
ARTICLE VII - INTELLECTUAL PROPERTY RIGHTS AND THE FILING, PROSECUTION AND
MAINTENANCE OF PATENT RIGHTS
7.00 - ROCHE Proprietary Material
ROCHE Proprietary Material shall remain the property of ROCHE. CURAGEN
shall use such ROCHE Proprietary Material only for the purpose of conducting the
Discovery Collaboration hereunder and shall not transfer or disclose ROCHE
Proprietary Material to any Third Party.
7.01 - Data
All data generated by CURAGEN and ROCHE in the course of performance of
the Discovery Collaboration, including Discovery Project Data Sets, shall be
owned by ROCHE. The Parties' rights to use Discovery Project Data Sets shall be
subject to the provisions of this Agreement.
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<PAGE>
7.02 - Inventions
Each Party shall promptly disclose to the other Party all Discovery
Project Inventions. Ownership of all Discovery Project Inventions, and Patent
Rights based thereon, shall vest with ROCHE for all inventions relating solely
to ROCHE Products and with CURAGEN for all inventions relating solely to CURAGEN
Products, and jointly for all inventions relating to both ROCHE Products and
CURAGEN Products. ROCHE and CURAGEN warrant that their employees, including
non-employees working for ROCHE on ROCHE's behalf or for CURAGEN on CURAGEN's
behalf, are under obligation to assign their rights to ROCHE or CURAGEN as the
case may be. ROCHE and CURAGEN will use commercially reasonable efforts to
secure such assignments from all future employees or persons working on their
behalf.
7.03 - Filing Prosecution and Maintenance of Patent Rights for Discovery
Project Inventions Relevant to ROCHE Products
ROCHE shall, at ROCHE's expense, have sole responsibility hereunder to
file, prosecute and maintain patents on all Discovery Project Inventions
pertaining primarily to ROCHE Products. CURAGEN agrees to provide reasonable
assistance and cooperation to ROCHE to facilitate such filing, prosecution and
maintenance. CURAGEN shall be informed within thirty (30) days after issuance of
any such patent.
In the event ROCHE elects to discontinue patent protection for any
Discovery Project Invention, or part thereof, subject to this Article 7.03,
CURAGEN may assume the prosecution of any such patent application at its own
expense; provided, however, that if ROCHE has permanent exclusive rights to such
Discovery Project Invention and permanent exclusive access to the Discovery
Project Data Set from which such Discovery Project Invention arose, then ROCHE
may certify to CURAGEN that ROCHE wishes to maintain such Discovery Project
Invention as a trade secret, in which event CURAGEN shall not have the right to
assume prosecution of such patent application. In case CURAGEN does not wish to
assume the prosecution of any such patent application ROCHE elected to
discontinue, then ROCHE shall be free to abandon or
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<PAGE>
license or sell such patent application, subject to ROCHE's obligations under
this Agreement.
7.04 - Filing, Prosecution and Maintenance of Patent Rights for Discovery
Project Inventions Relevant to CURAGEN Products
CURAGEN shall, at CURAGEN's expense, have sole responsibility hereunder
to file, prosecute and maintain patents on all Discovery Project Inventions
pertaining primarily to CURAGEN Products. ROCHE 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 diligently and that ROCHE shall be kept fully
informed of the progress thereof and provided with copies of all material
documents pertaining thereto for ROCHE owned Discovery Project Inventions
prosecuted by CURAGEN.
7.05 - Preventing Loss of Patent Rights
The Parties shall mutually agree prior to either Party taking any
action which would (a) permit any patent application or patent within the Patent
Rights to lapse; or (b) amend any patent application or patent within the Patent
Rights so as to irrevocably limit or change the lawful scope of such patent
Rights; provided, however, that such obligation shall not apply to any Patent
Rights being prosecuted by one party in which that party has exclusive rights
(either by ownership or license) hereunder.
7.06 - Conflicting Applications
In the event a Discovery Project Invention is relevant to both ROCHE
Products and CURAGEN Products, ROCHE will have first and primary responsibility
for seeking patent protection pursuant to Article 7.03, and ROCHE will use
commercially reasonable efforts to seek protection for all CURAGEN Products and
all ROCHE Products in patents claiming such Discovery Project Inventions.
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<PAGE>
7.07 - Notice of Infringement
If, during the term of this Agreement, either Party learns of any
infringement or threatened infringement by a Third Party of the patents within
Patent Rights which affects rights licensed to ROCHE or CURAGEN hereunder, such
Party shall promptly notify the other Party and shall provide such other Party
with available evidence of such infringement.
