Document:

<PAGE>

DATED                                                                      2000
-------------------------------------------------------------------------------

CONFIDENTIAL TREATMENT REQUESTED                                  EXHIBIT 10.74

CONFIDENTIAL TREATMENT REQUESTED: PAGES WHERE CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "CONFIDENTIAL TREATMENT REQUESTED" AND APPROPRIATE
SECTIONS, WHERE TEXT HAS BEEN OMITTED, ARE NOTED WITH "[CONFIDENTIAL TREATMENT
REQUESTED]." AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

                            (1) EVOTEC BIOSYSTEMS AG

                                     - AND -

                       (2) TREGA BIOSCIENCES, INCORPORATED

              ----------------------------------------------------
                  AGREEMENT FOR THE JOINT DEVELOPMENT OF ASSAYS
                AND THE CROSS LICENSING OF AFFILIATED TECHNOLOGY
              ----------------------------------------------------

<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

THIS AGREEMENT IS MADE THE _____ DAY OF JANUARY 2000

BETWEEN:

(1)  EVOTEC BIOSYSTEMS AG, a German corporation having a place of business at
     Schnackenburgallee 114, 22525 Hamburg Germany ("Evotec"); and

(2)  TREGA BIOSCIENCES, INCORPORATED, a Delaware corporation, having a place of
     business at 9880 Campus Point Drive, San Diego, California 92121 ("Trega").

BACKGROUND:

(A)  Evotec and Trega have independently developed expertise in the field of
     ADME. Evotec has expertise in ADME related hardware and assay detection
     technology. Trega has expertise in ADME testing, choice and generation of
     cell lines, data interpretation and simulations.

(B)  Evotec and Trega wish to combine their expertise and resources to create
     new assays, which will be exploited by both parties, either jointly or
     independently, in accordance with this Agreement.

(C)  Evotec shall commercially exploit the jointly developed new assays in
     combination with Evotec's own technology and pay Trega royalties in respect
     of such commercial exploitation.

(D)  Trega shall use the Assays to expand the predictive capabilities of Trega's
     IDEA-TM- simulation software and shall grant Evotec a time-limited
     world-wide, fully paid-up, royalty free, non-exclusive, non-transferable
     license of such software for the purposes of internal drug development
     only.

THE PARTIES AGREE AS FOLLOWS:

1.   DEFINITIONS

In this Agreement the following words shall have the following meanings:-

1.1      ADME                           absorption, distribution, metabolism,
                                        excretion;

1.2      ADME Hardware                  Evotec's ADME hardware known as
                                        "[CONFIDENTIAL TREATMENT REQUESTED]"
                                        further described in Schedule 1;

1.3      Appointee                      shall be a person appointed by either
                                        party to the Joint Steering Committee
                                        pursuant to Clause 2.3;

1.4      Assay                          an assay which falls within the
                                        definition of Jointly Developed
                                        Technology at Clause 3.4 or an assay
                                        created, invented or discovered
                                        by Trega using the ADME Hardware or
                                        [CONFIDENTIAL TREATMENT REQUESTED]
                                        Technology, as referred to at
                                        Clause 4.2.2;

1.5      Assay Screening                the screening by Evotec of any compound
                                        using an Assay;

1.6      Affiliate                      an Affiliate of a company shall be any
                                        legal entity which:

                                    - 1 -
<PAGE>

                                        (a)  is directly or indirectly owned
                                             and/or controlled by that company;

                                        (b)  directly or indirectly owns and/or
                                             controls 50% or more of that
                                             company; or

                                        (c)  is directly or indirectly owned or
                                             controlled by the legal entity
                                             referred to in (b) above.

                                        In the case of legal entities
                                        having stocks and/or shares,
                                        ownership or control shall exist
                                        through the direct or indirect
                                        ownership and/or control of more
                                        than fifty percent of the voting
                                        shares. In the case of any other
                                        legal entity, ownership and/or
                                        control shall exist through the
                                        ability to directly or indirectly
                                        control the management and/or business
                                        of the legal entity;

1.7      Business Day                   all days other than Saturdays, Sundays
                                        and public holidays in either the United
                                        States or Germany;

1.8      Client                         any third party other than an Internal
                                        Drug Development Partner;

1.9      Commencement Date              the date of signature of this Agreement;

1.10     Commercialisation              in respect of any Assay the earlier of
                                        the date on which Evotec first uses it
                                        in Assay Screening for any Client,
                                        licenses it to any Client or sells it to
                                        any Client;

1.11     Confidential Information       shall have the meaning given to it in
                                        Clause 12;

1.12     Evotec Background Technology   all technology covered by Patents or
                                        Patent Applications or comprising
                                        Know-how and in each case owned by
                                        Evotec;

1.13     First Commercialisation Date   the date of Commercialisation of first
                                        Assay to be Commercialised;

1.14     IDEA Software                  the software, including improvements and
                                        updates thereto, owned by Trega known as
                                        IDEA-TM- a description of which is set
                                        out in Schedule 2;

1.15     Intellectual Property          Patents, Know-how, copyrights, design
                                        rights, semi-conductor topography
                                        rights, moral rights, database rights,
                                        trade marks, service marks, applications
                                        for any of the foregoing, the right to
                                        apply for any of the foregoing, rights
                                        in trade names, business names, brand
                                        names, get-up, logos and all other forms
                                        of intellectual property right having
                                        equivalent or similar effect to any of
                                        the foregoing which may exist anywhere
                                        in the world;

1.16     Internal Drug                  in respect of either party, drug
                                        development carried out solely by that
                                        party or carried out by that

                                    - 2 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

         Development                    party in conjunction with an Internal
                                        Drug Development Partner;

1.17     Internal Drug                  in respect of either party, a third
         Development Partner            party with whom that party has agreed
                                        to work exclusively in conducting
                                        research in a particular field;

1.18     Joint Steering Committee       the joint steering committee to be
                                        constituted by the parties pursuant to
                                        Clause 2;

1.19     Jointly Developed Technology   shall have the meaning given to it in
                                        Clause 3.4;

1.20     Know-how                       know-how, show-how, trade secrets,
                                        confidential information and data
                                        exclusivity rights, in each case insofar
                                        as the same is documented;

1.21     Library Sales Agreement        the organic chemical compound library
                                        sales agreement entered into by the
                                        parties on December 8, 1999;

1.22     Patents                        patents, any extensions of the
                                        exclusivity granted in connection with
                                        patents (including extensions granted
                                        under the US Drug Price Competition and
                                        Patent Term Restoration Act 1984 and the
                                        EC Supplementary Protection Certificate
                                        Regulation), petty patents, utility
                                        models, registered designs, applications
                                        for any of the foregoing and the right
                                        to apply for any of the foregoing;

1.23     Project                        a project for the joint development of
                                        Assays agreed upon by the Joint Steering
                                        Committee pursuant to Clause 2;

1.24     Quarter                        the quarterly periods ending 31st March,
                                        30th June, 30th September and
                                        31st December;

1.25     [CONFIDENTIAL                  Evotec's [CONFIDENTIAL TREATMENT
         TREATMENT                      REQUESTED] technology known as
         REQUESTED] Technology          "[CONFIDENTIAL TREATMENT REQUESTED]"
                                        further described in Schedule 1;

1.26     Solely Developed Technology    shall have the meaning given to it in
                                        Clause 3.3;

1.27     Trega Material                 a subset library compound purchased by
                                        Evotec from Trega pursuant to the
                                        Library Sales Agreement;

1.28     Trega Background Technology    all technology covered by Patents or
         owned by Trega;                comprising Know-how in each case and

1.29     Trega Competitor               such entities as can be reasonably
                                        considered to compete with Trega in
                                        the combinatorial chemistry library
                                        business. Trega's Competitors at the
                                        Commencement Date include, but are not
                                        limited to, those listed in Schedule 4.

                                    - 3 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

2.      DEVELOPMENT PROJECTS AND JOINT STEERING COMMITTEE

2.1     The parties shall form a Joint Steering Committee which shall have
        responsibility for developing and approving Projects for the joint
        development of Assays and authority to determine all matters in
        connection therewith. The area of the Joint Steering Committee's
        responsibility and authority shall include, in respect of each Project:

        2.1.1   scientific objectives;

        2.1.2   the respective obligations of the parties including the
                resources and the Background Technology to be made available by
                each party and the costs to be borne by each party; and

        2.1.3   any milestones to be achieved on which the payment of sums or
                performance of other obligations is dependent;

        but in the event of any conflict between the plan for any Project and
        the terms of this Agreement, this Agreement shall prevail unless the
        parties expressly agree in writing that an amendment of this Agreement
        is intended.

