CO-DEVELOPMENT AGREEMENT
                          BETWEEN SRI AND EUROBIOTECH


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                                TABLE OF CONTENTS

1.   DEFINITIONS ..............................................................1

2.   LICENSE AND CO-DEVELOPMENT PROGRAM .......................................3

3.   TECHNICAL INFORMATION LICENSE ............................................4

4.   LICENSE FEE AND RESEARCH AND DEVELOPMENT FUNDING .........................5

5.   ACQUISITION ..............................................................6

6.   COMMERCIALIZATION STAGE ..................................................7

7.   SUBLICENSING .............................................................8

8.   PAYMENTS AND REPORTS .....................................................8

9.   RECORDS .................................................................10

10.  DILIGENCE ...............................................................10

11.  OWNERSHIP OF THE TECHNOLOGY, TECHNICAL INFORMATION AND
     IMPROVEMENTS ............................................................10

12.  PATENT PROSECUTION ......................................................11

13.  INFRINGEMENT BY THIRD PARTY .............................................11

14.  REVOCATION PROCEEDINGS ..................................................12

15.  INFRINGEMENT OF THIRD PARTY RIGHTS ......................................13

16.  REPRESENTATIONS .........................................................13

17.  DISCLAIMER ..............................................................14

18.  INDEMNIFICATION .........................................................14

19.  INSURANCE ...............................................................15

20.  TERM AND TERMINATION ....................................................15


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2].  CONFIDENTIALITY; PUBLICATION; PUBLICITY .................................16

22.  DISPUTE RESOLUTION ......................................................18

23.  ASSIGNABILITY ...........................................................19

24.  REFORM ..................................................................20

25.  WAIVER AND ALTERATION ...................................................20

26.  MARKING .................................................................20

27.  IMPLEMENTATION ..........................................................21

28.  GOVERNING LAW ...........................................................21

29.  EXPORTATION OF TECHNICAL INFORMATION ....................................21

30.  HEADINGS ................................................................21

31.  PARTIES INDEPENDENT .....................................................21

32.  COUNTERPARTS ............................................................22

33.  FORCE MAJEURE ...........................................................22

34.  NOTICE ..................................................................21

35.  EXECUTION ...............................................................23

APPENDIX I -    PATENTS

APPENDIX II -   TERMS FOR EUROBIOTECH GROUP, INC. ("EUROBIOTECH")
                AND SOUTHERN RESEARCH INSTITUTE ("SOUTHERN") CO-
                DEVELOPMENT AGREEMENT

APPENDIX III -  EXTENSION OF THE CO-DEVELOPMENT PROGRAM BETWEEN
                SOUTHERN RESEARCH INSTITUTE AND EUROBIOTECH GROUP,
                INC.

APPENDIX IV -   GROSS PROFIT MARGIN AND NET INCOME EXAMPLES

APPENDIX V -    INTER-INSTITUTIONAL AGREEMENT


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                            CO-DEVELOPMENT AGREEMENT

THIS AGREEMENT (the  "Agreement") is entered into and effective this 31st day of
August  1998,  the same  date  affixed  hereto by the party  last  signing  this
Agreement, by and between Southern Research Institute having its principal place
of business in Birmingham,  Alabama, herein called "SRI", and Eurobiotech Group,
Inc.  having a place of business in 40 South  Audley  Street,  London W1,  Great
Britain herein called "Eurobiotech".

WITNESSETH

WHEREAS,  SRI has rights in patents and  technical  information  relating to the
development  and  uses  of   2'-fluoro-2-halo   substituted  purine  nucleosides
effective in vivo against  hematologic  malignancies and solid tumors as well as
potentially effective for other therapeutic  indications such as skin disorders,
arthritis and transplantation immunity; and

WHEREAS,  Eurobiotech  recognizes  that SRI  owns  inventions  and  intellectual
property useful in the conduct of Eurobiotech's business; and

WHEREAS,  Eurobiotech  recognizes  that its anticipated  business  activity will
encompass the practice of technology that requires a license under patents owned
by SRI; and

WHEREAS, Eurobiotech wishes to acquire certain rights to practice the inventions
of such patents and technical information; and

WHEREAS the parties have signed a "Terms for ...  Co-Development  Agreement" set
forth in Appendix II, to enter into this Agreement, and

NOW THEREFORE,  in  consideration  of the mutual  covenants herein contained and
intending to be legally bound thereby, the parties agree as follows:

                                 1. DEFINITIONS

As usual herein the following terms shall have the meanings set forth below:

A.   Co-Development  Program means the joint  development  of the  Technology by
     Eurobiotech and SRI.

B.   Commercialization  Stage means that period of time during which Eurobiotech
     is directly marketing and selling  Product(s)  through normal  distribution
     channels in any region of the Territory after receiving  regulatory  agency
     approval to do so in such region.

C.   Cost of Goods Sold means the release to the  current  period as a result of
     the sale of a Product(s)  of  inventoriable  costs (the sum of direct costs
     and  manufacturing  overhead)  adjusted for changes in ending and beginning
     inventory levels.


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D.   Eurobiotech means Eurobiotech Group, Inc. and joint ventures, subsidiaries,
     or other business entities controlled directly or indirectly by Eurobiotech
     or in which Eurobiotech owns at least fifty-one percent (51%) interest.

E.   Field means,  and is limited to, the practice of the Patent,  Invention and
     Technical   Information   licensed   hereunder  for  use  in  human  health
     applications.

F.   Gross Margin means the difference  between the manufacturing  Cost of Goods
     Sold and Gross Sales  Revenue,  with SRI  royalties  treated as an excluded
     cost.

G.   Gross Profit  Margin means the ratio of Gross Margin to Gross Sales Revenue
     expressed in percentage terms.

H.   Gross Sales Revenue means the gross amount recognized by Eurobiotech or its
     affiliates  for  the  sale  of a  Product(s)  through  normal  distribution
     channels (as determined by generally accepted accounting principles),  less
     any  deductions  for  value  added  taxes  incurred  and not  recovered  by
     Eurobiotech  or  the  equivalent  in  Great  Britain  or  elsewhere  in the
     Territory.

I.   Invention  means  patented and  unpatented,  patentable  and  unpatentable,
     proprietary  technology  related to a  2'-fluoro-2-halo  substituted purine
     nucleoside (hereafter  "Technology") developed by or on behalf of SRI, that
     is (i)  related to human  health  applications  of the  Technology  or (ii)
     necessary for the practice of Technology for human health  applications  as
     disclosed and claimed in the Patent(s).

J.   Improvement means those unencumbered  technology advances in the Technology
     made by or on  behalf of SRI  during  the term of this  Agreement  that are
     either  within the scope of and would  constitute  an  infringement  of the
     Patent claims or use Technical  Information  and are within the Field.  SRI
     shall be  obligated to include  within the licenses  granted only those SRI
     Improvements  developed during the first three (3) years from the effective
     date of the  Agreement  which  would be  reasonably  deemed  necessary  for
     Eurobiotech's  practice of the Technology,  and without which such practice
     would constitute an infringement of SRI's rights,  unless such grant is not
     possible due to SRI's  obligations  to a third party.  Notwithstanding  the
     limitation  of SRI's  obligation  set forth in the previous  sentence,  all
     Improvements  developed  under  projects  funded,  in whole or in part,  by
     Eurobiotech will be included in the licenses granted in this Agreement.  In
     the event that a  conflicting  obligation  prevents  SRI from  including an
     Improvement  within the grant of license,  SRI shall use reasonable efforts
     to assist  Eurobiotech to obtain rights from the appropriate third party or
     parties.

K.   Licensed   Technology   means  the  Patent,   Improvement,   and  Technical
     Information relating to human health applications of Technology.


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L.   Net Income means the difference  between Gross Sales Revenue and the sum of
     Cost  of  Goods  sold  and  Operating  Expenses  (Appendix  IV),  with  SRI
     royalties, local taxes, corporate income taxes and foreign taxes treated as
     excluded costs.

M.   Patent means the patents and/or patent applications,  set forth in Appendix
     1, covering the Invention or Improvement  as defined  above,  patents to be
     issued   pursuant    thereto,    and   all   divisionals,    continuations,
     continuations-in-part, reissues, substitutions, and extensions thereof, and
     any patent issuing on a patent  application  filed after the Effective Date
     of this Agreement  which is included in the grant of license  hereunder and
     any foreign counterparts of the foregoing.

N.   Product means a product,  service,  test, or  information  which is sold or
     provided for a fee and but for the license  granted  herein would  infringe
     one or more claims of a Patent,  or was  discovered,  developed,  approved,
     manufactured  or marketed  using an  Invention,  Improvement  or  Technical
     Information.

0.   Technical   Information   means   unencumbered   published  or  unpublished
     confidential  and  proprietary  information  in the nature of research  and
     development information,  knowledge and technical data, together with trade
     secrets  relating  to  the  Technology,  including  any  inventions  in the
     possession of and belonging solely to SRI on or prior to the Effective Date
     of this  Agreement  and which SRI has the  obligation  to  include  in this
     Agreement,  or which comes into the  possession of  Eurobiotech  during the
     term of this Agreement and which is generated as a consequence of access to
     technical  information  provided by SRI. SRI shall include herein only that
     Technical  Information  which is  reasonably  necessary  for  Eurobiotech's
     practice of the Invention or without which such practice  would  constitute
     an infringement of SRI's rights.  Technical  Information  includes only the
     above  information  which  is  developed  by or on  behalf  of  SRI,  or is
     generated pursuant to research funded, in whole or in part, by Eurobiotech.

P.   Territory means worldwide,  with the exception of Japan and Southeast Asia.
     Southeast  Asia  consists  of  Indonesia,   Malaysia,  Taiwan,  Hong  Kong,
     Singapore, Vietnam, Cambodia, Thailand, Laos, Philippines and South Korea.

                      2. LICENSE AND CO-DEVELOPMENT PROGRAM

A.   The  parties  to this  Agreement  hereby  agree to jointly  co-develop  the
     Technology  according to the terms of this Agreement  which  supersedes the
     "Terms for ...  Co-Development  Agreement" set forth in Appendix II and all
     other  written or verbal  agreements,  express or implied,  between SRI and
     Eurobiotech  relating to  co-development  of the Technology  except for the
     written understanding set forth in Appendix III.

B.   SRI  hereby  grants  to  Eurobiotech,  to the  extent  of the Field for the
     Territory,   an  exclusive  license  to  make,  have  made,  use  and  sell
     Product(s).


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C.   The exclusive  license set forth herein shall remain  exclusive for so long
     as  Eurobiotech  meets the  payments and other  obligations  set forth with
     regard to the development and  commercialization of the Licensed Technology
     or a Product.  If such conditions are not met, SRI, in its sole discretion,
     may  elect to  terminate  the  Co-Development  Agreement  or take  whatever
     actions it deems necessary.

D.   SRI  reserves  for itself all rights to practice  the  Inventions,  Patent,
     Improvements  and  Technical  Information  except as  exclusively  licensed
     herein.

                        3. TECHNICAL INFORMATION LICENSE

A.   To the extent it is able to do so, SRI hereby grants to Eurobiotech, to the
     extent of the Field for the  Territory,  an  exclusive  license  to use the
     Technical  Information  necessary  to  practice  the  Technology  such that
     Eurobiotech  may  make,  have  made,  use and  sell  Product(s),  including
     disclosures of the Technical  Information as needed to obtain patent rights
     or authorization  to sell or manufacture  Products or services in the Field
     within any political jurisdiction requiring such disclosure.

B.   The exclusive  license set forth herein shall remain  exclusive for so long
     as  Eurobiotech  meets the  payments and other  obligations  set forth with
     regard to the development and  commercialization of the Licensed Technology
     or a Product.  If such  conditions are not met, SRI in its sole  discretion
     may elect to terminate the Co-Development Agreement or take whatever action
     it deems necessary.

C.   (1) SRI shall  make  efforts to make  available  to  Eurobiotech  Technical
     Information in SRI's possession  related to the Technology that SRI has the
     obligation to disclose under this Agreement. Eurobiotech shall not disclose
     to third parties any Technical Information furnished by SRI during the term
     of  this  Agreement,  or  any  time  thereafter,  provided,  however,  that
     disclosure may be made of any such  Technical  Information at any time: (i)
     with the prior written consent of SRI, or (ii) to the extent necessary,  to
     Eurobiotech's  sublicensees and purchasers of  Eurobiotech's  Product(s) or
     services, or (iii) after the same shall have entered into the public domain
     through no fault of Eurobiotech or Eurobiotech's  subsidiaries.  Disclosure
     of Technical  Information is permitted  without a prior written  consent of
     SRI to the extent  required by statute,  rule or  regulation of a governing
     body during the course of Eurobiotech's  normal business  practices,  or in
     the application or prosecution of an application  for patent rights,  or in
     connection with securing financing for the development or commercialization
     of the  Technology or a Product.  Eurobiotech  shall inform SRI of any such
     disclosure  and use its best efforts to protect its  confidentiality  under
     such  disclosure.  Any  combination of Technical  Information  shall not be
     considered in the public domain merely because individual  elements thereof
     are in the public domain. To the extent that any such Technical Information
     is disclosed to Eurobiotech's  sublicensees and purchasers of Eurobiotech's
     Product(s) or services,  the agreements  contained in this Section shall be
     made


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     Eurobiotech  under a  confidentiality  agreement  to  apply  to and be made
     binding upon all such parties.

     (2) The fact that some or all of the Technical  Information  becomes public
     knowledge  shall  not  affect  the  financial  obligations  for  use of the
     Technical  Information  licensed  under this  Agreement  if such  Technical
     Information was used or usable in the discovery, development,  manufacture,
     or approval for sale of a Product within the Field.

