printer-friendly

Sample Business Contracts

Research Collaboration and License Agreement - Cubist Pharmaceuticals Inc. and Novalon Pharmaceutical Corp.

Sponsored Links

                              Research Collaboration and
                                  License Agreement
                                           


                             Cubist Pharmaceuticals, Inc.
                         Novalon Pharmaceuticals Corporation
                                           


                               Dated as of May 5, 1997
                                            

<PAGE>
    
    
                     Research Collaboration and License Agreement
                                            
    
    RESEARCH COLLABORATION AND LICENSE AGREEMENT, dated as of May 5, 1997 (the
Effective Date), by and between Cubist Pharmaceuticals, Inc., a Delaware
corporation (Cubist) and Novalon Pharmaceutical Corporation, a Delaware
corporation (Novalon).
    
    WHEREAS, Cubist and Novalon have entered into a Series B Convertible
Preferred Stock Purchase Agreement, dated as of May 5, 1997 (the Stock Purchase
Agreement), pursuant to which Cubist purchased shares of the Series B
Convertible Preferred Stock of Novalon and agreed to engage in a collaborative
"BioKeys" research project and the "ElectroScreen" research project with
Novalon.
    
    WHEREAS, pursuant to Section 7.6 of the Stock Purchase Agreement, Cubist
and Novalon agreed to negotiate and enter into this Agreement to set forth in
greater detail the rights and obligations of the parties with respect to the
research projects.
    
    WHEREAS, Novalon has the right to grant licenses with respect to certain
Novalon Patent Rights and Novalon Technology (as each is defined herein) and
desires to grant a license thereto; and
    
    WHEREAS, Cubist desires to obtain a license to use and practice the Novalon
Patent Rights and Novalon Technology to develop products;
    
    NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Cubist and Novalon hereby agree as
follows:
    
    Section 1.     Definitions.  Capitalized terms used in this Agreement shall
have the meanings set forth in Schedule I annexed hereto.
    
    Section 2.     Research Collaboration.
    
    2.1  Collaboration.
    
    (a)  Cubist and Novalon hereby agree (i) to engage in the
         Collaborative "BioKeys" Research Project and the "ElectroScreen"
         Research Project, all as described in Exhibit A, (ii) to engage in the
         research activities described in Section 2.1(b) and (c) below and
         (iii) to engage in such other research activities as the parties may
         agree upon from time to time.  The terms and Conditions of the
         Collaboration and of all research activities of the parties pursuant
         to the Collaboration 

<PAGE>

         shall be governed by, to the extent applicable, the provisions of this 
         Agreement and such other provisions as the parties may agree upon in 
         writing from and after the date hereof.  The term of the Collaboration 
         shall commence on the date hereof and end on [          ]*, provided 
         that Cubist shall be entitled to terminate the Collaboration at any 
         time from and after the end of the Minimum Research Period by giving 
         Novalon at least thirty (30) days prior written notice of termination.
    
    (b)  During the Minimum Research Period, Cubist and Novalon shall engage in
         the research activities described in Exhibit A. The respective tasks,
         activities and obligations of the parties during the Minimum Research
         Period are set forth in Exhibit A.
    
    (c)  In the event that Cubist elects not to exercise the Acquisition
         Option, Cubist shall, within [          ]* after the Acquisition
         Option Expiration Date, deliver to Novalon a schedule listing all of
         the research programs then being conducted by Cubist (the Specified
         Research Programs, Exhibit B describes the current research programs
         at Cubist).  During the Remaining Research Period, Novalon and Cubist
         shall (i) continue the research activities described in Exhibit A,
         (ii) engage in such research, screening, target discovery and
         validation, and drug discovery and development activities as Cubist
         shall request, provided that such research, screening, target
         discovery and validation, and drug discovery and development
         activities are related to, or involve, biological targets that are
         within the scope of the Specified Research Programs and (iii) engage
         in such other research activities as the parties may agree upon from
         time to time.  The respective tasks, activities and obligations of the
         parties in connection with any of the matters on which the parties are
         collaborating during the Remaining Research Period shall be mutually
         agreed upon by the parties.
    
2.2 Funding.
    
    (a)  On the first day of each month during the Minimum Research Period and
         on the first day or the first month immediately after the Minimum
         Research Period, Cubist shall reimburse Novalon for any payments made
         by Novalon during the immediately preceding month in respect of (i)
         salary and fringe benefits payable by Novalon to no more than
         [          ]* employed by Novalon and 

________________________

*   Confidential Treatment requested:  material has been omitted and filed
    separately with the Commission.

                                      2

<PAGE>

         engaged solely in activities relating to the Collaboration, and (ii)
         laboratory supplies for use solely in activities relating to the
         Collaboration; provided, however, that the amount of any monthly
         payment that Cubist shall be required to make to Novalon pursuant to
         the foregone provisions of this Section 2.2(a) shall in no event
         exceed [          ]* (it being understood that any expenses incurred
         or payments, made by Novalon in connection with (the Collaboration in
         any month during the Minimum Research Period in excess of
         [          ]* shall be Novalon's sole responsibility and Cubist shall
         have no obligation to reimburse Novalon with respect to any such
         excess).  [          ]*
    
    (b)  On the first day of each month during the Remaining Research Period
         and on the first day of the first month immediately after the
         Remaining Research Period, Cubist shall reimburse Novalon for the
         direct costs incurred by Novalon in connection with activities
         relating to the Collaboration, provided that such costs shall not
         exceed [          ]* (it being understood that any costs incurred by
         Novalon in connection with the Collaboration activities that are in
         excess of [          ]* shall be Novalon's sole responsibility and
         Cubist shall have no obligation to reimburse Novalon with respect to
         any such excess).
    
    2.3  Obligations Following Termination of Collaboration.  Except for
Cubist's obligation, pursuant to Section 2.2(a) above, to make a payment to
Novalon on the first day of the first month immediately after the Remaining
Research Period and except for any other payment obligations of Cubist in
connection with the Collaboration which are agreed upon by the parties in
writing after the date hereof and which by their own terms survive the
Collaboration Termination Date, Cubist shall have no obligations or liabilities
to Novalon pursuant to this Section 2 (including, without limitation, the
obligation to make payments to Novalon in connection with the Collaboration)
from and after the Collaboration Termination Date.
    
    2.4  Exclusivity.
    
    (a)  Until [          ]* Novalon shall not engage in any research
         collaboration, any drug discovery or drug development collaboration,
         partnership or alliance, any licensing transactions or any other kind
         of transaction, involving all or any portion of Novalon's intellectual
         property or know-how or the intellectual property or know-how of any
         Person; provided, however, that the foregoing provisions of this
         Section 2.4(a) shall not preclude Novalon from 

_____________________

*   Confidential Treatment requested:  material has been omitted and filed
    separately with the Commission.

                                   3

<PAGE>

         engaging in the Collaboration.  The restrictions set forth in this
         Section 2.4(a) may be waived, in any instant, by written consent of
         Cubist.
    
