<PAGE>

                  RESEARCH COLLABORATION, CONTRACT SERVICE AND
                                LICENSE AGREEMENT

     THIS RESEARCH COLLABORATION, CONTRACT SERVICE AND LICENSE AGREEMENT (the
"Agreement") is made and entered into effective as of March 31, 1999 (the
"Effective Date") by and between VERSICOR, INC., a Delaware corporation with its
principal office at 34790 Ardentech Court, Fremont, CA 94555 ("Versicor") and
PHARMACIA AND UPJOHN COMPANY, a Delaware corporation with a principal office at
7000 Portage Road, Kalamazoo, Michigan 49001 (together with its Affiliates
"P&U"). Versicor and P&U may be referred to herein individually as a "Party" and
collectively as the "Parties." Terms not otherwise defined herein shall have the
meanings set forth in Article 1.

                                    RECITALS

     WHEREAS, Versicor is engaged in the design, discovery and synthesis of new
classes of small molecule drugs that may be useful as pharmaceuticals;

     WHEREAS, P&U is a pharmaceutical company dedicated to the research,
development, manufacture and commercialization of pharmaceutical products; and

     WHEREAS, Versicor and P&U wish to establish a collaborative relationship to
discover second and third generation oxazolidinone product candidates using
oxazolidinone-based compounds and know-how from each Party.

     NOW, THEREFORE, in consideration of the covenants and agreements contained
in this Agreement, Versicor and P&U agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     For purposes of this Agreement, the following terms shall have the
following meanings:

     1.1 "AFFILIATE" means, with respect to a Party, any trust, business, joint
venture, partnership, corporation, association or any other entity that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by a Party. For purposes of this definition, the term "controls"
(including, with correlative meanings, the terms "owned by" and "under common
ownership with") means the direct or indirect ownership of more than fifty
percent (50%) of outstanding voting securities of a corporation or other entity
or comparable equity interest in any other type of entity.

     1.2 "COLLABORATION COMPOUND" means any Compound, with the specific
exception of Excluded Compounds, that is:

          (a) an Included P&U Compound; or


<PAGE>


          (b) an Oxazolidinone Compound discovered or synthesized by Versicor
     prior to the Effective Date, including but not limited to any Compound
     claimed in a Compound Patent; or

          (c) an Oxazolidinone Compound discovered or synthesized by either
     Party during the Research Term and pursuant to the Research Project; or

          (d) claimed by any genus claim in a Collaboration Patent claiming an
     invention made solely or jointly by Versicor during the Research Term and
     pursuant to the Research Project, which Compound is synthesized by or on
     behalf of P&U prior to the date three (3) months after the end of the
     Research Term.

     1.3 "COLLABORATION KNOW-HOW" means all Know-how (other than Excluded
Compounds) that is discovered, invented or developed by either Party during the
Research Term and pursuant to work conducted under the Research Project, which
is necessary or useful to identify, discover, synthesize, develop, make, or use
a Collaboration Compound.

     1.4 "COLLABORATION PATENT" means any Patent that claims any invention in
Collaboration Know-how or that comprises or relates to a Collaboration Compound.

     1.5 "COMBINATION PRODUCT" means any Product containing a Lead Candidate and
one or more other active ingredients in addition to such Lead Candidate. As used
herein and in Section 1.22, the term "active ingredient" does not include any
ingredient whose primary effect is the enhancement of drug delivery, even if
such ingredients have pharmacological activity.

     1.6 "COMPOUND" means any composition of matter.

     1.7 "COMPOUND PATENT" means any Patent or Patent application listed on
Schedule a that claims an Oxazolidinone Compound and that is Controlled by
Versicor as of the Effective Date, and any continuation, continuation-in-part
(to the extent the claims of such application claim subject matter disclosed in
the patent application), divisional, reissue, reexamination or extension of any
of the foregoing Patents or Patent Applications.

     1.8 "CONFIDENTIAL INFORMATION" means all Know-how received (whether in
oral, written, graphic or electronic form) by a Party from the other Party
pursuant to this Agreement other than Know-how that the receiving Party can
prove by competent evidence:

          (i) is now, or hereafter becomes, through no act or failure to act on
     the part of the receiving Party, generally known by or available to the
     public; or

          (ii) is known by the receiving Party at the time of receiving such
     information, as evidenced by its records; or

          (iii) is hereafter furnished to the receiving Party by a Third Party,
     as a matter of right and without restriction on disclosure; or


                                       2
<PAGE>


          (iv) is independently developed by the receiving Party without the
     aid, application or use of Confidential Information; or

          (v) is the subject of a written permission to disclose provided by the
     disclosing Party.

     1.9 "CONTROLLED" means, with respect to any Know-how or Patent, ownership
thereof or the ability of a person to grant to another person access, an
assignment, a license, or a sublicense to such Know-how or Patent without
violating the fights of a Third Party.

     1.10 "EXCLUDED COMPOUNDS" means any of the following Compounds: (a)
PNU-100592, PNU-100766 (linezolid), PNU-141659, PNU-177553, PNU-179759,
PNU-184147, PNU-184148, PNU-184149, PNU-184248, PNU-184249, PNU-184320, or
PNU-184539, or (b) any other Oxazolidinone Compound, whether patented or not,
that P&U synthesized prior to the Effective Date, but excluding any Included P&U
Compound, or (c) any ester, salt, hydrate, solvate or prodrug of the foregoing
Compounds set forth in (a) or (b).

     1.11 "FDA" means the United States Food and Drug Administration and any
successor agency thereof.

     1.12 "FIELD" means antibacterial use in humans.

     1.13 "FTE" means the amount of work equivalent to a full time equivalent
researcher employed on a full time basis consistent with normal business and
scientific practice (at least 40 hours per week of dedicated effort for at least
48 weeks per year).

     1.14 "FIRST COMMERCIAL SALE" means the first commercial transfer of a
Product to a Third Party in a particular country by P&U or its Affiliate or
Sublicensee, for payment in cash or in kind, but excluding sales or transfers of
a Product that is used in any testing or clinical trial.

     1.15 "HIT COMPOUND" means a Collaboration Compound that demonstrates any
reproducible, significant activity in an assay that searches for activity that
may be useful in the Field. The JRC will establish the level of activity and
specificity required to constitute a "Hit Compound."

     1.16 "INCLUDED P&U COMPOUND" means any Oxazolidinone Compound that (a) P&U
synthesized prior to the Effective Date, and (b) the JRC or P&U determines is
appropriate for inclusion into the Research Project as a Collaboration Compound
(for the reason that such Compound is determined either to be active in a screen
for human bacterial diseases conducted after the Effective Date or to have
useful activity in the Field based on Collaboration Know-how), and (c)is
included by the JRC on Schedule B on or after the Effective Date, which Schedule
may be amended from time to time by the JRC.

     1.17 "IND" means the application required to be filed with the FDA
(pursuant to 21 CFR ss.312.3), or with any equivalent agency or governmental
authority outside the United States


                                       3
<PAGE>


(e.g., ICTA ex-U.S.), before human clinical trials may be conducted in the
particular regulatory jurisdiction.

     1.18 "JRC" means the joint research committee organized to supervise and
manage the Research Project pursuant to Article 3 below.

     1.19 "KNOW-HOW" means materials, techniques, technology, practices, trade
secrets, intellectual property, inventions (whether or not patentable), methods,
knowledge, skill, experience, test data and results (including pharmacological,
toxicological and clinical test data and results), analytical and quality
control data and results or descriptions, and software.

     1.20 "LEAD CANDIDATE" means any Hit Compound that is selected by the JRC
for additional Hit Compound expansion and initial pre-clinical safety
assessment, testing and development in the Field.

     1.21 "NDA" means a complete New Drug Application and all amendments and
supplements thereto filed with the FDA (as more fully defined in 21 C.F.R. 314.5
et seq.), or the equivalent application filed with any equivalent agency or
governmental authority outside the United States (including any supra-national
agency such as in the European Union) requiring such filing, including all
documents, data, and other information concerning a Product which are necessary
for gaining Regulatory Approval to market and sell such Product.

     1.22 "NET SALES" means the actual amount invoiced for sale of a Product by
P&U or its Affiliate(s) or Sublicensee(s) to a Third Party after deducting the
following, to the extent actually incurred or allowed with respect to such sale:

          (a) actual transportation charges, including insurance, paid by the
     selling party;

          (b) import, export, sales, use and excise taxes, tariffs and duties
     paid or allowed by a selling Party and any other governmental charges
     imposed upon the importation, use or sale of a Product;

          (c) normal and customary (i) quantity discounts (including volume or
     formulary or other positioning discounts paid or credited to any
     wholesaler, purchaser or Third Party payor or other contractee as a result
     of a contractual arrangement specific to a Product), (ii)cash discounts
     (including discounts for prompt payment), and (iii)trade promotional
     allowances and credits, in each case of (i), (ii), or (iii), in the
     ordinary course of a business;

          (d) discounts (including retroactive price reductions or a statutorily
     required reimbursement) mandated by or granted in response to local, state,
     provincial or federal law or regulation;

          (e) allowances or credits to customers on account of recalls,
     rejection or return (including for spoiled, damaged and outdated goods) in
     the ordinary course of business;


                                       4
<PAGE>


          (f) rebates paid or credited to any government or agency or any Third
     Party payor, administrator or contractee; and

          (g) wholesaler charge-backs allowed and taken in amounts customary in
     the trade.

Net Sales shall not include the supply of Product as commercial samples or for
use in testing or clinical or marketing studies undertaken; nor shall it include
sales between or among P&U and its Affiliates or Sublicensees (except where such
Affiliates or Sublicensees are end users), but Net Sales shall include the
subsequent final sales to Third Parties by such Affiliates or Sublicensees.

In the event Versicor is entitled to royalties under this Agreement for any
Product sold in the form of a Combination Product, Net Sales for determining
such royalties will be calculated by multiplying Net Sales of such Combination
Product by the fraction A/(A+B) where a is the fair market value of the portion
of the Combination Product that contains the Collaboration Compound and B is the
fair market value of the other active ingredients included in such Combination
Product, as determined by market prices of such portions if separately priced
and sold, or if not so priced and sold, as determined by mutual agreement of the
Parties.

     1.23 "OXAZOLIDINONE COMPOUND" means any Compound with the general chemical
structure set forth in Schedule C, or an analog thereof as determined by the
JRC.

     1.24 "PATENTS" means (i) valid and enforceable letters patent, and all
related reexaminations, reissues, renewals, extensions, inventor's certificates
and all foreign counterparts thereof, and (ii) pending (at any time during the
Term of this Agreement) applications for letters patent, including without
limitation all provisional, divisional, substitute, continuation and
continuation-in-part applications and all foreign counterparts thereof.

     1.25 "P&U KNOW-HOW" means Know-how (other than Excluded Compounds) that is
Controlled by P&U during the Research Term and that is useful for Versicor to
conduct its obligations and tasks under the Research Project, excluding P&U
Patents.

     1.26 "P&U PATENTS" means all Patents that are Controlled by P&U during the
Term of the Agreement and that (a)claim an Included P&U Compound, or (b)claim
any Collaboration Compound or the manufacture or use thereof, or (c)are
necessary or useful for discovering, developing, manufacturing, or using
Collaboration Compounds.

     1.27 "PRODUCT" means any finished pharmaceutical composition containing any
formulation or dosage of a Collaboration Compound as a pharmaceutically active
ingredient.

     1.28 "REGULATORY APPROVAL" means any approval (including pricing and
reimbursement approvals), license, registration or authorization of any
national, supra-national, regional, state or local regulatory agency, department
or other governmental entity necessary for


                                       5
<PAGE>


the manufacture, distribution, storage, importation, exportation, use and sale
of a Product in a regulatory jurisdiction.

     1.29 "RESEARCH PLAN" means the plan adopted and revised by the JRC covering
each Party's responsibilities 'in support of the research work to be
contemplated by this Agreement. The initial Research Plan is set forth in the
Scientific Scope Statement attached as Schedule D.

     1.30 "RESEARCH PROJECT" means the collaborative research activities carried
out by the Parties pursuant to the terms and conditions of this Agreement, as
set forth in the Research Plan.

