Document:

<PAGE>   1
                                                                    EXHIBIT 10.1

Portions of Exhibit 10.1 have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.

<PAGE>   2

                                LICENSE AGREEMENT

          AGREEMENT made this 3rd day of January, 2000 (the "Effective Date") by
and between OSI Pharmaceuticals, Inc. ("OSI"), a Delaware corporation with
principal offices at 106 Charles Lindbergh Boulevard, Uniondale, New York
11553-3649, American Home Products Corporation ("AHPC"), a Delaware corporation
with principal offices at Five Giralda Farms, Madison, New Jersey 07940, and
American Cyanamid Company ("ACC"), a Maine corporation and wholly-owned
subsidiary of AHPC with principal offices at One Campus Drive, Parsippany, New
Jersey 07054.

                              W I T N E S S E T H:

          WHEREAS, OSI is the owner of certain gene transcription patents and is
willing to grant a license under such patents to AHPC and its Affiliates,
including ACC; and

          WHEREAS, AHPC and its Affiliates, including ACC, are the owners of
certain patents relating to yeast screening assays and AHPC and its Affiliates,
including ACC, are willing to grant a license under such patents to OSI; and

          WHEREAS, OSI and AHPC desire to cross license their respective
patents, according to the terms contained herein.

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

1.     DEFINITIONS

       1.1    "Affiliate" means any corporation, company, partnership, joint
              venture and/or firm which controls, is controlled by or is under
              common control with a Party. For purposes of this Section 1.1,
              "control" means (a) in the case of corporate entities, direct or
              indirect ownership of at least 50% of the stock or shares entitled
              to vote for the election of directors; and (b) in the case of
              non-corporate entities, direct or indirect ownership of at least
              50% of the equity interest with the power to direct the management
              and policies of such non-corporate entities.

       1.2    "AHPC Field of Use" means (a) the research and development of
              products for human therapeutic purposes, other than the discovery
              or development of Cosmeceuticals, and (b) the research and
              development of products for agricultural purposes. Following April
              23, 2002, the discovery or development of Cosmeceuticals shall be
              included in the "AHPC Field of Use".

       1.3    "AHPC Licensed Compound" means any compounds or other molecules,
              and any compounds or other molecules derived therefrom, the
              identification, development, manufacture, use, importation or sale
              of which in a specific

<PAGE>   3

              country would, in the absence of this Agreement, infringe an
              issued or granted claim in an AHPC Licensed Patent.

       1.4    "AHPC Licensed Patents" means the U.S. patents and patent
              applications listed on Exhibit A hereto, any patent applications
              filed prior or subsequent to the Effective Date that claim the
              benefit of the filing date of any patent application listed on
              Exhibit A and any reissues, extensions, substitutions,
              confirmations, re-registrations, re-examinations, continuations,
              divisionals or continuations-in-part of the foregoing patents and
              patent applications, as well as all foreign counterparts thereof.

       1.5    "AHPC Licensed Product" means any product for sale by OSI or its
              Affiliates to a Third Party in the OSI Field of Use which contains
              an AHPC Licensed Compound.

       1.6    "Confidential Information" means all information received by a
              Party from another Party pursuant to this Agreement, which is
              deemed confidential by the disclosing Party and is designated
              confidential at the time the information is disclosed, subject to
              the exceptions set forth in Section 6.

       1.7    "Cosmeceuticals" means compounds, or assays for discovering
              compounds, useful for (a) stimulation or control of hair growth,
              (b) prevention or reversal of wrinkling of the skin, and (c)
              alteration of skin or hair pigmentation.

       1.8    "Licensed Patent" means an AHPC Licensed Patent or an OSI Licensed
              Patent.

       1.9    "Licensed Product" means an AHPC Licensed Product or an OSI
              Licensed Product.

       1.10   "OSI Field of Use" means the internal research and development by
              OSI and its Third Party collaborators, without the right to
              sublicense, of products for human therapeutic purposes.

       1.11   "OSI Licensed Compound" means any compounds or other molecules,
              and any compounds or other molecules derived therefrom, the
              identification, development, manufacture, use, importation or sale
              of which in a specific country would, in the absence of this
              Agreement, infringe an issued or granted claim in an OSI Licensed
              Patent.

       1.12   "OSI Licensed Patents" means the U.S. patents and patent
              applications listed on Exhibit B hereto, any patent applications
              filed prior or subsequent to the Effective Date that claim the
              benefit of the filing date of any patent application listed on
              Exhibit B and any reissues, extensions, substitutions,
              confirmations, re-registrations, re-examinations, continuations,
              divisionals or continuations-in-part of the foregoing patents and
              patent applications, as well as all foreign counterparts thereof.

                                       2
<PAGE>   4

       1.13   "OSI Licensed Product" means any product for sale by AHPC or its
              Affiliates to a Third Party in the AHPC Field of Use which
              contains an OSI Licensed Compound.

       1.14   "Party" means any of AHPC, ACC or OSI and "Parties" means AHPC,
              ACC and OSI, collectively.

       1.15   "Person" means any individual, corporation, limited liability
              company, cooperative, partnership, trust, unincorporated
              association or any other entity which possesses a juridical
              personality, including any governmental authorities or body of
              competent jurisdiction; pronouns, when referring to a Person,
              shall have a similar extended meaning.

