Exhibit 10.1
ACQUISITION OPTION AGREEMENT
THIS ACQUISITION OPTION AGREEMENT, dated this 5th day of May, 1997,
is entered into by and among NOVALON PHARMACEUTICAL CORPORATION, a Delaware
corporation (the "Corporation"), each of the persons whose signature appears
in the signature pages of this Agreement under the caption "Novalon
Stockholders" (collectively, the "Novalon Stockholders" and each individually
a "Novalon Stockholder"), and CUBIST PHARMACEUTICALS, INC., a Delaware
corporation ("Cubist").
WHEREAS, pursuant to the terms of that certain Series B Convertible
Preferred Stock Purchase Agreement, dated of even date herewith (the "Series
B Stock Purchase Agreement"), between the Corporation and Cubist, the
Corporation has agreed to issue and sell to Cubist, and Cubist has agreed to
purchase from the Corporation, 333,333 shares of the Series B Convertible
Preferred Stock, $.001 par value per share, of the Corporation, upon the
terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the consummation by Cubist
of all of its obligations under the Series B Stock Purchase Agreement that
the Corporation and the Novalon Stockholders enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto, intending to be legally
bound, hereby agree as follows.
SECTION 1. DEFINITIONS. The following terms as used herein shall
have the meanings set forth below in this Section 1 or shall have the
meanings ascribed thereto elsewhere as referred to below in this Section 1:
"Acquisition Closing" shall have the meaning ascribed to such
term in Section 2.4 hereof.
"Acquisition Closing Date" shall mean the date of the
Acquisition Closing.
"Affiliate" shall mean, with regard to any Person, any other
Person or entity that directly or indirectly controls, or is controlled
by, or is under common control with, such Person.
"Agreement" and "this Agreement" shall mean this Acquisition
Option Agreement, as amended from time to time.
"Average Trading Price Per Share" shall mean the average of
the closing sale prices per share of Cubist Common Stock on the Nasdaq
Stock Market, as reported in the Wall Street Journal, for the ten
trading days prior to the date that the Acquisition Option is exercised
by Cubist pursuant to Section 2.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collaboration" shall have the meaning ascribed to such term
in the Series B Stock Purchase Agreement.
"Corresponding Novalon Stock Option" shall mean, with respect
to any Substitute Stock Option, the Novalon Stock Option in
substitution of which such Substitute Stock Option was granted pursuant
to, and in accordance with, the provisions of Section 2.5 hereof.
"Cubist Common Stock" shall mean the common stock, $.001 par
value per share, of Cubist.
"Encumbrances" shall mean any claims, liens, pledges, options,
charges, security interests, mortgages, conditional sales agreements,
contingent sales agreements, any title retention agreements, leases,
encumbrances or other rights of third parties, whether voluntarily
incurred or arising by operation of law, including, without limitation,
any agreement to give any of the foregoing in the future.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Novalon Common Stock" shall mean the common stock, $.001 par
value per share, of the Corporation.
"Novalon Outstanding Stock" shall mean all shares of any and
all classes or series of capital stock of the Corporation that are
outstanding immediately prior to the Acquisition Closing; provided,
however, that the term "Novalon Outstanding Stock" shall not include
any shares of any class or series of capital stock of the Corporation
that are owned by Cubist.
"Novalon Stock Option" shall have the meaning ascribed to such
term in Section 2.5 hereof.
"Person" shall mean an individual, partnership, corporation,
association, limited liability company, trust, joint venture,
unincorporated
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organization, and any government, governmental department or agency or
political subdivision thereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subsidiaries" shall mean, collectively, all corporations,
partnerships, limited liability companies or other Persons with respect
to which the Corporation shall own, directly or indirectly, more that
fifty percent (50%) of the issued and outstanding equity interests of
such corporations, partnerships, limited liability companies or other
Persons.
"Substitute Stock Option" shall have the meaning ascribed to
such term in Section 2.5 hereof.
"UNC" shall mean The University of North Carolina at Chapel
Hill.
SECTION 2. ACQUISITION OPTION.
2.1. Option to Acquire Stock.
(a) Subject to and upon the terms and conditions set forth
in this Section 2, Cubist shall have the option (but not the obligation) to
acquire all of the Novalon Outstanding Stock (the "Acquisition Option"). The
Acquisition Option may only be exercised by Cubist during the period
commencing on the date hereof and ending on February 5, 1998 (the
"Acquisition Option Period"). Cubist shall exercise the Acquisition Option by
giving written notice of exercise to the Corporation (the "Exercise Notice"),
which Exercise Notice shall specify the proposed structure of the transaction
pursuant to which Cubist shall acquire all of the Novalon Outstanding Stock
and the proposed date by which such transaction will be consummated. The
Corporation shall send to each Novalon Stockholder a copy of the Exercise
Notice promptly after receipt thereof by the Corporation.
(b) In the event that Cubist shall not have exercised the
Acquisition Option on or prior to November 5, 1997 and that Cubist shall not
have terminated this Agreement pursuant to Section 12(a) hereof, then Cubist
shall be obligated to make an additional $500,001 equity investment in the
Corporation (the "Additional Equity Investment") upon the terms and
conditions set forth in this Section 2.1(b). Cubist shall effect the
Additional Equity Investment by purchasing an additional 166,667 shares (the
"Additional Series B Preferred Shares") of Series B Convertible Preferred
Stock of the Corporation at a purchase price of $3.00 per share. Cubist's
obligation to effect the Additional Equity Investment shall be subject to the
conditions that (i) the Corporation shall have executed and delivered to
Cubist a counterpart of a stock purchase agreement, in form and substance
substantially the
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same as Series B Stock Purchase Agreement (except that such stock purchase
agreement shall not contain any provisions pertaining to the Collaboration),
more fully implementing the terms of the purchase and sale of the Additional
Series B Preferred Shares and (ii) all of the parties to each of the Related
Agreements (as defined in the Series B Stock Purchase Agreement) shall have
entered into such amendments to such Related Agreement as may be necessary to
ensure that the Additional Series B Preferred Shares become subject to, and
entitled to the benefits of, such Related Agreement.
