10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

OR

¨ 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 incorporation or organization)	(I.R.S. Employer Identification No.)

555 Long Wharf Drive, 11th Floor, New Haven, Connecticut	06511 (Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (203) 401-3330

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value

Preferred Stock Purchase Rights

(Title of Class)

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  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes x No ¨

The aggregate market value of common stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included in determining such value is an affiliate) computed by reference to the price at which the common stock was last sold, or the average bid and asked price of the common stock, as of the last business day of the registrant’s most recently completed second fiscal quarter was $245,138,290.

The number of shares outstanding of the registrant’s common stock as of February 28, 2003 was 49,417,677.

Documents Incorporated by Reference

The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2002. Portions of such proxy statement are incorporated by reference into Part III of this report.

CURAGEN CORPORATION

FORM 10-K

INDEX

		Page #
	PART I
ITEM 1.	BUSINESS	1
ITEM 2.	PROPERTIES	11
ITEM 3.	LEGAL PROCEEDINGS	11
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	11
	PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	12
ITEM 6.	SELECTED FINANCIAL DATA	13
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	23
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	23
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	46
	PART III
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	46
ITEM 11.	EXECUTIVE COMPENSATION	46
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	46
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	46
ITEM 14.	CONTROLS AND PROCEDURES	46
	PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K	47

1

PART I

Item 1.    Business

The following Business Section contains forward-looking statements, which involve risks and uncertainties. The Registrant’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Certain Factors That May Affect Results of Operations.”

BUSINESS

General

We are a genomics based pharmaceutical development company. We apply our integrated functional genomic technologies and Internet-based bioinformatic systems to discover and develop pharmaceutical products to treat unmet medical needs. Through the application of our proprietary technologies, we are gaining an understanding of how genes and proteins function in the context of disease, and are applying this knowledge to the development of protein, antibody, and small molecule therapeutics.

Our integrated functional genomic technologies are enabling our scientists to conduct research throughout each stage of the drug discovery, drug development and pharmacogenomics screening and evaluation process. We have established internal programs to develop products to treat metabolic diseases, cancer, inflammatory diseases, and central nervous system (“CNS”) disorders.

Our efforts are focused on the development of pharmaceutical products that address unmet medical needs. At each stage of the drug development process, we reevaluate the relative merits of continuing our progress solely through internal efforts or through strategic drug development alliances. By leveraging our knowledge of the human genome, we expect to gain a greater understanding of the molecular basis of disease. And, by combining this comprehensive understanding of disease mechanisms with our functional genomic technologies, Internet-based bioinformatic systems, and industrialized discovery and development processes, we believe we can develop pharmaceutical products with greater efficacy, and fewer side effects and increase the probability that the most appropriate drugs will be administered to patients.

Overview

The large-scale study of genes and genetic information is known as genomics. In recent years, scientists have analyzed large portions of the genetic information contained within the human genome, resulting in a nearly complete set of human genes. The most prominent of these projects was the publicly funded Human Genome Project. Through the study of genomics, scientists seek to understand the molecular basis of disease and to develop more effective treatments than those that are currently available. Historically, the pharmaceutical, animal health and agricultural industries have not used genomic approaches broadly to investigate the molecular basis of disease when developing new products primarily because:

• the entire sequence of the human genome was not previously available;

• genomics technologies had been inadequate;

• discovery processes used by these industries had caused them to underestimate the influence of genetic and environmental factors upon disease;

• uniform information systems necessary to drive genomics technologies had been largely unavailable; and

• information systems designed to manage, analyze and ultimately understand genomic information were largely unavailable.

1

We believe that we have addressed these issues through the application of proprietary technologies to better understand the molecular basis of disease, and we are actively applying this knowledge to discover and develop novel pharmaceutical products. We intend to apply our proprietary genomic technologies to uncover and understand the molecular basis of disease, and we expect to be able to exploit a unique opportunity to develop the next generation of therapeutic products to treat important diseases that are not being adequately addressed by existing therapeutics or treatment regimens.

Many important and complex diseases often arise through a combination of genetic and environmental factors. The successful treatment of such diseases often depends upon an understanding of how the human body interprets its genetic information, how disruptions in this information can lead to disease and, in turn, how drugs can arrest or reverse disease progression. Metabolic diseases, cancer, inflammatory diseases and CNS disorders are examples of such complex diseases. As scientific advances improve our understanding of the molecular basis of many diseases, we believe that the methods used by the pharmaceutical industry to develop new drugs will undergo a fundamental transformation.

Developing successful treatments for complex diseases remains a major technological challenge and will require an integrated set of genomics technologies, processes and information systems. We believe that increased information about gene sequences, variations in gene sequences, gene expression, biological pathways and the proteins affecting these pathways, and about their interplay with drugs and the environment, coupled with information systems that enable the comprehensive understanding of this information, will accelerate drug discovery and development. We have developed our technologies, and related processes and information systems to generate this information and enable our improved understanding, and we are actively applying our knowledge to develop pharmaceutical products.

Our Drug Discovery, Drug Development, and Pharmacogenomic Programs

We are focusing our drug discovery, drug development and pharmacogenomic programs to develop pharmaceutical products to address unmet or insufficiently addressed medical needs, including the need for more efficient and accurate drug target identification and validation and a more systematic means of analyzing the molecular basis of certain diseases and conditions. Our discovery programs focus on identifying and validating drug targets derived from the human genome. We then apply our functional genomics technologies to proprietary research programs to systematically analyze the molecular basis of metabolic diseases, cancer, inflammatory diseases, and CNS disorders, in order to determine their distinct mechanisms of action. Our discovery approach has enabled the rapid identification of a large number of commercially valuable disease-related genes and potential drug targets.

Our scientists analyze human diseases that have the potential to yield protein therapeutics, monoclonal antibodies and small molecule targets, and seek to uncover variations of genes that may predispose or protect individuals from susceptibility, onset, or progression of disease. We are using this knowledge to develop drugs that are potentially safer and more effective than previously made. As part of our internal drug development programs, we also seek patent protection for newly discovered disease-related genes and proteins, as well as for novel uses of known genes and the proteins they encode.

We have expertise in pharmacogenomics, a process of: determining how drugs work and why they fail within the human body; understanding why certain drugs may be unsafe due to adverse side effects that may be associated with a person’s genetic inheritance; and, determining which drugs are appropriate for specific patients. We are using pharmacogenomic studies to find additional drug targets, to understand how current drugs work, to identify potential toxicities, and to prioritize the development of our own drugs.

Drug Discovery Programs

Metabolic Diseases.    Within the field of metabolic diseases, we are analyzing a variety of primary human disease tissues and genetic and cell-based models relating to specific metabolic diseases, including obesity and

2

adult onset diabetes. We believe that our technologies are well suited to identify the genes and pathways involved in these diseases, which are known to involve errors in cellular communication mechanisms and the regulation of metabolic pathways. To date, we have used our functional genomic technologies to discover genes associated with these diseases and to identify disease-related pathways and additional targets for drug discovery.

Cancer.    Cancer encompasses disease processes of almost every organ system and involves a loss of control in multiple, diverse cellular communication mechanisms and pathway regulation. We are applying our functional genomic technologies to identify the genes and pathways involved in the early development of cancer and its progression to metastatic disease. We have analyzed a number of models of cancer and have identified pathways incorporating proteins common to many of the models. We believe that genes that are highly active in cancerous tissue may be excellent targets for the development of monoclonal antibody drugs.

Inflammatory Diseases.    Although inflammatory diseases such as asthma, osteoarthritis and rheumatoid arthritis are among the most common and chronic, existing drugs have exhibited limited efficacy and debilitating side effects. We are actively identifying and validating potential drug targets associated with these diseases and have filed for patent protection related to discoveries made thus far.

CNS Disorders.    We are currently examining both psychiatric and neurological disorders in order to identify potential targets in these areas. Our efforts combine the understanding of currently marketed drugs with the best human and animal models of the disease. To date, we have studied numerous human tissues, cell lines, animal models and existing drugs with specific action in the CNS and discovered a number of novel genes, pathways and potential targets.

Drug Development Programs

The goal of our drug development programs is to advance promising therapeutic candidates into clinical trials in the United States (“U.S.”) and worldwide, ultimately leading to product registration. We are focusing on developing three broad classes of therapeutics:

• secreted proteins;

• fully human monoclonal antibodies raised against membrane-bound or secreted proteins; and

• small molecule therapeutics.

Therapeutic Proteins.    In order to determine the therapeutic potential of genes that encode secreted proteins, we have implemented high-throughput protocols for the production, purification and testing of these proteins. We have established high-throughput cell-based assays for characterizing the therapeutic potential of secreted proteins. By using animal models, we are currently evaluating the efficacy of a number of secreted proteins as potential human therapeutics. Proteins that have excellent efficacy and favorable toxicity profiles will be selected as protein drugs for clinical development.

As of December 31, 2002, our scientists have elected approximately 60 potential protein therapeutic projects and are now focused on advancing 20 of these projects that have been given the highest priority. Five of these proteins have been validated in relevant cellular assays and on March 3, 2003, the U.S. Food and Drug Administration (“FDA”) approved our Investigational New Drug (“IND”) application to initiate clinical trials for one of these five proteins, CG53135 (or FGF20), a potential protein therapeutic being investigated as a treatment for oral mucositis. Oral mucositis is a side effect of chemotherapy and radiotherapy that results in the degradation of mucosal tissue that can range from redness and irritation to severe ulcerations of the mouth and throat. We now plan to proceed with a multi-center Phase I clinical trial during April 2003, to evaluate safety and pharmacokinetics in patients with cancer who are at risk for mucositis following chemotherapy.

Therapeutic Antibodies.    We are employing a genomics based approach for the development of monoclonal antibody therapeutics. We have identified genes that make suitable targets for monoclonal antibody

3

therapy, may be associated with disease, and on which we have filed patent applications. These proteins are used to make fully human monoclonal antibodies by Abgenix, Inc. (“Abgenix”). Antibodies are naturally occurring proteins used by the body’s immune system to combat many diseases. As therapeutic products, antibodies have several potential advantages over other therapies. The highly specific interaction between an antibody and its target may, for example, reduce unwanted side effects that may occur with the use of other therapies. Fully human antibodies are desirable because they reduce the risk of rejection by the human body that is present with mouse or partially “humanized” antibodies.

We have an alliance with Abgenix to create fully human monoclonal antibodies against targets that we have identified (see “Strategic Research and Development Alliances”). We will be jointly and systematically testing human monoclonal antibodies for efficacy in human cells and animal models of disease. We intend to select human monoclonal antibodies that demonstrate excellent efficacy combined with a favorable toxicity profile as antibody drugs for clinical development.

As of December 31, 2002, we have selected approximately 90 antibody targets with Abgenix. This collaboration has produced fully human monoclonal antibodies against 28 of these targets, six of which have been validated in relevant cellular assays. In early January 2003, we contracted with Abgenix for the clinical manufacture of CR002, the first antibody that we selected to develop as a CuraGen product from the Abgenix collaboration. We expect to advance CR002 into clinical trials during 2004 as a potential treatment for kidney disease.

Small Molecule Therapeutics.    We are also applying our expertise in genomics and knowledge of disease to develop small molecule therapeutics. Specifically, we are identifying and validating drug targets for use in small molecule drug development. We currently do not have expertise in combinatorial and medicinal chemistry. We have entered into an alliance with Bayer AG (“Bayer”) to develop small molecule drugs in the areas of obesity and adult onset diabetes (see “Strategic Research and Development Alliances”). Bayer is screening targets identified by us against its compound library and developing promising leads into pre-clinical candidates. Therefore, we continue to seek alliances similar to our Bayer alliance that will provide us access to this expertise, in exchange for sharing the profits on therapeutics that may be developed as a result of these alliances.

The therapeutic candidates that show superior efficacy will be further evaluated using our pharmacogenomics technologies. We contribute to clinical development costs and are sharing the profits on therapeutics that may be developed as a result of this alliance.

As of December 31, 2002, our scientists and Bayer have elected approximately 60 small molecule projects, conducted screening on 20 of these, and advanced nine into chemical optimization and proof-of-principle experiments.

Pharmacogenomic Programs

Using our functional genomic technologies, the tissues targeted by a drug, as well as the organs that might exhibit side effects, including liver, heart, and kidney, can be studied in animal models thought to be indicative of human response. We believe that this information may help us and other pharmaceutical companies select and optimize drug candidates based on improved efficacy and reduced side effects. We further believe that this information will help the pharmaceutical industry to significantly reduce the time and cost of drug development. For drugs already on the market, an understanding of the mechanism of action through pharmacogenomics can help identify appropriate patient populations and lead to an improved second generation of drugs.

We have analyzed drugs whose commercial viability or clinical indications are threatened either by a lack of understanding of how they work within the human body, the mechanism of action, or by severe side effects. Our goal is to continue to generate data to provide pharmacology and toxicology information, to understand the mechanism of drug action, to identify patient populations that are likely to respond favorably to a particular medication and, potentially, to identify new indications or more optimal targets.

4

In September 2002, we introduced the Predictive Toxicogenomics Screen (“PTS”), which is a technology that is potentially capable of predicting a drug compound’s toxicity by testing very small quantities of compounds, such as the quantities that are available after high-throughput drug screening. In collaboration with Bayer, our scientists tested the PTS technology by evaluating more than 150 preclinical drug compounds and ranking these compounds according to their potential for toxicity.

This unique technology was developed by analyzing more than 100 known toxic compounds and identifying specific marker genes whose activity correlates with known forms of liver toxicity. These marker genes have been affixed to gene expression microarrays (chips) for use in high-throughput comparative analysis. By comparing the gene expression of cells exposed to small quantities of compounds that are in development against these gene markers of toxicity, scientists are potentially able to rank-order tested compounds based upon their potential for toxicity. The resulting information can be used to aid scientists in determining which compounds have the highest likelihood for success in clinical development.

In addition to understanding the genes that respond to drug treatments we are linking these genes to our database containing thousands of human genetic variations, or single nucleotide polymorphisms (“cSNPs”). The discovery of cSNPs that have a role in drug efficacy or toxicity may be of tremendous value in personalizing medicine at the genetic level to the extent that researchers or physicians may use them to:

• expedite compounds through clinical trials;

• reduce toxicity by segmenting patient populations; and

• give the right drug to the right patient.

To date, we have identified thousands of cSNPs in potential drug targets and drug response genes.

Strategic Research and Development Alliances

As part of our business strategy, we seek to establish strategic research and development alliances with companies to gain access to expertise that is currently unavailable to us. We expect that these alliances with other pharmaceutical and biotechnology companies may provide us with access to unique technologies, capital, near term revenues, milestone and/or royalty payments, and potential profit sharing arrangements. In return, we provide access to unique technologies, expertise in genomics, and information on the molecular basis of disease, drug targets, and drug candidates. To date, we have entered into significant strategic alliances with Abgenix and Bayer, in addition to numerous smaller agreements to facilitate these efforts. In these strategic alliances, either party can terminate the agreement at any time the alliance permits them to or if either party materially breaches the contract. We may not be able to maintain or expand existing alliances or establish any additional alliances.

If any of our existing alliance partners were to breach, terminate or not renew their agreements with us or otherwise fail to conduct activities successfully and in a timely manner, the preclinical or clinical development or commercialization of product candidates or research programs may be delayed or terminated.

Abgenix

In December 1999, we entered into a strategic alliance with Abgenix to develop and commercialize genomics based antibody drugs using Abgenix’ XenoMouse^™ technology. This five-year alliance was established initially to identify up to 120 fully human antibody drug candidates intended for treating a broad range of complex diseases including cancer and autoimmune disorders. Antibodies determined to have commercial product potential will be allocated between the parties for further development. We will reciprocate milestone and royalty payments with Abgenix for products resulting from this drug development alliance. In addition, under the agreement, Abgenix purchased 837,990 shares of our common stock at a price of $17.90 per share for $15.0 million through a private placement.

5

In November 2000, we expanded our alliance with Abgenix to develop and commercialize up to 250 fully human antibody drug candidates across all disease areas. As part of this expanded alliance, Abgenix purchased an additional 1,441,442 shares of our common stock at a price of approximately $34.69 per share for $50.0 million in a private placement.

Bayer

In January 2001, we signed two comprehensive drug discovery, evaluation, development, and co-commercialization agreements with Bayer. As part of these agreements, Bayer purchased 3,112,482 shares of our common stock at a price of approximately $27.31 per share in a private placement totaling $85.0 million.

The first agreement is a comprehensive alliance to discover, develop, and jointly commercialize small molecule drugs to treat obesity and adult onset diabetes. We are to provide 80 drug targets over the first five years of the collaboration, as well as grant access to our comprehensive suite of functional genomic technologies, bioinformatics and pharmacogenomic expertise to select, prioritize and ensure that the resulting drugs are administered to the appropriate patients. Bayer will utilize its high-throughput screening, combinatorial chemistry, medicinal chemistry, pharmacology, and development expertise to develop small molecule compounds against the targets supplied by us. We will share expenses with Bayer related to later stage preclinical and clinical compound development, and both companies anticipate bringing 12 candidates in obesity and diabetes to clinical development. Both parties will jointly fund the relevant research, development and commercialization activities up to $1.34 billion over a 15-year period. Ultimately, we will jointly commercialize drugs resulting from this alliance with Bayer, and then share profits 56% to Bayer and 44% to us. Under the termination provisions in the agreement, either party can terminate upon breach of contract or if there is a change in corporate control, upon providing 30 days written notice to the other party.

The second agreement is a broad, five-year pharmacogenomic and toxicogenomic collaboration. We will apply our functional genomic technologies and pharmacogenomics expertise to evaluate Bayer’s developmental and preclinical pipeline of pharmaceutical compounds across all disease areas. Through the efforts of this collaboration, we and Bayer expect to reduce drug development costs, reduce the time to market, and create safer and more efficacious drugs. In addition, we and Bayer intend to compile a database of gene-based markers and information that will enable scientists to predict potential drug toxicities, understand how particular drugs work, and identify new disease indications. Both parties have exclusive rights to use the established database; however, we have the right to externally market toxicity screening services, which incorporate information from this database and give rise to royalties payable to Bayer on the resulting revenues. During the later stages of this collaboration, Bayer has an option to negotiate a technology transfer agreement. During years one and two, the collaboration generated approximately $14.0 million in revenue from completion of the set-up phase and initiation of the production phase. In accordance with the terms and conditions of the collaborative agreement, the maximum amount of remaining production phase funding is approximately $25.0 million, which may be adjusted during the production phase, but will in no event generate less than $12.0 million in revenues over the remaining term of the agreement. Under the termination provisions in the agreement, either party can terminate at any time upon mutually agreeing to do so, or after 30 days written notice of breach of contract. Under the termination provisions in the agreement, either party can terminate at any time upon mutually agreeing to do so, or after 30 days written notice of breach of contract.

Other

In addition to the above listed alliances, we have smaller, ongoing collaborative relationships with Alexion Pharmaceuticals, Altria Group, Inc. (formerly Philip Morris USA), Genentech, Inc., Mitsubishi Pharma Company, Ono Pharmaceuticals, Pfizer, Inc. and Sequenom, Inc. We have also established relationships with more than 100 universities, academic institutions, and individual companies to gain access to disease tissue samples, disease models, and select technologies. Individually, we do not consider these relationships to be of a material nature, but as a group they form an important component of our business. We have also successfully

6

conducted research with, and have the potential to receive future milestones and royalties from companies including Biogen, Inc., DuPont/Pioneer Hi-Bred International, Inc., GlaxoSmithKline, Inc., Hoffmann-La Roche Inc. and its affiliate, Roche Vitamins, Inc., Millennium Pharmaceuticals, Inc. (formerly COR Therapeutics, Inc.), and Monsanto Company. Refer to Note 4 of our consolidated financial statements for revenue information on major collaborators.

Integrated Functional Genomic Technologies

Our Internet-enabled functional genomic technologies, processes and information systems are fully integrated through a bioinformatics operating system that enables the rapid generation of comprehensive information about gene and protein function and about their interactions with drugs, the environment, and diverse patient populations.

Our genomic technologies, processes and information systems are designed to overcome significant technological limitations present in existing gene-based drug discovery and development methods. Our technology platform rapidly generates comprehensive information about gene sequences, variations in gene sequences, gene expression, biological pathways and the proteins affecting these pathways, and information about their interplay with drugs, the environment and diverse patient populations. Our technology platform has been used by our collaborators and ourselves to analyze many diseases and has led to the discovery of a number of disease-related genes, drug targets and potential drugs.

Drug Target Identification, Qualification, and Validation

Our gene sequencing technology generates comprehensive sequence databases of expressed genes from any species and is used to identify cSNPs. Our gene expression technology measures substantially all of the differences in gene expression levels between biological samples in order to discover disease-related genes and to measure their activity. Specifically, we designed our gene discovery and analysis technologies to:

• comprehensively measure the expression levels of the genes expressed in any species; and

• be integrated into an efficient, automated, high-throughput process.

The combination of these traits enables us to rapidly generate large databases of gene expression profiles. These technologies also permit us to pursue research programs for many disease systems and systematically process many samples in parallel. As a result, we are able to discover and seek patent protection for many commercially valuable disease-related genes and gene products.

We have developed our proprietary technologies to reduce the time and cost associated with the identification and functional understanding of targets for therapeutic intervention. Genes identified through the application of our technologies may potentially act as drug targets. Our protein pathway analysis technology is an automated, high-throughput process that identifies interactions between combinations of proteins and assembles these protein-protein interactions into our proteomics database. By identifying such protein-protein interactions and comparing them with known pathways within the proteomics database, we can determine the role of these proteins within a given biological pathway. We have designed our proteomic technologies to permit disease-related genes to be linked rapidly to specific biological pathways, providing valuable information that can lead to the discovery of new genes and additional targets for therapeutic intervention.

Once potential drug targets are identified, we apply technologies and processes to qualify and validate the discoveries as actual drug targets. To accomplish these, we have industrialized a series of “wet” biology approaches that include gene analysis across human disease tissue samples, cellular and biochemical assays, and in vitro and in vivo models of disease. Each of these processes further characterizes the drug targets, and provides scientists with a greater insight into their biological role.

7

Pharmacogenomics, Pharmacogenetics, and Toxicogenomics

In addition to accelerating the discovery of new drug candidates, we are also using our technologies to predict the efficacy and safety of drug candidates currently in pharmaceutical development pipelines, and to review the performance and side effects of drugs already being marketed. This approach, referred to as pharmacogenomics, is aiding in the development of more effective and safer drugs. When this approach focuses exclusively on drug toxicity, it is referred to as toxicogenomics. Pharmacogenomics can also potentially be utilized to identify more appropriate patient populations for use in clinical drug studies.

Our functional genomic technologies can also be used in preclinical and clinical trials to predict which drugs are more likely to be effective by analyzing gene expression changes induced by drug treatment in humans and animal models. We have generated gene expression databases for numerous drugs already on the market to accelerate the development of an improved generation of drugs with fewer side effects and to assist in the selection of appropriate patient populations. By correlating gene expression levels and the activities of biological pathways following treatment with specific drugs, we may be able to minimize the side effects of drugs, to identify appropriate patient populations for existing drugs and to aid in the development of safer and more effective drugs. In addition, we use our gene sequence database to identify cSNPs in genes that respond to drugs, and can use these variations for identifying the most appropriate patients for a specific drug treatment.

Technology Integration and Information Systems (Our GeneScape Bioinformatics Platform)

We have integrated our functional genomic technologies, processes and databases through a computer operating system that we refer to as the GeneScape bioinformatics platform, which tracks and analyzes data and integrates all aspects of process management, data analysis and visualization. GeneScape is also a web-based portal that provides simultaneous, real-time access to our technologies, systems, databases and bioinformatics to researchers at multiple sites, allowing them to work together on discovery and development projects. We plan to continue enhancing the functionality and integrating additional technologies on our GeneScape operating platform.

We designed GeneScape to meet the needs of researchers using a single operating system, which integrates research requests, project management, database access and data analysis and visualization. GeneScape provides the user with a web-based standardized interface to our processes and databases, operating over the Internet on any computer platform that supports a standard web browser. By providing simultaneous, real-time access to our technologies, systems and databases to researchers at multiple sites, GeneScape is a powerful tool that permits researchers to work together on discovery and development projects. These technologies can be used alone or in concert in discovery efforts as well as preclinical and clinical trials to predict which drugs are more likely to succeed by analyzing gene expression changes induced by drug treatment in humans and animal models. As GeneScape is modular and may be expanded to incorporate other technologies, systems and databases, we intend to continually enhance this technology platform by adding additional technologies as they become applicable.

Technology Subsidiary

In June 2000, we announced the formation of 454 Corporation (currently doing business as 454 Life Sciences) (“454”), a 60%-owned subsidiary established to develop novel technologies for rapidly and comprehensively analyzing entire genomes. The technologies being developed at 454 are expected to have broad applications in industrial engineering, agriculture, animal health, and human health care including drug discovery and development, and disease diagnosis. This subsidiary was funded primarily with $40.0 million from investors including ourselves, Soros Fund Management, L.L.C., Cooper Hill Partners, L.L.C, and members of our senior management team.

The operations of 454 are run by a separate management team and governed by a Board of Directors made up of members of our management team and Board of Directors. Over the last two and a half years, 454 has made significant progress in developing technologies to rapidly sequence entire genomes. In August 2002,

8

454 successfully sequenced a viral genome on their technology platform. As this new technology is refined and its applications across the life sciences industry become more apparent, we anticipate that 454 will positively impact our overall corporate valuation.

Competition

We currently face, and will continue to face, intense competition from one or more of the following entities:

• pharmaceutical companies;

• biotechnology companies;

• diagnostic companies;

• academic and research institutions; and

• government agencies.

We are also subject to significant competition from organizations that are pursuing technologies and products that are the same as or similar to our technology and products. Many of the organizations competing with us have greater capital resources, research and development staffs and facilities and marketing capabilities. In addition, research in the field of genomics generally is highly competitive. Our competitors in the genomics area include:

• Human Genome Sciences, Inc.;

• Millennium Pharmaceuticals, Inc.;

• major pharmaceutical companies; and

• universities and other research institutions (including those receiving funding from the federally funded Human Genome Project).

A number of our competitors are attempting to rapidly identify and patent genes and gene fragments sequenced at random, typically without specific knowledge of the function of such genes or gene fragments. If our competitors discover or characterize important genes or gene fragments before we do, it could adversely affect any of our related disease research programs. We expect that competition in genomics research will intensify as technical advances are made and become more widely known. The competition listed above was selected based upon identifying those companies that we feel have business models that are similar to ours.

Intellectual Property

Our business and competitive position depend on our ability to protect our genomic technologies, gene sequences, products, information systems and proprietary databases, software and other methods and technology. We continually file patent applications for our proprietary methods and devices for sequencing, gene expression analysis, discovery of biological pathways and drug screening and development. As of the date of this report, we had approximately 900 patent applications pending covering genes and gene transcripts, as well as for our technologies, discoveries and products with the United States Patent and Trademark Office (“USPTO”), as well as numerous corresponding international and foreign patent applications. As of the date of this report, we had been issued 38 patents with respect to aspects of our technologies, discoveries and products with expiration dates extending from 2015 onward.

In 2001, the USPTO issued new guidelines for patent applications reflecting the USPTO’s current policy regarding statutory written description and utility requirements for patentability. The implementation of these new guidelines may cause the USPTO initially to reject some of our pending new gene and protein patent applications. Although we believe that we will overcome such rejections to any of our new gene and protein

9

cases, there is no guarantee that the USPTO will approve them. We strive especially to gain issued patents for our commercially important genes and proteins. The new guidelines are not expected to impact pending cases directed to technology platforms.

CuraGen^®, GeneScape^®, GeneCalling^®, SeqCalling^™, PathCalling^®, HitCalling^™, SNPCalling^™, CuraTools^®, CuraMap^®, CuraChip^™, PTS^™, Predictive Toxicogenomics Screen^™ and other trademarks of CuraGen Corporation mentioned in this report are the property of CuraGen Corporation. All other trademarks or trade names referred to herein are the property of their respective owners.

Government Regulation

Prior to the marketing of any new drug developed by us, or by our collaborators, that new drug must undergo an extensive regulatory approval process in the United States and other countries. This regulatory process, which includes preclinical and clinical studies to establish a compound’s safety and efficacy, can take many years and require the expenditure of substantial resources. Data obtained from such studies are susceptible to varying interpretations that could delay, limit or prevent regulatory approval. The rate of completion of clinical trials is dependent upon, among other factors, the enrollment of patients. Patient recruitment is a function of many factors, including the:

• size of the patient population;

• proximity of patients to clinical sites;

• eligibility criteria for the study; and

• existence of competitive clinical trials.

We have received FDA approval to conduct clinical trials for CG53135, a potential protein therapeutic for the treatment of oral mucositis in cancer patients that are undergoing chemotherapy and radiotherapy. None of our product candidates have been approved for commercialization in the United States or elsewhere. We, or any of our collaborators, may not be able to conduct clinical testing or obtain the necessary approvals from the FDA or other regulatory authorities for some products. Failure by us, or our collaborators, to obtain required governmental approvals will delay or preclude our collaborators or us from marketing drugs or diagnostic products developed with us or limit the commercial use of such products and could have a material adverse effect on our business, financial condition and results of operations.

Our research and development activities involve the controlled use of hazardous materials, chemicals and controlled substances. We are subject to federal, state and local laws and regulations governing the acquisition, use, storage, handling and disposal of such materials and certain waste products.

Available Information

We were incorporated in Delaware in November 1991. Our principal executive offices are located at 555 Long Wharf Drive, 11th Floor, New Haven, Connecticut 06511. Our telephone number is (203) 401-3330. We maintain a web site on the Internet at http://www.curagen.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, are available to you free of charge through the Investor Relations section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). These documents are also available in the SEC’s Public Reference Room.

Employees

As of December 31, 2002, we and 454 had 403 full and part-time employees, 173 of whom hold Ph.D., M.D. or J.D. degrees. Our employees include engineers, physicians, molecular biologists, chemists, lawyers and

10

computer scientists. We believe that we maintain good relationships with our employees. We believe that our future success will depend in large part on our ability to attract and retain experienced and skilled employees.

Seasonality

Our business is not subject to any material fluctuations based on the season of the year.

Item 2.    Properties

We maintain our principal administrative offices along with research facilities at locations in both Branford and New Haven, Connecticut. We lease a total of approximately 146,000 square feet at all locations. The leases are for terms of two to six years, and generally provide renewal options for terms of up to five years. Our plans to construct a new corporate headquarters and protein production facility in Branford have been deferred indefinitely, pending improvements in the external financing environment which would afford us the ability to finance the future construction costs. We believe that our facilities are adequate for our current operations or that suitable additional leased space will be available as needed.

Item 3.    Legal Proceedings

We are not currently a party to any material legal proceedings.

Item 4.    Submission Of Matters To A Vote Of Security Holders

No matters were submitted to a vote of our security holders during the quarter ended December 31, 2002.

11

PART II

Item 5.    Market For Registrant’s Common Equity And Related Stockholder Matters

Market Information

Our common stock is traded on the Nasdaq National Market under the symbol “CRGN”. The following table sets forth, for the periods indicated, the low and high closing prices per share for our common stock, as reported by the Nasdaq National Market:

	2001
	Low		High
Quarter Ended March 31, 2001	$	18.9375	$	44.0625
Quarter Ended June 30, 2001		20.6250		41.1300
Quarter Ended September 30, 2001		16.0500		38.1300
Quarter Ended December 31, 2001		19.0800		25.0000
	2002
	Low		High
Quarter Ended March 31, 2002	$	14.0000	$	21.3800
Quarter Ended June 30, 2002		4.87000		15.6000
Quarter Ended September 30, 2002		3.86000		7.00000
Quarter Ended December 31, 2002		3.41000		5.34000

On February 28, 2003, the closing price of our common stock on the Nasdaq National Market was $3.43 per share.

Stockholders

As of February 28, 2003, there were approximately 237 shareholders of record of our common stock and, according to our estimates, 11,662 beneficial owners of our common stock.

Dividends

We have never paid cash dividends on our common stock and do not anticipate declaring any cash dividends in the foreseeable future. We currently intend to retain earnings, if any, to finance the development of our business.

12

Item 6.    Selected Financial Data

The selected consolidated financial data set forth below for each of the three years in the period ended December 31, 2002 are derived from our consolidated balance sheets as of December 31, 2002 and 2001 and the related audited consolidated statements of operations, of stockholders’ equity and of cash flows for each of the three years ended December 31, 2002, 2001 and 2000 and notes thereto, which are included elsewhere in this report. The consolidated balance sheet data as of December 31, 2000, 1999 and 1998 and the consolidated statements of operations data for each of the two years in the periods ended December 31, 1999 and 1998 have been derived from our related financial statements. The selected consolidated financial data set forth below should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements.

	Year Ended December 31,
	2002			2001			2000			1999			1998
	(In thousands, except per share amounts)
Consolidated Statements of Operations Data:
Total revenue	$	18,246		$	23,475		$	20,838		$	15,104		$	9,257
Net loss attributable to common stockholders		(90,403	)		(42,912	)		(26,978	)		(25,763	)		(18,936	)
Net loss per share attributable to common stockholders		(1.85	)		(0.89	)		(0.70	)		(0.89	)		(0.78	)
Weighted average number of common shares outstanding attributable to common stockholders		48,942			48,208			38,748			28,802			24,402
	December 31,
	2002			2001			2000			1999			1998
	(In thousands)
Consolidated Balance Sheet Data:
Cash and investments	$	414,809		$	508,349		$	477,031		$	76,374		$	43,294
Working capital		404,211			496,131			462,543			67,890			33,066
Total assets		448,529			538,701			499,163			93,894			60,804
Total long-term liabilities		150,263			152,297			154,907			8,410			6,984
Accumulated deficit		(214,995	)		(124,592	)		(81,680	)		(54,702	)		(28,939	)
Stockholders’ equity		271,504			355,945			311,610			74,998			42,475
Cash dividends declared per common share		None			None			None			None			None

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a genomics based pharmaceutical development company. We apply our integrated functional genomic technologies and Internet-based bioinformatic systems to discover and develop pharmaceutical products to treat unmet medical needs. We use this information to develop protein, antibody, and small molecule therapeutics to treat metabolic diseases, cancer, inflammatory diseases, and central nervous system disorders. We are developing protein drugs on our own behalf. We have established a strategic alliance with Abgenix, Inc. (“Abgenix”) to develop antibody drugs across all diseases areas, and have established a strategic alliance with Bayer AG (“Bayer”) to develop small molecule drugs to treat obesity and adult onset diabetes. We are currently pursuing additional alliances to develop small molecule drugs across other disease areas.

We were incorporated in November 1991 and, until March 1993, were engaged primarily in organizational activities, research and development of our technologies, grant preparation and obtaining financing. We have incurred losses since inception, principally as a result of research and development and general and administrative expenses in support of our operations. We anticipate incurring additional losses over the next

13

several years as we focus our resources on prioritizing, selecting and rapidly advancing our most promising drug candidates. We expect that losses will fluctuate from quarter to quarter and that such fluctuations may be substantial.

Our ability to earn revenues and become profitable is dependent primarily on our ability to successfully develop and commercialize pharmaceutical products based upon our expertise in genomics, our technologies, and our drug discovery and development programs. Accomplishing this goal also depends in part on our ability to maintain our existing strategic alliances with Abgenix and Bayer, and on our ability to establish new alliances to aid us in developing and commercializing small molecule therapeutics. We cannot guarantee that any such strategic alliances, either new or existing, will be successful. We have also established a majority-owned subsidiary, 454 Corporation (currently doing business as 454 Life Sciences) (“454”), to develop novel technologies for rapidly and comprehensively analyzing entire genomes. We expect that 454 will commercialize these products upon their development, which may be a future source of revenues for us.

Our failure to successfully develop and market pharmaceutical products over the next several years would materially adversely affect our business, financial condition and results of operations. Royalties or other revenue generated from commercial sales of products developed through the application of our technologies and expertise are not expected for several years, if at all.

The 2001 and 2000 consolidated financial statements have been reclassified to conform to the classifications used in 2002. All dollar amounts in tabular presentations are shown in thousands.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and as such, actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 1 to our consolidated financial statements, we believe the following to be our critical accounting policies:

Revenue Recognition—We have entered into certain collaborative research agreements that provide for the partial or complete funding of specified projects in exchange for access to, and certain rights in, the data discovered under the related projects. Revenue is recognized based upon defined metrics of completion that include percentage of completion milestones, and project specific initiatives as defined in each of the respective research plans. The defined metrics are reviewed internally each month to determine the work performed and the appropriate revenue to be recognized. We have also entered into a collaborative research exchange agreement in which services and technology access are exchanged between the collaborative partner and us. Revenues and expenses under this exchange agreement include the fair value of the work performed by each collaborative partner. Deferred revenue arising from payments received from collaborative research agreements is recognized as income when earned.

Cash and Investments—We consider investments readily convertible into cash, with an original maturity of three months or less, to be cash equivalents. Investments with an original maturity greater than three months but less than one year are considered short-term investments. The carrying amount of these investments approximates fair value due to their short maturity. Investments with an original maturity greater than one year are designated as marketable securities, are classified as available-for-sale securities, and are carried at fair value with the unrealized gains and losses reported in stockholders’ equity under the caption “Accumulated Other Comprehensive Income”. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Interest on debt securities, amortization of premiums and accretion of discounts are included in interest income.

14

Impairment of Long-Lived Assets—We regularly evaluate the recoverability of the net carrying value of our property, and intangible assets, when an indicator of impairment is present by comparing the carrying values to the estimated future undiscounted cash flows and fair value of the long-lived asset. An impairment loss is recognized when the carrying value of the long-lived asset exceeds its undiscounted future cash flows and its fair value. The impairment write-down would be the difference between the carrying amounts and the fair value of these long-lived assets. A loss on impairment would be recognized by a charge to earnings.

Patent Application Costs—Costs incurred in filing for patents are charged to operations, until such time as it is determined that the filing will be successful. When it becomes evident with reasonable certainty that an application will be successful, the costs incurred in filing for patents will begin to be capitalized. Capitalized costs related to successful patent applications will be amortized over a period not to exceed twenty years or the remaining life of the patent, whichever is shorter, using the straight-line method.

Stock-Based Compensation—In October 1995, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), which was effective for us beginning January 1, 1996. SFAS 123 requires expanded disclosures of stock-based compensation arrangements with employees and non-employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instruments awarded to employees.

In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure”, an Amendment of SFAS 123 (“SFAS 148”). SFAS 148 permits two additional transition methods for entities that voluntarily change to the fair value based method of accounting for stock based compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock based employee compensation and the effect of the method used on reported results. SFAS 148 became effective for financial statements issued after December 15, 2002. Companies are permitted to continue to apply Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), which recognizes compensation cost based on the intrinsic value of the equity instruments awarded. We will continue to apply APB 25 to our stock-based compensation awards to employees.

Results of Operations

Years Ended December 31, 2002 and 2001

Revenue.    Collaboration revenue for the year ended December 31, 2002 was $18.2 million, a decrease of $5.3 million, or 23%, as compared to $23.5 million for the corresponding period in 2001, reflecting our current business strategy to establish strategic research and development alliances with companies, rather than focusing on shorter term service based collaborations. Therefore, the decrease in collaboration revenue from 2001 to 2002, was primarily due to the completion in 2001 of the service based collaborations with GlaxoSmithKline, Inc. (“GSK”), Hoffmann-La Roche Inc. and its affiliate, Roche Vitamins, Inc (“Roche”) and Millennium Pharmaceuticals, Inc. (formerly COR Therapeutics, Inc.) (“Millennium”), which generated an aggregate of approximately $7.0 million in collaboration revenue during 2001. The decrease in collaboration revenue was also a result of the progression of the Bayer alliance during 2002 from the set-up phase to the production phase, offset by additional revenue recognized from the Abgenix strategic alliance.

Revenues recorded in the twelve month period ended December 31, 2002 were primarily related to our collaborative agreements with Abgenix, Bayer, and Genentech, Inc. (“Genentech”) while the same period in 2001 primarily included revenue from our collaborative agreements with Abgenix, Bayer, GSK, Millennium and Roche. Revenue from each of Abgenix and Bayer accounted for 10% or more of our total revenue in fiscal 2002. Abgenix, Bayer and GSK each accounted for 10% or more of our total revenue in 2001.

We expect that 2003 collaboration revenues will continue to decrease significantly compared to 2002 revenues, unless we receive royalties or milestone payments from products currently under development by our current and former collaborative partners. We will continue to focus on the establishment of strategic research

15

and development alliances with companies to gain access to expertise that is currently unavailable to us. We expect these alliances with other pharmaceutical and biotechnology companies to provide us with access to unique technologies, access to capital, near term revenues, milestone and/or royalty payments, and potential profit sharing arrangements. Future revenues will be dependent upon our ability to enter into additional alliances and collaborations, maintain and expand current collaborations, receive royalties and milestone payments from products currently under development by our current and former collaborators, successfully sell technologies being developed by 454 and successfully develop and market products that may arise from our own internal drug development pipeline.

Operating Expenses.    Research and development expenses for the year ended December 31, 2002 were $81.7 million compared to $65.8 million for the same period in 2001. The increase of $15.9 million, or 24%, was primarily attributable to increased internal research efforts and our obligations to fulfill research requirements under existing collaborations and strategic alliances, which included payments for contractual services, increased equipment depreciation expense and additional personnel costs. Research and development expenses for 2003 are expected to decrease slightly in comparison to 2002, reflecting the expected reduction in costs as a result of the recent corporate restructuring, partially offset by the expected increase in clinical trial costs and 454’s increased operating expenses as its operations continue to expand.

General and administrative expenses for the year ended December 31, 2002 increased $4.2 million, or 22%, to $23.0 million as compared to $18.8 million for the same period in 2001. The increase was primarily attributable to legal expenses in support of the development of our intellectual property portfolio and additional personnel costs. General and administrative expenses for 2003 are expected to decrease slightly in comparison to 2002, reflecting the recent corporate restructuring, including decreases in personnel costs, depreciation expense, consulting costs, and facility repairs and maintenance costs.

Restructuring and related charges.    Restructuring and related charges of approximately $11.0 million were incurred in 2002 as a part of our restructuring plan which was intended to reduce costs and focus resources on prioritizing, selecting and rapidly advancing our most promising drug candidates. As a result of the restructuring plan, our employee base was reduced by approximately 125 personnel, representing approximately 24% of our workforce. The reduction in personnel included early-stage drug-discovery employees and general and administrative support positions. In connection with this restructuring plan, we incurred $1.8 million related to employee separation costs and $1.1 million of asset impairment costs related to equipment no longer in service. The employee separation costs were recorded under Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”) and included amounts to be paid for severance and related benefits, the services for which had been performed in full as of the end of 2002. The cash requirements under the restructuring plan were $1.9 million, of which $1.2 million was paid prior to December 31, 2002. We expect to pay the majority of our remaining cash obligations related to the 2002 restructuring plan during the first quarter of 2003 and currently do not anticipate any additional restructuring plans.

Also included in restructuring and related charges was an asset impairment of $8.1 million, consisting of costs previously incurred in conjunction with the planned construction of a campus facility, including a new corporate headquarters and protein production facility in Branford, Connecticut. Plans to construct these facilities have been deferred indefinitely, pending improvements in the external financing environment, which would afford us the ability to finance the future construction costs.

Interest Income, net.    Net interest income for the year ended December 31, 2002 of $1.5 million decreased $11.7 million, or 89%, as compared to $13.2 million for the same period in 2001. Interest income for the year ended December 31, 2002 of $11.7 million decreased $12.1 million, or 51%, as compared to $23.8 million for the same period in 2001. The decrease in interest income was primarily due to lower yields in our investment portfolio and a decrease in cash and investment balances during 2002. We earned an average yield of 2.7% in 2002 as compared to 4.0% in 2001. The decrease in cash and investments during 2002 was primarily a result of

16

operating losses in support of our research and development activities, acquisitions of additional property and equipment and payment of interest to the holders of our convertible subordinated debt which we issued on February 2, 2000. We anticipate that interest income in 2003 will continue to decrease significantly as compared to 2002, as cash and investment balances are utilized in the normal course of operations and the yields in our investment portfolio continue to decrease slightly.

Interest expense for the year ended December 31, 2002 of $10.2 million represented a decrease of $0.4 million, or 4%, as compared to $10.6 million for the year ended December 31, 2001. Interest expense was primarily attributable to accrued interest and interest paid to the holders of our convertible subordinated debt which we issued on February 2, 2000. We expect that interest expense will remain relatively constant in 2003.

Income Tax Benefit.    For the year ended December 31, 2002, we recorded a Connecticut income tax benefit of $1.5 million, representing a decrease of $2.1 million, as compared to a Connecticut income tax benefit of $3.6 million in 2001. The decrease in the income tax benefit was a result of the decline in various expenses which qualify for the annual research and development credit, primarily tax based compensation and consulting expenses resulting from the exercise of stock options by employees and non-employees. We recorded the income tax benefit as a result of Connecticut legislation, which allows companies to obtain cash refunds from the State of Connecticut at a rate of 65% of their annual research and development expense credit, in exchange for forgoing carryforward of the credit. We expect to record a Connecticut income tax benefit during 2003 of significantly less than the 2002 amount, due to an anticipated reduction in qualified Connecticut research and development expenses.

We determine our income taxes using the asset and liability method. Realization of deferred tax assets is dependent on future earnings, if any, the timing and amount of which are uncertain. As we have no prior earnings history, a valuation allowance in an amount equal to the deferred income tax assets has been established to reflect these uncertainties. The increase in the valuation allowance was $40.7 million for the year ended December 31, 2002.

Minority Interest in Subsidiary Loss.    Minority interest in subsidiary loss for the year ended December 31, 2002, which is the portion of 454’s loss attributable to stockholders of 454 other than us, was $3.9 million as compared to $1.5 million for the same period in 2001. The increase of $2.4 million, or 160%, was primarily due to 454’s additional personnel costs, increased purchases of laboratory supplies, increased equipment depreciation expense and payments for consulting and contractual services. During 2003, losses attributed to the minority ownership in 454 are expected to continue to increase as compared to 2002, as 454 continues to make significant progress in developing new technologies.

Net Loss.    For the year ended December 31, 2002, we reported a net loss of $90.4 million, or $1.85 per share as compared to $42.9 million, or $0.89 per share, for the same period in 2001. Our net loss for 2003 is expected to decrease slightly as compared to 2002. Since inception, we have incurred operating losses, and as of December 31, 2002, we had an accumulated deficit of $215.0 million. To date, we have not paid any federal income taxes.

Years Ended December 31, 2001 and 2000

Revenue.    Collaboration revenue for the year ended December 31, 2001 was $23.5 million, an increase of $2.7 million, or 13%, as compared to $20.8 million for the corresponding period in 2000. Revenues recorded in the twelve month period ended December 31, 2001 were primarily related to our collaborative arrangements with Abgenix, Bayer, GSK, Millennium and Roche, while the same period in 2000 primarily included revenue from our collaborative arrangements with Abgenix, Genentech, GSK and Millennium. Revenue from each of Abgenix, Bayer, and GSK accounted for 10% or more of our total revenue in fiscal 2001. Abgenix, DuPont/Pioneer Hi-Bred International, Inc., Genentech, GSK, Millennium and Roche each accounted for 10% or more of our total revenue in 2000.

17

Operating Expenses.    Research and development expenses for the year ended December 31, 2001 were $65.8 million compared to $40.9 million for the same period in 2000. The increase of $24.9 million, or 61%, was primarily attributable to increased internal research efforts and our obligations to fulfill research requirements under new and existing collaborations, which resulted in increased purchases of laboratory supplies, increased equipment depreciation and facilities expenses, and additional personnel costs.

General and administrative expenses for the year ended December 31, 2001 increased $4.6 million, or 32%, to $18.8 million as compared to $14.2 million for the same period in 2000. The increase was primarily attributable to higher recruiting, personnel, payroll and marketing costs, expenses in connection with upgrades and expansion of our facilities and related increased rent expenses, as well as legal expenses in support of the development of our intellectual property portfolio.

Interest Income, net.    Net interest income for the year ended December 31, 2001 of $13.2 million increased $7.6 million, or 134%, as compared to $5.6 million for the same period in 2000. Interest income for the year ended December 31, 2001 of $23.8 increased $8.1 million, or 51%, as compared to $15.7 million for the same period in 2000. The increase in interest income was primarily due to higher cash and investment balances as a result of funds we received from the proceeds of our public offering in November 2000 and from the combined net proceeds from our private placements with Abgenix in November 2000 and Bayer in January 2001, offset by recent declines in interest rates. Interest expense for the year ended December 31, 2001 of $10.6 million represented an increase of $0.5 million, or 5%, as compared to $10.1 million for the year ended December 31, 2000. This increase in interest expense was primarily attributable to accrued interest and interest paid to the holders of our convertible subordinated debt which we issued on February 2, 2000.

Income Tax Benefit.    For the year ended December 31, 2001, we recorded a Connecticut income tax benefit of $3.6 million, an increase of $2.1 million over the amount recorded in 2000. This increase was a result of the increase in various expenses which qualified for the annual research and development credit, including tax based compensation and consulting expenses resulting from the exercise of stock options by employees and non-employees. The income tax benefit was recorded as a result of Connecticut legislation, which allows companies to obtain cash refunds from the State of Connecticut at a rate of 65% of their annual research and development expense credit, in exchange for forgoing carryforward of their research and development credit.

We determine our income taxes using the asset and liability method. 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. The increase in the valuation allowance was $22.2 million for the year ended December 31, 2001.

Minority Interest in Subsidiary Loss.    Minority interest in subsidiary loss for the year ended December 31, 2001, which is the portion of 454’s loss attributable to stockholders of 454 other than us, was $1.5 million as compared to $0.3 million for the same period in 2000. The increase of $1.2 million, or 359%, was primarily due to 454’s increased purchases of laboratory supplies, increased equipment depreciation and facilities expenses, as well as additional personnel costs, all of which were incurred during a full twelve month period in 2001, as compared to seven months during 2000, as 454 was formed in June 2000.

Net Loss.    For the year ended December 31, 2001, we reported a net loss of $42.9 million, or $0.89 per share as compared to $27.0 million, or $0.70 per share, for the same period in 2000. Since inception, we have incurred operating losses, and as of December 31, 2001, we had an accumulated deficit of $124.6 million. To date, we have not paid any federal income taxes.

