PRINCETON UNIVERSITY LICENSE AGREEMENT

     This Agreement is made and entered into this 15th day of April, 1998,
effective as of the 30th day of June 1997 (the Effective Date") by and between
The Trustees of PRINCETON UNIVERSITY, a corporation duly organized and existing
under the laws of the STATE OF NEW JERSEY, U.S.A. (hereinafter referred to as
PRINCETON), and Interneuron Pharmaceuticals, Inc., a corporation duly organized
under the laws of Delaware and having its principal office at 99 Hayden Avenue,
Lexington MA 02173 (hereinafter referred to as LICENSEE).

                                   WITNESSETH:

     WHEREAS, PRINCETON is the owner of certain "Patent Rights" (as later
defined herein) relating to Princeton University Case #97-1387-1 and has the
right to grant licenses under said Patent Rights; and

     WHEREAS, PRINCETON desires to have the Patent Rights utilized in the public
interest and is willing to grant an exclusive license thereunder; and

     WHEREAS, PRINCETON and LICENSEE entered into a Research Agreement on April
29, 1997 (the "Research Agreement") granting Licensee an exclusive option to
acquire an exclusive worldwide license, with the right to sublicense, to any
inventions and confidential information, including any Patent Rights arising
under the Research Agreement;

     WHEREAS, LICENSEE desires to obtain an exclusive license under the Patent
Rights upon the terms and conditions hereinafter set forth; and

     WHEREAS, LICENSEE has represented to PRINCETON, to induce PRINCETON to
enter into this Agreement, that LICENSEE intends to commit itself to a thorough,
vigorous and diligent program of exploiting the Patent Rights with the intention
that public utilization shall result therefrom;

     WHEREAS, PRINCETON, LICENSEE, Transcell Technologies, Inc. ("Transcell")
and Merck & Co., Inc. ("Merck") entered into a Side Agreement effective as of
June 30, 1997 (the "Side Agreement") and PRINCETON and LICENSEE desire to have
this Agreement be on terms that are consistent with Merck's rights under the
Side Agreement;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

                            ARTICLE I - DEFINITIONS

     For the purposes of this Agreement, the following words and phrases shall
have the following meanings:



<PAGE>

     1.1 "Affiliate" shall mean any corporation, company, or other business
entity controlled by, controlling or under common control with LICENSEE or
Princeton, as the case may be. For this purpose, control shall mean direct or
indirect beneficial ownership of more than fifty percent (50%) of the voting
stock of, or a fifty percent (50%) or greater interest in the income of such
corporation or other business entity or fifty percent (50%) or greater
management control over a joint venture, or such other relationship as, in fact,
constitutes actual control.

     1.2 "Compound" shall mean any chemical entity that is synthesized in and/or
discovered in or during the Research Program.

     1.3 "Compound Analog" shall mean any derivative, homolog or analog of a
Compound.

     1.4 "LICENSEE" shall mean Interneuron Pharmaceuticals, Inc. ("IPI") and any
Affiliate or Subsidiary of IPI (except Transcell).

     1.5 "Licensed Product(s)" shall mean any product which includes a Compound
or a Compound Analog which

     (a)  is covered in whole or in part by (i) a pending claim contained in a
          Patent Rights Patent Application in the country in which the Licensed
          Product(s) is made, used or sold or (ii) a valid and unexpired claim
          contained in a Patent Rights Patent in the country in which the
          Licensed Product(s) is made, used or sold.

     (b)  is manufactured using a process covered in whole or in part by (i) a
          pending claim contained in a Patent Rights Patent Application in the
          country in which the Compound(s) or Compound Analog(s) is(are)
          imported, used or sold or (ii) a valid or unexpired claim contained in
          a Patent Rights Patent in the country in which the Compound or
          Compound Analog is(are) made, used, or sold.

     1.6 "Licensed Process(es)" shall mean any process covered in whole or in
part by (i) a pending claim contained in a Patent Rights Patent Application or
(ii) a valid and unexpired claim contained in a Patent Rights Patent in the
country in which the Process is used.

     1.7 "Milestone Payment" shall mean non-refundable cash payments received by
LICENSEE from a Sublicensee upon the achievement of specified milestones related
to Licensed Products or use of Licensed Processes excluding, without limitation,
amounts received by LICENSEE for product development or other services, license,
sublicense or option fees or equity investments.

