Document:

<PAGE>

Certain confidential information contained in this document, marked by brackets,
has been ommitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

                                                                   EXHIBIT 10.28

                            COLLABORATION AGREEMENT

     This Collaboration Agreement ("Agreement") is entered into as of June 1,
2000 (the "Effective Date"), between Tularik Inc. ("Tularik"), a Delaware
corporation, and Japan Tobacco Inc. ("JT"), a corporation organized under the
laws of Japan (individually, a "Party" and, collectively, the "Parties").

     Whereas, Tularik and JT have entered into two previous agreements to
research, develop and commercialize certain pharmaceutical products useful in
the diagnosis, prevention and treatment of human diseases;

     Whereas, Tularik and JT desire to participate in an additional
collaborative program (as herein defined) to research, discover, develop,
manufacture and market products that agonize or antagonize various Program
Targets (as herein defined) for the treatment of disease in humans; and

     Whereas, Tularik has established a wholly owned subsidiary (the
"Subsidiary") to conduct a portion of such collaborative program;

     Whereas, the Parties desire to execute a definitive agreement with respect
to such additional collaborative program;

     Now, Therefore, in consideration of the foregoing and the premises and
conditions set forth herein, the Parties agree as follow:

                                   ARTICLE 1

                                  DEFINITIONS

     1.1  "Affiliate" shall mean any corporation or other business entity that
during the term of this Agreement controls, is controlled by or is under common
control with JT or Tularik, but only for so long as such entity controls, is
controlled by or is under common control with JT or Tularik. For this purpose,
control means the possession of the power to direct or cause the direction of
the management and the policies of an entity, whether through ownership
(directly or indirectly) of over fifty percent (50%) of the stock entitled to
vote, or if not meeting the preceding requirements, any company owned or
controlled by or owning or controlling JT or Tularik at the maximum control or
ownership right permitted in a country where such company exists.
Notwithstanding the foregoing, the Government of Japan shall not be considered
an Affiliate of JT.

     1.2  "AAA" shall have the meaning set forth in Section 20.2.

     1.3  "Amount Due" shall have the meaning set forth in Section 7.3(c).

     1.4  "Change of Control Purchase Option" shall have the meaning set forth
in Section 1.5 of the Option Agreement.

                                       1.
<PAGE>

     1.5  "Claims" shall have the meaning set forth in Section 14.1(a).

     1.6  "Closing Date" shall have the meaning given in Section 2.3 of the
Option Agreement between the Parties of even date herewith.

     1.7  "Collaboration Lead Compound" shall have the meaning set forth in
Section 4.2(a).

     1.8  "Competitive Non-Collaboration Compound Infringement" shall have the
meaning set forth in Section 15.7.

     1.9  "Competitive Product Infringement" shall have the meaning set forth in
Section 15.7.

     1.10 "Confidential Information" shall mean, subject to the limitations set
forth in Section 16.1 hereof, all information disclosed by each Party to the
other Party under this Agreement.

     1.11 "Co-Promotion" or "Co-Promote" shall mean activities that the Parties
are undertaking to promote jointly Products in the Co-Promotion Territory, if
the Co-Promotion Alternative is elected as provided in Section 9.5.

     1.12 "Co-Promotion Alternative" shall have the meaning set forth in Section
9.4.

     1.13 "Co-Promotion Territory" shall mean all of the countries and
territories of the world other than the countries and territories within the
Exclusive Territories.

     1.14 "Cost of Goods" shall have the meaning set forth in Appendix C.

     1.15 "Cost of Manufacture" shall have the meaning set forth in Appendix C.

     1.16 "Current Program Target" shall mean one of the Targets set forth on
Appendix F that has been proposed by a Party, and accepted by the RMC, pursuant
to Section 3.3. The Parties shall update Appendix F from time to time to reflect
all Current Program Targets, including New Target Candidates selected as New
Targets and any Current Program Targets that the RMC determines should not
continue to be included in the Research Program, pursuant to Section 3.3. The
number of Current Program Targets at any given point in time shall not exceed
[*] unless the RMC shall have otherwise unanimously agreed pursuant to Section
2.3(b)(ii). Current Program Targets include New Targets.

     1.17 "Development" shall mean the development of any Product occurring from
and after the filing of an IND, through and including approval of an NDA and any
other governmental approvals required for the commercialization of such Product
in a country. Development shall not include Pre-Clinical Development activities.

     1.18 "Development Budget" shall mean the budget prepared for Development of
a Product pursuant to Section 4.7.

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                       2.
<PAGE>

     1.19 "Development Costs" shall mean all costs and expenses reasonably
charged directly to the Pre-Clinical Development of any Lead Compound, Research
Compound or Collaboration Lead Compound or Development of any Product, as well
as Overhead costs of the functions that directly support such Pre-Clinical
Development or Development (as calculated in accordance with GAAP and using the
same allocation methods that the Party incurring such costs uses throughout its
operations, but in all events [*], all as specified in the Development Plan and
the Development Budget for the Co-Promotion Territory and each development plan
and budget prepared for the Exclusive Territories pursuant to Section 4.7.
"Development Costs" shall include, without limitation: (i) [*]

     1.20 "Development Plan" shall mean the plan prepared for Development of a
Product pursuant to Section 4.7.

     1.21 "Direct Administrative Expenses" shall have the meaning set forth in
Appendix C.

     1.22 "Discontinued Compound" shall have the meaning set forth in Section
4.3.

     1.23 "Distribution Costs" shall have the meaning set forth in Appendix C.

     1.24 "Drug Approval Applications" shall have the meaning set forth in
Section 4.11.

     1.25 "EC" shall mean the executive committee established pursuant to
Section 2.2.

     1.26 "Excluded Targets" shall mean a Target that [*]

     1.27 "Exclusive Marketing Party" shall mean JT in the JT Territory and
Tularik in the Tularik Territory.

     1.28 "Exclusive Territory" shall mean with respect to Tularik, the Tularik
Territory and with respect to JT, the JT Territory. "Exclusive Territories"
shall mean both the Tularik Territory and the JT Territory.

     1.29 "Expenses" shall mean expenses incurred by a Party to the extent
allocable to the promotion of Products in all countries in the Territory,
calculated in accordance with GAAP, consistently applied. "Expenses" shall
include, without limitation, the following: (a) [*], all as defined in Appendix
C.

     1.30 "FDA" shall mean the United States Food and Drug Administration, or
any successor thereto.

     1.31 "Field" shall mean the [*] for the treatment of disease in humans.

     1.32 "GAAP" shall mean [*]

     1.33 "General Corporate Overhead" shall have the meaning set forth in
Appendix C.

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                       3.
<PAGE>

     1.34 "IND" or "Investigational New Drug Application" shall mean an
application for required approvals or authorizations from the FDA to commence
human clinical testing of a drug, as defined by the FDA, or the equivalent
application in any other country.

     1.35 "Independent Derivatives" shall have the meaning set forth in Section
3.12.

     1.36 "Independent Lead Compound" shall have the meaning set forth in
Section 4.15.

     1.37 "Independent Party" shall have the meaning set forth in Section 4.15.

     1.38 "Independent Product" shall have the meaning set forth in Section
4.15. Independent Products do not include Products.

     1.39 "JDC" shall mean the joint development committee established pursuant
to Section 2.5.

     1.40 "Joint Program Inventions" shall have the meaning set forth in Section
15.2.

     1.41 "JT Program" shall mean the research and development program being
conducted by JT as of the Effective Date to discover and develop compounds
having activity against certain of the Current Program Targets for use in the
Field.

     1.42 "JT Technology" shall mean, collectively, the Patent Rights and the
Know-How owned or controlled by JT.

     1.43 "JT Territory" shall mean [*] and their territories and possessions.

     1.44 "Know-How" shall mean know-how, Substances, information, inventions,
discoveries, data and technologies, whether or not patentable, owned or
controlled by a Party that either (i) exist as of the Effective Date or (ii) are
owned or controlled by such Party and arise outside of the Program during the
Term, in each case that are applicable to the Program Targets, Lead Compounds,
Research Compounds, Collaboration Lead Compounds, Independent Lead Compound,
Products or Independent Products and the Field. Know-How shall exclude Program
Know-How, Patent Rights and Program Patents.

     1.45 "Launch Expenses" shall have the meaning set forth in Section 7.3(c).

     1.46 "Launching Party" shall have the meaning set forth in Section 7.3(c).

     1.47 "Lead Compound" shall mean a Substance designated by the RMC as
suitable for initial development against a Current Program Target within the
Field based upon results of screening performed pursuant to Section 3.4. Lead
Compounds may be selected as Collaboration Lead Compounds pursuant to Section
4.2.

     1.48 "Loss" shall mean in any calendar year the excess, if any, by which
Expenses exceed Net Sales.

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                       4.
<PAGE>

     1.49 "Marketing, Advertising and Education Expenses" shall have the meaning
set forth in Appendix C.

     1.50 "Marketing Budget" shall have the meaning set forth in Section 9.6.

     1.51 "Marketing Plan" shall have the meaning set forth in Section 9.6.

     1.52 "MC" shall mean the marketing committee established pursuant to
Section 2.6.

     1.53 "NCC Party" shall have the meaning set forth in Section 15.7.

     1.54 "NDA" or "New Drug Application" shall mean a Drug Approval Application
filed with the FDA to obtain approvals or authorizations to commence marketing
of a drug, as defined by the FDA, or the equivalent application in any other
country.

     1.55 "Net Sales" shall mean the gross sales prices of the Product or
Independent Product, as applicable, in finished product form, invoiced by a
Party or the Independent Party, as the case may be, its affiliates and
sublicensees from sales to arms'-length Third Party end users, less, to the
extent such amounts are included in the invoiced sales price, taxes, shipping
costs (including freight and insurance) and duties and other governmental
charges paid for and separately identified on the invoice. Additionally, the
following amounts will be subtracted from the gross invoiced sales price: (i)
[*] discounts actually allowed; (ii) [*] rejection or return of goods; (iii) [*]
amounts paid or credited to a wholesaler, purchaser, Third Party payor or other
contractee as a result of [*] (iv) rebates paid or credited to any governmental
agency (or branch thereof) or to any Third Party payor, administrator or
contractee; and (v) discounts mandated by, or granted in response to, [*]

     1.56 "New Target Candidates" shall mean any Target [*]

     1.57 "New Targets" shall mean a New Target Candidate that [*]

     1.58 "Non-Collaboration Compounds" shall have the meaning set forth in
Section 3.9(b).

     1.59 "Non-Collaboration Patents" shall have the meaning set forth in
Section 15.3.

     1.60 "Non-Launching Party" shall have the meaning set forth in Section 7.4.

     1.61 "Non-Proposed Compound" shall have the meaning set forth in Section
4.4.

     1.62 "Non-Proposed Compound Interested Party" shall have the meaning set
forth in Section 4.4.

     1.63 "Options" shall mean any option to purchase shares of Tularik common
stock: (i) granted to [*] or (ii) granted to [*], which grant was made during
the time such [*] was [*] and has not vested at the time of such [*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                       5.
<PAGE>

     1.64 "Other Allowable Expenses" shall have the meaning set forth in
Appendix C.

     1.65 "Overage Threshold" shall have the meaning set forth in Section 4.8.

     1.66 "Overhead" shall have the meaning set forth in Appendix C.

     1.67 "Patent Rights" shall mean patents and patent applications, both
foreign and domestic, including without limitation all substitutions,
provisionals, continuations, continuations-in-part, divisionals, extensions,
reexaminations, reissues, renewals, supplementary protection certificates and
inventors' certificates, that are owned or controlled by a Party that either
exist as of the Effective Date or claim inventions owned or controlled by a
Party arising outside the Program during the Term, in each case to the extent
such patents and patent applications are applicable to the Program Targets,
Substances, Lead Compounds, Research Compounds, Collaboration Lead Compounds,
Independent Lead Compounds, Products or Independent Products and the Field.
Patent Rights do not include Program Patents.

     1.68 "Post-Regulatory Approval Clinical Studies Expenses" shall have the
meaning set forth in Appendix C.

     1.69 "Pre-Clinical Development" shall have the meaning set forth in Section
2.3(b)(viii).

     1.70 "Pre-Clinical Development Criteria" shall mean the criteria for
commencing pre-clinical development of a Lead Compound or Research Compound set
forth by the RMC for a particular Lead Compound or Research Compound from time
to time.

     1.71 "Pre-Launch Expenses" shall have the meaning set forth in Appendix C.

     1.72 "Product" shall have the meaning set forth in Section 4.2(a). Products
do not include Independent Products.

     1.73 "Profit" shall mean in any calendar year the excess, if any, by which
Net Sales exceed Expenses.

     1.74 "Program" shall mean the collaborative program by which the Subsidiary
will discover and research, and Tularik and JT will discover, develop,
manufacture and market Products with activity against the Program Targets in the
Field. The Program includes the Research Program.

     1.75 "Program Inventions" shall mean both Joint Program Inventions and Sole
Program Inventions.

     1.76 "Program Know-How" shall mean know-how, Substances, information,
inventions, discoveries, data and technologies, whether or not patentable, that
are owned or controlled by either Party or both Parties and made, discovered or
developed during the Term in the course of the discovery, research, Pre-Clinical
Development, Development and commercialization of Lead Compounds, Research
Compounds, Collaboration Lead Compounds,

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                       6.
<PAGE>

Independent Lead Compounds, Products or Independent Products pursuant to the
Program. Program Know-How shall include Program Inventions and shall exclude
Program Patents and Research Compound Inventions.

     1.77 "Program Patents" shall mean patents and patent applications, both
foreign and domestic, including without limitation all substitutions,
provisionals, continuations, continuations-in-part, divisionals, extensions,
reexaminations, reissues, renewals, supplementary protection certificates and
inventors' certificates, that are owned or controlled by either Party or both
Parties and claim Program Inventions made during the Term in the course of the
discovery, research, Pre-Clinical Development, Development and commercialization
of Substances, Lead Compounds, Research Compounds, Collaboration Lead Compounds,
Independent Lead Compounds, Products or Independent Products pursuant to the
Program. Program Patents shall exclude Research Compound Patents and Program
Know-How.

     1.78 "Program Target" shall mean one of the Targets included on Appendix F
as a Current Program Target at any time during the Research Program Term.
Program Targets shall not include the [*]

     1.79 "Purchase Option" shall have the meaning given in Section 1.19 of the
Option Agreement between the Parties of even date herewith.

     1.80 "Recall Expenses" shall have the meaning set forth in Appendix C.

     1.81 "Re-Engagement Amount" shall have the meaning set forth in Section
4.20(b).

     1.82 "Re-Engagement Expiration Date" shall have the meaning set forth in
Section 4.20(a).

     1.83 "Re-Engagement Notice" shall have the meaning set forth in Section
4.20(a).

     1.84 "Regulatory Approval" shall mean any approvals, licenses,
registrations or authorizations of any federal, state or local regulatory
agency, ministry, department, bureau or other governmental entity necessary for
the development, manufacture, use, marketing, sale or distribution of any
Product in any country in the Territory.

     1.85 "Research Compound" shall mean any compound that is based upon a
Substance that agonizes or antagonizes a Current Program Target and that is
made, created, discovered, identified, invented, synthesized, optimized or
acquired by or on behalf of either Party pursuant to the Research Plan, or
otherwise in the course of the Program. Research Compounds may be selected as
Collaboration Lead Compounds pursuant to Section 4.2.

     1.86 "Research Compound Inventions" shall have the meaning set forth in
Section 15.1.

     1.87 "Research Compound Patents" shall mean any and all patents and patent
applications, both foreign and domestic, including without limitation all
substitutions, provisionals, continuations, continuations-in-part, divisionals,
extensions, reissues,

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                       7.
<PAGE>

reexaminations, renewals, supplementary protection certificates and inventors'
certificates, which claim Research Compound Inventions made by or on behalf of
either Party alone or both Parties jointly pursuant to the Program during the
Term. Research Compound Patents shall not include any Program Patents.

     1.88  "Research Plan" shall mean the research plan approved by the Parties
pursuant to a letter agreement between them of even date herewith, as amended
from time to time.

     1.89  "Research Program" shall mean the research component of the Program
pursuant to which the Subsidiary will conduct research on behalf of Tularik to
identify and characterize Lead Compounds or Research Compounds, and the Parties
shall conduct research on Lead Compounds or Research Compounds to identify
Collaboration Lead Compounds.

     1.90  "Research Program Term" shall have the meaning set forth in Section
3.7(a).

     1.91  "RMC" shall mean the research management committee established
pursuant to Section 2.3.

     1.92  "Scientific FTE" shall mean the [*] costs, including [*], but
excluding [*] of employing a full-time scientific/technical person (or, in the
case of less than a full-time dedicated person, the full-time equivalent
scientific/technical person/year) dedicated to the research, Pre-Clinical
Development or Development of Substances, Lead Compounds, Research Compounds,
Collaboration Lead Compounds or Products for a period of one (1) year, where a
scientific/technical person is an employee of either Party having skills in a
[*] or in the areas of [*] The Scientific FTE rate for Scientific FTEs employed
by the Parties is set forth in Appendix D.

     1.93  "Selling and Promotion Expenses" shall have the meaning set forth in
Appendix C.

     1.94  "Share of Loss" shall have the meaning set forth in Section 6.2.

     1.95  "Share of Profit" shall have the meaning set forth in Section 6.2.

     1.96  "Sole Program Inventions" shall have the meaning set forth in Section
15.2.

     1.97  "Subsidiary" shall have the meaning set forth in the recitals.

     1.98  "Sublicense Revenues" shall have the meaning set forth in Section
5.2.

     1.99  "Substances" shall mean those natural extracts, natural compounds and
synthetic compounds which a Party owns or has a license (with the right to
sublicense) as of the Effective Date or from time to time during the Term, which
such Party actually provides to the Program.

     1.100 "Targets" shall mean biochemical components of a pathway that
have potential to be agonized or antagonized by Substances or Research Compounds
for use in the Field.

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                       8.
<PAGE>

     1.101 "Term" shall mean the period from the Effective Date until the later
to occur of (i) the expiration of all Program Patents and Patent Rights
containing a Valid Claim covering the manufacture, use or sale of Products or
Independent Products; or (ii) the date on which Net Sales on all Products and
Independent Products shall be reduced from a positive number to zero; provided,
however, that if this Agreement is terminated prior to such date pursuant to
Section 18.1, then the Term shall end upon the effective date of such earlier
termination.

     1.102 "Territory" shall mean the Exclusive Territories and the Co-Promotion
Territory.

     1.103 "Third Party" shall mean any person or entity other than Tularik, JT
or their Affiliates.

     1.104 "Third Party/Other Agreement" shall mean any of the agreements
between Tularik and a Third Party or JT governing Tularik's collaborative
programs with JT (obesity/diabetes and orphan nuclear receptors), Knoll AG
(obesity), Merck & Co., Inc. (viral diseases), Sumitomo Pharmaceuticals Co.,
Ltd. (hypercholesterolemia), Taisho Pharmaceuticals Co., Ltd. (immune
regulation), the Roche Bioscience division of Syntex (U.S.A.), Inc.
(inflammation) and Yamanouchi Pharmaceuticals Co., Ltd. (inflammation).

     1.105 "Third Party Royalties" shall have the meaning set forth in Appendix
C.

     1.106 "Tularik Program" shall mean the research and development program
being conducted by Tularik as of the Effective Date to discover and develop
compounds having activity against certain of the Current Program Targets for use
in the Field.

     1.107 "Tularik Technology" shall mean, collectively, the Patent Rights and
the Know-How owned or controlled by Tularik. The Tularik Technology includes
rights owned or controlled by the Subsidiary that are licensed to Tularik
pursuant to the Tularik/Subsidiary Agreement.

     1.108 "Tularik Territory" shall mean [*] and their territories and
possessions.

     1.109 "Tularik/Subsidiary Agreement" shall mean the License Agreement
between Tularik and the Subsidiary of even date herewith.

     1.110 "Valid Claim" shall mean a claim of a pending patent application or
issued and unexpired patent that is included within the Program Patents or
Patent Rights, in each case that has not been held unenforceable, unpatentable,
or invalid by a court or other governmental agency of competent jurisdiction,
and that has not been admitted to be invalid or unenforceable through reissue,
disclaimer or otherwise.

     1.111 "Volitional Purchase Option" shall have the meaning given in Section
1.25 of the Option Agreement.

                                   ARTICLE 2

                                  MANAGEMENT

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                       9.
<PAGE>

     2.1  Committees. The Parties agree that an EC, an RMC, a JDC and an MC
shall manage the relationship established by this Agreement.

     2.2  Executive Committee.

          (a)  Composition. The executive committee ("EC") shall be comprised of
the Chief Executive Officer of Tularik and a senior officer of JT's
pharmaceutical business. JT may replace its designee to the EC by written notice
to Tularik.

          (b)  Responsibilities. The EC shall oversee and manage the
relationship established by this Agreement and the other committees. The EC
shall resolve problems and settle disagreements that have not been resolved by
the RMC, JDC or MC, except as otherwise provided in this Agreement.

          (c)  Meetings and Voting. The EC shall meet as necessary to resolve
problems and settle disagreements within its jurisdiction, as provided in this
Agreement. Except as otherwise provided herein, all decisions of the EC shall be
unanimous.

