Document:

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                                                                    EXHIBIT 10.7

                                LICENSE AGREEMENT

This LICENSE AGREEMENT (the "Agreement"), dated as of July 23, 2003 (the
"Effective Date"), is made by and between Adolor Corporation, a Delaware
corporation having its principal office at 700 Pennsylvania Drive, Exton,
Pennsylvania 19341 ("Adolor"), and EpiCept Corporation, a Delaware corporation
having its principal office at 270 Sylvan Avenue, Englewood Cliffs, New Jersey
07632 ("EpiCept"). Adolor and EpiCept are each sometimes referred to
individually as a "Party" and together as the "Parties."

                                    RECITALS

         WHEREAS, EpiCept is currently developing a topical lidocaine patch
product known as LidoPAIN(R) SP for the treatment of pain associated with
surgical wounds;

         WHEREAS, Adolor is engaged in the research and development of
proprietary pharmaceutical products for the treatment of pain; and

         WHEREAS, Adolor desires to obtain from EpiCept, and EpiCept desires to
grant to Adolor, the exclusive rights in the Territory to certain patents and
other technology for the development and commercialization of Licensed Products
(each as defined below).

         NOW, THEREFORE, in consideration of the foregoing premises and the
representations, covenants and agreements contained herein, Adolor and EpiCept,
intending to be legally bound, hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         When used in this Agreement, whether in the singular or plural, each of
the following capitalized terms shall have the meanings set forth in this
Article 1.

         1.1 "Adolor Inventions" has the meaning set forth in Section 10.1(b).

         1.2 "Adolor Reply" has the meaning set forth in Section 3.8(a).

         1.3 "Affiliate" means a Person that, directly or indirectly, through
one or more intermediates, controls, is controlled by, or is under common
control with, the Person specified. For the purposes of this definition, control
shall mean the direct or indirect ownership of (i) in the case of corporate
entities, securities authorized to cast more than fifty percent (50%) of the
votes in any election for directors, (ii) in the case of non-corporate entities,
more than fifty percent (50%) ownership interest with the power to direct the
management and policies of such non-corporate entity, or (iii) such lesser
percentage as may be the maximum percentage allowed to be owned by a foreign
corporation under the applicable laws or regulations of a particular
jurisdiction outside of the United States) of the equity having the power to
vote in the election of directors or to direct the management and policies of
another entity. Notwithstanding the foregoing, the term "Affiliate" shall not
include subsidiaries in which a Person or its Affiliates owns a majority of the
ordinary voting power to elect a majority of the board of directors, but is
restricted from electing such majority by contract or otherwise, until such time
as such restriction is no longer in effect.

         1.4 "Breach Notice" has the meaning set forth in Section 9.3.

         1.5 "Breaching Party" has the meaning set forth in Section 9.3.

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         1.6 "Business Day" means any day except Saturday and Sunday, on which
commercial banking institutions in New York are open for business. Any reference
in this Agreement to "day" whether or not capitalized shall refer to a calendar
day, not a Business Day.

         1.7 "Cassel Royalty Agreement" means that certain Amended and Restated
Royalty Agreement dated July 16, 2003 between EpiCept (successor-in-interest of
American Pharmed Labs, Inc.) and R. Douglas Cassel.

         1.8 "CMC Section" means the Chemistry, Manufacturing and Controls
Section of a regulatory submission document included in the NDA as set forth in
21 C.F.R. Section 314.50.

         1.9 "Combination Licensed Product" has the meaning set forth in Section
1.40.

         1.10 "Commercially Reasonable Efforts" means, with respect to a Party,
the efforts and resources which would be used by that Party consistent with
prevailing pharmaceutical industry standards for a company of similar size and
scope to such Party with respect to a product or potential product at a similar
stage in its development or product life and of similar market potential taking
into account efficacy, safety, the anticipated Regulatory Authority approved
labeling, the competitiveness of alternative products in the market place or
under development, the patent and other proprietary position of the product, the
likelihood of Regulatory Approval, the commercial value of the product and other
relevant factors.

         1.11 "Competition" means that one or more Third Parties is marketing,
for use in human beings, a sterile topical patch product containing an active
pharmaceutical ingredient with analgesic activity (other than, an OTC Product)
in a country within the Territory and which Third Party patch product competes
with a Licensed Product in such country within the Territory and where the sales
of such Third Party patch product are equal to or greater than either (x)
twenty-five percent (25%) of total sales of Licensed Products sold in such
country, expressed in units, or (y) twenty-five percent (25%) of the total sales
of all such Licensed Products in such country, expressed in local currency.

         1.12 "Confidential Information" means all secret, confidential or
proprietary information or data, whether provided in written, oral, graphic,
video, computer or other form, provided by one Party (the "Disclosing Party") to
the other Party (the "Receiving Party") pursuant to this Agreement or generated
pursuant to this Agreement, including but not limited to, information relating
to the Disclosing Party's existing or proposed research, development efforts,
patent applications, business or products and any other materials that have not
been made available by the Disclosing Party to the general public. The terms of
this Agreement shall also be deemed Confidential Information hereunder, except
to the extent disclosed pursuant to Section 7.5 herein. Notwithstanding the
foregoing sentences, Confidential Information shall not include any information
or materials that:

                  (a) were already known to the Receiving Party (other than
under an obligation of confidentiality), at the time of disclosure by the
Disclosing Party to the extent such Receiving Party has documentary evidence to
that effect;

                  (b) were generally available to the public or otherwise part
of the public domain at the time of its disclosure to the Receiving Party;

                  (c) became generally available to the public or otherwise part
of the public domain after its disclosure or development, as the case may be,
and other than through any act or omission of a Party in breach of such Party's
confidentiality obligations under this Agreement;

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                  (d) were subsequently lawfully disclosed to the Receiving
Party by a Third Party who had no obligation to the Disclosing Party not to
disclose such information to others;

                  (e) were independently discovered or developed by or on behalf
of the Receiving Party without the use of the Confidential Information belonging
to the other Party and the Receiving Party has documentary evidence to that
effect; or

                  (f) is approved for release by the Disclosing Party in
writing.

         1.13 "Control," "Controls," "Controller" or "Controlled" means with
respect to Technology and/or Patent Rights, the ownership thereof, or the
possession of the ability to grant licenses or sublicenses thereto without
violating the terms of any agreement or other arrangement with, or the rights
of, any Third Party existing as of the date on which such license or sublicense
is granted.

         1.14 "Disclosing Party" has the meaning set forth in Section 1.12.

         1.15 "EpiCept Agreements" has the meaning set forth in Section 6.2(k).

         1.16 "EpiCept Cost of Goods" means the cost to EpiCept for a Licensed
Product as invoiced by Third Parties.

         1.17 "EpiCept Future Patents" means any and all Patent Rights
Controlled by EpiCept arising after the Effective Date that contain one or more
claims that would, if unlicensed, be infringed by the research, development,
manufacture, use, offer for sale, sale or import of a Licensed Product. For the
avoidance of doubt, EpiCept Future Patent Rights shall not include EpiCept
Improvements.

         1.18 "EpiCept Improvements" means any and all Patent Rights or
Technology Controlled by EpiCept arising after the Effective Date that claim an
improvement, enhancement, invention or modification to a Licensed Product.

         1.19 "EpiCept Intellectual Property" means the EpiCept Technology,
EpiCept Improvements and EpiCept Licensed Patents.

         1.20 "EpiCept Licensed Patents" means any and all Patent Rights
Controlled by EpiCept as of the Effective Date necessary to research, develop,
make, use, sell or import Licensed Products, including without limitation, the
Patent Rights recited in Schedule 1.20.

         1.21 "EpiCept Technology" means any and all Technology Controlled by
EpiCept as of the Effective Date.

         1.22 "FDA" means the United States Food and Drug Administration, or any
successor agency thereof.

         1.23 "First Commercial Sale" means the first sale by Adolor or its
Affiliates or sublicensees of a Licensed Product to a Third Party for end use or
consumption of such Licensed Product in the Territory after a Regulatory
Authority in the Territory has granted Regulatory Approval of such Licensed
Product.

         1.24 "Force Majeure" means any occurrence beyond the reasonable control
of a Party that prevents or substantially interferes with the performance by the
Party of any of its obligations hereunder, if such occurs by reason of any act
of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute,
casualty or accident; or war, revolution, civil commotion, acts of public
enemies, terrorist attack,

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blockage or embargo; or any injunction, law, order, proclamation, regulation,
ordinance, demand or requirement of any government (to the extent such
government has ruling authority over such Party) or of any subdivision,
authority or representative of any such government; or other similar event,
beyond the reasonable control of such Party, if and only if the Party affected
shall have used reasonable efforts to avoid such occurrence.

         1.25 "GAAP" has the meaning set forth in Section 1.40(e).

         1.26 "IND" means an Investigational New Drug Application, as defined in
the U.S. Federal Food, Drug, and Cosmetic Act, pursuant to 21 C.F.R. Section
312.3 as amended, and the regulations promulgated thereunder, or the equivalent
thereto as specified in any succeeding legislation.

         1.27 "Indemnitee" has the meaning set forth in Section 8.3(a).

         1.28 "Indemnitor" has the meaning set forth in Section 8.3(a).

         1.29 "Independent Party" has the meaning set forth in Section
5.3(a)(ii).

         1.30 "Independent Sublicensees" has the meaning set forth in Section
9.5.

         1.31 "Infringement Notice" has the meaning set forth in Section
10.7(a).

         1.32 "Licensed Product" means a sterile topical patch for use solely in
human beings containing an active pharmaceutical ingredient with analgesic
activity either alone (including without limitation the LidoPAIN(R) SP Product)
or in combination with one or more other active pharmaceutical ingredients other
than an OTC Product. For purposes of clarity, a Licensed Product: (a) does not
include (i) a sterile topical patch for use in non-human animals containing an
active pharmaceutical ingredient with analgesic activity either alone or in
combination with one or more other active pharmaceutical ingredients, (ii) an
OTC Product, or (iii) a non-sterile topical patch product; and (b) does include
a product that contains an active analgesic pharmaceutical ingredient in an
amount less than or equal to the amount permitted under the tentative final
monograph for external analgesic drug products published by the FDA in the
Notice of Proposed Rulemaking dated February 8, 1983 if such product is labeled
for sale by prescription.

         1.33 "LidoPAIN(R) SP Product" means a sterile topical hydrogel patch
for sale by prescription containing lidocaine as the only active ingredient. For
the purpose of clarity, the LidoPAIN(R) SP Product shall not be considered an
OTC Product for purposes of this Agreement.

         1.34 "LidoPAIN(R) SP Product Data" means any and all data and
information relating to the LidoPAIN(R) SP Product, including without limitation
that related to pharmacology, toxicology, preclinical testing, clinical testing,
CMC data, batch records, trials and studies, safety and efficacy, manufacturing
information, analytical and quality control, including without limitation the
data and information listed on Schedule 1.34.

         1.35 "Losses" has the meaning set forth in Section 8.1.

         1.36 "Milestone Payments" has the meaning set forth in Section 4.2.

         1.37 "NDA" means a New Drug Application pursuant to 21 U.S.C. Section
505(b)(1) or Section 505(b)(2) submitted to the FDA or any successor application
or procedure required for Regulatory Approval to commence sale of a Licensed
Product.

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         1.38 "NDA Acceptance" means the written notification by the FDA that
the NDA has met all the criteria for filing acceptance pursuant to 21 C.F.R.
Section 314.101.

         1.39 "Negotiation Period" has the meaning set forth in Section 3.8(a).

         1.40 "Net Sales" means the gross amounts invoiced by Adolor, any of its
Affiliates and/or any of its sublicensees on account of sales of Licensed
Products to Third Parties (including without limitation Third Party distributors
and wholesalers), less the total of:

                  (a) Trade, cash and/or quantity discounts actually allowed or
accrued which are not already reflected in the amount invoiced;

                  (b) Excise, sales and other consumption taxes and custom
duties to the extent included in the invoice price and to the extent such taxes
are remitted to the applicable taxing authority;

                  (c) Freight, insurance and other transportation charges to the
extent included in the invoice price and separately identified on the invoice or
other documentation maintained in the ordinary course of business;

                  (d) Amounts repaid, credited or accrued by reason of returns,
rejections, defects or recalls or because of chargebacks, retroactive price
reductions, refunds or billing errors;

                  (e) Payments and rebates directly related to the sale of
Licensed Products accrued, paid or deducted in a manner consistent with
generally accepted accounting principles ("GAAP"), pursuant to agreements
(including, but not limited to, managed care agreements) with Third Parties or
governmental regulations; and

                  (f) Any other similar and customary deductions taken in
accordance with GAAP consistently applied.

In the event a Licensed Product is product that contains one or more active
pharmaceutical ingredients in addition to an active pharmaceutical ingredient
with analgesic activity (a "Combination Licensed Product"), the Net Sales from
the Combination Licensed Product, for the purposes of determining royalty
payments, shall be determined by multiplying the Net Sales of the Combination
Licensed Product during the applicable royalty reporting period, by the
fraction, A/A+B, where A is the weighted average per unit sale price of the
Licensed Product when sold in finished form with only the active pharmaceutical
ingredient with analgesic activity and no other active pharmaceutical ingredient
in the country in which the Combination Licensed Product is sold, and B is the
weighted average per unit sale price of an active ingredient other than an
active pharmaceutical ingredient with analgesic activity (it being understood
that if there are multiple other active ingredients they shall be designated as
B-l, B-2, etc.) contained in the other product(s) included in the Combination
Licensed Product when sold separately in finished form in the country in which
the Combination Licensed Product is sold multiplied by the number of units of
such active ingredient(s) in the Combination Licensed Product, in each case
during the applicable royalty reporting period or, if sales of the Licensed
Product alone did not occur in such period, then in the most recent royalty
reporting period in which arm's length fair market sales of such Licensed
Product occurred. In the event that such weighted average sale price cannot be
determined for either the Licensed Product or all other product(s) included in
the Combination Licensed Product, Net Sales for the purposes of determining
royalty payments due on a Combination Licensed Product shall be mutually agreed
upon by the Parties based on the relative value contributed by each component,
such agreement not to be unreasonably withheld, conditioned or delayed.

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No deductions shall be made for commissions paid to sales persons or agents or
for the cost of collections. Use of Licensed Products for promotional, sampling
or compassionate use purposes or for use in clinical trials contemplated under
this Agreement shall not be considered in determining Net Sales. In the case of
any sale of a Licensed Product between the Parties and their respective
Affiliates or sublicensees for resale. Net Sales shall be calculated as above
only on the first arm's length sale thereafter to a Third Party.

         1.41 "Non-Breaching Party" has the meaning set forth in Section 9.3.

         1.42 "Offer Notice" has the meaning set forth in Section 3.8(a).

         1.43 "OTC Product" means a sterile topical patch, for sale
over-the-counter and is not for sale by prescription, that is not covered by one
or more claims of the Cassel Patents (as defined on Schedule 1.20) and that is
for use in human beings containing an active pharmaceutical ingredient with
analgesic activity in an amount less than or equal to the amount permitted under
the tentative final monograph for external analgesic drug products published by
the FDA in the Notice of Proposed Rulemaking dated February 8, 1983 as it exists
as of the Effective Date, either alone or in combination with one or more other
active pharmaceutical ingredients. For purposes of clarity, an OTC Product does
not include: (a) a sterile topical patch for use in non-human animals containing
an active pharmaceutical ingredient with analgesic activity either alone or in
combination with one or more other active pharmaceutical ingredients; (b) a
sterile topical patch for sale by prescription containing an active
pharmaceutical ingredient with analgesic activity either alone or in combination
with one or more other active pharmaceutical ingredients; (c) a sterile topical
patch for sale over-the-counter containing an active analgesic pharmaceutical
ingredient in an amount that is higher than the tentative final monograph for
external analgesic drug products published by the FDA in the Notice of Proposed
Rulemaking dated February 8, 1983 as it exists as of the Effective Date; or (d)
a sterile topical patch containing an active pharmaceutical ingredient with
analgesic activity for use with surgically closed wounds.

         1.44 "Other Payments" has the meaning set forth in Section 5.3(a).

         1.45 "Patent Rights" means the rights and interests in and to all
issued patents and pending patent applications, including without limitation,
all provisional applications, substitutions, continuations,
continuations-in-part, divisions, and renewals, all letters patent granted
thereon, and all patents-of-addition, reissues, reexaminations and extensions or
restorations by existing or future extension or restoration mechanisms. and all
supplementary protection certificates, together with any foreign counterparts
thereof in the Territory.

         1.46 "Person" or "person" means any individual, firm, corporation,
partnership, limited liability company, trust, unincorporated organization or
other entity or a government agency or political subdivision thereto, and shall
include any successor (by merger or otherwise) of such Person.

         1.47 "Phase II Clinical Trial" means a controlled clinical trial
designed to evaluate clinical efficacy and safety of a Licensed Product as well
as to obtain an indication of the dosage regimen required, as more fully
described in 21 C.F.R. Section 312.21(b).

         1.48 "Phase III Clinical Trial" means a controlled clinical trial to
confirm with statistical significance the efficacy and safety of a Licensed
Product in larger, targeted populations, performed to obtain Regulatory
Approval, as more fully described in 21 C.F.R. Section 312.21(c).

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         1.49 "Prosecution" means the preparation, filing, prosecution, issuance
and maintenance (including, without limitation, interference, opposition and
similar third party proceedings before the relevant patent office) of any patent
applications and patents in EpiCept Licensed Patents.

         1.50 "Receiving Party" has the meaning set forth in Section 1.12.

         1.51 "Regulatory Approval" means the technical, medical and scientific
licenses, registrations, authorizations and approvals (including, without
limitation, approvals of NDAs, supplements and amendments, pre- and post-
approvals, pricing and Third Party reimbursement approvals, and labeling
approvals) of any national, supra-national, regional, state or local regulatory
agency, department, bureau, commission, council or other governmental entity in
the Territory, necessary for the development (including the conduct of clinical
trials), manufacture, distribution, marketing, promotion, offer for sale, use,
import, reimbursement, export or sale of a Licensed Product in a regulatory
jurisdiction.

         1.52 "Regulatory Authority" means any national (e.g., the FDA),
supra-national, regional, state or local regulatory agency, department, bureau,
commission, council or other governmental entity involved in the granting of
Regulatory Approval in any country in the Territory.

         1.53 "Royalties" has the meaning set forth in Section 5.1.

         1.54 "Serious Adverse Drug Experience" means any of an "adverse drug
experience," a "life-threatening adverse drug experience," a "serious adverse
drug experience," or an "unexpected adverse drug experience," as those terms are
defined at either 21 C.F.R. Section 312.32 or 21 C.F.R. Section 314.80 or
relevant foreign regulation within the Territory.

         1.55 "Technology" means any and all compounds, materials, equipment,
specifications, designs, formulae, methods, techniques, processes, procedures,
inventions, know how, data and information (including without limitation the
LidoPAIN(R) SP Product Data), documentation and other technology, whether or not
patentable or protectible as a trade secret, that is necessary to make, use or
sell a Licensed Product.

         1.56 "Term" has the meaning set forth in Section 9.1.

         1.57 "Territory" means the United States, Canada and Mexico and their
respective territories and possessions.

         1.58 "Third Party(ies)" means any Person other than EpiCept, Adolor and
their respective Affiliates.

         1.59 "Third Party Claim" has the meaning set forth in Section 8.1.

         1.60 "Third Party Offer" has the meaning set forth in Section 3.8(a).

         1.61 "Valid Claim" means a claim of an issued and unexpired patent, or
a claim of a pending patent application or a supplementary protection
certificate, which claim has not been held invalid or unenforceable by a court
or other government agency of competent jurisdiction from which no appeal can be
or has been taken and has not been held or admitted to be invalid or
unenforceable through re-examination or disclaimer, opposition procedure,
nullity suit or otherwise, which claim, but for the licenses granted herein,
would be infringed by the sale of a Licensed Product; provided, however, that if
a claim of a pending patent application shall not have issued within five (5)
years after the filing date from

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which such claim takes priority such claim shall not constitute a Valid Claim
for the purposes of this Agreement unless and until such claim shall issue.

         1.62 "Withholding Taxes" has the meaning set forth in Section 5.5.

                                    ARTICLE 2
                            LICENSES AND EXCLUSIVITY

         2.1 License Grant.

                  (a) Subject to Section 2.5, EpiCept hereby grants to Adolor a
royalty-bearing, exclusive (even as to EpiCept and its Affiliates) right and
license, with the right to grant sublicenses (subject to Section 2.2) under the
EpiCept intellectual Property to market, have marketed, commercialize, have
commercialized, offer for sale, sell, have sold, import and have imported a
Licensed Product within the Territory.

                  (b) Subject to Section 2.5, EpiCept, for purposes of
commercialization and/or sale in the Territory, hereby grants to Adolor an
exclusive (even as to EpiCept and its Affiliates) right and license, with the
right to grant sublicenses (subject to Section 2.2), under the EpiCept
Intellectual Property to research, have researched, develop, have developed,
make, have made, use and have used a Licensed Product anywhere in the world. For
purposes of clarity, Adolor and its sublicensees shall not have the right to
commercialize, have commercialized, offer for sale or sell a Licensed Product
outside of the Territory and, subject to Sections 2.3, 2.5 and 3.8, nothing
contained herein shall prevent EpiCept or its Affiliates or licensees from
researching, having researched, developing, having developed, making, having
made, using or having used a Licensed Product anywhere in the world. For the
further purpose of clarity, nothing shall prevent Adolor, its Affiliates or
sublicensees from purchasing from or selling to Adolor, an Affiliate or
sublicensee, as applicable, Licensed Product for the purposes of marketing,
commercializing or selling such Licensed Product in the Territory.

         2.2 Use of Affiliates, Sublicensees and Subcontractors. The licenses
granted under Section 2.1 include the right of Adolor to use its Affiliates,
sublicensees and subcontractors in exercising such rights and in carrying out
its obligations under this Agreement, provided that Adolor gives EpiCept advance
written notice of any sublicenses and a reasonable opportunity to comment on the
identity of such sublicensee and that Adolor takes into consideration EpiCept's
comments with respect thereto. Adolor acknowledges that the grant of a
sublicense shall not relieve Adolor from its obligations under this Agreement.
Adolor shall be responsible for the compliance of its Affiliates, sublicensees
and subcontractors with this Agreement.

         2.3 Exclusivity. During the Term, neither EpiCept nor its Affiliates
shall, either itself or with a Third Party, (a) develop (except as permitted
under Section 2.5) or commercialize a Licensed Product in the Territory, or (b)
submit or reopen an IND for the LidoPAIN(R) SP Product.

         2.4 No Implied Licenses. Only the licenses expressly granted herein
shall be of legal force and effect. No license rights shall be created hereunder
by implication, estoppel or otherwise.

         2.5 Reservation of Rights. For the avoidance of doubt, and subject to
Section 2.3, EpiCept reserves the right for EpiCept and/or its Affiliates to
research, develop, make and have made a Licensed Product in the Territory for
development and commercialization outside the Territory. For purposes of
clarity, EpiCept shall have the right to develop a Licensed Product (other than
the LidoPAIN(R) SP Product) in the Territory up to, but not including, a Phase
III Clinical Trial, and shall have no right whatsoever to develop the
LidoPAIN(R) SP Product in the Territory.

