<PAGE>

                                                                    Exhibit 10.2

Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Securities and Exchange Commission without the Mark pursuant to
the Company's Application for Order Granting Confidential Treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.


                                LICENSE AGREEMENT

         This License Agreement (hereinafter referred to as this "Agreement"),
effective as of February 25, 1998 (the "Effective Date"), is entered into by and
between Dr. Stuart Weg (the "Licensor") and Pain Management, Inc., a corporation
duly organized and existing under the laws of the State of Delaware (the
"Company").

         WHEREAS, the Licensor is the owners of U.S. Patent Number 5,543,434,
entitled "Nasal Administration of Ketamine to Manage Pain" and United States
Patent Applications USSN ***, entitled "Nasal Administration of Ketamine to
Manage Pain and Reduce Drug Dependency" (collectively the "Ketamine
Technology"), which is based on inventions and confidential information
discovered by the Licensor;

         WHEREAS, the Licensor may discover or develop additional intellectual
property, technical information or proprietary rights that may be subject to the
terms of this Agreement; and

         WHEREAS, the Company now desires to obtain a license to the Ketamine
Technology, under the initial application and to further developments to the
Ketamine Technology, upon the terms and conditions hereinafter set forth.

         NOW, THEREFORE, it is agreed as follows:



                             ARTICLE 1 - DEFINITIONS

         For the purposes of this License Agreement, the following words and
phrases shall have the following meanings:



*** Represents material which has been omitted pursuant to an Application for
    Order Granting Confidential Treatment and filed separately with the
    Commission.

                                      -1-
<PAGE>

         1.1 "Affiliate" shall mean, with respect to any Entity (as hereinafter
defined), any Entity that directly or indirectly controls, is controlled by, or
is under common control with such Entity.

            1.1.1 "Control" shall mean, for this purpose, direct or indirect
control of more than fifty percent (50%) of the voting securities of an Entity
or, if such Entity does not have outstanding voting securities, more than 50% of
the directorships or similar positions with respect to such Entity.

            1.1.2 "Entity" shall mean any corporation, association, joint
venture, partnership, trust, university, business, individual, government or
political subdivision thereof, including an agency, or any other organization
that can exercise independent legal standing

         1.2 "Patent Rights" shall mean all U.S. and foreign patents and patent
applications set forth in Appendix I;

            1.2.1 Any later-filed United States and/or foreign patent
applications based on the patent applications and/or patents listed in Appendix
I, or corresponding thereto, including any continuations, continuations-in-part,
divisional, reissues, reexaminations, or extensions thereof, and any subsequent
patent applications and/or patents relating to the use of ketamine for the
treatment of pain, including any continuations, continuations-in-part,
divisional, reissues, reexaminations, or extensions thereof;

            1.2.2 Any other United States and/or foreign patent applications
and/or patents together with any and all patents issuing thereon, including
continuation, divisionals and re-issue applications and continuation-in-part
applications and any United States or foreign patents granted upon such
applications, based upon inventions or improvements discovered by the Licensor
during the term of the Consulting Agreement relating to the Ketamine Technology,
any and all of which shall be deemed added to Appendix I;


                                      -2-
<PAGE>

            1.2.3 Any United States and/or foreign patents issuing from any of
the foregoing; and

            1.2.4 Any United States and/or foreign trademark applications filed
by or on behalf of the Licensor related to the Ketamine Technology.

         1.3 "Know-how" shall mean all tangible information (other than that
contained in the Patent Rights) whether patentable or not (but which has not
been patented) and physical objects related to the Ketamine Technology or to the
Licensed Product (as defined below), including but not limited to formulations,
materials, data, drawings and sketches, designs, testing and test results,
regulatory information of a like nature, owned by any of the Licensor, which the
Licensor has the right to disclose and license to the Company.

         1.4 "Licensed Product(s)" shall mean:

            1.4.1 Any product which is covered in whole or in part by a valid
and unexpired claim contained in the Patent Rights in the country in which the
product is made, used, leased or sold;

            1.4.2 Any product which is manufactured using a process which is
covered in whole or in part by a valid and unexpired claim contained in the
Patent Rights in the country in which the process is used;


                                       -3-
<PAGE>

            1.4.3 Any product which is used according to a method which is
covered in whole or in part by a valid and unexpired claim contained in the
Patent Rights in the country in which the method is used.

         1.5 "Licensed Process(es)" shall mean any process or method, which is
covered, in whole, or in part, by a valid and unexpired claim contained in the
Patent Rights in the country in which the process or method is used.

         1.6 "Net Sales" shall mean the total gross receipts for sales of
Licensed Products or practice of Licensed Processes by or on behalf of the
Company or any of its Affiliates or sublicensees or otherwise making Licensed
Products available to others without sale or other dispositions, whether
invoiced or not, less only the sum of the following:

            1.6.1 Usual trade discounts to customers;

            1.6.2 Sales, tariff duties and/or use taxes directly imposed and
with reference to particular sales;

            1.6.3 Outbound transportation prepaid or allowed and transportation
insurance;

            1.6.4 Amounts allowed or credited on returns;

            1.6.5 Bad debt deductions actually written off during the accounting
period;

            1.6.6 Sales commissions; and

            1.6.7 Packaging and freight charges.


                                      -4-
<PAGE>

                                ARTICLE 2 - GRANT

         2.1 The Licensor hereby grants to the Company and the Company accepts,
subject to the terms and conditions of this Agreement, an exclusive, worldwide
license in all fields of use to practice under the Patent Rights and to utilize
the Know-how, and to make, have made, use, lease and/or sell Licensed Products
and to practice Licensed Processes, until expiration or termination of the
Patent Rights as hereinafter provided.