        2.2     Each party shall use its reasonable endeavours to ensure that,
                within [CONFIDENTIAL TREATMENT REQUESTED] of the Commencement
                Date, its Appointees to the Joint Steering Committee agree on at
                least one Project with the other party's Appointees.

        2.3     At any time each party shall be entitled to appoint up to three
                Appointees to the Joint Steering Committee. Each party's
                Appointees at the Commencement Date are set out in Schedule 3.
                Either party may change its Appointee or appoint further
                Appointees (up to the maximum of 3) by notice to the other
                party, such notice to be given not less than 10 Business Days
                prior to any meeting of the Joint Steering Committee. Unless
                otherwise agreed, a party's Appointees must be employees of that
                party. Evotec and Trega shall each have the right, but not the
                obligation, to appoint the chairman of the Joint Steering
                Committee from their Appointees for alternate years, with Evotec
                having the right to appoint the chairman for the year commencing
                on the Commencement Date.

        2.4     Each party shall procure that its Appointees attend a meeting of
                the Joint Steering Committee within 60 days of the Commencement
                Date and thereafter attend such meetings at intervals agreed by
                the parties but in any case no less frequently than every
                Quarter, unless otherwise agreed.

        2.5     The location for meetings of the Joint Steering Committee shall
                alternate between the offices of the two parties, unless
                otherwise agreed. Each party shall bear its own costs of
                attendance at the meetings.

        2.6     All the Appointees of each party shall share one vote and the
                parties shall abide by and shall carry out all unanimous
                decisions of the Joint Steering Committee in accordance with and
                subject to the terms of this Agreement. For the avoidance of
                doubt the chairman of the Joint Steering Committee shall not
                have a deciding vote.

        2.7     If in respect of any matter the Appointees of the two parties
                cannot reach agreement either party shall, at the request of the
                other party, procure that its chief executive officer meets with
                the chief

                                    - 4 -

<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                executive officer of the other party to discuss the matter
                within 60 days of such request. Unless agreement is reached on
                the disputed matter within 10 days of such meeting either party
                may terminate this Agreement, subject to surviving obligations
                under Section 16 of this Agreement, by notice to the other
                having immediate effect.

        2.8     Each party shall, at meetings of the Joint Steering Committee
                and otherwise from time to time as may be appropriate, keep the
                other informed of any on-going technology development by that
                party which could apply to ADME. Technology which could apply to
                ADME shall include [CONFIDENTIAL TREATMENT REQUESTED] technology
                and software prediction models.

        2.9     The obligation at Clause 2.8 shall apply whether the relevant
                technology is being developed by a party either solely in-house
                or in collaboration with any third party always provided that
                neither party shall be obliged to make any disclosure which
                would be a breach of confidentiality obligations owed to a third
                party.

        2.10    The obligations of the parties and the Joint Steering Committee
                under this Clause 2 to agree on Projects shall commence on the
                Commencement Date and, subject to earlier termination of this
                Agreement and unless the parties agree to extend the same, shall
                terminate [CONFIDENTIAL TREATMENT REQUESTED].

        3.      OWNERSHIP AND LICENSING OF INTELLECTUAL PROPERTY RIGHTS USED IN
                AND ARISING FROM PROJECTS

                BACKGROUND TECHNOLOGY

        3.1     Each party and/or its licensors shall retain ownership of all
                Intellectual Property Rights in that party's Background
                Technology. Each party hereby grants the other a non-exclusive,
                non-transferrable, royalty-free, fully paid-up licence to use
                its Background Technology solely for the purpose of carrying out
                its obligations pursuant to any Project.

                SOLELY DEVELOPED TECHNOLOGY

        3.2     Each party shall own all Intellectual Property Rights in any
                technology which is created, invented or discovered in the
                course of carrying out any Project solely by that party without
                use of the other party's Background Technology or other party's
                Solely Developed Technology ("Solely Developed Technology").

        3.3     Neither party shall be subject to any restriction in its use of
                its own Solely Developed Technology. Each party shall grant the
                other a non-exclusive, non-transferrable, royalty-free, fully
                paid-up licence to use its Solely Developed Technology for the
                purpose of carrying out its obligations pursuant to any Project.

                JOINTLY DEVELOPED TECHNOLOGY

        3.4     In respect of technology which is created, invented or
                discovered in the course of carrying out any Project and to
                which Clause 3.3 does not apply ("Jointly Developed
                Technology"):

                3.4.1   Evotec shall own all Intellectual Property Rights in all
                        Jointly Developed Technology which relates principally
                        to Evotec's Background Technology;

                                    - 5 -

<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                3.4.2   Trega shall own all Intellectual Property Rights in all
                        Jointly Developed Technology which relates principally
                        to Trega's Background Technology.

        3.5     Each party agrees to make all such assignments of its rights,
                title and interest in and to the Intellectual Property Rights in
                Jointly Developed Technology as may be necessary to effect the
                allocation of ownership referred to in Clause 3.4.

        3.6     If either party disputes the other party's claim to ownership of
                any Jointly Developed Technology it shall notify the other party
                and the parties shall each appoint a patent attorney to
                negotiate the dispute on their behalf. If the parties'
                respective patent attorneys do not resolve the dispute within 30
                days then the two patent attorneys shall agree on the
                appointment of a third, independent patent attorney and the
                majority decision of the three patent attorneys shall be binding
                on the parties. Each party shall bear the costs of appointment
                of its own patent attorney and the costs of the third patent
                attorney shall be split equally between the parties unless the
                third patent attorney determines otherwise.

        3.7     Each party hereby grants the other a world-wide, non-exclusive,
                non-transferrable license to Jointly Developed Technology
                comprising Assays owned by that party on terms permitting the
                use of the same as set out below:

                3.7.1   Trega may use the Assays only in [CONFIDENTIAL TREATMENT
                        REQUESTED] and only for any one or all of the following:
                        [CONFIDENTIAL TREATMENT REQUESTED]. For the purposes of
                        this Clause 3.7.1 [CONFIDENTIAL TREATMENT REQUESTED]
                        means [CONFIDENTIAL TREATMENT REQUESTED]. No royalties
                        or fees shall be payable by Trega to Evotec in respect
                        of the exercise of the rights so licensed;

                3.7.2   Evotec may use the Assays in any form for Internal Drug
                        Development. No royalties or fees shall be payable by
                        Evotec to Trega in respect of the exercise of the rights
                        so licensed;

                3.7.3   subject to payment of any applicable royalties in
                        accordance with Clause 6 and to Clause 7.1, Evotec may
                        commercially exploit the Assays in any form without
                        restriction, including:

                        3.7.3.1 by the utilisation of the Assays, in combination
                                with screening and/or other technology owned by
                                or licensed to Evotec, for the provision of
                                services to Clients;

                        3.7.3.2 by way of licence of the Assays; and

                        3.7.3.3 by way of sale of the Assays.

                DATA PRODUCED IN THE COURSE OF ASSAY SCREENINGS

        3.8     All data produced in the course of the Assay Screening to be
                carried out pursuant to Clauses 6.2 and 6.3 shall be owned by
                Trega.

                                    - 6 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

        3.9     Trega hereby grants to Evotec in respect of data produced from
                the Assay Screening of Trega Materials pursuant to Clause 6.2 a
                world-wide, non-exclusive, non-transferable, royalty free, fully
                paid-up license to:

                3.9.1   use the same for Internal Drug Development;

                3.9.2   use the same as a marketing tool for the purposes of
                        promoting Trega Materials to Evotec's clients, the form
                        of such promotion to be approved by Trega in advance.

        4.      EVOTEC'S [CONFIDENTIAL TREATMENT REQUESTED] TECHNOLOGY AND ADME
                HARDWARE

        4.1     Evotec shall, at the time of providing any [CONFIDENTIAL
                TREATMENT REQUESTED] Technology or ADME Hardware to a third
                party on commercial terms and subject to any contractual
                restrictions imposed on Evotec by such third party,
                [CONFIDENTIAL TREATMENT REQUESTED]. Trega shall notify Evotec of
                its acceptance or rejection of such offer within 30 days of
                receiving the same.

        4.2     If Trega accepts the offer made to it by Evotec pursuant to
                Clause 4.1 Trega shall, for the duration of any license and
                lease agreement, promptly notify Evotec of:

                4.2.1   any improvements to [CONFIDENTIAL TREATMENT REQUESTED]
                        Technology or ADME Hardware developed by Trega; and

                4.2.2   any Assays developed by Trega using the [CONFIDENTIAL
                        TREATMENT REQUESTED] Technology or ADME Hardware.

        4.3     Trega hereby grants Evotec a world-wide, non-exclusive,
                royalty-free, fully paid-up licence (with the right to
                sub-license) in respect of improvements notifiable to Evotec
                pursuant to Clause 4.2.1.