       1.16   "Third Party" means any entity other than AHPC or its Affiliates,
              including ACC, or OSI or its Affiliates.

2. LICENSE GRANT

       2.1    By OSI.

              2.1.1  OSI hereby grants to AHPC and its Affiliates, including
                     ACC, for the AHPC Field of Use, a nonexclusive,
                     nontransferable (other than as permitted by Section 8.1),
                     worldwide, ** license under the OSI Licensed Patents to
                     make, have made, use, sell, offer for sale, import, export,
                     or otherwise exploit OSI Licensed Products.

              2.1.2  OSI agrees that commencing April 24, 2002 (or on such
                     earlier date if the field of Cosmeceuticals ceases to be
                     the subject of an exclusive license grant by OSI to the
                     Third Party as of the Effective Date), the scope of the
                     nonexclusive license under Section 2.1 shall be expanded to
                     include Cosmeceuticals.

       2.2    By AHPC. Each of AHPC and ACC hereby grants to OSI and its
              Affiliates, for the OSI Field of Use, a nonexclusive,
              nontransferable, world-wide, ** license under the AHPC License
              Patents owned by it to make, have made, use, sell, offer for sale,
              import, export or otherwise exploit AHPC Licensed Products,
              provided that the foregoing license shall not include the right
              for OSI to sell any compositions or methodologies used in the
              discovery or development of such AHPC Licensed Products, such as
              screens, to a Third Party or otherwise provide Third Parties
              (other than OSI's collaborators) with access to same.

3.     PATENT RIGHTS AND INFRINGEMENT

       3.1    OSI shall have complete control, at its expense and within its
              sole discretion, over the prosecution, maintenance and enforcement
              of the OSI Licensed Patents.

---------------------

**     This portion has been redacted pursuant to a request for confidential
       treatment.

                                       3
<PAGE>   5

              When information comes to the attention of AHPC or its Affiliates,
              including ACC, that an OSI Licensed Patent has been or is
              threatened to be infringed by a Third Party, AHPC shall promptly
              bring such infringement or threatened infringement to the
              attention of OSI. OSI shall have the right (but not the
              obligation), in its sole discretion, at its own risk and expense,
              and using counsel of its choice, to take such action as it may
              deem necessary to prosecute or prevent such infringement.

       3.2    AHPC shall have complete control, at its expense and within its
              sole discretion, over the prosecution, maintenance and enforcement
              of the AHPC Licensed Patents. When information comes to the
              attention of OSI that an AHPC Licensed Patent has been or is
              threatened to be infringed by a Third Party, OSI shall promptly
              bring such infringement or threatened infringement to the
              attention of AHPC. AHPC shall have the right (but not the
              obligation), in its sole discretion, at its own risk and expense,
              and using counsel of its choice, to take such action as it may
              deem necessary to prosecute or prevent such infringement.

       3.3    If AHPC or any of its customers shall be sued by a Third Party for
              infringement of a patent because of the research, development,
              manufacture, use or sale of OSI Licensed Products, AHPC shall
              promptly notify OSI in writing of the institution of such suit.
              OSI shall have all authority over such suit (including the right
              to exclusive control of the defense of any such suit, action, or
              proceeding and the exclusive right to compromise, litigate,
              settle, or otherwise dispose of any such suit, action, or
              proceeding). AHPC and its Affiliates shall provide information and
              assistance necessary to defend or settle any such suit, action or
              proceeding at OSI's expense. If OSI does not elect to manage the
              defense against such infringement action or fails to take
              appropriate and diligent action with respect to such defense, then
              AHPC shall have the right to assume such defense, at its own cost
              and expense.

       3.4    If OSI or any of its customers shall be sued by a Third Party for
              infringement of a patent because of the research, development,
              manufacture, use or sale of AHPC Licensed Products, OSI shall
              promptly notify AHPC in writing of the institution of such suit.
              AHPC shall have all authority over such suit (including the right
              to exclusive control of the defense of any such suit, action, or
              proceeding and the exclusive right to compromise, litigate,
              settle, or otherwise dispose of any such suit, action, or
              proceeding). OSI shall provide information and assistance
              necessary to defend or settle any such suit, action or proceeding
              at AHPC's expense. If AHPC does not elect to manage the defense
              against such infringement action or fails to take appropriate and
              diligent action with respect to such defense, then OSI shall have
              the right to assume such defense, at its own cost and expense.

                                       4
<PAGE>   6

4.     REPRESENTATIONS AND WARRANTIES

       4.1    Representations and Warranties of AHPC, ACC and OSI. As of the
              Effective Date, each Party hereby represents and warrants that:

              4.1.1  Corporate Power. Such Party is duly organized and validly
                     existing and in good standing under the laws of the state
                     of its incorporation and has all requisite corporate power
                     and authority to enter into this Agreement and to carry out
                     the provisions hereof.

              4.1.2  Due Authorization. Such Party is duly authorized to execute
                     and deliver this Agreement and to perform its obligations
                     hereunder.

