<PAGE>

Exhibit 10.110

                 ASSIGNMENT, ASSUMPTION AND LICENSE AGREEMENT

     This ASSIGNMENT, ASSUMPTION AND LICENSE AGREEMENT (the "Agreement") is made
and executed as of July 15, 1999, by and between CPEC LLC, a Delaware limited
liability company ("CPEC"), and INTERCARDIA, INC., a Delaware corporation
("Intercardia").  Capitalized terms not otherwise defined herein are used as
defined in Article I hereof.

                                R E C I T A L S
                                ---------------

     A.   CPEC owns or has certain rights to certain patents, patent
applications, technology, data, know-how and other rights related to Bucindolol
for use as a pharmaceutical therapy for congestive heart failure and/or left
ventricular dysfunction.

     B.   Intercardia and CPEC are parties to an agreement with BASF
Pharma/Knoll AG dated as of December 19, 1996 (the "Knoll Agreement") related to
the development and commercialization of Bucindolol in the Knoll Territory.

     C.   Interneuron Pharmaceuticals, Inc., a Delaware corporation
("Interneuron"), wishes to acquire, and Intercardia wishes to sell, 65% of the
limited liability company interests of CPEC, in exchange for certain shares of
Intercardia common stock owned by Interneuron (the "Exchange").

     D.   Following the Exchange, Intercardia and Interneuron will jointly
develop Bucindolol in the CPEC Territory under the LLC Agreement.

     E.   As a condition of the Exchange, (i) CPEC desires to assign to
Intercardia, and Intercardia desires to assume, all rights and obligations of
CPEC under the Knoll Agreement and (ii) CPEC desires to license to Intercardia,
and Intercardia desires to license from CPEC, the intellectual property rights
of CPEC related to Bucindolol in the Knoll Territory.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, receipt of which is
hereby acknowledged, CPEC and Intercardia hereby agree as follows:


                                  ARTICLE I -
                                  DEFINITIONS

     1.1  Definitions.  For purposes of this Agreement, capitalized terms not
          -----------
otherwise defined herein shall have the corresponding meanings specified below.

     "Affiliate" means, when used with reference to a specified person or
entity, any person or entity that directly or indirectly controls, is controlled
by or is under common control with, the specified person.  The term "control"
means the ownership, directly or indirectly, of over 50% of
<PAGE>

the outstanding voting securities of an entity, or the right to receive over 50%
of the profits or earnings of an entity, or the power to director or cause the
direction of the management and policies of a person or entity, whether by
contract or otherwise.

     "BEAT" means the Bucindolol Evaluation in Acute Myocardial Infarction Trial
being conducted by Knoll.

     "BEST" means the "Beat-blocker Evaluation of Survival Trial" being
conducted by the National Institutes of Health and the Veterans Administration,
evaluating the use of Bucindolol in treating patients with congestive heart
failure.

     "BMS License" means the Agreement dated as of December 6, 1991, between
Bristol-Myers Squibb Company and Cardiovascular Pharmacology and Engineering
Consultants, Inc., a predecessor-in-interest of CPEC.

     "Bucindolol" means the compound Benzonitrile, 2-[2-hydroxy-3-[[2-(1H-indol-
3-yl)-1,1-dimethylethyl]amino]propoxy]-, monohydrochloride, also known under the
trademark "BEXTRA".

     "Bucindolol Intellectual Property" means the Trademarks and any patents,
patent applications, copyrights, know-how, processes, formulae, data (including,
but not limited to, preclinical, clinical, and marketing data) and trade secrets
relating to the manufacture, development, commercialization or use of Bucindolol
including any Improvement made or acquired by CPEC during the term of this
Agreement.

     "CPEC" means CPEC LLC or any predecessors-in-interest, including CPEC,
Inc., a Nevada corporation, and Cardiovascular Pharmacology and Engineering
Consultants, Inc., a California corporation.

     "CPEC Territory" means the United States of America, the District of
Columbia, Puerto Rico and Japan.

     "Field" means use of Bucindolol as a pharmaceutical therapy for congestive
heart failure and/or left ventricular dysfunction.

     "Improvement" means any discovery or invention related to a new claim,
indication, formulation, dosage form, delivery method, or use of Bucindolol.

     "Knoll" means BASF Pharma/Knoll AG and any sublicensee thereof under the
Knoll Agreement.

     "Knoll Territory" means all countries with the exception of the United
States of America, the District of Columbia, Puerto Rico and Japan.