    (b)  During the period commencing upon the expiration of the restrictions
         set forth in Section 2.4(a) above and ending on the Collaboration
         Termination Date, Novalon shall not engage in any research or
         screening activities or programs, any research collaborations, any
         drug discovery or drug development collaborations, partnerships or
         alliances, any licensing transactions, or any other kind of
         transactions, in the anti-bacterial and anti-fungal therapeutic area;
         provided, however, that the foregoing provisions of this Section
         2.4(b) shall not preclude Novalon from engaging in (i) the
         Collaboration, or (ii) any research or screening activity or program
         so long as it (A) covers, a finite number of specific biological
         targets for drug discovery and development, none of which have been
         subject to research and development activities pursuant to the
         Collaboration, (B) provides for Novalon to engage in active research,
         discovery and development activities with respect to all of such
         biological targets, (C) provides for the payment to Novalon of
         commercially reasonable consideration and (D) does not preclude
         Novalon from entering into similar arrangements with other parties
         (including Cubist) relating to other targets in the same or any
         different field of pathogen.  The restrictions set forth in this
         Section 2.4(b) may be waived. in any instance, by written consent of
         Cubist.
    
    (c)  Until [          ]* Novalon, subject to any applicable nondisclosure
         agreements between Novalon and third parties, shall discuss and
         coordinate in advance with Cubist any contacts, meetings, discussions
         or negotiations that Novalon proposes to make or in which Novalon
         proposes to participate, to the extent that such proposed contacts,
         meetings, discussions or negotiations relate to any research or
         screening activities or programs, any research collaboration, any drug
         discovery or drug development collaboration, partnership or alliance,
         any licensing transaction, or any other kind of transaction, involving
         all or any portion of Novalon's intellectual property or know-how or
         the intellectual property or know-how of any Person; provided,
         however, that the foregoing provisions of this Section 2.4(c) shall
         not apply to the Collaboration.

___________________

*   Confidential Treatment requested:  material has been omitted and filed
    separately with the Commission.

                                         4

<PAGE>

    
    Section 3.  License.  Subject to all of the terms of this Agreement,
Novalon hereby grants to Cubist a worldwide right and license to use the Novalon
Patent Rights and the Novalon Technology, for purposes of (i) researching,
screening for, discovering or developing anti-bacterial or anti-fungal drug
candidates or antibacterial or anti-fungal drug discovery targets or (ii)
selling, licensing, marketing or otherwise commercializing anti-bacterial or
anti-fungal drugs discovered or developed using any portion of the Novalon
Patent Rights and the Novalon Technology.  The license shall be perpetual and
irrevocable.  The license shall be exclusive with respect to any Novalon Patent
Rights and Novalon Technology that were developed in the course of the research
and development activities provided for in Section 2 hereof.  Cubist shall have
the right to sublicense the license granted to Cubist pursuant to this Section
3.  Except for any payments made or required to be made by Cubist to Novalon
pursuant to Section 2.2 or Section 4.1 in connection with the Collaboration,
Cubist shall not have to pay or otherwise owe to Novalon any consideration of
any kind in connection with the license.
    
    Section 4.     Royalties & Payments.
    
Section 4.1   Royalties.  In consideration for the license granted under this
Agreement, Cubist shall pay royalties (collectively, the Royalties) to Novalon,
within [          ]* after the end of each calendar quarter, in the amount of
[          ]* of all revenue actually received by Cubist from third parties to
the extent that such revenue is directly attributable to (a) Net Sales of
Products for such quarter, (b) drug development milestone payments actually
received by Cubist during such quarter on account of any antibacterial or
antifungal drug candidate that was discovered or developed as a result of the
use of the Novalon Patent Rights or the Novalon Technology, and (c) any
licensing fees actually received by Cubist during such quarter with respect to
any Sublicense.
    
    Section 4.2  Payments.  All payments due under this Agreement shall be paid 
(a) in full without deduction of exchange, collection, taxes or other fees that 
may be imposed by any government and (b) in United States dollars at Novalon's
office in Chapel Hill, North Carolina or at such other place as Novalon may
designate consistent with applicable law.  Currency conversions shall be made by
reference to the prevailing exchange rate for bank transfers from the foreign
currency to U.S. Dollars, as quoted at BankBoston on the last business day of
the calendar quarter immediately preceding the payment due date. If by law,
regulation or fiscal policy of any country, conversion from that country's
currency into U.S. dollars is restricted or forbidden, written notice thereof
shall be given to Novalon and payment of amounts from that country shall be made
through such lawful means as Novalon shall designate, including, without
limitation, deposit of local currency in such recognized banking institution as

________________________

*   Confidential Treatment requested:  material has been omitted and filed
    separately with the Commission.

                                     5

<PAGE>

Novalon shall designate.  When in any country the law or regulation prohibits
both the transmittal and the deposit of royalties as sales in that country,
royalty payments from that country will be suspended for as long as the
prohibition is in effect and, as soon as the prohibition ceases, all royalties
that Cubist or its Sublicensees would have been obligated to pay, but for the
prohibition, will promptly be deposited or transmitted, as (be case may be, to
the extent then allowed.
    
    Section 5.  Intellectual Property.
    
    Section 5.1  Ownership Rights.  Novalon shall own all Technology and
inventions made, developed or discovered solely by its employees or agents or by
the employees or agents of any of its Affiliates, and shall own all Patent
Rights relating to such Technology and inventions.  Cubist shall own all
Technology and inventions made, developed or discovered solely by its employees
or agents or by the employees or agents of any of its Affiliates, and shall own
all Patent Rights relating to such Technology and inventions.  Cubist and
Novalon shall own all Technology and inventions developed jointly by the
employees or agents of Novalon and Cubist or their respective Affiliates, and
shall own all Patent Rights relating to such Technology and inventions.  Subject
to the provisions of Section 5.2 below, Novalon retains all rights to file and
prosecute any and all patent applications included within the Novalon Patent
Rights, and Cubist retains all rights to file and prosecute any and all patent
applications included within the Cubist Patent Rights.
    
    Section 5.2  Patent Filings.  Novalon shall, at its expense and using
patent attorneys selected by it, apply for, seek issuance of and maintain the
Novalon Patent Rights and other patents based on the Novalon Technology in the
United States and in such other countries as are identified in the Patent List
hereto or as Cubist may request in writing; provided that Cubist shall cooperate
with Novalon in such prosecutions filing and maintenance.  Cubist shall be given
at least ten (10) days to advise and comment upon such filings and actions as
are undertaken by Novalon.  Novalon may, in its discretion, decline to apply
for, prosecute or maintain any Novalon Patent Rights in any country, but shall
give timely notice to Cubist of any such determination, whereupon Cubist may
undertake such action, in the name and on behalf of Novalon, at its own expense.
Novalon agrees to cooperate with Cubist as reasonably necessary to permit
Cubist to be able to prosecute or maintain any Novalon Patent Rights in those
countries that Novalon declines to undertake action.  Novalon also agrees to
cooperate with Cubist as reasonably necessary to permit Cubist to be able to
prosecute or maintain any Cubist Patent Rights arising from the Collaboration in
those countries selected by Cubist.
    
