EXHIBIT 10.1

***Confidential  treatment has been requested for portions of this exhibit.  The
copy  filed  herewith  omits  the  information  subject  to the  confidentiality
request.  Omissions are designated as [***]. A complete  version of this exhibit
has been filed separately with the Securities and Exchange Commission.


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EXECUTION COPY


                       EXCLUSIVE LICENSE, DEVELOPMENT AND
                           COMMERCIALIZATION AGREEMENT

                                 BY AND BETWEEN

                        MSD WARWICK (MANUFACTURING) LTD.

                                       AND

                            DOV PHARMACEUTICAL, INC.


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         EXCLUSIVE LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

      THIS AGREEMENT  (including all exhibits,  schedules and other attachments,
this  "Agreement"),  effective as of the Closing Date  (defined  below),  by and
between MSD WARWICK  (MANUFACTURING)  LTD., a corporation organized and existing
under the laws of Bermuda  ("MERCK"),  with a  principal  place of  business  at
Chesney   House,   96  Pitts  Bay  Road,   Pembroke  HM  08,   Bermuda  and  DOV
Pharmaceutical,  Inc., a corporation  organized  and existing  under the laws of
Delaware,  with  a  principal  place  of  business  at  433  Hackensack  Avenue,
Hackensack, NJ 07601 ("DOV").

                                    RECITALS:

      WHEREAS,  DOV has developed DOV Know-How (as hereinafter  defined) and has
rights to DOV Patent Rights (as hereinafter defined); and

      WHEREAS, MERCK and DOV desire to enter into a collaboration to develop the
Compound  (as  hereinafter  defined)  upon the  terms and  conditions  set forth
herein; and

      WHEREAS, MERCK desires to obtain a license under the DOV Patent Rights and
DOV Know-How,  upon the terms and conditions set forth herein and DOV desires to
grant such a license; and

      WHEREAS,  MERCK  desires to obtain a right of first  refusal to obtain the
rights to develop DOV 102,677 for the  treatment  and/or  prevention  of anxiety
and/or depression;

      NOW, THEREFORE,  in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:

1.    DEFINITIONS

      Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural,  shall have the respective  meanings set
forth below:

1.1   "ACT" shall mean, as applicable,  the United States Federal Food, Drug and
      Cosmetic  Act,  21 U.S.C.  ss.ss.  301 et seq.,  and/or the Public  Health
      Service  Act, 42 U.S.C.  ss.ss.  262 et seq.,  as such may be amended from
      time to time.

1.2   "AFFILIATE"  shall mean, in relation to a Party, any corporation or entity
      that,  directly  or  indirectly  owns,  is  owned  by or is  under  common
      ownership with such Party. For purposes of this definition, the term "own"
      (as used in the terms  "owns,"  "owned by" and "under  common  ownership")
      means direct or indirect  beneficial  or legal  ownership of fifty percent
      (50%) or more of the voting interest in, or fifty percent (50%) or more of
      the equity of or the right to appoint  fifty  percent (50%) or more of the
      directors or managers of that  corporation or other business entity or the
      power to direct or cause the direction of the  management  and policies of
      such  corporation or entity,  whether  pursuant to the ownership of voting
      securities, by contract or otherwise.


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1.3   "ASYMMETRIC PROCESS" shall mean, (i) with regard to the manufacture of DOV
      21,947 , a process whereby no significant amount of DOV 102,677 is created
      and (ii) with regard to the manufacture of DOV 102,677,  a process whereby
      no significant amount of DOV 21,947 is created.

1.4   "BANKRUPTCY EVENT" is defined in Section 9.3.2.

1.5   "CALENDAR  QUARTER"  shall  mean  the  respective  periods  of  three  (3)
      consecutive  calendar months ending on March 31, June 30, September 30 and
      December 31.

1.6   "CALENDAR  YEAR" shall mean each  successive  period of twelve (12) months
      commencing on January 1 and ending on December 31.

1.7   "CHANGE OF CONTROL" is defined in Section 12.2.

1.8   "CLINICAL  TRIAL" shall mean a Phase I Clinical  Trial,  Phase II Clinical
      Trial, Phase III Clinical Trial and/or Phase IV Clinical Trial.

1.9   "CLOSING DATE" shall mean the date upon which the HSR Conditions have been
      met.

1.10  "COLLABORATION  TERM"  shall mean the  duration of the  Collaboration,  as
      described more fully in Section 2.7.

1.11  "COLLABORATION" shall mean the activities undertaken by the Parties hereto
      as set forth in Article 2.

1.12  "COMBINATION  DRUG" shall mean a Product that  includes one or more active
      ingredients  other  than  Compound  in  combination  with  Compound.   All
      references  to  Product  in this  Agreement  shall be  deemed  to  include
      Combination Drug.

1.13  "COMMERCIALLY  REASONABLE  EFFORTS" shall mean with respect to the efforts
      to be  expended  by a Party  with  respect to any  objective,  reasonable,
      diligent,  good faith efforts to accomplish  such  objective as such Party
      would  normally  use to  accomplish  a  similar  objective  under  similar
      circumstances,  it being  understood  and agreed that with  respect to the
      research,  development or commercialization  of Compound or Product,  such
      efforts shall be  substantially  equivalent to those efforts and resources
      commonly used by a Party for a similar  pharmaceutical product owned by it
      or to which it has  rights,  which  product  is at a similar  stage in its
      development or product life and is of similar market potential taking into
      account  efficacy,  safety,  approved  labeling,  the  competitiveness  of
      alternative products in the marketplace,  the patent and other proprietary
      position of the product,  the likelihood of regulatory  approval given the
      Regulatory Authority involved,  the profitability of the product including
      the  royalties  payable  to  licensors  of  patent  or other  intellectual
      property  rights,   alternative   products  and  other  relevant  factors.
      Expenditures  by MERCK for development of the Product or Compound that are
      comparable to expenditures by MERCK for similar products or compounds at a
      similar  commercial  value and stage of  development  shall be evidence of
      Commercially Reasonable Efforts.  Commercially Reasonable Efforts shall be
      determined on a market-by-market and Indication-by-Indication  basis for a
      particular  Compound or Product,  and it is anticipated  that the level of
      effort will be different for different markets, and will change over time,
      reflecting  changes  in  the  status  of the  Product  and  the  market(s)
      involved.  The  royalties  and other  payments made or required to be made
      hereunder or under the Wyeth Agreement shall not be factors in determining
      whether  a Party has used  Commercially  Reasonable  Efforts,  (that is, a
      Party may not apply lesser resources or efforts in support of a Product or
      Compound because such Product or Compound is subject to a royalty on sales
      or to any other payments under this Agreement or the Wyeth Agreement).

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1.14  "COMMITTEE"  shall mean the joint  development  committee  established  to
      facilitate the Collaboration, as more fully described in Section 2.3.1.

1.15  "COMPOUND"  shall mean DOV 21,947,  and/or DOV 216,303.  For  avoidance of
      doubt, "Compound" does not include DOV 102,677.

1.16  "CONFIDENTIAL  INFORMATION" shall mean any Information disclosed by either
      Party that such Party has either marked as confidential or proprietary, or
      has identified in writing as  confidential  or  proprietary  within thirty
      (30) days of  disclosure  to the other  Party ;  provided,  however,  that
      (subject  in all cases to Article 4 below,  including  without  limitation
      Sections  4.2 and  4.4)  information  regarding  the  Collaboration,  or a
      disclosing Party's business plans, strategies, technology,  manufacturing,
      research  and  development,  and  products  or  services  shall be  deemed
      Confidential  Information of the disclosing Party even if not so marked or
      identified.

1.17  "CONTROL",  "CONTROLS" OR "CONTROLLED  BY" shall mean, with respect to any
      item of or right  under DOV Patent  Rights,  DOV  Know-How,  MERCK  Patent
      Rights,  MERCK Know-How or MERCK Termination  Know-How,  the possession of
      (whether by ownership or license,  other than pursuant to this Agreement),
      or the ability of a Party and/or its Controlled Affiliates to grant access
      to, or a license or  sublicense  of,  such item or right as  provided  for
      herein without  violating the terms of any agreement or other  arrangement
      with any Third  Party  existing  at the time such Party  would be required
      hereunder  to grant the other Party such access or license or  sublicense.
      For avoidance of doubt,  intellectual  property rights that are Controlled
      by a Controlled  Affiliate of a Party shall be deemed to be  Controlled by
      such Party.

1.18  "CONTROLLED AFFILIATE" shall mean, in relation to a Party, any corporation
      or entity that,  directly or indirectly  controls,  is controlled by or is
      under common control with such Party. For purposes of this definition, the
      term  "control"  (as used in the  terms  "controls,"  "controlled  by" and
      "under  common  control")  means  direct or indirect  beneficial  or legal
      ownership of more than fifty percent  (50%) of the voting  interest in, or
      more than  fifty  percent  (50%) of the  equity of or the right to appoint
      more  than  fifty  percent  (50%) of the  directors  or  managers  of that
      corporation or other  business  entity or the power to direct or cause the
      direction of the  management  and policies of such  corporation or entity,
      whether  pursuant to the  ownership of voting  securities,  by contract or
      otherwise.

1.19  "CO-PROMOTION  AGREEMENT" shall have the meaning provided for in paragraph
      2 of Schedule 3.7.

1.20  "CRO" is defined in Section 2.2.1 hereof.

1.21  "DDMAC" shall mean the United States Food and Drug Administration Division
      of Drug Marketing, Advertising, and Communications.

1.22  "DETAIL" shall mean a product presentation in a face-to-face meeting in an
      individual  or  group  practice  setting  between  a  professional   sales
      representative  and a Target  Prescriber  in which one or more key product
      benefits are verbally  presented in a balanced  manner.  For  avoidance of
      doubt,  a Detail does not include a reminder or sample  drop.  "Detailing"
      shall mean the act of presenting a Detail.

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1.23  "DOV   21,947"   shall  mean  the   compound   having  a   chemical   name
      (+)-1-(3,4-dichlorophenyl)-3-azabicyclo[3.1.0]hexane,     including    all
      solvates, Prodrugs, salts and polymorphs thereof.

1.24  "DOV   102,677"   shall  mean  the   compound   having  a  chemical   name
      (-)-1-(3,4-dichlorophenyl)-3-azabicyclo[3.1.0]hexane,     including    all
      solvates, Prodrugs, salts and polymorphs thereof.

1.25  "DOV   216,303"   shall  mean  the   compound   having  a  chemical   name
      (+)-1-(3,4-dichlorophenyl)-3-azabicyclo[3.1.0]hexane,     including    all
      solvates, Prodrugs, salts and polymorphs thereof.

1.26  "DOV INFORMATION AND INVENTIONS" shall mean all protocols, formulas, data,
      Inventions, know-how and trade secrets, patentable or otherwise, resulting
      from the Collaboration developed or invented solely by employees of DOV or
      other persons not employed by MERCK acting on behalf of DOV.

1.27  "DOV KNOW-HOW" shall mean all information and materials, including but not
      limited  to  discoveries,  improvements,  processes,  methods,  protocols,
      formulas,  data  (including  data and results from  research,  preclinical
      development and Clinical Trials), inventions (including without limitation
      DOV  Information  and  Inventions  and DOV's and/or any of its  Controlled
      Affiliates'  rights in Joint  Information  and  Inventions),  know-how and
      trade  secrets,  patentable or otherwise,  which (i) are Controlled by DOV
      and/or any of its  Controlled  Affiliates as of the Closing Date or become
      Controlled by DOV and/or its Controlled Affiliates during the term of this
      Agreement,  (ii) are not generally known and (iii) are necessary or useful
      to  MERCK  in  connection   with  the   Collaboration   or  the  research,
      development, manufacture, marketing, use or sale of Compound or Product in
      the Territory, excluding, however, any MERCK Know-How.

1.28  "DOV PATENT RIGHTS" shall mean any and all Patent Rights Controlled by DOV
      or its Controlled  Affiliates as of the Closing Date or become  Controlled
      by DOV and/or its Controlled  Affiliates during the term of this Agreement
      that (i) would be practiced by the manufacture,  use, sale, offer for sale
      or  importation  of  Compound  or  Product;  or (ii)  claim or  cover  DOV
      Information  and Inventions,  including,  but not limited to, those Patent
      Rights listed on Schedule 1.28.

1.29  "DRUG   DEVELOPMENT   PLAN"  shall  mean  the   preclinical  and  clinical
      development  plan for Compound(s) and Product(s),  developed in accordance
      with the Collaboration as described in Article 2.

1.30  "EMEA"  shall mean the  European  Agency for the  Evaluation  of Medicinal
      Products (a cross-national Regulatory Authority in the European Union) and
      any  successor   Governmental  Authority  having  substantially  the  same
      function.

1.31  "EXECUTION DATE" shall mean the date of last execution by both Parties.

1.32  "FDA" shall mean the United States Food and Drug  Administration,  and any
      successor Governmental Authority having substantially the same function.

1.33  "FIELD"  shall mean (i) in the case of DOV  21,947,  the use of DOV 21,947
      and/or pharmaceutical preparations in final form containing DOV 21,947 for
      the  treatment  and/or  prevention  and/or  diagnosis  of diseases  and/or
      medical conditions in humans and/or animals; and (ii) in the case of

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      DOV 216,303, the use of DOV 216,303 and/or pharmaceutical  preparations in
      final form  containing  DOV 216,303 for the  treatment  and/or  prevention
      and/or  diagnosis of  depression,  anxiety or  addiction in humans  and/or
      animals.

1.34  "FILING" of an NDA shall mean the acceptance by a Regulatory  Authority of
      an NDA for filing.

1.35  "FIRST COMMERCIAL SALE" shall mean, with respect to any Product, the first
      sale by  MERCK  or a  Related  Party  for end use or  consumption  of such
      Product in a country,  excluding,  however, any sale or other distribution
      for use in a Clinical Trial.

1.36  "FIRST POSITION DETAIL" shall mean a Detail where key product messages and
      benefits are  presented  in the first  position and at least [***]% of the
      time available is spent on this presentation.

1.37  "GLP" or "GOOD LABORATORY PRACTICE" shall mean the applicable then-current
      standards for laboratory activities for pharmaceuticals or biologicals, as
      set forth in the Act and any regulations or guidance documents promulgated
      thereunder,  as  amended  from  time to time,  together  with any  similar
      standards of good  laboratory  practice as are required by any  Regulatory
      Authority in the Territory.

1.38  "GMP"  OR  "GOOD   MANUFACTURING   PRACTICE"  shall  mean  the  applicable
      then-current standards for United States Good Manufacturing  Practices, as
      specified  in the  United  States  Code  of  Federal  Regulations  and any
      regulations or guidance documents promulgated thereunder,  as amended from
      time to time,  together with any similar  standards of good  manufacturing
      practice as are required by any Regulatory Authority in the Territory.

1.39  "GOVERNMENTAL  AUTHORITY" means any government,  any governmental  entity,
      department,  commission, board, agency or instrumentality,  and any court,
      tribunal or judicial or arbitral body,  whether  federal,  state or local,
      including, without limitation, the U.S. Federal Trade Commission.

1.40  "HSR ACT" means the Hart-Scott-Rodino  Antitrust Improvements Act of 1974,
      as amended, 15 U.S.C. ss.18A.

1.41  "HSR  CLEARANCE  DATE" means the  earliest  date on which both  Parties or
      their  Controlled  Affiliates  have actual  knowledge  that all applicable
      waiting  periods  under  the  HSR Act  with  respect  to the  transactions
      contemplated hereunder have expired or have been terminated.

1.42  "HSR CONDITIONS" shall have the meaning provided in Section 11.2.

1.43  "HSR FILING" means filings by MERCK or its  Controlled  Affiliates and DOV
      with the United States Federal Trade Commission and the Antitrust Division
      of the United States  Department of Justice of a  Notification  and Report
      Form for Certain Mergers and  Acquisitions (as that term is defined in the
      HSR Act) with respect to the matters set forth in this Agreement, together
      with all required documentary attachments thereto.

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1.44  "IND" shall mean an investigational  new drug application,  clinical study
      application,   clinical  trial  exemption,   or  similar   application  or
      submission  for approval to conduct human  clinical  investigations  filed
      with or  submitted  to a  Regulatory  Authority  in  conformance  with the
      requirements of such Regulatory Authority.

1.45  "INDICATION"  shall  mean  the  primary  prophylactic  and/or  therapeutic
      purpose for which a Product is  developed  specifically  directed  towards
      obtaining  Regulatory  Approval  for use of such  Product  pursuant  to an
      approved  label  claim.  A single  Indication  shall  include  the primary
      disease and variants or sub-divisions or  sub-classifications  within such
      primary disease.  For example,  for purposes of this Agreement,  treatment
      and/or  prevention  of  anxiety  is a single  Indication;  treatment  of a
      particular  phobia  would be  treated as a  sub-classification  within the
      single  Indication  of  anxiety.  Treatment  and  prophylaxis  of the same
      general  psychiatric  disorder  (e.g.  anxiety)  as  defined by the DSM-IV
      (i.e.,  Diagnosis  and  Statistical  Manual)  shall be treated as the same
      Indication.  However,  treatment of depression shall be deemed a different
      Indication from treatment of anxiety.

1.46  "INFORMATION"  shall  mean any and all  information  and  data,  including
      without  limitation all MERCK Know-How,  MERCK Termination  Know-How,  DOV
      Know-How,  and all other scientific,  preclinical,  clinical,  regulatory,
      manufacturing,  marketing,  financial and commercial  information or data,
      whether  communicated in writing or orally or by any other method, that is
      provided by one Party (or such Party's Controlled Affiliates) to the other
      Party in connection with this Agreement.

1.47  "INITIATES"   shall  mean,   with  respect  to  a  Clinical   Trial,   the
      administration of the first dose to a patient in such Clinical Trial.

1.48  "INVENTION" shall mean any process, method, composition of matter, article
      of manufacture,  discovery or finding that is (i) conceived as a result of
      the Collaboration; or (ii) is conceived as a result of the practice of DOV
      Patent Rights during or after the term of the Collaboration.

1.49  "JOINT  INFORMATION  AND INVENTIONS"  shall mean all protocols,  formulas,
      data,  Inventions,  know-how and trade  secrets,  patentable or otherwise,
      resulting from  collaborative  activities  occurring  prior to the Closing
      Date, or during the  Collaboration  or resulting  from the practice of the
      DOV Patent Rights during or after the term of the Collaboration  developed
      or  invented  jointly by  employees  of MERCK and DOV or others  acting on
      behalf of MERCK and DOV.

