COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

                                     between

                       Synaptic Pharmaceutical Corporation

                                       and

                             Warner-Lambert Company























                                  July 28, 1997




<PAGE>




                                TABLE OF CONTENTS


RECITALS....................................................................-1-

ARTICLE I...................................................................-2-
        Definitions.........................................................-2-

ARTICLE II..................................................................-5-
 Scope and Structure of Project.............................................-5-
        2.0     Scope of Project............................................-5-
        2.1     Structure of Project........................................-5-
                (a)    General..............................................-5-
                (b)    Duration of Stage 1..................................-5-
                (c)    Duration of Stage 2..................................-5-
                (d)    Suspension of Stage 2 Commencement Date..............-5-

ARTICLE III.................................................................-6-
 Management and Planning of Project; Reports and Exchange of Information....-6-
        3.0     Steering Committee; Management Committee....................-6-
        3.1     Research Committee..........................................-7-
        3.2     Meetings....................................................-7-
        3.3     Personnel and Resources.....................................-7-
        3.4     Modification of Research Plan...............................-7-
        3.5     Conduct of Studies..........................................-7-
        3.6     Research with Third Parties; Third Party Technologies.......-8-
                (a)    No Research with Third Parties within Project Scope..-8-
                (b)    Research with Third Parties Outside Project Scope....-8-
                (c)    Acquiring Third Party Technologies...................-8-
        3.7     Written Reports.............................................-8-
        3.8     Disclosure of Technology....................................-9-
        3.9     Samples.....................................................-9-

ARTICLE IV..................................................................-9-
 Stage 1 of the Project.....................................................-9-
        4.0     Principal Objectives........................................-9-

ARTICLE V...................................................................-9-
 Stage 2 of the Project.....................................................-9-
        5.0     Principal Objectives........................................-9-
        5.1     Reconsideration of Research Plan............................-9-




                                (i)

<PAGE>



ARTICLE VI.................................................................-10-
 Funding of Project and Equity Commitment..................................-10-
        6.0     Stage 1 Funding............................................-10-
        6.1     Stage 2 Funding............................................-10-
                (a)    Research Funding....................................-10-
                (b)    Other Amounts.......................................-10-
                (c)    Payment.............................................-10-
        6.2     Stage 2 Equity Commitment..................................-11-
                (a)    Synaptic Put Option.................................-11-
                (b)    Conditions to Warner Stock Purchase Obligation......-11-
                (c)    Transfer Restrictions; Stock Registration...........-11-

ARTICLE VII................................................................-12-
 License Grants and Commercialization Efforts..............................-12-
        7.0     Grant by Synaptic..........................................-12-
                (a)    License Grant.......................................-12-
                (b)    Limited Sublicensing Rights.........................-12-
        7.1     Grant by Warner............................................-12-
        7.2     Efforts to Commercialize, Etc..............................-12-
                (a)    Development, Commercialization and Sales Efforts....-12-
                (b)    Lead Compound Development Team......................-12-
                (c)    Synaptic Participation in Post-NDA Filing Activities-13-

ARTICLE VIII...............................................................-13-
 Royalties.................................................................-13-
        8.0     General....................................................-13-
                (a)    Royalty Percentages.................................-13-
                (b)    Royalties on Unpatented Products....................-13-
                (c)    Cost of Goods Sold Limitation.......................-14-
                (d)    Annual Reconciliation of Royalty Payments Due.......-14-
                (e)    Term of Royalty Obligation..........................-14-
        8.1     Currency of Payment........................................-15-
        8.2     Payment and Reporting......................................-15-
        8.3     Records....................................................-15-
        8.4     Computation of Royalties...................................-15-
        8.5     Taxes Withheld.............................................-16-
        8.6     Licenses to Affiliates.....................................-16-
        8.7     Restrictions on Payment....................................-16-

ARTICLE IX.................................................................-16-
 Milestone Payments........................................................-16-
        9.0     First Lead Compound Designated by End of Project Term......-16-
                (a)    Milestone Amounts...................................-16-


                               (ii)

<PAGE>



                       (b)    Trigger Event................................-17-
                       (c)    Exceptions to Payment Obligations............-17-
               9.1     Second Lead Compound with Different Mechanism of 
                       Action..............................................-17-
               9.2     Third and Each Additional Lead Compound with Different
                       Mechanism of Action.................................-17-
               9.3     Backup Compounds....................................-18-
               9.4     Second Generation Compounds.........................-18-
               9.5     Same Compound but Different Therapeutic Indication..-18-

ARTICLE X..................................................................-19-
 Royalties and Milestones on Pre-Existing Compounds in Development.........-19-
        10.1    Pre-Phase II Completion Other Compound.....................-19-
        10.2    Post-Phase II Completion Other Compound....................-20-

ARTICLE XI.................................................................-20-
 Patent Protection.........................................................-20-
        11.0    Disclosure of Inventions...................................-20-
        11.1    Ownership of Project Technology and Inventions.............-20-
        11.2    Preparation, Filing and Prosecution of Patent Applications.-21-
                (a)    Responsible Party...................................-21-
                (b)    Assistance..........................................-21-
                (c)    Abandonment.........................................-21-
                (d)    Costs...............................................-21-
        11.3    Third Party Infringement...................................-22-
        11.4    Allegations of Infringement by Third Parties...............-22-
                (a)    Licenses Under Third Parties' Patents...............-22-
                (b)    Defense of Suits by Third Parties Relating to 
                       Products............................................-23-
                (c)    Defense of Suits by Third Parties Relating to 
                       Research Activities.................................-23-
                (d)    Pre-Existing Infringement Claims....................-23-

ARTICLE XII................................................................-23-
 Confidentiality...........................................................-23-
        12.0    Obligations................................................-23-
        12.1    Waiver of Confidentiality Obligation.......................-23-
        12.2    Disclosure of Agreement....................................-23-
        12.3    Publicity..................................................-24-
        12.4    Scientific Publications....................................-24-

ARTICLE XIII...............................................................-24-
 Term......................................................................-24-

ARTICLE XIV................................................................-24-
 Termination and License Maintenance Payment Options.......................-24-


                                (iii)

<PAGE>



        14.0    Material Default...........................................-24-
        14.1    Insolvency, Etc............................................-24-
        14.2    No Chemical Lead and No Novel Galanin Receptor During
                First Twelve Months........................................-24-
        14.3    No Chemical Lead but Novel Galanin Receptor During First
                Twelve Months..............................................-25-
                (a)    Synaptic's Limited Termination Right................-25-
                (b)    Synaptic's Further Termination Right; Warner's Right
                       to Override Termination and Enter Stage 2...........-25-
                (c)    Grant of Nonexclusive License Relating to Previously
                       Terminated Rights...................................-25-
        14.4    No BACL by Eighteen-Month Anniversary of Stage 1
                Commencement Date..........................................-26-
                (a)    Warner's Termination Right..........................-26-
                (b)    Warner's Right to Partial Termination...............-26-
                (c)    Warner's Further Termination Right..................-26-
        14.5    No BACL and No Lead Compound by End of Project Term;
                BACL or Lead Compound for Some but Not For All Galanin
                Receptors..................................................-26-
                (a)    Termination Right at End of Project Term............-26-
                (b)    Synaptic's Limited Termination Right................-26-
        14.6    BACLs Still Being Pursued but No Lead Compound by End
                of Project Term............................................-27-
                (a)    First BACL..........................................-27-
                (b)    Additional BACLs....................................-28-
        14.7    Lead Compound by End of Project Term.......................-31-
                (a)    First Lead Compound.................................-31-
                (b)    Additional Lead Compounds...........................-32-
        14.8    Two Targeted Galanin Receptors for Single BACL or Lead
                Compound...................................................-34-

ARTICLE XV.................................................................-34-
 Effect of Termination.....................................................-34-
        15.0    Termination Pursuant to Section 14.0 or Section 14.1.......-34-
                (a)    Rights and Obligations..............................-34-
                (b)    Survival of Certain Provisions......................-35-
        15.1    Termination Pursuant to Section 14.2.......................-35-
                (a)    Rights and Obligations..............................-35-
                (b)    Survival of Certain Provisions......................-35-
        15.2    Termination Pursuant to Section 14.3(b), Section 14.4(a),
                Section 14.4(c), Section 14.5(a) or Section 14.6(a)(ii)....-35-
                (a)    Rights and Obligations..............................-35-
                (b)    Survival of Certain Provisions......................-36-
        15.3    Partial Termination Pursuant to Section 14.3(a) or 
                Section 14.4(b)............................................-36-


                               (iv)

<PAGE>



                (a)    Restrictive Covenant................................-36-
                (b)    Survival of Certain Provisions......................-36-
        15.4    Partial Termination Pursuant to Section 14.5(b)............-37-
                (a)    Restrictive Covenant................................-37-
                (b)    Survival of Certain Provisions......................-37-
        15.5    Partial Termination Pursuant to Section 14.6 or
                Section 14.7...............................................-37-
                (a)    Restrictive Covenant................................-37-
                (b)    Survival of Certain Provisions......................-38-
        15.6    Option to Acquire License; Payments to Warner..............-38-
        15.7    Survival of Accrued Rights.................................-38-

ARTICLE XVI................................................................-39-
 Representations and Warranties............................................-39-
        16.1    Synaptic Prohibition Against Certain Third Party Licenses..-39-
        16.2    Warner Limitations on Certain Development Activities.......-39-
        16.3    Cost of Goods Sold Experience..............................-39-

ARTICLE XVII...............................................................-39-
 Miscellaneous Provisions..................................................-39-
        17.0    No Agency..................................................-39-
        17.1    Governing Law..............................................-39-
        17.2    Notices....................................................-39-
        17.3    Force Majeure..............................................-40-
        17.4    Amendment; Waiver..........................................-40-
        17.5    Indemnification............................................-41-
        17.6    Assignment.................................................-41-
        17.7    No Strict Construction.....................................-42-
        17.8    Counterparts...............................................-42-
        17.9    Entire Agreement...........................................-42-
        17.10   Headings...................................................-42-

Schedule I.................................................................-43-
        In Vivo Models.....................................................-43-

Schedule II................................................................-44-
        Specifications for Cells...........................................-44-
               A.      Cell Membranes......................................-44-
               B.      Cells for Signal Transduction Assays................-44-

Schedule III...............................................................-45-
        Research Plan......................................................-45-

Schedule IV................................................................-46-


                                       (v)

<PAGE>


        Responsibilities of the Parties....................................-46-
               A.      Responsibilities of Synaptic........................-46-
               B.      Responsibilities of Warner..........................-46-



                                      (vi)

<PAGE>




                  COLLABORATIVE RESEARCH AND LICENSE AGREEMENT


         This Agreement is made as of the 28th day of July, 1997 (the "Effective
Date"),  between Synaptic  Pharmaceutical  Corporation,  a Delaware  corporation
having a principal  place of business at 215 College Road,  Paramus,  New Jersey
07652-1410  ("Synaptic"),  and Warner-Lambert  Company,  a Delaware  corporation
having a  principal  place of business at 201 Tabor  Road,  Morris  Plains,  New
Jersey 07950 ("Warner").


                                    RECITALS

         1. Synaptic and Warner are each actively  conducting  research directed
at  discovering  and  developing  compounds  useful  for  treating  a variety of
disorders through the modulation of Galanin Receptors (as defined below).

         2.  Synaptic  has  expertise in the  discovery  and cloning of receptor
genes,  the  development of binding and signal  transduction  assays that employ
cloned  receptor  genes for use in drug discovery  programs,  and the design and
discovery of compounds that modulate the receptors of interest.

         3. Synaptic has utilized its expertise to discover and clone genes that
code for Galanin Receptors,  to develop binding and signal  transduction  assays
that employ  such genes and to design and  discover  Galanin  Receptor-selective
compounds,  and Synaptic is  continuing  to utilize its  expertise to attempt to
discover and clone genes that code for additional Galanin Receptors,  to develop
additional binding and signal  transduction assays that employ such genes and to
design and discover Galanin Receptor-selective compounds.

         4.  Warner  has  compound  libraries  that it would  like to  screen at
Galanin  Receptors cloned by Synaptic and has expertise in optimizing  candidate
compounds and in evaluating them in in vivo model systems.

         5. Warner has  expertise in  preclinical  and  clinical  testing and in
commercializing pharmaceutical products.

         6.  Synaptic and Warner have  expressed a mutual  interest in utilizing
their complementary  skills and resources in a collaborative  effort to discover
and develop agonists and antagonists of Galanin  Receptors for human therapeutic
indications.

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
hereinafter set forth, the parties agree as follows:


                                                        -1-

<PAGE>




                                    ARTICLE I
                                   Definitions

         When used in this Agreement, each of the following terms shall have the
meaning set forth below:

         1.1 "Affiliate"  means,  with respect to Warner or Synaptic,  any other
entity directly or indirectly controlling, controlled by or under common control
with such entity,  but only for so long as such control exists. One entity shall
be deemed to control another entity if it holds at least 50% of the voting stock
or income interest of such other entity.

         1.2 "Biologically Active Chemical Lead" or "BACL" means a Chemical Lead
or a chemical entity derived from a Chemical Lead that has exhibited preliminary
evidence of therapeutic utility, as judged by the Steering Committee,  in one or
more In Vivo Models, and is an agonist or an antagonist of a Galanin Receptor.

         1.3 "Chemical  Lead" means any chemical entity which binds to a Galanin
Receptor  either (a) at a  concentration of [**] or less and to which  synthetic
chemistry resources are committed for the purpose of obtaining a BACL or (b) has
been approved by both parties for testing in an In Vivo Model.

         1.4 "Cost of Goods Sold" means,  with respect to any Product,  the cost
of goods sold, as computed in accordance with United States  Generally  Accepted
Accounting  Standards  and in a manner  consistent  with the way in which Warner
computes  the cost of goods sold with respect to its other  products  generally.
Subject  to  the  preceding  sentence,  such  cost  may  include,  for  example,
formulation, filling, finishing, labeling and packaging (in accordance with Good
Manufacturing  Practice)  of bulk  drug for  commercial  therapeutic  sales of a
product,  with no markup if internally  produced,  including the cost of all raw
material, and the net cost of any value-added taxes actually paid or utilized in
respect of the subject good.

         1.5 "FDA" means the United States Food and Drug Administration.

         1.6 "FTE"  means a  researcher  employed  by  Synaptic  or  Warner  and
assigned  to work on the  Project  with such time and effort to  constitute  one
scientist  working on the  Project on a full time basis  consistent  with normal
business  and  scientific  practice  (i.e.,  at least  forty  hours  per week of
dedicated effort for at least [**] weeks per year).

         1.7  "Galanin  Receptor"  means any G  protein-coupled,  membrane-bound
receptor which binds galanin at ten nanomolar or lower concentration and with an
affinity  that is at least  100-fold  higher than the  affinity  with which such
receptor binds neuropeptide Y, norepinephrine and serotonin.



                                                        -2-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



         1.8 "IND" means an investigational  new drug application filed with the
FDA, or any comparable application filed with a foreign equivalent of the FDA in
a Major Market Country other than the United States.

         1.9 "In Vivo Model" means any of the tests for evaluating compounds set
forth on Schedule I attached  hereto and any other in vivo tests for  evaluating
the potential therapeutic utility of compounds.