               4. LICENSE FEE AND RESEARCH AND DEVELOPMENT FUNDING

A.   Eurobiotech shall pay the costs of any further pre-cliical development work
     deemed  necessary  prior to  commencing  clinical  trials,  and this  shall
     include the development of the Product for other therapeutic  applications,
     the use of different  formulations and preparations of the Product and oral
     and  parenteral   preclinical   toxicology.   The  costs  of   pre-clinical
     development  is  anticipated  not to exceed $1 million  (one  million  U.S.
     dollars).  Subject  to  funding  by  Eurobiotech,  SRI  shall  perform  the
     necessary pre-clinical studies whenever appropriate,  unless agreed by both
     parties  that the work would be more  advantageously  performed  by a third
     party.  Eurobiotech's  retention of rights to therapeutic  areas outside of
     cancer  is  contingent  upon  Eurobiotech  providing  funding  support  for
     development  of such  areas  in  accordance  with  the  commitments  of the
     business  development plan, as indicated in Article 10, and as periodically
     reviewed and updated as agreed to by the parties.

B.   Eurobiotech  shall pay the costs of a Phase I clinical trial of the Product
     for hematologic malignancies, to be performed at the Leukemia Unit at the M
     D Anderson Cancer Center in Houston,  Texas.  The costs of such development
     will not exceed $1.25 million (one million,  two hundred and fifty thousand
     U.S.  dollars).  Both parenteral and oral modes of  administration  will be
     studied if  warranted  by  commercial  considerations  and the  preclinical
     toxicology work.

C.   Upon successful completion of Phase I clinical trials Eurobiotech shall pay
     the costs of a  multi-center  Phase II  clinical  trial of the  Product  in
     hematologic malignancies.

D.   Upon successful  completion of Phase II clinical trials SRI and Eurobiotech
     may jointly pay the costs of Phase III clinical  trials and further Product
     development.  If SRI  shall  not  jointly  fund  the  cost of  such  trials
     Eurobiotech may pay the costs in full after paying a non-refundable  option
     fee of $750,000  within 60 days of  completion  and  evaluation of Phase II
     trials or 60 days from the  commencement of Phase III trials,  whichever is
     the earlier. If the parties jointly develop the Product in Phase III trials
     no option fee shall be payable by Eurobiotech.

E.   Eurobiotech   shall  issue  to  SRI  100,000  shares  of  common  stock  of
     Eurobiotech  Group,  Inc.  within  30  days of the  Effective  Date of this
     Agreement.


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F.   Eurobiotech  shall pay to SRI the sum of  $750,000  upon the earlier of the
     completion of Phase III trials in Europe or the  initiation of sales of the
     Product in the USA.

G.   Eurobiotech  shall  pay the cost of  prosecuting,  filing  and  maintaining
     patents  and  defending  revocation   proceedings  on  patents  and  patent
     applications, on the Product within the Territory.

H.   Eurobiotech  shall  also  pay  the  costs  as in  4G,  if  any,  for  those
     Sloan-Kettering  Institute for Cancer  Research  ("SKI")  patents which the
     Product might infringe but for the separate  Agreement  between SKI and SRI
     (Appendix  V)  which  provides  SRI  and  Eurobiotech  the  rights  to such
     Sloan-Kettering  Institute for Cancer Research patents in the Field for the
     Territory for the Product.

                                 5. ACQUISITION

     Acquisition  of the  Licensed  Technology  is meant in its  broadest  sense
     including assignment, transfer, sublicense, merger, joint venture and so on
     and so forth.

A.   Prior to Phase III Clinical Trials

     If all or part of the rights granted to Eurobiotech are acquired by a third
     party at,  or before  completion  of Phase II  clinical  trials or prior to
     Phase III  clinical  trials,  all  current  or future  payments  derived by
     Eurobiotech  from the transfer,  whether in cash,  shares,  property or any
     other form of payment,  including  but not  limited to  up-front  payments,
     milestone  payments and royalties will be divided  equally  between SRI and
     Eurobiotech.

B.   During or After Phase III Clinical Trials

     If Eurobiotech  alone funds Phase III clinical trials,  then if all or part
     of the rights are acquired by a third party during or after  completion  of
     Phase III trials,  all current or future  payments  derived by  Eurobiotech
     from the transfer,  whether in cash, shares,  property or any other form of
     payment,  including  but not limited to  up-front  payments  and  milestone
     payments  but  excluding  royalties  will be  shared on the basis of 65% to
     Eurobiotech  and 35% to SRI until 50% of the monies expended by Eurobiotech
     in conducting the Phase III trials are reimbursed. Thereafter, both parties
     shall  receive  50% each of all  payments  derived  form  the  acquisition,
     exclusive of royalty payments.  Royalty payments related to the acquisition
     of  rights  by a third  party in  order to  market  or  further  sublicense
     Product(s) shall be divided in the ratio Eurobiotech 65; SRI 35.

     If a third party  funds the Phase III trials  either in whole or in part in
     return for rights,  the parties to this Agreement shall divide all payments
     including  up-front  payments,  milestone  payments and royalties from that
     third party in equal amounts.


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     If the parties to this Agreement share Phase III trial costs equally,  then
     if all or part of the rights are  acquired by a third party during or after
     completion of Phase III trials, all current or future payments derived from
     the acquisition will be divided equally between SRI and Eurobiotech.

C.   Manufacturing

     Should Eurobiotech  manufacture or have Product(s) manufactured for sale to
     any  unaffiliated  third  party  acquirer  such as a  sublicensee  or joint
     venture  prior to,  during or after Phase III  clinical  trials,  SRI shall
     receive 35% of Net Income from such sale(s).

D.   Approval

     The foregoing scenarios (articles 5A and 5B) are subject to the approval of
     SRI which shall not be unreasonably withheld.

                           6. COMMERCIALIZATION STAGE

A.   Eurobiotech  shall  have  exclusive  rights to market  the  Product  in the
     Territory  under  the  following   terms:  For  the  Patent  and  Technical
     Information licenses granted herein, Eurobiotech shall pay to SRI a royalty
     of 7% of the Gross Sales Revenue of all Product(s)  sold to an unaffiliated
     third party,  likely to be a distributor or wholesaler,  but not limited to
     such, where Eurobiotech is responsible for the marketing of the Product. In
     addition to the seven percent of Gross Sales  Revenue,  if the Gross Profit
     Margin from  operations  in any  geographical  area equals or exceeds 31% a
     further  profit-sharing  agreement  will apply,  according to the following
     formula and further exemplified in Appendix IV:

          Gross Profit Margin           Payment as % of Net Income
          -------------------           --------------------------
                 >70%                             20%
               50-70%                             10%
               31-49%                              5%

B.   If the Product incorporates  inventions,  patents, or technical information
     that is necessary for the successful  commercialization  of the Product and
     that is  obtained  from  sources  other  than  SRI,  the  Parties  agree to
     negotiate in good faith a new royalty rate to reflect the  contribution  of
     such third party inventions,  patents, or technical information,  but in no
     event shall the royalty rate be reduced by more than 50%.

C.   If this  Agreement  is for any  reason  terminated  before  all the  earned
     royalties herein provided for have been paid, Eurobiotech shall immediately
     pay to SRI any remaining unpaid balance of earned royalties even though the
     due date provided in Article 8 has not been reached.


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D.   If  Eurobiotech  shall  sell  the  rights  to  the  Technology  during  the
     Commercialization Stage, in combination with the sale, acquisition,  merger
     or disposition of Eurobiotech Group, Inc.,  Eurobiotech,  SRI and the third
     party(ies) shall negotiate in good faith the specific details for such sale
     of rights,  subject to the approval of SRI which shall not be  unreasonably
     withheld.

                                 7. SUBLICENSING

A.   Eurobiotech  shall  have  the  right to  sublicense  in the  Field  for the
     Territory.

B.   Eurobiotech will keep SRI routinely  updated on progress of discussions and
     negotiations  with  potential  sublicensees.  SRI  shall  have the right to
     review  the  form of  sublicenses  to be  granted  hereunder  prior  to the
     execution of the same by  Eurobiotech.  Eurobiotech  agrees that sublicense
     agreements  shall  conform  in  all  material  respects  to the  terms  and
     conditions of this  Agreement.  If SRI has not objected  within thirty (30)
     days of receiving the form of such agreement describing the material terms,
     Eurobiotech may proceed to negotiate and grant sublicenses  without further
     review by SRI if the form of the  sublicense  has not  materially  changed.
     Eurobiotech  shall provide SRI with a copy of each sublicense within thirty
     (30) days of  execution,  and shall not grant to its  sublicensees  any SRI
     rights not conveyed by this Agreement.

C.   If this Agreement is terminated  for any reason,  except breach of contract
     by  SRI,  any  sublicense  shall  automatically  transfer  to  SRI,  unless
     sublicensee is in breach or default of sublicense, and remain in full force
     and effect so long as the  sublicensees  performs  the  obligations  of the
     sublicense, and Eurobiotech will execute such documents as may be requested
     by SRI to attest to the transfer to SRI of all sublicense rights, including
     the right to receive future payments.

                             8. PAYMENTS AND REPORTS

A.   Payments  owed to SRI shall be  payable  within ten (10) days of receipt by
     Eurobiotech  except as stated  otherwise  elsewhere in this  Agreement  and
     except for royalties and profit-sharing  compensation as a result of direct
     marketing of Product by Eurobiotech.

B.   Royalties and  profit-sharing  compensation owed to SRI as a consequence of
     direct  marketing of Product by Eurobiotech  shall be due for each calendar
     quarter  beginning with the first calendar quarter in which sales occur and
     shall be payable to SRI within  forty-five (45) days following the last day
     of the applicable calendar quarter.

C.   All  payments  from  Eurobiotech  to SRI shall be made in U.S.  dollars  by
     corporate  check SRI at the address  specified  in Article 34 or an address
     designated in writing by SRI from time-to-time.


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D.   With respect to non-dollar denominated payments owed by Eurobiotech to SRI,
     such  payments  shall be  converted  into U.S.  Dollars  at the  conversion
     rate(s)  published in The Wall Street Journal  (Eastern  Edition) as of the
     last business day of the calendar quarter included in the report.

E.   In the event that  Eurobiotech  is prevented from making any payment to SRI
     under this Agreement by virtue of  restrictions  on currency  conversion or
     repatriation under the statutes, laws, codes or governmental regulations of
     the country from which the payment is to be made, then such payments may be
     paid by  depositing  them in the currency in which accrued to SRI's account
     in a bank  acceptable to SRI in the country whose currency is involved.  If
     the local  currency  cannot be converted  or remitted to SRI within  twelve
     (12)  months  from  the  initial  deposit,  Eurobiotech  shall  pay SRI the
     equivalent  of  such  amount  at the  initially  computed  conversion  rate
     (including any interest  earnings) in United States dollars,  and the local
     currency  shall  be  transferred  to an  account  in a bank  acceptable  to
     Eurobiotech in that country.

F.   Payments to SRI hereunder  shall be deemed paid as of the day on which they
     are received at the address designated  pursuant to Article 34. Any part of
     a  payment  which is not paid on or before  the date when due shall  accrue
     interest  thereon  from such date until the date of its  payment in full at
     two (2) percentage points over the per annum interest rate published as the
     "Prime Rate" in The Wall Street Journal (Eastern Edition),  but in no event
     shall such rate exceed the maximum rate permitted by applicable law.

G.   All foreign taxes, assessments and fees of any nature levied or incurred on
     account of any payments  accruing  under this Agreement will be assumed and
     paid by Eurobiotech and not deducted from payments owed to SRI.

H.   Eurobiotech  shall deliver to SRI within forty-five (45) days after the end
     of each calendar quarter a report, certified by the chief financial officer
     (or  equivalent)  of  Eurobiotech,  setting forth in reasonable  detail the
     calculation  of SRI payments  made during the quarter and for each calendar
     quarter,  including gross sales,  value added taxes,  number of units sold,
     unit  price  and the like on a  country-by-country  basis  by  Eurobiotech,
     sublicensees, joint ventures and their affiliates.

I.   The  Eurobiotech  report to SRI  shall be  supported  by and  based  upon a
     similar financial report or, if permitted, a copy from each sublicensee and
     other commercialization entity(ies).

J.   The  parties  will  promptly  share  all  information  generated  under the
     Co-Development  Program  pursuant  to  the  confidentiality  provisions  of
     Article 21 and with  particular  respect  to the  preclinical  studies  and
     clinical  trials.  Upon  commercialization  of the Product(s),  Eurobiotech
     shall provide SRI with  quarterly  updates  (which may be oral unless other
     requested by SRI) in reasonable  detail,  describing  Eurobiotech's  plans,
     activities and accomplishments.


                                        9

<PAGE>


                                   9. RECORDS

Eurobiotech  shall keep accurate  records of all operations  affecting  payments
hereunder, and shall permit SRI or its duly authorized agent to inspect all such
records and to make  copies of or  extracts  from such  records  during  regular
business hours throughout the term of this Agreement and for a reasonable period
of not less  than  three  (3)  years  thereafter.  The fees  charged  for an SRI
authorized  audit  shall  be paid by SRI;  provided,  however,  that if an audit
discloses an underpayment by Eurobiotech of more than five percent (5%) for such
audited period,  Eurobiotech  shall pay the reasonable fees and expenses charged
by the firm conducting the audit.

                                  10. DILIGENCE

A.   In  conjunction  with  the  developmental   actions  and  commercialization
     activities  of  Eurobiotech  referred to  throughout  this  Agreement,  the
     parties  shall  prepare,  within  90 days of the  date of  signing  of this
     Agreement,  a business development plan outlining the strategy,  timing and
     implementation of steps to commercialize the technology.

B.   Retention of rights by Eurobiotech is contingent  upon  submission of a NDA
     to the FDA within four years of the effective date of this Agreement.

                   11. OWNERSHIP OF THE TECHNOLOGY, TECHNICAL
                          INFORMATION AND IMPROVEMENTS

A.   SRI and  Eurobiotech  shall each retain full  ownership  of their  existing
     intellectual  property  rights  including  rights in the  process  of being
     protected  and rights  conceived  but not yet reduced to practice as of the
     effective date of this Agreement.