         2.2 The Licensor hereby grants to the Company and Company accepts, an
option (the "Option") to an exclusive, worldwide license, with the right to
grant sublicenses, to any future inventions discovered by the Licensor relating
to the analgesic management of pain ("Future Inventions"). The Licensor shall
promptly provide written notice to the Company of any such Future Inventions.
The Option shall be exercisable by the Company upon written notice delivered to
Licensor within ninety (90) days of receipt of written notice of the
availability of a Future Invention. Upon the exercise of the Option, the
Licensor and the Company shall negotiate in good faith the terms of a license to
such Future Invention, which terms shall include royalty payments, milestone
payments, reimbursement of expenses and assumption by the Company of patent
prosecution costs. In the event that the Company determines not to exercise its
Option to a Future Technology, or, having exercised its Option, the Company and
the Licensor have not agreed to terms for the license to any Future Invention
within one hundred eighty (180) days, then, unless otherwise agreed between the
parties hereto, the Company shall have no further rights in such Future
Invention, and the Licensor shall be free to enter into any agreement with a
third party respecting such Future Invention as the Licensor deems fit.
Notwithstanding the foregoing, nothing in this paragraph 2.2 shall require the
Company to exercise an Option or negotiate a license to any invention contained
in the Patents Rights, Know-how or with respect to any Future Invention related
to the use of ketamine, for which the terms of this Agreement control.


                                      -5-
<PAGE>

         2.3 To the Licensor's knowledge and belief, the Licensor has all right,
title, and interest in and to the Patent Rights, including exclusive, absolute,
irrevocable right, title and interest thereto, free and clear of all liens,
charges, encumbrances or other restrictions or limitations of any kind
whatsoever and to the Licensor's knowledge and belief, other than as set forth
on Schedule B hereof, there are no licenses, options, restrictions, liens,
rights of third parties, disputes, royalty obligations, proceedings or claims
relating to, affecting, or limiting its rights or the rights of the Company
under this Agreement with respect to, or which may reasonably lead, to a claim
of infringement or invalidity regarding, any part or all of the Patent Rights
and their use as contemplated in the underlying patent.

         2.4 To the Licensor's knowledge and belief there is no pending claim of
infringement, interference or invalidity regarding, any part or all of the
Patent Rights and the use thereof as contemplated in the underlying patent.

         2.5 The Licensor has disclosed certain information to the Company
subject to the terms of the Confidentiality Agreement entered into prior to the
execution of this Agreement, some of which information may have been made
available to the public without restriction. Accordingly, attached hereto as
Schedule A is a list of all prior written publications, oral presentations and
any other public disclosure of the Patent Rights and/or information covered by
Know-how.


                                      -6-
<PAGE>

         2.6 The Licensor grants to the Company the right to grant sublicenses
to third parties under the license granted hereunder.

            2.6.1 Within thirty (30) days after execution or receipt thereof, as
applicable, the Company shall provide the Licensor with a copy of each
sublicense issued hereunder and shall promptly deliver copies of all royalty
reports received by the Company from such sublicensees.

            2.6.2 Any sublicensee under this Agreement shall be required to
comply with Articles 3,5,9 and 10 of this Agreement.

            2.6.3 Upon termination of this Agreement other than by expiration in
accordance with paragraph 7.7, any and all sublicenses shall survive such
termination.



                            ARTICLE 3 - DUE DILIGENCE

         The Company shall use its reasonable best efforts to bring Licensed
Products or Licensed Processes to market through a thorough, vigorous and
diligent development program for commercial exploitation of the Patent Rights
and Know-how, including compliance with the milestones set forth in Exhibit A.
The Company shall continue active, diligent marketing efforts for the Licensed
Products or Licensed Processes throughout the life of this Agreement.



                  ARTICLE 4 - ROYALTIES AND OTHER CONSIDERATION


                                      -7-
<PAGE>

         4.1 In consideration of the rights, privileges and license granted
hereunder, the Company shall pay to the Licensor as set forth in, and in
accordance with the provisions of, this Article 4 until the earlier to occur of
(a) the last to expire patent contained in the Patent Rights and (b) until or
termination of this License Agreement as hereinafter provided.

         4.2 (a) Pursuant to a stockholders agreement to be entered into between
Lindsay A. Rosenwald, M.D., the Company, the Licensor, Herbert Brotspies and
Calgar and Associates (the "Stockholders Agreement"), the Company shall grant to
the Licensor and/or his representatives a number of shares of common stock of
the Company, par value $.001 per share (the "Common Stock"), representing
twenty-five percent (25%) of the initial share capital of the Company. Twenty
percent (20%) shall be immediately issued to the Licensor and/or his
representatives and distributed as follows: (i) seventeen percent (17%) to the
Licensor; (ii) one-half percent (1.5%) to Herbert Brotspies and (iii) one-half
percent (1.5%) to Calgar and Associates.

         (b) Of the shares of Common Stock to be issued to the Licensor and/or
his representatives, the Company shall hold in escrow a number of such shares of
Common Stock equal to five percent (5%) of the initial share capital of the
Company (the "Escrow Shares"). The Escrow Shares shall vest, if at all, and be
released from escrow upon completion of a statistically significant Phase III
clinical trial and shall be distributed as follows: (i) four and one-quarter
percent (4.25%) to the Licensor; (ii) three hundred seventy-five one-hundredth
percent (0.375%) to Herbert Brotspies and (iii) three hundred seventy-five
one-hundredth percent (0.375%) to Calgar and Associates.



                                      -8-
<PAGE>

         4.3 The Company shall pay to the Licensor and/or his representatives a
non-refundable semi-annual royalty in an amount equal to *** percent (***%) of
Net Sales by the Company, or any Affiliate of the Company, of the Licensed
Products or Licensed Processes covered by at least one issued and unexpired
claim under the Patent Rights to be paid as follows: (a) *** percent (***%) to
the Licensor; (b) *** percent (***%) to Herbert Brotspies and (c) *** percent
(***%) to Calgar and Associates.

