Document:

EXHIBIT 10.1

                   RESEARCH, DEVELOPMENT AND LICENCE AGREEMENT
                           DATED MAY 11, 1999 BETWEEN
          PRAXIS PHARMACEUTICALS, INC. AND FAIRCHILD INTERNATIONAL INC.

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                   RESEARCH, DEVELOPMENT AND LICENCE AGREEMENT
                         DATED THE 11TH DAY OF MAY, 1999

BETWEEN:

                          PRAXIS PHARMACEUTICALS, INC.,
                     a body corporate incorporated pursuant
                        to the laws of the State of Utah,
                       one of the United States of America
                             and having an office at
                        ANUTECH Court, North Road, in the
                        City of Canberra, ACT, Australia
                                   ("Praxis")

                                     - and -

                 FAIRCHILD INTERNATIONAL INC., a body corporate
                      incorporated pursuant to the laws of
                    the Province of British Columbia, Canada
                             and having an office at
                          Suite 600, 595 Hornby Street,
                   City of Vancouver, British Columbia, Canada
                                  ("FAIRCHILD")

                  WHEREAS:

A. The Australian National University is the owner of certain patents related to
the invention entitled "Phosphosugar-based anti-inflammatory and/or
immunosuppressive drugs" and certain patent applications related to an invention
entitled "Novel phosphosugars and phosphosugar-containing compounds having
anti-inflammatory activity" which are described in more detail herein;

B.                ANUTECH PTY Ltd. ("Anutech"), the commercialization company of
                  the Australian National University, has entered into an
                  agreement as agent for and on behalf of the Australian
                  National University with Praxis pursuant to which Praxis has
                  been granted an exclusive licence for the use of the
                  inventions described above in specified areas of application;

C.       Praxis has and intends to continue to conduct research and development

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related to the above described inventions;

D. Praxis wishes to obtain funding from FAIRCHILD to conduct research in the
area of arthritis and dermal wrinkles and related to the above inventions;

E. FAIRCHILD wishes to obtain an exclusive, world-wide licence to make, use and
sell products and processes developed by Praxis relating to arthritis and dermal
wrinkles;

                  NOW THEREFORE, in consideration of the mutual terms and
conditions contained herein, the parties hereto agree as follows:

                     PART I - DEFINITIONS AND INTERPRETATION

SECTION 1 - DEFINITIONS

                  In this Agreement, including this Section, the following
defined terms have the meanings indicated:

         (a)      "Anutech Licence Agreements" means the agreement entered into
                  between Anutech and Praxis dated 27th October, 1997, a copy of
                  which is attached hereto as Schedule "D";

         (b)      "Closing Date" means September 30th, 1999

         (c)      "Confidential Information" means confidential or proprietary
                  information, trade secrets, know-how and technical information
                  related to the inventions claimed pursuant to the Patents and
                  any other information disclosed in confidence by Praxis to
                  FAIRCHILD or by FAIRCHILD to Praxis;

         (d)      "Field of Use" means arthritis and dermal wrinkles;

         (e)      "Intellectual Property" means any and all methods, devices,
                  techniques, discoveries, inventions (whether or not
                  patentable), know-how, ideas,

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                  processes, trade secrets and other proprietary information,
                  including any patent right, copyright, trade secret or similar
                  right;

         (f)      "Licensed Patent Applications" means:

                  (i)      the patent applications relating to the invention
                           entitled "Novel phosphosugars and
                           phosphosugar-containing compounds having
                           anti-inflammatory activity", including United State
                           Patent Application No. 08/953305, Australian
                           Application No. 41866/97 and any patent applications
                           filed now or in the future in any country which
                           disclose and claim the same inventions or the
                           priority of Australian Provisional Application PO
                           3098/96, filed October 18, 1996; and

                  (ii)     all patent applications related to the New
                           Intellectual Property;

         (g)      "Licensed Patents" means:

                  (i)      the patents described on Schedule "A" hereto;

                  (ii)     all patents issued out of the Patent Applications;

                  (iii)    any patents issued in any country disclosing and
                           claiming the same inventions as those claimed in the
                           patents referred to in clauses (i) and (ii) hereof;
                           and

                  (iv)     all divisions, re-issues, re-examinations,
                           continuations, renewals and extensions of the
                           foregoing;

         (h)      "Licensed Product" means any product the manufacture or use of
                  which is covered by a Valid Claim;

         (i)      "Licensed Technology" means:

                  (i)      the inventions disclosed and claimed in the Licensed
                           Patent Applications and Licensed Patents;

                  (ii)     any additional Intellectual Property related to the
                           inventions referred to in clause (i), their
                           description, use, or application; and

                  (iii)    all Confidential Information in any way related to
                           the inventions referred to in clause (i) hereof and
                           the Intellectual Property referred to in clause (ii)
                           hereof;

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         (j) "Net Revenue" means all consideration received by FAIRCHILD:

                  (i)      for the sale or other disposition of Licensed
                           Products; and

                  (ii)     pursuant to the terms of any sublicences granted by
                           FAIRCHILD in accordance with Section 11(3);

                  less the following:

                           (A)      all costs incurred by FAIRCHILD in the
                                    development of Licensed Products, including,
                                    without limitation, payments made by
                                    FAIRCHILD to Praxis pursuant to Section 8,
                                    costs and expenses incurred by FAIRCHILD
                                    pursuant to Section 13 and expenses incurred
                                    by FAIRCHILD in connection with obtaining
                                    Regulatory Approvals, including those
                                    referred to in Section 17;

                           (B)      all costs of direct materials, labour and
                                    overhead expenses required in the
                                    manufacture and production of Licensed
                                    Products;

                           (C)      costs incurred by FAIRCHILD in connection
                                    with the marketing, selling and distribution
                                    of Licensed Products;

                           (D)      any tax or government charge (other than an
                                    income tax) levied on the sale,
                                    transportation or delivery of Licensed
                                    Product;

                           (E)      trade and quantity discounts or rebates
                                    actually allowed and taken; and

                           (F)      credits or allowances given or made for
                                    rejection or return of previously sold
                                    Licensed Products;

         (k)      "New Intellectual Property" means Intellectual Property that
                  is developed by Praxis during the conduct of the Research
                  Projects performed by Praxis in accordance with Section 8;

         (l)      "Regulatory Approval" means any approvals, licenses,
                  registrations or authorizations of any relevant authority
                  having jurisdiction necessary for the development, use,
                  importation, packaging, marketing, distribution, sale, storage
                  and transportation of the Licensed Products;

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         (m)      "Research Projects" means the Research and Development
                  Projects relating to dermal wrinkles and arthritis conducted
                  in accordance with Section 8;

         (n)      "Shares" means shares in the capital stock of FAIRCHILD
                  described as Class A Common and having the rights set out on
                  Schedule "B" hereto;

         (o)      "Valid Claim" means a claim of any issued and unexpired
                  Licensed Patent which claim has not been held unenforceable,
                  unpatentable or invalid by a decision of a court or government
                  body of competent jurisdiction, unappealable or unappealed
                  within the time allowed for appeal, which has not been
                  rendered unenforceable through disclaimer or otherwise, and
                  which has not been lost through an interference proceeding or
                  by abandonment.

