<PAGE>

                                                                    EXHIBIT 10.4

                        JOINT VENTURE AGREEMENT BETWEEN
                      CRAUN RESEARCH SDN.  BHD., SARAWAK
                                      AND
                          MEDICHEM RESEARCH INC., USA

                                DECEMBER, 1996
<PAGE>

                                   AGREEMENT
                                   ---------

THIS AGREEMENT is made the 21st day of December, 1996

BETWEEN:

(1)  CRAUN RESEARCH SENDIRIAN BERHAD a company incorporated in Sarawak, Malaysia
     under the Companies Act, 1965, whose registered office is at Levels 5, 8
     and 12, Wisma Satok, Jalan Satok, 93400 Kuching, Sarawak and place of
     business at Lot 3147 Block 14, Jalan Santubong, 93055 Kuching, Sarawak
     (hereinafter referred to as "CRAUN") of the one part and

(2)  MEDICHEM RESEARCH INC. a company organized and incorporated under the laws
     of the United States of America and State of Illinois, with a place of
     business at 12305 So. New Avenue, Lemont, ILLINOIS 60439, United States of
     America (hereinafter referred to as "MEDICHEM") of the other part.

WHEREAS

(1)  CRAUN is the duly authorized agent for and on the behalf of the Government
     of the State of Sarawak, Malaysia ("the State Government") where the
     species of Callophylum plants from which the COMPOUND known scientifically
     as (+) - Calanolide A (hereinafter referred to as "the said COMPOUND") is
     isolated; and CRAUN, therefore, enters into this Agreement for and on
     behalf of the State Government;
<PAGE>

(2)  MEDICHEM is primarily engaged in research and early stage development of
     therapeutic agents.  MEDICHEM has title or has the exclusive licenses to
     the following patents and patent applications relating to the COMPOUND
     which are potent inhibitors of Human Immunodeficiency Virus (HIV) reverse
     transcriptase and intermediates, namely:

     (a)  MediChem U.S. Patent No. 5,489,697; 1996 - Method for the Preparation
          of (+)-Calanolide A and Intermediates Thereof (Boulanger, Flavin,
          et al.).

     (b)  MediChem U.S. Patent Application No. 08/510,213; 1995, and
          International Application No. PCT/US95/09804; 1995 - Method for the
          Preparation of (+)-Calanolide A and Intermediates Thereof (Flavin, Xu,
          et al.).

     (c)  MediChem U.S. Patent Application No. 08/609,537; 1996 - Method for the
          Preparation of (+)-Calanolide A and Analogues Thereof (Flavin, Xu,
          et al).

     (d)  NCI U.S. Patent Application No. 08/065,618; 1993 - Calanolide and
          Related Antiviral Compounds, Compositions, and Uses Thereof (Boyd,
          Cardellina, et al.).

     (e)  NCI International Patent Application No. PCT/US94/05658; 1995 -
          Calanolide and Related Antiviral Compounds, Compositions, and Uses
          Thereof (Boyd, Cardellina, et al.).

(3)  MEDICHEM has by virtue of a Patent License Agreement (Patent License No.
     L-135-94) with National Cancer Institute ("'NCI") of the National Institute
     of Health which is an agency of the United States Public Health Service
     within the Department of Health and Human Services, U.S.A. (a copy whereof
     is hereto attached as Appendix A) the use of the Patent rights licensed
     thereunder to undertake research into the said COMPOUND with a
<PAGE>

     view to developing a drug for the treatment of acquired immunodeficiency
     syndrome (AIDS) diseases, and to use and sell the licensed PRODUCTS, i.e.,
     the drug derived from the said COMPOUND;

(4)  MEDICHEM entered into an Agreement with the State Government whereby in
     consideration of the State Government agreeing to NIH granting to MEDICHEM
     a license to use the COMPOUND and to sell and distribute drugs developed
     therefrom, MEDICHEM agrees to pay royalties, at the rate stated therein, to
     the State Government. A copy of the Agreement is attached as Appendix B;

(5)  MEDICHEM has a duly executed license with vita of Spain under the License
     Agreement attached as Appendix C.

(6)  MEDICHEM has invited the State Government, through CRAUN, to form a COMPANY
     for the clinical trials for the said COMPOUND and subscribe to purchase
     shares in the COMPANY with a view to enhancing benefits to the State
     Government in the event of the successful development and commercialization
     of the PRODUCT;

(7)  Both the Sarawak Government (through CRAUN) and MEDICHEM wish to jointly
     cooperate to form a COMPANY for conducting research into the COMPOUND and
     more particularly in the conduct of the clinical trials for the said
     COMPOUND, with a view to the production and medical application of the
     PRODUCT.  CRAUN and MEDICHEM wish to be equal shareholders in the COMPANY.
<PAGE>

     In pursuance thereof, the parties hereto have agreed to enter into mutual
commitments and to regulate their rights in relation to such COMPANY in the
manner and upon the terms and conditions hereinafter appearing.
<PAGE>

IT IS MUTUALLY AGREED as follows:

1.      Interpretations

1.1     In this Agreement unless the context otherwise requires:

1.1.1   "the COMPOUND" means the anti-viral molecule or agent isolated from the
             --------
        plants of the genus callophylum found in the State of Sarawak in
        Malaysia and including Calanolide or any synthesized form thereof or
        that derived from preparation made by MEDICHEM under the said patents.

1.1.2   "the COMPANY" means the COMPANY incorporated under Clause 4 below.
             -------

1 1.3   "FDA" means the Food and Drug Administration of the United States of
         ---
        America.

1.1.4   MEDICHEM "intellectual Property Rights" means technical information, all
                  ----------------------------
        trade secrets, patent applications and patents and licenses related to
        COMPOUND or PRODUCT in which MEDICHEM has right, title and interest at
        the date of signing this Agreement.

1.1.5   "State Government" means the Government of the State of Sarawak,
         ----------------
        Malaysia.

1.1.6   COMPANY Intellectual Property Rights shall mean technical information,
        trade secrets, and patent rights developed or obtained by the COMPANY.

1 1.7   "The PRODUCT" means any drug or pharmaceutical goods or PRODUCT derived
         -----------
        from the COMPOUND for the treatment of Human Immunodeficiency (HIV) or
        HIV related diseases, developed through or under this Project.
<PAGE>

1.1.8  "This Project" means
        ------------

          (a)  the development of Calanolide as a Therapeutic for treatment of
               HIV infection;

          (b)  development of Calanolide A as a Therapeutic for treatment of non
               HIV viral infections;

          (c)  development of Calanolide-related compounds including Costatolide
               as Therapeutic agent for treatment of viral infections;

          (d)  the research and study into medicinal properties of other plant
               materials from the State of Sarawak, and

          (e)  undertake any current or future endeavours or collaboration
               entered into between MEDICHEM and the U.S. National Institute of
               Health in connection with the research and study into Calanolide
               Compounds.

1.2    References to statutory provisions shall be construed as references to
       those provisions as respectively amended or re-enacted or as their
       application is modified by other provisions (whether before or after the
       making of this agreement) from time to time and shall include any
       provisions of which they are re-enactments (whether with or without
       modifications).

1.3    The headings are inserted for convenience only and shall not affect the
       construction of this Agreement.

1.4    The Appendices shall be considered as an integral part of this Agreement.
<PAGE>

1.5  Words importing one gender include all other genders and words importing
     the singular include the plural and vice versa.

1.6  Any covenant by a party not to do an act or thing shall be deemed to
     include an obligation not to permit or suffer such act or thing to be done
     by another person.

2.   Term

     This Agreement shall commence on the date shown hereinabove and shall
     continue until and unless terminated in accordance with hereunder.

3.   Nature of Collaboration

3.1  CRAUN and MEDICHEM hereby mutually agree to cooperate with each other to
     form a COMPANY for the purpose of taking the COMPOUND through its clinical
     trials which shall start as soon as such trials are approved by the FDA and
     to comply with and achieve the Benchmarks for the development thereof as
     set out in Appendix D to the Patent License Agreement between MEDICHEM and
     the National Institutes of Health (further set out in Appendix C hereof).

3.2  The COMPANY shall seek the requisite approvals of the FDA and any other
     governing bodies (hereinafter referred to as "the regulatory authorities")
     for the conduct of clinical trials for the COMPOUND and comply with all the
     conditions and requirements set out in the approvals by the regulatory
     authorities.
<PAGE>

3.3  The COMPANY shall seek the approvals of the regulatory authorities in the
     United States of America and those of other countries for the manufacture,
     use, marketing and sale of the PRODUCT.

3.4. Upon approvals from the regulatory authorities for the manufacturing of
     the PRODUCT and its medical application, the parties hereto shall proceed,
     either through the COMPANY itself or by arrangements with other parties (to
     be mutually agreed upon by CRAUN and MEDICHEM), to have the PRODUCT
     manufactured, distributed and sold both in the United States of America and
     abroad.

3.5  MEDICHEM shall make available to the COMPANY, at MEDICHEM's standard cost,
     the scientists to undertake the research and clinical trials of the
     COMPOUND and manufacture of the PRODUCT and shall (subject to Visa and U.S.
     immigration clearance) train scientists nominated by CRAUN at MEDICHEM's
     facilities in the United States and permit such scientists from Sarawak, to
     participate in the clinical trials, development, manufacture, marketings
     and distribution of the PRODUCT.

4.   Scheme of Collaboration

4.1  CRAUN and MEDICHEM agree to have incorporated, under United States laws, a
     COMPANY, with limited liability, whose shares shall be owned by the parties
     hereto in the following proportions:-

     CRAUN

     (as agent and nominee of the State Government): 50%
<PAGE>

          CRAUN'S shares are to be obtained by making subscription payments in
          accordance with Subscription Agreement. (Appendix D).

          MEDICHEM: 50%.

          MEDICHEM's shares are to be obtained by contribution of MEDICHEM
          Intellectual Property Rights and shall vest automatically according to
          Appendix E.

4.2       The COMPANY shall be known as SARAWAK MEDICHEM PHARMACEUTICALS, INC.,
          or such other name as may be approved by the Secretary of State of
          Delaware, United States of America.

4.3  (a)  The COMPANY'S principal business and activity is to undertake the
          research work and carry out clinical trials for the COMPOUND and
          thereafter, to carry out research and study into other plant materials
          for their medicinal properties.

     (b)  In the event of a successful development of the PRODUCT, the parties,
          as shareholders of the COMPANY, shall mutually agree upon the mode and
          manner for undertaking the commercialization of the PRODUCT, in
          particular, manufacturing, sale and distribution thereof either
          through the COMPANY or such third parties as may be mutually agreed by
          CRAUN and MEDICHEM. In making this determination both parties will
          take into consideration the following:

          (i)  capital expenditure that may be required for the
               commercialization of the PRODUCT,
<PAGE>

     (ii) the most efficient and cost effective manner for the manufacturing,
          promoting and distributing thereof.

4.4  The objects, constitution and articles of association of the COMPANY shall
     be in the document set out in Appendix F, the provision of this appendix
     both parties hereto may both mutually agree in writing to modify, alter, or
     amend the provisions of Appendix F.

4.5  All Patents, License Agreements and Approvals relating to the development
     of the PRODUCT shall be assigned or exclusively licensed to the COMPANY
     upon payment by CRAUN of the sum of US $1,200,000 to the COMPANY as the
     first payment for subscription of shares. These funds are to be used for
     the attainment of the first benchmark stipulated in Appendix D.

5.   WARRANTIES AND UNDERTAKINGS

5.1  MEDICHEM undertakes that its scientists whose names appear in Appendix G
     will carry out for the COMPANY all research and trials envisaged under the
     Project and throughout the duration of this Agreement. MEDICHEM will be
     reimbursed for services of MEDICHEM scientists at a rate approved by the
     COMPANY's Board of Directors.

5.2  MEDICHEM warrants that all the scientists named in Appendix G possess the
     requisite knowledge, skill and experience to undertake the research and
     trials described hereinabove, and will undertake such responsibilities to
     the best of their professional competence and according to the highest
     standard of professional conduct and ethics.

5.3  MEDICHEM undertakes to recruit, engage, appoint, or involve other
     scientists for the COMPANY whose skills and professional abilities are
     required for the successful
<PAGE>

     implementation of the Project or for the development and commercialization
     of the PRODUCT in addition to or in substitution of those scientists named
     in Appendix G.

5.4  MEDICHEM undertakes to procure or obtain for the COMPANY from the
     scientists named in Appendix G and any scientists recruited or appointed
     under clause 5.3, written undertakings in the form acceptable to the State
     Government, that they will not make any unauthorised use or disclosure of
     any data, findings or knowledge acquired that may or come into their
     possession during or in the course of their involvement or participation in
     the Project.

5.5  MEDICHEM warrants that no other person has any claim, interest or right
     whatsoever to any of the Patents, and that the same can be validly be
     assigned to the COMPANY and that the COMPANY shall have absolute right and
     ownership of the Patents and entitled to custody and control of the
     certificates and the documentary evidence relating thereto except as that
     provided in Appendices A, B and C.

5.6  CRAUN warrants that it has the authority to enter into this Agreement on
     behalf of the State Government and has secured funds to meet the payments
     due under this Agreement.

