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Collaboration Agreement - Tularik Inc. and Knoll AG

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                            COLLABORATION AGREEMENT

                                    between

                                 TULARIK, INC.

                                      and

                                   KNOLL AG


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933 as amended.
<PAGE>

Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.


                            COLLABORATION AGREEMENT

     This Collaboration Agreement is entered into as of the first day of
November, 1998 (the "Effective Date") by and between Tularik Inc., a Delaware
corporation ("Tularik"), and Knoll Ag, a corporation organized under the laws of
Germany ("Knoll").

                                   Recitals

     Whereas, Tularik has developed proprietary screening assays and other
proprietary technology useful in the identification of compounds that directly
agonize or antagonize certain targets for the therapeutic treatment of obesity
and related diseases in humans; and

     Whereas, Knoll and Tularik both possess substantial libraries of natural
and synthetic compounds that have potential therapeutic pharmaceutical utility;
and

     Whereas, Tularik and Knoll desire to establish a cooperative research
relationship where the compound libraries of each Party will be screened using
the Tularik Assays (as hereinafter defined); and

     Whereas, the Parties wish to develop and market novel therapeutic products
based on compounds identified during such research; and

     Now, Therefore, in consideration of the foregoing and the covenants and
promises contained herein, the Parties agree as follows:

                             ARTICLE 1 Definitions

     As used herein, the following terms shall have the following meanings:

     1.1  "Additional Target" shall mean a Target that is added to Appendix A
pursuant to Section 2.7.2(i) and that it is not a Substitute Target. An
"Additional Target" may or may not also be a [ * ].

     1.2  "Affiliate" shall mean any company or entity controlled by,
controlling or under common control with a Party and shall include without
limitation any company fifty percent (50%) or more of whose voting stock or
participating profit interest is owned or controlled, directly or indirectly, by
a Party, and any company that owns or controls, directly or indirectly, fifty
percent (50%) or more of the voting stock of a Party.

     1.3  "Agreement" shall mean this Collaboration Agreement.
<PAGE>

     1.4  "At Risk" shall mean a Body Mass Index greater than or equal to [ * ]
but less than [ * ], which may be revised from time to time in accordance with
generally accepted international and national scientific practice.

     1.5  "Body Mass Index" shall mean weight in kilograms divided by height in
meters squared (kg/m2), as such index shall be revised from time to time in
accordance with generally accepted international and national scientific
practice.

     1.6  "Collaboration Program" shall mean the research and development
program in the Field conducted pursuant to this Agreement.

     1.7  "Collaboration Program Term" shall mean the period during which the
Collaboration Program is to be conducted as provided in Section 15.1.

     1.8  "Commercialization Notice" shall have the meaning set forth in Section
5.1.

     1.9  "Compound Libraries" means the Knoll Compound Library, the Tularik
Compound Library and the Research Compound Library.

     1.10 "Compound Opportunity" shall have the meaning set forth in Section
2.7.1.

     1.11 "Confidential Information" shall mean, subject to the limitations set
forth in Section 13.1 hereof, all information relating to the Collaboration
Program disclosed by one Party to the other Party pursuant to this Agreement.

     1.12 "Contribution Royalty" shall mean a royalty determined in accordance
with the procedure set forth in Section 4.4.6.

     1.13 "Current Program Target" shall mean one of the Program Targets
included on Appendix A at any given point in time.  As of the Effective Date,
the two Current Program Targets are (1) [ * ] and (2) [ * ].  In the event
Additional Targets or Substitute Targets are added to Appendix A pursuant to
Section 2.7.2, at the time such targets are added, they shall be deemed to be
Current Program Targets.

     1.14 "Developing Party" shall have the meaning given in Section 4.3.2 of
this Agreement.

     1.15 "Development" shall mean the standard, internal program established by
a Party for drug development, which shall commence at the sole discretion of
that Party, but in no event shall such program be considered to have commenced
prior to the start of [ * ].

     1.16 "Effective Date" shall have the meaning given in the introductory
paragraph of this Agreement.

     1.17 "Extra-Field Products" shall mean products based upon or incorporating
Research Compounds to be commercialized (i) [ * ]; and (ii) [ * ], as set forth
in this Agreement.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       2
<PAGE>

"Extra-Field Products" include Knoll Extra-Field Products, Tularik Extra-Field
Products and Third Party Extra-Field Products.

     1.18 "FDA" shall mean the United States Food and Drug Administration.

     1.19 "Field" shall mean the research, development and commercialization of
products that are agonists or antagonists of the Program Targets and are useful
in the Indications.

     1.20 "FTE" shall mean full-time equivalents.

     1.21 "Hit" means a Library Compound that agonizes or antagonizes a Program
Target in an HTS performed as part of the Research Program.

     1.22 "HTS" means high throughput screening.

     1.23 "IND" stands for "Investigational New Drug Application" and shall mean
an application for approval by the FDA, or the equivalent non-U.S. regulatory
authority, to commence human clinical testing of a drug.

     1.24 "Independent Research" shall have the meaning set forth in Section
3.1.2.

     1.25 "Indications" means the [ * ] human patients and, in addition, may
include the [ * ].  Treatment shall include any [ * ] used in combination with
Program Products.

     1.26 "Inventing Party" means the Party whose employees, agents or
consultants have made an Invention.

     1.27 "Invention" means any possibly patentable discovery or invention,
whether patentable or not, made during the course of the Collaboration Program
and within the scope of the Research Plan.  Determination of inventorship shall
be made in accordance with the patent laws of the United States of America.

     1.28 "JT" shall mean Japan Tobacco Inc.

     1.29 "JT Agreement" shall mean the agreement between JT and Tularik dated
December 31, 1996 and amendments thereto.

     1.30 "Knoll Compound Library" means the compound library consisting of
Knoll Substances.

     1.31 "Knoll Extra-Field Products" shall mean all Extra-Field Products
synthesized by Knoll or its Affiliates.

     1.32 "Knoll Know-How" shall mean all materials, know-how and information
(a) that exists as of the Effective Date, (b) that Knoll owns, controls or to
which it has a license (with the right to sublicense), during the Collaboration
Program Term and (c) that would be infringed or misappropriated by the conduct
of the Research Program or the development, manufacture, use or sale of Program
Products.  Knoll Know-How shall not include Knoll Patents.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       3
<PAGE>

     1.33 "Knoll Patents" shall mean any and all patents (other than Program
Patents), both foreign and domestic, that have not been held invalid or
unenforceable by a court of competent jurisdiction from which no appeal has been
or can be taken, including without limitation all extensions, reissues,
renewals, reexaminations, supplementary protection certificates and inventors'
certificates, (a) that (i) are issued as of the Effective Date, (ii)
subsequently issue from applications (including substitutions, divisionals,
continuations and continuations-in-part) pending as of the Effective Date or
(iii) issue from any such applications subsequently filed on inventions made as
of the Effective Date, (b) that Knoll owns, controls or to which it has a
license (with the right to sublicense), during the term of this Agreement and
(c) that would be infringed by the conduct of the Research Program or the
development, manufacture, use or sale of Program Products.

     1.34 "Knoll Substances" shall mean those natural extracts, natural
compounds and synthetic compounds that either Knoll or its Affiliates owns or
has the right to license or sublicense as of the Effective Date or from time to
time during the Collaboration Program Term independently of the Collaboration
Program.

     1.35 "Knoll Technology" shall mean, collectively, the Knoll Know-How, the
Knoll Patents and the Knoll Substances.

     1.36 "Knoll Territory" shall mean [ * ].

     1.37 "Library Compound" means a compound from a Knoll Compound Library or a
Tularik Compound Library.

     1.38 "License Agreement" shall mean the license agreement or agreements to
be entered into between the Parties substantially in the form attached hereto as
Appendix C.

     1.39 "NDA" stands for "New Drug Application" and shall mean an application
for regulatory approval by the FDA, or an equivalent non-U.S. authority,
required for the marketing and sale of a pharmaceutical product in a given
jurisdiction.

     1.40 "New Target Candidates" shall mean any Target that is not, and has not
been, a Program Target.  [ * ].

     1.41 "New Targets" shall mean Additional Targets and Substitute Targets.

     1.42 "Obese" shall mean a Body Mass Index greater than or equal to [ * ],
which may be revised from time to time in accordance with generally accepted
international and national scientific practice.

     1.43 "Overweight" shall mean a Body Mass Index greater than or equal to [ *
] but less than [ * ], which may be revised from time to time in accordance with
generally accepted international and national scientific practice.

     1.44 "Party" shall mean either Tularik or Knoll.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       4
<PAGE>

     1.45 "Patents" shall mean Program Patents and/or Research Compound Patents.

     1.46 "Pharmaceutical Market" shall mean [ * ].

     1.47 "Prior Interest" means a compound that, at the time of identification
as a Validated Hit:  [ * ].

     1.48 "Program Know-How" shall mean any know-how developed by either Party
pursuant to the Collaboration Program during the Collaboration Program Term.
Program Know-How shall not include Program Patents.

     1.49 "Program Patents" shall mean any and all patents and patent
applications, both foreign and domestic, that have not been held invalid or
unenforceable by a court of competent jurisdiction in a decision from which no
appeal has been or can be taken, including without limitation all extensions,
reissues, reexaminations, renewals, supplementary protection certificates and
inventors' certificates, which cover inventions or discoveries made by either
Party or both Parties pursuant to the Collaboration Program during the
Collaboration Program Term.  Program Patents shall not include any Research
Compound Patents.

     1.50 "Program Product" shall have the meaning set forth in Section 5.1.

     1.51 "Program Target" shall mean one of the targets included on Appendix A
at any time during the Collaboration Program Term.

     1.52 "Program Technology" shall mean all Program Patents and Program Know-
How.

     1.53 "Regulatory Approval" means all approvals (including pricing and
reimbursement approvals), product and/or establishment licenses, registrations
or authorizations of any regional, federal, state or local regulatory agency,
department, bureau or other governmental entity, necessary for the manufacture,
use, storage, import, export, transport or sale of Program Products in a
regulatory jurisdiction.

     1.54 "RC" shall stand for "Research Committee" and shall mean that
committee formed pursuant to Section 2.2.1 hereof.

     1.55 "Research Compound" means any compound that is based upon any Hit and
that is made, created, discovered, identified, invented, synthesized, optimized
or acquired by either Party pursuant to the Research Plan, in the course of the
Collaboration Program or at the direction of the RC.

     1.56 "Research Compound Inventions" shall have the meaning given in Section
4.3.

     1.57 "Research Compound Library" means all Research Compounds. The Research
Compound Library shall not include any Knoll Substances or Tularik Substances.

     1.58 "Research Compound Patents" shall mean any and all patents and patent
applications, both foreign and domestic, that have not been held invalid or
unenforceable by a


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       5
<PAGE>

court of competent jurisdiction in a decision from which no appeal has been or
can be taken, including without limitation all extensions, reissues,
reexaminations, renewals, supplementary protection certificates and inventors'
certificates, which cover Research Compound Inventions made by either Party or
both Parties pursuant to the Collaboration Program during the Collaboration
Program Term. Research Compound Patents shall not include any patents or patent
applications claiming Program Patents.

     1.59 "Research Opportunity" shall have the meaning set forth in Section
2.7.1.

     1.60 "Research Plan" shall mean a detailed plan for conducting the
Collaboration Program directed toward the Field attached hereto as Appendix B,
as amended from time to time by the RC in accordance with Section 2.3.

     1.61 "Research Program" shall mean the components of the Collaboration
Program in the Field occurring prior to the commencement of Development for each
Validated Hit or Program Product, as described in the Research Plan.

     1.62 "Screening Library" means the Knoll Compound Library or the Tularik
Compound Library.

     1.63 "SC" shall stand for "Steering Committee" and shall mean that
committee formed pursuant to Section 2.2.2 hereof.

     1.64 "Section 12.4 Termination" shall have the meaning set forth in Section
15.1.

     1.65 "Substitute Targets" shall mean a Target that is substituted for a
Current Program Target pursuant to Section 2.7.2(ii).  Thereafter, such
Substitute Target shall be deemed to be a Current Program Target.  A "Substitute
Target" may or may not also be a [ * ].

     1.66 "Tail Period" shall mean the twelve (12) month period commencing on
the date the Collaboration Program Term expires or is terminated.

     1.67 "Targets" shall mean biochemical components of a system determined by
Tularik to have potential to be agonized or antagonized by Research Compounds or
Library Compounds for use in the Indications.

     1.68 "Third Party" shall mean a person or entity other than Tularik, Knoll
or an Affiliate of either Tularik or Knoll.

     1.69 "Third Party Extra-Field Products" shall mean all Extra-Field Products
synthesized by a Third Party.

     1.70 "Three-Party Agreement" shall mean an agreement that may be executed
following the Effective Date among JT, Knoll and Tularik relating to the
subject matter of this agreement.

     1.71 "Tularik Assays" shall mean those biochemical and cell-based assays
developed by, or on behalf of, Tularik for the Research Program.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       6
<PAGE>

     1.72 "Tularik Compound Library" means the library consisting of Tularik
Substances.

     1.73 "Tularik Extra-Field Products" shall mean all Extra-Field Products
synthesized by Tularik or its Affiliates.

     1.74 "Tularik Know-How" shall mean all materials, know-how and information
(a) that exists as of the Effective Date, (b) that Tularik owns, controls or to
which it has a license (with the right to sublicense), during the Collaboration
Program Term and (c) that would be infringed or misappropriated by the conduct
of the Research Program or the development, manufacture, use or sale of Program
Products.  Tularik Know-How shall not include Tularik Patents.

     1.75 "Tularik License Agreement" shall mean a license agreement or license
agreements entered into between the Parties pursuant to this Agreement and
substantially in the form of the License Agreement, with such changes as are
necessary to reflect the grant of licenses from Knoll to Tularik and the
consideration for such licenses described in this Agreement.

     1.76 "Tularik Partner" shall mean one or more of:  (i) Japan Tobacco Inc.,
Merck & Co., Inc., Sumitomo Pharmaceuticals Co., Ltd., Taisho Pharmaceutical
Co., Ltd. and Rosche Bioscience division of Syntex (U.S.A.) Inc.; (ii) any
Affiliates of the foregoing; and (iii) any successors of an entity described in
clause (i) or (ii).

     1.77 "Tularik Patents" shall mean any and all patents (other than Program
Patents), both foreign and domestic, that have not been held invalid or
unenforceable by a court of competent jurisdiction in a decision from which no
appeal has been or can be taken, including without limitation all extensions,
reissues, renewals, reexaminations, supplementary protection certificates and
inventors' certificates, (a) that (i) are issued as of the Effective Date, (ii)
subsequently issue from applications (including substitutions, divisionals,
continuations and continuations-in-part) pending as of the Effective Date or
(iii) issue from any such applications subsequently filed on inventions made as
of the Effective Date, (b) that Tularik owns, controls or to which it has a
license (with the right to sublicense) during the term of this Agreement and (c)
that would be infringed by the conduct of the Research Program or the
development, manufacture, use or sale of Program Products.

