<PAGE>

                                                                    EXHIBIT 10.8

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.

                                LICENSE AGREEMENT

This Agreement is made and entered into this 11th day of July, 2002 (the
"Effective Date") by and between Shionogi & Co., Ltd., a Japanese corporation
having its principal office at 1-8 Doshomachi 3-chome, Chuo-ku, Osaka 541-0045,
Japan ("Shionogi") and Peninsula Pharmaceuticals, Inc., a Delaware corporation
having its principal office at 6540 Kaiser Road, Fremont, CA 94555, USA
("Peninsula"). Peninsula and Shionogi may be referred to herein individually as
a "Party", and collectively as the "Parties".

                                   WITNESSETH:

WHEREAS, Shionogi is engaged in the development and manufacturing of the
chemical compound having its internal code number S-4661, and Peninsula has
evaluated S-4661 under the Non-Disclosure Agreement dated May 15, 2001 and the
Material Transfer Agreement dated September 18, 2001 (collectively, "Secrecy
Agreement");

WHEREAS, Peninsula showed its interest in developing, manufacturing and selling
the S-4661 in the Territory (as hereinafter defined), and the Parties negotiated
in good faith major terms and conditions of a possible license agreement on
S-4661;

WHEREAS, through the due diligence investigations concerning S-4661 conducted by
Peninsula under the Letter of Intent dated March 12, 2002 between the Parties
("Letter of Intent") to which the list of major terms and conditions of
licensing from Shionogi to Peninsula are attached, Peninsula is interested in
pursuing the development and commercialization of S-4661 in the Territory and
desirous of obtaining from Shionogi certain license necessary therefor; and

WHEREAS, Shionogi is willing to grant such license to Peninsula under the terms
and conditions set forth hereinafter;

[*] = 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.

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NOW, THEREFORE,  in consideration of the covenants contained herein, the Parties
hereto hereby agree as follows;

ARTICLE 1  DEFINITIONS

As used in this Agreement, the following capitalized terms (the singular may
include the plural and vice versa) shall have the following meanings:

1.1  "Affiliates" shall mean any company or organization directly or indirectly
     controlling, controlled by, or under common control with Peninsula or
     Shionogi, as the case may be. For this purpose, "control" shall mean the
     power (whether or not normally exercised), to direct the management and
     affairs of the subject corporation or entity, directly or indirectly,
     whether through the ownership of voting securities, by contract, or
     otherwise. In case of a corporation, the direct or indirect ownership of
     fifty percent (50%) or more of its outstanding voting securities shall in
     any case be deemed to confer "control".

1.2  "Controlled" means, with respect to any Information or intellectual
     property right, that the Party owns or has a license to such Information or
     intellectual property right and has the ability to grant to the other Party
     access, a license, or a sublicense to such Information or intellectual
     property right as provided for in the Agreement without violating an
     agreement with or rights of a third party.

1.3  "Compound" shall mean a methylcarbapenem antibiotic compound with the

     molecular formula of C(15)H(24)N(4)O(6)S(2) and the chemical name of
     (+)-(4R,5S,6S)-6-[(1R)-1-hydroxyethyl]-4-methyl-7-oxo-3-[[(3S,5S)-5-
     [(sulfamoylamino)methyl]-3-pyrrolidinyl]thio]-1-azabicyclo[3.2.0]hept-2-
     ene-2-carboxylic acid, the chemical structure of which is shown in Appendix
     I hereto. The "Compound" may also be referred to as S-4661 or Doripenem
     (designated as International Nonproprietary Names for Pharmaceutical
     Substances; INN).

1.4  "FDA" shall mean the United States Food and Drug Administration or any
     successor thereto having the administrative authority to regulate the
     investigation, development and marketing of human pharmaceutical products
     in the United States.

[*] = 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.

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1.5  "GMP" shall mean the current good manufacturing practices required by the
     FDA and set forth in the Food, Drug & Cosmetic Act or FDA regulations,
     policies or guidelines in effect at a particular time, for the
     manufacturing and testing of pharmaceutical materials.

1.6  "ICH" shall mean the International Conference on Harmonization of Technical
     Requirements for Registration of Pharmaceuticals for Human Use.

1.7  "Information" shall mean any confidential or proprietary information of any
     kind other than Know-How (as hereinafter defined) that is communicated by
     or on behalf of one Party to the other Party, whether orally, in writing or
     otherwise, under this Agreement.

1.8  "Know-How" shall mean any scientific or technical information and data
     relating to the Compound and/or the Licensed Product (as hereinafter
     defined) owned and/or Controlled by Shionogi, including but not limited to
     pre-clinical, clinical, manufacturing, and/or regulatory documentation,
     data, information, or reports, which is necessary and/or useful for
     Peninsula's development or commercialization of the Licensed Product in the
     Territory.

1.9  "Licensed Patents" shall mean (a) patents and patent applications listed in
     Appendix II hereto, including without limitation United States Patent
     Numbers [*] and [*]; (b) any patents issuing on the patent applications
     listed in Appendix II, including without limitation Patent Application
     Number [*]; (c) any additions, divisions, continuations,
     continuations-in-part, extensions, reissues, renewals, substitutions, and
     reexaminations of the patents and patent applications in (a) and (b); and
     (d) counterparts of the foregoing patent applications and patents issued by
     or filed in any country or other jurisdiction in the Territory.

1.10 "Licensed Product" shall mean any pharmaceutical product intended for use
     for the prevention and/or treatment of various bacterial infectious
     diseases, or other appropriate uses, in humans that contains the Compound
     as an active ingredient. As of the Effective Date, the Licensed Product
     shall be considered to be vial-filled product containing a 250 mg and/or
     500 mg strength of the Compound.

[*] = 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.

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1.11 "Registration Approval" shall mean, with respect to a country in the
     Territory, all approvals, licenses, registrations, or authorizations by an
     applicable Regulatory Authority (as hereinafter defined) necessary to
     import, commercialize and market the Licensed Product in such country,
     including pricing and reimbursement approval in such country.

1.12 "Regulatory Authority" shall mean the FDA in the United States, and the
     equivalent regulatory authority or governmental entity having the
     responsibility, jurisdiction, and authority to approve the manufacture,
     use, importation, packaging, labeling, marketing, and sale of
     pharmaceutical products in any country or jurisdiction other than the
     United States.

1.13 "Specifications" shall mean the specifications set forth in Appendix V for
     the of the Licensed Product, as they may be amended from time to time by
     agreement of the Parties.

1.14 "Territory" shall mean the United States of America, Canada and Mexico.

ARTICLE 2 GRANT OF LICENSE

2.1  License Grant

     Shionogi hereby grants to Peninsula, during the term of this Agreement, the
     sole and exclusive license under the Licensed Patents and Know-How, to
     develop, import, use, market, sell and/or offer for sale Licensed Products
     in the Territory. For the purpose of this Article, the license granted to
     Peninsula hereunder shall not include any right to manufacture the
     Compound. Under the said license, Peninsula shall be permitted to have its
     subcontractors (such as contract research organizations and contract sales
     organizations), distributors (wholesalers), resellers and retailers perform
     the same obligations undertaken by Peninsula under this Agreement.