SECTION 2 - GOVERNING LAW AND JURISDICTION

                  This Agreement shall be governed by and interpreted in

accordance with the laws in force in the Province of British Columbia. The

parties hereby submit to the jurisdiction of the Courts of British Columbia.

SECTION 3 - CURRENCY

                  All monetary units, except as expressly stated otherwise in

this Agreement, are in United States dollars.

SECTION 4 - AFFILIATES

                  For the purpose of this Agreement, a company is an Affiliate
of a party if:

         (a)      the party owns or controls, directly or indirectly, 50% or
                  more of the voting stock of that company;

         (b)      the party owns or controls, directly or indirectly, sufficient
                  voting stock in that company to elect a majority of the
                  directors of that company;

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         (c)      that company owns or controls, directly or indirectly, 50% or
                  more of the voting stock of the party;

         (d)      that company owns or controls, directly or indirectly,
                  sufficient voting stock in the party to elect a majority of
                  the directors of the party;

         (e)      an organization owns or controls, directly or indirectly, 50%
                  or more of the voting stock of the party and that company; or

         (f)      an organizations owns or controls, directly or indirectly,
                  sufficient voting stock in the party and the company to elect
                  a majority of the directors of the party and that company.

SECTION 5 - SCHEDULES

                  The following Schedules are incorporated into and form part of

this Agreement:

                           Schedule "A" - Patents
                           Schedule "B" - Share Rights
                           Schedule "C" - Research Projects
                           Schedule "D" - Anutech Licence

                      PART II - PURCHASE AND SALE OF SHARES

SECTION 6 - SUBSCRIPTION AND PURCHASE

(1) In consideration for the licensing rights to the Praxis Intellectual
Property, FAIRCHILD hereby agrees to transfer, on or before the Closing Date,
260,000 pre-split shares or 2.6 million post-split shares of Fairchild
International Inc. to Praxis, and guarantees that the Shares will be issued as
fully paid up and non-accessible Shares; that the Shares be allotted and that a
certificate for the Shares be issued to Praxis.

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(2) Praxis shall certify as at the Closing Date that the following

representations and warranties are correct:

         (a)      Praxis is engaged primarily in the business of developing a
                  unique panel of natural carbohydrate based compounds and
                  exploiting commercial applications of such;

         (b)      there are no material lawsuits against Praxis, or its
                  directors or officers that are related to the business of
                  Praxis, nor, to the best of the knowledge of Praxis and its
                  directors and officers are any being contemplated;

         (c)      Praxis is current in all taxes owed, including payroll taxes,
                  and on all debts, accounts payable and leases;

         (d)      Praxis has provided copies of its most recent financial
                  statements to FAIRCHILD and the information contained in such
                  financial statements is complete and accurately reflects
                  Praxis' situation, financial and otherwise;

         (e)      a copy of every material executed lease, licence, partnership
                  or collaboration agreement (whether technical, marketing,
                  manufacturing or other) stockholder agreement, loan agreement,
                  employment agreement, purchase and sale agreement has been
                  provided to FAIRCHILD;

         (f)      a comprehensive listing and description of all Intellectual
                  Property in the name of Praxis or obtained by Praxis through
                  licensing has been provided to FAIRCHILD as have copies of
                  file wrappers for all Licensed Patent Applications and there
                  are no existing or potential patent disputes of which Praxis
                  is aware or for which Praxis has not provided full and
                  complete disclosure to FAIRCHILD;

         (g)      a complete and current listing of Praxis' capital structure
                  and the terms and conditions associated therewith has been
                  provided to FAIRCHILD, including a list of all shareholders,
                  options, Warrants, puts and other instruments that may affect
                  FAIRCHILD's equity position after shareholdings are fully
                  diluted;

         (h)      there are no material written or oral agreements with any
                  other person or corporation pursuant to which Praxis or it
                  directors or officers have agreed to do anything beyond the
                  requirements of the formal written contracts referred to in
                  clause (e);

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         (i)      the transfer of the Shares to Praxis contemplated by this
                  Agreement will not constitute a breach of any contract or
                  commitment to which FAIRCHILD is a party;

         (j)      Praxis has filed all necessary tax returns;

         (k)      this Agreement has been duly authorized, executed and
                  delivered by Praxis and is a legal, valid and binding
                  obligations of Praxis enforceable by FAIRCHILD in accordance
                  with its terms, except as enforcement may be limited by
                  bankruptcy, insolvency and other laws affecting the rights of
                  creditors generally;

         (l)      the execution and delivery of this Agreement by Praxis and the
                  completion of the transactions herein will not result in a
                  breach or violation of any of the provisions of any obligation
                  of Praxis under any contract to which Praxis may be a party;
                  any judgment, decree, order or award of any court,
                  governmental body or arbitrator having jurisdiction over
                  Praxis; or any applicable law, statute, ordinance, regulation
                  or rule;

         (m)      the issue of the Shares to Praxis is in compliance with the
                  constating documents of FAIRCHILD; and

         (n)      Praxis is not a non-resident of Canada within the meaning of
                  Section 116 of the Income Tax Act (Canada).

(3)               If at any time prior to the Closing Date:

         (a)      Praxis shall have failed to comply with any term or condition
                  contained herein;

         (b)      any representations and warranties set out in Section 6(2) is
                  incorrect in any material respect;

         (c)      there is any material default under debts owed by Praxis which
                  default has not been cured within any applicable grace period;
                  or

         (d)      any material final judgments are rendered against Praxis;

FAIRCHILD may terminate this Agreement upon written notice to Praxis.

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(4) All registration and recording fees payable to third parties in connection

with the closing of the transactions outlined in this Section 6 shall be borne

by Praxis.