18

Liquidity and Capital Resources

As of December 31, 2002, we had $414.8 million in cash and investments, compared to $508.3 million as of December 31, 2001. The decrease of $93.5 million in cash and investments during 2002 was primarily a result of additional operating losses in support of our research and development activities, acquisitions of additional property and equipment and payment of interest to the holders of our convertible subordinated debt issued in February 2000. We have financed our operations since inception primarily through public equity offerings, our convertible subordinated debt offering, revenues received under our collaborative research agreements, private placements of equity securities, government grants, and capital leases. As of December 31, 2002, we had recognized $99.1 million of cumulative sponsored research revenues from collaborative research agreements and government grants. To date, inflation has not had a material effect on our business.

Our cash investing activities have consisted primarily of acquisitions of equipment and expenditures for leasehold improvements and net outflows from purchases and maturities of short-term investments and marketable securities. At December 31, 2002, our gross investment in lab and office equipment, computers, land and leasehold improvements was $42.9 million. At December 31, 2002, equipment with a gross book value of $4.5 million secures our equipment financing loan facilities. We had approximately $1.3 million in material commitments for capital expenditures at December 31, 2002.

In accordance with our investment policy, we are utilizing the following investment objectives for cash and investments: (1) investment decisions are made with the expectation of minimum risk of principal loss, even with a modest penalty in yield; (2) appropriate cash balances and related short-term funds are maintained for immediate liquidity needs, and appropriate liquidity is available for medium-term cash needs; and (3) maximum after-tax yield is achieved.

Cash Flows For The Year Ended December 31, 2002

Operating Activities.    Net cash used in operating activities was $74.6 million for the year ended December 31, 2002 and was primarily due to the net cash loss from operations of $74.3 million, increases in income taxes receivable of $1.5 million and prepaid expenses of $0.6 million and a decrease in accounts payable of $1.1 million, offset by a decrease in deferred revenue of $0.6 million, plus increases in accrued expenses of $0.8 million and other current liabilities of $0.8 million.

Investing Activities.    Net cash used in investing activities was $90.7 million for the year ended December 31, 2002 and was primarily due to net outflows from purchases and maturities of short-term investments and marketable securities of $70.4 million and acquisitions of property and equipment, including expenditures for leasehold improvements, of $20.3 million.

Financing Activities.    Net cash used in financing activities was $1.9 million for the year ended December 31, 2002 and primarily included payments on capital lease obligations of $3.0 million offset by proceeds from exercises of stock options in the amount of $1.1 million.

Future Liquidity

Sources of Liquidity.    During 2003, we expect to fund our operations through a combination of the following sources: cash and investment balances; collaboration revenue; gross interest income; and potential public securities offerings and/or private strategic-driven common stock offerings.

Uses of Liquidity.    Throughout 2003, we plan to continue making substantial investments in our emerging preclinical and clinical drug pipeline. In that regard, we foresee the following as significant uses of liquidity: salaries and benefits, supplies and reagents, contractual services, clinical trials on our recently approved protein therapeutic CG53135, legal expenses in support of the development of our intellectual property portfolio, and interest expense related to payments made to the holders of our convertible subordinated debt issued in February 2000. In addition, we anticipate that we will also incur additional capital expenditures in 2003 primarily for the

19

purchase of equipment and leasehold improvements at our New Haven and Branford research facilities and administrative offices, including the expansion of our existing protein production laboratory.

The following table represents our contractual obligations as of December 31, 2002:

	Payments Due Year Ended December 31,
	Total		2003		2004		2005		2006		2007		2008 and thereafter
Capital leases	$	1,861	$	1,592	$	269	$	—	$	—	$	—	$	—
Operating leases		8,607		2,482		1,997		1,648		1,340		1,030		110
Interest on convertible subordinated debt		40,500		9,000		9,000		9,000		9,000		4,500		—
Long-term debt obligation (1)		150,000		—		—		—		—		150,000		—
Total	$	200,968	$	13,074	$	11,266	$	10,648	$	10,340	$	155,530	$	110

(1) Refer to Note 8 of our consolidated financial statements for additional discussion of our long-term debt obligation.

We believe that our existing cash and investment balances and other sources of liquidity will be sufficient to meet our requirements through the end of 2003. Our operating and capital expenditures are considered to be crucial to our future success, and by continuing to make strategic investments in research and development programs, we believe that we are building substantial value for our shareholders. Our future operating and capital requirements, and the adequacy of our available funds will depend on many factors, including the progress we make in our drug discovery, drug development, and pharmacogenomic programs, the magnitude of these programs, the success of our strategic research and development alliance partners in developing and commercializing drugs from existing programs and our ability to establish additional collaborative and licensing arrangements. While we will continue to explore alternative sources for financing our business activities, including the possibility of public securities offerings and/or private strategic-driven common stock offerings, we cannot be certain that in the future these sources of liquidity will be available when needed or that our actual cash requirements will not be greater than anticipated. In appropriate strategic situations, we may seek financial assistance from other sources, including contributions by others to joint ventures and other collaborative or licensing arrangements for the development and testing of products under development. However, should we be unable to obtain future financing either through the methods described above or through other means, we may be unable to meet the critical objectives of our long-term business plan, which are to successfully develop and market pharmaceutical products.

Income Taxes

We and 454 have the following tax net operating loss carryforwards available to reduce future federal and Connecticut taxable income and research and development tax credit carryforwards available to offset future federal and Connecticut income taxes:

Net Operating Loss Carryforwards	Federal	Expire In	Connecticut	Expire In
CuraGen	$264,970	2008 to 2023	$248,221	2004 to 2023
454	$  13,922	2021 to 2023	$  13,671	2021 to 2023
Research and Development Tax Credit Carryforwards	Federal	Expire In	Connecticut	Expire In
CuraGen	$10,903	2008 to 2023	$8,458	2014 to 2018
454	$     570	2021 to 2023	$   148	2018

For income tax purposes, we do not file consolidated income tax returns with 454.

20

Minority Interest in Subsidiary

As of December 31, 2002, minority interest in subsidiary was $10.1 million. Minority interest in subsidiary is related to the establishment of 454, a majority-owned subsidiary, during 2000 and reflects the initial minority shareholders’ capitalization less a gain recognition of $3.9 million as a result of our contribution of technology to 454, less the minority shareholders’ portion of losses incurred to date. The loss attributed to the minority ownership in 454 is expected to continue to increase during 2003, as 454’s expenditures associated with technology development continue to increase.

Recently Enacted Pronouncements

In April 2002, the FASB issued Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”). SFAS 145 rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, and an amendment of that Statement, FASB Statement No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements”. SFAS 145 also rescinds FASB Statement No. 44, “Accounting for Intangible Assets of Motor Carriers”. SFAS 145 also amends FASB Statement No. 13, “Accounting for Leases”, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The provisions of SFAS 145 are effective for annual financial statements issued on or after May 15, 2002, and the adoption of SFAS 145 did not have a material effect on our financial statements.

In July 2002, the FASB issued SFAS 146 which requires that a liability for a cost associated with an exit or disposal activity be recognized at its fair market value when the liability is incurred, rather than at the date of an entity’s commitment to an exit plan. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after December 31, 2002. We have recorded the effect of our November 2002 restructuring plan, as discussed above and in Note 11 of our consolidated financial statements, under the early adoption provisions of SFAS 146.

In December 2002, the FASB issued SFAS 148, which permits two additional transition methods for entities, that voluntarily change to the fair value based method of accounting for stock based compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock based employee compensation and the effect of the method used on reported results. SFAS 148 became effective for financial statements issued after December 15, 2002, and the adoption of SFAS 148 did not have a material effect on our financial statements, as we have not yet adopted SFAS 123.

In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 clarifies and expands existing disclosure requirements for guarantees, including loan guarantees. The provisions of FIN No. 45 are effective for financial statements issued after December 15, 2002, and the adoption of FIN No. 45 did not have a material effect on our financial statements.

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities—an Interpretation of Accounting Research Bulletin No. 51.” FIN No. 46 clarifies rules for consolidation of special purpose entities. The provisions of FIN No. 46 are effective for financial statements issued after January 31, 2003. We do not expect the adoption of this statement to have a material impact on our financial statements.

21

Certain Factors That May Affect Results of Operations

This report contains forward-looking statements that are subject to certain risks and uncertainties. These statements include statements regarding: (i) our ability to apply proprietary genomic technologies to understand the molecular basis of disease and develop the next generation of therapeutic products for important diseases; (ii) our ability to develop pharmaceutical products with greater efficacy and fewer side effects and increase the probability that the most appropriate drugs will be administered to patients; (iii) our expectation that CG53135 (or FGF20) will be advanced into clinical trials during April 2003; (iv) our expectation that CR002 will be advanced into clinical trials during 2004 as a potential treatment for kidney disease; (v) our ability to generate data and information that will help the pharmaceutical industry to significantly reduce the time and cost of drug development; (vi) our expectation of bringing 12 candidates in obesity and diabetes to clinical development under our collaboration with Bayer; (vii) our ability to establish our fully integrated technologies and GeneScape operating system as the preferred platform for genomics, drug discovery, drug development and pharmacogenomics; (viii) the ability of 454 Corporation to develop technologies that have broad applications in drug discovery, preclinical drug development and the field of pharmacogenetics and to create a future source of revenues for us; (ix) the likely success of our technologies; (x) the expected benefits, effects, efficiency and performance of our services and products; (xi) the expected future levels of losses, operating expenses and material commitments; (xii) our ability to enter into additional collaborations and strategic alliances, maintain and expand current collaborations, garner royalties and milestone payments from products currently under development by current and former collaborators and successfully develop and market products from our internal product pipeline; (xiii) our expectation that our research and development expenses for 2003 are expected to decrease slightly in comparison to 2002; (xiv) our expectation that our general and administrative expenses for 2003 are expected to decrease slightly in comparison to 2002; (xv) the expectation that a majority of our remaining cash obligations related to the restructuring plan will be paid in the first quarter of 2003; (xvi) our expectation that interest expense will remain relatively constant in 2003; (xvii) our expected sources and uses of liquidity in 2003 and (xviii) our belief that our existing cash and investment balances and other sources of liquidity will be sufficient to meet our requirements through the end of 2003. Such statements are based on our 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. We caution 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: our stage of development as a genomics based pharmaceutical company; uncertainties of preclinical and clinical testing and trials; government regulation and healthcare reform; technological uncertainty and product development risks; product liability exposure; uncertainty of additional funding; our history of incurring losses and the uncertainty of achieving profitability; reliance on research collaborations and strategic alliances; competition; the ability of our third party manufacturers to deliver materials on a timely basis and to comply with applicable regulatory requirements, including the FDA’s current Good Manufacturing Practices, or GMP, and our ability to protect our patents and proprietary rights and uncertainties relating to commercialization rights including the acquisition of licenses; the availability and terms of which cannot be predicted. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

For further information, refer to the more specific risk and uncertainties discussed throughout this discussion and analysis.

22

Item 7a.    Quantitative and Qualitative Disclosures About Market Risk

Currently, we maintain approximately 15% of our cash and investments in financial instruments with original maturity dates of less than three months, 50% of our cash and investments in financial instruments with original maturity dates of greater than three months and less than one year, and the remaining 35% in financial instruments with original maturity dates of greater than one year and less than five years. These financial instruments are subject to interest rate risk and will decline in value if interest rates increase. We estimate that a change of 100 basis points in interest rates would result in a $3.5 million decrease in the fair value of our cash and investments.

Our outstanding long-term liabilities as of December 31, 2002 consist of our 6% convertible subordinated debentures due February 2, 2007 and capital lease obligations, both of which bear interest at fixed rates, therefore, our results of operations would not be affected by interest rate changes. Although future borrowings would be affected by interest rate changes, at this point we do not anticipate any significant future borrowings, and therefore do not believe that a change of 100 basis points in interest rates would have a material effect on our financial condition.

Accordingly, we do not believe that there is any material market risk exposure with respect to derivative or other financial instruments that would require disclosure under this item.

As of December 31, 2002, the market value of our convertible subordinated debentures based on quoted market prices was estimated at $95.0 million.

As of December 31, 2002, we did not have any off-balance sheet arrangements.

Item 8.    Financial Statements and Supplementary Data

23

CURAGEN CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)

	December 31,
	2002			2001
ASSETS
Current assets:
Cash and cash equivalents	$	68,401		$	235,618
Short-term investments		198,301			272,731
Marketable securities		148,107			—
Cash and investments		414,809			508,349
Income taxes receivable		2,359			856
Other current assets		275			676
Prepaid expenses		3,405			2,810
Total current assets		420,848			512,691
Property and equipment, net		24,336			19,376
Other assets		245			321
Intangible assets, net		3,100			6,313
Total assets	$	448,529		$	538,701
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,426		$	3,476
Accrued expenses		2,539			1,744
Accrued payroll and related items		2,300			1,924
Interest payable, short-term		3,750			3,750
Deferred revenue		2,610			2,025
Deferred rent		—			59
Current portion of obligations under capital leases		1,511			2,800
Other current liabilities		1,501			782
Total current liabilities		16,637			16,560
Long-term liabilities:
Convertible subordinated debt		150,000			150,000
Obligations under capital leases, net of current portion		263			2,297
Total long-term liabilities		150,263			152,297
Commitments and contingencies
Minority interest in subsidiary		10,125			13,899
Stockholders’ equity:
Common Stock; $.01 par value, issued and outstanding 49,362,463 shares at December 31, 2002, and 48,729,319 shares at December 31, 2001		494			487
Treasury Stock, at cost; 12,500 shares at December 31, 2002, and none at December 31, 2001		(49	)		—
Additional paid-in capital		483,824			480,050
Accumulated other comprehensive income		3,357			—
Accumulated deficit		(214,995	)		(124,592	)
Unamortized stock-based compensation		(1,127	)		—
Total stockholders’ equity		271,504			355,945
Total liabilities and stockholders’ equity	$	448,529		$	538,701

See accompanying notes to consolidated financial statements

24

CURAGEN CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Year Ended December 31,
	2002			2001			2000
Revenue:
Collaboration revenue	$	18,246		$	23,475		$	20,838
Total revenue		18,246			23,475			20,838
Operating expenses:
Research and development		81,654			65,849			40,951
General and administrative		22,955			18,831			14,244
Restructuring and related charges		10,982			—			—
Total operating expenses		115,591			84,680			55,195
Loss from operations		(97,345	)		(61,205	)		(34,357	)
Interest income, net
Interest income		11,728			23,790			15,717
Interest expense		(10,176	)		(10,553	)		(10,066	)
Total interest income, net		1,552			13,237			5,651
Net loss before income tax benefit and minority interest in subsidiary loss		(95,793	)		(47,968	)		(28,706	)
Income tax benefit		1,503			3,550			1,400
Minority interest in subsidiary loss		3,887			1,506			328
Net loss	$	(90,403	)	$	(42,912	)	$	(26,978	)
Basic and diluted net loss per share	$	(1.85	)	$	(0.89	)	$	(0.70	)
Weighted average number of shares used in computing basic and diluted net loss per share		48,942			48,208			38,748

See accompanying notes to consolidated financial statements

25

CURAGEN CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(in thousands, except number of shares)

	Number of Shares	Voting Common Stock ($.01 par value)		Number of Shares		Non-Voting Common Stock ($.01 par value)		Number of Shares	Treasury Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income		Accumulated Deficit			Unamortized Stock-Based Compensation			Total			Total Comprehensive Loss
January 1, 2000	32,843,076	$	329	1,955,272		20		—		—		$	129,667			—	$	(54,702	)	($	315	)	$	74,999			—
Net loss	—		—	—		—		—		—			—			—		(26,978	)					(26,978	)		—
Issuance of common stock	6,241,442		62	—		—		—		—			246,738			—		—			—			246,800			—
Issuance of warrants													12,500			—		—			—			12,500			—
Stock issuance costs	—		—	—		—		—		—			(10,949	)		—		—			—			(10,949	)		—
Amortization and write-off of stock-based compensation	—		—	—		—		—		—			(131	)		—		—			284			153			—
Amortization of warrants—capital lease obligations	—		—	—		—		—		—			(17	)		—		—			—			(17	)		—
Employee stock option activity	775,782		8	—		—		—		—			2,672			—		—			—			2,680			—
Non-employee stock option activity	356,224		4	—		—		—		—			1,491			—		—			—			1,495			—
Exercise of non-employee warrants	3,137,732		31	—		—		—		—			6,433			—		—			—			6,464			—
Stock-based 401(k) employer plan match	10,761		—	—		—		—		—			534			—		—			—			534			—
Conversion of non-voting common stock	685,000		7	(685,000	)	(7	)	—		—			—			—		—			—			—			—
Gain on sale of technology to subsidiary	—		—	—		—		—		—			3,929			—		—			—			3,929			—
December 31, 2000	44,050,017		441	1,270,272		13							392,867			—		(81,680	)		(31	)		311,610			—
Net loss	—		—	—		—		—		—			—			—		(42,912	)		—			(42,912	)		—
Issuance of common stock	3,112,482		31	—		—		—		—			84,969			—		—			—			85,000			—
Stock issuance costs	—		—	—		—		—		—			(125	)		—		—			—			(125	)		—
Amortization and write-off of stock-based compensation	—		—	—		—		—		—			—			—		—			31			31			—
Amortization of warrants—capital lease obligations	—		—	—		—		—		—			(5	)		—		—			—			(5	)		—
Employee stock option activity	200,546		2	—		—		—		—			788			—		—			—			790			—
Non-employee stock option activity	32,848		—	—		—		—		—			754			—		—			—			754			—
Exercise of non-employee warrrants	30,000		—	—		—		—		—			61			—		—			—			61			—
Stock-based 401(k) employer plan match	33,154		—	—		—		—		—			741			—		—			—			741			—
Conversion of non-voting common stock	1,270,272		13	(1,270,272	)	(13	)	—		—			—			—		—			—			—			—
December 31, 2001	48,729,319		487	—		—							480,050			—		(124,592	)		—			355,945			—
Net loss	—		—	—		—		—		—			—			—		(90,403	)		—			(90,403	)	$	(90,403	)
Unrealized gain on marketable securities	—		—	—		—		—		—			—		$	3,357		—			—			3,357			3,357
Issuance of restricted stock	266,250		3	—		—		—		—			1,751			—		—			(1,751	)		3			—
Repurchase of restricted stock	—		—	—		—		12,500		(49	)		(38	)		—		—			—			(87	)		—
Amortization and write-off of stock-based compensation	—		—	—		—		—		—			—			—		—			624			624			—
Employee stock option activity	162,247		2	—		—		—		—			773			—		—			—			775			—
Non-employee stock option activity	69,845		1	—		—		—		—			291			—		—			—			293			—
Stock-based 401(k) employer plan match	134,802		1	—		—		—		—			997			—		—			—			998			—
Comprehensive loss	—		—	—		—		—		—			—			—		—			—			—		$	(87,046	)
December 31, 2002	49,362,463	$	494	—		—		12,500	$	(49	)	$	483,824		$	3,357	$	(214,995	)	$	(1,127	)	$	271,504

See accompanying notes to consolidated financial statements

26

CURAGEN CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2002			2001			2000
Cash flows from operating activities:
Net loss	$	(90,403	)	$	(42,912	)	$	(26,978	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		9,287			7,109			6,090
Asset impairment restructuring expense		9,056			—			—
Non-monetary compensation		612			687			744
Stock-based 401(k) employer plan match		998			741			534
Minority interest		(3,887	)		(1,506	)		(328	)
Changes in assets and liabilities:
Income taxes receivable		(1,503	)		544			(1,400	)
Other current assets		401			(5	)		196
Prepaid expenses		(595	)		(2,128	)		454
Other assets		77			212			(302	)
Accounts payable		(1,050	)		(111	)		1,744
Accrued expenses		795			(20	)		750
Accrued payroll and related items		376			556			534
Interest payable		—			—			3,729
Deferred revenue		585			(1,827	)		(131	)
Deferred rent		(59	)		(59	)		(69	)
Other current liabilities		719			782			—
Net cash used in operating activities		(74,591	)		(37,937	)		(14,433	)
Cash flows from investing activities:
Acquisitions of property and equipment		(20,339	)		(11,382	)		(4,273	)
Payments for intangible assets		(130	)		(2,583	)		(463	)
Proceeds from sale of fixed assets		31			25			165
Net inflows (outflows) from purchases and maturities of short-term investments		74,430			(125,195	)		(117,804	)
Gross purchases of marketable securities		(144,750	)		—			—
Net cash used in investing activities		(90,758	)		(139,135	)		(122,375	)
Cash flows from financing activities:
Payments on capital lease obligations		(2,963	)		(3,518	)		(3,318	)
Proceeds from issuance of Common Stock		—			85,000			246,800
Proceeds from issuance of 454 Corporation Preferred Stock		—			—			20,000
Proceeds from issuance of warrants		—			—			12,500
Proceeds from sale-leaseback of equipment		—			901			—
Proceeds from issuance of convertible subordinated debt		—			—			150,000
Payments of stock issuance costs		—			(125	)		(11,288	)
Payments of financing costs		(12	)		(12	)		(5,080	)
Proceeds from exercise of stock options		1,104			888			3,583
Proceeds from exercise of warrants		—			61			6,464
Proceeds from issuance of restricted stock		3			—			—
Net cash (used in) provided by financing activities		(1,868	)		83,195			419,661
Net (decrease) increase in cash and cash equivalents		(167,217	)		(93,877	)		282,853
Cash and cash equivalents, beginning of year		235,618			329,495			46,642
Cash and cash equivalents, end of year	$	68,401		$	235,618		$	329,495
Supplemental cash flow information:
Interest paid	$	9,367		$	9,767		$	5,652
Income tax benefit payments received		—		$	4,875			—
Noncash financing transactions:
Obligations under capital leases		—		$	901			—

See accompanying notes to consolidated financial statements

27

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Organization and Summary of Significant Accounting Policies

Organization—CuraGen Corporation (“CuraGen”) is a genomics based pharmaceutical development company that applies their integrated functional genomic technologies and Internet-based bioinformatic systems to discover and develop pharmaceutical products to treat unmet medical needs. Through the application of its proprietary technologies, CuraGen is gaining an understanding of how genes and proteins function in the context of disease, and is applying this knowledge to the development of protein, antibody, and small molecule therapeutics. CuraGen was incorporated in November 1991 and, until March 1993, was engaged primarily in organizational activities, research and development of its technologies, grant preparation and obtaining financing. In June 2000, CuraGen formed 454 Corporation (currently doing business as 454 Life Sciences) (“454”), a majority-owned subsidiary.

The 2001 and 2000 consolidated financial statements have been reclassified to conform to the classification used in 2002. All dollar amounts in tabular presentations are shown in thousands, except per share data.

Principles of Consolidation—The consolidated financial statements include CuraGen and 454 (the “Company”). All material intercompany accounts, transactions, and profits have been eliminated in consolidation.

Revenue Recognition—The Company has entered into certain collaborative research agreements that provide for the partial or complete funding of specified projects in exchange for access to, and certain rights in, the data discovered under the related projects. Revenue is recognized based upon defined metrics of completion that include percentage of completion milestones, and project specific initiatives as defined in each of the respective research plans. The defined metrics are reviewed internally each month to determine the work performed and the appropriate revenue to be recognized.

The Company has also entered into a collaborative research exchange agreement in which services and technology access are exchanged between the collaborative partners. Revenues and expenses under this exchange agreement include the fair value of the work performed by each collaborative partner. Revenues were $9.6 million, $5.4 million and $2.4 million and expenses were $11.1 million, $6.9 million and $3.9 million under the exchange agreement for the years ended December 31, 2002, 2001 and 2000, respectively. Deferred revenue arising from payments received from collaborative agreements is recognized as income when earned.

Cash and Investments—The Company considers investments readily convertible into cash, with an original maturity of three months or less to be cash equivalents. Investments with an original maturity greater than three months but less than one year are considered short-term investments. The carrying amount of these investments approximates fair value due to their short maturity. Investments with an original maturity greater than one year are designated as marketable securities, are classified as available-for-sale securities, and are carried at fair value with the unrealized gains and losses reported in stockholders’ equity under the caption “Accumulated Other Comprehensive Income”. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Interest on debt securities, amortization of premiums and accretion of discounts are included in interest income. The cost of securities sold is based on the specific identification method.

Property and Equipment—Property and equipment are recorded at cost. Equipment under capital leases is recorded at the lower of the net present value of the minimum lease payments required over the term of the lease or the fair value of the assets at the inception of the lease. Additions, renewals and betterments that significantly extend the life of an asset are capitalized. Minor replacements, maintenance and repairs are charged to operations as incurred. Equipment is depreciated over the estimated useful lives of the related assets, ranging from three to five years, using the straight-line method. Equipment under capital leases is amortized over the shorter of the estimated useful lives or the terms of the leases, ranging from three to five years, using the straight-line method.

28

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Leasehold improvements are amortized over the shorter of the estimated lives or the remaining terms of the leases, ranging from six months to five years, using the straight-line method. Under accounting principles generally accepted in the United States of America, land is not required to be depreciated. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation or amortization are eliminated from the accounts and any resulting gain or loss is reflected in income.

Impairment of Long-Lived Assets— The Company regularly evaluates the recoverability of the net carrying value of its property, and intangible assets, when an indicator of impairment is present by comparing the carrying values to the estimated future undiscounted cash flows and fair value of the long-lived asset. An impairment loss is recognized when the carrying value of the long-lived asset exceeds its undiscounted future cash flows and its fair value. The impairment write-down would be the difference between the carrying amounts and the fair value of these long-lived assets. A loss on impairment would be recognized by a charge to earnings.

Deferred Real Estate Costs—Deferred real estate costs of $0.07 million were paid in 1997 in connection with the original signing of the operating lease in New Haven, Connecticut (see Note 3). These costs, which are included in Intangible assets, net, were amortized over the remaining life of the lease as of the date of occupancy, 69 months, using the straight-line method. Accumulated amortization aggregated $0.07 million, $0.06 million and $0.05 million, respectively, as of December 31, 2002, 2001 and 2000. Related amortization expense was $0.01 million for each of the years ended December 31, 2002, 2001 and 2000. Additional deferred real estate costs of $2.6 million paid during 2001 in connection with the previously planned construction of a new corporate headquarters and protein production facility in Branford, Connecticut, were reclassified to property in progress in February 2002, coincident with the purchase of the land, and were then subsequently written off in November 2002 as plans to construct these facilities were deferred indefinitely (see Note 2 and Note 11).

Licensing Fees—Licensing fees for various research and development purposes were paid during 2002, 2001 and 2000. These costs, which are included in Intangible assets, net, are amortized over the various lives of the licenses ranging from three months to five years. Certain fully amortized licensing fees were written-off during 2002, 2001 and 2000. Accumulated amortization aggregated $0.04 million, $0.08 million and $0.1 million, respectively, as of December 31, 2002, 2001 and 2000. Related amortization expense was $0.08 million, $0.1 million and $0.4 million, respectively, for the years ended December 31, 2002, 2001 and 2000.

Financing Costs—Financing costs related to the convertible subordinated debt (see Note 8) were paid during 2002, 2001 and 2000. These costs, which are included in Intangible assets, net, are amortized over the period of time from the date incurred to February 2, 2007, the due date of the debt. Accumulated amortization aggregated $2.1 million, $1.4 million and $0.7 million, respectively, as of December 31, 2002, 2001 and 2000. Related amortization expense was $0.7 million for each of the years ended December 31, 2002, 2001 and 2000.

Patent Application Costs—Costs incurred in filing for patents are charged to operations, until such time as it is determined that the filing will be successful. When it becomes evident with reasonable certainty that an application will be successful, the costs incurred in filing for patents will begin to be capitalized. Capitalized costs related to successful patent applications will be amortized over a period not to exceed twenty years or the remaining life of the patent, whichever is shorter, using the straight-line method. During 2002, 2001 and 2000, all patent application costs have been charged to operations.

Research and Development Costs—Research and development costs are charged to operations as incurred. All remaining research and development costs are incurred for the development and maintenance of current and future research collaboration agreements and accordingly, have been classified as collaborative research and development expenses.

29

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock-Based Compensation—In October 1995, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), which was effective for the Company beginning January 1, 1996. SFAS 123 requires expanded disclosures of stock-based compensation arrangements with employees and non-employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instruments awarded to employees. Companies are permitted to continue to apply Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), which recognizes compensation cost based on the intrinsic value of the equity instruments awarded. The Company will continue to apply APB 25 to its stock-based compensation awards to employees.

In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure”, an Amendment of SFAS 123 (“SFAS 148”). SFAS 148 permits two additional transition methods for entities that voluntarily change to the fair value based method of accounting for stock based compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock based employee compensation and the effect of the method used on reported results. SFAS 148 became effective for financial statements issued after December 15, 2002, and the adoption of SFAS 148 did not have a material effect on the Company’s financial statements, as SFAS 123 has not yet been adopted by the Company.

For options issued to non-employees, the Company records the transactions based upon the difference between the option strike price and the estimated fair market value as of the date each option vests. The Company recorded stock-based compensation expense attributable to non-employees totaling $0.03 million, $0.7 million and $0.6 million, for the years ended December 31, 2002, 2001 and 2000, respectively.

For options issued to employees, CuraGen records the transactions based upon the difference between the option strike price and its closing stock price on the Nasdaq National Market as of the date of issuance. Stock-based compensation associated with options granted to employees during 1997 amounted to $1.7 million, and was expensed from 1997 to 2001, the vesting period of the underlying options. During 2002, 2001 and 2000, no stock-based compensation in connection with options granted to employees was recorded, as all options granted were issued at CuraGen’s closing stock price on the Nasdaq National Market as of the date of issuance.

For options issued to employees, 454 records the transactions based upon the difference between the option strike price and the fair market value of the stock on the date of issuance, as determined by the Board of Directors of 454. During 2002, 2001 and 2000, no stock-based compensation in connection with options granted to employees was recorded as all options granted were issued at the fair market value of the stock on the date of issuance.

For restricted stock issued to employees, CuraGen records the transactions based upon the difference between its closing stock price on the Nasdaq National Market as of the date of issuance and the cash paid by the employee for the stock. Pursuant to the term of CuraGen’s 1997 Employee, Director and Consultant Stock Plan (“1997 Stock Plan”), the cash required to be paid by employees upon the issuance of restricted stock is equal to the par value of CuraGen’s Common Stock. Restricted stock awards result in the recognition of unamortized stock-based compensation. Unamortized stock-based compensation is shown as a reduction of stockholders’ equity and is amortized to operating expenses over the period of time during which the restrictions will lapse. Stock-based compensation associated with restricted stock granted to employees during 2002 amounted to $1.7 million, and is being expensed from 2002 to 2005, the period of time over which the restrictions on the stock will lapse.

30

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company recorded amortization and write-offs of stock-based compensation expense for options and restricted stock issued to employees of $0.6 million, $0.03 million and $0.3 million, for the years ended December 31, 2002, 2001 and 2000, respectively.

Had compensation cost for the Company’s stock option plans been determined in accordance with SFAS 123, the Company’s net loss and net loss per share would have approximated the pro forma amounts shown below for each of the years ended December 31, 2002, 2001 and 2000.

	Year Ended December 31,
	2002			2001			2000
Net loss, as reported	$	(90,403	)	$	(42,912	)	$	(26,978	)
Stock-based employee compensation expense included in net loss		624			31			284
Total stock-based employee compensation expense determined under Black-Scholes option pricing model		(16,163	)		(19,609	)		(21,281	)
Pro forma net loss	$	(105,942	)	$	(62,490	)	$	(47,975	)
Basic and diluted net loss per share:
As reported	$	(1.85	)	$	(0.89	)	$	(0.70	)
Pro forma	$	(2.16	)	$	(1.30	)	$	(1.24	)

The assumptions utilized by the Company in deriving the pro forma amounts for the years ended December 31, 2002, 2001 and 2000 are as follows:

	Year Ended December 31,
	2002	2001	2000
Expected dividend yield	0%	0%	0%
Expected stock price volatility	60%	60%	60%
Risk-free interest rate (approximate)	2.00%	5.75%	6.00%
Expected option term in years	Between 3.9 and 7.5	Between 3.9 and 9.1	Between 4.1 and 8.7

The weighted average grant date fair value of options granted during the years ended December 31, 2002, 2001, and 2000 was approximately $7.42, $18.50 and $35.17 per share, respectively.

Income Taxes—Income taxes are provided for as required under Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”. This statement requires the use of the asset and liability method in determining the tax effect of the “temporary differences” between the tax basis of assets and liabilities and their financial reporting amounts (see Note 6).

Loss Per Share—Basic loss per share (“LPS”) is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted LPS reflects the potential dilution that could occur if options or other contracts to issue Common Stock were exercised or converted into Common Stock. Due to the loss from operations, warrants granted but not yet exercised, convertible subordinated debt, and stock options granted under the Company’s stock option plans but not yet exercised are antidilutive and therefore not considered for the diluted LPS calculations. Under the assumption that warrants, convertible subordinated debt and options were not antidilutive, the denominator for diluted loss per share would be 50,516,582, 50,680,170 and 42,638,848 at December 31, 2002, 2001 and 2000, respectively.

31

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value of Financial Instruments—Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of Financial Instruments” requires the disclosure of fair value information for certain assets and liabilities, whether or not recorded in the balance sheets, for which it is practical to estimate that value. The Company has the following financial instruments: cash and cash equivalents, short-term investments, marketable securities, receivables, accounts payable, accrued expenses and certain other liabilities. The Company considers the carrying amount of these items to approximate fair value due to their short-term nature. In addition, the Company also has convertible subordinated debt (see Note 8).

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Segments—The FASB issued Statement of Financial Accounting Standards No. 131, “Disclosures About Segments of an Enterprise and Related Information” which establishes standards for reporting information on operating segments in interim and annual financial statements, and became effective for fiscal years beginning after December 15, 1997. An enterprise is required to separately report information about each operating segment that engages in business activities from which the segment may earn revenues and incur expenses, whose separate operating results are regularly reviewed by the chief operating decision maker regarding allocation of resources and performance assessment and which exceeds specific quantitative thresholds related to revenue, profit or loss and assets. As of December 31, 2002, we did not meet both of these requirements, so accordingly, the Company had only one reportable segment.

Recently Enacted Pronouncements—In April 2002, the FASB issued Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”). SFAS 145 rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, and an amendment of that Statement, FASB Statement No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements”. SFAS 145 also rescinds FASB Statement No. 44, “Accounting for Intangible Assets of Motor Carriers”. SFAS 145 also amends FASB Statement No. 13, “Accounting for Leases”, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The provisions of SFAS 145 are effective for annual financial statements issued on or after May 15, 2002, and the adoption of SFAS 145 did not have a material effect on the Company’s financial statements.

In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”). SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized at its fair market value when the liability is incurred, rather than at the date of an entity’s commitment to an exit plan. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company has recorded the effect of its November 2002 restructuring plan under the early adoption provisions of SFAS 146 (see Note 11).

In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure”, an Amendment of SFAS 123 (“SFAS 148”). SFAS 148 permits two additional transition methods for entities that voluntarily change to the fair value based

32

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

method of accounting for stock based compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock based employee compensation and the effect of the method used on reported results. SFAS 148 became effective for financial statements issued after December 15, 2002, and the adoption of SFAS 148 did not have a material effect on the Company’s financial statements as it has not yet adopted SFAS 123.

In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 clarifies and expands existing disclosure requirements for guarantees, including loan guarantees. The provisions of FIN No. 45 are effective for financial statements issued after December 15, 2002, and the adoption of FIN No. 45 did not have a material effect on the Company’s financial statements.

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities—an Interpretation of Accounting Research Bulletin No. 51.” FIN No. 46 clarifies rules for consolidation of special purpose entities. The provisions of FIN No. 46 are effective for financial statements issued after January 31, 2003. The Company does not expect the adoption of this statement to have a material impact on its financial statements.

2.    Property and Equipment

Property and equipment consisted of the following:

	December 31,
	2002		2001
Laboratory equipment	$	15,476	$	11,088
Leased equipment		4,549		10,301
Leasehold improvements		5,563		4,434
Office equipment		12,089		9,427
Land		4,475		1,702
Property in progress		718		—
Total property and equipment		42,870		36,952
Less accumulated depreciation and amortization		18,534		17,576
Total property and equipment, net	$	24,336	$	19,376

Depreciation and amortization expense for property and equipment was $8.4 million, $6.2 million and $4.9 million, for the years ended December 31, 2002, 2001 and 2000, respectively. Property in progress relates primarily to leasehold improvements and laboratory equipment for which the costs were incurred but the assets have not yet been placed in service.

In connection with the restructuring plan in November 2002, the Company recognized as a charge to earnings, a loss on impairment of $9.2 million.

3.    Leases

Capital Leases

From 1997 to 2000, the Company signed various lease-financing commitments to receive up to $16.4 million to purchase lab, office and computer equipment and to expand its facilities. The lease commitments

33

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

provided for payment terms of 24 to 60 months per individual lease schedule. The Company financed leased assets with costs of $0.9 million for the year ended December 31, 2001. The Company did not finance any leased assets during the years ended December 31, 2002 or 2000. As of December 31, 2002, these lease-financing commitments have expired.

Leased equipment under all capital lease agreements consisted of the following:

	December 31,
	2002		2001
Leased equipment	$	4,549	$	10,301
Less accumulated amortization		3,442		6,347
Total leased equipment, net	$	1,107	$	3,954

The current outstanding lease agreements have remaining terms of 6 to 18 months, and interest rates of approximately 9.5%. At the end of the respective lease terms, the Company has the right to either return the equipment to the lessor or purchase the equipment at between $1 and 11% of the then fair market value of the equipment.

The future minimum lease payments under capital lease obligations at December 31, 2002 were as follows:

Year Ending December 31,
2003	$	1,592
2004		269
Total minimum lease payments		1,861
Less amounts representing interest		87
Present value of future minimum lease payments		1,774
Less current portion of obligations		1,511
Obligations under capital leases, net of current portion	$	263

Operating Leases

In December 1996, the Company entered into a six-year lease agreement for 26,000 square feet to house its principal research and administrative facility at 555 Long Wharf Drive, New Haven, Connecticut. In October 1997 and August 1998, the Company amended the original lease to increase its leased space to a total of 32,000 and 36,000 square feet, respectively, with a lease term ending December 2002. In December 2000, June 2001 and May 2002, the Company amended the lease to increase its leased space to a total of 40,000, 48,000 and 50,000 square feet, respectively. This additional 14,000 square feet of space has a term ending June 2006, without a renewal option. In May 2002, the Company also amended the lease to increase its leased space to a total of 55,000 square feet. This additional 5,000 square feet of space has a term ending October 2008, without a renewal option.

Under the original terms of the lease, the Company had the option to renew the initial 36,000 square foot lease for two additional terms of five years each. In March 2002, the Company exercised the option to renew for one additional five-year period, ending December 2007, and relinquished the second five-year period renewal option.

In May 1998, the Company entered into a two-year lease agreement for 32,000 square feet of research and administrative space at 322 East Main Street, Branford, Connecticut. In October 1999, the Company exercised

34

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the first of three options to renew for an additional two-year term and amended this lease to increase the leased space to a total of 46,000 square feet. In August 2001 and October 2001, the Company amended the lease to increase its leased space to a total of 48,000 and 51,000 square feet, respectively. In April 2002, the Company exercised the second of three options to renew this lease for an additional term of two years. The term of the lease as it pertains to the original space and new space shall continue until May 2004. There remains one additional option to renew for an additional term of two years, through May 2006.

In May 2001, the Company entered into a five-year lease agreement for an additional 20,000 square foot research facility at 16 Commercial Street, Branford, Connecticut. The Company has the option to renew this lease for one additional term of five years.

In January 2002, the Company entered into a non-renewable five-year lease agreement for a 4,000 square foot storage facility in Branford, Connecticut.

In November 2001, 454 entered into a non-renewable five-year lease agreement for its 16,000 square foot research and administrative facility at 20 Commercial Street, Branford, Connecticut.

Total rent expense under all operating leases for 2002, 2001 and 2000 was approximately $2.2 million, $1.8 million and $1.5 million, respectively.

The future minimum rental payments for all operating leases are as follows as of December 31, 2002:

Year Ending December 31,
2003	$2,482
2004	1,997
2005	1,648
2006	1,340
2007	1,030
2008 and thereafter	110
Total	$8,607

4.    Major Collaborators

The Company has entered into certain collaborative research agreements which provide for the partial or complete funding of specified projects in exchange for access to and certain rights in the resultant data discovered under the related project. Revenues from collaborative research agreements representing 10% or more of the Company’s total revenues are as follows:

	Year Ended December 31,
	2002				2001				2000
	Dollars		Percentages		Dollars		Percentages		Dollars		Percentages
Company A	$	9,574	52	%	$	5,384	23	%	$	2,371	11	%
Company B		6,062	33	%		8,332	35	%		*	*
Company C		*	*			*	*			2,363	11	%
Company D		*	*			*	*			4,706	23	%
Company E		*	*			*	*			2,732	13	%
Company F		*	*			4,252	18	%		4,102	20	%
Company G		*	*			*	*			3,511	17	%

*less than 10%

35

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

5.    Stockholders’ Equity

Authorized Capital Stock

CuraGen’s authorized capital stock consists of 250,000,000 shares of Common Stock, par value of $.01 per share (“Common Stock”), 5,000,000 shares of Preferred Stock, par value of $.01 per share (“Preferred Stock”) and 3,000,000 shares of Non-Voting Common Stock. At December 31, 2002, the Company had reserved 937,500 shares of Common Stock for issuance pursuant to outstanding warrants and 2,350,084 shares of Common Stock for issuance pursuant to the convertible subordinated debt (see Note 8). In addition, 470,980 and 5,851,406 shares of Common Stock had been reserved for issuance pursuant to the Company’s 1993 Stock Option and Incentive Award Plan (“1993 Stock Plan”) and the 1997 Stock Plan, respectively.

454’s authorized capital stock consists of 40,000,000 shares of Common Stock, par value of $.01 per share (“454 Common Stock”) and 30,000,000 shares of Preferred Stock, par value of $.01 per share (“454 Preferred Stock”), of which 12,000,000 shares are designated as Series A Convertible Preferred Stock and 8,000,000 shares are designated as Series B Convertible Preferred Stock. At December 31, 2002, 454 had reserved 4,954,667 shares of Common Stock for issuance pursuant to the 454 2000 Stock Plan.

Common Stock

In March 2000, CuraGen effected a two-for-one split on both its Voting Common Stock and Non-Voting Common Stock, each payable to stockholders in the form of a stock dividend. All share and per share data have been adjusted retroactively to reflect the split.

In June 2000, in conjunction with its formation of 454, the Company agreed to sell to Soros Fund Management, L.L.C., and Cooper Hill Partners, L.L.C. five-year warrants to purchase 937,500 shares of its Common Stock at $32.375 per share for an aggregate purchase price of $12.5 million.

In November 2000, the Company completed a public offering of 4,800,000 shares of its Common Stock and received net proceeds of $186.9 million.

In November 2000, the Company completed a private placement of 1,441,442 shares of unregistered Common Stock for an aggregate purchase price of $50.0 million to Abgenix, Inc.

In January 2001, the Company completed a private placement of 3,112,482 shares of unregistered Common Stock for an aggregate purchase price of $85.0 million to Bayer AG.

In March 2001, 454 effected a two-for-one split on both its 454 Common Stock and 454 Preferred Stock, each payable to stockholders in the form of a stock dividend. All share and per share data have been adjusted retroactively to reflect the split.

During 2000 and 2001, all of the Company’s Non-Voting Common Stock was held by Genentech, Inc., and was converted to Voting Common Stock in various installments, with the final conversion occuring in November 2001.

Stockholder Rights Plan

In March 2002, the Board of Directors of the Company adopted a stockholder rights plan and declared a dividend distribution of one preferred share purchase right for each outstanding share of the Company’s Common Stock. Each right entitles registered holders of the Company’s Common Stock to purchase one one-hundredth of

36

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

a share of a new series of junior participating Preferred Stock, designated as “Series A Junior Participating Preferred Stock”. The rights generally will be exercisable only if a person (which term includes an entity or group) (i) acquires 20 percent or more of the Company’s Common Stock or (ii) announces a tender offer, the consummation of which would result in ownership by that person, entity or group of 20 percent or more of the common stock. Once exercisable, the stockholder rights plan allows the Company’s stockholders (other than the acquiror) to purchase Common Stock of the Company or of the acquiror at a substantial discount.

Stock Options

The Company’s 1993 Stock Plan was adopted by the Company’s Board of Directors and stockholders in December 1993 and subsequently amended by the Board of Directors in May 1997. The 1993 Stock Plan provided for the issuance of stock options and stock awards to officers, directors, advisors, employees, and affiliates of the Company. Of the 3,000,000 shares of Common Stock which were originally reserved for issuance under the 1993 Stock Plan, options to purchase 470,980 shares were outstanding as of December 31, 2002 and 1,199,988 stock options have been exercised under the 1993 Stock Plan as of December 31, 2002. Effective October 1997, upon a resolution by the Board of Directors, the Company will not grant any further options under the 1993 Stock Plan.

A summary of all stock option activity under the 1993 Stock Plan during the years ended December 31, 2000, 2001 and 2002 is as follows:

	Number of Options		Weighted Average Exercise Price
Outstanding January 1, 2000	1,308,366		$	2.40
Granted	—
Exercised	(630,980	)		2.26
Canceled or lapsed	(51,600	)		3.75
Outstanding December 31, 2000	625,786			2.43
Granted	—			—
Exercised	(97,306	)		2.91
Canceled or lapsed	—			—
Outstanding December 31, 2001	528,480			2.34
Granted	—
Exercised	(57,500	)		3.08
Canceled or lapsed	—
Outstanding December 31, 2002	470,980			2.25
Exercisable December 31, 2000	471,599			2.13
Exercisable December 31, 2001	493,946			2.21
Exercisable December 31, 2002	470,980			2.25

The following table summarizes information about stock options under the 1993 Stock Plan at December 31, 2002:

Range of Exercise Prices	Number of Options Outstanding and Exercisable	Weighted Average Contractual Life	Weighted Average Exercise Price
$0.76-1.50	222,150	2.8	$	1.22
2.05-5.00 .	248,830	4.2		3.17
	470,980

37

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In addition to the options granted under the 1993 Stock Plan, the Company had granted non-plan options to purchase shares of Common Stock pursuant to individual agreements with Company employees and consultants. As of December 31, 2000, all previously granted non-plan options had been exercised or canceled.

A summary of all non-plan stock option activity during the year ended December 31, 2000 is as follows:

	Number of Options		Weighted Average Exercise Price
Outstanding January 1, 2000	16,500		$	.50
Granted	—			—
Exercised	(16,500	)		.50
Canceled or lapsed	—			—
Outstanding December 31, 2000	—			—
Exercisable December 31, 2000	—			—

The Company’s 1997 Stock Plan was approved by the Company’s Board of Directors in October 1997 and by its stockholders in January 1998. The 1997 Stock Plan provides for the issuance of stock options and stock grants (“Stock Rights”) to employees, directors and consultants of the Company. A total of 3,000,000 shares of Common Stock were originally reserved for issuance under the 1997 Stock Plan and in May 1999, upon approval of the stockholders, the amount reserved was increased to 7,000,000. The 1997 Stock Plan is administered by the Compensation Committee of the Board of Directors of the Company (“the Compensation Committee”). The Compensation Committee has the authority to administer the provisions of the 1997 Stock Plan and to determine the persons to whom Stock Rights will be granted, the number of shares to be covered by each Stock Right and the terms and conditions upon which a Stock Right may be granted. As of December 31, 2002, the Company had 4,948,953 options outstanding under the 1997 Stock Plan and an additional 902,453 available for grant. In addition, 894,844 stock options had been exercised under the 1997 Stock Plan as of December 31, 2002.

A summary of all stock option activity under the 1997 Stock Plan during the years ended December 31, 2000, 2001 and 2002 is as follows:

	Number of Options		Weighted Average Exercise Price
Outstanding January 1, 2000	2,995,698		$	4.50
Granted	1,182,520			49.31
Exercised	(484,126	)		4.44
Canceled or lapsed	(230,497	)		20.03
Outstanding December 31, 2000	3,463,595			18.77
Granted	1,147,000			25.83
Exercised	(136,088	)		4.45
Canceled or lapsed	(196,616	)		22.30
Outstanding December 31, 2001	4,277,891			20.96
Granted	2,045,275			10.99
Exercised	(174,592	)		4.66
Canceled or lapsed	(1,199,621	)		26.63
Outstanding December 31, 2002	4,948,953			16.04
Exercisable December 31, 2000	791,172			6.16
Exercisable December 31, 2001	1,523,954			13.27
Exercisable December 31, 2002	2,019,081			14.70

38

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes information about stock options under the 1997 Stock Plan at December 31, 2002:

Range of Exercise Prices	Number of Options Outstanding	Weighted Average Contractual Life		Weighted Average Exercise Price
$  2.5650-3.7800	731,030		5.1	$	3.30
3.8750-5.3150	829,752		7.2		4.22
5.7500-5.9700	951,530		7.5		5.86
7.3750-8.4800	320,050		7.6		7.79
15.8300-20.0625	747,650		8.7		16.55
22.5000-31.6600	726,900		7.6		26.79
41.1250-58.3340	642,041		6.5		52.25
	4,948,953
Range of Exercise Prices	Number of Options Exercisable	Weighted Average Exercise Price
$  2.5650-3.7800	596,208	$	3.29
3.8750-5.3150	366,952		4.15
5.7500-5.9700	312,446		5.81
7.3750-8.4800	163,900		7.67
15.8300-20.0625	33,632		16.48
22.5000-31.6600	233,567		26.68
41.1250-58.3340	312,376		52.27
	2,019,081

During July 2002, the Compensation Committee approved grants for 100,000 shares of restricted stock. Additionally, during August 2002 the Compensation Committee approved the cancellation of 655,000 underwater stock options held by certain executive officers of the Company in exchange for an immediate grant of 166,250 shares of restricted stock. Pursuant to the provisions of the 1997 Stock Plan, the exercise price of the restricted stock is equal to the par value of the Company’s Common Stock, and each grant of restricted stock is subject to certain repurchase rights of the Company. During 2002, the restrictions lapsed on 21,750 shares and 12,500 shares of the previously granted restricted stock were repurchased from employees upon their termination for an aggregate purchase price of $0.05 million. All of the repurchased shares became treasury shares and may be used for general corporate or other purposes, or may be retired upon a resolution by the Board of Directors. As of December 31, 2002, 232,000 shares of restricted stock remain outstanding and will vest in one-third increments on each of the grant anniversary dates, with the lapsing of the repurchase rights.