7.08 - Infringement Litigation
ROCHE shall have the first right (but not the obligation), at its own
expense, to bring suit (or other appropriate legal action) against any actual or
suspected infringement of the Patent Rights owned by ROCHE. CURAGEN shall have
the first right (but not the obligation), at its own expense, to bring suit (or
other appropriate legal action) against any actual or suspected infringement of
the Patent Rights owned by CURAGEN. With respect to Patent Rights that are
jointly owned, ROCHE shall have the first right (but not the obligation), at its
own expense, to bring suit (or other appropriate legal action) against any
actual or suspected infringement of the Patent Rights by a product that is a
ROCHE Product and CURAGEN shall have the first right (but not the obligation),
at its own expense, to bring suit (or other appropriate legal action) against
any actual or suspected infringement of the Patent Rights by a product that is a
CURAGEN Product. If the Party given the first right does not take such action
with respect to a jointly owned Patent Right within one hundred twenty (120)
days after written notice from the other Party of the infringement, then the
other Party shall have the right (but not the obligation), at its own expense,
to bring suit against such infringement. The Party bringing the suit shall have
the right to settle such suit. 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, then to the costs and
expenses (including attorneys fees), if any, of the other Party. Any amounts
remaining shall be allocated to each party in accordance with each Party's
damages incurred on account of such infringement, calculated in accordance with
United States laws pertaining to patent damages.
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<PAGE>
7.09 - Cooperation
Each Party shall, at the expense of the Party bringing any suit,
execute all papers and perform such other acts as may be reasonably required to
maintain any infringement suit brought in accordance with Article 7.08 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.
ARTICLE VIII - COMMERCIAL LICENSES TO ROCHE
8.00 - ROCHE Products
(a) Subject to Article 8.00(e), CURAGEN grants to ROCHE and its
Affiliates a [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX].
(b) Subject to Article 8.00(e), CURAGEN grants to ROCHE and its
Affiliates [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXX].
(c) Subject to Article 8.00(e), effective upon the exercise of each
option under Article 4.00(b)(iii) and payment of the fee specified therein,
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
(d) Subject to Article 8.00(e), effective upon the exercise of each
option under Article 4.00(b)(iv) and payment of the fee specified therein,
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX].
(e) At any time ROCHE identifies an RVI Product or HLR Human Product,
ROCHE shall give written notice to CURAGEN and shall describe and identify such
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<PAGE>
ROCHE Product in such notice. The licenses granted by Articles 8.00(a), (b), (c)
and (d) shall not include rights under any CURAGEN Background Inventions that
have been previously licensed, at the time such notice is received by CURAGEN,
to Third Parties for the type of product (i.e., Human Health Product, HLR Human
Diagnostic Product, Animal Nutrition and Health Product, or Animal Diagnostic
Product) identified by ROCHE in such notice except to the extent permitted by
any such previously granted license.
8.01 - Sublicenses
ROCHE shall have the right to grant sublicenses under any portion of
the licenses granted by CURAGEN in Article 8.00(a), Article 8.00(b), Article
8.00(c) and Article 8.00(d) above; provided, however, that ROCHE remains
obligated to ensure any sub-licensee's payment of bonus payments and royalties
to CURAGEN pursuant to this Article.
8.02 - Royalty Payments for ROCHE Products that are Animal Diagnostic Products
ROCHE shall pay CURAGEN a royalty of between [XXXXXXXXX] of each RVI
product that is an Animal Diagnostic Product, with the final royalty for each
product to be negotiated in good faith considering the competitive environment,
market size and anticipated sales volume, as well as such other market factors
as may be relevant. In the event the Parties are not successful in determining
the final royalty for any product, the matter shall be resolved pursuant to
Article 11.06.
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<PAGE>
8.03 - Royalty Payments for ROCHE Products that are Animal Nutrition and
Health Products
ROCHE shall pay CURAGEN a royalty of [XXXXXXXXX] of each RVI product
that is an Animal Nutrition and Health Product, with the final royalty for each
product to be negotiated in good faith considering the competitive environment,
market size and anticipated sales volume, as well as such other market factors
as may be relevant. In the event the Parties are not successful in determining
the final royalty for any product, the matter shall be resolved pursuant to
Article 11.06.
8.04 - Royalty Payments for ROCHE Products that are Human Diagnostics Products
ROCHE shall pay CURAGEN a royalty of [XXXXXXXXX] of each HLR Human
Diagnostic Product, with the final royalty for each product to be negotiated in
good faith considering the competitive environment, market size and anticipated
sales volume, as well as such other market factors as may be relevant. In the
event the Parties are not successful in determining the final royalty for any
product, the matter shall be resolved pursuant to Article 11.06. It is agreed
that royalties on Net Sales of a given HLR Human Diagnostic Product used for the
diagnosis of a particular disease shall not exceed 3% of Net Sales regardless of
whether such HLR Human Diagnostic Product infringes the claims of one or more
Patent Rights, or its discovery or development incorporates or makes material
use of one or more Discovery Project Data Sets.
8.05 - Royalty Payments for Products that are HLR Human Health Products
ROCHE shall pay CURAGEN a royalty of [XXXXXXXXX] of each HLR Human
Health Product, to be at the highest applicable rate below:
(a) Target Identification: [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
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(b) Candidate for Clinical Development:
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX].