B.   All  Improvements  by SRI developed under projects  funded,  in whole or in
     part,  by  Eurobiotech  shall be owned by SRI and shall be  included in the
     licenses  granted  in  this  Agreement.  In the  event  that a  conflicting
     obligation  prevents SRI from including such an Improvement,  SRI shall use
     reasonable  efforts  to  assist  Eurobiotech  to  obtain  rights  from  the
     appropriate third party or parties.

C.   All  Improvements  by SRI made  during  the first  three (3) years from the
     effective date of the Agreement and not developed under projects funded, in
     whole  or in part,  by  Eurobiotech,  shall  be owned by SRI and if  deemed
     reasonably  necessary for Eurobiotech  practice of the Technology,  without
     which such practice would constitute an infringement of SRI's rights, shall
     be  included  to the extent  necessary,  as decided  solely by SRI,  in the
     licenses granted in this Agreement, unless inclusion is not possible due to
     SRI's  obligations  to a  third  party.  In the  event  that a  conflicting
     obligation  prevents SRI from including such an Improvement,  SRI shall use
     reasonable  efforts  to  assist  Eurobiotech  to  obtain  rights  from  the
     appropriate third party or parties.


                                       10

<PAGE>


D.   Eurobiotech shall have the first right of negotiation to a license or other
     commercial  arrangement to any SRI  intellectual  property  developed under
     projects  funded,  in whole  or in part,  by  Eurobiotech,  which  does not
     constitute an Improvement.

                             12. PATENT PROSECUTION

A.   SRI shall  file,  prosecute  and  maintain  all of the Patent  that are the
     property of SRI.

B.   Eurobiotech  shall  bear all  patenting  expenses  related  to the  filing,
     prosecution or maintenance of all Patent and Improvement licensed hereunder
     in whole or in part.

C.   SRI shall furnish  Eurobiotech  with copies of all allowed claims when such
     claims  are  allowed in the Field and in the  Territory  for all Patent and
     Improvement licensed hereunder.

D.   SRI shall provide  Eurobiotech with draft copies of all  correspondence and
     filings and related  prosecution  documents  on the Patent and  Improvement
     licensed hereunder and Eurobiotech shall promptly provide comments, if any,
     to SRI. SRI shall confer with Eurobiotech,  and make reasonable  efforts to
     adopt Eurobiotech's suggestions regarding prosecution tactics and strategy.
     Notwithstanding  the  foregoing,  SRI  shall  have the  right to take  such
     actions  as are  reasonably  necessary,  in its good  faith  judgement,  to
     preserve  all  rights  under the  Patent  and  Improvement  throughout  the
     Territory.  As  soon  as  practical,   subsequent  to  the  filing  of  any
     prosecution  document,  SRI shall provide  Eurobiotech  with a copy of such
     document. In addition,  SRI shall copy Eurobiotech with any official office
     action  and SRI  responses  and  submissions.  Eurobiotech  shall  bear the
     expenses of the activities noted in this Article 14.E.

E.   SRI will inform  Eurobiotech at least sixty (60) days prior to any decision
     having  as a result  the  failure  to file,  or the  abandonment  of Patent
     applications  or failure to  maintain a Patent,  Patents  and  Improvements
     licensed  hereunder so that  Eurobiotech  may take over and  maintain  such
     Patent and Improvements in force.

F.   Provided that SRI has been informed by Eurobiotech at least sixty (60) days
     in advance,  in the event that  Eurobiotech  decides  not to pay  patenting
     expenses in any  jurisdiction,  SRI may elect to  maintain  such Patent and
     Improvements in force and terminate  Eurobiotech's  licenses granted as for
     the  jurisdiction  in which  Eurobiotech  abandoned  or  failed  to file or
     maintain such Patent rights.  Notwithstanding  the  foregoing,  Eurobiotech
     shall be obligated to pay patenting expenses within the European Community.

                         13. INFRINGEMENT BY THIRD PARTY

A.   Either party shall notify the other party of any suspected  infringement by
     a third party of the Patent in the Field and the Territory,  and each party
     shall inform the other of any evidence of such infringement(s).


                                       11

<PAGE>


B.   Eurobiotech   shall   have  the   first   right  to   institute   suit  for
     infringement(s)  in the  Field  and  Territory  so long  as this  Agreement
     remains  exclusive.  At Eurobiotech's  expense,  SRI will reasonably assist
     Eurobiotech in such  prosecutions if so requested by Eurobiotech,  and will
     lend its name to such actions if requested  by  Eurobiotech  or required by
     law.  Notwithstanding the foregoing SRI shall have the right to participate
     and be represented in any such  prosecutions  by its own counsel at its own
     expense.

C.   If  SRI  notifies   Eurobiotech   of  its  desire  to  institute  suit  for
     infringement(s)  and Eurobiotech fails to exercise its first right to do so
     within  ninety (90) days of such notice,  then SRI may, at its own expense,
     bring  suit or  take  any  other  appropriate  action.  At  SRI's  expense,
     Eurobiotech will reasonably assist SRI in such prosecutions if so requested
     by SRI,  and will  lend its name to such  actions  if  requested  by SRI or
     required by law.  Notwithstanding the foregoing  Eurobiotech shall have the
     right to participate and be represented in any such prosecutions by its own
     counsel at its own expense.

D.   No settlement of any suspected  infringement(s),  whether or not a suit has
     been instituted, may be entered into without the express written consent of
     Eurobiotech and SRI.

E.   Any amounts  recovered  pursuant to an  infringement  suit,  settlement  or
     otherwise  shall be retained by and be the  property of the party  bringing
     the  action.  In  the  event  Eurobiotech  receives  any  monies  or  other
     consideration  from a third party as a result of Eurobiotech's  exercise of
     its rights under Article 13 of this Agreement,  Eurobiotech  shall first be
     reimbursed  for  expenses  incurred  and paid for, SRI shall then receive a
     portion of the remainder in accordance with the applicable  provision(s) of
     Article 6 as applied  to all such  monies or other  considerations  whether
     such monies or other considerations are denoted as "royalties,"  "damages,"
     "releases" from prior acts, or any other designation.

F.   If  Eurobiotech  fails to exercise  its first right to  institute  suit for
     infringement(s)  and SRI  elects  not to  institute  suit,  then SRI  shall
     provide  Eurobiotech  with at least sixty (60) days notice of its intention
     to terminate Eurobiotech's licenses granted in those jurisdictions affected
     by the  infringement  or to take any  other  action it sees fit in its best
     judgement.

                           14. REVOCATION PROCEEDINGS

A.   In the event either party becomes aware of the institution by a third party
     of  any  proceedings   for  the  revocation  of  any  Patent,   patents  or
     Improvements  in  any  country  in  the  Territory  licensed  hereunder  to
     Eurobiotech, such party shall notify the other party promptly.  Eurobiotech
     shall defend any such proceedings at its own expense, in its own name.

B.   SRI shall have the right to participate in such  revocation  proceedings at
     Eurobiotech's  expense,  and  will  lend its  name to such  proceedings  if
     requested by  Eurobiotech or required by law.  Sublicensees  of Eurobiotech
     shall also have the right to participate in such revocation proceedings.


                                       12

<PAGE>


C.   Settlement of any revocation  proceedings  shall be subject to the approval
     of SRI; such approval shall not be unreasonably withheld.

                     15. INFRINGEMENT OF THIRD PARTY RIGHTS

A.   SRI "does not  warrant"  as stated in  Article  17.  Disclaimer,  "that the
     patents will be free from claims of  infringement  by third  parties or any
     other rights of third parties."

B.   Eurobiotech  as  stipulated  in  Article  18.  Indemnification,  "agrees to
     indemnify,  hold harmless and defend  SRI....  from and against any and all
     demands,  claims,  suits,  and actions ..." which includes  infringement of
     third party rights.

C.   SRI will reasonably assist Eurobiotech to defend or settle such third party
     claim if so requested and at the expense of Eurobiotech.

D.   SRI shall  have the right to  participate  and be  represented  in any such
     claim by a third party by its own counsel.

E.   No  settlement  of any third  party claim may be entered  into  without the
     express written consent of SRI.

F.   In the event,  by way of  counterclaim  or otherwise,  either party or both
     parties  recover  any  damages  or  other  sums  in any  action,  suit,  or
     proceeding  involving a claim by a third party,  or in settlement  thereof,
     such recovery shall be applied and shared as mutually agreed.

                               16. REPRESENTATIONS

A.   This  Agreement is entered  into by SRI in its  corporate  capacity.  It is
     understood  and  agreed  that  the U.S.  Government  is not a party to this
     Agreement  and in no manner  whatsoever  shall be liable  for or assume any
     responsibility or obligation for any claim, cost, or damages arising out of
     or resulting from this Agreement or the subject matter licensed.

B.   Nothing  in this  Agreement  shall  be  deemed  to be a  representation  or
     warranty by SRI, or the U.S. Government, of the safety,  merchantability or
     usefulness  for any purpose,  of any technical  information,  techniques or
     practices at any time made available by SRI to Eurobiotech hereunder.

C.   SRI  represents  that it has the right to grant all of the  rights  herein,
     except for a non-exclusive,  non-royalty bearing, non-commercial license to
     the Government of The United States of America.


                                       13

<PAGE>


D.   SRI is unaware of any claims asserted against SRI by any third parties with
     respect to Patent  infringement or any other type of liability  relevant to
     licensing of the  Inventions,  which have not been disclosed to Eurobiotech
     as of the Effective Date of this Agreement.

E.   SRI represents  that it has full power,  authority and legal right to enter
     into  this  contemplated  Agreement  and  to  consummate  the  transactions
     contemplated therein.

F.   Eurobiotech represents that it has full power, authority and legal right to
     enter into this  contemplated  Agreement and to consummate the transactions
     contemplated therein.

G.   Eurobiotech shall accept liability for or on account of any injury, loss or
     damage,  of any kind or nature  sustained  by, or any  damage  assessed  or
     asserted against, or any other liability incurred by or imposed upon either
     party  arising  out of or in  connection  with or  resulting  from  (i) the
     production,  use or sale of any  Product  or (ii) the use of any  technical
     information,  techniques,  or practices disclosed by either party, or (iii)
     any advertising or other promotional  activities with respect to any of the
     foregoing.  If a sublicense is granted by Eurobiotech to a third party that
     third party shall accept all  liability  for any injury,  loss or damage as
     defined above.

                                 17. DISCLAIMER

EXCEPT AS  EXPRESSLY  SET FORTH IN ARTICLE  16, SRI DOES NOT MAKE ANY EXPRESS OR
IMPLIED  WARRANTIES,  STATUTORY OR OTHERWISE,  CONCERNING  THE TECHNOLOGY OR ANY
TECHNICAL  INFORMATION  COMMUNICATED  TO EUROBIOTECH BY SRI.  SPECIFICALLY,  BUT
WITHOUT  LIMITING  THE  FOREGOING,  SRI MAKES NO EXPRESS OR IMPLIED  WARRANTY OF
MERCHANTABILITY,  FITNESS (FOR A PARTICULAR  PURPOSE OR  OTHERWISE),  QUALITY OR
USEFULNESS  OF THE  TECHNOLOGY.  ALL  PHYSICAL  EMBODIMENTS  OF  THE  TECHNOLOGY
PROVIDED BY SRI HEREUNDER ARE PROVIDED ON AN "AS IS" BASIS. SRI DOES NOT WARRANT
THE ACCURACY OF ANY INFORMATION  INCLUDED  WITHIN THE TECHNICAL  INFORMATION NOR
DOES  SRI  WARRANT  THAT ANY  SUCH  INFORMATION  CONSTITUTES  TRADE  SECRETS  OR
CONFIDENTIAL  INFORMATION  OR THAT  THE  PATENTS  WILL BE FREE  FROM  CLAIMS  OF
INFRINGEMENT BY THIRD PARTIES OR ANY OTHER RIGHTS OF THIRD PARTIES.

UNDER NO  CIRCUMSTANCES  SHALL  EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY
THIRD  PARTY FOR ANY  INCIDENTAL  OR  CONSEQUENTIAL  DAMAGES IN TORT,  CONTRACT,
STRICT LIABILITY OR OTHERWISE INCURRED BY OTHER PARTY OR ANY THIRD PARTY.

                               18. INDEMNIFICATION

     Eurobiotech  hereby agrees to  indemnify,  hold harmless and defend SRI and
SKI and its officers, directors, representatives,  agents and employees from and
against any and all demands,


                                       14

<PAGE>


claims, suits or actions of any character presented or brought on account of any
injuries,  losses or damages  sustained by any person or property in consequence
of  (i)  any  act  or  omission  of  Eurobiotech  or its  agents,  employees  or
subcontractors,  or  (ii)  any  liability  under  Article  160,  except  for any
injuries,  losses or damages that  specifically  result from the  negligence  or
willful misconduct of SRI or SKI. The foregoing  indemnity shall include but not
be limited to court costs,  attorneys' fees, costs of investigation and costs of
defense associated with such demands, claims, suits or actions.

                                  19. INSURANCE

       Eurobiotech shall maintain, during the term of this Agreement, reasonable
amounts  of  comprehensive  general  liability  insurance,   including  products
liability insurance, with reputable and financially secure insurance carriers to
cover the activities of Eurobiotech,  its affiliates and sublicensees hereunder.
Such  insurance  shall  be  written  to  cover  claims   incurred,   discovered,
manifested,  or made  during or beyond the  expiration  or  termination  of this
Agreement during the period that any product,  process, or service, relating to,
or developed  pursuant to, this Agreement is being  commercially  distributed or
sold by Eurobiotech or by a sublicensee, affiliate or agent of Eurobiotech. Such
insurance shall include SRI as an additional insured.  Eurobiotech shall furnish
to SRI a certificate  of insurance  evidencing  such coverage and  periodically,
upon request, provide evidence that the coverage is still in effect.

