10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2004

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
(Address of principal executive office)	(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

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

The number of shares outstanding of the Registrant’s common stock as of July 30, 2004 was 50,084,106.

CURAGEN CORPORATION AND SUBSIDIARY

FORM 10-Q

INDEX

			Page
PART I. Financial Information
	Item 1.	Financial Statements
		Consolidated Balance Sheets, June 30, 2004 (unaudited) and December 31, 2003	3
		Consolidated Statements of Operations, for the Three and Six Months Ended June 30, 2004 and 2003 (unaudited)	4
		Consolidated Statements of Cash Flows, for the Six Months Ended June 30, 2004 and 2003 (unaudited)	5
		Notes to Consolidated Financial Statements (unaudited)	6 – 9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10 – 31
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
	Item 4.	Controls and Procedures	32
PART II. Other Information
	Item 4.	Submission of Matters to a Vote of Security Holders	33
	Item 6.	Exhibits and Reports on Form 8-K	33 – 34
Signatures			35
Exhibit Index			36

CURAGEN CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)

	June 30, 2004			December 31, 2003
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	54,926		$	42,843
Short-term investments		109,321			72,402
Marketable securities		210,863			228,396
Cash and investments		375,110			343,641
Income taxes receivable		613			429
Other current assets		104			26
Prepaid expenses		2,464			1,757
Total current assets		378,291			345,853
Property and equipment, net		22,132			23,540
Intangible and other assets, net		15,082			7,564
Total assets	$	415,505		$	376,957
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,213		$	4,661
Accrued expenses		5,310			3,671
Accrued payroll and related items		1,857			1,864
Interest payable		4,875			3,750
Deferred revenue		2,674			3,010
Current portion of obligations under capital leases		—			204
Other current liabilities		1,944			2,383
Total current liabilities		18,873			19,543
Long-term liabilities:
Convertible subordinated debt		240,000			150,000
Accrued long-term liabilities		1,514			1,500
Total long-term liabilities		241,514			151,500
Commitments and contingencies
Minority interest in subsidiary		5,438			8,233
Stockholders’ equity:
Common Stock; $.01 par value, issued and outstanding 50,068,232 shares at June 30, 2004, and 49,896,622 shares at December 31, 2003		501			499
Additional paid-in capital		486,345			485,531
Accumulated other comprehensive (loss) income		(1,256	)		1,524
Accumulated deficit		(335,723	)		(289,492	)
Unamortized stock-based compensation		(187	)		(381	)
Total stockholders’ equity		149,680			197,681
Total liabilities and stockholders’ equity	$	415,505		$	376,957

See accompanying notes to consolidated financial statements

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CURAGEN CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Revenue:
Grant revenue	$	358		$	—		$	358		$	—
Collaboration revenue		916			1,695			2,531			3,639
Total revenue		1,274			1,695			2,889			3,639
Operating expenses:
Grant research		100			—			100			—
Research and development		24,591			18,388			39,732			32,848
General and administrative		4,946			4,823			9,803			9,773
Restructuring and related charges		—			2,888			—			2,888
Total operating expenses		29,637			26,099			49,635			45,509
Loss from operations		(28,363	)		(24,404	)		(46,746	)		(41,870	)
Interest income		2,016			2,078			4,052			4,411
Interest expense		(3,345	)		(2,464	)		(6,222	)		(4,939	)
Loss on extinguishment of debt		—			—			(294	)		—
Loss before income taxes and minority interest in subsidiary loss		(29,692	)		(24,790	)		(49,210	)		(42,398	)
Income tax benefit (expense)		90			(117	)		184			—
Minority interest in subsidiary loss		1,410			1,480			2,795			2,829
Net loss	$	(28,192	)	$	(23,427	)	$	(46,231	)	$	(39,569	)
Basic and diluted net loss per share	$	(0.57	)	$	(0.48	)	$	(0.93	)	$	(0.80	)
Weighted average number of shares used in computing basic and diluted net loss per share		49,875			49,234			49,839			49,195

See accompanying notes to consolidated financial statements

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CURAGEN CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2004			2003
Cash flows from operating activities:
Net loss	$	(46,231	)	$	(39,569	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,875			4,132
Non-monetary compensation		233			487
Stock-based 401(k) employer plan match		405			423
Loss on extinguishment of debt		294			—
Minority interest		(2,795	)		(2,829	)
Changes in assets and liabilities:
Income taxes receivable		(184	)		856
Other current assets		(78	)		139
Prepaid expenses		(707	)		512
Intangible and other assets, net		(25	)		5
Accounts payable		(2,448	)		1,954
Accrued expenses		1,639			47
Accrued payroll and related items		(7	)		(80	)
Interest payable		1,125			—
Deferred revenue		(336	)		(292	)
Other current liabilities		(439	)		2,301
Accrued long-term liabilities		14			—
Net cash used in operating activities		(44,665	)		(31,914	)
Cash flows from investing activities:
Acquisitions of property and equipment		(2,155	)		(3,278	)
Acquisitions of non-perpetual licenses		(302	)		(491	)
Loans to employees, net of repayments		(40	)		17
Convertible loan to collaborator		(5,000	)		—
Net (outflows) inflows from purchases and maturities of short-term investments		(36,918	)		66,274
Net inflows (outflows) from purchases and maturities of marketable securities		14,752			(36,803	)
Net cash (used in) provided by investing activities		(29,663	)		25,719
Cash flows from financing activities:
Payments on capital lease obligations		(204	)		(1,076	)
Proceeds from exercise of stock options		372			197
Proceeds from issuance of convertible debt		110,000			—
Payment for extinguishment of debt		(20,000	)		—
Payment of financing costs		(3,757	)		(12	)
Payment of stock issuance costs		—			(1	)
Net cash provided by (used in) financing activities		86,411			(892	)
Net increase (decrease) in cash and cash equivalents		12,083			(7,087	)
Cash and cash equivalents, beginning of period		42,843			68,401
Cash and cash equivalents, end of period	$	54,926		$	61,314
Supplemental cash flow information:
Interest paid	$	4,589		$	4,562
Income tax benefit payments received	$	—		$	862

See accompanying notes to consolidated financial statements

5

CURAGEN CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, the accompanying unaudited consolidated financial statements include all adjustments, consisting of only normal recurring accruals, necessary to present fairly our consolidated financial position, results of operations and cash flows. Interim results are not necessarily indicative of the results that may be expected for the entire year. The consolidated financial statements of CuraGen Corporation and subsidiary (the “Company”) include CuraGen Corporation (“CuraGen”) and its majority-owned subsidiary, 454 Life Sciences Corporation (“454”), and accordingly, all material intercompany balances and transactions have been eliminated.

The June 30, 2003 and December 31, 2003 consolidated financial statements have been reclassified to conform to the classifications used in 2004. All dollar amounts in tabular presentations are shown in thousands, except par value and per share data.

The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2003.

2. Comprehensive Loss

Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income” (“SFAS 130”), requires reporting and displaying of comprehensive income and its components. In accordance with SFAS 130, the accumulated balance of other comprehensive loss is disclosed as a separate component of stockholders’ equity and is composed of unrealized gains and losses on marketable securities.

A summary of total comprehensive loss is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Net loss	$	(28,192	)	$	(23,427	)	$	(46,231	)	$	(39,569	)
Other comprehensive loss:
Unrealized (losses) gains on securities:
Unrealized holding (losses) gains arising during period		(3,507	)		58			(2,780	)		339
Reclassification adjustment for losses (gains) included in net loss		94			31			(37	)		73
Net unrealized (losses) gains on securities		(3,413	)		89			(2,817	)		412
Total comprehensive loss	$	(31,605	)	$	(23,338	)	$	(49,048	)	$	(39,157	)

3. 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 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.

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Had compensation cost for the Company’s stock option plans been determined in accordance with SFAS 123, net loss and net loss per share would have approximated the pro forma amounts shown below for each of the three and six month periods ended June 30, 2004 and 2003.

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Net loss, as reported	$	(28,192	)	$	(23,427	)	$	(46,231	)	$	(39,569	)
Stock-based employee compensation expense included in net loss		97			231			194			462
Total stock-based employee compensation expense determined under Black-Scholes option pricing model		(2,355	)		(3,100	)		(4,767	)		(6,200	)
Pro forma net loss	$	(30,450	)	$	(26,296	)	$	(50,804	)	$	(45,307	)
Basic and diluted net loss per share:
As reported	$	(0.57	)	$	(0.48	)	$	(0.93	)	$	(0.80	)
Pro forma	$	(0.61	)	$	(0.53	)	$	(1.02	)	$	(0.92	)

4. Restructuring and Related Charges

In June 2003, the Company announced a restructuring plan intended to focus resources on continuing to advance its broad pipeline of protein, antibody, and small molecule therapeutics into preclinical and clinical development. In connection with this restructuring plan, a charge of approximately $2.9 million was recorded in the second quarter of 2003, including $1.8 million related to employee separation costs, $1.0 million of operating lease obligations and $0.1 million of asset impairment costs. The cash requirements under the June 2003 restructuring plan were $2.7 million, of which $1.9 million was paid prior to June 30, 2004. The remaining cash requirements of $0.8 million will be paid through the end of 2008.

5. Segment Reporting

The Company currently operates in two business segments: CuraGen and 454. CuraGen is a genomics-based pharmaceutical development company, dedicated to improving the lives of patients by developing a pipeline of novel protein, antibody, and small molecule therapeutics in the areas of oncology, inflammatory diseases, obesity and diabetes. 454, the Company’s majority-owned subsidiary, is developing novel nanoscale instrumentation and technologies for rapidly and comprehensively determining the nucleotide sequence - “whole genome sequencing”- of entire genomes. The operations of 454 are run by a separate management team and governed by a separate Board of Directors made up of members of CuraGen’s management team and Board of Directors. The Company currently exceeds the quantitative thresholds described above governing segment reporting, and as a result, the financial information disclosed herein represents all of the material financial information related to the Company’s reportable business segments. All of the Company’s revenues are generated in the United States and all assets are located in the United States.

	June 30, 2004			December 31, 2003
Cash and investments:
CuraGen	$	358,855		$	319,444
454		16,255			24,197
Total	$	375,110		$	343,641
Total assets:
CuraGen	$	407,389		$	365,906
454		24,983			33,260
Intercompany eliminations		(16,867	)		(22,209	)
Total	$	415,505		$	376,957

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	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Revenues:
CuraGen	$	924		$	1,695		$	2,436		$	3,639
454		510			—			613			—
Intercompany eliminations		(160	)		—			(160	)		—
Total	$	1,274		$	1,695		$	2,889		$	3,639
Operating expenses:
CuraGen	$	25,111		$	22,347		$	40,877		$	38,312
454		4,686			3,752			8,918			7,197
Intercompany eliminations		(160	)		—			(160	)		—
Total	$	29,637		$	26,099		$	49,635		$	45,509
Net loss:
CuraGen	$	25,487		$	21,208		$	40,870		$	35,326
454		4,115			3,699			8,156			7,072
Minority interest in subsidiary loss		(1,410	)		(1,480	)		(2,795	)		(2,829	)
Total	$	28,192		$	23,427		$	46,231		$	39,569
Capital expenditures:
CuraGen	$	869		$	1,969		$	1,598		$	2,567
454		288			386			573			841
Intercompany eliminations		(1	)		—			(15	)		(130	)
Total	$	1,156		$	2,355		$	2,156		$	3,278
Depreciation and amortization:
CuraGen	$	1,687		$	1,746		$	3,679		$	3,441
454		604			363			1,196			691
Total	$	2,291		$	2,109		$	4,875		$	4,132

6. 4% Convertible Subordinated Notes Due in 2011

On February 17, 2004, the Company completed an offering of $100.0 million of 4% convertible subordinated notes due February 15, 2011 and received net proceeds of approximately $96.5 million. In addition, on March 16, 2004, the initial purchasers exercised their option to purchase an additional $10.0 million of 4% convertible subordinated notes due February 15, 2011, providing the Company with additional net proceeds of approximately $9.7 million. The notes 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 notes are convertible by the holders of the notes into the Company’s common stock at any time prior to the close of business on the maturity date of the notes, unless previously redeemed or repurchased, at a conversion rate of 103.2429 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $9.69 per share of common stock, or a total of 11,356,719 shares of common stock issuable upon conversion of the notes.

In addition, during the period commencing February 18, 2009, to and including February 14, 2010, the Company has the right to redeem the notes at a redemption price equal to 101.143% of the principal amount of the notes plus accrued and unpaid interest, if any, to, but not including, the redemption date; and beginning on February 15, 2010, the Company has the right to redeem the notes at a redemption price equal to 100.571% of the principal amount of the notes plus accrued and unpaid interest, if any, to, but not including, the redemption date. The Company will pay cash interest on the notes on February 15 and August 15 of each year, beginning on August 15, 2004. Pursuant to the obligations under the convertible subordinated note agreement, the Company filed a registration statement with the Securities and Exchange Commission on March 25, 2004 to register the resale of any shares issued as a result of the conversion of the notes. The SEC declared such registration statement effective on June 30, 2004.

7. TopoTarget A/S Collaboration and License Agreement

On June 3, 2004, the Company and TopoTarget A/S (“TopoTarget”) entered into a license and collaboration agreement to develop and commercialize PXD101, a novel histone deacetylase (“HDAC”) inhibitor for the treatment of solid and hematological cancers, which is currently in a Phase I clinical trial in patients with advanced solid and hematological tumors. The two companies will also work together to identify additional candidates from TopoTarget’s HDAC inhibitor library for clinical development in the treatment of cancer and

8

inflammatory diseases. Under the terms of the agreement, the Company is acquiring exclusive rights to develop, and commercialize PXD101 in North America, Asia and all other markets excluding Europe. TopoTarget will retain commercialization rights in Europe.

Under the financial terms of the agreement, during the second quarter of 2004, the Company paid a $5.0 million perpetual license fee to TopoTarget, which was fully expensed during the second quarter of 2004, pursuant to the Company’s accounting policies. In addition, during the second quarter of 2004 the Company made a $5.0 million equity investment in TopoTarget, which is included in Intangible and other assets, net on the June 30, 2004 balance sheet, was recorded as a Convertible Loan Receivable and is due May 10, 2009, unless TopoTarget completes an Initial Public Offering (“IPO”), at which time the Company must convert the loan into common stock at the IPO subscription price. The loan began accruing interest quarterly on June 30, 2004, at an annual rate of 6% and such interest will be added to the principal amount of the loan on a quarterly basis if not paid by TopoTarget. In addition, the principal amount of the loan (plus any interest that has accrued and been added to the principal balance) may not be repaid prior to May 10, 2009, except with the Company’s consent or if TopoTarget becomes insolvent. If TopoTarget does not complete an IPO prior to January 1, 2009, then the Company shall be obligated to convert the loan at the first subscription price after January 1, 2005 in connection with a subscription for TopoTarget securities of more than $5.0 million.

TopoTarget is expected to receive royalties from the Company based on sales of PXD101 outside of Europe, and the Company is expected to receive reciprocal royalties from TopoTarget based on sales of PXD101 in Europe. The Company will fund the global development of PXD101. In addition, the Company has an option to select additional HDAC compounds from TopoTarget for clinical development in oncology and other indications for a take-up fee not to exceed $1.0 million and up to $30.0 million in milestone payments based on successful development, regulatory approval, and commercialization of each additional product. TopoTarget has the option to fund a portion of the global development of PXD101 and additional products in exchange for higher royalties. Potential payments to TopoTarget from the Company based on the successful development and commercialization of PXD101, and two additional HDAC inhibitor products, could exceed $100.0 million.

8. Seattle Genetics, Inc. Collaboration Agreement

On June 18, 2004, the Company and Seattle Genetics, Inc. (“Seattle Genetics”) entered into a collaboration agreement to license Seattle Genetics’ proprietary Antibody-Drug Conjugate (“ADC”) technology for use with the Company’s proprietary antibodies for the potential treatment of cancer. The Company paid an upfront fee of $2.0 million for access to the ADC technology for use in one of its proprietary antibody programs. This upfront perpetual license fee was fully expensed during the second quarter of 2004, pursuant to the Company’s accounting policies.

The Company also has an option to access Seattle Genetics’ ADC technology for a second CuraGen proprietary antibody program in exchange for payment of an additional fee. Under the terms of the multi-year agreement, Seattle Genetics may receive up to $28.0 million in milestone payments assuming successful development of two antibody therapeutics employing ADC technology and will receive royalties on net sales of any resulting products. The Company is responsible for research, product development, manufacturing and commercialization of all products under the collaboration, and will pay maintenance and material supply fees as well as research support payments for any assistance provided by Seattle Genetics in developing ADC products.

9. Grant Award

In May 2004, 454 received a two-year, $2.4 million federal grant from the National Human Genome Research Institute, one of the National Institutes of Health. The grant, entitled “Massively Parallel High Throughput, Low Cost Sequencing” will partially fund the scale up of 454’s technology toward sequencing larger genomes. The grant also allowed 454 to recover all expenses incurred after February 2004 that were directly related to the research outlined in the grant award. During the second quarter of 2004, 454 recognized $0.4 million of grant revenue and $0.1 million of grant research expenses. The grant is subject to review and audit by the federal government and any such audit could lead to requests for reimbursement for any expenditure 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.

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CURAGEN CORPORATION AND SUBSIDIARY

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations as of June 30, 2004 and for the three and six month periods ended June 30, 2004 and 2003 should be read in conjunction with the sections of our audited consolidated financial statements and notes thereto as well as our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are included in our Annual Report on Form 10-K for the year ended December 31, 2003, as amended.

Overview

We are a genomics-based pharmaceutical development company dedicated to improving the lives of patients by developing novel protein, antibody and small molecule therapeutics in the areas of oncology, inflammatory diseases, obesity and diabetes. Our pipeline of therapeutics is based on targets from the human genome that we believe play a role in important mechanisms underlying disease.

We have taken a systematic approach to identifying and validating the most promising therapeutic targets from the human genome that are both applicable and amenable to drug development. We use internal resources to develop our potential protein therapeutics and have established development alliances with Abgenix, Inc. (“Abgenix”) to support our antibody projects, Bayer AG (“Bayer”) to support small molecule projects for obesity and diabetes, TopoTarget A/S (“TopoTarget”) to support small molecule histone deacetylase (“HDAC”) inhibitor projects for oncology and inflammatory diseases, and Seattle Genetics, Inc. (“Seattle Genetics”) to support antibody-drug conjugate projects.

As our pipeline has matured over the past few years, we have decreased our early-stage target discovery efforts and focused our resources on the advancement of our pipeline of potential protein, antibody and small molecule therapeutics into clinical development. In 2003, we initiated a Phase I trial on CG53135 after receiving U.S. Food and Drug Administration (“FDA”) clearance. CG53135 is being investigated as a potential protein therapeutic for oral mucositis (“OM”) in cancer patients that are undergoing chemotherapy and radiotherapy. During 2004, we continued to make progress on the development of CG53135 for OM, including the initiation of an additional Phase I study in cancer patients undergoing bone marrow transplantation which complements the first Phase I study in colorectal cancer patients, since CG53135 is being investigated for the prevention and treatment of OM in patients with solid tumors, such as colorectal cancer, as well as in patients with hematological tumors, such as the ones that require bone marrow transplantation. We anticipate that this Phase I study in cancer patients undergoing bone marrow transplantation will help build momentum to initiate a Phase II study in 2004 in this same patient population.

In February 2004, we received orphan drug designation from the FDA for CG53135 in OM, which we believe will help to strengthen the program by offering important clinical development and commercialization benefits. In June 2004, we presented animal model data at the 16th Annual International Symposium on Supportive Care in Cancer held by the Multinational Association of Supportive Care in Cancer that highlights the potential of this molecule and differentiates it from competing products. The data demonstrates that a single-dose of CG53135 administered to patients exposed to chemotherapy but before the development of active OM reduces the severity and duration of subsequent OM; and that administration of CG53135 to animals with active OM resulted in a significant reduction in the number of days and severity of OM. This preclinical data supports the Company’s strategy to investigate CG53135 as a single dose agent for the prevention of OM and as a treatment for active OM. The potency of CG53135 is believed to be due to the molecule’s activity on two critical layers of cells (epithelial and mesenchymal) present in the mucosa lining of the mouth and the remainder of a patient’s gastrointestinal tract.

In June 2004, we added PXD101, a novel HDAC inhibitor, to our pipeline through a license and collaboration agreement with TopoTarget. PXD101 is one of the most advanced HDAC inhibitors in development and will be investigated as a potential treatment of both solid and hematological cancers either alone, or in combination with other cancer drugs. The collaboration with TopoTarget also provides us with access to their extensive library of HDAC inhibitor candidates. HDAC inhibitors represent a new mechanistic class of anti-cancer therapeutics that target HDAC enzymes, and have been shown to: arrest growth of cancer cells; induce apoptosis, or programmed cell death; promote differentiation; inhibit angiogenesis; and sensitize cancer cells to overcome drug resistance. A Phase I clinical trial evaluating PXD101 in patients with solid tumors was initiated in October 2003. A second Phase I clinical trial was initiated in June 2004 to evaluate the safety and potential efficacy of PXD101 in patients with hematological cancers. We anticipate that PXD101 will transition to Phase II in the first half of 2005.

CR002, which is the most advanced fully-human monoclonal antibody stemming from our collaboration with Abgenix, is currently in preclinical development and we anticipate initiating clinical trials of CR002 later this year.

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CR002 is a novel fully-human monoclonal antibody with the potential to treat forms of kidney inflammation that, if left untreated, could progress to kidney failure. In addition to CG53135, PXD101, and CR002, we have over 10 potential protein, antibody and small molecule therapeutics currently being evaluated in animal studies or being prepared for animal studies. Many of the investigational new drug applications (“INDs”) that we anticipate filing in the future will be identified from these programs.

To enable us to focus on our drug pipeline, we announced the formation of 454 Life Sciences Corporation (“454”) in June 2000. This majority-owned subsidiary is developing novel nanoscale instrumentation and technologies for rapidly and comprehensively determining the nucleotide sequence — “whole genome sequencing” — of entire genomes. 454’s proprietary technology is expected to have widespread applications in industrial processes, agriculture, animal health, biodefense, human health care, including drug discovery and development, and disease diagnosis. Currently, 454 is focusing on the analysis of viruses and bacteria and, with the support of a $2.4 million grant from the National Human Genome Research Institute, will begin scaling its technology to further analyze fungi, larger model organisms, human DNA, and other genomic applications during 2004. 454 plans to sell both genomic analysis services and complete genomic analysis systems, including instrumentation, reagents and software to end-users. 454 recognized revenue related to its first genomic analysis services during the first quarter of 2004.

We expect to generate value for our shareholders by developing genomics-based therapeutics. We expect to become profitable by commercializing a subset of therapeutics stemming from our development pipeline, and establishing partnerships with pharmaceutical and biotechnology companies for the co-development and co-commercialization of other therapeutics from our development pipeline. Our failure to successfully develop pharmaceutical products that we can commercialize 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. We expect that our revenue or income sources for at least the next several years may be limited to: interest income; payments under various collaboration agreements to the extent milestones are met; and 454 grant, service and product revenue (to the extent 454’s technology is successfully commercialized).

We expect to continue to incur substantial expenses relating to our research and development efforts, as we focus on: preclinical studies and clinical trials required for the development of therapeutic protein, antibody and small molecule product candidates; external programs identified by our platform as being promising and synergistic with our products and expertise; and 454, as it continues work on the development and commercialization of its technology for whole genome analysis. Conducting clinical trials is a lengthy, time-consuming and expensive process. We will incur substantial expenses for, and devote a significant amount of time to, these studies. As a result, we expect to incur continued and increasing losses over the next several years, unless we are able to realize additional revenues under existing or new collaboration agreements or through 454’s sales of genomic analysis services and/or complete genomic analysis systems. The timing and amounts of such revenues, if any, cannot be predicted with certainty and may fluctuate. Results of operations for any period may be unrelated to the results of operations for any other period. In addition, historical results should not be viewed as indicative of future operating results.

The 2003 consolidated financial statements have been reclassified to conform to the classifications used in 2004. All dollar amounts in tabular presentations are shown in millions, unless otherwise noted.

Critical Accounting Policies and Use of Estimates

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, and revenues and expenses, and as such, actual results may differ from our estimates under different assumptions or conditions. Our significant accounting policies are fully described in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2003.

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Results of Operations

The following tables set forth a comparison of the components of our net loss for the three and six month periods ended June 30, 2004 and 2003 (in millions):

	Three months ended June 30,
	2004		2003			$ Change			% Change
Grant revenue	$	0.4		—		$	0.4		100	%
Collaboration revenue		0.9	$	1.7			(0.8	)	(47	)%
Grant research expenses		0.1		—			0.1		100	%
Research and development expenses		24.6		18.4			6.2		34	%
General and administrative expenses		5.0		4.8			0.2		4	%
Restructuring and related charges		—		2.9			(2.9	)	(100	)%
Interest income		2.0		2.1			(0.1	)	(5	)%
Interest expense		3.3		2.5			0.8		32	%
Income tax benefit (expense)		0.1		(0.1	)		0.2		200	%
Minority interest in subsidiary loss		1.4		1.5			(0.1	)	(7	)%
Net loss	$	28.2	$	23.4			4.8		21	%

	Six months ended June 30,
	2004		2003		$ Change			% Change
Grant revenue	$	0.4		—	$	0.4		100	%
Collaboration revenue		2.5	$	3.6		(1.1	)	(31	)%
Grant research expenses		0.1		—		0.1		100	%
Research and development expenses		39.7		32.8		6.9		21	%
General and administrative expenses		9.8		9.8		—		—
Restructuring and related charges		—		2.9		(2.9	)	(100	)%
Interest income		4.0		4.4		(0.4	)	(9	)%
Interest expense		6.2		4.9		1.3		27	%
Loss on extinguishment of debt		0.3		—		0.3		100	%
Income tax benefit		0.2		—		0.2		100	%
Minority interest in subsidiary loss		2.8		2.8		—		—
Net loss	$	46.2	$	39.6		6.6		17	%

Grant revenue. The increase in grant revenue for the three and six months ended June 30, 2004 was a result of a federal grant awarded to 454 in May 2004 from the National Human Genome Research Institute, one of the National Institutes of Health (“NIH”). This grant will partially fund the scale up of 454’s technology toward sequencing larger genomes. The grant allowed 454 to recover all expenses incurred after February 2004 that were directly related to the research outlined in the grant award. We expect that grant revenue for the remaining quarters of 2004 will remain fairly consistent with the second quarter of 2004.

Collaboration revenue. The decreases in collaboration revenue for the three and six months ended June 30, 2004 were primarily a result of a decline in revenue recognized from various strategic alliances and the on-going change in our business strategy, which is to commercialize therapeutics from our development pipeline, rather than focusing on short-term revenue generating service-based collaborations. We expect that 2004 collaboration revenue will remain fairly constant as compared to 2003, reflecting continued progress of the Bayer alliance and the Philip Morris collaboration, as well as the inclusion of nominal revenues expected from the commercialization of 454’s new technology.

Grant research expenses. The increase in grant research expenses for the three and six months ended June 30, 2004 was a result of a federal grant awarded to 454 in May 2004 from the NIH, which will partially fund the scale up of 454’s technology toward sequencing larger genomes. Grant research expenses are related to expenses incurred from mid-May 2004 through June 2004 that were specifically associated with the research under the grant. We expect that grant research expenses for the third and fourth quarters of 2004 will increase slightly as 454 only incurred expenses related to this grant for half of the second quarter of 2004.

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Research and development expenses.

The following table sets forth a comparison of research and development expenses by segment,

for the three and six month periods ended June 30, 2004 and 2003 (in millions):

	Three months ended June 30,
	2004		2003		$ Change		% Change
Research and development expenses:
CuraGen	$	21.1	$	15.5	$	5.6	36	%
454		3.5		2.9		0.6	21	%
Total	$	24.6	$	18.4

	Six months ended June 30,
	2004		2003		$ Change		% Change
Research and development expenses:
CuraGen	$	33.1	$	27.1	$	6.0	22	%
454		6.6		5.7		0.9	16	%
Total	$	39.7	$	32.8

Research and development expenses consist primarily of salary and benefits, supplies and reagents, contractual services, perpetual license fees, and facility costs. Our research and development efforts are concentrated on four major project areas: collaborations; preclinical drug candidates; clinical trials; and our majority-owned subsidiary, 454. With the exception of 454, we budget and monitor our research and development costs by expense category, rather than by project, because these costs often benefit multiple projects and/or our technology platform. However, once we receive FDA clearance to conduct a Phase I clinical trial for a potential therapeutic, we begin to track the direct research and development costs associated with that clinical candidate. As of June 30, 2004, we had incurred approximately $12.5 million of direct research and development expenses related to our initial clinical candidate, CG53135, for which we initiated a Phase I clinical trial for oral mucositis in the first quarter of 2003 and initiated an additional Phase I study in cancer patients undergoing bone marrow transplantation during the second quarter of 2004. As of June 30, 2004, we had not incurred any material costs related to our clinical candidate, PXD101, for which a Phase I clinical trial was initiated in patients with solid tumors in the fourth quarter of 2003, and an additional Phase I clinical trial was initiated in patients with hematological cancer in the second quarter of 2004. Below is a summary that reconciles our total research and development expenses for the three and six month periods ended June 30, 2004 and 2003 into the major categories mentioned above (in millions):

	Three months ended June 30,
	2004		2003		$ Change			% Change
Salary and benefits	$	5.7	$	7.0	$	(1.3	)	(19	)%
Supplies and reagents		3.3		5.0		(1.7	)	(34	)%
Contractual and manufacturing costs		4.8		2.7		2.1		78	%
Perpetual license fees		7.2		—		7.2		100	%
Depreciation and amortization		1.2		1.4		(0.2	)	(14	)%
Overhead		2.4		2.3		0.1		4	%
Total research and development expenses	$	24.6	$	18.4

	Six months ended June 30,
	2004		2003		$ Change			% Change
Salary and benefits	$	11.7	$	13.3	$	(1.6	)	(12	)%
Supplies and reagents		6.2		7.5		(1.3	)	(17	)%
Contractual and manufacturing costs		7.2		4.8		2.4		50	%
Perpetual license fees		7.2		—		7.2		100	%
Depreciation and amortization		2.8		2.7		0.1		4	%
Overhead		4.6		4.5		0.1		2	%
Total research and development expenses	$	39.7	$	32.8

The increases in research and development expenses for CuraGen for the three and six months ended June 30, 2004 were primarily due to an increase in contractual services related to our preclinical studies and clinical trials, and perpetual license fee payments of approximately $7.0 million primarily related to the recent addition of the TopoTarget and Seattle Genetics collaborations, offset by a reduction in the first quarter of 2004 of prior year accruals related to payments subsequently determined to be no longer owed due to amended contract terms for the Abgenix collaboration. In addition, decreases in salary and benefits, and supplies and reagents, in connection with the June 2003 restructuring plan offset the overall increases in research and development expenses. We anticipate that research and development expenses, excluding perpetual license fees, will increase for the remainder of 2004 as we continue to advance our pipeline of protein, antibody, and small molecule therapeutics.

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The increases in research and development expenses for 454 for the three and six months ended June 30, 2004 were primarily due to increased personnel costs, lab supplies and reagents, consulting fees and depreciation expense associated with developing a measurement service center and manufacturing capabilities in connection with the preparation for commercialization of 454’s technology. We anticipate that 454’s research and development expenses will continue to increase in the second half of 2004 in connection with further improvements of its technology.

Currently, our potential pharmaceutical products require significant research and development efforts and preclinical testing, and will require extensive clinical trials prior to submitting an application to regulatory agencies for their commercial use. Although we are conducting human studies with respect to CG53135 and PXD101, we may not be successful in developing or commercializing CG53135, PXD101 or other products. Our product candidates are subject to the risks of failure inherent in the development and commercialization of pharmaceutical products and we cannot currently reliably estimate when, if ever, our product candidates will generate revenue and cash flows.

Completion of research and development, preclinical testing and clinical trials may take many years. Estimates of completion periods for any of our major research and development projects are highly speculative and variable, depending on the nature of the disease indication, how common it is among the general populace, and the results of the research. For example, preclinical testing and clinical trials can often go on for an indeterminate period of time since the results of tests are continually monitored, with each test considered “complete” only when sufficient data has been accumulated to assess whether the next phases are warranted or whether the effort should be abandoned. Typically, Phase I clinical trials are expected to last between 12 and 24 months, Phase II clinical trials are expected to last between 24 and 36 months and Phase III clinical trials are expected to last between 24 and 60 months. The most significant time and costs associated with clinical development are the Phase III trials as they tend to be the longest and most comprehensive studies conducted during the drug development process.

In addition, many factors may delay the commencement and speed of completion of preclinical testing and clinical trials, including the number of patients participating in the trial, the duration of patient follow-up required, the number of clinical sites at which the trials are conducted, and the length of time required to locate and enroll suitable patient subjects. The successful completion of our development programs and the successful development of our product candidates are highly uncertain and are subject to numerous challenges and risks. Therefore, we cannot presently estimate anticipated completion dates for any of our projects. See also “Risks Related to Our Business.”

Due to the variability in the length of time necessary to develop a product candidate, the uncertainties related to the cost of projects and our ability to obtain governmental approval for commercialization, accurate and meaningful estimates of the ultimate costs to bring our product candidates to market are not available. If our major research and development projects are delayed, then we can expect to incur additional costs in conducting our preclinical testing and clinical trials and a longer period of time before we become profitable from our operating activities, as described more fully in the Risk Factors section under the headings “We have a history of operating losses and expect to incur losses in the future” and “We may need to raise additional funding, which may not be available on favorable terms, if at all.” Accordingly, the timing of the potential market approvals for our existing product candidates, CG53135, PXD101, and future product development candidates, may have a significant impact on our capital requirements.

General and administrative expenses. General and administrative expenses for the three and six months ended June 30, 2004 remained relatively consistent with the same periods in 2003. General and administrative expenses are expected to remain constant for the remainder of 2004.

Interest income. Interest income for the three and six months ended June 30, 2004 decreased primarily due to lower yields in our investment portfolio and decreases in the cash and investment balances. We earned an average yield of 2.0% in the second quarter of 2004 as compared to 2.1% in the second quarter of 2003, and earned an average yield of 2.1% in the first six months of 2004 as compared to 2.2% during the same period in 2003. During 2004, we anticipate that interest income will decrease by approximately $1.0 million as compared to 2003, as a result of the utilization of cash and investment balances in the normal course of operations and the repurchase of $20.0 million of our 6% convertible subordinated debentures due in 2007, offset by the receipt of net proceeds of approximately $106.2 million from our 4% convertible subordinated notes due in 2011. However, in the event that later in 2004 we use cash to repay a portion of our remaining existing debt due in 2007, our anticipation of the size of anticipated decrease in interest income for 2004 will differ accordingly. During the remainder of 2004, we expect the yields in our investment portfolio to be consistent with the first half of 2004.

Interest expense. We expect interest expense to increase to approximately $13.0 million during 2004, attributable to the interest to be paid semi-annually to the holders of our $110.0 million 4% convertible subordinated notes due in 2011, offset by a decrease in interest expense related to the repurchase of $20.0 million of the 6% convertible subordinated debentures due in 2007.

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Loss on extinguishment of debt. In February 2004, we repurchased $20.0 million of our 6% convertible subordinated debentures due in 2007, for total consideration of $20.0 million, plus accrued interest of $0.05 million to the date of repurchase. As a result of the transaction, and in accordance with SFAS 145, we recorded a loss of approximately $0.3 million in “Loss on extinguishment of debt”, which includes the write-off of the ratable portion of unamortized deferred financing costs relating to the repurchased debt.

Minority interest in subsidiary loss. Minority interest in subsidiary loss for the three and six months ended June 30, 2004 (which is the portion of 454’s loss attributable to shareholders of 454 other than us) remained relatively consistent with the same periods in 2003. During 2004, losses attributed to the minority ownership in 454 are expected to remain fairly constant as compared to 2003, as 454 continues to make progress towards commercializing and developing new technologies.

Liquidity and Capital Resources

Since our inception, we have financed our operations and met our capital expenditure requirements primarily through public equity offerings, private placements of equity securities, convertible subordinated debt offerings, revenues received under our collaborative research agreements and government grants, capital leases and exercises of stock options. On February 17, 2004, we completed an offering of $100.0 million of 4% convertible subordinated notes due February 15, 2011, and received net proceeds of approximately $96.5 million. In addition, on March 16, 2004, the initial purchasers exercised their option to purchase an additional $10.0 million of 4% convertible subordinated notes due February 15, 2011, providing us with additional net proceeds of approximately $9.7 million. On February 17, 2004, we repurchased $20.0 million of our 6% convertible subordinated debentures due in 2007, for total consideration of $20.0 million, plus accrued interest of $0.05 million to the date of repurchase. As of June 30, 2004, we had recognized $108.9 million of cumulative sponsored research revenues from collaborative research agreements and government grants. At June 30, 2004, our gross investment in lab and office equipment, computers, land and leasehold improvements was $47.9 million. Since inception, we have not had any off-balance sheet arrangements. To date, inflation has not had a material effect on our business.

Cash and investments. The following table depicts the components of our operating, investing and financing activities for the six months ended June 30, 2004, using the direct cash flow method (in millions):

Cash received from collaborators	$	2.2
Cash received from grantor		0.3
Cash paid to suppliers and employees		(46.2	)
Restructuring and related charges paid		(0.4	)
Interest income received		4.1
Interest expense paid		(4.6	)
Net cash and investments used in operating activities		(44.6	)
Cash paid to acquire property and equipment, net of sales proceeds		(2.2	)
Cash paid to acquire non-perpetual licenses		(0.3	)
Convertible loan to collaborator		(5.0	)
Net cash and investments used in investing activities		(7.5	)
Cash paid for principal portion of capital leases		(0.2	)
Cash received from employee stock option exercises		0.4
Cash received from issuance of convertible debt, net of financing costs		106.2
Cash paid for extinguishment of debt		(20.0	)
Net cash and investments provided by financing activities		86.4
Unrealized loss on marketable securities		(2.8	)
Net increase in cash and investments		31.5
Cash and investments, beginning of period		343.6
Cash and investments, end of period	$	375.1

The increase in cash and investments during the first half of 2004 was primarily a result of the receipt of net proceeds of approximately $106.2 million from our 4% convertible subordinated notes due in 2011, offset by the repurchase of $20.0 million of our 6% convertible subordinated debentures due in 2007, additional operating losses in support of our research and development activities, acquisitions of additional property and equipment and intangible assets, and a convertible loan to a collaborator (see Note 7).

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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.

Future Liquidity

Sources of Liquidity. During 2004, we expect to continue to fund our operations through a combination of the following sources: cash and investment balances; interest income; collaboration revenue; grant revenue; and potential public securities offerings and/or private strategic-driven common stock offerings.

Uses of Liquidity. Throughout 2004, 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: personnel costs; supplies and reagents; clinical trial related costs such as contractual services and manufacturing costs; and capital expenditures. These costs will be incurred primarily in connection with the following preclinical and clinical efforts: ongoing clinical trial costs and anticipated Phase II manufacturing costs beginning in 2004 on our protein therapeutic CG53135 in the area of oral mucositis; costs related to our manufacturing agreement with Abgenix for CR002; toxicology costs to support our planned submission of an IND for CR002; preclinical and clinical costs in connection with the use of our protein therapeutic CG53135 to treat alternative clinical indications; costs related to the Phase I trial of PXD101 in patients with solid tumors and hematological cancers; external programs identified by our platform as being promising and synergistic with our products and expertise; and legal expenses in support of the continued protection of our intellectual property portfolio. In addition, we expect the payments of interest to the holders of our convertible subordinated debt due in 2007 and in 2011 to be a significant use of liquidity.

Depending on market and other conditions, from time to time, we may repurchase a portion of the remainder of our existing notes due in 2007 in open market purchases, in privately negotiated transactions, or otherwise. In addition, we will use cash and investments for working capital, general corporate purposes and potentially for future acquisitions of complementary businesses or technologies. The amounts and timing of our actual expenditures will depend upon numerous factors, including the amount and extent of our acquisitions, our product development activities, our investments in technology and the amount of cash generated by our operations. Actual expenditures may vary substantially from our estimates. Our failure to use such funds effectively could have a material adverse effect on our business, results of operations and financial condition. We anticipate that we will also incur significant capital expenditures in 2004, primarily for the expansion of our existing protein production laboratory facilities, in addition to the purchase of equipment and leasehold improvements at both our and 454’s research facilities and administrative offices.

We believe that our existing cash and investment balances and other sources of liquidity will be sufficient to meet our requirements for the next twenty-four months. Our operating and capital expenditures are considered to be crucial to our future success, and by continuing to make strategic investments in our preclinical and clinical drug pipeline, we believe that we are building substantial value for our shareholders. The adequacy of our available funds to meet our future operating and capital requirements, including the repayment of our remaining $130.0 million of 6% convertible subordinated debentures due February 2, 2007 and our $110.0 million of 4% convertible subordinated notes due February 15, 2011, will depend on many factors. These factors include: the number, breadth and progress of our research, product development and clinical programs; the costs and timing of obtaining regulatory approvals for any of our products; in-licensing of pharmaceutical products; costs incurred in enforcing and defending our patent claims and other intellectual property rights; and potential future acquisitions of complementary businesses or technologies.

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 objective of our long-term business plan, and may be unable to continue operations. This result could cause the Company’s shareholders to lose all or a substantial portion of their investment.

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Contractual Obligations

The following table represents our consolidated contractual obligations as of June 30, 2004 (in millions):

	Payments Due Year Ended December 31,
	Total		2004		2005		2006		2007		2008		Thereafter
Long-term debt obligations	$	240.0		—		—		—	$	130.0		—	$	110.0
Interest on convertible subordinated debt		54.2	$	6.1	$	12.2	$	12.2		8.3	$	4.4		11.0
Operating leases		7.6		1.4		2.8		1.9		1.2		0.3		—
Purchase commitments (1)		8.0		3.0		2.0		2.0		1.0		—		—
Other long-term liabilities		1.5		—		0.5		0.5		0.5		—		—
Total	$	311.3	$	10.5	$	17.5	$	16.6	$	141.0	$	4.7	$	121.0

(1) Includes commitments for capital expenditures and contractual services, but excludes amounts included on our balance sheet as liabilities and certain purchase obligations as discussed below.

The expected timing of payment of the obligations discussed above is based on our current information. Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.

Purchase obligations for supplies and reagents are not included in the table above, because our purchase orders typically represent authorizations to purchase rather than binding agreements. For the purposes of this table, contractual obligations for the purchase of goods or services are defined as agreements that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase orders are based on our current operating needs and are fulfilled by our vendors within short time periods. We do not have significant agreements for the purchase of supplies and reagents specifying minimum quantities or set prices. However, we have entered into agreements for contractual services primarily relating to the manufacturing costs of our protein therapeutic CG53135, our fully-human monoclonal antibody CR002, and a license and collaboration agreement with TopoTarget under which we have agreed to fund the pre-clinical development and clinical testing costs of various HDAC inhibitors, and have included these amounts in our purchase commitments above.

Minority Interest in Subsidiary

As of June 30, 2004, minority interest in subsidiary was $5.4 million. Minority interest in subsidiary is related to 454 and reflects the minority shareholders’ capitalization, less a gain recognition of $3.9 million as a result of our contribution of technology to 454 in 2000, and less the minority shareholders’ portion of losses incurred to date. The loss attributed to the minority ownership in 454 is expected to remain fairly constant during 2004, as 454 continues to make progress towards commercializing and developing new technologies.

Certain Factors That May Affect Results of Operations

This report contains certain forward-looking statements. Generally, these statements can be identified by the use of terms such as “estimate,” “project,” “plan,” “intend,” “expect,” “believe,” “anticipate,” “should,” “may,” “will,” and similar expressions. Forward-looking statements may include statements about: (i) our ability to pay the remaining cash requirements of $0.8 million through the end of 2008 as part of our June 2003 restructuring plan, (ii) our expectation that our Phase I study of CG53135 in cancer patients undergoing bone marrow transplantation will help build momentum to initiate a Phase II study in 2004 in this same patient population, (iii) our expectation that PXD101 will transition to Phase II in the first half of 2005, (iv) our expectation of initiating clinical trials of CR002 later this year, (v) our expectation that many of the INDs that we plan to file in the future will be identified from our animal studies, (vi) the expectation that 454’s proprietary technology will have widespread applications in industrial processes, agriculture, animal health, biodefense, human health care, including drug discovery and development, and disease diagnosis, (vii) the ability of 454 to scale its technology to further analyze fungi, larger model organisms, human DNA, and other genomic applications during 2004, (viii) the ability of 454 to sell both genomic analysis services and complete genomic analysis systems, including instrumentation, reagents and software to end-users, (ix) our expectation to become profitable by commercializing a subset of therapeutics stemming from our development pipeline, and establishing partnerships with pharmaceutical and biotechnology companies for the co-development and co-commercialization of therapeutics from our development pipeline, (x) our expectation that grant revenue for the remaining quarters of 2004 will remain fairly consistent with the second quarter of 2004, (xi) our expectation that 2004 collaboration revenue will remain fairly constant as compared to 2003, (xii) our expectation that grant research

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expenses for the third and fourth quarters of 2004 will increase slightly as 454 only incurred expenses related to this grant for half of the second quarter of 2004, (xiv) our expectation that general and administrative expenses will remain constant for the remainder of 2004, (xv) our expectation that interest income will decrease by approximately $1.0 million overall as compared to 2003, (xvi) our expectation that the 2004 yields in our investment portfolio will be consistent with the first half of 2004, (xvii) our expectation that interest expense will increase to approximately $13.0 million during 2004, (xviii) our expectation that losses attributed to the minority ownership in 454 will remain fairly constant as compared to 2003, (xix) our plan to continue making substantial investments in our emerging preclinical and clinical drug pipeline throughout 2004, (xx) our expectation that the payments of interest to the holders of our convertible subordinated debt due in 2007 and 2011 to be a significant use of liquidity, (xxi) our expectation that we will incur significant capital expenditures in 2004, primarily for the expansion of our existing protein production laboratory facilities, in addition to the purchase of equipment and leasehold improvements at both our and 454’s research facilities and administrative offices, and (xxii) our belief that our existing cash and investment balances and other sources of liquidity will be sufficient to meet our requirements for the next twenty-four months.

These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements, therefore, should be considered in light of all of the information included or referred to in this report, including the cautionary information set forth under the heading Risk Factors below. 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, unless required by law.

Risk Factors

Risks Related to Our Business

Because our business strategy is still largely untested, we do not know whether we will be able to commercialize any of our products or to what extent we will generate revenue or become profitable.

We do not know whether we can implement our business strategy successfully because we are in the early stages of development. Initially, we set out to find as many genes and their related functions as possible and are now using that information to develop therapeutic products. This strategy is largely untested. Other companies first target particular diseases and try to find cures for them, have a limited number of genes and proteins of potential therapeutic interest, or rely on other more proven strategies. If our strategy does not result in the development of products that we can commercialize, we will be unable to generate revenue. We have not completed development of any product based on our genomics research. Although our first potential product has entered clinical trials, we cannot be certain that this or any future products will receive marketing approval. If we are unable to commercialize products, we may not be able to recover our investment in our product development efforts.

Because clinical trials for our products will be expensive and protracted and their outcome is uncertain, we must invest substantial amounts of time and money that may not yield viable products.

Conducting clinical trials is a lengthy, time-consuming and expensive process. Before obtaining regulatory approvals for the commercial sale of any product, we must demonstrate through laboratory, animal and human studies that such product is both effective and safe for use in humans. Preclinical drug candidate testing and clinical drug trials can often go on for an undetermined period of time in the sense that testing and trials are continually monitored, with each test or trial considered “complete” only when sufficient data has been accumulated to assess whether the next phases are warranted or whether the effort should be abandoned. Many factors may delay the commencement and speed of completion of preclinical drug candidate testing and clinical drug trials, including the size and number of patients participating in the trial, the duration of patient follow-up required, the number of clinical sites at which the trials are conducted, and the length of time required to locate and enroll suitable patient subjects. We will incur substantial expense for, and devote a significant amount of time to, these studies.

Completion of clinical trials may take many years. The length of time required varies substantially according to the type, complexity, novelty and intended use of the product candidate. The FDA monitors the progress of each phase of testing, and may require the modification, suspension, or termination of a trial if it is determined to present excessive risks to patients. Our rate of commencement and completion of clinical trials may be delayed by many factors, including:

• our inability to manufacture sufficient quantities of materials for use in clinical trials;

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• variability in the number and types of patients available for each study, as well as the difficulty in enrolling patients in each study;

• difficulty in maintaining contact with patients after treatment, resulting in incomplete data;

• unforeseen safety issues or side effects;

• poor or unanticipated effectiveness of products during the clinical trials;

• institutional review board delays at institutions assisting us with our clinical trials; and

• government or regulatory delays.