         4.4 The Company shall pay to the Licensor non-refundable semi-annual
royalties in an amount equal to the greater of (a) *** percent (***%) of the
royalties received by Licensee or its Affiliate from sales by any sublicensee of
Licensed Products or Licensed Processes and (b) *** percent (***%) of Net Sales
by any such sublicensee. In addition, the Company shall pay to the Licensor ***
percent (***%) of all sublicensing fees or other lump sum payments or other
compensation received by the Company or an Affiliate from its sublicensees for
the use, lease or sale of Licensed Products and Licensed Processes, excluding
(i) payments used or reimbursed for research and development and (ii) payments
as a result of the issuance of debt or equity securities of the Company. Any
payments made pursuant to this paragraph 4.4 shall be made as follows: (A)
ninety percent (90%) to the Licensor; (B) five percent (5%) to Herbert Brotspies
and (C) five percent (5%) to Calgar and Associates.

         4.5 The Company agrees to pay to the Licensor the Milestone Payments
set forth on Exhibit A attached hereto, which shall be deducted from or credited
against, as the case may be, payments in accordance with section 4.4 above.

*** Represents material which has been omitted pursuant to an Application for
    Order Granting Confidential Treatment and filed separately with the
    Commission.

                                      -9-
<PAGE>

         4.6 The Company agrees not to sell the technology without requiring the
purchaser thereof to comply with the terms of this Agreement.

         4.7 On sales of Licensed Products by the Company to Affiliates or
related parties that are end users of such Licensed Products the value of Net
Sales attributed under this Article 4 shall be that which would have been
received in an arms-length transaction, based on sales of like quantity and
quality products at or about the time of such transaction.

         4.8 No multiple royalties shall be payable because the use, lease or
sale of any Licensed Product or Licensed Process is, or shall be, covered by
more than one valid and unexpired claim contained in the Patent Rights. In
addition, royalties shall be paid for a Licensed Product or Licensed Process
based upon only one of paragraphs 4.3 or 4.4 above (that is, royalties on direct
sales of a Licensed Product or Licensed Process by the Company or its Affiliates
shall be based only on paragraph 4.3, while royalties on sales of a Licensed
Product or Licensed Process by the Company's sublicensees shall be based only on
paragraph 4.4, so as to avoid double counting).

         4.9 In the event that a Licensed Product is sold in the form of a
combination product containing one or more products or technologies that are
themselves not a Licensed Product, the Net Sales for such combination product
shall be calculated by multiplying the sales price of such combination product
by the fraction A/(A+B) where A is the invoice price of the Licensed Product
(or, if sold to an Affiliate, the Fair Market Value of the Licensed Product) and
B is the total invoice price of the other products or technologies (or, if
purchased from an Affiliate, the Fair Market Value of the other products or
technologies). In the case of a combination product which includes one or more
Licensed Products, the Net Sales for such combination product upon which the
royalty due to the Licensor is based shall not be less than the normal aggregate
Net Sales for such Licensed Product.


                                      -10-
<PAGE>

         4.10 Royalty payments shall be paid in United States dollars in New
York, New York or at such other place as the Licensor may reasonably designate
consistent with the laws and regulations controlling in any foreign country. Any
withholding taxes that the Company, its Affiliate or any sublicensee shall be
required by law to withhold on remittance of the royalty payments shall be
deducted from such royalty payment to the Licensor. The Company shall furnish
the Licensor with the original copies of all official receipts for such taxes.
If any currency conversion shall be required in connection with the payment of
royalties hereunder, such conversion shall be made by using the exchange rate
prevailing at Citibank, N.A. in New York, New York on the last business day of
the calendar quarterly reporting period to which such royalty payments relate.

         4.11 Royalties payable to the Licensor shall be paid semi-annually on
or before the thirtieth (30th) day of June and the thirty-first (31st) day of
December of each calendar year. Each such payment shall be for unpaid royalties
which accrued within or prior to the Company's two most recently completed
fiscal quarters.

         4.12 No payment obligations shall be due with respect to any sale or
sublicense covering any Licensed Product in a country it

            4.12.1 There are no issued Patent Rights underlying such Licensed
Product in such country; and


                                      -11-
<PAGE>

            4.12.2 To the extent that a patent application is pending, there is
no claim within such patent application on which a royalty herein can reasonably
be based or that has been pending for less than seven (7) years since the
initial filing date.

         4.13 To the extent that the Company or any Affiliate of the Company is
required, by order or judgement of any court to obtain in any jurisdiction any
license from a third party in order to make, use or sell any Licensed Product or
Licensed Process, then up to fifty percent (50%) of the royalties payable
hereunder with respect to such Licensed Product or Licensed Process in such
jurisdiction may be deducted from royalties otherwise payable to the Licensor
hereunder, provided that in no event shall the aggregate royalties payable to
the Licensor in any semi-annual period in such jurisdiction be reduced by more
than fifty percent (50%) as a result of any such deduction, and provided further
that any excess deduction remaining as a result of such limitation may be
carried forward to subsequent periods.

                         ARTICLE 5 - REPORTS AND RECORDS

         5.1 The Company shall keep full, true and accurate books of account
containing all particulars that may be necessary for the purpose of showing the
amounts payable to the Licensor by way of royalty as aforesaid. Said books of
account shall be kept at the Company's principal place of business and the
supporting data shall be open up to twice per year upon reasonable notice to the
Company, for three (3) years following the end of the calendar year to which
they pertain, for inspection by an auditor selected by the Licensor, except one
to whom the Company has reasonable objection, for the purpose of verifying the
Company's royalty statement or compliance in other respects with this License
Agreement. If an inspection shows an under reporting or underpayment in excess
of the greater of *** dollars ($***) or *** percent (***%) of royalties payable
for any twelve (12) month period, then the Company shall reimburse the Licensor
for the cost of the inspection at the time the Company pays the unreported
royalties, including any late charges as required by paragraph 5.4 of this
Agreement. All payments required under this Article 5 shall be due within sixty
(60) days of the date the Licensor provides the Company notice of the payment
due.