     1.8 "Net Revenues" shall mean all amounts actually received by LICENSEE on
account of its billings for the Licensed Product(s) or Licensed Process(es) sold
by LICENSEE, less the sum of the following:



                                       2
<PAGE>

     (a)  Discounts and free goods allowed in amounts customary in the trade;

     (b)  Sales, tariff duties and/or use taxes directly imposed and with
          reference to particular sales;

     (c)  Outbound transportation prepaid or allowed;

     (d)  Amounts allowed or credited on returns, including, but not limited to,
          allowances or credits to customers on account of rejection or return
          of Licensed Product; and

     (e)  Actual losses incurred due to changes in foreign currency exchange
          rates and an allowance for bad debt expense.

     Net Revenues shall not include amounts received by LICENSEE as payment for
product development services or other services rendered by LICENSEE.

     1.9 "Net Revenues of Sublicensee" shall mean all amounts actually received
by Sublicensee on account of billings by Sublicensee for Licensed Product(s)
sold and Licensed Processes used or sold, by Sublicensee, less the sum of the
following:

     (a)  Discounts and free goods allowed in amounts customary in the trade;

     (b)  Sales, tariff duties and/or use taxes directly imposed and with
          reference to particular sales;

     (c)  Outbound transportation prepaid or allowed;

     (d)  Amounts allowed or credited on returns, including, but not limited to,
          allowances or credits to customers on account of rejection or return
          of Licensed Product; and

     (e)  Actual losses incurred due to changes in foreign currency exchange
          rates and an allowance for bad debt expense.

     1.10 "Net Ancillary Product Royalties" shall mean royalties actually
received by LICENSEE from its Sublicensees on account of Sublicensee's sales of
Licensed Products and/or sale or use of Licensed Processes (giving effect to any
deductions or credits against such sales or royalties).

     1.11 "Party(ies)" shall mean person(s) or entity(ies) who is(are) party to
the Agreement.

     1.12 "Patent Rights" shall mean:

     (a)  Any United States and/or foreign patent applications arising out of
          the Research Program as set forth in the Research Agreement, including
          any



                                       3
<PAGE>

          continuations, continuations-in-part, divisionals, reissues,
          reexaminations, or extensions thereof (hereinafter referred to as
          "Patent Rights Patent Applications"), and

     (b)  Any United States and/or foreign patents issuing from any of the
          foregoing in 1.12(a) (hereinafter referred to as the "Patent Rights
          Patents").

     1.13 "Research Program" shall mean the research project described in, and
conducted during the term of, the Research Agreement, which is attached hereto
as Appendix A.

     1.14 "Sublicense" shall mean a sublicense granted by LICENSEE.

     1.15 "Sublicensee" shall mean any Third Party licensed by LICENSEE to make,
have made, import, export, use or sell any Licensed Product or to use or sell
any Licensed Process.

     1.16 "Subsidiary" shall mean any corporation, company, or other entity,
more than fifty percent (50%) of whose voting stock is owned or controlled
directly or indirectly by IPI.

     1.17 "Third Party" shall mean person(s) or entity(ies) who or which is(are)
neither a Party nor an Affiliate of a Party.

     1.18 "Transcell License Agreement" shall mean the license agreement
effective as of October 14, 1993, as amended on February 21, 1997, between
Princeton and Transcell.

                         ARTICLE II - GRANT OF LICENSE

     2.1 PRINCETON hereby grants to LICENSEE an exclusive (even as to Princeton)
worldwide license, with the right to sublicense, under the Patent Rights to
make, have made, use, lease and/or sell the Licensed Product(s), and to practice
the Licensed Process(es) to the full end of the term for which the Patent Rights
are granted unless sooner terminated as hereinafter provided.

     2.2 LICENSEE agrees to use commercially reasonable efforts to provide that
LICENSED PRODUCTS leased or sold in the United States shall be manufactured
substantially in the United States.

     2.3 PRINCETON expressly reserves the right to use the Patent Rights,
Licensed Products, Licensed Processes, and associated information and technology
for Princeton's own educational, research and other non-commercial purposes
only, on the terms and conditions as set forth in the Research Agreement and
this Agreement, provided, however, that PRINCETON shall notify LICENSEE of any
additional intellectual property that may arise from such use and such
intellectual property shall become part of and subject to the terms of this
Agreement.



