Document:

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Collaboration and License Agreement Between Esperion Therapeutics, Inc. and
Pharmacia & Upjohn AB dated June 24, 1998.

Confidential treatment requested for portions of this document.

                                                                  EXHIBIT 10.2

                      COLLABORATION AND LICENSE AGREEMENT

     COLLABORATION AND LICENSE AGREEMENT (this "Agreement") dated as of the 24th
                                                ---------
day of June, 1998, by and between Pharmacia & Upjohn AB, a Swedish corporation
with a principal place of business at Lindhagensgatan 133, S-112 87, Stockholm,
Sweden ("PNU"), and Esperion Therapeutics, Inc., a Delaware corporation with a
         ---
principal place of business at 690 KMS Place, Ann Arbor, Michigan 48108, U.S.A.
(the "Company").
      -------

                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS, PNU has been engaged in the development of the Compound (as
defined below) as a therapeutic for cardiovascular market, and owns certain
patent rights and know-how with respect thereto; and

     WHEREAS, PNU has decided for strategic reasons to divest such project from
its portfolio; and

     WHEREAS, the Company has as its principal business objective the
development of novel anti-atherogenic therapies, and has an interest in
acquiring exclusive rights to the project from PNU and continuing the
development of the Compound and pursuing the commercialization thereof; and

     WHEREAS, the parties desire to enter into an agreement pursuant to which
(i) PNU shall transfer and assign to the Company the project and certain patent
rights, know-how and technology relating thereto, (ii) the Company will pursue
the continued development of the Compound and ultimately the commercialization
thereof and (iii) PNU shall have certain options to participate in the
development and marketing of the Compound.

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

SECTION 1.    DEFINITIONS
     For the purpose of this Agreement, the following words and phrases shall
have shall have the meanings set forth below:

1.1  "Affiliate" means, with respect to any Person, any other Person that
      ---------
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under control with such Person.  For purposes hereof, the
term "control" (including, with its correlative meanings, the terms "controlled
      -------                                                        ----------
by" and "under common control with"), with respect to any Person, means the
--       -------------------------
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person (whether through the
ownership of voting securities, by contract or otherwise); provided, that in
                                                           --------
each event in which any Person owns directly or indirectly more than fifty
percent (50%) of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or more than 50% of the
securities having ordinary

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.
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voting power for the election of directors or other governing body of a
corporation or more than fifty percent (50%) of the ownership interest of any
other Person, such Person shall be deemed to control such corporation or other
Person.

1.2  "Aggregate Cash Reserves" means cash and marketable securities.
      -----------------------

1.3  "Assigned Contracts" means the contracts specified in Appendix A hereto.
      ------------------

1.4  "Assigned PNU Patent Rights" means all Patents owned by PNU or its
      --------------------------
Affiliates as of the date of this Agreement and listed in Appendix B hereto.
The Patents listed in Appendix B hereto include Patents (a) which have issued as
of the date of this Agreement, and (b) which issue at any time from applications
(i) pending as of the date of this Agreement or (ii) subsequently filed
worldwide.

1.5  "Company Know-How" means any and all technology, manufacturing and other
      ----------------
know-how, technical information, inventions, discoveries, methods,
specifications and trade secrets owned or Controlled by the Company relating to
the development, manufacture, use, marketing or sale of Licensed Products or any
Improvements with respect thereto.

1.6  "Company Patent Rights" means any and all Patents owned or Controlled by
      ---------------------
the Company claiming inventions necessary or useful to the development,
manufacture, use, marketing or sale of Licensed Products or any Improvements
with respect thereto, including the Assigned PNU Patent Rights.

1.7  "Compound" means the Milano variant of Apolipoprotein A-I.
      --------

1.8  "Confidential Information" means any and all information (in any and every
      ------------------------
form and media) not generally known in the relevant trade or industry, which was
obtained from any party or any Affiliate thereof in connection with this
Agreement or the respective rights and obligations of the parties hereunder,
including, without limitation, (a) information relating to trade secrets of such
party or any Affiliate thereof, (b) information relating to existing or
contemplated products, services, technology, designs, processes, formulae,
research and development (in any and all stages) of such party or any Affiliate
thereof, (c) information relating to the Compound or the Licensed Products, and
(d) information relating to business plans, methods of doing business, sales or
marketing methods, customer lists, customer usages and/or requirements and
supplier information of such party or any Affiliate thereof, except that
                                                             ------
"Confidential Information" shall not include any information which (i) at the
-------------------------
time of disclosure, is generally known to the public, (ii) after disclosure,
becomes part of the public knowledge (by publication or otherwise) other than by
breach of this Agreement by the receiving party, (iii) the receiving party can
verify by written documentation was in its possession at the time of disclosure
and which was not obtained, directly or indirectly, from the other party or any
Affiliate thereof, (iv) the receiving party can verify by written documentation
results from research and development by the receiving party or any Affiliate
thereof independent of disclosures by the other party or any Affiliate thereof
or (v) the receiving party can prove was obtained from any Person who had the
legal right to disclose such

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<PAGE>

information, provided that such information was not obtained to the knowledge
             --------
of the receiving party or any Affiliate thereof by such Person, directly or
indirectly, from the other party or any Affiliate thereof on a confidential
basis.

1.9  "Control" means, with respect to any Licensed PNU Patent Rights or PNU
      -------
Know-How, or any Company Patent Rights Company Know-How, the possession of the
ability to grant a license or sublicense with respect thereto as provided for
herein without violating the terms of any agreement with, or the rights of, any
third Person.

1.10  "FDA" means the United States Food and Drug Administration or any
       ---
successor agency thereof.

1.11  "Governmental Approval" means any and all approvals, licenses,
       ---------------------
registrations or authorizations, including pricing approval and reimbursement,
if required, of any Federal, State or local agency, department, bureau or other
governmental entity, foreign or domestic, necessary for the manufacture, use,
storage, import, transport and sale of the Licensed Products in any regulatory
jurisdiction.

1.12  "Improvements" means any invention, discovery or improvement to the PNU
       ------------
Patent Rights, the PNU Know-How, the Company Patent Rights or the Company Know-
How made, discovered, developed, acquired or Controlled by either party after
the date hereof, whether or not patentable or patented.  For purposes of this
Agreement, "Improvements" shall not include any novel technology, uses,
techniques or methods (whether or not incorporated into or used in connection
with the Licensed Products).

1.13  "Licensed PNU Patent Rights" means all Patents (other than Assigned PNU
       --------------------------
Patent Rights) (i) which have issued as of the date of this Agreement, a list of
which is attached hereto as Appendix C hereto, or (ii) which issue at any time
from applications pending as of the date of this Agreement or subsequently filed
worldwide and claiming priority from such pending application, now owned or
Controlled during the term of this Agreement, by or on behalf of PNU or any of
its successors or Affiliates, claiming inventions necessary or useful to the
development, manufacture, purification, formulation, use, marketing or sale of
the Compound and/or the Licensed Products or any Improvements with respect
thereto.

1.14  "Licensed Product" means any pharmaceutical product including the Compound
       ----------------
as its active ingredient the manufacture, use or sale of which (i) would
infringe one of the issued, valid unexpired claims or one of the pending claims
contained in the PNU Patent Rights in any country or (ii) involves use of the
PNU Know-How.

1.15  "NDA" means a complete New Drug Application and all supplements thereto
       ---
filed with the FDA, including all documents, data and other information
concerning a Licensed Product which are necessary for, or included in, FDA
approval to market such Licensed Product as more fully defined in 21 C.F.R.
(S)314.5 et seq.
         ------

1.16  "Net Sales" means gross receipts received by any party and/or such party's
       ---------
Affiliates for sale of the Licensed Products, less the sum of the following
(collectively, "Permitted Deductions"):
                --------------------

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        (i)    discounts and rebates allowed in amounts customary in the trade;

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

        (iii)  outbound transportation and delivery charges (including insurance
               premiums related to transportation and delivery), prepaid or
               allowed;

        (iv)   amounts repaid, allowed or credited on returns; and

        (v)    commissions paid or allowed to distributors, dealers and agents
               which are not Affiliates of such party.

     In the event of any sale of the Licensed Products by any party to any
Affiliate thereof for resale to its customers, "Net Sales" shall be based on the
                                                ---------
greater of the amount actually received by such party from its Affiliate or the
amount actually received by such Affiliate from its customers for the sale of
the Licensed Products, less (in either such case) the Permitted Deductions.
                       ----

     If any party or any of its Affiliates sells any Licensed Products in
combination with other items which are not Licensed Products such as other
active compounds or convenience systems ("Other Items") at a single invoice
                                          -----------
price, "Net Sales" for purposes of computing royalty payments on the combination
        ---------
shall be determined as follows:

        (a)  if all Licensed Products and Other Items contained in the
             combination are available separately, "Net Sales" for purposes of
                                                    ---------
             computing royalty payments shall be determined by multiplying Net
             Sales of the combination by the fraction A/(A+B), where A is the
             selling price of all Licensed Products at comparable doses and
             strengths in the combination and B is the selling price of all
             Other Items in the combination;

        (b)  if the combination includes Other Items which are not sold
             separately (but all Licensed Products contained in the combination
             are available separately), "Net Sales" for purposes of computing
             royalty payments shall be determined by multiplying Net Sales of
             the combination by A/C, where A is as defined above and C is the
             selling price of the combination; and

        (c)  if neither the Licensed Products nor the Other Items contained in
             the combination are sold separately, "Net Sales" for purposes of
                                                   ---------
             computing royalty payments shall be determined by multiplying Net
             Sales of the combination by the fraction D/(D+E), where D is the
             cost of manufacture of all Licensed Products in the combination and
             E is the cost of manufacture of all Licensed Products in the
             combination, all as reasonably determined by the parties or, if the
             parties are unable to agree, by an independent third party mutually
             agreed upon by the parties or, if the parties are unable to agree
             upon such third party within fifteen (15) days after either party
             requests that such third party make such determination, by
             arbitration as provided in Section 14.2 hereof (which determination
             shall be conclusive).

                                       4
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1.17  "Patent" means (i) unexpired letters patent (including inventor's
       ------
certificates) which have not been held invalid or unenforceable by a court of
competent jurisdiction from which no appeal can be taken or has been taken
within the required time period, including, without limitation, any
substitution, extension (such as supplementary protection certificates),
registration, confirmation, reissue, re-examination, renewal or any like filing
thereof, and (ii) pending applications for letters patent, including without
limitation any continuation, division or continuation-in-part thereof and any
provisional applications, and any foreign counterparts and all patents that
issue therefrom.

1.18  "Person" means any individual, estate, trust, partnership, joint venture,
       ------
association, firm, corporation or company, or governmental body, agency or
official.

1.19  "PNU Patent Rights" means, collectively, the Assigned PNU Patent Rights
       -----------------
and the Licensed Patent Rights.

1.20  "PNU Know-How" means any and all technology, manufacturing and other know-
       ------------
how, technical information, inventions, discoveries, methods, specifications and
trade secrets owned or Controlled by PNU as of the date hereof relating to the
Compound or the Licensed Products (the nature of which is described in the
internal reports of PNU listed or referred to in Appendix D hereto), and any
Improvements with respect thereto.

1.21  "U.S. Dollars" and the sign "$" each means lawful currency of the United
       ------------
States of America.

                              SECTION 2. GRANT

2.1  Transfer of Rights.  Upon the terms and subject to the conditions herein
     ------------------
stated, PNU hereby sells, assigns, transfers, conveys and delivers to the
Company, and the Company hereby purchases and accepts from PNU, good and valid
title to all of the Assigned PNU Patent Rights, free and clear of all liens and
other defects in title.  On the date hereof, or from time to time hereafter in
and to the extent the Company shall so request in order to give effect to this
Agreement, PNU shall, and shall cause its Affiliates to, deliver to the Company
(I) such specific assignments, bills of sale, endorsements and other good and
sufficient instruments of conveyance and transfer, in form and substance and
reasonably satisfactory to the Company, as shall be effective to assign and vest
in the Company good and valid title to all of the Assigned PNU Patent Rights,
free and clear of all liens and other defects in title, and (ii) originals or
copies of all records relating to the Assigned PNU Patent Rights, including
originals of any certificates of registration of any Assigned PNU Patent Rights
or renewals thereof.

2.2  Grant of License.  Upon the terms and subject to the conditions herein
     ----------------
stated, PNU hereby grants the Company an exclusive, worldwide license under the
Licensed PNU patent Rights and PNU Know-How to develop, make, use, import,
export, offer for sale and sell, and to have developed, made, used, imported,
exported, offered for sale and sold, the Licensed Products, with the right to
grant sublicenses.  The grant of any

                                       5
<PAGE>

sublicense shall not exceed the scope of the license granted to the Company
pursuant to this Agreement.

2.3  Delivery of PNU Know-How.  PNU shall deliver to the Company as soon as
     ------------------------
reasonably practicable after the date hereof copies of all of its records, data
and documentation relating to the PNU Know-How, including, without limitation,
scientific data and regulatory submissions and documentation, manufacturing
process, reagents, expression systems, formulations and other information
relevant to the Compound and/or the development, manufacture, purification,
formulation, use or marketing of any Licensed Products.  In addition, PNU shall
make available to the Company the necessary and appropriate PNU personnel who
are familiar with the PNU Know-How for a reasonable period of consultation at no
cost to the Company, in order to effect the transfer of the PNU Know-How to the
Company.

2.4  Delivery of Improvements.  To provide an ongoing procedure for the transfer
     ------------------------
of Improvements, PNU and the Company shall meet on a periodic basis (but not
less frequently than annually) to discuss Improvements to which either party may
wish to have access and obtain rights thereto in accordance with the provisions
of this Agreement.

2.5  Patent Assignment Procedure.  PNU shall execute and deliver to the Company
     ---------------------------
such patent assignments and such other instruments of transfer and conveyance,
in form and substance satisfactory to the requirements of each patent office, as
shall be effective to vest and/or confirm in the Company good and marketable
title to all of the Assigned PNU Patent Rights.  The Company shall perform and
accomplish all the other procedures for transfer and conveyance of the Assigned
Patent Rights required by applicable laws, decrees and regulations.  The
expenses incurred hereunder for transfer and conveyance of the Assigned PNU
Patent Rights, including reasonable attorneys' fees and expenses, shall be
shared equally by PNU and the Company.  The Company shall be responsible for all
costs relating to maintenance of the Assigned Patent Rights.

