<PAGE>   1
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILE SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                                                 EXHIBIT 10.94

                  COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

        THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (this "Agreement") is
made and entered into effective as of December 11, 1998, by and between AXYS
PHARMACEUTICALS, INC., a Delaware corporation having its principal place of
business at 180 Kimball Way, South San Francisco, CA 94080 ("Axys"), and
RHONE-POULENC RORER PHARMACEUTICALS INC., a Delaware corporation having a place
of business at 500 Arcola Road, Collegeville, Pennsylvania 19426 ("RPR"). Axys
and RPR may be referred to herein as a "Party" or, collectively, as "Parties."

                                    RECITALS

        WHEREAS, Axys and its Affiliates possess proprietary technology and
know-how related to the discovery, identification and/or synthesis of cathepsin
S inhibitors and have identified chemical compounds that are cathepsin S
inhibitors; and

        WHEREAS, RPR and its Affiliates are engaged in the research, development
and marketing of products for the treatment of, among other things, respiratory
and cardiovascular diseases; and

        WHEREAS, Axys and RPR desire to collaborate in the discovery,
development and commercialization of cathepsin S inhibitors for use in the
prevention and/or treatment of certain human diseases as identified below.

        NOW, THEREFORE, in consideration of the various promises and
undertakings set forth herein, the Parties agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

        Unless otherwise specifically provided herein, the following terms shall
have the following meanings:

        1.1 "ACTIVE COMPOUND" means any compound that:

                (a) (1) has the ability to inhibit (or, in the case of a
prodrug, an active species of which inhibits) cathepsin S with a [*]; (2) has
greater than [*] for cathepsin S against an [*], as determined by the JRC; and
(3) has appropriate [*] selected by the JRC; and



                                       1.
<PAGE>   2


                (b) satisfies one or more of the following:

                        (1) is [*]; or

                        (2) is [*] either (i) [*] or (ii) [*]; or

                        (3) [*] (including without limitation the [*] thereto)
[*], and is determined to [*] or

                        (4) is [*], as defined in any pending or issued claim of
any unexpired Axys Patent, RPR Patent or Joint Patent filed in the United States
or Japan or as a European Patent Application, or as a Patent Cooperation Treaty
("PCT") application designating the United States and the contracting states of
the European Patent Convention, and [*], provided that [*].

        Notwithstanding the foregoing provisions of this Section 1.1, the term
"Active Compounds" [*].

        1.2 "AFFILIATE" with respect to Axys, shall mean any Person controlling,
controlled by, or under common control with, Axys. With respect to RPR,
"Affiliate" shall mean any Person controlled by Rhone-Poulenc Rorer, Inc., a
Pennsylvania corporation. For the purposes of this Section 1.2 only, "control"
shall refer to (a) the possession, directly or indirectly, of the power to
direct the management or policies of a Person, whether through the ownership of
voting securities, by contract or otherwise or (b) the ownership, directly or
indirectly, of at least 50% (or, if less, the maximum ownership interest
permitted by law) of the voting securities or other ownership interest of a
Person.

        1.3 "AXYS KNOW-HOW" means all Information Controlled by Axys at any time
prior to the end of the Research Term constituting methods, techniques,
materials, know-how, trade secrets, inventions or data necessary or useful for
the identification, development, synthesis, assaying, manufacture, use or sale
of Active Compounds and Licensed Products, but excluding the Axys Patents, Joint
Patents and any information that Axys is restricted from disclosing due to
confidentiality obligations to a Third Party.

        1.4 "AXYS PATENTS" means all Patent Rights that are Controlled by Axys
or an Affiliate of Axys that claim (i) Active Compounds or Licensed Products,
(ii) the manufacture or use of Active Compounds or Licensed Products, or (iii)
methods or materials used for discovering, identifying, or assaying for Active
Compounds or Licensed Products, where such Patent Rights claim inventions made
prior to the end of the Research Term, but excluding any Joint Patents.

        1.5 "AXYS PRODUCT" shall have the meaning ascribed to such term in
Section 5.3.

        1.6 "BACK-UP COMPOUND" means any Active Compound [*], as provided in 
Section [*], together with any salt, solvate or prodrug of such [*].


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                       2.
<PAGE>   3

        1.7 "COLLABORATION COMPOUND" means any Active Compound that has been [*]
for further development and commercialization as a Collaboration Compound,
pursuant to Section 5.1, together with any salt, solvate or prodrug of such
selected compound.

        1.8 "CONFIDENTIAL INFORMATION" means a Party's confidential information,
inventions, know-how, data and materials relating to the Research, or the Active
Compounds or Licensed Products, including without limitation research,
technical, clinical development, manufacturing, marketing, financial, personnel
and other business information and plans, which, if disclosed in written,
graphic or electronic form, is marked or otherwise designated as "confidential"
or "proprietary" and, if disclosed orally, is summarized and designated as
"confidential" or "proprietary" in a writing provided to the receiving Party not
later than sixty (60) days after such disclosure.

        1.9 "CONTROL" means, with respect to an item of Information or
intellectual property right, possession of the ability, whether by ownership or
license, to grant a license or sublicense as provided for herein under such item
or right without violating the terms of any agreement or other arrangements with
any Third Party.

        1.10 "EFFECTIVE DATE" means the effective date of this Agreement as set
forth in the first paragraph hereof.

        1.11 "FAIR MARKET VALUE" means the cash consideration which a willing
seller would realize from an unaffiliated, unrelated and willing buyer in an
arm's length sale of an identical item sold in the same quantity and at the same
time and place of the transaction.

        1.12 "FDA" means the United States Food and Drug Administration, or the
successor federal agency thereto.

        1.13 "FIELD" means the [*] of one or more Indications by means of
inhibition of cathepsin S.

        1.14 "FIRST COMMERCIAL SALE" means, with respect to any Licensed Product
in any country, the first sale for use or consumption by the general public of
such Licensed Product in such country after all Regulatory Approvals have been
obtained in such country.

        1.15 "FTE" means a full-time scientific person dedicated by Axys or RPR
(or their Affiliates, as applicable) to the Research, or in the case of less
than a full-time dedicated scientific person, a full-time, equivalent scientific
person year, based upon a total of [*] per year of [*].

        1.16 "IND" means an investigational new drug application filed with the
FDA for approval to commence human clinical trials, or the equivalent in other
countries or regulatory jurisdictions.

        1.17 "INDICATION" means any one of the following indications:


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                       3.
<PAGE>   4

                (a) rheumatoid arthritis;

                (b) atherosclerosis and diseases and conditions caused by
atherosclerosis;

                (c) Respiratory Diseases treated via oral delivery of a
therapeutic; or

                (d) Respiratory Diseases treated by an inhalable or intranasally
delivered formulation of a therapeutic.

The term "Indication" shall also include any New Indication that is included
within the definition pursuant to the terms of Section 5.3 (except as otherwise
provided in Section 5.3(d)).

        1.18 "INFORMATION" means any data results, information, know-how, trade
secrets, techniques, methods, development, material, or compositions of matter
of any type or kind.

        1.19 "JOINT KNOW-HOW" means all Research Technology that is made jointly
by employees or agents of Axys or its Affiliates and by employees or agents of
RPR or its Affiliates, prior to the end of the Research Term, but excluding the
Joint Patents.

        1.20 "JOINT PATENTS" means all Patent Rights that claim or cover
inventions within the Research Technology that are made jointly by employees or
agents of Axys and by employees or agents of RPR or their respective Affiliates,
prior to the end of the Research Term and name as inventors one or more
employees or agents of Axys or its Affiliates together with one or more
employees or agents of RPR or its Affiliates.

        1.21 "JOINT RESEARCH COMMITTEE" OR "JRC" means that committee to be
formed pursuant to Section 4.1.

        1.22 "KNOW-HOW" means Axys Know-How and/or RPR Know-How.

        1.23 "LICENSED PRODUCT" means any product, including any formulation
thereof, containing or comprising a Collaboration Compound.

        1.24 "MAJOR PHARMACEUTICAL MARKET" means each of the United States, the
countries of the European Union, and Japan.

        1.25 "MATERIALS" shall have the meaning assigned to such term in Section
2.11.

        1.26 "NDA" means a New Drug Application filed pursuant to the
requirements of the FDA, as more fully defined in 21 C.F.R. Section 314.5 et
seq, and any equivalent application filed with any equivalent regulatory
authority in a Major Pharmaceutical Market.

        1.27 "NET SALES" means the [*].

For clarification, [*].

[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                       4.
<PAGE>   5

        1.28 "PATENT RIGHT" means (i) an issued and existing letters patent,
including any extensions, supplemental protection certificates, registration,
confirmation, reissue, reexamination or renewal thereof, (ii) pending
applications, including any continuation, divisional, continuation-in-part
application thereof, for any of the foregoing, and (iii) all counterparts to any
of the foregoing issued by or filed in any country or other jurisdiction.

        1.29 "PERSON" means any natural person, corporation, firm, business
trust, joint venture, association, organization, company, partnership or other
business entity, or any government or agency or political subdivision thereof.

        1.30 "PHASE I" means that portion of the clinical development program
which generally provides for the first introduction into humans of a product
with the primary purpose of determining safety, metabolism and pharmacokinetic
properties and clinical pharmacology of the product.

        1.31 "PHASE III" means that portion of the clinical development program
which provides for the pivotal trials of a product on sufficient numbers of
patients to establish the safety and efficacy of a product for the desired label
claims and indications.

        1.32 "PHASE TRANSITION CRITERIA" shall have the meaning ascribed to it
in the "Phase Transition Criteria" document, which is attached hereto as Exhibit
A.

        1.33 "REGULATORY APPROVAL" means any and all approvals (including price
and reimbursement approvals), licenses, registrations, or authorizations of any
federal, national, state, provincial or local regulatory agency, department,
bureau or other government entity, necessary for the manufacture, use, storage,
import, transport and sale of a Licensed Product in a country.

        1.34 "RELEVANT PERIOD" means the period which begins on the Effective
Date and ends on the [*] of the expiration of the Research Term.

        1.35 "RESEARCH" means the collaborative research program undertaken by
the Parties pursuant to this Agreement to discover, identify, synthesize and
evaluate Active Compounds for use in the Field.

        1.36 "RESEARCH PLAN" means the specific plan for conducting the
Research, as described in Section 2.1 and attached hereto as Exhibit B, as such
plan may be revised from time to time by the JRC.

        1.37 "RESEARCH TECHNOLOGY" means all tangible and intangible know-how,
trade secrets, inventions (whether or not patentable), discoveries,
developments, data, clinical and preclinical results, information, and physical,
chemical or biological material, and any replication of or any part of any of
the foregoing, that was made by employees or agents of Axys, RPR, and/or any of
their respective Affiliates, either alone or jointly, during the course of and
in the conduct of the Research during the Research Term.



                                       5.
<PAGE>   6

        1.38 "RESEARCH TERM" means the period during which the Parties shall
conduct the Research, commencing on the Effective Date and terminating upon
either: [*].

        1.39 "RESPIRATORY DISEASES" means [*] .

        1.40 "RPR KNOW-HOW" means all Information Controlled by RPR at any time
prior to the end of the Research Term constituting methods, techniques,
materials, know-how, trade secrets, inventions or data necessary or useful for
the identification, pharmacological development, synthesis, assaying and use of
Active Compounds and Licensed Products, but excluding RPR Patents and Joint
Patents and excluding any Information that RPR is restricted from disclosing due
to confidentiality obligations to a Third Party.