                                       4

<PAGE>

     2.4 LICENSEE shall have the right to sublicense the Patent Rights granted
pursuant to this Agreement to any Third Party (other than Transcell); provided
that LICENSEE shall not grant any such Sublicense without Princeton's written
consent, which consent shall not be unreasonably withheld.

     2.5 LICENSEE agrees that any sublicenses granted by it shall have privity
of contract between PRINCETON and Sublicensee such that the obligations of this
Agreement shall be binding upon the Sublicensee as if it were in the place of
LICENSEE. LICENSEE further agrees to attach copies of Articles II, V, VII, IX,
X, XII, XIII and XV of this Agreement to all sublicense agreements, provided,
however, that notwithstanding the foregoing, in accordance with Paragraph 1 of
the Side Agreement, (i) only the following provisions of this Agreement shall
apply to Merck as if it were in the place of LICENSEE, to the extent, and only
to the extent, that such provisions relate to the Merck Rights and to the
Merck/Transcell Collaboration Agreement (as defined in the Side Agreement):
Section 2.2 (manufacture in the U.S.); Section 10.2 (indemnification); Article
XII (non-use of names); and Article XIII (export controls), and (ii) all other
rights and obligations of LICENSEE under this Agreement shall be rights and
obligations of LICENSEE only, except as otherwise provided in this Agreement or
the Side Agreement.

     2.6 LICENSEE agrees to forward to PRINCETON a copy of any and all fully
executed sublicense agreements, and further agrees to forward to PRINCETON
annually a copy of such reports received by LICENSEE from its Sublicensees
during the preceding twelve (12) month period under the sublicenses as shall be
pertinent to a royalty accounting under said sublicense agreements.

                          ARTICLE III - DUE DILIGENCE

     3.1 LICENSEE shall use its best efforts to commercialize the Licensed
Product(s) and/or Licensed Process(es) through a thorough, vigorous and
diligent program for exploitation of the Patent Rights. The progress and results
of LICENSEE's efforts shall be reported to PRINCETON through annual reports.

     3.2 A sublicense by LICENSEE of the Patent Rights in accordance with the
terms of this Agreement shall satisfy the obligations of LICENSEE set forth in
Section 3.1; provided, however, that if the sublicense is terminated with
respect to a Licensed Product, LICENSEE shall continue to have the obligations
set forth in Section 3.1. In such event, LICENSEE shall also submit a
development plan to PRINCETON on an annual basis relating to the budget and
estimated time for development of Licensed Products.

     3.3 LICENSEE's failure to perform in accordance with Paragraphs 3.1 and 3.2
above shall be grounds for PRINCETON to have the right to terminate this
Agreement pursuant to Paragraph 7.3 hereof.



                                       5

<PAGE>

                      ARTICLE IV - ROYALTIES AND PAYMENTS

     4.1 For the rights, privileges and license granted hereunder, LICENSEE
shall pay to PRINCETON in the manner hereinafter provided to the end of the term
of the Patent Rights or until this Agreement shall be terminated as hereinafter
provided:

     (a)  A License Issue Fee of One Hundred Thousand Dollars ($100,000), which
          shall be deemed earned immediately upon the execution of this
          Agreement and payable within ten (10) days after such execution.

     (b)  License Maintenance Fees of One Hundred Thousand Dollars ($100,000)
          per year, payable on each anniversary of the Effective Date of this
          Agreement until the earlier of the year in which the first commercial
          sale of Licensed Product or Licensed Process occurs or the termination
          of the Agreement occurs.

     (c)  In the event LICENSEE is selling Licensed Products directly, a royalty
          in an amount equal to (i) three percent of Net Revenues in any year of
          Licensed Products arising from Compounds, and (ii) one and one-half
          percent of Net Revenues in any year of Licensed Products arising from
          Compound Analogs, provided, however, that fifty percent (50%) of any
          other royalties accrued or paid by Licensee in any year to a Third
          Party in connection with the manufacture or sale of Licensed Products
          may be deducted from the amounts due under this Paragraph.

     (d)  In the event that LICENSEE grants a Sublicense, a royalty in an amount
          equal to (i) twenty-five percent (25%) of Net Ancillary Product
          Royalties in any year of Licensed Products arising from Compound,
          subject to a minimum royalty equal to 1.5% of Net Revenue of
          Sublicensee, and (ii) fifteen percent (15%) of Net Ancillary Product
          Royalties in any year of Licensed Products arising from analogs of
          Compound, subject to a minimum royalty equal to a 1.0% of Net Revenue
          of Sublicensee, provided, however, that fifty percent (50%) of any
          other royalties accrued or paid by LICENSEE or a Sublicensee in any
          year to a Third Party in connection with the sale of Licensed Products
          may be deducted from the amounts due under this Paragraph.