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         2.6 Non-assertion of EpiCept Future Patents. Adolor and EpiCept shall
negotiate in good faith to reach agreement on the terms and conditions for a
license agreement for any EpiCept Future Patent(s) in or out of the Territory.
In the event that EpiCept and Adolor do not reach an agreement to license any
such EpiCept Future Patents, EpiCept shall not assert any claim(s) contained in
such EpiCept Future Patent(s) against Adolor for Adolor's or its Affiliates' or
licensees' research, development, manufacture or use of a Licensed Product in or
out of the Territory, or the offer for sale, sale or importation of a Licensed
Product in the Territory.

                                    ARTICLE 3
                    DEVELOPMENT, COMMERCIALIZATION AND SUPPLY

         3.1 Data and Materials Transfer and Right of Reference.

                  (a) In furtherance of the activities contemplated by this
Article 3, EpiCept shall, or shall cause its Affiliates and/or manufacturers to,
transfer promptly (but in all events within thirty (30) days following the
Effective Date) to Adolor the physical embodiment, to the extent available, of
the EpiCept Intellectual Property necessary for Adolor to perform its
obligations under this Agreement, including, but not limited to the LidoPAIN(R)
SP Product Data. Without limiting the foregoing, EpiCept shall provide to Adolor
copies of all final audited study reports prepared in accordance with applicable
FDA guidelines for all studies relating to LidoPAIN(R) SP Product, including but
not limited to those listed on Schedule 3.1(a).

                  (b) At Adolor's request, EpiCept hereby agrees to assign and
hereby does assign to Adolor IND number 63,666 relating to the LidoPAIN(R) SP
Product. Effective as of the Effective Date. EpiCept shall execute a letter in
the form attached hereto as Schedule 3.1(b) notifying the FDA of the transfer of
such IND to Adolor.

                  (c) EpiCept hereby grants to Adolor a "Right of Reference or
Use" as that term is defined in 21 C.F.R. Section 314.3(b) to the LidoPAIN(R) SP
Product Data and agrees to sign, and cause its Affiliates to sign, any
instruments reasonably requested by Adolor in order to effect such grant.

                  (d) EpiCept shall, at EpiCept's sole cost and expense, at
reasonable times and to a reasonable extent, assist Adolor in preparing the CMC
Section of the NDA adequate to meet FDA standards with respect to CMC
requirements, including writing any portion of the CMC Section relating to the
activities performed by EpiCept or its subcontractors.

         3.2 Conduct of Current Study. EpiCept shall be responsible, at
EpiCept's sole cost and expense, for continuing and completing the currently
ongoing dermal sensitivity study relating to the LidoPAIN(R) SP Product
described on Schedule 3.2 in accordance with current good clinical practices.
Promptly upon completion of such study, EpiCept shall report the results thereof
to Adolor in accordance with applicable FDA guidelines. EpiCept shall prepare or
cause to be prepared, at its sole cost and expense, a final, audited study
report with respect to such study in compliance with ICH Guidelines suitable for
submission to the FDA and EpiCept shall provide such report to Adolor within six
(6) months after completion of the study described on Schedule 3.2. Adolor shall
have the full right to use and refer to such study in connection with Adolor's
activities under this Agreement.

         3.3 Diligence. Except as specifically provided herein or as otherwise
mutually agreed upon by the Parties, Adolor shall be responsible for conducting
all clinical studies, development and commercialization activities for Licensed
Products in the Territory. Adolor shall use Commercially Reasonable Efforts to
develop and commercialize a Licensed Product within the Territory. Subject to
the foregoing, Adolor shall have sole discretion in determining which Licensed
Products it will submit for

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Regulatory Approval, in which countries it will file for Regulatory Approvals of
such Licensed Products and in which countries it will commercialize such
Licensed Products in the Territory.

         3.4 Reports.

                  (a) By Adolor. Every six (6) months following the Effective
Date, Adolor shall provide EpiCept a written report summarizing the efforts and
accomplishments of Adolor, its Affiliates and its sublicensees during the
preceding six (6) month period in developing and commercializing Licensed
Products and their development and commercialization plans for the subsequent
six (6) month period. Such reports shall include, without limitation, summaries
of scientific and clinical data obtained in furtherance of Adolor's attempts to
develop and commercialize Licensed Products and a showing of compliance with
Adolor's obligations under Section 3.3 above. EpiCept shall have the right to
provide Adolor with comments regarding Adolor's development and
commercialization plans for the subsequent six (6) month period contained in
such reports and Adolor shall take such comments into consideration, provided
that Adolor shall retain final decision-making authority with respect to any and
all such development and/or commercialization plans.

                  (b) By EpiCept. Every six (6) months following the Effective
Date, EpiCept shall provide Adolor a written report summarizing the efforts and
accomplishments of EpiCept, its Affiliates and sublicenses during the preceding
six (6) month period in developing and commercializing Licensed Products. Such
reports shall include, without limitation, summaries of scientific and clinical
data obtained in furtherance of EpiCept's attempts to develop and commercialize
Licensed Products.

         3.5 Regulatory Matters; EpiCept Assistance. All Regulatory Approvals
with respect to Licensed Products in the Territory shall be in Adolor's name.
Adolor shall have exclusive control over, and authority and responsibility for,
the regulatory strategies relating to the development and commercialization of
all Licensed Products in the Territory, including, without limitation: (a) the
preparation of all documents submitted to Regulatory Authorities and the filing
of all submissions relating to Regulatory Approval Licensed Products; and (b)
all regulatory actions, communications and meetings with any Regulatory
Authority with respect to any Licensed Product. Upon the request of Adolor,
EpiCept shall provide to Adolor on a timely basis such information in its
possession relating to the LidoPAIN(R) SP Product and any other Licensed Product
as may be required for the foregoing regulatory activities, and otherwise
provide reasonable assistance to Adolor in complying with all regulatory
obligations in the Territory, including without limitation, safety updates,
amendments, annual reports, pharmacovigilance filings, investigator
notifications, manufacturing facility inspections and certifications and product
approvals. Except as required by Section 3.1(d), Adolor shall reimburse EpiCept
for the out-of-pocket costs and expenses incurred by EpiCept in complying with
such request. Adolor shall be responsible for interfacing, corresponding and
meeting with all Regulatory Authorities in the Territory with respect to any
Licensed Product. Except as required by applicable law, EpiCept shall not
communicate directly with the FDA or any other Regulatory Authority in the
Territory relating to the LidoPAIN(R) SP Product or any other Licensed Product
without the prior written consent of Adolor. In furtherance thereof, EpiCept
shall refer all FDA communications relating to any Licensed Product to Adolor.
EpiCept shall cooperate with Adolor to provide all reasonable assistance and
take all actions reasonably requested by Adolor that are necessary to comply
with any law applicable to any Licensed Product, including, but not limited to,
reporting of adverse drug experience reports (and serious adverse drug
experiences) to Regulatory Authorities in the Territory.

         3.6 Regulatory Matters; Adolor's Assistance. In the event that a
Regulatory Authority outside of the Territory in a country where Adolor is
developing Licensed Products requests that EpiCept provide it with information
within Adolor's possession, Adolor will make available to EpiCept such tangible
written information in Adolor's possession and control that is requested by such
Regulatory

                                      -10-
<PAGE>

Authority, which information shall be presented in a form which satisfies the
requirements of applicable regulatory guidelines and/or regulations for such
Regulatory Authority. Notwithstanding the foregoing, Adolor may instead agree to
provide such information directly to the applicable Regulatory Authority, as the
case may be, or to an independent third party of its choosing, and shall respond
directly (or through its independent agent) to any questions or inquiries from
such Regulatory Authority regarding the information. In addition, Adolor shall
have no duty to disclose any of its proprietary or confidential information to
any Regulatory Authority or any other party, unless the Regulatory Authority in
question provides for the protection of such proprietary or confidential
information from disclosure in a manner substantially similar to that provided
by the FDA. EpiCept shall reimburse Adolor for the out-of-pocket costs and
expenses incurred by Adolor in complying with any such requests. Adolor shall
endeavor in good faith to cooperate and comply with any requests from EpiCept or
from any Regulatory Authority pursuant to this Section 3.6.

         3.7 Adverse Event Reporting.

                  (a) Each Party shall, and shall require its respective
Affiliates to:

                           (i) to the extent permissible under time constraints
and reporting requirements, provide to the other Party in advance of initial or
periodic submission to Regulatory Authorities any and all adverse event reports
and Serious Adverse Drug Experience reports from clinical trials and commercial
experiences with each Licensed Product;

                           (ii) provide such adverse event reports and Serious
Adverse Drug Experience reports to the other Party contemporaneously with the
provision of such reports to the applicable Regulatory Authority; and

                           (iii) adhere to all requirements of applicable laws,
rules and regulations which relate to the reporting and investigation of adverse
events and Serious Adverse Drug Experiences and keep the other Party informed of
such events.

                  (b) If a Party contracts with a Third Party for research to be
performed by such Third Party on any of the Licensed Products, that Party shall
require such Third Party to report to the contracting Party the information set
forth above.

         3.8 Adolor's Right of First Refusal.

                  (a) If, at any time, EpiCept receives an offer by a Third
Party to develop or commercialize Licensed Products outside the Territory or an
OTC Product anywhere in the world (the "Third Party Offer"), EpiCept shall offer
in writing to Adolor an exclusive license to make, have made, use, develop,
sell, and have sold such Licensed Product or OTC Product in such country or
countries on the same terms as the Third Party Offer. Such written notice (an
"Offer Notice") shall specify (i) the Licensed Product(s) or OTC Product subject
to such Third Party Offer, (ii) any pre-clinical and clinical data relating to
such Licensed Product(s) or OTC Product and (iii) the fees, terms, conditions
and other material items related to such Third Party Offer. Within thirty (30)
days after receipt of an Offer Notice, if Adolor or its Affiliate desires to
negotiate a definitive agreement related to such Third Party Offer, Adolor shall
send a written reply to such effect (an "Adolor Reply"). Upon receipt of an
Adolor Reply, Adolor and EpiCept shall negotiate the terms thereof in good faith
for a period not to exceed ninety (90) days, which period may be mutually
extended in writing by the Parties (the "Negotiation Period").

                  (b) EpiCept shall not negotiate, enter into, or agree to enter
into an agreement for the manufacture, use, or sale of a Licensed Product or OTC
Product with any person or entity other than

                                      -11-
<PAGE>

Adolor during the pendency of such thirty (30) day period after an Offer Notice
and during any Negotiation Period. Accordingly, EpiCept shall not offer,
negotiate, or enter into such an agreement for a Licensed Product with a Third
Party, unless (i) Adolor fails to send an Adolor Reply within the thirty (30)
day period after the Offer Notice or (ii) Adolor fails to agree to enter into a
definitive agreement with EpiCept with respect to any such Offer Notice on the
terms of the Third Party Offer within the Negotiation Period. In the case of the
foregoing clauses (i) and (ii), EpiCept may enter into a definitive agreement
with such Third Party with respect to such Third Party Offer; provided, however,
that if any terms of such agreement with such other person or entity when taken
as a whole would be less favorable to EpiCept than as specified in the Offer
Notice therefor, EpiCept shall deliver a new Offer Notice to Adolor specifying
such variations from the initial Offer Notice, whereupon Adolor shall have
another thirty (30) day period to send a new Adolor Reply and, if it does so,
another Negotiation Period therefor. The Parties hereby acknowledge and agree
that neither Adolor nor EpiCept shall have an obligation to enter into a
definitive agreement with respect to any such Offer Notice.

         3.9 EpiCept Right to Co-Promote. EpiCept, at its option, shall have the
right to negotiate to become Adolor's co-promotion partner as set forth in this
Section 3.9. Within thirty (30) days after Adolor's first filing of an NDA or
the equivalent thereof in a country other than the United States in the
Territory for its first Licensed Product, Adolor shall notify EpiCept in writing
(the "NDA Notice"). Unless EpiCept shall have waived this option to negotiate to
become Adolor's co-promotion partner in writing within thirty (30) days
following receipt by EpiCept of the NDA Notice, then Adolor and EpiCept shall
negotiate in good faith to reach agreement on terms for the co-promotion of such
Licensed Product for a period of up to sixty (60) days commencing on the date of
the NDA Notice. Notwithstanding the foregoing, neither Party shall be under any
obligation to enter into such a co-promotion arrangement. Unless mutually agreed
to by the Parties, no such co-promotion arrangement shall effect any change to
the financial terms of this Agreement and EpiCept shall be solely responsible
for the costs and expenses of its sales representatives. Furthermore, it is
understood and agreed that Adolor may refuse to enter into any such co-promotion
arrangement if it would, in Adolor's reasonable discretion, adversely affect
Adolor's planned commercialization of the Licensed Product. It is further
understood and agreed that, to the extent that the Parties enter into such a
co-promotion arrangement, EpiCept shall cause its sales representatives to
comply with all instructions and decisions of Adolor with respect to the
promotion of the Licensed Product.

         3.10 Supply.

                  (a) Supply for Development. At Adolor's sole option, EpiCept
shall be responsible to supply, or to obtain supply, for Adolor's requirements
in the Territory of Licensed Product for clinical and other development
activities in accordance with Adolor's obligations under this Agreement.
Alternatively, Adolor, in its sole discretion, shall be entitled to supply and
manufacture clinical supplies of Licensed Product in the Territory. The Parties
acknowledge that Third Party subcontractors may be engaged by Adolor to carry
out such manufacture and supply on Adolor's behalf. Within sixty (60) days after
the Effective Date, in the amounts and at a price per patch set forth on
Schedule 3.10(a), EpiCept shall deliver to a location designated by Adolor
LidoPAIN(R) SP Product 9.5% patches and LidoPAIN(R) SP Product placebo 0.0%
patches that are stored at PharmaForm.

                  (b) Cost of Supply. EpiCept shall supply such Licensed Product
to Adolor at a price per Licensed Product equal to the EpiCept Cost of Goods or
a price otherwise mutually agreed to in writing by the Parties.

                  (c) Clinical Supply. If Adolor desires to order clinical
supplies from EpiCept, Adolor shall place orders for clinical supplies of
Licensed Product on a purchase order basis on at least sixty (60) days' written
notice prior to the requested delivery date. The Parties acknowledge that Third

                                      -12-
<PAGE>

Party subcontractors may be engaged by EpiCept to carry out such manufacture and
supply on EpiCept's behalf.

                  (d) Commercial Supply. Adolor shall be responsible for the
manufacture of the commercial supply of Licensed Products for commercialization
in the Territory. The Patties acknowledge that Third Party subcontractors may be
engaged by Adolor to carry out such manufacture and supply on Adolor's behalf.
Adolor shall offer, or shall cause its Third Party subcontractors to offer, to
EpiCept and/or its Affiliates and/or its sublicensees supplies of Licensed
Product for commercialization outside of the Territory, which offer EpiCept may
accept or in lieu thereof EpiCept may separately arrange for manufacture of
commercial supply of Licensed Product for commercialization outside of the
Territory.

                                    ARTICLE 4
                     INITIAL PAYMENT AND MILESTONE PAYMENTS

         4.1 Initial Payment. Within two (2) Business Days after the Effective
Date, Adolor shall pay EpiCept Two and on half million U.S. Dollars
($2,500,000), by wire transfer, to the credit of such bank account as designated
by EpiCept in Schedule 4.1.

         4.2 Milestone Payments. Adolor shall pay the following milestone
payments (the "Milestone Payments") within *** calendar days following the first
occurrence of the specified event (whether the applicable milestone is achieved
by Adolor or any of its Affiliates or sublicensees):

***

For purposes of clarification, each of the foregoing Milestone Payments shall be
made only once and upon the first occurrence of each milestone, regardless of
the number of Licensed Products or occurrences of each milestone for Licensed
Products under the same NDA. In addition, notwithstanding any other provision of
this Agreement to the contrary, if any milestone event described in this Section
4.2 is achieved prior to or in the absence of the achievement of any preceding
milestone (as designated by the order of clauses (a) through (e) of this Section
4.2), then, effective upon the occurrence of such milestone, any preceding
milestone event for which the milestone has not been paid shall be deemed to
have been achieved and the applicable payment shall become due and payable. For
the avoidance of doubt, with respect to clause (f), a supplemental NDA shall not
be considered a new NDA for purposes of determining achievement of such
milestone event.

                                    ARTICLE 5
                                    ROYALTIES

         5.1 Royalty Rates. Subject to the provisions of this Article 5, Adolor
shall pay the following royalties in accordance with this Article 5
("Royalties") on a Licensed Product-by-Licensed Product basis based on aggregate
Net Sales of each Licensed Product in the Territory, as follows:

                  (a) *** of that portion of aggregate Net Sales of such
Licensed Product that is less than or equal to *** in a calendar year.

                  (b) *** of that portion of aggregate Net Sales of such
Licensed Product that is greater than *** in a calendar year.

         5.2 Royalty Term. Subject to the provisions of Section 5.3, the
Royalties set forth in Section 5.1 shall be payable on a Licensed
Product-by-Licensed Product basis and a country-by-country basis for so long as
there exists in such country a Valid Claim of an issued patent within the
EpiCept Licensed

                                      -13-
<PAGE>

Patents or EpiCept Improvements covering a Licensed Product, or, if longer, the
tenth (10th) anniversary of the First Commercial Sale of such Licensed Product
in such country; provided, however, that such Royalties shall be reduced by ***
for any portion of such payment term during which no such Valid Claim of an
issued patent within the EpiCept Licensed Patents or EpiCept improvements exists
in such country.

         5.3 Royalty Reductions.

                  (a) For Third Party Licenses.

                           (i) Assessment of Third Party Intellectual Property
Rights. If Adolor reasonably believes that the sale of Licensed Products would
infringe the intellectual property rights of a Third Party unless a license is
obtained from such Third Party, Adolor may enter into a license with such Third
Party and such license shall be subject to this Section (a). Adolor shall
provide EpiCept with written notice of such belief. Such notice shall include
documents supporting Adolor's position. EpiCept shall have forty-five (45) days
to review the notice from Adolor and to agree or disagree with Adolor's belief.
If EpiCept disagrees with Adolor's belief, then EpiCept shall provide Adolor
with documents supporting EpiCept's position. Adolor shall have forty-five (45)
days to review the documents from EpiCept. All documents exchanged by the
parties shall be maintained in confidence and shall not be used for any other
purpose than the resolution of the scope of a third party's intellectual
property rights as it pertains to the sale of a licensed product as set forth in
this agreement. If Adolor maintains its original position after such review
period, then the matter shall be referred first to the officers of EpiCept and
Adolor having responsibility for the subject matter of the dispute, or their
designees. such officers, or their designees, as the case may be, shall
negotiate in good faith to resolve such dispute in a mutually satisfactory
manner for thirty (30) days. if such efforts do not result in a mutually
satisfactory resolution of the dispute, the matter shall be referred to the
chief executive officer of each party, or their respective designees. Such
individuals shall negotiate in good faith to resolve such dispute in a mutually
satisfactory manner for thirty (30) days, or such longer period of time as the
parties may agree. If such efforts do not result in a mutually satisfactory
resolution, the dispute shall be finally settled by the independent party
selected pursuant to Section 5.3(a)(ii).

                           (ii) Appointment of Independent Party. If a dispute
with respect to a Third Party license cannot be resolved by Adolor and EpiCept
pursuant to Section 5.3(a)(i), then Adolor and EpiCept shall, within thirty (30)
days, select and retain a neutral person bound to confidentially by profession
who is independent and disinterested with respect to the Parties (the
"Independent Party"). The Independent Party shall be a patent attorney
knowledgeable in the biopharmaceutical area. Neither Party shall unreasonably
withhold agreement to the selection of a qualified Independent Party. The
Parties shall share equally any and all fees, expenses, reimbursements and other
out-of-pocket costs related to the engagement of the Independent Party.

                           (iii) Reductions. If the Independent Party determines
that the sale of a Licensed Product would not infringe the intellectual property
rights of a Third Party, then Adolor shall not be entitled to any reductions in
Royalties or Other Payments for a Licensed Product under this Section (iii) as a
result of entering into a license with such Third Party. If, however, the
Independent Party determines that the sale of a Licensed Product would infringe
the intellectual property rights of a Third Party unless a license is obtained
from such Third Party, Adolor may offset *** of any such Third Party royalty
payments or Other Payments (as defined below) against the Royalties. Offsets for
any such Third Party royalty payments for Net Sales in a quarter may be applied
only against Royalties due hereunder for the same Net Sales in the same quarter.
Offsets for Other Payments to such Third Parties may be amortized equally over
the remaining portion of the ten (10) year period following first commercial
sale in such country and applied in each corresponding quarter until the
application of such other payments in

                                      -14-
<PAGE>

their entirety. as used herein, "Other Payments" shall mean license issue fees
or milestones, but shall specifically exclude equity investments.
Notwithstanding the foregoing, nothing contained in this Section 5.3(a) shall
reduce the Royalties otherwise due EpiCept by more than *** for any given year.

                  (b) Reductions for Competition. All Royalties on a Licensed
Product shall be reduced by *** effective on and after the date when Competition
occurs with respect to such Licensed Product in such country, provided that the
reduction for any given year shall not reduce the Royalties paid to EpiCept for
such year by more than ***. If Competition ceases to exist, then beginning with
the first calendar quarter after Competition does not exist, the Royalties on a
Licensed Product will return to the percentages set forth in Section 5.1 until
such time as Competition may again exist with respect to such Licensed Product.

                  (c) Request for Reductions. If Adolor reasonably and in good
faith believes that a lower royalty rate is required in order to permit Adolor
to commercialize the Licensed Product in a particular country with a reasonable
profit, Adolor may notify EpiCept of such belief and their basis therefor and,
if such notification is made, the Parties shall meet as promptly as practicable
to discuss in good faith whether a reduction to the royalty rate for such
Licensed Product in such country is appropriate provided that nothing shall
require EpiCept to agree to such a reduction.

         5.4 Reports and Payments.

                  (a) Cumulative Royalties. The obligation to pay Royalties
under this Article 5 shall be imposed only once (i) with respect to any sale of
the same unit of any Licensed Product, and (ii) with respect to a single unit of
any Licensed Product regardless of the number or scope of the EpiCept Licensed
Patents or EpiCept Improvements that, but for the licenses granted by EpiCept to
Adolor hereunder, would be infringed by sale of the Licensed Product in the
relevant country.

                  (b) Statements and Payment. Adolor shall deliver to EpiCept,
within *** days after the end of each calendar quarter, a report setting forth
for such calendar quarter the following information for each Licensed Product:
(i) Net Sales of such Licensed Product on a country-by-country basis; (ii) the
basis for any adjustments to the Royalties payable on account of sales of such
Licensed Product in any country; (iii) the Royalties due to. EpiCept on account
of sales of such Licensed Product; and (iv) the exchange rates used in
calculating any of the foregoing. The total Royalties due on account of sales of
Licensed Products during such calendar quarter shall be remitted at the time
such report is made.