        4.4     Trega hereby grants to Evotec a world-wide, non-exclusive,
                non-transferrable license of Assays notifiable to Evotec
                pursuant to Clause 4.2.2 to:

                4.4.1   use the Assays in any form for Internal Drug
                        Development. No royalties or fees shall be payable by
                        Evotec to Trega in respect of this exercise of the
                        rights so licensed;

                4.4.2   (subject to payment of any applicable royalties in
                        accordance with Clause 6 and to Clause 7.1) commercially
                        exploit the Assays in any form without restriction,
                        including:

                        4.4.2.1 by the utilisation of the Assays, in combination
                                with screening and/or other technology owned by
                                or licensed to Evotec, for the provision of
                                services to Clients;

                        4.4.2.2 by way of licence of the Assays; and

                        4.4.2.3 by way of sale of the Assays.

                                       - 7 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

        5.      LICENSE OF IDEA SOFTWARE

        5.1     Trega shall retain ownership of the IDEA Software and all
                improvements or enhancements thereto made by Trega.

        5.2     [CONFIDENTIAL TREATMENT REQUESTED].

        5.3     Evotec may sub-license the rights granted to it under Clause 5.2
                to its Affiliates but not otherwise.

        5.4     For the avoidance of doubt neither Evotec nor any of its
                Affiliate sub-licensees shall have any right to use the
                [CONFIDENTIAL TREATMENT REQUESTED].

        5.5     Trega shall provide to Evotec and Evotec's Affiliate
                sub-licensees free of charge the standard level of support
                services offered to any third party from time to time in respect
                of the IDEA Software .

        5.6     If so agreed by the parties, Trega shall [CONFIDENTIAL TREATMENT
                REQUESTED].

        5.7     Evotec may at any time [CONFIDENTIAL TREATMENT REQUESTED] to
                Evotec under Clause 5.2 by [CONFIDENTIAL TREATMENT REQUESTED]
                written notice to Trega. With [CONFIDENTIAL TREATMENT REQUESTED]
                but, for the avoidance of doubt, [CONFIDENTIAL TREATMENT
                REQUESTED] until completed or terminated in accordance with this
                Agreement.

        6.      ROYALTIES

                NO ROYALTIES ON USE OF JOINTLY DEVELOPED TECHNOLOGY FOR INTERNAL
                DRUG DEVELOPMENT

        6.1     Neither party shall pay the other any royalties in respect of
                the use, including by means of screening, of the Jointly
                Developed Technology for Internal Drug Development or in respect
                of the sale or license of any technology arising from any such
                Internal Drug Development.

                SCREENING OBLIGATION

        6.2     [CONFIDENTIAL TREATMENT REQUESTED].

        6.3     [CONFIDENTIAL TREATMENT REQUESTED].

                REVENUE FROM ASSAY SCREENING FOR CLIENTS

                                       - 8 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

        6.4     Evotec shall pay Trega a royalty in respect of Assay Screening
                for any Client. Such royalty shall be calculated as follows:

<TABLE>
<CAPTION>
                TOTAL RELEVANT SCREENING FEES IN ANY COMMERCIALIZATION YEAR       ROYALTY RATE
<C>                                                                             <S>

                up to [CONFIDENTIAL TREATMENT REQUESTED]                          [CONFIDENTIAL TREATMENT REQUESTED]

                between [CONFIDENTIAL TREATMENT REQUESTED]                        [CONFIDENTIAL TREATMENT REQUESTED]

                above [CONFIDENTIAL TREATMENT REQUESTED]                          [CONFIDENTIAL TREATMENT REQUESTED]
</TABLE>

                where:
<TABLE>

<S>                                          <C>

                "Relevant Screening Fees"   is the proportion of the net fees received by Evotec from the Client in respect of
                                            screening services which is attributable to the use of the Assay. Net fees shall be
                                            the total fees received in respect of screening services less sales taxes, customary
                                            trade discounts, costs of delivery and amounts repaid or credited for defective Assay
                                            Screening. Marketing costs described in Clause 8.2 shall not be considered in any
                                            calculation of Relevant Screening Fees;

                "Commercialisation Year"    is a calendar year commencing on the First Commercialisation Date or any anniversary
                                            thereof.
</TABLE>

        6.5     All obligations of Evotec to pay royalties under Clause 6.4
                shall expire, in respect of each Assay, [CONFIDENTIAL TREATMENT
                REQUESTED] from the date of Commercialisation of that Assay.

                REVENUE FROM THE LICENSE OR SALE OF ASSAYS

        6.6     Evotec shall pay Trega [CONFIDENTIAL TREATMENT REQUESTED] of:

                6.6.1   all up-front lump sum license fees and royalties
                        received by Evotec from any third party in respect of
                        such third party's exploitation of the Assays;

                6.6.2   the net sales price received by Evotec in respect of the
                        sale of any Assay. The net sale price for the purposes
                        of this Clause 6.6.2 shall be calculated after the
                        deduction of sales taxes, customary trade discounts,
                        costs of delivery, amounts repaid or credited for
                        defective or returned Assays and government rebates
                        charged on the purchase price.

                6.6.3   the net sales price received by Evotec, less costs of
                        production, in respect of the sale of any reagent
                        relating to an Assay.

        6.7     Where an Assay is licensed or sold in combination with other
                technology or when any aspect of an Assay is sold in conjunction
                with a reagent under Clause 6.6.3 Evotec shall present the Joint
                Steering Committee with a calculation of the up-front lump sum
                licence fees and royalties or sales

                                       - 9 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                price, as applicable, attributed to the Assay or reagent, as the
                case may be. If the parties are unable to agree the attribution
                the matter shall be referred to an expert for determination in
                accordance with Clauses 17.18 to 17.21.

        6.8     All obligations of Evotec to make payments under Clause 6.6
                shall expire, in respect of each Assay, [CONFIDENTIAL TREATMENT
                REQUESTED] from the date of Commercialisation of that Assay.

                NO DOUBLE ROYALTY

        6.9     For the avoidance of doubt, in no circumstances shall Trega be
                entitled to a share of any sum received from a Client under more
                than one of Clauses 6.4 or 6.6.1 or 6.6.2.

                DEDUCTION OF COSTS OF PROCURING PAYMENT

        6.10    Before calculating any sums due pursuant to Clauses 6.4 or 6.6
                Evotec may deduct from the relevant sums received from Clients
                any direct and/or third party costs and/or expenses incurred by
                Evotec in procuring payment of such royalties and/or licence
                fees.

                DUE DATES FOR PAYMENT

        6.11    All sums due to Trega from Evotec pursuant to Clauses 6.4 or 6.6
                shall be payable by Evotec within 60 days of the end of the
                Quarter in which they are received by Evotec. For the purposes
                of calculating the royalty rate applicable under Clause 6.4
                Evotec shall take into account all Relevant Screening Fees
                received to the date of payment in the relevant
                Commercialisation Year.

        6.12    Evotec shall notify Trega within 60 days of the end of each
                Quarter with a financial statement for that Quarter setting
                out:-

                6.12.1  the payments due to Trega pursuant to Clauses 6.4 and
                        6.6; and

                6.12.2  the amount of any withholding tax deducted pursuant to
                        Clause 10.1.3.

                RECONCILIATION OF SCREENING ROYALTIES

        6.13    In the final statement to be provided by Evotec to Trega
                pursuant to Clause 6.12 in respect of any Commercialisation Year
                Evotec shall present Trega with a calculation setting out
                royalties paid under Clause 6.4 and royalties actually due
                taking into account royalty rates applicable in respect of all
                Relevant Screening Fees received during the Commercialisation
                Year. Where there is an overpayment of royalties due under
                Clauses 6.4 Trega shall refund such overpayment within 30 days
                of receipt of the statement. Where there is an underpayment of
                royalties due under Clause 6.4 Evotec shall pay the balance due
                on presentation of the statement to Evotec.

                PAYMENTS DUE FROM TREGA TO EVOTEC IN RESPECT OF SCREENING
                SERVICES

        6.14    In respect of any Assay Screening to be carried out by Evotec
                pursuant to Clauses 6.2 and 6.3 no fees shall be payable by
                Trega to Evotec and no royalties shall be payable by Evotec to
                Trega pursuant to Clause 6.4.

                                       - 10 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

        6.15    Subject to Clause 6.14, all screening services performed by
                Evotec for Trega at Trega's request from time to time shall be
                charged by Evotec to Trega on terms equivalent to the most
                favourable terms (number of compounds, type and number of
                assays) on which Evotec provides screening services to Clients.

        6.16    Evotec shall credit any sums accrued due under Clauses 6.4 or
                6.6 against any sums due from Trega to Evotec in respect of
                screening services provided by Evotec.