     "LLC Agreement" means the Amended and Restated Limited Liability Agreement
of CPEC among CPEC, Interneuron and Intercardia, dated as of the date of this
Agreement.

                                       2
<PAGE>

     "Net Sales" shall have the meaning specified in Section 6.1 of the Knoll
Agreement./1/

     "Once-a-Day-Formulation" means the administration of Bucindolol using a
once-a-day formulation, including the formulation, currently being developed by
SkyePharma AG (formerly JAGO Pharma AG) under an Agreement for Feasibility Study
dated March 15, 1996, as amended.

     "Product" means Bucindolol and any finished product containing Bucindolol
as the active ingredient.

     "Trademark" means the registered trademark BEXTRA(R), any other trademark,
trade name or service mark used as a product identifier for Bucindolol and any
variations thereof, in each case, whether or not registered.


                                 ARTICLE II -
                        ASSIGNMENT OF KNOLL AGREEMENT;
                        GRANT OF LICENSE TO INTERCARDIA

     2.1  Assignment and Assumption of Knoll Agreement.  Effective upon the date
          --------------------------------------------
of this Agreement, CPEC hereby assigns all of its rights under the Knoll
Agreement to Intercardia, and Intercardia hereby assumes and agrees to perform,
pay and discharge all of Intercardia's and CPEC's obligations under the Knoll
Agreement arising after the date of this Agreement, as such relate to the
development or commercialization of Bucindolol or the Product in the Knoll
Territory.  Without limiting the foregoing, Intercardia will be responsible for
all funding obligations of Intercardia and CPEC under the Knoll Agreement
related to the development or commercialization of Bucindolol or the Product in
the Knoll Territory from and after the date of this Agreement.  Nothing in this
Agreement is intended to assign or modify CPEC's rights and obligations, if any,
to Knoll for the supply of Bucindolol for purposes of the CPEC Territory.

     2.2  Knoll Revenues to Intercardia.  In return for the assumption of CPEC's
          -----------------------------
obligations under the Knoll Agreement, Intercardia shall be entitled to receive
all revenues from commercialization of Bucindolol or the Product in the Knoll
Territory, including royalties, milestone payments and other payments or
reimbursements by Knoll under the Knoll Agreement, which relate to periods after
the date of this Agreement, subject to Intercardia's obligations to pay CPEC the
royalties and share of the milestone payment specified in Article 3 below.

___________________
/1/ Section 6.1 of the Knoll Agreement states in part: "Net Sales shall mean the
total amount invoiced by KNOLL or its affiliates or sublicensees, for sales of
Licensed Product less commission, discounts, returns and return allowances,
sales, use or value-added taxes, duties and other credits or allowances shown on
the invoices; provided, however, Net Sales shall with respect to unaffiliated
third parties include the sales amount to such unaffiliated third parties or
agents (and not the value of resales by such third parties or agents) and
royalties payable to third parties in connection with sales by unaffiliated
third parties or agents shall be a deductible expense. Expenses shall be based
on actual costs incurred and shall not include general administrative, corporate
or affiliate overhead or reserves...."

                                       3
<PAGE>

2.3  License of Bucindolol Intellectual Property.
     -------------------------------------------

     (a)  Subject to the terms and conditions herein, CPEC hereby grants to
Intercardia an exclusive (even as to CPEC) right and license under the
Bucindolol Intellectual Property in the Knoll Territory to make, have made, use,
modify, further develop, improve, market, sell and otherwise commercially
exploit the Product in the Field. The foregoing license includes CPEC's rights
in and to any Improvement that CPEC, makes, discovers, owns or acquires after
the date hereof. The license granted to Intercardia hereunder specifically
includes a sublicense of CPEC's rights in the Knoll Territory under the BMS
License, and is granted subject to the terms of the BMS License.

     (b)  CPEC acknowledges and agrees that Knoll is a permitted licensee of
Intercardia under this Agreement.  The license granted to Intercardia (including
the sublicense of the BMS License) may not be sublicensed by Intercardia to any
other third party for the development or commercialization of the Product in the
Knoll Territory without CPEC's consent, which shall not be unreasonably
withheld.  However, CPEC's consent shall not be required with respect to any
sublicensing by Knoll of its rights or obligations pursuant to the Knoll
Agreement to the extent permitted under the Knoll Agreement as of the date of
this Agreement.