         1.10 "Lead  Compound"  means any chemical entity which is or is derived
from a Chemical Lead that has an affinity for each Galanin  Receptor of which it
is an  agonist or an  antagonist  that is more than ten times  greater  than its
affinity for any alpha  adrenergic,  neuropeptide  Y or  serotonin  receptor and
which Warner approves for the  commencement of toxicology  studies in accordance
with Good Laboratory Practices, as defined in regulations promulgated by the FDA
and in effect from time to time ("GLP").

         1.11 "Lead Compound  Development Team" shall have the meaning set forth
in Section 7.2(b).

         1.12 "Major Market Country" means any of the United States, France,
Germany, Great Britain, Italy, Japan or Spain.

         1.13  "Management  Committee"  means the  management  committee  formed
pursuant to Section 3.0.

         1.14 "Net Sales" means,  with respect to any Product,  the gross amount
invoiced to non-affiliated  customers for sales of such Product in each calendar
year,  after  deduction for the following  items:  (i) trade,  quantity and cash
discounts or rebates  actually  allowed to such  customers,  including,  without
limitation,  payments made in  connection  with  government-sponsored  insurance
programs; (ii) credits, rebates, charge-back rebates,  reimbursements or similar
payments  actually  granted or given to such  customers for Products  previously
sold;  (iii) any tax,  tariff,  duty or other  governmental  charge  (other than
income tax) levied on the sale,  transportation  or delivery of such Product and
borne by the seller thereof ; (iv) any charge for freight or insurance  actually
borne by the customer;  and (v) allowances for bad debt expense, in each case as
determined in accordance with Warner's normal accounting procedures.

         1.15 "Novel Galanin  Receptor"  means,  as of any date, a human Galanin
Receptor which had not been cloned by Synaptic prior to such date.

         1.16 "Patent  Rights"  means patents and patent  applications  owned or
controlled  by  Synaptic  or Warner  relating to  Products,  and all  divisions,
continuations,   continuations-in-part,   reissues,   extensions   and   foreign
counterparts thereof.



                                                        -3-

<PAGE>



         1.17 "Product"  means any  pharmaceutical  product which includes as an
active  ingredient a chemical  entity which is an agonist or an  antagonist of a
Galanin  Receptor which is included  within  Synaptic  Background  Technology or
Project Technology, and which is made, used or sold for a Project Use.

         1.18     "Project" shall have the meaning set forth in Section 2.0.

         1.19 "Project  Technology" means all know-how,  trade secrets,  assays,
inventions,  experimental data, experimental procedures, technology, biological,
chemical and other  materials and other  proprietary  information of Synaptic or
Warner  which  relate to the  Project  and which  are  developed  as part of the
Project during the Project Term.

         1.20  "Project  Term" means the period  commencing  as of the Effective
Date and ending on the third anniversary of the Stage 2 Commencement Date.

         1.21  "Project  Use" means any  pharmaceutical  use of an agonist or an
antagonist of a Galanin Receptor in humans.

         1.22 "Research  Committee"  means the joint research  committee  formed
pursuant to Section 3.1.

         1.23 "Research Plan" shall have the meaning set forth in Section 3.0.

         1.24 "Six-Month  Extension  Date"  shall have the meaning set forth in
Section 2.1(d).

         1.25 "Stage 1 Commencement Date" shall have the meaning set forth in
Section 2.1(b).

         1.26 "Stage 2 Commencement Date" shall have the meaning set forth in
Section 2.1(c).

         1.27 "Steering  Committee"  means the joint steering  committee  formed
pursuant to Section 3.0.

         1.28  "Synaptic  Background  Technology"  shall  mean  all  technology,
inventions,  information, data, know-how, and materials (whether or not patented
or  patentable)  that (i) are  related to Galanin  Receptors  (including  cloned
Galanin  Receptors,  transfected  cells  expressing  Galanin  Receptors,  assays
utilizing  Galanin  Receptors,  and chemical  entities  identified  as selective
agonists or antagonists of Galanin  Receptors),  (ii) are owned or controlled by
Synaptic and (iii) existed as of the Effective Date.

         1.29 "Targeted  Galanin  Receptor" means,  with respect to any chemical
entity,  the  Galanin  Receptor  which is the  primary  receptor  target of such
chemical entity.

         1.30  "Trigger  Event"  shall  have the  meaning  set forth in  Section
9.0(b).


                                                        -4-

<PAGE>



         1.31     "Warner Library" means Warner's proprietary compound library.


                                   ARTICLE II
                         Scope and Structure of Project

         2.0 Scope of Project. During the Project Term, the parties shall engage
in a collaborative research and development program to identify and develop Lead
Compounds  for Project Uses (the  "Project").  The Project shall be conducted in
accordance with the terms of this Agreement.

         2.1      Structure of Project.

                  (a)  General.  The Project  shall be  conducted in two stages:
Stage 1 and Stage 2.

                  (b) Duration of Stage 1. Stage 1 of the Project shall commence
upon the date of the delivery to Warner of the cell membranes  described in Part
A of Schedule II (the "Stage 1  Commencement  Date").  Unless this  Agreement is
terminated  earlier pursuant to Article XIV, Stage 1 of the Project shall end as
of  the  earliest  of  (i)  the  eighteen-month   anniversary  of  the  Stage  1
Commencement  Date,  (ii) the date on which a BACL shall have been identified or
(iii) if Warner shall have delivered the written notice  contemplated  by and in
accordance with Section 14.3(b), the twelve-month anniversary of the delivery by
Synaptic to Warner of the Novel Galanin Receptor referred to therein.

                  (c) Duration of Stage 2. Unless this  Agreement is  terminated
earlier  pursuant to Article XIV and subject to Section  2.1(d),  Stage 2 of the
Project shall  commence on the fifteenth day following the conclusion of Stage 1
(the "Stage 2 Commencement Date"). Stage 2 of the Project shall end on the third
anniversary of the Stage 2 Commencement Date.

                  (d) Suspension of Stage 2 Commencement Date. In the event that
(i) Synaptic  discovers and clones,  at any time during the period commencing on
the twelve-month  anniversary of the Stage 1 Commencement Date and ending on the
eighteen-month  anniversary  thereof,  a Novel Galanin  Receptor and (ii) Warner
terminates this Agreement in part pursuant to Section 14.4(b) due to its failure
to have identified a BACL prior to such eighteen-month anniversary, Warner shall
have the right,  at its option,  to suspend the Stage 2 Commencement  Date until
the six-month  anniversary  (the "Six-Month  Extension  Date") of the date as of
which Synaptic shall have provided to Warner transfected cells or cell membranes
which express the Novel Galanin Receptor.  Such right shall be exercised,  if at
all,  upon written  notice to Synaptic no later than the fifteenth day following
such eighteen-month  anniversary. If Warner exercises its right pursuant to this
Section 2.1(d),  the Stage 2 Commencement  Date shall,  unless this Agreement is
subsequently  terminated  pursuant to Section 14.4(c),  occur  automatically and
without any action on the part of the parties, on the Six-Month Extension Date.




                                                        -5-

<PAGE>



                                   ARTICLE III
                       Management and Planning of Project;
                       Reports and Exchange of Information

         3.0 Steering Committee;  Management  Committee.  The Steering Committee
shall be formed  promptly  following the Effective  Date,  but in no event later
than thirty  days  thereafter.  Each party  shall be  entitled to appoint  three
members of its staff to act as its  representatives  on the Steering  Committee.
Each  party may from time to time  change  its  representation  on the  Steering
Committee,  but shall  notify the other  party  promptly  in writing of any such
change.

         The Steering  Committee  shall be  responsible  for (a)  monitoring and
directing  the  activities  of the Research  Committee  and resolving any issues
which cannot be resolved by the Research Committee,  (b) determining the overall
direction  of  the  Project  (within  the  terms  of  this  Agreement)  and  (c)
recommending to each party for its approval the personnel, facilities, expertise
and other  resources to be used by each party in the performance of the Project.
In addition,  the Steering Committee shall have such other  responsibilities  as
are set forth herein or contemplated hereby.

         The Steering  Committee  shall meet  promptly  following  the Effective
Date,  but in no event later than thirty days  thereafter,  to (a) prepare  such
procedures and mechanisms as may be necessary for the Steering Committee and the
Research  Committee  to operate  in a manner  which  will  ensure the  efficient
conduct of the  Project  and (b)  devise,  in  collaboration  with the  Research
Committee  and for review and approval by each party,  an initial  research plan
setting forth the principal  goals to be achieved during Stage 1 of the Project,
the relative priorities of the parties and the proposed timetables for achieving
these goals (such initial  research  plan, as the same may be modified from time
to time  during  the  Project  Term in  accordance  with this  Agreement,  being
referred to herein as the "Research Plan").  Once approved by both parties,  the
initial  Research Plan shall be attached to this Agreement as Schedule III. Such
initial  Research  Plan,  as the  same  may be  modified  from  time  to time in
accordance with this Agreement, shall thereafter be deemed incorporated into and
constitute a part of this Agreement.  The Steering Committee shall meet at least
quarterly and shall prepare agendas and minutes for each of its meetings.

         All actions taken and decisions made by the Steering Committee shall be
by unanimous agreement.

         Any issues which cannot be resolved by the Steering  Committee shall be
referred to a Management Committee,  comprising one individual from Synaptic and
one  individual  from  Warner,  for  resolution.  The members of the  Management
Committee  are  currently,  from  Synaptic:  Kathleen  P.  Mullinix,   Chairman,
President and Chief Executive Officer;  and from Warner:  Senior Vice President,
Research:  Parke-Davis  Pharmaceutical Division. Each of Synaptic and Warner may
from time to time change its  representation  on the Management  Committee,  but
shall notify the other party  promptly in writing of any such  change.  The sole
responsibilities  of the  Management  Committee  will be to resolve issues which
cannot be resolved by the Steering Committee and to address  infringement issues
as contemplated by Section 11.3.


                                                        -6-

<PAGE>



         3.1 Research Committee. The Research Committee shall be formed promptly
following the Effective Date, but in no event later than thirty days thereafter.
Each party shall be entitled to appoint three members of its staff to act as its
representatives  on the  Research  Committee.  Each  party may from time to time
change its representation on the Research Committee,  but shall notify the other
party promptly of any such change.  The Research  Committee  shall report to and
operate under the overall direction of the Steering Committee.

         The Research  Committee  shall be  responsible  for (a)  monitoring and
directing  the  activities  of  the  scientists  working  on  the  Project,  (b)
elaborating and  coordinating  action plans,  (c) the economic use of capacities
and  (d) the  fulfillment  of the  Research  Plan.  In  addition,  the  Research
Committee  shall have such  other  responsibilities  as are set forth  herein or
contemplated hereby.

         The Research  Committee  shall meet  promptly  following  the Effective
Date,  but in no  event  later  than  thirty  days  thereafter,  to  devise,  in
collaboration   with  the  Steering   Committee,   the  initial  Research  Plan.
Thereafter,  the Research Committee shall meet at least quarterly.  The Research
Committee  shall  prepare  agendas  and minutes  for each of its  meetings.  All
actions taken and decisions made by the Research Committee shall be by unanimous
agreement.  Any issues which cannot be resolved by the Research  Committee shall
be referred to the Steering Committee.

         3.2 Meetings. The Steering Committee,  the Management Committee and the
Research  Committee  may meet by telephone or in person,  as  determined  by the
respective  members of such  committees;  provided,  however,  that at least two
meetings of the Research Committee shall be held in person each year. Attendance
at meetings shall be at the respective  expenses of the  participating  parties.
The parties shall alternate the right to determine the location of each meeting,
with Warner determining the location of the first meeting of each committee.

         3.3 Personnel and  Resources.  Each party shall commit such  personnel,
facilities,  expertise and other resources to the Project as it may determine to
be necessary to perform its obligations under this Agreement; provided, however,
that  each  party  shall  devote a minimum  of six FTEs per year to the  Project
during Stage 1 of the Project;  provided  further,  however,  that neither party
warrants  that  the  Project  shall  achieve  any  of  the  research  objectives
contemplated by the parties.

         3.4  Modification of Research Plan. The Steering  Committee will review
the Research  Plan at least  quarterly  and propose,  for review and approval by
each party,  any changes  thereto that are determined to be appropriate in light
of changing  priorities of the Project or experience or knowledge  gained in the
course of the  Project.  In  addition,  the  Research  Plan shall be modified in
accordance  with Section 5.1. In  implementing  the Research  Plan, the Research
Committee  shall endeavor to assign  specific tasks to Synaptic and Warner so as
to maximize  progress of the  Project and to avoid any  duplication  of research
efforts.

         3.5 Conduct of Studies. All studies done in connection with the Project
shall be carried out in strict compliance with all applicable laws,  regulations
and guidelines governing the conduct of


                                                        -7-

<PAGE>



research at the site where such studies are being conducted. Synaptic and Warner
shall both comply with all laws and  regulations  applicable to the care and use
of experimental animals at the site where the studies are conducted.

         3.6      Research with Third Parties; Third Party Technologies.

                  (a) No  Research  with Third  Parties  within  Project  Scope.
Without the approval of the Steering Committee,  neither party shall at any time
during the Project Term conduct,  by itself or with a third party,  any research
to identify  and/or  develop for a Project Use compounds the mechanism of action
of which  involves a Galanin  Receptor  with respect to which Warner has at such
time an exclusive license from Synaptic  hereunder.  Any third party for or with
which such  research  is to be  conducted  shall agree in advance to be bound by
obligations  of  confidentiality  no less stringent than those set forth in this
Agreement,  and shall be obliged to disclose  the results of its research to the
parties  to this  Agreement  and,  at a  minimum,  to  grant to both  parties  a
royalty-free license to use any technology,  data or results arising out of such
research within the scope of the Project.

                  (b) Research with Third Parties  Outside Project Scope. In the
event that either party desires to enter into a  collaboration  or other project
with a third  party the focus of which  would be  research  relating  to Galanin
Receptors but which would not seek to develop agonists or antagonists of Galanin
Receptors,  such party (the "Proposing Party") shall notify the other party (the
"Receiving  Party")  and  provide  the  Receiving  Party  with a right  of first
negotiation with respect to such  collaboration or project.  The Receiving Party
shall have  thirty  days  within  which to  exercise  such right and ninety days
within which to conclude an agreement  relating thereto.  If the Receiving Party
fails to exercise  its right of first  negotiation  or to conclude an  agreement
within the  aforementioned  time periods,  the Proposing  Party shall be free to
pursue  such  collaboration  or  project  with a third  party  on  terms no more
favorable to such third party than the Receiving  Party indicated it was willing
to accept during such ninety-day period. Anything contained in this Agreement to
the contrary  notwithstanding,  this Section 3.6(b) shall apply for only so long
as Warner has an exclusive  license from Synaptic  hereunder  with respect to at
least one Galanin Receptor.

