Document:

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EXHIBIT NO. 10(P)

                           THE PROGRESSIVE CORPORATION

                               1995 INCENTIVE PLAN

SECTION 1.  PURPOSE; DEFINITIONS.

                  The purpose of The Progressive Corporation 1995 Incentive Plan
(the "Plan") is to enable The Progressive Corporation (the "Company") to
attract, retain and reward key employees of the Company and its Subsidiaries and
Affiliates and strengthen the mutuality of interests between such key employees
and the Company's shareholders by offering such key employees equity or
equity-based incentives.

                  For purposes of the Plan, the following terms shall be defined
as set forth below:

                  (a) "Affiliate" means any entity (other than the Company and
         its Subsidiaries) that is designated by the Board as a participating
         employer under the Plan.

                  (b) "Award" means any award of Stock Options, Stock
         Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase
         Rights and Other Stock-Based Awards under the Plan.

                  (c) "Board" means the Board of Directors of the Company.

                  (d) "Book Value" means, as of any given date, on a per share
         basis (1) the shareholders' equity in the Company as of the end of the
         immediately preceding fiscal year as reflected in the Company's audited
         consolidated balance sheet as of such year-end date, subject to such
         adjustments as the Committee shall specify at or after grant, divided
         by (2) the number of outstanding shares of Stock as of such year-end
         date, subject to such adjustments as the Committee shall specify for
         events subsequent to such year-end date.

                  (e) "Code" means the Internal Revenue Code of 1986, as amended
         from time to time, and any successor thereto.

                  (f) "Committee" means the Committee referred to in Section 2
         of the Plan.

                  (g) "Company" means The Progressive Corporation, an Ohio
         corporation, or any successor corporation.

                  (h) "Deferred Stock" means an award of the right to receive
         Stock at the end of a specified deferral period granted pursuant to
         Section 8.

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                  (i) "Disability" means disability as determined under
         procedures established by the Committee for purposes of the Plan.

                  (j) "Disinterested Person" shall have the meaning set forth in
         Rule 16b-3(c)(2)(i) as promulgated by the Securities and Exchange
         Commission under the Exchange Act, or any successor definition adopted
         by the Commission.

                  (k) "Exchange Act" means the Securities Exchange Act of 1934,
         as amended.

                  (l) "Fair Market Value" means, as of any given date, the mean
         between the highest and lowest quoted selling price, regular way, of
         the Stock on such date on the New York Stock Exchange or, if no such
         sale of the Stock occurs on the New York Stock Exchange on such date,
         then such mean price on the next preceding day on which the Stock was
         traded. If the Stock is no longer traded on the New York Stock
         Exchange, then the Fair Market Value of the Stock shall be determined
         by the Committee in good faith.

                  (m) "Incentive Stock Option" means any Stock Option intended
         to be and designated as an "Incentive Stock Option", within the meaning
         of Section 422 of the Code or any successor section thereto.

                  (n) "Non-Qualified Stock Option" means any Stock Option that
         is not an Incentive Stock Option.

                  (o) "Other Stock-Based Award" means an award granted pursuant
         to Section 10 that is valued, in whole or in part, by reference to, or
         is otherwise based on, Stock.

                  (p) "Plan" means The Progressive Corporation 1995 Incentive
         Plan, as amended from time to time.

                  (q) "Restricted Stock" means an award of shares that is
         granted pursuant to Section 7 and is subject to restrictions.

                  (r) "Section 16 participant" means a participant under the
         Plan who is then subject to Section 16 of the Exchange Act.

                  (s) "Stock" means the Common Shares, $1.00 par value per
         share, of the Company.

                  (t) "Stock Appreciation Right" means an award of rights that
         is granted pursuant to Section 6.

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                  (u) "Stock Option" or "Option" means any option to purchase
         shares of Stock (including Restricted Stock and Deferred Stock, if the
         Committee so determines) that is granted pursuant to Section 5.

                  (v) "Stock Purchase Right" means an award of the right to
         purchase Stock that is granted pursuant to Section 9.

                  (w) "Subsidiary" means any corporation (other than the
         Company) in an unbroken chain of corporations beginning with the
         Company if each of the corporations (other than the last corporation in
         the unbroken chain) owns stock possessing 50% or more of the total
         combined voting power of all classes of stock in one of the other
         corporations in such chain.

                  In addition, the terms "Change in Control," "Potential Change
in Control" and "Change in Control Price" shall have the meanings set forth,
respectively, in Sections 11(b), (c) and (d) and the term "Cause" shall have the
meaning set forth in Section 5(b)(8) below.

SECTION 2.  ADMINISTRATION.

                  The Plan shall be administered by the Executive Compensation
Committee of the Board (the "Committee"). The Committee shall consist of not
less than three directors of the Company, all of whom shall be Disinterested
Persons and "outside directors", as defined in Section 162(m) of the Code and
the regulations promulgated thereunder. Such directors shall be appointed by the
Board and shall serve as the Committee at the pleasure of the Board. The
functions of the Committee specified in the Plan shall be exercised by the Board
if and to the extent that no Committee exists which has the authority to so
administer the Plan.

                  The Committee shall have full power to interpret and
administer the Plan and full authority to select the individuals to whom Awards
will be granted and to determine the type and amount of Award(s) to be granted
to each participant, the consideration, if any, to be paid for such Award(s),
the timing of such Award(s), the terms and conditions of Awards granted under
the Plan and the terms and conditions of the related agreements which will be
entered into with participants. As to the selection of and grant of Awards to
participants who are not Section 16 participants, the Committee may delegate its
responsibilities to members of the Company's management consistent with
applicable law.

                  The Committee shall have the authority to adopt, alter and
repeal such rules, guidelines and practices governing the Plan as it shall, from
time to time, deem advisable; to interpret the terms and provisions of the Plan
and any Award issued under the Plan (and any agreements relating thereto); to
direct employees of the Company or other advisors to prepare such materials or
perform such analyses as the Committee deems necessary or appropriate; and
otherwise to supervise the administration of the Plan.

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                  Any interpretation and administration of the Plan by the
Committee, and all actions and determinations of the Committee, shall be final,
binding and conclusive on the Company, its shareholders, Subsidiaries,
Affiliates, all participants in the Plan, their respective legal
representatives, successors and assigns, and upon all persons claiming under or
through any of them. No member of the Board or of the Committee shall incur any
liability for any action taken or omitted, or any determination made, in good
faith in connection with the Plan.

SECTION 3.  STOCK SUBJECT TO THE PLAN.

                  (a) Aggregate Stock Subject to the Plan. Subject to adjustment
         as provided below in Section 3(c), the total number of shares of Stock
         reserved and available for Awards under the Plan is 5,000,000. Any
         Stock issued hereunder may consist, in whole or in part, of authorized
         and unissued shares or treasury shares.

                  (b) Forfeiture or Termination of Awards of Stock. If any Stock
         subject to any Award granted hereunder is forfeited or an Award
         otherwise terminates or expires without the issuance of Stock, the
         Stock subject to such Award shall again be available for distribution
         in connection with future Awards under the Plan as set forth in Section
         3(a), unless the participant who had been awarded such forfeited Stock
         or the expired or terminated Award has theretofore received dividends
         or other benefits of ownership with respect to such Stock. For purposes
         hereof, a participant shall not be deemed to have received a benefit of
         ownership with respect to such Stock by the exercise of voting rights
         or the accumulation of dividends which are not realized due to the
         forfeiture of such Stock or the expiration or termination of the
         related Award without issuance of such Stock.

                  (c) Adjustment. In the event of any merger, reorganization,
         consolidation, recapitalization, share dividend, share split,
         combination of shares or other change in corporate structure of the
         Company affecting the Stock, such substitution or adjustment shall be
         made in the aggregate number of shares of Stock reserved for issuance
         under the Plan, in the number and option price of shares subject to
         outstanding Options granted under the Plan, in the number and purchase
         price of shares subject to outstanding Stock Purchase Rights granted
         under the Plan, and in the number of shares subject to Restricted Stock
         Awards, Deferred Stock Awards and any other outstanding Awards granted
         under the Plan as may be approved by the Committee, in its sole
         discretion; provided that the number of shares subject to any Award
         shall always be a whole number. Any fractional shares shall be
         eliminated.

                  (d) Annual Award Limit. No participant may be granted Stock
         Options or other Awards under the Plan with respect to an aggregate of

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         more than 300,000 shares of Stock (subject to adjustment as provided in
         Section 3(c) hereof) during any calendar year.

SECTION 4.  ELIGIBILITY.

                  Officers and other key employees of the Company and its
Subsidiaries and Affiliates (but excluding members of the Committee and any
person who serves only as a director) who are responsible for or contribute to
the management, growth or profitability of the business of the Company or its
Subsidiaries or Affiliates are eligible to be granted Awards under the Plan.

SECTION 5.  STOCK OPTIONS.

                  (a) Grant. Stock Options may be granted alone, in addition to
         or in tandem with other Awards granted under the Plan or cash awards
         made outside of the Plan. However, no Incentive Stock Option shall be
         issued in tandem with any other Award other than a Stock Appreciation
         Right as provided for in Section 6. The Committee shall determine the
         individuals to whom, and the time or times at which, grants of Stock
         Options will be made, the number of shares purchasable under each Stock
         Option and the other terms and conditions of the Stock Options in
         addition to those set forth in Sections 5(b) and 5(c). Any Stock Option
         granted under the Plan shall be in such form as the Committee may from
         time to time approve.

                  Stock Options granted under the Plan may be of two types which
         shall be indicated on their face: (i) Incentive Stock Options and (ii)
         Non-Qualified Stock Options. Subject to Section 5(c) hereof, the
         Committee shall have the authority to grant to any participant
         Incentive Stock Options, Non-Qualified Stock Options or both types of
         Stock Options.

                  (b) Terms and Conditions. Options granted under the Plan shall
         be evidenced by Option Agreements, shall be subject to the following
         terms and conditions and shall contain such additional terms and
         conditions, not inconsistent with the terms of the Plan, as the
         Committee shall deem desirable:

                      (1) Option Price. The option price per share of Stock
                  purchasable under a Non-Qualified Stock Option shall be
                  determined by the Committee at the time of grant and shall not
                  be less than fifty percent of the Fair Market Value of the
                  Stock at the date of grant. The option price per share of
                  Stock purchasable under an Incentive Stock Option shall be
                  determined by the Committee at the time of grant and shall be
                  not less than 100% of the Fair Market Value of the Stock at
                  the date of grant (or 110% of the Fair Market Value of the
                  Stock at the date of grant in the case of a participant who at
                  the date of grant owns shares possessing more than ten percent
                  of the total combined voting power of all classes of stock of
                  the Company

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                  or its parent or subsidiary corporations (as determined under
                  Section 424(d), (e) and (f) of the Code)).

                      (2) Option Term. The term of each Stock Option shall be
                  determined by the Committee and may not exceed ten years from
                  the date the Option is granted (or, with respect to Incentive
                  Stock Options, five years in the case of a participant who at
                  the date of grant owns shares possessing more than ten percent
                  of the total combined voting power of all classes of stock of
                  the Company or its parent or subsidiary corporations (as
                  determined under Section 424(d), (e) and (f) of the Code)).

                      (3) Exercise. Stock Options shall be exercisable at such
                  time or times and subject to such terms and conditions as
                  shall be determined by the Committee at or after grant;
                  provided, however, that, except as provided in Section 5(b)(6)
                  and Section 11, unless otherwise determined by the Committee
                  at or after grant, no Stock Option shall be exercisable prior
                  to six months and one day following the date of grant. If any
                  Stock Option is exercisable only in installments or only after
                  a specified vesting date, the Committee may accelerate or
                  waive, in whole or in part, such installment exercise
                  provisions or vesting date, at any time at or after grant
                  based on such factors as the Committee shall determine, in its
                  sole discretion.

                      (4) Method of Exercise. Subject to whatever installment
                  exercise provisions apply with respect to such Stock Option,
                  and the six month and one day holding period set forth in
                  Section 5(b)(3), Stock Options may be exercised in whole or in
                  part, at any time during the option period, by giving to the
                  Company written notice of exercise specifying the number of
                  shares of Stock to be purchased.

                          Such notice shall be accompanied by payment in full of
                  the option price of the shares of Stock for which the Option
                  is exercised, in cash or by check or such other instrument as
                  the Committee may accept. Subject to the following sentence,
                  unless otherwise determined by the Committee, in its sole
                  discretion, at or after grant, payment, in full or in part, of
                  the option price of (i) Incentive Stock Options may be made in
                  the form of unrestricted Stock then owned by the participant
                  and (ii) Non-Qualified Stock Options may be made in the form
                  of unrestricted Stock then owned by the participant or Stock
                  that is part of the Non-Qualified Stock Option being
                  exercised. Notwithstanding the foregoing, any election by a
                  Section 16 participant to satisfy such payment obligation, in
                  whole or in part, with Stock that is part of the Non-Qualified
                  Stock Option being exercised shall be subject to approval by
                  the Committee, in its sole discretion. The value of each

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                  such share surrendered or withheld shall be 100% of the Fair
                  Market Value of the Stock on the date the Option is exercised.

                          No Stock shall be issued pursuant to an exercise of an
                  Option until full payment has been made. A participant shall
                  not have rights to dividends or any other rights of a
                  shareholder with respect to any Stock subject to an Option
                  unless and until the participant has given written notice of
                  exercise, has paid in full for such shares, has given, if
                  requested, the representation described in Section 14(a) and
                  such shares have been issued to him.

                      (5) Non-Transferability of Options. No Stock Option shall
                  be transferable by the participant other than by will or by
                  the laws of descent and distribution, and all Stock Options
                  shall be exercisable, during the participant's lifetime, only
                  by the participant or, subject to Sections 5(b)(3) and 5(c),
                  by the participant's authorized legal representative if the
                  participant is unable to exercise an Option as a result of the
                  participant's Disability.

                      (6) Termination by Death. Subject to Section 5(c), if any
                  participant's employment by the Company or any Subsidiary or
                  Affiliate terminates by reason of death, any Stock Option held
                  by such participant may thereafter be exercised, to the extent
                  such Option was exercisable at the time of death or would have
                  become exercisable within one year from the time of death had
                  the participant continued to fulfill all conditions of the
                  Option during such period (or on such accelerated basis as the
                  Committee may determine at or after grant), by the estate of
                  the participant (acting through its fiduciary), for a period
                  of one year (or such other period as the Committee may specify
                  at or after grant) from the date of such death. The balance of
                  the Stock Option shall be forfeited.