Studies that we conduct, or studies which third parties conduct on our behalf, may not demonstrate sufficient effectiveness and safety to obtain the requisite regulatory approvals for these or any other potential products. Regulatory authorities may not permit us to undertake any additional clinical trials. The clinical trial process may be accompanied by substantial delay and expense and there can be no assurance that the data generated in these studies ultimately will be sufficient for marketing approval by the FDA.

We have two products in clinical development and our other products are in preclinical development. None of these products may demonstrate sufficient effectiveness or safety to obtain the requisite regulatory approvals required for initiation or continuation of clinical studies or obtaining marketing approval.

Because we have limited experience in developing, commercializing and marketing products, we may be unsuccessful in our efforts to do so.

Currently, we are developing several potential pharmaceutical products, and such products will require significant research and development and preclinical testing, and will require extensive clinical testing prior to our submitting any regulatory application for their commercial use. Although we are conducting human studies with respect to two products, we have limited experience with these activities and may not be successful in developing or commercializing these or other products. These activities, if undertaken without the collaboration of others, will require the expenditure of significant funds. Such potential pharmaceutical products will be subject to the risks of failure inherent in the development of pharmaceutical products based on new technologies. Before we can commercialize a product, we must rigorously test the product in the laboratory and complete extensive human studies. Even if we complete such studies, our ability to develop and commercialize products will depend on our ability to:

• complete laboratory testing and human studies;

• obtain and maintain necessary intellectual property rights to our products;

• obtain and maintain necessary regulatory approvals related to the efficacy and safety of our products;

• enter into arrangements with third parties to manufacture our products on our behalf; and

• deploy sales and marketing resources effectively or enter into arrangements with third parties to provide these functions.

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As a result of these possibilities, we may not be able to develop through our research and development activities any commercially viable products. We cannot be certain that expenses for testing and study will yield profitable products or even products approved for marketing by the FDA. If we are not successful in identifying products that we can develop commercially, we may be unable to recover the large investment we have made in research, development and manufacturing. In addition, should we choose to develop pharmaceutical products internally, we will have to make significant investments in pharmaceutical product development, marketing, sales and regulatory compliance resources, and we will have to establish or contract for the manufacture of products under the current good manufacturing practices (“cGMPs”) of the FDA. Any potential products developed by our licensees will be subject to the same risks.

We do not have any marketed products. If we develop products that can be marketed, we intend to market the products either independently or together with collaborators or strategic partners. If we decide to market any products independently, we will incur significant additional expenditures and commit significant additional management resources to establish a sales force. For any products that we market together with partners, we will rely, in whole or in part, on the marketing capabilities of those parties. We may also contract with third parties to market certain of our products. Ultimately, we and our partners may not be successful in marketing our products.

We depend on a limited number of suppliers and depend on them to manufacture and supply critical components of our development and clinical programs.

Currently, we contract with third-party manufacturers or develop products with partners and use the partners’ manufacturing capabilities. As we use others to manufacture our products, we depend on those parties to comply with cGMPs, and other regulatory requirements and to deliver materials on a timely basis. These parties may not perform adequately. Any failures by these third parties may delay our development of products or the submission of these products for regulatory approval.

We depend on third-party research organizations to design and conduct our laboratory testing and human studies. If we are unable to obtain any necessary testing services on acceptable terms, we may not complete our product development efforts in a timely manner. As we rely on third parties for laboratory testing and human studies, we may lose some control over these activities and become too dependent upon these parties. These third parties may not complete testing activities on schedule or when we request.

Because neither we nor any of our collaborative partners have received marketing approval for any product resulting from our research and development efforts, and may never be able to obtain any such approval, we may not be able to generate any product revenue.

All the products being developed by our collaborative partners also will require additional research and development, extensive preclinical studies and clinical trials and regulatory approval prior to any commercial sales. In some cases, the length of time that it takes for our collaborative partners to achieve various regulatory approval milestones may affect the payments that we are eligible to receive under our collaboration agreements. We and our collaborative partners may need to address a number of technical challenges successfully in order to complete development of our products. Moreover, these products may not be effective in treating any disease or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining regulatory approval or prevent or limit commercial use.

We may be unable to manufacture or obtain sufficient quantities of our products and ensure their proper performance and quality.

Biopharmaceuticals must be produced under the cGMPs of the FDA. We do not have facilities capable of manufacturing drug products under cGMPs and must outsource any such production. We are devoting resources to establishing our own manufacturing capabilities to support development and preclinical activities and are contracting with third-party vendors for the manufacture of materials for use in humans. We may be unable to contract successfully for cGMPs manufacture of any products and may be unable to obtain required quantities of our products economically. We may not be able to obtain capacity to produce a sufficient amount of commercial product to meet our commercial and clinical development needs. Failure to meet the demand for product may adversely affect our ability to continue to market the product.

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Compliance with government regulation is critical to our business and failure to satisfy regulatory requirements could impair our business.

Prior to the marketing of any new drug developed by us, or by our collaborators, that new drug must undergo an extensive regulatory review process in the United States and other countries. This regulatory process, which includes preclinical and clinical studies, as well as post-marketing surveillance 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. Even if the FDA approves our products, we will still need to obtain institutional review board approval, which may involve additional delays. The rate of completion of clinical trials depends upon, among other factors, the enrollment of patients. Patient enrollment is a function of many factors, including:

• timing and restriction of institutional review board approval;

• the size of the patient population;

• proximity of patients to clinical sites;

• eligibility criteria for the study;

• time commitment of a patient to the study; and

• existence of competitive clinical trials.

We have not had any of our product candidates receive approval for commercialization in the United States or elsewhere. Neither we nor our collaborators may be able to conduct clinical testing or obtain the necessary approvals from the FDA or other regulatory authorities for any products. Failure by us or our collaborators to obtain required governmental approvals will delay or preclude our collaborators or us from marketing drugs 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. Even where a product is exempted from FDA clearance or approval, the FDA may impose restrictions as to the types of customers to which we can market and sell our products. Such restrictions may materially and adversely affect our business, financial condition and results of operations.

In addition, the FDA may condition marketing approval on the conduct of specific post-marketing studies to further evaluate safety and efficacy. Rigorous and extensive FDA regulation of pharmaceutical products continues after approval, particularly with respect to compliance with cGMPs reporting of adverse effects, advertising, promotion and marketing. Discovery of previously unknown problems or failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions, any of which could materially adversely affect our business.

We must obtain regulatory approval by governmental agencies in other countries prior to commercialization of our products in those countries. Foreign regulatory systems may be just as rigorous, costly and uncertain as in the United States.

We rely significantly on our collaborative partners, and our business could be harmed if we are unable to maintain strategic alliances.

As part of our business strategy, we have strategic research and development alliances with companies to gain access to specific technologies. These alliances with other pharmaceutical and biotechnology companies may provide us with access to unique technologies, access to 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, Bayer, TopoTarget, and Seattle Genetics in addition to numerous smaller agreements to facilitate these efforts. In these strategic alliances, either party can terminate the agreement at any time

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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 collaborators 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.

We depend on attracting and retaining key employees.

We are highly dependent on the principal members of our management and scientific staff, including Jonathan M. Rothberg, Ph.D., our Chief Executive Officer, President and Chairman of the Board; David M. Wurzer, Executive Vice President, Treasurer and Chief Financial Officer; Christopher K. McLeod, Executive Vice President; Timothy M. Shannon, M.D., Executive Vice President and Chief Medical Officer; and Richard F. Begley, Ph.D., President and Chief Executive Officer of 454. The loss of services of any of these personnel could materially adversely affect our business, financial condition and results of operations. We have entered into employment agreements with all of the principal members of our management and scientific staff. We maintain key person life insurance on the life of Dr. Rothberg in the amount of $2.0 million. Our future success also will depend in part on the continued services of our key scientific and management personnel and our ability to attract, hire and retain additional personnel. There is intense competition for such qualified personnel and there can be no assurance that we will be able to continue to attract and retain such personnel. Failure to attract and retain key personnel could materially, adversely affect our business, financial condition and results of operations.

We depend on academic collaborators, consultants and scientific advisors.

We have relationships with collaborators and consultants at academic and other institutions who conduct research at our request. These collaborators and consultants are not our employees. Substantially all of our collaborators and consultants are employed by employers other than us and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. As a result, we have limited control over their activities and, except as otherwise required by our collaboration and consulting agreements, can expect only limited amounts of their time to be dedicated to our activities. Our ability to discover genes and biological pathways involved in human disease and commercialize products based on those discoveries may depend in part on continued collaborations with researchers at academic and other institutions. We may not be able to negotiate additional acceptable collaborations with collaborators or consultants at academic and other institutions.

Our academic collaborators, consultants and scientific advisors may have relationships with other commercial entities, some of which could compete with us. Our academic collaborators, consultants and scientific advisors sign agreements which provide for confidentiality of our proprietary information and of the results of studies. We may not be able to maintain the confidentiality of our technology and other confidential information in connection with every academic collaboration or advisory arrangement, and any unauthorized dissemination of our confidential information could materially adversely affect our business, financial condition and results of operations. Further, any such collaborator, consultant or advisor may enter into an employment agreement or consulting arrangement with one of our competitors.

Competition in our field is intense and likely to increase.

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

• biotechnology companies;

• pharmaceutical companies;

• academic and research institutions; and

• government agencies.

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We also are subject to significant competition from organizations that are pursuing approaches, 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, protein therapeutics, and fully-human antibodies generally is highly competitive. Our competitors include:

• Human Genome Sciences, Inc.;

• Genentech, Inc.;

• ZymoGenetics, Inc.;

• Amgen, Inc.;

• Incyte Pharmaceuticals, Inc.;

• major biotechnology and pharmaceutical companies; and

• universities and other non-profit research organizations.

A number of organizations 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 our ability to commercialize our products. We expect that competition in genomics research, protein therapeutics, and therapeutic antibodies will intensify as technical advances are made and become more widely known. In addition, a number of competitors are producing proteins from genes and claiming both the proteins as potential therapeutics as well as claiming antibodies against these proteins. In many cases generic antibody claims are being issued by the United States Patent and Trademark Office (“USPTO”) even though competitors have not actually made antibodies against the protein of interest, or do not have cellular, animal, or human data to support the use of these antibodies as therapeutics. These claims on proteins as therapeutics and these claims covering all antibodies against the proteins and methods of use in broad human indications are being filed at a rapid rate, and some number of these claims have issued and may continue to issue. In addition, purified proteins, therapeutic data, and antibodies, including polyclonal antibodies, mouse monoclonal antibodies and, in some cases, fully-human monoclonal antibodies, are being generated against a large number of targets within the human genome. All of these activities may make it difficult to commercialize products, or, if licenses are made available, may make the royalty burden on these products so high as to prevent commercial success.

We may engage in acquisitions that are unsuccessful.

In the future, we may engage in acquisitions in order to exploit technology or market opportunities. We are not experienced in acquiring and integrating new businesses. If we acquire another company, we may not be able to integrate the acquired business successfully into our existing business in a timely and non-disruptive manner or at all. Furthermore, an acquisition may not produce the revenues, earnings or business synergies that we anticipate. If we fail to integrate the acquired business effectively or if key employees of that business leave, the anticipated benefits of the acquisition would be jeopardized. The time, capital management and other resources spent on an acquisition that fails to meet our expectations could cause our business and financial condition to be materially and adversely affected. In addition, acquisitions can involve material non-recurring charges and amortization of significant amounts of non-cash acquisition costs that could adversely affect our results of operations.

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If our patent applications do not result in issued patents, then our competitors may obtain rights to commercialize our discoveries.

Our business and competitive position depends on our ability to protect our products, processes and technologies. We file patent applications covering novel genes and gene transcripts, as well as our development products, processes and technologies with the USPTO and major foreign patent authorities. As of the date of this report, we had been issued approximately 70 patents with respect to aspects of our gene portfolio, products, processes and technologies.

Our commercial success also depends in part on obtaining patent protection on genes and proteins for which we or our collaborators discover utility and on products, methods and services based on such discoveries. We have applied for patent protection on novel genes and proteins, novel mutants of known genes and their uses, partial sequences of novel proteins and their gene sequences and uses, and novel uses for previously identified genes discovered by third parties. We have applied for patents on antibodies against the proteins we have discovered, as well as seek or have our partners seek patent protection on the antibodies we produce against these proteins. We have sought and intend to continue to seek patent protection for novel uses for genes and proteins and therapeutic antibodies that may have been patented by third parties. In such cases, we would need a license from the holder of the patent with respect to such gene or protein in order to make, use or sell such gene or protein for such use. We may not be able to acquire such licenses on commercially reasonable terms, if at all. Our patent application filings that result from the identification of genes associated with the cause or effect of a particular disease generally seek to protect the genes and the proteins encoded by such genes as well as antibodies raised against these gene products. We also seek patent protection for our therapeutic, diagnostic and drug screening methods and products.

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. 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 patent positions of pharmaceutical, biopharmaceutical and biotechnology companies, including us, are generally uncertain and involve complex legal and factual questions. Our patent applications may not protect our products, processes and technologies because of the following reasons:

• there is no guarantee that any of our pending patent applications will result in additional issued patents;

• we may develop additional proprietary technologies that are not patentable;

• there is no guarantee that any patents issued to us or our collaborative customers will provide a basis for commercially viable products;

• there is no guarantee that any patents issued to us or our collaborative customers will provide us with any competitive advantages;

• there is no guarantee that any patents issued to us or our collaborative customers will not be challenged or circumvented or invalidated by third parties; and

• there is no guarantee that any patents issued to others will not have an adverse effect on our ability to do business.

In addition, patent law relating to the scope of claims in the technology fields in which we operate is still evolving. The degree of future protection for our proprietary rights is uncertain. Furthermore, there can be no assurance that others will not independently develop similar or alternative technologies, duplicate any of our technologies, or, if patents are issued to us, design around the patented technologies developed by us. In addition, we could incur substantial costs in litigation if we are required to defend ourselves in patent suits brought by third parties or if we initiate such suits.

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The issuance of patents may not provide us with sufficient protection.

We may not be able to obtain further patents for our products, processes and technologies, or, if we are able to obtain further patents, these patents may not provide us with substantial protection or be commercially beneficial. The issuance of a patent is not conclusive as to its validity or enforceability, nor does it provide the patent holder with freedom to operate without infringing the patent rights of others. A patent could be challenged by litigation and, if the outcome of such litigation were adverse to the patent holder, competitors could be free to use the subject matter covered by the patent, or the patent holder may license the technology to others in settlement of such litigation. The invalidation of key patents owned by or licensed to us or non-approval of pending patent applications could increase competition, and materially adversely affect our business, financial condition and results of operations. In addition, any application or exploitation of our technology could infringe patents or proprietary rights of others and any licenses that we might need as a result of such infringement might not be available to us on commercially reasonable terms, if at all. Third parties have indicated to us that they believe we may be required to obtain a license in order to perform certain processes that we use in the conduct of our business or in order to market potential drugs we have in development.

We cannot predict whether our or our competitors’ pending patent applications will result in the issuance of valid patents. Litigation, which could result in substantial cost to us, also may be necessary to enforce our patent and proprietary rights and/or to determine the scope and validity of others’ proprietary rights. We may participate in interference proceedings that may in the future be declared by the USPTO to determine priority of invention, which could result in substantial cost to us. The outcome of any such litigation or interference proceeding might not be favorable to us, and we might not be able to obtain licenses to technology that we require or that, if obtainable, we could license such technology at a reasonable cost.

The public availability of genomic sequence information or other sequence information prior to the time we apply for patent protection on a corresponding full-length or partial gene could adversely affect our ability to obtain patent protection with respect to such gene or gene sequences. In addition, certain other groups are attempting to rapidly identify and characterize genes through the use of gene expression analysis and other technologies. To the extent any patents issue to other parties on such partial or full-length genes or uses for such genes, the risk increases that the sale of potential products, including therapeutics, or processes developed by us or our collaborators may give rise to claims of patent infringement. Others may have filed and in the future are likely to file patent applications covering genes or gene products or antibodies against the gene products that are similar or identical to our products. Any such patent application may have priority over our patent applications. Any legal action against us or our collaborators claiming damages and seeking to enjoin commercial activities relating to the affected products and processes could, in addition to subjecting us to potential liability for damages, require us or our collaborators to obtain a license in order to continue to manufacture or market the affected products and processes or could enjoin us from continuing to manufacture or market the affected products and processes. There can be no assurance that we or our collaborators would prevail in any such action or that any license required under any such patent would be made available on commercially acceptable terms, if at all. We believe that there may be significant litigation in the industry regarding patent and other intellectual property rights. If we become involved in such litigation, it could consume a substantial portion of our managerial and financial resources.

There is substantial uncertainty concerning the extent to which supportive data will be required for issuance of patents for human therapeutics. If data additional to that available to us is required, our ability to obtain patent protection could be delayed or otherwise adversely affected. Although the USPTO issued new utility guidelines in July 1995 that address the requirements for demonstrating utility for biotechnology inventions, particularly for inventions relating to human therapeutics, there can be no assurance that the USPTO examiners will follow such guidelines or that the USPTO’s position will not change with respect to what is required to establish utility for gene sequences and products and methods based on such sequences.

We cannot be certain that our security measures will protect our proprietary technologies.

We also rely upon trade secret protection for some of our confidential and proprietary information that is not subject matter for which patent protection is being sought. We have developed a database of proprietary gene expression patterns and biological pathways which we update on an ongoing basis and which can be accessed over the Internet. We have taken security measures to protect our proprietary technologies, processes, information systems and data and continue to explore ways to enhance such security. Such measures, however, may not provide adequate protection for our trade secrets or other proprietary information. While we require employees, academic collaborators and consultants to enter into confidentiality and/or non-disclosure agreements where appropriate, any of the following could still occur:

• proprietary information could be disclosed;

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• others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technology; or

• we may not be able to meaningfully protect our trade secrets.

We depend upon our ability to license technologies.

We may have to acquire or license certain components of our technologies or products from third parties. We may not be able to acquire from third parties or develop new technologies, either alone or with others. Failure to license or otherwise acquire necessary technologies could materially adversely affect our business, financial condition and results of operations.

The 454 Life Sciences technology platform is in development and the early stages of commercialization.

The technology platform of 454, our majority-owned subsidiary, is still in development and 454 has not had significant sales of its services or products. 454 may not be able to continue to successfully develop or commercialize the 454 technology platform. The success of commercialization of the 454 technology platform depends on many factors, including:

• the acceptance of 454’s technology in the market place;

• technical performance of 454’s platform in relation to existing technologies;

• 454’s ability to obtain key components for the manufacture of the 454 instrument and reagents from suppliers; and

• 454’s ability to obtain licenses to resell reagents for use in the 454 instrument, if required.

454 is subject to competition from organizations that have developed or are developing technologies and products to service 454’s potential customers.

Many of the organizations competing with 454 potentially have greater capital resources, research and development staffs and facilities and marketing capabilities. 454’s potential competitors include:

• Applied Biosystems;

• GE Healthcare (formerly Amersham Biosciences);

• Affymetrix;

• Perlegen; and

• other companies recently formed or soon to be funded to develop whole genome sequencing technologies.

We believe that the future success of 454 will depend in large part on our ability to maintain a competitive position in instruments for the high throughput nucleic acid sequencing field. Before we recover development expenses for our products or technologies, such products or technologies may become obsolete as a result of technological developments by us or others. Our products could also be made obsolete by new technologies which are less expensive or more effective. We may not be able to make the enhancements to our technology necessary to compete successfully with newly emerging technologies. A market for the high throughput nucleic acid sequencing field may not be sufficient to generate revenues significant enough for 454 to achieve profitability.

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We could be liable for any failure to comply with hazardous product regulations.

Our research and development activities involve the controlled use of hazardous materials and chemicals. We are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of such materials and certain waste products. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by federal, state and local laws and regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result and any liability could exceed our resources.

Risks Related to Our Financial Results

We have a history of operating losses and expect to incur losses in the future.

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 several years as we focus our resources on prioritizing, selecting and advancing our most promising drug candidates. We may never be profitable or achieve significant revenues. For example, we experienced net losses of $74.5 million in 2003, $90.4 million in 2002 and $42.9 million in 2001, and as of June 30, 2004 had an accumulated deficit of $335.7 million.

Our quarterly operating results have fluctuated greatly and may continue to do so.

Our operating results have fluctuated on a quarterly basis. We expect that losses will continue to fluctuate from quarter to quarter and that these fluctuations may be substantial. Our results of operations are difficult to predict and may fluctuate significantly from period to period, which may cause our stock price to decline and result in losses to investors. Some of the factors that could cause our operating results to fluctuate include:

• changes in the demand for our services;

• the nature, pricing and timing of products and services provided to our collaborators;

• our ability to compete effectively in our therapeutic discovery and development efforts against competitors that have greater financial or other resources or drug candidates that are in further stages of development;

• acquisition, licensing and other costs related to the expansion of our operations;

• losses and expenses related to our investments;

• regulatory developments or changes in public perceptions relating to the use of genetic information and the diagnosis and treatment of disease based on genetic information;

• regulatory actions and changes related to the development of drugs;

• changes in intellectual property laws that affect our patent rights;

• payments of milestones, license fees or research payments under the terms of our external alliances and collaborations and our ability to monitor and enforce such payments; and

• the timing of intellectual property licenses that we may enter into.

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We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of future performance. In addition, fluctuations in quarterly results could affect the market price of our common stock in a manner unrelated to our long-term operating performance.

The market price of our common stock is highly volatile.

The market price of our common stock has fluctuated widely and may continue to do so. For example, during the second quarter of 2004, the closing sale price of our stock ranged from a high of $6.55 per share to a low of $4.65 per share. Many factors could cause the market price of our common stock to rise and fall. These factors include:

• variations in our quarterly operating results;

• announcements of technological innovations, clinical results, or new products by us or our competitors;

• introduction of new products or new pricing policies by us or our competitors;

• acquisitions or strategic alliances by us or others in our industry;

• announcement by the government or other agencies regarding the economic health of the United States and the rest of the world;

• the hiring or departure of key personnel;

• changes in market valuations of companies within the biotechnology industry; and

• changes in estimates of our performance or recommendations by financial analysts.

We have a large amount of debt and our debt service obligations may prevent us from taking actions that we would otherwise consider to be in our best interests.

As of June 30, 2004, we had total consolidated debt of $241.5 million; and for the year ended December 31, 2003, we had a deficiency of earnings available to cover fixed charges of $80.6 million. A variety of uncertainties and contingencies will affect our future performance, many of which are beyond our control. We may not generate sufficient cash flow in the future to enable us to meet our anticipated fixed charges, including our debt service requirements with respect to our notes due in 2007 and in 2011. At June 30, $240.0 million of those notes remained outstanding. The following table shows, as of June 30, 2004, the remaining aggregate amount of our interest payments due in each of the years listed (in millions):

Year	Aggregate Interest
2004	$	6.1
2005		12.2
2006		12.2
2007		8.3
2008		4.4
Thereafter		11.0

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Our substantial leverage could have significant negative consequences for our future operations, including:

• increasing our vulnerability to general adverse economic and industry conditions;

• limiting our ability to obtain additional financing;

• requiring the dedication of a substantial portion of our expected cash flow to service our indebtedness, thereby reducing the amount of our expected cash flow available for other purposes, including working capital and capital expenditures;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; or

• placing us at a possible competitive disadvantage compared to less leveraged competitors and competitors that have better access to capital resources.

Our debt investments are impacted by the financial viability of the underlying companies.

We have a diversified portfolio of investments of which $199.7 million at June 30, 2004 were invested in U.S. Treasuries and debt investments that are sponsored by the U.S. Government. Our corporate fixed-rate debt investments comply with our policy of investing in only investment-grade debt instruments. The ability for the debt to be repaid upon maturity or to have a viable resale market is dependent, in part, on the financial success of the underlying company. Should the underlying company suffer significant financial difficulty, the debt instrument could either be downgraded or, in the worst case, our investment could be worthless. This would result in our losing the cash value of the investment and incurring a charge to our statement of operations.

We may need to raise additional funding, which may not be available on favorable terms, if at all.

We believe that we have sufficient capital to satisfy our capital needs for at least the next twenty-four months. However, our future funding requirements will depend on many factors and we anticipate that, at some future point, we will need to raise additional capital to fund our business plan and research and development efforts on a going-forward basis. To the extent that we need to obtain additional funding, the amount of additional capital we would need to raise would depend on many factors, including:

• the number, breadth and progress of our research, product development and clinical programs;

• our ability to establish and maintain additional collaborations;

• the progress of our collaborators;

• our costs incurred in enforcing and defending our patent claims and other intellectual property rights; and

• the costs and timing of obtaining regulatory approvals for any of our products.

We expect that we would raise any additional capital we require through public or private equity offerings, debt financings or additional collaborations and licensing arrangements. 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. If we raise additional capital by issuing equity securities, the issuance of such securities would result in ownership dilution to our shareholders. If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish rights to certain of our technologies or product

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candidates, or to grant licenses on unfavorable terms. The relinquishing of rights or granting of licenses on unfavorable terms could materially adversely affect our business, financial condition and results of operations. If adequate funds are not available, our business, financial condition and results of operations would be materially adversely affected. 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 objective of our long-term business plan, which is to successfully develop and market pharmaceutical products. If we require additional capital at a time when investment in biotechnology companies such as ours, or in the marketplace in general, is limited due to the then prevailing market or other conditions, we may not be able to raise such funds at the time that we desire or any time thereafter.

Risks Related to Our Convertible Debt and Our Common Stock into which Our Debt is Convertible

We have significant leverage as a result of the sales of our debt in 2000 and 2004.

In February 2000, in connection with the sale of our 6% convertible subordinated debentures due in 2007, we incurred $150.0 million of indebtedness. In February 2004, we repurchased $20.0 million of these debentures, for total consideration of $20.0 million, plus accrued interest of $0.05 million to the date of repurchase. As a result of the remaining indebtedness of $130.0 million, our interest payment obligations amount to $7.8 million per year.

In February 2004, in connection with the sale of our 4% convertible subordinated notes due in 2011, we incurred an additional $100.0 million of indebtedness. In addition, in March 2004, the initial purchasers exercised their option to purchase an additional $10.0 million of 4% convertible subordinated notes due in 2011, providing us with additional net proceeds of approximately $9.7 million. As a result of this indebtedness of $110.0 million, our interest payment obligations amount to $4.4 million per year. The degree to which we are leveraged could adversely affect our ability to obtain further financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures. Our ability to meet our debt service obligations will depend upon our future performance, which may be subject to the financial, business and other factors affecting our operations, many of which are beyond our control.

These notes, due in 2007 and in 2011, are effectively subordinated to all of our secured indebtedness and all indebtedness of our subsidiaries. These notes are our general unsecured obligations and are not guaranteed by any of our subsidiaries. Accordingly, these notes are effectively subordinated to all of our current and future secured indebtedness to the extent of the assets securing the indebtedness. Furthermore, our right to receive any distribution of assets of any subsidiary upon that subsidiary’s liquidation, reorganization or otherwise, is subject to the prior claims of creditors of that subsidiary, except to the extent we also are recognized as a creditor of that subsidiary. As a result, these notes are effectively subordinated to the claims of such creditors.

There are no restrictive covenants in our indentures relating to our ability to incur future indebtedness.

The indentures governing our notes due in 2007 and in 2011 do not contain any financial or operating covenants or restrictions on the payment of dividends, the incurrence of indebtedness, transactions with affiliates, incurrence of liens or the issuance or repurchase of securities by us or any of our subsidiaries. We may therefore incur additional debt, including secured indebtedness senior to these notes. As part of our growth strategy, we potentially may use proceeds from the 2004 offering to finance future acquisitions of complementary businesses or technologies, which may cause us or our subsidiaries to incur significant indebtedness to which these notes would be subordinate.

These notes, due in 2007 and in 2011, are obligations exclusively of CuraGen Corporation. Our subsidiaries are separate and distinct legal entities. Our subsidiaries have no obligation to pay any amounts due on these notes or to provide us with funds for our payment obligations, whether by dividends, distributions, loans or other payments. In addition, any payment of dividends, distributions, loans or advances by our subsidiaries to us could be subject to statutory or contractual restrictions. Payments to us by our subsidiaries will also be contingent upon our subsidiaries’ earnings and business considerations.

Our debt service obligations may adversely affect our cash flow.

A higher level of indebtedness increases the risk that we may default on our debt obligations. We cannot be certain that we will be able to generate sufficient cash flow to pay the interest on our debt or that future working capital, borrowings or equity financing will be available to pay or refinance such debt. If we are unable to generate sufficient cash flow to pay the interest on our debt, we may have to delay or curtail our research and development programs.

30

The level of our indebtedness among other things, could:

• make it difficult for us to make payments on our notes;

• make it difficult for us to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements or other purposes;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and

• make us more vulnerable in the event of a downturn in our business.

Our ability to repurchase notes, if required, with cash upon a change in control or fundamental change may be limited.

In certain circumstances involving a change in control, we may be required to repurchase some or all of the notes due in 2007. In certain circumstances involving a fundamental change, we may be required to repurchase some or all of the notes due in 2011. We cannot be certain that we will have sufficient financial resources at such time or would be able to arrange financing to pay the repurchase price of the notes. Our ability to repurchase the notes in such event may be limited by law, by the indenture and by such indebtedness and agreements as may be entered into, replaced, supplemented or amended from time to time.

Securities we issue to fund our operations could cause dilution to our shareholders’ ownership.

The conversion of our notes into shares of common stock will dilute the ownership interest of our current shareholders. We may decide to raise additional funds through a public or private debt or equity financing to fund our operations. If we raise funds by issuing equity securities, the percentage ownership of current shareholders, including the ownership that holders of the notes would have upon conversion, will be reduced, and the new equity securities may have rights prior to those of the common stock issuance upon conversion of the notes. We may not obtain sufficient financing on terms that are favorable to existing shareholders and us.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our outstanding long-term liabilities as of June 30, 2004 consisted of $130.0 million of our 6% convertible subordinated debentures due February 2, 2007, $110.0 million of our 4% convertible subordinated notes due February 15, 2001, and an accrued long-term liability of $1.5 million for the remaining future minimum payments under a license agreement (see Note 11 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2003). As the debentures bear interest at a fixed rate, our results of operations would not be affected by interest rate changes. As of June 30, 2004, the market value of our $130.0 million 6% convertible subordinated debentures due 2007, based on quoted market prices, was estimated at $126.8 million, and the market value of our $110.0 million 4% convertible subordinated notes due 2011, based on quoted market prices, was estimated at $99.3 million. Although future borrowings may bear interest at a floating rate, and our result of operations would therefore 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.

There have been no other significant changes in our market risk compared to the disclosures in Item 7a of our Annual Report on Form 10-K for the year ended December 31, 2003.

31

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, 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-15(e) and 15d-15(e)). Based on that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures were adequate and effective to ensure that material information relating to us, including our consolidated subsidiary, was made known to them by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared.

(b) Changes in Internal Controls

There have been no changes in our internal controls over financial reporting, identified in connection with the above-mentioned evaluation of such internal controls that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

32

Part II - Other Information

Item 4. Submission of Matters to a Vote of Security Holders

We held our annual meeting of shareholders on May 26, 2004, and the following matters were voted on at that meeting:

1. The election of David R. Ebsworth, Ph.D., Jonathan M. Rothberg, Ph.D. and Patrick J. Zenner as Class III Directors, to serve for a three-year term of office or until their respective successors have been elected. The following chart shows the number of votes cast for or withheld:

DIRECTOR	FOR	WITHHELD
David R. Ebsworth, Ph.D.	41,848,158	170,665
Jonathan M. Rothberg, Ph.D.	41,895,958	122,865
Patrick J. Zenner	40,545,311	1,473,512

Our current Directors are Vincent T. DeVita, Jr., M.D., David R. Ebsworth, Ph.D., John H. Forsgren, Robert E. Patricelli, J.D., Jonathan M. Rothberg, Ph.D. and Patrick J. Zenner.

Item 6. Exhibits and Reports on Form 8-K

A. Exhibits

Exhibit 10.1	Second Restated Collaboration Agreement, dated April 12, 2004, between Abgenix, Inc. and the Registrant.
Exhibit 10.2	License and Collaboration Agreement, dated June 3, 2004, between TopoTarget A/S and the Registrant.
Exhibit 31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	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).

B. Reports on Form 8-K

On April 21, 2004 we filed a report on Form 8-K under Item 5, “Other Events and Regulation FD Disclosure”, announcing the initiation of a Phase I study of CG53135 for oral mucositis (OM) in cancer patients undergoing bone marrow transplantation (BMT). This study in BMT patients complements the first Phase I study in colorectal cancer patients since CG53135 is being investigated for the prevention of OM in patients with solid tumors, such as colorectal cancer, as well as in patients with hematologic tumors, such as the ones that require BMT.

On April 29, 2004 we furnished a report on Form 8-K under Item 12, “Results of Operations and Financial Condition”, announcing financial results for the quarter ended March 31, 2004 and revised guidance on 2004 interest income and interest expense.

On May 20, 2004 we filed a report on Form 8-K under Item 5, “Other Events and Regulation FD Disclosure”, announcing that 454 Life Sciences (“454”), our majority-owned subsidiary, had received a two-year, $2.4 million grant titled “Massively Parallel High Throughput, Low Cost Sequencing” from the National Human Genome Research Institute (NHGRI), one of the National Institutes of Health (NIH).

33

On June 4, 2004, we filed a report on Form 8-K under Item 5, “Other Events and Regulation FD Disclosure”, announcing a license and collaboration agreement with TopoTarget A/S, Copenhagen, Denmark, to develop and commercialize PXD101, a novel histone deacetylase (HDAC) inhibitor for the treatment of solid and hematological cancers. PXD101 is currently in a Phase I clinical trial in patients with advanced solid tumors and is one of the most advanced HDAC inhibitors in development.

On June 24, 2004, we filed a report on Form 8-K under Item 5, “Other Events and Regulation FD Disclosure”, announcing that our scientists reported new preclinical data on CG53135, our Phase I clinical product being investigated for the prevention and treatment of radiation and chemotherapy induced oral mucositis (OM), demonstrating preclinical single dose activity for the prevention of OM, and preclinical activity for the treatment of OM after the appearance of initial signs and symptoms of OM in predictive animal models.

On June 30, 2004, we filed a report on Form 8-K under Item 5, “Other Events and Regulation FD Disclosure”, announcing the initiation of a Phase I clinical trial with TopoTarget A/S to evaluate PXD101, one of the most advanced histone deacetylase (HDAC) inhibitors in development, in patients with hematologic cancer.

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August 6, 2004	CuraGen Corporation
	By:	/s/ Jonathan M. Rothberg, Ph.D.
		Jonathan M. Rothberg, Ph.D.
		Chief Executive Officer, President and Chairman of the Board
	By:	/s/ David M. Wurzer
		David M. Wurzer
		Executive Vice-President, Chief Financial Officer and Treasurer (principal financial and accounting officer of the registrant)

35

CURAGEN CORPORATION

EXHIBIT INDEX

No.
Exhibit 10.1	Second Restated Collaboration Agreement, dated April 12, 2004, between Abgenix, Inc. and the Registrant.
Exhibit 10.2	License and Collaboration Agreement, dated June 3, 2004, between TopoTarget A/S and the Registrant.
Exhibit 31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	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).

36

EX-10.1

Exhibit 10.1

SECOND RESTATED COLLABORATION AGREEMENT

THIS SECOND RESTATED COLLABORATION AGREEMENT (this “Agreement”), dated as of April 12, 2004, the “Revision Date”, is made between ABGENIX, INC., a Delaware corporation (“ABX”), having a place of business at 7601 Dumbarton Circle, Fremont, California 94555, and CURAGEN CORPORATION, a Delaware corporation (“CuraGen”), having a place of business at 555 Long Wharf Drive, New Haven, Connecticut 06511, with respect to the following facts:

RECITALS

A. The parties entered into the Collaboration Agreement effective as of December 8, 1999 (the “Original Agreement”) and a Restated Collaboration Agreement effective as of November 27, 2000, as subsequently amended on January 23, 2001, January 16, 2002 and January 10, 2003 (the “Restated Agreement”).

B. The parties desire to amend the Restated Agreement in certain respects effective as of the date hereof, and for convenience to restate the Restated Agreement, on the terms and conditions set forth below.

NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth below, the parties amend the Restated Agreement and agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the terms set forth in this Article 1 shall have the respective meanings set forth below:

1.1 “ABX In-License” shall mean a license, sublicense or other agreement under which ABX acquired rights to the ABX Patent Rights or ABX Know-How, specifically including (a) that certain license agreement between ABX and the Medical Research Council, dated December 14, 1998 (as amended or restated from time to time), (b) that certain license agreement between ABX and Babraham Bioscience Technologies Limited dated May 14, 2002 (as amended or restated from time to time) and (c) that certain license agreement between ABX and ImmunoGen, Inc. dated September 5, 2000 (as amended or restated from time to time) (the “ImmunoGen Agreement”) .

1.2 “ABX Know-How” shall mean, collectively, all inventions, discoveries, data, information, methods, techniques, technology and other results, whether or not patentable but which are not generally known, regarding ABX Technology and Information. All ABX Know-How shall be Confidential Information of ABX.

1.3 “ABX Licensed Antigens” shall mean all ABX Optioned Antigens for which ABX has exercised an option to obtain a commercial license pursuant to Article 7 below, and “ABX Licensed Antigen” shall mean any one of the ABX Licensed Antigens.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.4 “ABX Optioned Antigens” shall mean all antigens which are selected from the Eligible Antigens by ABX pursuant to Article 5 below (or otherwise pursuant to the Extended Research Program), for which CuraGen has the right to grant ABX the commercial license under Article 7 below, and which are not Licensed Antigens, and “ABX Optioned Antigen” shall mean any one of the ABX Optioned Antigens.

1.5 “ABX Patent Claim” shall mean a Patent Claim within the Licensed ABX Intellectual Property Rights.

1.6 “ABX Patent Rights” shall mean, collectively, (a) all patents and patent applications listed on Exhibit A and any foreign counterparts claiming priority thereof; (b) all patent applications heretofore or hereafter filed in any country which claim (and only to the extent they claim) ABX Technology and Information or the use thereof; (c) all patents that have issued or in the future issue from any of the foregoing patent applications, including without limitation utility models, design patents and certificates of invention; and (d) all divisionals, continuations, continuations-in-part, reissues, renewals, supplemental protection certificates, extensions or additions to any such patents and patent applications.

1.7 “ABX Product” shall mean, with respect to any ABX Licensed Antigen, any product comprising (a) an Antibody or Antibody Equivalent which binds to such ABX Licensed Antigen; or (b) Genetic Material that encodes such an Antibody or Antibody Equivalent, wherein, in respect of each ABX Product, said Genetic Material does not encode multiple antibodies.

1.8 “ABX Technology and Information” shall mean, collectively, (a) [*******************************]; (b) [*******************************]; (c) [*******************************], and (d) [*******************************]. [*****************************************************************].

1.9 “Affiliate” shall mean, with respect to any person or entity, any other person or entity which controls, is controlled by or is under common control with such person or entity. A person or entity shall be regarded as in control of another entity if it owns or controls at least fifty percent (50%) of the equity securities of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority).

1.10 “Antibody” shall mean a composition comprising (a) a whole antibody, or any fragment thereof, derived from the XenoMouse Animals hereunder; or (b) a whole antibody, or any fragment thereof, which is derived from a whole antibody or any fragment thereof, which itself is derived from the XenoMouse Animals hereunder or which is derived from the Genetic Material encoding or derived from, or the amino acid sequences of or derived from, a whole antibody or any fragment thereof, which itself is derived from the XenoMouse Animals hereunder.

2

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.11 “Antibody Cells” shall mean all cells that contain, express, or secrete antibodies or Genetic Materials that encode antibodies.

1.12 “Antibody Equivalent” shall mean (i) [***************************], or (ii) [***************************]. For purposes of clarification, the following are not [**************]: (a) [*******************************************] and (b) [*******************************************].

1.13 “Antigen Specific Materials and Information” shall mean with respect to an Antigen, collectively, (a) [***********************************************]; and (b) [*********************************************].

1.14 “Antigens” shall mean, collectively, the Research Antigens, Eligible Antigens, Optioned Antigens and Licensed Antigens, and “Antigen” shall mean any one of the Antigens.

1.15 “BLA” shall mean a Biologics License Application, Product License Application, New Drug Application, or similar application for marketing approval of a product for use in the Therapeutic Field submitted to the FDA, or its foreign equivalent.

1.16 “Commercial Field” shall mean, collectively, the Therapeutic Field and the Diagnostic Field.

1.17 “Confidential Information” shall mean, with respect to a party, all information of any kind whatsoever, and all tangible and intangible embodiments thereof of any kind whatsoever, which is disclosed by such party to the other party pursuant to this Agreement, and (if disclosed in writing or other tangible medium) is marked or identified in writing as confidential at the time of disclosure to the receiving party or (if otherwise disclosed or if not so marked or identified in writing) is identified as confidential at the time of disclosure to the receiving party and is summarized and identified as confidential in writing or by electronic means within thirty (30) days after such disclosure. Notwithstanding the foregoing, Confidential Information of a party shall not include information which, and only to the extent, the receiving party can establish by written documentation or electronic records (a) has been publicly known prior to disclosure of such information by the disclosing party to the receiving party; (b) has become publicly known without fault on the part of the receiving party, subsequent to disclosure of such information by the disclosing party to the receiving party; (c) has been received by the receiving party at any time from a source, other than the disclosing party, rightfully having possession of and the right to disclose such information free of confidentiality obligations; (d) has been otherwise known by the receiving party free of confidentiality obligations prior to disclosure of such information by the disclosing party to the receiving party; or (e) has been independently developed (as demonstrated by contemporaneous written or electronic evidence maintained in the ordinary course of business of the receiving party) by employees or agents of the receiving party without access to or use of such information disclosed by the disclosing party to the receiving party.

3

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.18 “CuraGen Databases” shall mean, collectively, all data, information and materials (other than Research Program Technology and Information) related to human Genetic Materials and the expression products thereof which as of the Effective Date are contained in CuraGen’s SeqCalling Database or which at any time during the term of this Agreement are added thereto. For purposes hereof, the CuraGen SeqCalling Database shall include without limitation the following data, information, and materials possessed, acquired or developed by CuraGen as of the Effective Date or at any time during the term of this Agreement, the acquisition or development of which has not been sponsored or directed by a commercial Third Party to whom rights in such data, information, and materials have been granted in advance (without breaching the exclusivity obligations of this Agreement): (i) sequence data with respect to human Genetic Materials (including expressed sequences) and expression products thereof; (ii) the tissue or cellular distribution relating to such Genetic Materials, their expression and expression products; (iii) literature publications and patent status (i.e., information related to CuraGen filing dates, priority of claim(s) and any related patents and patent applications, and any information known by CuraGen regarding Third Party patents and patent applications) related to such Genetic Materials and expression products; (iv) the biological function of such Genetic Materials and expression products; (v) clones, expression products, proteins, cell lines and vectors related to such Genetic Materials and expression products, and (vi) all of the data, information, and materials described in the foregoing clauses (i) to (v) with respect to any homologs of such Genetic Materials and expression products. As of the Effective Date, the CuraGen SeqCalling Database includes at least [************************************].

1.19 “CuraGen Exclusive Antigen” shall mean an antigen (other than a Research Antigen) or Research Antigen that is designated by CuraGen as a CuraGen Exclusive Antigen in accordance with Section 4.6.

1.20 “CuraGen Know-How” shall mean, collectively, all inventions, discoveries, data, information, methods, techniques, technology and other results, whether or not patentable but which are not generally known, regarding CuraGen Technology and Information. All CuraGen Know-How shall be Confidential Information of CuraGen.

1.21 “CuraGen Licensed Antigens” shall mean all CuraGen Optioned Antigens for which CuraGen has exercised an option to obtain a commercial license pursuant to Article 7 below, and “CuraGen Licensed Antigen” shall mean any one of the CuraGen Licensed Antigens.

1.22 “CuraGen Optioned Antigens” shall mean all antigens which are selected from the Eligible Antigens by CuraGen pursuant to Article 5 below (or otherwise pursuant to the Extended Research Program), for which ABX has the right to grant CuraGen the commercial license under Article 7 below, and which are not Licensed Antigens, and “CuraGen Optioned Antigen” shall mean any one of the CuraGen Optioned Antigens.

1.23 “CuraGen Patent Claim” shall mean a Patent Claim within the Licensed CuraGen Intellectual Property Rights, other than Patent Claims that are (i) directed to a method of use of the Research Antigen or antibodies to such antigen that is initially identified solely

4

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

through the use of Antigen Specific Materials and Information or (ii) enabled solely by data relating to or supporting a specific indication that was initially identified solely through the use of the Antigen Specific Materials and Information.

1.24 “CuraGen Patent Rights” shall mean, collectively, (a) all patent applications heretofore or hereafter filed in any country which claim (and only to the extent they claim) CuraGen Technology and Information or the use thereof; (b) all patents that have issued or in the future issue from any of the foregoing patent applications, including without limitation utility models, design patents and certificates of invention; and (c) all divisionals, continuations, continuations-in-part, reissues, renewals, supplemental protection certificates, extensions or additions to any such patents and patent applications.

1.25 “CuraGen Product” shall mean, with respect to any CuraGen Licensed Antigen, any product comprising (a) an Antibody or Antibody Equivalent which binds to such CuraGen Licensed Antigen, or (b) Genetic Material that encodes such an Antibody or Antibody Equivalent wherein, in respect of each CuraGen Product, said Genetic Material does not encode multiple antibodies.

1.26 “CuraGen Technology and Information” shall mean, collectively, (a) [*******************************]; (b) [*********************************]; (c) [*******************************]; and (d) [******************************]. [*************************************************************************].

1.27 “Derived” or “derived” shall mean obtained, developed, created, synthesized, designed, derived or resulting from, based upon or otherwise generated (whether directly or indirectly, or in whole or in part).

1.28 “Diagnostic Field” shall mean the use of Products for the following human medical purposes: the detection, diagnosis and monitoring of [*************], predisposition, state or condition in humans or the selection of a particular patient(s) to receive a particular therapeutic treatment(s).

1.29 “Effective Date” shall mean December 8, 1999.

1.30 “Eligible Antigen” shall mean a Research Antigen which satisfies the criteria of Exhibit B as determined by the JMC pursuant to Section 3.2 below or the arbitrator pursuant to Section 3.5 below, and which is not an Optioned Antigen.

1.31 “Excluded ABX Technology” shall mean, collectively, [***********************************] (a) [*********************************]; (b) [********************************]; (c) [***************************]; (d) [***************************]; (e) [***************************]; and (f) [***************************].

5

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.32 “Excluded CuraGen Technology” shall mean, collectively, [*******************************************] (a) [*******************************************]; (b) [***********************************]; and (c) [*******************************************].

1.33 “FDA” shall mean the United States Food and Drug Administration or its successor agency.

1.34 “First Commercial Sale” shall mean, with respect to each Product in each country, the date of first commercial sale (other than for purposes of obtaining regulatory approval) of such Product by a party hereto, its Sublicensee or their respective Affiliates to an unaffiliated Third Party in such country.

1.35 “Gene Therapy” shall mean the treatment or prevention of a disease by means of Ex Vivo or In Vivo delivery (via viral or nonviral gene transfer systems) of compositions comprising either (a) Genetic Material that encodes an Antibody, wherein such Antibody serves a material function in the treatment or prevention of such disease; (b) Genetic Material that encodes a moiety other than an Antibody, wherein the moiety serves a material function in the treatment or prevention of such disease and wherein such composition incorporates an Antibody (or Genetic Material that encodes such Antibody), which Antibody is used as a targeting vehicle for the composition; or (c) Genetic Material that encodes an Antibody that serves a material function in the treatment or prevention of such disease, wherein such composition also incorporates an Antibody (or Genetic Material that encodes such Antibody) which Antibody is used as a targeting vehicle for the composition. “Ex Vivo” delivery shall mean the introduction, outside of the body of a human, of such compositions into a cell, tissue, organoid, or organ, followed by the administration of the cell, tissue, organoid, or organ which contains such introduced compositions into the body of the same (autologous) or different (allogeneic) human, without limitation as to the formulation, anatomic site, or route of administration or the use of encapsulation or other devices for such administration. “In Vivo” delivery shall mean the introduction of such compositions into an individual, without limitation as to the formulation, anatomic site, or route of administration or the use of encapsulation or other devices for such administration.