     1.31 "RESEARCH TERM" means the period beginning on the Effective Date and
ending on the third anniversary of the Effective Date, or on the second
anniversary of the Effective Date if P&U elects to terminate the Research
Project early as provided in Section 11.1.

     1.32 "SUBLICENSEE" means any entity, other than Versicor or an Affiliate of
P&U, to whom P&U has granted a license or sublicense with respect to the
Product.

     1.33 "TERM" means the period beginning on the Effective Date and ending as
provided for in Section 11.2

     1.34 "THIRD PARTY" means any entity other than Versicor or P&U, an
Affiliate of Versicor or P&U, or a Sublicensee.

     1.35 "VALID CLAIM" means a claim in an issued Patent or pending Patent
application, which claim has not lapsed, been cancelled or abandoned, and has
not been or is not declared invalid, as determined by an unappealable decision
or judgment of a court or other appropriate body of competent jurisdiction, and
which has not been or is not admitted to be invalid or unenforceable through
reissue or disclaimer.

     1.36 "VERSICOR KNOW-HOW" means all Know-how that is Controlled by Versicor
during the. Research Term that is useful for P&U to conduct its obligations and
tasks under the Research Project, but excluding Collaboration Know-how.

     1.37 "VERSICOR PATENTS" means the Patents that are Controlled by Versicor
during the Term of the Agreement and are useful to discover, develop,
manufacture, or use Collaboration Compounds or Products, but excluding Compound
Patents and Collaboration Patents.

                                    ARTICLE 2
                     ASSIGNMENT OF RIGHTS AND LICENSE GRANTS

     2.1 ASSIGNMENT. Subject to the terms and conditions of this Agreement,
Versicor shall assign to P&U Versicor's entire right, title and interest in and
to (i) the Compound Patents pursuant to a patent assignment agreement executed
on the same date as this Agreement and (ii) any Oxazolidinone Compound
synthesized, discovered and/or developed by Versicor prior to the Effective
Date. Versicor otherwise retains all rights, title and full interest in and to
its technology, Patents and Know-how, subject only to the licenses granted
hereunder.


                                       6
<PAGE>


     2.2 RESEARCH LICENSES.

          (a) Subject to the terms and conditions of this Agreement, Versicor
     grants to P&U during the Research Term a worldwide, exclusive (with
     reserved rights to Versicor) royalty-free license, without the right of
     Versicor to grant further licenses or of P&U to grant sublicenses, under
     the Versicor Know-how and Versicor Patents as necessary for P&U to conduct
     its obligations and tasks under the Research Plan.

          (b) Subject to the terms and conditions of this Agreement, P&U grants
     to Versicor during the Research Term a worldwide, non-exclusive,
     royalty-free license, without the right to grant sublicenses, under the P&U
     Know-how, P&U Patents, Collaboration Know-how and Collaboration Patents as
     necessary for Versicor to conduct its obligations and tasks under the
     Research Project.

     2.3 COMMERCIALIZATION LICENSE. Subject to the terms and conditions of this
Agreement, Versicor grants to P&U during the Term of this Agreement a worldwide,
exclusive, royalty-bearing license under the Versicor Know-how and Versicor
Patents to use, make, have made, market, distribute, promote, offer for sale,
sell, export and import Product, including the right to grant sublicenses to
Affiliates and Sublicensees.

     2.4 RIGHT OF FIRST REFUSAL. In the event that P&U elects to seek a partner
or sales representative to co-promote an intravenous composition containing a
Collaboration Compound for the territory comprising the United States and
Canada, P&U shall notify Versicor of its intentions, and Versicor shall have a
non-exclusive right to negotiate with P&U for such a co-promotion agreement, if
Versicor elects to negotiate for such rights, then P&U and Versicor each agree
to negotiate in good faith commercially reasonable terms for a co-promotion
agreement at that time. P&U shall remain free to concurrently negotiate the same
opportunity with a Third Party, provided that, to the extent Versicor's sales
force is of similar size, quality and productivity as such Third Party's sales
force, P&U may not grant any such right to a Third Party on terms equal or less
advantageous to P&U than were proposed by Versicor. In the event that (i)
Versicor's sales force is not of similar size or quality and productivity as
such Third Party's sales force or (ii)P&U obtains more favorable terms and
conditions from such Third Party, P&U may enter into an agreement with such
Third Party with no further obligation to Versicor other than to inform Versicor
of the agreement with such Third Party.

     2.5 SUBLICENSES. P&U shall notify any Sublicensee hereunder of P&U's rights
and obligations under this Agreement licensed to such Sublicensee and require
such Sublicensee to be bound by all of the terms and conditions of this
Agreement, as applicable. P&U shall guarantee the actions of its respective
Sublicensees with respect to meeting the obligations hereunder. Upon termination
of this Agreement by P&U or Versicor pursuant to Article 11, no existing
sublicenses shall be affected by such termination as long as such Sublicensee is
in compliance with all of the terms and conditions of its sublicensee agreement,
and all such sublicenses shall remain in effect according to their terms and
shall be either (a) assigned to Versicor, if acceptable to Versicor or P&U, or
(b) continue as Sublicensees of P&U following such termination.


                                       7
<PAGE>


     2.6 NO OTHER LICENSE. No right or license under any Patent or patent
application is granted by P&U or Versicor under this Agreement, except as
specifically and expressly set forth herein.

                                    ARTICLE 3
                            JOINT RESEARCH COMMITTEE

     3.1 FORMATION. Within thirty (30) business days after the Effective Date,
Versicor and P&U shall organize the JRC, which will consist of three (3) members
from Versicor and four (4) members from P&U. P&U shall select one of its members
to serve as Chairperson of the JRC. Either Party may appoint, substitute or
replace members of the JRC upon notice to the other Party.

     3.2 FUNCTION. The JRC shall plan, coordinate, oversee and manage the
Research Project and ensure that the Research Project proceeds in a timely and
coordinated fashion. The JRC shall have the responsibility and authority, among
other things, to:

          (a) establish and modify research goals and prepare, adopt and revise
     the Research Plan to achieve the objectives of this Agreement;

          (b) assign tasks and responsibilities to the Parties under the
     Research Plan (including but not limited to determining each Party's
     responsibilities for Compound synthesis and the methods and sites for
     testing) and monitor the same;

          (c) set criteria for identification of Hit Compounds and recommend to
     P&U Hit Compounds to be selected for assessment, testing and development as
     Lead Candidates and/or to be chemically modified for such development;

          (d) determine target specifications for second and third generation
     Lead Candidates, establish and pursue appropriate screening assays relative
     to the Field, and select Collaboration Compounds appropriate for
     exploration and optimization;

          (e) examine Versicor's existing Oxazolidinone Compound database to
     identify any molecules that may already qualify as Lead Candidates and
     evaluate Versicor's novel oxazolidinone templates for further optimization;

          (f) provide Versicor with certain novel P&U oxazolidinone templates
     for combinatorial chemistry and/or possible parallel synthesis by Versicor
     (as deemed necessary and appropriate by the JRC) in accordance with the
     Research Plans;

          (g) synthesize and test Collaboration Compounds in JRC determined
     test-systems and evaluate their results;


                                       8
<PAGE>


          (h) propose and provide specific and novel oxazolidinone templates for
     expansion by combinatorial chemistry methods or parallel synthesis by the
     Parties under the Research Project;

          (i) transfer appropriate oxazolidinone combinatorial chemistry and
     medicinal chemistry methods between the Parties;

          (j) monitor the progress of the Research Project;

          (k) amend Schedule a of this Agreement as may be necessary or
     appropriate; and

          (l) determine the number of FTEs needed to staff the Research Project,
     pursuant to Section 4.5, and the ratio of chemists to biologists and PhDs
     to non-PhDs that serve as FTEs.

     3.3 DECISION MAKING. All decisions of the JRC shall be made by a majority
vote of the members. In the event of a deadlock on any matter to be decided by
the JRC, the Chairperson shall cast the deciding vote.

     3.4 MEETINGS. 'The JRC shall meet in-person or by teleconference on a
calendar quarter basis (or more frequently as may be agreed upon) to review the
Parties' progress in performing the Research Project, with each Party to bear
all travel and related costs for its representatives. The Chairperson shall be
responsible for the timing, agenda and minutes of each JRC meeting. The location
of the JRC meeting will alternate between Versicor's facility and one of P&U's
facilities. Non-members of the JRC are welcome to attend; provided, however,
that prior notice of their attendance is given to and approved by the JRC's
Chairperson. Each JRC meeting will be summarized within two weeks after the
meeting, and the summary will not be official until the Chairperson has agreed
to it.

     3.5 DURATION. The JRC will function throughout the Research Term and
disband at the conclusion of the Research Term. After the Research Term, P&U
shall have all of the rights and shall undertake all of the responsibilities of
the JRC as set forth herein.

                                    ARTICLE 4
                             RESEARCH COLLABORATION

     4.1 EXCLUSIVITY. Collaboration Compounds shall be developed and
commercialized for use pursuant to and subject to the provisions of this
Agreement. During the Research Term and for three (3) years thereafter, Versicor
shall not enter into any negotiations or agreements with any Third Party with
respect to the identification, discovery, synthesis, development or
commercialization of any Oxazolidinone Compound; provided, however, that after
the Research Term, Versicor may independently discover, synthesize, develop and
COMMERCIALIZE an Oxazolidinone Compound, but only to the extent such Compound is
not a Collaboration Compound.


                                       9
<PAGE>


     4.2 OBJECTIVES. The primary objective of this Agreement and the Research
Project is to discover, synthesize and develop second generation Oxazolidinone
Compounds and to screen such compounds in a high throughput screening and
compound-profiling process in order to identify and select Lead Candidates in
the Field. a secondary objective, to the extent time and resources permit, would
be to identify third generation Oxazolidinone Compounds. The proposed criteria
for second generation and third generation compounds is set forth in the
Scientific Scope Statement, dated October 26, 1998, attached as Schedule D.

     4.3 OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES. In addition to those
tasks and responsibilities assigned to each Party by the JRC, Versicor and P&U
will have the following obligations and responsibilities.

          (a) VERSICOR. Versicor will transfer any novel oxazolidinone-dependent
     combinatorial chemistry compounds and methods to P&U (including Compound
     Patents and Oxazolidinone Compounds discovered, synthesized or developed by
     Versicor prior to the Effective Date), in accordance with Section 2.1, for
     the performance of the Parties' obligations under the Research Project.

          (b) P&U. P&U will be responsible for all development activities, if
     any, related to any Collaboration Compound that the JRC has designated as a
     Lead Candidate, including but hot limited to P&U determining, in its sole
     discretion, whether and to what extent any Lead Candidate should be the
     subject of (i) any further assessment or testing, (ii) any pre-clinical or
     clinical development, (iii)any regulatory submission seeking Regulatory
     Approval, or (iv)any manufacturing, testing and commercialization as a
     Product.

     4.4 RESEARCH PROJECT. The Research Project shall be conducted in accordance
with the initial Research Plan, which is set forth in the Scientific Scope
Statement attached as Schedule D and which the JRC may modify or supplement from
time to time. The Research Project shall address, without limitation: (i) the
JRC's initial examination of (a) all Oxazolidinone Compounds known and/or
identified by Versicor as of the Effective Date, including Compounds claimed
under Compound Patents and (b) Included P&U Compounds as selected by P&U or the
JRC from P&U's library of such Compounds in existence as of the Effective Date,
from which the JRC may select molecules for further derivatization or as Lead
Candidates; (ii) evaluation of novel oxazolidinone templates for further
chemical Synthesis to prepare additional Collaboration Compounds for screening
in assays; (iii) confirmation of Hit Compounds and determination of
specifications for Hit Compounds; (iv)determination of contribution by each
Party of combinatorial chemistry methods and technology to the Research Project;
(v) division of responsibility for assessing activity of Hit Compounds; and
(vi)the division of responsibility for in-vivo testing of Collaboration
Compounds and any scale-up chemistry.