                  (c)  Acquiring  Third  Party  Technologies.  In the  event the
parties  become  aware  of  technology  of a third  party  relating  to  Galanin
Receptors  at any time during the Project  Term,  the Steering  Committee  shall
determine whether such technology should be brought into the Project.  [**]

         3.7      Written Reports.  The Research Committee shall prepare or
cause to be prepared, at least once every six months during the Project Term,
confidential written reports.  These reports


                                                        -8-
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shall  summarize  the  progress  of the  Project,  the  development  of  Project
Technology,  Chemical  Leads and Lead  Compounds  by code  number,  the manpower
utilization and the future direction of the Project, and shall be distributed to
the members of the Steering Committee.

         3.8 Disclosure of  Technology.  Synaptic shall disclose to Warner on an
ongoing  basis  Synaptic  Background  Technology  to the  extent  necessary  for
purposes of the Project and Synaptic and Warner shall each disclose to the other
on an ongoing basis all Project Technology.  Such disclosure may include limited
visits  by  Synaptic  and  Warner  to the  facilities  of the  other  to  permit
discussion  and  observation  of  Synaptic  Background  Technology  and  Project
Technology,  any such  visits to be with a frequency  and  duration to be agreed
upon by the Research Committee.

         3.9 Samples. During the Project Term, Synaptic and Warner shall provide
each other with samples of materials which embody Synaptic Background Technology
and Project Technology,  and may also provide each other with such other samples
for use in the  Project  as may be  reasonably  requested  and  approved  by the
Research  Committee.  Any such samples shall be cared for by the receiving party
in accordance with Article XII.


                                   ARTICLE IV
                             Stage 1 of the Project

         4.0 Principal  Objectives.  The principal  objectives of Stage 1 of the
Project will be (i) to identify at least one BACL and (ii) to discover and clone
genes that code for human and rat Galanin Receptors (in addition to GalR1, GalR2
and GalR3). Toward these objectives, Synaptic and Warner shall have during Stage
1 of the Project the  responsibilities set forth on Schedule IV attached hereto,
as the same may be modified from time to time by the Research Plan.


                                    ARTICLE V
                             Stage 2 of the Project

         5.0 Principal  Objectives.  The principal  objectives of Stage 2 of the
Project will be (a) to develop Lead Compounds based on BACLs  identified  during
Stage  1 of the  Project,  (b) to  identify  and  develop  additional  BACLs  as
potential  backups for the BACLs referred to in the foregoing clause (a), (c) to
identify  and develop  additional  BACLs for Project  Uses,  (d) to discover and
clone genes for human and rat Galanin  Receptors that have not theretofore  been
cloned and (e) to continue,  to the extent determined by the Steering  Committee
to be  appropriate,  to perform the activities  which were undertaken as part of
Stage 1.

         5.1  Reconsideration  of Research Plan.  Promptly following the Stage 2
Commencement  Date,  but in no event  later than  thirty  days  thereafter,  the
Steering  Committee  shall meet to reconsider and revise the Research Plan based
upon its determination of the specific objectives and priorities of


                                                        -9-

<PAGE>



the  Project  at the  time and the  number  of FTEs and  other  resources  to be
dedicated to the Project by each party,  and shall submit such revised  Research
Plan to each party for review and approval.


                                   ARTICLE VI
                    Funding of Project and Equity Commitment

         6.0 Stage 1 Funding.  During Stage 1 of the  Project,  each party shall
bear the costs and expenses of any work done by it at its  laboratories  as part
of the Project pursuant to this Agreement.

         6.1      Stage 2 Funding.

                  (a)  Research  Funding.  In  consideration  for  the  research
performed  and to be performed by Synaptic as part of the Project,  Warner shall
provide  research  funding to Synaptic to support  that number of FTEs  assigned
from time to time to work on the  Project  during  the period  beginning  on the
Stage 2 Commencement  Date and ending on the last day of Stage 2 of the Project.
The amount of such research funding shall be calculated at the rate (the "Rate")
of  [**]  per annum per  Synaptic  FTE.  The Rate  shall be  subject to
adjustment on the Stage 2 Commencement Date for inflation during the period from
the Effective Date to the Stage 2 Commencement  Date, such adjustment to be made
pursuant  to the  Bureau  of Labor  Statistics  Consumer  Price  Index for Urban
Consumers,  New York,  N.E.  New Jersey  Metropolitan  Region  Price  Index (the
"CPI").  The Rate,  as adjusted in  accordance  with the  immediately  preceding
sentence,  shall  thereafter be subject to adjustment for inflation  pursuant to
the CPI on each anniversary of the Stage 2 Commencement Date.

                  (b) Other Amounts.  In addition to the research  funding to be
provided pursuant to Section 6.1(a), Warner shall, to the extent approved by the
Steering Committee, reimburse Synaptic for its out-of-pocket,  third party costs
incurred in the direct  performance of its  obligations  under the Research Plan
during Stage 2 of the Project.

                  (c)  Payment.  The  research  funding  referred  to in Section
6.1(a)  shall be paid to Synaptic  by Warner in  substantially  equal  quarterly
payments on or before the first day of each calendar  quarter during the term of
this Agreement;  provided,  however,  that the first payment of research funding
shall be made within forty-five days following the Stage 2 Commencement Date and
if the Stage 2  Commencement  Date is not the first day of a  calendar  quarter,
such  payment  shall be equal to a pro-rated  portion of the  quarterly  payment
(based on the  number of days  between  the  Stage 2  Commencement  Date and the
beginning  of  the  first  complete   calendar  quarter  following  such  date).
Reimbursements pursuant to Section 6.1(b) shall be made promptly upon (and in no
event later than thirty days  following)  presentation  by Synaptic to Warner of
invoices received from such third parties for the related expenditures.



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<PAGE>



         6.2      Stage 2 Equity Commitment.

                  (a)  Synaptic Put Option.  During the period  beginning on the
Stage 2 Commencement Date and ending on the fifth anniversary thereof,  Synaptic
shall have the right, at its option, to require Warner, and Warner hereby agrees
upon the exercise of such right by Synaptic in accordance with this Section 6.2,
to invest [**] in shares of Common Stock, $.01 par value (the "Common
Stock"),  of  Synaptic.  Synaptic's  right  under  this  Section  6.2  shall  be
exercisable upon the giving by Synaptic to Warner of written notice stating that
Synaptic is  exercising  its right under Section 6.2 of this  Agreement.  Warner
shall select a date on which to consummate the purchase (the "closing date") and
shall notify  Synaptic of such date at least three  business days prior thereto.
The closing date shall be not more than thirty days following  Warner's  receipt
of the exercise  notice from Synaptic.  The specific  number of shares of Common
Stock to be  purchased  by Warner  shall  equal such  number of whole  shares of
Common Stock as results from the quotient of [**] divided by [**] of
the average  last sale price of Common  Stock,  as reported by The Nasdaq  Stock
Market,  for the twenty  trading days of the Common Stock  preceding the closing
date.
No fractional shares shall be issued.

                  (b) Conditions to Warner Stock Purchase  Obligation.  Warner's
obligation  to purchase the Common  Stock  pursuant to this Section 6.2 shall be
conditioned  on: (i)  Synaptic  not being in breach or  default of its  material
obligations  under this  Agreement  as of the closing  date;  and (ii)  Synaptic
representing  as of the  closing  date  that:  (A) it is  solvent;  and  (B) the
information  contained in all annual and  quarterly  reports and filings made to
the United States  Securities  and Exchange  Commission  for the period from the
date of this  Agreement  through the closing  date was true and  accurate in all
material  respects at the time of submission  and no changes have occurred since
the date of any such submission which were required to have been disclosed prior
to the closing  date but which were not  disclosed  and which  would  materially
adversely affect Synaptic's business as a whole.

                  (c) Transfer Restrictions;  Stock Registration.  The shares of
Common  Stock  acquired  by Warner  pursuant  to this  Section  6.2 shall not be
transferable by Warner until the first anniversary of the closing date. Synaptic
shall  register the shares of Common Stock  acquired by Warner  pursuant to this
Section  6.2  under  the  Securities  Act of 1933,  as  amended,  by such  first
anniversary.  In  connection  with such  registration,  Warner shall  furnish to
Synaptic such information  regarding Warner as Synaptic may reasonably  request.
In addition, Warner shall indemnify Synaptic against any claims, losses, damages
and  liabilities  arising  out of any untrue  statement  of a  material  fact or
omission  thereof in a registration  statement  covering the shares  acquired by
Warner,  but only to the extent that such  statement  or omission is made in the
registration  statement in reasonable reliance upon and accurately  incorporates
the written information provided by Warner to Synaptic.  Warner shall bear up to
the first  $25,000 of the fees and expenses  incurred by Synaptic in  connection
with the  registration  of the shares of Common Stock acquired by it (including,
without   limitation,   the  costs  of  preparing,   reviewing  and  filing  any
registration statement covering such shares), as well as all of its own fees and
expenses incurred in connection with any such registration.



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                                   ARTICLE VII
                  License Grants and Commercialization Efforts

         7.0      Grant by Synaptic.

                  (a)  License  Grant.  Synaptic  hereby  grants  to  Warner  an
exclusive,  worldwide  license  to use,  for the sole  purpose  of  discovering,
developing,  manufacturing,  having manufactured, using and selling Products for
Project  Uses,  all  Synaptic  Background   Technology,   all  Synaptic  Project
Technology and all Synaptic  Patent Rights,  subject to the reservation in favor
of Synaptic of the right to use all Synaptic Background Technology, all Synaptic
Project  Technology and all Synaptic  Patent Rights for the purposes of carrying
out its obligations  under this Agreement and for all other purposes not falling
within the scope of the license hereby granted.

                  (b) Limited Sublicensing Rights. The licenses granted pursuant
to Section  7.0(a)  above  shall not be  sublicensable  by Warner  except to the
extent necessary to enable Products to be manufactured, used or sold by Warner's
Affiliates and/or sold by third parties ("permitted sublicensees").

         7.1 Grant by Warner.  Warner hereby grants to Synaptic, a nonexclusive,
worldwide,  royalty-free  license to use solely for the purposes of carrying out
its  obligations  under this  Agreement,  all Warner Project  Technology and all
Warner Patent Rights.

         7.2      Efforts to Commercialize, Etc.

                  (a)  Development,  Commercialization  and Sales Efforts.  With
respect to each Lead Compound, Warner shall exercise reasonably diligent efforts
toward  developing  and  commercializing  such Lead  Compound  as a Product  and
optimizing the sales  thereof. [**]

                  (b) Lead Compound  Development Team.  Promptly after a BACL is
designated a Lead Compound,  Warner shall form a lead compound  development team
which shall  oversee the  pre-clinical  and  clinical  development  of such Lead
Compound through the filing of an NDA on a


                                                       -12-
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<PAGE>



Product arising from such Lead Compound (the "Lead Compound  Development Team").
At the time that Warner  appoints the Lead Compound  Development  Team, it shall
promptly inform Synaptic and Synaptic shall have the authority to appoint one of
its employees to such team. Such Synaptic  representative shall be provided with
(i)  reasonable  advance  notice of and an opportunity to attend all meetings of
the Lead  Compound  Development  Team and (ii) copies of all  documentation  and
minutes prepared for such Lead Compound  Development Team's review and approval.
All actions taken and decisions made by the Lead Compound Development Team shall
be under the direction  and control of Warner and all meetings  thereof shall be
held in Ann Arbor,  Michigan,  or such other location as Warner shall determine.
Synaptic shall be responsible for paying all travel costs and expenses  incurred
by its representative in attending such meetings.  A party may change any of its
appointments  to the Lead  Compound  Development  Team at any time  upon  giving
written notice to the other party.

                  (c)  Synaptic  Participation  in Post-NDA  Filing  Activities.
Following the filing of an NDA on a Product arising from a Lead Compound, Warner
shall keep  Synaptic  fully  informed  concerning  the status of the  regulatory
approval  process as it relates to such  Product and its plans,  strategies  and
activities with respect to the  commercialization of such Product.  Warner shall
give reasonable  consideration to Synaptic's comments and suggestions concerning
the foregoing.  Synaptic shall be responsible  for paying all costs and expenses
incurred by it in connection with its participation in the foregoing.

                                  ARTICLE VIII
                                    Royalties

         8.0      General.

                  (a)  Royalty  Percentages.  In  further  consideration  of the
licenses granted to Warner hereunder,  Warner shall pay to Synaptic a royalty on
Net Sales of each Product as follows:

                  [**]

                  (b) Royalties on Unpatented Products. In the case of Net Sales
of any  Product  in a  country  in which  the  manufacture,  use or sale of such
Product is not covered by a claim of the


                                                       -13-
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<PAGE>



Patent  Rights (an  "Unpatented  Product"),  the rate of the royalty  payable in
respect of such Net Sales  shall be  reduced to  one-half  of the  royalty  rate
payable pursuant to Section 8.0(a).

                  (c) Cost of Goods Sold  Limitation.  Notwithstanding  anything
contained herein to the contrary, the percentage royalty payable in any calendar
quarter with respect to Net Sales of each Product  pursuant to the provisions of
this  Section 8.0 shall be reduced by the number of  percentage  points by which
the Cost of Goods Sold for such Product in such  quarter  exceeds[**] of the Net
Sales of such Product in such quarter.

                  (d) Annual  Reconciliation  of Royalty  Payments Due. If, with
respect to any Product,  the  aggregate  Net Sales in any  calendar  year should
exceed  any of the  thresholds  set forth in  Section  8(a),  then sales of each
category of the Product  (i.e.,  Unpatented  Products and Products  covered by a
claim of the Patent Rights ("Patented  Products")) shall be deemed to have taken
place in the same  proportion  throughout the calendar year and the parties will
reconcile  the payments made by Warner with respect to such calendar year within
ninety days  following the end of any such calendar year.  (For example,  if Net
Sales of Products in any Year totalled $750 million of which $500 million (i.e.,
2/3) were of Patented  Products and $250 million (i.e.,  1/3) were of Unpatented
Products, the royalties due on such sales would be calculated as follows:

                  Patented Products:

                  $250  million x 2/3 at [**]
                  $250  million x 2/3 at [**]
                  $250  million x 2/3 at [**]

                  Unpatented Products:

                  $250  million x 1/3 at [**]
                  $250  million x 1/3 at [**]
                  $250  million x 1/3 at [**]

                  Total royalties = [**]

                  (e) Term of Royalty  Obligation.  Warner's  obligation  to pay
Synaptic  royalties  under this  Agreement  shall commence as of the date of the
first  commercial  sale of a Product for a Project Use and,  subject to the last
sentence of this Section 8.0(e), shall continue (i) for Patented Products, until
the expiration of the last to expire of the Patent Rights  relating to each such
Product and (ii) for Unpatented  Products,  until the tenth  anniversary of such
date of first commercial sale, in each case on a country-by-country  basis. Only
one royalty  will be due on the sale of a specific  Product,  regardless  of the
number of patent claims covering such Product.  If the Patent Rights relating to
a Patented  Product  expire,  lapse or are revoked  before the expiration of ten
years from the launch date in any  country,  the Product  shall be treated as an
Unpatented  Product until (A) if no generic form of the Product is being sold in
such country, the end of the ten-year period and (B) if


                                                       -14-
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<PAGE>



a  generic  form of the  Product  is  being  sold in such  country,  the  second
anniversary of the later of (x) the first  commercial  sale of such generic form
of the  Product in such  country and (y) the date of such  expiration,  lapse or
revocation and  thereafter,  no royalty shall be payable on such Product in such
country.