     2.3  Research Management Committee.

          (a)  Composition. Promptly after the Effective Date, a research
management committee (the "RMC") shall be established and shall be composed of
three members from each of Tularik and JT, the Chairperson of which shall be
named by Tularik. Tularik's representatives to the RMC shall be [*] JT's
representatives to the RMC shall be [*] A Party may replace any designee to the
RMC by written notice to the other Party.

          (b)  Responsibilities. The goals and progress of the Research Program
shall be determined and monitored by the RMC, which shall receive all data and
information obtained by either Party pursuant to the Research Program. In
particular, the RMC shall:

               (i)    select New Targets from among New Target Candidates
proposed by the Parties, and determine whether to cease development of or
replace Current Program Targets, pursuant to Section 3.3;

               (ii)   determine whether to increase the number of Current
Program Targets beyond [*];

               (iii)  periodically review the Research Program and the
Subsidiary's progress thereunder pursuant to the Research Plan, including all
screening results and new developments regarding the Current Program Targets and
the Field;

               (iv)   propose changes to the Research Plan based upon the
results of prior work and new developments regarding the Current Program Targets
in the Field;

               (v)    select the Lead Compounds, Research Compounds and the
Collaboration Lead Compounds;

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of
1934, as amended.

                                      10.
<PAGE>

               (vi)   delegate initial responsibility for the filing and
prosecution of Program Patents;

               (vii)  be responsible for coordinating all aspects of all
activities (including, but not limited to: [*] that will be undertaken pursuant
to the Research Program to identify and develop a Lead Compound or Research
Compound and that are necessary or desirable to determine whether such Lead
Compound or Research Compound may be suitable for designation as a Collaboration
Lead Compound;

               (viii) be responsible for coordinating all aspects of all
activities (including, but not limited to: [*] that will be undertaken with
respect to a Collaboration Lead Compound that are necessary or desirable to
enable the filing of an IND for Products based upon or incorporating such
Collaboration Lead Compound, including the preparation and filing of an IND
(collectively, "Pre-Clinical Development");

               (ix)   establish a system for identification of Research
Compounds as provided in Section 15.1;

               (x)    establish a system for identifying in advance, to the
extent reasonably possible, those compounds for which Third Party/Other
Agreements impose contractual obligations upon Tularik, potentially resulting in
a [*] pursuant to Section 4.22; provided, however, that such system shall in no
event require Tularik to breach any obligations of confidentiality to Third
Parties with respect to such compounds. Tularik shall make available to the RMC
relevant information from such Third Party/Other Agreements to enable the system
established by this Section 2.3(b)(x) to function.

     2.4  Meetings and Voting. The RMC shall meet at least twice annually. All
decisions of the RMC shall be unanimous. Any disagreement that cannot be
resolved by the unanimous vote of the RMC that is within the RMC's jurisdiction
shall be referred to the EC for resolution under Section 2.2(c). If a
disagreement is still unresolved after a seven (7) day period following
submission to the EC, [*] in which case such disagreement shall be resolved in
accordance with Section 3.5(b). It is the intent of the Parties to resolve
issues relating to Section 2.3(b) through the RMC whenever possible and to refer
issues to the EC only when resolution through the RMC cannot be achieved. The
RMC may meet by telephone or in person at such times as are agreeable to the
members of each such committee. The location of each RMC meeting will be
determined alternately by each Party, with each Party bearing the expenses of
its representatives attending RMC meetings. Tularik will determine the location
of the first meeting of each committee. Members of a committee may be
represented at any meeting by another member of the committee, or by a deputy,
either of whom may cast the absent member's vote. The RMC shall issue
agendas in advance of each meeting. The chairperson shall appoint someone to
keep accurate minutes of the meetings, which shall be effective upon approval of
the other Party, such approval not to be unreasonably withheld or delayed.

     2.5  Joint Development Committee.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      11.
<PAGE>

          (a)  Composition. Within thirty (30) days after the date upon which
the RMC designates the first Collaboration Lead Compound, the Parties shall each
appoint three representatives to a Joint Development Committee ("JDC"). A Party
may replace any designee to the JDC by written notice to the other Party. Such
representatives will include individuals with expertise and responsibilities in
the areas of pre-clinical development, clinical development or regulatory
affairs.

          (b)  Responsibility. The JDC will be responsible for coordinating all
aspects of the Development of each Product as provided in Article 4 through the
filing of an NDA or equivalent.

          (c)  Meetings and Voting. The JDC shall meet at least twice annually.
All decisions of the JDC shall be unanimous. Any disagreement that cannot be
resolved by the unanimous vote of the JDC that is within its jurisdiction shall
be referred to the EC for resolution under Section 2.2(c). If a disagreement is
still unresolved after a seven (7) day period following submission to the EC,
such disagreement shall be resolved in accordance with Section 20.1. It is the
intent of the Parties to resolve issues relating to Section 2.5(b) through the
JDC whenever possible and to refer issues to the EC only when resolution through
the JDC cannot be achieved. The JDC may meet by telephone or in person at such
times as are agreeable to the members of each such committee. The location of
each JDC meeting will be determined alternately by each Party, with each Party
bearing the expenses of its representatives attending JDC meetings. Tularik will
determine the location of the first meeting of each committee. Members of a
committee may be represented at any meeting by another member of the committee,
or by a deputy, either of whom may cast the absent member's vote. The JDC
shall issue agendas in advance of each meeting. The chairperson shall appoint
someone to keep accurate minutes of the meetings, which shall be effective upon
approval of the other Party, such approval not to be unreasonably withheld or
delayed.

     2.6  Marketing Committee.

          (a)  Composition. Upon recommendation of the JDC in anticipation of
the first commercial launch of one or more Products, but in any event no later
than at the conclusion of the [*] for any Product, the Parties shall each
appoint three representatives to a Marketing Committee ("MC"). A Party may
replace any designee to the MC by written notice to the other Party. Such
representatives will include individuals with expertise and responsibilities in
the areas of sales, marketing, manufacturing or regulatory affairs.

          (b)  Responsibility. The MC will develop a marketing plan for each
Product in the Co-Promotion Territory, shall oversee quality control of the
Product and all operational aspects of marketing and sales in the Co-Promotion
Territory following launch of each such Product.

          (c)  Meetings and Voting. The MC shall meet at least twice annually.
All decisions of the MC shall be unanimous. Any disagreement that cannot be
resolved by the unanimous vote of the MC that is within its jurisdiction shall
be referred to the EC for resolution under Section 2.2(c), except as otherwise
provided in Section 9.5. If a disagreement is still

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      12.
<PAGE>

unresolved after a seven (7) day period following submission to the EC, such
disagreement shall be resolved in accordance with Section 20.1. It is the intent
of the Parties to resolve issues relating to Section 2.6(b) through the MC
whenever possible and to refer issues to the EC only when resolution through the
MC cannot be achieved. The MC may meet by telephone or in person at such times
as are agreeable to the members of each such committee. The location of each MC
meeting will be determined alternately by each Party, with each Party bearing
the expenses of its representatives attending MC meetings. Tularik will
determine the location of the first meeting of each committee. Members of a
committee may be represented at any meeting by another member of the committee,
or by a deputy, either of whom may cast the absent member's vote. The MC
shall issue agendas in advance of each meeting. The chairperson shall appoint
someone to keep accurate minutes of the meetings, which shall be effective upon
approval of the other Party, such approval not to be unreasonably withheld or
delayed.

                                   ARTICLE 3

                               RESEARCH PROGRAM

     3.1  Research Program. The Research Program shall be conducted against the
Current Program Targets by the Subsidiary to identify and characterize Lead
Compounds or Research Compounds and by the Parties to select Collaboration Lead
Compounds pursuant to the Research Plan. Tularik shall cause the Subsidiary to
commence the Research Program promptly after the Effective Date.

     3.2  Basic Research. Tularik shall cause the Subsidiary to undertake, under
the direction of the RMC and pursuant to the Research Plan, basic research
towards the objectives of the Research Program. During the Term, JT shall
provide to Tularik the research payments set forth in Section 6.1 to support [*]
Scientific FTEs employed by the Subsidiary in the conduct of the Research Plan,
which shall be distributed as set forth in Appendix E. The actual distribution
of such Scientific FTEs among the scientific disciplines represented on Appendix
E may vary from the projected distribution of Scientific FTEs set forth on
Appendix E as a function of the needs of the Research Program at any particular
time, as determined by the RMC.

     3.3  Targets. Tularik or JT may from time to time present New Target
Candidates to the RMC for designation as New Targets pursuant to Section 3.3(i).
If a given New Target Candidate is designated by the RMC as a New Target, such
New Target Candidate shall either (i) be substituted for an existing Current
Program Target, if at the time of such designation the number of Current Program
Targets is equal to [*] (or such greater number as the RMC unanimously agrees
pursuant to Section 3.3(ii)), or (ii) be added as a Current Program Target, if
at the time of such designation the number of Current Program Targets is less
than [*] The number of Current Program Targets shall in no event be greater than
[*] unless the RMC unanimously agrees to increase the number of Current Program
Targets pursuant to Section 3.3(i). In the event such New Target Candidates are
not designated as New Targets by the RMC, such rejected New Target Candidates
may be pursued by either Party [*]. Program Targets for which work under the
Research Program is terminated may be pursued independently by either Party [*]
Additionally, the RMC may elect to stop further research on a Current Program
Target

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      13.
<PAGE>

without replacing such Target at such time, in which case such Target shall no
longer be a Current Program Target.

     3.4  Screening. Tularik shall develop and perform, through the Subsidiary,
[*] assays to determine (i) the effect of Substances selected for screening by
the RMC on Current Program Targets and (ii) the [*] of such Substances, for the
purpose of identifying Lead Compounds and determining whether to make and
develop Research Compounds based upon such Lead Compounds. The RMC shall
designate Lead Compounds and determine whether to make and develop such Research
Compounds. Each Party will provide its proprietary [*] libraries to the
Subsidiary for such screening as directed by the RMC; provided, however, that a
Party shall not be required to [*] Unless otherwise directed by the RMC and
except as provided in Section 3.5, the activities under Sections 3.2 and 3.4 for
a Substance, Lead Compound or Research Compound shall be the responsibility of
the Subsidiary until such time as the RMC designates a Substance as a Lead
Compound or determines to make a Research Compound based on a Substance pursuant
to this Section 3.4. At such time, such Substance shall be removed from the
screening library from which such Lead Compound originated (i.e., such Substance
shall no longer be used by the Party owning the library for further screening
outside the scope of the Program) until such time as such Pre-Clinical
Development or Development of such Lead Compound (or Research Compound,
Collaboration Lead Compounds, Independent Lead Compounds, Independent Products
or Products resulting therefrom) shall be terminated by the Parties, subject to
Sections 4.10 and 6.5.

     3.5  Research Chemists. The Parties recognize that [*] Accordingly, the
Parties agree that the RMC, by unanimous decision, shall be responsible for
determining: (i) the identity of Lead Compounds or Research Compounds to which
medicinal chemistry resources will be dedicated; and (ii) the number and level
(i.e., Ph.D., research assistant, etc.) of chemistry Scientific FTE to be
assigned to perform medicinal chemistry on each Lead Compound or Research
Compound. [*] shall be responsible for dedicating to the Program [*] of the
number of chemistry Scientific FTE assigned to each Lead Compound or Research
Compound by the RMC; provided, however, that the RMC may decide to [*] on a
particular Lead Compound or Research Compound, by unanimous decision, while
maintaining [*] Scientific FTE split among the chemistry Scientific FTEs
assigned to all Lead Compounds or Research Compounds in the aggregate within the
Program. The Parties anticipate that [*], will provide medicinal chemistry
resources for Lead Compounds or Research Compounds except as set forth in
Appendix E. [*] shall in no event be required to provide any medicinal chemistry
resources to the Program, either [*] for such purpose, except as set forth on
Appendix E or unless the Parties otherwise agree.

          (a)  In the event that either JT or Tularik is unable to dedicate the
number of chemistry Scientific FTEs designated by the RMC, such Party shall be
required to pay the other Party [*] each year for every chemistry Scientific FTE
that the paying Party is unable to provide; provided, however, that the
receiving Party shall, upon written request by the paying Party, provide
documentation to demonstrate that the receiving Party has actually employed the
number of additional chemistry Scientific FTE that the paying Party is unable to
provide. In the event that the receiving Party shall be unable to employ the
number of additional chemistry Scientific FTE that the paying Party is unable to
provide, the paying Party shall be required to pay the receiving Party an annual
amount equal to (the number of chemistry Scientific FTE provided by

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      14.
<PAGE>

the receiving Party less the number of chemistry Scientific FTE provided by the
paying Party) multiplied by [*]

          (b)  The chemistry scientific FTE rates referenced in this Section 3.5
shall be adjusted [*] (utilizing the cost-breakdown and methodology attached
hereto as Appendix D as the basis for such adjustment) and shall assume that
such chemistry Scientific FTE is [*] In no event shall the chemistry Scientific
FTEs be required to [*] in connection with any imbalance in the Parties'
Scientific FTE efforts hereunder unless the Parties mutually agree to do so;
rather, such chemistry Scientific FTE shall [*] such chemistry Scientific FTE.
Each Party shall provide Scientific FTEs with a comparable level of experience
to the Scientific FTEs provided by the other Party as required by the RMC.

          (c)  In the event that the RMC is unable to agree unanimously on the
[*] performed pursuant to Section 3.4, and/or the [*] the matter shall be
referred to the EC. In the event that the EC is unable to agree unanimously on
the [*] pursuant to this Section 3.5 for a period of [*] each Party will have
the right to proceed independently to develop such compound as an Independent
Lead Compound under Section 4.15 and to develop Independent Products
incorporating such Collaboration Lead Compound as provided therein. In such
event, the Parties shall use good faith efforts to negotiate appropriate
mechanisms for commercializing such Independent Product in the Co-Promotion
Territory so as to comply with all laws, rules and regulations in each country
in the Co-Promotion Territory, and the EC shall resolve any disputes with
respect to such mechanisms.

     3.6  Exchange of Pre-Clinical Data. JT and Tularik will exchange research
and Pre-Clinical Development data generated during the Program [*] In accordance
with Sections 5.2 and 5.3, the Parties may also make such data available to any
permitted sublicensees in a country or countries in the Territory; provided,
however, such data shall not be made available to such sublicensees until a
sublicensee has executed a standard confidentiality agreement covering
disclosure and use of such data, and ownership of such data and intellectual
property rights consistent with the terms of this Agreement.

     3.7  Research Program Term. The Research Program shall be conducted during
the period of five (5) years commencing as of the Effective Date, or until such
earlier time as the Research Program may be terminated as provided in this
Section 3.7 (the "Research Program Term"). Upon at least [*] days' prior written
notice to Tularik, JT may, in its sole discretion, terminate the Research
Program effective at the end of [*] of the Research Program. The RMC may
terminate the Research Program any time during the Research Program Term if it
unanimously determines the Research Program is [*] or that [*]

     3.8  In the event that JT exercises the Purchase Option during the Research
Program Term, the Research Program Term shall terminate on the Closing Date. If
the Research Program Term is terminated as provided in Section 3.7 without JT
simultaneously exercising the Purchase Option, then the Purchase Option shall
terminate in accordance with Section 2.6 of the Option Agreement.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      15.
<PAGE>

     3.9  Effect of Termination of Research Program. In case of an early
termination of the Research Program by JT or the RMC pursuant to Section 3.7, JT
shall be exempt from any payment(s) under Section 6.1(a) that would have become
due and payable after the effective date of such early termination, or if any
payment(s) have been made by JT under Section 6.1(b) for the Research Program
that otherwise would have been applicable for the period after the effective
date of such early termination, Tularik shall refund to JT the amount of such
overpayment as calculated on pro-rata basis. Additionally, the RMC shall meet at
least seven (7) days prior to the end of the Research Program Term to determine
which compounds screened or made during the Research Program that are not then
either a Collaboration Lead Compound or an Independent Lead Compound should be
designated as a Collaboration Lead Compound or an Independent Lead Compound.

          (a)  If the Research Program terminates early pursuant to Section 3.7
and this Agreement terminates simultaneously in accordance with Section 18.2
(i.e., no compound or Lead Compound or Research Compound has been designated
previously a Collaboration Lead Compound in accordance with Section 3.9(a) or
4.2 and no Independent Lead Compound has been identified pursuant to Section
3.9(a) or is being developed in accordance with Section 4.15), then: (i) all
licenses granted by Tularik to JT under this Agreement will terminate, other
than the [*] license contained in the last sentence of Section 15.2; (ii) JT
will grant to Tularik a non-exclusive, sublicensable, worldwide license, to
develop, make, use, sell, offer for sale or import Substances, Lead Compounds or
Research Compounds screened in or made pursuant to the Research Program under
JT's interest in Program Patents and Program Know-How; and (iii) [*] JT will
also grant to Tularik a nonexclusive, sublicensable, worldwide license under the
JT Technology to the extent necessary to practice the license granted under the
Program Patents and Program Know-How in subsection 3.9(a)(ii) [*]; provided that
in the event that [*] elects to pursue a Discontinued Compound or a Non-Proposed
Compound on or before the [*] of the Term pursuant to Section 4.3 or 4.4
respectively, (i), (ii) and (iii) above shall not apply to the relevant
Collaboration Lead Compound, Product, Independent Lead Compound or Independent
Product that JT elects within such time period to develop and commercialize
pursuant to Section 4.3 or 4.4 until such time as [*] shall have terminated its
development or commercialization thereof.

          (b)  If the Research Program terminates early pursuant to Section 3.8,
then: (i) all licenses granted under this Agreement shall continue as provided
in Articles 5 and 15, (ii) the Parties shall continue performing under this
Agreement during the remainder of the Term and (iii) notwithstanding Section
3.10, [*] may perform medicinal chemistry on Lead Compounds, Research Compounds
and Independent Lead Compounds [*] to generate compounds for use in the Field
[*] and such [*] compounds resulting from such medicinal chemistry efforts that
are [*] (collectively, "Non-Collaboration Compounds"), subject to the terms of
this Section 3.9(b). In no event shall Non-Collaboration Compounds include any
compound that is, prior to the time such Non-Collaboration Compound is made, a
Lead Compound, Research Compound, Collaboration Lead Compound or Independent
Lead Compound. Promptly after [*] commences [*] on a Non-Collaboration Compound
[*] it shall notify [*] of the [*] as well as the [*] Under no circumstances
during the term of this Agreement and thereafter, shall [*] develop [*] However,
during the Term of this Agreement and thereafter, [*] shall have the right to
develop [*] Non-Collaboration Compound, to the extent such Non-Collaboration
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 24b-2 of the Securities Act of 1934, as amended.

                                      16.
<PAGE>

Ownership of inventions made during the course of [*] performance of medicinal
chemistry to make Non-Collaboration Compounds or development and
commercialization of products based upon or incorporating such compounds shall
[*] with the Parties intending that [*] shall own all such inventions [*] such
activities outside the scope of this Agreement pursuant to a separate agreement
between the Parties.

           (c)  Section 4.21 provides for the Parties' rights and obligations in
the event that the Research Program terminates early but the Term of this
Agreement does not terminate simultaneously.

     3.10  Exclusive Collaboration. Except as otherwise provided in Section
3.9(c) and Articles 4, 5 and 8 with respect to Third Party sublicensees,
contractors and the Subsidiary, the Parties shall work exclusively with each
other to research and develop compounds that are [*] during the Research Program
Term. During the Term, neither Party shall research, develop or commercialize a
product [*] other than pursuant to this Agreement, subject to Sections 3.9(c)
and 4.22. [*] provided, however, that neither Party shall be required to [*] and
that, outside and independent of the Program, are either (a) discovered by such
Party, independently or jointly with a Third Party, or (b) discovered on behalf
of such Party, or (c) otherwise obtained by such Party outside and independent
of the Program.

     3.11  [*] Efforts Following the Research Program Term. After the Research
Program Term expires, then during the remainder of the Term, neither Party may
[*] unless the Parties otherwise agree. If either Party believes that [*] would
be necessary or useful to [*] Collaboration Lead Compounds or Products, then
such Party may propose [*] and shall provide to the other Party information
reasonably necessary to determine whether [*] If the other Party agrees that [*]
should be conducted, then the proposing Party may perform such [*] compound and
any [*] Collaboration Lead Compound shall be deemed to be a [*] Expenses of [*]
pursuant to this Section 3.11 shall be a [*] of the Parties for Products. This
Section 3.11 shall not apply in the event that the Research Program Term
terminates pursuant to Section 3.9(b). The Party [*] shall notify the other
Party of the [*] within [*] days after it first [*] This Section 3.11 shall not
apply after the Research Program Term is terminated prior to its expiration
either pursuant to Section 3.7, if the Term terminates simultaneously, or as
provided in Section 3.7.