                                6

<PAGE>

    Section 6.  Indemnification.
    
    Section 6.1  Indemnification.  Cubist shall at all times defend and hold
Novalon, and its officers, directors, employees, agents and Affiliates
(together, Novalon Indemnitees) harmless from and against all claims, suits,
demands, liability and expenses, including legal expenses and reasonable
attorneys' fees, arising out of (a) the death of or injury to any person or
persons, (b) damage to property, or (c) any other claim, proceeding, demand,
expense and liability of any kind whatsoever resulting from (i) the production,
manufacture, shipping, handling, use (in commerce or otherwise), sale, lease,
consumption, promotion or advertisement of the Products by Cubist or any
Sublicensee or (ii) any obligation or activity of Cubist under this Agreement or
of any Sublicensee under any Sublicense; provided that Cubist shall have no
obligation to indemnify Novalon to the extent of liability attributable to the
Novalon's gross negligence or willful misconduct.
    
    Section 6.2  Indemnification.  Novalon shall at all times defend and hold
Cubist, its officers, directors, employees, agents and Affiliates (together,
Cubist Indemnitees) harmless from and against all claims, suits, demands,
liability and expenses, including legal expenses and reasonable attorneys' fees,
arising out of any claim, proceeding, demand, expense and liability of any kind
whatsoever resulting from (i) the Novalon Patent Rights and the Novalon
Technology or (ii) any obligation or activity of Novalon under this Agreement;
provided that Novalon shall have no obligation to indemnify Cubist to the extent
of liability attributable to the Cubist's gross negligence or willful
misconduct.
    
    Section 7.  Infringement.
    
    Section 7.1  Notice.  Cubist shall notify Novalon promptly in writing of
any alleged Infringement of the Novalon Patent Rights by a third party and shall
provide any available evidence thereof.
    
    Section 7.2 Prosecution By Novalon.  Novalon shall have the right, at its
sole discretion, to prosecute, at its own expense, any alleged infringements of
the Novalon Patent Rights.  Cubist agrees to allow Novalon to include Cubist, at
Novalon's expense, as a party plaintiff in any suit brought with respect to
infringement alleged to have occurred during the Collaboration within the
antibacterial and anti-fungal therapeutic area.  In the event that Novalon takes
the lead counsel role with respect to the commencement or defense of any action,
the total cost shall be borne by and any recovery or damages shall be paid
solely to Novalon.  Cubist shall have the right to participate in any action, at
Cubist's expense, and Novalon agrees to consult with counsel for Cubist on any
significant matters related to the litigation.
  
                                7

<PAGE>
  
    Section 7.3  Prosecution By Cubist.
    
    (a)  Procedure.  If Novalon, within six (6) months after having been
notified of an alleged infringement, shall have been unsuccessful in negotiating
with the alleged infringer to cease and desist such infringement and shall not
have brought an infringement action, or if Novalon shall notify Cubist at any
time prior thereto or its intention not to bring suit against any alleged
infringer, then Cubist shall have the right, but shall not be obligated, to
prosecute at its own expense any such infringement of the Novalon Patent Rights.
Cubist shall be entitled to offset the costs of any such litigation against any
amounts due by Cubist to Novalon under this Agreement.  In such circumstances,
Cubist may use the name of Novalon as the plaintiff if necessary for the
prosecution of the infringement suit.  Notwithstanding anything in the foregoing
to the contrary, no settlement, consent judgment or other voluntarily final
disposition of any such suit may be entered into without the consent of Novalon,
which consent shall not be unreasonably withheld.
    
    (b)  Damages.  In the event that Cubist undertakes litigation pursuant to
Section 7.3(a) for the enforcement of Novalon Patent Rights, any recovery of
damages by Cubist for each suit shall be applied as follows: (a) first, to
Cubist to reimburse Cubist for the expenses of the litigation or suit, including
reasonable attorneys' fees, (b) then, second, to Novalon to reimburse Novalon
for its expenses of the litigation or case, including reasonable attorneys' fees
and any Running Royalty Amounts and licensing Fees withheld by Cubist pursuant
to Section 8.3(a), (c) then, third, an amount equal to the aggregate dollar
amount of sales revenue made by the infringing person would be allocated
[          ]* to Cubist and [          ]* to Novalon and (d) then, the balance
would be allocated [          ]* between Cubist and Novalon.
    
    Section 7.4  Actions Against Cubist or Novalon.
    
    (a)  In the event that an action alleging invalidity or noninfringement of
any of the Novalon Patent Rights shall be brought against Cubist or against
Novalon (whether as an independent action or as a counterclaim of a suit filed
by Cubist pursuant to Section 7.3(a)), Novalon, at its sole option, shall have
the right, within thirty (30) days after the commencement of such action, to
take or regain control of the action at its own expense.  If Novalon shall
determine not to exercise this right, Cubist may take over or remain as lead
counsel for the action at Cubist's sole expense, with any settlement or recovery
subject to the approval provisions of Section 7.3(a) and allocation provisions
of Section 7.3(b).

_____________________

*   Confidential Treatment requested:  material has been omitted and filed
    separately with the Commission.

                                   8

<PAGE>
    
    (b)  In the event that an action alleging any of the Novalon Patent Rights
or Novalon Technology infringes, or resulted from the misappropriation of, any
third party shall be brought against Cubist or against Novalon (whether as an
independent action or as a counterclaim of a suit filed by Novalon pursuant to
Section 7.2), Cubist, at its sole option, shall have the right, within thirty
(30) days after the commencement of such action, to take or regain control of
the action at its own expense.  If Cubist shall determine not to exercise this
right, Novalon may take over or remain as lead counsel for the action at
Novalon's sole expense.
    
    Section 7.5  Cooperation.  In any infringement suit, either party shall be
entitled to request the cooperation and assistance of the other party, at the
requesting party's expense, as may be reasonably necessary for the suit.  Each
party agrees to make available relevant records, papers, information, samples
and specimens, as well as to have its employees testify upon request.
    
    Section 7.6  Third Party Licenses.  If Cubist and Novalon mutually
determine that sales of Products or use of the Novalon Patent Rights or Novalon
Technology would be impractical or impossible without obtaining a
royalty-bearing license from a third party, Cubist may enter into a license with
such third party, and Cubist shall be permitted to offset royalties or any other
amounts paid thereunder as a deduction within the calculation of Royalties,
unless the third party is an Affiliate of Cubist; provided, however, that Cubist
shall be entitled to offset no more than [          ]* of the Royalties
otherwise payable to Novalon.
    
    Section 8.  Dispute Resolution.
    