              4.1.3  Binding Agreement. This Agreement is a legal and valid
                     obligation binding upon it and enforceable in accordance
                     with its terms. The execution, delivery and performance of
                     this Agreement by such Party does not conflict with any
                     agreement, instrument or understanding, oral or written, to
                     which it is a party or by which it may be bound, nor
                     violate any law or regulation of any court, governmental
                     body or administrative or other agency having jurisdiction
                     over it.

              4.1.4  Patents. Such Party acknowledges and agrees that nothing in
                     this Agreement shall be construed as a warranty or
                     representation that any Licensed Product is, or will be,
                     free from infringement of patents of Third Parties.

              4.1.5  Right to License. Such Party owns all right, title and
                     interest in and to the Licensed Patents licensed by it
                     hereunder.

              4.1.6  Patents. There are no pending or, to its knowledge,
                     threatened suits, claims, or proceedings including
                     interferences or opposition proceedings relating to the
                     Licensed Patents licensed by it hereunder, other than
                     normal patent prosecution proceedings.

5.            INDEMNITY

              5.1    AHPC shall indemnify and hold harmless OSI, its Affiliates
                     and all directors, officers, employees and agents of OSI
                     and its Affiliates from and against any and all claims,
                     demands, actions, liabilities, judgments, costs and
                     expenses of whatever kind, whether based on contract,
                     negligence, strict liability or statutory liability,
                     including, without limitation, attorneys' fees and costs of
                     defense, arising out of or related in any way to the
                     clinical testing or use, production, sale, offer to sell,
                     import, export or other exploitation of OSI Licensed
                     Products by AHPC or its Affiliates under this Agreement,
                     other than such as arise out of or are related to OSI's
                     gross negligence or intentional misconduct.

                                       5
<PAGE>   7

              5.2    OSI shall indemnify and hold harmless AHPC, its Affiliates
                     and all directors, officers, employees and agents of AHPC
                     and its Affiliates from and against any and all claims,
                     demands, actions, liabilities, judgments, costs and
                     expenses of whatever kind, whether based on contract,
                     negligence, strict liability or statutory liability,
                     including, without limitation, attorneys' fees and costs of
                     defense, arising out of or related in any way to the
                     clinical testing or use, production, sale, offer to sell,
                     import, export or other exploitation of AHPC Licensed
                     Products by OSI or its Affiliates under this Agreement,
                     other than such as arise out of or are related to AHPC's
                     gross negligence or intentional misconduct.

              5.3    Each of AHPC and OSI shall indemnify and hold the other and
                     the other's Affiliates harmless with respect to any injury,
                     loss or cost resulting from the breach of any
                     representation or warranty provided pursuant to Section 4
                     hereof.

6.            CONFIDENTIALITY

              6.1    Confidential Information. Except as expressly provided
                     herein, the Parties agree that the receiving Party shall
                     keep completely confidential and shall not publish or
                     otherwise disclose to another Party and shall not use for
                     any purpose other than to perform the purposes contemplated
                     by this Agreement any Confidential Information furnished to
                     it by the disclosing Party hereto pursuant to this
                     Agreement, except to the extent that it can be established
                     by the receiving Party 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; (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
                     lawfully disclosed to the receiving Party by a person other
                     than a Party hereto; or (e) was independently developed by
                     the receiving Party.

              6.2    Permitted Use and Disclosures. Each Party hereto may use or
                     disclose Confidential Information disclosed to it by
                     another Parry to the extent such use or disclosure is
                     reasonably necessary in filing or prosecuting patent
                     applications, prosecuting or defending litigation,
                     complying with applicable law, governmental regulation or
                     court order, submitting information to tax or other
                     governmental authorities, or otherwise exercising its
                     rights hereunder, provided that if a Party is required to
                     make any such disclosure of another Party's Confidential
                     Information, it will give reasonable advance notice to the
                     latter Party of such disclosure and, save to the extent
                     inappropriate in the case of patent applications, will use
                     reasonable efforts to secure confidential treatment of such
                     information prior to its disclosure (whether through
                     protective orders or otherwise).

                                       6
<PAGE>   8

              6.3    Confidential Terms. Except as expressly provided herein,
                     each Party agrees not to disclose any terms of this
                     Agreement to a Third Party without the consent of the other
                     Parties; provided, however, that each Party reserves the
                     right to make reasonable disclosures as required by
                     securities or other applicable laws, or to actual or
                     prospective investors or corporate partners, or to
                     accountants, attorneys and other professional advisors on a
                     need-to-know basis under circumstances that reasonably
                     ensure the confidentiality thereof, or to the extent
                     required by law. If such Confidential Information is to
                     become public information by such disclosure the disclosing
                     Party must obtain the written consent of the non-disclosing
                     Parties in order to obtain protection of the Confidential
                     Information if necessary.

              6.4    Press Release. Notwithstanding the foregoing, the Parties
                     shall agree upon a press release to announce the execution
                     of this Agreement. Thereafter, OSI, AHPC and ACC may each
                     disclose to Third Parties the information contained in such
                     press release without the need for further approval by the
                     other.

       7.     TERM AND TERMINATION

              7.1    This Agreement is effective as of the Effective Date and
                     shall continue in full force and effect, with respect to a
                     Party, on a country by country basis until the last
                     expiration date of all patents encompassed within the
                     Licensed Patents licensed to such Party hereunder.