1.36 “Genetic Material” shall mean a nucleic acid, including DNA, RNA, and nucleic acid complementary and reverse complementary to such nucleotide sequences or nucleic acid, whether coding or noncoding and whether intact or a fragment.

1.37 “GenPharm Cross License Agreement” shall mean that certain Cross License Agreement entered into by and between ABX, JTI, XT, Cell Genesys, Inc., and GenPharm International, Inc., effective as of March 26, 1997, as the same may be amended from time to time.

1.38 “Human Antibody Equivalent” shall mean (i) [*********************], or (ii) [**********************************].

6

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.39 “IND” shall mean an Investigational New Drug application filed with the FDA, or any similar filing with any foreign regulatory authority, to commence human clinical testing of any Product in any country.

1.40 “JMC” shall mean the joint management committee comprising representatives of ABX and CuraGen described in Section 3.1 below.

1.41 “JTI” shall mean Japan Tobacco Inc., a Japanese corporation.

1.42 “Licensed Antigens” shall mean, collectively, the ABX Licensed Antigens and CuraGen Licensed Antigens, and “Licensed Antigen” shall mean any one of the Licensed Antigens.

1.43 “Licensed ABX Intellectual Property” shall mean ABX’s rights in the ABX Patent Rights, ABX Know-How, Research Program Patent Rights and Research Program Know-How; provided, however, that the Licensed ABX Intellectual Property (a) is all to the extent and only to the extent that ABX has the right to grant (sub)licenses thereunder (including without limitation to the extent permitted under the applicable ABX In-Licenses); (b) is expressly subject to the ABX In-Licenses; and (c) shall exclude the Excluded ABX Technology.

1.44 “Licensed CuraGen Intellectual Property” shall mean CuraGen’s rights in the CuraGen Patent Rights, CuraGen Know-How, Research Program Patent Rights and Research Program Know-How; provided, however, that the Licensed CuraGen Intellectual Property (a) is all to the extent and only to the extent that CuraGen has the right to grant (sub)licenses thereunder; and (b) shall exclude the Excluded CuraGen Technology.

1.45 “Licensed Intellectual Property” shall mean, collectively, the Licensed ABX Intellectual Property and the Licensed CuraGen Intellectual Property.

1.46 “Net Sales” shall mean, with respect to a Product, the gross sales price charged by a party, its Sublicensees and their respective Affiliates for sales of such Product to non-Affiliate customers, less (a) [***************************]; (b) [*****************]; and (c) [**********************************************************************]. [****************************************************************************].

1.47 “Optioned Antigens” shall mean, collectively, the ABX Optioned Antigens and CuraGen Optioned Antigens, and “Optioned Antigen” shall mean any one of the Optioned Antigens.

1.48 “Patent Claim” shall mean a claim of a pending patent application (pending for no longer than five (5) years) or issued and unexpired patent included within the Licensed Intellectual Property which has not been held unenforceable or invalid by a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

7

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.49 “Person” shall mean an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

1.50 “Phase I Clinical Trial” shall mean a human clinical trial in any country that is intended to initially evaluate the safety and/or pharmacological effect of a Product in subjects, or that would otherwise satisfy requirements of 21 CFR 312.21(a), or its foreign equivalent.

1.51 “Phase II Clinical Trial” shall mean a human clinical trial in any country that is intended to initially evaluate the effectiveness of a Product for a particular indication or indications in patients with the disease or indication under study, or that would otherwise satisfy requirements of 21 CFR 312.21(b), or its foreign equivalent.

1.52 “Phase III Clinical Trial” shall mean a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a Product as a basis for a marketing approval application submitted to the FDA, or that would otherwise satisfy requirements of 21 CFR 312.21(c), or its foreign equivalent.

1.53 “PMA” shall mean a Pre-Market Approval Application, 510(k) notice or similar application for marketing approval of a product for use in the Diagnostic Field submitted to the FDA, or its foreign equivalent.

1.54 “Products” shall mean, collectively, the ABX Products and the CuraGen Products, and “Product” shall mean any one of the Products.

1.55 “Program Year” shall mean any period commencing on the Effective Date or any anniversary thereof, and continuing through the first anniversary thereof, during the term of the Research Program.

1.56 “Research Antigens” shall mean, collectively, the antigens which are selected by the JMC, ABX or CuraGen pursuant to Section 4.1 below for use in the Research Program, for which ABX and CuraGen have the right to grant the other party the commercial license under Article 7 below, and which are not Optioned Antigens or Licensed Antigens, and “Research Antigen” shall mean any one of the Research Antigens.

1.57 “Research Field” shall mean the use of materials derived from XenoMouse Animals that are immunized with Research Antigens solely for the creation, identification, analysis, research, characterization and preclinical development of potential Products for use in the Commercial Field.

1.58 “Research Program” shall mean the collaborative research program described in Section 4.4 below

8

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.59 “Research Program Know-How” shall mean, collectively, all inventions, discoveries, data, information, methods, techniques, technology and other results, whether or not patentable but which are not generally known, regarding Research Program Technology and Information or the use thereof.

1.60 “Research Program Technology and Information” shall mean, with respect to an Antigen, collectively, (a) [*******************************************]; and (b) [*******************************************].

1.61 “Research Program Patent Rights” shall mean, collectively, (a) all patent applications hereafter filed in any country which claim Research Program Technology and Information or the use thereof; (b) all patents that have issued or in the future issue from any of the foregoing patent applications, including without limitation utility models, design patents and certificates of invention; and (c) all divisionals, continuations, continuations-in-part, reissues, renewals, supplemental protection certificates, extensions or additions to any such patents and patent applications.

1.62 “Royalty Commencement Date” shall mean, with respect to each Product in each country, the date of the First Commercial Sale of such Product in such country.

1.63 “Sublicense” shall mean, with respect to a Product, an agreement or arrangement pursuant to which a (sub)license or distribution right regarding such Product has been granted to a Sublicensee.

1.64 “Sublicense Income” shall mean, with respect to a Product, the aggregate cash consideration, and the fair market value of the non-cash consideration, received by a party or its Affiliate in connection with the Sublicense of such Product, excluding consideration received (a) in reimbursement of such party’s or its Affiliate’s cost to perform research, development or similar services conducted for such Product after the grant of such Sublicense, (b) in reimbursement of patent or other out-of-pocket expenses on such Product, or (c) in consideration for the purchase of any securities of such party or its Affiliates at a price equal to no more than 120% of the then fair market value of such securities).

1.65 “Sublicensee” shall mean a Third Party that is granted (a) a (sub)license under the Licensed Intellectual Property to develop, make, use, offer for sale, sell or import a Product in the Commercial Field; or (b) a right to distribute a Product in the Commercial Field, provided that such Third Party is responsible for marketing and promotion of such Product within the applicable territory.

1.66 “Technology and Information” shall mean, collectively, the ABX Technology and Information, CuraGen Technology and Information and Research Program Technology and Information.

1.67 “Therapeutic Field” shall mean the use of Products for the following human medical purposes: the prevention or treatment of [***************************].

9

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.68 “Third Party” shall mean any Person other than ABX, CuraGen and their respective Affiliates.

1.69 “XenoMouse Animals” shall mean the transgenic mice capable of producing human antibodies when immunized by ABX with an antigen.

1.70 “XT” shall mean Xenotech, L.P., a California limited partnership.

1.71 “XT Master Research License and Option Agreement” shall mean that certain Master Research License and Option Agreement entered into by and among XT, JTI and Cell Genesys, Inc. effective as of June 28, 1996, and subsequently assigned to ABX by Cell Genesys, Inc., as the same may be amended from time to time.

1.72 “XT/ABX Product License Agreement” shall mean a license agreement between XT and ABX entered into pursuant to the XT Master Research and License Agreement granting to ABX a license (with the right to grant sublicenses) to commercialize Products in one or more territories.

1.73 “Conjugate” shall mean a specific composition, as mutually agreed upon by the parties in writing, which ABX owns or to which ABX otherwise has rights (including the right to grant sublicenses to CuraGen hereunder) to be conjugated to one or more Antibodies hereunder. “DM1”, as defined under the ImmunoGen Agreement, is the initial Conjugate.

1.74 “Imaging Peptide” shall mean a peptide that (a) is less than fifty (50) amino acids in length, and (b) is not derived from an Antibody Equivalent.

1.75 “Lambda Antibodies” shall mean Antibodies derived from the Lambda XenoMouse Animals hereunder comprising a human lambda light chain.

1.76 “Lambda Licensed Antigen” shall mean an Optioned Antigen that is designated as a Lambda Licensed Antigen at the time CuraGen exercises an option to take a commercial license to such Optioned Antigen under Article 7.

1.77 “Lambda Optioned Antigen” shall mean an Optioned Antigen for which Lambda XenoMouse Animals will or may be immunized under the Research Program and designated as such pursuant to Section 5.

1.78 “Lambda XenoMouse Animals” shall mean XenoMouse Animals that are transgenic for a portion of the human lambda light chain immunoglobulin locus and produce human lambda light chain-containing immunoglobulin molecules.

1.79 “Specifically Binds” refers to those antibodies that have a minimum affinity (KD value) of [******] (as measured by standard techniques such as the BIAcore) toward a specified antigen and do not bind to related isozymes, proteins or antigens with an affinity of better than 1 uM.

10

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

2. REPRESENTATIONS AND WARRANTIES

Each party hereby represents and warrants to the other party as follows:

2.1 Existence. Such party is duly organized, validly existing and in good standing under the laws of the state in which it is organized.

2.2 Authorization and Enforcement of Obligations. Such party: (a) has the requisite power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder; and (b) has taken all requisite action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such party, and constitutes a legal, valid, binding obligation enforceable against such party in accordance with its terms except as enforcement may be limited by equitable remedies or defenses and applicable bankruptcy laws.

2.3 No Consents. All necessary consents, approvals and authorizations of all governmental authorities and other persons required to be obtained by such party in connection with this Agreement have been obtained.

2.4 No Conflict. The execution and delivery of this Agreement and the performance of such party’s obligations hereunder (a) do not conflict with or violate any requirement of applicable laws or regulations; and (b) do not conflict with, or constitute a default under, any contractual obligation of it.

2.5 ABX In-Licenses. ABX has made available to counsel to CuraGen correct copies of ABX In-Licenses, as in effect on the Effective Date.

2.6 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND REGARDING TECHNOLOGY AND INFORMATION, PRODUCTS OR LICENSED INTELLECTUAL PROPERTY EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OR VALIDITY. ALL TECHNOLOGY AND INFORMATION IS PROVIDED “AS IS.”

3. JOINT MANAGEMENT COMMITTEE

3.1 Composition. The JMC shall comprise three (3) named representatives of CuraGen and three (3) named representatives of ABX. Each party shall notify the other party in writing of its initial representatives to the JMC within ten (10) days after the Effective Date, and may substitute one or more representatives from time to time effective upon written notice to the other party.

11

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

3.2 Responsibilities. The JMC shall be responsible for (a) selecting antigens from the CuraGen Databases as Research Antigens; (b) monitoring and reporting the progress of the Research Program; (c) recommending to the parties any modifications to the Research Program with respect to any or all of the Research Antigens; (d) facilitating open and frequent exchange of information between the parties regarding the Research Program; (e) reviewing the data and information regarding Research Antigens and determining whether a Research Antigen satisfies the criteria set forth in Exhibit B; and (f) making selections of Eligible Antigens under Article 5 below. The JMC shall also be responsible for discussing potential Conjugates that are to be utilized in the Research Program; provided, however, that no Conjugate shall be utilized in the Research Program until the parties have mutually agreed in writing (i) that such Conjugate shall be used in the Research Program, and (ii) those specific one or more Antibodies with which such Conjugate will be utilized.

3.3 Meetings. The JMC shall meet in person (unless otherwise agreed on a meeting-by-meeting basis) not less than once each calendar quarter during the term of the Research Program, on such dates and at such times and places as agreed to by CuraGen and ABX, alternating between Fremont, California and New Haven, Connecticut, or such other locations as the parties mutually agree. For all other meetings, the JMC may meet by telephonic or video conference or in person, as the parties mutually agree. Each party shall have the right to have one (or such greater number as the parties mutually agree) employee or agent who is not a member of the JMC attend each meeting of the JMC as a non-voting observer. Each party shall be responsible for all its own personnel, travel and related expenses relating to JMC meetings. The first meeting of the JMC shall take place at the offices of ABX as soon as practicable after the Effective Date, but in no event later than thirty (30) days after the Effective Date.

3.3.1 Within thirty (30) days following each JMC meeting, the party hosting the meeting (or entitled to host the meeting, if held by telephonic or video conference or at a location other than Fremont, California or New Haven, Connecticut) shall prepare and provide to the other party mutually acceptable, reasonably detailed written minutes describing (a) all matters reviewed or considered by the JMC; (b) all discussions regarding potential and actual Antigens; and (c) all determinations and actions of the JMC and the reasons therefor. Such minutes shall be the Confidential Information of both ABX and CuraGen; provided, however, that to the extent that such minutes relate to the Optioned Antigens and Licensed Antigens of a party they shall be the Confidential Information solely of such party.

3.3.2 Not less than ten (10) days prior to each regularly scheduled quarterly meeting of the JMC, each party shall provide the other party with all data and information, not previously disclosed to the other party, regarding the activities of such party under the Research Program.

3.3.3 Not less than five (5) days prior to each regularly scheduled meeting of the JMC, each party shall provide the other party with a list of the antigens that such party desires to discuss at such JMC meeting for potential use in the Research Program.

12

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

3.4 Actions. ABX and CuraGen each shall be entitled to cast one vote on matters before the JMC. Decisions of the JMC shall be made by unanimous approval.

3.5 Disagreements. All disagreements within the JMC shall be resolved in the following manner:

3.5.1 Promptly upon receipt of written notice (a “Dispute Notice”) from one party to the other of a disagreement to be resolved under this Paragraph 3.5, the JMC representatives of each party promptly shall present the disagreement to the chief executive officer of such party.

3.5.2 The chief executive officers of each party thereafter shall meet to discuss each party’s view and to explain the basis for their respective positions of such disagreement, and in good faith shall attempt to resolve such disagreement among themselves.

3.5.3 If, within thirty (30) days after receipt of a Dispute Notice as to whether a Research Antigen satisfies the criteria of Exhibit B, the chief executive officers of each party cannot resolve such disagreement, then upon written notice from one party to the other party, such disagreement shall be settled as follows. Within forty five (45) days after receipt of such Dispute Notice, the parties shall attempt to mutually agree upon a single independent Third Party arbitrator, who shall be a scientific professional in the antibody field, to resolve such disagreement. If the parties are unable to mutually agree upon one such person, then each party shall appoint one independent Third Party scientific professional in the antibody field prior to the expiration of such forty five (45) day period, and within sixty (60) days after receipt of such Dispute Notice, such person(s) shall select a single independent Third Party arbitrator, who shall be a scientific professional in the antibody field, to resolve such disagreement. Each party shall present all information presented to the JMC and all other information as such party reasonably desires regarding such disagreement. Within ninety (90) days after receipt of such Dispute Notice, such arbitrator shall determine whether such Research Antigen satisfies the criteria of Exhibit B and provide written notice to the parties regarding such determination.

4. RESEARCH ANTIGEN IDENTIFICATION AND RESEARCH

4.1.1 Searches for Research Antigens. During the term of the Research Program, CuraGen shall have primary responsibility for the screening of the CuraGen Databases and shall conduct searches thereof to identify and recommend to the JMC potential antigens of interest hereunder. CuraGen shall recommend to the JMC all antigens of interest (whether or not the genes encoding such antigens are contained in the CuraGen Databases) that, based on the data and information in the CuraGen Databases and such other data and information as CuraGen may have acquired or developed, (i) CuraGen reasonably believes is not the subject of any Third Party intellectual property rights (or the parties mutually believe, as evidenced by written agreement, that a license to all applicable Third Party intellectual property rights can be

13

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

reasonably obtained), (ii) CuraGen reasonably believes could be subject (or the parties mutually believe, as evidenced by written agreement, that the antibodies to which could be subject) to a proprietary position of CuraGen, (iii) CuraGen reasonably believes would be available hereunder as a Research Antigen, and (iv) CuraGen reasonably believes is reasonably likely to have potential as a target for antibody-based therapeutics. In addition, CuraGen will use its best efforts to recommend to the JMC antigens that would have an IP Score (as defined below) of 1, 2, or 3 and not 4 or 5 in a sufficient number to allow selection of at least [*****] Priority Research Antigens per year from the CuraGen Databases. ABX shall have the right, but not the obligation, to recommend to the JMC antigens of interest from the CuraGen Databases or from other sources that ABX reasonably believes are not the subject of Third Party intellectual property rights and would be available hereunder as Research Antigens and are reasonably likely to have potential as targets for antibody-based therapeutics.

4.1.2 Research Antigen Selection.

During the term of the Research Program, based upon the data and information provided by the parties regarding potential antigens of interest, the JMC shall select at any JMC meeting, from those antigens proposed by the parties under Section 3.3.3 and 4.1, potential antigens of interest for use in the Research Program. With respect to each potential antigen which is selected, by the action of the JMC, for use under the Research Program, within thirty (30) days after the date of such JMC meeting, each party shall notify the other party in writing if such party does not have the right to grant the other party a commercial license under Article 7 below for such antigen. Unless a party timely notifies the other party in writing that it does not have the right to grant the other party a commercial license under Article 7 below for such antigen, such antigen thereafter shall be a Research Antigen.

4.1.3 Notwithstanding anything to the contrary in this Agreement, if a party gives written notice to the other party at any time stating that such party does not have the right to grant the other party a commercial license under Article 7 below for a Research Antigen, then effective thirty (30) days after the receipt by the other party of such notice, such antigen shall cease to be a Research Antigen and both parties shall destroy all Antigen Specific Materials and Information pertaining to such antigen. A party shall give such written notice to the other party promptly upon the occurrence of the event giving rise to such party’s not having the right to grant the other party a commercial license under Article 7, to the extent such party has the right to do so.

4.2 Research Program.

4.2.1 Research Responsibilities. During the term of the Research Program, each party shall use its commercially reasonable efforts to perform its obligations set forth in the Work Plan within the time schedules contemplated therein. The JMC may recommend changes to the allocation of responsibilities set forth in Exhibit C, from time to time; provided, however, that such changes shall only be effective if in a written amendment duly executed by both parties. Other than the activities specified in Exhibit C as being the

14

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

responsibility of one party or another, the JMC shall allocate the responsibility for each such activity between the parties, taking into account the skills of each party, in an effort to divide the resources and internal costs reasonably required to be dedicated by each party to the conduct of such activities [*******************]. In the event that any activities with respect to Research Antigens (other than CuraGen Exclusive Antigens), other than those specified in Exhibit C as being the responsibility of one party or another, require any payments to a Third Party for goods or services (e.g., specific animal models), such payments shall be [*******************], provided that all such goods and services and payments therefor are approved by the JMC prior to incurring any such expense. Notwithstanding anything to the contrary in this Agreement, all activities with respect to Research Antigens that are CuraGen Exclusive Antigens, other than the generation and biochemical characterization of Antibodies as described and allocated to ABX in Exhibit C, shall be the sole and exclusive responsibility of CuraGen, at its sole cost and expense. With respect to each Research Antigen, during the term of the Research Program, each party may conduct, in its sole discretion, such additional preclinical research in the Research Field as such party reasonably desires to evaluate its interest in such Research Antigen, provided that, the preceding right shall not apply to ABX in the case of Research Antigens that are CuraGen Exclusive Antigens, and provided further that prior to commencing such additional preclinical research with respect to Research Antigens that are not CuraGen Exclusive Antigens, such party shall give prior written notice to the other party of the nature and scope of such additional preclinical research regarding such Research Antigen and shall provide the other party with all results of such research, which research shall be deemed to have been part of the Research Program. Each party shall provide the personnel, materials, equipment and other resources required to conduct its obligations hereunder; provided, however, that CuraGen shall transfer to ABX all information and materials available to CuraGen that are useful in the conduct of all assays conducted by or on behalf of CuraGen in connection with the Research Program. ABX shall reimburse CuraGen for all reasonable out-of-pocket expenses incurred in effecting such transfer. CuraGen grants to ABX the nonexclusive, worldwide license (without the right to grant sublicenses) to practice and use all such assays both (a) for use in the Research Program, and (b) for research purposes (unrelated to the Research Program or CuraGen) related to the research and development of antigens and/or antibodies. Each party shall perform its obligations hereunder in accordance with high scientific and professional standards, and in compliance in all material respects with the requirements of applicable laws and regulations. Each party shall provide reasonable assistance required by the other party in connection with the performance of the Research Program. Each party shall have the right, at reasonable times during normal business hours and upon reasonable notice, to visit the facilities of the other party where the other party is conducting its obligations under the Research Program to observe such activities.

4.2.2 Research Antigen Work Plans.

(a) Each year, the JMC will prioritize up to [****] Research Antigens for immunization based on IP Score (as defined below) and biology (“Priority Research Antigens”). The Parties agree that for purposes of this Agreement, an “IP Score” for a Research Antigen shall be determined as follows: (i) if CuraGen has priority for the composition of matter for a full length Research Antigen (that is not a variant) such Research Antigen will be accorded a IP

15

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Score of 1, (ii) if CuraGen has priority for the composition of matter of a Research Antigen that is a variant and has priority for data demonstrating a novel method of use for such variant or antibodies thereto such Research Antigen shall be accorded an IP Score of 2, (iii) if the composition of matter of a Research Antigen has been publicly disclosed in the literature (other than the patent literature, unless such disclosure does not include a disclosure of antibodies) before CuraGen’s priority date and CuraGen has priority for data demonstrating a novel method of use for such variant or antibodies thereto, such Research Antigen shall be accorded an IP Score of 3, (iv), if the composition of matter of a Research Antigen (or antibodies thereto) has been disclosed in patent literature together with a disclosure of antibodies before CuraGen’s priority date such Research Antigen shall be accorded an IP Score of 4, and (v) if the composition of matter of a Research Antigen (or antibodies thereto) has been claimed in an issued or granted patent in the patent literature together with a disclosure of antibodies before CuraGen’s priority date such Research Antigen shall be accorded an IP Score of 5. Unless agreed as provided herein, neither Party shall have any obligation to undertake any work or continue any work with respect to a Research Antigen accorded an IP Score of 4 or 5 and no Research Antigen accorded an IP Score of 4 or 5 shall be a Priority Research Antigen unless ABX agrees in writing. In the event that CuraGen reasonably believes that, notwithstanding a Research Antigen having an IP Score of 4 or 5, CuraGen has priority for a substantive method of use for the Research Antigen not previously disclosed in the literature, CuraGen shall have the right to propose such Research Antigen for reconsideration by ABX and if ABX agrees to such reconsideration, present information demonstrating such method of use and CuraGen’s priority information. Upon a determination by ABX that such a Research Antigen would be acceptable, such Research Antigen shall be accorded an IP Score of “4-MOU” or “5-MOU”, as the case may be, and may be designated a Priority Research Antigen. From the pool of Priority Research Antigens, ABX will attempt to raise Antibodies by immunization of Xenomouse Animals and the Parties will attempt to generate and characterize such Antibodies to such Priority Research Antigens. The Parties will use reasonable efforts to analyze or reanalyze, as the case may be, the IP Score of each proposed Priority Research Antigen within ten (10) business days of its becoming a proposed Priority Research Antigen. If the JMC determines to reimmunize a Xenomouse Animal with a Research Antigen, it will be counted as one of the Priority Research Antigens.

(b) For each Priority Research Antigen a Work Plan will be created, including design of the immunogen(s) and specification of all assays required for Eligible Antigen designation pursuant to Exhibit B. For each Research Antigen for which research activities have already begun as of the Revision Date, a Work Plan will be created that summarizes the work already completed and the work that remains for Eligible Antigen designation pursuant to Exhibit B. In each case, the Work Plan will detail the work to be done or remaining to be done and define the responsibility of each party in conducting the work under the Work Plan consistent with Section 4.2.2. It is understood and agreed by the Parties that Exhibit C shall serve as a guide for the creation of the Work Plans of each Research Antigen, however, the Work Plan once created and agreed to by the Parties shall take precedence over Exhibit C with respect to the particular Research Antigen to which the Work Plan applies.

16

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(c) Failure by ABX to immunize a Xenomouse Animal within thirty (30) days of delivery of an immunogen by CuraGen for a Priority Research Antigen meeting the Work Plan criteria for such Priority Research Antigen will result in that Priority Research Antigen being no longer designated as a Research Antigen. ABX will return all CuraGen Technology and Information to CuraGen related to such Research Antigen and CuraGen will no longer be subject to exclusivity provisions of Section 4.4 with respect to such Research Antigen.

4.2.3 Neither Party is obligated to perform any further research on a Research Antigen outside the scope of the agreed upon Work Plan once such Work Plan is completed unless a new Work Plan is agreed to by the JMC. If either Party unreasonably fails to perform an assigned task under a Work Plan after written request for more than 90 days from the date of the request, unless such delay is due to the failure of the other Party to perform, the other Party can perform it instead and be reimbursed by the originally assigned Party.

4.2.4 The parties shall [**********] all costs incurred by ABX for the provision of the Conjugates prior to the selection of an Eligible Antigen by one of the parties including without limitation (a) fees paid by ABX in consideration for the Conjugate in-licensed technology to the extent such fees are directly related to the use of the Conjugates hereunder and are payable prior to such selection, and (b) costs of scale-up manufacturing of Conjugates incurred by ABX prior to such selection.

4.2.5 Access. Without limiting the generality of Section 4.1, each party shall permit up to three (3) employees of the other party access to such party’s facilities, upon reasonable advance notice, at all times during normal business hours during the term of the Research Program Term to work with the employees of such party in the development and use of assays pursuant to the Research Program. Each party shall provide such employees of the other party in person access to one or more employees of such party skilled in the development and use of such assays to enable such employees of such other party to utilize such assays and develop similar assays for use in the Research Program and, in the case of ABX, as contemplated under Section 4.2.2; provided, however, except as otherwise provided in Section 4.2.2, that no license (or sublicense, as the case may be) to any intellectual property relating to such assays is granted hereby, whether expressly or by implication.

4.2.6 Term of the Research Program. Unless this Agreement is earlier terminated, the term of the Research Program shall commence on the Effective Date and shall continue through completion of all Work Plans for Research Antigens for which CuraGen has delivered to ABX for immunization on or prior to June 30, 2005 an immunogen meeting the Work Plan criteria for such Research Antigen (the “Last Immunization Date”). Without limiting the generality of the foregoing, CuraGen will have no obligation to deliver Research Antigens after June 30, 2005 and ABX will have no obligation to immunize Xenomouse Animals with Research Antigens delivered after June 30, 2005 or conduct any further work with respect to such unimmunized antigens.

17

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

4.2.7 Extended Research. Subject to Sections 6.1.4, 6.1.5, 6.1.6, both parties may use Antibody Specific Materials and Information and Research Program Technology and Information relating to Research Antigens (i) for which Xenomouse Immunizations were conducted but that failed to become Eligible Antigens, as listed on Exhibit E and as updated by agreement of the JMC, or (ii) which became Unpicked Eligible Antigens under Section 5.2.12 (“Extended Research Antigens”). At any time during the term of the Extended Research License under Section 6.1.6 (the “Extended Research License Term”), either party can designate such a Research Antigen as an Optioned Antigen by notice to the other and payment of the Section 8.2.1 fee, provided that a commercial license is available from the other party. If a commercial license is not available, the Extended Research License shall terminate for such Antigen and each party shall destroy all Antigen Specific Materials and Information related to such antigen. Further, at any time during the Extended Research License Term, should an antigen subject to the Extended Research License cease to be available for commercial license, the party no longer having the right to grant the exclusive license shall notify the other party and the Extended Research License shall immediately terminate and each party shall destroy all Antigen Specific Materials and Information related to such antigen.

4.3 Research Records and Reports.

4.3.1 Research Records. Each party shall maintain records, in sufficient detail and in good scientific manner appropriate for patent purposes, which shall be complete and accurate and shall fully and properly reflect all work done and results achieved in the performance of the activities under the Research Program. Each party shall have the right, during normal business hours and upon reasonable notice, to inspect and copy all such records of the other party to the extent reasonably required for the performance of its obligations under this Agreement. Each party shall maintain such records and the information of the other party contained therein in confidence in accordance with Article 11 below.

4.3.2 Research Reports and Information. Each party shall keep the other informed of the progress of its own activities under the Research Program. At a minimum, within thirty (30) days following the last day of each calendar quarter during the term of the Research Program, each party shall prepare, and provide to the other party, a reasonably detailed written summary report which shall describe the work performed by such party to date under the Research Program.

4.4 Exclusivity.

4.4.1 Except as otherwise expressly permitted under this Agreement, during the term of the Research Program, CuraGen shall not, [**************************************************************************]. [***********************************************], (i) [*******************]or (ii) [****************************************************************************]. [***********************************************] (i) [********************] and (ii) [*************************************************************************]. [****************************************************************************].

18

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

4.4.2 For a period commencing on November 27, 2000, and ending on the earlier of (i) the Last Immunization Date, and (ii) the effective date of a termination of the Research Program and the options, licenses and rights of ABX under this Agreement by CuraGen pursuant to Section 14.2.3 upon an uncured material breach of a material obligation by ABX, CuraGen shall not enter into any agreement (other than permitted license and sublicense agreements hereunder) with any other Person under which:

(a) [*******************************************************].

(b) [*******************************************************].

(c) [*******************************************************].

(d) [*******************************************************].

(e) [*******************************************************]

4.4.3 Except as otherwise expressly permitted under this Agreement, for a period ending on the earlier of (a) the Last Immunization Date, and (b) the effective date of a termination of the Research Program and the options, licenses and rights of ABX under this Agreement by CuraGen pursuant to Section 14.2.3 upon an uncured material breach of a material obligation by ABX, CuraGen shall not, and shall not grant any license (or sublicense, as the case may be), immunity or other right to any Person to, research, develop, make, have made, use, import, offer to sell or sell any Antibody Equivalent to an [**********************]. for use in the Commercial Field from and after the date on which a XenoMouse Animal was first immunized with such Antigen; provided, however, that the foregoing limitation shall not apply to antigens as to which ABX has notified CuraGen that it does not have the right to grant CuraGen a commercial license under Article 7 unless ABX has agreed to pay CuraGen the amounts provided hereunder upon the development and commercialization of an antibody product targeting such antigen as if it were an ABX Product hereunder in return for the licenses from CuraGen for such product as if it were an ABX Product hereunder. For the avoidance of doubt, nothing in this Agreement shall preclude CuraGen from granting any license (or sublicense, as the case may be), immunity or other right to any Person to research, develop, make, have made, use, import, offer to sell or sell any Antibody Equivalent to an antigen contained in the CuraGen Databases [**********************] for any purpose other than for use in the prevention, treatment, detection, diagnosis or monitoring of, or the determination of a predisposition for, or the selection of a particular patient(s) to receive a particular therapeutic treatment(s) for, [**********************], unless and until a XenoMouse Animal has been immunized with such Antigen under this Agreement.

19

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

4.4.4 Except as otherwise expressly permitted under this Agreement, for a period ending on the earlier of (a) the Last Immunization Date, and (b) the effective date of a termination of the Research Program and the options, licenses and rights of CuraGen under this Agreement by ABX pursuant to Section 14.2.3 upon an uncured material breach of a material obligation by CuraGen, ABX shall not, and shall not grant any license (or sublicense, as the case may be), immunity or other right to any Person to, research, develop, make, have made, use, import, offer to sell or sell any Antibody Equivalent to an [***************************] for use in the Commercial Field from and after the date on which a XenoMouse Animal was first immunized with such Antigen. For the avoidance of doubt, nothing in this Agreement shall preclude ABX from granting any license (or sublicense, as the case may be), immunity or other right to any Person to research, develop, make, have made, use, import, offer to sell or sell any Antibody Equivalent to an [****************************] for any purpose, unless and until a XenoMouse Animal has been immunized with such Antigen under this Agreement.

4.4.5 Except as otherwise expressly permitted under this Agreement, during the term of this Agreement, ABX shall not, and shall not grant any license (or sublicense, as the case may be), immunity or other right to any Person to, research, develop, make, have made, use, import, offer to sell or sell any Antibody Equivalent to a CuraGen Optioned Antigen [***************************], for so long as such antigen remains a CuraGen Exclusive Antigen, CuraGen Optioned Antigen, or a CuraGen Licensed Antigen [***************************] for use in the Commercial Field.

4.4.6 Except as otherwise expressly permitted under this Agreement, during the term of this Agreement, CuraGen shall not, and shall not grant any license (or sublicense, as the case may be), immunity or other right to any Person to, research, develop, make, have made, use, import, offer to sell or sell any Antibody Equivalent to an ABX Optioned Antigen [***************************], for so long as such antigen remains an ABX Optioned Antigen, or an ABX Licensed Antigen [***************************] for use in the Commercial Field.

4.5 Research Program Licenses.

4.5.1 Subject to the terms and conditions of this Agreement, ABX hereby grants to CuraGen a nonexclusive license (or sublicense, as the case may be) under the Licensed ABX Intellectual Property, without right to grant Sublicenses, in the Research Field solely to conduct its obligations under the Research Program and to conduct additional preclinical research as permitted under Sections 4.2 and 4.6. Except as expressly set forth in this Agreement or otherwise expressly agreed in writing by the parties, CuraGen shall not use the Licensed ABX Intellectual Property or any ABX Technology and Information or any Research Program Technology and Information for any use other than those uses expressly licensed under this Section 4.5.1.

4.5.2 Subject to the terms and conditions of this Agreement, CuraGen hereby grants to ABX a nonexclusive license (or sublicense, as the case may be) under the

20

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Licensed CuraGen Intellectual Property, without right to grant Sublicenses, in the Research Field solely to conduct its obligations under the Research Program and to conduct additional preclinical research as permitted under Section 4.2. Except as expressly set forth in this Agreement or otherwise expressly agreed in writing by the parties, ABX shall not use the Licensed CuraGen Intellectual Property or any CuraGen Technology and Information or any Research Program Technology and Information for any use other than those uses expressly licensed under this Section 4.5.2.

4.6 CuraGen Exclusive Antigens.

4.6.1 Designation of CuraGen Exclusive Antigens.

(a) As of the Revision Date, Exhibit E lists the antigens designated as CuraGen Exclusive Antigens. Subject to Section 4.6.3, CuraGen shall have no right to designate any additional CuraGen Exclusive Antigens pursuant to this Agreement.

(b) Each CuraGen Exclusive Antigen shall be a Research Antigen, but shall not be a part of the Pool (as defined in Section 5.2), (i) CuraGen shall have the exclusive right to select such Research Antigen as an Optioned Antigen or Licensed Antigen regardless of whether such Research Antigen is an Eligible Antigen; and (ii) ABX shall have no right to select such Research Antigen as an Optioned Antigen or Licensed Antigen.

4.6.2 Selection of CuraGen Exclusive Antigens as Optioned Antigens. CuraGen shall have the right to select any Research Antigen that is a CuraGen Exclusive Antigen as an Optioned Antigen regardless of whether such CuraGen Exclusive Antigen is an Eligible Antigen. CuraGen shall make any such selection by giving express written notice to ABX at any time during the first eight (8) years after the Effective Date. CuraGen’s right to make such selections under this Section 4.6.2 shall be outside, and in addition to, the selection process for Optioned Antigens under Section 5.2.

4.6.3 If ABX notifies CuraGen in writing that ABX does not have the right to grant CuraGen a commercial license under Article 7 below for an antigen that CuraGen has designated as a CuraGen Exclusive Antigen, then CuraGen shall be allowed to replace such antigen with another antigen by amending Exhibit E.

4.7 Material Transfer.

4.7.1 Subject to the reimbursement of costs, each party will use commercially reasonable efforts to support the research activities of the other party under this Section 4.

21

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

4.7.2 ABX will supply CuraGen with Control Antibody Material at commercial prices and subject to the Control Antibody Material Transfer Agreement dated April 4, 2003, (the “Control Antibody MTA”).

4.7.3 With respect to Antibody Specific Materials and Information and Research Program Technology and Information regarding any Research Antigen, other than a CuraGen Exclusive Antigen or an Optioned Antigen or Licensed Antigen of a Party, transfer to a Third Party shall be done under the terms of an MTA under which both ABX and CuraGen are parties. The Parties agree they will execute any such MTA if it is in the form of Exhibit F (the “Three-way MTA”). Any change will require the approval of both Parties, not to be unreasonably withheld. The Parties will dedicate sufficient resources to review and comment on Three-way MTAs within ten business days and to execute such Three-way MTAs within one week of receipt of the execution version. A Party will be free to execute a Two-way MTA with respect to Antibody Specific Materials and Information and Research Program Technology and Information regarding any Research Antigen should the other Party fail to reasonably adhere to these timelines with respect to such Research Antigen.

4.7.4 With respect to Optioned Antigens and Licensed Antigens, this Second Restated Collaboration Agreement supercedes Transferred Cell Line Material Transfer Agreement dated April 4, 2003 (the “Transferred Cell Line MTA”).

4.7.5 Notwithstanding the provisions of Section 12.6 or any other provisions hereof, CuraGen may transfer to any Third Party (a) CuraGen Optioned Antigens, and Antibody Specific Materials and Information and Research Program Technology and Information regarding any CuraGen Optioned Antigen, (b) any Antibodies to any such CuraGen Optioned Antigens and (c) any Control Antibody Material, provided, that, in each such instance, (a) CuraGen shall use a materials transfer and services agreement substantially in the form attached hereto as Exhibit G (the “Two-way MTA”), (b) such Third Party shall have first executed the Two-way MTA, (c) CuraGen shall diligently enforce, and shall provide prompt written notice to ABX of any breach of, any such Two-way MTA by such Third Party and (d) CuraGen shall have made commercially reasonable efforts to include ABX as a third party beneficiary of any such Two-way MTA as described more fully in Section 15 of the form of Two-way MTA. CuraGen shall provide to ABX copies of any reports provided to CuraGen by a Third Party utilizing the materials covered by a Two-way MTA, shall timely notify ABX of the proposed publication or required disclosure of Confidential Information by any Third Party and shall disclose to ABX any inventions arising under a Two-way MTA. CuraGen agrees to indemnify ABX and hold it harmless from any and all claims, liabilities, and/or losses which arise as a result of any Third Party’s use of the materials transferred, and shall not permit a Third Party to undertake an assignment of its rights without the prior consent of ABX. In addition, transfer to a third party of any Control Antibody Materials shall be made only pursuant and subject to the Control Antibody MTA.

4.7.6 Notwithstanding the provisions of Section 12.6 or any other provisions hereof, ABX may transfer to any Third Party (a) ABX Optioned Antigens and

22

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Antibody Specific Materials and Information and Research Program Technology and Information regarding any ABX Optioned Antigen, and (b) any Antibodies to any such ABX Optioned Antigens, provided, that, in each such instance, (a) ABX shall use a materials transfer and services agreement substantially in the form of the Two-way MTA, (b) such Third Party shall have first executed a Two-way MTA, (c) ABX shall diligently enforce, and shall provide prompt written notice to CuraGen of any breach of, any such Two-way MTA by such Third Party and (d) ABX shall have made commercially reasonable efforts to include CuraGen as a third party beneficiary of any such Two-way MTA as described more fully in Section 15 of the form of MTA. ABX shall provide to CuraGen copies of any reports provided to ABX by a Third Party utilizing the materials covered by a Two-way MTA, shall timely notify CuraGen of the proposed publication or required disclosure of Confidential Information by any Third Party and shall disclose to CuraGen any inventions arising under a Two-way MTA. ABX agrees to indemnify CuraGen and hold it harmless from any and all claims, liabilities, and/or losses which arise as a result of any Third Party’s use of the materials transferred, and shall not permit a Third Party to undertake an assignment of its rights without the prior consent of CuraGen.

4.7.7 A Party will be considered to have made commercially reasonable efforts to have the other party included as a third party beneficiary if such language is included in the initial draft Two-way MTA sent to a Third Party.

4.7.8 CuraGen may use and transfer to any Third Party (a) CuraGen Exclusive Antigens and CuraGen Licensed Antigens and Antibody Specific Materials and Information and Research Program Technology and Information regarding any CuraGen Exclusive Antigen or CuraGen Licensed Antigen, and (b) Antibodies (and Antibody Cells thereto) to CuraGen Exclusive Antigens and CuraGen Licensed Antigens, all without the approval of ABX, provided, that, in each such instance, (a) CuraGen shall use a materials transfer and services agreement substantially in the form of the Two-way MTA, (b) such Third Party shall have first executed the Two-way MTA, and (c) CuraGen shall diligently enforce, and shall provide prompt written notice to ABX of any breach of, any such Two-way MTA by such Third Party.

4.7.9 ABX may use and transfer to any Third Party (a) ABX Licensed Antigens and Antibody Specific Materials and Information and Research Program Technology and Information regarding any ABX Licensed Antigen, and (b) Antibodies (and Antibody Cells thereto) to ABX Licensed Antigens, all without the approval of CuraGen, provided, that, in each such instance, (a) ABX shall use a materials transfer and services agreement substantially in the form of the Two-way MTA, (b) such Third Party shall have first executed the Two-way MTA, (c) ABX shall diligently enforce, and shall provide prompt written notice to CuraGen of any breach of, any such Two-way MTA by such Third Party.

23

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

5. SELECTION OF OPTIONED ANTIGENS

5.1 Eligible Antigens. Not less than ten (10) days prior to each regularly scheduled meeting of the JMC, each party shall provide the other party with a dossier for each Research Antigen that it proposes to be considered as a potential Eligible Antigen. Such dossier shall contain all information reasonably available to such party demonstrating whether such Research Antigen satisfies the criteria set forth in Exhibit B. At such regularly scheduled meeting of the JMC, the JMC shall consider whether such Research Antigen satisfies the criteria set forth in Exhibit B. A Research Antigen shall be an Eligible Antigen at such time as it is determined to satisfy the criteria set forth in Exhibit B, as determined by the JMC under Section 3.2 above or the arbitrator under Section 3.5 above. Notwithstanding anything to the contrary in this Agreement, if a party gives written notice to the other party at any time stating that such party does not have the right to grant the other party a commercial license under Article 7 below for an Eligible Antigen, then effective thirty (30) days after the receipt by the other party of such notice, such antigen shall cease to be an Eligible Antigen and both parties shall destroy all Antigen Specific Materials and Information pertaining to such Eligible Antigen.

5.2 Selection of Optioned Antigens. During the first eight (8) years after the Effective Date, each party shall have the right, in its sole discretion, to select Optioned Antigens from the list of Eligible Antigens at the time in question (the “Pool”) as follows:

5.2.1 [*************************************************].

5.2.2 [*************************************************].

5.2.3 [*************************************************].

5.2.4 [*************************************************].

5.2.5 [*************************************************].

5.2.6 [*************************************************].

5.2.7 [*************************************************].

5.2.8 [*************************************************].

5.2.9 With respect to each Eligible Antigen which is selected by CuraGen as a CuraGen Optioned Antigen pursuant to this Section 5.2, ABX shall notify CuraGen in writing, within thirty (30) days of receipt of the notice of selection from CuraGen, if ABX does not have the right to grant CuraGen a commercial license under Article 7 below for such Eligible Antigen. Unless ABX timely notifies CuraGen in writing that ABX does not have the right to grant CuraGen a commercial license under Article 7 below for such antigen, ABX shall use its good faith efforts to nominate such Eligible Antigen under the XT/ABX Master Research and License Agreement and to obtain the right thereunder to obtain an XT/ABX

24

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Product License Agreement with respect to CuraGen Products to such Eligible Antigen. If ABX is successful in nominating such Eligible Antigen and in obtaining the right to obtain an XT/ABX Product License Agreement for CuraGen Products to such Eligible Antigen, the ABX shall give prompt written notice to CuraGen. Effective upon such notice, such Eligible Antigen shall be a CuraGen Optioned Antigen. If CuraGen desires that an Eligible Antigen selected by CuraGen as a CuraGen Optioned Antigen is also designated as a Lambda Optioned Antigen, then CuraGen shall so notify ABX in writing at the time CuraGen selects such Eligible Antigen, and subject to this Section 5.2.9, if such an Eligible Antigen becomes a CuraGen Optioned Antigen it shall also be a Lambda Optioned Antigen hereunder.

5.2.10 With respect to each Eligible Antigen which is selected by ABX as an ABX Optioned Antigen pursuant to this Section 5.2, CuraGen shall notify ABX in writing, within thirty (30) days of receipt of the notice of selection from ABX, if CuraGen does not have the right to grant ABX a commercial license under Article 7 below for such Eligible Antigen. Unless CuraGen timely notifies ABX in writing that CuraGen does not have the right to grant ABX a commercial license under Article 7 below for such antigen, such Eligible Antigen thereafter shall be an ABX Optioned Antigen upon the expiration of such thirty (30) day period.

5.2.11 At such time as an Eligible Antigen becomes an Optioned Antigen of one of the parties (the “Optioning Party”), the other party shall deliver to the Optioning Party all Antigen Specific Materials and Information in its possession pertaining to such Optioned Antigen and all related Confidential Information of such other party, and such Antigen Specific Materials and Information and Confidential Information shall thereafter be the Confidential Information of the Optioning Party.

5.2.12 Within sixty (60) days after completion of the Research Program Term, the Parties will meet to select any remaining Eligible Antigens in the Pool, with the Party possessing the next pick selecting first, and then alternating, until all Eligible Antigens are selected or both parties have passed on any remaining Eligible Antigens (“Unpicked Eligible Antigens”). Within thirty (30) days after completion of the Research Program Term, each Party will advise the other as to whether it has the right to grant the other Party a commercial license under Article 7 for each such remaining Eligible Antigen.

6. RESEARCH FIELD LICENSES FOR OPTIONED ANTIBODIES

6.1 Research Field Licenses.

6.1.1 Subject to the terms and conditions of this Agreement, ABX hereby grants to CuraGen a nonexclusive license (or sublicense, as the case may be) under the Licensed ABX Intellectual Property, without right to grant Sublicenses, (a) to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or an interest in) Antibody Cells that contain, express or secrete Antibodies to the CuraGen Optioned Antigens solely for use in the Research Field, (b) to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or an interest in) Antibodies that bind to the CuraGen Optioned Antigens and Genetic Material that encodes such

25

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Antibodies, solely for use in the Research Field for the research and development of potential CuraGen Products and (c) with respect to one or more Antibodies that bind to a CuraGen Optioned Antigen, if the parties have mutually agreed in writing to a Conjugate to be conjugated to such one or more Antibodies that bind to such CuraGen Optioned Antigen, to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or interest in) such Conjugates conjugated to such Antibodies that bind to such CuraGen Optioned Antigens, solely for use in the Research Field for the research and development of potential CuraGen Products. Except as expressly agreed in this Agreement or otherwise expressly agreed in writing by the parties, CuraGen shall not use the Licensed ABX Intellectual Property, the ABX Technology and Information or the Research Program Technology and Information for any use other than those uses expressly licensed under this Section 6.1.1.

6.1.2 Subject to the terms and conditions of this Agreement, CuraGen hereby grants to ABX a nonexclusive license (or sublicense, as the case may be) under the Licensed CuraGen Intellectual Property, without right to grant Sublicenses, (a) to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or an interest in) Antibody Cells that contain, express or secrete Antibodies to the ABX Optioned Antigens solely for use in the Research Field, and (b) to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or an interest in) Antibodies that bind to the ABX Optioned Antigens and Genetic Material that encodes such Antibodies, solely for use in the Research Field for the research and development of potential ABX Products. Except as expressly agreed in this Agreement or otherwise expressly agreed in writing by the parties, ABX shall not use the Licensed CuraGen Intellectual Property, the CuraGen Technology and Information or the Research Program Technology and Information for any use other than those uses expressly licensed under this Section 6.1.2.

6.1.3 The licenses (or sublicenses, as the case may be) granted under this Section 6.1 shall terminate with respect to each Optioned Antigen on the second anniversary of the date on which such antigen became an Optioned Antigen; provided, however, if a party has timely exercised its option under Article 7 below to obtain a license (or sublicense, as the case may be) for Products to such Optioned Antigen, such license (or sublicense, as the case may be) shall remain in effect for Products to such Optioned Antigen for the term of the applicable license (or sublicense, as the case may be) under Article 7 below. If a party does not timely exercise its option under Article 7 below to obtain a license (or sublicense, as the case may be) for Products to an Optioned Antigen and the other party does not timely exercise its standby option under Section 7.1.2 or 7.2.2, as the case may be, for Products to such Optioned Antigen, such Antigen shall cease to be an Optioned Antigen but shall be restored as an Eligible Antigen.