    Section 8.1  Scope and Enforcement.  Any controversy or claim arising
between the parties in connection with this Agreement shall be resolved by
binding arbitration in accordance with the terms and conditions of this Section
9; provided, that actions by either party seeking equitable or declaratory
relief may be brought in court pursuant to Section 9.  This agreement to
arbitrate shall continue in full force and effect despite the expiration,
rescission or termination of this Agreement.  All arbitration shall be
undertaken in accordance with the federal policy favoring arbitration, as set
forth in the Federal Arbitration Act, and the decision of the arbitrator(s)
shall be enforceable in any court of competent jurisdiction.  The parties
knowingly and voluntarily waive their rights to have their dispute tried and
adjudicated by a judge and jury except as expressly provided herein.  The
arbitrator(s) shall apply the law of the Commonwealth of Massachusetts and the
arbitration shall be held in Boston, Massachusetts or in such other city as the
parties may mutually agree.

_______________________

*   Confidential Treatment requested:  material has been omitted and filed
    separately with the Commission.
    
                                    9
<PAGE>

    Section 8.2  Procedure.  Any party may demand arbitration by sending
written notice to the other party.  The arbitration and the selection of the
arbitrator(s) shall he conducted in accordance with such rules as may be agreed
upon by the parties, or, failing agreement within thirty (30) days after
arbitration is demanded, under the Commercial Arbitration Rules of the American
Arbitration Association (AAA), as such rules may be modified by this Agreement. 
If the parties are unable to agree upon a single arbitrator within sixty (60)
days, three (3) arbitrators shall be used, one selected by each party within ten
(10) days after the conclusion of the sixty (60) day period and a third selected
by the first two within ten (10) days thereafter.  The arbitrator or arbitrators
shall be accredited by the AAA and shall be individuals with relevant business
experience in structuring and negotiating biotechnology research collaborations;
provided, however, that the parties may mutually agree in writing to waive
either UT both of the foregoing requirements.  Unless the parties agree
otherwise, they shall be limited in their discovery to directly relevant
documents- Responses or objections to a document request shall be served twenty
(20) days after receipt of the request.  The arbitrator(s) shall resolve any
discovery disputes.
    
    Section 8.3  Awards.  The arbitrator(s) shall have the authority to award
actual money damages (with interest on unpaid amounts from the date due),
specific performance, and temporary injunctive relief, but the arbitrator(s)
shall not have the authority to award exemplary or punitive damages, and the
parties expressly waive any claimed right to such damages.  The arbitration
shall be of each party's individual claims only, and no claim of any other party
shall be subject to arbitration in such proceeding.  The parties are unable to
agree on the appointment of a single arbitrator, each party shall bear the cost
of the arbitrator appointed by such party and the cost of the third arbitrator
shall be shared equally by both parties.  Each party shall be responsible for
all costs incurred by it in preparing for and participating in the arbitration. 
Except as otherwise required by law, the parties and the arbitrator(s) agree to
maintain as confidential all information or documents obtained during the
arbitration process, including the resolution of the dispute.
    
    Section 9.  General Provisions.
    
    Section 9.1  Remedies.  The parties acknowledge and agree that, in the
event of a breach or a threatened breach by either party of' Section 9.4 hereof,
the other party may suffer irreparable damage for which it will have no adequate
remedy at law and, accordingly, shall be entitled to injunctive and other
equitable remedies to prevent or restrain such breach or threatened breach,
without the necessity of posting any bond or surety, in addition to any other
remedy it might have at law or at equity.
    
                                    10

<PAGE>

    Section 9.2  Governing Law.  This Agreement shall be governed and construed
in accordance with the internal laws of' the State of Delaware, without regard
to its rules concerning conflicts of laws.
    
    Section 9.3  Exclusive Venue; Consent to Jurisdiction.  Any action, suit or
other proceeding pursuant to, arising under, or touching or concerning this
Agreement or the transactions contemplated hereby (other than those for which
arbitration pursuant to Section 8 is the sale forum) shall be brought
exclusively in any court of competent jurisdiction in the State of' Delaware. 
The parties agree to take any and all necessary or appropriate action to submit
to the exclusive jurisdiction of any such court.  In any such action, suit or
proceeding, the successful or prevailing party shall be entitled to recover its
reasonable attorneys' fees and other costs incurred in connection with that
action, suit or proceeding, in addition to any other relief to which such party
may be entitled.
    
    Section 9.4  Confidentiality.  It is contemplated that in the course of the
performance of this Agreement each party may, from time to time, disclose
Confidential Information to the other.  Each party agrees to take all reasonable
steps to prevent disclosure of Confidential Information; provided that no
provision of this Agreement shall be construed to preclude such disclosure of
Confidential Information as may be necessary or appropriate to obtain from any
governmental agency any necessary approval or license or to obtain patents that
are to be included in Novalon Patent Rights.
    
    Section 9.5  Amendment and Waiver.  No provision of or right under this
Agreement shall be deemed to have been waived by any act or acquiescence on the
part of either party, its agents or employees, but only by an instrument in
writing signed by an authority officer of each party.  No waiver by either party
of any breach of this Agreement by the other party shall be effective as to any
other breach, whether of the same or any other term or condition and whether
occurring before or after the date of such waiver.
    
    Section 9.6  Independent Contractors.  Each party represents that it is
acting on its own behalf as an independent contractor and is not acting as an
agent for or on behalf of any third party.  This Agreement and the relations
hereby established by and between Cubist and Novalon do not constitute a
partnership, joint venture, agency or contract of employment between them.
    
    Section 9.7  Assignment.  Neither party may assign its rights or
obligations hereunder without the prior written consent of the other party,
which consent shall not be unreasonably withheld in the case of any assignment
pursuant to a merger, consolidation or sale of substantially all of the assets
or stock of a party, provided that (a) nothing contained in this Section 9.7
shall prohibit sublicensing, and (b) the proposed assignee under this Section
9.7 agrees in writing to assume all of the obligations of such party under this
Agreement.

                                  11

<PAGE>
    
    Section 9.8  Successors and Assigns.  This Agreement shall bind and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
    
    Section 9.9  Use of Names.  Neither party shall use the name of the other
party or any officer, employee or consultant of the other party or any
adaptation thereof in any advertising, promotional or sales literature,
publicity or In any document employed to obtain funds or financing without the
prior written approval of the party or individual whose name is to be used;
provided that Cubist may state that it is licensed by Novalon under the Novalon
Patent Rights and the Novalon Technology and may make such disclosure as is
required by the Securities Act of 1933, the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder.
    
    Section 9.10  Notices.  All communications hereunder shall be in writing
and shall he deemed to have been duly given upon receipt by the addressee at the
addresses set forth below or such other address as either party may specify by
notice sent in accordance with this Section:
    
    If to Cubist:
    
    Cubist Pharmaceuticals, Inc.
    24 Emily Street
    Cambridge, MA 02139
    Boston, MA 02118
    Attention:  Scott M. Rocklage, Ph.D.
    Telecopier: (617) 576-0232
    
    With a copy to,
    
    Bingham Dana LLP
    150 Federal Street
    Boston, MA  02110
    Attention:  Julio E. Vega, Esquire
    Telecopier: (617) 951-8736
    
    (i)  If to Novalon:
    
    Novalon Pharmaceutical Corporation
    214 West Cameron Avenue, Suite B
    Chapel Hill, N.C. 27516
    Attention:     Dana M. Fowlkes, NM, Ph.D.
    Telecopier:    (919) 968-9255
    
                                          12

<PAGE>

    with a copy to:
    
    Jenner & Block
    12th Floor
    601 Thirteenth Street, N. W.
    Washington, D.C. 20005
    Attention:     D. Joe Smith, Esquire
    Telecopier:    (203) 639-6066
    
    Section 9.11  Severability.  In the event any provision of this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other term or provision hereof.  The parties agree that they will negotiate in
good faith or will permit a court or arbitrator to replace any provision hereof
so held invalid, illegal or unenforceable with a valid provision which is as
similar as possible in substance to the invalid, illegal or unenforceable
provision.
    