                            20. TERM AND TERMINATION

A.   This  Agreement  shall  commence on the Effective  Date and,  unless sooner
     terminated  under this  Article  20,  shall  expire  upon the later of: (i)
     expiration  of the last to expire  of all  Patent(s),  Improvement(s),  and
     Patent(s) licensed under this Agreement  [hereafter "Licensed Patents" only
     for  Article  20],  including  any  extensions  thereof  and any periods of
     exclusivity  granted by regulatory  agencies or other governmental  bodies;
     (ii)  Eurobiotech  is no longer due any payments  from  Sublicensee(s);  or
     (iii) Eurobiotech is no longer directly marketing a Product.

B.   The payment  obligations  under the  licenses  granted to  Eurobiotech  for
     Licensed Patents and Technical  Information  shall continue  throughout the
     term as  defined  in  Article  20.A but  would  be  subject  to good  faith
     renegotiations  upon the  expiration  of the last to expire of the Licensed
     Patents,  or upon the abandonment of the last to be abandoned of any patent
     applications if no patents have been issued, whichever is the later, unless
     this Agreement is sooner terminated.  Such good faith  renegotiations shall
     take into  account on a  country-by-country  or  regional  basis but not be
     limited to: (i) Product  competition;  (ii) utilization,  incorporation and
     value of Technical Information;  (iii) value of Technical Information if no
     longer  confidential or proprietary  through no fault of  Eurobiotech,  its
     Sublicensee(s),  contractors,  financiers or any other Eurobiotech agent(s)
     or   purchasers   of  Product  or  services   having  access  to  Technical
     Information;  (iv) the  applicable  contract  or  patent  law or (v)  prior
     payment commitments such as in Article 3.C(2).


                                       15

<PAGE>


C.   Eurobiotech  may terminate this Agreement at any time upon ninety (90) days
     written  notice to SRI and upon  payment of all amounts due SRI through the
     effective date of the termination.

D.   Upon  termination of this  Agreement,  neither party shall be released from
     any   obligation   that  matured  prior  to  the  effective  date  of  such
     termination.  Eurobiotech  and any  sublicensee  may,  however,  after  the
     effective date of such termination, sell all Products in inventory provided
     that Eurobiotech shall pay to SRI the royalties and profit-sharing  thereon
     as required by Article 6 hereof and submit the reports  required by Article
     8 hereof.

E.   Except as  provided  in Article  13F  above,  if either  party  shall be in
     default of any  obligation  hereunder,  the other party may terminate  this
     Agreement by giving Notice of Termination  by Certified or Registered  Mail
     to the party at fault,  specifying  the  basis for  termination.  If within
     sixty (60) days after the receipt of such Notice of Termination,  the party
     in default  shall remedy the  condition  forming the basis for  termination
     such Notice of Termination shall cease to be operative,  and this Agreement
     shall continue in full force.

F.   SRI shall have the right to terminate this  Agreement if Eurobiotech  shall
     cease to carry out its business, become bankrupt or insolvent, apply for or
     consent to the  appointment  of a trustee,  receiver or  liquidator  of its
     assets  or  seek  relief  under  any law  for  the  aid of  debtors,  or if
     Eurobiotech fails to submit an NDA as provided in Article 10B.

G.   Eurobiotech shall inform SRI of its intention to file a voluntary  petition
     in bankruptcy or of another's intention to file an involuntary  petition in
     bankruptcy  to be received at least thirty (30) days prior to filing such a
     petition. Eurobiotech's filing without conforming to this requirement shall
     be deemed a  material,  pro-petition  incurable  breach not  subject to the
     Notice requirement of Paragraph 20.

H.   Notwithstanding  anything  else  in this  Agreement  to the  contrary,  the
     parties  agree that  Eurobiotech's  obligation  to pay SRI any  payments or
     other  consideration  accrued but unpaid prior to termination shall survive
     the  termination of this Agreement.  In addition,  Articles 5, 6, 8, 9, 17,
     18,  19, 21,  22, 28 and 34 as well as any other  provisions  to the extent
     required for the full observation and performance of the foregoing Articles
     or which by their nature are intended to survive  such  termination,  shall
     survive the termination of this Agreement and continue to be enforceable.

                   21. CONFIDENTIALITY; PUBLICATION; PUBLICITY

A.   In fulfilling their obligations  under this Agreement,  it may be desirable
     or  necessary  for the parties to disclose to one another  certain of their
     Confidential  Information.  In the event of  receipt  of such  Confidential
     Information,  the receiving  party agrees to preserve such  information  as
     confidential and not to disclose it to third parties or to use it except in
     connection with this


                                       16

<PAGE>


     Agreement  during the term of this  Agreement  and for a period of five (5)
     years following its termination.  The foregoing obligations shall not apply
     to any information that:

     1.   is now in the public  domain or  becomes  generally  available  to the
          public through no fault of the receiving party;

     2.   is already known to, or in the possession  of, the receiving  party as
          can be demonstrated by documentary evidence;

     3.   is disclosed to the receiving  party on a  nonconfidential  basis by a
          third party having the right to make such disclosure; or

     4.   is   independently   developed  by  the  receiving  party  as  can  be
          demonstrated by documentary evidence.

     For the  purposes of the  preceding  portion of this  Section A, Article 21
     only,  "parties"  or "party" but not "third  parties" or "third  party" may
     also include SKI.

     In addition,  to the extent reasonably necessary to fulfill its obligations
     or  exercise  its rights  under  this  Agreement  (i) a party may  disclose
     Confidential  Information  to its  Affiliates,  Sublicensees,  consultants,
     outside contractors and clinical investigators,  on a need-to-know basis on
     condition that such persons or entities agree to be bound by the provisions
     of this  Article 20, (ii) a party or its  Affiliates  or  Sublicensees  may
     disclose  Confidential  Information  to  governmental  or other  regulatory
     authorities to the extent that such  disclosure is reasonably  necessary to
     obtain patents or regulatory authorizations,  provided the disclosing party
     shall  request  confidential  treatment  thereof,  and  (iii) a  party  may
     disclose Confidential Information as required by applicable law, regulation
     or judicial  process,  provided  that such party shall give the other party
     (x) prior written notice thereof, (y) adequate opportunity to object to any
     such disclosure or to request confidential treatment thereof, and (z) shall
     take all steps reasonably possible to minimize the disclosure to that level
     mandated by law.

B.   (i)  If either  party  desires to publish  or  present  the  results of the
          Co-Development Program, the publishing/presenting  party shall provide
          the  non-publishing/non-presenting  party a copy of the  manuscript of
          any      proposed      publication      or      presentation.      The
          non-publishing/non-presenting  party  shall then have thirty (30) days
          to review  and  comment on the  manuscript  or  presentation,  and the
          publishing/presenting   party   agrees  to  delete   any   information
          identified  by the  non-publishing/non-presenting  party as its  Trade
          Secrets or Confidential Information.

     (ii) In the event the non-publishing/non-presenting party determines that a
          Patent  application  covering  information  contained  in the proposed
          publication or presentation  should be filed,  the party proposing the
          publication or presentation shall


                                       17

<PAGE>


          delay such  publication or  presentation  for up to sixty (60) days to
          allow such filing to be made.

C.   Each party  shall  provide the other  party with the prior  opportunity  to
     review and  approve  any press  releases  or similar  public  announcements
     concerning   this   Agreement  or  clinical,   regulatory   and  commercial
     developments  related to Products as soon as  practicable,  but in no event
     later than 24 hours before an announcement is made.  Eurobiotech  shall not
     use the name of SRI or otherwise refer to any organization  related to SRI,
     except  with  the  written  approval  of  SRI,  such  approval  not  to  be
     unreasonably withheld.

                             22. DISPUTE RESOLUTION

A.   The parties shall  attempt to resolve  through good faith  discussions  any
     dispute which arises under this Agreement. Any dispute may, at the election
     of either  party,  be  referred  to the chief  executive  officers,  or the
     equivalent,  of each  party.  If they are  unable to resolve  the  dispute,
     within  thirty (30) days after  delivery  of written  notice of the dispute
     from one  party to the  other,  either  party  may  seek to  resolve  it by
     initiating  Alternative  Dispute  Resolution  ("ADR")  at the  geographical
     location of the noninitiating  party in which the Judicial  Arbitration and
     Mediation Services ("JAMS") of such location,  through a panel of three (3)
     arbitrators (the "Arbitrators"),  shall control the proceedings as provided
     herein.  If JAMS is not in  existence  at the  time  of such  dispute,  the
     American Arbitration Association, of such location shall be substituted.

B.   An ADR shall be initiated by a party by sending  written  notice thereof to
     the  other  party and  JAMS,  which  notice  shall  state the  issues to be
     resolved.  Within ten (10) business days after receipt of such notice,  the
     other  party may, by sending  written  notice to the  initiating  party and
     JAMS, add issues to be resolved. Within twenty (20) business days after the
     date of the  original  ADR  notice,  JAMS shall  nominate to the parties at
     least ten (10) qualified  nominees from JAMS' panel.  Each party shall have
     five (5) business days after the receipt of such  nominations to select one
     Arbitrator.  The two (2)  Arbitrators so selected shall mutually agree on a
     third arbitrator to complete the panel.

C.   Each Arbitrator  shall have experience in the Field relevant to the dispute
     and in intellectual property law matters. In the event of a dispute between
     the parties  relating to the  calculation of any royalties or the amount of
     other  consideration   payable  under  this  Agreement  (including  without
     limitation,  the  results  of any  audit  conducted  on  behalf  of a party
     pursuant to Article 9), then,  in addition to the procedure set forth above
     and in Article 22.B, the  Arbitrators  shall be partners or full members of
     an internationally recognized certified public accounting firm which is not
     an auditing firm for either party and has not provided material services to
     either  party  during the last two (2) year period prior to the date of ADR
     initiation.

D.   Except as  otherwise  provided in this  Article 22, such  hearing  shall be
     conducted pursuant to the JAMS Rules or the Commercial Arbitration Rules of
     the American Arbitration Association (AAA) as applicable.


                                       18

<PAGE>


E.   The  Arbitrators  shall render a  disposition  on the  proposed  rulings as
     expeditiously  as possible  after the  hearing,  but not later than fifteen
     (15)   business  days  after  the   conclusion  of  the  hearing.   In  the
     circumstances where the Arbitrators rule for a party on a claim in the form
     of a claim for  monetary  damages,  the parties will then submit a proposed
     remedy  within ten (10) days of notice of the ruling.  The proposed  remedy
     may be  accompanied  by a brief in support of the remedy not to exceed five
     (5) pages.  The Arbitrators  will rule on the proposed  remedies within ten
     (10) days of their submission.  The Arbitrators' disposition shall be final
     and not appealable, except that either party shall have the right to appeal
     such  disposition  on the  basis it was  affected  by fraud or bad faith in
     connection  with  the  ADR  proceedings.  A  judgment  on the  Arbitrators'
     disposition  may be  entered  in any  court  having  jurisdiction  over the
     parties.  The reasonable fees and expenses of the  Arbitrators,  as well as
     the standard charges of JAMS for its assistance,  shall be borne equally by
     the parties or as they may otherwise agree.

F.   A party shall not be prohibited from bringing a claim for resolution  under
     this Article 22 on the ground that the claim could have been brought during
     an earlier proceeding under this same Article.

G.   The following disputes,  causes of action or claims shall not be subject to
     the dispute resolution process set forth in this Article 22:

     (i)   a claim arising from a suit, action, or proceeding brought by a third
           party or Sublicensee not subject to ADR;

     (ii)  a claim  relating to undisputed  amounts  owed by either party to the
           other under this Agreement;

     (iii) a suit,  action,  or proceeding to compel either party to comply with
           the dispute resolution procedures set forth in this Article 22;

     (iv)  a   dispute,   controversy,  or   claim   relating   to  the   scope,
           enforceability,  infringement or validity of a patent or trademark of
           either party; and

     (v)   a cause of action seeking temporary or preliminary injunction relief.

                                23. ASSIGNABILITY

A.   Eurobiotech   shall  not  assign  any  rights  under  this   Agreement  not
     specifically  transferable  by its terms without  prior written  consent of
     SRI.  SRI may not assign its rights  hereunder  without  the prior  written
     consent of Eurobiotech.

B    In the event of a Change of Control (as defined below) of Eurobiotech,  SRI
     may elect,  upon not less than sixty (60) days written notice following the
     Change of Control or receipt of notice  provided  pursuant to Article 23.C,
     to terminate this Agreement if such Change of Control is not,


                                       19

<PAGE>


     in the good faith judgement of SRI, in the developmental  and/or commercial
     interest  of  the  Licensed   Technology   or   significantly   limits  its
     applicability or scope.

C.   For purposes of this Article  23C,  "Change of Control"  shall be deemed to
     have taken  place if (a) a third  party,  including a "group" as defined in
     section  13(d)(3) of the Securities  Exchange Act of 1934 but excluding the
     current  directors of Eurobiotech,  becomes the beneficial  owner of shares
     having fifty percent (50%) or more of the total number of votes that may be
     cast for the election of directors of Eurobiotech; or (b) as the result of,
     or in connection  with, any cash tender or exchange offer,  merger or other
     business  combination,  sale  of  assets  or  contested  election,  or  any
     combination  of the  foregoing  transactions  (a  "Transaction"),  (X)  the
     persons who were  directors of  Eurobiotech  before the  Transaction  shall
     cease to constitute a majority of the Board of Directors of  Eurobiotech or
     any successor to Eurobiotech,  or (Y) there is the sale,  exchange of other
     disposition of all or substantially all of Eurobiotech's  assets to a third
     party.   Within  thirty  (30)  days   following  a  Change  of  Control  of
     Eurobiotech, Eurobiotech shall provide notice thereof to SRI.