2.2. Structure of the Transaction; Acquisition Agreement. Upon
exercise by Cubist of the Acquisition Option pursuant to, and in accordance
with, the provisions of Section 2.1 above, the acquisition by Cubist of all
of the Novalon Outstanding Stock (the "Acquisition") shall be effected
pursuant to a transaction structured as a merger, a reverse or forward
triangular merger, an asset acquisition, a stock acquisition or otherwise, as
may be selected and requested by Cubist and specified in the Exercise Notice
to be delivered to the Corporation and the Novalon Stockholders pursuant to
Section 2.1 hereof. The Corporation hereby acknowledges and agrees that the
structure of any such transaction may require that its separate corporate
existence terminate, such as, for example, in the case of a merger or a
reverse triangular merger. Each Novalon Stockholder hereby acknowledges and
agrees that, in the event that the structure of any such transaction is a
stock acquisition, he will sell or cause to be sold to Cubist all of the
shares of capital stock of the Corporation owned by such Novalon Stockholder
on the Acquisition Closing Date. The Corporation and the Novalon Stockholders
hereby acknowledge and agree that, in the event that Cubist exercises the
Acquisition Option, the Corporation and the Novalon Stockholders will be
required to enter into an acquisition agreement with Cubist and/or its
Subsidiaries or Affiliates pursuant to which the Acquisition will be
consummated, and that the terms and conditions of any such acquisition
agreement shall include and/or be consistent with all of the terms set forth
in this Agreement and shall include such other reasonable terms and
provisions (including representations and warranties, covenants,
indemnification provisions and conditions to closing) as are customary for
similar transactions (any such acquisition agreement being hereinafter
referred to as the "Definitive Acquisition Agreement"). Upon the execution
and delivery of the Definitive Acquisition Agreement, this Agreement shall be
deemed to have been terminated and superseded by the Definitive Acquisition
Agreement. The failure of the parties to mutually agree upon and enter into
the Definitive Acquisition Agreement shall in no way relieve the Corporation
and the Novalon Stockholders from their respective obligations hereunder to
consummate the Acquisition upon and subject to the terms and provisions of
this Agreement. The failure or refusal of any party hereto to enter into the
Definitive Acquisition Agreement having reasonable and customary terms and
conditions shall be a material breach of such party's obligations under this
Agreement.
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2.3. Consideration; Escrow; Adjustments.
(a) The aggregate purchase price payable by Cubist for the
Novalon Outstanding Stock shall be $10,000,000 (the "Purchase Price"),
subject to adjustment pursuant to Section 2.3(b) hereof (the Purchase Price,
as so adjusted, being referred to herein as the "Adjusted Purchase Price").
At the Acquisition Closing, Cubist shall make payment of such aggregate
purchase price by issuing to the Novalon Stockholders, as a group, that
number of shares of Cubist Common Stock (the "Consideration Shares") as shall
be equal to the quotient obtained by dividing (i) the Adjusted Purchase Price
by (ii) the Average Trading Price Per Share. Cubist shall not be required to
issue any fractional share, but, in lieu thereof, Cubist shall make a cash
payment equal to the product obtained by multiplying (x) such fractional
share by (y) the Average Trading Price Per Share. The Consideration Shares
and any cash payment made in lieu of any fractional share shall be allocated
among the Novalon Stockholders ratably in proportion to the respective number
of shares of Novalon Common Stock owned by the Novalon Stockholders
immediately prior to the Acquisition Closing.
(b) The Purchase Price shall be reduced by the aggregate
amount of any liabilities incurred by the Corporation after December 31, 1996
that are outside the ordinary course of business of the Corporation.
(c) Notwithstanding anything in Section 2.3(a) to the
contrary, Cubist shall be entitled to hold-back up to ten percent (10%) of
the Consideration Shares in escrow until the third anniversary of the
Acquisition Closing. Cubist shall be entitled to proceed against any of the
Consideration Shares held in escrow in the event that Cubist shall have any
claim for indemnification against the Novalon Stockholders.
(d) Notwithstanding anything in Section 2.3(a) to the
contrary, Cubist shall be entitled (but not required) to pay up to twenty
percent (20%) of the Purchase Price in cash, in which case the number of
Consideration Shares shall be ratably adjusted based on the Average Trading
Price Per Share.
2.4. Closing. If, but only if, the Acquisition Option is exercised
by Cubist pursuant to, and in accordance with, the provisions of Section 2.1
above, the closing of the Acquisition (the "Acquisition Closing") shall be
held at the offices of Bingham, Dana & Gould LLP, 150 Federal Street, Boston,
Massachusetts, on such date as may be mutually agreed upon by Cubist and the
Corporation; provided, however, that, if Cubist and the Corporation are
unable to agree upon such date, then such date shall be designated by Cubist,
but Cubist may not designate a date earlier than the thirtieth day following
the date that the Exercise Notice is given. Cubist and the Corporation, or,
in the absence of agreement as to the Acquisition Closing Date, Cubist alone,
shall give written notice to the Novalon Stockholders of the Acquisition
Closing Date. At the
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Acquisition Closing, the parties shall take such actions as may be required
in order to consummate the Acquisition.
2.5. Stock Options. At the Acquisition Closing, if any, each stock
option of the Corporation that is outstanding immediately prior thereto (each
a "Novalon Stock Option" and collectively, the "Novalon Stock Options") shall
be canceled, and Cubist shall grant to the holder thereof a stock option
under Cubist's Amended and Restated 1993 Stock Option Plan (each such stock
option granted by Cubist being referred to herein as a "Substitute Stock
Option" and, collectively with all other stock options granted by Cubist
pursuant to this Section 2.5, the "Substitute Stock Options") in substitution
for such holder's canceled Novalon Stock Option; provided, however, that in
no event shall Cubist be obligated to grant a Substitute Stock Option
pursuant to this Section 2.5 with respect to any Novalon Stock Option that
was not outstanding as of March 21, 1997. Each Substitute Stock Option shall
be exercisable for the number of shares of Cubist Common Stock as shall be
equal to the product of (A) the number of shares of Novalon Common Stock that
would be issued upon exercise of the Corresponding Novalon Stock Option if
such Corresponding Novalon Stock Option were exercised immediately prior to
the Acquisition Closing, multiplied by (B) a fraction, the numerator of which
is the Consideration Shares, and the denominator of which is the number of
shares of Novalon Common Stock deemed outstanding immediately prior to the
Acquisition Closing (determined in the manner set forth in Section 2.6
below). The exercise price per share of each Substitute Stock Option shall be
equal to the quotient obtained by dividing (A) the exercise price per share
of the Corresponding Novalon Stock Option by (B) a fraction, the numerator of
which is the Consideration Shares, and the denominator of which is the number
of shares of Novalon Common Stock deemed outstanding immediately prior to the
Acquisition Closing (determined in the manner set forth in Section 2.6
hereof). Each Substitute Stock Option shall vest or become exercisable on the
same basis as its Corresponding Novalon Stock Option. It is the intention of
the parties that the Substitute Stock Options be treated as non-qualified
stock options for income tax purposes. At the Acquisition Closing, Cubist
shall enter into a non-qualified stock option agreement with each individual
to whom Cubist must grant a Substitute Stock Option pursuant to this Section
2.5, which non-qualified stock option agreement shall evidence the terms of
the Substitute Stock Option to which it pertains and shall otherwise be
substantially in the form of Cubist's standard form of non-qualified stock
option agreement.