1.50  "JOINT  PATENT  RIGHTS" shall mean any and all Patent Rights that claim or
      cover any Joint Information or Inventions.

1.51  "LAUNCH  DATE" shall mean the date  subsequent  to receiving the necessary
      Regulatory  Approvals in the United  States when the Parties will initiate
      Detailing  activities in the United States,  as such date is determined by
      MERCK.

1.52  "MAJOR  MARKET"  shall  mean any one of the  following  countries:  United
      States, Japan, the United Kingdom, France, Germany, Italy or Spain.

1.53  "MARKETING  AUTHORIZATION"  shall  mean  (i) for the  United  States,  the
      approval of an NDA,  and (ii) for any foreign  jurisdiction,  the approval
      from the  relevant  Regulatory  Authority  necessary  to market and sell a
      Product in that country,  including,  without  limitation,  all applicable
      pricing and government reimbursement approvals.

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1.54  "MERCK  INFORMATION  AND INVENTIONS"  shall mean all protocols,  formulas,
      data,  Inventions,  know-how and trade  secrets,  patentable or otherwise,
      resulting  from the  Collaboration  or resulting  from the practice of DOV
      Patent Rights during or after the term of the Collaboration,  developed or
      invented solely by employees of MERCK or other persons not employed by DOV
      acting on behalf of MERCK.

1.55  "MERCK  KNOW-HOW" shall mean all information and materials,  including but
      not limited to discoveries,  improvements,  processes, methods, protocols,
      formulas,  data  (including  data and results from  research,  preclinical
      development and Clinical Trials), inventions (including without limitation
      MERCK  Information and Inventions and MERCK's and/or any of its Controlled
      Affiliates'  rights in Joint  Information  and  Inventions),  know-how and
      trade  secrets,  patentable  or  otherwise,  which during the term of this
      Agreement,  (i) are  Controlled  by  MERCK  and/or  any of its  Controlled
      Affiliates, (ii) are not generally known and (iii) are necessary or useful
      to DOV in connection with the Collaboration.

1.56  "MERCK PATENT  RIGHTS" shall mean any and all Patent Rights  Controlled by
      MERCK  and/or  any of  MERCK's  Controlled  Affiliates,  that (i) would be
      practiced by the manufacture,  use, sale, offer for sale or importation of
      Compound  or  Product;  or (ii)  claim  or  cover  MERCK  Information  and
      Inventions or MERCK's rights in Joint Information and Inventions.

1.57  "MERCK  TERMINATION  KNOW-HOW"  shall mean all  information and materials,
      including  but  not  limited  to  discoveries,   improvements,  processes,
      methods,  protocols,  formulas,  data  (including  data and  results  from
      research,   preclinical  development  and  Clinical  Trials),   inventions
      (including without limitation MERCK Information and Inventions and MERCK's
      and/or any of its Controlled  Affiliates'  rights in Joint Information and
      Inventions),  know-how and trade secrets,  patentable or otherwise,  which
      during the term of this Agreement,  (i) are Controlled by MERCK and/or any
      of MERCK's Controlled Affiliates,  (ii) are not generally known, and (iii)
      are necessary for the research, development,  manufacture,  marketing, use
      or sale of Compound or Product in the Territory,  excluding,  however, any
      DOV Know-How. The MERCK Termination Know-How shall include the information
      of the type set forth in Schedule 1.57.

1.58  "MOTHER  LIQUOR"  shall mean a liquid stream (i)  containing  the negative
      isomer after recovery of the desired positive  isomer,  or (ii) containing
      the positive isomer after recovery of the desired negative isomer.

1.59  "NDA" shall mean a New Drug Application or Biologics  License  Application
      submitted  to the FDA, or a  Worldwide  Marketing  Application,  Marketing
      Authorization  Application or similar  application filed with a Regulatory
      Authority to obtain approval for marketing a biological or  pharmaceutical
      product in a foreign country or group of countries.

1.60  "NET SALES" shall mean the gross invoice price of Product sold by MERCK or
      any  Related  Party to the first  Third  Party,  after  deducting,  if not
      previously deducted, from the amount invoiced or received:

      (a) trade and  quantity  discounts  actually  allowed or taken  other than
      early pay cash discounts;

      (b) amounts  allowed or taken by reason of returns,  rebates,  chargebacks
      and other allowances;

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      (c) retroactive  price reductions that are actually allowed or granted and
      that are specifically identifiable as relating to Products; and

      (d) a fixed amount equal to [***] percent  ([***]%) of the amount invoiced
      to cover bad debt,  sales or excise taxes,  early payment cash  discounts,
      custom duties, and other governmental  charges,  sales commissions paid to
      Third Party distributors and/or selling agents, and the cost of devices or
      delivery systems used for dispensing or administering Product;

      With respect to sales of Combination  Drugs, Net Sales shall be calculated
      on the basis of the gross invoice price of Product(s)  containing the same
      strength of Compound sold without other active  ingredients.  In the event
      that Product is sold only as a Combination  Drug,  (y) with respect to any
      Combination  Drug in which  Compound  is  combined  only  with one or more
      active  ingredients  the  manufacture,   use,  sale,  offer  for  sale  or
      importation  of which active  ingredient(s)  would not practice any Patent
      Right Controlled by MERCK, MERCK's Controlled Affiliates or a Third Party,
      Net Sales shall be  calculated  on the basis of the gross invoice price of
      the Combination Drug and (z) with respect to any Combination Drug in which
      Compound  is  combined  only  with  one or  more  active  ingredients  the
      manufacture,  use sale,  offer  for sale or  importation  of which  active
      ingredient(s) would practice any Patent Right Controlled by MERCK, MERCK's
      Controlled Affiliates, or a Third Party, DOV and MERCK shall, prior to any
      sales  of such  Combination  Drug,  negotiate  in good  faith  to agree in
      writing on the relative value of Compound and each other active ingredient
      in such Combination  Drug, which  determination  shall be based upon sales
      prices for comparable  products.  Such relative  value(s) shall be used in
      calculating Net Sales.  The deductions set forth in paragraphs (a) through
      (d) above will be applied in calculating Net Sales for a Combination Drug.

1.61  "PARTY" shall mean MERCK and DOV,  individually,  and "PARTIES" shall mean
      MERCK and DOV, collectively.

1.62  "PATENT  RIGHTS"  shall  mean  patents  and  patent  applications  in  the
      Territory  (which for the  purposes of this  Agreement  shall be deemed to
      include  certificates of invention and  applications  for  certificates of
      invention),    including    provisionals,     divisions,    continuations,
      continuations-in-part,   reissues,  renewals,  extensions,   supplementary
      protection  certificates,  and the like of any  such  patents  and  patent
      applications,  and foreign equivalents  thereof, and shall include patents
      whose term has been  extended  by  statutory  patent term  adjustments  or
      extensions in any jurisdiction in the Territory, including but not limited
      to those patent term  adjustments  and extensions  granted under 37 C.F.R.
      ss.ss. 1.701 - 1.705, 35 U.S.C. ss. 154(b), or 35 U.S.C. ss. 156.

1.63  "PIVOTAL  CLINICAL  TRIAL"  shall  mean an  adequate  and  well-controlled
      Clinical Trial designed to demonstrate  efficacy of a Product  intended to
      form the basis of Filing an NDA .

1.64  "PHASE I CLINICAL  TRIAL" shall mean a human clinical trial in any country
      that would satisfy the requirements of 21 CFR 312.21(a).

1.65  "PHASE II CLINICAL TRIAL" shall mean a human clinical trial in any country
      that would satisfy the requirements of 21 CFR 312.21(b).

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1.66  "PHASE  III  CLINICAL  TRIAL"  shall  mean a human  clinical  trial in any
      country that would satisfy the requirements of 21 CFR 312.21(c).

1.67  "PHASE IV CLINICAL  TRIAL" shall mean a human clinical trial following the
      approval  of an NDA,  including  any human  clinical  trial in any country
      consistent with the description set forth in 21 CFR 312.85.

1.68  "PRODRUG" shall mean a compound that, upon metabolism  within the body, is
      converted  to DOV  21,947,  DOV  216,303  or  DOV  102,677,  the  in  vivo
      pharmacological  activity of which substantially  derives from the in vivo
      presence of the DOV 21,947, DOV 216,303 or DOV 102,677, respectively, into
      which the compound is converted.

1.69  "PRODUCT(S)"  shall mean any  pharmaceutical  preparation  in final  form,
      including without limitation any Combination Drug, containing Compound (i)
      for sale by prescription,  over-the-counter  or any other method,  or (ii)
      for administration to human patients in a Clinical Trial.

1.70  "REGULATORY  AUTHORITY"  shall mean any applicable  government  regulatory
      authority,  including  the FDA in the  United  States  and the EMEA in the
      European  Union,  involved in granting  approvals  for  manufacturing  and
      marketing a Product in the United States, or for manufacturing, marketing,
      reimbursement  and/or  pricing  of a Product  in any other  country in the
      Territory.

1.71  "RELATED  PARTY"  shall  mean each of  MERCK,  its  Affiliates,  and their
      respective  sublicensees (which term does not include distributors to whom
      MERCK sells,  without  restriction,  Product or Compound),  as applicable;
      provided, however, that a manufacturer that is sublicensed by MERCK solely
      for the purpose of  manufacturing  (and not for the purpose of developing,
      marketing  or  selling)  Compound  or Product  for MERCK and whose  Patent
      Rights are not Controlled by Merck shall not be deemed a "Related Party".

1.72  "SPECIALIST"  shall  mean a  psychiatrist  or  neurologist,  or such other
      specialist  medical or health care  professional  authorized  to prescribe
      Product under the laws of the jurisdiction in which such medical or health
      care  professional  is practicing,  to the extent that such  psychiatrist,
      neurologist or other specialist is approved by MERCK.

1.73  "SPECIALTY SALES  REPRESENTATIVES"  shall mean employees of DOV performing
      the sales promotion of pharmaceutical products to Target Prescribers.

1.74  "SUCCESSFUL  COMPLETION"  of a  Pivotal  Clinical  Trial  shall  mean  the
      achievement of a [***] and [***].

1.75  SYMMETRIC  PROCESS" shall mean, (i) with regard to the  manufacture of DOV
      21,947, a process whereby a significant amount of DOV 102,677 is made, and
      (ii) with regard to the  manufacture of DOV 102,677,  a process  whereby a
      significant amount of DOV 21,947 is made

1.76  "TARGET PRESCRIBER" shall mean a Specialist  identified as a member of the
      target  audience to whom DOV shall direct a Detail as  determined by MERCK
      in its marketing plans for Product.

1.77  "TERRITORY"  shall  mean all of the  countries  in the  world,  and  their
      territories and possessions.

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1.78  "THIRD  PARTY"  shall  mean an entity  other  than  MERCK and its  Related
      Parties, and DOV and its Affiliates.

1.79  "VALID  PATENT  CLAIM"  shall  mean a claim of an issued  patent  included
      within the DOV Patent Rights or Joint Patent Rights that claims the use or
      composition  of matter of  Compound  or  Product,  or a claim of an issued
      patent  included  within the MERCK Patent Rights that claims a composition
      of matter of Compound or Product,  the term and statutory  extensions,  if
      any,  of which  patent  have not yet  expired,  which  claim  has not been
      revoked or held unenforceable or invalid by a decision of a court or other
      governmental  agency of  competent  jurisdiction  (which  decision  is not
      appealable or has not been  appealed  within the time allowed for appeal),
      and which claim has not been disclaimed,  denied or admitted to be invalid
      or  unenforceable   through  reissue,   re-examination  or  disclaimer  or
      otherwise.

1.80  "WYETH" shall mean Wyeth Holdings Corporation, a Maine corporation.

1.81  "WYETH  AGREEMENT"  shall mean the certain  Amended and  Restated  License
      Agreement between DOV and Wyeth, effective as of May 29, 1998, relating to
      the license of DOV 216,303, as amended and restated on February 25, 2004.

2.    COLLABORATION

2.1   DRUG DEVELOPMENT PLAN.

      DOV and  MERCK  shall  engage  in the  Collaboration  upon the  terms  and
conditions set forth in this  Agreement.  The activities to be undertaken in the
course of the Collaboration  shall be set forth in the Drug Development Plan set
forth as Schedule 2.1 and incorporated by reference herein. The Drug Development
Plan is subject to  modification  by MERCK,  subject in all  respects  to and in
accordance with the terms and conditions of this Agreement.  MERCK shall present
any  modifications  (and if timing permits proposed  modifications)  of the Drug
Development Plan to the Committee for review and discussion,  and shall consider
in  good  faith  DOV's  input  with  regard  to  such  modifications.  The  Drug
Development  Plan shall include the preclinical  development  and  pre-Marketing
Authorization  Clinical Trials that MERCK plans to conduct,  and shall include a
plan describing with specificity the Clinical Trials to be undertaken to achieve
the Development  Milestones and Product Profile Milestones set forth in Sections
5.3 and 5.4,  and the  projected  time  frame for  these  Clinical  Trials.  For
avoidance  of doubt,  MERCK  shall have the right to  reasonably  determine  the
appropriate  Clinical Trials to be performed to achieve  Development  Milestones
and Product Profile Milestones. Notwithstanding anything herein to the contrary,
the Drug  Development  Plan shall  provide for  conducting  Clinical  Trials the
successful  outcome of which will result in the  achievement  of the  milestones
provided for in Sections  5.3(a) and 5.4 of this  Agreement,  where the Clinical
Trials  are  adequately  designed  and  powered  to  provide  data that has both
statistical and clinical significance.

2.2   CONDUCT OF COLLABORATION.

2.2.1 MERCK shall be responsible for all formulation,  preclinical  development,
      clinical  development and regulatory  work, and  manufacturing of clinical
      supplies   pursuant  to  the  Drug  Development   Plan.  Merck  shall  use
      Commercially  Reasonable  Efforts to perform  the Drug  Development  Plan.
      MERCK shall be responsible  for all regulatory  activities,  both prior to
      and after  obtaining  Marketing  Authorization,  including  global  safety
      reporting.  MERCK  shall be  entitled  to utilize  the  services  of Third
      Parties to  perform  its  Collaboration  activities.  To the extent  MERCK
      determines to use DOV as a Contract Research  Organization  ("CRO"),  such
      activities  shall be pursuant to an agreement  containing  customary terms
      and conditions and commercial  terms  negotiated in good faith between the
      Parties.  Pursuant to such an agreement, DOV shall use only Clinical Trial
      facilities  approved in advance by MERCK, and shall be entitled to utilize
      the service of Third Parties to perform its  activities as a CRO only upon
      MERCK's  prior written  consent.  Notwithstanding  any such consent,  each
      Party  shall  remain  at  all  times  fully  liable  for  its   respective
      responsibilities under the Collaboration.

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2.2.2 DOV and MERCK shall  conduct any  activities  that either  Party  performs
      pursuant to the  Collaboration  in compliance  with all  applicable  laws,
      rules and  regulations,  including,  without  limitation,  Good Laboratory
      Practice and Good Manufacturing Practice, to the extent applicable.  It is
      not  contemplated  that DOV shall use animals in performing its activities
      under the  Collaboration.  Each  Party  hereby  certifies  that it has not
      employed  or  otherwise  used in any  capacity,  and  will not  employ  or
      otherwise use in any capacity,  the services of any person  debarred under
      United States law,  including but not limited to 21 U.S.C. ss. 335(a),  in
      performing any portion of the Collaboration.

2.3   JOINT DEVELOPMENT  COMMITTEE.  The Parties hereby establish a committee to
      facilitate the Collaboration as follows:

2.3.1 COMPOSITION OF THE JOINT DEVELOPMENT COMMITTEE. The Collaboration shall be
      conducted  under  the  direction  of a joint  development  committee  (the
      "Committee")  comprised  of  three  representatives  of  MERCK  and  three
      representatives  of DOV. Each Party may change its  representatives to the
      Committee from time to time, in its sole discretion, effective upon notice
      to the  other  Party of such  change.  These  representatives  shall  have
      appropriate technical credentials,  experience and knowledge,  and ongoing
      familiarity  with  the   Collaboration.   Additional   representatives  or
      consultants  may from time to time, by mutual  consent of the Parties,  be
      invited to attend Committee meetings,  subject to such representative's or
      consultant's  written agreement to comply with the requirements of Article
      4. The Committee shall be chaired by a representative  of MERCK, and MERCK
      will have final  decision  making  authority on all issues  related to the
      research,    development,    regulatory   approval,    manufacturing   and
      commercialization  of Compounds  and  Products.  DOV shall have a right to
      review and provide comments on the Drug Development Plan, and in the event
      DOV has a substantive  dispute in regard to the Drug Development Plan, the
      Parties' representatives may refer the issue in dispute to the appropriate
      Executive Vice President,  MERCK Research Laboratories,  for MERCK and the
      Chief  Executive  Officer  for DOV.  In the  event  that  the  appropriate
      Executive  Vice  President  of MERCK  Research  Laboratories  or the Chief
      Executive Officer of DOV requests, in writing within fifteen (15) business
      days after the  referral  of the dispute to such  parties,  or within such
      extended period agreed upon by such executives, such executives shall meet
      in-person  to attempt to resolve the  dispute.  If  unresolved,  the final
      resolution  and/or  course  of  conduct  shall be  determined  by  MERCK's
      President,   MERCK  Research   Laboratories,   in  such  executive's  sole
      discretion.  Each  Party  shall  bear  its  own  expenses  related  to the
      attendance  of such  meetings  by its  representatives.  Each Party  shall
      provide  Committee  members with reasonable access during regular business
      hours  to  all  its  records  and  documents   that  are  related  to  the
      Collaboration or to the development of the Product.

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2.3.2 MEETINGS.   The  Committee  shall  meet  in  accordance  with  a  schedule
      established  by  mutual  written  agreement  of the  Parties,  but no less
      frequently  than once per  Calendar  Quarter,  with the  location for such
      meetings  alternating  between  DOV and MERCK  facilities  (or such  other
      location  as  may be  determined  by the  Committee).  Alternatively,  the
      Committee may meet by means of  teleconference,  videoconference  or other
      similar communications equipment. The Committee shall confer regarding the
      status of the Collaboration,  review relevant data and the progress of the
      Drug  Development  Plan,  consider and advise on any technical issues that
      arise  relating to the  Collaboration  that may be referred to, or invited
      for referral by, the Committee.  MERCK will provide DOV with copies of any
      minutes taken of Committee meetings.