*** Represents material which has been omitted pursuant to an Application for
    Order Granting Confidential Treatment and filed separately with the
    Commission.


                                      -12-
<PAGE>

         5.2 Within sixty (60) days from the end of each quarter of each
calendar year, the Company shall deliver to the Licensor complete and accurate
reports, giving such particulars of the business conducted by the Company during
the preceding quarter under this License Agreement as shall be pertinent to a
royalty accounting hereunder. These. shall include at least the following:

            5.2.1 All Licensed Products and Licensed Processes used, leased or
sold, by or for the Company, its Affiliates or any sublicensees.

            5.2.2 Total amounts invoiced for Licensed Products and Licensed
Processes used, leased or sold, by or for the Company, its Affiliates or any
sublicensees.

            5.2.3 Deductions applicable in computed "Net Sales" as defined in
Paragraph 1.6.

            5.2.4 Total royalties due based on Net Sales by or for the Company,
its Affiliates or any sublicensee, any lump sum payment due to the Licensor, if
any, pursuant to paragraph 4.4.


                                      -13-
<PAGE>

            5.2.5 Names and addresses of all sublicensees and Affiliates of the
Company.

            5.2.6 On an annual basis, the Company's year-end audited financial
statements.

         5.3 With each such quarterly report submitted, the Company shall pay to
the Licensor the royalties due and payable under this Agreement. If no royalties
shall be due, the Company shall not be required to make a report pursuant to
this Article 5.

         5.4 Amounts that are not paid when due and that are not the subject of
a bona fide dispute shall accrue interest from the due date until paid, at a
rate equal to the then prevailing prime rate of Citibank, N.A., plus two percent
(2%).

         5.5 The Company agrees to forward to the Licensor semi-annually a copy
of any report, which is in substance similar to the report required by this
Article 5, received from any sublicensee and other documents received from any
sublicensee as the Licensor may reasonably request, as may be pertinent to an
accounting of royalties.

         5.6 The Licensor agree to hold in confidence each report delivered by
the Company pursuant to this Article 5 until the termination of this Agreement.
Notwithstanding the foregoing, the Licensor may disclose any such information
required to be disclosed pursuant to any judicial, administrative or
governmental request, subpoena, requirement or order, provided that the Licensor
takes reasonable steps to provide the Company with the opportunity to contest
such request, subpoena, requirement or order.


                                      -14-
<PAGE>

                 ARTICLE 6 - PATENT PROSECUTION AND MAINTENANCE

         6.1 Upon receipt by the Company of appropriate documentation, the
Company shall reimburse the Licensor in an amount not to exceed Two Hundred
Twenty Five Thousand Dollars ($225,000) for (a) reasonable past patent expenses,
(b) expenses incurred prior to the Effective Date with respect to United States
and foreign patent applications and (c) administrative costs incurred in
connection with any of the foregoing, payable in equal monthly installments over
a nine (9) month period commencing ninety (90) days from the Effective Date;
provided, however, that the entire amount payable pursuant to this Section 6.1
or the balance thereof, as the case may be, shall become due and payable on the
thirtieth (30th) day following the closing of the first public offering or
private placement of debt or equity securities of the Company in which gross
proceeds to the Company exceed Two Million Dollars ($2,000,000). Notwithstanding
the foregoing, the Company shall reimburse the Licensor in the amount of
twenty-five thousand dollars ($25,000) within forty-five (45) days from the
Effective Date. All amounts payable pursuant to this Section 6.1 shall be made
to the individuals and/or entities set forth on Schedule I attached hereto. In
addition, the Company shall assume all future patent expenses.

         6.2 The Company shall diligently prosecute and maintain the Patent
Rights as set forth in Appendix I hereto (as the same may be amended or
supplemented from time to time after the date hereof), including, but not
limited to, the filing of patent applications for inventions and improvements to
the Ketamine Technology, based upon inventions or improvements discovered by the
Licensor or the Company, utilizing such patent counsel as may be mutually agreed
upon by the parties hereto. The Company agrees to keep the Licensor reasonably
well informed with respect to the status and progress of any such applications,
prosecutions and maintenance activities including and to consult in good faith
with the Licensor and take into account the Licensor's comments and requests
with respect thereto. Both parties agree to provide reasonable cooperation to
each other to facilitate the application and prosecution of patents pursuant to
this Agreement and the Consulting Agreement.


                                      -15-
<PAGE>


         6.3 The Company may, in its discretion, elect to abandon any patent
application or issued patent comprising the Patent Rights, in which case the
Company shall make no further use of such Patent Rights and shall have no
further royalty obligation to the Licensor in respect of any Licensed Products
and Licensed Processes the manufacture, use or sale of which is covered by an
issued claim of such abandoned Patent Rights. Prior to any such abandonment, the
Company shall give the Licensor at least sixty (60) days notice and a reasonable
opportunity to take over prosecution of such Patent Rights. In such event, the
Licensor shall have the right, but not the obligation, to commence or continue
such prosecution and to maintain any such Patent Rights under its own control
and at its expense and the Company shall then make no further use of any such
Patent Rights and shall have no royalty or other obligation to the Licensor in
respect of any Licensed Products and Licensed Processes, the manufacture, use or
sale of which is covered by an issued claim of such Patent Rights. The Company
agrees to cooperate in such activities, including execution of any assignments
or other documents necessary to enable the Licensor to obtain and retain sole
ownership and control of such Patent Rights.



