<PAGE>











                         RESEARCH AND LICENSE AGREEMENT

                                    BETWEEN

                            KOSAN BIOSCIENCES, INC.

                                      AND

              THE MEMORIAL SLOAN-KETTERING CANCER RESEARCH CENTER




                                AUGUST 25, 2000


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                               TABLE OF CONTENTS


<TABLE>
<CAPTION>

                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE 1 -- DEFINITIONS                                                     -2-

ARTICLE 2 -- RESEARCH                                                        -8-

ARTICLE 3 -- SCREENING BY LICENSEE                                          -14-

ARTICLE 4 -- LICENSES                                                       -15-

ARTICLE 5 -- DEVELOPMENT AND COMMERCIALIZATION                              -18-

ARTICLE 6 -- LICENSE FEES AND MILESTONE PAYMENTS                            -21-

ARTICLE 7 -- ROYALTIES, RECORDS, AND REPORTS                                -22-

ARTICLE 8 -- SUPPLY OF PRODUCTS                                             -27-

ARTICLE 9 -- CONFIDENTIALITY                                                -27-

ARTICLE 10 -- REGULATORY MATTERS                                            -29-

ARTICLE 11 -- PATENT INFRINGEMENT                                           -30-

ARTICLE 12 -- INTELLECTUAL PROPERTY                                         -31-

ARTICLE 13 -- PUBLICITY                                                     -34-

ARTICLE 14 -- WARRANTIES AND REPRESENTATIONS                                -34-

ARTICLE 15 -- TRADEMARKS                                                    -36-

ARTICLE 16 -- INDEMNIFICATION                                               -36-

ARTICLE 17 -- BANKRUPTCY                                                    -37-

ARTICLE 18 -- TERM AND TERMINATION                                          -37-

ARTICLE 19 -- ASSIGNMENT                                                    -40-

<PAGE>

ARTICLE 20 -- DISPUTE RESOLUTION                                            -41-

ARTICLE 21 -- MISCELLANEOUS                                                 -42-


</TABLE>


<PAGE>

                         RESEARCH AND LICENSE AGREEMENT

         This RESEARCH AND LICENSE AGREEMENT (the "AGREEMENT"), made as of
August 25, 2000 (the "EFFECTIVE DATE"), by and between KOSAN BIOSCIENCES,
INC., a corporation organized under Delaware law having its principal office
at 3832 Bay Center Place, Hayward, California 94545 ("LICENSEE");

         ON THE ONE HAND, AND:

         THE SLOAN-KETTERING INSTITUTE FOR CANCER RESEARCH, a non-profit
organization having its principal office at 1275 York Ave., New York, NY 10021
("SKI");

         ON THE OTHER HAND,

WITNESSETH:

         A.       WHEREAS, SKI has been engaged in research efforts focused on
the discovery and development of EPOTHILONES and has certain research and
development capabilities in the FIELD to which it has the right to grant
licenses;

         B.       WHEREAS, patent applications have been filed in the name of
SKI in the United States and other territories for the granting of letters
patent relating to certain EPOTHILONES that may have activity within the FIELD;

         C.       WHEREAS, LICENSEE has been engaged in research efforts
focused on the discovery and development of EPOTHILONES and has certain
research, development, and commercialization capabilities in the FIELD;

         D.       WHEREAS, SKI and LICENSEE desire to engage in collaborative
research to conduct a drug discovery and development program as generally
described in the RESEARCH PLAN attached hereto as Exhibit A;

         E.       WHEREAS, LICENSEE is prepared to undertake a program for the
development, manufacture, and SALE of PRODUCTS, provided that LICENSEE is able
to obtain a license under the SKI PATENT RIGHTS and SKI KNOW-HOW (as
hereinafter defined) with exclusivity to protect its investment in such
program; and

         F.       WHEREAS, SKI recognizes that LICENSEE requires such a
license to justify the investment in funding and personnel needed to develop
and market PRODUCTS and is willing to grant such rights.

         NOW, THEREFORE, in consideration of the premises and the performance
of the covenants herein contained, IT IS AGREED AS FOLLOWS:

                                       1

<PAGE>

ARTICLE 1 -- DEFINITIONS

         For the purposes of this AGREEMENT and solely for such purposes, the
terms hereinafter set forth shall have the following respective meanings:

         1.1      "AFFILIATE" or "AFFILIATE(S)" shall mean any corporation(s)
or organization(s) that directly or indirectly CONTROLS, is (are) CONTROLLED
by, or is (are) under common CONTROL with LICENSEE or SKI.

         1.2      "ANTICANCER ACTIVITY" shall mean cytotoxic or cytostatic
activity.

         1.3      "BEST EFFORTS" shall mean efforts by a party commensurate
with that party's efforts to research, develop, market and/or commercialize
its own product.

         1.4      "BULK PRODUCT" shall mean the purified active ingredient, or
purified intermediate for manufacture of any PRODUCT, as the case may be, in
bulk form.

         1.5      "COLLABORATION COMPOUNDS" shall mean any EPOTHILONE claimed
in SKI PATENT RIGHTS.

         1.6      "COMMITTED FTEs" shall mean, with respect to the RESEARCH
PROGRAM, those SKI FTEs for which LICENSEE will provide RESEARCH FUNDING as
set forth in the RESEARCH PLAN to conduct such RESEARCH PROGRAM.

         1.7      "CONTROL," "CONTROL(S)," or "CONTROLLED" shall refer to
direct or indirect beneficial ownership of at least fifty percent (50%) of the
voting stock of a corporation or other business entity, or a fifty percent
(50%) or greater interest in the income of such corporation or other business
entity, or the power to direct or cause the direction of the management or
policies of such corporation or other business entity whether by ownership of
voting securities, by contract, or otherwise, or such other relationship as,
in fact, constitutes actual control.

         1.8      "DEVELOPMENT" shall mean all work involved in STAGES O, I,
II, and III for a PRODUCT in any country or territory.

         1.9      "DEVELOPMENT PLAN" shall mean the plan for DEVELOPMENT of a
PRODUCT pursuant to Article 5.

         1.10     "EFFECTIVE DATE" shall mean August 26, 2000.

         1.11     "EPOTHILONE" shall mean epothilone A, epothilone B,
epothilone C, epothilone D, epothilone E, epothilone F, desoxyepothilone F,
and any intermediate, derivative, or analog of any of the foregoing compounds.

                                       2

<PAGE>

         1.12     "FDA" shall mean the United States Food and Drug
Administration.

         1.13     "FIELD" shall mean the research, development, manufacture,
USE, and SALE of any COLLABORATION COMPOUND for any purpose, including but not
limited to all human and animal pharmaceutical and agricultural applications.

         1.14     "FINISHED PRODUCT" shall mean the finished pharmaceutical
form, in any formulation, of a PRODUCT packaged for sale to a THIRD PARTY.

         1.15     "FTE" shall mean a full time scientific person with
appropriate academic credentials and training dedicated to the RESEARCH
PROGRAM or in the case of less than a full-time dedicated scientific person, a
full time, equivalent scientific person year (based upon a total of fifty-two
(52) weeks or two thousand eighty (2080) hours per year, with the foregoing
including all working days and vacations, paid holidays, sick days, and the
like, consistent with SKI's normal business practices) of scientific work, on
or directly related to the RESEARCH PROGRAM, carried out by such a person.
Included are research scientists (Ph.D. or equivalent) and their associates
(MS or BS). Excluded are project management personnel, administrative
facilities support, general information and computer support, laboratory
support, and other internal or external support personnel involved in the
RESEARCH PROGRAM.

         1.16     "IND" shall mean an Investigational New Drug Application
filed pursuant to the requirements of the FDA as more fully defined in 21
C.F.R. Section 312.3 or its equivalent in any MAJOR MARKET COUNTRY or in the
European Economic Community.

         1.17     "JDAC" shall mean the Joint Development Advisory Committee
described in Section 5.1.1 below.

         1.18     "JRC" shall mean the Joint Research Committee described in
Section 2.3.1 below.

         1.19     "KNOW-HOW" shall mean all information not generally known to
the public, including techniques and data, including but not limited to,
screens, models, methods, assays, inventions, discoveries, trade secrets,
improvements, and technical information, together with all experience, data,
formulas, procedures, and results, and including all biological, chemical,
pharmacological, toxicological, clinical, analytical, and quality control
data, in each case, which is necessary or useful in the DEVELOPMENT,
manufacturing, or USE of COLLABORATION COMPOUNDS or PRODUCTS.

         1.20     "LICENSEE KNOW-HOW" shall mean such KNOW-HOW that LICENSEE
or its AFFILIATE(S) discloses to SKI under this AGREEMENT.

         1.21     "LICENSEE PATENT RIGHTS" shall mean any patents and patent
applications, including all corresponding Patent Co-operation Treaty
applications, European Patent Convention applications or applications under
similar administrative international conventions, and corresponding national
patents and patent applications, together with any divisional,

                                       3

<PAGE>

continuation, continuation-in-part, substitution, reissue, extension,
supplementary protection certificate or other application based thereon, owned
or controlled by LICENSEE or its AFFILIATE(S), and to which LICENSEE or its
AFFILIATE(S) has the ability to grant a license or sublicense to without
violating the terms of any agreement with any THIRD PARTY.

         1.22     "MAJOR MARKET COUNTRY" shall mean each of the United States,
United Kingdom, Germany, France, Italy, Spain, or Japan.

         1.23     "MARKETING AUTHORIZATION" shall mean all allowances and
approvals (including pricing and reimbursement approvals) granted by the
appropriate federal, state, and local regulatory agencies, departments,
bureaus, or other governmental entities within a country necessary to market
and SELL a PRODUCT.

         1.24     "NDA" shall mean a New Drug Application and any supplements
filed pursuant to the requirements of the FDA, including all documents, data,
and other information concerning the PRODUCT that are necessary for or
included in FDA approval to market such PRODUCT as more fully defined in 21
C.F.R. Section 314.50 ET SEQ., as well as equivalent submissions to the
appropriate health authorities in other countries.

         1.25     "NET SALES" shall mean the revenue received by LICENSEE or
an AFFILIATE or received by LICENSEE from a SUBLICENSEE from the sale of
PRODUCTS to independent THIRD PARTIES in a BONA FIDE arm's length transaction,
less the following amounts: (i) discounts, including cash discounts, or
rebates, including rebates to governmental agencies such as Medicaid rebates
and the like, actually allowed or granted, (ii) credits or allowances actually
granted upon claims or returns regardless of the party requesting the return,
(iii) freight charges paid for delivery, (iv) taxes or other governmental
charges levied on or measured by the billed amount, when included in billing,
as adjusted for rebates and refunds, and (v) provisions for uncollectible
amounts determined in accordance with U.S. Generally Accepted Accounting
Principles, consistently applied to all products of the selling party. A
"sale" shall include any transfer or other disposition for consideration, and
NET SALES shall include the fair market value of all other consideration
received by LICENSEE or its AFFILIATE(S) or SUBLICENSEE(S) in respect of any
grant of rights to make, USE, SELL, or otherwise distribute PRODUCTS, whether
such consideration is in cash, payment in kind, exchange, or another form.

In the case of discounts on "bundles" of products or services which include
PRODUCTS, LICENSEE may with notice to SKI calculate NET SALES by discounting
the BONA FIDE list price of a PRODUCT by the average percentage discount of
all products of LICENSEE and/or its AFFILIATE(S) or SUBLICENSEE(S) in a
particular "bundle", calculated as follows:

             Average percentage
             discount on a         =     (1 - A / B) x 100
             particular "bundle"

                                       4

<PAGE>

where A equals the total discounted price of a particular "bundle" of
products, and B equals the sum of the undiscounted BONA FIDE list prices of
each unit of every product in such "bundle." LICENSEE shall provide SKI
documentation, reasonably acceptable to SKI, establishing such average
discount with respect to each "bundle." If LICENSEE cannot so establish the
average discount of a "bundle", NET SALES shall be based on the undiscounted
list price of the PRODUCT in the "bundle." If a PRODUCT in a "bundle" is not
sold separately and no BONA FIDE list price exists for such PRODUCT, the
parties shall within sixty (60) days negotiate in good faith an imputed list
price for such PRODUCT, and NET SALES with respect thereto shall be based on
such imputed list price.

In the event that PRODUCTS are sold in the form of combination products
containing one or more physiologically, therapeutically, or prophylactically
active ingredients other than the PRODUCT, NET SALES for such combination
products will be calculated by multiplying actual NET SALES of such
combination products by the fraction A DIVIDED BY (A+B) where A is the invoice
price of the PRODUCT if sold separately, and B is the total invoice price of
any other active component or components in the combination, if sold
separately by LICENSEE or an AFFILIATE OR SUBLICENSEE.

If on a country-by-country basis the other active component or components in
the combination are not sold separately in said country by the LICENSEE or an
AFFILIATE or SUBLICENSEE, NET SALES, for the purpose of determining royalties
on the combination products shall be calculated by multiplying actual NET
SALES of such combination products by the fraction A DIVIDED BY C where A is
the invoice price of the PRODUCT if sold separately and C is the invoice price
of the combination product.

If on a country-by-country basis neither the PRODUCT nor the combination
product is sold separately in said country by the LICENSEE or an AFFILIATE or
SUBLICENSEE, NET SALES for purposes of determining royalties on the
combination products shall be reasonably allocated between the LICENSED
PRODUCT and the other active components based on their relative value as
determined within sixty (60) days by the parties in good faith.

         1.26     "PATENT RIGHTS" shall mean all United States and foreign
patents (including all reissues, extensions, substitutions, confirmations,
re-registrations, re-examinations, revalidations and patents of addition) and
patent applications (including, without limitation, all continuations,
continuations-in-part and divisions thereof) in each case, claiming an
invention which is necessary or useful for the design, development, testing,
USE, manufacture, or SALE of COLLABORATION COMPOUNDS or PRODUCTS.

         1.27     "PHASE I", "PHASE II", and "PHASE III" shall mean Phase I
(or Phase I/II), Phase II (or Phase II/III), and Phase III clinical trials,
respectively, in each case as prescribed by the regulations of the applicable
government agency or other regulatory entity.

                                       5

<PAGE>

         1.28     "PRODUCT" shall mean any pharmaceutical product containing a
COLLABORATION COMPOUND that is selected for DEVELOPMENT and/or marketing by
LICENSEE or its AFFILIATE(S) or SUBLICENSEE(S).

         1.29     "RESEARCH FUNDING" shall mean the funding to be paid by
LICENSEE to SKI for the conduct of the RESEARCH PROGRAM.

         1.30     "RESEARCH PLAN" shall have the meaning described in Section
2.2 hereof and is attached hereto as Exhibit A.

         1.31     "RESEARCH PROGRAM" shall mean all research and development
performed in the course of performing the RESEARCH PLAN during the RESEARCH
TERM.

         1.32     "RESEARCH TERM" shall mean the period set forth in Section
2.5 hereunder, unless this AGREEMENT or the RESEARCH TERM is earlier
terminated under Article 18 below.