         8.1 Currency of Payment. All payments to be made to Synaptic under this
Agreement  shall be made in United States dollars in the United States to a bank
account  designated by Synaptic.  Royalties  earned shall first be determined in
the currency of the country in which they are earned and then converted to their
equivalent  in United  States  currency.  The buying  rates of exchange  for the
currencies  involved  into the currency of the United  States quoted by Citibank
(or its successor in interest) in New York, New York at the close of business on
the last business day of the quarterly period in which the royalties were earned
shall be used to determine any such conversion.

         8.2 Payment and  Reporting.  The  royalties  earned  under  Section 8.0
during any calendar  quarter  shall be paid within sixty days after the close of
such quarter.  With each such quarterly  payment,  Warner shall furnish Synaptic
with  a  royalty  statement  (the  "Royalty  Statement"),  setting  forth  on  a
country-by-country  basis the total number of units of each Product  made,  used
and/or  sold  during the  calendar  quarter  with  respect to which the  royalty
payment is being made.

         8.3 Records.  Warner shall keep,  and shall require its  Affiliates and
permitted  sublicensees  to keep,  accurate  books  and  accounts  of  record in
connection with the manufacture, use and/or sale by or for it of the Products in
sufficient detail to permit accurate  determination of all figures necessary for
verification of royalty obligations set forth in this Article VIII. Such records
shall be  maintained  for a period of three  years  from the end of each year in
which sales occurred.  Synaptic, at its expense, through a nationally recognized
certified  public  accountant,  shall  have the right to access  such  books and
records for the sole purpose of verifying the Royalty Statements, such access to
be conducted after reasonable prior notice by Synaptic to Warner during Warner's
ordinary  business  hours and not more  frequent  than once during each calendar
year.  Synaptics'  certified public accountant shall not disclose to Synaptic or
any other party any information  other than  information that should properly be
contained in a royalty  report  required  under this Agreement and shall sign an
agreement to that effect.  If, as a result of such accounting,  it is determined
that  Synaptic  received at least 5% less than it was properly due in respect of
any quarter, then Warner shall pay to Synaptic, in addition to the amount of the
discrepancy,  (a) interest accrued thereon during the period from the date as of
which such amount was originally due to the date of payment, such interest to be
computed at the average prime rate announced by Citibank N.A. during such period
plus 2%, and (b) an amount equal to the costs reasonably incurred by Synaptic in
conducting  the  accounting  (including  the fees  and  expenses  of  Synaptic's
certified public accountant).

         8.4  Computation  of Royalties.  Sales of Products among Warner and its
Affiliates and permitted  sublicensees  shall not be subject to royalties  under
this  Article  VIII,  but in such  instances  royalties  shall be  payable  upon
Warner's,  its Affiliates' and its permitted  sublicensees' sales to independent
third parties.  Nothing  contained  herein shall obligate Warner to pay Synaptic
more than one royalty on any unit of a Product.


                                                       -15-

<PAGE>



         8.5 Taxes Withheld. Any income or other tax that Warner, its Affiliates
or  sublicensees  is required to withhold (the  "Withholding  Party") and pay on
behalf  of  Synaptic  hereunder  (the  "Withheld  Party")  with  respect  to the
royalties payable under this Agreement shall be deducted from and offset against
said royalties  prior to remittance to the Withheld  Party;  provided,  however,
that in regard to any tax so deducted, the Withholding Party shall give or cause
to be given to the Withheld Party such assistance as may reasonably be necessary
to enable the Withheld Party to claim  exemption  therefrom or credit  therefor,
and in each case shall furnish the Withheld  Party proper  evidence of the taxes
paid on its behalf.

         8.6  Licenses to  Affiliates.  Each party shall,  at the other  party's
request,  sign license and/or royalty agreements directly with the other party's
Affiliates and permitted  sublicensees in those situations where such agreements
would not decrease the amount of royalties which would be owed  hereunder.  Such
agreements  shall contain the same language as contained herein with appropriate
changes in parties and territory.  No such license and/or royalty agreement will
relieve  Warner of its  obligations  hereunder,  and Warner will  guarantee  the
obligations  of its Affiliate or sublicensee  in any such  agreement.  Royalties
received  directly from Warner's  Affiliates and sublicensees  shall be credited
towards Warner's royalty obligations under Section 8.0.

         8.7 Restrictions on Payment. The obligation to pay royalties under this
Agreement shall be waived and excused to the extent that statutes,  laws,  codes
or government  regulations in a particular country prevent such royalty payments
by the seller of Products,  provided, however, that if legally permissible,  the
seller of Products  shall pay the  royalties  owed to the other party  hereto by
depositing  such  amounts  in a bank  account  in such  country  that  has  been
designated by the party owed such royalties.


                                   ARTICLE IX
                               Milestone Payments

         In addition  to the other  amounts  which  Warner is required to pay to
Synaptic  hereunder and in consideration  for the rights and licenses granted by
Synaptic to Warner hereunder:

         9.0      First Lead Compound Designated by End of Project Term.

                  (a) Milestone  Amounts.  Subject to the  provisions of Article
XIV, with respect to the first Lead Compound  designated by Warner as such prior
to the end of the Project Term, Warner shall become obligated to pay Synaptic:

                  (i) [**] upon the designation of such Compound as a
         Lead Compound;

                  (ii) [**] upon the  acceptance  for filing of the
         first IND covering such Lead Compound;


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                  (iii)  [**]  upon  the  commencement  of  Phase  II
clinical trials;

                  (iv)   [**] upon the commencement of Phase III
clinical trials;

                  (v)  [**]  upon  the  sixtieth  day  following  the
         submission  of an NDA  covering  such Lead  Compound  with the FDA or a
         comparable  submission in another Major Market  Country,  provided that
         Warner has not received  written  notice from the FDA or an  equivalent
         foreign  agency during such  sixty-day  period stating that the NDA has
         not been accepted for filing;

                  (vi) [**] upon the approval of an NDA covering such
         Lead  Compound  by the FDA or approval of a  comparable  submission  in
         another Major Market Country; and

                  (vii)  [**] upon the approval for marketing of such
         Lead Compound in a Major Market Country;  provided,  however, that such
         [**]  milestone  payment shall not be payable unless and until an
         NDA covering  such Lead  Compound or a comparable  submission  in Japan
         shall have been approved.

                  (b) Trigger Event.  For convenience of reference,  each of the
events  described in clauses (i) through  (vii) above is referred to herein as a
"Trigger  Event."  Each of the payments  described in clauses (i) through  (vii)
above  shall be due not later  than  thirty  days  following  the  Trigger  Date
described therein.

                  (c)   Exceptions  to  Payment   Obligations.   Notwithstanding
anything contained herein to the contrary, with respect to any Lead Compound for
which Warner becomes obligated to make a milestone payment under any of Sections
9.1 through 9.5, no payment obligation shall arise under Section 9.0(a).

         9.1 Second Lead  Compound  with  Different  Mechanism  of Action.  With
respect  to any Lead  Compound  the  mechanism  of  action of which  involves  a
different Targeted Galanin Receptor than any Lead Compound with respect to which
Warner has previously made the milestone payments referred to in each of clauses
(i) through  (vii) of Section  9.0(a),  Warner  shall  become  obligated to make
milestone  payments to Synaptic  in the amounts and upon the  occurrence  of the
Trigger  Events  described  in clauses  (i)  through  (vii) of  Section  9.0(a);
provided,  however,  that the amount of the milestone payment which Warner shall
become obligated to make pursuant to clause (i) shall be reduced to [**].

         9.2 Third and Each Additional Lead Compound with Different Mechanism of
Action.  With  respect to any Lead  Compound  the  mechanism  of action of which
involves a different  Targeted  Galanin  Receptor than does (a) the mechanism of
action of any Lead Compound with respect to which Warner has  previously  become
obligated  under Section  9.0(a) to make the milestone  payments  referred to in
each of clauses (i) through (vii) thereof and (b) the mechanism of action of


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any Lead Compound with respect to which Warner has previously  become  obligated
under Section 9.1 to make the milestone  payments referred to in each of clauses
(i) through (vii) of Section  9.0(a),  Warner shall become  obligated,  upon the
occurrence  of the Trigger  Events  described  in clauses  (i) through  (vii) of
Section  9.0(a),  to make  milestone  payments to  Synaptic equal to [**] of the
respective amounts set forth in such clauses; provided, however, that the amount
of the  milestone  payment  which  Warner  shall be  obligated  to make upon the
occurrence  of the Trigger  Event  described in clause (i) shall be [**] instead
of   [**].

         9.3  Backup  Compounds.  With  respect to any Lead  Compound  that is a
backup  compound  (the "Backup  Compound")  for a Lead  Compound with respect to
which Warner has previously  become  obligated under Sections 9.0, 9.1 or 9.2 to
make any of the milestone  payments  referred to in such sections (the "Replaced
Compound"),  Warner shall become obligated,  upon the occurrence of each Trigger
Event with respect to such Backup Compound, to make the corresponding  milestone
payment under such sections to Synaptic; provided, however, that no such payment
obligation  shall arise upon the occurrence of any Trigger Event if such Trigger
Event (a) would not have  triggered  a payment  obligation  with  respect to the
Replaced  Compound or (b) had  previously  occurred with respect to the Replaced
Compound.

         9.4 Second Generation  Compounds.  With respect to any Lead Compound (a
"Second  Generation  Compound") that is a second  generation  compound of a Lead
Compound  with respect to which Warner has  previously  become  obligated  under
Sections 9.0, 9.1, 9.2 or 9.3 to make all of the milestone  payments referred to
in such  sections,  Warner shall become  obligated,  upon the occurrence of each
Trigger  Event  referred  to in  clauses  [**] of Section  9.0(a)  with
respect to such Second Generation Compound, to make the corresponding  milestone
payment under such sections to Synaptic, but only to the extent of [**] thereof.

         9.5 Same Compound but Different  Therapeutic  Indication.  In the event
that any Lead Compound (an  "Additional  Indication  Compound")  with respect to
which Warner has previously  become  obligated under Sections 9.0, 9.1, 9.2, 9.3
or 9.4 to make any of the  milestone  payments  referred to in such  sections is
pursued for a therapeutic  indication  which is different  from the  therapeutic
indication  that  was its  focus at the time  that any such  payment  obligation
arose, Warner shall become obligated,  upon the occurrence of each Trigger Event
referred to in clauses (i) through (vii) of Section  9.0(a) with respect to such
Additional  Indication  Compound,  to make the  corresponding  milestone payment
under  such  sections  to  Synaptic;  provided,  however,  that no such  payment
obligation  shall arise upon the  occurrence of the Trigger Event referred to in
[**] if such  Trigger  Event had  previously occurred with respect to such
Compound.




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                                    ARTICLE X
                    Royalties and Milestones on Pre-Existing
                            Compounds in Development

         In lieu of the provisions  contained in Section 8.0 and Article IX, the
following  provisions of this Article X shall apply to any chemical  entity with
respect to which GLP toxicology  studies have either commenced or been completed
as of the Effective  Date (any such chemical  entity being referred to herein as
an "Other Compound"):

         Section 10.1 Pre-Phase II Completion Other Compound. In the case of any
Other  Compound  which (a) Warner is  developing  for a  particular  therapeutic
indication (the "Original  Indication"),  (b) has not undergone clinical testing
beyond Phase II clinical trials (or comparable trials outside the United States)
and (c) is determined to have activity measured at one or more Galanin Receptors
included within Synaptic  Background  Technology or Project  Technology,  Warner
shall pay Synaptic royalties and milestones as follows:

                  (i) If Warner  continues to develop the Other Compound for the
         Original  Indication and does not utilize the  information  relating to
         the Other Compound's  galanin activity in any way,  including,  without
         limitation,  in its FDA (or comparable foreign) registration package or
         its  promotional  or  other  marketing   activities  relating  to  such
         Compound,  then  Warner  shall  not be  required  to pay  Synaptic  any
         royalties or milestones with respect to such Compound;

                  (ii) If Warner continues to develop the Other Compound for the
         Original  Indication  (and not for a new therapeutic  indication),  but
         utilizes  the  information  relating  to the Other  Compound's  galanin
         activity  either (A) in its  development of such Other Compound and the
         Original Indication involves the diagnosis,  treatment or prevention of
         the condition  implicated by the galanin activity or (B) in its FDA (or
         comparable  foreign)  registration  package or its promotional or other
         marketing  activities  relating to such Compound,  then Warner shall be
         required to pay Synaptic [**] of the  royalties  payable  under Article
         VIII and [**] of any  milestones  payable  under  Article IX; provided,
         however,  that such  milestones  shall be payable  only with respect to
         Trigger Events which as of the time the  information  was generated had
         not previously occurred; and

                  (iii)  If  Warner  develops  the  Other  Compound  for  a  new
         therapeutic  indication  in  addition  to or in  lieu  of the  Original
         Indication  and  utilizes  the   information   relating  to  the  Other
         Compound's  galanin  activity either (A) to develop such Other Compound
         for  such  new  indication  or (B) in its FDA (or  comparable  foreign)
         registration  package or its promotional or other marketing  activities
         relating  to such  Compound,  then  Warner  shall  be  required  to pay
         Synaptic [**] of  the  royalties payable under Article VIII and [**] of
         any  milestones  payable  under  Article IX;  provided,  however,  that
         such milestones  shall be payable only with respect to Trigger  Events 
         which as of the  time  the  information  was  generated  had  not
         previously occurred.


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         Section 10.2 Post-Phase II Completion  Other  Compound.  In the case of
any Other  Compound  (a) with  respect  to which  Phase II  clinical  trials (or
comparable  trials outside the United States) have been  successfully  completed
for an Original Indication and (b) which is determined to have activity measured
at one or more Galanin Receptors included within Synaptic Background  Technology
or Project  Technology,  Warner shall pay Synaptic  royalties and  milestones as
follows:

                  (i) If Warner  continues to develop the Other Compound for the
         Original  Indication and does not utilize the  information  relating to
         the Other Compound's galanin activity in any way, then Warner shall not
         be required to pay Synaptic any royalties or milestones with respect to
         such Compound;

                  (ii) If Warner continues to develop the Other Compound for the
         Original  Indication  (and not for a new therapeutic  indication),  but
         utilizes  the  information  relating  to the Other  Compound's  galanin
         activity  either (A) in its  development of such Other Compound and the
         Original Indication involves the diagnosis,  treatment or prevention of
         the condition  implicated by the galanin activity or (B) in its FDA (or
         comparable  foreign)  registration  package or its promotional or other
         marketing  activities  relating to such Compound,  then Warner shall be
         required to pay Synaptic [**] of the  royalties  payable  under Article
         VIII and [**] of any  milestones  payable  under  Article IX; provided,
         however,  that such  milestones  shall be payable  only with respect to
         Trigger Events which as of the time the  information  was generated had
         not previously occurred; and

                  (iii)  If  Warner  develops  the  Other  Compound  for  a  new
         therapeutic  indication  in  addition  to or in  lieu  of the  Original
         Indication  and  utilizes  the   information   relating  to  the  Other
         Compound's  galanin  activity either (A) to develop such Other Compound
         for  such  new  indication  or (B) in its FDA (or  comparable  foreign)
         registration  package or its promotional or other marketing  activities
         relating  to such  Compound,  then  Warner  shall  be  required  to pay
         Synaptic [**]of the royalties payable under Article VIII and [**]of any
         milestones  payable  under  Article IX;  provided,  however,  that such
         milestones  shall be payable only with respect to Trigger  Events which
         as of the  time  the  information  was  generated  had  not  previously
         occurred.