        1.41 "RPR PATENTS" means all Patent Rights Controlled by RPR or an
Affiliate of RPR that claim Active Compounds, the manufacture or use of Active
Compounds or methods or materials useful for discovering, identifying, or
assaying for Active Compounds, where such Patent Rights claim inventions made
prior to the end of the Research Term, but excluding any Joint Patents.

        1.42 "SUBLICENSEE" means a Person other than an Affiliate of RPR to
which RPR has granted sublicense rights under the licenses granted RPR
hereunder, which rights include at least the rights to make and sell Licensed
Products. Third Parties that are permitted only to distribute and resell
finished Licensed Products or that manufacture or finish Licensed Products for
supply to RPR or its Affiliate are not "Sublicensees."

        1.43 "THIRD PARTY" means any Person other than Axys, RPR or Affiliates
of either of them, or any Sublicensee.

        1.44 "VALID CLAIM" means a claim of an issued and unexpired patent which
has not been revoked or held unenforceable or invalid by a decision of a court
or governmental agency of competent jurisdiction from which no appeal can be
taken or, after mutual consultation and agreement, an appeal is not taken within
the time allowed for appeal, and which has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise.

                                    ARTICLE 2

                                    RESEARCH

        2.1 COLLABORATIVE RESEARCH. Commencing on the Effective Date, subject to
the terms and conditions herein, the Parties shall each use commercially
reasonable diligent efforts to conduct the Research on a collaborative basis,
with the goal of discovering, identifying, synthesizing and performing
preclinical research on Active Compounds with the further goal of identifying
and selecting certain Active Compounds that are suitable for development as
Collaboration Compounds and for commercialization as Licensed Products for use
in the Field as soon as reasonably practicable. Subject to Sections 2.3 and 2.4,
the Parties shall conduct 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                       6.
<PAGE>   7

Research as generally specified in the Research Plan (as amended or revised by
the JRC from time to time) and in a manner consistent with the Phase Transition
Criteria. The Research Plan, among other things as further specified in Section
4.3, shall specify the scientific direction and research milestones, and
allocate Research responsibilities and resources between the Parties in a manner
consistent with this Agreement.

        2.2 CONDUCT OF THE RESEARCH.

                (a) The Research will be managed and directed by the JRC, as
provided in Article 4 hereof.

                (b) During the course of the Research, each Party shall disclose
to the other the Know-How and patent applications of such Party as the other
Party reasonably needs to conduct its obligations and assigned tasks under the
Research Plan. All work conducted by either Party in the course of the Research
shall be completely and accurately recorded, in sufficient detail and in good
scientific manner, in separate laboratory notebooks distinct from other work
being conducted by the Parties. On reasonable notice, and at reasonable
intervals, each Party shall have the right to inspect and copy all such records
of the other Party reflecting Research Technology or work done under the
Research, to the extent reasonably required to carry out its respective
obligations and to exercise its respective rights hereunder. Notwithstanding
Section 1.8, all such records shall constitute Confidential Information of the
Party creating such records. The Parties acknowledge and agree that neither
Party guarantees the success of the Research tasks undertaken hereunder.

                (c) In order to protect the Parties' patent rights under U.S.
law in any inventions conceived or reduced to practice during or as a result of
the Research, each Party agrees to maintain a policy which requires its
employees to record and maintain all data and information developed during the
Research in such a manner as to enable the parties to use such records to
establish the earliest date of invention and/or diligence to reduction to
practice. At a minimum, the policy shall require such individuals to record all
inventions generated by them in standard laboratory notebooks which are dated
and corroborated by non-inventors on a regular, contemporaneous basis.

        2.3 AXYS RESEARCH EFFORTS. Axys agrees to commit the resources set forth
in this Section 2.3 to perform its obligations under the Research Plan. In
conducting the Research, Axys shall be responsible for the tasks allocated to it
under the Research Plan. In the performance of such work, Axys shall maintain
and utilize scientific staff, laboratories, offices and other facilities
consistent with such undertaking. Axys shall use personnel with sufficient
skills and experience as are required to accomplish efficiently and
expeditiously the objectives of the Research as set forth in the Research Plan
in good scientific manner and in compliance in all material respects with all
applicable laws, rules, regulations, and all other requirements of applicable
good laboratory practices. Commencing upon the Effective Date and continuing in
each year during the Research Term, Axys shall commit [*] to conduct Axys'
obligations under the Research Plan. [*]. Axys shall provide RPR [*] 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                       7.
<PAGE>   8

        2.4 RPR RESEARCH EFFORTS. RPR agrees to commit the resources set forth
in this Section 2.4 to perform its obligations under the Research Plan. In
conducting the Research, RPR shall be responsible for the tasks allocated to it
under the Research Plan. In the performance of such work, RPR shall maintain and
utilize scientific staff, laboratories, offices and other facilities consistent
with such undertaking and shall use personnel with sufficient skills and
experience as are required to accomplish efficiently and expeditiously the
objectives of the Research as set forth in the Research Plan in good scientific
manner and in compliance in all material respects with all requirements of
applicable laws, rules and regulations, and all other requirements of applicable
good laboratory practices. Each year during the Research Term, RPR shall commit
such average number of FTEs in its or its Affiliates' employ as shall be
specified in the Research Plan and as shall be necessary to conducting RPR's
obligations under the Research Plan.

        2.5 RESEARCH FUNDING. RPR will support Axys' efforts under the Research
by paying Axys an amount per year per FTE (the "FTE Reimbursement Rate"),
dedicated to the Research during the Research Term, as provided in the Research
Plan. The FTE Reimbursement Rate shall initially [*], but [*]. The amounts due
Axys under this Section 2.5 shall be payable in equal installments on a
quarterly basis, on the first day of each January, April, July and October of
each year during the Research Term; provided, however, [*], which amounts shall
be paid in equal quarterly installments as described in the immediately
preceding sentence. [*]. RPR shall be solely responsible for supporting the
costs of RPR's Research efforts, including its preclinical development efforts
hereunder.

        2.6 RESEARCH INFORMATION AND REPORTS. Subject to restrictions imposed by
a Party's confidentiality obligations to any Third Party, each Party will also
disclose at any time on or before the end of the Research Term any Know-How
learned, acquired or discovered by such Party reasonably promptly after such
Know-How is learned, acquired or discovered to the extent reasonably needed by
the other Party for conducting its tasks under the Research. Further, each Party
will disclose to the other all Research Technology discovered, invented, or made
by such Party that is useful in or relates to the Research, including, without
limitation, information regarding Active Compounds, activities of Active
Compounds, derivatives, and results of in vitro and in vivo studies, assay
techniques and new assays. Such Research Technology will be promptly disclosed
to the other Party, with meaningful discoveries or advances being communicated
as promptly as practicable after such information is obtained or its
significance is appreciated. Each Party will provide the other with copies of
the raw data generated in the course of the Research, if reasonably necessary to
the other Party's work under the Research. Commencing six (6) months after the
Effective Date, and continuing thereafter during the Agreement, each Party will
give the other written reports on a semi-annual basis summarizing all research
or development work done on Active Compounds, Back-Up Compounds and
Collaboration Compounds during the previous two (2) quarters; provided, however,
that once RPR or its Affiliates initiate clinical development for a
Collaboration Compound or Back-Up Compound, RPR's obligations pursuant to this
sentence regarding such Collaboration Compound or Back-Up Compound shall
terminate and RPR shall thereafter provide the reports required by Section 5.2
hereof. Nothing herein shall require either Party to disclose information
received from a Third Party which remains subject to confidentiality obligations
to such Third 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                       8.
<PAGE>   9

        2.7 IDENTIFICATION AND TESTING OF ACTIVE COMPOUNDS. Each Party shall
inform the other Party and the JRC in writing as promptly as practicable upon
the Party's discovery, synthesis, acquisition or identification of Active
Compounds. The notifying Party shall include in such notices [*]. RPR and its
Affiliates, alone or in conjunction with Axys, shall conduct such further
testing of the Active Compounds as needed [*].

        2.8 EARLY TERMINATION OF AGREEMENT.

                (a) TERMINATION FOR [*]. If during the Research Term, the 
Parties mutually determine, in good faith, that the pursuit of cathepsin S 
inhibitors for use in the Field is [*] then upon such determination the Parties
shall terminate this Agreement. Upon termination of this Agreement pursuant to 
this Section 2.8(a): (i) [*], and (ii) each Party [*].

                (b) TERMINATION DUE TO ISSUANCE OF THIRD PARTY PATENT RIGHTS. In
the event that, during the Research Term, a Patent Right owned by a Third Party
(other than an affiliate of Rhone-Poulenc S.A.) is either granted or published
in a Major Pharmaceutical Market and such Patent Right (a "Blocking Patent")
claims (i) [*], or (ii) [*] by Axys and/or RPR as of the date the Parties become
aware of such Patent Right, (each, a "Blocking Claim") then [*]. If in [*], and
(y) [*], (i) RPR shall as promptly as practicable provide to Axys all copies of
all data, reports, records and materials in RPR's possession or control which
relate to the Research (provided that the provision to Axys of the foregoing
copies shall not be deemed to create any additional rights or licenses in any
such copies or the intellectual property embodied therein, and Axys' rights to
use or exploit such information and rights shall be solely as expressly granted
by RPR to Axys elsewhere in the Agreement and, with respect to Joint Know-How or
Joint Patents, those rights of Axys as a joint owner); (ii) [*]; and (iii) RPR
covenants that RPR and its Affiliates [*].

        2.9 EARLY TERMINATION OF COLLABORATIVE ASPECT OF RESEARCH.

                (a) TERMINATION FOR [*] OF RESEARCH OBLIGATIONS. In the event
that Axys defaults in its performance of its obligations hereunder [*] either
(i) to conduct its tasks under the Research Plan, and such failure [*] or (ii)
to comply with its applicable exclusivity obligations under Section 2.13(a),
then RPR may give notice to Axys specifying the nature of the default,
requesting Axys to cure such default and stating RPR's intention to terminate
the Research if such default is not cured within the period set forth below. If
such default is not cured within sixty (60) days after the receipt of such
notice, or if such default is not curable within such period, if Axys has not
commenced reasonable actions to perform its obligations in the future and does
not diligently continue to perform such obligations, RPR shall be entitled,
without prejudice to any of its other rights conferred on it by this Agreement
and in addition to any other remedies available to it by law or in equity, to
terminate the collaborative aspects of the Research and RPR's obligations under
Section 2.5 hereof by giving written notice to take effect immediately upon
delivery of such notice.

[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.



                                       9.
<PAGE>   10

                (b) TERMINATION FOR CHANGE IN CONTROL OF AXYS. RPR may also
terminate the collaborative aspects of the Research and its obligations under
Section 2.5 hereof at any time prior to the expiration of the Research Term in
the event that a Third Party acquires, directly or indirectly with its
affiliates, fifty percent (50%) or more of the voting stock of, or all or
substantially all of the assets of, Axys, whether through merger, consolidation,
acquisition or otherwise), [*], provided, however, that RPR shall have exercised
its termination rights within thirty (30) days after such rights first arise
hereunder.