SECTION 7 - PURCHASE OF ADDITIONAL SHARES

                  Praxis shall not purchase any Shares in addition to those to

which Praxis is entitled pursuant to Section 6 unless such purchase is made in

conjunction with or pursuant to an agreement between Praxis and FAIRCHILD for

the acquisition by Praxis of voting control of FAIRCHILD.

                       PART III - RESEARCH AND DEVELOPMENT

SECTION 8 - RESEARCH PROJECTS

(1) Praxis shall conduct the Research Projects and perform all work described in

Schedule "C".

(2) Praxis shall commence work on October 1st, 1999 and shall use reasonable

efforts to complete the Research Projects in accordance with the work schedule

included as part of Schedule "C".

(3) The Research Projects shall be performed by Praxis in a thorough and

diligent manner in accordance with Good Laboratory Practices and normal

professional standards.

(4) Praxis shall report to FAIRCHILD at the times and in the manner set forth in

Schedule "C".

(5) FAIRCHILD shall pay to Praxis the total sum of $250,000.00 USD, after

deduction for any loans to the company, payable as an initial payment of $62,500

USD

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and then in three equal quarterly instalments of $50,000 USD payable on the

first day of each month commencing on January 1st, 2000 and a single, and final,

quarterly payment of $37,500 USD on October 1st, 2000, such payments to be

exclusive of any taxes, whether municipal, provincial, federal or Goods and

Services. The funds paid by FAIRCHILD to Praxis pursuant to this Section 8 shall

only be used by Praxis for the conduct of the Research Projects and shall only

be expended in accordance with the budget included as part of Schedule "C",

unless Praxis obtains prior written authorization from FAIRCHILD.

(6) FAIRCHILD and Praxis shall, not less than once every three (3) months,

review and evaluate progress on the Research Projects. Following such reviews

milestones as set out in Schedule C may be revised as and when needed by mutual

agreement between FAIRCHILD and Praxis.

(7) Praxis shall use reasonable efforts to ensure that the technology used in

the Research Projects does not infringe on any patents or proprietary rights of

other persons.

SECTION 9 - RECORDS AND CONFIDENTIALITY

(1) Praxis shall maintain complete and accurate records of the activities

conducted and results obtained pursuant to the Research Projects, all in

accordance with good scientific practice. Upon written request from FAIRCHILD,

Praxis shall provide copies of any such records to FAIRCHILD.

(2) Praxis shall keep full, accurate and complete records of books of account

relating to financial aspects of the Research Projects. FAIRCHILD, or a

designate of FAIRCHILD, may from time to time upon reasonable prior written

notice to Praxis examine, audit or have examined or audited the records and

books of account of Praxis.

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(3) All data, reports, plans, records, logs and other information relating to

the Research Projects shall be treated by Praxis and FAIRCHILD as the

confidential property of both parties and both parties shall use all reasonable

efforts to ensure that such information is kept strictly confidential during the

term of this Agreement and for a period of ten (10) years thereafter. Nothing

herein shall prevent Praxis from using, disclosing or authorizing disclosure of

information:

         (a)      which is or becomes part of the public domain through no act

                  or failure on the part of Praxis;

         (b)      which was in Praxis' possession prior to its development

                  pursuant to the Research Projects or prior to receipt or

                  acquisition from FAIRCHILD;

         (c)      which is disclosed to Praxis by a third party without a

                  covenant of confidentiality, provided that such third party

                  is, to the knowledge of Praxis, under no obligation of

                  confidentiality with respect to the information; or

         (d)      with the prior written authorization of FAIRCHILD.

SECTION 10 - OWNERSHIP OF NEW INTELLECTUAL PROPERTY

(1) New Intellectual Property shall promptly be disclosed by Praxis to FAIRCHILD

and thereafter shall be included as part of the Licensed Technology and licensed

to FAIRCHILD pursuant to Section 11.

(2) All expenses connected with preparing, filing, prosecuting, obtaining,

maintaining and enforcing intellectual property rights related to the New

Intellectual Property shall be borne by FAIRCHILD.

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                                PART IV - LICENCE

SECTION 11 - GRANT

(1) Praxis hereby grants to FAIRCHILD an exclusive, world-wide sublicence under

the Licensed Patent Applications and Licensed Patents, and an exclusive,

world-wide sublicence under the New Intellectual Property, to use the Licensed

Technology and to make, use and sell any products, compounds, compound uses,

processes, applications, methods or procedures within the Field of Use.

(2) FAIRCHILD shall be entitled to grant further sublicences of the rights

granted by Praxis to FAIRCHILD pursuant to Section 11(1) hereof. FAIRCHILD shall

advise Praxis in writing of any and all sublicences granted by FAIRCHILD in

accordance with this Section 11(3) and shall provide Praxis with the following

information:

         (a)      name of the sublicencee;

         (b)      the amount of any licence fee or royalties payable by the

                  sublicencee; and

         (c)      such further information as may be reasonably requested by

                  Praxis.

(3) FAIRCHILD may assign this Agreement to an Affiliate of FAIRCHILD or may

transfer or assign the rights and obligations of FAIRCHILD pursuant to Parts

III, IV or V, or any combination thereof, to an Affiliate of FAIRCHILD.

FAIRCHILD shall advise Praxis in writing of any such transfer or assignment.

Notwithstanding any such transfer or assignment, FAIRCHILD shall at all times

remain liable to Praxis for the performance of the obligations set out herein,

including the obligation to pay to Praxis a share of Net Revenue in accordance

with Section 12.

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SECTION 12 - REVENUE

(1) Net Revenue shall be apportioned between the parties and FAIRCHILD shall pay

to Praxis an amount equal to thirty five percent (35%) of Net Revenue of Praxis

products for so long as there are Valid Claims.

(2) All payments required to be made pursuant to Section 12(1) shall be made

according to Section 8(5).

SECTION 13 - RECORDS AND REPORTS

(1) FAIRCHILD shall keep full, accurate and complete records and books of

account relating to Net Revenue and any amounts payable by FAIRCHILD to Praxis

pursuant to Section 12 hereof.

(2) All payments made by FAIRCHILD to Praxis pursuant to Section 12 shall be

accompanied by a report providing such information as is reasonably required by

Praxis to determine an accurate determination of the amounts payable by

FAIRCHILD to Praxis in accordance with Section 12.

(3) Praxis may from time to time, upon reasonable prior notice to FAIRCHILD have

the records and books of account maintained by FAIRCHILD in accordance with

Section 13(1) hereof audited or examined by a duly authorized independent

chartered accountant to ascertain the accuracy of the payments made. All costs

of any audit, examination or report shall be payable by Praxis, unless the

report discloses an underpayment of five (5%) percent or more, in which case the

cost of the audit, examination or report shall be payable by FAIRCHILD.

