Document:

AMENDMENT #1 TO LETTER AGREEMENT DATED NOVEMBER 14,2000 W/ ROBERT L. BRATZLER

 Exhibit 10.7 
  
 

 
  
 COLEY PHARMACEUTICAL GROUP, INC.

  
 Amendment No. 1 to the Bratzler Letter Agreement

  
 This Amendment No. 1 to Letter Agreement, effective as of
November 14, 2000 (“Amendment No. 1”), is entered into by and between Coley Pharmaceutical Group, Inc., a Delaware corporation (the “Company”), with its principal offices located at 20 William Street, Suite 115, Wellesley,
Massachusetts 02481, and Robert L. Bratzler, Ph.D. (the “Executive”), residing at 13 Blueberry Lane, Concord, MA 01742. 
  
 WHEREAS, the Executive is employed by the Company as its President and Chief Executive Officer pursuant to a Letter Agreement, dated May 6, 1998, by and
between the Company and the Executive (the “Letter Agreement”); 
  
 WHEREAS, the Company and the Executive desire to agree to certain provisions applicable in the event of termination of the Executive’s employment under the circumstances provided herein: and 
  
 WHEREAS, Section 10(c) of the Letter Agreement requires any amendment or
modification of the Letter Agreement to be in the form of a writing executed by the Executive and the Company: 
  
 NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

  
 1. Amendments to Section 3(d) of the Letter Agreement.

  
 1.1. Section 3(d) of the Letter Agreement is
hereby amended by adding the following words to the beginning of the first sentence of Section 3(d): 
  
 “Except with respect to the termination of your employment within twelve (12) months after a Change in Control (as defined below) of the
Company.” 
  
 1.2 Section 3(d) of the Letter
Agreement is hereby further amended by adding the following sentence to the end of Section 3(d): 
  
 “Change in Control” shall have the meaning set forth in Section 2.l(a)(i) of Amendment No. 1 to the Letter Agreement.” 
  
 2. Change of Control Payments; Benefits. 
  
 2.1. Termination Events Resulting in Change of Control
Payments. 
  
 (a) Following a Change of
Control (as hereinafter defined) of the Company, in the event of the termination of the Executive’s employment by the Company without cause within twelve (12) months after such Change of Control, the Company shall make Change of Control
payments to the Executive in the amount set forth in, and payable in accordance with, Section 2.2(a). 
  

 (b) In the event of the termination of the Executive’s employment by the Executive
for Good Reason (as defined below) within twelve (12) months after a Change of Control (as defined below), the Company shall make Change of Control payments to the Executive in the amount set forth in and payable in accordance with, Section 2.2(a).

  
 (i) For purposes of this Amendment No. 1, a
“Change of Control” shall mean the occurrence of any one of the following: 
  
 A. The acquisition by any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934), other
than the Company or its affiliates, from any party of an amount of the capital stock of the Company, so that such person holds or controls 50% or more of the Company’s capital stock; or 
  
 B. A merger or similar combination between the Company and
another entity after which 50% or more of the voting stock of the surviving corporation is held by persons other than the Company or its affiliates; or 
  
 C. A merger or similar combination (other than with the Company) in which the Company is not the surviving corporation; or 
  
 D. An acquisition, merger or similar combination or a
divestiture of a substantial portion of the Company’s business after which the Executive’s role is not substantially the same as such role prior to the transaction; or 
  
 E. The sale of all or substantially all of the Company’s assets or business. 
  
 (ii) For purposes of this Amendment No. 1, “Good
Reason” shall mean the following involuntary circumstances: 
  
 A. The assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position (including titles and reporting requirements), authority, duties or responsibilities as
contemplated by the job description of the Executive’s position, or any other action by the Company or its successor, which results in a diminution in such position, authority, duties or responsibilities, other than an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; 
  
 B. A reduction in the Executive’s annual base salary (or an adverse change in the form or timing of the payment thereof), other than
an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; or 
  
 C. The Company’s or its successor’s requiring the Executive to be based at any office or location
more than 50 miles away from the office or location where Executive was performing services immediately prior to the Change in Control or to relocate his personal residence or the Company’s requiring the Executive to travel on company business
to a substantially greater extent than required immediately prior to the Change in Control. 
  

