CONFIDENTIAL


                                                                  Execution Copy


                              SUBLICENSE AGREEMENT


                                 BY AND BETWEEN



                              SUNPHARM CORPORATION

                             A Delaware Corporation


                                       AND


                           SCHEIN PHARMACEUTICAL, INC.

                             A Delaware Corporation

<PAGE>


                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

ARTICLE I.     DEFINITIONS....................................................2

ARTICLE II.    GRANT..........................................................6

ARTICLE III.   ROYALTY AND LUMP SUM PAYMENTS..................................7

ARTICLE IV.    RECORDS AND PAYMENTS..........................................10

ARTICLE V.     DEVELOPMENT AND MARKETING.....................................11

ARTICLE VI.    PATENT PROSECUTION AND INFRINGEMENT...........................14

ARTICLE VII.   OBLIGATION OF CONFIDENTIALITY.................................16

ARTICLE VIII.  REPRESENTATIONS AND WARRANTIES................................18

ARTICLE IX.    COVENANTS.....................................................19

ARTICLE X.     TERM OF AGREEMENT.............................................19

ARTICLE XI.    MISCELLANEOUS.................................................23

<PAGE>


                              SUBLICENSE AGREEMENT


         THIS  AGREEMENT  is  made as of the  4th  day of  October,  1999 by and
between  SUNPHARM  CORPORATION,  a corporation  organized and existing under the
laws of the State of Delaware and having its principal  place of business at The
Veranda,   Suite  301,  814  Highway  A1A,  Ponte  Vedra  Beach,  Florida  32082
(hereinafter  referred to as  "Licensor"),  and SCHEIN  PHARMACEUTICAL,  INC., a
corporation  organized and existing  under the laws of the State of Delaware and
having its principal  place of business at 100 Campus Drive,  Florham Park,  New
Jersey 07932 (hereinafter referred to as "Licensee").

                              W I T N E S S E T H:

                  WHEREAS, the University of Florida Research Foundation,  Inc.,
a  not-for-profit  corporation duly organized and existing under the laws of the
State of  Florida,  and having  its  principal  office at 1 Progress  Boulevard,
Alachua,  Florida 32615  ("UFRFI"),  is the owner of the Licensed Patents (which
are hereinafter  defined;  such Licensed  Patents having been referred to as the
"Patent Rights" under the UFRFI License  Agreement  described and defined below)
by assignment from the University of Florida and has the right to grant licenses
under the Licensed Patents, subject only to a royalty-free, nonexclusive license
previously granted to the United States Government, and has developed and is the
owner of the Know-How (as hereinafter defined); and

                  WHEREAS, UFRFI has granted an exclusive license to Licensor to
make, have made, use, have used, lease and sell and have sold Licensed  Products
(as hereinafter  defined),  and to practice  Licensed  Processes (as hereinafter
defined),  and  Improvements  (as  hereinafter  defined)  in the  Territory  (as
hereinafter  defined)  pursuant to the Patent  License  Agreement  with Research
Component  entered  into  between  UFRFI and  Licensor at  December 9, 1991,  as
amended and as may be further amended,  supplemented or otherwise  modified from
time to time (the "UFRFI License Agreement"); and

                  WHEREAS,  Licensee wishes to obtain an exclusive sublicense of
Licensor's rights under the Licensed Patents and an exclusive  sublicense to use
the  Know-How  for the  Field of Use (as  hereinafter  defined)  throughout  the
Territory  (as  hereinafter  defined),  and  Licensor  is  willing to grant such
sublicenses  to Licensee,  subject to the terms and conditions set forth in this
Agreement.

                  NOW,  THEREFORE,  in view of the foregoing  premises which are
hereby incorporated as part of this Agreement and in consideration of the mutual
covenants herein contained, Licensor and Licensee agree as follows:

<PAGE>


                                   ARTICLE I.
                                   DEFINITIONS

                  The following  terms as used in this Agreement  shall have the
meanings set forth in this Article:

                  1.  AFFILIATE.  "Affiliate"  means any  corporation  or entity
controlling,  controlled by or under common  control with the party in question.
As used herein the term  control  means  possession  of the power to direct,  or
cause the direction of, the  management  and policies of a corporation or entity
by reason of any ownership interest therein.

                  2.  AGREEMENT COMPOUND.  "Agreement  Compounds" means the [ **
].

                  3.  BULK  SUBSTANCE.  "Bulk  Substance"  shall  mean  the bulk
active drug substance for the manufacture of the Licensed Products.

                  4.  DMF.  "DMF"  means a Drug Master File as that term is used
by  the  FDA,  and  any  comparable  corresponding   documentation  required  by
applicable regulatory authorities to authorize the manufacture, marketing and/or
sale of the Bulk Substance in the Territory.

                  5.  FDA.   "FDA"  means  the  United   States  Food  and  Drug
Administration  but  shall  also  include,   where  appropriate,   such  foreign
governmental agencies having a similar regulatory function.

                  6.  FIELD  OF  USE.   "Field  of  Use"  means  iron   overload
conditions, including, but not limited to, Thalassemia,  sickle-cell anemia, and
myelodysplasia (but excluding neuro- degenerative disorders),  but shall exclude
uses of Agreement Compounds by a route of delivery other than subcutaneous or IM
injection or IV infusion or transdermal.

                  7.  IMPROVEMENTS.   "Improvements"   means   any   change   or
modification to an Agreement  Compound or Licensed  Product or compounds used in
the  production  thereof,  or  Licensed  Process  or to any  Licensed  Patent or
Know-How licensed  hereunder,  together with any patent applications and patents
that  may  issue  from  such  changes  or  modifications  which  are  conceived,
discovered or reduced to practice, in whole or in part, hereunder or pursuant to
the Research Agreement,  PROVIDED, that any additional University Inventions, as
defined in the Research Agreement,  other than University  Inventions related to
the Agreement Compounds, shall be excluded from this definition.

                  8.  IND.  "IND" means an IND as defined in 21 CFR 312.3(b) (as
hereinafter  modified  or  amended)  for any  Agreement  Compound,  such term to
specifically include the Investigator's IND's filed with the FDA in support of a
Phase I clinical trial.

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<PAGE>


                  9.  JOINT COMMITTEE.  "Joint Committee" shall have the meaning
given to such term in Section 5.03 hereof.

                  10. KNOW-HOW.  "Know-How" means any and all data, information,
trade  secrets,  expertise or knowledge  which relate to Agreement  Compounds or
Licensed Products or compounds used in the production thereof,  the Improvements
or the Licensed Processes or that can be utilized,  directly or indirectly,  for
the  development,   manufacture,  marketing,  registration,  packaging,  purity,
quality,  potency, safety and efficacy, use, promotion,  distribution or sale of
Agreement  Compounds or Licensed  Products or compounds  used in the  production
thereof,  or Licensed  Processes or Improvements,  and that is owned,  licensed,
acquired  and/or  controlled by Licensor and its  Affiliates  during the term of
this  Agreement,  including,  but not  limited to, any IND filed with the FDA in
support  of a  Phase  I  clinical  trial  of the  Agreement  Compounds,  and the
information  contained  therein,  and all other  clinical data and test results,
whether or not covered by any patent, design,  trademark,  trade secret or other
industrial or intellectual  property  rights.  The term  "controlled" as used in
this definition  shall mean a sufficient  interest through  ownership,  contract
right or  otherwise,  to grant a  license  to  Licensee  and/or  its  Affiliates
hereunder.

                  11. LICENSED  PATENTS.  "Licensed  Patents"  means  all of the
following  intellectual  property,  granted to  Licensor  pursuant  to the UFRFI
License  Agreement  identified  herein as Agreement  Compounds for the described
Field of Use and as further described below:

                  (a) the  United  States  and  foreign  patents  and/or  patent
applications listed in Exhibit A;

                  (b) United  States  and  foreign   patents   issued  from  the
applications listed in Exhibit A and from divisionals and continuations of these
applications;

                  (c) claims of United  States and foreign  continuation-in-part
applications, and of the resulting patents, which are directed to subject matter
either  specifically  described in, or subject  matter of, a claim of the United
States patent application as originally filed and foreign applications listed in
Exhibit A;

                  (d) claims  of all  foreign  patent  applications,  and of the
resulting  patents,  which are directed to subject  matter  either  specifically
described  in, or subject  matter of, a claim of the  United  States  patents as
originally filed and/or patent applications  described in (a), (b) or (c) above;
and/or

                  (e) any reissues,  extensions,  substitutions,  confirmations,
registrations,  revalidations,  additions,  continuations or divisions of United
States and foreign patents described in (a), (b), (c) or (d) above;

as well as any and all other  patents in the  Territory  necessary or useful for
the manufacture, use or sale of Licensed Products, Licensed Processes, Agreement
Compounds or compounds used in the

                                        3
<PAGE>


production  thereof,  now or subsequently  owned,  acquired and/or controlled or
licensed by, or granted to,  Licensor or under which Licensor is or shall become
empowered   to  grant   licenses,   and  any  and  all   reissues,   extensions,
substitutions,    confirmations,    registrations,   revalidations,   additions,
continuations,     divisionals,     continuations-in-part,      re-examinations,
supplementary  protection  certificates,  inventor's  certificates  and  foreign
counterparts of or to any of the aforesaid  patents and patent  applications and
any patents issuing thereon and extensions of any patents licensed hereunder.