SECTION 14 - PROTECTION, ENFORCEMENT AND INFRINGEMENTS

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(1) Praxis shall permit FAIRCHILD to control and direct (including the selection

of patent agents or patent attorneys) the preparation, filing and prosecution of

all patent applications the subject of this Agreement included within the Field

of Use of the Licensed Technology, including the New Intellectual Property.

Without limiting the generality of the foregoing, Praxis shall, upon FAIRCHILD's

request and at FAIRCHILD's cost and expense, file and prosecute patent

applications to protect the Licensed Technology in any country that a patent

application has not been filed. FAIRCHILD shall consult with Praxis on the

content of all patent applications and related filings. Praxis shall bear all

costs related to the preparation, filing, prosecution and maintenance with

respect to the Licensed Patents described on Schedule "A", the Licensed Patent

Applications described in Section 1(g)(i) and any other patents or Licensed

Patent Applications that disclose and claim the same inventions. FAIRCHILD shall

pay all costs of preparing, filing, prosecuting and maintaining all Licensed

Patent Applications and Licensed Patents related to the New Intellectual

Property.

(2) If either party believes that any Licensed Patents are being infringed by

another person, that party shall promptly notify the other party and shall

provide any evidence of infringement which is reasonably available. FAIRCHILD

shall have the first right and option, but not the obligation, to bring an

action for infringement, at FAIRCHILD's sole cost and expense, against the

alleged infringer. If FAIRCHILD elects to take such action, the conduct of the

action shall be entirely under the direction and control of FAIRCHILD. If

FAIRCHILD exercises the rights contained herein, FAIRCHILD may name Praxis as a

party plaintiff in such action, suit or proceeding, if reasonably necessary

under the circumstances, provided that FAIRCHILD shall indemnify and hold Praxis

and Anutech harmless from any costs or expenses incurred in connection with such

action, suit or proceeding. Any damages or sums recovered by FAIRCHILD in any

such action, suit or proceeding, or any settlement thereof, shall be retained by

FAIRCHILD, but, to the extent that the recovery reflects lost sales of Licensed

Products, the net amount after deducting expenses incurred by FAIRCHILD, shall

be included as part of Net Revenue.

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(3) If FAIRCHILD elects not to pursue an action for infringement, whether alone

or jointly with Praxis, Praxis shall have the right and option, but not the

obligation, at Praxis's sole cost and expense, to bring the action for

infringement against the alleged infringer. Any damages or sums recovered by

Praxis in such action, suit or proceeding, or any settlement thereof, shall be

retained by Praxis, but, to the extent that the recovery reflects lost sales of

Licensed Products, Praxis shall pay to FAIRCHILD one-half of the net amount

after deducting expenses incurred by Praxis.

(4) The parties shall cooperate in defending any impeachment, interference or

infringement action, suit or proceeding brought against either Praxis or

FAIRCHILD related to the Licensed Technology.

(5) The parties shall not take any actions that may be reasonably known to

compromise the position of the other party with respect to legal proceedings

commenced or to be commenced or being defended by the other party.

(6) The parties shall render all reasonable assistance, including providing all

documents in their possession and any witnesses as are or may be required in the

conduct of any proceedings referred to herein. If any party renders such

assistance at the request of another party, the requesting party shall reimburse

the assisting party for expenses incurred to render such assistance.

SECTION 15 - WARRANTIES, INDEMNITIES AND INSURANCE

(1) Praxis represents and Warrants to FAIRCHILD that, as of the Closing Date:

         (a)      Praxis owns or has valid and enforceable licenses of the
                  Licensed Technology free and clear of all liens, charges,
                  security interests

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                  and encumbrances, licences and other restrictions;

         (b)      the Anutech Licence Agreement is in full force and effect,
                  unamended and that neither Praxis nor Anutech are in default
                  of any of the terms and conditions contained therein;

         (c)      to the best of Praxis's knowledge and belief, the practising
                  of the Licensed Technology will not infringe the rights of any
                  other person; and

         (d)      to the best of Praxis's knowledge and belief, it is not aware
                  of any activities or conduct of any other person that would
                  constitute infringement of the Licensed Technology.

(2) The parties shall assume and be liable for their own losses, damages and

expenses of any nature whatsoever which they may suffer, sustain, pay or incur

by reason of any matter or thing arising out of, or in any way related to this

Agreement, except for such losses, costs, damages and expenses as are the result

of the wilful breach of any term herein by the other party or the wilful or

negligent acts or omissions of the other party.

(3) Each party shall indemnify and hold harmless the other party, its employees

and agents, from and against any and all claims, demands and costs whatsoever

that may arise out of, directly or indirectly, the indemnifying party's

performance of this Agreement or that of the indemnifying party's employees or

agents. Such indemnifications shall survive this Agreement.

(4) Praxis shall, at its own expense and without limiting its liabilities

herein, maintain comprehensive or commercial general liability insurance with an

insurer in an amount not less than $1,000,000.00 per occurrence (annual general

aggregate, if any, not less than $2,000,000.00), insuring against bodily injury,

personal injury and property damage, including loss of use thereof. Such

insurance shall include blanket contractual liability.

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(5) From the date that any Product arising out of the the Licenced Technology is

first applied for therapeutic human use (and for the term or foreseeable term of

the human use) FAIRCHILD undertakes to hold product liability insurance to the

value of at least $10,000,000.00. Such policies shall name Praxis as additional

insureds and shall be purchased from a reputable insurer. Certificates

evidencing the coverage shall be provided to Praxis.

SECTION 17 - REGULATORY APPROVALS

(1) FAIRCHILD shall use reasonable efforts to obtain Regulatory Approvals.

(2) Praxis shall assist FAIRCHILD in obtaining Regulatory Approvals in the

various countries by providing such information and data as may be in the

possession of Praxis necessary for or of assistance in obtaining any Regulatory

Approvals. FAIRCHILD shall be responsible for all regulatory, agency, filing,

inspection and other fees and expenses and charges incurred in connection with

obtaining any Regulatory Approvals pursuant to Section 17(1).

(3) Praxis shall ensure that all information and data generated by Praxis that

is related to the Clinical Trials or would be of any assistance to FAIRCHILD in

obtaining Regulatory Approvals shall be maintained in a form suitable for

submission to regulatory authorities and shall at all times be kept secure and

confidential.