2.6  Assigned Contracts.  PNU hereby assigns and transfers to the Company and
     ------------------
the Company hereby accepts from PNU all PNU's rights and obligations under the
Assigned Contracts.  The transfer of each of the Assigned Contracts to the
Company is conditional upon consent to the assignment and transfer, where so
required, being obtained by PNU from the other party to the Assigned Contract,
and nothing in this Agreement shall be deemed to constitute an assignment or an
attempt to any Assigned Contract with any third party if the attempted
assignment thereof, without the consent of any such third party, would
constitute a breach thereof or adversely affect in any way the rights of PNU
thereunder.  If, after PNU has used reasonable efforts to obtain such consent
from any such third party, any such consent shall not have been obtained, PNU
shall cooperate with the Company, at the Company's expense, in any reasonable
arrangement designed to provide for the Company the benefits of such Assigned
Contract, provided that the Company also undertakes to perform and discharge the
          --------
outstanding obligations and liabilities of PNU under such Assigned Contract.

                                       6
<PAGE>

                           SECTION 3. DEVELOPMENT

3.1  Development Effort.  The Company shall use its reasonable good faith
     ------------------
efforts to pursue the development of the Compound, including the necessary
manufacturing, process development, preclinical and clinical trials and
preparation and prosecution of regulatory submissions, and ultimately shall use
its reasonable good faith efforts to pursue commercialization of the Compound,
either on its own or in conjunction with one or more other Persons, as
determined by the Company.

3.2  Transfer of Materials.  PNU shall transfer and as soon as practicably
     ---------------------
possible deliver to the Company, at the location(s) specified by the Company,
all of its existing supplies and materials relating to the Compound and/or any
Licensed Products, including, without limitation, the Compound, finished
product, intermediates and formulation materials, master cell lines, antibodies
and any available custom-designed reagents, at no cost to the Company.

3.3  Rights of Election.  Upon completion of the Company's data analysis of
     ------------------
Phase IIb trials in the United States for the initial indication of the
Compound, the Company shall furnish written notice of such completion to PNU,
together with a written summary of the results thereof and, upon PNU's written
request, all written documentation reasonably necessary for PNU to review and
evaluate such data analysis and the results thereof.  PNU shall have the right
to elect, within ninety (90) days after receipt of such notice and summary (or,
if requested by PNU, the receipt by PNU of the written documentation), to
participate in the further development and/or marketing of the Compound pursuant
to one of the following two options:

        (i)  PNU may elect to have the exclusive right to co-develop and the
             exclusive right to market the Licensed Products in countries other
             than the United States and Canada, with the right to grant
             sublicenses in such countries (i.e., other than in the United
                                            ---
             States and Canada) and, if the Company chooses to pursue a co-
             development and co-promotion arrangement in the United States and
             Canada and with a third Person such as PNU, the right of first
             negotiation to co-develop and co-promote the Licensed Products in
             the United States and Canada. In the event that PNU makes such
             election and desires to exercise its right of first negotiation
             with respect to such rights for the United States and Canada, it
             shall give written notice thereof to the Company and, if the
             Company chooses to pursue such arrangement with another Person for
             co-development and co-production in the United States and Canada,
             the Company shall first offer such rights to PNU, and the Company
             and PNU shall enter into good faith negotiations for such rights.
             If the parties have been unable to enter into a mutually acceptable
             binding Heads of Agreement containing the basic terms of such a
             transaction within four months after such notice is given by PNU,
             then the Company may offer such rights to a third Person without
             further obligation to PNU; provided that the financial terms of
                                        --------
             such

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<PAGE>

             transaction, when taken in their entirety, are not more favorable
             to the third Person than the terms offered by PNU. In no event
             shall the Company pursue any discussions with a third Person
             without having first responded to a proposal made by PNU during
             such four month period.

        (ii) PNU may elect not to participate in the development or marketing of
             the Licensed Products.

     In the event that PNU does not deliver to the Company a written notice of
its election pursuant to the foregoing clause (i) or (ii) within ninety (90)
days after receipt of the notice and summary described in the firs sentence of
this Section 3.3, then PNU shall be deemed to have elected the option provided
in the foregoing clause (ii) of this Section 3.3.

     In the event that PNU makes the election provided in clause (i) of this
Section 3.3, PNU shall use its reasonable good faith efforts to commit the
resources necessary to develop and market the Licensed Products in the countries
in which PNU has exclusive marketing rights, including a collaborative global
strategy wherein studies conducted in the respective countries of the Company
and PNU will be, wherever possible, useful in submissions to regulatory
authorities in their respective countries.  In the event that PNU makes the
election provided in clause (i) of this Section 3.3, then resource allocation,
development and commercialization strategies shall be discussed jointly by the
parties in order to coordinate their respective activities for such countries in
which they have marketing rights, such discussions to be conducted through a
joint steering committee, to consist of an equal number of designees from each
of the Company and PNU, with disputes relating thereto to be resolved in
accordance with the provisions of this Agreement.

3.4  Development Charges.  All costs incurred by the Company in the development
     -------------------
of the Licensed Products, including, without limitation, payments for clinical
trials and other studies, tests and all filings and applications and other
actions necessary for achieving Governmental Approval of the Licensed Product,
shall be the sole responsibility of the Company, unless PNU elects the option
provided in clause (i) of Section 3.3 and pursuant to the provisions thereof the
Company grants co-development and marketing rights to PNU in the United States,
in which case the costs incurred by either party after completion of the Phase
IIb clinical trials in the United States shall be shared as mutually agreed upon
by the parties.

3.5  Manufacturing.  In the event that PNU elects the option provided in clause
     -------------
(i) of Section 3.3 and the parties enter into a marketing or co-promotion
agreement as the result of which PNU has certain rights to market and sell the
Licensed Products, the Company shall be and become the exclusive supplier to
PNU, its Affiliates and sublicensees of the Licensed Products for those
countries in which PNU has such marketing rights.  The supply of clinical trial
materials and commercial product shall be a  follows:

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<PAGE>

3.5.1  Clinical Trial Materials.  The Company shall provide to PNU clinical
       ------------------------
trial materials in accordance with the specifications of PNU, and will be
invoiced at the Company's fully burdened costs.

3.5.2  Commercial Product.  The Company and PNU shall enter into a separate
       ------------------
supply agreement incorporating a transfer price (including royalties) for
finished product equal to [**] of the Net Sales of the Licensed Products by PNU
and its Affiliates up to the first [**] in any given annual period and [**] of
the portion of Net Sales of the Licensed Products by PNU and its Affiliates
which is in excess of [**] in such annual period. The Company shall have both
primary and secondary sources for its production of commercial quantities of the
Licensed Product, and PNU shall be given the option of serving as a primary or
secondary vendor of manufacturing services.

                  SECTION 4.    ROYALTIES AND OTHER PAYMENTS

4.1  Initial License Fee.  The Company shall pay to PNU an initial license fee
---  -------------------
of 750,000 in cash, which initial license fee shall be paid within ninety (90)
days after the execution of this Agreement.

4.2  Milestone, Development and Royalty Obligations.

     4.2.1  For the rights, privileges and licenses granted hereunder, the
parties shall pay the following amounts to each other in the manner hereinafter
provided during the term of this Agreement:

        4.2.1.1  Upon completion of clinical studies showing preliminary safety
and initial proof-of-concept (which may include early Phase IIa studies), the
Company shall pay to PNU $1,000,000 in cash or by issuance of a promissory note,
with the form of payment to be at the exclusive option of the Company. In the
event that such payment is made by promissory note, the terms thereof shall be
as described in Section 4.2.2.

        4.2.1.2  In the event that PNU elects the option provided in clause (i)
of Section 3.3, the parties shall make the payments to each other provided in
this Section 4.2.1.2. In the case of milestone payments made by the Company to
PNU, such payments ,may be in the form of cash or a promissory note, as
determined by the Company, except that a milestone payment in cash if the amount
thereof is less than ten percent (10%) of the then Aggregate Cash Reserve of the
Company. The Company shall notify PNU whether it is obligated to pay the
milestone payment in cash, based upon its Aggregate Cash Reserves, and provide
financial documentation related thereto. Upon PNU's written request, PNU shall
have the right to arrange for an independent third party audit to verify whether
the Company shall be obligated to pay a milestone payment in cash, and the
Company will cooperate in such audit making available its financial books and
records to such auditor during normal business hours. If there is a discrepancy
of greater than five percent (5%) in PNU's favor, PNU shall be entitled to
reimbursement of

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       9
<PAGE>

the reasonable cost of such audit and, if such audit discloses that PNU shall
have been entitled to receive a milestone payment in cash that the Company paid
in the form of a promissory note shall be returned to the Company for
cancellation. If such payment is made by promissory note, the terms thereof
shall be as described in Section 4.2.2. The payments to be made pursuant to this
Section 4.2.1.2 are as follows:

(i)  a milestone payment in the amount of $2,500,000 shall be made by the
     Company to PNU upon the granting of Governmental Approval for marketing of
     the initial Licensed Product in the United States;

        (ii)   the Company shall pay to PNU royalties in the amount of [**] of
               the Net Sales of the Licensed Product by the Company and its
               Affiliates up to the first [**] of Net Sales in any annual period
               and [**] of the Net Sales of the Licensed Product by the Company
               and its Affiliates in excess of [**] in such annual period,
               except that the Company shall pay PNU [**] of the royalties
               received by the Company based on the Net Sales of the Licensed
               Products by its sublicensees (other than PNU, its Affiliates and
               sublicensees) and [**] of any and all license fees and milestone
               payments received by the Company (other than from PNU, its
               Affiliates and sublicensees) or [**] of the Net Sales of its
               sublicensees (other than PNU, its Affiliates and sublicenses),
               whichever is greater;

        (iii)  PNU shall pay to the Company royalties in the amount of [**] of
               the Net Sales of the Licensed Products by PNU and its Affiliates
               up to the first [**] of Net Sales in any annual period and [**]
               of the portion of Net Sales of the Licensed Products by PNU and
               its Affiliates which is in excess of [**] in such annual period;
               and

        (iv)   in the event that PNU has granted sublicensees to any Person
               other than the Company or any Affiliate thereof, PNU shall pay
               the Company [**] of any and all payments received by PNU and/or
               any of is Affiliates from such sublicensees (including, without
               limitation, any royalties, sublicense issue fees, lump sum
               payments, technology transfer payments or other similar fees and
               payments) or [**] of the Net Sales of PNU's sublicensees,
               whichever is greater.

     If PNU and the Company enter into a definitive co-development and co-
promotion agreement with respect to the United States and Canada pursuant to
clause (i) of this Section 3.3, [**] of the amount of the milestone payment
payable by the Company pursuant to clause (i) of this Section 4.2.1.2. shall be
credited against future royalties owned by the Company to PNU hereunder.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       10
<PAGE>

4.2.1.3  In the event that PNU elects the option provided in clause (ii) of
Section 3.3, the Company shall make the payments to PNU provided in this Section
4.2.1.3.  In the case of milestone payments made by the Company to PNU, such
payments may be in the form of cash or a promissory note, as determined by the
Company, except that a milestone payment will be made in cash if the amount
thereof is less than ten percent (10%) of the then aggregate cash reserves of
the Company.  If such payment is made by promissory note, the terms thereof
shall be as provided in Section 4.2.2.  The payments to be made pursuant to this
Section 4.2.1.3 are as follows:

(i)  a milestone payment in the amount of $1,500,000 shall be made by the
     Company to PNU upon the enrollment of the first patient in the first Phase
     III trial for the initial Licensed Product in the United States;

        (ii)   a milestone payment in the amount of $2,000,000 shall be made by
               the Company to PNU upon the filing of the first NDA with respect
               to marketing of the initial Licensed Product in the United
               States;

        (iii)  a milestone payment in the amount of $2,000,000 shall be made by
               the Company to PNU upon the filing of the first application with
               the applicable regulatory authorities for Governmental Approval
               of the marketing of the initial Licensed Product in any two of
               the following countries: France, Italy, Germany and the United
               Kingdom;

        (iv)   a milestone payment in the amount of $4,000,000 shall be made by
               the Company to PNU upon the final approval by the FDA of the
               first NDA with respect to the marketing of the initial Licensed
               Product in the United States;

        (v)    a milestone payment in the amount of $4,000,000 shall be made by
               the Company to PNU upon final Governmental Approval of the first
               application to market the initial Licensed Product in any two of
               the following countries: France, Italy, Germany and the United
               Kingdom; and

        (vi)   the Company shall pay to PNU royalties in the amount of [**] of
               the Net Sales of the Licensed Products by the Company and its
               Affiliates up to the first [**] of Net Sales in any annual period
               and [**] of the Net Sales of the Licensed Products by the Company
               and its Affiliates in excess of [**] in such annual period,
               except that the Company shall pay PNU [**] of the royalties
               received by the Company based on the Net Sales of the Licensed
               Products by its sublicensees (other than PNU, its Affiliates and
               sublicensees) and [**] of any and all license fees and milestone
               payments received by the Company

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       11
<PAGE>

               (other than from PNU, its Affiliates and sublicensees) or [**] of
               the Net Sales of its sublicensees (other than PNU, its Affiliates
               and sublicensees), whichever is greater.

     The Company shall be entitled to a credit against future royalties
otherwise payable by the Company to PNU hereunder in an amount equal to [**] of
the amount of the milestone payments paid by the Company pursuant to clause (i,
(ii) and (iii) of this Section 4.2.1.3 and [**] of the amount of the milestone
payments paid by the Company pursuant to clauses (iv) and (v) of this Section
4.2.1.3. In no event shall the Company be entitled to use such credits to offset
than [**] of the royalties otherwise payable to PNU with respect to any calendar
year, and any unused credits shall be carried over and used by the Company in
subsequent years.

                4.2.2  Each promissory note, if any, delivered by the Company to
        PNU as a milestone payment pursuant to this Section 4 shall (i) be
        issued by the Company to PNU and be dated the date such milestone
        payment is due, (ii) be assignable by the holder thereof, (iii) bear
        interest at the prime rate per annum plus [**] using the prime rate as
        quoted in The Wall Street Journal on the date such milestone payment
                                -----------------------
        is due and (iv) provide for the payment of the principal amount thereof,
        together with interest thereon to the date of payment, on the first to
        occur of (a) the fifth anniversary of the date on which such milestone
        payment is due or (b) the closing date of the first public offering of
        securities of the Company which results in receipt by the Company of net
        proceeds of at least [**]. Each such note shall also provide that it may
        be prepaid in full at any time without penalty.

4.3  Limitation on Royalties.  Notwithstanding anything to the contrary
---  -----------------------
contained herein, (a) no royalties shall be payable by any party hereunder with
respect to the Net Sales of the Licensed Products to any of its Affiliates or by
any of such party's Affiliates to any other Affiliate thereof, and (b) no
multiple royalties shall be payable in the event that any of the Licensed
Products or the manufacture, use or sale thereof is covered by more than one
percent included in the PNU Patent Rights.