              7.2    If a Party shall fail in any material respect to perform or
                     observe any term, covenant or understanding contained in
                     this Agreement or in any of the other documents or
                     instruments delivered pursuant to, or concurrently with,
                     this Agreement, and any such failure shall remain
                     unremedied for 90 days after written notice to the
                     defaulting Party, the Party not responsible may, by notice
                     to the defaulting Party, terminate the license granted by
                     such Party to the defaulting Party.

              7.3    OSI shall have the right to terminate the Agreement if
                     either AHPC or ACC makes an assignment for the benefit of
                     its creditors, becomes insolvent, files a petition in
                     bankruptcy, petitions or applies to any tribunal for the
                     appointment of a custodian, receiver or any trustee for it
                     or a substantial part of its assets, or commences any
                     proceeding under any bankruptcy, reorganization,
                     arrangement, readjustment of debt, dissolution or
                     liquidation law or statute of any jurisdiction, whether now
                     or hereafter in effect; or if there has been filed any such
                     petition or application against either AHPC or ACC, or any
                     such proceeding has been commenced against it, in which an
                     order for relief is entered or which remains

                                       7
<PAGE>   9

                     undismissed for a period of 60 days or more; or if either
                     AHPC or ACC, by any act or omission, indicates its consent
                     to, approval of or acquiescence in, any such petition,
                     application or proceeding or order for relief or the
                     appointment of a custodian, receiver or any trustee for it
                     or any substantial part of any of its properties, or is the
                     subject of any such custodianship, receivership or
                     trusteeship that continues undischarged for a period of 60
                     days or more.

              7.4    AHPC and ACC shall have the right to terminate the
                     Agreement if OSI makes an assignment for the benefit of its
                     creditors, becomes insolvent, files a petition in
                     bankruptcy, petitions or applies to any tribunal for the
                     appointment of a custodian, receiver or any trustee for it
                     or a substantial part of its assets, or commences any
                     proceeding under any bankruptcy, reorganization,
                     arrangement, readjustment of debt, dissolution or
                     liquidation law or statute of any jurisdiction, whether now
                     or hereafter in effect; or if there has been filed any such
                     petition or application against OSI, or any such proceeding
                     has been commenced against it, in which an order for relief
                     is entered or which remains undismissed for a period of 60
                     days or more; or if OSI, by any act or omission, indicates
                     its consent to, approval of or acquiescence in, any such
                     petition, application or proceeding or order for relief or
                     the appointment of a custodian, receiver or any trustee for
                     it or any substantial part of any of its properties, or is
                     the subject of any such custodianship, receivership or
                     trusteeship that continues undischarged for a period of 60
                     days or more.

       8.     MISCELLANEOUS

              8.1    Binding Effect; Assignment. This Agreement shall be binding
                     upon the Parties' respective successors and permitted
                     assigns. Neither Party may assign this Agreement or any of
                     its rights or obligations hereunder without the prior
                     written consent of the other Party (not to be unreasonably
                     withheld) except that either Party may assign this
                     Agreement as part of a merger or consolidation in which the
                     surviving entity assumes all of the Party's rights and
                     obligations hereunder or a sale of substantially all of the
                     assets of such Party to which this Agreement relates. In
                     addition, if AHPC sells to a Third Party all of the stock
                     of ACC or if ACC sells all or substantially all of its
                     assets to a Third Party, AHPC or ACC, as the case may be,
                     may assign the license granted by OSI in Section 2.1 to
                     such Third Party purchaser, without the consent of OSI,
                     only to the extent that such license is for the research
                     and development of products for agricultural purposes
                     (i.e., subsection (b) of Section 1.1), provided that such
                     Third Party purchaser assumes the obligations of AHPC or
                     ACC, as the case

                                       8
<PAGE>   10

                     may be, to grant the license set forth in Section 2.2. In
                     the event of such a sale, the license granted in Section
                     2.1 to AHPC shall remain in effect as to AHPC and its
                     Affiliates only with respect to the research and
                     development of products for human therapeutic purposes
                     (i.e., subsection (a) of Section 1.1).

              8.2    Effect of Waiver. No waiver of any default, condition,
                     provisions or breach of this Agreement shall be deemed to
                     imply or constitute a waiver of any other default,
                     condition, provision or breach of this Agreement.

              8.3    Force Majeure. No Party shall lose any rights hereunder or
                     be liable to the other Parties for damages or losses
                     (except for payment obligations) on account of failure of
                     performance by the defaulting Party if the failure is
                     occasioned by war, strike, fire, acts of God, earthquake,
                     flood, lockout, embargo, governmental acts or orders or
                     restrictions, failure of suppliers, or any other reason
                     where failure to perform is beyond the reasonable control
                     and not caused by the negligence or intentional conduct or
                     misconduct of the nonperforming Party, and such Party has
                     exerted all reasonable efforts to avoid or remedy such
                     force majeure; provided, however, that in no event shall a
                     Party be required to settle any labor dispute or
                     disturbance.