5.7  CRAUN undertakes to procure or obtain for the COMPANY from its scientists
     involved in the Project, a written undertaking, in a form acceptable to
     MEDICHEM, that they will not make any unauthorized use or disclosure of any
     date, findings, or knowledge acquired or come into their possession during
     or in the course of their involvement or participation in the Project.
<PAGE>

5.8  Neither CRAUN nor MEDICHEM shall, during the subsistence of the Agreement
     enter into or establish any relationship, arrangement or collaboration with
     any other parties or institution for the purpose of undertaking any
     research, study, trial, manufacture, production, distribution, or sale of
     the PRODUCT, the COMPOUND or any analogs or derivatives thereof without the
     prior written consent of the other party.

6.   FUNDS FOR PROJECT AND PAID UP CAPITAL OF COMPANY
     -------------------------------------------------

6.1  MEDICHEM has estimated that the costs of both Phases of the clinical trials
     for the COMPOUND would have US $21,000,000 particulars of which are as
     follows:

          Phase                           Amount
          -----                           ------
          (a) Phase 1A/1B         US   $ 6,000,000
          (b) Phase II            US   $15,000,000
                                  ----------------
          Total                   U.S. $21,000,000

     A detailed schedule for the disbursement of the above mentioned sum is
     found in Appendix D hereto.

6.2  The clinical trials shall be undertaken by the Company from funds provided
     as follows:-

     (i)  CRAUN will provide to the COMPANY a total sum of US$9,000,000 through
          subscription in COMPANY stocks to cover the full costs of the Phase
          1A/1B clinical trials and part of the costs of Phase II of the trials.
          The sum of US $9,000,000 shall be made available in the manner and at
          the times set out in subscription Appendix D, subject always to the
          condition that prior to each payment the results of the clinical
          trials are shown to be satisfactory and the benchmarks stipulated in
          Appendix D are attained.  The COMPANY shall issue
<PAGE>

          stocks in accordance with the provisions of Appendices D and E within
          30 days from the date of the subscription payment.

    (ii)  MEDICHEM shall be issued shares in the COMPANY equivalent to the value
          of the MEDICHEM Intellectual Property Rights assigned or licensed to
          the COMPANY.  Both parties agree that the ultimate value of the
          MEDICHEM Intellectual Property Rights assigned or licensed to the
          COMPANY shall be US $9,000,000, but the shares for MEDICHEM shall be
          vested and be issued at the same time as the shares are issued to
          CRAUN, to the intent that the amount of shares issued to CRAUN and
          MEDICHEM shall be equal at all material times.  Except if CRAUN fails
          to make subscription payments, CRAUN shall not receive any further
          shares, MEDICHEM shares shall continue to automatically be vested
          according to the Schedule E.

    (iii) The balance of the sum required to complete the clinical trials of US
          $12,000,000 shall be raised by the COMPANY as follows:

          (a)  through license fees or royalties received by the COMPANY from
               the licensing of the rights to manufacture, sale, and
               distribution of the PRODUCT to a pharmaceutical company or
               companies:

          (b)  by loans or finance obtained from banks or financial
               institutions;

          (c)  by a combination of (a) and (b);

          (d)  by loans provided by CRAUN to the COMPANY, or;
<PAGE>

          (e)  by the COMPANY calling for additional working capital from its
               shareholders and CRAUN and MEDICHEM will purchase an equal number
               of shares to meet the working capital needs of the COMPANY.  In
               such an event, CRAUN will make available a loan [on terms to be
               agreed upon by the parties hereto] to MEDICHEM to subscribe to
               the shares of the COMPANY to the intent that MEDICHEM shall
               retain 50% equity interest in the COMPANY.

6.3  Both parties shall endeavor to ensure that the COMPANY has sufficient funds
     at all material times, to complete the clinical trials for the COMPOUND.

7.  Intellectual Property Rights

7.1  Any Product created jointly by the parties in pursuance of this Agreement,
     shall belong to the Company at the date of its creation:

     (a)  Where in the course of developing the PRODUCT Intellectual Property
          Rights are brought into existence, such Intellectual Property Rights
          SHALL be COMPANY Intellectual Property Rights and be held in the name
          of the COMPANY, and the COMPANY'S expense, shall take all reasonable
          steps necessary to protect the same by applying for US and Worldwide
          Patents and such foreign rights corresponding to them or registrations
          of them as may be reasonable.

     (b)  If at any time during the existence of the COMPANY any Intellectual
          Property Rights belonging to the COMPANY or assigned or licensed to
          the COMPANY by MEDICHEM are infringed by a third party then the
          COMPANY shall take all
<PAGE>

          reasonable steps necessary to enforce the COMPANY and MEDICHEM
          Intellectual Property Rights at COMPANY expense. Both parties shall
          use all steps and provide all information and assistance reasonably
          required for the purpose of such proceedings. Any sums recovered as a
          result of proceedings taken to enforce the COMPANY or MEDICHEM
          Intellectual Property Rights shall after deduction of all legal fees
          and other expenses incurred in connection with such proceedings by the
          parties be paid to the COMPANY'S general account.

8.    Termination and breach of Agreement and their consequences.

8.1   This Agreement shall be deemed to have been terminated if:

      (a) both CRAUN and MEDICHEM mutually agree in writing not to proceed
          further with any stage of the clinical trials of the COMPOUND;

      (b) the State Government fails to provide share subscription funds
          required for the clinical trials of the COMPOUND in accordance with
          the provisions of Clause 6 above or in the manner stipulated and at
          the times mentioned in Appendix D hereto or fails, without reasonable
          cause, to provide the funds in accordance with clause 6.2 (iii).

8.2.1 Where this Agreement is terminated pursuant to clause 8.1(a) both parties
      will be released from their prospective obligations hereunder and any
      liabilities of the COMPANY will be settled by the parties hereto equally.
      Upon settlement of such liabilities, all patents assigned or licensed to
      the COMPANY shall be reassigned back to
<PAGE>

       MEDICHEM, including rights to clinical trials, and the parties will take
       steps to dissolve the COMPANY in accordance with the laws of the State of
       Delaware of the United States of America.

8.2.2  Where this Agreement is terminated pursuant to Clause 8.1(b), the
       MEDICHEM Intellectual Property Rights shall be reassigned by the COMPANY
       back to MEDICHEM, who shall be entitled to continue with the development
       of the COMPOUND.

8.3    In the event that the parties are unable to arrive at a joint decision as
       required under Clause 8.1(a) and the provisions of Clause 8.1(b) do not
       apply on whether or not to proceed further with any stage of the clinical
       trials for the PRODUCT that the party that wishes to proceed with the
       development of the PRODUCT is entitled to do so, subject to the
       following:

       (a)  in the event that it is CRAUN that does not want to proceed,
            MEDICHEM shall have the right but not the obligation to purchase
            CRAUN's shares at the price paid by CRAUN.

       (b)  in the event it is MEDICHEM that does not wish to proceed, CRAUN
            shall have the right, but not the obligation to purchase MEDICHEM's
            shares at the price of $9,000,000 US being the price paid by
            MEDICHEM.

       (c)  in the event that the conditions in subparagraphs (a) and (b) above
            cannot be fulfilled within a period of six months from the date when
            either party gives written notice to the other of its desire not to
            proceed with the clinical trial of the
<PAGE>

          COMPOUND, this Agreement shall be deemed mutually terminated and the
          provisions of clause 8.2 shall apply.

8.4. Subject to the provisions of 8.1(b), a breach of any of the provisions of
     the Agreement shall not result in its termination, but the party in breach
     shall be liable to compensate the other party for all damages and loss
     suffered or sustained by the innocent party in consequence of such breach.

9.   Profit Sharing

     The profits derived from the sale of the PRODUCT when commercialized shall
     be shared by the parties hereto in the manner and in the proportion set out
     in Appendix H.

10.  Nature of this Agreement

     This Agreement relates only to the single COMPANY referred to in it and
     shall neither constitute either party to it the agent of the other party
     nor shall it constitute a partnership between such parties.

11.  Taxation

     Each of the parties hereto agrees that each shall bear its own liability
     for any taxation chargeable in the United States of America or Malaysia in
     respect of its participation in this collaboration and each undertakes to
     indemnify the other in respect of any such taxation assessed on and paid by
     the other in respect of which the former is primarily liable.
<PAGE>

12.       General

12.1      This Agreement shall be binding on the parties to it and their
          respective successors and permitted assigns, provided that neither of
          such parties shall be entitled to assign this Agreement or any of its
          rights and obligations under this Agreement without the consent of the
          other (which consent either party may in its absolute discretion
          withhold).

12.2      No exercise or failure to exercise or delay in exercising any right,
          power, or remedy vested in either party under or pursuant to this
          Agreement shall constitute a waiver by that party of that or any other
          right, power, or remedy.

12.3      Each party shall bear its own costs of or in connection with the
          preparation and execution of this Agreement.

12.4(a)   Neither party hereto shall issue any press release or other public
          statement or publish any article or account of any patent findings,
          conclusions, or results of any trials carried out under this agreement
          without the prior written consent of the other party but such consent
          should not be unreasonably withheld.

     (b)  Both parties shall and also ensure that their respective scientists
          and staff keep and maintain complete confidentiality over any
          information, data, findings, conclusions, or outcome of any research,
          patents, patent applications, approvals, negotiations, discussions,
          records pertaining to the PRODUCT, or any activity carried out under
          this Agreement.

12.5      This Agreement (together with all agreements and documents executed
          contemporaneously with it or referred to in it) constitutes the entire
          Agreement between
<PAGE>

          the parties in relation to its subject matter and supersedes all prior
          Agreements and undertakings whether oral or written with respect to
          that subject matter and no variation of this Agreement shall be
          effective unless reduced to writing and signed by or on behalf of a
          duly authorised representative of each of the parties to this
          Agreement.

12.6      In the event that any term, condition, or provision of this Agreement
          is held to be in violation of any applicable law, statute or
          regulation, the same shall be deemed to be deleted from this Agreement
          and shall be of no force and effect and this Agreement shall remain in
          full force and effect as if such term, condition or provision had not
          originally been contained in this Agreement. Notwithstanding the
          foregoing in the event of any such deletion the parties shall
          negotiate in good faith in order to agree to the terms of a mutually
          acceptable and satisfactory alternative provision in place of the
          provision so deleted.

12.7      This Agreement may be executed in any number of counterparts or
          duplicates each of which shall be an original but such counterparts or
          duplicates shall together constitute as one and the same Agreement.

12.8      Time shall be of the essence for the purposes of any provision of this
          Agreement.

12.9      This Agreement supersedes, overrides, rescinds and revokes all
          previous arrangements, agreements, promises, undertakings and deeds
          (if any) entered into between the parties which is the subject matter
          of this Agreement provided that the provisions of this clause shall
          not apply to the Agreement (Appendix B) subsisting between the State
          Government and MEDICHEM.
<PAGE>

13.  Notices

     Any notice to be given by either party to this Agreement shall be in
     writing and shall be deemed duly served if delivered personally or sent by
     telex or facsimile transmission or by prepaid air mail registered post to
     the addressee at the address or (as the case may be) the telex or facsimile
     number of that party set opposite its name below:

          CRAUN's Address:   c/o STATE ATTORNEY GENERAL's OFFICE
                                 17th Floor, Wisma Bapa Malaysia,
                                 Petra Java. 93502 Kuching, Sarawak
                                 Malaysia

          Facsimile Number:  60-82-440525

          [Marked for the attention of:]

          MEDICHEM RESEARCH, INC.
          12305 S. New Avenue
          Lemont, IL 60439

          Telex Number:      630-257-1500
          Facsimile Number:  630-257-1505
               ATTN:         Dr. Michael T. Falvin

     or at such other address (or telex or facsimile number) as the party to be
     served may have notified (in accordance with the provisions of this clause)
     for the purposes of this Agreement.

13.2 Any notice sent by telex or facsimile shall be deemed served when
     dispatched and any notice served by prepaid air mail registered post shall
     be deemed served 10 days after posting to an address in the United States
     of America or Malaysia. In proving the service of any notice it will be
     sufficient to prove in the case of a letter that such letter was property
     stamped, addressed and placed in the post or delivered or left at the
     current address if delivered personally and in the case of a telex or
     facsimile that such telex or
<PAGE>

     facsimile transmission was duly dispatched to the telex or facsimile number
     of the addressee given above or subsequently notified for the purposes of
     this Agreement.

14.  Law and jurisdiction

     This Agreement shall be governed by and construed in all respects in
     accordance with the law of England applicable at the time of the execution
     of this Agreement.

15.  Arbitration

     All disputes which arise out of this Agreement shall be settled by
     arbitration in accordance with the conciliation and arbitration rules and
     regulations of the International Arbitration Centre in England to which the
     parties hereto submit.  The arbitrator shall have background and expertise
     relating to the issues(s) involved.  The arbitration shall be in a mutually
     agreed location and the UNCITRAL (United Nations Commission on
     International Trade Laws) rules shall apply to such arbitration.  The
     parties shall share equally the fees and expenses of the arbitration.  The
     arbitrator's decision shall be binding, final and non-appealable.
<PAGE>

IN WITNESS

SIGNED by                                   )
Datuk Wan Ali Tuanku Yubi                   )
Chairman/Director of                        )
CRAUN RESEARCH SDN BHD                      )
under and by virtue of a                    )
Resolution of its Board of Directors,       ) __________________________________
in the presence of:                               Datuk Wan Ali Tuanku Yubi



Name of Witness:
                                              __________________________________
                                                        Datuk J.C. Fong

Address:                                      State Attorney-General's Chambers,
                                                            Kuching.