     4.5 FTES. During the Research Term, and unless otherwise agreed to by the
JRC, P&U will provide funding to Versicor pursuant to Section 6.3 to support at
least ten (10) qualified FTEs at Versicor as specified in the Research Plan. P&U
will also commit the number of FTEs to perform its responsibilities herein as
specified in the Research Plan. Any


                                       10
<PAGE>


modification in such FTE commitments by the Parties shall be made by the JRC in
accordance with Article 3. Versicor will employ the number of FTEs supported by
P&U hereunder and will assign such FTEs to work solely on the Research Project.

     4.6 RESEARCH EFFORTS AND DILIGENCE. Each Party shall use commercially
reasonable efforts to perform its responsibilities under the Research Plan and
shall comply with all applicable good laboratory practices and applicable legal
requirements. As used in this Agreement, the term "commercially reasonable
efforts" means, unless the Parties agree otherwise in writing, those efforts
consistent with the exercise of prudent scientific and business judgment in
accordance with industry standards, as applied to other products of similar
scientific and commercial potential.

     4.7 AVAILABILITY OF RESOURCES. Each Party will maintain laboratories,
offices and all other facilities, at its own expense and risk, necessary to
carry out its responsibilities under the Research Project. In particular, within
ninety (90) days following the Effective Date, Versicor will have established,
and will thereafter maintain during the Research Term, a BSL-2 laboratory
space for conducting the work. Each Party agrees to make its employees
reasonably available at their respective places of employment to consult with
the other Party on issues arising during the collaboration and/or in connection
with any request from any regulatory agency.

     4.8 DISCLOSURE; SCREENING OF COLLABORATION COMPOUNDS. Each Party will make
available and disclose to the other Party as promptly as is reasonably
practicable all Collaboration Know-how that is possessed, learned, acquired or
discovered by such Party at any time during the Research Term. In addition, each
Party shall inform the other promptly upon identifying any Hit Compounds in its
performance of screening activities pursuant to the Research Plan and shall
provide additional information with respect thereto. During the Research Term,
as assays are developed and validated pursuant to the Research Plan, the Parties
shall disclose to the JRC any results and other biologic screening activities,
as well as information pertaining to potential Hit Compounds, as soon as
reasonably practicable after such results and information are obtained. The JRC
shall promptly determine which Collaboration Compounds will continue in the
process for further development.

     4.9 REPORTS. During the Research Term, and within thirty (30) days
following the end of each calendar quarter, Versicor and P&U shall each provide
to the JRC a written report summarizing in reasonable detail the work performed
by it under the Research Plan, and the results thereof, during the preceding
calendar quarter. In addition, on reasonable request by a Party, the other Party
will make presentations of its activities under this Agreement. Collaboration
Know-how disclosed by one Party to the other Party pursuant hereto will be
treated as Confidential Information of the disclosing Party (in accordance with
Article 9) and used only in accordance with the rights granted under this
Agreement. After the Research Term and during the Term, to the extent
applicable, P&U shall provide Versicor with annual reports concerning the status
of any development and commercialization activities with respect to any Lead
Candidate.

     4.10 RECORDS. Versicor and P&U shall each maintain records in sufficient
detail and in good scientific manner that properly reflect all work done and
results achieved in the


                                       11
<PAGE>


performance of the Research Project (including all data in the form required to
be maintained under any applicable governmental regulations). Such records shall
include books, reports, research notes, charts, graphs, comments, computations,
analyses, recordings, photographs, computer programs and documentation thereof,
computer information storage means, samples of materials and other graphic or
written data generated in connection with the Research Project. Versicor and P&U
shall each have the right to inspect such records of the other and shall provide
copies of all requested records, to the extent reasonably required for the
performance of the requesting Party's obligations under this Agreement;
provided, however, that such records shall constitute Confidential Information
and shall be held in accordance with Article 9, and the requesting Party shall
not use such records or information except to the extent otherwise permitted by
this Agreement.

     4.11 SUBCONTRACTS. Notwithstanding Section 4.1, and subject to both the
provisions of Article 9 and the prior written approval of the JRC, Versicor and
P&U may subcontract portions of the Research Project to be performed by them in
the normal course of their business to a Third Party; provided, however, that
such Third Party has entered into an appropriate confidentiality agreement with
Versicor and/or P&U, as the case may be, obligating such Third Party to be bound
by the obligations contained in this Agreement and that the JRC has no valid
objections to the use of such Third Party.

                                    ARTICLE 5
                               PRODUCT DEVELOPMENT

     5.1 P&U DEVELOPMENT EFFORTS. During and after the Research Term, P&U shall
have the exclusive right to determine, in its sole discretion, whether to
assess, screen, test or clinically develop any Collaboration Compound or Lead
Candidate (and, if applicable, the appropriate development plan for any selected
Collaboration Compound or Lead Candidate), whether to seek Regulatory Approval
of any Product containing a Collaboration Compound or Lead Candidate, and
whether (and to what extent) to commercialize any Product containing a
Collaboration Compound or Lead Candidate. P&U agrees to use commercially
reasonable efforts to clinically develop Collaboration Compound or Lead
Candidates that it selects, if any, for further development, with the goal of
obtaining Regulatory Approval of a second generation Oxazolidinone Compound.

     5.2 DEVELOPMENT INFORMATION AND REPORTING. Commencing upon the first Phase
I trial covering a Collaboration Compound in the Field or Lead Candidate, if
any, P&U shall prepare and maintain complete and accurate records and other
Know-how regarding the efforts and results of any worldwide clinical development
of each Collaboration Compound in the Field or Lead Candidate. At least
annually, P&U shall provide Versicor with (i)a status report, describing the
efforts undertaken and results of all such development efforts on each
Collaboration Compound in the Field or Lead Candidate that P&U has selected for
further development and (ii) P&U's plans, if any, for future development
activities over the next 12-month period. Such reports shall reasonably and
accurately summarize the status and results of all such development efforts.
Versicor will be entitled to provide comments to P&U regarding such development
efforts, and P&U shall reasonably consider such comments. Notwithstanding


                                       12
<PAGE>


Versicor right to review and comment, P&U (along with its Affiliates) retains
the right, using commercially reasonable efforts, to develop any selected
Collaboration Compound in the Field or Lead Candidate in its sole discretion.

                                    ARTICLE 6
                               PAYMENT OBLIGATIONS

     6.1 ASSIGNMENT AND LICENSE FEE. In consideration of the assignments of
rights and grant of the license set forth in Sections 2.1 and 2.3, P&U agrees
to pay Versicor [ * ] within fifteen (15) business days of the Effective Date.

     6.2 EQUITY INVESTMENT.

          (a) In connection with the transactions set forth herein, P&U
     agrees to purchase a total of Three Million Seven Hundred Fifty Thousand
     ($3,750,000) of Versicor preferred stock pursuant to the terms and
     conditions of a Stock Purchase Agreement (the "SPA") executed on the
     same date as this Agreement. The parties acknowledge and agree that the
     purchase price of such preferred stock shall be $7.50 per share.

          (b) In addition, Versicor shall have the sole option to cause P&U to
     make a single, additional equity investment in Versicor, solely as provided
     in and pursuant to the terms and conditions of Section 1.2(b) of the SPA.

     6.3 RESEARCH STAFFING AND FUNDING. Versicor agrees to provide contract R&D
services to P&U in support of the Research Project, and P&U agrees to provide
Versicor funding to support the Research Project as follows:

          (a) Versicor shall employ a total of at least ten (10) FTEs, and
     Versicor agrees that the chemistry FTEs shall be dedicated full time to
     the Research Plan, while other FTEs under the Research Plan may be
     allocated as appropriate.

          (b) Within fifteen (15) days of the Effective Date, P&U will pay
     Versicor One Million Two Hundred Thousand Dollars ($1,200,000) as a 1999
     contract research service fee. Additionally, P&U will provide Versicor
     funding to support the FTEs employed by Versicor that are dedicated full
     time to the Research Project on a fully allocated FTE basis, in an amount
     equal to: (i)[ * ] per FTE per year for the first year of the Research
     Project; (ii) [ * ] per FTE per year for the second year of the Research
     Project; and (iii) [ * ] per FTE per year for the third year of the
     Research Project, all in accordance with the FTE requirements set forth
     in the Research Plan. The amounts referenced in (i), (ii) and (iii)
     above shall be payable in advance in four quarterly installments during
     each calendar year on or before the beginning of each calendar quarter.
     Any payments for a portion of a quarterly period shall be made on a pro
     rata basis. The first such payment shall be made within ten (10) days of
     the Effective Date. P&U will bear all of its own expenses incurred in
     connection with the Research Project.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

                                       13
<PAGE>

          (c) In the event Versicor exercises the Put Option provided in
     Section 1.2(b) of the SPA to require an additional equity investment
     from P&U, and Versicor exercises such Put Option AFTER Versicor's firm
     commitment, underwritten initial public offering, P&U will pay Versicor
     an additional [ * ] as reimbursement to Versicor for that year's
     research and development expenses of the Research Project. Such payment
     will be made to Versicor, if at all, only in conjunction with (and not
     independent of) the proper exercise by Versicor of the Put Option as set
     forth in Section 1.2(b) of the SPA (including without limitation giving
     the appropriate notice to P&U as required in such Section).

          (d) Versicor agrees that P&U is entitled to claim the FTE support
     payments on its federal tax returns as R&D expenses for purposes of
     Sections 174 and 41 of the Internal Revenue Codes, as amended.

     6.4 RESEARCH PERFORMANCE BONUS PAYMENTS.

          (a) Subject to Section 6.6, within thirty (30) days after achievement
     or completion of each of the research performance events set forth below,
     P&U shall pay to Versicor the indicated research performance bonus with
     respect to each Lead Candidate:

          [ * ]

          Total                                  $14,000,000

          (b) All research performance bonus payments made by P&U under this
     Section 6.4 may be credited against royalties owed by P&U to Versicor
     under Section 6.5, until the total amount of such payments have been
     fully credited against royalties owed, but provided that (i) P&U may not
     apply such credits (aggregated with any other credits or deductions) so
     as to reduce the amount of royalties owed for any particular calendar
     quarter by more than [ * ] of the amount otherwise owed under this Article
     6, and (ii) any amount of such credit or deduction that was not credited
     because of the



[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


                                       14
<PAGE>


          [ * ] limitation may be applied in future quarters until fully
     utilized. Any amounts of uncredited research performance bonus payments
     that cannot be credited against a particular royalty payment may be
     carried forward and credited against future royalty payments owed
     hereunder, subject also to the foregoing limitation.

          (c) In the event that P&U pays to Versicor any research performance
     bonus with respect to a Lead Candidate, which Lead Candidate is
     subsequently abandoned (or must be abandoned) by P&U for any reason, then
     P&U shall be credited with all research performance bonus payments made
     with respect to such abandoned Lead Candidate to be applied against
     research performance bonus payments for then current or future Lead
     Candidates or credited against then current or future royalty payments as
     provided herein.

          (d) P&U shall have no obligation to pay Versicor any research
     performance bonus with respect to any Collaboration Compound developed
     and/or approved for use outside the Field, with the specific and limited
     exception that for the first (and only the first) Collaboration Compound
     developed for non-antibacterial use in humans, P&U will, subject to
     Sections 6.4(b) and (c), pay Versicor f of the research performance bonus
     as set forth in Section 6.4(a).

     6.5 ROYALTY. In further consideration of the assignment of rights and
licenses granted pursuant to Section 2.1 and 2.3, and subject to Sections 6.6
and 6.7, P&U agrees to pay Versicor certain royalties as follows:

          (a) ANTIBACTERIAL USE IN HUMANS. Subject to the terms and conditions
     of this Agreement, P&U shall pay to Versicor a royalty on the total,
     worldwide Net Sales of each Product (calculated individually, not in the
     aggregate, on an annual basis) sold for use solely or primarily in the
     Field, with the royalty amount determined as follows:

              (i)    [ * ] of the total annual Net Sales of each Product sold
          for use solely or primarily in the Field up to the first
          $500,000,000 of such sales in a calendar year;

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

                                       15
<PAGE>

              (ii)   [ * ] of the total annual Net Sales of each Product sold
          for use solely or primarily in the Field in excess of $500,000,000
          of such sales and through $1,000,000,000 of such sales in such
          calendar year; and

              (iii)  [ * ] of the total annual Net Sales of each Product sold
          for use solely or primarily in the Field in excess of $1,000,000,000
          in such calendar year.