2.6. Common Stock Deemed Outstanding. For purposes of Section 2.5
hereof, the number of shares of Novalon Common Stock deemed outstanding
immediately prior to the Acquisition Closing shall be equal to (i) the number
of shares of Novalon Common Stock that are actually issued and outstanding
immediately prior to the Acquisition Closing, plus (ii) the number of shares
of Novalon Common Stock issuable immediately prior to the Acquisition Closing
upon
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exercise, exchange or conversion of any security or instrument exercisable or
exchangeable for, or convertible into, shares of Novalon Common Stock
immediately prior to the Acquisition Closing. Without limiting the generality
of the foregoing provisions of this Section 2.6, the shares of Common Stock
issuable immediately prior to the Acquisition Closing upon conversion of any
Preferred Stock then issued and outstanding shall be included, for purposes
of Section 2.5 above, among the number of shares of Novalon Common Stock
deemed outstanding immediately prior to the Acquisition Closing.
2.7. Accounting Treatment. The parties intend that the Acquisition
shall be treated as a pooling of interests for accounting purposes.
2.8. Tax Treatment. The parties intend that the Acquisition shall be
treated as a reorganization for purposes of Section 368 of the Code.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE
NOVALON STOCKHOLDERS. The Corporation and the Novalon Stockholders hereby
jointly and severally represent and warrant to Cubist that the
representations and warranties made by the Corporation in the Series B Stock
Purchase Agreement are true and correct, all to the same extent as if such
representations and warranties were set forth in full herein.
SECTION 4. SPECIAL REPRESENTATIONS AND WARRANTIES OF THE NOVALON
STOCKHOLDERS. The Novalon Stockholders hereby represent and warrant to Cubist
as follows:
4.1. Due Authorization, Etc.
(a) Each Novalon Stockholder that is not a natural person
has obtained all necessary authorizations and approvals from its Board of
Directors and shareholders, or Board of Trustees or other governing body,
required for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of the Novalon Stockholders and
constitutes the legal, valid and binding obligation of each of the Novalon
Stockholders enforceable against each of the Novalon Stockholders in
accordance with its terms.
(b) The execution, delivery and performance of this
Agreement by each Novalon Stockholder and his, her, or its participation in
the consummation of the transactions contemplated hereby are within such
Novalon Stockholder's full legal right, power and authority and do not
contravene, permit the termination of or constitute a default (or an event
which, with or without the giving of notice or the passage of time, or both,
will constitute a default) under (i) the corporate charter and By-Laws, or
other constituent instruments, of any Novalon Stockholder that is
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not a natural person, or (ii) any agreement or other instrument binding upon
such Novalon Stockholder, and will not result in the creation or imposition
of any lien, charge or encumbrance in favor of any third party upon any of
such Novalon Stockholder's assets or properties. The execution, delivery and
performance by the Novalon Stockholders of this Agreement do not violate any
provision of applicable law or regulations or any judgment, injunction,
award, decree or order to which any such Novalon Stockholder is subject.
(c) None of the Novalon Stockholders has any present plan
or intention to sell or otherwise transfer the shares of Cubist Common Stock
to be received in connection with the Acquisition.
4.2. Title to Stock. Schedule 4.2 hereto sets forth the number of
shares of Novalon Common Stock owned by each Novalon Stockholder on the date
hereof. Each Novalon Stockholder owns of record and beneficially, and on the
Acquisition Closing Date will own of record and beneficially, all right,
title and interest in and to the shares of Novalon Common Stock set forth
opposite such Novalon Stockholder's name on Schedule 4.2 hereto, free and
clear of all Encumbrances.
4.3. Ownership of Cubist Capital Stock. As of the date hereof, none
of the Corporation, the Novalon Stockholders or their respective affiliates
or associates (as such terms are defined under the Exchange Act), (i)
beneficially own, directly or indirectly, or (ii) are parties to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, shares of capital stock of
Cubist other than as a result of this transaction.
4.4. Securities Act Matters.
(a) If and to the extent that the Acquisition is
consummated, each Novalon Stockholder will be acquiring the shares of Cubist
Common Stock to be issued to such Stockholder pursuant to the Acquisition for
such Stockholder's account for investment and not with a view to the
distribution thereof. Each Novalon Stockholder acknowledges that the
Consideration Shares to be acquired by such Novalon Stockholder in connection
with the Acquisition will not be registered under the Securities Act and,
therefore, such Consideration Shares must be held, and the economic risk of
the investment must be borne, indefinitely unless and until such
Consideration Shares are subsequently registered under the Securities Act or
an exemption from such registration is available.
(b) Such Stockholder has received copies of Cubist's Annual
Report to Stockholders for 1997 and Cubist's Annual Report on Form 10-K for
its fiscal year ended December 31, 1996 (the "SEC Material"). Cubist has made
available to each Novalon Stockholder or such Novalon Stockholder's purchaser
representative, if any, the opportunity to ask questions of, and receive
answers from, Cubist or
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persons acting on its behalf concerning the terms and conditions of the
Acquisition and to obtain any additional information that such Novalon
Stockholder or such Novalon Stockholder's purchaser representative may deem
necessary to verify the accuracy of the information contained in the SEC
Material.
(c) Each Novalon Stockholder is an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act or meets the
requirements of Section 4.4(d) below.
(d) As indicated in Schedule 4.4 hereto, each Novalon
Stockholder either (i) has such knowledge and experience in financial and
business matters so that such Stockholder is capable of evaluating the merits
and risks of an investment in Cubist, or (ii) has relied upon the advice of
such Novalon Stockholder's purchaser representative, named in Schedule 4.4
hereto, with regard to the considerations involved in making such investment,
and such purchaser representative and such Novalon Stockholder together have
such knowledge and experience in financial and business matters so that such
purchaser representative and Novalon Stockholder are capable of evaluating
the merits and risks of such investment.
(e) At the Acquisition Closing, each Novalon Stockholder
shall enter into a Registration Rights Agreement with Cubist, in form and
substance reasonably satisfactory to such Novalon Stockholder and Cubist,
pursuant to which such Novalon Stockholder shall be granted customary
"piggyback" registration rights with respect to any registration statement on
Form S-1 or Form S-3 filed by Cubist with the Securities Exchange Commission
in connection with any public offering of shares of Cubist Common Stock for
Cubist's own account at any time during the period commencing on the last
business day of the sixth month following the Acquisition Closing Date and
ending on the first anniversary of the Acquisition Closing Date. Each Novalon
Stockholder hereby agrees that such Registration Rights Agreement shall also
provide that such Novalon Stockholder shall not be entitled to exercise his,
her or its rights thereunder to the extent that any such exercise would
disqualify the Acquisition as a "pooling of interests" for accounting
purposes.
SECTION 5. CONDUCT OF BUSINESS PRIOR TO ACQUISITION CLOSING DATE.