     (e)  A payment in an amount equal to Fifty Percent (50%) of any Sublicense
          Fees received by LICENSEE from a Sublicensee of Licensed Product,
          provided, however, that this provision shall be subject to maximum
          aggregate payments to Princeton of $500,000, which payment with
          respect to the sublicense to Merck is due and payable retroactive to
          the Effective Date of this Agreement and payable within ten (10) days
          of signing of this License Agreement.



                                       6
<PAGE>

     (f)  Payments based on Milestone Payments received by LICENSEE from a
          Sublicensee in an amount equal to

          (i)  34% of cumulative Milestone Payments up to $1.5 Million;

          (ii) 25% of cumulative Milestone Payments from $1.5 Million to $4.5
               Million;

         (iii) 20% of cumulative Milestone Payments from $4.5 Million to $8.5
               Million;

          (iv) 15% of cumulative Milestone Payments from $8.5 Million to $14.5
               Million; and

          (v)  10% of cumulative Milestone Payments greater than $14.5 Million.

     4.2 No multiple royalties shall be payable to PRINCETON pursuant to the
License if the manufacture, use or sale of a Licensed Product or practice of the
Licensed Process is covered by more than one patent application or patent
contained in the Patent Rights, if such royalty or payment may be covered under
more than one of the above provisions, or if a royalty is payable in connection
with the manufacture, use, or sale of such Licensed Product under the Transcell
License Agreement, provided, however, that if a royalty would be payable to
Princeton in connection with the manufacture, use or sale of such Licensed
Product under the Transcell License Agreement, then for such Licensed Product,
PRINCETON shall be entitled to select, by notifying LICENSEE in writing prior to
the First Commercial Sale of such Licensed Product, whether to receive the
royalty rate set forth under this Agreement or the royalty rate set forth under
the Transcell License Agreement.

     4.3 Royalty payments shall be paid in United States dollars in Princeton,
New Jersey, or at such other place as PRINCETON may reasonably designate
consistent with the laws and regulations controlling in any foreign country. Any
withholding taxes which LICENSEE or any Sublicensee shall be required by law to
withhold on remittance of the royalty payments shall be deducted from royalties
paid to PRINCETON. LICENSEE shall furnish PRINCETON with copies of all official
receipts for such taxes. If any currency conversion shall be required in
connection with the payment of royalties hereunder, such conversion shall be
made by using the exchange rate prevailing at a first-class foreign exchange
bank on the last business day of the calendar quarterly reporting period to
which such royalty payments relate, provided, however, that in the event a
calculation is made based on sales by Merck, the rate of exchange to be used in
computing the amount of currency equivalent in United States dollars shall be
made at the rate of exchange utilized by Merck in its worldwide accounting
system, prevailing in the fourth to the last business day of the Calendar
Quarter in which such payments relate. Such rated of exchange is that rate
quoted by Reuters Ltd. for the spot purchase of U.S. dollars at 7:15 a.m.
Eastern Standard Time on such day.



                                       7
<PAGE>

                        ARTICLE V - REPORTS AND RECORDS

     5.1 LICENSEE shall keep full, true and accurate books of account containing
all particulars that may be necessary for the purpose of showing the amount
payable to PRINCETON by way of royalty as aforesaid. Said books of account shall
be kept at LICENSEE's principal place of business or the principal place of
business of the appropriate division of LICENSEE to which this Agreement
relates. Said books and the supporting data shall be open at all reasonable
times, for three (3) years following the end of the calendar year to which they
pertain, to the inspection of the PRINCETON Internal Audit Division and/or an
independent certified public accountant retained by PRINCETON and/or a certified
public accountant employed by PRINCETON for the purpose of verifying LICENSEE's
royalty statement or compliance in other aspects with this Agreement.

     5.2 LICENSEE, within forty-five (45) days after March 31, June 30,
September 30 and December 31 of each year, shall deliver to PRINCETON true and
accurate reports, giving such particulars of the business conducted by LICENSEE
during the preceding quarter under this Agreement as shall be pertinent to a
royalty accounting hereunder. These shall include at least the following:

          (a)  All Licensed Products manufactured and sold.