Extended Research License

6.1.4 Subject to the terms and conditions of this Agreement, ABX hereby grants to CuraGen a nonexclusive license (or sublicense, as the case may be) under the Licensed ABX Intellectual Property and ABX’s interest in Antibody Specific Materials and Information and Research Program Technology and Information relating to Research Antigens,

26

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

without right to grant Sublicenses, (a) to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or an interest in) Antibody Cells that contain, express or secrete Antibodies to the Extended Research Antigens solely for use in the Research Field, (b) to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or an interest in) Antibodies that bind to the Extended Research Antigen and Genetic Material that encodes such Antibodies, solely for use in the Research Field for the research and development of potential CuraGen Products and (c) with respect to one or more Antibodies that bind to an Extended Research Antigen, if the parties have mutually agreed in writing to a Conjugate to be conjugated to such one or more Antibodies that bind to such Extended Research Antigen, to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or interest in) such Conjugates conjugated to such Antibodies that bind to such Extended Research Antigens, solely for use in the Research Field for the research and development of potential CuraGen Products. Except as expressly agreed in this Agreement or otherwise expressly agreed in writing by the parties, CuraGen shall not use the Licensed ABX Intellectual Property, the ABX Technology and Information or the Research Program Technology and Information for any use other than those uses expressly licensed under this Section 6.1.4.

6.1.5 Subject to the terms and conditions of this Agreement, CuraGen hereby grants to ABX a nonexclusive license (or sublicense, as the case may be) under the Licensed CuraGen Intellectual Property and CuraGen’s interest in Antibody Specific Materials and Information and Research Program Technology and Information relating to Research Antigens, without right to grant Sublicenses, (a) to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or an interest in) Antibody Cells that contain, express or secrete Antibodies to the Extended Research Antigens solely for use in the Research Field, and (b) to research, develop, make and use (but not to transfer, sell, lease, offer to sell or lease, or otherwise transfer title to or an interest in) Antibodies that bind to the Extended Research Antigens and Genetic Material that encodes such Antibodies, solely for use in the Research Field for the research and development of potential ABX Products. Except as expressly agreed in this Agreement or otherwise expressly agreed in writing by the parties, ABX shall not use the Licensed CuraGen Intellectual Property, the CuraGen Technology and Information or the Research Program Technology and Information for any use other than those uses expressly licensed under this Section 6.1.5.

6.1.6 The licenses (or sublicenses, as the case may be) granted under Sections 6.1.4 and 6.1.5 shall terminate with respect to each Extended Research Antigen on the [********] anniversary of the date on which such antigen became an Extended Research Antigen; provided, however, if a party has timely exercised its option under Article 7 below to obtain a license (or sublicense, as the case may be) for Products to such Extended Research Antigen, such license (or sublicense, as the case may be) shall remain in effect for Products to such Extended Research Antigen for the term of the applicable license (or sublicense, as the case may be) under Article 7 below. If neither Party timely exercise its option under Article 7 below to obtain a license (or sublicense, as the case may be) for Products to an Extended Research Antigen, such Extended Research Antigen shall cease to be an Antigen and all Antigen Specific Materials and Information shall be destroyed by both Parties.

27

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

6.2 Research and Preclinical Development.

6.2.1 As between ABX and CuraGen, ABX shall have the sole right and responsibility, at its sole expense, to conduct research and preclinical development of Antibodies that bind to the ABX Optioned Antigens and Genetic Material that encodes such Antibodies for use in the research and development of potential ABX Products in the Research Field.

6.2.2 As between ABX and CuraGen, CuraGen shall have the sole right and responsibility, at its sole expense, to conduct research and preclinical development of Antibodies that bind to the CuraGen Optioned Antigens and Genetic Material that encodes such Antibodies for use in the research and development of potential CuraGen Products in the Research Field.

6.2.3 Each party shall conduct such research and preclinical development in accordance with high scientific and professional standards, and in compliance in all material respects with the requirements of applicable laws and regulations.

7. COMMERCIAL FIELD LICENSES FOR LICENSED ANTIGENS

7.1 CuraGen Products.

7.1.1 Options for CuraGen Optioned Antigens. Subject to the terms and conditions of this Agreement, ABX hereby grants to CuraGen exclusive, non-transferable options to obtain a license (or sublicense, as the case may be) under Section 7.1.3 below for CuraGen Products to each CuraGen Optioned Antigen, with each such option being exercisable in accordance with the provisions of this Section 7.1.1 until the earliest of (a) the second anniversary of the date on which such antigen became a CuraGen Optioned Antigen; (b) such time as ABX no longer would be obligated to grant a license (or sublicense, as the case may be) under Section 7.1.3 below for such CuraGen Products, and (c) the twelfth anniversary of the Effective Date.

(a) If CuraGen desires to exercise its option for CuraGen Products to such CuraGen Optioned Antigen, CuraGen shall so notify ABX in writing. At the time CuraGen exercises its option to obtain a license (or sublicense, as the case may be) under Section 7.1.3 for any CuraGen Optioned Antigen that is a Lambda Optioned Antigen, if CuraGen wishes such license to include rights for CuraGen Products for use in the Therapeutic Field directed to a CuraGen Licensed Antigen and comprising a Lambda Antibody or Genetic Material that encodes such Lambda Antibody, then CuraGen shall designate such CuraGen Licensed Antigen as a Lambda Licensed Antigen.

(b) Effective upon such notice, such CuraGen Optioned Antigen shall be a CuraGen Licensed Antigen, and the exclusive license (or sublicense, as the case may be) grant under Section 7.1.3 below for CuraGen Products to such CuraGen Licensed Antigen shall then be effective.

28

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

7.1.2 Standby Options for ABX Optioned Antigens. If ABX fails to timely exercise its option under Section 7.2.1 below for any ABX Optioned Antigen, within ten (10) days after the written request by CuraGen, ABX shall provide CuraGen with copies of, or access to, all data and information of ABX regarding such ABX Optioned Antigen and Antibodies thereto. Except as otherwise expressly provided in this Agreement or the parties otherwise expressly agree in writing, CuraGen shall have the right to use such data and information for the sole purpose of evaluating its interest in exercising its option under this Section 7.1.2 for such ABX Optioned Antigen. Subject to the terms and conditions of this Agreement, ABX hereby grants to CuraGen exclusive, non-transferable options to obtain a license (or sublicense, as the case may be) under Section 7.1.3 below for CuraGen Products to each ABX Optioned Antigen for which ABX fails to timely exercise its option under Section 7.2.1 below, with each such option being exercisable in accordance with the provisions of this Section 7.1.2 commencing on the expiration of ABX’s option under Section 7.2.1 below until the earliest of (a) the date six (6) months thereafter, (b) such time as ABX no longer would be obligated to grant a license (or sublicense, as the case may be) under Section 7.1.3 below for such CuraGen Products, and (c) the twelfth anniversary of the Effective Date.

(a) If CuraGen desires to exercise its option for CuraGen products to such ABX Optioned Antigen, CuraGen shall so notify ABX in writing. At the time CuraGen exercises its option to obtain a license (or sublicense, as the case may be) under Section 7.1.3 for any ABX Optioned Antigen that is a Lambda Optioned Antigen, if CuraGen wishes such license to include the rights for CuraGen Products for use in the Therapeutic Field directed to a CuraGen Licensed Antigen and comprising a Lambda Antibody or Genetic Material that encodes such Lambda Antibody, then CuraGen shall designate such CuraGen Licensed Antigen as a Lambda Licensed Antigen.

(b) Within thirty (30) days after receipt of such notice, ABX shall notify CuraGen in writing if ABX does not have the right to grant CuraGen the license (or sublicense, as the case may be) under Section 7.1.3 below for CuraGen products to such ABX Optioned Antigen. If ABX does not have such a right, ABX shall have no obligation to grant CuraGen the license (or sublicense, as the case may be) under Section 7.1.3 below for CuraGen Products to such ABX Optioned Antigen.

(c) Unless ABX timely notifies CuraGen in writing that it does not have such a right, effective upon the expiration of such thirty (30) day period, such antigen shall be a CuraGen Licensed Antigen, and the exclusive license (or sublicense, as the case may be) grant under Section 7.1.3 below for CuraGen Products to such CuraGen Licensed Antigen shall be effective upon the expiration of such thirty (30) day period.

7.1.3 Commercial Field License. Subject to the terms and conditions of this Agreement, ABX hereby grants to CuraGen an exclusive worldwide license (or sublicense,

29

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

as the case may be) (with the right to grant Sublicenses) under Licensed ABX Intellectual Property to research, develop, make, have made, use, import, offer to sell and sell CuraGen Products in the Commercial Field. CuraGen shall provide ABX with a copy of each Sublicense promptly after executing the same; provided, however, that CuraGen shall have the right to redact any confidential financial terms or confidential research, development or commercialization plans from the copy provided to ABX. Any Sublicense shall be subject and subordinate to the terms and conditions of this Agreement, and CuraGen shall remain responsible for all payments due to ABX hereunder.

7.2 ABX Products.

7.2.1 Options for ABX Optioned Antigens. Subject to the terms and conditions of this Agreement, CuraGen hereby grants to ABX exclusive, non-transferable options to obtain a license (or sublicense, as the case may be) under Section 7.2.3 below for ABX Products to each ABX Optioned Antigen, with each such option being exercisable in accordance with the provisions of this Section until the earliest of (a) the second anniversary of the date on which such antigen became a ABX Optioned Antigen, (b) such time as CuraGen no longer would be obligated to grant a license (or sublicense, as the case may be) under Section 7.2.3 below for such ABX Products, and (c) the twelfth anniversary of the Effective Date.

(a) If ABX desires to exercise its option for ABX Products to such ABX Optioned Antigen, ABX shall so notify CuraGen in writing.

(b) Effective upon such notice, such antigen shall be an ABX Licensed Antigen, and the exclusive license (or sublicense, as the case may be) grant under Section 7.2.3 below for ABX Products to such ABX Licensed Antigen shall be effective.

7.2.2 Standby Options for CuraGen Optioned Antigens. If CuraGen fails to timely exercise its option under Section 7.1.1 above for any CuraGen Optioned Antigen that is not a CuraGen Exclusive Antigen, within ten (10) days after the written request by ABX, CuraGen shall provide ABX with copies of, or access to, all data and information of CuraGen regarding such CuraGen Optioned Antigen and Antibodies thereto. Except as otherwise expressly provided in this Agreement or the parties otherwise expressly agree in writing, ABX shall have the right to use such data and information for the sole purpose of evaluating its interest in exercising its option under this Section 7.2.2 for such CuraGen Optioned Antigen. Subject to the terms and conditions of this Agreement, CuraGen hereby grants to ABX non-exclusive, non-transferable options to obtain a license (or sublicense, as the case may be) under Section 7.2.3 below for ABX Products to each CuraGen Optioned Antigen that is not a CuraGen Exclusive Antigen for which CuraGen fails to timely exercise its option under Section 7.1.1 above, with each such option being exercisable in accordance with the provisions of this Section 7.2.2 commencing on the expiration of CuraGen’s option under Section 7.1.1 above until the earliest of (a) the date six (6) months thereafter, (b) such time as CuraGen no longer would be obligated to grant a license (or sublicense, as the case may be) under Section 7.2.3 below for such ABX Products, and (c) the twelfth anniversary of the Effective Date.

30

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(a) If ABX desires to exercise its option for ABX products to such CuraGen Optioned Antigen, ABX shall so notify CuraGen in writing.

(b) Within thirty (30) days after receipt of such notice, CuraGen shall notify ABX in writing if CuraGen does not have the right to grant ABX the license (or sublicense, as the case may be) under Section 7.2.3 below for ABX products to such CuraGen Optioned Antigen. If CuraGen does not have such a right, CuraGen shall have no obligation to grant ABX the license (or sublicense, as the case may be) under Section 7.2.3 below for ABX Products to such CuraGen Optioned Antigen.

(c) Unless CuraGen timely notifies ABX in writing that it does not have such a right, effective upon the expiration of such thirty (30) day period, such antigen shall be an ABX Licensed Antigen, and the exclusive license (or sublicense, as the case may be) grant under Section 7.2.3 below for ABX Products to such ABX Licensed Antigen shall be effective upon the expiration of such thirty (30) day period.

7.2.3 Commercial Field License. Subject to the terms and conditions of this Agreement, CuraGen hereby grants to ABX an exclusive worldwide license (or sublicense, as the case may be) (with the right to grant Sublicenses) under Licensed CuraGen Intellectual Property to research, develop, make, have made, use, import, offer to sell and sell ABX Products in the Commercial Field. ABX shall provide CuraGen with a copy of each Sublicense promptly after executing the same; provided, however, that ABX shall have the right to redact any confidential financial terms or confidential research, development or commercialization plans from the copy provided to CuraGen. Any Sublicense shall be subject and subordinate to the terms and conditions of this Agreement, and ABX shall remain responsible for all payments due to CuraGen hereunder.

7.3 No Other Rights. No rights other than those expressly set forth in this Agreement are granted to either party hereunder, and no additional rights shall be granted to either party by implication, estoppel or otherwise.

7.4 Further Restrictions.

7.4.1 Notwithstanding anything to the contrary in this Agreement, neither a party, nor its Sublicensees hereunder nor their respective Affiliates shall submit an IND for, or otherwise commence human clinical testing of, any Product to any Antigen unless and until such party has obtained a commercial license under this Article 7 for Products to such Antigen.

7.4.2 For purposes of this Agreement, if (a) ABX has otherwise granted exclusive rights to antibodies to an antigen to a Third Party without breach of the-exclusivity provisions of Section 4.4, or (b) ABX has an active research and development program ongoing

31

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

for antibodies to an antigen (that was not provided by CuraGen hereunder) that is independent of its efforts hereunder and does not and did not involve access to, or otherwise make use of, the CuraGen Databases, then ABX shall not have the right to grant CuraGen a license (or sublicense, as the case may be) hereunder to use such antigen in the Research Field or a license (or sublicense, as the case may be) regarding the related CuraGen Products in the Commercial Field.

7.4.3 For purposes of this Agreement, if CuraGen has granted exclusive rights to antibodies to an antigen to a Third Party without breach of the exclusivity provisions of Section 4.4, then CuraGen shall not have the right to grant ABX a license (or sublicense, as the case may be) hereunder to use such antigen in the Research Field or a license (or sublicense, as the case may be) regarding the related ABX Products in the Commercial Field.

8. PAYMENTS

8.1 Research Funding.

8.1.1 CuraGen has paid to ABX aggregate research funding of [***************************(**********)] to date. CuraGen shall pay to ABX additional research funding of [*******************************************].

8.1.2 CuraGen shall pay ABX [******************(**********)] for each of the first five immunizations of Xenomouse Animals with Research Antigens after the Revision Date, payable [**************************************].

8.2 Certain Fees.

8.2.1 Each party shall pay to the other party a non-refundable, non-creditable technology access fee of [*********************(**********)] for each Eligible Antigen it selects under Article 5 above that becomes an Optioned Antigen within ten (10) days after such Eligible Antigen becomes an Optioned Antigen. CuraGen additionally shall pay to ABX a non-refundable, non-creditable technology access fee of [*************(**********)] for each Eligible Antigen that becomes a Lambda Optioned Antigen hereunder, within ten (10) days after such Eligible Antigen becomes a Lambda Optioned Antigen.

8.2.2 Each party shall pay to the other party a non-refundable, non-creditable exercise fee of [*************(**********)] for each Optioned Antigen for which it exercised an option to obtain a commercial license under Article 7 above within ten (10) days after such Optioned Antigen becomes a Licensed Antigen. CuraGen additionally shall pay to ABX a non-refundable, non-creditable exercise fee of [*************(**********)] for each Lambda Optioned Antigen for which CuraGen exercised an option to obtain a commercial license under Article 7 above within ten (10) days after such Lambda Optioned Antigen becomes a Lambda Licensed Antigen.

8.2.3 With respect to each Licensed Antigen for which a party exercised an option to obtain a commercial license under Article 7 above, but for which it was not required

32

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

to pay an option fee under Section 8.2.1 above because it was not selected as an Optioned Antigen by such party under Article 5 above, such party shall pay to the other party, in lieu of the amounts set forth in Sections 8.2.1 and 8.2.2, a non-refundable, non-creditable exercise fee of [*************(**********)] for such Licensed Antigen within ten (10) days after such antigen becomes a Licensed Antigen. CuraGen additionally shall pay to ABX a non-refundable, non-creditable exercise fee of [*************(**********)] for each CuraGen Licensed Antigen for which CuraGen exercised an option to obtain a commercial license and designated such CuraGen Licensed Antigen as a Lambda Licensed Antigen under Article 7 above, but for which it was not required to pay an option fee under Section 8.2.1 above because it was not selected as an Optioned Antigen by CuraGen under Article 5 above, and within ten (10) days after such antigen becomes a Lambda Licensed Antigen.

8.3 Milestone Payments.

8.3.1 In the Therapeutic Field.

(a) Subject to Section 8.3.1(d), and, in the case of Sublicenses, to Section 8.4.3(c) below, within thirty (30) days following the achievement of each of the following milestones with respect to each CuraGen Product for use in the Therapeutic Field (other than a CuraGen Product directed to a CuraGen Licensed Antigen and comprising a Lambda Antibody or Genetic Material that encodes such Lambda Antibody), on a CuraGen Product-by-CuraGen Product basis, CuraGen shall give written notice to ABX thereof and shall (i) pay to ABX the corresponding milestone payments described below and (ii) pay to ABX the milestone payments due any Third Party under an ABX In-License arising from use of a Conjugate as part of such CuraGen Product (as permitted under this Agreement), as applicable. Subject, in the case of Sublicenses, to Section 8.4.3(a) below, within thirty (30) days following the achievement of each of the following milestones with respect to each ABX Product for use in the Therapeutic Field, on an ABX Product-by-ABX Product basis, ABX shall give written notice to CuraGen thereof and shall pay to CuraGen the corresponding milestone payments described below.

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

(b) Subject to Section 8.3.1(d), and, in the case of Sublicenses, to Section 8.4.3(c) below, within thirty (30) days following the achievement of each of the following milestones with respect to each CuraGen Product for use in the Therapeutic Field directed to a CuraGen Licensed Antigen and comprising a Lambda Antibody or Genetic Material that encodes such Lambda Antibody, on a CuraGen Product-by-CuraGen Product basis, CuraGen shall give

33

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

written notice to ABX thereof and shall (i) pay to ABX the corresponding milestone payments described below, and (ii) pay to ABX the milestone payments due any Third Party under an ABX In-License arising from use of a Conjugate as part of such CuraGen Product (as permitted under this Agreement), as applicable.

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

(c) If, at the time when any milestone payment listed in this Section 8.3.1, with respect to a Product for use in the Therapeutic Field, is due from a party, such party has not paid all other milestone payments (if any) previously listed in this Section 8.3.1 with respect to such Product, then at such time such party shall pay all such unpaid milestone payments (if any) previously listed in this Section 8.3.1 with respect to such Product. If, at the time of the First Commercial Sale by a party, its Affiliate or their respective Sublicensee of a Product for use in the Therapeutic Field, such party has not paid all milestone payments (if any) listed in this Section 8.3.1 with respect to such Product, then at such time such party shall pay all such unpaid milestone payments (if any) listed in this Section 8.3.1 with respect to such Product. If at any time a party abandons the development of a Product after the payment to the other party of one or more milestone payments under this Section 8.3.1 and subsequently commences or continues the development of another Product directed to the same Licensed Antigen as the abandoned Product, then such party shall have no obligation to pay to the other party a milestone payment upon the occurrence of a milestone event for the subsequent Product for which such party previously has paid to the other party a milestone payment under this Section 8.3.1 for the abandoned Product.

(d) Notwithstanding Sections 8.3.1(a) and (b), CuraGen shall only be required to make the higher payments set forth in Section 8.3.1(b) with respect to a CuraGen Product comprising a Lambda Antibody or Genetic Material that encodes a Lambda Antibody if and to the extent that the additional amounts are owed or paid by ABX to the licensors under the licenses specified in Section 1.2 of Amendment No. 2. If such payments to such licensors are not owed or paid by ABX, CuraGen shall only be required to make the payments set forth in Section 8.1.3(a).

8.3.2 In the Diagnostic Field.

(a) Subject to Section 8.3.2(d), and, in the case of Sublicenses, to Section 8.4.3(d) below, within thirty (30) days following the achievement of each of the following milestones with respect to each CuraGen Product for use in the Diagnostic Field (other than a

34

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

CuraGen Product directed to a CuraGen Licensed Antigen and comprising a Lambda Antibody or Genetic Material that encodes such Lambda Antibody), on a CuraGen Product-by-CuraGen Product basis, CuraGen shall give written notice to ABX thereof and shall (i) pay to ABX the corresponding milestone payments described below, and (ii) pay to ABX the milestone payments due any Third Party under an ABX In-License arising from use of a Conjugate as part of such CuraGen Product (as permitted under this Agreement), as applicable. Subject, in the case of Sublicenses, to Section 8.4.3(b) below, within thirty (30) days following the achievement of each of the following milestones with respect to each ABX Product for use in the Diagnostic Field, on an ABX Product-by-ABX Product basis, ABX shall give written notice to CuraGen thereof and shall pay to CuraGen the corresponding milestone payments described below.

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

(b) Subject to Section 8.3.2(d), and, in the case of Sublicenses, to Section 8.4.3(d) below, within thirty (30) days following the achievement of each of the following milestones with respect to each CuraGen Product for use in the Diagnostic Field directed to a CuraGen Licensed Antigen and comprising a Lambda Antibody or Genetic Material that encodes such Lambda Antibody, on a CuraGen Product-by-CuraGen Product basis, CuraGen shall give written notice to ABX thereof and shall (i) pay to ABX the corresponding milestone payments described below, and (ii) pay to ABX the milestone payments due any Third Party under an ABX In-License arising from use of a Conjugate as part of such CuraGen Product (as permitted under this Agreement), as applicable.

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

(c) If, at the time when any milestone payment listed in this Section 8.3.2, with respect to a Product for use in the Diagnostic Field, is due from a party, such party has not paid all other milestone payments (if any) previously listed in this Section 8.3.2 with respect to such Product, then at such time such party shall pay all such unpaid milestone payments (if any) previously listed in this Section 8.3.2 with respect to such Product. If, at the time of the First Commercial Sale by a party, its Affiliate or permitted (sub)licensee of a Product for use in the Diagnostic Field, such party has not paid all milestone payments (if any) listed in this Section 8.3.2 with respect to such Product, then at such time such party shall pay all such unpaid milestone payments (if any) listed in this Section 8.3.2 with respect to such Product. If at any time a party abandons the development of a Product after the payment to the other party of one or more milestone payments under this Section 8.3.2 and subsequently commences or continues the development of another Product directed to the same Licensed Antigen as the abandoned

35

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Product, then such party shall have no obligation to pay to the other party a milestone payment upon the occurrence of a milestone event for the subsequent Product for which such party previously has paid to the other party a milestone payment under this Section 8.3.2 for the abandoned Product.

(d) Notwithstanding Sections 8.3.2(a) and (b), CuraGen shall only be required to make the higher payments set forth in Section 8.3.2(b) with respect to a CuraGen Product comprising a Lambda Antibody or Genetic Material that encodes a Lambda Antibody if and to the extent that the additional amounts are owed or paid by ABX to the licensors under the licenses specified in Section 1.2 of Amendment No. 2. If such payments to such licensors are not owed or paid by ABX, CuraGen shall only be required to make the payments set forth in Section 8.1.3(a).

8.4 Royalties.

8.4.1 Notice of Royalty Commencement Date. Within thirty (30) days following the Royalty Commencement Date for each CuraGen Product in each country, CuraGen shall give written notice to ABX thereof. Within thirty (30) days following the Royalty Commencement Date for each ABX Product in each country, ABX shall give written notice to CuraGen thereof.

8.4.2 Royalties on Net Sales.

(a) Subject, in the case of Sublicenses, to Sections 8.4.3(a) and (b) below, where a CuraGen Patent Claim covers an ABX Product, ABX shall pay to CuraGen royalties equal to (a) [*******************************************], and (b) [*******************************************]. [*******************************************].

(b) Subject, in the case of Sublicenses, to Sections 8.4.3(a) and (b) below, where no CuraGen Patent Claim covers an ABX Product, ABX shall pay to CuraGen royalties equal to [******************************] (i) [**********************************] and (ii) [*******************************************]; provided, however, [*******************************************] (a) [*******************************************] or (b) [*******************************************].

(c) Subject, in the case of Sublicenses, to Sections 8.4.3(c) and (d) below, where an ABX Patent Claim covers a CuraGen Product, CuraGen shall pay to ABX royalties equal to (a) [*******************************************], (b) [*******************************************] and (c) [*******************************************]. [*******************************************].

36

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(d) Subject, in the case of Sublicenses, to Sections 8.4.3(a) and (b) below, where no ABX Patent Claim covers a CuraGen Product, CuraGen shall pay to ABX royalties equal to (x) [*******************************************] or (y) [*******************************************].

8.4.3 Royalties on Sublicense Income.

(a) In the event that ABX grants a Sublicense with respect to any ABX Product for use in the Therapeutic Field, ABX shall notify CuraGen in writing, within fifteen (15) days of the grant of such Sublicense, whether ABX elects to pay to CuraGen (i) the milestone payments set forth in Section 8.3.1 upon the occurrence with respect to such ABX Product of the milestone events set forth therein and the royalties set forth in Section 8.4.2 based on Net Sales of such ABX Product or (ii) the following payments and royalties equal to the following percentage of Sublicense Income received by ABX and its Affiliates in connection with such Sublicense for each ABX Product for use in the Therapeutic Field:

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

Notwithstanding the foregoing, the royalties owing by ABX under this Section 8.4.3(a) in any calendar quarter, with respect to Net Sales by such Sublicensee and its Affiliates of any ABX Product for use in the Therapeutic Field, shall not be less than [********(***)] of Net Sales by such Sublicensee and its Affiliates of such ABX Product in such calendar quarter. Once made, the election of the basis of payment hereunder may not be changed, and ABX shall pay the amounts determined in accordance with its election.

(b) In the event that ABX grants a Sublicense with respect to any ABX Product for use in the Diagnostic Field, ABX shall notify CuraGen in writing, within fifteen (15) days of the grant of such Sublicense, whether ABX elects to pay to CuraGen (i) the milestone payments set forth in Section 8.3.2 upon the occurrence with respect to such ABX Product of the milestone events set forth therein and the royalties set forth in Section 8.4.2 based on Net Sales of such ABX Product or (ii) the following payments and royalties equal to the following percentage of Sublicense Income received by ABX and its Affiliates in connection with such Sublicense for each ABX Product for use in the Diagnostic Field:

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

37

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Notwithstanding the foregoing, the royalties owing by ABX under this Section 8.4.3(b) in any calendar quarter, with respect to Net Sales by such Sublicensee and its Affiliates of any ABX Product for use in the Diagnostic Field, shall not be less than [********(***)] of Net Sales by such Sublicensee and its Affiliates of such ABX Product in such calendar quarter. Once made, the election of the basis of payment hereunder may not be changed, and ABX shall pay the amounts determined in accordance with its election.

(c) In the event that CuraGen grants a Sublicense with respect to any CuraGen Product for use in the Therapeutic Field, CuraGen shall notify ABX in writing, within fifteen (15) days of the grant of such Sublicense, whether CuraGen elects to pay to ABX (i) the milestone payments set forth in Section 8.3.1 upon the occurrence with respect to such CuraGen Product of the milestone events set forth therein and the royalties set forth in Section 8.4.2 based on Net Sales of such CuraGen Product or (ii) the following payments and royalties equal to the following percentage of Sublicense Income received by CuraGen and its Affiliates in connection with the Sublicense for each CuraGen Product for use in the Therapeutic Field:

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

Notwithstanding the foregoing, the royalties owing by CuraGen under this Section 8.4.3(c) in any calendar quarter, with respect to Net Sales by such Sublicensee and its Affiliates of any CuraGen Product for use in the Therapeutic Field, shall not be less than the aggregate of (i) [********(***)] of Net Sales by such Sublicensee and its Affiliates of such CuraGen Product in such calendar quarter, plus (ii) [***************************************************************************************] Once made, the election of the basis of payment hereunder may not be changed, and CuraGen shall pay the amounts determined in accordance with its election.

(d) In the event that CuraGen grants a Sublicense with respect to any CuraGen Product for use in the Diagnostic Field, CuraGen shall notify ABX in writing, within fifteen (15) days of the grant of such Sublicense, whether CuraGen elects to pay to ABX (i) the milestone payments set forth in Section 8.3.2 upon the occurrence with respect to such CuraGen Product of the milestone events set forth therein and the royalties set forth in Section 8.4.2 based on Net Sales of such CuraGen Product or (ii) the following payments and royalties equal to the following percentage of Sublicense Income received by CuraGen and its Affiliates in connection with the Sublicense for such CuraGen Product for use in the Diagnostic Field:

[*******]    [***************************************************]

[*******]    [***************************************************]

[*******]    [***************************************************]

38

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Notwithstanding the foregoing, the royalties owing by CuraGen under this Section 8.4.3(d) in any calendar quarter, with respect to Net Sales by such Sublicensee and its Affiliates of any CuraGen Product for use in the Diagnostic Field, shall not be less than the aggregate of (i) [********(***)] of Net Sales by such Sublicensee and its Affiliates of such CuraGen Product in such calendar quarter, plus (ii) [*****************************************************************************************]. Once made, the election of the basis of payment hereunder may not be changed, and CuraGen shall pay the amounts determined in accordance with its election.

(e) Length of Royalty Obligations. Each party’s obligations to pay royalties (including without limitation percentages of Sublicense Income) with respect to each Product in each country shall commence on the Royalty Commencement Date for such Product in such country, and shall continue for such Product in such country until (i) [**************************], or (ii) [*************************************].

8.4.4 Discounting. If a party, its Sublicensees or their respective Affiliates sells a Product to a Third Party who also purchases other products or services from such party, its Sublicensees or their respective Affiliates, and such party, its Sublicensees or their respective Affiliates discounts the purchase price of such Product to a greater degree than it generally discounts the price of its other products or services to such customer, then in such case the Net Sales for the sale of such Product to such Third Party shall equal the arm’s length price that Third Parties would generally pay for the Product alone when not purchasing any other product or service from such party, its Sublicensee or their respective Affiliates. For purposes of this provision “discounting” includes establishing the list price at a lower-than-normal level.

9. ACCOUNTING AND RECORDS

9.1 Royalty Reports and Payments. Commencing with the first calendar quarter in which the Royalty Commencement Date for a Product occurs, CuraGen in the case of CuraGen Products, and ABX in the case of ABX Products (the “Payor”) shall make written reports to the other party (the “Payee”) within sixty (60) days after the end of each calendar quarter, stating in each such report (a) the number, description, and aggregate Net Sales of such Product sold during the calendar quarter, (b) the calculation of the royalties and other amounts payable under Article 8 above, and (c) otherwise satisfying the royalty reporting requirements under each ABX In-License applicable to such Product (in the case of CuraGen Products). Concurrently with the making of such reports, the Payor shall pay to the Payee all royalties payable under Article 8 above. With respect to (1) each CuraGen Product directed to a CuraGen Licensed Antigen and comprising a Lambda Antibody or Genetic Material that encodes such Lambda Antibody, and (2) each CuraGen Product comprising a Conjugate, prior to the date any Third Party royalty is due for such CuraGen Products pursuant to Section 8.4, ABX shall provide to CuraGen information from the applicable ABX In-License(s) sufficient for CuraGen to calculate the royalty then owing and to satisfy the royalty reporting obligations under such ABX In-License(s).

39

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

9.2 Records; Inspection. The Payor shall keep (and cause its Affiliates, Sublicensees and Sublicensees’ Affiliates to keep) complete, true and accurate books of account and records for the purpose of determining the royalties payable to the Payee under this Agreement. Such books and records shall be kept at the principal place of business of the Payor, its Sublicensee or their respective Affiliates, as the case may be, for at least three years following the end of the calendar quarter to which they pertain. Such records of the Payor and its Affiliates shall be open for inspection during such three-year period by independent accountants chosen by the Payee, and subject to the approval of the Payor, which approval shall not be unreasonably withheld or delayed, (which accountants, in the case of ABX, may also represent XT) for the purpose of verifying the royalty statements. The Payor shall require each of its Sublicensees to maintain similar books and records and to open such records for inspection during the same three-year period by a representative of the Payor reasonably satisfactory to the Payee on behalf of, and as required by, the Payee for the purpose of verifying the royalty statements. All such inspections may be made no more than once each calendar year at reasonable times mutually agreed by the Payor and the Payee. The independent accountants chosen by the Payee will be obliged to execute a reasonable confidentiality agreement prior to commencing any such inspection. Inspections conducted under this Section 9.2 shall be at the expense of the Payee, unless a variation or error producing an increase exceeding five percent (5%) of the amount stated for any period is established in the course of any such inspection, whereupon all costs relating to the audit of such period will be paid by the Payor.

9.3 Payment Method. All payments by the Payor to the Payee hereunder shall be in United States Dollars in immediately available funds and shall be made by wire transfer from a United States bank located in the United States to such bank account as designated by the Payee to the Payor.

9.4 Currency Conversion. If any currency conversion shall be required in connection with the calculation of royalties hereunder, such conversion shall be made using the selling exchange rate for conversion of the foreign currency into United States Dollars, quoted for current transactions reported under the heading “Currency Trading – Exchange Rates” in The Wall Street Journal in the United States for the last business day of the calendar quarter to which such payment pertains. If The Wall Street Journal ceases to be published, then the rate of exchange to be used shall be that reported in such other business publication of national circulation in the United States as the parties reasonably agree.

9.5 Late Payments. Any payments due from the Payor that are not paid on the date such payments are due under this Agreement shall bear interest at the lesser of (i) the Prime Rate as reported under the heading “Money Rates” in The Wall Street Journal in the United States on the date such payment is due, plus an additional two percent (2%), or (ii) the maximum rate permitted by applicable law, in each case calculated on the number of days such payment is delinquent. This Section 9.5 shall in no way limit any other remedies available to any party. If The Wall Street Journal ceases to be published, then the prime rate to be used shall be that reported in such other business publication of national circulation in the United States as the parties reasonably agree.

40

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

9.6 Withholding Taxes. Each party shall be entitled to deduct from the royalties owing to the other party hereunder the amount of any withholding taxes, value-added taxes or other taxes, levies or charges with respect to such amounts, other than United States taxes, payable by such party, or any taxes required to be withheld by such party, to the extent such party pays to the appropriate governmental authority on behalf of the other party such taxes, levies or charges. The withholding party shall use reasonable efforts to minimize any such taxes, levies or charges required to be withheld on behalf of the other party by such party. The withholding party promptly shall deliver to the other party proof of payment of all such taxes, levies and other charges, together with copies of all communications from or with such governmental authority with respect thereto, and shall reasonably assist the other party in obtaining a refund thereof (to the extent permitted under applicable law) or to obtain a foreign tax credit therefor.

10. DILIGENCE

10.1 Diligence Obligation of CuraGen.

10.1.1 CuraGen shall use commercially reasonable efforts to actively research, develop and obtain regulatory approvals as expeditiously as reasonably practicable to market in major markets throughout the world at least one CuraGen Product to each CuraGen Licensed Antigen, and following such approval to maximize Net Sales of such CuraGen Product.

10.1.2 Without limiting Section 10.1.1, CuraGen, its Sublicensees or their respective Affiliates shall file an IND with the FDA for at least one CuraGen Product to each CuraGen Licensed Antigen within three (3) years after the effective date of the applicable XT/ABX Product License Agreement. After the filing of an IND for at least one CuraGen Product to a CuraGen Licensed Antigen, CuraGen, its Sublicensees or their respective Affiliates, shall have an active IND and actively and diligently conduct clinical trials in pursuit of regulatory approval for at least one such CuraGen Product in the United States until at least one such CuraGen Product may be sold commercially in the United States.

10.1.3 During the term of this Agreement and for a period of five (5) years thereafter, CuraGen shall keep complete and accurate records of its activities conducted under this Agreement regarding the commercialization of CuraGen Products and the results thereof. Within thirty (30) days after the end of each semi-annual period during the term of this Agreement, CuraGen shall prepare and provide ABX with a reasonably detailed written report of such activities and results, through such date.

10.2 Diligence Obligation of ABX.

10.2.1 ABX shall use commercially reasonable efforts to actively research, develop and obtain regulatory approvals as expeditiously as reasonably practicable to market in major markets throughout the world at least one ABX Product to each ABX Licensed Antigen, and following such approval to maximize Net Sales of such ABX Product.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

10.2.2 Without limiting Section 10.2.1, ABX, its Sublicensees or their respective Affiliates shall file an IND with the FDA for at least one ABX Product to each ABX Licensed Antigen within three (3) years after the effective date of the applicable XT/ABX Product License Agreement. After the filing of an IND for at least one ABX Product to a ABX Licensed Antigen, ABX, its Sublicensees or their respective Affiliates, shall have an active IND and actively and diligently conduct clinical trials in pursuit of regulatory approval for at least one such ABX Product in the United States until at least one such ABX Product may be sold commercially in the United States.

10.2.3 During the term of this Agreement and for a period of five (5) years thereafter, ABX shall keep complete and accurate records of its activities conducted under this Agreement regarding the commercialization of ABX Products and the results thereof. Within thirty (30) days after the end of each semi-annual period during the term of this Agreement, ABX shall prepare and provide CuraGen with a reasonably detailed written report of such activities and results, through such date.

10.3 Standards of Performance. The development and commercialization of a Product hereunder by a party, its Sublicensees and their respective Affiliates shall be performed in accordance with high scientific and professional standards, and in compliance in all material respects with the requirements of applicable laws and regulations. ABX, its Sublicensees and their respective Affiliates shall be solely responsible for providing the personnel, materials, equipment, and other resources for the development and commercialization of ABX Products hereunder. CuraGen, its Sublicensees and their respective Affiliates shall be solely responsible for providing the personnel, materials, equipment, and other resources for the development and commercialization of CuraGen Products hereunder.

10.4 Gene Therapy Applications. Each party’s intention as of the Effective Date is to commercialize a Product hereunder for an application other than Gene Therapy before commercializing a Product hereunder for a Gene Therapy application. It is understood, however, that either party may or may not also intend to develop and sell Products for use in Gene Therapy, and that such Gene Therapy application may ultimately be commercialized before a Product is commercialized hereunder for a non-Gene Therapy application.

11. CONFIDENTIALITY

11.1 Confidential Information. During the term of this Agreement and for a period of five (5) years following the expiration or earlier termination hereof, each party shall maintain in confidence the Confidential Information of the other party, and shall not disclose, use or grant the use of the Confidential Information of the other party except on a need-to-know basis to such party’s directors, officers employees, consultants and collaborators, and to the Third Party licensors of the Licensed Intellectual Property, to the extent such disclosure is reasonably necessary or required in connection with such party’s activities as expressly authorized by this Agreement. To the extent that disclosure by a party to any Person is authorized by this Agreement, prior to disclosure, a party shall obtain written agreement of such

42

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Person to hold in confidence and not disclose, use or grant the use of the Confidential Information of the other party except as expressly permitted under this Agreement. Each party shall notify the other promptly upon discovery of any unauthorized use or disclosure of the other party’s Confidential Information. Upon the expiration or earlier termination of this Agreement, each party shall return to the other party all tangible items regarding the Confidential Information of the other party and all copies thereof, except for Confidential Information pertaining to any Licensed Antigen and related Products for which, and for so long as, such party retains a license (or sublicense, as the case may be) hereunder; provided, however, that each party shall have the right to retain one (1) copy for its legal files for the sole purpose of determining its obligations hereunder.

11.2 Terms of Agreement. Neither party shall disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other party; provided, however, that either party may disclose the terms or conditions of this Agreement, (a) on a need-to-know basis to its legal and financial advisors to the extent such disclosure is reasonably necessary in connection with such party’s activities as expressly permitted by this Agreement or for the conduct of its business; (b) to the Third Party licensors of the Licensed Intellectual Property; (c) to a Third Party in connection with (i) an equity investment or other form of financing in such party by a Third Party; (ii) a merger, consolidation or similar transaction entered into by such party; or (iii) the sale of all or substantially all of the assets of such party; and (d) as may, in the reasonable opinion of such party’s counsel, be required by applicable law, regulation or court order, including without limitation, a disclosure in connection with such party’s filing of a registration statement or other filing with the United States Securities and Exchange Commission (in which event such party will first consult with the other party, to the extent reasonably practicable, with respect to such disclosure). Notwithstanding the foregoing, (i) the parties will jointly issue a press release in mutually agreed form promptly after execution hereof and (ii) prior to execution of this Agreement CuraGen and ABX shall agree upon the substance of information that can be used to describe the terms of this transaction, and CuraGen and ABX may disclose such information, as modified by mutual agreement from time to time, without the other party’s consent.

12. TECHNOLOGY, INFORMATION AND INTELLECTUAL PROPERTY

12.1 Ownership.

12.1.1 ABX shall solely own all right, title and interest in the ABX Technology and Information and in all patent rights and other intellectual property rights therein. CuraGen shall not (and shall not attempt or purport to) file or prosecute any patent application in any country which claims or purports to claim the ABX Technology and Information, unless the parties otherwise expressly agree in writing. ABX shall solely own all right, title and interest in the Excluded ABX Technology and in all patent rights and other intellectual property rights therein. CuraGen shall not (and shall not attempt or purport to) file or prosecute any patent application in any country which claims or purports to claim the Excluded ABX Technology.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

12.1.2 CuraGen shall solely own all right, title and interest in the CuraGen Technology and Information and in all patent rights and other intellectual property rights therein. ABX shall not (and shall not attempt or purport to) file or prosecute any patent application in any country which claims or purports to claim the CuraGen Technology and Information, unless the parties otherwise expressly agree in writing. CuraGen shall solely own all right, title and interest in the Excluded CuraGen Technology and in all patent rights and other intellectual property rights therein. ABX shall not (and shall not attempt or purport to) file or prosecute any patent application in any country which claims or purports to claim the Excluded CuraGen Technology.

12.1.3 ABX shall solely own all right, title and interest in Research Program Technology and Information conceived, reduced to practice or otherwise derived solely by Persons on behalf of ABX, together with all patent rights and other intellectual property rights therein and, subject to the provisions of this Agreement, shall have the right to freely exploit, transfer, license, or encumber its rights thereto. CuraGen shall solely own all right, title and interest in Research Program Technology and Information conceived, reduced to practice or otherwise derived solely by Persons on behalf of CuraGen, together with all patent rights and other intellectual property rights therein and, subject to the provisions of this Agreement, shall have the right to freely exploit, transfer, license, or encumber its rights thereto. The parties jointly shall own all right, title and interest in Research Program Technology and Information conceived, reduced to practice or otherwise derived jointly by Persons on behalf of ABX and by Persons on behalf of CuraGen, together with all patent rights and other intellectual property rights therein. Each party shall have the right, subject to the provisions of this Agreement, to freely exploit, transfer, license or encumber its rights in any jointly-owned Research Program Technology and Information (and all patent rights and other intellectual property rights therein) without the consent of, or payment or accounting to, the other party.

12.1.4 The transfer of physical possession of any Technology and Information owned by, and the physical possession and use of any Technology and Information by, CuraGen or ABX, as the case may be, shall not be (nor be construed as) a sale, lease, offer to sell or lease, or other transfer of title of such Technology and Information to CuraGen or ABX, as the case may be.

12.1.5 During the term of this Agreement, neither party shall (and neither party shall attempt or purport to) assign, sell, have sold, lease, offer to sell or lease, otherwise transfer title to, or otherwise distribute or license, sublicense or otherwise commercialize or exploit, any Research Program Technology and Information, except as otherwise set forth herein or the parties otherwise expressly agree in writing.

12.2 Assignment and Disclosure. Each party shall cause all employees and others conducting work on its behalf under this Agreement to promptly disclose to the other party all Technology and Information in which the other party has an ownership interest, and to assign any and all right, title and interest in all Technology and Information and all patent rights and other intellectual property rights therein in accordance with this Agreement. Each party

44

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

shall maintain records in sufficient detail and in good scientific manner appropriate for patent purposes to properly reflect all work done and results achieved in conducting its work hereunder, and shall respond to reasonable requests of the other party for information regarding Technology and Information in which the other party has an ownership interest.

12.3 Research Program Patent Rights.

12.3.1 Prosecution and Maintenance.

(a) Subject to the provisions of Section 12.3.1(e) and Section 12.3.1(g) below, ABX shall have the right (but not the obligation), at its sole expense, to prepare, file, prosecute and maintain the ABX Patent Rights. ABX will use reasonable efforts to file Antibody composition of matter claims (i) with respect to any ABX Patent Rights arising before the Revision Date, within 6 months of the Revision Date and (ii) with respect to any ABX Patent Rights arising after the Revision Date, within 6 months of characterization of Antibody supernatants resulting from immunizations with Research Antigens. If ABX unreasonably fails to file such claims in such time period, CuraGen may, by written notice to ABX, assume control of the preparation, filing, prosecution and maintenance of the ABX Patent Rights, to the extent and only to the extent, that such ABX Patent Rights claim such Antibodies as a composition of matter, and ABX shall reimburse CuraGen on demand for all expenses of the preparation, filing, prosecution and maintenance of such ABX Patent Rights.

(b) CuraGen shall have the right (but not the obligation), at its sole expense, to prepare, file, prosecute and maintain the CuraGen Patent Rights. CuraGen shall have the right to use Antigen Specific Materials and Information and Research Program Technology and Information in preparing, prosecuting, maintaining and defending CuraGen Patent Rights; provided, however, that CuraGen shall not claim any ABX Technology.

(c) Subject to the provisions of Section 12.3(a) above and Section 12.3.1(e) and (f) below, (i) ABX shall have the right (but not the obligation), at its sole expense, to prepare, file, prosecute and maintain the Research Program Patent Rights owned solely by ABX; (ii) CuraGen shall have the right (but not the obligation), at its sole expense, to prepare, file, prosecute and maintain the Research Program Patent Rights owned solely by CuraGen; and (iii) CuraGen shall have the right (but not the obligation) to prepare, file, prosecute and maintain the Research Program Patent Rights owned jointly by the parties, and ABX shall reimburse CuraGen on demand for one-half the reasonable expenses thereof.

(d) Any method of use data arising from the conduct of in-vitro assays or use of in-vivo models in the Research Program will be filed by the responsible party simultaneously in the patent applications claiming Antibodies and Research Antigens, regardless of the category in which such patent applications fall. The parties will coordinate such filings and will use reasonable efforts to file such applications within three months of generating the data.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(e) Upon the effective date of a research license under Article 6 to a CuraGen Optioned Antigen, and for so long as such license or a commercial license under Article 7 for such Antigen remains in effect, (i) CuraGen shall have the right (but not the obligation) to assume control of the preparation, filing, prosecution and maintenance of the Research Program Patent Rights that specifically and solely claim such CuraGen Licensed or Optioned Antigen or the use thereof; (ii) CuraGen shall have the right (but not the obligation) to assume control of the preparation, filing, prosecution and maintenance of the ABX Patent Rights that specifically and solely claim the use of such CuraGen Antigen or Antibodies to such CuraGen Licensed or Optioned Antigen or the use thereof; (iii) CuraGen shall reimburse ABX on demand for all previously unreimbursed expenses of the preparation, filing, prosecution and maintenance of such ABX Patent Rights and Research Program Patent Rights; and (iv) CuraGen shall be solely responsible for the expenses of the preparation, filing, prosecution and maintenance of such ABX Patent Rights and Research Program Patent Rights thereafter. In the event there are any Research Program Patent Rights or ABX Patent Rights with such claims and other claims, ABX shall file such divisional or other applications, to the extent legally permitted, as may be necessary to separate such claims into a separate application, which CuraGen shall then have the right to control as aforesaid. If the claims cannot be so separated ABX will take no action with respect to any such claim that would materially narrow the scope thereof without CuraGen’s express written consent, which consent shall not be unreasonably withheld or delayed. If CuraGen assumes control of any patent application pursuant to this Section and determines to abandon such application, CuraGen shall give written notice of such intention to ABX at least thirty (30) days before taking such action, and ABX shall have the right, by written notice to CuraGen, to assume the prosecution and maintenance thereof.