         5.5 Taxes and Withholding. Any payments made by Adolor to EpiCept under
this Agreement shall be reduced by the amount required to be paid or withheld
pursuant to any applicable law, including, but not limited to, United States
federal, state or local tax law ("Withholding Taxes"). Any such Withholding
Taxes required by law to be paid or withheld shall be an expense of, and borne
solely by, EpiCept. Adolor, as applicable, shall submit to EpiCept reasonable
proof of payment of the Withholding Taxes, together with an accounting of the
calculations of such taxes, within thirty (30) days after such Withholding Taxes
are remitted to the proper authority. The Parties will cooperate reasonably in
completing and filing documents required under the provisions of any applicable
tax laws or under any other applicable law in connection with the making of any
required tax payment or withholding payment, or in connection with any claim to
a refund of or credit for any such payment.

         5.6 Currency Exchange. With respect to Net Sales invoiced or expenses
incurred in U.S. dollars, the Net Sales or expense amounts and the amounts due
to EpiCept hereunder shall be expressed in U.S. dollars. With respect to Net
Sales invoiced or expenses incurred in a currency other than U.S. dollars, the
Net Sales or expense shall be expressed in the domestic currency of the entity
making the sale or incurring the expense, together with the U.S. dollar.
equivalent, calculated using the arithmetic average

                                      -15-
<PAGE>

of the spot rates on the last Business Day of each month of the calendar quarter
in which the Net Sales were made or the expense was incurred. The "closing
mid-point rates" found in the "Dollar spot forward against the Dollar" table
published by The Financial Times, or any other publication as agreed to by the
Parties, shall be used as the source of spot rates to calculate the average as
defined in the preceding sentence. All payments shall be made by wire transfer
in U.S. dollars to the credit of such bank account as shall be designated at
least five (5) Business Days in advance by EpiCept in writing to Adolor.

         5.7 Maintenance of Records; Audit. For a period of three (3) years,
Adolor shall maintain, and shall require its respective Affiliates and
sublicensees to maintain, complete and accurate books and records in connection
with the sale of Licensed Products hereunder, as necessary to allow the accurate
calculation consistent with generally accepted accounting principles of the
Royalties due to EpiCept, including any records required to calculate any
royalty adjustments hereunder. Once per calendar year, EpiCept shall have the
right to engage an independent accounting firm reasonably acceptable to Adolor,
which shall have the right to examine in confidence the relevant Adolor records
as may be reasonably necessary to determine and/or verify the amount of Royalty
payments due hereunder. Such examination shall be conducted, and Adolor shall
make its records available, during normal business hours, after at least fifteen
(15) days prior written notice to Adolor, as applicable, and shall take place at
the facility(ies) where such records are maintained. Each such examination shall
be limited to pertinent books and records for any year ending not more than
thirty-six (36) months prior to the date of request; provided that EpiCept shall
not be permitted to audit the same period of time more than once. Before
permitting such independent accounting firm to have access to such books and
records, Adolor may require such independent accounting firm and its personnel
involved in such audit, to sign a confidentiality agreement (in form and
substance reasonably acceptable to Adolor) as to any confidential information
which is to be provided to such accounting firm or to which such accounting firm
will have access, while conducting the audit under this paragraph. The EpiCept
independent accounting firm will prepare and provide to each Party a written
report stating whether the Royalty reports submitted and Royalties paid are
correct or incorrect and the details concerning any discrepancies. Such
accounting firm may not reveal to EpiCept any information learned in the course
of such audit other than the amount of any such discrepancies. EpiCept agrees to
hold in strict confidence all information disclosed to it, except to the extent
necessary for EpiCept to enforce its rights under this Agreement or if
disclosure is required by law. In the event there was an underpayment by Adolor
hereunder, Adolor shall promptly (but in no event later than thirty (30) days
after such Party's receipt of the independent auditor's report so correctly
concluding) make payment to EpiCept of any shortfall. In the event that there
was an overpayment by Adolor hereunder, EpiCept shall promptly (but in no event
later than thirty (30) days after EpiCept's receipt of the independent auditor's
report so correctly concluding) refund to Adolor or credit to future royalties,
at Adolor's election, the excess amount. EpiCept shall bear the full cost of
such audit unless such audit discloses an underreporting by Adolor of more than
*** of the aggregate amount of Royalties in any twelve (12) month period, in
which case, Adolor shall bear the full cost of such audit.

         5.8 Interest on Late Payments. Any failure by Adolor to make a payment
of any undisputed amount when due shall obligate Adolor to pay interest to
EpiCept at a rate equal to *** per month (or the maximum allowed by law, if
less), calculated on the basis of an a three hundred sixty (360) day year, the
interest period commencing on the due date and ending on the payment date.

                                    ARTICLE 6
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

         6.1 Mutual Representations and Warranties. Each Party hereby
represents, warrants and covenants to the other Party that:

                                      -16-
<PAGE>

                  (a) such Party is a corporation or entity duly organized,
validly existing and in good standing under the laws of the state of
incorporation and has full corporate power and authority to enter into this
Agreement and to carry out the provisions hereof;

                  (b) such Party is duly authorized, by all requisite corporate
action, to execute and deliver this Agreement and the execution, delivery and
performance of this Agreement by such Party does not require any shareholder
action or approval, and the Person executing this Agreement on behalf of such
Party is duly authorized to do so by all requisite corporate action;

                  (c) no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the part of such
Party in connection with the valid execution, delivery and performance of this
Agreement, except where the failure to obtain any of the foregoing would not
have a material adverse impact on the ability of such Party to meet its
obligations hereunder;

                  (d) this Agreement is a legal and valid obligation binding
upon such Party and enforceable in accordance with its terms except as
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights and
(ii) equitable principles of general applicability;

                  (e) the execution, delivery and performance by it of this
Agreement and its compliance with the terms and provisions of this Agreement
does not and will not conflict with or result in a breach of any of the terms or
provisions of (i) any other contractual or other obligations of such Party, (ii)
the provisions of its charter, operating documents or bylaws, or (iii) any
order, writ, injunction or decree of any court or governmental authority entered
against it or by which it or any of its property is bound except where such
breach or conflict would not materially impact the Party's ability to meet its
obligations hereunder; and

                  (f) it shall comply in all material respects with all laws,
rules and regulations applicable to its performance under this Agreement.

         6.2 Additional EpiCept Representations, Warranties and Covenants.
EpiCept additionally represents, warrants and covenants to Adolor that:

                  (a) EpiCept has the full right, power and authority to grant,
and is not prohibited by the terms of any agreement to which it is a party from
granting, the licenses granted to Adolor under Article 2 hereof;

                  (b) EpiCept has not previously granted and will not grant any
rights inconsistent with the rights and licenses granted herein;

                  (c) as of the Effective Date, EpiCept has provided to Adolor
all requested documents in its files for, as well as all other information, to
its knowledge, that is material to, the EpiCept Intellectual Property and the
LidoPAIN(R) SP Product, including without limitation, any information that
relates to the patentability or validity of the EpiCept Licensed Patents or the
freedom to operate with respect to the LidoPAIN(R) SP Product, provided that it
is understood that EpiCept has not obtained an opinion of patent counsel with
respect to the validity of the EpiCept Licensed Patents nor has EpiCept engaged
patent counsel to prepare a freedom to operate opinion or conduct a freedom to
operate search;

                  (d) to the best of EpiCept's knowledge, as of the Effective
Date, the EpiCept Licensed Patents are valid and enforceable, and there are no
Patent Rights or similar intellectual property

                                      -17-
<PAGE>

rights of a Third Party that the manufacture, use or sale of the LidoPAIN(R) SP
Product would infringe if Adolor did not have a license thereto, provided that
it is understood that EpiCept has not obtained an opinion of patent counsel with
respect to the validity or enforceability of the EpiCept Licensed Patents;

                  (e) as of the Effective Date, EpiCept holds good title to and
is the legal and beneficial owner of the EpiCept Licensed Patents set forth on
Schedule 1.20, free and clear of all liens, security interests, charges and
other encumbrances of any kind (other than unilateral creditor filings with
respect to which this representation shall be made to the best of EpiCept's
knowledge), and no Third Party has any right, title or interest in the EpiCept
Licensed Patents set forth on Schedule 1.20;

                  (f) as of the Effective Date, there are no pending claims,
judgments or settlements against or owed by EpiCept pending with respect to the
EpiCept Intellectual Property, and, EpiCept has not received written notice of
any threatened claims or litigation seeking to invalidate the EpiCept Patent
Rights. During the Term, EpiCept shall promptly notify Adolor in writing upon
learning of any such actual or threatened claim, judgment or settlement;

                  (g) as of the Effective Date. there are no inquiries, actions
or other proceedings pending before or, to the best of EpiCept's knowledge,
threatened by any Regulatory Authority or other government agency with respect
to the LidoPAIN(R) SP Product or any facility where the LidoPAIN(R) SP Product
is manufactured, and EpiCept has not received written notice threatening any
such inquiry, action or other proceeding. As of the Effective Date, there are no
investigations pending before or, to the best of EpiCept's knowledge, threatened
by any Regulatory Authority or other government agency with respect to the
LidoPAIN(R) SP Product or any facility where the LidoPAIN(R) SP Product is
manufactured, and EpiCept has not received written notice threatening any such
investigation. During the Term, EpiCept shall promptly notify Adolor in writing
upon learning of any such actual or threatened investigation, inquiry or
proceeding;

                  (h) the EpiCept Licensed Patents listed on Schedule 1.20
constitute all of EpiCept's Patent Rights that are necessary for Adolor to make,
have made, use, sell, have sold and/or import the LidoPAIN(R) SP Product;

                  (i) as of the Effective Date, to the best of EpiCept's
knowledge the making, using or selling of the LidoPAIN(R) SP Product as a
pharmaceutical product would not infringe the Patent Rights of any Third Party,
and EpiCept has no knowledge that any Third Party is infringing any of the
EpiCept Licensed Patents set forth on Schedule 1.20;

                  (j) as of the Effective Date, the development and manufacture
of the LidoPAIN(R) SP Product has been conducted by EpiCept and its Affiliates
and, to the best of EpiCept's knowledge, its subcontractors are in compliance in
all material respects with all applicable laws, rules and regulations, and as of
the Effective Date, neither EpiCept nor its Affiliates, and to the best of
EpiCept's knowledge, its subcontractors, have received any notice in writing, or
otherwise has knowledge of any facts, which have, or reasonably should have, led
EpiCept to believe that any of the INDs relating to the LidoPAIN(R) SP Product
are not currently in good standing with, the FDA;

                  (k) as of the Effective Date, the Cassel Royalty Agreement and
each other agreement with a Third Party under which either (i) rights with
respect to the EpiCept Intellectual Property are or have been assigned, licensed
or sublicensed to EpiCept or (ii) activities with respect to the LidoPAIN(R) SP
Product are or have been performed (collectively the ("EpiCept Agreements") are
in full force and effect, and no party (including EpiCept) to those EpiCept
Agreements is in breach or default thereunder. EpiCept has provided a true and
complete copy of each EpiCept Agreement to Adolor. EpiCept shall devote
commercially reasonable best efforts to maintain in full force and effect and to
fully perform its

                                      -18-
<PAGE>

obligations thereunder and to keep Adolor fully informed of any material
development pertaining thereto that would have an adverse effect on Adolor's
rights under this Agreement. EpiCept shall not, without the prior written
approval of Adolor: (i) amend any provision of an EpiCept Agreement that would
have an adverse effect on Adolor's rights under this Agreement or (ii) make any
election or exercise any right or option to terminate in whole or in part any
EpiCept Agreement; and

                  (l) EpiCept has, up to and including the Effective Date,
endeavored in good faith to furnish Adolor with all material information
requested by Adolor concerning the quality, toxicity, safety and/or efficacy
concerns that may materially impair the utility and/or safety of the Licensed
Products.

         6.3 Additional Adolor Representations, Warranties and Covenants. Adolor
additionally represents, warrants and covenants to EpiCept that, as of the
Effective Date, Adolor has the financial capacity to perform its obligations
under this Agreement.

         6.4 Disclaimer of Warranties. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, CONCERNING THE SUCCESS OR POTENTIAL
SUCCESS OF THE DEVELOPMENT, COMMERCIALIZATION, MARKETING OR SALE OF ANY LICENSED
PRODUCT. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS
ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.

                                    ARTICLE 7
              CONFIDENTIALITY, PUBLICATION AND PUBLIC ANNOUNCEMENTS

         7.1 Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing, Adolor and EpiCept agree that, until
the later of (i) the termination this Agreement or (ii) five (5) years after the
date of disclosure, each of Adolor or EpiCept, upon receiving or learning of any
Confidential Information of the other Party, shall keep such Confidential
Information confidential and otherwise shall not disclose or use such
Confidential Information for any purpose other than as provided for in this
Agreement. The Receiving Party shall advise its employees and consultants who
might have access to the Disclosing Party's Confidential Information of the
confidential nature thereof and agrees that its employees shall be bound by the
terms of this Agreement. The Receiving Party shall not disclose any Confidential
Information of the Disclosing Party to any employee who does not have a need for
such information.

         7.2 Authorized Disclosure. Notwithstanding the foregoing, each of
Adolor and EpiCept may disclose Confidential Information of the other Party to a
Third Party to the extent such disclosure is reasonably necessary to exercise
the rights granted to or retained by it under this Agreement in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with applicable governmental regulations, submitting information to tax or other
governmental authorities (including regulatory authorities), or conducting
clinical trials hereunder with respect to Licensed Products, provided that if a
Party is required by law to make any such disclosure of the Disclosing Party's
Confidential Information, to the extent it may legally do so, it will give
reasonable advance notice to the Disclosing Party of such disclosure and, save
to the extent inappropriate in the case of patent applications or otherwise,
will use its reasonable efforts to secure confidential treatment of such
Confidential Information prior to its disclosure (whether through protective
orders or otherwise). If the Disclosing Party has not filed a patent application
with respect to such Confidential Information, it may require the Receiving
Party to delay the proposed disclosure (to the extent the disclosing party may
legally do so), for up to ninety (90) days, to allow for the filing of such an
application.

                                      -19-
<PAGE>

         7.3 Return of Confidential Information. Upon termination of this
Agreement except upon termination by expiration of the licenses granted
hereunder, the Receiving Party shall promptly return all of the Disclosing
Party's Confidential Information, including all reproductions and copies thereof
in any medium, except that the Receiving Party may retain one copy for its legal
files.

         7.4 Unauthorized Use. If either Party becomes aware or has knowledge of
any unauthorized use or disclosure of the other Party's Confidential
Information, it shall promptly notify the disclosing Party of such unauthorized
use or disclosure.

         7.5 Public Announcements. Except as set forth in the press release
agreed to by the Parties pursuant to this Section 7.5 and for filing a copy of
this Agreement by Adolor and/or EpiCept (in the event that EpiCept becomes a
public company) with the Securities and Exchange Commission, to the extent
Adolor and/or EpiCept determines to make such a filing and for disclosure by
EpiCept to its present and prospective investors, neither Party shall make any
public announcement regarding this Agreement, any EpiCept Intellectual Property
or any Licensed Products, unless required by law, and then only after providing
the other Party at least two (2) Business Days to review, comment on and approve
such public announcement; provided, however, the Parties agree that a period of
less than two (2) Business Days for review, comment and approval is permissible
if such lesser period of time is necessitated in order to comply with law or by
an emergency situation due to unexpected circumstances. The Parties agree to
issue a press release announcing the execution of this Agreement. In addition,
following the initial agreed upon press release announcing this Agreement, each
Party shall be free to disclose, without the other Parties' prior written
consent, the existence of this Agreement, the identity of the other Party and
those terms of the Agreement which have already been publicly disclosed in
accordance herewith.

         7.6 Disclosures for Tax Purposes. Notwithstanding anything else in this
Agreement to the contrary, each Party hereto (and each employee, representative,
or other agent of any Party) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of any and all
transaction(s) contemplated herein and all materials of any kind (including
opinions or other tax analyses) that are or have been provided to any Party (or
to any employee, representative, or other agent of any Party) relating to such
tax treatment or tax structure, provided, however, that this authorization of
disclosure shall not apply to restrictions reasonably necessary to comply with
securities laws. This authorization of disclosure is retroactively effective
immediately upon commencement of the first discussions regarding the
transactions contemplated herein, and the Parties aver and affirm that this tax
disclosure authorization has been given on a date which is no later than thirty
(30) days from the first day that any Party hereto (or any employee,
representative, or other agent of any Party hereto) first made or provided a
statement as to the potential tax consequences that may result from the
transactions contemplated hereby.

                                    ARTICLE 8
                                 INDEMNIFICATION

         8.1 Adolor. Adolor shall defend EpiCept and its Affiliates at Adolor's
cost and expense, and will indemnify and hold EpiCept and its Affiliates and
their respective directors, officers, employees and agents harmless from and
against any and all losses, costs, damages, fees or expenses (including
reasonable attorney's fees and expenses) ("Losses") incurred in connection with
or arising out of any Third Party claim (a "Third Party Claim") relating to (i)
any material breach by Adolor of any of its representations, warranties or
obligations pursuant to this Agreement, (ii) any gross negligence or willful
misconduct of Adolor in the exercise of any of its rights or the performance of
any of their obligations under this Agreement, or (iii) subject to Section 8.2,
any liability or other claims arising from the manufacture, handling, packaging,
storage, sale or other disposition of any Licensed Product by Adolor or

                                      -20-
<PAGE>

any of its Affiliates or sublicensees, except for any Licensed Products
manufactured by or on behalf of Adolor that is sold to EpiCept or its Affiliates
or sublicensees it being understood that any such indemnification obligation
will be set forth in a supply agreement to be negotiated between the Parties for
supply of such Licensed Products.

         8.2 EpiCept. EpiCept agrees to defend Adolor and its Affiliates at
EpiCept's cost and expense, and will indemnify and hold Adolor and its
Affiliates and their respective directors, officers, employees and agents
harmless from and against any and all Losses incurred in connection with or
arising out of any Third Party Claim relating to (i) any material breach by
EpiCept of any of its representations, warranties or obligations pursuant to
this Agreement, (ii) any gross negligence or willful misconduct of EpiCept in
the exercise of any of its rights or the performance of any of its obligations
under this Agreement, (iii) any product liability, clinical trial liability or
other claims arising from the manufacture, handling, packaging, storage, sale or
other disposition of any Licensed Product prior to the Effective Date, (iv)
subject to Section 8.1, any liability or other claims from the manufacture,
handling, packaging, storage, sale or other disposition of any Licensed Product
by EpiCept or any of its Affiliates or sublicensees, or (v) any liability or
claims arising from Licensed Product supplied by or on behalf of EpiCept to
Adolor for clinical supply pursuant to Section 3.10 that was not manufactured in
accordance with current Good Manufacturing Practices, the specifications and/or
all applicable laws and regulations.

         8.3 Indemnification Procedures.

                  (a) In the case of a Third Party Claim made by any Person who
is not a Party to this Agreement (or an Affiliate thereof) as to which a Party
(the "Indemnitor") may be obligated to provide indemnification pursuant to this
Agreement, such Party seeking indemnification hereunder ("Indemnitee") will
notify the Indemnitor in writing of the Third Party Claim (and specifying in
reasonable detail the factual basis for the Third Party Claim and to the extent
known, the amount of the Third Party Claim) reasonably promptly after becoming
aware of such Third Party Claim; provided, however, that failure to give such
notification will not affect the indemnification provided hereunder except to
the extent the Indemnitor shall have been actually prejudiced as a result of
such failure.

                  (b) If a Third Party Claim is made against an Indemnitee and
the Indemnitor acknowledges in writing its obligation to indemnify the
Indemnitee therefor, the Indemnitor will be entitled, within one hundred twenty
(120) days after receipt of written notice from the Indemnitee of the
commencement or assertion of any such Third Party Claim, to assume the defense
thereof (at the expense of the Indemnitor) with counsel selected by the
Indemnitor and reasonably satisfactory to the Indemnitee, for so long as the
Indemnitor is conducting a good faith and diligent defense. Should the
Indemnitor so elect to assume the defense of a Third Party Claim, the Indemnitor
will not be liable to the Indemnitee for any legal or other expenses
subsequently incurred by the Indemnitee in connection with the defense thereof;
provided, that if under applicable standards of professional conduct a conflict
of interest exists between the Indemnitor and the Indemnitee in respect of such
claim, such Indemnitee shall have the right to employ separate counsel (which
shall be reasonably satisfactory to the Indemnitor) to represent such Indemnitee
with respect to the matters as to which a conflict of interest exists and in
that event the reasonable fees and expenses of such separate counsel shall be
paid by such Indemnitor; provided, further, that the Indemnitor shall only be
responsible for the reasonable fees and expenses of one separate counsel for
such Indemnitee. If the Indemnitor assumes the defense of any Third Party Claim,
the Indemnitee shall have the right to participate in the defense thereof and to
employ counsel, at its own expense, separate from the counsel employed by the
Indemnitor. If the Indemnitor assumes the defense of any Third Party Claim, the
Indemnitor will promptly supply to the Indemnitee copies of all correspondence
and documents relating to or in connection with such Third Party Claim and keep
the Indemnitee informed of developments relating to or in connection with such
Third Party Claim, as may be reasonably requested by the Indemnitee (including,
without limitation, providing to the Indemnitee on

                                      -21-
<PAGE>

reasonable request updates and summaries as to the status thereof). If the
Indemnitor chooses to defend a Third Party Claim, all Indemnitees shall
reasonably cooperate with the Indemnitor in the defense thereof (such
cooperation to be at the expense, including reasonable legal fees and expenses,
of the Indemnitor). If the Indemnitor does not elect to assume control of the
defense of any Third Party Claim within the one hundred twenty (120) day period
set forth above, or if such good faith and diligent defense is not being or
ceases to be conducted by the Indemnitor, the Indemnitee shall have the right,
at the expense of the Indemnitor, after three (3) Business Days notice to the
Indemnitor of its intent to do so, to undertake the defense of the Third Party
Claim for the account of the Indemnitor (with counsel selected by the
Indemnitee), and to compromise or settle such Third Party Claim, exercising
reasonable business judgment.

                  (c) If the Indemnitor acknowledges in writing its obligation
to indemnify the Indemnitee for a Third Party Claim, the Indemnitee will agree
to any settlement, compromise or discharge of such Third Party Claim that the
Indemnitor may recommend that by its terms obligates the Indemnitor to pay the
full amount of Losses (whether through settlement or otherwise) in connection
with such Third Party Claim and unconditionally and irrevocably releases the
Indemnitee completely from all liability in connection with such Third Party
Claim; provided, however, that, without the Indemnitee's prior written consent,
the Indemnitor shall not consent to any settlement, compromise or discharge
(including the consent to entry of any judgment), and the Indemnitee may refuse
in good faith to agree to any such settlement, compromise or discharge, that
provides for injunctive or other nonmonetary relief affecting the Indemnitee. If
the Indemnitor acknowledges in writing its obligation to indemnify the
Indemnitee for a Third Party Claim, the Indemnitee shall not (unless required by
law) admit any liability with respect to, or settle, compromise or discharge,
such Third Party Claim without the Indemnitor's prior written consent (which
consent shall not be unreasonably withheld).