          (b) OTHER USES IN HUMANS. Subject to the terms and conditions of this
     Agreement, and to the extent any Product is sold for use in humans other
     than for use solely or primarily in the Field, P&U shall pay to Versicor a
     royalty on the total, worldwide Net Sales of Such Product in accordance
     with the royalty rates set forth in Section 6.5(a).

          (c) ANY NON-HUMAN USE. Subject to the terms and conditions of this
     Agreement, and to the extent any Product is sold for any non-human use, P&U
     shall pay to Versicor a royalty on the total, worldwide Net Sales of such
     Product in accordance with the royalty rates set forth in Section 6.5(a),
     except that such royalty rates shall be reduced by

          (d) DETERMINATION OF NET SALES AND ROYALTY. The determination of Net
     Sales for calculating the royalty rate shall be made separately for any
     Product (i) used solely and primarily in the Field (which may or may not
     include Combination Products), (ii) used in humans outside of the Field
     (which may or may not include Combination Products) and (iii) in non-humans
     (which may or may not include Combination Products). The actual royalty
     rate based on the level of Net Sales shall then be calculated on a Product
     by Product basis, taking into account any modifications or adjustments to
     the royalty rate as provided herein.

     6.6 LIMITATION ON PAYMENT OBLIGATION. Notwithstanding Sections 6.4 and 6.5,
P&U's obligation to pay Versicor any research performance bonus or royalty under
those Sections shall arise if and only if the Product for which a research
performance bonus or royalty payment is sought is a Collaboration Compound or
Lead Candidate with a chemical structure experimentally confirmed prior to the
date three (3) months after the expiration of the Research Term, and any salt,
hydrate or solvate thereof; otherwise, P&U shall have no obligation to pay any
performance bonus or royalty to Versicor.

     6.7 ROYALTY REDUCTION.

          (a) NO VALID CLAIM. For sales of a Product in a country where there is
     no Valid Claim in a Collaboration Patent or Versicor Patent that claims the
     composition, manufacture, or use of the Product or the Collaboration
     Compound in such Product, then the amount of royalty owed by P&U for such
     sales shall be equal to fifty percent (50%) of the amount of royalties owed
     as calculated under Section 6.5 for such sales in such country; provided,
     however, that, in the event it is subsequently determined that no Valid
     Claim existed, P&U shall be credited with fifty percent (50%) of any
     royalties paid (against future royalties owed) during the period that no
     Valid Claim existed.



[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

                                       16
<PAGE>


          (b) THIRD PARTY PATENTS. If the JRC or P&U, as applicable, in its
     reasonable judgment, determines that P&U is required to obtain a license
     from a Third Party under a Valid Claim of a dominating Patent owned by such
     Third Party in order to import, manufacture, distribute, use, market or
     sell a Product or the Collaboration Compound contained in a Product, and
     the infringement of such Patent cannot reasonably be avoided by P&U, then
     P&U shall be entitled to seek and obtain such license, and P&U shall be
     entitled to reduce the amount of royalties owed under Sections 6.5 and
     6.7(a) with respect to sales of such Product in the countries where such
     license is obtained by fifty percent (50%) of the amount of the royalty
     actually paid to such Third Party based on the sales of such Product in
     such countries, provided that in any event the royalty payable to Versicor
     shall not be reduced by more than fifty percent (50%) of the amounts
     otherwise owed under Sections 6.5 and 6.7(a).

     6.8 ROYALTY TERM. The royalty obligation of P&U with respect to a
particular Product in a country shall commence on the date of First Commercial
Sale of the Product in such country and shall expire upon the later of: (a) 10
years from the date of First Commercial Sale in such country, or (b) the
expiration of the last to expire of the Compound Patents, Versicor Patents, P&U
Patents and Collaboration Patents containing a Valid Claim that claims the
composition of matter, manufacture, or use of the Product or the Collaboration
Compound in such Product, in such country.

     6.9 ACCRUAL AND PAYMENT OF ROYALTIES. Royalties payable under Section 6.5
shall accrue on the date of the invoice for the sale of a particular Product or,
if earlier, on the date that title transfers to the purchaser. Royalties that
accrue during a particular calendar quarter shall be due and paid by P&U within
sixty (60) days of the end of such calendar quarter. Each royalty payment shall
be accompanied by a royalty report setting forth, for each Product and each
country, the gross invoiced sales of the Product, the itemized deductions and
calculations deriving Net Sales in sufficient detail to permit confirmation of
the accuracy of the royalty payment made, the method used to calculate the
royalty and the exchange rates used.

     6.10 CURRENCY EXCHANGE RATE, MANNER OF PAYMENT. All payments to be made by
P&U to Versicor pursuant to this Agreement shall be made in U.S. dollars. With
respect to each quarter, for countries other than the United States, whenever
conversion of payments from any foreign currency shall be required, such
conversion shall be based on P&U's internal exchange rate used in preparing
P&U's consolidated earnings statements for such quarter. All payments owed under
this Agreement shall be made by wire transfer, unless otherwise specified by
Versicor.

     6.11 LATE PAYMENTS. In the event that any payment, including royalty,
performance bonus and research payments, due hereunder is not made within ten
(10) business days of when due, the payment shall accrue interest from the date
due at the rate of prime plus one percent annually or such lesser rate that is
the maximum legal annual interest rate. The payment of such interest shall not
limit Versicor from exercising any other rights it may have as a consequence of
the lateness of any payment.


                                       17
<PAGE>


     6.12 PAID-UP LICENSE. Upon expiration, pursuant to Section 6.8, of P&U's
obligation to pay royalties hereunder with respect to a particular Product in a
country, the license granted to P&U under Section 2.3 shall terminate as to such
Product in such country, and P&U shall automatically be deemed to have been
granted a fully paid-up, non-exclusive license under the Versicor Know-how and
Versicor Patents to make, have made, distribute, use, import, market, offer for
sale and sell such Product in such country.

     6.13 TAXES. All turnover and other taxes levied on account of the royalties
and other payments accruing to Versicor under this Agreement shall be paid by
Versicor for its own account, including taxes levied thereon as income to
Versicor. If provision is made in U.S. or foreign law or regulation for tax
withholding, such tax shall be deducted from the royalty or other payment made
by P&U and deposited with the proper tax authority and a receipt of payment of
the tax secured and promptly delivered to Versicor. P&U agrees to assist
Versicor in all reasonable ways in claiming exemption, or reduction from such
deductions or withholdings under any double taxation or similar agreement or
treaty from time to time in force.

                                    ARTICLE 7
                            RECORDKEEPING AND AUDITS

     7.1 RECORDKEEPING. Versicor and P&U shall keep complete and accurate
records pertaining to the discovery, identification, synthesis, development,
manufacture or use of Collaboration Compounds and the sale of Product, in
sufficient detail to permit the other Party to confirm, in the case of Versicor,
its research and discovery efforts and the calculation of research funding under
Section 6.3, and in the case of P&U, its research and discovery efforts,
clinical research, and commercialization efforts, as well as the accuracy of
calculations of all royalty payments.

     7.2 RECORDS RETENTION. All records and information required under 7.1 shall
be maintained for the longer of:

          (a) three (3) years following the year in which any such efforts or
     payments were made under this Agreement; or

          (b) such longer period as may be required by law.

     7.3 AUDIT REQUEST. Versicor and P&U shall have the right to audit each
others records at their own expense and on an annual basis, to determine, with
respect to any calendar year, the accuracy of any report, payment or calculation
made under or pursuant to this Agreement,. but only with respect to each
calendar year; provided, however, that if any discrepancy exceeds five percent
(5%), the cost and expense of such audit shall be paid by the Party against whom
the discrepancy is found. Any such audit may be exercised (a) only once a year,
(b) during normal business hours, and (c) upon at least thirty (30) working days
prior notice to the other Party. No period of time shall be audited more than
once. If a Party desires to audit such records, it shall engage an independent,
certified public accountant of recognized standing reasonably acceptable to the
other Party to examine such records. The audited party shall make its records
available for inspection by the accountant during regular business hours at such
place


                                       18
<PAGE>


or places where such records are customarily kept. The results of any such audit
shall be made available to both Parties. Any information received by a Party or
its accountants pursuant to this Section 7.3 shall be deemed to be Confidential
Information. This Section 7.3 shall survive any termination of this Agreement
for a period of three (3) years.

     7.4 SUBLICENSEE RECORDKEEPING. P&U shall include in each sublicense granted
by it pursuant to this Agreement and in each distribution agreement with a
distributor in a distributor market, a provision requiring the sublicensee and
the distributor to (a)make reports to P&U, (b) keep and maintain books and
records of sales made pursuant to such sublicense and distribution agreement,
and (c)grant access to such books and records by an independent accountant to
the same extent and under the same obligations as required by Versicor under
this Agreement.

                                    ARTICLE 8
                            PATENTS AND INFRINGEMENT

     8.1 OWNERSHIP OF PATENTS AND INFORMATION.

          (a) P&U shall own and have the exclusive right, title and interest in
     all Collaboration Compounds, Collaboration Know-how and Collaboration
     Patents.

          (b) Versicor shall provide P&U with any and all assignments, bills of
     sale or other transfer documents that may be necessary, at any time, to
     vest in and transfer to P&U all rights, title and interest in the
     Collaboration Compounds, Collaboration Know-how and Collaboration Patents.

     8.2 PROSECUTION AND MAINTENANCE OF PATENTS.

          (a) Versicor shall be responsible for the preparation, filing,
     prosecution and maintenance of all Versicor Patents. P&U shall be
     responsible for and shall have sole discretion with respect to the
     preparation, filing, prosecution and maintenance of all Patent applications
     and Patents covering any inventions transferred to (under Sections 2.1 and
     8.1) and/or owned solely by P&U, including without limitation P&U Patents,
     Compound Patents and Collaboration Patents. During the Research Term, P&U
     will reasonably attempt to accommodate and address Versicor's reasonable
     requests with respect to the filing and prosecution of any Compound Patent
     and Collaboration Patent. The prosecuting Party shall keep the other Party
     informed in a timely manner of progress with regard to the filing,
     prosecution, maintenance, enforcement and defense of Patent applications
     and Patents subject to this Section 8.2(a).

          (b) P&U shall have the right to refuse to file, prosecute, and
     maintain any Compound Patent and Collaboration Patent and to abandon
     enforcement or declines responsibility for a Compound Patent and
     Collaboration Patent.

          (c) Each Party will promptly disclose to the other Party such
     inventions arising from or made in the performance of the Research Project
     during the Research


                                       19
<PAGE>


     Term, and P&U shall, pursuant to Section 8.1, own and have all right, title
     and interest in such inventions and any Patent or Patent applications
     claiming such inventions.

          (d) In the event that Versicor decides not to continue the prosecution
     or maintenance of a Versicor Patent in a country, Versicor shall provide
     P&U with prior written notice of this decision and cooperate with P&U so as
     to provide P&U reasonable opportunity to assume full responsibility
     (including assignment to P&U) for the continued maintenance of such Patent
     or prosecution of such Patent application at P&U's expense.

     8.3 COOPERATION OF THE PARTIES. The Parties agree to cooperate fully in the
preparation, filing, and prosecution of any Collaboration Patent. Such
cooperation includes, but is not limited to:

          (i) executing all papers and instruments, or requiting its employees
     or agents, to execute such papers and instruments, so as to effectuate the
     ownership of Patents set forth in Section 8.1 above and to enable Patent
     application and prosecution in any country; and

          (ii) promptly informing the other Party of any matters coming to such
     Party's attention that may affect the preparation, filing, or prosecution
     of any such Patent applications.

     8.4 INFRINGEMENT BY THIRD PARTIES.

          (a) Versicor and P&U each shall provide the other immediate notice in
     writing of any actual or potential infringement by a Third Party of any
     Compound Patent, Versicor Patent, P&U Patent, or Collaboration Patent or of
     any certification of which one or both become aware filed under the United
     States Drug Price Competition and Patent Term Restoration Act of 1984
     claiming that any Compound Patent, Versicor Patent, P&U Patent or
     Collaboration Patent is invalid or unenforceable or that infringement of
     any such Patents will not arise from the manufacture, use or sale of any
     Product by a Third Party.