454’s 2000 Employee, Director and Consultant Stock Plan (“454 2000 Stock Plan”) was approved by its Board of Directors and stockholders in September 2000. The 454 2000 Stock Plan provides for the issuance of stock options and stock grants (“Stock Rights”) to employees, directors and consultants of 454. A total of 5,000,000 shares of Common Stock are reserved for issuance under the 454 2000 Stock Plan. The 454 2000 Stock Plan is administered by the Board of Directors of 454. The Board of Directors of 454 has the authority to administer the provisions of the 454 2000 Stock Plan and to determine the persons to whom Stock Rights will be granted, the number of shares to be covered by each Stock Right and the terms and conditions upon which a Stock Right may be granted. As of December 31, 2002, 454 had 3,101,317 options outstanding and an additional 1,853,350 available for grant. In addition, 45,333 stock options have been exercised under the 454 2000 Stock Plan as of December 31, 2002.

39

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A summary of all stock option activity under the 454 2000 Stock Plan during the years ended December 31, 2000, 2001 and 2002 is as follows:

	Number of Options		Weighted Average Exercise Price
Outstanding January 1, 2000.	—			—
Granted.	1,570,000		$	2.50
Exercised	—			—
Canceled or lapsed.	—			—
Outstanding December 31, 2000.	1,570,000			2.50
Granted.	1,657,250			2.45
Exercised	—
Canceled or lapsed.	(1,300,000	)		2.50
Outstanding December 31, 2001.	1,927,250			2.46
Granted.	1,404,000			2.50
Exercised	(45,333	)		2.50
Canceled or lapsed.	(184,600	)		2.50
Outstanding December 31, 2002.	3,101,317			2.48
Exercisable December 31, 2000.	—			—
Exercisable December 31, 2001.	417,454			2.52
Exercisable December 31, 2002.	960,207			2.41

The following table summarizes information about stock options under the 454 2000 Stock Plan at December 31, 2002:

Range of Exercise Prices	Number of Options Outstanding	Weighted Average Contractual Life		Weighted Average Exercise Price
$1.250 – 2.750 .	3,101,317		7.9	$	2.48
Range of Exercise Prices	Number of Options Exercisable	Weighted Average Exercise Price
$1.250 – 2.750 .	960,207	$	2.41

40

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6.    Income Taxes

The Company provides for income taxes using the asset and liability method. The difference between the income tax benefit and the amount that would be computed by applying the statutory Federal income tax rate to net loss is attributable to the following:

	Year Ended December 31,
	2002			2001			2000
Net loss before income tax benefit	$	(91,906	)	$	(46,462	)	$	(28,378	)
Expected tax benefit at 35%	$	32,167		$	16,262		$	9,932
Employee stock options for which no book benefit is available					(103	)
Minority interest for which no tax benefit is available		1,360			527			115
Other items		(12	)		(11	)		(10	)
Connecticut taxes, including research and development credits subject to carryforward, net of federal benefit		6,539			5,331			4,539
Federal research and development credits subject to carryforward		2,723			2,066			1,789
Increase in valuation allowance on deferred tax asset		(41,274	)		(20,522	)		(14,965	)
Total income tax benefit	$	1,503		$	3,550		$	1,400

The income tax benefits were recorded as a result of Connecticut legislation, which allows companies to obtain cash refunds from the State of Connecticut at a rate of 65% of their annual incremental research and development expense credit, in exchange for forgoing carryforward of the research and development credit.

The net deferred income tax assets consisted of the following:

	December 31,
	2002			2001
Total deferred income tax assets	$	129,031		$	88,339
Valuation allowance		(129,031	)		(88,339	)
Total	$	0		$	0

As the Company has no prior earnings history, a valuation allowance has been established due to the Company’s uncertainty in its ability to benefit from the federal and Connecticut net operating loss carryforwards. A tax benefit of approximately $28.1 million related to stock options will be credited to equity when the benefit is realized. The increase in the valuation allowance was $40.7 million, $22.2 million and $35.9 million for the years ended December 31, 2002, 2001 and 2000, respectively.

41

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CuraGen and 454 have the following tax net operating loss carryforwards available to reduce future federal and Connecticut taxable income and research and development tax credit carryforwards available to offset future federal and Connecticut income taxes:

Net Operating Loss Carryforwards	Federal		Expire In	Connecticut		Expire In
CuraGen	$	264,970	2008 to 2023	$	248,221	2004 to 2023
454	$	13,922	2021 to 2023	$	13,671	2021 to 2023
Research and Development Tax Credit Carryforwards	Federal		Expire In	Connecticut		Expire In
CuraGen	$	10,903	2008 to 2023	$	8,458	2014 to 2018
454	$	570	2021 to 2023	$	148	2018

For income tax purposes, CuraGen does not file consolidated income tax returns with 454.

7.    Grants

The Company received federal grants during 1999 and earlier years, for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursement by the grantor agency for any expenditures disallowed under the terms of the grant. Additionally, any noncompliance with the terms of the grant could lead to loss of current or future awards.

During 1995, the Company received two grants from Connecticut Innovations, Inc. (“CII”) in the amounts of $0.5 million and $0.2 million. The term of the $0.5 million grant is January 4, 1995 to December 31, 2004, and the term of the $0.2 million grant is February 1, 1995 to January 31, 2005. The Company could be required to repay 100% of these amounts if during the terms of the respective grants (i) the Company breaches and fails to cure a material covenant, (ii) a material representation or warranty of the Company becomes untrue and is not cured, (iii) the Company becomes bankrupt or insolvent or liquidates its assets, or (iv) the Company is required to repay the federal grants to which the CII grants relate. In addition, the Company could be required to repay up to 200% of the amounts of the CII grants if the Company ceases to have a “Connecticut presence,” during the terms of the respective grants.

8.    Convertible Subordinated Debt

During February 2000, the Company completed an offering for $125.0 million of 6% convertible subordinated debentures due February 2, 2007 and received net proceeds of approximately $121.3 million. In addition, also in February 2000, the initial purchasers exercised their option to purchase an additional $25.0 million of 6% convertible subordinated debentures due February 2, 2007, providing the Company with additional net proceeds of approximately $24.3 million. Related interest expense for the years ended December 31, 2002, 2001 and 2000 was $9.0 million, $9.0 million and $8.2 million, respectively.

The debentures may be resold by the initial purchasers to qualified institutional buyers under Rule 144A of the Securities Act and to non-U.S. persons outside the United States under Regulation S under the Securities Act. The debentures are convertible at the election of the Company into Common Stock at any time prior to their maturity at a conversion price of $63.8275 per share. In addition, prior to February 2, 2003, if the Company’s Common Stock price reaches specified levels, it has the right to redeem the debentures at a premium by converting the debentures into Common Stock. The market value of the debentures based on quoted market prices, was estimated at $95.0 million on December 31, 2002.

42

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

9.    Minority Interest in Subsidiary

In June 2000, CuraGen launched 454, a 60% owned subsidiary, established to develop novel technologies for rapidly and comprehensively analyzing entire genomes. CuraGen sold to Soros Fund Management, L.L.C., and Cooper Hill Partners, L.L.C. five-year warrants to purchase 937,500 shares of its Common Stock at $32.375 per share for an aggregate purchase price of $12.5 million. Simultaneously, 454 sold 8,000,000 shares of Series B Preferred Stock to Soros Fund Management and Cooper Hill Partners and members of CuraGen’s senior management team and related parties for an aggregate purchase price of $20.0 million.

In order to complete the funding of 454, and in exchange for 12,000,000 shares of Series A Preferred Stock, CuraGen contributed $20.0 million in cash and certain technologies for conducting genomic analyses. As a result of this contribution of technology to 454, CuraGen recognized a gain of $3.9 million recorded in additional paid-in-capital.

10.    Marketable Securities

Beginning in the second quarter of 2002, the Company purchased marketable securities consisting primarily of debt securities, which have been designated as “available-for-sale” as required by Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities”. Available-for-sale securities are carried at fair value with the unrealized gains and losses reported in stockholders’ equity under the caption “Accumulated Other Comprehensive Income”. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Interest on debt securities, amortization of premiums and accretion of discounts is included in interest income. The cost of securities sold is based on the specific identification method.

The amortized cost, gross unrealized gains and losses and estimated fair value based on published closing prices of securities at December 31, 2002, by contractual maturity, are shown below.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Marketable Securities
Due in one year or less	$	31,642	$	321		—		$	31,963
Due in one through three years		101,537		2,526	$	(2	)		104,061
Due in three through five years		11,571		512		—			12,083
Total Marketable Securities	$	144,750	$	3,359	$	(2	)	$	148,107

At December 31, 2001, the company had no marketable securities.

For the year ended December 31, 2002 the Company did not realize any material gains or losses on securities sold. Contractual maturities of mortgage backed and asset-backed securities are allocated in the table above based on the expected maturity date.

43

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

11.    Restructuring and Related Charges

In November 2002, the Company announced a restructuring plan intended to reduce costs and focus its resources on prioritizing, selecting and rapidly advancing its most promising drug candidates. As a result of the restructuring plan, the Company’s employee base was reduced by approximately 125 personnel, representing approximately 24% of its workforce. The reduction in personnel included early-stage drug-discovery employees and general and administrative support positions. The Company substantially completed its restructuring plan by the end of 2002.

In connection with this restructuring plan, a charge of approximately $11.0 million was recorded in the fourth quarter of 2002, including $1.8 million related to employee separation costs and $1.1 million of asset impairment costs related to equipment no longer in service. The employee separation costs were recorded under FASB 146 (see Note 1) and included amounts to be paid for severance and related benefits, the services for which had been performed in full as of the end of 2002. The cash requirements under the restructuring plan were $1.9 million, of which $1.2 million were paid prior to December 31, 2002. The Company expects to pay the majority of its remaining cash obligations related to the restructuring plan during the first quarter of 2003.

Also included in restructuring and related charges was an asset impairment of $8.1 million, consisting of costs previously incurred in conjunction with the planned construction of a campus facility, including the new corporate headquarters and protein production facility in Branford, Connecticut. Plans to construct these facilities have been deferred indefinitely, pending improvements in the external financing environment, which would afford the Company the ability to finance the future construction costs.

12.    Summary of Selected Quarterly Financial Data (Unaudited)

	Quarter Ended
	March 31			June 30			Sept. 30			Dec. 31
2002:
Total revenues	$	4,812		$	3,659		$	6,019		$	3,756
Total operating expenses		26,068			27,491			27,502			34,530
Net loss		(19,631	)		(22,021	)		(19,882	)		(28,869	)
Net loss per share		(0.40	)		(0.45	)		(0.41	)		(0.59	)
2001:
Total revenues	$	5,662		$	6,240		$	6,084		$	5,489
Total operating expenses		16,658			20,975			22,218			24,829
Net loss		(5,355	)		(10,279	)		(11,116	)		(16,162	)
Net loss per share		(0.11	)		(0.21	)		(0.23	)		(0.34	)

44

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors

of CuraGen Corporation

New Haven, Connecticut

We have audited the accompanying consolidated balance sheets of CuraGen Corporation and its subsidiary (the “Company”) as of December 31, 2002 and 2001, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CuraGen Corporation and its subsidiary at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

January 24, 2003

45

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

PART III

Item 10.    Directors and Executive Officers of the Registrant

The response to this item is incorporated by reference from the discussion under the captions “Management” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement for the 2003 Annual Meeting of Stockholders.

Item 11.    Executive Compensation

The response to this item is incorporated by reference from the discussion under the caption “Executive Compensation” in our Proxy Statement for the 2003 Annual Meeting of Stockholders.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

                  Matters

The response to this item is incorporated by reference from the discussion under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Proposal 2: Increase in the Aggregate Number of Shares of Common Stock for Which Stock Options and Stock Awards May Be Granted Under the Company’s 1997 Employee, Director and Consultant Stock Plan” in our Proxy Statement for the 2003 Annual Meeting of Stockholders.

Item 13.    Certain Relationships and Related Transactions

The response to this item is incorporated by reference from the discussion under the captions “Executive Compensation-Employment Agreements and Other Termination of Employment Agreements” and “Related Transactions” in our Proxy Statement for the 2003 Annual Meeting of Stockholders.

Item 14.    Controls and Procedures

(a)    Evaluation of Disclosure Controls and Procedures

As of a date within 90 days before the filing date of this Annual Report on Form 10-K, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)). Based on that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures relating to material information about the Company were adequate and effective.

(b)    Changes in Internal Controls

The CEO and CFO have indicated that there have been no significant changes in our internal controls or other factors that could significantly affect internal controls subsequent to the above-mentioned evaluation, nor were there any significant deficiencies or material weaknesses in the Company’s internal controls. Accordingly, no corrective actions were required or undertaken.

46

PART IV

Item 15.    Exhibits, Financial Statement Schedules and Reports on Form 8-K.

Item 15 (a)(1)    Financial Statements

The following Financial Statements are included in Item 8:

Consolidated Balance Sheets as of December 31, 2002 and 2001

Consolidated Statements of Operations for the Years Ended December 31, 2002, 2001 and 2000

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2002, 2001 and 2000

Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000

Notes to Consolidated Financial Statements

Independent Auditors’ Report

Item 15 (a)(2)    Financial Statement Schedules

All schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.

47

Item 15 (a)(3)    Exhibits

The following is a list of exhibits filed as part of this Annual Report on Form 10-K.

Exhibit No.	Description
@3.1	Amended and Restated Certificate of Incorporation of the Registrant (Filed as Exhibit 3.3)
@3.2	Amended and Restated Bylaws of the Registrant (Filed as Exhibit 3.5)
*3.3	Certificate of Designation, Series A Junior Participating Preferred Stock
@4.1	Article Fourth of the Amended and Restated Certificate of Incorporation of the Registrant (Filed as Exhibit 4.1)
@4.2	Form of Common Stock Certificate (Filed as Exhibit 4.2)
-4.3	Indenture dated as of February 2, 2000 between the Registrant and The Chase Manhattan Bank, as trustee (Filed as Exhibit 4.1)
^4.4	Stockholder Rights Agreement, dated March 27, 2002, by and between the Registrant and American Stock Transfer and Trust Company (Filed as Exhibit 4.4)
*10.1	Memorandum of Lease Agreements as amended and restated, through May 8, 2002 (New Haven) by and between the Registrant and Fusco Harbour Associates, LLC
*10.2	Lease, as amended and restated, through April 23, 2002, (Branford) by and between T.K.J. Associates, LLC and the Registrant
*10.3	1997 Employee, Director and Consultant Stock Plan, as amended and restated through February 15, 2003
@10.4	1993 Stock Option and Incentive Award Plan (Filed as Exhibit 10.5)
@10.5	Amendment to 1993 Stock Option and Incentive Plan, dated May 12, 1997 (Filed as Exhibit 10.6)
+!10.6	Agreement, dated March 1999, by and among the Registrant, F. Hoffmann-LaRoche Ltd., Roche Vitamins, Inc. and Hoffmann-LaRoche, Inc. (Filed as Exhibit 10.1)
+@10.7	Research and Option Agreement, dated November 20, 1997, between the Registrant and Genentech, Inc. (Filed as Exhibit 10.15)
+@10.8	Notice of Grant Award and Grant Application to Department of Health and Human Services for Automated Sequencing System for Human Genome Project, dated March 25, 1995 (Filed as Exhibit 10.16)
@10.9	ATP Agreement for Integrated Microfabricated DNA Analysis Device for Diagnosis of Complex Genetic Disorders, dated February 1995 (Filed as Exhibit 10.17)
@10.10	ATP Agreement for Molecular Recognition Technology for Precise Design of Protein-Specific Drugs, dated March 2, 1995 (Filed as Exhibit 10.18)
@10.11	ATP Agreement for Programmable Nanoscale Engines for Molecular Separation, dated May 6, 1997 (Filed as Exhibit 10.19)
+%10.12	Pharmacogenomics Research and License Agreement, dated November 18, 1998, by and between Glaxo Wellcome, Inc. and the Registrant (Filed as Exhibit 10.21)
+&10.13	Agreement between COR Therapeutics, Inc. and the Registrant dated May 1, 1999 (Filed as Exhibit 10.1)
÷10.14	Letter Agreement with Pequot Partners Fund, L.P. and Pequot International Fund, Inc. (Filed as Exhibit 10.1)
–10.15	Registration Rights Agreement dated as of February 2, 2000 among the Registrant and Lehman Brothers Inc., Morgan Stanley & Co. Incorporated and Dain Rauscher Incorporated, as the initial purchasers (Filed as Exhibit 4.2)
+~10.16	Collaboration Agreement, dated as of December 8, 1999, between Abgenix, Inc. and the Registrant (Filed as Exhibit 10.1)
+^10.17	Metabolic Disorder Collaboration Agreement, dated January 12, 2001, by and between Bayer Corporation and the Registrant (Filed as Exhibit 10.24)
+^10.18	Pharmacogenomics Agreement, dated January 12, 2001, by and between the Registrant and Bayer AG (Filed as Exhibit 10.25)

48

Exhibit No.	Description
^10.19	Stock Purchase Agreement, dated January 12, 2001, by and between Bayer AG and the Registrant (Filed as Exhibit 10.26)
+^10.20	Restated Collaboration Agreement, dated November 27, 2000, between Abgenix, Inc. and the Registrant (Filed as Exhibit 10.27)
^10.21	Lease, dated May 24, 2001, (Branford) by and between 16 Commercial Street Associates, LLC and the Registrant (Filed as Exhibit 10.27)
^10.22	Lease, dated November 29, 2001, (Branford) by and between 20 Commercial Street Associates, LLC and 454 Corporation (Filed as Exhibit 10.28)
^10.23	Assignment of Purchase Agreement, dated April 10, 2001, by and between the Registrant and Richard E. Beauvais (Filed as Exhibit 10.29)
^10.24	Employment Agreement, dated April 1, 2002, between the Registrant and Jonathan M. Rothberg (Filed as Exhibit 10.30)
^10.25	Employment Agreement, dated April 1, 2002, between the Registrant and Christopher K. McLeod (Filed as Exhibit 10.31)
^10.26	Employment Agreement, dated April 1, 2002, between the Registrant and David M. Wurzer (Filed as Exhibit 10.32)
^^10.27	Employment Agreement, dated May 20, 2002, between the Registrant and John E. Murphy (Filed as Exhibit 10.2)
^^10.28	Employment Agreement, dated May 20, 2002, between the Registrant and Elizabeth A. Whayland (Filed as Exhibit 10.3)
$10.29	Employment Agreement, dated September 9, 2002, between the Registrant and Timothy M. Shannon (Filed as Exhibit 10.1)
*10.30	Employment Agreement, dated December 19, 2002, between 454 Corporation and Richard F. Begley
++*10.31	Amended and Restated Research and Option Agreement, dated March 31, 2000, by and between the Registrant and Genentech, Inc.
*21.1	Subsidiaries of the Registrant
*23.1	Consent of Deloitte & Touche LLP
*99.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

* Filed herewith.

+ Confidential Treatment has been granted by the Commission as to certain portions.

++ Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 406 of the Securities Act or Rule 24b-2 of the Exchange Act.

@ Previously filed with the Commission as Exhibits to, and incorporated herein by reference from, the Registrant’s Registration Statement filed on Form S-1, File No. 333-38051.

% Previously filed with the Commission and incorporated herein by reference from the Form 10-K, File No. 000-23223, for the year ended December 31, 1998.

! Previously filed with the Commission and incorporated herein by reference from the Form 10-Q, File No. 000-23223, for the period ended March 31, 1999.

& Previously filed with the Commission and incorporated herein by reference from the Form 10-Q, File No. 000-23223, for the period ended June 30, 1999.

÷ Previously filed with the Commission and incorporated herein by reference from the Form 10-Q, File No. 000-23223, for the period ended September 30, 1999.

- Previously filed with the Commission as Exhibits to, and incorporated herein by reference from the Registrant’s Registration Statement on Form S-3, File No. 333-32756.

~ Previously filed with the Commission as Exhibits to, and incorporated herein by reference from the Form 10-Q/A, File No. 000-23223, for the period ended June 30, 2000.

^ Previously filed with the Commission and incorporated herein by reference from the Form 10-K, File No. 000-23223, for the year ended December 31, 2001.

49

^^ Previously filed with the Commission and incorporated herein by reference from the Form 10-Q, File No. 000-23223, for the period ended June 30, 2002.

$ Previously filed with the Commission and incorporated herein by reference from the Form 10-Q, File No. 000-23223, for the period ended September 30, 2002.

Where a document is incorporated by reference from a previous filing, the Exhibit number of the document in that previous filing is indicated in parentheses after the description of such document.

Item 15 (b)    Reports on Form 8-K

The following Reports on Form 8-K were filed during the quarter ended December 31, 2002:

On October 24, 2002 we filed a report on Form 8-K under Item 5, “Other Events and Regulation FD Disclosure”, announcing financial results for the quarter ended September 30, 2002.

On November 8, 2002 we filed a report on Form 8-K under Item 5, “Other Events and Regulation FD Disclosure”, announcing a corporate restructuring to reduce early stage research efforts and to focus our resources on prioritizing, selecting and rapidly advancing our most promising drug candidates.

On December 18, 2002 we furnished a report on Form 8-K under Item 9, “Regulation FD Disclosure”, announcing a collaborative research agreement with Philip Morris to characterize lung response to cigarette smoke using an animal model, to generate an annotated database of the cigarette smoke-induced transcriptome of the animal, and to recommend candidate cigarette smoke-induced genes for further research.

50

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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: March 26, 2003	CURAGEN CORPORATION
	By:	/s/    DAVID M. WURZER
	David M. Wurzer Executive Vice President, Chief Financial Officer and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 26, 2003.

Signature	Title
/s/    JONATHAN M. ROTHBERG, Ph.D       Jonathan M. Rothberg, Ph.D	Chief Executive Officer, President and Chairman of the Board of Directors (principal executive officer)
/s/    DAVID M. WURZER       David M. Wurzer	Executive Vice President,  Chief Financial Officer and Treasurer (principal financial and accounting officer)
/s/     RONALD M. CRESSWELL, Ph.D.         Ronald M. Cresswell, Ph.D.	Director
/s/    VINCENT T. DEVITA, JR., M.D.         Vincent T. DeVita, Jr., M.D.	Director
/s/    DAVID R. EBSWORTH, Ph.D.         David R. Ebsworth, Ph.D.	Director
/s/    JOHN H. FORSGREN         John H. Forsgren	Director
/s/    ROBERT E. PATRICELLI, J.D         Robert E. Patricelli, J.D.	Director
/s/    PATRICK J. ZENNER         Patrick J. Zenner	Director

51

CERTIFICATIONS

I, Jonathan M. Rothberg, certify that:

1. I have reviewed this annual report on Form 10-K of CuraGen Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 26, 2003

/s/    Jonathan M. Rothberg, Ph.D.            

Jonathan M. Rothberg, Ph.D.

Chief Executive Officer, President and

Chairman of the Board

52

CERTIFICATIONS

I, David M. Wurzer, certify that:

1. I have reviewed this annual report on Form 10-K of CuraGen Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 26, 2003

/s/    David M. Wurzer            

David M. Wurzer

Executive Vice President, Chief Financial Officer

and Treasurer (principal financial and accounting officer of the registrant)

53

EXHIBIT INDEX

Exhibit Number	Description
3.3	Certificate of Designation, Series A Junior Participating Preferred Stock
10.1	Memorandum of Lease Agreements as amended and restated, through May 8, 2002 (New Haven) by and between the Registrant and Fusco Harbour Associates, LLC
10.2	Lease, as amended and restated, through April 23, 2002, (Branford) by and between T.K.J. Associates, LLC and the Registrant
10.3	1997 Employee, Director and Consultant Stock Plan, as amended and restated through February 15, 2003
10.30	Employment Agreement, dated December 19, 2002, between 454 Corporation and Richard F. Begley
10.31	Amended and Restated Research and Option Agreement, dated March 31, 2000, by and between the Registrant and Genentech, Inc.
21.1	Subsidiaries of the Registrant
23.1	Consent of Deloitte & Touche LLP
99.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

EX-3.3

EXHIBIT 3.3

CERTIFICATE OF DESIGNATION

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

($.01 Par Value)

of

CURAGEN CORPORATION

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

CuraGen Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

FIRST: That pursuant to the authority conferred upon the Board of Directors by the Restated Certificate of Incorporation of the Corporation filed on March 23, 1998 and as amended on May 25, 2000, the Board of Directors of the Corporation at a meeting of the Board of Directors on March 27, 2002, adopted the following resolutions creating a series of 1,000,000 shares of Preferred Stock, $.01 par value per share, designated as Series A Junior Participating Preferred Stock:

RESOLVED: That pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of Article FOURTH, Section B of its Restated Certificate of Incorporation, as amended, a series of Preferred Stock of the Corporation (the “Series A Junior Participating Preferred Stock”) be, and it hereby is, created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of the Series A Junior Participating Preferred Stock, and the qualifications, limitations or restrictions thereof, shall be as follows:

Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” and the number of shares constituting such series shall be 1,000,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares of Series A Junior Participating Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Junior Participating Preferred Stock.

Section 2. Dividends and Distributions.

(A) Subject to the rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock, in preference to the holders of Common Stock, $.01 par value per share (the “Common Stock”), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds of the Corporation legally available for the payment of dividends, quarterly dividends payable in cash on March 31, June 30, September 30 and December 31 in each year (each suchdate being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision, combination or consolidation of the outstanding Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock) and the Corporation shall pay such dividend or distribution on the Series A Junior Participating Preferred Stock before the dividend or distribution declared on the Common Stock is paid or set apart; provided, however, that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of

issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision, combination of consolidation of the outstanding Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) Except as otherwise provided herein, by law, or in any other Certificate of Designation creating a series of Preferred Stock or any similar stock, the holders of shares of Series A Junior Participating Preferred Stock, the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) Directors.

(ii) During any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Preferred Stock.

(iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the Chairman of the Board or the President of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 10 days and not later than 60 days after such order or request. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders.

(iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence.

(v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the certificate of incorporation or by-laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the certificate of incorporation or bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors.

(D) Except as set forth herein, or as otherwise provided by law, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends on distributions payable on the Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i) declare or pay dividends on or make any other distributions on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock;

(ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation/dissolution or winding up) to the Series A Junior Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Preferred Stock;

(iv) purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall

determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of theCorporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5. Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

Section 6. Liquidation, Dissolution on Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received $150 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph C below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.

(B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock.

(C) In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(D) Neither the consolidation, merger or other business combination of the Corporation with or into any other corporation the sale, lease, exchange or conveyance of all or any part of the property, assets or business of the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 6.

Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denomination of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 8. No Redemption. The shares of Series A Junior Participating Preferred Stock shall not be redeemable.

Section 9. Ranking. The Series A Junior Participating Preferred Stock shall rank junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.

Section 10. Amendment. The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the owers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least seventy-five percent of the outstanding shares of Series A Junior Participating Preferred Stock, voting together as a single class.

Section 11. Fractional Shares. Series A Junior Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, said CuraGen Corporation has caused this Certificate of Designation to be signed by its duly authorized officer this              day of             , 2002.

CURAGEN CORPORATION
By
	Jonathan M. Rothberg, Chief Executive Officer, President and Chairman of the Board

EX-10.1

EXHIBIT 10.1

THIRD AMENDMENT TO LEASE AGREEMENT

THIS THIRD AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the “Third Amendment”) is made as of the 1^st day of January, 2001 by and between FUSCO HARBOUR ASSOCIATES, LLC, a Connecticut limited liability company, with offices and a principal place of business c/o The Fusco Corporation, 555 Long Wharf Drive, New Haven, Connecticut 06511 (said Fusco Harbour Associates, LLC, its successors and assigns hereinafter referred to as the “Landlord”) and CURAGEN CORPORATION, a Delaware corporation with an office at 555 Long Wharf Drive, New Haven, Connecticut 06511 (said CuraGen Corporation, its successors and assigns hereinafter referred to as the “Tenant”).

WITNESSETH: That

WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated December 23, 1996 (the “Lease”) whereunder Landlord leased to Tenant and Tenant leased from Landlord twenty six thousand two hundred sixty six (26,266) rentable square feet of floor area located on the eleventh floor of Landlord’s Building as described in said Lease; and

WHEREAS, Landlord and Tenant entered into that certain First Amendment to Lease Agreement dated as of the 27^th day of October, 1997 (the “First Amendment”) whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional five thousand three hundred ninety seven (5,397) rentable square feet of floor area located on the thirteenth floor of Landlord’s Building (the “First Expansion Premises”), on terms and conditions as described in said First Amendment; and

WHEREAS, Landlord and Tenant entered into that certain Second Amendment to Lease Agreement dated as of the 31^st day of August, 1998 (the “Second Amendment”) whereunder Landlord leased to Tenant and Tenant leased from Landlord (i) an additional two thousand nine hundred twenty eight (2,928) rentable square feet of floor area on the thirteenth floor of Landlord’s Building (the “Second Expansion Premises”) and (ii) an additional one thousand three hundred forty seven (1,347) rentable square feet of floor area situated on the thirteen floor of Landlord’s Building (the “Third Expansion Premises”); and

WHEREAS, Landlord and Tenant desire that Tenant shall lease additional space on the ninth floor of Landlord’s Building which additional space shall be let, to Tenant upon the terms and conditions contained hereinafter; and

WHEREAS, the parties desire to enter into this Third Amendment to set forth the terms and conditions of their agreement in connection with the foregoing;

NOW THEREFORE, in consideration of the mutual terms, conditions and covenants as contained in said Lease, as contained in said First Amendment, as contained in said Second Amendment, and as contained in the herein Third Amendment, the parties hereto do hereby agree as follows:

1. Article 1. Premises, is hereby amended by the addition thereto of a new paragraph A-3. to be inserted after paragraph A-2. now there appearing, which paragraph A-3. shall stipulate as follows:

“A-3. In addition to the foregoing, effective January 1,2001, Landlord does hereby lease to Tenant and Tenant does hereby lease from Landlord an additional four thousand five hundred twenty four (4,524) rentable square feet of floor area situated on the ninth floor of Landlord’s Building in the area designated on Exhibit B-3 annexed hereto and made a part hereof (the “Fourth Expansion Premises”).

Whenever the defined term “Premises” shall be used hereinafter it shall, wherever the context may indicate or wherever proper reading may require, also be deemed to refer to the First Expansion Premises, the Second Expansion Premises, the Third Expansion Premises and the Fourth Expansion Premises in all respects as if initially the said First Expansion Premises, Second Expansion Premises, Third Expansion Premises and Fourth Expansion Premises were fully includable within the intent of the defined term “Premises”.”

2. Article 3. Term, is hereby amended by the addition thereto of a new paragraph A- 4. to be inserted after paragraph A-2. now there appearing, which new paragraph A-4. shall stipulate the following:

“A-4. TO HAVE AND HOLD the Fourth Expansion Premises for a period and term commencing January 1,2001 and ending at midnight December 31, 2002 (the “Fourth Expansion Premises Initial Term”).

3. Article 3. Term is hereby further amended by the addition thereto of a new paragraph C-3. to be inserted after paragraph C-3. now there appearing which new paragraph C- 3. shall stipulate the following:

“C-3. Notwithstanding anything contained in the herein Lease to the contrary, or any amendment thereto, the Initial Term with respect to all portions of the Premises (including the Initial Premises, the First Expansion Premises, the Second Expansion Premises, the Third Expansion Premises and the Fourth Expansion Premises) shall each and all extend to and end at midnight December 31, 2002. The parties recognize that rights granted to Tenant pursuant to paragraph 3.C. of said Lease with respect to options to renew the herein Lease shall remain operative in all respects and shall apply to all portions of the Premises.”

2

4. Article 4. Rent and Rent Commencement, is hereby amended by the deletion in its entirety of paragraph A. set forth therein and by the substitution in its place and stead of the following paragraph A.:

A. Tenant covenants and agrees to pay to Landlord and Landlord shall be entitled to receive during the Initial Term of this Lease Agreement, an annual base rental (“Base Rent”) in the following amounts:

Fiscal Period of Lease	Base Rent Per Square Foot		Annualized Base Rent		Monthly Installments
1. Year One:
a) January 1, 1997 to July 1, 1997	$	0	$	0	$	0
b) July 1, 1997 to December 1, 1997	$	10.00	$	262,660.00	$	21,888.33
c) December 1, 1997 to January 1, 1998	$	10.00	$	316,630.00	$	26,385.83
2. Year Two:
a) January 1, 1998 to April 1, 1998	$	10.00	$	316,630.00	$	26,385.83
b) April 1, 1998 to October 1, 1998	$	20.50	$	649,091.50	$	54,090.96
c) October 1, 1998 to November 1, 1998*	$	20.50	$	709,115.50	$	59,092.96
d) November 1, 1998* to January 1, 1999	$	20.50		736,729.00	$	61,394.08

*Or earlier date if Third Expansion Premises are made available to Tenant on earlier date per paragraph 1. hereinabove.

3

Fiscal Period of Lease	Base Rent Per Square Foot			Annualized Base Rent		Monthly Installments
3. Years Three and Four:
January 1, 1999 through December 31, 2000	$	20.50		$	736,729.00	$	61,394.08
Year Five:
January 1, 2001 through December 31, 2001	$ $	20.50 22.50	* **	$	838,519.00	$	69,876.58
Year Six:
January 1, 2002 to December 31, 2002	$ $	21.50 22.50	* **	$	874,457.00	$	72,871.42

* With respect to 35,938 square feet (Original, First, Second and Third Expansion Premises)

** With respect to 4,524 square feet (Fourth Expansion Premises)”

5. Article 14. Construction, is hereby amended by the addition thereto of a new paragraph G. to appear after paragraph F. which paragraph G. shall stipulate as follows:

“G. Notwithstanding the foregoing or anything contained herein to the contrary, the Fourth Expansion Premises shall be delivered to Tenant prior to commencement of the Fourth Expansion Premises Initial Term on an “as is” basis, and any improvements to the Fourth Expansion Premises shall be the sole responsibility of and at cost of Tenant. If Tenant shall elect to make such improvements, Tenant shall comply in all respects with paragraph 6.D. of the Lease set forth hereinabove.”

6. Article 36. Brokerage, is hereby amended by the addition thereto of a new paragraph which paragraph shall stipulate the following:

“Further notwithstanding the foregoing, Landlord and Tenant covenant and agree to and with each other that no broker is recognized as being responsible for consummation of the herein Third Amendment or the leasing from Landlord to Tenant of the Fourth Expansion Premises. Landlord and Tenant mutually agree to indemnify the other and to hold the other harmless from all suits, claims and demands brought by any party for brokerage commission with respect to leasing of the Fourth Expansion Premises.”

7. Exhibit E, PARKING, NO. OF SPACES, is hereby amended by the deletion of reference to one hundred (100) unreserved spaces and by substitution in its place and stead of reference to one hundred thirteen (113) unreserved spaces, two of which shall be located in the “contractor lot”, so-called, located on the ground floor of the structured parking facility.

4

8. Exhibit E, PARKING, COST PER PARKING SPACE, is hereby amended by the deletion of reference to one hundred (100) unreserved spaces and by substitution in its place and stead of reference to one hundred thirteen (113) unreserved spaces. Reference to eighty three (83) Additional Spaces at costs stipulated therein shall remain without amendment.

9. Ratification. The terms, conditions and provisions of said Lease Agreement as amended by the terms, conditions and provisions of the First Amendment and the Second Amendment are hereby ratified and confirmed in all respects except as amended by the terms, conditions and provisions of the herein Third Amendment.

19. Conflict. In the event of any conflict between the terms, conditions and provisions of this Third Amendment and the terms, conditions and provisions of said Lease Agreement, as amended by the said First Amendment and the said Second Amendment, then in such event the terms, conditions and provisions of this Third Amendment shall govern and prevail in all respects.

IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year first above written.

In the presence of:

LANDLORD

FUSCO HARBOUR ASSOCIATES, LLC

By:                                                                                                       

Edmund J. Fusco

Its Manager

Duly Authorized

5

In the presence of:	TENANT CURAGEN CORPORATION
Elizabeth A. Whayland	David M. Wurzer
Catherine Mugo	Its EVP & CFO Duly Authorized

STATE OF CONNECTICUT) )

ss.: New Haven; December 21, 2000

COUNTY OF NEW HAVEN)

Personally appeared, Edmund J. Fusco, Jr., Manager of FUSCO HARBOUR ASSOCIATES, LLC, signer and sealer of the foregoing instrument, and acknowledged the same to be his free act and deed and the free act and deed of said corporation, before me. ¨

Notary Public

My Commission Expires March 31, 2001

STATE OF CONNECTICUT) )

ss.: New Haven;

COUNTY OF NEW HAVEN)

Personally appeared, David M. Wurzer, EVP & CFO, of CURAGEN CORPORATION, signer and sealer of the foregoing instrument, and acknowledged the same to be his free act and deed and the free act and deed of said corporation, before me.

Terrie B. Atkinson                                                                                          

Notary Public

My Commission Expires November 30, 2004

6

FOURTH AMENDMENT TO

LEASE AGREEMENT

FUSCO HARBOUR ASSOCIATES, LLC

LANDLORD

AND

CURAGEN CORPORATION

TENANT

LONG WHARF MARITIME CENTER

BUILDING 1

555 LONG WHARF DRIVE

NEW HAVEN, CONNECTICUT

DATE: AS OF

June 5, 2001

FOURTH AMENDMENT TO LEASE AGREEMENT

THIS FOURTH AMENDMENT TO LEASE AGREE~T (hereinafter referred to as the “Fourth Amendment”) is made as of the 5^th day of June, 2001 by and between FUSCO HARBOUR ASSOCIATES, LLC, a Connecticut limited liability company, with offices and a principal place of business c/o The Fusco Corporation, 555 Long Wharf Drive, New Haven, Connecticut 06511 (said Fusco Harbour Associates, LLC, its successors and assigns hereinafter referred to as the “Landlord”) and CURAGEN CORPORATION, a Delaware corporation with an office at 555 Long Wharf Drive, New Haven, Connecticut 06511 (said CuraGen Corporation, its successors and assigns hereinafter referred to as the “Tenant”).

WITNESSETH: That

WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated December 23, 1996 (the “Lease”) whereunder Landlord leased to Tenant and Tenant leased from Landlord twenty six thousand two hundred sixty six (26,266) rentable square feet of floor area located on the eleventh floor of Landlord’s Building (the “Initial Premises”) as described in said Lease; and

WHEREAS, Landlord and Tenant entered into that certain First Amendment to Lease Agreernent dated as of the 27^th day of October, 1997 (the “First Amendment”) whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional five thousand three hundred ninety seven (5,397) rentable square feet of floor area located on the thirteenth floor of Landlord’s Building (the “First Expansion Premises”), on terms and conditions as described in said First Amendment; and

WHEREAS, Landlord and Tenant entered into that certain Second Amendment to Lease Agreement dated as of the 31 It day of August, 1998 (the “Second Amendment”) whereunder Landlord leased to Tenant and Tenant leased from Landlord (i) an additional two thousand nine hundred twenty eight (2,928) rentable square feet of floor area on the thirteenth floor of Landlord’s Building (the “Second Expansion Premises”) and (ii) an additional one thousand three hundred forty seven (1,347) rentable square feet of floor area situated on the thirteen floor of Landlord’s Building (the “Third Expansion Premises”); and

WHEREAS, Landlord and Tenant entered into that certain Third Amendment to Lease Agreement dated as of the 1^st day of January, 2001, whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional four thousand five hundred twenty four (4,524) rentable square feet of floor area located on the ninth floor of Landlord’s Building (the “Fourth Expansion Premises”); and

WHEREAS, Landlord and Tenant desire that Tenant shall lease additional space on the ninth floor of Landlord’s Building which additional space shall be let to Tenant upon the terms and conditions contained hereinafter; and

WHEREAS, the parties desire to enter into this Fourth Amendment to set forth the terms and conditions of their agreement in connection with the foregoing;

NOW THEREFORE, in consideration of the mutual terms, conditions and covenants as contained in said Lease, as contained in said First Amendment, as contained in said Second Amendment, as contained in the Third Amendment, and as contained in the herein Fourth Amendment, the parties hereto do hereby agree as follows:

1. Article 1. Premises is hereby amended by the addition thereto of a new paragraph A-4. to be inserted after paragraph A-3. now there appearing, which paragraph A-4. shall stipulate as follows:

“A-3. In addition to the foregoing, effective July 1,2001, Landlord does hereby lease to Tenant and Tenant does hereby lease from Landlord an additional seven thousand two hundred ninety (7,290) rentable square feet of floor area situated on the ninth floor of Landlord’s Building in the area designated on Exhibit B-4 annexed hereto and made a part hereof (the “Fifth Expansion Premises”). The total rentable area leased to Tenant on the said ninth floor shall as of such date be eleven thousand eight hundred fourteen (11,814) rentable square feet.

Whenever the defined term “Premises” shall be used hereinafter it shall, wherever the context may indicate or wherever proper reading may require, also be deemed to refer to the First Expansion Premises, the Second Expansion Premises, the Third Expansion Premises, the Fourth Expansion Premises and the Fifth Expansion Premises in all respects as if initially the said First Expansion Premises, Second Expansion Premises, Third Expansion Premises, Fourth Expansion Premises and Fifth Expansion Premises were fully includable within the intent of the defined term “Premises”, all until January 1, 2003, at which time the term “Premises” shall be deemed thereupon and thereafter to refer solely to the Fourth Expansion Premises and the Fifth Expansion Premises respectively.”

2. Article 3. Term, is hereby amended by the addition thereto of a new paragraph A- 5. to be inserted after paragraph A-4. now there appearing, which new paragraph A-5. shall stipulate the following:

“A-5. TO HAVE AND HOLD the Fifth Expansion Premises for a period and term commencing July 1,2001 (the “Fifth Expansion Premises Commencement Date”).”

2

3. Article 3. Term, is hereby further amended by the addition thereto of a new paragraph C-4. to be inserted after paragraph C-3. now there appearing which new paragraph C- 4. shall stipulate the following:

“C-4. Effective as of the date of the herein Fourth Amendment and notwithstanding anything contained in the Lease, as amended, to the contrary, the term of this Lease, as amended, with respect to all portions of the Initial Premises, the First Expansion Premises, the Second Expansion Premises and the Third Expansion Premises (being all portions of the Premises located on the eleventh floor and thirteenth floor of Landlord’s Building) shall each and all extend to and end at midnight December 31, 2002. The term of this Lease, as amended, with respect to all portions of the Fourth Expansion Premises and the Fifth Expansion Premises (being all portions of the Premises located on the ninth floor of Landlord’s Building) shall each extend to and end at midnight on June 30, 2006. The parties acknowledge, recognize and agree that any rights of first refusal, rights to expand and rights to renew or extend the teml hereof as stipulated or provided for in said Lease, as amended, wherever appearing and however stated, shall not apply in any manner to the Fourth Expansion Premises or Fifth Expansion Premises, any such rights of first refusal, renewal, extension or expansion existing pursuant to the temlS of the Lease, as amended, wherever appearing or however stipulated, being expressly deemed to be inapplicable with respect to said Fourth or Fifth Expansion Premises.”

4. Article 4. Rent and Rent Commencement is hereby amended by the addition thereto of a new paragraph A-I. to be inserted after paragraph A. now there appearing, which paragraph A-I. shall stipulate the following:

“A-I. Notwithstanding anything contained in the foregoing paragraph A. to the contrary, Tenant covenants and agrees to pay to Landlord and Landlord shall be entitled to receive an annual base rental (“Base Rent”) during the following periods of time in the following amounts:

Fiscal Period of Lease	Base Rent Per Square Foot			Annualized Base Rent		Monthly Installments
1. Year Five:
a) January 1,2001 to July 1, 2001	$ $	20.50 22.50	* **	$	838,519.00	$	69,876.58
b) July 1, 2001 through December 31, 2001	$ $ $	20.50 22.50 25.00	* ** ***	$	1,020,769.00	$	85,064.08

3

Fiscal Period of Lease	Base Rent Per Square Foot			Annualized Base Rent		Monthly Installments
2. Year Six:
January 1, 2002 through December 31, 2002	$ $ $	21.50 22.50 25.00	* ** ***	$	1,056,707.00	$	88,058.92
3. Years Seven through Ten:
January 1, 2003 through June 30, 2006	$	25.00	****	$	295,350.00	$	24,612.50

* With respect to 35,938 square feet (Initial, First, Second and Third Expansion Premises)

** With respect to 4,524 square feet (Fourth Expansion Premises)

*** With respect to 7,290 square feet (Fifth Expansion Premises)

**** With respect to the total ninth floor premises (Fourth and Fifth Expansion Premises) of 11,814 square feet

All such Base Rent shall be paid on a monthly installment basis, in advance, on the first day of each month during the term hereof.”

5. Article 14. Construction, is hereby amended by the addition thereto of a new paragraph H. to appear after paragraph G. which paragraph H. shall stipulate the following:

“H. Notwithstanding the foregoing or anything contained herein to the contrary, the Fifth Expansion Premises shall be delivered to Tenant prior to commencement of the Fifth Expansion Premises Commencement Date on an “as is” basis. Any improvements to the Fifth Expansion Premises shall be the sole responsibility of and at the cost of Tenant. If Tenant shall elect to make such improvements, Tenant shall comply in all respects with paragraph 6.0. of the Lease set forth hereinabove. Tenant shall be entitled to early possession of the Premises for such purposes upon the date of execution of this Fourth Amendment.”

6. Article 31. Assignment, is hereby amended by the addition thereto of a new paragraph D. which paragraph D. shall stipulate the following:

“D. Notwithstanding anything contained hereinabove in paragraphs A., B. or C., the parties agree that effective as of the date of the herein Fourth Amendment, any

4

intent, attempt or effort on the part of Tenant to either assign this Lease, as amended, with respect to the Fourth Expansion Premises and Fifth Expansion Premises (collectively in this paragraph the “Ninth Floor Premises”), or to sublet any portion of the Ninth Floor Premises, shall first give rise to a right of call on the part of Landlord either (a) to take back the entirety of the Ninth Floor Premises in the event of an intended assignment of this Lease or a sublease of the entirety of the Ninth Floor Premises, or (b) to take back such lesser portion of the Ninth Floor Premises as Tenant shall intend to sublease. In either event the herein Lease shall be terminated as to the portion taken back by Landlord in accordance with the provisions contained hereinafter in this paragraph, but shall remain in full force and effect as to any portion remaining and not taken back. In the alternative, however, Landlord shall have the right at Landlord’s election either (i) to permit any assignment or sublease of the said Premises or any portion thereof requested on the part of Tenant to be consummated without taking back any such portion of the said Premises; or (ii) to withhold consent to any such assignment or sublease without taking back any portion of the said Premises, all in accordance with the provisions contained hereinafter in this paragraph.

The provisions of this paragraph D. shall operate in such manner that if Tenant shall intend to assign this Lease, as amended, in connection with the Ninth Floor Premises or to sublet all or any portion thereof, Tenant shall notify Landlord in writing of such intent in sufficient detail so as to apprise Landlord of the business and other terms and conditions of any such intended assignment or sublease. Landlord shall thereafter have fifteen (15) business days in which to notify Tenant in writing of its election as to whether (a) Landlord shall exercise its call rights and take back the said Premises or such portion thereof as intended by Tenant to be subleased; or (b) whether Landlord shall waive such call rights and permit any such assignment or sublease of the said Premises or any portion thereof to be consummated by Tenant; or (c) whether Landlord shall withhold its consent to any such assignment or sublease.

In the event that Landlord shall exercise its call rights, the herein Lease with respect to the Ninth Floor Premises or such lesser portion thereof as to which Landlord’s call rights shall appertain, shall terminate as of a date certain to be identified by Landlord in the above referenced notice to Tenant In the event of permitted assignment or sublease, Tenant shall be entitled to consummate such assignment or sublease transaction on the terms outlined in Tenant’s notice of request to Landlord. Any Base Rent and/or Additional Rent or any other manner of consideration paid by any assignee or sublessee in excess of the value of that being paid by Tenant hereunder shall be tendered to Landlord periodically from time to time within ten (10) days of receipt by Tenant thereof. In the event that Landlord shall withhold its consent to any such assignment or sublease, then in such event this Lease and Tenant’s obligations hereunder shall remain in full force and effect Landlord agrees that any request by Tenant for the consent of Landlord to any such assignment or sublease shall not be unreasonably withheld, delayed or conditioned.

5

The provisions of the herein paragraph D. shall supersede and take priority over the provisions of paragraph A., B. and C. hereinabove.”

7. Article 36. Brokerage, is hereby amended by the addition thereto of a new paragraph which paragraph shall stipulate the following:

“Further notwithstanding the foregoing, Landlord and Tenant covenant and agree to and with each other that no broker is recognized as being responsible for consummation of the herein Fourth Amendment or the leasing from Landlord to Tenant of the Fifth Expansion Premises. Landlord and Tenant mutually agree to indemnify the other and to hold the other harmless from all suits, claims and demands brought by any party for brokerage commission with respect to leasing of the Fifth Expansion Premises.”

8. Exhibit E, PARKING, NO. OF SPACES, is hereby amended by the deletion of reference to one hundred thirteen (113) unreserved spaces and by substitution in its place and stead of reference to one hundred thirty three (133) unreserved spaces (two of which shall be located in the “contractor lot”, so-called, located on the ground floor of the structured parking facility) until January 1, 2003 at which time the number of spaces shall be reduced to a total of thirty three (33) spaces included in the Base Rent being paid by Tenant. Additional spaces may be leased from time to time at then prevailing market rental rates, plus applicable sales taxes, and strictly subject to availability. Reference to eighty three (83) Additional spaces at costs stipulated therein shall remain without amendment until January 1, 2003 at which time such reference shall expire and such right to lease such Additional spaces shall expire by the express provision hereof.

9. Ratification. The terms, conditions and provisions of said Lease Agreement as amended by the terms, conditions and provisions of the First Amendment, the Second Amendment and the Third Amendment are hereby ratified and confirmed in all respects except as amended by the terms, conditions and provisions of the herein Fourth Amendment.

10. Conflict. In the event of any conflict between the tenns, conditions and provisions of this Fourth Amendment and the tenns, conditions and provisions of said Lease Agreement, as amended by the said First Amendment, the said Second Amendment and the said Third Amendment, then in such event the tenns, conditions and provisions of this Fourth Amendment shall govern and prevail in all respects.

6

IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year first above written.