          (b)  Total amounts actually received by LICENSEE on account of its
               billings for Licensed Product sold.

          (c)  Accounting for all the Licensed Process(es) used or sold.

          (d)  Deductions applicable as provided in Paragraph 1.8.

          (e)  Total royalties due.

          (f)  Names and addresses of all Sublicensees of LICENSEE.

          (g)  Annually, within one hundred (100) days of LICENSEE's fiscal year
               end, LICENSEE's certified financial statements for the preceding
               twelve (12) months including, at a minimum, a Balance Sheet and
               an Operating Statement.

     5.3 With each such report submitted, LICENSEE shall pay to PRINCETON the
royalties due and payable under this Agreement, provided that no payment to
PRINCETON shall be payable in the event that the remittance of royalties from
foreign countries to the accounts of LICENSEE in the United States shall be
blocked by exchange controls in foreign countries, which exchange controls are
beyond the control of LICENSE, in which case, such royalties shall be held in
escrow and paid to PRINCETON at such time as such exchange controls are no
longer blocked. If no royalties shall be due, LICENSEE shall so report.



                                       8
<PAGE>

                        ARTICLE VI - PATENT PROSECUTION

     6.1 PRINCETON and LICENSEE agree to cooperate fully in applying for,
obtaining, prosecuting and maintaining patents.

     6.2 PRINCETON shall promptly disclose to LICENSEE, in writing, any
PRINCETON-owned or Jointly-owned Inventions disclosed to PRINCETON. PRINCETON
shall file and prosecute U.S. and foreign patent applications in its name at
LICENSEE's request and expense, using mutually agreed upon patent counsel, on
such PRINCETON-owned or Jointly-owned Inventions as may, in LICENSEE's judgment,
become appropriate during the term of this Agreement, provided, however, that
notwithstanding the foregoing, Merck shall have the rights set forth in
Paragraph 3 of the Side Agreement. Such patent applications and any patents
resulting therefrom shall be subject to the terms of this Agreement.

     6.3 PRINCETON shall have the opportunity to file patent applications in its
name at its own expense for those PRINCETON-owned or Jointly-owned Inventions
made by its personnel and for which Licensee does not agree, within thirty (30)
days after notification by PRINCETON of its intent to file a patent application,
to pay for PRINCETON to file said patent applications, provided, however, that
notwithstanding the foregoing, Merck shall have the rights set forth in
Paragraph 3 of the Side Agreement. Such patent applications and any patents
resulting therefrom shall not be subject to the terms of this Agreement.

     6.4 LICENSEE patent counsel may prepare, file and prosecute all U.S.
applications for any Jointly-owned Inventions, at LICENSEE's sole cost and
expense, provided, however, that PRINCETON shall have the right to review and
approve the application, and be consulted on all prosecution actions, and
foreign filing decisions. PRINCETON's right, title and interest in the
Jointly-owned Inventions disclosed or claimed in such patent applications or in
any such patents shall be subject to the terms of this Agreement.

                           ARTICLE VII - TERMINATION

     7.1 If LICENSEE shall become bankrupt or insolvent, or shall file a
petition in bankruptcy, or if the business of LICENSEE shall be placed in the
hands of a receiver, assignee or trustee for the benefit of creditors, whether
by the voluntary act of LICENSEE or otherwise, this Agreement shall
automatically terminate, provided, however, that notwithstanding the foregoing,
Merck shall have the rights set forth in Paragraph 5 of the Side Agreement with
respect to this Agreement.

     7.2 Should LICENSEE fail in its payment to PRINCETON of royalties due in
accordance with the terms of this Agreement, PRINCETON shall have the right to
serve notice upon LICENSEE by certified mail at the address designated in
Article XIV hereof, of its intention to terminate this Agreement within thirty
(30) days after receipt of said notice of termination unless LICENSEE shall pay
to PRINCETON, within the thirty (30) day period, all such royalties due and
payable. Upon the expiration of the thirty (30) day period, if LICENSEE shall
not have paid all such royalties due and payable, the rights, privileges and



                                       9
<PAGE>

license granted hereunder shall thereupon immediately terminate, provided,
however, that notwithstanding the foregoing, Merck shall have the rights set
forth in Paragraph 6 of the Side Agreement in the event of any failure to pay or
other material breach or default by LICENSEE under this Agreement.