For the avoidance of doubt, the Parties  acknowledge and agree that for purposes
of Sections  1.11(c)  and 1.11(d)  hereof,  claims  that cover  subject  matters
contained  within the parent United States  application or foreign  applications
listed in Exhibit A are within the  license  granted  by  Licensor  to  Licensee
hereunder to the extent of such coverage, whether described specifically or only
generically in the  applications and patents listed in Exhibit A. Should a claim
of a  continuation-in-part  application or patent cover in whole or in part such
subject  matter,  that  portion of the  subsequent  claim which falls within the
scope of the  applications  and  patents  listed in  Exhibit A are  specifically
licensed to Licensee in this Agreement.

                  12. LICENSED PROCESSES. "Licensed Processes" means any process
which is:

                  (a) covered in whole or in part by an issued,  unexpired claim
or a pending claim contained in Licensed Patents;

                  (b) derived  from  Licensed  Patents,  Know-How  and/or  trade
secrets related to or described in Licensed Patents;

                  (c) sold or used in any country under this Agreement; and/or

                  (d) practiced  or  otherwise  used  in  connection  with,  and
necessary for the synthesis of, Agreement Compounds hereunder.

                  13. LICENSED PRODUCTS.  "Licensed  Products" means any product
or part thereof which:

                  (a) is  covered  in whole or in part by an  issued,  unexpired
claim or a pending  claim  contained in the  Licensed  Patents in the country in
which any Licensed Products are made, used or sold;

                  (b) is  manufactured  by using a process  which is  covered in
whole or in part by an issued,  unexpired  claim or a pending claim contained in
the Licensed  Patents in the country in which any Licensed Process is used or in
which such product or part thereof is used or sold;

                  (c) is derived from Licensed  Patents,  Know-How  and/or trade
secrets related to or described in the Licensed Patents;

                                        4
<PAGE>


                  (d) is sold,  manufactured  or used in any country  under this
Agreement; and/or

                  (e) contains  Agreement   Compounds  in  final  packaged  form
suitable for  distribution to  non-affiliated  customers and bears Licensee's or
Licensee's Affiliates typical trade dress.

                  14. NDA. "NDA" means the initial Application, as defined in 21
CFR 314.2(b) (as hereafter  modified or amended),  seeking approval from the FDA
to use any  Agreement  Compound  for any human  indication  or  treatment in the
United States in the Field of Use.

                  15. NET SALES.  "Net  Sales"  means the  actual  gross  amount
invoiced by Licensee and its Affiliates to non-affiliated customers for the sale
of Licensed  Products in the Territory less trade,  cash and quantity  discounts
and unaffiliated  broker's or agent's  commissions,  if any, actually allowed or
paid; credits and allowances  related to price  adjustments,  billing errors and
the  rejection  or  return  of  goods;   rebates,   chargeback  rebates,   fees,
reimbursements  or similar  payments  granted or given to wholesalers  and other
distributors,  buying  groups,  etc. in respect of the purchase  price;  freight
insurance  and other  transportation  costs and all other taxes  (except  income
taxes),  tariffs, duties and other similar governmental charges paid by Licensee
and its Affiliates.

                  16. PARTY  AND  PARTIES.   "Party"   shall  mean  Licensor  or
Licensee, and "Parties" means Licensor and Licensee.

                  17. PHASE 1. "Phase 1" means the first clinical  investigation
of the type described in 21 CFR 312.21(a) (as  hereinafter  modified or amended)
with respect to any Agreement Compound as reasonably determined by Licensee.

                  18. POPULATION ADJUSTED. "Population Adjusted" means adjusting
an amount stated by multiplying such amount due by a fraction,  the numerator of
which shall be the  population  of the  relevant  country or  countries  and the
denominator  of which shall be the population of all countries in the Territory,
in each case as determined by the most recent  governmental  census,  rounded to
the nearest million in population.

                  19. PROJECT.  "Project"  shall have the  meaning  set forth in
Section 5.01 hereto.

                  20. RESEARCH   AGREEMENT.   "Research   Agreement"  means  the
Corporate Research Agreement entered into by and between Licensor and UFRFI, and
acknowledged  and  consented to by the  University  of Florida,  dated March 26,
1993, as amended,  providing  for the provision of research  assistance by UFRFI
and the  University of Florida to Licensor  relating to the Agreement  Compounds
and the Field of Use.

                  21. RESEARCH   AND   DEVELOPMENT   EXPENSES.   "Research   and
Development  Expenses" means the costs and expenses  incurred by Licensor in the
course of its pre-clinical studies

                                        5
<PAGE>


in connection  with its filing of an IND and conduct and  development of Phase 1
of the Project, net of any funding received from the United States Government or
any subdivision thereof.

                  22. TERRITORY. "Territory" means the countries of the European
Community,  the  United  States,  Canada,  Cyprus,  Turkey,  Australia,  and New
Zealand.

                  23. VALID CLAIM.  "Valid  Claim" means a claim which,  but for
the license granted hereunder, would be infringed by Licensee's manufacture, use
or sale of a  Licensed  Product,  and  which is in an  unexpired  issued  patent
included  within  the  Licensed  Patents  which  has not been  held  invalid  or
unenforceable by a decision of a court of competent  jurisdiction,  unappealable
or  unappealed  within  the time  allowed  for  appeal,  and  which has not been
admitted  to be invalid by the owner  through  reissue or  disclaimer.  If there
should  be two or more  decisions  which are  conflicting  with  respect  to the
invalidity  of the same claim,  the  decision of the higher or highest  tribunal
shall  thereafter  control;  however,  should the tribunals be of equal dignity,
then the decision or decisions  holding the claim valid shall  prevail where the
conflicting  decisions are equal in number,  and the majority of decisions shall
prevail where the conflicting decisions are unequal in number.

                                   ARTICLE II.
                                      GRANT

                  1.  GRANT OF LICENSE.  Licensor  hereby  grants to Licensee an
exclusive  sublicense under the Licensed Patents in the Field of Use to make and
have made,  manufacture and have manufactured  Agreement  Compounds and Licensed
Products from Agreement  Compounds for sale in the Territory and to use and have
used and  lease,  sell and have sold  Licensed  Products,  and to  practice  the
Licensed Processes, and Improvements,  with the right to grant sublicenses (with
the prior written  consent of Licensor,  which consent shall not be unreasonably
withheld), in the Territory and Licensor further grants to Licensee an exclusive
sublicense  to use the  Know-How  to make and have  made,  manufacture  and have
manufactured  Agreement Compounds and Licensed Products from Agreement Compounds
for sale in the  Territory  and to use the  Know-How  to use and  have  used and
lease,  sell and have sold  Licensed  Products,  and to  practice  the  Licensed
Processes, and Improvements, with the right to grant sublicenses (with the prior
written consent of Licensor,  which consent shall not be unreasonably withheld),
in the Territory.  For the avoidance of doubt, the Parties acknowledge and agree
that the license granted by Licensor to Licensee hereunder includes the right of
Licensee to practice the Licensed Processes and Improvements,  with the right to
grant  sublicenses  (with the prior written  consent of Licensor,  which consent
shall  not be  unreasonably  withheld)  outside  of the  Territory  for the sole
purpose of importing the Licensed Products into the Territory.

                  2.  KNOW-HOW.  To the extent Licensor has not already done so,
promptly  after the date of this  Agreement,  Licensor  shall make  available to
Licensee any  Know-How not  previously  furnished  to Licensee.  Licensor  shall
disclose  to  Licensee,  during  the  term of  this  Agreement,  all  additional
Know-How, including all Improvements,  and Licensee shall have the right, at its
option, to include said Know-How, whether patentable or not, within the scope of
the license herein granted.