In the presence of:	In the presence of: LANDLORD FUSCO HARBOUR ASSOCIATES, LLC
	By:    Lynn Fusco Hughes Duly Authorized
	By:    Edmund J. Fusco, Jr. Duly Authorized

In the presence of:	TENANT CURAGEN CORPORATION
	By:    David M. Wurzer Its EVP & CFO Duly Authorized

7

STATE OF CONNECTICUT)

) ss.: New Haven; June 13, 2001

COUNTY OF NEW HAVEN)

Personally appeared, Lynn Fusco Hughes, _____________________________________ of FUSCO HARBOUR ASSOCIATES, LLC, signer and sealer of the foregoing instrument, and acknowledged the same to be her free act and deed and the free act and deed of said company, before me.

STATE OF CONNECTICUT)

) ss.: New Haven; June 13, 2001

COUNTY OF NEW HAVEN)

Personally appeared, Edmund J. Fusco, Jr., _____________________________________ of FUSCO HARBOUR ASSOCIATES, LLC, signer and sealer of the foregoing instrument, and acknowledged the same to be his free act and deed and the free act and deed of said company, before me.

STATE OF CONNECTICUT)

) ss.: New Haven;

COUNTY OF NEW HAVEN)

Personally appeared, _____________________________________ , of CURAGEN CORPORATION, signer and sealer of the foregoing instrument, and acknowledged the same to be his/her free act and deed and the free act and deed of said corporation, before me.

Wendy F. Bristow                                                                              

Notary Public

My Commission Expires: 3/31/06

8

FIFTH AMENDMENT TO

LEASE AGREEMENT

FUSCO HARBOUR ASSOCIATES, LLC

LANDLORD

AND

CURAGEN CORPORATION

TENANT

LONG WHARF MARITIME CENTER

BUILDING l

555 LONG WHARF DRIVE

NEW HAVEN, CONNECTICUT

DATE: MARCH 12^th, 2002

FIFTH AMENDMENT TO LEASE AGREEMENT

THIS FIFTH AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the “Fifth Amendment”) is made as of the 12^th day of March, 2002 by and between FUSCO HARBOUR ASSOCIATES, LLC, a Connecticut limited liability company, with offices and a principal place of business c/o The Fusco Corporation, 555 Long Wharf Drive, New Haven, Connecticut 06511 (said Fusco Harbour Associates, LLC, its successors and assigns hereinafter referred to as the “Landlord”) and CURAGEN CORPORATION, a Delaware corporation with an office at 555 Long Wharf Drive, New Haven, Connecticut 06511 (said CuraGen Corporation, its successors and assigns hereinafter referred to as the “Tenant”).

WITNESSETH: That

WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated December 23,1996 (the “Lease”) whereunder Landlord leased to Tenant and Tenant leased from Landlord twenty six thousand two hundred sixty six (26,266) rentable square feet of floor area located on the eleventh floor of Landlord’s Building (the “Initial Premises”) as described in said Lease; and

WHEREAS, Landlord and Tenant entered into that certain First Amendment to Lease Agreement dated as of the 27^th day of October, 1997 (the “First Amendment”) whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional five thousand three hundred ninety seven (5,397) rentable square feet of floor area located on the thirteenth floor of Landlord’s Building (the “First Expansion Premises”), on terms and conditions as described in said First Amendment; and

WHEREAS, Landlord and Tenant entered into that certain Second Amendment to Lease Agreement dated as of the 31^st day of August, 1998 (the “Second Amendment”) whereunder Landlord leased to Tenant and Tenant leased from Landlord (i) an additional two thousand nine hundred twenty eight (2,928) rentable square feet of floor area on the thirteenth floor of Landlord’s Building (the “Second Expansion Premises”) and (ii) an additional one thousand three hundred forty seven (1,347) rentable square feet of floor area situated on the thirteen floor of Landlord’s Building (the “Third Expansion Premises”); and

WHEREAS, Landlord and Tenant entered into that certain Third Amendment to Lease Agreement dated as of the 1^st day of January, 2001, whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional four thousand five hundred twenty four (4,524) rentable square feet of floor area located on the ninth floor of Landlord’s Building (the “Fourth Expansion Premises”); and

WHEREAS, Landlord and Tenant entered into that certain Fourth Amendment to Lease Agreement dated as of the 5^th day of June, 2001, whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional seven thousand two hundred ninety (7,290) rentable square feet of floor area located on the ninth floor of Landlord’s Building (the “Fifth Expansion Premises”); and

WHEREAS, the parties desire that the Term hereof with respect to those portions of the Premises as are located on the eleventh and thirteenth floors of Landlord’s Building be extended for a five (5) year period ending at midnight December 31, 2007; and

WHEREAS, the parties desire to enter into this Fifth Amendment to set forth the terms and conditions of their agreement in connection with the foregoing;

NOW THEREFORE, in consideration of the mutual terms, conditions and covenants as contained in said Lease, as contained in said First Amendment, as contained in said Second Amendment, as contained in the Third Amendment, as contained in the Fourth Amendment, and as contained in the herein Fifth Amendment, the parties hereto do hereby agree as follows:

1.    Article 3., Term. is hereby amended by the addition thereto of a new paragraph C- 5. to be inserted after paragraph C-4. now there appearing which new paragraph C-5. shall stipulate the following:

“C-5. Notwithstanding anything contained in the Lease, as amended, to the contrary, the Term of this Lease, as amended, with respect to all portions of the Initial Premises, the First Expansion Premises, the Second Expansion Premises and the Third Expansion Premises (being all portions of the Premises located on the eleventh floor and thirteenth floor of Landlord’s Building) shall each and all extend to and end at midnight December 31, 2007. The term of this Lease, as amended, with respect to all portions of the Fourth Expansion Premises and the Fifth Expansion Premises (being all portions of the Premises located on the ninth floor of Landlord’s Building) shall each continue to extend to and end at midnight on June 30, 2006 as stipulated and set forth in the Fourth Amendment. The parties acknowledge, recognize and agree that any rights of first refusal, rights to expand and rights to renew or extend the term hereof as stipulated or provided for in said Lease, as amended, wherever appearing and however stated, shall not apply in any manner hereafter. Holding over after the end of the Term with respect to any portion of the Premises is strictly prohibited.”

2.    Article 4., Rent and Rent Commencement, is hereby amended by the addition thereto of a new paragraph A-2. to be inserted after paragraph A-I. now there appearing, which paragraph A-2. shall stipulate the following:

“A-2. Notwithstanding anything contained in the foregoing paragraph A-I. to the contrary, commencing January 1, 2003 (prior to which time the rental structure set forth

2

in the Fourth Amendment shall continue to be applicable), Tenant covenants and agrees to pay to Landlord and Landlord shall be entitled to receive an annual base rental (“Base Rent”) during the following periods of time in the following amounts:

Fiscal Period of Lease	Base Rent Per Square Foot	Annualized Base Rent	Monthly Installments
* 1/1/03 through 6/30/06	$25.00	$1,193,800.00	$99,483.33
** 7/1/06 through 12/31/07	$25.00	$898,450.00	$74,870.83

* With respect to entire leased Premises of 47,752 rentable square feet

** With respect to the portion of Premises on 11th and 13th floors containing 35,938 rentable square feet

All such Base Rent shall be paid on a monthly installment basis, in advance, on the first day of each month during the term hereof.”

3.    Article 14., Construction, is hereby amended by the addition thereto of a new to appear after paragraph H. which paragraph I. shall stipulate the following:

“I. Notwithstanding anything contained herein to the contrary, as of and after the date hereof, the Premises shall continue to be leased on an “as is” basis, and any improvements to the Premises shall be the sole responsibility of and at the cost of Tenant. If Tenant shall elect to make such improvements, Tenant shall comply in all respects with paragraph 6.D. of the Lease set forth hereinabove.”

4.    Article 31., Assignment, is hereby amended by the addition thereto of a new paragraph E. which paragraph E. shall stipulate the following:

“E. Notwithstanding anything contained hereinabove in paragraphs A., B., C. or D., the parties agree that effective as of the date of the herein Fifth Amendment, any intent, attempt or effort on the part of Tenant to either (i) assign this Lease, as amended, with respect to the Initial Premises, the First Expansion Premises, the Second Expansion Premises or the Third Expansion Premises (being all portions of the Premises located on the eleventh and thirteenth floors of Landlord’s Building containing a total of thirty five thousand nine hundred thirty eight (35,938) rentable square feet and collectively in this paragraph referred to as the “Upper Floor Premises”), or (ii) to sublet any portion of the Upper Floor Premises, shall first give rise to a right of call on the part of Landlord (“Call Rights”) either (a) to take back the entirety of the Upper Floor Premises in the event of an intended assignment of this Lease or a sublease of the entirety of the Upper Floor Premises, or (b) to take back such lesser portion of the Upper Floor Premises as Tenant

3

shall intend to sublease. In either event the herein Lease shall be terminated as to the portion taken back by Landlord in accordance with the provisions contained hereinafter in this paragraph, but shall remain in full force and effect as to any portion remaining and not taken back. In the alternative, however, Landlord shall have the right at Landlord’s election either (i) to permit any assignment or sublease of the said Upper Floor Premises or any portion thereof requested on the part of Tenant to be consummated without exercising Call Rights and taking back any such portion of the said Premises; or (ii) to withhold consent to any such assignment or sublease without exercising Call Rights and taking back any portion of the said Upper Floor Premises, all in accordance with the provisions contained hereinafter in this paragraph.

The provisions of this paragraph E. shall operate in such manner that if Tenant shall intend to assign this Lease, as amended, in connection with the Upper Floor Premises or to sublet all or any portion thereof, Tenant shall notify Landlord in writing of such intent in sufficient detail so as to apprise Landlord of the business and other terms and conditions of any such intended assignment or sublease, including fiscal information and data with respect to the proposed assignee or sublessee in such detail as Landlord shall reasonably require. Landlord shall thereafter have fifteen (15) business days in which to notify Tenant in writing of its election as to whether (a) Landlord shall exercise its Call Rights and take back the said Premises or such portion thereof as intended by Tenant to be subleased; or (b) whether Landlord shall waive such Call Rights and permit any such assignment or sublease of the said Premises or any portion thereof to be consummated by Tenant; or (c) whether Landlord shall withhold its consent to any such assignment or sublease, setting forth in its notice the reasons therefor.

In the event that Landlord shall exercise its Call Rights, the herein Lease with respect to the Upper Floor Premises or such lesser portion thereof as to which Landlord’s Call Rights shall appertain, shall terminate as of a date certain to be identified by Landlord in the above referenced notice to Tenant.

In the event of a permitted assignment or sublease, Tenant shall be entitled to consummate such assignment or sublease transaction on the terms outlined in Tenant’s notice of request to Landlord. Notwithstanding any such permitted assignment or sublease, Tenant shall remain liable hereunder to perform all duties and obligations of Tenant, mitigated only to the extent of actual and timely performance on the part of assignee or sublessee. Any Base Rent and/or Additional Rent or any other manner of consideration paid by any assignee or sublessee in excess of the value of that being paid by Tenant hereunder, after deduction of all reasonable costs of effecting such sublease or assignment including reasonable fees of counsel, shall be shared equally by Landlord and Tenant, and Landlord’s share as aforesaid shall be tendered by Tenant to Landlord periodically from time to time within ten (10) days of receipt by Tenant thereof.

4

In the event that Landlord shall withhold its consent to any such assignment or sublease, then in such event this Lease and Tenant’s obligations hereunder shall remain in full force and effect. Landlord agrees that any request by Tenant for the consent of Landlord to any such assignment or sublease shall not be unreasonably withheld, delayed or conditioned.

The provisions of the herein paragraph E. shall supersede and take priority over the provisions of paragraph A., B., C. and D. hereinabove with respect to the Upper Floor Premises.”

5.    Article 36., Brokerage, is hereby amended by the addition thereto of a new paragraph which paragraph shall stipulate the following:

“Further notwithstanding the foregoing, Landlord and Tenant covenant and agree to and with each other that no broker is recognized as being responsible for consummation of the herein Fifth Amendment or the extension of the Term hereof with respect to those portions of the Premises described hereinabove. Landlord and Tenant mutually agree to indemnify the other and to hold the other harmless from all suits, claims and demands brought by any party for brokerage commission with respect to the herein Fifth Amendment and the transactions described herein.”

6. Ratification. The terms, conditions and provisions of said Lease Agreement as amended by the terms, conditions and provisions of the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment are hereby ratified and confirmed in all respects except as amended by the terms, conditions and provisions of the herein Fifth Amendment.

7. Conflict. In the event of any conflict between the terms, conditions and provisions of this Fifth Amendment and the terms, conditions and provisions of said Lease Agreement, as amended by the said First Amendment, the said Second Amendment, the said Third Amendment and the said Fourth Amendment, then in such event the terms, conditions and provisions of this Fifth Amendment shall govern and prevail in all respects.

5

IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the day and year first above written.

In the presence of:		LANDLORD FUSCO HARBOUR ASSOCIATES, LLC
	Paula Gaudino	By:	Lynn Fusco Hughes
			Duly Authorized

Brenna Anz	By:	Edmund J. Fusco, Jr.
		Duly Authorized

Paula Gaudino

Brenna Anz

In the presence of:		TENANT CURAGEN CORPORATION
	Lana Porter Schmitz	By:	David M. Wurzer
			Its EVP & CFO Duly Authorized

Wendy F. Bristow

6

STATE OF CONNECTICUT)

) ss.: New Haven; March 19, 2002

COUNTY OF NEW HAVEN)

Personally appeared, Lynn Fusco Hughes, duly authorized , of FUSCO HARBOUR ASSOCIATES, LLC, signer and sealer of the foregoing instrument, and acknowledged the same to be her free act and deed and the free act and deed of said company, before me.

By:	Brenna Anz
	Notary Public My Commission Expires: 3/31/06

STATE OF CONNECTICUT)

) ss.: New Haven; March 19, 2002

COUNTY OF NEW HAVEN)

Personally appeared, Edmund J. Fusco, Jr., duly authorized , of FUSCO HARBOUR ASSOCIATES, LLC, signer and sealer of the foregoing instrument, and acknowledged the same to be his free act and deed and the free act and deed of said company, before me.

By:	Brenna Anz
	Notary Public My Commission Expires: 3/31/06

STATE OF CONNECTICUT)

) ss.:

COUNTY OF NEW HAVEN)

Personally appeared, Dave M. Wurzer, EVP & CFO of CURAGEN CORPORATION, signer and sealer of the foregoing instrument, and acknowledged the same to be his/her free act and deed and the free act and deed of said corporation, before me.

By:	Terrie B. Atkinson
	Notary Public My Commission Expires: 11/30/04

7

SIXTH AMENDMENT TO

LEASE AGREEMENT

FUSCO HARBOUR ASSOCIATES, LLC

LANDLORD

AND

CURAGEN CORPORATION

TENANT

LONG WHARF MARITIME CENTER

BUILDING

555 LONG WHARF DRIVE

NEW HAVEN, CONNECTICUT

DATE: MAY      , 2002

SIXTH AMENDMENT TO LEASE AGREEMENT

THIS SIXTH AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the “Sixth Amendment”) is made as of the 8th day of May, 2002 by and between FUSCO HARBOUR ASSOCIATES, LLC, a Connecticut limited liability company, with offices and a principal place of business c/o The Fusco Corporation, 555 Long Wharf Drive, New Haven, Connecticut 06511 (said Fusco Harbour Associates, LLC, its successors and assigns hereinafter referred to as the “Landlord”) and CURAGEN CORPORATION, a Delaware corporation with an office at 555 Long Wharf Drive, New Haven, Connecticut 06511 (said CuraGen Corporation, its successors and assigns hereinafter referred to as the “Tenant”).

WITNESSETH: That

WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated December 23, 1996 (the “Lease”) whereunder Landlord leased to Tenant and Tenant leased from Landlord twenty six thousand two hundred sixty six (26,266) rentable square feet of floor area located on the eleventh floor of Landlord’s Building (the “Initial Premises”) as described in said Lease; and

WHEREAS, Landlord and Tenant entered into that certain First Amendment to Lease Agreement dated as of the 27th day of October, 1997 (the “First Amendment”) whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional five thousand three hundred ninety seven (5,397) rentable square feet of floor area located on the thirteenth floor of Landlord’s Building (the “First Expansion Premises”), on terms and conditions as described in said First Amendment; and

WHEREAS, Landlord and Tenant entered into that certain Second Amendment to Lease Agreement dated as of the 31 st day of August, 1998 (the “Second Amendment”) whereunder Landlord leased to Tenant and Tenant leased from Landlord (i) an additional two thousand nine hundred twenty eight (2,928) rentable square feet of floor area on the thirteenth floor of Landlord’s Building (the “Second Expansion Premises”) and (ii) an additional one thousand three hundred forty seven (1,347) rentable square feet of floor area situated on the thirteen floor of Landlord’s Building (the “Third Expansion Premises”); and

WHEREAS, Landlord and Tenant entered into that certain Third Amendment to Lease Agreement dated as of the 1st day of January, 2001, whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional four thousand five hundred twenty four (4,524) rentable square feet of floor area located on the ninth floor of Landlord’s Building (the “Fourth Expansion Premises”); and

WHEREAS, Landlord and Tenant entered into that certain Fourth Amendment to Lease Agreement dated as of the 5th day of June, 2001, whereunder Landlord leased to Tenant and Tenant leased from Landlord an additional seven thousand two hundred ninety (7,290) rentable square feet of floor area located on the ninth floor of Landlord’s Building (the “Fifth Expansion Premises”); and

WHEREAS, Landlord and Tenant into that certain Fifth Amendment to Lease Agreement dated as of the 12th day of March, 2002, whereunder, inter alia. the Term was modified, rental rates were modified and certain assignment rights were restricted; and

WHEREAS, Tenant desires to expand its occupancy upon the fifth floor and upon the ninth floor of Landlord’s Building; and

WHEREAS, the parties desire to enter into this Sixth Amendment to set forth the terms and conditions of their agreement in connection with the foregoing;

NOW THEREFORE, in consideration of the mutual terms, conditions and covenants as contained in said Lease, as contained in said First Amendment, as contained in said Second Amendment, as contained in the Third Amendment, as contained in the Fourth Amendment, as contained in the Fifth Amendment, and as contained in the herein Sixth Amendment, the parties hereto do hereby agree as follows:

1.    Article 1., Premises. is hereby amended by the addition thereto of a new paragraph A-5. to be inserted after paragraph A-4. now there appearing, which paragraph A-5. shall stipulate as follows:

“A-5. In addition to the foregoing, effective June 1, 2002, Landlord does hereby lease to Tenant and Tenant does hereby lease from Landlord (i) an additional five thousand two hundred seventy eight (5,278) rentable square feet of floor area situated on the fIfth floor of Landlord’s Building in the area designated on Exhibit B-5 annexed hereto and made a part hereof (the “Sixth Expansion Premises”), and (ii) an additional two thousand (2,000) rentable square feet of floor area situated on the ninth floor of Landlord’s Building in the area designated on Exhibit B-6 annexed hereto and made a part hereof (the “Seventh Expansion Premises”). The total rentable area leased to Tenant shall as of such date be fifty five thousand thirty (55,030) rentable square feet situated on respective floors as follows:

5th floor	5,278
9th floor	13,814
11th floor	26,266
13th floor	9,672
Total	55,030

2

Whenever the defmed term “Premises” shall be used hereinafter it shall, wherever the context may indicate or wherever proper reading may require, also be deemed to refer to the First Expansion Premises, the Second Expansion Premises, the Third Expansion Premises, the Fourth Expansion Premises, the Fifth Expansion Premises, the Sixth Expansion Premises and the Seventh Expansion Premises in all respects as if initially the said First Expansion Premises, Second Expansion Premises, Third Expansion Premises, Fourth Expansion Premises, Fifth Expansion Premises, Sixth Expansion Premises and Seventh Expansion Premises were fully includable within the intent of the defined tenn “Premises”, all until any relevant portion of the Premises shall no longer be included hereunder due to tenn expiration or otherwise.

2.    Article 3., Term, is hereby amended by the addition thereto of a new paragraph A- 6. to be inserted after paragraph A-5. now there appearing, which new paragraph A-6. shall stipulate the following:

“A-6. TO HAVE AND HOLD the Sixth Expansion Premises and the Seventh Expansion Premises for a period and term commencing June 1,2002 (the “Sixth Expansion Premises Commencement Date and Seventh Expansion Premises Commencement Date” respectively).”

3.    Article 3., Term. is hereby further amended by the addition thereto of a new paragraph C-5. to be inserted after paragraph C-4. now there appearing which new paragraph C- 5. shall stipulate the following:

“C-5. Effective as of the date of the herein Sixth Amendment and notwithstanding anything contained in the Lease, as amended, to the contrary, the term of this Lease, as amended, with respect to all portions of the Premises shall expire as follows:

Location	Rentable Square Footage	Term Expiration Date
5th floor	5,278	October 31, 2008
9th floor	13,814	June 30, 2006
11th floor	26,266	December 31, 2007
13th floor	9,672	December 31, 2007

Holding over beyond the foregoing Term Expiration Dates is strictly prohibited.”

4.    Article 4., Rent and Rent Commencement. is hereby amended by the addition thereto of a new paragraph A-3. to be inserted after paragraph A-2. now there appearing, which paragraph A-3. shall stipulate the following:

3

“A-3. Notwithstanding anything contained in the foregoing paragraph A-2. to the contrary, commencing June 1, 2002 (prior to which time the rental structure set forth in the Fifth Amendment shall continue to be applicable), Tenant covenants and agrees to pay to Landlord and Landlord shall be entitled to receive an annual base rental (“Base Rent”) during the following periods of time in the following amounts:

Lease Period	Base Rent Per Square Foot	Total Annual Base Rent	Monthly Installments
A.    June 1,2002 through         December 31, 2002	$21.501             $22.502             $25.003	$1,238,657.00	$103,221.42
B.    January 1, 2003 through         June 30, 2006	$25.004	$1,375,750.00	$114,645.83
C.    July 1,2006 through         December 31, 2007	$25.005	$1,030,400.00	$85,866.67
D.    January 1,2008 through         October 31, 2008	$25.006	$131,950.00	$10,995.83

All such Base Rent shall be paid on a monthly installment basis, in advance, on the first day of each month during the term hereof.”

5.    Article 14., Construction, is hereby amended by the addition thereto of a new paragraph J. to appear after paragraph I. which paragraph J. shall stipulate the following:

1. With respect to 35,938 square feet (Initial, First, Second and Third Expansion Premises)

2. With respect to 4,524 square feet (Fourth Expansion Premises)

3. With respect to 14,568 square feet (Fifth, Sixth and Seventh Expansion Premises)

4. With respect to entire Premises of 55,030 square feet

5. With respect to all Premises excepting ninth floor Premises and thus 41,216

6. With respect only to Fifth Floor Premises of 5,278 square feet

4

“J.    Notwithstanding anything contained herein to the contrary, the Sixth Expansion Premises and the Seventh Expansion Premises shall be delivered to Tenant and leased on an “as is” basis, and any improvements to the Sixth Expansion Premises and the Seventh Expansion Premises shall be the sole responsibility of and at the cost of Tenant. If Tenant shall elect to make such improvements, Tenant shall comply in all respects with paragraph 6.D. of the Lease set forth hereinabove.”

6. Article 36., Brokerage, is hereby amended by the addition thereto of a new paragraph which paragraph shall stipulate the following:

“Further notwithstanding the foregoing, Landlord and Tenant covenant and agree to and with each other that no broker is recognized as being responsible for consummation of the herein Sixth Amendment or the addition hereto of those portions of the Premises described hereinabove as the Sixth Expansion Premises and the Seventh Expansion Premises. Landlord and Tenant mutually agree to indemnify the other and to hold the other harmless from all suits, claims and demands brought by any party for brokerage commission with respect to the herein Sixth Amendment and the transactions described herein.”

7. Parking. Exhibit E, PARKING, NO. OF SPACES, is hereby amended by inclusion of the following:

Lease Period	Number of Unreserved Parking Spaces Allotted to Tenant
A.    June 1, 2002 through         June 30, 2006	151
B.    June 30, 2006 through         December 31, 2007	113
C.    January 1, 2008 through         October 31, 2008	15

Two of the above spaces shall be located in the “contractor lot”, so-called, located on the ground floor of the structured parking facility) until December 31, 2007. All such spaces shall be included in the Base Rent being paid by Tenant. Additional spaces may be leased from time to time at then prevailing market rental rates, plus applicable sales taxes, and strictly subject to availability.

8.    Ratification. The terms, conditions and provisions of said Lease Agreement as amended by the terms, conditions and provisions of the First Amendment, the Second

5

Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment are hereby ratified and confmned in all respects except as amended by the terms, conditions and provisions of the herein Sixth Amendment.

9.    Conflict. In the event of any conflict between the terms, conditions and provisions of this Sixth Amendment and the terms, conditions and provisions of said Lease Agreement, as amended by the said First Amendment, the said Second Amendment, the said Third Amendment, the said Fourth Amendment and the said Fifth Amendment, then in such event the terms, conditions and provisions of this Sixth Amendment shall govern and prevail in all respects.

IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of

        In the presence of: LANDLORD

FUSCO HARBOUR ASSOCIATES, LLC

Lisa Crosby	By:	Lynn Fusco Hughes
Brenna Anz		Lynn Fusco Hughes Duly Authorized

Lisa Crosby	By:	Edmund J. Fusco, Jr.
Brenna Anz		Edmund J. Fusco, Jr. Duly Authorized

        In the presence of: TENANT

CURAGEN CORPORATION

Catherine Mugo	By:	David M. Wurzer
Lana Porter Schmitz		Its EVP & CFO Duly Authorized

STATE OF CONNECTICUT)

) ss.: New Haven; May 21, 2002

COUNTY OF NEW HAVEN)

Personally appeared, Lynn Fusco Hughes, duly authorized of FUSCO HARBOUR ASSOCIATES, LLC, signer and sealer of the foregoing instrument, and acknowledged the same to be her free act and deed and the free act and deed of said company, before me.

By:	Brenna Anz
	Notary Public My Commission Expires March 31, 2006

STATE OF CONNECTICUT)

) ss.: New Haven; May 21, 2002

COUNTY OF NEW HAVEN)

Personally appeared, Edmund J. Fusco, Jr., duly authorized of FUSCO HARBOUR ASSOCIATES, LLC, signer and sealer of the foregoing instrument, and acknowledged the same to be his free act and deed and the free act and deed of said company, before me.

By:	Brenna Anz
	Notary Public My Commission Expires March 31, 2006

7

STATE OF CONNECTICUT)

) ss.: New Haven;

COUNTY OF NEW HAVEN)

Personally appeared, David. M. Wurzer, EVP & CFO of CURAGEN CORPORATION, signer and sealer of the foregoing instrument, and acknowledged the same to be his/her free act and deed and the free act and deed of said corporation, before me.

By:	Terrie B. Atkinson
	Notary Public My Commission Expires November 30, 2004

8

EX-10.2

EXHIBIT 10.2

AMENDMENT TO LEASE

THIS AMENDMENT TO LEASE (“Amendment”) made and entered into this 23^rdday of April, 2002 by and between TKJ ASSOCIATES LLC, a Connecticut limited liability company having an address at No.1 Selden Avenue, Branford, Connecticut 06405, hereinafter referred to as Landlord; and CURAGEN CORPORATION, a Delaware corporation having an office at 555 Long Wharf Drive, 11^th Floor, New Haven, Connecticut 06510, hereinafter referred to as Tenant.

WITNESSETH

WHEREAS, Landlord and Tenant are parties to that certain Indenture of Lease (“Lease”) dated May 29, 1998 which Lease provides, inter alia, for the lease of certain space located at 322 East Main Street, Branford, Connecticut, defined in said Lease as the Original Space and New Space; or Amendment to Lease, dated October 12, 1999, and comprising, in the aggregate, a total of approximately 46,548 square feet of space on the first, second, and third floors of the Building, as that term is defined in the Lease, and the Amendment to Lease dated October 12, 1999.

WHEREAS, Tenant has requested that Landlord lease additional space to Tenant and Landlord has agreed to lease such space to Tenant, in accordance with and upon the terms and conditions contained herein and in the Lease; and

WHEREAS, Tenant and Landlord intend that the terms and provisions contained in this Amendment shall be governed by and become part of the Lease as if such terms and provisions of this Amendment were originally contained in said Lease.

NOW, THEREFORE, the parties hereto, and for their successors and assigns, hereby covenant and agree as follows:

1. All of the defined words in the Lease used in this Amendment shall have the same meaning and definition given such words in the Lease.

2. Tenant hereby exercises its second option to renew, for an additional term of two (2) years (June 1, 2002 through May 31, 2004 inclusive), the Lease for all the space occupied by Tenant pursuant to the Lease as of the date hereof, namely, the Original Space, the First Floor Space, Second Floor Space, and Third Floor space, pursuant to all the terms and provisions of the Lease pertaining to such renewal including, but not limited to, the provisions of paragraph 6 (“Rent Adiustments: Renewal Terms.”) Landlord and Tenant agree that no further written notice of Tenant’s exercise of said option to renew shall be required.

Page 2

3. Paragraph 2 of the Lease (“Leased Premises”) is hereby deleted and replaced with the following:

“In consideration of the rent and covenants herein reserved and contained on the part of the Tenant to paid, performed and observed, the Landlord does hereby lease, demise and let unto the Tenant and the Tenant does hereby hire from the Landlord upon the terms, provisions, covenants and conditions hereinafter set forth: (a) approximately 8,000 square feet of space on the second (2^nd) floor of the Building, as more particularly depicted on Exhibit A attached hereto (the second Floor Space”); and (b) approximately 16,000 square feet of space on the first (1^st) floor of the Building, as more particularly depicted in Exhibit B attached hereto (the “First Floor Space”); (c) the original space; (d) approximately 14,548 square feet of space on the third (3^rd) floor of the building not currently occupied by Vision Medical Imaging (now known as Canavan Corporation), more particularly depicted on Exhibit C attached hereto (the “Third Floor Space”); and (d) approximately 2,000 square feet of ADDITIONAL space on the third (3^rd) floor of the Building not currently occupied by Vision Medical Imaging (now known as Canavan Corporation), more particularly depicted on Exhibit D attached hereto (the “Third Floor Space”) and identified as Executive/Administrative Suite”. (e) approximately 2,474 square feet of space in the Warehouse, located at 10 Sylvia Street, Branford, CT, more particularly depicted on Exhibit E, attached hereto (the “Warehouse Space”).

4. Paragraph 3 of the Lease (“Length of Term”) is hereby deleted and replaced with the following:

“Lenqth of Term. The term of this Lease, as it pertains to the “New Space”, the “Original Space”, and “Third Floor Space” as it has been extended by the Tenant’s exercise of its option described in Paragraph 2 above, shall commence on May 29, 1998 and continue through May 31, 2004, both inclusive, unless sooner terminated or renewed as hereinafter provided. As it pertains to the “ADDITIONAL Third Floor Space”, the term of the Lease shall commence on September 10, 2001, and continue until May 31, 2004, both

Page 3

inclusive, unless sooner terminated or renewed as hereinafter provided. As it pertains to the “Warehouse Space”, the term of the lease shall commence on July 15, 2001, and continue until May 31, 2004, both inclusive, unless sooner terminated or renewed as herinafter provided.”

5. Paragraph 4 of the Lease (“Option to Renew”) is hereby deleted and replaced with the following:

“Option to Renew. (a) With respect to the New Space and the Original Space, Tenant shall have the option, by giving written notice to Landlord at least six (6) months prior to the expiration of the then existing term of this Lease, to renew this Lease for One (1) additional term of two (2) years. The Lease may be renewed for any or all of the four (4) one-half floor sections, but not less than such one-half floor sections, of the New space and/or Original Space, provided, however, that if the Tenant chooses to renew this Lease for only two (2) of such one-half floor sections, such renewal shall only be for two (2) one-half floor sections on the same floor.

“(b) With respect to the Third Floor Space, Tenant shall have the option, by giving written notice to Landlord at least six (6) months prior to the termination of the then existing term of this Lease, to renew the Lease as it pertains to the Third Floor Space for one (1) additional term of two (2) years.”

“(c) With respect to the Warehouse Space, Tenant shall have the option, by giving written notice to Landlord at least six (6) months prior to the termination of the then existing term of this Lease, to renew the Lease as it pertains to the Warehouse Space for one (1) additional term of two (2) years.”

“Notwithstanding any provision to the contrary contained in this Lease, Tenant shall not have the right to renew any term of this Lease, whether with respect to the New Space, Original Space, Third Floor or Warehouse Space, if Tenant shall be in default under any provision of this

Page 4

Lease as of the date on which Tenant delivers the notice of its intention to renew or the expiration date of any term of this Lease. If Tenant does not exercise an option with respect to any portion of the leased premises all future options for that portion of space shall expire.”

6. Paragraph 5 (“Rent Initial Term”) of the Lease is amended by adding the following subparagraphs:

“C. Third Floor Space. The total rent payable for the period January 1,2000 through May 31, 2002 inclusive, for the Third Floor Space shall be Five Hundred Seventy-Five Thousand Three Hundred Sixty and 00/100 Dollars ($575,360.00) payable in equal monthly installments in the amount of Nineteen Thousand Eight Hundred Forty and 00/100 Dollars ($19,840.00) per month, said rent to be paid in advance without demand on the first (1^st) day of the month commencing January 1, 2000 and continuing to and including May 1, 2002.

“D. ADDITIONAL Third Floor space (Designated as “Executive/Administrative Suite”). The total rent payable for the period September 10, 2001 through May 31, 2002, both inclusive, for the “ADDITIONAL Third Floor space” (Designated as “Executive/Administrative Suite”) shall be Twenty-eight Thousand Nine Hundred Sixty-eight and 03/100 Dollars ($28,968.03). A pro rata payment of Two Thousand Three Hundred One and 39/100 Dollars ($2,301.39) payable for the month of September, 2001 and Twenty-six Thousand Six Hundred Sixty-six and 64/100 Dollars ($26,666.64) payable in equal monthly installments in the amount of Three thousand Three Hundred Thirty-three and 33/100 ($3,333.33) per month, said rent to be paid in advance without demand on the first (1^st) day of the month commencing October 1, 2001 and continuing to and including May 1,2002. The September, 2001 pro rata payment of Two Thousand Three Hundred One and 39/100 Dollars ($2,301.39) to be paid with the October, 2001 payment.”

Page 5

“E. Warehouse Space. The total rent for the period July 15, 2001 through May 31, 2002, both inclusive, for the Warehouse Space shall be Twenty-one Thousand Seven Hundred Sixty-seven and 26/100 Dollars ($21,767.26) payable in one (1) prorated payment for the period July 15, 2001 through July 31, 2001, both inclusive, of One Thousand One Hundred Fifty and 56/100 Dollars ($1,150.56); and Twenty Thousand Six Hundred Sixteen and 70/100 Dollars ($20,616.70) payable in equal monthly installments of Two Thousand Sixty-one and 67/100 Dollars ($2,061.67) per month, said rent to be paid in advance without demand on the first (1^st) day of the month commencing August 1, 2001 and continuing to and including May 1, 2002. The July pro rata payment of One Thousand One Hundred Fifty and 56/1000 Dollars ($1,150.56) to be paid with the August, 2001 payment.”

7. The Lease is amended by adding the following paragraphsafter Paragraph 6 (“Rent Adiustment: Renewal Terms”):

“6A. Third Floor Space Rent Ad;ustments: Renewal Terms.

In the event the Tenant exercises the first option to renew this Lease for the lease of the Third Floor Space, the annual rent payable for the Third Floor Space during the period June 1, 2002 through May 31, 2004, shall be Four Hundred Seventy Six Thousand One Hundred Sixty and 00/100 Dollars ($476,160.00) payable in equal monthly installments in the amount of Nineteen Thousand Eight Hundred Forty and 00/100 dollars ($19,840.00) per month, said rent to be paid in advance without demand on the first (1^st) day of the month commencing June 1, 2002 and continuing to and including May 31, 2004.”

“In the event the Tenant exercises the second option to renew this Lease for the lease of the Third Floor Space, the annual rent payable for the Third Floor Space during the period June 1,

Page 6

2004 through May 31, 2006 shall be determined in accordance with the provisions of Paragraph 6 (“Rent; Renewal Terms”) subparagraphs (a) through (e) of this Lease.”

“6B. ADDITIONAL Third Floor Space (Designated as “Executive/Administrative Suite”. Adjustment; Renewal Terms. As the Tenant has exercised the first option to renew this Lease for the ADDITIONAL Third Floor Space (“Executive/Administrative Suite”), the total rent payable for the ADDITIONAL Third Floor Space Executive/Administrative Suite) during the period June 1, 2002 through May 31, 2004, shall be Eighty Thousand and 00/100 Dollars ($80,000.00) payable in equal monthly installments in the amount of Three Thousand Three Hundred Thirty-three and 33/100 Dollars ($3,333.33) per month, said rent to be paid in advance without demand on the first (1st) day of the month commencing June 1, 2002 and continuing to and including May 1, 2004.”

“In the event the Tenant exercises the second option to renew this Lease for the Lease of the ADDITIONAL Third Floor Space (Executive/Administrative Suite), the annual rent payable for the ADDITIONAL Third Floor Space (Executive/Administrative Suite) during the period June 1, 2004 through, May 31, 2006 shall be determined in accordance with the provisions of Paragraph 6 (“Rent; Renewal Terms”) subparagraphs {a} through (e) of this Lease.”

“(C) Warehouse SDace Rent Adiustments; Renewal Terms. As the Tenant has exercised the first (1^st) option to renew this Lease for the lease of the Warehouse Space, the total rent payable for the Warehouse space during the period June 1, 2002 through May 31, 2004, shall be Forty-nine Thousand Four Hundred Eighty and 00/100 Dollars ($49,480.00) payable in equal monthly installments in the amount of Two Thousand Sixty-one and 67/100 Dollars ($2,061.67) per month, said rent to be paid in advance without demand on the first (1^st) day of the month commencing June 1,2002 and continuing to and including May 1, 2004.”

Page 7

“In the event the Tenant exercised the second (2^nd) option to renew this Lease for the lease of the Warehouse Space, the annual rent payable for the Warehouse Space during the period June 1, 2004 through May 31, 2006 shall be determined in accordance with the provisions of Paragraph 6 (“Rent; Renewal Terms) subparagraphs (a) through (e) of this Lease.”

8. The following provision is added to the Lease as paragraph 45:

“45. Audio-Visual Room. Landlord and Tenant agree that any and all audio-visual equipment, accessories and furniture currently located or used in or within the audio-visual room, which Audio-Visual Room is a portion of the space being leased to the Tenant and part of the Third Floor Space, is owned by Landlord and shall remain the personal property of Landlord throughout the term of the Lease and following any termination thereof. Tenant agrees to use and handle all such personal property with care and to maintain and repair such personal property, at Tenant’s expense, throughout the term of the Lease, and to deliver same to Landlord upon termination of the Lease in substantially the same condition as such personal property exists as of the date hereof, reasonable wear and tear excepted.”

9. The “Third Floor Space” depicted on Schedule A attached to this Amendment is hereby made a part of the Lease, to be attached thereto as Exhibit C.

10. The Third Floor Space, identified as “Executive/Administrative Suite”, is depicted and attached to this Amendment as Exhibit D and is hereby made a part of the Lease.

11. The “Warehouse Space” is depicted and attached to this Amendment as Exhibit E and is hereby made a part of the Lease.

Page 8

12. All other terms and provisions of the Lease not otherwise amended shall remain in full force and effect as originally written.

IN WITNESS WHEREOF, the parties have caused these premises to be duly signed and executed the day and date first above written.

Signed, Sealed and Delivered In the Presence Of:

TENANT :

CURAGEN CORPORATION

Terrie B. Atkinson                                                                                          By: David M Wurzer            

                                                     Witness                                             Title EVP & CFO

Elizabeth A. Whayland

                                                     Witness

LANDLORD :

T.K.J. ASSOCIATES, L.L.C.

Cheryl L. Tyler                                                                                                By: M. Joseph Canavan            

                                                     Witness                                               Title Member

                                                     Witness

EX-10.3

CURAGEN CORPORATION

AMENDED AND RESTATED

(Effective February 15, 2003)

1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

1. DEFINITIONS.

Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this CuraGen Corporation 1997 Employee, Director and Consultant Stock Plan, have the following meanings:

Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means the Committee.

Affiliate means a corporation, which for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.

Board of Directors means the Board of Directors of the Company.

Code means the United States Internal Revenue Code of 1986, as amended.

Committee means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.

Common Stock means shares of the Company’s voting common stock, $.01 par value per share.

Company means CuraGen Corporation, a Delaware corporation.

Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.

Fair Market Value of a Share of Common Stock means:

(1)    If the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the Common Stock, the closing or last price of the Common Stock on the Composite Tape or other comparable reporting system for the trading day immediately preceding the applicable date;

(2)    If the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the trading day on which Common Stock was traded immediately preceding the applicable date; and

(3)    If the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Administrator, in good faith, shall determine.

ISO means an option meant to qualify as an incentive stock option under Section 422 of the Code.

Key Employee means an employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan.

Non-Qualified Option means an option which is not intended to qualify as an ISO.

Option means an ISO or Non-Qualified Option granted under the Plan.

Option Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve.

Participant means a Key Employee, director or consultant to whom one or more Stock Rights are granted under the Plan. As used herein, “Participant” shall include “Participant’s Survivors” where the context requires.

Plan means this CuraGen Corporation 1997 Employee, Director and Consultant Stock Plan, as Amended and Restated.

Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.

Stock Grant means a grant by the Company of Shares under the Plan.

2

Stock Grant Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve.

Stock Right means a right to Shares of the Company granted pursuant to the Plan — an ISO, a Non-Qualified Option or a Stock Grant.

Survivors means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and distribution.

2. PURPOSES OF THE PLAN.

The Plan is intended to encourage ownership of Shares by Key Employees and directors of and certain consultants to the Company in order to attract such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for the granting of ISOs, Non-Qualified Options and Stock Grants.

3. SHARES SUBJECT TO THE PLAN.

The number of Shares which may be issued from time to time pursuant to this Plan shall be 7,000,000 or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 23 of the Plan.

If an Option ceases to be “outstanding”, in whole or in part, or if the Company shall reacquire any Shares issued pursuant to a Stock Grant, the Shares which were subject to such Option and any Shares so reacquired by the Company shall be available for the granting of other Stock Rights under the Plan. Any Option shall be treated as “outstanding” until such Option is exercised in full, or terminates or expires under the provisions of the Plan, or by agreement of the parties to the pertinent Option Agreement.

4. ADMINISTRATION OF THE PLAN.

The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:

a. Interpret the provisions of the Plan or of any Option or Stock Grant and to make all rules and determinations, which it deems necessary or advisable for the administration of the Plan;

3

b. Determine which employees of the Company or of an Affiliate shall be designated as Key Employees and which of the Key Employees, directors and consultants shall be granted Stock Rights;

c. Determine the number of Shares for which a Stock Right or Stock Rights shall be granted, provided, however, that in no event shall Stock Rights with respect to more than 750,000 shares be granted to any Participant in any fiscal year; and

d. Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted;

provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs. Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee.

5. ELIGIBILITY FOR PARTICIPATION.

The Administrator will, in its sole discretion, name the Participants in the Plan, provided, however, that each Participant must be a Key Employee, director or consultant of the Company or of an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an employee, director or consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the delivery of the Agreement evidencing such Stock Right. ISOs may be granted only to Key Employees. Non-Qualified Options and Stock Grants may be granted to any Key Employee, director or consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights.

6. TERMS AND CONDITIONS OF OPTIONS.

Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Administrator may provide that Options be granted subject to such conditions as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the following terms and conditions:

4

A. Non-Qualified Options: Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non-Qualified Option:

a. Option Price: Each Option Agreement shall state the option price (per share) of the Shares covered by each Option, which option price shall be determined by the Administrator but shall not be less than the par value per share of Common Stock.

b. Each Option Agreement shall state the number of Shares to which it pertains;

c. Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain conditions or the attainment of stated goals or events; and

d. Exercise of any Option may be conditioned upon the Participant’s execution of a Share purchase agreement in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that:

i. The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and

ii. The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions.

e. Directors’ Options: Each director of the Company who is serving on the Board of Directors on October 6, 1997 and who is not an employee of or consultant to the Company or any Affiliate, shall be granted a Non-Qualified Option to purchase 5,000 Shares as of such date. Each director of the Company who is elected or appointed to the Board of Directors after October 6, 1997 and before March 31, 2000, and who is not an employee of or consultant to the Company or any Affiliate, upon first being elected or appointed to the Board of Directors, shall be granted a Non-Qualified Option to purchase 20,000 Shares as of the date of election or appointment. Each director of the Company who is elected or appointed to the Board of Directors after March 30, 2000, and who is not an employee of or consultant to the Company or any Affiliate, upon first being elected or appointed to the Board of Directors, shall be granted a Non-Qualified Option to purchase 20,000 Shares as of the date of election

5

or appointment. Each Option described in the foregoing two sentences shall (i) have an exercise price equal to the Fair Market Value (per share) of the Shares on the date of grant of the Option, (ii) have a term of ten years, and (iii) become cumulatively exercisable as follows: (x) one-third shall vest immediately on the date of grant, (y) one-third shall vest on the first anniversary of the date of grant, and (z) one-third shall vest on the second anniversary of the date of grant.

Immediately following the 1998 annual meeting of stockholders (or special meeting in lieu of an annual meeting), and until the 1999 annual meeting of stockholders, each Continuing Director (as defined below) will be granted a Non-Qualified Option to purchase 5,000 Shares. Immediately following the 1999 annual meeting of stockholders (or special meeting in lieu of an annual meeting), and until the 2000 annual meeting of stockholders, each Continuing Director (as defined below) will be granted a Non-Qualified Option to purchase 7,500 Shares. Immediately following the 2000 annual meeting of stockholders (or special meeting in lieu of an annual meeting), and until the 2003 annual meeting of stockholders, each Continuing Director (as defined below) will be granted a Non-Qualified Option to purchase 7,500 Shares. Immediately following each annual meeting of stockholders (or special meeting in lieu of an annual meeting), commencing with the 2003 annual meeting, each Continuing Director (as defined below) will be granted a Non-Qualified Option to purchase 10,000 Shares. As used herein, the term “Continuing Director” shall mean a director who (i) is serving as a director immediately following such annual or special meeting but was not first elected at such annual or special meeting, (ii) has been in continued and uninterrupted service as a director of the Company since his or her initial election or appointment and (iii) is not an employee of or consultant to the Company or any Affiliate. Each such annual Option shall (i) have an exercise price equal to the Fair Market Value (per share) of the Shares on the date of grant of the Option, (ii) have a term of ten years, and (iii) be immediately exercisable in full.

Each director of the Company who is appointed to serve as the Lead Outside Director, and who is not an employee of or consultant to the Company or any Affiliate, shall be granted a prorated annual Non-Qualified Option to purchase 2,500 Shares as of such date, the proration to be calculated from date of appointment through to date of the next annual meeting of stockholders (or special meeting in lieu of an annual meeting). Thereafter, immediately following each annual meeting of stockholders (or special meeting in lieu of an annual meeting), commencing with the 2003 annual meeting, each Continuing Lead Outside Director will be granted a Non-Qualified Option to purchase 2,500 Shares. Each such annual Option shall (i) have an exercise price equal to the Fair Market Value (per share)

6

of the Shares on the date of grant of the Option, (ii) have a term of ten years, and (iii) be immediately exercisable in full.

Any director entitled to receive an Option under this subparagraph may elect to decline the Option.

Except as otherwise provided in the pertinent Option Agreement, if a director who receives Options pursuant to this subparagraph:

a. ceases to be a member of the Board of Directors for any reason other than death or Disability, any then unexercised Options granted to such director may be exercised by the director within a period of three (3) months after the date the director ceases to be a member of the Board of Directors, but only to the extent of the number of Shares with respect to which the Options are exercisable on the date the director ceases to be a member of the Board of Directors, and in no event later than the expiration date of the Option; or

b. ceases to be a member of the Board of Directors by reason of his or her death or Disability, any then unexercised Options granted to such director may be exercised by the director (or by the director’s personal representative, or the director’s Survivors) within a period of one (1) year after the date the director ceases to be a member of the Board of Directors, but only to the extent of the number of Shares with respect to which the Options are exercisable on the date the director ceases to be a member of the Board of Directors, and in no event later than the expiration date of the Option.

B. ISOs: Each Option intended to be an ISO shall be issued only to a Key Employee and be subject to at least the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service:

a. Minimum standards: The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(A) above, except clauses (a) and (e) thereunder.

b. Option Price: Immediately before the Option is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code:

i. Ten percent (10%) or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price

7

per share of the Shares covered by each Option shall not be less than one hundred percent (100%) of the Fair Market Value per share of the Shares on the date of the grant of the Option.

ii. More than ten percent (10%) of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the Shares covered by each Option shall not be less than one hundred ten percent (110%) of the said Fair Market Value on the date of grant.

c. Term of Option: For Participants who own

i. Ten percent (10%) or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each Option shall terminate not more than ten (10) years from the date of the grant or at such earlier time as the Option Agreement may provide.

ii. More than ten percent (10%) of the total combined voting power of all classes of stock of the Company or an Affiliate, each Option shall terminate not more than five (5) years from the date of the grant or at such earlier time as the Option Agreement may provide.

d. Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of Options which may be exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined at the time each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed one hundred thousand dollars ($100,000), provided that this subparagraph (d) shall have no force or effect if its inclusion in the Plan is not necessary for Options issued as ISOs to qualify as ISOs pursuant to Section 422(d) of the Code.

7. TERMS AND CONDITIONS OF STOCK GRANTS.

Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock Grant must be accepted by the Participant, and the principal terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Stock Grant Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards:

(a) Each Stock Grant Agreement shall state the purchase price (per share), if any, of the Shares covered by each Stock Grant, which purchase price shall be determined

8

by the Administrator but shall not be less than the minimum consideration required by the Delaware General Corporation Law on the date of the grant of the Stock Grant;

(b) Each Stock Grant Agreement shall state the number of Shares to which the Stock Grant pertains; and

(c) Each Stock Grant Agreement shall include the terms of any right of the Company to reacquire the Shares subject to the Stock Grant, including the time and events upon which such rights shall accrue and the purchase price therefor, if any.

8. EXERCISE OF OPTIONS AND ISSUE OF SHARES.

An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee, together with provision for payment of the full purchase price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such written notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement. Payment of the purchase price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Option and held for at least six months, or (c) at the discretion of the Administrator, by delivery of the grantee’s personal note for full or partial recourse, bearing interest payable not less than annually at not less than the greater of the market interest rate or 100% of the applicable Federal rate, on the date of exercise, as defined in Section 1274(d) of the Code, or (d) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator, or (e) at the discretion of the Administrator, by any combination of (a), (b), (c), and (d) above. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.