                (c) EFFECT OF TERMINATING THE RESEARCH. Upon termination of the
collaborative aspects of the Research by RPR pursuant to subsection 2.9(a) or
2.9(b), Axys shall promptly provide to RPR copies of all data, reports, records
and materials in Axys' possession that either (i) [*], or (ii) [*]. The
provision to RPR of the foregoing copies shall not be deemed to create any
additional rights or licenses in any such copies or the intellectual property
embodied therein, and RPR's rights to use or exploit such information and rights
shall be solely as expressly granted by Axys to RPR in Article 3 and, with
respect to Joint Know-How or Joint Patents, those rights of RPR as a joint
owner. After such termination, [*]; all of Axys' obligations under this Article
2 to undertake or conduct any actions relating to the Research shall immediately
terminate; and [*]. RPR's exercise of its rights under this Section 2.9 shall
not terminate any other rights (including without limitation the licenses
granted to RPR and its Affiliates pursuant to Sections 3.1, 3.2 and 3.5 hereof)
or obligations of the Parties under this Agreement other than those obligations
set forth in this Article 2 that pertain directly to the conduct or funding of
the Research, except as follows: thereafter (i) RPR shall be obligated to
disclose to Axys any Research Technology developed by it only at the time it
provides Axys the semi-annual reports specified in Section 2.6, (ii) [*] and
(iii) the license granted to Axys and its Affiliates pursuant to Section 3.1(a)
shall terminate.

        2.10 EXTENSION OF RESEARCH TERM. By written notice to Axys given at
least [*] of the Effective Date, RPR may extend the Research Term [*] of the
Effective Date. In the event that RPR has elected to extend the Research Term
for [*], then, by written notice to Axys given at least [*] prior to the third
anniversary of the Effective Date, RPR may [*] the Research Term for an [*],
which extension shall commence on the [*] of the Effective Date. At the end of
the Research Term, whether extended or not, all obligations of the Parties to
conduct any further Research activities shall terminate, but the other rights
and obligations under this Agreement shall not otherwise be affected.

        2.11 MATERIAL TRANSFER. In order to facilitate the Research, either
Party may provide to the other Party certain biological materials or chemical
compounds including, but not limited to Active Compounds, receptors, reagents
and screens (collectively, "Materials") owned by or licensed to the supplying
Party (other than under this Agreement) for use by the other Party in
furtherance of the Research. Except as otherwise provided under this Agreement,
all such Materials delivered to the other Party shall remain the sole property
of the supplying Party, shall be used only in furtherance of the Research and
solely under the control of the other Party (and, in the case of RPR, its
Affiliates), shall not be used or delivered to or for the benefit of any Third
Party without the prior written consent of the supplying Party, and shall not be
used in research 


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      10.
<PAGE>   11

or testing involving human subjects. The Materials supplied under this Section
2.11 must be used with prudence and appropriate caution in any experimental
work, since not all of their characteristics may be known. EXCEPT AS EXPRESSLY
SET FORTH IN SECTION 11.4 HEREOF, THE MATERIALS ARE PROVIDED "AS IS" AND WITHOUT
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE
OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY
PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

        2.12 LIABILITY. In connection with conduct of the Research, each Party
shall be responsible for, and hereby assumes, any and all risks of personal
injury or property damage attributable to the negligent acts or omissions of
that Party or its Affiliates, and their respective directors, officers,
employees and agents.

        2.13 [*].

                (a) During the [*], neither Party (including its Affiliates)
will [*]; provided, however, that a Party may [*] as it applies to such Party,
as one of its remedies and not to the exclusion of any other remedy such Party
may have, if the other Party materially violates its obligations under the
foregoing covenant. During the [*], neither Party may [*].

                (b) RPR and its Affiliates shall not [*].

                (c) Upon expiration or termination of the [*] and continuing
thereafter [*], then Axys covenants that it and its Affiliates shall not (i)
[*], or (ii) [*]. For purposes of this Subsection 2.13(c)(ii), [*].

                (d) The Parties agree that, given the high costs and significant
risks involved in discovering and developing pharmaceutical products, and given
that the Parties will be exchanging Confidential Information in order to perform
the Research, the [*] relationship between them regarding the Research and the
Field, which is reflected herein, is a fair and efficient means to reach a
satisfactory conclusion from their cooperative efforts.

        2.14 SUBCONTRACTORS. Either Party may perform some of its obligations
under the Research through one or more subcontractors; provided that (i) none of
the rights of the other Party hereunder are diminished or otherwise adversely
affected as a result of such subcontracting, (ii) such Party obtains the written
approval of the other Party prior to engaging any subcontractor, which approval
shall not be unreasonably withheld or delayed, and (iii) the subcontractor
undertakes in writing obligations of confidentiality and non-use regarding the
other Party's Confidential Information which are substantially the same as those
undertaken by RPR and Axys pursuant to Article 8 hereof. In the event a Party
performs one or more of its obligations under the Research through a
subcontractor, then such Party shall at all times be responsible for the
performance of such subcontractor. For the avoidance of doubt, it is understood
that an Affiliate of a Party shall not be deemed to be a subcontractor of such
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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      11.
<PAGE>   12
                                    ARTICLE 3

                                    LICENSES

        3.1 RESEARCH LICENSES.

                (a) Subject to the other provisions of this Agreement, Axys
hereby grants to RPR and its Affiliates during the Research Term an [*]
world-wide, paid-up right and license under the Axys Patents and the Axys
Know-How and Axys' rights in the Joint Patents and Joint Know-How [*] and to
[*]. Subject to the other provisions of this Agreement, RPR hereby grants to
Axys and its Affiliates during the Research Term an [*] world-wide, paid-up
right and license under the RPR Patents and the RPR Know-How and RPR's rights in
the Joint Patents and Joint-Know-How solely [*], and to [*]. [*] granted by the
other Party in this Section 3.1(a).

                (b) Subject to the other provisions of this Agreement, Axys
hereby grants to RPR and its Affiliates, [*], world-wide, paid-up right and
license under the Axys Patents and Axys Know-How, and Axys' rights in the Joint
Patents and Joint Know-How, solely [*] under the rights granted by Axys in this
Section 3.1(b).

        3.2 COMMERCIALIZATION LICENSE TO RPR. Subject to the other provisions of
this Agreement, Axys hereby grants to RPR and its Affiliates an [*], world-wide,
royalty-bearing right and license, [*], under the Axys Patents, the Axys
Know-How and under Axys' rights in the Joint Know-How and Joint Patents, solely
to [*] for use in the Field. For the avoidance of doubt, it is understood that
RPR's and its Affiliates' right to sell Licensed Products shall include the
right to sell such Licensed Products under the foregoing license through
distributors.

        3.3 NEGATIVE COVENANTS AND LICENSE LIMITATIONS.

                (a) MUTUAL COVENANTS. Each Party covenants to the other Party
that it shall not practice, exercise or use any intellectual property rights
licensed to it by the other Party under this Agreement, except as permitted
expressly by the terms hereof.

                (b) ADDITIONAL NEGATIVE COVENANTS OF AXYS. Axys further
covenants to RPR that:

                        (i) except as otherwise permitted in Section 2.13(c),
Axys and its Affiliates shall not [*];

                        (ii) until [*] Axys and its Affiliates shall not [*];

                        (iii) Axys and its Affiliates shall not [*] for any use
or purpose; and

                        (iv) except as otherwise permitted in Section 2.13(c),
Axys and its Affiliates shall not [*], and Axys shall impose such restrictions
on all its sublicensees and distributors of Axys 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      12.
<PAGE>   13

                (c) ADDITIONAL NEGATIVE COVENANTS OF RPR. RPR further covenants
to Axys that:

                        (i) RPR and its Affiliates shall not research, develop
or commercialize, or license any Third Party [*], but excluding from the 
foregoing covenant (x) [*], or (y) any research undertaken by RPR and its 
Affiliates [*];

                        (ii) RPR and its Affiliates shall not conduct any
clinical development work, or license any Third Party to conduct any clinical
development work, on any Active Compound for use in the Field unless and until
such Active Compound has been selected as a Collaboration Compound or a Back-Up
Compound as provided in Section 5.1;

                        (iii) RPR and its Affiliates and Sublicensees shall not
commercialize or sell, or license any Third Party to commercialize or sell, any
Back-up Compound for use in the Field, unless and until such Back-up Compound
has been selected as a [*] as provided in Section 5.1; and

                        (iv) RPR and its Affiliates shall not [*], and RPR shall
impose such restriction on all its Sublicensees and distributors of Licensed
Products.

        3.4 LICENSE FOR AXYS PRODUCTS. Subject to the conditions set forth in
Section 5.3, RPR hereby grants to Axys an exclusive license, with right to
sublicense, under RPR's interests in the Joint Patents and Joint Know-How to
conduct development on and to make, have made, use, import, offer for sale or
sell Axys Products solely for use in the [*], as defined in Section [*] below.

        3.5 CROSS-LICENSE OF [*]. Axys hereby grants to RPR and its Affiliates a
non-exclusive, [*] license under the [*] disclosed to RPR hereunder for any
purpose or use. RPR hereby grants to Axys a non-exclusive, [*] license under the
[*] disclosed to Axys hereunder for any purpose or use. The licenses granted
pursuant to this Section 3.5 shall [*].

                                    ARTICLE 4

                            JOINT RESEARCH COMMITTEE.

        4.1 CREATION AND STRUCTURE OF THE JOINT RESEARCH COMMITTEE. As of the
Effective Date, the Parties have created a Joint Research Committee of [*]
to facilitate the collaboration called for herein. The JRC shall consist of
equal representatives nominated by each Party, as listed in the Research Plan.
RPR shall designate one of its representatives as the Chairperson of the JRC.
Members of the JRC may be represented at any meeting by a designee appointed by
such member for such meeting. Each Party shall be free to change its
representatives on notice to the other or to send a substitute representative to
any JRC meeting. The JRC shall exist until the [*] anniversary of the
termination or expiration of the Research Term, except that the JRC shall
automatically terminate in the event (i) RPR terminates the Agreement pursuant
to Sections 10.2 or 10.3, (ii) Axys terminates the Agreement pursuant 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.

                                      13.
 

<PAGE>   14


Section 10.2, (iii) this Agreement is terminated pursuant to the
provisions of Section 2.8, or (iv) RPR terminates the collaborative aspects of
the Research pursuant to Section 2.9.

        4.2 REGULAR MEETINGS. The Chairperson shall call for the meetings of the
JRC, which shall occur at mutually agreeable times except in extraordinary
circumstances in which case Axys may request a meeting of the JRC. During the
Relevant Period, the JRC shall meet in person at least once every three months.
Meetings shall alternate between the offices of Axys and RPR. A JRC member of
the Party hosting the meeting shall serve as Secretary of that meeting. The
Secretary of the meeting shall prepare and distribute to all members of the JRC
minutes of the meeting sufficiently in advance of the next meeting to allow
adequate review and comment prior to the meeting. Such minutes shall provide a
description in reasonable detail of the discussions had at the meeting and a
list of any actions, decisions or determinations approved by the JRC. Minutes of
each JRC meeting shall be approved or disapproved, and revised as necessary, at
the next meeting. Final minutes of each meeting shall be distributed to the
members of the JRC by the Chairperson. The JRC may also convene, or be polled or
consulted, from time to time by means of telecommunications, video conferencing
or written correspondence, as deemed necessary or appropriate.