     3.12  [*] Independent Lead Compounds. During the term of this Agreement,
until and unless the Research Program terminates early pursuant to Section 3.7,
each Party that is an Independent Party may [*] Independent Lead Compounds
during the term of this Agreement to [*] at [*] and such Party shall be [*] that
are [*] (collectively, "Independent [*]"), subject to the terms of this Section
3.12. In no event shall Independent [*] include [*] the date upon which such
Independent [*] Promptly after a Party making an Independent [*] (the "[*]
Party"), commences [*] on an Independent [*] it shall notify the other Party
(the "[*] Party") of the [*] that the [*] Party has modified, as well as [*] of
the Independent [*] upon which such Party is commencing [*] Each Independent [*]
shall be deemed to be [*] of the [*] Party, provided that under no circumstances
during the term of this Agreement and thereafter, shall either Party develop any
Independent [*] that is also a [*] Ownership of inventions made during the
course of the [*] Party's [*] to make Independent [*] shall be determined
according to Article 15. If the Research Program terminates early pursuant to
Section 3.7, then Section 3.8(c) shall apply to

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      17.
<PAGE>

determine each Party's ability to [*] Each [*] shall be deemed to be [*] who
shall be the [*] In no event shall a Party that is not an Independent Party [*]

                                   ARTICLE 4

                              DEVELOPMENT PROGRAM

     4.1  General Principles. The Parties agree to use commercially reasonable
efforts to develop Collaboration Lead Compounds for use in the Field, making use
of each Party's special expertise as directed by the RMC, with the intent of
obtaining all Regulatory Approvals and commercializing Products as soon as
reasonably practicable thereafter.

     4.2  Designation of Collaboration Lead Compound. From time to time
either Party may propose to the RMC one or more Lead Compounds or Research
Compounds for Pre-Clinical Development. The RMC will promptly determine whether
such Lead Compound or Research Compound is suitable for Pre-Clinical Development
by determining whether such Lead Compound or Research Compound meets the
Pre-Clinical Development Criteria and, if so, propose a plan and budget for
Pre-Clinical Development thereof.

          (a)  If the RMC determines that such Lead Compound or Research
Compound meets the Pre-Clinical Development Criteria, then within [*] of such
determination, each Party shall provide to the RMC a written notice as to
whether it elects to participate in and, subject to Section 4.8, commit
resources to conduct Pre-Clinical Development of such Lead Compound or Research
Compound as a Collaboration Lead Compound according to the proposed plan and
budget. If the RMC determines that such Lead Compound or Research Compound does
not meet the Pre-Clinical Development Criteria, then, within [*] of such
determination each Party shall provide to the RMC a written notice as to whether
it elects to designate such Lead Compound or Research Compound as a
Collaboration Lead Compound and participate in and commit resources to conduct
Pre-Clinical Development of such Collaboration Lead Compound, notwithstanding
that such Lead Compound or Research Compound does not meet the Pre-Clinical
Development Criteria. If both Parties make an affirmative election with respect
to any Lead Compound or Research Compound pursuant to either the first or second
sentence of this Section 4.2(a), then such Lead Compound or Research Compound
shall be designated a "Collaboration Lead Compound" and any products
incorporating or based upon such Collaboration Lead Compound for which an IND is
submitted to a regulatory authority shall be designated as a "Product." If one
Party makes an affirmative election and the other Party makes a negative
election with respect to whether any Lead Compound or Research Compound shall be
designated a Collaboration Lead Compound, the Party making an affirmative
election will have the right to proceed independently to develop such compound
as an Independent Lead Compound or Independent Product under Section 4.15.

     4.3  Designation of Discontinued Compound/Independent Lead
Compound/Independent Product. Subject to Section 3.9(b), if neither Party makes
an affirmative election with respect to any Lead Compound or Research Compound
being designated a Collaboration Lead Compound pursuant to Section 4.2, such
Lead Compound or Research Compound shall be neither a Collaboration Lead
Compound nor a compound that may

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      18.
<PAGE>

be developed as an Independent Lead Compound or Independent Product under
Section 4.15, and development of products based upon such non-elected Lead
Compound or Research Compound (a "Discontinued Compound") may be subsequently
initiated by a Party by notifying the other Party of its interest in initiating
Pre-Clinical Development of such Discontinued Compound at any time on or before
the [*] If the other Party indicates it is not interested in initiating Pre-
Clinical Development of such Discontinued Compound, the initiating Party may
proceed with development of such Discontinued Compound as an Independent Lead
Compound or an Independent Product and the initiating Party shall be deemed to
be the Independent Party therefor, as provided in Section 4.15. At any time
after the [*] either Party may, upon written notice to the other Party, proceed
with development of a Discontinued Compound as an Independent Product and such
Party shall be deemed to be the Independent Party therefor, as provided in
Section 4.15.

     4.4  Designation of Non-Proposed Compound/Independent Product. Subject to
Section 3.9(b), if a Lead Compound or Research Compound is not, at any time,
presented to the RMC pursuant to Section 4.2, such Lead Compound or Research
Compound shall be neither a Collaboration Lead Compound nor a compound that may
be developed under Section 4.15, and this Section 4.4 shall govern any future
development of products based upon such non-proposed Lead Compound or Research
Compound (a "Non-Proposed Compound"), subject to Section 3.9(a). Subject to
Section 18.1(b), if at any time [*] a Party hereunder (the "Non-Proposed
Compound Interested Party") determines to initiate Pre-Clinical Development of
such Non-Proposed Compound, it shall provide written notice to the other Party
of such interest and the reasons therefor. The other Party will then have [*] to
indicate whether it also is interested in the development of products based upon
such Non-Proposed Compound. If the other Party is so interested, the Parties
will proceed with Pre-Clinical Development of such Non-Proposed Compound as a
Collaboration Lead Compound pursuant to the terms of this Agreement. If the
other Party is not so interested, the Non-Proposed Compound Interested Party may
proceed with development of such Non-Proposed Compound as an Independent Product
and the Non-Proposed Compound Interested Party shall be deemed to be the
Independent Party, as provided in Section 4.15. Subject to Section 18.1(b), at
any time [*] either Party may, upon written notice to the other Party, proceed
with development of a Non-Proposed Compound as an Independent Product, and such
Party shall be deemed to be the Independent Party therefor, as provided in
Section 4.15.

     4.5  Pre-Clinical Development. The Parties, under the direction of the RMC
shall diligently conduct Pre-Clinical Development with respect to any designated
Collaboration Lead Compound. The costs of conducting such Pre-Clinical
Development shall be shared by the Parties as set forth in Section 4.8. Under no
circumstances shall either Party conduct Pre-Clinical Development of any
Collaboration Lead Compound in the Field except as permitted by the RMC, the
Research Plan and the plan for Pre-Clinical Development established by the RMC.

     4.6  Collaborative Development of Products. The Parties will each
diligently collaborate in the Development of Products in the Co-Promotion
Territory and use commercially reasonable efforts to develop and commercialize
Products as soon as reasonably practicable. The role of each Party in the
Development process will be determined by the JDC, with the Parties intending
that each Party will provide advisory and supporting services with respect to
any phase

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      19.
<PAGE>

of the process in which such Party is not actively or primarily involved. Each
Party shall supply [*] of the total Development effort for each Product in the
Co-Promotion Territory in the aggregate, as determined by the JDC. The JDC will
determine appropriate written standards for measuring each Party's required
Development efforts and accounting procedures to confirm and document each
Party's performance of its required Development effort for any Product before
the Parties commence Development thereof. No clinical trials involving any
Product shall be commenced by or on behalf of either Party without the prior
approval of the JDC. Nothing contained in this Section shall be deemed to
preclude either Party from terminating its participation in the collaborative
Development of a Product pursuant to Section 4.14. Any decision by a Party not
to participate in Development of a Product pursuant to Section 4.2 or to
terminate participation in the Development of a Product pursuant to Section 4.14
shall not be deemed a breach of this Agreement.

     4.7  Development Plan and Development Budget. Promptly following the
designation of a Collaboration Lead Compound pursuant to Section 4.2, the JDC
shall initiate preparation of the development plan for the Development of such
Collaboration Lead Compound in the Co-Promotion Territory (the "Development
Plan") and a budget (the "Development Budget") for proposed Development Costs
therefor. Each Party shall prepare and submit for review by the JDC a
development plan and budget for each Product in such Party's Exclusive
Territory, in accordance with Section 4.11 and other relevant provisions of this
Agreement, which shall become a part of the Development Plan or Development
Budget. The initial Development Plan for a Collaboration Lead Compound shall set
time lines and priorities for the various Development activities in the Co-
Promotion Territory and in each Party's Exclusive Territory [*] is to be
responsible for each activity in the Co-Promotion Territory. Each Party [*]
conducting Development of each Product in [*] Exclusive Territory. The budget
for each Development program shall include a detailed short-term budget covering
all proposed Development Costs of the Development program expected during the
initial [*] of the Development process for a Collaboration Lead Compound. Each
Development Plan and Budget shall be approved by the JDC. Both Parties recognize
that the Development Plan and the Development Budget represent projections only
and will be subject to frequent changes during the Development process. Each
such Development Plan and Development Budget shall be updated as deemed
appropriate by the JDC, but in no event less frequently than [*] and approved by
the JDC not later than [*] prior to [*] of each applicable calendar year.

     4.8  Funding of Pre-Clinical Development and Development. Tularik shall be
responsible for [*] of the Development Costs and JT shall be responsible for the
remaining [*] of Development Costs for each Collaboration Lead Compound and
Product throughout the Territory. In the event the Development Costs incurred by
a Party during any calendar quarter exceed [*] of the Development Costs set
forth in the most recently approved Development Budget for activities to be
conducted by such Party during such quarter (the "Overage Threshold"), then the
other Party shall not be responsible for paying [*] of any Development Costs in
excess of the Overage Threshold incurred by the Party triggering such overage
unless such overage had been approved in advance, or is subsequently ratified,
unanimously, by the JDC (in which case each of the Parties shall be responsible
for [*] of all such Development Costs). In the event such overage has not been
approved or ratified unanimously by the JDC, the Party incurring Development
Costs in a calendar quarter exceeding

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      20.
<PAGE>

the Overage Threshold in such quarter shall be responsible for [*] of the
portion of the Development Costs in excess of the Overage Threshold.

     4.9   Scientific FTE. In preparing the Development Budget and determining
Development Costs, the Parties will use a rate of [*] per Scientific FTE. Such
Scientific FTE rate shall be adjusted [*] (utilizing the cost-breakdown and
methodology attached hereto as Appendix D as the basis for such adjustment) and
shall assume that such Scientific FTE is [*] [*] hereby represents and warrants
that the Scientific FTE rate contained on Appendix D is a good faith estimate of
the [*] costs of employing such Scientific FTE [*] for [*] period following the
Effective Date.

     4.10  Payment of Development Costs. Each Party shall be responsible for
paying its share of Development Costs incurred pursuant to the Development Plan
and the Development Budget prepared pursuant to Section 4.7, subject to
reimbursement as provided herein. Within thirty (30) days after each calendar
quarter, each Party shall provide the JDC with detailed information concerning
the Development Costs incurred by such Party during such quarter. Promptly after
receipt thereof, the JDC will determine the amount, if any, that either Party
has paid in excess of the amount to be borne by such Party for such quarter
pursuant to Section 4.8, and shall so notify the Parties. In the event of an
overpayment by a Party of its share of Development Costs in a particular
calendar quarter, the other Party shall pay to the Party making the overpayment
the amount by which such other Party underpaid within thirty (30) days after the
underpaying Party's receipt of notice from the JDC that an overpayment has
occurred.

     4.11  Drug Approval Applications. Consistent with the Development Plan and
Development Budget and as directed by the JDC, the Parties (or their Affiliates)
will file applications for regulatory approval required before commercial sale
or use of a Product as a drug in a country within the Territory ("Drug Approval
Applications") and attempt to obtain Regulatory Approvals in each country in the
Territory in which the Parties, either individually or jointly, intend to
commercialize Products. JT will be responsible for filing in its name and shall
own all regulatory submissions relating to Products including, without
limitation, all INDs and NDAs, in each country in the JT Territory in which
Products will be commercialized. Tularik will be responsible for filing in its
name and shall own all regulatory submissions, including, without limitation,
all INDs and NDAs, in each country in the Tularik Territory in which Products
will be commercialized. The JDC will be responsible for designating a Party to
be responsible for filing all regulatory submissions in each country in the Co-
Promotion Territory in which Products will be commercialized. The Party not
responsible for filing regulatory submissions for a Product in a country
pursuant to this Agreement shall have a right to cross-reference to all such
filings made by the other Party for such Product in any country. The Parties
will cooperate in the preparation of all such regulatory filings and in
obtaining Regulatory Approvals under this Section 4.11, including without
limitation providing access to each Party's data and information obtained under
the Program to the extent necessary for obtaining Regulatory Approvals of
Products.

     4.12  Line Extensions. JT and Tularik may each prepare and submit to the
JDC for consideration plans for development of Product line extensions and the
conduct of clinical trials covering indications other than those for which
Products are then being developed or

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      21.
<PAGE>

commercialized in the Territory. Any such line extensions or any additional
clinical trials for additional indications will be subject to the approval and
supervision of the JDC as part of the ongoing Development of such Product.

     4.13  Compliance. The Parties will comply with all supranational, federal,
state and/or local laws pertaining to the Development of Products and
Independent Products.

     4.14  Termination of Participation in Collaborative Development. Either
Party may elect, on a Collaboration Lead Compound-by-Collaboration Lead Compound
basis, to terminate its participation in, or to not to participate in, the
Pre-Clinical Development of a given Collaboration Lead Compound or Development
of a given Product based upon or incorporating such Collaboration Lead Compound
by written notice to the other Party: (i) [*] following such Party's [*] for
such Collaboration Lead Compound; (ii) during the period commencing upon receipt
by such Party of executed reports covering all aspects of [*] for such Product
and [*] or (iii) during the period commencing [*] for such Product and [*] After
receipt of such notice by the other Party in accordance with this Section 4.14,
the Party providing such notice shall no longer be responsible for bearing
further Development Costs for such Collaboration Lead Compound or Product
pursuant to Section 4.8, in which event the other Party will have the right to
proceed independently to develop such Collaboration Lead Compound or Product as
an Independent Lead Compound or Independent Product, and the Party continuing
such development shall thereafter be deemed to be the Independent Party
therefor, as provided in Section 4.15. In the event a Party gives notice under
this Section 4.14, such non-Independent Party (i) will remain responsible for
its share of Development Costs for such Collaboration Lead Compound or Product
until [*] and (ii) will make its personnel, relevant data and other resources
available to the Independent Party as necessary to effect an orderly transition
of development responsibilities, with the costs of such personnel, relevant data
and resources to be [*] notice under this Section 4.14. In the event of a
Party's termination of participation in Development of a Product in accordance
with this Section 4.14, such Party shall [*] to the Independent Party all
regulatory submissions, including all Drug Approval Applications relating to
such Collaboration Lead Compound and/or Products based upon or incorporating
such Collaboration Lead Compound, together with all materials and data related
thereto in its possession.

     4.15  Independent Development.

           (a)  In the event (A) a Party, pursuant to Sections 4.3, 4.4 or
4.14, elects not to, or does not, participate in and commit resources to the
Pre-Clinical Development of a Research Compound or Lead Compound as a
Collaboration Lead Compound, or the pre-clinical development of a Discontinued
Compound or a Non-Proposed Compound, or (B) any Party unilaterally terminates
its participation in the Pre-Clinical Development or Development of a
Collaboration Lead Compound or Product pursuant to Section 4.14, then the Party
that either made an affirmative election to conduct such Pre-Clinical
Development or Development of such Compound, or commenced or is continuing
Development of a Collaboration Lead Compound or Development of a Product (in
either case, the "Independent Party"), shall have the right to practice the
license granted in Section 5.4 and to undertake pre-clinical development of a
Lead Compound or Research Compound or to continue Pre-Clinical Development and
Development

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      22.
<PAGE>

of such Collaboration Lead Compound or Product independently as an "Independent
Lead Compound" or "Independent Product," [*]

           (b)  In the event the EC is unable to agree unanimously on the [*]
and/or the [*] pursuant to Section 3.5 for a period of [*] and both Parties
thereafter elect to commit resources to conduct development of such Lead
Compound or Research Compound and to develop related Products: (X) such Lead
Compound or Research Compound may be developed by each Party as an Independent
Lead Compound and such related Product may be commercialized by each Party as an
Independent Product in such Party's Exclusive Territory, [*] under the direction
of such Party; and (Y) the Parties shall agree on the terms and conditions
governing their development of such Lead Compound or Research Compound and
commercialize such related Product in the Co-Promotion Territory. Neither Party
may [*] an Independent Lead Compound or Independent Product [*] either [*]

     4.16  Information Obligations. Until the earlier of the Re-Engagement
Expiration Date or the date on which the Independent Party receives a Re-
Engagement Notice for a Product from the non-Independent Party, the Independent
Party will (A) inform the other Party of all material information developed in
its research and development of each Independent Lead Compound or Independent
Product; and (B) provide the other Party a copy of all proposed regulatory
submissions relating to such Independent Lead Compound or Independent Product at
least [*] prior to submitting such filing to the FDA or its foreign equivalent.

     4.17  Sole Discretion. In the event either Party elects to proceed as an
Independent Party, subject to Section 4.20, such Independent Party shall be
entitled to develop such Independent Lead Compound and commercialize such
Independent Product at its sole discretion, alone or with a Third Party (subject
to Section 4.15 & 4.18), [*]

     4.18  Sublicensing. The Independent Party may not sublicense intellectual
property rights owned or controlled by the Independent Party that relate to an
Independent Lead Compound or Independent Product to any Third Party [*] prior to
the Re-Engagement Expiration Date for such Independent Lead Compound or
Independent Product.

     4.19  Termination. If either Party terminates its development or
commercialization of an Independent Lead Compound or an Independent Product,
then (i) it shall promptly so notify the other Party, (ii) such compound shall
no longer be an Independent Lead Compound and such product shall no longer be an
Independent Product, and (iii) the licenses granted to such Independent Party
for such compound or product shall terminate upon such other Party's receipt of
such notice.

     4.20  Re-engagement Option.

           (a)  Notice. Either Party may elect to resume its participation in
the Pre-Clinical Development or Development of an Independent Lead Compound or
Independent Product throughout the Territory by so notifying the Independent
Party for such Independent Lead Compound or Independent Product in writing (the
"Re-engagement Notice"), at any time prior to the expiration of the thirty (30)
day period [*] ("Re-Engagement Expiration Date") for

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      23.
<PAGE>

such Independent Lead Compound or Independent Product [*] If a Party so elects
to resume participation hereunder, such Independent Lead Compound or Independent
Product shall immediately cease to be an Independent Lead Compound or
Independent Product, as applicable, and shall instead be designated a
Collaboration Lead Compound or Product for all purposes under this Agreement,
for purposes including calculating each Party's responsibility for paying
Development Costs, Expenses and Selling and Promotion Expenses and receiving the
Share of Profit commencing upon and continuing after the Independent Party's
receipt of the Re-engagement Notice. Notwithstanding the foregoing, a Party may
not elect to participate in the Pre-Clinical Development or Development of an
Independent Lead Compound or Independent Product for which the Independent Party
obtained the right to conduct such activities pursuant to Section 3.5(d), unless
the Independent Party otherwise agrees.

           (b)  Costs. If a Party provides a Re-Engagement Notice pursuant to
Section 4.20(a), then such Party shall pay to the Independent Party [*] of the
non-Independent Party's share, based on the allocation set forth in Section 4.8,
of the costs of research and development of the Independent Lead Compound or
Independent Product incurred by the Independent Party after the date upon which
it commenced research or development of such compound or product as an
Independent Lead Compound or Independent Product and prior to the date of the
Re-engagement Notice, calculated as if such Independent Lead Compound had been a
Collaboration Lead Compound or such Independent Product had been a Product
during such period of development by the Independent Party therefor (the "Re-
Engagement Amount"). In calculating such amounts, the Parties shall use
Scientific FTE rates set forth in Appendix D. The non-Independent Party shall
pay the Re-Engagement Amount [*] beginning on the first day of the calendar
quarter following the date upon which the Independent Party receives the
relevant Re-Engagement Notice.

           (c)  Exclusive Territory Re-engagement.

                (i)   Anything in this Section 4.20 to the contrary
notwithstanding: (i) JT may resume its participation in the Pre-Clinical
Development or Development in the JT Territory of an Independent Lead Compound
or Independent Product designated pursuant to Section 4.15(a)(i) for which it is
not the Independent Party (but not the Co-Promotion Territory or the Tularik
Territory) by (a) delivering to Tularik a Re-engagement Notice to that effect
prior to the Re-Engagement Expiration Date; (b) paying to Tularik the Re-
Engagement Amount attributable to such Independent Lead Compound or Independent
Product; and (c) thereafter paying to Tularik the Share of Profit for sales in
the JT Territory in accordance with Article 6; and (ii) Tularik may resume its
participation in the Pre-Clinical Development or Development in the Tularik
Territory of an Independent Lead Compound or Independent Product designated
pursuant to Section 4.15(a)(i) for which it is not the Independent Party (but
not the Co-Promotion Territory or the JT Territory) by (a) delivering to JT a
Re-engagement Notice to that effect prior to the Re-Engagement Expiration Date;
(b) thereafter paying to JT the Re-Engagement Amount attributable to such
Independent Lead Compound or Independent Product; and (c) paying to JT the Share
of Profit for sales in the Tularik Territory in accordance with Article 6.