          (b) With respect to any infringement of a Versicor Patent by a Third
     Party making, distributing, marketing, using or selling an Oxazolidinone
     Compound, P&U as exclusive licensee with respect to the Versicor Patents
     shall bring suit or other proceeding at its expense against such infringer
     as to such infringement in its own name, or in the name of Versicor where
     necessary, after obtaining Versicor's prior written consent, which consent
     shall not unreasonably be withheld. Versicor shall be kept advised at all
     times of such suit or proceedings brought by P&U. Versicor may, in its
     discretion, join P&U as Party to the suit or other proceeding, provided
     that P&U shall retain control of the prosecution of such suit or
     proceedings in such event. Versicor agrees to cooperate with P&U in its
     efforts to enforce the Versicor Patents.

          (c) If P&U does not bring suit or other proceeding against an
     infringer under subsection (b) above, Versicor may in its discretion, bring
     suit or other proceeding at its


                                       20
<PAGE>


     expense against the infringer, provided however, that Versicor shall first
     consult with P&U. P&U shall be kept advised at all times of such suit or
     proceedings brought by Versicor and P&U agrees to cooperate with Versicor
     in its efforts to enforce Versicor Patents, including joining as a Party
     where necessary.

          (d) Neither Party shall have the right to settle any patent
     infringement litigation under this Section 8.4 without the consent of the
     other Party, such consent not to be unreasonably withheld.

          (e) With respect to infringement of a Compound Patent, P&U Patent or
     Collaboration Patent by a Third Party, P&U may bring suit or other
     proceeding at its expense against such infringer as to such infringement in
     its own name. Versicor shall be kept advised at all times of such suit or
     proceedings brought by P&U. Versicor agrees to cooperate with P&U in its
     efforts to enforce Versicor Patents.

          (f) Each Party will bear its own expenses with respect to any suit or
     other proceeding against an infringer under this Section 8.4. Any recovery
     in connection with such suit or proceeding, including recovery by
     settlement, judgment or otherwise, will first be applied to reimburse
     Versicor and P&U for their out-of-pocket expenses; including attorney's
     fees. The Party controlling the suit will retain the balance of any
     recovery, provided that any such balance retained by P&U, which would
     properly be characterized as Net Sales of a Product, shall be deemed to be
     Net Sales of such Product for which P&U shall pay royalties to Versicor
     pursuant to Section 6.5, as if such recovery had been Net Sales of Product
     in the calendar quarter in which such recovery was received. In the event
     that part of such recovery by P&U is in the form of a royalty on future
     sales of the infringing product, based on a license granted by P&U under
     the applicable Patents, then the sales of such product shall be deemed to
     be Net Sales of Products by a Sublicensee for which royalties are owed
     under Article 6.

     8.5 INFRINGEMENT OF THIRD PARTY RIGHTS. P&U and Versicor shall promptly
notify the other in writing of any allegation by a Third Party that the activity
of either of the Parties hereunder infringes or may infringe the intellectual
property rights of such Third Party. P&U shall have the first right to control
any defense of such claim at its own expense and by counsel of its own choice,
and Versicor shall have the right, at its own expense, to be represented in any
such action by counsel of its own choice. If P&U fails to proceed in a timely
fashion with regard to such defense, Versicor shall have the right to control
any such defense of such claim at its own expense and by counsel of its own
choice, and P&U shall have the right, at its own expense, to be represented in
any such action by counsel of its own choice. Neither Party shall have the right
to settle any patent infringement litigation under this Section 8.5 without the
consent of such other Party, which consent shall not be unreasonably withheld.

     8.6 PATENT TERM EXTENSION. Versicor shall cooperate with P&U in obtaining
patent term restoration or supplemental protection certificates or their
equivalents in any country with respect to the Versicor Patents, Compound
Patents and Collaboration Patents. In the event that elections with respect to
obtaining such patent term restoration, supplemental protection


                                       21
<PAGE>


certificates or their equivalents are to be made, P&U shall have the right to
make the election and Versicor agrees to abide by such election.

                                    ARTICLE 9
                                 CONFIDENTIALITY

     9.1 NONDISCLOSURE. During the Research Term and for a period of five (5)
years thereafter, each Party will maintain all Confidential Information received
from the other Party in trust and confidence and will not disclose in any form
or manner any such Confidential Information to any Third Party or use such
Confidential Information for any purpose except (a) as expressly authorized by
this Agreement, (b) as required by law or court order, (c) as to use with its
Affiliates, or (d) as mutually agreed upon in writing by the parties. Each Party
may use such Confidential Information only to the extent required to accomplish
the purposes of this Agreement and will use at least the same standard of care
as it uses to protect proprietary or confidential information of its own to
ensure that its Affiliates, employees, agents, consultants and other
representatives do not disclose or make any unauthorized use of the Confidential
Information. Each Party will promptly notify the other upon discovery of any
unauthorized use or disclosure of the Confidential Information.

     9.2 AUTHORIZED DISCLOSURES. Each Party may disclose the other Party's
Confidential Information hereunder to the extent reasonably necessary in
connection with the exercise of its rights and discharge of its obligations
under this Agreement (or in connection with negotiations related to the sale of
either Party by sale of assets, stock, merger or similar transaction) or its
business, provided all such disclosures are subject to written confidentiality
obligations containing provisions no less protective than those contained
herein. Such permitted disclosures include those made in connection with filing
or prosecuting Patent applications, prosecuting or defending litigation,
complying with applicable governmental regulations, or conducting non-clinical
or clinical trials. If a Party is required by law or regulation to make any such
disclosure of the other Party's Confidential Information it will, except where
impractical for necessary disclosures (for example in the event of medical
emergency), give reasonable advance notice to the other Party of such disclosure
requirement and, except to the extent inappropriate in the case of Patent
applications, will use reasonable efforts to secure confidential treatment of
such Confidential Information required to be disclosed.

     9.3 PUBLICATIONS. Each Party to this Agreement recognizes that the
publication of papers regarding results of Research Project hereunder, including
oral presentations and abstracts, may be beneficial to both Parties provided
such publications are subject to reasonable controls to protect Confidential
Information. In particular, it is the intent of the Parties to maintain the
confidentiality of any Confidential Information included in any foreign patent
application until such foreign patent application has been published.
Accordingly, each Party shall have the right, during the Research Term and for a
period of one (1) year thereafter, to review and approve any paper proposed for
publication by the other Party, including oral presentations and abstracts,
which utilizes data generated from the Research Project and/or includes
Confidential Information of the other Party. Before any such paper is submitted
for publication, the Party proposing publication shall deliver a complete copy
to the other Party at least sixty (60) days prior to submitting the paper to a
publisher. The receiving Party shall


                                       22
<PAGE>


review any such paper and give its comments to the publishing Party within
thirty (30) days of the delivery of such paper to the receiving Party. The
publishing Party shall comply with the other Party's request to delete
references to such other Party's Confidential Information in any such paper and
agrees to withhold publication of same for an additional ninety (90) days in
order to permit the Parties to file an appropriate Patent application, if either
of the Parties deem it necessary, in accordance with the terms of this
Agreement. With respect to oral presentation materials and abstracts, the
Parties shall make reasonable efforts to expedite review of such materials and
abstracts, and shall return such items as soon as practicable to the publishing
Party with appropriate comments, if any, but in no event later than thirty (30)
days from the date of delivery to the receiving Party. If no response is
received in thirty (30) days from the date of notification, approval for
publication and/or oral presentation will be assumed. After the one year
anniversary of the expiration of the Research Term, P&U shall have sole rights
and responsibilities with respect to publications and presentations concerning
data generated from the Research Project.

                                   ARTICLE 10
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

     10.1 REPRESENTATIONS AND WARRANTIES.

          (a) Each Party hereby represents and warrants that it is duly
     organized and validly existing under the laws of the state of its
     incorporation and that it has the full corporate power and authority to
     enter into this agreement and to carry out the provisions hereof.

          (b) Each Party represents and warrants that it is duly authorized to
     execute and deliver this Agreement and to perform all obligations
     hereunder.

          (c) Each Party represents and warrants (i) that this Agreement is a
     legal and valid obligation binding upon it and is enforceable in accordance
     with its terms, and (ii) that the execution, delivery and performance of
     this Agreement by such Party does not conflict with any material agreement,
     instrument or understanding, oral or written, to which it is a Party or by
     which it may be bound, nor violate any law or regulation of any court,
     governmental body or administrative or other agency having authority over
     it.

          (d) Each Party represents and warrants that it has enforceable written
     agreements with all of its employees who receive Confidential Information
     under this Agreement assigning to such Party ownership of all intellectual
     property rights created in the course of their employment.

          (e) Each Party represents and warrants that, to the best of its
     knowledge, neither it nor any of its employees, officers, subcontractors or
     consultants, who has rendered services relating to the Collaboration
     Compound or the use of a Collaboration Compound in the Field (i) has ever
     been disbarred or, to its actual knowledge, convicted of a crime for which
     an entity or person could be debarred under 21 USC Section 335(a)


                                       23
<PAGE>


     or (ii) is the subject of a disbarment proceeding or under indictment for a
     crime for which a person or entity could be debarred under that Section.

          (f) Each Party represents and warrants that all of its actions and
     services provided under this Agreement are and will be Year 2000 compliant
     and that no Year 2000 Problem (as defined below) exists or will exist
     during the term of this Agreement with respect to any computer system,
     software or equipment that is owned, leased or licensed by such Party or
     its Affiliates, that will materially interfere with such Party's ability to
     perform under this Agreement. a "Year 2000 Problem" means a date-handling
     problem relating to the Year 2000 date change that would cause a computer
     system, software or equipment to fail to correctly perform, process and
     handle date-related data for the dates within and between the 20th and 21st
     centuries and all other centuries.

          (g) Versicor represents and warrants as of the Effective Date that, to
     Versicor's best knowledge based on a reasonable review of or investigation
     into all relevant facts:

               (i) There is no claim existing or threatened to the effect that
          the operations of Versicor with respect to Oxazolidinone Compounds
          infringe upon or conflict with the asserted rights of any Third Party;

               (ii) There is no claim pending or threatened to the effect that
          any Versicor Patent or Compound Patent is invalid or unenforceable;

               (iii) it has disclosed to P&U all (A) Compound Patents and (B)
          Oxazolidinone Compounds that it has discovered or synthesized prior to
          the Effective Date; and

               (iv) all Versicor Know-how for which patent protection has not
          been sought has been kept confidential.

          (h) Versicor further represents and warrants that (i)to the best of
     its knowledge, it has good title to or valid leases or licenses for all its
     properties, fights and assets necessary for the fulfillment of its
     obligations and responsibilities under this Agreement; and (ii)to the best
     of its knowledge, it owns and possesses all necessary rights to use all
     Patents, Patent rights, inventions and Know-how, including any Compound
     Patent and Versicor Patent needed to conduct research, to grant rights and
     licenses granted herein to P&U, and to fulfill its other duties and
     obligations pursuant to this Agreement; and (iii)it has not granted or
     assigned to any Third Party any rights, which rights are still in existence
     as of the Effective Date, under any intellectual property rights owned by
     Versicor to manufacture, have manufactured, assemble or sell any Compound
     Patent or Collaboration Compound.

     10.2 DISCLAIMER OF WARRANTIES. Neither Party guarantees the safety or
usefulness of any Product. P&U does not make any representation or warranty or
guarantee that it will ultimately develop and/or commercialize a Product as a
result of the Research Project, and the


                                       24
<PAGE>


failure of P&U to successfully develop and/or commercialize any Product will not
constitute a breach of any representation or warranty or other obligation under
this Agreement. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY NATURE, EXPRESS
OR IMPLIED.