Occupation:                                    State Attorney-General, Sarawak



SIGNED by                                   )
Dr. Michael T. Flavin                       )
President, for and on behalf of             )
MEDICHEM RESEARCH INC.                      ) __________________________________
in the presence of:                         )         Dr. Michael T. Flavin


Name of Witness:

Address:

Occupation:
<PAGE>

                                  APPENDIX A

                         MEDICHEM/NCI LICENSE L-135-95
                         -----------------------------
<PAGE>

                         NATIONAL INSTITUTES OF HEALTH
                          CENTERS FOR DISEASE CONTROL
                      PATENT LICENSE AGREEMENT - EXCLUSIVE
                                                 ---------
                                   COVER PAGE



_____________________________________________________________
For Office of Technology Transfer/NIH internal use only:

_____________________________________________________________
Patent License Number:  L-135-94
Serial Numbers of Licensed Patents:  USPA SN 07/861.249
                                          SN 08/065,618
Licensee:  MediChem Research, Inc.
CRADA Number (if applicable):
Additional Remarks:

_____________________________________________________________


This Patent License Agreement, hereinafter referred to as the "Agreement,"
consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A
((Patent or Patent Application) , Appendix B (Fields of Use and Territory),
Appendix C (Royalties), Appendix D (Modifications), and Appendix E (Benchmarks).
This Cover Page serves to identify the Parties to this Agreement:

     1)    The National Institutes of Health ("NIH") or the Centers for Disease
           Control ("CDC"), hereinafter singly or collectively referred to as
           "PHS," agencies of the United States Public Health Service within the
           Department of Health and Human Services ("DHHS") ; and

     2)    The person, corporation, or institution identified above and/or on
           the Signature Page, having offices at the address indicated on the
           Signature Page, hereinafter referred to as "Licensee."

PHS and Licensee agree as follows:

1.   BACKGROUND
     ----------

     1.01  In the course of conducting biomedical and behavioral research, PHS
           investigators made inventions that may have commercial applicability.

     1.02  By assignment of rights from PHS employees and other inventors, DHHS,
           on behalf of the United States Government, owns intellectual property
           rights claimed in any United States and foreign patent applications
           or patents corresponding to the assigned inventions. DHHS also owns
           any tangible embodiments of these inventions actually reduced to
           practice by PHS.

     1.03  The Assistant Secretary for Health of DHHS has delegated to PHS the
           authority to enter into this Agreement for the licensing of rights to
           these inventions under 35 U.S.C. (S)(S)200-212, the Federal
           Technology Transfer Act of 1986, 15 U.S.C.
<PAGE>

           (S)3710a, and/or the regulations governing the licensing of
           Government-owned inventions, 37 CFR Part 404.

     1.04  PHS desires to transfer these inventions to the private sector
           through commercialization licenses to facilitate the commercial
           development of products and processes for public use and benefit.

     1.05  Licensee desires to acquire commercialization rights to certain of
           these inventions in order to develop processes, methods, or
           marketable products for public use and benefit.

2.   DEFINITIONS
     -----------

     2.01  "Licensed Patent Rights" shall mean:

           a)  U.S. patent applications and patents listed in Appendix A, all
               divisions and continuations of these applications, all patents
               issuing from such applications, divisions, and continuations, and
               any reissues, reexaminations, and extensions or all such patents;

           b)  to the extent that the following contain one or more claims
               directed to the invention or inventions claimed in a) above:  i)
               continuations-in-part of a) above; ii) all divisions and
               continuations of these continuations-in-part; iii) all patents
               issuing from such continuations-in-part, divisions, and
               continuations; and iv) any reissues, reexaminations, and
               extensions of all such patents;

           c)  to the extent that the following contain one or more claims
               directed to the invention or inventions claimed in a) above:
               Licensed Products in the Licensed Fields of Use and to practice
               and have practiced any Licensed Processes in the Licensed Fields
               of Use.

     3.02  This Agreement confers no license or rights by implication, estoppel,
           or otherwise under any patent applications or patents of PHS other
           than Licensed Patent Rights regardless of whether such patents are
           dominant or subordinate to Licensed Patent Rights.

4.   SUBLICENSING
     ------------

     4.01  Upon written approval by PHS, which approval will not be unreasonably
           withheld, Licensee may enter into sublicensing agreements under the
           Licensed Patent Rights.

     4.02  Licensee agrees that any sublicenses granted by it shall provide that
           the obligations to PHS of Paragraphs 5.01-5.05, 8.01, 10.01, 10.02,
           12.05, and 13.08-13.11 of this Agreement shall be binding upon the
           sublicensee as if it were a party to this Agreement. Licenses further
           agrees to attach copies of these Paragraphs to all sublicense
           agreements.
<PAGE>

     4.03  Any sublicenses granted by Licensee shall provide for the termination
           of the sublicense, or the conversion to a license directly between
           such sublicensees and PHS, at the option of the sublicensee, upon
           termination of this Agreement under Article 13. Such conversion is
           subject to PHS approval and contingent upon acceptance by the
           sublicensee of the remaining provisions of this Agreement.

     4.04  Licensee agrees to forward to PHS a copy of each fully executed
           sublicense agreement postmarked within sixty (60) days of the
           execution of such agreement.

5.   STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHT
     ------------------------------------------------------------

     5.01  PHS reserves on behalf of the Government an irrevocable,
           nonexclusive, nontransferable, royalty-free license for the practice
           of all inventions licensed under the Licensed Patent Rights
           throughout the world by or on behalf of the Government and an behalf
           of any foreign government or international organization pursuant to
           any existing or future treaty or agreement to which the Government is
           a signatory.

     5.02  Licensee agrees that products used or sold in the United States
           embodying Licensed Products or produced through use of Licensed
           Processes shall be manufactured substantially in the United States,
           unless a written waiver is obtained in advance from PHS.

     5.03  Licensee acknowledges that PHS may enter into future Cooperative
           Research and Development Agreements (CRADAs) under the Federal
           Technology Transfer Act of 1986 that relate to the subject matter of
           this Agreement. Licensee Agrees not to unreasonably deny requests for
           sublicense or cross-license rights from such future collaborators
           with PHS when acquiring such derivative rights is necessary in order
           to make a CRADA project feasible. Licensee may request an opportunity
           to join as a party to the proposed CRADA.

     5.04  DHHS has responsibility for funding basic biomedical research, for
           funding medical treatment through programs such as Medicare and
           Medicaid, for providing direct medical care and, more generally, for
           protecting the health and safety of the public. Because of these
           responsibilities, and the public investment in the research that
           culminated in the Licensed Patent Rights, PHS may require Licensee to
           submit documentation in confidence showing a reasonable relationship
           between the pricing of a Licensed Product, the public investment in
           that product, and the health and safety needs of the public. This
           paragraph shall not restrict the right of Licensee to price a
           Licensed Product or Licensed Process so as to obtain a reasonable
           profit for its sale or use. This Paragraph 5.04 does not permit PHS
           to set or dictate prices for Licensed Products or Licensed Processes.

     5.05  In addition to the reserved license of Paragraph 5.01 above, PHS
           reserves the right to grant nonexclusive licenses to make and to use
           the inventions defined by the Licensed Patent Rights for purposes of
           research involving the inventions
<PAGE>

           themselves, and not for purposes of commercial manufacture or in lieu
           of purchase if the inventions are available as commercial products
           for research purposes. The purpose of this research license is to
           encourage basic research, whether conducted at an academic or
           corporate facility. In order to safeguard the Licensed Patent Rights,
           however, PHS shall consult with Licensee before granting to
           commercial entities a research license or providing to them research
           samples of the materials claimed in the Licensed Patent Rights.

6.   ROYALTIES AND REIMBURSEMENT
     ---------------------------

     6.01  Licensee agrees to pay to PHS a noncreditable, nonrefundable license
           issue royalty as set forth in Appendix C within thirty (30) days from
           the date that this Agreement becomes effective.

     6.02  Licensee agrees to pay to PHS a nonrefundable minimum annual royalty
           as set forth in Appendix C. The minimum annual royalty is due and
           payable on January 1 of each calendar year and may be credited
           against any earned royalties due for sales made in that year. The
           minimum annual royalty due for the first calendar year of this
           Agreement may be prorated according to the fraction of the calendar
           year remaining between the Effective Date of this Agreement and the
           next subsequent January 1.

     6.03  Licensee agrees to pay PHS earned royalties as set forth in Appendix
           C.

     6.04  Licensee agrees to pay PHS benchmark royalties as set forth in
           Appendix C.

     6.05  A claim of a patent or patent application licensed under this
           Agreement shall cease to fall within the Licensed Patent Rights for
           the purpose of computing the minimum annual royalty and earned
           royalty payments in any given country an the earliest of the dates
           that a) the claim has been abandoned but not continued, b) the patent
           expires, c) the patent is no longer maintained by the Government, or
           d) all claims of the Licensed Patent Rights have been held to be
           invalid or unenforceable by an unappealed or unappealable decision of
           a court of competent jurisdiction or administrative agency.

     6.06  No multiple royalties shall be payable because any Licensed Products
           or Licensed Processes are covered by more than one of the Licensed
           Patent Rights.

     6.07  On sales of Licensed Products by Licensee to sublicensees or
           affiliated parties or on sales made in other than an arm's-length
           transaction, the value of the Net Sales attributed under this Article
           6 to such a transaction shall be that which would have been received
           in an arm's-length transaction, based on sales of like quantity and
           quality products an or about the time of such transaction.

     6.08  As an additional royalty, Licensee agrees to pay PHS, within sixty
           (60) days of PHS's submission of a statement and request for payment,
           an amount equivalent to all reasonable expenses previously incurred
           by PHS in the preparation, filing, prosecution, and maintenance of
           Licensed Patent Rights. Licensee further agrees
<PAGE>

           to pay PHS annually, within sixty (60) days of PHS's submission of a
           statement and request for payment, a royalty amount equivalent to all
           such future patent expenses incurred during the previous calendar
           year, as of the date the statement and request for payment is sent by
           PHS to Licensee. Fifty percent (50%) of the cumulative amount of such
           payments may be credited against royalties due under Paragraph 6.03;
           however, the net royalty payment in any calendar year may not be
           lower than the minimum annual royalty specified in Appendix B.
           Licensee may elect to surrender its rights in any country of the
           Licensed Territory under any Licensed Patent Rights upon sixty (60)
           days' written notice to PHS and owe no payment obligation under this
           paragraph for subsequent patent-related expenses incurred in that
           country.

7.   DOMESTIC AND FOREIGN PATENT-FILING, PROSECUTION, AND MAINTENANCE
     ----------------------------------------------------------------

     7.01  PHS agrees to take responsibility for, but to consult with the
           Licensee in, the preparation, filing, prosecution, and maintenance of
           any and all patent applications or patents included in the Licensed
           Patent Rights and shall furnish copies of relevant patent-related
           documents to Licensee.

     7.02  Each party shall promptly inform the other as to all matters that
           come to its attention that may affect the preparation, filing,
           prosecution, or maintenance of the Licensed Patent Rights and permit
           each other to provide comments and suggestions with respect to the
           preparation, filing, and prosecution of Licensed Patent Rights, which
           comments and suggestions shall be considered by the other party.

8.   RECORD KEEPING
     --------------

     8.01  Licensee agrees to keep accurate and correct records of Licensed
           Products made, used, or sold and Licensed Processes practiced under
           this Agreement appropriate to determine the amount of royalties due
           PHS. Such records shall be retained for at least five (5) years
           following a given reporting period. They shall be available during
           normal business hours for inspection at the expense of PHS by an
           accountant or other designated auditor selected by PHS for the sole
           purpose of verifying reports and payments hereunder. The accountant
           or auditor shall only disclose to PHS information relating to the
           accuracy of reports and payments made under this Agreement. If an
           inspection shows an underreporting or underpayment in excess of five
           percent (5%) for any twelve (12) month period, then Licensee shall
           reimburse PHS for the cost of the inspection at the time Licensee
           pays the unreported royalties, including any late charges as required
           by Paragraph 7.06 of this Agreement. All payments required under this
           Paragraph shall be due within thirty (30) days of the date PHS
           provides Licensee notice of the payment due.