         1.33     "SELLER" shall mean one who SELLS.

         1.34     "SKI KNOW-HOW" shall mean all KNOW-HOW that (i) SKI owns as
of the EFFECTIVE DATE and that relates to the FIELD, or (ii) is developed by
SKI in performance of the RESEARCH PROGRAM during the RESEARCH TERM.

         1.35     "SKI PATENT RIGHTS" shall mean (i) the patents and patent
applications identified in Exhibit B hereof, and in respect of such letters
patent, and patent applications, all corresponding Patent Co-operation Treaty
applications, European Patent Convention applications, or applications under
similar administrative international conventions and corresponding national
patents and patent applications, together with any divisional, continuation,
continuation-in-part, substitution, reissue, extension, supplementary
protection certificate, or other application based thereon; and (ii) other
patents or patent applications to the extent they disclose and claim
inventions made by SKI in performance of the RESEARCH PROGRAM, and (iii) any
other claims in existing or future patents or patent applications covering the
manufacture, USE, or SALE of a PRODUCT for the treatment of cancer to the
extent such patents or patent applications claim inventions made by SKI during
the RESEARCH TERM of this AGREEMENT.

         1.36     "SOLD," "SALE," "SALES," "SELL," "SELLING" and "SELLS" shall
refer to the act of selling or disposing of for value.

         1.37     "STAGE O" shall mean that portion of the DEVELOPMENT program
which starts with the selection of a COLLABORATION COMPOUND for development
into a PRODUCT under Article 5 hereunder and which generally provides for
toxicological and pharmacological studies as well as drug substance and drug
product formulation and

                                       6

<PAGE>

manufacturing development necessary to obtain the permission of regulatory
authorities to begin and continue human clinical testing.

         1.38     "STAGE I" shall mean that portion of the DEVELOPMENT program
which provides for the first introduction into humans of a PRODUCT with the
purpose of determining safety, metabolism, absorption, elimination, and other
pharmacological action in humans as well as additional development work on
animal toxicity, metabolism, drug substance and drug product formulation, and
manufacturing development to ensure continuation of human clinical testing.

         1.39     "STAGE II" shall mean that portion of the DEVELOPMENT
PROGRAM which provides for the initial trials of PRODUCT on a limited number
of patients for the purposes of determining dose and evaluating safety and
preliminary efficacy data in the proposed therapeutic indication as well as
additional development work on animal toxicity, metabolism, drug substance and
drug product formulation, and manufacturing development to ensure continuation
of human clinical testing.

         1.40     "STAGE III" shall mean that portion of the DEVELOPMENT
PROGRAM which provides for continued trials of PRODUCT on sufficient numbers
of patients to establish the safety and efficacy of a PRODUCT to support
MARKETING AUTHORIZATION in the proposed indication. In addition, all other
development work on animal toxicity, metabolism, drug substance and drug
product formulation, and manufacturing development will be finalized in STAGE
III.

         1.41     "SUBLICENSEE" shall mean, with respect to a particular
PRODUCT, a THIRD PARTY to whom LICENSEE has granted a license or sublicense to
make and sell such PRODUCT. As used in this AGREEMENT, "SUBLICENSEE" shall
also include a THIRD PARTY to whom LICENSEE has granted the right to
distribute such PRODUCT, provided that such THIRD PARTY is responsible for
marketing or promoting such PRODUCTS within the applicable territory.

         1.42     "THIRD PARTY" shall mean any party other than SKI or
LICENSEE or AFFILIATE(S) of either of them.

         1.43     "USE," "USES", and "USED" shall refer to the act of using
for any commercial purposes whatsoever.

         1.44     "VALID CLAIM" shall mean a claim of an issued, unexpired
patent that is within the PATENT RIGHTS. A claim of an issued, unexpired
patent shall be presumed to be valid unless and until it has been held to be
invalid by a final judgement of a court of competent jurisdiction from which
no appeal can be or is taken.

ARTICLE 2 -- RESEARCH

                                       7

<PAGE>


         2.1      RESEARCH PROGRAM. Subject to the terms and conditions herein,
SKI hereby agrees to conduct the RESEARCH PROGRAM in collaboration with LICENSEE
with a goal of discovering, identifying, and synthesizing COLLABORATION
COMPOUNDS for DEVELOPMENT by LICENSEE into one or more PRODUCTS for
commercialization by LICENSEE, an AFFILIATE, or SUBLICENSEE.

         2.2      RESEARCH PLAN. The RESEARCH PROGRAM shall be conducted in
accordance with the overall RESEARCH PLAN attached hereto as Exhibit A, as may
be amended from time to time with the agreement of the parties, describing the
activities to be conducted by SKI and LICENSEE hereunder, the objectives
thereof, and the budget therefor.

         2.3      MANAGEMENT.

                  2.3.1    JRC. The parties shall establish a Joint Research
Committee ("JRC") within thirty (30) days of the EFFECTIVE DATE to administer
the RESEARCH PROGRAM and provide general oversight and direction of the RESEARCH
PROGRAM. The JRC shall be responsible for making changes to the RESEARCH PLAN
based on the results of the RESEARCH PROGRAM and other factors. The JRC shall
endeavor to make decisions on a consensus basis, but all decisions of the JRC
must be by majority vote.

                  2.3.2    MEMBERSHIP. The JRC shall include three (3)
representatives of each of LICENSEE and SKI, each Party's members selected by
that party, and each member shall be actively engaged in managing or conducting
the RESEARCH PROGRAM. SKI and LICENSEE may each replace its JRC representatives
at any time, upon written notice to the other party. From time to time, the JRC
may establish subcommittees, to oversee particular projects or activities, and
such subcommittees will be constituted as the JRC agrees.

                  2.3.3    MEETINGS; MINUTES. At least for the first two (2)
years of the RESEARCH TERM, the JRC shall meet at least quarterly, or more
frequently as agreed by the parties, and shall meet at least bi-annually
thereafter. Such meetings shall take place by teleconference or in person in New
York at SKI or in California at Kosan, or at other locations as the parties
agree. The JRC will otherwise communicate regularly by telephone, electronic
mail, facsimile and/or video conference. With the consent of the parties, other
representatives of SKI or LICENSEE may attend JRC meetings as nonvoting
observers. Each party shall be responsible for all of its own expenses
associated with attendance of such meetings. The first meeting of the JRC shall
occur within thirty (30) days after the EFFECTIVE DATE. The JRC shall prepare
written minutes of each JRC meeting and a written record of all JRC decisions,
whether made at a JRC meeting or otherwise. A written record shall be provided
to each party by the presenting party of all materials presented at meetings of
the JRC.

                  2.3.4    FUNCTIONS OF THE JRC. The JRC shall be responsible
for managing the RESEARCH PROGRAM. In carrying out this function, the JRC will:

                                       8
<PAGE>


                  (i)      oversee and direct research and DEVELOPMENT
activities to be undertaken under the RESEARCH PROGRAM in accordance with the
RESEARCH PLAN, which will specify the details by which the parties will conduct
the RESEARCH PROGRAM;

                  (ii)     review and monitor the progress of the RESEARCH
PROGRAM, and determine, at each meeting, whether each party is making
satisfactory progress in achieving the objectives of the RESEARCH PLAN, and if
not, then provide direction regarding the actions to be taken by either party in
the following quarter to address any problems identified that impede such
progress, revise the RESEARCH PLAN as it deems appropriate, set priorities for
research activities, review results achieved, and provide general guidance to
assist in achieving the overall objective of fostering successful identification
of COLLABORATION COMPOUNDS for DEVELOPMENT by LICENSEE;

                  (iii)    advise LICENSEE regarding the selection of
COLLABORATION COMPOUNDS for full DEVELOPMENT under Article 5;

                  (iv)     attempt to settle disputes or disagreements between
the parties regarding the performance of the RESEARCH PROGRAM hereunder;

                  (v)      approve any relevant agreements with THIRD PARTIES to
be made by SKI related to performance of the RESEARCH PROGRAM under this
AGREEMENT;

                  (vi)     determine, at any time prior to the initiation of
Phase II clinical trials using materials provided by LICENSEE, whether actions
directed by the JRC to be taken by a party to address a problem preventing
satisfactory progress of the RESEARCH PROGRAM have been taken, and if so,
whether such actions have addressed the problem, and if not, then to recommend
to the authorized representatives of the parties whether the AGREEMENT should be
terminated pursuant to Section 18.2.4; and

                  (vii)    perform such other functions as are appropriate to
further the purposes of this AGREEMENT as determined by the parties.

         2.3.5    DISPUTE RESOLUTION. If a majority of the JRC members fails
to reach agreement on any issue being considered by the JRC, and which after
[**] of discussion between the JRC representatives of LICENSEE and SKI cannot
be resolved, the issue will be referred to the respective Chief Executive
Officers of each party or their designees for resolution. If there is no
resolution of the issue at that level after [**] days, and the issue pertains
to (i) the RESEARCH PLAN, then the status quo as reflected in the last
approved RESEARCH PLAN shall remain in effect; (ii) LICENSEE's ability to
produce or provide sufficient amounts of epothilone D to initiate and
complete Phase II clinical trials, then SKI shall have the right to initiate
mediation, followed by termination if mediation does not result in agreement
between the parties; (iii) whether sufficient [**] is available to conduct
the [**] development plan, or whether the [**] development plan jeopardizes
or poses a risk of serious delay to the RESEARCH PROGRAM, then SKI shall make
the final determination; (iv) the

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.


                                       9
<PAGE>



provision to SKI of COLLABORATION COMPOUND pursuant to section 18.2.4, then SKI
shall make the final determination; and (v) any other matter, then LICENSEE
shall make the final determination. SKI shall be able to initiate mediation
pursuant to subsection (ii) hereinabove only after [**]. If during the
pendency of any mediation proceeding initiated pursuant to subsection (ii) of
this section, LICENSEE is able to provide SKI with [**] of COLLABORATION
COMPOUND at Good Manufacturing Practice (GMP) level of purity, then SKI shall no
longer be able to exercise its right to terminate this AGREEMENT pursuant to
subsection (ii) of this section.

                  2.3.6    INFORMATION AND ACCESS. SKI and LICENSEE shall
provide the JRC, its members, and authorized representatives with reasonable
access during regular business hours to all records and documents relating to
the performance of this AGREEMENT that it reasonably may request to perform its
obligations hereunder; provided that, if such documents are under a bona fide
obligation of confidentiality to a THIRD PARTY, SKI or LICENSEE, as the case may
be, may withhold access thereto to the extent necessary to satisfy such
obligation.

         2.4      RESPONSIBILITIES.

                  2.4.1    REASONABLE EFFORTS. LICENSEE and SKI shall each use
reasonable efforts to conduct the RESEARCH PROGRAM and collaborate in the
DEVELOPMENT of COLLABORATION COMPOUNDS in a professional manner in accordance
with the applicable RESEARCH PLAN within the time schedules contemplated
therein.

                  2.4.2    RESOURCES. Each party agrees to commit the personnel,
facilities, expertise, and other resources necessary to perform its obligations
under the RESEARCH PLAN; provided, however, that neither party warrants that the
RESEARCH PROGRAM shall achieve any of the research objectives contemplated by
them.

                  2.4.3    SKI RESEARCH EFFORTS. SKI agrees to commit to the
RESEARCH PROGRAM such efforts as are specified in the RESEARCH PLAN, to maintain
and utilize the scientific staff, laboratories, offices, equipment, and other
facilities consistent with such undertaking, and reasonably to cooperate with
LICENSEE in the conduct of the RESEARCH PROGRAM. SKI agrees that, on average for
each twelve (12) month period during the RESEARCH TERM, SKI shall dedicate FTEs
to each phase of each PROJECT and the RESEARCH PROGRAM as specified the RESEARCH
PLAN. SKI will use its BEST EFFORTS to continue its research efforts on
COLLABORATION COMPOUNDS and continue its efforts in the chemical synthesis of
existing and new COLLABORATION COMPOUNDS and in the IN VITRO and IN VIVO testing
of COLLABORATION COMPOUNDS in animals and humans. SKI shall initiate and
complete in 2001 a physician-sponsored Phase I clinical trial at SKI of
epothilone D with material produced with the support of the RAID award from the
National Cancer Institute. Should SKI fail to complete the Phase I clinical
trial in 2001, LICENSEE shall have no further obligation to conduct clinical
trials at SKI or, if Phase II clinical trials are not initiated at SKI, to pay
the milestone payment for the initiation of Phase II clinical trials in the U.S.
pursuant to Section 6.3 and SKI shall have no further obligation to conduct the

                                       10

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.


<PAGE>

Phase I clinical trials for LICENSEE. Provided the Phase I trial results are
deemed by the JRC to be satisfactory, the parties shall initiate in 2002 a Phase
II clinical trial of epothilone D using materials provided by LICENSEE. In
addition, SKI will collaborate with LICENSEE to identify and conduct
pre-clinical testing on one or more COLLABORATION COMPOUNDS as potential back-up
development candidates for epothilone D and as second-generation anticancer
agents.

                  2.4.4    LICENSEE RESEARCH EFFORTS. LICENSEE agrees to commit
to the RESEARCH PROGRAM such efforts as are specified in the RESEARCH PLAN, to
maintain and utilize the scientific staff, laboratories, offices, equipment, and
other facilities consistent with such undertaking, and reasonably to cooperate
with SKI in the conduct of the RESEARCH PROGRAM. LICENSEE will use its BEST
EFFORTS to develop a process for making epothilone D and intermediates with the
aim of establishing a process by which COLLABORATION COMPOUNDS can be made in
quantities sufficient and at a reasonable cost for the completion of clinical
trials and commercialization. Concurrently, LICENSEE will use its BEST EFFORTS
to produce epothilone D or intermediates in [**] and
[**] to make epothilone D at commercial levels. LICENSEE
shall conduct biological synthesis of COLLABORATION COMPOUNDS or related
intermediates in amounts sufficient to conduct IN VITRO testing and IN VIVO
testing in animals and humans and to manufacture any approved PRODUCT. LICENSEE
will prepare and provide to SKI GMP-produced epothilone D as provided for in the
RESEARCH PLAN.

                  2.4.5    SUBCONTRACTORS. SKI may have work performed by THIRD
PARTY contractors as provided in the RESEARCH PLAN or otherwise approved by the
JRC. LICENSEE, after notifying and consulting with the JRC, shall have the right
to have THIRD PARTY contractors prepare or provide COLLABORATION COMPOUNDS for
use in the RESEARCH PROGRAM.

                  2.4.6    INFORMATION AND REPORTS.

                           (a)      DISCLOSURES.

                                    (i)      Each party will make available and
use all reasonable efforts to disclose to the other party the information
necessary to conduct the other party's responsibilities under the RESEARCH PLAN
and all KNOW-HOW relating to COLLABORATION COMPOUNDS, and the ANTICANCER
ACTIVITY of such COLLABORATION COMPOUNDS, including information regarding
compounds synthesized or discovered, initial leads, activities of leads,
derivatives, results of IN VITRO and IN VIVO studies, assay techniques, and new
assays. Significant discoveries or advances shall be communicated as soon as
practical after such KNOW-HOW is obtained or its significance is appreciated.