     (c)  Promptly following the execution of this Agreement, Intercardia will
notify Knoll in form and substance reasonably acceptable to CPEC of the transfer
of CPEC's obligations to Intercardia hereunder and will request that Knoll
notify CPEC of any payment defaults or other breaches by Intercardia under the
Knoll Agreement. Intercardia will further seek Knoll's agreement that CPEC may
but shall not be obligated to cure any default or other breaches by Intercardia
thereunder. Intercardia will provide CPEC with a copy of Knoll's acknowledgement
of such notice when available.

     2.4  Exchange of Product Information.
          -------------------------------

          (a)  Each of CPEC and Intercardia shall promptly make available to the
other party for the purposes set forth in Section 2.4(b) below, all technical,
scientific and marketing data and information owned or possessed by it during
the term of this Agreement relating to Bucindolol or the Product, including (i)
all information relating to indications for use and conditions of Bucindolol or
the Product whether or not in the Field and whether existing on the date of this
Agreement or arising thereafter, including, without limitation, the database,
study report, case report forms and other data and documentation available to
CPEC from BEST, (ii) all data and documentation received by Intercardia under
the Knoll Agreement related to BEAT and the progress of development of
Bucindolol in the Knoll Territory will be reported by Intercardia to CPEC, (iii)
BMS Know-How (as defined in the BMS License) and (iv) all other methods,
processes, know-how and trade secrets related to Bucindolol or the Product,
whether or not patented or patentable.  In addition, CPEC shall furnish
Intercardia with one complete copy (including appendices) of the New Drug
Application ("NDA") as filed with the U.S. Food and Drug Administration, and any
amendments to the NDA and a copy of any material correspondence to or from the
FDA relating to the safety or efficacy of Bucindolol and Intercardia shall
furnish CPEC with the European filing and a copy of any material correspondence
to or from the European regulatory authorities, to the extent a copy of such
filing

                                       4
<PAGE>

and correspondence is available to Intercardia.

          (b)  Each party may report data about the safety or efficacy of
Bucindolol received from the other party to a regulatory authority, to the
extent required by applicable laws and regulations.  Intercardia also may
furnish any of the foregoing data and information received from CPEC to Knoll or
any other permitted licensee of Intercardia, for use in the development or
commercialization of the Product in the Knoll Territory.  CPEC shall be entitled
to use the any of the foregoing data in the development or commercialization of
Bucindolol in the CPEC Territory.  Any other data or information received by
CPEC from Intercardia under this Agreement that constitutes an Improvement will
be owned by CPEC if the costs of such Improvement are shared by CPEC pursuant to
Section 8.9 of the LLC Agreement.

     2.5  Improvements.  Improvements shall be governed by Section 8.9 of the
          ------------
LLC Agreement, subject to the provisions of the Knoll Agreement.

     2.6  Safety Data Collection and Reporting.  CPEC and Intercardia will
          ------------------------------------
cooperate to establish a system for the timely collection and reporting of
product complaints, adverse events and similar occurrences related to the
Product that allows CPEC and Intercardia to report such occurrences to
regulatory authorities in the CPEC Territory and the Knoll Territory,
respectively, in compliance with applicable laws and regulations.


                                ARTICLE III --
                                ROYALTIES, ETC.

     3.1  Royalties to CPEC on Net Sales.  In consideration of the exclusive
          ------------------------------
rights granted by CPEC hereunder, Intercardia shall pay CPEC a royalty equal to
6.5% of Net Sales of the Product in the Knoll Territory.  CPEC shall be entitled
to the foregoing royalty on Net Sales of the Once-a-Day Formulation of
Bucindolol, whether or not CPEC shares in the cost of developing the Improvement
under Section 8.9 of the LLC Agreement.  The royalty shall be payable by
Intercardia on Net Sales of the Product in the Knoll Territory, whether sold
directly by Intercardia, Knoll (or an affiliate thereof) or any other permitted
sublicensee of Intercardia.

     3.2  Duration of Royalty Obligation.  Intercardia's obligation to pay CPEC
          -------------------------------
royalties under Section 3.1 of this Agreement shall continue for fifteen years
from the first commercial sale of the Product in the Knoll Territory, or
termination or expiration of the Knoll Agreement in accordance with its terms,
whichever is longer.

     3.3  Milestone Payments under Knoll Agreement.  Intercardia will pay CPEC
          ----------------------------------------
65% of the $10 million milestone payment received under Section 3.4(d) of the
Knoll Agreement (i.e., if Net Sales of the Product in the Knoll Territory exceed
$200 million in any consecutive twelve-month period).  Intercardia shall notify
CPEC in writing 10 days after the receipt of payment of this milestone and such
notice shall be accompanied by payment.  Intercardia will be entitled to retain
the entire $10 million milestone payment due under Section 3.4(c) of the Knoll
Agreement upon the first regulatory approval of the Product in certain countries
of the European Community.