2.4 EXCHANGE OF  INFORMATION.  DOV shall  transfer  copies of all  documents and
materials  Controlled by DOV or DOV's  Controlled  Affiliates  embodying the DOV
Know-How and the subject  matter of the DOV Patent Rights to MERCK within thirty
(30) days after the Closing  Date of this  Agreement  (the  "Initial  Transition
Period") and provide MERCK reasonable  technical  support from DOV technical and
scientific  personnel during this the Initial  Transition Period relating to the
use of such DOV Know-How and the practice of such DOV Patent  Rights,  solely to
the extent permitted under the licenses  granted to MERCK herein.  Following the
Initial  Transition Period,  from time to time upon MERCK's reasonable  request,
DOV shall provide reasonable technical support from DOV technical and scientific
personnel,  relating to the use of DOV  Know-How  and the practice of DOV Patent
Rights,  solely to the  extent  permitted  under the  licenses  granted to MERCK
herein.  In furtherance of the foregoing,  DOV shall  cooperate with MERCK,  and
shall cause its Controlled Affiliates and Third Party manufacturers to cooperate
with  MERCK,  in order to  accomplish  an orderly  transition  of  manufacturing
technology for Compound to MERCK.

2.5   RECORDS AND REPORTS.

2.5.1 DOV RECORDS.  If DOV is utilized as a CRO, DOV shall maintain records,  in
      sufficient detail and in good scientific manner appropriate for patent and
      regulatory purposes,  which shall fully and properly reflect all work done
      and results achieved in the performance of the Collaboration by DOV.

2.5.2 COPIES AND  INSPECTION  OF  RECORDS.  MERCK  shall have the right,  during
      normal business hours and upon reasonable  notice, to inspect and copy all
      such records of DOV  referred to in Section  2.5.1.  MERCK shall  maintain
      such  records  and the  information  disclosed  therein in  confidence  in
      accordance with Section 4.1. MERCK shall have the right to arrange for its
      employees  and/or  consultants  involved  in the  activities  contemplated
      hereunder  to visit the  offices  and  laboratories  of DOV and any of its
      Third Party  contractors  as  permitted  under  Section 2.2 during  normal
      business hours and upon reasonable  notice,  to discuss the  Collaboration
      work and its  results  in  detail  with the  technical  personnel  and any
      permitted Third Party contractors of DOV. Upon request,  DOV shall provide
      copies of the records described in Section 2.5.1.

2.5.3 QUARTERLY REPORTS.  The Parties shall each prepare a written report, which
      shall be delivered to the other Party at least  fifteen (15) days prior to
      each  quarterly  meeting of the  Committee,  which report shall inform the
      Committee of the work performed to date on the Collaboration, evaluate the
      work performed in relation to the goals of the  Collaboration  and provide
      such other information as may be reasonably  requested by the Committee (a
      "Collaboration  Quarterly  Report").  The  MERCK  Collaboration  Quarterly
      Report shall include  Information in sufficient detail that performance by
      MERCK of the Drug Development Plan and progress achieved in performing the
      Drug Development Plan may be ascertained.

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2.5.4 LDRC AND EDRC  REPORTS.  Only to the extent  applicable  to Compounds  and
      Products,  during  the  Collaboration  Term,  MERCK  shall  provide to DOV
      progress  reports  provided in accordance  with MERCK's  regular  business
      practices to MERCK's Early Development  Review Committee ("EDRC") and Late
      Development  Review Committee  ("LDRC"),  or the respective  successors to
      such  committees,  in order to keep DOV  informed  of the  progress of the
      conduct of activities under the  Collaboration  and the development of the
      Compounds and Products.

2.6   INFORMATION AND INVENTIONS. The entire right, title and interest in:

      (a)   DOV Information and Inventions shall be owned solely by DOV;

      (b)   MERCK Information and Inventions shall be owned solely by MERCK; and

      (c)   Joint  Information and Inventions  shall be owned jointly by DOV and
            MERCK.  Each of the  Parties,  as owners  of a joint  and  undivided
            interest in the Joint  Information  and  Inventions and Joint Patent
            Rights, shall have the right to exploit and to grant licenses in and
            to such Joint Information and Inventions and/or Joint Patent Rights,
            without an accounting or  obligation  to, or other consent  required
            from, the other Party, unless otherwise specified in this Agreement.
            Each Party  further  agrees to execute  such  documents as the other
            Party may  reasonably  require to give  effect to the intent of this
            Section  2.6(c).  For avoidance of doubt,  this Section 2.6(c) shall
            not  supersede  the licenses and other  rights  granted  pursuant to
            Article 3.

      Each Party shall  promptly  disclose to the other Party,  in writing,  the
      development,   making,  conception  or  reduction  to  practice  of  Joint
      Information   and  Inventions  or,   respectively,   DOV  Information  and
      Inventions and MERCK Information and Inventions.

2.7 COLLABORATION TERM AND TERMINATION. Except as otherwise provided herein, the
term of the Collaboration  shall commence on the Closing Date and continue until
approval of the NDA by the FDA for the first Product.

2.8 DEVELOPMENT REPORTS FOLLOWING TERMINATION OF COLLABORATION.  Notwithstanding
any  other  provision  of  this  Agreement,  following  the  termination  of the
Collaboration,  MERCK  shall  provide a  development  report  to DOV upon  DOV's
request no more frequently than  semianually,  which report shall include (i) an
update describing the development efforts of MERCK and its Controlled Affiliates
pertaining to the Compound and the Product,  and (ii) a description  of clinical
studies  commenced  to  achieve   Development   Milestones  or  Product  Profile
Milestones as described in Section 5.3 or Section 5.4, respectively.

3.    LICENSE; EXCHANGE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION

3.1   LICENSE GRANT.

3.1.1 DOV hereby grants to MERCK an exclusive license (even as to DOV, except as
      set forth in  Section  3.1.2  below)  in the  Territory  under DOV  Patent
      Rights,  DOV's  and its  Controlled  Affiliates'  rights  in Joint  Patent
      Rights, and DOV Know-How, with a right to sublicense,  to make, have made,
      use,  offer to sell,  sell or import  Compound(s)  and  Product(s)  in the
      Field.  For the avoidance of doubt,  DOV reserves all rights not expressly
      licensed to MERCK under this  Agreement  (e.g.,  DOV reserves the right to
      make,  use,  sell,  offer to sell and  import DOV  216,303  outside of the
      Field).

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3.1.2 DOV hereby retains the right in the Territory  under DOV Patent Rights and
      DOV  Know-How,  to make or have made DOV  21,947 for the  purposes  of (i)
      making,  having made, using,  offering for sale,  selling or importing DOV
      102,677 and/or any pharmaceutical  preparation or preparations  containing
      DOV 102,667 and (ii) conforming to any  then-applicable  requirements of a
      Regulatory  Authority,  provided  that DOV may not use DOV  21,947 for any
      other  purposes or provide DOV 21,947 to any other  person  other than for
      the purpose of having DOV 102,677 made, and any DOV 21,947 in DOV's or any
      of its  Controlled  Affiliates'  or any  Third  Party's  possession  after
      completion  of the  process  of  making  DOV  102,677  shall  be  promptly
      destroyed.

3.2.  NON-EXCLUSIVE LICENSE GRANTS.

3.2.1 In the event that the making,  having made,  use, offer for sale,  sale or
      import by MERCK, or MERCK's Related Parties,  of Compound(s) or Product(s)
      in the Field would  infringe  during the term of this Agreement a claim of
      an issued patent Controlled by DOV or its Controlled  Affiliates and which
      patent is not covered by the grant in Section  3.1,  DOV hereby  grants to
      MERCK,  to the  extent  DOV is  legally  able to do so,  a  non-exclusive,
      sublicensable, royalty-free license in the Territory under any such issued
      patent for MERCK and  MERCK's  Related  Parties to make,  have made,  use,
      sell,  offer  for  sale  or  import  Compound(s)  and  Product(s)  in  the
      Territory.

3.2.2 DOV hereby grants to MERCK a non-sublicenseable,  non-exclusive license to
      use DOV  102,677 for the purpose of  developing  an assay  relating to DOV
      21,947 that  quantifies the level,  if any, of DOV 102,677  present in DOV
      21,947 in vitro or in vivo.

3.2.3 MERCK hereby grants to DOV a non-sublicenseable,  non-exclusive license to
      use DOV 21,947 for the  purpose of  developing  an assay  relating  to DOV
      102,677 that  quantifies  the level,  if any, of DOV 21,947 present in DOV
      102,677 in vitro or in vivo.

3.3.  SUBLICENSES.

3.3.1 MERCK may grant  written  sublicenses  of the  licenses  granted  it under
      Sections 3.1 and 3.2 above (each,  a  "Sublicense  Agreement"),  provided,
      however,  that no sublicense  granted under this Agreement  shall be valid
      unless each sublicensee (a "MERCK  Sublicensee") agrees in writing in such
      Sublicense Agreement:

      (i)   to exercise its rights under the  sublicense in accordance  with the
            applicable terms of this Agreement;

      (ii)  to maintain  records  that Merck  would be required to retain  under
            this Agreement and to permit auditors of DOV to inspect such records
            on the same basis as such records  could be inspected if retained by
            MERCK;

      (iii) to, in the event of a Bankruptcy Event affecting MERCK, (a) transfer
            to  DOV  any  MERCK   Termination   Know-How  to  which  such  MERCK
            Sublicensee  has access no later  than 60 days  after the  effective
            date of such Bankruptcy  Event,  (b) transfer to DOV any Information
            or Joint  Information and Inventions to which such MERCK Sublicensee
            has access and that is necessary or useful to the prosecution of DOV
            Patent Rights or Joint Patent Rights no less than 30 days before any
            application  deadline  applicable  to any DOV Patent  Right or Joint
            Patent  Right;  (c) transfer to DOV title to or  sponsorship  of any
            IND, NDA or other  regulatory  filing held in the name of such MERCK
            Sublicensee  pertaining  to the Compound or the Product,  or if such
            transfer  is not  legally  permissible  or such  items do not relate
            solely to Compound

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            or Product,  to grant DOV the right,  with right to  sublicense,  to
            access,  use and  cross-reference  such data,  filings and approvals
            from  Regulatory   Authorities,   which  right  shall  be  exclusive
            (including as to the MERCK  Sublicensee) with respect to Compound or
            Product;  and (d) provide to DOV reasonable  technical  support from
            technical and scientific  personnel to effect the complete  transfer
            of MERCK  Termination  Know-How to which such MERCK  Sublicensee has
            access,  including  Information  necessary  for the use of any MERCK
            Termination Know-How and the practice of any MERCK Patent Rights and
            Joint  Patent  Rights in relation  to  Compound or Product;  and (e)
            provide  that all of the  provisions  of the  foregoing  clauses (a)
            through  (d)  shall  survive  any   termination  of  the  applicable
            Sublicense Agreement;

      (iv)  to observe all other applicable terms of this Agreement; and

      (v)   that (a) DOV shall be a third party beneficiary under the applicable
            Sublicense  Agreement solely for purposes of enforcing its rights in
            the event of a Bankruptcy  Event  affecting  MERCK;  and (b) that in
            such a Bankruptcy  Event,  if the  Sublicense  Agreement by MERCK is
            rejected  and the  MERCK  Sublicensee  does not  elect to treat  the
            Sublicense  Agreement  as  terminated,  then the  MERCK  Sublicensee
            shall, at DOV's option,  enter into a license  agreement with DOV on
            the  same  terms  and  conditions  as  the   applicable   Sublicense
            Agreement.

3.3.2 (a) Contemporaneously with the execution of a Sublicensee Agreement, MERCK
      shall obtain from each MERCK  Sublicensee a written  acknowledgement  (the
      "Sublicensee  Acknowledgement")  stating  that  the  Sublicense  Agreement
      executed   between  such  MERCK   Sublicensee  and  MERCK  contains  those
      provisions  required by Section 3.3.1 of this Agreement.  During the first
      twelve months following the Closing Date, MERCK shall promptly provide DOV
      with a copy of each  Sublicense  Acknowledgement.  Thereafter,  MERCK will
      provide DOV with copies of any additional Sublicense Acknowledgements upon
      request, but no more frequently than once per year.

      (b)  MERCK  shall  maintain  a list of MERCK  Sublicensees  and a  general
      description  of the  subject  matter  of each  Sublicense  Agreement  (the
      "Sublicensee  List").   During  the  first  twelve  months  following  the
      Execution  Date, the Sublicensee  List shall be updated  contemporaneously
      upon the execution of each Sublicense  Agreement and provided  promptly to
      DOV  following  the execution of each  Sublicense  Agreement.  Thereafter,
      MERCK will  provide DOV with a copy of the updated  Sublicensee  List upon
      request, but no more frequently than once per year. .

3.3.3 MERCK unconditionally guarantees the performance of all MERCK Sublicensees
      in  accordance  with  the  terms of this  Agreement,  and  MERCK  shall be
      responsible  for enforcing the provisions of any  sublicense  agreement to
      ensure  that  the  MERCK  Sublicensees  do not  breach  the  terms of this
      Agreement.

3.3.4 In the event of a Bankruptcy Event affecting MERCK, any and all Sublicense
      Agreements shall immediately terminate.

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3.4.  RIGHT OF FIRST REFUSAL FOR DOV 102,677.

3.4.1.RIGHT OF FIRST REFUSAL. In the event that DOV desires to commercialize DOV
      102,677 or a Product  containing it for the treatment and/or prevention of
      depression  and/or  anxiety in humans  and/or  animals,  MERCK will have a
      right of first refusal with regard to obtaining  exclusive  rights to such
      commercialization.  In such a circumstance, DOV shall present a good faith
      offer for the commercialization rights for DOV 102,677.  Thereafter, after
      a sixty  (60) day period of good faith  negotiation,  if it is  reasonably
      apparent that the Parties are unable to reach agreement with regard to the
      terms and  conditions  under  which MERCK may obtain  exclusive  rights to
      commercialize   DOV  102,677  for  the  treatment  and/or   prevention  of
      depression and/or anxiety in humans and/or animals, then DOV shall be free
      to  commercialize  DOV 102,677  itself or to negotiate  with Third Parties
      with  respect  to  the   commercialization   of  DOV  102,677   through  a
      collaboration or by such Third Party,  provided,  however,  that
      prior to entering into an agreement  granting  rights to a Third Party for
      commercializing  DOV 102,677 for lesser compensation than DOV's last offer
      to MERCK,  DOV shall offer the  compensation  and other relevant  material
      terms to MERCK in writing.  If MERCK does not accept such compensation and
      other  relevant  material in writing  within  thirty (30) days, it will be
      deemed to have waived its rights.

3.5.  NO IMPLIED  LICENSES.  Except as specifically set forth in this Agreement,
      neither  Party shall  acquire any license or other  intellectual  property
      interest, by implication or otherwise,  in any Information disclosed to it
      under  this  Agreement  or  under  any  patents  or  patent   applications
      Controlled by the other Party or its Controlled Affiliates.

3.6.  DEVELOPMENT AND COMMERCIALIZATION.

      MERCK   shall  use   Commercially   Reasonable   Efforts  to  develop  and
commercialize  a Product  containing  at least one of the  Compounds  at its own
expense.  For  avoidance  of doubt,  a temporary  suspension,  not to exceed six
months,  of the  development  or  commercialization  of a Product due to MERCK's
reasonable determination that the Product is materially unsafe for use in humans
shall not cause MERCK to be in breach of this Section 3.6. For the  avoidance of
doubt, in the event of any such  suspension,  the provisions of Article 10 shall
apply.

3.7.  OPTION FOR DOV TO CO-PROMOTE PRODUCTS IN UNITED STATES.

3.7.1.MERCK hereby grants DOV an option to co-promote  the Product in the United
      States  only  (the   "Co-promotion   Option")  by  Detailing   Product  to
      Specialists  designated  by MERCK as Target  Prescribers,  subject  to the
      provisions of this Section 3.7, and  conditioned on DOV and MERCK entering
      into a  Co-Promotion  Agreement on terms and  conditions  consistent  with
      Schedule 3.7.

3.7.2.MERCK shall  determine the Launch Date of the Product,  and shall keep DOV
      apprised at quarterly  Committee  meetings of any changes in the projected
      Launch  Date for the  Product,  so that DOV has  reasonable  notice of the
      projected  Launch Date.  DOV will notify MERCK in writing of its intent to
      exercise  the  Co-Promotion  Option  twenty-four  (24) months prior to the
      projected Launch Date as communicated by MERCK (the "Exercise  Date").  If
      DOV chooses to exercise the Co-Promotion  Option, MERCK and DOV will enter
      into a Co-Promotion Agreement consistent with the terms and conditions set
      forth in Schedule 3.7 no later than eighteen (18) months before the Launch
      Date.

3.7.3.If DOV  exercises  the  Co-Promotion  Option,  DOV  shall be  required  to
      commence  Detailing  on the  Launch  Date for the  Product,  and  shall be
      required to deploy a sufficient number of Specialty

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      Sales  Representatives  as  determined  by  MERCK,  based on the reach and
      frequency of Detailing  that MERCK  determines  is desirable to the Target
      Prescribers.  For  avoidance  of doubt,  DOV shall be required to deploy a
      minimum of [***] and, unless otherwise  agreed upon in writing,  a maximum
      of [***] Specialty Sales Representatives, with the specific number of such
      Specialty  Sales  Representatives  to be  determined by MERCK based on the
      desired  reach and  frequency  of  Detailing  to Target  Prescribers,  and
      communicated  by MERCK to DOV at least sixty (60) days before the Exercise
      Date. In the event that DOV has an existing  sales force that is detailing
      a  DOV  product  to  the  same  Target   Prescribers   and  employs   more
      representatives    than   the   required   number   of   Specialty   Sales
      Representatives as determined by MERCK, MERCK shall consider in good faith
      utilizing such existing DOV sales force.  Compensation  in any event shall
      be as described in Paragraph 2(e) of Schedule 3.7.

3.7.4. The Co-Promotion Option shall lapse if:

      (a)   DOV does not notify  MERCK in writing of its intent to exercise  the
            Co-Promotion Option by the Exercise Date; or

      (b)   DOV cannot  provide the number of  Specialty  Sales  Representatives
            provided for in Section  3.7.3,  unless  otherwise  agreed to by the
            Parties; or

      (c)   The Agreement is terminated pursuant to Article 9.