                                    (ii)     Each party will make available and
use all reasonable efforts to disclose to the other party KNOW-HOW necessary to
make chemical modifications of the COLLABORATION COMPOUNDS in accordance with
the RESEARCH PLAN, to conduct process development and strain selection research
with respect to COLLABORATION

                                       11

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

COMPOUNDS, to make PRODUCTS for DEVELOPMENT and commercialization purposes, to
characterize, evaluate and test such PRODUCTS and to otherwise carry out its
activities pursuant to the RESEARCH PLAN and DEVELOPMENT PLAN.

                                    (iii)    SKI shall disclose KNOW-HOW from
research conducted in the laboratory of Professor Samuel J. Danishefsky at SKI
and funded by the RESEARCH PROGRAM as described in Article 2.6.

                           (b)      REPORTS. The JRC shall periodically and not
less often than semiannually during the RESEARCH TERM, request, and the parties
shall have the obligation to prepare and provide to the JRC, written reports
summarizing the progress of the research performed by or sponsored by the
parties pursuant to the RESEARCH PLAN during the preceding half-year. In
addition, the parties will exchange at least quarterly verbal or written reports
presenting a meaningful summary of their activities performed in connection with
the RESEARCH PROGRAM.

                           (c)      PROJECT COORDINATOR. Each party shall
designate a single project coordinator whose duties shall be to oversee matters
arising under the provisions of this AGREEMENT and to facilitate the
communication of research results. Such project coordinator shall be responsible
for day-to-day, worldwide coordination of the RESEARCH PROGRAM and will serve to
facilitate communication between the parties relating to the RESEARCH PROGRAM.
Each party may change its designated project coordinator upon notice to the
other party.

                           (d)      RECORDS. Personnel working on the RESEARCH
PROGRAM shall use all reasonable efforts to make accurate laboratory notebook
records of the RESEARCH PROGRAM in a manner suitable for use in United States
patent prosecution and litigation. Each party shall be permitted to review such
laboratory notebooks and records at any reasonable time and to obtain copies
thereof for further review by the other party. Each party shall make reasonable
effort to safeguard such notes and records against theft and loss by fire,
flood, or other damage.

                           (e)      ASSIGNMENT AGREEMENTS. To the extent
permitted by applicable law, SKI shall require all persons, agents, contractors,
and consultants employed or retained by SKI to work on the RESEARCH PROGRAM,
prior to beginning such employment, to be bound in writing to (i) assign to SKI
all rights, title, and interest in and to any ideas, discoveries, improvements,
inventions, KNOW-HOW, patents, patent applications, and the like which were made
or conceived in performing the RESEARCH PROGRAM, and to sign all documents and
give lawful assistance necessary for filing and defending patents and patent
applications in all countries, whether such filing is by SKI or its designees or
assignees, and (ii) to be bound in writing to provisions of confidentiality
substantially similar to those of Article 9.

         2.5      RESEARCH TERM. The RESEARCH PROGRAM shall commence on the
EFFECTIVE DATE and continue for two (2) years thereafter. The RESEARCH TERM
shall

                                       12
<PAGE>


automatically be extended for such period as SKI is performing clinical testing
of COLLABORATION COMPOUNDS and may be further extended by mutual agreement.

         2.6      RESEARCH PROGRAM FUNDING.

                  2.6.1    FUNDING. For the conduct of the RESEARCH PROGRAM by
SKI, LICENSEE shall pay SKI RESEARCH FUNDING in accordance with the budget in
the RESEARCH PLAN. LICENSEE shall fund all costs of the RESEARCH PROGRAM;
provided (i) the Phase I clinical trials shall be conducted using epothilone D
materials produced with the support of the RAID award received by SKI from the
National Cancer Institute; and (ii) SKI and LICENSEE shall use BEST EFFORTS to
obtain funding from the NIH and other government agencies with which to support
the RESEARCH PROGRAM and shall continue to apply any such existing funding
supporting current activities that will continue as part of the RESEARCH
PROGRAM.

                  2.6.2    TIMING OF PAYMENTS. SKI RESEARCH FUNDING shall be
paid in four (4) equal quarterly installments during each calendar year, payable
in advance on or about January 1, April 1, July 1, and October 1; provided that
the first quarterly payment shall be due ten (10) days after the EFFECTIVE DATE.
Any payment for a portion of a quarter shall be made on a PRO RATA BASIS.

                  2.6.3    USE OF RESEARCH FUNDING. All funds provided by
LICENSEE hereunder shall be used by SKI in the conduct of the RESEARCH PROGRAM.
LICENSEE shall be under no obligation to provide FTE support to SKI beyond the
levels stated in the RESEARCH PLAN. SKI shall have no obligation to expend any
amount on the RESEARCH PROGRAM except the amounts paid by LICENSEE and the
amounts received under grants awarded pursuant to 2.6.1.(ii).

                  2.6.4    THIRD PARTY LICENSES. In the event that SKI or
LICENSEE becomes aware that it is necessary for SKI to acquire a license from
any THIRD PARTY specifically for the conduct of the RESEARCH PROGRAM, such party
shall inform the JRC. If SKI determines that such license is required, then
LICENSEE shall either acquire such license or relieve SKI of its obligation to
perform that aspect of the RESEARCH PROGRAM for which SKI believes a license is
required.

                  2.7      AUDIT. SKI will maintain complete and accurate
records which are relevant to its expenditure of SKI RESEARCH FUNDING provided
to it by LICENSEE pursuant to Section 2.6 hereof. Such records shall be open
during regular business hours for a period of three (3) years from creation of
individual records for examination at LICENSEE's expense for the sole purpose of
verifying that SKI has devoted to the RESEARCH PROGRAM the resources required by
Section 2.4.3 above; provided however, that such right may not be exercised more
than once in any calendar year. LICENSEE shall be entitled to a credit against
future research payments or a refund in the event such audit reveals that the
proper resources were not allocated in accordance with Section 2.4.3 above.

                                      13
<PAGE>


ARTICLE 3 -- SCREENING BY LICENSEE

         3.1      EXCLUSIVE SCREENING.

                  3.1.1    ANTICANCER ACTIVITY. During the TERM of this
AGREEMENT, LICENSEE shall have the exclusive right to screen COLLABORATION
COMPOUNDS for ANTICANCER ACTIVITY. Until the termination of this AGREEMENT, SKI
agrees that (i) it shall not grant a THIRD PARTY the right to screen or develop
the COLLABORATION COMPOUNDS, and (ii) except in connection with the RESEARCH
PROGRAM, shall not itself screen or develop the COLLABORATION COMPOUNDS for
ANTICANCER ACTIVITY.

         3.2      DELIVERY OF COMPOUNDS.

                  3.2.1    COLLABORATION COMPOUNDS.

                           (a)      During the TERM of this AGREEMENT, SKI will
deliver to LICENSEE agreed quantities of COLLABORATION COMPOUNDS sufficient to
conduct IN VITRO screening for ANTICANCER ACTIVITY, as specified in the RESEARCH
PLAN.

                  3.2.2    NO TRANSFER; LIMITED USE. Except as expressly
provided herein, LICENSEE shall not (i) transfer any of the COLLABORATION
COMPOUNDS supplied to LICENSEE to any THIRD PARTY other than an AFFILIATE or an
actual or prospective SUBLICENSEE without the express prior written consent of
SKI, or (ii) use or permit any other person or entity to use any of the
COLLABORATION COMPOUNDS supplied to LICENSEE for any purpose other than for
screening or development and/or commercialization as expressly permitted in this
AGREEMENT.

         3.3      SCREENING RESULTS. Each party shall provide the other with
written quarterly summary reports within thirty (30) days of the end of each
calendar quarter with respect to their screening activities, identifying all
assays in which any of the COLLABORATION COMPOUNDS demonstrated activity and the
level of such activity for the COLLABORATION COMPOUNDS, all assays in which the
COLLABORATION COMPOUNDS did not demonstrate activity, and a summary of all other
results of screening activities.

ARTICLE 4 -- LICENSES

         4.1      RESEARCH LICENSES.

                  4.1.1    TO LICENSEE. Subject to the terms and conditions of
this AGREEMENT, SKI hereby grants LICENSEE an exclusive paid-up license, with no
right to grant sublicenses, under SKI PATENT RIGHTS and SKI KNOW-HOW to make and
use methods and materials to carry out the RESEARCH PROGRAM during the RESEARCH
TERM.

                                       14
<PAGE>



                  4.1.2    TO SKI. Subject to the terms and conditions of this
AGREEMENT, LICENSEE hereby grants SKI a non-exclusive paid-up license, with no
right to grant sublicenses, under LICENSEE PATENT RIGHTS and LICENSEE KNOW-HOW
to make and use methods and materials to carry out the RESEARCH PROGRAM during
the RESEARCH TERM.

                  4.1.3    ACADEMIC AND NOT-FOR-PROFIT RESEARCH. SKI and
LICENSEE agree that SKI may provide, at its own expense, small amounts of
COLLABORATION COMPOUNDS to scientists at academic or other not-for-profit
research institutions solely for non-commercial research purposes, provided that
(i) the members JRC are informed of any such transfers in advance; and (ii) the
recipient signs SKI's standard material transfer agreement providing that the
material is to be used only for research purposes, that such research is not
funded by or conducted for or on behalf of a for-profit entity, and that SKI and
LICENSEE will be granted a royalty-free license, with right to sublicense, to
any patent filed by the recipient that discloses such research. Any rights
flowing to SKI as a result of any such material transfer agreement shall be
exclusively sublicensed to LICENSEE.

         4.2      SCREENING LICENSES. SKI hereby grants to LICENSEE an
exclusive, worldwide license during the TERM of this AGREEMENT to use the
COLLABORATION COMPOUNDS to conduct screening for ANTICANCER ACTIVITY.

         4.3      DEVELOPMENT AND COMMERCIALIZATION LICENSE.

         4.3.1    GRANT. SKI hereby grants to LICENSEE, and LICENSEE hereby
accepts from SKI, a worldwide, exclusive license, with the right to grant
sublicenses, under the SKI PATENT RIGHTS and SKI KNOW-HOW, to make, USE, and
develop COLLABORATION COMPOUNDS, and, to make, have made, USE, import, offer for
SALE, SELL, and have SOLD PRODUCTS in the FIELD.

         4.3.2    TERM. Unless LICENSEE's rights are terminated earlier as
provided in Article 18, the foregoing license in Section 4.3.1 shall remain
exclusive on a COLLABORATION COMPOUND-by-COLLABORATION COMPOUND and
PRODUCT-by-PRODUCT basis (i) as to the applicable SKI PATENT RIGHTS, for their
respective terms on a country-by-country basis, and (ii) as to the SKI KNOW-HOW,
until the termination of LICENSEE's obligation to make royalty payments under
Section 7.1, at which time the license under the SKI KNOW-HOW shall
automatically become a fully paid, non-exclusive license. Notwithstanding the
foregoing, however, with respect to any country of the European Union, the
license to the SKI KNOW-HOW shall remain exclusive until the earlier of (i) the
date on which the SKI KNOW-HOW becomes published or generally known to the
public through no fault on the part of LICENSEE, its AFFILIATE(S), or
SUBLICENSEE(S) or (ii) the tenth (10th) anniversary of the first commercial sale
of the first PRODUCT in any country of the European Union, at which time the
license under the SKI KNOW-HOW shall automatically become a fully paid,
non-exclusive license.

                                       15
<PAGE>


         4.4      AFFILIATE LICENSES. In the event LICENSEE wishes to
manufacture PRODUCT or SELL in a country where its AFFILIATE is unable to pay
royalties to LICENSEE or where payment of royalties to LICENSEE is limited as to
its tax deductibility, SKI hereby agrees, at the written request of LICENSEE,
such written request to constitute a license from LICENSEE to SKI to do the
same, to grant appropriate licenses containing the same terms, conditions, and
provisions as this AGREEMENT to any AFFILIATE under SKI PATENT RIGHTS and SKI
KNOW-HOW to make, have made, USE, and SELL PRODUCTS. Any such licensed AFFILIATE
shall thereafter report NET SALES directly to SKI, and the activities of any
such AFFILIATE shall not be includable in any reports made by LICENSEE to SKI.

         4.5      SUBLICENSES. LICENSEE and its AFFILIATE(S) shall have the
right to grant to THIRD PARTIES sublicenses under the licenses granted to
LICENSEE in Sections 4.1, 4.2, and 4.3 (or to its AFFILIATE(S) under Section
4.4) with respect to PRODUCTS developed by or on behalf of LICENSEE; provided,
however, that until the earlier of (i) [**] from the EFFECTIVE DATE,
and (ii) the initiation of Phase II clinical trials of epothilone D, SKI and
LICENSEE shall make joint decisions regarding all sublicenses to THIRD PARTIES
for the DEVELOPMENT and commercialization of COLLABORATION COMPOUNDS. After that
time, LICENSEE has the right and sole discretion to grant sublicenses to THIRD
PARTIES; provided, however, that SKI shall have the right to notify LICENSEE of
THIRD PARTIES to which LICENSEE shall not grant sublicenses, because the
activities of such THIRD PARTIES are incompatible with SKI's mission or inimical
to its interests.

         4.6      RSUBLICENSE TO [**]. Provided that sufficient amounts of
polyglutamate-linked [**] can be made available to [**] for its research and
development, LICENSEE will grant [**] a sublicense of SKI PATENT RIGHTS under
which [**] will be licensed to make, USE, and SELL [**] for the treatment of
cancer. [**] shall be required to provide to the JRC a development plan
specifying the research to be conducted and a timeline for clinical trials,
as well as the amounts of [**] required and the source(s) from which it will
be obtained. If the JRC determines that sufficient [**] is available to
conduct the [**] development plan, and that the [**] development plan does
not jeopardize or pose a risk of serious delay to the RESEARCH PROGRAM, then
the JRC shall approve the development plan. The JRC shall make this
determination within [**] of receipt of the [**] development plan. LICENSEE
and SKI shall agree upon the business terms of a sublicense to [**] and
negotiate diligently with [**] to conclude a sublicense to [**] within [**]
of the date the JRC approves the [**] development plan. Such [**]sublicense
shall include a timeline for the development of the compound, with the right
for LICENSEE to terminate such sublicense if development milestones are not
met in accordance with the timeline, and such other terms and conditions as
are commercially reasonable and agreed upon by SKI and LICENSEE.

         4.7      No COMPETING RESEARCH. During the RESEARCH TERM, researchers
working on the RESEARCH PROGRAM and employed by SKI or LICENSEE shall not
knowingly conduct, have conducted, or fund any research or development activity
specifically directed at discovery or

                                       16

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

developing COLLABORATION COMPOUNDS intended for use in the FIELD, except
pursuant to this AGREEMENT.

         4.8      COLLABORATION COMPOUND EXCLUSIVITY. During the term of this
AGREEMENT, SKI shall not develop, commercialize, or sublicense to any THIRD
PARTY any COLLABORATION COMPOUND to which LICENSEE retains commercial license
rights, without the prior written consent of LICENSEE.