(f) Upon the effective date of a research license under Article 6 to an ABX Optioned Antigen, and for so long as such license or a commercial license under Article 7 for such Antigen remains in effect, (i) ABX shall have the right (but not the obligation) to assume control of the preparation, filing, prosecution and maintenance of the Research Program Patent Rights that specifically and solely claim such ABX Licensed or Optioned Antigen or the use thereof; (ii) ABX shall have the right (but not the obligation) to assume control of the preparation, filing, prosecution and maintenance of the CuraGen Patent Rights that specifically and solely claim antibodies to such ABX Licensed or Optioned Antigen or the use thereof; (iii) ABX shall reimburse CuraGen on demand for all previously unreimbursed expenses of the preparation, filing, prosecution and maintenance of such Research Program Patent Rights and CuraGen Patent Rights; and (iv) ABX shall be solely responsible for the expenses of the preparation, filing, prosecution and maintenance of such Research Program Patent Rights and CuraGen Patent Rights thereafter. In the event there are any Research Program Patent Rights or CuraGen Patent Rights with such claims and other claims, CuraGen shall file such divisional or other applications, to the extent legally permitted, as may be necessary to separate such claims into a separate application, which ABX shall then have the right to control as aforesaid. If the claims cannot be so separated CuraGen will take no action with respect to any such claim that would materially narrow the scope thereof without ABX’s express written consent, which consent shall not be unreasonably withheld or delayed. If ABX assumes control of any patent application pursuant to this Section and determines to abandon such application, ABX shall give

46

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

written notice of such intention to CuraGen at least thirty (30) days before taking such action, and CuraGen shall have the right, by written notice to ABX, to assume the prosecution and maintenance thereof.

(g) CuraGen shall have the right (but not the obligation) to control the preparation, filing, prosecution and maintenance of any Research Program Patent Rights and ABX Patent Rights that specifically and solely claim any CuraGen Exclusive Antigen or the use thereof or Antibodies that Specifically Bind to such CuraGen Exclusive Antigen or the use thereof. In the event there are any Research Program Patent Rights or ABX Patent Rights with such claims and other claims, ABX shall file such divisional or other applications, to the extent legally permitted, as may be necessary to separate such claims into a separate application, which CuraGen shall then have the right to control as aforesaid. If the claims cannot be so separated ABX will take no action with respect to any such claim that would materially narrow the scope thereof without CuraGen’s express written consent, which consent shall not be unreasonably withheld or delayed.

(h) With respect to each patent application and patent within the Licensed Intellectual Property Rights or Research Program Patent Rights that specifically and solely claims an Optioned Antigen, a Licensed Antigen, an Antibody that Specifically Binds to an Optioned Antigen, an Antibody to a Licensed Antigen or the use thereof and with respect to each other patent and patent application within the Research Program Patent Rights owned jointly by the parties, the controlling party shall (i) provide the non-controlling party with any patent application filed by the controlling party prior to filing in order to provide the non-controlling party with an opportunity to comment thereon, and consider in good faith reasonable comments by the non-controlling party thereon; (ii) provide the non-controlling party with any patent application filed by the controlling party promptly after such filing; and (iii) provide the non-controlling party promptly with copies of all substantive communications received from or filed in patent office(s) with respect to such filings and consider in good faith reasonable comments by the non-controlling party thereon; and (iv) use commercially reasonable efforts to obtain the broadest reasonable claims.

(i) The non-controlling party shall assist the controlling party, upon the controlling party’s request, and to the extent commercially reasonable, in preparing, filing or maintaining the patent applications and patents within the Research Program Patent Rights and Licensed Intellectual Property Rights.

12.3.2 Enforcement.

(a) Subject to the provisions of Section 12.3.2(e) below, ABX shall have the right (but not the obligation), at its sole expense, to control the enforcement of the ABX Patent Rights; provided, however, that CuraGen shall have the right (but not the obligation), at its sole expense, to control the enforcement of those ABX Patent Rights (if any) for which CuraGen assumes control of the preparation, filing, prosecution and maintenance under Section 12.3.1(e) and (g) above.

47

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(b) Subject to the provisions of Section 12.3.2(e) below, CuraGen shall have the right (but not the obligation), at its sole expense, to control the enforcement of the CuraGen Patent Rights; provided, however, that ABX shall have the right (but not the obligation), at its sole expense, to control the enforcement of those CuraGen Patent Rights (if any) for which ABX assumes control of the preparation, filing, prosecution and maintenance under Section 12.3.1(f) above.

(c) Subject to the provisions of Section 12.3.2(e) below, the controlling party identified under Section 12.3.1 above shall have the first right (but not the obligation), at its sole expense, to enforce the Research Program Patent Rights.

(d) With respect to each patent within the Licensed Intellectual Property Rights or Research Program Patent Rights that specifically and solely claims a Licensed Antigen, an Antibody to a Licensed Antigen or the use thereof, the controlling party shall keep the non-controlling party informed and consider in good faith the reasonable comments of the non-controlling party, both prior to and during any such enforcement. The non-controlling party shall assist the controlling party, upon request and at the controlling party’s sole expense, and to the extent commercially reasonable, in taking any action to enforce such Licensed Intellectual Property Rights or Research Program Patent Rights to the extent the non-controlling party has the right to do so.

(e) If the controlling party fails to abate an infringement of any patent within the Licensed Intellectual Property Rights or Research Program Patent Rights that specifically and solely claims a Licensed Antigen, an Antibody to a Licensed Antigen or the use thereof, or to file an action to abate such infringement, within ninety (90) days after a written request from the non-controlling party to do so, or if the controlling party discontinues the prosecution of any such action after filing patent, the non-controlling party at its expense may, in its discretion, undertake such action as it determines appropriate to enforce the Research Program Patent Rights. In such case, the controlling party shall assist the non-controlling party, upon request and at the non-controlling party’s sole expense, and to the extent commercially reasonable, in taking any action to enforce such patent within the Licensed Intellectual Property Rights or Research Program Patent Rights to the extent the controlling party has the right to do so.

(f) All monies recovered upon the final judgment or settlement of any such action regarding the Licensed Intellectual Property Rights or Research Program Patent Rights that specifically and solely claims a Licensed Antigen, an Antibody to a Licensed Antigen or the use thereof shall be used (i) first, to reimburse the costs and expenses (including reasonable attorneys’ fees and costs) of the controlling party and the non-controlling party, and (ii) the remainder, [******************************].

48

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

12.4 Patent Marking. Each party shall mark, and shall cause its Sublicensees and their respective Affiliates to mark all Products, sold pursuant to this Agreement by such party, its Sublicensees and their respective Affiliates in accordance with the requirements of applicable laws and regulations in the country or countries of manufacture and sale thereof.

12.5 Limitation. Notwithstanding any other provision in this Article 12, (a) ABX shall not be obligated to prepare, file, prosecute, and maintain patents and patent applications, or to bring or pursue enforcement proceedings or defend declaratory judgment actions regarding the Licensed ABX Intellectual Property if, and to the extent that, ABX is not entitled to do so under one or more ABX In-Licenses, and (b) any rights conveyed under this Article 12 permitting CuraGen to prepare, file, prosecute and maintain certain patents and patent applications, or to bring and pursue enforcement proceedings, or defend declaratory judgment actions, regarding the Licensed ABX Intellectual Property, shall be subject to all applicable ABX In-Licenses, and are conveyed only to the extent permitted under such agreements.

12.6 Use and Transfer Restrictions. Each party shall use the Technology and Information owned by the other party solely for purposes of conducting its obligations or exercising its rights under this Agreement, at its facilities, under commercially and scientifically reasonable containment conditions, and not for any other commercial, business or other use or purpose, without the prior express written consent of the other party. Except as otherwise provided in this Agreement, (a) a party shall not transfer or provide access to the Technology and Information owned by the other party to any Affiliate or Third Party; (b) a party shall not transfer or transport the Technology and Information owned by the other party from its facilities to any other location; (c) a party shall limit access to the Technology and Information owned by the other party to those of its employees working on its premises, to the extent such access is reasonably necessary to conduct its obligations or exercise its rights under this Agreement; and (d) a party shall not (and shall not attempt or purport to) assign, sell, have sold, lease, offer to sell or lease, otherwise transfer title to, or otherwise distribute or license, sublicense or otherwise commercialize or exploit, any Technology and Information owned by the other party or any interest therein.

12.7 Grant Backs.

12.7.1 It is the intent of the parties that this Agreement shall not restrict ABX’s freedom to practice and commercialize the Licensed ABX Intellectual Property, the XenoMouse Animals and the ABX Technology and Information, except as expressly set forth herein. CuraGen hereby grants to ABX a royalty-free, perpetual, irrevocable, exclusive, worldwide license (with the right to grant sublicenses) under CuraGen’s rights in the Research Program Patent Rights and Research Program Know-How to research, develop, make, have made, use, offer for sale, sell and import Human Antibody Equivalents and products comprising Human Antibody Equivalents (other than CuraGen Products) for all uses. CuraGen hereby grants to ABX a royalty-free, perpetual, irrevocable, nonexclusive worldwide license (with the right to grant sublicenses) under CuraGen’s rights in the Research Program Patent Rights and Research Program Know-How to research, develop, make and use Antibody Equivalents (other

49

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

than Human Antibody Equivalents) solely in connection with the research, development, making, having made, using, offering for sale, selling and importing of Human Antibody Equivalents and products comprising Human Antibody Equivalents (other than CuraGen Products) for all uses. CuraGen hereby grants to ABX a royalty-free, perpetual, irrevocable, nonexclusive, worldwide license (with the right to grant sublicenses) under those certain one or more CuraGen Patent Rights, which have a common claim of priority and relate to the same antigen and in which the claims within such CuraGen Patent Rights are supported by information or data derived from the use of the ABX Technology and Information and/or Research Program Technology and Information, solely in connection with the research, development, making, having made, using, offering for sale, selling and importing of Human Antibody Equivalents and products comprising Human Antibody Equivalents (other than CuraGen Products) for all uses.

12.7.2 It is the intent of the parties that this Agreement shall not restrict CuraGen’s freedom to practice and commercialize the Licensed CuraGen Intellectual Property, the CuraGen Databases, and the CuraGen Technology and Information, except as expressly set forth herein. ABX hereby grants to CuraGen a royalty-free, perpetual, irrevocable, exclusive, worldwide license (with the right to grant sublicenses) under ABX’s rights in the Research Program Patent Rights and Research Program Know-How to research, develop, make, have made, use, offer for sale, sell and import Antibody Equivalents (other than Human Antibody Equivalents) and compositions other than Antibody Equivalents, and products (other than ABX Products) comprising Antibody Equivalents (other than Human Antibody Equivalents) and compositions other than Antibody Equivalents, for all uses; provided, however, that ABX reserves, for itself and its sublicensees, the right under ABX’s rights in the Research Program Patent Rights and Research Program Know-How to exercise its license rights granted under Section 12.7.1 above. ABX hereby grants to CuraGen a royalty-free, perpetual, irrevocable, nonexclusive, worldwide license (with the right to grant sublicenses) under those certain one or more ABX Patent Rights, which have a common claim of priority and relate to the same antigen and in which the claims within such ABX Patent Rights are supported by information or data derived from the use of the CuraGen Technology and Information and/or Research Program Technology and Information, solely in connection with the research, development, making, having made, using, offering for sale, selling and importing of Antibody Equivalents (other than Human Antibody Equivalents) and compositions other than Antibody Equivalents, and products (other than ABX Products) comprising Antibody Equivalents (other than Human Antibody Equivalents) and compositions other than Antibody Equivalents, for all uses.

12.8 Imaging Peptides. Nothing in this Agreement shall preclude CuraGen from making, using, offering for sale, selling or importing Imaging Peptides for purposes of in vivo diagnostic imaging use.

13. INDEMNIFICATION

13.1 ABX. ABX shall indemnify and hold harmless CuraGen, and its directors, officers, employees and agents, from and against all losses, liabilities, damages and expenses, including reasonable attorneys’ fees and costs (collectively, “Liabilities”), resulting from any

50

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

claims, demands, actions or other proceedings by any Third Party arising from (a) the material breach of any representation, warranty or covenant by ABX under this Agreement, (b) any use, handling or storage by ABX, its Sublicensees (other than CuraGen) and their respective Affiliates of the CuraGen Technology and Information or the Research Program Technology and Information, (c) the manufacture, use, sale, handling or storage by ABX, its Sublicensees (other than CuraGen) and their respective Affiliates of ABX Products (without regard to culpable conduct), or (d) any use by ABX, its Sublicensees (other than CuraGen) and their respective Affiliates of the Confidential Information of CuraGen; provided, however, that ABX shall not be obligated to indemnify or hold harmless CuraGen for such Liabilities to the extent that such Liabilities arise from the gross negligence or willful misconduct of CuraGen.

13.2 CuraGen. CuraGen shall indemnify and hold harmless ABX, and its directors, officers, employees and agents, from and against all Liabilities resulting from any claims, demands, actions or other proceedings by any Third Party arising from (a) the material breach of any representation, warranty or covenant by CuraGen under this Agreement, (b) any use, handling or storage by CuraGen, its Sublicensees (other than ABX) and their respective Affiliates of the ABX Technology and Information or the Research Program Technology and Information, (c) the manufacture, use, sale, handling or storage by CuraGen, its Sublicensees (other than ABX) and their respective Affiliates of CuraGen Products (without regard to culpable conduct), or (d) any use by CuraGen, its Sublicensees (other than ABX) and their respective Affiliates of the Confidential Information of ABX; provided, however, that CuraGen shall not be obligated to indemnify or hold harmless ABX for such Liabilities to the extent that such Liabilities arise from the gross negligence or willful misconduct of ABX.

13.3 Procedure. If a party (an “Indemnitee”) intends to claim indemnification under this Article 13, it shall promptly notify the indemnifying party (the “Indemnitor”) in writing of any claim, demand, action or other proceeding for which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have the right to participate in, and, to the extent the Indemnitor so desires, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceeding. The indemnity agreement in this Article 13 shall not apply to amounts paid in settlement of any claim, demand, action or other proceeding if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed unreasonably. The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 13, but the omission so to deliver written notice to the Indemnitor shall not relieve it of any liability that it may have to any party claiming indemnification otherwise than under this Article 13. The party claiming indemnification under this Article 13, its employees and agents, shall reasonably cooperate with the Indemnitor and its legal representatives in the investigation of any claim, demand, action or other proceeding covered by this indemnification.

51

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

13.4 Insurance. Each party shall maintain insurance, including product liability insurance, with respect to the research, development, manufacture and sale of Products hereunder by such party, its Sublicensees and their respective Affiliates in such amount as such party customarily maintains with respect to the research, development, manufacture and sale of its other products. Each party shall maintain such insurance for so long as such party, its Sublicensees and their respective Affiliates continues to research, develop, manufacture or sell any Products hereunder, and thereafter for so long as such party customarily maintains insurance covering the research, development, manufacture and sale of its other products.

14. TERM AND TERMINATION

14.1 Term. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated, shall continue in full force and effect until the expiration of the parties’ respective royalty obligations pursuant to this Agreement.

14.2 Termination.

14.2.1 If CuraGen breaches its obligations under Section 8.2, 8.3 or 8.4 above, or materially breaches its obligations under Section 10.1 above, with respect to any Antigen or to CuraGen Products to any CuraGen Licensed Antigen, and such breach shall have continued for ten (10) days, in the case of breaches under Section 8.2, 8.3, or 8.4, or for thirty (30) days, in the case of material breaches under Section 10.1, after written notice of such breach was provided to CuraGen by ABX, ABX shall have the right at its option to terminate the licenses (or sublicenses, as the case may be) under this Agreement with respect to such Antigen or to CuraGen Products to such CuraGen Licensed Antigen (as applicable) effective at the end of such ten (10) day or thirty (30) day period, as the case may be, without otherwise affecting the other licenses (or sublicenses, as the case may be) granted under this Agreement or the other remaining provisions of this Agreement. In the event of such termination by ABX, the Antigen which was the subject of the termination shall be subject to ABX’s standby option under Section 7.2.2, CuraGen’s obligation to provide data and information under Section 7.2.2 shall apply to all data and information in existence at the time of the termination, the six-month period in which to exercise such option shall commence on the date of termination, and no payment shall be due under Section 8.2.3 upon the exercise by ABX of such option.

14.2.2 If ABX breaches its obligations under Section 8.2, 8.3 or 8.4 above, or materially breaches its obligations under Section 10.2 above, with respect to any Antigen or to ABX Products to any ABX Licensed Antigen, and such breach shall have continued for ten (10) days, in the case of breaches under Section 8.2, 8.3, or 8.4, or for thirty (30) days, in the case of material breaches under Section 10.2, after written notice of such breach was provided to ABX by CuraGen, CuraGen shall have the right at its option to terminate the licenses (or sublicenses, as the case may be) under this Agreement with respect to such Antigen or to ABX Products to such ABX Licensed Antigen (as applicable) effective at the end of such ten (10) day or thirty (30) day period, as the case may be, without otherwise affecting the other licenses (or sublicenses, as the case may be) granted under this Agreement or the other remaining

52

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

provisions of this Agreement. In the event of such termination by CuraGen, the Antigen which was the subject of the termination shall be subject to CuraGen’s standby option under Section 7.1.2, ABX’s obligation to provide data and information under Section 7.1.2 shall apply to all data and information in existence at the time of the termination, the six-month period in which to exercise such option shall commence on the date of termination, and no payment shall be due under Section 8.2.3 upon the exercise by CuraGen of such option.

14.2.3 If a party shall have materially breached any of its material obligations hereunder (other than under Sections 8.2, 8.3, 8.4, 10.1 and 10.2 above), and such breach shall have continued for thirty (30) days after written notice of such breach was provided to the breaching party by the nonbreaching party, the nonbreaching party shall have the right (at its option), effective at the end of such thirty (30) day period, to terminate the Research Program and all options, licenses, and rights to obtain additional options and licenses granted to the breaching party under this Agreement; provided, however, that any commercial licenses previously granted to the breaching party under Article 7 above (and any related continuing research licenses to the breaching party under Section 6.1 above), all licenses granted to the breaching party under Section 12.7 above, and all options, licenses, and rights to obtain additional options and licenses granted to the nonbreaching party under this Agreement shall survive any such termination by the nonbreaching party under this Section 14.2.3.

14.3 Effect of Expiration or Termination.

14.3.1 Expiration or termination of this Agreement shall be without prejudice to any rights which shall have accrued to the benefit of a party prior to such expiration or termination. Without limiting the foregoing, the license rights granted under Section 4.2.7, Section 4.2.2 and the provisions of Sections 4.4.4 and 8.1 and Articles 9, 11, 12, 13, 14 and 15 shall survive any expiration or termination of this Agreement.

14.3.2 Following the expiration under Section 8.4.3(e) of CuraGen’s obligation to pay royalties to ABX hereunder with respect to a CuraGen Product (provided that CuraGen’s option, license or other rights with respect to such CuraGen Product have not been previously terminated), CuraGen shall have a fully-paid up, non-exclusive license (or sublicense, as the case may be) (with the right to grant sublicenses) under the ABX Know-How and Research Program Know-How solely to make, have made, use, offer for sale, sell and import such CuraGen Product for use in the Commercial Field. Following the expiration under Section 8.4.3(e) of ABX’s obligation to pay royalties to CuraGen hereunder with respect to an ABX Product (provided that ABX’s option, license or other rights with respect to such ABX Product have not been previously terminated), ABX shall have a fully-paid up, non-exclusive license (or sublicense, as the case may be) (with the right to grant sublicenses) under the CuraGen Know-How and Research Program Know-How solely to make, have made, use, offer for sale, sell and import such ABX Product for use in the Commercial Field.

14.3.3 Upon termination of this Agreement, or upon termination of the licenses (or sublicenses, as the case may be) hereunder for any CuraGen Product, CuraGen, its

53

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Sublicensees and their respective Affiliates shall have the right to sell or otherwise dispose (consistent with all applicable laws and regulations and subject to Articles 8 and 9 above) of the stock of any CuraGen Product then on hand. Upon termination of this Agreement, or upon termination of the licenses (or sublicenses, as the case may be) hereunder for any ABX Product, ABX, its Sublicensees and their respective Affiliates shall have the right to sell or otherwise dispose (consistent with all applicable laws and regulations and subject to Articles 8 and 9 above) of the stock of any ABX Product then on hand.

14.3.4 Upon termination of this Agreement by ABX, or upon termination by ABX of the licenses (or sublicenses, as the case may be) hereunder for any CuraGen Product, any Sublicense granted by CuraGen hereunder shall survive, provided that upon request by ABX, such Sublicensee promptly agrees in writing that such Sublicensee shall be bound by the terms of such Sublicense for the benefit of ABX and ABX shall have all of the rights of CuraGen under such Sublicense, but ABX shall not be bound by any obligation of CuraGen thereunder except to the extent it is already bound to an equivalent obligation hereunder. Upon termination of this Agreement by CuraGen, or upon termination by CuraGen of the licenses (or sublicenses, as the case may be) hereunder for any ABX Product, any Sublicense granted by ABX hereunder shall survive, provided that upon request by CuraGen, such Sublicensee promptly agrees in writing that such Sublicensee shall be bound by the terms of such Sublicense for the benefit of CuraGen and CuraGen shall have all of the rights of ABX under such Sublicense, but CuraGen shall not be bound by any obligation of ABX thereunder except to the extent it is already bound to an equivalent obligation hereunder.

14.3.5 Except as otherwise expressly agreed in writing by the parties, promptly upon the expiration of the Extended Research License Term, each party shall destroy all remaining Research Program Technology and Information and Antigen Specific Materials and Information; in each case except to the extent such party retains an option or license (or sublicense, as the case may be) thereto hereunder; that survives such expiration or termination.

14.3.6 Except as otherwise expressly agreed in writing by the parties, promptly upon the expiration or earlier termination of this Agreement, (a) CuraGen shall destroy or return to ABX (as ABX shall direct) all remaining ABX Technology and Information; (b) ABX shall destroy or return to CuraGen (as CuraGen shall direct) all remaining CuraGen Technology and Information; and (c) each party shall destroy all remaining Research Program Technology and Information and Antigen Specific Materials and Information; in each case except to the extent such party retains a license (or sublicense, as the case may be) thereto hereunder; that survives such expiration or termination.

14.3.7 Except as otherwise expressly agreed in writing by the parties, promptly upon the termination of the license (or sublicense, as the case may be)s granted to CuraGen hereunder regarding any Antigen, CuraGen shall destroy or return to ABX (as ABX shall direct) all remaining ABX Technology and Information regarding such Antigen, Antibodies to such Antigens and Products to such Antigen, and shall destroy all remaining Research Program Technology and Information and Antigen Specific Materials and Information regarding such Antigen, Antibodies to such Antigens and Products to such Antigen.

54

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

14.3.8 Except as otherwise expressly agreed in writing by the parties, promptly upon the termination of the license (or sublicense, as the case may be)s granted to ABX hereunder regarding any Antigen, ABX shall destroy or return to CuraGen (as CuraGen shall direct) all remaining CuraGen Technology and Information regarding such Antigen, Antibodies to such Antigens and Products to such Antigen, and shall destroy all remaining Research Program Technology and Information and Antigen Specific Materials and Information regarding such Antigen, Antibodies to such Antigens and Products to such Antigen.

15. MISCELLANEOUS

15.1 Governing Laws. This Agreement shall be governed by, interpreted and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles.

15.2 Waiver. No waiver by any party hereto of any breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent and/or similar breach or default.

15.3 Assignments. Neither this Agreement nor any right or obligation hereunder may be assigned or delegated, in whole or part, by either party without the prior express written consent of the other; provided, however, that either party may, without the written consent of the other, assign this Agreement and its rights and delegate its obligations hereunder in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger, consolidation, change in control or similar transaction. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any purported assignment in violation of this Section 15.3 shall be void.

15.4 Independent Contractors. The relationship of the parties hereto is that of independent contractors. The parties hereto shall not be deemed to be agents, partners or joint venturers of the others for any purpose as a result of this Agreement or the transactions contemplated thereby.

15.5 Further Actions. Each party agrees to execute, acknowledge and deliver such further instruments and to do all such other acts as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

15.6 Notices. All requests and notices required or permitted to be given to the parties hereto shall be given in writing, shall expressly reference the section(s) of this Agreement to which they pertain, and shall be delivered to the other party, effective on receipt, at the appropriate address as set forth below or to such other addresses as may be designated in writing by the parties from time to time during the term of this Agreement.

55

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

If to ABX:

Abgenix, Inc.

7601 Dumbarton Circle

Fremont, California 94555

Attn: President

with a copy to:

Gray Cary Ware & Freidenrich LLP

4365 Executive Drive, Suite 1600

San Diego, California 92121-2189

Attn: Mark R. Wicker

If to CuraGen:

CuraGen Corporation

555 Long Wharf Drive

New Haven, Connecticut 06511

Attn: President

with a copy to:

Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.

One Financial Center

Boston, Massachusetts 02111

Attn: Jeffrey M. Wiesen

15.7 No Implied Licenses. Only licenses (or sublicenses, as the case may be) and rights granted expressly herein shall be of legal force and effect. No license (or sublicense, as the case may be) or other right shall be created hereunder by implication, estoppel or otherwise. By way of clarification and not limitation, no license (or sublicense, as the case may be) is granted hereunder to CuraGen to have in its possession any XenoMouse Animals or to conduct immunizations thereof.

15.8 Compliance with Laws. Each party shall use the Technology and Information of the other party and the Research Program Technology and Information in compliance in all material respects with all applicable laws, guidelines and regulations which are applicable to such Technology and Information or the use thereof, including without limitation any biosafety procedures and all safety precautions accompanying such Technology and Information. Except as otherwise expressly agreed in this Agreement or otherwise expressly agreed in writing by the parties, neither party shall administer the Technology and Information of the other party or the Research Program Technology and Information to humans under any circumstances.

56

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

15.9 Export Laws. Notwithstanding anything to the contrary contained herein, all obligations of ABX and CuraGen are subject to prior compliance with United States export regulations and such other United States laws and regulations as may be applicable, and to obtaining all necessary approvals required by the applicable agencies of the government of the United States. Each party shall be responsible for obtaining such approvals as required of it, and shall use efforts consistent with prudent business judgment to obtain such approvals. Each party shall cooperate reasonably with the other party and provide reasonable assistance to the other party as may be reasonably necessary to obtain any required approvals.

15.10 Force Majeure. Nonperformance of a party (other than for the payment of money) shall be excused to the extent that performance is rendered impossible by strike, fire, earthquake, flood, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform, is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the nonperforming party.

15.11 No Consequential Damages. IN NO EVENT SHALL A PARTY HERETO BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 15.11 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY.

15.12 Third Party Rights. Notwithstanding anything to the contrary in this Agreement, the grant of rights by ABX under this Agreement shall be subject to and limited in all respects by the terms of the applicable ABX In-License(s) pursuant to which ABX acquired any Licensed ABX Intellectual Property, and all rights or sublicenses granted under this Agreement shall be limited to the extent that ABX may grant such rights and sublicenses under such ABX In-Licenses. Additionally, and without limiting the foregoing, the rights granted to CuraGen hereunder, including without limitation any grant of “exclusive” rights, shall be subject to the rights granted to or retained by GenPharm under the GenPharm Cross License Agreement.

15.13 Complete Agreement. This Agreement constitutes the entire agreement between the parties regarding the subject matter hereof, and all prior representations, understandings and agreements regarding the subject matter hereof (including without limitation, the Original Agreement and the letter dated July 5, 2000, from Christopher McLeod to Raymond Withy) either written or oral, expressed or implied, are superseded and of no effect.

15.14 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and both together shall be deemed to be one and the same agreement.

57

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

15.15 Headings. The captions to the several Articles and Sections hereof are not a part of this Agreement, but are included merely for convenience of reference only and shall not affect its meaning or interpretation.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written.

ABGENIX, INC.
By:
	(Signature)
	(Printed Name)
	(Title)
CURAGEN CORPORATION
By:
	(Signature)
	Christopher K. McLeod
	(Printed Name)
	Executive Vice President
	(Title)

58

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT A

ABX PATENT RIGHTS

I. Pursuant to the MRLOA

A. Any of the patent applications listed in the following Table:

[*******]	[*******]	[*******]	[*******]	[*******]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]
[**********]	[************]	[*************]	[***************]	[********************]

B. [****************************************************************]:

[**********************************************************************].

D. [****************************************************************]:

[**********************************************************************].

E. [****************************************************************]:

[**********************************************************************].

II. [*********************************]

59

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

A. [**********************************************************************].

B. [**********************************************************************].

C. [******************************************************************]:

[**********************************************************************].

60

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT B

ELIGIBLE ANTIGEN CRITERIA

A Research Antigen shall become an Eligible Antigen if it meets the following criteria:

1. [*****************************************************************]

2. [*****************************************************************]

61

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT C

RESEARCH PLAN

CuraGen/ABX Research Plan

[ATTACHED]

62

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT D

THIRD PARTY AGREEMENTS

Collaboration Agreements between CuraGen and

[***********************************]

[***********************************]

[***********************************]

[***********************************]

[***********************************]

[***********************************]

63

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT E

RESEARCH ANTIGEN DESIGNATION

64

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT F

FORM OF THREE-WAY MTA

65

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT G

FORM OF TWO-WAY MTA

66

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EX-10.2

Exhibit 10.2

LICENSE AND COLLABORATION AGREEMENT

BETWEEN

TOPOTARGET A/S

AND

CURAGEN CORPORATION

DATED AS OF June 3, 2004

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

LICENSE AND COLLABORATION AGREEMENT

THIS LICENSE AND COLLABORATION AGREEMENT (this “Agreement”), dated as of June 3, 2004, is between TopoTarget A/S, a company duly organized and existing under the laws of Denmark and having offices at Symbion Science Park, Fruebjergvej 3, 2100 Copenhagen, Denmark (“TOPOTARGET”), and CURAGEN Corporation, a company duly organized and existing under the laws of the State of Delaware and having offices at 555 Long Wharf Drive, New Haven, CT 06511, USA (“CURAGEN”).

PRELIMINARY STATEMENTS

A. TOPOTARGET is a biotechnology company with a development program, a library of compounds, and other intellectual property rights relating to HDAC Inhibitors.

B. CURAGEN is a biopharmaceutical company with an interest in commercializing HDAC Inhibitors in the Territory.

C. TOPOTARGET and CURAGEN wish to collaborate in connection with the research, development and commercialization of TOPOTARGET HDAC Inhibitors, upon the terms and conditions set forth in this Agreement.

D. TOPOTARGET and CURAGEN are willing to grant to each other certain rights owned or controlled by them relating to HDAC Inhibitors in connection with their collaboration, upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing preliminary statements and the mutual covenants and agreements of the Parties contained in this Agreement, the Parties hereby agree as follows:

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1. DEFINITIONS.

As used in this Agreement, the following terms shall have those meanings set forth in this Section 1 unless the context dictates otherwise.

1.1 “Affiliate” with respect to either Party, shall mean any Person controlling, controlled by, or under common control with, such Party. For purposes of this Section 1.1, “control” shall mean (i) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, or (ii) the beneficial ownership (as such term is defined in the 1934 Act) of at least 50% of the voting securities or other ownership interest of a Person.

1.2 “Back-Up Product” shall mean, subject to Section 7.2(e), an HDAC Inhibitor other than the First Product or any Future Product that (i) could be claimed under U.S. patent law by the broadest independent composition of matter claim that could be supported by the disclosure of any single Patent within the TOPOTARGET Licensed Technology that covers such First Product or Future Product and (ii) demonstrates at least equivalent efficacy in the same animal model of any disease that was the determining model for selecting the First Product or Future Product for development in such disease, adjusted for therapeutic index (defined by the exposure of the First or Future Product at NOAEL (“no observed adverse effect level”) divided by exposure of the First or Future Product at the ED50 in the same animal species).

1.3 “Collaboration Product” shall mean the First Product, the Future Products and Back-Up Products, unless and until CURAGEN’s license to any such Collaboration Product under this Agreement has terminated in accordance with the terms hereof.

1.4 “Combination Product” means any Covered Product containing (whether in the same formulation or packaged together) both a pharmaceutically active agent which is itself a Covered Product and one or more other pharmaceutically active agents which are not Covered Products.

1.5 “Confidential Information” shall have the meaning set forth in Section 12.1.

2

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.6 “Controlled” shall mean the legal authority or right of a Party hereto or an Affiliate of a Party to grant a license or sublicense of intellectual property rights to the other Party hereto to effectuate the purposes of this Agreement, or to otherwise disclose proprietary, trade secret information, or other Confidential Information to such other Party, without breaching the terms of any agreement with a Third Party.

1.7 “Covered Product” shall mean any Collaboration Product the manufacture, sale or use of which in the Field in the country of sale is covered by a Valid Claim of any Patent included in the TOPOTARGET Licensed Technology, the TOPOTARGET Collaboration Technology or the Joint Collaboration Technology.

1.8 “CURAGEN Clinical Data” shall have the meaning set forth in Section 8.5.

1.9 “CURAGEN Collaboration Technology” shall mean all Inventions and Know-How first conceived and reduced to practice solely by employees of CURAGEN or of any Third Party working on behalf of or for the benefit of CURAGEN and/or in whose Inventions and Know-How CURAGEN shall have secured rights, in each case in the course of or in connection with the Research Program, as well as any and all Patents covering same.

1.10 “CURAGEN Licensed Technology” shall mean all Patents owned or controlled by, or licensed to, CURAGEN, and all Know-How and Inventions developed, owned or controlled by, or licensed to, CURAGEN, as of the Effective Date, or acquired by or licensed to CURAGEN after the Effective Date to the extent that such Patents, Know-How and/or Inventions are not included within any CURAGEN Collaboration Technology or Joint Collaboration Technology, and which, in the reasonable opinion of the Parties, is necessary for the development, manufacture, use or sale of the relevant Collaboration Product, or which was actually used in the Research Program or by CURAGEN in the development, manufacture, use or sale of such Collaboration Product, all to the extent that CURAGEN has the right to license or otherwise make available such Patents, Know-How and Inventions to TOPOTARGET hereunder.

1.11 “CURAGEN Trademarks” shall have the meaning set forth in Section 8.8.

3

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.12 “Development Program” shall mean the development efforts to be conducted by the Parties as provided in Section 8.

1.13 “Effective Date” shall mean the date first set forth above.

1.14 “EU” shall mean the European Union.

1.15 “FDA” shall mean the United States Food and Drug Administration, or any successor thereto.

1.16 “Field” shall mean the prevention, diagnosis, control or treatment of any human disease or condition by use of a Collaboration Product, either as a single agent or in combination with any other therapy.

1.17 “First Commercial Sale” shall mean, with respect to any Covered Product, the first sale for use or consumption by the general public of such Covered Product in a country in the Territory after all required marketing and pricing approvals have been granted, or otherwise permitted, by the governing health authority of such country. “First Commercial Sale” shall not include the sale of any Covered Product for use in clinical trials or for compassionate use prior to the approval of an NDA.

1.18 “First Product” shall mean any formulation of the chemical compound known as PXD101, as further described in Exhibit A.

1.19 “Future Product(s)” shall mean, subject to Sections 7.2(c), (d) and (f), any formulation of an HDAC Inhibitor other than the First Product which is deemed a Future Product as provided in Section 5.2.

1.20 “HDAC Inhibitor” shall mean [***********************************].

1.21 “IND” shall mean an Investigational New Drug Application to be filed with the FDA, or the equivalent thereof in other countries or regulatory jurisdictions.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.22 “Invention” shall mean any new or useful method, process, manufacture, compound or composition of matter, whether or not patentable or copyrightable, or any improvement thereof.

1.23 “Joint Collaboration Technology” shall mean all Inventions and Know-How first conceived jointly and/or reduced to practice jointly by one or more employees of CURAGEN (or of any Third Party working on behalf of or for the benefit of CURAGEN and/or in whose Inventions and Know-How CURAGEN otherwise has rights) and one or more employees of TOPOTARGET (or of any Third Party working on behalf of or for the benefit of TOPOTARGET and/or in whose Inventions and Know-How TOPOTARGET otherwise has rights), or first conceived by such employees of one Party and reduced to practice by such employees of the other Party, in all cases during the performance of the Parties’ respective obligations under the Agreement, as well as any and all Patents covering same. It is understood, however, that no compounds in TOPOTARGET’s library of HDAC Inhibitors at the outset of the Research Program shall be brought within the “Joint Collaboration Technology” by virtue of CURAGEN and TOPOTARGET employees or Third Parties working on their behalf jointly reducing to practice or demonstrating utility of such compound in any medical or clinical application or indication.

1.24 “Joint Steering Committee” shall mean the entity organized and acting pursuant to Section 4.

1.25 “Know-How” shall mean unpatented technical and other information which is not in the public domain including information comprising or relating to discoveries, inventions, data, designs, formulae, methods, models, assays, research plans, procedures, designs for experiments and tests and results of experimentation and testing (including results of research or development), processes (including manufacturing processes, specifications and techniques), laboratory records, chemical, pharmacological, toxicological, clinical, analytical and quality control data, trial data, case report forms, data analyses, reports or summaries, and information contained in submissions to and information from ethical committees and regulatory authorities (provided that inclusion of the latter information as “Know-How” shall not be understood to

5

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

limit or restrict a Party’s ability to submit appropriate information to an ethical committee and/or regulatory authority). Know-How includes rights protecting Know-How. No combination of information shall be deemed to be within the public domain because individual features of the information are in the public domain. No information shall be deemed to be within the public domain because it is embraced by more general information in the public domain.

1.26 “NDA” shall mean a New Drug Application to be filed with the FDA, or the equivalent thereof in other countries or regulatory jurisdictions.

1.27 “Net Sales” shall mean, with respect to any Covered Product, the gross amount invoiced to Third Parties by CURAGEN, its Affiliates or its Sublicensees, as the case may be, for such Covered Product, commencing with the First Commercial Sale of such Covered Product, less deductions for:

(i) [************************************************];

(ii) [***********************************************************************],

(iii) [***********************************************************************];

(iv) [*********************************************************************]; and

(v) [***********************************************************************]. [***********************************************************************]. The books and records of CURAGEN, its Affiliates or its Sublicensees, as the case may be, shall be maintained in accordance with the generally accepted accounting principles, consistently applied, and with sufficient particulars as necessary to determine such deductions and amounts.

In the event that CURAGEN, its Affiliates, or Sublicensees intend to sell a Combination Product, the Parties shall meet approximately one (1) year prior to the anticipated Launch of such Combination Product to negotiate in good faith and agree to [********************************************************************************************************].

Notwithstanding the foregoing, in connection with (X) any sale or other disposition of Covered Product that is not a bona fide, arms length transaction for money, or (Y) any other use of Covered Product that does not result in or give rise to sales revenue that is customary in the country in which such use takes place (except as provided in the next paragraph), Net Sales shall

6

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

be calculated at the relevant open market price in the country in which such sale, disposition or use takes place, or, if such price is not reasonably ascertainable, at a reasonable price, assessed on an arms length basis, for the goods and/or services received in consideration of the sale, disposition or use of Covered Product.

CURAGEN’s or any of its Affiliate’s transfer of Covered Product to another Affiliate or a Sublicensee shall not result in any Net Sales, unless such Covered Product is consumed by such Affiliate or Sublicensee in the course of its commercial activities. In such case, Net Sales shall occur upon such other Affiliate’s or Sublicensee’s sale of such Covered Product to a Third Party. Further, the disposition of Covered Product for, or the use of Covered Product in, pre-clinical or clinical (Phase I – III) trials or other market-focused (Phase IV or V) trials or free samples shall not result in any Net Sales, unless CURAGEN, its Affiliate or Sublicensee is permitted to receive payment for Covered Product used in clinical trials which includes a reasonable profit.

1.28 “NIH” shall mean the U.S. National Institutes of Health.

1.29 “1934 Act” shall mean the Securities Exchange Act of 1934, as amended, and all regulations promulgated pursuant thereto from time to time.

1.30 “Party” shall mean TOPOTARGET or CURAGEN and, when used in the plural, shall mean TOPOTARGET and CURAGEN.

1.31 “Patents” shall mean all letters patent and patent applications, as well as any and all substitutions, extensions, supplementary protection certificates, renewals, continuations, continuations-in-part, divisions, patents-of-addition and/or reissues thereof.

1.32 “Person” shall mean any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government or any agency or political subdivision thereof.

1.33 “Phase II” shall mean within oncology, one or more trials with enough patients (usually 20 patients or more) in at least one treatment arm designed to determine a reasonable estimate of response rate (usually a confidence interval narrow enough to be acceptable as

7

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

evidence of activity versus active or historical control data). For other indications, one or more randomized controlled trials of sufficient size to determine with 80% power an a priori agreed upon clinical effect.

1.34 “Phase III” shall mean one or more pivotal trials designed and powered for registration with FDA. Agreement from the FDA on study design must be obtained before Phase III initiation in a pre-Phase III meeting or through FDA’s Special Protocol Assessment Procedures.

1.35 “Phase II Initiation” shall mean the day when the first patient in the first Phase II clinical trial of the relevant Collaboration Product, which trial has been approved by the Joint Steering Committee, gets dosed. If the trial is a Phase I/II trial, the Initiation of Phase II refers to the day when the first patient in the treatment arm designed to determine a reasonable estimate of response rate gets dosed.

1.36 “Phase III Initiation” shall mean the day when the first patient in the first Phase III clinical trial of the relevant Collaboration Product, which trial has been approved by the Joint Steering Committee, gets dosed.

1.37 “Research Plan” shall have the meaning set forth in Section 5.1.

1.38 “Research Program” shall mean the research program that is conducted by TOPOTARGET and CURAGEN pursuant to Section 5.

1.39 “Research Term” shall have the meaning set forth in Section 5.8.

1.40 “Royalty Term” shall mean, with respect to each Covered Product sold in a country, the period of time commencing on the First Commercial Sale in such country and ending on the date of expiration of the last Valid Claim of any Patent included in the TOPOTARGET Licensed Technology, or the TOPOTARGET Collaboration Technology, or the Joint Collaboration Technology in such country which is directed to the composition of matter or use in the Field of such Covered Product or a pharmaceutical preparation containing such Covered Product, or which is directed to a manufacturing process actually used for the

8

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

manufacture of such Covered Product; provided, however, that in any country where only Valid Claims of such manufacturing process patents remain, the Royalty Term shall end on the last day of the first calendar quarter in which units of generic versions of the Covered Product sold in such country equal or exceed [******(****)] of all units of Covered Product sold in such country.

1.41 “Sublicensee” shall mean a Third Party to which CURAGEN has granted sublicense rights under the TOPOTARGET Licensed Technology, TOPOTARGET Collaboration Technology, and/or Joint Collaboration Technology.

1.42 “Substances” shall have the meaning assigned thereto in Section 5.6.

1.43 “Supply Agreement” shall have the meaning assigned thereto in Section 11.2.

1.44 “Territory” shall mean all of the countries in the entire world other than those countries in the TOPOTARGET Territory.

1.45 “Third Party” shall mean any Person who or which is neither a Party nor an Affiliate of a Party.

1.46 “TOPOTARGET Clinical Studies” shall have the meaning assigned thereto in Section 8.4.

1.47 “TOPOTARGET Collaboration Technology” shall mean all Inventions and Know-How first conceived and reduced to practice solely by employees of TOPOTARGET, or of any Third Party working on behalf of or for the benefit of TOPOTARGET and/or in whose Inventions and Know-How TOPOTARGET shall have secured rights, in each case in the course of or in connection with the Research Program, as well as any and all Patents covering same. It is understood, however, that no compounds in TOPOTARGET’s library of HDAC Inhibitors at the outset of the Research Program shall be brought within the “TOPOTARGET Collaboration Technology” (as opposed to being within “TOPOTARGET Licensed Technology”) by virtue of TOPOTARGET reducing to practice or demonstrating utility of such compound in any medical or clinical application or indication during the course of or in connection with the Research Program.

9

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

1.48 “TOPOTARGET Licensed Technology” shall mean all Patents owned or controlled by, or licensed to, TOPOTARGET, and all Know-How and Inventions developed, owned or controlled by, or licensed to, TOPOTARGET, as of the Effective Date, or which are developed, acquired by or licensed to TOPOTARGET after the Effective Date to the extent such Patents, Know-How and/or Inventions are not included within any TOPOTARGET Collaboration Technology or Joint Collaboration Technology, and which, in the reasonable opinion of the Parties, is necessary for or may be useful in the development, manufacture, use or sale of Collaboration Products in the Field in the Territory, all to the extent that TOPOTARGET has the right to license or otherwise make available such Patents, Know-How and Inventions to CURAGEN hereunder. A list of all such Patents in existence on the Effective Date is included in Exhibit A attached.

1.49 “TOPOTARGET Territory” shall mean the following countries: Norway, Iceland, Switzerland, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, United Kingdom, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, Russian Federation, Ukraine, Albania, Andorra, Belarus, Bosnia-Hercegovina, Bulgaria, Croatia, Liechtenstein, Moldova, Monaco, Romania, Serbia-Montenegro, Yugoslavia (Macedonia), Turkey, and Israel.

1.50 “Valid Claim” shall mean a claim of any issued letters patent that, in each case, has not been held invalid or unenforceable by final decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and that is not admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

10

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

2. REPRESENTATIONS AND WARRANTIES.

2.1 Representations and Warranties of Both Parties. Each Party represents and warrants to the other Party that, as of the Effective Date:

(a) Such Party is duly organized and validly existing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

(b) Such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement;

(c) This Agreement is a legal and valid obligation of such Party, binding upon such Party and enforceable against such Party in accordance with the terms of this Agreement, except as such enforceability may be affected by laws affecting creditors’ rights generally. The execution, delivery and performance of this Agreement by such Party do not and shall not conflict with any agreement, instrument or understanding, oral or written, to which such Party is a party or by which such Party may be bound, except as expressly set forth in Section 2.2(g), and do not and shall not, to the best of such Party’s knowledge, violate any law or regulation of any court, governmental body or administrative or other agency having authority over such Party. All consents, approvals and authorizations from all governmental authorities or other Third Parties required to be obtained by such Party in connection with the execution, delivery and performance of this Agreement have been obtained;

(d) Such Party has sufficient facilities, experienced personnel and other capabilities to enable it to perform its obligations under this Agreement; and

(e) No Person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon such Party for any commission, fee or other compensation as a finder or broker because of any act by such Party or of any agent of such Party.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

2.2 Additional Representations and Warranties of TOPOTARGET. TOPOTARGET represents and warrants to CURAGEN that, as of the Effective Date:

(a) TOPOTARGET and/or its Affiliates are the owner of, or have exclusive rights to, all of the Patents included in the TOPOTARGET Licensed Technology in existence on the Effective Date, and have the exclusive right to grant the licenses granted under this Agreement;

(b) All such Patents consist of either patent applications that have been filed and are pending and actively being prosecuted as of the Effective Date, or issued letters patent that are in full force and effect and have been maintained through the Effective Date;

(c) TOPOTARGET is not aware of any asserted or unasserted claim or demand which it believes can be enforced by a Third Party against any such Patents;

(d) To the best of TOPOTARGET’s knowledge and belief, the practice of all inventions claimed in such Patents and the performance of the Research Program as currently contemplated by the Parties does not and shall not infringe upon or conflict with any patent, copyright or other proprietary right of any Third Party;

(e) TOPOTARGET and/or its Affiliates are the owner(s) of, or have exclusive rights to all of the Know-How and Inventions included in the TOPOTARGET Licensed Technology in existence on the Effective Date, and have the right to grant the licenses granted under this Agreement;

(f) To the best of TOPOTARGET’s knowledge and belief, such Know-How and Inventions were not obtained by TOPOTARGET in violation of any contractual or fiduciary obligation to which TOPOTARGET, or any of its employees or staff members are or were bound, or by the misappropriation of the trade secrets of any Third Party;

(g) TOPOTARGET has not entered into any agreement with any Third Party, except for The NATIONAL INSTITUTES OF HEALTH/NATIONAL CANCER INSTITUTE, LEO PHARMA A/S and the WORLD HEALTH ORGANIZATION, as set out in Section 3 below, which is in conflict with the rights granted to CURAGEN under to this Agreement, and the execution and performance of this Agreement by TOPOTARGET do not and shall not violate any agreement or undertaking to which TOPOTARGET is a party; and

12

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(h) To the best of TOPOTARGET’s knowledge and belief, all of the data and information that TOPOTARGET has provided to CURAGEN prior to the Effective Date relating to such Patents, Know-How and Inventions, are reasonably accurate, and to the best of TOPOTARGET’s knowledge and belief, TOPOTARGET has not omitted therefrom any material data or information in TOPOTARGET’s possession or control reasonably in advance of the Effective Date concerning same that a reasonable Person in CURAGEN’s position would want to have examined prior to executing this Agreement.