                                       5
<PAGE>

     3.4  Currency.  The payments to CPEC under 3.1 and 3.3 shall be paid in
          --------
U.S. dollars, converted from foreign currency in the same manner as Knoll
converts royalties from foreign currency into U.S. dollars under the Knoll
Agreement.

     3.5  Place of Payment.  All payments to CPEC under this Agreement shall be
          ----------------
made by check or wire transfer in immediately available funds in legal currency
of the United States and shall be delivered to CPEC at the address or account
designated in writing by CPEC from time to time.

     3.6  Timing of Payment and Royalty Reports.  Royalties shall be paid by
          -------------------------------------
Intercardia to CPEC within 40 days after the end of each calendar quarter.  The
payment shall be accompanied by a report of Intercardia, setting forth in
reasonable detail the calculation of the royalties payable to CPEC for such
calendar quarter, including the Net Sales of the Product and the currency
conversion calculation.  In addition, Intercardia will furnish CPEC within 24
hours after receipt by Intercardia with copies of any written reports provided
by Knoll that relate to the amount or calculation of Net Sales in the Knoll
Territory.

     3.7  Defaults in Payment Obligations; Interest.  If Intercardia defaults in
          -----------------------------------------
its payment obligations to CPEC with respect to Net Sales of the Product in the
Knoll Territory or the milestone payment to be shared with CPEC, interest shall
accrue on the defaulted amount at the rate of 20% per annum until the defaulted
payment, with accrued interest, is paid.  The amount of the defaulted payment
and accrued interest shall be treated as "Member Debt" under Section 8.7 of the
LLC Agreement.  If such default does not stem from a payment default by Knoll to
Intercardia, Intercardia, at CPEC's request, shall assign to CPEC the right to
receive a portion of the royalty or any other payment due under Section 3.4 of
the Knoll Agreement, if any, owed by Knoll to Intercardia sufficient to satisfy
such default.  If Knoll has defaulted on its payment obligation, Intercardia, at
CPEC's request, will use all commercially reasonable efforts to exercise its
rights and remedies under the Knoll Agreement, and will keep CPEC informed of
all such efforts.  The foregoing shall be in addition to any other rights and
remedies CPEC may have under this Agreement or otherwise, at law or in equity,
for such default.

     3.8  Third Party Royalties.  Intercardia shall be responsible for the
          ---------------------
timely payment of any royalties payable to BMS under the BMS License upon Net
Sales of the Product in the Knoll Territory.  Intercardia shall be responsible
for any other royalties or similar payments owed to third parties as a result of
Intercardia's commercialization of Product in the Knoll Territory under this
Agreement.

     3.9  Repatriation Restrictions.  Intercardia shall exercise reasonable due
          -------------------------
diligence to determine if restrictions on the transfer of currency exist in any
country which would prevent Intercardia from making payments in the United
States.  If an unexpected currency restriction occurs, Intercardia shall take
all reasonable steps to obtain a waiver of such restrictions or to otherwise
enable Intercardia to make such payments, failing which, if Intercardia is
prevented from making any payment under this Agreement by virtue of restrictions
on currency conversion or repatriation under the statutes, laws, codes or
governmental regulations of the country from which the sales are generated or
the payment is to be made, then such payments may be paid by depositing them in
the local currency to CPEC's account in a bank acceptable to CPEC in the country
whose currency is involved.

                                       6
<PAGE>

     3.10  Taxes.  If laws, rules or regulations require withholding of income
           -----
taxes or other taxes imposed upon payments payable by Intercardia to CPEC as set
forth in this Article 3,  Intercardia shall make such withholding payments as
required and subtract such withholding payments from the payments set forth in
this Article 3.  Intercardia shall submit appropriate proof of payment of the
withholding taxes to CPEC within a reasonable period of time.  Intercardia will
use efforts consistent with its usual business practices to minimize foreign
withholding taxes and CPEC shall cooperate with such efforts.  Intercardia will
be responsible for any other taxes and assessments on sales of the Product and
its other activities under this Agreement.

     3.11  Records.  Intercardia will maintain for three (3) years after the
           -------
submission of each report under Section 3.5 hereof complete and accurate books
and records in sufficient detail to enable the milestone payment and the
royalties payable hereunder to be verified.  Upon reasonable prior notice to
Intercardia, CPEC or its duly authorized representative, at CPEC's cost and
expense, shall have access to and the right to copy the books and records of
Intercardia to conduct an inspection, examination, review or verification
thereof.  Such access shall be available not more than twice each calendar year,
during normal business hours, during the term of this Agreement and for a period
of three (3) years after its expiration or termination.