        7.      RESTRICTIONS ON THE PARTIES

        7.1     [CONFIDENTIAL TREATMENT REQUESTED].

        7.2     [CONFIDENTIAL TREATMENT REQUESTED].

        7.3     Except as provided in Clause 3.7.1, Trega shall not at any time
                [CONFIDENTIAL TREATMENT REQUESTED].

        8.      MARKETING

        8.1     The parties shall develop a joint marketing programme to
                maximise the value of the Assays and the parties' respective
                technologies applicable to such Assays and such activities shall
                include:

                8.1.1   developing marketing materials highlighting the
                        partnership between the parties. Each party shall ensure
                        that such marketing materials are used whenever the
                        Assays and applicable technologies are presented to
                        third parties;

                8.1.2   presenting the story of the parties' technical
                        partnership at meetings and conferences world-wide.

        8.2     Unless otherwise agreed, the parties shall split the costs of
                marketing activities equally between them, always provided that
                neither party shall be obliged to reimburse the other for any
                marketing activity unless it has approved the activity and the
                Affiliated cost in advance.

        9.      PARTY [CONFIDENTIAL TREATMENT REQUESTED]

        9.1     The parties shall [CONFIDENTIAL TREATMENT REQUESTED].

        9.2     The conditions attached to any [CONFIDENTIAL TREATMENT
                REQUESTED] shall be subject to the agreement of both parties.
                The parties shall act reasonably in considering any
                [CONFIDENTIAL TREATMENT REQUESTED] and the conditions attached,
                always provided that neither party shall be obliged to agree any
                terms which would reduce the anticipated benefits of this
                Agreement to that party or which would allow the other party a
                disproportionate share of such benefits.

                                       - 11 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

        9.3     Unless otherwise agreed, [CONFIDENTIAL TREATMENT REQUESTED]
                shall be split between the parties in proportion to the parties'
                respective contributions, whether financial or in the form of
                resources, other than resources comprising Background
                Technology, Solely Developed Technology, the IDEA Software , the
                ADME Hardware or the [CONFIDENTIAL TREATMENT REQUESTED]
                Technology.

        9.4     Any balance of [CONFIDENTIAL TREATMENT REQUESTED] remaining
                after completion of any Project for which the [CONFIDENTIAL
                TREATMENT REQUESTED] was provided shall be [CONFIDENTIAL
                TREATMENT REQUESTED] the parties, always provided that:

                9.4.1   nothing in this Clause shall affect the application of
                        Clauses 6.4 and 6.6 to any fees received by Evotec from
                        the third party funder in respect of the exploitation of
                        Assays resulting from such Project; and

                9.4.2   [CONFIDENTIAL TREATMENT REQUESTED].

        10.     PAYMENTS

        10.1    All sums payable under this Agreement:-

                10.1.1  are exclusive of any sales taxes which, where
                        applicable, shall be payable by the payer in addition,
                        provided that the payee provides the payer with an
                        invoice suitable for sales tax purposes;

                10.1.2  shall be paid in United States dollars to the credit of
                        a bank account nominated by the payee, details of which
                        shall be notified to the payer as and when necessary;

                10.1.3  shall be subject to any deductions that the payer is
                        required by law to deduct. If the payer is required by
                        law to deduct withholding tax then the payer shall
                        co-operate with the payee to assist the payee to obtain
                        a tax credit in respect of the amount withheld.

        10.2    If sums in respect of which Trega is entitled to royalties or a
                revenue share pursuant to Clause 6.4 or 6.6 are received by
                Evotec from third parties in a currency other than United States
                dollars, the royalties payable in respect of such sales under
                this Agreement shall be first determined in the currency of the
                country in which such sales took place and then converted into
                United States dollars at the exchange rate prevailing at the end
                of the Quarter in which the sales took place as stated in the
                London Financial Times.

        11.     RECORDS, INSPECTIONS AND STATEMENTS

                MAINTENANCE OF RECORDS

        11.1    Evotec shall keep at its normal place of business records and
                books of account sufficient to calculate any sums due to Trega
                under Clauses 6.4 or 6.6 in each case during the previous two
                years.

                                       - 12 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                INSPECTIONS

        11.2    Evotec shall make its records and books available for inspection
                during normal business hours by an independent professional
                accountant appointed by Trega and reasonably acceptable to
                Evotec for the sole purpose of verifying the accuracy of any
                statement provided by Evotec to Trega pursuant to Clause 6.12
                provided that such accountant executes Evotec's non-disclosure
                agreement.

        11.3    Trega shall be entitled to have inspections carried out pursuant
                to Clause 11.2 not more than once in any period [CONFIDENTIAL
                TREATMENT REQUESTED] on giving Evotec [CONFIDENTIAL TREATMENT
                REQUESTED] written notice prior to each inspection.

        11.4    Trega shall bear the costs of carrying out the inspections
                referred to in Clause 11.2 unless an inspection reveals a
                deficit of more than [CONFIDENTIAL TREATMENT REQUESTED] in any
                payment made to Trega pursuant to this Agreement in which case
                Evotec shall promptly pay to Trega the reasonable costs incurred
                by Trega's accountant in making the inspection concerned.

        12.     CONFIDENTIALITY

        12.1    In this Clause 12, "Confidential Information" shall, subject to
                Clause 12.3, mean:

                12.1.1  in respect of Evotec, any Evotec [CONFIDENTIAL TREATMENT
                        REQUESTED] Technology or ADME Hardware licensed to
                        Trega;

                12.1.2  in respect of Trega, the IDEA Software ;

                12.1.3  in respect of each party, its Background Technology and
                        Solely Developed Technology and any and all know-how,
                        data, results, show-how, plans, business information and
                        other information, whether oral, in writing or in any
                        other form, disclosed before, on or after the
                        Commencement Date by that party to the other; and

                12.1.4  in respect of both parties the Jointly Developed
                        Technology.

        12.2    In this Clause 12, "Disclosing Party" shall mean the party
                disclosing Confidential Information and "Receiving Party" shall
                mean the party to whom the Confidential Information is
                disclosed.

        12.3    Confidential Information shall not include any information
                which:-

                12.3.1  is or becomes public knowledge through no improper
                        conduct on the part of the Receiving Party, its
                        officers, employees, agents, representatives or those of
                        its sub-licensees;

                12.3.2  is already lawfully possessed by the Receiving Party
                        prior to first receiving it from the Disclosing Party;

                12.3.3  is obtained subsequently by the Receiving Party from a
                        third party without any obligations of confidentiality
                        and such third party is in lawful possession of such
                        information and not in violation of any contractual or
                        legal obligation to maintain the confidentiality of such
                        information; and/or

                                       - 13 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                12.3.4  is released from confidentiality in writing by the
                        Disclosing Party.

        12.4    For the avoidance of doubt, information shall not be deemed to
                be within any of the exceptions set out in Clause 12.3 merely
                because it is embraced by general disclosure (1) in the public
                domain or (2) in the lawful possession of the Receiving Party,
                nor shall a combination of information be deemed to be within
                any of the exceptions set out in Clause 12.3 merely because
                individual items of information are (1) in the public domain or
                (2) in the lawful possession of the Receiving Party, unless the
                specific combination (if any) is (1) in the public domain or (2)
                in the lawful possession of the Receiving Party.

        12.5    The onus shall be on the Receiving Party to prove that any of
                the exceptions set out in Clause 12.3 apply to any information
                referred to in Clause 12.1.

        12.6    The Receiving Party shall not use, copy or disclose to any third
                party any Confidential Information received from the Disclosing
                Party (whether before, on or after the Commencement Date) except
                as set out in Clause 12.7.

        12.7    The Receiving Party may:

                12.7.1  use Confidential Information received from the
                        Disclosing Party for the purpose of carrying out its
                        obligations or exploiting its rights under this
                        Agreement;

                12.7.2  disclose Confidential Information received from the
                        Disclosing Party to its officers, employees and
                        sub-contractors and those of its Affiliates (and in the
                        case of Evotec with regard to the IDEA Software , those
                        of its Internal Drug Development Partners) who need to
                        know the same provided that the Receiving Party shall
                        remain responsible for procuring that such officers,
                        employees and sub-contractors do not further disclose
                        the Confidential Information or use it for any purpose
                        other than to assist the Receiving Party carry out its
                        obligations under this Agreement;

                12.7.3  disclose Confidential Information comprising of Assays,
                        [CONFIDENTIAL TREATMENT REQUESTED] Technology, ADME
                        Hardware and the IDEA Software to Clients, potential
                        Clients and Internal Drug Development Partners insofar
                        as is necessary for the purposes of carrying out its
                        obligations or exploiting its rights under this
                        Agreement always provided that the Receiving Party
                        ensures that such Clients, potential Clients and
                        Internal Drug Development Partners have entered into an
                        appropriate confidentiality agreement prior to such
                        disclosure being made;

                12.7.4  disclose Confidential Information received from the
                        Disclosing Party to the extent that it is specifically
                        authorised to do so in writing by an authorised
                        representative of the Disclosing Party; and/or

                12.7.5  disclose any part of the Confidential Information
                        received from the Disclosing Party solely to the extent
                        that it is legally required to do so pursuant to an
                        order of a court of competent jurisdiction or
                        governmental authority provided that the Receiving Party
                        uses its best endeavours to limit such disclosure and to
                        provide the Disclosing Party with an opportunity to make
                        representations to the relevant court or governmental
                        authority.