        4.3 RESPONSIBILITIES OF THE JOINT RESEARCH COMMITTEE. During the
pendency of the Research, the JRC shall be the primary vehicle for interaction
between the Parties with respect to the Research. Without limiting the
foregoing, the JRC shall be responsible for: (i) reviewing, approving and
amending the Research Plan; (ii) directing, managing and monitoring the progress
of the Research; (iii) identifying to the parties that the criteria for
particular changes to the Research Plan arising from changes in the Phase
Transitions by RPR have been met; (iv) [*], and (v) reviewing and commenting
upon (but not approving) the [*] of the Parties as provided in Article 7. The
Research Plan shall contain the specific research objectives to be achieved
according to the Phase Transition Criteria document attached hereto as Exhibit
A, the specific responsibilities of the Parties, the timeline and budget for the
Research, and the total number of FTEs to be devoted by each Party to the
Research. Each Party shall disclose to the other proposed agenda items in
advance of each meeting of the JRC.

        4.4 SUBCOMMITTEES OF THE JRC. From time to time, the JRC may establish
one or more subcommittees to oversee particular projects or activities, and such
subcommittees will be constituted as the JRC agrees.

        4.5 DECISIONS OF THE JRC. At least [*] of the JRC shall constitute a
quorum for any meeting of the JRC; provided, that there are at least [*] present
from each Party. All decisions of the JRC shall be made by the [*] JRC members
participating in the meeting. In the event that the members of the JRC cannot
agree with respect to a particular issue, such issue shall be referred to the
President of Axys and the Senior Vice President, Research at RPR for resolution
pursuant to Section 11.12.

        4.6 EXPENSES. Each Party shall be responsible for all travel and related
costs for its representatives to attend meetings of, and otherwise participate
on, the JRC.



[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      14.
<PAGE>   15

                                    ARTICLE 5

                               PRODUCT DEVELOPMENT

        5.1 SELECTION OF COMPOUNDS AND DILIGENCE.

                (a) Based upon criteria established by the JRC, the JRC shall
review all data relating to the [*] and shall identify appropriate [*] for
recommendation to RPR for selection as [*] for potential further development and
commercialization. RPR, [*], shall select and designate certain of the [*] as
the [*] for further preclinical and clinical development for use in the Field
hereunder. With respect to any particular [*] selected by RPR, RPR [*]. At any
time, [*] and the other terms of this Agreement. The [*] selected during a
particular period shall be noted in the minutes of the next JRC meeting. RPR
shall have the right to select any [*] at any time during the term of this
Agreement except as otherwise provided as follows: [*].

                (b) Once a Collaboration Compound is selected for preclinical
development, RPR and its Affiliates shall be solely responsible for and shall
have the sole right to develop the Collaboration Compound through preclinical
development, all phases of clinical trials, and making all applications for and
obtaining all Regulatory Approvals on a worldwide basis. RPR and its Affiliates
shall use [*] to pursue the preclinical and clinical development and
commercialization of all Collaboration Compounds in the Major Pharmaceutical
Markets. RPR shall be [*]. If RPR and its Affiliates [*], provided that, [*].
Further, if [*], then (i) [*], (ii) [*], and (iii) [*].

                (c) So long as RPR (or its Affiliates or Sublicensees) continues
to use [*] for use in the Field in the Major Pharmaceutical Markets, [*].
Further, if [*] and [*], or [*].

                (d) However, if [*] for use in the Field in each of the Major
Pharmaceutical Markets, and [*]. If [*] for use in the Field in the Major
Pharmaceutical Markets, then [*].

        5.2 DEVELOPMENT INFORMATION AND REPORTING. Commencing upon the [*], RPR
shall prepare and maintain complete and accurate information regarding the
worldwide clinical development of Collaboration Compounds and shall make such
information available to Axys in the form of detailed reports provided to Axys
[*]. Such reports shall reasonably and accurately summarize the status and
results of all such development efforts. RPR [*] of Collaboration Compounds.
Axys will be entitled to [*], and [*], Axys [*] to discuss RPR's development
efforts of Collaboration Compounds. [*], RPR and its Affiliates [*].

        5.3 [*] AND [*].

                (a) [*]. Commencing on the [*] of the Effective Date, if Axys 
[*]. RPR shall have [*] from the date of its [*] to determine whether [*], which
activity would be subject to terms of this Agreement and the specific
development and commercialization requirements set forth in this Section 5.3, or
alternatively, to [*] and subject to the terms thereof. If RPR decides that [*],
it shall so inform Axys of its decision by providing written notice. Upon
receipt of such notice, but subject to subsection (e) below, [*] hereof, and RPR
shall proceed as


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      15.
<PAGE>   16

provided in subsection (d) below. If RPR [*], subject to the requirements in
subsection (e) below.

                (b) FURTHER RPR INVESTIGATION. If, after receipt of the [*], RPR
determines [*]. RPR shall have [*] from the date of providing Axys such notice
and plan to complete such plan and determine whether [*] pursuant to subsection
(a) above. RPR shall inform Axys by providing written notice of its decision.
If, at the end of such [*].

                (c) RPR Development of [*]. Within [*], under subsection (a) or 
(b) above, to develop a particular [*], RPR shall select such Active Compound as
a Collaboration Compound and shall prepare a plan, which shall be attached as an
appendix to the Research Plan, that contains the timeline and estimated
resources for the preclinical and initial clinical development of such
Collaboration Compound (the "Investigational Plan"). In addition to such
Investigational Plan, RPR shall provide Axys with the following: (i) a timeline
which has as a target the filing of the IND for the Collaboration Compound for
the [*]; (ii) a description of how the proposed research for the Collaboration
Compound meets RPR's Phase Transition Criteria (as set forth in Exhibit A
attached hereto); (iii) a [*] regarding the development status of the
Collaboration Compound; and (iv) a [*] of such Collaboration Compound (it being
understood that the provisions of subsections (iii) and (iv) shall be in lieu of
any obligations of RPR regarding such Collaboration Compound pursuant to Section
5.2 hereof). No later than [*] prior to the filing of the IND for the
Collaboration Compound, RPR shall prepare a "Development Plan" for the
Collaboration Compound, which shall consist of the expected timeline for
development of such Collaboration Compound through Regulatory Approval for the
[*], to be reviewed and approved by Axys, which approval shall not be
unreasonably withheld or delayed. Following submission of the first NDA for such
Collaboration Compound in the [*], RPR shall regularly report the
commercialization status of the Collaboration Compound to Axys according to a
schedule that shall be agreed to by the Parties, and [*] of such Collaboration
Compound for use in the applicable [*]. RPR shall use [*] to complete its
obligations under the Investigational Plan and the Development Plan regarding
such Collaboration Compound for use in the [*].

                (d) COMPOUND [*] If RPR [*], upon written notice to RPR. Upon
such a [*], (i) such [*], (ii) Axys shall [*], subject to the requirements in
subsection (e) below, and (iii) when there are [*], as such term is defined in
Section 1.17.

                (e) DEVELOPMENT AND COMMERCIALIZATION OF AXYS PRODUCTS. Subject
to RPR's rights pursuant to this Section 5.3, Axys may develop and commercialize
an Axys Product on its own or seek out a corporate partner to assist in the
development and commercialization. If, however, [*]. In no event shall [*] of
the net sales of the Axys Product where such "net sales" shall be calculated
using the methodology equivalent to that set forth in the definition of Net
Sales in Section 1.27.

                (f) DILIGENT EFFORTS. For purposes of this Section 5.3, the term
[*] shall be interpreted to mean [*], as such term is used elsewhere 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      16.
<PAGE>   17

                                    ARTICLE 6

                                PAYMENTS TO AXYS

        6.1 LICENSE FEES. RPR shall pay Axys a [*] upon the Effective Date of
this Agreement.

        6.2 UP-FRONT RESEARCH PAYMENT. Upon the Effective Date, RPR shall pay
Axys a [*] of Axys' activities under the Research.

        6.3 MILESTONE PAYMENTS.

                (a) RPR shall make the following [*] payments to Axys within [*]
after the occurrence of each of the listed Milestone Events:


<TABLE>
<CAPTION>
        MILESTONE EVENT                                                    PAYMENT AMOUNT
        ---------------                                                    --------------
<S>                                                                        <C>
        [*]                                                                     [*]

        As used in this Section 6.3, the following definitions apply:

        [*] shall have the meaning set forth in the [*].

        [*] shall have the meaning set forth in the [*].

        [*] means when [*].

        [*] means when [*].

        [*] shall have the meaning set forth in the [*].

        [*] shall be [*].
</TABLE>

                        (i) The Parties shall [*], which determination shall be
made reasonably and in good faith.

                        (ii) For clarity, the [*].

        6.4 ROYALTY PAYMENTS. Subject to the terms and conditions of this
Agreement, RPR shall pay to Axys [*] of the Net Sales of Licensed Products. The
Parties agree that the above royalty rates reflect an efficient and reasonable
blended allocation of the values of the worldwide Know-How and Patent Rights
licensed by Axys hereunder.

        6.5 TERM OF ROYALTY OBLIGATION. The royalty obligations to Axys under
Section 6.4 to Axys as to a particular Licensed Product shall terminate,
[*] on the later of (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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      17.
<PAGE>   18
or (b) [*].


        6.6 TIMING OF PAYMENT. Running royalties shall be payable on a quarterly
basis, within [*] after the end of each calendar quarter, based upon the Net
Sales during each calendar quarter, commencing with the calendar quarter in
which the First Commercial Sale of a Licensed Product is made. Royalties shall
be calculated in accordance with U.S. generally accepted accounting principles
consistently applied and with the terms of this Article 6.

        6.7 [*] LICENSES. If [*] a Party (or its Affiliate) [*], and such [*].

        6.8 THIRD PARTY LICENSES.

                (a) If an unexpired Third Party patent(s) claiming a
Collaboration Compound, or its manufacture or its use in the Field, exist(s) in
a country where a Licensed Product containing such Collaboration Compound is
being manufactured, used or sold, and if it should prove in [*], then RPR may
either:

                        (i) [*]; or

                        (ii) [*].

                (b) It is understood that [*].

                (c) Notwithstanding the foregoing in (b) above, [*], then the
Parties shall [*], as provided in the foregoing paragraph, [*], then thereafter
[*], then (a) Axys [*], and (b) RPR [*], and (ii) [*].

        6.9 MODE OF PAYMENT. All payments to Axys hereunder shall be made by
deposit of United States Dollars in the requisite amount to such bank account as
Axys may from time to time designate by notice to RPR. Payments shall be free
and clear of any taxes (other than withholding and other taxes imposed on Axys),
fees or charges, to the extent applicable. With respect to sales outside the
United States, payments shall be calculated based on currency exchange rates for
the last calendar quarter for which remittance is made for royalties. For each
month and each currency, such exchange rate shall equal the arithmetic average
of the daily exchange rates (obtained as described below) during the calendar
quarter; each daily exchange rate shall be obtained from the Reuters Daily Rate
Report or The Wall Street Journal, Eastern U.S. Edition, or, if not so
available, as otherwise agreed by the Parties.

        6.10 OBLIGATION TO PAY ROYALTIES. RPR's obligation to pay royalties to
Axys under this Article 6 is imposed only once with respect to the same unit of
Licensed Product regardless of the number of Axys Patents, RPR Patents, or Joint
Patents pertaining thereto.