                             ARTICLE 7 - TERMINATION


                                      -16-
<PAGE>

         7.1 If the Company shall become bankrupt, or shall file a petition in
bankruptcy, or if the business of the Company shall be placed in the hands of a
receiver, assignee or trustee for the benefit of creditors, whether by the
voluntary act of the Company or otherwise, this License Agreement shall
automatically terminate.

         7.2 In the event that the Company fails to make payment to the Licensor
of royalties due in accordance with the terms of this Agreement, provided such
failure to make payment is not as a result of a bona fide dispute between the
Licensor and the Company, the Licensor shall have the right to terminate this
License Agreement within sixty (60) days after giving said notice of termination
unless the Company shall pay to the Licensor, within the 60-day period, all
such royalties due and payable. Subject to Article 8, upon the expiration of the
60-day period, if the Company shall not have paid all such royalties due and
payable, the rights, privileges and license granted hereunder shall, at the
option of the Licensor, immediately terminate.

         7.3 Upon any material breach or default of this License Agreement by
the Company, other than as set forth in Paragraphs 7.1 and 7.2 hereinabove, the
Licensor shall have the right to terminate this Agreement and the rights,
privileges and license granted hereunder upon giving sixty (60) days notice to
the Company. Such grounds for termination include, but shall not be limited to,
the Licensor's reasonable determination that the Company is not using its
reasonable best efforts to develop the Ketamine Technology and keep Licensed
Products or Licensed Processes reasonably available to the public after
commercial use commences. Such termination shall become effective immediately
unless the Company shall have cured any such breach or default prior to the
expiration of the sixty (60) day period referred to above.


                                      -17-
<PAGE>

         7.4 In the event that the Company has not obtained financing (or
otherwise obtained net assets) in excess of two million dollars ($2,000,000)
within one (1) year from the date hereof, then the Licensor at his option may
terminate this Agreement upon ten (10) days notice to the Company. If so
terminated (a) the Company shall return to the Licensor all documents,
equipment, tangible information or other items relating to the Ketamine
Technology and shall no longer have any right, title or interest therein and (b)
the Company shall repurchase any shares of Common Stock issued to the Licensor,
Herbert Brotspies and/or Calgar and Associates pursuant the Stockholders
Agreement at a price per share equal to $.00l.

         7.5 The Company shall have the right at any time to terminate this
Agreement in whole or as to any portion of the Patent Rights by giving sixty
(60) days notice thereof in writing to the Licensor.

         7.6 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination or obligations under Articles 5,
8, 9, 10, 15 and 16. The Company and/or any sublicensee thereof may, however, at
any time after the effective date of such termination and continuing for a
period not to exceed six (6) months thereafter, sell all completed Licensed
Products, and any Licensed Products in the process of manufacture at the time of
such termination, and sell the same, provided that the Company shall pay or
cause to be paid to the Licensor the royalties thereon as required by Article 4
of this License Agreement and shall submit the reports required by Article 5
hereof on the sales of Licensed Products.




                                      -18-
<PAGE>

         7.7 If not terminated sooner, this Agreement shall terminate on the
date of the last to expire claim contained in the Patent Rights.

         7.8 Upon termination of this Agreement, except pursuant to 7.7 hereof,
the Company shall have no future rights to the Patent Rights and Know-how
granted hereunder, and shall make no further use thereof, including the
manufacture, use or sale of Licensed Products or Licensed Processes, except as
otherwise set forth herein.



                             ARTICLE 8 - ARBITRATION

         8.1 Any dispute arising from or relating to this Agreement shall be
determined before a tribunal of three (3) arbitrators in New York, New York in
accordance with the rules of the American Arbitration Association. One
arbitrator shall be selected by the Licensor, one arbitrator shall be selected
by the Company and the third arbitrator shall be selected by mutual agreement of
the first two arbitrators.

         8.2 Any claim, dispute, or controversy concerning the validity,
enforceability, or infringement of any patent contained in the Patent Rights
licensed hereunder shall be resolved in court having jurisdiction thereof.

         8.3 In the event that, in any arbitration proceeding, any issue shall
arise concerning the validity, enforceability, or infringement of any patent
contained in the Patent Rights licensed hereunder, the arbitrators shall, to the
extent possible, resolve all issues other than validity, enforceability, and
infringement; in any event, the arbitrators shall not delay the arbitration
proceeding for the purpose of obtaining or permitting either party to obtain
judicial resolution of such issues, unless an order staying the arbitration
proceeding shall be entered by a court of competent jurisdiction. Neither party
shall raise any issue concerning the validity, enforceability, or infringement
of any patent contained in the Patent Rights licensed hereunder, in any
proceeding to enforce any arbitration award hereunder, or in any proceeding
otherwise arising out of any such arbitration award.


                                      -19-
<PAGE>

         8.4 The costs of such arbitration shall be borne proportionate to the
finding of fault as determined by the Arbitrator. Judgment on the arbitration
award may be entered by any court of competent jurisdiction.



                   ARTICLE 9 - INFRINGEMENT AND OTHER ACTIONS

         9.1 The Company and the Licensor shall promptly provide written notice,
to the other party, of any alleged infringement by a third party of the Patent
Rights and provide such other party with any available evidence of such
infringement.

         9.2 During the term of this Agreement, the Company shall have the
right, but not the obligation, to prosecute and/or defend, at its own expense
and utilizing counsel of its choice, any infringement of, and/or challenge to,
the Patent Rights. In furtherance of such right, the Licensor hereby agrees that
the Company may join the Licensor as a party in any such suit, without expense
to the Licensor. No settlement, consent judgment or other voluntary final
disposition of any such suit which would adversely affect the rights of the
Licensor may be entered into without the consent of the Licensor, which consent
shall not be unreasonably withheld. The Company shall indemnify and hold the
Licensor harmless against any costs, expenses or liability that may be found or
assessed against the Licensor in any such suit other than resulting from the
Licensor's gross negligence, recklessness or wilful misconduct.