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 For purposes of this Section 2.1 (b)(ii), any good faith determination of “Good Reason” made by
the Executive shall be conclusive. 
  
 (c) No
Change of Control payments shall be payable pursuant to this Amendment No. 1 in the event that the Executive’s employment is terminated (i) by the Executive, except in accordance with Section 2.1(b) above, (ii) by the Company in the event of
the Executive’s death or inability, by reason of physical or mental impairment, to perform substantially all of the Executive’s duties for any 120 consecutive days, or (iii) by the Company in the event of the Executive’s breach of any
material duty or obligation to the Company, or intentional or grossly negligent conduct that is materially injurious to the Company (as reasonably determined by the Company’s Board of Directors) or willful failure to follow the reasonable
directions of the Company’s executive officers or Board of Directors. 
  
 2.2. Amount and Payment of Change of Control Payments. 
  
 (a) The aggregate Change of Control payment referred to in Sections 2.1(a) and 2.l(b) above shall be equal to the sum of (1) one-twelfth
(1/12th) of the Executive’s annual base salary at the time of such termination multiplied by twelve (12) months, plus (2) an amount equal to one-twelfth (1/12th) of the Executive’s maximum annual incentive bonus multiplied by twelve (12) months, if any, that would next be payable to him or her and would otherwise
be due to Executive if such termination had not occurred, such sum to be payable in one lump sum not later than thirty (30) days after the termination date. 
  
 (b) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 2.2 by seeking other employment
or otherwise. The amount of any payment or benefit provided for in this Section 2.2 shall not be reduced as the result of employment by the Executive with another employer after termination of employment with the Company, or otherwise. 

 
 (c) Commencing on the date of termination of employment
(the “Termination Date”), all of the Executive’s health, dental, retirement, insurance, medical, vacation, sick leave, and other employee benefits shall cease. The Executive shall be entitled to continue health and dental coverage
under COBRA. The Company shall pay the full COBRA premium for the Executive for the twelve (12) months following the Termination Date. Thereafter, the Executive shall be entitled to continue such coverage at his or her own expense by paying a
premium amount equal to up to the maximum amount that Company is permitted to charge by law (which currently is 102% of the full premium cost) during the remainder of whatever period is provided by applicable law. 
  
 2.3. Option Vesting. If the Executive’s
employment with the Company is terminated pursuant to Sections 2.1 (a) or 2.1(b), 100% of any options to purchase shares of Common Stock of the Company then held by Executive, which options are then subject to vesting, shall, notwithstanding any
contrary provision in the option agreement or stock option plan pursuant to which such options had been granted, be accelerated and become fully vested and exercisable on the date immediately preceding the effective date of such termination. All
other terms of the Executive’s options shall remain in full force and effect. 
  

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 2.4. Lapsing Purchase Right. If the Executive’s employment with the Company
is terminated pursuant to Sections 2.l(a) or 2.1(b) and, on the date immediately preceding the effective date of such termination, the Executive then holds (i) any shares of Common Stock of the Company received upon exercise of stock options granted
to the Executive, which shares are subject to a “Lapsing Purchase Right.” and/or (ii) any outstanding options to purchase shares of Common Stock of the Company, which, upon exercise thereof, would result in the issuance to the Executive of
shares of Common Stock subject to a “Lapsing Purchase Right” then, notwithstanding any contrary provision in the relevant option agreement or stock option plan pursuant to which such options had been granted, such Lapsing Purchase Right
shall expire in its entirety, with respect to shares of Common Stock then outstanding and with respect to shares of Common Stock issuable upon exercise of outstanding stock options, on the date immediately preceding the Termination Date and all of
such shares of Common Stock shall become transferable free of restriction (upon issuance, in the case of the exercise of outstanding stock options), subject to the applicable provisions of federal and state securities laws. All other terms of the
Executive’s options shall remain in full force and effect. 
  