         4.9      MODE OF COMMERCIALIZATION. Subject to the limitation in 4.5,
LICENSEE shall have the right to sublicense one or more THIRD PARTIES to conduct
manufacturing, marketing, sales, and/or distribution activities for any
COLLABORATION COMPOUND; provided, however, that SKI shall have the right to
notify LICENSEE of THIRD PARTIES to which LICENSEE shall not grant sublicenses,
because the activities of such THIRD PARTIES are incompatible with SKI's mission
or inimical to its interests. LICENSEE may SELL PRODUCTS through its
AFFILIATE(S), SUBLICENSEE(S), or agents in any country. LICENSEE agrees to be
responsible and liable for the performance hereunder by its AFFILIATE(S),
agents, and SUBLICENSEE(S) to which the license and rights hereunder shall have
been extended. For the purposes of reporting and making payments of earned
royalties under this AGREEMENT, the manufacture, SALE, or USE of PRODUCTS by any
AFFILIATE or SUBLICENSEE to which such license rights shall have been extended
shall be considered the manufacture, SALE, or USE of such PRODUCT by LICENSEE,
and any such AFFILIATE or SUBLICENSEE may make the pertinent reports and royalty
payments specified in Article 7 hereof directly to SKI on behalf of LICENSEE;
otherwise, such reports and payments on account of SALES of PRODUCTS by each
AFFILIATE and SUBLICENSEE shall be made by LICENSEE; and, in any event, the
SALES of PRODUCT by each such AFFILIATE and SUBLICENSEE shall be separately
shown in the reports to SKI if such information is readily available to
LICENSEE.

         4.10     NO IMPLIED RIGHTS. No other, further or different license or
right, except as expressly provided in this Article 4 hereof, is hereby granted
or implied.

ARTICLE 5 -- DEVELOPMENT AND COMMERCIALIZATION

         5.1      DEVELOPMENT.

                  5.1.1    JDAC. LICENSEE shall have the right to select one or
more COLLABORATION COMPOUNDS for DEVELOPMENT as replacement or back-up
candidates for epothilone D and as second generation anticancer PRODUCTS. For
each PRODUCT in DEVELOPMENT, including epothilone D, the parties shall establish
a Joint Development Advisory Committee (the "JDAC") to oversee the DEVELOPMENT
of PRODUCTS.

                  5.1.2    MEMBERSHIP. The JDAC shall include three (3)
representatives from each of SKI and LICENSEE, each party's members to be
selected by that party. SKI and LICENSEE may each replace its JDAC
representatives at any time, upon written notice to the other party.

                                       17

<PAGE>

One of the LICENSEE members of the JDAC, chosen at the sole discretion of
LICENSEE, shall serve as chair of the JDAC.

                  5.1.3    MEETINGS; MINUTES. The JDAC shall meet at least
quarterly, or more frequently as agreed by the parties, at such locations as
the parties agree, and will otherwise communicate regularly by telephone,
electronic mail, facsimile, and/or video conference. Meetings of the JDAC
shall be held at least quarterly and may be called by either party with not
less than ten (10) working days notice to the other unless such notice is
waived, and meetings shall be held at the office of the party not calling the
meeting, unless otherwise agreed. The JDAC may be convened, polled, or
consulted from time to time by means of telecommunication or correspondence.
Each party will disclose to the other proposed agenda items reasonably in
advance of each meeting of the JDAC. With the consent of the parties, other
representatives of SKI or LICENSEE may attend JDAC meetings as observers. Each
party shall be responsible for all of its own expenses associated with
attendance of such meetings. The JDAC shall prepare written minutes of each
JDAC meeting and a written record of all JDAC recommendations, whether made at
a JDAC meeting or otherwise. A written record shall be provided by the
presenting party to each party of all materials presented at meetings of the
JDAC.

                  5.1.4    FUNCTIONS OF THE JDAC. The JDAC shall serve in an
advisory capacity concerning the management of the DEVELOPMENT of PRODUCTS as
well as related pre-market activities performed under the provisions of this
AGREEMENT. In carrying out this function, the JDAC will:

                           (a)      promptly upon selection of a PRODUCT for
DEVELOPMENT, advise LICENSEE in the preparation of a written DEVELOPMENT PLAN
that describes LICENSEE'S proposed commercialization activities, including
appropriate timelines for DEVELOPMENT, for such PRODUCT, which DEVELOPMENT
PLAN shall be provided by LICENSEE to SKI;

                           (b)      review progress of the DEVELOPMENT work at
least quarterly, and advise LICENSEE concerning changes or modifications to
the DEVELOPMENT PLAN;

                           (c)      oversee and direct the transfer of
COLLABORATION COMPOUNDS from LICENSEE to clinical trial site(s); and

                           (d)      review progress reports as to the
performance of the DEVELOPMENT PLAN, the first such report to be submitted by
LICENSEE six (6) months following selection of a COLLABORATION COMPOUND for
DEVELOPMENT and at six (6) month intervals thereafter until the SALE of
PRODUCT is approved and PRODUCT is being marketed on a regular commercial
basis in the United States and each MAJOR MARKET COUNTRY and such approval and
marketing is reported in writing to SKI.


                                      18

<PAGE>

Minutes of meetings of the JDAC may serve as such progress reports. The
parties agree to maintain information in such reports in confidence in
accordance with the confidentiality provisions of Article 9 hereof.

                  5.1.5    DEVELOPMENT PROGRAM. LICENSEE shall be solely
responsible for and have the exclusive right, at its discretion but in
consultation with the JDAC, to select COLLABORATION COMPOUNDS which shall then
be designated PRODUCTS for further DEVELOPMENT by LICENSEE and marketing by
LICENSEE and its AFFILIATE(S) or SUBLICENSEE(S). LICENSEE shall provide SKI
with written notice of its decision to select a COLLABORATION COMPOUND for
DEVELOPMENT. Once a PRODUCT has been selected for further DEVELOPMENT,
LICENSEE, with the advice of the JDAC, shall have the exclusive right to
develop the PRODUCT through STAGES O, I, II and III and shall have the
exclusive right to prepare and file, and shall be the owner of, all
applications for MARKETING AUTHORIZATION throughout the world. During such
DEVELOPMENT efforts, SKI will assist LICENSEE as may be mutually agreed, at
LICENSEE's expense, in chemical development, formulation development,
production of labeled material and production of sufficient quantities of
material for STAGE O and initial STAGE I studies. LICENSEE shall exercise
diligent efforts, commensurate with the efforts it would normally exercise for
products with similar potential sales volume and consistent with its overall
business strategy, in developing such PRODUCT in accordance with the
DEVELOPMENT PLAN established by LICENSEE. In the course of such efforts
LICENSEE shall, either directly or through an AFFILIATE or SUBLICENSEE to
which the license shall have been extended, take appropriate steps including
the following:

                           (i)      in consultation with the JDAC, select
certain COLLABORATION COMPOUNDS for STAGE O DEVELOPMENT; and

                           (ii)     establish and maintain a program
reasonably designed, funded, and resourced to obtain information adequate to
enable the preparation and filing with an appropriate and properly empowered
national regulatory authority all necessary documentation, data, and other
evidence required for IND non-rejection to commence and conduct human clinical
trials of such PRODUCT.

                           (iii)    proceed following IND non-rejection to
commence PHASE I, II, and III clinical trials, associated studies and such
other work which LICENSEE reasonably deems to be required for subsequent
inclusion in filings for MARKETING AUTHORIZATION; and

                           (iv)     after such submissions are filed,
prosecute such submissions and file all reasonably necessary reports and
respond to all reasonable requests from the pertinent regulatory authorities
for information, data, samples, tests, and the like.

         5.2      MARKETING AUTHORIZATION. MARKETING AUTHORIZATION
applications shall be compiled by LICENSEE based on information generated
during the DEVELOPMENT program. LICENSEE shall own such MARKETING
AUTHORIZATIONS. At LICENSEE's


                                      19

<PAGE>


request and expense, SKI shall prepare supporting documentation requested by
LICENSEE and SKI shall further assist LICENSEE with the preparation of
supporting data to apply for and pursue MARKETING AUTHORIZATIONS. Before
filing an NDA for a COLLABORATION COMPOUND, LICENSEE shall provide a
pre-marketing plan to SKI that describes its proposed commercialization
activities for such COLLABORATION COMPOUND.

         5.3      COMMERCIALIZATION STATUS. If LICENSEE is developing a
COLLABORATION COMPOUND, or any PRODUCT, during the period from the EFFECTIVE
DATE to the first commercial sale of such PRODUCT, LICENSEE shall keep SKI
informed of its DEVELOPMENT activities with respect to such COLLABORATION
COMPOUND and PRODUCT, including without limitation, the achievement of the
milestones set forth in Section 6.4 and the commercialization of such
COLLABORATION COMPOUND and PRODUCT, by annually providing SKI with a written
report stating the status of development of each such COLLABORATION COMPOUND
and PRODUCT. It is understood that the report provided to the JDAC under
Section 5.1.4(d) may serve to fulfill LICENSEE's obligation to SKI hereunder.

         5.4      COMMERCIALIZATION. Once a PRODUCT has been approved for
marketing, LICENSEE shall exercise BEST EFFORTS, commensurate with the efforts
it would normally exercise for products with similar potential sales volume
and consistent with its overall business strategy, in promoting, advertising,
and SELLING such PRODUCT under this AGREEMENT. LICENSEE shall be responsible
for all commercialization activities relating to COLLABORATION COMPOUNDS
approved for therapeutic use.

         5.5      PERFORMANCE OBLIGATIONS.

                  5.5.1    LACK OF DILIGENCE. LICENSEE, directly or through an
AFFILIATE or SUBLICENSEE, shall use its BEST EFFORTS to commercialize and
develop a PRODUCT. Non-performance of this Article 5, or any subparagraph
thereof by LICENSEE, shall be a breach of this AGREEMENT, subject to SKI's
right to terminate this AGREEMENT pursuant to Section 18.2.

                  5.5.2    ACKNOWLEDGMENT. Notwithstanding any other provision
hereunder, LICENSEE makes no representation or warranty that DEVELOPMENT and
marketing of PRODUCT shall be the exclusive means by which LICENSEE will
participate in the FIELD. Furthermore, all business decisions concerning the
DEVELOPMENT, marketing, and SALES of PRODUCT(S) including, without limitation,
the design, SALE, price, and promotion of PRODUCTS covered under this
AGREEMENT shall be within the sole discretion of LICENSEE. SKI acknowledges
that LICENSEE may now or in the future develop or acquire other products for
the treatment or prevention of cancer.

         5.6      NO OTHER PRODUCTS OTHER THAN PRODUCTS. Except as otherwise
agreed in writing or specifically provided by this AGREEMENT, neither LICENSEE
nor its SUBLICENSEE(S)

                                      20

<PAGE>


shall commercialize any COLLABORATION COMPOUND other than as a PRODUCT in
accordance with this AGREEMENT.

ARTICLE 6 -- LICENSE FEES AND MILESTONE PAYMENTS

         6.1      INITIAL FEE. In consideration of the rights and licenses
granted to LICENSEE under this AGREEMENT on the EFFECTIVE DATE, LICENSEE
shall pay SKI an initial fee of [**] to reimburse SKI for past research and
development. Such fee shall neither be refundable nor creditable against
other amounts due SKI under this AGREEMENT.

         6.2      MAINTENANCE FEE. In consideration of the continuing rights
and licenses granted to LICENSEE under this AGREEMENT and subject to Article
18, LICENSEE shall pay SKI a maintenance fee of [**] on each anniversary of
the EFFECTIVE DATE prior to the first commercial SALE of a PRODUCT by
LICENSEE or its AFFILIATE or SUBLICENSEE. Such fee shall neither be
refundable nor creditable against other amounts due SKI under this AGREEMENT.

         6.3      DEVELOPMENT MILESTONE PAYMENTS. Within thirty (30) days
following the occurrence of the relevant events specified below with respect
to the first such PRODUCT developed by LICENSEE or its AFFILIATE(S) but not by
its SUBLICENSEE(S) to achieve such development milestone and subject to
Article 18, LICENSEE shall pay to SKI the following amounts:

                 DEVELOPMENT MILESTONE                           PAYMENT
                 ---------------------                           -------
                         [**]                                      [**]
                         [**]                                      [**]
                         [**]                                      [**]
                         [**]                                      [**]
                         [**]                                      [**]
                         [**]                                      [**]
                         [**]                                      [**]
                         [**]                                      [**]

         Payments for achievement of [**] milestones may be withheld at the
time of the corresponding event unless and until SKI has received a VALID
CLAIM in a patent that is neither involved nor expected by the parties to
become involved in an interference or opposition proceeding in such country
claiming such PRODUCT, claiming the approved use of such PRODUCT where the
PRODUCT itself is not patented by a THIRD PARTY, or claiming the actual
method of manufacture of such PRODUCT where neither the PRODUCT nor its use
is patented by a THIRD PARTY. In no event shall LICENSEE be obligated to make
the payment due on any milestone event more than once with respect to the
same PRODUCT, regardless of the number of indications for which such PRODUCT
is developed.

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


         6.4      NO WITHHOLDING. All amounts paid to SKI pursuant to this
Article 6 shall be made without withholding for taxes or any other charge.

ARTICLE 7 -- ROYALTIES, RECORDS, AND REPORTS

         7.1      EARNED AND MINIMUM ANNUAL ROYALTIES; ROYALTY TERM. For the
rights and privileges granted under this AGREEMENT and subject to Article 18,
LICENSEE shall pay to SKI, on a country-by-country and PRODUCT-by-PRODUCT
basis, earned and minimum annual royalties on NET SALES by LICENSEE or its
AFFILIATE(S) but not its SUBLICENSEE(S) as follows:

                  7.1.1    where the PRODUCT itself is within the scope of a
VALID CLAIM which is owned solely by SKI or owned jointly by SKI and
LICENSEE, LICENSEE shall pay to SKI a [**] royalty on the NET SALES of all
such PRODUCTS that are SOLD by or for LICENSEE or its AFFILIATE(S) under this
AGREEMENT in a country until the expiration of the last to expire of such
patents in the PATENT RIGHTS in such country;

                  7.1.2    where the approved use for which the PRODUCT is
marketed falls within the scope of a VALID CLAIM which is owned solely by
SKI, and such PRODUCT is itself not patented by a THIRD PARTY, LICENSEE shall
pay to SKI a [**] royalty on the NET SALES of all such PRODUCTS that are SOLD
by or for LICENSEE or AFFILIATE(S) under this AGREEMENT until the expiration
of the last to expire of such patents in the PATENT RIGHTS in such country;

                  7.1.3    where the actual method of manufacture used by
LICENSEE to manufacture the PRODUCT falls within the scope of a VALID CLAIM
which is owned solely by SKI, LICENSEE shall pay to SKI [**] royalty on the
NET SALES of all such PRODUCTS that are SOLD by or for LICENSEE or
AFFILIATE(S) under this AGREEMENT until the expiration of the last to expire
of such patents in the PATENT RIGHTS in such country and in any country where
the PRODUCT is SOLD, provided the PRODUCT SOLD in that country was made using
the patented method in the country where the patent issued;

                  7.1.4    where the manufacture, use, or SALE of the PRODUCT
is not within the scope of a VALID CLAIM subject to Section 7.1.1, 7.1.2, or
7.1.3, LICENSEE shall pay to SKI a [**] royalty on NET SALES of all such
PRODUCTS that are SOLD by or for LICENSEE or AFFILIATE(S) under this
AGREEMENT in such country, for a period of [**] from the date of first
commercial sale of such PRODUCT in such country, provided that the PRODUCT or
its actual manufacture or use is patented by SKI in the United States, a
MAJOR MARKET COUNTRY in Europe, or Japan; and

                  7.1.5.   beginning on the anniversary of the EFFECTIVE DATE
after the first SALE of a PRODUCT by LICENSEE or its AFFILIATE(S) and until
the later of the expiration date of the last to expire SKI PATENT RIGHTS or
[**] after the first SALE of a

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

PRODUCT by LICENSEE or its AFFILIATE(S), LICENSEE shall pay to SKI a minimum
annual royalty, which shall be fully creditable against royalties paid on NET
SALES for that same calendar year, of [**].