2.3 Disclaimer. THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES NOT EXPRESSLY SET FORTH HEREIN. TOPOTARGET AND CURAGEN DISCLAIM ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO EACH OF THEIR RESEARCH, DEVELOPMENT AND COMMERCIALIZATION EFFORTS HEREUNDER, INCLUDING, WITHOUT LIMITATION, WHETHER THE PRODUCTS CAN BE SUCCESSFULLY DEVELOPED OR MARKETED, THE ACCURACY, PERFORMANCE, UTILITY, RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WHATSOEVER OF THE PRODUCTS.

3. THIRD PARTY AGREEMENTS, EXCLUSIVITY.

3.1 Representations and Warranties of TOPOTARGET with respect to Collaborative Research and Development Agreement (“CRADA”). TOPOTARGET represents and warrants to CURAGEN that, as of the Effective Date.

(a) TOPOTARGET has entered into a Letter of Intent for Proposed Collaborative Research and Development Agreement with the NIH dated as of March 24, 2004 (the “CRADA LOI”), a copy of which has been furnished to CURAGEN;

(b) TOPOTARGET and NIH are diligently pursuing execution of a formal Collaborative Research and Development Agreement (“CRADA”), but have not yet entered such

13

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

an agreement. TOPOTARGET shall include CURAGEN as a party to the CRADA, or else TOPOTARGET shall not include any aspect of clinical research in the CRADA and shall use its best efforts to cause any aspects of the proposed CRADA which are relevant to clinical research to be embodied in a separate CRADA between CURAGEN and NIH; and

(c) TOPOTARGET shall include in the CRADA provision(s) permitting CURAGEN to receive all information described under Section 3.2, and permitting CURAGEN employees to participate on the CRADA Steering Committee as described under Section 3.2 and CURAGEN shall do the same for TOPOTARGET if CURAGEN enters into any CRADA as provided above.

3.2 TOPOTARGET Obligations. TOPOTARGET agrees that during the term of the CRADA:

(a) TOPOTARGET will designate two CURAGEN employees, as selected by CURAGEN from time to time, as representatives on the CRADA Steering Committee (as defined in the CRADA), provided that all matters relating to the CRADA shall be discussed by the Joint Steering Committee or its designated subcommittees, as applicable, pursuant to Article 4 below, and provided further that all official communications and/or decisions on behalf of CURAGEN and/or TOPOTARGET with respect to any CRADA shall be communicated to the CRADA Steering Committee and/or NIH by the TOPOTARGET representatives of the CRADA Steering Committee with respect to any pre-clinical products and by the CURAGEN representatives of the CRADA Steering Committee with respect to any products in clinical trials.

(b) TOPOTARGET will use commercially reasonable efforts to fulfill all of its material obligations under the CRADA, to the extent such obligations have not been expressly delegated to CURAGEN hereunder;

(c) TOPOTARGET shall not enter into any subsequent agreement with the NIH that modifies or amends the CRADA in any way that could potentially adversely affect CURAGEN’s rights under this Agreement without CURAGEN’s prior written consent, which shall not be unreasonably withheld, and shall provide CURAGEN with a copy of all modifications to or amendments of the CRADA, regardless of whether CURAGEN’s consent was required with respect thereto;

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(d) TOPOTARGET shall not terminate the CRADA in whole or in part, directly or indirectly, without CURAGEN’s prior written consent, which shall not be unreasonably withheld; provided, however, that the Joint Steering Committee shall have the right, upon written notice to TOPOTARGET, to require TOPOTARGET to terminate the CRADA, in whole or in part, in accordance with its terms at any time, if in the reasonable judgment of the Joint Steering Committee the continuation of the CRADA will adversely impact the clinical development of Collaboration Products in the Territory;

(e) TOPOTARGET shall request the NIH to allow TOPOTARGET and CURAGEN to be involved in the planning of any Data Safety Monitoring Board (DSMB) and to be involved in any Serious Adverse Events (SAE) communication cascades;

(f) TOPOTARGET shall promptly notify CURAGEN and furnish CURAGEN with copies of all reports and other communications TOPOTARGET receives from NIH pursuant to the CRADA that relate to the subject matter of this Agreement, including those related to DSMB or SAE;

(g) TOPOTARGET shall allow CURAGEN to review and approve prior to submission to NIH all reports and other communications that TOPOTARGET intends to furnish to NIH which relate to the subject matter of this Agreement;

(h) TOPOTARGET shall furnish CURAGEN with copies of all notices received by TOPOTARGET relating to any alleged breach or default of any material obligation by TOPOTARGET under the CRADA within three business days after TOPOTARGET’s receipt thereof and, if TOPOTARGET cannot or chooses not to cure or otherwise resolve any such alleged breach or default, TOPOTARGET shall allow CURAGEN, in CURAGEN’s sole discretion, to cure or otherwise resolve any such alleged breach or default; and

(i) Except for the initiation of litigation of any type against NIH or the National Cancer Institute, TOPOTARGET shall use all commercially reasonable efforts, at

15

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

TOPOTARGET’s sole expense, to exercise and enjoy the direct benefit of all of TOPOTARGET’s affirmative rights under the CRADA, to the extent they relate to Collaboration Products in the Field and in the Territory, including without limitation obtaining exclusive license rights in the Field and Territory to all Subject Inventions as defined therein.

(j) In the event that CURAGEN enters into any CRADA as provided in Section 3.1(b), CURAGEN shall adhere to each of (b) through (i) above, with the designations of the Parties reversed.

3.3 Rights of, and Obligations to LEO PHARMA A/S and the World Health Organization.

(a) Leo.

(i) The Parties acknowledge that TOPOTARGET has entered into a Material Transfer and Screening Agreement with LEO PHARMA A/S (“Leo”) dated as of October 27, 2003 (the “Leo Agreement”), and that pursuant to such Leo Agreement, Leo may obtain worldwide rights to certain HDAC Inhibitors for use solely in the field of dermatological diseases, as defined in the Leo Agreement (the “Leo Field”). The Parties further acknowledge that TOPOTARGET is prohibited from entering into any agreement regarding the screening or development in the Leo Field of the 10 HDAC Inhibitors provided to Leo for evaluation pursuant to the Leo Agreement during the term of the Leo Agreement, as defined therein. The Parties hereby agree that notwithstanding anything herein to the contrary, the rights granted to CURAGEN by TOPOTARGET hereunder, including without limitation any grant of “exclusive” rights, shall be subject to TOPOTARGET’s obligations to Leo, and the rights granted to Leo, under the Leo Agreement; provided, however, that CURAGEN shall have the right to approve in advance the terms and conditions of any license to be granted to Leo regarding the use of HDAC Inhibitors in the Leo Field (such approval to not be unreasonably withheld), and that TOPOTARGET shall pay to CURAGEN [******(*****)] of any consideration received by TOPOTARGET under any such license, net of

16

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

TOPOTARGET’s fully-burdened labor costs for any collaborative research or development activities required to be performed by TOPOTARGET pursuant to any such license and its out-of-pocket expenses related to the granting of such license, which payments shall be made within thirty (30) days of receipt of any such consideration.

(ii) TOPOTARGET hereby represents and warrants to CURAGEN than it has disclosed to CURAGEN the identity of the 10 HDAC Inhibitors that it has provided to Leo pursuant to the Leo Agreement and that it will inform CURAGEN of the status of any and all license negotiations which are conducted with Leo pursuant to the Leo Agreement.

(b) The World Health Organization.

(i) The Parties acknowledge that TOPOTARGET has transferred HDAC Inhibitors to the World Health Organization (“WHO”) pursuant to a letter dated as of March 28, 2003 (the “WHO Agreement”), and that pursuant to such WHO Agreement, WHO may desire to obtain rights to certain HDAC Inhibitors for use in the field of malarial diseases (the “WHO Field”). The Parties hereby agree that notwithstanding anything herein to the contrary, the rights granted to CURAGEN by TOPOTARGET hereunder, including without limitation any grant of “exclusive” rights, shall be subject to any of TOPOTARGET’s obligations to WHO, and any rights granted to WHO, under the WHO Agreement; provided, however, that CURAGEN shall have the right to approve in advance the terms and conditions of any license to be granted to WHO regarding the use of HDAC Inhibitors in the WHO Field (such approval to not be unreasonably withheld), and that TOPOTARGET shall pay to CURAGEN [******(*****)] of any consideration received by TOPOTARGET under any such license, received by TOPOTARGET under any such license, net of TOPOTARGET’s fully-burdened labor costs for any collaborative research or development activities required to be performed by TOPOTARGET pursuant to any such license and its out-of-pocket expenses related to the granting of such license, which payments shall be made within thirty (30) days of receipt of any such consideration.

17

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

3.4 Exclusivity. (a) During the Research Term - For the duration of the Research Term, CURAGEN shall be TOPOTARGET’s exclusive collaborator for HDAC Inhibitors in the Territory, and CURAGEN therefore agrees that, during the Research Term, CURAGEN and its Affiliates shall not, for the benefit of CURAGEN or any Third Party, acquire rights from any Third Party, perform any research or clinical development for, collaborate with or grant licenses to any Third Party, in all cases with respect to any HDAC Inhibitors other than Collaboration Products, except as provided in Section 3.4(d) below.

(b) Without limiting the generality of Section 3.4(a), during the Research Term, (i) TOPOTARGET agrees that it shall not, itself or through another party, perform research for, collaborate with or grant licenses to any Third Party with respect to any HDAC Inhibitor for use in the Field within the Territory, and will not, itself or through another party, undertake such activities with respect to any HDAC Inhibitor for use in the Field within the Territory for the benefit of any Third Party, except in connection with the Third Party Agreements described in Section 3.1 hereof or as otherwise expressly permitted herein in Section 3.3, and (ii) TOPOTARGET shall be permitted, itself and/or with one or more other parties, to perform research for, collaborate with and/or grant licenses to any Third Party with respect to any HDAC Inhibitor for development, sale and/or use solely within the TOPOTARGET Territory, subject only to the provisions of Section 3.5 hereof and to the provisions of Section 8.4 hereof.

(c) Following the Research Term. TOPOTARGET agrees that, following the Research Term, it shall not, itself or through another party, for the benefit of TOPOTARGET or any Third Party, perform research for, collaborate with or grant licenses to any Third Party with respect to any Collaboration Product for use in the Territory, or perform clinical development anywhere in the world with respect to, or market or sell any HDAC Inhibitor in a therapeutic indication (e.g., lung cancer) within the Territory, for which, at the time of the commencement of any such research, collaboration, license grant, clinical development, marketing or selling, any

18

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Collaboration Product is being marketed or developed, or is planned for development based on demonstrated efficacy in a relevant animal model of a disease (“CURAGEN Indications”) for use in the Territory in the Field and such Collaboration Product continues to be diligently developed in that indication by CURAGEN. CURAGEN shall regularly advise TOPOTARGET of such development and planning for development, and TOPOTARGET shall notify CURAGEN of any intent to exercise its rights hereunder within the Territory and provide CURAGEN with [******(*****)] business days in which to update any such information as to which indications are currently in development or planned for development based on demonstrated efficacy in a relevant animal model of a disease. In the event that any such prohibited clinical development of a TOPOTARGET HDAC Inhibitor is conducted by an independent Third Party which leads to the use of any such HDAC Inhibitor in a CURAGEN Indication in competition with actual sales of a Collaboration Product that has been developed specifically for that indication, the Parties shall agree in good faith on appropriate compensation to CURAGEN [***************************************************************]; PROVIDED THAT such compensation shall not exceed the lesser of (i) [****************** *********************************] or (ii) [***********************************]. In the event that the parties cannot agree on appropriate compensation after ninety (90) days of good faith negotiations, the parties shall refer the matter to an independent expert agreed upon by the parties, who will set such compensation at an amount not to exceed the lesser of (i) and (ii) above. The decision of the expert shall be binding on the parties, and any compensation provided to CURAGEN pursuant to this Section 3.4(c) shall be CURAGEN’s exclusive remedy and TOPOTARGET’s sole obligation and liability with respect to any independent Third Party clinical development as described herein.

(d) The Parties hereby agree that, during the Research Term, CURAGEN shall not be permitted to license an HDAC Inhibitor or acquire a Third Party with an HDAC Inhibitor program and CURAGEN shall prohibit its Affiliates from licensing HDAC Inhibitors from Third Parties or acquiring a Third Party with an HDAC Inhibitor program as provided above. Notwithstanding the foregoing, in the event that CURAGEN is acquired by a Third Party which has an HDAC Inhibitor program, such transaction shall not be precluded by this Section

19

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

3.4 and, subject to compliance with Sections 7.2(f), 8.2(a) and Article 12, CURAGEN shall be free to develop and commercialize any HDAC Inhibitors arising from such Third Party’s program alone or in conjunction with such Third Party following any such transaction.

(e) TOPOTARGET’s activities with respect to HDAC Inhibitors which are not Collaboration Products shall not be limited except as expressly provided in this section. Nothing in this Section 3.4 shall in any way be deemed to affect the scope of any licenses or rights expressly granted to CURAGEN pursuant to Section 7 below, or the Parties’ obligations pursuant to Section 8 or Section 12 below.

3.5 Licensing by TOPOTARGET within the TOPOTARGET Territory; CURAGEN’s Right of First Negotiation.

(a) In the event that TOPOTARGET wishes to grant any Third Party licenses or rights in any country within the TOPOTARGET Territory with respect to the development, marketing or distribution of a Collaboration Product (regardless of whether TOPOTARGET or such Third Party initiated discussions of such sublicensing), it may do so during the Research Term only after such Collaboration Product has completed Phase II clinical studies and after the Research Term it may do so at any development stage. In any event, before making or accepting any such Third Party offer, as the case may be, TOPOTARGET shall first propose to grant such rights to CURAGEN. Such proposal shall be in writing, be made in good faith, and set forth terms no less favorable to CURAGEN than those to be offered to, or offered by, such Third Party. Within [********] days after receipt of any such proposal, CURAGEN shall notify TOPOTARGET as to whether CURAGEN wishes to enter into negotiations for such rights. If CURAGEN provides timely notice that it wishes to do so, then the Parties shall conduct exclusive negotiations and use good faith efforts to conclude an agreement within [********] days thereafter. If the Parties are unable to agree upon the terms of such agreement despite the use of good faith efforts for a period of at least [********] days, CURAGEN shall put its proposal in writing (the “Last Offer”). Thereafter, TOPOTARGET shall be free to grant a license or other rights to Third Parties to the rights described in such Last Offer, but only during a [*****(***)] month period following receipt of such Last Offer and only on terms more

20

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

favorable to TOPOTARGET as the Last Offer made by CURAGEN. If, on the other hand, (i) CURAGEN gives TOPOTARGET notice that CURAGEN does not wish to enter into any such license, or (ii) CURAGEN does not respond to TOPOTARGET’s initial proposal within [********] days after receipt thereof, then TOPOTARGET shall be free to grant a license or other rights as outlined in the initial proposal to Third Parties on any terms, but only during a [*****(***)] month period following such initial proposal.

(b) For [*****(***)] months after the Effective Date, TOPOTARGET shall exclusively negotiate in good faith with CURAGEN for a license to its E2F program. At CURAGEN’s option, such license can include screening assays and/or compounds.

4. JOINT STEERING COMMITTEE

4.1 Members. The Parties shall establish a Joint Steering Committee (the “Joint Steering Committee”), which shall comprise three representatives designated by each Party (or such other number as the Parties may agree). The initial members of the Joint Steering Committee are set forth on Exhibit B. Members of the Joint Steering Committee may be represented at any meeting by a designee who is appointed by such member for such meeting and who has authority to act on behalf of such member. The chairperson shall be selected by CURAGEN and the initial chairperson is designated on Exhibit B. Each Party shall be free to replace its representative members with new appointees who have authority to act on behalf of such Party, on notice to the other Party.

4.2 Responsibilities. The Joint Steering Committee shall be responsible for overseeing and directing the Research Program and the Development Program. Its duties, therein, shall include, without limitation:

(i) evaluating and determining scientific criteria to be implemented under the Research Program;

(ii) after providing thirty (30) days notice, proposing, approving and, from time to time, updating and modifying the Research Plans and Development Program plans;

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(iii) providing guidance for the implementation of the Research Plans and Development Program plans;

(iv) determining the deliverables each Party is responsible for under the Research Plans and Development Program;

(v) reviewing expenditures made by TOPOTARGET to verify that such expenditures conformed with the budget established in the annual Research Plan

(vi) allocating responsibilities and resources between the Parties with respect to the Research Program and Development Program;

(vii) determining whether to commence or terminate various projects under the Research Program;

(viii) setting patent filing policies and making patent filing determinations, as contemplated by Sections 6.4(a) – (d);

(ix) evaluating data from the Research Program and designating Future Products for further development;

(x) reviewing the results of any clinical trials conducted by CURAGEN or by TOPOTARGET pursuant to the Development Program and assigning to the Parties’ activities under the Development Program based on such results, as appropriate;

(xi) reviewing and evaluating progress, milestone achievement and diligence under the Research Program and the Development Program, provided that the Joint Steering Committee shall not have authority to make any determination that either Party is in breach of its obligations under this Agreement or any Research Plan or other plan created by the Joint Steering Committee;

22

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(xii) providing for the exchange of information between the Parties relating to the Research Program and the Development Program;

(xiii) addressing issues and resolving differences that may arise between the Parties with respect to the Research Program and the Development Program;

(xiv) approving all CRADA research plans and amendments thereto and all other official decisions to be communicated to NIH with respect to any CRADA; and

(xv) approving any Party’s entrance into agreements and other arrangements with third party service providers for services necessary to effectuate the purposes of the Research Plan.

4.3 Research Team and Development Team. The Joint Steering Committee shall, at request of either Party, be authorized to constitute separate committees to oversee the Research Program and/or the Development Program, which committees will operate under written guidelines set forth by the Joint Steering Committee and which are consistent with the terms of this Agreement. Such committees shall have the same allocation of members from each party as the allocation for the Joint Steering Committee.

4.4 Meetings. The Joint Steering Committee shall meet at least once every calendar quarter, and more frequently as the Parties deem appropriate, on such dates and at such times as the Parties shall agree, on 10 days’ written notice to the other Party unless such notice is waived by the Parties. The Joint Steering Committee may convene or be polled or consulted from time to time by means of telecommunications, video conferences or correspondence, as deemed necessary or appropriate by the Parties. To the extent that meetings are held in person, they shall alternate between the offices of the Parties unless the Parties otherwise agree. The chairperson shall be responsible for sending notices of meetings to all members.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

4.5 Decisions.

(a) A quorum for a meeting of the Joint Steering Committee shall require the presence of at least one TOPOTARGET member (or designee) and at least one CURAGEN member (or designee) in person or by telephone. All decisions made or actions taken by the Joint Steering Committee shall be made unanimously by its members, with the TOPOTARGET members cumulatively having one vote and the CURAGEN members cumulatively having one vote.

(b) In the event that unanimity cannot be reached by the Joint Steering Committee with respect to a matter that is a subject of its decision-making authority, (i) any matter concerning the development and commercialization of any First Product or Future Product after the acceptance for filing of an IND by the FDA, or the appropriate scope of any regulatory toxicity studies of any Future Product, shall be decided by the designated officer of CURAGEN in good faith, taking into account the reasonable commercial interests of TOPOTARGET and the express provisions of this Agreement, and (ii) any matter concerning the development of any First Product or Future Product prior to the acceptance for filing of an IND by the FDA, or the allocation of any funds provided by CURAGEN pursuant to Section 5.3(a), shall be decided by the designated officer of TOPOTARGET in good faith, taking into account the reasonable commercial interests of CURAGEN and the express provisions of this Agreement.

4.6 Minutes. Within 15 days after each Joint Steering Committee meeting, the Chairman, of the Joint Steering Committee or another member of the Steering Committee designated by the Chairman, shall have prepared and distributed minutes of the meeting, which shall provide a description in reasonable detail of the discussions had at the meeting and a list of any actions, decisions or determinations approved by the Joint Steering Committee. Draft minutes shall circulated to all members of the Joint Steering Committee sufficiently in advance of the next meeting to allow adequate review and comment prior to the meeting. Minutes shall be approved or disapproved, and revised as necessary, at the next meeting. Final minutes shall be distributed to the members of the Joint Steering Committee.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

4.7 Term. The Joint Steering Committee shall exist until the termination or expiration of the Research Program and the Development Program.

4.8 Expenses. Each Party shall be responsible for all travel and related costs for its representatives to attend meetings of, and otherwise participate on, the Joint Steering Committee.

5. COLLABORATIVE RESEARCH PROGRAM.

5.1 Scope of Research Program. The Parties agree to undertake a Research Program for the pre-clinical development of the First Product, including use as a combination therapy, and for pre-clinical development of Future Products. The Joint Steering Committee shall prepare, or have prepared, and provide to each Party a detailed description, mutually acceptable to the Parties in form and substance, of the activities to be undertaken during each 12-month period during the Research Program, which shall include a reasonably detailed description of the goals and scope of such research, a corresponding detailed budget for each Party, the allocation of responsibilities to the respective Parties and a work plan, milestones and project target dates for such period (including the personnel, equipment and facilities that TOPOTARGET or CURAGEN is required to provide) (each such 12-month plan, as may be updated or modified from time to time, a “Research Plan”). The objective of the Research Plan will be to allow and support US IND submissions and submissions to governmental authorities of other countries as determined by the Joint Steering Committee concerning the First Product and Future Products. The initial Research Plan is attached as Exhibit C. Each subsequent Research Plan shall be embodied in a letter agreement to be executed by the Parties and shall be finalized at least thirty (30) days prior to the end of the prior twelve-month period. The Joint Steering Committee shall regularly review, update and, as necessary, modify each Research Plan from time to time. The Joint Steering Committee shall promptly provide each Party with any such updates or modifications.

5.2 Selection of Future Products. As of the Effective Date, TOPOTARGET shall have disclosed to CURAGEN all HDAC Inhibitors that have met the conditions set forth in Exhibit D and, during the Research Term, TOPOTARGET shall promptly disclose to CURAGEN all future HDAC Inhibitors Controlled by TOPOTARGET that meet such

25

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

conditions, whether identified during the course of performance of the Research Program or otherwise. All such HDAC Inhibitors that meet the conditions set forth in Exhibit D and that are shown to have efficacy in an animal model other than the [********] model prior to or during the course of the Research Program shall be deemed Future Products for purposes of this Agreement. Each disclosure hereunder regarding an HDAC Inhibitor shall include the composition of the HDAC Inhibitor and all data with respect thereto in the possession or Control of TOPOTARGET.

5.3 Support of Research Program.

(a) Subject to Section 5.3(e), on or before the first day of each calendar quarter during the Research Term, CURAGEN shall advance one fourth of the annual Research Program budget for TOPOTARGET as specified in the relevant Research Plan via wire transfer into an account designated by TOPOTARGET. Payments for any partial calendar quarter during the Research Term shall be prorated. Such payments shall cover all pre-clinical development costs incurred by TOPOTARGET in conducting the Research Plan for selected HDAC Inhibitors Controlled by TOPOTARGET and meeting the criteria in Exhibit D, including animal models of efficacy and ADME, PK, toxicology and mutagenicity studies, and including any such work related to use in combination therapy, and also including all pre-clinical studies (other than regulatory toxicity studies) for Future Products, and including all relevant product supply costs, in each case as authorized in advance by the Joint Steering Committee under each Research Plan. If any such costs include labor costs for TOPOTARGET employees, they shall be budgeted at an annual FTE rate of [*********************(********)] which amount includes an allocation of direct overhead expenses, which rate shall be revised annually at TOPOTARGET’s request subject to approval of the Joint Steering Committee. At the end of each calendar quarter, TOPOTARGET shall provide the STEERING COMMITTEE with a list itemizing expenditures and charges over the preceding quarter.

(b) At the end of each calendar year, TOPOTARGET shall provide a full accounting to CURAGEN of actual expenditures for work actually done by TOPOTARGET under the Research Plan during the preceding calendar year. If the expenses and charges of

26

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

TOPOTARGET exceed the budgeted amount for any quarter, as such budget may be amended in accordance with the terms hereof, CURAGEN shall have no obligation to reimburse TOPOTARGET for any such overrun. At the time of the final annual report, any such excess funds shall be carried forward to the next calendar year for use by TOPOTARGET in discharging its duties under the next annual Research Plan. However, in no case shall any quarterly payment by CURAGEN be reduced or withheld by CURAGEN because of any excess funds remaining in the designated account of TOPOTARGET.

(c) Costs for regulatory toxicology studies required to support the initial US IND for the First Product shall be paid from and charged against the Research Program budget as specified in Section 5.3(e). Any costs for any regulatory toxicology studies for any Future Product and for new formulations or different administration schedules of the First Product shall not be paid from or be charged against the quarterly advances made by CURAGEN pursuant to Section 5.3(a), and shall be CURAGEN’s responsibility unless CURAGEN has provided written notice within thirty (30) days of receipt of written notice of a Joint Steering Committee recommendation regarding such studies that it does not wish to fund such studies, in which event Section 7.2(d) shall apply.

(d) In no event shall costs incurred by CURAGEN in carrying out any work directed by the Joint Steering Committee under Section 5.3(f) be paid for from the funds described in Section 5.3(a) above. Such funds shall also not be used to fund any SAR chemistry or manufacturing process development work performed by TOPOTARGET or any in-vitro research as described in Section II of Exhibit C hereto performed by either Party, which work shall be funded by the Party who is to perform such work.

(e) Pursuant to Section 5.3(a), CURAGEN shall be obligated to pay a maximum of US$6,000,000 towards costs of the Research Program over the first three (3) years of the Research Program and aggregate payments shall not at any time exceed more than $500,000 per quarterly period for all quarterly periods which have elapsed since the Effective Date without CURAGEN’s prior written consent. The Joint Steering Committee may recommend an increase or an acceleration in such budget to the extent necessary to complete any

27

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

relevant work allocated to TOPOTARGET under this Agreement or under the Research Plan; provided, however, that CURAGEN shall not be required to fund any such excess amount or agree to any acceleration of payments without its prior written consent. In the event that TOPOTARGET’s budgeted expenses as approved by the Joint Steering Committee reach US$6,000,000 prior to the end of the Research Term, the Research Program shall terminate unless otherwise agreed by the Parties. Neither party shall be liable to the other party for any costs, damages, expenses or other liabilities as a result of such termination, and neither party shall have any obligation to continue work under the Research Plan following the date of such termination.

(f) If requested by the Joint Steering Committee, CURAGEN shall utilize its systems biology technologies to support the Research Program, subject to CURAGEN’s prior approvals, not to be unreasonably withheld, with advance notice to TOPOTARGET. The Joint Steering Committee may decide that CURAGEN should participate in certain activities other than as described above relating to identification and in-vitro evaluation of Future Products. If so agreed, then such activities shall be documented in writing and reported to TOPOTARGET and the Joint Steering Committee.

5.4 Conduct of Research Program. During the term of the Research Program, each Party shall:

(a) undertake an interactive, cooperative Research Program with the other Party as set forth in the Research Plans, and such other activities that the Joint Steering Committee decides, from time to time, are necessary for the scientific or commercial success of the Research Program, consistent with Article 4, this Agreement, and the intent of the Parties as evidenced by this Agreement;

(b) use all reasonable efforts and proceed diligently to perform the work set out for such Party to perform under the Research Plan, including, without limitation, by using personnel with sufficient skills and experience, together with sufficient equipment and facilities;

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(c) conduct the Research Program in good scientific manner, in compliance with all requirements of all applicable laws, rules and regulations and all other requirements of any applicable good laboratory practices and using resources consistent with those that such party would dedicate to its own research efforts, to attempt to achieve the objectives of the Research Program in a reasonably efficient and expeditious manner;

(d) provide the other Party with notice of all significant developments and of all milestones achieved in the performance of the Research Program as they occur, in accordance with any guidelines established by the Joint Steering Committee;

(e) promptly provide an invention disclosure report to the other Party with respect to any Invention included in the TOPOTARGET Licensed Technology, TOPOTARGET Collaboration Technology, CURAGEN Collaboration Technology or Joint Collaboration Technology;

(f) allow representatives of the other Party, upon reasonable notice and during normal business hours, and subject to reasonable restrictions necessary to protect the confidentiality of such Party’s other programs, to visit the facilities of such Party where the Research Program is being conducted, and consult informally, during such visits and by telephone, with such Party’s personnel performing work on the Research Program; and

(g) with respect to each Party, ensure that all of its employees and agents involved in the Research Program on such Party’s behalf agree, in writing, to assign to such Party, directly or indirectly, such Person’s entire interest in and to any and all Inventions arising from such involvement.

5.5 Records.

(a) TOPOTARGET and CURAGEN each shall maintain records in a manner suitable for carrying out the purposes of the Research Program, and in sufficient detail and in good scientific manner (which shall be complete and accurate in all material respects) and in a form required under all applicable laws and regulations. Each Party shall use reasonable efforts to maintain its records, and to require its subcontractors to do so, in an electronic form suitable

29

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

for electronic filing with any regulatory authority. In addition, TOPOTARGET shall retain records of personnel commitments and other expenditures made in support of the Research Program in sufficient detail to satisfy its reporting requirements to the Steering Committee. CURAGEN shall maintain its records in a similar form.

(b) TOPOTARGET and CURAGEN shall share all information contained in such records, and each shall have the right, during normal business hours, upon reasonable notice and subject to such reasonable procedures as the other Party may require, to inspect and copy all such records of the other Party relating specifically to the Research Program to the extent reasonably required for the performance of the inspecting Party’s obligations, or exercise of such Party’s rights, under this Agreement. TOPOTARGET and CURAGEN each shall maintain such records and the information of the other Party contained therein in confidence in accordance with Section 12 and shall not use such records or information except to the extent otherwise permitted by this Agreement.

5.6 Material Transfer. In order to facilitate the Research Program, either Party may provide to the other Party certain biological materials or chemical compounds (collectively, the “Substances”) owned by or licensed to the supplying Party (other than under this Agreement) for use by the other Party in furtherance of the Research Program. Except as otherwise provided under this Agreement, all Substances delivered to the other Party shall remain the sole property of the supplying Party, shall be used only in furtherance of the Research Program or the receiving Party’s rights under this Agreement, shall remain under the sole control of the other Party. Substances shall not be used by or delivered to any Third Party except under a written Material Transfer Agreement containing terms and conditions substantially similar to those contained in the form attached as Exhibit E. Any rights to inventions acquired by either Party pursuant to any such Material Transfer Agreement shall be deemed Joint Collaboration Technology. The Substances supplied under this Section 5.6 shall not be used in research or testing involving human subjects, and must be used otherwise with prudence and appropriate caution in any experimental work, since not all of their characteristics may be known. THE SUBSTANCES ARE PROVIDED HEREUNDER “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT

30

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE SUBSTANCES WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

5.7 Liability. Each Party shall be responsible for, and hereby assumes, any and all risks of personal injury or property damage attributable to the grossly negligent or willful acts or omissions, during the term of the Research Program, of such Party, its Affiliates, Sublicensees and their respective directors, officers, employees and agents.

5.8 Term of Research Program. The term of the Research Program (“Research Term”) shall commence on the Effective Date, and shall continue until the third anniversary of the Effective Date, unless earlier terminated as provided herein; provided, however, that CURAGEN may elect, at its sole discretion, to extend the Research Term for one or more additional 12-month periods by committing to fund any such continued Research Program at a level of at least US$2,000,000 per year, such amount, to the extent greater than $2,000,000, to be negotiated in good faith, giving due consideration to prior research costs and expenses under the Research Program and mutually agreed to by the Parties on or before the expiration of the prior period. Notice of any such election shall be made, if at all, at least 90 days prior to the relevant anniversary of the Effective Date. In the event that the election is made but the parties cannot agree upon appropriate consideration by the expiration of the prior period, then the Research Program shall terminate as of such date.

5.9 Termination of Research Program; Effect.

(a) At any time during the term of the Research Program, either Party shall have the right to terminate the Research Program upon 30 days’ written notice to the other Party, in the event that:

(i) the other Party is acquired (whether through merger, consolidation, acquisition (directly or indirectly) of stock representing 50% or more of the outstanding voting stock or other of its equity securities, sale of all or

31

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

substantially all of its assets, or otherwise) by a Third Party which is reasonably perceived by the non-acquired Party as a competitor with respect to HDAC Inhibitors or not capable of meeting the requirements of the Research Program or the purposes of this Agreement; or

(ii) Either Party has become entitled to terminate this Agreement under clause (b) or (c) of Section 15.3.

(iii) Notwithstanding any other provisions of this Agreement, CURAGEN shall have the right to terminate the Research Program at any time after the first anniversary of the Effective Date upon three (3) months’ notice to TOPOTARGET (x) in its entirety or solely with respect to additional Future Products, and with no penalty, in the event that CURAGEN reasonably concludes, in good faith and based on the results of the Research Program and other appropriate scientific and commercial information available to CURAGEN, which conclusion and the grounds therefor shall be presented to the Joint Steering Committee in writing, that it is not likely that any additional Future Products will be identified for which an IND can properly be filed in the United States or that any Future Product which is likely to be identified for which an IND can properly be filed in the United States is not likely to be sufficiently commercially successful to warrant the cost of filing an IND and conducting the necessary clinical trial to obtain approval of an NDA in the United States; or (y) for any reason upon payment of a penalty equal to 50% of any remaining unexpended portion of the US $6,000,000 in research funding to be provided pursuant to Section 5.3. In the event the Research Program is terminated under Section 5.9(a)(iii)(x) only with respect to additional Future Products, the Parties will negotiate, in good faith, a revised budget for the continued development of then existing Collaboration Products. If the parties cannot agree upon appropriate budget within thirty (30) days, then this matter will be referred to the Chief Executive Officers of the Parties for resolution through good faith negotiations. If the budget is not agreed by such individuals within thirty (30) days, then the

32

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Parties shall utilize a mutually agreed upon expert, who shall decide on the appropriate reductions from the current budget, if any, and whose decision will be binding on the parties.

Either Party shall promptly notify the other Party of the occurrence of any of the events specified in Sections 5.9(a)(i) or (ii).

(b) At any time during the term of the Research Program, either Party (the “terminating Party”) shall have the right to terminate the Research Program upon notice to the other Party (the “defaulting Party”) in the event the defaulting Party materially defaults with respect to any of its material obligations in connection with the Research Program and fails to cure such default within 60 days after the receipt of a notice from the terminating Party specifying the nature of, and requiring the remedy of, such default.

(c) In the event of termination of the Research Program by CURAGEN pursuant to Section 5.9(a) or (b), or by TOPOTARGET pursuant to Section 5.9(a)(i), CURAGEN may elect to have the Agreement and the license rights granted hereunder continue in effect as follows: CURAGEN shall thereafter be permitted to continue development and commercialization within the Territory with respect to the First Product and all Future Products identified pursuant to Section 5.2 prior to such termination, provided that such activities are not contrary to the terms of this Agreement and that the provisions of this Agreement are observed at all times, including, but not limited to, Section 7.2(f), Article 8 and others requiring diligence in development and commercialization, payment of fees and milestones under this Article and Article 9, and termination under Article 15. TOPOTARGET shall (i) promptly transfer to CURAGEN copies, whether in written or electronic form, of all data, reports, and records, in TOPOTARGET’s possession or control, relating to TOPOTARGET Licensed Technology and/or TOPOTARGET Collaboration Technology but only to the extent required to enable CURAGEN to continue to conduct the Research Program with respect to the Future Products identified under Section 5.2, and all to the extent not previously disclosed to CURAGEN; (ii) return to CURAGEN all relevant records and materials, whether in written or electronic form, in TOPOTARGET’s possession or control containing Confidential Information of CURAGEN and

33

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(iii) furnish to CURAGEN all unused Substances provided to TOPOTARGET by CURAGEN in connection with the Research Program. Thereafter, CURAGEN shall have no further obligation to fund the Research Program and, except as provided in Article 11, TOPOTARGET shall not thereafter be obligated to provide CURAGEN with any Collaboration Product(s) in inventory or be obligated to continue to supply any such product for purposes of the Research Program.

(d) In the event of termination of the Research Program by TOPOTARGET pursuant to Section 5.9 (a)(ii) or (b), or a termination by CURAGEN pursuant to Section 5.9(a)(i) or (iii), TOPOTARGET may elect to have the Agreement and the license rights granted hereunder continue in effect as follows: TOPOTARGET shall thereafter be permitted to continue development and commercialization within the TOPOTARGET Territory with respect to the First Product and all Future Products, provided that such activities are not contrary to the terms of this Agreement. CURAGEN shall (i) promptly provide TOPOTARGET with copies, whether in written or electronic form, of all data, reports, and records, in CURAGEN’s possession or control, relating to any CURAGEN Licensed Technology, CURAGEN Collaboration Technology, or CURAGEN’s interest in Joint Collaboration Technology but only to the extent required to enable TOPOTARGET to continue to conduct of the Research Program, all to the extent not previously disclosed to TOPOTARGET; (ii) return to TOPOTARGET all relevant records and materials, whether in written or electronic form, in CURAGEN’s possession or control containing Confidential Information of TOPOTARGET; and (iii) furnish to TOPOTARGET all unused Substances provided to CURAGEN by TOPOTARGET in connection with the Research Program, and TOPOTARGET may elect to have the licenses granted to it pursuant to this Agreement and the rights granted to it pursuant to this Agreement continue in effect, subject to the provisions of this Agreement relating to such activities.

(e) Either Party’s termination of the Research Program pursuant to this Section 5.9 shall be without prejudice to, and shall not affect, any of the Parties’ respective rights and obligations under this Agreement that do not specifically relate to the Research Program. Without limiting the generality of the foregoing, in the event of a termination by either CURAGEN or TOPOTARGET of the Research Program pursuant to Section 5.9(a) or (b), either terminating Party’s right to exploit the licenses granted to it hereunder, in accordance with the terms of this Agreement, shall not be terminated but shall continue in effect as further provided in Section 5.9(c) and 5.9(d) as relevant.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

6. OWNERSHIP; PATENT PROTECTION.

6.1 Ownership of CURAGEN Collaboration Technology. Except as otherwise provided in this Agreement, the entire right, title and interest in and to all CURAGEN Collaboration Technology shall be owned solely by CURAGEN.

6.2 Ownership of TOPOTARGET Licensed Technology, TOPOTARGET Collaboration Technology. Except as otherwise provided in this Agreement, the entire right, title and interest in and to all TOPOTARGET Licensed Technology and TOPOTARGET Collaboration Technology shall be owned solely by TOPOTARGET.

6.3 Ownership of Joint Collaboration Technology. Except as otherwise provided in this Agreement, the right, title and interest in and to all Joint Collaboration Technology shall be owned jointly and in undivided shares by TOPOTARGET and CURAGEN.

6.4 Patent Filing, Prosecution and Maintenance.

(a) Reasonably promptly after the Effective Date the Joint Steering Committee, in consultation with the Parties’ respective patent counsel, shall agree upon a patent filing policy with respect to Collaboration Products. In addition, from time to time, the Joint Steering Committee shall determine, in accordance with such policy, whether and in what jurisdictions patent applications should be filed with respect to any Know-How or Inventions included in the TOPOTARGET Licensed Technology, TOPOTARGET Collaboration Technology, CURAGEN Collaboration Technology, and Joint Collaboration Technology.

(b) Following a determination by the Joint Steering Committee that a patent application should be filed with respect to any Know-How or Inventions included in the TOPOTARGET Licensed Technology or TOPOTARGET Collaboration Technology, TOPOTARGET, through outside patent counsel (including, without limitation, foreign patent counsel and agents) reasonably acceptable to CURAGEN and TOPOTARGET, shall promptly

35

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

file a patent application with respect thereto in the jurisdiction(s) selected by the Joint Steering Committee, and thereafter TOPOTARGET shall prosecute such application and maintain any letters patent issuing therefrom. TOPOTARGET shall take all such actions in consultation with CURAGEN and its patent counsel and shall keep CURAGEN apprised as to the status of all pending patent applications. The costs of filing, prosecuting and maintaining any Patents under this Section 6.4(b) in the Territory shall be borne solely by TOPOTARGET. To the extent that TOPOTARGET disagrees with any such filing, prosecution or maintenance of a Patent under this Section 6.4(b) and such actions are required by the Joint Steering Committee, the associated costs and fees shall be borne solely by CURAGEN and such Patents shall be assigned to CURAGEN and shall no longer be deemed TOPOTARGET Licensed Technology or TOPOTARGET Collaboration Technology, as relevant, provided that, solely with respect to Patents on TOPOTARGET Collaboration Technology, such Patents shall be included within the CURAGEN Collaboration Technology for the purpose of the license granted to TOPOTARGET pursuant to Section 7.4.

(c) Following a determination by the Joint Steering Committee that a patent application should be filed with respect to any Know-How or Inventions included in any CURAGEN Collaboration Technology, CURAGEN shall promptly file a patent application with respect thereto in the jurisdiction(s) selected by the Joint Steering Committee, and thereafter CURAGEN shall prosecute such application and maintain any letters patent issuing therefrom. CURAGEN shall take all such actions in consultation with TOPOTARGET and its patent counsel and shall keep TOPOTARGET apprised as to the status of all pending patent applications. The costs of filing, prosecuting and maintaining any Patents under this Section 6.4(c) shall be borne solely by CURAGEN.

(d) Following a determination by the Joint Steering Committee that a patent application should be filed with respect to a any Know-How or Invention included in the Joint Collaboration Technology, CURAGEN shall promptly file a patent application with respect thereto, in the Parties’ joint names, in the jurisdiction(s) selected by the Joint Steering Committee, and thereafter CURAGEN shall prosecute such application and maintain any letters patent issuing therefrom. CURAGEN shall take all such actions in consultation with

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

TOPOTARGET and shall keep TOPOTARGET apprised as to the status of all pending patent applications. The costs of filing, prosecuting and maintaining any Patents under this Section 6.4(d) shall be shared equally by the Parties.

6.5 Termination of Support. Either Party shall have the right to terminate all of its obligations, if any, under Section 6.4 with respect to the filing, prosecution or maintenance of any Patent, from time to time, upon notice to the other Party; provided, however, that no such notice shall be effective with respect to any such Patent if it is given fewer than 60 days prior to a deadline for taking any action that must be taken in order to preserve the owner’s rights in such Patent. Upon the delivery of any such effective notice, unless otherwise provided above, such Patent shall be removed from operation of this Agreement, assigned to the non-notifying Party upon request and all of the notifying Party’s rights, licenses and obligations under this Agreement, if any, with respect to such Patent shall terminate, except those patent expense obligations that shall have accrued prior to the Effective Date of such notice.

7. GRANT OF LICENSES; RESERVATION OF RIGHTS.

7.1 Mutual Research Licenses.

(a) TOPOTARGET hereby grants CURAGEN, during the term of the Research Program, a co-exclusive (solely with TOPOTARGET), paid-up right and license in the Field throughout the Territory under the TOPOTARGET Licensed Technology, TOPOTARGET Collaboration Technology, and TOPOTARGET’s interest in the Joint Collaboration Technology to conduct the Research Program and to make and use Collaboration Products in connection with the Research Program, each in accordance with the terms of this Agreement. Notwithstanding the foregoing, the parties recognize that the CRADA described in Section 3.1, and any other agreements entered into pursuant to Section 3.3, whether executed either before or after the Effective Date, shall not be considered in violation of CURAGEN’s co-exclusivity pursuant to this provision 7.1(a).

(b) CURAGEN hereby grants TOPOTARGET, during the term of the Research Program, a co-exclusive (solely with CURAGEN), paid-upright and license in the Field

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

throughout the TOPOTARGET Territory under the CURAGEN Licensed Technology, the CURAGEN Collaboration Technology and CURAGEN’s interest in the Joint Collaboration Technology to conduct the Research Program and to make and use Collaboration Products in connection with the Research Program, each in accordance with the terms of this Agreement.

7.2 CURAGEN Commercialization License.

(a) Subject to Section 7.2(c), 7.2(d) and 7.2(e), TOPOTARGET hereby grants to CURAGEN an exclusive (even as to TOPOTARGET), royalty-bearing right and license in the Field throughout the Territory , with the right to grant sublicenses in accordance with the terms of this Agreement, under the TOPOTARGET Licensed Technology, the TOPOTARGET Collaboration Technology and TOPOTARGET’s interest in the Joint Collaboration Technology to develop, have developed, make, have made, use, sell, offer for sale, and have sold, and to import, have imported, export and have exported within the Territory, Collaboration Products and, subject to Section 7.2(b), any HDAC Inhibitor that is not a Collaboration Product.

(b) From and after the date of expiration or termination of the Research Term, any HDAC Inhibitor which is not a Collaboration Product at such time, shall no longer be subject to the license granted to CURAGEN under Section 7.2(a).

(c) Notwithstanding Section 7.2(a), for any distinct Future Product for which an IND is filed in any country, whether during or after the Research Term, if CURAGEN fails to make any payment specified in Section 9.4 for such Future Product within the time period provided therein, such Future Product and its Back-Up Products shall no longer be deemed Collaboration Products and shall be removed from operation of this Agreement.

(d) In addition, for any distinct Future Product for which CURAGEN declines to fund regulatory toxicity studies recommended by the Joint Steering Committee within thirty (30) days of any written notice thereof provided to CURAGEN, such Future Product and its Back-Up Products shall no longer be deemed Collaboration Products and shall be removed from operation of this Agreement.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(e) Unless CURAGEN has designated a specific Back-Up Product as a potential replacement for a Collaboration Product within [*****(****)] years after the first filing of an IND in the Territory for such Collaboration Product, CURAGEN’s license under Section 7.2(a) to Back-Up Products for such Collaboration Product, shall terminate as of such date and such Back-Up Products shall thereafter no longer be deemed Collaboration Products. If CURAGEN has designated a Back-Up Product prior to such date, such Back-Up Product shall continue to be licensed hereunder, but rights to all non-designated Back-Up Products shall terminate at such time.

(f) In order to maintain the license rights of Section 7.2(a), CURAGEN must diligently develop and commercialize Collaboration Products. CURAGEN will have satisfied the foregoing obligation by adhering to the clinical plan for Collaboration Products as determined by the Joint Steering Committee and, meeting targets for (i) initiating clinical trials: [****************************************************************************] and (ii) prosecuting clinical trials: [**********************************************]. The failure to achieve any specific target will not mean that CURAGEN has failed to meet the foregoing obligation; provided that CURAGEN can demonstrate that it has used commercially reasonable efforts to do so. Demonstration of commercial due diligence may include, but is not limited to developing a marketing plan to market the Covered Products in the Territory reflecting activities and resources customary in the industry for similar products, submitting the marketing plan to TOPOTARGET at least six (6) months prior to launch of the first Covered Product for comment and providing annual updates thereafter, establishing (directly or indirectly) a suitable sales force and committing sufficient marketing resources and budget to meet the objectives of the marketing plan, and meeting minimum sales targets beginning in the third calendar year after market launch in the United States.

7.3 Sublicensing by CURAGEN.

(a) CURAGEN shall have the right to grant sublicenses to any of its Affiliates and/or to Third Parties of the licenses or rights granted to CURAGEN hereunder for purposes of permitting such Affiliate(s) or Third Party to perform CURAGEN’s rights and obligations

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

hereunder, provided that: (i) CURAGEN shall provide TOPOTARGET written notice within 30 days of identifying said Affiliate or Third Party; (ii) the rights to be granted to any Third Party shall not include rights to any Future Product with respect to which the take up fee specified in Section 9.4 has not been paid; (iii) CURAGEN shall guarantee and be responsible for ensuring the diligent discharge of CURAGEN’s obligations under, and compliance with all applicable terms of, this Agreement, whether by CURAGEN or any Sublicensee; (iv) each Affiliate or Sublicensee agrees in writing to keep books and records and permit TOPOTARGET to review such books and records pursuant to the relevant provisions of, and to observe and to be bound by all other applicable terms of, this Agreement (including, without limitation, those set forth in Sections 8.2, 8.7, 12, 13, 15 and 17); and (v) the rights of TOPOTARGET under this Agreement are preserved in connection with any such sublicensing. CURAGEN shall promptly provide TOPOTARGET with notice of any sublicense granted pursuant to this Section 7.3. Notwithstanding the foregoing, for any sublicense with respect to a Collaboration Product which has not yet entered Phase II clinical studies, TOPOTARGET shall have the right within 20 days of any notice provided pursuant to (i) above, to prevent CURAGEN from granting such sublicense if TOPOTARGET notifies CURAGEN that it believes that such proposed Sublicensee lacks sufficient capability to conduct clinical development of such Collaboration Product, and such belief is reasonable.