The Corporation covenants and agrees that (and the Stockholders covenant and
agree that they will cause the Corporation to), from and after the date of
this Agreement and until the earlier of (i) the Acquisition Closing Date or
(ii) the expiration date of the Acquisition Option Period, except as
otherwise specifically consented to or approved by Cubist in writing:
5.1. Full Access. The Corporation shall afford to Cubist and its
authorized representatives full access during normal business hours to all
properties, books, records, contracts and documents of the Corporation and
its Subsidiaries and a full
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opportunity to make such investigations as Cubist or any of its authorized
representatives shall desire to make of the Corporation and its Subsidiaries,
and the Corporation shall furnish or cause to be furnished to Cubist and its
authorized representatives all such information with respect to the affairs
and businesses of Corporation and its Subsidiaries as Cubist may reasonably
request.
5.2. Carry on in Regular Course. The Corporation and its
Subsidiaries shall maintain their owned and leased properties in good
operating condition and repair, reasonable wear and tear excepted, and to
make all necessary renewals, additions and replacements thereto. The
Corporation and its Subsidiaries shall carry on their business diligently and
substantially in the same manner as heretofore and not make or institute any
unusual or novel methods of manufacture, purchase, sale, lease, management,
accounting or operation. The Corporation and its Subsidiaries shall preserve
all of their accounting and business records, corporate records, trade
secrets and proprietary information for the benefit of Cubist.
5.3. No Dividends, Issuances, Repurchases, Etc. The Corporation
shall not declare or pay any dividends (whether in cash, shares of stock,
property or otherwise) on, or make any other distribution (whether in cash,
shares of stock, property or otherwise) in respect of, any shares of its
capital stock, or authorize, sell, issue, purchase, redeem or acquire for
value any shares of its capital stock or any options, warrants or rights to
acquire any shares of its capital stock.
5.4. No Increases. Neither the Corporation nor any of its
Subsidiaries shall increase the compensation payable or to become payable to
officers, employees or consultants, or increase any bonus, insurance, pension
or other benefit plan, payment or arrangement made to, for or with any such
officers, employees or consultants.
5.5 Loans; Investments; Prepayments; Contingent Liabilities. Neither
the Corporation nor any of its Subsidiaries shall borrow money from, or lend
money to, any Person. Neither the Corporation nor any of its Subsidiaries
shall make any investment in any Person. Neither the Corporation nor any of
its Subsidiaries shall guarantee, indemnify or otherwise become contingently
liable in any way, or act as a surety with respect to, any debt, liability or
obligation of any Person.
5.6 Prepayments; Forgiveness of Debt. Neither the Corporation nor
any of its Subsidiaries shall (i) prepay any of its debt obligations or
otherwise accelerate payment of any of its debt obligations or (ii) forgive
any debt or obligation owed to the Corporation or such Subsidiary.
5.7 Expenditures. Neither the Corporation nor any of its
Subsidiaries shall accrue, expend or commit, in any single transaction or
series of related
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transactions, any amount in excess of $50,000 without the prior written
consent of Cubist.
5.8 No Unauthorized Subsidiaries. Neither the Corporation nor any of
its Subsidiaries shall not acquire, own or otherwise have or control any
equity interest in any corporation, partnership, limited liability company or
any other Person, without the prior written consent of Cubist.
5.9. Contracts, Commitments and Related Matters. Neither Corporation
nor any of its Subsidiaries shall enter into any contract or commitment or
engage in any transaction not in the usual and ordinary course of business
and consistent with their normal business practices.
5.10. Sale, Exchange, Lease or License of Assets. Neither
Corporation nor any of its Subsidiaries shall sell, exchange, license, lease
or otherwise dispose of any asset or properties without the prior written
consent of Cubist. Without limiting the generality of the foregoing, neither
the Corporation nor any of its Subsidiaries shall license any of its
intellectual property to any Person without the prior written consent of
Cubist.
5.11. Acquisitions of Assets. Except with the prior written consent
of Cubist, neither the Corporation nor any of its Subsidiaries shall
purchase, license, lease or otherwise acquire any asset or properties, except
for acquisitions of inventory, supplies, tools, spare parts, research
equipment and supplies, laboratory equipment and supplies and biological
materials, in each case in the ordinary course of business consistent with
past practices. Without limiting the generality of the foregoing, neither the
Corporation nor any of its Subsidiaries shall license any of intellectual
property from any Person without the prior written consent of Cubist.
5.12. Preservation of Organization. The Corporation shall use its
best efforts to preserve the business organization of Corporation and its
Subsidiaries intact, to keep available to Cubist the present officers and
employees of Corporation and its Subsidiaries and to preserve for Cubist the
present relationships with suppliers and customers and others having business
relations with the Corporation or any of its Subsidiaries. The Corporation
shall not amend its Certificate of Incorporation or By-Laws, except with the
prior written consent of Cubist. Neither the Corporation nor any of its
Subsidiaries shall merge or consolidate with any other Person, or acquire any
stock or securities of any other Person.
5.13. No Default. Neither the Corporation nor any of its
Subsidiaries shall do any act or omit to do any act, or permit any act or
omission to act, which will cause a material breach of any contract,
commitment or obligation of the Corporation or any of its Subsidiaries.
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5.14. Compliance with Laws. The Corporation and its Subsidiaries
shall duly comply in all material respects with all laws, regulations and
orders applicable with respect to their business.
5.15. Title to Assets. The Corporation shall continue to have good
and valid record and marketable title to all of its assets, free and clear of
all Encumbrances.
5.16. Advice of Change. The Corporation shall promptly advise Cubist
in writing of any material adverse change in the business, condition,
operations, prospects or assets of the Corporation and its Subsidiaries.
5.17. Consents of Third Parties. The Corporation shall employ its
best efforts to secure, before the Acquisition Closing Date, the consent, in
form and substance satisfactory to Cubist and Cubist's counsel, to the
consummation of the transactions contemplated by this Agreement by each party
to any contract, commitment or obligation of the Corporation or any of its
Subsidiaries, under which such transactions would constitute a default, would
accelerate, modify or vest obligations of the Corporation or any of its
Subsidiaries or would permit cancellation of any such contract.
5.18. Transactions with Affiliates. Neither Corporation nor any
of its Subsidiaries will enter into any transaction with any Affiliate.
SECTION 6. COVENANTS OF THE PARTIES.
6.1. "Target Space" Technology. Within ninety (90) days of the date
of this Agreement, the Corporation shall provide Cubist with a copy of a
patent application filed by, or assigned to, the Corporation with respect to
certain inventions relating to the Target Space technology described in more
detail in Schedule 6.1 hereto (the "Target Space Technology"). For a period
of ninety (90) days after copies of such patent application are delivered to
Cubist, Cubist shall have the right to negotiate with the Corporation to
acquire from the Corporation all of the Corporation's right, title and
interest in and to such patent application, the inventions disclosed therein,
and the Target Space Technology. If Cubist and the Corporation are unable to
agree upon the terms of such acquisition within such 90 day period, then
Cubist shall have no rights to such patent application, the inventions
disclosed therein or the Target Space Technology, and, prior to the
Acquisition Closing, if any, the Corporation shall transfer all of its right,
title and interest in and to such patent application, the inventions
disclosed therein and the Target Space Technology so that they are not
included among the assets of the Corporation at the time of the Acquisition
Closing. If the Target Space Technology is not acquired by Cubist, Dana M.