              8.4    Amendment. No modification, supplement to or waiver of this
                     Agreement or any of the provisions hereof or any Exhibit
                     hereto shall be binding upon a Party hereto unless made in
                     writing and duly signed by an authorized representative of
                     OSI, AHPC or ACC.

              8.5    Entire Agreement. This Agreement, including the Exhibits
                     attached hereto, sets forth the entire understanding and
                     agreement of the Parties as to the subject matter hereof,
                     and there are no other understandings, representations or
                     promises, written or verbal, not set forth herein on which
                     a Party has relied.

              8.6    Notices. All notices under this Agreement shall be given in
                     writing and shall be addressed to the Parties at the
                     following addresses:

                         For OSI:     OSI Pharmaceuticals, Inc.
                                      106 Charles Lindbergh Blvd.
                                      Uniondale, NY 11553
                                      Attn: Chief Executive Officer

                                       9
<PAGE>   11

                      For AHPC:    American Home Products
                                   c/o Wyeth-Ayerst Research
                                   87 Cambridge Park Drive
                                   Cambridge, MA 02140
                                   Attn:  Vice President, Law

                      For ACC:     American Cyanamid Corporation
                                   One Campus Drive
                                   Parsippany, NJ 07054
                                   Attn:  Director, Technology Assessment and
                                            Acquisition

                     Notices shall be in writing and shall be deemed delivered
                     when received, if delivered by hand, courier or overnight
                     delivery service, or on the second business day following
                     mailing, if sent by first-class certified or registered
                     mail, postage prepaid, and return receipt requested.

              8.7    Governing Law; Jurisdiction. This Agreement shall be
                     governed by and construed in accordance with the laws of
                     the State of New York, applicable to agreements made in New
                     York except that the federal laws of the United States
                     shall apply to questions regarding the validity or
                     infringement or enforceability of United States federal
                     patents. The parties hereto agree that the state and
                     federal courts sitting in the state and city of New York
                     shall be the proper forums for any legal controversy
                     arising in connection with this Agreement and the parties
                     irrevocably and unconditionally consent to the
                     non-exclusive jurisdiction of such courts for such
                     purposes.

              8.8    Severability. This Agreement is intended to be severable.
                     If any provision of this Agreement is or becomes invalid,
                     is ruled illegal by a court of competent jurisdiction or is
                     deemed unenforceable under the current applicable law from
                     time to time in effect during the term hereof, it is the
                     intention of the Parties that the remainder of this
                     Agreement shall not be affected thereby and shall continue
                     to be construed to the maximum extent permitted by law at
                     such time. It is further the intention of the Parties that
                     in lieu of each such provision which is invalid, illegal,
                     or unenforceable, there shall be substituted or added as
                     part of this Agreement by such court of competent
                     jurisdiction a provision which shall be as similar as
                     possible in terms of the economic and business objectives
                     intended by the Parties, to such invalid, illegal or
                     unenforceable provision, but shall be valid, legal and
                     enforceable.

              8.9    Independent Contractors. The Parties hereto are acting as
                     independent contractors and shall not be considered
                     partners, joint venturers or agents of the other. Except as
                     expressly provided herein, no Party shall have the right to
                     act on behalf of, or to bind, the other.

                                       10
<PAGE>   12

              8.10   Headings; Counterparts. Captions and paragraph headings are
                     for convenience only and shall not form an interpretative
                     part of this Agreement. This Agreement may be executed in
                     two or more counterparts, each of which will be deemed an
                     original.

                                       11
<PAGE>   13

       IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.

                             OSI PHARMACEUTICALS, INC.

                             By:    /s/ Colin Goddard
                                -------------------------------------------
                                   Name:  Colin Goddard, Ph.D.
                                   Title: President and Chief Executive
                                                Officer

                             AMERICAN HOME PRODUCTS CORPORATION

                             By:    /s/ Gerald A. Jibilian
                                -------------------------------------------
                                   Name:  Gerald A. Jibilian
                                   Title: Vice President and Associate
                                              General Counsel

                             AMERICAN CYANAMID COMPANY

                             By:   /s/ Gerald A. Jibilian
                                -------------------------------------------
                                   Name:  Gerald A. Jibilian
                                   Title: Vice President and Associate
                                            General Counsel

                                       12
<PAGE>   14

                                    EXHIBIT A

                                       **

-------------------

**     This portion has been redacted pursuant to a request for confidential
       treatment.

<PAGE>   15

                                    EXHIBIT B

                              OSI LICENSED PATENTS

<TABLE>

  Country          Application No.      Filing Date      Patent No.    Issue Date
____________________________________________________________________________________

<S>                <C>                  <C>              <C>           <C>
US                 08/458,691           6/02/95          5,776,502     7/07/98

US                 08/267,834           6/28/94          5,665,543     9/09/97

</TABLE>
                                        **

---------------------

**     This portion has been redacted pursuant to a request for confidential
       treatment.<PAGE>   1
                                                                    EXHIBIT 10.3

                               GUARANTY AGREEMENT

         WHEREAS, the execution of this Guaranty Agreement is a condition to
COMPASS BANK, a bank organized and existing under the laws of the State of
Alabama ("Lender"), agreeing to enter into that certain Settlement and
Deficiency Agreement (herein so called) dated as of March 28, 2000 which is by
and between TOTAL BUILDING SYSTEMS, INC., a Texas corporation ("Total"), JOYVER
INVESTMENTS, LLC, a Texas limited liability company ("Joyver"), CHARLES D.
McPHAIL ("McPhail"), MEGA WORLD, INC., a Delaware corporation ("Mega World") and
TEXAS TBS, INC., a Texas corporation ("TBS") covering certain obligations more
fully described therein. Collectively hereinafter Total, Joyver and McPhail are
referred to as the "Borrower."

         NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, Mega World and TBS,
(collectively herein the "Guarantor"), hereby jointly and severally, irrevocably
and unconditionally guarantee to Lender the full and prompt payment and
performance of the Guaranteed Indebtedness (hereinafter defined), this Guaranty
Agreement being upon the following terms:

         1. The term "Guaranteed Indebtedness", as used herein means all
obligations, indebtedness, and liabilities of Borrower to Lender, fully
described in the Settlement and Deficiency Agreement and all extensions,
renewals, and modifications thereof. The term "Guaranteed Indebtedness" shall
include any and all post-petition interest and expenses (including attorneys'
fees) whether or not allowed under any bankruptcy, insolvency, or other similar
law. The Guarantors acknowledge that as of the date hereof, the principal amount
owing by the Borrower is the Deficiency described in the Settlement and
Deficiency Agreement.

         2. This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Indebtedness. No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which Borrower may have against Lender or any
other party, or which Guarantor may have against Borrower, Lender, or any other
party, shall be available to, or shall be asserted by, Guarantor against Lender
or any subsequent holder of the Guaranteed Indebtedness or any part thereof or
against payment of the Guaranteed Indebtedness or any part thereof.

         3. If Guarantor becomes liable for any indebtedness owing by Borrower
to Lender by endorsement or otherwise, other than under this Guaranty Agreement,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Lender hereunder shall be cumulative of

<PAGE>   2

any and all other rights that Lender may ever have against Guarantor. The
exercise by Lender of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.

         4. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due thereon to Lender without notice or demand in
lawful money of the United States of America and it shall not be necessary for
Lender, in order to enforce such payment by Guarantor, first to institute suit
or exhaust its remedies against Borrower or others liable on such Guaranteed
Indebtedness, or to enforce any rights against any collateral which shall ever
have been given to secure such Guaranteed Indebtedness. In the event such
payment is made by Guarantor, then Guarantor shall be subrogated to the rights
then held by Lender with respect to the Guaranteed Indebtedness to the extent to
which the Guaranteed Indebtedness was discharged by Guarantor and, in addition,
upon payment by Guarantor of any sums to Lender hereunder, all rights of
Guarantor against Borrower or any collateral arising as a result therefrom by
way of right of subrogation, reimbursement, or otherwise shall in all respects
be subordinate and junior in right of payment to the prior indefeasible payment
in full of the Guaranteed Indebtedness.

         5. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by Guarantor hereunder forthwith on demand by Lender.

         6. Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of Guarantor hereunder, or the full or partial release of any
other guarantor from liability for any or all of the Guaranteed Indebtedness;
(c) any disability of Borrower, or the dissolution, insolvency, or bankruptcy of
Borrower, Guarantor, or any other party at any time liable for the payment of
any or all of the Guaranteed Indebtedness; (d) any renewal, extension,
modification, waiver, amendment, or rearrangement of any or all of the
Guaranteed Indebtedness or any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(e) any adjustment, indulgence, forbearance, waiver, or compromise that may be
granted or given by Lender to Borrower, Guarantor, or any other party ever
liable for any or all of the Guaranteed Indebtedness; (f) any neglect, delay,
omission, failure, or refusal of Lender to take or prosecute any action for the
collection of any of the Guaranteed Indebtedness or to foreclose or take or
prosecute any action in connection with any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (g) the unenforceability or invalidity of any or all of the
Guaranteed Indebtedness or of any

                                       -2-
<PAGE>   3

instrument, document, or agreement evidencing, securing, or otherwise relating
to any or all of the Guaranteed Indebtedness; (h) any payment by Borrower or any
other party to Lender is held to constitute a preference under applicable
bankruptcy or insolvency law or if for any other reason Lender is required to
refund any payment or pay the amount thereof to someone else; (i) the settlement
or compromise of any of the Guaranteed Indebtedness; (j) the non-perfection of
any security interest or lien securing any or all of the Guaranteed
Indebtedness; (k) any impairment of any collateral securing any or all of the
Guaranteed Indebtedness; (l) the failure of Lender to sell any collateral
securing any or all of the Guaranteed Indebtedness in a commercially reasonable
manner or as otherwise required by law; (m) any change in the corporate
existence, structure, or ownership of Borrower; or (n) any other circumstance
which might otherwise constitute a defense available to, or discharge of,
Borrower or Guarantor.

         7. Guarantor represents and warrants to Lender as follows:

                  (a) Guarantor has the power and authority and legal right to
         execute, deliver, and perform its obligations under this Guaranty
         Agreement and this Guaranty Agreement constitutes the legal, valid, and
         binding obligation of Guarantor, enforceable against Guarantor in
         accordance with its terms, except as limited by bankruptcy, insolvency,
         or other laws of general application relating to the enforcement of
         creditor's rights.