                                       - 14 -
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

        13.     UNDERTAKINGS, WARRANTIES AND LIABILITY

        13.1    Each party undertakes that it shall perform its obligations
                under any Project diligently and with reasonable skill and care.

        13.2    Trega warrants that the IDEA Software shall perform in
                accordance with the specifications that are then standard for
                the relevant version of the product. Trega shall remedy any
                defects or errors in the IDEA Software free of charge in
                accordance with the standard level of support services offered
                to any third party from time to time in respect the IDEA
                Software and in any case within a reasonable time, having regard
                to the severity of the error.

        13.3    Evotec shall provide its [CONFIDENTIAL TREATMENT REQUESTED]
                Technology and ADME Hardware to Trega with such warranties and
                subject to such limitations as are offered to other commercial
                clients.

        13.4    Each party warrants to the other that:

                13.4.1  it has the full authority, power and capacity to enter
                        into this Agreement and all necessary actions have been
                        taken to enable it lawfully to enter into this
                        Agreement;

                13.4.2  it has not entered into any agreement or other
                        arrangement with any third party that is inconsistent
                        with the provisions of this Agreement;

                13.4.3  it is not at the Commencement Date aware of any third
                        party Intellectual Property Rights that may be infringed
                        by its own or the other party's use, in accordance with
                        this Agreement, of its Background Technology existing at
                        the Commencement Date; and

                13.4.4  it shall promptly notify the other if it receives a
                        claim or assertion or otherwise becomes aware that its
                        own or the other party's use of its own or the other
                        party's Background Technology, Solely Developed
                        Technology or Jointly Developed Technology, in each case
                        in accordance with this Agreement infringes or otherwise
                        violates the Intellectual Property Rights of any third
                        party.

                13.5    Save as set out in Clauses 13.1, 13.2 and 13.4 neither
                        party gives any undertakings or warranties, either
                        express or implied, with respect to:

                13.5.1  its Background Technology, its Solely Developed
                        Technology or any other materials provided by or
                        produced by it pursuant to this Agreement and in
                        particular their safety or efficacy or appropriateness
                        for any Project, their satisfactory or merchantable
                        quality or fitness for a particular purpose and their
                        non-infringement of the Intellectual Property Rights of
                        any third party;

                13.5.2  its performance of its obligations under any Project or
                        this Agreement, including its ability to market Assays
                        or secure funding for Projects.

        13.6    Subject to Clause 13.7, each party ("the Defaulting Party")
                shall indemnify and hold harmless the other ("the Non-defaulting
                Party") from and against any and all losses, damages and/or
                expenses (including legal expenses) incurred by the
                Non-defaulting Party arising out of or in connection with:

                                       - 15 -
<PAGE>

                13.6.1  any breach by the Defaulting Party of this Agreement or
                        any negligent act or omission of the Defaulting Party in
                        connection therewith;

                13.6.2  any claims, demands, actions or other proceedings made
                        or instituted by a third party against the
                        Non-defaulting Party or any Affiliates, directors,
                        officers, employees or agents of the Non-defaulting
                        Party insofar as the same relate to the use by or on
                        behalf of the Defaulting Party or any of its Internal
                        Drug Development Partners of Assays;

                13.6.3  any claims, demands, actions or other proceedings made
                        or instituted by a third party against the
                        Non-defaulting Party or any Affiliates, directors,
                        officers, employees or agents of the Non-defaulting
                        Party insofar as the same relate to the development,
                        manufacture, storage, use, sale, administration or
                        advertisement of a product which has been designed,
                        manufactured or sold by the Defaulting Party or any of
                        its Internal Drug Development Partners and which
                        incorporates, derives from, is based upon or is a
                        by-product of an Assay.

        13.7    In no circumstances shall the Defaulting Party have any
                liability to the Non-defaulting Party for any incidental,
                special or consequential losses of the Non-defaulting Party
                arising from the Defaulting Party's breach of this Agreement or
                the Defaulting Party's negligent act or omission.

        14.     FORCE MAJEURE

        14.1    In this Agreement, "Force Majeure" shall mean any cause
                preventing either party from performing any or all of its
                obligations which arises from or is attributable to acts,
                events, omissions or accident beyond the reasonable control of
                the party so prevented including without limitation strikes,
                lock-outs or other industrial disputes, act of God, war, riot,
                civil commotion, malicious damage, compliance with any law or
                governmental order, rule, regulation or direction, accident,
                breakdown of plant or machinery, fire, flood, or storm.

        14.2    Subject to Clause 14.3, neither party shall have any liability
                for any non-performance or delay in performance of its
                obligations under any Project or this Agreement which is caused
                by Force Majeure for so long as the event of Force Majeure
                continues.

        14.3    The exemption from liability at Clause 14.2 is subject to the
                party affected by Force Majeure promptly giving the other party
                full details of the relevant Force Majeure event and using all
                reasonable endeavours to mitigate the effects of the Force
                Majeure event.

        15.     COMMENCEMENT AND DURATION OF THIS AGREEMENT

        15.1    This Agreement shall commence on the Commencement Date and shall
                continue unless or until terminated pursuant to Clauses 2.7,
                15.2 or 15.3.

        15.2    Either party may terminate this Agreement at any time without
                cause by 90 days' written notice to the other.

        15.3    Either party may terminate this Agreement at any time by giving
                the other immediate notice of termination if the other:

                                       - 16 -

<PAGE>

        15.3.1  is in material breach of this Agreement and in the case of a
                breach capable of remedy, has not remedied such breach within
                60 (sixty) days of being notified in writing of such breach;

        15.3.2  ceases to do business, becomes unable to pay its debts as they
                fall due, becomes or is deemed insolvent, has a receiver,
                manager, administrator, administrative receiver or similar
                officer appointed in respect of the whole or any part of its
                assets or business, makes any composition or arrangement with
                its creditors, takes or suffers any similar action in
                consequence of debt or an order or resolution is made for its
                dissolution or liquidation (other than for the purpose of
                solvent amalgamation or reconstruction), or any equivalent or
                similar action or proceeding is taken or suffered in any
                jurisdiction and the same is not dismissed or discharged within
                thirty (30) days thereafter.

16.     CONSEQUENCES OF TERMINATION OF THIS AGREEMENT

16.1    On termination of this Agreement howsoever caused:

        16.1.1  each party shall retain all rights granted to it in this
                Agreement to use and exploit the Jointly Developed Technology;

        16.1.2  the licences granted to Evotec under Clauses 4.3 and 4.4
                shall remain in full force and effect;

        16.1.3  any lease or licence of [CONFIDENTIAL TREATMENT REQUESTED]
                Technology or ADME Hardware paid for by Trega pursuant to
                Clause 4 shall remain in force until the termination thereof
                in accordance with the terms of such lease or licence;

        16.1.4  nothing shall affect the accrued rights and liabilities of the
                parties; and

        16.1.5  in addition to the provisions listed at Clauses 16.1.1 to
                16.1.4, Clauses 1, 12 and 17 shall remain in full force and
                effect.

16.2    On termination of this Agreement by either party pursuant to Clause
        15.2:

        16.2.1  any obligation of Evotec to pay royalties to Trega in accordance
                with Clauses 6.4 and 6.6 shall continue until its expiry
                pursuant to Clauses 6.5 and 6.8 respectively; and

        16.2.2  the license of the IDEA Software granted in Clause 5 shall
                continue until its expiry pursuant to Clause 5.2;

                in each case subject to the right of Evotec to terminate the
                license of the IDEA Software under Clause 5.7 and thus terminate
                the obligation to pay royalties.

16.3    On termination of this Agreement by Evotec pursuant to Clause 15.3 the
        license to Evotec of the IDEA Software shall continue until its expiry
        pursuant to Clause 5.2, PROVIDED, HOWEVER, that Evotec continue to pay
        royalties under Clauses 6.4 and 6.6 until the earlier expiration under
        Clause 5.2 or Clauses 6.5 and 6.8 respectively. On expiry of the license
        pursuant to Clause 5.2, Evotec can purchase a license to the IDEA
        software in the form and on commercial terms offered to the public at
        that time.