                                   24. REFORM

A.   The parties agree that if any part,  form,  or provision of this  Agreement
     shall be found illegal or in conflict with any valid  controlling  law, the
     validity of the remaining provisions shall not be affected thereby.

B.   In the event the  legality of any  provision  of this  Agreement is brought
     into question because of a decision by a court of competent jurisdiction of
     any country in which this  Agreement  applies,  SRI,  by written  notice to
     Eurobiotech, may revise the provision in question or may delete it entirely
     so as to comply with the decision of the said court.

                            25. WAIVER AND ALTERATION

A.   The failure of either party to insist,  in any one or more instances,  upon
     the  performance  of any of the  terms,  covenants  or  conditions  of this
     Agreement and to exercise any right hereunder,  shall not be construed as a
     waiver  or  relinquishment  of the  future  performance  of any such  term,
     covenant  or  condition  or the  future  exercise  of such  right,  but the
     obligations  of the other  party with  respect to such  future  performance
     shall continue in full force and effect.

B.   A provision of this  Agreement  may be altered only by a writing  signed by
     both parties, except as provided by Article 24, above.

                                   26. MARKING

A.   Eurobiotech  shall  place in a  conspicuous  location on any product or its
     packaging,  which is made or sold  under  any  Patent  coming  within  this
     Agreement,  a patent  notice in  accordance  with the laws  concerning  the
     marking of patented articles.


                                       20

<PAGE>


B.   Eurobiotech  shall include a marking provision similar to Paragraph A above
     in every sublicense granted pursuant to Article 7 above.

                               27. IMPLEMENTATION

Each party shall execute any instruments  reasonably believed by the other party
to be necessary to implement the provisions of this Agreement.

                                28. GOVERNING LAW

This  Agreement  shall be deemed to have been entered into and shall be governed
by,  construed and enforced in  accordance  with laws of the State of Alabama of
the United States of America and in the English language, and any action brought
to enforce any provision or obligation  hereunder shall be brought in a court of
competent jurisdiction in the State of Alabama.

                    29. EXPORTATION OF TECHNICAL INFORMATION

Eurobiotech agrees not to export from The United States of America,  directly or
indirectly,  any Technical  Information furnished to Eurobiotech either directly
or indirectly by SRI, except to the extent and to the countries permitted by the
laws of The United States of America.  Eurobiotech  agrees to indemnify,  defend
and hold  harmless SRI, its  officers,  agents and employees  from all liability
involving  the  violation  of  such  export  regulations,   either  directly  or
indirectly by Eurobiotech.

                                  30. HEADINGS

The headings of the articles, sections and paragraphs used in this Agreement are
included  for  convenience  only  and  are  not  to be  used  in  construing  or
interpreting this Agreement.

                             31. PARTIES INDEPENDENT

In making and performing  this  Agreement,  the parties act and shall act at all
times as independent  entities and nothing  contained in this Agreement shall be
construed or implied to create an agency,  partnership  or employer and employee
relationship  between  Eurobiotech  and SRI.  Except  as  specifically  provided
herein,  at no time shall either party make  commitments or incur any charges or
expenses for or in the name of the other party.

                                32. COUNTERPARTS

This Agreement  shall become binding when any one or more  counterparts  hereof,
individually or taken together, shall bear the signatures of each of the parties
hereto.  This Agreement may be executed in any number of  counterparts,  each of
which shall be an  original as against  either  party  whose  signature  appears
thereon,  but all of  which  together  shall  constitute  but  one and the  same
instrument.


                                       21

<PAGE>


                                33. FORCE MAJEURE

The  parties  shall  not  be  responsible  for  failure  to  perform  any of the
obligations  imposed by this  Agreement  (except an  obligation  to pay  money),
provided  such failure is caused by fire,  storms,  floods,  strikes,  lockouts,
accidents, war, riots or civil commotions,  inability to obtain railroad cars or
raw materials,  embargoes, any State or Federal regulation, law, or restriction,
seizure or  acquisition of the Technology or the Product(s) by the Government of
the United States or of any state,  or of any agency thereof or by reason of any
compliance  with a demand  or  request  for such  Product  for any  purpose  for
national  defense,  or any other  cause or  contingency  beyond  the  reasonable
control of said party  (whether  or not of the same kind or nature as the causes
or contingencies above enumerated) shall not subject the party so failing to any
liability to the other.

                                   34. NOTICE

For the  purpose  of all  written  communications  between  the  parties,  their
addresses shall be:


If to EUROBIOTECH:                           If to SRI:

Address:   ________________________          Address:   ________________________
           ________________________                     ________________________
           ________________________                     ________________________
Attention: ________________________          Attention: ________________________
Telephone: ________________________          Telephone: ________________________
FAX:       ________________________          FAX:       ________________________

or any other  addresses  of which  either  party shall notify the other party in
writing.


                                       22

<PAGE>


                                  35. EXECUTION

     IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly  authorized  officers on the  respective  dates and at the respective
places hereinafter set forth.


EUROBIOTECH:                                 SRI:


By:         /s/ [ILLEGIBLE]                  By:         /s/ [ILLEGIBLE]
            -----------------------                      -----------------------

Print Name:     [ILLEGIBLE]                  Print Name:    [ILLEGIBLE]
            -----------------------                      -----------------------

Its:                  CEO                    Its:           President and CEO
            -----------------------                      -----------------------

Date:             19 Aug 98                  Date:               9/1/98
            -----------------------                      -----------------------


                                       23

<PAGE>


                                   APPENDIX I

<TABLE>
<CAPTION>
                                   Filing                                                    Expiration
   Country          Serial No.      Date       Priority          Patent No.     Issued          Date
<S>                 <C>            <C>        <C>                <C>            <C>           <C>
United States       07/355,358     5/23/89    5/23/89            5,034,518      7/23/91       7/23/2008
United States       07/693,646     5/10/91    5/23/89            5,384,310      1/24/95       7/23/2008
                                              & 5/10/91
United States       08/320,879     9/21/94    5/10/91            5,661,136      8/26/97       8/26/2014
European            90909080.5     5/23/90    5/23/89 U.S.       0473708
  France                                                         0473708        1/15/97       5/23/2010
  Germany                                                        0473708        1/25/97       5/23/2010
  Great Britain                                                  0473708        1/15/97       5/23/2010
  Italy                                                          0473708        1/25/97       5/23/2010
  Netherlands                                                    0473708        1/25/97       5/23/2010
  Spain                                                          0473708        1/25/97       5/23/2010
  Sweden                                                         90909080.5     1/15/97       5/23/2010
  Switzerland                                                    0473708        1/25/97       5/23/2010
European            92912163.0     5/7/92     5/23/89 U.S.       (Substantive (first) examination
  Austria                                     & 5/10/91 U.S.     report received; Claims equivalent
  Belgium                                                        to U.S. 07/693,646
  Germany
  Greece
  France
  Italy
  Luxembourg
  Monaco
  Netherlands
  Spain
  Sweden
  Switzerland
  United
    Kingdom

Japan               2-508789       5/23/90    5/23/89 U.S.       (Request for examination filed
                                                                 5/23/97; case expected to be taken
                                                                 up for examination about 5/99;
                                                                 Claims equivalent to U.S.
                                                                 07/355,358)
Japan               500121/1993    5/7/92     5/23/89 U.S.       (Request for examination must be
                                              & 5/10/91 U.S.     filed prior to 5/7/99; Claims
                                                                 equivalent to U.S. 07/693,646)
Canada              2,102,782      5/7/92     5/7/90             (Request for examination must be
                                                                 filed prior to 5/7/99; Claims
                                                                 equivalent to U.S. 07/693,646)
</TABLE>

<PAGE>


                                  APPENDIX II


<PAGE>


                Terms for Eurobiotech Group. Inc. ("Eurobiotech")
                  and Southern Research Institute ("Southern").
                            Co-Development Agreement

Scope

     Co-develop  Product(s)  based on  Southern's  patented  and  patent-pending
2`-fluoro-2-halo substituted purine nucleoside technology.

Product(s)

     Drugs effective against  hematologic  malignancies and solid tumors as well
as other therapeutic  indications,  such as (but not exclusively) skin disorders
and transplantation immunity. All modes of administration, particularly oral and
iv., are included in these terms as are specialized  formulations  such as those
imparting controlled-release characteristics.

Agreement

     The parties hereby agree to enter into good faith discussions, based on the
terms agreed to in this document,  for the exclusive  co-development,  exclusive
world-wide  commercial  rights  except  for Japan  and  Southeast  Asia,  to the
Product(s) and all therapeutic  indications and all modes of  administration  of
the 2'-fluoro-2-halo substituted purine nucleoside technology.

Preclinical Development

     Funding  provided by Eurobiotech  not to exceed US$1 million for parenteral
and oral preclinical  toxicology,  oral formulation,  and other preclinical work
needed  prior to  commencing  clinical  trials  including  development  funds to
explore other therapeutic indications.

Drug Synthesis for Preclinical and Phase I

     Discussions for the definitive  Agreement will include the possible role of
Southern in the supply of material and production of GMP and non-GMP Product(s).

Preclinical Toxicology

     To  be  performed  by  Southern  whenever  appropriate  at a  price  to  be
negotiated.  This agreement takes full account of the initial  preparations  for
preclinical toxicology studies conducted and planned by the MD Anderson group.


                                       1

<PAGE>


Phase I

     Funding  provided by Eurobiotech  not to exceed US$1.25 million for Phase I
clinical  trials to be performed at the M. D. Anderson Cancer Center in Houston,
Texas, for hematologic malignancies. Eurobiotech to further fund the preclinical
and, if indicated,  the clinical  development for other therapeutic  indications
including,  but not limited to, solid tumors, skin disorders and transplantation
immunity.

Phase II

     Eurobiotech  to fund the  multi-center  Phase  II  clinical  trials  of the
2'-fluoro-2-halo  substituted purine nucleoside in hematologic  malignancies.  A
decision  to proceed  or not will be made  prior to or at the time when  US$1.25
million has been expended. Eurobiotech's rights to hematologic malignancies will
revert to Southern if the  decision  is not to proceed.  Retention  of rights to
other  therapeutic  indications is contingent upon adequate levels of funding to
be provided by Eurobiotech for fast-track preclinical and clinical development.

NDA After Phase II

     An NDA or  equivalent  document may be submitted to the FDA and/or  foreign
regulatory  agencies  if the  results  after  completion  of Phase II trials are
encouraging and the agencies appear receptive.

Phase Ill

     If Eurobiotech  decides not to proceed after completion of Phase II trials,
the rights to the technology will revert to Southern. If Southern decides not to
proceed with the co-development program (i.e., equal sharing of phase III costs)
after completion of Phase II trials, Eurobiotech shall have the right to conduct
the Phase III trials after paying a non-refundable option fee of $750,000 within
60 days of  completion  and  evaluation  of Phase II  trials or 60 days from the
commencement of Phase III trials,  whichever is the earlier. If Southern decides
to proceed with the co-development  program, if Phase III trials are successful,
and the parties  decide to proceed  with Phase III  clinical  trials,  the costs
incurred will be shared equally between Southern and Eurobiotech.  In that case,
there will be no option fee for commencing Phase III trials.


                                        2

<PAGE>


Intellectual Property Ownership

     Southern and Eurobiotech shall each retain full ownership of their existing
intellectual property rights.

Additional Intellectual Property

     Ownership shall be linked directly to inventorship.  Eurobiotech shall have
the first right of negotiation to any additional intellectual property developed
as a result of this co-development program.

Additional Compensation to Southern

     100,000 Shares of common stock of Eurobiotech;  $750,000  milestone payment
on  completion of Phase III trials in Europe or the first sales of Product(s) in
the USA,  whichever is the earlier;  payment of patent costs from the  effective
date of the definitive co-development Agreement for Southern and Sloan Kettering
Institute.

Acquisition of Rights by Third Party (Non-Marketing by Eurobiotech)

     If all or part of the rights granted to Eurobiotech are acquired by a third
party at, or before completion of Phase II clinical trials or prior to Phase III
clinical trials,  all current or future payments derived by Eurobiotech from the
transfer,  whether in cash,  shares,  property  or the like,  including  but not
limited to up-front  payments,  milestone payments and royalties will be divided
equally between Southern and Eurobiotech.

     If Eurobiotech  alone funds Phase III clinical trials,  then if all or part
of the rights are acquired by a third party during or after  completion of Phase
III  trials,  all current or future  payments  derived by  Eurobiotech  from the
transfer,  whether in cash,  shares,  property  or the like,  including  but not
limited to up-front payments and milestone payments but excluding royalties will
be shared on the basis of 65% to  Eurobiotech  and 35% to Southern  until 50% of
the  monies  expended  by  Eurobiotech  in  conducting  the Phase III trials are
reimbursed.  Thereafter,  both  parties  shall  receive 50% each of all payments
derived from the  transfer,  exclusive  of royalty  payments.  Royalty  payments
related  to the  transfer  or  sublicense  of the  rights to  market or  further
sublicense Product(s) shall be divided in the ratio Eurobiotech 65; Southern 35.

     If a third party  funds the Phase III trials  either in whole or in part in
return for  rights,  the parties to this  Agreement  shall  divide all  payments
including  up-front  payments,  milestone payments and royalties from that third
party in equal amounts.

     If the parties to this Agreement share Phase III trial costs equally,  then
if all or part of the rights are  acquired  by a third  party at, or before,  or
after completion of Phase 111 trials, all


                                        3

<PAGE>


payments  derived from the acquisition  will be divided equally between Southern
and Eurobiotech.

     All of the  foregoing  scenarios  are  subject to the  approval of Southern
which shall not be unreasonably withheld.

     As  part  of  the  co-development   program,  should  Eurobiotech  directly
manufacture Product(s) for sale to a third party, Southern and Eurobiotech shall
agree that net income from such sales shall be divided in the ratio  Eurobiotech
65: Southern 35.