    Section 9.12  Conflict or Inconsistency.  In the event of any conflict or
inconsistency between the terms and conditions hereof and any terms or
conditions set forth in any purchase order or other document relating to the
transactions contemplated by this Agreement, the terms and conditions set forth
in this Agreement shall prevail.
    
    Section 9.13  Captions.  Captions or the sections and subsections of this
Agreement are for reference purposes only and do not constitute terms or
conditions of this Agreement and shall not limit or affect the terms and
conditions hereof.
    
    Section 9.14  Word Meanings.  Words such as herein, hereinafter, hereof and
hereunder refer to this Agreement as a whole and not merely to a section or
paragraph in which such words appear, unless the context otherwise requires. 
The singular shall include the plural, and each masculine, feminine and neuter
reference shall include and refer also to the others, unless the context
otherwise requires.
    
    Section 9.15  Entire Agreement.  This Agreement contains the entire
understanding of the parties hereto with respect to the transactions and matters
contemplated hereby, supersedes all prior agreements and understandings relating
to the subject matter hereof (including, without limitation, Section 7 of' the
Stock Purchase Agreement), and no representations, inducements, promises or
agreements, whether oral or otherwise, between such parties not contained herein
or incorporated herein by reference shall be of any force or effect.
    
    Section 9.16  Acquisition.  This Agreement shall immediately terminate upon
consummation of the Acquisition.

                                 13

<PAGE>
    
    Section 9.17  Rules of Construction.  The parties agree that they have
participated equally in the formation of this Agreement and that the language
and terms of this Agreement shall not be presumptively construed against either
of them.
    
    Section 9.18  Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
    
    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers, and have duly delivered
and executed this Agreement under seal as of the date first set forth above.
    
CUBIST PHARMACEUTICALS, INC.             NOVALON PHARMACEUTICAL CORPORATION


/s/ Mark Carthy for Scott M. Rocklage    /s/ Dana M. Fowlkes           
-------------------------------------    ------------------------------
By:      Scott M. Rocklage               By:       Dana M. Fowlkes
Title:   President and Chief             Title:    President and Chief 
         Executive Officer                         Executive Officer
    

                                  14

<PAGE>
    
                                                                      Schedule I
                                                                     Definitions
    
    
    When used as capitalized terms in the Research Collaboration and License
Agreement to which this Schedule I is attached, the following terms shall have
the respective meanings set forth below:
    
    AAA has the meaning specified in Section 10.
    
    Acquisition means the acquisition by Cubist of all of the outstanding
shares of Novalon's capital stock.
    
    Acquisition Option means Cubists option to acquire all of the outstanding
shares of Novalon's capital stock pursuant to that certain Acquisition Option
Agreement, dated May 5, 1997.
    
    Acquisition Option Expiration Date means the earlier of (i) [          ]*
or (ii) such date as the Acquisition Option terminates pursuant to that certain
Acquisition Option Agreement, dated May 5, 1997.
    
    Affiliate means with respect to any person or Entity, any other person or
Entity that controls, is controlled by or is under common control with the
specified person or Entity.  As used in this definition, the term control means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an Entity, whether through ownership
of voting securities, by contract or otherwise.
    
    Agreement means the research collaboration and license agreement to which
this Schedule I is attached, together with all Schedules and Exhibits annexed
thereto, as the same shall be modified and in effect from time to time.
    
    Collaboration means the collaboration and other research activities engaged
in by Cubist and Novalon pursuant to Section 2 of this Agreement.
    
    Collaboration Termination Date means the earlier of (i) [          ]* or
(ii) the effective date of termination of the Collaboration pursuant to the
provision, of Section 2.1(a) of this Agreement.
    
    Confidential Information means all information and data provided by the
parties to each other hereunder in written or other tangible medium and

_____________________

*   Confidential Treatment requested:  material has been omitted and filed
    separately with the Commission.

                                    1

<PAGE>

marked as confidential, or if disclosed orally, confirmed in writing within
thirty (30) days after disclosure, except any portion thereof which:
    
    (a)  is known to the receiving party, as evidenced by the receiving party's
written record, before receipt thereof under this Agreement;
    
    (b)  is disclosed to the receiving party by a third person who has a right
to make such disclosure; or
    
    (c)  is or becomes generally known in the trade through no fault of the
receiving party.
    
    Cubist Indemnitee has the meaning specified in Section 6.2.
    
    Cubist Patent Rights means Patent Rights which are owned by Cubist or any
of its Affiliates or which Cubist or any of its Affiliates has the right to
license or sublicense to persons or Entities.
    
    Cubist Technology means Technology which is owned by Cubist or any of its
Affiliates or which Cubist Or any of its Affiliates has the right to license or
sublicense to persons or Entities.
    
    Effective Date has the meaning set forth in the preamble to this Agreement.
    
    Entity means any corporation, association, partnership (general or
limited), joint venture, trust, estate, limited liability company, limited
liability partnership or other legal entity or organization.
    
    Exhibit A means Exhibit A to this Agreement, as said Exhibit A may be
amended and in effect from time to time.
    
    Minimum Research Period means the period commencing on the Effective Date
and ending on the later of [          ]* or [          ]* after the Acquisition
Option Expiration Date.
    
    Net Sales means all gross amounts billed to any person or Entity (other
than an Affiliate of such person or Entity) at the earliest of invoice, shipment
or payment in respect of Products, less the sum of the following amounts:
    
    (a)  sales and use taxes, tariffs, duties and the like imposed directly and
         with reference to particular sales or leases; plus
    
    (b)  outbound shipping prepaid or actually allowed; plus
    
_____________________

*   Confidential Treatment requested:  material has been omitted and filed
    separately with the Commission.

                                          2

<PAGE>

    (c)  amounts allowed on credits or returns; plus
    
    (d)  discounts allowed in amounts customary in the trade.
    
    Novalon Indemnitee has the meaning specified in Section 6.1.
    
    Novalon Patent Rights means Patent Rights as they relate to Cubist's
Specified Research Program as described in 2.1 c. which are owned by Novalon or
any of its Affiliates or which Novalon or any of its Affiliates has the right to
license or sublicense to persons or Entities.  Without limiting the generality
of the foregoing, the term Novalon Patent Rights shall include all Patent Rights
of Novalon as they relate to Cubist's Specified Research Program as described in
2.1 c. with respect to the patents and patent applications listed in the Patent
List.
    