                                 ARTICLE IV --
                    CERTAIN RESPONSIBILITIES OF THE PARTIES

     4.1   Commercialization of Product and Indications.  Intercardia shall use
           --------------------------------------------
commercially reasonable efforts to develop and commercialize the Product in the
Knoll Territory, and shall comply in all material respects with all applicable
laws, rules and regulations in the performance of its activities in the Knoll
Territory.  Intercardia shall inform CPEC, through updates to CPEC's BEXTRA
Committee, of the development and commercialization status of the Product in the
Knoll Territory.  Intercardia will promptly notify CPEC if at any time it
discontinues in its entirety the development or commercialization of the Product
in the Knoll Territory, at which time this Agreement may be terminated by CPEC
as provided in Section 6.2(a) hereof.

     4.2   Government Approvals.  Intercardia shall be responsible, directly or
           --------------------
through Knoll or any other permitted licensee of Intercardia, for obtaining and
maintaining all approvals, licenses, registrations or authorizations, including
pricing and reimbursement approvals, of any national, state or local regulatory
agency, department, bureau or other government entity, necessary for the
manufacture, use, storage, transport or sale of Product sold in the Knoll
Territory.  Any of the foregoing may be filed, obtained or maintained in the
name of Intercardia or any licensee thereof.

     4.3   Supply of Bucindolol.  Intercardia shall be responsible for obtaining
           --------------------
supplies of Bucindolol drug substance and the finished Product from Knoll AG or
any other qualified third party manufacturer for purposes of the Knoll
Territory.  CPEC shall not be obligated to supply Intercardia with any part of
Intercardia's requirements for Bucindolol unless otherwise agreed by the parties
in writing.


                                       7
<PAGE>

                                 ARTICLE V --
                       PROTECTION OF LICENSED TECHNOLOGY

     5.1  Restrictions on Use of Trademarks.  Intercardia shall maintain any
          ---------------------------------
registrations of Trademarks to be used in the Knoll Territory in its name, to
the extent permitted by applicable law.  All Trademarks will be assigned to CPEC
upon termination of this Agreement under Section 6.2 hereof.  Intercardia agrees
that any rights arising to it from the use of the Trademark(s) included in the
Bucindolol Intellectual Property and any goodwill associated therewith shall
inure to the benefit of CPEC.  Intercardia shall not have the right to use a
Trademark for any purpose other than the marketing of a Product under this
Agreement.

     5.2  Prosecution of Patents and Trademarks.  Intercardia shall be
          -------------------------------------
responsible, at its cost and expense, for prosecuting and maintaining all
Trademarks and patent applications, for filing and prosecuting all patent
reissues and re-examinations, for applying for and obtaining any patent term
extensions, and for paying all maintenance fees, in each case to the extent
related to the Bucindolol Intellectual Property in the Knoll Territory provided,
however, if Intercardia elects not to file, prosecute or maintain a trademark or
patent application or patent included in the Bucindolol Intellectual Property in
the Knoll Territory, CPEC shall have the right, at its sole expense, to file,
prosecute, or maintain such trademark or patent application or patent, and
Intercardia shall cooperate in the filing, prosecution, or maintenance of such
patent application or patent.

     5.3  Cooperation.  Each party shall cooperate with the other party
          -----------
including, without limitation, executing all lawful papers and instruments and
making all rightful oaths and declarations, as may be necessary in the
preparation and prosecution of the Bucindolol Intellectual Property for purposes
of the Knoll Territory.

     5.4  Infringement.
          ------------

          (a)  Each party shall promptly give written notice to the other party
of any infringement or possible infringement of any of the Bucindolol
Intellectual Property by a third party.  The Parties will thereafter consult and
cooperate fully to determine a course of action, including, without limitation,
the commencement of legal action by any Party.  However, Intercardia, directly
or through its licensee, shall be responsible, at its discretion and at its cost
and expense, for prosecuting any such infringement in the Knoll Territory.  In
such event, CPEC shall cooperate with Intercardia, at Intercardia's expense.
Intercardia shall not settle or compromise any such suit in a manner that
imposes any obligations or restrictions on CPEC or its Affiliates, without
CPEC's prior written consent (which consent shall not be unreasonably withheld).