                  7.1.6    Regardless of any credits or offsets to which
LICENSEE is entitled under this AGREEMENT, the royalty payments due SKI under
Article 7 shall not be less than [**] of the royalties due pursuant
to Sections 7.1.1, 7.1.2, 7.1.3, or 7.1.4, as applicable, on NET SALES of any
PRODUCT in the applicable quarter. Any such royalty credits or offsets may be
carried forward until applied.

         7.2      ROYALTY ON NET SALES TO THIRD PARTIES. Earned royalties
shall be paid pursuant to Sections 7.1 and 7.5 hereof on all PRODUCTS SOLD
under this AGREEMENT, and the earned royalty payable on a given PRODUCT made
hereunder shall not become due and owing until such PRODUCT is SOLD. In the
event that more than one of the foregoing royalty rates specified in Sections
7.1.1 through 7.1.4 apply, LICENSEE shall pay the highest of these rates.
Except where LICENSEE or its AFFILIATE(S) or SUBLICENSEE is an end-user of a
PRODUCT, the earned royalty for any particular PRODUCT shall be due upon the
first bona fide arm's length SALE to a THIRD PARTY other than an AFFILIATE or
SUBLICENSEE thereof and any subsequent SALE of such PRODUCT by a THIRD PARTY
that is not an AFFILIATE or SUBLICENSEE shall be royalty-free.

         7.3      THIRD-PARTY ROYALTIES. LICENSEE shall be responsible for
procuring such licenses as it deems, in its sole discretion, required for the
manufacture, use, marketing, SALE, or distribution of PRODUCTS by LICENSEE
and its AFFILIATE(S) and SUBLICENSEE(S), and for the payment of any amounts
due THIRD PARTIES under such licenses; provided that LICENSEE may offset
against the royalties owed to SKI up to [**] of royalties owed to such THIRD
PARTY, up to a maximum of [**] of the royalty owed to SKI in any quarter with
respect to the applicable PRODUCT. Any such amounts which are uncredited in a
quarter may be carried forward until expended.

         7.4      ONE ROYALTY. Notwithstanding the provisions of Section 7.2
hereof, in the case of transfers or SALES of any PRODUCT among LICENSEE,
AFFILIATE(S), and SUBLICENSEE(S) or between AFFILIATE(S) for re-sale to THIRD
PARTIES, one and only one royalty shall be payable thereon and such royalty
shall become payable upon the SALE thereof to a THIRD PARTY.

         7.5      ROYALTIES ON NET SALES BY SUBLICENSEE(S). In lieu of the
royalty payments under Section 7.1 and the development milestone payments
under Section 6.3, for any sublicense of only SKI PATENT RIGHTS entered into
prior to the earlier of (i) [**] years from the EFFECTIVE DATE; and (ii) the
initiation of Phase II clinical trials for epothilone D, SKI shall receive
[**] of all sublicensing proceeds, and LICENSEE shall receive the remainder.
For any other sublicense, and in lieu of the royalty payments under Section
7.1 and the development milestone payments under Section 6.3, LICENSEE shall
pay SKI [**] of the sublicensing proceeds, provided, however, that SKI's [**]

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


share of any royalty payments received from such SUBLICENSEE shall not exceed
the royalty that LICENSEE would have paid to SKI if LICENSEE marketed the
PRODUCT. Sublicensing proceeds include both royalty and non-royalty income
received by LICENSEE, including anything of value in lieu of cash payments,
but excluding reimbursement for research and development, including clinical
trial, expenses, proceeds from sale of equity (but not any premium
attributable to the sublicense thereon) made in connection with the
sublicense, and manufacturing costs (but not any profits in excess of normal
manufacturing profits therefrom). SKI shall have the right to audit
LICENSEE's business records, as provided in Section 7.7, to verify that such
expenses, premium, or costs reported by LICENSEE are accurate. In the event
LICENSEE sublicenses SKI or LICENSEE's PATENT RIGHTS as part of an agreement
to license THIRD PARTY technology required to make, use, or sell a PRODUCT,
then such agreement shall not be subject to the sharing of sublicensing
proceeds specified in this Section 7.5.

         7.6      ROYALTIES ON COMMERCIALIZATION OF LICENSEE'S EPOTHILONE
TECHNOLOGY. In the event that LICENSEE, by itself or through its AFFILIATE(S)
or a THIRD PARTY, during the TERM of this AGREEMENT, commercializes an
EPOTHILONE or commercializes technology for producing an EPOTHILONE without
utilization of SKI PATENT RIGHTS or SKI KNOW-HOW licensed hereunder, then
Kosan agrees to pay SKI a royalty on the NET SALES by LICENSEE or its
AFFILIATE(S) or SUBLICENSEE(S) of such product or any product made using such
technology. If SKI performs pre-clinical and Phase I clinical testing of such
EPOTHILONE product, then the royalty rate shall be [**] of NET SALES of such
product, regardless of whether LICENSEE or its AFFILIATE(S) or SUBLICENSEE(S)
markets the product. If SKI does not perform such pre-clinical and Phase I
clinical testing, then the royalty shall be [**] on NET SALES, regardless of
whether LICENSEE or its AFFILIATE(S) or SUBLICENSEE(S) markets the product.
In either event, such royalty shall be subject to the third party royalty
credit set forth in Section 7.3. No other payments of any type or kind shall
be due SKI for the commercialization of LICENSEE's EPOTHILONE technology by
LICENSEE or its AFFILIATE(S) or SUBLICENSEE(S).

         7.7      AUDIT RIGHTS. LICENSEE shall keep, and shall cause its
AFFILIATE(S) and SUBLICENSEE(S) to keep, full, true, and accurate books of
account containing all particulars in accordance with LICENSEE's normal
accounting procedures then in effect for the purpose of showing the amount
payable to SKI by way of royalty as aforesaid or by way of any other provision
hereunder. Said books of account shall be kept at LICENSEE's (or if sales by a
SUBLICENSEE, at the SUBLICENSEE's) principal place of business. Said books and
the supporting data shall be maintained and kept open during reasonable
business hours, for five (5) years following the end of the calendar year to
which they pertain (and access shall not be denied thereafter, if reasonably
available), to the inspection of an independent certified public accountant
retained by SKI and reasonably acceptable to LICENSEE or such SUBLICENSEE for
the purpose of verifying LICENSEE's royalty statements, or LICENSEE's
compliance in other respects with this AGREEMENT, but this right to inspect
may not be exercised more than once in any year and once a calendar period is
audited, it may not be re-audited unless a payment discrepancy is identified.
Said accountant shall disclose to SKI only information relating to the


                                      24

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


accuracy of the royalty reports and the royalties paid under this AGREEMENT.
Names of customers and other confidential information shall not be disclosed
to SKI by such independent accountant. Such accountant shall be retained at
SKI's sole expense. Notwithstanding the foregoing, inspections of the records
of SUBLICENSEE(S) shall be limited to the extent that LICENSEE has the right
to authorize SKI to make such inspection; provided that if LICENSEE does not
have the right to authorize SKI to make such an inspection, upon SKI's
request, LICENSEE, at its expense, using an independent certified accountant
reasonably acceptable to SKI, shall inspect the SUBLICENSEE's records and
shall provide to SKI the results of such inspection. In any audit, if an
underpayment of more than [**] is established for a quarter, LICENSEE shall
pay the costs of the audit of such period and shall promptly pay to SKI any
amounts due together with interest as provided in Section 7.8.

         7.8      ROYALTY REPORTS. LICENSEE within sixty (60) days after the
first day of January, April, July, and October of each year (the "Reporting
Date") shall deliver to SKI a true and accurate report, giving such
particulars of the PRODUCTS SOLD by LICENSEE, AFFILIATE(S), and SUBLICENSEE(S)
and the NET SALES due during the three (3) months preceding the Reporting Date
("Accounting Period") under this AGREEMENT as are pertinent to an accounting
for royalty under this AGREEMENT. Each such report shall state, separately for
LICENSEE and each AFFILIATE and SUBLICENSEE, the number, description, and
aggregate NET SALES, by country, of each PRODUCT sold during the calendar
quarter upon which a royalty is payable under this AGREEMENT. Simultaneously
with the delivery of each such report, LICENSEE shall pay to SKI the royalty
due under this AGREEMENT for the period covered by such report. If no
royalties are due, it shall be so reported.

         7.9      PAYMENT METHOD; LATE PAYMENTS. All amounts due SKI
hereunder shall be paid in U.S. dollars by check in immediately available
funds to a bank account designated by SKI. Any payments or portions thereof
due hereunder which are not paid on the date such payments are due under this
AGREEMENT shall bear interest at a rate equal to the lesser of prime rate as
reported by Citibank (or its successor in interest), New York, New York, plus
[**], or the maximum rate permitted by law, calculated on the number of days
such payment is delinquent, compounded monthly.

         7.10     CURRENCY CONVERSION. All royalty payments by LICENSEE to SKI
shall be converted into U.S. Dollars in accordance with LICENSEE's current
customary and usual procedures for calculating same which are the following:
the rate of currency conversion shall be calculated using a simple average of
monthly period end "spot rates" provided by Brown Brothers Harriman, 59 Wall
Street, NY, NY 10005 for each quarter, or if such rate is not available, the
spot rate as published by a leading United States commercial bank for such
accounting period. LICENSEE shall give SKI prompt written notice of any
changes to LICENSEE's customary and usual procedures for currency conversion,
which shall only apply after such notice has been delivered and provided that
such changes continue to maintain a set methodology for currency conversion.
If the transfer or the conversion into U.S. Dollars in any such instance is
not lawful or possible, the payment of each part of the royalties due as is
necessary, shall be made by the deposit thereof, in whatever currency is
allowable, to the credit


                                      25

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


and account of SKI in any commercial bank or trust company of SKI's choice
located in that country. Prompt notice of said deposit shall be given by
LICENSEE to SKI and LICENSEE shall use reasonable efforts to assist SKI in
securing the payment of such funds to SKI's U.S. bank account.

         7.11     TAXES. Any tax required to be withheld on royalties payable
to SKI under the laws of any foreign country shall be promptly paid by
LICENSEE for and on behalf of SKI to the appropriate governmental authority,
and LICENSEE shall furnish SKI with proof of payment of such tax together with
official documents issued by the appropriate governmental authority and other
appropriate evidence sufficient to enable SKI to support a claim for a tax
credit in respect of any sum so withheld, and at SKI's request, provide
reasonable assistance to SKI in recovering such amounts, if possible.

         7.12     LEGAL LIMIT ON ROYALTIES. In any country where the rate of
royalty is limited by applicable law, the royalty payment shall be made to SKI
at the highest rate permitted by law in that country for licenses of the type
herein granted, provided that such rate is equal to or less than the rate
specified in this AGREEMENT.

         7.13     RESTRICTIONS ON PAYMENTS. The obligation to pay royalties to
SKI under this AGREEMENT shall be waived and excused to the extent that
applicable statutes, laws, codes, or government regulations in a particular
country prevent such royalty payments; provided, however, in such event, if
legally permissible, LICENSEE shall pay the royalties owed to SKI by
depositing such amounts, to the credit and account of SKI or its nominee in
any commercial bank or trust company of SKI's choice located in that country,
prompt notice of which shall be given by LICENSEE to SKI.

ARTICLE 8 -- SUPPLY OF PRODUCTS

         8.1      LICENSEE RESPONSIBILITY. With the exception of the
epothilone D requirements for the Phase I clinical trials, for which SKI shall
be responsible, LICENSEE shall be solely responsible for making or having made
PRODUCTS for DEVELOPMENT and commercialization.

         8.2      TECHNOLOGY TRANSFER. Upon LICENSEE's request, SKI shall
provide reasonable technical assistance, and, to the extent that SKI has a
right to do so without incurring additional expense, licenses, as may
reasonably be requested by LICENSEE to transfer such technology as needed for
LICENSEE or its designee to commence or continue manufacturing under Section
8.1. All such technical assistance shall be provided at LICENSEE's expense.

ARTICLE 9 -- CONFIDENTIALITY

         9.1      CONFIDENTIAL INFORMATION. Except as expressly provided
herein, the parties agree that, for the term of this AGREEMENT and for five
(5) years thereafter, the receiving party shall keep completely confidential
and shall not publish or otherwise disclose and shall not use for any


                                      26

<PAGE>


purpose except for the purposes contemplated by this AGREEMENT, any
confidential information of the other party, or any data, samples, technical,
and economic information (including the economic terms hereof),
commercialization, clinical and research strategies, and KNOW-HOW and other
information provided by the other party (the "Disclosing Party") during the
TERM of this AGREEMENT or during the negotiation of this AGREEMENT, or in
connection with the transactions contemplated thereby, or any RESEARCH PROGRAM
technology, and all other data, results, and information developed pursuant to
the RESEARCH PROGRAM and solely owned by the Disclosing Party (collectively,
the "Confidential Information") furnished to it by the Disclosing Party hereto
pursuant to this AGREEMENT or the transactions contemplated thereby.
Notwithstanding the above, Confidential Information shall not include
information that:

                  (i)      is or hereafter becomes generally available to the
public other than by reason of any default with respect to a confidentiality
obligation under this AGREEMENT; or

                  (ii)     was already known to the recipient as evidenced by
prior written documents in its possession; or

                  (iii)    is disclosed to the recipient by a THIRD PARTY who
is not in default of any confidentiality obligation to the disclosing party
hereunder; or

                  (iv)     is developed by or on behalf of the receiving
party, without reliance on Confidential Information received from the other
party hereunder; or

                  (v)      is used with the consent of the Disclosing Party
(which consent shall not be unreasonably withheld) in applications for patents
or copyrights under the terms of this AGREEMENT; or

                  (vi)     has been approved in writing for publication by the
Disclosing Party; or

                  (vii)    is PRODUCT-related information that is reasonably
required to be disclosed in connection with marketing of PRODUCT covered by
this AGREEMENT.