(c) Clinical Development: [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
(d) For purposes of Article 8.05 (b) and 8.05(c), use of data or
information in connection with new indications for an existing product that is
not otherwise an HLR Human Health Product will be treated as use of such data or
information in the optimization, selection or testing of such product.
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
8.06 - ROCHE Right of First Negotiation for CURAGEN Human Health Products
During the term of the Discovery Collaboration, in the event that
CURAGEN determines to undertake a program to develop and commercialize for
itself or to license to any Third Party rights to make, use, offer for sale,
sell and import any CURAGEN Human Health Product, CURAGEN shall give written
notice to ROCHE, specifying in reasonable detail the rights CURAGEN intends to
license or the CURAGEN Human Health Product CURAGEN intends to develop (the
"CURAGEN Notice"). ROCHE shall have sixty (60) days after the date of the
CURAGEN Notice to provide a written response to CURAGEN ("ROCHE Response") as to
whether or not it wishes to enter into negotiations with CURAGEN concerning such
CURAGEN Human Health Product. If CURAGEN does not receive a ROCHE Response
within such sixty (60) day period or if ROCHE declines to enter into
negotiations, CURAGEN shall thereafter have the right, alone or in collaboration
with a Third Party, to pursue development, commercialization or
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<PAGE>
licensing of the rights which were the subject of the CURAGEN Notice, free of
any restriction or limitation, or duty to ROCHE whatsoever other than bonus
payments and royalties payable under Article IX. If the ROCHE Response states
that ROCHE wishes to enter into negotiations with CURAGEN, the parties shall
negotiate in good faith the licensing of such rights to ROCHE for a period of
ninety (90) days from the date of the ROCHE Response.
If the parties do not agree upon and execute a written agreement for
such rights within such ninety (90) day period, as such period may be extended
by written agreement of both parties, ROCHE shall set forth in writing in detail
its "last best offer" with respect to such licensing of rights. If CURAGEN does
not accept such last best offer, CURAGEN will furnish ROCHE with a written
statement that it rejects such last best offer, and CURAGEN shall thereafter
have the right, alone or in collaboration with a Third Party, to pursue
development, commercialization or licensing of the rights which were the subject
of the CURAGEN Notice, but only on terms reasonably believed by CURAGEN to be
more favorable in the aggregate to CURAGEN than ROCHE's last best offer.
8.07 - Bonus Payments
(i) In addition to the foregoing payments, ROCHE shall also make
the following bonus payments to CURAGEN for each ROCHE
Product [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
All such payments shall be made to CURAGEN within thirty (30) days of
the event specified above. For each Animal Nutrition and Health Product which
can be sold in any country without a NADA filing or NADA approval, the bonus
payments required for NADA filing and NADA approval shall be made upon the first
commercial sale of such Animal Nutrition and Health Product in any country.
[XXXXXXXXXXXXXXXXXXX
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XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
(ii) Payment Limitations. For a given ROCHE Product, [XXXXXXXXXXXXX
-------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXX].
8.08 - Royalty Reductions
If ROCHE makes any royalty payment to a Third Party on sales in a given
country of an RVI Product or HLR Human Product [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXX]
8.09 - Remittance of Payments
The royalties due under this Article VIII shall be calculated quarterly
as of March 31, June 30, September 30, and December 31 and shall be paid within
sixty (60) days after the end of each quarterly period in which such royalties
are earned during the period of time that such royalties are accrued. With each
such quarterly payment, CURAGEN shall receive from ROCHE and/or its Affiliates a
royalty statement setting forth on a country-by-country and ROCHE
Product-by-ROCHE Product basis, the relevant sales information, including at
least the total Net Sales of each ROCHE Product in each country, the calculation
of such Net Sales and the royalty payable to CURAGEN.
8.10 - Foreign Currency Conversions
All payments to be made under this Agreement, including the royalties
payable to CURAGEN by ROCHE, shall be paid by ROCHE within the time period set
forth
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<PAGE>
above in U.S. dollars by wire transfer or other mutually acceptable means to a
bank account designated by CURAGEN, and where appropriate, following receipt by
ROCHE of an invoice for the same from CURAGEN. Whenever for the purpose of
calculating royalties conversion from any foreign currency shall be required,
such conversion shall be made as follows:
(a) when calculating the Net Sales in each quarter, the amount of such
sales in foreign currencies shall be converted into Swiss Francs as computed in
ROCHE's central Swiss Francs sales statistics for the countries concerned, using
the average monthly rate of exchange at the time for such currencies as
retrieved from the Reuters System.
(b) when calculating the royalties on Net Sales, such conversion shall
be at the average rate of the Swiss Franc to the United States currency as
retrieved from the Reuters System for the applicable quarter.
8.11 - Taxes Withheld
Any income or other tax that ROCHE or any of its Affiliates, Licensees
or Licensors is required by a government agency to withhold and pay on behalf of
CURAGEN with respect to the royalties payable under this Agreement shall be
deducted from and offset against said royalties prior to remittance to CURAGEN;
provided, however, that in regard to any tax so deducted, ROCHE shall give or
cause to be given to CURAGEN such assistance as may reasonably be necessary to
enable CURAGEN to claim exemption therefrom or credit therefor, and in each case
shall furnish CURAGEN proper evidence of the taxes paid on CURAGEN's behalf.