The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be). In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery, be evidenced by an appropriate certificate or certificates for fully paid, non-assessable Shares.

The Administrator shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Administrator shall not accelerate the exercise date of any

9

installment of any Option granted to any Key Employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Paragraph 26) if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6.B.d.

The Administrator may, in its discretion, amend any term or condition of an outstanding Option provided (i) such term or condition as amended is permitted by the Plan, (ii) any such amendment shall be made only with the consent of the Participant to whom the Option was granted, or in the event of the death of the Participant, the Participant’s Survivors, if the amendment is adverse to the Participant, and (iii) any such amendment of any ISO shall be made only after the Administrator, after consulting the counsel for the Company, determines whether such amendment would constitute a “modification” of any Option which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holder of such ISO.

9. ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.

A Stock Grant (or any part or installment thereof) shall be accepted by executing the Stock Grant Agreement and delivering it to the Company at its principal office address, together with provision for payment of the full purchase price, if any, in accordance with this Paragraph for the Shares as to which such Stock Grant is being accepted, and upon compliance with any other conditions set forth in the Stock Grant Agreement. Payment of the purchase price for the Shares as to which such Stock Grant is being accepted shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months and having a fair market value equal as of the date of acceptance of the Stock Grant to the purchase price of the Stock Grant determined in good faith by the Administrator, or (c) at the discretion of the Administrator, by delivery of the grantee’s personal note, for full or partial recourse, bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by any combination of (a), (b) and (c) above.

The Company shall then reasonably promptly deliver the Shares as to which such Stock Grant was accepted to the Participant (or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the Stock Grant Agreement. In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.

The Administrator may, in its discretion, amend any term or condition of an outstanding Stock Grant or Stock Grant Agreement provided (i) such term or condition as amended is permitted by the Plan, and (ii) any such amendment shall be made only with the consent of the Participant to whom the Stock Grant was made, if the amendment is adverse to the Participant.

10

10. RIGHTS AS A SHAREHOLDER.

No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right, except after due exercise of the Option or acceptance of the Stock Grant and tender of the full purchase price, if any, for the Shares being purchased pursuant to such exercise or acceptance and registration of the Shares in the Company’s share register in the name of the Participant.

11. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as otherwise determined by the Administrator and set forth in the applicable Option Agreement or Stock Grant Agreement. Notwithstanding the foregoing an ISO transferred except in compliance with clause (i) above shall no longer qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant shall not be deemed a transfer prohibited by this Paragraph. Except as provided above, a Stock Right shall only be exercisable or may only be accepted, during the Participant’s lifetime, by such Participant (or by his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void.

12. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR DISABILITY.

Except as otherwise provided in the pertinent Option Agreement in the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:

a. A Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate (for any reason other than termination “for cause”, Disability, or death for which events there are special rules in Paragraphs 13, 14, and 15, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within such term as the Administrator has designated in the pertinent Option Agreement.

b. Except as provided in subparagraph (c) below, or Paragraph 14 or 15, in no event may an Option Agreement provide, if an Option is intended to be an ISO, that the

11

time for exercise be later than three (3) months after the Participant’s termination of employment.

c. The provisions of this Paragraph, and not the provisions of Paragraph 14 or 15, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy, provided, however, in the case of a Participant’s Disability or death within three (3) months after the termination of employment, director status or consultancy, the Participant or the Participant’s Survivors may exercise the Option within one (1) year after the date of the Participant’s termination of employment, but in no event after the date of expiration of the term of the Option.

d. Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Board of Directors determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute “cause”, then such Participant shall forthwith cease to have any right to exercise any Option.

e. A Participant to whom an Option has been granted under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a permanent and total Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.

f. Except as required by law or as set forth in the pertinent Option Agreement, Options granted under the Plan shall not be affected by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate.

13. EFFECT ON OPTIONS OF TERMINATION OF SERVICE “FOR CAUSE”.

Except as otherwise provided in the pertinent Option Agreement, the following rules apply if the Participant’s service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated “for cause” prior to the time that all his or her outstanding Options have been exercised:

a. All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated “for cause” will immediately be forfeited.

12

b. For purposes of this Plan, “cause” shall include (and is not limited to) dishonesty with respect to the Company or any Affiliate, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, and conduct substantially prejudicial to the business of the Company or any Affiliate. The determination of the Administrator as to the existence of “cause” will be conclusive on the Participant and the Company.

c. “Cause” is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of “cause” occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute “cause”, then the right to exercise any Option is forfeited.

d. Any definition in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of “cause” for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to such Participant.

14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

Except as otherwise provided in the pertinent Option Agreement, a Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant:

a. To the extent exercisable but not exercised on the date of Disability; and

b. In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion of any additional rights as would have accrued had the Participant not become Disabled prior to the end of the accrual period which next ends following the date of Disability. The proration shall be based upon the number of days of such accrual period prior to the date of Disability.

A Disabled Participant may exercise such rights only within a period of not more than one (1) year after the date of the Participant’s termination of employment, directorship or consultancy, as the case may be, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not become disabled and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be

13

used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

15. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

Except as otherwise provided in the pertinent Option Agreement, in the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate, such Option may be exercised by the Participant’s Survivors:

a. To the extent exercisable but not exercised on the date of death; and

b. In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion of any additional rights which would have accrued had the Participant not died prior to the end of the accrual period which next ends following the date of death. The proration shall be based upon the number of days of such accrual period prior to the Participant’s death.

If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one (1) year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

16. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.

In the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant, such offer shall terminate.

For purposes of this Paragraph 16 and Paragraph 17 below, a Participant to whom a Stock Grant has been offered under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a permanent and total Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.

In addition, for purposes of this Paragraph 16 and Paragraph 17 below, any change of employment or other service within or among the Company and any Affiliates shall not be treated as a termination of employment, director status or consultancy so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate.

14

17. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR DISABILITY.

Except as otherwise provided in the pertinent Stock Grant Agreement, in the event of a termination of service (whether as an employee, director or consultant), other than termination “for cause,” Disability, or death for which events there are special rules in Paragraphs 18, 19, and 20, respectively, before all Company rights of repurchase shall have lapsed, then the Company shall have the right to repurchase that number of Shares subject to a Stock Grant as to which the Company’s repurchase rights have not lapsed.

18. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE “FOR CAUSE”.

Except as otherwise provided in the pertinent Stock Grant Agreement, the following rules apply if the Participant’s service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated “for cause”:

a. All Shares subject to any Stock Grant shall be immediately subject to repurchase by the Company at the purchase price, if any, thereof.

b. For purposes of this Plan, “cause” shall include (and is not limited to) dishonesty with respect to the employer, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, and conduct substantially prejudicial to the business of the Company or any Affiliate. The determination of the Administrator as to the existence of “cause” will be conclusive on the Participant and the Company.

c. “Cause” is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of “cause” occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute “cause,” then the Company’s right to repurchase all of such Participant’s Shares shall apply.

d. Any definition in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of “cause” for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to such Participant.

15

19. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

Except as otherwise provided in the pertinent Stock Grant Agreement, the following rules apply if a Participant ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability: to the extent the Company’s rights of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such rights of repurchase lapse periodically, such rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant as would have lapsed had the Participant not become Disabled prior to the end of the vesting period which next ends following the date of Disability. The proration shall be based upon the number of days of such vesting period prior to the date of Disability.

The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

20. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

Except as otherwise provided in the pertinent Stock Grant Agreement, the following rules apply in the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate: to the extent the Company’s rights of repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that in the event such rights of repurchase lapse periodically, such rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant as would have lapsed had the Participant not died prior to the end of the vesting period which next ends following the date of death. The proration shall be based upon the number of days of such vesting period prior to the Participant’s death.

21. PURCHASE FOR INVESTMENT.

Unless the offering and sale of the Shares to be issued upon the particular exercise or acceptance of a Stock Right shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:

16

a. The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to the Company, prior to the receipt of such Shares, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their Shares issued pursuant to such exercise or such grant:

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

b. At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise or acceptance in compliance with the 1933 Act without registration thereunder.

22. DISSOLUTION OR LIQUIDATION OF THE COMPANY.

Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants which have not been accepted will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation.

23. ADJUSTMENTS.

Upon the occurrence of any of the following events, a Participant’s rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in the pertinent Option Agreement or Stock Grant Agreement:

A.    Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, the number of shares of

17

Common Stock deliverable upon the exercise or acceptance of such Stock Right may be appropriately increased or decreased proportionately, and appropriate adjustments may be made in the purchase price per share to reflect such events. The number of Shares subject to Options to be granted to directors pursuant to Paragraph 6(A)(e) and the number of Shares subject to the limitation in Paragraph 4(c) shall also be proportionately adjusted upon the occurrence of such events.

B.    Consolidations or Mergers. If the Company is to be consolidated with or acquired by another entity in a merger, sale of all or substantially all of the Company’s assets or otherwise (an “Acquisition”), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that all Options must be exercised (either to the extent then exercisable or, at the discretion of the Administrator, all Options being made fully exercisable for purposes of this Subparagraph) at the end of which period the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Options (either to the extent then exercisable or, at the discretion of the Administrator, all Options being made fully exercisable for purposes of this Subparagraph) over the exercise price thereof.

With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall either (i) make appropriate provisions for the continuation of such Stock Grants by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Acquisition or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that all Stock Grants must be accepted (to the extent then subject to acceptance) within a specified number of days of the date of such notice, at the end of which period the offer of the Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Stock Grants over the purchase price thereof, if any. In addition, in the event of an Acquisition, the Administrator may waive any or all Company repurchase rights with respect to outstanding Stock Grants.

C.    Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company (other than a transaction described in Subparagraph B above) pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising or accepting a Stock Right shall be entitled to receive for the purchase price, if any, paid upon such exercise or acceptance the securities which would have been received if such Stock Right had been exercised or accepted prior to such recapitalization or reorganization.

18

D.    Modification of ISOs. Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph A, B or C with respect to ISOs shall be made only after the Administrator, after consulting with counsel for the Company, determines whether such adjustments would constitute a “modification” of such ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs. If the Administrator determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments, unless the holder of an ISO specifically requests in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the ISO.

24. ISSUANCES OF SECURITIES.

Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right.

25. FRACTIONAL SHARES.

No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.

19

26. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an Affiliate at the time of such conversion. Such actions may include, but not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Options. At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action. The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such conversion.

27. WITHHOLDING.

In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participant’s salary, wages or other remuneration in connection with the exercise or acceptance of a Stock Right or in connection with a Disqualifying Disposition (as defined in Paragraph 28) or upon the lapsing of any right of repurchase, the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of Common Stock or a promissory note, is authorized by the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the fair market value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer. The Administrator in its discretion may condition the exercise of an Option for less than the then Fair Market Value on the Participant’s payment of such additional withholding.

28. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

Each Key Employee who receives an ISO must agree to notify the Company in writing immediately after the Key Employee makes a Disqualifying Disposition of any shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is any disposition (including any

20

sale) of such shares before the later of (a) two years after the date the Key Employee was granted the ISO, or (b) one year after the date the Key Employee acquired Shares by exercising the ISO. If the Key Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

29. TERMINATION OF THE PLAN.

The Plan will terminate on 10 years after adoption, the date which is ten (10) years from the earlier of the date of its adoption and the date of its approval by the shareholders of the Company. The Plan may be terminated at an earlier date by vote of the shareholders of the Company; provided, however, that any such earlier termination shall not affect any Option Agreements or Stock Grant Agreements executed prior to the effective date of such termination.

30. AMENDMENT OF THE PLAN AND AGREEMENTS.

The Plan may be amended by the shareholders of the Company. The Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code, and to the extent necessary to qualify the shares issuable upon exercise or acceptance of any outstanding Stock Rights granted, or Stock Rights to be granted, under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers. Any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such shareholder approval. Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under a Stock Right previously granted to him or her. With the consent of the Participant affected, the Administrator may amend outstanding Option Agreements and Stock Grant Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of the Administrator, outstanding Option Agreements and Stock Grant Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.

31. EMPLOYMENT OR OTHER RELATIONSHIP.

Nothing in this Plan or any Option Agreement or Stock Grant Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.

21

32. GOVERNING LAW.

This Plan shall be construed and enforced in accordance with the law of the State of Delaware.

22

EX-10.30

EXHIBIT 10.30

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of December 19, 2002 between 454 Corporation, a corporation organized under the laws of the State of Delaware, with its principal place of business at 20 Commercial Street, Branford, Connecticut (the “Company”), and Richard F. Begley, Ph.D. (“Executive”).

WHEREAS, the Executive desires to be employed by the Company, subject to the terms and conditions of this Agreement; and the Company desires to retain the Executive’s services, subject to the terms and conditions of this Agreement.

THEREFORE, the Company and the Executive, intending to be legally bound, hereby agree as follows:

1. Employment; Duties and Responsibilities

A) The Company shall employ the Executive, and the Executive shall serve the Company, as President and Chief Executive Officer, with such duties and responsibilities as may be assigned to the Executive by the Board of Directors (“BOD”) of the Company and are typically associated with a position of that nature.

B) The Executive shall devote his best efforts and all of his business time to the performance of his duties under this Agreement and shall perform them faithfully, diligently and competently in a manner consistent with the policies and goals of the Company as determined from time to time by the BOD or an officer of the Company.

C) The Executive shall report to the BOD of the Company, or identified member of the Executive Committee.

D) The Executive shall not engage in any activities outside the scope of his employment that would detract from, or interfere with, the fulfillment of his responsibilities or duties under this Agreement.

E) The Executive shall not serve as a director (or the equivalent position) of any company or entity and shall not render services of a business, professional or commercial nature to any other person or firm, except for not-for-profit entities, without prior written consent of the BOD. Such consent shall not be unreasonably withheld.

F) The Executive shall not receive fees or other remuneration for work performed either within or outside the scope of his employment without prior written consent of the BOD. Such consent shall not be unreasonably withheld.

2. Term of Employment

A) The Executive’s employment by the Company under this Agreement shall commence on the date of this Agreement and, subject to the earlier termination pursuant to section 10 shall terminate on December 31, 2003; provided, however, that commencing on January 1, 2004 and each January 1 thereafter the term of this Agreement shall be extended for one (1) additional year unless, not later than October 31 of the preceding year, the Company or the Executive shall have given written notice that the Company or the Executive does not wish to extend this Agreement.

B) Notwithstanding any such notice by the Company, if a Change of Control occurs after this Agreement has been terminated without cause, but within twelve (12) months after such notice to terminate the Agreement was given by the Company, the termination shall be deemed ineffective and the Agreement shall continue in effect. In any event, the term of this Agreement shall expire on the second (2^nd) anniversary of the date of the Change of Control.

2

3. Compensation

As full compensation for all services rendered by the Executive to the Company under this Agreement, the Company shall pay the Executive the compensation set forth in Schedule A attached and incorporated into this Agreement. This schedule may be amended from time to time in writing by the Company and the Executive.

4. Fringe Benefits

A) The Executive shall be entitled to participate in all health and welfare benefit plans provided by the Company to its employees.

B) The Executive shall be entitled to participate in all pension plans provided by the Company to its employees.

C) The Company may, at its sole option, devise a benefit plan for its executives or senior managers. The Executive shall be entitled to participate in benefit plans provided by the Company to its executives or senior managers.

D) The Executive shall be entitled to a minimum of four (4) weeks paid vacation time annually.

5. Expenses

The Company shall reimburse the Executive for all reasonable and necessary expenses incurred by him in connection with the performance of his services for the Company in accordance with the Company’s policies, upon submission of appropriate expense reports and documentation in accordance with the Company’s policies and procedures.

3

6. Disability or Death

A) If, as the result of any physical or mental disability, the Executive shall have failed or is unable to perform his duties for a period of ninety (90) consecutive days, the Company may, by notice to the Executive, terminate his employment under this Agreement as of the date of the notice without any further payment or the furnishing of any benefit by the Company under this Agreement (other than accrued and unpaid base salary and expenses and benefits which have accrued pursuant to any plan or by law). However, the Executive shall be entitled to continued participation in any health and welfare benefit plan of the Company for twelve (12) months following the termination of his employment under this clause.

B) The term of the Executive’s employment under this Agreement shall terminate upon his death without any further payment or the furnishing of any benefit by the Company under this Agreement (other than accrued and unpaid base salary and commission and expenses and benefits which have accrued pursuant to any plan or by law). This provision shall not be read to change the terms of any other agreement between the Executive and the Company, including any stock option plans, which shall be governed by its terms. Unless expressly provided for in such agreements, the death of the Executive shall not terminate such agreements.

7. Patents, Copyrights and Intellectual Property

A) The Executive shall promptly disclose to the Company all Inventions. Inventions shall mean, for purposes of this paragraph, inventions, discoveries, developments, methods and processes (whether or not patenable or copyrightable or constituting trade secrets) conceived, made or discovered by the Executive (whether alone or with others) while employed by the Company that relate, directly or indirectly, to the past, present, or future business activities, research, product design or development, personnel, and business opportunities of the Company,

4

or result from tasks assigned to the Executive by the Company or done by the Executive for or on behalf of the Company. The Executive hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) his full right, title and interest in and to all Inventions. The Executive agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including, among others, the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Inventions to the Company and to permit the Company to file, obtain and enforce any patents, copyrights or other proprietary rights in the Inventions. The Executive agrees to make and maintain adequate and current records of all Inventions, in the form of notes, sketches, drawings, or reports relating thereto, which records shall be and remain the property of and available to the Company at all times.

B) All designs, ideas, inventions, improvements, and other creations made or owned by the Executive before becoming an employee of the Company and which the Executive desires to exempt from this Agreement are listed on Attachment A hereof and authorized for exclusion by the signature of an Officer of the Company. (If the Executive does not have any such designs, ideas, inventions, improvements, or other creations write “none” on this line: None.)

C) The Executive agrees to notify the Company in writing before the Executive makes any disclosure or performs or causes to be performed any work for or on behalf of the Company, which appears to threaten or conflict with (a) rights the Executive claims in any invention or idea conceived by the Executive or others (i) prior to the Executive’s employment, or (ii) otherwise outside the scope of this Agreement; or (b) rights of others arising out of obligations incurred by the Executive (i) prior to this Agreement, or (ii) otherwise outside the scope of this Agreement. In the event of the Executive’s failure to give notice under the

5

circumstances specified, the Company may assume that no such conflicting invention or idea exists and the Executive agrees that the Executive will make no claim against the Company with respect to the use of any such invention or idea in any work which the Executive performs or causes to be performed for or on behalf of the Company.

8. Proprietary and Trade Secret Information

A) The Executive agrees that he will keep confidential and will not make any unauthorized use or disclosure, or use for his own benefit or the benefit of others, during or subsequent to his employment of any research, development, engineering and manufacturing data, plans, designs, formulae, processes, specifications, techniques, trade secrets, financial information, customer or supplier lists or other information that becomes known to him as a result of his employment with the Company which is the property of the Company or any of its clients, customers, consultants, licensors, licensees, or affiliates, provided nothing herein shall be construed to prevent the Executive from using his general knowledge and skill after termination of his employment whether acquired prior to or during his employment by the Company.

B) Proprietary information subject to paragraph 8(A) does not include information that: (i) is or later becomes available to the public through no breach of this Agreement by the Employee; (ii) is obtained by the Executive from a third party who had the legal right to disclose the information to the Executive; or (iii) is required to be disclosed by law, government regulation, or court order.

C) The Executive is not expected to and is expressly forbidden by the Company policy from disclosing to the Company a “Trade Secret” or “Confidential” or “Proprietary” information from a former employer.

6

D) Upon leaving the employment of the Company, the Executive will not remove from the Company premises, either directly or indirectly, any drawings, writings, prints, any documents or anything containing, embodying, or disclosing any confidential or proprietary information or any of the Company’s trade secrets unless express written permission is given by the Company management. Upon termination of his employment, the Executive shall return to the Company any and all documents and materials that are the property of the Company or its customers, licensees, licensors or affiliates or which contain information that is the property of the Company.

9. Covenant Not to Compete

A) While in the employ of the Company and for a period of one year or the maximum period permitted by applicable law (whichever is shorter) following termination of his employment with the Company, the Executive shall not, without the approval of the Company, alone or as a partner, officer, director, consultant, employee, stockholder or otherwise, engage in any employment, consulting or business activity or occupation that is or is intended to be directly competitive with the business of the Company or any of its affiliates, as being considered, researched, developed, marketed and/or sold at the time of termination, in the area of massively parallel sequencing, specifically including the following companies: U. S. Genomics, Inc., Solexa, Ltd., Mobious Genomics, Ltd., Visigen Biotechnologies, Inc.; provided, however, that the holding by the Executive of any investment in any security shall not be deemed to be a violation of this section if such investment does not constitute over one percent (1%) of the outstanding issue of such security. The restriction shall run for a period of one year after said termination, and if there shall be any violation hereof during said period, then for a period of one year after cessation of such violation. These restrictions shall in no way prohibit the Executive

7

from obtaining employment at a multi-product company that may happen to have a program in massively parallel sequencing technology. In this circumstance, the Executive cannot actively contribute directly to the program for a period of one year, even if it reports to him.

B) While in the employ of the Company, the Executive shall promptly notify the Company, if the Executive, alone or as a partner, officer, director, consultant, employee, stockholder or otherwise, engages in any employment, consulting or business activity or occupation outside his employment by the Company.

C) The Executive shall not, directly or indirectly, either during the term of the Executive’s employment under this Agreement or for a period of one (1) year thereafter, solicit, directly or indirectly, the services of any person who was a full-time employee of the Company, its subsidiaries, divisions or affiliates, or solicit the business of any person who was a client or customer of the Company, its subsidiaries, divisions or affiliates, in each case at any time during the last year of the term of the Executive’s employment under this Agreement. The Executive shall not, directly or indirectly, either during the term of the Executive’s employment under this Agreement or for a period of one (1) year thereafter, employ, directly or indirectly, the services of any person who was a full-time employee of the Company, its subsidiaries, divisions or affiliates, or solicit the business of any person who was a client or customer of the Company, its subsidiaries, divisions or affiliates, in each case at any time during the last year of the term of the Executive’s employment under this Agreement. For purposes of this Agreement, the term “person” shall include natural persons, corporations, business trusts, associations, sole proprietorships, unincorporated organizations, partnerships, joint ventures and governments or any agencies, instrumentalities or political subdivisions thereof.

8

D) The Executive acknowledges and agrees that the covenants in this section are necessary for the protection of the legitimate business interests of the Company and that the covenants are reasonable in all respects. The Executive further acknowledges and agrees that, if his employment by the Company is terminated, his experience and capabilities are such that he is both qualified and willing to seek and obtain employment involving business activities which will not violate any covenant on his part to be observed hereunder and that a court decree enjoining any such violation will not prevent him from earning a reasonable livelihood.

E) Just compensation for the duties under this paragraph is included in the salary and benefits provided herein.

F) If the Executive is terminated as a result of a Change of Control, as defined in this Agreement, this Section, titled “Covenant Not to Compete,” shall not be applicable.

10. Termination

A) The Company shall have the right at any time to terminate this Agreement and the Executive’s employment with the Company for cause or without cause.

B) For purposes of this Agreement, the term “for cause” shall mean the Executive’s willfully engaging in conduct demonstrably and materially injurious to the Company, monetarily or otherwise, provided that the Executive receives a copy of a resolution duly adopted by the unanimous affirmative vote of the entire membership of the Board of Directors of the Company at a meeting of the Board of the Company called and held for such purpose after the Executive has been given reasonable notice of such meeting and has been given an opportunity, together with his counsel, to be heard by the Board of the Company, finding that in the good faith opinion of the Board of the Company the Executive was guilty of the conduct set forth and specifying the particulars thereof in detail.

9

C) The Executive’s act, or failure to act, shall be deemed “willful” if the Executive was not acting in good faith or acting without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act or failure to act based on authority given pursuant to a resolution duly adopted by the Board of the Company, or based upon the advice of counsel for the Company shall be conclusively presumed to have been done by the Executive in good faith and in the best interests of the Company.

D) If the Executive is terminated for cause, the Company shall not be obligated to make any further payment to the Executive (other than accrued and unpaid base salary and expenses to the date of termination), or continue to provide any benefit (other than benefits which have accrued pursuant to any plan or by law) to the Executive under this Agreement.

E) If the Executive is terminated without cause, the Executive shall be entitled to certain benefits. The benefits shall consist of (i) salary continuation at the base salary the Executive was receiving at the time of termination and (ii) the Executive’s continued participation in any employee health and welfare benefit plan to which the Executive was a participant prior to his termination on the same basis as the Executive had participated as an employee. The salary continuation and continued participation in any health and welfare benefit plan shall be for no more than twelve (12) months from the date of termination by the Company, regardless of the number of months remaining in the term of the Agreement. The offer of the benefits referenced in this paragraph is conditioned upon a covenant not to initiate any action or suit in law or equity in any forum against the Company, its officers, directors, employees or agents in connection with the Executive’s employment or termination of employment (“Covenant Not to Sue”). The Covenant Not to Sue shall be presented to the Executive in writing at the time

10

of notice of termination. The Executive’s refusal to agree to the Covenant Not to Sue shall constitute a waiver by the Executive of any and all benefits referenced in this paragraph.

11. Change of Control

A) “Change in Control” of 454 Corporation means the occurrence of any one of the following events:

(i) individuals who, on January 1, 2002, constituted the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to January 1, 2002, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be an Incumbent Director; provided, however, that no individual elected or nominated as a director of the Company initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies (or consents) by or on behalf of any person other than the Board shall be deemed an Incumbent Director;

(ii) any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 [the “Exchange Act”] and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing in the aggregate (A) in the event that the

11

Company is not subject to the reporting requirements of the Exchange Act and has registered a class of equity securities pursuant to Section 12(b) or 12(g) of the Exchange Act (a “Reporting Company”) 50% or more or, (B) in the event the Company is a Reporting Company, 25% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; provided, however, that the event described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the following: (A) acquisitions by the Company or any Subsidiary unless otherwise set forth in Section 11B below; (B) acquisitions by any employee benefit plan sponsored or maintained by the Company or Subsidiary; (C) acquisitions by any underwriter temporarily holding securities pursuant to an offering of such securities or (D) acquisitions or dispositions by CuraGen or any of its affiliates;

(iii) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the

12

Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, shares into which such Company Voting Securities were converted pursuant to such Business Combination); or

(iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale or disposition of all or substantially all of the Company’s assets except to CuraGen or any of its affiliates.

Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership at a time when the Company (i) is not a Reporting Person, of more than 50% of the Company Voting Securities; or (ii) is a Reporting Person, of more than 25% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.

12. Benefits Upon Termination After a Change in Control

A) If the Executive terminates for good reason or is terminated by the Company, within twelve (12) months of a Change of Control as defined in this Agreement, the Executive shall be entitled to an additional twelve (12) months of salary continuation and continued participation in any health and welfare benefit plan for a total of twenty-four (24) months salary continuation and participation in the health and welfare benefit plan.

13

B) Termination by the Executive of his employment for “good reason” shall mean termination based on:

(i) subsequent to a Change in Control of the Company, and without the Executive’s express written consent, the assignment to Executive of any duties inconsistent with those duties prior to a Change in Control, or a change in the level of the Executive’s reporting responsibilities, titles or offices as in effect immediately prior to a Change in Control, or any removal of the Executive from, or any failure to re-elect the Executive, to any of such positions, except in connection with the termination of the Executive’s employment for Cause, Disability or Retirement or as a result of the Executive’s death or by the Executive other than for good reason;

(ii) subsequent to a Change in Control of the Company, a reduction by the Company in the Executive’s base salary as in effect on the date hereof or as the same may be increased from time to time;

(iii) subsequent to a Change in Control of the Company, a failure by the Company to continue any bonus plans in which the Executive is presently entitled to participate (the “Bonus Plans”) as the same may be modified from time to time but substantially in the form currently in effect, or a failure by the Company to continue the Executive as a participant in the Bonus Plans (or plans providing the Executive with substantially similar benefits) on at least the same basis as the Executive presently participates in accordance with the Bonus Plans;

(iv) subsequent to a Change in Control of the Company and without the Executive’s express written consent, the Company’s requiring the Executive to be

14

based anywhere other than within fifty (50) miles of the Executive’s present office location, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(v) subsequent to a Change in Control of the Company, the failure by the Company to continue in effect any benefit or compensation plan, stock ownership plan, stock purchase plan, stock option plan, life insurance plan, health-and-accident plan or disability plan in which the Executive is participating at the time of a Change in Control of the Company (or plans providing the Executive with substantially similar benefits), the taking of any action by the Company which would adversely affect the Executive’s participation in or materially reduce the Executive’s benefits under any of such plans or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is then entitled in accordance with the Company’s normal vacation policy in effect on the date hereof;

(vi) subsequent to a Change in Control of the Company, the failure by the Company to obtain the assumption of this Agreement by any successor; or

(vii) subsequent to a Change in Control of the Company, any purported termination of the Executive’s employment which is not effected pursuant to the terms of this Agreement. No such purported termination shall be effective.

C) If the Executive terminates his employment for a “good reason,” the Executive shall be entitled to the same benefits as provided in paragraph A of this section.

15

D) Upon a Change of Control, notwithstanding any other agreement, all stock, restricted stock, stock options or restricted stock options of the Executive shall become fully vested to 100%.

13. Arbitration

A) Any dispute under this Agreement, including any dispute as to cause or good reason for termination, shall be submitted to binding arbitration subject to the rules of the American Arbitration Association. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY SUCH ACTIONS, SUIT OR PROCEEDING. The Company shall bear all costs associated with the Arbitration, including filing fees and any stipend for the arbitrator. The Company and the Executive shall each bear its own attorneys’ fees. However, if the Executive prevails in a challenge to the Company’s determination for cause, the Executive shall be entitled to be reimbursed for all attorney fees.

B) Nothing in this section shall be read to preclude the Company seeking injunctive relief for the Executive’s breach of Section 8, Proprietary and Trade Secret Information or Section 9, Covenant Not to Compete.

14. Injunctive Relief

A) The Executive acknowledges that the services rendered by him under this Agreement are of a special, unique and extraordinary character and, in connection with such services, he will have access to confidential information concerning the Company’s business. By reason of this access to confidential information, the Executive consents and agrees that if he violates any of the provisions of this Agreement with respect to Proprietary and Trade Secret Information or the Covenant Not to Compete, the Company would sustain irreparable harm and,

16

therefore, in addition to any other remedies which the Company may have under this Agreement or otherwise, the Company shall be entitled to an injunction to be issued by any court of competent jurisdiction restraining the Executive from committing or continuing to commit any such violation of this Agreement.

15. Miscellaneous

A) This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut, applicable to agreements made and to be performed in Connecticut, and shall be construed without regard to any presumption or other rule requiring construction against the party causing the Agreement to be drafted.

B) This Agreement contains a complete statement of all the arrangements between the Company and the Executive with respect to its subject matter, supersedes all previous agreements, written or oral, among them relating to its subject matter and cannot be modified, amended or terminated orally. Amendments may be made to this Agreement at any time if mutually agreed upon in writing.

C) Any amendment, notice or other communication under this Agreement shall be in writing and shall be considered given when received and shall be delivered personally or mailed by Certified Mail, Return Receipt Requested, to the parties at their respective addresses set forth in this Agreement, or at such other address as a party may specify by written notice to the other.

D) The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing.

17

E) Each of the parties irrevocably submits to the exclusive jurisdiction of any court of the State of Connecticut or the Federal District Court of Connecticut over any action, suit or proceeding relating to or arising out of this Agreement and the transactions contemplated hereby. Each party hereby irrevocably waives any objections, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens which such party may now or hereafter have to the bringing of any such actions, suit or proceeding in any such court and irrevocably agrees that process in any such actions, suit or proceeding may be served upon that party personally or by Certified or Registered Mail, Return Receipt Requested.

F) The invalidity or unenforceability of any term or provision of this Agreement shall not affect the validity or enforceability of the remaining terms or provisions of this Agreement which shall remain in full force and effect and any such invalid or unenforceable term or provision shall be given full effect as is legally permissible. If any term or provision of this Agreement is invalid or unenforceable in one jurisdiction, it shall not affect the validity or enforceability of that term or provision in any other jurisdiction.

G) This Agreement is not assignable by either party except that it shall inure to the benefit of and be binding upon any successor to the Company by merger or consolidation or the acquisition of all or substantially all of the Company’s assets, provided such successor assumes all of the obligations of the Company, and shall inure to the benefit of the heirs and legal representatives of the Executive.

18

By:	/s/    JONATHAN M. ROTHBERG, PH.D.                12-19-02	By:	/s/    RICHARD F. BEGLEY, PH.D                 12-20-02
	Jonathan M. Rothberg, Ph.D.                                     Date Chairman, Board of Directors 20 Commercial Street Branford, CT 06405 (“the Company”)		Richard F. Begley, Ph.D.                                 Date Chief Executive Officer and President 20 Commercial Street Branford, CT 06405 (“the Executive”)

19

SCHEDULE A

Compensation

The Executive shall receive the following compensation for services during the initial term of employment:

1) The Executive’s base salary shall be $300,000 per year, payable in bi-weekly installments, subject to increases by the Board of Directors, which shall review the salary periodically.

2) The Executive, if otherwise eligible, shall participate in any incentive compensation plan, pension, profit sharing, stock purchase or stock option plan, annuity, or group insurance plan, medical plan and other benefits, maintained by the Company for its employees.

3) The Executive shall be eligible to receive performance-based bonuses on the attainment of certain goals set by the BOD.

20

EX-10.31

AMENDED AND RESTATED RESEARCH AND OPTION AGREEMENT

by and between

GENENTECH, INC.

and

CURAGEN CORPORATION

March 31, 2000

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

TABLE OF CONTENTS

1. DEFINITIONS		2
1.1	AFFILIATE	2
1.2	CLONE	2
1.3	CURAGEN BACKGROUND INVENTIONS	2
1.4	CURAGEN DATA	3
1.5	CURAGEN DATA SET	3
1.6	CURAGEN PROJECT	3
1.7	CURAGEN PROJECT INVENTION	3
1.8	CURAGEN PROJECT PATENT RIGHTS	3
1.9	CURAGEN PROJECT PROPRIETARY MATERIAL	3
1.10	CURAGEN ROYALTY PRODUCT	3
1.11	DATA SET	4
1.12	EXCLUSIVE DATA SET	4
1.13	EXCLUSIVE EVALUATION PERIOD	4
1.14	EXTENDED RESEARCH	4
1.15	EXTENDED RESEARCH DATA	4
1.16	EXTENDED RESEARCH INVENTIONS	4
1.17	EXTENDED RESEARCH PATENT RIGHTS	4
1.18	FTE	4
1.19	GENENTECH PDC APPROVAL	4
1.20	GENENTECH PROPRIETARY MATERIAL	5
1.21	GENESCAPE®	5
1.22	INDEPENDENT PATENT COUNSEL	5
1.23	“INITIAL RESEARCH PROJECTS”	5
1.24	INVENTION	5
1.25	KNOW-HOW INFORMATION	5
1.26	KNOW-HOW INFORMATION PRODUCT	5
1.27	LICENSED CLONE	5
1.28	LICENSED PRODUCT	5
1.29	LICENSE AGREEMENT	6
1.30	MIM/PATHCALLING	6
1.31	NET SALES	6
1.32	OPTIONED CLONE	7
1.33	OPTION PERIOD	7
1.34	PATENT COORDINATORS	7
1.35	PATENT RIGHTS	7
1.36	PREVIOUSLY COMMITTED CLONE	7
1.37	PRIME RATE	8
1.38	PROJECT DATA	8
1.39	PROJECT DATA SETZZMPQUOTEHOLDER	8
1.40	QEA/GENECALLING	8
1.41	“RESEARCH COMMITTEE OR RC	8
1.42	RESEARCH PLAN	8
1.43	RESEARCH PROGRAM	8
1.44	RESEARCH PROJECT	8
1.45	RESEARCH PROJECT INVENTION	9
1.46	RESEARCH PROJECT PATENT RIGHTS	9
1.47	RESEARCH PROJECT PROPRIETARY MATERIAL	9
1.48	RESEARCH QUARTER	9
1.49	RESEARCH TERM	9

Page i

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.50	RETAINED GENE	9
1.51	TERM	9
1.52	TERRITORY	9
1.53	VALID CLAIM(S)	9
2. RESEARCH PROGRAM		10
2.1	IMPLEMENTATION OF RESEARCH PROGRAM	10
2.1.1    Basic Provisions of Program		10
2.1.2    Collaborative Efforts and Reports		10
2.1.3    Research Plans		12
2.1.4    Exclusivity		13
2.1.5    Research License		18
2.1.6    Software License		18
2.2	RESEARCH COMMITTEE	18
2.2.1    Establishment and Functions of the RC		18
2.2.2    RC Membership.		19
2.2.3    Meetings.		19
2.2.4    Additional Reporting.		20
2.2.5    Minutes.		20
2.2.6    Quorum; Voting; Decisions.		21
2.2.7    Expenses.		21
2.2.8    Record Keeping.		21
2.3	RESEARCH TERM.	21
2.3.1    Term of the Research Program		21
2.3.2    Extension of the Research Program		22
2.4	PROJECT DATA EVALUATIONS	22
2.4.1    Exclusive Access		22
2.4.2    Extensions		24
2.4.3    Non-exclusive Access and License		25
2.4.4    Data Annotations		25
2.5	CURAGEN PROJECTS	25
2.5.1    Access		25
2.5.2    Exclusive Evaluation Option		26
2.5.3    Extensions		27
2.6	DATA FROM PREVIOUS PROJECTS	27
3. FINANCIAL TERMS		28
3.1	EQUITY INVESTMENT	28
3.2	AMENDMENT FEE	28
3.3	LOAN COMMITMENT	28
3.4	ADDITIONAL RESEARCH FUNDING.	29
3.5	SUCCESS FEES	29
4. TREATMENT OF CONFIDENTIAL INFORMATION		30
4.1	CONFIDENTIAL INFORMATION	30
4.2	PUBLICATIONS	31
4.3	PRESS RELEASE AND REGULATORY FILINGS	32
5. INTELLECTUAL PROPERTY RIGHTS		33
5.1	GENENTECH PROPRIETARY MATERIAL	33
5.2	CURAGEN PROJECT PROPRIETARY MATERIAL AND RESEARCH PROJECT PROPRIETARY MATERIAL	33
5.3	INVENTIONS	34
5.4	CURAGEN RETAINED RIGHTS	35

Page ii

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

6. PROVISIONS CONCERNING THE FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS		35
6.1	APPLICABILITY	36
6.2	PATENT FILINGS	36
6.2.1    CURAGEN Project Inventions		36
6.2.2    Research Project Inventions		36
6.2.3    Amendments		39
6.2.4    Fees and Cost		39
6.2.5    Division of Patents		39
6.3	NOTICE OF INFRINGEMENT	39
6.4	INFRINGEMENT	40
6.5	COOPERATION	40
7. OPTION TO GENENTECH		40
7.1	OPTION GRANT	40
7.1.1    Option		40
7.1.2    Option Election		41
7.1.3    Reservation of Rights		42
7.2	OPTION FEE	43
7.3	OPTION PERIOD	43
7.4	OPTION EXERCISE	43
7.4.1    Exercise of Option		43
7.4.2    Expiration of Option		43
7.5	OMITTED
7.6	NO OTHER RIGHTS	44
7.7	ROYALTIES TO GENENTECH	45
8. TERM AND TERMINATION		48
8.1	TERM	48
8.2	TERMINATION	48
8.3	ADDITIONAL EFFECTS OF TERMINATION	49
8.4	REMEDIES	50
8.5	SURVIVING PROVISIONS.	51
9. MISCELLANEOUS		51
9.1	CURAGEN REPRESENTATIONS AND COVENANTS	51
9.2	GENENTECH REPRESENTATIONS	52
9.3	NO WARRANTIES	52
9.4	LIABILITY	53
9.5	NOTICES	53
9.6	GOVERNING LAW	54
9.7	LIMITATIONS	54
9.8	ENTIRE AGREEMENT	54
9.9	WAIVER	54
9.10	HEADINGS	54
9.11	ASSIGNMENT	54
9.12	FORCE MAJEURE	55
9.13	CONSTRUCTION	55
9.14	SEVERABILITY	55
9.15	STATUS	55
9.16	INDEMNIFICATION	56
9.17	COUNTERPARTS	57

Page iii

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

    9.18 TERMINATION OF ORIGINAL RESEARCH AGREEMENT 58

Page iv

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

AMENDED AND RESTATED RESEARCH AND OPTION AGREEMENT

This Amended and Restated Research and Option Agreement (this “Agreement”) is made effective as of March 31, 2000 (the “Amendment Effective Date”) by and between GENENTECH, INC., a Delaware corporation having its principal business office at 1 DNA Way, South San Francisco, CA 94080 (“GENENTECH”), and CURAGEN CORPORATION, a Delaware corporation with its principal place of business at 555 Long Wharf Drive, 11th Floor, New Haven, Connecticut 06511 (“CURAGEN”). GENENTECH and CURAGEN are each hereafter referred to individually as a “Party” and together as the “Parties”.

WHEREAS, GENENTECH desires to have access to CURAGEN’s genomics technologies (including GeneScape^®, QEA/GeneCalling, MIM/PathCalling and all additional services provided by CURAGEN) and to have CURAGEN apply such technologies to certain GENENTECH Proprietary Material in order to expedite the discovery of information which may lead to the development of novel pharmaceutical products; and

WHEREAS, GENENTECH and CURAGEN have previously collaborated on genomics projects pursuant to the terms of that certain Research Services and Evaluation Agreement dated June 12, 1996 and that certain Research and License Agreement dated December 27, 1996 (together, the “Collaboration Agreements”); and

WHEREAS, the Parties have entered into a Research and Option Agreement (the “Original Research Agreement”) dated as of November 20, 1997 pursuant to which CURAGEN performed certain Initial Research Projects (as hereinafter defined); and

WHEREAS, GENENTECH and CURAGEN wish to initiate the performance of certain additional Research Projects by GENENTECH and CURAGEN and, in connection therewith, wish to amend and restate the Original Research Agreement in its entirety and set forth in a single document such amended and restated terms; and

WHEREAS, GENENTECH wishes to obtain certain rights to evaluate and license the inventions obtained or made by GENENTECH and/or CURAGEN in the performance of the previous Collaboration Agreements, the Original Research Agreement and in the performance of the research pursuant to this Agreement, as well as an option to evaluate and license certain other inventions of CURAGEN; and

Page 1

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

WHEREAS, CURAGEN and GENENTECH each wish to retain certain rights to data and inventions made by GENENTECH and CURAGEN hereunder; and

WHEREAS, GENENTECH and CURAGEN therefore agree to undertake the foregoing, all under the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereby agrees as follows:

1.  DEFINITIONS

Whenever used in the Agreement with an initial capital letter, the terms defined in this Section 1 shall have the meanings specified.

1.1 “Affiliate” shall mean any corporation, firm, limited liability company, partnership or other entity which directly or indirectly controls or is controlled by or is under common control with a Party to this Agreement. “Control” means ownership, directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interests in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby a party controls or has the right to control the Board of Directors or equivalent governing body of a corporation or other entity.

1.2 “Clone” shall mean a segment of DNA representing a whole or partial gene whose sequence or utility is first determined from the analysis of one or more Data Sets or from the Extended Research during the Term of this Agreement.

1.3 “CURAGEN Background Inventions” shall mean all patent rights and know-how of CURAGEN, other than those relating primarily to Inventions, which CURAGEN has the right to license and which would be infringed by the activities of GENENTECH permitted by this Agreement or by the development, manufacture, use, sale or importation of a Licensed Product by GENENTECH; provided, however, that CURAGEN Background Inventions shall expressly exclude (i) any patent rights or know-how not licensed to GENENTECH under this Agreement and (ii) any patent rights or know-how arising from any CURAGEN collaboration with a third party, except to the extent permitted thereby.

Page 2

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.4 “CURAGEN Data” shall mean all information obtained by CURAGEN from the processing of specified CURAGEN samples, including QC data, QEA/GeneCalling data, MIM/PathCalling data, sequence data and any other information obtained or generated by CURAGEN in the performance of a discrete CURAGEN Project outside the performance of the Research Program, Non-directed Research or Directed Research (defined below).

1.5 “CURAGEN Data Set” shall mean all CURAGEN Data resulting from a discrete CURAGEN Project that CURAGEN can make exclusively available to GENENTECH.

1.6 “CURAGEN Project” shall mean a particular project undertaken by CURAGEN on its own (and outside the Research Program, Non-directed Research or Directed Research), to process and analyze a specified set of samples (and the nucleic acid contained therein) which does not contain GENENTECH Proprietary Material, and which project does not use any Project Data Set or Non-Directed Research data, Directed Research data, or Clones, nucleic acid sequences or protein amino acid sequences derived therefrom, and as to which CURAGEN is free to grant rights to GENENTECH hereunder.

1.7 “CURAGEN Project Invention” shall mean any discovery, invention, know-how or trade secret conceived or made by employees of CURAGEN in the performance of a CURAGEN Project that results from CURAGEN Data that becomes part of an Exclusive Data Set, that is based on, incorporates or makes material use of the corresponding CURAGEN Data.

1.8 “CURAGEN Project Patent Rights” shall mean Patent Rights containing a claim or claims covering CURAGEN Project Inventions. CURAGEN Project Patent Rights shall also include Patent Rights containing a claim or claims covering CURAGEN Project Inventions exclusively licensed in by CURAGEN, with the right to sublicense, now or in the future.

1.9 “CURAGEN Project Proprietary Material” shall mean all substances made by CURAGEN in the performance of CURAGEN Projects, including mRNA pools. CURAGEN Project Proprietary Material shall include, without limitation, QEA fragments, MIM constructs and materials derived or constructed from QEA fragments and MIM constructs, including, without limitation, fragment and full length cDNA clones made by CURAGEN in the performance of a CURAGEN Project.

1.10 “CURAGEN Royalty Product” shall have the meaning set forth in Section 7.7.

Page 3

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.11 “Data Set,” which may be either a Project Data Set or a CURAGEN Data Set, shall mean all Project Data resulting from a discrete Research Project or all CURAGEN Data resulting from a discrete CURAGEN Project, respectively.

1.12 “Exclusive Data Set” shall mean any Project Data Set during the corresponding Exclusive Evaluation Period as provided in Section 2.4.1 or any CURAGEN Data Set during the corresponding Exclusive Evaluation Period as provided in Section 2.5.2.

1.13 “Exclusive Evaluation Period” shall have the meaning set forth in Section 2.4.1 or 2.5.2.

1.14 “Extended Research” shall mean the Non-directed Research and Directed Research undertaken by CURAGEN pursuant to Sections 2.4.1, 2.5.2 and/or 7.1.3 hereof.

1.15 “Extended Research Data” shall mean all information and results obtained by CURAGEN from its performance of Extended Research.

1.16 “Extended Research Inventions” shall mean any discovery, invention, know-how or trade secret conceived or made by employees of CURAGEN in the performance of Extended Research, other than such discoveries, inventions, know-how or trade secrets that are deemed to be defined as Research Project Inventions pursuant to the terms of this Agreement or an executed License Agreement.

1.17 “Extended Research Patent Rights” shall mean all rights and interests in and to issued patents and pending patent applications in any country, including, but not limited to, all provisional applications, substitutions, continuations, continuations-in-part (solely to the extent that the claims of such continuations-in-part cover Extended Research Inventions), divisions, and renewals thereof, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof, whether owned now or hereafter, solely or jointly by CURAGEN, and wherein at least one claim of such patent right covers an Extended Research Invention.

1.18 “FTE” shall mean the equivalent of a full year of effort on a full time basis of a researcher possessing skills and experience necessary to carry out applicable tasks under the Research Program.

1.19 “GENENTECH PDC Approval” shall mean an approval by GENENTECH’s Product Development Committee, in accordance with its customary product development practices, for GENENTECH to pursue clinical product development of a Licensed Product.

Page 4

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.20 “GENENTECH Proprietary Material” shall mean substances made by GENENTECH or provided by GENENTECH to CURAGEN in the performance of the Research Program, including without limitation (a) tissue samples provided by GENENTECH to CURAGEN and (b) the nucleic acids and other substances actually contained in such tissue samples, and (c) full length genes cloned by GENENTECH.

1.21 “GeneScape^®” shall mean the web-based software and database product for accessing and storing Data Sets generated through the application of CURAGEN’s QEA/GeneCalling and MIM/PathCalling technologies.

1.22 “Independent Patent Counsel” shall have the meaning set forth in Section 6.2.2.

1.23 “Initial Research Projects” shall mean any Research Project conducted under the Original Research Agreement, as more fully described in Appendix D attached hereto.

1.24 “Invention” shall mean either a CURAGEN Project Invention or a Research Project Invention.

1.25 “Know-How Information” shall have the meaning set forth in Section 2.1.4(c).

1.26 “Know-How Information Product” shall have the meaning set forth in Section 2.1.4(c).

1.27 “Licensed Clone” shall mean one or more Clones collectively that correspond to a full length gene sequence, and such full length gene sequence itself, that are licensed by GENENTECH pursuant to an executed License Agreement.

1.28 “Licensed Product”, as to each Licensed Clone, shall mean:

(a) [*************************************************************************************************** ************************************************************************************************]

(b) [*************************************************************************************************** *************************************************************************************************]

(c) [*************************************************************************************************** *************************************************************************************************]

(d) [***************************************************************************************************

Page 5

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

**************************************************************************************************** *******************************]

(e) [*************************************************************************************************** *************************************************************************************************]

(f) [*************************************************************************************************** *************************************************************************************************]

(g) [*************************************************************************************************** *************************************************************************************************]

(h) [*************************************************************************************************** *************************************************************************************************]

(i) [*************************************************************************************************** *************************************************************************************************]

1.29 “License Agreement” shall mean a license agreement in the form of Appendix C attached hereto executed by the Parties.

1.30 “MIM/PathCalling” shall mean the technology employed by CURAGEN for identifying protein-protein interactions from libraries of cDNAs.

1.31 “Net Sales” shall mean

[***************************************************************************************************

****************************************************************************************************

****************************************************** ]

(a) [**********************************************************]

(b) [**********************************************************

Page 6

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

**************************************************************************************************** *******************************]

(c) [*************************************************************************************************** *************************************************************************************************]

(d) [*************************************************************************************************** *************************************************************************************************]

[******************************************************************************************************* ************************************************************************************************************ *****************************************************************]

[******************************************************************************************************* ************************************************************************************************************ *****************************************************************]

1.32 “Optioned Clone” shall have the meaning set forth in Section 7.1.