                                      -20-
<PAGE>

         9.3 In the event that a claim or suit is asserted or brought against
the Company alleging that the manufacture or sale of any Licensed Product by the
Company, an Affiliate of the Company, or any sublicensee, or the use of such
Licensed Product by any customer of any of the foregoing, infringes proprietary
rights of a third party, the Company shall give written notice thereof to the
Licensor. The Company may, in its sole discretion, modify such Licensed Product
to avoid such infringement and/or may settle on terms that it deems advisable in
its sole discretion, subject to paragraph 9.2. Otherwise, the Company shall have
the right, but not the obligation, to defend any such claim or suit. In the
event the Company elects not to defend such suit, the Licensor shall have the
right, but not the obligation to do so at its sole expense.

         9.4 Any recovery of damages by the Company, in any such suit, shall be
applied first in satisfaction of any unreimbursed expenses and legal fees of the
Company relating to the suit and then to the Licensor for any royalties credited
in accordance with paragraph 9.4. The balance remaining from any such recovery
shall be treated as royalties received by the Company from sublicensees and
shared by the Licensor and the Company eighty percent (80%) to the Company and
twenty percent (20%) to the Licensor.

         9.5 The Company may credit up to fifty percent (50%) of any reasonable
litigation costs incurred by the Company in any country pursuant to this Article
9 and up to 50% of all amounts paid in judgement or settlement of litigation
within this Article 9 scope of against royalties thereafter payable to the
Licensor hereunder for such country and apply the same toward one-half of its
actual, reasonable out-of-pocket litigation costs. If one-half of such
litigation costs in such country exceeds 50% of royalties payable to the
Licensor in any year in which such costs are incurred than the amount of such
costs, expenses and amounts paid in judgement or settlement, in excess of such
50% of the royalties payable shall be carried over and credited against royalty
payments in future years for such country.



                                      -21-
<PAGE>

         9.6 If within ninety (90) days from receipt of notice by the Company of
any alleged infringement, the Company shall have been unsuccessful in persuading
the alleged infringer to desist, or shall not have brought and shall not be
diligently prosecuting an infringement action, or if the Company shall notify
the Licensor, at any time prior thereto, of its intention not to bring suit
against the alleged infringer, then, and in those events only, the Licensor
shall have the right, but not the obligation, to prosecute, at its own expense
and utilizing counsel of its choice, any infringement of the Patent Rights, and
the Licensor may, for such purposes, join the Company as a party plaintiff. The
total cost of any such infringement action commenced solely by the Licensor
shall be borne by the Licensor and the Licensor shall keep any recovery or
damages for infringement or otherwise derived therefrom and such shall not be
applicable to any royalty obligation of the Company.

         9.7 In any suit to enforce and/or defend the Patent Rights pursuant to
this License Agreement, the party not in control of such suit shall, at the
request and expense of the controlling party, cooperate in all respects and, to
the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.


                                      -22-

<PAGE>

                 ARTICLE 10 - LIMITATION OF LIABILITY, INDEMNITY

         10.1 Other than as set forth in Article 2 hereof, the Licensor, by this
License Agreement, makes no representations or warranties as to the validity
and/or breadth of the inventions contained in the Patent Rights and the Company
so acknowledges. Other than as set forth in Article 2, the Licensor, by this
License Agreement makes no representations or warranties as to patents now held
or which will be held by others in the field of the Licensed Products and/or
Licensed Processes for a particular purpose.

         10.2 EXCEPT AS MAY BE EXPRESSLY PROVIDED HEREIN, THE LICENSOR DOES NOT
MAKE, AND EXPRESSLY DISCLAIMS ANY WARRANTIES, EITHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

         10.3 The Company agrees to defend, indemnify and hold the Licensor
harmless from and against all liability, demands, damages, including without
limitation, expenses or losses including death, personal injury, illness or
property damage (each a "Claim") arising directly or indirectly: (a) out of use
by the Company or its transferees of inventions licensed or information
furnished under this License Agreement or (b) out of any use, sale or other
disposition by the Company or its transferees of Patent Rights, Licensed
Products or Licensed Processes, except to the extent, in each such case, that
such Claim results from or arises out of the Licensor's gross negligence,
recklessness or wilful misconduct. The Company agrees that any sublicense
agreement it enters relative to the Licensed Products and/or Licensed Processes
shall contain a covenant by such sublicensee providing for the indemnification
of the Licensor as provided in this Article.


                                      -23-
<PAGE>

         10.4 (a) The Company shall obtain and carry in full force and effect
commercial, general liability insurance, at such time when the Company has
developed Licensed Products for sale, which shall protect the Company and the
Licensor with respect to events covered by paragraph 10.3 above. Such insurance
shall be written by a reputable insurance company, shall list the Licensor as an
additional named insured thereunder, shall be endorsed to include product
liability coverage and shall require thirty (30) days written notice to be given
to the Licensor prior to any cancellation or material change thereof. The limits
of such insurance shall not be less than two million dollars ($2,000,000) per
occurrence with an aggregate of five million dollars ($5,000,000) for personal
injury or death, and one million dollars ($1,000,000) per occurrence with an
aggregate of three million dollars ($3,000,000) for property damage. The Company
shall provide the Licensor with Certificates of Insurance evidencing the same.

         (b) Notwithstanding the foregoing, if the requirements of this
paragraph 10.4 are not consistent with general industry norms or good business
practices at the time, the Licensor agrees to negotiate in good faith to modify
this paragraph 10.4; provided, however, that if the Company, using good-faith
reasonable efforts, cannot obtain the insurance required by this paragraph 10.4
at rates that are prudent given the Company's financial position as determined
by the Board of Directors of the Company at the time such insurance is required
then the Licensor agrees to waive the requirements of this paragraph 10.4 until
a determination by the Board of Directors of the Company that the Company's
financial position permits it to obtain the insurance required by this paragraph
10.4.