          (b)  If Intercardia fails to prosecute such infringement in a
reasonable period of time (but in no event later than sixty (60) days after CPEC
provides Intercardia with notice thereof), CPEC shall have the right, but not
the obligation, to prosecute such infringement at its own expense.  In such
event, Intercardia shall cooperate with CPEC, at CPEC's expense.  CPEC shall not
settle or compromise any such suit in a manner that imposes any obligations or
restrictions on Intercardia or its Affiliates or licensees, without
Intercardia's prior written consent (which consent shall not be unreasonably
withheld).

                                       8
<PAGE>

                                 ARTICLE VI --
                                  TERMINATION

     6.1  Term.  This Agreement shall continue in effect until expiration of all
          ----
royalty obligations and other obligations hereunder, unless sooner terminated
under this Article VI.

     6.2  Termination by CPEC.  Subject to the provisions of Section 9.2, CPEC
          -------------------
shall have the right to terminate this Agreement upon sixty (60) calendar days
notice to Intercardia, if

          (a) Intercardia notifies CPEC that Intercardia has discontinued the
development or commercialization of the Product in its entirety in the Knoll
Territory; or

          (b) CPEC has received notice from Knoll or Intercardia that
Intercardia has defaulted on a payment obligation under the Knoll Agreement and
such default is continuing ninety (90) days after notice to Intercardia of such
default.

     6.3  Termination by Intercardia.  Subject to the provisions of Section 9.2
          --------------------------
hereof, Intercardia shall have the right to terminate this Agreement upon ninety
(90) days notice to CPEC upon breach by CPEC of any covenant, representation or
warranty under this Agreement that is continuing ninety (90) calendar days after
Intercardia gives CPEC written notice of such breach.

     6.4  Rights and Duties Upon Termination.  Within 30 days after termination
          ----------------------------------
of this Agreement under Sections 6.2 or 6.3:

          (a) Each party shall return to the other party any confidential or
proprietary information of the other party received pursuant to this Agreement
or otherwise.

          (b) Upon termination of this Agreement by CPEC under Section 6.2,
Intercardia shall deliver to CPEC all Bucindolol Intellectual Property which is
embodied in physical form, shall assign the Trademarks to CPEC (or any designee
thereof), and shall deliver a copy of any and all promotional materials and
other data, information, test results, marketing information, customer lists and
records, distributor lists and records, sales data and projections, and any
other information under Intercardia's control that is related to the
manufacture, marketing or sale of the Product in the Knoll Territory, to the
extent permitted to be delivered by the Knoll Agreement or applicable law.

          (c) Upon termination of this Agreement by CPEC under Section 6.2,
Intercardia may sell, to the extent permitted by applicable law, any remaining
inventory and finished goods for a period not to exceed six (6) months, subject
to the royalty obligations and other provisions of this Agreement.

          (d) Upon termination of this Agreement by Intercardia under Section
6.3, the licenses granted to Intercardia under Article II hereof shall be fully
paid.

                                       9
<PAGE>

          (e) Upon termination of this Agreement by CPEC under Section 6.2(b)
hereof, CPEC may, but shall not be obligated to, upon written notice to Knoll
and Intercardia, assume all rights and obligations of Intercardia under the
Knoll Agreement.  In such event, CPEC shall pay Intercardia a commercially
reasonable royalty on Net Sales of Bucindolol in the Knoll Territory, if and to
the extent CPEC has recovered all amounts previously owed by Intercardia to CPEC
under this Agreement.  The royalty to Intercardia shall be negotiated by the
parties in good faith.

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

     6.5  Survival of Contents.  Notwithstanding anything else in this Agreement
          --------------------
to the contrary, the parties agree that Articles VI, VII, VIII and IX shall
survive the termination of this Agreement, together with any other provisions to
the extent required for the full observation and performance of the surviving
terms by any of the parties hereto.


                                ARTICLE VII --
                                  DISCLAIMERS

     7.1  No Warranty.  CPEC MAKES NO EXPRESS OR IMPLIED WARRANTIES, STATUTORY
          -----------
OR OTHERWISE, CONCERNING THE BUCINDOLOL INTELLECTUAL PROPERTY, THE PRODUCT OR
ANY INFORMATION COMMUNICATED TO INTERCARDIA BY CPEC.  SPECIFICALLY, BUT WITHOUT
LIMITING THE FOREGOING, CPEC MAKES NO EXPRESS OR IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS (FOR A PARTICULAR PURPOSE OR OTHERWISE), QUALITY OR
USEFULNESS OF THE TECHNOLOGY OR THE PRODUCT.  THE RIGHTS GRANTED HEREUNDER ARE
GRANTED ON AN "AS IS" BASIS.