1.33 “Option Period” shall have the meaning set forth in Section 7.3.

1.34 “Patent Coordinators” shall mean a patent attorney or patent agent representing CURAGEN and a patent attorney or patent agent representing GENENTECH.

1.35 “Patent Rights” means the rights and interests in and to issued patents and pending patent applications in any country, including, but not limited to, all provisional applications, substitutions, continuations, continuations-in-part (solely to the extent claims of such continuations-in-part cover Inventions), divisions, and renewals, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof, whether owned now or hereafter, solely or jointly by a Party, wherein at least one claim of such patent right covers an Invention.

1.36 “Previously Committed Clone” shall mean any Clone which, at the relevant time under Section 7.1.1 or 7.4.2, (a) is subject to a license or an option previously granted by CURAGEN to any third party, or (b) a third party collaborator of CURAGEN or subscriber to CURAGEN’s GeneCalling or PathCalling database has requested CURAGEN to full-length

Page 7

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

clone such Clone or has itself commenced full-length cloning of such Clone and notified CURAGEN thereof, and provided that such third party still retains evaluation, option or license rights to such Clone pursuant to the terms of a written agreement with CURAGEN.

1.37 “Prime Rate” shall mean the prime rate of interest as reported by Citibank, N.A. In the event that Citibank, N.A. ceases to report such a rate, the term “Prime Rate” shall mean the generally prevailing base corporate lending rate of Fleet National Bank.

1.38 “Project Data” shall mean all information obtained by CURAGEN from the processing of GENENTECH Proprietary Material in a particular Research Project or Initial Research Project, including QC data, QEA/GeneCalling data, MIM/PathCalling data, sequence data and any other information obtained or generated by CURAGEN in the performance of each Research Project or Initial Research Project.

1.39 “Project Data Set” shall mean all Project Data resulting from a discrete Research Project.

1.40 “QEA/GeneCalling” shall mean the software, database and other technologies employed by CURAGEN for tagging and identifying the expression level of specific gene fragments within a cDNA pool.

1.41 “Research Committee” or “RC” shall have the meaning set forth in Section 2.2.1.

1.42 “Research Plan” shall mean the written description of the Research Program to be performed by CURAGEN and GENENTECH under this Agreement, as further described in Section 2.1.3. The Research Plan may specify one or more independent Research Projects.

1.43 “Research Program” shall mean (a) the Research Projects to be performed by CURAGEN and GENENTECH under this Agreement as described in the Research Plan and amendments thereto and (b) the Initial Research Projects performed by CURAGEN and GENENTECH under the Original Research Agreement.

1.44 “Research Project” shall mean a particular project to be performed by CURAGEN and GENENTECH to process and analyze a specified set of samples for a defined potential therapeutic and diagnostic field of use, which project is approved pursuant to Section 2.1.3 and which shall, unless otherwise agreed by the Parties, involve the analysis of approximately [*****(**)] samples with confirmation of approximately [*****(**)] genes but shall not, unless otherwise agreed by the Parties, require any full length cloning.

Page 8

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.45 “Research Project Invention” shall mean any discovery, invention, know-how or trade secret conceived or made (a) by employees of CURAGEN or GENENTECH or jointly by employees of both in the performance of the Research Program, (b) by GENENTECH employees in performing the specific following activities utilizing any Data Set: QEA and MIM data analysis, confirmation of QEA or MIM data, fragment cloning and sequencing of a Clone, and full-length cloning of a Clone or (c) any discovery, invention, know-how or trade secret deemed to be a Research Project Invention pursuant to the terms of this Agreement or an executed License Agreement. All inventions claimed in a patent application filed on a Research Project Invention shall also be a Research Project Invention. Research Project Inventions shall not include inventions conceived or made solely by GENENTECH outside of the Research Program, whether before or during an Exclusive Evaluation Period or Option Period, or at any other time, except as specifically set forth in (b) above.

1.46 “Research Project Patent Rights” shall mean Patent Rights containing a claim or claims covering Research Project Inventions.

1.47 “Research Project Proprietary Material” shall mean all substances made by CURAGEN in the performance of the Research Program other than mRNA pools extracted from GENENTECH Proprietary Material. Research Project Proprietary Material shall include, without limitation, QEA fragments, MIM constructs and materials derived or constructed from QEA fragments and MIM constructs, including, without limitation, fragment and full length cDNA clones made by CURAGEN in the performance of a Research Project.

1.48 “Research Quarter” shall mean each three (3) calendar month period commencing on July 1, 2000 and ending on December 31, 2002.

1.49 “Research Term” shall have the meaning set forth in Section 2.3.1.

1.50 “Gene” shall have the meaning set forth in Section 7.7.

1.51 “Term” shall have the meaning set forth in Section 8.1.

1.52 “Territory” shall mean the world.

1.53 “Valid Claim(s)” shall mean an unexpired claim of any issued patent within Patent Rights which has not been finally declared invalid or unenforceable by a patent office or by a court or other body of competent jurisdiction in any unappealed or unappealable decision and which has not been lost through an interference or opposition proceeding.

Page 9

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

2. RESEARCH PROGRAM

2.1 Implementation of Research Program.

2.1.1 Basic Provisions of Program.

(a) The objective of the Research Program will be to generate Project Data Sets by performing Research Projects utilizing GENENTECH Proprietary Material. CURAGEN and GENENTECH shall each use commercially reasonable efforts to perform such tasks as are set forth in the Research Plan, including the provision of such facilities, samples and materials (including GENENTECH Proprietary Material), equipment and consultants as each deems necessary to the achievement of such Research Plan. GENENTECH may, at its option, propose that the Parties perform up to one (1) new Research Project each Research Quarter, which proposal shall be approved and conducted in accordance with Section 2.1.3 of this Agreement. In carrying out the Research Program, CURAGEN shall devote a number of FTEs to the Research Program as is sufficient to enable it to complete all Initial Research Projects and also to initiate one (1) new Research Project per Research Quarter, commencing on July 1, 2000, up to a maximum of ten (10) new Research Projects in the aggregate, and to complete such new Research Projects

(b) In the event that GENENTECH does not elect to propose a new Research Project for one or more Research Quarters, GENENTECH may defer such proposal(s) for a subsequent Research Quarter or Research Quarters, subject to the agreement and ability of CURAGEN to devote the number of FTE’s required to initiate such additional Research Projects in such subsequent Research Quarter(s). GENENTECH shall also have the right, with the agreement of CURAGEN, to accelerate its new Research Project proposals hereunder such that more than one new Research Project is initiated in any one Research Quarter, provided that, for each Research Project so accelerated in any Research Quarter, GENENTECH, either at or prior to the time of such agreement, pays the $[*******] research payment described, in Section 3.3 below, in advance for such Research Quarter.

2.1.2 Collaborative Efforts and Reports.

(a) The Parties agree that the successful execution of the Research Program

Page 10

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

will require the collaborative use of both Parties’ areas of expertise. Each Party shall keep the RC fully informed about the status of the portions of the Research Program they respectively perform including, without limitation, summaries of their direct uses of the Project Data during the Exclusive Evaluation Periods and Option Periods hereunder for such Project Data. CURAGEN shall promptly provide GENENTECH with a description of Project Data Sets from completed Research Projects. All information provided hereunder will be treated as Confidential Information of the disclosing Party pursuant to the provisions of Article 4.

(b) Scientists at CURAGEN and GENENTECH shall cooperate in the performance of the Research Program and, subject to any confidentiality obligations to third parties, shall exchange information and materials as necessary to carry out the Research Program, subject to the provisions of Section 4. Each Party will attempt to accommodate any reasonable request of the other Party to send or receive personnel for purposes of collaborating or exchanging information under the Research Program. Such visits and/or access will have defined purposes and be scheduled in advance.

(c) For each Research Project, GENENTECH scientists shall request cDNA band confirmations within twelve (12) weeks after notice to GENENTECH that such Research Project QEA chemistry is complete. CURAGEN will give written notice to GENENTECH and the RC promptly upon completion of the Project Data Set from each Research Project. “Completion” of a Project Data Set shall occur upon completion of 80% of the band confirmations requested by GENENTECH. However, CURAGEN shall be obligated to complete all band confirmations requested. Access to such data shall be promptly provided to GENENTECH through the GeneScape^® database.

(d) CURAGEN shall set up and maintain, throughout the Research Term, a secure partition of its GeneScape^® database and software for the exclusive use of GENENTECH and CURAGEN solely for the purpose of identifying genes from Exclusive Data Sets, and shall provide online E-mail and telephone help during normal business hours in the use thereof to GENENTECH. CURAGEN and GENENTECH shall jointly set up and maintain a secure connection to said partition of the GeneScape^® database and software in order to give GENENTECH on-line access thereto.

Page 11

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(e) If, after receiving access to any Data Set under the terms of this Agreement, GENENTECH becomes aware that analysis of such Data Set has led GENENTECH to file a patent application on, or to full-length sequence, any Clone whose sequence or utility was directly identified from such Data Set, GENENTECH shall promptly notify the RC of such patent filing or sequencing. Any full-length Clone sequenced by GENENTECH after the identification of such Clone from a Data Set shall be a Research Project Invention, unless at the time of such full length sequencing: (i) such full-length sequence is in the public domain, (ii) such full-length sequence is in the possession of GENENTECH (as can be documented by written or computer records), (iii) such full length sequence is independently determined, or is in the process of being independently determined, by GENENTECH (as can be documented by written or computer records) prior to the date on which the decision is made to full length sequence such Clone from the Data Set. If CURAGEN becomes aware that analysis of a Data Set during GENENTECH’s Exclusive Evaluation Period pertaining to such Data Set has led CURAGEN to file a patent application on, or to full-length sequence, any Clone whose sequence or utility was identified from such Data Set, CURAGEN shall promptly notify the RC of such patent filing or sequencing, and any full-length Clone sequenced by CURAGEN after the identification of such Clone from a Data Set shall be deemed a Research Project Invention, unless at the time of such sequencing, such full-length sequence: (i) is in the public domain, (ii) is in the possession of CURAGEN (as can be documented by written or computer records), or (iii) is independently developed by CURAGEN (as can be documented by written or computer records).

2.1.3 Research Plans. The Research Plan for the first twelve months of the Research Program shall be agreed upon by the Parties as of the Amendment Effective Date and shall include completion of the Initial Research Projects. In addition, GENENTECH shall propose, at or before the first Research Committee (defined in Section 2.2 below) meeting after the Amendment Effective Date, the therapeutic and diagnostic fields of use for the Initial Research Projects, which shall be agreed upon by the members of the Research Committee. In the event that the Research Committee cannot agree upon such fields of use, such decision will be resolved by GENENTECH in accordance with Section 2.2.6 below. At each Research Committee

Page 12

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

meeting during the Research Term, or at any time on request of either GENENTECH or CURAGEN, the Research Plan shall be updated or modified by CURAGEN and GENENTECH to cover the next twelve months and shall be approved by the RC at such meeting. The Research Plan shall set forth specific Research Projects for the period covered by the Research Plan. In addition, new Research Projects, including the therapeutic and diagnostic fields of use, will be proposed by GENENTECH at the beginning of each Research Quarter, pursuant to Section 2.1.1(a) above, at Research Committee meetings or teleconferences, and such new Research Project(s) will be initiated at the beginning of the following Research Quarter. For each Research Project, the Research Plan will be deemed to include the following activities: (i) [**********************************************]. During any Exclusive Evaluation Period for a Data Set, CURAGEN shall not utilize such Data Set in performing the activities specified in (i)-(iii), or determine the full length sequence of Clones identified from such Data Set except as part of the Research Program. The RC will consider adjustments in the Research Plan at any time upon the request of GENENTECH or CURAGEN. Notwithstanding the foregoing, no project shall become a Research Project without the express consent of both GENENTECH and CURAGEN; provided, however, that CURAGEN shall consent to any reasonable proposed Research Project which is not substantially similar to a project that is ongoing, planned internally solely by CURAGEN, the subject of active negotiation with a third party or subject to a prior commitment to a third party, all the above as evidenced by written or computer records, and which would not violate a prior restriction under an agreement with a third party. During the Research Term, once a Research Project becomes part of the Research Plan, such Research Project will not be discontinued (unless such discontinuation is approved by the RC) regardless of any other negotiations or commitments with third parties.

2.1.4 Exclusivity.

(a) CURAGEN agrees that, commencing upon inclusion of a Research Project in the Research Plan, and continuing through the duration of any subsequent Exclusive Evaluation Period, CURAGEN shall not undertake to perform a substantially similar research project with any third party.

(b) CURAGEN agrees that during any Exclusive Evaluation Period, CURAGEN will not grant access to any Exclusive Data Set to any other party and that during any

Page 13

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

Option Period, CURAGEN shall not grant to any third party rights to any Optioned Clone or to any Licensed Products related to such Optioned Clone. In addition, CURAGEN shall not, during any Exclusive Evaluation Period, grant a third party any rights to option or to license (A) any Clone contained in the corresponding Exclusive Data Set, or (B) any Licensed Products relating to such a Clone. Notwithstanding the provisions of Article 4, upon the expiration of any Exclusive Evaluation Period for any Exclusive Data Set (or if the Clone contained in such Exclusive Data Set is optioned by GENENTECH under this Agreement, then upon the expiration of the applicable Option Period), CURAGEN shall have the right, at its sole option, to make such Data Set, and, subject to the provisions of Section 2.4.4, reasonable descriptions of the data contained therein, available to third parties or to put the Data Set and such descriptions in the subscription portion of the GeneScape^® database. After the expiration of such Exclusive Evaluation Period and any applicable Option Period, CURAGEN may perform research or collaborate with third parties, and grant to third parties the right to exploit the results of any such research or collaborations, without restriction other than as expressly provided in this Agreement or in an executed License Agreement, and subject to GENENTECH’s rights under this Agreement and an executed License Agreement.

(c) CURAGEN acknowledges that during the Research Program, GENENTECH may obtain useful proprietary information from Research Projects, Project Data, CURAGEN Projects, CURAGEN Data and CURAGEN’s databases and other information which is not covered by a Valid Claim of a Research Project Patent Right or a CURAGEN Project Patent Right (collectively, “Know-How Information”). Without limitation, Know-How Information may include identification of pathways involved in diseases or protein-protein interactions involved in diseases, which involvement was not previously known by GENENTECH. GENENTECH shall have a right to use Know-How Information for all purposes and CURAGEN hereby grants GENENTECH a perpetual, nonexclusive, worldwide, sublicensable license to use Know-How Information for

Page 14

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

such purposes. In the event that GENENTECH, or its sublicensee under this Know-How license, develops a product which is not covered by a Valid Claim of a Research Project Patent Right, a Valid Claim of a CURAGEN Project Patent Right or a Valid Claim of an Extended Research Patent Right and is not licensed to GENENTECH under a License Agreement and which was discovered by GENENTECH or such sublicensee based directly and materially on its use of such Know-How Information (a “Know-How Information Product”), GENENTECH or such sublicensee shall pay to CURAGEN a [*****] on Net Sales of such Know-How Information Product. Without limitation, GENENTECH’s development of a product which has the intended biological activity of modifying the outcome of a pathway by binding to a protein or inhibiting protein function and such pathway was directly identified in a Research Project, such product would be a Know-How Information Product subject to the [*****] set forth above, provided that such pathway identification makes a direct and material contribution to the development of such product. Notwithstanding the above, the obligation above to pay a [*****] to CURAGEN on Net Sales of Know-How Information Products shall not apply to GENENTECH if, at the time of receipt by GENENTECH from CURAGEN and first use by GENENTECH in the discovery of such Know-How Information Product, such Know-How Information: (i) was in the public domain; (ii) was known to, or in the possession or control of, GENENTECH (as demonstrated by its written or computer records); (iii) had already been obtained by GENENTECH from sources independent of CURAGEN; or (iv) was developed by GENENTECH independently of such Know-How Information (as can be demonstrated by written or computer records). The right contained in this paragraph does not include any license under any patent claims owned or controlled in whole or in part by CURAGEN.

(d) GENENTECH agrees that, until any such information is in the public domain other than as a result of a disclosure by GENENTECH in violation of this Agreement or an executed License Agreement, or until GENENTECH discovers or obtains such information independently of CURAGEN without use of

Page 15

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

CURAGEN Data Sets or Inventions or knowledge thereof, GENENTECH will only utilize Project Data, CURAGEN Data, CURAGEN Project Proprietary Material, Research Project Proprietary Material, Inventions or Patent Rights as expressly provided herein (including use for GENENTECH’s research purposes as provided in Section 2.4.3 below) or in an executed License Agreement. CURAGEN agrees that CURAGEN will not utilize any GENENTECH Proprietary Material, Project Data, Research Project Proprietary Material, Research Project Inventions or Research Project Patent Rights other than as expressly provided herein. After any Exclusive Evaluation Period and applicable Option Period for any Clone, in addition to its rights under Section 5.3(b) CURAGEN shall have a nonexclusive right to use Research Project Inventions, and to practice Research Project Patent Rights, covering the use of such Clone identified in a Research Project hereunder only for its own internal research purposes or as otherwise permitted under this Agreement, but shall not otherwise be permitted to use such Inventions and Patent Rights for commercial purposes without a written license agreement between GENENTECH and CURAGEN. CURAGEN shall not have the right to sublicense to any third party or collaborator such nonexclusive right to use such Inventions and Patent Rights for research purposes.

(e) Royalty payments on Net Sales of a Know-How Information Product due pursuant to subsection (c) above shall be made to CURAGEN in United States Dollars quarterly within sixty (60) days following the end of each calendar quarter for which royalties are due. Each royalty payment shall be accompanied by a report summarizing the total Net Sales for each Know-How Information Product during the relevant three-month period and the calculation of royalties, if any, due thereon pursuant to this Section 2.1.4. All royalties shall be payable in full in the United States in United States Dollars, regardless of the countries in which sales are made. For the purpose of computing Net Sales for Know-How Information Products sold in a currency other than United States dollars, such currency shall be converted into United States dollars at the exchange rate for buying U.S.

Page 16

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

dollars set forth in The Wall Street Journal for the last business day of the calendar quarter.

(f) GENENTECH shall pay royalties with respect to each Know-How Information Product on a country by country basis for a period of [******] from the first commercial sale of such Know-How Information Product in such country. Following such period, GENENTECH shall have a fully paid-up, irrevocable license in such country to make, have made, use, have used, sell, have sold, offer for sale, import and have imported such Know-How Information Product in such country.

(g) Royalties not paid within the time period set forth in this Section 2.1.4 shall bear interest at [*****], accruing monthly, from the due date until paid in full.

(h) GENENTECH shall keep for [*****] from the date of each payment of royalties complete and accurate records of sales by GENENTECH of each Know-How Information Product in sufficient detail to allow the accruing royalties to be determined accurately. CURAGEN shall have the right for a period of [*****] after receiving any report or statement with respect to royalties due and payable to appoint an independent certified public accountant reasonably acceptable to GENENTECH to inspect the relevant records of GENENTECH to verify such report or statement. GENENTECH shall make its records available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon reasonable notice from CURAGEN, solely to verify the accuracy of the reports and payments. Such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales of any Know-How Information Product in any given payment period. CURAGEN agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent necessary for CURAGEN to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law, regulation or judicial order. The results of each inspection, if any, shall be binding on both Parties.

Page 17

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

CURAGEN shall pay for such inspections, except that in the event there is any upward adjustment in aggregate royalties payable for any year shown by such inspection of more than [*****] of the amount paid, GENENTECH shall pay for such inspection.

2.1.5 Research License. CURAGEN hereby grants to GENENTECH a non-exclusive license, without the right to sublicense, under CURAGEN Background Inventions and CURAGEN’s interest in any Inventions, solely to the extent necessary to allow GENENTECH to perform its obligations under the Research Program and to exercise the rights granted to GENENTECH herein, including without limitation, its evaluation hereunder of Research Project Data, CURAGEN Data and Clones, and its research under Section 2.4.3 below.

2.1.6 Software License. Any access granted to the GeneScape^® database and software hereunder, or any components thereof, is granted according to the following terms:

The GeneScape^® database, software and display screens are protected by copyright, patent, trade secret and other intellectual property laws. CURAGEN hereby grants to GENENTECH and its employees a non-exclusive non-transferable license to access the GeneScape^® database and software solely for the purposes of and during the Term of this Agreement. GENENTECH shall access Project Data Sets and CURAGEN Data Sets only through the GeneScape^® database and software provided by CURAGEN. GENENTECH shall not copy the GeneScape^® database, software or display screens except as occurs during the normal course of CURAGEN-provided access. In particular, GENENTECH will not retain such normal copies for a time not reasonably related to CURAGEN-provided access. GENENTECH shall not reverse engineer, decompile, or disassemble the GeneScape^® software or display screens. The GeneScape^® database and software embody trade secrets of CURAGEN that are considered Confidential Information of CURAGEN and subject to the provisions of Article 6 hereof.

2.2 Research Committee.

2.2.1 Establishment and Functions of the RC.

Page 18

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(a) CURAGEN and GENENTECH shall establish a “Research Committee” (the “RC”). The RC will act on behalf of the two Parties and will be responsible for the planning and monitoring of the Research Program. In particular, the activities of the RC shall include reviewing progress in the Research Program and recommending necessary adjustments to the Research Program, including any Research Project substitutions deemed desirable based on results and on GENENTECH’s commercial interest, as the research and development progresses.

(b) In planning and monitoring the Research Program, the RC shall assign tasks and responsibilities taking into account each Party’s respective specific capabilities and expertise in order in particular to avoid duplication and enhance efficiency and synergies. The RC shall also monitor the assignment of CURAGEN employees to the Research Program and the allocation of such CURAGEN employees to specific Research Projects.

2.2.2 RC Membership.

CURAGEN and GENENTECH each shall appoint, in their sole discretion, three (3) members to the RC, which shall include a Co-Chair to be designated by GENENTECH and a Co-Chair to be designated by CURAGEN. Substitutes or alternates for the Co-Chairs or other RC members may be appointed at any time by notice in writing to the other Party. The Parties may mutually agree to change the size of the RC as long as there shall be an equal number of representatives of each party on the RC. The initial Co-Chairs and other RC members shall be designated by the Parties upon execution of this Agreement. CURAGEN shall appoint a Project Coordinator, who shall be reasonably satisfactory to GENENTECH, to serve as the principal CURAGEN liaison with GENENTECH for the Research Program. Such Project Coordinator will be one of CURAGEN’s members of the RC.

2.2.3 Meetings.

The RC will meet at least quarterly as described in this Section 2.2.3 during the Research Term. The RC shall meet once a year in New Haven, Connecticut, and once a year in South San Francisco, California unless the Parties agree otherwise. Any additional meetings shall be held at places and on dates selected by the Co-Chairs of the RC. The RC shall also conduct two

Page 19

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

meetings a year by conference call, or as otherwise agreed by the RC members. In addition, the RC may act without a formal meeting by a written memorandum signed by the Co-Chairs of the RC. Whenever any action by the RC is called for hereunder during a time period in which the RC is not scheduled to meet, the Co-Chairs of the RC shall cause the RC to take the action in the requested time period by calling a special meeting, conference call or by action without a meeting. Subject to the obligations set forth in Section 4, representatives of each Party, in addition to the members of the RC, may attend RC meetings at the invitation of either Party with the prior approval of the other Party, which shall not be unreasonably withheld.

2.2.4 Additional Reporting.

Each Party will provide a written report to the RC not less than once every six (6) months during the Research Term and any Exclusive Evaluation Periods and Option Periods describing its full length cloning of any Clone contained in Research Project Data, and any research results within the therapeutic and diagnostic fields of use of Research Projects obtained by such Party over the immediately preceding six (6) month period which are derived from Research Projects or that otherwise utilize Know-How Information, to the extent permitted under any agreement with a third party At the same time, CURAGEN will provide a written report for such time periods describing the results of its Non-directed Research and Directed Research (each defined below). In addition, during the Term of this Agreement GENENTECH will promptly report to the RC and to CURAGEN any GENENTECH PDC Approvals made with respect to any Licensed Clones, and CURAGEN will promptly report to GENENTECH any Clone, whose sequence or utility is determined from the analysis of one or more Project Data Sets, that is or becomes a Previously Committed Clone, and the filing of any patent applications that cover Extended Research Inventions.

2.2.5 Minutes.

The RC shall keep accurate minutes of its deliberations which record all proposed decisions and all actions recommended or taken. Drafts of the minutes shall be delivered to the Co-Chairs of the RC within twenty (20) days after the meeting. The Party hosting the meeting shall be responsible for the preparation and circulation of the draft minutes. Draft minutes shall be edited by the Co-Chairs and shall be issued in final form only with their approval and agreement as evidenced by their signatures on the minutes.

Page 20

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

2.2.6 Quorum; Voting; Decisions.

At each RC meeting, at least two (2) member(s) appointed by each Party present in person or by telephone shall constitute a quorum and decisions shall be made by majority vote. Each RC member shall have one vote on all matters before the RC, provided that the member or members of each Party present at an RC meeting shall have the authority to cast the votes of any of such Party’s members on the RC who are absent from the meeting. Notwithstanding the foregoing, the objective of the Parties to this Agreement is that decisions of the RC shall be made by consensus. However, except as otherwise set forth herein, in the event that the RC is unable to resolve any matter before it as set forth above, such matter shall be resolved by GENENTECH, taking into reasonable consideration the best interests of both GENENTECH and CURAGEN. Notwithstanding the foregoing, no project shall become a Research Project without the express consent of both GENENTECH and CURAGEN; provided, however, that CURAGEN shall consent to any reasonable proposed Research Project which is not substantially similar to a project that is ongoing, planned internally solely by CURAGEN, the subject of active negotiation with a third party or subject to a prior commitment to a third party, all the above as evidenced by written or computer records, and which would not violate a prior restriction under an agreement with a third party.

2.2.7 Expenses.

CURAGEN and GENENTECH shall each bear all expenses of their respective RC members related to their participation on the RC and attendance at RC meetings.

2.2.8 Record Keeping.

Throughout the Term of this Agreement, the Parties will maintain a list of Research Projects, including the therapeutic and diagnostic fields being investigated by each Research Project, and start dates and completion dates thereof, Exclusive Data Sets, Exclusive Evaluation Periods and extensions thereof, Option Periods and extensions thereof and Optioned Clones. Such task shall be performed by the RC unless otherwise mutually agreed by the Parties.

2.3 Research Term.

2.3.1 Term of the Research Program.

Page 21

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

The Research Program shall expire on the later of three (3) years after the Amendment Effective Date or two (2) years after the Completion of the last Research Project to be completed hereunder, unless extended as provided below or unless earlier terminated by either Party by virtue of termination of the Research Program or this Agreement pursuant to the provisions of Article 8 (the “Research Term”).

2.3.2 Extension of the Research Program.

The Research Term may be extended upon six (6) months prior written notice by mutual agreement of the Parties on terms to be agreed upon by the Parties.

2.4 Project Data Evaluations.

2.4.1 Exclusive Access

(a) From the time at which a Research Project or Initial Research Project is begun and continuing through the later of (a) [********] after the Amendment Effective Date and (b) [********] after the first day of the calendar quarter immediately following the calendar quarter in which delivery of a proper written notice of Completion of the applicable Project Data Set is made pursuant to Section 2.1.2(c) and access to such complete Project Data Set is given to GENENTECH (the “Exclusive Evaluation Period”), GENENTECH shall have the exclusive right to use all Project Data, Research Project Inventions, Clones identified in Project Data and Research Project Proprietary Material related to such Research Project for its evaluation and research purposes. During such Exclusive Evaluation Period, CURAGEN (i) shall not use such Project Data Set (which, during such Exclusive Evaluation Period shall be an Exclusive Data Set) and related Research Project Proprietary Material for any purpose other than conducting the Research Program hereunder and (ii) shall keep all such Project Data Set and related Research Project Inventions and Research Project Proprietary Material confidential and will not disclose or transfer such Project Data Set, or related Research Project Inventions and Research Project Proprietary Material to third parties by publication or otherwise, without the prior written consent of GENENTECH.

Page 22

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(b) Notwithstanding the foregoing, CURAGEN shall have the right during the Exclusive Evaluation Period to use, but not to transfer to third parties (except pursuant to an agreement with a third party who has identified such specific Clone independently of the Project Data), all such Clones or the proteins derived therefrom, outside of the Research Program as part of CURAGEN’s clone or protein libraries for its internal, general, non-directed research purposes (“Non-directed Research”). For purposes of clarity, but without limitation, inclusion of a Clone together with other clones in research to determine multiple protein-protein interactions, or inclusion of a specific Clone together with other clones in a screen against one or more molecules to determine inhibition, would be “Non-directed Research”. Activities associated with choosing a specific Clone and conducting research investigating this specific Clone or the variants, homologs, orthologs, derivatives or mutants thereof, including, without limitation, full length cloning of such Clone, drug screening with such Clone, or conducting research to elucidate the biological activity of such Clone (e.g., generating antibodies to the Clone, testing the Clone or protein encoded thereby in preclinical models, enriching libraries with such Clone to purposefully look for proteins which bind to such Clone) would be “Directed Research.” CURAGEN shall not be permitted to perform Directed Research activities other than as may be expressly permitted under subsection 2.4.1(c) below.

(c) Notwithstanding anything to the contrary in this Section 2.4.1, the Parties hereby agree that during the Exclusive Evaluation Period CURAGEN will be permitted to perform Directed Research on specific Clones utilizing a Project Data Set only with the prior written consent of GENENTECH, which consent shall be at GENENTECH’s sole discretion. To request such consent, CURAGEN shall give to GENENTECH at a RC meeting a written request to conduct such Directed Research, describing such proposed Directed Research and the therapeutic and diagnostic field of use of such research with reasonable detail. GENENTECH shall respond to such request at the next scheduled RC meeting, but in no event shall a response be due before sixty (60) days after its receipt of such request. If

Page 23

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

GENENTECH fails to respond by such following RC meeting, such failure shall be deemed to be a denial of such request. CURAGEN shall have the right to make such requests at any RC meeting with respect to Clones identified in any Initial Research Project, but it shall not have the right to make such requests with respect to any Research Project initiated after the Amendment Effective Date until one calendar year after the completion of, and delivery of all Project Data for, such Research Project.

(d) CURAGEN shall keep GENENTECH reasonably informed of the results of any Non-directed Research, Directed Research (including Extended Research Inventions) and patent applications and patents relating thereto on a confidential and timely basis in order to allow GENENTECH to make informed decisions regarding the exercise of its option and license rights hereunder. All inventions conceived or made in the course of such Non-directed Research and Directed Research which relate to the Clone, the proteins derived therefrom, antibodies that bind such proteins, homologs, orthologs, variants, derivatives or mutants with substantially the same biological activity as such Clone, or the uses of any of the above, shall be deemed Research Project Inventions subject to GENENTECH’s option and license rights for such Clone and its uses under Section 5.3 and Article 7, provided that, with respect to Directed Research inventions only, such inventions are in the same therapeutic or diagnostic field of use defined in the Research Project in which such Clone or its use was identified. All other inventions from such research shall be Extended Research Inventions and GENENTECH will have rights to such Extended Research Inventions and Extended Research Patent Rights resulting therefrom as provided in Article 7 hereof and in Section 2.3 of the License Agreement attached hereto as Appendix C.

2.4.2 Extensions. GENENTECH may elect to extend the Exclusive Evaluation Period for any Project Data Set that has become an Exclusive Data Set, and all rights thereunder, for an additional [********] by giving written notice to CURAGEN and making a payment of [*****] to CURAGEN prior to expiration of the initial Exclusive Evaluation Period for such Project Data

Page 24

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

Set. An Exclusive Evaluation Period will be automatically extended for up to three months in order to allow the completion of any reasonable requests for confirmation of data made by GENENTECH during the primary twelve-month period of such Exclusive Evaluation Period.

2.4.3 Non-exclusive Access and License. Following the expiration of the Exclusive Evaluation Period for a Project Data Set (a) GENENTECH shall continue to have non-exclusive access to such Project Data Set and (b) CURAGEN shall be deemed to have granted to GENENTECH, without any further action by either Party, a perpetual, sublicensable, worldwide non-exclusive license, under CURAGEN’s interests in Research Project Patent Rights, Extended Research Patent Rights, CURAGEN Background Inventions, CURAGEN Project Patent Rights and Know-How Information, to use such Data Set, Clones, Research Project Inventions and Research Project Proprietary Material for internal research purposes, subject to GENENTECH’s obligation to pay royalties on a Know-How Information Product, if applicable, under Section 2.1.4(c) above.

2.4.4 Data Annotations. Upon the expiration of the Exclusive Evaluation Period for each Project Data Set, CURAGEN shall furnish to GENENTECH reasonable descriptions of the Project Data Set to be included as annotations in the GeneScape^® database with the Project Data Set. Such descriptions and annotations shall be prepared solely by CURAGEN at its cost, without the use of any portion of the FTE’s to be used for Research Projects hereunder. GENENTECH shall have a period of [*****] to review such descriptions and advise CURAGEN of reasonable objections. CURAGEN shall not include in the GeneScape^® database any descriptions, or portions thereof, to which GENENTECH reasonably objects. CURAGEN shall not include any Confidential Information of GENENTECH (as defined in Section 4.1 below) in any annotation.

2.5 CURAGEN Projects.

2.5.1 Access. GENENTECH shall have the option, for such reasonable period or periods as CURAGEN may specify, to review specified proprietary CURAGEN Data Sets and related CURAGEN Project Inventions, which are offered by CURAGEN in its sole discretion to GENENTECH for review and to request exclusive access thereto. Such option shall be exercisable as set forth in Section 2.5.2 below.

Page 25

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

2.5.2 Exclusive Evaluation Option.

(a) Subject to any rights which CURAGEN may grant or have granted to third parties, GENENTECH may request at any time during the time period specified by CURAGEN (as described in Section 2.5.1) that it receive exclusive access to any CURAGEN Data Set offered to GENENTECH pursuant to Section 2.5.1. Such exclusive access to such CURAGEN Data Set shall be granted to GENENTECH for an Exclusive Evaluation Period of [***********] commencing upon CURAGEN’s receipt of written notice from GENENTECH and payment of an exclusive evaluation fee of[*****], unless GENENTECH is notified by CURAGEN at any time prior to CURAGEN’s receipt of GENENTECH’s written notice that exclusive access to such CURAGEN Data Set is no longer available as a result of CURAGEN’s agreements with third parties existing at the time of the request. During each Exclusive Evaluation Period, CURAGEN (a) shall not use such CURAGEN Data Set (which, during such Exclusive Evaluation Period shall be an Exclusive Data Set) and related CURAGEN Project Proprietary Material for any purpose hereunder and (b) shall keep such CURAGEN Data Set and related CURAGEN Project Inventions and CURAGEN Project Proprietary Material confidential and will not disclose or transfer the CURAGEN Data Set, or related CURAGEN Project Inventions and CURAGEN Project Proprietary Material to third parties by publication or otherwise, without the prior written consent of GENENTECH.

(b) Notwithstanding the foregoing, CURAGEN shall have the right during such Exclusive Evaluation Period to use, but not transfer to third parties (except pursuant to an agreement with a third party who has identified such Clone independently of the CURAGEN Data), all Clones or the proteins derived therefrom, outside of the Research Program as part of CURAGEN’s Non-directed Research, as defined in Section 2.4.1 (b) above. CURAGEN shall not be permitted to perform Directed Research activities, as defined in Section 2.4.1(b) above, under this Section 2.5.2. Such Non-directed Research shall be Extended Research, and GENENTECH shall have rights to such Extended Research and Extended Research Inventions and Extended Research Patent Rights resulting therefrom as provided in Article 7 hereof

Page 26

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

and in Section 2.3 of the License Agreement attached hereto as Appendix C. CURAGEN shall keep GENENTECH reasonably informed of the results of any such Extended Research and Extended Research Patent Rights on a confidential and timely basis in order to allow GENENTECH to make informed decisions regarding the exercise of its option and license rights hereunder.

2.5.3 Extensions. GENENTECH may elect to extend the Exclusive Evaluation Period for any CURAGEN Data Set for an additional [*****] by giving written notice to CURAGEN and making a second payment of [*****] to CURAGEN prior to expiration of the initial Exclusive Evaluation Period for such CURAGEN Data Set. An Exclusive Evaluation Period will be automatically extended for up to [*****] in order to allow the completion of any reasonable requests for confirmation of data made by GENENTECH during the primary [*****] period of such Exclusive Evaluation Period. Following the expiration of the Exclusive Evaluation Period for a CURAGEN Data Set, GENENTECH shall have no access to or right to use such CURAGEN Data Set, other than as expressly permitted in an executed License Agreement.

2.6 Data from Previous Projects. Pursuant to the Collaboration Agreements and the Original Research Agreement, CURAGEN has generated the data sets listed on Appendix D hereto and has provided such data sets to GENENTECH. Notwithstanding any other provision of the Collaboration Agreements, the Original Research Agreement or this Agreement, such data sets shall be deemed Project Data Sets for all purposes hereunder and shall be deemed completed as of the date indicated for each Data Set on Appendix D (which Appendix shall be updated as Initial Research Projects are completed). GENENTECH shall have exclusive access to all such Project Data Sets for Exclusive Evaluation Periods commencing on such indicated completion dates and continuing until [********], and shall have evaluation and option rights as otherwise provided for Project Data Sets herein. In addition, following the expiration of the Exclusive Evaluation Periods above, GENENTECH shall have the perpetual, nonexclusive right to use such Project Data Sets and Clones, and Research Project Inventions and Research Project Proprietary Material, for research purposes pursuant to Section 2.4.3 above.

Page 27

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

3. FINANCIAL TERMS

3.1 Equity Investment. Under the Original Research Agreement, GENENTECH made an equity investment in CURAGEN in the amount of five million dollars ($5,000,000), pursuant to the terms of a stock purchase agreement (the “Stock Purchase Agreement”) and registration rights agreement (the “Registration Rights Agreement”) executed between the Parties. Such stock purchase by Genentech shall continue to be governed by the terms of the Stock Purchase Agreement and Registration Rights Agreement, both of which shall remain in full force and effect.

3.2 Amendment Fee. In partial consideration for the Initial Research Projects and of the licenses and rights granted to GENENTECH hereunder, GENENTECH agrees to pay CURAGEN an amendment fee of [************(******)] within thirty (30) days after the Amendment Effective Date.

3.3 Loan Commitment. In partial consideration of the licenses and rights granted to GENENTECH hereunder, GENENTECH hereby commits to the following:

(a) GENENTECH shall, subject to the terms set forth below, make funds available to CURAGEN for general corporate purposes in the form of a loan or loans (the “ Remaining Loan Amount”) to CURAGEN in an amount up to Five Million Dollars ($5,000,000.00), which amount represents the balance of the original loan commitment of GENENTECH under the Original Research Agreement and Note in the aggregate amount of Twenty-One Million Dollars ($21,000,000) (the “Original Loan”). Unless this Agreement or the Research Program has been terminated for any reason and subject to the drawdown limits discussed below, CURAGEN may, in such amounts and at such times as CURAGEN, in its sole discretion, may determine, draw down the Remaining Loan Amount, or any portion thereof, upon fifteen (15) days’ written notice. GENENTECH shall not be obligated to advance any funds under the Remaining Loan Amount at any time after March 31, 2003, or at any time during which an Event of Default (as defined in the Amended Note) has occurred and is continuing under the Amended Note (as defined below). In addition, in the event that a temporary restraining order or preliminary injunction is entered against CURAGEN by a court of competent jurisdiction, the effect of which is to enjoin CURAGEN from utilizing its proprietary genomics technologies such that it is substantially unable to perform the

Page 28

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

Research Program, for as long as such temporary restraining order or preliminary injunction remains outstanding GENENTECH shall not be obligated to advance any funds under the Remaining Loan Amount. GENENTECH’s obligation to advance any funds under the Remaining Loan Amount shall terminate upon the earlier of the expiration of the Research Program or any termination of this Agreement.

(b) On the Amendment Effective Date, CURAGEN shall execute and deliver to GENENTECH an unsecured note, which shall be an amendment to the Note executed by CURAGEN for the Original Loan, and substantially in the form set forth in Appendix B attached hereto and made a part hereof (the “Amended Note”), evidencing the Remaining Loan Amount. The schedule attached to the Amended Note shall be revised each time any amount is drawn down under the Remaining Loan Amount and each time any amount is repaid.

(c) In the event that CURAGEN makes any repayment hereunder in CURAGEN Convertible Non-Voting Common Stock and CURAGEN is eligible to file a registration statement on Form S-3 (or successor short form) at the time of repayment, then within twenty (20) days of the repayment date, CURAGEN shall file a registration statement on Form S-3 covering the resale by GENENTECH of the shares issuable upon conversion of any shares of Convertible Non-Voting Common Stock so delivered to GENENTECH.

3.4 Additional Research Funding.

In partial consideration of the work to be done by CURAGEN in the Research Program, GENENTECH shall make ten (10) research payments to CURAGEN, each such payment to be in the amount of $[**********] and the total aggregate of such payments to be in the amount of $[******************(***)] in exchange for which, GENENTECH shall have the right to initiate up to ten (10) Research Projects. Such payments will be made quarterly in advance within fifteen (15) days of the first day of each Research Quarter, commencing with the Research Quarter beginning on July 1, 2000 and continuing through October 1, 2002. GENENTECH will fund its own activities under the Research Program, and CURAGEN shall provide any additional funds needed to complete the Research Projects conducted hereunder.

3.5 Success Fees.

Page 29

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

3.5.1 In partial consideration of the grant of the licenses and rights granted to GENENTECH hereunder, GENENTECH will make the following noncreditable payments (“Success Fee Payments”) to CURAGEN within thirty (30) days of the achievement of each of the events set forth below:

Event	Success Fee Payment
[*****************]	$[*********]
[*****************]	$[*********]
[*****************]	$[*********]

3.5.2 The Parties hereby agree that the amount of the Success Fee Payments paid by GENENTECH may be reduced by the amount of the Success Fee Credit, as determined on the third anniversary of the Amendment Effective Date. As used in this Section 3.4.2, the term “Success Fee Credit” shall mean [**************************************************************************** ****************************]; provided, that, (i) under no circumstances shall the amount of the Success Fee Credit exceed $[*********] in the aggregate and (ii) to the extent that the Success Fee Credit is not used by GENENTECH on the date it is calculated, it may be carried forward and used by GENENTECH at any time.

4. TREATMENT OF CONFIDENTIAL INFORMATION

4.1 Confidential Information. During the course of the Research Program, or in discussions concerning Exclusive Data Sets, each Party may disclose to the other proprietary technical, research and business information, including but not limited to information contained in Data Sets (which Data Set information shall be deemed Confidential Information of CURAGEN), (collectively, “Confidential Information”). For a period of [*****] after the receipt of any such Confidential Information, except as expressly permitted hereunder, the receiving Party shall keep confidential all such Confidential Information of the other Party and will not disclose such Confidential Information of the other Party to third parties by publication or otherwise. Each Party further agrees not to use Confidential Information of the other Party for

Page 30

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

any purpose other than conducting or evaluating research hereunder, evaluating and analyzing Data Sets or exercising any rights granted to it or reserved by it under this Agreement. Notwithstanding the foregoing, it is understood and agreed that the receiving Party’s obligations of confidentiality and nonuse herein shall not apply to any information which:

(a) is, at the time of disclosure by the disclosing Party hereunder, or thereafter becomes, a part of the public domain or publicly known or available through no fault or negligence of the receiving Party or any of its Affiliates; or

(b) was otherwise in the receiving Party’s lawful possession prior to disclosure by the disclosing Party, as demonstrated by the receiving Party’s written records; or

(c) is lawfully disclosed to the receiving Party on a non-confidential basis by a third party who is not in violation of an obligation of confidentiality to the disclosing Party relative to such information.

(d) is developed independently by the receiving Party without the use of the disclosing Party’s Confidential Information.

Each Party may disclose the other Party’s Confidential Information to the extent reasonably necessary to comply with applicable government law or regulations, provided that prompt notice of any such disclosure shall be given to the other Party. In addition, GENENTECH may disclose Confidential Information of CURAGEN generated under the Research Program to third parties to the extent reasonably necessary to conduct research under a written collaboration or material transfer agreement between GENENTECH and such third parties, provided that such third parties are bound by obligations of confidentiality at least as restrictive as those provided in this Section 4.1. Information disclosed other than in written or electronic form shall be subject to the terms of this Section 4.1 only if confirmed in writing to other Party within thirty (30) days of initial disclosure and specifying with particularity that Confidential Information disclosed other than in written form which is subject to the provisions of this Section 4.1.

4.2 Publications. It is expected that each Party may wish to publish or otherwise publicly disclose the results of the research under this Agreement. CURAGEN may publish the results of its Non-directed Research or Directed Research only after the expiration of the

Page 31

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

Exclusive Evaluation Period and Option Periods applicable to the Clone that is the subject of such publication, and only in accordance with the following provisions. In order to safeguard intellectual property rights, the Party wishing to publish or otherwise publicly disclose the results of its research hereunder shall first submit a draft of the proposed manuscripts or disclosure to the RC for each Party’s review, comment and consideration of appropriate patent action at least [*****] prior to any submission for publication or other public disclosure. Within [*****] of receipt of the prepublication materials, the RC will advise the Party seeking publication as to whether a patent application will be prepared and filed or whether trade secret protection should be pursued and, if so, such Party will delay the submission of such publication or disclosure for an additional [********] days to permit the filing of a patent application. . In no event shall a proposed publication be delayed for more than [********] days. If, during such [********], the RC does not advise the Party seeking publication that a patent application should be filed and the other Party does not prohibit publication of certain information as provided below in this Section 4.2, the Party seeking publication shall be free to publish such results. CURAGEN shall have the right to reasonably prohibit publications based primarily upon CURAGEN Projects. CURAGEN shall also have the right to reasonably prohibit publication of QEA/GeneCalling or MIM/PathCalling data. Each Party shall have the right to reasonably prohibit publication of its own Confidential Information provided to the other Party hereunder.

4.3 Press Release and Regulatory Filings. The Parties shall mutually agree on a press release announcing the execution of this Agreement and on any confidential treatment request to be filed with the Securities and Exchange Commission with respect to this Agreement. Once any such written statement is approved for disclosure by both Parties, either Party may make subsequent public disclosures of the contents of such statement without the further approval of the other Party. Neither Party shall make any disclosure of the terms of this Agreement except as required by applicable law or as set forth above without the prior written consent of the other Party.

Page 32

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

5. INTELLECTUAL PROPERTY RIGHTS

5.1 GENENTECH Proprietary Material. Any mRNA pools extracted by CURAGEN from GENENTECH Proprietary Material in the performance of the Research Program and full-length genes cloned by GENENTECH using any Clone shall be GENENTECH Proprietary Material. All other substances made by CURAGEN in the performance of the Research Program shall be Research Project Proprietary Material and all other substances made by GENENTECH shall be GENENTECH Proprietary Material. Except as provided in an executed License Agreement, GENENTECH Proprietary Material shall remain the property of GENENTECH, and CURAGEN shall use such GENENTECH Proprietary Material only for the purpose of conducting the Research Program hereunder or as otherwise permitted herein, and shall not transfer GENENTECH Proprietary Material to any other person or entity.

5.2 CURAGEN Project Proprietary Material and Research Project Proprietary Material.

(a) CURAGEN Project Proprietary Material shall remain the property of CURAGEN and GENENTECH shall use such CURAGEN Project Proprietary Material only for purposes relating to performance of the Research Program, evaluation of the CURAGEN Data, the exercise of the option provided in Section 7.1, or pursuant to the terms of an executed License Agreement. GENENTECH shall not transfer CURAGEN Project Proprietary Material to any other person or entity except in connection with rights granted to GENENTECH pursuant to an executed License Agreement. CURAGEN shall not transfer to any third party or otherwise use CURAGEN Project Proprietary Material during an Exclusive Evaluation Period or Option Period except as otherwise permitted herein.

(b) Research Project Proprietary Material shall remain the joint property of CURAGEN and GENENTECH. GENENTECH shall use such Research Project Proprietary Material for purposes relating to performance of the Research Program, its research conducted under Section 2.4.3 above, the evaluation of the Project Data, the exercise of the option provided in Section 7.1, or pursuant to the

Page 33

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

terms of an executed License Agreement. GENENTECH shall not transfer Research Project Proprietary Material to any other person or entity except in connection with rights granted to GENENTECH pursuant to an executed License Agreement. GENENTECH shall also have the right to transfer Research Project Proprietary Material, for research purposes, to third party researchers who have executed a written collaboration or material transfer agreement with GENENTECH, provided that such written agreement prohibits such researchers from transferring such materials to any other party. CURAGEN shall not transfer to any third party or otherwise use Research Project Proprietary Material during an Exclusive Evaluation Period or Option Period except as otherwise permitted herein.

5.3 Inventions.

(a) Each Party shall promptly disclose to the other Party all Research Project Inventions and Extended Research Inventions. During the term of any Exclusive Evaluation Period or relevant Option Period, CURAGEN shall not use Research Project Inventions, Project Data, to support patent filings made by CURAGEN outside the Research Program without GENENTECH’s express prior written consent. All Research Project Inventions, and Research Project Patent Rights shall be jointly owned by CURAGEN and GENENTECH; and (ii) all CURAGEN Project Inventions and CURAGEN Project Patent Rights and Extended Research Patent Rights shall be owned by CURAGEN. Inventorship of Patent Rights shall be agreed upon in good faith by the Parties prior to the filing of each new patent application in accordance with applicable law. The Parties will use their best efforts to file the earliest possible priority patent applications on Research Project Inventions in accordance with Article 6 below, including claims to at least (1) compositions of matter, including Clones whose sequence is first determined from the analysis of one or more Project Data Sets, the proteins encoded by such Clones, and recombinant processes for making such proteins and (2) any methods of use, including medical indications, first discovered from the analysis of one or more Project Data Sets.

Page 34

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(b) GENENTECH hereby grants to CURAGEN an exclusive (even as to GENENTECH), sublicensable worldwide license for all purposes, under GENENTECH’s interests in Research Project Patent Rights with respect to [********************* *******************************************], subject to GENENTECH’s right to use such licensed subject matter for research purposes and subject to GENENTECH’s rights under this Agreement to option and to license such Clones and proteins.