2.2  Sublicense

     Subject to Article 7 hereof, Peninsula shall have the right to grant
     sublicenses, under the license granted pursuant to Section 2.1 to any third
     parties ("Sublicensees"); provided, however, that in case Peninsula is
     desirous of granting a sublicense to a third party, Peninsula shall obtain
     Shionogi's prior written consent, which consent shall not

[*] = 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.

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     be unreasonably withheld, and shall guarantee that all of its Sublicensees
     will comply with all applicable terms and conditions of this Agreement
     undertaken by Peninsula.

2.3  Covenants Regarding Licenses

     Subject to Article 7 hereof, Shionogi hereby covenants and agrees that
     Shionogi and its Affiliates shall not develop, market or sell, or license
     any other party to develop, market or sell, in the Territory any product
     containing the Compound for human use.

ARTICLE 3 DEVELOPMENT

3.1  Shionogi's assistance

     Shionogi shall disclose to Peninsula all available Know-How, including but
     not limited to that set forth in Appendix III hereto, after the Effective
     Date without delay. Any additional Know-How developed or acquired by
     Shionogi thereafter shall be promptly disclosed to Peninsula. Peninsula
     will be free to utilize the Know-How for Peninsula's development and/or
     commercialization of the Licensed Product in the Territory.

3.2  Development Committee

(a)  Shionogi and Peninsula shall establish a Joint Development Committee
     ("JDC") which will consist of [*] from Shionogi and Peninsula. The
     representatives of each Party may be changed from time to time at the
     discretion of the Party making such change upon written notice by the Party
     to the other.

(b)  The JDC shall meet periodically, in principle semi-annually, in alternating
     home office locations or via videoconference or teleconference, whichever
     is appropriate. Each Party shall bear its costs associated with attendance
     at the JDC meetings.

(c)  The JDC shall discuss and decide on the development plan and strategy for
     the development in the Territory of the Licensed Product, including [*]. It
     is agreed by the Parties that the underlying concept in establishing such
     development plan and strategy shall be reasonably consistent with that
     employed by Shionogi for the development of the product containing the
     Compound in Japan. Further, the JDC shall review the progress of the
     development activities conducted by Peninsula. Shionogi and Peninsula shall
     make the minutes of the JDC meetings jointly in order to confirm the
     matters discussed and the decision made at the JDC meetings.

[*] = 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.

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(d)  All decisions of the JDC shall be made by unanimous consent. In case the
     JDC cannot reach unanimous consent because of the difference in opinions
     between the Parties, such dispute shall be referred to the President of
     Peninsula and [*] of Shionogi, who will meet promptly and use diligent good
     faith efforts to seek a resolution. If the matter is not resolved by such
     executives within [*] days, it shall be resolved according to the mechanism
     set forth in Article 21.

3.3  Development activity

(a)  Peninsula (or its contractor or Sublicensee) shall use reasonable efforts
     to undertake all development work necessary to obtain Registration Approval
     for the Licensed Product for the Territory at its own expense and risk in
     accordance with the development plan and strategy decided by the JDC as if
     the Licensed Product were Peninsula's own product. Further, Peninsula, when
     commercially and financially reasonable, shall conduct development work in
     accordance with ICH guidelines.

(b)  Promptly after the Effective Date, Peninsula shall prepare a preliminary
     development plan, which contains an estimated time-line for clinical
     studies, the filing of an Investigational New Drug ("IND") application and
     New Drug Application ("NDA"), and a target date for the commercial launch
     of the Licensed Product in the United States of America and Canada.  Within
     sixty (60) days from the Effective Date, the JDC shall review and approve a
     development plan ("Development Plan") based on the preliminary development
     plan to be prepared by Peninsula. The initial Development Plan shall be
     attached to this Agreement as Appendix IV. From time to time during the
     term of this Agreement, the JDC shall review and modify, as appropriate
     based on development results, the Development Plan, and any updates,
     revisions, or modifications to the Development Plan shall be attached to
     this Agreement as Appendix IV, provided, however, that updates, revisions
     or modifications to the Development Plan that are needed due to delays
     caused by Peninsula's negligence or willful misconduct in the development
     work shall not be made unless Shionogi agrees to such changes.

(c)  Peninsula shall provide Shionogi with any synopses of protocols for
     clinical trials relating to the Licensed Product planned by Peninsula prior
     to the initiation thereof in order to provide Shionogi with an opportunity
     to review and comment thereon. Peninsula shall reasonably consider
     Shionogi's comments, provided that Peninsula receives such comments no
     later than [*] days after Shionogi receives such synopses. Peninsula shall
     provide Shionogi with copies of all finalized protocols prior to the
     initiation of the applicable study.

[*] = 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.

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(d)  Peninsula shall inform and report in writing to Shionogi its development
     progress from time to time in order for Shionogi to evaluate the
     development status. If Peninsula files an IND and/or NDA with the FDA,
     Peninsula shall provide Shionogi with a summary of such filings submitted
     to the FDA (including any amendments thereto). If Peninsula foresees or
     becomes aware of any delay of [*] months or more in the actual development
     of the Licensed Product as compared with the estimated timeline set forth
     in the then-current Development Plan, Peninsula shall inform Shionogi of
     such delay in writing no later than ten (10) days after becoming aware of
     such delay. In the event that Peninsula so informs Shionogi, the JDC shall
     convene a special meeting to discuss the reasons and potential
     countermeasures for such delay, and to discuss appropriate revisions to the
     Development Plan. If necessary, the JDC shall amend the Development Plan.
     If any such delay in development is attributable to Peninsula's negligence
     or willful misconduct, Shionogi may terminate this Agreement in accordance
     with Section 17.2 hereof if Peninsula does not initiate diligent efforts to
     address and minimize the delay to Shionogi's reasonable satisfaction within
     [*] days after Shionogi determines such delay is attributable to
     Peninsula's negligence or willful misconduct.

(e)  Subject to applicable laws in the Territory, Peninsula shall provide
     Shionogi with all data, information and documents obtained by Peninsula
     promptly after Peninsula obtains final reports of each pre-clinical or
     clinical study for a Licensed Product and give Shionogi reasonable
     assistance in obtaining registration approval for the products containing
     the Compound outside the Territory. Shionogi will be free to utilize such
     data, information and documents to develop and commercialize the products
     containing the Compound in countries outside the Territory. At Peninsula's
     request, Shionogi shall give Peninsula reasonable assistance in obtaining
     Registration Approval in the Territory.

3.4  Shionogi representative(s)' visit

     Upon the request of Shionogi, Peninsula shall allow Shionogi
     representative(s) to attend Peninsula's meetings concerning development of
     the Compound and/or the Licensed Product (including internal meetings and
     meetings with investigators and Regulatory Authorities); provided, however,
     that Shionogi shall obtain Peninsula's approval in advance with respect to
     such attendance of Shionogi representative(s), which approval shall not be
     unreasonably withheld, and that any Shionogi representative(s) shall be
     bound by obligations of confidentiality consistent with 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.

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     obligations contained in Article 16 with respect to the information
     disclosed at such meetings.