8.12 - License Term Subject to Royalty Payments
The term of any license granted hereunder ("License Term") pursuant to
which ROCHE, its Affiliates or sublicensees are obligated to pay royalties to
CURAGEN shall, with respect to each ROCHE Product, be on a country-by-country
basis until the later of [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX].
8.13 - Records Retention. Audits
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ROCHE, its Affiliates and sublicensees shall keep, for three (3) years
from the date of each payment of royalties, complete and accurate records of
sales by ROCHE and it Affiliates and sublicensees of each ROCHE Product in
sufficient detail to allow the accruing royalties to be determined accurately.
CURAGEN shall have the right for a period of three (3) years after receiving any
report or statement with respect to royalties due and payable to notify ROCHE
that it wishes to conduct an audit.
At CURAGEN's expense, except as specified below, CURAGEN or its
authorized independent public accountant has the right to engage ROCHE's
independent public accountant to perform, on behalf of CURAGEN or its
independent public accountant, an audit, conducted in accordance with generally
accepted auditing standards in the United States of America, of such books and
records of ROCHE that are deemed necessary by ROCHE's independent public
accountants to report on Net Sales of the product for the period or periods
requested by CURAGEN. Such audit shall not be performed more frequently than
once per calendar year nor more frequently than once with respect to records
covering any specific period of time, upon at least thirty (30) working days'
prior written notice, and shall be conducted during regular business hours in
such a manner as to not unnecessarily interfere with ROCHE's normal business
activities.
The failure of CURAGEN to request verification of any royalty
calculation during the above-mentioned three (3) year period when records have
to be retained shall be considered acceptance of the accuracy of such reporting.
In the event that such audit shall indicate that in any calendar year
the royalties which should have been paid by ROCHE are greater than those which
were actually paid by ROCHE, then ROCHE shall promptly pay the underpaid amount
to CURAGEN and, if the royalties which should have been paid are at least five
percent (5%) greater than the amount actually paid, shall also reimburse CURAGEN
for the reasonable cost of such audit. In the event that such audit shall
indicate that in any calendar year the royalties which were actually paid by
ROCHE are greater than those which should have been paid, then CURAGEN shall
promptly reimburse ROCHE with such overpaid amount.
ARTICLE IX - COMMERCIAL LICENSES TO CURAGEN
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9.00 - License to CURAGEN for CURAGEN Products.
ROCHE hereby grants to CURAGEN, [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
9.01 - License to CURAGEN where ROCHE has Non-Exclusive Rights.
ROCHE hereby grants to CURAGEN, [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
9.02 - Deblocking Licenses to CURAGEN.
In connection with the grant of a license to CURAGEN pursuant to
Article 9.00 and 9.01 above, upon written request of CURAGEN, ROCHE shall grant
to CURAGEN, a worldwide, non-exclusive license to any ROCHE Background
Inventions solely to the extent necessary to allow CURAGEN to practice the
licenses granted to CURAGEN herein.
9.03 - Royalty Payments for Products that are CURAGEN Human Health Products
CURAGEN shall pay ROCHE a royalty [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
9.04 - Bonus Payments
(i) In addition to the foregoing payments CURAGEN shall also make the
following bonus payments to ROCHE [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
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(ii) Payment Limitations. For a given CURAGEN Human Health Product,
CURAGEN will make each payment under Article 9.04 [XXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
9.05 - Remittance of Payments
The royalties due under this Article IX shall be calculated quarterly
as of March 31, June 30, September 30, and December 31 and shall be paid within
sixty (60) days after the end of each quarterly period in which such royalties
are earned during the period of time that such royalties are accrued. With each
such quarterly payment, ROCHE shall receive from CURAGEN a royalty statement
setting forth on a country-by-country and CURAGEN Human Health
Product-by-CURAGEN Human Health Product basis, the relevant sales information,
including at least the total Net Sales of each CURAGEN Human Health Product in
each country, the calculation of such Net Sales and the royalty payable to
ROCHE.
9.06 - Foreign Currency Conversions
All payments to be made under this Agreement, including the royalties
payable to ROCHE by CURAGEN, shall be paid by CURAGEN within the time period set
forth above in U.S. dollars by wire transfer or other mutually acceptable means
to a bank account designated by ROCHE. Whenever for the purpose of calculating
royalties conversion from any foreign currency shall be required, such
conversion shall be made as follows:
(a) when calculating the Net Sales, the amount of such sales in foreign
currencies shall be converted into US Dollars, using the average monthly rate of
exchange at the time for such currencies as retrieved from the Reuters System.
(b) when calculating the royalties on Net Sales, royalty shall be
payable on Net Sales converted into dollars as set forth in the preceding
paragraph.