         8.4 Insurance Proceeds. Any indemnification hereunder shall be made net
of any insurance proceeds recovered by the Indemnitee (it being understood that
an Indemnitee may simultaneously pursue an insurance claim and a claim for
indemnification hereunder); provided, however, that if, following the payment to
the Indemnitee of any amount under this Article 8, such Indemnitee recovers any
insurance proceeds in respect of the claim for which such indemnification
payment was made, the Indemnitee shall promptly pay an amount equal to the
amount of such proceeds (but not exceeding the amount of such indemnification
payment) to the indemnifying Party.

         8.5 Insurance. Each Party agrees to obtain and maintain commercial
general liability insurance, including clinical trials and products liability
insurance, with reputable and financially secure insurance carriers, in such
amounts and subject to such deductibles as are reasonable and customary in the
pharmaceutical industry for companies of comparable size and activities. Each
Party shall maintain such insurance for so long as Licensed Products in the
Territory continue to be developed, manufactured or sold and thereafter for so
long as is necessary to cover any and all Third Party Claims which may arise
from the development, manufacture or sale of a Licensed Product in the
Territory. Upon reasonable request by a Party, the other Party shall produce
evidence that such insurance policies are valid, kept up to date and in full
force and effect.

                                    ARTICLE 9
                              TERM AND TERMINATION

         9.1 Term.

                  (a) Except as set forth in Section 11.13, unless earlier
terminated by mutual agreement of the Parties in writing or pursuant to the
provisions of this Article 9, this Agreement will continue in full force and
effect on a country-by-country and Licensed Product-by-Licensed Product basis

                                      -22-
<PAGE>

until the obligation to pay Royalties with respect to the sale of a Licensed
Product in such country expires (the "Term").

                  (b) On a country-by-country basis and on a Licensed
Product-by-Licensed Product basis, upon the scheduled expiration (as
contemplated in Section 5.2) of the obligation to pay Royalties with respect to
the sale of such Licensed Product in such country, the licenses granted
hereunder shall become fully paid up, royalty-free, perpetual and irrevocable
and the exclusivity restrictions pursuant to Section 2.3 with respect to such
country shall no longer be applicable.

         9.2 Voluntary Termination by Adolor. Notwithstanding any other
provision herein, Adolor may terminate this Agreement on a country-by-country
basis and/or Licensed Product-by-Licensed Product basis or in its entirety at
any time upon one hundred twenty (120) days advance written notice to EpiCept.

         9.3 Material Breach. Upon a material breach of this Agreement by Adolor
on the one hand, or EpiCept on the other hand (in such capacity, the "Breaching
Party"), the other Party (in such capacity, the "Non-Breaching Party") may
provide written notice (a "Breach Notice") to the Breaching Party specifying the
material breach. If the Breaching Party fails to cure such material breach
during the ninety (90) day period (or, if applicable, such longer period, but
not to exceed one hundred and eighty (180) days, as would be reasonably
necessary for a diligent party to cure such material breach, provided the
Breaching Party has commenced and continues its diligent efforts to cure during
the initial ninety (90) day period following the date on which the Breach Notice
is provided), then the Non-Breaching Party may terminate this Agreement on a
Licensed Product-by-Licensed Product and country-by-country basis with respect
to the Licensed Product and country to which the breach relates. If Adolor is
the Breaching Party and the material breach relates to a particular Licensed
Product (such as, e.g., and without limitation the LidoPAIN(R) SP Product) in a
particular country within the Territory and EpiCept has elected to terminate
this Agreement with respect to such Licensed Product in such country, at
EpiCept's written request, Adolor agrees to and hereby does assign to EpiCept
any IND or foreign equivalent thereof for such Licensed Product in such country.
By way of example and not by limitation, if Adolor is the Breaching Party and
the material breach relates to the LidoPAIN(R) SP Product in the United States,
at the written request of EpiCept, Adolor agrees to and hereby assigns back to
EpiCept IND number 63,666. Notwithstanding the foregoing, the cure period for
any failure by Adolor to make Milestone Payments or Royalty payments due
hereunder shall be thirty (30) days; provided further, however, that the failure
by Adolor to make any such payment shall not be considered a `breach to the
extent that such payment is the subject of a good faith dispute by Adolor. For
the purposes of this Section 9.3, material breach shall mean a breach which
materially adversely affects the rights under this Agreement of the other Party
with respect to the applicable Licensed Product in the applicable country in the
Territory.

         9.4 Bankruptcy. Either Party may, subject to the provisions set forth
herein, terminate this Agreement by giving the other Party written termination
notice if, at any time, the other Party shall: (a) file in any court pursuant to
any statute a petition for bankruptcy or insolvency, or for reorganization in
bankruptcy, or for an arrangement or for the appointment of a receiver, trustee
or administrator of such Party or of its assets; (b) be served with an
involuntary petition against it, filed in any insolvency proceeding, and such
petition shall not be dismissed within sixty (60) days after the filing thereof;
(c) propose or be a party to any dissolution; or (d) make an assignment for the
benefit of its creditors. Should EpiCept become a party to a bankruptcy
proceeding and such proceeding is not dismissed within sixty (60) days then, to
the extent permitted by law, this Agreement and the licenses granted by EpiCept
hereunder shall be adopted by any bankruptcy trustee or relevant Third Party
charged with the disposition of same, and shall not be rejected by same, it
being the Parties' intent that, in such event, Adolor and its Affiliates and
sublicensees shall be entitled to retain the rights granted to them hereunder by
EpiCept.

                                      -23-
<PAGE>

         9.5 Continuing Rights of Sublicensees. Upon any termination of this
Agreement each sublicense previously granted by Adolor, or any of its
Affiliates, to any Person that is not an Affiliate of Adolor (each, an
"Independent Sublicensee") shall, at EpiCept's option, remain in effect and
shall become a direct license or sublicense, as the case may be, of such rights
by EpiCept to such Independent Sublicensee, subject to the Independent
Sublicensee agreeing in writing to assume Adolor's terms, conditions and
obligations to EpiCept under this Agreement as they pertain to the sublicensed
rights.

         9.6 Effect of Expiration or Termination. Expiration or termination of
this Agreement pursuant to this Article 9 shall not (i) relieve a Party hereto
of any obligation accruing to such Party prior to such termination, or (ii)
result in the waiver of any right or remedy by a Party hereto accruing to such
Party prior to such termination.

         9.7 Limitation of Liabilities. NOTWITHSTANDING THE FOREGOING, EXCEPT AS
MAY BE THE CASE UNDER ARTICLE 8 ABOVE WITH RESPECT TO INDEMNIFICATION FOR THIRD
PARTY CLAIMS, NO PARTY WILL BE LIABLE TO ANY OF THE OTHER PARTIES FOR PUNITIVE,
EXEMPLARY, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
WITHOUT LIMITATION LOST PROFITS, BUSINESS OR GOODWILL) ATTRIBUTABLE TO ANY
BREACH OR DEFAULT BY SUCH PARTY UNDER THIS AGREEMENT. THIS LIMITATION SHALL
SURVIVE ANY FAILURE OF THE ESSENTIAL PURPOSE OF A LIMITED OR EXCLUSIVE REMEDY
SET FORTH HEREIN.

                                   ARTICLE 10
                              INTELLECTUAL PROPERTY

         10.1 Ownership of Technology and Patent Rights.

                  (a) EpiCept shall own any Technology, and EpiCept Improvements
and EpiCept Future Patents claiming such Technology, invented, developed or
discovered solely by EpiCept or its Affiliate's employees or agents.

                  (b) Adolor shall own any Technology, and any Patent Rights
claiming such Technology, invented, developed or discovered solely by Adolor's
or its Affiliate's employees or agents in the performance of Adolor's
obligations and the exercise of its rights under this Agreement (respectively,
"Adolor Inventions") for use in Adolor's sole discretion. EpiCept shall have no
rights, title or interest in or to any Adolor Inventions. Nothing herein shall
obligate Adolor to file, prosecute, defend or maintain any applications or
patents covering Adolor Inventions.

         10.2 Prosecution of EpiCept Licensed Patents. EpiCept shall have the
obligation to diligently Prosecute the Patent Rights within the EpiCept Licensed
Patents and EpiCept Improvements in the Territory, through patent counsel
selected by EpiCept and reasonably acceptable to Adolor. EpiCept and Adolor
shall consult and cooperate with each other regarding the Prosecution of the
EpiCept Licensed Patents.

         10.3 Right to Consult. During the Term of this Agreement, EpiCept shall
copy Adolor, or have Adolor copied, on all substantive documents relating to
EpiCept Licensed Patents and EpiCept Improvements received from or to be filed
in any patent office in the Territory, within fifteen (15) days of receipt from
the patent office and at least fifteen (15) days prior to filing with the patent
office, respectively, including without limitation copies of each patent
application, official action, response to official action, declaration,
information disclosure statement, request for terminal disclaimer, request for
patent term extension, and request for reexamination. Adolor shall have the
right to comment on the Prosecution of the EpiCept Licensed Patents and EpiCept
Improvements and provide such comments to

                                      -24-
<PAGE>

EpiCept's patent counsel, and EpiCept shall require its patent counsel to
consider in good faith such comments from Adolor, and, to the extent not
inconsistent with EpiCept's rights and/or commercial interests, EpiCept shall
require its patent counsel to incorporate all such comments. In the event that
Adolor's comments are inconsistent with EpiCept's rights and/or commercial
interests, EpiCept and Adolor agree to negotiate in good faith a Prosecution
strategy with respect to the relevant EpiCept Licensed Patents and/or EpiCept
Improvements that would adequately cover Adolor's interests, without adversely
affecting EpiCept's rights and/or commercial interests. If Adolor fails to
provide its comments with respect to the Prosecution of a patent application
and/or patent within the EpiCept Licensed Patents and/or EpiCept Improvements at
least five (5) days prior to the deadline for filing or otherwise responding to
the relevant paper in the relevant patent office, EpiCept shall be free to act
without consideration of Adolor's comments.

         10.4 Abandonment of Prosecution by EpiCept. EpiCept shall notify Adolor
in the event it is unable for any reason to meet its obligations under Section
10.2. Such notification shall be given within a reasonable period (i.e., with
sufficient time for Adolor to take whatever action may be necessary or desired)
prior to the date on which such patent application(s) or patent(s) will lapse or
go abandoned. Adolor shall then have the option, exercisable upon written
notification to EpiCept, to assume full responsibility, at its discretion and
its sole cost and expense, for Prosecution of the affected patent application(s)
or maintenance of any of the affected patent(s) in such country or countries in
the Territory; provided, however, Adolor may offset any such costs and expenses
against any Milestone Payments or Royalties due to EpiCept.

         10.5 Patent Term Extensions. Adolor shall have the right to request
that EpiCept file all applications and take actions necessary to obtain patent
extension pursuant to 35 U.S.C. Section 156 or like foreign statutes for the
EpiCept Licensed Patent Rights in the Territory, which extensions shall be owned
by EpiCept. If EpiCept declines to pursue such patent extensions, then Adolor
shall have the right (at Adolor's cost and expense) on behalf of EpiCept to file
all such applications and take all such actions necessary to obtain such patent
extensions. EpiCept agrees to sign such further document and take such further
actions (all at Adolor's expense) as may be requested by Adolor in this regard.

         10.6 Patent Marking. Adolor and its Affiliates and its sublicensees
shall mark all Licensed Products made under this Agreement with a notice in
accordance with 35 U.S.C. Section 287 and similar marking provisions in foreign
countries. The Parties agree that listing of the patent numbers in the package
inserts or foreign equivalent shall be considered sufficient marking of Licensed
Products as required by this Section 10.6.

         10.7 Third Party Infringement.

                  (a) Suits for Infringement of the EpiCept Licensed Patents and
EpiCept Improvements. If EpiCept or Adolor becomes aware of infringement of any
patent included in the EpiCept Licensed Patents or EpiCept Improvements by a
Third Party in the Territory, such Party shall promptly notify the other Party
in writing to that effect and provide a summary of the relevant facts and
circumstances known to such Party relating to such infringement ("Infringement
Notice"). EpiCept shall have the right, at its sole discretion, on its own
behalf, to institute, prosecute and control any action or proceeding to restrain
infringement of any EpiCept Licensed Patents or EpiCept Improvements licensed to
Adolor hereunder. Adolor agrees to be joined as a Party plaintiff if necessary
to prosecute the action or proceeding and shall provide all reasonable
cooperation, including any necessary use of its name, required to prosecute such
litigation. EpiCept shall have sole control of any such suit and all
negotiations for its settlement or compromise, provided that, EpiCept shall not
settle or compromise any such suit or enter into any consent order for the
settlement or compromise thereof without the prior written consent of Adolor,
which consent shall not be unreasonably withheld, conditioned or delayed.

                                      -25-
<PAGE>

                  (b) Step-in Right for Adolor. If, prior to the expiration of
three (3) months from said Infringement Notice, EpiCept has not obtained a
discontinuance of an alleged infringement by a Third Party or brought an
infringement action or proceeding or otherwise taken appropriate action to abate
such infringement, or if EpiCept shall notify Adolor at any time prior thereto
of its intention not to bring suit against an alleged infringer and such
infringement is relevant to a Licensed Product in the Territory then, and in
those events only, Adolor shall have the right, but not be obligated, to
institute, prosecute and control any action or proceeding to restrain such
infringement. EpiCept agrees to be joined as a Party plaintiff if necessary to
prosecute the action or proceeding and shall provide all reasonable cooperation,
including any necessary use of its name, required to prosecute such litigation.
Adolor shall have sole control of any such suit and all negotiations for its
settlement or compromise, provided that Adolor shall not settle or compromise
any such suit or enter into any consent order for the settlement or compromise
thereof without the prior written consent of EpiCept, which consent shall not be
unreasonably withheld, conditioned or delayed.

                  (c) Costs and Recoveries from Infringement Action. Each Party
shall assume and pay all of its own out-of-pocket costs incurred in connection
with any litigation or proceedings described in this Section 10.7 including,
without limitation, the fees and expenses of that Party's counsel. Any recovery
obtained by any Party as a result of any proceeding described in this Section
10.7, by settlement or otherwise, shall be applied in the following order of
priority: (i) first, to reimburse each Party for all litigation costs in
connection with such proceeding paid by that Party and not otherwise recovered
(on a pro rata basis based on each Party's respective litigation costs, to the
extent the recovery was less than all such litigation costs); and (ii) second,
the remainder of the recovery shall be shared equally.

                  (d) Declaratory Actions & Counterclaims Against Adolor or
EpiCept. In the event that an action alleging invalidity or non-infringement of
any of the EpiCept Licensed Patents or EpiCept Improvements shall be brought
against EpiCept or Adolor, EpiCept, at its sole discretion, shall have the
right, within thirty (30) days after the commencement of such action, to take or
regain control of the action at its own expense. If EpiCept shall determine not
to exercise this right, Adolor may take over or remain as lead counsel for the
action at Adolor's sole discretion. Any recovery obtained from such litigation,
proceeding or settlement shall be shared in accordance with Section 10.7(c).

         10.8 Infringement of Third Party Rights.

                  (a) Infringement Claims. With respect to any and all claims
instituted by Third Parties for patent infringement involving the manufacture,
use, offer for sale or sale of a Licensed Product covered by the EpiCept
Licensed Patents or EpiCept Improvements in the Territory during the Term,
except for any such claims for which EpiCept is obligated to indemnify Adolor
under Section 8.2, Adolor shall promptly notify EpiCept of such claim, and
Adolor shall have the right, at its sole discretion, to defend and control any
action or proceeding with respect to such claim. EpiCept agrees to be joined as
a party if necessary to defend the action or proceeding and shall provide all
reasonable cooperation, including any necessary use of its name, required to
defend such litigation. Adolor shall have sole control of any such suit and all
negotiations for its settlement or compromise, provided that, Adolor shall not
settle or compromise any such suit or enter into any consent order for the
settlement or compromise thereof without the prior written consent of EpiCept
which consent shall not be unreasonably withheld, conditioned or delayed.

                  (b) Step-in Right for EpiCept. If, prior to the expiration of
three (3) months from said claim being brought, or such sooner period as may be
necessary to appropriately respond to said claim, Adolor has not elected to
defend such action or proceeding, or if Adolor shall notify EpiCept at any time
prior thereto of its intention not to defend such action or proceeding, then,
and in those events only, EpiCept shall have the right, but not be obligated, to
defend and control any action or proceeding. Adolor

                                      -26-
<PAGE>

agrees to be joined as a party if necessary to defend the action or proceeding
and shall provide all reasonable cooperation, including any necessary use of its
name, required to defend such litigation. EpiCept shall have sole control of any
such suit and all negotiations for its settlement or compromise, provided that
EpiCept shall not settle or compromise any such suit or enter into any consent
order for the settlement or compromise thereof without the prior written consent
of Adolor, which consent shall not be unreasonably withheld, conditioned or
delayed.

                  (c) Costs and Expenses from Defending an Infringement Action.
For so long as Adolor has and continues to defend such action or proceeding, the
Parties shall share equally all out-of-pocket costs and expenses incurred in
connection with any litigation or proceedings described in this Section 10.8,
including without limitation, the fees and expenses of counsel.

                                   ARTICLE 11
                                  MISCELLANEOUS

         11.1 Assignment. This Agreement may not be assigned or otherwise
transferred (in whole or in part, whether voluntarily, by operation of law or
otherwise) by either Party without the prior written consent of the other Party
(which consent shall not be unreasonably withheld); provided, however, that such
consent shall not be required if (i) the assignment is to an Affiliate, or (ii)
the assignment is in connection with the transfer or sale of all or
substantially all of the transferor's business (whether by asset sale, merger,
consolidation, or similar transaction). This Agreement shall be binding upon the
permitted successors and assigns of the Parties.

         11.2 Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

         11.3 Force Majeure. Neither Party shall be liable to the other Party
for loss or damages, or shall have any right to terminate this Agreement for any
default or delay attributable to any Force Majeure, provided that the Party
affected gives prompt notice of any such cause to the other Party. The Party
giving such notice shall thereupon be excused from such of its obligations
hereunder for so long as it is thereby disabled from performing such
obligations; provided, however, that such affected Party promptly commences and
continues to use its Commercially Reasonable Efforts to cure such disablement as
soon as practicable.

         11.4 Notices. Notices to EpiCept shall be addressed to:

                  EpiCept Corporation
                  270 Sylvan Avenue
                  Englewood Cliffs, New Jersey 07632
                  Attention:  Chief Executive Officer
                  Facsimile No.:  (201) 837-0200

                  with a copy to:

                                      -27-
<PAGE>

                  Pennie & Edmonds LLP
                  1155 Avenue of the Americas
                  New York, New York 10036
                  Attention:  Arm Gisolfi
                  Facsimile No:  (212) 869-9741

                  Notices to Adolor shall be addressed to:

                  Adolor Corporation
                  700 Pennsylvania Drive
                  Exton, Pennsylvania 19341
                  Attention:  General Counsel
                  Facsimile No.:  (484) 595-1582

                  with a copy to:

                  Morgan, Lewis & Bockius LLP
                  502 Carnegie Center
                  Princeton, New Jersey 08540
                  Attention:  Randall B. Sunberg
                  Facsimile No.:  (609) 919-6639

Either Party may change the address to which notices shall be sent by giving
notice to the other Party in the manner herein provided. Any notice required or
provided for by the terms of this Agreement shall be in writing and shall be (i)
sent by registered or certified mail, return receipt requested, postage prepaid,
(ii) sent via a reputable overnight courier service, or (iii) sent by facsimile
transmission, in each case properly addressed in accordance with the paragraphs
above. The effective date of any notice shall be the actual date of receipt by
the Party receiving the same.

         11.5 Amendment. No amendment, modification or supplement of any
provision of this Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each Party.

         11.6 Waiver. No provision of this Agreement shall be waived by any act,
omission or knowledge of a Party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by a duly
authorized officer of the waiving Party.

         11.7 Counterparts; Facsimile Signatures. This Agreement may be executed
in counterparts and such counterparts taken together shall constitute one and
the same agreement. This Agreement may be executed by facsimile signatures,
which signatures shall have the same force and effect as original signatures.

         11.8 Descriptive Headings. The descriptive headings of this Agreement
are for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

         11.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to any
choice of law provisions thereof. Each Party hereby submits itself for the
purpose of this Agreement and any controversy arising hereunder to the exclusive
jurisdiction of the state and federal courts located in the State of Delaware,
and any courts of appeal therefrom, and waives any objection on the grounds of
lack of jurisdiction (including, without

                                      -28-
<PAGE>

limitation, venue) to the exercise of such jurisdiction over it by any such
courts. Prior to bringing a legal action against the other Party, such dispute
shall be separately negotiated by the Parties hereto in good faith and all
reasonable efforts undertaken to settle amicably such matters before resorting
to further legal recourse, as follows: upon the occurrence of a dispute between
the Parties, including, without limitation, any breach of this Agreement or any
obligation relating thereto, or any dispute with respect to whether a product is
a Licensed Product, the matter shall be referred first to the officers of
EpiCept and Adolor having responsibility for the subject matter of the dispute,
or their designees. The officers, or their designees, as the case may be, shall
negotiate in good faith to resolve such dispute in a mutually satisfactory
manner for up to thirty (30) days. If such efforts do not result in mutually
satisfactory resolution of the dispute, the matter shall be referred to the
chief executive officers of EpiCept and Adolor, or their designees, the chief
executive officers, or their designees, as the case may be, shall negotiate in
good faith to resolve such dispute in a mutually satisfactory manner for up to
thirty additional (30) days, or such longer period of time to which the chief
executive officers may agree.

         11.10 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, the Parties hereto
shall substitute, by mutual consent, valid provisions for such invalid, illegal
or unenforceable provisions which valid provisions in their economic effect are
sufficiently similar to the invalid, illegal or unenforceable provisions that it
can be reasonably assumed that the Parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalid, illegal or unenforceable provisions of this Agreement
shall not affect the validity of this Agreement as a whole, unless the invalid,
illegal or unenforceable provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the Parties would not have
entered into this Agreement without the invalid, illegal or unenforceable
provisions.

         11.11 Entire Agreement of the Parties. This Agreement hereby, together
with the Schedules and Exhibits hereto and thereto, constitute and contain the
complete, final and exclusive understanding and agreement of the Parties and
cancels and supersedes any and all prior negotiations, correspondence,
understandings and agreements whether oral or written, between the Parties
respecting the subject matter hereof and thereof.

         11.12 Independent Contractors. The relationship between the Parties
created by this Agreement is one of independent contractors and neither Party
shall have the power or authority to bind or obligate the other except as
expressly set forth in this Agreement.

         11.13 Accrued Rights; Surviving Obligations. Unless explicitly provided
otherwise in this Agreement, termination, relinquishment or expiration of this
Agreement for any reason shall be without prejudice to any rights, which shall
have accrued to the benefit to any Party prior to such termination,
relinquishment or expiration, including damages arising from any breach
hereunder. Such termination, relinquishment or expiration shall not relieve any
Party from obligations which are expressly indicated to survive termination or
expiration of the Agreement, including, without limitation, those obligations
set forth in Sections 2.6, 5.7, 9.1(b), 9.5, 9.6, 9.7 and 10.1 and Articles 6,
7, 8 and 11 hereof.