ARTICLE 4 FIRST REFUSAL RIGHT FOR EUROPEAN TERRITORY

     Within [*] years from the Effective Date and in the event Shionogi decides
     to seek a partner or grant a license with respect to the Compound and/or
     the Licensed Product in one or more countries in the European Union
     ("European Territory"), Shionogi shall first provide to Peninsula written
     notice offering to Peninsula the opportunity to enter into the negotiation
     with Shionogi. Peninsula shall have [*] days in which to provide to
     Shionogi written notice that it wishes to enter into negotiations with
     Shionogi. If Peninsula provides such written notice to Shionogi within such
     [*] day period, the Parties shall promptly enter into good faith
     negotiations for reasonable terms and conditions for, and to amend this
     Agreement to include, a license with respect to the Licensed Product in
     such European Territory, and shall negotiate for up to [*] days from the
     date of Peninsula's notice. If Peninsula does not exercise its right of
     first negotiation within the [*] day period or if the Parties fail to
     execute an amendment of this Agreement within the [*] day period, Shionogi
     shall be free to discuss terms and conditions with a third party for the
     possible partnership or license in the European Territory; provided,
     however, that Shionogi shall not grant to a third party any right to
     negotiate on terms and conditions materially more favorable to such third
     party than the terms and conditions last offered by Shionogi to Peninsula
     without first offering such more favorable terms and conditions to
     Peninsula for Peninsula's consideration and possible acceptance.

ARTICLE 5 CONSIDERATION

5.1  Milestone Payment.

     In consideration of the license granted by Shionogi to Peninsula herein,
     Peninsula shall pay Shionogi the following non-refundable, one-time
     payments, which total in the aggregate one million eight hundred thousand
     US dollars (US$ 1,800,000). Such payments shall be made upon the first
     occurrence of each milestone specified below:

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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.

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     i.   Within thirty (30) days of the Effective Date, Peninsula shall pay the
          non-refundable payment of [*] US dollars (US$ [*]) to Shionogi.

     ii.  Upon the first dosing of a human subject with a Licensed Product,
          regardless of geographical location, Peninsula shall pay the
          non-refundable payment of [*] US dollars (US$ [*]) to Shionogi.

     iii. Upon the acceptance of the first IND by a Regulatory Authority as to
          the Phase II or Phase III clinical study (whichever occurs first) in
          the Territory, Peninsula shall pay the non-refundable payment of [*]
          US dollars (US$ [*]) to Shionogi.

     iv.  Upon submission of the first NDA for a Licensed Product in the
          Territory, Peninsula shall pay the non-refundable payment of [*] US
          dollars (US$ [*]) to Shionogi.

     v.   Upon obtaining Registration Approval of the Licensed Product for the
          first indication from the FDA, Peninsula shall pay the non-refundable
          payment of [*] US dollars (US$ [*]) to Shionogi.

     Peninsula shall inform Shionogi of the occurrence of each milestone event
     set forth in Subsections (ii) to (v) hereof in writing within [*] business
     days after each such occurrence.

     For clarity, the foregoing milestone payments will be made only once as to
     each milestone under this Agreement.

5.2  Delay

     If, due to the negligence or willful misconduct of Peninsula, each
     milestone event stipulated in Subsection 5.1 (iii), (iv) and (v) does not
     occur within [*] after the target dates set forth for such events in the
     then-current Development Plan, the non-refundable milestone payments set
     forth in Subsections (iii), (iv) and (v) of Section 5.1, as applicable,
     shall become due upon the expiration of the applicable [*] period.

5.3  Bank Account

[*] = 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.

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     All milestone payments made by Peninsula to Shionogi under this Article 5
     shall be paid in United States dollars and remitted by wire transfer to the
     following bank account of Shionogi:

         BANK ACCOUNT
         Bank Name:               [*]
         Bank Address:            [*]
         Account Name:            Shionogi & Co., Ltd.
         Account No.:             [*]

5.4  Tax treaty

     The payments to be made hereunder by Peninsula to Shionogi shall be net
     payments, i.e. without deduction of any bank or transfer charges and any
     taxes, levies or duties levied on such payments in the country of Peninsula
     by any governmental authority, except that Peninsula shall be entitled to
     deduct from the payments to be made to Shionogi the withholding tax, if
     applicable, levied on the payments and shall undertake to pay such
     withholding tax on behalf of Shionogi and shall provide Shionogi with a
     receipt for such payment or other taxation certificate without delay
     following the payment.

ARTICLE 6 MARKETING

6.1  Exchange of Information

     The Parties shall meet periodically, at least once a year, to exchange any
     information and documents each Party possesses or obtains regarding
     marketing of products containing the Compound, including but not limited to
     the marketing plan and/or strategy of each Party. The initial meeting shall
     be held not later than [*] months prior to the anticipated commercial
     launch date of the Licensed Product in the United States.

6.2  Diligent efforts

     Peninsula shall use its diligent efforts in the promotion, marketing and
     sale of the Licensed Product with the goal of maximizing the profit from
     sales of the Licensed Products as early as reasonably practical and
     maintaining such sales as long as commercially reasonable.

[*] = 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.

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\
6.3  Package insert and promotional materials

(a)  To assist Peninsula's marketing activities, Shionogi shall provide
     Peninsula with all information useful for the sale and promotion of the
     Licensed Products by Peninsula.

(b)  To the extent allowable by law, Peninsula shall ensure that all Licensed
     Product packaging, package inserts and significant promotional materials
     associated with the Licensed Products include the logo or company name of
     "Shionogi & Co., Ltd.". Peninsula agrees to provide Shionogi with samples
     of significant written promotional materials prior to the actual use
     thereof in order to obtain Shionogi's approval thereon, which approval
     shall not be unreasonably withheld.

ARTICLE 7 OPTION FOR COLLABORATION

     In the event Peninsula decides to seek a partner (including the Sublicensee
     stipulated in Section 2.2 hereof) for the development and/or the marketing
     of the Compound and/or the Licensed Product for the Territory (a
     "Collaboration"), Peninsula shall first provide to Shionogi written notice
     offering to Shionogi the opportunity to enter into such Collaboration.
     Shionogi shall have [*] days in which to provide to Peninsula written
     notice that it wishes to enter into negotiations with Peninsula for such
     Collaboration. If Shionogi provides such written notice to Peninsula within
     such [*] day period, the Parties shall promptly enter into good faith
     negotiations for reasonable terms and conditions for and to execute a
     Collaboration Agreement, and shall negotiate for up to [*] days from the
     date of Shionogi's notice. If Shionogi does not exercise its right of first
     negotiation within the [*] day period or if the Parties fail to execute the
     Collaboration Agreement within the [*] day period, Peninsula shall be free
     to discuss terms and conditions with a third party for entering into such
     Collaboration, provided however that Peninsula shall not grant to a third
     party any right or sublicense to enter into such Collaboration on terms and
     conditions materially more favorable to such third party than the terms and
     conditions last offered by Peninsula to Shionogi without first offering
     such more favorable terms and conditions to Shionogi for Shionogi's
     consideration and possible acceptance.

[*] = 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.