(c) CURAGEN hereby grants to GENENTECH an exclusive (even as to CURAGEN), sublicensable worldwide license for all purposes under CURAGEN’s interests in Research Project Patent Rights with respect to [*********************]. In the event that GENENTECH, in its exercise of its rights under the foregoing license, develops or otherwise uses a Clone for a use claimed within Research Project Patent Rights for commercial purposes, (A) such Clone shall be deemed to be a Licensed Clone subject to a License Agreement such that GENENTECH shall be obligated to pay the license fee referenced in Section 7.4.1 of this Agreement on the date that GENENTECH PDC Approval is given with respect to such Clone (or the equivalent approval if there is no PDC) or any earlier date determined at GENENTECH’s discretion, and (B) GENENTECH shall be obligated to pay all milestone payments and royalties in the License Agreement and Success Fee Payments referenced in this Agreement with respect to such Clone.

5.4 CURAGEN Retained Rights. CURAGEN shall retain all rights to all Project Data, CURAGEN Data, Extended Research Data, CURAGEN Project Proprietary Material, Research Project Proprietary Material, CURAGEN Project Inventions, Extended Research Inventions, and Extended Research Patent Rights not expressly granted to GENENTECH hereunder, including, without limitation, all GENETECH option and license rights.

6. PROVISIONS CONCERNING THE FILING, PROSECUTION AND

MAINTENANCE OF PATENT RIGHTS

Page 35

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

6.1 Applicability. The provisions of this Section 6 shall be applicable to all Inventions and Patent Rights unless and until they become subject to a License Agreement, whereupon the License Agreement will govern the rights of the parties with respect to the subject matter thereof.

6.2 Patent Filings

6.2.1. CURAGEN Project Inventions

CURAGEN shall have the responsibility to prepare, file, prosecute, obtain and maintain U.S. and foreign patent applications and patents on CURAGEN Project Inventions at its sole expense.

6.2.2 Research Project Inventions

(a) CURAGEN and GENENTECH, through the RC, will mutually agree on whether to prepare, file, prosecute and maintain U.S. and foreign patent applications and patents on Research Project Inventions. The Patent Coordinators for each Party will be designated by such Party from time to time to act as provided below. The Parties shall use their respective best efforts to cause to be filed by Independent Patent Counsel (IPC), which IPC is not an employee of CURAGEN or GENENTECH, the earliest possible priority applications on claims under Research Project Inventions covering at least (i) compositions of matter (including Clones whose sequence is determined from analysis of one or more Data Sets, proteins encoded by such Clones and recombinant processes for making such proteins) and (ii) methods of use (including for medical indications), and related claim formats to the extent required in foreign applications. In each case where the Parties determine to pursue U.S. and foreign patent applications and patents on Research Project Inventions, the Parties shall use IPC to prepare, file, prosecute, obtain and maintain U.S. and foreign patent applications and patents on Research Project Inventions. Initial patent filings shall be made in the form of a regular U.S. priority patent application or a provisional application pursuant to CFR 1.51, as determined by the Patent Coordinators. Patent applications will be perfected by making, as soon as available, an ATCC deposit

Page 36

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

of at least such Clone(s) as reasonably agreed by the Patent Coordinators, and by making any subsequent application filings necessary to perfect U.S. or foreign priority patent rights in the countries of Europe that are members of the European Patent Organization, Japan, Canada, Australia, Israel, Mexico and at least such other countries as mutually agreed by the Parties. GENENTECH and CURAGEN agree to provide reasonable and timely assistance and cooperation to the IPC to facilitate such filing, prosecution and maintenance, including without limitation, the execution of appropriate powers of attorney. GENENTECH and CURAGEN agree that any such preparation, filing, prosecution and maintenance shall be conducted diligently and in a timely fashion. GENENTECH and CURAGEN shall be kept fully informed by the IPC of the progress of all patent filings and prosecution under this section 6.2.2 and shall be provided with copies of all material documents pertaining thereto including, without limitation, information regarding inventorship, sequences and sequence listings, serial numbers, filing dates, foreign filing licenses and copies of patent applications. GENENTECH and CURAGEN shall be given the opportunity, whenever practical, to review and comment in advance on any patent filings or other correspondence with the patent office. GENENTECH and CURAGEN shall pursue priority to claims on Research Project Inventions by filing all necessary interferences and opposition papers, motions and the like. Any proposed interference settlement agreement relating to Research Project Inventions subject to potential Option by GENENTECH hereunder will be reviewed by the RC. All patent applications which have been filed with the United States Patent and Trademark Office (USPTO), the World Intellectual Property Organization (WIPO) or any foreign national patent office and any patent application which is in the process of being written at GENENTECH or CURAGEN and which relates specifically to any existing Research Project Invention or Extended Research Invention, as of the Amendment Effective Date, shall be forwarded to IPC within thirty (30) days of the Amendment Effective Date, by GENENTECH or CURAGEN, as appropriate,

Page 37

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

to allow IPC to prepare, file, prosecute and maintain U.S. and foreign patent applications and patents as necessary.

(b) IPC shall be selected by mutual agreement of the Patent Coordinators. If the Patent Coordinators are unable to agree on selecting IPC, the matter shall be set before and resolved by the RC pursuant to section 2.2.6.

(c) If, during the Term of this Agreement, a Party does not wish to continue with the preparation, filing, prosecution or maintenance of any patent applications or patents covering Research Project Inventions or Extended Research Inventions, that Party shall notify the other Party of such intention at least sixty (60) days prior to the date upon which such right shall lapse or become abandoned, or upon which the next response to the applicable patent office is due to be filed, and the other Party shall thereupon have the right, but not the obligation, to assume sole responsibility for the prosecution, maintenance and defense of such patents and patent applications, including all prospective expenses related thereto.

(d) The Parties will share equally all expenses associated with the preparation, filing, prosecution and maintenance of the patents and patent applications related to the Research Project Inventions. In the event that the Parties do not agree as to whether such a patent application should be filed, the Party wishing to file such patent application may do so at its sole expense. In such event, the other Party shall be kept fully informed by the filing Party of the progress of such patent filing and prosecution and shall be provided with copies of all material documents pertaining thereto including, without limitation, information regarding inventorship, sequences and sequence listings, serial numbers, filing dates, foreign filing licenses and copies of patent applications. The ownership and license rights for such patent applications and patents issuing thereon shall be the same as for any other Research Project Invention patent applications and patents under this Agreement.

(e) Either Party may prospectively assign to any third party or Affiliate its rights under any Research Project Patent Rights, but only if such assignment is expressly subject to all of the rights of the other Party under this Agreement and

Page 38

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

under any executed License Agreement. Any other such assignment is prohibited without the prior written consent of the other Party.

6.2.3 Amendments.

The Parties shall mutually agree before permitting any patent application or patent within Patent Rights to lapse as well as before authorizing any amendment to any patent application or patent within Patent Rights that would irrevocably limit the lawful scope of the Patent Rights, until the end of the Exclusive Evaluation Period, and for any Invention which becomes subject to an option, until the end of the Option Period.

6.2.4 Fees and Costs.

Unless specifically provided herein, no Party shall have any obligation under this Agreement to pay any fees or costs: (i) for bringing a lawsuit or other action to enforce any of the Patent Rights against an actual or suspected infringement or (ii) for any other Party to obtain for its own benefit independent business or legal advice concerning any of the Patent Rights.

6.2.5 Division of Patents.

Notwithstanding the above, GENENTECH shall, at its sole discretion, control and expense, have the exclusive right to prepare, file, prosecute and maintain, divisional and/or continuation and/or continuation-in-part patent applications claiming solely subject matter and inventions exclusively licensed to GENENTECH by CURAGEN pursuant to section 5.3. Notwithstanding the above, CURAGEN shall, at its sole discretion, control and expense, have the exclusive right to prepare, file, prosecute and maintain, divisional and/or continuation and/or continuation-in-part patent applications claiming solely subject matter and inventions exclusively licensed to CURAGEN by GENETECH pursuant to section 5.3.

6.3 Notice of Infringement. If either Party learns of any infringement or threatened infringement by a third party of the patents within Patent Rights, such Party shall promptly notify the other Party and shall provide such other Party with available evidence of such infringement.

Page 39

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

6.4 Infringement. CURAGEN shall have all rights, at its own expense, to bring suit (or other appropriate legal action) against any actual or suspected infringement of the Patent Rights except as may be provided in a License Agreement executed by the Parties.

6.5 Cooperation. Each Party agrees to provide reasonably cooperation, and shall execute all papers and perform such other acts as may be reasonably required, to file and prosecute any patent applications (including without limitation divisionals, continuations and continuations-in-part) as provided in Section 6.2 and to maintain any infringement suit brought in accordance with Section 6.4 above (including giving legal consent for bringing such suit, and agreeing to be named as a plaintiff or otherwise joined in such suit), and at its option and expense, may be represented in such suit by counsel of its choice.

7. OPTION TO GENENTECH

7.1 Option Grant.

7.1.1 Option. Subject to rights third parties have obtained by virtue of access to other CURAGEN Data Sets or data sets resulting from written agreements between CURAGEN and third parties, or the subscription portion of the GeneScape^® database prior to GENENTECH’s election, CURAGEN hereby grants to GENENTECH the right to elect at any time an exclusive option (the “Option”) to license all Inventions and know-how relating to the one or more Clones that correspond to a full length gene sequence, and such full length sequence itself, which Clone sequence or a portion thereof, or its utility, is determined in whole or in part by GENENTECH or CURAGEN from the use of an Exclusive Data Set or which is identified by GENENTECH pursuant to the rights granted in Section 2.4.3, and which is not a Previously Committed Clone. Such Option shall give GENENTECH the right to obtain, at GENENTECH’s sole discretion and as further described in the License Agreement, either (a) subject to the rights reserved by CURAGEN in Section 7.1.3 hereof, an exclusive, worldwide sublicensable license to the one or more Clones that correspond to such full length gene sequence, and such full length gene sequence itself, specified in GENENTECH’s notice of exercise (collectively, an “Optioned

Page 40

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

Clone”) and to all Research Project Patent Rights, CURAGEN Project Patent Rights, Inventions, Extended Research Inventions, Extended Research Patent Rights and know-how to the extent that they relate to such Optioned Clone or Licensed Products related to such Optioned Clone, to develop, make, have made, use, have used, sell, offer for sale, have sold, import and have imported any and all products, in the Territory, for any and all human uses; (b) a worldwide sublicensable non-exclusive license to the Optioned Clone under all Research Project Patent Rights, CURAGEN Project Patent Rights, Inventions and know-how, to the extent that they relate to such Optioned Clone, to develop, make, have made, use, have used, sell, offer for sale, have sold, import and have imported Licensed Products; or (c) subject to the rights reserved by CURAGEN in Section 7.1.3 hereof, an exclusive license to all Research Project Patent Rights, CURAGEN Project Patent Rights, Inventions, Extended Research Inventions, Extended Research Patent Rights and know-how to the extent that they relate to a “known” Optioned Clone or Licensed Products related to such Optioned Clone, to develop, make, have made, use, have used, sell, offer for sale, have sold, import and have imported any and all products, in the Territory, for any and all human uses. Such Option shall be exercisable at any time during the Option Period specified in Section 7.3. If any Previously Committed Clone is or becomes available for licensing by GENENTECH on an exclusive or non-exclusive basis, CURAGEN shall so notify GENENTECH and GENENTECH shall have the right to obtain an option to license any available rights on the terms set forth in the form of License Agreement attached hereto as Appendix C.

7.1.2 Option Election.

Such Option shall be elected by GENENTECH by giving written notice to CURAGEN within the Exclusive Evaluation Period for such Exclusive Data Set, which shall specify in detail the Optioned Clone to be included within the terms of any such Option and which shall be accompanied by the payment of any Option Fee as specified in Section 7.2. Each Optioned Clone, and the term of the corresponding Option Period, shall be listed on Appendix A hereto from time to time. Notwithstanding the foregoing, GENENTECH may request such an Option from Project Data Sets after expiration of the Exclusive Evaluation Period, which Option shall be granted by CURAGEN upon payment of the Option Fee specified in Section 7.2 unless prohibited by written agreements with third parties.

Page 41

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

7.1.3 Reservation of Rights.

(a) Notwithstanding the foregoing, during any Option Period, CURAGEN shall retain for itself the right (i) to use, but not to transfer to third parties (except pursuant to an agreement with a third party who has identified such Optioned Clone independently of the related Data Set) the Optioned Clone or the protein derived therefrom outside of the Research Program as part of CURAGEN’s libraries for internal Non-directed Research, as defined in Section 2.4.1(b) above.

(b) Notwithstanding anything to the contrary in this Section 7.1.3, the Parties hereby agree that CURAGEN will be permitted to perform Directed Research, as defined in Section 2.4.1(b) above, on specific Optioned Clones utilizing a Project Data Set with GENENTECH’s prior written consent obtained in accordance with the request procedures described in Section 2.4.1(c) above.

(c) All inventions conceived or made in the course of such Non-directed Research and Directed Research which relate to the Clone, the proteins derived therefrom, antibodies that bind to such proteins, homologs, orthologs, derivatives or mutants with substantially the same biological activity as such Clone, or uses of any of the above, shall be deemed Research Project Inventions subject to GENENTECH’s option and license rights for such Clone and its uses under Section 5.3 and Article 7, provided that, with respect to Directed Research inventions only, such inventions are in the same therapeutic or diagnostic field of use as is the Research Project in which such Clone or its use was identified. All other inventions from such research shall be Extended Research Inventions and GENENTECH will have rights to such Extended Research Inventions and Extended Research Patent Rights resulting therefrom as provided in this Article 7 and in Section 2.3 of the License Agreement attached hereto as Appendix C. CURAGEN shall keep GENENTECH reasonably informed of the results of any such Non-directed Research and Directed Research using an Optioned Clone and patent applications and patents relating to such research on a timely basis in order to allow GENENTECH to make informed decisions regarding the exercise of its option and license rights hereunder.

Page 42

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

7.2 Option Fee. An Option Fee of [*****] per Optioned Clone shall be due upon the election of an Option with respect to any Clone from any Exclusive Data Set; provided, however, that [********************************************************], provided however that such remaining Clones have not been already optioned or licensed to a third party under a written agreement between CURAGEN and such party.

7.3 Option Period. Each Option shall remain in effect for a period of [*****] from receipt by CURAGEN of GENENTECH’s written notice of its election of such Option and payment of any required Option Fee (the “Option Period”); provided, however, that any Option Period may be extended for one additional [*****] period upon payment by GENENTECH of an additional [*****] per Optioned Clone.

7.4 Option Exercise.

7.4.1 Exercise of Option. During each Option Period, upon notice to CURAGEN and upon payment of the corresponding license fee, GENENTECH shall have the right to receive a license to the Optioned Clone under the terms and conditions set forth in an executed License Agreement and CURAGEN shall grant such license to GENENTECH. The license fee for a license described in Section 7.1.1, clause (a) shall be [*****] and the license fee for a license described in Section 7.1.1, clause (b) or (c), shall be[*****]. The License Agreement shall be executed in substantially the form attached hereto upon exercise of the first Option and shall be amended from time to time in accordance with the terms hereof and thereof as additional Options are exercised.

7.4.2 Additional Options to License.

(a) On and after the expiration of an Option Period (and regardless of whether such expiration takes place before or after the expiration of the Research Term) with respect to an Optioned Clone, GENENTECH shall have the right, upon written notice to CURAGEN, to obtain an exclusive or non-exclusive license, as the case may be, to any Optioned Clone to the extent it is not a Previously-Committed Clone at the time

Page 43

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

of such notice on the terms set forth in the form of License Agreement attached hereto as Appendix C.

(b) In addition to the option and license rights of GENENTECH hereunder during any Exclusive Evaluation Period or Option Period, GENENTECH shall have the right, upon written notice to CURAGEN at any time, to obtain an exclusive or non-exclusive license, at GENENTECH’s discretion, to any one or more Clones that correspond to a full length gene sequence, and such full length gene sequence itself, specified in GENENTECH’s notice of exercise (to the extent it is not a Previously-Committed Clone at the time of such notice) whose sequence (in whole or in part) or utility is first determined by GENENTECH or CURAGEN from the use of a Project Data Set, or determined by CURAGEN from Non-directed or Directed Research results (including from Extended Research Data), as follows:

(i) After any applicable Exclusive Evaluation Period and Option Periods hereunder for any Clone, but prior to [********************], GENENTECH shall have the right to so license such Clone for all or certain human uses, at GENENTECH’s choice, on the terms set forth in the form of License Agreement attached hereto as Appendix C.

(ii) [********************], GENENTECH shall have the right to so license such Clone, on the terms set forth in the form of License Agreement attached hereto as Appendix C,

for all or certain human uses, at GENENTECH’s choice, except for those uses [***********************************************]. GENENTECH shall have the right to license such Clone for those uses discovered by CURAGEN from its Extended Research Data only as agreed upon by CURAGEN.

7.5 Omitted

7.6 No Other Rights. No rights to Data Sets or Clones under Patent Rights, Inventions, Extended Research Patent Rights or Extended Research Inventions are

Page 44

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

granted to GENENTECH hereunder except as expressly set forth herein or in an executed License Agreement. CURAGEN shall receive no rights to Data Sets or Clones under GENENTECH’s interests in Research Project Patent Rights or Research Project Inventions except as expressly set forth herein or in an executed License Agreement. For the avoidance of doubt, CURAGEN shall have no rights to any patents or patent applications of GENENTECH which relate to inventions (including inventions related to Clones) made outside the Research Program and CURAGEN shall only have exclusive rights in Research Project Inventions and Research Project Patent Rights as expressly provided herein.

7.7 Royalties to GENENTECH.

(a) Solely with respect to [***********************************] (a “CURAGEN Royalty Product”) on a country-by-country basis as follows:

(i) If the CURAGEN Royalty Product is as described in Subsections (a)-(c) of the definition of Licensed Product, the royalty rate on Net Sales of such CURAGEN Royalty Product shall be as follows:

[**] if the manufacture, use, importation or sale in such country of such CURAGEN Royalty Product by a third party would infringe a Valid Claim of a Research Project Patent Right.

(ii) If the CURAGEN Royalty Product is as described in Subsections (d)-(i) of the definition of Licensed Product, the royalty rate on Net Sales of such CURAGEN Royalty Product shall be:

[**] if the manufacture, use, importation or sale in such country of such CURAGEN Royalty Product by a third party would infringe a Valid Claim of a Research Project Patent Right.

Page 45

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(iii) Royalties due to GENENTECH pursuant to subsections (i) and (ii) above for a given CURAGEN Royalty Product may be reduced by [*****] of any royalties paid to third parties by CURAGEN on net sales of such CURAGEN Royalty Product under patent licenses that are required in order to allow CURAGEN to manufacture, use and sell such CURAGEN Royalty Product; provided, however, that such reductions shall in no event reduce the royalty for such CURAGEN Royalty Product payable pursuant to such subsection by more than [*****].

(b) Notwithstanding the foregoing, in the event that such Gene was at any time during the Term of this Agreement an Optioned Clone, or was ever a Licensed Clone, the royalty due to GENENTECH pursuant to Section 7.7(a) shall be [*******************].

(c) Notwithstanding the foregoing, in the event that CURAGEN Royalty Products are sold by sublicensees of CURAGEN, and the royalty received by CURAGEN under such sublicense is less than two times the applicable royalty due to GENENTECH pursuant to Section 7.7(a) and (b) hereof, the amount payable to GENENTECH under this Section 7.7 shall be [**************************] of (i) royalties, (ii) license fees and (iii) product development milestone payments based on the sublicensee’s performance, received by CURAGEN or its Affiliates. For the avoidance of doubt (x) equity payments, (y) research funds and (z) milestone payments based on CURAGEN’s research performance, received by CURAGEN or its Affiliates from a sublicensee shall not be included in such calculation. CURAGEN shall not intentionally structure any sublicense agreement in order to shift payments from categories (i), (ii) or (iii) to categories (x), (y) or (z), so as to reduce amounts payable to GENENTECH hereunder. Copies of all executed sublicenses of CURAGEN’s rights hereunder shall be provided to GENENTECH.

(d) Only one royalty, calculated at the highest applicable royalty rate hereunder, shall be payable to GENENTECH hereunder for each sale of a CURAGEN Royalty

Page 46

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

Product, regardless of the number of patents, patent applications or Valid Claims directed to or covering such CURAGEN Royalty Product.

(e) Royalty payments shall be made to GENENTECH in United States Dollars quarterly within sixty (60) days following the end of each calendar quarter for which royalties are due. Each royalty payment shall be accompanied by a report summarizing the total Net Sales for each CURAGEN Royalty Product during the relevant three-month period and the calculation of royalties, if any, due thereon pursuant to this Section 7.7. All royalties shall be payable in full in the United States in United States Dollars, regardless of the countries in which sales are made. For the purpose of computing Net Sales for CURAGEN Royalty Products sold in a currency other than United States dollars, such currency shall be converted into United States dollars at the exchange rate for buying U.S. dollars set forth in The Wall Street Journal for the last business day of the calendar quarter.

(f) CURAGEN shall pay royalties with respect to each CURAGEN Royalty Product on a country by country basis until (i) the expiration or revocation or complete rejection of the last to expire or to be revoked or to be completely rejected of any Valid Claim of a GENENTECH Patent Right covering such CURAGEN Royalty Product in such country, or (ii) [******] from the first commercial sale of such CURAGEN Royalty Product in such country, whichever is later. Following such period, CURAGEN shall have a fully paid-up, irrevocable license in such country under the relevant GENENTECH Patent Rights to make, have made, use, have used, sell, have sold, offer for sale, import and have imported such CURAGEN Royalty Product in such country.

(g) Royalties not paid within the time period set forth in this Section 7.7 shall bear interest at [*****], accruing monthly, from the due date until paid in full.

(h) CURAGEN shall keep for [*****] from the date of each payment of royalties complete and accurate records of sales by CURAGEN of each CURAGEN Royalty Product in sufficient detail to allow the accruing royalties to be determined accurately. GENENTECH shall have the right for a period of [*****]

Page 47

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

after receiving any report or statement with respect to royalties due and payable to appoint an independent certified public accountant reasonably acceptable to CURAGEN to inspect the relevant records of CURAGEN to verify such report or statement. CURAGEN shall make its records available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon reasonable notice from GENENTECH, solely to verify the accuracy of the reports and payments. Such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales of any CURAGEN Royalty Product in any given payment period. GENENTECH agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent necessary for GENENTECH to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law, regulation or judicial order. The results of each inspection, if any, shall be binding on both Parties. GENENTECH shall pay for such inspections, except that in the event there is any upward adjustment in aggregate royalties payable for any year shown by such inspection of more than [***********] of the amount paid, CURAGEN shall pay for such inspection.

8. TERM AND TERMINATION

8.1 Term. The term of this Agreement shall begin on the Amendment Effective Date and shall continue, unless terminated earlier pursuant to Section 8.2 below, until the date on which GENENTECH no longer has access to Project Data Sets for research purposes hereunder (the “Term”).

8.2 Termination.

(a) This Agreement, the Research Program, and the rights granted herein may be terminated by either Party upon any breach by the other Party of any material

Page 48

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

obligation or condition, effective fifteen (15) days after giving written notice to the other Party of such termination in the case of a payment breach and sixty (60) days after giving written notice to the other Party of such termination in the case of any other breach, which notice shall describe such breach in reasonable detail. The foregoing notwithstanding, if the default or breach is cured or shown to be non-existent within the aforesaid fifteen (15) or sixty (60) day period, the notice shall be deemed automatically withdrawn and of no effect.

(b) If either Party files for protection under bankruptcy laws, makes an assignment for the benefit of creditors, appoints or suffers appointment of a receiver or trustee over its property, files a petition under any bankruptcy or insolvency act or has any such petition filed against it which is not discharged within sixty (60) days of the filing thereof, then the other party may terminate the Research Program and this Agreement effective upon giving written notice to such Party.

(c) In addition to the rights set forth in Sections 8.2(a) and (b) above, GENENTECH may terminate the Research Program effective thirty (30) days after giving written notice to CURAGEN in the event that a final non-appealable injunction is entered against CURAGEN by a court of competent jurisdiction, the effect of which is to enjoin CURAGEN from utilizing its proprietary genomics technologies such that it is substantially unable to perform the Research Program. Any such termination shall not affect GENENTECH’s rights hereunder with respect to any Exclusive Evaluation Period or Option Period then ongoing, or GENENTECH’s other rights to license Clones hereunder, or any License Agreement by the Parties executed prior to such termination. Upon such termination the Amended Note shall become due in accordance with its terms.

(d) GENENTECH may terminate this Agreement for any reason after March 31, 2003.

8.3 Additional Effects of Termination.

(a) Upon termination of this Agreement by a Party pursuant to Section 8.2(a) due to a payment breach by the other Party with respect to payments due on a specific

Page 49

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

product pursuant to Section 2.1.4(c) and (e) or Section 7.7 hereof (but not any other breach), all relevant rights and licenses granted by such terminating Party to the breaching Party under such Section regarding the specific product shall immediately and automatically terminate and revert to the terminating Party, subject to the breaching Party’s right to sell any remaining quantities of product remaining in its inventories as of the date of termination.

(b) Upon termination of this Agreement by a Party pursuant to Section 8.2(a) due to a breach other than a payment breach covered by Section 8.3(a), the Research Program shall end. If CURAGEN is the terminating Party, all Exclusive Evaluation Periods and all Option Periods shall terminate, but all License Agreements previously executed shall continue. If GENENTECH is the terminating Party, all of GENENTECH’s rights under Exclusive Evaluation Periods, Option Periods and License Agreements then ongoing shall continue in accordance with their terms, and the Amended Note shall become due in accordance with its terms.

(c) At the request of the terminating Party, the breaching Party shall execute and deliver such bills of sale, assignments and licenses and other documents as may be necessary to fully vest in the non-breaching Party all right, title and interest to which it is entitled as aforesaid pursuant to this Section 8.3.

(d) The breaching Party shall have no obligation to make any payment to the terminating Party that has not accrued prior to the effective date of such termination except for royalties on remaining inventory, but shall remain liable for all obligations accruing prior to termination.

8.4 Remedies. If either Party shall fail to perform or observe or otherwise breaches any of its material obligations under this Agreement, in addition to any right to terminate this Agreement, the non-defaulting Party may elect to obtain other relief and remedies available under law.

Page 50

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

8.5 Surviving Provisions. Notwithstanding any provision herein to the contrary, the rights and obligations set forth in Sections 2.1.5, 2.1.6, 2.4.3, 3.2, 3.5, Articles 4, 5, and 6, and Sections 8.3, 8.4 and 8.5, and Article 9 hereof (other than Sections 9.1 and 9.2, which shall not survive, except for Sections 9.1(e) and 9.2(c)), as well as any rights and obligations otherwise accrued, shall survive the expiration of the Term or any termination of this Agreement. In addition, the rights and obligations set forth in Sections 2.1.4 (c)-(h) and Section 7.7 shall survive the expiration or termination of this Agreement, unless otherwise terminated as specified in Section 8.3 above, and the rights and obligations with respect to ongoing Exclusive Evaluation Periods and Option Periods shall survive as described elsewhere in this Agreement.

9. MISCELLANEOUS

9.1 CURAGEN Representations and Covenants. CURAGEN represents and warrants that: (a) the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all appropriate CURAGEN corporate action; (b) CURAGEN is under no obligation which is inconsistent with this Agreement; (c) CURAGEN employees are contractually bound to assign all rights in inventions and know-how arising from their employment to CURAGEN; (d) there are no adverse proceedings claims or actions pending, or to the best of CURAGEN’s knowledge, threatened relating to CURAGEN’s genomics technologies, including without limitation, GeneScape, QEA/GeneCalling, MIM/PathCalling and all additional services to be provided by CURAGEN to GENENTECH hereunder, and at the time of disclosure and access thereof to GENENTECH, to the best of CURAGEN’s knowledge, CURAGEN shall have the full right and legal capacity to disclose and provide access to such CURAGEN genomics technologies to GENENTECH and to itself use such technologies to perform its obligations under this Agreement without violating the rights of third parties; (e) CURAGEN has the full right and legal capacity to grant the rights to GENENTECH pursuant to Article 7 without violating the rights of any third party and (f) CURAGEN has not disclosed to any third party Project Data or any annotations with respect to the Initial Research Projects. CURAGEN covenants that it will not enter into any agreement with any third party that is inconsistent with the terms of

Page 51

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

this Agreement. Subject to CURAGEN’s obligation not to enter into any agreement that is inconsistent with the terms of this Agreement, CURAGEN shall use commercially reasonable efforts to obtain, at its sole cost, any rights, licenses, approvals or permissions related to its genomics technology and know-how that are required, now or in the future, to carry out its obligations to conduct the Research Projects hereunder and to provide its services and genomics technologies to GENENTECH hereunder and to grant GENENTECH the intellectual property rights under Article 7 above. Nothing in this Agreement shall be interpreted as obligating either Party to commercialize technology made hereunder or to perform any additional work beyond that set forth in the Research Plan.

9.2 GENENTECH Representations. GENENTECH represents and warrants that: (a) the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all appropriate GENENTECH corporate action; (b) GENENTECH is under no obligation which is inconsistent with this Agreement, and (c) GENENTECH has the full right and legal capacity to grant the rights to CURAGEN pursuant to Article 7 without violating the rights of any third party. Nothing in this Agreement shall be interpreted as obligating either Party to commercialize technology made hereunder or to perform any additional work beyond that set forth in the Research Plan.

9.3 No Warranties.

(a) Nothing in this Agreement is or shall be construed as:

(i) a warranty or representation by CURAGEN or GENENTECH as to the validity or scope of any application or patent within the Patent Rights;

(ii) a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted pursuant to this Agreement is or will be free from infringement of patents, copyrights, and other rights of third parties.

(b) Except as expressly set forth in this Agreement, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR

Page 52

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF NON-INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.

9.4 Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.

9.5 Notices. Any notices, requests, deliveries, approvals or consents required or permitted to be given under this Agreement to GENENTECH or CURAGEN shall be in writing and shall be personally delivered or sent by telecopy (with written confirmation to follow via United States first class mail), overnight courier providing evidence of receipt or certified mail, return receipt requested, postage prepaid, in each case to the respective address specified below (or to such address as may be specified in writing to the other Party hereto):

CURAGEN:	555 Long Wharf, 11th Floor
	New Haven, CT 06511
	Attn: Vice President, Business Development
	Telecopy: (203) 401-3333
GENENTECH:	1 DNA Way
	South San Francisco, CA 94080
	Attn: Corporate Secretary
	Telecopy: (650) 952-9881

Such notices shall be deemed to have been sufficiently given on: (a) the date sent if delivered in person or transmitted by telecopy, (b) the next business day after dispatch in the case of overnight courier or (c) five (5) business days after deposit in the U.S. mail in the case of certified mail.

Page 53

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

9.6 Governing Law. This Agreement will be construed, interpreted and applied in accordance with the laws of the State of New York (excluding its body of law controlling conflicts of law).

9.7 Limitations. Except as set forth elsewhere in this Agreement, neither Party grants to the other Party any right or license to any of its intellectual property.

9.8 Entire Agreement. This is the entire Agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements between the Parties with respect to the subject matter hereof. No modification shall be effective unless in writing with specific reference to this Agreement and signed by the Parties.

9.9 Waiver. The terms or conditions of this Agreement may be waived only by a written instrument executed by the Party waiving compliance. The failure of either Party at any time or times to require performance of any provision hereof shall in no manner affect its rights at a later time to enforce the same. No waiver by either Party of any condition or term shall be deemed as a continuing waiver of such condition or term or of another condition or term.

9.10 Headings. Section and subsection headings are inserted for convenience of reference only and do not form part of this Agreement.

9.11 Assignment. This Agreement may not be assigned by either Party without the consent of the other, except that each Party may, without such consent, assign this Agreement and the rights, obligations and interests of such Party, in whole or in part, to any of its wholly-owned subsidiaries, to any purchaser of all or substantially all of its assets in the line of business to which this Agreement pertains, or of all of its capital stock, or to any successor corporation resulting from any merger or consolidation of such Party with or into such corporation.

Page 54

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

9.12 Force Majeure. Neither Party shall be liable for failure of or delay in performing obligations set forth in this Agreement, and neither shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes beyond the reasonable control of such Party. In event of such force majeure, the Party affected thereby shall use reasonable efforts to cure or overcome the same and resume performance of its obligations hereunder.

9.13 Construction. The Parties hereto acknowledge and agree that: (i) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to all Parties hereto and not in a favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement.

9.14 Severability. If any provision(s) of this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the Term hereof, it is the intention of the Parties that the remainder of this Agreement shall not be affected thereby provided that a Party’s rights under this Agreement are not materially affected. The Parties hereto covenant and agree to renegotiate any such term, covenant or application thereof in good faith in order to provide a reasonably acceptable alternative to the term, covenant or condition of this Agreement or the application thereof that is invalid, illegal or unenforceable, it being the intent of the Parties that the basic purposes of this Agreement are to be effectuated.

9.15 Status. Nothing in this Agreement is intended or shall be deemed to constitute a partner, agency, employer-employee, or joint venture relationship between the Parties.

Page 55

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

9.16 Indemnification.

(a) GENENTECH shall indemnify, defend and hold harmless CURAGEN, its Affiliates and their respective directors, officers, employees, and agents and their respective successors, heirs and assigns (the “CURAGEN Indemnitees”), against any liability, damage, loss or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon the CURAGEN Indemnitees, or any of them, in connection with any claims, suits, actions, demands or judgments (“Claims”) of third parties, for personal injury and product liability matters (except in cases where such Claims result from a willful material breach of this Agreement or the gross negligence or willful misconduct on the part of a CURAGEN Indemnitee or are the subject matter of CURAGEN’s indemnification of GENENTECH as set forth in Section 9.16(b)) arising out of the performance of the Research Program by GENENTECH or arising out of or relating to any actions of GENENTECH or any Affiliate, licensee, sublicensee, distributor agent of GENENTECH in the development, testing, production, manufacture, promotion, import, sale or use by any person of any Know-How Information Product manufactured or sold by GENENTECH or by an Affiliate, licensee, sublicensee, distributor or agent of GENENTECH.

(b) CURAGEN shall indemnify, defend and hold harmless GENENTECH, its Affiliates and their respective directors, officers, employees, and agents and their respective successors, heirs and assigns (the “GENENTECH Indemnitees”), against any liability, damage, loss or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon the GENENTECH Indemnitees, or any of them, in connection with any Claims of third parties, for personal injury matters and product liability matters (except to the extent such Claims result from a material breach of this Agreement or the gross negligence or willful misconduct on the part of GENENTECH or are the subject matter of GENENTECH’s indemnification of CURAGEN as set forth in Section 9.16(a)) arising out of the performance of the Research Program by CURAGEN or arising

Page 56

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

out of or relating to any actions of CURAGEN or any Affiliate, licensee, sublicensee, distributor agent of CURAGEN in the development, testing, production, manufacture, promotion, import, sale or use by any person of any product manufactured or sold by CURAGEN or by an Affiliate, licensee, sublicensee, distributor or agent of CURAGEN.

(c) GENENTECH’s obligation to indemnify, defend and hold the CURAGEN Indemnitees harmless pursuant to Section 9.16(a), and CURAGEN’s obligation to indemnify, defend and hold the GENENTECH Indemnitees harmless pursuant to Section 9.16(b), are conditioned on the indemnified Party: (i) providing written notice to the indemnifying Party of any Claim arising out of the indemnified activities promptly after the indemnified Party has knowledge of such Claim, (ii) permitting the indemnifying Party to assume, at its discretion, sole and full control of the investigation, preparation, defense, trial and settlement in connection with such Claim, (iii) assisting and cooperating with the indemnifying Party, at the indemnifying Party’s reasonable expense, in the investigation of, preparation for and defense of any such Claim, and (iv) not compromising, negotiating or settling such Claim without the indemnifying Party’s prior written consent.

9.17 Counterparts.

This Agreement may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

Page 57

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

9.18 Termination of Original Research Agreement.

The Parties hereby agree that, as of the Amendment Effective Date, the Original Research Agreement shall be terminated and be of no further force or effect.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representative in two (2) originals.

GENENTECH, INC.		CURAGEN CORPORATION
By:	Arthur D. Levinson	By:	Christpoher K. McLeod
Title:	President and CEO	Title:	Executive Vice President

Page 58

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

APPENDIX A

Optioned Clones

Page 1

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

APPENDIX B

Amended Note

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

FIRST ALLONGE TO PROMISSORY NOTE

This FIRST ALLONGE dated as of March 31, 2000 between CURAGEN CORPORATION (the “Borrower”), having an address of 555 Long Wharf Drive, 11^th Floor, New Haven, Connecticut 06511, and GENENTECH, INC. (the “Lender”), having an address at 1 DNA Way, South San Francisco, CA 94080, to the Promissory Note dated as of November 20, 1997 (as the same may be further amended, modified or supplemented from time to time, the “Note”), payable to the order of the Lender and made by the Borrower.

RECITALS

WHEREAS, the Borrower and the Lender have agreed to amend the Note as set forth below.

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are acknowledged, the Borrower and the Lender hereby agree, with effect from the date first set forth above, as follows:

1. The Note is hereby amended as follows:

1.1 The references on the first page of the Note to “$26,000,000” and “TWENTY-SIX MILLION DOLLARS ($26,000,000)” are hereby deleted and replaced with “$21,000,000” and “TWENTY ONE MILLION DOLLARS ($21,000,000)” respectively.

1.2 The reference on the first page of the Note to the “Research and Option Agreement dated November 20, 1997” is hereby deleted and replaced with “Amended and Restated Research and Option Agreement dated March 31, 2000”.

1.3 Section 1(a) of the Note is hereby deleted in its entirety and replaced with the following:

“The Borrower shall pay the accrued interest and principal balance of this Note, which represents the Loan, in full within fifteen (15) days of March 31, 2003 (the “Maturity Date”).”

1.4 The third sentence of Section 1(c) of the Note is hereby amended by deleting the following from the end thereof:

“; provided, that, in the event that the Additional Issuance Date occurs after the last day of the third Loan Year and prior to the Maturity Date, then the Lender may, at its option, extend the Maturity Date to a date two (2) years from the Additional Issuance Date.”

1.5 The fifth sentence of Section 1(c) of the Note is hereby deleted in its entirety.

1.6 All references in the Note to “Preferred Stock” and to “Series F Preferred Stock” are hereby deleted in their entirety.

1.7 Section 6 of the Note is hereby deleted in its entirety.

1.8 Section 7 of the Note is hereby amended by deleting the third sentence thereof in its entirety and replacing it with the following:

“The price of such repurchase shall be equal to the Fair Market Value of CuraGen Common Stock, with respect to a repurchase of Non-Voting Common Stock.”

1.9 The following is hereby added at the end of the first sentence of Section 14:

“As used herein, a “Loan Year” commences on the Amendment Effective Date or an anniversary thereof and terminates twelve months later.”

1.10 The Schedule to Promissory Note is hereby amended by changing the reference therein from “$26,000,000” to “$21,000,000”.

2. The Note is, and shall continue to be, in full force and effect as modified hereby, and is hereby in all respects ratified and confirmed. The Lender is hereby authorized to attach this Allonge to the Note.

WITNESS the execution hereof under seal as of the day and year first above written.

CURAGEN CORPORATION
By:	Christopher K. McLeod
Title:	Executive Vice President

GENENTECH, INC.
By:	Arthur D. Levinson
Title:	President and CEO

APPENDIX C

Form of License Agreement

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

LICENSE AGREEMENT

This License Agreement (“Agreement”) is made effective as of              (“Effective Date”) by and between GENENTECH, INC., a Delaware corporation having its principal business office at 1 DNA Way, South San Francisco, CA 94080 (“GENENTECH”), and CURAGEN CORPORATION, a Delaware corporation with its principal place of business at 555 Long Wharf Drive, 11th Floor, New Haven, Connecticut 06511 (“CURAGEN”). GENENTECH and CURAGEN are each hereafter referred to individually as a “Party” and together as the “Parties”.

WHEREAS, GENENTECH wishes to obtain a license to certain inventions made or owned by CURAGEN as provided in that certain Amended and Restated Research and Option Agreement between the Parties hereto dated as of March 31, 2000 which is attached hereto (the “Research Agreement”);

WHEREAS, CURAGEN has agreed to provide such license under the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereby agrees as follows:

1. DEFINITIONS

Whenever used in the Agreement with an initial capital letter, the terms defined in this Section 1 shall have the meanings specified.

1.1 “Affiliate” shall mean any corporation, firm, limited liability company, partnership or other entity which directly or indirectly controls or is controlled by or is under common control with a Party to this Agreement. “Control” means ownership, directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interests in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby a Party controls or has the right

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

to control the Board of Directors or equivalent governing body of a corporation or other entity.

1.2 “Clone” shall mean a segment of DNA representing a whole or partial gene whose sequence or utility is determined from the analysis of one or more Data Sets or from the Extended Research during the Term of the Research Agreement.

1.3 “CURAGEN Background Inventions” shall mean all patent rights and know-how of CURAGEN, other than those relating primarily to Inventions, which CURAGEN has the right to license and which would be infringed by, or is reasonably necessary for, the development, manufacture, use, sale or importation of any product developed by GENENTECH pursuant to the licenses granted hereunder; provided, however, that CURAGEN Background Inventions shall expressly exclude: (i) any patent rights and know-how relating to Clones not licensed by GENENTECH pursuant to this Agreement and (ii) any patent rights or know-how arising from any CURAGEN collaboration with a third party, except to the extent permitted thereby.

1.4 “CURAGEN Data” shall mean, with respect to a Licensed Clone, all information pertaining to such Licensed Clone obtained from the processing of specified CURAGEN samples, including QC data, QEA/GeneCalling data, MIM/PathCalling data, sequence data and any other information obtained or generated by CURAGEN in the performance of the CURAGEN Project relating to such Licensed Clone.

1.5 “CURAGEN Data Set” shall mean all CURAGEN Data resulting from a discrete CURAGEN Project that CURAGEN can make exclusively available to GENENTECH.

1.6 “CURAGEN Project” shall mean a particular project undertaken by CURAGEN on its own (outside the Research Program, and outside Non-directed Research and Directed Research undertaken by CURAGEN pursuant to Sections 2.41, 2.5.2 and 7.1.3 of the Research Agreement) to process and analyze a specified set of samples which do not contain GENENTECH Proprietary Material, and which project does not use any Project Data Set or Non-Directed Research data, Directed Research data, or Clones, nucleic acid

2

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

sequences or protein amino acid sequences derived therefrom, and as to which CURAGEN is free to grant rights to GENENTECH hereunder.

1.7 “CURAGEN Project Invention” shall mean any discovery, invention, know-how or trade secret conceived or made by employees of CURAGEN (i) in the performance of a CURAGEN Project that results in CURAGEN Data that becomes part of an Exclusive Data Set, that is based on, incorporates or makes material use of the corresponding CURAGEN Data or (ii) relating to a Lead generated outside of the Extended Research.

1.8 “CURAGEN Project Patent Rights” shall mean Patent Rights containing a claim or claims covering CURAGEN Project Inventions. CURAGEN Project Patent Rights shall also include Patent Rights containing a claim or claims covering CURAGEN Project Inventions exclusively licensed in by CURAGEN, with the right to sublicense, now or in the future.

1.9 “CURAGEN Project Proprietary Material” shall mean, with respect to a Licensed Clone, all substances made by CURAGEN in the performance of the CURAGEN Project relating to such Licensed Clone, including mRNA pools. CURAGEN Project Proprietary Material shall include, without limitation, QEA fragments, MIM constructs and materials derived or constructed from QEA fragments and MJIM constructs, including, without limitation, fragment and full length cDNA clones made by CURAGEN.

1.10 “Data Set,” which may be either a Project Data Set or a CURAGEN Data Set, with respect to a Licensed Clone, shall mean all Project Data resulting from the discrete Research Project relating to the Licensed Clone or all CURAGEN Data resulting from the discrete CURAGEN Project relating to the Licensed Clone, respectively.

1.11 “Exclusive Data Set” shall mean any Project Data Set during the corresponding Exclusive Evaluation Period as provided in Section 2.4 of the Research Agreement or any CURAGEN Data Set during the corresponding Exclusive Evaluation Period as provided in Section 2.5.2 of the Research Agreement.

1.12 “Exclusive Evaluation Period” shall have the meaning set forth in Section 2.4 or 2.5.2 of the Research Agreement.

3

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.13 “Extended License Patent Rights” shall have the meaning set forth in Section 2.3.

1.14 “Extended Research” shall mean, as to each Licensed Clone, the research undertaken by CURAGEN before or after the Effective Date hereof pursuant to Sections 2.4.1, 2.5.2 and/or 7.1.3 of the Research Agreement relating to or using such Licensed Clone.

1.15 “Extended Research Data” shall mean all information and results obtained by CURAGEN from its performance of Extended Research.

1.16 “Extended Research Inventions” shall mean any discovery, invention, know-how or trade secret conceived or made by employees of CURAGEN in the performance of Extended Research, other than such discoveries, inventions, know-how or trade secrets that are deemed to be defined as Research Project Inventions pursuant to the terms of the Research Agreement or this Agreement.

1.17 “Extended Research Patent Rights” shall mean all rights and interests in and to issued patents and pending patent applications in any country, including, but not limited to, all provisional applications, substitutions, continuations, continuations-in-part (solely to the extent that the claims of such continuations-in-part cover Extended Research Inventions), divisions, and renewals thereof, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof, whether owned now or hereafter solely or jointly by CURAGEN, and wherein at least one claim of such patent right covers an Extended Research Invention, and including, without limitation, those Extended Research Patent Rights listed on Schedule I attached hereto.

1.18 “GeneScape”^® shall mean the web-based software and database product for accessing and storing Data Sets generated through the application of CURAGEN’s QEA/GeneCalling and MIM/PathCalling.

1.19 “Invention,” as to each Licensed Clone, shall mean CURAGEN Project Inventions and Research Project Inventions relating to the Licensed Clone.

4

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.20 “Know- How” shall mean: (a) as to each Licensed Clone, all unpatented Project Data, Research Project Inventions, CURAGEN Data and CURAGEN Project Inventions relating to such Licensed Clone; (b) as to each Lead, all unpatented information, inventions, discoveries and trade secrets relating to the Lead; and (c) as to Extended Research using a Licensed Clone, all unpatented Extended Research Data and all Extended Research Inventions relating thereto.

1.21 “Lead” shall mean, as to each Licensed Clone, a small molecule which was discovered or developed to bind to a protein or inhibit protein function, and which was developed directly and materially from the use of a Licensed Clone or the protein encoded thereby by CURAGEN outside of the Research Program prior to the point in time at which the Clone became a Licensed Clone, including, without limitation, in the course of the Extended Research.

1.22 “Licensed Clone” shall have the meaning set forth in Section 2.1.

1.23 “Licensed Product,” as to each Licensed Clone, shall mean:

(a) [*************************************************************************************************** **************************************************************************************************** ******];

(b) [*************************************************************************************************** **************************************************************************************************** **************************************************************************************************** **************************************];

(c) [**************************************************************************************************];

5

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(d) [*************************************************************************************************** **************************************************************************];

(e) [*************************************************************************************************** **************************************************************************************************** ***********];

(f) [*************************************************************************************************** **************************************************************************************************** ***********];

(g) [*************************************************************************************************** **************************************************************************************************** ***********];

(h) [*************************************************************************************************** ******************************************];

(i) [*************************************************************************************************** **********************************************************];

1.24 “MIM/PathCalling” shall mean the technology employed by CURAGEN for identifying protein-protein interactions from libraries of cDNAs.

1.25 “Net Sales” shall mean [*********************************************************************************************************** ***********************************************

6

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

************************************************************************************************************ **********];

(a) [**************************************************************************************************];

(b) [*************************************************************************************************** ********************************************];

(c) [*************************************************************************************************** ****];

(d) [*************************************************************************************************** **************************************************************************************************** ***********];

[******************************************************************************************************* ************************.]

[******************************************************************************************************* ************************************************************************************************************ ************************************************************************************************************ ************************************************************************************************************ ************************************************************************************************************ **************************************************.]

1.26 “Optioned Clone” shall have the meaning set forth in Section 7.1 of the Research Agreement.

7

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.27 “Patent Coordinators” shall mean a patent attorney or patent agent representing CURAGEN and a patent attorney or patent agent representing GENENTECH.

1.28 “Patent Rights” shall mean, as to each Licensed Clone, all rights and interests in and to issued patents and pending patent applications in any country, including, but not limited to, all provisional applications, substitutions, continuations, continuations-in-part (solely to the extent that the claims of such continuations-in-part cover Research Project Inventions or CURAGEN Project Inventions), divisions, and renewals thereof, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof, whether owned now or hereafter, solely or jointly by a Party, and wherein at least one claim of such patent right covers an Invention, and including, without limitation, those Patent Rights listed on Schedule I attached hereto.

1.29 “Prime Rate” shall mean the prime rate of interest as reported by Citibank, N.A. In the event that Citibank, N.A. ceases to report such a rate, the term “Prime Rate” shall mean the generally prevailing base corporate lending rate of Fleet National Bank.

1.30 “Project Data” shall mean all information obtained from the processing of GENENTECH Proprietary Material in a particular Research Project, including QC data, expression data, sequence data and any other information obtained or generated by CURAGEN in the performance of the Research Project relating to such Licensed Clone.

1.31 “Project Data Set” shall mean all Project Data resulting from a discrete Research Project.

1.32 “QEA/GeneCalling” shall mean the technology employed by CURAGEN for tagging and identifying the expression level of specific gene fragments within a cDNA pool.

1.33 “Research Program” shall mean the Research Projects to be performed by CURAGEN and GENENTECH under the Research Agreement.

1.34 “Research Project” shall mean a particular project to process and analyze a specified set of samples, as defined in the Research Agreement.

8

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

1.35 “Research Project Invention” shall mean any discovery, invention, know-how or trade secret conceived or made: (a) by employees of CURAGEN or GENENTECH or jointly by employees of both in the performance of the Research Program, (b) by GENENTECH employees in performing the following specific activities utilizing any Data Set: (i) QEA or MIM data analysis, confirmation of QEA or MIM data, fragment cloning and sequencing of a Clone, and (ii) full-length cloning of a Clone, or (c) any discovery, invention, know-how or trade secret deemed to be a Research Project Invention pursuant to the terms of the Research Agreement or this Agreement. All inventions claimed in a patent application filed on a Research Project Invention shall also be a Research Project Invention. Research Project Inventions shall not include inventions conceived or made solely by GENENTECH outside of the Research Program, whether before or during an Exclusive Evaluation Period or Option Period, or at any other time, except as specifically set forth in (b) above.