                                PART VI - GENERAL

SECTION 18 - TERM AND TERMINATION

(1) The term of this Agreement shall expire on the expiration of the last

Licensed Patent. Upon the expiration of this Agreement, FAIRCHILD's licence

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pursuant to Section 11 shall become a fully paid-up, perpetual licence.

(2) This Agreement may be terminated at any time upon the mutual agreement of

the parties.

(3)               If:

         (a)      either party has breached any of its obligations pursuant to
                  this Agreement and fails to remedy such breach or to commence
                  and diligently pursue reasonable steps to remedy such breach
                  within sixty (60) days after notice in writing from the other
                  party;

         (b)      either party becomes bankrupt or insolvent or takes the
                  benefit of any statute for bankrupt or insolvent debtors or
                  makes any proposal, assignment or arrangement with its
                  creditors, or any steps are taken or proceedings commenced by
                  any person for the dissolution, winding up or termination of
                  either parties existence or the liquidation of its assets; or

         (c)      a trustee, receiver, receiver manager or like person is
                  appointed with respect to the business or assets of a party;

the party in default may terminate this Agreement by giving written notice to

the party in default.

(4) If Praxis is in default of any of its obligations related to the performance

of the Research Projects, and has failed to remedy such breach within sixty (60)

days after notice in writing from FAIRCHILD, FAIRCHILD may terminate the

Research Projects immediately upon written notice to Praxis. If FAIRCHILD

terminates the Research Projects in accordance with this Section 18(4):

         (a)      FAIRCHILD shall reimburse Praxis for costs and expenses
                  incurred in accordance with the budget included as part of
                  Schedule "C" to the date of termination;

         (b)      FAIRCHILD shall have no further obligation with respect to the
                  conduct of

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                                      -19-
                  the Research Projects or any costs and expenses related
                  thereto;

         (c)      notwithstanding the termination of the Research Project, all
                  New Intellectual Property developed prior to the date of
                  termination shall be disclosed by Praxis to FAIRCHILD and
                  shall be included as part of the Licensed Technology and
                  licensed to FAIRCHILD pursuant to Section 11; and

         (d)      FAIRCHILD shall have the right to complete the Research
                  Project, or any part thereof at its own cost and expense and
                  any results; improvements to Intellectual Property sublicenced
                  from Praxis under the terms of this Agreement; new patents and
                  patent applications arising from this shall be deemed to be
                  New Intellectual Property.

(5) The following sections shall survive termination of this Agreement: 1, 2, 3,

4, 5, 9 and 15.

SECTION 19 - PUBLICITY

(1) A copy of all public announcements and press releases which either party

intends to release or make regarding products or technology covered by the

licence shall be provided to the other party prior to being released or made.

Any public announcement or news release that names, refers to or in any way

identifies both parties shall be approved by both parties prior to being

released or made. Each party shall respond to a request for approval within five

(5) working days of receipt of the copy and the approval of each party shall not

be unreasonably withheld.

(2) If either party is prevented from complying with Section 19(1) as a result

of the requirements of a Securities Commission or other regulatory body, the

party shall not be considered to be in breach of this Agreement, but shall use

reasonable efforts to consult with and keep the other party informed.

(3) The parties shall not use each other's name in any advertising material

without the prior written consent of the other party, which consent may be

arbitrarily

<PAGE>
                                      -20-
withheld.

(4) Subject to subsection (3), FAIRCHILD shall be responsible for and have
control of labelling of Licensed Products.

SECTION 20 - COMPLIANCE WITH LAWS

                  The parties shall observe and comply with all applicable laws,

ordinances, codes and regulations of Government agencies, including Federal,

Provincial, Municipal and local governing bodies having jurisdiction.

SECTION 21 - RELATIONSHIP

                  Nothing in this Agreement shall be construed as:

         (a)      constituting either party as the agent, employee or
                  representative of the other party; or

         (b)      creating a partnership or as imposing upon either party any
                  partnership duty, obligation or liability to the other party.

SECTION 22 - NOTICES

                  All notices or other communications required or permitted to

be given hereunder shall be in writing and shall be sent to the following

addresses or such other addresses as the relevant party may notify from time to

time:

                           TO: William B Cowden, CEO
                           Praxis Pharmaceuticals Inc.
                           GPO Box 1978
                           Canberra, ACT, Australia 2601
                           Facsimile: 61 2 6279 9758

<PAGE>
                                      -21-

                           TO:  Byron Cox
                           FAIRCHILD INTERNATIONAL Inc.
                           #600 - 595 Hornby Street
                           Vancouver, British Columbia   V6C 1A4
                           Facsimile:  (604) 646-5649

Notices sent by prepaid registered mail shall be deemed to be received by the

addressee on the 7th day (excluding Saturdays, Sundays, statutory holidays and

any period of postal disruption) following the mailing thereof. Notices

personally served or transmitted by facsimile shall be deemed received when

actually delivered or transmitted, provided such delivery shall be made during

normal business hours.

SECTION 23 - ASSIGNMENT

                  Except as expressly permitted pursuant to Section 11, the

parties shall not assign this Agreement or any part thereof, or any rights

hereunder without the prior written consent of the other party, such consent not

to be unreasonably withheld.

SECTION 24 - FURTHER ASSURANCES

                  The parties shall with reasonable diligence take all action,

do all things, attend or cause their representatives to attend all meetings and

execute all further documents, agreements and assurances as may be required from

time to time in order to carry out the terms and conditions of this Agreement in

accordance with their true intent.

SECTION 25 - SETTLEMENT OF DISPUTES

(1) If there is any dispute or disagreement related to or arising out of this

Agreement (the "Disagreement") the parties shall refer the Disagreement for

resolution

<PAGE>
                                      -22-
to their respective Chief Executive Officers, or their nominees.

(2) If the Disagreement is not resolved pursuant to Section 25(1) within thirty

(30) days (or such longer period as agreed upon between the parties), a mediator

shall be appointed by the parties who shall assist the parties in resolving the

Disagreement.