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      18.
<PAGE>   19

        6.11 RECORDS RETENTION. For [*] after each sale of each Licensed
Product, RPR shall keep (and shall ensure that its Affiliates and Sublicensees
shall keep) records of such sale in sufficient detail to confirm the accuracy of
the royalty calculations hereunder.

        6.12 AUDITS.

                (a) Upon the written request of Axys, and not more than [*], RPR
shall permit an independent certified public accounting firm of nationally
recognized standing selected by Axys, and reasonably acceptable to RPR, at Axys'
expense, to have access during normal business hours, and upon reasonable prior
written notice, to such of the records of RPR as may be reasonably necessary to
verify the accuracy of the royalty reports hereunder for any calendar year
ending not more than [*] prior to the date of such request. The accounting firm
shall disclose to Axys and RPR only whether the royalty reports are correct or
incorrect and the specific details concerning any discrepancies. No other
information shall be provided to Axys.

                (b) [*], with interest from the date originally due at the prime
rate, as published in The Wall Street Journal (Eastern U.S. Edition) on the last
business day preceding such date, within [*] after the date Axys delivers to RPR
such accounting firm's written report, subject to the provisions of Subsection
6.12(e). If the amount of the underpayment is greater than [*] of the total
amount owed, then [*].

                (c) RPR shall include in each sublicense granted by it pursuant
to this Agreement a provision requiring the Sublicensee to make reports to RPR,
to keep and maintain records of sales made pursuant to such sublicense and to
grant access to such records by Axys' independent accountant to the same extent
required by RPR under this Agreement.

                (d) Axys shall treat all information subject to review under
this Section 6.13 or under any sublicense agreement in accordance with the
confidentiality provisions of Article 8 of this Agreement, and shall cause its
accounting firm to enter into an acceptable confidentiality agreement with RPR
obligating such firm to retain all such financial information in confidence
pursuant to such confidentiality agreement.

                (e) If RPR in [*], then RPR shall [*]. The Parties shall
promptly thereafter meet and negotiate in good faith a resolution to such
dispute. In the event that the Parties are [*], the matter shall be resolved in
a manner consistent with the procedures set forth in Section 11.12, and interest
shall be payable on any [*] in the same manner as provided for in Section
6.12(b).

        6.13 NO NON-MONETARY CONSIDERATION FOR SALES. Without the prior written
consent of Axys, RPR shall not accept or solicit any non-monetary consideration
in the sale of a Licensed Product other than as would be reflected in Net Sales,
except in the case of clinical studies and customary promotional samples.

        6.14 TAXES. The Party receiving royalties and other payments under this
Agreement shall pay any and all taxes levied on account of such payment. If any
taxes are required to be withheld by the paying Party, it shall (a) deduct such
taxes from the remitting payment, (b) timely pay the taxes to the proper taxing
authority, and (c) send proof of payment to the other 


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      19.
<PAGE>   20

Party and certify its receipt by the taxing authority within sixty (60) days
following such payment.

                                    ARTICLE 7

                             INVENTIONS AND PATENTS

        7.1 TITLE TO INVENTIONS. Each Party shall own and retain all right,
title and interest in and to all Research Technology made solely by such Party's
and/or any of its Affiliates' employee(s) or agent(s) and all intellectual
property rights in such Research Technology. The Parties shall jointly own any
Research Technology made jointly by the Parties' and/or their Affiliates
employees or agents. Inventorship in Axys, RPR and Joint Patents will be
determined by the applicable laws of the country or jurisdiction in which the
particular Patent Right is sought. In the event that there is a dispute between
the parties as to which Party shall own any Research Technology, the JRC shall
establish a procedure to resolve such dispute, which may include engaging a
Third Party patent attorney completely unaffiliated and independent of the
Parties and jointly selected by the Parties, as an expert to resolve such
dispute.

        7.2 RIGHTS TO OTHER COMPOUNDS. The Parties expect that each of them will
make [*] for purposes of this Agreement and that [*]. With respect to such
compounds, the Parties agree as follows:

                (a) [*];

                (b) Except as provided otherwise in this Agreement, compounds
that are owned by a Party, either solely or jointly with the other Party, as
determined under the provisions of Section 7.1, shall remain the solely or
jointly owned property of such Party. All such compounds that are determined
under the provisions of Section 1.1 not to be Active Compounds shall not be
subject to this Agreement;

                (c) No implied license under any Patent Rights is granted under
this Section 7.2.

        7.3 PATENT PROSECUTION. The Parties expect that patent applications will
be filed as required to secure suitable Patent Rights covering inventions within
the Research Technology or otherwise applicable to the Field. The Parties agree
as follows with respect to the filing and prosecution of such applications.

                (a) AXYS PATENTS. Subject to the provisions of this Section 7.3,
(i) [*] shall be responsible for obtaining, prosecuting and/or maintaining [*],
and (ii) [*] shall be responsible for obtaining, prosecuting and/or maintaining
the [*]. In this regard, [*] shall file, prosecute and/or maintain patent
applications in the [*] to secure Patents Rights for any Research Technology
owned by [*] and other inventions claimed in the [*]. Within [*] of filing any
such United States patent application, [*] will file a counterpart International
Application under the PCT designating all member countries and any additional
counterpart national patent applications in non-PCT member countries as [*]
deems appropriate (or, for patent applications for which [*] retains 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      20.
<PAGE>   21

international filing and prosecution obligations as provided above, [*] shall
file such counterparts, designating the member countries requested by [*]). [*]
shall bear all costs for filing, prosecuting and/or maintaining [*]. [*] shall
bear all costs for filing, prosecuting and/or maintaining [*]; provided,
however, that (i) [*] the costs for filing, prosecuting and/or maintaining [*]
under which [*] has granted a license to a Third Party, or which claim an Active
Compound or any other compound or medicament (or their manufacture or use) for
which [*] undertakes clinical development, and (ii) [*] may decline to pay costs
for filing, prosecuting and/or maintaining any particular [*] in one or more
countries, in which case such [*] under Sections 3.1 and 3.2 hereto in such
countries. Unless [*] in a relevant country, [*]. To the extent reasonably
practicable, without jeopardizing the breadth or availability of obtaining
broad, enforceable Patent Rights, [*] shall attempt to file [*] based on
Research Technology invented solely by [*].

                (b) RPR PATENTS. [*] shall be responsible for obtaining,
prosecuting and/or maintaining [*] Patent Rights covering Research Technology
solely owned by [*]. [*] shall bear all costs for filing, prosecuting and/or
maintaining RPR Patents throughout the world.

                (c) JOINT PATENTS. [*] shall be responsible for obtaining,
prosecuting and/or maintaining throughout the world Patent Rights covering
Research Technology jointly owned by Axys and RPR. [*] the costs for filing,
prosecuting and/or maintaining Joint Patents in the United States. [*] shall
bear all costs for filing, prosecuting and/or maintaining Joint Patents
throughout the world (excluding the United States); provided, however, [*] the
costs for filing, prosecuting and/or maintaining Joint Patents claiming an
Active Compound for which [*] or grants a license to a Third Party.
Notwithstanding the above, [*] may decline to file, prosecute and/or maintain
any Joint Patent(s) or may decline to pay [*] the costs for filing, prosecuting
and/or maintaining any Joint Patent(s), in which case [*], as the case may be.

                (d) COOPERATION. Each Party shall regularly provide the other
Party with copies of all patent applications filed hereunder and other material
submissions and correspondence with the patent offices, in sufficient time to
allow for review and comment by the other Party. In addition, such filing Party
shall provide the other Party and its patent counsel with an opportunity to
consult with the Party and its patent counsel regarding the filing and contents
of any such application, amendment, submission or response, and the advice and
suggestions of the other Party and its patent counsel shall be taken into
reasonable consideration by such Party and its legal counsel in connection with
such filing. Each Party shall also provide the other Party [*].

        (e) ELECTION NOT TO PROSECUTE. If either Party elects not to pursue the
initial filing of a potential Axys Patent, RPR Patent or Joint Patent, or
support the PCT International filing or the continued prosecution or maintenance
of an Axys Patent, RPR Patent or Joint Patent, in a particular country for which
it is responsible pursuant to Section 7.3(a), (b) or (c) (such Party being
referred to herein as the "Non-Filing Party"), then it shall notify the other
Party promptly in writing and in good time to enable the other Party to meet any
applicable deadlines. With respect to Axys Patents, RPR Patents or Joint Patents
scheduled for international filing with respect to such country, the Non-Filing
Party shall notify the other Party in writing at least sixty 


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      21.
<PAGE>   22

(60) days before the date required for the convention year filing of such Axys
Patent, RPR Patent or Joint Patent application or any other deadline date by
which an action must be taken to establish or preserve an Axys Patent, RPR
Patent or Joint Patent right in such country. The other Party shall then have
the right, but not the obligation, to pursue the filing or support the continued
prosecution or maintenance of such Axys Patent, RPR Patent or Joint Patent, at
its expense in such country. If the other Party does so elect to pursue such
filing or continue such support, then it shall notify the Non-Filing Party of
such election, and the Non-Filing Party shall (i) reasonably cooperate with the
other Party in this regard, and (ii) promptly release or assign, as the case may
be, to the other Party, without consideration, all right, title and interest in
such Axys Patent, RPR Patent or Joint Patent in such country. For the avoidance
of doubt, in the event that the other Party supports a patent application that
the Non-Filing Party declines to support, then such patent applications and
patents that may result therefrom shall be considered an Axys Patent (in the
case RPR is the Non-Filing Party) or an RPR Patent (in the case Axys is the
Non-Filing Party), as applicable, for purposes of this Agreement.

        7.4 ENFORCEMENT OF PATENTS.

                (a) If either Party considers that any Axys Patent, RPR Patent
or Joint Patent claiming an Active Compound or Licensed Product, or the
manufacture or use thereof, is being infringed by a Third Party's activities 
[*], it shall notify the other Party and provide it with any evidence of such
infringement which is reasonably available. Subject to any limitations in the
license agreements between Axys and Third Party licensors covering Axys Patents
that are licensed to Axys, [*] shall have the first opportunity at its own
expense to attempt to remove such infringement by commercially appropriate
steps, including filing an infringement suit or taking other similar action. If
required by law for [*] to prosecute such suit, [*] shall join such suit as a
party, at [*]. [*] agrees to use reasonable efforts to obtain any consents
required by Third Parties owning [*] to conduct suits thereunder for
infringement by Third Parties in the Field. In the event [*] following notice of
such infringement, [*] shall have the right to do so at its expense; provided
that if [*] has commenced negotiations with an alleged infringer of the patent
for discontinuance of such infringement within such three-month period, [*]
shall have an [*] to conclude its negotiations before [*] may bring suit for
such infringement. In no event, however, shall [*] be required to enforce any
such Patent Right being infringed against more than one entity or in more than
one country at any one time.

                (b) The Party not enforcing the applicable Patent Rights shall
provide reasonable assistance to the other Party, including providing access to
relevant documents and other evidence and making its employees available,
subject to the enforcing Party's reimbursement of any out-of-pocket expenses
incurred by the non-enforcing Party.