    Novalon Technology means Technology as it relates to Cubist's Specified
Research Program as described in 2.1 c which is owned by Novalon or any of its
Affiliates or which Novalon or any of its Affiliates has the right to license or
sublicense to persons or Entities.
    
    Patent List means Exhibit C annexed hereto as they may be amended and in
effect from time to time.
    
    Patent Rights means all rights related to any of the following:
    
    (a)  all United States and foreign patent applications and provisional
         applications;
    
    (b)  all patents issued with respect to all United States and Foreign
         patent applications and provisional applications and with respect to
         divisionals and continuations of these applications;
    
    (c)  claims of United States and foreign continuation-in-part applications,
         and of resulting patents, that are directed to subject matter
         described in the patent applications described in clause (a) above;
    
    (d)  claims of all foreign patent applications and of the resulting patents
         that are directed to the subject matter described in the United States
         patents and patent applications described in clauses (a), (b) or (c)
         hereof, and
    
    (e)  any reissues of United States patents described in (a), (b) or (c)
         hereof 
    
                                    3

<PAGE>

    Products means any anti-bacterial or anti-fungal drug that was discovered
or developed as a result of the use of the Novalon Patent Rights or the Novalon
Technology.
    
    Remaining Research Period means the period commencing at the end of the
Minimum Research Period and ending on the Collaboration Termination Date.
    
    Royalties has the meaning set forth in Section 4.1.
    
    Sublicense means any license or right granted by Cubist to any person or
Entity (and any such license or right granted by such person or Entity to any
other person or Entity) to use the Novalon Patent Rights or the Novalon
Technology to the same extent as Cubist is entitled pursuant to this Agreement,
together with all agreements between the parties related thereto.
    
    Sublicensor means any person or Entity (including without limitation,
Cubist) who grants a Sublicense.
    
    Sublicensee Any person or Entity to whom a Sublicense is granted.
    
    Technology means all proprietary developments, ideas, designs, concepts,
techniques, processes, inventions, cell lines, discoveries, improvements,
research results, toxicology data, assays, preclinical data, mask Works,
manufacturing processes, clinical results, regulatory submissions, approvals and
licenses, product licenses, papers, photographs, computer programs and
databases, manuals, prototypes, models, plans, drawings, formulations,
specifications, methods, shop-practices, formulas, supplier lists, engineering
and manufacturing information costing information, accounting and financial
data, and strategic plans (without regard to whether they are Confidential
Information, patentable or copyrightable) of a person but that are not included
within Patent Rights, including without limitation,
    
    (a)  inventions that are the subject of patent applications for which
         patents do not issue or are invalidated (from and after the date a
         final determination is made from which no further appeal may be
         taken);
    
    (b)  inventions that directly relate to the Patent Rights but do not
         infringe a valid, unexpired or pending claim contained in the Patent
         Rights;
    
    (c)  from and after the abandonment of a claim of a patent contained in the
         Patent Rights or after the removal of a patent from the list of Patent
         Rights, inventions formerly covered thereby; and

                                        4

<PAGE>
    
    (d)  in countries where the parties hereto have agreed that obtaining
         patent protection is not economically viable or advisable, all
         inventions that directly relate to the Patent Rights.