(3) If the Disagreement is not resolved under Section 25(2) within thirty (30)

days (or such longer period as agreed upon between the parties) either party may

refer the Disagreement to be resolved by arbitration conducted as follows:

         (a)      either party may require arbitration by giving written notice
                  to arbitrate to the other party, which written notice shall
                  identify the nature of the Disagreement;

         (b)      if the parties are able to agree upon a single arbitrator, the
                  arbitration shall be conducted before the single arbitrator;

         (c)      if the parties have been unable to agree upon the selection of
                  a single arbitrator within two (2) weeks after receipt of the
                  notice requiring arbitration, each party shall within one (1)
                  further week, by notice in writing given to the other party,
                  nominate one neutral arbitrator. If either party fails to
                  nominate an arbitrator in accordance with this clause, the
                  arbitrator so nominated shall proceed to conduct the
                  arbitration alone. If both parties nominate neutral
                  arbitrators in accordance with this clause, the two
                  arbitrators so nominated shall nominate a third arbitrator
                  within one (1) week of their nomination;

         (d)      the arbitrator or arbitrators shall immediately proceed to
                  hear and determine the Disagreement. The parties agree that it
                  is important that all Disagreements be resolved promptly and
                  the parties therefore agree that the arbitration shall be
                  required to be conducted expeditiously and that the final
                  disposition shall be accomplished within two (2) weeks. The
                  parties shall ensure that the arbitrator or arbitrators upon
                  accepting the nomination shall agree that the arbitrator has
                  time available for the timely handling of the arbitration in
                  order to achieve final disposition within two (2) weeks;

         (e)      the decision of the arbitrator or arbitrators shall be
                  rendered in writing, without reasons and shall be promptly
                  served upon both parties. If the

<PAGE>
                                      -23-

                  arbitration is being conducted before a panel of three
                  arbitrators, the decision of any two of the three arbitrators
                  shall be decision of the arbitration panel. The decision of
                  the arbitrator or arbitrators shall be binding upon the
                  parties;

         (f)      in the event of the death, resignation, incapacity, neglect or
                  refusal to act of any arbitrator, and if the neglect or
                  refusal continues for a period of five (5) days after notice
                  in writing of such has been given by either party, another
                  arbitrator shall be nominated to replace the arbitrator by the
                  person who has originally nominated that arbitrator;

         (g)      the costs of the arbitration shall be in the discretion of the
                  arbitrators, and shall be borne by the parties in accordance
                  with the decision of the arbitrators;

SECTION 26 - ENUREMENT

                  This Agreement shall enure to the benefit of and be binding

upon the parties hereto and their respective successors and permitted assigns.

                  IN WITNESS WHEREOF the parties hereto have executed this

Agreement as of the day and year first above written.

                                PRAXIS PHARMACEUTICALS, INC.

                                Per:      /S/ BRETT CHARLTON (PRESIDENT)

                                Per:

                                FAIRCHILD INTERNATIONAL INC.

                                Per:      /S/ BYRON COX

                                Per:

<PAGE>

                             SCHEDULE "A" - PATENTS
                             ----------------------

<PAGE>

<TABLE>
<CAPTION>

UNITED STATES PATENT  [19]                  [11]    PATENT NUMBER:     5,506,210
Parish et al.                               [45]   DATE OF PATENT:  Apr. 9, 1996
--------------------------------------------------------------------------------

<S>                                                                    <C>

[54] PHOSPHOSUGAR-BASED                                                 4,935,406   6/1990 Coleman et al............... 514.54
     ANTI-INFLAMMATORY AND/OR
     IMMUNOSUPPRESSIVE DRUGS
                                                                                     FOREIGN PATENT DOCUMENTS
[75] inventors:   Christopher R. Parish, Campbell;
                  William B. Cowden, Kambah; David                       596800        1/1987        Australia
                  O. Willenborg, Sterling, all of Australia              614772        4/1989        Australia
                                                                         158879       10/1985        European Pat. Off.
                                                                         194710        9/1986        European Pat. Off.
[73] Assignee:    The Australian National University,                    2144332       3/1985        United Kingdom
                  Acton, Australia                                       2185398       7/1987        United Kingdom
[21] Appl. No.:   988,001
                                                                                             OTHER PUBLICATIONS
[22] Filed:       Dec. 29, 1992
                                                                         Patent Abstracts of Japan, vol. 7, No. 7,
     Related U.S. Application Data                                       issued 07 Oct. 1982, Murakami, "Production
                                                                         of Mannose Monophosphate salt Derivative",
                                                                         C144, p. 7, JP, A, 57-163491.
[63] Continuation of Ser. No. 656,082, filed as PCT/AU89/                Patent Abstracts of Japan, vol. 12, No.
     00350, Aug. 18, 1989, abandoned.                                    482, issued 17 Aug. 1988, Murata,
                                                                         "Preventive and Remedy for Hypertension",
                                                                         C553, p. 48, JP.A, 63-198629.
[30]              Foreign Application Priority Data                      Journal of Biological Chemistry, vol. 257,
                                                                         No. 17, issued 10 Sep. 1982, Fischer et
                                                                         al., "Binding of Phosphorylated Oli-
Aug. 19, 1988 [AU] Australia ............... P199942/88                  gosaccharides to Immobilized
                                                                         Phosphomannosyl Receptors", pp. 9938-9943.
                                                                         Journal of Biological Chemistry, vol. 258,
[51] Int. Cl.6 .......................... A61K 31/70; C07H 11/04;        No. 5, issued 10 Mar. 1982, Varki et al.,
                                                      C07H 13/00         "The Spectrum of Anionic Oligosaccharides
                                                                         Released by Endo-B-N-acetylglucosainidase H
[52] U.S. Cl. .......................... 514/23; 514/825; 514/885;       from Glycoproteins" pp. 2808-2814.
                                                          536/117
                                                                         PRIMARY EXAMINER-Michael G. Wityshyn
                                                                         ASSISTANT EXAMINER-Everett White
[58] Field of Search ..................... 514/23, 825, 885;             ATTORNEY, AGENT, OR FIRM-Bacon & Thomas
                                                    536/117
                                                                         [57]                       ABSTRACT

                                                                         The invention relates to a method of anti-
                                                                         inflammatory and/or immunosuppressive
                                                                         treatment of an animal or human patient
[56]                      References Cited                               comprising administering to the patient an
                                                                         effective amount of at least one
                    U.S. PATENT DOCUMENTS                                phosphosugar or derivative thereof, or a
                                                                         phosphosugar-containing oligosaccharide or
   4,096,250   6/1978 Hill ......................... 536/117             polysaccharide or derivative thereof.
   4,122,179 10/1978 Vegezzi ....................... 514/23
   4,247,540   1/1981 Holzmann ..................... 424/537                      17 Claims, 1 Drawing Sheet
   4,448,771   5/1984 Cattani et al. .............   514/23
   4,703,040 10/1987 Markov .......................  536/117
   4,739,046   4/1988 DiLuzio .....................  536/117
   4,745,185   5/1988 Maryanoff et al. ............  536/117

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                  5,506,210
<S>                                                      <C>             <C>