Confidential Information shall be safeguarded by the recipient, shall not be
disclosed to THIRD PARTIES, and shall be made available only to recipient's
employees or independent contractors who agree in writing to equivalent
conditions and who have a need to know the information for the purposes
specified under this AGREEMENT; however, the recipient may disclose
Confidential Information to the extent such disclosure is required in
compliance with applicable laws or regulations in connection with the
manufacture or SALE of PRODUCTS, or is otherwise required to be disclosed in
compliance with applicable laws or regulations or order by a court or other
regulatory body having competent jurisdiction, provided that in the event such
disclosure is required, the recipient (i) shall, unless prohibited by law,
give reasonable advance notice of such disclosure to the other party and (ii)
shall use reasonable efforts to secure confidential treatment of such
information (whether by protective order or otherwise). Notwithstanding the
foregoing,


                                      27
<PAGE>

Confidential Information may be provided to THIRD PARTIES under appropriate
terms and conditions including confidentiality provisions equivalent to those
in this AGREEMENT for consulting, sublicensing negotiations, manufacturing
development, manufacturing, external testing, and marketing trials with
respect to PRODUCTS.

         9.2      PUBLICATION. The parties shall cooperate in appropriate
publication of the results of research and development work performed pursuant
to this AGREEMENT, but subject to the predominating interest to obtain patent
protection for any patentable subject matter. To this end, it is agreed that
prior to any public disclosure of such results, the party proposing disclosure
shall send the other party a copy of the information to be disclosed, and
shall allow the other party thirty (30) days from the date of receipt in which
to determine whether the information to be disclosed contains subject matter
for which patent protection should be sought prior to disclosure, or otherwise
contains Confidential Information of the reviewing party which such party
desires to maintain as a trade secret. Each party shall designate a
representative for receipt of proposed publications from the other party. If
due to a valid business reason or a reasonable belief by the non-disclosing
party that the disclosure contains subject matter for which a patentable
invention should be sought, then prior to the expiration of the thirty (30)
day period, the non-disclosing party shall so notify the Disclosing Party, who
shall then delay public disclosure of the information for an additional period
of up to thirty (30) days to permit the preparation and filing of a patent
application on the subject matter to be disclosed or other action to be taken.
The party proposing disclosure shall thereafter be free to publish or disclose
the information. If the publication discloses a COLLABORATION COMPOUND, the
Disclosing Party shall submit a copy of the manuscript to the JRC thirty (30)
days prior to submission for publication.

         9.3      ACQUISITION. In the event a party hereto is acquired, such
party shall take reasonable efforts to ensure that the Confidential
Information of the other party hereto is used only for the purposes of this
AGREEMENT, and is not disclosed otherwise to the acquiror.

ARTICLE 10 -- REGULATORY MATTERS

         10.1     ADVERSE EVENT REPORTING. Each party shall promptly inform
the other in writing within twenty-four (24) hours of its receipt of any
information which it receives regarding or related to any serious, unexpected
adverse reaction in humans to a PRODUCT. Each party shall comply with each
Adverse Drug Experience reporting requirement of it in the United States
Federal Food Drug and Cosmetic Act, as amended (21 U.S.C. Section 301 ET SEQ.)
and the similar requirements of international regulatory authorities. In
addition, on an on-going basis, each party agrees to make a good faith effort
promptly to provide the other party with any additional information in its
possession that indicates adverse effects in humans associated with a PRODUCT.
The obligations of this Article shall survive termination of this AGREEMENT as
to any PRODUCT continued to be SOLD by LICENSEE or its AFFILIATE(S) or
SUBLICENSEE(S).

                                     28

<PAGE>

         10.2     REGULATORY AND OTHER INQUIRIES. In the event SKI is
contacted by the FDA or any drug regulatory agency for any regulatory purpose
pertaining to this AGREEMENT or to a PRODUCT, SKI and LICENSEE shall promptly
(within two (2) business days) notify and consult with one another, and
LICENSEE shall provide a response as it deems appropriate, subject to SKI
approval. LICENSEE shall have sole responsibility for responding to all
inquiries to LICENSEE or SKI regarding the benefits, side effects, and other
characteristics of PRODUCTS. The party responsible for manufacturing the BULK
PRODUCT form of the pertinent PRODUCT shall have the sole responsibility for
responding to all inquiries regarding the manufacture of such BULK PRODUCT
after consultation with the other party.

         10.3     PRODUCT RECALL. In the event that LICENSEE or SKI determines
that an event, incident or circumstance has occurred which may result in the
need for a recall or other removal of any PRODUCT, or any lot or lots thereof,
from the market, it shall advise and consult with the other party with respect
thereto. In consultation with SKI, and with due consideration thereto,
LICENSEE shall make the final determination to recall or otherwise remove the
PRODUCT or any lot or lots thereof from the market. SKI shall be responsible
for the costs of any recall due to defects in BULK PRODUCTS manufactured by
SKI, and LICENSEE shall be responsible for the costs of other recalls.

ARTICLE 11 -- PATENT INFRINGEMENT

         11.1     NOTICE. In the event that there is infringement by a THIRD
PARTY of any patent licensed to LICENSEE hereunder that covers the
manufacture, USE, or SALE of a PRODUCT, LICENSEE shall notify SKI in writing
to that effect, including with said written notice evidence establishing a
PRIMA FACIE case of infringement by such THIRD PARTY.

         11.2     ACTION.

                  11.2.1   LICENSEE ACTION. LICENSEE shall have the right,
but not the obligation, to bring suit against any infringer of any patent
licensed to LICENSEE hereunder that is owned solely by SKI or jointly by SKI
and LICENSEE and join SKI as a party plaintiff, provided that LICENSEE shall
bear all the expenses of such suit. In the event LICENSEE brings such suit,
and damages or other monies are awarded or received in settlement of such
suit, LICENSEE shall be entitled to deduct an amount to cover its
out-of-pocket expenses, including attorneys' and professional fees. The
balance of any recoveries shall be [**]. SKI will cooperate with LICENSEE in
any suit for infringement of a licensed patent brought by LICENSEE against a
THIRD PARTY, and shall have the right to consult with LICENSEE and to
participate in and be represented by independent counsel in such litigation
at its own expense. LICENSEE shall incur no liability to SKI as a consequence
of such litigation or any unfavorable decision resulting therefrom, including
any decision holding SKI's patent invalid or unenforceable; provided,
LICENSEE shall not enter into any settlement, consent judgment, or other
voluntary final disposition of such litigation without the prior written
consent of SKI, which consent shall not be unreasonably withheld.

                                     29

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

                  11.2.2   SKI ACTION. In the event that LICENSEE notifies
SKI that it intends to take no action to stop infringement of a patent owned
solely by SKI or jointly by SKI and LICENSEE, or LICENSEE fails to take such
action within one hundred eighty (180) days of being requested to do so by
SKI, then SKI shall after any such notification or time period, at its
option, take action to obtain a discontinuance of such infringement or bring
suit against the THIRD PARTY infringer. SKI shall bear all the expenses of
any suit brought by it. In the event damages or other monies are awarded or
received in settlement of such suit, SKI shall be entitled to deduct an
amount to cover its out-of-pocket expenses, including attorneys' and
professional fees. The balance of any recoveries shall be [**]. LICENSEE and
its AFFILIATE(S) will cooperate with SKI in any such suit and shall have the
right to consult with SKI and be represented by its own counsel at its own
expense. SKI shall incur no liability to LICENSEE and its AFFILIATE(S) as a
consequence of such litigation or any unfavorable decision resulting
therefrom, including any decision holding SKI's patent invalid or
unenforceable; provided, SKI shall not enter into any settlement, consent
judgment, or other voluntary final disposition of such litigation without the
prior written consent of LICENSEE, which consent shall not be unreasonably
withheld. In the event that SKI or LICENSEE is sued by a third party for
alleged infringement of the third party's patent, LICENSEE shall pay the
legal costs of defending such suit.

         11.3     COOPERATION. In the event either party hereto shall initiate
or carry on legal proceedings to enforce the PATENT RIGHTS against an alleged
infringer, as provided herein, the other party hereto shall fully co-operate
with the party initiating or carrying on such proceedings.

ARTICLE 12 -- INTELLECTUAL PROPERTY

         12.1     OWNERSHIP.

                  12.1.1   OWNERSHIP OF INVENTIONS. SKI will own any
inventions and patents claiming such inventions conceived or reduced to
practice solely by SKI personnel in connection with the performance of the
RESEARCH PROGRAM, subject to the licenses granted in Article 4 above. LICENSEE
will own any inventions and patents claiming such inventions conceived and
reduced to practice solely by LICENSEE personnel in connection with the
RESEARCH PROGRAM. The parties will jointly own any inventions and patents
claiming such inventions conceived and reduced to practice jointly by LICENSEE
and SKI personnel in connection with the RESEARCH PROGRAM ("Joint Inventions").

                  12.1.2   U.S. LAW. Inventorship and rights of ownership
shall be determined in accordance with U.S. patent law. The laws of the United
States with respect to joint ownership of inventions shall apply in all
jurisdictions, and each party hereby waives any right (other than as set forth
in this AGREEMENT) to obtain an accounting of profits or approve any license
or exploitation thereof.

         12.2     PATENT PROSECUTION.

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

                  12.2.1   SKI shall file, maintain, and prosecute the patent
applications within the SKI PATENT RIGHTS to obtain patents thereon in such
countries it deems appropriate. Upon the receipt of an invoice from the
provider of patent services detailing the same, LICENSEE shall reimburse SKI
for all past costs of filing, maintaining, and prosecuting the patent
applications within the SKI PATENT RIGHTS, and LICENSEE shall pay all future
costs for any such activities it approves in advance in writing. If LICENSEE
declines to pay the costs of filing, maintaining, and prosecuting a patent or
patent application, then LICENSEE's license to that patent or patent
application hereunder shall terminate. SKI does not represent or warrant that
any such patent will be obtained, and SKI shall, subject to Section 12.2.2, be
responsible for determining whether to abandon any or all of said patent
applications or any portions thereof.

                  12.2.2   SKI shall promptly notify LICENSEE in the event SKI
decides not to file or decides to abandon or discontinue prosecution or
maintenance of any one or more patents or patent applications included in the
SKI PATENT RIGHTS. Such notification will be given as early as possible, which
in no event will be less than sixty (60) days prior to the date on which said
application(s) will become abandoned. LICENSEE shall have the option,
exercisable upon written notification to SKI, to assume full responsibility
for the filing, prosecution, or maintenance of the affected patents or patent
application(s), in LICENSEE's name, at its expense. Royalty obligations with
respect to such affected patents or patent applications shall be governed by,
and at the royalty rate, set forth in Section 7.1.4 for the life of such
patent.

                  12.2.3   LICENSEE shall file, maintain, and prosecute the
patent applications within the PATENT RIGHTS solely owned by LICENSEE to
obtain patents thereon in such countries it deems appropriate, at its own
expense. LICENSEE does not represent or warrant that any such patent will be
obtained, and LICENSEE shall, in its sole discretion be responsible for
determining whether to abandon any or all of said patent applications or any
portions thereof.

         12.3     CONSULTATION. LICENSEE shall have the right to consult with
SKI regarding the content of patent applications in the SKI PATENT RIGHTS,
prior art searches and correspondence, and to comment thereon. SKI shall
consider all such comments offered by LICENSEE, it being agreed, however,
that, subject to Section 12.2.2, all final decisions respecting conduct of the
prosecution of said patent applications shall rest solely in the discretion of
SKI. SKI agrees to promptly provide LICENSEE with copies of:

                  12.3.1   all patent applications included in SKI PATENT
RIGHTS which disclose COLLABORATION COMPOUNDS or methods for their manufacture
or USE;

                  12.3.2   all prior art searches and patentability, validity,
or infringement opinions conducted on behalf of SKI related to said patent
applications and the subject matter of this AGREEMENT; and

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<PAGE>

                  12.3.3   all correspondence to and from the United States
Patent and Trademark Office related to said patent applications as well as all
correspondence relating to corresponding foreign national and international
patent applications.

         12.4     JOINT INVENTIONS.

                  12.4.1   The parties will cooperate to file, prosecute, and
maintain patent applications covering the Joint Invention(s) within the
RESEARCH PROGRAM in the United States, Japan, and the European Union (in
Europe through a European Patent Convention application) (collectively, the
"Core Countries") and other countries agreed by the parties. LICENSEE shall
pay all expenses and fees associated with the filing, prosecution, issuance,
and maintenance of any patent application and resulting patent for a Joint
Invention in the Core Countries and other agreed countries.

                  12.4.2   In the event that either party wishes to seek
patent protection with respect to any Joint Invention outside the Core
Countries, it shall notify the other party hereto. If both parties wish to
seek patent protection with respect to such Joint Invention in such country or
countries, activities shall be subject to Section 12.4.1 above. If only one
party wishes to seek patent protection with respect to such Joint Invention in
such country or countries, it may file, prosecute, and maintain patent
applications and patents with respect thereto, at its own expense. Whenever
possible, the parties shall cooperate to obtain the benefit of international
treaties, conventions, and/or agreements (e.g., the Patent Cooperation Treaty)
to obtain the benefits afforded thereby. In any such case, the party declining
to participate in such activities shall not grant any THIRD PARTY a license
under its interest in the applicable joint invention in the applicable country
or countries without the prior written consent of the other party, which shall
not be unreasonably withheld. SKI agrees to provide its written consent, if
necessary, for LICENSEE to sublicense any joint invention in any country
pursuant to the terms of this AGREEMENT.

         12.5     PATENT TERM EXTENSIONS. LICENSEE shall cooperate with SKI,
and SKI agrees to seek diligently any extension under the U.S. Drug Price
Competition and Patent Term Restoration Act of 1984, the Supplementary
Certificate of Protection of the Member States of the European Community, or
other similar measure in any other country that is available or that becomes
available in respect of the term of any patent within the SKI PATENT RIGHTS,
including any patent that may issue on a patent application within the SKI
PATENT RIGHTS. LICENSEE shall diligently advise SKI in a timely manner of
approval by the Food and Drug Administration of the United States of America
to USE, SELL, or market PRODUCTS or any other governmental approval obtained
by or on behalf of LICENSEE or an AFFILIATE that is pertinent to any such
extension. LICENSEE shall supply SKI with any pertinent information and data
in its possession or control or that is in the possession or control of any
AFFILIATE or SUBLICENSEE and shall cooperate fully in assisting SKI to obtain
any such extension that it may seek. LICENSEE shall supply SKI in a timely
manner with any information and data and any supporting affidavits or
documents required to comply with 35 U.S.C. Section 156 Extension of Patent
Term (and any successor legislation) and any administrative rules or
regulation thereunder

                                      32

<PAGE>

or required to comply with any corresponding laws and regulations that are or
shall be in effect in any country within the SKI PATENT RIGHTS, all without
further consideration. LICENSEE shall require its AFFILIATE(S) to comply with
this Section 12.5.





