                      (7) Termination by Reason of Disability. Subject to
                  Sections 5(b)(3) and 5(c), if a participant's employment by
                  the Company or any Subsidiary or Affiliate terminates by
                  reason of Disability, any Stock Option held by such
                  participant may thereafter be exercised, to the extent such
                  Option was exercisable at the time of termination or would
                  have become exercisable within one year from the time of
                  termination had the participant continued to fulfill all
                  conditions of the Option during such period (or on such
                  accelerated basis as the Committee may determine at or after
                  grant), by the participant or by the participant's duly
                  authorized legal representative if the participant is unable
                  to exercise the Option as a result of the participant's
                  Disability, for a period of one year (or such other period as
                  the Committee may specify at or after grant) from the date of
                  such termination of employment; provided, however, that in no
                  event may any such Option be exercised prior to six months and
                  one day from the date of grant; and provided, further, that if
                  the participant dies within such one-year period (or such
                  other period as

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                  the Committee shall specify at or after grant), any
                  unexercised Stock Option held by such participant shall
                  thereafter be exercisable by the estate of the participant
                  (acting through its fiduciary) to the same extent to which it
                  was exercisable at the time of death for a period of one year
                  from the date of such termination of employment. The balance
                  of the Stock Option shall be forfeited.

                      (8) Other Termination. Unless otherwise determined by the
                  Committee at or after the time of granting any Stock Option,
                  if a participant's employment by the Company or any Subsidiary
                  or Affiliate terminates for any reason other than death or
                  Disability, all Stock Options held by such participant shall
                  thereupon immediately terminate, except that if the
                  participant is involuntarily terminated by the Company or any
                  Subsidiary or Affiliate without Cause, any such Stock Option
                  may be exercised, to the extent otherwise exercisable at the
                  time of such termination, at any time during the lesser of two
                  months from the date of such termination or the balance of
                  such Stock Option's term. For purposes of this Plan, "Cause"
                  means a felony conviction of a participant or the failure of a
                  participant to contest prosecution for a felony, or a
                  participant's willful misconduct or dishonesty, any of which,
                  in the judgment of the Committee, is harmful to the business
                  or reputation of the Company or any Subsidiary or Affiliate.

                  (c) Incentive Stock Options. Notwithstanding Section 4, only
         key employees of the Company or any Subsidiary shall be eligible to
         receive Incentive Stock Options. Notwithstanding Sections 5(b)(6) and
         (7), an Incentive Stock Option shall be exercisable by (i) a
         participant's authorized legal representative (if the participant is
         unable to exercise the Incentive Stock Option as a result of the
         participant's Disability) only if, and to the extent, permitted by
         Section 422 of the Code and Section 16 of the Exchange Act and the
         rules and regulations promulgated thereunder and (ii) by the
         participant's estate, in the case of death, or authorized legal
         representative, in the case of Disability, no later than 10 years from
         the date the Incentive Stock Option was granted (in addition to any
         other restrictions or limitations which may apply). Anything in the
         Plan to the contrary notwithstanding, no term or provision of the Plan
         relating to Incentive Stock Options shall be interpreted, amended or
         altered, nor shall any discretion or authority granted under the Plan
         be exercised, so as to disqualify the Plan under Section 422 of the
         Code, or, without the consent of the participant(s) affected, to
         disqualify any Incentive Stock Option under such Section 422 or any
         successor Section thereto.

                  (d) Buyout Provisions. The Committee may at any time buy out
         for a payment in cash, Stock, Deferred Stock or Restricted Stock an
         Option previously granted, based on such terms and conditions as the
         Committee shall establish and agree upon with the participant, provided
         that no such transaction involving a Section 16 participant shall be
         structured or effected in a manner that would violate, or result in any
         liability on the

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         part of the participant under, Section 16 of the Exchange Act or the
         rules and regulations promulgated thereunder.

SECTION 6.  STOCK APPRECIATION RIGHTS.

                  (a) Grant. Stock Appreciation Rights may be granted alone, in
         addition to or in tandem with other Awards granted under the Plan or
         cash awards made outside of the Plan. The Committee shall determine the
         individuals to whom, and the time or times at which, grants of Stock
         Appreciation Rights will be made and the other terms and conditions of
         the Stock Appreciation Rights in addition to those set forth in Section
         6(b). Any Stock Appreciation Right granted under the Plan shall be in
         such form as the Committee may from time to time approve. In the case
         of Non-Qualified Stock Options, such rights may be granted either at or
         after the time of the grant of the related Non-Qualified Stock Options.
         In the case of Incentive Stock Options, such rights may be granted in
         tandem with Incentive Stock Options only at the time of the grant of
         such Incentive Stock Options and exercised only when the Fair Market
         Value of the Stock subject to the Option exceeds the option price of
         the Option.

                      Stock Appreciation Rights issued in tandem with Stock
         Options ("Tandem SARs") shall terminate and no longer be exercisable
         upon the termination or exercise of the related Stock Option, subject
         to such provisions as the Committee may specify at grant if a Stock
         Appreciation Right is granted with respect to less than the full number
         of shares of Stock subject to the related Stock Option.

                      All Stock Appreciation Rights granted hereunder shall be
         exercised, subject to Section 6(b), in accordance with the procedures
         established by the Committee for such purpose. Upon such exercise, the
         participant shall be entitled to receive an amount determined in the
         manner prescribed in Section 6(b).

                  (b) Terms and Conditions. Stock Appreciation Rights granted
         under the Plan shall be subject to the following terms and conditions
         and shall contain such additional terms and conditions, not
         inconsistent with the provisions of the Plan, as the Committee shall
         deem desirable:

                      (1) Tandem SARs shall be exercisable only at such time or
                  times and to the extent that the Stock Options to which they
                  relate shall be exercisable in accordance with the provisions
                  of Section 5 and this Section 6, and Stock Appreciation Rights
                  granted separately ("Freestanding SARs") shall be exercisable
                  as the Committee shall determine; provided, however, that any
                  Stock Appreciation Right granted to a Section 16 participant
                  shall not be exercisable at any time prior to six months and
                  one day from the date of the grant of such Stock Appreciation
                  Right, except that this limitation shall not

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                  apply in the event of the death of the participant prior to
                  the expiration of the six-month and one-day period.

                      (2) Upon the exercise of a Stock Appreciation Right, a
                  participant shall be entitled to receive an amount in cash or
                  shares of Stock, as determined by the Committee, equal in
                  value to the excess of the Fair Market Value of one share of
                  Stock on the date of exercise of the Stock Appreciation Right
                  over (i) the option price per share specified in the related
                  Stock Option in the case of Tandem SARs, which price shall be
                  fixed no later than the date of grant of the Tandem SARs, or
                  (ii) the price per share specified in the related Stock
                  Appreciation Rights Agreement in the case of Freestanding
                  SARs, which price shall be fixed at the date of grant and
                  shall be not less than fifty percent of the Fair Market Value
                  of the Stock on the date of grant, multiplied by the number of
                  shares of Stock in respect of which the Stock Appreciation
                  Right shall have been exercised. The Committee, in its sole
                  discretion, shall have the right to determine the form of
                  payment (i.e. cash, Stock or any combination thereof) and to
                  approve any election by the participant to receive cash, in
                  whole or in part, upon exercise of the Stock Appreciation
                  Right. When payment is to be made in Stock, the number of
                  shares of Stock to be paid shall be calculated on the basis of
                  the Fair Market Value of the Stock on the date of exercise.
                  Notwithstanding the foregoing, the Committee may unilaterally
                  limit the appreciation in value of any Stock Appreciation
                  Right at any time prior to exercise.

                      (3) Upon the exercise of a Tandem SAR, the Stock Option or
                  part thereof to which such Tandem SAR is related shall be
                  deemed to have been exercised.

                      (4) In its sole discretion, the Committee may grant
                  "Limited" Stock Appreciation Rights under this Section 6; that
                  is, Freestanding SARs that become exercisable only in the
                  event of a Change in Control or a Potential Change in Control,
                  subject to such terms and conditions as the Committee may
                  specify at grant. Such Limited Stock Appreciation Rights shall
                  be settled solely in cash.

                      (5) Stock Appreciation Rights shall not be transferable by
                  the participant other than by will or by the laws of descent
                  and distribution, and all Stock Appreciation Rights shall be
                  exercisable, during the participant's lifetime, only by the
                  participant or, subject to Section 6(b)(6), by the
                  participant's authorized legal representative if the
                  participant is unable to exercise a Stock Appreciation Right
                  as a result of the participant's Disability.

                      (6) Unless varied by the Committee, Stock Appreciation
                  Rights shall be subject to the terms and conditions specified
                  for Stock Options in Sections 5(b)(6), (7) and (8) and 5(d),
                  except that the terms and conditions applicable to any Stock
                  Appreciation Right held

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                  by a Section 16 participant shall not be varied in a manner
                  that would cause the exercise or cancellation of such Stock
                  Appreciation Right to fail to qualify for any applicable
                  exemption from Section 16(b) of the Exchange Act provided by
                  Rule 16b-3 thereunder.

SECTION 7.  RESTRICTED STOCK.

                  (a) Grant. Shares of Restricted Stock may be issued alone, in
         addition to or in tandem with other Awards under the Plan or cash
         awards made outside of the Plan. The Committee shall determine the
         individuals to whom, and the time or times at which, grants of
         Restricted Stock will be made, the number of shares of Restricted Stock
         to be awarded to each participant, the price (if any) to be paid by the
         participant (subject to Section 7(b)), the date or dates upon which
         Restricted Stock Awards will vest and the period or periods within
         which such Restricted Stock Awards may be subject to forfeiture, and
         the other terms and conditions of such Awards in addition to those set
         forth in Section 7(b).

                      The Committee may condition the grant of Restricted Stock
         upon the attainment of specified performance goals or such other
         factors as the Committee may determine in its sole discretion.

                  (b) Terms and Conditions. Restricted Stock awarded under the
         Plan shall be subject to the following terms and conditions and shall
         contain such additional terms and conditions, not inconsistent with the
         provisions of the Plan, as the Committee shall deem desirable. A
         participant who receives a Restricted Stock Award shall not have any
         rights with respect to such Award, unless and until such participant
         has executed an agreement evidencing the Award in the form approved
         from time to time by the Committee and has delivered a fully executed
         copy thereof to the Company, and has otherwise complied with the
         applicable terms and conditions of such Award.

                      (1) The purchase price for shares of Restricted Stock
                  shall be determined by the Committee at the time of grant and
                  may be equal to their par value or zero.

                      (2) Awards of Restricted Stock must be accepted by
                  executing a Restricted Stock Award agreement and paying
                  whatever price (if any) is required under Section 7(b)(1).

                      (3) Each participant receiving a Restricted Stock Award
                  shall be issued a stock certificate in respect of such shares
                  of Restricted Stock. Such certificate shall be registered in
                  the name of such participant, and shall bear an appropriate
                  legend referring to the terms, conditions and restrictions
                  applicable to such Award.

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                      (4) The Committee shall require that the stock
                  certificates evidencing such shares be held in custody by the
                  Company until the restrictions thereon shall have lapsed, and
                  that, as a condition of any Restricted Stock Award, the
                  participant shall have delivered to the Company a stock power,
                  endorsed in blank, relating to the Stock covered by such
                  Award.

                      (5) Subject to the provisions of this Plan and the
                  Restricted Stock Award agreement, during a period set by the
                  Committee commencing with the date of such Award (the
                  "Restriction Period"), the participant shall not be permitted
                  to sell, transfer, pledge, assign or otherwise encumber the
                  shares of Restricted Stock awarded under the Plan. The
                  Restriction Period shall not be less than six months and one
                  day in duration ("Minimum Restriction Period"). Subject to
                  these limitations and the Minimum Restriction Period
                  requirement, the Committee, in its sole discretion, may
                  provide for the lapse of such restrictions in installments and
                  may accelerate or waive such restrictions, in whole or in
                  part, based on service, performance or such other factors and
                  criteria as the Committee may determine, in its sole
                  discretion.

                      (6) Except as provided in this Section 7(b)(6), Section
                  7(b)(5) and Section 7(b)(7), the participant shall have, with
                  respect to the shares of Restricted Stock awarded, all of the
                  rights of a shareholder of the Company, including the right to
                  vote the Stock, and the right to receive any dividends. The
                  Committee, in its sole discretion, as determined at the time
                  of award, may permit or require the payment of cash dividends
                  to be deferred and, if the Committee so determines,
                  reinvested, subject to Section 14(f), in additional Restricted
                  Stock to the extent shares are available under Section 3, or
                  otherwise reinvested. Stock dividends issued with respect to
                  Restricted Stock shall be treated as additional shares of
                  Restricted Stock that are subject to the same restrictions and
                  other terms and conditions that apply to the shares with
                  respect to which such dividends are issued.

                      (7) No Restricted Stock shall be transferable by a
                  participant otherwise than by will or by the laws of descent
                  and distribution.

                      (8) If a participant's employment by the Company or any
                  Subsidiary or Affiliate terminates by reason of death, any
                  Restricted Stock held by such participant shall thereafter
                  vest or any restriction lapse, to the extent such Restricted
                  Stock would have become vested or no longer subject to
                  restriction within one year from the time of death had the
                  participant continued to fulfill all of the conditions of the
                  Restricted Stock Award during such period (or on such
                  accelerated basis as the Committee may determine at or after
                  grant). The balance of the Restricted Stock shall be
                  forfeited.

<PAGE>   13

                      (9) If a participant's employment by the Company or any
                  Subsidiary or Affiliate terminates by reason of Disability,
                  any Restricted Stock held by such participant shall thereafter
                  vest or any restriction lapse, to the extent such Restricted
                  Stock would have become vested or no longer subject to
                  restriction within one year from the time of termination had
                  the participant continued to fulfill all of the conditions of
                  the Restricted Stock Award during such period (or on such
                  accelerated basis as the Committee may determine at or after
                  grant), subject in all cases to the Minimum Restriction Period
                  requirement. The balance of the Restricted Stock shall be
                  forfeited.

                      (10) Unless otherwise determined by the Committee at or
                  after the time of granting any Restricted Stock, if a
                  participant's employment by the Company or any Subsidiary or
                  Affiliate terminates for any reason other than death or
                  Disability, the Restricted Stock held by such participant
                  which is unvested or subject to restriction at the time of
                  termination shall thereupon be forfeited.

                  (c) Minimum Value Provisions. In order to better ensure that
         award payments actually reflect the performance of the Company and
         service of the participant, the Committee may provide, in its sole
         discretion, for a tandem performance-based or other award designed to
         guarantee a minimum value, payable in cash or Stock to the recipient of
         a Restricted Stock Award, subject to such performance, future service,
         deferral and other terms and conditions as may be specified by the
         Committee.