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ARTICLE 8 CLINICAL SUPPLY

8.1  Supply of the Clinical Sample

     Shionogi shall manufacture or have manufactured and supply to Peninsula
     Peninsula's entire requirements of the Licensed Products which contain a
     250 mg and/or 500 mg strength of the Compound for Phase I, Phase II, and
     Phase III clinical studies for and in the Territory ("Clinical Sample").
     The Parties hereby acknowledge that, prior to the Effective Date, Peninsula
     has placed an initial purchase order for [*], 250 mg strength vials of
     Clinical Samples. Shionogi hereby agrees to manufacture or have
     manufactured and supply such quantity of Clinical Samples to Peninsula no
     later than November 1, 2002 or such other date as the Parties may mutually
     agree.

8.2  Quality Control and Quality Control Audits

     Shionogi shall maintain (or cause to be maintained) a quality control and
     testing program consistent with then-current [*] ("[*]"), as applicable, to
     ensure that the Clinical Samples supplied to Peninsula conform to the
     Specifications (the "Quality Control Procedures").

8.3  Records and Samples.

     Shionogi shall maintain (or cause to be maintained) complete, accurate, and
     authentic accounts, notes, data, and records pertaining to its manufacture,
     processing, Quality Control Procedure test results, and packaging of the
     Clinical Samples in accordance with [*].

8.4  Delivery

     The Clinical Samples ordered shall be delivered [*] (Incoterms 2000). Each
     shipment of the Clinical Samples shall be accompanied by a certificate of
     analysis (i) confirming that Shionogi (or its contract manufacturer)
     followed the Quality Control Procedures (as defined in Section 8.2) for the
     testing of such Clinical Samples, (ii) containing the quality control test
     results, and (iii) confirming that the Clinical Samples supplied to
     Peninsula conform to the Specifications (the "Certificate of Analysis").

8.5  Supply Price

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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.

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     Shionogi shall supply to Peninsula the first [*] vials of 250 mg strength
     Clinical Samples [*] to Peninsula ([*]). Each subsequent vial of 250 mg
     strength Clinical Samples supplied to Peninsula hereunder shall be at a
     price equal to [*] per vial ([*]/vial). The price for 500 mg strength
     Clinical Samples supplied to Peninsula hereunder shall be separately agreed
     upon by the Parties. All payments for the supply of the Clinical Samples by
     Shionogi shall be made in [*] and Shionogi shall deliver to Peninsula such
     Clinical Samples after Shionogi confirms the remittance for each shipment
     made by Peninsula to the bank account of Shionogi designated in Section
     5.3.

8.6  Acceptance and Rejection of Clinical Samples

(a)  All Clinical Samples supplied to Peninsula hereunder shall conform to the
     Specifications and shall be manufactured in compliance with [*]. Promptly
     after Peninsula or its designee receives the Clinical Samples supplied by
     Shionogi, Peninsula or its designee shall conduct an initial acceptance
     test to detect visible defects (such as broken or crushed vials) and to
     discover any shortfalls in the quantity delivered within thirty (30) days
     after delivery of the Clinical Samples to the delivery destination set
     forth in the applicable purchase order. If as a result of such initial
     acceptance test, Peninsula discovers Clinical Samples that are defective or
     do not conform to the Specifications ("Defective Products"), or any
     shortage of Clinical Samples with respect to the quantity delivered,
     Peninsula shall notify Shionogi in writing, which notice shall identify in
     reasonable detail the nature of the defect or shortage.

(b)  If Peninsula discovers that Clinical Samples are Defective Products and
     that the nature of such defect could not have been discovered by performing
     the initial acceptance test of the Clinical Samples set forth in Section
     8.6(a) within thirty (30) days after delivery of the Clinical Samples,
     Peninsula may revoke its acceptance of such Defective Products by providing
     written notice to Shionogi of such revocation. Such notice shall identify
     in reasonable detail the nature of the defect and shall be provided within
     thirty (30) days of determining the existence of the defect but no later
     than [*] months after the delivery of the Clinical Samples.

(c)  If it is determined that any non-conformity with the Specifications and/or
     shortage of quantity is attributable to Shionogi after Shionogi's
     confirmation of the notice together with relative information supplied by
     Peninsula under Section 8.6(a) or 8.6(b), Shionogi shall, at Peninsula's
     option and at Shionogi's expense, refund

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     Peninsula for the amount paid for such Defective Products under Section
     8.5, replace such Defective Products or make up the shortage in quantities
     of Clinical Samples, as applicable, as soon as reasonably possible.

(d)  If Shionogi disagrees with Peninsula's claim that certain Clinical Samples
     are Defective Products, the Parties will first use good faith efforts to
     settle such dispute within thirty (30) days of Peninsula's notice of such
     defects; if they are unable to do so within such time period, the dispute
     will be resolved by a mutually acceptable independent third party tester
     after analysis of the relevant Clinical Samples. Such third party tester
     shall determine whether such Clinical Samples are defective, and the
     Parties agree that such tester's determination shall be final, binding, and
     determinative as to whether such Clinical Samples are Defective Products.
     The Party against whom the third party tester rules shall bear all costs of
     the third party testing.

ARTICLE 9  COMMERCIAL SUPPLY

9.1  Commercial Supply of the Licensed Products

(a)  It is a common intention of the Parties, as of the Effective Date, that
     Shionogi will manufacture or have manufactured and supply to Peninsula, and
     Peninsula will purchase exclusively from Shionogi, Peninsula's entire
     requirements of the Licensed Products (in final form and in compliance with
     GMP) for commercial sale by Peninsula in the Territory. Promptly after the
     Effective Date, the Parties shall discuss and negotiate in good faith the
     terms and conditions for such supply of the Licensed Products, which terms
     shall be commercially reasonable and typical for transactions of this type;
     provided, however, that the price per 250 mg vial of Licensed Product for
     commercial sale shall be [*]. Further, the Parties shall discuss an
     appropriate form of the Compound (i.e., bulk Compound or nude vial) to be
     supplied to Peninsula, if necessary. The Parties shall use diligent efforts
     to enter into an agreement governing the terms and conditions of Shionogi's
     supply of Peninsula's requirements of Licensed Products for commercial sale
     by the Target Date (as hereinafter defined).

(b)  Based on Peninsula's independent third party inspection of the facilities
     at which Shionogi will manufacture Licensed Products, as well as
     Peninsula's consultation with experts regarding FDA compliance, Peninsula
     agrees that the current manufacturing process for the Licensed Products at
     Shionogi's current facilities is sufficient for the manufacture of Clinical
     Samples for use in clinical studies of the Licensed Product in

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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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     the United States. However, the Parties understand and agree that a [*] to
     include the [*] would be beneficial to both Parties. Shionogi agrees that
     it [*], in addition to other slight modifications, at [*] in order to
     supply Licensed Products in compliance with GMP for commercial sale and/or
     for pre-approval inspection by a Regulatory Authority. Accordingly,
     Shionogi hereby agrees to use diligent and reasonable efforts to (i) [*] to
     its [*], including the [*] to the [*], in order to manufacture the Licensed
     Products in compliance with GMP or, in the alternative, (ii) enter into an
     agreement with a third party contractor for the manufacture of Licensed
     Products in accordance with GMP, no later than [*] years prior to the date
     on which Peninsula anticipates launching the first Licensed Product in any
     country in the Territory.