     1.78 "Tularik Product" shall have the meaning given in Section 5.3.1.

     1.79 "Tularik Substances" shall mean those natural extracts, natural
compounds and synthetic compounds that Tularik owns or has the right to license
or sublicense as of the Effective Date or from time to time during the
Collaboration Program Term independently of the Collaboration Program. "Tularik
Substances" shall not include compounds that (i) prior to the Effective Date,
have been designated as development candidates outside the Field by the
committee or group within Tularik that customarily makes such designations; or
(ii) are natural extracts, natural compounds or synthetic compounds contained in
the screening library of JT as of the Effective Date or from time to time during
the Collaboration Program Term without the written consent of JT.

     1.80 "Tularik Technology" shall mean, collectively, the Tularik Assays, the
Tularik Know-How, the Tularik Patents and the Tularik Substances.

     1.81 "Tularik Territory" shall mean [ * ].


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       7
<PAGE>

     1.82 [ * ] shall mean a biochemical component of a system that [ * ] that
is determined by the RC to have potential to be agonized or antagonized by
Research Compounds or Library Compounds for use against the Indications.

     1.83 "Validated Hit" means a Library Compound or Research Compound that
agonizes or antagonizes a Program Target in confirmatory screening of Hits as
part of the Research Program.

                        ARTICLE 2 Program; Development.

     2.1  Research Program. Tularik and Knoll shall conduct the Research Program
pursuant to the Research Plan.  The goals and progress of the Research Program
shall be determined by and monitored under the direction of the RC as set forth
in Section 2.2.  The Parties shall commence the Research Program upon the
Effective Date.

     2.2  Research Program Management.

          2.2.1  Research Committee ("RC").

                 (a) Tularik and Knoll will each appoint three (3)
representatives to the RC, which shall exist for the Collaboration Program Term
and then be dissolved.

                 (b) Each representative to the RC shall have appropriate
technical credentials and knowledge and ongoing familiarity with the Research
Program. Tularik's initial representatives to the RC will (i) Dr. Jin-Long Chen,
(ii) Dr. Shugui Huang and (iii) Dr. Martin Thoolen. Knoll's initial
representatives to the RC will be (i) Dr. Robert Jones, (ii) Dr. Siegfried
Bialojan and (iii) Dr. Jim Jeffery. Either Party may change any or all of its
appointments to the RC at any time upon giving written notice to the other
Party. Each Party will designate one of its RC representatives to serve as the
liaison between the Parties and to undertake and coordinate any day-to-day
communications as may be required by and between the Parties. Tularik shall
designate the chairperson of the RC.

                 (c) The RC shall meet semi-annually, or more frequently as
mutually agreed, such agreement not to be unreasonably withheld or delayed,
during the Research Program Term to review the results of the Research Program
and to revise the Research Plan, as needed. The RC will report to the SC on the
outcome of such meetings.

                 (d) The RC shall carry out the following responsibilities:

                     (i)   defining, periodically revising and recommending to
the SC the yearly objectives of the Research Program;

                     (ii)  co-ordinating activities required to carry out the
Collaboration Program;

                     (iii) monitoring progress of the Collaboration Program;

                     (iv)  delegating responsibility for the filing and
prosecution of Program Patents on inventions jointly discovered in the course of
the Collaboration Program Term; and


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       8
<PAGE>

                     (v)   recommending Validated Hits according to the Research
Plan to the SC for Development.

     All actions taken and decisions made by the Research Committee shall be by
unanimous agreement.

          2.2.2  Steering Committee.

                 (a) Each Party shall appoint two (2) representatives to the SC,
which shall exist for the Collaboration Program Term and then be dissolved.

                 (b) Tularik's initial representatives to the SC will be its
Chief Executive Officer, Dr. David V. Goeddel, and Dr. Terry Rosen, Vice
President, Research Operations. Knoll's initial representatives to the SC will
be Dr. Hans-Heinrich Gruenhagen, Vice President of Research and Technology,
Knoll, Germany, and Dr. Ian Hunneyball, Director of Research, Knoll
Pharmaceuticals, UK. Either Party may change its appointments to the SC at any
time upon giving written notice to the other Party. Knoll shall designate the
chairman of the SC.

                 (c) The SC will meet promptly after the Effective Date to
establish such procedures and mechanisms as may be necessary for the operation
of the SC and the RC to assure the efficient conduct of the Research Program.
Thereafter, the SC will meet annually, or as otherwise mutually agreed, such
agreement not to be unreasonably withheld or delayed, during the Collaboration
Program Term.

                 (d) The SC shall have the authority to:

                     (i)   recommend that Knoll approve or not approve the
annual Research Plan based on recommendations made by the RC;

                     (ii)  recommend Validated Hits for Development by Knoll;
and

                     (iii) resolve disputes within the RC.

                 (e) Decisions of the SC shall be unanimous; [ * ].

                 (f) Anything in Section 2.2.2(e) to the contrary
notwithstanding, the following decisions require the unanimous vote of the SC:

                     (i)   [ * ];

                     (ii)  [ * ];

                     (iii) [ * ]; and

                     (iv)  [ * ].

     2.2.3. Meetings. The SC and the RC may meet by telephone or in person at
such times as are agreeable to the members of each such committee. The location
of each SC and RC meeting will be determined alternately by each Party, with
each Party bearing the expenses of its representatives attending SC or RC
meetings. Tularik will determine the location of the first meeting of each
committee. Members of a committee may be represented at any meeting by another
member of the committee, or by a deputy, either of whom may cast the absent
member's vote. The SC and

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       9
<PAGE>

RC shall issue agendas in advance of each meeting. The chairperson shall appoint
someone to keep accurate minutes of the meetings, which shall be effective upon
approval of the other Party, such approval not to be unreasonably withheld or
delayed.

     2.3  Research Program Review and Amendment.  The RC will periodically
review the Research Program, including all screening results and new
developments regarding the Field, and propose changes to the Research Plan based
upon the results of prior work and new developments in the Field.

     2.4  Screening and Development.  For the purpose of identifying Validated
Hits that are suitable for designation as Program Products for development
within the Field, Tularik shall develop and perform the Tularik Assays during
the Collaboration Program Term to determine:  (i) [ * ] of Library Compounds and
Research Compounds; and (ii) [ * ] of such Library Compounds and Research
Compounds.  In addition, Tularik shall provide to Knoll the Tularik Assays to
enable Knoll to perform screening of Knoll Substances during the Collaboration
Program Term to identify Validated Hits that are suitable for designation as
Program Products for use in the Field.

     2.5  Validated Hit Optimization.  Both Parties shall undertake, under the
direction of the RC, target validation, medicinal chemistry, pharmacological
profiling and other preclinical activities with respect to Validated Hits and
otherwise as set forth in the Research Plan.  Knoll shall perform such further
preclinical or other activities as shall enable it to prepare one or more
Validated Hits for Development; provided, however, that [ * ] on any Research
Compound or Library Compound within the Field shall not be commenced by or on
behalf of Knoll until [ * ].

     2.6  Exchange of Data.  All data and information obtained by either Party
pursuant to the Research Program will be provided to the RC.  Tularik shall
apprise Knoll promptly following the discovery of compounds with [ * ];
provided, however, that the foregoing obligation shall terminate upon [ * ].
Knoll acknowledges and agrees that Tularik shall [ * ]; provided, however, that
Tularik shall not [ * ] will exchange data relating to Validated Hits [ * ] for
no additional fee or cost; provided, however, that the foregoing shall not
constitute an obligation to exchange reports compiled for submission to
authorities to receive Regulatory Approvals.  The Parties may also make such
data available to their respective licensee(s) in the Field subject to the
payment of a reasonable fee to be separately agreed at the time such data is
made available to such licensee(s); provided, however, such data shall not be
made available to licensees until each has executed a standard confidentiality
agreement with respect thereto.

     2.7  New Targets.

          2.7.1  Tularik may, in its sole discretion, (i) [ * ] New Target
Candidates; (ii) [ * ] to determine whether compounds from the Tularik Compound
Library agonize and/or antagonize such New Target Candidates; and/or (iii) [ * ]
with respect to compounds that agonize and/or antagonize such New Target
Candidates.  In the event Tularik determines, in its sole discretion, to [ * ]
as of the Effective Date, the opportunity:  (A) to [ * ] a New Target Candidate
(a "Research Opportunity"); or (B) to [ * ] a New Target Candidate (a "Compound
Opportunity"); Tularik shall [ * ] in a written notice reasonably describing
such [ * ], or such [ * ] shall have no obligation to offer to Knoll any:  (Y) [
* ]; or (Z) [ * ]; in which case Tularik shall


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       10
<PAGE>

be obligated to offer to Knoll such [ * ] or such Compound Opportunity that
relates to such compound that [ * ].

     2.7.2 In the event Tularik offers to Knoll a Research Opportunity
pursuant to Section 2.7.1, Knoll shall, within [ * ] of receipt of such written
notice, inform Tularik in writing whether Knoll:  (i) wishes to [ * ]; (ii)
wishes to [ * ]; or (iii) does not wish to [ * ].

     2.7.3 In the event Knoll elects the option contained in Section 2.7.2(i)
above, and the Research Opportunity relates to a New Target Candidate that is
not a [ * ], (i) Knoll shall pay Tularik [ * ] upon signing of the amended
Appendix A and (ii) Knoll shall [ * ], and such New Target Candidate shall be
added to Appendix A as [ * ];

     2.7.4 In the event Knoll elects the option contained in Section 2.7.2(i)
above, and the Research Opportunity relates to a New Target Candidate that is a
[ * ], Knoll shall [ * ] and such New Target Candidate shall be added to
Appendix A as [ * ];

     2.7.5 In the event Knoll elects the option contained in Section 2.7.2(ii)
above, Knoll shall not be required to [ * ] such New Target Candidate and such
New Target Candidate shall be added to Appendix A as [ * ]. Upon addition of a
New Target Candidate to Appendix A as a [ * ], one of the then-Current Program
Targets selected by the RC shall be [ * ] and Tularik may [ * ], both within and
outside of the Field, resulting from research relating to such Current Program
Target that has been deleted from Appendix A, either alone or with any Third
Party, [ * ]. Promptly after designation of a New Target Candidate as a [ * ]
hereunder, Knoll shall enter into a sole and exclusive, worldwide license with
Tularik, with the right to sublicense, under Knoll Patents and under Knoll's
interest in any Patents to make and use the [ * ] for research purposes and to
develop, make, have made, use, offer to sell, sell or import any products, both
within and outside of the Field, resulting from research relating to such [ * ],
subject to [ * ].

     2.7.6 In the event Knoll elects the option contained in Section 2.7.2(iii),
Tularik may perform research relating to, and/or develop and commercialize,
products, both within and outside of the Field, resulting from research relating
to such [ * ], either alone or with any Third Party without [ * ]. Additionally,
if Knoll elects the option contained in Section 2.7.2(iii), Knoll shall provide
to Tularik all relevant scientific data and information generated by Knoll in
the course of evaluating such [ * ].

     2.7.7 In the event Tularik offers to Knoll a [ * ] pursuant to Section
2.7.1, Knoll shall have a first right to [ * ] an exclusive, royalty-bearing
license to develop, make, have made, use, offer for sale, sell and import the [
* ] as described in this Section 2.7.7. Knoll shall provide written notice to
Tularik if Knoll wishes to exercise such right to negotiate for such [ * ] of
receipt by Knoll of the written notice provided by Tularik pursuant to Section
2.7.1. During the [ * ] period following receipt by Tularik of such written
notice, Knoll and Tularik shall negotiate in good faith regarding the terms and
conditions of such license; provided, however, that [ * ]. In the event Knoll
and Tularik are unable to agree upon mutually acceptable terms for any such
license or in the event that Knoll elects not to pursue the [ * ], Tularik may
develop and commercialize the [ * ] both within and outside of the Field, either
alone or with any Third Party, without any further obligation to Knoll.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       11
<PAGE>

     2.8  Due Diligence.  Each Party shall devote commercially reasonable
efforts to its obligations under the Collaboration Program.

     2.9  Research License.

          2.9.1  Grant of Rights. Each Party hereby grants to the other Party a
non-exclusive license, without the right to sublicense (except to Affiliates of
Knoll that enter into the agreement with Tularik attached as Exhibit 2.9.1 or as
provided in the following sentence), under its interest in the Program
Technology, Knoll Technology or Tularik Technology, respectively, to the extent
applicable to the Field, for the purpose of conducting the Collaboration
Program. Knoll agrees that Tularik may sublicense to JT such non-exclusive
licenses for use in the research program between Tularik and JT during the term
of the JT Agreement; provided, however, that the foregoing right to the
Sublicense to JT shall not apply unless: (i) JT shall have made a reciprocal
grant to Tularik of a right to sublicense to Knoll comparable intellectual
property or other proprietary rights arising under the research program between
Tularik and JT pursuant to the JT Agreement; and (ii) Tularik shall have, in
turn, sublicensed such JT intellectual property or proprietary rights to Knoll.

          2.9.2  Limited Use. Each Party acknowledges and agrees that use of the
Library Compounds provided pursuant to Sections 4.1 and 4.2 is limited solely to
those activities contemplated by the Collaboration Program, unless otherwise
provided for in this Agreement, and that such Library Compounds are for research
use only and shall not be administered to humans in any manner or form, except
in accordance with the terms of this Agreement, subject to receipt of
appropriate governmental approvals for such use.

          2.9.3  Use of a Party's Own Substances. Notwithstanding anything to
the contrary in Sections 2.4 and 2.9.2, but subject to Section 4.4, Knoll shall
retain the right to use freely Knoll Substances and Tularik shall retain the
right to use freely Tularik Substances, as the case may be, that are not Program
Products for purposes outside the Field and to file patent applications covering
any resulting inventions useful outside the Field. If a Commercialization Notice
is given and a Library Compound becomes a Program Product, such Library Compound
shall be removed from the Screening Library from which such Library Compound
originated until such time as a Party ceases using commercially reasonable
efforts to develop and market such Program Product.

     2.10 List of Validated Hits. Knoll shall provide to Tularik a list of
Validated Hits in which Knoll has an interest for developing Program Products
based thereon within [*] after (i) expiration or termination of
the Collaboration Program; or (ii) receipt of the payments required by Section
5.3.3(A), (B) or (C).

                       ARTICLE 3 Collaboration Program.