Marketing by Eurobiotech

     If products based on the  2'-fluoro-2-halo  substituted  purine nucleosides
are brought to market for the treatment of hematologic malignancies and/or other
therapeutic  indications,  Eurobiotech agrees to use all reasonable  measures to
market the products and to provide a sales force  sufficient to properly support
sales of the Product(s) in designated markets.

     A.   Phase III Funded by Eurobiotech

     Eurobiotech  will pay Southern a 7% royalty  payment on gross sales revenue
on  products  related  to the  2'-fluoro-2-halo  substituted  purine  nucleoside
technology,  applicable in all geographic areas where Eurobiotech is responsible
for the marketing of the Product(s).

     If the gross profit margin from opertions in any geographical  area exceeds
30% a further  profit-sharing  agreement  will  apply,  in addition to the above
royalty payment, according to the following formula:

          Gross Profit Margin           Payment as % of net income*
          -------------------           ---------------------------
                 >70%                              20%
               50-70%                              10%
               31-49%                               5%

*net  income to include  total  revenues  but not  include  local  sales tax and
corporate income taxes.

     If a sublicense is granted to third parties to sell Product(s) in specified
geographical  regions,  Southern  shall  receive  35% of all  current and future
payments  obtained by Eurobiotech  from the third parties  including 35 % of all
royalty payments made by the third parties.


                                       4

<PAGE>


     B.   Regulatory License Granted After Phase II Clinical Trials

     If  regulatory  approval is obtained  after  completion of Phase II trials,
Eurobiotech shall pay Southern according to the terms of section A above.

     C.   Phase III Trial Cost Reimbursed

     If a third  party  reimburses  the costs of a Phase III  clinical  trial in
exchange for a transfer or sublicense of rights,  Eurobiotech shall pay Southern
for its marketing of Product(s)  based on the terms of section A above,  but all
payments  from such a  sublicensee,  including  up-front,  milestone and royalty
payments shall be divided equally between the parties to this Agreement.

Disposition of Eurobiotech Rights

     Sale or acquisition of Eurobiotech's  rights to this technology in whole or
in part and whether or not in combination with the sale, acquisition,  merger or
disposition  of  Eurobiotech  shall be on the general basis of  Eurobiotech  65:
Southern 35 except as  otherwise  specified in the  Agreement  with the specific
details to be  negotiated  in good faith and subject to the approval of Southern
which shall not be unreasonably withheld.

Payment Duration

     Southern payments continue as long as Eurobiotech's,  subject to good faith
negotiations  regarding the impact of patent expirations,  non-patent countries,
competition, infringement, know-how and other issues.

Foreign Taxes

     Payments to Southern shall be made through  Eurobiotech U.S.A. and will not
include  deductions for foreign taxes (which  not-for-profit  U.S.  corporations
have no means of crediting or offsetting).

Due Diligence

     Upon the definitive  Agreement  being signed the two parties shall prepare,
within 90 days of the date of signing, a business development plan outlining the
strategy,  timing and  implementation  of steps to commercialize the technology.
Retention of rights by Eurobiotech is contingent upon submission of a NDA to the
FDA within four years of the effective date of the definitive Agreement.


                                       5

<PAGE>


Sloan-Kettering Institute

     It is agreed that Southern shall be responsible for obtaining authorization
and agreement  from Memorial Sloan  Kettering  Institute in order to fully carry
out its obligations under the terms of the definitive Agreement.

Authority

     Southern  has full  power,  authority  and legal  right to enter  into this
contemplated Agreement and to consummate the transactions contemplated hereby.

     Eurobiotech  has full power,  authority  and legal right to enter into this
contemplated Agreement and to consummate the transactions contemplated hereby.


Signed on behalf of Southern                 Signed on behalf of Eurobiotech


/s/  [ILLEGIBLE]                             /s/  [ILLEGIBLE]
-----------------------------------          -----------------------------------


Chief Executive Officer                      Chairman
-----------------------------------          -----------------------------------
Position                                     Position


Sept. 22, 1997                               29/9/97
-----------------------------------          -----------------------------------
Date                                         Date


                                       6

<PAGE>


                Terms for Eurobiotech Group, Inc. ("Eurobiotech")
                  and Southern Research Institute ("Southern")
                            Co-Development Agreement

Scope

     Co-develop  Product(s)  based on  Southern's  patented  and  patent-pending
2'-fluoro-2-halo substituted purine nucleoside technology.

Product(s)

     Drugs effective against  hematologic  malignancies and solid tumors as well
as other therapeutic  indications,  such as (but not exclusively) skin disorders
and transplantation immunity. All modes of administration, particularly oral and
iv., are included in these terms as are specialized  formulations  such as those
imparting controlled-release characteristics.

Agreement

     The parties hereby agree to enter into good faith discussions, based on the
terms agreed to in this document,  for the exclusive  co-development,  exclusive
world-wide  commercial  rights  except  for  Japan  and  Southeast  Ash,  to the
Product(s) and all therapeutic  indications and all modes of  administration  of
the 2'-fluoro-2-halo substituted purine nucleoside technology.

Preclinical Development

     Funding  provided by Eurobiotech  not to exceed US$1 million for parenteral
and oral preclinical  toxicology,  oral formulation,  and other preclinical work
needed  prior to  commencing  clinical  trials  including  development  funds to
explore other therapeutic indications.

Drug Synthesis for preclinical and Phase I

     Discussions for the definitive  Agreement will include the possible role of
Southern in the supply of material and production of GMP and non-GMP Product(s).

Preclinical Toxicology

     To  be  performed  by  Southern  whenever  appropriate  at a  price  to  be
negotiated.  This agreement takes full account of the initial  preparations  for
preclinical toxicology studies conducted and planned by the MD Anderson group.


                                       1

<PAGE>


Phase I

     Funding  provided by Eurobiotech  not to exceed US$1.25 million for Phase I
clinical  trials to be performed at the M. D. Anderson Cancer Center in Houston,
Texas, for hematologic malignancies. Eurobiotech to further fund the preclinical
and, if indicated,  the clinical  development for other therapeutic  indications
including,  but not limited to, solid tumors, skin disorders and transplantation
immunity.

Phase II

     Eurobiotech  to fund the  multi-center  Phase  II  clinical  trials  of the
2'-fluoro-2-halo  substituted purine nucleoside in hematologic  malignancies.  A
decision  to proceed  or not will be made  prior to or at the time when  US$1.25
million has been expended. Eurobiotech`s rights to hematologic malignancies will
revert to Southern if the  decision  is not to proceed.  Retention  of rights to
other  therapeutic  indications is contingent upon adequate levels of funding to
be provided by Eurobiotech for fast-track preclinical and clinical development.

NDA After Phase II

     An NDA or  equivalent  document may be submitted to the FDA and/or  foreign
regulatory  agencies  if the  results  alter  completion  of Phase II trials are
encouraging and the agencies appear receptive.

Phase III

     If Eurobiotech  decides not to proceed after completion of Phase II trials,
the rights to the technology will revert to Southern. If Southern decides not to
proceed with the co-development program (i.e., equal sharing of phase III costs)
after completion of Phase II trials, Eurobiotech shall have the right to conduct
the Phase III trials after paying a non-refundable option fee of $750,000 within
60 days of  completion  and  evaluation  of Phase II  trials or 60 days from the
commencement of Phase III trials,  whichever is the earlier. If Southern decides
to proceed with the co-development  program,  if Phase II trials are successful,
and the parties  decide to proceed  with Phase III  clinical  trials,  the costs
incurred will be shared equally between Southern and Eurobiotech.  In that case,
there will be no option fee for commencing Phase III trials.


                                       2

<PAGE>


Intellectual Property Ownership

     Southern and Eurobiotech shall each retain full ownership of their existing
intellectual property rights.

Additional Intellectual Property

     Ownership shall be linked directly to inventorship.  Eurobiotech shall have
the first right of negotiation to any additional intellectual property developed
as a result of this co-development program.

Additional Compensation to Southern

     100,000 Shares of common stock of Eurobiotech;  $750,000  milestone payment
on  completion of Phase III trials in Europe or the first sales of Product(s) in
the USA,  whichever is the earlier;  payment of patent costs from the  effective
date of the definitive co-development Agreement for Southern and Sloan Kettering
Institute.

Acquisition of Rights by Third Party (Non-Marketing by Eurobiotech)

     If all or part of the rights granted to Eurobiotech are acquired by a third
party at, or before  completion of Phase II clinical trials or prior to Phase HI
clinical trials,  all current or future payments derived by Eurobiotech from the
transfer,  whether in cash,  shares,  property  or the like,  including  but not
limited to up-front  payments,  milestone payments and royalties will be divided
equally between Southern and Eurobiotech.

     If Eurobiotech  alone funds Phase III clinical trials,  then if all or part
of the rights are acquired by a third party during or after  completion of Phase
III  trials,  all current or future  payments  derived by  Eurobiotech  from the
transfer,  whether in cash,  shares,  property  or the like,  including  but not
limited to up-front payments and milestone payments but excluding royalties will
be shared on the basis of 65% to  Eurobiotech  and 35% to Southern  until 50% of
the  monies  expended  by  Eurobiotech  in  conducting  the Phase III trials are
reimbursed.  Thereafter,  both  parties  shall  receive 50% each of all payments
derived from the  transfer,  exclusive  of royalty  payments.  Royalty  payments
related  to the  transfer  or  sublicense  of the  rights to  market or  further
sublicense Product(s) shall be divided in the ratio Eurobiotech 65; Southern 35.

     If a third party  funds the Phase III trials  either in whole or in part in
return for  rights,  the parties to this  Agreement  shall  divide all  payments
including  up-front  payments,  milestone payments and royalties from that third
party in equal amounts.

     If the parties to this Agreement share Phase III trial costs equally,  then
if all or part of the rights are  acquired  by a third  party at, or before,  or
after completion of Phase III trials, all


                                        3

<PAGE>


payments  derived from the acquisition  will be divided equally between Southern
and Eurobiotech.

     All of the  foregoing  scenarios  are  subject to the  approval of Southern
which shall not be unreasonably withheld.

     As  part  of  the  co-development   program,  should  Eurobiotech  directly
manufacture Product(s) for sale to a third party, Southern and Eurobiotech shall
agree that net income from such sales shall be divided in the ratio  Eurobiotech
65:Southern 35.

Marketing by Eurobiotech

     If products based on the  2'-fluoro-2-halo  substituted  purine nucleosides
are brought to market for the treatment of hematologic malignancies and/or other
therapeutic  indications,  Eurobiotech agrees to use all reasonable  measures to
market the products and to provide a sales force  sufficient to properly support
sales of the Product(s) in designated markets.

     A.   Phase III Funded by Eurobiotech

     Eurobiotech  will pay Southern a 7% royalty  payment on gross sales revenue
on  products  related  to the  2'-fluoro-2-halo  substituted  purine  nucleoside
technology,  applicable in all geographic areas where Eurobiotech is responsible
for the marketing of the Product(s).

     If the gross profit margin from opertions in any geographical  area exceeds
30% a further  profit-sharing  agreement  will  apply,  in addition to the above
royalty payment, according to the following formula:

          Gross Profit Margin           Payment as % of net income*
          -------------------           ---------------------------
                 >70%                               20%
               50-70%                               10%
               31-49%                                5%

*net  income to include  total  revenues  but not  include  local  sales tax and
corporate income taxes.

     If a sublicense is granted to third parties to sell Product(s) in specified
geographical  regions,  Southern  shall  receive  35% of all  current and future
payments  obtained by Eurobiotech  from the third parties  including 35 % of all
royalty payments made by the third parties.


                                       4

<PAGE>


     B.   Regulatory License Granted After Phase II Clinical Trials

     If  regulatory  approval is obtained  after  completion of Phase II trials,
Eurobiotech shall pay Southern according to the terms of section A above.

     C.   Phase III Trial Cost Reimbursed

     If a third  party  reimburses  the costs of a Phase III  clinical  trial in
exchange for a transfer or sublicense of rights,  Eurobiotech shall pay Southern
for its marketing of Product(s)  based on the terms of section A above,  but all
payments  from such a  sublicensee,  including  up-front,  milestone and royalty
payments shall be divided equally between the parties to this Agreement.

Disposition of Eurobiotech Rights

     Sale or acquisition of Eurobiotech's  rights to this technology in whole or
in part and whether or not in combination with the sale, acquisition,  merger or
disposition  of  Eurobiotech  shall be on the general basis of  Eurobiotech  65:
Southern 35 except as  otherwise  specified in the  Agreement  with the specific
details to be  negotiated  in good faith and subject to the approval of Southern
which shall not be unreasonably withheld.

Payment Duration

     Southern payments continue as long as Eurobiotech's,  subject to good faith
negotiations  regarding the impact of patent expirations,  non-patent countries,
competition, infringement, know-how and other issues.

Foreign Taxes

     Payments to Southern shall be made through  Eurobiotech U.S.A. and will not
include  deductions for foreign taxes (which  not-for-profit  U.S.  corporations
have no means of crediting or offsetting).

Due Diligence

     Upon the definitive  Agreement  being signed the two parties shall prepare,
within 90 days of the date of signing, a business development plan outlining the
strategy,  timing and  implementation  of steps to commercialize the technology.
Retention of rights by Eurobiotech is contingent upon submission of a NDA to the
FDA within four years of the effective date of the definitive Agreement.


                                       5

<PAGE>


Sloan-Kettering Institute

     It is agreed that Southern shall be responsible for obtaining authorization
and agreement  from Memorial Sloan  Kettering  Institute in order to fully carry
out its obligations under the terms of the definitive Agreement.

Authority

     Southern  has full  power,  authority  and legal  right to enter  into this
contemplated Agreement and to consummate the transactions contemplated hereby.

     Eurobiotech  has full power,  authority  and legal right to enter into this
contemplated Agreement and to consummate the transactions contemplated hereby.