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<PAGE>

ARTICLE 13 -- PUBLICITY

         Neither party shall originate any publicity, news release, or public
announcement, written or oral, whether to the public or press, stockholders,
or otherwise, relating to this AGREEMENT, including its existence, the subject
matter to which it relates, performance under it or any of its terms, to any
amendment hereto, or performances hereunder without the written consent of the
other party, save only (i) such announcements as in the opinion of counsel for
the party making such announcement is required by applicable law to be made
(including, but not limited to, the Securities and Exchange Act of 1934, as
amended, the regulations promulgated thereunder), or (ii) announcements to
LICENSEE's private advisors, present investors, and bona fide prospective
investors or a potential SUBLICENSEE so long as such disclosure is made under
a binder of confidentiality wherein such advisor or investor or potential
SUBLICENSEE agrees not to disclose the information contained in the
announcement to any THIRD PARTY or to use the information for any purpose
other than to evaluate its investment or prospective investment in LICENSEE or
its prospective sublicense. Such announcements shall be factual and as brief
as reasonable. If a party decides to make an announcement required by law or
otherwise permitted under this AGREEMENT, it will give the other party two (2)
days' advance written notice of the text of the announcement so that the other
party will have an opportunity to comment upon the announcement. Upon request
by a party for approval of any other disclosures, such approval or disapproval
shall be given in writing within one (1) day of its receipt. Upon request by
either party, the parties agree to prepare a mutually agreed press release and
related Question and Answer document with respect to this AGREEMENT. Once
information has been approved for disclosure, no further consent or approval
shall be required under this Article with respect to such information. Except
as expressly authorized by subsection (i), LICENSEE shall not use the name of
SKI or Memorial-Sloan Kettering Cancer Research Center, nor any of its
employees, nor any adoption thereof, in any fund-raising, advertising,
promotional or sales literature without prior written consent obtained from
SKI in each case.

ARTICLE 14 -- WARRANTIES AND REPRESENTATIONS

         14.1     SKI warrants to the best of its knowledge that as of the
EFFECTIVE DATE it owns or exclusively controls by agreement, assignment, or
license all right, title, and interest in the SKI PATENT RIGHTS and SKI
KNOW-HOW and that it has full power and authority to execute, deliver, and
perform this AGREEMENT and the obligations hereunder.

         14.2     LICENSEE to the best of its knowledge warrants that as of
the EFFECTIVE DATE it owns or exclusively controls by agreement, assignment,
or license all right, title, and interest in the LICENSEE PATENT RIGHTS and
LICENSEE KNOW-HOW and that it has full power and authority to execute,
deliver, and perform this AGREEMENT and the obligations hereunder.

         14.3     SKI expressly warrants and represents that it has no
outstanding encumbrances or agreements, either written, oral, or implied, in
connection herewith that are inconsistent with the rights granted herein, and
that it has not granted and will not grant during the term of this

                                      34

<PAGE>

AGREEMENT or any renewal hereof, any rights, license, consent, or privilege
that conflict with the rights granted herein.

         14.4     LICENSEE expressly warrants and represents that it has no
outstanding encumbrances or agreements, either written, oral, or implied, in
connection herewith that are inconsistent with the obligations undertaken by
LICENSEE herein, and that it has not entered into, and during the term of this
AGREEMENT or any renewal hereof will not enter into, any agreements, either
written, oral, or implied, that conflict with the rights granted, and
obligations undertaken, by LICENSEE herein.

         14.5     Each party expressly represents and warrants that it has the
full power and authority to enter into this AGREEMENT and to carry out the
transactions contemplated hereby.

         14.6     Each party hereby warrants that the execution, delivery, and
performance of this AGREEMENT has been duly approved and authorized by all
necessary corporate or partnership actions of both parties; do not require any
shareholder or partnership approval which has not been obtained or the
approval and consent of any trustee or the holders of any indebtedness of
either party; do not contravene any law, regulation, rules, or order binding
on either party, and do not contravene the provisions of or constitute a
default under any indenture, mortgage, contract, or other agreement or
instrument to which either party is a signatory.

         14.7     Each party hereby represents and warrants that, to the
extent the United States government has any interest in the SKI PATENT RIGHTS
as a result of government funded research, it will continue to make good faith
efforts to comply in all respects with the applicable provisions of any
applicable law, regulation, or requirement by the U.S. Government relating to
the SKI PATENT RIGHTS and shall make reasonable efforts to ensure that such
laws, regulations, and requirements are fulfilled with respect to the SKI
PATENT RIGHTS, including without limitation the provisions of 35 U.S.C.
Section 202. Each party agrees that it will make good faith efforts to ensure
that all necessary steps are taken to comply with the requirements of 35
U.S.C. Section 202 ET SEQ. and 37 C.F.R. Section 401.1 ET SEQ. to retain the
maximum rights under the SKI PATENT RIGHTS allowable by law. LICENSEE and SKI
agree that they will provide the necessary reports and information required to
comply with 35 U.S.C. Section 202 ET SEQ. and 37 C.F.R. Section 401.1 ET SEQ.,
including periodic reports on utilization or efforts on utilization of the
inventions covered by the SKI PATENT RIGHTS.

         14.8     SKI and LICENSEE each specifically disclaim that the
RESEARCH PROGRAM or the DEVELOPMENT will be successful, in whole or part, or
that any clinical or other studies undertaken by either will be successful.
SKI AND LICENSEE EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS,
IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO THE CONFIDENTIAL
INFORMATION, SKI PATENT RIGHTS OR KNOW-HOW, COLLABORATION COMPOUNDS, OR
PRODUCTS, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY INTELLECTUAL PROPERTY,

                                      35

<PAGE>

PATENTED OR UNPATENTED, OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES.

ARTICLE 15 -- TRADEMARKS

         LICENSEE, at its expense, shall be responsible for the selection,
registration, and maintenance of all trademarks which it employs in connection
with PRODUCTS and shall own and control such trademarks. SKI recognizes the
exclusive ownership by LICENSEE of any proprietary LICENSEE name, logotype, or
trademark furnished by LICENSEE (including LICENSEE's AFFILIATE(S)) for use in
connection with the PRODUCT. SKI shall not, either while this AGREEMENT is in
effect or at any time thereafter, register, use, or attempt to obtain any
right in or to any such name, logotype, or trademark or in and to any name,
logotype, or trademark confusingly similar thereto.

ARTICLE 16 -- INDEMNIFICATION

         16.1     BY LICENSEE. LICENSEE agrees to indemnify and hold harmless
SKI and its AFFILIATE(S) and their respective officers, directors, employees
and agents (each a "SKI Indemnitee") from and against any and all liability,
damages, losses, claims, suits, proceedings, demands, recoveries, or expenses,
including reasonable attorneys' fees and expenses, incurred or rendered
against such SKI Indemnitees that arise out of or result from the use,
testing, manufacture, processing, packaging, labeling, sale, or distribution
of PRODUCTS by LICENSEE or its AFFILIATE(S) or SUBLICENSEE(S); except to the
extent such liability, damages, losses, claims, suits, proceedings, demands,
recoveries, or expenses incurred by or rendered against SKI are based upon the
gross negligence or willful misconduct by SKI or its AFFILIATE(S).

         16.2     BY SKI. SKI agrees to indemnify and hold harmless LICENSEE
and its AFFILIATE(S) and SUBLICENSEE(S) and their respective officers,
directors, employees and agents (each a "LICENSEE Indemnitee") from and
against any and all THIRD PARTY liability, damages, losses, claims, suits,
proceedings, demands, recoveries, or expenses, including reasonable attorneys'
fees and expenses, incurred or rendered against such LICENSEE Indemnitee(s)
which arise out of or result from the gross negligence or willful misconduct
by SKI or its AFFILIATE(S) in carrying out the RESEARCH PROGRAM under this
AGREEMENT.

         16.3     CONTROL. A party or person (the "Indemnitee") that intends
to claim indemnification under this Article 16 shall promptly notify the other
party (the "Indemnitor") in writing of any loss, claim, damage, liability, or
action in respect of which the Indemnitee or any of its AFFILIATE(S) or
SUBLICENSEE(S) or their directors, officers, employees, agents, or counsel
intend to claim such indemnification, and the Indemnitor shall have the right
to participate in, and, to the extent the Indemnitor so desires, to assume the
defense thereof with counsel chosen by Indemnitor, with consent of Indemnitee,
which consent shall not be unreasonably withheld. The Indemnitee shall not
enter into negotiations or enter into any agreement with respect to the
settlement of any claim without the prior written approval of the Indemnitor,
and the indemnity agreement in this Article 16 shall not apply to amounts paid
in

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<PAGE>

settlement of any loss, claim, damage, liability, or action if such settlement
is made without the consent of the Indemnitor, which consent shall not be
withheld unreasonably. The failure to deliver written notice to the Indemnitor
within a reasonable time after the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 16. At the
Indemnitor's request, the Indemnitee under this Article 16 and its employees
and agents shall cooperate fully with the Indemnitor and its legal
representatives in the investigation and defense of any action, claim, or
liability covered by this indemnification and provide full information with
respect thereto.

ARTICLE 17 -- BANKRUPTCY

         All rights and licenses granted under or pursuant to this AGREEMENT
by each party are and shall otherwise be deemed to be for purposes of Section
365(n) of Title 11, United States Code (the "Bankruptcy Code"), licenses of
rights to "intellectual property" as defined under Section 101(60) of the
Bankruptcy Code. The parties agree that LICENSEE shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code.

ARTICLE 18 -- TERM AND TERMINATION

         18.1     TERM.

                  18.1.1   TERM OF AGREEMENT. This AGREEMENT shall commence
upon the EFFECTIVE DATE and shall, unless sooner terminated pursuant to any
other provision of this AGREEMENT, continue in full force and effect until the
latest of (i) the end of the RESEARCH TERM, or (ii) the date upon which
LICENSEE ceases to have one or more PRODUCTS in active DEVELOPMENT or
commercialization, or (iii) for as long as royalties are payable according to
the provisions of Article 7 herein. The licenses granted herein to LICENSEE
shall expire on a country-by-country and PRODUCT-by-PRODUCT basis, once
LICENSEE has paid royalties for the full period under which such royalty
payments are due under Section 7.1 hereunder, and LICENSEE and its
AFFILIATE(S) shall thereafter have a fully paid-up, irrevocable, non-exclusive
license under the SKI KNOW-HOW to make, have made, USE, SELL, and have SOLD
PRODUCTS.

                  18.1.2   TERM AND TERMINATION OF RESEARCH PROGRAM.

                           (a)      TERM. Unless earlier terminated pursuant
Sections 2.3.5, 18.1.2(b) or 18.2, the term of the RESEARCH PROGRAM shall be
as set forth in Section 2.5, above.

                           (b)      PERMISSIVE TERMINATION. With six (6)
month's prior written notice to SKI, LICENSEE may terminate the RESEARCH
PROGRAM after initiation of the Phase I clinical trial in the U.S. for
epothilone D.

         18.2     TERMINATION OF THE AGREEMENT.

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<PAGE>

                  18.2.1   PERMISSIVE TERMINATION FOLLOWING RESEARCH TERM.
After the end of the RESEARCH TERM, LICENSEE may (i) terminate this AGREEMENT
in its entirety, or (ii) terminate this AGREEMENT as to any PRODUCT, upon
three (3) months' written notice to SKI. At its sole discretion, SKI may on
receipt of such notice from LICENSEE immediately accelerate such termination
of this AGREEMENT or PRODUCT, as the case may be, at any time within such
three (3) month period.

                  18.2.2   MATERIAL BREACH. Notwithstanding any other
provisions of this AGREEMENT, either party, at its option, may terminate this
AGREEMENT on ninety (90) days prior written notice served by one party should
the other party fail to comply with or perform its obligations hereunder,
unless such failure or non-performance is corrected within the ninety (90) day
period following notification, or such extended period as may be agreed
between the parties. Failure to terminate this AGREEMENT following breach or
failure to comply with this AGREEMENT shall not constitute a waiver of a
party's defenses, rights, or causes of action arising from such or any future
breach or noncompliance.

                  18.2.3   BANKRUPTCY. If either party should be adjudicated
bankrupt, file a voluntary petition in bankruptcy, have filed against it a
petition for bankruptcy or reorganization unless such petition is dismissed
within sixty (60) days of filing, make a general assignment for the benefit of
creditors, enter into a procedure of winding up to dissolution, or should a
Trustee or Receiver be appointed for its business assets or operations, the
other party shall be entitled to terminate this AGREEMENT forthwith by giving
written notice to the first party.

                  18.2.4   FAILURE TO ACHIEVE RESEARCH PLAN OBJECTIVES. This
AGREEMENT shall terminate in the event the parties determine that the
objectives of the RESEARCH PLAN cannot be achieved in a reasonable time with
the resources available to them. The parties anticipate that the Phase II
clinical trials for epothilone D will begin in January, 2002, and will
require about [**] of material and that, for LICENSEE to meet its obligations
to provide such material, LICENSEE should commence production so that [**] of
GMP epothilone D will be available no later than [**], for use in the Phase
II clinical trials. Should LICENSEE fail to produce at least [**] of GMP
epothilone D by [**] prior to the anticipated initiation date of the Phase II
clinical trials, should such date be later than January, 2002), and should
such failure be for a cause that is not readily correctable by LICENSEE
without delay of the initiation of Phase II clinical trials, then SKI shall
have the right to terminate this Agreement. This AGREEMENT shall terminate in
the event that LICENSEE is unable to produce and provide SKI with [**] of
epothilone D at GMP-level of purity on or before the start of the Phase II
clinical trials as described in the RESEARCH PLAN. This AGREEMENT shall also
terminate in the event that LICENSEE is unable to produce and provide SKI
with an amount, not to exceed [**], of epothilone D sufficient for purity
testing by [**]. [**], if the JRC determines that it would be useful for
LICENSEE to provide additional samples, not to exceed [**] to SKI for further
purity testing, then LICENSEE shall do so. Further, if the JRC determines
that it would be needed for the RESEARCH PROGRAM, LICENSEE shall provide SKI
with up to [**] of epothilone

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[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

D for animal testing on or before [**].

         18.3     EFFECT OF TERMINATION.

                  18.3.1   ACCRUED RIGHTS AND OBLIGATIONS. Termination of this
AGREEMENT for any reason shall not release any party hereto from any liability
that, at the time of such termination, has already accrued to the other party
or which is attributable to a period prior to such termination, nor preclude
either party from pursuing any rights and remedies it may have hereunder or at
law or in equity that accrued or are based upon any event occurring prior to
such termination.

                  18.3.2   RETURN OF CONFIDENTIAL INFORMATION. Upon any
termination of this AGREEMENT, LICENSEE and SKI shall promptly return to the
other party all Confidential Information received from the other party (except
one copy of which may be retained by legal counsel solely for purposes of
monitoring compliance with the provisions of Article 9 and archival purposes).