                                      -24-
<PAGE>

                             ARTICLE 11 - ASSIGNMENT

         This Agreement and the rights and duties appertaining hereto may not be
assigned by either party without first obtaining the written consent of the
other, which Consent shall not be unreasonably withheld. Any such purported
assignment, without the written consent of the other party, shall be null and of
no effect. Notwithstanding the foregoing, the Company may assign this Agreement
(i) to a purchaser, merging or consolidating corporation, or acquiror of
substantially all of the Company's assets or business and/or pursuant to any
reorganization qualifying under section 368 of the Internal Revenue Code of 1986
as amended, as may be in effect at such time, or (ii) to an Affiliate of the
Company subject to the consent of the Licensor which consent shall not be
unreasonably withheld.



                    ARTICLE 12 - PAYMENT OF FEES AND EXPENSES

                  Each of the Company and the Licensor shall be responsible for
their own expenses relating to the preparation and consummation of this
Agreement and the agreements and transactions contemplated hereby.




                                      -25-
<PAGE>

                    ARTICLE 13 - USE OF NAMES AND PUBLICATION

         13.1 Nothing contained in this Agreement shall be construed as granting
any right to the Company or its Affiliates to use in advertising, publicity, or
other promotional activities any name, trade name, trademark, or other
designation of the Licensor or any of its units (including contraction,
abbreviation or simulation of any of the foregoing) without the prior, written
consent of the Licensor; provided, however, that the Licensor acknowledges and
agrees that the Company may use the name of the Licensor in various documents
used by the Company for capital raising and financing without such prior written
consent where the use of such names may be required by law. The Company agrees
to promptly provide the Licensor with a copy of any documents used by the
Company, which contain the name of the Licensor. The Licensor may act as a
consultant and scientific advisor to the Company with respect to the licenses
granted to the Company hereunder, subject to the policies, if any, of the
Licensor.

         13.2 Nothing herein shall be deemed to establish a relationship of
principal and agent between the Licensor and the Company, nor any of their
agents or employees for any purpose whatsoever. This Agreement shall not be
construed as creating a partnership between the Licensor and the Company, or as
creating any other form of legal association or arrangement which would impose
liability upon one party for the act or failure to act of the other party.

         13.3 In the event that the Licensor desires to publish or disclose, by
written, oral or other presentation, Know-how, Patent Rights, or any material
information related thereto then the Licensor shall notify the Company in
writing by facsimile where confirmed by the receiving party, and/or by certified
or registered mail (return receipt requested) of its intention at least sixty
(60) days prior to any speech, lecture or other oral presentation and at least
sixty (60) days before any written or other publication or disclosure. The
Licensor shall include with such notice a description of any proposed oral
presentation or, in any proposed written or other disclosure, a current draft of
such proposed disclosure or abstract. The Company may request that the Licensor,
no later than thirty (30) days following the receipt of such notice, delay such
presentation, publication or disclosure in order to enable the Company to file,
or have filed on their behalf, a patent application, copyright or other
appropriate form of intellectual property protection related to the information
to be disclosed or request that the Licensor does so. Upon receipt of such
request to delay such presentation, publication or disclosure, the Licensor
shall arrange for a delay of such presentation, publication or disclosure until
the earlier to occur of (a) to ninety (90) days and (b) such time as the Company
or the Licensor has filed, or has had filed on its behalf, such patent
application, copyright or other appropriate form of intellectual property
protection in form and in substance reasonably satisfactory to the Company and
the Licensor. If the Licensor does not receive any such request from the Company
to delay such presentation, publication or disclosure, the Licensor may submit
such material for presentation, publication or other form of disclosure.


                                      -26-
<PAGE>

             ARTICLE 14 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

                  Any payment, notice or other communication required or
permitted to be given pursuant to this Agreement shall be in writing and sent by
certified first class mail, postage prepaid, by hand delivery or by facsimile if
confirmed in writing, in each case effective upon receipt, at the addresses
below or as otherwise designated by written notice given to the other party:

                   In the case of the Licensor:

                            Stuart L. Weg, M.D.
                            ***
                            ***
                            Tel:     ***
                            Fax:     ***

                   In the case of the Company:

                            Pain Management, Inc.
                            c/o Paramount Capital Investment, LLC
                            787 Seventh Avenue, 48th Floor
                            New York, New York 10019
                            Tel:     212-554-4350
                            Fax:     212-554-4355
                            Attn:    Michael S. Weiss

                              15 - CONFIDENTIALITY

         15.1 Any proprietary or confidential information relating to the
Ketamine Technology (including but not limited to Know-how and patent
prosecution documents relating to Patent Rights) collectively constitute the
"Confidential Information." The Company and the Licensor agree that they will
not use the Confidential Information for any purpose unrelated to this Agreement
or the Research Agreement, and will hold it in confidence during the term of
this Agreement and for a period of five (5) years after the termination or
expiration date of this Agreement. The Company and the Licensor shall exercise
with respect to such the Confidential Information the same degree of care as the
Company and the Licensor exercise with respect to their own confidential or
proprietary information of a similar nature, and shall not disclose it or permit
its disclosure to any third party (except to those of its employees,
consultants, or agents who are bound by the same obligation of confidentiality
as the Company of the Licensor is bound by pursuant to this Agreement). However,
such undertaking of confidentiality by the Company or the Licensor shall not
apply to any information or data which:

*** Represents material which has been omitted pursuant to an Application for
    Order Granting Confidential Treatment and filed separately with the
    Commission.


                                      -27-
<PAGE>

            15.1.1 The receiving party receives at any time from a third party
lawfully in possession of same and having the right to disclose same.

            15.1.2 Is, as of the date of this Agreement, in the public domain,
or subsequently enters the public domain through no fault of the receiving
party.