     3.1  Exclusivity/Third Party Agreements.

          3.1.1  Exclusivity. The Parties shall work exclusively with each other
in the Field during the Collaboration Program Term, except as expressly provided
in this Article 3. Any research and development being conducted by the Parties
to discover and develop compounds having activity in the Field as of the
Effective Date shall be included as part of the Collaboration Program. During
the Collaboration Program Term, neither Party will develop or commercialize a
product in the Field other than pursuant to this Agreement. Anything in this


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of this Securities Act of 1933, as amended.

                                       12
<PAGE>

Article 3 to the contrary notwithstanding, the activities of JT and Tularik
under the JT Agreement in the Tularik Territory, and the activities of JT and
the Parties under the Three-Party Agreement, shall not be deemed to violate the
provisions of Article 3.

     3.1.2 Activities Relating to the Field. Except as provided in this Section
3.1, neither Tularik nor Knoll shall, during the Collaboration Program Term, (a)
[ * ] pursuant to any agreement with any Third Party (collectively, "Third Party
Technology") or (b) [ * ] or (c) [ * ] outside the Research Program
("Independent Research"). Independent Research shall not include research [ * ].

     3.1.3 Joint Decision-Making Process for Third Party Technology. If either
Party wishes to acquire or use any Third Party Technology or conduct or fund any
Independent Research, it shall present such opportunity to the SC. If the SC
wishes to include such Third Party Technology or Independent Research in the
Research Program, then the Parties shall mutually agree in writing on the terms
under which such Third Party Technology or Independent Research will be
incorporated into the Research Program; provided, however, that Knoll's
collaboration with Dr. Brand regarding [*] shall be included as Independent
Research under the Research Program to the extent permissible according to the
contractual arrangement between Knoll and Dr. Brand. If an agreement between a
Party and any Third Party is relevant to such decision, it shall be disclosed in
full to the other Party to the extent permissible under such Third Party
agreement. Each Party acknowledges that any rights that a Party obtains pursuant
to any such Third Party agreements that are incorporated into the Research
Program are and shall be subject to the terms of such agreements,
notwithstanding any provisions of this Agreement. If the SC does not agree to
include such Third Party Technology or Independent Research in the Research Plan
on mutually-agreeable terms, then the provisions of Section 3.1.5 shall apply.

     3.1.4 Re-Presentation to SC. If a Party proposes to acquire Third Party
Technology and the SC does not agree unanimously to acquire such Third Party
Technology, then either Party may negotiate such an agreement with such Third
Party; provided, however, that the negotiating Party shall again present such
opportunity to the other Party pursuant to Section 3.1.3 promptly following
execution of such agreement.

     3.1.5 Outside Activities. If the SC does not agree to include any
particular Third Party Technology or Independent Research in the Research Plan,
then, subject to Section 3.1.4, either Party may conduct or fund such
Independent Research, or use such Third Party Technology, outside the Research
Program (the "Outside Activities"); provided, however, that [ * ]. Should any [
* ] be imposed upon such activities or Program Products, the Party conducting
the Outside Activities shall indemnify the other Party for any [ * ]; provided,
however, that the other Party shall take commercially reasonable steps, if any
are possible or practical, to [ * ]; and provided further that the other Party
permits [ * ]. If a Party conducts or funds Independent Research outside the
Research Program, then such Party may not [ * ], except with the prior written
consent of the other Party, which consent may be withheld in its sole
discretion. Following the issuance of a Commercialization Notice with respect to
a Validated Hit or Program Product, and for so long as the Development of such
Program Product is conducted by Knoll in accordance with Section 5.4 hereof and
Section 2.1.2 of the License Agreement, Tularik shall [ * ].


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       13
<PAGE>

  3.2     Third Party Agreements.  Except as provided in Section 3.1.5 but
subject to Section 4.1 of the License Agreement, Knoll shall be responsible for
fulfilling all obligations of either Party or both Parties to Third Parties,
including but not limited to financial obligations, arising with respect to the
development and commercialization of Program Products in the Knoll Territory
(but not Third Party obligations arising with respect to research activities,
which Third Party obligations shall be fulfilled in accordance with Section 3.1)
under agreements with Third Parties relating to Third Party Technology,
Independent Research or any other agreements between either Party or both
Parties and Third Parties; provided, however, that such Third Party agreement
has been approved by the SC in accordance with Section 3.1.3.

              ARTICLE 4 Compound Libraries And Research Compounds.

  4.1     Knoll Compound Library.  The Knoll Compound Library shall be used in
HTS against the Current Program Targets. Knoll shall provide structural
information on Validated Hits from the Knoll Compound Library within forty-five
(45) days following Tularik's request and otherwise at the direction of the RC;
provided, however, that Knoll shall have no obligation to reveal structural
information on a Validated Hit if such Validated Hit is of Prior Interest.  The
Knoll Compound Library shall be treated as Knoll's Confidential Information.  In
no event shall Tularik grant to JT rights in the Knoll Compound Library without
the written consent of Knoll.

  4.2     Tularik Compound Library.  The Tularik Compound Library shall be used
in HTS against the Current Program Targets.  Except for the research license
granted to Knoll contained in Section 2.9.1, Knoll shall have no rights to make,
use or sell Tularik Substances in the Knoll Territory unless a Tularik Substance
becomes a Program Product and the Parties execute a License Agreement therefor
following a Commercialization Notice pursuant to Section 5.1.  Tularik shall
provide structural information to Knoll on Validated Hits from the Tularik
Compound Library within [ * ].  The Tularik Compound Library shall be treated as
Tularik's Confidential Information.

  4.3     Research Compound Library.

          4.3.1     Ownership of Research Compounds. Subject to this Section
4.3, all Research Compounds and all Inventions relating to the composition or
use of Research Compounds ("Research Compound Inventions"), whether made solely
by a Party or jointly by both Parties, shall be jointly owned by the Parties
without regard to whether such Research Compound resulted from the optimization
of a Knoll Substance or Tularik Substance. Each Party agrees to execute, or have
its employees, agents or consultants execute, all paperwork necessary to
effectuate any such assignment necessary to achieve such joint ownership of
Research Compounds and Research Compound Inventions. Research Compound Patents
shall be jointly owned by the Parties and shall be prosecuted in accordance with
Section 8.2 hereof. The RC shall establish a common numbering system for the
Research Compounds to allow the Parties to coordinate their activities with
respect to such Research Compounds. Knoll expressly acknowledges that Tularik
may, as joint owner of Research Compound Inventions, grant to JT a license under
such Research Compound Inventions to make, have made, use, sell, have sold,
import and have imported Research Compounds and Program Products in the Tularik
Territory; provided, however, that the foregoing right to grant a license to JT
shall not apply unless: (i) JT shall have made a reciprocal grant to Tularik of
a right to sublicense to Knoll comparable intellectual property or other
proprietary rights arising under the research program between Tularik and JT
pursuant to the JT Agreement; and (ii) Tularik shall have, in turn, sublicensed
such JT intellectual property or proprietary rights to Knoll.

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                      14
<PAGE>

     4.3.2     Development of Extra-Field Products.

        (a) The Parties intend that: (i) [ * ] may develop and market a Tularik
Extra-Field Product for use within the Pharmaceutical Market; (ii) [ * ] may
develop and market a Knoll Extra-Field Product for use within the Pharmaceutical
Market; (iii) [ * ] may develop and market any Knoll Extra-Field Product or
Tularik Extra-Field Product for use outside of the Pharmaceutical Market; and
(iv) [ * ] may develop and market a Third Party Extra-Field Product for use
within or outside the Pharmaceutical Market. A Party that is developing any
Extra-Field Product for any such use, or a Tularik Product, as the case may be,
shall be the "Developing Party" with respect to such Extra-Field Product and
such use or Tularik Product, as the case may be. If [ * ] desires to develop a
Tularik Extra-Field Product for use within the Pharmaceutical Market, [ * ]
shall disclose in writing to [ * ] the number assigned to the Research Compound
upon which such Tularik Extra-Field Product is based prior to [ * ] with respect
to such Tularik Extra-Field Product. Knoll shall disclose to Tularik the number
assigned to the Research Compound upon which: (i) a [ * ] is based, prior to [ *
] with respect to such [ * ]; or (ii) an Extra-Field Product for [ * ]. The
Developing Party shall disclose to the non-Developing Party the number assigned
to the Research Compound upon which: (i) a Third Party Extra-Field Product is
based, prior to [ * ] with respect to such Third Party Extra-Field Product; or
(ii) a Third Party Extra-Field Product for [ * ].

        (B) The Parties shall not at any time [ * ]; provided, however, that
Knoll may, in accordance with Section 4.4.3, commercialize [ * ]; provided
further that Tularik may commercialize [ * ]. If a Developing Party ceases to
use commercially reasonable efforts to develop or market [ * ], then the other
Party may thereafter commence development and commercialization of such [ * ].

        (C) Notwithstanding any other provision of this Agreement:  (i) the
Developing Party shall not commence [ * ] until the Developing Party has
notified the other Party of its intention to develop such [ * ] for such use in
accordance with Section 4.3.2(a) and has executed a license agreement in the
form of the License Agreement or Tularik License Agreement as provided in
Section 4.4.1; (ii) Knoll shall not commence [ * ] of its intention to develop
such Knoll Extra-Field Product for such use in accordance with Section 4.3.2(a)
and has executed a license agreement as provided in Section 4.4.2; (iii) Knoll
shall not commercialize any [ * ] until Knoll shall have notified Tularik in
accordance with Section 4.3.2(a) and executed a license agreement with respect
thereto as provided in Section 4.4.4; and (iv) the Developing Party shall not
commence [ * ], until the Developing Party has notified the other Party of its
intention to develop such Third Party Extra-Field Product for such use in
accordance with Section 4.3.2(a).  [ * ].

     4.3.3     Use of Research Compounds During the Collaboration Program Term.
During the Collaboration Program Term: (a) each Party may use Research Compounds
in HTS as provided in Section 2.4 and otherwise to accomplish the purposes of
the Collaboration Program; (b) all data generated on Research Compounds as part
of the Research Program shall be made available to each Party; and (c) Knoll and
Tularik shall each provide to the other Party at such other Party's request
aliquots of Research Compounds that Knoll or Tularik have synthesized or have
been synthesized by a Third Party at the direction of

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       15
<PAGE>

the RC.  Notwithstanding Section 4.3.2, during the Collaboration Program Term,
if Tularik is the non-Developing Party with respect to such Research Compound,
Tularik shall [ * ], and shall have a license for such Tularik Extra-Field
Product under Section 4.3.5(b); provided, however, that Tularik shall [ * ].

     4.3.4  Use of Research Compounds Following the Collaboration Program Term.
After the Collaboration Program Term, subject to Sections 4.3.2, 4.3.5, 4.4,
5.1, 5.2 and 5.3, (i) [ * ] may use Research Compounds to research, develop and
commercialize [ * ] in any manner the Developing Party deems appropriate; (ii) [
* ] may use Research Compounds to research, develop and commercialize [ * ] in
any manner [ * ] deems appropriate; (iii) [ * ] may use Research Compounds to
research, develop and commercialize [ * ] in any manner [ * ] deems appropriate;
(iv) [ * ] may use Research Compounds synthesized by Third Parties to
research, develop and commercialize [ * ] in any manner [ * ] deems appropriate;
and (v)(A) Tularik may use Research Compounds synthesized by Tularik in HTS; (B)
Knoll may use Research Compounds synthesized by Knoll in HTS; and (C) each Party
may use Research Compounds synthesized by a Third Party in HTS. The right to
develop and commercialize [ * ] identified through HTS pursuant to this Section
4.3.4 shall be as provided in Section 4.3.2. Each Party hereby covenants and
agrees to disclose to the other Party within [ * ] following completion of HTS
the relevant results of HTS performed pursuant to Section 4.3.4(v)(A)-(C);
provided, however, that neither Party shall be obligated to [ * ] from the
expiration or termination of the Collaboration Program Term. Research Compounds
synthesized by a Party that are based upon Research Compounds synthesized by a
Third Party shall be considered the Research Compounds of such Party.

     4.3.5  Cross-License to [ * ].

            (a)   Promptly following receipt by Tularik of a notice from Knoll
pursuant to Section 4.3.2(a), Tularik shall grant to Knoll a sole and exclusive,
worldwide, royalty-bearing (in accordance with Section 4.4) license, with the
right to sublicense [ * ], under the Tularik Patents and under Tularik's
interest in any Patents to develop, make, have made, use, offer to sell, sell or
import [ * ], subject to the terms of Section 4.3.  Any such license granted
with respect to [ * ] granted to Knoll pursuant to this Section 4.3.5(a) shall
be in the form of the License Agreement, subject to Section 4.4.  The license
granted pursuant to this Section 4.3.5(a) shall survive the termination of this
Agreement.

            (b)   Promptly following receipt by Knoll of a notice from Tularik
pursuant to Section 4.3.2(a), Knoll shall grant to Tularik a sole and exclusive
worldwide, royalty-bearing (in accordance with Section 4.4.1) license, with the
right to sublicense, under the Knoll Patents and under Knoll's interest in any
Patents to develop, make, have made, use, offer to sell, sell or import [ * ],
subject to the terms of Section 4.3.  The license granted pursuant to this
Section 4.3.5(b) shall be in the form of the Tularik License Agreement, subject
to Section 4.4.  The license granted pursuant to this Section 4.3.5(b) shall
survive the termination of this Agreement.

            (c)   Promptly following receipt by the non-Developing Party of a
notice from the Developing Party pursuant to Section 4.3.2(a), the non-
Developing Party shall


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 Of the Securities Act of 1933, as amended.

                                       16
<PAGE>

grant to the Developing Party a sole and exclusive worldwide, royalty-free
license, with the right to sublicense, under the non-Developing Party's Patents
and under the non-Developing Party's interest in any Patents to develop, make,
have made, use, offer to sell, sell or import [ * ], subject to the terms of
Section 4.3. The license granted pursuant to this Section 4.3.5(c) shall be in
the form (excluding financial terms) of the License Agreement or the Tularik
License Agreement, as the case may be. The license granted pursuant to this
Section 4.3.5(c) shall survive the termination of this Agreement.

  4.4     Payments for Extra-Field Products.

          4.4.1  Tularik Extra-Field Products Within the Pharmaceutical Market.
A license granted with respect to Tularik Extra-Field Products within the
Pharmaceutical Market pursuant to Section 4.3.5(a) or 4.3.5(b) shall provide for
the payment by [ * ] of both royalties based on net sales of such Tularik Extra-
Field Products and milestone payments with respect to such Tularik Extra-Field
Products in the amounts provided in Sections 4.1 and 4.2 of the License
Agreement.

          4.4.2  Knoll Extra-Field Products Within the Pharmaceutical Market.
Any license granted with respect to Knoll Extra-Field Products within the
Pharmaceutical Market pursuant to Section 4.3.5(a) shall [ * ].