               (ii)   In the event a Party resumes participation in the Pre-
Clinical Development or Development of an Independent Lead Compound or
Independent Product only

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      24.
<PAGE>

in such Party's Exclusive Territory, such Independent Lead Compound shall
immediately be deemed a Collaboration Lead Compound rather than an Independent
Lead Compound and such Independent Product shall immediately be deemed a Product
rather than an Independent Product solely with respect to such Party's Exclusive
Territory pursuant to this Section 4.20(c), and the Party resuming such
participation shall not receive the Share of Profit from the other Party that
such Party would have received had such Party participated in the Pre-Clinical
Development or Development of such Independent Lead Compound or Independent
Product as a Collaboration Lead Compound or Product, respectively, in the Co-
Promotion Territory. If a Party elects to resume its participation in the Pre-
Clinical Development or Development of an Independent Lead Compound or an
Independent Product pursuant to this Section 4.20(c), then the licenses granted
to the Independent Party pursuant to Section 5.4 with respect to such
Independent Lead Compound or Independent Product shall, upon payment of amounts
due to the Independent Party pursuant to this Section 4.20(c), be limited to the
Co-Promotion Territory and the Independent Party's Exclusive Territory.

     4.21  Reversion of Rights to Tularik on Early Termination of Research
Program. If, after the Research Program terminates early pursuant to Section 3.7
but not simultaneously with the termination of this Agreement pursuant to
Section 18.2, JT terminates Pre-Clinical Development of Collaboration Lead
Compounds and/or Development or Co-Promotion of any Products in any country
pursuant to Sections 4.14 or 9.3, respectively, or development of an Independent
Lead Compound in accordance with Section 4.15, then: (i) all licenses granted by
Tularik to JT will terminate (other than any [*] license provided in the last
sentence of Section 15.2) with respect to such Collaboration Lead Compound,
Independent Lead Compound, Product or Independent Product, (ii) JT will grant to
Tularik an non-exclusive, sublicensable, worldwide license, to develop, make,
use and sell such Collaboration Lead Compound, Independent Lead Compound,
Product or Independent Products under JT's interest in Program Patents and
Program Know-How and (iii) [*] JT will also grant to Tularik a nonexclusive,
sublicensable, worldwide license under the JT Technology to the extent necessary
to practice the license granted under the Program Patents and Program Know-How
in (ii) [*]

     4.22  Relinquishment of Rights. JT recognizes that the Tularik Substances
are used by Tularik both within and outside of the Program (subject to the
proviso in Section 3.4 and to Section 3.9(b), and that Third Parties or JT may
require Tularik to cease performing all research, development or
commercialization activities pursuant to this Agreement using a given compound
included in the Tularik Substances by reason of contractual obligations imposed
upon Tularik in a given Third Party/Other Agreement. If Tularik is so required
to cease research, development and/or commercialization of any Tularik Substance
that is a Collaboration Lead Compound or Product, or that is an Independent Lead
Compound or Independent Product for which JT is the Independent Party, then
subject to the final sentence of this Section 4.22, Tularik shall so notify JT
and thereafter [*] JT acknowledges that, if any Third Party or JT acquires
rights to a Collaboration Lead Compound, Independent Lead Compound, Product or
Independent Product as provided in this Section 4.22, such Third Party or JT may
commercialize such Collaboration Lead Compound, Independent Lead Compound,
Product or Independent Product during the Term. In no event shall JT be required
to [*] pursuant to this Section 4.22 [*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      25.
<PAGE>

                                   ARTICLE 5

                                LICENSE GRANTS

     5.1  Research License. Each Party hereby grants to the other Party, solely
for the purpose of conducting the Program, a non-exclusive license to practice
the Patent Rights and Know-How owned or controlled by such Party. A brief
general description of Tularik's Patent Rights and Know-How is attached as
Appendix A. A brief general description of JT's Patent Rights and Know-How is
attached as Appendix B. Tularik and JT shall provide to each other numbers of
all relevant patents and patent applications within their respective Patent
Rights in Appendix A and Appendix B respectively, if they have not already done
so. Neither Party may grant sublicenses under the foregoing research licenses
without the prior written consent of the other Party, not to be unreasonably
withheld, except as provided in Section 5.5.

     5.2  Grant by Tularik. Subject to the terms and conditions of this
Agreement, Tularik hereby grants and agrees to grant to JT: (i) an exclusive
(except as to Tularik), royalty-bearing (in accordance with Section 6.2) license
(with the right to sublicense as provided in this Section 5.2) under the Program
Patents, Program Know-How, and the Tularik Technology to the extent necessary or
useful to develop, have developed (following approval of the MC in accordance
with Section 9.4), make, have made, use, import, offer for sale, sell and have
sold (following approval of the MC in accordance with Section 9.4) any Product
in the Co-Promotion Territory (subject to Sections 4.17 and 9.3); and (ii) an
exclusive (even as to Tularik), royalty-bearing license (with the right to
sublicense as provided in this Section 5.2) under the Program Patents, Program
Know-How, and the Tularik Technology to develop, have developed, make, have
made, use, import, offer for sale, sell and have sold any Product in the JT
Territory. Except as provided in Section 5.6, JT may not sublicense any rights
granted under this Section 5.2 in the Co-Promotion Territory to any Third Party
without the prior written consent of Tularik, not to be unreasonably withheld.
JT may sublicense any rights granted under this Section 5.2 in the JT Territory
to any Third Party without the prior written consent of Tularik, provided that
any such sublicensee is subject to the payment obligations and other applicable
provisions set forth in this Agreement, including without limitation the last
sentence of Section 5.6. JT shall use reasonable efforts to ensure that any such
sublicense negotiated by JT as permitted under this Section 5.2 shall run from
the Parties to such sublicensee; and JT shall ensure that any such sublicense
shall provide that [*](collectively, "Sublicense Revenues"), shall be [*]
Notwithstanding the foregoing, if JT has elected to resume participation in Pre-
Clinical Development or Development of an Independent Lead Compound or an
Independent Product as a Collaboration Lead Compound or Product pursuant to
Section 4.16(c), then the license granted to JT hereunder with respect to such
Collaboration Lead Compound or Product shall be limited to only the license
granted to JT pursuant to subsection 5.2(ii), and if Tularik has elected to
resume participation in Pre-Clinical Development or Development of an
Independent Lead Compound or Independent Product as a Collaboration Lead Product
or Product pursuant to Section 4.16(c), then the license granted to JT pursuant
to subsection 5.2(ii) with respect to such Collaboration Lead Compound or
Product shall be exclusive (even as to Tularik) in the Co-Promotion Territory.

     5.3  Grant by JT. Subject to the terms and conditions of this Agreement,
and except as provided otherwise in this Section 5.3, JT hereby grants and
agrees to grant to Tularik: (i) an

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      26.
<PAGE>

exclusive (except as to JT), royalty-bearing (in accordance with Section 6.2)
license (with the right to sublicense as provided in this Section 5.3 and
Section 5.5) under the Program Patents, Program Know-How, and the JT Technology
to the extent necessary develop, have developed (following approval of the MC in
accordance with Section 9.4, except as provided in Section 5.5), make, have
made, use, import, offer for sale, sell and have sold (following approval of the
MC in accordance with Section 9.4) any Product in the Co-Promotion Territory
(subject to Sections 4.17 and 9.3); and (ii) an exclusive (even as to JT),
royalty-bearing license (with the right to sublicense as provided in this
Section 5.3) under the Program Patents, Program Know-How, and the JT Technology
to develop, have developed, make, have made, use, import, offer for sale, sell
and have sold (with the right to sublicense as provided in this Section 5.3 and
Section 5.5) any Product in the Tularik Territory. Tularik may grant, and
pursuant to the Tularik/Subsidiary Agreement has granted, a sublicense under
such license to the Subsidiary as set forth in Section 5.5 but may not, except
as provided in Section 5.6, sublicense any rights granted under this Section 5.3
to any Third Party in the Co-Promotion Territory without the prior written
consent of JT, not to be unreasonably withheld. Tularik may sublicense any
rights granted under this Section to any Third Party in the Tularik Territory
without the prior written consent of JT, provided that any such sublicensee is
subject to the payment obligations and other applicable provisions set forth in
this Agreement, including without limitation the last sentence of Section 5.6.
Tularik shall use reasonable efforts to ensure that any sublicense negotiated by
Tularik as permitted under this Section 5.3 shall run from the Parties to such
sublicensee; and Tularik shall ensure that [*] shall be [*] Notwithstanding the
foregoing, if Tularik has elected to resume participation in Pre-Clinical
Development or Development of an Independent Lead Compound or an Independent
Product as a Collaboration Lead Compound or Product pursuant to Section 4.16(c),
then the license granted to Tularik hereunder with respect to such Collaboration
Lead Compound or Product shall be limited to only the license granted to Tularik
pursuant to subsection 5.3(ii), and if JT has elected to resume participation in
Pre-Clinical Development or Development of an Independent Lead Compound or
Independent Product as a Collaboration Lead Product or Product pursuant to
Section 4.16(c), then the license granted pursuant to subsection 5.3(ii) to
Tularik with respect to such Collaboration Lead Product or Product shall be
exclusive (even as to JT) in the Co-Promotion Territory.

     5.4  Grant by JT and Tularik for Independent Products. Each of JT and
Tularik hereby grants to the other Party, to the extent such other Party is an
Independent Party with respect to an Independent Lead Compound or Independent
Product pursuant to Section 4.15, an exclusive, royalty-bearing (in accordance
with Section 4.16(c) or 6.4, as applicable), worldwide (subject to Section
4.16(c), the last two sentences of this Section 5.4 and Section 9.3) license
(with the right to sublicense after the Re-Engagement Expiration Date shall have
occurred without the non-Independent Party having given a Re-Engagement Notice)
under the granting Party's interest in the Program Patents and Program Know-How,
and a non-exclusive, royalty-bearing (in accordance with Sections 4.16(c) or
6.4, as applicable), worldwide (subject to the last sentence of this Section 5.4
and Section 9.3) license (with the right to sublicense after the Re-Engagement
Expiration Date shall have passed without the non-Independent Party having given
a Re-Engagement Notice) under the Patent Rights and Know-How owned or controlled
by the non-Independent Party to develop or have developed Independent Lead
Compounds and to make, have made, use, import, offer for sale, sell and have
sold Independent Products incorporating an Independent Lead Compound. Such
licenses under the non-Independent Party's

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      27.
<PAGE>

interest in Program Patents and Program Know-How are exclusive even as to the
granting Party, unless the granting Party has also elected to develop
independently such Independent Lead Compound or Independent Product pursuant to
Section 3.5(d), in which case such license shall be exclusive except as to the
granting Party in the Co-Promotion Territory to the extent the Parties agree to
commercialize such Independent Product in the Co-Promotion Territory as provided
in Section 4.15(a)(i). Any such license with respect to an Independent Product
or Independent Lead Compound shall terminate in the event such Independent
Product or Independent Lead Compound becomes a Collaboration Lead Compound or
Product pursuant to the terms of Section 4.20(a). Notwithstanding the foregoing,
if both Parties become an Independent Party for a given Independent Product in
their respective Exclusive Territories pursuant to Section 4.15(a)(ii), then
each Party shall grant to the other Party the licenses set forth in this Section
5.4 with respect to such Independent Product, except that such licenses shall be
limited to such Independent Party's Exclusive Territory, and shall operate in
the Co-Promotion Territory only to the extent of the Parties' mutual written
agreement as determined in the course of the Parties' negotiations pursuant to
Section 4.15(a)(ii).

     5.5  Subsidiary Patent Rights and Know-How. The Tularik/Subsidiary
Agreement provides for the allocation of intellectual property rights between
Tularik and the Subsidiary that are necessary or useful for the performance of
Tularik and/or the Subsidiary under this Agreement. Specifically, under the
Tularik/Subsidiary Agreement, the Patent Rights, Know-How, Program Patents,
Program Know-How, Research Compound Inventions, and Research Compound Patents
that are made, owned or controlled by the Subsidiary that are necessary or
useful for Tularik's performance under this Agreement are assigned or licensed
to Tularik in a manner consistent with Tularik's obligations under this Articles
5 and 15, and any Patent Rights, Know-How, Program Patents, Program Know-How,
Research Compound Inventions and Research Compound Patents necessary or useful
for the Subsidiary's performance under this Agreement that are owned or
controlled by or licensed to Tularik are licensed to the Subsidiary thereunder.
Accordingly, (i) Tularik may grant, and pursuant to the Tularik/Subsidiary
Agreement, has granted, to the Subsidiary a sublicense under the licenses
granted to Tularik in Section 5.1, and (ii) Tularik has, under the
Tularik/Subsidiary Agreement, been granted a license or other rights under
certain patent rights and know-how owned or controlled by the Subsidiary to
enable Tularik to conduct the Program pursuant to this Agreement. The licenses
granted to JT pursuant to this Article 5 include a sublicense under the
Subsidiary patent rights and know-how described in Subsection 5.5(ii).

     5.6  Third Party Technology; Consents to Certain Sublicenses. During the
Term, if either Party becomes aware of (i) an opportunity to participate in
research with a Third Party that could advance the objectives of the Research
Program; or (ii) an opportunity to obtain a license or other right owned or
controlled by a Third Party relating to the manufacture, marketing, import, use
or sale of a Product, it shall so notify the other Party and the RMC will
determine whether to pursue such opportunity in connection with the Program. In
the event that the Parties pursue such opportunity under subsection (i), they
shall grant appropriate licenses or sublicenses, as applicable, to such Third
Party solely to perform the tasks designated and approved by the RMC for such
Third Party and provide for confidentiality and non-use obligations, and for
ownership of or licenses under such Third Party's inventions and related
intellectual property rights arising in the course of worked performed by such
Third Party

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      28.
<PAGE>

pursuant to this Agreement consistent with those provided herein. If the
Parties, in connection with any opportunity described in subsection (i) or (ii),
incur obligations to make payments to a Third Party [*] such payments shall be
[*] Neither Party shall [*]

                                   ARTICLE 6

                   RESEARCH PAYMENTS AND PROFITS AND LOSSES

     6.1  Payments. In consideration of the Tularik Technology licensed to the
Subsidiary pursuant to the Tularik/Subsidiary Agreement for use by the
Subsidiary in activities taking place in the United States under the Research
Program, but not in consideration of the licenses granted pursuant to Article 5
hereof or as partial payment of any royalties to be paid in consideration
thereof, JT shall pay Tularik Twenty Five Million US Dollars (US$25,000,000)
within ten (10) days of the Effective Date.

          (a)  Additionally, JT shall pay to Tularik [*] to support the Research
Program: (A) within [*] of the Effective Date; (B) prior to or on [*] the
Effective Date; and (C) prior to or on [*] the Effective Date, unless [*] In the
event that the report provided pursuant to Section 7.2 for the quarters in which
each of the [*] of the Effective Date occur does not indicate that [*]

          (b)  In addition to the foregoing, JT shall pay Tularik, on [*] the
Effective Date, an amount equal to: (A) the [*] multiplied by (B)(i) the [*],
minus (ii) the [*] If such amount is negative, then JT shall not be obligated to
make any payment to Tularik hereunder. A [*] is attached hereto as Appendix G.

          (c)  JT shall also be responsible for payment of all costs associated
with the [*] during the Research Program Term, and shall pay such costs within
[*] after receipt of an invoice for such amounts.

          (d)  Any payments made by JT to Tularik pursuant to this Section 6.1
shall not [*]

     6.2  Profits and Losses. In consideration of the prohibition on each Party
commercializing Program Technology in the other Party's Exclusive Territory, as
provided in Sections 5.2(ii) or 5.3(ii), as the case may be, and 9.1 and subject
to Section 7.4, in exchange for a Share of Profits from such other Party's
commercialization effort, [*] "Share of Profit" shall equal [*] Profits, and [*]
"Share of Loss" shall equal [*] Losses for [*] Products sold in [*] Each Party
shall be responsible for its Share of Loss pursuant to Section 7.4 and shall be
entitled to receive its Share of Profits. [*] shall also receive [*] Sublicense
Revenues in the Co-Promotion Territory, if the Co-Promotion Alternative is not
elected for a given Product pursuant to Section 9.5, which sublicense agreements
shall conform to the requirements of Sections 5.2 and 5.3. Profits and Losses
and Sublicense Revenues shall be determined and paid as set forth in Section
7.3.

     6.3  Royalties Payable on Sales of Independent Products After Revocation of
Co-Promotion Rights. In the event a Party elects to terminate its participation
in the Co-Promotion

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      29.
<PAGE>

of a Product in a country or countries in the Co-Promotion Territory pursuant to
Section 9.3, the Parties shall negotiate in good faith for a period of [*]
following the non-terminating Party's receipt of such notice to determine the
appropriate royalty to be paid on Net Sales of such Product as an Independent
Product by the other Party as an Independent Party in such country or countries.
In the event the Parties are unable to agree on the appropriate royalty pursuant
to the immediately preceding sentence, the Independent Party with respect to
such Independent Product shall pay to the other Party a royalty on annual Net
Sales of such Independent Product in each such country in the Co-Promotion
Territory pursuant to Section 6.4, except that the applicable royalty shall be:
[*] of the portion of aggregate annual Net Sales of such Independent Product in
such country that is less than or equal to [*]; [*] of the portion of annual
aggregate Net Sales of such Independent Product in such country that is greater
than [*] but less than or equal to [*]; and [*] of the portion of annual
aggregate Net Sales of such Independent Product in such country that is greater
than [*] Such royalty is subject to offsets as provided in the last sentence of
Section 6.4.

     6.4  Royalties Payable by the Independent Party Other Than in the Event of
Revocation of Co-Promotion Rights. Except as provided in Section 4.15(a)(ii)
with respect to the Co-Promotion Territory, and Section 6.3, the Independent
Party will pay the non-Independent Party, in lieu of any Share of Profits, a
royalty equal to:

          (a)  [*] of Net Sales of Independent Products by the Independent
Party, its Affiliates or sublicensees if the non-Independent Party did not
participate, or terminates its participation, in the Pre-Clinical Development of
the relevant Collaboration Lead Compound pursuant to Section 4.14 prior to [*]
or [*] (in which case [*] with the Parties [*] as they shall agree pursuant to
Section 4.15(a)(ii));

          (b)  [*] of Net Sales of Independent Products by the Independent
Party, its affiliates or sublicensees if the non-Independent Party terminates
its participation in the Pre-Clinical Development of the relevant Collaboration
Lead Compound pursuant to Section 4.14 [*] but prior to [*]; or

          (c)  [*] of Net Sales of Independent Products by the Independent
Party, its Affiliates or sublicensees in the event the non-Independent Party
terminates participation in the Development of the relevant Product pursuant to
Section 4.14 [*] such Product.

          (d)  Such royalty shall be payable [*] in respect of each country in
which sales of Independent Products occur until the later of expiration of all
patents included in the Program Patents and Patent Rights necessary to make,
use, import for sale or sell such Independent Product in such country, or [*]
after first commercial sale of an Independent Product in such country. The
Independent Party may offset [*] of any royalties it must pay to Third Parties
pursuant to any licenses necessary to commercialize Independent Products against
royalties payable by the Independent Party to the non-Independent Party;
provided, however, that in no event shall the royalties payable by the
Independent Party to the non-Independent Party be reduced to less than [*] of
the amounts that would have otherwise been due under the percentages set forth
in this Section 6.4 or Section 6.3, as applicable.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      30.
<PAGE>

     6.5  Adjustments in the Event of Third Party/Other Rights. In the event
that Tularik provides notice to JT pursuant to Section 4.22 with respect to a
Substance, Collaboration Lead Compound, Independent Lead Compound, Product or
Independent Product and JT is therefore required to relinquish rights under this
Agreement with respect thereto, Tularik shall within [*] (i) return to JT an
amount to be negotiated between JT and Tularik in good faith that represents
[*], unless Tularik has provided such notice to JT because JT has required
Tularik to cease development or commercialization of a Substance, Collaboration
Lead Compound, Independent Lead Compound or Independent Product pursuant to a
Third Party/Other Agreement between Tularik and JT; and (ii) commence
negotiations in good faith with JT to determine [*] with respect to such
Collaboration Lead Compound, Product, Independent Lead Compound or Independent
Product.

     6.6  Taxes. The burden of paying all withholding or similar taxes that may
be imposed by any governmental authority on royalty and Share of Profit payment
amounts provided in this Agreement shall be [*]

                                   ARTICLE 7

                        ACCOUNTS AND RECORDS; PAYMENTS

     7.1  Records. JT and Tularik each shall keep accurate books and accounts of
record in connection with the manufacture, use and/or sale by or for such Party
of all Products and Independent Products in the Territory in sufficient detail
to permit accurate determination of all figures necessary for verification of
royalties, Profits, Losses, Sublicense Revenues, Expenses and other compensation
required to be paid or expenses required to be shared hereunder. JT and Tularik
shall maintain such records for a period of [*] after the end of the year in
which such records were generated. Either Party, through a certified public
accountant reasonably acceptable to the other Party, shall have the right to
access the books and records of the other Party for the sole purpose of
verifying amounts due to such Party pursuant to this Agreement, at the expense
of the auditing Party, unless such audit reveals an underpayment to such Party
greater than [*] of amounts due to such Party, in which case the audited Party
shall bear all costs of such audit. Such access shall be permitted only upon
reasonable prior written notice to the other Party during ordinary business
hours, and not more frequently than once during each calendar year.