3.8.  SUPPLY BY MERCK TO DOV OF MOTHER LIQUOR CONTAINING DOV 102, 677.

3.8.1.In  the  event  that  MERCK   develops  an  Asymmetric   Process  for  the
      manufacture of DOV 21,947, MERCK shall have no obligation to supply to DOV
      Mother Liquor containing DOV 102,677. In the event that MERCK manufactures
      DOV 21,947 using a Symmetric Process,  MERCK shall, upon DOV's request and
      subject to the terms and  conditions  of this Section  3.8,  supply to DOV
      such  quantities  of the Mother  Liquor  containing  DOV 102,677  that are
      obtained  by MERCK and its  Controlled  Affiliates  in the  course of such
      manufacturing  process  (except  such small  quantities  of Mother  Liquor
      needed by MERCK for  development of assays,  analytical  methods and other
      similar purposes).

3.8.2.Any  quantities of such Mother Liquor  supplied by MERCK shall be supplied
      "where is" and "as is",  with no  warranty as to the quality of the Mother
      Liquor  or its  fitness  for use for any  purpose.  Title and risk of loss
      shall shift to DOV upon delivery by MERCK at MERCK's site of  manufacture.
      DOV shall  develop  appropriate  packaging  and  labeling  for such Mother
      Liquor, and provide such packaging and labeling to MERCK.

3.8.3.DOV shall pay for any  transportation  or insurance costs  associated with
      the delivery of such  quantities  of Mother  Liquor,  and shall  reimburse
      MERCK for out of pocket costs incurred by MERCK in the recovery,  storage,
      packaging and labeling of such Mother Liquor.

3.8.4.DOV  shall  have  reasonable  access to  MERCK's  and  MERCK's  Controlled
      Affiliates'  data in  order  to  support  its  submissions  to  Regulatory
      Authorities relating to DOV 102,677;  provided,  however, that such access
      shall be  limited  to  employees  of DOV,  and  shall not be  extended  to
      consultants,  partners,  agents,  licensees or other Third Parties,  other
      than those  consultants  or  independent  Third Parties  involved with the
      analysis  of  studies  being  conducted  or data being  collected  for the
      purpose  of  gaining  Marketing   Authorization,   or  involved  with  the
      preparation  or  submission of materials to  Regulatory  Authorities;  and
      provided,  further  that  MERCK  shall  be  reimbursed  for  its  and  its
      Controlled   Affiliates'   fully   allocated  costs  for  supporting  such
      submissions to Regulatory Authorities.

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3.8.5.Any  obligation of MERCK or its Controlled  Affiliates  under this Section
      3.8 to supply Mother Liquor to DOV shall immediately cease upon any Change
      of Control in which a Major  Pharma  Entity (as  defined in Section  12.2)
      obtains  control  of  DOV by  acquiring  DOV's  assets  or  voting  equity
      securities (by asset purchase,  merger,  consolidation,  reorganization or
      otherwise), or upon the granting by DOV to any Third Party of any license,
      promotion  rights,  distribution  rights or other  rights  relating to DOV
      102,677.

3.9.  ASYMMETRIC TECHNOLOGY.  (a) In the event that MERCK develops an Asymmetric
      Process for  manufacture  of DOV 21,947,  MERCK shall so notify DOV. MERCK
      shall  thereafter,  upon  DOV's  request,  provide  technical  information
      necessary to permit DOV to manufacture  DOV 102,677 using such  Asymmetric
      Process ("MERCK Asymmetric  Technology").  To the extent DOV utilizes such
      MERCK Asymmetric  Technology,  and to the extent that the use of the MERCK
      Asymmetric  Technology  in the making or having made of DOV 102,677  would
      infringe  during the term of this  Agreement  a claim of an issued  patent
      Controlled by MERCK or its Controlled  Affiliates,  MERCK hereby grants to
      DOV, to the extent MERCK or its Controlled  Affiliates are legally able to
      do so, a non-exclusive, fully paid-up, sublicensable, royalty-free license
      in the Territory under the MERCK Asymmetric Technology and any such issued
      patent for DOV, DOV's Controlled Affiliates and its and their sublicensees
      to make or have made DOV 102,677 in the Territory.

      (b) In the event that DOV develops an Asymmetric  Process for  manufacture
of DOV 102,677,  DOV shall so notify MERCK. DOV shall  thereafter,  upon MERCK's
request,  provide technical information necessary to permit MERCK to manufacture
DOV 21,947 using such Asymmetric Process ("DOV Asymmetric  Technology").  To the
extent  MERCK  or  its  Controlled   Affiliates  utilizes  such  DOV  Asymmetric
Technology,  and to the extent that the use of the DOV Asymmetric  Technology in
the making or having made of DOV 21,947 would  infringe  during the term of this
Agreement  a claim  of an  issued  patent  Controlled  by DOV or its  Controlled
Affiliates,  DOV hereby  grants to MERCK,  to the  extent DOV or its  Controlled
Affiliates  are  legally  able  to  do  so,  a  non-exclusive,   fully  paid-up,
sublicensable,  royalty-free  license in the Territory  under the DOV Asymmetric
Technology and any such issued patent for MERCK,  MERCK's Controlled  Affiliates
and its and their sublicensees to make or have made DOV 21,947 in the Territory.

4.    CONFIDENTIALITY AND PUBLICATION

4.1 NONDISCLOSURE OBLIGATION.  Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties,  the Parties agree that
each Party (the "Receiving Party") shall keep confidential and shall not publish
or  otherwise  disclose  and  shall  not use for any  purpose  any  Confidential
Information  furnished to it by, or otherwise belonging to, the other Party (the
"Disclosing  Party")  pursuant to this Agreement,  except that a Receiving Party
may disclose  Confidential  Information of the Disclosing Party to its employees
and consultants who are required to have access to the Confidential  Information
in connection  with the exercise of Receiving  Party's rights and performance of
its  obligations   under  this  Agreement.   Each  Party  may  use  Confidential
Information  of the other Party only to the extent  required to  accomplish  the
purposes  of this  Agreement.  The  Receiving  Party  will use at least the same
standard  of care as it uses to  protect  its own  Confidential  Information  to
ensure that its employees,  agents, consultants and other representatives do not
disclose or make any unauthorized  use of such  Confidential  Information.  Each
Party will promptly notify the other upon discovery of any  unauthorized  use or
disclosure of the other Party's Confidential Information.

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4.2 EXCEPTIONS.  The  obligations of  confidentiality  and non-use  contained in
Section 4.1 will not apply to the extent it can be  established by the Receiving
Party by competent proof that such Confidential Information:

      (a)   is now, or  hereafter  becomes,  through no act or failure to act on
            the part of the Receiving Party, generally known or available;

      (b)   is  known by the  Receiving  Party  at the  time of  receiving  such
            information,  other than under a duty of confidentiality owed to the
            Disclosing Party, as evidenced by its records;

      (c)   is hereafter  furnished to the Receiving Party by a Third Party that
            does not owe a duty of  confidentiality  to the Disclosing  Party in
            relation to such Confidential Information;

      (d)   is  independently  developed by the Receiving Party without the aid,
            application  or use of  Confidential  Information  of the Disclosing
            Party, as evidenced by its records; or

      (e)   is the subject of a written  permission to disclose  provided by the
            Disclosing Party.

4.3 TERMS OF AGREEMENT.  This  Agreement and the terms hereof will be considered
Confidential Information of both Parties.  Notwithstanding the foregoing, either
Party may disclose such terms as are required to be disclosed  under  strictures
of  confidentiality  (i) to bona fide  potential  sublicensees  or (ii) for fund
raising or financing  efforts to investors  and lenders and bona fide  potential
investors and lenders,  provided,  however, that the term of confidentiality for
such entities shall be no less than ten (10) years.  In addition,  the Agreement
and terms hereof may be disclosed as otherwise  required  pursuant to applicable
law,  regulation  or  stock  market  or  stock  exchange  rule  (e.g.,  rules or
regulations of the United States Securities and Exchange Commission,  the Nasdaq
or the NYSE);  provided  that a Party  proposing  to make such a  disclosure  as
required by law,  rule or  regulation  shall inform the other Party a reasonable
time prior to such  required  disclosure,  shall  provide the other Party with a
copy of the text of such  proposed  disclosure  sufficiently  in  advance of the
proposed  disclosure  to afford such other  Party a  reasonable  opportunity  to
review and comment upon the proposed disclosure (including,  if applicable,  the
redacted  version of this Agreement) and shall reasonably  consider,  consistent
with applicable law, rule and regulation  (including  interpretations  thereof),
the  requests  of the other  Party  regarding  confidential  treatment  for such
disclosure.

4.4   AUTHORIZED DISCLOSURE.

4.4.1 The Receiving Party may disclose Confidential Information belonging to the
      Disclosing Party to the extent such disclosure is reasonably  necessary in
      the following instances:

      (a)   filing or prosecuting Patent Rights relating to the Collaboration;

      (b)   regulatory filings;

      (c)   prosecuting or defending litigation;

      (d)   complying with applicable court orders or governmental regulations;

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      (e)   disclosure  to  Affiliates,  sublicensees,  employees,  consultants,
            agents or other Third  Parties in  connection  with due diligence or
            similar investigations by such Third Parties, in each case who agree
            to be bound by similar terms of confidentiality and non-use at least
            equivalent in scope to those set forth in this Article 4; and

      (f)   disclosure  deemed necessary by counsel to the Receiving Party to be
            disclosed  to such Party's  attorneys,  independent  accountants  or
            financial  advisors for the sole purpose of enabling such attorneys,
            independent  accountants or financial  advisors to provide advice to
            the  Receiving   Party,   on  the  condition  that  such  attorneys,
            independent  accountants and financial advisors agree to be bound by
            the  confidentiality  and  non-use  obligations  contained  in  this
            Agreement;  provided,  however, that the term of confidentiality for
            such attorneys, independent accountants and financial advisors shall
            be no less than ten (10) years.

      Notwithstanding the foregoing,  in the event a Party is required to make a
      disclosure  of the other  Party's  Confidential  Information  pursuant  to
      Sections 4.3 or 4.4, it will seek to secure confidential treatment of such
      information  at least as diligently as such Party would use to protect its
      own Confidential Information.

4.4.2 MERCK may disclose Confidential Information belonging to DOV to the extent
      such disclosure is reasonably deemed necessary by MERCK to be disclosed to
      Related Parties, agents,  consultants,  and/or other Third Parties for any
      and all purposes  MERCK and its  Affiliates  reasonably  deem necessary or
      advisable for the research and development, manufacturing and/or marketing
      of the  Product  (or for such  entities  to  determine  their  interest in
      performing  such  activities  in  accordance  with this  Agreement  on the
      condition that such Third Parties agree to be bound by the confidentiality
      and non-use obligations  contained in this Agreement;  provided,  however,
      that the term of  confidentiality  for such Third Parties shall be no less
      than ten (10) years.

4.5 DOV KNOW-HOW.  DOV agrees to keep confidential all DOV Know-How  exclusively
licensed to MERCK  pursuant to this  Agreement,  subject to the  exceptions  set
forth in Sections 4.2 and 4.4.1 (i.e., as if DOV were the Receiving Party of the
DOV Know-How for purposes of such Sections 4.2 and 4.4.1).

4.6  PUBLICATION.  MERCK  shall  have  the  right  to  publish  results  of  the
Collaboration without restriction.  Except for disclosures permitted pursuant to
Section  4.1 and  4.2,  if DOV,  its  employees  or  consultants  wish to make a
publication,  DOV  shall  deliver  to  MERCK  a  copy  of the  proposed  written
publication  or an outline of an oral  disclosure at least sixty (60) days prior
to  submission  for  publication  or  presentation,  and MERCK shall provide its
comments  with respect to such  publication  or  disclosure  within  thirty (30)
business days of receiving  such written copy. The review period may be extended
for an additional  thirty (30) days if MERCK can  demonstrate a reasonable  need
for such  extension,  including but not limited to the preparation and filing of
patent  applications.  MERCK  shall  have the  right (a) to  propose  reasonable
modifications  to the  publication or  presentation  for patent reasons or trade
secret  reasons  or  (b)  to  request  a  reasonable  delay  in  publication  or
presentation  in order to protect  patentable  information.  If MERCK requests a
delay,  DOV shall delay  submission or  presentation  for a period of forty-five
(45) days from the date DOV delivers the  aforesaid  copy or outline to MERCK to
enable patent  applications  protecting MERCK's rights in such information to be
filed in accordance  with Article 7 below.  Upon  expiration of sixty (60) days,
DOV shall be free to proceed  with the  publication  or  presentation.  If MERCK
requests  modifications to the publication or presentation,  DOV shall edit such
publication  to  prevent  disclosure  of trade  secret or  proprietary  business
information prior to submission of

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the  publication or  presentation.  MERCK and DOV will each comply with standard
academic   practice   regarding   authorship  of  scientific   publications  and
recognition of contribution of other Parties in any publications relating to the
Collaboration.

4.7 PUBLICITY/USE OF NAMES. Neither Party shall use the name,  trademark,  trade
name or logo of the other Party, its Affiliates or their respective employees in
any publicity,  promotion, news release or disclosure relating to this Agreement
or its subject matter, without the prior express written permission of the other
Party,  except as may be required by law or  expressly  permitted by Section 4.3
above.  Promptly  after the Execution  Date, the Parties will release a mutually
agreeable press release, which release shall be consistent with the requirements
of the Wyeth Agreement.

5.    PAYMENTS; ROYALTIES AND REPORTS

5.1 EXECUTION FEE. In consideration  for DOV's granting of the license under the
DOV  Patent  Rights and DOV  Know-How,  MERCK  shall pay DOV an amount  equal to
thirty-five  million  dollars ($US 35 million)  within ten (10) business days of
the Closing Date. This payment is not refundable or creditable against any other
payments  or  obligations  of MERCK  coming  due and does not  create any future
performance obligations on the part of DOV.

5.2   COLLABORATION FUNDING.

5.2.1 MERCK shall pay for all costs and expenses  incurred in performance of the
      Drug Development Plan,  including  manufacture and formulation of Compound
      and Product,  costs incurred in all research and development,  preclinical
      and  clinical  trials,   pre-marketing  and  post-marketing   studies  and
      surveillance and manufacture of clinical supplies. None of these costs and
      expenses shall offset or be credited against any fees,  royalties or other
      payments required to be made by MERCK to DOV under this Agreement.

5.2.2 To the extent  that MERCK  determines  to use DOV as a CRO,  DOV and MERCK
      shall negotiate competitive rates for the performance of such functions in
      connection  with the  negotiation  of a definitive  agreement  pursuant to
      Section 2.2.

5.3   DEVELOPMENT MILESTONE PAYMENTS

      Subject to the terms and conditions of this Agreement,  MERCK shall pay to
DOV the following payments based on the achievement of the following  milestones
("Development Milestones"):

      (a) MERCK shall make the following  payments for the first  achievement of
the  following  Development  Milestones  by MERCK or any  Related  Party for any
Product:

         (i)      [***]                             $US [***]

         (ii)     [***]                             $US [***]

         (iii)    [***]                             $US [***]

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         (iv)     [***]                             $US [***]

         (v)      [***]                             $US [***]

         (vi)     [***]                             $US [***]

         (vii)    [***]                             $US [***]

         (viii)   [***]                             $US [***]

      (b) MERCK shall make the following  payments for the  achievement by MERCK
or any  Related  Party  of the  following  Development  Milestones  for a second
Indication for the first Product:

         (i)      [***]                             $US [***]

         (ii)     [***]                             $US [***]

      (c) The above  Development  Milestones  are not  refundable  or creditable
against any other  payments or obligations of MERCK coming due and do not create
any future  performance  obligations on the part of DOV, except as expressly set
forth in this  Agreement.  These payments shall not be triggered by any clinical
development  work  performed  by DOV (i) prior to the Closing Date or (ii) after
the Closing Date if such work is not in the  performance  of activities as a CRO
pursuant to the Drug Development  Plan. MERCK shall notify DOV in writing within
thirty (30) days following the achievement of each  Development  Milestone,  and
shall make the appropriate payment within thirty (30) days after the achievement
of such Development Milestone.  The milestone payment shall be payable only upon
the initial  achievement of such  Development  Milestone and no amounts shall be
due  hereunder  for  subsequent  or  repeated  achievement  of such  Development
Milestone.

      (d) (i) If during the Term of the  Agreement,  MERCK has not Initiated the
first  Phase II  Clinical  Trial for DOV  21,947 by [***],  MERCK  shall  make a
payment to DOV of [***] dollars ($US $[***]).

            (ii) If during the Term of the  Agreement,  MERCK has not  Initiated
the first Phase II Clinical  Trial for DOV 21,947 by [***],  MERCK shall pay DOV
an additional [***] dollars ($US [***]).

            (iii) If during the Term of the  Agreement,  MERCK has not Initiated
the first Phase II Clinical  Trial for DOV 21,947 by [***],  MERCK shall pay DOV
an  additional  [***]  dollars  ($US [***]);  thereafter  during the Term of the
Agreement  MERCK shall pay DOV an additional  [***] dollars ($US [***]),  due on
[***] of each Calendar Year unless MERCK has, prior [***] of such Calendar Year,
Initiated the first Phase II Clinical Trial for DOV 21,947.

            (iv) Payments  pursuant to this Section  5.3(d) are  conditioned  on
DOV's timely fulfillment of all of its material  obligations under the Agreement
that would reasonably have an effect on the commencement of the applicable Phase
II Clinical  Trial,  and all such  payments  shall be fully  creditable  against
subsequent Development Milestones payable by MERCK to DOV.

5.4   PRODUCT PROFILE MILESTONES

5.4.1 In the event  the DOV  21,947  development  program  generates  adequately
      powered data to support inclusion of the following  statements in Sections
      5.4.1(a) or (b) based upon clinically significant

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      data  about  [***] in either  (i) the [***] for a  Product,  or (ii) in an
      [***]  in  the  United  States,  MERCK  shall  pay  additional  milestones
      ("Product Profile Milestones"), as follows:

      (a)   [***]:

            (i)   [***], or                             $US [***]

            (ii)  [***]                                 $US [***]

      (b)   [***]:

              In at least [***] as measured by:         $US [***]

            (i)   [***],

            (ii)  [***],

            (iii) [***], or

            (iv)  [***].

5.4.2 In the event the DOV  21,947  development  program  generates  data as set
      forth in either  5.4.1(a) or (b),  fifty percent  (50%) of the  applicable
      Product  Profile  Milestone(s)  will be  pre-paid  at the same time as the
      Product  Development  Milestone set forth in Section  5.3(a)(iii)  for the
      [***],  and the remaining fifty percent (50%) will be pre-paid at the same
      time as the Product Development  Milestone set forth in Section 5.3(a)(vi)
      ([***]).