(b) CURAGEN hereby unconditionally guarantees the performance of any of its Affiliates and its Sublicensees hereunder.

(c) Activities of any Sublicensee shall be subject to milestone, royalty or other payments as if the activity was conducted by CURAGEN, and CURAGEN shall make payments to TOPOTARGET on behalf of its Sublicensee, unless CURAGEN and TOPOTARGET mutually agree to allow the Sublicensee to make payments directly to TOPOTARGET.

7.4 TOPOTARGET Commercialization License. CURAGEN hereby grants to TOPOTARGET an exclusive (even as to CURAGEN), royalty-bearing right and license in the Field throughout the TOPOTARGET Territory, with the right to grant sublicenses in accordance with the terms of this Agreement, under the CURAGEN Licensed Technology, the CURAGEN

40

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Collaboration Technology and CURAGEN’s interest in the Joint Collaboration Technology to develop, have developed, make, have made, use, sell, offer for sale, and have sold, and to import, have imported, export and have exported within the TOPOTARGET Territory, Collaboration Products.

7.5 Trademark License. CURAGEN hereby grants to TOPOTARGET a fully paid, exclusive right and license, with the right to sublicense subject to CURAGEN’s prior written approval, which approval shall not be unreasonably withheld, to use the CURAGEN Trademarks in the TOPOTARGET Territory solely in connection with the sale or distribution of Collaboration Products substantially identical to those for which such CURAGEN Trademarks are used by CURAGEN in the Territory and for which TOPOTARGET has become obligated to pay royalties to CURAGEN pursuant to Section 9.9. TOPOTARGET agrees that prior to any such use, it will submit to CURAGEN for reasonable review samples of the labels and other materials which depict such CURAGEN Trademarks and which TOPOTARGET intends to use. TOPOTARGET further agrees to cooperate with CURAGEN in connection with CURAGEN’s reasonable efforts to exercise quality control with respect to TOPOTARGET’s use of any CURAGEN Trademark. To the extent TOPOTARGET desires CURAGEN to enforce against a Third Party the rights to any CURAGEN Trademark in the TOPOTARGET Territory, TOPOTARGET shall be responsible for all costs and expenses associated therewith. TOPOTARGET agrees that all use of any CURAGEN Trademark by TOPOTARGET shall inure to the benefit of CURAGEN and that TOPOTARGET will not undertake any effort or cause a Third Party to undertake any efforts to challenge the rights of CURAGEN to any CURAGEN Trademark. TOPOTARGET hereby unconditionally guarantees the performance of any of its Affiliates or sublicensees with respect to any rights granted hereunder.

8. DEVELOPMENT AND COMMERCIALIZATION.

8.1 Development Program. The Parties agree to conduct a Development Program as further provided in this Section 8 to coordinate the global clinical development of the Collaboration Products. The Joint Steering Committee will approve specific Development Program plans for Collaboration Products in accordance with the principles outlined in Exhibit F.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

All risk-benefit decisions related to the development of Collaboration Products, including which pre-clinical toxicology studies and safety testing are to be performed, will be made by the Joint Steering Committee.

8.2 Development And Commercialization Efforts by CURAGEN.

(a) CURAGEN shall use commercially reasonable efforts, consistent at least with those described in Section 7.2(f), (including, but not limited to, conducting clinical trials (other than the TOPOTARGET Clinical Studies), filing for regulatory approvals, diligently pursuing such approvals and, upon the grant of regulatory approval, marketing Collaboration Products) to develop, commercialize and market at least one Collaboration Product in the Field in the Territory. In connection therewith, CURAGEN shall dedicate resources to the development, commercialization and marketing of Collaboration Products in the Territory that are consistent with the resources that CURAGEN, at all relevant times, would dedicate to products containing compounds with similar commercial potential generated from CURAGEN’s own research efforts that CURAGEN decided to develop commercially and market. Except as otherwise provided in this Agreement, CURAGEN shall be solely responsible for conducting all such development, commercialization and marketing activities in the Territory, and for all costs and expenses thereof.

(b) CURAGEN shall provide TOPOTARGET and the Joint Steering Committee on a timely basis (that is, promptly after generation) with all data, results, reports and other information generated in connection with CURAGEN’s development, either alone or in permitted collaboration with any Third Party(ies), of any Collaboration Products in the Territory. CURAGEN shall promptly inform the Joint Steering Committee regarding all significant developments and issues in connection with any such development of Collaboration Products in the Territory that may arise from time to time.

8.3 Exchange of Regulatory Information; Ownership of Regulatory Filings. The Parties acknowledge and agree that as of the Effective Date TOPOTARGET is conducting a Phase I clinical trial of the First Product in the TOPOTARGET Territory. Promptly after the Effective Date, TOPOTARGET shall provide to CURAGEN copies of all data, information and

42

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

regulatory filings made or exchanged with any regulatory authority with respect to any Collaboration Product. All INDs, NDAs and other regulatory filings in the TOPOTARGET Territory with respect to any Collaboration Products shall be in the name of, and be owned solely by, TOPOTARGET. Subject to applicable laws and regulations, unless this Agreement is terminated in its entirety by TOPOTARGET pursuant to Section 15.3 as a result of a payment breach, TOPOTARGET shall provide CURAGEN with the right to cross-reference any relevant existing regulatory filings and dossiers in connection with CURAGEN’s exercise of the rights granted hereunder. All INDs, NDAs and other regulatory filings in the Territory with respect to any Collaboration Products shall be in the name of, and be owned solely by, CURAGEN. CURAGEN shall provide to TOPOTARGET copies of all data, information and regulatory filings made or exchanged with any regulatory authority in such countries with respect to any Collaboration Product, promptly after generation of such data, information or regulatory filing. Subject to applicable laws and regulations, unless this Agreement is terminated by CURAGEN in its entirety pursuant to Section 15.3 as a result of a payment breach, CURAGEN shall provide TOPOTARGET with the right to cross-reference any such relevant existing regulatory filings and dossiers in connection with TOPOTARGET regulatory activities in the TOPOTARGET Territory.

8.4 TOPOTARGET’s Development of Collaboration Products

(a) TOPOTARGET shall conduct, at CURAGEN’s expense, those clinical studies for the First Product and the Future Products in the TOPOTARGET Territory as listed on Exhibit G attached hereto and as otherwise approved by the Joint Steering Committee (“TOPOTARGET Clinical Studies”). Notwithstanding the foregoing, CURAGEN shall not be required to pay for the expenses of any TOPOTARGET personnel involved in planning, coordinating or monitoring any such TOPOTARGET Clinical Studies.

(b) TOPOTARGET shall retain the option to conduct, or have conducted, at its own expense, any clinical trial it deems appropriate to support registrations for commercialization of Collaboration Products in the TOPOTARGET Territory; provided, however, that all protocols for such trials shall be reviewed with the Joint Steering Committee prior to initiation of any such trial.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(c) TOPOTARGET shall provide CURAGEN and the Joint Steering Committee on a timely basis (that is, promptly after generation) with all data, results, reports and other information generated in connection with TOPOTARGET’s development, either alone or in permitted collaboration with any Third Party(ies), of any Collaboration Products outside the Territory, including without limitation all data and information relating to any TOPOTARGET Clinical Studies. TOPOTARGET shall promptly inform the Joint Steering Committee regarding all significant developments and issues in connection with any such clinical studies of Collaboration Products that may arise from time to time.

(d) Notwithstanding the foregoing, the Joint Steering Committee shall have the right to require TOPOTARGET to terminate, for reasonable cause, any clinical trial of a Collaboration Product. The Parties acknowledge and agree that for purposes of this Section 8.4(d), reasonable cause shall include, without limitation, the Joint Steering Committee’s reasonable determination that [*************************************************].

8.5 Use of CURAGEN Clinical Data. Notwithstanding Section 12.1, and subject to compliance with Section 9.9, TOPOTARGET shall be permitted to use, and to allow its Affiliates and licensees to use, clinical data and information generated or obtained by CURAGEN or resulting from clinical trials paid for by CURAGEN hereunder (“CURAGEN Clinical Data”) with respect to TOPOTARGET’s efforts to obtain regulatory approval for Collaboration Products outside the Territory so long as TOPOTARGET informs CURAGEN of any such intended use, limits the extent of any concomitant disclosure to the maximum extent possible, and provides copies to CURAGEN of any documents which embody any such CURAGEN clinical data and/or information which are to provided to any Third Party. TOPOTARGET hereby unconditionally guarantees the performance of any of its Affiliates and licensees with respect to the rights granted hereunder.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

8.6 Reporting.

(a) The Joint Steering Committee shall establish data collection and data sharing standards, which will include without limitation, standards regarding the collection and provision to each Party of all safety data. The Parties shall use best efforts to adhere to such data collection standards.

(b) In the event of a change of control of TOPOTARGET (whether through merger, consolidation, acquisition (directly or indirectly) of stock representing 50% or more of the outstanding voting stock or other of its equity securities, sale of all or substantially all of its assets, or otherwise) which results in control of TOPOTARGET by any Third Party that, in the good faith determination of CURAGEN, is a competitor of CURAGEN and is developing an HDAC inhibitor, CURAGEN shall not be required to include in any report furnished by CURAGEN pursuant to this Agreement, or provide to any representative of TOPOTARGET (or any successor thereto), any information that CURAGEN, acting in good faith, determines to be competitively sensitive or enabling information. Nothing in this provision should be understood to restrict CURAGEN’s right to cross-reference regulatory filings and dossiers pursuant to Section 8.3 or to limit any obligation pursuant to Section 8.7 hereof.

(c) In the event of a change of control of CURAGEN (whether through merger, consolidation, acquisition (directly or indirectly) of stock representing 50% or more of the outstanding voting stock or other of its equity securities, sale of all or substantially all of its assets, or otherwise) which results in control of CURAGEN by any Third Party that, in the good faith determination of TOPOTARGET, is a competitor of TOPOTARGET and is developing an HDAC inhibitor, TOPOTARGET shall not be required to include in any report furnished by TOPOTARGET pursuant to this Agreement, or provide to any representative of CURAGEN (or any successor thereto), any information that TOPOTARGET, acting in good faith, determines to be competitively sensitive or enabling information. Nothing in this provision should be understood to restrict TOPOTARGET’s right to cross-reference regulatory filings and dossiers pursuant to Section 8.3 or to limit any obligation pursuant to Section 8.7 hereof.

45

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

8.7 Adverse Events.

(a) The Parties shall develop standard operating procedures for the investigation and reporting of adverse events concerning Collaboration Products. The Parties shall immediately implement such agreed procedures and shall provide each other in a time frame consistent with regulatory obligations with any information which has become available to them and which is relevant to the safe use of the Collaboration Products or which is required by local law in all countries where the Collaboration Products are marketed or are in clinical trials.

(b) Both as an integral part of the procedures referred to in (a) above and as a separate obligation under this Agreement, each Party shall notify the other Party of each report of a “serious adverse event” (as defined below). The notification shall be made in the appropriate format prescribed in the said procedures by the fastest available means. The responsibility for submitting any such report to health registration authorities in particular countries shall be stipulated in the said procedures. Upon the request of one Party, the other Party shall promptly investigate a serious adverse event and shall promptly submit follow-up reports upon the receipt of new information. The said procedures are subject to such changes as may be adjudged necessary or as shall be required by applicable law. For the purposes of this provision, “serious adverse event” shall mean any adverse drug experience occurring at any dose that results in any of the following outcomes: death, a life-threatening adverse drug experience (i.e. placing the patient or subject, in the view of the investigator, at immediate risk of death from the reaction as it occurred), inpatient hospitalization or prolongation of existing hospitalization, a persistent or significant disability/incapacity, or a congenital anomaly/birth defect. Important medical events that may not result in death, be life-threatening, or require hospitalization may be considered a serious adverse event when, based upon appropriate medical judgment, they may jeopardize the patient or subject and may require medical or surgical intervention to prevent one of the outcomes listed above.

(c) Each Party shall promptly notify the other of, and provide copies of, any proposed, pending, threatened or completed governmental action concerning adverse events which might affect any Collaboration Product.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(d) Each Party shall cooperate with the other Party to comply with any new applicable regulatory requirements on adverse drug event reporting which may from time to time be imposed in the countries where a Collaboration Product is developed, tested or marketed.

8.8 Trademarks. CURAGEN shall designate the generic name of any Collaboration Product and register such name with USAN (United States Adopted Name/International Nonproprietary Name). CURAGEN shall market the Collaboration Products throughout the Territory under trademarks (collectively, the “CURAGEN Trademarks”) selected by CURAGEN, which shall not use, incorporate or be confusingly similar to any trademark, trade name, or service mark of TOPOTARGET in existence as of the later of the Effective Date or the registration date of any such CURAGEN Trademark. CURAGEN shall own all right, title and interest in and to such CURAGEN Trademarks and shall bear all costs and expenses of registering, and maintaining the registration of, same, within or outside the Territory. TOPOTARGET may not use any marks similar to the CURAGEN Trademarks without the prior written consent of CURAGEN except as expressly set forth in Section 7.5 hereof. TOPOTARGET has retained the right to market the Collaboration Products outside the Territory and may select trademarks for such purposes in TOPOTARGET’s discretion, subject to the restrictions set forth above (collectively, the “TOPOTARGET Trademarks”). TOPOTARGET shall own all right, title and interest in and to such TOPOTARGET Trademarks and shall bear all costs and expenses of registering, and maintaining the registration of, same. CURAGEN may not use any marks similar to the TOPOTARGET Trademarks without the prior written consent of TOPOTARGET.

8.9 Publications. Each Party shall be free to publish and/or make presentations concerning the results of its development efforts under this Section 8, subject to its compliance with this Section 8.9 and with any other guidelines established by the Joint Steering Committee. Each Party shall deliver to the other Party and the Joint Steering Committee copies of all articles and papers to be published, and reasonably detailed abstracts of presentations to be made, concerning such subject matter at least 30 days prior to the anticipated submission or presentation date thereof. The non-publishing Party shall have 30 days after receipt of said copies to object to such proposed publication or presentation because Confidential Information

47

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

of such non-publishing Party is contained in the proposed publication or presentation, because such proposed publication or presentation would disclose Know-How or the proprietary and confidential details of an Invention for which such non-publishing Party has a license under this Agreement and that the Joint Steering Committee has determined, either generally or in particular, should be the subject of Patent protection. In the event the non-publishing Party makes such objection due to inclusion of the non-publishing Party’s Confidential Information, the Parties shall negotiate an acceptable version of such proposed publication or presentation. In the event that the non-publishing Party makes such objection due to the need for patent protection, then such publication or presentation shall be delayed for a reasonable period of time (not to exceed 90 days) during which the Party having responsibility therefore (under Section 6.4) shall file a patent application in the appropriate jurisdiction(s) with respect to such Know-How or Invention.

9. MONETARY OBLIGATIONS.

9.1 License Fee. In partial consideration of the rights and licenses granted to CURAGEN under this Agreement, within 30 days after the execution of this Agreement CURAGEN shall pay TOPOTARGET a non-refundable, non-creditable one-time license fee in the amount of US$5,000,000.

9.2 Loan Commitment. In partial consideration of the rights and licenses granted to CURAGEN hereunder, CURAGEN hereby agrees to advance certain sums to TOPOTARGET as further provided in the Convertible Debenture and Convertible Loan Agreement executed by the Parties and of even date herewith, copies of which are attached hereto in Exhibit H (the “Loan Agreements”).

In the event CURAGEN exercises its rights hereunder to terminate this Agreement pursuant to Section 15.3, CURAGEN shall have the right to accelerate the Loan and make immediate written demand for payment of all amounts due thereunder, and notwithstanding any provision of the Loan Agreements, all amounts due under the Loan shall become due and payable in cash thirty (30) days after delivery of such written demand for payment.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

9.3 Additional Upfront Payment. In addition to the consideration specified above, in partial consideration of the rights and licenses granted to CURAGEN under this Agreement, CURAGEN shall pay to TOPOTARGET a non-refundable, non-creditable payment of US$5,000,000 on Phase II Initiation in the United States for the First Product, provided that such event occurs by [*************]. Otherwise, the amount payable pursuant to this Section 9.3 shall be reduced by [***********************************************************].

9.4 Take Up Fee.

(a) The Parties acknowledge and agree that during the Research Program, the Parties may identify Future Products. In order to retain its rights to any such Future Products, CURAGEN shall pay to TOPOTARGET a non-refundable, non-creditable fee (the “Take Up Fee”) for each distinct Future Product within the earlier of (i) thirty (30) days after the first acceptance of the filing of an IND for such Future Product anywhere in the world or (ii) twenty-four months following the expiration or termination of the Research Term. The Take Up Fee shall be US$500,000 for each of the first two Future Products and US$1,000,000 for each Future Product thereafter.

(b) In addition, for each Future Product for which the Take Up Fee has not been paid within twelve (12) months following the expiration or termination of the Research Term, in order to retain its rights to such Future Product, CURAGEN shall pay to TOPOTARGET a non-refundable fee of [***************] (a “Maintenance Fee”) on or before such twelve-month anniversary, which amount shall be fully creditable against any Take Up Fee subsequently paid for the same Future Product. Failure to pay any such amount when due shall cause such Future Product and its Back-Up Products to be removed from operation of this Agreement as provided in Section 7.2(c).

9.5 Development Milestone Payments by CURAGEN.

(a) In partial consideration of the rights and licenses granted to CURAGEN under this Agreement, CURAGEN shall pay TOPOTARGET the following non-refundable, non-creditable milestone payments upon the first occurrence of each event set forth below with

49

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

respect to the First Product, whether such occurrence is achieved by CURAGEN or its Affiliates or its Sublicensees (or TOPOTARGET with respect to Phase II Initiation), so long as such event occurs prior to the expiration of the Royalty Term for the First Product:

(i) US$3,000,000 upon Phase II initiation for such First Product; provided, however, that such amount shall be reduced by [***************];

(ii) [***************] upon Phase III Initiation for the First Product;

(iii) [***************] upon acceptance of filing of the NDA for the First Product by the FDA;

(iv) [***************] upon acceptance of filing of the first NDA for the First Product by relevant authorities in Japan;

(v) [***************] upon First Commercial Sale of the First Product in the United States; and

(vi) [***************] upon First Commercial Sale of the First Product in Japan.

Each of the foregoing payments shall be made within 30 days after achievement of such milestone. For the avoidance of doubt, after CURAGEN has made any of the foregoing payments with respect to the First Product, CURAGEN shall have no further obligation to make the same milestone payment with respect to the First Product, or with respect to any other product which is an alternative formulation of the First Product, regardless of the number of clinical trials, NDAs or regulatory approvals for such First Product.

(b) In partial consideration of the rights and licenses granted to CURAGEN under this Agreement, CURAGEN shall pay TOPOTARGET the following non-refundable, non-creditable milestone payments upon the first occurrence of each event set forth below with respect to each Future Product, whether such occurrence is achieved by CURAGEN or its Affiliates or its Sublicensees so long as such event occurs prior to the expiration of the relevant Royalty Term:

(i) US$3,000,000 upon Phase II Initiation for such Future Product; provided, however, that such amount shall be reduced by [****************************************************************];

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

(ii) [************] upon Phase III Initiation for the Future Product;

(iii) [************] upon acceptance of filing of the first NDA for the Future Product by the FDA;

(iv) [************] upon acceptance of filing of the first NDA for the Future Product by relevant authorities in Japan;

(v) [************] upon First Commercial Sale of the Future Product in the United States; and

(vi) [************] upon First Commercial Sale of the Future Product in Japan.

Each of the foregoing payments shall be made within 30 days after achievement of such milestone. For the avoidance of doubt, after CURAGEN has made any of the foregoing payments with respect to any Future Product, CURAGEN shall have no further obligation to make the same milestone payment with respect to such Future Product, or with respect to any other Future Product that is an alternative formulation of such Collaboration Product for which milestones have been paid pursuant to Section 9.5(a) or (b) hereof, regardless of the number of clinical trials, NDAs or regulatory approvals for any such Future Product.

(c) If CURAGEN notifies TOPOTARGET that it is developing both a lead Collaboration Product and a Back-Up Product in the Territory, CURAGEN shall be obligated to pay only one set of milestones as set forth in (a) or (b) above until the acceptance for filing of an NDA on the second of such two Collaboration Products in the United States or Japan, at which

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

time CURAGEN shall pay: (i) the specified milestone for such event; and (ii) to the extent such payments were not previously made or applicable, all preceding milestones which have been met for such second Collaboration Product, plus interest on such amounts at an annual percentage rate equal to [*********(***)] per year or the highest rate allowed under applicable law, whichever is lower, compounded annually from the date the milestone would have been met until the payment is made; and (iii) the remaining milestones for such second Collaboration Product when the specified events are achieved.

(d) If the development or commercialization of a Collaboration Product is abandoned during the term of this Agreement for any specific, medical or commercial reason after one or more of the milestone payments specified in (a) or (b) above are made, and a Back-Up Product is developed to replace the abandoned Collaboration Product, then no milestone payment shall be required with respect to the Back-Up Product to the extent that such milestone payment has already been made with respect to the abandoned Collaboration Product.

9.6 Royalties.

(a) In partial consideration of the rights and licenses granted to CURAGEN under this Agreement, CURAGEN shall pay TOPOTARGET a royalty on Net Sales of each Covered Product, commencing on the First Commercial Sale of each such Covered Product by or on behalf of CURAGEN, its Affiliates or its Sublicensees in each country in the Territory and continuing during the Royalty Term for such Covered Product for such country, in an amount calculated by multiplying the applicable percentage (i.e., the royalty payable thereon) from the following chart by the aggregate Net Sales of each such Covered Product throughout the Territory during each calendar year (or portion thereof) during the term of this Agreement:

Increment of Annual Net Sales (“ANS”) of Subject Covered Product In the Territory Achieved During Calendar Year	Royalty Payable Thereon
[************]	[*****]
[************]	[*****]
[************]	[*****]
[************]	[*****]
[************]	[*****]
[************]	[*****]

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(b) CURAGEN’s obligation to pay royalties with respect to each Covered Product in each country in the Territory shall expire upon the expiration of the Royalty Term with respect to such Covered Product in such country.

(c) The obligation to pay royalties to TOPOTARGET under this Section 9.6 is imposed only once with respect to the same unit of Covered Product, regardless of the number of Patents pertaining thereto.

9.7 Third Party Royalties.

(a) CURAGEN, at its sole expense, shall pay all license fees, milestones and earned royalties owing to any Third Party with respect to patents regarding the composition or method of manufacture of the HDAC Inhibitor component of any Collaboration Product (“Third Party HDAC Patents”) that CURAGEN determines, in its reasonable business judgment, are necessary in order to develop, make, have made, use, sell, offer for sale, have sold or export any such Collaboration Product in the Territory (collectively, “Third Party HDAC Royalties”).

(b) CURAGEN shall be entitled to a credit against royalties due to TOPOTARGET under this Agreement for any Covered Product in an amount equal to [******] of the aggregate Third Party HDAC Royalties paid by CURAGEN in any country in the Territory with respect to the relevant Covered Product; provided, however, that the application of such credit shall not reduce the royalties payable by CURAGEN under this Agreement for such Covered Product with respect to any given calendar quarter by more than [******]. Notwithstanding the foregoing, if CURAGEN, in lieu of or in addition to any Third Party HDAC

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Royalties, is required to pay an award of damages or a settlement amount in the form of a reasonable royalty based on sales during any period of previous infringement of any Third Party HDAC Patents (as opposed to the on-going payment of a running royalty), then such payment shall be allocated to the several calendar quarters during such period of infringement, and the limits set forth in the previous sentence shall apply to each portion of such payment allocated to a specific quarter and not to such payment as a whole, and an appropriate credit shall be permitted so long as no quarterly payment is reduced by more than [******].

(c) Each Party, at its sole expense, shall pay all license fees, milestones and earned royalties owing to any Third Party as a result of the licensing of Patents other than Third Party HDAC Patents (“Other Third Party Patents”), that the Joint Steering Committee determines, in its reasonable business judgment, are necessary in order to develop, make, have made, use, sell, offer for sale, have sold or export any Collaboration Product in its respective territory (collectively, “Other Third Party Royalties”). All such amounts that are due with respect to a particular country shall be borne by the Party in whose territory such country falls hereunder. All other amounts shall be allocated based on the ratio of affected sales in each Party’s territory, as mutually agreed by the Parties.

(d) Each Party shall be entitled to a credit against royalties due to the other Party under this Agreement on any Covered Product from CURAGEN pursuant to Section 9.6, or on any Collaboration Product from TOPOTARGET pursuant to Section 9.9. in each case in an amount equal to [******] of the aggregate Other Third Party Royalties paid by such Party in any country in its territory; provided, however, that the application of such credit shall not reduce the royalties payable by such Party under this Agreement for such Covered Product or Collaboration Product, as relevant, with respect to any given calendar quarter, after any adjustment permitted to CURAGEN pursuant to (b) above where CURAGEN has paid both Third Party HDAC Royalties and Other Third Party Royalties, by more than [******]. Notwithstanding the foregoing, if such Party, in lieu or in addition to any Other Third Party Royalties, is required to pay an award of damages or a settlement amount in the form of a reasonable royalty based on sales during any period of previous infringement of Other Third Party Patents (as opposed to the on-going payment of a running royalty), then such payment shall be allocated to the several calendar

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quarters during such period of infringement, and the limits set forth in the previous sentence shall apply to each portion of such payment allocated to a specific quarter and not to such payment as a whole, and an appropriate credit shall be permitted so long as no quarterly payment is reduced by more than [******].

9.8 Royalty Increases. Notwithstanding any provision herein to the contrary, TOPOTARGET shall have the right, at its sole option, to share in the expenses of developing any Collaboration Product in the Territory and increase the royalties due to TOPOTARGET on sales of the resulting Covered Product(s) in the Territory as follows:

(a) TOPOTARGET must notify CURAGEN of its desire to exercise its option to increase royalties pursuant to this Section 9.8 by delivering written notice thereof to CURAGEN prior to Phase III Initiation of the relevant Collaboration Product;

(b) TOPOTARGET shall pay CURAGEN [*******(****)] of the development costs incurred by CURAGEN, its Affiliates and Sublicensees with respect to such Collaboration Product, including any Research Program funding provided by CURAGEN under Section 5.3 and excluding any milestones paid under Section 9, prior to the date of such notice, within thirty (30) days of receipt of an invoice from CURAGEN for such costs;

(c) TOPOTARGET shall, from and after the date of such notice, be responsible for [*******(****)] of all future development costs for such Collaboration Product and shall make payments therefore within ten (10) days of receipt of monthly invoices for such expenses from CURAGEN; and

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(d) Subject to TOPOTARGET making all payments specified above in full, the royalties on the relevant Covered Product(s) shall thereafter be as follows instead of as stated in Section 9.6:

Increment of Annual Net Sales (“ANS”) of Subject Covered Product In the Territory Achieved During Calendar Year	Royalty Payable Thereon
[********************]	[*****]
[********************]	[*****]
[********************]	[*****]
[********************]	[*****]
[********************]	[*****]
[********************]	[*****]

9.9 Royalties to CURAGEN. In the event that TOPOTARGET exercises its rights as provided in Section 8.5 to use CURAGEN Clinical Data, and makes any material use of any CURAGEN Clinical Data in connection with any registration or marketing of any Collaboration Product in the TOPOTARGET Territory, whether by itself or in collaboration with any Third Party, TOPOTARGET shall notify CURAGEN of such use and shall become obligated to make royalty payments to CURAGEN as partial consideration for access to such clinical data and the investment made by CURAGEN therein. Unless otherwise provided in Section 15.6(c), royalty payments shall be owed to CURAGEN at the rates specified in Section 9.6 on the Net Sales in the TOPOTARGET Territory of each Collaboration Product with respect to which such CURAGEN Clinical Data was used or whose use or sale in the relevant country is covered by one or more Valid Claims of CURAGEN Licensed Technology or the CURAGEN Collaboration Technology. The Parties hereby agree that, unless a shorter period is otherwise provided in Section 15.2, such payments shall continue in each country for the duration of any Royalty Term for a corresponding Covered Product in such country, notwithstanding the fact that such royalties are being provided as consideration for access to rights which are not necessarily patent rights. All such payments shall be subject to the Net Sales definition as if each such Collaboration Product was a Covered Product therein, and shall be subject to the Third Party Royalty provisions of Section 9.7(c) and (d) and the reporting and payment provisions as provided in Section 10, with the rights and obligations of the Parties under such definition and such Sections

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reversed. Notwithstanding the foregoing, royalty payments due to CURAGEN under this Section 9.9 during any royalty period shall be applied as a credit against any milestones and royalties owed by CURAGEN to TOPOTARGET on any or all Collaboration Products during the relevant royalty period; provided, however, that if any credit cannot be fully utilized in any royalty period, it shall be carried forward into future periods until exhausted, and such future credits shall accrue interest at the rate of [********(****)] compounded annually. Other than as provided in Article 15, TOPOTARGET shall not be obligated to submit actual payment of any royalty calculated to be due hereunder to CURAGEN.

10. PAYMENTS AND REPORTS.

10.1 Payment. Except as otherwise provided in this Agreement, all royalty and other payments due hereunder shall be paid quarterly within 45 days after the end of each calendar quarter. Each such payment shall be accompanied by a statement, Covered Product-by-Covered Product and country-by-country, of the amount of Net Sales during such quarter and the amount of royalties due on such Net Sales.

10.2 Mode of Payment. CURAGEN shall make all payments required under this Agreement as directed by TOPOTARGET from time to time, in U.S. Dollars (except as provided in Section 10.6). All royalties due hereunder shall first be determined in the currency of the country in which the Covered Products in question were sold and then converted into equivalent U.S. funds. The exchange rate for such conversion shall be that rate quoted in The Wall Street Journal on the last business day of the applicable reporting period.

10.3 Records Retention. CURAGEN, its Affiliates and its Sublicensees shall keep complete and accurate records pertaining to the sale of Covered Products in the Territory and covering all transactions from which Net Sales are derived for a period of three calendar years after the year in which such sales occurred, and in sufficient detail to permit TOPOTARGET to confirm the accuracy of royalty payments due hereunder.

10.4 Audit Request. At the request and expense (except as provided below) of TOPOTARGET, CURAGEN, its Affiliates and its Sublicensees shall permit an independent,

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certified public accountant appointed by TOPOTARGET and reasonably acceptable to CURAGEN, at reasonable times and upon reasonable notice, to examine those records and all other material documents relating to or relevant to Net Sales in the possession or control of CURAGEN, its Affiliates or its Sublicensees, for a period of three calendar years after the year in which such royalties have accrued. The results of any such examination shall be made available to both Parties. If, as a result of any inspection of the books and records of CURAGEN, its Affiliates or its Sublicensees, it is shown that CURAGEN’s royalty payments under this Agreement were less than the amount which should have been paid, then CURAGEN shall make all payments required to eliminate any discrepancy revealed by said inspection within 45 days after TOPOTARGET’s demand therefor. Furthermore, if the aggregate royalty payments CURAGEN made were less than [********] of the amount which should have been paid made during the period in question, CURAGEN shall also reimburse TOPOTARGET for the reasonable out-of-pocket cost of such inspection.

10.5 Taxes. In the event that CURAGEN is required to withhold any tax to the tax or revenue authorities in any country in the Territory in connection with any payment to TOPOTARGET due to the laws of such country, such amount shall be deducted from the royalty or other payment to be made by CURAGEN, and CURAGEN shall notify TOPOTARGET and promptly furnish TOPOTARGET with copies of any tax certificate or other documentation evidencing such withholding. Each Party agrees to cooperate with the other Party in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect.

10.6 Blocked Currency. If by law, regulations or fiscal policy of a particular country in the Territory, remittance of royalties in United States Dollars is restricted or forbidden, written notice thereof shall promptly be given to TOPOTARGET, and payment of the royalty shall be made by the deposit thereof in local currency to the credit of TOPOTARGET in a recognized banking institution reasonably designated by TOPOTARGET by written notice to CURAGEN. When in any country in the Territory the law or regulations prohibit both the transmittal and the deposit of royalties on sales in such country, royalty payments shall be suspended for as long as such prohibition is in effect and as soon as such prohibition ceases to be in effect, all royalties that CURAGEN would have been under an obligation to transmit or deposit but for the prohibition shall forthwith be deposited or transmitted, to the extent allowable.

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11. MANUFACTURING.

11.1 Manufacturing Responsibility.

(a) Until the completion of any transfer of responsibility to CURAGEN as provided in (b) below, TOPOTARGET shall use reasonable commercial efforts, to the extent it is reasonably capable of doing so, to supply CURAGEN, itself or through TOPOTARGET’s use of Third Party manufacturers, with CURAGEN’s requirements for Collaboration Products for use under this Agreement. The cost to CURAGEN of Collaboration Products supplied for use in the Development Program for studies conducted at CURAGEN’s expense, including without limitation studies conducted under the CRADA so long as CURAGEN has rights to use all resulting data in the Territory, shall be [********] of the invoiced price TOPOTARGET pays therefor or [********] of TOPOTARGET’s fully burdened cost of goods sold (which cost shall not include process development costs). Any supply for commercial purposes shall be at a price to be agreed for each Collaboration Product, assuring a reasonable profit to TOPOTARGET. TOPOTARGET shall manufacture Collaboration Products, or shall cause TOPOTARGET’s Third Party manufacturers to manufacture same, in accordance with current Good Manufacturing Practices under 21 C.F.R. 210 and 211 and all applicable laws, rules and regulations. TOPOTARGET shall provide CURAGEN with copies of, or permission to reference, as appropriate, any Drug Master File or similar filing (“DMF”) made by TOPOTARGET with respect to any Collaboration Product, and shall not withdraw or modify any such DMF without prior written notice to CURAGEN. TOPOTARGET shall promptly notify CURAGEN of any event which could materially affect TOPOTARGET’s ability to supply Collaboration Product to CURAGEN hereunder, and shall provide to CURAGEN copies of any correspondence with any regulatory authority that relates to its manufacturing activities with respect to Collaboration Products.

(b) Upon request of CURAGEN delivered at any time after the conclusion of the Research Term, TOPOTARGET shall give reasonable consideration to and agrees to discuss

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with CURAGEN in good faith the possibility of transferring responsibility for manufacturing Collaboration Products for use by CURAGEN from TOPOTARGET to CURAGEN. Any such proposal must take into consideration TOPOTARGET’s own needs for a reliable and economical supply of Collaboration Products.

11.2 Negotiation, Execution of Supply Agreement. Promptly upon request by CURAGEN, the Parties shall negotiate, diligently and in good faith, and execute a supply agreement (the “Supply Agreement”) pursuant to which TOPOTARGET shall sell to CURAGEN, and CURAGEN shall purchase from TOPOTARGET, CURAGEN’s commercial requirements of Collaboration Products as provided in Section 11.1(a) above.

11.3 Cost of Manufacturing and Related Activities. Except as expressly provided to the contrary in this Section 11, each Party shall be solely responsible for all of the costs and expenses it has incurred before, or incurs after, the Effective Date, in connection with the manufacture of any Collaboration Product.

11.4 Manufacturing Liaisons. Each Party shall have the right to appoint one employee or consultant to act as a liaison between TOPOTARGET’s and CURAGEN’s relevant manufacturing teams. Each Party shall inform the other Party’s liaison regarding the status of such Party’s manufacturing-related efforts (including scale-up, process development and actual manufacturing) under this Agreement and/or the Supply Agreement, and the two liaisons shall coordinate such efforts with the Parties’ performance of their other respective obligations under this Agreement and/or the Supply Agreement.

12. CONFIDENTIALITY.

12.1 Confidentiality; Exceptions. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, during the term of this Agreement and for five years thereafter each Party, its Affiliates and its Sublicensees, if any (collectively, a “receiving Party”), shall use their best efforts to keep completely confidential, shall not publish or otherwise disclose and shall not use for any purpose other than the performance of this Agreement both the financial terms of this Agreement and any information

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furnished to it by the other Party, its Affiliates or its Sublicensees, if any (collectively, a “disclosing Party”), or developed under or in connection with the Research Program or any product development efforts pursuant to this Agreement (and shall ensure that its and its Affiliates’ and its Sublicensees’ respective directors, officers, employees or agents do likewise), except to the extent that it can be established by the receiving Party by competent proof that such information: (i) is, or hereafter becomes, generally available to the public other than by reason of any default by the receiving Party with respect to its confidentiality obligations hereunder; or, (ii) with respect to information disclosed by one Party to the other Party (a) was already known to the receiving Party at the time of disclosure by the disclosing Party; (b) was lawfully disclosed to the receiving Party by a Third Party who was not in default of any confidentiality obligation to the disclosing Party; or (c) is independently developed by or for the receiving Party without reference to or reliance upon the information furnished by the disclosing Party (all such information to which none of the foregoing exceptions applies, “Confidential Information”).

12.2 Exclusions to Confidentiality. The restrictions contained in Section 12.1 shall not apply to any Confidential Information in the hands of a receiving Party to the extent that it (i) is submitted by the receiving Party to governmental authorities to facilitate the issuance of marketing approvals for a Collaboration Product in accordance with the terms of this Agreement, provided that reasonable measures shall be taken to assure confidential treatment of such information, if practicable; (ii) is provided by a Party to any Third Party under appropriate terms and conditions, including confidentiality provisions equivalent to those in this Agreement, for consulting, manufacturing development, manufacturing, external testing, marketing trials and sublicensing or potential sublicensing in accordance with the terms hereof; or (iii) is otherwise required to be disclosed in compliance with applicable laws or regulations (including, without limitation, to comply with any governmental or stock exchange disclosure requirements) or an order by a court or other regulatory body having competent jurisdiction; provided, however, that if a receiving Party is required to make any such disclosure of the disclosing Party’s Confidential Information such receiving Party shall, except where impracticable for necessary disclosures (for example to physicians conducting studies or to health authorities), give reasonable advance notice to the other Party of such disclosure requirement and, except to the extent inappropriate in the case of patent applications or otherwise, will use its best efforts to secure confidential treatment of such Confidential Information required to be disclosed.

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12.3 Injunctive Relief. The Parties acknowledge that monetary damages alone would not adequately compensate the disclosing Party in the event of a breach by the receiving Party of this Section 12, and that, in addition to all other remedies available to the disclosing Party under this Agreement, at law or in equity, it shall be entitled to injunctive relief for the enforcement of its rights under this Section 12, without the posting of a bond or other security, and to an accounting of profits made during the period of any breach of the receiving Party’s obligations under this Section 12.

13. INTELLECTUAL PROPERTY.

13.1 Patent Enforcement.

(a) Each Party shall notify the other promptly after such Party becomes aware of any alleged infringement in the Field of any Patent licensed to either Party under this Agreement in any country. CURAGEN shall have the first right, but not the duty, to institute patent infringement actions against Third Parties with respect to any such alleged infringement in the Field and in the Territory. CURAGEN shall take all such actions under this Section 13.1(a) (other than with respect to a Patent included solely in the CURAGEN Collaboration Technology) in reasonable consultation with TOPOTARGET and shall keep TOPOTARGET apprised as to the status of any such infringement action CURAGEN institutes. TOPOTARGET shall execute all reasonable, necessary and proper documents and take such actions, at CURAGEN’s request and expense, as shall be appropriate to allow CURAGEN to institute and prosecute infringement actions under this Section 13.1(a).

(b) The costs and expenses of bringing and maintaining any infringement action under Section 13.1(a) shall be borne solely by CURAGEN.

(c) Any award or compensation (including the fair market value of non-monetary compensation) paid by Third Parties as a result of any infringement action brought by CURAGEN under Section 13.1(a) (whether by way of settlement or otherwise) shall be allocated

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first to reimbursement of CURAGEN for all expenses incurred by it in connection with such action. Any remaining award or compensation shall be allocated to the Parties in the following proportions: [*************************************************].

(d) In the event CURAGEN elects not to, or fails to, exercise its rights under Section 13.1(a) with respect to any alleged infringement of a Patent licensed to CURAGEN under this Agreement (i.e., excluding any Patent included solely in the CURAGEN Collaboration Technology) within 120 days after receiving notice thereof, TOPOTARGET shall have the right, but not the duty, to institute patent infringement actions against Third Parties with respect to any such alleged infringement. TOPOTARGET shall take all such actions under this Section 13.1(d) in reasonable consultation with CURAGEN and shall keep CURAGEN apprised as to the status of any such infringement action TOPOTARGET institutes. CURAGEN shall execute all reasonable, necessary and proper documents and take such actions, at TOPOTARGET’s request and expense, as shall be appropriate to allow TOPOTARGET to institute and prosecute infringement actions under this Section 13.1(d). The costs and expenses of bringing and maintaining any infringement action under this Section 13.1(d) shall be borne solely by TOPOTARGET, and TOPOTARGET shall be entitled to retain any award or compensation (including the fair market value of non-monetary compensation) paid by Third Parties as a result of any such action.

13.2 Infringement Actions by Third Parties.

(a) Each Party shall notify the other Party promptly in writing of any claim of, or action for, infringement of any Patents owned or licensed by Third Parties which is threatened, made or brought against either Party by reason of either Party’s performance of its obligations under this Agreement or manufacture, use or sale of any Collaboration Products in the Territory in the Field.

(b) In the event that such an action for infringement is commenced solely against a Party or both Parties jointly and/or any of their respective Affiliates or Sublicensees, as the case may be, with respect to any Collaboration Product developed and commercialized by CURAGEN, its Affiliates and/or Sublicensees, CURAGEN shall defend such action at its own

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

expense, and TOPOTARGET hereby agrees to assist and cooperate with CURAGEN to the extent necessary in the defense of such suit, in accordance with Section 13.2(c). CURAGEN shall have the right to settle any such action or consent to an adverse judgment thereto, and TOPOTARGET’s consent shall not be required unless such settlement or consent: (i) imposes any material obligation on TOPOTARGET (including under Section 13.2(d)), or (ii) materially impairs TOPOTARGET’s rights in or to any TOPOTARGET Licensed Technology, TOPOTARGET Collaboration Technology, CURAGEN Collaboration Technology and/or Joint Collaboration Technology, in which event TOPOTARGET’s consent shall not be unreasonably withheld or delayed.

(c) The costs of defending any infringement action with respect to a Collaboration Product developed and commercialized by CURAGEN, its Affiliates and/or Sublicensees shall be borne solely by CURAGEN.

(d) Subject to Section 9.6(b), during the pendency of any such action, CURAGEN shall continue to pay all royalties due hereunder and CURAGEN shall be fully liable for the payment of any award for damages, or any amount due pursuant to any settlement entered into by CURAGEN, to the extent that any such action pertains to a Collaboration Product developed and commercialized by CURAGEN and/or its Affiliates or Sublicensees.

(e) Except to the extent that the provisions of Section 13.1 shall apply to any portion thereof, CURAGEN shall retain any award or compensation (including the fair market value of non-monetary compensation) received by CURAGEN as a result of any such action (i.e., as a result of a counterclaim).

(f) In the event that such an action for infringement is commenced solely against a Party or both Parties jointly and/or any of their respective Affiliates or sublicensees, as the case may be, with respect to any Collaboration Product developed and commercialized by TOPOTARGET, its Affiliates and/or sublicensees, TOPOTARGET shall defend such action at its own expense, and CURAGEN hereby agrees to assist and cooperate with TOPOTARGET to the extent necessary in the defense of such suit, in accordance with Section 13.2(g). TOPOTARGET shall have the right to settle any such action or consent to an adverse judgment

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thereto, and CURAGEN’s consent shall not be required unless such settlement or consent: (i) imposes any material obligation on CURAGEN (including under Section 13.2(h)), or (ii) materially impairs CURAGEN’s rights in or to any TOPOTARGET Licensed Technology, TOPOTARGET Collaboration Technology, CURAGEN Collaboration Technology and/or Joint Collaboration Technology, in which event CURAGEN’s consent shall not be unreasonably withheld or delayed.

(g) The costs of defending any infringement action with respect to a Collaboration Product developed and commercialized by TOPOTARGET, its Affiliates and/or sublicensees shall be borne solely by TOPOTARGET.

(h) During the pendency of any such action, TOPOTARGET shall continue to pay any royalties due hereunder. TOPOTARGET shall be fully liable for the payment of any award for damages, or any amount due pursuant to any settlement entered into by TOPOTARGET, to the extent that any such action pertains to a Collaboration Product developed and commercialized by TOPOTARGET and/or its Affiliates or sublicensees.

(i) Except to the extent that the provisions of Section 13.1 shall apply to any portion thereof, TOPOTARGET shall retain any award or compensation (including the fair market value of non-monetary compensation) received by TOPOTARGET as a result of any such action (i.e., as a result of a counterclaim).

14. INDEMNIFICATION.

14.1 By CURAGEN. CURAGEN shall indemnify and hold TOPOTARGET and its Affiliates and their respective directors, officers, employees and agents, harmless from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals and other reasonable litigation expenses) arising out of or resulting from:

(i) any and all product liability claims resulting from the development and/or commercialization of any Collaboration Product by CURAGEN, its Affiliates or its Sublicensees; and

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(ii) any warranty claims, Collaboration Product recalls or any tort claims of personal injury (including death) or property damage relating to or arising out of the manufacture, use, distribution or sale of any Collaboration Product by CURAGEN, its Affiliates or its Sublicensees due to any negligence, recklessness or intentional misconduct by, or strict liability of, CURAGEN, its Affiliates or its Sublicensees, and their respective directors, officers, employees and agents.

14.2 By TOPOTARGET. TOPOTARGET shall indemnify and hold CURAGEN, its Affiliates and their respective directors, officers, employees and agents, harmless from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals and other reasonable litigation expenses) arising out of or resulting from:

(i) any and all product liability claims resulting from the development and/or commercialization of any Collaboration Product by TOPOTARGET, its Affiliates or its licensees (other than CURAGEN); and

(ii) any warranty claims, Collaboration Product recalls or any tort claims of personal injury (including death) or property damage relating to or arising out of the manufacture, use, distribution or sale of any Collaboration Product by TOPOTARGET, its Affiliates or its licensees (other than CURAGEN) due to any negligence, recklessness or intentional misconduct by, or strict liability of, TOPOTARGET, its Affiliates or its licensees (other than CURAGEN), and their respective directors, officers, employees and agents.

14.3 Notice. In the event that any Person entitled thereto (an “indemnitee”) is seeking indemnification under Section 14.1 or 14.2, such indemnitee shall inform the indemnifying Party of a claim as soon as reasonably practicable after the indemnitee receives notice of the claim, shall permit the indemnifying Party to assume direction and control of the defense of the claim (including the sole right to settle it at the sole discretion of the indemnifying Party, provided that such settlement does not impose any material obligation on the indemnitee or the other Party)

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and shall cooperate as requested (at the expense of the indemnifying Party) in the defense of the claim (including, without limitation, granting the indemnifying Party limited access to pertinent records and making persons under such indemnitee’s control available for interview and testimony).

14.4 Complete Indemnification. As the Parties intend complete indemnification, all costs and expenses incurred by any indemnitee to enforce this Section 14 shall be reimbursed by the indemnifying Party.

15. TERM; TERMINATION.

15.1 Term. This Agreement shall commence as of the Effective Date and, unless sooner terminated as provided hereunder, shall expire upon the expiration of all Royalty Terms in all countries in the Territory with respect to all Collaboration Products.

15.2 Effect of Expiration. Following the expiration of the applicable Royalty Term with respect to a Collaboration Product in a country in the Territory, CURAGEN shall have the royalty-free, perpetual right to continue to make, have made, use, sell, offer for sale, have sold and export such Collaboration Product in such country and following the expiration of the last applicable Royalty Term with respect to a Collaboration Product in the Territory, TOPOTARGET shall have the royalty-free, perpetual right to continue to make, have made, use, sell, offer for sale, have sold and export such Collaboration Product throughout the TOPOTARGET Territory. Following the expiration of the term of this Agreement in its entirety pursuant to Section 15.1, CURAGEN shall have the royalty-free, perpetual right to continue to make, have made, use, sell, offer for sale, have sold and export all Collaboration Products in all countries in the Territory, and TOPOTARGET shall have the royalty-free, perpetual right to continue to make, have made, use, sell, offer for sale, have sold and export all Collaboration Products in all countries in the TOPOTARGET Territory.