     7.2  Reports. Tularik shall provide JT with a quarterly report describing
Tularik's use of the annual payments received from JT pursuant to Sections
6.1(a), (b) and (d) for research, Pre-Clinical Development, and Development
purposes. JT shall provide Tularik with a quarterly report describing JT's
expenditure of funds for Pre-Clinical Development and Development purposes. Such
report shall include the following two categories of expenditures: (i)
"Personnel Costs" and (ii) "Other Costs." Each Party shall provide such reports
on an unaudited basis. Within a reasonable time following the receipt of such
quarterly report, a Party's independent public accountants shall attest to the
accuracy of such report.

     7.3  Product Reporting and Payments of the Parties' Share of Profit/Loss.
Payments and reporting for each Product shall be made as follows, subject to
Section 7.3(c).

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      31.
<PAGE>

Within [*] after the close of Tularik's accounting year in which Products are
sold, or earlier if possible, during the Term [*] Tularik shall furnish to JT a
profit and loss statement for [*] setting forth for each country [*] in which
Products were developed or sold during [*] Net Sales of each Product, Expenses,
Sublicense Revenues and all data on which the determination of each Party's
Share of Profit, Share of Loss or share of Sublicense Revenues was calculated.
Within [*] after the close of JT's [*] in which Products are sold, or earlier if
possible, during the Term [*], JT shall furnish to Tularik a profit and loss
statement for such [*] setting forth for each country [*] in which Products were
developed or sold during [*] Net Sales of each Product, Expenses, Sublicense
Revenues and all data on which the determination of each Party's Share of
Profit, Share of Loss, or share of Sublicense Revenues was calculated. If the
Term ends during [*] the amounts due hereunder shall be calculated for such [*]
If either Party owes an amount of Share of Profit to the other Party pursuant to
Section 6.2, then subject to Section 7.3(c), it shall make such payment within
[*] after receipt of the profit and loss statement, but in no event shall such
payment be due earlier than [*] after the end of the relevant period. If either
Party owes an amount of Share of Loss to the other Party pursuant to Section
6.2, then such Share of Loss shall be settled pursuant to Section 7.4; provided,
however, that the Share of Loss [*] shall be paid as provided in the penultimate
sentence of this Section 7.3(a).

          (a)  For the purposes of calculating Profit or Loss for a Product, a
given item of cost or expense shall be allocated only to one category of cost
and expense and not to multiple categories. Each Party agrees to determine such
costs and expenses hereunder with respect to Products using its standard
accounting procedures, consistently applied, to the maximum extent practical as
if such Product were a solely owned product of the Party, except as specifically
provided in this Agreement. The Parties also recognize that such procedures may
change from time to time and that any such changes may affect the definitions of
the elements of the Profit or Loss. The Parties agree that, where such changes
are economically material to either Party, adjustments shall be made to
compensate the affected Party in order to preserve the same economics as
reflected under this Agreement under such Party's accounting procedures in
effect as of the date on which the activity in question (for example,
development, marketing or manufacturing) first commences under this Agreement.
Transfers between a Party and its Affiliates (or between such Affiliates) shall
not have effect for purposes of calculating revenues, costs, profits, royalties
or other payments or expenses under this Agreement.

     7.4  If the Party commercializing a given Product [*] (such Party, the
"Launching Party") incurs any Loss for such Product in any year during the Term,
then it shall [*] for the calculation of [*] of the subsequent [*] which shall
be deductible until [*]provided, however, that the other Party shall owe to the
Launching Party [*] of the aggregate [*] pursuant to this sentence until the
earliest to occur of (i) the [*] of the end of the accounting [*] in which the
commercial launch of such Product [*] occurred, (ii) the end of the accounting
[*] in which the [*] occurred or (iii) the end of the accounting [*] in which
the effective date of [*] occurs, in any of such cases, the Party owing its [*]
share of the aggregate [*] shall make such payment within [*] after receipt of
the profit and loss statement of the applicable accounting [*] together with, if
any, the amount of its Share of Loss of such accounting [*] but in no event
shall such payment be due [*] after the end of the applicable accounting [*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      32.
<PAGE>

                                   ARTICLE 8

                                  SUBSIDIARY

     8.1  Responsibilities of the Subsidiary and Tularik. The Subsidiary will
perform Tularik's responsibilities under the Research Program, except as
otherwise provided in Section 3.4, although Tularik will develop and
commercialize Products and Independent Products resulting from the Program
pursuant to this Agreement, unless the Parties otherwise mutually agree.

     8.2  Modification of Licenses and Rights Upon Exercise of the Purchase
Option. Subject to Section 3.9(b), if JT exercises the Volitional Purchase
Option during the Research Program Term or the Change of Control Option during
the Term, then (i) the license provided in Section 2.2 of the Tularik/Subsidiary
Agreement shall come into effect, and (ii) the Research Program shall terminate
if such event occurs prior to the expiration of the Research Program Term, as
provided in Section 3.7.

                                   ARTICLE 9

                        PROMOTION AND COMMERCIALIZATION

     9.1  Promotion Rights in the Exclusive Territory. Subject to the terms and
conditions of this Article 9, each Party shall have the exclusive responsibility
for promoting each Product in its Exclusive Territory. All information and
materials generated by a Party in the course of its promotion effort for
Products within any country in such Party's Exclusive Territory or in the Co-
Promotion Territory shall be provided to the MC for use in the promotion effort
within the other Party's Exclusive Territory and in the Co-Promotion Territory.

     9.2  Commercialization of Products in the Exclusive Territories. JT shall
oversee and implement all commercialization activities in the JT Territory
during the Term, based on the principle of maximizing profits from sales of
Products. Tularik shall oversee and implement all commercialization activities
in the Tularik Territory during the Term, based on the principle of maximizing
profits from sales of Products. The MC shall review each Party's plans for and
implementation of commercialization activities within its Exclusive Territory
and provide suggestions for facilitating the promotion and commercialization of
Products on a global basis.

     9.3  Election of Revocation of Co-Promotion Right or Profit Share Interest
in the Exclusive Territory. If the Co-Promotion Alternative is elected for a
Product pursuant to Section 9.5, then either Party may terminate early its
participation in the Co-Promotion of a Product in any country in the Co-
Promotion Territory at any time following [*] Either Party may terminate its
right to receive a Share of Profits and Sublicense Revenues in any country in
the other Party's Exclusive Territory at any upon [*] In either such case, the
other Party may continue promotion of such Product as an Independent Product,
either alone or with a Third Party, and shall thereafter be deemed to be an
Independent Party for such Independent Product solely with respect to such
country or countries, effective as of the date of the terminating Party's notice
hereunder, in which case the Independent Party's license under Section 5.4 shall
be

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      33.
<PAGE>

limited to the country or countries in which the other Party has terminated its
Co-Promotion of or profit sharing interest in such Product (the "Terminated Co-
Promotion Countries"), and the licenses granted to the Parties pursuant to
Sections 5.2 and 5.3 with respect to the relevant compound and Product shall
continue in effect as to all countries other than the Terminated Co-Promotion
Countries. In the event a Party elects to cease participating in the Co-
Promotion of a Product in a country in the Co-Promotion Territory and the other
Party proceeds to commercialize such Product in the Terminated Co-Promotion
Countries as an Independent Product, the other Party (the non-Independent Party)
shall (i) [*] to the commercializing Party (the Independent Party) all
regulatory submissions and Drug Approval Applications in such country relating
to such former Products, together with all materials and data related thereto in
its possession and (ii) [*] to the Independent Party all other relevant
information that will enable such Independent Party to promote such former
Product as an Independent Product in such country. A non-Independent Party may
not reinitiate its participation in the Co-Promotion of a Product in any country
in the Co-Promotion Territory or its profit sharing interest in a Product in any
country in the Exclusive Territories in which it relinquished such right
hereunder. Any relinquishment of a Party's right to Co-Promote Products pursuant
to this Section 9.3 shall not be a breach of this Agreement.

     9.4  Promotion Rights in the Co-Promotion Territory. The MC shall oversee
and implement all commercialization activities in the Co-Promotion Territory
during the Term, based on the principle of maximizing profits from sales of
Products, by unanimous decisions. The MC shall have the ability to determine
whether the objective of maximizing profits from sales of Products in the Co-
Promotion Territory during the Term is best achieved through, inter alia,
granting sublicenses to a Third Party or Third Parties, creating or entering
into joint ventures with Third Parties or jointly Co-Promoting such Products as
provided in Section 9.5. In the event the MC determines that the foregoing
objective is best achieved by activities other than as provided in Section 9.5,
the MC shall determine [*] the optimal alternative structure and the duties,
responsibilities and economic parameters for the Parties and Third Parties in
such alternative structure. If the MC determines to pursue alternatives other
than the Co-Promotion Alternative, then the licenses provided to the parties in
Sections 5.2(i) and 5.3(i) shall include the right to have developed and have
sold Products in the Co-Promotion Territory, as directed by the MC.

     9.5  Co-Promotion Alternative. In the absence of [*] by the MC pursuant to
Section 9.4 or in the event of [*] by the MC to retain for the Parties
commercialization rights to a Product in the Co-Promotion Territory (the "Co-
Promotion Alternative"), JT and Tularik shall have the co-exclusive
responsibility for promoting such Product in the Co-Promotion Territory, except
as otherwise provided in this Agreement.

     9.6  Marketing Plan and Marketing Budget. If the RMC elects the Co-
Promotion Alternative for a Product, no later than [*] for a Product, the MC
shall commence preparation of a marketing plan ("Marketing Plan") and a
marketing budget ("Marketing Budget") for such Product. The Co-Promotion of a
Product in the Co-Promotion Territory will be governed by the Marketing Plan and
Marketing Budget. The Marketing Plan and Marketing Budget will describe fully,
to the extent practicable, the proposed plan for commercialization of the
Product in each country in which the Parties Co-Promote Products, including
overall marketing strategy,

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      34.
<PAGE>

marketing, sales and promotion efforts to be performed by each Party, market and
sales forecasts, pricing, reimbursement and discounting analysis and estimated
launch date, as well as preparation of advertising and other promotional
materials to be used in the Co-Promotion of Products. The Marketing Plan will
take into consideration market conditions, regulatory factors and competition
with respect to Products. The Marketing Budget will include all projected
Expenses for the Product. The initial Marketing Plan and Marketing Budget shall
be completed by the MC no later than [*] for a Product in any country in the Co-
Promotion Territory. Each such Marketing Plan and Marketing Budget shall
thereafter be updated by the MC [*]

     9.7   Sales Effort. Tularik and JT shall each diligently perform its
respective obligations under the Marketing Plan and use efforts to Co-Promote
Products in the Co-Promotion Territory pursuant to the terms and conditions
hereof from initiation of pre-launch activities for such Product in the
Co-Promotion Territory until the expiration of the Term comparable to those it
uses to promote other products of similar commercial value. The Parties intend
that [*] shall provide [*] of the total promotional and marketing effort
(including details, if determined to be an appropriate sales activity for a
Party by the MC) for each Product being Co-Promoted by the Parties in the
Co-Promotion Territory, as determined by the MC. The MC will determine
appropriate written standards for measuring, and accounting procedures to
confirm and document, each Party's marketing and promotional effort under the
Marketing Plan, no later than [*] for any Product. Nothing contained in this
Section 9.5 or Section 9.4 shall be deemed to preclude either Party from
relinquishing its right to participate in the Co-Promotion of Products in the
Co-Promotion Territory pursuant to Section 9.3, at any time

     9.8  Promotional and Advertising Materials in the Co-Promotion Territory.
If the Co-Promotion Alternative is elected pursuant to this Section 9.5, the
Parties shall disseminate in the Co-Promotion Territory only those promotional
and advertising materials that have been provided or approved for use by the MC,
and the cost of producing such materials shall be an Expense of the Party
incurring such cost. All such materials shall be consistent with the relevant
Marketing Plan and Marketing Budget approved by the MC and neither Party shall
make any claims or representations in respect of the Products outside the scope
of those previously approved by the MC.

     9.9   Miscellaneous. If the MC elects the Co-Promotion Alternative for a
Product, it shall [*] designate a Party as being primarily responsible for each
country in the Co-Promotion Territory for booking sales, establishing pricing
for Products based upon the market analyses performed by the Parties under the
direction of the MC, obtaining necessary pricing approvals, handling returns and
customer complaints and providing samples. In addition, the MC shall determine
the policies and procedures necessary to implement the foregoing, including
coordination of the Parties' efforts to train sales and marketing
representatives for Co-Promotion Products.

     9.10  Exclusive Territory Marketing Plans and Budgets; Promotional and
Advertising Materials. Each Party shall submit to the MC a marketing plan and
budget for each Product it intends to commercialize in its Exclusive Territory
for informational purposes, which plan and budget is prepared in accordance with
Section 9.6. All information and materials generated by a Party in the course of
its promotion effort for Products within any country in such

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      35.
<PAGE>

Party's Exclusive Territory shall be provided to the MC for use in the promotion
effort within the other Party's Exclusive Territory and in the Co-Promotion
Territory. In all such written or visual materials related to Products that
identify either of the Parties, the Parties will be presented and described to
the medical communities (including, for example, the physician, pharmacy,
governmental, reimbursement and hospital sectors) as joining in the development
of the Product , subject to applicable laws, rules and regulations. All such
written and visual materials and all documentary information, promotional
material and oral presentations (where practical) regarding the promotion of the
Product will state this arrangement and will display the JT and Tularik names
and logos with equal prominence, subject to applicable laws, rules and
regulations and as directed by the MC.

     9.11  Compliance with Laws. In performing their responsibilities under this
Article 9, the Parties shall comply with all applicable laws, rules and
regulations.

                                  ARTICLE 10

                                  TRADEMARKS

     10.1  Trademarks. The Parties shall mutually select the trademark or
trademarks for Products. To the extent commercially reasonable and appropriate,
a single trademark shall be used for each Product in all countries in the Co-
Promotion Territory. To the extent the Parties determine that the use of a
single trademark for a given Product is impractical or not advisable given
cultural and other differences among countries in the Co-Promotion Territory,
the Parties shall agree on the appropriate trademark for a Product for use
within different countries within the Co-Promotion Territory; provided, however,
that in no event shall different trademarks be used for the same Product within
the same country in the Co-Promotion Territory. Each Party shall have the right
to designate a different trademark for a Product for use within different
countries within such Party's Exclusive Territory. Each trademark shall be used
only in connection with the applicable Product and shall not be used by either
Party on, or in connection with, any other product. The Parties shall determine
which Party shall own each trademark used to promote Products in the Co-
Promotion Territory and assign responsibility to one or both Parties for
searching, clearing, filing, prosecuting, maintaining and all reasonable steps
necessary in defending each Product trademark(s). Each Party shall own the
trademark used to promote Products in such Party's Exclusive Territory and shall
be responsible for searching, clearing, filing, prosecuting, maintaining and
taking all reasonable steps necessary in defending each such Product trademark.

           (a)  The Party owning a given trademark and related intellectual
property rights in a country in the Territory shall, and hereby does, grant to
the other Party a nonexclusive, royalty-free license, with the right to grant
sublicenses only with the prior written consent of the granting Party, to use
such trademark to promote and commercialize Products as permitted under this
Agreement, provided that the Party receiving such license shall refrain from
taking any actions that may dilute or otherwise reduce the value of such
trademark. The Parties shall approve all trade dress, logos, slogans, designs
and copyrights used on and in connection with any Product in the Co-Promotion
Territory. During the Term, the Parties shall approve all printed materials
bearing each trademark for a Product in the Co-Promotion Territory, including

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      36.
<PAGE>

but not limited to business materials, printed materials, advertising materials,
promotional materials and any such other materials that may reference or
incorporate such trademark.

           (b)  In the event that any action or proceeding is brought against
either or both JT or Tularik with respect to a Product trademark in the
Territory or relating to any alleged infringement of a Third Party's trademark,
trade dress or similar intellectual property rights in the Territory arising out
of the Parties' promotion or commercialization of Products pursuant to this
Agreement, each Party shall promptly notify the other and cooperate in the
defense of any such action or proceeding, as applicable. The Parties shall agree
on the management of such action. In the event Tularik or JT becomes aware of
any actual or threatened violation of any trademark for a Product in any country
in the Territory, that Party shall promptly notify the other Party and the EC
shall promptly discuss how to proceed in connection with such actual or
threatened violation. Any expenses incurred by either or both Parties for
registering, prosecuting applications for or maintaining trademarks for
Products, and any expenses incurred in defending such trademarks or for
defending any Third Party claims of trademark infringement relating to the
commercialization of Products, shall be included as an element of [*]

     10.2  Compliance. The Parties shall comply with all supranational, federal,
state and/or local laws pertaining to the commercialization of Products.

                                   ARTICLE 11

                              MANUFACTURE; SUPPLY

     11.1  Supply of Product. The JDC shall be responsible for determining the
sources of, and arrangements for, the clinical and commercial manufacture and
supply of Collaboration Lead Compounds and Products in a manner designed to
result in long-term profit maximization for such Products in compliance with all
applicable regulatory laws, rules and regulations. The JDC shall endeavor to
establish multiple sources of bulk material and fill and finish services and to
establish policies for the maintenance of inventories of key intermediates, bulk
material and finished products and for such other matters as necessary or useful
to assure such supply of Products in the Territory. The Independent Party shall
arrange for the supply of Independent Lead Compounds and Independent Products,
in both bulk and finished form.

     11.2  Specifications for Products. The Parties shall designate one of the
Parties to be responsible for establishing, subject to approval by the JDC and
the MC, the specifications for bulk and finished Product, and providing and
maintaining any necessary documentation, certificates of analysis and test
results, for each Product. Copies of all such specifications and other
information and documentation will be provided promptly to the Parties. In
addition, notice of, and results and data from, all FDA (or its foreign
equivalent) audits relating to the manufacture of Product will be provided to
each Party. The Cost of Goods (including [*] for Products actually used (and not
sold) for all Pre-Clinical Development and Development studies shall be included
in Development Costs.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      37.
<PAGE>

     11.3  Terms of Manufacture and Supply. The Parties shall establish
procedures acceptable to both Parties regarding forecasting of and ordering for
each Party's requirements of the Products in the Territory.

                                  ARTICLE 12

                              REGULATORY MATTERS

     12.1  Side Effects and Adverse Events. During the Term, each Party shall
promptly advise the other by telephone, telefax or overnight delivery service of
every serious or unexpected side effect, adverse reaction or injury that has
been brought to that Party's attention and which is alleged to have been caused
by a Product. For each country in the Territory, the Party that has the
responsibility for filing the Drug Approval Application and the IND (or foreign
equivalent) in such country for such Product shall have all rights and
responsibilities to report such side effect, adverse reaction or injury to the
appropriate regulatory authorities as required by applicable law, rule or
regulation. The Parties shall establish a procedure for such reporting
obligations prior to commencement of Phase I clinical trials for the first
Product.

     12.2  Communication with Regulatory Agencies. If a Party is contacted by
the FDA or any equivalent regulatory agency in any country in the Territory
during the Term pertaining to this Agreement or to a Product, Tularik and JT
shall promptly, but always within [*] notify and consult with one another. The
Party that has responsibility for regulatory filings for a Product shall provide
an appropriate response to such contact after such consultation with the other
Party, except where an earlier response may be required by law or to assure
patient safety.

     12.3  Product Recall. In the event that JT or Tularik determines that an
event, incident or circumstance has occurred that may result in the need for a
recall or other removal of any Product or any lot or lots thereof from the
market in a country within the Territory, it shall promptly advise and consult
with the other Party with respect thereto. Thereafter, on a country-by-country
basis, the owner of the Drug Approval Application for such Product in a country
shall, in its sole discretion (except as otherwise required by such government
authority), have the right to order a recall or other removal after such
consultations, and the other Party shall co-operate with such recall. Any
expenses related to a recall in the Co-Promotion Territory for a Co-Promoted
Product shall be [*]

                                  ARTICLE 13

                           DISCLAIMER OF WARRANTIES

     13.1  Tularik Disclaimer. THE TULARIK TECHNOLOGY PROVIDED HEREUNDER IS
PROVIDED "AS IS" AND TULARIK EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY
KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR ARISING FROM A COURSE OF
DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      38.
<PAGE>

RESPECT THERETO. Without limiting the generality of the foregoing, Tularik
expressly does not warrant (i) the success of any study or test commenced
pursuant to the Program or (ii) the safety or usefulness for any purpose of the
Tularik Technology or the Program Know-How.

     13.2  JT Disclaimer. THE JT TECHNOLOGY PROVIDED HEREUNDER ARE PROVIDED "AS
IS" AND JT EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE
PRACTICES, IN ALL CASES WITH RESPECT THERETO. Without limiting the generality of
the foregoing, JT expressly does not warrant (i) the success of any study or
test commenced pursuant to the Program or (ii) the safety or usefulness for any
purpose of the JT Technology or the Program Know-How.

                                  ARTICLE 14

                                INDEMNIFICATION

     14.1  Indemnification for Independent Products. With respect to Independent
Products:

           (a)  Each Independent Party hereby agrees to save, defend and hold
the other Party and its agents and employees harmless from and against any and
all suits, claims, actions, demands, liabilities, expenses and/or loss,
including reasonable legal expenses and attorneys' fees (collectively,
"Claims"), resulting directly from the manufacture, use, handling, storage, sale
or other disposition of Independent Products by such Independent Party, its
agents or sublicensees, except to the extent such Claims result from the
negligence or willful misconduct of Party seeking indemnification.