          4.4.3  Tularik Extra-Field Products Outside the Pharmaceutical Market.
Except as provided in Section 4.4.5, any license granted with respect to Tularik
Extra-Field Products outside the Pharmaceutical Market pursuant to Section
4.3.5(a) shall [ * ].

          4.4.4  Knoll Extra-Field Products Outside the Pharmaceutical Market.
Except as provided in Section 4.4.5, any license granted with respect to Knoll
Extra-Field Products outside the Pharmaceutical Market pursuant to Section
4.3.5(a) shall be [ * ].

          4.4.5  Sublicenses by [ * ] of Extra-Field Products Outside the
Pharmaceutical Market. Any sublicense granted by [ * ] with respect to Extra-
Field Products outside the Pharmaceutical Market pursuant to Section 4.3.5(a):
(a) as part of a transaction in which rights in such Extra-Field Products
outside the Pharmaceutical Market are exchanged for rights in the products of a
Third Party outside the Pharmaceutical Market shall [ * ]; or (b) as part of any
other transaction shall be subject to the payment by [ * ] of revenues received
by [ * ] from a Third Party in consideration for the grant of a sublicense under
such rights.  In no event shall a sublicense granted by [ * ] to an Affiliate of
[ * ] with respect to Extra-Field Products outside the Pharmaceutical Market
pursuant to Section 4.3.5(a) be subject to any payment to Tularik by [ * ] or
such Affiliate of [ * ].

          4.4.6  Contribution Royalties. A Party shall provide written notice to
the other Party that such Party desires to obtain a license as provided in
Section 4.3.5 or 5.3 with respect to an Extra-Field Product or a Tularik
Product. Within [ * ] following receipt of such notice, the Parties shall meet
to negotiate in good faith the terms and conditions of such license. Such good
faith negotiation shall continue for a period of [ * ]. In the event the
foregoing negotiation shall not result in an agreement on the terms and
conditions of such license, the Parties shall select three mutually acceptable
arbitrators (the "Arbitrators") to determine the Contribution Royalty.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       17
<PAGE>

One (1) of the three (3) Arbitrators shall be selected by Knoll, one (1) of the
Arbitrators shall be selected by Tularik and the third Arbitrator, who shall act
as chairperson, shall be selected by the mutual agreement of the other two (2)
Arbitrators within thirty (30) days of their selection; provided, however, if
within such time period the first two (2) selected Arbitrators are unable to
agree on a third member of the arbitration panel, such third member shall be
appointed by the President of the American Arbitration Association as soon as
practicable thereafter. The three (3) Arbitrators shall have relevant
biotechnology and/or pharmaceutical industry experience. Each Party shall submit
to the other Party and the Arbitrators, within [ * ] of the selection of the
chairperson of the Arbitrators, such Party's written proposal of the appropriate
royalty to be paid to the non-Developing Party, along with calculations
supporting such proposal. Such royalty estimates shall take into account [ * ].
Such royalty estimates shall reflect those royalty rates that are reasonable and
customary within the marketplace in which such Extra-Field Product shall be
sold. At the request of either Party, the Arbitrators shall hold a hearing to
determine the appropriate royalty rate. The Arbitrators shall rule on the
royalty estimate within [ * ] following the later to occur of receipt of such
estimates from the Party or such hearing. Such ruling shall [ * ]. The
Arbitrators shall [ * ]. Any arbitration herewith shall be conducted in the
English language to the maximum extent possible. Each Party shall bear its own
costs and attorneys' fees. A royalty percentage negotiated by the Parties or
determined by the Arbitrators in accordance with the procedure set forth in this
Section 4.4.6 shall be considered a "Contribution Royalty."

                ARTICLE 5 Commercialization Of Program Products.

  5.1     Commercialization Notice.  Subject to Sections 5.2 and 5.4 below, at
any time prior to the initiation of [ * ] for a Validated Hit for use within the
Field in the Knoll Territory by or on behalf of Knoll, Knoll may notify Tularik
("Commercialization Notice") of its intention to develop and, if results of the
human clinical studies justify, to prepare and file an NDA for and commercialize
products based upon or incorporating such Validated Hit for use within the Field
in the Knoll Territory. Knoll may provide to Tularik a Commercialization Notice
on compounds with confirmed activity against [ * ] that would qualify as
Validated Hits had such compounds been discovered under this Agreement;
provided, however, that the foregoing right to provide a Commercialization
Notice on compounds discovered pursuant to the JT Agreement shall terminate upon
a Section 12.4 Termination. Promptly after Tularik's receipt of each
Commercialization Notice, Tularik and Knoll shall enter into a License Agreement
with respect to the Validated Hit described in such Commercialization Notice
within the Field in the Knoll Territory and all products based upon or
incorporating such Validated Hit shall become, for all purposes, collectively, a
"Program Product". Knoll acknowledges and agrees that [ * ]; provided, however,
that JT may not commence IND-enabling toxicology studies on Validated Hits in
the JT Territory at any time following a Section 12.4 Termination.

  5.2     Additional Program Products.  Knoll may elect to issue multiple
Commercialization Notices, enter into additional License Agreements with Tularik
and undertake development of more than one Program Product; provided, however,
that, except as provided in Section 5.3.3, the Commercialization Notice for each
Validated Hit shall be given prior to [ * ]; provided further that any
Commercialization Notice given [ * ].

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       18
<PAGE>

  5.3     Rights to Validated Hits.

          5.3.1  Tularik Products. In the event that Knoll: (i) does not provide
to Tularik a Commercialization Notice for a Validated Hit prior to [ * ] as
required by Sections 2.5 and 5.1; (ii) does not provide to Tularik a
Commercialization Notice for a Validated Hit prior to [ * ]; (iii) determines to
[ * ]; (iv) fails to [ * ] set forth in Section 5.4 hereof or Section 2.1.2 of
the License Agreement; or (v) does not provide to Tularik a Commercialization
Notice for a Validated Hit prior to [ * ] from the date upon which Knoll
completes [ * ] with respect to such Validated Hit as required by Section 5.4,
Knoll:

                 (a) shall not commercialize in the Field products based upon or
incorporating any Validated Hit [ * ] ("5.3.1(a) Product") unless Knoll provides
a Commercialization Notice to Tularik in accordance with Section 5.1 and enters
into a License Agreement with respect to the 5.3.1(a) Product described in such
Commercialization Notice within the Field in the Knoll Territory. Anything in
Section 5.3.1(ii) to the contrary notwithstanding, a Commercialization Notice
with respect to a 5.3.1(a) Product provided pursuant to this Section 5.3.1(a)
may be given [ * ];

                 (b) shall not grant to a Third Party any rights in or to the
Knoll Technology or Knoll's interest in Program Technology or Research Compound
Patents to commercialize in the Field products [ * ] ("Tularik Product");

                 (c) will grant to Tularik an exclusive (even as to Knoll),
sublicensable, worldwide license pursuant to a Tularik License Agreement to
develop, make, have made, use, offer for sale, sell and import any such [ * ]
under Knoll's interest in the Program Technology and Research Compound Patents
and subject to the payment by Tularik to Knoll of: (A) [ * ] in the event that
Tularik commercializes such Tularik Product; or (B) [ * ] of revenues (excluding
[ * ]) received by Tularik (after deduction of royalties payable by Tularik to
Knoll under Section 5.3.1(d) but including [ * ]) from a Third Party in
consideration for the grant of a sublicense under such rights; and

                 (d) will grant to Tularik a non-exclusive, sublicensable,
worldwide license pursuant to a Tularik License Agreement to develop, make, have
made, use, offer for sale, sell and import such Tularik Product in the Field
under any [ * ].

     Upon the grant to Tularik of the licenses provided in this Section 5.3.1,
pursuant to a Tularik License Agreement, Tularik will be free to pursue clinical
development, registration and commercialization of such Tularik Product in the
Field throughout the world without further obligation to Knoll [ * ] .

          5.3.2  Limitations on Section 5.3.1 during Commercialization by Knoll.
For so long as Knoll [ * ] Program Product, Knoll may determine, in its sole
discretion, that [ * ]. In the event that Knoll makes the determination set
forth in the immediately preceding sentence, [ * ] such Program Product.

          5.3.3  Exceptions to Section 5.3.1(ii). Anything in Section 5.2 or
5.3.1(ii) to the contrary notwithstanding, (A) if Knoll terminates the
Collaboration Program at the end of the


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       19
<PAGE>

third year pursuant to Section 15.1 but makes an additional payment of [ * ] to
Tularik within [ * ] of the expiration of the Tail Period, Knoll may give
Tularik a Commercialization Notice as provided in, and with the effect stated
in, Section 5.1 above for an additional [ * ]; (B) if Knoll terminates the
Collaboration Program at the end of the fourth year pursuant to Section 15.1 but
makes an additional payment of [ * ] to Tularik within [ * ] of the expiration
of the Tail Period, Knoll may give Tularik a Commercialization Notice as
provided in, and with the effect stated in, Section 5.1 above for an additional
[ * ]; or (C) if the Collaboration Program terminates at the end of the fifth
year pursuant to Section 15.1 but Knoll makes an additional payment to Tularik
within [ * ] of the expiration of the Tail Period in an amount [ * ], Knoll may
give Tularik, as if the Collaboration Program had continued for an additional
year, a Commercialization Notice as provided in, and with the effect stated in,
Section 5.1 above.

     5.3.4     Tularik Commercialization of 5.3.1(a) Products.  In the event
Tularik desires to commercialize in the Field a 5.3.1(a) Product, Tularik may
provide written notice to Knoll of its intention to develop and, if results of
the human clinical studies justify, to prepare and file an NDA for and
commercialize such 5.3.1(a) Product for use within the Field anywhere in the
world, subject to the payment by Tularik to Knoll of:  (A) [ * ] in the event
that Tularik commercializes such 5.3.1(a) Product; or (B) [ * ] of revenues
(excluding [ * ]) received by Tularik (including [ * ]) from a Third Party in
consideration for the grant of a sublicense to such Third Party.  Such written
notice to Knoll may be given at any time following the expiration of the
Collaboration Program Term.

  5.4 Diligence. Both Parties shall use commercially reasonable efforts to
discharge their respective responsibilities under the Research Plan. Knoll shall
use commercially reasonable efforts to develop Validated Hits, consistent with [
* ], unless and until it terminates this Agreement; provided, however, that
Knoll may elect to terminate development of a Validated Hit at any time for any
reason. If Knoll fails to use such efforts to develop Validated Hits, Tularik
may terminate this Agreement upon [ * ] prior written notice. If the Parties
disagree on whether Knoll is using commercially reasonable efforts as required
hereunder, [ * ]. In the event of termination of this Agreement for failure to
use such efforts, Knoll will grant to Tularik the licenses set forth in Sections
5.3.1(c) and 5.3.1(d) of this Agreement with respect to such Program Product,
subject to the payment by Tularik to Knoll of the amounts set forth in Sections
5.3.1(c) and 5.3.1(d) of this Agreement. Tularik will then be free to pursue
clinical development, registration and commercialization of any such Program
Product as a Tularik Product in the Field throughout the world without further
obligation to Knoll other than the payment of the foregoing amounts. Anything in
this Agreement to the contrary notwithstanding, Knoll may not issue a
Commercialization Notice on a Validated Hit following [ * ] from the date upon
which Knoll completes [ * ] with respect to such Validated Hit.

                          ARTICLE 6 Financial Support

  6.1     Program Funding.  Knoll will support the Research Program with the
payment of a technology access fee equal to [ * ].  In support of Tularik's
activities in the Research Program, Knoll shall pay Tularik (i) [ * ] and (ii) [
* ] The amounts set forth in Section 6.1(ii) shall be paid on each quarter-year
anniversary of the Effective Date in arrears until the end of the Collaboration
Program Term.  The first quarterly payment shall be made on the [ * ] of the


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       20
<PAGE>

Effective Date, and shall constitute payment for the third quarter following the
Effective Date. In the event of a [ * ], Knoll shall pay to Tularik an amount
equal to [ * ]. Any payment required by the immediately preceding sentence shall
be made within [ * ] of the effective date of the Section 12.4 Termination.

  6.2     Manner of Payment.  Remittance of payments under Section 6.1(ii) will
be within [ * ] of the occurrence of the above specified events by means of
telegraphic transfer to Tularik's account in a bank in the United States to be
designated by Tularik.  All payment amounts set forth in this Agreement,
including the Appendices, are stated net of withholding or similar taxes which
may be imposed by any governmental authority, other than U.S. income taxes;
provided, however, that Tularik has provided Knoll with a Certificate of
Exemption (Freistellungsbescheinigung) from the German Federal Tax Office
(Bundesamt fur Finanzen).

  6.3     Personnel and Resources.  Tularik shall [ * ] to carry out its
obligations under the Research Plan, along with the facilities and other
resources necessary to perform its obligations under this Agreement.  Within [ *
] of each anniversary of the Effective Date, Tularik shall provide a report to
Knoll confirming [ * ] in performing under the Research Plan during the
preceding year.

  6.4     Records, Reports, Inspection, Audit and Maintenance.

          6.4.1  Tularik shall maintain scientific and financial records that
shall be complete, accurate and adequate to verify [ * ] its obligations under
this Agreement. Such records shall fully and properly reflect all work done and
results achieved in the performance of the Collaboration Program.

          6.4.2  Knoll shall have the right, during normal business hours and
upon reasonable advance notice, to inspect and copy all records maintained
pursuant to Section 6.4.1 to the extent reasonably required for verification of
[ * ] the performance of Tularik's obligations under this Agreement. Tularik
shall have the right to delete any information contained in such records that
does not pertain to the Collaboration Program prior to any such inspection or
copying by Knoll.

                          ARTICLE 7 License To Tularik

  7.1     Grant by Knoll to Tularik.  Knoll shall grant to Tularik an exclusive
royalty-free, sublicensable, worldwide license under Knoll's interest in the
Program Technology and Research Compound Patents to develop, manufacture, use,
sell, offer for sale and import products based upon or incorporating Hits or
Validated Hits in the Field in the Tularik Territory and, under terms to be
separately agreed, a non-exclusive, sublicensable, worldwide license under any
then-existing Knoll Technology to the extent necessary to make, use, sell, offer
for sale and import products based upon or incorporating Hits or Validated Hits
in [ * ]. In no event shall Tularik receive rights in the Knoll
Compound Library without the written consent of Knoll.

  7.2     Non-use of Technology Outside of the Field.  Subject to Article 4
hereof, Knoll covenants and agrees that it will not use, directly or indirectly,
the Tularik Technology, Tularik's


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       21
<PAGE>

Confidential Information or Tularik's interest in the Program Technology for any
purpose outside the Field other than developing, making, having made, using or
selling Extra-Field Products. Subject to Article 4 hereof, Tularik covenants and
agrees that it will not use, directly or indirectly, the Knoll Technology,
Knoll's Confidential Information or Knoll's interest in the Program Technology
for any purpose outside the Field other than developing, making, having made,
using or selling Extra-Field Products.