1.36 “Research Project Patent Rights” shall mean Patent Rights containing a claim or claims covering Research Project Inventions.

1.37 “Research Project Proprietary Material” shall mean, with respect to a Licensed Clone, all substances made by CURAGEN in the performance of the Research Project relating to such Licensed Clone other than mRNA pools extracted from GENENTECH Proprietary Material. Research Project Proprietary Material shall include, without limitation, QEA fragments, MIM constructs and materials derived or constructed from QEA fragments and MIM constructs, including, without limitation, fragment and full length cDNA clones made by CURAGEN.

1.38 “Sublicensee” shall mean any non-Affiliate third party sublicensed by GENENTECH under the license granted to GENENTECH hereunder, to make, have made, use, have used, offer to sell, sell, have sold, import or have imported any Licensed Product.

1.39 “Term” shall have the meaning set forth in Section 3.10.

1.40 “Territory” shall mean the world.

1.41 “Valid Claim(s)” shall mean an unexpired claim of any issued patent within Patent Rights or Extended License Patent Rights which has not been finally declared invalid

9

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

or unenforceable by a patent office or by a court or other body of competent jurisdiction in any unappealed or unappealable decision and which has not been lost through an interference or opposition proceeding.

2. LICENSE GRANT

2.1 License Grant. Upon exercise of an Option pursuant to Section 7.4 of the Research Agreement for any Optioned Clone, or exercise of any other right to license a Clone(s) under Section 7.4.2(b) of the Research Agreement, GENENTECH shall elect one of the types of licenses set forth below, for either (a) any and all human uses or (b) any and all human uses except those covered by Extended License Patent Rights (these subsections (a) or (b) shall each be “GENENTECH Uses”). The Parties shall indicate such election and complete the information for such Optioned Clone or Clone(s) on Schedule I attached hereto and incorporated herein, and sign such Schedule I. Such Optioned Clone or Clone(s) shall thereafter be deemed a Licensed Clone. With respect to the license types set forth in (a) and (b) below, GENENTECH shall also indicate on Schedule I its election, if any, to obtain an exclusive license hereunder to CURAGEN’s rights and interests in any Lead relating to such Licensed Clone.

(a) For each Licensed Clone and corresponding Lead(s) listed on Schedule I for which this Section 2.1(a) exclusive license is elected, subject to the rights reserved to CURAGEN in Section 2.5 below, CURAGEN hereby grants to GENENTECH an exclusive license (even as to CURAGEN) in the Territory, to develop, make, have made, use, have used, sell, have sold, offer for sale, import and have imported any and all products for GENENTECH Uses, under: (x) all Patent Rights, Inventions, Know-How, CURAGEN Project Proprietary Material and Research Project Proprietary Material that pertain to such Licensed Clone, related Licensed Products and the uses thereof, including but not limited to Patent Rights claiming whole or partial sequences or utility; and (y) all Patent Rights and Know-How of CURAGEN which CURAGEN has the right to license to GENENTECH relating to Leads discovered or developed using such Licensed Clone or the protein encoded thereby as a target, and which GENENTECH has elected to license. Such license shall be

10

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

for the Term specified in Section 3.10, unless terminated as set forth in this Agreement.

(b) For each Licensed Clone and corresponding Lead(s) listed on Schedule I for which this Section 2.1(b) exclusive license is elected and which were “known” by third parties prior to GENENTECH’s notice of its election of such license hereunder, as determined pursuant to subsection (d) below, subject to the rights reserved to CURAGEN in Section 2.5 below, CURAGEN hereby grants to GENENTECH an exclusive license (even as to CURAGEN) in the Territory, to develop, make, have made, use, have used, sell, have sold, offer for sale, import and have imported any and all products for GENENTECH Uses, under: (x) all Patent Rights, Inventions, Know-How, CURAGEN Project Proprietary Material and Research Project Proprietary Material that pertain to such Licensed Clone, related Licensed Products and the uses thereof, including but not limited to Patent Rights claiming whole or partial sequences or utility; and (y) all Patent Rights and Know-How of CURAGEN which CURAGEN has the right to license to GENENTECH relating to Leads discovered or developed using the Licensed Clone or the protein encoded thereby as a target, and which GENENTECH has elected to license. Such license shall be for the Term specified in Section 3.10, unless terminated as set forth in this Agreement.

(c) For each Licensed Clone listed on Schedule I for which this Section 2.1(c) non-exclusive license is elected and for Licensed Products related to such Licensed Clone that are discovered or developed by GENENTECH, CURAGEN hereby grants to GENENTECH a non-exclusive license in the Territory to use such Licensed Clone or the protein encoded thereby as a reagent for discovering or developing Licensed Products and to develop, make, have made, use, have used, sell, have sold, offer for sale, import and have imported Licensed Products for any and all human uses, under all Patent Rights, Inventions, Know-How, Research Project Proprietary Materials and CURAGEN Project Proprietary Materials pertaining to such Licensed Clone,

11

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

related Licensed Products and the uses thereof, including but not limited to Patent Rights claiming whole or partial sequences or utility. Such license shall be for the Term specified in Section 3.10, unless terminated as set forth in this Agreement.

(d) The Parties shall mutually agree in good faith on whether any Licensed Clone is “known” by third parties prior to GENENTECH’ s notice of its election of a license hereunder, based primarily on the availability of whole or substantially whole coding domains substantially the same as such Licensed Clone in publicly available literature, patent applications or databases or on knowledge of such information by GENENTECH as evidenced by written or computer records. Licensed Clones which are “known” only as a result of either a previous Research Project or a CURAGEN Project from which GENENTECH received access to an Exclusive Data Set from which the Licensed Clone was optioned, and are not “known” to third parties or to GENENTECH other than through any public disclosure of research results related to such Research Project or CURAGEN Project, shall not be deemed “known” for the purposes hereof.

2.2 Non-exclusive License. CURAGEN hereby grants to GENENTECH a nonexclusive license, coterminous with each license grant in Section 2.1, under CURAGEN Background Inventions solely to the extent necessary to allow GENENTECH to practice the license granted in Section 2.1 and for no other purpose.

2.3 Extended License. Any license granted to GENENTECH under (i) Section 2.1(a) or (b), or (ii) Section 2.1(c) where there exists no Valid Claim of Research Project Patent Rights, CURAGEN Project Patent Rights or Extended Research Patent Rights that is directed to the full length sequence of the Licensed Clone, shall also include, with respect to each Licensed Clone and corresponding Lead(s) listed on Schedule I, an exclusive license (or non-exclusive license if under Section 2.1 (c)) under the know-how, patents and patent applications set forth below to the extent CURAGEN has the right to grant such license (an “Extended License”); provided, however, that GENENTECH may elect, at its sole discretion, not to accept a license under any Extended License Patent Rights (as defined below), such

12

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

election to be made within sixty (60) days of the license grant to the corresponding Licensed Clone, or within sixty (60) days of CURAGEN’s notice to GENENTECH of the filing of any patent application within Extended License Patent Rights for patent applications filed after execution of this Agreement with respect to the relevant Licensed Clone:

(a) Any patents or patent applications (including all provisional applications, substitutions, continuations, continuations-in-part, divisions and renewals thereof, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof) owned by CURAGEN that result from any activities other than the Research Program (x) that are not Extended Research Patent Rights or Patents Rights and do not arise from CURAGEN’ s exercise of its rights under Section 2.5 hereof but claim any Licensed Product relating to such Licensed Clone, provided that CURAGEN is not utilizing the invention or inventions claimed in such patent or application in a preclinical or clinical development project being actively planned or conducted by CURAGEN (alone or in collaboration with any third party) on the date such Licensed Clone was optioned by GENENTECH pursuant to the Research Agreement as evidenced by written or computer records; or (y) that are Extended Research Patent Rights arising from the use of such Licensed Clone ((x) and (y) collectively, the “Extended License Patent Rights”); and

(b) Know-How as described in Section 1.20(c).

2.4 Due Diligence. GENENTECH agrees to use commercially reasonable efforts in pursuing research and development of at least one Licensed Product based upon each Licensed Clone in a manner similar to other products in research and development at GENENTECH at a similar development stage and of similar commercial value. If GENENTECH ceases to use such commercially reasonable efforts for a commercially unreasonable period of time with respect to at least one Licensed Product for any Licensed Clone, CURAGEN shall have the right to terminate the license granted to GENENTECH hereunder with respect to such Licensed Clone only, provided that: (a) CURAGEN refunds to GENENTECH on the effective date of such termination all licensing and milestone payments which have previously been paid to CURAGEN hereunder for such Licensed Clone and (b)

13

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

that CURAGEN (i) pays to GENENTECH royalties on Net Sales of Licensed Products based upon such Licensed Clone that are sold by CURAGEN, its Affiliates and its sublicensees under the same royalty rates and terms as are set forth in Section 7.7 of the Research Agreement and (ii) obtains from GENENTECH any other license rights required for such uses of such Licensed Clone under terms to be agreed upon by the Parties. Such termination by CURAGEN shall be effective sixty (60) days after giving GENENTECH written notice of such termination, describing the lack of diligence and shall have the consequences set forth in Section 6.2. The foregoing notwithstanding, if such breach of diligence is shown to be non-existent within the aforesaid sixty (60) day period, CURAGEN’S notice shall be deemed automatically withdrawn and of no effect.

2.5 Reservation of Rights. Notwithstanding anything in this Agreement to the contrary, CURAGEN hereby retains for itself the right to use each Licensed Clone and the protein encoded thereby for CURAGEN’s clone or protein libraries for its internal, general, non-directed, research purposes. For example, but without limitation, inclusion of the Licensed Clone together with other clones in research to determine multiple protein-protein interactions, or inclusion of the Licensed Clone together with other clones in a screen against one or more molecules to determine inhibition would be “non-directed” research, whereas activities associated with choosing a specific Licensed Clone and conducting research investigating such Licensed Clone or the variants, homologs, orthologs, derivatives or mutants thereof, including without limitation drug screening with such Licensed Clone, or conducting research to elucidate the biological activity of such Licensed Clone (e.g., generating antibodies to the Licensed Clone, testing the Licensed Clone or protein encoded thereby in preclinical models, enriching libraries with such Licensed Clone to purposefully look for proteins which bind to such Licensed Clone) would be considered “directed” research and CURAGEN would not be permitted to perform such activities under this Section 2.5. CURAGEN shall promptly report to GENENTECH a summary of all such non-directed research results. Any inventions conceived or made during such non-directed research which relate to the sequence or utility of the Licensed Clone, the proteins derived therefrom, homologs and mutants with substantially the same biological activity as such Licensed Clone or protein, or antibodies or small molecules which interact with such Licensed Clone or protein or homolog or mutant thereof, shall be deemed Research Project Inventions and shall

14

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

be subject to the licenses granted pursuant to Section 2.l hereof, without payment of any additional license or option fee by GENENTECH. With respect to all other inventions resulting from such research, in the event that such Licensed Clone is subject to an exclusive license hereunder, CURAGEN shall, prior to disclosure to any other party, offer all such inventions and related research results to GENENTECH as a CURAGEN Project pursuant to the provisions of Section 2.5 of the Research Agreement for an initial Exclusive Evaluation Period of ninety (90) days, which shall be granted to GENENTECH upon its request at no additional fee. Extensions of such Exclusive Evaluation Period, Options, extensions of Options and the exercise of Options shall be governed by Section 2.5 and Article 7 of the Research Agreement. Notwithstanding any other provisions of this Agreement or the Research Agreement, any such inventions which are ultimately licensed by GENENTECH after exercise of the above-granted rights pursuant to Section 2.5 and Article 7 of the Research Agreement relating to research performed under Section 2.5 of this Agreement shall be deemed Research Project Inventions for all purposes under this License Agreement, including, without limitation, the determination of royalties.

2.6 Sublicenses. GENENTECH shall have the right to grant sublicenses to all or any portion of its rights under any license granted herein to any Affiliate or Sublicensee, provided, however, that GENENTECH shall remain obligated to ensure payment of royalty and milestone obligations as set forth in Article 3.

3. CONSIDERATION

3.1 License Fees. Upon election of a license pursuant to Section 7.4 of the Research Agreement for any Clone(s) or Optioned Clone and execution of Schedule I by the Parties with respect to such Clone(s) or Optioned Clone and corresponding Lead(s), GENENTECH shall pay to CURAGEN a license fee as set forth below:

License Type	$ (thousands)
[********************************************]
[********************************************]
[********************************************]

15

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

3.2 Milestone Payments for Therapeutic or Prophylactic Products.

3.2.1 Milestone Payments under Exclusive License. GENENTECH shall make the following milestone payments to CURAGEN for each therapeutic or prophylactic Licensed Product covered by an exclusive license under Section 2.1(a):

(a) [*********************************] thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee files the first Investigational New Drug application (or foreign equivalent) with the FDA (or equivalent foreign regulatory agency) for the Licensed Product (“IND”);

(b) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee commences the first Phase III or Phase II/III clinical trial in any country for the Licensed Product;

(c) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee submits the first Biologics License Application, Product License Application, New Drug Application or other application for approval to sell the Licensed Product to the FDA (or equivalent foreign regulatory agency) for the Licensed Product;

(d) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee receives FDA approval of the Licensed Product for commercial sale in the United States;

(e) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee first receives all required regulatory approval to commence sales of the Licensed Product in Germany, France, Italy, Spain, the United Kingdom or Japan; and

(f) [***********************] within forty-five (45) days following the end of the first calendar year in which Net Sales of such Licensed Product exceed [***************].

16

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

3.2.2 Milestone Payments under Exclusive License. GENENTECH shall make the following milestone payments to CURAGEN for each therapeutic or prophylactic Licensed Product covered by an exclusive license under Section 2.1(b) but only in the event that a therapeutic or prophylactic use for such Licensed Product is a Research Project Invention, a CURAGEN Research Project Invention or an Extended Research Invention licensed hereunder:

(a) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee files the first Investigational New Drug application (or foreign equivalent) with the FDA (or equivalent foreign regulatory agency) for the Licensed Product for a use covered by the exclusive licenses granted herein (“IND”);

(b) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee commences the first Phase III or Phase II/III clinical trial in any country for the Licensed Product for a use covered by the exclusive licenses granted herein;

(c) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee submits the first Biologics License Application, Product License Application, New Drug Application or other application for approval to sell the Licensed Product to the FDA (or equivalent foreign regulatory agency) for the Licensed Product for a use covered by the exclusive licenses granted herein;

(d) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee receives FDA approval of the Licensed Product for commercial sale for a use covered by the exclusive licenses granted herein;

(e) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee first receives approval to commence sales of the Licensed Product for a use covered by the exclusive

17

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

licenses granted herein in Germany, France, Italy, Spain, the United Kingdom or Japan; and

(f) [***********************] within forty-five (45) days following the end of the first calendar year in which Net Sales of such Licensed Product for a use covered by the exclusive licenses granted herein exceed[***************].

3.2.3 Milestone Payments under Non-exclusive License. GENENTECH shall make the following milestone payments to CURAGEN for each therapeutic or prophylactic Licensed Product covered by a non-exclusive license under Section 2.1(c):

(a) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee files the first Investigational New Drug application (or foreign equivalent) with the FDA (or equivalent foreign regulatory agency) for the Licensed Product (“IND”);

(b) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee commences the first Phase III or Phase II/III clinical trial in any country for the Licensed Product;

(c) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee submits the first Biologics License Application, Product License Application, NDA or other application for approval to sell the Licensed Product to the FDA (or equivalent foreign regulatory agency) for the Licensed Product;

(d) [***********************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee receives FDA (or equivalent foreign regulatory agency) approval of the Licensed Product for commercial sale; and

(e) [***********************] within thirty (30) days following the end of the first calendar year in which Net Sales of such Licensed Product exceed [**************].

18

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(f) All of the above milestones will be increased by [******] if GENENTECH has elected a non-exclusive Extended License.

3.3 Milestone Payments for Diagnostic Products. GENENTECH shall make the following milestone payment to CURAGEN for each Licensed Product described in Subsection (h) of the definition of Licensed Products covered by an exclusive license under Section 2.1(a) or 2.1(b):

[*************] within thirty (30) days following the date GENENTECH or an Affiliate or Sublicensee receives FDA (or equivalent foreign regulatory agency) approval of the Licensed Product for commercial sale.

3.4 Royalties on Licensed Products Licensed Exclusively to GENENTECH and Covered Solely by Research Project Patent Rights. GENENTECH shall pay to CURAGEN a royalty on Net Sales of Licensed Products in those countries where the manufacture, use, importation or sale of such Licensed Product by a third party (i) would infringe a Valid Claim of a Research Project Patent Right and (ii) would not infringe a Valid Claim of an Extended License Patent Right or a CURAGEN Project Patent Right, as follows:

(a) [*************************************************************************************************** **************************************************.]

(b) [*************************************************************************************************** *************************************************.]

(c) [*************************************************************************************************** *************************************.]

(d) Royalties due to CURAGEN pursuant to subsections (a), (b) and (c) above for a given Licensed Product may be reduced by [***************] of any royalties paid to third parties by GENENTECH, its Affiliates or Sublicensees

19

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

on net sales of such Licensed Product that are required in order to allow GENENTECH, its Affiliates or Sublicensees to manufacture, use or sell such Licensed Product; provided, however, that such reductions shall in no event reduce the royalty for such Licensed Product payable pursuant to such subsection by more than [*****************].

3.5 Royalties on Licensed Products Licensed Exclusively to GENENTECH and Covered by Research Project Patent Rights and CuraGen Project Patent Rights or Extended License Patent Rights. GENENTECH shall pay to CURAGEN a royalty on Net Sales of Licensed Products in those countries where the manufacture, use, importation or sale of such Licensed Product by a third party (i) would infringe a Valid Claim of a Research Project Patent Right and (ii) would infringe a Valid Claim of an Extended License Patent Right or a CURAGEN Project Patent Right, as follows:

(a) If the Licensed Product is as described in subsections (a)-(c) or (e) of the definition of Licensed Product, the royalty rate on Net Sales of such Licensed Product shall be as follows:

[***********************************************]

[**************************************************************************]

[***********************************************]

(b) If the Licensed Product is as described in subsections (d) or (f) of the definition of Licensed Product, or is a product as described in subsection (g) of the definition of Licensed Product and is not discovered from material use of a Lead by GENENTECH, its Affiliates or Sublicensees, the royalty rate on Net Sales of such Licensed Product shall be:

[***********************************************]

[**************************************************************************]

20

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

[***********************************************]

(c) If the Licensed Product is as described in subsection (g) of the definition of Licensed Product and is discovered from the material use by GENENTECH, its Affiliates or Sublicensees of a Lead identified by CURAGEN and provided to GENENTECH pursuant to an exclusive license granted pursuant to the provisions of Section 2.1(a) or (b), the royalty rate on Net Sales of such Licensed Product shall be:

[***********************************************]

[**************************************************************************]

[***********************************************]

(d) If the Licensed Product is as described in subsections (h) or (i) of the definition of Licensed Product, the royalty rate on Net Sales of such Licensed Product shall be [****].

(e) Royalties due to CURAGEN pursuant to subsections (a), (b) (c) and (d) above for a given Licensed Product may be reduced by [******************] of any royalties paid to third parties by GENENTECH, its Affiliates or Sublicensees on net sales of such Licensed Product that are required in order to allow GENENTECH, its Affiliates or Sublicensees to manufacture, use or sell such Licensed Product; provided, however, that such reductions shall in no event reduce the royalty for such Licensed Product payable pursuant to such subsection by more than [****************].

3.6 Royalties on Licensed Products Licensed Exclusively to GENENTECH and Covered Solely by CURAGEN Project Patent Rights or Extended License Patent Rights. GENENTECH shall pay to CURAGEN a royalty on Net Sales of Licensed Products in those countries where the manufacture, use, importation or sale of such Licensed Product by a third party (i) would not infringe a Valid Claim of a Research Project Patent Right and

21

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(ii) would infringe a Valid Claim of an Extended License Patent Right or a CURAGEN Project Patent Right, as follows:

(a) If the Licensed Product is as described in subsections (a)-(c) or (e) of the definition of Licensed Product, the royalty rate on Net Sales of such Licensed Product shall be as follows:

[***********************************************]

[**************************************************************************]

[***********************************************]

(b) if the Licensed Product is as described in subsections (d) or (f) of the definition of Licensed Product, or is a product as described in subsection (g) of the definition of Licensed Product and is not discovered from material use of a Lead by GENENTECH, its Affiliates or Sublicensees, the royalty rate on Net Sales of such Licensed Product shall be:

[***********************************************]

[**************************************************************************]

[***********************************************]

(c) if the Licensed Product is as described in subsection (g) of the definition of Licensed Product and is discovered from material use by GENENTECH, its Affiliates or Sublicensees of a Lead identified by CURAGEN and provided to GENENTECH pursuant to an exclusive license granted pursuant to the provisions of Section 2.1(a) or (b), the royalty rate on Net Sales of such Licensed Product shall be:

[***********************************************]

22

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

[**************************************************************************]

[***********************************************]

(d) If the Licensed Product is as described in subsections (h) or (i) of the definition of Licensed Product, the royalty rate on Net Sales of such Licensed Product shall be [*****].

(e) Royalties due to CURAGEN pursuant to subsections (a), (b), (c) and (d) above for a given Licensed Product may be reduced by [*************] of any royalties paid to third parties by GENENTECH, its Affiliates or Sublicensees on net sales of such Licensed Product that are required in order to allow GENENTECH, its Affiliates or Sublicensees to manufacture, use or sell such Licensed Product; provided, however, that such reductions shall in no event reduce the royalty for such Licensed Product payable pursuant to such subsection by more than [**************].

3.7 Licensed Products Non Exclusively Licensed to GENENTECH or Exclusively Licensed But Not Covered by Patent Rights or Extended License Patent Rights. For Licensed Products that are discovered under a license to GENENTECH pursuant to Section 2.1(c) above, or that are licensed exclusively to GENENTECH hereunder and are made, used or sold by GENENTECH, its Affiliates or Sublicensees, where the manufacture, use, importation or sale of such Licensed Product by a third party would not infringe a Valid Claim of any Patent Right or Extended License Patent Right, GENENTECH shall pay to CURAGEN a royalty on Net Sales as follows:

(a) For Licensed Products as described in subsections (a)-(c) or (e) of the definition of Licensed Product, the royalty rate on Net Sales of such Licensed Product shall be [****].

(b) For Licensed Products as described in subsections (d) or (1) of the definition of Licensed Product or as described in subsection (g) of the definition of Licensed Product which are not discovered from material use of a Lead by

23

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

GENENTECH, its Affiliates or Sublicensees, the royalty rate on Net Sales of such Licensed Product shall be [*****].

(c) For Licensed Products as described in subsection (g) of the definition of Licensed Product which are discovered from material use by GENENTECH, its Affiliates or Sublicensees of a Lead, the royalty rate on Net Sales of such Licensed Products shall be [*****].

(d) For Licensed Products as described in subsections (h) or (i) of the definition of Licensed Product, the royalty rate on Net Sales of such Licensed Products shall be [****].

(e) Royalties due to CURAGEN pursuant to subsections (a), (b), (c), and (d) above for a given Licensed Product may be reduced by [****************] of any royalties paid to third parties by GENENTECH, its Affiliates or Sublicensees on net sales of such Licensed Product that are required in order to allow GENENTECH, its Affiliates or Sublicensees to manufacture, use or sell such Licensed Product; provided, however, that such reductions shall in no event reduce the royalty for such Licensed Product payable pursuant to such subsection by more than [****************].

(f) Royalties due to CURAGEN pursuant to subsections (a), (b) (c)2 and (d) above for a given Licensed Product shall be increased by [****] if GENENTECH has elected a non-exclusive Extended License, and such increased royalty shall be subject to subsection (e) above.

3.8 One Royalty. Only one royalty, calculated at the highest applicable royalty rate hereunder, shall be payable to CURAGEN hereunder for each sale of a Licensed Product, regardless of the number of patents, patent applications or Valid Claims directed to or covering such Licensed Product.

3.9 Payment Terms.

24

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(a) Royalty payments shall be made to CURAGEN in United States Dollars quarterly within sixty (60) days following the end of each calendar quarter for which royalties are due. Each royalty payment shall be accompanied by a report summarizing the total Net Sales for each Licensed Product during the relevant three-month period and the calculation of royalties, if any, due thereon pursuant to this Article 3.

(b) All royalties shall be payable in full in the United States in United States Dollars, regardless of the countries in which sales are made. For the purpose of computing Net Sales for Licensed Products sold in a currency other than United States dollars, such currency shall be converted into United States dollars at the exchange rate for buying U.S. dollars set forth in The Wall Street Journal for the last business day of the calendar quarter.

3.10 Royalty Term. GENENTECH shall pay royalties with respect to each Licensed Product on a country-by-country basis until (i) the expiration or revocation or complete rejection of the last to expire or to be revoked or to be completely rejected of any Valid Claim of a Patent Right or Extended License Patent Right covering such Licensed Product in such country, or (ii) [******] from the first commercial sale of such Licensed Product in such country, whichever is later. The term of each license under this Agreement (the “Term”) shall commence upon execution of Schedule I with respect thereto, and shall continue as long as any royalties are due hereunder for Licensed Products under such license. Following such period, unless the license pertaining to such Licensed Product has previously been terminated, GENENTECH shall have a fully paid-up, irrevocable license in such country under the Patent Rights, Extended License Patent Rights, Inventions, Know-How and CURAGEN Background Inventions relating to the relevant Licensed Clone, to make, have made, use, have used, sell, have sold, offer for sale, import and have imported such Licensed Product in such country.

3.11 Overdue Royalties. Royalties not paid within the time period set forth in this Article 3 shall bear interest at [***********], accruing monthly, from the due date until paid in full.

25

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

3.12 Records Retention. Audits. GENENTECH, its Affiliates and Sublicensees shall keep for [****************] from the date of each payment of royalties complete and accurate records of sales by GENENTECH and its Affiliates and Sublicensees of each Licensed Product in sufficient detail to allow the accruing royalties to be determined accurately. CURAGEN shall have the right for a period of [************] after receiving any report or statement with respect to royalties due and payable to appoint an independent certified public accountant reasonably acceptable to GENENTECH to inspect the relevant records of GENENTECH and its Affiliates and Sublicensees to verify such report or statement. GENENTECH and its Affiliates and Sublicensees shall each make its records available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon reasonable notice from CURAGEN, solely to verify the accuracy of the reports and payments. Such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales of any Licensed Product in any given payment period. CURAGEN agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent necessary for CURAGEN to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law, regulation or judicial order. The results of each inspection, if any, shall be binding on both Parties. CURAGEN shall pay for such inspections, except that in the event there is any upward adjustment in aggregate royalties payable for any year shown by such inspection of more than [****************] of the amount paid, GENENTECH shall pay for such inspection.

4. TREATMENT OF CONFIDENTIAL INFORMATION

4.1 Confidential Information. During the Term of this Agreement, each Party may disclose to the other proprietary technical, research and business information (collectively, “Confidential Information”). For a period of [***********] after the receipt of any such Confidential Information, the receiving Party shall keep confidential all such Confidential Information of the other Party and will not disclose such Confidential Information of the other Party to third parties by publication or otherwise. Each Party further agrees not to use Confidential Information of the other Party for any purpose other than

26

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

exercising any rights granted to it or reserved by it under this Agreement. Notwithstanding the foregoing, it is understood and agreed that the receiving Party’s obligations of confidentiality and nonuse herein shall not apply to any information which:

(a) is, at the time of disclosure by the disclosing Party hereunder, or thereafter becomes, a part of the public domain or publicly known or available through no fault or negligence of the receiving Party or any of its Affiliates; or

(b) was otherwise in the receiving Party’s lawful possession prior to disclosure by the disclosing Party, as demonstrated by the receiving Party’s written records; or

(c) is lawfully disclosed to the receiving Party on a non-confidential basis by a third party who is not in violation of an obligation of confidentiality to the disclosing Party relative to such information.

(d) is developed independently by the receiving Party without the use of the disclosing Party’s Confidential Information.

Each Party may disclose the other Party’s Confidential Information to the extent reasonably necessary to comply with applicable government laws or regulations, provided that prompt notice of any such disclosure shall be given to the other Party.

Information disclosed other than in written or electronic form shall be subject to the terms of this Section 4.1 only if confirmed in writing to other Party within thirty (30) days of initial disclosure and specifying with particularity that Confidential Information disclosed other than in written form which is subject to the provisions of this Section 4.1.

4.2 Press Release and Regulatory Filings. The Parties shall mutually agree on a press release announcing the execution of this Agreement and on any confidential treatment request to be filed with the Securities and Exchange Commission with respect to this Agreement. Neither Party shall make any disclosure of the terms of this Agreement except as required by applicable law or as set forth above without the prior written consent of the other Party. Once any written statement is approved for disclosure by both Parties, either Party may

27

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

make subsequent public disclosures of the contents of such statement without the further approval of the other Party.

5. PROVISIONS CONCERNING THE FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS

5.1 Patent Filing. During the Term of this Agreement, with respect to any Patent Rights, Extended Patent Rights, Inventions or Extended Research Inventions licensed hereunder:

(a) Upon granting an exclusive license to GENENTECH hereunder for a Licensed Clone, Lead(s), Extended Research Invention or Extended License Patent Right, CURAGEN and GENENTECH shall file CFR Rule 1.53(b) continuation patent applications having claims directed solely to Licensed Clones, Leads, Extended Research Inventions and Extended License Patent Rights which are exclusively licensed hereunder and not to other Clones or inventions, unless the Parties reasonably agree that such actions are not feasible or desirable.

(b) CURAGEN and GENENTECH, through the RC, will mutually agree on whether to prepare, file, prosecute and maintain licensed Patent Rights and licensed Extended Patent Rights relating solely to Licensed Clones or Licensed Products relating to Licensed Clones or Leads which are exclusively licensed hereunder. The Patent Coordinators for each Party will be designated by such Party from time to time to act as provided below. The Parties shall use their respective best efforts to cause to be filed by Independent Patent Counsel (IPC), which IPC is not an employee of CURAGEN or GENENTECH, initial patent filings in the form of a regular U.S. priority patent application or a provisional application pursuant to CFR 1.51, as determined by the Patent Coordinators. Patent applications will be perfected by making, as soon as available, an ATCC deposit of at least such Clone(s) as reasonably agreed by the Patent Coordinators, and by making any subsequent application filings necessary to perfect U.S. or foreign priority patent rights in the countries of

28

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

Europe that are members of the European Patent Organization, Japan, Canada, Australia, Israel, Mexico and any such other countries that are mutually agreed to by the Parties. GENENTECH and CURAGEN agree to provide reasonable and timely assistance and cooperation to the IPC to facilitate such filing, prosecution and maintenance, including without limitation, the execution of appropriate powers of attorney. GENENTECH and CURAGEN agree that any such preparation, filing, prosecution and maintenance shall be conducted diligently and in a timely fashion. GENENTECH and CURAGEN shall be kept fully informed by the IPC of the progress of all patent filings and prosecution under this section 5.1(b) and shall be provided with copies of all material documents pertaining thereto including, without limitation, information regarding inventorship, sequences and sequence listings, serial numbers, filing dates, foreign filing licenses and copies of patent applications. GENENTECH and CURAGEN shall be given the opportunity, whenever practical, to review and comment in advance on any patent filings or other correspondence with the patent office. GENENTECH and CURAGEN shall pursue priority to claims on licensed Patent Rights and licensed Extended Patent Rights by filing all necessary interferences and opposition papers, motions and the like. Any proposed interference settlement agreement relating to licensed Patent Rights and licensed Extended Patent Rights hereunder will be reviewed by the RC.

(c) IPC shall be selected by mutual agreement of the Patent Coordinators. If the Patent Coordinators are unable to agree on selecting IPC, the matter shall be set before and resolved and decided by the RC.

(d) If, during the Term of this Agreement, a Party does not wish to continue with the preparation, filing, prosecution or maintenance of any patent applications or patents covering licensed Patent Rights and licensed Extended Patent Rights, that Party shall notify the other Party of such intention at least sixty (60) days prior to the date upon which such right shall lapse or become abandoned, or upon which the next response to the applicable patent office is

29

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

due to be filed, and the other Party shall thereupon have the right, but not the obligation, to assume sole responsibility for the prosecution, maintenance and defense of such patents and patent applications, including all prospective expenses related thereto

(e) The Parties will share equally all expenses associated with the preparation, filing, prosecution and maintenance of the patents and patent applications related to the licensed Patent Rights and licensed Extended Patent Rights. In the event that the Parties do not agree as to whether such a patent application should be filed, the Party wishing to file such patent application may do so at its sole expense. In such event, the other Party shall be kept fully informed by the filing Party of the progress of such patent filing and prosecution and shall be provided with copies of all material documents pertaining thereto including, without limitation, information regarding inventorship, sequences and sequence listings, serial numbers, filing dates, foreign filing licenses and copies of patent applications.

(f) Notwithstanding the above, GENENTECH shall have at its sole discretion the right to prepare, file, prosecute, obtain and maintain, at its sole expense, all Patent Rights and Extended License Patent Rights relating solely to Licensed Clones or Licensed Products relating to Licensed Clones or Leads which are exclusively licensed hereunder as set forth is this section 5.1(e). CURAGEN agrees to provide reasonable assistance and cooperation to GENENTECH to facilitate such filing, prosecution and maintenance including, without limitation, the execution of appropriate powers of attorney. GENENTECH agrees that any such preparation, filing, prosecution and maintenance shall be conducted diligently and in a timely fashion and that CURAGEN shall be kept reasonably informed of the progress thereof. Upon request GENENTECH will provide copies of the following documents to CURAGEN: information regarding inventorship, sequences and sequence listings, serial numbers, filing dates, foreign filing licenses, copies of patent applications and official correspondence with the patent office. CURAGEN shall, whenever practical,

30

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

be given the opportunity to review and comment in advance on any patent filings or other correspondence with the patent office during such periods and GENENTECH shall use reasonable efforts to incorporate any comments provided by CURAGEN. GENENTECH shall, if warranted in its commercially reasonable judgment, pursue its priority to claims on Inventions by filing all necessary interferences and opposition papers, motions and the like. GENENTECH shall conduct any interference proceeding in good faith, applying its commercially reasonable efforts to prevail therein. CURAGEN shall be given the opportunity to review and comment upon any proposed settlement of an interference relating to Patent Rights or Extended Patent Rights subject to license hereunder. GENENTECH will consider CURAGEN’s comments in good faith, but shall have the right to decide and enter into a good faith settlement of the interference. if GENENTECH elects at any time to abandon its right to prepare, file, prosecute, obtain and maintain patent applications and patents as described in this section 5.1(e), CURAGEN and GENENTECH will prepare, file, prosecute and maintain licensed Patent Rights and licensed Extended Patent Rights as described in section 5.1(b).

(g) No Party shall have any obligation under this Agreement to pay any fees or costs: (i) for bringing a lawsuit or other action to enforce any of the Patent Rights or Extended License Patent Rights against an actual or suspected infringement or (ii) for any other Party to obtain for its own benefit independent business or legal advice concerning any of the Patent Rights or Extended License Patent Rights.

5.2 Notice of Infringement. If, during the Term of this Agreement or the term of any license hereunder, either Party learns of any infringement by a third party of the patents within Patent Rights or Extended License Patent Rights exclusively licensed hereunder, such Party shall promptly notify the other Party and shall provide such other Party with available evidence of such infringement.

5.3 Infringement.

31

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(a) GENENTECH shall have the first right (but not the obligation), at its own expense, to take appropriate action to enforce Patent Rights or Extended License Patent Rights licensed exclusively to GENENTECH hereunder in the event of any actual or suspected infringement of such rights. GENENTECH may, in its sole judgment, institute suit against any such infringer or alleged infringer and control and defend and settle such suit in a manner consistent with the terms and provisions hereof. if GENENTECH has not commenced reasonable action to enforce such Patent Rights and Extended License Patent Rights, in the case of significant infringement, or has ceased to pursue such action within one hundred twenty (120) days after written notice from CURAGEN of the infringement, or any mutually acceptable extension thereof, which notice includes all of CURAGEN’s then available supporting evidence and a request by CURAGEN that action should be taken against such alleged infringer, CURAGEN shall have the right (but not the obligation), at its own expense, to bring suit against such infringement. Any amount recovered, whether by judgment or settlement, shall first be applied to reimburse the costs and expenses (including attorneys’ fees) of the Party bringing suit, and then to reimburse the costs and expenses (including attorneys’ fees), if any, of the other Party and then to reimburse CURAGEN for any royalties withheld by GENENTECH as provided in Section 5.3(b) below, which shall be paid with interest as specified in Section 3.11. [*************************************************************************************************** ****************************************************************************]

(b) In the event that GENENTECH brings any suit in any country as permitted in Section 5.3(a) above with respect to a Material Infringement as defined in (c) below, GENENTECH shall be entitled to reduce royalties payable to CURAGEN hereunder with respect to Licensed Products substantially similar to the product alleged to be infringing the Patent Right(s) or Extended License Patent Right(s) which are the subject of the suit in such country and for so long as a Material Infringement exists, by [***************] of the amounts

32

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

otherwise due hereunder with respect to such Licensed Products in such country.

(c) For purposes of this Section 5.3, a Material Infringement shall be deemed to exist with respect to a Licensed Product on a country-by-country basis when sales by a third party of allegedly infringing products in such country reach a level of [******] or more of the combined sales of such allegedly infringing product(s) and sales of the Licensed Product in such country.

5.4 Cooperation. Each Party shall execute all papers and perform such other acts as may be reasonably required to cooperate with the Party bringing any infringement suit brought in accordance with Section 5.3 above (including giving legal consent for bringing such suit, and agreeing to be named as a plaintiff or otherwise joined in such suit), and at its option and expense, may be represented in such suit by counsel of its choice.

6. TERM AND TERMINATION

6.1 Termination Provisions.

The Term of any license hereunder shall be as specified in Section 3.10, unless terminated as set forth below:

(a) Any license hereunder with respect to any Licensed Clone and the related Leads, Extended Research Inventions or Extended License Patent Rights, may be terminated by either Party upon any material breach by the other Party of any material obligation or condition of such license, effective thirty (30) days after giving written notice to the breaching Party of such termination in the case of a payment breach and sixty (60) days after giving written notice to the breaching Party of such termination in the case of any other breach, which notice shall describe such breach in reasonable detail; provided, however, that a breach of Section 2.4 shall only give rise to the termination rights specified therein. The foregoing notwithstanding, if the default or breach is cured or shown to be nonexistent within the aforesaid thirty (30) or sixty (60) day period, the notice shall be deemed automatically withdrawn and of no effect.

33

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(b) if either Party files for protection under bankruptcy laws, makes an assignment for the benefit of creditors, appoints or suffers appointment of a receiver or trustee over its property, files a petition under any bankruptcy or insolvency act or has any such petition filed against it which is not discharged within sixty (60) days of the filing thereof, then the other Party may terminate this Agreement by notice to such Party.

(c) The licenses granted hereunder with respect to certain Licensed Clones shall terminate as specified in Section 2.3.4 of the Research Agreement without any requirement of further action by CURAGEN hereunder.

6.2 Effect of Termination.

(a) Upon termination of a license or licenses granted hereunder by CURAGEN pursuant to Section 6.1(a), (b) or (c) or under Section 2.4 with respect to any Licensed Clone, all relevant rights to such Licensed Clone and the related Leads, Extended Research Inventions and Extended License Patent Rights included in any such license(s) granted by CURAGEN to GENENTECH hereunder under which GENENTECH is in breach shall immediately and automatically revert to CURAGEN, subject to GENENTECH’s right to sell any remaining quantities of Licensed Product remaining in its inventories as of the date of termination. All remaining license rights granted to GENENTECH hereunder shall remain in full force and effect. GENENTECH shall promptly transfer to CURAGEN such Licensed Clones, Data Sets and CURAGEN Proprietary Material in its possession without retaining any copies thereof, as well as any full-length sequence data of such Licensed Clone(s). In addition, upon any termination pursuant to Section 6.1(a) or (c) or Section 2.4, GENENTECH shall be deemed without any further action to have granted to CURAGEN an exclusive, worldwide, license (including the right to grant sublicenses), under GENENTECH’s ownership interest in any Research Project Inventions and Research Project Patent Rights covering or related to the relevant Licensed Clone(s) for which GENENTECH’ s license rights have been terminated to develop, have developed, make, have made, use, have used,

34

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

offer for sale, sell, have sold, import and have imported any and all products in all fields with royalties payable only as set forth in Section 7.7 of the Research Agreement.

(b) Documentation. At the request of CURAGEN, GENENTECH shall execute and deliver such bills of sale, assignments and licenses and other documents as may be necessary to fully vest in CURAGEN all right, title and interest to which it is entitled as aforesaid pursuant to this Section 6.2.

(c) Payment Obligations. GENENTECH shall have no obligation to make any milestone or royalty payment to CURAGEN that has not accrued prior to the effective date of any termination, except for royalties due on sales of remaining inventory, but shall remain liable for all obligations accruing prior to termination.

(d) In the event of a material breach by CURAGEN of any material obligation or condition under this Agreement relating to any license hereunder with respect to any Licensed Clone, in lieu of terminating this Agreement as provided in Section 6.1(a), GENENTECH may, effective sixty (60) days after giving written notice to CURAGEN, which notice shall describe such breach in reasonable detail, elect to maintain the license to the Licensed Clone to which the breach relates with a [***************] reduction in the royalties otherwise due hereunder with respect to Licensed Products relating to such Licensed Clone. The foregoing notwithstanding, if the material breach is cured or shown to be non-existent within the aforesaid sixty (60) day period, such notice and election shall be deemed automatically withdrawn and of no effect.

6.3 Other Termination by GENENTECH. GENENTECH may terminate this Agreement, or any license or licenses granted hereunder with respect to any Licensed Clone(s), Lead(s) or Extended Research Inventions or Extended License Patent Rights, and the related rights and obligations hereunder, in its sole discretion at any time by giving written notice thereof to CURAGEN. Such termination shall be effective fifteen (15) days following the date such notice is received by CURAGEN and shall have all consequences as

35

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

set forth in Section 6.2 above, but only with respect to such Licensed Clone or Lead, as if this Agreement had been terminated pursuant to Section 6.1(a).

6.4 Remedies. If either Party shall fail to perform or observe or otherwise breaches any of its material obligations under this Agreement, in addition to any right to terminate this Agreement, the non-defaulting Party may elect to obtain other relief and remedies available under law.

6.5 Surviving Provisions. Notwithstanding any provision herein to the contrary, the rights and obligations set forth in Sections 3.9, 3.11 and 3.12, Article 4, Sections 6.2 and 6.4, and Article 7 hereof, as well as any rights and obligations otherwise accrued, shall survive the expiration or termination of this Agreement.

7. MISCELLANEOUS

7.1 CURAGEN Representations. CURAGEN represents and warrants that: (a) the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all appropriate CURAGEN corporate action; (b) CURAGEN is under no obligation which is inconsistent with this Agreement; and (c) CURAGEN has the full right and legal capacity to grant the rights to GENENTECH pursuant to Article 2 above without violating the rights of any third party.

7.2 GENENTECH Representations. GENENTECH represents and warrants that: (a) the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all appropriate GENENTECH corporate action; and (b) GENENTECH is under no obligation which is inconsistent with this Agreement.

7.3 No Warranties.

(a) Nothing in this Agreement is or shall be construed as:

(i) a warranty or representation by CURAGEN or GENENTECH as to the validity or scope of any application or patent within the Patent Rights;

36

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(ii) a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents, copyrights, and other rights of third parties.

(b) Except as expressly set forth in this Agreement, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE DEVELOPMENT, MANUFACTURE, SALE, IMPORTATION OR USE OF THE LICENSED PRODUCT(S) WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.

7.4 Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.

7.5 Notices. Any notices, requests, deliveries, approvals or consents required or permitted to be given under this Agreement to GENENTECH or CURAGEN shall be in writing and shall be personally delivered or sent by telecopy (with written confirmation to follow via United States first class mail), overnight courier providing evidence of receipt or certified mail, return receipt requested, postage prepaid, in each case to the respective address specified below (or to such address as may be specified in writing to the other Party hereto):

CURAGEN:	555 Long Wharf, 11th Floor
	New Haven, CT 06511
	Attn: Vice President, Business Development
	Telecopy: (203) 401-3333

37

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

GENENTECH:	1 DNA Way
	South San Francisco, CA 94080
	Attn: Corporate Secretary
	Telecopy: (650) 952-9881

Such notices shall be deemed to have been sufficiently given on: (a) the date sent if delivered in person or transmitted by telecopy, (b) the next business day after dispatch in the case of overnight courier or (c) five (5) business days after deposit in the U.S. mail in the case of certified mail.

7.6 Governing Law. This Agreement will be construed, interpreted and applied in accordance with the laws of the State of New York (excluding its body of law controlling conflicts of law).

7.7 Limitations. Except as set forth elsewhere in this Agreement, neither Party grants to the other Party any right or license to any of its intellectual property.

7.8 Entire Agreement. This is the entire Agreement between the Parties with respect to the subject matter herein. No modification shall be effective unless in writing and signed by the Parties.

7.9 Waiver. The terms or conditions of this Agreement may be waived only by a written instrument executed by the Party waiving compliance. The failure of either Party at any time or times to require performance of any provision hereof shall in no manner affect its rights at a later time to enforce the same. No waiver by either Party of any condition or term shall be deemed as a continuing waiver of such condition or term or of another condition or term.

7.10 Headings. Section and subsection headings are inserted for convenience of reference only and do not form part of this Agreement.

7.11 Assignment. This Agreement may not be assigned by either Party without the consent of the other, except that each Party may, without such consent, assign this Agreement and the rights, obligations and interests of such Party, in whole or in part, to any of its wholly-owned subsidiaries, to any purchaser of all or substantially all of its assets in the line of business to which this Agreement pertains, or of all of its capital stock, or to any successor

38

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

corporation resulting from any merger or consolidation of such Party with or into such corporation.

7.12 Force Majeure. Neither Party shall be liable for failure of or delay in performing obligations set forth in this Agreement, and neither shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes beyond the reasonable control of such Party. In event of such force majeure, the Party affected thereby shall use reasonable efforts to cure or overcome the same and resume performance of its obligations hereunder.

7.13 Construction. The Parties hereto acknowledge and agree that: (i) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to all Parties hereto and not in a favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement.

7.14 Severability. If any provision(s) of this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the Term hereof, it is the intention of the Parties that the remainder of this Agreement shall not be affected thereby provided that a Party’s rights under this Agreement are not materially affected. The Parties hereto covenant and agree to renegotiate any such term, covenant or application thereof in good faith in order to provide a reasonably acceptable alternative to the term, covenant or condition of this Agreement or the application thereof that is invalid, illegal or unenforceable, it being the intent of the Parties that the basic purposes of this Agreement are to be effectuated.

7.15 Status. Nothing in this Agreement is intended or shall be deemed to constitute a partner, agency, employer-employee, or joint venture relationship between the Parties.

7.16 Indemnification.

39

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(a) GENENTECH shall indemnify, defend and hold harmless CURAGEN, its Affiliates and their respective directors, officers, employees, and agents and their respective successors, heirs and assigns (the “CURAGEN Indemnitees”), against any liability, damage, loss or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon the CURAGEN Indemnitees, or any of them, in connection with any claims, suits, actions, demands or judgments (“Claims”) of third parties for personal injury and product liability matters (except in cases where such Claims result from a willful material breach of this Agreement or the gross negligence or willful misconduct on the part of a CURAGEN Indemnitee) arising out of or relating to any actions of GENENTECH or any Affiliate, licensee, sublicensee, distributor or agent of GENENTECH in the development, testing, production, manufacture, promotion, import, sale or use by any person of any Licensed Product manufactured or sold by GENENTECH or by an Affiliate, licensee, sublicensee, distributor or agent of GENENTECH.

(b) GENENTECH’s obligation to indemnify, defend and hold the CURAGEN Indemnitees harmless pursuant to Section 9.16(a) are conditioned on the indemnified Party: (i) providing written notice to the indemnifying Party of any Claim arising out of the indemnified activities promptly after the indemnified Party has knowledge of such Claim, (ii) permitting the indemnifying Party to assume, at its discretion, sole and full control of the investigation, preparation, defense, trial and settlement in connection with such Claim, (iii) assisting and cooperating with the indemnifying Party, at the indemnifying Party’s reasonable expense, in the investigation of, preparation for and defense of any such Claim, and (iv) not compromising, negotiating or settling such Claim without the indemnifying Party’s prior written consent.

40

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

7.17 Counterparts.

This Agreement may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representative in two (2) originals.

GENENTECH, INC.	CURAGEN CORPORATION
By:	By:
Title:	Title:

41

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

SCHEDULE I

(To be completed for each Licensed Clone)

Licensed Clone:

Type of License:

Project Data Set

or

CURAGEN Data Set

Pertaining to Licensed Clone:

CURAGEN Proprietary  

Material Pertaining to  

Licensed Clone:

CURAGEN Patent Rights  

Pertaining to Licensed Clone:

Rights under

Extended License:

Signed this              day of             ,             

CURAGEN CORPORATION

By:

Name:

Title:

GENENTECH, INC.

By:

Name:

Title:

42

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

APPENDIX D

Existing Research Projects and Data Sets

[**************************]

Description	Date of Completion	Species	Tissue	Therapeutic Field
[*********]	[*********]	[*********]	[*******]
[*********]	[*********]	[*********]	[*******]
[*********]	[*********]	[*********]	[*******]

Certain confidential information contained in this Exhibit, marked by brackets and asterisks, were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

GeneScape Corporation

454 Corporation

EX-23.1

EXHIBIT 23.1

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation by reference in Registration Statements No. 333-56829 and No. 333-89465 of CuraGen Corporation on Forms S-8, and Registration Statements No. 333-32756, 333-47600 and 333-90321 of CuraGen Corporation on Forms S-3 of our report dated January 24, 2003 appearing in this Annual Report on Form 10-K of CuraGen Corporation for the year ended December 31, 2002.

/s/ DELOITTE & TOUCHE LLP

Hartford, Connecticut

March 26, 2003

EX-99.1

EXHIBIT 99.1

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of CuraGen Corporation, a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Annual Report on Form 10-K for the year ended December 31, 2002 (the “Form 10-K”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 26, 2003	By:	/s/    JONATHAN M. ROTHBERG
	Jonathan M. Rothberg, Ph.D. Chief Executive Officer, President and Chairman of the Board (principal executive officer)
Dated: March 26, 2003	By:	/s/    DAVID M. WURZER
	David M. Wurzer Executive Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.