9.07 - Taxes Withheld
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Any income or other tax that CURAGEN or any of its Affiliates,
Licensees or Licensors is required by a government agency to withhold and pay on
behalf of ROCHE with respect to the royalties payable under this Agreement shall
be deducted from and offset against said royalties prior to remittance to ROCHE;
provided, however, that in regard to any tax so deducted, CURAGEN shall give or
cause to be given to ROCHE such assistance as may reasonably be necessary to
enable ROCHE to claim exemption therefrom or credit therefor, and in each case
shall furnish ROCHE proper evidence of the taxes paid on ROCHE's behalf.
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9.08 - License Term Subject to Royalty Payments
The term of any license granted hereunder pursuant to which CURAGEN
is obligated to pay royalties to ROCHE shall, with respect to each CURAGEN Human
Health Product, be on a country-by-country basis until [XXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
9.09 - Records Retention. Audits
CURAGEN, its Affiliates and sublicensees shall keep, for three (3)
years from the date of each payment of royalties, complete and accurate records
of sales by CURAGEN and it Affiliates and sublicensees of each CURAGEN Product
in sufficient detail to allow the accruing royalties to be determined
accurately. ROCHE shall have the right for a period of three (3) years after
receiving any report or statement with respect to royalties due and payable to
notify CURAGEN that it wishes to conduct an audit.
At ROCHE's expense, except as specified below, ROCHE or its authorized
independent public accountant has the right to engage CURAGEN's independent
public accountant to perform, on behalf of ROCHE or its independent public
accountant, an audit, conducted in accordance with generally accepted auditing
standards in the Untied States of America, of such books and records of CURAGEN
that are deemed necessary by CURAGEN's independent public accountants to report
on Net Sales of the product for the period or periods requested by ROCHE. Such
audit shall not be performed more frequently than once per calendar year nor
more frequently than once with respect to records covering any specific period
of time, upon at least thirty (30) working days' prior written notice, and shall
be conducted during regular business hours in such a manner as to not
unnecessarily interfere with CURAGEN's normal business activities.
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The failure of ROCHE to request verification of any royalty calculation
during the above-mentioned three (3) year period when records have to be
retained shall be considered acceptance of the accuracy of such reporting.
In the event that such audit shall indicate that in any calendar year
the royalties which should have been paid by CURAGEN are greater than those
which were actually paid by CURAGEN, then CURAGEN shall promptly pay the
underpaid amount to ROCHE and, if the royalties which should have been paid are
at least five percent (5%) greater than the amount actually paid, shall also
reimburse ROCHE for the reasonable cost of such audit. In the event that such
audit shall indicate that in any calendar year the royalties which were actually
paid by CURAGEN are greater than those which should have been paid, then ROCHE
shall promptly reimburse CURAGEN with such overpaid amount.
ARTICLE X - TERMINATION
10.00 - Early Termination
Any Party may terminate the Discovery Collaboration without cause at
its sole discretion upon six (6) months prior written notice to the other Party;
provided, however, that neither party shall have the right to terminate the
Discovery Collaboration prior to conclusion of the initial two-year term hereof.
For the avoidance of doubt, either RVI or HLR may terminate its participation in
the Discovery Collaboration with no impact on such participation by the other.
In the event that either of HLR or RVI terminates its participation under this
Agreement and the number of CURAGEN FTE's engaged in the Discovery Collaboration
is thereby reduced, the funding hereunder shall be adjusted appropriately.
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10.01 - Effects of Early Termination Upon Rights of the Parties
Any termination of the Discovery Collaboration under Article 10.00
shall be without prejudice to the rights of any Party then accruing or otherwise
accrued under this Agreement. Upon any such termination, all remaining ROCHE
Proprietary Materials or CURAGEN Proprietary Materials provided to the other
Party hereunder shall be destroyed or returned to the providing Party, except to
the extent any such materials are subject to a surviving license or right of use
hereunder. CURAGEN shall, in addition, comply with the requirements of Article
10.02.
10.02 - Post - Termination Access to GeneScape(R)
In the event the Discovery Collaboration is terminated by CURAGEN under
Article 10.00, ROCHE and its Affiliates [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
10.03 - Termination with Cause
This Agreement and the licenses granted by one Party to the other
hereunder may be terminated upon any breach by the other Party of any material
obligation or condition, 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. The foregoing notwithstanding, if the default or
breach is cured or shown to be non-existent within the aforesaid thirty (30) or
sixty (60) day period, the notice shall be deemed automatically withdrawn and of
no effect.
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10.04 - Termination Following Bankruptcy
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 all or substantially all of 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.