                          ARTICLE 8 Ownership; Patents

  8.1     Ownership.  Knoll shall have no rights in or to the Tularik Technology
except as expressly provided in this Agreement or any other agreement between
the Parties.  Tularik shall have no rights in or to the Knoll Technology except
as expressly provided in this Agreement or any other agreement between the
Parties.  Except as provided in Section 4.3.1, each Party shall solely own all
discoveries, information, technology or inventions made or created solely by its
employees, agents or consultants during the course of such Party's performance
under the Collaboration Program and all intellectual property rights related
thereto.  The Parties shall jointly own all discoveries, information, technology
or inventions made or created jointly by employees, agents or consultants of
both Parties during the course of their performance under the Collaboration
Program and all intellectual property rights related thereto, without regard, in
the case of Validated Hits and Program Products, to whether a Knoll Substance or
Tularik Substance was selected as a Validated Hit upon which Program Products
may be based.

  8.2     Patent Management.

          8.2.1  Filing Party. Tularik Patents and Knoll Patents shall be
prosecuted and maintained by Tularik and Knoll, respectively, at such Party's
option and its own expense. Only one Party (the "Filing Party") shall be
responsible for the preparation, filing, prosecution and maintenance (the
"Patent Management") of a Program Patent, subject to the provisions of Section
8.2.2. The Inventing Party shall be initially responsible for the Patent
Management of any patent covering an Invention made solely by such Party's
employees, agents or consultants. With respect to Program Patents covering
Inventions owned jointly by the Parties ("Joint Inventions") and Research
Compound Patents, the RC shall designate initially the Filing Party for related
Patents in accordance with the relative inventive contributions of the Parties.
If Knoll commences development of a compound covered by a Patent as a Program
Product, then responsibility for Patent Management of such Patent shall be
transferred to Knoll if Knoll is not then the Filing Party for such Patent,
unless such compound is [ * ]  If a Party commences development of an Extra-
Field Compound pursuant to Section 4.3.2, and if such Party is not then the
Filing Party for any Research Compound Patent upon which such Extra-Field
Compound is based, the Filing Party shall transfer responsibility for Patent
Management of such Research Compound Patents to the other Party, which shall
thereafter become the Filing Party therefor. If the Parties disagree upon the
designation of which Party should be the Filing Party for a particular Patent,
the matter shall be resolved in accordance with Section 2.2.3.

          8.2.2  Review Procedures. The Filing Party shall provide the other
Party with drafts of any patent application covering an Invention (the
"Application") prior to filing the


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       22
<PAGE>

Application, with a request for review within a certain time period, which time
period shall be at least [ * ] if possible or practicable but in no event less
than [ * ]. The Filing Party shall endeavor in good faith to incorporate any
comments made by the other Party with respect to such Application. If the other
Party fails to respond within the time period specified by the Filing Party, the
Filing Party shall not be obligated to delay the filing of such Application. In
addition, the Filing Party shall provide the other Party with copies of all
substantive communications to and from the United States or any foreign patent
office regarding all patent Applications and resulting patents promptly,
allowing at least [ * ] for review and comment by the other Party prior to
the due date for the response to the patent office. Each Party shall maintain
any information received from the other Party relating to a patent as
Confidential Information of the other Party, [ * ]

  8.3     Reversion.  If (i) Tularik receives a license to develop a Tularik
Product pursuant to Section 5.3.1 that is covered by an Application for which
Knoll is the Filing Party, or (ii) the Filing Party elects upon prior written
notice to the other Party (given at least [ * ] prior to any relevant deadline)
either to discontinue prosecution or maintenance or not to file or conduct any
further activities (including conducting any interferences, re-examinations,
reissues, or oppositions) with respect to an Application or a resulting patent,
then the Filing Party shall offer to transfer such Application or patent to the
other Party, who may, at its sole discretion, accept such transfer and
thereafter become the Filing Party therefor.

  8.4     Patent Costs.  All fees and expenses paid to outside legal counsel and
other Third Parties in connection with Applications or resulting patents
("Patent Costs") covering Inventions owned solely by a Party that are included
in the Program Patents shall be borne solely by the Inventing Party unless and
until the other Party becomes the Filing Party therefor.  All Patent Costs for
the Patents covering Joint Inventions shall be borne equally by the Parties,
regardless of which Party is the Filing Party therefor.  The Party developing a
Research Compound shall pay the Patent Costs for Research Compound Patents
relating to such Research Compounds commencing as of the date the developing
Party notifies the other Party in accordance with Section 4.3.2.

  8.5     Perfection of Interest.  Each Party agrees to cooperate with the other
and take all reasonable additional actions and execute such agreements,
instruments and documents as may be reasonably required to perfect the other
Party's ownership interest in accordance with the intent of this Agreement
including, without limitation, the execution of necessary and appropriate
instruments of assignment.

  8.6     Infringement of Patents.  Infringement of Knoll Patents, Tularik
Patents or Patents by Third Parties as well infringement of Third Party patents
by Knoll shall be governed by the provisions of the License Agreement or the
Tularik License Agreement, as the case may be.

                        ARTICLE 9 Publication; Publicity

  9.1     Publication.  Each Party recognizes that the publication of papers,
including oral presentations and abstracts, regarding the Program Technology or
Research Compounds, subject to reasonable controls to protect Confidential
Information, will be beneficial to both Parties.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       23
<PAGE>

Accordingly, each Party shall have the right to review and approve any paper
proposed for publication by the other Party, including oral presentations and
abstracts, that utilizes data generated from the Research Program and/or
includes Program Know-How, information relating to Research Compounds or
Research Compound Inventions or Confidential Information of the other Party.
Before any such paper is presented or submitted for publication, the Party
proposing to make a publication shall deliver a complete copy thereof to the
other Party at least [ * ] prior to presenting the paper to any Third Party
publisher. The Party receiving such proposed publication shall review any such
paper and provide comments thereon to the publishing Party within [ * ] of the
delivery of such paper to the receiving Party. With respect to oral presentation
materials and abstracts, the Parties shall make reasonable efforts to expedite
review of such materials and abstracts, and shall return such items as soon as
practicable to the publishing Party with appropriate comments, if any, but in no
event later than [ * ] from the date upon which such materials are received by
the receiving Party. The publishing Party shall comply with the other Party's
request to delete references to such other Party's Confidential Information in
any such paper and agrees to withhold publication of same for up to an
additional [ * ] in order to permit the Parties to obtain patent protection on
any patentable inventions disclosed therein, if either of the Parties deems it
necessary, in accordance with the terms of this Agreement. In addition, [ * ].

  9.2     Publicity.  Except as otherwise provided herein or required by law, no
Party shall make publicly available or provide to any Third Party any
publication, news release or other public announcement, written or oral, whether
in the public press, or stockholders' reports (if applicable), or otherwise,
relating to the existence of or the Parties' performance under this Agreement,
without the prior written approval of the other Party.

                   ARTICLE 10  Representations And Warranties

  10.1    Representations and Warranties.  Each Party hereby represents and
warrants that:

     10.1.1    it has full corporate power and authority under the laws of the
state or country of its incorporation to enter into this Agreement and carry out
the provisions hereunder and that the person executing this Agreement on its
behalf has been duly authorized to do so by all requisite corporate action;

     10.1.2    it will not take any material action or fail to take any material
action which would be in conflict with its obligations under this Agreement;

     10.1.3    to its best knowledge as of the Effective Date: (i) it has full
power and authority to undertake the scientific activities required of it; (ii)
its [ * ]; and (iii) the [ * ];

     10.1.4    as of the Effective Date, to the best of its knowledge, it is not
aware of any claims by Third Parties that [ * ];

     10.1.5    this Agreement is a legal and valid obligation binding upon it
and is enforceable in accordance with its terms; and

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       24
<PAGE>

             10.1.6 the execution, delivery and performance of this Agreement
by it does not conflict with any agreement, oral or written, to which it is a
Party or by which it may be bound, nor violate any law or regulation of any
court, governmental body or administrative or other agency having authority over
it.

     10.2    Third Party Licenses. Each Party agrees to identify to the other
Party any Third Party Licenses and the technologies to which they pertain. Knoll
shall have no obligation to make any payments whatsoever with respect to such
Third Party Licenses of Tularik. Tularik shall have no obligation to make any
payments whatsoever with respect to such Third Party Licenses of Knoll.

                     ARTICLE 11 Disclaimer Of Warranties

     11.1    Tularik Disclaimer. EXCEPT AS OTHERWISE PROVIDED IN SECTION 10.1,
THE TULARIK TECHNOLOGY PROVIDED HEREUNDER IS PROVIDED "AS IS" AND TULARIK
EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN
ALL CASES WITH RESPECT THERETO. Without limiting the generality of the
foregoing, Tularik expressly does not warrant (i) the success of any study or
test commenced pursuant to the Collaboration Program or (ii) the safety or
usefulness for any purpose of Tularik Technology.

     11.2    Knoll Disclaimer. EXCEPT AS OTHERWISE PROVIDED IN SECTION 10.1,
THE KNOLL TECHNOLOGY PROVIDED HEREUNDER IS PROVIDED "AS IS" AND KNOLL EXPRESSLY
DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL
CASES WITH RESPECT THERETO. Without limiting the generality of the foregoing,
Knoll expressly does not warrant the safety or usefulness for any purpose of the
Knoll Technology.

                          ARTICLE 12 Indemnification

     12.1    Indemnification by Tularik. Tularik hereby agrees to indemnify,
hold harmless and defend Knoll, its employees, directors, officers, agents and
consultants against any and all claims, suits, actions, demands, liabilities,
expenses and/or losses (including without limitation reasonable attorneys' fees
and related legal and court expenses) (collectively, "Claims") for damage to
persons or property resulting directly or indirectly from actions in connection
with this Agreement, but only to the extent that such Claims (i) arise out of or
are in connection with negligence, recklessness or willful misconduct of Tularik
or (ii) Tularik's breach of this Agreement, except to the extent such Claims
arise out of or are in connection with any occurrence for which Knoll must
indemnify Tularik pursuant to Section 12.2.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       25
<PAGE>

     12.2    Indemnification by Knoll. Knoll hereby agrees to indemnify, hold
harmless and defend Tularik, its employees, directors, officers, agents and
consultants against any and all Claims for damage to persons or property
resulting directly or indirectly from actions in connection with this Agreement,
but only to the extent that such Claims (i) arise out of or are in connection
with negligence, recklessness or willful misconduct of Tularik or (ii) Tularik's
breach of this Agreement, except to the extent such Claims arise out of or are
in connection with any occurrence for which Tularik must indemnify Knoll
pursuant to Section 12.1.

     12.3    Control of Defense. Any person or entity entitled to
indemnification under this Article 12 shall give notice to the indemnifying
Party of any Claims that may be subject to indemnification promptly after such
Party learns of such Claim. The indemnifying Party shall assume the defense of
such Claims using counsel reasonably satisfactory to the indemnified Party, and
the indemnifying Party will not be subject to any liability for any settlement
of such Claims made by the indemnified Party without the indemnifying Party's
consent (such consent not to be unreasonably withheld or delayed), and will not
be obligated to pay any fees and expenses of any separate counsel retained by
the indemnified Party with respect to such Claim.

     12.4    Tularik Responsibilities. Knoll acknowledges that Tularik owes
contractual obligations of diligence in the conduct of research and development
activities to JT under the JT Agreement. Furthermore, Knoll acknowledges that
the role of Tularik in identifying, selecting, evaluating and developing
compounds for Knoll under this Agreement and JT under the JT Agreement could
potentially conflict.  Knoll, its affiliates, successors and assigns, shall not
institute or be represented or participate in, nor shall it submit or file, or
permit to be submitted or filed on its behalf, any lawsuit, charge, claim,
complaint or other proceeding with any administrative agency, arbitration panel,
court or other forum, under any federal, state or local laws, regulations or
ordinances against Tularik, its affiliates, successors, directors, partners,
attorneys, representatives, stockholders, investors, agents, employees, former
employees, or any person acting by, through, under or in concert with each or
any of them, based upon any conduct by them related in any way to Tularik's non-
compliance with the terms and conditions of this Agreement and/or the Three
Party Agreement where such non-compliance results from a good faith attempt by
Tularik to resolve a dispute between JT and Knoll involving compounds that
agonize or antagonize [*]; and shall not, from any source or proceeding, seek or
accept any award or settlement therefrom.

                          ARTICLE 13 Confidentiality

     13.1    Confidential Information; Exceptions. Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing by the
Parties, each Party agrees that, for the term of this Agreement and for five (5)
years thereafter, it shall keep confidential and shall not publish or otherwise
disclose, and shall not use for any purpose other than as provided for in this
Agreement, any Confidential Information furnished to it by the other Party
pursuant to this Agreement, except to the extent the receiving Party can
demonstrate by competent proof that such Confidential Information:

          13.1.1 was already known to the receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the other Party;

          13.1.2 was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;

          13.1.3 became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of any obligation of confidentiality
with respect thereto;

          13.1.4 was disclosed to the receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party without breach
of any obligation of confidentiality with respect thereto; or


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       26
<PAGE>

             13.1.5 was independently discovered or developed by the receiving
Party without the use of Confidential Information of the disclosing Party.

     Notwithstanding the foregoing, either Party may disclose Confidential
Information of the other Party to those of its employees, agents and consultants
who require such information to perform such Party's obligations under this
Agreement, provided that such employees, agents and consultants are bound by
obligations of confidentiality and non-use with respect to such Confidential
Information at least equivalent in scope with those provided in this Section
13.1.

     13.2    Authorized Disclosure. Notwithstanding Section 13.1, each Party may
disclose Confidential Information belonging to the other Party to the extent
such disclosure is reasonably necessary in the following instances:

             13.2.1 filing or prosecuting patents relating to Program Products;

             13.2.2 making regulatory filings;

             13.2.3 prosecuting or defending litigation;

             13.2.4 complying with applicable governmental regulations;

             13.2.5 conducting pre-clinical or clinical trials of Program
Products; and

             13.2.6 as necessary to effectuate [ * ]

     Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party's Confidential Information pursuant to this
Section 13.2 it will, except where impracticable, give reasonable advance notice
to the other Party of such disclosure and endeavor in good faith to secure
confidential treatment of such information. In any event, the Parties agree to
take all reasonable action to avoid disclosure of Confidential Information
hereunder. The Parties will consult with one another and agree on the provisions
of this Agreement to be redacted in any filings made by the Parties with the
United States Securities and Exchange Commission or as otherwise required by
law.