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<PAGE>


                                  ARTICLE III.
                          ROYALTY AND LUMP SUM PAYMENTS

                  1.  LUMP  SUM  PAYMENTS.  In  consideration  of  the  licenses
granted hereunder,  Licensee shall pay Licensor, except as hereinafter provided,
an ongoing  royalty  during the term of this  Agreement  as set forth in Section
3.02 hereof and lump sum payments,  as set forth in this Section 3.01.  Lump sum
payments  shall be paid only once and only upon the  completion of the following
events during the term of this Agreement, as follows:

                  (a) A payment  of six  hundred  twenty-five  thousand  dollars
($625,000)  shall  be made in  immediately  available  funds  on  execution  and
delivery of this Agreement by the Parties as  consideration  of this  Agreement;
and

                  (b) A payment of [ ** ] shall be made in immediately available
funds  within ten (10) days of the  filing of an IND with the United  States FDA
with respect to the  Agreement  Compounds  or Licensed  Products in the Field of
Use; and

                  (c) A payment of [ ** ] shall be made  within ten (10) days of
the  completion  of the NaHBED  synthesis  and  delivery to Licensee of adequate
amounts  of DMF grade  active  pharmaceutical  ingredient  to  continue  product
development activities, accompanied by a fileable DMF for the United States; and

                  (d) A payment of [ ** ] shall be made  within ten (10) days of
the satisfactory  completion of the ninety (90) day toxicity studies  indicating
that the Agreement  Compounds can be administered safely long-term to humans for
a pivotal study; and

                  (e) A payment of [ ** ] shall be made  within ten (10) days of
the  later  of (i)  satisfactory  completion  of a  Phase I iron  balance  study
indicating  that product  development can be continued into Phase II studies and
(ii) the grant of a US patent with a Valid  Claim  which would  prohibit a third
party,  not  licensed by the  Parties,  from using the  Agreement  Compound  for
Thalassemia and sickle-cell anemia; and

                  (f) A payment of [ ** ] shall be made  within ten (10) days of
the later of (i) the start of Phase III  studies  for  Thalassemia  and (ii) the
grant of a US patent with a Valid Claim which would prohibit a third party,  not
licensed by the Parties, from using the Agreement Compound for Thalassemia; and

                  (g) A payment of [ ** ] shall be made  within ten (10) days of
the later of (i) the start of Phase III studies for sickle-cell  anemia and (ii)
the grant of a US patent with a Valid Claim which would  prohibit a third party,
not licensed by the Parties,  from using the Agreement  Compound for sickle-cell
anemia; and

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<PAGE>


                  (h) A payment of [ ** ] shall be made  within ten (10) days of
the  later of (i)  successful  completion  of Phase  III  studies  allowing  the
submission by Licensor of an NDA to the FDA for  Thalassemia  and (ii) the grant
of a US patent  with a Valid  Claim  which  would  prohibit a third  party,  not
licensed by the Parties,  from using the Agreement  Compound for Thalassemia and
sickle-cell anemia; and

                  (i) A payment of [ ** ] shall be made  within ten (10) days of
the  later of (i)  successful  completion  of Phase  III  studies  allowing  the
submission  by Licensor for  regulatory  approval in the European  Community for
Thalassemia  and (ii) the grant of a European  patent  with a Valid  Claim which
would  prohibit a third  party,  not  licensed  by the  Parties,  from using the
Agreement Compound for Thalassemia; and

                  (j) A payment of [ ** ] shall be made  within ten (10) days of
the  later of (i)  successful  completion  of Phase  III  studies  allowing  the
submission by Licensor of an NDA to the FDA for sickle-cell  anemia and (ii) the
grant of a US patent with a Valid Claim which would prohibit a third party,  not
licensed by the  Parties,  from using the  Agreement  Compound  for sickle- cell
anemia; and

                  (k) A payment of [ ** ] shall be made  within ten (10) days of
the  later of (i)  successful  completion  of Phase  III  studies  allowing  the
submission  by Licensor for  regulatory  approval in the European  Community for
sickle-cell  anemia and (ii) the grant of a European  patent  with a Valid Claim
which would prohibit a third party, not licensed by the Parties,  from using the
Agreement Compound sickle-cell anemia; and

                  (l) A payment of [ ** ] shall be made  within ten (10) days of
the  later of (i) the  receipt  of FDA  approval  of the NDA  pertaining  to the
Licensed Product for Thalassemia, and (ii) the grant of a US patent with a Valid
Claim which would  prohibit a third party,  not  licensed by the  Parties,  from
using the Agreement Compound for Thalassemia; and

                  (m) A payment of [ ** ] shall be made  within ten (10) days of
the later of (i) the receipt of regulatory approval of the marketing and sale in
the European  Community of the Licensed  Product for  Thalassemia,  and (ii) the
grant of a European  patent  with a Valid  Claim  which  would  prohibit a third
party,  not  licensed  by the  Parties  from using the  Agreement  Compound  for
Thalassemia; and

                  (n) A payment of [ ** ] shall be made  within ten (10) days of
(i) the receipt of FDA approval of the NDA  pertaining  to the Licensed  Product
for  sickle-cell  anemia  and (ii) the grant of a US patent  with a Valid  Claim
which would prohibit a third party, not licensed by the Parties,  from using the
Agreement Compound for sickle-cell anemia; and

                  (o) A payment of [ ** ] shall be made  within ten (10) days of
the later of (i) the receipt of regulatory approval of the marketing and sale of
the Licensed Product for sickle-cell

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<PAGE>


anemia,  and (ii) the grant of a European  patent with a Valid Claim which would
prohibit a third party,  not licensed by the Parties,  from using the  Agreement
Compound for sickle-cell anemia.

                  2.  ONGOING ROYALTY.  In consideration of the licenses granted
hereunder,  Licensee  shall pay to  Licensor  during the term of this  Agreement
(except as  hereinafter  provided) a royalty on all  Licensed  Products  sold by
Licensee at the rate of [ ** ] of Net Sales;

                  PROVIDED;  HOWEVER,  that to the extent Net Sales  exceed in a
                  calendar year the sum of [ ** ], but are less than [ ** ] then
                  Licensee  shall pay to  Licensor  a  royalty  of [ ** ] on the
                  amount of Net Sales which are above [ ** ] and are less than [
                  ** ];

                  PROVIDED FURTHER, that to the extent Net Sales are equal to or
                  greater than [ ** ] in a calendar year, but are less than [ **
                  ], then Licensee  shall pay to Licensor a royalty of [ ** ] on
                  the amount of Net Sales which are above [ ** ] but less than [
                  ** ]; and

                  PROVIDED  FURTHER,  that if Net Sales are equal to or  greater
                  than [ ** ] in a calendar  year,  then  Licensee  shall pay to
                  Licensor a royalty of [ ** ] on the amount of Net Sales  which
                  are above [ ** ].

                  3.  DEVELOPMENT EXPENSES. In addition to the payments required
in Sections 3.01 and 3.02,  Licensee shall either reimburse Licensor for, or pay
directly, the expenses associated with the pre-clinical and clinical development
of the  Agreement  Compounds  for the Field of Use,  as  agreed  in the  Project
described in more detail in Section  6.01,  to the extent such  expenses are not
paid for by  government  institution  grants;  provided  such expenses have been
previously approved in writing by Licensee.

                  4.  CURRENCY OF PAYMENT.  All  payments to be made by Licensee
to  Licensor  hereunder  shall be made in United  States  Dollars  in the United
States to the following bank account designated by Licensor:

                             SunTrust Bank, North Florida, N.A.
                             Routing number: 063002346
                             Beneficiary:  SunPharm Corp., Inc.
                             Account Number: 0070003765431

or at such other place as Licensor may reasonably  designate consistent with the
laws and regulations controlling in any foreign country.  Royalties earned shall
be first  determined in the currency of the country in which they are earned and
then converted to its equivalent in United States currency.  The buying rates of
exchange for the  currencies  involved  into the  currency of the United  States
quoted by Citibank N.A. (or its successor in interest) in New York,  New York at
the close of business on

                                        9
<PAGE>


the last business day of the quarterly period in which the royalties were earned
shall be used to determine any such conversion.

                  5.  TAXES  WITHHELD.  Any income or other tax that Licensee or
its  Affiliates  is  required to  withhold  and pay on behalf of  Licensor  with
respect to the  royalties  payable to  Licensor  under this  Agreement  shall be
deducted from said royalties prior to remittance to Licensor; PROVIDED, HOWEVER,
that in regard to any tax so deducted,  Licensee shall give or cause to be given
to Licensor such assistance as may reasonably be necessary to enable Licensor to
claim  exemption  therefrom or credit  therefor,  and in each case shall furnish
Licensor proper evidence of the taxes paid on its behalf.