                                    -17-
<PAGE>

16.4    On termination of this Agreement by Trega pursuant to Clause 15.3 any
        obligation of Evotec to pay royalties under Clauses 6.4 and 6.6 shall
        continue until its expiry pursuant to Clause 6.5 and 6.8 respectively.

17.     MISCELLANEOUS

        INTERPRETATION

17.1    In this Agreement:

        17.1.1  "including" means including without limitation and "include" and
                "includes" shall be construed accordingly;
                and

        17.1.2  the headings are for convenience only and shall not
                affect the interpretation of this Agreement.

17.2    In the event of any inconsistency or conflict between the provisions of
        the main body of this Agreement (Clauses 1 to 17) and the provisions of
        the Schedules to this Agreement, the provisions of the main body of
        this Agreement shall override those of the Schedules to the extent of
        the inconsistency or conflict only.

        NOTICES

17.3    Any notice or other communication given under this Agreement shall be
        in writing in the English language and shall be:-

        17.3.1  delivered by hand; or

        17.3.2  sent by pre-paid airmail; or

        17.3.3  sent by fax (confirmed by pre-paid airmail or first class post
                as appropriate placed in the post on or on the Business Day
                after the date of transmission);

                in each case to the address or fax number set out below or to
                such other address or fax number as may from time to time be
                notified to the other party in writing.

        Notices to Trega:                  Notices to Evotec:

        F.A.O.  The Company Secretary      F.A.O.  The Company Secretary
        Trega Biosciences Incorporated     Evotec BioSystems AG
        9880 Campus Point Drive            Schnackenburgallee 114
        San Diego                          22525 Hamburg
        California 92121                   Germany

        Fax No. 001 858 410 6664           Fax No. 00 49 40 5608 1222

17.4    Any notice given under Clause 17.3 shall be deemed to have been
        received:-

                                     -18-
<PAGE>

        17.4.1  on the date of delivery if delivered by hand prior to 5:00 p.m.
                on a Business Day, otherwise on the next Business Day following
                the date of delivery;

        17.4.2  on the tenth Business Day from and including the day of posting
                in the case of pre-paid airmail; or

        17.4.3  on the next Business Day following the day of transmission in
                the case of facsimile (confirmed by pre-paid first class
                post/airmail as provided above).

        SEVERABILITY

17.5    If any provision of this Agreement is declared by any judicial or other
        competent authority to be void, voidable, illegal or otherwise
        unenforceable then the remaining provisions of this Agreement shall
        continue in full force and effect. The judicial or other competent
        authority making such determination shall have the power to limit,
        construe or reduce the duration, scope, activity and/or area of such
        provision, and/or delete specific words or phrases as necessary to
        render, such provision enforceable.

        WAIVER

17.6    Failure or delay by either party to exercise any right or remedy under
        this Agreement shall not be deemed to be a waiver of that right or
        remedy, or prevent it from exercising that or any other right or remedy
        on that occasion or on any other occasion.

        ENTIRE AGREEMENT AND AMENDMENTS

17.7    This Agreement constitutes the entire agreement and understanding of the
        parties relating to the subject matter of this Agreement and supersede
        all prior oral or written agreements, representations, understandings or
        arrangements between the parties relating to the subject matter of this
        Agreement.

17.8    The parties acknowledge that they are not relying on any agreement,
        understanding arrangement, warranty, representation or term which is
        not set out in this Agreement.

17.9    The parties irrevocably and unconditionally waive any rights and/or
        remedies they may have to the fullest extent permitted by law (including
        but not limited to the right to claim damages and/or to rescind this
        Agreement) in respect of any misrepresentation other than a
        misrepresentation which is contained in this Agreement.

17.10   Nothing in this Agreement shall operate to limit or exclude any
        liability, right or remedy to a greater extent than is permissible under
        Delaware law.

17.11   No change may be made to this Agreement except in writing in the English
        language signed by the duly authorised representatives of both parties.

        RELATIONSHIP OF THE PARTIES

17.12   Nothing in this Agreement shall create, evidence or imply any agency,
        partnership or joint venture between the parties.

                                     -19-
<PAGE>

17.13   Neither party shall not act or describe itself as the agent of the other
        nor shall it represent that it has any authority to make commitments on
        the other's behalf.

        ASSIGNMENT AND SUB-CONTRACTING

17.14   Either party may assign this Agreement (or any of its rights or
        obligations under this Agreement) to any Affiliate of that party and for
        the avoidance of doubt the statement anywhere in this Agreement that a
        license is non-transferrable shall not prevent the assignment of such
        license by the relevant licensee to any one of its Affiliates.

17.15   Save as provided in Clause 17.14 neither party may assign or otherwise
        transfer this Agreement (or any of its rights under this Agreement)
        without the prior written consent of the other party.

        ANNOUNCEMENTS

17.16   Any announcement of the signing of this Agreement and any other third
        party funding agreement entered into pursuant to it shall be in a form
        agreed by both parties, acting reasonably.

        FURTHER ASSURANCES

17.17   Each party shall, as and when requested by the other party, do all acts
        and execute all documents as may be reasonably necessary to give effect
        to the provisions of this Agreement including carrying out such acts
        and/or executing such instruments as Evotec may require in order to
        register this Agreement and/or the licences granted in Clause 3 with
        patent offices in any country.

        EXPERT DETERMINATION

17.18   Where under Clause 6.8 any matter is to be determined by an Expert the
        matter shall be referred to such person as may be appointed by agreement
        between the parties or, in default of agreement, as is nominated on the
        application of either party by the President for the time being of the
        Association of the British Pharmaceutical Industry ("the Expert").

17.19   The Expert shall act as an expert and not as an arbitrator and shall be
        entitled to appoint such technical expert or experts as he considers
        necessary to assist him in determining the matter referred to him. The
        decision of the Expert (which shall be given by him in writing stating
        his reasons therefor) shall in the absence of manifest error be final
        and binding on the parties.

17.20   Each party shall provide any Expert with such information as he may
        reasonably require for the purposes of his determination; if either
        party claims any such information to be confidential to it then,
        provided that in the opinion of the Expert that party has properly
        claimed the same as confidential, the Expert shall not disclose the
        same to the other party or to any third party.

17.21   The costs of any Expert (including the costs of any technical expert
        appointed by him) shall be borne in such proportions as the Expert may
        determine to be fair and reasonable in all the circumstances or, if no
        such determination is made by the Expert, by the parties in equal
        proportions.

                                     -20-
<PAGE>

        LAW AND JURISDICTION

17.22   The validity, construction and performance of this Agreement shall be
        governed by laws of the State of Delaware and, the parties accept the
        exclusive jurisdiction of the Delaware courts in respect thereof.

                                     -21-
<PAGE>

AGREED by the parties through their duly authorised signatories on the
Commencement Date.

For and on behalf of                        For and on behalf of
EVOTEC BIOSYSTEMS AG                        TREGA BIOSCIENCES, INCORPORATED

Signed   /s/ Karsten Henco                Signed   /s/ Mark W. Schwartz
      -----------------------------             -----------------------------

Full Name    Dr. Karsten Henco            Full Name    Dr. Mark W. Schwartz
         --------------------------                --------------------------

Title              CEO                    Title   Chief Commercial Officer
     ------------------------------            -----------------------------

                                     -22-
<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                                   SCHEDULE 1

        BRIEF TECHNOLOGY DESCRIPTION: [CONFIDENTIAL TREATMENT REQUESTED]

PROJECT IDEA:

Use of [CONFIDENTIAL TREATMENT REQUESTED] as an [CONFIDENTIAL TREATMENT
REQUESTED] for the [CONFIDENTIAL TREATMENT REQUESTED]. The [CONFIDENTIAL
TREATMENT REQUESTED] is [CONFIDENTIAL TREATMENT REQUESTED] by [CONFIDENTIAL
TREATMENT REQUESTED]. The [CONFIDENTIAL TREATMENT REQUESTED] allows the
[CONFIDENTIAL TREATMENT REQUESTED]. A [CONFIDENTIAL TREATMENT REQUESTED] enables
the [CONFIDENTIAL TREATMENT REQUESTED] of their [CONFIDENTIAL TREATMENT
REQUESTED] with [CONFIDENTIAL TREATMENT REQUESTED]. The [CONFIDENTIAL TREATMENT
REQUESTED] is [CONFIDENTIAL TREATMENT REQUESTED] with a [CONFIDENTIAL TREATMENT
REQUESTED].