9.   REPORT ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS
     ---------------------------------------------------
<PAGE>

     9.01  Prior to signing this Agreement, Licensee has provided to PHS a
           written commercialization plan ("Commercial Development Plan") under
           which Licensee intends to bring the subject matter of the Licensed
           Patent Rights into commercial use. The Commercial Development Plan is
           hereby incorporated by reference into this Agreement. Based on this
           plan, performance benchmarks are determined as specified in Appendix
           E ("Benchmarks")

     9.02  Licensee shall provide written annual reports on its product
           development progress or efforts to commercialize under the Commercial
           Development Plan for each of the Licensed Fields of use within sixty
           (60) days after December 31 of each calendar year. These progress
           reports shall include, but not be limited to: progress on research
           and development, status of applications for regulatory approvals,
           manufacturing, sublicensing, marketing, and sales during the
           preceding calendar year, as well as plans for the present calendar
           year. If reported progress differs from that projected in the
           Commercial Development Plan and Benchmarks, Licensee shall explain
           the reasons for such differences. Licensee may propose amendments in
           any such annual report to the Commercial Development Plan, acceptance
           of which by PHS may not unreasonably be denied. Licensee agrees to
           provide any additional data reasonably required by PHS to evaluate
           Licensee's performance. Licensee may amend the Benchmarks at any time
           upon written consent by PHS. PHS shall not unreasonably withhold
           approval of any request of Licensee to extend the time periods of
           this schedule if such request is supported by a reasonable showing by
           Licensee of diligence in its performance under the Commercial
           Development Plan and toward bringing the Licensed Products to the
           point of practical application as defined in 37 CFR 404.3(d). License
           shall amend the Commercial Development Plan and Benchmarks at the
           request of PHS to address any Licensed Fields of Use not specifically
           addressed in the plan originally submitted.

     9.03  Licensee shall report to PHS the date of the First Commercial Sale in
           each country in the Licensed Territory within thirty (30) days or
           such occurrence.

     9.04  Licensee shall submit to PHS within sixty (60) days after each
           calendar half-year ending June 30 and December 31 a royalty report
           setting forth for the preceding half-year period the amount of the
           Licensed Products sold or Licensed Processes practiced by or on
           behalf of Licensee in each country within the Licensed Territory, the
           Net Sales, and the amount of royalty accordingly due. With each such
           royalty report, Licensee shall submit payment or the earned royalties
           due. If no earned royalties are due to PHS for any reporting period,
           the written report shall so state. The royalty report shall be
           certified as correct by an authorized officer of Licensee and shall
           include a detailed listing of all deductions made under Paragraph
           2.05 to determine Net Sales made under Article 6 to determine
           royalties due.

     9.05  Licensee agrees to forward semi-annually to PHS a copy of such
           reports received by Licensee from its sublicensees during the
           preceding half-year period as shall
<PAGE>

           be pertinent to a royalty accounting to PHS by Licensee for
           activities under the sublicense.

     9.06  Royalties due under Article 6 shall be paid in U.S. dollars. For
           conversion of foreign currency to U.S. dollars, the conversion rate
           shall be the rate quoted in The Wall Street Journal on the day that
           the payment is due. All checks and bank drafts shall be drawn on
           United States banks and shall be payable to NIH/Patent Licensing at
           the address shown on the Signature Page below. Any loss of exchange,
           value, taxes, or other expenses incurred in the transfer or
           conversion to U.S. dollars shall be paid entirely by Licensee. All
           royalty payments due under this Agreement shall be mailed to the
           following address: NIH, P.O. Box 360120, Pittsburgh, Pennsylvania
           15251-6120. The royalty report required by paragraph 9.04 of this
           Agreement shall accompany each such payment and a copy of such report
           shall also be mailed to PHS at its address for notices indicated on
           the Signature Page of this Agreement.

     9.07  Late charges will be applied to any overdue payments as required by
           the U.S. Department of Treasury in the Treasury Fiscal Requirements
           Manual, Section 8025.40. The payment of such late charges shall not
           prevent PHS from exercising any other rights it may have as a
           consequence of the lateness of any payment.

     9.08  All plans and reports required by this Article 9 and marked
           "confidential" by Licensee shall be treated by PHS as commercial and
           financial information obtained from a person and as privileged and
           confidential and, to the extent permitted by law, shall not be
           subject to disclosure under the Freedom of Information Act, 5
           U.S.C. (S)552.

10.  PERFORMANCE
     -----------

     10.01 Licensee shall use its reasonable best efforts to introduce the
           Licensed Products into the commercial market or apply the Licensed
           Processes to commercial use as soon as practicable. "Reasonable best
           efforts" for the purpose of this provision shall include, but not be
           limited to, adherence to the Commercial Development Plan and
           performance of the Benchmarks. The efforts of a sublicensee shall be
           considered the efforts of Licensee.

     10.02 Upon the First Commercial Sale, until the expiration of this
           Agreement, Licensee shall use its reasonable best efforts to keep
           Licensed Products and Licensed Processes reasonably accessible to the
           public.

11.  INFRINGEMENT AND PATENT ENFORCEMENT
     -----------------------------------

     11.01 PHS and Licensee agree to notify each other promptly of each
           infringement or possible infringement, as well as any facts which may
           affect the validity, scope, or enforceability of the Licensed Patent
           Rights of which either Party becomes aware.

     11.02 Pursuant to this Agreement and the provisions of Chapter 29 of Title
           35, United States Code, Licensee may a) bring suit in its own name,
           at its own expense, and
<PAGE>

           on its own behalf for infringement of presumably valid claims in the
           Licensed Patent Rights; b) in any such suit, enjoin infringement and
           collect for its use, damages, profits, and awards of whatever nature
           recoverable for such infringement; and c) settle any claim or suit
           for infringement of the Licensed Patent Rights-provided, however,
           that PHS and appropriate Government authorities shall have the first
           right to take such actions and shall have a continuing right to
           intervene in such suit. Licensee shall take no action to compel the
           Government either to initiate or to join in any such suit for patent
           infringement. Licensee may request the Government to initiate or join
           any such suit if necessary to avoid dismissal of the, suit. Should
           the Government be made a party to any such suit, Licensee shall
           reimburse the Government for any costs, expenses, or fees which the
           Government incurs as a result of such motion or other action,
           including any and all costs incurred by the Government in opposing
           any such motion or other action. Upon Licensee's payment of all costs
           incurred by the Government as a result of Licensee's joinder motion
           or other action, these actions by Licensee will not be considered a
           default in the performance of any material obligation under this
           Agreement. In all cases, Licensee agrees to keep PHS reasonably
           apprised of the status and progress of any litigation. Before
           Licensee commences an infringement action, Licensee shall notify PHS
           and give careful consideration to the views of PHS and to any
           potential effects of the litigation on the public health in deciding
           whether to bring suit.

     11.03 In any infringement action commenced under Paragraph 11.02, the
           expenses including costs, fees, attorney fees, and disbursements,
           shall be paid by Licensee. Up to fifty percent (50%) of such expenses
           may be credited against the royalties payable to PHS under Paragraph
           6.03 under the Licensed Patent Rights in the country in which such a
           suit is filed. In the event that fifty percent (50%) of such expenses
           exceed the amount of royalties payable by Licensee in any calendar
           year, the expenses in excess may be carried over as a credit on the
           same basis into succeeding calendar years. A credit against
           litigation expenses, however, may not reduce the royalties due in any
           calendar year to less than the minimum annual royalty. Any recovery
           made by Licensee, through court judgment or settlement, first shall
           be applied to reimburse PHS for royalties withheld as a credit
           against litigation expenses and then to reimburse Licensee for its
           litigation expense. Any remaining recoveries shall be shared equally
           by Licensee and PHS.

     11.04 PHS shall cooperate fully with Licensee in connection with an
           infringement action initiated under Paragraph 11.02. PHS agrees
           promptly to provide access to all necessary documents and to render
           reasonable assistance in response to a request by Licensee.

     11.05 In the event that a declaratory judgment action alleging invalidity
           or non-infringement of any of the Licensed Patent Rights shall be
           brought against Licensee or raised by way of counterclaim or
           affirmative defense in an infringement suit brought by Licensee under
           Paragraph 11.02, pursuant to this Agreement and the provisions of
           Chapter 29 of Title 35, United States Code or other statutes,
           Licensee may a) defend the suit in its own name, at its own
<PAGE>

            expense, and on its own behalf for presumably valid claims in the
            Licensed Patent Rights; b) in any such suit, ultimately to enjoin
            infringement and to collect for its use, damages, profits, and
            awards of whatever nature recoverable for such infringement; and c)
            settle any claim or suit for declaratory judgment involving the
            Licensed Patent Rights-provided, however, that PHS and appropriate
            Government authorities shall have the first right to take such
            actions and shall have a continuing right to intervene in such suit.
            Licensee shall take no action to compel the Government either to
            initiate or to join in any such declaratory judgment action.
            Licensee may request the Government to initiate or join any such
            suit if necessary to avoid dismissal of the suit. Should the
            Government be made a party to any such suit by motion or any other
            action of Licensee, Licensee shall reimburse the Government for any
            costs, expenses, or fees which the Government incurs as a result of
            such motion or other action. Upon Licensee's payment of all costs
            incurred by the Government as a result of Licensee's joinder motion
            or other action, these actions by Licensee will not be considered a
            default in the performance of any material obligation under this
            Agreement. If Licenses elects not to defend against such declaratory
            judgment action, PHS, at its option, may do so at its own expense.
            In all cases, Licensee agrees to keep PHS reasonably apprised of the
            status and progress of any litigation. Before Licensee commences an
            infringement action, Licensee shall notify PHS and give careful
            consideration to the views of PHS and to any potential effects of
            the litigation on the public health in deciding whether to bring
            suit.

12.  NEGATION OF WARRANTIES AND INDEMNIFICATION
     ------------------------------------------

     12.01  PHS offers no warranties other than those specified in Article 1.

     12.02  PHS does not warrant the validity of the Licensed Patent Rights and
            makes no representations whatsoever with regard to the scope of the
            Licensed Patent Rights, or that the Licensed Patent Rights may be
            exploited without infringing other patents or other intellectual
            property rights of third parties.

     12.03  PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR
            FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY
            THE CLAMS OF THE LICENSED PATENT RIGHTS.

     12.04  PHS does not represent that it will commence legal actions against
            third parties infringing the Licensed Patent Rights.

     12.05  Licenses shall indemnify and hold PHS, its employees, students,
            fellows, agents, and consultants harmless from and against all
            liability, demands, damages, expenses, and losses, including but not
            limited to death, personal injury, illness, or property damage in
            connection with or arising out of a) the use by or on behalf of
            Licensee, its sublicensees, directors, employees, or third parties
            of any Licensed Patent Rights, or b) the design, manufacture,
            distribution, or use of any Licensed Products, Licensed Processes or
            materials, or other products or processes
<PAGE>

            developed in connection with or arising out of the Licensed Patent
            Rights. Licensee agrees to maintain a liability insurance program
            consistent with sound business practice.

13.  TERMINATION, AND MODIFICATION OF RIGHTS
     ---------------------------------------

     13.01  This Agreement is effective when signed by all parties and shall
            extend to the expiration of the last to expire of the Licensed
            Patent Rights unless sooner terminated as provided in this
            Article 13.

     13.02  In the event that Licensee is in default in the performance of any
            material obligations under this Agreement, and if the default has
            not been remedied within ninety (90) days after the date of notice
            in writing of such default, PHS may terminate this Agreement by
            written notice.

     13.03  At least thirty (30) days prior to filing a petition in bankruptcy,
            Licensee must inform PHS in writing of its intention to file the
            petition in bankruptcy or of a third party's intention to file an
            involuntary petition in bankruptcy.

     13.04  In the event that Licensee becomes insolvent, files a petition in
            bankruptcy, has such a petition filed against it, determines to file
            a petition in bankruptcy, or receives notice of a third party's
            intention to file an involuntary petition in bankruptcy, Licensee
            shall immediately notify PHS in writing. Furthermore, PHS shall have
            the right to terminate this Agreement by giving Licensee written
            notice. Termination of this Agreement is effective upon Licensee's
            receipt of the written notice.

     13.05  Licensee shall have a unilateral right to terminate this Agreement
            and/or any licenses in any country by giving PHS sixty (60) days'
            written notice to that effect.

     13.06  PHS shall specifically have the right to terminate or modify, at its
            option, this Agreement, if PHS determines that the Licenses: 1) is
            not executing the Commercial Development Plan submitted with its
            request for a license and the Licensee cannot otherwise demonstrate
            to PHS's satisfaction that the Licensee has taken, or can be
            expected to take within a reasonable time, effective steps to
            achieve practical application of the Licensed Products or Licensed
            Processes; 2) has not achieved the Benchmarks as may be modified
            under Paragraph 9.02; 3) has willfully made a false statement of, or
            willfully omitted, a material fact in the license application or in
            any report required by the license agreement; 4) has committed a
            substantial breach of a covenant or agreement contained in the
            license; 5) is not keeping Licensed Products or Licensed Processes
            reasonably available to the public after commercial use commences;
            6) cannot reasonably satisfy unmet health and safety needs; or 7)
            cannot reasonably justify a failure to comply with the domestic
            production requirement of Paragraph 5.01 unless waived. In making
            this determination, PHS will take into account the normal course of
            such commercial development programs conducted with sound and
<PAGE>

            reasonable business practices and judgment and the annual reports
            submitted by Licensee under Paragraph 9.02. Prior to invoking this
            right, PHS shall give written notice to Licensee providing Licensee
            specific notice of, and a ninety (90) day opportunity to respond to,
            PHS's concerns as to the previous items 1) to 7). If Licensee fails
            to alleviate PHS's concerns as to the previous items 1) to 7) or
            fails to initiate corrective action to PHS's satisfaction, PHS may
            terminate this Agreement.