4.4  Royalties to Third Persons.  The parties recognize that acquisition of
---  --------------------------
various technologies in the future development work on the Compound or the
Licensed Product by the Company may require the Company to undertake royalty
obligations to third parties.  The parties further recognize that such royalty
obligations may render the project financially unacceptable.  Therefore, if the
Company contemplates the acquisition of new valuable technologies for the
development of the Compound or the Licensed Product prior to the Company's
notice of completion to PNU pursuant to Section 3.3, and which acquisition
includes royalty obligations that may render the project financially
unacceptable, the parties agree to discuss suitable arrangements to accommodate
for such acquisition of technology, which may include the absorption by PNU of
part of such third party royalty (and PNU agrees to consider any reasonable such
arrangements in good faith).

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       12
<PAGE>

4.5  Withholding Taxes.  The parties acknowledge and agree that there may be
deducted from any payments or royalties otherwise due and payable hereunder any
taxes or other payments required to be withheld under applicable law with
respect to such payments or royalties or otherwise relating to the Licensed
Product.

                SECTION 5. PAYMENT OF ROYALTIES, ACCOUNTING FOR
                           ROYALTIES, RECORDS, ETC.

5.1  Payment.  Royalties payable hereunder shall be paid within 30 days after
---  -------
the end of each calendar quarter, based on the Net Sales of the Licensed
Products by the parties and their respective Affiliates during the preceding
calendar quarter.  Such payments shall be accompanied by a statement setting
forth the Net Sales of the Licensed Products.

5.2  Accounting; Foreign Currency.  The aggregate amount of the Net Sales of the
---  ----------------------------
Licensed Products used for computing the royalties payable hereunder shall be
computed in U.S. Dollars, and all payments of such royalties shall be made in
U.S. Dollars.  For purposes of determining the amount of royalties due, the
amount of the Net Sales of the Licensed Products in any foreign currency shall
be computed by converting such amounts into U.S. Dollars at the prevailing
commercial rate of exchange for purchasing U.S. Dollars, as quoted in The Wall
Street Journal, on the last business day of the calendar quarter with respect to
which such royalty payment is payable hereunder.

5.3  Records.  Each party hereto shall keep for five (5) years complete and
---  -------
accurate records of the Net Sales of the Licensed Products sold by such party
and its Affiliates in sufficient detail to allow the royalties payable by such
party hereunder to be accurately determined.  Each party hereto shall have the
right for a period of five (5) years after receiving any report or statement
with respect to royalties due and payable hereunder by the other party hereto to
appoint an independent accounting firm to inspect and audit the relevant records
of the party furnishing such report or statement and its Affiliates to verify
such report or statement.  Each party hereto and its Affiliates shall make their
records available for inspection and audit by such independent accounting firm
during regular business hours at such place or places where such records are
customarily kept, upon reasonable notice of the other party hereto, to the
extent reasonably necessary to verify the accuracy of the reports and payments
required hereunder.  The cost of any such inspection and audit shall be paid by
the party conducting such inspection and audit, unless such inspection and audit
discloses for any calendar quarter examined that there shall have been a
negative discrepancy of greater than five percent (5%) between the royalties
payable hereunder by the relevant party and the royalties actually paid by the
relevant party with respect to such calendar quarter, in which case the party
paying such royalties shall be responsible for the payment of the entire cost of
such inspection and audit.

                         SECTION 6. PATENT PROSECUTION

6.1  Prosecution Obligation.  The Company shall, at its sole cost and expense,
---  ----------------------
maintain during the term of this Agreement any and all Assigned PNU Patent
Rights.

                                       13
<PAGE>

PNU shall, at its sole cost and expense, apply for, and use its reasonable good
faith efforts to seek issuance of, and maintain during the term of this
Agreement any and all Licensed PNU Patent Rights, in a timely and reasonably
prudent business manner.

                  SECTION 7. REPRESENTATIONS AND WARRANTIES.

7.1  By the Company.  The Company hereby represents and warrants to PNU that (a)
     --------------
the Company has full legal right, power and authority to execute, deliver and
perform its obligations under this Agreement, (b) the execution, delivery and
performance by the Company of this Agreement do not contravene or constitute a
default under any provision of applicable law or its articles or by-laws (or
equivalent documents) or of any agreement, judgment, injunction, order, decree
or other instrument binding upon the Company, (c) all licenses, consents,
authorizations and approvals, if any, required for the execution, delivery and
performance by the Company of this Agreement have been obtained and are in full
force and effect and all conditions thereof have been complied with, and no
other action by or with respect to, or filing with, any governmental authority
or any other Person is required in connection with this execution, delivery and
performance by the Company of this Agreement, (d) this Agreement constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms.

7.2  By PNU.  PNU hereby represents and warrants to the Company that (a) PNU has
     ------
full legal right, power and authority to execute, deliver and perform its
obligations under this Agreement, (b) the execution, delivery and performance by
PNU of this Agreement do not contravene or constitute a default under any
provision of applicable law or of its articles of incorporation or by-laws (or
equivalent documents) or of any agreement, judgment, injunction, order, decree
or other instrument binding upon PNU or otherwise relating to the Compound, the
PNU Patent Rights or the PNU Know-How, (c) all licenses, consents,
authorizations and approvals, if any, required for the execution, delivery and
performance by PNU of this Agreement have been obtained and are in full force
and effect and all conditions thereof have been complied with, and no other
action by or with respect to, or filing with, any governmental authority or any
other Person is required in connection with the execution, delivery and
performance by PNU of this Agreement, (d) PNU is the exclusive owner of all
legal and beneficial right, title and interest in and to the PNU Assigned Patent
Rights, free and clear of any lien, claim or encumbrance or rights of any other
Person, and PNU owns or Controls sufficient legal rights to the PNU Licensed
Patent Rights and the PNU Know-How to grant to the Company the exclusive
licenses and rights contemplated hereby, (e) except as set forth in Schedule 7.2
attached hereto, to the best knowledge of PNU, the practice of the PNU Patent
Rights and/or the PNU Know-How as contemplated by Section 2.2 hereof does not
infringe or violate any patent or other right of any Person, (f) Appendix B
hereto contains a complete and correct list of all Patents owned by PNU or its
Affiliates as of the date hereof claiming inventions relating solely to the
development, manufacture, purification, formulation, use or sale of the
Compound, and (g) this Agreement constitutes a valid and binding agreement of
PNU, enforceable against PNU, in accordance with its terms.

                                       14
<PAGE>

7.3  Due Diligence.  The Company and its consultants have, prior to the
     -------------
execution of this Agreement, conducted a due diligence of the PNU Patent Rights
and the PNU Know-How.  The parties agree that the Company shall not entitled to
raise any claims for compensation for Losses (as defined in Section 8.2.1)
against PNU or its Affiliates insofar as such claims relate to circumstances
that PNU can prove were evidence from the information made available to the
Company and its consultants in the above-mentioned due diligence.  The liability
of PNU under Sections 7.2(d) and (e) hereof shall remain valid for eighteen (18)
months from the effective date of this Agreement, prior to which date the
Company must notify PNU in writing of any claim specifying the exact nature and
the Losses relating to such claim, and after said eighteen (18) month period the
Company shall be precluded from raising claims for compensation for such Losses
against PNU or its Affiliates.

7.4  Survival of Representations and Warrants.  The representations and
     ----------------------------------------
warranties contained herein shall survive the execution, delivery and
performance of this Agreement by the parties, notwithstanding any investigation
at any time on or prior to the date hereof made by or on behalf of any party or
parties.

                  SECTION 8. INFRINGEMENT AND INDEMNIFICATION

8.1  Infringement Claims.
     -------------------

8.1.1  Third Party Infringement.  Each party shall promptly notify the other
       ------------------------
party of its knowledge of any potential or actual infringement of the PNU Patent
Rights or the Company Patent Rights.  The party having the exclusive marketing
rights to Licensed Products in the territory where the infringement takes place
shall have the first option to take such action against infringers as such
party, using prudent business judgment, deems appropriate.  For the purpose of
this Section 8.1, the Company shall be deemed to have the exclusive marketing
rights for U.S. and Canada, even if PNU and the Company conclude a co-promotion
agreement for said countries.  If the party having the exclusive marketing
rights fails to take appropriate action against any infringer within six (6)
months from written notice requesting such action from the other party, then
such other party shall have the right to take action against such infringer.
The party taking action to enforce any of the PNU Patent Rights or the Company
Patent Rights shall do so at its own expense and for its own benefit, except
that if a party with exclusive marketing rights is awarded damages by any court
of under any settlement, it shall report such amounts, less out-of-pocket
expenses, as Net Sales for royalty-related purposes insofar as such amounts
relate to damages for lost sales of Licensed Products.  In the event that any
such infringement shall not have terminated in any country within one (1) year
after the receipt of notice thereof to the party entitled to receive royalties
hereunder with respect to Net Sales of the Licensed Products in such country,
then the party having the marketing rights in such country shall be entitled to
a royalty reduction, on a country-by-country basis, as follows:  if sales of the
product(s) sold by or on behalf of the infringer exceed ten percent (10%) of the

                                       15
<PAGE>

combined sales of such product(s) sold by or on behalf of the infringer exceed
ten percent (10%) of the combined sales of such product(s) and the Licensed
Products, the royalty rate otherwise applicable shall be reduced by twenty-five
percent (25%) of the combined sales, the royalty rate otherwise applicable shall
be reduced by fifty percent (50%).

8.1.2  Third Party Claims.  Except to the extent arising out of a breach of such
       ------------------
party's representations and warranties set forth in Section 7 hereof, each party
shall defend at its own expense any actions brought against it, its Affiliates
or sublicensees alleging that the development, manufacture, marketing, use or
sale of any Licensed Products infringes any claim of any third party Patent in
any country of the world and such party shall pay all damages and costs payable
by such party in such actions.  If any claim or proceeding is made or brought
(or, in the reasonable opinion of such party's outside patent counsel (which
patent counsel must be reasonably acceptable to the other party) set forth in
writing and delivered to the other party, is likely to be made or brought)
against a party, its Affiliates or sublicensees, based on any claim of
infringement or alleged infringement of any third party's patent or other
proprietary rights necessary for the practice of the intellectual property
rights licensed or acquired by either party under this Agreement, then such
party may, in its sole judgment but after consultation with the other party,
settle such claim or proceeding (or potential claim or proceeding) by acquiring
or obtaining a license under such third party patent or other proprietary
rights.  In such case, the party acquiring or obtaining a license may offset one
hundred percent (100%) of the costs of such acquisition or license against any
royalties otherwise payable to the other party up to one percent (1%) of Net
Sales and fifty percent (50%) of such costs exceeding one percent (1%) of Net
Sales, provided that such party may not exercise such right of offset for an
       --------
aggregate amount in excess of fifty percent (50%) of the royalty payments and
other amounts otherwise payable to the other party hereunder.

8.1.3  Revocation or Invalidity Actions.  Each party shall have the right to
       --------------------------------
defend at its own expense all suits or proceedings seeking to have any of its
Patents licensed to the other party hereunder revoked or declared invalid.  If
such party fails to take action in either case at least thirty (30) days prior
to the time that such party is obliged to respond to such suit or proceeding,
the other party shall have the right to take whatever action it deems
appropriate to defend such suit or proceeding.  All costs and expenses
(including attorney's fees) incurred by such party in such action may be
deducted from royalties and/or other amounts otherwise payable to the other
party hereunder from the sale of the Licensed Products in the country where such
revocation or invalidity suit or proceeding is pending, up to a maximum of fifty
percent (50%) of such royalties and/or other payments.

8.1.4  Competing Products.  If, as a result of revocation or invalidation of one
       ------------------
or more of the Patents or unlicensed competition under the PNU Patent Rights,
one or more third Persons begins to sell a product competing with the Licensed
Product (a "Competing Product") in any country of the world, then the party
            -----------------
having the marketing rights in such country shall be entitled to a royalty

                                       16
<PAGE>

reduction, on a country-by-country basis, as follows:  if the sales of the
Competing Product in such country exceed ten percent (10%) of the combined sales
of the Competing Product and the Licensed Products, the royalty rate otherwise
applicable shall be reduced by twenty-five percent (25%), and if sales of such
Competing Product exceed twenty-five percent (25%) of such combined sales, the
royalty rate otherwise applicable shall be reduced by fifty percent (50%).

8.2  Indemnification.
     ---------------

8.2.1  Indemnification by the Company. The Company hereby agrees that it shall
       ------------------------------
be responsible for, indemnify, hold harmless and defend PNU and PNU Affiliates,
and their respective directors, officers, managing members, shareholders,
partners, attorneys, accountants, agents, employees and consultants, and their
respective heirs, successors and assigns (collectively, the "PNU Indemnities"),
                                                             ---------------
from and against any and all claims, demands, losses, liabilities, damages,
costs and expenses (including the cost of settlement, reasonable legal and
accounting fees and any other expenses for investigating or defending any
actions or threatened actions) (collectively, "Losses") suffered or incurred by
                                               ------
any PNU Indemnitee arising out of, relating to, resulting from or in connection
with (a) any actual or alleged injury or death of any Person or damage to any
property caused or claimed to be caused by any Licensed Product marketed or sold
by the Company, but only to the extent the Company has insurance coverage
therefor, (b) the breach of any representation or warranty made by the Company
herein, (c) the default by the Company in the performance or observance of any
of its obligations to be performed or observed hereunder, and (d) any action,
suit or other proceeding, or compromise, settlement or judgment, relating to any
of the foregoing matters with respect to which PNU Indemnitees are entitled to
indemnification hereunder.  The foregoing shall not apply to the extent that
such Losses are due to the willful misconduct or gross negligence of any of the
PNU Indemnitees.

8.2.2  Indemnification by PNU.  PNU hereby agrees that it shall be responsible
       ----------------------
for, responsible for, indemnify, hold harmless and defend the Company and the
Company's Affiliates, and their respective directors, officers, managing
members, shareholders, partners, attorneys, accountants, agents, employees and
consultants, and their respective heirs, successors and assigns (collectively,
the "Company Indemnities"), from and against any and all Losses suffered or
     -------------------
incurred by any of the Company Indemnitees arising out of, relating to,
resulting from or in connection with (a) the breach of any representation or
warranty made by PNU herein, (b) the default by PNU in the performance or
observance of any of its obligations to be performed or observed hereunder, and
(c) any action, suit or other proceeding, or compromise, settlement or judgment,
relating to any of the foregoing matters with respect to which the Company
Indemnitees are entitled to indemnification hereunder.  The foregoing shall not
apply to the extent that such Losses are due to the willful misconduct or gross
negligence of any of the PNU Indemnitees.