                (c) Any amounts recovered by [*] pursuant to subsection 7.4(a),
whether by settlement or judgment, shall be allocated in the following order:
(i) [*]; and (ii) [*], provided that if the [*], then the Parties shall [*]. 
Any amounts recovered by [*] pursuant to actions under subsection 7.4(a) shal 
be allocated in the following order: (i) [*] and (ii) 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      22.
<PAGE>   23


                (d) Except for Third Party infringement activities within the
Field covered by the provisions of subsection 7.4(a), each Party [*] retain the
sole and exclusive right to enforce its Patent Rights against all infringers at
its sole cost and expense.

        7.5 THIRD PARTY PATENT RIGHTS. If any warning letter or other notice of
infringement is received by a Party, or action, suit or proceeding is brought
against a Party alleging infringement of a Patent Right of any Third Party in
the manufacture, use or sale of a Licensed Product or in conducting the
Research, the Parties shall promptly discuss and decide the best way to respond.

                                    ARTICLE 8

                                 CONFIDENTIALITY

        8.1 CONFIDENTIALITY OBLIGATIONS. Each Party agrees that, for the term of
this Agreement and for [*] thereafter, such Party shall keep, and shall ensure
that its officers, directors, employees and agents keep, completely confidential
and shall not publish or otherwise disclose and shall not use for any purpose
except as expressly permitted hereunder any Confidential Information furnished
to it by the other Party pursuant to this Agreement (including, without
limitation, Know-How of the disclosing Party). The foregoing obligations shall
not apply to any information to the extent that it can be established by such
receiving Party that such information:

                (a) was already known to the receiving Party, other than under
an obligation of confidentiality, at the time of disclosure;

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

                (c) 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 this Agreement;

                (d) was subsequently lawfully disclosed to the receiving Party
by a Third Party other than in contravention of a confidentiality obligation of
such Third Party to the disclosing Party; or

                (e) was developed or discovered by employees of the receiving
Party or its Affiliates who had no access to the Confidential Information of the
disclosing Party.

        Each Party shall obtain written agreements from each of its employees
and consultants who perform substantial work on the Research, which agreements
shall obligate such persons 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      23.
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similar obligations of confidentiality and to assign to such Party all
inventions made by such persons during the course of performing the Research.
Each Party may disclose the other's Confidential Information to the extent such
disclosure is reasonably necessary in filing or prosecuting patent applications,
prosecuting or defending litigation, complying with applicable governmental
regulations, making a permitted sublicense of its rights hereunder or conducting
clinical trials or otherwise in performing its obligations or exercising its
rights hereunder, provided that if a Party is required to make any such
disclosure of the other Party's Confidential Information, it will give
reasonable advance notice to that other Party of such disclosure requirement,
will cooperate with the other Party in its efforts to secure confidential
treatment of such Information prior to its disclosure, and, save to the extent
inappropriate in the case of patent applications, will use all reasonable
efforts to secure confidential treatment of such information prior to its
disclosure (whether through protective orders or confidentiality agreements or
otherwise). In addition, RPR shall have the right to disclose Axys' Confidential
Information to its Affiliates, provided that RPR shall ensure that its
Affiliates maintain the confidentiality of such information in accordance with
the provisions of this Section 8.1. [*], provided that [*].

        8.2 PUBLICATIONS.

                (a) Neither Party or its Affiliates shall publish or present 
the results of the Research or of development studies carried out on any
Licensed Product, Collaboration Compound or Back-Up Compound [*] with respect
thereto. Subject to the foregoing and the restrictions provided below, either
Party may publish or present the results of the Research or of development
studies carried out on such Licensed Product, Collaboration Compound or Back-Up
Compound, subject to the prior review by the other Party [*] of such other
Party's Confidential Information. Each Party shall provide to the other Party
the opportunity to review any proposed abstracts, manuscripts or summaries of
presentations which cover the results of the Research or of [*] clinical
development of such Licensed Product, Collaboration Compound or Back-Up
Compound. Each Party shall designate a person who shall be responsible for
approving such publications. Such designated person shall respond in writing
promptly and in no event later than [*] after receipt of the proposed material
with either approval of the proposed material or a specific statement of
concern, based upon either the need to seek patent protection or concern
regarding competitive disadvantage arising from the proposal. In the event of
concern, the submitting Party agrees not to submit such publication or to make
such presentation that contains such information until the other Party is given
a reasonable period of time (not to exceed [*] to seek patent protection for any
material in such publication or presentation which it believes is patentable or
to resolve any other issues. This Section 8.2(a) shall cease to apply with
respect to any Collaboration Compound upon the commercial launch of a Licensed
Product containing such Collaboration Compound as an active ingredient.
Furthermore, with respect to any proposed abstracts, manuscripts or summaries 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      24.
<PAGE>   25

presentations by investigators or other Third Parties, such materials shall be
subject to review under this Section 8.2(a) to the extent that RPR or Axys (as
the case may be) has the right to do so.

                (b) Each Party also agrees to delete from any such proposed
publication any Confidential Information of the other Party upon its reasonable
request.

                (c) To the extent appropriate and within the Party's control, in
any publication permitted under this Section 8.2, each Party shall acknowledge
its collaboration with the other Party under this Agreement.

        8.3 PRESS RELEASES. Except to the extent required by law or as otherwise
permitted in accordance with this Section 8.3, neither Party shall make any
public announcements concerning this Agreement or the subject matter hereof
without the prior written consent of the other, which shall not be unreasonably
withheld. Notwithstanding the foregoing, the Parties agree that each Party may
desire or be required to issue press releases relating to the Agreement or
activities thereunder, and the Parties agree to consult with each reasonably and
in good faith with respect to the text and timing of such press releases prior
to the issuance thereof, provided that a Party may not unreasonably withhold
consent to such releases, and that either Party may issue such press releases as
it determines, based on advice of counsel, are reasonably necessary to comply
with laws or regulations or for appropriate market disclosure. The principles to
be observed by Axys and RPR in public disclosures with respect to this Agreement
shall be: accuracy, the requirements of confidentiality under this Article 8,
and the normal business practice in the pharmaceutical and biotechnology
industries for disclosures by companies comparable to Axys and RPR. In the event
of a required or desired public announcement, such Party shall provide the other
Party with a reasonable opportunity and the right to approve the content of such
announcement prior to its being made, which approval shall not be delayed or
unreasonably withheld. Furthermore, each Party shall give the other Party a
reasonable opportunity to review all filings with the United States Securities
and Exchange Commission describing the terms of this Agreement prior to
submission of such filings, and shall give due consideration to any reasonable
comments by the non-filing Party relating to such filing, including without
limitation the provisions of this Agreement for which confidential treatment
should be sought.

                                    ARTICLE 9

                                 INDEMNIFICATION

        9.1 INDEMNIFICATION BY RPR. RPR shall indemnify, defend and hold Axys
and its Affiliates and each of their respective agents, employees, officers and
directors (the "Axys Indemnitees") harmless from and against any and all
liability, damage, loss, cost or expense (including reasonable attorneys' fees)
arising out of Third Party claims or suits related to (a) RPR's performance of
its obligations under this Agreement; (b) the manufacture, use or sale of
Collaboration Compounds or Licensed Products by RPR and its Affiliates,
Sublicensees, distributors and agents; or (c) breach by RPR of its
representations and warranties set forth in Section 11.4; provided, however,
RPR's obligations pursuant to this Section 9.1 shall not apply 



                                      25.
<PAGE>   26

to the extent such claims or suits result from the negligence or willful
misconduct of any of the Axys Indemnitees. Notwithstanding the foregoing, RPR
shall have no obligation to indemnify the Axys Indemnitees with respect to
claims arising out of breach by Axys of its representations and warranties set
forth in Sections 11.4 or 11.5.

        9.2 INDEMNIFICATION BY AXYS. Axys shall indemnify, defend and hold RPR
and its Affiliates and each of their respective agents, employees, officers and
directors (the "RPR Indemnitees") harmless from and against any and all
liability, damage, loss, cost or expense (including reasonable attorney's fees)
arising out of Third Party claims or suits related to (a) Axys' performance of
its obligations under this Agreement; (b) breach by Axys of its representations
and warranties set forth in Sections 11.4 or 11.5; (c) the manufacture, use or
sale of Axys Products by Axys and its Affiliates, Sublicensees, distributors and
agents; or (d) the manufacture, use or sale of Active Compounds and Licensed
Products pursuant to any licenses which may be granted to Axys pursuant to
Section 10.4; provided, however, that Axys' obligations pursuant to this Section
9.2 shall not apply to the extent that such claims or suits result from the
negligence or willful misconduct of any of the RPR Indemnitees. Notwithstanding
the foregoing, Axys shall have no obligation to indemnify the RPR Indemnitees
with respect to claims arising out of a breach by RPR of its representations and
warranties set forth in Section 11.4.

        9.3 NOTIFICATION OF CLAIMS; CONDITIONS TO INDEMNIFICATION OBLIGATIONS.
As a condition to a Party's right to receive indemnification under this Article
9, it shall (i) promptly notify the other Party as soon as it becomes aware of a
claim or action for which indemnification may be sought pursuant hereto, (ii)
cooperate with the indemnifying Party in the defense of such claim or suit, and
(iii) permit the indemnifying Party to control the defense of such claim or
suit, including without limitation the right to select defense counsel. In no
event, however, may the indemnifying Party compromise or settle any claim or
suit in a manner which admits fault or negligence on the part of the indemnified
Party without the prior written consent of the indemnified Party. The
indemnifying Party shall have no liability under this Article 9 with respect to
claims or suits settled or compromised without its prior written consent.

                                   ARTICLE 10

                           TERMINATION AND EXPIRATION

        10.1 TERM AND TERMINATION. This Agreement shall commence upon the
Effective Date and, unless earlier terminated as provided herein, shall expire
on the expiration of all royalty and other payment obligations hereunder. Upon
the expiration, pursuant to Section 6.5, of RPR's royalty obligations with
respect to a particular Licensed Product, the licenses granted to RPR and its
Affiliates under Article 3 with respect to such Licensed Product shall expire,
and RPR and its Affiliates shall automatically thereafter be granted a [*]
license under the Axys Know-How and Axys Patents to make, have made, use,
import, sell and offer for sale such Licensed Product for use in the Field
worldwide.

        10.2 TERMINATION OF THE AGREEMENT UPON MATERIAL BREACH.



                                      26.
<PAGE>   27
 (a) Failure by a Party to comply with any of its material obligations contained
herein shall entitle the Party not in default to give to the Party in default
notice specifying the nature of the default, requiring it to make good or
otherwise cure such default, and stating its intention to terminate if such
default is not cured. If such default is not cured within [*] days after the
receipt of such notice (or, if such default cannot be cured within such [*]
period, if the Party in default does not commence and diligently continue
actions to cure such default), the Party not in default shall be entitled,
without prejudice to any of its other rights conferred on it by this Agreement,
and in addition to any other remedies available to it by law or in equity, to
terminate this Agreement; [*].

                (b) The right of a Party to terminate this Agreement, as herein
above provided, shall not be affected in any way by its waiver or failure to
take action with respect to any prior default.