                                   ARTICLE XI
                                Patent Protection

         11.0 Disclosure of Inventions. In the event that a patentable invention
is conceived or reduced to practice in the course of and within the scope of the
Project by employees of Synaptic  and/or Warner,  the party whose employees made
the invention shall promptly inform the other party.

         11.1  Ownership  of Project  Technology  and  Inventions.  All  Project
Technology shall be owned as follows:  (a) by Synaptic if and to the extent such
Project Technology  concerns Galanin  Receptors,  assays  incorporating  Galanin
Receptors, uses of Galanin Receptors, and uses of Galanin


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<PAGE>



Receptor agonists or antagonists  defined not by chemical  structures but by the
nature of their interaction with Galanin Receptors;  and (b) by Warner if and to
the  extent  such  Project  Technology  concerns  chemical  entities  defined by
chemical structures,  processes for making such chemical entities,  compositions
incorporating  such  chemical  entities,  and  methods  of using  such  chemical
entities and compositions.  All patentable inventions encompassed within Project
Technology on which patent  applications  are filed shall  identify as inventors
all persons  determined to be inventors in accordance with United States laws of
inventorship.  In the event that a Synaptic  employee  is an inventor of Project
Technology to be owned by Warner or a Warner  employee is an inventor of Project
Technology  to be  assigned  to  Synaptic,  Synaptic  or  Warner,  whichever  is
applicable,  shall  be  responsible  for  having  an  assignment  to it of  such
employee's rights and for assigning such rights to the other party.

         11.2     Preparation, Filing and Prosecution of Patent Applications.

                  (a) Responsible  Party.  Synaptic shall be responsible for the
preparation,   filing,  prosecution,  and  maintenance  of  patents  and  patent
applications  included within Synaptic  Background  Technology and within Patent
Rights owned or  controlled  by Synaptic.  Warner shall be  responsible  for the
preparation,   filing,  prosecution,  and  maintenance  of  patents  and  patent
applications  included  within  Patent  Rights  owned or  controlled  by Warner.
Whichever  of Synaptic or Warner is the  responsible  party shall keep the other
party fully informed  concerning its activities pursuant to this Section 11.2(a)
and shall  provide the other party with a reasonable  opportunity  to review and
comment on all substantive  actions which could  materially  affect the scope or
validity  of the patent  coverage  which may  result in  advance of taking  such
action. All review and comment by the non-responsible party shall be carried out
promptly.

                  (b) Assistance.  If so requested by the responsible party, the
other party shall  provide  reasonable  assistance to the  responsible  party in
order to obtain the optimum  patent  protection  for any invention  covered by a
claim  of  a  patent  or  patent  application  prepared,  filed,  prosecuted  or
maintained pursuant to Section 11.2(a).

                  (c)  Abandonment.   If  at  any  time  the  responsible  party
determines  not to  prepare,  file,  prosecute,  or  maintain a patent or patent
application  for which it is responsible to do so, such  responsible  party will
promptly  notify the other party of its  determination  within a time frame that
insures no loss of potential patent  protection.  If the other party then wishes
to pursue any such  patent or patent  application  the  responsible  party shall
assign  its  rights to the other  party  subject to the grant back to it by such
other  party of a  royalty-free  nonexclusive  license  under any such patent or
patent  application.  The other party shall thereafter be the responsible  party
pursuant  to Section  11.2(a)  and the  initial  responsible  party  shall fully
cooperate  with  the  other  party  in its  pursuit  of such  patent  or  patent
application.

                  (d) [**]


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[**]

         11.3 Third Party Infringement.  In the event Synaptic or Warner becomes
aware of any actual or  threatened  infringement  of any Patent  Right of either
party which claims an invention,  that party shall promptly notify the other and
the Management  Committee  shall  promptly  discuss how to proceed in connection
with such actual or threatened infringement.  In the conduct of any legal action
pursuant to this Section 11.3, (i) if one party  proceeds,  the actual costs and
expenses of such action shall be reimbursed  first to such party and then to the
other party out of any damages or other  monetary  awards  recovered  therein in
favor of Warner or Synaptic or (ii) if both  parties  proceed,  the actual costs
and  expenses  of such action  shall be  reimbursed  proportionally  between the
parties out of any damages or other monetary awards  recovered  therein in favor
or Warner or Synaptic,  based on the actual costs and expenses  incurred by each
party in connection  with such action.  Any remaining  damages or other monetary
recovery shall be divided as follows: (a) under case (i) [**] to the party which
proceeds and [**]to the party which does not proceed; and (b) under case (ii) in
the same  proportion as is applicable to the actual costs and expenses  incurred
by each party in  connection  with such action.  If either party  commences  any
actions or  proceedings  (legal or otherwise)  pursuant to this Section 11.3, it
shall  prosecute  the same  vigorously  at its  expense and shall not abandon or
compromise  them or fail to  exercise  any rights of appeal  without  giving the
other party the right to take over the prosecuting party's conduct at such other
party's own expense.

         11.4     Allegations of Infringement by Third Parties.

                  (a) Licenses Under Third Parties' Patents. If Warner should be
of the opinion that it cannot commercially  reasonably make, import, use, market
and/or  sell a  Product  without  infringing  a third  party's  patent  or other
intellectual  property  rights,  it shall  notify  Synaptic  and may endeavor to
secure a license from the third party on terms that are acceptable to Warner. If
such a license is secured, then [**]of any payments payable by Warner thereunder
shall be  deducted  from  royalty  payments  due to  Synaptic  pursuant  to this
Agreement with respect to such Product in such country;  [**]


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                  (b) Defense of Suits by Third  Parties  Relating to  Products.
Warner shall be solely responsible for any threatened or actual claims for third
party  patent  infringement  or other third party  intellectual  property  right
arising out of the  manufacture,  use, sale or  importation  of a Product.  Upon
receiving notice of such actual or threatened claims, Warner shall promptly meet
with  Synaptic  to discuss the course of action to be taken to resolve or defend
any such  infringement  litigation.  [**]

                  (c)  Defense of Suits by Third  Parties  Relating  to Research
Activities.  Each party shall be solely responsible for any threatened or actual
claims for third party infringement or other third party  intellectual  property
right  arising out of its own research  activities in the course of carrying out
the Project.

                  (d)  Pre-Existing  Infringement  Claims.  Notwithstanding  the
foregoing,  each party will pay 100% of any costs and  expenses  and  damages or
other  consideration  resulting from a third party patent infringement action if
it relates solely to allegations of  infringement  made against such party prior
to the Effective Date.


                                   ARTICLE XII
                                 Confidentiality

         12.0  Obligations.  Until the tenth  anniversary of the Effective Date,
each of Synaptic and Warner  shall use its best efforts to retain in  confidence
and not use,  except as  provided  in this  Agreement,  all  Project  Technology
received from the other party.  Such information may,  however,  be disclosed in
order to allow  either  party to defend  against  litigation  with a third party
(subject,  where  possible,  to adequate  safeguards  for  confidentiality),  in
connection with either party's filing and prosecution of patent applications and
in  order  to  enable  either  party  to  comply  with  laws  and   governmental
regulations.

         12.1  Waiver  of   Confidentiality   Obligation.   The   obligation  of
confidentiality  set  forth  in  Section  12.0  shall  be  deemed  waived  as to
information which (a) is in the public domain,  (b) comes into the public domain
through no fault of the party claiming waiver, (c) the party claiming waiver can
show by written  records was known by it prior to disclosure  hereunder,  (d) is
disclosed to the party claiming waiver without  obligation of confidentiality by
a third party having a legal right to make such disclosure or (e) is required to
be disclosed by law.

         12.2 Disclosure of Agreement.  Except as required by law, neither party
shall  release  to any  third  person  or  publish  in any  way  any  non-public
information  relating  to  the  terms  of  this  Agreement  or to  the  Project,
including,  without limitation, the provisions of Article XIV, without the prior
written  consent of the other party,  which  consent  shall not be  unreasonably
withheld.


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         12.3  Publicity.  The  text  of any  press  release  relating  to  this
Agreement or the transactions  contemplated  hereby shall be reviewed in advance
by both parties and may not, except as required by law, be published without the
prior written approval of both parties.

         12.4 Scientific  Publications.  During the Project Term,  neither party
shall make any  scientific  publication  concerning  the  results of its studies
carried out under this Agreement without the prior written approval of the other
party.  During such  period,  each party shall  provide the other party with the
opportunity to review any proposed  manuscripts or abstracts which relate to the
Project  at  least  thirty  days  prior  to  their  intended  submission  to any
scientific  publisher and not to submit any such manuscript or abstract  without
the written authorization of the reviewing party.


                                  ARTICLE XIII
                                      Term

         This Agreement shall become  effective on the Effective Date and shall,
unless  terminated  earlier  pursuant to Article XIV, remain in effect until the
last expiration of any royalty obligation pursuant to this Agreement.


                                   ARTICLE XIV
               Termination and License Maintenance Payment Options

         This  Agreement may be  terminated,  in whole or in part, in accordance
with any of the following provisions.

         14.0 Material Default.  If either party (the "Defaulting  Party") shall
be in default of any of its material  obligations under this Agreement and shall
fail to cure such default within sixty days following  receipt of written notice
thereof  from the other party (the  "Nondefaulting  Party"),  the  Nondefaulting
Party shall have the option of  terminating  this  Agreement  by giving  written
notice of termination to the Defaulting Party.

         14.1 Insolvency, Etc. Either party shall have the right, at its option,
to terminate this Agreement upon written notice to the other party if such other
party  shall  become  insolvent  or  involved  in  dissolution,   bankruptcy  or
receivership  proceedings affecting the operation of such other party's business
to such an extent  as to  render it  incapable  of  fulfilling  its  obligations
hereunder;  provided,  however,  that  if  such  proceeding  is  an  involuntary
bankruptcy filing against either party, such party shall have sixty days to cure
the situation  before this Agreement may be terminated  pursuant to this Section
14.1.

         14.2 No Chemical Lead and No Novel Galanin Receptor During First Twelve
Months.  If neither a  Chemical  Lead  shall  have been  identified  nor a Novel
Galanin  Receptor shall have been cloned by Synaptic  prior to the  twelve-month
anniversary of the Stage 1 Commencement Date, then


                                                       -24-

<PAGE>



Synaptic  shall have the right,  at its option,  to  terminate  this  Agreement,
effective upon such anniversary date. Such right shall be exercised,  if at all,
by written notice to Warner no later than thirty days following such anniversary
date.

         14.3 No Chemical Lead but Novel Galanin Receptor During First
              Twelve Months.

                   (a) Synaptic's Limited  Termination Right. If a Chemical Lead
shall not have been  identified  prior to the  twelve-month  anniversary  of the
Stage 1 Commencement Date but a Novel Galanin Receptor shall have been cloned by
Synaptic prior to such anniversary  date, then Synaptic shall have the right, at
its option,  to terminate  all rights and licenses  granted to Warner under this
Agreement which relate to the use of Synaptic  Background  Technology,  Synaptic
Project Technology and Synaptic Patent Rights to discover, develop, manufacture,
have  manufactured,  use and sell  Products  the  mechanism  of  action of which
involves  one  or  more  of  the  Galanin  Receptors  included  within  Synaptic
Background  Technology  or  Synaptic  Project  Technology  (other than the Novel
Galanin Receptor). Any such termination shall be effective upon the twelve-month
anniversary of the Stage 1 Commencement Date. Such right shall be exercised,  if
at all, by written  notice to Warner no later than thirty  days  following  such
anniversary date.

                  (b) Synaptic's Further  Termination  Right;  Warner's Right to
Override  Termination  and Enter Stage 2. If Synaptic  shall have  exercised its
termination  right  pursuant to Section  14.3(a) and a BACL,  the  mechanism  of
action  of which  involves  the  Novel  Galanin  Receptor,  shall  not have been
identified prior to the earlier of the eighteen-month anniversary of the Stage 1
Commencement Date and the twelve-month  anniversary of the delivery to Warner of
such  Receptor,  then  subject to the last  sentence  of this  Section  14.3(b),
Synaptic  shall  have the  further  right,  at its  option,  to  terminate  this
Agreement,  effective upon such earlier  anniversary  date.  Such right shall be
exercised,  if at all, by written  notice to Warner no later than  fifteen  days
following such anniversary  date.  Notwithstanding  the foregoing,  Warner shall
have the right,  at its option,  to prevent or override any  termination of this
Agreement by Synaptic pursuant to this Section 14.3(b) by providing to Synaptic,
no later than the  fifteenth  day  following  the earlier of the  eighteen-month
anniversary of the Stage 1 Commencement Date and the twelve-month anniversary of
the delivery to Warner of the Novel Galanin Receptor, written notice stating its
desire to continue the Agreement and enter Stage 2.

                  (c)  Grant of  Nonexclusive  License  Relating  to  Previously
Terminated  Rights.  If Synaptic  shall have  exercised  its  termination  right
pursuant to Section  14.3(a) and either a BACL the  mechanism of action of which
involves the Novel  Galanin  Receptor  shall have been  identified  prior to the
earlier of the  eighteen-month  anniversary of the Stage 1 Commencement Date and
the  twelve-month  anniversary  of the  delivery  to Warner of such  Receptor or
Warner  shall have  provided  to  Synaptic  the notice  contemplated  by Section
14.3(b)  by such  earlier  anniversary  date,  then  Warner  shall be  granted a
nonexclusive  license to use Synaptic  Background  Technology,  Synaptic Project
Technology and Synaptic  Patent Rights with respect to which Warner's rights and
licenses had previously been terminated pursuant to Section 14.3(a) for the sole
purpose of discovering,  developing,  manufacturing,  having manufactured, using
and selling Products.


                                                       -25-

<PAGE>



         14.4 No BACL by Eighteen-Month Anniversary of Stage 1
              Commencement Date.

                  (a) Warner's  Termination  Right.  Subject to Section 14.4(b),
Warner  shall  have the right,  at its  option,  to  terminate  this  Agreement,
effective upon the eighteen-month  anniversary of the Stage 1 Commencement Date,
if a BACL shall not have been identified  prior to such  anniversary  date. Such
right shall be exercised, if at all, by written notice to Synaptic no later than
the  fifteenth  day  following  the  eighteen-month  anniversary  of the Stage 1
Commencement Date.