                  6.  REDUCTION IN ROYALTIES.  In the event that any third party
begins  unlicensed sales of Licensed Products in any country in the Territory in
which  Licensee  or its  Affiliates  are  selling  Licensed  Products  under the
Licensed  Patents  and  Licensor is unable to force the  discontinuance  of such
sales within six (6) months after having received  written notice  thereof,  the
royalty  thereafter  due  pursuant to Section  3.02 with respect to such country
shall be reduced by fifty percent  (50%) and shall  continue for the duration of
such sales by an unlicensed third party. Licensee shall promptly notify Licensor
in  writing  of any  unlicensed  sales of  Licensed  Products  which may come to
Licensee's attention.

                  7.  COMPUTATION OF ROYALTIES.  All sales of Licensed  Products
between  Licensee  and  any of its  Affiliates  and/or  sub-licensees  shall  be
disregarded  for purposes of computing  royalties under this Article III, but in
such  instances  royalties  shall be  payable  only  upon  sales  to  unlicensed
independent  third parties.  Nothing herein contained shall obligate Licensee to
pay  Licensor  more than one  royalty on any unit of a  Licensed  Product or any
Licensed Process.

                  8.  LICENSES TO AFFILIATES.  Licensor shall, at the request of
Licensee,  sign license agreements directly with Licensee's  Affiliates in those
countries where such licenses will be advantageous to Licensee and will not have
a material adverse effect on Licensor. Such license agreements shall contain the
same  language  as  contained  herein  with  appropriate  changes in parties and
territory.  It shall be Licensee's  responsibility  to register such  agreements
with the appropriate  authorities.  Royalties received by Licensor directly from
Licensee's  Affiliates shall be credited towards  Licensee's  royalty obligation
under Section 3.02 hereof.

                  9.  STATUTORY  LIMIT.  If applicable  royalty rates  hereunder
exceed  the  maximum  permissible  rate  established  in a  given  country  by a
governmental  agency, the royalty payable by Licensee hereunder shall not exceed
such maximum permissible rate.


                                   ARTICLE IV.
                              RECORDS AND PAYMENTS

                  1.  QUARTERLY  REPORTS AND  PAYMENTS.  Within ninety (90) days
after the close of Licensee's  current  fiscal  quarter  during the term of this
Agreement following the first commercial

                                       10
<PAGE>


launch of a  Licensed  Product  in a country in the  Territory,  Licensee  shall
deliver or cause to be delivered to Licensor a written  report showing all sales
of  Licensed  Products  by  Licensee  and its  Affiliates  during the  preceding
quarterly period and showing the calculation of Net Sales and the amount payable
as royalties  pursuant to Article 3 hereof.  Concurrently with the submission of
each such written  report,  Licensee  shall pay Licensor or cause to be paid the
amount of royalties shown to be due thereon,  subject to the other provisions of
this Agreement. If no royalties shall be due, Licensee shall so report.

                  2.  RECORDS.  Licensee shall keep or cause to be kept accurate
records in  sufficient  detail to enable the royalties  payable  hereunder to be
determined. Said records shall be kept at Licensee's principal place of business
of the appropriate division of Licensee to which this Agreement relates.  Within
180  days  following  the  close of each  fiscal  year  during  the term of this
Agreement,  upon the  request  of  Licensor,  Licensee  shall  grant  access  to
Licensor's  independent certified public accounting firm (reasonably  acceptable
to Licensee),  during regular  business hours and upon reasonable  prior notice,
and subject to the confidentiality  undertakings contained in this Agreement, to
Licensee's  books and  records  relating  to Net Sales  solely for  purposes  of
verifying  the accuracy of the  calculations  hereunder for the fiscal year then
ended. If any such  verification  shows any  underpayment  or overpayment  then,
unless  either  Party  disagrees  in  any  respect  with  the  results  of  such
verification,  a correcting  payment or a refund,  together with interest at the
current prime lending rate established by leading New York banks as published in
THE WALL STREET JOURNAL,  shall be made within thirty (30) days of completion of
such  verification  and submission of the results  thereof,  with details of the
calculations included therein.

                  If either  party  disagrees in any respect with the results of
such  verification,  then Licensor and Licensee shall meet to attempt to resolve
the  disagreement.  If they  are  unable  within  thirty  (30)  days to  reach a
resolution, Licensor and Licensee shall jointly retain an independent auditor to
review calculations under Section 4.01 and the verification  conducted under the
preceding  paragraph.  The decision of such independent  auditor with respect to
the  payments if any, to be made  pursuant  to this  Section  shall be final and
binding on the Parties.  The costs of such  independent  auditor  shall be borne
equally by the Parties.

                                   ARTICLE V.
                            DEVELOPMENT AND MARKETING

                  1.  DEVELOPMENT OF LICENSED PRODUCTS. Subject to the terms and
conditions of this Agreement, including without limitation,  Sections 5.01, 5.02
and 5.03 hereof,  Licensor and Licensee shall coordinate activities with respect
to the Project through the Joint Committee.  The IND for the Agreement Compounds
shall be filed in the name of Licensor or Licensor's  designee.  Upon completion
of Phase 1 and provided that Licensee has elected to continue development of the
Project, (a) Licensor shall promptly transfer or cause to be transferred the IND
to Licensee  and execute or cause to be executed any  documentation  required in
connection   therewith,   and  (b)  Licensee  shall  control  and  complete  the
development and improvement of the Agreement  Compounds,  Licensed  Products and
Licensed Processes in accordance with the development plans

                                       11
<PAGE>


set forth in Exhibit B attached  hereto and shall pay all costs  arising from or
related to such development plans. (The development  activities  relating to the
Agreement  Compounds,  Licensed Products and Licensed  Processes are hereinafter
referred to as the "Project").

                  2.  PROGRESS REPORTS.

                  (a) DURING PHASE 1. During  Phase 1 of the Project,  Licensor,
through the Joint Committee, shall coordinate activities relating to the Project
and shall keep Licensee  informed of the progress of the work being performed by
Licensor  pursuant to the development  plans and the budget set forth in Exhibit
B. Without  prejudice to the generality of the foregoing,  Licensor shall submit
to Licensee  other  written  progress  reports at intervals of not more than six
months  summarizing  activities  during  each  reporting  period and the planned
activities  of the  succeeding  period.  Licensor  shall  provide  Licensee with
Investigator's  Brochures,  IND Annual  Reports,  Serious Adverse Event Reports,
clinical trial  protocols,  and Sponsor's  Study Reports within 30 days of final
draft.  Licensor shall provide Licensee with such access to relevant records and
facilities as to permit a reasonable review of the progress,  from time to time,
of the  activities  being  performed  by Licensor  during Phase 1 of the Project
pursuant to the development plans and the budget set forth in Exhibit B.

                  (b) AFTER COMPLETION OF PHASE 1. Following completion of Phase
1 of the Project,  Licensee  through the Joint  Committee,  shall keep  Licensor
informed of the progress of the work being performed by Licensee pursuant to the
development plans set forth in Exhibit B; provided, however, that Licensee shall
have responsibility and sole control for product development and clinical design
decisions in support of the plans set forth on Exhibit B and for  completion  of
the  clinical  designs and the  execution  of such plans set forth on Exhibit B.
Without  prejudice to the generality of the foregoing,  Licensee shall submit to
Licensor other written progress reports at intervals of not more than six months
summarizing  activities during each reporting period and the planned  activities
of the succeeding  period.  Licensee shall provide Licensor with  Investigator's
Brochures,  IND Annual Reports,  Serious  Adverse Event Reports,  clinical trial
protocols,  and Sponsor's Study Reports within 30 days of final draft.  Licensee
shall provide Licensor with such access to relevant records and facilities as to
permit a reasonable review of the progress, from time to time, of the activities
being  performed  by  Licensee  pursuant to the  development  plans set forth in
Exhibit B.

                  3.  JOINT RESEARCH AND DEVELOPMENT COMMITTEE AND MEETINGS.

                  (a) Licensee and  Licensor  shall  establish a committee  (the
"Joint  Committee")  to provide  each party with  timely  information  regarding
development  and  management of the Project in accordance  with the  development
plans set  forth in  Exhibit B hereto  and the terms of  Sections  5.01 and 5.02
above. Promptly following the execution of this Agreement,  each of Licensee and
Licensor  shall  (i)  appoint  one of its  employees  to serve  as its  Research
Development  Program  Leader,  who shall serve on the Joint  Committee and shall
have overall  responsibility  for conducting and directing the efforts of his or
her  respective  party  in  accordance  with  the  determinations  of the  Joint
Committee  and  (ii)  appoint  two  additional   representatives  to  the  Joint
Committee; and the Joint

                                       12
<PAGE>


Committee  shall have an initial  meeting as soon as  practicable  following the
appointment of the members thereof.