                 1                                                                          2
        PHOSPHOSUGAR-BASED                                               and/or immunosuppressive agents.  In this
      ANTI-INFLAMMATORY AND/OR                                           aspect, there is provided a method of
      IMMUNOSUPPRESSIVE DRUGS                                            anti-inflammatory and/or immunosup-
                                                                         pressive treatment of an animal or human
                                                          5              patient which comprises administration to
                                                                         the patient of an effective amount of at
                                                                         least one phosphosugar or a derivative
    This application is a continuation                                   thereof, or a phosphosugar-containing
of U.S. application Ser. No. 07/656.082,                                 oligosaccharide or polysac-charide or a
filed Mar. 6, 1991, now abandoned, which                 10              derivative thereof.
is the U.S. national phase of                                              In another aspect, this invention
International application serial number                                  relates to the use of at least one
PCT/AU89/00350, filed Aug. 18, 1989.                                     phosphosugar or phosphosugar-containing
   This invention relates to                                             oli-gosaccharide or polysaccharide in the
phosphosugars and phospho- sugar                                         preparation or manu-facture of a
containing compounds that possess anti-                  20              pharmaceutical or veterinary composition
inflammatory and/or immunosuppressive                                    for anti-inflammatory and/or
activity, and in particular it  relates                                  immunosuppressive treatment.  In this
to the use of these compounds as anti-                                   aspect, there is provided a
inflammatory and/or immunosuppressive                                    pharmaceutical or veterinary composition
agents in animals and man.                                               which comprises at least one phosphosugar
                                                         25              or a derivative thereof, or a
    BRIEF DESCRIPTION OF THE DRAWINGS                                    phosphosugar-containing oligosac-charide
                                                                         or polysaccharide or a derivative
                                                                         thereof, together with an acceptable
   FIG. 1 is a graphical representation                                  pharmaceutical or veterinary carrier or
of the analysis of phosphosugar                                          diluent therefor.
specificity presented in Table III.                      30                 Phosphosugars and phosphosugar-
                                                                         containing oligosac-charide or
         DETAILED DESCRIPTION                                            polysaccharide which may be used in
                                                                         accordance with the present invention
                                                                         comprise both naturally occurring and
   The lysosomes of cells contain a wide                                 synthetic compounds containing or
range of degrada- tive enzymes which                     35              comprising phosphosugar residues, that
play a central role in the entry of                                      is, sugar residues bearing at least one
leukocytes into inflammatory sites.                                      phosphate moiety.  Particularly useful
Lysosomal enzymes, produced in the rough                                 phosphosug- ars include phosphomannoses,
endoplasmic reticulum, undergo                                           phosphofructoses, phospho-galactoses and
glycosylation followed by a number of                                    phosphoglucoses, while particularly
'trimming' and phosphorylation reactions                 40              useful oligosaccharides or
resulting in oligosaccharides rich in                                    polysaccharides include polysaccharides
mannose-6-phosphate residues (1-3).                                      containing phosphomannose residues.
These mannose-6- phosphate residues are                                  Presently preferred phosphosugars include
specific recognition markers of lyso-                                    mannose-6-phosphate and fructose-1-
somal enzymes (3).  It is this marker on                                 phosphate.  Preferred phosphosugar
the enzymes that is recognized by a                      45              derivatives are the esters including
mannose phosphate receptor (MPR) which                                   acetate esters, particularly the 1,2, 3,
mediates transport of lysomsomal enzymes                                 4-tetraacetate of mannose-6-phosphate.
to lysosomes.  This receptor functions                                      Whilst it is not intended that the
not only in internal transport of                                        present invention should be restricted in
lysosomal enzymes but is also important                  50              any way by a theoretical explanation of the
in their secretory  pathway and their                                    mode of action of the phosphosugars in accordance
expression on cell surfaces (1). Receptor-                               with the invention, it is presently believed that
lysosomal enzyme interactions have been                                  these active compounds may exert their own anti-
extensively studied (4-6) and shown to be                                inflammatory effect, by acting as antagonists or
inhibited by exogenous mannose-6-phosphate.                              competitive inhibitors of the natural ligand of
Work leading to the present invention has                55              mannose phosphate receptors (MPR) on cells.
been based on the hypothesis that                                        Accordingly, the active phosphosugars or
mannose-6-phosphate and related phosphosugar                             phosphosugar-containing oligosaccharides or
structures might act as anti-inflammatory                                polysaccharides may include any such compounds
agents in vivo, possibly by depleting                                    which are effective antagonists or competitive
leukocytes of their lysosomal enzymes                    60              inhibitors of the natural ligand of the MPR.
although this has not been shown previously.                                The active anti-inflammatory and/or immuno-
   As a result of these investigations, it                               suppressive agents in accordance with the present
has now been discovered that certain phospho-                            invention may be used to treat inflammatory
sugars, notably mannose-6-phosphate and                                  diseases or conditions such as multiple sclerosis
fructose-1-phosphate, are in fact effective              65              and rheumatoid arthritis, as well as in the
anti-inflammatory agents, continuous                                     treatment of the inflammatory process associated
infusion of the sugars inhibiting experimental                           with the rejection of organ transplants (since
allergic encephalomyellits (EAE), an animal                              massive mononuclear cell infiltrates are usually
inflammatory disease of the central nervous                              associated with acute graft rejection).  These
system resembling multiple sclerosis in humans.                          active agents may be used alone, in combination
Polysaccharides containing D-mannose with                                with one or more other phosphosugars, or in
phosphate residues have also been found to                               combination with other known anti-inflammatory or
inhibit EAE.                                                             immunosuppressive agents.  In particular,
   Phosphosugars, particularly mannose-6-                                compositions of phosphosugars and sulphated
phosphate, have also been found to exhibit                               polysaccharides with heparanase-inhibitory activity
an anti-inflammatory effect on passively                                 may act synergistically and represent a formulation
induced adjuvant arthritis. Adjuvant-induced                             with potent anti-inflammatory activity.  The anti-
arthritis in the rat shares a number of                                  inflammatory activity of these sulphated poly-
features with arthritis in humans, viz.                                  saccharides is disclosed in detail in International
the presence of a proliferative synovitis                                Patent Application No. PCT/AU88/00017.
and subcurtaneous nodules, swelling of                                      The anti-inflammatory and/or immunosuppressive
extremities, and ultimately cartilage                                    activity and use of the phosphosugars in accordance
and bone errosion.  This animal model has                                with the present invention is demonstrated in the
been extensively used for detection of                                   following Example.
anti-inflammatory and immunosuppressive drugs.
   Finally, phosphosugars have been
found to be effective as an
immunosuppresant in preliminary
experiments, particularly in controlling
the delayed hypersensitivy reaction.
  In a first aspect, therefore, the
present invention relates to the use of
phosphosugars and phosphosugar-
containing oligosaccharides and
polysaccharides as anti-inflammatory