                  (b) The execution, delivery, and performance by Guarantor of
         this Guaranty Agreement do not and will not violate or conflict with
         any law, rule, or regulation or any order, writ, injunction, or decree
         of any court, governmental authority or agency, or arbitrator and do
         not and will not conflict with, result in a breach of, or constitute a
         default under, or result in the imposition of any lien upon any assets
         of Guarantor pursuant to the provisions of any indenture, mortgage,
         deed of trust, security agreement, franchise, permit, license, or other
         instrument or agreement to which Guarantor or its properties is bound.

                  (c) No authorization, approval, or consent of, and no filing
         or registration with, any court, governmental authority, or third party
         is necessary for the execution, delivery, or performance by Guarantor
         of this Guaranty Agreement or the validity or enforceability thereof.

                  (d) The value of the consideration received and to be received
         by Guarantor as a result of Lender making extensions of credit to
         Borrower and Guarantor executing and delivering this Guaranty Agreement
         is reasonably worth at least as much as the liability and obligation of
         Guarantor hereunder, and such liability and obligation and such
         extensions of credit have benefitted or may reasonably be expected to
         benefit Guarantor directly or indirectly.

                  (e) Guarantor has, independently and without reliance upon
         Lender and based upon such documents and information as Guarantor has
         deemed appropriate, made its own analysis and decision to enter into
         this Guaranty Agreement.

                                       -3-
<PAGE>   4

         8. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or Lender has any commitment to
Borrower:

                  (a) Guarantor will furnish to Lender as soon as available, and
         in any event within ninety (90) days after the end of each fiscal year
         of Guarantor, beginning with the fiscal year ending December 31, 2000,
         (i) a copy of the financial statements of Guarantor for such fiscal
         year and (ii) a certificate of Guarantor to Lender disclosing and
         certifying as to all material changes in Guarantor's debt or net worth
         or otherwise certifying that there has been no material change in
         Guarantor's personal debt or net worth since the previous financial
         statement delivered to Lender.

                  (b) Guarantor will furnish promptly to Lender written notice
         of the occurrence of any default under this Guaranty Agreement.

                  (c) Guarantor will furnish promptly to Lender such additional
         information concerning Guarantor as Lender may request.

                  (d) Guarantor will obtain at any time and from time to time
         all authorizations, licenses, consents or approvals as shall now or
         hereafter be necessary or desirable under all applicable laws or
         regulations or otherwise in connection with the execution, delivery and
         performance of this Guaranty Agreement and will promptly furnish copies
         thereof to Lender.

                  (e) Guarantor will at all times own directly or indirectly and
         free and clear of all liens and encumbrances whatsoever at least the
         same percentage of voting shares of Borrower, if any, as it owns
         directly or indirectly on the date hereof.

         9. Lender shall have the right to set off and apply against this
Guaranty Agreement or the Guaranteed Indebtedness or both, at any time and
without notice to Guarantor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from Lender to Guarantor whether or not the Guaranteed Indebtedness is then due
and irrespective of whether or not Lender shall have made any demand under this
Guaranty Agreement. As security for this Guaranty Agreement and the Guaranteed
Indebtedness, Guarantor hereby grants Lender a security interest in all money,
instruments, certificates of deposit, and other property of Guarantor now or
hereafter held by Lender, including, without limitation, property held in
safekeeping. In addition to Lender's right of setoff and as further security for
this Guaranty Agreement and the Guaranteed Indebtedness, Guarantor hereby grants
Lender a security interest in all deposits (general or special, time or demand,
provisional or final) and all other accounts of Guarantor now or hereafter on
deposit with or held by Lender and all other sums at any time credited by or
owing from Lender to Guarantor. The rights and remedies of Lender hereunder are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which Lender may have.

                                       -4-
<PAGE>   5

         10. (a) Guarantor hereby agrees that the Subordinated Indebtedness
shall be subordinate and junior in right of payment to the prior payment in full
of all Guaranteed Indebtedness, and Guarantor hereby assigns the Subordinated
Indebtedness to Lender as security for the Guaranteed Indebtedness. If any sums
shall be paid to Guarantor by Borrower or any other person or entity on account
of the Subordinated Indebtedness, such sums shall be held in trust by Guarantor
for the benefit of Lender and shall forthwith be paid to Lender without
affecting the liability of Guarantor under this Guaranty Agreement and may be
applied by Lender against the Guaranteed Indebtedness in such order and manner
as Lender may determine in its sole discretion. Upon the request of Lender,
Guarantor shall execute, deliver, and endorse to Lender such documents and
instruments as Lender may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty Agreement, the term "Subordinated
Indebtedness" means all indebtedness, liabilities, and obligations of Borrower
to Guarantor, whether such indebtedness, liabilities, and obligations now exist
or are hereafter incurred or arise, or whether the obligations of Borrower
thereon are direct, indirect, contingent, primary, secondary, several, joint and
several, or otherwise, and irrespective of whether such indebtedness,
liabilities, or obligations are evidenced by a note, contract, open account, or
otherwise, and irrespective of the person or persons in whose favor such
indebtedness, obligations, or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor.