5.4.3 In the event that MERCK receives an Adverse FDA Decision  (defined  below)
      with regard to a statement  as  described  in Section  5.4.1(a) or Section
      5.4.1(b), MERCK shall credit the Product Profile Milestone previously paid
      for  pursuant to Section  5.4.1(a)  or Section  5.4.1(b)  against  royalty
      payments  made by MERCK to DOV pursuant to Section 5.6,  which credit will
      be spread equally over the first five years  following the Launch Date (or
      if an Adverse FDA  Decision  is  received by MERCK after the Launch  Date,
      over the first five years  following  notification to MERCK of the Adverse
      DDMAC  Decision),  or such  longer  period as  necessary  to obtain a full
      credit of such  Product  Profile  Milestone.  Such credit shall be MERCK's
      sole remedy, and DOV's entire liability, for an Adverse FDA Decision.

            For purposes of this Section 5.4.3,  an "Adverse FDA Decision" shall
      be defined as occurring in the event that a decision is made by the FDA as
      set forth in either clause (a) or (b) of this Section 5.4.3.

      (a) An Adverse FDA Decision shall be deemed to occur if MERCK submits data
      to the FDA for  inclusion of a statement in the  FDA-approved  labeling of
      the Product as set forth in Section  5.4.1(a) or (b),  and if, after MERCK
      exercises  Commercially  Reasonable  Efforts to obtain the  inclusion of a
      such a statement  in the  FDA-approved  labeling of the  Product,  the FDA
      determines that the data presented by MERCK to support such a statement is
      not  sufficient  to support  inclusion  of such  statement in the approved
      labeling  for the  Product.  If MERCK  obtains  an  Adverse  FDA  Decision
      pursuant to Section  5.4.3(a)  relating to labeling as set forth in either
      Section 5.4.1(a) or (b), MERCK shall not be required to seek to publish or
      distribute  advertisements or promotional labeling  inconsistent with such
      Adverse FDA Decision.

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      (b) In addition to Section  5.4.3(a),  an Adverse  FDA  Decision  shall be
      deemed to occur if, after MERCK exercises Commercially  Reasonable Efforts
      to publish or distribute  advertisements  or  promotional  labeling as set
      forth in Section  5.4.1(a) or (b),  DDMAC objects to the inclusion of such
      statement in  advertisements or promotional  labeling,  and if MERCK after
      exercising  Commercially  Reasonable  Efforts  to  persuade  DDMAC  of the
      appropriateness of such statement,  is unsuccessful in persuading DDMAC or
      other  appropriate  officials  of  the  FDA to  either  (i)  withdraw  its
      objection,  or (ii) state that it will not take  enforcement  action  with
      regard to such statement in advertisements or promotional  labeling as set
      forth in Section  5.4.1(a)  or (b),  or (iii)  state that it will not take
      action  against MERCK with respect to the continued use of such  statement
      in advertisements or promotional labeling.

5.4.4 If,  subsequent  to receiving  an Adverse FDA Decision  pursuant to either
      Section  5.4.3(a) or (b),  MERCK obtains data from  Clinical  Trials for a
      Product to support inclusion of the statements in Sections 5.4.1(a) or (b)
      based upon clinically  significant data in either the  FDA-approved  label
      for the Product or promotional  or advertising  statements (as provided in
      Section 5.4.1(i) or (ii)),  MERCK shall exercise  Commercially  Reasonable
      Efforts to either (i) obtain FDA approval for  inclusion of a statement in
      the FDA-approved  labeling of the Product as set forth in Section 5.4.1(a)
      or (b), or (ii) to publish or  distribute  advertisements  or  promotional
      labeling as set forth in Section 5.4.1(a) or (b).

      (a) In the event that,  after  receiving  an Adverse FDA  Decision,  MERCK
      obtains FDA  approval for  inclusion  of a statement  in the  FDA-approved
      labeling  of the Product as set forth in Section  5.4.1(a)  or (b),  MERCK
      shall  cease to take a credit  against  royalties  as set forth in Section
      5.4.3, and shall, within thirty (30) days of such FDA approval,  refund to
      DOV the amount  previously  credited  against  royalties  relating to such
      statement.

      (b) In the event that MERCK  publishes or  distributes  advertisements  or
      promotional  labeling  as set forth in  Section  5.4.1(a)  or (b)  without
      obtaining FDA approval for inclusion of such statement in the FDA-approved
      labeling  of the  Product,  and if MERCK does not  receive an Adverse  FDA
      Decision  regarding the inclusion of such statements in  advertisements or
      promotional  labeling within six (6) months of the initial  publication or
      distribution of such advertisements or promotional  labeling,  MERCK shall
      thereafter  cease  to take a  credit  against  royalties  as set  forth in
      Section 5.4.3,  and shall  immediately upon the expiration of such six (6)
      month  period  refund  to  DOV  the  amount  previously  credited  against
      royalties relating to such statement.

      5.5   SALES MILESTONE PAYMENTS

      Subject to the terms and conditions of this Agreement,  MERCK shall pay to
DOV the following payments based on the achievement of the following  milestones
("Sales Milestones"):

      (i)   Upon  achievement  of worldwide Net Sales of Product
            in one Calendar Year of [***] dollars (US [***])           $US [***]

      (ii)  Upon  achievement  of worldwide Net Sales of Product
            in one Calendar Year of [***] dollars (US [***])           $US [***]

      (iii) Upon  achievement  of worldwide Net Sales of Product
            in one Calendar Year of [***] dollars (US [***])           $US [***]

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None  of  the  payments  attributable  to  Sales  Milestones  is  refundable  or
creditable  against any other payments or obligations of MERCK coming due and do
not create any future  performance  obligations  on the part of DOV. MERCK shall
notify DOV in writing within thirty (30) days following the end of each Calendar
Year in which a Sales  Milestone  is  achieved,  and shall make the  appropriate
payment within thirty (30) days after the end of the Calendar Year in which such
Sales  Milestone is achieved.  The milestone  payment shall be payable only upon
the initial  achievement  of such Sales  Milestone  and no amounts  shall be due
hereunder for subsequent or repeated  achievement of such Sales  Milestone.  For
avoidance of doubt,  each Sales  Milestone  is  separately  achievable,  and the
achievement of all Sales  Milestone will yield  aggregated  payments by MERCK to
DOV of $US [***].  If Net Sales of Product  reach $US [***] in one year, a Sales
Milestone payment of $US [***] will be due. If thereafter,  Net Sales of Product
reach $US [***] in a second year, a Sales Milestone payment of $US [***] will be
due. If thereafter Net Sales of Product reach $US [***] in a third year, a Sales
Milestone payment of $US [***] will be due.

5.6   ROYALTIES

5.6.1 ROYALTIES  PAYABLE BY MERCK.  Subject to the terms and  conditions of this
      Agreement,   MERCK   shall   pay   DOV   royalties,    calculated   on   a
      Product-by-Product basis, as set forth in this Section 5.6.1.

5.6.1.1 PATENT  ROYALTIES.  For those  countries  where the sale of a Product by
      MERCK or its Related  Parties  would,  but for either the existence of the
      license  grants  provided in Sections  3.1 and 3.2, or MERCK's  Control of
      those MERCK Patent Rights  claiming or covering  compositions of matter of
      Product  or  Compound,  infringe a Valid  Patent  Claim,  MERCK  shall pay
      royalties to DOV in an amount  equal to the  following  percentage  of Net
      Sales of Products:

      (a)   [***]  of  worldwide  Net  Sales  in  each  Calendar  Year up to and
            including [***] dollars ($US [***]);

      (b)   [***] of worldwide  Net Sales in each  Calendar Year for the portion
            of  Net  Sales  exceeding  [***]  dollars  ($US  [***]),  up to  and
            including [***] dollars ($US [***]);

      (c)   [***] of worldwide  Net Sales in each  Calendar Year for the portion
            of  Net  Sales  exceeding  [***]  dollars  ($US  [***]),  up to  and
            including [***] dollars ($US [***]); and

      (d)   [***] of worldwide  Net Sales in each  Calendar Year for the portion
            of Net Sales exceeding [***] dollars ($US [***]).

5.6.1.2 KNOW-HOW  ROYALTY.  In  countries  where the sale of  Product  would not
      result in a royalty payment obligation under Section 5.6.1.1,  MERCK shall
      pay  royalty  rates that  shall be set at [***]  percent  ([***]%)  of the
      applicable royalty rate determined according to Section 5.6.1.1.

5.6.1.3 Royalty tiers pursuant to 5.6.1.1 and 5.6.1.2 shall be calculated  based
      on worldwide Net Sales of each Product, provided that the determination of
      whether the royalty shall be calculated  under 5.6.1.1 or 5.6.1.2 shall be
      determined on a country-by-country basis. Royalties on each Product at the
      rates set forth above shall continue on a  country-by-country  basis until
      the expiration of the later of: (i) the last-to-expire Valid Patent Claim;
      and (ii) ten (10) years after  First  Commercial  Sale of such  Product in
      such country (the  "Royalty  Period").  All  royalties  are subject to the
      following conditions:

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      (a)   that only one royalty  shall be due with respect to the same unit of
            Product;

      (b)   that no royalties shall be due upon the sale or other transfer among
            MERCK or any Related  Party,  but in such cases the royalty shall be
            due and calculated  upon MERCK's or the Related Party's Net Sales to
            the first Third Party;

      (c)   that no royalties  shall accrue on the sale or other  disposition of
            Product by MERCK or its Related Parties for use in a Clinical Trial;
            and

      (d)   that no  royalties  shall  accrue on the  disposition  of Product in
            reasonable  quantities  by MERCK or its  Related  Parties as samples
            (promotion or otherwise) or as donations (for example, to non-profit
            institutions or government agencies for a non-commercial purpose).

5.6.2 CHANGE IN SALES PRACTICES. The Parties acknowledge that during the term of
      this Agreement, MERCK's sales practices for the marketing and distribution
      of  Product  may  change to the  extent to which  the  calculation  of the
      payment  for  royalties  on Net  Sales  may  become  impractical  or  even
      impossible.  In such event the  Parties  agree to meet and discuss in good
      faith new ways of compensating  DOV to the extent  currently  contemplated
      under Section 5.6.1.

5.6.3 ROYALTIES FOR BULK COMPOUND. In those cases where MERCK or a Related Party
      sells bulk  Compound  rather than  Product to a Third  Party,  the royalty
      obligations of Section 5.6.1 shall apply to such sale of bulk Compound.

5.6.4 COMPULSORY  LICENSES.  If MERCK or a  Related  Party,  as a  condition  of
      obtaining or maintaining Marketing Authorization in a country, is required
      to grant a compulsory  license to a Third Party with respect to Product in
      any country in the Territory,  and the royalty rate under such  compulsory
      license is lower than the royalty rate provided by Section 5.6.1, then the
      royalty  rate  to be paid by  MERCK  on Net  Sales  under  the  applicable
      compulsory license in that country under Section 5.6.1 shall be reduced to
      the rate paid by the compulsory licensee.

5.6.5 THIRD PARTY  LICENSES.  In the event that one or more patent licenses from
      other Third Parties are required by MERCK or its Related  Parties in order
      to  make,  have  made,  use,  offer  to  sell,  sell  or  import  Compound
      (hereinafter "Third Party Patent Licenses"), [***] percent ([***]%) of the
      consideration  actually  paid under such Third  Party  Patent  Licenses by
      MERCK or its  Related  Parties  for sale of such  Compound or Product in a
      country for a Calendar  Quarter  shall be  creditable  against the royalty
      payments  due DOV by MERCK with  respect to the sale of such  Compound  or
      Products in such country;  provided,  however,  that in no event shall the
      royalties  owed by MERCK to DOV for such Calendar  Quarter in such country
      be reduced by more than [***] percent ([***]%).

5.7 REPORTS; PAYMENT OF ROYALTY. During the term of this Agreement following the
First  Commercial  Sale of a Product,  MERCK  shall  furnish to DOV a  quarterly
written  report for the Calendar  Quarter  showing the Net Sales of all Products
subject  to  royalty  payments  sold by MERCK  and its  Related  Parties  in the
Territory  during the  reporting  period and the  royalties  payable  under this
Agreement.  Reports shall be due on the thirtieth (30th) day following the close
of each Calendar Quarter. Royalties shown to have accrued by each royalty report
shall be due and  payable on the date such  royalty  report is due.  MERCK shall
keep complete and accurate records in sufficient  detail to enable the royalties
payable hereunder to be determined.

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5.8   AUDITS.

      (a)   Upon  the  written  request  of DOV and not more  than  once in each
            Calendar Year,  MERCK shall permit an independent  certified  public
            accounting firm of nationally  recognized  standing  selected by DOV
            and reasonably acceptable to MERCK, at DOV's expense, to have access
            during normal  business hours to such of the records of MERCK as may
            be reasonably  necessary to verify the accuracy of the  Development,
            Product Profile and Sales  Milestones and royalty reports  hereunder
            for any year ending not more than [***] ([***])  months prior to the
            date of such request. The accounting firm shall disclose to DOV only
            whether the royalty  reports are correct or incorrect and the amount
            of any discrepancy. No other information shall be provided to DOV.

      (b)   If such  accounting  firm  correctly  identifies a discrepancy  made
            during such period,  the appropriate Party shall pay the other Party
            the amount of the  discrepancy  within  thirty (30) days of the date
            DOV  delivers  to MERCK such  accounting  firm's  written  report so
            correctly  concluding,  or as otherwise  agreed upon by the Parties.
            The  fees  charged  by such  accounting  firm  shall be paid by DOV;
            provided,  however,  that if such audit uncovers a non-payment or an
            underpayment of milestone  payments or royalties by MERCK during the
            audited period that exceeds the greater of [***] dollars ($US [***])
            or percent  ([***]%) of the total  milestone  payments or  royalties
            owed, then the fees of such accounting firm shall be paid by MERCK.

      (c)   MERCK  shall  include in each  sublicense  granted by it pursuant to
            this Agreement a provision requiring the sublicensee to make reports
            to MERCK,  to keep and  maintain  records of sales made  pursuant to
            such  sublicense  and to  grant  access  to such  records  by  DOV's
            independent  accountant  to the same extent  required of MERCK under
            this Agreement.

      (d)   DOV shall treat all  financial  information  subject to review under
            this Section 5.8 or under any  sublicense  agreement  in  accordance
            with the  confidentiality  and non-use provisions of this Agreement,
            and shall  cause its  accounting  firm to enter  into an  acceptable
            confidentiality  agreement  with MERCK  and/or its  Related  Parties
            obligating it to retain all such information in confidence  pursuant
            to such confidentiality agreement.

5.9 PAYMENT  EXCHANGE  RATE.  All payments to be made by MERCK to DOV under this
Agreement  shall be made in United States  dollars and may be paid by check made
to the order of DOV or bank wire transfer in immediately available funds to such
bank account in the United  States as may be  designated  in writing by DOV from
time to time.  In the case of  sales  outside  the  United  States,  the rate of
exchange to be used in computing  the monthly  amount of currency  equivalent in
United  States  dollars  due DOV shall be made at the  monthly  rate of exchange
utilized by MERCK in its worldwide accounting system, prevailing on the third to
the last  business day of the month  preceding the month in which such sales are
recorded by MERCK.

5.10 DOV  216,303  COMPETITION  WITH DOV  21,947.  If,  during  the term of this
Agreement  MERCK  reasonably  demonstrates  that the sale by  prescription  of a
finished  pharmaceutical  product  containing  DOV 216,303 by DOV,  Wyeth or any
Affiliate or licensee of DOV or Wyeth has  adversely  affected  MERCK's sales by
prescription  of DOV  21,947  for an  Indication  for which  MERCK has  obtained
Marketing  Authorization,  upon MERCK's  request the parties shall  negotiate in
good faith to determine either (i) a commercially  reasonable amount of monetary
compensation that DOV should pay MERCK, or (ii) any other reasonable  adjustment
of payments made under this Agreement,  in either such case to compensate  MERCK
for such lost sales.  The Parties agree that disputes arising under this Section
5.10 shall be governed by the dispute resolution procedures set forth in Section
12.6.

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5.11 INCOME TAX WITHHOLDING.  If laws, rules or regulations  require withholding
of income taxes or other taxes  imposed upon  payments set forth in this Article
5, MERCK  shall make such  withholding  payments  as may be  required  and shall
subtract such  withholding  payments from the payments set forth in this Article
5. MERCK shall submit  appropriate  proof of payment of the withholding taxes to
DOV within a reasonable period of time.

6.    REPRESENTATIONS AND WARRANTIES

6.1  REPRESENTATIONS AND WARRANTIES OF DOV. DOV represents and warrants to MERCK
that as of the date of this Agreement:

      (a)   to DOV's knowledge, the DOV Patent Rights and DOV Know-How exist and
            are not invalid or unenforceable, in whole or in part;

      (b)   DOV is duly  organized  and validly  existing  under the laws of its
            state of incorporation;

      (c)   DOV has the full corporate right,  power and authority to enter into
            this  Agreement,  to  perform  the  Collaboration  and to grant  the
            licenses granted under Article 3 hereof, provided, however, that any
            DOV representation or warranty pertaining to DOV Patent Rights or to
            the infringement of Third Party Patent Rights is made exclusively by
            DOV in Sections 6.1(g) and 6.1(h) below and not this Section 6.1(c);

      (d)   to DOV's  knowledge,  this Agreement is legally binding upon DOV and
            enforceable  in  accordance  with  its  terms,  and  the  execution,
            delivery, and performance of this Agreement by DOV does not conflict
            with any agreement, instrument or understanding, oral or written, to
            which it is a party or by which it may be  bound,  nor  violate  any
            material  law or  regulation  of any  court,  governmental  body  or
            administrative or other agency having jurisdiction over it;

      (e)   DOV has received from Wyeth an acknowledgment  that DOV has provided
            to Wyeth the  information  required  under  Section 4.1 of the Wyeth
            Agreement,  and that Wyeth has  declined  to  exercise  the right of
            first refusal conferred by Section 4.1 of the Wyeth Agreement;

      (f)   DOV has not previously assigned, transferred,  conveyed or otherwise
            encumbered its right, title and interest in DOV Patent Rights or DOV
            Know-How;

      (g)   to DOV's  knowledge,  it is the sole and exclusive owner or licensee
            of the DOV Patent Rights and DOV Know-How, all of which are free and
            clear of any liens,  charges and encumbrances,  and no other person,
            corporate  or  other  private  entity,  or  governmental  entity  or
            subdivision  thereof,  has any claim of  ownership  whatsoever  with
            respect to the DOV Patent Rights and DOV  Know-How,  or, in the case
            of  Wyeth,  Wyeth  has no  basis  for  objecting  to the  sublicense
            thereof;

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      (h)   to DOV's  knowledge,  the  exercise of the license  granted to MERCK
            under the DOV Patent  Rights  and DOV  Know-How,  including  without
            limitation  the  development,  manufacture,  use, sale and import of
            Compound  and  Products  do  not  interfere  with  or  infringe  any
            intellectual property rights owned or possessed by any Third Party;

      (i)   to DOV's  knowledge,  there are no claims,  judgments or settlements
            against  or owed by DOV  and no  pending  or  threatened  claims  or
            litigation relating to the DOV Patent Rights and DOV Know-How; and

      (j)   DOV has  disclosed  to MERCK  all  reasonably  relevant  information
            regarding the DOV Patent Rights and DOV Know-How licensed under this
            Agreement, including without limitation all patent opinions obtained
            by DOV related thereto.