           (b)  In the event that a Party is seeking indemnification under this
Section 14.1, it shall inform the other Party of a claim as soon as reasonably
practicable after it receives notice of the Claim, shall permit the indemnifying
Party to assume direction and control of the defense of the Claim (including the
right to settle the Claim solely for monetary consideration), and shall
cooperate as requested in the defense of the Claim.

     14.2  Indemnification for Products in the Co-Promotion Territory. With
respect to any Products Co-Promoted by the Parties in the Co-Promotion
Territory:

           (a)  Each Party hereby agrees to save, defend and hold the other
Party and its agents and employees harmless from and against any and all Claims
resulting directly or indirectly from the manufacture, use, handling, storage,
sale or other disposition of Products by the indemnifying Party, its agents or
sublicensees, but only to the extent such Claims result from the negligence or
willful misconduct of the indemnifying Party or its employees and agents and do
not also result from the negligence or willful misconduct of the Party seeking
indemnification. Any other Claims resulting directly or indirectly from the
manufacture, use,

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      39.
<PAGE>

handling, storage, sale or other disposition of Products shall be included as an
Expense of either Party at the time such claim is finally determined, whether by
judgment, award, decree or settlement.

           (b)  In the event that a Party is seeking indemnification under this
Section 14.2, it shall inform the other Party of a claim as soon as reasonably
practicable after it receives notice of the Claim, shall permit the indemnifying
Party to assume direction and control of the defense of the Claim (including the
right to settle the claim solely for monetary consideration), and shall
cooperate as requested in the defense of the Claim.

           (c)  In the event that either Party receives notice of a Claim by a
Third Party for injury or damage to property or person with respect to the
development, manufacture, use, handling, storage, sale or other disposition of a
Product, such Party shall inform the other Party as soon as reasonably
practicable. The Parties shall confer how to respond to the claim and how to
handle the claim in an efficient manner.

     14.3  Indemnification for Products in the Exclusive Territory. With respect
to any Products sold by a Party in such Party's Exclusive Territory:

           (a)  Each Party hereby agrees to save, defend and hold the other
Party and its agents and employees harmless from and against any and all Claims
resulting directly from the manufacture, use, handling, storage, sale or other
disposition of Products by the indemnifying Party, its agents or sublicensees
except to the extent such Claims result from the negligence or willful
misconduct of the Party seeking indemnification.

           (b)  In the event that a Party is seeking indemnification under this
Section 14.3, it shall inform the other Party of a claim as soon as reasonably
practicable after it receives notice of the Claim, shall permit the indemnifying
Party to assume direction and control of the defense of the Claim (including the
right to settle the Claim solely for monetary consideration), and shall
cooperate as requested in the defense of the Claim.

     14.4  Indemnification for Non-Collaboration Compounds. With respect to Non-
Collaboration Compounds:

           (a)  Each Party hereby agrees to save, defend and hold the other
Party and its agents and employees harmless from and against any and all Claims
resulting directly from the manufacture, use, handling, storage, sale or other
disposition of products based upon or incorporating any Non-Collaboration
Compounds by such Party, its agents or sublicensees, except to the extent such
Claims result from the negligence or willful misconduct of Party seeking
indemnification.

           (b)  In the event that a Party is seeking indemnification under this
Section 14.4, it shall inform the other Party of a claim as soon as reasonably
practicable after it receives notice of the Claim, shall permit the indemnifying
Party to assume direction and control of the defense of the Claim (including the
right to settle the Claim solely for monetary consideration), and shall
cooperate as requested in the defense of the Claim.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      40.
<PAGE>

                                  ARTICLE 15

                        PATENT AND TRADE SECRET RIGHTS

     15.1  Ownership of Research Compounds. All Research Compounds and all
inventions relating to the composition or use of Research Compounds ("Research
Compound Inventions"), whether made solely by or on behalf of a Party, or
jointly by or on behalf of both Parties, shall be [*] Inventorship of such
inventions shall be determined in accordance with U.S. patent laws. Each Party
agrees to execute, or have its employees, agents or consultants execute, all
paperwork necessary to effectuate any such assignment necessary to achieve such
[*] ownership of Research Compounds and Research Compound Inventions. The
Tularik/Subsidiary Agreement also provides for [*] necessary to achieve such [*]
ownership by the Parties of Research Compounds and Research Compound Inventions.
Research Compound Patents shall be [*] and shall be prosecuted in accordance
with Section 15.3 hereof. The RMC shall establish a common numbering system for
the Research Compounds to allow the Parties and the Subsidiary to coordinate
their activities with respect to such Research Compounds.

     15.2  Ownership of Inventions other than Research Compound Inventions. Each
Party shall remain the sole owner or licensee, as applicable, of all technology,
Substances, discoveries, patent applications, patents, know-how and inventions
owned or controlled by such Party on the Effective Date and shall have no rights
in or to technology, Substances, discoveries and inventions owned by the other
Party except as specifically granted herein. All inventions or discoveries made,
and materials and information created, jointly by Affiliates sublicensed
hereunder by, or employees, agents or consultants of, each Party, in the course
of conducting activities pursuant to this Agreement other than Research Compound
Inventions ("Joint Program Inventions") shall be [*] Except as provided in
Section 15.1, all inventions or discoveries made, and materials and information
created solely by Affiliates sublicensed hereunder by, or employees, agents or
consultants of, one Party in the course of conducting activities pursuant to
this Agreement other than Research Compound Inventions ("Sole Program
Inventions") shall be [*] except as otherwise provided in this Section 15.2.
Inventorship shall be determined in accordance with the U.S. patent laws. Each
Party shall disclose to the other Party promptly any inventions made by such
Party's Affiliate, employees, agents and consultants in the course of performing
such Party's obligations under the Program. The Tularik/Subsidiary Agreement
provides for the disclosure and ownership of inventions other than Research
Compound Inventions that are made by employees, agents or consultants of the
Subsidiary in the course of the Research Program in accordance with this
Agreement. If the Research Program Term is terminated as provided in Section 3.7
without JT simultaneously exercising the Purchase Option contained in Section
2.1 of the Option Agreement, JT shall, and hereby does, [*] and Tularik shall,
and hereby does, [*] provided, however, that if JT elects to develop and
commercialize a Non-Proposed Compound or Discontinued Compound pursuant to
Section 4.3 or 4.4 as provided therein, then JT shall not be obligated to [*]
until such time as [*]

     15.3  Prosecution and Maintenance of Research Compound Patents and
Program Patent Rights. The RMC or the JDC shall determine which Party shall be
responsible for filing, prosecuting and maintaining patent applications for
Research Compound Patents and Program Patents, provided that each Party shall be
responsible for bearing [*] of the cost of filing for and

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      41.
<PAGE>

prosecution and maintenance of such patent application and/or patent. In the
event that the Party selected to file, prosecute and maintain a patent
application decides not to proceed with such issuance, prosecution or
maintenance of any patent application filed under this Section 15.3, such Party
shall give the other Party [*] notice before any relevant deadline, and the
other Party shall have the right, but not the obligation, to pursue prosecution
of such patent application or maintenance of such patent [*]

              (a) The Parties desire to implement a patent prosecution and
maintenance strategy that provides strong, broad patent protection on inventions
made during the course of the Parties' performance under this Agreement, while
optimizing both Parties' ability to develop and commercialize Non-Collaboration
Compounds pursuant to Section 3.9(c) if the Research Program Term is terminated
pursuant to Section 3.7 because [*] Specifically, because the [*] Research
Compound Patents and Program Patents as provided in Sections 15.1 and 15.2, and
[*] shall have the right to file and own patent applications and obtain patents
on Non-Collaboration Compounds it may develop pursuant to Section 3.9(c)
("Non-Collaboration Patents"), the Parties recognize that patent prosecution
strategies may determine the ability of each Party to practice patent rights
necessary to develop and commercialize Non-Collaboration Compounds. Accordingly,
they shall use commercially reasonable efforts to work together to file,
prosecute and maintain Research Compound Patents and Program Patents under this
Article 15 that include claims relating to Substances, Lead Compounds, Research
Compounds, Collaboration Lead Compounds, Independent Lead Compounds, Independent
Products and Products that cover [*] To this end, the Party filing, prosecuting
and maintaining a Research Compound Patent or a Program Patent pursuant to
Section 15.3(a) shall provide to the other Party a copy of each patent
application or other patent filing it intends to make at least [*] prior to the
earlier of the relevant filing deadline or intended filing date for review and
comment. The Party making any such filing shall use all reasonable efforts to
incorporate the non-filing Party's comments on such filing before submitting
such filing to the relevant patent authority. Additionally, the Party filing,
prosecuting or maintaining a Research Compound Patent or Program Patent pursuant
to Section 15.3(a) shall promptly provide the other Party a copy of all material
notices received from a patent authority with respect to Research Compound
Patent or Program Patents, and (ii) shall not abandon or cease to prosecute or
maintain a Research Compound Patent or Program Patent unless it has first
notified the other Party not later than [*] prior to any relevant deadline for
making a filing with a patent authority or maintenance payment with respect
thereto and the other Party has not, within [*] after receiving such notice, by
written notice to such Party elected to assume responsibility for filing,
prosecuting or maintaining such Research Compound Patent or Program Patent. If a
dispute arises regarding the strategy for filing and prosecuting a patent
application hereunder, such matter shall be submitted to the EC for final
resolution.

      15.4    Prosecution and Maintenance of JT and Tularik Patent Rights. JT
and Tularik shall prosecute and maintain all Patent Rights and Know-How owned or
controlled by JT or Tularik, respectively, at such Party's sole expense and in
its sole discretion.

      15.5    Disclaimer. Each Party specifically disclaims any representation
or warranty, express or implied, that it will successfully obtain any Program
Patent or that any invention made by Affiliates, employees, agents and
independent contractors of such Party will be patentable.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      42.
<PAGE>

     15.6   Perfection of Interest. Each Party agrees to cooperate with the
other and take all reasonable additional actions and execute such agreements,
instruments and documents as may be reasonably required to perfect the other's
ownership interest in accordance with the intent of this Agreement including,
without limitation, the execution of necessary and appropriate instruments of
assignment.

     15.7   Infringement by Third Parties. With respect to infringement of any
jointly-owned Program Patents by a Third Party through the manufacture, import,
use, sale or offer for sale of a product competitive with a Product in any
country ("Competitive Product Infringement"), the JDC shall determine which
Party shall have the right to institute, prosecute and control any action or
proceeding with respect to such infringement (with the other Party having the
right to participate in such action and be represented, if it so desires, by
counsel of its own selection therein), it being the Parties' general intent that
any Competitive Product Infringement of a jointly-owned Program Patent in an
Exclusive Territory shall be instituted, prosecuted and controlled by the
relevant Exclusive Marketing Party. If necessary, in any action brought
hereunder, the Party not controlling such action agrees to be joined as a party
plaintiff and to give reasonable assistance and any needed authority to control,
file and to prosecute such action. The Parties shall consult with each other
regarding the institution, prosecution and control of any action or proceeding
with respect to infringement of any of the jointly owned Program Patents other
than Competitive Product Infringement. Each Party's costs related to patent
enforcement (including internal costs and expenses specifically attributable to
said patent enforcement) with respect to Competitive Product Infringement of
jointly owned Program Patents shall be [*] with any related recoveries [*]

            (a)  If either Party believes in good faith that any Patent Rights
owned or controlled by a Party are infringed by a Third Party through
Competitive Product Infringement, the Party first having knowledge of such
infringement shall promptly notify the other Party in writing thereof, which
notice shall set forth the facts of such infringement in reasonable detail. If
the Party owning or controlling such Patent Right shall have the first right,
but not the obligation, to bring an action or proceeding to abate such
infringement in the Co-Promotion Territory, and the Exclusive Marketing Party
shall have the first right to bring an action or proceeding to abate such
infringement in the Exclusive Territory. If the Party having the first right
hereunder with respect to a Patent Right fails to institute and prosecute an
action or proceeding to abate the infringement within a period of [*] after
receiving written notice or otherwise having knowledge of the infringement as
provided above, then the other Party shall have the right, but not the
obligation, to bring and prosecute any such action if such other Party then has
an exclusive or co-exclusive license under the relevant Patent Right pursuant to
Article 5. In such event, the Party which failed to bring such action agrees to
be joined as a party plaintiff and to give the Party bringing such action
reasonable assistance and all authority to control, file and prosecute the suit
as may be necessary; provided, however, that the Party failing to bring such
action shall have the right to participate in such action and to be represented
in any such action by counsel of its choice, [*] The Parties' costs of patent
enforcement (including internal costs and expenses specifically attributable to
said patent enforcement) and related awards with respect to actions brought
under this Section 15.7(b) shall be treated as [*] Any recovery of damages and
costs in such action referred to in this Section 15.7(b) for infringement in the
Co-Promotion Territory shall be [*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      43.
<PAGE>

              (b)  With respect to infringement by a Third Party of any Program
Patents or Patent Rights through the manufacture, import, use, sale or offer for
sale of a product competitive with an Independent Product ("Competitive
Independent Product Infringement"), the Independent Party shall have the first
right, but not the obligation, to institute, prosecute and control any action or
proceeding with respect to such infringement (with the other Party having the
right to participate in such action and be represented if it so desires by
counsel of its own selection). If the Independent Party fails to institute and
prosecute an action or proceeding to abate the infringement within a period of
[*] after receiving written notice or otherwise having knowledge of the
infringement as provided above, then the other Party, if it owns or controls the
Patent Right or Program Patent being infringed, shall have the right, but not
the obligation, to bring and prosecute any such action; provided, however, that
in such event the Independent Party shall have the right to participate in such
action and to be represented in any such action by counsel of its choice. If
necessary, in any action brought pursuant to this Section 15.7(c), the Party not
controlling such action agrees to be joined as a party plaintiff and to give
reasonable assistance and any needed authority to control, file and to prosecute
such action. Each Party's costs related to patent enforcement (including
internal costs and expenses specifically attributable to said patent
enforcement) with respect to Competitive Independent Product Infringement shall
be [*] and any related recoveries shall [*]

              (c)  With respect to infringement by a Third Party of any Program
Patents through the manufacture, import, use, sale or offer for sale of a
product competitive with a product incorporating a Non-Collaboration Compound
("Competitive Non-Collaboration Compound Infringement"), the Party developing or
commercializing such Non-Collaboration Compound (the "NCC Party") shall have the
first right, but not the obligation, to institute, prosecute and control any
action or proceeding with respect to such infringement (with the other Party
having the right to participate in such action and be represented if it so
desires by counsel of its own selection). If the NCC Party fails to institute
and prosecute an action or proceeding to abate the infringement within a period
of [*] after receiving written notice or otherwise having knowledge of the
infringement as provided above, then the other Party shall have the right, but
not the obligation, to bring and prosecute any such action; provided, however,
that in such event the NCC Party shall have the right to participate in such
action and to be represented in any such action by counsel of its choice. If
necessary, in any action brought pursuant to this Section 15.7(d), the Party not
controlling such action agrees to be joined as a party plaintiff and to give
reasonable assistance and any needed authority to control, file and to prosecute
such action. Each Party's costs related to patent enforcement (including
internal costs and expenses specifically attributable to said patent
enforcement) with respect to Competitive Non-Collaboration Compound Infringement
shall be [*] and any related recoveries shall [*]

              (d)  No settlement or consent judgment or other voluntary final
disposition of suit under this Section 15.7 may be entered into without the
consent of both Parties, which consents shall not be withheld unreasonably.

              (e)  If an infringement of Program Patents or Patent Rights by a
Third Party could be characterized as both a Competitive Product Infringement
and a Competitive Independent Product Infringement, the MC shall determine which
Party shall have the right to proceed against such Third Party.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      44.
<PAGE>

     15.8   Defense and Settlement of Third-Party Claims. If a Third Party
asserts that a patent or other right owned by it is infringed by the
manufacture, import, use, sale or offer for sale of any Product, the Party first
obtaining knowledge of such a claim shall immediately provide the other Party
with notice of such claim and the related facts in reasonable detail. In such
event, the MC shall determine how best to control the defense of any such claim.
In the event the MC cannot determine the proper manner of defending any such
claim, such defense shall be controlled by the Party in whose Exclusive
Territory the claim is brought, or by a Party selected by the MC if the claim is
brought in a country in the Co-Promotion Territory; provided, however, that the
other Party shall have the right to participate in such defense and to be
represented in any such action by counsel of its selection at its sole
discretion. The entity that controls the defense of a given claim with respect
to a Product in its Exclusive Territory, shall also have the right to control
settlement of such claim and the MC shall control settlement of any such claim
brought in the Co-Promotion Territory; provided, however, that no settlement
shall be entered into without the written consent of the other Party, which
consent shall not be withheld unreasonably.

            (a)  If a Third Party asserts that a patent or other right owned by
it is infringed by the manufacture, import, use, sale or offer for sale of any
Independent Product, the Party first obtaining knowledge of such a claim shall
immediately provide the other Party with notice of such claim and the related
facts in reasonable detail. In such event, the Independent Party for such
Independent Product shall control the defense of any such claim, and shall also
have the right to control settlement of such claim; provided, however, that no
settlement shall be entered into with respect to any Program Patent or Patent
Right owned, in whole or in part, or controlled by the other Party without the
written consent of such other Party, which consent shall not be withheld
unreasonably.

            (b)  If a Third Party asserts that a patent or other right owned by
it is infringed by the manufacture, import, use, sale or offer for sale of any
product incorporating a Non-Collaboration Compound, the Party first obtaining
knowledge of such a claim shall immediately provide the other Party with notice
of such claim and the related facts in reasonable detail. In such event, the NCC
Party for such product shall control the defense of any such claim, and shall
also have the right to control settlement of such claim; provided, however, that
no settlement shall be entered into with respect to any Program Patent without
the written consent of such other Party, which consent shall not be withheld
unreasonably.

     15.9   Allocation of Expenses. The expenses of patent defense, settlement
and judgments incurred pursuant to Section 15.8 with respect to Products shall
be [*] provided that any such costs incurred for activities occurring [*] shall
be borne [*] and any such costs [*] shall be [*] Any expenses of patent defense,
settlement and judgments incurred pursuant to Section 15.8 with respect to
Independent Products shall be [*] except as provided in Section 15.10. Any
expenses of patent defense, settlement and judgments incurred pursuant to
Section 15.8 with respect to products incorporating a Non-Collaboration Compound
shall [*]

     15.10  Settlement of Third-Party Claims for Infringement; Payment of Third-
Party Royalties. If a Third Party asserts that a patent or other right owned by
it is infringed by the development, manufacture, use, sale, offer for sale or
import of any Product, and as a result of

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      45.
<PAGE>

settlement procedures or litigation under this Article 15 a Party is required to
pay the Third Party a royalty or make any payment of any kind for the right to
sell a Product in a particular country, such expense shall be [*] if such
expense is incurred for activities occurring [*] or [*] to the extent incurred
for activities [*] If a Third Party asserts that a patent or other right owned
by it is infringed by the development, manufacture, use, sale, offer for sale or
import of any Independent Product, and as a result of settlement procedures or
litigation under this Article 15 a Party is required to pay the Third Party a
royalty or make any payment of any kind for the right to sell an Independent
Product in a particular country, such expense [*]

                                  ARTICLE 16

                         CONFIDENTIALITY AND PUBLICITY

         16.1 Confidential Information; Exceptions. Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing by the
parties, each Party agrees that, for the term of this Agreement and for [*]
thereafter, it shall keep confidential and shall not publish or otherwise
disclose and shall not use for any purpose other than as provided for in this
Agreement any Confidential Information furnished to it by the other Party
pursuant to this Agreement, except to the extent that the receiving Party can
demonstrate by competent proof that such Confidential Information:

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

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

              (c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;

              (d) was disclosed to the receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party who had no
obligation to the disclosing Party not to disclose such information to others;
or

              (e) was independently discovered or developed by the receiving
Party without the use of Confidential Information belonging to the disclosing
Party.

         16.2 Financial Terms; Permitted Disclosure. The Parties agree that the
material financial terms of the Agreement will be considered Confidential
Information of both Parties. Notwithstanding the foregoing, either Party may
disclose such terms to bona fide potential sublicensees, if necessary, and may
disclose other Confidential Information of the other Party as required by law,
regulation or court order. Tularik shall have the further right to disclose the
material financial terms of the Agreement to any bona fide potential investor,
investment banker, acquiror, merger partner or other potential financial
partner. In connection with any permitted disclosure of Confidential Information
pursuant to this Section 16.2, each Party agrees to use all

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      46.
<PAGE>

reasonable efforts to secure confidential treatment of, or a protective order
for, any such information.

         16.3 Publication. Each Party to this Agreement recognizes that the
publication of papers, including oral presentations and abstracts, regarding the
Program Know-How and the Program Patents, subject to reasonable controls to
protect Confidential Information, can be beneficial to both Parties.
Accordingly, each Party shall have the right to review and approve any paper
proposed for publication by the other Party, including oral presentations and
abstracts, which utilizes data generated from the Program and/or includes
Program Know-How or Confidential Information of the other Party. Before any such
paper is presented or submitted for publication, the Party proposing publication
shall deliver a complete copy to the other Party at least thirty (30) days prior
to presenting the paper to a publisher. The receiving Party shall review any
such paper and give its comments to the publishing Party within thirty (30) days
of the delivery of such paper to the receiving Party. With respect to oral
presentation materials and abstracts, the Parties shall make reasonable efforts
to expedite review of such materials and abstracts, and shall return such items
as soon as practicable to the publishing Party with appropriate comments, if
any, but in no event later than thirty (30) days from the delivery date thereof
to the receiving Party. The publishing Party shall comply with the other Party's
request to delete references to such other Party's Confidential Information in
any such paper and agrees to withhold publication of same an additional thirty
(30) days upon request by the non-publishing Party in order to permit the
Parties to obtain patent protection, if either of the Parties deem it necessary,
in accordance with the terms of this Agreement.