                                       17
<PAGE>

8.2.3  Notice of Claims.  In the event that a claim is made pursuant to Section
       ----------------
8.2.1 and 8.2.2 above against any party which seeks indemnification hereunder
(the "Indemnitee"), the Indemnitee agrees to promptly notify the other party
      ----------
(the "Indemnitor") of such claim or action and, in the case of any claim by a
      ----------
third Person against the Indemnitee, the Indemnitor may, at its option, elect to
assume control of the defense of such claim or action; provided, however, that
                                                       --------  -------
(a) the Indemnitee shall be entitled to participate therein (through counsel of
its own choosing) at the Indemnitee's sole cost and expense, and (b) the
Indemnitor shall not settle or compromise any such claim or action without the
prior written consent of the Indemnitee, unless such settlement or compromise
includes a general release of the Indemnitee and all of the other PNU
Indemnities or the Company Indemnities, as the case may be, from any and all
liability with respect thereto.

                          SECTION 9. CONFIDENTIALITY

     The parties each recognize that the Confidential Information of the other
party and any and all Affiliates thereof constitutes valuable confidential and
proprietary information.  Accordingly, the parties each agree that they and
their respective Affiliates shall, during the term of this Agreement and for a
period of five (5) years after the termination hereof for any reason, hold in
confidence all Confidential Information of the other party (including this
Agreement and the terms hereof) and not use the same for any purpose other than
as set forth in this Agreement nor disclose the same to any other Person except
                                                                         ------
to the extent that it is necessary for such party to enforce its rights under
this Agreement or if required by law or any governmental authority (including,
without limitation, the FDA or any stock exchange upon which such party's shares
or other equity securities may be traded); provided, however, if any party shall
                                           --------  -------
be required by law to disclose any such Confidential Information to any other
Person, such party shall give prompt written notice thereof to the other party
and shall minimize such disclosure to the amount required.  Notwithstanding the
foregoing, either party may disclose Confidential Information of the other (a)
to such party's attorneys, accountants and other professional advisors under an
obligation of confidentiality to such party, (b) to such party's banks or other
financial institutions or venture capital sources for the purpose of raising
capital or borrowing money or maintaining compliance with agreements,
arrangements and understandings relating thereto, and (c) to any Person who
proposes to purchase or otherwise succeed (by merger, operation of law or
otherwise) to all of such party's right, title and interest in, to and under
this Agreement, if such Person agrees to maintain the confidentiality of such
Confidential Information pursuant to a written agreement in form and substance
reasonably satisfactory to the parties.  The standard of care required to be
observed hereunder shall be not less than the degree of care which each party or
Affiliate thereof uses to protect its own information of a confidential nature.

                SECTION 10. INTELLECTUAL PROPERTY; IMPROVEMENTS

10.1  Rights to Propriety Technology.  Neither party shall through this
      ------------------------------
Agreement obtain any rights to the other party's proprietary technology except
for such rights as are expressly granted or allocated under this Agreement.

                                       18
<PAGE>

10.2  Improvements and Filing, Prosecution and Maintenance of Patents.
      ---------------------------------------------------------------

10.2.1  Any Improvement to the Compound or any Licensed Product made, discovered
or developed by any party during the term of this Agreement shall be owned
solely by such party, provided that the Company is hereby granted a license upon
                      --------
the terms set forth in Section 2.2 hereof to any such Improvement and under any
PNU Patent Rights and PNU Know-How and under any other intellectual property
rights of PNU relating thereto owned or Controlled by PNU, to the extent that
such Improvement is used solely for the development, manufacture, use,
importation, marketing, offer for sale or sale of any Licensed Product.  If PNU
elects to co-develop and market the Licensed Products, then PNU shall have a
license upon the same terms as granted to the Company with respect to any
Improvements, and under any Company Patent Rights and Company Know-How and under
any other intellectual property rights of the Company relating thereto owned or
Controlled by the Company, to the extent that such Improvement is used solely
for the development, manufacture, use, importation, marketing, offer for sale or
sale of any Licensed Product in the countries in which PNU has marketing rights.
Each party agrees to give the other Party prompt written notice of any
Improvement to the Compound or any Licensed Product discovered or developed by
such party during the term of this Agreement.  Improvements to the Company
Patent Rights and the Company Know-How made, discovered or acquired by the
Company during the term of this Agreement shall be owned by the Company,
provided that with respect to any such Improvement to the Assigned Patents made
--------
or developed by the Company in the nature of a patentable manufacturing process
or technique, PNU shall have the option to acquire, for such consideration as
may be mutually agreed upon by the parties after negotiation in good faith, a
non-exclusive, worldwide license under any intellectual property rights owned or
Controlled by the Company relating to such Improvement, with the right to
sublicense upon obtaining the Company's prior written consent thereto (which
consent shall not be unreasonably withheld), to use such Improvement for
purposes other than (i) to develop, manufacture, use, market or sell the
Licensed Products or any other pharmaceutical products or compounds containing
an apolipoprotein as an active ingredient for medical treatment in the field of
atherosclerosis, or (ii) any such purpose that may be adverse to or in
competition with the interests of the Company.  Improvements to the PNU Patents
and the PNU Know-How made, discovered or acquired by the Company during the term
of this Agreement shall be owned by the Company, provided that PNU shall be
                                                 --------
granted a non-exclusive, free-of-charge, worldwide license under any
intellectual property rights owned or Controlled by the Company relating to such
Improvement, with the right to sublicense, to use such Improvements for purposes
other than to develop, manufacture, use, market or sell pharmaceutical products
or compounds containing an apolipoprotein as an active ingredient for medical
treatment in the field of atherosclerosis.

10.2.2  In the event that any Improvements owned by either party are deemed
patentable, such party shall be entitled to file and prosecute patent
applications related thereto and maintain patents issued thereon, at its own
cost

                                       19
<PAGE>

        and expense. The other party shall render reasonable assistance to such
        party in filing such applications whenever requested to do so, at such
        party's sole cost and expense. The Company and PNU agree to sign and
        execute such forms and documents as may be reasonably requested by the
        other party as being necessary or desirable to vest or confirm in such
        other party title to all such improvements owned by such other party.

                     SECTION 11. LIMITATIONS ON LIABILITY

11.1  No Warranties.  Except as expressly set forth in Section 7 hereof, neither
      -------------
party makes any representations or warranties as to any matter whatsoever.  EACH
PARTY HEREBY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE.

11.2  Limitations of Liability.  UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE
      ------------------------
LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY SPECIAL, CONSEQUENTIAL OR
INDIRECT DAMAGES OF ANY KIND WHATSOEVER.

11.3  Force Majeure.  No party shall be liable for failure or delay in
      -------------
performing any of its obligations hereunder if such failure or delay is
occasioned by compliance with any governmental regulation, request or order, or
by circumstances beyond the reasonable control of the party so failing or
delaying, including, without limitation, Acts of God, war, insurrection, fire,
flood, accident, labor strikes, work stoppage or slowdown (whether or not such
labor event is within the reasonable control of the parties), or inability to
obtain raw materials, supplies, power or equipment necessary to enable such
party to perform its obligations hereunder.  Each party shall (a) promptly
notify the other party in writing of any such event of force majeure, the
expected duration thereof and its anticipated effect on the ability of such
party to perform its obligations hereunder, and (b) make reasonable efforts to
remedy any such event of force majeure.

                         SECTION 12. NON-USE OF NAMES

12.1  Non-use of Names.  Neither party shall use the name of the other party nor
      ----------------
the name of any of Affiliates or employees of such other party, nor any
adaptation thereof, in any advertising, promotional or sales literature without
prior written consent obtained from such other party in each case (which consent
shall not be unreasonably withheld or delayed).

12.2  Insurance.  The Company agrees to obtain and maintain in effect, from and
      ---------
after the first commercial sale of the Licensed Products, appropriate insurance
coverage for the Company's potential liability relating to the marketing and
sale of the Licensed Products consistent with industry standards for similar
companies.

                                       20
<PAGE>

                       SECTION 13. TERM AND TERMINATION

13.1  Term.  This Agreement shall be effective from the date of its execution by
      ----
the parties and, unless sooner terminated in accordance with the provisions of
this Section 13, shall continue until the later to occur of (i) 20 years from
the date of this Agreement, or (ii) the last to expire of any Patent included
within the PNU Patent Rights.

13.2  Events of Default.  Each party shall have the right to terminate this
      -----------------
Agreement upon the occurrence of any of the following events (each, an "Event of
                                                                        --------
Default") with respect to the other party (the "Defaulting Party"):  (a) a
-------                                         ----------------
decree or order shall have been entered by a court of competent jurisdiction
adjudging the Defaulting Party bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, readjustment, arrangement, composition
or similar relief for the Defaulting Party under any bankruptcy law or any other
similar applicable statute, law or regulation, or a decree or order of a court
of competent jurisdiction shall have been entered for the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the
Defaulting Party or a substantial part of its property, or for the winding up or
liquidation of its affairs; and (b) the Defaulting Party shall institute
proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy petition against it, or shall file a petition or answer
or consent seeking reorganization, readjustment, arrangement, composition,
liquidation or similar relief under any bankruptcy or insolvency of it or of a
substantial part of its property, or shall make an assignment for the benefit of
creditors, or shall be unable to pay its debts generally as they become due; or
(c) the Defaulting Party shall commit a material breach of the terms of this
Agreement and the same and all of its effects shall be remedied within 60 days
after written notice thereof is given by the other party to the Defaulting
Party.  The failure by either party to pay the other party any royalties or
other payments when due and payable in accordance with the provisions of Section
5 hereof shall be deemed a material breach of this Agreement.

13.3  Termination.  Each party may terminate this Agreement upon the occurrence
      -----------
of an Event of Default by giving written notice thereof to the other party,
which notice shall specifically identify the reason(s) for such termination.  In
addition, (i) the Company may terminate this Agreement and, PNU, if the option
set forth in Section3.3(i) hereof is elected by PNU, may terminate its co-
development and marketing rights hereunder at any time upon not less than ninety
(90) days' prior written notice to the other party, if the Board of Directors of
such party determines in good faith that the development, manufacture, marketing
or sale of the Licensed Product is not technically or commercially feasible and
such circumstances cannot be overcome by exerting reasonable good faith efforts
as provided in Sections 3.1 and 3.3, provided; that the other party shall have
                                     --------
the right to propose amended terms of this Agreement in order the improve the
technical or commercial feasibility for such party, which proposal such party
agrees to consider in good faith.  Such proposal shall be made in writing within
thirty (30) days following receipt of notice of termination and the party
receiving the proposal shall respond in writing within thirty (30) days
following receipt of such proposal.  (ii) PNU may terminate this Agreement by
giving at least 30 days' prior written notice to the Company in the event that
the Company has not obtained, in the aggregate, at least

                                       21
<PAGE>

$8,000,000 in equity financing within 12 months after the date of execution of
this Agreement.

13.4  Consequences of Termination.  Upon the termination of this Agreement, all
      ---------------------------
rights, privileges and licenses granted by PNU to the Company hereunder,
including the Assigned PNU Patent Rights (by reassignment), shall revert to PNU,
and the Company agrees thereupon to negotiate in good faith with PNU the terms
and conditions under which the Company would be willing to grant PNU a license
under the Company Patent Rights and the Company Know-How to make, use and sell
the Licensed Products, unless this Agreement has been terminated by PNU by
reason of a material breach or default by the Company with respect to its
obligations hereunder that shall not have been cured by the Company within one
hundred twenty (120) days following its receipt of written notice thereof from
PNU specifically describing such breach of default, in which case the Company
shall, without charge to PNU, (i) assign to PNU all of the Company Patent Rights
and the Company Know-How relating solely to the Licensed Products and (ii) grant
to PNU, free of charge, a license under any other Company Patent Rights and
Company Know-How, but only to the extent necessary to permit PNU to make, use
and sell the Licensed Products (with the right to grant sublicenses).  The
termination of this Agreement for any reason shall be without prejudice to (i)
the right of each party to receive all amounts accrued under Section 5 hereof
prior to the effective date of such termination, (ii) the rights and obligations
of the parties pursuant to Sections 6, 8 and 9 hereof, and (iii) any other
remedies as may now or hereafter be available to any party, whether under this
Agreement or otherwise.  Upon the termination of this Agreement (a) the Company
and its Affiliates and sublicensees shall immediately discontinue the
manufacture, use and sale of the Licensed Products, and (b) each party and its
Affiliates shall immediately discontinue the manufacture, use and sale of the
Licensed Products, and (b) each party and its Affiliates shall immediately cease
the use of all Confidential Information obtained from the other party or any
Affiliate thereof.

                           SECTION 14. MISCELLANEOUS

14.1  Notices.  All payments in the form of a promissory note, notices, reports
      -------
and/or other communications made in accordance with this Agreement, shall be
deemed to be duly made or given (i) when delivered by hand, (ii) three days
after being mailed by registered or certified mail (air mail if mailed
overseas), return receipt requested, or (iii) when received by the addressee, if
sent by facsimile transmission or by Express Mail, Federal Express or other
express delivery service (receipt requested), in each case addressed to such
party at its address set forth below (or to such other address as such party may
hereafter designate as to itself by notice to the other party hereto):

                                       22
<PAGE>

     In the case of the Company:

               Esperion Therapeutics, Inc.
               690 KMS Place
               Ann Arbor, MI 48108
               Attention:  President
               Telecopier:  (734)  332-0516

         with a copy to:

               Sills Cummis Radin
                 Tischman Epstein & Gross, P.A.
               One Riverfront Plaza
               Newark, New Jersey 07102
               U.S.A.
               Attention:     Ira A. Rosenberg, Esq.
               Telecopier:    (973)  643-6500

     In the case of PNU:

               Pharmacia & Upjohn AB
               Lindhagensgatan 133
               S-112 87, Stockholm
               SWEDEN
               Attention:    President
               Telecopier:   011-46-8-618-2668

         with a copy to:

               Pharmacia & Upjohn AB
               Legal Department
               Lindhagensgatan 133
               S-112 87, Stockhold
               SWEDEN
               Telecopier:  011-46-8-695-4708

14.2  Amendment, etc.  This Agreement may not be amended or modified, nor may
      ---------------
any right or remedy of any party be waived, unless the same is in writing and
signed by such party or a duly authorized representative of such party.  The
waiver by any party of the breach of any term or provision hereof by any other
party shall not be construed as a waiver of any other subsequent breach.