10.05 - Termination on Acquisition
In accordance with the following provisions in this Article 10.05, if
either CURAGEN or ROCHE (the "Acquired Party") shall sell all or substantially
all of its assets in the line of business to which this Agreement pertains or
shall be a party to a merger or consolidation as a result of which shareholders
owning the shares of such party immediately before the transaction do not own a
majority of the shares of the surviving entity in such merger or consolidation
immediately after such transaction (in either case, an "Acquisition"), then the
other Party (the "Non-Acquired Party") shall have the right to terminate this
Agreement in connection with the Acquisition. If either Party expects to be a
party to an Acquisition, to the extent possible such Party shall provide to the
Non-Acquired Party prompt prior written notice of such expected event, together
with such information with respect thereto as the Non-Acquired Party shall
reasonably request, which information the Non-Acquired Party shall request in
writing within 10 days of such written notice. Within 10 days of receipt of such
notice and information, the Non-Acquired Party shall give written notice to the
Acquired Party as to whether or not the Non-Acquired Party intends to terminate
this Agreement in connection with such Acquisition. If the Non-Acquired Party
does not give a written response within such 10 days, or if the Non-Acquired
Party's written response indicates it will not terminate this Agreement in
connection with the Acquisition, then the Non-Acquired Party will have no right
to terminate this Agreement in connection with the Acquisition. If the
Non-Acquired Party's response indicated it intends to terminate this Agreement
in connection with the Acquisition, then the Acquired Party shall notify the
Non-Acquired Party of the effectiveness of the Acquisition and the Non-Acquired
Party shall have the right,
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exercisable within 10 days after receipt of the Acquired Party's notice to the
Non-Acquired Party of the effectiveness of such Acquisition, to immediately
terminate this Agreement. Any Discovery Project in progress at the time of
termination shall be completed. Any termination under this Article 10.05 shall
be without liability or any further obligation of either party. All licenses
granted hereunder (and the corresponding royalty and milestone obligations)
shall survive termination under this Article 10.05.
10.06 - Effect of Termination under Article 10.03
Upon termination of this Agreement under Article 10.03 by a Party, all
relevant licenses granted by the terminating Party to the breaching Party
hereunder shall terminate automatically. In addition, upon any termination
pursuant to Article 10.03, the breaching Party shall be deemed without any
further action to have forfeited its rights to further access the Discovery
Project Data Sets or to utilize any Target or Optimization Panel.
10.07 - Obligations
All Parties shall remain liable for all obligations accruing prior
to the date of termination.
10.08 - Remedies
If either Party shall fail to perform or observe its material
obligations, or otherwise breaches any of its material obligations under this
Agreement, in addition to any right to terminate this Agreement, the
non-defaulting Party shall have the right to any other relief or remedies
available under law or equity.
10.09 - Surviving Provisions
Notwithstanding any provision herein to the contrary, the rights and
obligations set forth in Article VI hereof, as well as in Articles 4.00, 4.01
and Articles VII, VIII, IX, X and XI, shall survive the normal expiration, early
termination or termination upon Acquisition of this Agreement; provided,
however, that if this Agreement is terminated due to breach by ROCHE, ROCHE
shall have no continuing rights under Article 4.00 or Article VIII, and if this
Agreement is terminated due to breach by CURAGEN, CURAGEN shall have no
continuing rights under Article 4.01 or Article IX.
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ARTICLE XI - MISCELLANEOUS
11.00 - CURAGEN Representations and Covenants
CURAGEN represents and warrants that: (i) the execution and delivery of
this Agreement and the performance of the transactions contemplated hereby have
been duly authorized by all appropriate CURAGEN corporate actions; (ii) CURAGEN
is under no obligation which is inconsistent with this Agreement, except as
specifically set forth herein; (iii) CURAGEN has the full right and legal
capacity to grant the rights to ROCHE set forth in Article VIII, and that (iv)
CURAGEN's GeneScape(R) software is "Year 2000" compliant to the extent that
CURAGEN is responsible for creation of the GeneScape(R) executable code, i.e.,
the Genescape(TM) executable code created by CURAGEN will properly record, store
and process dates, and calculate spans of time between dates, on and following
January 1, 2000. (The GeneScape(R) system is dependent on software from a
variety of vendors including but not limited to: (a) the Solaris Operating
System (and associated compilers); (b) the Oracle relational database system;
and (c) the Oracle Web Server. While CURAGEN is making reasonable effort to
insure that the externally supplied software on which CURAGEN depends is Year
2000 compliant, CURAGEN does not warrant against a GeneScape(R) failure as a
result of non-compliance on the part of one or more of its external suppliers.
CURAGEN also does not warrant the compliance of other providers that may affect
ROCHE's ability to use GeneScape(R) including those portions of the internet
beyond CURAGEN's control and the computing platform and web browsing software in
use by ROCHE.) CURAGEN covenants that (i) CURAGEN will obtain from its employees
and consultants rights of assignment with respect to all Discovery Project
Inventions; and (ii) CURAGEN will not, without ROCHE's prior written consent,
enter into any agreement with any third party that would prevent CURAGEN's
performance of CURAGEN's obligations to ROCHE under this Agreement.