                  (b) Following  the  initial  meeting  of the  Joint  Committee
provided in paragraph  5.03(a),  the Joint  Committee shall meet at intervals of
not  less  than  three  and not  more  than six  months  in  order to carry  out
appraisals of the Project and the results thereof.  At such meetings the parties
shall consider  whether the direction of the Project should be modified in light
of the  parties'  experience,  PROVIDED,  that no  recommendations  of the Joint
Committee  which  would  extend  the scope or alter the terms of this  Agreement
shall be effective until an amendment to this Agreement shall have been prepared
and signed by the legal  representatives of the Parties,  in accordance with the
terms of Section 11.05 hereof.

                  (c) Actions  of the  Joint  Committee  shall be by  consensus;
PROVIDED,  HOWEVER, that notwithstanding anything contained in this Agreement to
the  contrary,  in the event of a  deadlock,  issues  shall be  resolved  (i) by
negotiations  between the  management  of Licensee  and Licensor and (ii) in the
event  that the  management  of  Licensee  and  Licensor  are unable to reach an
agreement,  then (1) if such issue  arises  during  Phase 1, the issue  shall be
resolved  by an  independent  third  party  expert  selected  by,  and  mutually
agreeable to, the Parties,  whose  determinations will be final and binding upon
the Parties and (2) if such issue arises after completion of Phase 1, Licensee's
decision,  determined in Licensee's sole discretion,  shall control and be final
and binding upon the Parties.

                  4.  GOVERNMENTAL  APPROVALS.  With  respect to each country in
the Territory,  Licensee  shall be responsible  for (either alone or with one or
more third parties deemed necessary or desirable in Licensee's sole discretion),
and pay the costs,  expenses and fees  associated  therewith,  the submission of
information  with  respect  to  each  Licensed  Product,  Licensed  Process  and
Agreement Compound to the appropriate  governmental  agency in such country from
which  approval  must be  obtained  in order to market  such  Licensed  Product,
Licensed Process and/or Agreement Compound. Licensor shall assist and cooperate,
and shall  cause UFRFI to assist and  cooperate,  with  Licensee  as  reasonably
requested in any such submission.

                  5.  MARKETING.   Licensee   shall   have  sole   control   and
responsibility  (either alone or with one or more third parties deemed necessary
or desirable  in  Licensee's  sole  discretion)  for the  marketing of Agreement
Compounds or Licensed Products in the Territory; provided that Licensee shall at
all times comply with the terms of Section 5.07.

                  6.  PHARMACOVIGILANCE   AND  ADVERSE   REACTION   INFORMATION.
Licensee shall maintain an adverse event and vigilance  reporting system that is
in compliance with FDA  requirements or any foreign  counterpart  thereof in the
Territory.  Such system shall track,  investigate  and report to the appropriate
regulatory  authorities  in the  Territory  adverse  events  for  the  Agreement
Compounds or Licensed  Products.  Licensee shall promptly notify Licensor of any
serious  adverse  reaction  investigation  with respect to Agreement  Compounds,
Licensed Products or Licensed Processes occurring within the Territory.  For FDA
reportable  adverse  events  occurring  within the  Territory,  notification  of
Licensor by Licensee shall be concurrent with FDA notification. Licensor

                                       13
<PAGE>


shall promptly  notify Licensee of any serious  adverse  reaction  investigation
with respect to Agreement  Compounds,  Licensed  Products or Licensed  Processes
occurring  outside the Territory.  For FDA reportable  adverse events  occurring
outside the Territory,  notification of Licensee by Licensor shall be concurrent
with FDA notification.

                  7.  DUE DILIGENCE.

                  (a) Licensee  shall use  commercially  reasonable  efforts  to
bring one or more Licensed Products or Licensed Processes to market such efforts
to be consistent with the efforts employed by Licensee for its own products.

                  (b) Licensee shall exercise commercially reasonable efforts in
developing  the  Project  in an  expeditious  manner,  in  accordance  with  the
development plan set forth in Exhibit B hereto and this Article V.

                  (c) Licensee,  or a  sublicensee  of Licensee,  will  promote,
market and sell a Licensed Product,  including the specific launch of commercial
sales in each country within the Territory, within one hundred eighty (180) days
of  governmental  market and pricing  approval of the Licensed  Product,  except
where  and to the  extent  that such  promotion,  marketing  and/or  sale may be
prohibited  or  restricted  by law;  provided,  however,  that in the event that
Licensee  fails to launch  the  commercial  sale of such  Licensed  Product in a
country within the Territory within such one hundred eighty (180) day period due
to Force  Majeure,  or the  inability  of  Licensee  to secure  DMF  grade  Bulk
Substance  from an FDA  approved  source  after a good  faith  effort,  such one
hundred  eighty  (180)  day  period  shall be  extended  by the  period of delay
resulting from any of such  occurrences.  In the event  Licensee  decides not to
launch a given  Licensed  Product in any given  country,  Licensee  shall notify
Licensor in writing of such  decision  promptly  after  governmental  market and
pricing approval of such Licensed Product. In such event, all rights of Licensee
under this  Agreement  with respect to such Licensed  Product in such country in
the Territory shall terminate.

                                   ARTICLE VI.
                       PATENT PROSECUTION AND INFRINGEMENT

                  1.  PROSECUTION.  Licensor  shall,  subject  to the  rights of
UFRFI under the UFRFI License Agreement,  prepare, file, prosecute and maintain,
all  patent  applications  and  issued  patents  related  to the  Know-How,  the
Agreement Compounds, the Licensed Products,  Licensed Processes and Improvements
in the Territory.  Licensor shall keep Licensee  currently  advised of all steps
taken or to be taken by Licensor in the  prosecution,  filing and maintenance of
all  applications  for  patents  relating  to  Agreement   Compounds,   Licensed
Processes,  Licensed  Products and  Improvements and shall furnish Licensee with
copies of all such patent  applications  promptly  after filing.  Licensee shall
have the right to advise and cooperate  with  Licensor in any such  prosecution,
filing or maintenance of such patent applications,  and such advice shall not be
rejected  unreasonably.  All costs and expenses incurred after the execution and
delivery of this Agreement by the Parties,

                                       14
<PAGE>


including  reasonable  attorneys fees, with respect to the preparation,  filing,
prosecution  and  maintenance  of all patent  applications  and  issued  patents
related  to the  Know-How,  the  Agreement  Compounds,  the  Licensed  Products,
Licensed  Processes and Improvements in the Territory shall be shared equally by
the Parties.

                  2.  OWNERSHIP  OF  INVENTIONS.  Inventions  made by one  Party
shall remain the property of, and shall be owned by, such Party;  and inventions
made jointly by the Parties shall be the property of, and shall be owned jointly
by, the Parties; provided, however, that all such inventions referred to in this
Section 6.02 that are owned  jointly or otherwise by Licensor  shall be included
in the grant of the license by Licensor to Licensee under Section 2.01 above. In
the event the License is terminated by Licensor with respect to a country in the
Territory and Licensee has transferred to Licensor  Know-How pursuant to Section
10.04 below,  Licensee shall also grant to Licensor an exclusive license for use
in the Field of Use solely  within the  country  in the  Territory  in which the
License hereunder has been terminated,  on terms and conditions similar to those
contained  herein,  including the royalty terms set forth in Section 3.01 hereof
on a Population  Adjusted basis, but excluding the Lump Sum Payments provided in
Section  3.02  hereof,  to all  Licensee  inventions  which may be  utilized  in
connection with the Products.

                  3.  ENFORCEMENT ACTIONS AGAINST THIRD PARTY INFRINGEMENTS.

                  (a) Licensor and Licensee shall promptly  notify each other of
any infringement of the Licensed Patents and/or unauthorized use of the Know-How
which may come to their attention.  Subject to Section  6.03(b),  Licensor shall
(i) promptly  notify Licensee if UFRFI elects to join Licensor as a plaintiff or
subsequently  bring  its own  action  against  an  infringer  or the  rights  or
unauthorized use of Licensed Products or Agreement Compounds,  and (ii) promptly
undertake  commercially  reasonable  efforts to obtain a  discontinuance  of the
aforesaid  infringement  or unauthorized  use and, if not  successful,  Licensor
shall bring suit against such  infringer or  unauthorized  user.  Subject to the
rights of UFRFI under the UFRFI  License  Agreement,  Licensee may elect to join
Licensor  and/or UFRFI as a party  plaintiff in any such suit, at the expense of
Licensee.