SECTION 8.  DEFERRED STOCK.

                  (a) Grant. Deferred Stock may be awarded alone, in addition to
         or in tandem with other Awards granted under the Plan or cash awards
         made outside of the Plan. The Committee shall determine the individuals
         to whom, and the time or times at which, Deferred Stock shall be
         awarded, the number of shares of Deferred Stock to be awarded to any
         participant, the duration of the period (the "Deferral Period") during
         which, and the conditions under which, receipt of the Stock will be
         deferred, and the other terms and conditions of the Award in addition
         to those set forth in Section 8(b).

                      The Committee may condition the grant of Deferred Stock
         upon the attainment of specified performance goals or such other
         factors as the Committee shall determine, in its sole discretion.

<PAGE>   14

                  (b) Terms and Conditions. Deferred Stock Awards shall be
         subject to the following terms and conditions and shall contain such
         additional terms and conditions, not inconsistent with the terms of the
         Plan, as the Committee shall deem desirable:

                      (1) The purchase price for shares of Deferred Stock shall
                  be determined at the time of grant and may be equal to their
                  par value or zero, as determined by the Committee. Subject to
                  the provisions of the Plan and the Award agreement referred to
                  in Section 8(b)(9), Deferred Stock Awards may not be sold,
                  assigned, transferred, pledged or otherwise encumbered during
                  the Deferral Period. At the expiration of the Deferral Period
                  (or the Elective Deferral Period referred to in Section
                  8(b)(8), where applicable), share certificates shall be
                  delivered to the participant, or his legal representative, for
                  the shares covered by the Deferred Stock Award. The Deferral
                  Period applicable to any Deferred Stock Award shall not be
                  less than six months and one day ("Minimum Deferral Period").

                      (2) Unless otherwise determined by the Committee at grant,
                  amounts equal to any dividends declared during the Deferral
                  Period with respect to the number of shares covered by a
                  Deferred Stock Award will be paid to the participant
                  currently, or deferred and deemed to be reinvested in
                  additional Deferred Stock, or otherwise reinvested, all as
                  determined at or after the time of the Award by the Committee,
                  in its sole discretion.

                      (3) No Deferred Stock shall be transferable by a
                  participant otherwise than by will or by the laws of descent
                  and distribution.

                      (4) If a participant's employment by the Company or any
                  Subsidiary or Affiliate terminates by reason of death, any
                  Deferred Stock held by such participant shall thereafter vest
                  or any restriction lapse, to the extent such Deferred Stock
                  would have become vested or no longer subject to restriction
                  within one year from the time of death had the participant
                  continued to fulfill all of the conditions of the Deferred
                  Stock Award during such period (or on such accelerated basis
                  as the Committee may determine at or after grant). The balance
                  of the Deferred Stock shall be forfeited.

                      (5) If a participant's employment by the Company or any
                  Subsidiary or Affiliate terminates by reason of Disability,
                  any Deferred Stock held by such participant shall thereafter
                  vest or any restriction lapse, to the extent such Deferred
                  Stock would have become vested or no longer subject to
                  restriction within one year from the time of termination had
                  the participant continued to fulfill all of the conditions of
                  the Deferred Stock Award during such period (or on such
                  accelerated basis as the Committee may determine at or after
                  grant), subject in all cases to the Minimum Deferral Period
                  requirement. The balance of the Deferred Stock shall be
                  forfeited.

<PAGE>   15

                      (6) Unless otherwise determined by the Committee at or
                  after the time of granting any Deferred Stock Award, if a
                  participant's employment by the Company or any Subsidiary or
                  Affiliate terminates for any reason other than death or
                  Disability, all Deferred Stock held by such participant which
                  is unvested or subject to restriction shall thereupon be
                  forfeited.

                      (7) Based on service, performance or such other factors or
                  criteria as the Committee may determine, the Committee may, at
                  or after grant, accelerate the vesting of all or any part of
                  any Deferred Stock Award or waive a portion of the Deferral
                  Period for all or any part of such Award, subject in all cases
                  to the Minimum Deferral Period requirement.

                      (8) A participant may elect to further defer receipt of a
                  Deferred Stock Award (or an installment of an Award) for a
                  specified period or until a specified event (the "Elective
                  Deferral Period"), subject in each case to the Committee's
                  approval and the terms of this Section 8 and such other terms
                  as are determined by the Committee, all in its sole
                  discretion. Subject to any exceptions approved by the
                  Committee, such election must be made at least 12 months prior
                  to completion of the Deferral Period for such Deferred Stock
                  Award (or such installment).

                      (9) Each such Award shall be confirmed by, and subject to
                  the terms of, a Deferred Stock Award agreement evidencing the
                  Award in the form approved from time to time by the Committee.

                  (c) Minimum Value Provisions. In order to better ensure that
         award payments actually reflect the performance of the Company and
         service of the participant, the Committee may provide, in its sole
         discretion, for a tandem performance-based or other Award designed to
         guarantee a minimum value, payable in cash or Stock to the recipient of
         a Deferred Stock Award, subject to such performance, future service,
         deferral and other terms and conditions as may be specified by the
         Committee.

SECTION 9.  STOCK PURCHASE RIGHTS.

                  (a) Grant. Stock Purchase Rights may be granted alone, in
         addition to or in tandem with other Awards granted under the Plan or
         cash awards made outside the Plan. The Committee shall determine the
         individuals to whom, and the time or times at which, grants of Stock
         Purchase Rights will be made, the number of shares of Stock which may
         be purchased pursuant to the Stock Purchase Rights, and the other terms
         and conditions of the Stock Purchase Rights in addition to those set
         forth in

<PAGE>   16

         Section 9(b). The Stock subject to the Stock Purchase Rights may be
         purchased, as determined by the Committee at the time of grant:

                      (1) at the Fair Market Value of such Stock on the date of
                  grant;

                      (2) at 50% of the Fair Market Value of such Stock on the
                  date of grant;

                      (3) at an amount equal to the Book Value of such Stock on
                  the date of grant; or

                      (4) at an amount equal to the par value of such Stock on
                  the date of grant.

                      Subject to Section 9(b) hereof, the Committee may also
         impose such deferral, forfeiture or other terms and conditions as it
         shall determine, in its sole discretion, on such Stock Purchase Rights
         or the exercise thereof.

                      Each Stock Purchase Right Award shall be confirmed by, and
         be subject to the terms of, a Stock Purchase Rights Agreement which
         shall be in form approved by the Committee.

                  (b) Terms and Conditions. Stock Purchase Rights may contain
         such additional terms and conditions not inconsistent with the terms of
         the Plan as the Committee shall deem desirable, and shall generally be
         exercisable for such period as shall be determined by the Committee.
         However, Stock Purchase Rights granted to Section 16 participants shall
         not become exercisable earlier than six months and one day after the
         grant date. Stock Purchase Rights shall not be transferable by a
         participant other than by will or by the laws of descent and
         distribution.

SECTION 10.  OTHER STOCK-BASED AWARDS.

                  (a) Grant. Other Awards of Stock and other Awards that are
         valued, in whole or in part, by reference to, or are otherwise based
         on, Stock, including, without limitation, performance shares,
         convertible preferred stock, convertible debentures, exchangeable
         securities and Stock Awards or options valued by reference to Book
         Value or subsidiary performance, may be granted alone, in addition to
         or in tandem with other Awards granted under the Plan or cash awards
         made outside of the Plan.

                      At the time the Stock or Other Stock-Based Award is
         granted, the Committee shall determine the individuals to whom and the
         time or times at which such Stock or Other Stock-Based Awards shall be
         awarded, the number of shares of Stock to be used in computing an Award
         or which are to be awarded pursuant to such Awards, the consideration,
         if any, to be

<PAGE>   17

         paid for such Stock or Other Stock-Based Awards, and all other terms
         and conditions of the Awards in addition to those set forth in Section
         10(b).

                      The provisions of Other Stock-Based Awards need not be the
         same with respect to each participant.

                  (b) Terms and Conditions. Other Stock-Based Awards shall be
         subject to the following terms and conditions and shall contain such
         additional terms and conditions, not inconsistent with the terms of the
         Plan, as the Committee shall deem desirable:

                      (1) Subject to the provisions of this Plan and the Award
                  agreement referred to in Section 10(b)(5) below, Stock awarded
                  or subject to Awards made under this Section 10 may not be
                  sold, assigned, transferred, pledged or otherwise encumbered
                  prior to the date on which the Stock is issued, or, if later,
                  the date on which any applicable restriction, performance,
                  holding or deferral period or requirement is satisfied or
                  lapses. All Stock or Other Stock Based Awards granted under
                  this Section 10 shall be subject to a minimum holding period
                  (including any applicable restriction, performance and/or
                  deferral periods) of six months and one day ("Minimum Holding
                  Period").

                      (2) Subject to the provisions of this Plan and the Award
                  agreement and unless otherwise determined by the Committee at
                  the time of grant, the recipient of an Other Stock-Based Award
                  shall be entitled to receive, currently or on a deferred
                  basis, interest or dividends or interest or dividend
                  equivalents with respect to the number of shares of Stock
                  covered by the Award, as determined at the time of the Award
                  by the Committee, in its sole discretion, and the Committee
                  may provide that such amounts (if any) shall be deemed to have
                  been reinvested in additional Stock or otherwise reinvested.

                      (3) Subject to the Minimum Holding Period, any Other
                  Stock-Based Award and any Stock covered by any such Award
                  shall vest or be forfeited to the extent, at the times and
                  subject to the conditions, if any, provided in the Award
                  agreement, as determined by the Committee, in its sole
                  discretion.

                      (4) In the event of the participant's Disability or death,
                  or in cases of special circumstances, the Committee may, in
                  its sole discretion, waive, in whole or in part, any or all of
                  the remaining limitations imposed hereunder or under any
                  related Award agreement (if any) with respect to any part or
                  all of any Award under this Section 10, provided that the
                  Minimum Holding Period requirement may not be waived, except
                  in case of a participant's death.
<PAGE>   18

                      (5) Each Award shall be confirmed by, and subject to the
                  terms of, an agreement or other instrument evidencing the
                  Award in the form approved from time to time by the Committee,
                  the Company and the participant.

                      (6) Stock (including securities convertible into Stock)
                  issued on a bonus basis under this Section 10 shall be issued
                  for no cash consideration. Stock (including securities
                  convertible into Stock) purchased pursuant to a purchase right
                  awarded under this Section 10 shall bear a price of at least
                  50% of the Fair Market Value of the Stock on the date of
                  grant. The purchase price of such Stock, and of any Other
                  Stock Based Award granted hereunder, or the formula by which
                  such price is to be determined, shall be fixed by the
                  Committee at the time of grant.

                      (7) In the event that any "derivative security", as
                  defined in Rule 16a-1(c) (or any successor thereto)
                  promulgated by the Securities and Exchange Commission under
                  Section 16 of the Exchange Act, is awarded pursuant to this
                  Section 10 to any Section 16 participant, such derivative
                  security shall not be transferrable other than by will or by
                  the laws of descent and distribution.

SECTION 11.  CHANGE IN CONTROL PROVISION.

                  (a) Impact of Event. In the event of: (1) a "Change in
         Control" as defined in Section 11(b) or (2) a "Potential Change in
         Control" as defined in Section 11(c), the following acceleration and
         valuation provisions shall apply:

                      (1) Any Stock Appreciation Rights and any Stock Options
                  awarded under the Plan not previously exercisable and vested
                  shall become fully exercisable and vested;

                      (2) The restrictions and deferral limitations applicable
                  to any Restricted Stock, Deferred Stock, Stock Purchase Rights
                  and Other Stock-Based Awards shall lapse and such shares and
                  awards shall be deemed fully vested; and

                      (3) The value of all outstanding Awards, in each case to
                  the extent vested, shall, unless otherwise determined by the
                  Committee in its sole discretion at or after grant but prior
                  to any Change in Control or Potential Change in Control, be
                  cashed out on the basis of the "Change in Control Price" as
                  defined in Section 11(d) as of the date such Change in Control
                  or such Potential Change in Control is determined to have
                  occurred;

<PAGE>   19

         provided, however, that the provisions of Sections 11(a)(1)-(3) shall
         not apply with respect to Awards granted to any Section 16 participant
         which have been held by such participant for less than six months and
         one day as of the date that such Change in Control or Potential Change
         in Control is determined to have occurred.

                  (b) Definition of Change in Control. For purposes of Section
         11(a), a "Change in Control" means the happening of any of the
         following:

                      (1) When any "person" as defined in Section 3(a)(9) of the
                  Exchange Act and as used in Sections 13(d) and 14(d) thereof,
                  including a "group" as defined in Section 13(d) of the
                  Exchange Act, but excluding the Company and any Subsidiary and
                  any employee benefit plan sponsored or maintained by the
                  Company or any Subsidiary (including any trustee of such plan
                  acting as trustee), directly or indirectly, becomes the
                  "beneficial owner" (as defined in Rule 13d-3 under the
                  Exchange Act, as amended from time to time), of securities of
                  the Company representing 20 percent or more of the combined
                  voting power of the Company's then outstanding securities;
                  provided, however, that the terms "person" and "group" shall
                  not include any "Excluded Director", and the term "Excluded
                  Director" means any director who, on the effective date of the
                  Plan, is the beneficial owner of or has the right to acquire
                  an amount of Stock equal to or greater than five percent of
                  the number of shares of Stock outstanding on such effective
                  date; and further provided that, unless otherwise determined
                  by the Board or any committee thereof, the terms "person" and
                  "group" shall not include any entity or group of entities
                  which has acquired Stock of the Company in the ordinary course
                  of business for investment purposes only and not with the
                  purpose or effect of changing or influencing the control of
                  the Company, or in connection with or as a participant in any
                  transaction having such purpose or effect, ("Investment
                  Intent"), as demonstrated by the filing by such entity or
                  group of a statement on Schedule 13G (including amendments
                  thereto) pursuant to Regulation 13D under the Exchange Act, as
                  long as such entity or group continues to hold such Stock with
                  an Investment Intent;

                      (2) When, during any period of 24 consecutive months
                  during the existence of the Plan, the individuals who, at the
                  beginning of such period, constitute the Board (the "Incumbent
                  Directors") cease for any reason other than death to
                  constitute at least a majority thereof; provided, however,
                  that a director who was not a director at the beginning of
                  such 24-month period shall be deemed to have satisfied such
                  24-month requirement (and be an Incumbent Director) if such
                  director was elected by, or on the recommendation of or with
                  the approval of, at least two-thirds of the directors who then
                  qualified as Incumbent Directors either actually (because they
                  were directors at the beginning of such 24-month period) or by
                  prior operation of this Section 11(b)(2); or

<PAGE>   20

                      (3) The occurrence of a transaction requiring shareholder
                  approval for the acquisition of the Company by an entity other
                  than the Company or a Subsidiary through purchase of assets,
                  by merger or otherwise; provided, however, a change in control
                  shall not be deemed to be a Change in Control for purposes of
                  the Plan if the Board approves such change prior to either (i)
                  the commencement of any of the events described in Section
                  (b)(l), (2), or (3) or (c)(l) or (ii) the commencement by any
                  person other than the Company of a tender offer for Stock.