     10.3 INDEMNIFICATION.

          (a) INDEMNIFICATION BY VERSICOR. During the Term of this Agreement,
     Versicor shall defend, indemnify, and hold harmless P&U and its directors,
     officers, agents, parent companies, Affiliates, and employees, from and
     against any and all claim, loss, damage, liability, injury (including
     death), cost or expense, including without limitation expenses of
     litigation and reasonable attorneys' fees, in connection with any claims
     made or suits brought against P&U relating to this Agreement which are
     alleged to arise from the negligence, willful misconduct, or material
     breach of this Agreement by Versicor, its Affiliates, Sublicensees,
     subcontractors or agents; provided, however, that Versicor shall not be
     obligated to provide indemnification hereunder to the extent that any
     such claim, loss, damage, liability, injury, cost or expense results from
     the negligence, willful misconduct, or material breach of this Agreement by
     P&U or from any matter for which P&U is obligated to indemnify Versicor
     under subsection (b) below.

          (b) INDEMNIFICATION BY P&U. During the term of this Agreement, P&U
     shall defend, indemnify and hold harmless Versicor, its directors,
     officers, agents, Affiliates and employees from and against any and all
     claim, loss, damage, liability, injury (including death), cost or expense,
     including without limitation expenses of litigation and reasonable
     attorneys' fees, in connection with any claims made or suits brought
     against Versicor relating to this Agreement and which are alleged to arise:
     (i) from the negligence, willful misconduct, or material breach of this
     Agreement by P&U, its Affiliates, Sublicensees, subcontractors of agents or
     (ii) out of the death of or injury to any person or persons or out of any
     damage to property and resulting from the production, manufacture, sale,
     use, lease, consumption, mislabeling, promotion or advertisement of
     Product; provided, however, that P&U shall not be obligated to provide
     indemnification hereunder to the extent that any such claim, loss, damage,
     liability, injury, cost or expense results from the negligence, willful
     misconduct, or material breach of this Agreement by Versicor or from any
     matter for which Versicor is obligated to indemnify P&U under subsection
     (a) above.

          (c) PROCEDURE. Should a Party or any of its directors, officers,
     agents, parent companies, affiliates, or employees (the "Indemnitee")
     intend to claim indemnification under this Article, such Indemnitee shall
     promptly notify the other Party (the "Indemnitor") in writing of any
     alleged loss, claim, damage, liability or action in respect of which the
     Indemnitee intends to claim such indemnification, and the Indemnitor shall
     be entitled to assume the defense thereof with counsel selected by the
     Indemnitor and approved by the Indemnitee, such approval not to be
     unreasonably withheld; provided, however, that if representation of
     Indemnitee by such counsel first selected by the Indemnitor would be
     inappropriate due to a conflict of interest between such Indemnitee


                                       25
<PAGE>


     and any other Party represented by such counsel, then Indemnitor shall
     select other counsel for the defense of Indemnitee, with the fees and
     expenses to be paid by the Indemnitor, such other counsel to be approved by
     Indemnitee and such approval not to be unreasonably withheld. The indemnity
     agreement in this Article shall not apply to amounts paid in settlement of
     any loss, claim, damage, liability or action if such settlement is effected
     without the consent of the Indemnitor, which consent shall not be
     unreasonably withheld. The failure to deliver notice to the Indemnitor
     within a reasonable time after the commencement of any such action, if
     prejudicial to its ability to defend such action, shall relieve such
     Indemnitor of any liability to the Indemnitee under this Article, but the
     omission to so deliver notice to the Indemnitor will not relieve it of any
     liability that it may have to any Indemnitee otherwise than under this
     Article. The Indemnitees under this Article, its directors, officers,
     employees and agents, shall cooperate fully with the Indemnitor and its
     legal representatives in the investigation of any action, claim or
     liability covered by this indemnification.

                                   ARTICLE 11
                              TERM AND TERMINATION

     11.1 RESEARCH TERM. The Research Term shall commence as of the Effective
Date and, unless sooner terminated as provided herein, end on the third
anniversary of the Effective Date; provided, however, that P&U shall have the
one-time right to terminate the Research Term effective the second anniversary
of the Effective Date, exercisable by written notice provided to Versicor at
least one hundred twenty (120) days prior to the second anniversary of the
Effective Date.

     11.2 TERM. This Agreement shall commence as of the Effective Date and,
unless sooner terminated as provided herein, shall expire on the expiration of
all royalty and other payment obligations, if any, of P&U hereunder.

     11.3 TERMINATION FOR BREACH. In the event that a Party commits a material
breach of any material provision of this Agreement, the non-breaching Party may
give written notice of such breach, specifying the basis for the assertion that
a breach has occurred, and demanding that such breach be cured. If the breaching
Party has not cured such breach within sixty (60) days after such notice, then
the non-breaching Party may terminate this Agreement upon written notice
provided within ninety (90) days thereafter.

     11.4 EFFECT OF EXPIRATION OR TERMINATION.

          (a) If P&U terminates the Agreement pursuant to Section 11.3, P&U
     shall remain obligated to pay Versicor in accordance with the terms and
     conditions of this Agreement for all sales of Products occurring
     thereafter, as offset by any damages offered by P&U as a result of
     Versicor's breach.

          (b) Expiration or termination of this Agreement shall not relieve the
     Parties of any obligation accruing prior to such expiration or termination.


                                       26
<PAGE>


          (c) The obligations and rights of the Parties stated under Article 9
     and Sections 7.3, 12.1 and 12.2 shall survive termination or expiration of
     this Agreement.

          (d) Without limiting any remedies otherwise available to P&U, if P&U
     terminates this Agreement for cause pursuant to Section 11.3, (a) all
     licenses set forth in Article 2 shall continue for so long as P&U is not in
     breach of its obligations to pay to Versicor all performance bonus payments
     and royalty payments in accordance with this Agreement and complies with
     the provisions of Articles 6 and 7 of this Agreement, and (b) Versicor
     shall return to P&U any Confidential Information of P&U.

          (e) without limiting any remedies otherwise available to Versicor, if
     Versicor terminates this Agreement for cause pursuant to Section 11.3, (a)
     all licenses granted by Versicor to P&U hereunder shall terminate and
     revert to Versicor, and (b) P&U shall return to Versicor any Confidential
     Information of Versicor.

                                   ARTICLE 12
                            PUBLICITY AND USE OF NAME

     12.1 PUBLICITY RELATED TO THIS AGREEMENT. Except as provided in Section
12.2 and as required by law, neither Party shall (i) disclose to any Third Party
any financial or other terms or conditions of this Agreement, which shall be
deemed to be Confidential Information, nor (ii) originate or initiate any
publicity, news release or public announcement, written or oral, whether to the
public, press, stockholders or otherwise, relating to the existence, scope or
economic terms of this Agreement, performance under it, or any of its specific
terms or conditions, without the express prior written consent of the other
Party.

     12.2 PUBLICITY RELATED TO THE RESEARCH PROJECT. Subject to the other
provisions of this Agreement, P&U may disclose Know-how generated by clinical
studies sponsored by P&U, or disclose any conclusions based on such Know-how. In
addition, P&U may announce periodically whether Phase I, II or III studies
involving any Product are underway or to be initiated. Any other disclosures of
information generated by the Research Project may only be made with the approval
of the JRC or P&U, as the case may be, except to the extent required by law or
to the extent such Know-how is publicly known through no fault of Versicor or
P&U.

     12.3 INVESTIGATOR PUBLICATIONS. Notwithstanding anything set forth in this
Agreement to the contrary, investigators who conduct clinical studies of the
Product sponsored by P&U may publish the results of their studies, provided they
agree to submit a draft of the publication to P&U for review a reasonable period
of time before submission to the publisher. Both Parties understand that neither
Party will have the right to approve or disapprove the publication. If P&U
believes the results of a sponsored study include Know-how that could be
patented, then the investigator will not be allowed to publish until a patent
application has been filed.

     12.4 POST-APPROVAL USE. Notwithstanding anything set forth in this
Agreement to the contrary, following approval of the Product, P&U shall be
permitted to use and publicize Know-how generated by the Research Project in
connection with the commercialization and promotion


                                       27
<PAGE>


of the Product, together with all clinical data and non-clinical data related to
the Product, in accordance with applicable laws and regulations.

     12.5 USE OF NAME AND TRADEMARKS. Unless specifically authorized by this
Agreement, neither Party shall use in any manner the names or trademarks of the
other Party without the express written consent of such Party.

                                   ARTICLE 13
                               DISPUTE RESOLUTION

     13.1 DISPUTES. The Parties recognize that disputes as to certain matters
may from time to time arise which relate to either Party's fights and/or
obligations under the Agreement. It is the objective of the Parties to establish
procedures to facilitate the resolution of such disputes in an expedient manner
by mutual cooperation and without resort to litigation.

     13.2 ATTEMPT TO RESOLVE. The Parties agree to take all reasonable efforts
to resolve in an amicable manner any dispute between them concerning diligence
obligations and/or questions of material breach and default in connection with
this Agreement. Any dispute between the Parties that cannot be resolved by the
representatives of Versicor and P&U on the JRC will be presented to the Chief
Executive Officer of Versicor and the Executive Vice President and President of
Research and Development of P&U, and such executives shall attempt in good faith
to resolve such dispute promptly. If such executives have not resolved the
dispute within sixty (60) days, either Party may seek to have the issue resolved
as otherwise provided herein.

     13.3 BINDING ARBITRATION. Except in the event of alleged breach, default or
lack of diligence by a bankrupt or insolvent Party, the Parties agree that any
such dispute that arises in connection with this Agreement and which cannot be
amicably resolved by the Parties shall be resolved by binding arbitration as set
forth in this Article 13, conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (AAA) by three (3)
arbitrators.

     13.4 WRITTEN NOTICE. If a Party intends to begin an arbitration to resolve
a dispute, such Party shall provide written notice to the other Party, informing
the other Party of such intention and the issues to be resolved. Within twenty
(20) business days after its receipt of such notice, the other Party may, by
written notice to the Party initiating arbitration, add additional issues to be
resolved.

     13.5 SELECTION OF ARBITRATORS. Within forty-five (45) days following the
receipt of the notice of arbitration, the Party referring the matter to
arbitration shall appoint an arbitrator and promptly notifying the other Party
of such appointment. The other Party shall, upon receiving such notice, appoint
a second arbitrator within twenty one (21) days, and the two (2) arbitrators
shall, within fifteen (15) days of the appointment of the second arbitrator,
agree on the appointment of a third arbitrator who will act with them and be
chairperson of the arbitration panel. In the event that either Party shall fail
to appoint an arbitrator within thirty (30) days after the commencement of the
arbitration proceeding, the arbitrator shall be appointed by the AAA in
accordance with the AAA's Rules. In the event of the failure of the two (2)
arbitrators to agree


                                       28
<PAGE>


within sixty (60) days after the commencement of the arbitration proceeding upon
to appoint the chairperson, the chairperson shall also be appointed by the AAA
in accordance with its Rules. The arbitrators shall not be employees, directors
or shareholders of either Party or of an Affiliate. Where applicable, the
arbitrators shall be independent experts in pharmaceutical product development
(including clinical development and regulatory affairs) in the U.S., Japan
and/or Europe.

     13.6 HEARINGS. The arbitrators shall conduct one or more hearings to allow
the Parties to present their positions regarding the dispute.

          (a) DISCOVERY. The arbitrators shall determine what discovery will be
     permitted, consistent with the goal of limiting the cost and time that the
     Parties must expend for discovery; provided the arbitrators shall permit
     such discovery as they deem necessary to permit an equitable resolution of
     the dispute. Any written evidence originally in a language other than
     English shall be submitted in English translation accompanied by the
     original or a true copy thereof. The arbitrators shall have sole discretion
     with regard to the admissibility of any evidence.

          (b) PROPOSED RULING. At least ten (10) business days prior, to a
     hearing, each Party must submit to the arbitrators and serve on the other
     Party a proposed ruling on each issue to be resolved. Such writings shall
     be limited to not more than fifty (50) pages.

          (c) TIME; TESTIMONY. Each Party shall be entitled to no more than
     eight (8) days of heating to present testimony or documentary evidence.
     Such time limitation shall include any direct, cross or rebuttal testimony,
     but such time limitation shall only be charged against the Party conducting
     such direct, cross or rebuttal testimony. It shall be the responsibility of
     the arbitrators' to determine whether the Parties have had the eight (8)
     days to which each is entitled.

          (d) REPRESENTATION BY AN ATTORNEY. Each Party shall have the right to
     be represented by counsel.

          (e) LOCATION. The arbitration shall take place in New York, NY.