Fowlkes and those other Novalon Stockholders that will become employees of
Cubist from and after the Acquisition Closing hereby agree that they shall
not have any role or involvement in conducting research and development
activities or
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commercializing the Target Space Technology (it being understood that, from
and after the Acquisition Closing, Cubist will expect that Dr. Fowlkes and
such other Novalon Stockholders will devote their entire time, attention and
energies to the businesses of the Corporation and Cubist). The provisions of
the foregoing sentence shall not preclude Dr. Fowlkes and such other Novalon
Stockholders from owning a a direct or indirect passive equity interest in
the Target Space Technology.
6.2. Novalon's Director of Business Development. During the
Acquisition Option Period, Cubist and the Corporation shall consider and
discuss whether to extend an offer of employment to Clay Thorp, the
Corporation's current Director of Business Development. The parties hereby
acknowledge that the foregoing provisions of this Section 6.2 do not obligate
Cubist to employ, or offer employment to, Clay Thorp.
6.3. Location of Corporation's Operations. During the Acquisition
Option Period, Cubist and the Corporation shall consider and discuss the
advantages and disadvantages to Cubist of keeping the businesses and
operations of the Corporation in the Chapel Hill, North Carolina area. If,
after such discussions, Cubist determines, in its sole discretion, that it is
in Cubist's best interests to relocate the businesses and operations of the
Corporation to another location, Cubist shall be free to effect such
relocation at any time after the Acquisition Closing Date upon providing
adequate notice thereof.
6.4. Transfer of Stock; Title to Stock. During the period commencing
on the date hereof and ending on the earlier of (x) the expiration date of
the Acquisition Option Period or (y) Acquisition Closing Date, each Novalon
Stockholder hereby covenants that:
(i) such Novalon Stockholder shall not sell, convey,
transfer, assign, pledge, encumber or otherwise dispose of any shares of
capital stock of the Corporation or any interest therein; and
(ii) such Novalon Stockholder shall continue to have good
and valid record and marketable title to all of the shares of capital stock
of the Corporation owned by such Novalon Stockholder on the date hereof, and
all of such shares shall continue to be free and clear of all Encumbrances.
6.5. Pooling and Tax-Free Reorganization Treatment. None of the
Corporation, the Novalon Stockholders or Cubist shall intentionally take or
cause to be taken any action, whether before or after the Acquisition
Closing, which would disqualify the Acquisition as a "pooling of interests"
for accounting purposes or as a "reorganization" within the meaning of
Section 368 of the Code.
13
6.6. No Solicitation. Unless and until the expiration of the
Acquisition Option Period, none of the Corporation, its officers, directors,
employees, representatives and agents, including, but not limited to,
investment bankers, attorneys and accountants, or the Novalon Stockholders
shall (and the Novalon Stockholders will not permit the Corporation to)
directly or indirectly encourage, solicit, initiate or participate in any
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Cubist
and its affiliates or representatives) concerning any offer or proposal for
any merger, tender offer, sale of substantial assets, sale of shares of
capital stock or debt securities or similar transaction involving the
Corporation (an "Acquisition Proposal"). The Corporation will immediately
communicate to Cubist the terms of any proposal, discussion, negotiation or
inquiry relating to an Acquisition Proposal and the identity of the party
making such proposal or inquiry which it may receive in respect of any such
transaction.
6.7. Public Announcements. Neither the Corporation nor Cubist will
distribute any news release or other public information disclosure with
respect to this Agreement or any of the transactions contemplated hereby
without the prior consent of the other; provided, however, any such prior
consent shall not be required with respect to the distribution of any such
news release or other public information disclosure to the extent such
distribution is required to satisfy either the Corporation's or Cubist's
obligations under applicable securities laws or is otherwise required by law.
6.8. Standstill. If the Acquisition Closing occurs, each Novalon
Stockholder hereby covenants and agrees that, so long as such Novalon
Stockholder or any of its affiliates (as such term is defined in the Exchange
Act) owns of record or beneficially (as such term is defined in the Exchange
Act) any of the Consideration Shares, neither such Novalon Stockholder nor
its affiliates shall, directly or indirectly, unless authorized in writing by
Cubist, in any manner:
(i) acquire, offer or propose to acquire, solicit an offer
to sell or agree to acquire, directly or indirectly, alone or in concert with
others, by purchase or otherwise, any direct or indirect beneficial interest
in any voting securities or direct or indirect rights, warrants or options to
acquire, or securities convertible into or exchangeable for, any voting
securities of Cubist;
(ii) make, or in any way participate in, directly or
indirectly, alone or in concert with others, any "solicitation" of "proxies"
to vote (as such terms are used in the proxy rules of the Securities and
Exchange Commission promulgated pursuant to Section 14 of the Exchange Act)
or seek to advise or influence in any manner whatsoever any person or entity
with respect to the voting of any voting securities of Cubist;
14
(iii) form, join or in any way participate in a "group"
within the meaning of Section 13(d)(3) of the Exchange Act with respect to
any voting securities of Cubist;
(iv) acquire, offer to acquire or agree to acquire,
directly or indirectly, alone or in concert with others, by purchase,
exchange or otherwise, (A) any of the assets, tangible or intangible, of
Cubist or any of its affiliates or (B) direct or indirect rights, warrants or
options to acquire any assets of Cubist or any of its affiliates, except for
such assets as are then being offered for sale by Cubist, or any of its
affiliates;
(v) arrange, or in any way participate, directly or
indirectly, in any financing for the purchase of any voting securities or
securities convertible or exchangeable into or exercisable for any voting
securities or assets of Cubist or any of its affiliates;
(vi) otherwise act, alone or in concert with others, to
seek to propose to Cubist or any of its stockholders any merger, business
combination, restructuring, recapitalization or other transaction to or with
Cubist or otherwise see, alone or in concert with others, to control, change
or influence the management, board of directors, or policies of Cubist or
nominate any person as a director who is not nominated by the then incumbent
directors, or propose any matter to be voted upon by the stockholders of
Cubist; or
(vii) take any action that might result in Cubist having to make a
public announcement regarding any of the matters referred to in clauses (i)
through (vi) of this Section 6.8, or announce an intention to do, or enter
into any agreement or understanding or discussions with others to do, any of
the actions restricted or prohibited under such clauses (i) through (vi).