     7.3 Upon any material breach or default of this Agreement by LICENSEE,
other than those occurrences set out in Paragraphs 7.1 and 7.2 hereinabove,
which shall always take precedence in that order over any material breach or
default referred to in this Paragraph 7.3, PRINCETON shall have the right to
terminate this Agreement and the rights, privileges and license granted
hereunder by ninety (90) days' notice by certified mail to LICENSEE, provided,
however, that notwithstanding the foregoing, Merck shall have the rights set
forth in Paragraph 6 of the Side Agreement in the event of any failure to pay or
other material breach or default by LICENSEE under this Agreement. Such
termination shall become effective unless LICENSEE shall have cured any such
breach or default prior to the expiration of the ninety (90) day period from
receipt of PRINCETON notice of termination, provided, however, that
notwithstanding the foregoing, Merck shall have the rights set forth in
Paragraph 6 of the Side Agreement in the event of any failure to pay or other
material breach or default by LICENSEE under this Agreement.

     7.4 LICENSEE shall have the right to terminate this Agreement at any time
on six (6) months' notice by certified mail to PRINCETON in whole or with
respect to designated countries or designated Patent Rights, Licensed Products
or Licensed Processes.

     7.5 Upon termination of this Agreement for any reason, nothing herein shall
be construed to release either party from any obligation that matured prior to
the effective date of such termination. LICENSEE and/or any Sublicensee thereof
may, however, after the effective date of such termination, sell all Licensed
Products, and complete Licensed Products in the process of manufacture at the
time of such termination and sell the same, provided that LICENSEE shall pay to
PRINCETON the royalties thereon as required by Article IV of this Agreement and
shall submit the reports required by Article V hereof on the sales of Licensed
Products.

                           ARTICLE VIII - ARBITRATION

     8.1 Except as to issues relating to the validity, construction or effect of
any patent licensed hereunder, any and all claims, disputes or controversies
arising under, out of or in connection with this Agreement, which have not been
resolved by good faith negotiations between the parties, shall be resolved by
final and binding arbitration in Princeton, New Jersey under the rules of the
American Arbitration Association then obtaining. The arbitrators shall have no
power to add to, subtract from or modify any of the terms or conditions of this
Agreement. Any award rendered in such arbitration may be enforced by either
party in either the courts of the State of New Jersey or in the United States to
whose jurisdiction for such purposes PRINCETON and LICENSEE each hereby
irrevocably consents and submits.



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<PAGE>

     8.2 Claims, disputes or controversies concerning the validity, construction
or effect of any patent licensed hereunder shall be resolved in any court having
jurisdiction thereof.

     8.3 In the event that, in any arbitration proceeding, any issue shall arise
concerning the validity, construction or effect of any patent licensed
hereunder, the arbitrators shall assume the validity of all claims as set forth
in such patent; in any event the arbitrators shall not delay the arbitration
proceeding for the purpose of obtaining or permitting either party to obtain
judicial resolution of such issue, unless an order staying such arbitration
proceeding shall be entered by a court of competent jurisdiction. Neither party
shall raise any issue concerning the validity, construction or effect of any
patent licensed hereunder in any proceeding to enforce any arbitration award
hereunder or in any proceeding otherwise arising out of any such arbitration
award.

                           ARTICLE IX - INFRINGEMENT

     9.1 LICENSEE and PRINCETON shall promptly inform the other in writing of
any alleged infringement of which it shall have notice by a third party of any
patents within the Patent Rights and provide such other with any available
evidence of infringement.

     9.2 During the term of this Agreement, LICENSEE shall have the right, but
shall not be obligated, to prosecute at its own expense any such infringements
of the Patent Rights and, in furtherance of such right, PRINCETON hereby agrees
that LICENSEE may join PRINCETON as a party plaintiff in any such suit, without
expense to PRINCETON, provided, however, that notwithstanding the foregoing,
Merck shall have the rights set forth in Paragraph 4 of the Side Agreement. The
total cost of any such infringement action commenced or defended solely by
LICENSEE shall be borne by LICENSEE, and LICENSEE shall keep any recovery or
damages for past infringements derived therefrom. No settlement, consent
judgment or other voluntary final disposition of the suit may be entered into
without the consent of PRINCETON, which consent shall not unreasonably be
withheld. LICENSEE shall indemnify PRINCETON against any order for costs that
may be made against PRINCETON in such proceedings.