         11.14 Compliance with Export Regulations. None of the Parties shall
export any technology licensed to it by the other Party under this Agreement,
except in compliance with United States export laws and regulations.

         11.15 Expenses. Unless otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party which shall have incurred the
same and the other Party shall have no liability relating thereto.

                                      -29-
<PAGE>

         11.16 No Third Party Beneficiaries. No person or entity other than the
Parties hereto and their respective Affiliates, successors and permitted assigns
shall be deemed an intended beneficiary hereunder or have any right to enforce
any obligation of this Agreement.

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

                      [SIGNATURE PAGE IMMEDIATELY FOLLOWS]

                                      -30-
<PAGE>

         IN WITNESS WHEREOF, duly authorized representatives of the Parties have
duly executed this Agreement as of the Effective Date.

                                   EPICEPT CORPORATION

                                   By: /s/  JOHN V. TALLEY
                                       ------------------------
                                   Name:  John V. Talley
                                   Title: Chief Executive Officer

                                   ADOLOR CORPORATION

                                   By: /s/ MICHAEL R. DOUGHERTY
                                       ------------------------
                                   Name:  Michael R. Dougherty
                                   Title: Senior Vice President, Chief Operating
                                          Officer and Chief Financial Officer

                       SIGNATURE PAGE TO LICENSE AGREEMENT

<PAGE>

                                  Schedule 1.20

                            EpiCept Licensed Patents

United States

         1. U.S. Patent No. 6383511 *

         2. U.S. Patent Application Serial No. 10/137685 (U.S. Publication No.
20020128285) (Allowed 6/25/03) *

         3. U.S. Patent Application Serial No. 10/045730 (U.S. Publication No.
20030082225)

Canada

         l. CA 2387888

Mexico

         1. MX 2002/004106

PCT

         1 PCT/US02/33195

Included but not recited are any foreign counterparts outside of the Territory
to the extent required to practice the rights granted to Adolor in Section
2.1(b) of this Agreement.

* The Patent Rights contained in these EpiCept Licensed Patents shall
collectively be referred to as the "Cassel Patents".

                                                                 IRSI 1965EP0103

<PAGE>

                                  Schedule 1.34

                           LidoPain(R) SP Product Data

***

                                                                 IRSI 1965EP0103

<PAGE>

                                 Schedule 3.1(a)

                           Final Audited Study Reports

Protocol EPC-2001: A Randomized, Double-Blind , Parallel-Group,
Placebo-Controlled Clinical Study to Evaluate the Effects of Topical Lidocaine
Patches in Post-Herniorrhapy Patients

Protocol 1965EP0103: A Double-Blind, Multi-Site, Placebo-Controlled Assay to
Determine the Skin Sensitization Potential of One (1) Test Product When Applied
to the Skin of 200 Health Human Subjects in a Shared Panel Assay

EPC2002-03: A Randomized, Open-Label, Crossover Study to Evaluate the
Pharmacokinetics and Safety after Application of Two Topical Lidocaine Patches
(LidoPAIN-SP versus Lidoderm) in Healthy Volunteers on Various Parts of the
Body.

                                                                 IRSI 1965EP0103

<PAGE>

                                 Schedule 3.1(b)

                              Form of Letter to FDA

             EPICEPT CORPORATION IND TRANSFER INFORMATION AND FORMS

______________, 200_

[Name, Title]
[Division]
Food and Drug Administration
[Address]

Subject:          IND [NUMBER]            GENERAL CORRESPONDENCE:
                  [PRODUCT](R)            Transfer of IND
                                          SERIAL NO.  XXX

Dear __________:

The purpose of this correspondence is to inform you that effective ___________,
200_, EpiCept Corporation hereby transfers the sponsorship and all
responsibilities of IND [number] ([name](R)) to Adolor Corporation [_________
will no longer be the agent for the IND.]

EpiCept Corporation and [agent] will provide Adolor Corporation with the
original IND and all records pertaining to it. Adolor Corporation will assume
all administrative and reporting responsibilities of the [product] (R) IND from
the date of transfer.

Future communications regarding this IND should be directed to:

[Employee]
[Title]
Adolor Corporation
700 Pennsylvania Drive
Exton, Pennsylvania  19341
Phone: __________
Fax: ___________

If you have any questions, please contact the undersigned at [telephone number].

Sincerely,

[Name]
[Title]
[Company]
[Address]

[cc: ________________, FDA Project Manager)
                                                                 IRSI 1965EP0103

<PAGE>

                                  Schedule 3.2

                        EpiCept Conduct of Current Study

***

                                                                 IRSI 1965EP0103

<PAGE>

                                Schedule 3.10(a)

                                 Cost Per Patch

***<PAGE>

                                                                    EXHIBIT 10.9

                               LICENSE AGREEMENT

      This LICENSE AGREEMENT (the "Agreement"), dated as of December 18, 2003
(the "Effective Date"), is made by and between Endo Pharmaceuticals Inc., a
Delaware corporation having its principal office at 100 Painters Drive, Chadds
Ford, Pennsylvania 19317 ("Endo"), and EpiCept Corporation, a Delaware
corporation having its principal office at 270 Sylvan Avenue, Englewood Cliffs,
New Jersey 07632 ("EpiCept"). Endo and EpiCept are each sometimes referred to
individually as a "Party" and together as the "Parties."

                                    RECITALS

      WHEREAS, EpiCept is currently developing a topical lidocaine patch product
currently known as LidoPAIN(R) BP for the treatment of acute low back pain and
owns patents covering the use of a topical lidocaine patch product for the
treatment of low back pain;

      WHEREAS, Endo is engaged in the development and marketing of proprietary
pharmaceutical products for the treatment of pain, including a topical lidocaine
patch product; and

      WHEREAS, Endo desires to obtain from EpiCept, and EpiCept desires to grant
to Endo, the exclusive rights in the Territory to the Licensed Products under
certain Patents and other Technology for the commercialization of Licensed
Products (each as defined below).

      NOW, THEREFORE, in consideration of the foregoing premises and the
representations, covenants and agreements contained herein, Endo and EpiCept,
intending to be legally bound, hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

      When used in this Agreement, whether in the singular or plural, each of
the following capitalized terms shall have the meanings set forth in this
Article 1.

      1.1 "Action or Proceeding" shall mean any action, suit, proceeding,
arbitration, Order, inquiry, hearing, assessment with respect to fines or
penalties or litigation (whether civil, criminal, administrative, investigative
or informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental or Regulatory Authority or other Person.

      1.2 "Affiliate" means a Person that, directly or indirectly, through one
or more intermediates, controls, is controlled by, or is under common control
with, the Person specified, but only for so long as the relationship exists. For
the purposes of this definition, control shall mean the direct or indirect
ownership of (i) in the case of

<PAGE>

corporate entities, securities authorized to cast at least fifty percent (50%)
of the votes in any election for directors, (ii) in the case of non-corporate
entities, at least fifty percent (50%) ownership interest with the power to
direct the management and policies of such non-corporate entity, or (iii) such
lesser percentage as may be the maximum percentage allowed to be owned by a
foreign corporation under the applicable laws or regulations of a particular
jurisdiction outside of the United States) of the equity having the power to
vote in the election of directors or to direct the management and policies of
another entity. Notwithstanding the foregoing, the term "Affiliate" shall not
include subsidiaries in which a Person or its Affiliates owns a majority of the
ordinary voting power to elect a majority of the board of directors, but is
restricted from electing such majority by contract or otherwise, until such time
as such restriction is no longer in effect.

      1.3 "Applicable Laws" shall mean all laws (including common law),
treaties, statutes, ordinances, rules, regulations, Orders, permits, directives,
plans, codes, interpretations, notice and demand letters, prohibitions,
obligations, schedules, timetables, standards, conditions and requirements of
any Governmental or Regulatory Authority, as may be in effect from time to time,
that relate to the Licensed Products or the Licensed Intellectual Property.

      1.4 "Breach Notice" has the meaning set forth in Section 9.2.

      1.5 "Breaching Party" has the meaning set forth in Section 9.2.

      1.6 "Business Day" means any day except Saturday and Sunday, on which
commercial banking institutions in New York are open for business. Any other
reference in this Agreement to "day" whether or not capitalized shall refer to a
calendar day, not a Business Day.

      1.7 "Commercially Reasonable Efforts" means, with respect to a Party, the
efforts and resources which would be used by that Party consistent with
prevailing pharmaceutical industry standards for a company of similar size and
scope to such Party with respect to a product or potential product at a similar
stage in its development or product life and of similar market potential taking
into account efficacy, safety, the anticipated Regulatory Authority approved
labeling, the competitiveness of alternative products in the market place or
under development, the patent and other proprietary position of the product, the
likelihood of Regulatory Approval, the commercial value of the product and other
relevant factors.

      1.8 "Confidential Information" means all secret, confidential or
proprietary information or data, whether provided in written, oral, graphic,
video, computer or other form, provided by one Party (the "Disclosing Party") to
the other Party (the "Receiving Party") pursuant to this Agreement or generated
pursuant to this Agreement, including but not limited to, information relating
to the Disclosing Party's existing or proposed research, development efforts,
patent applications, business or products and any other materials that have not
been made available by the Disclosing Party to the general public. The terms of
this Agreement shall also be deemed Confidential Information hereunder,

                                      -2-
<PAGE>

except to the extent disclosed pursuant to Section 7.5 herein. Notwithstanding
the foregoing sentences, Confidential Information shall not include any
information or materials that:

         (a) were already known to the Receiving Party (other than under an
obligation of confidentiality known to the Receiving Party), at the time of
disclosure by the Disclosing Party to the extent such Receiving Party has
documentary evidence to that effect;

         (b) were generally available to the public or otherwise part of the
public domain at the time of its disclosure to the Receiving Party;

         (c) became generally available to the public or otherwise part of the
public domain after its disclosure or development, as the case may be, and other
than through any act or omission of a Party in breach of such Party's
confidentiality obligations under this Agreement;

         (d) were subsequently lawfully disclosed to the Receiving Party by a
Third Party who, to the Knowledge of the Receiving Party, had no obligation to
the Disclosing Party not to disclose such information to others;

         (e) were independently discovered or developed by or on behalf of the
Receiving Party without the use of the Confidential Information belonging to the
Disclosing Party and the Receiving Party has documentary evidence to that
effect; or

         (f) is approved for release by the Disclosing Party in writing.

      1.9 "Control," "Controls," "Controller" or "Controlled" means with respect
to Technology and/or patent rights, the ownership thereof, or the possession of
the ability to grant licenses or sublicenses thereto without violating the terms
of any agreement or other arrangement with, or the rights of, any Third Party
existing as of the date on which such license or sublicense is granted.

      1.10 "Disclosing Party" has the meaning set forth in Section 1.8.

      1.11 "Endo Baseline Sales" ***

      1.12 "Endo BP Product" means a non-sterile adhesive backed topical patch,
for sale by prescription only, containing lidocaine as the only active
ingredient, indicated, and approved by the FDA, for treating chronic low back
pain (or a substantially similar indication), and which indication is covered by
a Valid Claim of the EpiCept Licensed Patents.

      1.13 "Endo Inventions" has the meaning set forth in Section 10.1(b).

                                      -3-
<PAGE>

      1.14 "EpiCept Improvements" means any and all Patent rights or Technology
Controlled by EpiCept arising after the Effective Date that claim an
improvement, enhancement, invention or modification relating to a Licensed
Product.

      1.15 "EpiCept Intellectual Property" means the EpiCept Technology, EpiCept
Trademarks, EpiCept Improvements and EpiCept Licensed Patents.

      1.16 "EpiCept Licensed Patents" means the Patent rights Controlled by
EpiCept as of the Effective Date necessary to make, have made, use, sell offer
for sale or import Licensed Products recited in Schedule 1.16 and the foreign
counterparts thereof, and any Patent rights included in the EpiCept
Improvements.

      1.17 "EpiCept Product Registration Data" means (i) all regulatory files
relating thereto, including, but not limited to, any licenses (to the extent
transferable), and minutes of meetings and telephone conferences with the FDA,
validation data, preclinical and clinical studies and tests related to the
Product including original data, case report forms, study files relating to the
aforementioned studies and tests, and all audit reports of clinical studies,
plus all investigational new drug applications and amendments, annual reports
and safety reports associated therewith, drug master files, as well as any
foreign equivalents of any of the foregoing, which are in EpiCept's or its
Affiliates' possession or control, and all correspondence with the FDA regarding
the marketing status of the Product; and (ii) all records maintained under
current Good Manufacturing Practices ("GMPs") or other record keeping or
reporting requirements of the FDA, the Environmental Protection Agency, the
Occupational Safety and Health Administration or any other United States or
foreign regulatory authorities, including, but not limited to, FDA warning
letters, FDA Notices of Adverse Finding Letters, FDA audit reports (including
any comments on such reports), all other correspondence and communications with
regulatory agencies in connection with the Product (including any advertising
and promotion documents and 2253 forms), adverse event files, complaint files,
manufacturing records; as well as any foreign equivalents of any of the
foregoing which are in EpiCept's or its Affiliates' possession or Control.

      1.18 "EpiCept Technology" means any and all Technology Controlled by
EpiCept as of the Effective Date and any Technology included in the EpiCept
Improvements.

      1.19 "EpiCept Third Party Consent(s)" has the meaning set forth in Section
6.2(c).

      1.20 "EpiCept Trademarks" means the trademarks set forth on Schedule 1.20,
including all applications, renewals, registrations and common law rights
therefor, together with all documentation associated therewith, including any
prior right agreements or consent letters pertaining thereto, and any
distinctive trade dress, logos and service marks owned by Seller and used solely
in connection with the Product, each as set forth on Schedule 1.20.

                                      -4-
<PAGE>

      1.21 "FDA" means the United States Food and Drug Administration, or any
successor agency thereof.

      1.22 "Final Regulatory Approval" means Regulatory Approval that allows for
the immediate marketing and sale of a Licensed Product.

      1.23 "First Commercial Sale" means the first sale by Endo or its
Affiliates or sublicensees of a Licensed Product to a Third Party for end use or
consumption of such Licensed Product in the Territory after a Regulatory
Authority in the Territory has granted Final Regulatory Approval of such
Licensed Product.

      1.24 "Force Majeure" means any occurrence beyond the reasonable control of
a Party that prevents or substantially interferes with the performance by the
Party of any of its obligations hereunder, if such occurs by reason of any act
of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute,
casualty or accident; or war, revolution, civil commotion, acts of public
enemies, terrorist attack, blockage or embargo; or any injunction, law, order,
proclamation, regulation, ordinance, demand or requirement of any government (to
the extent such government has ruling authority over such Party) or of any
subdivision, authority or representative of any such government; or other
similar event, beyond the reasonable control of such Party, if and only if the
Party affected shall have used reasonable efforts to avoid such occurrence.

      1.25 "GAAP" means accounting principles generally acceptable in the United
States.

      1.26 "Governmental or Regulatory Authority" means (a) the United States of
America, (b) any state, commonwealth, territory or possession of the United
States of America and any political subdivision thereof (including counties,
cities, municipalities, provinces and parishes), (c) any foreign (as to the
United States of America) sovereign entity and any political subdivision
thereof, and (d) any court, tribunal, department, board, bureau, arbitrator,
authority, quasi-governmental authority, agency, commission, official or other
instrumentality of any of the foregoing.

      1.27 "IND" means an Investigational New Drug Application, as defined in
the U.S. Federal Food, Drug, and Cosmetic Act, pursuant to 21 C.F.R. Section
312.3 as amended, and the regulations promulgated thereunder, or the equivalent
thereto as specified in any succeeding legislation, and all supplements and
amendments that may be filed with respect to the foregoing.

      1.28 "Indemnitee" has the meaning set forth in Section 8.3(a).

      1.29 "Indemnitor" has the meaning set forth in Section 8.3(a).

      1.30 "Independent Sublicensees" has the meaning set forth in Section 9.4.

      1.31 "Infringement Notice" has the meaning set forth in Section 10.7(a).

                                      -5-
<PAGE>

      1.32 "Knowledge" shall mean, with respect to any Party, that which the
management personnel (or individuals performing similar functions) of such Party
or other individuals with primary or supervisory responsibility for or daily
involvement with the business of such Party knows or should reasonably be
expected to know.

      1.33 "Licensed Products" means, collectively, the Endo BP Product and the
LidoPAIN(R) BP Product.

      1.34 "LidoPAIN(R) BP Product" means a non-sterile adhesive backed topical
patch, for sale by prescription only, containing lidocaine as the only active
ingredient and indicated, and approved by the FDA, for the treatment of acute
low back pain (or a substantially similar indication).

      1.35 "Lien or Other Encumbrance" shall mean, with respect to any asset,
any mortgage, lien, pledge, security interest, claim, charge, option, right of
first refusal or other encumbrance, restriction or limitation of any kind in
respect of such asset.

      1.36 "Losses" has the meaning set forth in Section 8.1.

      1.37 "Marketing Partner" means a Third Party with a reasonable marketing
presence in any country outside the North American Territory, as applicable,
that is competent and reputable in the industry of pharmaceutical sales and
distribution in such country.

      1.38 "Milestone Payments" has the meaning set forth in Section 4.2.

      1.39 "NDA" means a New Drug Application pursuant to 21 U.S.C. Section
505(b)(1) or Section 505(b)(2), or supplement thereto, submitted to the FDA or
any successor application or procedure required for Regulatory Approval to
commence sale of a Licensed Product.

      1.40 "NDA Acceptance" means the written notification by the FDA that the
NDA has met all the criteria for filing acceptance pursuant to 21
C.F.R. Section 314.101.

      1.41 "Net Sales" means the gross amounts invoiced by Endo, any of its
Affiliates and/or any of its sublicensees on account of sales of Licensed
Products to Third Parties (including without limitation Third Party distributors
and wholesalers), less the total of the following deductions from such gross
amounts which are actually incurred, allowed, accrued or specifically allocated:

         (a) Trade, cash and/or quantity discounts actually allowed or accrued
which are not already reflected in the amount invoiced;

         (b) Excise, sales and other consumption taxes and custom duties to the
extent included in the invoice price and to the extent such taxes are remitted
to the applicable taxing authority;

                                      -6-
<PAGE>

         (c) Freight, insurance and other transportation charges to the extent
included in the invoice price and separately identified on the invoice or other
documentation maintained in the ordinary course of business;

         (d) Amounts repaid, credited or accrued by reason of returns,
rejections, defects or recalls or because of chargebacks, retroactive price
reductions, refunds or billing errors;

         (e) ***

         (f) Payments and rebates directly related to the sale of Licensed
Products accrued, paid or deducted in a manner consistent with GAAP, pursuant to
agreements (including, but not limited to, managed care agreements) with Third
Parties or any Governmental or Regulatory Authority; and

         (g) Any other similar and customary deductions taken in accordance with
GAAP consistently applied.

No deductions shall be made for commissions paid to any Person who is regularly
employed by the seller of a Licensed Product on its payroll. Use of Licensed
Products for promotional, sampling or compassionate use purposes or for use in
clinical trials contemplated under this Agreement shall not be considered in
determining Net Sales. In the case of any sale of a Licensed Product between the
Parties and their respective Affiliates or sublicensees for resale, Net Sales
shall be calculated as above only on the first arm's length sale thereafter to a
Third Party.

      1.42 "Non-Breaching Party" has the meaning set forth in Section 9.2.

      1.43 "North American Territory" means the United States, Canada and
Mexico, and their respective territories, provinces and protectorates.

      1.44 "Order" shall mean any writ, judgment, decree, injunction, ruling or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).

      1.45 "Patents" means patents and patent applications and any and all
extensions, renewals, continuations, continuations-in-part, divisions, reissues,
re-examination certificates or foreign counterparts of any of the foregoing.

      1.46 "Person" or "person" means any individual, firm, corporation,
partnership, limited liability company, trust, unincorporated organization or
other entity or a government agency or political subdivision thereto, and shall
include any successor (by merger or otherwise) of such Person.

      1.47 "Prosecution" means the preparation, filing, prosecution, issuance
and maintenance (including, without limitation, interference, opposition and
similar third

                                      -7-
<PAGE>

party proceedings before the relevant patent office) of any patent applications
and patents in EpiCept Licensed Patents.

      1.48 "Receiving Party" has the meaning set forth in Section 1.8.

      1.49 "Regulatory Approval" means the technical, medical and scientific
licenses, registrations, authorizations and approvals (including, without
limitation, approvals of NDAs, supplements and amendments, pre- and post-
approvals, pricing and Third Party reimbursement approvals, and labeling
approvals) of any national, supra-national, regional, state or local regulatory
agency, department, bureau, commission, council or other governmental entity in
the Territory, necessary for the development (including the conduct of clinical
trials), manufacture, distribution, marketing, promotion, offer for sale, use,
import, reimbursement, export or sale of a Licensed Product in a regulatory
jurisdiction.

      1.50 "Regulatory Authority" means any national (e.g., the FDA),
supra-national, regional, state or local regulatory agency, department, bureau,
commission, council or other governmental entity involved in the granting of
Regulatory Approval in any country in the Territory.

      1.51 "Royalties" has the meaning set forth in Section 5.1.

      1.52 "Royalty Term" has the meaning set forth in Section 5.2.

      1.53 "Serious Adverse Drug Experience" means any of an "adverse drug
experience," a "life-threatening adverse drug experience," a "serious adverse
drug experience," or an "unexpected adverse drug experience," as those terms are
defined at either 21 C.F.R. Section 312.32 or 21 C.F.R. Section 314.80 or
relevant foreign regulation within the Territory.

      1.54 "Supply Agreement" means that certain supply agreement to be entered
into by the Parties in the future (but in any event within *** after the date on
which EpiCept has filed the NDA for the LidoPAIN(R) BP Product or such other
date as may be mutually agreed upon by the Parties), which agreement provides
for the supply of the LidoPAIN(R) BP Product by EpiCept to Endo on commercially
reasonable terms and conditions, as further set forth in Section 3.9.

      1.55 "Technology" means any and all information and materials, including
but not limited to, any and all compounds, equipment, specifications, designs,
formulae, methods, techniques, processes, procedures, inventions, know-how, data
and information, documentation and other technology, whether or not patentable
or protectible as a trade secret, that is necessary to use, market or sell a
Licensed Product and develop the Endo BP Product.

      1.56 "Term" has the meaning set forth in Section 9.1.

                                      -8-
<PAGE>

      1.57 "Territory" means worldwide.

      1.58 "Third Party(ies)" means any Person other than EpiCept, Endo and
their respective Affiliates.

      1.59 "Third Party Claim" has the meaning set forth in Section 8.1.

      1.60 "Valid Claim" means a claim of an issued and unexpired patent, or a
claim of a pending patent application or a supplementary protection certificate,
which claim has not been held invalid or unenforceable by a court or other
government agency of competent jurisdiction from which no appeal can be or has
been taken and has not been held or admitted to be invalid or unenforceable
through re-examination or disclaimer, opposition procedure, nullity suit or
otherwise, which claim, but for the licenses granted herein, would be infringed
by the sale of a Licensed Product; provided, however, that if a claim of a
pending patent application shall not have issued within five (5) years after the
filing date from which such claim takes priority such claim shall not constitute
a Valid Claim for the purposes of this Agreement unless and until such claim
shall issue.