STATUS:

Presently, the [CONFIDENTIAL TREATMENT REQUESTED] is on [CONFIDENTIAL TREATMENT
REQUESTED] of the [CONFIDENTIAL TREATMENT REQUESTED] of the [CONFIDENTIAL
TREATMENT REQUESTED] and not on [CONFIDENTIAL TREATMENT REQUESTED]. The
[CONFIDENTIAL TREATMENT REQUESTED] was [CONFIDENTIAL TREATMENT REQUESTED]. The
[CONFIDENTIAL TREATMENT REQUESTED]. The [CONFIDENTIAL TREATMENT REQUESTED] of
[CONFIDENTIAL TREATMENT REQUESTED] was [CONFIDENTIAL TREATMENT REQUESTED]. A
[CONFIDENTIAL TREATMENT REQUESTED] of the [CONFIDENTIAL TREATMENT REQUESTED] is
[CONFIDENTIAL TREATMENT REQUESTED].

PROPOSED PROJECT OBJECTIVES [CONFIDENTIAL TREATMENT REQUESTED]:

1.   [CONFIDENTIAL TREATMENT REQUESTED].

2.   [CONFIDENTIAL TREATMENT REQUESTED].

3.   [CONFIDENTIAL TREATMENT REQUESTED].

4.   [CONFIDENTIAL TREATMENT REQUESTED].

5.   [CONFIDENTIAL TREATMENT REQUESTED].

[Depending on [CONFIDENTIAL TREATMENT REQUESTED], an [CONFIDENTIAL TREATMENT
REQUESTED] could [CONFIDENTIAL TREATMENT REQUESTED].]

<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                                  SCHEDULE 2

                DESCRIPTION OF [CONFIDENTIAL TREATMENT REQUESTED]

[CONFIDENTIAL TREATMENT REQUESTED].

<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                                  SCHEDULE 3

                  TREGA'S COMPETITORS AT THE COMMENCEMENT DATE

                       [CONFIDENTIAL TREATMENT REQUESTED]

<PAGE>

CONFIDENTIAL TREATMENT REQUESTED

                                  SCHEDULE 4

    EVOTEC AND TREGA'S STEERING COMMITTEE APPOINTEE AT THE COMMENCEMENT DATE

                Trega Members: [CONFIDENTIAL TREATMENT REQUESTED]

               EVOTEC Members: [CONFIDENTIAL TREATMENT REQUESTED]<PAGE>

                                                                    Exhibit 10.1

                        SYSTEMS CONSULTING COMPANY, INC.

                                 1994 STOCK PLAN

      1. Purpose. This 1994 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of SYSTEMS CONSULTING
COMPANY, INC. (the "Company"), its parent (if any) and any present or future
subsidiaries of the Company (collectively, "Related Corporations") by providing
them with opportunities to purchase stock in the Company pursuant to options
granted hereunder which qualify as "incentive stock options" under Section
422(b) of the Internal Revenue Code of 1986 (the "Code") ("ISO" or "ISOs"); (b)
to directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors, officers,
employees and consultants of the Company and Related Corporations by providing
them with awards of stock in the Company ("Awards"); and (d) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with opportunities to make direct purchases of stock in the
Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options". Options,
Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights". As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 425 of the Code.

      2. Administration of the Plan.

      A. The Plan shall be administered by the Board of Directors of the Company
(the "Board"). The Board may appoint a Stock Plan Committee (the "Committee") of
three or more of its members to administer this Plan. Subject to ratification of
the grant or authorization of each Stock Right by the Board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee, if
so appointed, shall have the authority to (i) determine the employees of the
Company and Related Corporations (from among the class of employees eligible
under paragraph 3 to receive ISOs) to whom ISOs may be granted, and to determine
(from among the class of individuals and entities eligible under paragraph 3 to
receive Non-Qualified Options and Awards and to make Purchases) to whom
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted; (ii) determine the time or times at which Options or Awards may be
granted or Purchases made; (iii) determine the option price

<PAGE>

of shares subject to each Option, which price shall not be less than the minimum
price specified in paragraph 6, and the purchase price of shares subject to each
Purchase; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to paragraph 7) the time or times
when each Option shall become exercisable and the duration of the exercise
period; (vi) determine whether restrictions such as repurchase options are to be
imposed on shares subject to Options, Awards and Purchases and the nature of
such restrictions, if any, and (vii) interpret the Plan and prescribe and
rescind rules and regulations relating to it. If the Committee determines to
issue a Non-Qualified Option, it shall take whatever actions it deems
necessary, under Section 422 of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Stock Right granted under it.

      B. The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places as it may determine. Acts by a majority of
the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. All
references in this Plan to the Committee shall mean the Board if no Committee
has been appointed. From time to time the Board may increase or decrease the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan.

      C. Stock Rights may be granted to members of the Board, but any such grant
shall be made and approved in accordance with paragraph 2(D), if applicable. All
grants of Stock Rights to members of the Board shall in all other respects be
made in accordance with the provisions of this Plan applicable to other eligible
persons. Members of the Board who are either (i) eligible for Stock Rights
pursuant to the Plan or (ii) have been granted Stock Rights may vote on any
matters affecting the administration of the Plan or the grant of any Stock
Rights pursuant to the Plan, except that no such member shall act upon the
granting to himself of Stock Rights, but any such member may be counted in
determining the existence of a quorum at any meeting of the

                                       2
<PAGE>

Board during which action is taken with respect to the granting to him of Stock
Rights.

      D. In the event the Company registers any class of any equity security
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), any grant of Stock Rights to a member of the Board (made at any
time from the effective date of such registration until six months after the
termination of such registration) must be approved by a majority vote of the
other members of the Board; provided, however, that if a majority of the Board
is eligible to participate in the Plan or in any other stock option or other
stock plan of the Company or any of its affiliates, or has been so eligible at
any time within the preceding year, any grant of Stock Rights to a member of the
Board must be made by, or only in accordance with the recommendation of, the
Committee or a committee consisting of three or more persons, who may but need
not be directors or employees of the Company, appointed by the Board but having
full authority to act in the matter, none of whom is eligible to participate in
this Plan or any other stock option or other stock plan of the Company or any of
its affiliates, or has been eligible at any time within the preceding year. The
requirements imposed by the preceding sentence shall also apply with respect to
grants to officers who are also directors. Once appointed, such Committee shall
continue to serve until otherwise directed by the Board.

      3. Eligible Employees and Others. ISOs may be granted to any employee of
the Company or any Related Corporation. Those officers and directors of the
Company who are not employees may not be granted ISOs under the Plan. Non-
Qualified Options, Awards and authorizations to make Purchases may be granted to
any director (whether or not an employee), officer, employee or consultant of
the Company or any Related Corporation. The Committee may take into
consideration a recipient's individual circumstances in determining whether to
grant an ISO, a Non-Qualified Option or an authorization to make a Purchase.
The granting of any Stock Right to any individual or entity shall neither
entitle that individual or entity to, nor disqualify him from, participation in
any other grant of Stock Rights.

      4. Stock. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.0001
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is THIRTY-TWO THOUSAND, subject to adjustment as provided
in paragraph 13. Any such shares may be issued as ISOs, Non-Qualified Options
or Awards, or to persons or entities making Purchases, so long

                                       3
<PAGE>

as the number of shares so issued does not exceed such number, as adjusted. If
any Option granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, or if the Company shall reacquire any vested
shares issued pursuant to Awards or Purchases, the unpurchased shares subject to
such Options and any unvested shares so reacquired by the Company shall again be
available for grants of Stock Rights under the Plan.

      5. Granting of Stock Rights. Stock Rights may be granted under the Plan at
any time after May 20, 1994 and prior to May 20, 2004. The date of grant of a
Stock Right under the Plan will be the date specified by the Committee at the
time it grants the Stock Right; provided, however, that such date shall not be
prior to the date on which the Committee acts to approve the grant. The
Committee shall have the right, with the consent of the optionee, to convert any
ISO granted under the Plan to a Non-Qualified Option pursuant to paragraph 16.

      6. Minimum Option Price; ISO Limitations.

      A. The price per share specified in the agreement relating to each
Non-Qualified Option granted under the Plan shall in no event be less than the
lesser of (i) the book value per share of Common Stock as of the end of the
fiscal year of the Company immediately preceding the date of such grant, or (ii)
ten percent of the fair market value per share of Common Stock on the date of
such grant.

      B. The price per share specified in the agreement relating to each ISO
granted under the Plan shall not be less than the fair market value per share of
Common Stock on the date of such grant. In the case of an ISO to be granted to
an employee owning stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Company or any Related Corporation,
the price per share specified in the agreement relating to such ISO shall not be
less than 110 percent of the fair market value per share of Common Stock on the
date of grant.

      C. In no event shall the aggregate fair market value (determined at the
time an ISO is granted) of Common Stock for which ISOs granted to any employee
are exercisable for the first time by such employee during any calendar year
(under all stock option plans of the Company and any Related Corporation) exceed
$100,000; provided that this paragraph 6(C) shall have no force or effect if its
inclusion in the Plan is not necessary for Options issued as ISOs to qualify as
ISOs pursuant to Section 422(d) of the Code.