                  (b) Warner's Right to Partial Termination. If a BACL shall not
have been  identified  prior to the  eighteen-month  anniversary  of the Stage 1
Commencement Date but Synaptic shall have cloned a Novel Galanin Receptor during
the  period   commencing  on  the  twelve-month   anniversary  of  the  Stage  1
Commencement  Date and ending on the  eighteen-month  anniversary  of such Date,
then Warner shall have the right,  at its option,  in lieu of  terminating  this
Agreement pursuant to Section 14.4(a),  (i) to terminate all rights and licenses
granted  to Warner  under this  Agreement  which  relate to the use of  Synaptic
Background Technology, Synaptic Project Technology and Synaptic Patent Rights to
discover,  develop,  manufacture,  have manufactured,  use and sell Products the
mechanism of action of which involves any Galanin  Receptor other than the Novel
Galanin  Receptor and (ii) to suspend the Stage 2 Commencement  Date as provided
in Section 2.1. Such right shall be exercised,  if at all, by written  notice to
Synaptic  no  later  than  the  fifteenth   day  following  the   eighteen-month
anniversary of the Stage 1 Commencement Date.

                  (c)  Warner's  Further  Termination  Right.  In the event that
Warner shall have  terminated  this Agreement in part in accordance with Section
14.4(b),  Warner shall then have the further right, at its option,  to terminate
this Agreement, effective upon the Six-Month Extension Date, if a BACL shall not
have been identified  prior to such Date.  Such right shall be exercised,  if at
all, by written notice to the non-terminating  party no later than the Six-Month
Extension Date.

         14.5 No BACL and No Lead Compound by End of Project Term;  BACL or Lead
Compound for Some but Not For All Galanin Receptors.

                  (a) Termination Right at End of Project Term. If Warner is not
diligently  pursuing at least one BACL as a Lead Compound  candidate or at least
one Lead  Compound as of the end of the Project  Term,  then either  party shall
have the right, at its option,  to terminate this Agreement,  effective upon the
last day of the  Project  Term.  Such right  shall be  exercised,  if at all, by
written  notice to the  non-terminating  party no later than the last day of the
Project Term.

                  (b) Synaptic's  Limited  Termination Right. As of the last day
of the Project Term,  Synaptic shall have the right, at its option, to terminate
the exclusive license to use Synaptic  Background  Technology,  Synaptic Project
Technology and Synaptic Patent Rights granted to Warner pursuant to Section 7.0,
but only to the  extent  that such  license  conveys  the right to use  Synaptic
Background  Technology,  Synaptic Project  Technology and Synaptic Patent Rights
for the purpose of discovering, developing,  manufacturing, having manufactured,
using and selling  Products the mechanism of action of which  involves a Galanin
Receptor that is not the Targeted Galanin Receptor


                                                       -26-

<PAGE>



of a BACL or a Lead Compound which Warner is still  diligently  pursuing at such
time.  Such right shall be exercised,  if at all, by written notice to Warner no
later than the last day of the Project Term.

         14.6 BACLs Still Being  Pursued but No Lead  Compound by End of Project
Term. If Warner is still diligently  pursuing one or more BACLs as Lead Compound
candidates  as of the last day of the  Project  Term but has not  designated  at
least one Lead Compound prior to the last day of the Project Term, the following
shall apply:

                  (a) First BACL.  Warner shall  identify to Synaptic in writing
         prior to the  last day of the  Project  Term the BACL  subject  to this
         Section 14.6(a),  and with regard to such BACL and the Targeted Galanin
         Receptor of such BACL, one of the following shall apply:

                           (i) Warner  will make a [**]  payment to Synaptic
                  prior to the last day of the Project  Term, at which point the
                  exclusive  license  to  use  Synaptic  Background  Technology,
                  Synaptic Project Technology and Synaptic Patent Rights granted
                  to Warner pursuant to Section 7.0 will  automatically  convert
                  to  a   nonexclusive,   worldwide   license  to  use  Synaptic
                  Background   Technology,   Synaptic  Project   Technology  and
                  Synaptic  Patent  Rights for the sole purpose of  discovering,
                  developing,  manufacturing,  having  manufactured,  using  and
                  selling Products the mechanism of action of which involves the
                  Targeted  Galanin  Receptor  of such  BACL.  At the end of the
                  twelve-month  period  following  the last  day of the  Project
                  Term, one of the following shall apply:

                                    (A)  Warner  will  have  designated  a  Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL and paid
                           Synaptic,  in lieu of the payment required by Section
                           9.0(a)(i),  an  additional  [**]  as a  milestone
                           payment.   Within  eighteen  months   following  such
                           designation  of  such  Lead  Compound,   one  of  the
                           following shall apply:

                                            (1)  Warner  will have  filed an IND
                                    and paid Synaptic the  [**]  milestone
                                    required by Section 9.0(a)(ii);

                                            (2)  Warner  will not have  filed an
                                    IND but will have made a [**]  payment
                                    to  Synaptic to  maintain  its  nonexclusive
                                    license   to   use    Synaptic    Background
                                    Technology,  Synaptic Project Technology and
                                    Synaptic  Patent  Rights,  as  described  in
                                    subparagraph    (a)(i)   above,    with   an
                                    additional   [**]   milestone  payment
                                    being due  pursuant  to  Section  9.0(a)(ii)
                                    upon the ultimate filing of the IND; or

                                            (3)  Warner  will not have  filed an
                                    IND and will have elected to do nothing,  in
                                    which event Synaptic will have the option to


                                                       -27-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



                                    terminate Warner's  nonexclusive  license to
                                    use Synaptic Background Technology, Synaptic
                                    Project   Technology  and  Synaptic   Patent
                                    Rights, as described in subparagraph  (a)(i)
                                    above.

                                    (B) Warner will not have  designated  a Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL but will
                           have  elected  to  make a  payment  of an  additional
                           [**] to Synaptic  to  maintain  its  nonexclusive
                           license  to  use  Synaptic   Background   Technology,
                           Synaptic  Project   Technology  and  Synaptic  Patent
                           Rights,  as described in  subparagraph  (a)(i) above.
                           Within  eighteen  months  following  the  end  of the
                           above-mentioned   twelve-month  period,  one  of  the
                           following shall apply:

                                            (1)  Warner  will have  filed an IND
                                    and paid Synaptic the  [**]  milestone
                                    required by Section 9.0(a)(ii);

                                            (2)  Warner  will not have  filed an
                                    IND but will have made a [**]  payment
                                    to  Synaptic to  maintain  its  nonexclusive
                                    license   to   use    Synaptic    Background
                                    Technology,  Synaptic Project Technology and
                                    Synaptic  Patent  Rights,  as  described  in
                                    subparagraph    (a)(i)   above,    with   an
                                    additional   [**]   milestone  payment
                                    being due  pursuant  to  Section  9.0(a)(ii)
                                    upon the ultimate filing of the IND; or

                                            (3)  Warner  will not have  filed an
                                    IND and will have elected to do nothing,  in
                                    which event Synaptic will have the option to
                                    terminate Warner's  nonexclusive  license to
                                    use Synaptic Background Technology, Synaptic
                                    Project   Technology  and  Synaptic   Patent
                                    Rights, as described in subparagraph  (a)(i)
                                    above.

                                    (C) Warner will not have  designated  a Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL and will
                           have elected to do nothing,  in which event  Synaptic
                           will   have  the   option   to   terminate   Warner's
                           nonexclusive   license  to  use  Synaptic  Background
                           Technology,  Synaptic Project Technology and Synaptic
                           Patent Rights,  as described in  subparagraph  (a)(i)
                           above.

                           (ii)  Warner  will  not  make  the  [**]  payment
                  referred  to in  subparagraph  (a)(i)  above,  in which  event
                  Synaptic will have the option to terminate  this  Agreement in
                  its entirety.

                  (b)  Additional  BACLs.  With regard to each  additional  BACL
         identified  during the Project  Term which  Warner is still  diligently
         pursuing as a Lead Compound candidate as


                                                       -28-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



         of the last day of the  Project  Term and with  regard to the  Targeted
         Galanin Receptor of any such BACL, one of the following shall apply:

                           (i) Warner  will make a [**]  payment to Synaptic
                  prior to the  last day of the  Project  Term,  at which  point
                  Warner will be granted a  nonexclusive,  worldwide  license to
                  use   Synaptic   Background   Technology,   Synaptic   Project
                  Technology and Synaptic  Patent Rights for the sole additional
                  purpose  of  discovering,  developing,  manufacturing,  having
                  manufactured,  using and selling  Products  the  mechanism  of
                  action of which involves the Targeted Galanin Receptor of such
                  BACL.  Within three years following the  identification of the
                  BACL, one of the following shall apply:

                                    (A)  Warner  will  have  designated  a  Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL and paid
                           Synaptic the [**]  milestone  payment required by
                           the proviso contained in Section 9.1. Within eighteen
                           months thereafter, one of the following will apply:

                                            (1)  Warner  will have  filed an IND
                                    and paid Synaptic the  [**]  milestone
                                    required by Section 9.1;

                                            (2)  Warner  will not have  filed an
                                    IND but will have made a $[**]  payment
                                    to  Synaptic to  maintain  its  nonexclusive
                                    license   to   use    Synaptic    Background
                                    Technology,  Synaptic Project Technology and
                                    Synaptic  Patent  Rights,  as  described  in
                                    subparagraph    (b)(i)   above,    with   an
                                    additional   [**]   milestone  payment
                                    being due  pursuant  to Section 9.1 upon the
                                    ultimate filing of the IND; or

                                            (3)  Warner  will not have  filed an
                                    IND and will have elected to do nothing,  in
                                    which event Synaptic will have the option to
                                    terminate  Warner's  license to use Synaptic
                                    Background   Technology,   Synaptic  Project
                                    Technology and Synaptic  Patent  Rights,  as
                                    described in subparagraph (b)(i) above.

                                    (B) Warner will not have  designated  a Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL but will
                           have  elected  to  make a  payment  of an  additional
                           [**] to Synaptic  to  maintain  its  nonexclusive
                           license  to  use  Synaptic   Background   Technology,
                           Synaptic  Project   Technology  and  Synaptic  Patent
                           Rights,  as described in  subparagraph  (b)(i) above,
                           for an additional  twelve  months.  At the end of the
                           twelve-month  period,  one  of  the  following  shall
                           apply:

                                            (1) Warner  will have  designated  a
                                    Lead  Compound  the  mechanism  of action of
                                    which involves the Targeted Galanin Receptor


                                                       -29-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



                                    of such BACL and paid Synaptic the [**]
                                    milestone required by the proviso contained
                                    in Section 9.1;

                                            (2) Warner will not have  designated
                                    a Lead  Compound the  mechanism of action of
                                    which involves the Targeted Galanin Receptor
                                    of such BACL but will have paid  Synaptic an
                                    additional    [**]   to   maintain   its
                                    nonexclusive   license   to   use   Synaptic
                                    Background   Technology,   Synaptic  Project
                                    Technology and Synaptic  Patent  Rights,  as
                                    described in subparagraph (b)(i) above; or

                                            (3) Warner will not have  designated
                                    a Lead  Compound the  mechanism of action of
                                    which involves the Targeted Galanin Receptor
                                    of such  BACL and will  have  elected  to do
                                    nothing,  in which event  Synaptic will have
                                    the    option    to    terminate    Warner's
                                    nonexclusive   license   to   use   Synaptic
                                    Background   Technology,   Synaptic  Project
                                    Technology and Synaptic  Patent  Rights,  as
                                    described in subparagraph (b)(i) above.

                                            In the case of  subparagraph  (B)(l)
                                    or  (B)(2)  above,  within  eighteen  months
                                    following   the  end  of  the   twelve-month
                                    period, one of the following will apply:

                                                     (x)  Warner will have filed
                                            an IND and paid Synaptic the [**]
                                            milestone required by Section 9.1;

                                                     (y)  Warner  will  not have
                                            filed  an IND but will  have  made a
                                            [**]   payment   to   Synaptic    to
                                            maintain its nonexclusive license to
                                            use Synaptic Background  Technology,
                                            Synaptic   Project   Technology  and
                                            Synaptic Patent Rights, as described
                                            in  subparagraph   (b)(i),  with  an
                                            additional    [**]   milestone
                                            payment   being  due   pursuant   to
                                            Section 9.1 upon the ultimate filing
                                            of the IND; or

                                                     (z)  Warner  will  not have
                                            filed an IND and will  have  elected
                                            to  do   nothing,   in  which  event
                                            Synaptic  will  have the  option  to
                                            terminate   Warner's    nonexclusive
                                            license to use  Synaptic  Background
                                            Technology,     Synaptic     Project
                                            Technology   and   Synaptic   Patent
                                            Rights, as described in
                                            subparagraph (b)(i).

                                    (C) Warner will not have  designated  a Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL and will
                           have elected to do nothing,  in which event  Synaptic
                           will have


                                                       -30-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



                           the option to terminate Warner's nonexclusive license
                           to  use  Synaptic  Background  Technology,   Synaptic
                           Project  Technology and Synaptic  Patent  Rights,  as
                           described in subparagraph (b)(i).

                           (ii) Warner will do nothing,  in which event Synaptic
                  will  have  the  option  to  terminate  Warner's  nonexclusive
                  license  to  use  Synaptic  Background  Technology,   Synaptic
                  Project Technology and Synaptic Patent Rights, as described in
                  subparagraph (b)(i).

         14.7 Lead  Compound by End of Project  Term.  If Warner  designates  at
least  one  Lead  Compound  by the end of the  Project  Term  and is  diligently
pursuing  such  Compound as of the last day of the Project  Term,  the following
shall apply:

                  (a) First Lead Compound.  Warner shall identify to Synaptic in
         writing  prior to the last day of the  Project  Term the Lead  Compound
         subject to this Section 14.7(a),  and with regard to such Lead Compound
         and the  Targeted  Galanin  Receptor  of  such  Lead  Compound,  within
         eighteen months  following the last day of the Project Term, one of the
         following shall apply:

                           (i) Warner  will have filed an IND and paid  Synaptic
                  the [**] milestone required by Section 9.0(a)(ii).

                           (ii)  Warner will not have filed an IND but will have
                  made a  [**]  payment to  Synaptic  to  maintain  for an
                  additional twelve months the exclusive license to use Synaptic
                  Background   Technology,   Synaptic  Project   Technology  and
                  Synaptic  Patent Rights granted to Warner  pursuant to Section
                  7.0 and then in effect to the extent that such license conveys
                  the  right to use  Synaptic  Background  Technology,  Synaptic
                  Project  Technology and Synaptic Patent Rights for the purpose
                  of    discovering,    developing,     manufacturing,    having
                  manufactured,  using and selling  Products  the  mechanism  of
                  action of which involves the Targeted Galanin Receptor of such
                  Lead Compound.  At the end of the twelve-month  period, one of
                  the following shall apply:

                                    (A)  Warner  will have filed an IND and paid
                           Synaptic the [**] milestone required by Section
                           9.0(a)(ii).

                                    (B)  Warner  will not have  filed an IND but
                           will have made a  [**]  payment to  Synaptic to
                           maintain  its  exclusive   license  to  use  Synaptic
                           Background  Technology,  Synaptic Project  Technology
                           and   Synaptic   Patent   Rights,   as  described  in
                           subparagraph (a)(ii) above, with no further milestone
                           payment being due pursuant to Section 9.0(a)(ii) upon
                           the ultimate
                           filing of the IND.



                                                       -31-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



                                    (C)  Warner  will not have  filed an IND but
                           will have elected to convert its  exclusive  license,
                           as described in  subparagraph  (a)(ii) above,  into a
                           nonexclusive  license  without  making any payment to
                           Synaptic at the time, but with a [**] milestone
                           payment being due pursuant to Section 9.0(a)(ii) upon
                           the ultimate filing of the IND.