      1.61 "Withholding Taxes" has the meaning set forth in Section 5.4.

                                   ARTICLE 2
                            LICENSES AND EXCLUSIVITY

      2.1 License Grant. Subject to Section 2.5 herein, EpiCept hereby grants to
Endo a royalty-bearing, exclusive (even as to EpiCept and its Affiliates) right
and license, with the right to grant sublicenses (subject to Section 2.2) under
the EpiCept Intellectual Property and EpiCept Product Registration Data to (i)
develop, market, use, sell, offer for sale and import the LidoPAIN(R) BP Product
within the Territory and (ii) develop, make, have made, manufacture, market,
use, sell, offer for sale and import the Endo BP Product in the Territory. For
the avoidance of doubt, this Agreement does not grant Endo any right to make or
have made the LidoPAIN(R) BP Product nor grant EpiCept any rights whatsoever to
any Endo product, including the Lidoderm(R) and the Endo BP Product.

      2.2 Use of Affiliates, Sublicensees and Subcontractors. The licenses
granted under Section 2.1 include the right of Endo to grant sublicenses to its
Affiliates and other third parties, provided that Endo gives EpiCept advance
written notice of any sublicenses and a reasonable opportunity to comment on the
identity of such sublicensee and that Endo takes into consideration EpiCept's
reasonable comments with respect thereto. Endo acknowledges that the grant of a
sublicense shall not relieve Endo from its obligations under this Agreement, and
each sublicensee shall be bound by all of the terms and conditions of this
Agreement applicable to Endo. Endo shall be responsible for the compliance of
its Affiliates and sublicensees with this Agreement. Endo shall provide EpiCept
with a copy of each such sublicense agreement within thirty (30) days of its
execution, provided that Endo may redact elements of same that do not relate to
Endo's obligations to EpiCept hereunder, including, but not limited to,
financial terms.

                                      -9-
<PAGE>

      2.3 Exclusivity. During the Term, neither EpiCept nor its Affiliates
shall, either itself or with a Third Party, (a) develop, attempt to develop,
actively investigate, commercialize or sell a Licensed Product or any other
prescription lidocaine-containing topical patch product for the treatment of
pain in the Territory, or (b) submit or reopen an IND for the LidoPAIN(R) BP
Product, except that EpiCept may do any of the foregoing in order to fulfill its
obligations under this Agreement. Notwithstanding (a) above, EpiCept shall have
the right to develop or commercialize, by itself or with Third Parties, any
lidocaine-containing over-the-counter products, prescription
lidocaine-containing sterile topical hydrogel patch products indicated for, but
not limited to, the treatment of surgical, incisional pain and
lidocaine-containing topical patch products for the treatment of tinnitus and
vertigo.

      2.4 No Implied Licenses. Only the licenses expressly granted herein shall
be of legal force and effect. No license rights shall be created hereunder by
implication, estoppel or otherwise. Furthermore, nothing herein shall be
construed as granting any license whatsoever to EpiCept under any Intellectual
Property owned or licensed by Endo.

      2.5 Retained Rights. Subject to the restrictions set forth in Section 2.3
above, EpiCept retains the right to use and/or license others to use the EpiCept
Intellectual Property for every purpose except for those uses specifically
licensed to Endo in Section 2.1 above.

                                   ARTICLE 3
                    DEVELOPMENT, COMMERCIALIZATION AND SUPPLY

      3.1 Development of LidoPAIN(R) BP Product. EpiCept shall be responsible,
at EpiCept's sole cost and expense, for continuing and completing the
development, including, without limitation, the conduct of all clinical trials
(and the supply of clinical product therefor) and the preparation and submission
of the NDA in order to obtain Regulatory Approval for the LidoPAIN(R) BP
Product.

      3.2 Development of Endo BP Product. Endo shall be responsible, at Endo's
sole cost and expense, for continuing and completing the development, including,
without limitation, the conduct of all clinical trials (and the supply of
clinical product therefor) and the preparation and submission of the NDA in
order to obtain Regulatory Approval for the Endo BP Product.

      3.3 Diligence.

         (a) By EpiCept. Except as specifically provided herein or as otherwise
mutually agreed upon by the Parties, EpiCept shall be responsible for conducting
all clinical studies and development activities for the LidoPAIN(R) BP Product.
EpiCept shall also be responsible for manufacturing and packaging all clinical
supply of the LidoPAIN(R) BP Product for the clinical studies and development
activities. EpiCept shall use Commercially Reasonable Efforts to develop and
obtain Regulatory

                                      -10-
<PAGE>

Approval for the LidoPAIN(R) BP Product in the Territory. EpiCept shall be
responsible for (a) the preparation of all documents submitted to Regulatory
Authorities and the filing of all submissions relating to Regulatory Approval
for the LidoPAIN(R) BP Product; and (b) all regulatory actions, communications
and meetings with any Regulatory Authority with respect to the LidoPAIN(R) BP
Product. Subject to the foregoing, the Parties shall mutually agree as to which
countries EpiCept will file for Regulatory Approvals of the LidoPAIN(R) BP
Product. In the event the Parties do not agree as to any particular country,
Endo shall make the final determination as to whether Regulatory Approval of the
LidoPAIN(R) BP Product shall be sought in such country and such determination
shall be binding on the Parties; provided that if Endo elects not to seek
Regulatory Approval in any country, the license granted to Endo with respect to
the LidoPAIN(R) BP Product in such country shall revert back to EpiCept and Endo
shall have no commercialization rights with respect to the LidoPAIN(R) BP
Product in such country (other than those rights set forth in Section 3.4); it
being understood by the Parties that in such event, Endo shall continue to have
license rights in the EpiCept Intellectual Property in such country.

         (b) By Endo. Except as specifically provided herein or as otherwise
mutually agreed upon by the Parties, Endo shall be responsible for conducting
all clinical studies, development and commercialization activities for the Endo
BP Product in the North American Territory and all commercialization activities
for the LidoPAIN(R) BP Product in the Territory. Endo shall use Commercially
Reasonable Efforts to develop and commercialize the Endo BP Product in the North
American Territory and to commercialize the LidoPAIN(R) BP Product in the
Territory. Endo shall have sole discretion in determining in which countries it
will file for Regulatory Approvals of the Endo BP Product and in which countries
it will commercialize the Endo BP Product in the Territory. Subject to Section
3.4 herein, Endo shall commercialize the LidoPAIN(R) BP Product in the United
States within six (6) months from the date on which LidoPAIN(R) BP Product
receives Final Regulatory Approval in the United States so long as EpiCept shall
have supplied Endo with quantities of the LidoPAIN(R) BP Product sufficient to
commercially launch the Product as set forth in Endo's committed forecast
delivered pursuant to the Supply Agreement. With respect to those countries
outside the United States in which EpiCept has obtained Final Regulatory
Approval of the LidoPAIN(R) BP Product. Endo shall, either through a Marketing
Partner(s) or on its own, commercialize the LidoPAIN(R) BP Product in each such
country within *** from the date on which LidoPAIN(R) BP receives Final
Regulatory Approval in the United States.

      3.4 Reversion of Rights to EpiCept. LidoPAIN(R) BP. In the event that
EpiCept has obtained Final Regulatory Approval of the LidoPAIN(R) BP Product in
a particular country and Endo fails to commercialize the LidoPAIN(R) BP Product
in such country within three (3) years from the date on which the LidoPAIN(R) BP
Product receives Final Regulatory Approval in the United States (provided that
such period shall be *** months with respect to countries in the North American
Territory and so long as EpiCept shall have supplied Endo with quantities of the
LidoPAIN(R) BP Product sufficient to commercially launch the Product as set
forth in Endo's committed forecast

                                      -11-
<PAGE>

delivered pursuant to the Supply Agreement), then the license granted to Endo by
EpiCept in Section 2.1 above shall terminate with respect to the LidoPAIN(R) BP
Product in such country(ies), and EpiCept shall have the right to commercialize
or license the commercialization rights to the LidoPAIN(R) BP Product in each
such country; provided that EpiCept shall pay Endo a *** royalty on the net
sales of the LidoPAIN(R) BP Product in such country.

      3.5 Reports.

         (a) By EpiCept. Every six (6) months following the Effective Date,
EpiCept shall provide Endo a written report summarizing the efforts and
accomplishments of EpiCept during the preceding six (6) month period in
developing the LidoPAIN(R) BP Product and the development plans for same during
the subsequent six (6) month period. Such reports shall include, without
limitation, summaries of scientific and clinical data obtained in furtherance of
EpiCept's attempts to develop the LidoPAIN(R) BP Product and a showing of
compliance with EpiCept's obligations under Section 3.3(a) above. Endo shall
have the right to provide EpiCept with comments regarding EpiCept's development
plans for the subsequent six (6) month period contained in such reports, and
EpiCept shall take such comments into consideration, provided that EpiCept shall
retain final decision-making authority with respect to any and all such
development plans.

         (b) By Endo. Every six (6) months following the Effective Date, Endo
shall provide EpiCept a written report summarizing the efforts and
accomplishments of Endo, its Affiliates and its sublicensees during the
preceding six (6) month period in developing and commercializing the Endo BP
Product and, after Regulatory Approval has been received for the LidoPAIN(R) BP
Product, in commercializing the LidoPAIN(R) BP Product and their development and
commercialization plans, as applicable, for the subsequent six (6) month period.
Such reports shall include, without limitation, summaries of scientific and
clinical data obtained in furtherance of Endo's attempts to develop and
commercialize Licensed Products as required hereunder and a showing of
compliance with Endo's obligations under Section 3.3(b) above.

      3.6 Regulatory Matters; EpiCept Assistance. All Regulatory Approvals with
respect to the Endo BP Product in the Territory shall be in Endo's or Endo's
designee's name. Endo shall have exclusive control over, and authority and
responsibility for, the regulatory strategies relating to the development and
commercialization of the Endo BP Product in the Territory, including, without
limitation: (a) the preparation of all documents submitted to Regulatory
Authorities and the filing of all submissions relating to Regulatory Approval
for the Endo BP Product; and (b) all regulatory actions, communications and
meetings with any Regulatory Authority with respect to the Endo BP Product. Upon
the request of Endo, EpiCept shall provide to Endo on a timely basis such
information in its possession relating to the LidoPAIN(R) BP Product as may be
required for regulatory activities related to the commercialization of the
LidoPAIN(R) BP Product, and otherwise provide reasonable assistance to Endo in
complying with all regulatory obligations in the Territory, including without
limitation, safety updates,

                                      -12-
<PAGE>

amendments, annual reports, pharmacovigilance filings, investigator
notifications, manufacturing facility inspections and certifications and product
approvals. Endo shall be responsible for interfacing, corresponding and meeting
with all Regulatory Authorities in the Territory with respect to the Endo BP
Product and, after Regulatory Approval has been obtained, the LidoPAIN(R) BP
Product. EpiCept shall cooperate with Endo to provide all reasonable assistance
and take all actions reasonably requested by Endo that are necessary to comply
with any law applicable to any Licensed Product, including, but not limited to,
reporting of adverse drug experience reports (and serious adverse drug
experiences) to Regulatory Authorities in the Territory.

      3.7 Adverse Event Reporting.

         (a) Each Party shall, and shall require its respective Affiliates to:

            (i) to the extent permissible under time constraints and reporting
requirements, provide to the other Party in advance of initial or periodic
submission to Regulatory Authorities any and all adverse event reports and
Serious Adverse Drug Experience reports from clinical trials and commercial
experiences with the LidoPAIN(R) BP Product;

            (ii) provide such adverse event reports and Serious Adverse Drug
Experience reports relating to the LidoPAIN(R) BP Product to the other Party
contemporaneously with the provision of such reports to the applicable
Regulatory Authority; and

            (iii) adhere to all requirements of applicable laws, rules and
regulations which relate to the reporting and investigation of adverse events
and Serious Adverse Drug Experiences and keep the other Party informed of such
events.

         (b) EpiCept shall, and shall require its respective Affiliates to:

            (i) to the extent permissible under time constraints and reporting
requirements, provide to Endo in advance of initial or periodic submission to
Regulatory Authorities any and all adverse event reports and Serious Adverse
Drug Experience reports from clinical trials and commercial experiences with the
Endo BP Product; and

            (ii) provide such adverse event reports and Serious Adverse Drug
Experience reports relating to the Endo BP Product to Endo contemporaneously
with the provision of such reports to the applicable Regulatory Authority.

         (c) If a Party contracts with a Third Party for research to be
performed by such Third Party on any of the Licensed Products, that Party shall
require such Third Party to report to the contracting Party the information set
forth above.

                                      -13-
<PAGE>

      3.8 EpiCept Right to Co-Promote. EpiCept, at its option, shall have the
right to become Endo's co-promotion partner with respect to the LidoPAIN(R) BP
Product as set forth in this Section 3.8. Within thirty (30) days after
EpiCept's first filing of an NDA or the equivalent thereof in any country in the
Territory for the LidoPAIN(R) BP Product, EpiCept shall notify Endo of such
filing in writing (the "NDA Notice"). If such NDA Notice contains reasonably
detailed terms and conditions upon which EpiCept offers to co-promote the
LidoPAIN(R) BP Product in such country, then for a period of up to ***
commencing on the date of the NDA Notice, Endo and EpiCept shall negotiate in
good faith to reach agreement for the co-promotion of the LidoPAIN(R) BP Product
in such country. Unless mutually agreed to by the Parties, no such co-promotion
arrangement shall effect any change to the financial terms of this Agreement,
and, in any such co-promotion arrangement, EpiCept shall be solely responsible
for the costs and expenses of its sales representatives.

      3.9 Commercial Supply of LidoPAIN(R) BP Product. EpiCept shall be
responsible for the manufacture and supply, or to obtain supply, for Endo's
requirements in the Territory of the LidoPAIN(R) BP Product pursuant to a Supply
Agreement to be negotiated in good faith between the Parties after the Effective
Date. The Supply Agreement shall permit EpiCept to engage Third Party
subcontractors to carry out such manufacture and supply on EpiCept's behalf. Any
such supply shall be at EpiCept' s commercially reasonable, fully loaded
manufacturing costs, as documented by EpiCept, which costs shall include
reasonable profit margins set forth in Supply Agreement.

                                   ARTICLE 4
                     INITIAL PAYMENT AND MILESTONE PAYMENTS

      4.1 Initial Payment. Within two (2) Business Days after the Effective
Date, Endo shall pay EpiCept seven million five hundred thousand U.S. Dollars
(US$7,500,000), by wire transfer, to the credit of such bank account as
designated by EpiCept in Schedule 4.1.

      4.2 Milestone Payments. Endo shall pay to EpiCept the following one-time
milestone payments (the "Milestone Payments") within *** days following the
specified events:

***

                                   ARTICLE 5
                                   ROYALTIES

      5.1 Royalty Rate. Subject to the provisions of this Article 5, Endo shall
pay EpiCept *** of the aggregate Net Sales of the LidoPAIN(R) BP Product in the
Territory ("Royalties").

      5.2 Royalty Term. The Royalties shall be payable on a country-by-country
basis until the sooner of (a) the introduction of an AB rated generic equivalent
to the

                                      -14-
<PAGE>

LidoPAIN(R) BP Product in such country or (b) the expiration of the last EpiCept
Patent containing a Valid Claim covering the LidoPAIN(R) BP Product in such
country (the "Royalty Term").

      5.3 Reports and Payments.

         (a) Cumulative Royalties. During the Royalty Term, the obligation to
pay Royalties under this Article 5 shall be imposed only once (i) with respect
to any sale of the same unit of the LidoPAIN(R) BP Product, and (ii) with
respect to a single unit of the LidoPAIN(R) BP Product.

         (b) Statements and Payment. During the Royalty Term Endo shall deliver
to EpiCept, within *** days after the end of each calendar quarter, a report
setting forth for such calendar quarter the following information for the
LidoPAIN(R) BP Product: (i) Net Sales of the LidoPAIN(R) BP Product on a
country-by-country basis; (ii) the basis for any adjustments to the Royalties
payable on account of sales of the LidoPAIN(R) BP Product in any country; (iii)
the Royalties due to EpiCept on account of sales of the LidoPAIN(R) BP Product;
(iv) the exchange rates used in calculating any of the foregoing; and (v) the
aggregate Net Sales of the Endo BP Product in the Territory. The total Royalties
due on account of sales of the LidoPAIN(R) BP Product during such calendar
quarter and any one-time bonus due EpiCept pursuant to Section 4.2(b)(3) above
shall be remitted at the time such report is made.

      5.4 Taxes and Withholding. Any payments made by Endo to EpiCept under this
Agreement shall be reduced by the amount required to be paid or withheld
pursuant to any applicable law, including, but not limited to, United States
federal, state or local tax law ("Withholding Taxes"). Any such Withholding
Taxes required by law to be paid or withheld shall be an expense of, and borne
solely by, EpiCept. Endo, as applicable, shall submit to EpiCept reasonable
proof of payment of the Withholding Taxes, together with an accounting of the
calculations of such taxes, within thirty (30) days after such Withholding Taxes
are remitted to the proper authority. The Parties will cooperate reasonably in
completing and filing documents required under the provisions of any applicable
tax laws or under any other applicable law in connection with the making of any
required tax payment or withholding payment, or in connection with any claim to
a refund of or credit for any such payment.

      5.5 Currency Exchange. With respect to Net Sales invoiced or expenses
incurred in U.S. dollars, the Net Sales or expense amounts and the amounts due
to EpiCept hereunder shall be expressed in U.S. dollars. With respect to Net
Sales invoiced or expenses incurred in a currency other than U.S. dollars, the
Net Sales or expense shall be expressed in the domestic currency of the entity
making the sale or incurring the expense, together with the U.S. dollar
equivalent, at the average rate of exchange listed in The Wall Street Journal on
the first and last day of the applicable calendar quarter or a comparable
newspaper if The Wall Street Journal shall cease publishing exchange rates for
the U.S. Dollar. All payments shall be made by wire transfer in U.S. dollars to
the

                                      -15-
<PAGE>

credit of such bank account as shall be designated at least five (5) Business
Days in advance by EpiCept in writing to Endo.

      5.6 Maintenance of Records; Audit.

         (a) For a period of two (2) years, Endo shall maintain, and shall
require its respective Affiliates and sublicensees to maintain, complete and
accurate books and records in connection with the sale of Licensed Products
hereunder, as necessary to allow the accurate calculation consistent with GAAP
of the Royalties due to EpiCept and any one-time bonus that may be due to
EpiCept pursuant to Section 4.2(b)(3) above, including any records required to
calculate any royalty adjustments hereunder. Once per calendar year, EpiCept
shall have the right, at its sole expense, to engage an independent accounting
firm reasonably acceptable to Endo, which shall have the right to examine in
confidence the relevant Endo records as may be reasonably necessary to determine
and/or verify the amount of Royalty payments and/or one-time bonuses due
hereunder. Such examination shall be conducted, and Endo shall make its records
available, during normal business hours, after at least fifteen (15) days prior
written notice to Endo, as applicable, and shall take place at the facility(ies)
where such records are maintained. Each such examination shall be limited to
pertinent books and records for any year ending not more than twelve (12) months
prior to the date of request; provided that EpiCept shall not be permitted to
audit the same period of time more than once. Before permitting such independent
accounting firm to have access to such books and records, Endo may require such
independent accounting firm and its personnel involved in such audit, to sign a
confidentiality agreement (in form and substance reasonably acceptable to Endo)
as to any confidential information which is to be provided to such accounting
firm or to which such accounting firm will have access, while conducting the
audit under this Section 5.5. The EpiCept independent accounting firm will
prepare and provide to each Party a written report stating whether the Royalty
and Net Sales reports submitted and the amounts paid by Endo to EpiCept are
correct or incorrect and the details concerning any discrepancies. Such
accounting firm may not reveal to EpiCept any information learned in the course
of such audit other than the amount of any such discrepancies. EpiCept agrees to
hold in strict confidence all information disclosed to it, except to the extent
necessary for EpiCept to enforce its rights under this Agreement or if
disclosure is required by law.

         (b) In the event there was an underpayment by Endo hereunder, Endo
shall promptly (but in no event later than thirty (30) days after Endo's receipt
of the independent auditor's report so correctly concluding) either make payment
to EpiCept of any shortfall or proceed to the dispute resolution mechanism set
forth in Section 5.5(c). In the event that there was an overpayment by Endo
hereunder, EpiCept shall promptly inform Endo of such fact and promptly (but in
no event later than thirty (30) days after EpiCept's receipt of the independent
auditor's report so correctly concluding) refund to Endo the excess amount or
proceed to the dispute resolution mechanism set forth in Section 5.5(c).

                                      -16-
<PAGE>

         (c) In the event that the Parties do not agree on the amount of any
overpayment or underpayment, within ten (10) business days each Party shall
select an independent public accounting firm which firms shall meet and discuss
the amount in dispute and other related matters within ten (10) business days
thereafter (each Party shall pay the costs of its own accounting firm). If such
independent public accounting firms cannot agree on a resolution mutually
agreeable to the Parties, such independent public accounting firms shall, within
ten (10) business days after such conclusion, appoint a third independent public
accounting firm which shall resolve the issue within ten (10) business days
after its selection and the Parties shall equally share the costs of such
accounting firm. The recommendation of the third independent public accounting
firm shall be final and binding upon the Parties. A judgment on such firm's
disposition may be entered in any court having jurisdiction over the Parties. In
addition, if in the final disposition of such matter, the amount of underpayment
by Endo is either (a) more than *** of the amount which should have been paid to
EpiCept pursuant to this Agreement with respect to the period in question as a
result of incorrect reporting or calculation by Endo or (b) due to Endo
incorrectly reporting or calculating the Net Sales of the Endo BP Product above
Endo Baseline Sales by more than ***, then, in either case, Endo shall also
reimburse EpiCept for its documented reasonable out-of-pocket costs and expenses
incurred in connection with resolving such matter through the retention of such
accounting firms (including, without limitation, fees of attorneys, accountants
and other professionals). Further, if in the final disposition of such matter,
the amount of any overpayment by Endo is more than *** of the amount which
should have been paid to EpiCept pursuant to this Agreement with respect to the
period in question as a result of incorrect reporting or calculation by Endo,
then EpiCept shall also reimburse Endo for its documented reasonable
out-of-pocket costs and expenses incurred in connection with resolving such
matter through the retention of such accounting firms (including, without
limitation, fees of attorneys, accountants and other professionals).

      5.7 Interest on Late Payments. Any failure by Endo to make a payment of
any undisputed amount when due shall obligate Endo to pay interest to EpiCept at
a rate equal to *** per month (or the maximum allowed by law, if less), the
interest period commencing on the due date and ending on the payment date.