                  (b) Notwithstanding  anything  to the  contrary  set  forth in
Section  6.03(a),  in the  event  Licensee  desires  to be  designated  as  lead
plaintiff and select  counsel for such an action,  Licensee shall provide prompt
written  notice to Licensor  of such intent and shall,  subject to the rights of
UFRFI under the UFRFI  License  Agreement,  thereafter  assume  direction of the
litigation.  Any suit by Licensee shall be either in the name of Licensee, or in
the name of Licensor or UFRFI,  or jointly by Licensee,  Licensor and UFRFI,  or
any combination  thereof,  as may be required by the law of the forum.  For such
purpose  Licensor  shall  execute,  and where  necessary  shall  cause  UFRFI to
execute,  such legal papers  necessary  for  prosecution  of such suit as may be
reasonably requested by Licensee.

                                       15
<PAGE>


                  4.  DEFENSE AGAINST CLAIMS OF INFRINGEMENTS BY THIRD PARTIES.

                  (a) Subject to the rights of the UFRFI under the UFRFI License
Agreement  and  6.04(b)  below,  Licensor  shall  have  the  right,  but not the
obligation  to  defend  any and all  charges  of  infringement  of  intellectual
property  rights  concerning  the  manufacture,  use,  sale,  offer for sale, or
importation of the Licensed  Products whether such charge is made against UFRFI,
Licensor, Licensee, an Affiliate or sub-licensee of Licensee, or any combination
thereof.  In all  such  cases,  Licensor  shall  have  the  right,  but  not the
obligation,  to control such litigation or threatened litigation,  including the
right to choose counsel, the right to direct the conduct of the litigation,  the
right to settle or compromise the case or position, and to take any other action
as Licensor may, in its own discretion deem appropriate, provided, however, that
Licensor shall obtain Licensee's consent,  not to be unreasonably  withheld,  to
any settlement or compromise which would have an adverse effect on Licensee,  an
Affiliate of Licensee or sub-licensee of Licensee, or of such party's respective
rights hereunder.

                  (b) Notwithstanding  anything  to the  contrary  set  forth in
Section  6.04(a),  in the  event  Licensee  desires  to be  designated  as  lead
plaintiff and select  counsel for such an action,  Licensee shall provide prompt
written notice to Licensor of such intent and shall  thereafter,  subject to the
rights of UFRFI  under the UFRFI  License  Agreement,  assume  direction  of the
litigation.  Any suit by Licensee shall be either in the name of Licensee, or in
the name of Licensor or UFRFI,  or jointly by Licensee,  Licensor and UFRFI,  or
any combination  thereof,  as may be required by the law of the forum.  For such
purpose  Licensor  shall  execute,  and where  necessary  shall  cause  UFRFI to
execute,  such legal papers  necessary  for  prosecution  of such suit as may be
reasonably requested by Licensee.

                  5.  COOPERATION  OF  PARTIES.  With  respect  to any  suit for
infringement  of the Licensed  Patents or unauthorized  use of the Know-How,  or
defense of the Licensed  Patents,  the party that did not institute suit or that
does not  control  the  defense of the suit,  as the case may be,  shall  render
reasonable  assistance to the party that did institute  suit or is defending the
action,  including,  but  not  limited  to  executing  all  documents  as may be
reasonably  requested by the party that did institute suit, having its employees
testify  when  requested  and  making  available   relevant   records,   papers,
information, samples, specimens and the like.

                  6.  LEGAL  FEES  AND  RECOVERIES.   The  costs  and  expenses,
including  reasonable  attorneys  fees, of any action  brought by or defended by
Licensor or Licensee  pursuant to Sections 6.03 or 6.04 hereof,  shall be shared
equally by the  Parties.  Any  recovery of damages by Licensee for any such suit
shall be applied first in  satisfaction of any  unreimbursed  expenses and legal
fees of the parties and thereafter shall be divided equally between Licensee and
Licensor.  In the event a cash  settlement  is received as a result of an action
against an infringer or a "product  settlement" is received (as defined  below),
Licensor and Licensee  shall,  after  deduction  for costs of  litigation,  each
receive 50% of the net settlement amount. In the event the Licensor and Licensee
agree that a license is required to be obtained from a third party in connection
with any action or

                                       16
<PAGE>


settlement,  the parties  shall each bear fifty  percent  (50%) of the costs and
royalties associated therewith.

                                  ARTICLE VII.
                          OBLIGATION OF CONFIDENTIALITY

                  1.  CONFIDENTIALITY  OBLIGATION.   During  the  term  of  this
Agreement  and  thereafter,  the Parties  hereto  shall hold in  confidence  all
confidential  and  proprietary  information  ("Information")  of the other party
hereto except for and to the extent to which:

                  (a) Information which must be disclosed to government agencies
for the process of registering Licensed Products or Licensed Processes;

                  (b) Information  which is or becomes part of the public domain
through no fault of the parties or their respective Affiliates;

                  (c) Information  which was known by either of the  parties  or
such  party's  Affiliates  as shown by the written  records of such party at the
time of its disclosure by the other party;

                  (d) Information  which is  disclosed  with the  prior  written
approval of the other party;

                  (e) Information  which must be disclosed to those  persons who
have a need to know in order to effectuate the development of Licensed  Products
or  Licensed  Processes,  provided  that each  such  person  signs an  agreement
obligating  that person to hold the Information in confidence to the same extent
as the parties are obligated hereunder;

                  (f) Information  which must be disclosed to a company which is
appointed as a supply source of Agreement Compounds,  provided that such company
signs an agreement  obligating it to hold the  Information  in confidence to the
same extent as the parties are obligated hereunder;

                  (g) Information  which becomes known to Licensee from a source
other than  Licensor  or UFRFI  without  breach of this  Agreement  by  Licensee
provided that such other source has the right to disclose such Information; or

                  (h) Information  which is  disclosed  pursuant  to an order or
requirement of a court, administrative agency, or other government body.

                  2.  STANDARD   OF  CARE.   Each  party  shall  take  all  such
precautions  as it  normally  takes  with its own  confidential  information  to
prevent any improper  disclosure of the  Information;  provided,  however,  that
Information may be disclosed within the limits required to obtain any

                                       17
<PAGE>


authorization  from the FDA or any other  United  States or  foreign  regulatory
agency or, with the prior written consent of the other party.

                  3.  NON-USE OF NAMES.  Neither of the parties hereto shall use
the names of the other party hereto,  the  University of Florida or UFRFI or any
of either party's or institution's employees, nor any adaptation thereof, in any
advertising,  promotional or sales literature  without the prior written consent
of the other party or UFRFI in each case, except that the parties may state that
it is  licensed  and/or  sublicensed  by UFRFI  under one or more of the patents
and/or applications comprising the Licensed Patents.

                  4.  SURVIVAL. The obligations of confidentiality shall survive
expiration or termination of this Agreement.

                                  ARTICLE VIII.
                         REPRESENTATIONS AND WARRANTIES

                  1.  REPRESENTATIONS  AND  WARRANTIES  OF  LICENSOR.   Licensor
hereby represents and warrants the following:

                  (a) Except for the royalty-free,  nonexclusive license granted
by  UFRFI  to the  United  States  Government  described  in the  UFRFI  License
Agreement, to Licensor's knowledge,  Licensor is the sole licensee of the entire
right,  title and  interest  in and to  Licensed  Patents;  Licensor is the sole
licensee of the Know-How to be provided  under the terms of this  Agreement  and
the UFRFI  License  Agreement;  and Licensor is the sole  licensee of the right,
title and interest in and to the Agreement Compounds,  the Licensed Products and
Licensed Processes.

                  (b) Licensor  is free to  enter  into  this  Agreement  and to
sublicense its rights under the UFRFI License  Agreement to Licensor pursuant to
this Agreement.

                  (c) As of the date of this  Agreement,  there are no  actions,
suits or claims  pending  against  Licensor or any of its  Affiliates or, to the
best  of  Licensor's  knowledge,  UFRFI  in  any  court  or  by  or  before  any
governmental  body  or  agency  with  respect  to  Licensed  Patents,  Agreement
Compounds,  Licensed Products,  Licensed  Processes and/or Know-How,  and to the
best of  Licensor's  knowledge,  no such  actions,  suits or  claims  have  been
threatened  against  Licensor or any of its  Affiliates or UFRFI and Licensor is
unaware of any facts which would form a reasonable basis for such a claim.

                  (d) No other person or organization presently has been granted
by Licensor any effective option or license with respect to the manufacture, use
or sale of Agreement  Compounds,  Licensed Products or Licensed Processes in the
Field of Use in the Territory,  or is presently authorized to use Know-How in or
for the Field of Use in the Territory.