(c)  If Shionogi foresees that, despite diligent and reasonable efforts, it will
     not be able to or otherwise will elect not to manufacture or have
     manufactured and supply to Peninsula its requirements of Licensed Products
     in compliance with GMP for commercial sale by Peninsula in the Territory,
     for any reason, then Shionogi will promptly notify Peninsula in writing of
     such situation, but in no event later than [*] years prior to the date on
     which Peninsula anticipates launching the first Licensed Product in any
     country in the Territory. If Shionogi provides such notice to Peninsula,
     Peninsula and Shionogi will immediately convene a meeting to seek all
     appropriate means of solution, including without limitation further search
     for a possible third party contractor as a source for manufacturing (on
     Shionogi's behalf) the Licensed Product to be supplied to Peninsula. In any
     event, Shionogi shall manufacture or have manufactured and supply to
     Peninsula its requirements of GMP-compliant bulk Compound necessary to
     manufacture or have manufactured Licensed Products for commercial sale by
     Peninsula in the Territory at a supply price to be negotiated by the
     Parties that is appropriate under the circumstances. If the Parties cannot
     establish the means of solution within [*] days of convening the first such
     meeting, Shionogi is deemed to grant to Peninsula a license in the
     Territory with rights to grant sublicenses to third parties, under the
     Licensed Patents, Know-How and any other intellectual property Controlled
     by Shionogi covering or claiming the manufacture of the Compound and/or the
     Licensed Product on commercially reasonable terms and conditions to be
     mutually agreed by the Parties, taking into account the circumstances under
     which such license is being granted to Peninsula.

9.2  [*]

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     Peninsula and Shionogi agree to discuss in good faith an appropriate
     mechanism by which the supply price per 250 mg and/or 500 mg vial of
     Licensed Product for commercial sale will be [*] of Licensed Products
     purchased by Peninsula.

9.3  Target Date

     The Parties shall make their reasonable best efforts to conclude the
     agreement setting forth the result of discussions stipulated in Sections
     9.1 and 9.2 by September 30, 2002 or such other date to be mutually agreed
     by the Parties ("Target Date"). If, despite serious and faithful discussion
     and good faith efforts, the Parties are unable to enter into such agreement
     by the Target Date, such dispute shall be referred to the President of
     Peninsula and the [*] of Shionogi or other appropriate officer of Shionogi
     who shall meet promptly and use good faith and diligent efforts for final
     resolution.

ARTICLE 10 SALES REPORT

     Peninsula shall submit to Shionogi a detailed sales report on a quarterly
     and country by country basis, including the number of Licensed Products
     sold during each month of such quarter to customers, no later than [*] days
     after the end of each calendar quarter.

ARTICLE 11. SERIOUS ADVERSE DRUG REACTION REPORTING.

     Peninsula shall be responsible for receiving, investigating, and
     documenting all serious adverse drug reactions relating to the use of the
     Licensed Products which require reporting to appropriate Regulatory
     Authorities. Peninsula will be solely responsible for filing all
     post-marketing reports of such serious adverse drug reactions required by
     Regulatory Authorities, or as required by applicable laws or regulations.
     During the term of this Agreement, in the event that each Party receives a
     report of a serious adverse drug reaction relating to the use of a Licensed
     Product anywhere in the world, it shall immediately notify the other in
     writing. The Parties shall periodically exchange a summary of all serious
     adverse drug reactions of Licensed Products during the term of this
     Agreement and shall separately agree on detailed procedure for exchanging
     and reporting the information.

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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.

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ARTICLE 12 INTELLECTUAL PROPERTY RIGHTS

12.1 Representation and Warranty.

     UNLESS OTHERWISE PROVIDED HEREIN, SHIONOGI MAKES NO REPRESENTATIONS AND
     WARRANTS, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPOUND AND/OR
     THE LICENSED PRODUCT, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF
     VALIDITY OR ENFORCEABILITY OF THE LICENSED PATENTS, NON-INFRINGEMENT OF ANY
     THIRD PARTY'S PATENT OR THE NON-EXISTENCE OF ANY INFRINGEMENT OF THE
     LICENSED PATENTS IN THE TERRITORY.

12.2 Prosecution and Maintenance.

     During the term of this Agreement, Shionogi, [*], shall use diligent, good
     faith efforts to file, prosecute and maintain any patent applications and
     patents within the Licensed Patents. Shionogi shall use reasonable best
     efforts to extend the term of the Licensed Patents covering the Compound
     and/or the Licensed Product and Peninsula shall cooperate with Shionogi in
     obtaining such extension. Shionogi shall keep Peninsula continually
     informed of such prosecution efforts and shall reasonably consider
     Peninsula's comments on such prosecution.

12.3 Infringement.

(a)  In the event that a Party becomes aware of any alleged or threatened
     infringement of the Licensed Patents in the Territory, such Party shall
     promptly notify the other Party in writing. Shionogi shall have the right,
     but not the obligation, at its discretion and expense, to enforce the
     Licensed Patents against such infringement, and to defend the Licensed
     Patents against any claims of invalidity or unenforceability in the
     Territory. Peninsula shall give Shionogi all reasonable information and
     assistance with respect to such enforcement. Except as set forth in Section
     12.3(b), any damages or remuneration received as a result of such action
     shall be [*] after reimbursing for the costs and expenses incurred by
     Peninsula for its assistance.

(b)  Peninsula shall have the right, but not the obligation, at its discretion
     and expense, to join in such action and seek damages for its lost profits
     caused by such infringement. Any damages or remuneration received as a
     result of such action shall be applied first to reimburse each Party for
     the costs and expenses incurred in such action. Any

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     remaining amount of such damages or remuneration shall be allocated by the
     Parties [*] of the Parties.

(c)  If Shionogi does not take any legal action for any reason with respect to
     such infringement within one hundred twenty (120) days following
     Peninsula's notification, Peninsula shall have the right to bring any
     appropriate suit or action against the infringer at Peninsula's expense.
     Shionogi shall give Peninsula all reasonable information and assistance
     with respect to such infringement. Any damages or remuneration received as
     a result of such action shall be [*] after reimbursing any cost and
     expenses incurred by Shionogi for its assistance.

12.4 Generic compound

     If any of the patents included within the Licensed Patents are held invalid
     or unenforceable, and as a result, a generic version of the Licensed
     Product enters the pharmaceutical market in the Territory and the volume
     share of such generic version equals or exceeds [*] percent or more of the
     total sales of all Licensed Products in a country in the Territory during
     the term of this Agreement, Shionogi and Peninsula will negotiate in good
     faith a revision of financial conditions to be agreed by the Parties in
     accordance with Article 9.

12.5 Inventions.

(a)  If any inventions (an "Invention") are made pursuant to work conducted
     under this Agreement, such Invention shall belong to the Party making the
     Invention and such Party shall have the right to file, prosecute and
     maintain patent applications and patents covering Inventions made solely by
     that Party.