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15.3 Termination For Cause. Each Party shall have the right to terminate this Agreement, upon notice to the other Party, in the event that:

(a) Such other Party materially defaults with respect to any of its material obligations under this Agreement and does not cure such default within [*****] days after the receipt of a notice in writing from the non-breaching Party specifying the nature of, and requiring the remedy of, such default (or, if such default cannot be cured within such [*****]-day period, if the breaching Party does not commence cure within such [*****] day period and thereafter diligently continue actions to cure and actually cure same within a period of [*************] days following such notice); provided, however, that such right to terminate shall be stayed with respect to alleged payment breaches in the event that during such [*****]-day period, the Party alleged to have been in default with respect to any payment due hereunder shall have paid all undisputed amounts and shall have initiated dispute resolution in accordance with Section 17.15 with respect to any disputed payment default, which dispute resolution the Parties shall use their best efforts to have conducted and completed within [*****] months of initiation, and which stay shall last until [*********] days following resolution of any such dispute and determination of what, if any, payments are in default.; provided, further, that if such payment dispute is not resolved within [*********] months as provided above, in order for the stay to continue, [*****] of any amount then is dispute must be prepaid to the non-breaching Party on or before such [*****] month date, which prepayment shall be credited against any amount found to be due or repaid within [*****] days following resolution of such dispute to the extent all or any portion of it is determined not to be due upon. resolution of such dispute.

Notwithstanding the foregoing, if any such non-payment default is limited to the breaching Party’s obligations with respect to a particular Collaboration Product and/or a particular country, then any termination of this Agreement under this clause (a) due to such default shall be limited to the breaching Party’s rights under this Agreement with respect to such Collaboration Product and/or country unless termination in all countries is otherwise expressly provided below.

Any termination pursuant to this clause (a) shall be without prejudice to any of the non-breaching Party’s other rights under this Agreement, and in addition to any other remedies available to it by law or in equity;

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(b) The other Party shall have: (i) voluntarily commenced any proceeding or filed any petition seeking relief under the bankruptcy, insolvency or other similar laws of any jurisdiction, (ii) applied for, or consented to, the appointment of a receiver, trustee, custodian, sequestrator, conciliator, administrator or similar official for it or for all or substantially all of its property, (iii) filed an answer admitting the material allegations of a petition filed against or in respect of it in any such proceeding, (iv) made a general assignment for the benefit of creditors of all or substantially all of its assets, (v) admitted in writing its inability to pay all or substantially all of its debts as they become due, or (vi) taken corporate action for the purpose of effecting any of the foregoing;

(c) An involuntary proceeding shall have been commenced, or any involuntary petition shall have been filed, in a court of competent jurisdiction seeking: (i) relief in respect of the other Party, or of its property, under the bankruptcy, insolvency or similar laws of any jurisdiction, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conciliator, administrator or similar official for such other Party or for all or substantially all of its property, or (iii) the winding-up or liquidation of such other Party; and, in each case, such proceeding or petition shall have continued undismissed for 60 days, or an order or decree approving or ordering any of the foregoing shall have continued unstayed, unappealed and in effect for 30 days;

(d) In the event that TOPOTARGET becomes administered in bankruptcy, or goes into insolvent liquidation:

(i) This Agreement will remain in effect and binding upon the Parties if the trustee in bankruptcy decides to be subrogated to the rights and obligations of TOPOTARGET according to this Agreement.

(ii) Notwithstanding the foregoing, in the event that TOPOTARGET becomes administered in bankruptcy or goes into insolvent liquidation, TOPOTARGET shall, without any further notice and with immediate effect, transfer and assign to CURAGEN (A) all or, at CURAGEN’s option, part of TOPOTARGET’s right, title and interest in the Territory in and to any of the TOPOTARGET Licensed Technology, the TOPOTARGET Collaboration

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Technology and the Joint Collaboration Technology, and all data, reports, records, material and other intellectual property owned or controlled by TOPOTARGET, in each case solely to the extent that they have been licensed to CURAGEN under this Agreement, and in each case solely to the extent related to the Collaboration Products then included in the licenses granted to CURAGEN under this Agreement, (B) the full and complete right to file patent applications in the name of the CURAGEN, its designee, or in TOPOTARGET’s name at CURAGEN, or its designee’s election, on the aforesaid inventions, discoveries and applications in the Territory; (C) the entire right, title and interest in and to any Letters Patent which may issue thereon in the United States or in any country in the Territory, and any renewals, revivals, reissues, reexaminations and extensions thereof, and any patents of confirmation, registration and importation of the same; and (D) the entire right, title and interest in all Convention and Treaty Rights of all kinds thereon, including without limitation all rights of priority in any country of the world, in and to the above inventions, discoveries and applications. Such assignment or transfer shall require CURAGEN’s payment to TOPOTARGET or the estate thereof of an amount equivalent to [*********************************************************], which value shall be determined by an independent expert chosen by the Danish Institute of State Authorized Public Accountants (in Danish: Foreningen af Statsautoriserede Revisorer) following the methodology outlined on Exhibit I immediately following the effective date of any such transfer or assignment as provided below, and which amount shall be paid to TOPOGARGET or the estate thereof in equal monthly installments over [*******(****)] years following the date of determination of such fair market value by such independent expert. Such transfer or assignment shall be effective as from the date on which the trustee in bankruptcy decides not to be subrogated to the rights and obligations of TOPOTARGET according to this Agreement in accordance with the Danish Act on Bankruptcy, chapter 7, or when the trustee in bankruptcy or the liquidator decides to transfer or assign the TOPOTARGET Licensed Technology, the TOPOTARGET Collaboration Technology and/or TOPOTARGET’s interest in the Joint Collaboration Technology to a Third Party. If, however, the trustee in bankruptcy decides to be subrogated to the rights and obligations of TOPOTARGET according to this Agreement, such assignment and transfer shall not occur.

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(iii) In case the assignment or transfer as mentioned in the previous section cannot be carried out, regardless of the reason, and the trustee in bankruptcy has decided not to be subrogated to the rights and obligations of TOPOTARGET according to this Agreement, CURAGEN shall in any event have a right of first refusal to purchase the right, title and interest in the Territory in and to any of the TOPOTARGET Licensed Technology, the TOPOTARGET Collaboration Technology and the Joint Collaboration Technology, and all data, reports, records, materials and other intellectual property owned or controlled by TOPOTARGET that have been licensed to CURAGEN under this Agreement, upon receipt from the trustee in bankruptcy of an offer to purchase such right, title and interest from an independent third party, at the same price and conditions as such third party has offered. Further, in case neither the assignment nor the right of first refusal can be carried through, CURAGEN shall in such case have a preemption right to purchase the right, title and interest in the Territory in and to any of the TOPOTARGET Licensed Technology, the TOPOTARGET Collaboration Technology and the Joint Collaboration Technology, and all data, reports, records, materials and other intellectual property owned or controlled by TOPOTARGET that have been licensed to CURAGEN under this Agreement at a fixed fair market value determined by an independent expert chosen by the Danish Institute of State Authorized Public Accountants (in Danish: Foreningen af Statsautoriserede Revisorer) if the trustee in bankruptcy or the liquidator decides to transfer or assign the TOPOTARGET Licensed Technology, the TOPOTARGET Collaboration Technology and/or TOPOTARGET’s interest in the Joint Collaboration Technology or at the latest at the time of winding up of the bankruptcy estate. CURAGEN shall from the date on which the trustee in bankruptcy decides not to subrogate and until either the right of first refusal or the pre-emption right is exercised be entitled to make any and all necessary payments and take any necessary actions in order to maintain relevant patents. Further, CURAGEN shall from the date on which the trustee in bankruptcy decides not to subrogate and until either the right of first refusal or the pre-emption right is exercised be entitled to continue the use of the TOPOTARGET Licensed Technology, the TOPOTARGET Collaboration Technology and the Joint Collaboration Technology subject to continued payment by CURAGEN according to the terms of this Agreement during such period. Any and all costs, including license payments made after the effective date of the valuation, incurred by CURAGEN according to these rights of CURAGEN, shall be set off against the final purchase amount according to clause (iii) (right of first refusal or pre-emption right).

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(iv) In the event of any assignment or transfer to CURAGEN pursuant to clause (ii) CURAGEN shall have no further obligation to pay any milestones or royalties under this Agreement.

15.4 Termination Without Cause by CURAGEN. Notwithstanding any other provision of this Agreement, after the expiration or termination of the Research Term, CURAGEN shall have the right to terminate this Agreement, in its entirety or with respect to any particular Collaboration Product and/or country in the Territory, at any time upon three (3) months’ notice in writing to TOPOTARGET. Termination under this Paragraph shall automatically terminate any and all relevant CURAGEN license rights and relevant sublicenses granted hereunder by CURAGEN.

15.5 Effect of Termination.

(a) Upon any voluntary termination of any rights or licenses by CURAGEN pursuant to Section 15.4, any and all relevant licenses granted to CURAGEN hereunder, and all relevant sublicenses, shall terminate and TOPOTARGET shall thereafter have rights as provided in Section 15.6(a) hereof with respect to such terminated rights, and shall retain its rights as provided in Section 15.6(b).

(b) Upon any termination under this Agreement by TOPOTARGET pursuant to Section 15.3 other than as a result of any payment breach or any breach of Section 7.2(f), CURAGEN shall retain its rights to exploit the licenses granted pursuant to Section 7.2 for the First Product and for all Future Products for which CURAGEN has paid any Take Up Fee as provided in Section 9.4, and, subject to Section 7.2(e), for all corresponding Back-Up Products, in all cases subject to continued compliance with the relevant terms of this Agreement. TOPOTARGET shall retain its rights as provided in Section 15.6(b).

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(c) Upon any termination of this Agreement by TOPOTARGET pursuant to Section 15.3 as a result of a payment breach, CURAGEN shall no longer have rights to any Collaboration Products in any countries in the Territory and any and all licenses granted to CURAGEN hereunder, and all sublicenses, shall terminate. TOPOTARGET shall thereafter have rights as provided in Section 15.6(a) with respect to all Collaboration Products in all countries, and shall retain its rights as provided in Section 15.6(b).

(d) Upon any termination under this Agreement by TOPOTARGET pursuant to Section 15.3 as a result of a breach of Section 7.2(f) and not also as a result of a payment breach, CURAGEN shall no longer have rights in the Territory with respect to the relevant Collaboration Products for which breach of Section 7.2(f) was grounds for termination and any and all relevant licenses granted to CURAGEN, and all relevant sublicenses, shall terminate for the relevant Collaboration Product. However, CURAGEN shall retain its rights to exploit the licenses granted pursuant to Section 7.2 for all other Collaboration Products. TOPOTARGET shall thereafter have rights as provided in Section 15.6(a) for those Collaboration Products which were the subject of the breach of Section 7.2(f), and shall retain its rights as provided in Section 15.6(b).

(e) Upon termination under this Agreement by CURAGEN pursuant to 15.3, CURAGEN shall retain its rights to exploit the licenses granted pursuant to Section 7.2 for the First Product and for all Future Products identified prior to such termination and, subject to Section 7.2(e), for all corresponding Back-Up Products, subject to continued compliance with the relevant terms of this Agreement, including without limitation payment obligations, other than those requiring collaboration with TOPOTARGET. In addition, the rights granted to CURAGEN pursuant to Section 3.5 shall survive such termination and CURAGEN shall receive additional rights as provided in Section 15.6(c). Notwithstanding the foregoing, in the event that any such termination by CURAGEN is the result of a payment breach by TOPOTARGET, the Territory as defined herein shall become worldwide and CURAGEN’s continuing rights pursuant to Section 7.2 shall be exclusive in such expanded Territory and TOPOTARGET’s rights pursuant to Sections 7.4, 7.5 and 8.5 shall terminate with respect to all Collaboration Products.

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15.6 Access to Rights Following Termination.

(a) For all Collaboration Products for which CURAGEN’s rights do not continue following termination as provided in Sections 15.5(a), (b), (c), or (d) above, subject to (x) and (y) below, CURAGEN shall have no further rights pursuant to Section 7.2 for the relevant Collaboration Products following such termination and CURAGEN shall:

(i) transfer and assign to TOPOTARGET all of CURAGEN’s right, title and interest in and to any CURAGEN Collaboration Technology and all data, reports, records, materials and other intellectual property owned or controlled by CURAGEN that relates exclusively to such Collaboration Products;

(ii) grant TOPOTARGET a non-exclusive license, solely for the purpose of TOPOTARGET’s developing, making, having made, using, marketing and selling such Collaboration Products, under any CURAGEN Licensed Technology and CURAGEN Collaboration Technology that does not exclusively relate to such Collaboration Products;

(iii) transfer and assign to TOPOTARGET ownership of all INDs, NDAs and other regulatory filings made or filed with respect to any such Collaboration Product (or, if such transfer and assignment is not permitted under the laws of any applicable jurisdiction, CURAGEN shall take such other permitted actions with respect to such filings as may be reasonably requested by TOPOTARGET);

all upon commercially reasonable, arms length financial terms, which shall in no event exceed royalties in amounts as specified in Section 9.9, that the Parties shall negotiate in good faith and agree upon as soon as practicable after such termination of this Agreement. In the event the Parties, despite the mutual use of good faith efforts, are unable to agree upon such terms and conditions within six (6) months of the relevant termination date, the Parties shall appoint an independent valuation expert who shall determine such terms and conditions, which determination shall be binding upon the Parties. If the Parties are unable to agree upon the

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appointment of such an expert, then each Party shall nominate an expert (the cost of whom shall be borne by such Party), and both experts appointed by the Parties shall jointly appoint the expert who shall make such determination. Any expert appointed pursuant to this Section 15.6(a) shall have at least 15 years’ experience in the business of pharmaceutical development and commercialization. Except as provided above, the costs and expenses of any expert acting under this Section 15.6(a) shall be borne equally by the Parties. Notwithstanding any other provision hereof, in the event that the royalty set pursuant to this Section 15.6(a) is less than that specified in Section 9.9, such reduced royalty shall apply both inside and outside the TOPOTARGET Territory for the relevant Collaboration Product(s).

Notwithstanding the foregoing: (x) in the event of any termination of this Agreement in which CURAGEN loses rights for any Collaboration Product with respect to fewer than all of the countries in the Territory, any rights, licenses and other benefits to be transferred, granted and otherwise assigned to TOPOTARGET as provided above for such Collaboration Product shall be expressly limited to those pertaining to the countries in the Territory to which such termination applies; and (y) at any time prior to any transfer, granting and assignment of rights, licenses and benefits to TOPOTARGET pursuant to this Section 15.6(a), TOPOTARGET may elect, upon notice to CURAGEN, to waive the application of this Section 15.6(a) with respect to such rights, licenses and benefits. Following any such waiver neither Party shall have any obligation or liability to the other with respect to such rights, licenses and benefits.

(b) In the event of any termination of this Agreement by TOPOTARGET pursuant to Section 15.3 or by CURAGEN pursuant to Section 15.4, TOPOTARGET’s license rights pursuant to Sections 7.4 and 7.5 hereof, and its rights pursuant to Section 8.5 hereof, shall continue subject to continued compliance with the relevant terms of this Agreement; and provided that all royalties due to CURAGEN pursuant to Section 9.9 and/or Section 15.6(a) shall thereafter be payable to CURAGEN in accordance with Article 10 unless offsettable against milestones and royalties due with respect to any surviving rights of CURAGEN.

(c) In the event of termination of this Agreement by CURAGEN pursuant to Section 15.3, in addition to any relevant rights provided in Section 15.3(d), TOPOTARGET shall

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(i) promptly transfer to CURAGEN copies, whether in written or electronic form, of all data, reports, records and materials (including any TOPOTARGET Licensed Technology and/or TOPOTARGET Collaboration Technology necessary to allow CURAGEN to continue to conduct the Research Program and the Development Program all to the extent not previously disclosed to CURAGEN) in TOPOTARGET’s possession or control which relate to the Research Program and/or the Development Program; (ii) return to CURAGEN all relevant records and materials, whether in written or electronic form, in TOPOTARGET’s possession or control containing Confidential Information of CURAGEN, and (iii) furnish to CURAGEN all unused Substances provided to TOPOTARGET by CURAGEN in connection with the Research Program.

15.7 Right to Sell Stock on Hand. CURAGEN shall have the right for one year after any termination or expiration of this Agreement, to dispose of all Collaboration Product then in its inventory and to complete manufacture of and dispose of any work-in-progress then being manufactured, as though this Agreement had not terminated. CURAGEN shall pay royalties thereon, in accordance with the provisions of this Agreement, as though this Agreement had not terminated.

15.8 Accrued Rights, Surviving Obligations.

(a) Termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve either Party from obligations which are expressly indicated to survive termination or expiration of this Agreement.

(b) Termination, relinquishment or expiration of this Agreement shall not terminate each Party’s obligation to pay all royalties, milestone payments and other monetary obligations that may have accrued hereunder prior to such termination. All of the Parties’ rights and obligations under Sections 4.7, 5.3(e), 5.5, 5.6, 5.7, 6.1, 6.2, 6.3, 6.4(d), 8.3, 8.5 (except in the event of termination by CURAGEN for a payment breach by TOPOTARGET), 8.7, 8.8, 8.9, 9.9, 10, 12, 13 (solely with respect to actions pending at such time), 14, 15.2, 15.5, 15.6, 15.7, 15.8, 17.1 (if in effect at such time), 17.2 (if in effect at such time), 17.4, 17.6, 17.12, 17.15, 17.16 and 17.17 shall survive termination, relinquishment or expiration hereof.

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16. FORCE MAJEURE.

16.1 Events of Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to be in default under or in breach of any provision of this Agreement for failure or delay in fulfilling or performing any obligation under this Agreement when such failure or delay is due to force majeure, and without the fault or negligence of the Party so failing or delaying. For purposes of this Agreement, force majeure shall be defined as causes beyond the control of the Party, including, without limitation, acts of God; acts, regulations, or laws of any government; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers. In such event TOPOTARGET or CURAGEN, as the case may be, shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party giving such notice shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled and for 30 days thereafter. To the extent possible, each Party shall use reasonable efforts to minimize the duration of any force majeure.

17. MISCELLANEOUS.

17.1 Non-Solicitation. During the term of the Research Program and for a period of one year thereafter, neither Party shall solicit, induce, encourage or attempt to induce or encourage any employee of the other Party to terminate his or her employment with such other Party or to breach any other obligation to such other Party.

17.2 Relationship of Parties. Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employment or joint venture relationship between the Parties. Neither Party shall be entitled to, or shall, incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

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17.3 Guaranty. TOPOTARGET A/S hereby unconditionally guaranties the performance of all obligations of any TOPOTARGET Affiliate under this Agreement and the Supply Agreement, when executed. In the event of a breach by any TOPOTARGET Affiliate in the observance of the terms of this Agreement, CURAGEN shall be entitled to proceed against either such TOPOTARGET Affiliate or directly against TOPOTARGET A/S, as CURAGEN may determine in its sole discretion, to enforce this Agreement. CURAGEN CORPORATION hereby unconditionally guaranties the performance of all obligations of any CURAGEN Affiliate under this Agreement and the Supply Agreement, when executed. In the event of a breach by any CURAGEN Affiliate in the observance of the terms of this Agreement, TOPOTARGET shall be entitled to proceed against either such CURAGEN Affiliate or directly against CURAGEN CORPORATION, as TOPOTARGET may determine in its sole discretion, to enforce this Agreement.

17.4 Assignment.

(a) Each Party shall be entitled to assign this Agreement to any of its Affiliates upon 60 days’ prior written notice to the other Party; provided, however, that in the event of any such assignment, the assigning Party shall remain jointly and severally liable with respect to all of its obligations hereunder, and in the event of any default relating to any such obligations, the other Party shall be entitled to proceed against either such Affiliate or directly against the assigning Party, as such other Party may determine in its sole discretion, to enforce this Agreement.

(b) Except as provided in Section 17.4(a), neither Party shall be entitled to assign its rights hereunder without the express written consent of the other Party, except that each Party may assign this Agreement to any assignee of all or substantially all of such Party’s business (or that portion thereof to which this Agreement relates) or in the event of such Party’s merger, consolidation or similar transaction.

(c) No assignment contemplated by this Section 17.4 shall be valid or effective unless and until the assignee/transferee shall agree in writing to be bound by the provisions of this Agreement.

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17.5 Disclaimer of Warranties. EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE 2 AND SECTION 3.1, THE PARTIES EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE PRACTICE.

17.6 Further Actions. Each Party shall execute, acknowledge and deliver such further instruments, and take all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

17.7 Notice. Any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:

(i) In the case of CURAGEN, to:

555 Long Wharf Drive

New Haven, CT 06511

Attention: President

Facsimile No.: 203-401-3333

(ii) In the case of TOPOTARGET, to:

Attention:

Facsimile No.:

or to such other address for such Party as it shall have specified by like notice to the other Party, provided that notices of a change of address shall be effective only upon actual receipt thereof. If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express courier service, the date of delivery shall be deemed to be the next business day after such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be the fifth business day after such notice or request was deposited with the postal service in the country of mailing.

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17.8 Use of Name. Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name or trademark of the other Party (including, without limitation, any Trademark) for any purpose in connection with the performance of this Agreement.

17.9 Public Announcements.

(a) Except as required by law (including, without limitation, the applicable disclosure requirements of any relevant regulatory authority or stock exchange) and as permitted by Section 12.2, neither Party shall make any public announcement concerning this Agreement, any Covered Product or any other subject matter hereof without the prior written consent of the other Party, which shall not be unreasonably withheld or delayed. It shall not be unreasonable for a Party to withhold consent with respect to any public announcement containing any of such Party’s Confidential Information. In the event of any required or proposed public announcement, (i) the Parties shall consult with each other in good faith as to the timing thereof, and (ii) the Party making such announcement shall provide the other Party with a copy of the proposed text prior to such announcement sufficiently in advance of the scheduled release of such announcement to afford such other Party a reasonable opportunity to review and comment upon the proposed text.

(b) Following a Party’s consent to or approval of the public announcement of any information pursuant to this Section 17.9, both Parties shall be entitled to make subsequent public announcements of such information without renewed compliance with this Section 17.9, unless the scope and/or duration of such consent or approval is expressly limited.

(c) Notwithstanding the foregoing, on the Effective Date the Parties shall issue one or more press releases in the form attached hereto as Exhibit J, the timing of which shall be mutually agreed.

17.10 Waiver. A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings,

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obligations and agreements contained in this Agreement shall be cumulative, and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party.

17.11 Compliance with Law. Nothing in this Agreement shall be deemed to permit a Party to export, re-export or otherwise transfer any Collaboration Product sold under this Agreement without compliance with applicable laws.

17.12 Severability. When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

17.13 Amendment. No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

17.14 Governing Law; English Original; Jurisdiction.

(a) This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to its choice of law principles; provided, however, that any arbitration proceeding conducted pursuant to Section 17.15 shall be governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958. The English original of this Agreement shall prevail over any translation hereof.

(b) Without prejudice to the rights and obligations of the Parties under Section 17.15, each Party hereby consents to the in personam jurisdiction of any state or federal court sitting in the State of New York with respect to any matter arising in connection with this Agreement and further consents to the service of any process, notice of motion or other application to any such court or a judge thereof outside the State of New York by registered or certified mail or personal service, provided that reasonable time is allowed for appearance. Each Party hereby waives, to the greatest extent it may do so, any defense it may have on the grounds of inconvenient forum with respect to any action or proceeding maintained in any state or federal court in New York.

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17.15 Arbitration.

(a) Any dispute arising out of or relating to any provisions of this Agreement (a “Dispute”) shall first be referred to the professional mediator for resolution through good faith mediation (“Mediation”) involving the Chief Executive Officers of each respective Party. If the Dispute is not resolved by such individuals within thirty (30) days of written request of either Party for Mediation, then the Dispute shall be resolved as provided in (b) below.

(b) Any Dispute which is not resolved by Mediation as provided in (a) above shall be finally settled by arbitration to be held in New York, New York, under the auspices and then current commercial arbitration rules of the American Arbitration Association (the “AAA”). Such arbitration shall be conducted by three arbitrators. Within 30 days after the commencement of any arbitration, each Party shall appoint one arbitrator, and these two arbitrators shall jointly appoint the third arbitrator, who shall have significant experience in pharmaceutical drug development and commercialization; provided, however, that if the two arbitrators appointed by the Parties are unable to agree upon the third arbitrator within 30 days after their appointment, then the third arbitrator shall be appointed by the AAA. The Parties shall instruct such arbitrators to render a determination of any such dispute within four months after their appointment. All arbitration proceedings shall be conducted in English. Judgment upon any award rendered may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

(c) Neither Section 17.15(a) or (b) shall prohibit a Party from seeking injunctive relief from a court of competent jurisdiction in the event of a breach or prospective breach of Section 3.4 or Articles 6, 7 or 12 of this Agreement by the other Party which would cause irreparable harm to the first Party.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

17.16 No Consequential Damages. IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES OR SUBLICENSEES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES OR SUBLICENSEES FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH OR OTHER DAMAGES.

17.17 Entire Agreement. This Agreement (together with the Exhibits hereto and the Research Plans, as approved and modified from time to time by the Joint Steering Committee) sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the Effective Date in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby. Without limiting the generality of the foregoing, the terms and conditions of this Agreement shall supersede the terms and conditions of any confidentiality, non-disclosure or similar such agreement that the Parties may have executed prior to the Effective Date.

17.18 Parties in Interest. All the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns.

17.19 Section 365(n). All licenses granted under this Agreement are deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined in Section 101 of such Code. The Parties agree that either Party may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, regardless of whether the other Party files for bankruptcy in the United States or another jurisdiction. The Parties further agree that, in the event the non-insolvent Party elects to retain its rights as a licensee under such

83

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Code, such Party shall be entitled to complete access to any technology licensed to it hereunder and all embodiments of such technology. Such embodiments of the technology shall be delivered to such Party not later than;

(a) the commencement of bankruptcy proceedings against the insolvent Party, upon written request, unless such insolvent Party elects to perform its obligations under the Agreement, or

(b) if not delivered under (a) above, upon the rejection of this Agreement by or on behalf of the insolvent Party, upon written request.

17.20 Descriptive Headings. The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

17.21 Counterparts. This Agreement may be executed simultaneously in two counterparts, any one of which need not contain the signature of more than one Party, but both such counterparts taken together shall constitute one and the same agreement.

17.22 Construction. The Parties hereto acknowledge and agree that: (i) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to all Parties hereto and not in favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement.

17.23 Hart-Scott-Rodino Filing. The Parties shall cooperate fully and use all commercially reasonable efforts to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations issued thereunder (the “HSR Act”), to determine if a Notification Report is required thereunder, and to file any required Notification Report form with the Federal Trade Commission and the Department of Justice in accordance with such rules and regulations, with respect to the transactions contemplated in this Agreement.

84

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

* * *

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized officer as of the day and year first above written.

TOPOTARGET A/S

By:

Name:

Title:

CURAGEN CORPORATION

By:

Name:

Title:

85

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT A

EXISTING TOPOTARGET LICENSED TECHNOLOGY

[***********]

[*************************************]

[*************************************]

[*************************************]

[*************************************]

[***********]:

[***************************************************]

[*************************************]

[************]	[*********]	[************]	[**********]	[************]
[********]	[********]	[********]	[********]	[********]
[********]	[********]	[********]	[********]	[********]
[********]	[********]	[********]	[********]	[********]

*[*************************************]

[******************************************************************************************

*******************************************************************************************

********************]

1

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

[**********]:

[************************************************************]

[*********************************]

[********]	[********]	[********]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]

[************************************************************]

[*********************************]

[********]	[********]	[********]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]

[************************************************************]

[*********************************]

[********]	[********]	[********]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]
[************]	[************]	[************]

[************************************************************]

[*********************************]

[********]	[********]	[********]
[************]	[************]	[************]
[************]	[************]	[************]

2

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

[************************************************************]

[*********************************]

[********]	[********]	[********]
[************]	[************]	[************]
[************]	[************]	[************]

[************************************************************]

[*********************************]

[********]	[********]	[********]
[************]	[************]	[************]
[************]	[************]	[************]

3

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT B

JOINT STEERING COMMITTEE

Initial TOPOTARGET Representatives:

[***********************]

[*****************]

[*****************]

Initial CURAGEN Representatives:

[***********************]

[*****************]

[*****************]

Chairperson:

[***********************]

4

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT C

INITIAL RESEARCH PLAN

5

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT D

HDAC INHIBITOR CRITERIA

[*******************************************************]

[*******************************************************]

6

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT E

FORM OF MATERIAL TRANSFER AGREEMENT

7

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT F

DEVELOPMENT PROGRAM PRINCIPLES

[******************************************************************************************

*******************************************************************************************

*************************************************].

[***********************]

[******************************************************************************************

*******************************************************************************************

*****].

[*****************************************************************************************

******************************************************************************************].

JSC Governance of Development Program

[******************************************************************************************

**************************************************************].

[******************************************************************************************

*******************************************************************************************

*******************************************************************************************

*******************************************************************************************

************************].

[**********************************]

[******************************************************************************************

*******************************************************************************************

*******************************************************************************************

********************].

[******************************************************************************************

*******************************************************************************************

*******************************************************************************************

*****************].

8

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

[******************************************************************************************

******************************************************************************************

**************************************************].

[******************************************************************************************

*******************************************************************************************

*************************************************].

[******************************************************************************************

*******************************************************************************************

*******************************************************************************************

*******************************************************************************************

*******************************************************************************************

*******************************************************************************************

*******************************************************************************************

*****************************************************].

[******************************************************************************************

*******************************************************************************************

****************].

[*****************************************************************************************

******************************************************************************************

******************************************************************************************

************************************************************].

[*****************************************************************************************

******************************************************************************************

***************************************************].

[**********************************]

[*****************************************************************************************

******************************************************************************************

***************************************************].

[*************************************************************************]:

[*****************************************************************************************

******************************************************************************************

***************************************************].

9

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

[*************************************************************************].

[*****************************************************************************************

******************************************************************************************

******************************************************************************************

***********************************************************************************].

10

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT G

TOPOTARGET CLINICAL STUDIES

[************************************************************************].

[************************************************************************].

[************************************************************************].

11

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT H

CONVERTIBLE DEBENTURE

AND

CONVERTIBLE LOAN AGREEMENT

12

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

Convertible Loan Agreement

(hereinafter the “Agreement”)

This Agreement has on the date first written below been entered into between

TopoTarget A/S

CVR.no. 25 69 57 71

Symbion Science Park

Fruebjergvej 3

2100 Copenhagen Ø

Denmark

(hereinafter referred to as the “Company”)

and

CuraGen Cooperation

555 Long Warf Drive

New Haven, Connecticut 06511

USA

(hereinafter referred to as the “Lender”)

RECITALS:

Whereas the Lender and the Company as of even date herewith have entered into a License and Collaboration Agreement attached hereto as Exhibit 1.

Whereas the Lender in partial consideration of the rights and licenses granted to the Lender under the License Agreement within 30 days after the execution thereof has agreed to pay the Company a non-refundable, non-creditable one time license fee in the amount of USD 5,000,000.

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

Whereas the Lender in addition hereto wishes to make available to the Company a convertible loan facility for an aggregate amount of UDS 5 million to be converted into DKK on the date of draw down.

NOW THEREFORE, the Parties agree, in consideration of the mutual covenants and obligations contained herein, as follows:

1. Loan Commitment

1.1 Lender shall subject to the terms and conditions set forth below be obligated to advance to the Company funds to be used for general corporate purposes at the Company’s discretion in the form of a loan or loans in an aggregate amount not to exceed USD 5 million (hereinafter referred to as the “Loan Facility”).

1.2 It has been agreed that the Company may draw down the Loan Facility in one (1) instalment of USD 5 million.

1.3 The Company shall in the event that it wishes to draw down the Loan Facility notify the Lender not later than 2 working days after the last signature on this Agreement has been obtained and simultaneously forward a Convertible Debenture in a form as set out in Exhibit 2 to the Lender for signing. The Company shall, additionally, be obligated to call and convene an extraordinary general meeting with maximum 14 days’ notice with the purpose of obtaining the approval from the Shareholders to issue the Convertible Debenture as required according to the Danish Companies Act. The Lender shall within 10 days from receipt of the notification forward the draw down/loan amount to its client account with the Law Firm Osborne Clarke, Lautrupsgade 7, DK-2100 Copenhagen Ø. The draw down/loan amount shall be held on deposit by the law firm until the shareholders of the Company has approved the issuance of the Convertible Debenture. The draw down shall be converted into DKK on the date of receipt of the amount by the Law Firm Osborne Clarke at the exchange rate applicable at the date of receipt. It is for the sake of good order noted that the terms and conditions which shall apply to the draw down shall be on the terms and conditions as set out in the Convertible Debenture attached hereto as Exhibit 2.

1.4 The Board of Directors of the Company shall without delay after the general meeting has approved the issuance of the Convertible Debenture sign it and forward

2

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

a signed copy to the Lender, provided that the Law Firm Osborne Clark irrevocably undertakes to forward the draw down/Loan amount to the Company’s client account with the Law Firm Mazanti-Andersen Korsø Jensen & Partnere, Store Kongensgade 69, DK-1264 Copenhagen K, upon receipt of the Convertible Debenture. The Board of Directors of the Company shall be obligated to procure and ensure that the issuance of the Convertible Loan is duly registered with the Danish Commerce and Companies agency. The law firm Mazanti-Andersen, Korsø Jensen & Partnere shall not be entitled to release the draw down/loan amount to the Company until the issuance of the Convertible Loan has been duly registered.

2. Conversion of Advanced Loans

2.1 The Lender hereby irrevocably covenants, irrespective of the wording in the Convertible Debenture, to be obligated to convert the Loan advanced according to this agreement into shares in the Company in connection with an IPO of the Company. The Lender shall thus be obligated to convert into/subscribe ordinary shares of the same class, which is offered for subscription in connection with the IPO. The conversion/subscription price for the shares shall be equivalent to the subscription price applied for the offering of shares in connection with the IPO. The Lender shall to the extent that this is deemed necessary by the Company’s legal advisors additionally be obligated to sign a separate declaration whereby the Lender irrevocably declares that it wants to convert into shares in connection with the IPO.

2.2 The conversion of shares shall be carried out in accordance with the provisions of the Offering Circular published in connection with the IPO as determined by the Company’s investment bankers and advisors used in connection with the IPO.

2.3 The Company covenants to ensure that a sufficient number of shares are reserved for conversion/subscription by the Lender in connection with the IPO. In the event that there is an over subscription of shares offered in connection with the IPO there shall thus not be any cut-back on the shares to be converted into/subscribed by the Lender. The procedure used to secure the subscription shall be determined finally by the Company’s investment bankers and advisors used in connection with the IPO.

3

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

2.4 In the absence of an IPO prior to 1 January 2009 the Lender shall irrespective of the wording of the Convertible Debenture, be entitled and obligated, to convert the Loan into shares in the Company at a conversion price corresponding to the price per share applied by one or more independent third parties (hereinafter referred to as “Investor”) in connection with the first subscription of shares or a similar investment in the Company of a value, which exceeds in total DKK 30,000,000 taking place after 1 January 2005. The shares into which the loan shall be converted shall be of the same class and have the same rights attached as the shares issued to the Investor.

3. Term

3.1 This Agreement shall unless the Parties agree otherwise automatically terminate on 10 May 2009 (hereinafter the “Repayment Date”) and all advanced funds, including interest, which have not been converted according to the terms and conditions of the Convertible Debentures issued pursuant to this Agreement, shall fall due for payment. However, in the event of an IPO of the Company’s shares prior to the Repayment Date this agreement shall automatically terminate on the date of completion of the IPO except for the Company’s obligation to issue warrants to the Lender.

4. Conversion by Current Investors

4.1 The Lender acknowledges to have been informed that the Company is in the process of carrying out a conversion of convertible debentures issued by the Company to two of its majority shareholders. The Lender accepts that such conversion is carried out by the Company at a conversion price of not less than DKK 202 per nominal DKK 1 C-share and that the Lender shall not be entitled to any adjustment of the terms of the Convertible Debenture issued pursuant to this Agreement, irrespective of the wording in the Convertible Debenture attached as Exhibit 2. The Lender, furthermore, acknowledges and accepts that the Company issues shares and/or cash payment to AntiAntra ApS as payment for the rights according to the License Agreement entered into between the Company and AntiAntra ApS, provided that the subscription price applied in connection with such share issuance is not less than DKK 202 per DKK 1 A-share and provided that the value of the rights according to the said License Agreement does not exceed DKK 15 million.

4

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

5. Precedence

5.1 In the event of discrepancies between the wording or the terms and conditions of this Agreement and the wording or the terms and conditions of the Convertible Debenture issued pursuant hereto this Agreement shall prevail to the extent permissible according to Danish law.

6. Choice of Law, Venue and Signing

6.1 This Agreement and disputes, if any, which arise between the Parties regarding this Agreement shall if amicable settlement can not be reached be settled by Arbitration in Copenhagen according to the ICC rules of Arbitration and shall be settled according to Danish law. The language of the proceedings shall be in English.

6.2 This Agreement shall be signed by the Company and the Lender and shall be co-signed by shareholders of the Company representing minimum 9/10 of the Company’s share capital and the voting rights.

Date:	Date:
On behalf of TopoTarget A/S	On behalf of CuraGen Cooperation

The undersigned shareholders representing together minimum 90 per cent of the voting rights and share capital of the Company hereby irrevocably declare to be obligated to vote for and approve the issuance of the Convertible Debenture (Exhibit 2)

5

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

to the Lender and the adoption thereof in the Company’s Articles of Association provided that the issuance is in accordance with this Agreement. We, furthermore, accept that the issuance is made without pre-emptive subscription rights for existing shareholders.

Date:

6

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

Convertible Debenture

(non-negotiable)

TopoTarget A/S

Fruebjergvej 3

2100 Kobenhavn Ø

(hereinafter the “Company”)

has today issued the following Convertible Debenture to:

CuraGen Corporation

555 Long Warf Drive

New Haven, Connecticut 06511

USA

(hereinafter the “Lender”)

on the following terms and conditions:

1. Loan Amount

1.1 The Company acknowledges and accepts to have received from the Lender a loan in the amount of DKK 30,600,000 (hereinafter the “Loan”). The Loan is taken out as a convertible loan in accordance with the provisions set out in this debenture. The Loan has been paid to the Company simultaneously with the signing of this Convertible Debenture at par value.

2. Interest

2.1 Interest on the Loan shall be calculated at the rate of 6 per cent per annum from the date of payment to the date of conversion or the date of repayment. The interest is calculated on the basis of a year of 360 days.

2.2 Interest shall accrue on each quarter year on the 1^st of each quarter year, first time on 1 July 2004 (hereinafter “the Quarter Days”). In the event of repayment or conversion of the Loan on days other than the Quarter Days the interest shall be calculated proportionally.

2.3 The Company is entitled on each Quarter Day to pay interest accrued on the Loan to the Lender in U.S. dollars, based on a principal amount of US$5,000,000 plus accrued and unpaid interest from prior periods. If the Company does not pay the

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

accrued interest on the respective Quarter Day, the amount of such interest shall be compounded and appropriated as capital to and form part of, the outstanding balance of the Loan with effect from such Quarter Day and shall thereafter bear interest accordingly at the rate set forth in clause 2.1.

3. Repayment of the Loan

3.1 The Loan, plus interest, falls due for payment on 10 May 2009 (hereinafter the “Repayment Date”). The Loan shall, however, fall due for immediate repayment upon the occurrence of one of the events set out in clause 3.2 below prior to the Repayment Date. The Company may not repay the Lean, in whole or in part, at any time before the Repayment Date, unless the Lender in writing has consented to such early repayment, cf., however, clause 4.3 below. The loan shall be repaid in U.S. dollars, with the principal amount equal to US$5,000,000 plus accrued and unpaid interest from prior periods.

3.2 Notwithstanding anything else contained in this debenture the whole of the Loan, plus interest, shall fall due for payment without notice in the event that:

• The Company is unable to pay its debts/becomes insolvent within the meaning of the Danish Insolvency Act; suspends its payments; certifies that it is unable to pay its debts as and when they shall fall due or enters into or negotiates any compromise arrangements with its creditors;

• An order be made or a resolution be passed for the winding up of the Company other than for solvent liquidation, cf. however clause 6.3 below;

• A distress or execution be levied or issued against any of the property of the Company and not be satisfied within 21 days;

• The Company ceases to carry on its business or substantially the whole of its business;

• The Company commits or permits any material breach of any of the stipulations and provisions contained in this debenture, the Research Program established between the parties or the License Agreement entered into by the parties and fails to remedy such breach within 21 days of written notice from the Lender requiring such breach to be remedied.

4. Lender’s Conversion Right in the event of an IPO.

4.1 The Lender shall in the event of an IPO of the Company’s shares, as defined in clause 4.2, be entitled, but not obligated, to convert the Loan, including interest, to ordinary shares (i.e. shares of the same share class, which are issued in connection with the IPO) in the Company at a conversion price corresponding to the subscription price for the Company’s shares applied in connection with the IPO. The conversion

2

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

shall be carried out according to the terms set out in clause 4.1.1 without pre-emptive subscription rights for the Company’s shareholders.

4.1.1 If the Lender wishes to convert the Loan, fully or partly, the Lender shall, be entitled to subscribe shares in the Company in connection with the IPO on the same terms as other subscribers and as set out in the IPO prospectus. If the Lender chooses not to convert the Loan or chooses only to convert the Loan partly this will entail that the Lender’s conversion right to the amount of the Loan, which has not been converted in accordance with clause 4.1, shall automatically lapse.

4.2 An IPO shall mean an initial public offering of the Company’s shares for listing on an authorised stock exchange, e.g. the Copenhagen Stock Exchange, in accordance with the legislation and internal regulations applicable in connection with a listing on the relevant Stock Exchange.

4.3 The Company shall be entitled with 14 days’ notice to repay the Loan, including interest in the event that the Lender does not convert the Loan in accordance with the above in connection with an IPO. If the Loan has only been converted partly in connection with an IPO the Company shall be entitled with 14 days’ notice to repay the part of the Loan, including interest, which has not been converted.

5. Lender’s Conversion Right in the Absence of an IPO

5.1 In the event that an IPO is not completed prior to 1 January 2009 the Lender shall be entitled but not obligated in the period from 1 January 2009 to the Repayment Date to convert the Loan, fully or partly, to shares in the Company, cf., however clause 5.2 below. The conversion shall be carried out on the terms set out in clause 5.1.1-5.1.2 without pre-emptive subscription rights for the Company’s shareholders.

5.1.1  Conversion of the Loan to shares in the Company pursuant to clause 5.1 shall be carried out at a conversion price corresponding to the price per share applied by one or more independent third parties (hereinafter referred to as “Investor”) in connection with the first subscription of shares or a similar investment in the Company of a value, which exceeds in total DKK 30,000,000 taking place after January 1, 2005. The shares which shall be issued in connection with the conversion shall have the same rights attached and shall belong to the same share class as the shares which have been issued to the Investor in connection with such investment which has a value in excess of in total DKK 30,000,000. The Lender shall not be entitled to convert unless a subscription, as mentioned above, is made of more than DKK 30,000,000 in one or more installments.

3

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

5.1.2  The Lender shall if it wishes to convert the Loan, fully or partly forward a written notification to this effect to the Company’s Board of Directors. The Company’s Board of Directors is obligated without undue delay after receipt of such written notification, to ensure that the conversion is carried out and is duly registered.

5.2 In the event that the Lender converts the Loan, fully or partly, to shares in the Company in accordance with this clause 5, the Lender shall be obligated to adhere to and accept a Shareholder’s Agreement substantially similar to the Shareholders’ Agreement entered into between the Company’s shareholders, to be agreed by the Lender and the shareholders.

5.3 In the event that an IPO of the Company’s shares is carried out after 1 January 2009 and the Lender has not prior to the completion of the IP0 exercised its conversion right in accordance with clause 5.1, the Lender shall be entitled to convert the Loan to shares in accordance with the provisions in clause 4 above. If the Lender does not exercise its conversion right, fully or partly, in accordance with clause 4., the Lender’s conversion right shall lapse in its entirety for the part of the Loan, including interest, which has not been converted. Clause 4.3 regarding the Company’s right to repayment shall also apply in this situation.

5.4 In the event that the Loan has not been converted according to this clause 5 or clause 4 above at the latest on the Date of Repayment the Lender’s conversion right shall automatically lapse, without further notice and the Company shall in this case be obligated to repay the Loan, including interest not later than 3 working days after the Repayment Date.

6. Changes to the Company’s Share Capital etc.

6.1 Increases or decreases of the Company’s share capital at market value shall not result in any changes to the agreed conversion price or the number of shares, which can be subscribed through conversion according to this debenture.

6.2 In the event of changes to the Company’s share capital which are not at market value and which result in an increase or decrease to the value of the Lender’s conversion right, an adjustment to the conversion price and the number of shares which may be subscribed according to this debenture, shall be carried out in order to ensure that the value of the Lender’s conversion right in so far as possible remains unaffected by the changes to the share capital. Irrespective of this clause 6.2., there shall be no adjustments as a result of the Company’s issuance of employee shares, share options and/or warrants in connection with the implementation of employee incentive schemes (including to members of the board, advisors and consultants) and there shall not be any adjustments as a result of the exercise of

4

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

such instruments irrespective of whether such instruments have been issued prior to or subsequent to the date of this debenture.

6.3 In the event that the Company is dissolved in connection with a solvent liquidation, a merger or a demerger the Loan shall fall due for payment not later than 14 days after the merger or demerger plan has been signed by the Board of Directors of the participating companies or in the event of a solvent liquidation not later than 14 days after the general meeting has resolved to liquidate the Company. However, the Lender shall be entitled in lieu of requiring cash repayment of the Loan, to convert the Loan to C-shares (provided that C-shares have been issued at the time of conversion and if C-shares have not been issued the conversion shall be made into ordinary shares) at a conversion price corresponding to the price agreed for the other C-shares in connection with the liquidation/merger/demerger and participate in the liquidation/merger/demerger on the same terms and conditions as the Company’s other shareholders, however, the conversion price shall in the event of liquidation be determined as the price per share applied by a third party investor in an investment in the Company for an amount of DKK 30,000,000 or more and if no such investment has been made at a price per nominal DKK 1 share of DKK 201.7589 to be adjusted after issuance of bonus shares. If the Lender wishes to convert the Loan in accordance with this clause, the Lender shall forward written notification to this effect to the Company’s Board of Directors not later than 14 days from receipt of notification from the Company that the Company is being liquidated, merged or demerged. The Company shall be entitled not to carry out the conversion and let the Lender participate in the liquidation, merger or demerger as if the conversion defacto had been carried out.

7. Amendments as a Consequence of an IPO of the Company’s Shares

7.1 The Lender declares to be obligated to accept reasonable lock-up periods regarding a sale of the Company’s shares, which have been subscribed by the Lender in accordance with this debenture or which may be subscribed by the Lender in accordance with clause 4 above. A lock-up period shall be considered reasonable if it is recommended by the investment bank(s) which the Company uses in connection with the IPO and which apply to shareholders in the Company who owns 2 per cent or more of the Company’s share capital and to officers in the Company.

8. Miscellaneous

8.1 In the event of discrepancies between the Danish and the English text the Danish text shall prevail.

8.2 Disagreements and disputes, if any, which arise between the parties regarding this debenture shall, if amicable settlement cannot be reached, be settled by Arbitration

5

Mazanti-Andersen,

Korsø Jensen & Partnere

LAW FIRM

in Copenhagen according to the ICC-rules of arbitration and shall be settled according to Danish Law. The language of the proceedings shall be English.

8.3 This debenture shall be directly enforceable by the Bailiff’s Court according to the Danish Administration of Justice Act section 478, without the need of prior court ruling.

On behalf of TopoTarget A/S On behalf of CuraGen Corporation

6

EXHIBIT I

FAIR MARKET VALUE METHODOLOGY

[**************************]	[******************]
[**************************]	[******************]
[**************************]	[******************]

13

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EXHIBIT J

FORM OF PRESS RELEASE

14

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential Investment under Rule 24b-2 under the Securities Exchange Act of 1934.

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS UNDER SECTION 302

I, Jonathan M. Rothberg, certify that:

1. I have reviewed this quarterly report of CuraGen Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

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

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2004

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

Jonathan M. Rothberg, Ph.D.

Chief Executive Officer, President and

Chairman of the Board

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS UNDER SECTION 302

I, David M. Wurzer, certify that:

1. I have reviewed this quarterly report of CuraGen Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

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

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2004

/s/ David M. Wurzer

David M. Wurzer

Executive Vice-President, Chief Financial Officer and Treasurer (principal financial and accounting officer of the registrant)

EX-32

EXHIBIT 32

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 Quarterly Report on Form 10-Q for the period ended June 30, 2004 (the “Form 10-Q”) 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-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 6, 2004	By:	/s/ Jonathan M. Rothberg, Ph.D.
		Jonathan M. Rothberg, Ph.D.
		Chief Executive Officer, President and Chairman of the Board (principal executive officer)
Dated: August 6, 2004	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.