 2.5. Restricted Stock. If the Executive’s employment with the Company is terminated pursuant to Sections 2.1 (a) or 2.1 (b) and, on the date immediately preceding the effective date of such termination,
the Executive then holds shares of Common Stock of the Company that are subject to restrictions on transfer (“Restricted Stock”), which shares were issued to the Executive in a transaction other than pursuant to the exercise of a stock
option, then, notwithstanding any contrary provision in the relevant stock purchase agreement or other instrument pursuant to which the Executive acquired such shares of Restricted Stock, such restrictions shall expire in their entirety on the date
immediately preceding the Termination Date and all of such shares of Common Stock shall become transferable free of restriction, subject to the applicable provisions of federal and state securities laws. All other terms of any existing stock
purchase or similar document shall remain in full force and effect. 
  
 3. Noncompetition. 
  
 3.1.
Noncompetition Provision. Each of the Company and the Executive confirms that Section 5 of the Letter Agreement reflects all of the noncompetition provisions to which the Company and the Executive have agreed. 
  
 3.2. Noncompetition Payments; Enforcement of
Noncompetition Covenant. 
  
 (a) Subject to
the provisions of Section 3.2(b), following the termination of the Executive’s employment with the Company within twelve months after a Change of Control, the Company may enforce its rights with respect to the Executive’s noncompetition
covenant set forth in Section 5 of the Letter Agreement only if: 
  
 (i) The employment of the Executive by the Company is terminated and the Executive is entitled to Change of Control payments under the terms of Section 2.1 hereof or any other agreement or understanding between the
parties and the Company makes a Change of Control payment to the Executive hereunder and continues to provide benefits to the Executive for a total of twelve (12) months after the Termination Date as set forth herein; or 
  

 4 

 (ii) The employment of the Executive by the Company is terminated and the Executive is
not entitled to Change of Control payments under the terms of Section 2.1 hereof or any other agreement or understanding between the parties and the Company makes a Change of Control payment to the Executive hereunder; or 
  
 (iii) During the twelve-month period commencing with the
first week after termination, the Company makes any payments under another agreement or understanding between the parties which, together with any voluntary payments by the Company, equal or exceed the amount payable under Section 3.2(a)(ii).

  
 (b) The Company’s obligations under
Section 3.2 are subject to the following: 
  
 (i)
In the event that Executive breaches the covenant set forth in Section 5 of the Letter Agreement, the Company may enforce such covenant without continuing benefits under Section 3.2(a) after the date of such breach. 
  
 (ii) In the event that the Company makes payments and
provides benefits under Section 3.2 hereof, the Company may only terminate such benefits prior to the end of such twelve-month period if the Company has provided the Executive with two month’s prior written notice of such termination;
provided, however, that this clause (ii) does not entitle the Company to terminate payments required by Section 2.1 hereof or under any other agreement prior to payment in full. In the event of any such early termination of benefits,
the Company’s right to enforce the Executive’s noncompetition covenant set forth in Section 5 of the Letter Agreement will terminate upon the date of the last payment hereunder. The provisions of this Section 3.1(b)(ii) shall supersede the
18-month duration of the noncompetition covenant contained in Section 5 of the Letter Agreement only in the event of a Change of Control of the Company. 
  
 4. Miscellaneous. 
  
 4.1. Assignment. This Amendment No. 1 may not be assigned, in whole or in part, by either party without the prior written consent
of the other party, except that the Company shall assign its rights and obligations under this Amendment No. 1 to any corporation, firm or other business entity with or into which the Company may merge or consolidate, or to which the Company may
sell or transfer all or substantially all of its assets, or of which 50% or more of the equity investment and of the voting control is owned, directly or indirectly, by, or is under common ownership with, the Company. In the event of any such
assignment by the Company, the Company shall not be discharged from its liability hereunder. 
  
 4.2. Notices. All notices, requests, demands and other communications to be given pursuant to this Amendment No. 1 shall be in
writing and shall be deemed to have been duly given if delivered by hand or mailed by registered or certified mail, return receipt requested, postage prepaid, to the addresses set forth at the beginning of this Amendment No. 1 or such other address
as a party shall have designated by notice in writing to the other party, provided that notice of any change in address must actually have been received to be effective hereunder. 
  