14.3  No Waiver; Remedies.  No failure or delay by any party in exercising any
      -------------------
of its rights or remedies hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.  The
rights and remedies of the

                                       23
<PAGE>

parties provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.

14.4  Successors and Assigns.  This Agreement shall be binding upon and inure to
      ----------------------
the benefit of the parties and their respective heirs, legal representatives,
successors and permitted assigns; provided that, except as expressly provided
                                  --------
herein, neither party may assign or otherwise transfer this Agreement or any of
its rights, duties or obligations hereunder without the prior written consent of
the other party (which consent shall not be unreasonably withheld or delayed);
except that no such consent shall be required for any assignment or transfer of
this Agreement by either party to an Affiliate thereof (in which case the party
shall give prompt notice of such assignment or transfer to the other party
unless such assignment or transfer is to a wholly-owned subsidiary of such party
in which event no such notice shall be required).

14.5  Relationship of Parties.  The Company and the PNU, are not (and nothing in
      -----------------------
this Agreement shall be construed to constitute them) partners, joint venturers,
agents, representatives or employees of the other party, nor to create any
relationships between them other than that of an independent contractor.
Neither party shall have any responsibility of liability for the actions of the
other party except as specifically provided herein.  Neither party shall have
any right or authority to bind or obligate the other party in any manner or make
any representation or warranty on behalf of the other.

14.6  Expenses.  Unless otherwise provided herein, all costs and expenses
      --------
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party which shall have incurred the same and the
other party shall have no liability relating thereto.

14.7  Entire Agreement.  This Agreement constitutes the entire agreement between
      ----------------
the parties and supersedes all prior proposals, communications, representations
and agreements, whether oral or written, with respect to the subject matter
hereof.

14.8  Severability.  Any term or provision of this Agreement which is invalid or
      ------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions
hereof in any other jurisdiction.

14.9  Counterparts.  This Agreement may be signed in any number of counterparts,
      ------------
each of which shall be deemed an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

14.10  Headings.  The headings used in this Agreement are for convenience of
       --------
reference only and shall not affect the meaning or construction of this
Agreement.

14.11  Governing Law.  This Agreement, including the performance and
       -------------
enforceability hereof, shall be governed by and construed in accordance with the
laws of the State of New York, without reference to choice of law doctrine.  For
purposes of any legal proceedings described in the last sentence of Section
14.12, each party hereby

                                       24
<PAGE>

submits itself for the sole purpose of this Agreement and any controversy
arising hereunder to the jurisdiction of the courts located in the State of New
York and any courts of appeal therefrom, and waives any objection (on the
grounds of lack of jurisdiction, or forum non conveniens or otherwise) to the
exercise of such jurisdiction over it by any such courts.

14.12  Arbitration.  Except as expressly provided herein, any dispute,
       -----------
controversy, or claim arising out of or relating to this Agreement, its
validity, construction or enforceability or the breach of any of the terms or
provisions hereof shall be settled by arbitration under the American Arbitration
Association by a panel of three arbitrators, one selected by each party and the
third selected by the other two arbitrators.  Any arbitration proceeding
commenced by either party shall be held in the New York City, New York
metropolitan area (including Northern New Jersey).  The decision of the
arbitrators shall be final and binding upon the parties and judgment upon the
decision by the arbitrators may be entered in any court of competent
jurisdiction, and execution may be had thereon.  The expense of such
arbitration, including attorneys' fees, shall be allocated between the parties
as the arbitrators may decide and as the claims and interests of each party may
prevail.  Notwithstanding anything to the contrary contained in this Section
14.12, any dispute, controversy or claim relating to actual or threatened
unauthorized use or disclosure of any Confidential Information, or the validity,
applicability, enforceability or infringement of any patent rights, shall not be
required to be submitted to arbitration hereunder and may be resolved by a court
of competent jurisdiction.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written below.

                                PHARMACIA & UPJOHN AB

                                By: /s/ Hans Sievertsson
                                   -----------------------------

                                ESPERION THERAPEUTICS, INC.

                                By: /s/ Roger S. Newton
                                   -----------------------------

                                       25<PAGE>

                                                                    Exhibit 10.3

                              "LICENSE AGREEMENT"

        Confidential treatment requested for portions of this document

         LICENSE AGREEMENT (this "Agreement") dated as of the     day of      ,
1999, (the "Effective Date") by and among Jean-Louis Dasseux, with an address at
7898 Huron Oaks Drive, Brighton, Michigan 48116, Renate Sekul with an address at
Wichernstrasse 13, D-68526 Ladenburg, Germany, Klaus Buttner with an address at
Eichendorffstrasse 6, D-74925 Epfenbach, Germany, Isabelle Cornut with an
address at Meisenweg 10, D-68535 Edingen-Neckarhausen, Germany, Guenther Metz
with an address at Schenkendorfstrasse 1, D-53173 Bonn, Germany, and Jean
Dufourcq with an address at Avenue Schweizer, F-33600 Pessac, France
(individually an "Inventor" and collectively the "Inventors"), and Esperion
                  --------                        ---------
Therapeutics, Inc., a Delaware corporation with a principal place of business at
3621 S. State Street, 695 KMS Place, Ann Arbor, Michigan 48108 (the "Company").

                              W I T N E S S E T H :
                              - - - - - - - - - - -

         WHEREAS, the Inventors own or have exclusive rights to certain patent
rights, proprietary information and know-how with respect to compositions and
uses of peptide mimetics of Apoprotein A-I; and

         WHEREAS, the Company has an interest in acquiring exclusive rights to
the Licensed Patents (as defined below) and non-exclusive rights to the Know-How
(as defined below) from the Inventors and continuing the development thereof and
products based thereon; and

         WHEREAS, the parties desire to enter into an agreement pursuant to
which (i) the Inventors shall license to the Company the Licensed Patents and
Know-How, and (ii) the Company will pursue the continued development of the
Licensed Patents and Know-How and ultimately the commercialization of products
based thereon.

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

                             SECTION 1. DEF1NITIONS

         For the purpose of this Agreement, the following words and phrases
shall have the meanings set forth below:

     1.1 "Affiliate" means, with respect to Company, any other Person that
          ---------
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Company. For purposes hereof,
the term "control" (including, with its correlative meanings, the terms
          -------
"controlled by" and "under common control with", with respect to the Company,
 -------------       -------------------------
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of the

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.
<PAGE>

Company (whether through the ownership of voting securities, by contract or
otherwise); provided that in each event in which any Person owns directly or
indirectly more than 50% of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or more than 50%
of the ownership interest of any other Person, such Person shall be deemed to
control such corporation or other Person.

     1.2 "Confidential Information" means any and all information (in any and
          ------------------------
every form and media) not generally known in the relevant trade or industry,
which was obtained from any party or any Affiliate thereof in connection with
this Agreement or the respective rights and obligations of the parties
hereunder, including, without limitation, (a) information on trade secrets of
such party or any Affiliate thereof, (b) information relating to existing or
contemplated products, services, technology, designs, processes, formulae,
research and development (in any and all stages) of such party or any Affiliate
thereof, (c) information relating to the Licensed Patents, the Know-How or the
Licensed Products, and (d) information relating to business plans, methods of
doing business, sales or marketing methods, customer lists, customer usages
and/or requirements and supplier information of such party or any Affiliate
thereof, except that "Confidential Information" shall not include any
information which (i) at the time of disclosure, is generally known to the
public, (ii) after disclosure, becomes' part of the public knowledge (by
publication or otherwise) other than by breach of this Agreement by the
receiving party, (iii) the receiving party can verify by contemporaneous written
documentation was in its possession at the time of disclosure and which was not
obtained, directly or indirectly, from the other parry or any Affiliate thereof,
(iv) the receiving party can verify by contemporaneous written documentation
results from research and development by the receiving party or any Affiliate
thereof independent of disclosures by the other party or any Affiliate thereof
or (v) the receiving party can prove was obtained from any Person who had the
legal right to disclose such information, provided that such information was not
obtained to the knowledge of the receiving party or any Affiliate thereof by
such Person, directly or indirectly, from the other party or any Affiliate
thereof on a confidential basis.

     1.3 "Control" (i) means with respect to any Licensed Patents, excluding
          -------
Improvement(s), the possession of the ability to grant a license or sublicense
with respect thereto as provided for herein without violating the terms of any
agreement with, or the rights of, any third Person and, (ii) means with respect
to any Know-How and Improvement(s), that such Know-How or Improvement is known
to, in the custody of and owned solely by one or more of the Inventors, and such
Inventors are free to grant a license or sublicense hereunder without violating
the terms of any agreement with, or rights of, any third Person.

     1.4 "FDA" means the United States Food and Drug Administration or any
          ---
successor agency thereof, or equivalent thereof in any country other than the
United States.

     1.5 "Field" means Apoprotein A-I mimetics as described in the Licensed
          -----
Patents for the diagnosis and/or treatment of atherosclerosis and related
metabolic diseases.

                                      -2-
<PAGE>

     1.6 "Governmental Approval" means any and all approvals, licenses,
          ---------------------
registrations or authorizations, including pricing approval, of any Federal,
State or local agency, department, bureau or other governmental entity, foreign
or domestic, necessary for the manufacture, use, storage, import, transport and
sale of the Licensed Products in any regulatory jurisdiction.

     1.7 "Improvement" means any modification of a Licensed Product which is
          -----------
conceived by one or more of the Inventors during the term of this Agreement,
provided that, such modification (i) if unlicensed, would infringe one or more
claims of any Patent included within the Licensed Patents, and (ii) is
Controlled by, such Inventor(s).

     1.8 "Licensed Product" means any product the manufacture, use or sale of
          ----------------
which would infringe at least one claim of any of the Licensed Patents.

     1.9 "Know-How" means any and all non-patented proprietary technology and
          --------
information necessary for the practice of the Licensed Patents, that is
Controlled by one or more of the Inventors.

     1.10 "Licensed Patents" means all Patents(i) which have issued as of the
           ----------------
date of this Agreement, a list of which is attached hereto as Appendix A, (ii)
which consist of applications pending as of the date of this Agreement, a list
of which is attached hereto as Appendix B, and all patents issuing thereon, and
(iii) which consist of any improvement, and in each case described in clauses
(i) through (iii) hereof including any reissue, extension, substitution,
continuation-in-part thereof and any provisional applications and any foreign
counterparts and all patents that issue therefrom Controlled by one or more of
the Inventors.

     1.11 "NDA" means a complete New Drug Application and all supplements
           ---
thereto filed with the FDA, including all documents, data and other information
concerning a Licensed Product which are necessary for, or included in, FDA
approval to market such Licensed Product as more fully defined in 21 C.F.R.
(Sec.)314.5 et seq. For purposes of this Agreement, "NDA" shall also include any
            -------
analogous foreign applications f6r governmental and/or regulatory approval.

     1.12 "Net Sales" means gross receipts received by the Company, whether or
           ---------
not invoiced, and/or its Affiliates for the sale or other disposition of the
Licensed Products, less the sum of the following (collectively, "Permitted
                                                                 ---------
Deductions"):
----------
     (1)  discounts and rebates actually allowed in amounts customary in the
          trade;

     (2)  ales taxes, customs and tariff duties and/or use taxes directly
          imposed and with reference to particular sales;

     (3)  transportation and delivery charges (including insurance premiums
          related to transportation and delivery) prepaid or allowed; and

                                      -3-
<PAGE>

     (4)  amounts actually repaid, allowed or credited on returns.

         In the event of any sale of the Licensed Products by the Company to any
Affiliate for resale to its customers, "Net Sales" shall be based on the greater
                                        ---------
of the amount actually received by the Company from its Affiliate or the amount
actually received by such Affiliate from its customers for the sale of the
Licensed Products, less (in either such case) the Permitted Deductions.

         Where Licensed Products are not sold, but are otherwise disposed of,
the Net Sales of such products for the purpose of computing royalties shall be
the selling price at which such products or products of a similar kind and
quality, sold in similar quantities, are currently being offered for sale by
Company, its sublicensees and/or Affiliates. Where such products are not
currently being offered for sale by Company, the Net Sales of products otherwise
disposed of, for purpose of computing royalties, shall be the average selling
price at which products of similar kind and quality, sold in similar quantities,
are then currently being offered for sale by other manufacturers. Where such
products are not currently sold or offered for sale by Company or others, then
the Net Sales, for the purpose of computing royalties, shall be the Company's
cost of manufacture, determined by Company's accounting procedures, plus fifty
percent (50%).

         If the Company, its sublicensees, or any of its Affiliates sells any
Licensed Products in combination with other items which are not Licensed
Products ("Other Items") at a single invoice price "Net Sales" for purposes
           -----------                              ---------
computing royalty payments on the combination shall be determined as follows:

               (1) if all Licensed Products and Other Items contained in the
          combination are available separately, "Net Sales" for purposes of
          computing royalty payments shall be determined by multiplying Net
          Sales of the combination of the fraction A/A + B, where A is the
          selling price of all Licensed Products in the combination and B is the
          selling price of all Other Items in the combination;

               (2) if the combination includes Other Items which are not sold
          separately (but all Licensed Products contained in the combination are
          available separately), "Net Sales" for purposes of computing royalty
                                  ---------
          payments shall be determined by multiplying Net Sales of the
          combination by A/C, where A is as defined above and C is the selling
          price of the combination; and

               (3) if neither the Licensed Products nor the Other Items
          contained in the combination are sold separately, "Net Sales" for
          purposes of computing royalty payments shall be determined by
          multiplying Net Sales of the combination by the fraction D/D + E,
          where D is the cost of manufacture of all Licensed Products in the
          combination and E is the cost of manufacture of all Other Items in the
          combination, all as reasonably determined by the Company (which
          determination shall be conclusive).

                                      -4-
<PAGE>

     1.13 "Patent" means (i) unexpired letters patent (including inventor's
           ------
certificates) which have not been held invalid or unenforceable by a court of
competent jurisdiction from which no appeal can be taken or has been taken
within the required time period, including, without limitation, any
substitution, extension, registration, confirmation, reissued, reexamination,
renewal or any like filing thereof, and (ii) pending applications for letters
patent.

     1.14 "Person" means any individual, estate, trust, partnership, joint
           ------
venture, association, firm, corporation or company, or governmental body, agency
or official, or any other entity.

     1.15 "U.S. Dollars" and the sign "$" each means lawful currency of the
           ------------                -
United States of America.