                (c) In the event that RPR or its Affiliates is developing or
commercializing more than one Collaboration Compound and/or Licensed Product for
use in the Field, and Axys terminates this Agreement pursuant to this Section
10.2 due to a breach pertaining to RPR's failure to use commercially reasonable
diligent efforts with respect to, or make timely payments owed under this
Agreement on account of, a particular Collaboration Compound or Licensed
Product, then Axys shall be entitled to terminate this Agreement only with
respect to such particular Collaboration Compound, and its related Back-Up
Compounds, or such Licensed Product. Furthermore, in the event a breach relating
to a particular Collaboration Compound or Licensed Product is limited to a
particular Major Pharmaceutical Market, then Axys shall be entitled to terminate
this Agreement only with respect to the particular Collaboration Compound or
Licensed Product and only with respect to the particular Major Pharmaceutical
Market.

        10.3 TERMINATION OF THE AGREEMENT BY RPR. RPR may terminate this
Agreement in its entirety upon [*] prior written notice to Axys [*]. However, if
RPR terminates the Agreement under this Section 10.3, RPR covenants that [*]
shall not develop or sell any Active Compound for any use based upon its
cathepsin S inhibitory activity, and shall not license any Third Party to do so
and shall terminate all then-existing sublicense rights regarding Active
Compounds granted to Sublicensees.

        10.4 CONSEQUENCES OF TERMINATION.

                (a) Upon termination of this Agreement (but not upon expiration
of its term under Section 10.1), (i) each Party shall promptly return all
relevant records and materials in its possession or control containing or
comprising the other Party's Know-How or other Confidential Information and to
which the former Party does not retain rights hereunder (except one copy of
which may be retained in a Party's confidential files in its legal department
for archival purposes); (ii) all licenses granted by each Party to the other
under Article 3 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      27.
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terminate except as provided in Section 10.5(b); (iii) all rights in any Active
Compounds (including any Collaboration Compounds and Back-Up Compounds) owned by
a Party shall revert to such Party (subject to Section 10.3); (iv) [*] will
provide to [*] copies of all reports and data, including preclinical data and
reports, obtained by [*] pursuant to this Agreement that relate to Active
Compounds owned by [*], within sixty (60) days of such termination (except in
the case where [*] terminates under Section 10.2) (provided that the provision
to [*] of the foregoing copies shall not be deemed to create any additional
rights or licenses in any such copies or the intellectual property embodied
therein, and [*] rights to use or exploit such information and rights shall be
solely as expressly granted by [*] to [*] elsewhere in the Agreement and, with
respect to Joint Know-How or Joint Patents, those rights of [*] as a joint
owner); and (v) any and all claims and payment obligations that accrued prior to
the date of such termination shall survive such termination.

                (b) Further, in the event Axys terminates this Agreement
pursuant to Section 10.2, [*].

                (c) Further, in the event RPR terminates this Agreement under
the terms of Section 10.3, [*].

                (d) In connection with the grant of a license pursuant to
Section 10.4(c), [*], and upon the [*].

                (e) Notwithstanding the provisions of Section 10.5(b) hereof, in
the event that Axys terminates this Agreement pursuant to Section 10.2, then the
restrictions imposed upon it pursuant to, and its obligations under, [*].

                (f) Notwithstanding the provisions of Section 10.5(b) hereof, in
the event that RPR terminates this Agreement pursuant to Section 10.2, then the
restrictions imposed upon it pursuant to, and its obligations under, Sections
2.13(a), 3.3(c)(i) and 3.3(c)(iv) shall terminate, and the milestone payment and
royalty payment obligations with respect to any Collaboration Compound or
Licensed Product owned by RPR that RPR or its Affiliates or Sublicensees
develops or commercializes thereafter shall [*] of the amounts otherwise owed
under Article 6. 


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.



                                      28.
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Such termination and [*] shall be RPR's exclusive remedy for Axys' breach, and
RPR may not sue Axys for any damages or other remedy for such breach.

        10.5 ACCRUED RIGHTS; SURVIVING OBLIGATIONS.

                (a) Termination, relinquishment or expiration of this Agreement
for any reason shall be without prejudice to any rights which shall have accrued
to the benefit of a Party prior to such termination, or expiration. Such
termination, relinquishment or expiration shall not relieve a Party from
obligations which are expressly indicated to survive termination or expiration
of this Agreement.

                (b) Without limiting the foregoing, Sections 2.2(b), 2.3, 2.6,
2.7, 2.8, 2.11, 2.12, 2.13, 3.3, 3.4, 3.5, 5.3(d), (e) and (f), 6.3, 6.4, 6.5,
6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13, 6.14, 10.1, 10.4, 10.5, 10.6, 11.3, 11.6,
11.10, 11.11, 11.12, 11.14 and 11.15 and Articles 1, 7, 8 and 9 of this
Agreement shall survive the expiration or termination of this Agreement for any
reason (except as expressly provided in Section 10.4).

                (c) Upon any termination of this Agreement as regards any
particular Licensed Product, RPR and its Affiliates and Sublicensees shall be
entitled, during the [*] of the Licensed Product which [*] as of the date of the
termination, so long as RPR [*] in accordance with the terms and conditions set
forth in this Agreement.

        10.6 RIGHTS IN BANKRUPTCY. All rights and licenses granted under or
pursuant to this Agreement by RPR or Axys are, and shall otherwise be deemed to
be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of
right to "intellectual property" as defined under Section 101 of the U.S.
Bankruptcy Code. The Parties agree that the Parties, as licensees of such rights
under this Agreement, shall retain and may fully exercise all of their rights
and elections under the U.S. Bankruptcy Code. The Parties further agree that, in
the event of the commencement of a bankruptcy proceeding by or against either
Party under the U.S. Bankruptcy Code, the Party hereto which is not a party to
such proceeding shall be entitled to a complete duplicate of (or complete access
to, as appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in their possession, shall be
promptly delivered to them (i) upon any such commencement of a bankruptcy
proceeding upon their written request therefor, unless the Party subject to such
proceeding elects to continue to perform all of its obligations under this
Agreement, or (ii) if not delivered under (i) above, following the rejection of
this Agreement by or on behalf of the Party subject to such proceeding upon
written request therefor by the non-subject 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      29.
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                                   ARTICLE 11

                            MISCELLANEOUS PROVISIONS

        11.1 RELATIONSHIP OF THE PARTIES. Nothing in this Agreement is intended
or shall be deemed to constitute a partnership, agency or employer-employee
relationship between the Parties. Neither Party shall incur any debts or make
any commitments for the other.

        11.2 ASSIGNMENTS. Except as expressly provided herein, neither this
Agreement nor any interest hereunder shall be assignable, nor any other
obligation delegable, by a Party without the prior written consent of the other;
provided, however, that a Party may assign this Agreement to any Affiliate or to
any successor in interest by way of merger or sale of all or substantially all
of its assets in a manner such that the assignor shall remain liable and
responsible for the performance and observance of all such Party's duties and
obligations hereunder. This Agreement shall be binding upon the successors and
permitted assigns of the Parties. Any assignment not in accordance with this
Section 11.2 shall be void. [*].

        11.3 DISCLAIMER OF WARRANTIES. THE PARTIES EXPRESSLY DISCLAIM ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD
PARTY RIGHTS, UNLESS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.

        11.4 REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants
to the other Party that, as of the date of this Agreement:

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



                                      30.
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                (b) such Party has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the performance its
obligations under this Agreement;

                (c) this Agreement is a legal and valid obligation of such
Party, binding upon such Party and enforceable against such Party in accordance
with the terms of this Agreement. The execution, delivery and performance of
this Agreement by such Party does not conflict with any agreement, instrument or
understanding, oral or written, to which such Party is a party or by which such
Party may be bound, and does not violate any law or regulation of any court,
governmental body or administrative or other agency having authority over such
Party. All consents, approvals and authorizations from all governmental
authorities or other Third Parties required to be obtained by such Party in
connection with this Agreement have been obtained;

                (d) it has the full and exclusive right, power and authority to
enter into this Agreement, to perform the Research and to grant the licenses
granted under Article 3 hereof;

                (e) All individuals who will perform any activities on its
behalf in connection with the Research have assigned to it or its Affiliates the
whole of their rights in any intellectual property conceived or reduced to
practice by them as a result of the Research, and no Third Party will have any
rights to any such intellectual property; and

                (f) With respect to any Material provided by it to the other
Party, it has the full right to provide such Material and has no reason to
believe that the other Party's use of such Material as contemplated by this
Agreement will infringe the intellectual property rights of any Third Party.

        11.5 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF AXYS. Axys represents,
warrants and covenants (as the case may be) to RPR that:

                (a) To [*];

                (b) To [*];

                (c) To [*];

                (d) There [*];

                (e) Axys [*]; and

                (f) Axys [*].

        11.6 COMBINATORIAL CHEMISTRY. It is understood by RPR that Axys has a
combinatorial chemistry business, pursuant to which Axys has provided, and in
the future will provide, libraries of combinatorial chemistry compounds to Third
Party customers and grant to such customers certain license rights with respect
to such compounds, for use by such customers in screening against targets
selected by such customers and in synthesizing derivative 


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                      31.
<PAGE>   32

compounds. RPR agrees that Axys' providing such compounds and granting such
license rights to such customers [*].

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

        11.8 FORCE MAJEURE. Neither Party shall be liable to the other for
failure or delay in the performance of any of its obligations under this
Agreement for the time and to the extent such failure or delay is caused by
earthquake, riot, civil commotion, war, strike, flood, governmental acts or
restrictions or any other reason which is beyond the control of the respective
Party. The Party affected by force majeure shall provide the other Party with
full particulars thereof as soon as it becomes aware of the same (including its
best estimate of the likely extent and duration of the interference with its
activities), and will use commercially reasonable efforts to overcome the
difficulties created thereby and to resume performance of its obligations as
soon as practicable. If the performance of any obligation under this Agreement
is delayed owing to a force majeure for any continuous period of more than six
(6) months, the Parties hereto shall consult with respect to an equitable
solution, including the possibility of the mutual termination of this Agreement.

        11.9 NO TRADEMARK RIGHTS. No right, express or implied, is granted by
this Agreement to a Party to use in any manner the name or any other trade name
or trademark of a Party in connection with the performance of this Agreement.

        11.10 ENTIRE AGREEMENT OF THE PARTIES; AMENDMENTS. This Agreement and
the exhibits hereto constitute and contain the entire understanding and
agreement of the Parties respecting the subject matter hereof and cancel and
supersede any and all prior negotiations, correspondence, understandings and
agreements between the Parties, whether oral or written, regarding such subject
matter. No waiver, modification or amendment of any provision of this Agreement
shall be valid or effective unless made in writing and signed by a duly
authorized officer of each Party.

        11.11 CAPTIONS. The captions to this Agreement are for convenience only,
and are to be of no force or effect in construing or interpreting any of the
provisions of this Agreement.

        11.12 APPLICABLE LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the [*] applicable to contracts
entered into and to be performed wholly within the [*] excluding conflict of
laws principles.

        11.13 DISPUTES. In the event of any controversy or claim arising out of,
relating to or in connection with any provision of this Agreement, or the rights
or obligations of the Parties hereunder, the Parties shall try to settle their
differences amicably between themselves. Either Party may initiate such informal
dispute resolution by sending written notice of the dispute to the other Party,
and within [*] after such notice appropriate representatives of the Parties
shall meet for attempted resolution by good faith negotiations. If such
representatives are unable to resolve promptly such disputed matter, it shall be
referred to the President of Axys and to the member of 



                                      32.
<PAGE>   33

RPR's Executive Council specified by RPR, for discussion and resolution. If such
personnel are unable to resolve such dispute within [*] of initiating such
negotiations, the Parties agree first to try in good faith to settle the dispute
by mediation under the Commercial Mediation Rules of the American Arbitration
Association, before resorting to arbitration, litigation or some other dispute
resolution procedure.