     9.3 If within six (6) months after having been notified of any alleged
infringement, LICENSEE shall have been unsuccessful in persuading the alleged
infringer to desist and shall not have brought and shall not be diligently
prosecuting an infringement action, or if LICENSEE shall notify PRINCETON at any
time prior thereto of its intention not to bring suit against any alleged
infringer, then, and in those events only, PRINCETON shall have the right, but
shall not be obligated, to prosecute at its own expense any infringement of the
Patent Rights, and PRINCETON may, for such purposes, join LICENSEE as party
plaintiff, provided, however, that notwithstanding the foregoing, Merck shall
have the rights set forth in Paragraph 4 of the Side Agreement.

     9.4 In the event that LICENSEE shall undertake the enforcement and/or
defense of the Patent Rights by litigation, LICENSEE may withhold up to fifty
percent (50%) of the royalties otherwise thereafter due PRINCETON hereunder and
apply the same toward



                                       11
<PAGE>

reimbursement of its expenses, including reasonable attorneys' fees, in
connection therewith. Any recovery of damages by LICENSEE for any such suit
shall be applied first in satisfaction of any unreimbursed expenses and legal
fees of LICENSEE relating to the suit, and next toward reimbursement of
PRINCETON for any royalties past due or withheld and applied pursuant to this
Article IX. The balance remaining from any such recovery shall be divided
equally between LICENSEE and PRINCETON.

     9.5 In the event that a declaratory judgment action alleging invalidity or
non-infringement of any of the Patent Rights shall be brought against LICENSEE,
and LICENSEE is not diligently defending such action, PRINCETON, at its option,
shall have the right, within ninety (90) days after commencement of such action,
to intervene and take over the sole defense of the action at its own expense,
provided, however, that notwithstanding the foregoing, Merck shall have the
rights set forth in Paragraph 4 of the Side Agreement.

     9.6 In any infringement suit as either party may institute to enforce the
Patent Rights pursuant to this Agreement, the other party hereto shall, at the
request and expense of the party initiating such suit, cooperate in all respects
and, to the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.

     9.7 LICENSEE, during the exclusive period of this Agreement, shall have the
sole right in accordance with the terms and conditions herein to sublicense any
alleged infringer under the Patent Rights for future infringements.

                         ARTICLE X - PRODUCT LIABILITY

     10.1 PRINCETON by this Agreement makes no representation as to the
patentability and/or breadth of the inventions and/or discoveries involved in a
Licensed Patent. PRINCETON by this Agreement makes no representation as to
patents now held or which will be held by others in the field of the Licensed
Products for a particular purpose.

     10.2 LICENSEE agrees to defend, indemnify and hold PRINCETON harmless from
and against all liability, demands, damages, expense or losses for death,
personal injury, illness or property damage arising (a) out of use by LICENSEE
of its transferees of inventions licensed or information furnished under this
Agreement, or (b) out of any use, sale or other disposition by LICENSEE or its
transferees of products made by use of such inventions or information. As used
in this clause, PRINCETON includes its Trustees, Officers, Agents, Employees and
Students and "LICENSEE" includes its Affiliates, Subsidiaries, Contractors and
Sub-Contractors.

     10.3 In discharge of the above, on or prior to the date on which a clinical
trial commences with respect to a Licensed Product (the "Insurance Commencement
Date"), LICENSEE will maintain general liability insurance in the amount of at
least One Million Dollars ($1,000,000) per occurrence with a deductible of not
more than $10,000 per occurrence with commercially reasonable insurers against
damage to or destruction of property



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<PAGE>

and injury to or death of individuals and against such other risks as PRINCETON
may reasonably request arising out of or in connection with any of the Licensed
Products. PRINCETON, and its respective officers, trustees, and employees, will
be named insureds under all such insurance. Such insurance will also provide
that PRINCETON will be given notice of any modification thereof and at least ten
(10) days prior written notice of cancellation or termination and the reason
therefor. LICENSEE will furnish PRINCETON upon request, and in any event on the
Insurance Commencement Date and on each anniversary of the Insurance
Commencement Date, written confirmation issued by the insurer or an independent
insurance agent confirming that insurance is maintained in accordance with the
above requirements.