6.9. Non-Competition. If the Acquisition Closing occurs, each
Novalon Stockholder hereby covenants and agrees that, during the period
commencing on the Acquisition Closing Date and ending on the fifth
anniversary of the Acquisition Closing Date, such Novalon Stockholder shall
not, directly or indirectly:
(i) for its own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, consultant or
otherwise (except as an investor in a corporation whose stock is publicly
traded and in which such Novalon Stockholder holds less than 2% of the
outstanding voting shares), engage in any business relating to the research,
discovery, development, sale, licensing, marketing or other commercialization
of (i) any of the biological targets which Cubist is researching, developing,
otherwise actively pursuing, selling, marketing or otherwise commercializing
at the time of the Acquisition Closing (the "Cubist
15
Biological Targets") or (ii) anti-bacterial and/or anti-fungal drugs whose
principal mechanism of action is the inhibition of any Cubist Biological
Target;
(ii) solicit the employment of any employee of Cubist, the
Corporation or any of their respective Subsidiaries; or
(iii) interfere with any business relationship between
Cubist, the Corporation or any other of their respective Subsidiaries, on the
one hand, with any Person (including, without limitation, any licensor,
licensee, collaborator, corporate partner, supplier or customer), on the
other hand.
At the Acquisition Closing, Cubist shall deliver to the Corporation and Dana
M. Fowlkes a list of the Cubist Biological Targets and Dr. Fowlkes shall,
promptly thereafter, send a copy of such list to each of the other Novalon
Stockholders.
SECTION 7. CONDITIONS PRECEDENT TO CUBIST'S OBLIGATIONS.
Notwithstanding Cubist's exercise of the Acquisition Option pursuant to, and
in accordance with, the provisions of Section 2.1 hereof, Cubist shall be
obligated to consummate the Acquisition only if each of the following
conditions is satisfied at or prior to the Acquisition Closing Date, unless
any such condition is waived in writing by Cubist:
7.1. Accuracy of Representations and Warranties by the Corporation
and the Novalon Stockholders. The representations and warranties of the
Corporation and the Novalon Stockholders set forth in Sections 3 and 4 hereof
shall be true and correct in all material respects as of the Acquisition
Closing Date with the same force and effect as though made again at and as of
the Acquisition Closing Date, except for changes permitted or required by
this Agreement.
7.2. Compliance by the Corporation and the Novalon Stockholders. The
Corporation and the Novalon Stockholders shall have performed and complied in
all material respects with all covenants and agreements contained in this
Agreement required to be performed or complied with by them on or before the
Acquisition Closing Date.
7.3. No Material Change. Since December 31, 1996 there shall not
have been or threatened to be any material damage to or loss or destruction
of any properties or assets owned or leased by the Corporation or any of its
Subsidiaries (whether or not covered by insurance) or any material adverse
change in the condition (financial or otherwise), operations, business or
assets of the Corporation and its Subsidiaries taken as a whole or imposition
of any laws, rules or regulations which would materially adversely affect the
condition (financial or otherwise), operations, business or assets of the
Corporation and its Subsidiaries taken as a whole.
16
7.4. Officers' Closing Certificate. The Corporation shall have
executed and delivered to Cubist at and as of the Acquisition Closing a
certificate, duly executed by the Corporation's President, in form and
substance satisfactory to Cubist and Cubist's counsel, certifying that the
conditions specified in each of Section 7.1, 7.2 and 7.3 have been satisfied.
7.5. Definitive Acquisition Agreement. Each of Cubist, the
Corporation and the Novalon Stockholders shall have executed and delivered to
each other counterparts of the Definitive Acquisition Agreement.
7.6. UNC License Agreement. Each of the Corporation and UNC shall
have executed and delivered to the other counterparts of a license agreement
with respect to the U.S. patent application entitled "Electrochemical Probes
for Detection of Molecular Interactions and Drug Discovery" and any
continuations and divisions derived therefrom, and such license agreement
shall be in form and substance satisfactory to Cubist and shall be in full
force and effect prior to and immediately after the Acquisition Closing.
7.7. Invention Assignments. The Corporation shall have made
available to Cubist such invention assignments requested by Cubist with
respect to the U.S. patent application entitled "Identification of Drugs
Using Complementary Combinatorial Libraries", and such invention assignments
shall be in form and substance satisfactory to Cubist.
7.8. Employment and Non-Competition Agreement with Dana Fowlkes.
Dana Fowlkes and the Corporation shall have terminated Dr. Fowlkes employment
agreement with the Corporation, and Dr. Fowlkes shall have executed and
delivered to Cubist an employment and non-competition agreement (the "Fowlkes
Employment Agreement"), pursuant to which Dr. Fowlkes shall become a Vice
President of Cubist from and after the Acquisition Closing upon such terms
and conditions (including, without limitation, base salary and fringe
benefits) as Cubist and Dr. Fowlkes shall have mutually agreed upon as
reflected in the Fowlkes Employment Agreement; provided, however, that in no
event shall the base salary and fringe benefits of Dr. Fowlkes under the
Fowlkes Employment Agreement be less than the base salary and fringe benefits
of Dr. Fowlkes under his employment agreement with the Corporation, as in
effect on March 21, 1997.
7.9. Employment Matters.
(a) Each of the scientific employees of the Corporation shall have
agreed to become employees of Cubist upon the same terms of employment as
were in effect for such scientific employees on March 21, 1997; provided,
however, that the terms
17
of such scientific employees' employment with Cubist may require that such
scientific employees relocate.
(b) Each of the scientific employees of the Corporation shall have
executed and delivered to Cubist a counterpart of Cubist's standard form of
Proprietary Information and Inventions Agreement, a copy of which is attached
to this Agreement as Exhibit A hereto.
7.10. Consulting Agreements.
(a) The Corporation and each of its consultants shall have
terminated such consultant's consulting relationship with the Corporation,
and such consultant shall have entered into a consulting agreement with
Cubist for a term equal to the balance of the term of such consultant's
consulting agreement with the Corporation and upon such other terms
(including, without limitation, consulting effort and consideration) as were
included in such consultant's consulting agreement with the Corporation, as
in effect on March 21, 1997.
(b) Each of the consultants of the Corporation shall have executed
and delivered to Cubist a counterpart of Cubist's standard form of
Proprietary Information and Inventions Agreement, a copy of which is attached
to this Agreement as Exhibit A hereto.
7.11. Scientific Advisory Board. Each of Thomas Shenk, Holden Thorp
and Brian Kay shall have agreed to become members of Cubist's Scientific
Advisory Board.
7.12. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Acquisition shall be in effect.
7.13. Opinion of the Corporation's Counsel. The Corporation shall
have delivered to Cubist the opinion of Jenner & Block, counsel to the
Corporation and the Novalon Stockholders, dated the Acquisition Closing Date
and in form and substance reasonably satisfactory to Cubist and Cubist's
counsel.
7.14. Accounting Treatment. Cubist shall have received letters from
Coopers & Lybrand L.L.P. (on behalf of Cubist) and Ernst & Young L.L.P. (on
behalf of the Corporation and the Novalon Stockholders), dated the date of
the Acquisition Closing, substantially to the effect that, on the basis of a
review of this Agreement and the transactions contemplated hereby, in such
accountants' opinion Accounting
18
Principles Board Opinion No. 16 requires that the Acquisition be accounted for
as a pooling of interests.