                                SECTION 2. GRANT

     2.1 Grant of License. Upon the terms and subject to the conditions herein
         ----------------
stated, the Inventors hereby grant the Company (a) an exclusive, worldwide
license, with the right to grant sublicenses, under the Licensed Patents to
make, have made, use, import, offer for sale, sell and otherwise dispose of the
Licensed Products in the Field, and (b) subject to any pre-existing rights of
third Persons, a non-exclusive worldwide license, with the right to grant
sublicenses, under the Know-How to make, have made, use, import, offer for sale,
sell and otherwise dispose of the Licensed Products in the Field.

     2.2 Delivery of Know-How. Pursuant to the license granted in Section 2.1
         --------------------
hereof, the Inventors shall promptly deliver to the Company originals or copies
of all of their records, data and documentation relating to the Know-How, not
already known to and/or in the possession of the Company as of the Effective
Date.

                             SECTION 3. DEVELOPMENT

     3.1 Development Effort. The Company shall use commercially reasonable
         ------------------
efforts to develop and commercialize the Licensed Products.

     3.2 Development Review. The Company will make available to the Inventors an
         ------------------
annual summary of the Company's development efforts hereunder as follows: The
Inventors hereby designate Dr. Jean-Louis Dasseux as their representative to
receive such annual summaries, which summaries will disclose, in detail
appropriate to the intent of the review, the activities undertaken pursuant to
Section 3.1 hereof and any significant developments during the preceding year.
The Inventors may change their representative on written notice to the Company,
but only to another of the Inventors who is not involved in any competitive
activities in drug discovery or development, or a consultant to or employed by
any third party so engaged. Such annual summaries will be held by

                                      -5-
<PAGE>

the Inventors' representative in confidence. The Inventors may elect at any time
(but not more than once each year) to designate an independent consultant who is
acceptable to both the Company and the Inventors, for the purpose of determining
compliance by the Company with its diligence obligations under Section 3.1
hereof. Such consultant shall enter into a written confidentiality agreement
satisfactory to the Company, and shall disclose to the Inventors only whether
the Company, in the opinion of such consultant, is in compliance with its
diligence obligations under Section 3.1 hereof. The Company will provide such
consultant with commercially reasonable access to information. The consultant
shall conduct his/her review during normal business hours, and in a manner that
does not interfere with the Company's business, and will complete his/her review
within a reasonable time (not to exceed two weeks). The cost of such consultant,
which will be borne solely by the Company, shall not exceed $1500 for each
review plus reasonable out-of-pocket expenses. In the event that the Inventors'
representative or consultant believes that the Company has not made a
commercially reasonable effort pursuant to Section 3.1 hereof, then the parties
shall enter into good faith discussions to resolve the issue(s) raised,
including a cure for the potential breach in diligence, and allowing for a
reasonable period of time within which the breach can be resolved. If the
parties, however, are unable to agree on whether there has, in fact, been a
breach of the Company's diligence obligations under Section 3.1 hereof, then the
dispute will be resolved by binding arbitration, provided that, if the
arbitrator determines that the Company s diligence obligations have not been
satisfied, the Inventors shall have the right to terminate this Agreement and
the Company's rights hereunder.

     3.3 Development Charges. All costs incurred by the Company in the
         -------------------
development of the Licensed Products, including, without limitation, payments
for clinical trials and other studies, tests and all filings and applications
and other actions necessary for achieving Governmental Approval of the Licensed
Products, shall be the sole responsibility of the Company.

                    SECTION 4. ROYALTIES AND OTHER PAYMENTS

     4.1 License Fees. The Company shall pay to the Inventors an initial license
         ------------
fee of $50,000 in cash, which initial license fee shall be paid on the Effective
Date.

     4.2 Milestone and Royalty Obligations.
         ---------------------------------

     4.2.1. For the rights, privileges and licenses granted hereunder, the
Company shall pay the amounts set forth in this Section to the Inventors in the
manner hereinafter provided during the term of this Agreement as follows:

     (1)  a milestone payment in the amount of $50,000 in cash shall be made by
          the Company to the Inventors within fifteen (15) business days after
          the identification of the first lead candidate, which the Company
          decides to advance into pre-phase I evaluation, as a potential
          Licensed Product;

                                      -6-
<PAGE>

     (2)  a milestone payment in the amount of $150,000 in cash shall be made by
          the Company to the Inventors within fifteen (15) business days after
          the enrollment of the first patient in a Phase HI clinical trial for
          the first Licensed Product after generation of data in a Phase H trial
          of data satisfactory to the Company supporting a clinical indication
          for which the Company is seeking approval;

     (3)  a milestone payment in the amount of $300,000 in cash shall be made by
          the Company to the Inventors within fifteen (15) business days after
          submission of the first NDA in the United States or Europe for the
          first Licensed Product;

     (4)  a milestone payment in the amount of $150,000 in cash shall be made by
          the Company to the Inventors within fifteen (15) business days after
          submission of the first NDA in the United States or Europe for the
          second and third Licensed Products;

     (5)  a milestone payment in the amount of $1,000,000 in cash shall be made
          by the Company to the Inventors within fifteen (15) business days
          after approval of the first NDA in the United States or Europe for the
          first Licensed Product; and

     (6)  a milestone payment in the amount of $500,000 in cash shall be made by
          the Company to the Inventors within fifteen (15) business days after
          approval of the first NDA in the United State s or Europe for the
          second and third Licensed Products.

[**] of the milestone payments made pursuant to clauses (iii) through (vi) of
this Section 4.2.1 shall be creditable against future royalties owed by the
Company to the Inventors pursuant to Section 4.2.2 hereof.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                      -7-
<PAGE>

     4.2.2. The Company shall pay to the Inventors royalties in the amount of
[**] of the Net Sales of the Licensed Products by the Company and its
Affiliates, and the Company shall pay the Inventors [**] of the royalties
received by the Company based on the sales of the Licensed Products by its
sublicensees and [**] of all other cash payments received by the Company from
its sublicenses, excluding equity and research payments. In the event that the
Company licenses additional patents from third parties which are required to
practice the Licensed Patents, the Company shall be entitled to reduce Company's
royalty payments to the Inventors hereunder by the amount of such royalty
payments paid by the Company to such third parties; provided that the reduction
for any given year does not reduce the royalties paid to the Inventors for such
year to an amount less than [**] of Net Sales. In the event that no valid
current claims of any Licensed Patent (including any claims of any patent
application included therein) exist in a country with respect to a Licensed
Product, then the royalties otherwise payable by the Company to the Inventors
with respect to such Licensed Product in such country will be reduced by [**].

     4.3 Limitation on Royalties. Notwithstanding anything to the contrary
         -----------------------
contained herein, (a) no royalties shall be payable by the Company with respect
to the Net Sales of the Licensed Products to any of its Affiliates thereof
(although such sales may be used as the basis for calculating Net Sales pursuant
to Section 1. 12 hereof and the royalties payable to the Inventors based upon
such Affiliates' Net Sales), and (b) no multiple royalties shall be payable in
the event that any of the Licensed Products or the manufacture, use or sale
thereof is covered by more than one patent included in the Licensed Patents.

     4.4 Unlicensed Competition. The Company shall promptly notify the
         ----------------------
Inventors, in writing, of any substantial unlicensed competition by any Person
making, using, selling or importing a product in any geographic area which
product infringes one or more claims of any Licensed Patent. If, one (1) year
after such notice by Company, Company, after diligent efforts, has not abated
such infringement (e.g., by sublicense or legal action), Inventors shall
                   ----
negotiate with Company in good faith in an attempt to adjust the royalty
provided in Section 4.2.2 hereof, provided that, Company presents Inventors with
evidence, satisfactory to Inventors, that such unlicensed competition, and not
other market factors, is materially adversely affecting Net Sales.

     4.5 Withholding Taxes. The parties acknowledge and agree that there may be
         -----------------
deducted from any payments or royalties otherwise due and payable hereunder any
taxes or other payments required to be paid by Inventors under applicable law
with respect to such payments or royalties or otherwise relating to the Licensed
Products.

     4.6 Payments to Inventors. All payments to be made by the Company to the
         ---------------------
Inventors under this Agreement shall be made by the Company to Jean-Louis
Dasseux, and the Company shall have no responsibility whatsoever with respect to
the division of any such payment among Inventors or the receipt by any
particular Inventor of any particular portion of any such payment.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                      -8-
<PAGE>

                SECTION 5. PAYMEENT OF ROYALTIES, ACCOUNTING FOR
                            ROYALTIES, RECORDS, ETC.

     5.1 Payment. Royalties payable hereunder shall be paid within 60 days after
         -------
the end of each calendar quarter, based on the Net Sales of the Licensed
Products by the Company and its sublicensees and Affiliates during the preceding
calendar quarter.

     5.2 Accounting Reports. With each quarterly payment, the Company shall
         ------------------
deliver to Jean-Louis Dasseux, on behalf of the Inventors, a full and accurate
accounting that sets forth the following information:

          (a)  total receipts for each Licensed Product sold or otherwise
               disposed of by Company and/or its Affiliates subject to royalty,
               by country, and, to the extent used in any royalty calculations
               during such quarter, the exchange rate set forth in Section 5.3
               of this Agreement;

          (b)  Royalties and other payments received by Company in connection
               with any sublicense of Company's rights under this Agreement, and
               compensation due to Inventors on sales or other disposition of
               Licensed Products by sublicensees and other cash payments
               pursuant to such sublicense; and

          (c)  total royalties and/or compensation payable to the Inventors.

     5.3 Accounting: Foreign Currency. The aggregate amount of the Net Sales of
         ----------------------------
the Licensed Products used for computing the royalties payable hereunder shall
be computed in U.S. Dollars, and all payments of such royalties shall be made in
U.S. Dollars. For purposes of determining the amount of royalties due, the
amount of the Net Sales of the Licensed Products in any foreign currency shall
be computed by converting such amounts into U.S. Dollars at the prevailing
commercial rate of exchange for purchasing U.S. Dollars, as quoted in The Wall
Street Journal, on the last business day of the calendar quarter with respect to
which such royalty payment is payable hereunder.

     5.4 Records. The Company shall keep, and shall cause each of its Affiliates
         -------
and sublicensees to keep, for five (5) years, complete and accurate records of
the Net Sales of the Licensed Products sold in sufficient detail to allow the
royalties payable by the Company to be accurately determined. The Inventors
shall have the right for a period of five (5) years after receiving any report
or statement with respect to royalties due and payable hereunder by the Company
to appoint an independent accounting firm to inspect and audit the relevant
records of the Company and its Affiliates to verify such report or statement.
The Company and its Affiliates shall make their records available for inspection
and audit by such independent accounting firm during regular business hours at
such place or places where such records are customarily kept, upon reasonable
notice to the Company, to the extent reasonably necessary to verify the accuracy
of the reports and payments required hereunder. The cost of any such inspection
and audit shall be paid by the Inventors unless such inspection and audit
discloses for any calendar quarter examined that there shall have been a
discrepancy of greater than seven and one-half

                                      -9-
<PAGE>

percent (7-1/2%) between the royalties payable hereunder by the Company and the
royalties actually paid by the Company with respect to such calendar quarter, in
which case the Company shall be responsible for the payment of the entire cost
of such inspection and audit. In all cases, the Company shall pay to the
Inventors any underpaid royalties promptly and with interest at the prime rate
quoted by Citibank, N.A. on the date such payment was due.

                         SECTION 6. PATENT PROSECUTION

     6.1 Prosecution Obligation. The Company shall apply for, and maintain
         ----------------------
during the term of this Agreement any and all Licensed Patents in the European
Patent Community, Japan, the United States of America and Canada and such other
countries in which the Company desires in its sole discretion to commercialize
the Licensed Products. All reasonable costs and expenses of the prosecution and
maintenance of the Licensed Patents in such countries (including all
governmental filing fees) shall be paid by the Company. The Inventors shall
render reasonable assistance to the Company in filing and prosecuting such
applications and maintaining the Licensed Patents in such countries whenever
requested to do so, at the Company's expense.

                   SECTION 7. REPRESENTATIONS AND WARRANTIES.

     7.1 By the Company. The Company hereby represents and warrants to the
         --------------
Inventors that (a) the Company has full legal right, power and authority to
execute, deliver and perform its obligations under this Agreement, (b) the
execution, delivery and performance by the Company of this Agreement do not
contravene or constitute a default under any provision of applicable law or its
articles or by-laws (or equivalent documents) or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company, (c) all
licenses, consents, authorizations and approvals, if any, required for the
execution, delivery and performance by the Company of this Agreement have been
obtained and are in full force and effect and all conditions thereof have been
complied with, and no other action by or with respect to, or filing with, any
governmental authority or any other Person is required in connection with this
execution, delivery and performance by the Company of this Agreement, (d) this
Agreement constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, and (e) Company's patent
counsel, Patrea Pabst, Esq. has had full access to and has reviewed to her
satisfaction the complete and correct files relating to the prosecution of the
Licensed Patents.

     7.2 By The Inventors. The Inventors hereby jointly and severally represent
         ----------------
and warrant to the Company that (a) the Inventors have full legal right, power
and authority to execute, deliver and perform their obligations under this
Agreement, (b) the execution, delivery and performance by the Inventors of this
Agreement do not contravene or constitute a default under any provision of
applicable law or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Inventors, (c) all licenses, consents,
authorizations and approvals, if any, required for the

                                      -10-
<PAGE>

execution, delivery and performance by the Inventors of this Agreement have been
obtained and are in full force and effect and all conditions thereof have been
complied with, and no other action by or with respect to, or filing with, any
governmental authority or any other Person is required in connection with the
execution, delivery and performance by the Inventors of this Agreement, (d) to
the best knowledge of the Inventors, the Inventors are the exclusive owners of
all legal and beneficial right, title and interest in and to the Licensed
Patents, (e) as of the Effective Date (and without undertaking any independent
investigation), the Inventors are not aware of any patent or other right of any
third Person that would be infringed or violated by the practice of the Licensed
Patents as contemplated by Section 2.1 hereof, (f) the Inventors have caused to
be made available to the Company complete and correct files of their patent
counsel relating to the prosecution of the Licensed Patents, and (g) this
Agreement constitutes a valid and binding agreement of the Inventors,
enforceable against the Inventors, in accordance with its terms.

     7.3 Survival of Representations and Warrants. The representations and
         ----------------------------------------
warranties contained herein shall survive the execution, delivery and
performance of this Agreement by the parties, notwithstanding any investigation
at any time on or prior to the date hereof made by or on behalf of any party or
parties.

                      SECTION 8. THIRD PARTY INFRINGEMENT

     8.1 Third Party Infringement.

         8.1.1. Notice. In the event that either party becomes aware of any
                ------
substantial infringement of the Licensed Patents, such party shall notify the
other party of the substantial infringement in writing and must provide a
summary of the relevant facts and circumstances known to such party relating to
such infringement. Neither party will notify a third Person of the substantial
agreement of any of the Licensed Patents without first obtaining consent of the
other party, which consent shall not be unreasonably withheld or delayed. The
parties agree to consult with each other, prior to the commencement of any legal
or patent office proceedings, as to the most effective way of pursuing such
matter.