 4.3. Integration. This Amendment No. 1 reflects the entire agreement of the parties with respect to
the subject matter hereof and supersedes any prior agreement or 

  

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understanding relating to the subject matter hereof. This Agreement may not be superseded, amended, supplemented or otherwise modified except by a writing
signed by the Executive and the Company. 
  
 4.4.
Binding Effect. Subject to Section 4.1. this Amendment No. 1 shall inure to the benefit of and be binding upon the parties hereto and their successors, assigns, heirs and personal representatives. 
  
 4.5. Counterparts. This Amendment No. 1 may be
executed in two counterparts, each of which shall be deemed an original and shall together constitute one and the same instrument. 
  
 4.6. Severability. If any provision hereof shall, for any reason, be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof, and this Amendment No. 1 shall be construed as if such invalid or unenforceable provision had not been included herein. If any provision hereof shall for any reason be held
by a court to be excessively broad as to duration, geographical scope, activity or subject matter, it shall be construed by limiting and reducing it to make it enforceable to the extent compatible with applicable law as then in effect. 

 
 4.7. Governing Law. This Amendment No. 1 shall be
governed by the laws of the Commonwealth of Massachusetts, without regard to its conflict-of-law provisions. 
  
 4.8. Termination. Except as expressly set forth herein, nothing in this Amendment No. 1 is intended to or shall modify the nature
of the Executive’s employment with the Company pursuant to the Letter Agreement. The Executive may terminate his or her employment at any time with or without notice and with or without cause and the Company may do likewise, subject only to the
express provisions of Letter Agreement and this Amendment No. 1. 
  
 4.9. Survival of Obligations; Enforcement. The Executive’s duties hereunder shall survive termination of the Executive’s employment by the Company. The Executive acknowledges that a remedy at law for
any breach or threatened breach by the Executive of the provisions of this Amendment No. 1 may be inadequate and the Executive therefore agrees that the Company shall be entitled to injunctive relief in case of any such breach or threatened breach.

  
 [Remainder of page left blank intentionally.] 
  

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 IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Amendment No. 1 as of the date
first written above. 
  

			
	 EXECUTIVE

	
	 /s/ Robert L. Bratzler

	 Robert L. Bratzler, Ph.D.

	
	 COLEY PHARMACEUTICAL GROUP, INC.

		
	 By:
	 	 /s/ Joachim Schorr

	 	 	 Name:

	 	 	 Title:

  

 7PARTICIPATION AGREEMENT, DATED FEBRUARY 25,1998

 Exhibit 10.8 
  
 tbg Technologie-Beteiligungs- 
 Gesellschaft mBH der 
 Deutschen Ausgleichsbank 
  
 Version 09.07 
  
 PARTICIPATION AGREEMENT 
  
 Agreement on Establishing a Dormant Partnership between 
  
 CpG ImmunoPharmaceuticals GmbH, Max-Volmer-Str. 4, 40724 Hilden 
 - hereinafter referred to as Technology Company (TC) - 
  
 and 
  
 Technologie-Beteiligungs-Gesellschaft mbH 
  
 der Deutschen Ausgleichsbank, Ludwig-Erhard-Platz 1-3, 53179 Bonn 
 - Dormant Partner hereinafter referred to as tbg -

  
 amounting to 
  
 DM 3,000,000 
  
 to finance the project described in § 1 Section 2. 
  
 Preamble 
  

	1.	Within the framework of the “Equity Capital for Small Technology Companies” programme, implemented by the Federal German Ministry for Education, Science, Research and
Technology (BMBF) and Deutsche Ausgleichsbank, tbg is supporting commercial technology companies provided that are not older than 10 years and fulfil the EU definition of small and medium-sized companies (KMU) in the new Federal German
Laender (former East Germany) and Berlin (East), and small companies in the remaining area of Federal Germany, i.e.: 

  

	 	•	 	they do not employ more than 250 (50) people 

  
 and either 
  

	 	•	 	do not exceed an annual turnover of DM 40 million 

 (DM 10 million) 
  
 or 
  

	 	•	 	do not reach a balance sheet total of more than DM 20 million 

 (DM 4 million) 
  
 and 
  

	 	•	 	is owned by not more than 25% by one or more companies which do not fulfil this definition (Exception: public holding companies, risk capital companies and - in so far as no control
is exercised - institutional investors). 