         16.4 Publicity. Except as otherwise provided herein or required by law,
neither Party shall issue any publication, news release or other public
announcement, written or oral, whether in the public press, or stockholders'
reports (if applicable), or otherwise, relating to the existence of or the
performance under this Agreement, without the prior written approval of the
other Party, which approval shall not be unreasonably withheld; provided that if
a Party does not consent to such publication, release or announcement by the
other Party as proposed, then the Parties shall negotiate in good faith an
appropriate modification thereto that will make such publication, release or
announcement acceptable to the reviewing Party within [*] after submission
thereof by the publishing Party to the non-publishing Party.

                                  ARTICLE 17

                              GOVERNMENT CONTROLS

         This Agreement is made subject to any restrictions concerning the
export of Program Products or technical information from the United States that
may be imposed upon or related to Tularik or JT from time to time by the
government of the United States and other applicable jurisdictions. Furthermore,
each Party hereto agrees that it will not export, directly or indirectly, any
technical information acquired from the other under this Agreement or any
Program Products using such technical information to any country for which the
United States government or any agency thereof, and other applicable
jurisdictions at the time of export requires an export license or other
governmental approval, without first obtaining the written consent to do so from
the Department of Commerce or other agency of 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 24b-2 of the Securities Act of 1934, as
amended.

                                      47.
<PAGE>

government, and other applicable jurisdictions when required by an applicable
statute or regulation.

                                  ARTICLE 18

                             TERM AND TERMINATION

         18.1 Term. Subject to subsections (a) and (b), this Agreement shall
expire upon the end the Term.

         18.2 Early Termination. The Agreement shall terminate on such earlier
date as the Term shall have expired or been terminated pursuant to Section 3.7
without any Collaboration Lead Compound having been designated in accordance
with Section 3.9(a) or 4.2 or any Independent Lead Compound being developed in
accordance with Section 4.15.

         18.3 Termination for Material Breach. If either Party materially
breaches this Agreement and the breaching Party has not (i) cured the breach or
(ii) initiated good faith efforts to cure such breach to the reasonable
satisfaction of the non-breaching Party, within sixty (60) days of notice of
breach from the non-breaching Party, the non-breaching Party may terminate this
Agreement upon expiration of such sixty (60) day period. If this Agreement is
terminated pursuant to this Section 18.1(b), (A) all licenses granted to the
non-breaching Party shall survive such termination and shall be expanded to
apply on a worldwide basis and (B) all licenses and rights to obtain licenses
granted to the breaching Party shall terminate (other than as provided in
Section 15.2, if JT is the breaching Party).

         18.4 Surviving Rights. Subject to Section 18.1(b), the rights and
obligations set forth in this Agreement shall extend beyond the Term or
termination of the Agreement only to the extent expressly provided for herein,
or the extent that the survival of such rights or obligations are necessary to
permit their complete fulfillment or discharge. Without limiting the foregoing,
the Parties have identified various rights and obligations that are understood
to survive, for the period of time as follows: [*]

         18.5 Accrued Rights; Surviving Obligations. Termination, relinquishment
or expiration of the Agreement for any reason shall be without prejudice to any
rights that shall have accrued to the benefit of either Party prior to such
termination, relinquishment or expiration, including damages arising from any
breach hereunder. Such termination, relinquishment or expiration shall not
relieve either Party from obligations that are expressly indicated to survive
termination or expiration of the Agreement.

                                  ARTICLE 19

                   REPRESENTATIONS AND WARRANTIES; COVENANTS

         19.1 Representations and Warranties.

              (a) Power and Authority. Each Party hereby represents and warrants
that such Party has full corporate power and authority under the laws of the
state or country of its

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      48.
<PAGE>

incorporation to enter into this Agreement and carry out the provisions
hereunder and that the person executing this Agreement on each Party's behalf
has been duly authorized to do so by all requisite corporate action.

              (b) Conflicts. Each Party represents and warrants that, as of the
date of this Agreement, it is not a Party to any agreement, arrangement or
understanding with any Third Party that in any significant way prevents such
Party from fulfilling any of its material obligations under the terms of this
Agreement.

              (c) Intellectual Property. Each Party represents and warrants to
such Party's best knowledge as of the Effective Date: (i) that such Party has
full power and authority to undertake the scientific activities required of it;
(ii) that the performance of the scientific activities required of such Party
under the Research Plan will not infringe the intellectual property rights of
any Third Parties; and (iii) that the practice of such Party's Patent Rights or
Know-How described in Section 5.1 hereof pursuant to the Program does not
require any Third Party licenses not already obtained. Tularik and JT agree to
cooperate to identify existing Third Party licenses and the technologies to
which they pertain. Except as expressly provided in this Agreement, neither
Tularik nor JT shall have any obligation to make any payments whatsoever with
respect to any royalties that the other Party owes to any Third Party licensor
of technology that the Parties may practice while performing under this
Agreement.

              (d) Infringement. Each Party represents and warrants that as of
the date of this Agreement, to the best of its knowledge, it is not aware of any
claims by Third Parties that the practice of technology, methodology or
materials to be utilized in the Program would infringe patents owned or
controlled by such Third Party.

         19.2 Covenants.

              (a) Licenses. Each Party hereby covenants to the other that it
will not practice the license granted to it pursuant to Sections 5.1, 5.2, 5.3
or 5.4 under the other Party's interest in Patent Rights, Know-How, Program
Patents or Program Know-How, except as explicitly permitted in this Agreement.

              (b) Diligence. Subject to Sections 4.3, 4.4, 4.14 and 4.15, JT
and/or Tularik shall use commercially reasonable efforts to develop the Lead
Compounds, Research Compounds and Collaboration Lead Compounds consistent with
the efforts such Party expends on compounds involved in its other research and
development programs that have comparable market potential. Subject to Section
9.3, JT and/or Tularik shall use commercially reasonable efforts to develop and
market Products, consistent with the efforts it expends on its other products
having comparable market potential. If a Party disagrees on whether the other
Party's actions are commercially reasonable, such disagreement shall be resolved
in accordance with Section 20.1.

              (c) Conflicts. Each Party covenants that it will not commit any
acts or fail to take any action that would be in material conflict with its
obligations or licenses under this Agreement.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      49.
<PAGE>

                                  ARTICLE 20

                              DISPUTE RESOLUTION

         20.1 Dispute Resolution. Any disputes or disagreements arising in the
RMC, JDC or MC will be referred to the EC if the RMC, JDC or MC, as the case may
be, is unable to resolve such dispute or disagreement within [*] after
submission of an issue to such committee. In addition, any other disputes or
disagreements between the Parties arising hereunder will first be referred to
the EC. If such dispute is not resolved within the [*] period following
submission of such dispute to the EC and such dispute relates to an alleged
breach of this Agreement, then either Party may propose to refer such dispute to
arbitration, and thereafter such dispute shall be resolved pursuant to Section
20.2 below. In the event such dispute is not resolved within the [*] period
following submission of such dispute to the EC and such dispute does not relate
to an alleged breach of this Agreement, such dispute shall be referred to a
Third Party mediator with significant experience in the pharmaceutical industry
acceptable to both Parties for resolution. The costs and expenses of such Third
Party mediator shall be [*] In the event such dispute is not resolved within the
[*] following submission of such dispute to the Third Party mediator, then
either Party may propose to refer such dispute to arbitration, and thereafter
such dispute shall be resolved pursuant to Section 20.2 below.

         20.2 Arbitration. In the event of any controversy or claim arising out
of, relating to or in connection with any provision of this agreement, the
Parties shall try to settle their differences amicably between themselves by
referring the disputed matter to the RMC, JDC, MC or EC, as the case may be. Any
unresolved disputes arising between the Parties arising out of, relating to, in
connection with or in any way connected with this Agreement or any term or
condition hereof, or performance by either Party of its obligations hereunder,
whether before or after termination or expiration of this Agreement, shall be
finally resolved by binding arbitration, except as otherwise provided in this
Agreement and except that any disputes regarding the validity, scope or
enforceability of patents or trademarks shall be submitted to a court of
competent jurisdiction. The arbitration shall be held in San Francisco,
California according to the rules of the American Arbitration Association
("AAA"). The arbitration will be conducted by a panel of three (3) arbitrators
with significant experience in the pharmaceutical industry appointed in
accordance with applicable AAA rules. Any arbitration herewith shall be
conducted in the English language to the maximum extent possible. [*] Judgment
on the award so rendered shall be final and may be entered in any court having
jurisdiction thereof.

                                  ARTICLE 21

                                 MISCELLANEOUS

         21.1 Severability. If any part of this Agreement is declared invalid by
any legal authority having jurisdiction over either Party, then such declaration
shall not affect the remainder of the Agreement, which shall continue in full
force and effect. The Parties shall revise the invalidated part in a manner that
will render such provision valid and closely approximate the Parties' original
intent.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      50.
<PAGE>

     21.2  Waiver. Except as specifically provided for herein, the waiver from
time to time by either of the Parties of any of their rights or their failure to
exercise any remedy shall not operate or be construed as a continuing waiver of
same or of any other of such Party's rights or remedies provided in this
Agreement.

     21.3  Consents Not Unreasonably Withheld. Whenever provision is made in
this Agreement for either Party to secure the consent or approval of the other,
that consent or approval shall not unreasonably be withheld, and whenever in
this Agreement provision is made for one Party to object to or disapprove a
matter, such objection or disapproval shall not unreasonably be exercised.

     21.4  Ambiguities. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.

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

     21.6  Notices. All notices hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile transmission (receipt
verified), telexed, mailed by registered or certified mail (return receipt
requested), postage prepaid, or sent by express courier service, to the Parties
at the following addresses (or at such other address for a Party as shall be
specified by like notice; provided, that notices of a change of address shall be
effective only upon receipt thereof).

     If to Japan Tobacco, Inc., addressed to:

                        Japan Tobacco, Inc.
                        Pharmaceutical Division
                        JT Building, 2-1 Toranomon, 2-chome
                        Minato-ku, Tokyo 105, Japan
                        Attention:  Vice President Business Development
                        Telephone: 011 81 3 3582 3111
                        Facsimile: 011 81 3 5572 1449

     With a copy to:    Neal N. Beaton, Esq.

                        Gilbert, Segall and Young LLP
                        430 Park Avenue
                        New York, NY 10022
                        Telephone: (212) 644-4010
                        Facsimile:  (212) 644-4051

     If to Tularik Inc., addressed to:

                        Tularik Inc.

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      51.
<PAGE>

                         Two Corporate Drive
                         South San Francisco, CA 94080
                         Attn: Secretary
                         Telephone: (650) 825-7300
                         Facsimile: (650) 825-7392

     With a copy to:     Cooley Godward LLP

                         Five Palo Alto Square
                         El Camino Real
                         Palo Alto, CA 94306-2155
                         Attention:  Judith A. Hasko, Esq.
                         Telephone:  (650) 843-5000
                         Facsimile:  (650) 857-0663

     21.7   Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their permitted successors and assigns;
provided, however, that neither Party shall assign any of its rights and
obligations hereunder except (i) as incident to the merger, consolidation,
reorganization or acquisition of stock or assets affecting substantially all of
the assets or actual voting control of the assigning Party or (ii) to an
Affiliate; provided, however, that in no event shall either Party's obligations
under the Research Program be assigned to an Affiliate without the prior written
consent of the other Party. JT acknowledges and agrees that the Research Program
will be performed on behalf of Tularik by the Subsidiary.

     21.8   Force Majeure. Any delays in performance by either Party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the Party
affected, including but not limited to acts of God, embargoes, governmental
restrictions, strikes or other concerted acts of workers, fire, earthquake,
flood, explosion, riots, wars, civil disorder, rebellion or sabotage. The Party
suffering such occurrence shall immediately notify the other Party as soon as
practicable and any time for performance hereunder shall be extended by the
actual time of delay caused by the occurrence, provided that the Party affected
by such event uses reasonable efforts to overcome such delay.

     21.9   Headings. The section and paragraph headings contained herein are
for the purposes of convenience only and are not intended to define or limit the
contents of said sections or paragraphs.

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

     21.11  Governing Law and Language. This Agreement shall be governed by
California law, notwithstanding its conflicts of laws principles. The official
text of this Agreement and any Appendices hereto, or any notice given or
accounts or statements required by this Agreement shall be in English. In the
event of any dispute concerning the construction or

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      52.
<PAGE>

meaning of this Agreement, reference shall be made only to this Agreement as
written in English and not to any other translation into any other language.

     21.12   Limitation of Liability. IN NO EVENT SHALL EITHER PARTY OR ITS
AFFILIATES AND SUBLICENSEES BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR
OTHERWISE, including but not limited to loss of profits or revenues, except to
the extent such Party may be required to indemnify the other Party from such
damages claimed by Third Parties pursuant to this Agreement.

     21.13   Entire Agreement; Amendment. This Agreement, together with the
Option Agreement, sets forth the principal terms of the arrangement between the
Parties hereto and, except as otherwise set forth herein, supersedes and
terminates all prior agreements, including the preliminary agreement, and
understandings between the Parties. No subsequent alteration, amendment, change
or addition to this Agreement shall be binding upon the Parties unless reduced
to writing and signed by an authorized officer of each Party.

     In witness whereof, the Parties have signed this Agreement effective as of
the Effective Date.

Tularik Inc.

By:     /s/ David Goeddel
        -------------------------------
Title:  Chief Executive Officer

Japan Tobacco Inc.

By:    /s/ Takashi Kato
       --------------------------------
       Title: Takashi Kato
              Managing Director
              Pharmaceutical Division

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      53.
<PAGE>

                                  APPENDIX A
                        DESCRIPTION OF TULARIK EXISTING
                      TECHNOLOGY APPLICABLE TO THE FIELD
                   I. Summary of Existing Tularik Technology

[*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      54.
<PAGE>

                                  APPENDIX B
                     DESCRIPTION OF JAPAN TOBACCO EXISTING
                      TECHNOLOGY APPLICABLE TO THE FIELD

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      55.
<PAGE>

                                  APPENDIX C
          Definitions for Calculation of Expenses, Development Costs
                      and Selling and Promotion Expenses

         [*]

         [*]

         [*]

         [*]

         [*]

         [*]

         [*]

         [*]

         [*]

         [*]

         [*]

         [*]

         [*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      56.
<PAGE>

                                  APPENDIX D
                      Description of Scientific FTE Rate

          The initial Scientific FTE rate for employees of the Parties to be
used in preparing the Development Budget and determining Development Costs is
[*] Such rate is composed of the following expense categories in the amounts
indicated:

          Salaries and benefits                                [*]
          Scientific supplies and materials                    [*]
          Overhead                                             [*]
          Outside services                                     [*]
          Travel                                               [*]
          Scientific FTE rate                                  [*]

          Such Scientific FTE rate shall be adjusted [*] such that (a) the
increase in salaries and benefits is equal to the [*]; (b) the increases in
scientific supplies and materials, outside services and travel are equal to the
[*] and (c) the percentage increase in overhead costs does not exceed the
percentage increase [*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      57.
<PAGE>

                                  APPENDIX E
                   Scientific FTE Employed by the Subsidiary
                            Assigned to the Program

        2000         2001         2002         2003         2004        2005
        ----         ----         ----         ----         ----        ----
[*]      [*                                                               ]
[*]      [*                                                               ]
[*]      [*                                                               ]
[*]      [*                                                               ]
[*]      [*                                                               ]
[*]      [*                                                               ]

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      58.
<PAGE>

                                  APPENDIX F

                            Current Program Targets

[*]

[*]

[*]

[*]

[*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      59.
<PAGE>

                                  APPENDIX G

                                  Certificate

--------------------------------------------------------------------------------
                             INITIAL RESEARCH PLAN
                       (TO BE APPROVED IN A SIDE LETTER)
--------------------------------------------------------------------------------

The details of the Research Program described in this Agreement are as follows:

1.   The following tasks will be carried out by the Subsidiary on behalf of
Tularik:

         [*]

3.   Details will be discussed and determined by the RMC. An initial meeting of
the RMC will take place within [*] of the Effective Date.

[*] = Certain confidential information contained in this document, marked by
brackets, has been ommitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as
amended.

                                      60.<PAGE>

Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

                                                                   EXHIBIT 10.29

                                LICENSE AGREEMENT

         This License Agreement (the "Agreement") is made and entered into as of
this 1st day of June, 2000 (the "Effective Date"), by and among Tularik Inc.
("Tularik"), a Delaware corporation, and Tularik Pharmaceutical Company (the
"Subsidiary"), a Delaware corporation and a wholly owned subsidiary of Tularik
as of the Effective Date. Each of Tularik and the Subsidiary are referenced
herein individually as a "Party" and together as the "Parties."

                                   Witnesseth

         Whereas, Tularik and Japan Tobacco Inc. ("JT") have entered into two
previous agreements to research, develop and commercialize certain
pharmaceutical products useful in the diagnosis, prevention and treatment of
human diseases;

         Whereas, Tularik and JT are entering into a Collaboration Agreement as
of even date herewith, pursuant to which they will develop and commercialize
products useful to treat or prevent diseases and conditions (the "Collaboration
Agreement);

         Whereas, Tularik has formed the Subsidiary to perform certain
obligations under the research program to be conducted pursuant to the
Collaboration Agreement, and is the beneficial owner of all issued and
outstanding shares of capital stock of the Subsidiary (the "Stock");

         Whereas, Tularik and JT are entering into an Option Agreement of even
date herewith whereby JT acquires an option to purchase the Subsidiary, either
directly or indirectly through an affiliate, at specified times, which sets
forth certain requirements for the voting of Tularik's shares of Stock and the
management of the Subsidiary during the time period prior to any exercise by JT
of such option (the "Option Agreement");

         Whereas, Tularik desires to grant certain licenses to the Subsidiary
under certain technology and related intellectual property rights that are
necessary or useful for the Subsidiary's performance of research pursuant to the
Collaboration Agreement, and for the Subsidiary's practice of such technology
outside the scope of the Collaboration Agreement in the event JT or its
affiliate purchases the Subsidiary as provided in the Option Agreement;

         Whereas, Tularik desires to obtain certain rights to improvements of
such technology owned or controlled by the Subsidiary to enable Tularik to
continue to practice and develop such technology; and

         Whereas, the Parties hereto desire to set forth the terms and
conditions governing such licenses and rights in this Agreement;

         Now, Therefore, in consideration of these premises and other terms and
conditions set forth herein, the Parties hereto agree as follows:

                                       1.
<PAGE>

                                   ARTICLE 1

                                  Definitions

         Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to such terms in the Collaboration
Agreement and the Option Agreement.

         1.1 "Assignable Know-How" shall mean any and all know-how, compounds,
information, inventions, discoveries and technologies, whether or not
patentable, that are owned or controlled by the Subsidiary from the Effective
Date until the earlier to occur of [*] (such period of time, the "Assignment
Period"), either (i) the practice of which would infringe the Licensed Patents
or constitute a misappropriation of the Licensed Know-How, (ii) that are a
Research Compound Invention or Program Invention, or (iii) that are useful in
the discovery, development, manufacture, use, sale, offer for sale or import of
products in the Field; provided, however, that Assignable Know-How shall also
include any such know-how, information, inventions, discoveries and technologies
that relate to the composition or use of Targets that are owned or controlled by
the Subsidiary during the [*] The determination of whether know-how,
information, inventions, discoveries and technologies are owned or controlled by
the Subsidiary shall be made based upon the Subsidiary's rights in the absence
of this Agreement. Appendix A shall be amended from time to time to set forth
all Assignable Know-How. Assignable Know-How may be included in the Licensed
Know-How and excludes the Other Subsidiary Know-How.

         1.2 "Assignable Patents" shall mean any and all patents and patent
applications, both foreign and domestic, including without limitation all
substitutions, provisionals, continuations, continuations-in-part, divisionals,
extensions, reexaminations, reissues, renewals, supplementary protection
certificates and inventors' certificates, that are owned or controlled by the
Subsidiary during the Assignment Period, and (i) that claim inventions, the
practice of which would infringe the Licensed Patents or constitute a
misappropriation of the Licensed Know-How, (ii) are Research Compound Patents or
Program Patents, or (iii) that are useful in the discovery, development,
manufacture, use, sale, offer for sale or import of products in the Field;
provided, however, that Assignable Patents shall also include any such patents
and patent applications that relate to the composition or use of Targets that
are owned or controlled by the Subsidiary during the [*] The determination of
whether a patent or application is owned or controlled by the Subsidiary shall
be made based upon the Subsidiary's rights in the absence of this Agreement.
Appendix B shall be amended from time to time to set forth all Assignable
Patents.

         1.3 "Licensed Know-How" shall mean any and all Research Compound
Inventions, Know-How and Program Know-How owned or controlled by Tularik that
are necessary or useful for the performance of the Subsidiary Research
Activities, including without limitation Know-How and Program Know-How that are
licensed to Tularik by JT pursuant to the Collaboration Agreement, for [*]
Appendix C to this Agreement sets forth the Licensed Know-How, and shall be
amended from time to time to reflect all Licensed Know-How.