7.15. Tax Opinion. Cubist shall have received a legal opinion from
Bingham, Dana & Gould LLP, counsel to Cubist, to the effect that, on the
basis of the facts and representations set forth therein, or set forth in
writing elsewhere and referred to therein, for federal income tax purposes
the Acquisition constitutes a reorganization under Section 368 of the Code.
In rendering any such opinions, such counsel may rely, to the extent it deems
necessary or appropriate, upon opinions of other counsel and upon
representations of an officer or officers of Cubist and the Corporation or
any of their affiliates.
7.16. Due Diligence. Cubist shall have completed its due diligence
review of the Corporation and its assets, properties, contractual
obligations, intellectual property position, business and operations, and the
results of such due diligence review shall be satisfactory to Cubist in its
reasonable discretion.
7.17. Proceedings and Documents Satisfactory. All proceedings in
connection with the Acquisition and the other transactions contemplated by
this Agreement and all certificates and documents delivered to Cubist
pursuant to this Section 7 shall be reasonably satisfactory to Cubist and its
counsel.
SECTION 8. CONDITIONS PRECEDENT TO THE CORPORATION'S AND THE NOVALON
STOCKHOLDERS' OBLIGATIONS. Notwithstanding Cubist's exercise of the
Acquisition Option pursuant to, and in accordance with, the provisions of
Section 2.1 hereof, the Corporation and the Novalon Stockholders shall be
obligated to consummate the Acquisition only if each of the following
conditions is satisfied at or prior to the Acquisition Closing Date, unless
any such condition is waived in writing by the Corporation:
8.1. Compliance by Cubist. Cubist shall have performed and complied
in all material respects with all of the covenants and agreements required to
be performed or complied with by it on or before the Acquisition Closing Date.
8.2. Officers' Certificate. Cubist shall have delivered to the
Corporation a certificate of its President, dated the Acquisition Closing
Date, stating that the conditions set forth in Section 8.1 have been
satisfied.
8.3. Employment and Non-Competition Agreement with Dana Fowlkes.
Cubist shall have executed and delivered to Dana Fowlkes a counterpart of the
Fowlkes Employment Agreement, pursuant to which Dr. Fowlkes shall become a
Vice President of Cubist from and after the Acquisition Closing upon such
terms and conditions (including, without limitation, base salary and fringe
benefits) as Cubist and Dr. Fowlkes shall have mutually agreed upon as
reflected in the
19
Fowlkes Employment Agreement; provided, however, that in no event shall the
base salary and fringe benefits of Dr. Fowlkes under the Fowlkes Employment
Agreement be less than the base salary and fringe benefits of Dr. Fowlkes
under his employment agreement with the Corporation, as in effect on March
21, 1997.
8.4. Employment Matters. Cubist shall have offered employment to
each of the scientific employees of the Corporation upon the same terms of
employment as were applicable to such scientific employees during their
employment by the Corporation; provided, however, that the terms of such
scientific employees employment with Cubist may require that such scientific
employees relocate.
8.5. Consulting Agreements. Cubist shall have executed and delivered
to each of the Corporation's consultants a consulting agreement with a term
equal to the balance of the term of such consultant's consulting agreement
with the Corporation and upon such other terms (including, without
limitation, consulting effort and consideration) as were included in such
consultant's consulting agreement with the Corporation, as in effect on March
21, 1997.
8.7. Scientific Advisory Board. Each of Thomas Shenk, Holden
Thorp and Brian Kay shall have been appointed as members of Cubist's
Scientific Advisory Board.
8.8. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Acquisition shall be in effect.
8.9. Opinion of Cubist's Counsel. Cubist shall have delivered to the
Novalon Stockholders the opinion of Bingham, Dana & Gould LLP, counsel to
Cubist, dated the Acquisition Closing Date and in form and substance
reasonably satisfactory to the Novalon Stockholder and their counsel.
8.10. Tax Opinion. The Novalon Stockholders shall have received a
legal opinion from Jenner & Block, counsel to the Novalon Stockholders, to
the effect that, on the basis of the facts and representations set forth
therein, or set forth in writing elsewhere and referred to therein, for
federal income tax purposes the Acquisition constitutes a reorganization
under Section 368 of the Code. In rendering any such opinions, such counsel
may rely, to the extent it deems necessary or appropriate, upon opinions of
other counsel and upon representations of an officer or officers of Cubist
and the Corporation or any of their affiliates.
8.11. Proceedings and Documents Satisfactory. All proceedings in
connection with the Acquisition and the other transactions contemplated by
this Agreement and all certificates and documents delivered to the
Corporation and the
20
Novalon Stockholders pursuant to this Section 8 shall be reasonably
satisfactory to the Corporation, the Novalon Stockholders and their counsel.
SECTION 9. CONFIDENTIAL INFORMATION. Any and all non-public
information disclosed by Cubist to Corporation or by Corporation to Cubist as
a result of the negotiations leading to the execution of this Agreement, or
in furtherance hereof, shall remain subject to the terms of the Confidential
Non-Disclosure Agreement dated March 12, 1997 executed and delivered to each
other by Cubist and the Corporation (the "Confidentiality Agreement").
SECTION 10. SURVIVAL OF REPRESENTATIONS. Each of the representations
and warranties in this Agreement made by the Corporation or any of the
Novalon Stockholders shall survive the Acquisition Closing and shall expire
on the third anniversary of the Acquisition Closing Date.
SECTION 11. TAX CONSEQUENCES TO THE PARTIES. Cubist, on the one
hand, and the Corporation and the Novalon Stockholders, on the other,
understand and agree that neither Cubist, on the one hand, nor the
Corporation or the Novalon Stockholders, on the other, are making any
representation or warranty as to the tax consequences of this Agreement and
the events and actions contemplated hereby. Nonetheless, if the Acquisition
Closing occurs all parties hereto agree to report the Acquisition on their
respective federal income tax returns as a tax-free reorganization under
ss.368 of the Code.
SECTION 12. TERMINATION; LIABILITIES CONSEQUENT THEREON. This
Agreement may be terminated and the Acquisition abandoned at any time prior
to the Acquisition Closing only as follows:
(a) by Cubist, upon notice to the Corporation at
any time prior to the exercise of the Acquisition Option; or
(b) by Cubist or the Corporation, upon notice to the other
at any time after the expiration of the Acquisition Option Period if Cubist
did not timely exercise the Acquisition Option pursuant to, and in accordance
with, the provisions of Section 2.1 hereof; or
(c) by Cubist, upon notice to the Corporation if the
conditions set forth in Section 7 shall not have been satisfied within ninety
(90) days following Cubist's exercise of the Acquisition Option pursuant to,
and in accordance with, the provisions of Section 2.1 hereof; or
(d) by the Corporation, upon notice to Cubist if the
conditions set forth in Section 8 shall not have been satisfied within ninety
(90) days following
21
Cubist's exercise of the Acquisition Option pursuant to, and in accordance
with, the provisions of Section 2.1 hereof; or
(e) at any time by mutual agreement of Cubist and the
Corporation; or
(f) by Cubist, if there has been any material breach of any
representation, warranty or covenant of the Corporation or the Novalon
Stockholders contained herein and the same has not been cured within 30 days
after notice thereof; or
(g) by the Corporation, if there has been any material
breach of any covenant of Cubist contained herein and the same has not been
cured within 30 days after notice thereof.