Signed on behalf of Southern                 Signed on behalf of Eurobiotech


/s/  [ILLEGIBLE]                             /s/  [ILLEGIBLE]
-----------------------------------          -----------------------------------


Chief Executive Officer                      Chairman
-----------------------------------          -----------------------------------
Position                                     Position


Sept. 22, 1997                               29/9/97
-----------------------------------          -----------------------------------
Date                                         Date


                                       6

<PAGE>


                                  APPENDIX III


<PAGE>


   Extension of the Co-Development Program between Southern Research Institute
                           and Eurobiotech Group, Inc.

WHEREAS  Southern  Research   Institute  ("SRI")  and  Eurobiotech  Group,  Inc.
("Eurobiotech")  have  entered  into an Agreement  dated  8/31/98 to  co-develop
2'-fluoro-2-halo   substituted   purine   nucleoside(s)  for  the  treatment  of
hematological malignancies, other cancers and other therapeutic indications, and

WHEREAS  both parties wish to further  specify  additional  financial as well as
research and development obligations of Eurobiotech,

NOW, THEREFORE,  to consummate such extensions to the Co-Development  Program by
Eurobiotech, the parties agree as follows:

1.   INITIAL PAYMENT

     Eurobiotech  agrees to pay SRI a total of $50,000 as an initial,  once-only
     payment within ten (10) days of the signing of the Co-Development Agreement
     to co-develop 2'-fluoro-2-halo substituted purine nucleoside(s).

2.   RESEARCH AND DEVELOPMENT PAYMENTS

     Eurobiotech  agrees to pay SRI a further  $50,000 within 90 days of signing
     the Co-Development  Agreement to be used for research and development to be
     conducted at SRI's laboratories with respect to the use of 2'-fluoro-2-halo
     substituted  purine  nucleoside(s)  for therapeutic  indications other than
     cancer.  The research and development  program will be mutually agreed upon
     by the parties and funding  will begin no later than thirty (30) days after
     such  agreement  or within  ninety (90) days of the  effective  date of the
     Co-Development  Agreement,  whichever  date is earlier.  It is not intended
     that the sum  defined  in this  paragraph  shall be the  total  cost of the
     research and  development  program for therapeutic  indications  other than
     cancer.

3.   TERMINATION OF AGREEMENT

     This  extension of the  Co-Development  Agreement  shall be governed by the
     termination provisions of the Co-Development Agreement.


<PAGE>


                                   APPENDIX IV

                   Gross Profit Margin and Net Income Examples

     Joint product costing shall be based on the relative-sales-value  method of
joint cost  assignment  or other joint  costing  method  according  to generally
accepted accounting principles and agreed to by Eurobiotech and SRI.

Gross Margin+

     Gross Sales Revenue                     ______________________

     Cost of Goods Sold:

          Joint costs (assigned)             ______________________
          Separable costs                    ______________________
               Total Cost of Goods Sold      ______________________
     Gross Margin                            ______________________
     Gross Profit Margin                   % ______________________

+Excludes SRI royalties

Net Income++

     Gross Sales Revenue                     ______________________
     Total Cost of Goods Sold                ______________________
          Gross Margin                       ______________________
     *Operating Expenses:
          Joint costs (assigned):
          Selling, G&A                       ______________________
          R&D, regulatory                    ______________________
          Depreciation & amortization        ______________________
          Financing & interest               ______________________
               Total joint costs             ______________________

     Separable costs:
          Selling, G & A                     ______________________
          R&D, regulatory                    ______________________
          Depreciation &amortization         ______________________
          Financing & interest               ______________________

<PAGE>


               Total separable costs         ______________________
          Total Operating Expense            ______________________
     Net Income                              ______________________

++ Excludes SRI royalties, local taxes, corporate income taxes, foreign taxes.

*  Assignment  of such  allowable  operating  expenses as  selling,  general and
administrative;   research  and   development,   regulatory;   depreciation  and
amortization;  financing and interest  shall be according to generally  accepted
accounting principles.

<PAGE>


Inter Institutional Agreement                                             Page 1
SKI/ Southern

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

                          INTER-INSTITUTIONAL AGREEMENT
                                    (SK#3294)


     Effective on the 31st day of August, 1998 (the "Effective Date"),

     SLOAN-KETTERING INSTITUTE FOR CANCER RESEARCH, a not-for-profit corporation
organized  and  existing  under the laws of the State of New York,  and having a
place of  business  located  at 1275  York  Avenue,  New  York,  New York  10021
(hereinafter "SKI") and

     SOUTHERN RESEARCH INSTITUTE,  a not-for-profit  corporation organized under
the laws of the State of Alabama and having a place of business  located at 2000
Ninth Avenue  South,  P.O. Box 55305,  Birmingham,  Alabama  35205  (hereinafter
"Southern"),

     hereinafter  collectively referred to as the "Parties, or individually as a
"Party"

     in  consideration  of the  mutual  covenants  contained  herein,  AGREE  AS
FOLLOWS:

                                    ARTICLE 1
                            BACKGROUND & DEFINITIONS

ss.1.1    The  Parties  to  this  agreement  each  have  patents  and/or  patent
          applications relating to 2'-Fluoro-Arabinofuranosyl  Purine Nucleoside
          technology  including  specific  compounds,   the  synthesis  of  such
          compounds,  and uses of such compounds as  therapeutic  treatments for
          cancer and other disease conditions, including:

          a.   "SKI  Patents"  defined  as  compounds  3,4, 5 & 6 of claim 2 and
               compound 2 of claim 3 of U.S. Patent No.  4,751,221,  issued June
               14, 1988 entitled, 2'-Fluoro-Arabinofuranosyl Purine Nucleosides,
               and claim 1 of U.S.  Patent No.  4,918,179  issued April 17, 1990
               entitled  2'-Fluoro-Arabinofuranosyl  Purine Nucleosides, and any
               conversions, continuations,  continuations-in-part,  divisionals,
               foreign  equivalents,  reissues,  or other  derivatives  of these
               patents and patent  applications and matters that are the subject
               of these patents and patent applications,  (hereinafter  referred
               to as SKI Patents); and

          b.   "Southern  Patents"  defined as U.S. Patent 5,034,518 issued July
               23,     1991     entitled,     2'-Fluoro-9-(2-Deoxy-2-Fluoro-B-D-
               Arabinofuranosyl)  Adenine  Nucleosides,  U.S.  Patent  5,384,310
               issued     January     24,     1995     entitled     2'-Fluoro-2-
               Haloarabinoadinosines and Their Pharmaceutical Compositions,  and
               U.S.   Patent   5,661,136   issued   August  26,  1997   entitled
               2-halo-2'-fluoro ARA adenosines as antinoplastic  agents, and any
               conversions, continuations,  continuations-in-part,  divisionals,
               foreign  equivalents,  reissues,  or other  derivatives  of these
               patents and patent  applications and matters that are the subject
               of these patents and patent

<PAGE>


Inter Institutional Agreement                                             Page 2
SKI/ Southern

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

               applications (hereinafter referred to as "Southern Patents").

ss.1.2    "Technology"  shall  include  Southern  Patents  and those SKI Patents
          (listed in Exhibit B of this  Agreement)  to the extent  necessary  to
          enable the  practice  of Southern  Patents  and SKI Patents  issued in
          countries in which Southern Patents are not issued or pending.

ss.1.3    Inventions  described  in SKI Patents  were  developed  at SKI by Drs.
          Kyoichi A.  Watanabe,  Chung K. Chu, and Jack J. Fox,  and  inventions
          described in Southern  Patents were developed at Southern by Drs. John
          A.  Montgomery  and John A.  Secrist,  III  (hereinafter  collectively
          referred to as "Inventors").

ss.1.4    The Parties desire to provide for the  development,  utilization,  and
          commercialization  of the Technology  through licensing  activities or
          co-development activites.

ss.1.5    "Confidential Information"  means  (i) any  know-how,  information  or
          material  in  tangible  form  that  is  marked  as   confidential   or
          proprietary by the furnishing party at the time it is delivered to the
          receiving  party,  and  (ii)  information  that is  disclosed  orally,
          provided  that such  information  is  specifically  identified  by the
          disclosing  party as Confidential  Information;  and provided  further
          that any information  that is disclosed orally be confirmed in written
          summary  form by the  disclosing  party within  thirty (30) days.  The
          party who receives  Confidential  Information  from the other party is
          referred to in this Agreement as the  "Recipient",  and the disclosing
          Party is referred to as the "Discloser".

                                    ARTICLE 2
                                    OWNERSHIP

ss.2.1    The  Parties  have  or  shall  have  separate  agreements  with  their
          respective  Inventors,  whereby their  respective  Inventors  agree to
          assign  all  right,   title  and  interest  in   Inventions  to  their
          institutions,  and whereby the respective Inventors agree to cooperate
          with and assist their institutions in preparing,  filing,  prosecuting
          and maintaining patent applications and patents relating to Inventions
          throughout the world.

ss.2.2    Each  Party  shall  explicitly  retain  their  respective  rights  and
          ownership it may have in Technology.

                                    ARTICLE 3
                                COMMERCIALIZATION

ss.3.1    The Parties shall each cooperate to achieve the commercial utilization
          and  exploitation  of Technology and shall keep each other informed of
          all requests by third Parties  concerning  commercial  utilization  or
          exploitation.

<PAGE>


Inter Institutional Agreement                                             Page 3
SKI/ Southern

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

ss.3.2    The Parties warrant and represent that with respect to Technology they
          are  under  no  obligation   to  anyone  other  than  the   inventors,
          contributors, and funding agencies.

ss.3.3    Except as otherwise expressly set forth in this Agreement,  each Party
          MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
          EXPRESS  OR  IMPLIED,  INCLUDING  BUT NOT  LIMITED  TO  WARRANTIES  OF
          MERCHANTABILITY,  FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PATENT
          RIGHTS CLAIMS, ISSUED OR PENDING, AND ABSENSE OF INFRINGEMENT OF OR BY
          RIGHTS OF OTHERS.

ss.3.4    Each Party is unaware of any claims asserted against them by any third
          parties  with  respect  to patent  infringement  or any other  type of
          liability relevant to licensing of the Technology, which have not been
          disclosed  to  the  other  Party  as of the  Effective  Date  of  this
          Agreement.

                                    ARTICLE 4
                                     GRANTS

ss.4.1    Upon execution of the  co-development  agreement  between Southern and
          Eurobiotech Group, Inc. (hereinafter "Eurobiotech") shown in Exhibit A
          (hereinafter   "Eurobiotech   Agreement")   by   both   Southern   and
          Eurobiotech,  SKI will have been deemed to have granted to Southern an
          exclusive,  worldwide license to SKI's rights in the Technology,  with
          the right to  sublicense,  to the extent  necessary  for  Southern  to
          fulfill  its  obligations  under  its  license  of the  Technology  to
          Eurobiotech Group, Inc.

ss.4.2    Both  SKI  and  Southern  are  free to use the  Technology  for  their
          internal  purposes  in any way they deem fit,  without  informing  the
          other party.

                                    ARTICLE 5
                               SHARING OF PROCEEDS

ss.5.1    All proceeds  received by Southern,  including but not limited to cash
          or common  stock  payments,  from the  licensing  or other  commercial
          utilization of any portion of Technology pursuant to Articles 3 and 4,
          excluding  fees for  research  &  development,  shall  be  apportioned
          seventy-five  percent (75%) to Southern and twenty-five  percent (25%)
          to SKI until the termination of Eurobiotech Agreement.

ss.5.2    If Southern  receives  from  Eurobiotech  anything of value in lieu of
          cash payments, Southern shall share such payment with SKI according to
          Article  5.1,  based on the fair market  value of such  payment on the
          date  received by Southern,  unless SKI waives in writing such payment
          obligation in part or in full.

<PAGE>


Inter Institutional Agreement                                             Page 4
SKI/ Southern

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

ss.5.3    Southern  agrees to  distribute  to SKI it's share of royalty or other
          income in accordance with this  Agreement,  within thirty (30) days of
          receiving such payments.  If  distribution  requires  having shares of
          stock be put  into  SKI's  name,  Southern  agrees  to  initiate  such
          procedure within fifteen (15) days of of receipt of such stock shares.
          Such  payments  shall be  accompanied  by a report from each  licensee
          detailing  the  calculation  of royalties or milestone  payment  being
          paid.  Such payments  shall show "Payment  under Contract SK# 3294" on
          the check stub, and shall be sent to:

                 Memorial Sloan-Kettering Cancer Center
                 Office of Industrial Affairs
                 1275 York Avenue
                 New York, New York 10021

          Failure  to pay such sums  within  thirty  (30) days of  receipt  from
          licensee shall be considered a material  breach of this Agreement and,
          after due notice  according to Article 12, is  sufficient  grounds for
          termination of this Agreement with the non-paying Party.

ss.5.4    Southern  shall keep full,  true and accurate  records  containing all
          particulars  that may be  necessary  for the  purpose of  showing  the
          proceeds paid. For the term of this Agreement,  upon receipt of thirty
          (30) days prior written notice, Southern shall allow SKI or its agents
          to  inspect  such  records  for the  purpose of  verifying  Southern's
          payment   statements  or  compliance  in  other   respects  with  this
          Agreement.  Should such  inspection lead to the discovery of a greater
          than five percent (5%)  discrepancy  in reporting to SKI's  detriment,
          Southern agrees to pay the full cost of such inspection.

ss.5.5    Southern agrees to copy SKI promptly with all material  correspondence
          between  Southern and Eurobiotech and to consult with  Sloan-Kettering
          on all Southern  decisions  which may cost an estimated $1000 or more,
          or which may affect the value of the Technology or the income from the
          Technology by an estimated $1000 or more.