                  (c) Definition of Potential Change in Control. For purposes of
         Section 11(a), a "Potential Change in Control" means the happening of
         any one of the following:

                      (1) The approval by shareholders of an agreement by the
                  Company, the consummation of which would result in a Change in
                  Control of the Company as defined in Section 11(b); or

                      (2) The acquisition of beneficial ownership, directly or
                  indirectly, by any entity, person or group (other than the
                  Company or a Subsidiary or any Company employee benefit plan
                  (including any trustee of such plan acting as such trustee))
                  of securities of the Company representing 5% or more of the
                  combined voting power of the Company's outstanding securities
                  and the adoption by the Board of a resolution to the effect
                  that a Potential Change in Control of the Company has occurred
                  for purposes of this Plan.

                  (d) Change in Control Price. For purposes of this Section 11,
         "Change in Control Price" means the highest price per share paid in any
         transaction reported on the New York Stock Exchange Composite Index, or
         paid or offered in any bona fide transaction related to a Change in
         Control or Potential Change in Control of the Company, at any time
         during the 60-day period immediately preceding the occurrence of the
         Change in Control (or, where applicable, the occurrence of the
         Potential Change in Control event), in each case as determined by the
         Committee, except that, in the case of Incentive Stock Options and
         Stock Appreciation Rights relating to Incentive Stock Options, such
         price shall be based only on transactions reported for the date on
         which the participant exercises such Stock Appreciation Rights or,
         where applicable, the date on which a cashout occurs under Section
         11(a)(3).

SECTION 12.  AMENDMENTS AND TERMINATION.

                  The Board may at any time, in its sole discretion, amend,
alter or discontinue the Plan, but no such amendment, alteration or
discontinuation shall be made which would impair the rights of a participant
under an Award theretofore granted, without the participant's consent. The
Company shall

<PAGE>   21

submit to the shareholders of the Company for their approval any amendments to
the Plan which are required by Section 16 of the Exchange Act, or the rules and
regulations thereunder, to be approved by the shareholders.

                  The Committee may at any time, in its sole discretion, amend
the terms of any Award, but no such amendment shall be made which would impair
the rights of a participant under an Award theretofore granted, without the
participant's consent; nor shall any such amendment be made which would make the
applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable
to any Section 16 participant holding the Award without the participant's
consent. The Committee may also substitute new Stock Options for previously
granted Stock Options (on a one-for-one or other basis), including previously
granted Stock Options having a higher option price.

                  Subject to the above provisions, the Board shall have all
necessary authority to amend the Plan to take into account changes in applicable
securities and tax laws and accounting rules, as well as other developments.

SECTION 13.  UNFUNDED STATUS OF PLAN.

                  The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payments not yet made
to a participant by the Company, nothing contained herein shall give any such
participant any rights that are greater than those of a general creditor of the
Company.

SECTION 14.  GENERAL PROVISIONS.

                  (a) The Committee may require each participant acquiring Stock
         pursuant to an Award under the Plan to represent to and agree with the
         Company in writing that the participant is acquiring the Stock without
         a view to distribution thereof. The certificates for such shares may
         include any legend which the Committee deems appropriate to reflect any
         restrictions on transfer.

                      All shares of Stock or other securities delivered under
         the Plan shall be subject to such stop-transfer orders and other
         restrictions as the Committee may deem advisable under the rules,
         regulations and other requirements of the Securities and Exchange
         Commission, any stock exchange upon which the Stock is then listed, and
         any applicable federal or state securities laws, and the Committee may
         cause a legend or legends to be put on any certificates for such shares
         to make appropriate reference to such restrictions.

                  (b) Nothing contained in this Plan shall prevent the Board
         from adopting other or additional compensation arrangements, subject to

<PAGE>   22

         shareholder approval if such approval is required; and such
         arrangements may be either generally applicable or applicable only in
         specific cases.

                  (c) Neither the adoption of the Plan, nor its operation, nor
         any document describing, implementing or referring to the Plan, or any
         part thereof, shall confer upon any participant under the Plan any
         right to continue in the employ, or as a director, of the Company or
         any Subsidiary or Affiliate, or shall in any way affect the right and
         power of the Company or any Subsidiary or Affiliate to terminate the
         employment, or service as a director, of any participant under the Plan
         at any time with or without assigning a reason therefor, to the same
         extent as the Company or any Subsidiary or Affiliate might have done if
         the Plan had not been adopted.

                  (d) For purposes of this Plan, a transfer of a participant
         between the Company and its Subsidiaries and Affiliates shall not be
         deemed a termination of employment.

                  (e) No later than the date as of which an amount first becomes
         includable in the gross income of the participant for federal income
         tax purposes with respect to any Award under the Plan, the participant
         shall pay to the Company, or make arrangements satisfactory to the
         Committee regarding the payment of, any federal, state or local taxes
         or other items of any kind required by law to be withheld with respect
         to such amount. Subject to the following sentence, unless otherwise
         determined by the Committee, withholding obligations may be settled
         with Stock, including unrestricted Stock previously owned by the
         participant or Stock that is part of the Award that gives rise to the
         withholding requirement. Notwithstanding the foregoing, any election by
         a Section 16 participant to settle such tax withholding obligation with
         Stock that is part of such Award shall be subject to approval by the
         Committee, in its sole discretion. The obligations of the Company under
         the Plan shall be conditional on such payment or arrangements and the
         Company and its Subsidiaries and Affiliates shall, to the extent
         permitted by law, have the right to deduct any such taxes from any
         payment of any kind otherwise due to the participant.

                  (f) The actual or deemed reinvestment of dividends or dividend
         equivalents in additional Restricted Stock (or in Deferred Stock or
         other types of Awards) at the time of any dividend payment shall only
         be permissible if sufficient shares of Stock are available under
         Section 3 for such reinvestment (taking into account then outstanding
         Stock Options, Stock Purchase Rights and other Plan Awards).

                  (g) The Plan, all Awards made and actions taken thereunder and
         any agreements relating thereto shall be governed by and construed in
         accordance with the laws of the State of Ohio.

                  (h) All agreements entered into with participants pursuant to
         the Plan shall be subject to the Plan.

<PAGE>   23

                  (i) The provisions of Awards need not be the same with respect
         to each participant.

SECTION 15.  SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.

                  The Plan was adopted by the Board on February 10, 1995 and is
subject to approval by the holders of the Company's outstanding Stock, in
accordance with applicable law. The Plan will become effective on the date of
such approval.

SECTION 16.  TERM OF PLAN.

                  No Award shall be granted pursuant to the Plan on or after
February 10, 2005, but Awards granted prior to such date may extend beyond that
date.<PAGE>   1

                                                                   Exhibit 10.21

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Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

              RESEARCH COLLABORATION, OPTION AND LICENSE AGREEMENT

         THIS RESEARCH COLLABORATION, OPTION AND LICENSE AGREEMENT (this
"Agreement"), effective as of December 23, 1999 (the "Effective Date"), is made
between ABGENIX, INC., a Delaware corporation ("ABX"), having a place of
business at 7601 Dumbarton Circle, Fremont, California 94555, and GLIATECH
MEDICAL INC., an Ohio corporation ("Gliatech"), having a place of business at
23420 Commerce Park Road, Cleveland, Ohio 44122, with respect to the following
facts:

                                    RECITALS

         A. ABX has rights in certain strains of transgenic mice, XenoMouse(TM)
mice, that are capable of producing human antibodies when immunized with an
antigen.

         B. Gliatech has rights in the Antigen (as defined below).

         C. The parties desire to commence a research program, pursuant to which
ABX would immunize XenoMouse Animals, with the Antigen provided by Gliatech to
ABX, to generate human monoclonal antibodies to the Antigen.

         D. ABX additionally is willing to offer to Gliatech the opportunity to
obtain an exclusive license to develop and commercialize certain antibody
products for human medical purposes on the terms and conditions described
herein.

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

         1. DEFINITIONS

         For purposes of this Agreement, the terms set forth in this Article 1
shall have the respective meanings set forth below:

         1.1 "ABX IN-LICENSE" shall mean a license, sublicense or other
agreement under which ABX acquired rights to the ABX Patent Rights or ABX
Know-How.

         1.2 "ABX KNOW-HOW" shall mean, collectively, all inventions,
discoveries, data, information, methods, techniques, technology and other
results, whether or not patentable but which are not generally known, regarding
ABX Materials and Information. All ABX Know-How shall be Confidential
Information of ABX.

         1.3 "ABX MATERIALS AND INFORMATION" shall mean, collectively, [***]
<PAGE>   2

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

         1.4 "ABX PATENT RIGHTS" shall mean, collectively, (a) all patents and
patent applications listed on Exhibit B and any foreign counterparts claiming
priority thereof; (b) all patent applications heretofore or hereafter filed in
any country which claim (and only to the extent they claim) the ABX Materials
and Information described in clauses (a) and (b) of Section 1.3 above or the use
thereof; (c) all patents that have issued or in the future issue from any of the
foregoing patent applications, including without limitation utility, model and
design patents and certificates of invention; and (d) all divisionals,
continuations, continuations-in-part, reissues, renewals, extensions or
additions to any such patents and patent applications; PROVIDED, HOWEVER, that
ABX Patent Rights shall exclude Research Program Patent Rights.

         1.5 "AFFILIATE" shall mean, with respect to any person or entity, any
other person or entity which controls, is controlled by or is under common
control with such person or entity. A person or entity shall be regarded as in
control of another entity if it owns or controls at least fifty percent (50%) of
the equity securities of the subject entity entitled to vote in the election of
directors (or, in the case of an entity that is not a corporation, for the
election of the corresponding managing authority).

         1.6 "ANTIBODY" shall mean a composition comprising (a) a whole
antibody, or any fragment thereof, derived from the XenoMouse Animals, or (b) a
whole antibody, or any fragment thereof, which is derived from a whole antibody,
or any fragment thereof, which itself is derived from the XenoMouse Animals (or
the nucleotide sequences that encode, or amino acid sequences of, a whole
antibody, or any fragment thereof, derived from the XenoMouse Animals).

         1.7 "ANTIBODY CELLS" shall mean all cells that contain, express, or
secrete antibodies or genetic materials that encode antibodies.

         1.8 "ANTIGEN" shall mean [***]

         1.9 "BLA" shall mean a Biologics License Application, Product License
Application, New Drug Application, or a similar application for marketing
approval submitted to the U.S. FDA or its counterpart in another country.

         1.10 "COLLABORATION COMMITTEE" shall mean the joint collaboration
committee comprising representatives of ABX and Gliatech described in Section
3.1 below.

         1.11 "CONFIDENTIAL INFORMATION" shall mean, with respect to a party,
all information of any kind whatsoever (including without limitation,
compilations, data, formulae, models, patent disclosures, procedures, processes,
projections, protocols, results of experimentation and testing, specifications,
strategies and techniques), and all tangible and intangible embodiments thereof
of any kind whatsoever (including without limitation, apparatus, biological or
chemical materials, animals, cells, compositions, documents, drawings,
machinery, patent applications, records, reports), which is owned or controlled
by one party as provided herein and/or disclosed by such party to the other
party hereunder. Confidential Information includes, without limitation, the
Research Program Materials and Information and all tangible and intangible
embodiments thereof of any kind. Notwithstanding the foregoing, Confidential
<PAGE>   3

Information of a party shall not include information which the other party can
establish by written documentation (a) to have been publicly known prior to
disclosure of such information by the disclosing party to the other party, (b)
to have become publicly known before the use or disclosure of such information
by the other party (other than as permitted hereby), (c) to have been received
by the other party at any time from a source, other than the disclosing party,
rightfully having possession of and the right to disclose such information free
of confidentiality obligations, (d) to have been otherwise known by the other
party free of confidentiality obligations prior to disclosure of or access to
such information, or (e) to have been independently developed (as demonstrated
by contemporaneous written evidence maintained in the ordinary course of the
business of the other party) after the expiration or termination of this
Agreement by employees or agents of the other party without access to or use of
such information. The parties acknowledge that the foregoing exceptions shall be
narrowly construed and that the obligations imposed upon each party under
Article 8 below shall be relieved solely with respect to such Confidential
Information of the other party which falls within the above exceptions and not
with respect to related portions, other combinations, or characteristics of the
Confidential Information of the other party including, without limitation,
advantages, operability, specific purposes, uses and the like.

         1.12 "DERIVED" or "DERIVED" shall mean obtained, developed, created,
synthesized, designed, derived or resulting from, based upon or otherwise
generated (whether directly or indirectly, or in whole or in part).

         1.13 "EXCLUDED TECHNOLOGY" shall mean, collectively, all patent rights,
know-how and other intellectual property rights of ABX in (a) all antigens other
than the Antigen, including without limitation (i) compositions of such antigens
or of Genetic Materials that encode such antigens; (ii) uses of such antigens;
(iii) antibodies or other compositions that bind to such antigens, Genetic
Material that encodes such antibodies or compositions, and Antibody Cells that
contain, express or secrete such antibodies, Genetic Materials or compositions;
and (iv) uses of such antibodies, Genetic Materials or compositions; (b) methods
to discover novel antigens; (c) methods of using antigens other than to create
antibodies; (d) ABX Materials and Information (except for those described in
clauses (a) and (b) of Section 1.1 above); and (e) inventions, discoveries,
data, information, methods, techniques, technology and other results, whether or
not patentable, other than ABX Materials and Information.

         1.14 "FEE AND ROYALTY COMMENCEMENT DATE" shall mean either the Net
Sales Royalty Commencement Date or the Sublicensing Revenue Fee Commencement
Date, as applicable.

         1.15 "FIELD" shall mean the use of Products for human medical purposes.

         1.16 "FIRST COMMERCIAL SALE" shall mean, with respect to each Product
in each country, the date of first commercial sale (other than for purposes of
obtaining regulatory approval) of such Product by Gliatech, its Sublicensee or
their respective Affiliates to an unaffiliated Third Party in such country.