                                       18
<PAGE>


                  (e) As  of  the  date  of  this  Agreement,  to  the  best  of
Licensor's  knowledge,  none  of  the  Agreement  Compounds,  Licensed  Patents,
Licensed  Processes or Know-How  infringe upon the patent or other  intellectual
property rights of any third party.

                  (f) To the best of Licensor's knowledge, there is no patent or
patent  application  of another,  which  contains  claims  that  dominate or may
dominate any Know-How,  or any of the Licensed  Patents,  Licensed  Processes or
Licensed Products.

                  (g) Nothing  has come to the  attention  of Licensor  which it
believes  would  indicate  that the  Licensed  Products  are not  patentable  or
marketable  or would be unable upon  completion  of the  development  program to
receive FDA approval.

                  2.  REPRESENTATION AND WARRANTIES OF LICENSEE. Licensee hereby
represents and warrants the following:

                  (a) Licensee is free to enter into this  Agreement and perform
all  of the  obligations  required  by  Licensee  hereunder.  When  executed  by
Licensee,  this Agreement shall be valid and enforceable  against  Licensee,  in
accordance with its terms.

                  (b) There are no  actions,  suits or  claims  pending  against
Licensee or any of its Affiliates, in any court or by or before any governmental
body or  agency  preventing  Licensee  from  entering  into  this  Agreement  or
performing its obligations hereunder.

                                   ARTICLE IX.
                                    COVENANTS

                  1.  COVENANTS  OF  LICENSOR.   Licensor  hereby  covenants  to
Licensee as follows:

                  (a) it shall not terminate the UFRFI License Agreement for any
reason without the prior written consent of Licensee;

                  (b) it shall not amend the UFRFI License Agreement without the
prior written consent of Licensee if such amendment  would  adversely  affect or
diminish any of Licensee's or Licensee's  Affiliates or sublicensees'  rights or
privileges hereunder; and

                  (c) it shall meet all of its  obligations  to UFRFI  under the
UFRFI License Agreement.

                  2.  COVENANTS  OF  LICENSEE.   Licensee  hereby  covenants  to
Licensor that Licensor's obligations to UFRFI under the UFRFI License Agreement,
to the extent they relate  directly to the  Agreement  Compounds,  the  Licensed
Patents,  the Licensed  Processes and Know-How (other than financial  commitment
and payment  obligations),  shall be binding upon Licensee as if Licensee were a
party thereto, except as otherwise provided in this Agreement.

                                       19
<PAGE>


                                   ARTICLE X.
                                TERM OF AGREEMENT

                  1.  TERM.  Unless  sooner  terminated  as  provided in Section
10.02,  this  Agreement  shall  commence as of the date first above  written and
shall continue on a product by product and country by country basis with respect
to each Licensed Product in each country in the Territory until (i) with respect
to a Licensed Product in a country in the Territory in which a patent is granted
prior to regulatory  approval of such  Licensed  Product for such country in the
Territory, the expiration date of the last to expire granted Licensed Patent for
such Licensed  Product  containing a Valid Claim in that  country;  or (ii) with
respect to a Licensed Product in a country in the Territory in which a patent is
not  granted  prior to  regulatory  approval of such  Licensed  Product for such
country in the Territory, five (5) years from the date of regulatory approval of
such Licensed Product for such country in the Territory; provided, however, that
in the event a patent for such Licensed  Product is subsequently  granted during
such five year period for such country in the Territory,  then expiration of the
term of this  Agreement  for  such  Licensed  Product  for such  country  in the
Territory shall be the last to expire granted  Licensed Patent for such Licensed
Product containing a Valid Claim in that country. Upon expiration of the term of
this  Agreement  with  respect to any  Licensed  Product  in any  country in the
Territory  or earlier  termination  with  respect  to  Licensed  Products  whose
underlying  Licensed  Patents  have been  determined  to lack a Valid Claim in a
country in the  Territory,  Licensee  shall retain all rights to any  trademarks
utilized  in  connection  with  the  sale and  marketing  of any  such  Licensed
Products,  and nothing herein shall be deemed to restrict  Licensee's ability to
manufacture,  sell, distribute,  market and promote the Licensed Products in any
country in the Territory with respect to which the Licensed Patents have expired
or lack a Valid Claim.

                  2.  TERMINATION. This Agreement may be terminated:

                  (a) By either party  hereto upon the breach of this  Agreement
by the other party,  on sixty (60) days' prior  written  notice to the breaching
party,  the notice to become  effective  at the end of the sixty (60) day period
unless the breach is sooner cured by the  breaching  party,  PROVIDED,  that (i)
upon the breach by  Licensee  of any  obligation  to make  payments  to Licensor
hereunder,  Licensor  may  terminate  this  Agreement on thirty (30) days' prior
written  notice to Licensee  unless the breach is cured by Licensee  within such
thirty  (30) day period;  and (ii) upon  breach by  Licensor  of any  obligation
hereunder,  the Licensee shall be entitled to a fifty percent (50%) reduction in
royalties payable hereunder until such breach is cured; or

                  (b) By a party,  if the other party  hereto seeks relief under
any bankruptcy,  insolvency, or other laws affecting creditors' rights generally
or seeks to place its  business in the hands of a receiver or any such  petition
or action is filed or sought  against such party which is not  dismissed  within
sixty (60) days of the commencement thereof; or

                  (c) By  Licensee  upon the  termination  of the UFRFI  License
Agreement  relating to the Licensed  Patents (it being  understood  that in such
event Licensee shall be entitled, without any

                                       20
<PAGE>


obligation to Licensor,  to enter into a license  agreement  with the UFRFI with
respect to the Agreement Compounds, Licensed Products or Licensed Processes); or

                  (d) By Licensee on a product by product and country by country
basis, if an NDA or its non-US equivalent is not approved within thirty-six (36)
months of submission; or

                  (e) By Licensee  with respect to the United States and without
further  obligation for royalty payments  hereunder with respect to Net Sales in
the United  States,  in the event the United  States  government  exercises  its
residual  rights  arising from its National  Institute of Health  grants to fund
research on Agreement Compounds (except if the United States Government requires
sales to it by Schein at no less than the then current market price); or

                  (f) By Licensee on a product-by-product and country by country
basis with respect to Licensed  Products whose  underlying  patents lack a Valid
Claim in a country in the  Territory,  in which event  Licensee shall be free to
manufacture,  sell, transfer,  commercialize and market such Licensed Product in
such country in the Territory  without  obligation to Licensor  other than those
set forth in Sections 10.03 and 10.04 below; or

                  (g) By  Licensee,  on six (6) months'  notice,  if Licensee is
unable to secure DMF grade Bulk  Substance  from an FDA approved  source after a
good faith effort; or

                  (h) By  Licensee,  on a product  by  product  and  country  by
country basis, if a temporary restraining order, preliminary injunction or other
order  is  granted  by  a  court  or  authority  enjoining  or  restricting  the
manufacture or distribution of a Licensed Product in a country in the Territory,
as contemplated hereby; or

                  (i) By  Licensee,  on a product  by  product  and  country  by
country  basis,  if it determines  in good faith that a Licensed  Product is not
commercially feasible in a country in the Territory; or

                  (j) By  Licensee,  on a product  by  product  and  country  by
country basis, if the Licensed  Patents or the Licensed  Products  infringe upon
third party  patents or other third party  rights in a country in the  Territory
and Licensee is unable to effect an arrangement that is satisfactory to Licensee
to avoid infringement after a good faith effort to do so; or

                  (k) By Licensee,  if the results of clinical studies in humans
with  respect  to  the  Licensed   Products  or  the  Agreement   Compounds  are
inconclusive  and do not permit a filing for an NDA,  or if  additional  studies
need to be  performed  or redone  which  additional  studies  would  extend  the
timetable for the Project by eighteen (18) or more months; or

                  (l) By Licensee,  after  completion of Phase 1, upon 180 days'
prior  written  notice to Licensor,  for any other  reason,  including,  without
limitation, a change of Licensee's strategic plans; or

                                       21
<PAGE>


                  (m) By  Licensor,  during  the  period  from  the  date of the
transfer of the IND to the Licensee  until date of submission of the NDA, if the
Licensee does not use commercially  reasonable  efforts to pursue development of
the Agreement Compound for a period of nine months.

                  3.  CONTINUING  RIGHTS.  Termination of this Agreement for any
reason shall be without prejudice to:

                  (a) Licensor's  right to receive  all  royalties  accrued  and
unpaid on the effective date of such termination;

                  (b) the  rights  and  obligations  provided  in  Section  7.03
hereof; and

                  (c) any  other   remedies  which  either  party  may  then  or
thereafter have hereunder or otherwise.