         8.1.2. Company Options. During the term of this Agreement, the Company
                ---------------
shall have the right, but shall not be obligated, to prosecute, at its own
expense, any infringements of the Licensed Patents, to defend the Licensed
Patents and to recover, for its own account, any damages, awards or settlements
resulting therefrom. The Inventors hereby agree that the Company may join one or
more of the Inventors as a party plaintiff in any such suit, without expense to
the Inventors. The Company shall hold harmless and indemnify the Inventors from
and against any order for costs arising without fault of the Inventors that may
be made against the Inventors by reason of being named a party plaintiff in such
proceedings. The Company shall have sole control of any such suit and all
negotiations for its settlement or compromise, provided that, the Company shall
not settle or compromise any such suit or enter into any consent order for the
settlement or compromise thereof that adversely affects the Licensed Patents
without

                                      -11-
<PAGE>

the prior written consent of a majority of the Inventors, or Jean-Louis Dasseux
(on behalf of the Inventors), which consent shall not be unreasonably withheld
or delayed. The total cost of any infringement action commenced or defended
solely by the Company shall be borne by the Company.

         8.1.3. Investors' Options. If, within one (1) year after having been
                ------------------
notified of any, potential infringement subject to the provisions of Sections
8.1.2, the Company shall have been unsuccessful in causing the alleged infringer
to desist and shall not have brought and shall not be diligently prosecuting an
infringement action, or if the Company notifies the Inventors at any time prior
thereto of its intention not to bring suit against any alleged infringer, then,
in those events only, the Inventors shall have the right, but shall not be
obligated, to prosecute, at their own expense, any infringements of the Licensed
Patents, to defend the Licensed Patents and to recover, for their own account,
any damages, awards or settlements resulting therefrom. The Company hereby
agrees that the Inventors may join the Company as a party plaintiff in any such
suit, without expense to the Company. The Inventors shall hold harmless and
indemnify the Company from and against any order for costs arising without fault
of the Company that may be made against the Company by reason of being named a
party plaintiff in such proceedings. The Inventors shall have sole control of
any such suit and all negotiations for its settlement or compromise, provided
that the Inventors shall not settle or compromise any such suit or enter into
any consent order for the settlement or compromise thereof that adversely
affects the Licensed Patents or any of the licenses or rights of the Company
hereunder, without the prior written consent of the Company which consent shall
not be unreasonably withheld or delayed. The total cost of any infringement
action commenced or defended solely by the Inventors shall be borne by the
Inventors.

     8.2 Infringement Charges Against the Company. In the event that any action,
         ----------------------------------------
suit or proceeding is brought against, or written notice or threat thereof is
provided to, the Company alleging infringement of any patent or unauthorized use
or misappropriation of technology arising out of or in connection with the
Company's practice of Licensed Patents, the Company shall defend at its own
expense such action, suit or proceeding and, in futherance of such rights, the
Inventors hereby agree that the Company may join one or more of the Inventors as
a party in such suit, without expense to the Inventors. The Company shall hold
harmless and indemnify the Inventors from and against any order for costs
arising without fault of the Inventors that may be made against the Inventors in
such proceedings. The Inventors agree to cooperate with the Company, at the
Company's expense, in connection with the Company's response to or defense of
such action, suit or proceeding, or notice or threat thereof

     8.3 Cooperation. In the event that a party shall undertake the enforcement
         -----------
and/or defense of the Licensed Patents by legal or patent office proceedings
pursuant to this Agreement, the other party shall, at the request and expense of
the party undertaking such enforcement and/or defense, cooperate in all
reasonable respects and, to the extent possible, have its employees testify when
requested and make available relevant records, papers, information, samples and
the like.

                                      -12-
<PAGE>

     8.4 Company Rights. The Company shall have the sole right in accordance
         --------------
with the terms and conditions hereof to sublicense any alleged infringer for
future use of the Licensed Patents to which it has exclusive rights under
Section 2.1 of this Agreement.

                           SECTION 9. INDEMNIFICATION

     9.1 Indemnification. The Company hereby agrees that it shall be responsible
         ---------------
for, indemnify, hold harmless and defend the Inventors and their Affiliates and
heirs, successors and assigns (collectively, the "Indemnities"), from and
against any and all claims, demands, losses, liabilities, damages, costs and
expenses (including the cost of settlement, reasonable legal and accounting fees
and any other expenses for investigating or defending any actions or threatened
actions) (collectively, "Losses") suffered or incurred by any Indemnitee arising
out of, relating to, resulting from or in connection with (a) a claim brought by
a third Person of personal injury (including death) or property damage caused by
a Licensed Product manufactured by or for the Company its Affiliates or
sublicensees, (b) the exercise of any of the rights and/or licenses granted
herein to Company, its Affiliates, or any sublicensee, and (c) any action, suit
or other proceeding, or compromise, settlement or judgment, relating to any of
the foregoing matters described in subparagraph (a) hereof with respect to which
the Indemnitees are entitled to indemnification hereunder. The foregoing shall
not apply to the extent that such Losses are due to the willful misconduct or
gross negligence of any of the Indemnitees.

     9.2 Notice of Claims. In the event that a claim is made pursuant to Section
         ----------------
9.1 above against any Indemnitee, the Indemnitee agrees to promptly notify the
Company of such claim or action and, in any such case the Company shall assume
control of the defense of such claim or action; provided, however, that (a) all
Indemnitees shall be entitled to participate therein (through a single counsel
of their own choosing) at the Indemnitees' sole cost and expense, (b) the
Indemnitees shall fully cooperate with the Company in all reasonable respects,
and (c) the Company shall not settle or compromise any such claim or action
without the prior written consent of the Indemnitees, unless such settlement or
compromise includes a general release of the Indemnities from any and all
liability with respect thereto and does not include an admission of liability on
the part of any Indemnitee, and does not impose any restriction on the conduct
by such Indemnitee of any of its activities.

                          SECTION 10. CONFIDENTIALITY

     10.1 Confidentiality. The parties each recognize that the Confidential
          ---------------
Information of the other party and any and all Affiliates and sublicensees
thereof constitute valuable confidential and proprietary information.
Accordingly, the parties each agree that they and any Affiliates shall, during
the term of this Agreement and for a period of five (5) years after the
termination hereof for any reason, hold in confidence all Confidential
Information of the other party (including this Agreement and the terms hereof)
and not use the same for any purpose other dm as set forth in this Agreement or
disclose the same to any other Person except to the extent that it is necessary
for such

                                      -13-
<PAGE>

party to enforce its rights under this Agreement or if required by law or any
governmental authority (including, without limitation, any stock exchange upon
which such party's shares or other equity securities may be traded); provided,
however' if any party shall be required by law to disclose any such Confidential
Information to any other Person, such party shall give prompt written notice
thereof to the other party and shall minimize such disclosure to the amount
required. Notwithstanding the foregoing, either party may disclose Confidential
Information of the other (a) to such party's attorneys, accountants and other
professional advisors under an obligation of confidentiality to such party, (b)
to such party's banks or other financial institutions or venture capital sources
for the purpose of raising capital or borrowing money or maintaining compliance
with agreements, arrangements and understandings relating thereto, and (c) to
any Person who proposes to purchase or otherwise succeed (by merger, operation
of law or otherwise) to all of such party's right, title and interest in, to and
under this Agreement, if such Person identified in subparagraphs (b) and (c) of
this Section IO. I agrees to maintain the confidentiality of such Confidential
Information pursuant to a written agreement in form and substance reasonably
satisfactory to the parties. The standard of care required to be observed
hereunder shall be not less than the degree of care which each party uses to
protect its own information of a confidential nature. The Company agrees that
any and all Affiliates and sublicensees thereof shall enter into and maintain
appropriate confidentiality agreements prior to receiving Confidential
Information belonging to the Inventors and/or relating to the subject matter of
this Agreement.

                SECTION 11. INTELLECTUAL PROPERTY; IMPROVEMENTS

     11.1 Rights to Propriety Technology. Neither party shall through this
          ------------------------------
Agreement obtain any rights to the other party's proprietary technology except
for such rights as are expressly granted or allocated under this Agreement.

     11.2 Improvements and Filing, Prosecution and Maintenance of Patents.
          ---------------------------------------------------------------

          11.2.1. Any improvement to the Licensed Patents, the Know-How or any
Licensed Product discovered or developed by any party during the term of this
Agreement shall be owned solely by such party, provided that, any Improvement
shall be subject to the license granted to Company under Section 2. 1(c) hereof.

          11.2.2. Subject to Company'sobligationsetforthinSection6.lhereofifany
improvements owned by either party are deemed patentable, such party shall be
entitled to file and prosecute patent applications related thereto and maintain
patents issued thereon, in its own name and, at its own cost. The other party
shall render reasonable assistance to such party in filing such applications
whenever requested to do so, at such party's sole cost and expense. The Company
and the Inventors agree to sign and execute such forms and documents as may be
reasonably requested by the other party as being necessary or desirable to vest
or confirm in such other party title to all such improvements owned by such
other party.

                                      -14-
<PAGE>

                     SECTION 12. LIMITATIONS ON LIABILITY

     12.1 No Warranties. Except as expressly set forth in Section 7 hereof,
          -------------
neither party makes any representations or warranties as to any matter
whatsoever. EACH PARTY HEREBY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED PATENTS, THE
KNOW-HOW AND THE LICENSED PRODUCTS, INCLUDING, WITHOUT LMTATION, ANY WARRANTIES
OF MERCHANTABI]LITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

     12.2 Limitations of Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE
          ------------------------
LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY SPECIAL, CONSEQUENTIAL OR
INDIRECT DAMAGES OF ANY KIND WHATSOEVER.

     12.3 Force Majeure. No party shall be liable for failure or delay in
          -------------
performing any of its obligations hereunder if such failure or delay is
occasioned by compliance with any governmental regulation, request or order, or
by circumstances beyond the reasonable control of the party so failing or
delaying, including, without limitation, Acts of God, war, insurrection, fire,
flood, accident, labor strikes, work stoppage or slowdown (whether or not such
labor event is within the reasonable control of the parties), or inability to
obtain raw materials, supplies, power or equipment necessary to enable such
party to perform its obligations hereunder. Each party shall (a) promptly notify
the other party in writing of any such event of force majeure, the expected
duration thereof and its anticipated effect on the ability of such party to
perform its obligations hereunder, and (b) make reasonable efforts to remedy any
such event of force majeure.

                          SECTION 13. NON-USE OF NAMES

     Neither party shall use the name of the other party nor the name of any of
Affiliates or employees of such other party, nor any adaptation thereof, in any
advertising, promotional or sales literature without prior written consent
obtained from such other party in each case (which consent shall not be
unreasonably withheld or delayed).

                           SECTION 14. PATENT MARKING

     The Company shall mark all Licensed Products made, used, offered for sale,
sold or imported under this Agreement, or their containers, in accordance with
the applicable patent marking laws.

                                      -15-
<PAGE>

                        SECTION 15. TERM AND TERMINATION

     15.1 Term. This Agreement shall be effective from the date of its execution
          ----
by the parties and, unless sooner terminated in accordance with the provisions
of this Section 15, shall continue until the later to occur of (i) 10 years from
the date of this Agreement, or (ii) the last to expire of any Patent included
within the Licensed Patents.

     15.2 Events of Default. Each party shall have the right to terminate this
          -----------------
Agreement upon the occurrence of any of the following events (each, an "Event of
                                                                        --------
Default") with respect to the other party (the "Defaulting Party"): (a) to the
-------                                         ----------------
extent permitted by law, the Inventors may terminate this Agreement if a decree
or order shall have been entered by a court of competent jurisdiction adjudging
the Company bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, readjustment, arrangement, composition or similar relief
for the Company under any bankruptcy law or any other similar applicable
statute, law or regulation, or a decree or order of a court of competent
jurisdiction shall have been entered for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the Company or
a substantial part of its property, or for the winding up or liquidation of its
affairs; and (b) to the extent permitted by law, the Inventors may terminate
this Agreement if the Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy petition
against it, or shall file a petition or answer or consent seeking
reorganization, readjustment, arrangement, composition, liquidation or similar
relief under any bankruptcy law or any other similar applicable statute, law or
regulation, or shall consent to the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of it or of a substantial part
of its property, or shall make an assignment for the benefit of creditors, or
shall be unable to pay its debts generally as they become due.

     15.3 Termination. Each party may terminate this Agreement upon the
          -----------
occurrence of an Event of Default specified in Section 15.2 by giving written
notice thereof to the other party, which notice shall specifically identify the
reason(s) for such termination. In addition, (i) the Company may terminate this
Agreement at any time by giving at least ninety (90) days' prior written notice
to the Inventors; and (ii) this Agreement shall terminate upon written notice of
a material breach of the terms of this Agreement to a Defaulting Party unless
the same and all of its effects are remedied within thirty (30) days after such
written notice thereof is given by the other party to the Defaulting Party. The
failure by the Company substantially to comply with the diligence obligations
set forth in Section 3.1 of this Agreement, or to pay the Inventors any
royalties or other payments when due and payable in accordance with the
provisions of Section 4 hereof shall be deemed a material breach of this
Agreement.

     15.4 Consequences of Termination. Upon the termination of this Agreement by
          ---------------------------
the Company for any reason other than an Event of Default on the part of the
Inventors, all rights and obligations of the Company hereunder shall revert to
the Inventors. The termination of this Agreement for any reason shall be without
prejudice to (i) the right of the Inventors to receive all amounts accrued under
Section 4 hereof prior to the effective date of such termination, (ii) the
rights and obligations of the parties

                                      -16-
<PAGE>

pursuant to Sections 6, 8 and 9 hereof, and (iii) any other remedies as may now
or hereafter be available to any party, whether under this Agreement or
otherwise. Upon any termination of this Agreement which results in the reversion
to the Inventors of the rights and obligations of the Company hereunder pursuant
to the first sentence of this Section 15.4 (a) the Company and its Affiliates
and sublicensees shall immediately discontinue the manufacture, use and sale of
the Licensed Products, and (b) each party and its Affiliates shall immediately
cease the use of all Confidential Information obtained from the other party or
any Affiliate thereof, provided that, upon termination of this Agreement by the
Company, the Inventors may, in their sole discretion, ratify and maintain in
full force and effect any sublicense(s) of the rights granted under this
Agreement.