         1.4 "Licensed Patents" shall mean any and all Research Compound
Patents, Patent Rights and Program Patents owned or controlled by Tularik, that
are necessary or useful for the

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                       2.
<PAGE>

performance of the Subsidiary Research Activities. Licensed Patents shall
include Assignable Patents, to the extent such Assignable Patents are necessary
or useful for the performance of the Subsidiary Research Activities, as well as
the Patent Rights and Program Patents that are licensed to Tularik by JT
pursuant to the Collaboration Agreement, [*] Appendix D to this Agreement sets
forth the Licensed Patents, and shall be amended from time to time to reflect
all Licensed Patents.

         1.5 "Other Subsidiary Know-How" shall mean know-how, compounds,
information, inventions, discoveries and technologies, whether or not
patentable, that are owned or controlled by the Subsidiary during the Assignment
Period, and are necessary or useful for the practice of the Licensed Patents or
the Assignable Patents; provided, however, that Other Subsidiary Know-How shall
also include any such know-how, information, inventions, discoveries and
technologies [*] that are owned or controlled by the Subsidiary during the [*]
following the expiration of the Assignment Period. Other Subsidiary Know-How
excludes the Assignable Know-How and the Licensed Know-How.

         1.6 "Other Subsidiary Patents" shall mean patents and patent
applications, both foreign and domestic, including without limitation all
substitutions, provisionals, continuations, continuations-in-part, divisionals,
extensions, reexaminations, reissues, renewals, supplementary protection
certificates and inventors' certificates, that are owned or controlled by the
Subsidiary during the Assignment Period, and are necessary or useful for the
practice of the Licensed Patents or the Assignable Patents; provided, however,
that Other Subsidiary Patents shall also include any such patents and patent
applications [*] that are owned or controlled by the Subsidiary during the [*]
following expiration of the Assignment Period. Other Subsidiary Patents exclude
the Licensed Patents and Assignable Patents.

         1.7 "Subsidiary Collaboration Activities" shall mean the activities
designated under the Collaboration Agreement or otherwise by the RMC to be
performed by the Subsidiary pursuant to the Program during the Term but
following the Research Program Term.

         1.8 "Subsidiary Research Activities" shall mean the activities
designated under the Collaboration Agreement or otherwise by the RMC to be
performed by the Subsidiary pursuant to the Research Program during the Research
Program Term.

                                   ARTICLE 2

                 Licenses And Assignments; Technology Transfer

         2.1 License to Subsidiary Before Buy-Out. Subject to the terms and
conditions of this Agreement, Tularik hereby grants to the Subsidiary a
nonexclusive, royalty-free license, without the right to grant sublicenses,
under the Licensed Know-How, Licensed Patents, Assignable Know-How and
Assignable Patents solely to perform the Subsidiary Research Activities at its
principal place of business. Such license shall become effective as of the
Effective Date and continue in effect for the term of this Agreement [*]

         2.2 License to Subsidiary After Buy-Out. Subject to the terms and
conditions of this Agreement, Tularik hereby grants to the Subsidiary a
nonexclusive, worldwide, royalty-free

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                       3.
<PAGE>

license, under the Licensed Know-How and Licensed Patents (i) to perform the
Subsidiary Collaboration Activities and (ii) to discover, develop, make, use,
sell, offer for sale and import pharmaceutical products outside the scope of the
Collaboration Agreement. The Subsidiary may not grant sublicenses under the
foregoing licenses to a Third Party other than JT or its Affiliates [*] The
license granted by Tularik to the Subsidiary in this Section 2.2 shall not
become effective until the Closing Date, if any, and shall continue in effect
for the term of this Agreement.

         2.3 Assignment of Assignable Patents and Assignable Know-How;
Quitclaim. The Subsidiary hereby assigns to Tularik all of the Subsidiary's
right, title and interest in and to the Assignable Know-How and the Assignable
Patents. The Parties acknowledge that [*] The Subsidiary hereby waives and
quitclaims to Tularik any and all claims or actions, of any nature whatsoever,
that the Subsidiary may have for infringement of any proprietary rights assigned
to Tularik pursuant to this Section 2.3.

         2.4 License to Tularik. Subject to the terms and conditions of this
Agreement, the Subsidiary hereby grants to Tularik a nonexclusive, worldwide,
royalty-free license, with the right to grant sublicenses, under the Other
Subsidiary Know-How and Other Subsidiary Patents, to discover, develop, make,
use, sell, offer for sale or import pharmaceutical products either (i) the
manufacture, use or sale of which would infringe or misappropriate the Licensed
Know-How, Licensed Patents, Assignable Patents or Assignable Know-How or (ii)
that were discovered, developed, made, used, sold, offered for sale or imported
by means of the practice of the Licensed Know-How, Licensed Patents, Assignable
Know-How or Assignable Patents.

         2.5 Technology Transfer; Reports.

             (a) Promptly after the Effective Date, Tularik shall deliver to
the Subsidiary [*], including, without limitation, [*] that are necessary or
useful for the Subsidiary to perform the Subsidiary Research Activities, to the
extent such materials have not been transferred prior to the Effective Date.
Tularik agrees to provide to the Subsidiary competent and knowledgeable
assistance to facilitate the transfer to the Subsidiary of such tangible
materials.

             (b) The Subsidiary shall, upon request by Tularik, provide to
Tularik from time to time written reports summarizing its performance of the
Subsidiary Research Activities, and shall disclose to Tularik all Assignable
Patents and Assignable Know-How made by employees, agents or independent
contractors of the Subsidiary promptly after becoming aware that such
inventions, discoveries, materials, data or information has been made or
produced. The Subsidiary shall transfer to Tularik from time to time [*] that
are necessary or useful for Tularik to practice the rights granted to it
pursuant to this Agreement.

                                   ARTICLE 3

                 Prosecution And Enforcement Of Patent Rights

         3.1 Cooperation by the Subsidiary. The Subsidiary shall promptly
execute, upon each request by Tularik, assignment and other documents and
testify and take other acts as reasonably requested by Tularik to apply for and
obtain, in Tularik's name and for its benefit [*], any and all patents, trade
secrets or other intellectual property rights throughout the world related

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                       4.
<PAGE>

to the Assignable Patent Rights or the Assignable Know-How, and to transfer,
effect, confirm, perfect, record, preserve, protect and enforce all rights,
titles and interests assigned or licensed to Tularik pursuant to Sections 2.3 or
2.4.

         3.2  Prosecution and Maintenance of Patent Applications and Patents.

              (a) Except as otherwise provided in this Section 3.2, Tularik
shall have the sole and exclusive right, but not the obligation, to file and
prosecute all patent applications and to maintain all patents included in the
Assignable Patents, Licensed Patents and Other Subsidiary Patents, at [*]

              (b) Notwithstanding the foregoing, after the Closing Date, if any,
the following modifications to the Parties' rights and obligations set forth in
Section 3.2(a) shall apply:

                  (i) The Subsidiary shall file, prosecute and maintain patent
applications and patents included in the Other Subsidiary Patents, [*] If the
Subsidiary decides that it will not continue to prosecute a patent application
or maintain a patent included in the Other Subsidiary Patents, then it shall
promptly so notify Tularik, in which case Tularik [*] continue to prosecute such
application or maintain such patent.

                  (ii) Tularik shall provide the Subsidiary with an
opportunity to review and comment upon prosecution strategy for and consult with
Tularik on the content of all material documents and correspondence to be filed
with or sent to the U.S. Patent and Trademark Office (or any foreign equivalent
thereof) relating to the Assignable Patents. If Tularik decides that it will not
continue to prosecute a patent application or maintain a patent included in the
Assignable Patents, then Tularik shall promptly so notify the Subsidiary. If
Tularik provides any such notice, then the Subsidiary may, [*] continue to
prosecute such application or maintain such patent.

                                   ARTICLE 4

                   Representations, Warranties And Covenants

         4.1 General Representations. Each Party hereby represents to the other
Party that it is duly organized and validly existing under the laws of its state
of incorporation; that it has full corporate power and authority to enter into
this Agreement and to carry out the provisions hereof; that it is duly
authorized to execute and deliver this Agreement and to perform its obligations
hereunder; and that this Agreement is legally binding upon it and enforceable in
accordance with its terms.

         4.2 Intellectual Property; Infringement. Each Party represents and
warrants to such Party's best knowledge as of the Effective Date that the
practice of the licenses or other rights that such Party grants to the other
Party will not infringe intellectual property rights of any Third Party.

         4.3 Tularik. Tularik hereby represents, warrants and covenants that (i)
it shall not grant any sublicense under the Other Subsidiary Know-How or Other
Subsidiary Patents except

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                       5.
<PAGE>

as permitted hereunder; (ii) it is not, and shall not be, under any obligation
to grant any such license or to make any such assignment described in subsection
(i); (iii) assuming that it has received the full right, title and interest in
and to the Assignable Know-How and Assignable Patent Rights by operation of
Section 2.3 of this Agreement, it shall have the full right to license the
Assignable Know-How and Assignable Patent Rights as provided in this Agreement;
(iv) no outstanding liens, encumbrances, agreements or understandings of any
kind, either written, oral or implied, do or shall exist with respect to the
Licensed Know-How and Licensed Patents that are inconsistent with any provision
of this Agreement; (v) its execution, delivery and performance of this Agreement
does not and shall not conflict with, constitute a breach of, or in any material
way violate any arrangement, understanding or agreement to which it is, or shall
be, a party or by which it is, or shall be, bound; and (vi) it shall not
practice the Other Subsidiary Know-How and the Other Subsidiary Patents outside
the scope of the license granted to it pursuant to Section 2.4.

         4.4 Subsidiary. The Subsidiary hereby represents, warrants and
covenants that (i) it shall not grant any license under or make any assignment
of the Assignable Patent Rights, Assignable Know-How, Licensed Patent Rights or
Licensed Know-How except as permitted hereunder; (ii) it is not, and shall not
be, under any obligation to grant any such license or to make any such
assignment described in subsection (i); (iii) it has, and shall have, full
right, title and interest in and to, and shall have the full right to assign,
the Assignable Know-How and Assignable Patent Rights; (iv) no outstanding liens,
encumbrances, agreements or understandings of any kind, either written, oral or
implied, shall exist with respect to the Assignable Know-How, Assignable
Patents, Other Subsidiary Know-How, or Other Subsidiary Patents that are
inconsistent with any provision of this Agreement; (v) its execution, delivery
and performance of this Agreement does not and shall not conflict with,
constitute a breach of, or in any material way violate any arrangement,
understanding or agreement to which it is, or shall be, a party or by which it
is, or shall be, bound; and (vi) it shall not practice the Licensed Know-How,
Licensed Patents, Assignable Know-How and Assignable Patents outside the scope
of the licenses granted to it pursuant to Section 2.1 or 2.2, as applicable.

                                   ARTICLE 5

                                Confidentiality

         5.1 Confidential Information; Exceptions. Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing by the
parties, each party agrees that, for the term of this Agreement and for [*]
after the first to occur of the termination date of the Collaboration Agreement
or the Closing Date, it shall keep confidential and shall not publish or
otherwise disclose and shall not use for any purpose other than as provided for
in this Agreement any Confidential Information furnished to it by the other
Party pursuant to this Agreement, except to the extent that the receiving Party
can demonstrate by competent proof that such Confidential Information: (a) was
already known to the receiving Party, other than under an obligation of
confidentiality, at the time of disclosure by the other Party; (b) was generally
available to the public or otherwise part of the public domain at the time of
its disclosure to the receiving Party; (c) became generally available to the
public or otherwise part of the public domain after its disclosure and other
than through any act or omission of the receiving Party in breach of this
Agreement; (d) was disclosed to the receiving Party, other than under an
obligation

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                       6.
<PAGE>

of confidentiality to a Third Party, by a Third Party who had no obligation to
the disclosing Party not to disclose such information to others; or (e) was
independently discovered or developed by the receiving Party without the use of
Confidential Information belonging to the disclosing Party.

         5.2 Permitted Disclosure. The Parties agree that the material terms of
the Agreement will be considered Confidential Information of both Parties.
Notwithstanding the foregoing, either Party may disclose such terms to bona fide
potential investors or acquirers or to investment banks, if necessary for
purposes of this Agreement, the Option Agreement and/or the Collaboration
Agreement, and may disclose other Confidential Information as required by law,
regulation or court order. In connection with any permitted disclosure of
Confidential Information pursuant to this Section 5.2, each Party agrees to use
all reasonable efforts to secure confidential treatment of, or a protective
order for, any such information. Neither Party shall make any public
announcement regarding the existence or terms of this Agreement without the
prior written consent of the other Party.

                                   ARTICLE 6

                                Indemnification

         6.1 Indemnification by the Subsidiary. The Subsidiary hereby agrees to
indemnify, hold harmless and defend Tularik, its Affiliates other than the
Subsidiary, employees, agents and independent contractors against any and all
expenses, costs of defense (including without limitation reasonable attorneys'
fees, witness fees, damages, judgments, fines and amounts paid in settlement)
and any amounts Tularik becomes legally obligated to pay because of any Third
Party claim or claims against it to the extent that such claim or claims result
from (i) the negligence, recklessness or willful misconduct of the Subsidiary,
its employees, agents, or independent contractors [*] (ii) the Subsidiary's
breach or alleged breach of any representation or warranty or any other
provision of this Agreement [*] or (iii) the manufacture, use or sale, [*] of
pharmaceutical products discovered, developed, made, used, sold, offered for
sale or imported by the Subsidiary, its Affiliates other than Tularik or its
permitted sublicensees following the Closing Date, except in each case to the
extent such claims arise from the negligence, recklessness or willful misconduct
of Tularik, its Affiliates other than the Subsidiary, employees or agents, or
from any breach of any representation or warranty in this Agreement or of any
other provision of this Agreement by Tularik; provided that Tularik provides the
Subsidiary with prompt notice of any such claim and the exclusive ability to
defend (with the reasonable cooperation of Tularik, its Affiliates other than
the Subsidiary, employees, agents and independent contractors) and settle any
such claim. [*]

         6.2 Indemnification by Tularik. Tularik hereby agrees to indemnify,
hold harmless and defend the Subsidiary, its Affiliates other than Tularik,
employees, agents and independent contractors against any and all expenses,
costs of defense (including without limitation reasonable attorneys' fees,
witness fees, damages, judgments, fines and amounts paid in settlement) and any
amounts the Subsidiary becomes legally obligated to pay because of any Third
Party claim or claims against it to the extent that such claim or claims arise
out of (i) the negligence, recklessness or willful misconduct of Tularik, its
employees or agents [*] (ii) Tularik's breach or alleged breach of any
representation or warranty or of any other provision of

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                       7.
<PAGE>

this Agreement by Tularik [*] or (iii) the manufacture, use or sale, prior to or
after the Closing Date, of pharmaceutical products discovered, developed, made,
used, sold, offered for sale or imported by Tularik, its Affiliates other than
the Subsidiary, or its sublicensees [*] except in each case to the extent such
claims arise from the negligence, recklessness or willful misconduct of the
Subsidiary, its Affiliates other than Tularik, employees or agents, or any
breach of any representation or warranty or of any other provision of this
Agreement by the Subsidiary; provided that the Subsidiary provides Tularik with
prompt notice of any such claim and the exclusive ability to defend (with the
reasonable cooperation of the Subsidiary, its Affiliates other than Tularik,
employees, agents and independent contractors) or settle any such claim. [*]

         6.3 Mechanics. In the event that the Parties cannot agree as to the
application of Sections 6.1 and 6.2 above to any particular loss or claim, the
Parties may conduct separate defenses of such claim. Each Party further reserves
the right to claim indemnity from the other in accordance with Sections 6.1 and
6.2 above upon resolution of the underlying claim, notwithstanding the
provisions of Sections 6.1 and 6.2 above requiring the indemnified Party to
tender to the indemnifying Party the exclusive ability to defend such claim or
suit.

                                   ARTICLE 7

                                     Term

         7.1 Term. The term of this Agreement shall commence upon the Effective
Date and shall continue in effect thereafter.

                                   ARTICLE 8

                                 Miscellaneous

         8.1 Notices. All notices hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile transmission (receipt
verified), telexed, mailed by registered or certified mail (return receipt
requested), postage prepaid, or sent by express courier service, to the Parties
at the following addresses (or at such other address for a Party as shall be
specified by like notice; provided, that notices of a change of address shall be
effective only upon receipt thereof).

             (a)  If to the Subsidiary, addressed to:
                        Tularik Pharmaceutical Company
                        Two Corporate Drive
                        South San Francisco, CA 94080
                        Attn: _________
                        Telephone:  (650) 825-7300
                        Facsimile:  (650) 825-7392

             (b)  If to Tularik Inc., addressed to:
                        Tularik Inc.
                        Two Corporate Drive
                        South San Francisco, CA 94080

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                       8.
<PAGE>

                            Attn: Secretary
                            Telephone: (650) 825-7300
                            Facsimile: (650) 825-7392

          With a copy to:
                            Cooley Godward LLP
                            Five Palo Alto Square
                            3000 El Camino Real
                            Palo Alto, CA 94306-2155
                            Attention: Judith A. Hasko, Esq.
                            Telephone: (650) 843-5000
                            Facsimile: (650) 857-0663

          (c)  Copies of all notices provided by either Party hereto shall also
be provided to JT and addressed to:

                            Japan Tobacco, Inc.
                            Pharmaceutical Division
                            JT Building, 2-1 Toranomon, 2-chome
                            Minato-ku, Tokyo 105, Japan
                            Attention: Vice President Business Development
                            Telephone: 011 81 3 3582 3111
                            Facsimile: 011 81 3 5572 1449

          With a copy to:
                            Neal N. Beaton, Esq.
                            Gilbert, Segall and Young LLP
                            430 Park Avenue
                            New York, NY 10022
                            Telephone: (212) 644-4010
                            Facsimile: (212) 644-4051

     8.2  Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their permitted successors and assigns;
provided, however, that no Party shall assign any of its rights and obligations
hereunder.

     8.3  Force Majeure. Any delays in performance by a Party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the Party
affected, including but not limited to acts of God, embargoes, governmental
restrictions, strikes or other concerted acts of workers, fire, earthquake,
flood, explosion, riots, wars, civil disorder, rebellion or sabotage. The Party
suffering such occurrence shall immediately notify the other Party as soon as
practicable and any time for performance hereunder shall be extended by the
actual time of delay caused by the

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                       9.
<PAGE>

occurrence, provided that the Party affected by such event uses reasonable
efforts to overcome such delay.

     8.4  Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same agreement.

     8.5  Headings. The section and paragraph headings contained herein are
for the purposes of convenience only and are not intended to define or limit the
contents of said sections or paragraphs.

     8.6  Governing Law and Language. This Agreement shall be governed by
California law, notwithstanding its conflicts of laws principles. The official
text of this Agreement and any Appendices hereto, or any notice given or
accounts or statements required by this Agreement shall be in English. In the
event of any dispute concerning the construction or meaning of this Agreement,
reference shall be made only to this Agreement as written in English and not to
any other translation into any other language.

     8.7  Arbitration. In the event of any controversy or claim arising out
of, relating to or in connection with any provision of this agreement, the
Parties shall try to settle their differences amicably between themselves. Any
unresolved disputes arising between the Parties arising out of, relating to, in
connection with or in any way connected with this Agreement or any term or
condition hereof, or performance by a Party of its obligations hereunder,
whether before or after termination or expiration of this Agreement, shall be
finally resolved by binding arbitration, except as otherwise provided in this
Agreement and except that any disputes regarding the validity, scope or
enforceability of patents shall be submitted to a court of competent
jurisdiction. The arbitration shall be held in San Francisco, California
according to the rules of the American Arbitration Association ("AAA"). The
arbitration will be conducted by a panel of three (3) arbitrators with
significant experience in the pharmaceutical industry appointed in accordance
with applicable AAA rules. Any arbitration herewith shall be conducted in the
English language to the maximum extent possible. Each Party shall bear its own
costs and attorney's and witness' fees. Judgment on the award so rendered shall
be final and may be entered in any court having jurisdiction thereof.

     8.8  Entire Agreement; Amendment. This Agreement, together with the Option
Agreement, and all Appendices hereto and thereto, sets forth the principal terms
of the arrangement between the Parties hereto and, except as otherwise set forth
herein, supersedes and terminates all prior agreements, including the
preliminary agreement, and understandings between the Parties. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties unless reduced to writing and signed by an authorized officer
of each Party.

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      10.
<PAGE>

     In Witness Whereof, the Parties hereto have executed this Agreement as of
the Effective Date.

Tularik Inc.

By: /s/ David Goeddel
    ---------------------------
    Chief Executive Officer

Tularik Pharmaceutical Company

By: /s/ William J. Rieflin
    ---------------------------

Name: Wm. J. Rieflin
      -------------------------

Title: Secretary
       ------------------------

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      11.
<PAGE>

                                   Appendix A

                              Assignable Know-How

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      12.
<PAGE>

                                  Appendix B

                              Assignable Patents

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      13.
<PAGE>

                                  Appendix C

                               Licensed Know-How

                                      [*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      14.
<PAGE>

                                  Appendix D

                               Licensed Patents

                                      [*]

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Act of 1934, as amended.

                                      15.

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