                                       4
<PAGE>

      D. If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the NASDAQ
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid prices)
last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the NASDAQ
National Market List. However, if the Common Stock is not publicly traded at the
time an Option is granted under the Plan, "fair market value" shall be deemed to
be the fair value of the Common Stock as determined by the Committee after
taking into consideration all factors which it deems appropriate, including,
without limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.

      7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant in
the case of Non-Qualified Options, (ii) ten years from the date of grant in the
case of ISOs generally, and (iii) five years from the date of grant in the case
of ISOs granted to an employee owning stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or any
Related Corporation. Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.

      8. Exercise of Option. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:

      A. The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.

      B. Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by the
Committee.

                                       5
<PAGE>

      C. Each Option or installment may be exercised at any time or from time to
time, in whole or in part, for up to the total number of shares with respect to
which it is then exercisable.

      D. The Committee shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Committee shall not
accelerate the exercise date of any installment of any Option granted to any
employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 16) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(C).

      9. Termination of Employment. If an ISO optionee ceases to be employed by
the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of sixty (60)
days, from the date of termination of his employment, but in no event later than
on their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 16. Employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as those attributable
to illness, military obligations or governmental service) provided that the
period of such leave does not exceed 90 days or, if longer, any period during
which such optionee's right to reemployment is guaranteed by statute. A bona
fide leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any Related Corporation
to continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.

      10. Death; Disability.

      A. If an ISO optionee ceases to be employed by the Company and all Related
Corporations by reason of his death, any ISO of his may be exercised, to the
extent of the number

                                       6
<PAGE>

or shares with respect to which he could have exercised it on his death, by his
estate, personal representative or beneficiary who has acquired the ISO by will
or by the laws of descent and distribution, at any time prior to the earlier of
the ISO's specified expiration date or 12 months from the date of the optionee's
death.

      B. If an ISO optionee ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise
any ISO held by him on the date of termination of employment, to the extent of
the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the ISO's specified expiration date or
12 months from the date of the termination of the optionee's employment. For the
purposes of the Plan, the term "disability" shall mean "permanent and total
disability" as defined in Section 22(e)(3) of the Code or successor statute.

      11. Assignability. No Stock Right shall be assignable or transferable by
the grantee except by will or by the laws of descent and distribution, and
during the lifetime of the grantee each Stock Right shall be exercisable only by
him.

      12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.

      13. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:

      A. If the shares of Common Stock shall be subdivided

                                       7
<PAGE>

or combined into a greater or smaller number of shares or if the Company shall
issue any shares of Common Stock as a stock dividend on its outstanding Common
Stock, the number of shares of Common Stock deliverable upon the exercise of
Options shall be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price per share to reflect
such subdivision, combination or stock dividend.

      B. If the Company is to be consolidated with or acquired by another entity
in a merger, sale of all or substantially all of the Company's assets or
otherwise (including without limitation a "reverse-triangular" merger in which
the Company is the surviving entity but stockholders of the Company immediately
prior to such event represent less than 50% of the outstanding voting stock of
the Company immediately after such event) (an "Acquisition"), all outstanding
Options shall become exercisable immediately prior to the Acquisition. In
addition, the Committee or the board of directors of any entity assuming the
obligations of the Company hereunder (the "Successor Board") shall, as to
outstanding Options either (i) make appropriate provision for the continuation
of such Options by substituting on an equitable basis for the shares then
subject to such Options the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition; or (ii)
upon written notice to the optionee, provide that all Options must be exercised
within a specified number of days of the date of such notice, at the end of
which period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the fair market value of the
shares subject to such Options over the exercise price thereof.

      C. In the event of a recapitalization or reorganization of the Company
(other than a transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise the
securities he would have received if he had exercised his Option prior to such
recapitalization or reorganization.

      D. Notwithstanding the foregoing, any adjustments made pursuant to
subparagraphs A, B or C with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company, determines whether
such adjustments would constitute a "modification" of such ISOs (as that term is
defined in Section 425 of the Code) or would cause any adverse tax consequences
for the holders of such ISOs. If

                                       8
<PAGE>

the Committee determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments.

      E. In the event of the proposed dissolution or liquidation of the Company,
each Option will terminate immediately prior to the consummation of such
proposed action or at such other time and subject to such other conditions as
shall be determined by the Committee.

      F. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Company.

      G. No fractional shares shall be issued under the Plan and the optionee
shall receive from the Company cash in lieu of such fractional shares.

      H. Upon the happening of any of the foregoing events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.

If any person or entity owning restricted Common Stock obtained by exercise of a
Stock Right made hereunder receives shares or securities or cash in connection
with a corporate transaction described in subparagraphs A, B or C above as a
result of owning such restricted Common Stock, such shares or securities or cash
shall be subject to all of the conditions and restrictions applicable to the
restricted Common Stock with respect to which such shares or securities or cash
were issued, unless otherwise determined by the Committee or the Successor
Board.

      14. Means of Exercising Stock Rights. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, or (b) at the
discretion of the

                                       9
<PAGE>

Committee, through delivery of shares of Common Stock having a fair market value
equal as of the date of the exercise to the cash exercise price of the Stock
Right, or (c) at the discretion of the Committee, by delivery of the grantee's
personal recourse note bearing interest payable not less than annually at no
less than 100% of the lowest applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Committee, by any
combination of (a), (b) and (c) above. If the Committee exercises its discretion
to permit payment of the exercise price of an ISO by means of the methods set
forth in clauses (b), (c), or (d) of the preceding sentence, such discretion
shall be exercised in writing at the time of the grant of the ISO in question.
The holder of a Stock Right shall not have the rights of a shareholder with
respect to the shares covered by his Option until the date of issuance of a
stock certificate to him for such shares. Except as expressly provided above in
paragraph 13 with respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificate is issued.

      15. Terms and Amendment of Plan. This Plan was adopted by the Board on May
20, 1994, subject (with respect to the validation of ISO's granted under the
Plan) to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of the stockholders is not obtained before May 20, 1995, any grants of ISO's
under the Plan made prior to that date will be rescinded. The Plan shall expire
on May 20, 2004 (except as to Options outstanding on that date). Subject to the
provisions of paragraph 5 above, Stock Rights may be granted under the Plan
prior to the date of stockholder approval of the Plan. The Board may terminate
or amend the Plan in any respect at any time, except that, without the approval
of such stockholders obtained within 12 months before or after the Board adopts
a resolution authorizing any of the following actions: (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to paragraph 13); (b) the provisions of paragraph 3
regarding eligibility for grants of ISOs may not be modified; (c) the provisions
of paragraph 6(B) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to paragraph
13); and (d) the expiration date of the Plan may not be extended. Except as
provided in the fourth sentence of this paragraph 15, in no event may action of
the Board or stockholders alter or impair the rights of a grantee, without his
consent, under any Stock Right previously granted to him.

      16. Conversion of ISOs into Non-Qualified Options.

                                       10
<PAGE>

Termination of ISOs. The Committee, at the written request of any optionee, may
in its discretion take such actions as may be necessary to convert such
optionee's ISOs for any installment or portions of installments thereof) that
have not been exercised on the date of conversion into Non-Qualified Options
at any time prior to the expiration of such ISOs, regardless of whether the
optionee is an employee of the Company or a Related Corporation at the time of
such conversion. Such actions may include, but are not limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Options. At the time of such conversion, the Committee (with the consent
of the Optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Committee in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan. Nothing
in the Plan shall be deemed to give any optionee the right to have such
optionee's ISOs converted into Non-Qualified Options, and no such conversion
shall occur until and unless the Committee takes appropriate action. The
Committee, with the consent of the optionee, may also terminate any portion of
any ISO that has not been exercised at the time of such termination.

      17. Application of Funds. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.

      18. Governmental Regulation. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.

      19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 20) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includible in such person's gross income.
The Committee in its discretion may condition (i) the exercise of an Option,
(ii) the grant of an Award, (iii) the making of a Purchase of Common Stock for
less than its fair market value, or (iv) the vesting of restricted Common Stock
acquired by exercising a Stock Right on the grantee's payment of such additional
withholding taxes.

                                       11
<PAGE>

      20. Notice to Company of Disqualified Disposition. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any Common Stock acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such Common Stock before the later of (a)
two years after the date the employee was granted the ISO or (b) one year after
the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.

      21. Governing Law; Construction. The validity and construction of the Plan
and the instruments evidencing Stock Rights shall be governed by the laws of The
Commonwealth of Massachusetts. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.

                                       12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}]]