     13.07  When the public health and safety so require, and after written
            notice to Licensee providing Licensee a sixty (60) day opportunity
            to respond, PHS shall have the right to require Licensee to grant
            sublicenses to responsible applicants, on reasonable terms, in any
            Licensed Fields of Use under the Licensed Patent Rights, unless
            Licensee can reasonably demonstrate that the granting of the
            sublicense would not materially increase the availability to the
            public of the subject matter of the Licensed Patent Rights. PHS will
            not require the granting of a sublicense unless the responsible
            applicant has first negotiated in good faith with Licensee.

     13.08  PHS reserves the right according to 35 U.S.C. (S)209(f) (4) to
            terminate or modify this Agreement if it is determined that such
            action is necessary to meet requirements for public use specified by
            Federal regulations issued after the date of the license and such
            requirements are not reasonably satisfied by Licensee.

     13.09  Within thirty (30) days of receipt of written notice of PHS's
            unilateral decision to modify or terminate this Agreement, Licensee
            may, consistent with the provisions of 37 CFR. (S)404.11, appeal the
            decision by written submission to the Director of NIH or designee.
            The decision of the NIH Director or designee shall be the final
            agency decision. Licensee may thereafter exercise any and all
            administrative or judicial remedies that may be available.

     13.10  Within ninety (90) days of termination of this Agreement under this
            Article 13 or expiration under Paragraph 3.02, a final report shall
            be submitted by Licensee. Any royalty payments, including those
            related to patent expense, due to PHS shall become immediately due
            and payable upon termination or expiration. If terminated under this
            Article 13, sublicensees may elect to convert their sublicenses to
            direct licenses with PHS pursuant to Paragraph 4.03.

14.  GENERAL PROVISIONS
     ------------------

     14.01  Neither Party may waive or release any of its rights or interests in
            this Agreement except in writing. The failure of the Government to
            assert a right hereunder or to insist upon compliance with any term
            or condition of this Agreement shall not constitute a waiver of that
            right by the Government or excuse a similar subsequent failure to
            perform any such term or condition by Licensee.

     14.02  This Agreement constitutes the entire agreement between the Parties
            relating to the subject matter of the Licensed Patent Rights, and
            all prior negotiations,
<PAGE>

            representations, agreements, and understandings are merged into,
            extinguished by, and completely expressed by this Agreement.

     14.03  The provisions of this Agreement are severable, and in the event
            that any provision of this Agreement shall be determined to be
            invalid or unenforceable under any controlling body of law, such
            determination shall not in any way affect the validity or
            enforceability of the remaining provisions of this Agreement.

     14.04  If either Party desires a modification to this Agreement, the
            Parties shall, upon reasonable notice of the proposed modification
            by the Party desiring the change, confer in good faith to determine
            the desirability of such modification. No modification will be
            effective until a written amendment is signed by the signatories to
            this Agreement or their designees.

     14.05  The construction, validity, performance, and effect of this
            Agreement shall be governed by Federal law as applied by the Federal
            courts in the District of Columbia.

     14.06  All notices required or permitted try this Agreement shall be given
            by prepaid, first class, registered or certified mail properly
            addressed to the other Party at the address designated an the
            following Signature Page, or to such other address as may be
            designated in writing by such other Party, and shall be effective as
            of the date of the postmark of such notice.

     14.07  This Agreement shall not be assigned by Licensee except a) with the
            prior written consent of PHS, such consent to be reasonably given;
            or b) as part of a sale or transfer of substantially the entire
            business of Licensee relating to operations which concern this
            Agreement. Licensee shall notify PHS within ten (10) days of any
            assignment of this Agreement by Licensee.

     14.08  Licensee agrees in its use of any PHS-supplied materials to comply
            with all applicable statutes, regulations, and guidelines, including
            Public Health Service and National Institutes of Health regulations
            and guidelines. Licensee agrees not to use the materials for
            research involving human subjects or clinical trials in the United
            States without complying with 21 CFR Part 50 and 45 CFR Part 46.
            License agrees not to use the materials for research involving human
            subjects or clinical trials outside of the United States without
            notifying PHS, in writing, of such research or trials and complying
            with the applicable regulations of the appropriate national control
            authorities. Written notification to PHS of research involving human
            subjects or clinical trials outside of the United States shall be
            given no later than sixty (60) days prior to commencement of such
            research or trials.

     14.09  Licensee acknowledges that it is subject to and agrees to abide by
            the United States laws and regulations (including the Export
            Administration Act of 1979 and Arms Export Control Act) controlling
            the export of technical data, computer software, laboratory
            prototypes, biological material, and other commodities. The
<PAGE>

            transfer of such items may require a license from the cognizant
            agency of the U.S. Government or written assurances by Licensee that
            it shall not export such items to certain foreign countries without
            prior approval of such agency. PHS neither represents that a license
            is or is not required or that, if required, it shall be issued.

     14.10  Licensee agrees to mark the Licensed Products or their packaging
            sold in the United States with all applicable U.S. patent numbers
            and similarly to indicate "Patent Pending" status. All Licensed
            Products manufactured in, shipped to, or sold in other countries
            shall be marked in such a manner as to preserve PHS patent rights in
            such countries.

     14.11  By entering into this Agreement, PHS does not directly or indirectly
            endorse any product or service provided, or to be provided, by
            Licensee whether directly or indirectly related to this Agreement.
            Licensee shall not state or imply that this Agreement is an
            endorsement by the Government, PHS, any other Government
            organizational unit, or any Government employee. Additionally,
            Licensee shall not use the names of NIH, CDC, or PHS or their
            employees in any advertising, promotional, or sales literature
            without the prior written consent of PHS.

     14.12  The Parties agree to attempt to settle amicably any controversy or
            claim arising under this Agreement or a breach of this Agreement,
            except for appeals of modification or termination decisions provided
            for in Article 13. Licensee agrees first to appeal any such
            unsettled claims or controversies to the Director of NIH, or
            designee, whose decision shall be considered the final agency
            decisions Thereafter, Licensee may exercise any administrative or
            judicial remedies that may be available.

     14.13  Nothing relating to the grant of a license, nor the grant itself,
            shall be construed to confer upon any person any immunity from or
            defenses under the antitrust laws or from a charge of patent misuse,
            and the acquisition and use of rights pursuant to 37 CFR Part 404
            shall not be immunized from the operation of state or Federal law by
            reason of the source of the grant.

     14.14  Paragraphs 4.03, 8.01, 9.06, 9.07, 12.01-12.05, 13.09, 13.10, and
            14.12 of this Agreement shall survive termination of this Agreement.

                         SIGNATURES BEGIN ON NEXT PAGE
<PAGE>

                    PHS PATENT LICENSE AGREEMENT-EXCLUSIVE
                     ---------------------------------------

                                 SIGNATURE PAGE
                                 --------------

FOR PHS:

By:____________________________________________        _________________
Barbara McGarey, J.D.                                  Date
Deputy Director, Office of Technology Transfer
National Institutes of Health

Mailing Address for Notices:

Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland 20852
Fax: (301) 402-0220


Form Licensee:

By:____________________________________________        _________________
Michael T. Flavin, Ph.D.                               Date
President
MediChem Research, Inc.

Mailing Address for Notices:

MediChem Research, Inc.
12305 South New Avenue
Lemont, Illinois 60439
Fax: (708) 257-1505
<PAGE>

                   APPENDIX A - Patent or Patent Application
                   -----------------------------------------

Patent or Patent Application:

     USPA SN 07/861,249 "Calanolides, Novel Antiviral Compounds, Compositions
     and Uses Thereof"

     USPA SN 08/065,618 (CIP of SN 07/861,249) "Calanolides, Novel Antiviral
     Compounds, Compositions and Uses Thereof"
<PAGE>

               APPENDIX B - Licensed Fields of Use and Territory
               -------------------------------------------------

Licensed Territory: World-wide, including all countries, states, provinces and
territories.

Licensed Fields of Use: Treatment of viral infection, viral-related infection
or viral-related disease in humans.
<PAGE>

                            APPENDIX C - Royalties
                            ----------------------

Royalties:

Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of Fifty Thousand Dollars ($50,000.00) according to the
                         -----------------------------------
following payment schedule:

     A.   Fifteen Thousand Dollars ($15,000.00) within thirty (30) days from the
          -------------------------------------
     Effective Date; and

     B.   Thirty-Five Thousand Dollars ($35,000.00) within one (1) year from the
          -----------------------------------------
     Effective Data less a credit of up to Twenty-Five Thousand Dollars
     ($25,000.00) for license issue royalties paid by Licensee to government of
     Sarawak for the manufacture and sale of Licensed Products.

Licensee agrees to pay to PHS a nonrefundable minimum annual royalty according
to the following schedule:

     A.   Five Thousand Dollars ($5,000.00) beginning in 1996 less an annual
          ---------------------------------
     credit of up to Two Thousand Five Hundred Dollars ($2,500.00) for minimum
     annual royalties paid by Licensee to government of Sarawak for the
     manufacture and sale of Licensed Products; and

     B.   Ten Thousand Dollars ($10,000.00) for 1998 and subsequent years less
          ---------------------------------
     an annual credit of up to Five Thousand Dollars ($5,000.00) for minimum
     annual royalties paid by Licensee to government of Sarawak for the
     manufacture and sale of Licensed Products.

Licensee agrees to pay PHS earned royalties on Net Sales as follows:

     A.   Four percent (4.0%) of Net Sales by Licensee or an Affiliate of
          -------------------
     Licensee of all Licensed Products manufactured or sold in the Licensed
     Territory; and;

     B.   Licensee shall be entitled to a One Hundred percent (100%) credit
     against PHS earned royalty payments for earned royalty payments Licensee
     must pay to the government of Sarawak for the manufacture and sale of
     Licensed Products.  Said reduction, however, shall not reduce the earned
     royalty payments to PHS below half of the rate provided for under Paragraph
     above.

Licensee agrees to pay PHS Sublicensing Royalties as follows:

     A.   Four percent (4.0%) of Net Sales by Sublicensee, or an Affiliate of
          -------------------
     Sublicensee of all Licensed Products manufactured and sold in the Licensed
     Territory plus Twenty per cent (20%) of the value of any consideration
     received in granting the sublicense.

     B.   Licensee shall be entitled to a One Hundred percent (100%) credit
     against PHS Sublicensing Royalties for sublicensing royalty payments
     Licensee must pay to the government of Sarawak.  Said reduction, however,
     shall not reduce the sublicensing royalty payments to PHS below half of the
     rates provided for under Paragraph A above.
<PAGE>

     Licensee agrees to pay PHS benchmark royalties as follows:

     A.   Twenty-Five Thousand Dollars ($25,000.00) upon filing of an IND
          -----------------------------------------
     application in the United States; and

     B.   Fifty Thousand Dollars ($50,000.00) upon completion of Phase I and
          -----------------------------------
     initiation of Phase II clinical trials; and

     C.   One Hundred- Thousand Dollars ($100,000.00) upon completion of Phase
          -------------------------------------------
     II and initiation of Phase III clinical trials; and

     D.   Two Hundred Thousand Dollars ($200,000.00) upon filing of a NDA
          ------------------------------------------
     application or equivalent in the United States, Europe or Japan; and

     E.   Licensee shall be entitled to a One Hundred percent (100%) credit
     against PHS benchmark royalties for benchmark royalty payments Licensee
     must pay to the government of Sarawak.  Said reduction, however, shall not
     reduce the benchmark royalty payments to PHS below half of the rates
     individually provided for under Paragraphs A through D above.  One hundred
     percent (100%) of such benchmark royalty payments actually made to PHS may
     be credited against royalties due under Paragraph 6.03; however, the net
     royalty payment in any calendar year may not be lower than the minimum
     annual royalty specified in Appendix C although uncredited benchmark
     royalty payments may be carried forward into subsequent years.
<PAGE>

                          APPENDIX D - Modifications
                          --------------------------

PHS and Licensee agree to the following modifications to the Articles and
Paragraphs of this Agreement:

Article Two

     2.09 (new) "Effective Date" shall mean the date when the last party to sign
has executed this Agreement.

Article Five

     5.03 (revised) Licenses acknowledges that PHS may enter into future
Cooperative Research and Development Agreements (CRADAs) under the Federal
Technology Transfer Act of 1986 that relate to the subject matter of this
Agreement.  Licensee agrees not to unreasonably deny requests for sublicense or
cross-license rights  from such future collaborators with PHS when acquiring
such derivative rights is necessary in order to make a CRADA project feasible.
Licensee may request an opportunity to join as a party to the proposed CRADA,
such request not to be unreasonably denied by PHS.

     5.04 (revised) DHHS has responsibility for funding basic biomedical
research, for funding medical treatment through programs such as Medicare and
Medicaid, for providing direct medical care and, more generally, for protecting
the health and safety of the public. Because of these responsibilities, and the
public investment in the research that culminated in the Licensed Patent Rights,
Licensee agrees, upon regulatory approval for marketing, to set up a special
patient access program in the United States so that Licensed Products may be
provided to individuals who are unable to afford them.