<PAGE>   4

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

         1.17 "GENETIC MATERIAL" shall mean a nucleotide sequence, including
DNA, RNA, and complementary and reverse complementary nucleotide sequences
thereto, whether coding or noncoding and whether intact or a fragment.

         1.18 "GENPHARM CROSS LICENSE AGREEMENT" shall mean that certain Cross
License Agreement entered into by and between ABX, JTI, XT, Cell Genesys, Inc.,
and GenPharm International, Inc., effective as of March 26, 1997, as the same
may be amended from time to time.

         1.19 "GLIATECH MATERIALS AND INFORMATION" shall mean, collectively,
[***]

         1.20 "IND" shall mean an Investigational New Drug application submitted
to Food and Drug Administration in the United States, or any similar submission
to, or filing with, any foreign regulatory authority, to commence human clinical
testing of any Product in any country.

         1.21 "JTI" shall mean Japan Tobacco Inc., a Japanese corporation.

         1.22 "LICENSED TECHNOLOGY" shall mean ABX's rights in the ABX Patent
Rights, ABX Know-How, Research Program Patent Rights and Research Program
Know-How; PROVIDED, HOWEVER, that the Licensed Technology (a) is all to the
extent and only to the extent that ABX has the right to grant (sub)licenses
thereunder (including without limitation to the extent permitted under the
applicable ABX In-Licenses); (b) is expressly subject to the ABX In-Licenses;
and (c) shall exclude the Excluded Technology.

         1.23 "MATERIALS AND INFORMATION" shall mean, collectively, the ABX
Materials and Information, Gliatech Materials and Information and Research
Program Materials and Information.

         1.24 "MILESTONE COMMENCEMENT DATE" shall mean, with respect to a
Product, the date which is thirty (30) days after the earlier of (a) the first
grant of a Sublicense with respect to such Product or (b) the enrollment of the
first patient in the first Phase III clinical trial for such Product by Gliatech
or its Affiliate.

         1.25 "NET SALES" shall mean, with respect to each Product, the gross
sales price charged by a Person and its Affiliates for sales of such Product to
non-Affiliate customers, less: (i) normal and customary rebates, cash and trade
discounts and credits for returns and allowances; (ii) sales, consumption or
other excise taxes or duties imposed upon and paid by such Person and its
Affiliates with respect to such sales; (iii) charges included as part of the
gross sales price for freight, postage, shipping and insurance charges, to the
extent billed; (iv) taxes, duties or other governmental charges when included in
the billing; (v) reasonable reserves for uncollectable accounts, as reflected in
financial statements of such Person and its Affiliates, to the extent such
accounts are not actually collected, and (vi) withholding taxes required to be
deducted under Section 6.6 below. Net Sales shall not include sales among such
Person, its Sublicensees and their respective Affiliates for resale, provided
that Net Sales shall include the

<PAGE>   5

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

amounts invoiced by such Person, its Sublicensees and their respective
Affiliates to third parties on the resale of such Products.

         1.26 "NET SALES ROYALTY COMMENCEMENT DATE" shall mean, with respect to
each Product in each country, the date of the First Commercial Sale of such
Product in such country.

         1.27 "PATENT CLAIM" shall mean a claim of a pending patent application
or issued and unexpired patent included within the Licensed Technology which has
not been held unenforceable or invalid by a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal and which has not been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise.

         1.28 "PERSON" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.

         1.29 "PHASE II CLINICAL TRIAL" shall mean a human clinical trial in any
country that is intended to initially evaluate the effectiveness of a Product
for a particular indication or indications in patients with the disease or
indication under study, or that would otherwise satisfy requirements of 21 CFR
312.21(b).

         1.30 "PHASE III CLINICAL TRIAL" shall mean a human clinical trial in
any country the results of which could be used as pivotal to establish safety
and efficacy of a Product as a basis for a marketing approval application
submitted to the U.S. FDA, or that would otherwise satisfy requirements of 21
CFR 312.21(c).

         1.31 "PRODUCT" shall mean any dosage or formulation of a product
comprising an Antibody which binds to the Antigen.

         1.32 "RESEARCH PROGRAM KNOW-HOW" shall mean, collectively, all
inventions, discoveries, data, information, methods, techniques, technology and
other results, whether or not patentable but which are not generally known,
regarding the Research Program Materials and Information or the use thereof.

         1.33 "RESEARCH PROGRAM MATERIALS AND INFORMATION" shall mean,
collectively, [***]

         1.34 "RESEARCH PROGRAM PATENT RIGHTS" shall mean, collectively, (a) all
patent applications heretofore or hereafter filed in any country which claim
Research Program Materials and Information or the use thereof; (b) all patents
that have issued or in the future issue from any of the foregoing patent
applications, including without limitation utility, model and design patents and
certificates of invention; and (c) all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions or additions to any such
patents and patent applications.

<PAGE>   6

         1.35 "RESEARCH PLAN" shall mean the written research work plan
established by the parties pursuant to Section 2.2.1 below, as modified from
time to time pursuant to Section 2.2.1 below.

         1.36 "RESEARCH PROGRAM" shall mean the research and preclinical
development program described in Article 2 for the generation, creation and
identification of Antibodies that bind to the Antigen.

         1.37 "FEE AND ROYALTY COMMENCEMENT DATE" shall mean either the Net
Sales Royalty Commencement Date or the Sublicensing Revenue Fee Commencement
Date, as applicable.

         1.38 "SUBLICENSE" shall mean an agreement or arrangement pursuant to
which such a sublicense or distribution right has been granted to a Sublicensee.

         1.39 "SUBLICENSEE" shall mean a Third Party that is granted (a) a
sublicense under the license granted under Section 4.2.1, or (b) a right to
distribute Product in the Field, provided that such Person is responsible for
marketing and promotion of Product within the applicable territory.

         1.40 "SUBLICENSING REVENUE" shall mean, with respect to a Sublicensee,
all cash amounts (other than cash royalty payments calculated as a percentage of
sales of Products), and the fair market value of all non-cash consideration,
received by Gliatech or its Affiliates from such Sublicensee in consideration
for or otherwise in connection with the grant of a Sublicense to such
Sublicensee (excluding amounts received in reimbursement of the actual cost to
Gliatech or its Affiliates of conducting research and development activities).

         1.41 "SUBLICENSING REVENUE FEE COMMENCEMENT DATE" shall mean, with
respect to each Product, the date of the first grant of a Sublicense with
respect to such Product in the Territory.

         1.42 "TERRITORY" shall mean all the countries of the world.

         1.43 "THIRD PARTY" shall mean any Person other than ABX, Gliatech and
their respective Affiliates.

         1.44 "XENOMOUSE ANIMALS" shall mean the transgenic mice utilized by ABX
for immunization with the Antigen under this Agreement.

         1.45 "XT" shall mean Xenotech, L.P., a California limited partnership.

         1.46 "XT MASTER RESEARCH LICENSE AND OPTION AGREEMENT" shall mean that
certain Master Research License and Option Agreement entered into by and among
XT, JTI and Cell Genesys, Inc. effective as of June 28, 1996, and subsequently
assigned to ABX by Cell Genesys, Inc., as the same may be amended from time to
time.

<PAGE>   7

         1.47 "XT/ABX PRODUCT LICENSE AGREEMENT" shall mean a license agreement
between XT and ABX entered into pursuant to the XT Master Research and License
Agreement granting to ABX a license (with the right to grant sublicenses) to
commercialize Products in one or more territories.

      2. RESEARCH PROGRAM
         ----------------

         2.1 COLLABORATIVE RESEARCH. The goal of the Research Program is: (a) to
generate, through immunization of the XenoMouse Animals with the Antigen and IN
VITRO screening, Antibodies that bind to the Antigen to serve as potential lead
candidates for the development of a commercial pharmaceutical product; and (b)
to perform certain preclinical development.

         2.2 CONDUCT OF RESEARCH PROGRAM.

             2.2.1 RESEARCH PLAN. An initial Research Plan is attached as
Exhibit C. Prior to each anniversary of the Effective Date during the Research
Program Term, the parties shall use their good faith efforts to prepare a
mutually acceptable Research Plan for the following year. If, notwithstanding
the good faith efforts of ABX and Gliatech to negotiate a mutually acceptable
Research Plan for such year, the parties fail to reach agreement, the Research
Program and this Agreement shall terminate immediately, and neither party shall
be held responsible for failure to agree on a Research Plan. The Collaboration
Committee may recommend changes to the Research Plan at any time during the
Research Program Term. Such changes shall only be effective if in a written
amendment duly executed by both parties.

             2.2.2 SPECIFIC OBLIGATIONS OF GLIATECH. Gliatech shall provide to
ABX sufficient quantities of the Antigen, the assay components and any Gliatech
technology necessary or useful for the performance of assays in accordance with
the Research Program, and any information known and available to Gliatech
concerning the storage or handling of the Antigen that may be unique or peculiar
to the Antigen. Gliatech shall use its commercially reasonable efforts to
perform its obligations under the Research Program in accordance with the
applicable Research Plan within the time schedules contemplated therein.
Gliatech shall perform its obligations under the Research Program in accordance
with generally accepted scientific and professional standards, and in compliance
in all material respects with the requirements of applicable laws and
regulations and shall provide all commercially reasonable assistance to ABX in
connection with ABX's performance of the Research Program.

             2.2.3 SPECIFIC OBLIGATIONS OF ABX. ABX shall immunize the XenoMouse
Animals with the Antigen, and conduct certain Antibody characterization as set
forth in the applicable Research Plan. ABX shall use its commercially reasonable
efforts to perform its obligations under the Research Program in accordance with
the applicable Research Plan within the time schedules contemplated therein. ABX
shall provide personnel, materials, equipment and other resources required to
conduct its obligations under the Research Program. ABX shall perform its
obligations under the Research Program in accordance with generally accepted
scientific and professional standards, and in compliance in all material
respects with the

<PAGE>   8

requirements of applicable laws and regulations and shall provide all
commercially reasonable assistance to Gliatech in connection with Gliatech's
performance of the Research Program.

             2.2.4 MATERIALS AND INFORMATION.

                   a. Each party shall use the Materials and Information owned
by the other party solely for purposes of conducting the Research Program under
commercially and scientifically reasonable containment conditions, and not for
any commercial, business or other use or purpose, without the prior express
written consent of the other party. A party shall not transfer or transport the
Materials and Information owned by the other party from its address identified
above to any other location, and shall limit access to the Materials and
Information owned by the other party to those of its employees working on its
premises at the address identified above, to the extent such access is
reasonably necessary in connection with its activities as expressly authorized
by this Agreement; provided, however, (i) either party may transfer the Research
Program Materials and Information to other locations with the prior written
consent of the other party, which shall not be unreasonably withheld, and
subject to the terms and conditions of this Agreement; and (ii) if Gliatech has
obtained the license under Section 4.2.1 below with respect to the Antigen for
commercial use by Gliatech as provided herein, Gliatech thereafter shall have
the right to transfer the Research Program Materials and Information to other
locations without such consent subject to the terms and conditions of this
Agreement.

                   b. Notwithstanding anything to the contrary in this
Agreement, a party shall not transfer or provide access to the Materials and
Information owned by the other party to any Affiliate or Third Party, without
the prior express written consent of the other party; provided, however, that if
Gliatech has obtained the license under Section 4.2.1 below with respect to the
Antigen for commercial use by Gliatech as provided herein, Gliatech thereafter
shall have the right to transfer the Research Program Materials and Information
to any Affiliate or Third Party without such consent to the extent permitted by
such license grant.

                   c. Except as Gliatech is otherwise permitted by the license
under Section 4.2.1 below, with respect to the Antigen for commercial use by
Gliatech (provided that Gliatech has timely obtained such license as provided
herein), a party shall not (and shall not attempt or purport to) assign, sell,
have sold, lease, offer to sell or lease, otherwise transfer title to, or
otherwise distribute or license, sublicense or otherwise commercialize or
exploit, any Materials and Information owned by the other party or any interest
therein.

             2.2.5 FUNDING OF THE RESEARCH PROGRAM. Each party shall be
responsible for funding its own obligations under the Research Program until its
completion or termination.

             2.2.6 TERM OF THE RESEARCH PROGRAM. Unless earlier terminated as
provided herein, the term of the Research Program shall begin on the Effective
Date and

<PAGE>   9

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

continue through the earlier of (a) [***]. If either party has not completed its
obligations under the Research Program and made all reports required under this
Agreement prior to the expiration or termination of the Research Program Term,
the parties shall discuss in good faith and attempt to reach mutually acceptable
agreement on terms and conditions upon which the parties would extend the
Research Program Term.

         2.3 RESEARCH RECORDS AND REPORTS.

             2.3.1 RECORDS. Gliatech and ABX each shall maintain records, in
sufficient detail and in accordance with generally accepted scientific standards
appropriate for patent purposes, which shall be complete and accurate and shall
fully and properly reflect all work done and results achieved in the performance
of the Research Program.

             2.3.2 INSPECTION OF RECORDS. Gliatech and ABX each shall have the
right, during normal business hours and upon not less than five (5) days prior
written notice, to inspect and obtain copies, upon consent of the other party
(which shall not be unreasonably withheld or delayed), of such records of the
other party to the extent commercially reasonably required for the performance
of its obligations under the Agreement (with the party owning the records
determining what is commercially reasonably required). Each party shall maintain
such records and the information of the other party contained therein in
confidence in accordance with Article 8 below and shall not use such records or
information except to the extent otherwise permitted by the Agreement.

             2.3.3 RESEARCH REPORTS AND INFORMATION. Gliatech and ABX each shall
keep the other informed of the progress of its own activities under the Research
Program. At a minimum, within thirty (30) days following the last day of each
December, March, June and September during the term of the Research Program and
within thirty (30) days following the expiration or termination of the Research
Program, Gliatech and ABX each shall prepare, and provide to the other party, a
reasonably detailed written summary report which shall describe the work
performed by such party to date under the Research Program.

      3. RESEARCH PROGRAM MANAGEMENT

         3.1 COLLABORATION COMMITTEE.

             3.1.1 RESPONSIBILITIES. Gliatech and ABX shall establish a
Collaboration Committee to oversee, review and coordinate the Research Program.
The Collaboration Committee shall be responsible for (a) establishing the
Research Plan and recommending modifications thereto, (b) monitoring and
reporting the progress of the Research Program, and (c) facilitating open and
frequent exchange between the parties with respect to Research Program
activities.

             3.1.2 COMPOSITION OF THE COLLABORATION COMMITTEE. The Collaboration
Committee shall comprise three (3) named representatives of Gliatech and three
(3) named representatives of ABX. Each party shall appoint its respective
representatives to the

<PAGE>   10

Collaboration Committee from time to time, and may substitute one or more of its
representatives, in its sole discretion, effective upon notice to the other
party of such change.