6.2  REPRESENTATIONS  AND WARRANTIES OF MERCK.  MERCK represents and warrants to
DOV that as of the date of this Agreement:

      (a)   MERCK has the full  right,  power and  authority  to enter into this
            Agreement and to perform the Collaboration;

      (b)   MERCK is duly  organized and validly  existing under the laws of its
            country of incorporation;

      (c)   to MERCK's  knowledge,  this Agreement is legally binding upon MERCK
            and  enforceable  in accordance  with its terms,  and the execution,
            delivery,  and  performance  of this  Agreement  by  MERCK  does not
            conflict with any agreement,  instrument or  understanding,  oral or
            written,  to which it is a party  or by which it may be  bound,  nor
            violate any material law or  regulation  of any court,  governmental
            body or administrative or other agency having jurisdiction over it;

      (d)   MERCK is a direct or  indirect  wholly-owned  subsidiary  of Merck &
            Co., Inc.; and

      (e)   MERCK is not  actively  engaged in the clinical  development  of any
            compound for the Indication of depression (as defined under DSM-IV).

6.3 DISCLAIMER.  THE FOREGOING WARRANTIES OF EACH PARTY ARE IN LIEU OF ANY OTHER
WARRANTIES,  EXPRESS OR  IMPLIED,  INCLUDING  WITHOUT  LIMITATION,  ANY  IMPLIED
WARRANTIES OF NONINFRINGEMENT,  ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR ANY
IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE,  ALL OF WHICH ARE HEREBY
SPECIFICALLY EXCLUDED AND DISCLAIMED.

7.    PATENT PROVISIONS

7.1 FILING,  PROSECUTION AND MAINTENANCE OF PATENTS.  DOV shall file,  prosecute
and maintain in the Territory, upon appropriate consultation with MERCK, the DOV
Patent  Rights  licensed  to MERCK  under  this  Agreement.  MERCK  shall  file,
prosecute and maintain in the Territory, upon appropriate consultation with DOV,
the Joint Patent Rights. With respect to DOV Information and Inventions, DOV may
elect not to file and if so,  DOV shall  notify  MERCK and MERCK  shall have the
right to file such patent  applications.  In such event,  DOV shall execute such
documents and perform such acts at DOV's expense as may be reasonably  necessary
in a timely manner to allow MERCK to continue such  prosecution on behalf of and
in the name of DOV. In each case,  the filing  Party  shall give the  non-filing
Party an opportunity to review the text of the application before filing,  shall
consult with the  non-filing  Party with respect  thereto,  and shall supply the
non-filing  Party with a copy of the application as filed,  together with notice
of its filing date and serial number. For those patents and patent  applications
covered in this Section 7.1, each filing Party shall keep the  non-filing  Party
advised of the status of the actual and  prospective  patent  filings and,  upon
request,  shall  provide  advance  copies of any papers  related to the  filing,
prosecution  and  maintenance  of such patent  filings.  DOV shall promptly give
notice to MERCK of the grant,  lapse,  revocation,  surrender,  invalidation  or
abandonment  of any DOV  Patent  Rights  licensed  to  MERCK  for  which  DOV is
responsible  for the filing,  prosecution and  maintenance.  With respect to all
filings  hereunder,  the filing  Party shall be  responsible  for payment of all
costs and expenses related to such filings.

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7.2 OPTION OF MERCK TO PROSECUTE AND MAINTAIN PATENTS.  DOV shall give notice to
MERCK of any desire to cease prosecution and/or maintenance of DOV Patent Rights
on a country by country basis in the Territory  and, in such case,  shall permit
MERCK, in its sole  discretion,  to continue  prosecution or maintenance of such
DOV Patent Rights at its own expense. If MERCK elects to continue prosecution or
maintenance  or to file based on DOV's  election not to file pursuant to Section
7.1 above,  DOV shall  execute  such  documents  and perform  such acts at DOV's
expense as may be reasonably  necessary for MERCK to perform such prosecution or
maintenance  or  filing  on  behalf  of and  in  the  name  of  DOV.  All of the
out-of-pocket  expenses and costs incurred by MERCK to continue  prosecution and
maintenance of DOV Patent Rights shall be fully creditable against royalties due
under Section 5.6 of this Agreement;  provided, however, that no royalty payment
when  due,  regardless  of the  number  of such  credits  available  to MERCK in
accordance with the terms of this Agreement, shall be reduced by more than fifty
percent  (50%).  Unused  credits  may be carried  over into  subsequent  royalty
periods.

7.3   INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE.

7.3.1 Each Party shall,  within ten (10) days of learning of such event,  inform
      the other  Party of any  request  for,  or filing or  declaration  of, any
      interference,  opposition, reissue or reexamination relating to DOV Patent
      Rights or Joint Patent Rights.  MERCK and DOV shall thereafter consult and
      cooperate  fully to  determine a course of action with respect to any such
      proceeding.  MERCK  shall  have  the  right  to  review  and  approve  any
      submission to be made in connection with such  proceeding  relating to DOV
      Patent Rights.

7.3.2 DOV  shall  not  initiate  any  reexamination,   interference  or  reissue
      proceeding relating to DOV Patent Rights without the prior written consent
      of MERCK,  which consent shall not be unreasonably  withheld.  MERCK shall
      not  initiate  any  reexamination,   interference  or  reissue  proceeding
      relating to Joint Patent Rights without the prior written  consent of DOV,
      which consent shall not be unreasonably withheld.

7.3.3 In connection with any interference, opposition, reissue, or reexamination
      proceeding relating to DOV Patent Rights or Joint Patent Rights, MERCK and
      DOV will cooperate  fully and will provide each other with any information
      or assistance  that either may reasonably  request.  Each Party shall keep
      the other Party informed of developments in any such action or proceeding,
      including,  to the extent permissible by law, consultation on and approval
      of any settlement, the status of any settlement negotiations and the terms
      of any offer related thereto.

7.3.4 DOV shall bear the expense of any interference, opposition, reexamination,
      or reissue  proceeding  relating to DOV Patent Rights.  Both Parties shall
      share equally the expense of any interference,  opposition,  reexamination
      or reissue proceeding related to Joint Patent Rights.

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7.3.5 Regardless  of which Party has the right to initiate  and  prosecute  such
      action,  both Parties shall, as soon as practicable after receiving notice
      of such  certification,  convene and consult with each other regarding the
      appropriate course of conduct for such action.  The  non-initiating  Party
      shall  have  the  right  to be kept  fully  informed  and  participate  in
      decisions regarding the appropriate course of conduct for such action, and
      the right to join and participate in such action.

7.4   ENFORCEMENT AND DEFENSE.

7.4.1 DOV shall give MERCK notice of either (i) any  infringement  of DOV Patent
      Rights or (ii) any  misappropriation  or misuse of DOV  Know-How  that may
      come to DOV's  attention.  MERCK  and DOV  shall  thereafter  consult  and
      cooperate fully to determine a course of action, including but not limited
      to the  commencement  of legal  action by either or both MERCK and DOV, to
      terminate any infringement of DOV Patent Rights or any misappropriation or
      misuse of DOV Know-How. However, DOV, upon notice to MERCK, shall have the
      first right to initiate and prosecute such legal action at its own expense
      and in the  name  of DOV and  MERCK,  or to  control  the  defense  of any
      declaratory judgment action relating to DOV Patent Rights or DOV Know-How.
      DOV shall  promptly  inform MERCK if it elects not to exercise  such first
      right and MERCK shall  thereafter  have the right to either  initiate  and
      prosecute  such  action or to  control  the  defense  of such  declaratory
      judgment action in the name of MERCK and, if necessary, DOV; provided that
      MERCK shall not admit the invalidity or fail to defend the validity of any
      DOV  Patent  Right   without  DOV's  prior  consent  which  shall  not  be
      unreasonably  withheld.  Each Party shall have the right to be represented
      by counsel of its own choice.

7.4.2 In the event that DOV elects not to initiate  and  prosecute  an action as
      provided  in Section  7.4.1,  and MERCK  elects to do so, the costs of any
      agreed-upon  course of  action to  terminate  infringement  of DOV  Patent
      Rights or  misappropriation  or misuse of DOV Know-How,  including without
      limitation  the costs of any legal action  commenced or the defense of any
      declaratory judgment, shall be shared equally by DOV and MERCK.

7.4.3 For any action to terminate any  infringement  of DOV Patent Rights or any
      misappropriation  or misuse of DOV  Know-How,  in the event  that MERCK is
      unable to initiate or prosecute  such action  solely in its own name,  DOV
      will  join  such  action  voluntarily  and  will  execute  and  cause  its
      Affiliates  to  execute  all  documents  necessary  for MERCK to  initiate
      litigation to prosecute and maintain such action.  In connection  with any
      action,  MERCK and DOV will  cooperate  fully and will  provide each other
      with any  information or assistance  that either may  reasonably  request.
      Each Party shall keep the other informed of  developments in any action or
      proceeding,  including,  to the extent permissible by law, consultation on
      and approval of any settlement,  the status of any settlement negotiations
      and the terms of any offer related thereto.

7.4.4 Any recovery  obtained by either or both MERCK and DOV in connection  with
      or as a result of any action  contemplated by this Section 7.4, whether by
      settlement or otherwise, shall be shared in order as follows:

      (a)   the Party that  initiated and prosecuted the action shall recoup all
            of its costs and expenses incurred in connection with the action;

      (b)   the other  Party  shall then,  to the extent  possible,  recover its
            costs and expenses incurred in connection with the action; and

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      (c)   the amount of any  recovery  remaining  shall then be allocated on a
            [***]%/[***]%  basis,  with the Party that  initiated and prosecuted
            the action  receiving  [***]% of the  recovery  and the other  Party
            receiving [***]% of the recovery.

7.4.5 DOV shall  inform  MERCK of any  certification  regarding  any DOV  Patent
      Rights it has received pursuant to either 21 U.S.C. ss.ss.355(b)(2)(A)(iv)
      or  (j)(2)(A)(vii)(IV)  or  its  successor  provisions,   or  any  similar
      provisions in a country in the Territory other than the United States, and
      shall provide MERCK with a copy of such certification within five (5) days
      of receipt.  DOV's and MERCK's  rights with respect to the  initiation and
      prosecution of any legal action as a result of such  certification  or any
      recovery  obtained as a result of such legal action shall be as defined in
      Sections  7.4.1 through 7.4.4 hereof;  provided,  however,  that DOV shall
      exercise  its first right to initiate and  prosecute  any action and shall
      inform  MERCK of such  decision  within  ten (10) days of  receipt  of the
      certification, after which time MERCK shall have the right to initiate and
      prosecute such action.

7.5 PATENT TERM RESTORATION,  EXTENSION OR ADJUSTMENT.  The Parties hereto shall
cooperate with each other,  including  without  limitation to provide  necessary
information  and  assistance  as the other  Party  may  reasonably  request,  in
obtaining patent term restoration, extension or adjustment certificates or their
equivalents  in any  country in the  Territory  where  applicable  to DOV Patent
Rights or Joint Patent Rights.  The Party  responsible  for prosecuting a patent
application included in the DOV Patent Rights or Joint Patent Rights shall apply
promptly for patent term restoration or adjustment after the application  issues
as a U.S. or foreign patent,  consistent  with those  procedures set forth in 35
U.S.C. ss.ss. 154(b) and 155A or their foreign equivalents. For any patent which
encompasses  within its scope  Compound or Product,  either as a composition  of
matter or as a process for using such  composition,  that has been  subjected to
regulatory review by the FDA or comparable  foreign regulatory agency, the owner
of record for such patent shall apply for patent term  extension  in  accordance
with the  procedures set forth in 35 U.S.C ss. 156. For any Product or Compound,
if the Party sponsoring the regulatory review thereof is not the owner of record
of all patents  eligible for patent term extension under 35 U.S.C.  ss. 156, the
Party sponsoring the regulatory  review for Compound or Product shall inform the
owner of record promptly of any regulatory  approval that triggers the aforesaid
obligation to apply for patent term extension.  In the event that elections with
respect to obtaining such patent term  restoration,  extension or adjustment are
to be made,  MERCK shall have the right to make the  election  and DOV agrees to
abide by such election.

7.6 WYETH AGREEMENT.  The Parties acknowledge that DOV's rights to prosecute and
maintain  DOV Patent  Rights  relating  to DOV  216,303 are subject to the Wyeth
Agreement,  and that this Article 7 shall be interpreted and applied in a manner
consistent with the relevant provisions of the Wyeth Agreement.

7.7 EFFECT OF CERTAIN TERMINATIONS.  Notwithstanding the foregoing provisions of
Article 7 to the contrary,  in the event of a termination  of this  Agreement by
either Party  pursuant to Section 9.2 or by DOV  pursuant to Section 9.3,  MERCK
shall have no rights and DOV shall have no obligations under this Article 7 with
respect to DOV Patent Rights.

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8.    INDEMNIFICATION

8.1   BY MERCK. MERCK agrees to indemnify,  hold harmless and defend DOV and its
      officers,  directors,  shareholders,  employees,  successors  and  assigns
      (collectively,  the "DOV Indemnified Parties") against any and all losses,
      costs,  expenses,  fees or damages  arising  out of or  relating to claims
      asserted by any Third Party, whether governmental and private, arising out
      of or  relating  to (i)  personal  injury  arising  from the  development,
      manufacture,  use,  sale or other  disposition  of Product by MERCK or its
      Related  Parties under this  Agreement;  (ii) MERCK's breach of any of its
      representations and warranties set forth in Section 6.2 of this Agreement;
      (iii)  MERCK's  failure  to comply  with all  applicable  laws,  rules and
      regulations;  or (iv) the gross negligence or willful misconduct of any of
      the MERCK Indemnified Parties as defined below,  provided that MERCK shall
      not be required to indemnify,  hold harmless or defend any DOV Indemnified
      Party against any claim  arising out of or related to any DOV  Indemnified
      Party's  (w) use,  development  and/or  commercialization  of any  product
      containing a Compound in the event of DOV's  obtaining of rights  relating
      to Compounds  and Products  pursuant to Section  9.4.3;  (x) use of Mother
      Liquor  provided  by MERCK to DOV  pursuant  to  Section  3.8;  (y)  gross
      negligence  or  willful  misconduct,  or (z)  failure  to comply  with all
      applicable laws, rules and regulations.

8.2   BY DOV. DOV agrees to  indemnify,  hold  harmless and defend MERCK and its
      officers,  directors,  shareholders,  employees,  successors  and  assigns
      (collectively,  the  "MERCK  Indemnified  Parties")  against  any  and all
      losses,  costs,  expenses,  fees or damages  arising out of or relating to
      claims  asserted by any Third  Party,  whether  governmental  and private,
      arising  out  of  or   relating  to  (i)  DOV's   breach  of  any  of  its
      representations and warranties set forth in Section 6.1 of this Agreement;
      (ii)  DOV's  failure  to  comply  with  all  applicable  laws,  rules  and
      regulations;  (iii) in the event of DOV's  obtaining of rights relating to
      Compounds and Products pursuant to Section 9.4.3,  DOV's use,  development
      and/or  commercialization  of any product containing a Compound;  (iv) any
      use by DOV or any other person of Mother  Liquor  provided by MERCK to DOV
      pursuant to Section 3.8; or (v) the gross negligence or willful misconduct
      of any of the DOV  Indemnified  Parties,  provided  that DOV  shall not be
      required to indemnify, hold harmless or defend any MERCK Indemnified Party
      against  any claim  arising  out of or  related  to any MERCK  Indemnified
      Party's  (y) gross  negligence  or willful  misconduct,  or (z) failure to
      comply with all applicable laws, rules and regulations.

8.3   PROCEDURE.  If either Party is seeking  indemnification under Sections 8.1
      or 8.2 (the  "Indemnified  Party"),  it shall  inform the other Party (the
      "Indemnifying  Party")  of the  claim  giving  rise to the  obligation  to
      indemnify pursuant to such section as soon as reasonably practicable after
      receiving notice of the claim. The Indemnifying Party shall have the right
      to assume  the  defense  of any such  claim for which it is  obligated  to
      indemnify the Indemnified  Party.  The  Indemnified  Party shall cooperate
      with the Indemnifying  Party and the  Indemnifying  Party's insurer as the
      Indemnifying Party may reasonably request, and at the Indemnifying Party's
      cost  and  expense.   The  Indemnified  Party  shall  have  the  right  to
      participate,  at its own  expense and with  counsel of its choice,  in the
      defense  of any claim or suit that has been  assumed  by the  Indemnifying
      Party.  Neither  Party shall have the  obligation  to indemnify  the other
      Party in  connection  with any  settlement  made  without the  Indemnified
      Party's written consent,  which consent shall not be unreasonably withheld
      or delayed.  If the Parties cannot agree as to the application of Sections
      8.1 or 8.2 to any claim,  pending  resolution  of the dispute  pursuant to
      Section 12.6,  the Parties may conduct  separate  defenses of such claims,
      with each  Party  retaining  the right to claim  indemnification  from the
      other Party in accordance  with Sections 8.1 or 8.2 upon resolution of the
      underlying claim.

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9.    TERM AND TERMINATION

9.1 TERM AND  EXPIRATION.  This  Agreement  shall be effective as of the Closing
Date and, unless terminated  earlier pursuant to Sections 9.2 or 9.3 below, this
Agreement shall continue in effect until  expiration of all royalty  obligations
hereunder.  Upon  expiration  of this  Agreement,  MERCK's  and  DOV's  licenses
pursuant to Section 3.1 and Section 3.2 shall  become fully  paid-up,  perpetual
licenses.