  
 All
three preconditions must be simultaneously fulfilled, i.e. a company is only considered to be a small or medium-sized company (KMU) if it has the required independence, fulfils the stipulations regarding the number of employees and does not exceed
at least one of the limit values for annual turnover or balance sheet total. 
  
 tgb enters into participations to finance innovation ventures in the sense of the participation fundamentals of tbg which form an integral part of this Agreement and which recognizes the Technology
Company, namely: 
  

	 	•	 	For applied research and development up to a logical second before commencing commercial production in conformity with the EU definition with the following demarcations:

  
 Applied research covers research and
experimental work for the purpose of gaining new knowledge in order to reach specific practical aims such as the creation of new products, production processes or services. Normally it can be stated that this ends with the creation of the first
prototype. Development involves work on the basis of applied research with the aim of introducing new or significantly improved products, production processes or services right up to, but not including, industrial application and commercial use.
This stage normally includes pilot and demonstration ventures as well as the development work that continues to be necessary, finally culminating in a pool of information which will enable the commencement of production. 
  

	 	•	 	For investments for a market launch. 

  
 § 1 
 Purpose of the company

  

	1)	The Technology Company, registered in the Commercial Register of the Langenfeld Local Court under No. 3093, conducts a business in conformity with the Company Agreement in the
version of 31.07.1997 for the following purpose: 

  
 Research, development, manufacture and sale of immune-stimulating substances, used individually or in combination for the prophylaxis or therapy of diseases. 
  

	2)	Within the framework of the company’s purpose, the Technology Company is concerned with the determination of optimal CpG-motives for the stimulation of humane PBMC cells for
subsequent application in the therapy of allergies (asthma) and as an immune stimulator in combination with antigens. 

  
 § 2 
 Contribution

  

	1.	tbg will fund a contribution amounting to DM 3,000,000 exclusively for the purpose of promoting the innovation venture described in §1 Section 2 and on the basis of the
details of the Technology Company stated in the participation application of 25.09.1997, provided that the Technology Company can furnish proof of the following participation arrangements: 

  

	 	•	 	Participation agreement amounting to DM 3,000,000 with CpG ImmunoPharmaceuticals Inc., 890 Park Place, Iowa City, IA 52246 (USA) (hereinafter referred to - also with several
participation donors - as BG), and BG has concluded a co-operation agreement with tgb. 

  
 In attending to the Technology Company, BG will be advised by TVM Techno Venture Management III GmbH, Denninger Strasse 15, 81679 Munich - hereinafter
referred to as TVM - as guardian company. 
  

	 	•	 	Agreements for the transfer of rights to existing patents to the Technology Company. 

  

	 	•	 	Patronage declaration of CpG ImmunoPharmaceuticals Inc., 890 Park Place, Iowa City, IA 52246 (USA) for the Technology Company. 

  

	 	•	 	Direct debit authorization for tbg to debit due fixed remunerations. 

  

	2.	The contribution from tbg is to be used to co-finance the venture-related planning specified in Annex I which forms an integral part of this Participation Agreement.

  

	3.	The Technology Company can request the contribution after the commencement of the company (see § 4 Section 1) if immediate use in conformity with the intended purpose is
assured, i.e. proportionate use of the funds with other financial funds listed in Annex I and overall financing of the innovation venture. 

  
 The request must include a confirmation of the request preconditions by BG and TVM. 
  

	4.	This Agreement is terminated if the contribution has not been called, at least in part, at the latest by 31.05.1998. 

  

	5.	For the first partial call tbg will retain a processing fee amounting to 1% of the total contribution specified in this Agreement. 

  

	6.	The contribution from tbg must be kept by the Technology Company in a separate deposit account. tbg cannot withdraw from this account. 

  
 § 3 
 Proof of use 
  
 The
Technology Company must confirm on the printed form, enclosed with the assurance note, the correct use of the contribution funds in conformity with the intended purpose within 3 months of expiry of the venture period specified in Annex I of this
Agreement, subject to an extension of this period by tbg. The proof of use must be submitted to tbg by way of BG. Correct use in keeping with the intended purpose must be supported by documentary evidence when requested by BG and
tbg. 
  