                           (iii) Warner will not have filed an IND but will have
                  elected to convert its  exclusive  license,  as  described  in
                  subparagraph   (a)(ii)  above,  into  a  nonexclusive  license
                  without making any payment to Synaptic at the time, but with a
                  [**]  milestone  payment  being due  pursuant to Section
                  9.0(a)(ii) upon the ultimate filing of the IND.

                  (b) Additional  Lead  Compounds.  Within three years following
         the  identification  during  the  Project  Term of a BACL the  Targeted
         Galanin  Receptor  of which is  different  from  the  Targeted  Galanin
         Receptor  of the first Lead  Compound  referred  to in Section  14.7(a)
         above, one of the following shall apply:

                           (i) Warner will have  designated a Lead  Compound the
                  mechanism of action of which  involves  the  Targeted  Galanin
                  Receptor of such BACL and paid Synaptic the [**] milestone
                  payment required by the proviso contained in Section 9.1.

                           (ii) Warner will not have  designated a Lead Compound
                  the mechanism of action of which involves the Targeted Galanin
                  Receptor of such BACL but will have  elected to make a payment
                  of [**] to Synaptic to maintain for an  additional  twelve
                  months  the  exclusive  license  to  use  Synaptic  Background
                  Technology,  Synaptic  Project  Technology and Synaptic Patent
                  Rights  granted to Warner  pursuant to Section 7.0 and then in
                  effect to the extent  such  license  conveys  the right to use
                  such  Synaptic   Background   Technology,   Synaptic   Project
                  Technology  and  Synaptic  Patent  Rights  for the  purpose of
                  discovering,  developing,  manufacturing, having manufactured,
                  using and selling  Products  the  mechanism of action of which
                  involves the Targeted  Galanin  Receptor of such BACL.  At the
                  end of the  twelve-month  period,  one of the  following  will
                  apply:

                                    (A)  Warner  will  have  designated  a  Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL and paid
                           Synaptic the [**]  milestone  payment required by
                           the proviso contained in Section 9.1.

                                    (B) Warner will not have  designated  a Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL but will
                           have  made a payment  of an  additional  [**]  to
                           Synaptic,  whereupon  its  exclusive  license  to use
                           Synaptic Background Technology,


                                                       -32-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



                           Synaptic  Project   Technology  and  Synaptic  Patent
                           Rights,  as described in subparagraph  (b)(ii) above,
                           will be converted into a nonexclusive license. Within
                           eighteen   months    following   the   end   of   the
                           above-mentioned   twelve-month  period,  one  of  the
                           following shall apply:

                                            (1)  Warner  will have  filed an IND
                                    and paid Synaptic the  [**]  milestone
                                    required by Section 9.0(a)(ii).

                                            (2)  Warner  will not have  filed an
                                    IND but will have made a [**]  payment
                                    to  Synaptic to  maintain  its  nonexclusive
                                    license   to   use    Synaptic    Background
                                    Technology,  Synaptic Project Technology and
                                    Synaptic  Patent  Rights,  as  described  in
                                    subparagraph    (b)(ii)   above,   with   an
                                    additional   [**]   milestone  payment
                                    being due  pursuant  to Section 9.1 upon the
                                    ultimate filing of the IND.

                                            (3)  Warner  will not have  filed an
                                    IND and have elected to do nothing, in which
                                    event  Synaptic  will  have  the  option  to
                                    terminate  Warner's  license to use Synaptic
                                    Background   Technology,   Synaptic  Project
                                    Technology and Synaptic  Patent  Rights,  as
                                    described in
                                    subparagraph (b)(ii) above.

                                    (C) Warner will not have  designated  a Lead
                           Compound the  mechanism  of action of which  involves
                           the Targeted  Galanin  Receptor of such BACL and will
                           have elected to do nothing,  in which event  Synaptic
                           will have the option to terminate Warner's license to
                           use Synaptic Background Technology,  Synaptic Project
                           Technology and Synaptic Patent Rights, as
                           described in subparagraph (b)(ii) above.

                  (iii)  Warner will not have  designated  a Lead  Compound  the
         mechanism of action of which involves the Targeted  Galanin Receptor of
         such BACL and will have elected to do nothing,  in which event Synaptic
         will have the option to  terminate  Warner's  license  to use  Synaptic
         Background Technology,  Synaptic Project Technology and Synaptic Patent
         Rights, as described in subparagraph (b)(ii) above.

                  Within  eighteen  months  following the  designation of a Lead
         Compound  pursuant to subparagraph  (b)(i) or (b)(ii)(A)  above, one of
         the following will apply:

                           (x) Warner  will have filed an IND and paid  Synaptic
                  the [**] milestone required by Section 9.1.

                           (y)  Warner  will not have filed an IND but will have
                  made a payment of  [**]  to  Synaptic  to  maintain  its
                  exclusive  license  to  use  Synaptic  Background  Technology,
                  Synaptic  Project  Technology and Synaptic  Patent Rights,  as
                  described


                                                       -33-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



                  in subparagraph  (b)(ii) above, with an additional  [**]
                  milestone  payment  being due upon the ultimate  filing of the
                  IND.

                           (z)  Warner  will not have filed an IND but will have
                  elected  to convert  its  exclusive  license  to use  Synaptic
                  Background   Technology,   Synaptic  Project   Technology  and
                  Synaptic Patent Rights,  as described in subparagraph  (b)(ii)
                  above, into a nonexclusive  license without making any payment
                  to  Synaptic  at the  time,  but with a  [**]  milestone
                  payment  being due  pursuant to Section 9.1 upon the  ultimate
                  filing of the IND.

         14.8 Two Targeted  Galanin  Receptors for Single BACL or Lead Compound.
For so long as it has not been  determined  whether the mechanism of action of a
BACL or a Lead  Compound  referred  to in this  Article  XIV  involves  a single
Galanin  Receptor or multiple  Galanin  Receptors,  then all  references  to the
Targeted  Galanin  Receptor of any such BACL or Lead Compound shall be deemed to
include all such Galanin Receptors, and any payments which Warner is required to
make  pursuant  to this  Article  XIV in order to  maintain  its  license to use
Synaptic Background Technology,  Synaptic Project Technology and Synaptic Patent
Rights  for  the  purpose  of  discovering,  developing,  manufacturing,  having
manufactured,  using and selling  Products  based on such BACL or Lead  Compound
shall be paid only once; provided,  however, that in the event it is at any time
subsequently  determined  that the  mechanism  of  action  of such  BACL or Lead
Compound  does not require  activity  at all such  Galanin  Receptors,  Warner's
license with respect to all such other Galanin  Receptors  shall,  to the extent
that  it  is  exclusive  at  such  time,   automatically  be  converted  into  a
nonexclusive license.


                                   ARTICLE XV
                              Effect of Termination

         15.0     Termination Pursuant to Section 14.0 or Section 14.1.

                  (a)  Rights  and  Obligations.  Upon  the  occurrence  of  any
termination  pursuant to Section 14.0 or Section 14.1, (i) the terminating party
shall  have  a  license  to  use  all of  the  non-terminating  party's  Project
Technology  (including,  without  limitation,  chemical  entities  and any  data
relating to SAR  activity  thereof  and any data  relating  to  preclinical  and
clinical   trials  with  respect  to  such  chemical   entities)  and  (ii)  the
non-terminating  party  shall  return  to  the  terminating  party  all  of  the
terminating  party's Project  Technology  (including,  without  limitation,  all
biological  and chemical  materials) and transfer to the  terminating  party all
data relating to the  non-terminating  party's  Project  Technology  (including,
without limitation, all Project Technology referred to in clause (i)); provided,
however,  that the  terminating  party shall not have the right to use,  and the
non-terminating party shall not be required to transfer,  any Project Technology
which relates to rights or licenses previously held by the terminating party but
terminated  by the  non-terminating  party.  In  addition,  if  Synaptic  is the
non-terminating  party, Synaptic will transfer to Warner all Synaptic Background
Technology  and  will  be  prohibited  from  attempting  to  discover,  develop,
manufacture, use or sell any pharmaceutical


                                                       -34-
[** CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>



product the mechanism of action of which involves one or more Galanin  Receptors
included in  Synaptic  Background  Technology  or  Synaptic  Project  Technology
transferred  to  Warner  pursuant  to this  Section  15.0 and if  Warner  is the
non-terminating  party,  then, except for Other Compounds  described in Sections
10.1 and 10.2,  Warner will be  prohibited,  for three years  commencing  on the
effective  date of such  termination,  from  attempting  to  discover,  develop,
manufacture,  have  manufactured,  use or sell any  pharmaceutical  product  the
mechanism of action of which involves one or more Galanin Receptors not included
in Synaptic  Background  Technology or Synaptic Project  Technology and for five
years commencing on such date from attempting to discover, develop, manufacture,
have  manufactured,  use or sell any  pharmaceutical  product the  mechanism  of
action of which  involves  one or more  Galanin  Receptors  included in Synaptic
Project Technology.

                  (b)  Survival  of  Certain  Provisions.   In  the  case  of  a
termination pursuant to Section 14.0, Article I; Section 6.2; Article X; Article
XI; the  obligations  of the  non-terminating  party under  Section  12.0;  this
Article XV; and Article XVII shall survive any such  termination  until the last
expiration of any royalty  obligation  thereunder.  In the case of a termination
pursuant to Section  14.1,  all of the  provisions  referred to in the preceding
sentence,  as well as Articles VIII and IX, shall  survive any such  termination
until the last expiration of any royalty obligation thereunder.

         15.1     Termination Pursuant to Section 14.2.

                  (a)  Rights  and  Obligations.  Upon  the  occurrence  of  any
termination  by Warner or Synaptic  pursuant to Section  14.2,  each party shall
return to the other party or destroy all of the other party's Project Technology
(including,  without  limitation,  all  biological and chemical  materials).  In
addition,  Warner shall  return to Synaptic or destroy all  Synaptic  Background
Technology and shall be prohibited, for a period of [**] years commencing on the
effective  date of such  termination,  from  attempting  to  discover,  develop,
manufacture,  have  manufactured,  use or sell any  pharmaceutical  product  the
mechanism of action of which  involves one or more Galanin  Receptors  that were
included in Synaptic Background Technology or Synaptic Project Technology.

                  (b)  Survival  of  Certain  Provisions.   In  the  case  of  a
termination  pursuant to Section  14.2,  Article I; Article X; Article XII; this
Article XV; and Article XVII shall survive any such  termination  until the last
expiration of any royalty obligation thereunder.

         15.2     Termination Pursuant to Section 14.3(b), Section 14.4(a),
                  Section 14.4(c), Section 14.5(a) or Section 14.6(a)(ii).

                  (a)  Rights  and  Obligations.  Upon  the  occurrence  of  any
termination by Warner or Synaptic pursuant to Section 14.3(b),  Section 14.4(a),
Section 14.4(c), Section 14.5(a) or Section 14.6(a)(ii), (i) Synaptic shall have
the right to use all Warner Project Technology  (excluding chemical entities but
including,  without  limitation,  data  relating  to chemical  entities  and SAR
activity  thereof and any data relating to preclinical  and clinical trials with
respect to such  chemical  entities) to  discover,  develop,  manufacture,  have
manufactured,  use and sell  pharmaceutical  products the mechanism of action of
which involves one or more Galanin Receptors and (ii) Warner shall (A)


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return to Synaptic  all Synaptic  Background  Technology  and  Synaptic  Project
Technology   (including,   without  limitation,   all  biological  and  chemical
materials),  (B)  transfer  to  Synaptic  all data  relating  to Warner  Project
Technology (including, without limitation, all Project Technology referred to in
the  foregoing  clause  (i)) and (c) be  prohibited,  for a period of [**] years
commencing  on the  effective  date  of such  termination,  from  attempting  to
discover,   develop,   manufacture,   have   manufactured,   use  or  sell   any
pharmaceutical  product the  mechanism of action of which is one or more Galanin
Receptors  that were  included in  Synaptic  Background  Technology  or Synaptic
Project Technology.

                  (b)  Survival  of  Certain  Provisions.   In  the  case  of  a
termination  pursuant to Section  14.3(b),  Section  14.4(a),  Section  14.4(c),
Section  14.5(a) or Section  14.6(a)(ii),  Article I;  Section  6.2;  Article X;
Article XI;  Article XII;  this  Article XV; and Article XVII shall  survive any
such termination until the last expiration of any royalty obligation thereunder.

         15.3     Partial Termination Pursuant to Section 14.3(a) or
                  Section 14.4(b).

                  (a) Restrictive  Covenant.  Upon the occurrence of any partial
termination  by Synaptic  pursuant to Section  14.3(a) or by Warner  pursuant to
Section  14.4(b),  (i) Synaptic  shall have the right to use all Warner  Project
Technology (excluding chemical entities but including,  without limitation, data
relating to chemical  entities and SAR activity thereof and any data relating to
preclinical  and  clinical  trials with  respect to such  chemical  entities) to
discover, develop, manufacture,  have manufactured,  use and sell pharmaceutical
products the  mechanism of action of which  involves the Galanin  Receptor  with
respect to which Warner's rights were  terminated  pursuant to such sections and
(ii) Warner shall be  prohibited,  for a period of [**] years  commencing on the
effective  date of such  termination,  from  attempting  to  discover,  develop,
manufacture,  have  manufactured,  use or sell any  pharmaceutical  product  the
mechanism  of action of which  involves  any Galanin  Receptor  that is included
within Synaptic Background Technology or Synaptic Project Technology but that is
not the Novel  Galanin  Receptor  referred  to in  Section  14.3(a)  or  Section
14.4(b), as applicable.

                  (b)  Survival  of  Certain  Provisions.   In  the  case  of  a
termination  by Synaptic  pursuant to Section  14.3(a) or by Warner  pursuant to
Section 14.4(b), the license grant set forth in Section 7.0 shall, to the extent
that it covers  the use of  Synaptic  Background  Technology,  Synaptic  Project
Technology  and  Synaptic   Patent  Rights  for  the  purpose  of   discovering,
developing,  manufacturing,  having manufactured, using and selling, for Project
Uses,  Products the mechanism of action of which  involves any Galanin  Receptor
other than the Novel Galanin  Receptor that is the subject of Section 14.3(a) or
Section  14.4(b),  terminate;  and all other provisions of this Agreement shall,
except to the extent  inconsistent  with Section  15.3(a) and unless  terminated
pursuant to another  provision of this Article XV, survive any such  termination
until the last expiration of any royalty obligation  pursuant to Article VIII or
Article X.



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         15.4     Partial Termination Pursuant to Section 14.5(b).

                  (a) Restrictive  Covenant.  Upon the occurrence of any partial
termination by Synaptic pursuant to Section 14.5(b), (i) Synaptic shall have the
right to use all Warner  Project  Technology  (excluding  chemical  entities but
including,  without  limitation,  data  relating  to chemical  entities  and SAR
activity  thereof and any data relating to preclinical  and clinical trials with
respect to such  chemical  entities) to  discover,  develop,  manufacture,  have
manufactured,  use and sell  pharmaceutical  products the mechanism of action of
which involves the Galanin  Receptor with respect to which Warner's  rights were
terminated  pursuant to such section and (ii) Warner shall be prohibited,  for a
period of [**] years commencing on the effective date of such termination,  from
attempting to discover,  develop,  manufacture,  use, have manufactured,  use or
sell any  pharmaceutical  product the mechanism of action of which  involves any
Galanin  Receptor  that is included  within  Synaptic  Background  Technology or
Synaptic  Project  Technology but that is not the Targeted Galanin Receptor of a
BACL or a Lead Compound referred to in Section 14.5(b).