             3.1.3 CONFERENCES. The Collaboration Committee shall conference
monthly during the term of the Research Program. The Collaboration Committee
shall conference in person not less than once each six (6) month period during
the term of the Research Program, on such dates and at such times and places as
agreed to by Gliatech and ABX, alternating between Fremont, California and
Cleveland, Ohio, or such other locations as the parties shall agree. For all
other conferences, the Collaboration Committee may conference by telephone or in
person, as the parties mutually agree. With the consent of the parties, other
representatives of Gliatech or ABX may attend Collaboration Committee
conferences as non-voting observers. Each party shall be responsible for all its
own personnel and travel costs and expenses relating to Collaboration Committee
conferences. The first conference of the Collaboration Committee shall occur as
soon as practicable after the Effective Date, but in no event later than
forty-five (45) days after the Effective Date. Members of the Collaboration
Committee may participate in conferences, in person, by telephone or by video
conference. A Gliatech representative of the Collaboration Committee shall
prepare written minutes of each conference and a written record of all
Collaboration Committee decisions, whether made at a Collaboration Committee
conference or otherwise, in form and content reasonably acceptable to ABX.

             3.1.4 COMMITTEE ACTIONS. ABX and Gliatech each shall be entitled to
cast one vote on matters before the Collaboration Committee. Decisions of the
Collaboration Committee shall be made by unanimous approval.

         3.2 DISAGREEMENTS. The parties shall use their good faith efforts
to resolve all disagreements within the Collaboration Committee in a mutually
acceptable manner as soon as reasonably practicable. If, notwithstanding the
good faith efforts of the parties to resolve any such disagreement, any such
unresolved disagreements within the Collaboration Committee shall be resolved in
the following manner:

             3.2.1 The representatives of the Collaboration Committee promptly
shall present the disagreement to the Chief Executive Officer of Gliatech and
the Chief Executive Officer of ABX (or their respective officer designees who
are not members of the Collaboration Committee).

             3.2.2 Such executives (or designees) shall conference to discuss
each party's view and to explain the basis for their respective positions of
such disagreement, and in good faith shall attempt to resolve such disagreement
among themselves; PROVIDED, HOWEVER, that the parties do not waive any rights
which they may have under the Agreement or otherwise as a result of the
resolution of a disagreement under this Section 3.2.2.

             3.2.3 If such executives (or designees) cannot promptly resolve
such disagreement, then any disagreement concerning the Research Program shall
be settled by such means as such executives (or designees) determine.
Notwithstanding the foregoing, the parties

<PAGE>   11

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

do not waive any rights which they may have under the Agreement or otherwise as
a result of the resolution of a disagreement under this Section 3.2.3.

             3.2.4 If any disagreement regarding the Research Program is not
promptly resolved pursuant to this Section 3.2, then upon written notice from
either party to the other party, the Research Program shall terminate and INTER
ALIA the provisions of Section 12.5.4 below shall apply.

      4. COMMERCIAL LICENSE

         4.1 OPPORTUNITY TO OBTAIN COMMERCIAL LICENSE.

             4.1.1 On or before the second regularly scheduled board meeting of
XT in 2000, ABX shall nominate the Antigen under the XT Master Research License
and Option Agreement and obtain the right thereunder to obtain an XT/ABX Product
License Agreement with respect to the Antigen for commercial use by Gliatech.
ABX shall give prompt written notice to Gliatech upon nominating the Antigen
under the XT Master Research License and Option Agreement and obtaining the
right thereunder to obtain an XT/ABX Product License Agreement with respect to
the Antigen for commercial use by Gliatech.

             4.1.2 After ABX has nominated the Antigen under the XT Master
Research License and Option Agreement and obtained the right thereunder to
obtain an XT/ABX Product License Agreement with respect to the Antigen, subject
to the terms and conditions of this Agreement, if Gliatech desires to obtain the
commercial license described in Section 4.2.1 below, Gliatech shall give express
written notice (the "License Notice") to ABX thereof. If Gliatech fails to give
the License Notice to ABX on or before [***], this Agreement immediately shall
terminate.

             4.1.3 If (a) on or before the date that is [***], Gliatech
demonstrates to ABX's reasonable satisfaction its ability to manufacture Product
in accordance with Good Manufacturing Practices, has demonstrated its ability to
scale up such manufacture for quantities required for clinical trials and has
completed Stage III of the Research Program, and (b) Gliatech timely provides
the License Notice to ABX in accordance with Section 4.1.2 above, ABX shall
exercise its option under the XT Master Research License and Option Agreement to
obtain, and shall obtain, the XT/ABX Product License Agreement for the Antigen.
ABX shall notify Gliatech at such time as ABX has obtained the XT/ABX Product
License Agreement for the Antigen.

         4.2 GRANT OF COMMERCIAL LICENSE.

             4.2.1 Provided that (a) [***], Gliatech has demonstrated to ABX's
reasonable satisfaction its ability to manufacture Product in accordance with
Good Manufacturing Practices, has demonstrated its ability to scale up such
manufacture for quantities required for clinical trials and has completed Stage
III of the Research Program; (b) Gliatech has timely provided ABX with the
License Notice; and (c) ABX has obtained the XT/ABX Product License Agreement
for the Antigen, effective as of the date that ABX has obtained the XT/ABX

<PAGE>   12

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

Product License Agreement for the Antigen and subject to the terms and
conditions of this Agreement, ABX shall grant to Gliatech an exclusive license
or sublicense, as the case may be (with the right to grant sublicenses), under
the Licensed Technology, to make and use Research Program Materials and
Information solely to make and have made Product and to use, sell, lease, offer
to sell or lease, import, export, otherwise transfer physical possession of or
otherwise transfer title to Product, in the Territory for use in the Field.

             4.2.2 Notwithstanding anything to the contrary in this Agreement,
Gliatech shall not commence manufacturing for commercial use, under current Good
Manufacturing Practices in the United States (or their foreign equivalent), any
Product, unless and until Gliatech successfully obtains the commercial license
under Section 4.2.1 above.

             4.3 SUBLICENSES. Gliatech shall have the right to grant Sublicenses
under the license granted under Section 4.2.1 above. Gliatech shall provide ABX
with a copy of each such Sublicense promptly after executing the same. Any such
Sublicense shall be subject and subordinate to the terms and conditions of this
Agreement. Notwithstanding the foregoing, Gliatech shall not have the right to
Sublicense any right under this Agreement in or to a XenoMouse Animal or other
transgenic animal covered by the Licensed Technology.

             4.4 NO OTHER RIGHTS. No rights other than those expressly set forth
in this Agreement are granted to Gliatech hereunder, and no additional rights
shall be deemed granted to Gliatech by implication, estoppel or otherwise.

      5. CONSIDERATION

         5.1 TECHNOLOGY ACCESS FEES. Gliatech shall pay to ABX the following
non-refundable, non-creditable technology access fees on or before the
applicable dates set forth below:

         [***]

         5.2 MILESTONE PAYMENTS.

             5.2.1 AMOUNTS. Subject to the provisions of Sections 5.2.2 and
5.2.3 below, within thirty (30) days following the achievement of each of the
following milestones with respect to each Product, on a Product-by-Product
basis, Gliatech shall give written notice to ABX thereof and shall pay to ABX
the corresponding milestone payments:

         [***]    upon entering into a Sublicense for each Product (for
                  reimbursement of research costs previously incurred by ABX)

         [***]    upon the Milestone Commencement Date

         [***]    upon (a) the submission of the first IND for each Product by
                  Gliatech, its Affiliate or Sublicensee, or (b) the enrollment
                  of the first subject in the first human clinical trial for
                  such Product if no IND is required therefor

<PAGE>   13

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

         [***]    upon enrollment of the first patient in the first Phase II
                  clinical trial for the each Product by Gliatech, its Affiliate
                  or Sublicensee

         [***]    upon enrollment of the first patient in the first Phase III
                  clinical trial for each Product by Gliatech, its Affiliate or
                  Sublicensee

         [***]    upon submission of the first BLA for each Product by Gliatech,
                  its Affiliate or Sublicensee

             5.2.2 COMMENCEMENT OF MILESTONE PAYMENTS. Notwithstanding anything
to the contrary in Section 5.2.1 above, the due date for Gliatech's obligation
to pay any milestone payment described in Section 5.2.1 above with respect to a
Product shall be suspended with respect to such Product until the Milestone
Commencement Date.

             5.2.3 OFFSET OF SUBLICENSING REVENUES ROYALTIES. With respect to
each milestone payment under Section 5.2.1 above owing after the Milestone
Commencement Date, Gliatech shall have the right to offset fees paid to ABX
under Section 5.3.2 below prior to the date of such milestone payment owing
under Section 5.2.1 above, against such milestone payment owing under Section
5.2.1 above.

             5.2.4 MINIMUMS. In the event that Gliatech enters into Sublicenses
with more than one Sublicensee, the Milestone payments set forth in Section
5.2.1 above shall be paid with respect to the first Sublicensee, but not
subsequent Sublicensees.

             5.3 ROYALTIES AND SUBLICENSE REVENUES FEE.

             5.3.1 NOTICE OF FEE AND ROYALTY COMMENCEMENT DATES. Within thirty
(30) days following the Net Sales Royalty Commencement Date for each Product in
each country and the Sublicensing Revenue Fee Commencement Date for each
Product, Gliatech shall give written notice to ABX thereof.

             5.3.2 SUBLICENSING REVENUES FEE.

                   a. Subject to the provisions of Sections 5.3.2(b) below,
Gliatech shall pay to ABX the following fees with respect to each Sublicense for
each Product:

         If such Sublicense for such Product is granted prior to the initiation
         of GMP manufacture of such Product for use in human clinical trials,
         Gliatech shall pay to ABX [***] of Sublicensing Revenues for such
         Product.

         If such Sublicense for such Product is granted following the initiation
         of GMP manufacture of such Product for use in human clinical trials,
         but prior to the earlier of (a) the submission of an IND for such
         Product, or (b) the enrollment of the first subject in the first human
         clinical trial for such Product if no IND is required therefor,
         Gliatech shall pay to ABX [***] of Sublicensing Revenues for such
         Product.

<PAGE>   14

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Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

         If such Sublicense for such Product is granted following the earlier of
         (a) the submission of an IND for such Product, or (b) the enrollment of
         the first subject in the first human clinical trial for such Product if
         no IND is required therefor, but prior to enrollment of the first
         patient in the first Phase II clinical trial for such Product, Gliatech
         shall pay to ABX [***] of Sublicensing Revenues for such Product.

         If such Sublicense for such Product is granted following the enrollment
         of the first patient in the first Phase II clinical trial for such
         Product, but prior to submission of the first BLA for such Product,
         Gliatech shall pay to ABX [***] of Sublicensing Revenues for such
         Product.

         If such Sublicense for such Product is granted following submission of
         the first BLA for such Product, Gliatech shall pay to ABX [***] of
         Sublicensing Revenues for such Product.

                   b. Gliatech shall have the right to offset any milestone
payment paid under Section 5.2.1 above with respect to a Product against the
Sublicensing Revenues fee payments thereafter owing under Section 5.3.2(a) above
with respect to such Product.

             5.3.3 NET SALES ROYALTY. Gliatech shall pay to ABX a royalty with
respect to each Product equal to (a) [***] of the aggregate Net Sales of such
Product by Gliatech and its Affiliates, and (b) the greater of (i) the
applicable percentage set forth in Section 5.3.2(a) of the cash royalty payments
(that are calculated as a percentage of sales of such Product) received by
Gliatech or its Affiliates from each Sublicensee in consideration for or
otherwise in connection with the grant of a Sublicense with respect to such
Product to such Sublicensee, or (ii) [***] of the aggregate Net Sales of such
Product by each Sublicensee and its Affiliates.

             5.3.4 LENGTH OF FEE AND ROYALTY OBLIGATIONS. Gliatech's obligation
to pay royalties under clause (a) of Section 5.3.3 with respect to each Product
in each country shall commence on the Net Sales Royalty Commencement Date for
such Product in such country. Gliatech's obligation to pay fees under Sections
5.3.2 and Royalties under clause (b) of Section 5.3.3 with respect to each
Product shall commence on the Sublicensing Revenue Fee Commencement Date for
such Product. Gliatech's obligation to pay fees and royalties with respect to
each Product under Sections 5.3.2 and 5.3.3 shall continue for such Product in
each country until (a) if, as of the First Commercial Sale of such Product in
such country, there exists a Patent Claim in the country where such Product is
made, used or sold that covers (i) Gliatech's or its Affiliate's or
Sublicensee's manufacture, use or sale of such Product, or (ii) XenoMouse
Animals or their use, such date as no such Patent Claim exists in the country
where such Product is made, used or sold, or (b) otherwise, ten (10) years after
the First Commercial Sale of such Product in such country.

      6. ACCOUNTING AND RECORDS

         6.1 FEE AND ROYALTY REPORTS AND PAYMENTS. Commencing with the first
calendar quarter in which the first Fee and Royalty Commencement Date occurs,
Gliatech shall

<PAGE>   15

make written reports to ABX within thirty (30) days after the end of each
calendar quarter, stating in each such report the number, description, and
aggregate Net Sales of Product sold during the calendar quarter, the
Sublicensing Revenues for such calendar quarter, and the calculation of the
royalties payable under Article 5 above. Concurrently with the making of such
reports, Gliatech shall pay to ABX all amounts payable pursuant to Article 5
above.

         6.2 RECORDS; INSPECTION. Gliatech shall keep (and cause its
Affiliates and Sublicensees to keep) complete, true and accurate books of
account and records for the purpose of determining the fee and royalty amounts
payable to ABX under this Agreement. Such books and records shall be kept at the
principal place of business of Gliatech or its Affiliates or Sublicensees, as
the case may be, for at least three years following the end of the calendar
quarter to which they pertain. Such records of Gliatech or its Affiliates will
be open for inspection during such three-year period by representatives of ABX
(which representatives may also represent XT) for the purpose of verifying the
fee and royalty statements. Gliatech shall require each of its Sublicensees to
maintain similar books and records and to open such records for inspection
during normal business hours upon reasonable prior written notice during the
same three-year period by a representative of Gliatech reasonably satisfactory
to ABX on behalf of, and as required by, ABX for the purpose of verifying the
fee and royalty statements. All such inspections may be made no more than once
each calendar year at reasonable times mutually agreed by Gliatech and ABX. The
representative of ABX will be obliged to execute a reasonable confidentiality
agreement prior to commencing any such inspection. Inspections conducted under
this Section 6.2 shall be at the expense of ABX, unless a variation or error
producing an increase exceeding ten percent (10%) of the amount stated for any
period is established in the course of any such inspection, whereupon all costs
relating to the audit of such period will be paid by Gliatech.