                                ARTICLE VIII --
                                   INDEMNITY

     8.1  Indemnification by Intercardia.  Intercardia will indemnify and hold
          ------------------------------
harmless CPEC and its Affiliates, employees, officers, directors, stockholders
and agents (a "CPEC Indemnified Party") from and against any and all liability,
loss, damages, costs, or expenses (including reasonable attorneys' fees) which
the CPEC Indemnified Party may incur, suffer or be required to pay resulting
from or arising in connection with (i) the breach by Intercardia of any
covenant, representation or warranty of Intercardia contained in this Agreement,
or (ii) the successful enforcement by a CPEC Indemnified Party of any of the
foregoing.

     8.2  Indemnification by CPEC.  CPEC will indemnify and hold harmless
          -----------------------
Intercardia and its Affiliates, employees, officers, directors, shareholders and
agents (a "Intercardia Indemnified Party") from and against any and all
liability, loss, damages, costs or expenses (including reasonable attorneys'
fees) which the Intercardia Indemnified Party may incur, suffer or be required
to pay resulting from or arising in connection with (i) the breach by CPEC of
any covenant, representation or warranty of CPEC contained in this Agreement, or
(ii) the successful enforcement by a Intercardia Indemnified Party of any of the
foregoing.

                                       10
<PAGE>

     8.3  Conditions to Indemnification.  As a condition of indemnification
          -----------------------------
under Sections 8.1 and 8.2, the party seeking indemnification must give written
notice to the other party of the existence and nature of such claim within
thirty (30) business days after receiving actual knowledge of such claim.
Within twenty (20) days thereafter, the party receiving an indemnity notice
relating to a claim by a third party must elect or decline in writing to accept
such claim for defense.  As to any other type of indemnity claim (e.g., for
breach), the party receiving the notice must indicate within the twenty (20)-day
period whether it accepts or disputes the indemnification obligation; if it
accepts the obligation, payment of such amount shall be made no later than 30
days thereafter.  If a third party claim has been accepted for defense by the
indemnifying party, the indemnified party shall not have any authority to
resolve, compromise or settle the third party claim without the indemnifying
party's written consent.  An indemnified party may participate in, but not
control, the defense of a claim for which it is receiving indemnity, at its own
cost and expense.

     8.4  Rights Not Exclusive.  The indemnification rights and obligations
          --------------------
under this Article VIII shall be in addition to any other indemnification rights
and obligations of the parties.


                                 ARTICLE IX --
                                 MISCELLANEOUS

     9.1  Notices.  Any notice required to be given hereunder shall be in
          -------
writing, shall refer specifically to this Agreement, and shall be sent by
facsimile transmission (with a confirmatory copy sent by overnight courier), by
courier service (with proof of service), by hand delivery or by certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows, or to such other addressee as shall be properly designated
in accordance with these notice provisions.  All such notices shall be deemed to
have been given when received at the address specified below.

     If to CPEC:

          c/o Interneuron Pharmaceuticals, Inc.
          99 Hayden Avenue, Suite 200
          Lexington, MA 02421
          Facsimile: 781-862-3859
          Telephone: 781-402-3400
          Attention: Glenn L. Cooper, M.D.

                                       11
<PAGE>

     If to Intercardia:

          Intercardia, Inc.
          Post Office Box 14287
          3200 East Highway 54
          Cape Fear Building, Suite 300
          Research Triangle Park, NC 27709
          Facsimile: 919-544-1245
          Telephone: 919-558-8688
          Attention: Clayton I. Duncan

          With a copy to:

          Wyrick Robbins Yates & Ponton LLP
          4101 Lake Boone Trail, Suite 300
          Raleigh, NC 27607
          Facsimile: 919-781-4865
          Telephone: 919-781-4000
          Attention: Larry E. Robbins, Esq.