                  (b)  Survival  of  Certain  Provisions.   In  the  case  of  a
termination by Synaptic pursuant to Section 14.5(b), the license grant set forth
in  Section  7.0  shall,  to the  extent  that it  covers  the  use of  Synaptic
Background  Technology,  Synaptic Project  Technology and Synaptic Patent Rights
for the purpose of discovering, developing,  manufacturing, having manufactured,
using and selling,  for Project Uses,  Products the mechanism of action of which
involves  any  Galanin  Receptor  other than the  Targeted  Galanin  Receptor(s)
referred to in Section  14.5(b),  terminate;  and all other  provisions  of this
Agreement  shall,  except to the extent  inconsistent  with Section  15.4(a) and
unless terminated  pursuant to another provision of this Article XV, survive any
such termination until the last expiration of any royalty obligation pursuant to
Article VIII or Article X.

         15.5     Partial Termination Pursuant to Section 14.6 or Section 14.7.

                  (a)   Restrictive   Covenant.   Upon  the  occurrence  of  any
termination  by Synaptic  pursuant to Section  14.6 or Section  14.7 of Warner's
license under this  Agreement to use Synaptic  Background  Technology,  Synaptic
Project  Technology and Synaptic  Patent Rights for the purpose of  discovering,
developing,  manufacturing,  having manufactured, using and selling Products the
mechanism of action of which involves a particular  Targeted  Galanin  Receptor,
(i)  Synaptic  shall  have  the  right  to use  all  Warner  Project  Technology
(excluding chemical entities but including, without limitation, data relating to
chemical  entities and SAR activity thereof and any data relating to preclinical
and  clinical  trials  with  respect to such  chemical  entities)  to  discover,
develop,  manufacture,  have manufactured,  use and sell pharmaceutical products
the mechanism of action of which  involves the Galanin  Receptor with respect to
which Warner's rights were  terminated  pursuant to such section and (ii) Warner
shall be prohibited, for a period of [**] years commencing on the effective date
of such termination,  from attempting to discover,  develop,  manufacture,  have
manufactured,  use or sell any pharmaceutical product the mechanism of action of
which involves such Targeted Galanin Receptor.



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                  (b)  Survival  of  Certain  Provisions.   In  the  case  of  a
termination  by Synaptic  pursuant to Section 14.6 or Section 14.7,  the license
grant set forth in Section  7.0 shall,  to the extent  that it covers the use of
Synaptic Background Technology,  Synaptic Project Technology and Synaptic Patent
Rights  for  the  purpose  of  discovering,  developing,  manufacturing,  having
manufactured,  using and selling,  for Project  Uses,  Products the mechanism of
action of which involves the Targeted Galanin Receptor(s) referred to in Section
14.6 or Section 14.7,  terminate;  and all other  provisions  of this  Agreement
shall,  except to the  extent  inconsistent  with  Section  15.5(a)  and  unless
terminated  pursuant to another  provision of this Article XV,  survive any such
termination  until the last  expiration  of any royalty  obligation  pursuant to
Article VIII or Article X.

         15.6 Option to Acquire License;  Payments to Warner.  Subsequent to the
designation  of a Lead  Compound,  in the  event of a  termination  pursuant  to
Section 14.6 or Section 14.7 with respect to such Lead Compound,  Synaptic shall
have an  option  to  obtain  an  exclusive  license  with  the  right  to  grant
sublicenses  under any Warner  Patent  Right  covering  such Lead  Compound.  If
Synaptic  exercises such option and develops and markets the Lead  Compound,  it
shall pay Warner  the same  percentage  royalties  on the net sales of such Lead
Compound  that Warner  would have been  required to pay Synaptic had it marketed
such Lead Compound. If Synaptic exercises such option and sublicenses its rights
under any such Patent Right to a third  party,  then  Synaptic  shall pay Warner
compensation  based upon the stage of  development  of such Lead Compound at the
time of the termination pursuant to Section 14.6 or 14.7. Such compensation will
be in an amount  equal to a percentage  of any  development  milestone  payments
which  Synaptic  receives from such third party licensee in respect of such Lead
Compound and a percentage of any  royalties  which  Synaptic  receives from such
third party in respect of such Lead Compound, as follows:

                  If the Termination Occurs:               Applicable Percentage

                  (i)   Prior to completion of Phase II              [**]

                  (ii)  After completion of Phase II but             [**]
                           prior to completion of Phase III

                  (iii) After completion of Phase III but            [**]
                           prior to NDA approval

                  (iv)  After NDA approval                           [**]

         15.7 Survival of Accrued  Rights.  Notwithstanding  anything  contained
herein to the contrary,  termination of this Agreement,  in whole or in part, in
accordance  with this  Article  XV shall be without  prejudice  to the rights of
either party  against the other party accrued or accruing  under this  Agreement
prior to the termination,  including the obligation to pay royalties pursuant to
the terms hereof.




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                                   ARTICLE XVI
                         Representations and Warranties

         16.1  Synaptic   Prohibition  Against  Certain  Third  Party  Licenses.
Synaptic  agrees that it will not at any time grant to any third party a license
to use its technology to develop compounds that bind G protein-coupled receptors
other  than  Galanin  Receptors  with an  affinity  which is less than ten times
greater  than their  affinity  for any Galanin  Receptor  with  respect to which
Warner has an exclusive license at such time.

         16.2  Warner  Limitations  on Certain  Development  Activities.  Warner
acknowledges  that  Synaptic  has  licensed  its  technology  relating  to alpha
adrenergic,  neuropeptide  Y  and  serotonin  receptors  to  third  parties  and
understands and agrees that it is not receiving any right or license to use such
technology  hereunder and may not develop or commercialize any compound which is
an agonist or antagonist of a Galanin Receptor  included in Synaptic  Background
Technology  or Project  Technology  unless the affinity of any such compound for
any such  receptor  is at least  ten-fold  less than its  affinity  for any such
Galanin Receptor.

         16.3  Cost of Goods  Sold  Experience.  Warner  hereby  represents  and
warrants that not more than [**] of the pharmaceutical  products currently being
promoted by Warner have Cost of Goods Sold which  exceed [**]of the Net Sales of
such products, as computed on a product-by-product basis.


                                  ARTICLE XVII
                            Miscellaneous Provisions

         17.0 No Agency.  It is  understood  and agreed that Synaptic and Warner
shall each have the status of an independent contractor under this Agreement and
that nothing in this Agreement  shall be construed as  authorization  for either
party to act as agent for the other party.

         17.1 Governing  Law. This Agreement  shall be governed by and construed
in  accordance  with the laws of the  State of New  Jersey  (without  regard  to
principles of conflicts of laws).

         17.2 Notices.  Any notice  required or permitted to be given under this
Agreement  shall be in writing  and shall be sent by first  class  certified  or
registered mail, postage prepaid,  or by express courier services,  addressed to
the party to be notified at its address shown below or such other address as may
have been furnished in writing to the notifying party.



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         If to Synaptic:

         Synaptic Pharmaceutical Corporation
         215 College Road
         Paramus, New Jersey 07652
         Attention:        Kathleen P. Mullinix
                           Chairman, President and CEO

         If to Warner:

         Warner-Lambert Company
         201 Tabor Road
         Morris Plains, New Jersey 07950
         Attention:        President, Parke-Davis Pharmaceutical Division

         with a copy to:

         Warner-Lambert Company
         201 Tabor Road
         Morris Plains, New Jersey 07950
         Attention:        Vice President and General Counsel

         Any notice  hereunder  shall be deemed  given as of the actual  date of
receipt by Synaptic or Warner.

         17.3  Force  Majeure.  No failure or  omission  by either  party in the
performance of any obligation of this Agreement shall be deemed a breach of this
Agreement  or create any  liability if the same shall have arisen from any cause
or causes beyond the control of the party, including, without limitation, any of
the following:  an act of God; acts or omissions of any  government;  any rules,
regulations  or orders issued by any  governmental  authority or by any officer,
department,  agency or  instrumentality  thereof;  a fire; a storm; a flood;  an
earthquake;  an  accident;  a war; a  rebellion;  an  insurrection;  a riot;  an
invasion; a strike; and a lockout,  provided, in each case, that such failure or
omission is cured as soon as is  practicable  following  the  occurrence of such
event.

         17.4 Amendment; Waiver. This Agreement may not be amended, supplemented
or otherwise  modified,  except by a written  instrument signed by both parties.
Any obligation of either party may be waived by a written  instrument  signed by
the other party.  Any delay or omission on the part of any party in the exercise
of its rights  hereunder  will not impair such rights,  nor will it constitute a
renunciation or waiver of such rights. The waiver by either party of any term or
condition of this Agreement in any one instance shall not be deemed or construed
to be a waiver of such term or  condition  for any other  instance in the future
(whether similar or dissimilar) or of any subsequent breach thereof.



                                                       -40-

<PAGE>



         17.5  Indemnification.  Warner  agrees to indemnify  and hold  harmless
Synaptic and its affiliates and their respective  employees,  agents,  officers,
directors  and  permitted  assigns from and against any claims by a third party,
and any resulting judgments,  expenses (including  reasonable  attorney's fees),
losses, liabilities, damages and awards arising out of or resulting from (a) its
negligence  or  willful  misconduct,  (b) a  breach  of any of its  obligations,
representations   or  warranties   hereunder  or  (c)  its  performance  of  its
obligations hereunder,  including, without limitation, its testing, manufacture,
use or sale of any Product or other chemical  entity,  except to the extent that
such claim results from any negligence or willful  misconduct of any such person
seeking to be indemnified hereunder.

         Synaptic  shall  indemnify and hold harmless  Warner and its affiliates
and their  respective  employees,  agents,  officers,  directors  and  permitted
assigns  from  and  against  any  claims  by a third  party,  and any  resulting
judgments, expenses (including reasonable attorney's fees), losses, liabilities,
damages  and awards  arising  out of or  resulting  from (a) its  negligence  or
willful misconduct,  (b) a breach of any of its obligations,  representations or
warranties hereunder or (c) its performance of its obligations hereunder, except
to the extent that such claim results from any negligence or willful  misconduct
of any such person seeking to be indemnified hereunder.

         Whenever any person seeking to be indemnified hereunder has information
from which it may reasonably  conclude an incident has occurred which could give
rise to a claim for  indemnification  under this Section 17.5, such person shall
promptly give notice to the indemnifying party of all pertinent data surrounding
such incident and, in the event a claim is made or suit is brought,  all persons
seeking indemnification shall assist the indemnifying party and cooperate in the
gathering of information  with respect to the time,  place and  circumstances of
such incident and in obtaining  the names and  addresses of any injured  parties
and available witnesses.  If the indemnifying party has accepted  responsibility
for  indemnifying  the person  seeking  indemnification  hereunder  by providing
prompt written notice to such person,  and such indemnifying party is diligently
defending or attempting to settle the subject claim, then (i) the person seeking
indemnification  shall not voluntarily  make any payment or incur any expense in
connection  with any such  claim  without  the  prior  written  consent  of such
indemnifying  party and (ii) the indemnifying party shall have sole control over
the  defense  and  settlement  of any  claim  with  respect  to  which it may be
obligated to provide indemnification  hereunder. If the indemnifying party fails
to   diligently   defend  or  settle   any  claim,   then  the  person   seeking
indemnification  shall have the right to assume  control  over the  defense  and
settlement of such claim at the expense of the indemnifying party.

         17.6  Assignment.  Neither party may assign its rights and  obligations
under this  Agreement  without  the prior  written  consent of the other  party;
provided,  however,  that either party may assign this  Agreement in  connection
with the  sale of all or  substantially  all of its  assets;  provided  further,
however,  that Warner may assign this Agreement to a wholly-owned  subsidiary of
Warner  in  connection  with  a  reorganization   of  Warner  involving  all  or
substantially all of its research and development assets.



                                                       -41-

<PAGE>



         17.7  No Strict Construction.  This Agreement has been prepared jointly
and shall not be strictly construed against either party.

         17.8  Counterparts.  This  Agreement  may  be  executed  in  one or two
counterparts,  each of which shall be an  original,  but both of which  together
shall constitute one and the same instrument.

         17.9 Entire Agreement.  This Agreement constitutes the entire agreement
between the parties with respect to the subject  matter  hereof,  and supersedes
all prior agreements,  understandings and arrangements, whether oral or written,
of the parties with respect thereto.

         17.10 Headings.  The headings of the sections of this Agreement are for
general  information  and  reference  only,  and  this  Agreement  shall  not be
construed by reference to such headings.


         IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  this
Agreement to be executed on its behalf as of the Effective Date.

                                    SYNAPTIC PHARMACEUTICAL CORPORATION


                                    By:/s/ Kathleen P. Mullinix
                                       --------------------------------
                                       Name:    Kathleen P. Mullinix
                                       Title:   Chairman, President and
                                                Chief Executive Officer

                                    WARNER-LAMBERT COMPANY


                                    By:/s/ Ronald Cresswell
                                       --------------------------------
                                       Name:    Dr. Ronald M. Cresswell
                                       Title:   Vice President, Warner Lambert


                                                       -42-

<PAGE>



                                                                    Schedule I


                                 In Vivo Models


1.   Antiobesity:    Antagonism of ICV galanin-stimulated feeding in rats
                     Inhibition of feeding/body weight gain in Zucker obese rats

2.   Analgesia:      Rat tail flick
                     Rat formalin paw pressure hyperalgesia


3.   Anxiolytic:     Rat elevated X maze
                     Rat Vogel conflict test

4.   Antidepressant: Rat behavioral despair test

5.   Cognition:      Antagonism of galanin-inhibited acetylcholine release by
                       intracerebral microdyalysis
                     Antagonism of galanin-induced impairment of rat swim maze
                       performance

6.   Diabetes:       Effects on glucose-stimulated insulin secretion in isolated
                       islets
                     Effects on insulin secretion in Zucker diabetic rats




                                                       -43-

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                                                                   Schedule II


                            Specifications for Cells



A.       Cell Membranes [**]


B.       Cells for Signal Transduction Assays [**]


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                                                                  Schedule III


                              Initial Research Plan


-   [**] 
         
         
-   [**] 
         

-   [**] 
          

-   [**]  
         

-   [**]   
         

-   [**]    


-   [**]   
         

-   [**]   
         

-   [**]     
         

-   [**]     
         
         
         





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                                                                   Schedule IV

                         Responsibilities of the Parties


         A.  Responsibilities of Synaptic. [**]

          (i)    [**]

          (ii)   [**]

          (iii)  [**]

          (iv)   [**]

          (v)    [**]

         B.  Responsibilities of Warner.   [**]


          (i)    [**]

          (ii)   [**]

          (iii)  [**]

          (iv)   [**]



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          [**]











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