                                   ARTICLE 6
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

      6.1 Mutual Representations and Warranties. Each Party hereby represents,
warrants and covenants to the other Party that:

         (a) such Party is a corporation or entity duly organized, validly
existing and in good standing under the laws of its state of incorporation and
has full corporate power and authority to enter into this Agreement and to carry
out the provisions hereof;

         (b) such Party is duly authorized, by all requisite corporate action,
to execute and deliver this Agreement and the execution, delivery and
performance of this

                                      -17-
<PAGE>

Agreement by such Party is within such Party's corporate powers and does not
require any shareholder action or approval, and the Person executing this
Agreement on behalf of such Party is duly authorized to do so by all requisite
corporate action;

         (c) no consent, waiver, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
Governmental or Regulatory Authority is required on the part of such Party in
connection with the valid execution, delivery and performance of this Agreement;

         (d) this Agreement is a legal and valid obligation binding upon such
Party and enforceable in accordance with its terms except as enforceability may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights and (ii) judicial discretion
in the availability of agreeable relief;

         (e) the execution, delivery and performance by it of this Agreement and
its compliance with the terms and provisions of this Agreement does not and will
not (a) contravene or conflict with the provisions of its charter, operating
documents or bylaws, (b) contravene or conflict with or constitute a violation
of any Applicable Law, or (c) result (with or without the giving of notice or
lapse of time or both) in the creation of any Lien or Other Encumbrance upon any
of the Licensed Products or, in the case of EpiCept, the EpiCept Licensed
Intellectual Property, or constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or any obligation by
it or to a loss of any benefit relating to the Licensed Products or, in the case
of EpiCept, the EpiCept Licensed Intellectual Property, under any provision of
any contract binding upon it or by which any of the Licensed Products or, in the
case of EpiCept, the EpiCept Licensed Intellectual Property, are or may be
bound;

         (f) it shall comply in all material respects with all laws, rules and
regulations applicable to its performance under this Agreement; and

         (g) no broker, finder or similar agent has been employed by or on
behalf of such Party, and no Person with which such Party has had any dealings
or communications of any kind is entitled to any brokerage commission, finder's
fee or any similar compensation, in connection with this Agreement or the
transactions contemplated hereby.

      6.2 Additional EpiCept Representations, Warranties and Covenants. EpiCept
additionally represents, warrants and covenants to Endo that:

         (a) EpiCept has the full right, power and authority to grant, and is
not prohibited by the terms of any agreement to which it is a party from
granting, the licenses granted to Endo under Article 2 hereof.

         (b) EpiCept has not previously granted and will not grant any rights
inconsistent with the rights and licenses granted herein.

                                      -18-
<PAGE>

         (c) EpiCept Third Party Consents. Schedule 6.2(c) sets forth each
agreement binding upon EpiCept requiring a consent with respect to the
execution, delivery and performance of this Agreement, or the performance of
EpiCept's obligations hereunder (each such consent, a "EpiCept Third Party
Consent" and together the "EpiCept Third Party Consents").

         (d) EpiCept is the sole and exclusive legal and equitable owner of the
EpiCept Intellectual Property and the LidoPAIN(R) BP Product and has good and
marketable title to the EpiCept Intellectual Property and the LidoPAIN(R) BP
Product free and clear of any Lien or Other Encumbrance.

         (e) Licensed Assets. The EpiCept Intellectual Property includes all of
the assets and properties that are owned or licensed by EpiCept with respect to
the development, marketing and sale of the LidoPAIN(R) BP Product and that are
reasonably required to develop, sell and ship the LidoPAIN(R) BP Product after
the Effective Date, No Affiliate of EpiCept owns or licenses any assets or
properties reasonably necessary for Endo to develop, produce or sell the
Licensed Products as contemplated herein. EpiCept possesses or controls all
material EpiCept Product Registration Data.

         (f) Intellectual Property.

            (i) The EpiCept Intellectual Property includes all the intellectual
property and proprietary rights Controlled by EpiCept that relate to the
development, marketing, use, distribution and sale of the LidoPAIN(R) BP
Product;

            (ii) No Action or Proceeding relating to the EpiCept Intellectual
Property has been instituted and is pending, or to the Knowledge of EpiCept,
threatened;

            (iii) There are no royalty, commission or similar obligations on
EpiCept applicable to the EpiCept Intellectual Property, or any material
licenses, sublicenses or agreements with third parties relating to or involving
the EpiCept Intellectual Property;

            (iv) EpiCept has not agreed to indemnify any Person for or against
any infringement by the EpiCept Intellectual Property or the LidoPAIN(R) BP
Product;

            (v) To the Knowledge of EpiCept, none of the EpiCept Intellectual
Property or the LidoPAIN(R) BP Product infringes upon or otherwise violates the
intellectual property rights of any Person;

            (vi) To the Knowledge of EpiCept, the EpiCept Intellectual Property
is valid and enforceable and has been properly registered or filed, as the case
may be, and has been properly maintained under all Applicable Laws.

                                      -19-
<PAGE>

            (vii) EpiCept owns all right, title and interest in and to all of
the EpiCept Intellectual Property and owns such EpiCept Intellectual Property
free and clear of all Liens or Other Encumbrances.

            (viii) EpiCept has not received any written notice from any Third
Party, nor does EpiCept have Knowledge that any Third Party has infringed or
misappropriated or is infringing or misappropriating any of the EpiCept
Intellectual Property.

         (g) Regulatory Status.

            (i) EpiCept is the lawful holder of the IND and all necessary
regulatory documentation relating to the LidoPAIN(R) BP Product. The regulatory
status of the LidoPAIN(R) BP Product is set forth in Schedule 6.2(g)(i).

            (ii) The IND is in full force and effect and, to the Knowledge of
EpiCept, the IND has been duly and validly issued. There is no Action or
Proceeding by any Governmental or Regulatory Authority pending or, to the
Knowledge of EpiCept, threatened seeking the revocation or suspension of any of
the IND.

         (h) EpiCept has no Knowledge of any facts which furnish any reasonable
basis for any notice of adverse findings, warning or other regulatory letters or
sanctions, Section 305 notices, or other similar communication. EpiCept has no
Knowledge of any misstatements or material omissions relating to the LidoPAIN(R)
BP Product in any regulatory submission or other document required to be
maintained by Applicable Law and the accuracy of its regulatory submissions has
not been contested by any Governmental or Regulatory Authority.

         (i) Litigation. There are no Actions or Proceedings by or before any
Governmental or Regulatory Authority currently pending, and EpiCept has not
received any written notice from any Third Party of any Action or Proceeding,
nor does EpiCept have Knowledge of any facts that would be reasonably likely to
result in an Action or Proceeding, in any event, against EpiCept relating to,
affecting or arising in connection with (a) the LidoPAIN(R) BP Product; (b) the
EpiCept Licensed Intellectual Property, (c) this Agreement; or (d) the
transactions contemplated by this Agreement. EpiCept is not subject to any Order
relating to the LidoPAIN(R) BP Product or the EpiCept Licensed Intellectual
Property.

      6.3 Additional Endo Representations, Warranties and Covenants. Endo
additionally represents, warrants and covenants to EpiCept that, as of the
Effective Date, Endo has the financial capacity to perform its obligations under
this Agreement.

      6.4 Disclaimer of Warranties. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, CONCERNING THE SUCCESS OR POTENTIAL SUCCESS OF
THE

                                      -20-
<PAGE>

DEVELOPMENT, COMMERCIALIZATION, MARKETING OR SALE OF ANY LICENSED PRODUCT.
EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

                                   ARTICLE 7
              CONFIDENTIALITY, PUBLICATION AND PUBLIC ANNOUNCEMENTS

      7.1 Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing, Endo and EpiCept agree that, until the
fifth (5th) anniversary of the expiration or termination this Agreement, each of
Endo and EpiCept, upon receiving or learning of any Confidential Information of
the other Party, shall keep such Confidential Information confidential and
otherwise shall not disclose or use such Confidential Information for any
purpose other than as provided for in this Agreement. The Receiving Party may
disclose Confidential Information to its employees, representatives or
Affiliates who need to know such information for any purpose contemplated by
this Agreement (and then only to the extent that such Persons need to know such
information and are under an obligation at least as stringent as this Article 7
to maintain the confidentiality of the Confidential Information). The Receiving
Party may disclose Confidential Information to its consultants so long as the
Disclosing Party approves of such disclosure in writing prior thereto and such
consultant is under an obligation at least as stringent as this Article 7 to
maintain the confidentiality of the Confidential Information.

      7.2 Authorized Disclosure. Notwithstanding the foregoing, each of Endo and
EpiCept may disclose Confidential Information of the other Party to a Third
Party to the extent such disclosure is reasonably necessary to exercise the
rights granted to or retained by it under this Agreement in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with applicable governmental regulations, submitting information to tax or other
governmental authorities (including Regulatory Authorities), or conducting
clinical trials hereunder with respect to Licensed Products, provided that if a
Party is required by law to make any such disclosure of the Disclosing Party's
Confidential Information, to the extent it may legally do so, it will give
reasonable advance notice to the Disclosing Party of such disclosure and, save
to the extent inappropriate in the case of patent applications or otherwise,
will use its reasonable efforts to secure confidential treatment of such
Confidential Information prior to its disclosure (whether through protective
orders or otherwise). If the Disclosing Party has not filed a patent application
with respect to such Confidential Information, it may require the Receiving
Party to delay the proposed disclosure (to the extent the disclosing party may
legally do so), for up to ninety (90) days, to allow for the filing of such an
application.

      7.3 Return of Confidential Information. Upon termination of this Agreement
except upon termination by expiration of the licenses granted hereunder, the
Receiving

                                      -21-
<PAGE>

Party shall promptly return or, at the option of the Receiving Party, destroy,
all of the Disclosing Party's Confidential Information, including all
reproductions and copies thereof in any medium, except that the Receiving Party
may retain one copy for its legal files; provided that any such destruction
shall be confirmed in writing by the Receiving Party to the Disclosing Party.

      7.4 Unauthorized Use. If either Party becomes aware or has Knowledge of
any unauthorized use or disclosure of the other Party's Confidential
Information, it shall promptly notify the disclosing Party of such unauthorized
use or disclosure.

      7.5 Public Announcements. Except as set forth in the press release agreed
to by the Parties pursuant to this Section 7.5 and for filing a copy of this
Agreement by Endo and/or EpiCept (in the event that EpiCept becomes, or files to
become, a public company), with the Securities and Exchange Commission (provided
that in any such filing, this Agreement shall be redacted as reasonably
determined by the filing Party), to the extent Endo and/or EpiCept determines to
make such a filing and for disclosure by EpiCept to its present and prospective
investors, counselors and advisors and investment banks and other Persons in
connection with its financing activities, neither Party shall make any public
announcement regarding this Agreement, any EpiCept Intellectual Property or any
Licensed Products, unless required by law, and then only after providing the
other Party at least two (2) Business Days to review, comment on and approve
such public announcement; provided, however, the Parties agree that a period of
less than two (2) Business Days for review, comment and approval is permissible
if such lesser period of time is necessitated in order to comply with law or by
an emergency situation due to unexpected circumstances. The Parties agree to
issue a press release announcing the execution of this Agreement. In addition,
following the initial agreed upon press release announcing this Agreement, each
Party shall be free to disclose, without the other Parties' prior written
consent, the existence of this Agreement, the identity of the other Party and
those terms of the Agreement which have already been publicly disclosed in
accordance herewith. This Section 7.5 supersedes and replaces in its entirety
any prior confidentiality agreements between EpiCept or its Affiliates and Endo
or its Affiliates to the extent related to the transactions contemplated by this
Agreement or the LidoPAIN(R) BP Product.

                                   ARTICLE 8
                                 INDEMNIFICATION

      8.1 Endo. Endo shall defend EpiCept and its Affiliates at Endo's cost and
expense, and will indemnify and hold EpiCept and its Affiliates and their
respective directors, officers, employees and agents (collectively, the "EpiCept
Indemnified Parties") harmless from and against any and all losses, costs,
damages, fees or expenses (including reasonable attorneys' fees and expenses)
("Losses") incurred by any EpiCept Indemnified Party to the extent arising out
of or resulting from (i) any material breach by Endo of any of its
representations, warranties or obligations pursuant to this Agreement, (ii) any
gross negligence or willful misconduct of Endo or its Affiliates or
sublicensees, as applicable, in the exercise of any of their rights and/or the
performance of any of their

                                      -22-
<PAGE>

obligations under this Agreement or any sublicense agreement, as applicable,
(iii) any liability or other claims arising from the manufacture, handling,
packaging, storage, sale or other disposition of the Endo BP Product by Endo or
any of its Affiliates or sublicensees, or (iv) any liability or other claims
arising from the marketing of the LidoPAIN(R) BP Product by Endo or any of its
Affiliates or sublicensees.

      8.2 EpiCept. EpiCept agrees to defend Endo and its Affiliates at EpiCept's
cost and expense, and will indemnify and hold Endo and its Affiliates and their
respective directors, officers, employees and agents (collectively, the "Endo
Indemnified Parties") harmless from and against any and all Losses incurred by
any Endo Indemnified Party to the extent arising out of or resulting from (i)
any material breach by EpiCept of any of its representations, warranties or
obligations pursuant to this Agreement, (ii) any gross negligence or willful
misconduct of EpiCept in the exercise of any of its rights or the performance of
any of its obligations under this Agreement, or (iii) any product liability,
clinical trial liability or other claims arising from the development,
manufacture, handling, or packaging of the LidoPAIN(R) BP Product.

      8.3 Indemnification Procedures.

         (a) Any Party seeking indemnification pursuant to this Article 8 (the
"Indemnitee") shall give the other party or parties from whom indemnification is
sought (the "Indemnitor") prompt written notice (an "Indemnification Claim
Notice") of any Loss or discovery of fact upon which such Indemnitee is seeking
indemnification under this Article 8. Failure to give any such Indemnification
Claim Notice shall not constitute a waiver of any right to indemnification or
reduce in any way the indemnification available hereunder, except to the extent
such failure to notify directly increases the amount to be indemnified
hereunder. Each Indemnification Claim Notice must contain a description of the
claim and the nature and amount of such Losses (to the extent that the nature
and amount of such Loss is known at such time). The Indemnitee shall furnish
promptly to the Indemnitor copies of all papers and official documents received
in respect of any such Loss. All indemnification claims hereunder, whether in
respect of Endo, EpiCept, their respective Affiliates or their respective
directors, officers, employees and agents, shall be made solely by Endo or
EpiCept, as applicable, as the Party to this Agreement.

         (b) In the case of Losses arising from claims of any Third Party that
are subject to indemnification provided in this Article 8 (a "Third Party
Claim"), as to which the Indemnitor may be obligated to provide indemnification
pursuant to this Agreement, the Indemnitee will notify the Indemnitor in writing
of the Third Party Claim (and specifying in reasonable detail the factual basis
for the Third Party Claim and to the extent known, the amount of the Third Party
Claim) reasonably promptly after becoming aware of such Third Party Claim;
provided, however, that failure to give such notification will not affect the
indemnification provided hereunder except to the extent the Indemnitor shall
have been actually prejudiced as a result of such failure.

                                      -23-
<PAGE>

         (c) If a Third Party Claim is made against an Indemnitee and the
Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee
therefor, the Indemnitor will be entitled, within one hundred twenty (120) days
after receipt of written notice from the Indemnitee of the commencement or
assertion of any such Third Patty Claim, to assume the defense thereof (at the
expense of the Indemnitor) with counsel selected by the Indemnitor and
reasonably satisfactory to the Indemnitee, for so long as the Indemnitor is
conducting a good faith and diligent defense. Should the Indemnitor so elect to
assume the defense of a Third Party Claim, the Indemnitor will not be liable to
the Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof provided that if under
applicable standards of professional conduct a conflict of interest exists
between the Indemnitor and the Indemnitee in respect of such claim, such
Indemnitee shall have the right to employ separate counsel to represent such
Indemnitee with respect to the matters as to which a conflict of interest exists
and in that event the reasonable fees and expenses of such separate counsel
shall be paid by such Indemnitor; provided, further, that the Indemnitor shall
only be responsible for the reasonable fees and expenses of one separate counsel
for such Indemnitee; provided still further that the Indemnitor and its counsel
shall cooperate with the Indemnitee and its counsel, as may be reasonably
requested. If the Indemnitor assumes the defense of any Third Party Claim, and
no such conflict of interest exists, the Indemnitee shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnitor. If the Indemnitor assumes
the defense of any Third Party Claim, the Indemnitor will promptly supply to the
Indemnitee copies of all correspondence and documents relating to or in
connection with such Third Party Claim and keep the Indemnitee informed of
developments relating to or in connection with such Third Party Claim, as may be
reasonably requested by the Indemnitee (including, without limitation, providing
to the Indemnitee on reasonable request updates and summaries as to the status
thereof). If the Indemnitor chooses to defend a Third Party Claim, all
Indemnitees shall reasonably cooperate with the Indemnitor in the defense
thereof (such cooperation to be at the expense, including reasonable legal fees
and expenses, of the Indemnitor). If the Indemnitor does not elect to assume
control of the defense of any Third Party Claim within the one hundred twenty
(120) day period set forth above, or if such good faith and diligent defense is
not being or ceases to be conducted by the Indemnitor, the Indemnitee shall have
the right, at the expense of the Indemnitor, after three (3) Business Days
notice to the indemnitor of its intent to do so, to undertake the defense of the
Third Party Claim for the account of the Indemnitor (with counsel selected by
the Indemnitee), and to compromise or settle such Third Party Claim, exercising
reasonable business judgment.

         (d) If the Indemnitor acknowledges in writing its obligation to
indemnify the Indemnitee for a Third Party Claim, the Indemnitee will agree to
any settlement, compromise or discharge of such Third Party Claim that the
Indemnitor may recommend that by its terms obligates the Indemnitor to pay the
full amount of Losses (whether through settlement or otherwise) in connection
with such Third Party Claim and unconditionally and irrevocably releases the
Indemnitee completely from all liability in connection with such Third Party
Claim; provided, however, that, without the

                                      -24-
<PAGE>

Indemnitee's prior written consent, the Indemnitor shall not consent to any
settlement, compromise or discharge (including the consent to entry of any
judgment), and the Indemnitee may refuse in good faith to agree to any such
settlement, compromise or discharge, that provides for injunctive or other
nonmonetary relief affecting the Indemnitee. If the Indemnitor acknowledges in
writing its obligation to indemnify the Indemnitee for a Third Party Claim, the
Indemnitee shall not (unless required by law) admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim without the
Indemnitor's prior written consent (which consent shall not be unreasonably
withheld).

      8.4 Insurance Proceeds. Any indemnification hereunder shall be made net of
any insurance proceeds recovered by the Indemnitee (it being understood that an
Indemnitee may simultaneously pursue an insurance claim and a claim for
indemnification hereunder); provided, however, that if, following the payment to
the Indemnitee of any amount under this Article 8, such Indemnitee recovers any
insurance proceeds in respect of the claim for which such indemnification
payment was made, the Indemnitee shall promptly pay an amount equal to the
amount of such proceeds (but not exceeding the amount of such indemnification
payment) to the Indemnitor.

      8.5 Insurance. Each Party agrees to obtain and maintain commercial general
liability insurance, including clinical trials and products liability insurance,
with reputable and financially secure insurance carriers, or to be self-insured,
in either case, in such amounts and subject to such deductibles as are
reasonable and customary in the pharmaceutical industry for companies of
comparable size and activities. Each Party shall maintain such insurance for so
long as Licensed Products in the Territory continue to be manufactured or sold
and thereafter for so long as is necessary to cover any and all Third Party
Claims which may arise from the development, manufacture or sale of a Licensed
Product in the Territory. Upon reasonable request by a Party, the other Party
shall produce evidence that such insurance policies are valid, kept up to date
and in full force and effect.

                                   ARTICLE 9
                              TERM AND TERMINATION

      9.1 Term.

         (a) Except as set forth in Section 11.13, unless earlier terminated by
mutual agreement of the Parties in writing or pursuant to the provisions of this
Article 9, this Agreement will continue in full force and effect until the later
of (i) the conclusion of the Royalty Term on a country-by-country basis and (ii)
the expiration of the last EpiCept Licensed Patent containing a Valid Claim
covering the Endo BP Product on a country-by-country basis (the "Term").

         (b) On a country-by-country basis, at the conclusion of the Royalty
Term, the licenses granted hereunder with respect to the LidoPAIN(R) BP Product
and the Endo BP Product, respectively, shall become fully paid up, royalty-free,
perpetual and

                                      -25-
<PAGE>

irrevocable and the exclusivity restrictions pursuant to Section 2.3 with
respect to each such country shall no longer be applicable.

      9.2 Material Breach. Upon a material breach of this Agreement by Endo on
the one hand, or EpiCept on the other hand (in such capacity, the "Breaching
Party"), the other Party (in such capacity, the "Non-Breaching Party") may
provide written notice (a "Breach Notice") to the Breaching Party specifying the
material breach. If the Breaching Party fails to cure such material breach
during the forty-five (45) day period (or, if applicable, such longer period,
but not to exceed ninety (90) days, as would be reasonably necessary for a
diligent party to cure such material breach, provided the Breaching Party has
commenced and continues its diligent efforts to cure during the initial
forty-five (45) day period following the date on which the Breach Notice is
provided), then the Non-Breaching Party may terminate this Agreement on a
Licensed Product-by-Licensed Product and country-by-country basis with respect
to the Licensed Product and country to which the breach relates. If Endo is the
Breaching Party and the material breach relates to the LidoPAIN(R) BP Product in
a particular country within the Territory and EpiCept has elected to terminate
this Agreement with respect to the LidoPAIN(R) BP Product in such country, the
exclusivity restrictions pursuant to Section 2.3 with respect to such country
shall no longer be applicable with respect to the LidoPAIN(R) BP Product.
Notwithstanding the foregoing, the cure period for any failure by Endo to make
Milestone Payments or Royalty payments due hereunder shall be forty-five (45)
days; provided further, however, that the failure by Endo to make any such
payment shall not be considered a breach to the extent that such payment is the
subject of a good faith dispute by Endo. For the purposes of this Section 9.2,
material breach shall mean a breach which materially adversely affects the
rights under this Agreement of the other Party with respect to the applicable
Licensed Product in the applicable country in the Territory.

      9.3 Bankruptcy. Either Party may, subject to the provisions set forth
herein, terminate this Agreement by giving the other Party sixty (60) days'
written termination notice if, at any time, the other Party shall: (a) file in
any court pursuant to any statute a petition for bankruptcy or insolvency, or
for reorganization in bankruptcy, or for an arrangement or for the appointment
of a receiver, trustee or administrator of such Party or of its assets; (b) be
served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof; (c) propose or be a party to any dissolution; or (d)
make an assignment for the benefit of its creditors. Should EpiCept become a
party to a bankruptcy proceeding and such proceeding is not dismissed within
sixty (60) days then, to the extent permitted by law, this Agreement and the
licenses granted by EpiCept hereunder shall be adopted by any bankruptcy trustee
or relevant Third Party charged with the disposition of same, and shall not be
rejected by same, it being the Parties' intent that, in such event, Endo and its
Affiliates and sublicensees shall be entitled to retain the rights granted to
them hereunder by EpiCept.