                  18.3.3   LICENSES. In the event of any termination of this
AGREEMENT pursuant to Sections 18.1.2.(b),18.2.1(i), 18.2.2, 18.2.3, or
18.2.4, the licenses granted in Article 4 shall terminate concurrently. In the
event of any termination pursuant to Section 18.2.1(ii) only with respect to
one or more PRODUCTS, the licenses granted in Article 4 shall terminate only
with respect to such PRODUCTS.

                  18.3.4   REVERSION. In the event that the licenses terminate
as described in Section 18.3.3 above, then each party undertakes the following:

                           (a)      to deliver to the other any of the other
party's KNOW-HOW in its possession;

                           (b)      not to use the other party's KNOW-HOW as
long as it has to be kept confidential pursuant to Article 9 hereunder;

                           (c)      at SKI's request, to transfer (and grant
the right to access, cross-reference and use, without charge) all MARKETING
AUTHORIZATIONS, pre-clinical and clinical data, and regulatory filings
relating to COLLABORATION COMPOUNDS and PRODUCTS (including clinical studies
and other supporting information, and any written communications to and with
the FDA and other comparable agencies), and any data relating to reportable
adverse events in respect of PRODUCTS for use in connection with developing
and commercializing, and submitting regulatory filings for PRODUCTS for which
LICENSEE does not retain rights under this AGREEMENT;

                           (d)      at SKI's request, to transfer to SKI
responsibility for and control of ongoing DEVELOPMENT work, including
contracts with THIRD PARTIES for such work, in

                                      39

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

an expeditious and orderly manner with the costs for such work assumed by SKI
as of the date such contracts are transferred; and

                           (e)      in the event of a termination of licenses
pursuant to Sections 18.2.1(ii) wherein LICENSEE retains certain licenses, the
foregoing provisions of Section 18.3.4 shall apply only to the terminated
rights and licenses.

         18.4     SURVIVAL. Sections 2.7, 7.7, 10.1, 12.1, 12.4, 14.7, 18.3,
and 19.2, and Articles 9, 15, 20, and 21 shall survive the expiration and any
termination of the AGREEMENT for any reason.

ARTICLE 19 -- ASSIGNMENT

         19.1     PERMITTED ASSIGNMENTS. This AGREEMENT or any interest herein
shall not be assigned or transferred, in whole or in part, by either party
without the prior written consent of the other party. However, without
securing such prior written consent, either party may assign this AGREEMENT to
an AFFILIATE or a successor of all or substantially all of its business to
which this AGREEMENT relates, provided that no such assignment shall be
binding and valid until and unless the assignee shall have assumed in a
writing, delivered to the non-assigning party, all of the duties and
obligations of the assignor, and, provided, further, that the assignor shall
remain liable and responsible to the non-assigning party hereto for the
performance and observance of all such duties and obligations.

         19.2     BINDING EFFECT. This AGREEMENT shall be binding upon and
inure to the benefit of the parties and to the benefit of any permitted
assignee or successor. LICENSEE shall also have the right, whether or not it
elects to terminate this AGREEMENT, to require that all reasonable steps it
may reasonably specify be taken to prevent disclosure of its confidential
information to an acquiror or assignee of SKI in any way reasonably adverse to
its interests.







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<PAGE>

ARTICLE 20 -- DISPUTE RESOLUTION

         20.1     DISCUSSION. The parties shall attempt in good faith to
resolve any dispute arising out of or relating to this AGREEMENT promptly by
negotiations between the Chief Executive Officers of SKI and LICENSEE or
their designees, who each have authority to settle the controversy and who
are at a higher level of management than the persons with direct
responsibility for administration of this AGREEMENT. Any party may give the
other party written notice of any dispute not resolved in the normal course
of business. Within [**] business days after receipt of the notice, the
receiving party shall submit to the other a written response. The notice and
the response shall include a detailed statement of each party's position and
a summary of arguments supporting that position. Within [**] days after
delivery of the response, the Chief Executive Officers of SKI and LICENSEE
shall meet at a mutually acceptable time and place and thereafter as often as
they reasonably deem necessary to attempt to resolve the dispute. All
reasonable requests for information made by one party to the other will be
honored. All negotiations pursuant to this clause will be confidential and
shall be treated as compromise and settlement negotiations for the purposes
of the Federal Rules of Evidence and all other evidentiary purposes.

         20.2     MEDIATION. If the matter has not been resolved within [**]
of the disputing party's notice, or if the Chief Executive Officers of SKI
and LICENSEE fail to meet within the time frame set forth in Section 20.1,
either party may initiate mediation of the dispute as set forth in this
Section 20.2 of this AGREEMENT.

                  (a)      Any dispute, controversy, or claim arising out of
or related to this AGREEMENT, or the interpretation, application, breach,
termination, or validity thereof, including any claim of inducement by fraud
or otherwise, shall be mediated through non-binding mediation in accordance
with the Model Procedures for the Mediation of Business Disputes promulgated
by the Center for Public Resources ("CPR") then in effect, except where those
rules conflict with these provisions, in which case these provisions control.
The mediation shall be conducted in New York, New York and shall be attended
by a senior executive with authority to resolve the dispute from each of the
parties.

                  (b)      The mediator shall be an attorney specializing in
business litigation who has at least fifteen (15) years of experience as a
lawyer with a law firm of over twenty-five (25) lawyers or was a judge of a
court of general jurisdiction and who shall be appointed from the list of
neutrals maintained by CPR.

                  (c)      The parties shall promptly confer in an effort to
select a mediator by mutual agreement. In the absence of such an agreement,
the mediator shall be selected from a list generated by CPR with each party
having the right to exercise challenges for cause and [**] peremptory
challenges within [**] of receiving the CPR list.

                  (d)      The mediator shall confer with the parties to
design procedures to conclude the mediation within no more than [**] days
after initiation.

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[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

                  (e)      Each party agrees to toll all applicable statutes
of limitation during the mediation process and not to use the period or
pendency of the mediation to disadvantage the other party procedurally or
otherwise. All negotiations pursuant to this clause will be confidential and
shall be treated as compromise and settlement negotiations for the purposes of
the Federal Rules of Evidence and all other evidentiary purposes.

ARTICLE 21 -- MISCELLANEOUS

         21.1     ENTIRE AGREEMENT. Before signing this AGREEMENT the parties
have had numerous conversations, including preliminary discussions, formal
negotiations, and informal conversations at meals and social occasions and
have generated correspondence and other writings in which the parties
discussed the transaction that is the subject of this AGREEMENT and their
aspirations for its success. In such conversations and writings, individuals
representing the parties may have expressed their judgments and beliefs
concerning the intentions, capabilities, and practices of the parties, and may
have forecasted future events. The parties recognize that such conversations
and writings often involve an effort by both sides to be positive and
optimistic about the prospects for the transaction. It is also recognized,
however, that all business transactions contain an element of risk, as does
the transaction contemplated by this AGREEMENT, and that it is normal business
practice to limit the legal obligations of contracting parties to only those
promises and representations that are essential to their transaction so as to
provide certainty as to their respective future rights and remedies.
Accordingly, it is agreed that this AGREEMENT constitutes the entire agreement
and understanding between the parties as to the legal undertakings hereunder.
All prior negotiations, representations, agreements, contracts, offers, and
earlier understandings of whatsoever kind, whether written or oral, between
SKI and LICENSEE in respect of this AGREEMENT are superseded by, merged into,
extinguished by, and completely expressed by this AGREEMENT. No aspect, part,
or wording of this AGREEMENT may be modified except by mutual agreement
between SKI and LICENSEE taking the form of an instrument in writing signed
and dated by duly authorized representatives of both SKI and LICENSEE.

         21.2     NOTICES. All communications, reports, payments and notices
required by this AGREEMENT by one party to the other shall be addressed to the
parties at their respective addresses set forth below or to such other address
as requested by either party by notice in writing to the other.

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<PAGE>

         If to SKI:
                   James S. Quirk, Senior Vice-President
                   The Memorial Sloan-Kettering Cancer Research Center
                   1275 York Ave.
                   New York, NY 10021
                   Telefax No. 212-717-3439

         If to LICENSEE:
                   Michael S. Ostrach, Chief Operating Officer
                   Kosan Biosciences, Inc.
                   3832 Bay Center Place
                   Hayward, CA 94545
                   Telefax No. 510-732-8401

All such notices, reports, payments, and communications shall be made in
writing by telefax to the numbers set forth above or by First Class mail,
postage prepaid, and shall be considered made as of the date of deposit with
the United States Post Office or when received by telefax.

         21.3     GOVERNING LAW. All matters affecting the interpretation,
validity, and performance of this AGREEMENT shall be governed by the internal
laws of the State of New York without regard to its conflict of law
principles, except as to any issue which by New York law depends upon the
validity, scope, or enforceability of any patent within the PATENT RIGHTS,
which issue shall be determined in accordance with the applicable patent laws
of the country of such patent.

         21.4     SEVERABILITY. Should any part or provision of this AGREEMENT
be held unenforceable or in conflict with the law of any jurisdiction, the
validity of the remaining part or provisions shall not be affected by such
holdings; provided that the parties shall use their best efforts to negotiate
an enforceable provision that most nearly reflects the parties' original
intentions.

         21.5     WAIVER. The waiver by either party, whether express or
implied, of any provisions of this AGREEMENT, or of any breach or default of
either party, shall not be construed to be a continuing waiver of such
provision, or of any succeeding breach or default or of a waiver of any other
provisions of this AGREEMENT.

         21.6     NO REPRESENTATIONS. Notwithstanding anything to the contrary
in this AGREEMENT, nothing herein contained shall be construed as a
representation by SKI that the PATENT RIGHTS can or will be used to prevent
the importation, SALE, or USE by a THIRD PARTY of a product in any country
within the PATENT RIGHTS where such product shall have been placed in commerce
under circumstances which preclude the use of the PATENT RIGHTS to prevent
such importation, SALE, or USE by reason of any applicable law or treaty.

                                      43

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         21.7     FORCE MAJEURE. Notwithstanding any other provisions of this
AGREEMENT, neither of the parties hereto shall be liable in damages or have
the right to terminate this AGREEMENT for any delay or default in performing
hereunder if such delay or default is caused by conditions beyond its control
including, but not limited to, acts of God, governmental restrictions, wars or
insurrections, strikes, floods, earthquakes, work stoppages, and/or lack of
materials, and any time for performance hereunder shall be extended for the
actual time of delay caused by such occurrence; provided, however, that the
party suffering such delay or default shall notify the other party in writing
of the reasons for the delay or default and shall diligently seek to correct
such conditions. If such reasons for delay or default continuously exist for
twelve (12) months, this AGREEMENT may be terminated by either party.

         21.8     INDEPENDENT CONTRACTORS. It is understood that both parties
hereto are independent contractors and are engaged in the operation of their
own respective businesses, and neither party is to be considered the agent or
partner of the other for any purpose whatsoever. Neither party has any
authority to enter into any contracts or assume any obligations for the other
party or make any warranties or representations on behalf of the other party.

         21.9     ADVICE OF COUNSEL. SKI and LICENSEE have each consulted
counsel of their choice regarding this AGREEMENT, and each acknowledges and
agrees that this AGREEMENT shall not be deemed to have been drafted by one
party or another and will be construed accordingly.

         21.10    PATENT MARKING. LICENSEE agrees to mark and have its
AFFILIATE(S) and SUBLICENSEE(S) mark all PRODUCTS they sell or distribute
pursuant to this AGREEMENT in accordance with the applicable statute or
regulations in the country or countries of manufacture and sale thereof.

         21.11    COMPLIANCE WITH LAWS. Each party shall furnish to the other
party any information requested or required by that party during the term of
this AGREEMENT or any extensions hereof to enable that party to comply with
the requirements of any U.S. or foreign federal, state, and/or government
agency. Each party shall comply with all applicable U.S., foreign, state,
regional, and local laws, rules and regulations relating to its activities to
be performed pursuant to this AGREEMENT, including without limitation, the
United States Foreign Corrupt Practices Act, United States export regulations,
and such other United States and foreign laws and regulations as may be
applicable, and to obtaining all necessary approvals, consents, and permits
required by the applicable agencies of the government of the United States and
foreign jurisdictions.

         21.12    FURTHER ASSURANCES. At any time or from time to time on and
after the date of this AGREEMENT, each party shall at the request of the other
party (i) deliver to such party such records, data or other documents
consistent with the provisions of this AGREEMENT, (ii) execute, and deliver or
cause to be delivered, all such consents, documents or further instruments of
transfer or license, and (iii) take or cause to be taken all such actions, as
the

                                      44

<PAGE>

requesting party may reasonably deem necessary or desirable in order for the
requesting party to obtain the full benefits of this AGREEMENT and the
transactions contemplated hereby.

         21.13    USE OF SINGULAR. As used in this AGREEMENT, singular includes
the plural, and plural includes the singular, wherever so required by the
context.

         21.14    HEADINGS. The captions to the several Sections and Articles
hereof are not a part of this AGREEMENT, but are included merely for
convenience of reference only and shall not affect its meaning or
interpretation.

         21.15    COUNTERPARTS. This AGREEMENT may be executed in two
counterparts, each of which shall be deemed an original and which together
shall constitute one instrument.

         IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and duly executed this AGREEMENT on the date(s) indicated below, to be
effective the day and year first above written.


For and on Behalf of SKI                      For and on Behalf of LICENSEE




By: /s/ JAMES S. QUIRK                        By: /s/ MICHAEL S. OSTRACH
   -----------------------------                 -------------------------------
         James S. Quirk                               Michael S. Ostrach
         Senior Vice President,                       Chief Operating Officer
         Research Resources Management

Date: August 25, 2000                         Date: August 25, 2000












                                      45

<PAGE>

                                    EXHIBIT A

                                  RESEARCH PLAN

                                 25 AUGUST 2000



         This Research Plan describes the activities contemplated by the

parties as of the Effective Date of the Research Collaboration and License

Agreement. These activities include:


<TABLE>
<S>   <C>

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</TABLE>

                              Confidential Information
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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


         [**]

                              Confidential Information
                                         2

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

         [**]


                             Confidential Information
                                         3

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

         [**]

                             Confidential Information
                                         4

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


         [**]

                             Confidential Information
                                         5

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


         [**]

                             Confidential Information
                                         6

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


         [**]

                             Confidential Information
                                         7

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

         [**]

                             Confidential Information
                                         8

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>


         [**]


                             Confidential Information
                                         9

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

         [**]

                             Confidential Information
                                        10

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

         [**]

                             Confidential Information
                                        11

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>



         [**]

                             Confidential Information
                                       12

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>



         [**]

                             Confidential Information
                                       13

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>



         [**]

                             Confidential Information
                                       14

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>



         [**]

                             Confidential Information
                                       15

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>



         [**]


                             Confidential Information
                                       16

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

<TABLE>
<CAPTION>
                                    EXHIBIT B

                                SKI PATENT RIGHTS

SERIAL NUMBER                             FILING DATE                      STATUS
---------------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>

         [**]
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[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.