     13.7 COSTS. The costs of the arbitration, including administrative and
arbitrators' fees, shall be shared equally by the Parties. Each Party shall bear
its own costs and attorneys' and witness' fees.

     13.8 DECISION. In any arbitration pursuant to this Agreement, the award or
decision shall be rendered by a majority of the members of the panel provided
for herein, with each member having one (1) vote. The arbitrators shall render a
written decision with their resolution of the dispute. The decision of the
arbitrators shall be final and non-appealable and binding on the Parties.


                                       29
<PAGE>


     13.9 REMEDY. a disputed performance or suspended performances pending the
resolution of the arbitration must be completed within thirty (30) days
following the final decision of the arbitrators or such other reasonable period
as the arbitrators determine in a written opinion.

     13.10 FINAL DECISION WITHIN ONE YEAR. Any arbitration subject to this
Article 13 shall be completed within one (I) year from the filing of notice of a
request for such arbitration.

                                   ARTICLE 14
                                  MISCELLANEOUS

     14.1 ACTIVITIES OUTSIDE OF COLLABORATION. Except as otherwise specifically
provided herein, all activities of the Parties outside of the Research Project
are outside of the scope of this Agreement and nothing herein is intended to
limit Versicor or its Affiliates from using the Versicor Know-how for other
purposes.

     14.2 AFFILIATES. Each Party may perform its obligations hereunder
personally or through one or more Affiliates, although each Party shall
nonetheless be solely responsible for the performance of its Affiliates. Either
Party shall permit any of its Affiliates to commit any act (including any act of
omission) which such Parties prohibited hereunder from committing directly.

     14.3 ASSIGNMENT.

          (a) This Agreement may not be assigned or otherwise transferred by
     either Party, without the consent of the other Party, except that P&U or
     Versicor may, without such consent, assign in whole or in part this
     Agreement and its rights and obligations hereunder to (i) its Affiliates or
     (ii) any party succeeding (by sale, merger, reverse merger, or otherwise)
     to substantially all of P&U's or Versicor's business and operations,
     provided, however, that (i)the Affiliate or successor, as the case may be,
     assumes and agrees to be bound by the provisions hereof, and (ii)in the
     case of an Affiliate, the assigning party remains obligated for its
     Affiliate's performance of this Agreement.

          (b) This Agreement shall be binding upon and inure to the benefit of
     the successors and permitted assigns of the Parties. Any assignment not in
     accordance with this Agreement shall be void.

     14.4 FORCE MAJEURE. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, fire, explosion, flood, strike, lockout, embargo, act of God, or
any other similar cause beyond the control of the defaulting Party; provided,
however, that the Party claiming force majeure has exerted all reasonable
efforts to avoid such force majeure and has given prompt notice to the other
Party of any such force majeure. The Party giving such notice shall be excused
from such of its obligations hereunder as it is disabled from performing for so
long as it is so disabled; provided, however, that Party commences and continues
to take reasonable and diligent actions to cure or remedy such force


                                       30
<PAGE>


majeure. In the event of any such force majeure event, 'the Parties shall meet
promptly to determine an equitable, solution to the effects of any such event.
Force majeure shall not include a Party's failure to perform any obligation
under this Agreement as a result of any Year 2000 Problem.

     14.5 NOTICES. Any notice or other communication pursuant to this Agreement
shall be sufficiently made or given of the date of mailing if sent to such Party
by facsimile on such date, with paper copy being sent by certified first class
mail, postage prepaid, or by next day express delivery service, addressed to it
at its address below (or such address as it shall designate by written notice
given to the other Party).

     in the case of P&U:

                  Senior Vice President, Corporate Licensing
                  95 Corporate Drive
                  Bridgewater, NJ 08807
                  Phone: (908) 3064505
                  Fax: (908) 306-4484

     With a copy to:

                  Vice President, Corporate Law
                  95 Corporate Drive
                  Bridgewater, NJ 08807
                  Phone: (908) 306-5441
                  Fax: (908) 306-4416

     In the case of Versicor:

                  Chief Executive Officer
                  Versicor Inc.
                  34790 Ardentech Court
                  Fremont, CA 94555
                  Fax number: (5.10) 739-3003

     With a copy to:

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

     14.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to any rules
of conflict of


                                       31
<PAGE>


laws, except that all questions concerning the construction or effect of any
Patents will be construed in accordance with the laws of the country granting
those rights.

     14.7 WAIVER. Except as specifically provided for herein, the failure of a
Party to insist upon the strict performance of any provision hereof or to
exercise any right or remedy shall not be deemed a waiver or a continuing waiver
of any right or remedy with respect to any existing or subsequent breach or
default.

     14.8 SEVERABILITY. If any provision of this Agreement is, to any extent,
held to be invalid or unenforceable, then (a)such invalid or unenforceable
provision shall not affect the validity of the remaining provisions of this
Agreement, which shall remain valid and be enforced to the fullest extent
permitted by law; and (b) the Parties hereto covenant and agree to renegotiate
any such provision in good faith in order to provide a reasonably acceptable
alternative to the provision that is invalid or unenforceable, it being the
intent of the Parties that the basic purposes of this Agreement are to be
effectuated. If any of the terms or provisions of this Agreement are in conflict
with any applicable statute or rule of law, then such terms or provisions shall
be deemed inoperative to the extent that they may conflict therewith and shall
be deemed to be modified to conform with such statute or rule of law unless such
modification would render such provision inconsistent with the intent of the
Parties.

     14.9 INDEPENDENT CONTRACTORS. It is expressly agreed that Versicor and P&U
shall be independent contractors and that the relationship between the two
Parties shall not constitute a partnership or agency of any kind. Neither
Versicor nor P&U shall have the authority to make any statements,
representations or commitments of any kind, or take any action, which shall be
binding on the other, without the prior written authorization of the Party to do
so.

     14.10 ENTIRE AGREEMENT. This Agreement sets forth all of the covenants,
promises, agreements, warranties, representations, conditions and understanding
between the Parties hereto with respect to the subject matter hereof and
supersedes and terminates all prior agreements and understanding between the
Parties, except all obligations of the Parties under the Confidentiality
Disclosure Agreement survive and are subject to further terms and conditions of
this Agreement. There are no covenants, promises, agreements, warranties,
representations conditions or understandings, either oral or written, between
the Parties other than as set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties hereto unless reduced to writing and signed by the respective
authorized officers of the Parties.

     14.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     14.12 USE OF TRADE NAMES. Subject to Article 12, neither Party will,
without prior written consent of the other Party, use any trademark or trade
name owned by the other Party, or owned by an Affiliate or Parent corporation of
the other Party, in any publication, publicity, advertising, or otherwise.


                                       32
<PAGE>


     14.13 CAPTIOUS AND TITLES. All captions and titles herein are for
convenience only and shall not be interpreted as having any substantive meaning.

     14.14 LIMITATION OF LIABILITY. Except with respect to the Parties'
respective indemnification obligations pursuant to Section 10.3, the Parties
expressly agree that, with respect to any claim by either Party against the
other arising out of any breach of this Agreement, the liability of the
breaching Party to the non-breaching Party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct money damages only,
and no event shall a Party be liable to the other for direct, incidental,
punitive, exemplary or consequential damages, even if advice of the possibility
of the same.

     14.15 REMEDIES NOT EXCLUSIVE. Except as specifically provided herein, the
remedies under this Agreement shall be cumulative and not alternative, and the
election of one remedy for a breach shall not preclude pursuit of other
remedies.


                                       33
<PAGE>


     IN WITNESS WHEREOF, the Parties hereto have cause this Agreement to be
executed in duplicate by their duly; authorized officers as of the date first
above written.

PHARMACIA AND UPJOHN                      VERSICOR, INC.


By: /s/ XXX ANDO                          By: /s/ G.F. HORNER III
    -------------------------------           -------------------------------
    Name:  XXX ANDO                           Name:  G.F. HORNER III
           ------------------------                  ------------------------
    Title: EVP & PRESIDENT OF R&D             Title: PRESIDENT & CEO
           ------------------------                  ------------------------


By:  /S/ DOUGLAS R. MORTON
    -------------------------------
   Name:  DOUGLAS R. MORTON
           ------------------------
   Title:  GVP TECHNOLOGY ACQ.
           ------------------------


                                       34
<PAGE>


                                   SCHEDULE A

                                COMPOUND PATENTS

TITLE: METHOD FOR SOLID PHASE SYNTHESIS OF ALCOHOL DERIVATIVES AND RESULTING
COMPOSITIONS
DOCKET NO.: 34231-20005.00
U.S. SERIAL NO.: 09/012,535
FILED: JANUARY 23, 1998

     This application discloses methods for the solid phase synthesis of
oxazolidinones; oxazolidinone combinatorial libraries and methods for their
synthesis; pharmaceutical compositions comprising bioactive oxazolidinone
compounds, including those adapted for oral, topical or parenteral use for the
treatment of bacterial infections; and methods of screening combinatorial
libraries to detect compounds with activity for treatment of disease states such
as inflammation, infection, hypertension, CNS disorders and cardiovascular
disorders. This application has now been abandoned in favor of the
continuation-in-part US application and corresponding PCT application
34231-20009.20/.40 filed on January 22, 1999.

TITLE: OXAZOLIDINONE COMBINATORIAL LIBRARIES, COMPOSITIONS AND METHODS OF
       PREPARATION DOCKET NO.: 34231.20009.00 U.S. SERIAL NO.: 09/086,702 FILED:
       MAY 28, 1998

     This application discloses combinatorial libraries comprising
oxazolidinones; methods of preparation of the libraries; biologically active
oxazolidinone compositions including compositions for use for the treatment of
bacterial infections; and methods of screening combinatorial libraries to detect
bioactive compounds useful for treatment of disease states such as inflammation,
infection, hypertension, central nervous system disorders and cardiovascular
disorders. This application has now been abandoned in. favor of the
continuation-in-part US application and corresponding PCT application
34231-20009.20/.40 filed on January 22, 1999.

TITLE: OXAZOLIDINONE COMBINATORIAL LIBRARIES, COMPOSITIONS AND METHODS OF
       PREPARATION
DOCKET NO.: 34231-20009.20 AND 20009.40
FILED: JANUARY 22, 1999

     Biologically active oxazolidinones, libraries and pharmaceutical
compositions, and methods of preparation are disclosed, wherein the biologically
active oxazolidinones may be used in pharmaceutical applications including use
as sedatives, anticonvulsants,


<PAGE>


muscle relaxants, anti-Parkinson agents, analgesics, antiinflammatories, local
anesthetics, muscle contractants, antibiotic, antiviral, antiretroviral,
antimalarials, diuretics, lipid regulating agents, antiandrogenic agents,
antiparasitics, neoplastics, antineoplastics and chemotherapy agents, as well as
for treatment of cardiovascular diseases, central nervous system diseases,
cancer, metabolic disorders, infections and dermatological diseases as well as
other biological disorders and infections. This application has been filed as a
continuation-in-part of the 20005100 and 20009.00 applications in the U.S. and
through the PCT on January 22, 1999.

     This application includes the disclosure of oxazolidinones included in the
20005.00 and 20009.00 cases, and thus discloses oxazolidinones and combinatorial
libraries thereof, as well as methods of preparation. Biologically active
oxazolidinone compositions, and methods of preparation of the oxazolidinone
compositions, also are disclosed. Methods of screening oxazolidinone libraries
for biologically active molecules for use in different disorders are disclosed.
Pharmaceutical compositions comprising the oxazolidinones are disclosed, in
forms such as those suitable for oral, topical or parenteral use.

     Pharmaceutical applications that are disclosed for which the oxazolidinones
can be used include use as sedatives, anticonvulsants, muscle relaxants,
anti-Parkinson agents, analgesics, antiinflammatories, local anesthetics, muscle
contractants, antibiotic, antiviral, monoamine oxidase inhibitors,
antiretroviral, antimalarials, diuretics, lipid regulating agents,
antiandrogenic agents, antiparasitics, neoplastics, antineoplastics and
chemotherapy agents, as well as for treatment of cardiovascular diseases,
central nervous system diseases, cancer, metabolic disorders, infections and
dermatological diseases as well as other biological disorders and infections.
The compounds are disclosed for use in infectious disorders such as central
nervous system infections, ear infections, infections of the cranial sinuses,
eye infections, infections of the oral cavity, respiratory tract infections,
genitourinary infections, gastrointestinal infections, and skin and skin
structure infections, caused by a variety of bacterial organisms, including Gram
positive and Gram negative aerobic and anaerobic bacteria.