                  Upon  termination  of this Agreement for any reason other than
the  expiration  of this  Agreement  under  Section  10.01,  Licensee may notify
Licensor of the amount of Licensed Products that Licensee and its Affiliates and
sublicensees  then have on hand, in which case Licensee and its  Affiliates  and
sublicensees  shall  have the right to sell that  amount of  Licensed  Products,
provided that Licensee  shall pay or cause to be paid  royalties  thereon at the
rates and at the times herein  provided and render reports thereon in the manner
herein provided.  Notwithstanding  the foregoing,  upon the occurrence of any of
the events set forth in Sections 10.02(e) or (j), above, Licensee shall have the
right to elect to (i) terminate the term of this  Agreement  with respect to the
applicable  Licensed Product or Products in a country in the Territory,  or (ii)
continue the  Agreement on the same terms and  conditions  except that  Licensee
shall  have the right to  continue  selling  the  affected  Licensed  Product or
Products the applicable  country or countries in the Territory at fifty (50%) of
the royalty rate set forth in Section 3.02 above.

                  4.  RETURN  OF  KNOW-HOW.   Upon  early  termination  of  this
Agreement by (1) Licensor following breach of this Agreement by Licensee, or (2)
by Licensee pursuant to Sections 10.02(d),  (e), (f), (h), (i), (j), (k) or (l),
Licensee,  its successors and legal  representatives shall collect and return to
Licensor  all  Know-How and  information  obtained by Licensee  pursuant to this
Agreement  in whatever  form it may exist and shall do its utmost to prevent the
further  use of any and all such  Know-How  or  information  without  Licensor's
express  written  consent.  Upon the early  termination of this Agreement as set
forth in the first  sentence of this Section 10.04,  Licensee shall  immediately
transfer to Licensor or to a third party  designated  by Licensor the  marketing
registrations,  data  base and  registration  dossier  information  relating  to
Licensed   Products   or   Licensed   Processes   in   Licensee's    possession.
Notwithstanding  the  foregoing,  in the  event  of  such  termination  of  this
Agreement as to less than all of the countries in the Territory, the obligations
set forth in this Section 10.04 shall apply only with respect to such  countries
and  Licensee  shall be  permitted  to retain  Know-How  and  other  information
obtained  pursuant to this Agreement and utilize such Know- How and  information
in such  countries in the Territory with respect to which this Agreement has not
been  terminated.  In the event Licensee  terminates this Agreement  pursuant to
Sections 10.02(d),

                                       22
<PAGE>


(e),  (h),  (j),  or (k),  Licensor  shall,  at such  time  as  Licensor  or any
sub-licenseee  of  Licensor  shall  commence  the first  commercial  launch of a
product based upon the Agreement Compound, reimburse Licensee for the Population
Adjusted fifty percent (50%) cost of cumulative  clinical  expenses  incurred by
Licensee  on such  Agreement  Compound,  such  amounts to be paid from  royalty,
milestone and profits derived from the license, development and sale of Licensed
Products at the same rate as provided  herein for payment of  royalties on sales
of the Agreement Compound. In the event this Agreement is terminated by Licensee
pursuant to Subsection 10.02(l),  Licensee agrees that, for a period of five (5)
years following such  termination,  it will not undertake to develop an ANDA for
the Agreement Compound.

                  5.  WAIVER.  Failure to  terminate  this  Agreement  following
breach or failure to comply with this Agreement  shall not be deemed a waiver of
the non-breaching party's defenses, rights or causes of action arising from such
or any future breach or noncompliance.

                                   ARTICLE XI.
                                  MISCELLANEOUS

                  1.  FORCE  MAJEURE.  If  for  reasons  of  Force  Majeure,  as
hereinafter defined, either party fails to comply with its obligations hereunder
other than the payment of money,  such failure  shall not  constitute  breach of
contract.  For the purpose of this  Article,  Force  Majeure shall means acts of
God;  acts,  regulations  or  laws  of any  government;  war;  civil  commotion;
destruction of production  facilities or materials;  fire;  earthquake or storm;
labor disturbances; failure of public utilities or common carriers and any other
causes beyond this reasonable control of either party.

                  2.  ASSIGNMENT.  Either party hereto may assign this Agreement
in whole or in part to any  Affiliate  or  Affiliates  who shall be  substituted
directly  in whole  or in part for it  hereunder,  provided,  however,  that the
assignor shall  guarantee the performance of its Affiliate  assignee  hereunder.
This  Agreement  shall not  otherwise be  assignable by either party without the
prior written consent of the other party,  except by a party to the successor or
assignee  of  all or  substantially  all of its  business  related  to  Licensed
Products.

                  3.  NOTICES.  Any notice or report required or permitted to be
given or made under this  Agreement  by one of the  parties  hereto to the other
shall be in writing and sent to the other party at its address  indicated  below
or to such other address as the addressee  shall have  theretofore  furnished in
writing to the addressor:

                                       23
<PAGE>


                  If to Licensor:

                                            SunPharm Corporation
                                            The Veranda, Suite 301
                                            814 Highway A1A
                                            Ponte Vedra Beach, Florida 32082
                                            Attention:  Stefan Borg
                                                        President and CEO
                  If to Licensee:

                                            Schein Pharmaceutical, Inc.
                                            100 Campus Drive
                                            Florham Park, New Jersey 07932
                                            Attention:  General Counsel

                  4.  GOVERNING LAW. This  Agreement  shall be construed and the
respective rights of the parties hereto determined  according to the substantive
laws of Delaware,  other than those provisions  governing  conflict of laws. The
Parties  agree that the venue of any action in  connection  with this  Agreement
shall be the Federal  District Court sitting in Wilmington,  Delaware and hereby
waive any and all defenses of improper venue or that the forum is inconvenient.

                  5.  ENTIRE  AGREEMENT.  The terms and provisions  contained in
this  Agreement  constitute the entire  Agreement  between the parties and shall
supersede   all  previous   communications,   representations,   agreements   or
understandings,  either oral or written, between the parties hereto with respect
to the  subject  matter  hereof and no  agreement  or  understanding  varying or
extending  this Agreement  shall be binding upon either party hereto,  unless in
writing  which  specifically  amended  thereby  shall  remain in full  force and
effect.

                  6.  NON-WAIVER.  Any waiver must be explicitly in writing. The
waiver by either of the parties to this Agreement of any breach of any provision
hereof  by  the  other  party  shall  not be  construed  to be a  waiver  of any
succeeding breach of such provision or a waiver of the provision itself.

                  7.  SEVERABILITY.  If and to the  extent  that  any  court  or
tribunal  of  competent  jurisdiction  holds  any of the  terms,  provisions  or
conditions or parts thereof of this Agreement,  or the application hereof to any
circumstances,  to be invalid or to be  unenforceable  in a final,  unappealable
order,  the  remainder  of this  Agreement  and the  application  of such terms,
provision or condition or part thereof to  circumstances  other than those as to
which it is held invalid or  unenforceable  shall not be affected  thereby,  and
each of the other terms,  provisions and  conditions of this Agreement  shall be
valid and enforceable to the fullest extent of the law.

                                       24
<PAGE>


                  8.  AGENCY.   The  relationship  of  the  parties  under  this
Agreement is that of independent  contractors.  Neither party shall be deemed to
be the agent of the other,  and neither is authorized to take any action binding
upon the other.

                  9.  COUNTERPARTS,   HEADINGS,   ETC.  This  Agreement  may  be
executed in  counterparts,  each of which shall be deemed to be an original  and
both together  shall be deemed to be one and the same  Agreement.  All headings,
the cover page and the index in this  Agreement are inserted for  convenience of
reference  only and  shall  not  affect  its  meaning  or  interpretation.  When
necessary or  applicable,  the use of the singular  includes the plural and vice
versa, and the masculine includes the feminine and vice versa.

                  IN WITNESS  WHEREOF,  Licensor and Licensee have executed this
Agreement in duplicate as of the day and year first above written.

                       SUNPHARM CORPORATION

                       By:     /s/ STEFAN BORG
                               ------------------------------------------------
                       Name:       STEFAN BORG
                       Title:      PRESIDENT AND CHIEF EXECUTIVE OFFICER


                       SCHEIN PHARMACEUTICAL, INC.

                       By:     /s/ PAUL P. KLEUTGHEN
                               ------------------------------------------------
                       Name:       PAUL P. KLEUTGHEN
                       Title:      SENIOR VICE-PRESIDENT, STRATEGIC DEVELOPMENT

                                       25
<PAGE>


                                    EXHIBIT A

                                LICENSED PATENTS

                                     [ ** ]

                                       26
<PAGE>


                                    EXHIBIT B

                                DEVELOPMENT PLANS

All of the attached Exhibit B has been deleted.

                                       27