     5.05 (revised) In addition to the reserved license of Paragraph 5.01
above, PHS reserves the right to grant nonexclusive licenses to make and to use,
but not to sell or have sold, the inventions defined by the Licensed Patent
Rights for purposes of research involving the inventions themselves, and not for
purposes of commercial manufacture or in lieu of purchase if the inventions are
available as commercial products for research purposes.  The purpose of this
research license is to encourage basic research, whether conducted at an
academic or corporate facility.  In order to safeguard the Licensed Patent
Rights, however, PHS shall consult with Licensee before granting to commercial
entities a research license or providing to them research samples of the
materials claimed in the Licensed Patent Rights.  In the event that Licenses can
provide convincing written evidence to PHS that a commercial entity that has
been granted a research license to Licensed Patent Rights is developing the
inventions for commercial manufacture or in lieu of purchase if the inventions
are available as commercial products, then Licensee can request that PHS
terminate its research license with such commercial entities, such request not
to unreasonably denied.

Article Six

     6.01 (revised) Licensee agrees to pay to PHS a noncreditable, nonrefundable
license issue royalty as set forth in Appendix C within thirty (30) days from
the Effective Date of this Agreement.
<PAGE>

     6.02 (revised) Licensee agrees to pay to PHS a nonrefundable minimum annual
royalty as set forth in Appendix C. The minimum annual royalty is due and
payable on January 1 of each calendar year and may be credited against any
earned royalties due for sales made in that year.

     6.08 (revised) As an additional royalty, Licensee agrees to pay PHS upon
submission of a statement and request for payment, an amount equivalent to all
reasonable expenses previously incurred by PHS in the preparation, filing,
prosecution, and maintenance of Licensed Patent Rights according to the
following schedule: one-third within sixty (60) days; one-third within one (1)
year of the Effective Date of this Agreement; and one-third within two (2) years
of the Effective Date of this Agreement.  Licensee further agrees to pay PHS
annually, within sixty (60) days of PHS's submission of a statement and request
for payment, a royalty amount equivalent to all such future patent expenses
incurred during the previous calendar year, as of the date the statement and
request for payment is sent by PHS to Licensee.  Licensee may elect to surrender
its rights in any country of the Licensed Territory under any Licensed Patent
Rights upon sixty (60) days' written notice to PHS and owe no payment obligation
under this paragraph for subsequent patent-related expenses incurred in that
country.

Article Seven

     7.01 (revised) Upon Effective Date of this Agreement, Licensee agrees to
take the responsibility for, as well as pay for, but to consult with PHS in, the
preparation, filing, prosecution, and maintenance of any and all patent
applications or patents included in the Licensed Patent Rights and shall furnish
copies of relevant patent-related documents to PHS, who shall retain its
principle power of attorney.  Licensee may elect to surrender its rights in any
country of the Licensed Territory under any Licensed Patent Rights upon sixty
(60) days' written notice to PHS and owe no payment obligation under this
paragraph for subsequent patent-related expenses incurred in that country.
<PAGE>

                            APPENDIX E - Benchmarks
                            -----------------------

Licensee agrees to the following Benchmarks for its performance under this
Agreement and, within ten (10) days of achieving a Benchmark, shall notify PHS
that the Benchmark has been achieved:

A.   Development of Calanolide As A Therapeutic For Treatment of HIV Infection
     -------------------------------------------------------------------------

     1.   Begin negotiations for an agreement with Sarawak as to the extent of
     return to Sarawak from eventual marketing of synthetic licensed product
     within one (1) month of the Effective Date of the Agreement.  Complete
     agreement with Sarawak within nine (9) months of the Effective Date of the
     Agreement.

     2.   Develop and validate a plasma assay (using mouse, rat and dog plasma)
     for (+)Calanolide A.  Compare behavior of (-) Dihydrocalanolide B (to be
     supplied by the National Cancer Institute (NCI) ) in same.  To be completed
     by February 28, 1996.

     3.   Determine pharmacology of (+)Calanolide A in the mouse, rate and dog
     following single dose IV administration.  Provide results in the mouse to
     NCI to allow scheduling of efficacy and combination studies in hollow fiber
     and PBL-SCID models.  To be completed by March 31, 1996.

     4.   Develop and validate with respect to shelf stability of product a
     formulation of (+) Calanolide suitable for use in further toxicologic and
     eventual clinical evaluation.  To be completed by March 31, 1996.

     5.   Using the results in (3) to select dose and schedule, conduct initial
     dose-ranging studies in the rate and the dog with a frequency of
     administration IV that would support a two-week duration clinical trial.
     To be completed by June 30, 1996.

     6.   Formulate a quantity of GMP-prepared Calanolide A sufficient to
     complete IND-directed toxicology studies and two Phase I studies.  To be
     completed by June 30, 1996.

     7.   Conduct IND-directed toxicology studies in the rat and the dog
     according to protocols reviewed by NCI's Toxicology and Pharmacology Branch
     to support a two-week IV infusion study.  To be completed by September 30,
     1996.

     8.   Complete reports and quality control to support IND-filing.  To be
     completed by November 30, 1996.

     9.   File IND  To be completed by December 31, 1996.

     10.  Commence two-week infusion Phase I clinical trial.  To be completed by
     March 31, 1997.

     11.  Commence Phase II clinical trials by July 31, 1997.

     12.  Commence Phase III clinical trials (if necessary) by September 30,
     1998.
<PAGE>

     13.  Submit NDA by December 31, 1999.

B.   Development of Calanolide A As A Therapeutic For Treatment of non-HIV Viral
     ---------------------------------------------------------------------------
     Infections
     ----------

     1.   Begin assessment of activity of Calanolide A in primary screens
     against a panel of non-HIV viral strains which include but are not limited
     to: Herpes Simplex Virus-2, Herpes Simplex Virus-2, Cytomegalo Virus,
     Variella Zoster Virus, Epstein-Barr Virus, Adenovirus Type 5, Parainfluenza
     Type 3 Virus, Respiratory Syncytial Virus, Hepatitis B Virus, Measles
     Virus, Influenza A (H1N1) , Influenza A (H3N2) by December 31, 1995.

     2.   Conclude analysis of activity of Calanolide A in primary screens
     against non-HIV viral strains by March 31, 1996.

     3.   Election of non-HIV anti-viral therapeutic areas demonstrating
     potential for development and submission of development plan for those
     indications by June 30, 1996.

C.   Development of Calanolide -related Compounds, including Costatolide, As
     -----------------------------------------------------------------------
     Therapeutics For Treatment of Viral Infections
     ----------------------------------------------

     1.   Synthesize and submit to NCI for further testing at least one backup
     compound to Calanolide A per calendar year from 1995 through 1997.

     2.   Election of Calanolide-related compounds demonstrating potential for
     development and submission of development plan for those compounds by
     December 31, 1997.
<PAGE>

                                  APPENDIX B

                      MEDICHEM/STATE GOVERNMENT AGREEMENT
                      -----------------------------------
<PAGE>

                               LICENSE AGREEMENT
                               -----------------

     This Agreement made this 27th day of December, 1995 between MEDICHEM
SEARCH, INC., 12305 So. New Avenue, Lemont, Illinois 60439 (hereinafter
"MEDICHEM") of one part and the GOVERNMENT OF SARAWAK, Tingkat 17, Wisma Bapa
Malaysia, Petra 393502 Kuching, Sarawak, Malaysia (herein after 'SARAWAK') of
the other part.

     WHEREAS there exists An Agreement between the United States Government
National Institute of Health (NIH) and SARAWAK related to Calanolide compounds

     WHEREAS MEDICHEM is the NIH licensee under U.S.  Patent Application Serial
Nos. 861,249 and 08/065,618; and License is granted by NIH subject to MEDICHEM
entering into this Agreement with SARAWAK

     WHEREAS MEDICHEM wishes to obtain an exclusive license for SARAWAK's entire
_______, title, interest relating to the said Calanolide compounds in the
Agreement with NIH;

     SARAWAK and MEDICHEM agree as follows:

                             ARTICLE I DEFINITION
                             --------------------

     SARAWAK and MEDICHEM mutually agree and declare as follows:

_______ of Licensee or its sublicensees in exchange for cash or some equivalent
to which value can be assigned for the purpose of determining Net Sales.

EAST ASIA REGION
----------------

          China               Laos
          Korea               Malaysia
<PAGE>

          Japan               Singapore
          Hong Kong           The Philippines
          Macau               Brunei
          Taiwan              Indonesia
          Myanmar (Burma)     Papua New Guinea
          Thailand            Cambodia
          Vietnam

Licensed Territory - Worldwide

                          ARTICLE II  LICENSE GRANTS
                          --------------------------

     SARAWAK hereby agrees to the grant of License by NIH to MEDICHEM to make,
have made, use and sell License Product in the Licensed Territory under any
right, title or interest that SARAWAK may have related to the Licensed Product.
MEDICHEM shall, subject to the conditions stipulated in this Agreement, have the
right to grant sublicenses.

                             ARTICLE III  PAYMENTS
                             ---------------------

     MEDICHEM agrees to pay to SARAWAK a noncreditable, nonrefundable license
issue royalty for the manufacturing and sale of Licensed Products in the amount
of Sixteen Thousand Six Hundred and Sixty Seven U.S. Dollars (US$16,667.00)
according to the following payment schedule:

     A    Five Thousand U.S. Dollars (US$5,000.00) within thirty (30) days from
the Effective Date of this Agreement; and

     B.   Eleven Thousand Six Hundred and Sixty Seven U.S. Dollars
(US$11,667.00) within one (1) year from the Effective Date.
<PAGE>

     MEDICHEM, agrees to pay to SARAWAK a nonrefundable minimum annual royalty
according to the following schedule:

     A    One Thousand Six Hundred and Sixty Seven U.S. Dollars (US$1,667.00)
beginning in 1996.

     B.   Three Thousand Three Hundred and Thirty Three U.S. Dollars
(US$3,333.00) for 1998 and subsequent years.

MEDICHEM agrees to pay SARAWAK earned royalties on Net Sales as follows:

One and One-Third percent (1.33%) of Net Sales by Licensee or an Affiliate of
Licensee of all Licensed Products manufactured or sold in the Licensed
Territory; except the royalty in the East Asia Region shall be two percent (2%)
of Net Sales.

MEDICHEM agrees to pay SARAWAK Sublicensing Royalties as follows:

One and One-Third percent (1.33% of Net Sales by Sublicensee, or an Affiliate of
Sublicensee of Licensed Products manufactured and sold in the Licensed Territory
(except for the East Asia region, the royalities rate shall be two per cent
(2.0%) of Net Sales) PLUS Six and Two-Thirds percent (6.6%) of the value of any
consideration received or receivable by MEDICHEM in granting the sublicense.

MEDICHEM agrees to pay SARAWAK benchmark royalities as follows:

     Eight Thousand Three Hundred and Thirty Three U.S. Dollars (US$8,333.00)
upon filing __ IND application in the United States; and
<PAGE>

     Sixteen Thousand Six Hundred and Sixty Seven U.S. Dollars (US$16,667.00)
upon completion of Phase I and initiation of Phase II clinical trials; and

     C.   Thirty-Three Thousand Three Hundred and Thirty Three U.S. Dollars
     (US$33,333.00) upon completion of Phase II and initiation of Phase III
     clinical trials; and

     D.   Sixty-Six Thousand Six Hundred and Sixty Seven U.S. Dollars
     (US$66,667.00) upon filing of a NDA application or equivalent in the United
     States, Europe or Japan.

     One Hundred percent (100%) of such benchmark royalty payments actually made
     to SARAWAK may be credited against earned royalties due above.

     MEDICHEM agrees with SARAWAK that the computation of Net Sales shall be
based on the sale price of the Licensed Products published from time to time by
MEDICHEM as the selling price of the Licensed Products to MEDICHEM's Licensed or
Sub-Licensees, and the published Sale Price shall be made available to SARAWAK
upon request by the latter.

                      ARTICLE IV CONTINUATION OF PAYMENT
                      ----------------------------------

     Royalty payments hereunder shall be made in U.S. dollars within thirty days
from the end of each calendar year throughout the period of validity of this
Agreement.  The payment shall be accompanied with a statement of accounts duly
certified by auditors of MEDICHEM sufficient to determine how the royalty
payment was determined or assessed.

     SARAWAK shall have the right to inspect and audit MEDICHEM's accounting,
sales and other records to the extent necessary to determine or assess royalties
due hereunder.  SARAWAK shall pay the expenses of any such inspection of audits.
<PAGE>

                         ARTICLE V TERM AND TERMINATION
                         ------------------------------

     1.   Term.  Except as otherwise provided in this Agreement, this Agreement
          ----
shall terminate with the expiration of the period of validity of NIH patent
covering Licensed Product.

     2.   Termination.  MEDICHEM may terminate this Agreement during the term of
          -----------
the license granted for any reason by giving SARAWAK ninety (90) days prior
written notice, in which case the license granted pursuant to Article II shall
also terminate.  MEDICHEM agrees on termination to discontinue use, manufacture,
and sale of Licensed Product for which MEDICHEM was obligated to pay just prior
to such termination and account for the stocks of any products manufactured from
the Licensed Products.  Such stocks shall be sold or disposed of under the
supervision of or with the agreement of SARAWAK and the proceeds derived
therefrom, after deducting the costs of such sale, be shared by MEDICHEM and
SARAWAK equally.

     3.   Obligations Upon Termination.  MEDICHEM shall be liable for all
          ----------------------------
royalty payments due SARAWAK during the ninety (90) days notice period.