(b)  If Shionogi makes an Invention that is necessary or useful for Peninsula to
     develop, import, use, market or sell the Licensed Product, such Invention
     shall be included in the definition of the Know-How or the Licensed
     Patents, as the case may be, and shall be added to Appendix II hereto
     promptly after Shionogi files patent applications relating to such
     Invention.

(c)  If Peninsula makes an Invention that is necessary or useful for Shionogi to
     develop, import, use, market or sell the Licensed Product outside the
     Territory, Peninsula shall grant to Shionogi [*] license with a right to
     grant sublicenses under the patents claiming such Invention solely for use
     in using, manufacturing, developing and commercializing the Licensed
     Product outside the Territory.

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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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(d)  If the Invention is jointly made by the Parties, Shionogi and Peninsula
     shall determine in good faith whether or not patent applications should be
     filed concerning such jointly-owned Invention and which Party shall be
     responsible for filing and prosecuting any patent applications filed. The
     Parties shall share the costs in filing any patent applications, obtaining
     and maintaining any patents covering the joint Invention.

ARTICLE 13 TRADEMARK

     The Licensed Products sold in the Territory shall bear a trademark
     ("Trademark") chosen and owned by Peninsula. Peninsula, at its reasonable
     discretion, may use the trademark (if any) owned by Shionogi for the
     marketing of the Licensed Products (the "Shionogi Trademark") for so long
     as Peninsula markets the Licensed Products. If Peninsula desires to use the
     Shionogi Trademark, then to the extent legally permitted, Shionogi shall
     grant the right to use the Shionogi Trademark for such purpose free of
     charge during the term of this Agreement. The Licensed Products sold in the
     Territory shall bear the Shionogi name or logo (the "Marks"), as provided
     in Subsection 6.3(b), and Shionogi grants Peninsula the right to use the
     Marks to the extent necessary for Peninsula to fulfill the obligations set
     forth in Subsection 6.3(b) applicable to the Licensed Products sold in the
     Territory. Peninsula will have no obligation to pay royalties for such use
     of the Marks and Shionogi Trademark during the term the Agreement. If
     Shionogi desires to use the Trademark owned or Controlled by Peninsula to
     market products containing the Compound outside the Territory, then to the
     extent legally permitted, Peninsula shall grant the right to use the
     Trademark for such purpose free of charge for so long as Shionogi (or its
     licensee) markets and sells any products containing the Compound outside
     the Territory. Shionogi shall not use the Trademark outside the scope of
     this Agreement and shall use the Trademark in accordance with Peninsula's
     then-current reasonable trademark guidelines, if any, as provided to
     Shionogi in writing in advance of any such use as they may be updated from
     time to time by Peninsula, or alternatively, with Peninsula's prior written
     approval for such use.

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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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ARTICLE 14 INDEMNIFICATION

14.1 Indemnification by Shionogi.

     Shionogi shall indemnify, defend and hold Peninsula and Peninsula's
     Affiliates and Sublicensees harmless from and against any and all
     liabilities, demands, damages, losses, costs, expenses or money judgments
     (including reasonable attorney's fees and expenses of litigation) arising
     or resulting from any claims made or suits which arise or result from (i)
     the manufacture and/or supply of the Licensed Product by or under the
     control of Shionogi, (ii) the breach of any obligations or warranties
     hereunder by Shionogi, (iii) the intentional act or omission or the
     negligence of Shionogi, or (iv) the use of the Trademark in connection with
     the marketing and/or sale of products containing the Compound outside the
     Territory, unless such liabilities, demands, damages, losses, costs,
     expenses or money judgments arise or result from the intentional act or
     omission or the negligence of Peninsula. Such indemnity shall not apply to
     the extent that Peninsula has an indemnity obligation for such claim
     pursuant to Section 14.2, or if Peninsula fails to comply with the
     indemnification procedures set forth in Section 14.3.

14.2 Indemnification by Peninsula.

     Peninsula shall indemnify and hold Shionogi and its Affiliates harmless
     from and against any and all liabilities, demands, damages, losses, costs,
     expenses or money judgments (including reasonable attorney's fees and
     expenses of litigation) arising or resulting from any claims made or suits
     which arise or result from (i) Peninsula's development, distribution,
     marketing and promotion of the Licensed Product in and for the Territory,
     (ii) Peninsula's exploitation or use of the Licensed Patents, Know-How or
     Marks, (iii) the breach of any obligations hereunder by Peninsula or (iv)
     the intentional act or omission or the negligence of Peninsula unless such
     liabilities, demands, damages, losses, costs, expenses or money judgments
     arise or result from the intentional act or omission or the negligence of
     Shionogi. Such indemnity shall not apply to the extent that Shionogi has an
     indemnity obligation for such claim pursuant to Section 14.1, or if
     Shionogi fails to comply with the indemnification procedures set forth in
     Section 14.3.

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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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14.3 Control of Defense.

     If either Party is entitled to indemnification under this Article 14 (the
     "Indemnified Party"), it shall give written notice to the Party providing
     indemnification (the "Indemnifying Party") of any claims that may be
     subject to indemnification promptly after learning of such claims, and the
     Indemnifying Party shall assume the defense of such claims with counsel
     reasonably satisfactory to the Indemnified Party. If such defense is
     assumed by the Indemnifying Party with counsel so selected, the
     Indemnifying Party shall not be subject to any liability for any settlement
     of such claims made by the Indemnified Party without the Indemnifying
     Party's consent (but such consent shall not be unreasonably withheld or
     delayed), and shall not be obligated to pay the fees and expenses of any
     separate counsel retained by the Indemnified Party with respect to such
     claims.

ARTICLE 15 NON-COMPETITION

     Peninsula shall not distribute, sell, market or promote, during the term of
     this Agreement, any injectable carbapenem antibiotics other than the
     Licensed Product in the Territory.

ARTICLE 16 CONFIDENTIALITY AND LIMITATION-ON-USE

16.1 Obligation

     Except to the extent expressly authorized by this Agreement, during the
     term of this Agreement and for a period of five (5) years after termination
     or expiration of this Agreement, each Party agrees to keep Information
     and/or Know-How received from the other Party (including the information
     received from the other Party under the Secrecy Agreement or Letter of
     Intent) (collectively "Confidential Information") confidential and not to
     disclose the same to any third party without the prior written consent of
     the other Party except as otherwise permitted in this Article 16, and to
     use the other Party's Confidential Information only for the purpose of this
     Agreement.

     The obligations set forth above do not apply to the following Confidential
     Information that the receiving Party can demonstrate by competent written
     proof:

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     (i)   is or becomes publicly known through no fault of the receiving Party,

     (ii)  is already known to the receiving Party, other than under an
           obligation of confidentiality, prior to disclosure by the disclosing
           Party as evidenced by the business records of the receiving Party,

     (iii) is learned by the receiving Party from a third party under no
           obligations of confidentiality with respect thereto; or

     (iv)  is developed independently by employees of the receiving Party who
           had no access to the Confidential Information.