             (b) Guarantor agrees that any and all liens, security interests,
judgment liens, charges, or other encumbrances upon Borrower's assets securing
payment of any Subordinated Indebtedness shall be and remain inferior and
subordinate to any and all liens, security interests, judgment liens, charges,
or other encumbrances upon Borrower's assets securing payment of the Guaranteed
Indebtedness or any part thereof, regardless of whether such encumbrances in
favor of Guarantor or Lender presently exist or are hereafter created or
attached. Without the prior written consent of Lender, Guarantor shall not (i)
file suit against Borrower or exercise or enforce any other creditor's right it
may have against Borrower, or (ii) foreclose, repossess, sequester, or otherwise
take steps or institute any action or proceedings (judicial or otherwise,
including without limitation the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any liens, security interests, collateral rights,
judgments or other encumbrances held by Guarantor on assets of Borrower.

             (c) In the event of any receivership, bankruptcy, reorganization,
rearrangement, debtor's relief, or other insolvency proceeding involving
Borrower as debtor, Lender shall have the right to prove and vote any claim
under the Subordinated Indebtedness and to receive directly from the receiver,
trustee or other court custodian all dividends, distributions, and payments made
in respect of the Subordinated Indebtedness. Lender may apply any such
dividends, distributions, and payments against the Guaranteed Indebtedness in
such order and manner as Lender may determine in its sole discretion.

             (d) Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice

                                       -5-
<PAGE>   6

thereon that the indebtedness evidenced thereby is subordinated under the terms
of this Guaranty Agreement.

         11. No amendment or waiver of any provision of this Guaranty Agreement
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by Lender. No failure
on the part of Lender to exercise, and no delay in exercising any right, power,
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power, or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

         12. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by Borrower or others (including
Guarantor), with respect to any of the Guaranteed Indebtedness shall, if the
statute of limitations in favor of Guarantor against Lender shall have commenced
to run, toll the running of such statute of limitations and, if the period of
such statute of limitations shall have expired, prevent the operation of such
statute of limitations.

         13. This Guaranty Agreement is for the benefit of Lender and its
successors and assigns, and in the event of an assignment of the Guaranteed
Indebtedness, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty Agreement is binding not only on Guarantor, but on
Guarantor's heirs and personal representatives.

         14. Guarantor recognizes that Lender is relying upon this Guaranty
Agreement and the undertakings of Guarantor hereunder in making extensions of
credit to Borrower and further recognizes that the execution and delivery of
this Guaranty Agreement is a material inducement to Lender in making extensions
of credit to Borrower. Guarantor hereby acknowledges that there are no
conditions to the full effectiveness of this Guaranty Agreement.

         15. This Guaranty Agreement is executed and delivered as an incident to
a lending transaction negotiated, consummated, and performable in Harris County,
Texas, and shall be governed by and construed in accordance with the laws of the
State of Texas. Any action or proceeding against Guarantor under or in
connection with this Guaranty Agreement may be brought in any state or federal
court in Harris County, Texas. Guarantor hereby irrevocably (i) submits to the
nonexclusive jurisdiction of such courts, and (ii) waives any objection it may
now or hereafter have as to the venue of any such action or proceeding brought
in such court or that such court is an inconvenient forum. Guarantor agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified below. Nothing herein shall affect
the right of Lender to serve process in any other matter permitted by law or
shall limit the right of Lender to bring any action or proceeding against
Guarantor or with respect to any of Guarantor's property in courts in other
jurisdictions. Any action or proceeding by Guarantor against Lender shall be
brought only in a court located in Harris County, Texas.

                                       -6-
<PAGE>   7

         16. Guarantor shall pay on demand all attorneys' fees and all other
costs and expenses incurred by Lender in connection with the preparation,
administration, enforcement, or collection of this Guaranty Agreement.

         17. Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by Borrower of additional indebtedness, and
all other notices and demands with respect to the Guaranteed Indebtedness and
this Guaranty Agreement.

         18. Guarantor hereby represents and warrants to Lender that Guarantor
has adequate means to obtain from Borrower on a continuing basis information
concerning the financial condition and assets of Borrower and that Guarantor is
not relying upon Lender to provide (and Lender shall have no duty to provide)
any such information to Guarantor either now or in the future.

         19. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED
INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY GUARANTOR AND
LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY
AGREEMENT, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

         20. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR HEREBY
IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS GUARANTY AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION,
OR ENFORCEMENT THEREOF.

                                       -7-
<PAGE>   8

     EXECUTED as of the 28th day of March 2000.

                                      GUARANTOR

                                      MEGA WORLD, INC.
                                      a Delaware corporation

                                      By: /s/ CHARLES McPHAIL
                                          ----------------------------
                                      Name:  Charles McPhail
                                      Title: President

                                      Address: 6250 North Houston Rosslyn Road
                                               Houston, Texas 77091

                                      TEXAS TBS, INC.
                                      a Texas corporation

                                      By: /s/ CHARLES McPHAIL
                                          ----------------------------
                                      Name:  Charles McPhail
                                      Title: President

                                      Address: 6250 North Houston Rosslyn Road
                                               Houston, Texas 77091

                                      -8-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}]]