     9.2  Arbitration.  Any disputes arising between the Parties relating to,
          -----------
arising out of or in any way connected with this Agreement or any term or
condition hereof, or the performance by either Party of its obligations
hereunder, whether before or after termination of the Agreement, shall be
finally resolved by binding arbitration, provided that no termination shall be
effective until resolution of the arbitration referred to in this Section 9.2.
Whenever a Party shall decide to institute arbitration proceedings, it shall
give written notice to that effect to the other Party.  The Party giving such
notice shall refrain from instituting the arbitration proceedings for a period
of sixty (60) days following such notice.  During such period, the Parties shall
make good faith efforts to amicably resolve the dispute without arbitration.
Any arbitration hereunder shall be conducted under the rules of the American
Arbitration Association.  Each such arbitration shall be conducted by a panel of
three arbitrators:  one arbitrator shall be appointed by each of Interneuron and
Intercardia and the third shall be appointed by the two arbitrators; provided,
however, if no mutually acceptable arbitrator can be agreed to by the first two
arbitrators, a third shall be appointed by the American Arbitration Association.
Any such arbitration shall be held in New York, New York.  The arbitrators shall
have the authority to direct the Parties as to the manner in which the Parties
shall resolve the disputed issues, to render a final decision with respect to
such disputed issues, or to grant specific performance with respect to any such
disputed issue.  Judgment upon the award so rendered may be entered in any court
having jurisdiction or application may be made to such court for judicial
acceptance of any award and an order of enforcement, as the case may be.
Nothing in this Section shall be construed to preclude either Party from seeking
provisional remedies, including but not limited to, temporary restraining orders
and preliminary injunctions, from any court of competent jurisdiction, in order
to protect its rights pending arbitration, but such preliminary relief shall not
be sought as a means of avoiding arbitration.  In no event shall a demand for
arbitration be made after the date when institution of a legal or equitable
proceeding based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations.

                                       12
<PAGE>

     9.3  Cumulative Remedies.  The rights and remedies provided by this
          -------------------
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies.  Said
rights and remedies are given in addition to any other rights the parties may
have by Law or otherwise.

     9.4  Confidentiality.  Each party may have access through CPEC (including
          ---------------
as a member, director or member of the BEXTRA Committee) or otherwise under this
Agreement to confidential or proprietary information of CPEC or third parties
(including Knoll).  In such event, the receiving party shall hold in confidence
and not disclose to any third party any information from the disclosing party
that is marked as confidential or proprietary, and shall cause its
representatives to do the same.  This restriction shall not apply to information
that becomes part of the public domain through no fault of the receiving party
or is obtained from a third party who is not under any obligation of
confidentiality.  In addition, Intercardia may disclose such information to
Knoll for purposes of the Knoll Agreement, and any receiving party may disclose
the information to a consultant, collaborator or potential collaborator who is
subject to obligations of confidentiality comparable to those set forth in this
Section 9.4, if necessary in connection with the conduct of its responsibilities
under this Agreement.  If the receiving party receives a subpoena or becomes
subject to any other legal process requiring disclosure of the disclosing
party's confidential or proprietary information, it will promptly notify the
disclosing party and cooperate to minimize the scope of the disclosure to the
extent practicable.  This Section 9.4 shall continue for five years from and
after termination of this Agreement.

     9.5  Amendments.  Any amendment to this Agreement shall be effective only
          ----------
if adopted by both parties in writing.

     9.6  Binding Effect.  This Agreement shall be binding upon and inure to the
          --------------
benefit of all of the parties and, to the extent permitted by this Agreement,
their successors, legal representatives and assigns.

     9.7  Interpretation.  Throughout this Agreement, nouns, pronouns and verbs
          --------------
shall be construed as masculine, feminine, neuter, singular or plural, whichever
shall be applicable.  All references herein to "Articles," and "Sections" shall
refer to corresponding provisions of this Agreement.

     9.8  Severability.  The invalidity or unenforceability of any particular
          ------------
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.

     9.9  Counterparts.  This Agreement may be executed in any number of
          ------------
counterparts with the same effect as if all parties hereto had signed the same
document.  All counterparts shall be construed together and shall constitute one
instrument.

                                       13
<PAGE>

     9.10  Governing Law.  This Agreement and the rights of the parties
           -------------
hereunder shall be interpreted in accordance with the laws of the State of
Delaware, and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.

     9.11  Consistency with Knoll Agreement.  If any term of this Agreement is
           --------------------------------
inconsistent with the Knoll Agreement as such exists as of the date hereof,
Intercardia shall notify CPEC of such circumstance and the provision of this
Agreement shall be modified to the extent required to be consistent with the
Knoll Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement as of the date first above stated.


                         INTERCARDIA, INC.

                         By: /s/ Richard W.Reichow
                             ---------------------
                             Name: Richard W.  Reichow
                             Title: Executive Vice President & CFO



                         CPEC LLC

                         By: /s/  Michael W. Rogers
                            -----------------------
                            Name: Michael W. Rogers
                            Title: Executive Vice President

                                       14