     13.3    Financial Terms. The Parties agree that the material financial
terms of the Agreement will be considered Confidential Information of both
Parties. Notwithstanding the foregoing, either Party may disclose such terms to
bona fide potential corporate parties or other sublicensees under the rights
granted herein, if necessary, provided that the Party disclosing such
information shall first enter into a confidentiality agreement with such
corporate partner or other sublicensee governing such disclosure providing
protections commensurate in scope with those provided in Section 13.1. In
connection with any such disclosure, each Party agrees to use its best efforts
to secure confidential treatment of such information. Tularik shall have the
further right to disclose the material financial terms of the Agreement to any
potential investor, investment banker, acquiror, merger partner, or other bona
fide potential financial partner, subject to a requirement of best efforts to
secure confidential treatment of such information.

                        ARTICLE 14 Government Controls


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       27
<PAGE>

     This Agreement is made subject to any restrictions concerning the export of
Program Products or technical information from the United States that may be
imposed upon or related to Tularik or Knoll from time to time by the government
of the United States and other applicable jurisdictions.

                         ARTICLE 15 Term; Termination

     15.1    Term and Termination of Collaboration Program. The Collaboration
Program shall be performed during the five year period following the Effective
Date (the "Collaboration Program Term"); provided, however, that Knoll may
terminate the Collaboration Program upon either the third (3rd) or the fourth
(4th) anniversary of the Effective Date upon no less than one (1) year's prior
written notice to Tularik. Knoll may terminate the Collaboration Program at any
time during the Collaboration Program Term in the event an arbitration conducted
pursuant to Section 16.8 concludes, or Tularik acknowledges in writing, that
Tularik [ * ] ("Section 12.4 Termination"); provided, however, that, in the
event of a Section 12.4 Termination, Knoll shall provide to Tularik a written
acknowledgment that [ * ]. Additionally, the RC may terminate the Collaboration
Program at any time during the Collaboration Program Term if the RC unanimously
decides that the then-current Research Plan does not provide adequate
opportunities (i.e., New Targets are not available, the Program Targets and
related pathways have been fully exploited and insufficient opportunities remain
for developing and commercializing products within the Field). In case of such
an early termination of the Collaboration Program by Knoll or the RC, as the
case may be, Knoll shall not be obligated to make any payment(s) under Section
6.1 that would have become due and payable after the effective date of such
early termination.

     15.2    Term. Except as provided under Section 15.3 below, the term of this
Agreement shall commence upon the Effective Date and shall expire on the later
to occur of (i) the expiration of the Tail Period, if the Parties have not
previously entered into any License Agreement or Tularik License Agreement
pursuant to this Agreement, or (ii) the expiration or termination of the last to
expire or last to terminate license that the Parties have entered into pursuant
to this Agreement.

     15.3    Termination on Material Breach. If either Party materially breaches
this Agreement, including without limitation its diligence obligations under
Section 2.8, and the breaching Party has not (i) cured the breach or (ii)
initiated good faith efforts to cure such breach to the reasonable satisfaction
of the non-breaching Party, within [ * ] of notice of breach from the non-
breaching Party, the non-breaching Party may terminate this Agreement upon
expiration of such [ * ] period.

     15.4    Surviving Rights. The obligations and rights of the Parties under
Sections 4.3 and 4.4 and Articles 5, 8, 9, 10, 11, 12, 13, 14, 15 and 16 shall
survive termination. In the event that Knoll terminates this Agreement pursuant
to Section 15.3 following the failure by Tularik to cure or initiate good faith
efforts to cure a material breach, the obligations contained in Section 5.3
shall not survive such termination. Additionally, the failure by Knoll to comply
with [ * ].

     15.5    Accrued Rights; Surviving Obligations. The termination,
relinquishment or expiration of the Agreement for any reason shall be without
prejudice to any rights that shall have accrued to the benefit of either Party
prior to such termination, relinquishment or expiration,

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       28
<PAGE>

including any damages arising from any breach hereunder. Such termination,
relinquishment or expiration shall not relieve either Party from obligations
that are expressly indicated to survive termination or expiration of the
Agreement.

     15.6    Return of Assays. Upon the expiration or earlier termination of the
Collaboration Program Term, Knoll shall return to Tularik the Tularik Assays
provided to Knoll pursuant to Section 2.4; provided, however, that, [ * ].

                           ARTICLE 16 Miscellaneous

     16.1    Waiver. No waiver by either Party of any breach or default of any
of the covenants or agreements herein set forth shall be deemed a waiver as to
any subsequent or similar breach or default.

     16.2    Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties and their permitted successors and assigns; provided,
however, that neither Party shall assign any of its rights and obligations
hereunder except (i) as incident to the merger, consolidation, reorganization or
acquisition of stock or assets affecting substantially all of the assets or
actual voting control of the assigning Party or (ii) to an Affiliate; provided
further in no event shall either Party's obligations under the Collaboration
Program be assigned to an Affiliate without the prior written consent of the
other Party.

     16.3    Notices. Any notice or other communication required or permitted to
be given to either Party shall be in writing and shall be deemed to have been
properly given and to be effective on the date of delivery if delivered in
person or by facsimile or five (5) days after mailing by registered or certified
mail, postage paid, to the other Party at the following address:

               In the case of Tularik:   Tularik Inc.
                                         Two Corporate Drive
                                         S. San Francisco, CA  94080
                                         Fax: (650) 829-4303
                                         Attention: Chief Executive Officer

               In the case of Knoll:     Knoll AG
                                         Knollstrasse
                                         67061 Ludwigshafen
                                         Germany
                                         Attention: Head of R&D

     Either Party may change its address for communications by a notice to the
other Party in accordance with this Section.

     16.4    Headings. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       29
<PAGE>

     16.5    Amendment. No amendment or modification hereof shall be valid or
binding upon the Parties unless made in writing and signed by both Parties.

     16.6    Governing Law and Language. This Agreement shall be governed
exclusively by laws of California, U.S.A., excluding any choice of law rules
that may direct the application of the law of any other jurisdiction. This
Agreement and the Appendices hereto were drafted in the English language, and
any notice to be given or accounts or statements required to be made under this
Agreement shall be in English. In the event of any dispute concerning the
construction or meaning of this Agreement, reference shall be made only to this
Agreement as written in English and not to any other translation into any other
language.

     16.7    Force Majeure. Any delays in performance by any Party under this
Agreement (other than either Party's failure to pay money to the other Party,
unless such failure results solely from wire transfer failures beyond the
control of the paying Party, or the like) shall not be considered a breach of
this Agreement if and to the extent caused by occurrences beyond the reasonable
control of the Party affected, including but not limited to acts of God,
embargoes, governmental restrictions, strikes or other concerted acts of
workers, fire, flood, earthquake, explosion, riots, wars, civil disorder,
rebellion or sabotage. The Party suffering such occurrence shall immediately
notify the other Party as soon as practicable and any time for performance
hereunder shall be extended by the actual time of delay caused by the
occurrence, provided that the affected Party uses reasonable efforts to overcome
such delay.

     16.8    Dispute Resolution. In the event of any controversy or claim
arising out of, relating to or in connection with any provision of this
Agreement (other than those relating to the determination of Contribution
Royalties), the Parties shall try to settle their differences amicably between
themselves by referring the disputed matter to the SC. Any unresolved disputes
arising between the Parties arising out of, relating to, in connection with or
in any way connected with this Agreement or any term or conditions hereof, or
performance by either Party of its obligations hereunder, whether before or
after termination or expiration of this Agreement, shall be finally resolved by
binding arbitration, except that any disputes regarding the validity, scope or
enforceability of a patent shall be submitted to a court of competent
jurisdiction. The arbitration shall be held in San Francisco, California
according to the rules of the American Arbitration Association ("AAA"). The
arbitration will be conducted by a panel of three (3) arbitrators with
significant experience in the pharmaceutical industry appointed in accordance
with applicable AAA rules. Any arbitration herewith shall be conducted in the
English language to the maximum extent possible. Each Party shall bear its own
costs and attorneys' and witness' fees. Judgment on the award so rendered shall
be final and may be entered in any court having jurisdiction thereof.

     16.9    Independent Contractors. In making and performing this Agreement,
Knoll and Tularik act and shall act at all times as independent contractors and
nothing contained in this Agreement shall be construed or implied to create an
agency, partnership or employer and employee relationship between Tularik and
Knoll. At no time shall one Party make commitments or incur any charges or
expenses for or in the name of the other Party.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       30
<PAGE>

     16.10   Severability. If any part of this Agreement is declared invalid by
any legally governing authority or court having jurisdiction over either Party,
then such declaration shall not affect the remainder of the Agreement and the
Parties shall revise the invalidated part in a manner that will render such
provision valid while achieving closely the Parties' original interest.

     16.11   Cumulative Rights. The rights, powers and remedies hereunder shall
be in addition to, and not in limitation of, all rights, powers and remedies
provided at law or in equity, or under any other agreement between the Parties.
All of such rights, powers and remedies shall be cumulative, and may be
exercised successively or cumulatively.

     16.12   Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

     16.13   Entire Agreement. This Agreement and any and all Appendices
referred to herein embodies the entire understanding of the Parties with respect
to the subject matter hereof and supersedes and terminates all previous
communications, representations or understandings, either oral or written,
between the Parties relating to the subject matter hereof.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       31
<PAGE>

     In Witness Whereof, both Knoll and Tularik have executed this Agreement, as
of the Effective Date.


     Tularik Inc.                           Knoll AG



     By: /s/ David V. Goeddel                By: /s/ Erich Schlich
        ----------------------------           ------------------------------
                                                     Head R&D

     Title:  Chief Executive Officer        Title:  /s/ Gottfried Freier
                                                  ------------------------
                                                        General Counsel
                                                        Legal & Taxes

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
<PAGE>

                                  APPENDIX A

                                PROGRAM TARGETS

[ * ]

[ * ]


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
<PAGE>

                                  APPENDIX B

                                 RESEARCH PLAN

     The Research Program described in this Agreement is further described as
follows:
                                    [ * ]


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
<PAGE>

                                 EXHIBIT 2.9.1

Tularik Inc.
Two Corporate Drive
South San Francisco, CA  94080
Attention:  President

Knoll AG
Knollstrasse
67061 Ludwigshafen
Germany
Attention:

Dear Tularik and Knoll:

     Knoll AG ("Knoll") and Tularik Inc. ("Tularik") have entered into a
Collaboration Agreement, dated as of November 1, 1998 (the "Collaboration
Agreement"). The undersigned ("Affiliate") is an Affiliate of Knoll. By this
letter, the undersigned agrees to be bound by, comply with and assume all terms,
conditions, rights, obligations, duties and restrictions of Knoll under the
Collaboration Agreement to the full extent as if the Affiliate were a party to
the Collaboration Agreement. Capitalized terms used herein but not otherwise
defined shall have the respective meaning given in the Collaboration Agreement.

Affiliate:______________________________

By:_____________________________________

Printed Name:___________________________

Title:__________________________________

Date:___________________________________

The undersigned acknowledge receipt of this letter:

Tularik Inc.

By:_____________________________________

Printed Name:___________________________

Date:___________________________________


Knoll AG

By:_____________________________________

Printed Name:___________________________

Date:___________________________________


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
<PAGE>

                                  APPENDIX C

                           FORM OF LICENSE AGREEMENT

                                    between

                                 TULARIK INC.

                                      and

                                  KNOLL A.G.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
<PAGE>

                               LICENSE AGREEMENT

     This License Agreement (the "Agreement") is made and entered into as of
_____________, ____ (the "Effective Date") by and between Tularik Inc., a
Delaware corporation ("Tularik"), and Knoll AG, a corporation organized under
the laws of Germany ("Knoll").

                                   Recitals

     Whereas, Tularik and Knoll have entered into a Collaboration Agreement
dated as of November 1, 1998 (the "Collaboration Agreement"); and

     Whereas, the Parties have jointly engaged in researching certain compounds
potentially useful for the treatment of human disease by means of regulation of
[ * ], and Knoll has selected one of such compounds for development of Program
Products (as defined in the Collaboration Agreement) based thereon; and

     Whereas, Knoll has given a Commercialization Notice as provided in the
Collaboration Agreement with respect to the compound listed in the
Commercialization Notice; and

     Whereas, Knoll intends to [ * ] with respect to one or more Program
Products based on the compound listed in the Commercialization Notice and to
commence clinical development with the intention of obtaining Regulatory
Approval (as defined below) of at least one Program Product based on such
compound for commercialization; and

     Now, Therefore, in consideration of the foregoing and the covenants and
premises contained herein, the Parties agree as follows:

                            ARTICLE 1 Definitions.

     Capitalized terms used herein and not otherwise defined shall have the
respective meanings given in the Collaboration Agreement. As used herein, the
following capitalized terms shall have the following meanings:

     1.1  "Aggregate Amount" shall have the meaning ascribed in Section
4.1.2(a).

     1.2  "Allocable Portion" shall have the meaning ascribed in Section
4.1.2(a).

     1.3  "Confidential Information" shall mean, subject to the limitations set
forth in Section 7.1 hereof, all information disclosed by each Party to the
other Party pursuant to this Agreement.

     1.4  "FDA" shall mean the United States Food and Drug Administration or any
successor thereto.

     1.5  "Field" shall mean [ * ] (as such terms are defined in the
Collaboration Agreement) human patients and, in addition, may include [ * ].
"Field" shall also include any [ * ] used in combination with Program Products.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       1
<PAGE>

     1.6   "Licensed Validated Compounds" shall mean a Validated Hit (as defined
in Section 1.83 of the Collaboration Agreement) that agonizes or antagonizes a
Program Target (as defined in Section 1.51 of the Collaboration Agreement) and
that is set forth on Exhibit A, with respect to which Knoll has issued to
Tularik a Commercialization Notice (as defined in Section 1.7 of the
Collaboration Agreement).

     1.7   "Net Sales" shall mean the gross sales price of Program Products in
finished form, invoiced by Knoll, its Affiliates and sublicensees from sales to
arm's-length Third Party purchasers, less, to the extent such amounts are
included in the invoiced sales price, taxes, shipping costs (including freight
and insurance) and duties and other governmental charges paid for and separately
identified on the invoice. Additional allowances will be permitted for (i) cash,
trade and/or quantity discounts actually allowed; (ii) amounts repaid or
credited by reason of rejection or return of goods; and (iii) discounts mandated
by or granted in response to law. Net Sales shall not be reduced for any
reserves or allowance for bad debts.

     1.8   "Party" shall mean either Tularik or Knoll.

     1.9   "Royalty Term" shall have the meaning ascribed in Section 4.3.

     1.10  "Significant Market Products" shall have the meaning ascribed in
Section 4.1(a).

     1.11  "Third Party" shall mean any person or entity other than Knoll and
Tularik, and their respective Affiliates.

     1.12  "Third Party Royalties" means royalties payable by Tularik or Knoll
to a Third Party in respect of the sale of Program Products.

     1.13  "Valid Claim" shall mean a claim in an issued, unexpired patent that
has not been held invalid or unenforceable in an unappealed and unappealable
judgment of a court of competent jurisdiction.