         6.3 PAYMENT METHOD. All payments by Gliatech to ABX hereunder shall
be in United States Dollars in immediately available funds and shall be made by
wire transfer from a United States bank located in the United States to such
bank account as designated by ABX to Gliatech.

         6.4 CURRENCY CONVERSION. If any currency conversion shall be
required in connection with the calculation of royalties hereunder, such
conversion shall be made using the selling exchange rate for conversion of the
foreign currency into United States Dollars, quoted for current transactions
reported in THE WALL STREET JOURNAL for the last business day of the calendar
quarter to which such payment pertains.

         6.5 LATE PAYMENTS. Any payments due from Gliatech that are not paid
on the date such payments are due under this Agreement shall bear interest at a
rate per annum equal to the lesser of (i) the prime rate as reported by the Bank
of America in San Francisco, California on the date such payment is due, plus an
additional one percent (1%), or (ii) the maximum rate permitted by applicable
law, in each case calculated on the number of days such payment is delinquent.
This Section 6.5 shall in no way limit any other remedies available to any
party.

         6.6 WITHHOLDING TAXES. All payments required to be made pursuant to
Article 5 above shall be without deduction or withholding for or on account of
any taxes or
<PAGE>   16

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Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

similar governmental charge imposed by a jurisdiction, such taxes being referred
to herein as "Withholding Taxes." Withholding Taxes shall be the sole
responsibility of the withholding party. The withholding party shall provide a
certificate evidencing payment of any Withholding Taxes hereunder.

      7. DILIGENCE

         7.1 DILIGENCE OBLIGATION. Gliatech shall use its reasonable commercial
efforts to actively research, develop and obtain regulatory approvals to market
in major markets throughout the world at least one Product hereunder as
expeditiously as possible, and following such approval to maximize sales of such
Product. Without limiting the foregoing, Gliatech shall meet the following
diligence milestones by the dates set forth below:

             7.1.1 SUBMISSION OF IND.

                   a. Gliatech or its Sublicensee shall submit an IND with the
U.S. FDA for one or more Products under this Agreement within [***] after the
grant by ABX to Gliatech of a commercial license in accordance with Section
4.2.1.

                   b. Notwithstanding Section 7.1.1(a)[***]

                   c. After the submission of an IND for a Product, Gliatech, or
its Sublicensee, shall be required to have an active IND and to be actively and
diligently conducting a program of clinical trials in pursuit of regulatory
approval (as soon as commercially practicable) for such Product in the United
States until such Product may be sold commercially in the United States.

             7.1.2 OBTAIN REGULATORY APPROVALS. Gliatech or its Sublicensee
shall use its reasonable commercial efforts to obtain, as soon as commercially
practicable, regulatory approval to market in the United States at least one
Product.

             7.1.3 MARKETING AND SALES. Gliatech or its Sublicensee (a) shall
commence marketing each Product in a country within [***] after receipt of the
applicable governmental approvals, including, without limitation, pricing
approvals, in such country, and (b) shall use its reasonable commercial efforts
to market, and shall meet the reasonably foreseeable market demands for, each
approved Product in such country.

         7.2 FAILURE TO MEET DILIGENCE OBLIGATION. If the diligence
requirements set forth in Section 7.1 are not met by Gliatech (or its
Sublicensees), ABX shall have the right to terminate this Agreement pursuant to
Section 12.2 below as its sole and exclusive remedy for a failure to satisfy
such diligence requirements.

         7.3 OBLIGATIONS OF GLIATECH. The work performed by Gliatech, its
Sublicensees and their respective Affiliates under this Agreement shall be
performed in accordance with generally accepted scientific and professional
standards, and in compliance in all material respects with the requirements of
applicable laws and regulations. Gliatech, its

<PAGE>   17

Sublicensees and their respective Affiliates shall be solely responsible for
providing the personnel, materials, equipment, and other resources therefor in
connection with the work performed by any of Gliatech, its sublicensees or their
respective Affiliates.

         7.4 NO CONFLICTS.

             7.4.1 OTHER PRODUCTS. During the term of this Agreement, Gliatech
shall not directly or indirectly sell or commercialize for human medical use, or
conduct research or development toward the human medical use of any product
(other than the Products), comprising (a) an antibody, antibody fragment,
peptide or amino acid sequence derived from an antibody, in each case which
binds to the Antigen, or (b) Genetic Material that encodes such any such
composition.

             7.4.2 UNAUTHORIZED PRODUCTS. During the term of this Agreement,
Gliatech shall not directly or indirectly sell or commercialize for any purpose
any product comprising any chemical or biological material derived by Gliatech
from XenoMouse Animals immunized with the Antigen other than strictly in
accordance with the terms and conditions of this Agreement.

         7.5 REPORTS. Gliatech shall keep ABX informed of the progress of
its, its Affiliates and Sublicensees' activities to develop and commercialize
Products following the expiration or termination of the Research Program. At a
minimum, within thirty (30) days following the last day of each December and
June following the expiration or termination of the Research Program, Gliatech
shall prepare, and provide to ABX, a reasonably detailed written summary report
which shall describe such activities since the last report under this Section
7.5.

      8. CONFIDENTIALITY

         8.1 During the term of this Agreement and for a period of ten (10)
years following the expiration or earlier termination hereof, each party shall
maintain in confidence the Confidential Information of the other party, and
shall not disclose, use or grant the use of the Confidential Information of the
other party except on a need-to-know basis to such party's directors, officers
and employees, and to such party's consultants working on such party's premises,
and (in the case of Gliatech) to the inventors of the technology pertaining to
the Research Program, to the extent such disclosure is reasonably necessary in
connection with such party's activities as expressly authorized by this
Agreement. To the extent that disclosure to any person is authorized by this
Agreement, prior to disclosure, a party shall obtain written agreement of such
person to hold in confidence and not disclose, use or grant the use of the
Confidential Information of the other party except as expressly permitted under
this Agreement. Each party shall notify the other promptly upon discovery of any
unauthorized use or disclosure of the other party's Confidential Information.
Upon the expiration or earlier termination of this Agreement, each party shall
return to the other party all tangible items regarding the Confidential
Information of the other party and all copies thereof; PROVIDED, HOWEVER, that
each party shall have the right to retain one (1) copy for its legal files for
the sole purpose of determining its obligations hereunder.
<PAGE>   18

         8.2 For purposes of this Agreement, (a) the ABX Materials and
Research Program Materials and Information and all oral or written
communications received by Gliatech regarding the ABX Materials and Research
Program Materials and Information are, and shall remain, Confidential
Information of ABX; and (b) the Gliatech Materials and Information and all oral
or written communications received by ABX regarding the Gliatech Materials and
Information are, and shall remain, Confidential Information of Gliatech.

         8.3 This Article 8 shall neither (a) prevent ABX from using or
disclosing for any purpose the ABX Materials and Information, nor (b) prevent
Gliatech from using or disclosing for any purpose the Gliatech Materials and
Information.

         8.4 Neither party shall disclose any terms or conditions of this
Agreement to any Third Party without the prior consent of the other party;
PROVIDED, HOWEVER, that either party may disclose the terms or conditions of
this Agreement, (a) on a need-to-know basis to its legal and financial advisors
to the extent such disclosure is reasonably necessary in connection with such
party's activities as expressly permitted by this Agreement or for the conduct
of its business, (b) to a Third Party in connection with (i) an equity
investment in such party by a Third Party, (ii) a merger, consolidation or
similar transaction entered into by such party, or (iii) the sale of all or
substantially all of the assets of such party, and (c) as may, in the reasonable
opinion of such party's counsel, be required by applicable law, regulation or
court order, including without limitation, a disclosure in connection with such
party's filing of a registration statement or other filing with the United
States Securities and Exchange Commission (in which event such party will first
reasonably consult with the other party with respect to such disclosure).
Notwithstanding the foregoing, prior to execution of this Agreement Gliatech and
ABX shall agree upon the form of a press release that can be used to describe
the terms of this transaction, and Gliatech and ABX may disclose the information
contained in such press release, together with such additional information as
the parties from time to time mutually agree, without the other party's consent.

      9. MATERIALS AND INFORMATION AND PATENT RIGHTS
         -------------------------------------------

         9.1 OWNERSHIP.

             9.1.1 ABX shall solely own all right title and interest in the ABX
Materials and Information, the Research Program Materials and Information and
all patent rights and other intellectual property rights therein. Gliatech shall
solely own all right title and interest in the Gliatech Materials and
Information and all patent rights and other intellectual property rights
therein. The transfer of physical possession of any Materials and Information
owned by, and the physical possession and use of any Materials and Information
by, Gliatech or ABX, as the case may be, shall not be (nor be construed as) a
sale, lease, offer to sell or lease, or other transfer of title of such
Materials and Information to Gliatech or ABX, as the case may be.

             9.1.2 During the term of this Agreement, neither party shall (and
neither party shall attempt or purport to) assign, sell, have sold, lease, offer
to sell or lease, otherwise transfer title to, or otherwise distribute or
license, sublicense or otherwise commercialize or exploit, any Research Program
Materials and Information, except as otherwise set forth herein,

<PAGE>   19

or the parties otherwise expressly agree in writing. Except as otherwise
provided herein, upon the expiration or earlier termination of the term of this
Agreement, Gliatech shall deliver to ABX all Research Program Materials and
Information in its possession.

             9.1.3 ABX shall not (and shall not attempt or purport to) file or
prosecute any patent application in any country which claims or purports to
claim the Gliatech Materials and Information, unless the parties otherwise
expressly agree in writing. Gliatech shall not (and shall not attempt or purport
to) file or prosecute any patent application in any country which claims or
purports to claim the ABX Materials and Information or the Research Program
Materials and Information, unless the parties otherwise expressly agree in
writing.

         9.2 ASSIGNMENT AND DISCLOSURE. Each party shall cause all employees
and others conducting work on its behalf under this Agreement to promptly
disclose to the other party all Materials and Information in which the other
party has an ownership interest, and to assign any and all right, title and
interest in all Materials and Information and all patent rights and other
intellectual property rights therein in accordance with this Agreement. Each
party shall maintain records in sufficient detail and in accordance with
generally accepted scientific and professional standards appropriate for patent
purposes to properly reflect all work done and results achieved in conducting
its work hereunder, and shall respond to reasonable requests the other party for
information regarding Materials and Information in which the other party has an
ownership interest.

         9.3 RESEARCH PROGRAM PATENT RIGHTS.

             9.3.1 PROSECUTION AND MAINTENANCE. Gliatech shall have the first
right (but not the obligation), at its sole expense, to prepare, file, prosecute
and maintain the Research Program Patent Rights, subject to the following:

                   a. With respect to each patent application and patent within
the Research Program Patent Rights, Gliatech shall (i) provide ABX with any
patent application filed by Gliatech prior to filing in order to provide ABX
with an opportunity to comment thereon, and consider in good faith reasonable
comments by ABX thereon; (ii) provide ABX with any patent application filed by
Gliatech promptly after such filing; and (iii) provide ABX promptly with copies
of all substantive communications received from or filed in patent office(s)
with respect to such filings and consider in good faith reasonable comments by
ABX thereon.

                   b. ABX shall assist Gliatech, upon Gliatech's request, and to
the extent commercially reasonable, in preparing, filing or maintaining the
patent applications and patents within the Research Program Patent Rights.

                   c. If Gliatech fails to undertake the filing of a patent
application (or continuing or divisional application) within ninety (90) days
after a written request from ABX to do so, or if Gliatech discontinues the
prosecution or maintenance of a patent application or a patent, within the
Research Program Patent Rights, ABX shall have the right (but not the
obligation), at its sole expense, to undertake such filing, prosecution or
maintenance thereof.

<PAGE>   20

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Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

             9.3.2 ENFORCEMENT. Gliatech shall have the first right (but not the
obligation), at its sole expense, to enforce the Research Program Patent Rights,
subject to the following:

                   a. Gliatech shall keep ABX informed and consider in good
faith the reasonable comments of ABX, both prior to and during any such
enforcement. ABX shall assist Gliatech, upon request and at Gliatech's sole
expense, and to the extent commercially reasonable, in taking any action to
enforce the Research Program Patent Rights to the extent ABX has the right to do
so.

                   b. If Gliatech fails to abate an infringement of the Research
Program Patent Rights, or to file an action to abate such infringement, within
ninety (90) days after a written request from ABX to do so, or if Gliatech
discontinues the prosecution of any such action after filing, ABX at its expense
may, in its discretion, undertake such action as it determines appropriate to
enforce the Research Program Patent Rights. In such case, Gliatech shall assist
ABX, upon request and at ABX's sole expense, and to the extent commercially
reasonable, in taking any action to enforce the Research Program Patent Rights
to the extent Gliatech has the right to do so.

                   c. All monies recovered upon the final judgment or settlement
of any such action shall be used (i) first, to reimburse the costs and expenses
(including reasonable attorneys' fees and costs) of ABX and Gliatech, and (ii)
the remainder, to be divided [***] to the controlling party of the litigation
and [***] to the other party.

         9.4 INFRINGEMENT CLAIMS. Subject to Section 9.6 below, if the
production, sale or use of Product pursuant to this Agreement results in any
claim, suit or proceeding alleging patent infringement against Gliatech (or its
Affiliates or Sublicensees), Gliatech shall promptly notify ABX thereof in
writing setting forth the facts of such claim in reasonable detail. Gliatech
shall keep ABX reasonably informed of all material developments in connection
with any such claim, suit or proceeding as it relates to the Licensed
Technology. Notwithstanding the above, Gliatech shall not admit the invalidity
of any patent within the Licensed Technology without written consent from ABX.

         9.5 PATENT MARKING. Gliatech agrees to mark and have its Affiliates
and all Sublicensees mark all Products sold pursuant to this Agreement in
accordance with the applicable statutes or regulations in the country or
countries of manufacture and sale thereof.

         9.6 LIMITATION. Notwithstanding any other provision in this Article
9, (a) ABX shall not be obligated to prepare, file, prosecute, and maintain
patents and patent applications, or to bring or pursue enforcement proceedings
or defend declaratory judgment actions regarding the Licensed Technology if, and
to the extent that, ABX is not entitled to do so under one or more ABX
In-Licenses, and (b) any rights conveyed under this Article 9 permitting
Gliatech to prepare, file, prosecute and maintain certain patents and patent
applications, or to bring and pursue enforcement proceedings, or defend
declaratory judgment actions, regarding the Licensed Technology, shall be
subject to all applicable ABX In-Licenses, and are conveyed only to the extent
permitted under such agreements.