        11.14 NOTICES AND DELIVERIES. Any notice, request, delivery, approval or
consent required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been sufficiently given if delivered in
person, transmitted by telecopier (receipt verified) or by express courier
service (signature required) or five (5) days after it was sent by registered
letter, return receipt requested (or its equivalent), to the Party to which it
is directed at its address or facsimile number shown below or such other address
or facsimile number as such Party shall have last given by notice to the other
Parties.

        If to RPR, addressed to:

               Rhone-Poulenc Rorer Pharmaceuticals Inc.
               500 Arcola Road
               Collegeville, PA 19426
               Telecopier:  (610) 454-3807
               Attn.:  General Counsel

        If to Axys, addressed to:

               Axys Pharmaceuticals, Inc.
               180 Kimball Way
               South San Francisco, CA  U.S.  94080
               Telecopier:  (650) 829-1067
               Attn.:  President

               and to:

               Axys Pharmaceuticals, Inc.
               180 Kimball Way
               South San Francisco, CA 94080
               Attn:  General  Counsel
               Telecopier:  (650) 829-1067

               With copies to:

               Cooley Godward
               Five Palo Alto Square
               3000 El Camino Real
               Palo Alto, CA  94306-2155
               Telecopier:  (650) 857-0663
               Attn:  Barclay James Kamb, Esq.



                                      33.
<PAGE>   34

        11.15 NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY OR ANY OF
ITS RESPECTIVE AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES
FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT,
WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, including, but not
limited to, loss of profits or revenue, or claims of customers of any of them or
other Third Parties for such or other damages.

        11.16 NON-SOLICITATION. During the Research Term, and for a period of
one (1) year thereafter, neither Party shall solicit, induce, encourage or
attempt to induce or encourage any employee of the other Party to terminate his
or her employment with such other Party or to breach any other obligation to
such other Party.

        11.17 WAIVER. A waiver by either Party of any of the terms and
conditions of this Agreement in any instance shall not be deemed or construed to
be a waiver of such term or condition for the future, or of any subsequent
breach hereof. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement shall be cumulative and none of them shall be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either Party.

        11.18 COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit a Party to export, reexport or otherwise transfer any Licensed Product
sold under this Agreement without compliance with applicable laws.

        11.19 SEVERABILITY. When possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement. The Parties shall make a good faith effort to replace the invalid or
unenforceable provision with a valid one which in its economic effect is most
consistent with the invalid or unenforceable provision.

        11.20 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, any one of which need not contain the signature of more
than one Party but all such counterparts taken together shall constitute one and
the same agreement.



                                      34.
<PAGE>   35

        IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written, each copy of which shall for all purposes be deemed to be
an original.



AXYS PHARMACEUTICALS, INC.                  RHONE-POULENC RORER
PHARMACEUTICALS INC.




By:   /s/  Daniel Petree                    By:   /s/ John Leone
   -------------------------------             ---------------------------------
Name:   Daniel H. Petree                    Name:   John R. Leone
     -----------------------------               -------------------------------

Title:    President & COO                   Title:     Sr. V.P. & G.M. RPRP
      ----------------------------                ------------------------------



                                      35.
<PAGE>   36

                                    EXHIBIT A

                            PHASE TRANSITION CRITERIA



[*]


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                       1.
<PAGE>   37

                                    EXHIBIT B

                                  RESEARCH PLAN



                                       [*]


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.





                                       1.
<PAGE>   38
                                                                      APPENDIX 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 24b-2 of the Securities and Exchange Act 
of 1934, as amended.


<PAGE>   39
                                                               


                  COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

                                     BETWEEN

                           AXYS PHARMACEUTICALS, INC.

                                       AND

                    RHONE-POULENC RORER PHARMACEUTICALS INC.



<PAGE>   40

<TABLE>
<S>            <C>                                                                          <C>
ARTICLE 1       DEFINITIONS..................................................................1

        1.1    "Active Compound".............................................................1

        1.2    "Affiliate"...................................................................2

        1.3    "Axys Know-How"...............................................................2

        1.4    "Axys Patents"................................................................2

        1.5    "Axys Product"................................................................2

        1.6    "Back-Up Compound"............................................................2

        1.7    "Collaboration Compound"......................................................2

        1.8    "Confidential Information"....................................................2

        1.9    "Control".....................................................................3

        1.10   "Effective Date"..............................................................3

        1.11   "Fair Market Value"...........................................................3

        1.12   "FDA".........................................................................3

        1.13   "Field".......................................................................3

        1.14   "First Commercial Sale".......................................................3

        1.15   "FTE".........................................................................3

        1.16   "IND".........................................................................3

        1.17   "Indication"..................................................................3

        1.18   "Information".................................................................4

        1.19   "Joint Know-How"..............................................................4

        1.20   "Joint Patents"...............................................................4

        1.21   "Joint Research Committee" or "JRC"...........................................4

        1.22   "Know-How"....................................................................4

        1.23   "Licensed Product"............................................................4

        1.24   "Major Pharmaceutical Market".................................................4

        1.25   "Materials"...................................................................4

        1.26   "NDA".........................................................................4

        1.27   "Net Sales"...................................................................4

        1.28   "Patent Right"................................................................5

        1.29   "Person"......................................................................5

        1.30   "Phase I".....................................................................5

        1.31   "Phase III"...................................................................5
</TABLE>


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.


                                       2.
<PAGE>   41

<TABLE>
<S>            <C>                                                                          <C>
        1.32   "Phase Transition Criteria"...................................................5

        1.33   "Regulatory Approval".........................................................5

        1.34   "Relevant Period".............................................................5

        1.35   "Research"....................................................................5

        1.36   "Research Plan"...............................................................5

        1.37   "Research Technology".........................................................5

        1.38   "Research Term"...............................................................6

        1.39   "Respiratory Diseases"........................................................6

        1.40   "RPR Know-How"................................................................6

        1.41   "RPR Patents".................................................................6

        1.42   "Sublicensee".................................................................6

        1.43   "Third Party".................................................................6

        1.44   "Valid Claim".................................................................6

ARTICLE 2         RESEARCH...................................................................6

        2.1    Collaborative Research........................................................6

        2.2    Conduct of the Research.......................................................7

        2.3    Axys Research Efforts.........................................................7

        2.4    RPR Research Efforts..........................................................8

        2.5    Research Funding..............................................................8

        2.6    Research Information and Reports..............................................8

        2.7    Identification and Testing of Active Compounds................................9

        2.8    Early Termination of Agreement................................................9

        2.9    Early Termination of Collaborative Aspect of Research.........................9

        2.10   Extension of Research Term...................................................10

        2.11   Material Transfer............................................................10

        2.12   Liability....................................................................11

        2.13   [*]..........................................................................11

        2.14   Subcontractors...............................................................11

ARTICLE 3         LICENSES..................................................................12

        3.1    Research Licenses............................................................12

        3.2    Commercialization License to RPR.............................................12

        3.3    Negative Covenants and License Limitations...................................12
</TABLE>

[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.


                                       3.
<PAGE>   42

<TABLE>
<S>            <C>                                                                          <C>
        3.4    License for Axys Products....................................................13

        3.5    Cross-License of [*].........................................................13

ARTICLE 4         JOINT RESEARCH COMMITTEE..................................................13

        4.1    Creation and Structure of the Joint Research Committee.......................13

        4.2    Regular Meetings.............................................................14

        4.3    Responsibilities of the Joint Research Committee.............................14

        4.4    Subcommittees of the JRC.....................................................14

        4.5    Decisions of the JRC.........................................................14

        4.6    Expenses.....................................................................14

ARTICLE 5         PRODUCT DEVELOPMENT.......................................................15

        5.1    Selection of Compounds and Diligence.........................................15

        5.2    Development Information and Reporting........................................15

        5.3    [*] and [*]..................................................................15

ARTICLE 6         PAYMENTS TO AXYS..........................................................17

        6.1    License Fees.................................................................17

        6.2    Up-Front Research Payment....................................................17

        6.3    Milestone Payments...........................................................17

        6.4    Royalty Payments.............................................................18

        6.5    Term of Royalty Obligation...................................................18

        6.6    Timing of Payment............................................................18

        6.7    [*] Licenses.................................................................19

        6.8    Third Party Licenses.........................................................19

        6.9    Mode of Payment..............................................................19

        6.10   Obligation to Pay Royalties..................................................19

        6.11   Records Retention............................................................19

        6.12   Audits.......................................................................19

        6.13   No Non-Monetary Consideration for Sales......................................20

        6.14   Taxes........................................................................20

ARTICLE 7         INVENTIONS AND PATENTS....................................................20

        7.1    Title to Inventions..........................................................20

        7.2    Rights to Other Compounds....................................................21

        7.3    Patent Prosecution...........................................................21
</TABLE>


[*] = 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 24b-2 OF THE SECURITIES EXCHANGE ACT OF 
1934, AS AMENDED.




                                       4.
<PAGE>   43

<TABLE>
<S>            <C>                                                                          <C>
        7.4    Enforcement of Patents.......................................................23

        7.5    Third Party Patent Rights....................................................23

ARTICLE 8         CONFIDENTIALITY...........................................................24

        8.1    Confidentiality Obligations..................................................24

        8.2    Publications.................................................................25

        8.3    Press Releases...............................................................26

ARTICLE 9         INDEMNIFICATION...........................................................26

        9.1    Indemnification by RPR.......................................................26

        9.2    Indemnification by Axys......................................................26

        9.3    Notification of Claims; Conditions to Indemnification Obligations............27

ARTICLE 10        TERMINATION AND EXPIRATION................................................27

        10.1   Term and Termination.........................................................27

        10.2   Termination of the Agreement upon Material Breach............................27

        10.3   Termination of the Agreement by RPR..........................................28

        10.4   Consequences of Termination..................................................28

        10.5   Accrued Rights; Surviving Obligations........................................29

        10.6   Rights in Bankruptcy.........................................................30

ARTICLE 11        MISCELLANEOUS PROVISIONS..................................................30

        11.1   Relationship of the Parties..................................................30

        11.2   Assignments..................................................................30

        11.3   Disclaimer of Warranties.....................................................31

        11.4   Representations and Warranties...............................................31

        11.5   Additional Representations and Warranties of Axys............................32

        11.6   Combinatorial Chemistry......................................................32

        11.7   Further Actions..............................................................32

        11.8   Force Majeure................................................................32

        11.9   No Trademark Rights..........................................................33

        11.10  Entire Agreement of the Parties; Amendments..................................33

        11.11  Captions.....................................................................33

        11.12  Applicable Law...............................................................33

        11.13  Disputes.....................................................................33

        11.14  Notices and Deliveries.......................................................33
</TABLE>



                                       5.
<PAGE>   44

<TABLE>
<S>            <C>                                                                          <C>
        11.15  No Consequential Damages.....................................................34

        11.16  Non-Solicitation.............................................................34

        11.17  Waiver.......................................................................34

        11.18  Compliance with Law..........................................................35

        11.19  Severability.................................................................35

        11.20  Counterparts.................................................................35
</TABLE>



                                       6.