                                    5    



CONFIDENTIAL Addendum to the Research Collaboration and License Agreement ADDENDUM to the RESEARCH COLLABORATION AND LICENSE AGREEMENT, dated as of May 5, 1997 (the Effective Date), by and between Cubist Pharmaceuticals, Inc., a Delaware corporation (Cubist) and Novalon Pharmaceutical Corporation, a Delaware corporation (Novalon). WHEREAS, Cubist and Novalon have entered into a Series B Convertible Preferred Stock Purchase Agreement, dated as of May 5, 1997 (the Stock Purchase Agreement), pursuant to which Cubist purchased shares of the Series B Convertible Preferred Stock of Novalon and agreed to engage in a collaborative "BioKeys" research project and the "ElectroScreen" project with Novalon. WHEREAS, pursuant to Section 7.6 of the Stock Purchase Agreement, Cubist and Novalon negotiated and entered into a Research Collaboration and License Agreement, dated May 5, 1997, to set forth the rights and obligations of the parties with respect to the research projects. WHEREAS, Cubist and Novalon wish to amend said Research Collaboration and License Agreement with this Addendum; and WHEREAS, Cubist and Novalon wish to maintain in full force and effect all provisions of the Research Collaboration and License Agreement except for those provisions that are amended herein. NOW, THEREFORE, in consideration with the mutual promises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cubist and Novalon hereby agree as follows: Section 1. Definitions. Capitalized terms used in this Agreement shall have the meanings set forth in the Research Collaboration and License Agreement, dated May 5, 1997, except for the following terms which will have the meaning as set forth below: Collaboration Targets List means a schedule, as amended from time to time, listing Targets subject to the provisions of this Section 2 and Section 3 that Cubist has an intention to screen and for which Novalon will make its best efforts to develop assays. <PAGE> Cubist Patent Rights means Patent Rights which are owned by Cubist or any of its Affiliates at any time and from time to time or which Cubist or any of its Affiliates has the right at any time and from time to time to license or sublicense to persons or Entities. The term Cubist Patent Rights shall not include any Patent Rights that are included within Joint Patent Rights. Cubist Technology means Technology which is owned by Cubist or any of its Affiliates at any time and from time to time or which Cubist or any of its Affiliates has the right at any time and from time to time to license or sublicense to persons or Entities. The term Cubist Technology shall not include any Technology that is included within the Joint Technology. Joint Patent Rights means Patent Rights that are jointly owned by Cubist and Novalon and that relate to Joint Technology. Joint Technology means Technology that is developed jointly by the employee, or agents of Novalon and Cubist or their respective Affiliates during the term of the Collaboration. Novalon Patent Rights means Patent Rights which are owned by Novalon or any of its Affiliates at any time and from time to time or which Novalon or any of its Affiliates has the right at any time and from time to time to license or sublicense to persons or Entities. Without limiting the generality of the foregoing, the term Novalon Patent Rights shall include all Patent Rights of Novalon with respect to the patents and patent applications listed in the Patent List. The term Novalon Patent Rights shall not include any Patent Rights that are included within the Joint Patent Rights. Novalon Technology means Technology which is owned by Novalon or any of its Affiliates at any time and from time to time or which Novalon or any of its Affiliates has the right at any time and from time to time to license or sublicense to persons or Entities. The term Novalon Technology shall not include any Technology that is included within the Joint Technology. RCLA means the Research Collaboration and License Agreement. -2- <PAGE> Research Collaboration and License Agreement means that certain Research Collaboration and License Agreement, dated May 5, 1997, by and between Cubist Pharmaceuticals, Inc. and Novalon Pharmaceutical Corporation, as amended from time to time. Sublicense means any license or right granted by Cubist to any person or Entity (and any such license or right granted by such person or Entity to any other person or Entity) to use the Novalon Patent Rights, the Novalon Technology, the Joint Patent Rights, and the Joint Technology to the same extent as Cubist is entitled pursuant to this Agreement, together with all agreements between the parties related thereto. Target means a macromolecule, including but not limited to the amino acid sequence (if known) or nucleic acid sequence (if known) of said macromolecule. Target Activation Date means the date Cubist lists a Target on the Collaboration Targets List, as described in Section 2 herein. Target Exclusivity Fee means a fee of [ ]* per Target per year as described in Section 3 herein to maintain Cubist's exclusive license and/or collaborative relationship for the use of Novalon's technology to research a Target. Section 2 Research Collaboration The following Section 2-1 (c) supersedes and replaces Section 2.1 (c) of the RCLA. Section 2.1 Collaboration (c) In the event that Cubist elects not to exercise the Acquisition Option, Cubist shall, within [ ]* after the Acquisition Option Expiration Date, deliver to Novalon a schedule listing not more than ten (10) Targets that comprise the Collaboration Targets List. The aforementioned Targets will be the focus of the Minimum Research Period. Within ------------------- * Confidential Treatment requested: material has been omitted and filed separately with the Commission. -3- <PAGE> [ ]* after the end of the Minimum Research Period and in the event that the Collaboration continues to be in effect pursuant to the RCLA, Cubist and Novalon will mutually agree upon the number of Targets that shall be added to the Collaboration Targets List to be worked on in the Collaboration during the Remaining Research Period in addition to those Targets that comprised the Collaboration Targets List during the Minimum Research Period, provided that said Targets shall not have been previously listed on the Collaboration Targets List and are not the subject of a research agreement with any third party that would preclude Novalon or Cubist from collaborating to research said Targets with each other. The parties may modify the Collaboration Targets List at any time upon mutual agreement. Novalon shall have the right to remove any Target from the Collaboration Targets List at any time after the last day of the eighteenth month following the Target's respective Target Activation Date by giving Cubist thirty (30) days written notice, provided, however, that the foregoing shall not give Novalon the right to remove a Target if Cubist has paid the Target Exclusivity Fee for such Target for the current period pursuant to Section 3 hereof During the Remaining Research Period, Novalon and Cubist shall (i) continue the research activities described in Exhibit A, (ii) engage in such research, screening, target discovery and validation, and drug discovery and development activities as Cubist shall request, provided that such research, screening, target discovery and validation, and drug discovery and development activities arc related to, or involve, Targets that arc listed on the Collaboration Targets List and (iii) engage in such other research activities as the parties may agree upon from time to time. The respective tasks, activities and obligations of the parties in connection with any of' the matters on which the parties are collaborating during the Remaining Research Period shall be mutually agreed upon by the parties. The following Section 2.4 (b) supersedes and replaces Section 2.4 (b) of the RCLA. ------------------- * Confidential Treatment requested: material has been omitted and filed separately with the Commission. -4- <PAGE> Section 2.4 Exclusivity. (b) During the period commencing upon the [ ]*, Novalon shall not engage in any research or screening activities or programs, any research collaborations, any drug discovery or drug development collaborations, partnerships or alliances, any licensing transactions, or any other kind of transactions in the antibacterial and anti-fungal therapeutic area; provided, however, that the foregoing provisions of this Section 2.4 (b) shall not preclude Novalon from engaging in (i) the Collaboration, or (ii) any research or screening activity or program so tong as it (A) covers a finite number of specific biological Targets for drug discovery and development, (B) provides for Novalon to engage in active research, discovery and development activities with respect to all of such biological Targets, (C) provides for the payment to Novalon commercially reasonable consideration, (D) does not involve Targets that are listed on the Collaboration Targets List at the time the research or screening activity or program is entered into, and (E) does not preclude Novalon from entering into similar arrangements with other parties (including Cubist) relating to other Targets in the same or any different field or pathogen. The restrictions set forth in this Section 2.4 (b) may be waived, in any instance, by written consent of Cubist. Section 3. License. The following Section 3 supersedes and replaces Section 3 of the RCLA. Section 3. License. Subject to all of the terms and conditions of this Agreement, Novalon hereby grants to Cubist an exclusive, worldwide right and license to use the Novalon Patent Rights, the Novalon Technology, the Joint Patent Rights, and the Joint Technology, for purposes of (i) researching, screening for, discovering or developing anti-bacterial or anti-fungal drug candidates or anti-bacterial or anti-fungal drug discovery targets derived from research on Targets listed on the Collaboration Targets List or (ii) selling, licensing, marketing or otherwise commercializing antibacterial or anti-fungal drugs discovered Or developed using any portion of the Novalon ------------------- * Confidential Treatment requested: material has been omitted and filed separately with the Commission. -5- <PAGE> Patent Rights, the Novalon Technology, the Joint Patent Rights, and Joint Technology in research on Targets listed on the- Collaboration Targets List, The license granted hereunder with respect to each Target listed on the Collaboration Targets List shall be for a term of eighteen (18) months' following the Target Activation