Any termination pursuant to this Section 12 shall be without liability on the
part of any party, unless such termination is the result of a material breach
of this Agreement by a party to this Agreement in which case such breaching
party shall remain liable for such breach notwithstanding any termination of
this Agreement. The Confidentiality Agreement shall survive any termination
of this Agreement.
SECTION 13. GENERAL.
13.1 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated; provided, however, that, on the earlier of
(x) the Acquisition Closing or (y) the termination of this Agreement pursuant
to Section 12 hereof, Cubist shall reimburse the Corporation, up to a maximum
aggregate amount of $40,000, for any amounts paid or payable by the
Corporation in respect of the reasonable fees, expenses and disbursements of
the Corporation's outside legal, accounting and tax advisors but only if and
to the extent that (i) such reasonable fees, expenses and disbursements
pertain to the transactions contemplated by this Agreement, (ii) such
reasonable fees, expenses and disbursements relate to services rendered from
and after the date that Cubist exercises the Acquisition Option and (iii) the
Corporation provides the Investor with a copy of the invoices submitted to
the Corporation by such advisors and such invoices are sufficiently detailed
to adequately support the amount of such fees, expenses and disbursements.
13.2. Assignment and Benefits of Agreement. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their
respective successors, but may not be assigned by any of the parties without
the written consent of the others. Except as aforesaid or as specifically
provided for elsewhere in this Agreement, nothing in this Agreement, express
or implied, is intended to
22
confer upon any person other than the parties hereto and their said
successors and permitted assigns, any rights under or by reason of this
Agreement.
13.3 Remedies. In case that any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements may proceed to protect and enforce its or their rights, either by
suit in equity and/or action at law, including, but not limited to, an action
for damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Agreement.
The rights, powers and remedies of the parties to this Agreement are
cumulative and not exclusive of any other right, power or remedy which such
parties may have under any other agreement or law. No single or partial
assertion or exercise of any right, power or remedy of a party hereunder
shall preclude any other or further assertion or exercise thereof.
13.4 Entire Agreement. Except as specifically otherwise provided for
elsewhere in this Agreement, this Agreement contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes
all prior and contemporaneous arrangements or understandings with respect
thereto.
13.5 Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by first
class, registered, certified or overnight mail, postage prepaid, or
telecopied with a confirmation copy by regular mail, addressed or telecopied,
as the case may be, to such party at the address or telecopier number, as the
case may be, set forth below or such other address or telecopier number, as
the case may be, as may hereafter be designated in writing by the addressee
to the addressor listing all parties:
(i) If to the
Corporation, to:
Novalon Pharmaceutical Corporation
214 West Cameron Avenue, Suite B
Chapel Hill, N.C. 27516
Attention: Dana M. Fowlkes, M.D., Ph.D.,
President & CEO
Telecopier:(919) 968-9255
with a copy to:
Jenner & Block
12th Floor
601 Thirteenth Street, N.W.
Washington, D.C. 20005
23
Attention: D. Joe Smith, Esq.
Telecopier: (203) 639-6066
(ii) If to Cubist, to:
Cubist Pharmaceuticals, Inc.
24 Emily Street
Cambridge, MA 02139
Attention: Scott M. Rocklage, Ph.D.
Telecopier: (617) 576-0232
with a copy to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, MA 02110-1726
Attention: Julio E. Vega, Esquire
Telecopier:(617) 951-8736
(iii) If to any Novalon
Stockholder, to
c/o Novalon Pharmaceutical Corporation
214 West Cameron Avenue, Suite B
Chapel Hill, N.C. 27516
Attention: Dana M. Fowlkes, M.D., Ph.D.,
President & CEO
Telecopier:(919) 968-9255
with a copy to:
Jenner & Block
12th Floor
601 Thirteenth Street, N.W.
Washington, D.C. 20005
Attention: D. Joe Smith, Esq.
Telecopier: (203) 639-6066
Any notice or other communication pursuant to this Agreement shall be deemed
to have been duly given or made and to have become effective (i) when
delivered in hand to the party to which it was directed, (ii) if sent by
telex, telecopier, facsimile machine or telegraph and properly addressed in
accordance with the foregoing provisions of this Section 13.5, when received
by the addressee, (iii) if sent by commercial courier guaranteeing next
business day delivery, on the business day
24
following the date of delivery to such courier, or (iii) if sent by
first-class mail, postage prepaid, and properly addressed in accordance with
the foregoing provisions of this Section 13.5, (A) when received by the
addressee, or (B) on the third business day following the day of dispatch
thereof, whichever of (A) or (B) shall be the earlier.
13.6 Amendments and Waivers. Any provision of this Agreement may be
amended, modified or terminated, and the observance of any provision of this
Agreement may be waived (either generally or in a particular instance and
either retrospectively or prospectively), with, but only with, the written
consent of each of the parties hereto.
13.7 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
13.8 No Waiver of Future Breach. No failure or delay on the part of
any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof. No assent, express or implied,
by any party hereto to any breach in or default of any agreement or condition
herein contained on the part of any other party hereto shall constitute a
waiver of or assent to any succeeding breach in or default of the same or any
other agreement or condition hereof by such other party.
13.9 Attorneys' Fees. If any party to this Agreement brings an
action to enforce its rights under this Agreement and such party is the
prevailing party, then such party shall be entitled to recover its costs and
expenses, including, without limitation, reasonable attorneys' fees, incurred
in connection with such action, including any appeal of such action. The
amount of such costs and expenses to which such party shall be entitled shall
be determined and set by the judge and not a jury.
13.10 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not
be deemed to be a part of this Agreement.
13.11 Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
25
13.12 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, excluding
choice of law rules thereof.
13.13 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CORPORATION:
NOVALON PHARMACEUTICAL
CORPORATION
By: [signature appears here]
----------------------------
Name: Dana M. Fowlkes, M.D., Ph.D.
Title: President & CEO
CUBIST:
CUBIST PHARMACEUTICALS, INC.
By: [signature appears here]
------------------------
Scott M. Rocklage, President
NOVALON STOCKHOLDERS:
[signature appears here]
--------------------------
Dana M. Fowlkes
[signature appears here]
--------------------------
Susan T. Lord
[signature appears here]
--------------------------
Thomas E. Shenk
27