                              ARTICLE 2 Licenses.

     2.1   License to Knoll. Subject to the other provisions of this Agreement,
Tularik hereby grants to Knoll a license for the development, manufacture, use,
sale and importation of the Program Product based upon or incorporating the
Licensed Validated Compound in the Knoll Territory under Tularik's interest in
Program Technology and Research Compound Patents and under the Tularik
Technology. Such license shall be exclusive and include the right to grant
sublicenses with respect to the Knoll Territory. Subject to Section 2.1.1,
Tularik is granting no licenses to Knoll outside the Knoll Territory.

           2.1.1  Right of First Refusal. In the event [ * ], Tularik shall
grant Knoll a right of first refusal for an exclusive license, including the
right to grant sublicenses, to develop, make, have made, use, offer for sale,
sell and import Program Products based upon or incorporating the Licensed
Validated Compound in the Tularik Territory (the "Right of First Refusal").
Tularik shall negotiate exclusively with Knoll for [ * ] days for such licenses
prior to


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       2
<PAGE>

Tularik offering such opportunity to any Third Party. If the Parties have not
reached agreement by the end of such [ * ] day exclusive negotiation period,
Tularik may negotiate with Third Parties. When Tularik and such Third Party have
reached consensus on the financial terms and general scope of a proposed license
agreement, Tularik must offer Knoll the opportunity to enter into a license
agreement with Tularik on the same financial terms and general scope of such
proposed license agreement (the "Offer"). Knoll shall have [ * ] days to
unqualifiedly accept or decline such Offer in writing. If Knoll fails to respond
within such time period, it shall be deemed to have declined such Offer. If
Knoll declines the Offer, Tularik has no further obligation to grant such a
Right of First Refusal to Knoll with respect to the license opportunity that
Knoll has declined; provided, however, that [ * ]. Knoll has [ * ] days to
unqualifiedly accept or decline such re-Offer in writing. If Knoll fails to
respond within such time period, it shall be deemed to have declined such re-
Offer.

          2.1.2   Due Diligence. Knoll shall use commercially reasonable efforts
to develop and market the Program Products based upon or incorporating the
Licensed Validated Compound, consistent with [ * ], unless and until it
terminates this Agreement. If Knoll fails to use such efforts, Tularik may
terminate this Agreement upon [ * ] prior written notice. If the Parties
disagree on whether Knoll is using commercially reasonable efforts as required
hereunder, (i) [ * ]. In the event of termination of this Agreement for failure
to use such efforts, Knoll will grant to Tularik the licenses set forth in
Sections 5.3.1(c) and 5.3.1(d) of the Collaboration Agreement with respect to
such Program Product, subject to [ * ]. Tularik will then be free to pursue
clinical development, registration and commercialization of any such Program
Product as a Tularik Product in the Field throughout the world without further
obligation to Knoll other than the payment of the foregoing amounts.

     2.2  Obligation to Inform. Knoll agrees to keep Tularik fully informed on a
reasonable basis of the development and commercialization of all Program
Products based upon or incorporating the Licensed Validated Compound, including
but not limited to providing to Tularik periodic written updates on the progress
of each filing for Regulatory Approval.

                        ARTICLE 3 Product Development.

     Knoll is responsible for funding and performing the preclinical and
clinical development plan for the Program Products based upon or incorporating
the Licensed Validated Compound in the Knoll Territory. Knoll will perform all
such preclinical and clinical studies in such manner that the data generated
therefrom will meet the regulatory requirements of the FDA or foreign equivalent
for approval of human pharmaceuticals.


                              ARTICLE 4 Payments.

     4.1  Royalties.

          4.1.1 Preliminary Royalties. Knoll will pay Tularik royalties on Net
Sales on a quarterly basis within [ * ] after the end of each calendar quarter.
The royalty rate for each Program Product for which Net Sales are less than [ *
] will be [ * ], subject to a possible increase in the royalty rate (and the
subsequent payment of additional amounts to Tularik) applicable to Net Sales of
any Program Products for which worldwide Net Sales are equal to or greater than


[ * ] = Certain confidential informatin contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       3
<PAGE>

[ * ] in any given calendar year ("Significant Market Products"), as provided in
Section 4.1.2(c) below.

          4.1.2  Additional Royalties. Within [ * ] after the end of each
calendar year during the term of this Agreement, Knoll shall make any additional
royalty payments that may be required by Section 4.1.2(c) to Tularik on Net
Sales of Significant Market Products during such calendar year. The amount of
any such additional royalties shall be determined as follows:

                 (a) First, the amount of Net Sales of Significant Market
Products shall be [ * ] "Aggregate Amount"). The portion of the Aggregate Amount
allocable to [ * ] under this Agreement is the "Allocable Portion."

                 (b) Second, [ * ] will be determined by ascertaining whether
the Effective Date precedes or follows the date on which the Parties executed
any license agreement (other than this Agreement) for which worldwide net sales
are equal to or greater than [ * ] in any given calendar year. The net sales of
products or of Significant Market Products under [ * ] shall be considered the
first net sales (i.e., sales from $1 upward) and the royalty rate applicable to
net sales of less than [ * ] of such product or Significant Market Product shall
be [ * ] Net sales of subsequently executed agreement(s) shall be considered
sales made in addition to net sales made under the earliest executed agreement.
The foregoing is illustrated in the following example:

        [ * ].


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

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


                 (c) Knoll shall pay to Tularik any additional royalty due
pursuant to this Section 4.1.2 equal to the amount, if any, by which the amount
of royalties due to Tularik with respect to the Allocable Portion determined
pursuant to Section 4.1.2(a) and (b) exceeds the amount previously paid or due
and payable to Tularik pursuant to Section 4.1.1.

          4.1.3  Royalty Offset. Knoll may offset [ * ] of any royalties it must
pay to Third Parties on Net Sales of Program Product pursuant to any licenses
necessary to sell such Program Product against royalties payable by Knoll to
Tularik pursuant to Section 4.1; provided, however, that Tularik's royalty is
not reduced hereunder by more than [ * ] of Net Sales.

     4.2  Milestone Payments. Knoll will make the following payments to Tularik
in US Dollars upon the occurrence of the listed event in the Knoll Territory for
each Program Product based upon or incorporating the Licensed Validated
Compound:

Event                                                           Payment
[ * ]      [ * ]                                                [ * ]
[ * ]      [ * ]                                                [ * ]
[ * ]      [ * ]                                                [ * ]
[ * ]      [ * ]                                                [ * ]


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       4
<PAGE>

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


     Amounts due upon achievement of events [ * ] are payable [ * ] the event is
achieved for any Program Product based upon or incorporating a Licensed
Validated Compound in the Knoll Territory. Amounts due upon the achievement of
events [ * ] are payable [ * ] the event is achieved for a Program Product based
upon or incorporating the Licensed Validated Compound [ * ]. For any amount
payable upon achievement of [ * ]. In the event a Program Product based upon or
incorporating a Licensed Validated Compound achieves [ * ] of the listed events
above but does not achieve [ * ] events listed above, the listed events not
achieved by such Program Product shall be available to subsequent Program
Products based upon or incorporating a Licensed Validated Compound until such
time as [ * ] milestones shall have been paid by Knoll to Tularik for one or
more Program Products based upon or incorporating a Licensed Validated Compound.

     4.3  Period of Royalty Obligation. The royalty obligation under Section 4.1
shall commence on the date of first commercial sale of a Program Product based
upon or incorporating a Licensed Validated Compound in a country and shall
expire, on a country-by-country and product-by-product basis, on the later of
the expiration of the last to expire patent licensed to Knoll under Section 2.1
above or the [ * ] anniversary of the first commercial sale of the Program
Product in such country ("Royalty Term").

                       ARTICLE 5 Payment: Record; Audit.

     5.1  Payments; Reports. All amounts payable to Tularik under this Agreement
shall be paid in U.S. dollars. The royalty obligation under Section 4.1 shall
accrue at the time of sale of the Program Products to a Third Party. Royalty
obligations that accrue during a particular quarter shall be paid within [ * ]
after the end of such calendar quarter and other payments due to Tularik shall
be made as specified herein. Each payment of royalties and amounts due to
Tularik under Section 4.1 shall be accompanied by a statement of the amount of
Net Sales during such period on a product-by-product and country-by-country
basis, including all other information necessary to determine the appropriate
amount of such payments, and any additional information or reports required
under the Agreement.

     5.2  Exchange Rate. The rate of exchange to be used in computing the amount
of currency equivalent in United States dollars due Tularik shall be made at the
period end rate of exchange quoted on the last business day of the royalty
period in the Wall Street Journal.

     5.3 Records and Audit. During the term of this Agreement and for a period
of [ * ] thereafter, Knoll shall keep complete and accurate records pertaining
to the sale or other disposition of the Program Products commercialized by it
pursuant to this Agreement, in sufficient detail to permit Tularik to confirm
the accuracy of all payments due hereunder and compliance with the covenants set
forth in Section 2.1.2. Tularik shall have the right to cause an independent,
certified public accountant to audit such records to confirm Net Sales and
royalty payments due thereon to Tularik; provided, however, that such auditor
shall not disclose Knoll's Confidential Information to Tularik, except to the
extent such disclosure is necessary to verify the amount of royalties and other
payments due under this Agreement. Such audit right may b e


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       5
<PAGE>

exercised once a year, within [ * ] years after the royalty period to which such
records relate, upon notice to Knoll and during normal business hours. Any
under-payment of amounts due to Tularik by such audits shall be paid immediately
with interest in the amount of [ * ] per month (or the maximum amount permitted
by law, if less) from the date that such amount should have been paid to Tularik
until Knoll actually pays such amount. Tularik shall bear the full cost of such
audit unless such audit discloses a variance in the amounts paid by Knoll of
more than [ * ] from the amount of royalties and/or other payments actually
owed. In such case, Knoll shall bear the full cost of such audit. The terms of
this Section 5 shall survive any termination or expiration of this Agreement for
a period of [ * ].

     5.4  Withholding of Taxes. All payment amounts set forth in the Agreement
are stated net of withholding or similar taxes (other than U.S. income taxes)
that may be imposed by any governmental authority; provided, however, that
Tularik has provided Knoll with a Certificate of Exemption
(Freistellungsbescheinigung) from the German Federal Tax Office (Bundesamt fur
Finanzen).

     5.5  Blocked Currency. In each country where the local currency is blocked
and cannot be removed from the country, royalties accrued in that country shall
be paid to Tularik in such country in local currency by deposit in a local bank
designated by Tularik.

     5.6  Cross-Border Sales. Knoll agrees that it shall not, and that it shall
not grant the right to any affiliate or Third Party to, use, sell, offer for
sale or import Program Products in any country outside of the Knoll Territory,
and that Knoll shall use reasonable efforts to deter the importation of Program
Products into any country outside of the Knoll Territory by its affiliates and
licensees. Knoll and Tularik recognize that in certain territories, and in
particular in free trade regions, customers or other third parties may import
Program Products purchased in one country for use in another. If such activity
materially distorts the aggregate relative profitability of the parties from the
sale of Program Products in one or more countries, Tularik and Knoll shall [ * ]
to offset the economic effect of such cross-border transfers to the extent it is
practical to do so.

                         ARTICLE 6 Ownership; Patents.

     6.1  Ownership. Provision is made in the Collaboration Agreement for
ownership of the Knoll Technology, the Tularik Technology, the Research Compound
Inventions and the Program Technology and such matters shall be governed
thereby.

     6.2  Patents. Provision is made in the Collaboration Agreement for the
ownership, filing, prosecution and maintenance of Patents, Tularik Patents and
Knoll Patents and such matters shall be governed thereby.

     6.3  Infringement of Program Patents.

          6.3.1  Notice. Each Party shall promptly notify the other in writing
of any alleged or threatened infringement of the Patents that may adversely
impact the rights of the Parties hereunder, of which it becomes aware.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       6
<PAGE>

          6.3.2  Cooperation. Neither Party will notify a Third Party (except
for the Parties' outside litigation counsel) of the infringement of any of the
Patents by a Third Party in the Field without first obtaining the consent of the
other Party, which consent shall not be unreasonably withheld. Both Parties
shall use their best efforts in cooperating with each other to terminate such
infringement without litigation, with each Party being responsible for the
payment of its own out-of-pocket costs (including legal costs) relating thereto.
Any monetary settlement resulting from any such process shall first be allocated
to reimburse both Parties for such out-of-pocket costs, and the remainder shall
be [ * ].

          6.3.3  Enforcement Action. In the event that any alleged or threatened
infringement of the Patents by a Third Party in the Field and in the Knoll
Territory cannot be terminated without litigation, Knoll shall have the first
right, but not the obligation, to take appropriate action against any person or
entity directly or contributorily infringing such Patent. In the event Knoll
fails to institute an infringement suit or take other reasonable action in
response to such infringement within [ * ] after notice in accordance with
paragraph 6.3(a) above, Tularik shall have the right, but not the obligation,
upon [ * ] notice to Knoll to institute such suit or take other appropriate
action in its own name, the joint owners' names or both. In the event that any
alleged or threatened infringement of the Patents by a Third Party in the Field
and in the Tularik Territory cannot be terminated without litigation, Tularik
shall have the first right, but not the obligation, to take appropriate action
against any person or entity directly or contributorily infringing such Patent.
If Tularik fails to institute an infringement suit or take other reasonable
action in response to such infringement within [ * ] after notice in accordance
with paragraph 6.3(a) above, Knoll shall have the right, but not the obligation,
upon [ * ] notice to Tularik to institute such suit or take other appropriate
action in its own name, the joint owners' names or both. Regardless of which
Party brings such enforcement action, the other Party hereby agrees to cooperate
reasonably in any such effort, including, if required, bringing a legal action
or furnishing a power of attorney. The Party not bringing the action shall have
the right to participate in such action at its own expense with its own counsel
and any recovery obtained by settlement or otherwise shall be disbursed as
follows: Each Party shall first recover any reasonable expenses incurred in such
action (including counsel fees). Thereafter, the Parties shall [ * ]; provided,
however, that in the event Knoll fails to institute an infringement suit or take
other appropriate action in the Knoll Territory and Tularik shall institute such
suit or take such action, [ * ].

     6.4 Infringement of Tularik Patents and Knoll Patents. Subject to [ * ]
Tularik and Knoll shall defend and enforce the Tularik Patents and the Knoll
Patents respectively throughout the world.

     6.5  Infringement of Third Party Patent Rights.

          6.5.1  Joint Strategy. In the event that the manufacture, use or sale
of a Program Product based upon or incorporating the Licensed Validated Compound
becomes the subject of a claim of infringement of a patent, copyright or other
proprietary right anywhere in the world, and without regard to which Party is
charged with said infringement, or the venue of such claim, the Parties [ * ]
shall promptly confer to discuss the claim.