<PAGE>   21

      10. INDEMNIFICATION

          10.1 ABX. ABX shall indemnify and hold harmless Gliatech, and its
directors, officers, employees and agents, from and against all losses,
liabilities, damages and expenses, including reasonable attorneys' fees and
costs (collectively, "Liabilities"), resulting from any claims, demands, actions
or other proceedings by any Third Party arising from (a) the material breach of
any representation, warranty or covenant by ABX under this Agreement, (b) any
use, handling or storage by ABX of the Gliatech Materials and Information or the
Research Program Materials and Information, (c) the use, sale, handling or
storage by ABX of the Antibody or the Products, or (d) any use by ABX of the
Confidential Information of Gliatech; PROVIDED, HOWEVER, that ABX shall not be
obligated to indemnify or hold harmless Gliatech for such Liabilities to the
extent that such Liabilities arise from the gross negligence or willful
misconduct of Gliatech.

          10.2 GLIATECH. Gliatech shall indemnify and hold harmless ABX, and
its directors, officers, employees and agents, from and against all Liabilities
resulting from any claims, demands, actions or other proceedings by any Third
Party arising from (a) the material breach of any representation, warranty or
covenant by Gliatech under this Agreement, (b) any use, handling or storage by
Gliatech of the ABX Materials and Information or the Research Program Materials
and Information, (c) the manufacture, use, sale, handling or storage by
Gliatech, its Affiliates or Sublicensees of the Products (without regard to
culpable conduct), or (d) any use by Gliatech of the Confidential Information of
ABX; PROVIDED, HOWEVER, that Gliatech shall not be obligated to indemnify or
hold harmless ABX for such Liabilities to the extent that such Liabilities arise
from the gross negligence or willful misconduct of ABX.

          10.3 PROCEDURE. If a party (an "Indemnitee") intends to claim
indemnification under this Article 10, it shall promptly notify the indemnifying
party (the "Indemnitor") in writing of any claim, demand, action or other
proceeding for which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall have the right to participate in, and, to the extent the
Indemnitor so desires, to assume the defense thereof with counsel mutually
satisfactory to the parties with the fees of such counsel to be paid by the
Indemnitor; PROVIDED, HOWEVER, that an Indemnitee shall have the right to retain
its own counsel, with the fees and expenses to be paid by the Indemnitor, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such
proceeding. The indemnity agreement in this Article 10 shall not apply to
amounts paid in settlement of any claim, demand, action or other proceeding if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld or delayed unreasonably. The failure to deliver written
notice to the Indemnitor within a reasonable time after the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve
such Indemnitor of any liability to the Indemnitee under this Article 10, but
the omission so to deliver written notice to the Indemnitor shall not relieve it
of any liability that it may have to any party claiming indemnification
otherwise than under this Article 10. The party claiming indemnification under
this Article 10, its employees and agents, shall reasonably cooperate with the
Indemnitor and its legal representatives in the investigation of any claim,
demand, action or other proceeding covered by this indemnification.

<PAGE>   22

          10.4 INSURANCE. Gliatech shall maintain insurance, including
product liability insurance, with respect to development, manufacture and sales
of Products in such amount as Gliatech customarily maintains with respect to the
development, manufacture and sale of its other products. ABX shall be named as
an additional insured on any such Gliatech policies. Gliatech shall maintain
such insurance for so long as it continues to develop, manufacture or sell any
Products, and thereafter for so long as Gliatech customarily maintains insurance
for itself covering the development, manufacture and sale of its other products.

      11. REPRESENTATIONS AND WARRANTIES

          11.1 MUTUAL REPRESENTATIONS. Each party hereby represents and
warrants to the other party as follows:

               11.1.1 EXISTENCE. Such party is duly organized, validly existing
and in good standing under the laws of the state in which it is organized.

               11.1.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party:
(a) has the requisite power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder; and (b) has taken all
requisite action on its part to authorize the execution and delivery of this
Agreement and the performance of its obligation hereunder. This Agreement has
been duly executed and delivered on behalf of such party, and constitutes a
legal, valid, binding obligation enforceable against such party in accordance
with its terms except as enforcement may be limited by equitable remedies or
defenses and applicable bankruptcy laws.

               11.1.3 NO CONSENTS. All necessary consents, approvals and
authorizations of all governmental authorities and other person required to be
obtained by such party in connection with this Agreement have been obtained.

               11.1.4 NO CONFLICT. The execution and delivery of this Agreement
and the performance of such party's obligations hereunder: (a) do not conflict
with or violate any requirement of applicable laws or regulations; and (b) do
not conflict with, or constitute a default under, any contractual obligation of
it.

         11.2 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, ABX MAKES NO REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND
REGARDING MATERIALS, PRODUCTS OR LICENSED TECHNOLOGY EITHER EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NONINFRINGEMENT, AND VALIDITY OF TECHNOLOGY OR PATENT
CLAIMS, ISSUED OR PENDING. SUCH MATERIALS PROVIDED PURSUANT TO THIS AGREEMENT
ARE PROVIDED "AS IS."

     12. TERM; TERMINATION

         12.1 TERM. The term of this Agreement shall commence on the
Effective Date and, unless earlier terminated as provided in Articles 2 or 4 or
this Article 12, shall continue in

<PAGE>   23

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

full force and effect on a Product-by-Product and country-by-country basis until
the expiration of all fee and royalty obligations pursuant to this Agreement for
such Product in such country. Following the expiration, but not earlier
termination, of this Agreement on a Product-by-Product and country-by-country
basis, Gliatech shall have a fully-paid up, non-exclusive license to use the ABX
Know-How and the Research Program Know-How solely to make and have made Product
and to use, sell, lease, offer to sell or lease, import, export, otherwise
transfer physical possession of or otherwise transfer title to Product, for use
in the Field.

         12.2 TERMINATION FOR BREACH. In the event that a party shall have
materially breached or defaulted in the performance of any of its material
obligations hereunder, and such breach or default shall have continued for
thirty (30) days after written notice of such breach was provided to the
breaching party by the nonbreaching party, the nonbreaching party shall have the
right at its option to terminate this Agreement effective at the end of such
thirty (30) day period.

         12.3 TERMINATION FOR FAILURE TO TIMELY GIVE LICENSE NOTICE. If
Gliatech fails to give the License Notice to ABX on or before the expiration or
termination of the Research Program Term, this Agreement immediately shall
terminate.

         12.4 TERMINATION BY GLIATECH. Gliatech may terminate this Agreement
at any time upon ninety (90) days prior written notice to ABX.

         12.5 EFFECT OF EXPIRATION OR TERMINATION.

              12.5.1 Expiration or termination of this Agreement shall be
without prejudice to any rights which shall have accrued to the benefit of a
party prior to such expiration or termination. Without limiting the foregoing,
Articles 8, 9, 10 and 11 shall survive any expiration or termination of this
Agreement.

              12.5.2 If ABX terminates this Agreement under Section 12.2 or if
Gliatech terminates pursuant to 12.4 above, or if this Agreement automatically
terminates under Section 12.3 above, at the request of ABX, Gliatech and its
Affiliates shall grant to ABX an exclusive, worldwide, royalty-bearing license
under their respective intellectual property rights regarding the Gliatech
Materials and Information and Research Program Materials and Information to make
and have made Product and to use, sell, lease, offer to sell or lease, import,
export, otherwise transfer physical possession of or otherwise transfer title to
Product, in the Territory for use in the Field. In consideration therefor, ABX
shall pay royalties to Gliatech equal to [***] of Net Sales of Products by ABX,
its Affiliates and sublicensees that infringe a valid claim of an issued patent
of Gliatech or its Affiliates. The royalty payment and reporting provisions of
Article 6 above shall apply to ABX MUTATIS MUTUNDIS.

              12.5.3 If this Agreement is terminated for any reason, Gliatech
and its Affiliates and Sublicensees shall have the right to sell or otherwise
dispose (consistent with all applicable regulations and law and subject to
Articles 4 and 5 of this Agreement) of the stock of any Product subject to this
Agreement then on hand. Upon termination of this Agreement by ABX for any
reason, any sublicense granted by Gliatech hereunder shall survive, provided
that

<PAGE>   24

upon request by ABX, such Sublicensee promptly agrees in writing to be bound by
the applicable terms of this Agreement.

            12.5.4 Except as otherwise provided herein or as otherwise
expressly agreed in writing by the parties, promptly upon the expiration or
earlier termination of this Agreement, (a) each party shall destroy all
remaining Research Program Materials and Information, (b) ABX shall destroy or
return to Gliatech (as Gliatech shall direct) all remaining Gliatech Materials
and Information, and (c) Gliatech shall destroy or return to ABX (as ABX shall
direct) all remaining ABX Materials and Information.

     13. MISCELLANEOUS PROVISIONS

         13.1 NOTICES. Except as otherwise set forth in this Agreement, all
requests and notices required or permitted to be given to the parties hereto
shall be given in writing, shall expressly reference the section(s) of this
Agreement to which they pertain, and shall be delivered to the other party,
effective on receipt, at the appropriate address as set forth below or to such
other addresses as may be designated in writing by the parties from time to time
during the term of this Agreement.

         If to ABX:

               Abgenix, Inc.
               7601 Dumbarton Circle
               Fremont, California  94555
               Attn: President

         with a copy to:

               Pillsbury Madison & Sutro LLP
               101 West Broadway, Suite 1800
               San Diego, California 92101
               Attn: Mark R. Wicker

        If to Gliatech:

               Gliatech Medical Inc.
               23420 Commence Park Road
               Cleveland, Ohio 44122
               Attn: President

         13.2 COMPLIANCE WITH LAWS. Each party shall use the Materials and
Information of the other party and the Research Program Materials and
Information in compliance in all material respects with all applicable laws,
guidelines and regulations which are applicable to such Materials and
Information or the use thereof, including without limitation any biosafety
procedures and all safety precautions accompanying such Materials and
Information. Except as otherwise expressly agreed in this Agreement or otherwise
expressly agreed in writing

<PAGE>   25

by the parties, neither party shall administer the Materials and Information of
the other party or the Research Program Materials and Information to humans
under any circumstances.

         13.3 ASSIGNMENT. Neither party shall assign its rights or
obligations under this Agreement, in whole or in part, by operation of law or
otherwise, without the prior express written consent of the other party;
PROVIDED, HOWEVER, that either party may, without such consent, assign this
Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its business, or in the event of
its merger or consolidation or change in control or similar transaction. Any
permitted assignee shall assume all obligations of its assignor under this
Agreement. Any purported assignment in violation of this Section 13.3 shall be
void.

         13.4 WAIVERS AND AMENDMENTS. No change, modification, extension,
termination or waiver of this Agreement, or any of the provisions herein
contained, shall be valid unless made in writing and signed by duly authorized
representatives of the parties hereto.

         13.5 INJUNCTIVE RELIEF. In addition to any other rights and
remedies available to a party for any breach by the other party of this
Agreement, the non-breaching party shall have the right to seek injunctive or
other equitable relief to enforce the provisions of this Agreement.

         13.6 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties regarding the subject matter of this Agreement and
supersedes any previous understandings, representations, acknowledgements,
commitments or agreements, oral or written, regarding such subject matter.

         13.7 GOVERNING LAW. This Agreement shall be governed by and
construed under laws of the State of California, without regard to its conflicts
of laws principles.

         13.8 INDEPENDENT CONTRACTORS. The relationship of the parties
hereto is that of independent contractors. The parties hereto are not deemed to
be agents, partners or joint venturers of the others for any purpose as a result
of this Agreement or the transactions contemplated thereby.

         13.9 NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL A PARTY HERETO BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION
LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT,
REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 13.9 IS
INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF
EITHER PARTY.

         13.10 EXPORT LAWS. Notwithstanding anything to the contrary
contained herein, all obligations of ABX and Gliatech are subject to prior
compliance with United States export regulations and such other United States
laws and regulations as may be applicable, and to obtaining all necessary
approvals required by the applicable agencies of the government of the

<PAGE>   26

United States. Gliatech shall be responsible for obtaining such approvals, and
shall use efforts consistent with prudent business judgment to obtain such
approvals. ABX agrees to cooperate reasonably with Gliatech and provide
reasonable assistance to Gliatech as may be reasonably necessary to obtain any
required approvals.

         13.11 THIRD PARTY RIGHTS. Notwithstanding anything to the contrary
in this Agreement, the grant of rights by ABX under this Agreement shall be
subject to and limited in all respects by the terms of the applicable ABX
In-License(s) pursuant to which ABX acquired any Licensed Technology, and all
rights or sublicenses granted under this Agreement shall be limited to the
extent that ABX may grant such rights and sublicenses under such ABX
In-Licenses. Additionally, and without limiting the foregoing, the rights
granted to Gliatech hereunder, including without limitation any grant of
"exclusive" rights, shall be subject to the rights granted to or retained by
GenPharm under the GenPharm Cross License Agreement.

         13.12 NO THIRD-PARTY BENEFICIARIES. None of the provisions of this
Agreement shall be for the benefit of, or enforceable by, any Third-Party. The
agreements herein contained are made for the sole benefit of the parties hereto
and no other Person is intended to or shall have any rights or benefits
hereunder, whether as a third party beneficiary or otherwise.

             IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.

                                   ABGENIX, INC.

                                   By: /s/ Raymond M. Withy
                                       ----------------------------
                                       (Signature)

                                        Raymond M. Withy, Ph.D.
                                        -----------------------
                                        (Printed Name)

                                        Vice President, Corporate Development
                                        -------------------------------------
                                        (Title)

                                    GLIATECH MEDICAL INC.

                                    By: /s/ Thomas O. Oesterling
                                        ------------------------
                                        (Signature)

                                        Thomas O. Oesterling, Ph.D.
                                        ---------------------------
                                        (Printed Name)

                                         Chairman and Chief Executive Officer
                                         ------------------------------------
                                         (Title)

<PAGE>   27

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

                                    EXHIBIT A

                          ABX MATERIALS AND INFORMATION

[***] mg of an anti-KLH antibody (generated in XenoMouse Animals)

<PAGE>   28

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

                                    EXHIBIT B

[***]

<PAGE>   29

--------------------------------------------------------------------------------
Confidential treatment has been requested for the redacted portions of this
exhibit, and such confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

                                    EXHIBIT C

                              INITIAL RESEARCH PLAN
                              ---------------------

[***]

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