Date for such Target, provided that Cubist may extend the term of the license by one year for each such Target by the payment to Novalon of' a Target Exclusivity Fee of [ ]* on or before the first day of the nineteenth month following the Target Activation Date for such Target. Cubist may extend the license for such Target for successive one-year terms by the payment to Novalon of an additional Target Exclusivity Fee of [ ]* on each anniversary date of the due date of the first payment of the Target Exclusivity Fee for such Target. In the event that Cubist fails to make any such Target Exclusivity Fee payment, Novalon may, upon giving Cubist thirty (30) days written notice and upon Cubist's failing to make such Target Exclusivity Fee payment, remove such Target from the Collaboration Targets List and revoke the license granted hereunder with respect to such Target. Upon the revocation of a license with respect to any such Target, Cubist shall not thereafter have the right to reinstate such license unless Novalon shall consent thereto in writing. Except for the foregoing, Cubist's license shall be perpetual and irrevocable. Cubist shall have the right to sublicense the license granted to Cubist pursuant to this Section 3. Except for any payments made or required to be made by Cubist to Novalon pursuant to Section 2.2, Section 3 or Section 4.1 of the RCLA and in connection with the Collaboration, Cubist shall not have to pay or otherwise owe to Novalon any consideration of any kind in connection with the license. Section 4. Confidentiality and Use of Names. The following Section 9.4 supersedes and replaces Section 9.4 of the RCLA. Section 9.4 Confidentiality. It is contemplated that in the course of the performance of this Agreement each party may, from time to time, disclose Confidential Information to the other. Each party agrees to take all reasonable steps to prevent disclosure of Confidential Information; ------------------- * Confidential Treatment requested: material has been omitted and filed separately with the Commission. -6- <PAGE> provided that no provision of this Agreement shall be construed to preclude such disclosure of Confidential Information as may be necessary or appropriate to obtain from any governmental agency any necessary approval or license or to obtain patents that are to be included in Novalon Patent Rights and Joint Patent Rights. The following Section 9.9 supersedes and replaces Section 9.9 of the RCLA. Section 9.9 Use of Names. Neither party shall use the name of the other party or any officer, employee or consultant of the other party or any adaptation thereof in any advertising, promotional or sales literature, publicity or in any document employed to obtain funds or financing without the prior written approval of the party or individual whose name is to be used; provided that Cubist my state that it is licensed by Novalon under the Novalon Patent Rights, the Novalon Technology, the Joint Patent Rights, and the Joint Technology and may make such disclosure as is required by the Securities Act of 1933, the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder. Section 5. Joint Rights. The following Section 10 is hereby added to the RCLA. Section 10. Joint Rights. Section 10.1 Ownership Rights. Cubist and Novalon shall jointly and equally own all Technology and inventions developed jointly by the employees or agents of Novalon and Cubist or their respective Affiliates, and shall jointly and equally own all Patent Rights relating to such Technology and inventions. Subject to the provisions of Section 5.2 of the RCLA, Novalon retains all rights to file and prosecute any and all patent applications included within the Novalon Patent Rights, and Cubist retains all rights to file and prosecute any and all patent applications included within the Cubist Patent Rights. Section 10.2 Patent Filings. Novalon shall, using patent attorneys selected by Novalon, apply for, seek issuance of and maintain the Joint Patent Rights and other patents based on the Joint Technology in the United States and in such other countries as Novalon identifies or as Cubist may request in writing, provided that Cubist shall cooperate with Novalon in such prosecution, filing and maintenance. Cubist shall be given at least twenty-five (25) days to advise and comment upon such -7- <PAGE> filings and actions as are undertaken by Novalon. Costs relating to patent filings shall be shared equally between Novalon and Cubist. Cubist may, in its discretion, decline to participate in the prosecution and maintenance of any Joint Patent Rights in any country, provided, however, that in doing so, Cubist shall convey all of its ownership interests in such Joint Patent Rights to Novalon and Novalon shall bear all subsequent patent costs for such Joint Patent Rights. Novalon may, in its discretion, decline to apply for, prosecute or maintain any Joint Patent Rights in any country, but shall give timely notice to Cubist of any such determination, provided, however, that in doing so, Novalon shall convey all of its ownership interests in such Joint Patent Rights to Cubist and Cubist shall bear all subsequent patent costs for such Joint Patent Rights. Novalon agrees to cooperate with Cubist as reasonably necessary to permit Cubist to be able to prosecute or maintain any Joint Patent Rights in those countries where Novalon declines to undertake action. Section 6. Infringement of Joint Rights. The following Section 11 is hereby added to the RCLA. Section 11. Infringement of Joint Rights. Section 11.1 Notice. Cubist shall notify Novalon promptly in writing upon becoming aware of any alleged infringement of the Joint Patent Rights by a third party and shall provide any available evidence thereof, Novalon shall notify Cubist promptly in writing upon becoming aware of any alleged infringement of the Joint Patent Rights by a third party and shall provide any available evidence thereof. Section 11.2 Prosecution By Novalon Related to Joint Rights. Novalon shall have the right, at its sole discretion, to prosecute any alleged infringements of the Joint Patent Rights. Cubist agrees to allow Novalon to include Cubist, at Novalon's own expense, as a party plaintiff in any suit brought with respect to infringement. In the event that Novalon takes the lead role with respect to the commencement or defense of any action, the total costs shall be borne by Novalon, and any recovery or damages shall be applied as follows: (a) first, to Novalon to reimburse Novalon for the expenses of the litigation or suit, including reasonable attorneys' fees and (b) then, the balance would be allocated equally between Cubist and Novalon. Cubist shall have the right to participate in any action, and Novalon agrees to consult with counsel for Cubist on any significant matters related to the litigation. -8- <PAGE> Section 11.3 Prosecution By Cubist Related to Joint Rights. (a) Procedure. If Novalon, within six (6) months after having been notified of an alleged infringement, shall have been unsuccessful in negotiating with the alleged infringer to cease and desist such infringement and shall not have brought an infringement action, or if Novalon shall notify Cubist at any time prior thereto of its intention not to bring suit against any alleged infringer, then Cubist shall have the right, but shall not be obligated, to prosecute at its own expense any such infringement of the Joint Patent Rights. Cubist shall be entitled to offset the costs of any such litigation against any amounts due by Cubist to Novalon under this Agreement. In such circumstances, Cubist may use the name of Novalon as the plaintiff if necessary for the prosecution of the infringement suit. Notwithstanding anything in the foregoing to the contrary, no settlement, consent judgment or other voluntarily final disposition of any such suit may be entered into without the consent of Novalon, which consent shall not be unreasonably withheld. (b) Damages. In the event that Cubist undertakes litigation pursuant to Section 11.3 (a) for the enforcement of Joint Patent Rights, any recovery of damages by Cubist or Novalon, as the case may be, for each suit shall be applied as follows: (a) first, to Cubist to reimburse Cubist for the expenses of the litigation or suit, including reasonable attorneys' fees, (b) then, second, to Novalon to reimburse Novalon for its expenses of the litigation or case, including reasonable attorneys' fees [ ]* and (c) then the balance would be allocated [ ]* between Cubist and Novalon. Section 11.4 Actions Against Cubist or Novalon Related to Joint Rights. (a) In the event that an action alleging invalidity or noninfringement of any of the Joint Patent Rights shall be brought against Cubist or against Novalon (whether as an independent action or as a counterclaim of a suit filed by either Novalon pursuant to Section 11.2 or Cubist pursuant to Section 11.3(a)), Novalon, at its sole option, shall have the right, within thirty (30) days after the commencement of such action, to take or regain control of the action at its own expense. If Novalon shall determine not to exercise this right, Cubist may take over or remain as ------------------- * Confidential Treatment requested: material has been omitted and filed separately with the Commission. -9- <PAGE> lead counsel for the action at Cubist's sole expense, with any settlement or recovery subject to the approval provisions of Section 11.3(a) and allocation provisions or Section 11.3(b). (b) In the event that an action alleging any of the Joint Patent Rights or Joint Technology infringes, or resulted from the misappropriation of, any third party shall be brought against Cubist or against Novalon (whether as an independent action or as a counterclaim of a suit filed by either Novalon pursuant to Section 11.2 or Cubist. pursuant to Section 11.3 (a)), Novalon, at its sole option, shall have the right, within thirty (30) days after the commencement of such action, to take or regain control of the action at its own expense. If Novalon shall determine not to exercise this right, Cubist may take over or remain as lead counsel for the action at Cubist's sole expense. -10- <PAGE> IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers, and have duly delivered and executed this Agreement under seal as of the date first set forth above. Novalon Pharmaceutical Corporation Cubist Pharmaceuticals, Inc. /s/ Dana M. Fowlkes /s/ Scott M. Rocklage ----------------------------------- ----------------------------- By: Dana M. Fowlkes, M.D., Ph.D. By: Scott M. Rocklage, Ph.D. Title: Chairman, President, and CEO Title: President and CEO -11-