9.2  TERMINATION  BY MERCK WITHOUT  CAUSE.  Notwithstanding  anything  contained
herein to the contrary,  MERCK shall have the right to terminate  this Agreement
at any time in its sole discretion by giving [***] ([***]) days' advance written
notice to DOV. Prior to the effective date of the  termination of this Agreement
pursuant to this Section 9.2,  MERCK shall return or cause to be returned to DOV
all  Information  in tangible  form  received  from DOV and all copies  thereof;
provided,  however,  that MERCK may retain one copy of Information received from
DOV in its confidential files for record purposes.

9.3.  TERMINATION FOR CAUSE. This Agreement may be terminated at any time during
      the term of this Agreement:

9.3.1.upon  written  notice by either  Party if the other  Party is in breach of
      any material  obligation  hereunder  and has not cured such breach  within
      ninety  (90) days after  written  notice  requesting  cure of the  breach,
      subject to Section 9.3.2;  provided,  however, that in the event of a good
      faith  dispute with respect to the  existence  of a material  breach,  the
      ninety (90) day cure period shall be tolled until such time as the dispute
      is resolved pursuant to Section 12.6 hereof; or

9.3.2.either   Party   upon   the   filing   or   institution   of   bankruptcy,
      reorganization,  liquidation  or  receivership  proceedings,  or  upon  an
      assignment  of a  substantial  portion of the  assets  for the  benefit of
      creditors by the other party (a "Bankruptcy  Event"),  provided,  however,
      that in the case of any  involuntary  bankruptcy  proceeding such right to
      terminate shall only become effective if the Party consents to involuntary
      bankruptcy or such  proceeding  is not  dismissed  within ninety (90) days
      after the filing thereof.

9.3.3.In the event that MERCK  breaches a material  obligation  of the Agreement
      after the First  Commercial Sale in the United States,  EMEA or Japan, and
      such breach relates only to the  development or  commercialization  of the
      Product in a single country or group of countries,  the Agreement shall be
      terminable  by DOV only in the country or group of countries to which such
      breach  relates.  For  avoidance of doubt,  a failure of MERCK to exercise
      Commercially  Reasonable Efforts pursuant to Section 3.6 shall be deemed a
      breach of a material obligation of MERCK.

9.4   EFFECT OF TERMINATION; SURVIVAL.

9.4.1 EFFECT ON  LICENSES.  (a) In the event of  termination  under  Section 9.2
      above or  termination  by DOV  pursuant  to  Section  9.3  above,  MERCK's
      licenses  pursuant  to  Sections  3.1 and 3.2 shall  terminate  as of such
      termination  date,  provided,  however,  that  MERCK  shall  have a  fully
      paid-up,  non-exclusive  license to use DOV Information and Inventions and
      Joint Information and Inventions for internal research purposes only.

      (b) In the event of  termination  by MERCK  pursuant to Section 9.3 above,
      all  licenses  pursuant to  Sections  3.1 and 3.2 shall  become  perpetual
      licenses, subject to the obligation to pay

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      milestones and royalties as set forth in this Section  9.4.1(b),  provided
      that  any  license  to DOV  216,303  will  be  subject  to the  terms  and
      conditions of the Wyeth Agreement,  and MERCK's rights pursuant to Section
      3.4 shall become perpetual.  DOV shall,  within thirty (30) days after the
      effective  date of such  termination,  return or cause to be  returned  to
      MERCK all Information in tangible form, and all substances or compositions
      delivered or provided by MERCK, as well as any other material  provided by
      MERCK in any medium.  In the event of such a termination  by MERCK,  MERCK
      shall continue to have an obligation to pay DOV milestones pursuant to and
      under the terms set forth in Sections 5.3, 5.4 and 5.5,  provided that the
      amount of such milestone  payments shall be [***] percent  ([***]%) of the
      amounts set forth in Sections  5.3, 5.4 and 5.5,  and MERCK shall  further
      continue to have an obligation to pay DOV royalties  pursuant to and under
      the terms set  forth in  Section  5.6,  provided  that the  amount of such
      royalties  shall be [***]  percent  ([***]%)  of the  amounts set forth in
      Section 5.6.

9.4.2 PAYMENT  OBLIGATIONS  FOLLOWING  TERMINATION.  In the event of termination
      under Section 9.2 or 9.3 above,  each Party shall pay all amounts then due
      and owing as of the effective date of such termination no later than sixty
      (60)  days  after  the  effective  date of such  termination  (such 60 day
      period, the "Transition Period").

9.4.3 KNOW-HOW AND PATENT TRANSFERS, REGULATORY FILINGS AND LICENSES.

      (a)   In the event of  termination  by MERCK pursuant to Section 9.2 or by
            DOV  pursuant  to Section  9.3  above,  no later than the end of the
            Transition Period,  MERCK shall deliver to DOV the MERCK Termination
            Know-How;  provided;  however,  that MERCK and its  Affiliates  will
            transfer to DOV any Information or Joint  Information and Inventions
            necessary or useful to the prosecution of DOV Patent Rights or Joint
            Patent  Rights no less than thirty (30) days before any  application
            deadline applicable to any DOV Patent Right or Joint Patent Rights.

      (b)   Effective only upon the event of termination of this Agreement under
            Section  9.2 or by DOV  pursuant  to Section  9.3  above,  (i) MERCK
            hereby  transfers,  and  agrees  to  transfer,  to DOV  title  to or
            sponsorship of any IND, NDA or other  regulatory  filing held in the
            name of MERCK or its Related  Parties  pertaining to the Compound or
            the Product or, (ii) if such transfer is not legally  permissible or
            such items do not relate solely to Compound or Product, MERCK hereby
            grants,  and  agrees  to  grant,  DOV the  right,  with the right to
            sublicense,  to access, use and  cross-reference  such data, filings
            and  approvals  from  Regulatory  Authorities,  which right shall be
            exclusive  (including  as to MERCK)  with  respect to  Compound  and
            Product.

      (c)   Effective  upon  the  effective  date  of the  termination  of  this
            Agreement under Section 9.2 or 9.3 above, MERCK hereby grants to DOV
            a paid-up, royalty-free,  perpetual, irrevocable, exclusive (even as
            to MERCK and its  Affiliates)  license,  under MERCK Patent  Rights,
            MERCK's and its  Controlled  Affiliates'  rights  under Joint Patent
            Rights,  and MERCK  Termination  Know-How,  to the extent  that such
            MERCK Patent Rights and MERCK  Termination  Know-How are exclusively
            related  to  Compound(s)   and/or   Product(s),   with  a  right  to
            sublicense,  to make,  have made, use, offer to sell, sell or import
            Compound(s)  and/or  Product(s)  for use and sale in the  country or
            countries to which such termination relates.

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      (d)   Effective  upon  the  effective  date  of the  termination  of  this
            Agreement under Section 9.2 or 9.3 above, MERCK hereby grants to DOV
            a  paid-up,  royalty-free,  perpetual,  irrevocable,   non-exclusive
            license,  under MERCK  Patent  Rights,  MERCK's  and its  Controlled
            Affiliates'  rights under Joint Patent Rights and MERCK  Termination
            Know-How that are not licensed  under Section  9.4.3(b) and that are
            related  to  Compound(s)   and/or   Product(s),   with  a  right  to
            sublicense,  to make,  have made, use, offer to sell, sell or import
            Compound(s)  and/or  Product(s)  for use and sale in the  country or
            countries to which such termination relates.

      (e)   Following the effective  date of the  termination  of this Agreement
            under  Section 9.2 or 9.3 above,  neither  MERCK nor its  Controlled
            Affiliates  shall sue or  otherwise  assert  any claim  against  (or
            participate  in or join or  otherwise  aid in any  claim  or  action
            against)   DOV,  any  contract   manufacturer   of  DOV  and/or  any
            sublicensee  of DOV to the  extent  that  such  claim is or would be
            based on the  manufacture,  use, sale, offer for sale or importation
            of Compound(s)  and/or  Product(s),  which  manufacture,  use, sale,
            offer for sale or importation is or would be alleged to infringe any
            Patent  Right  (now or in the  future)  Controlled  by  MERCK or its
            Controlled Affiliates .

      (f)   No  later  than  the end of the  Transition  Period,  MERCK  and its
            Controlled  Affiliates shall transfer at no cost to DOV any Compound
            or Product in MERCK's  possession or in the  possession of a Related
            Party.

      (g)   During the Transition  Period,  MERCK and its Controlled  Affiliates
            shall  provide  reasonable  technical  support  from  technical  and
            scientific  personnel  of MERCK and its  Affiliates  to  effect  the
            complete  transfer  of  Information  from  MERCK  to DOV,  including
            Information  necessary for the use of MERCK Termination Know-How and
            the  practice  of MERCK  Patent  Rights and Joint  Patent  Rights in
            relation to Compound or Product.

9.4.4 Notwithstanding  anything in this Section 9.4, MERCK shall not be required
      to  provide a  license  under  MERCK  Patent  Rights or MERCK  Termination
      Know-How,  for use of Compound(s)  and/or Product(s) in humans as a result
      of a termination of this Agreement,  if (a) [***] and (b) either (i) [***]
      or  (ii)  [***].  For  the  avoidance  of  doubt,  (y) in the  event  of a
      determination  by MERCK that such Product is materially  unsafe for use in
      humans,  the  provisions of Article 10 shall apply and (z) nothing in this
      Section  9.4.4 shall prevent DOV from  exercising  any of its rights under
      Section 9.4.3 in connection with the use of Compound(s)  and/or Product(s)
      in non-humans.

9.5   SURVIVAL.  Expiration or termination  of this Agreement  shall not relieve
      the  Parties  of any  obligation  accruing  prior  to such  expiration  or
      termination.  Any expiration or  termination  of this  Agreement  shall be
      without  prejudice to the rights of either Party against the other accrued
      or accruing  under this  Agreement  prior to  expiration  or  termination,
      including   without   limitation  the  obligation  to  pay  royalties  for
      Product(s) or Compound sold prior to such expiration or  termination.  The
      provisions  of  Article 4 (other  than  Section  4.5)  shall  survive  the
      expiration or  termination  of this Agreement and shall continue in effect
      for ten (10)  years.  In  addition,  the  provisions  of  Articles 1, 6, 7
      (subject to Section 7.7), 8, and 12 and Sections 9.4 and 9.5 shall survive
      any expiration or termination of this Agreement.

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9.6 UNITED STATES  BANKRUPTCY  CODE. All licenses and rights to licenses granted
under or pursuant to this  Agreement  are, and shall  otherwise be deemed to be,
for  purposes  of  Section  365(n) of the  United  States  Bankruptcy  Code (the
"Code"),  licenses of rights to "intellectual property" as defined under Section
101(35A) of the Code.  Either  Party,  as a licensee  of such rights  under this
Agreement (the "non-Bankrupt party"), shall retain and may fully exercise all of
its rights and elections  under the Code, and upon  commencement of a bankruptcy
proceeding by or against the other Party (the "Bankrupt  Party") under the Code,
shall be entitled  to a complete  duplicate  of, or  complete  access to (as the
non-Bankrupt Party deems  appropriate),  any such intellectual  property and all
embodiments of such intellectual  property.  Such intellectual  property and all
embodiments  thereof shall be promptly  delivered to the non-Bankrupt  Party (i)
upon any such  commencement  of a bankruptcy  proceeding  upon  written  request
therefor by the non-Bankrupt Party, unless the Bankrupt Party elects to continue
to perform all of its obligations  under this Agreement or (ii) if not delivered
under (i) above,  upon the  rejection  of this  Agreement by or on behalf of the
Bankrupt Party upon written  request  therefor by the  non-Bankrupt  Party.  The
foregoing  provisions  of Section  9.6 are without  prejudice  to any rights the
non-Bankrupt Party may have arising under the Code or other applicable law.

10.   SAFETY ISSUES.

      10.1 In the event that MERCK  determines  that the  Product is  materially
      unsafe for use in humans, MERCK agrees to meet promptly with DOV following
      such  determination,  (i) to show DOV all  preclinical  and clinical  data
      related to the Product,  including  the data  demonstrating  such material
      lack of safety  for use in  humans;  (ii) to  explain to DOV the basis for
      MERCK's reasonable determination that the Product is materially unsafe for
      use in humans,  including the factors  supporting  MERCK's  decision;  and
      (iii) to discuss  with DOV  whether  Compound  or Product  may be safe for
      Indications other than those tested by MERCK, or may be safe using reduced
      doses, or may be safe for administration to patient populations other than
      those tested by MERCK.

      10.2 [***].

11.   CONDITIONS TO CLOSING; HSR ACT

11.1  HSR FILING.

      (a)   Each of MERCK and DOV  shall,  within  fifteen  (15) days  after the
            Execution Date, file with the United States Federal Trade Commission
            and the  Antitrust  Division  of the  United  States  Department  of
            Justice,  any HSR  Filing  required  of it  under  the HSR Act  with
            respect to the transactions  contemplated  hereby.  The Parties will
            cooperate   with  one  another  to  the  extent   necessary  in  the
            preparation  of any such HSR Filing.  Each Party will be responsible
            for its own costs, expenses, and filing fees associated with any HSR
            Filing.

      (b)   In  respect  of any HSR  Filing,  each of MERCK and DOV will use its
            good faith efforts to eliminate any concern on the part of any court
            or  Governmental  Authority  regarding  the legality of the proposed
            transaction, including cooperating in good faith with any government
            investigation and the prompt production of documents and information
            demanded  by a second  request for  documents  and of  witnesses  if
            requested.

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11.2  CLOSING  DATE OF  AGREEMENT.  The Closing  Date shall not occur until such
      time as (a) the  waiting  period  under the HSR Act shall have  expired or
      earlier been terminated; (b) no injunction (whether temporary, preliminary
      or permanent) prohibiting consummation of the transactions contemplated by
      this Agreement or any material portion hereof shall be in effect;  and (c)
      no  requirements  or  conditions  shall have been  imposed  in  connection
      therewith   which  are  not   reasonably   satisfactory   to  the  Parties
      (collectively, the "HSR Conditions").

11.3  PORTIONS OF  AGREEMENT  EFFECTIVE AS OF  EXECUTION  DATE.  Notwithstanding
      Section 11.2 and anything in this Agreement to the contrary, the following
      provisions  of the  Agreement  shall be in full force and effect as of the
      Execution  Date:  Article 1  (Definitions),  Article 4  (Confidentiality),
      Article 6 (Representations  and Warranties),  Article 8 (Indemnification),
      Article 9 (Termination)  Article 11 (Conditions to Closing;  HSR Act), and
      Article 12 (Miscellaneous).

12.   MISCELLANEOUS

12.1 FORCE MAJEURE. Neither Party shall be held liable to the other Party nor be
deemed to have  defaulted  under or breached this Agreement for failure or delay
in  performing  any  obligation  under this  Agreement  to the extent  that such
failure  or delay is caused by or results  from  causes  beyond  the  reasonable
control of the  affected  Party,  potentially  including,  but not  limited  to,
embargoes,  war,  acts of war (whether  war be declared or not),  insurrections,
riots, civil commotions,  strikes,  lockouts or other labor disturbances,  fire,
floods,  or other  acts of God,  or acts,  omissions  or delays in acting by any
Governmental  Authority or the other Party.  The affected Party shall notify the
other Party of such force majeure circumstances as soon as reasonably practical,
and shall promptly undertake all reasonable efforts necessary to cure such force
majeure circumstances.

12.2  ASSIGNMENT/  CHANGE OF CONTROL.  Except as provided in this Section  12.2,
this Agreement may not be assigned or otherwise  transferred,  nor may any right
or obligation hereunder be assigned or transferred,  by either Party without the
consent of the other  Party.  MERCK may,  without  DOV's  consent,  assign  this
Agreement  and its rights  and  obligations  hereunder  in whole or in part to a
MERCK Affiliate or in connection with a Change of Control (as defined below). In
the event of such Change of Control,  MERCK will promptly (but in no event later
than five (5) days  thereafter)  notify DOV of such Change of Control.  DOV may,
without  MERCK's  consent,  assign this Agreement and its rights and obligations
hereunder (except as specified below) in connection with a Change of Control. In
the event of such Change of Control,  DOV will  promptly  (but in no event later
than five (5) days  thereafter)  notify  MERCK of such  Change of  Control.  Any
assignee  shall  assume all  assigned  obligations  of its  assignor  under this
Agreement.  Any attempted  assignment  not in accordance  with this Section 12.2
shall be void. In addition to MERCK's rights set forth above,  in the event of a
Change of  Control  in which a Major  Pharma  Entity  obtains  control of DOV by
acquiring DOV's assets or voting equity  securities (by asset purchase,  merger,
consolidation, reorganization or otherwise) (a) all provisions of this Agreement
that require MERCK to provide  information  to DOV shall  terminate,  except (i)
royalty  reports  pursuant to Section 5.7; (ii) notices of the attainment of any
Development  Milestone or Product Profile Milestone (as described in Section 5.3
or Section 5.4 hereunder);  and (iii)  disclosures to DOV required under Section
9.4.4 or Section 10; and (b) DOV's  option to  co-promote  Product in the United
States pursuant to Section 3.7 shall terminate  immediately  upon such Change of
Control. A "Change of Control" of a Party shall be

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*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO THIS MATERIAL.

deemed  to occur if such  Party  is  involved  in a  merger,  reorganization  or
consolidation, or if there is a sale of all or substantially all of such Party's
assets or business relating to this Agreement or if a person or group other than
the current controlling person or group shall effectively acquire control of the
management and policies of such Party.  Also, for purposes of this Section 12.2,
"Major Pharma  Entity"  shall mean any health care  company,  or group of health
care companies  acting in concert to effect a Change of Control of DOV, for whom
the worldwide sales of pharmaceutical products (collectively in the case of such
a group of  companies)  in the Calendar Year that preceded the Change of Control
is in excess of [***] U.S. Dollars ($[***]), as reported by such entity or group
or as reported by IMS America Ltd. of Plymouth Meeting,  Pennsylvania ("IMS") or
any successor to IMS. In the event of any permitted  assignment for either Party
hereunder,  no Patent Rights, or any Information for purposes of the definitions
of DOV Know-How,  MERCK Know-How and MERCK  Termination  Know-How,  of any Third
Party, or any of such Third Party's  Affiliates that is an acquiring party shall
be deemed  "Controlled"  for any  purpose  hereunder  if such  Patent  Rights or
Information were not so Controlled prior to such permitted assignment.