     The application as filed includes claims present in the 20005.00 and
20009.00 cases to: oxazolidinone combinatorial libraries; methods of preparing
the combinatorial libraries; biologically active oxazolidinones derived from the
libraries; and methods of making biologically active oxazolidinones.
Additionally, this application as filed includes the following new claims:

     CLAIMS

     Claims are included that are directed to generic structures and subgeneric
structures of oxazolidinones. For example claims are directed to the formula:


<PAGE>


                                   [molecule]

                                       2c

     wherein:

          R(6) is acyl or sulfonyl;
          R(7) is aryl or heteroaryl;
          R(8) is C(1)-C(7) alkyl, NR, O, S, C(=O)NR, NRC(=O), C(=O), C(=O)O,
     OC(=O), S(=O), SO(2), SO(2)NR, NR. SO(2), NRCONR', or (CH(2))(n)O, wherein
     n = 0-6, and wherein R and R' are independently H, alkyl, heteroalkyl, aryl
     or heteroaryl; and
          R(9) is hydrogen, OH, alkyl, aryl, heteroalkyl, or heteroaryl.

     A large number of specific oxazolidinones that have been synthesized and
have been shown to have antimicrobial activity also are claimed including:

                               [molecule diagrams]


     A variety of subgeneric oxazolidinone formulas are claimed including
compounds of formula 5c:


<PAGE>


                               [molecule diagram]
                                       5C

     wherein:
          R(2), R(3), R(4) and R(5) are, independently, hydrogen, alkyl,
     heteroalkyl, heteroaryl or an electron withdrawing group;
          R(6) is acyl or sulfonyl;
          R(8) is C(1)-C(7) alkyl, NR, O, S, C(=O)NR, NRC(=O), C(=O)NOR C(=O),
     C(=O)O, OC(=O), S(=O), SO(2), SO(2)NR, NRSO(2), NRCONR', or (CH(2))(n)(O),
     wherein n = 0-6, and wherein R and R' are independently H, alkyl,
     heteroalkyl, aryl or heteroaryl; and
          Het(2) is a heterocyclic group.

     Additionally claimed are oxazolidinone compounds of formula 6C:

                               [molecule diagram]
                                       6C

     wherein:
          R(6) is acyl or sulfonyl;
          R(8) is C(1)-C(7) alkyl, NR, O, S, C(=O)NR, NRC(=O), C(=O)NOR C(=O),
     C(=O)O, OC(=O), S(=O), SO(2), SO(2)NR, NRSO(2), NRCONR', or (CH(2))(n)O,
     wherein n = 0-6, and wherein R and R' are independently H, alkyl,
     heteroalkyl, aryl or heteroaryl;
          Her(1) is heteroaryl, including thiophenyl, thiazolyl,
     1,3,4-thiadiazolyl, pyridinyl, pyrimidinyl, phenyl or fluorophenyl; and
          Het(2) is a heterocyclic group, including oxazolyl, isoxazolyl,
     1,2,4--oxadiazolyl, 1,3,4-oxadiazolyl, 1,2,3-oxadiazolyl, thiophenyl,
     thiazolyl, isothiazolyl, 1,2,3-thiadiazolyl, 1,2A-thiadiazolyl,
     1,3,4-thiadiazolyl, pyrrolyl, imidazolyl, pyrazolyl, 1,2,3-triazolyl,
     1,2,4-triazolyl, 1,2,3-triazinyl, 1,2,4-triazinyl, tetrazolyl, pyridinyl,
     pyrazinyl, pyrimidinyl, pyridazinyl, 1,2,4-triazinyl, 1,3,5-triazinyl, and
     1,2,4,5-tetrazinyl.

     Other claimed oxazolidinones include oxazolidinones of formulas 7c or 8c:


<PAGE>


               [molecule diagram]      [molecule diagram]
                       7C                      8C

     wherein:
          R(6) is acyl or sulfonyl;
          R(8) is C(1)-C(7) alkyl, NR, O, S, C(=O)NR, C(=O)NOR, NRC(=O), C(=O),
     C(=O)O, OC(=O), S(=O), SO(2), SO(2)NR, NRSO(2), NRCONR', or (CH(2))(n)O,
     wherein n = 0-6, and wherein R and R' are independently H, alkyl,
     heteroalkyl, aryl or heteroaryl;
          R(9) is alkyl, aryl, heteroalkyl, or heteroaryl; and R(10), R(11) and
     R(l2) are independently hydrogen, alkyl, aryl, heteroalkyl, electron
     withdrawing group, F, Cl, CN, NO(2), NR"R"', OR", SR", S(=O)R", SO(2)R",
     C(=O)R", C(=O)OR", OC(=O)R", C(=O)NR"R"', N(R")C(=O)R"', or N-oxide group
     in the pyridine nuclei, wherein R" and R"' are independently H, alkyl,
     heteroalkyl, aryl or heteroaryl.

     Further claimed are compounds of formula 11C, 12C OR 13C:

         [molecule diagram][molecule diagram][molecule diagram]
                 11C               12C               13C

     wherein:
          R(6) is acyl or sulfonyl;
          R(8) is C(1)-C(7) alkyl, NR, O, S, C(=O)NR, C(=O)NOR, NRC(=O), C(=O),
     C(=O)O, OC(=O), S(=O), SO(2), SO(2)NR, NRSO(2), NRCONR', or (CH(2))(n)O,
     wherein n - 0-6, and wherein R and R' are independently H, alkyl,
     heteroalkyl, aryl or heteroaryl;
          R(9) is alkyl, aryl, heteroalkyl, or heteroaryl; and
          R(10) and R11 are independently hydrogen, alkyl, aryl, heteroalkyl,
     electron withdrawing group, F, Cl, CN, NO(2), NR"R"', OR", SR", S(=O)R",
     SO2R", C(=O)R", C(=O)OR", OC(=O)R", C(--O)NR"R"', or N(R")C(=O)R"', wherein
     R" and R"' are independently H, alkyl, heteroalkyl, aryl or heteroaryl.

     Other subgeneric oxazolidinone structures that are claimed include
compounds of formula 14C, 15C or 16C:


<PAGE>


         [molecule diagram][molecule diagram][molecule diagram]
                 14C               15C               16C

     wherein:

          R(6) is acyl or sulfonyl,

          R(8) is C(1)-C(7) alkyl, NR, O, S, C(=O)NR, C(=O)NOR, NRC(=O), C(=O),
     C(=O)O, OC(=O), S(=O), SO(2), SO(2)NR, NRSO(2), NRCONR', or (CH(2))(n)O,
     wherein n = 0-6, and wherein R and R' are independently H, alkyl,
     heteroalkyl, aryl or heteroary;

          R(9) is alkyl, aryl, heteroalkyl, or heteroaryl, and

          R(10) is hydrogen, alkyl, aryl, heteroalkyl, electron withdrawing
     group, F, C1, CN, NO(2), NR"R"', OR", SR", S(=O)R", SO(2)R", C(=O)R",
     C(=O)OR", OC(=O)R", C(=O)NR"R"', or N(R")C(=O)R"', where R" and R"' are
     independently H, alkyl, heteroalkyl, aryl or heteroary.

      Also claimed are compositions for the treatment or prevention of an
infectious disorder comprising an effective amount of certain oxazolidinone
compounds and a pharmaceutically acceptable carrier, as well as methods of
treating or preventing an infectious disorder in a human or other animal
subject, comprising administering to the subject an effective amount of certain
oxazolidinone compounds.


<PAGE>


                                   SCHEDULE B

                             INCLUDED P&U COMPOUNDS







                                       B-1


<PAGE>


                                   SCHEDULE C

                               CHEMICAL STRUCTURE






                                    [DIAGRAM]







                                       C-1


<PAGE>


                           SCIENTIFIC SCOPE STATEMENT

                                       FOR

                         RESEARCH COLLABORATION BETWEEN

                         PHARMACIA & UPJOHN AND VERSICOR

                                OCTOBER 26, 1998

PURPOSE: The top priority objective will be to identify a community-use
oxazolidinone molecule (i.e. second generation). Proposed criteria for
Exploratory Candidate status are outlined below:

     -    ANTIBACTERIAL ACTIVITIES: MIC90's of all 1. ug/mL (versus
          STAPHYLOCOCCUS AUREUS); < 0.2 ug/mL (versus STREPTOCOCCUS PNEUMONIAE);
         < 2 ug/mL (versus HEMOPHILUS INFLUENZAE). Also antibacterial activity
         versus selected atypical Gm+ pathogens like Mycoplasma and Chlamydia
         would be desirable.

     -    ADME profile in animals that supports a BID (i.e. > MIC90 levels for
          least sensitive target pathogen for > 6 hours in man) or once daily
          regimen.

     -    Similar preclinical toxicology profile compared to linezolid.

     -    Ki versus MAO-A at least 50 fold higher than MIC90 for least sensitive
          target pathogen.

     -    Practical synthesis.

A second priority is a third generation oxazolidinone molecule for the hospital
that will add important Gm- coverage. Proposed criteria for Exploratory
Candidate status are outlined below:

     -    ANTIBACTERIAL ACTIVITIES: MIC90's versus Gm+ pathogens similar to
          those listed above for the second generation compound. In addition,
          MIC90 < 1 ug/mL versus the ENTEROCOCCI; MIC90's less than or equal to
          4 ug/mL for gram negative pathogens such AS E. COLI, Klebsiella, and
          Bacteroides sp.

     -    Solubility required for practical IV formulation.

     -    ADME, safety, and MAO-A profile as indicated above for second
          generation molecule; practical synthesis.


<PAGE>


SCOPE OF THE COLLABORATION: Both Pharmacia & Upjohn (P&U) and Versicor have made
significant investments in the oxazolidinone antibacterial area from their
respective perspectives. P&U has made significant research investments in the
field and has secured a leading position in the area with the clinical
development of linezolid (PNU-100766). Both companies propose to implement a
collaboration to identify later generation antibacterial compounds based on the
oxazolidinone chemical template.

The following specific elements are suggested for the proposed collaboration:

1.   A Joint Steering Committee (JSC) would be established with membership from
     both parties. a P&U representative would chair the JSC, and P&U would
     retain the right to decide any decision deadlocks.

2.   Agreement would be reached by the JSC concerning the target specifications
     for second and third generation oxazolidinone Exploratory Candidates and
     the testing funnels to be implemented. This would include agreement on
     where compounds will be synthesized and where and how they will be tested.
     Each of these aspects could be shared or handled uniquely at one location.

3.   P&U would intend to explore with Versicor the following:

     -    Examine Versicor's existing oxazolidinone database to identify any
          molecules that may already qualify as Exploratory Candidates.

     -    Evaluate Versicor's novel oxazolidinone templates for further SAR
          work.

     -    Provide Versicor with novel P&U oxazolidinone templates for
          combichem/parallel synthesis SAR expansion.

     -    Transfer novel oxazolidinone combichem methods to P&U. This could
          involve short term visits to either site.

1.   The JSC, working from the target specifications and a general understanding
     of current SAR, would propose specific oxazolidinone templates for
     expansion by combichem and/or parallel synthesis techniques at Versicor.
     Selection of templates for expansion and specific plans for expansion would
     be hypothesis driven.

2.   Compounds synthesized would then be tested in the agreed upon test systems.
     The JSC would evaluate the results and determine next steps. SAR hypotheses
     would be modified as appropriate by the JSC.

3.   Inventorship would be according to international patent laws.


<PAGE>


4.   The JSC would ultimately approve selected compounds appropriate for
     optimization and determine which party would be responsible for this
     activity. This could be a shared responsibility.

5.   The JSC would ultimately endorse compounds of interest which meet or exceed
     the target specifications and that are appropriate for further optimization
     leading to exploratory development. It is understood that P&U would be
     responsible for all activities following acceptance in the clinical
     development system.