16.2 Authorized Disclosure.

     Each Party may disclose Confidential Information received from the other
     Party to the extent such disclosure is reasonably necessary for the
     following reasons:

     (a)  filing or prosecuting the Licensed Patents;

     (b)  regulatory filings to the Regulatory Authorities;

     (c)  prosecuting or defending litigation;

     (d)  complying with applicable governmental regulations;

     (e)  conducting pre-clinical or clinical trials of the Licensed Product in
          the Territory; and

     (f)  disclosure to Affiliates, Sublicensees, advisors, consultants,
          contract research organizations or other persons or entities who agree
          to be bound by similar terms of confidentiality and limitation-on-use
          obligations set forth in Section 16.1 hereof.

     Notwithstanding the foregoing, in the event a Party is required to make a
     disclosure of the other Party's Confidential Information pursuant to this
     Section 16.2 it will, except where impracticable, give reasonable advance
     notice to the other Party of such disclosure and use best efforts to secure
     confidential treatment of, or obtain a protection order or other similar
     order for, such information. In any event, the Parties agree to take all
     reasonable action to avoid disclosure of confidential information
     hereunder.

ARTICLE 17 TERM AND TERMINATION

17.1 Term

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     This Agreement will become effective as of the Effective Date and continue
     to be effective until the later of (a) the expiration of the last to expire
     of the Licensed Patents owned or Controlled by Shionogi, or (b) ten (10)
     years after the first commercial launch of the Licensed Product in the
     Territory on a country-by-country basis.

17.2 Right to Terminate of Shionogi

     Shionogi has the right to terminate this Agreement as follows:

     (a)  If Peninsula fails to achieve the milestones set forth in the
          then-current Development Plan for first dosing for human as to the
          Phase II and/or Phase III clinical trials, submitting an NDA or
          obtaining Registration Approval for the Licensed Product by [*] months
          or more and such delay is attributable to Peninsula's negligence or
          willful misconduct, Shionogi shall provide written notice to Peninsula
          of such material failure. If Peninsula does not initiate diligent
          efforts to address and minimize the delay to Shionogi's reasonable
          satisfaction within [*] days after the date on which it receives
          notice of failure, Shionogi shall have the right to terminate on
          written notice,

     (b)  If there occurs a change in control in Peninsula and (i) the acquiring
          company elects not to further develop and/or market the Compound
          and/or the Licensed Product or (ii) the acquiring company is
          developing and/or marketing any injectable carbapenem antibiotics,

     (c)  In the event Peninsula materially breaches any of the provisions of
          this Agreement and fails to remedy such breach within sixty (60) days
          after receiving notice thereof from Shionogi (except as provided in
          subsection (a) above), or

     (d)  On written notice, in the event Peninsula commences liquidation
          proceedings, is subject to an assignment for the benefit of creditors,
          or ceases to carry on its business in the normal course.

17.3 Right to Terminate of Peninsula

     Peninsula has the right to terminate this Agreement:

     (a)  In the event Peninsula determines that it is not feasible to pursue
          the development, launch or sale of the Licensed Product due to [*],
          and/or [*] reasons, including but not limited to [*] caused by the
          Compound and/or the Licensed Product and the [*] of the Licensed
          Product, Peninsula may provide written notice to Shionogi of such
          determination, together with competent information thereof (the
          "Determination Notice") and have serious discussions with Shionogi.
          Peninsula may terminate

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          effective upon written notice thirty (30) days after Shionogi's
          receipt of the Determination Notice,

     (b)  In the event Shionogi materially breaches any of the provisions of
          this Agreement and fails to remedy such breach within sixty (60) days
          after receiving notice thereof from Peninsula, or

     (c)  Upon thirty (30) days' written notice in the event Shionogi commences
          liquidation proceedings, is subject to an assignment for the benefit
          of creditors, or ceases to carry on its business in the normal course.

17.4 Expiration of this Agreement

     Upon expiration of this Agreement pursuant to Section 17.1 hereof:

     (a)  Peninsula's obligation to purchase from Shionogi, and Shionogi's
          obligation to sell to Peninsula Licensed Products will cease;
          provided, however, that either Party shall not be relieved from
          performing any obligations accrued prior to the date this Agreement
          terminates. If Peninsula desires to continue purchasing the Licensed
          Product from Shionogi after the expiration of this Agreement, the
          Parties shall negotiate in good faith the terms and conditions
          therefor.

     (b)  Peninsula's license will revert to a perpetual, irrevocable,
          non-exclusive, royalty-free license with regard to the use of
          Know-How. If Peninsula has been using the Shionogi Trademark and
          desires to continue using such trademark after the expiration of this
          Agreement, the Parties will enter into a trademark license agreement
          covering use of the Shionogi Trademark under mutually agreed
          conditions.

17.5 Early termination of this Agreement

     Upon early termination of this Agreement pursuant to Section 17.2 or
     Subsection 17.3(a):

     (a)  Peninsula shall immediately cease to develop, distribute, market and
          promote the Licensed Product and shall destroy or return to Shionogi
          all Peninsula's inventory stock of the Licensed Product at the time of
          termination in accordance with Shionogi's instruction.

     (b)  Peninsula shall return any Know-How received from Shionogi under this
          Agreement.

     (c)  Peninsula shall transfer and/or cause to transfer to Shionogi or
          Shionogi's designee(s) the [*], with Shionogi [*] Peninsula for [*] in
          connection with such transfer.

17.6 Damages

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     Termination of this Agreement by the non-breaching Party shall in no way
     affect or limit such non-breaching Party's right to claim against the
     breaching Party for any damages arising out of the breach of this
     Agreement.

     NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
     INCIDENTAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS) ARISING
     OUT OF THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS
     SECTION 17.6 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
     OBLIGATIONS OF ANY PARTY UNDER ARTICLE 14, OR DAMAGES AVAILABLE FOR BREACH
     UNDER ARTICLE 16.

17.7 Survival

     Any provisions of Article, Sections or Subsections 3.3(e), 12.1, 12.3,
     12.5, 14, 16, 17.6, and 17.7 of this Agreement shall survive the
     termination or expiration of this Agreement.

ARTICLE 18 FORCE MAJEURE

     Each Party shall be excused from the performance of its obligations under
     this Agreement to the extent that such performance is prevented by force
     majeure, i.e. any events beyond the reasonable control of the Party which
     shall include, but not be restricted to, fire, flood, earthquake,
     explosion, riot, strike, lockout, war and regulations of any governmental
     authority. The affected Party shall promptly provide notice of such force
     majeure to the other Party. Such excuse of performance shall continue for
     so long as the condition constituting force majeure continues and solely to
     the extent the inability to perform is caused by such condition, and
     provided that the affected Party takes reasonable efforts to avoid the
     affects of such condition and to perform if possible. Notwithstanding the
     foregoing, a force majeure condition shall not excuse Peninsula for making
     any payments owed hereunder, unless such force majeure event actually
     prevents Peninsula's ability to make such payment. Either Party shall
     notify the other Party promptly in the event of any indications of any
     force majeure conditions occurring and shall discuss the effect of such
     conditions on this Agreement and the

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     measures to be taken. Each Party shall use its best efforts to reasonably
     avoid or restrict any detrimental effects in connection with such
     incidents.