     4.   Termination for Default.  Either party may terminate this Agreement on
          -----------------------
written notice to the other party, effective immediately, if any of the
following events of default should occur and not be cured within sixty (60) days
after written notice from the Notifying party describing the default:

          (i)  the material failure of the notified party to meet its
               obligations hereunder; or
<PAGE>

          (ii) the filing by or against SARAWAK or MEDICHEM of a petition under
any bankruptcy or insolvency law, an assignment for the benefit of MEDICHEM's
creditors or the appointment of a receiver for substantially all of MEDICHEM's
property.  Such termination shall be without prejudice to any rights or remedies
which the non-defaulting party hitherto may have against the party in default,
for any breach of this Agreement.

              ARTICLE VI WARRANTIES; DISCLAIMERS; INDEMNIFICATION
              ---------------------------------------------------

     1.   Each party represents and warrants to the other party that it has no
pre-existing contractual or other obligations to any third party which preclude
it from entering into this Agreement and meeting its obligations hereunder, or
which conflict with any provision of this Agreement.

     2.   Each party shall have the status of an independent contractor without
the authority legally to bind the other party, its officers, directors or
employees.  This Agreement shall not be deemed to have created any partnership
between the parties hereto in relation to any of the matters contained in this
Agreement.

                    ARTICLE VII TRAINING SARAWAK PERSONNEL
                    --------------------------------------

     MEDICHEM agrees to train, or to provide scientific training for, two (2)
SARAWAK designated scientists in technology related to the synthesis of
Calanolide compounds at MEDICHEM's Lemont, Illinois facilities for up to one
year.  SARAWAK will pay for all transportation, compensation and living expenses
for such scientists.  It is acceptable to MEDICHEM if the SARAWAK scientists
participate in clinical trials, if this participation is approved by the
institution where the clinical trials are carried out.
<PAGE>

                          ARTICLE VIII MISCELLANEOUS
                          --------------------------

     1.   Governing Law.  This Agreement shall be deemed made in and construed
          -------------
in accordance with the law of England.

     2.   Actions Survive.  All causes of action accruing to either party under
          ---------------
this Agreement shall survive termination for any reason, as shall those
provisions which expressly state survival unless such survival is conditional
and the requisite conditions(s) has been fulfilled prior to or on such
termination.

     3.   Entire Agreement.  This Agreement constitutes the only and entire
          ----------------
understanding between the parties concerning its subject matter.

     4.   Amendments.  This Agreement may be amended or modified only in writing
          ----------
signed by both parties.

     5.   Arbitration.  All disputes which arise out of this Agreement shall be
          -----------
settled by arbitration in accordance with the conciliation and arbitration rules
and regulations of the International Arbitration Centre in England to which the
parties hereto submit.  The arbitrator shall have background and expertise
relating to the issue(s) involved.  The arbitration shall be in a mutually
agreed location and the UNCITRAL (United Nations Commission on International
Trade Laws) rules shall apply to such arbitration.  The parties shall share
equally the fees and expenses of the arbitration.  The arbitrator's decision
shall be binding, final and non-appealable.

     6.   Force Majeure.  If either party is prevented from performing any
          -------------
obligation hereunder by reason of fire, explosion, strike, labor dispute,
casualty, accident, lack or failure of transportation facilities, flood, war,
civil commotion, acts of God, or any law, order or decree of
<PAGE>

any government or subdivision thereof, then such party shall be excused from
performance hereunder to the extent and for the duration of such prevention,
provided that such party first notifies the other party in writing of such
prevention.

     7.   Publicity.  Except as required by law or applicable stock exchange
          ---------
rule, no public statements shall be made by either party concerning this
Agreement, its subject matter or its existence without prior consultation with
and the approval of the other party.

     8.   Severability.  In the event that any provision of this Agreement shall
          ------------
be found to be illegal, invalid or unenforceable for any reason, such shall not
affect the validity of the remainder of this Agreement, which shall be construed
and interpreted as though such provision was not present.

     9.   Notices.  Notices may be given to an officer of a party by
          -------

          (i)   personal delivery,

          (ii)  telex or facsimile transmission, or

          (iii) first class, registered mail addressed as follows:

          If to MEDICHEM:  President
                           12305 South New Avenue
                           Lemont, Illinois 60439

          If to SARAWAK:   State Financial Secretary
                           Pejabat Setiausaha Kewangan Negeri
                           Tingkat 17
                           Wisma Bapa Malaysia
                           Petra Jaya 93502 Kuching
                           Sarawak, Malaysia
<PAGE>

     Notice given under (i) above shall be deemed given on the date of delivery
and if given under (ii) shall be deemed to have been received 24 hours after the
time of transmission.  Notice under (iii) above shall be deemed given on the
second week after that on which the letter is mailed.

     10.  Binding Effect.  This Agreement shall inure to the benefit of and be
          --------------
binding on each party's successors in interest and assigns.

     11.  Assignment.  Except as otherwise contemplated by this Agreement,
          ----------
either party may with the prior written consent of the other, assign this
Agreement only in connection with the sale or disposition of the entire business
of such party or that portion to which this Agreement pertains.

     12.  Sub-License.  MEDICHEM may grant a sub-license to any third party,
          -----------
subject to the assignee agreeing to the payment of royalty stipulated in Article
III hereinabove.

     13.  In the event MEDICHEM has no further interest in any LICENSED PRODUCT,
MEDICHEM shall notify SARAWAK and SARAWAK shall have whatever right, title and
interest it had in the LICENSED PRODUCT and MEDICHEM may be willing to negotiate
the availability of MEDICHEM's data under terms to be agreed upon.
<PAGE>

     IN WITNESS WHEREOF, this Agreement has been executed in duplicate originals
on behalf of the parties by their below authorized officers as of the date first
written above.  This Agreement is effective on the date that the Government of
Sarawak approves the Agreement.

                                             MEDICHEM RESEARCH, INC.


                                             By:________________________________

                                             Its:_______________________________

                                             Date:______________________________


                                             GOVERNMENT OF SARAWAK


                                             By:________________________________

                                             Its:_______________________________

                                             Date:______________________________
<PAGE>

                                  APPENDIX C
                                  ----------

                        MEDICHEM/VITA INVEST AGREEMENT
                        ------------------------------
<PAGE>

                               LICENSE AGREEMENT
                               -----------------

     This Agreement, made this ____ day of December, 1996, between MediChem
Research, Inc., 12305 South New Avenue, Lemont, Illinois 60439, U.S.A.
(hereinafter MEDICHEM), and Vita-Invest, S.A., c/Fontsanta, 12-14, 08970 Sant.
Joan Despi, Barcelona, Spain (hereinafter VITA-INVEST).

     WHEREAS, MEDICHEM and VITA-INVEST have entered into a Joint Venture
Agreement and license agreement related to the development of (+)-calanolide A
(Exhibit A) and now wish to enter into this revised Licensing Agreement which
grants VITA-INVEST exclusive rights to use and sell Licensed Product in Spain
and Portugal.

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

I.   DEFINITIONS
     -----------

     Licensed Product shall mean the active ingredient (+)-calanolide A, the
making, using or selling of which utilized MEDICHEM Patent Rights or MEDICHEM
Technical Information.

     MEDICHEM Patent Rights shall mean any patents in which MEDICHEM has any
right, title or interest, including patents licensed MEDICHEM which relate to
the active ingredient (+)-calanolide A or the use or manufacture of such agent.

     MEDICHEM Technical Information shall mean all unpatented information
related to the active ingredient(+)-calanolide A, or use or manufacturer
thereof.

     Net Sales Price shall mean the gross sales price less standard trade
allowances and discounts not to exceed 5% of the gross sales price.
<PAGE>

II.   LICENSE GRANT
      -------------

      1.   All previous agreements between VITA-INVEST and MEDICHEM are
cancelled and neither party has any claim against each other with respect to the
prior agreements.

      2.   MEDICHEM hereby grants VITA-INVEST an exclusive license to use and
sell Licensed Product in Spain and Portugal, and including the right to
sublicense Licensed Product in Spain which includes its right to use and sell
Licensed Product in Spain and Portugal.

      3.   MEDICHEM hereby exclusively sublicenses VITA-INVEST under MEDICHEM's
right and interest in Patent Rights and Technical Information licensed to
MEDICHEM for using or selling Licensed Product in Spain and Portugal.  Such
sublicenses shall be subject to the terms of the license to MEDICHEM from the
NIH appended to this Agreement as Exhibit B.

III.  PAYMENTS
      --------

      1.   VITA-INVEST shall reimburse MEDICHEM within thirty (30) days for any
licensing payments of 4% of Net Sales Price of Licensed Product sold in Spain
and Portugal, of which 2.67% of Net Sales Price of Licensed Product sold in
Spain and Portugal is paid to NIH directly by MEDICHEM (Exhibit B).

      2.   MEDICHEM agree to supply VITA-INVEST at VITA-INVEST's request with
Licensed Product for sale in Spain and Portugal at MEDICHEM's manufacturing
costs up to $3 million dollars and VITA-INVEST shall pay MEDICHEM 15% above
MEDICHEM's manufacturing costs for such product thereafter.  In the event that
MEDICHEM is unable or unwilling to supply VITA-INVEST with Licensed Product,
then MEDICHEM agrees to provide
<PAGE>

VITA-INVEST with information necessary for the manufacture of Licensed Product
and VITA-INVEST shall have the right to manufacture in Spain and to sell
Licensed Product in Spain and Portugal.

     3.   VITA-INVEST shall bear the cost of obtaining regulatory approval to
market Licensed Product in Spain and Portugal.  MEDICHEM shall provide VITA-
INVEST with all technical information in the possession of MEDICHEM and its
licensees for obtaining regulatory approval in Spain and Portugal.

     4.   VITA-INVEST shall have the right to audit MEDICHEM's books to the
extent necessary to determine MEDICHEM's manufacturing costs hereunder.  VITA-
INVEST shall pay the expenses of any such audits.

     5.   MEDICHEM will provide VITA-INVEST with a semi-annual summary report on
their research work and licensing activity on the active ingredient(+)-
calanolide A.

IV.  INFRINGEMENT
     ------------

     1.   Each party agrees to notify the other party of infringement of
MEDICHEM's Patent Rights by third parties.

     2.   Either party may bring suit or action for infringement of the
MEDICHEM's Patent Rights in Spain at its expense.  If it fails to take action
with respect to such infringement within three (3) months following receipt of
reasonable notice thereof, and other party may bring suit or action for
infringement at the litigating party's expense, and if necessary or desirable
the other party may be joined as a party plaintiff and shall execute all papers
and perform all such other acts as may reasonably be requested by the litigating
party.  Any amount recovered,
<PAGE>

whether by judgment, award, decree or settlement, after deduction by the
litigating party of an amount equal to the expenses incurred by it in conducting
such suit or action, shall be divided equally between MEDICHEM and VITA-INVEST.

V.   TERM AND TERMINATION
     --------------------

     1.   Term.  Except as otherwise provided in this agreement, this Agreement
          ----
shall terminate with the expiration of the last to expire patent within Patent
Rights or fifteen (15) years after the first commercial sale of Licensed Product
in Spain whichever of the two conditions occurs last.

     2.   Termination.  VITA-INVEST may terminate this Agreement during the term
          -----------
of the license granted for any reason by giving MEDICHEM ninety (90) days prior
written notice, in which case the license granted pursuant to Section II shall
also terminate.  VITA-INVEST agrees to discontinue use and sale of Licensed
Product for which VITA-INVEST was obligated to pay just prior to such
termination.

     3.   Termination for Default.  Either party may terminate this Agreement on
          -----------------------
written notice to the other party, effective immediately, if any of the
following events of default should occur and not be cured within thirty (30)
days after written notice from the notifying party describing the default: (i)
the material failure of the notified party to meet its obligations hereunder; or
(ii) the filing by or against VITA-INVEST or MEDICHEM of a petition under any
bankruptcy or insolvency law, an assignment for the benefit of VITA-INVEST's or
MEDICHEM's creditors or the appointment of a receiver for substantially all of
VITA-INVEST's or MEDICHEM's property.
<PAGE>

VI.  WARRANTIES, DISCLAIMERS; INDEMNIFICATION
     ----------------------------------------

     1.   Each party represents and warrants to the other party that it has no
pre-existing, contractual or other obligations to any third party which preclude
it from entering into this Agreement and meeting its obligations hereunder, or
which conflict with any provision of this Agreement.

     2.   Each party represents and warrants to the other party that it shall
use reasonable efforts to achieve the objectives of the license. However, the
parties agree that no guarantees or warranties are made or intended as to the
success or outcome of this license on an overall or interim basis, or as to the
achievement of the various goals, steps, tasks, time schedules and the other
particulars of the project.

     3.   VITA-INVEST will not be liable for Product Liability Claims when such
claims arise from the product made by MEDICHEM and sold by VITA-INVEST in Spain
and Portugal.

     4.   MEDICHEM shall not be liable to VITA-INVEST, its Affiliates or the
officers, directors or employees of any of them for any consequential damages
arising out of any breach of this Agreement by such party, including without
limitation any lost profits or incidental or indirect damages.