                                    ARTICLE 6
                          PATENT MANAGEMENT & EXPENSES

ss.6.1    SKI  shall be  responsible  for  preparing,  filing,  prosecuting  and
          maintaining  SKI Patents.  As of the Effective Date of the Eurobiotech
          Agreement,  SKI shall  maintain SKI Patent Rights until the expiration
          of such rights or the termination of this Agreement,  whichever occurs
          first. SKI agrees to copy Southern on patent  correspondence  relating
          to SKI Patent Rights.

ss.6.2    Southern shall be responsible for preparing,  filing,  prosecuting and
          maintaining  Southern  Patents.  As  of  the  Effective  Date  of  the
          Eurobiotech Agreement,  Southern shall maintain Southern Patent Rights
          until  the  expiration  of  such  rights  or the  termination  of this
          Agreement,  whichever  occurs  first.  Southern  agrees to copy SKI on
          patent correspondence relating to Southern Patent Rights.

ss.6.3    All costs and expenses associated with preparing,  filing, prosecuting
          and maintaining

<PAGE>


Inter Institutional Agreement                                             Page 5
SKI/ Southern

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

          all patent  applications  and patents  relating to Technology shall be
          borne by the respective  Party until the execution of the  Eurobiotech
          Agreement.  Upon signing the Eurobiotech Agreement,  Southern shall be
          responsible for and pay all future costs and expenses  incurred by SKI
          for the preparation, filing, prosecution, issuance, and maintenance of
          the  SKI  Patents.  SKI or its  outside  patent  counsel  will  submit
          invoices to Southern for such costs and expenses,  and Southern  shall
          pay the  invoiced  amount  within  sixty days (60) of the date of such
          invoice.

ss.6.4    Failure to pay patent  expenses shall be considered a material  breach
          of  contract  and,  after  due  notice  according  to  Article  12, is
          sufficient   grounds  for  termination  of  this  Agreement  with  the
          non-paying Party.

                                    Article 7
                                    Interest

ss.7.1    Southern  shall pay to SKI  interest on any amounts not paid when due.
          Such  interest  will  accrue from the  fifteenth  (15th) day after the
          payment  was due at a rate two  percent  (2%)  above the  daily  prime
          interest rate, as determined by The Chase Manhattan Bank (N.A.) or its
          successor  entity,  on each day the  payment  is  delinquent,  and the
          interest  payment  will be due and  payable  on the  first day of each
          month  after  interest  begins to accrue,  until  full  payment of all
          amounts due Sloan-Kettering is made.

ss.7.2    SKI's rights to receive such interest payments shall be in addition to
          any other rights and remedies available to SKI.

ss.7.3    If the interest  rate  required in this  subsection  exceeds the legal
          rate in a  jurisdiction  where a claim  for  such  interest  is  being
          asserted,  the required interest rate shall be reduced, for such claim
          only, to the maximum interest rate allowable in the jurisdiction.

                                    ARTICLE 8
                                 CONFIDENTIALITY

ss.8.1    During  the  term of this  Agreement  and for a period  of five  years
          thereafter, The receiving party (hereinafter "Recipient") shall retain
          in  confidence,  and shall not  disclose to a third party  without the
          express   written  consent  of  the  disclosing   party   (hereinafter
          "Discloser"),   any  Confidential  Information  disclosed  under  this
          Agreement, except for that Confidential Information which:

          a)   was in the  possession or control of the Recipient  before it was
               received, as shown by written records;

          b)   is  available,  or becomes  available,  to the public  through no
               fault of Recipient or of any of Recipient agents or employees;

          c)   is  rightfully  received  from  sources  not  bound by a  similar
               confidentiality agreement

<PAGE>


Inter Institutional Agreement                                             Page 6
SKI/ Southern

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

               with the Discloser, or

          d)   is independently  developed by Recipient without knowledge or use
               of the Confidential Information, as proven by competent evidence.

ss.8.2    After   receipt  of  written   consent  from   Discloser  to  disclose
          Confidential   Information  to  a  third  party,  and  prior  to  such
          disclosure,  Recipient  hereto shall  obtain the written  agreement of
          such third party, who is not otherwise bound by fiduciary  obligations
          to Recipient,  to hold in confidence and not make use of  Confidential
          Information  for  any  purpose  other  than  those  permitted  by this
          Agreement. Recipient shall notify the other promptly upon discovery of
          any  unauthorized  use or disclosure of the  Discloser's  Confidential
          Information.

ss.8.3    Nothing in this  Agreement  shall preclude SKI or Southern from making
          reports or disclosures  required by the National  Institutes of Health
          or any other  organization  which provided funds used for the research
          relating to Technology,  or disclosing Confidential Information to the
          minimum  extent  required to comply with court orders,  regulations or
          statutes.

                                    ARTICLE 9
                               PATENT INFRINGEMENT

ss.9.1    If any Party becomes aware of any  infringement of a patent covered by
          this Agreement,  it shall notify and discuss with the other Party what
          action is required to terminate  such  infringement.  Each Party shall
          have the option of taking action against any third party  infringer of
          their respective  patent rights.  If both Parties agree to act against
          the infringement jointly, they shall share equally in the expenses and
          disbursements  in  connection  with such  action  and shall also share
          equally all monies  received as a result of such action.  If one Party
          does not agree to join in the action against  infringement,  the other
          Party will have the right to prosecute a patent infringement action at
          their  sole  expense,  and  shall be  entitled  to retain  all  monies
          recovered.

ss.9.2    If the Eurobiotech Agreement has been executed at the time the Parties
          become aware of any such  infringement,  Eurobiotech  may join in such
          action  against  any  third  party   infringer  as  specified  in  the
          Eurobiotech Agreement. In that event one or both Parties may elect not
          to join in the action  against the third party  infringer as specified
          in the  Eurobiotech  Agreement  without being  penalized  according to
          Article 9.1.

                                   ARTICLE 10
                                INVENTORS SHARES

ss.10.1   This Agreement does not preclude inventors institutions their share of
          royalty income and under the respective  patent  policies of each from
          receiving from their respective such other benefits, if any, specified
          of the Parties or under such other

<PAGE>


Inter Institutional Agreement                                             Page 7
SKI/ Southern

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

          agreements  that may exist  between  inventors  and  their  respective
          institutions.  No Party shall be  responsible  for the other  Parties'
          obligations to their inventors.

                                   ARTICLE 11
                                NON-USE OF NAMES

ss.11.1   Neither  Party shall use the names of the other Party,  nor any of its
          Affiliates, employees, nor any adaptation thereof, in any advertising,
          promotional or sales literature without prior written consent obtained
          from the other Party in each case.

                                   ARTICLE 12
                              TERM AND TERMINATION

ss.12.1   This  Agreement  shall remain in effect from the Effective  Date until
          the last to occur of: (a) the  expiration of the last to expire of SKI
          Patents and Southern  Patents;  (b) the expiration of the  Eurobiotech
          Agreement,  (c) termination according to ss.12.2 of this Agreement; or
          (d) by mutual agreement of the parties expressed in writing.

ss.12.2   Failure by any Party to comply  with any of the  material  obligations
          and  conditions  contained in this  Agreement  shall entitle the other
          Party to give written  notice  requiring it to cure such  default.  If
          such default is not cured within sixty (60) days after receipt of such
          notice,  the notifying Party shall be entitled  (without  prejudice to
          any  of  its  other  rights  conferred  on it by  this  Agreement)  to
          terminate this Agreement with the defaulting Party by giving notice to
          take effect immediately.

ss.12.3   Provisions of Article 8, and any other obligation  incurred by a Party
          during the term of this Agreement shall survive termination.

                                   ARTICLE 13
                                  SEVERABILITY

ss.13.1   If one or more of the provisions of this Agreement shall be held to be
          invalid,  illegal,  or  unenforceable  in any respect,  the  validity,
          legality,  and enforceability of the remaining provisions shall not in
          any way be affected or impaired  thereby,  provided that the intent of
          the Parties in entering into the Agreement is not materially  affected
          thereby.

                                   ARTICLE 14
                                     NOTICES

ss.14.1   Any communication  required or permitted under this Agreement shall be
          made in writing and sent to such Party, postage prepaid,  addressed to
          it as set out below, or as it shall  subsequently  designate by notice
          to the other Party. However, if the communication  involves an alleged
          breach of this Agreement or a cancellation of this

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Inter Institutional Agreement                                             Page 8
SKI/ Southern

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          Agreement, such communication shall be sent by registered or certified
          mail or other means providing proof of delivery, and also communicated
          by telephone as promptly as possible.  Communications or notices shall
          be addressed as follows:

          In the case of SKI, the communication or notice shall be addressed to:

                   Sloan-Kettering Institute for Cancer Research
                   1275 York Avenue
                   New York, New York 10021
                      Attention: James S. Quirk
                                 Senior Vice President
                                 Research Resources Management

          In the  case  of  Southern,  the  communication  or  notice  shall  be
          addressed to:

                   Southern Research Institute
                   2000 Ninth Avenue South
                   P.O. Box 55305
                   Birmingham, Alabama 35255-5305
                   Attention:   President

                                   ARTICLE 15
                                  GOVERNING LAW

ss.15.1   This Agreement  shall be governed by and construed in accordance  with
          the laws of the State of New York.

                                   ARTICLE 16
                                ENTIRE AGREEMENT

ss.16.1   This  instrument  contains  the entire  Agreement  between the Parties
          hereto and supersedes all prior Agreements with respect to Technology.
          Any modifications of this Agreement to be effective must be in writing
          and signed by all Parties.

                                   ARTICLE 17
                                 INDEMNIFICATION

ss.17.1   Southern,  and any sublicensee of rights granted under this Agreement,
          including  Eurobiotech,  shall at all  times  during  the term of this
          Agreement and thereafter, indemnify, defend and hold SKI, its Board of
          Managers,  officers,  employees and affiliates,  harmless  against all
          claims  and  expenses,   including   legal   expenses  and  reasonable
          attorneys'  fees,  arising out of the death of or injury to any person
          or persons  or out of any damage to  property  and  against  any other
          claim,   proceeding,   demand,  expense  and  liability  of  any  kind
          whatsoever  resulting from the  production,  manufacture,  sale,  use,
          lease, consumption or advertisement of the Licensed

<PAGE>


Inter Institutional Agreement                                             Page 9
SKI/ Southern

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

          Product(s) and/or Licensed  Process(es) or arising from any obligation
          of LICENSEE hereunder, except for any injuries, losses or damages that
          specifically result from the gross negligence or willful misconduct of
          SKI.

                                   ARTICLE 18
                             MISCELANEOUS PROVISIONS

ss.18.1   Each Party hereby acknowledges that the rights and obligations of this
          Agreement are subject to the laws and regulations of the United States
          relating to the export of products and technical information.  Without
          limitation,   each  Party   shall   comply  with  all  such  laws  and
          regulations.

ss.18.2   This  Agreement  shall not be  construed to grant any license or other
          rights  to  either  party in any  patent  rights,  know-how,  or other
          technology  of the other party,  except as expressly  provided in this
          Agreement.

ss.18.3   Neither  party  shall  assign  its  rights or  obligations  under this
          Agreement,  in whole or in part,  by  operation  of law or  otherwise,
          without the prior written consent of the other, except to successor to
          all or substantially all of the party's assets or business  operations
          relating  to the  intellectual  property  that is the  subject of this
          Agreement. Any purported assignment in violation of this article shall
          be null and void.

ss.18.4   The waiver by either  party  hereto of any right  hereunder  or of the
          failure  to  perform  or of a breach by the other  party  shall not be
          deemed a waiver of any other right hereunder or of any other breach or
          failure by said other party whether of a similar nature or otherwise.

ss.18.5   This  Agreement may be executed in two or more  counterparts,  each of
          which shall be deemed an  original,  but all of which  together  shall
          constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties have the Effective Date.


Sloan-Kettering Institute for Cancer         Southern Research Institute
Research


By:  /s/  G. Bernhardt                       By:  /s/  G. E. Dwyer
     ------------------------------               ------------------------------
Name:  James S. Quirk                        Name:  G. E. Dwyer
Title: Senior Vice President                 Title: President and CEO
       Research Resources Management


Date:     9/8                  , 1998        Date:     9/1/98            , 1998
     --------------------------------             -----------------------------

<PAGE>


Inter Institutional Agreement
SKI/ Southern

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

                                    EXHIBIT B


SKI Patents

     United States Patent Number 4,751,221 issued June 14, 1988
     United States Patent Number 4,918,179 issued April 17,1990
     Canadian Patent Number 1,271,192 issued July 3, 1990
     EPO Patent Number 0219829 issued December 30, 1992 in Germany, France, and
          the United Kingdom
     Japanese Patent Number 1998734 issued December 5, 1995


Southern Patents

     United States Patent Number 5,034,518 issued July 23, 1991
     United States Patent Number 5,384,310 issued January 24, 1995
     United States Patent Number 5,661,136 issued August 26,1997
     European Patent Number 0473708 issued January 15, 1997 in France, Germany,
          Great Britain, Italy, Netherlands, Spain, Sweden, and Switzerland
     European Patent Application Serial Number 92912163.0 filed May 7,1992,
          designating Austria, Belgium, Germany, Greece, France, Italy,
          Luxembourg, Monaco, Netherlands, Spain, Sweden, Switzerland, and the
          United Kingdom.
     Japanese Patent Application Serial Number 2-508789 filed May 23, 1990
     Japanese Patent Application Serial Number 500121/1993 filed May 7, 1992
     Canadian Patent Application Serial Number 2,102,782 filed May 7, 1992

<PAGE>


                                     [LOGO]

                              Senior Vice President
                          Research Resources Management



                                                               September 3, 1998


TO WHOM IT MAY CONCERN:

     In my absence,  Mr.  Gustave J.  Bernhardt,  Director,  Research  Resources
Management,  will  sign as an  institutional  official  for the  Sloan-Kettering
Institute for Cancer Research.


                                             /s/  James S. Quirk
                                                  -----------------------------
                                                  James S. Quirk
                                                  Senior Vice President

JSQ:meb


                     Memorial Sloan-Kettering Cancer Center
                   1275 York Avenue, New York, New York 10021

                   NCI-designated Comprehensive Cancer Center