 If the costs of the venture decline compared with the details
given in Annex I, or if further public funds have been acquired, then tbg will be entitled to reduce their contribution in the same ratio as the reduction of the investment volume. The reduced amount must be immediately transferred back to
tbg. 
  
 § 4 
 Commencement and duration of the company 
  

	1.	The dormant company commences as soon as this Agreement has been signed by both parties. 

  

	2.	The duration of the dormant company is limited until 31.12.2007. 

  

	3.	The contribution from tbg and the share of the profits that have not been paid out, are payable to tbg with the termination of the company status.

  

	4.	In so far as the funds granted by BG are paid back before 31.12.2007, then the contribution from tbg becomes due for repayment at the same time and to the full extent.
tbg is entitled to demand a final reimbursement, in conformity with the corresponding application of § 9 Section 2, for that part of their contribution that is due for early repayment. 

  

 § 5 
 Management 
  

	1.	tbg will not participate in the management of the Technology Company, other than alternative provisions are stipulated hereafter. 

  

	2.	The Technology Company requires the approval of tbg for: 

  

	 	a)	Every change of the company agreement, particularly a change of the purpose of the company, the inclusion of new shareholders or the stipulation of new participations;

  

	 	b)	Appointing and dismissal of managers of the Technology Company or changes to the manager’s agreement; 

  

	 	c)	The conclusion, amendment and termination of agreements on granting or purchasing licences, trade marks or know-how (except for the day-to-day software business), patents, utility
models and designs in so far as they affect the innovation venture promoted as a result of tbg participation; 

  

	 	d)	The conclusion, amendment and termination of significant distribution agreements; 

  

	 	e)	Partial or complete company relocation, leasing, sale or closure; 

  

	 	f)	Conclusion and termination of control as well as profit and loss transfer agreements; 

  

	 	g)	Abandonment or substantial amendment of the innovation venture described in § 1 Section 2; 

  

	 	h)	Assumption of commitments, in so far as these are not contained in project financing by tbg, for investments which exceed DM 100,000, or for leasing or renting agreements
that exceed DM 10,000 per month. 

  

	3.	Approvals in keeping with § 5 Section 2 must be directly obtained from tbg. 

  
 If, within a period of 14 days after receipt of the notification concerning the measures that require approval in keeping
with § 5 Section 2, tbg have not refused approval in writing, then approval is considered to have been granted. 
  

 § 6 
 Information and control rights 
  

	1.	The Technology Company must continue to report to tbg at half yearly intervals, as of 31.03 and 30.09. of the given year, concerning the economic situation of the Technology
Company and the status of the innovation venture described in § 1 Section 2, until tbg waivers these reports because BG is simultaneously checking the Technology Company also on behalf of tbg. Moreover, tbg will
additionally receive from the Technology Company a summarized status report in conformity with the enclosed Annex II and, at the end of the business year, an updated business plan for the subsequent year. 

  

	2.	Irrespective of whether BG is checking the Technology Company simultaneously on behalf of tbg, the Technology Company must directly inform tbg in due course regarding
all measures which go beyond the framework of customary business operations. 

  

	3.	Furthermore, tbg has control rights in conformity with § 716 BGB (German Civil Code). This also applies after termination of the company to the necessary extent
to audit the winding-up assets. 

  
 tbg is
also entitled to inspect the records of the Technology Company relating to the innovation venture described in § 1 Section 2. tbg can employ a third party to carry out their controlling rights. 
  

	4.	The Technology Company grants BMBF and a person authorized by them the same submission, information and auditing rights as granted to tbg. The Technology Company agrees that
tbg can pass on data they have gained on the company and the promoted innovation venture for scientific evaluation of the programme mentioned in the preamble of this Agreement to BMBF or an institute authorized by BMBF. Furthermore, the
Technology Company agrees to give BMBF and their authorized institute all the information that is directly required for the scientific evaluation of the programme and, if necessary, also after termination of the dormant company. BMBF is entitled to
pass on the data the Ministry has been given to the EU Commission so that they can implement their supervisory and controlling powers. It must be ensured that the Technology Company cannot be damaged by the evaluation and, possibly, publication of
data relating to the programme. 