                            ARTICLE XI - ASSIGNMENT

     11.1 LICENSEE may assign or otherwise transfer this Agreement and the
license granted hereby and the rights acquired by it hereunder, so long as such
assignment or transfer shall be to an Affiliate (other than Transcell), or shall
be accompanied by a sale or other transfer of LICENSEE's entire business or of
that part of LICENSEE's business to which the license granted hereby relates or
as PRINCETON may otherwise consent, which consent shall not be unreasonably
withheld. LICENSEE shall give PRINCETON thirty (30) days prior notice of any
such assignment and transfer requiring PRINCETON's consent, and if PRINCETON
raises no reasonable objection to such assignment or transfer, in writing within
thirty (30) days after the giving of such notice and stating the reasons for
such objection, then PRINCETON shall be deemed to have approved such assignment
or transfer; provided, however, PRINCETON shall not be deemed to have approved
such assignment and transfer unless such assignee or transferee shall have
agreed in writing to be bound by the terms and conditions of this Agreement.
Upon such assignment or transfer and agreement by such assignee or transferee,
the term LICENSEE as used herein shall include such assignee or transferee. If
LICENSEE shall sell or otherwise transfer its entire business or that part of
its business to which the license granted hereby relates and the transferee
shall not have agreed in writing to be bound by the terms and conditions of this
Agreement, or new terms and conditions shall not have been agreed upon within
sixty (60) days of such sale or transfer, PRINCETON shall have the right to
terminate this Agreement.

                         ARTICLE XII - NON-USE OF NAMES

     12.1 LICENSEE shall not use the name PRINCETON nor any adaptation thereof
in any advertising, promotional or sales literature without prior written
consent obtained from PRINCETON, in each case, except that LICENSEE may state
that it is licensed by PRINCETON under one or more of the patents and/or
applications comprising the Patent Rights.



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<PAGE>

                         ARTICLE XIII - EXPORT CONTROLS

     13.1 It is understood that PRINCETON is subject to United States laws and
regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export Control
Act, as amended, and the Export Administration Act of 1979), and that its
obligations hereunder are contingent on compliance with applicable United States
export laws and regulations. The transfer of certain technical data and
commodities may require a license from the cognizant agency of the United States
Government and/or written assurances by LICENSEE that LICENSEE shall not export
data or commodities to certain foreign countries without prior approval of such
agency. PRINCETON neither represents that a license shall not be required nor
that, if required, it shall be issued.

            ARTICLE XIV - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

     14.1 Any payment, notice or other communication pursuant to this Agreement
shall be sufficiently made or given on the date of mailing if sent to such party
by certified first class mail, postage prepaid, address to it at its address
below or as it shall designate by written notice given to the other party:

          In the case of PRINCETON UNIVERSITY

               Office of Technology and Trademark Licensing
               Princeton University
               5 New South Building, P.O. Box 36
               Princeton, New Jersey  08544
               Attention: Jean A. Mahoney

          In the case of LICENSEE:

               Interneuron Pharmaceuticals, Inc.
               One Ledgemont Center
               99 Hayden Avenue
               Lexington MA  02173
               Attention: Glenn L. Cooper, M.D.,
                          President and Chief Executive Officer

                     ARTICLE XV - MISCELLANEOUS PROVISIONS

     15.1 This Agreement shall be construed, governed, interpreted and applied
in accordance with the laws of the State of New Jersey, except that questions
affecting the construction and effect of any patent shall be determined by the
law of the country in which the patent was granted.

     15.2 The parties hereto acknowledge that this Agreement sets forth the
entire Agreement and understanding of the parties hereto as to the subject
matter hereof, and shall not



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<PAGE>

be subject to any change or modification except by the execution of a written
instrument subscribed to by the parties hereto.

     15.3 The provisions of this Agreement are severable, and in the event that
any provision of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.

     15.4 LICENSEE agrees to mark the Licensed Products sold in the United
States with all applicable United States patent numbers. All Licensed Products
shipped to or sold in other countries shall be marked in such a manner as to
conform with the patent laws and practice of the country of manufacture or sale.

     15.5 The failure of either party to assert a right hereunder or to insist
upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.

     IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals and duly executed this License Agreement the day and year first set forth
below.

Attest:                              The Trustees of Princeton University

_____________________________        By:________________________________________

Title:_______________________        Title:_____________________________________

                                     Date:______________________________________

Attest:                              LICENSEE: Interneuron Pharmaceuticals, Inc.

_____________________________        By:________________________________________

Title:_______________________        Title:_____________________________________

                                     Date:______________________________________

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