ARTICLE 19 PUBLIC ANNOUNCEMENT

     Either Party shall be free to make a public announcement regarding the
     existence of this Agreement but not the terms and conditions hereof. If a
     Party wishes to make a public announcement regarding the terms and
     conditions of this Agreement, such Party shall provide the other Party with
     a copy of any proposed announcement text or other relevant information
     proposed to be published at least sixty (60) days prior to the scheduled
     publication date for the other Party to review and comment.

ARTICLE 20 MISCELLANEOUS

20.1 Notice

     Any notice or other communication required or permitted under this
     Agreement shall be in writing, in English, addressed to the appropriate
     Party at the address given on the first page of this Agreement or to such
     other address as may be specified by a Party in accordance with this
     Section 20.1, and shall be deemed to have been duly given (a) when
     received, if hand-delivered, sent by a reputable overnight service, or by
     facsimile (provided that such facsimile is later confirmed in writing) or,
     (b) five (5) business days after mailing, if placed in the mail for
     delivery by registered or certified mail, return receipt requested, postage
     prepaid.

20.2 Entire Agreement/Amendments

     This Agreement including the Appendices attached hereto and made a part
     hereof embodies the entire agreement between the Parties concerning the
     subject matter hereof, and all prior representations, warranties or
     agreements relating hereto are hereby terminated and shall be of no force
     or effect whatsoever. No amendment, change, modification nor alteration of
     the terms and conditions of this Agreement shall be binding upon either
     party unless in writing and signed by the Parties.

20.3 Assignment

[*] = 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.

                                      -26-
<PAGE>

     This Agreement is personal in its nature and neither Party shall assign any
     right or obligation hereunder, except those expressly provided herein,
     without the prior written consent of the other Party. Notwithstanding the
     foregoing, subject to Subsection 17.2 (b), either Party may assign this
     Agreement to its successor in interest in connection with any merger,
     acquisition, reorganization, consolidation or sale of all or substantially
     all of the assets of the business to which this relates. This Agreement
     shall be binding upon and, subject to the terms of the foregoing sentence,
     inure to the benefit of the Parties' successors, and permitted assigns.

20.4 Severability

     In case any provision in this Agreement shall be held to be invalid,
     illegal, or unenforceable, the validity, legality, and enforceability of
     the remaining provision hereof shall not in any way be affected or impaired
     thereby.

20.5 Relationship of the Parties.

     This Agreement shall not constitute any Party the legal representative or
     agent of the other, nor shall any Party have the right or authority to
     assume, create, or incur any third-party liability or obligation of any
     kind, either express or implied, against, in the name of, or on behalf of
     the other except as expressly set forth in this Agreement.

20.6 Headings.

     The headings contained in this Agreement have been added for convenience
     only and shall not affect the construction, meaning or interpretation of
     this Agreement or any of its terms and conditions.

20.7 Counterparts.

     This Agreement may be executed in one or more counterparts, each of which
     shall be an original and all of which shall constitute together the same
     document.

20.8 Export Control.

     This Agreement is made subject to any restrictions concerning the export of
     products or technical information from the United States of America or
     other countries which may be imposed upon or related to Shionogi or
     Peninsula from time to time. Each Party agrees that it will not export,
     directly or indirectly, any technical information acquired from the other
     Party under this Agreement or any products using such technical

[*] = 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.

                                      -27-
<PAGE>

     information to a location or in a manner that at the time of export
     requires an export license or other governmental approval, without first
     obtaining the written consent to do so from the appropriate agency or other
     governmental entity.

ARTICLE 21 GOVERNING LAW AND DISPUTE RESOLUTION

21.1 Governing Law

     This Agreement shall be interpreted and construed in accordance with the
     laws of the State of New York, without reference to the principles of
     conflict of laws. This Agreement was prepared in the English language,
     which language shall govern the interpretation of and any dispute regarding
     the terms of the Agreement.

21.2  Dispute Resolution.

(a)  Any controversies, disputes, or claims arising between in the Parties in
     connection with this Agreement that the Parties are unable otherwise to
     resolve shall be referred to the President of Peninsula and the [*] of
     Shionogi or other appropriate officer of Shionogi appointed by Shionogi,
     who shall promptly meet and use good faith, diligent efforts to seek to
     resolve the matter. If such officers are unable to resolve a matter
     presented to them under the preceding sentence within [*] days of referral,
     and if such dispute relates to scientific or technical issues, the Parties
     shall mutually agree upon an independent third party with an appropriate
     scientific background to resolve such dispute. Such independent third
     party's decision shall be binding on the Parties. All other disputes that
     the officers are unable to resolve shall be referred to arbitration in
     accordance with Subsection 21.2(b).

(b)  Any controversy or disputes or claims arising between the Parties in
     connection with this Agreement which are not scientific or technical and
     have not been settled by the officers of the Parties under Subsection
     21.2(a) shall be finally settled under the Rules of Arbitration of the
     International Chamber of Commerce in Paris, France, by one or more
     arbitrators appointed in accordance with said Rules. The arbitration shall
     be held in San Francisco (the United States) if requested by Shionogi, or
     in Osaka (Japan) if requested by Peninsula. Any award or decision made in
     such arbitration shall be final and binding upon the Parties.

[*] = 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.

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<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their respective duly authorized officers as of the Effective Date.

For and on behalf of                  For and on behalf of
Shionogi & Co., Ltd.                  Peninsula Pharmaceuticals, Inc.

/s/ Reiji Takeda                      /s/ Paul F. Truex
-----------------------------------   ----------------------------------
Name: Reiji Takeda                    Name:  Paul F. Truex
Title: Director and General Manager   Title:    President
Date: July 11, 2002                   Date: July 11, 2002

[*] = 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.

                                      -29-
<PAGE>

                                                                      Appendix I

[Chemical formula of the Compound]

[*] = 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.

                                      -30-
<PAGE>

                                                                     Appendix II

[List of Licensed Patents]

UNITED STATES

          Patent No. or                       Expiry date*
         Application No.
               [*]                                 [*]
               [*]                                 [*]
               [*]                                 [*]
               [*]                                 [*]
               [*]                                 [*]

CANADA
          Patent No. or                       Expiry date*
         Application No.
               [*]                                 [*]
               [*]                                 [*]
               [*]                                 [*]
               [*]                                 [*]

MEXICO
          Patent No. or                       Expiry date*
         Application No.
               [*]                                 [*]
               [*]                                 [*]

* Original term without extension

[*] = 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.

                                      -31-
<PAGE>

                                                                    Appendix III

     I.   [*]

     II.  [*]

     III. [*]

     IV.  [*]

     V.   [*]

     VI.  [*]

     VII. [*]

[*] = 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.

                                      -32-
<PAGE>

                                                                     Appendix IV

[Development Plan to be separately attached]

[*] = 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.

                                      -33-
<PAGE>

                                                                      Appendix V

[Specifications of the Licensed Product]

<TABLE>
<CAPTION>
Test                                              Acceptance Limits
<S>                                               <C>
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
[*]                                                   [*]
</TABLE>

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

                                      -34-