  

	5.	The Federal Audit Office has auditing rights vis-à-vis in keeping with § 91 BHO (Federal Budgetary Regulations). The Technology Company will submit to the Federal
Audit Office and tbg all records for auditing and which the Federal German Audit Office consider to be necessary, together with the corresponding information. 

  

 § 7 
 Advisory board 
  
 tbg can demand at
any time that an advisory board be formed. tbg should participate in this advisory board with due consideration of their contributed amount. The advisory board gives the Technology Company advice in economic and technical respects, especially
concerning the venture described in § 1 Section 2. The advisory board has the same information and controlling rights as those assigned to tbg by this Agreement. 
  
 § 8 
 Business year, annual financial statement 
  

	1.	The business year of the dormant company corresponds with that of the Technology Company (“participation year”). The business year of the Technology Company always ends on
31st December. 

  

	2.	The Technology Company must draw up an annual financial statement (balance, profit and loss, annex) under consideration of §§ 238-289 HGB (German Commercial Code)
within six months of the expiry of the business year and to send to tbg a signed original copy with an attestation of an auditor or certified accountant. 

  
 § 9 
 Profit and loss sharing 
  

	1.	tbg receives for the effected contribution a minimum remuneration amounting to 6% p.a. that is independent of the annual profit and loss of the Technology Company. This
becomes due in retrospect on the 31.3. and 30.09. of each year. 

  

	2.	tbg is entitled to demand at the end of the participation time a one-off remuneration amounting to 30% of the participation contribution, plus 6% of the participation
contribution for each year after the expiry of the fifth complete participation year (final remuneration). 

  
 tbg will only make use of this right if, in their opinion, this is justified on account of the overall economic conditions of the Technology
Company, but especially on account of the profits achieved during the last three years before the end of the participation or the hidden reserves built up during the participation time. 
  

 The Technology Company and tbg agree that if the Technology Company were to be quoted on the stock
exchange, then the premium should be converted into shares. The price margin stipulation in the quotation for the stock market forms the basis for this conversion. 
  

	3.	tbg does not participate in the losses of the Technology Company. 

  
 § 10 
 Taxes 
  
 The Technology Company will ensure payment of the legally stipulated capital yield tax, plus
the solidarity surcharge, on the remuneration for the silent contribution, and retain from the respective payments to tbg the capital yield tax and the solidarity surcharge for direct payment to the responsible revenue office when payment
becomes due. After the payments have been effected the Technology Company will give tbg, within 2 months after payment was due, the certificates in the sense of § 45a Section 2 EStG (German Income Tax Law) supplied by tbg
in the form of printed forms. 
  
 § 11 

Dissolving the dormant company 
  

	1.	The dormant company will be dissolved in the event that the Technology Company is dissolved. The silent contribution has to be paid back in such an event. 

 

	2.	§ 9 Section 2 is also applicable in this event. 

  
 § 12 
 Termination

  

	1.	The Technology Company is entitled to replace, partly or entirely, the contribution from tbg with a notice period of 3 months to take effect on 30.6. or 31.12. of each year.
If the replacement takes place at the end of the fifth full participation year, then the contribution from tbg is repayable with a premium amounting to 30%. The provision in § 9 Section 2 is applicable with the commencement of the sixth
participation year. tbg can waiver the payment of the premium if termination is due to the abandonment of the promoted innovation venture according to § 1 Section 2. 