            15.1.3 Is independently developed by the receiving party as
demonstrated by written evidence without reference to information disclosed to
the receiving party.

            15.1.4 Is disclosed pursuant to the prior written approval of the
disclosing party.

            15.1.5 Is required to be disclosed pursuant to law or legal process
(including, without limitation, to a governmental authority) provided, in the
case of disclosure pursuant to legal process, reasonable notice of the impending
disclosure is provided to the disclosing party and disclosing party has agreed
to such disclosure in writing or has exhausted its right to contest such
disclosure.




                                      -28-
<PAGE>

                      ARTICLE 16 - MISCELLANEOUS PROVISIONS

         16.1 This License Agreement shall be construed, governed, interpreted
and applied in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws.

         16.2 If this Agreement or any associated transaction is required by the
law of any nation to be either approved or registered with any governmental
agency, the Company shall assume all legal obligations to do so and the costs in
connection therewith.

         16.3 The Company shall observe all applicable United States and foreign
laws with respect to the use, sale manufacture and transfer of Licensed Products
and related technical data to foreign countries, including, without limitation,
the regulations of the Food and Drug Administration and its foreign equivalents,
the International Traffic in Arms Regulations (ITAR), the Export Administration
Regulations.

         16.4 The parties hereto acknowledge that this Agreement, including the
Appendices and documents incorporated by reference, sets forth the entire
agreement and understanding of the parties hereto as to the subject matter
hereof, and shall not be subject to any change of modification except by the
execution of a written instrument subscribed to by the parties hereto.

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


                                      -29-
<PAGE>

         16.6 The failure of either party to assert a right hereunder or to
insist upon compliance with any term or condition of this License Agreement
shall not constitute a waiver of that right or excuse a similar subsequent
failure to perform any such term or condition by the other party.

         16.7 The headings of the several articles are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.

         16.8 This Agreement will not be binding upon the parties until it has
been signed below on behalf of each party, in which event, it shall be effective
as of the date recited on page one.

         16.9 This Agreement embodies the entire understanding of the parties
and shall supersede all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof.

         16.10 Each party hereto shall be excused from any breach of this
Agreement which is proximately caused by governmental regulation, act of war,
strike, act of God or other similar circumstance normally deemed outside the
control of the parties.


                                      -30-
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
License Agreement, in triplicate by proper persons thereunto duly authorized.


PAIN MANAGEMENT, INC.                                       LICENSOR

By: ____________________                          By: ______________________

Name:      Michael S. Weiss                       Name: Stuart Weg, M.D.
           ----------------                             ----------------
Title:     Sole Director                          Date: February 24, 1998
           -------------                                -----------------
Date:      February 25, 1998
           -----------------


                                      -31-
<PAGE>

                                   APPENDIX I



1. United States Patent Applications USSN ***, entitled "Nasal Administration
   of Ketamine to Manage Pain."

2. United States Patent Applications USSN ***, entitled "Nasal Administration
   of Ketamine to Manage Pain and Reduce Drug Dependency."



*** Represents material which has been omitted pursuant to an Application for
    Order Granting Confidential Treatment and filed separately with the
    Commission.

                                      -32-
<PAGE>

                                    EXHIBIT A

                         PERFORMANCE MILESTONE PAYMENTS



To ensure that the Company is diligently pursuing the development and
commercialization of the Licensed Products and Licensed Processes, in further
consideration of the license and options granted herein, the Company shall make
the following payments (the "Milestone Payments") in accordance with the
following schedule:

<TABLE>
<CAPTION>
           MILESTONE                                 AMOUNT                                DATE
<S>                                                  <C>                    <C>
   Investigative New Drug (IND)                                                 *** (***) Months following
        Application Filing                          $***                            the Effective Date

  Completion of First Clinical
  Trial Pursuant to a Company                                                  *** (***) Months following
         sponsored IND                               $***                          the Effective Date

  Commencement of Phase II/III                                                       *** (***) Months
   Phase III pivotal trial (1)                      $***                         following the Effective Date

   New Drug Application (NDA)                                                   *** (***) Months From the
          Filing (1),(2)                            $***                               Effective Date

                                                                                      *** (***) Months
                                                                                   following execution the
       NDA Approval (1),(2)                         $***                               Effective Date

                                                                                   *** (***) Months from
     First Commercial Sale (1),(2)                  $***                             the Effective Date
</TABLE>

         (1) Payable in cash or equity at the discretion of the Company. The
Company shall only be entitled to make payments in equity if the Company is a
publicly traded company. Any equity payments payable hereunder shall be priced
at the average closing price of the common stock of the Company for the ten (10)
consecutive trading days immediately preceding the date of achievement of any
such milestone or the date upon which any such payment becomes due, whichever is
earlier.


         (2) *** percent (***%) of such Milestone Payment shall be creditable
against royalties earned pursuant to articles 4.3 and/or 4.4; provided, however,
that in no event shall royalties earned pursuant to articles 4.3 and/or 4.4 be
reduced by more than *** percent (***%) in any applicable semi-annual period.

*** Represents material which has been omitted pursuant to an Application for
    Order Granting Confidential Treatment and filed separately with the
    Commission.



                                      -33-
<PAGE>

Any Milestone Payments made in accordance with the above shall be distributed as
follows: (a) eighty-five percent (85%) to the Licensor; (c) seven and one-half
percent (7.5 %) to Herbert Brotspies and (c) seven and one-half percent (7.5 %)
to Calgar and Associates.


                                      -34-

<PAGE>

                                   SCHEDULE A

For each twenty-five thousand dollar ($25,000) payment described in paragraph
6.1 hereof, payment shall be made as follows:

                  Stuart Weg, M.D.                            $21,250.00

                  Herbert Brotspies                           $ 1,875.00

                  Calgar & Asociates                          $ 1,875.00




                                      -35-