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       7
<PAGE>

          6.5.2  Defense. Unless the Parties otherwise agree, Knoll shall assume
the primary responsibility at its expense for the conduct of the defense of any
such claim brought in the Knoll Territory. Tularik shall have the right, but not
the obligation, to participate in any such suit at its sole option and at its
own expense. Unless the Parties otherwise agree, Tularik shall assume the
primary responsibility at its expense for the conduct of the defense of any such
claim brought in the Tularik Territory. Knoll shall have the right but not the
obligation to participate in any such suit at its sole option and at its own
expense. Each Party shall reasonably cooperate with the Party conducting the
defense of the claim. Neither Party shall enter into any settlement that affects
the other Party's rights or interests without such other Party's written
consent, not to be unreasonably withheld. If Knoll and Tularik agree that
payment must be made to a Third Party (the "Third Party Payment") to avoid
infringement of such Third Party's patent in the Knoll Territory, [ * ].

     6.6  Patent Marking. Knoll shall mark, if necessary, all products
manufactured, used or sold under the terms of this Agreement, or their
containers, in accordance with the applicable patent marking laws, as required.

                          ARTICLE 7 Confidentiality.

     7.1  Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, each Party agrees that,
for the term of this Agreement and for [ * ] thereafter, it shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other Party pursuant to this Agreement except
to the extent the receiving Party can demonstrate by competent proof that such
Confidential Information:

          7.1.1  was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;

          7.1.2  was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;

          7.1.3  became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of any obligation of confidentiality
with respect thereto;

          7.1.4  was disclosed to the receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party without breach
of any obligation of confidentiality with respect thereto; or

          7.1.5  was independently discovered or developed by the receiving
Party without the use of Confidential Information belonging to the disclosing
Party.

     Notwithstanding the foregoing, either Party may disclose Confidential
Information of the other Party to those of its employees, agents and consultants
who require such information to perform such Party's obligations under this
Agreement, provided that such employees, agents


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       8
<PAGE>

and consultants are bound by obligations of confidentiality and non-use with
respect to such Confidential Information at least equivalent in scope with those
provided in this Section 7.1.

     7.2  Authorized Disclosure. Notwithstanding Section 7.1, each Party may
disclose Confidential Information belonging to the other Party to the extent
such disclosure is reasonably necessary in the following instances:

          7.2.1  filing or prosecuting patents relating to Program Products;

          7.2.2  making regulatory filings;

          7.2.3  prosecuting or defending litigation;

          7.2.4  complying with applicable governmental regulations;

          7.2.5  conducting pre clinical or clinical trials of Program Products;
and

          7.2.6  as necessary to effectuate the [ * ]

     Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party's Confidential Information pursuant to this
Section 7.2 it will, except where impracticable, give reasonable advance notice
to the other Party of such disclosure and endeavor in good faith to secure
confidential treatment of such information. In any event, the Parties agree to
take all reasonable action to avoid disclosure of Confidential Information
hereunder. The Parties will consult with one another and agree on the provisions
of this Agreement to be redacted in any filings made by the Parties with the
United States Securities and Exchange Commission or as otherwise required by
law.

                       ARTICLE 8 Publication; Publicity.

     8.1  Publicity. Except as otherwise provided herein or required by law, no
Party shall make publicly available or provide to any Third Party any
publication, news release or other public announcement, written or oral, whether
in the public press, or stockholders' reports (if applicable), or otherwise,
relating to the existence of or the Parties' performance under this Agreement,
without the prior written approval of the other Party.

                   ARTICLE 9 Representations And Warranties.

     9.1  Representations and Warranties.  Each Party hereby represents and
warrants that:

          9.1.1  it has full corporate power and authority under the laws of the
state or country of its incorporation to enter into this Agreement and carry out
the provisions hereunder and that the person executing this Agreement on its
behalf has been duly authorized to do so by all requisite corporate action;

          9.1.2  it will not take any material action or fail to take any
material action which would be in conflict with its obligations under this
Agreement;


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       9
<PAGE>

          9.1.3  to its best knowledge as of the date of this Agreement: (i) it
has full power and authority to undertake the scientific activities required of
it; (ii) [ * ]; and (iii) the [ * ];

          9.1.4  as of the date of this Agreement, to the best of its knowledge,
it is not aware of [ * ];

          9.1.5  this Agreement is a legal and valid obligation binding upon it
and is enforceable in accordance with its terms; and

          9.1.6  the execution, delivery and performance of this Agreement by it
does not conflict with any agreement, oral or written, to which it is a Party or
by which it may be bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having authority over it.

     9.2  Third Party Licenses. Each Party agrees to identify to the other Party
any Third Party Licenses and the technologies to which they pertain. Knoll shall
have no obligation to make any payments whatsoever with respect to such Third
Party Licenses of Tularik. Tularik shall have no obligation to make any payments
whatsoever with respect to such Third Party Licenses of Knoll.

     9.3  Tularik Disclaimer. EXCEPT AS OTHERWISE PROVIDED IN SECTION 9.1, THE
TULARIK TECHNOLOGY AND PROGRAM TECHNOLOGY LICENSED HEREUNDER ARE PROVIDED "AS
IS" AND TULARIK EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES ARISING FROM A COURSE OF DEALING,
USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO.

                          ARTICLE 10 Indemnification.

     10.1 Indemnification by Tularik. Tularik hereby agrees to indemnify, hold
harmless and defend Knoll, its employees, directors, officers, agents and
consultants against any and all claims, suits, actions, demands, liabilities,
expenses and/or losses (including without limitation reasonable attorneys' fees
and related legal and court expenses) (collectively, "Claims") for damage to
persons or property resulting directly or indirectly from actions in connection
with this Agreement, but only to the extent that such Claims [ * ], except to
the extent such Claims arise out of or are in connection with any occurrence for
which Knoll must indemnify Tularik pursuant to Section 10.2.

     10.2 Indemnification by Knoll. Knoll hereby agrees to indemnify, hold
harmless and defend Tularik, its employees, directors, officers, agents and
consultants against any and all Claims for damage to persons or property
resulting directly or indirectly from actions in connection with this Agreement,
to the extent that such Claims [ * ], except to the extent such Claims arise out
of or are in connection with any occurrence for which Tularik must indemnify
Knoll pursuant to Section 10.1.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       10
<PAGE>

     10.3  Control of Defense. Any person or entity entitled to indemnification
under this Article 10 shall give notice to the indemnifying Party of any Claims
that may be subject to indemnification promptly after such Party learns of such
Claim. The indemnifying Party shall assume the defense of such Claims using
counsel reasonably satisfactory to the indemnified Party, and the indemnifying
Party will not be subject to any liability for any settlement of such Claims
made by the indemnified Party without the indemnifying Party's consent (such
consent not to be unreasonably withheld or delayed), and will not be obligated
to pay any fees and expenses of any separate counsel retained by the indemnified
Party with respect to such Claim.

                        ARTICLE 11 Government Controls.

     This Agreement is made subject to any restrictions concerning the export of
Program Products or technical information from the United States that may be
imposed upon or related to the Parties from time to time by the government of
the United States and other applicable jurisdictions. Furthermore, each Party
agrees that it will not export, directly or indirectly, any technical
information acquired from the other under this Agreement or any Program Products
made using such technical information to any country for which the United States
government or any agency thereof, or any other applicable jurisdictions at the
time of export requires an export, license or other governmental approval,
without first obtaining the written consent to do so from the Department of
Commerce or other agency of the United States government, or any other
applicable jurisdictions when required by an applicable statute or regulation.

                 ARTICLE 12 Term And Termination Of Agreement.

     12.1  Term. Except as provided under Section 12.2 below, the term of this
Agreement shall commence upon the Effective Date and shall expire on the
expiration date of the last to expire royalty obligation under Section 4.3.

     12.2  Termination for Material Breach. Each Party shall have the right to
terminate the Agreement after [ * ] days written notice to the other that the
other is in material breach of the Agreement, unless the other Party cures the
breach before the expiration of such period of time, or, in the case that such
breach cannot be cured within such period, the Party continues to use diligent
efforts to cure such breach until actually cured. In addition, this Agreement
shall terminate in the event the Collaboration Agreement is terminated pursuant
to Section 15.2 or 15.3 thereof. Upon termination, all licenses granted to the
non-breaching Party shall survive and all licenses granted to the breaching
Party under the Agreement shall automatically terminate, but such termination
shall not impair any other rights the non-breaching Party may have at law or
equity. Upon any termination by Knoll for a breach of this Agreement by Tularik,
Tularik shall be entitled to receive a royalty equal to that provided in Section
4.1 until expiration of all Tularik Patents or Patents claiming the manufacture,
use or sale of such Program Products, reduced by any money damages that may be
awarded to Knoll in connection with any such breach by Tularik and by any costs
incurred in connection with the transition of Tularik's responsibilities under
this Agreement to Knoll, its Affiliate or sublicensee. The provisions of Section
4.3 and Article 5 shall apply with respect to any such amounts due to Tularik
hereunder.

     12.3  Accrued Rights; Surviving Obligations. Termination of this Agreement
shall not affect any accrued rights of either Party. The terms of Section 5.3
and Article 7 (for the


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       11
<PAGE>

period specified therein), and Articles 6, 8, 9, 10 and 13 and Sections 12.2 and
12.3 of this Agreement, shall survive termination of this Agreement.

                           ARTICLE 13 Miscellaneous.

     13.1  Waiver. No waiver by either Party hereto of any breach or default of
any of the covenants or agreements herein set forth shall be deemed a waiver as
to any subsequent or similar breach or default.

     13.2  Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties and their permitted successors and assigns; provided,
however, that neither Party shall assign any of its rights and obligations
hereunder except (i) as incident to the merger, consolidation, reorganization or
acquisition of stock or assets affecting substantially all of the assets or
actual voting control of the assigning Party or (ii) to an Affiliate.

     13.3  Notices. Any notice or other communication required or permitted to
be given to either Party hereto shall be in writing and shall be deemed to have
been properly given and to be effective on the date of delivery if delivered in
person or by facsimile or five (5) days after mailing by registered or certified
mail, postage paid, to the other Party at the following address:

               In the case of Tularik:   Tularik Inc.
                                         Two Corporate Drive
                                         S. San Francisco, CA 94080
                                         Fax: (650) 829-4303
                                         Attention:  Chief Executive Officer

               In the case of Knoll:     Knoll AG
                                         Knollstrasse
                                         67061 Ludwigshafen
                                         Germany
                                         Attention: Head of R&D

     Either Party may change its address for communications by a notice to the
other Party in accordance with this Section.

     13.4  Headings. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

     13.5  Amendment. No amendment or modification hereof shall be valid or
binding upon the Parties unless made in writing and signed by both Parties.

     13.6  Governing Law and Language. This Agreement shall be governed
exclusively by laws of California, U.S.A., excluding any choice of law rules
that may direct the application of the law of any other jurisdiction. The
official text of this Agreement and any appendices, exhibits and schedules
hereto, or any notice given or accounts or statements required by this Agreement
shall be in English. In the event of any dispute concerning the construction or


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       12
<PAGE>

meaning of this Agreement, reference shall be made only to this Agreement as
written in English and not to any other translation into any other language.


     13.7   Force Majeure. Any delays in performance by any Party under this
Agreement (other than either Party's failure to pay money to the other Party,
unless such failure results solely from wire transfer failures beyond the
control of the paying Party, or the like) shall not be considered a breach of
this Agreement if and to the extent caused by occurrences beyond the reasonable
control of the Party affected, including but not limited to acts of God,
embargoes, governmental restrictions, strikes or other concerted acts of
workers, fire, flood, earthquakes, explosion, riots, wars, civil disorder,
rebellion or sabotage. The Party suffering such occurrence shall immediately
notify the other Party as soon as practicable and any time for performance
hereunder shall be extended by the actual time of delay caused by the
occurrence, provided that the affected Party uses reasonable efforts to overcome
such delay.

     13.8   Dispute Resolution. In the event of any controversy or claim arising
out of, relating to or in connection with any provision of this Agreement, the
Parties shall try to settle their differences amicably between themselves by
referring the disputed matter to the SC (as defined in the Collaboration
Agreement). Any unresolved disputes arising between the Parties arising out of,
relating to, in connection with or in any way connected with this Agreement or
any term or conditions hereof, or performance by either Party of its obligations
hereunder, whether before or after termination or expiration of this Agreement,
shall be finally resolved by binding arbitration, except that any disputes
regarding the validity, scope or enforceability of a patent shall be submitted
to a court of competent jurisdiction. The arbitration shall be held in San
Francisco, California according to the rules of the American Arbitration
Association ("AAA"). The arbitration will be conducted by a panel of three (3)
arbitrators with significant experience in the pharmaceutical industry appointed
in accordance with applicable AAA rules. Any arbitration herewith shall be
conducted in the English language to the maximum extent possible. Each Party
shall bear its own costs and attorney's and witness' fees. Judgment on the award
so rendered shall be final and may be entered in any court having jurisdiction
thereof.

     13.9   Independent Contractors. In making and performing this Agreement,
Knoll and Tularik act and shall act at all times as independent contractors and
nothing contained in this Agreement shall be construed or implied to create an
agency, partnership or employer and employee relationship between Tularik and
Knoll. At no time shall one Party make commitments or incur any charges or
expenses for or in the name of the other Party.

     13.10  Severability. If any part of this Agreement is declared invalid by
any legally governing authority having jurisdiction over either Party, then such
declaration shall not affect the remainder of the Agreement and the Parties
shall revise the invalidated part in a manner that will render such provision
valid without impairing the Parties' original interest.

     13.11  Cumulative Rights. The rights, powers and remedies hereunder shall
be in addition to, and not in limitation of, all rights, powers and remedies
provided at law or in equity, or under any other agreement between the Parties.
All of such rights, powers and remedies shall be cumulative, and may be
exercised successively or cumulatively.


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       13
<PAGE>

     13.12  Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

     13.13  Entire Agreement. This Agreement, the Collaboration Agreement and
any and all Exhibits referred to herein embodies the entire understanding of the
Parties with respect to the subject matter hereof and supersedes and terminates
all previous communications, representations or understandings, either oral or
written, between the Parties relating to the subject matter hereof.


     In Witness Whereof, the Parties have duly executed this Agreement.


     Tularik Inc.                            Knoll AG



     By:                                     By:
         -----------------------------           -----------------------------

     Title:  Chief Executive Officer         Title:
            --------------------------              --------------------------


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                       14
<PAGE>

                                   Exhibit A

                          LICENSED VALIDATED COMPOUND


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
<PAGE>

                                   Exhibit B

                    PROGRAM PATENTS AND PATENT APPLICATIONS


[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
<PAGE>

                                   Exhibit C

                        LICENSE UNDER KNOLL TECHNOLOGY

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.