11.01 - ROCHE Representations and Covenants
ROCHE represents and warrants that: (i) the execution and delivery of
this Agreement and the performance of the transactions contemplated hereby have
been duly authorized by all appropriate ROCHE corporate actions; (ii) ROCHE is
under no
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obligation which is inconsistent with this Agreement; and (iii) ROCHE has the
full right and legal capacity to grant the rights to CURAGEN set forth to
Article IX. ROCHE covenants that (i) ROCHE will obtain from its employees and
consultants rights of assignment with respect to all Discovery Project
Inventions; and (ii) ROCHE will not, without CURAGEN's prior written consent,
enter into any agreement with any third party that would prevent ROCHE's
performance of ROCHE's obligations to CURAGEN under this Agreement.
11.02 - Entire Agreement
The Parties agree that the provisions contained in this Agreement
constitute the entire agreement between the Parties with respect to the subject
matter and supersede all previous communications, representations and agreements
(whether verbal or written) between the Parties with respect to the subject
matter hereof, including, without limitation, the LOI.
11.03 - No Warranties
(a) Nothing in this Agreement is or shall be construed as:
(i) a warranty or representation by either Party 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 above 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, FITNESS, 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.
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11.04 - 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.
11.05 - Notices
Any notices, requests, deliveries, approvals or consents required or
permitted to be given under this Agreement to RVI, HLR or CURAGEN shall be in
writing and shall be personally delivered or sent by facsimile (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):
If to CURAGEN: CuraGen Corporation
555 Long Wharf Drive, 11th Floor
New Haven, CT 06511
Attn: Vice President, Business Development
Fax: (203) 401-3333
With a copy to: Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attn: Jeffrey M. Wiesen, Esq.
Fax: (617) 542-2241
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If to HLR Inc.: Hoffman-LaRoche Inc.
340 Kingsland Street
Nutley, NJ 07110
Attn: Corporate Secretary
Fax: 973-235-2800
With a copy to: Vice President
Pre-Clinical Research and Development
Hoffman-LaRoche Inc.
340 Kingsland Street
Nutley, NJ 07110
Fax: 973-235-6449
If to RVI: Roche Vitamins Inc.
340 Kingsland Street
Nutley, NJ 07110
Attn: Corporate Secretary
Fax: 973-235-2800
With a copy to: Director of Research
Animal Nutrition and Health
Roche Vitamins Inc.
340 Kingsland Street
Nutley, NJ 07110
Fax: 973-284-6060
If to HLR Ltd: F.Hoffman-LaRoche Ltd
Grenzacherstrasse 124
CH-4070 Basel
Switzerland
Attn: Corporate Law
Fax: 0041-61-688-1396
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Such notices shall be deemed to have been sufficiently given on:
a) the date sent if delivered in person, b) the next business day after dispatch
in the case of transmission by facsimile or overnight courier or c) five (5)
business days after deposit in the US mail in the case of certified mail.
11.06 - Arbitration
Any dispute arising out of or relating to this Agreement, or any
alleged breach of this Agreement, shall be settled by binding arbitration in
accordance with the Rules of the American Arbitration Association ("AAA"),
except as modified by this Article 11. Each arbitration shall be conducted by
three arbitrators, consisting of one arbitrator chosen by each party and the
third arbitrator chosen by the first two so chosen. No arbitrator shall be
affiliated with either Party. In the event that the first two arbitrators are
not able to agree upon and choose a third arbitrator, the third arbitrator shall
be appointed in accordance wit the Commercial Arbitration Rules of the AAA. The
arbitration proceeding shall be conducted in the English language in New York,
NY, unless the Parties agree to conduct the arbitration in another location. The
arbitration shall be binding and not appealable to any court in any
jurisdiction. The prevailing party may enter the arbitration decision in any
court having competent jurisdiction.
11.07 - Currency
The Parties agree that, unless otherwise indicated, all monetary
amounts referred to in this Agreement are in United States currency.
11.08 - Further Assurances
The Parties agree to execute such further documents and to do such
further acts as may be necessary to implement and carry out the intent of this
Agreement.
11.09 - Limitations
Except as expressly set forth in this Agreement, neither Party grants
to the other Party any right or license to any of its respective intellectual
property.
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11.10 - Waiver
The terms or conditions of this Agreement may be waived only by a
written instrument executed by the Parties hereto. The failure of any 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 any
Party of any condition or term shall be deemed as a continuing waiver of such
condition or term or of another condition or term.
11.11 - Assignment
Subject to Article 10.05, 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 Affiliates, to any purchaser of all or
substantially all of its assets in the line of business to which this Agreement
pertains or to any successor corporation resulting from any merger or
consolidation of such Party with or into such corporations.
11.12 - 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 the 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.
11.13 - 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 favor of or against any Party, regardless of which Party was
generally responsible for the preparation of this Agreement.
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11.14 - 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 effecting 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, in which circumstance the Parties hereto
covenant and agree to renegotiate any such term, covenant or application of this
Agreement 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.
11.15 - Status
Nothing in this Agreement is intended to, or shall be deemed to,
constitute a partnership, agency, employer-employee, or joint venture
relationship between the Parties. Neither Party shall have the right to bind the
other Party or to act on behalf of the other Party.