      9.4 Continuing Rights of Sublicensees. Upon any termination of this
Agreement, each sublicense previously granted by Endo, or any of its Affiliates,
to any

                                      -26-
<PAGE>

Person that is not an Affiliate of Endo (each, an "Independent
Sublicensee") shall, at EpiCept's option, remain in effect and shall become a
direct license or sublicense, as the case may be, of such rights by EpiCept to
such Independent Sublicensee, subject to the Independent Sublicensee agreeing in
writing to assume Endo's terms, conditions and obligations to EpiCept under this
Agreement as they pertain to the sublicensed rights.

      9.5 Effect of Expiration or Termination. Expiration or termination of this
Agreement pursuant to this Article 9 shall not (i) relieve a Party hereto of any
obligation accruing to such Party prior to such termination, or (ii) result in
the waiver of any right or remedy by a Party hereto accruing to such Party prior
to such termination.

      9.6 Limitation of Liabilities. NOTWITHSTANDING THE FOREGOING, EXCEPT AS
MAY BE THE CASE UNDER ARTICLE 8 ABOVE WITH RESPECT TO INDEMNIFICATION FOR THIRD
PARTY CLAIMS, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR PUNITIVE,
EXEMPLARY, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
WITHOUT LIMITATION LOST PROFITS, BUSINESS OR GOODWILL) ATTRIBUTABLE TO ANY
BREACH OR DEFAULT BY SUCH PARTY UNDER THIS AGREEMENT. THIS LIMITATION SHALL
SURVIVE ANY FAILURE OF THE ESSENTIAL PURPOSE OF A LIMITED OR EXCLUSIVE REMEDY
SET FORTH HEREIN.

                                   ARTICLE 10
                              INTELLECTUAL PROPERTY

      10.1 Ownership of Technology and Patent Rights.

         (a) EpiCept shall own any Technology and EpiCept Improvements claiming
such Technology, invented, developed or discovered solely by EpiCept or its
Affiliate's employees or agents.

         (b) Endo shall own any Technology, and any patent rights claiming such
Technology, invented, developed or discovered solely by Endo's or its
Affiliate's employees or agents.

      10.2 Prosecution of EpiCept Licensed Patents. EpiCept shall have the
obligation to diligently Prosecute the patent rights within the EpiCept Licensed
Patents and EpiCept Improvements in the Territory, through patent counsel
selected by EpiCept. EpiCept and Endo shall consult and cooperate with each
other regarding the Prosecution of the EpiCept Licensed Patents. Endo shall
reimburse EpiCept for *** of the Prosecution costs incurred by EpiCept after the
Effective Date within thirty (30) days of Endo's receipt of an invoice therefor.

      10.3 Right to Consult. During the Term of this Agreement, EpiCept shall
copy Endo, or have Endo copied, on all substantive documents relating to EpiCept
Licensed Patents and EpiCept Improvements received from or to be filed in any
patent office in the

                                      -27-
<PAGE>

Territory, within fifteen (15) days of receipt from the patent office and at
least fifteen (15) days prior to filing with the patent office, respectively,
including without limitation copies of each patent application, official action,
response to official action, declaration, information disclosure statement,
request for terminal disclaimer, request for patent term extension, and request
for reexamination. Endo shall have the right to comment on the Prosecution of
the EpiCept Licensed Patents and EpiCept Improvements and provide such comments
to EpiCept's patent counsel, and EpiCept shall require its patent counsel to
consider in good faith such comments from Endo, and, to the extent not
inconsistent with EpiCept's rights and/or commercial interests, EpiCept shall
require its patent counsel to incorporate all such comments. In the event that
Endo's comments are inconsistent with EpiCept's rights and/or commercial
interests, EpiCept and Endo agree to negotiate in good faith a Prosecution
strategy with respect to the relevant EpiCept Licensed Patents and/or EpiCept
Improvements that would adequately cover Endo's interests, without adversely
affecting EpiCept's rights and/or commercial interests. If Endo fails to provide
its comments with respect to the Prosecution of a patent application and/or
Patent within the EpiCept Licensed Patents and/or EpiCept Improvements at least
five (5) days prior to the deadline for filing or otherwise responding to the
relevant paper in the relevant patent office, EpiCept shall be free to act
without consideration of Endo's comments.

      10.4 Abandonment of Prosecution by EpiCept. EpiCept shall notify Endo in
the event it is unable for any reason to meet its obligations under Section
10.2. Such notification shall be given within a reasonable period (i.e., with
sufficient time for Endo to take whatever action may be necessary or desired)
prior to the date on which such patent application(s) or patent(s) will lapse or
go abandoned. Endo shall then have the option, exercisable upon written
notification to EpiCept, to assume full responsibility, at its discretion and
its sole cost and expense, for Prosecution of the affected patent application(s)
or maintenance of any of the affected Patent(s) in such country or countries in
the Territory; provided, however, Endo may offset any such costs and expenses
against any Milestone Payments or Royalties due to EpiCept.

      10.5 Patent Term Extensions. Endo shall have the right to request that
EpiCept file all applications and take actions necessary to obtain patent
extension pursuant to 35 U.S.C. Section 156 or like foreign statutes for the
EpiCept Licensed Patents in the Territory, which extensions shall be owned by
EpiCept. If EpiCept declines to pursue such patent extensions, then Endo shall
have the right (at Endo's cost and expense) on behalf of EpiCept to file all
such applications and take all such actions necessary to obtain such patent
extensions. EpiCept agrees to sign such further document and take such further
actions (all at Endo's expense) as may be requested by Endo in this regard.

      10.6 Patent Marking. Endo and its Affiliates and its sublicensees shall
mark all Licensed Products made or sold under this Agreement with a notice in
accordance with 35 U.S.C. Section 287 and similar marking provisions in foreign
countries. The Parties agree that listing of the patent numbers in the package
inserts or foreign equivalent shall be considered sufficient marking of Licensed
Products as required by this Section 10.6.

                                      -28-
<PAGE>

      10.7 Third Party Infringements.

         (a) Suits for Infringement of the EpiCept Licensed Patents and EpiCept
Improvements. If EpiCept or Endo becomes aware of infringement of any Patent
included in the EpiCept Licensed Patents or EpiCept Improvements by a Third
Party in the Territory, such Party shall promptly notify the other Party in
writing to that effect and provide a summary of the relevant facts and
circumstances known to such Party relating to such infringement ("Infringement
Notice"). EpiCept shall have the right, at its sole discretion, on its own
behalf, to institute, prosecute and control any action or proceeding to restrain
infringement of any EpiCept Licensed Patents or EpiCept Improvements licensed to
Endo hereunder. Endo agrees to be joined as a Party plaintiff if necessary to
prosecute the action or proceeding and shall provide all reasonable cooperation,
including any necessary use of its name, required to prosecute such litigation.
EpiCept shall have sole control of any such suit and all negotiations for its
settlement or compromise, provided that, EpiCept shall not settle or compromise
any such suit or enter into any consent order for the settlement or compromise
thereof without the prior written consent of Endo, which consent shall not be
unreasonably withheld, conditioned or delayed.

         (b) Step-in Right for Endo. If, prior to the expiration of three (3)
months from said Infringement Notice, EpiCept has not obtained a discontinuance
of an alleged infringement by a Third Party or brought an infringement action or
proceeding or otherwise taken appropriate action to abate such infringement, or,
in the event that a Third Party files a paragraph IV certification relating to
any Patent pursuant to 21 U.S.C. Section 355(j)(2)(A)(vii)(IV) of the
Hatch/Waxman Act (or any successor statute), if EpiCept does not institute an
infringement proceeding against such Third Party within 20 days of receipt of
notice of such paragraph IV certification, or if EpiCept shall notify Endo at
any time prior thereto of its intention not to bring suit against an alleged
infringer or EpiCept at any time ceases to actively prosecute any such ongoing
infringement, and such infringement is relevant to a Licensed Product in the
Territory, then, and in those events only, Endo shall have the right, but not be
obligated, to institute, prosecute and control any action or proceeding to
restrain such infringement. EpiCept agrees to be joined as a Party plaintiff if
necessary to prosecute the action or proceeding and shall provide all reasonable
cooperation, including any necessary use of its name, required to prosecute such
litigation. Endo shall have sole control of any such suit and all negotiations
for its settlement or compromise, provided that Endo shall not settle or
compromise any such suit or enter into any consent order for the settlement or
compromise thereof without the prior written consent of EpiCept, which consent
shall not be unreasonably withheld, conditioned or delayed.

         (c) Costs and Recoveries from Infringement Action. Each Party shall
assume and pay all of its own out-of-pocket costs incurred in connection with
any litigation or proceedings described in this Section 10.7 including, without
limitation, the fees and expenses of that Party's counsel. Any recovery obtained
by any Party as a result of any proceeding described in this Section 10.7, by
settlement or otherwise, shall be applied in the following order of priority:
(i) first, to reimburse each Party for all

                                      -29-
<PAGE>

litigation costs in connection with such proceeding paid by that Party and not
otherwise recovered (on a pro rata basis based on each Party's respective
litigation costs, to the extent the recovery was less than all such litigation
costs); and (ii) second, the remainder of the recovery shall be shared equally.

         (d) Declaratory Actions & Counterclaims Against Endo or EpiCept. In the
event that an action alleging invalidity or non-infringement of any of the
EpiCept Licensed Patents or EpiCept Improvements shall be brought against
EpiCept or Endo, EpiCept, at its sole discretion, shall have the right, within
thirty (30) days after the commencement of such action, to take or regain
control of the action at its own expense. If EpiCept shall determine not to
exercise this right, Endo may take over or remain as lead counsel for the action
at Endo's sole discretion. Any recovery obtained from such litigation,
proceeding or settlement shall be shared in accordance with Section 10.7(c). Any
amounts owed in such litigation, proceeding or settlement shall be paid by
EpiCept.

      10.8 Infringement of Third Party Rights.

         (a) Infringement Claims. With respect to any and all claims instituted
by Third Parties for patent infringement involving the manufacture, use, offer
for sale or sale of a Licensed Product covered by the EpiCept Licensed Patents
or EpiCept Improvements in the Territory during the Term, except for any such
claims for which EpiCept is obligated to indemnify Endo under Section 8.2, Endo
shall promptly notify EpiCept of such claim, and Endo shall have the right, at
its sole discretion, to defend and control any action or proceeding with respect
to such claim. EpiCept agrees to be joined as a party if necessary to defend the
action or proceeding and shall provide all reasonable cooperation, including any
necessary use of its name, required to defend such litigation. Endo shall have
sole control of any such suit and all negotiations for its settlement or
compromise, provided that, Endo shall not settle or compromise any such suit or
enter into any consent order for the settlement or compromise thereof without
the prior written consent of EpiCept, which consent shall not be unreasonably
withheld, conditioned or delayed.

         (b) Step-in Right for EpiCept. If, prior to the expiration of three (3)
months from said claim being brought, or such sooner period as may be necessary
to appropriately respond to said claim, Endo has not elected to defend such
action or proceeding, or, in the event that a Third Party files a paragraph IV
certification relating to any Patent pursuant to 21 U.S.C. Section
355(j)(2)(A)(vii)(lV) of the Hatch/Waxman Act (or any successor statute), if
EpiCept does not institute an infringement proceeding against such Third Party
within 20 days of receipt of notice of such paragraph IV certification, or if
Endo shall notify EpiCept at any time prior thereto of its intention not to
defend such action or proceeding, then, and in those events only, EpiCept shall
have the right, but not be obligated, to defend and control any action or
proceeding. Endo agrees to be joined as a party if necessary to defend the
action or proceeding and shall provide all reasonable cooperation, including any
necessary use of its name, required to defend such litigation. EpiCept shall
have sole control of any such suit and all negotiations for its settlement or
compromise, provided that EpiCept shall not settle or

                                      -30-
<PAGE>

compromise any such suit or enter into any consent order for the settlement or
compromise thereof without the prior written consent of Endo, which consent
shall not be unreasonably withheld, conditioned or delayed.

                                   ARTICLE 11
                                  MISCELLANEOUS

      11.1 Assignment. This Agreement may not be assigned or otherwise
transferred (in whole or in part, whether voluntarily, by operation of law or
otherwise) by either Party without the prior written consent of the other Party
(which consent shall not be unreasonably withheld); provided, however, that such
consent shall not be required if (i) the assignment is to an Affiliate, or (ii)
the assignment is in connection with the transfer or sale of all or
substantially all of the transferor's business (whether by asset sale, merger,
consolidation, or similar transaction). This Agreement shall be binding upon the
permitted successors and assigns of the Parties.

      11.2 Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

      11.3 Force Majeure. Neither Party shall be liable to the other Party for
loss or damages, or shall have any right to terminate this Agreement for any
default or delay directly attributable to any Force Majeure, provided that the
Party affected gives prompt notice of any such cause to the other Party. The
Party giving such notice shall thereupon be excused from such of its obligations
hereunder for so long as it is thereby disabled from performing such
obligations; provided, however, that such affected Party promptly commences and
continues to use its Commercially Reasonable Efforts to cure such disablement as
soon as practicable.

      11.4 Notices. Notices to EpiCept shall be addressed to:

           EpiCept Corporation
           270 Sylvan Avenue
           Englewood Cliffs, New Jersey  07632
           Attention: Chief Executive Officer
           Facsimile No.: (201) 837-0200

           with a copy to:

           Pennie & Edmonds LLP
           1155 Avenue of the Americas
           New York, New York 10036
           Attention: Ann Gisolfi
           Facsimile No: (212) 869-9741

                                      -31-
<PAGE>

            Notices to Endo shall be addressed to:

            Endo Pharmaceuticals Inc.
            100 Painters Drive
            Chadds Ford, Pennsylvania 19317
            Attention: Chief Executive Officer
            Facsimile No.: (610) 558-9682

            with a copy to:

            Endo Pharmaceuticals Inc.
            100 Painters Drive
            Chadds Ford, Pennsylvania 19317
            Attention: General Counsel
            Facsimile No: (610) 558-9684

Either Party may change the address to which notices shall be sent by giving
notice to the other Party in the manner herein provided. Any notice required or
provided for by the terms of this Agreement shall be in writing and shall be (i)
sent by registered or certified mail, return receipt requested, postage prepaid,
(ii) sent via a reputable overnight courier service, or (iii) sent by facsimile
transmission, in each case properly addressed in accordance with the paragraphs
above. The effective date of any notice shall be as of the date received, in the
case of personal delivery, (b) on the next business day following transmission
thereof by facsimile or deposit thereof with a nationally recognized overnight
courier service, or (c) on the fifth business day following the mailing thereof
by registered or certified mail.

      11.5 Amendment. No amendment, modification or supplement of any provision
of this Agreement shall be valid or effective unless made in writing and signed
by a duly authorized officer of each Party.

      11.6 Waiver. No provision of this Agreement shall be waived by any act,
omission or Knowledge of a Party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by a duly
authorized officer of the waiving Party.

      11.7 Counterparts; Facsimile Signatures. This Agreement may be executed in
two (2) counterparts and such counterparts taken together shall constitute one
(1) and the same agreement. This Agreement may be executed by facsimile
signatures, which signatures shall have the same force and effect as original
signatures.

      11.8 Descriptive Headings. The descriptive headings of this Agreement are
for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

                                      -32-
<PAGE>

      11.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of law provisions thereof. Each Party hereby submits itself for the
purpose of this Agreement and any controversy arising hereunder to the exclusive
jurisdiction of the state and federal courts located in the State of New York,
and any courts of appeal therefrom, and waives any objection on the grounds of
lack of jurisdiction (including, without limitation, venue) to the exercise of
such jurisdiction over it by any such courts. Prior to bringing a legal action
against the other Party, such dispute shall be separately negotiated by the
Parties hereto in good faith and all reasonable efforts undertaken to settle
amicably such matters before resorting to further legal recourse, as follows:
upon the occurrence of a dispute between the Parties, including, without
limitation, any breach of this Agreement or any obligation relating thereto, or
any dispute with respect to whether a product is a Licensed Product, the matter
shall be referred first to the officers of EpiCept and Endo having
responsibility for the subject matter of the dispute, or their designees. The
officers, or their designees, as the case may be, shall negotiate in good faith
to resolve such dispute in a mutually satisfactory manner for up to thirty (30)
days. If such efforts do not result in mutually satisfactory resolution of the
dispute, the matter shall be referred to the chief executive officers of EpiCept
and Endo, or their designees. The chief executive officers, or their designees,
as the case may be, shall negotiate in good faith to resolve such dispute in a
mutually satisfactory manner for up to thirty additional (30) days, or such
longer period of time to which the chief executive officers may agree.

      11.10 Nature of Licenses. All rights and licenses granted pursuant to this
Agreement are, and shall otherwise be deemed to be, for purposes of 11 U.S.C.
365(n) of the Bankruptcy Laws, licenses of rights to "intellectual property" as
defined under 11 U.S.C. 101(35A) of the Bankruptcy Laws. The Parties agree that
Endo, as a licensee of such rights under this Agreement, shall retain and may
fully exercise all of its rights, including any right to enforce any exclusivity
provision of this Agreement, remedies, and elections under the Bankruptcy Laws.
To the fullest extent permitted by law, the Parties further agree that, in the
event of the commencement of a bankruptcy proceeding by or against EpiCept under
the Bankruptcy Laws, Endo shall be entitled to all applicable rights under 11
U.S.C. 365(n) of the Bankruptcy Laws, including copies and access to, as
appropriate, any such intellectual property and all embodiments of such
intellectual property upon written request therefor by Endo, and such, if not
already in its possession, shall be promptly delivered to Endo.

      11.11 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, the Parties hereto
shall substitute, by mutual consent, valid provisions for such invalid, illegal
or unenforceable provisions which valid provisions in their economic effect are
sufficiently similar to the invalid, illegal or unenforceable provisions that it
can be reasonably assumed that the Parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalid, illegal or unenforceable provisions of this Agreement
shall not affect the validity of this Agreement as a whole, unless the invalid,
illegal or unenforceable provisions are of such essential importance to this
Agreement

                                      -33-
<PAGE>

that it is to be reasonably assumed that the Parties would not have entered into
this Agreement without the invalid, illegal or unenforceable provisions.

      11.12 Entire Agreement of the Parties. This Agreement, together with the
exhibits and Schedules hereto, constitute and contain the complete, final and
exclusive understanding and agreement of the Parties and cancels and supersedes
any and all prior negotiations, correspondence, understandings and agreements
whether oral or written, between the Parties respecting the subject matter
hereof and thereof.

      11.13 Independent Contractors. The relationship between the Parties
created by this Agreement is one of independent contractors and neither Party
shall have the power or authority to bind or obligate the other except as
expressly set forth in this Agreement.

      11.14 Accrued Rights; Surviving Obligations. Unless explicitly provided
otherwise in this Agreement, termination, relinquishment or expiration of this
Agreement for any reason shall be without prejudice to any rights, which shall
have accrued to the benefit to any Party prior to such termination,
relinquishment or expiration, including damages arising from any breach
hereunder. Such termination, relinquishment or expiration shall not relieve any
Party from obligations which are expressly indicated to survive termination or
expiration of the Agreement, including, without limitation, those obligations
set forth in Sections 3.7 (relating to adverse event reporting), 5.6 (relating
to maintenance of records; audit), 7.1 (relating to confidentiality), 7.3
(relating to confidentiality), 9.5 (relating to effect of expiration or
termination), 10.1 (relating to ownership of technology and patent rights), 11.4
(relating to notices), 11.9 (relating to governing law), 11.10 (relating to
nature of licenses), 11.16 (relating to expenses) and 11.17 (relating to third
party beneficiaries) and Articles 6 (relating to representations and warranties)
and 8 (relating to indemnification) hereof.

      11.15 Compliance with Export Regulations. None of the Parties shall export
any technology licensed to it by the other Party under this Agreement, except in
compliance with United States export laws and regulations.

      11.16 Expenses. Unless otherwise provided herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party which shall have incurred the same and the
other Party shall have no liability relating thereto.

      11.17 No Third Party Beneficiaries. No person or entity other than the
Parties hereto and their respective Affiliates, successors and permitted assigns
shall be deemed an intended beneficiary hereunder or have any right to enforce
any obligation of this Agreement.

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

                      [SIGNATURE PAGE IMMEDIATELY FOLLOWS]

                                      -34-
<PAGE>

      IN WITNESS WHEREOF, duly authorized representatives of the Parties have
duly executed this Agreement as of the Effective Date.

                                          EPICEPT CORPORATION

                                          By: /s/ JOHN V. TALLEY
                                             ---------------------------------
                                              Name: John V. Talley
                                              Title: Chief Executive Officer

                                          ENDO PHARMACEUTICALS INC.

                                          By: /s/ CAROL A. AMMON
                                             ---------------------------------
                                              Name: Carol A. Ammon
                                              Title: Chairman and CEO

                       SIGNATURE PAGE TO LICENSE AGREEMENT

<PAGE>

                                  Schedule 1.16

                            EpiCept Licensed Patents

<TABLE>
<CAPTION>
                                Application No./                                            Inventor(s)/
Patent Title                       Patent No.             Country          Filing Date       Assignee
----------------------------    ----------------       --------------      -----------    ---------------
<S>                             <C>                    <C>                 <C>            <C>
Method and Composition for      US 5,776,952           US                                 Liedtke/
Topical Therapy of Back Pain                                                              EpiCept
and Muscle Tension              EP 96 111 436.0        Europe:
                                EP 0 758 548 B1        Germany
                                                       France
                                                       Italy
                                                       Netherlands
                                                       Spain
                                                       Sweden
                                                       United Kingdom

Intradermal-Penetration Agents                         US                    9/24/02      Fischer et al/
for Topical Local Anesthetic    09/523,652             US                    3/10/00      EpiCept
Administration                  6,455,066              US                    3/6/01
                                PCT/US01/07060         PCT
                                                                             3/9/01
                                P 01 01 01125          Argentina             3/6/01
                                                       Brazil                3/9/01
                                No. 536-2001           Chile                 3/6/01
                                No. 01809238.1         China                 3/6/01
                                PV 2002-3030           Czech Rep.            3/6/01
                                No. 01918363.1         European
                                                       Hungary
                                                       India
                                                       Israel                3/6/01
                                No. 13-566701          Japan                 3/6/01
                                No. 2002-7011879       Korea                 3/6/01

                                No. 2002/008828        Mexico
                                                       New Zealand           3/6/01
                                No. 20024309           Norway                3/8/01
                                No. 1-2001-00573       Philippines
                                                       Poland
                                                       Russia
                                                       Singapore
                                                       Slovak                3/9/01
                                No. 090105562          Taiwan                3/7/01
                                No. 064112             Thailand
                                No. 2001-000505        Venezuela

Intradermal Penetration         No. 10/201,901         US                    7/25/02      Fischer, Huber,
Agents for Topical Local        (Continuation of                                          Mason/ EpiCept
Anesthetic Administration       09/523,652)
</TABLE>

<PAGE>

                                  Schedule 1.20

                               EpiCept Trademarks

1.    LidoPAIN(R)

2.    EpiCept(TM)

<PAGE>

                                  Schedule 4.1

                        EpiCept Wire Transfer Instruction

***

<PAGE>

                                 Schedule 6.2(f)

                          EpiCept Third Party Consents

      There are no Third Party Consents required.

<PAGE>

                               Schedule 6.2(g)(i)

                   Regulatory Status of LidoPAIN(R) BP Product

1.    US IND #60,957

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