12.3  SEVERABILITY.  If any  one or  more of the  provisions  contained  in this
Agreement  is  held  invalid,  illegal  or  unenforceable  in any  respect,  the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein shall not in any way be affected or impaired thereby,  unless the absence
of the invalidated  provision(s) adversely affects the substantive rights of the
Parties. The Parties shall in such an instance use their best efforts to replace
the  invalid,  illegal  or  unenforceable  provision(s)  with  valid,  legal and
enforceable provision(s) which, insofar as practical,  implement the purposes of
this Agreement.

12.4 NOTICES.  All notices which are required or permitted hereunder shall be in
writing and sufficient if delivered personally,  sent by facsimile (and promptly
confirmed  by personal  delivery,  registered  or  certified  mail or  overnight
courier), sent by nationally-recognized  overnight courier or sent by registered
or certified  mail,  postage  prepaid,  return receipt  requested,  addressed as
follows:

         If to DOV, to:                    DOV Pharmaceutical, Inc.
                                           433 Hackensack Avenue
                                           Hackensack, NJ  07601
                                           Attention: CEO
                                           Facsimile No.: (201) 968-0986





                  and:                     Attention: Office of General Counsel
                                           Facsimile No.: (201) 968-0986

         If to MERCK, to:                  MSD Warwick (Manufacturing) Ltd.
                                           Chesney House
                                           96 Pitts Bay Road,
                                           Pembroke HM 08,
                                           Bermuda
                                           Attention:  Financial Director


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                    with a copy to:        MERCK & Co., Inc.
                                           One MERCK Drive
                                           P.O. Box 100, WS3A-65
                                           Whitehouse Station, NJ 08889-0100
                                           Attention: Office of Secretary
                                           Facsimile No.: (908)735-1246

                    and                    MERCK & Co., Inc.
                                           One MERCK Drive
                                           Attention: Chief Licensing Officer
                                           P.O. Box 100, WS2A-30
                                           Whitehouse Station, NJ 08889-0100
                                           Facsimile: (908)735-1214


or to such other address(es) as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith.  Any such notice
shall be deemed to have been given: (a) when delivered,  if personally delivered
or  sent  by  facsimile  on a  business  day  (or  if  delivered  or  sent  on a
non-business  day, then on the next business day); (b) on the business day after
dispatch,  if sent by  nationally-recognized  overnight  courier;  or (c) on the
fifth (5th) business day following the date of mailing, if sent by mail.

12.5  APPLICABLE  LAW.  This  Agreement  shall be governed by and  construed  in
accordance  with the laws of the State of New Jersey and the patent  laws of the
United  States,  without  reference  to any rules of conflict of laws or renvoi,
provided  that any  dispute  relating  to the scope,  validity,  enforceability,
infringement  or misuse of any Patent Rights shall be governed by, and construed
and enforced in accordance  with, the  substantive  laws of the  jurisdiction in
which such Patent Right originates.  The United Nations conventions on Contracts
for the International Sale of Goods shall not apply.

12.6     DISPUTE RESOLUTION.

12.6.1   The Parties shall negotiate in good faith and use reasonable efforts to
         settle any  dispute,  controversy  or claim  arising from or related to
         this  Agreement  or the  breach  thereof.  If the  Parties do not fully
         settle,  and a Party  wishes to pursue the matter,  each such  dispute,
         controversy  or claim that is not an "Excluded  Claim" shall be finally
         resolved  by binding  arbitration  in  accordance  with the  Commercial
         Arbitration  Rules  and  Supplementary  Procedures  for  Large  Complex
         Disputes of the American Arbitration  Association ("AAA"), and judgment
         on  the   arbitration   award  may  be  entered  in  any  court  having
         jurisdiction thereof.

12.6.2   The  arbitration  shall  be  conducted  by a  panel  of  three  persons
         experienced  in the  pharmaceutical  business.  Within thirty (30) days
         after initiation of arbitration,  each Party shall select one person to
         act as arbitrator;  and the two Party-selected arbitrators shall select
         a third arbitrator within thirty (30) days of their appointment. If the
         arbitrators  selected  by the  Parties are unable or fail to agree upon
         the third  arbitrator,  the third  arbitrator shall be appointed by the
         AAA.  The place of  arbitration  shall be New York,  New York,  and all
         proceedings and communications shall be in English.

12.6.3   Either Party may apply to the arbitrators for interim injunctive relief
         until the arbitration award is rendered or the controversy is otherwise
         resolved.  Either Party also may, without waiving any remedy under this
         Agreement,  seek from any court having  jurisdiction  any injunctive or
         provisional  relief necessary to protect the rights or property of that
         Party pending the arbitration

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         award. The arbitrators shall have no authority to award punitive or any
         other type of damages not measured by a Party's  compensatory  damages.
         Each Party shall bear its own costs and  expenses and  attorneys'  fees
         and an equal share of the arbitrators' fees and any administrative fees
         of arbitration.

12.6.4   Except  to the  extent  necessary  to  confirm  an  award  or as may be
         required by law,  neither a Party nor an  arbitrator  may  disclose the
         existence,  content,  or results of an  arbitration  without  the prior
         written  consent of both Parties.  In no event shall an  arbitration be
         initiated  after the date  when  commencement  of a legal or  equitable
         proceeding  based on the dispute,  controversy or claim would be barred
         by the applicable New Jersey statute of limitations.

12.6.5   The Parties  agree that,  in the event of a dispute  over the nature or
         quality  of  performance  under  this  Agreement,   neither  Party  may
         terminate this Agreement until final  resolution of the dispute through
         arbitration or other judicial determination.  The Parties further agree
         that any payments made pursuant to this Agreement pending resolution of
         the dispute shall be refunded if an arbitrator or court determines that
         such payments are not due.

12.6.6   In any  arbitration  on the issue of whether  MERCK  used  Commercially
         Reasonable  Efforts to develop a Product pursuant to Section 3.6, MERCK
         shall  have the burden of proving  that it has  exercised  Commercially
         Reasonable Efforts, provided,  however, that MERCK shall be presumed to
         have met such obligation if MERCK does not materially  deviate from the
         objectives, plans and timelines described in the Drug Development Plan.
         If MERCK  does  materially  deviate  from  the  objectives,  plans  and
         timelines  described in the Drug Development Plan, MERCK shall have the
         burden of demonstrating that, under the circumstances,  MERCK exercised
         Commercially Reasonable Efforts to develop the Product.

12.6.7   [***].

12.6.8   As used  in this  Section,  the  term  "Excluded  Claim"  shall  mean a
         dispute,  controversy  or  claim  that  concerns  (a) the  validity  or
         infringement of a patent, trademark or copyright; or (b) any antitrust,
         anti-monopoly  or  competition  law  or  regulation,   whether  or  not
         statutory.

12.7  ENTIRE  AGREEMENT;   AMENDMENTS.   This  Agreement   contains  the  entire
understanding of the Parties with respect to the  Collaboration and the licenses
granted hereunder.  Any other express or implied agreements and  understandings,
either oral or written, with regard to the Collaboration or the licenses granted
hereunder  (including but not limited to the Material  Transfer  Agreement dated
August 4, 2004) are  superseded by the terms of this  Agreement.  This Agreement
may be amended,  or any term hereof modified,  only by a written instrument duly
executed by authorized representatives of both Parties hereto.

12.8 HEADINGS.  The captions to the several Articles and Sections hereof are not
a part of this  Agreement,  but are merely for convenience to assist in locating
and reading the several Articles and Sections hereof.

12.9 INDEPENDENT CONTRACTORS. It is expressly agreed that DOV and MERCK shall be
independent  contractors and that the relationship between the Parties shall not
constitute a partnership,  joint venture or agency.  Neither DOV nor MERCK shall
have the authority to make any statements, representations or commitments of any
kind, or to take any action,  which shall be binding on the other Party, without
the prior written consent of the other Party.

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12.10 WAIVER.  The waiver by either Party hereto of any right  hereunder,  or of
any failure of the other Party to perform,  or of any breach by the other Party,
shall not be deemed a waiver of any other right hereunder or of any other breach
by or failure of such other Party, whether of a similar nature or otherwise.

12.11 CUMULATIVE  REMEDIES.  No remedy referred to in this Agreement is intended
to be  exclusive,  but each shall be  cumulative  and in  addition  to any other
remedy referred to in this Agreement or otherwise available under law.

12.12  WAIVER OF RULE OF  CONSTRUCTION.  Each Party has had the  opportunity  to
consult with counsel in connection with the review,  drafting and negotiation of
this Agreement. Accordingly, the rule of construction that any ambiguity in this
Agreement shall be construed against the drafting Party shall not apply.

12.13 COUNTERPARTS.  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.


                  [Remainder of page intentionally left blank.]


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      IN WITNESS  WHEREOF,  the Parties have executed  this  Agreement as of the
date first set forth above.


MSD WARWICK (MANUFACTURING) LTD.           DOV PHARMACEUTICAL, INC.

BY:      /s/ Kevin Latham                  BY:   /s/ Arnold S. Lippa
      -----------------------                   ----------------------
NAME:    Kevin Latham                      NAME:  Arnold S. Lippa

TITLE:   Vice President                    TITLE: Chief Executive Officer

DATE:    August 5, 2004                    DATE:  August 5, 2004


Merck  &  Co.,  Inc.  hereby  makes  the  following  limited  guarantees  of the
obligations of MSD Warwick (Manufacturing) Ltd. under this Agreement:  (1) Merck
& Co.,  Inc.  guarantees  payment by MSD  Warwick  (Manufacturing)  Ltd.  of its
payment obligations pursuant to this Agreement, for the duration of such payment
obligations  pursuant to this  Agreement;  (2) Merck & Co., Inc.  guarantees the
solvency of MSD Warwick (Manufacturing) Ltd. during the term of this Agreement.


MERCK & CO., INC.

By:      /s/ Judy C. Lewent
    --------------------------------
Name:    Judy C. Lewent
Title:   Executive VP & CFO,
         President Human Health Asia

/rsk

8/05/04


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                         SCHEDULE 1.28 DOV PATENT RIGHTS
                         -------------------------------


U.S. Pat. No. 6,372,919

U.S. Pat. No. 6,204,284


                              Schedule 1.28; Page 1

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                    SCHEDULE 1.57 MERCK TERMINATION KNOW-HOW
                    ----------------------------------------

***CONFIDENTIAL  TREATMENT HAS BEEN  REQUESTED FOR THIS ENTIRE  SCHEDULE,  WHICH
CONSISTS OF A TOTAL OF ONE PAGE.  A COMPLETE  VERSION OF THIS  SCHEDULE HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 [***]


                              Schedule 1.57; Page 1


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                       SCHEDULE 2.1 DRUG DEVELOPMENT PLAN

               PRELIMINARY PROPOSED DEVELOPMENT PROGRAM FOR [***]

***CONFIDENTIAL  TREATMENT HAS BEEN  REQUESTED FOR THIS ENTIRE  SCHEDULE,  WHICH
CONSISTS OF A TOTAL OF FIVE PAGES. A COMPLETE  VERSION OF THIS SCHEDULE HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 [***]


                              Schedule 2.1; Page 1


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                  SCHEDULE 3.7 CO-PROMOTION OF PRODUCTS BY DOV

***  CONFIDENTIAL  TREATMENT HAS BEEN REQUESTED AS TO THIS MATERIAL.  A COMPLETE
VERSION OF THIS  SCHEDULE  HAS BEEN FILED  SEPARATELY  WITH THE  SECURITIES  AND
EXCHANGE COMMISSION.

1. GENERAL:  This Schedule sets out the terms under which DOV may co-promote the
Product  by  Detailing  to  psychiatrists  and  neurologists,   subject  to  the
negotiation and execution of a definitive Co-Promotion Agreement.

2. CO-PROMOTION AGREEMENT.  Upon exercise by DOV of the Co-Promotion Option, and
pursuant to the  procedures  set forth in Section 3.7,  the Parties  shall enter
into an agreement  relating to the  Detailing of Products to Target  Prescribers
(the "Co-Promotion Agreement"). The Co-Promotion Agreement shall include but not
be limited to the following provisions:

      (a)   Recruitment and Training.  All DOV Specialty  Sales  Representatives
            shall be recruited by DOV at DOV's sole  expense.  MERCK will assist
            DOV in  establishing  skill and  experience  criteria for  Specialty
            Sales  Representatives who are Detailing to Target  Prescribers.  At
            the request of DOV, and at DOV's  expense,  MERCK will assist in the
            recruitment of the Specialty  Sales  Representatives.  DOV Specialty
            Sales  Representatives  will be available for training [***] ([***])
            months  prior to the Launch  Date and will be trained on the Product
            by MERCK, subject to the remaining provisions of this paragraph. DOV
            will be  responsible  for  expenses  including  but not  limited  to
            travel, lodging, meals and representative salary and benefits during
            the  training  period.  MERCK will be  responsible  for the costs of
            MERCK employees  providing the training,  the training  facility and
            training  materials.  The  training  will be carried  out at a MERCK
            training facility and will be equivalent to the training received by
            the  corresponding  MERCK  specialty sales force. A component of the
            training period includes training on selling skills which MERCK will
            provide to DOV Specialty Sales Representatives if DOV agrees.

      (b)   Launch Meeting: DOV Specialty Sales  Representatives will attend the
            same  launch  meeting as the  corresponding  MERCK  specialty  sales
            force.

      (c)   Position of Details:  MERCK shall  determine the Target  Prescribers
            and territory alignment for the Product.  Details to be delivered by
            DOV for the Product will be First Position  Details for the duration
            of the  Co-Promotion  Agreement  unless  otherwise  agreed to by the
            Parties.

      (d)   Content  of  Details.  The  form  and  content  of  all  information
            communicated in all Details or other  communications  to health care
            professionals  by DOV for the Product  shall be those  developed  by
            MERCK  at its sole  expense  and in use by the  corresponding  MERCK
            sales  force.  DOV will limit its claims of efficacy  and safety for
            the  Product to those which are  consistent  with  MERCK's  approved
            labeling for the product and shall  provide  appropriate  balance in
            all  communications  regarding  the  product.  DOV shall  Detail the
            Product in strict  adherence to all  applicable  legal,  regulatory,
            professional and policy requirements, including, but not limited to,
            all applicable MERCK policies that have been communicated to DOV, as
            they exist at the time of the Detail.

      (e)   Compensation.  Commencing on the Launch Date, MERCK shall compensate
            DOV,  commensurate  with  MERCK  standards,  for all costs  directly
            related to a Specialty  Sales  Representative  including  salary and
            benefits [***]. MERCK shall compensate DOV for


                              Schedule 3.7; Page 1

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***  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO THIS MATERIAL.

            100% of the cost of the Specialty Sales Representatives,  limited to
            those costs  described  above, if no other product is being Detailed
            by the DOV Specialty Sales  Representative.  If there is a non-MERCK
            product, in addition to the Product,  also being Detailed by the DOV
            Specialty Sales Representatives,  then MERCK will compensate DOV for
            a proportional share of a DOV Specialty Sales Representative's cost,
            based on activity related to the Product. If 100% of a DOV Specialty
            Sales Representative's  expenses are being paid by MERCK, then MERCK
            may at its discretion and at no additional  cost, add a second MERCK
            product to be Detailed by the DOV Specialty Sales Representative.

      (f)   Schedule  of  Payments.  Within  thirty (30) days of the end of each
            Calendar Quarter,  DOV shall submit to MERCK an invoice containing a
            schedule of Specialty Sales  Representative  activities and expenses
            for review and approval.  MERCK shall make the required  payments to
            DOV within sixty (60) days after the invoice is approved.

      (g)   Performance Criteria. The Parties shall agree on a minimum number of
            total  Details to be conducted by DOV each year for Product based on
            industry  standard  performance  expectations  of a Specialty  Sales
            Representative  (calls and Details per day).  Compensation to DOV as
            provided above will be subject to adjustment if the minimum level of
            such Details is not achieved.

      (h)   Sampling   and   Promotional   Materials.    DOV   Specialty   Sales
            Representatives  are  required  to use  only  promotional  materials
            provided  to  them  by  MERCK.   MERCK  shall  provide  samples  and
            promotional  material to DOV Specialty  Sales  Representatives  in a
            manner and  quantity  consistent  with its  provision of samples and
            promotional material to its own corresponding sales force.

      (i)   Maintenance and Audit of Records. Under the Co-Promotion  Agreement,
            DOV will be  responsible  for the  maintenance  of accurate  records
            corresponding  to the invoice of the expenses and  activities of its
            Specialty  Sales  Representatives  engaged in  Detailing  including,
            without  limitation,  an  accurate  monthly  record of the number of
            Details, by position. MERCK shall have the right to review and audit
            all such records.

      (j)   Exclusivity.  During the term of any Co-Promotion Agreement, neither
            DOV  nor  any  DOV   Affiliate   shall  use  any   Specialty   Sales
            Representatives  that are used for  Detailing  the Product to Detail
            any  other  non-MERCK  product  that  is  indicated  for  a  similar
            Indication as such Product.

      (k)   Term and Termination.  The term of the Co-Promotion  Agreement shall
            continue  until the last to expire  Valid Patent Claim in the United
            States,  or as long as MERCK  Details  such  Product  in the  United
            States,  whichever occurs later. The Co-Promotion Agreement shall be
            subject to termination:

            (i)   by MERCK in the event of a DOV Change of Control;

            (ii)  by MERCK at any  time,  if  evidence  that DOV is not  meeting
                  expected minimum Detail levels;

            (iii) by DOV at any time with at  least[***]  ([***])  months  prior
                  written notice;

            (iv)  by either Party immediately in the event of termination of the
                  Agreement,   or  upon  twelve  months   written   notice  upon
                  expiration of the Agreement;


                              Schedule 3.7; Page 2

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            (v)   by either Party in the event of an uncured  material breach by
                  the other Party, including, but not limited to, a violation by
                  DOV in promoting or  Detailing  the Product of any  applicable
                  law,  regulation  or  procedure  applicable  to the  sale  and
                  promotion of such a Product  including  any  applicable  MERCK
                  policy that was communicated to DOV; or;

            (vi)  by  either  Party  in  the  event  of  other  mutually  agreed
                  termination events as set forth in the Co-Promotion  Agreement
                  (breach, bankruptcy, etc.).


                              Schedule 3.7; Page 3