11.16 - ROCHE Indemnification of CURAGEN
ROCHE 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 and all 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 of third parties, including without limitation personal
injury matters ("Claims"), arising out of or relating to any actions of ROCHE
under this Agreement including, without limitation, the supply of samples for
use in the Discovery Collaboration or the development, manufacture, use or sale
of any ROCHE Product, except and to the extent such Claims are based on the
negligence or intentional misconduct of the CURAGEN indemnitee.
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11.17 - CURAGEN Indemnification of ROCHE
CURAGEN shall indemnify, defend and hold harmless ROCHE, its Affiliates
and their respective directors, officers, employees, and agents and their
respective successors, heirs and assigns (the "ROCHE Indemnitees"), against any
liability, damage, loss or expense (including reasonable attorneys' fees and
expenses of litigation) incurred by or imposed upon the ROCHE Indemnitees, or
any of them, in connection with any claims, suits, actions, demands or judgments
of third parties, including without limitation personal injury matters
("Claims"), arising out of the performance of the Discovery Collaboration by
CURAGEN (except and to the extent such claims, suits, actions, demands or
judgments are based on the samples or information provided to CURAGEN by ROCHE
under this Agreement) or the development, manufacture, use or sale of any
CURAGEN Product, except and to the extent such Claims are based on the
negligence or intentional misconduct of the ROCHE indemnitee.
11.18 - Governing Law
The Parties agree that this Agreement shall be governed and construed
in accordance with the laws of the State of New Jersey, without application of
its principles of conflict of law.
11.19 - Captions and Headings
The Parties agree that the captions and headings appearing in this
Agreement have been inserted for reference and as a matter of convenience and in
no way define, limit or enlarge the scope or meaning of this Agreement or any
provision.
11.20 - Amendments
Any amendment to this Agreement shall only be effective if the
amendment is in writing and is signed by all the Parties to this Agreement.
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11.21 - Counterparts
This Agreement may be executed in facsimile counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same Agreement. IN WITNESS WHEREOF, the Parties have caused this
Agreement to be executed as of the date first set forth above by their duly
authorized representatives in four (4) originals.
HOFFMANN-LA ROCHE INC. ROCHE VITAMINS INC.
By: /s/ Lee Babbis By: /s/ P. Gilgen
--------------------------------- ---------------------------
Name Lee Babbis Name P. Gilgen
and Title: V.P. Preclinical R&D and Title: President
-------------------------- ---------------------
Date: March 17, 1999 Date: March 16, 1999
------------------------------- ---------------------------
F.HOFFMANN-LA ROCHE LTD
By: /s/ Jonathan Knowles By: /s/ Dr. Christian Wind
---------------------------------- ---------------------------
Name Jonathan Knowles Name Dr. Christian Wind
and Title: President of R&D and Title: Attorney at Law
--------------------------- -------------------
Date: March 17, 1999 Date: March 15, 1999
------------------------------- ------------------------
CURAGEN CORPORATION
By: /s/ Peter A. Fuller
----------------------------------
Name Peter A. Fuller
and Title: V.P., Business Development
----------------------------
Date: March 24, 1999
-------------------------------
58
<PAGE>
EXHIBIT 11
CURAGEN CORPORATION
COMPUTATION OF NET LOSS PER SHARE
ATTRIBUTABLE TO COMMON STOCKHOLDERS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
1999 1998
-------------- ------------
<S> <C> <C>
Net loss ($7,206,927) ($3,167,513)
Preferred dividends - (508,435)
-------------- ------------
Net loss attributable to common stockholders ($7,206,927) ($3,675,948)
============== ============
Basic and diluted net loss per share attributable to
common stockholders $ (0.54) $ (0.40)
============== ============
Weighted average number of shares used in computing
basic and diluted net loss per share attributable to
common stockholders 13,402,421 9,187,491
============== ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 33,841,099 53,815,461
<SECURITIES> 0 0
<RECEIVABLES> 455,766 906,911
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 34,841,453 55,278,687
<PP&E> 24,421,106 10,767,551
<DEPRECIATION> 5,502,270 2,152,955
<TOTAL-ASSETS> 54,286,170 64,299,581
<CURRENT-LIABILITIES> 12,292,008 6,320,339
<BONDS> 0 0
0 0
0 0
<COMMON> 134,304 128,452
<OTHER-SE> 35,425,794 53,728,822
<TOTAL-LIABILITY-AND-EQUITY> 54,286,170 64,299,581
<SALES> 0 0
<TOTAL-REVENUES> 2,671,943 1,989,572
<CGS> 0 0
<TOTAL-COSTS> 6,972,070 3,814,706
<OTHER-EXPENSES> 3,209,067 1,378,990
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (7,206,927) (3,167,513)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (7,206,927) (3,167,513)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (7,206,927) (3,675,948)
<EPS-PRIMARY> (0.54) (0.40)
<EPS-DILUTED> (0.54) (0.40)
</TABLE>