  

	2.	Furthermore, the dormant company can be terminated without notice by either shareholder by a written declaration to this effect in the event of an important reason. In the event
that the contribution has not yet or only been partly effected, then tbg will be released from their contribution obligation with the notice declaration. 

  
 tbg is entitled to give notice for an important reason when: 
  

	 	a)	The Technology Company has made false statements in the participation application; 

  

	 	b)	It becomes apparent that the preconditions for granting or retaining the contribution did not exist, or if the preconditions for retaining the contribution have been dropped, but
particularly if it is found that the innovation venture described in § 1 Section 2 is found to be not implementable or has been abandoned or significantly changed by the Technology Company. In so far as the innovation venture described in
§ 1 Section 2 is found to be not technically feasible or economically realizable, tbg can waiver full or partial repayment of the contribution if this enables the Technology Company to continue to exist; 

  

	 	c)	If, in spite of a corresponding reminder, the Technology Company does not submit the proof of use in conformity with § 3 at the latest three months after it was due;

  

	 	d)	If a bill of exchange drawn by the Technology Company is contested, if the Technology Company is discontinued, if a bankruptcy petition or composition proceedings are filed, or if
insolvency is established by any other way; 

  

	 	e)	If, when the Agreement on the dormant company was concluded, senior know-how executives are no longer in full-time employment in the management of the Technology Company;

  

	 	f)	If one of the measures listed in § 5 Section 2 is carried out without the previous consent of tbg. 

  
 § 13 
 Due payments 
  
 4%
p.a. interest is payable on due payments from the time the delay arises until the payments are received by tbg. 
  

 § 14 
 General provisions 
  

	1.	Amendments and supplements to this Agreement must be in writing. There are no verbal supplements to this Agreement. 

  

	2.	In the event that a provision of this Agreement should be legally ineffective, then this shall not affect the remaining provisions. The Technology Company and tbg undertake
to replace the ineffective contractual provisions by provisions that are legally effective and that come closest to the original sense and purpose of the legally ineffective provisions. 

  

	3.	Bonn is the place of jurisdiction for all legal disputes arising out of this Agreement or its implementation. 

  

									
	 Bonn, dated 25.02.1998
	  	Hilden, dated	  	 	  	 	  	 
					
	 Technologie-Beteiligungs-
 Gesellschaft mbH der
 Deutschen Ausgleichsbank
	  	CpG ImmunoPharmaceuticals GmbH	  	 	  	 	  	 

  

					
			
	/s/    ERNEST G. MAYER        	 	 	 	/s/    JOACHIM SCHOR        
			
	/s/    ROBERT SCHLÖSSER        	 	 	 	  

  
 Venture-related Planning (Annex I)

 Summarized Status (Annex II) 
 Participation Fundamentals of
tbg 
  

 tbg Technologie-Beteiligungs- 
 Gesellschaft mBH der 
 Deutschen Ausgleichsbank 
  
 Annex I 
  
 Venture-related Planning 
  
 Plan period: 01.10.1997 to 01.10.1999 
  
 VENTURE-SPECIFIC EXPENDITURES 
  

					
	 	 	 	  	Amount in DM (excluding V.A.T.)

	I.	 	For applied research and development	  	 
	1.	 	Investments balanced in the fixed assets	  	 
	1.1	 	Laboratory instruments and equipment	  	1,250,000
	1.2	 	Machines and equipment to produce the prototype	  	500,000
	1.3	 	Miscellaneous	  	 
	2.	 	Non-investive research and development expenditures	  	 
	2.1	 	Personnel	  	1,400,000
	2.2	 	Material	  	2,300,000
	2.3	 	Outside services (Awarding contracts/ consultations)	  	 
	2.4	 	Patents and permits	  	250,000
	2.5	 	Travel expenses	  	100,000
	2.6	 	Miscellaneous	  	200,000
	II. For investments for a market launch	  	 
	Total	  	6,000,000

  
 VENTURE-SPECIFIC FINANCING

  

					
	 	 	 	  	Amount in DM (excluding V.A.T.)

	1.	 	 Own resources
	  	 
	1.1	 	 ...
	  	 
	1.2	 	 ...
	  	 
	2.	 	 Equity capital
	  	 
	2.1	 	 of tbg
	  	3,000,000
	2.2	 	 of the lead investor
	  	3,000,000
	2.3	 	 Other participants
	  	 
	3.	 	 Public funds
	  	 
	3.1	 	 Subsidies, grants, bonuses
	  	 
	3.2	 	 Miscellaneous
	  	 
	4.	 	 Outside funds
	  	 
	4.1	 	 of the bank
	  	 
	4.2	 	 Other
	  	 
	Total	  	6,000,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]