                          SECTION 16. EXPORT CONTROLS

         All obligations to furnish goods, technology, or software under this
Agreement are subject to U.S. Export Control Laws and Regulations. Company
agrees to comply fully with all applicable laws and regulations before exporting
any goods, technology, or software to any Person. Company recognizes and agrees
that its obligations to comply with U.S. export control laws and regulations
survive the termination or expiration of this Agreement.

                           SECTION 17. MISCELLANEOUS

     17.1 Notices. All notices, reports and/or other communications made in
          -------
accordance with this Agreement, shall be deemed to be duly made or given (i)
when delivered by hand, (ii) three days after being mailed by registered or
certified mail (air mail if mailed overseas), return receipt requested, or (iii)
when received by the addressee, if sent by facsimile transmission or by Express
Mail, Federal Express or other express delivery service (receipt requested), in
each case addressed to such party at its address set forth below (or to such
other address as such party may hereafter designate as to itself by notice to
the other party hereto):

         In the case of the Company:

                  Esperion Therapeutics, Inc.
                  3621 S. State Street
                  695 KMS Place
                  Ann Arbor, MI 48108
                  Attention: President
                  Telecopier: (734)  332-0516

                                      -17-
<PAGE>

         with a copy to:

                  Sills Cummis Radin
                  Tischman Epstein & Gross, P.A.
                  One Riverfront Plaza
                  Newark, New Jersey  07102
                  Attention: Ira A. Rosenberg, Esq.
                  Telecopier: (973)  643-6500

         In the case of the Inventors:

                  To his or her address set forth at the beginning of this
                  Agreement

         with a copy to:

                  Ann L. Gisolfi, Esq.
                  Pennie & Edmonds LLP
                  1155 Avenue of the Americas
                  New York, New York 10036
                  Telecopier: (212)  869-9741

     17.2 Amendment, etc. This Agreement may not be amended or modified, nor may
          --------------
any right or remedy of any party be waived, unless the same is in writing and
signed by such party or a duly authorized representative of such party. The
waiver by any party of the breach of any term or provision hereof by any other
party shall not be construed as a waiver of any other subsequent breach.

     17.3 No Waiver: Remedies. No failure or delay by any party in exercising
          -------------------
any of its rights or remedies hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or remedy preclude any
other or further exercise thereof or the exercise of any other right or remedy.
The rights and remedies of the parties provided in this Agreement are cumulative
and not exclusive of any rights or remedies provided by law.

     17.4 Assignment. Neither party may assign or otherwise transfer this
          ----------
Agreement or any -of its rights, duties or obligations hereunder without the
prior written consent of the other party.

     17.5 Sublicense of Rights by the Company. If the Company sublicenses any of
          -----------------------------------
its rights under this Agreement to a sublicensee, such sublicensee shall be
bound by the terms and conditions of this Agreement. The Company shall advise
the Inventors in writing of any such sublicense and provide the Inventors with a
copy of any sublicense within thirty (30) days of execution of such sublicense;
provided that, the Company may redact such copy to delete any financial
provisions.

     17.6 The Company as Guarantor. The Company shall guarantee and be
          ------------------------
responsible for the payment of all royalties due and the making of reports under
this

                                      -18-
<PAGE>

Agreement by reason of the development and sales of any Licensed Products by the
Company, its Affiliates and sublicensees and their compliance with all
applicable terms of this Agreement. The performance or satisfaction of any
obligations of the Company under this Agreement by any of its Affiliates or
sublicensees shall be deemed performance or satisfaction of such obligation by
the Company.

     17.7 Relationship of Parties. The Company, on the one hand, and the
          -----------------------
Inventors, on the other hand, are not (and nothing in this Agreement shall be
construed to constitute them) partners, joint venturers, agents, representatives
or employees of each other (except that Jean-Louis Dasseux is an employee of the
Company), nor to create any relationships between them other than that of an
independent contractor. Neither the Company, on one hand, nor the Inventors, on
the other hand, shall have any responsibility or liability for the actions of
the other party except as specifically provided herein. Neither the Company, on
one hand, nor the Inventors, on the other hand, shall have any right or
authority to bind or obligate the other in any manner or make any representation
or warranty on behalf of the other. The foregoing provisions of this Section
17.7 relate solely to the relationship between the Company, on the one hand, and
the Inventors, on the other hand. All covenants, representations and warranties
of the Inventors hereunder are joint and several obligations of the Inventors to
the Company hereunder and one or more Inventors may act as agent or
representative of the other Inventors hereunder to the extent expressly provided
herein.

     17.8 Expenses. Unless otherwise provided herein, all costs and expenses
          --------
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party which shall have incurred the same and the
other party shall have no liability relating thereto.

     17.9 Entire Agreement. This Agreement constitutes the entire agreement
          ----------------
between the parties and supersedes all prior proposals, communications,
representations and agreements, whether oral or written, with respect to the
subject matter hereof.

     17.10 Severability. Any term or provision of this Agreement which is
           ------------
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions hereof in any other jurisdiction.

     17.11 Counterparts. This Agreement may be signed in any number of
           ------------
counterparts,each of which shall be deemed an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.

     17.12 Headings. The headings used in this Agreement are for convenience of
           --------
reference only and shall not affect the meaning or construction of this
Agreement.

     17.13 Governing Law. This Agreement, including the performance and
           -------------
enforceability hereof, shall be governed by and construed in accordance with the
laws of the State of Michigan, without reference to choice of law doctrine. Each
party hereby

                                      -19-
<PAGE>

submits itself for the sole purpose of this Agreement and any controversy
arising hereunder to the jurisdiction of the courts located in the State of
Michigan and any courts of appeal therefrom, and waives any objection (on the
grounds of lack of jurisdiction, or forum non conveniens or otherwise) to the
                                          --- ----------
exercise of such jurisdiction over it by any such courts.

     17.14 Arbitration. Except as expressly provided herein, any dispute,
           -----------
controversy, or claim arising out of or relating to this Agreement, its
validity, construction or enforceability or the breach of any of the terms or
provisions hereof shall be settled by arbitration under the Commercial
Arbitration Rules of the American Arbitration Association by a panel of three
arbitrators, one selected by each party and the third selected by the other two
arbitrators. Any arbitration proceeding commenced by either party shall be held
in the New York City, New York. The decision of the arbitrators shall be final
and binding upon the parties and judgment upon the decision by the arbitrators
may be entered in any court of competent jurisdiction, and execution may be had
thereon. The expense of such arbitration, including attorneys' fees, shall be
allocated between the parties as the arbitrators may decide and as the claims
and interests of each party may prevail. Notwithstanding anything to the
contrary contained in this Section 17.14, any dispute, controversy or claim
relating to actual or threatened unauthorized use or disclosure of any
Confidential Information, or the validity, applicability, enforceability or
infringement of any patent rights, shall not be required to be submitted to
arbitration hereunder and may be resolved by a court of competent jurisdiction.

     17.15 Representative of Inventors. Each of Inventors, by executing this
           ---------------------------
Agreement, irrevocably appoints Jean-Louis Dasseux (the "Inventors'
Representative") as his agent and true and lawful attorney-in-fact, with full
power of substitution, with full capacity and authority and in his sole
discretion, to act in the name of and for and on behalf of each of them in
connection with all matters arising out of, resulting from, contemplated by or
related or incident to this Agreement. Without limiting the generality of the
foregoing, the powers of the Inventors' Representative shall include the power
to represent each of the Inventors with respect to all aspects of this
Agreement, which power shall include, without limitation, the power to (i)
receive any payment or transfer to be made pursuant to this Agreement, (ii)
waive any and all conditions of this Agreement, (iii) amend this Agreement and
any agreement executed in connection herewith in any respect, (iv) settle claims
for indemnity pursuant to Section 9.1 hereof, (v) retain legal counsel and be
reimbursed by Inventors for all fees, expenses and other charges of such legal
counsel, (vi) receive notices or other communications, (vii) deliver any
notices, certificates or other documents required, and (viii) take all such
other action and to do all such other things as the Inventors' Representative
deems necessary or advisable with respect to this Agreement. The Company shall
have the absolute right and authority to rely upon the acts taken or omitted to
be taken by the Inventors' Representative on behalf of the Inventors and the
Company shall have no duty to inquire as to the acts and omissions of Inventors'
Representative. Each of the Inventors acknowledge and agree that (i) all
deliveries by the Company to Inventors Representative shall be deemed deliveries
to each of the Inventors, (ii) the Company shall not have any liability with
respect to any aspect of the distribution or communication of such deliveries

                                      -20-
<PAGE>

between the Inventors' Representative and any of the Inventors or among any
thereof, and (iii) any disclosure made to the Inventors Representative by or on
behalf of the Company shall be deemed to be disclosure made to each. In the
event the Inventors' Representative refuses to, or is no longer capable of,
serving as Inventors' Representative hereunder, each of the Inventors shall
promptly appoint a successor Inventors' Representative who shall thereafter by a
successor Inventors' Representative hereunder.

                            [SIGNATURE PAGE FOLLOWS]

                                      -21-
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written below.

                                                     EXPERION THERAPEUTICS, INC.

                                          By:  /s/ Roger S. Newton
                                             ----------------------------------
                                               Roger S. Newton, President & CEO

                                               /s/ Jean-Louis Dasseux
                                             ----------------------------------
                                               Jean-Louis Dasseux

                                               /s/ Renate Sekul
                                             ----------------------------------
                                               Renate Sekul

                                               /s/ Klaus Buttner
                                             ----------------------------------
                                               Klaus Buttner

                                               /s/ Isabelle Cornut
                                             ----------------------------------
                                               Isabelle Cornut

                                               /s/ Guenther Metz
                                             ----------------------------------
                                               Guenther Metz

                                               /s/ Jean Defourcq
                                             ----------------------------------
                                               Jean Dufourcq

                                      -22-
<PAGE>

                                  APPENDIX A
                                  ----------

                        Amended as of February 22, 2000

--------------------------------------------------------------------------------
         Title                        Patent No.              Issue Date
         -----                        ----------              -----------
--------------------------------------------------------------------------------
APOLIPOPROTEIN AI               US 6,004,925            12/21/99
AGONISTS AND THEIR USE
TO TREAT DYSLIPIDEMIC
DISORDERS (10001)
--------------------------------------------------------------------------------
<PAGE>

<TABLE>
<CAPTION>
                                                            APPENDIX B
                                                            ----------

                                                  Amended as of February 22, 2000

---------------------------------------------------------------------------------------------------------------------------
                        Title                                                   Serial No.              Filing Date
                        -----                                                   ----------              -----------
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                     <C>
APOLIPOPROTEIN AI AGONISTS AND THEIR USE TO TREAT                               PCT/US98/20327          09/28/98
DYSLIPIDEMIC DISORDERS (10001)
-------------------------------------------------------------------------------
APOLIPOPROTEIN AI AGONISTS AND THEIR USE TO TREAT                               08/940,096              09/28/97
DYSLIPIDEMIC DISORDERS (5005)
---------------------------------------------------------------------------------------------------------------------------
APOLIPOPROTEIN AI AGONISTS AND THEIR USE TO TREAT                               PCT/US98/20326          09/28/98
DYSLIPIDEMIC DISORDERS (50051)
-------------------------------------------------------------------------------
APOLIPOPROTEIN AI AGONISTS AND THEIR USE TO TREAT                               08/940,093              09/28/97
DYSLIPIDEMIC DISORDERS (18-mer)
-------------------------------------------------------------------------------
APOLIPOPROTEIN AI AGONISTS AND THEIR USE TO TREAT                               PCT/US98/20328          09/28/81
DYSLIPIDEMIC DISORDERS (18-mer)
---------------------------------------------------------------------------------------------------------------------------
GENE THERAPY APPROACHES TO SUPPLY APOLIPOPROTEIN                                08/940,136              09/29/97
A-I AGONISTS AND THEIR USE TO TREAT DYSLIPIDEMIC
DISORDERS
-------------------------------------------------------------------------------
GENE THERAPY APPROACHES TO SUPPLY APOLIPOPROTEIN                                PCT/US98/20329          09/28/98
A-I AGONISTS AND THEIR USE TO TREAT DYSLIPIDEMIC
DISORDERS
---------------------------------------------------------------------------------------------------------------------------
PEPTIDE/LIPID COMPLEX FORMATION BY CO-                                          08/942,597              10/02/97
LYOPHILIZATION
---------------------------------------------------------------------------------------------------------------------------
PEPTIDE/LIPID COMPLEX FORMATION BY CO-                                          PCT/US98/20330          09/28/98
LYOPHILIZATION
---------------------------------------------------------------------------------------------------------------------------
MULTIMERIC APO AI AGONIST COMPOUNDS                                             09/453,841              12/01/99
---------------------------------------------------------------------------------------------------------------------------
MULTIMERIC APO AI AGONIST COMPOUNDS                                             09/453,840              12/01/99
---------------------------------------------------------------------------------------------------------------------------
BRANCHED APO AI AGONIST COMPOUNDS                                               09/453,833              12/01/99
---------------------------------------------------------------------------------------------------------------------------
LIPID COMPLEXES OF APO AI AGONIST COMPOUNDS                                     09/453,838              12/01/99
---------------------------------------------------------------------------------------------------------------------------
METHOD OF TREATING DYSLIPIDEMIA                                                 09/453,826              12/01/99
---------------------------------------------------------------------------------------------------------------------------
METHOD OF TREATING SEPTIC SHOCK                                                 09/453,605              12/01/99
---------------------------------------------------------------------------------------------------------------------------
APOLIPOPROTEIN AI AGONISTS AND THEIR USE TO TREAT                               09/453,834              12/01/99
DYSLIPIDEMIC DISORDERS (10001)
---------------------------------------------------------------------------------------------------------------------------
APOLIPOPROTEIN AI AGONISTS AND THEIR USE TO TREAT                               09/465,719              12/17/99
DYSLIPIDEMIC DISORDERS (5005)
---------------------------------------------------------------------------------------------------------------------------
APOLIPOPROTEIN AI AGONISTS AND THEIR USE TO TREAT                               09/465,718              12/17/99
DYSLIPIDEMIC DISORDERS (18-mer)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

The foregoing Amended Appendices A and B to the License Agreement entered into
between Esperion Therapeutics, Inc. and the Inventors on August 23, 1999 are
hereby Acknowledged and Agreed to:

/s/ Roger S. Newton                             2/22/00
--------------------------------            ---------------------------
By Esperion Therapeutics, Inc.              Date

/s/ Jean-Louis Dasseux                      February 22, 2000
---------------------------------           ---------------------------
By the Inventors,
  as represented by Jean-Louis Dasseux

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