     5.  Each party shall have the status of an independent contractor without
the authority legally to bind the other party, its officers, directors or
employees.

VII. MISCELLANEOUS
     -------------

     1.   Governing Law. This Agreement shall be deemed made in and construed in
          -------------
accordance with the law of Delaware.
<PAGE>

     2.   Actions Survive. All causes of action accruing to either party under
          ---------------
this Agreement shall survive termination for any reason, as shall those
provisions which expressly state such survival unless such survival is
conditional and the requisite condition(s) has been fulfilled prior to or on
such termination.

     3.   Entire Agreement. This Agreement constitutes the only and entire
          ----------------
understanding between the parties concerning its subject matter.

     4.   Amendments. This Agreement may be amended or modified only in
          ----------
writing signed by both parties.

     5.   Arbitration. All disputes which arise out of this Agreement shall be
          -----------
settled by arbitration in accordance with the conciliation and arbitration rules
and regulations of the International Chamber of Commerce in Switzerland to which
the parties hereto submit. The arbitrator shall have background and expertise
relating to the issue(s) involved. The arbitration shall be in a mutually agreed
location. The parties shall share equally the cost of such arbitration. The
arbitrator's decision shall be binding, final and non-appealable.

     6.   Force Majeure. If either party is prevented from performing any
          -------------
obligation hereunder by reason of fire, explosion, strike, labor dispute,
casualty, accident, lack or failure of transportation facilities, flood, war,
civil commotion, acts of God, or any law, order or decree of any government or
subdivision thereof, then such party shall be excused from performance hereunder
to the extent and for the duration of such prevention, provided that such party
first notifies the other party in writing of such prevention.
<PAGE>

     7.   Publicity. Except as required by law or applicable stock exchange
          ---------
rule, no public statements shall be made by either party concerning this
Agreement, its subject matter or its existence without prior consultation with
and the approval of the other party.

     8.   Severability.  In the event that any provision of this Agreement shall
          ------------
be found to be illegal, invalid or enforceable for any reason, such shall not
affect the validity of the remainder of this Agreement, which shall be construed
and interpreted as though such provision was not present.

     9.   Notices.  Notices may be given to an officer of any party by (i)
          -------
personal delivery, (ii) telex or telecopy, or (iii) first class, registered mail
addressed as follows:

     If to MEDICHEM:              12305 South New Avenue
                                  Lemont, Illinois 60439
     If to VITA-INVEST:           c/Fontsanta, 12-14
                                  08970 Sant. Joan Despi
                                  Barcelona, Spain

Notice given under (i) or (ii) above shall be deemed given on the date of
delivery or telecommunication transmission. Notice under (iii) above shall be
deemed given on the third business day after that on which the letter is mailed.

     10.  Binding Effect. This Agreement shall inure to the benefit of and be
          --------------
binding on each party's successors in interest and assigns.

     11.  Assignment. Except as otherwise contemplated by this Agreement,
          ----------
either party may assign this Agreement only in connection with the sale or
disposition of the entire business
<PAGE>

of such party or that portion to which this Agreement pertains. Either party may
assign this Agreement to an Affiliate(s) without permission of the other party.

     IN WITNESS WHEREOF, this Agreement has been executed in duplicate originals
on behalf of the parties by their authorized officers as of the date first
written above.

     This Agreement has originally been executed in both the English and Spanish
languages. In the event that any disagreement between the two versions may
arise, the English version shall take legal precedence over the Spanish version.

                                        MEDICHEM RESEARCH, INC.


                                        By__________________________

                                        Its__________________________

                                        Date_________________________

                                        VITA-INVEST, S. A.


                                        By__________________________

                                        Its__________________________

                                        Date_________________________
<PAGE>

                                  APPENDIX D
                                  ----------

              SCHEDULE FOR REMITTANCE OF STOCK SUBSCRIPTION FUNDS
              ---------------------------------------------------
                   BY CRAUN ON BEHALF OF SARAWAK GOVERNMENT
                   ----------------------------------------
<PAGE>

                                   APPENDIX D
                                   ----------

              SCHEDULE FOR REMITTANCE OF STOCK SUBSCRIPTION FUNDS
              ---------------------------------------------------
                   BY CRAUN ON BEHALF OF SARAWAK GOVERNMENT
                   ----------------------------------------

<TABLE>
<CAPTION>

                                                                      SUBSCRIPTION
                                                                      AMOUNT US $
PERIOD                   BENCHMARK                                    @ $10.000/SHARE               SHARE
------                   ---------                                    ---------------               -----
<S>                      <C>                                          <C>                           <C>
January, 1997            Execution of J.V. agreement
                         Incorporation of J.V. Company
                         Appointment of CRAUN's and
                         MEIDICHEM's Directors to Board
                         of COMPANY
                         Assignment/Transfer of MEDICHEM's
                         patents, etc.
                         Opening of Bank account for COMPANY;
                         and appointment of joint signatories for
                         account                                      $1,200,000                    120

March 15, 1997           Phase IA Trial begins

April 30, 1997           Review of Phase IA Trial Progress
                         Progress if deemed satisfactory              $  800,000                     80

June 15, 1997            Review of Phase IA Trial Progress
                         Progress if deemed satisfactory              $1,000,000                    100

July 15, 1997            Board of Directors' approval for Phase
                         IB after progress review                     $1,264,000                    126.4

August 31, 1997          Review of Phase IB trial progress
                         Progress if deemed satisfactory              $1,078,000                    107.8

Nov. 30, 1997            Review of Phase IB trial progress
                         Progress if deemed satisfactory              $  658,000                     65.8

January, 1998            Board of Directors' approval for Phase
                         II Progress if deemed satisfactory           $3,000,000                      300
                                                                      ----------                    -----
                         Total                                        $9,000,000                      900
</TABLE>

(1)  If at any stage CRAUN feels that the progress of the Trial is
     unsatisfactory, CRAUN can elect to terminate, with 15 days written notice,
     its participation in the joint venture and thereafter, released from its
     obligations to provide further funds.

(2)  At time of approval for Phase II, Board of Directors shall determine how to
     raise the balance of US $12,000,000 required for the completion of Phase II
     trials. Such funds should be available from the beginning of February,
     1998.

(3)  All remittances shall be made to a bank account in USA in the name of the
     joint venture company and operated jointly by 2 Treasurers of the Company
     with CRAUN and MEDICHEM appointing one Treasurer each.
<PAGE>

                                  APPENDIX E
                                  ----------

                          MEDICHEM VESTING OF SHARES
                          --------------------------
<PAGE>

                                  APPENDIX E
                                  ----------

                          MEDICHEM VESTING OF SHARES
                          --------------------------

<TABLE>
<CAPTION>
                                   Shares
                                   ------
<S>                                <C>
February 01, 1997                  120
March 31, 1997                      80
May 31, 1997                       100
June 30, 1997                      126.4
August 31, 1997                    107.8
October 31, 1997                    65.8
December 01, 1997                  300
                                   -----
                                   900
</TABLE>
<PAGE>

                               State of Delaware

                       Office of the Secretary of State

                            _______________________

     I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "SARAWAK MEDICHEM PHARMACEUTICALS, INC.", FILED IN THIS OFFICE
ON THE TWENTY-SEVENTH DAY OF DECEMBER, A.D. 1996, AT 10 O'CLOCK A.M.

     A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.



                                    ____________________________________
                                    Edward J. Freel, Secretary of State

                                    AUTHENTICATION:     8263196

                                    DATE:               12-27-96
<PAGE>

                         Certificate of Incorporation

                                      of

                    Sarawak Medichem Pharmaceuticals, Inc.

          For the purpose of forming a corporation (the "Corporation") under the
General Corporation Law of the State of Delaware (the "Delaware General
Corporation Law"), the undersigned incorporator certifies as follows:

                                   Article 1

                                     Name

          The name of the Corporation is Sarawak Medichem Pharmaceuticals, Inc.,

                                   Article 2

                      Initial Registered Office and Agent

          The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle.  The name of its registered agent at this address is The
Corporation Trust Company.

                                   Article 3

                                    Purpose

          The nature of the business or purposes to be conducted or promoted by
the Corporation are to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law.

                                   Article 4

                               Authorized Shares

          The total number of shares of stock which the Corporation shall have
authority to issue is 3000 shares of Common Stock, par value $0.01 per share.

                                   Article 5

                                    By-Laws

          The Corporation's board of directors shall have the power to adopt,
amend or repeal the Corporation's by-laws.

                                   Article 6
<PAGE>

                             Election of Directors



          Elections of directors need not be by written ballot unless the
Corporation's by-laws so provide.

                                   Article 7

                            Liability of Directors

          No director of the Corporation shall have personal liability to the
Corporation or its stockholders for monetary damages for breach of his or her
fiduciary duty as a director, except for liability:  (i) for a breach of the
director's duty of loyalty to the Corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under (S) 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the director derived an
improper personal benefit.

          If the Delaware General Corporation Law is amended to authorize
further limitation or elimination of the liability of directors, then in
addition to the limitation on personal liability provided in this Article 7, the
liability of a director of the Corporation shall be further limited or
eliminated to the fullest extent permitted by the Delaware General Corporation
Law as so amended.

          No amendment or repeal of this Article 7 shall apply to or have any
effect on the liability or alleged liability of any director of the Corporation
for or in respect of acts or omissions occurring prior to the amendment or
repeal.

                                   Article 8

                   Indemnification of Directors and Officers

          The corporation shall indemnify each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Corporation (a
"proceeding") by reason of the fact that he or she, or the person of whom he or
she is the legal representative, is or was a director or officer of the
Corporation or, while a director or officer, is or was serving at the
Corporation's request as a director, officer, trustee, employee or agent of
another corporation or a partnership, joint venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, which he or she reasonably incurs in connection with the
proceeding, to the fullest extent authorized by the Delaware General Corporation
Law, as it now exists and as it may be amended (but in the case of any
amendment, only to the extent that the amendment authorizes the Corporation to
provide broader indemnification rights than were permitted prior to the
amendments).  This right to indemnification shall continue as to a person who
has ceased to be a director or officer of the Corporation and shall inure to the
benefit of his or her heirs and legal representatives.
<PAGE>

          The right to indemnification under this Article 8 shall include the
right to be paid by the Corporation the expenses incurred in defending any
proceeding in advance of its final deposition.  If required by the Delaware
General Corporation Law, however, the payment of the expenses incurred by a
director or officer of the Corporation in his or her capacity as such (and not
in any other capacity in which he or she renders or rendered service while
serving as an officer or director) shall be made only on delivery of an
undertaking by the director or officer to repay all amounts advanced if it is
ultimately determined that he or she is not entitled to indemnification under
this Article 8 (or otherwise).

          The Corporation, by action of its board of directors, may provide
indemnification to its employees and agents with the same scope and effect as
the indemnification provided to its directors and officers in this Article 8.

                                   Article 9

                                 Incorporator

          The name and mailing address of the sole incorporator of the
Corporation are:

                    Name                Mailing Address

            Laurence J. DeVries

                                        Johnson and Colmar
                                        300 South Wacker Drive, Suite 1000
                                        Chicago, Illinois 60606


Signed on December 24, 1995.



_________________________________
Laurence J. DeVries, Incorporator
<PAGE>

                                  APPENDIX G
                                  ----------


                          LIST OF MEDICHEM SCIENTISTS
                          ---------------------------

<PAGE>

                         CALANOLIDE PROJECT APPENDIX G

                         MediChem Scientists Involved

1.   Michael T. Flavin, Ph.D.

2.   Ze-Qi Xu, Ph.D. (Calanolide Project Manager)

3.   David Zembower, Ph.D.

4.   Sergy Dzekhster, M.S.

5.   Lin Lin, M.S.

6.   Bo Shen, M.S.

7.   Weiguo Nie, M.S.

8.   John D. Rizzo, B.S.

9.   Darko Brankovic, B.S.

10.  Albert Khilevich, B.S.
<PAGE>

                                  APPENDIX H
                                  ----------


                    DETERMINATION/DEFINITION OF NET PROFIT
                    --------------------------------------
<PAGE>

                                 Appendix ___

                    DETERMINATION/DEFINITION OF NET PROFIT

<TABLE>
<CAPTION>
                                                                                    (UNIT: US $)
Gross Sales                                                                                X.XX
   Less: Returns and Allowances                                                           -X.XX
                                                                 ------------------------------
<S>                                                              <C>
Net Sales                                                                                  X.XX
   Less: Cost of Goods Sold (Produced)                                                    -X.XX
                                                                 ------------------------------
Gross Margin                                                                               X.XX
   Less:  Sales, General, and Administration Expenses                                     -X.XX
                                                                 ------------------------------
Operating Income                                                                           X.XX
   Less: Interest and Taxes                                                               -X.XX
                                                                 ------------------------------
Net Profit (Loss)                                                                          X.XX
                                                                 ------------------------------
</TABLE>

Note (1):  Cost of Goods Sold (Produced) includes but is not limited to royalty
payments, subcontracting fees, direct salaries and wages, supplies, and raw
materials

Note (2):  All recognition of revenues, costs, expenses, and profit shall be
accounted for using Generally Accepted Accounting Principles (GAAP)

Note (3):  All Net Profits/Losses shall be shared by each shareholder in a 50/50
proportion