<PAGE>

                   3                                                                         4
                                                                            The first data column in the Tables
               EXAMPLE 1                                                 refers to the number of animals in each
                                                                         group which showed any clinical signs of
Inhibition of EAE.                                                       EAE during the entire course of the
   In this Example, a number of                                          experiment.  Thus, although 7/10 animals
phosphosugars and one phospho-                            5              treated with mannose-6-phosphate
polysaccharide were tested for their                                     developed some clinical signs of disease
ability to inhibit development of EAE in                                 (Table III) the severity of these disease
rats.  (All phosphosugars tested are                                     symptoms was extremely mild compared with
commercially available and were obtained                                 untreated animals, i.e. <10% disease
from Sigma Chemical Co., St. Louis, Mo.,                 10              severity of controls when clinical scores
U.S.A.).  Experimental details are                                       and duration of disease are examined.  In
included in the footnotes to the Tables                                  this sense, the mannose-6-phosphate data
setting out the test results.                                            in Tables I and III are almost identical.
   Table I presents data from an EAE                                     Similarly, the estimation of disease
experiment in rats where mannose-6-                                      severity can be used to rank the anti-
phosphate, administered to animals via                   15              inflammatory activity of phosphosugars
osmotic pumps, totally inhibited                                         which only partially inhibit disease,
development of disease.  The data                                        e.g., glucose-6-phosphate and fructose-
presented in Table II demonstrates that                                  1,6-diphosphate.
a four fold reduction in the mannose-6-
phosphate dose (40 mg/rat/week to 10                     20                                      TABLE I
mg/rat/week) still resulted in a                                         -----------------------------------------------------------
substantial reduction in disease
severity, i.e. the lowest dose of                                                Effect of Mannose-6-Phosphate on Adoptively
phosphosugar reduced disease severity to                                                       Transferred EAE
37.7% that of control animals.                                                   -------------------------------------------
   Analysis of phosphosugar specificity                  25                                          Mean       Mean     Mean Length
revealed (Table III) that fructose-1-                                                     No. With    Day     Clinical    Disease
phosphate was as effective as mannose-6-                                 Treatment        EAE/Total  Onset      Score      (days)
phosphate at inhibiting disease.                                         -----------------------------------------------------------
Fructose-6-phosphate was also a
compartively effective inhibitor of EAE,                                 Control             8/8       5.2       3.0        3.5
whereas galactose-6-phosphate, glucose-                                  Mannose-6-          0/8       0         0          0
6-phosphate and fructose-1-6-diphosphate                 30              phosphate
were partially inhibitory.  Glucose-1-                                   -----------------------------------------------------------
phosphate and D-mannose apparently had
little or no effect on disease                                           Legend to Table 1:
progression.  These results are                                          EAE induced in Lewis rats with 30 + 106 ConA activated
displayed graphically in FIG. 1.  Such                                   EAE effector cells.  Miniosomotic pumps containing
phosphosugar specificity closely                         35              phosphosugar were implanted subcultaneously on day 3
rsembles the monosaccharide specificity                                  after cell transfer.  Dose was 40 mg/rat delivered over
of the mannose-6-phosphate receptors on                                  a 7 day period by 2.0 ml pumps.  Clinical EAE was
cells (1).                                                               graded according to the following scheme: 0 asymptomanic;
   In two separate experiments (Table                                    1, flaccid distal half of tail; 2, entire tail flaccid;
IV) administration of the D-mannose                                      3, ataxia, difficulty in righting; 4, hind limb weakness;
polysaccharide (mannan) from SACCHAROMY-                 40              and 5, hind limb paralysis.
CES CEREVISIAE, which contains phosphate
moieties, totally inhibited EAE,
indicating that phosphomannans can
inhibit disease.
   Histological examination of central
nervous system (CNS) tissue from
untreated animals with EAE and EAE
animals which had been treated with
either mannose-6-phosphate or mannan
containing phosphate moieties, (Table V)
revealed that both treatments
dramatically inhibited development of CNS
lesions. No lesions were detected in
mannose-6-phosphate treated animals and a
small number of lesions, compared with
controls, in mannan treated rats. Such data
are consistent with the view that the
sugars are inhibiting entry of leukocytes into
the CNS.

</TABLE>

<TABLE>

                                                     TABLE II
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------
                          Effect of Mannose-6-Phosphate Dose on Adoptively Transferred EAE
                          ----------------------------------------------------------------

                                      No. with          Mean              Mean             Mean Length     Disease Severity
Treatment               Dose (mg)    EAE/total       Day Onset       Clinical Score          Disease            ( %Control)
---------------------------------------------------------------------------------------------------------------------------
<S>                       <C>           <C>             <C>               <C>                  <C>                 <C>

Control                   ----          4/4             4.5               3.5                  4.5                  100%
Mannose-6-Phosphate        40           1/3             5.0               0.3                  0.7                  1.7%
Mannose-6-Phosphate        20           4/4             5.0               1.5                  3.0                 28.6%
Mannose-6-Phosphate        10           4/4             5.0               1.8                  3.3                 37.7%
---------------------------------------------------------------------------------------------------------------------------

</TABLE>

Legend to Table II:
Experimental details as in Table I. Mannose-6-phosphate dose represents amount
of phosphosugar delivered to rats over a 7 day period via mino-osmotic pumps.
"Disease Severity" represents product of mean clinical score and mean length
disease.

<PAGE>

                                   5,506,210
             5                                               6

<TABLE>
<CAPTION>

                                                            TABLE III
---------------------------------------------------------------------------------------------------------------------------
                                            Phosphosugar Specificity of EAE Inhibition
                                            ------------------------------------------

                                No. with            Mean             Mean          Mean Length         Disease Severity
Treatment                       EAE/Total        Day Onset      Clinical Score    Disease(days)             (% Control)
---------------------------------------------------------------------------------------------------------------------------
<S>                                <C>              <C>              <C>              <C>                       <C>

Control                            9/9              5.0              3.6              4.2                         100%
Mannose-6-phosphate                7/10             6.0              0.9              1.5                         8.9%
Fructose-1-phosphate               3/5              5.5              1.2              1.6                        12.6%
Fructose-6-phosphate               4/5              6.0              1.6              2.4                        25.4%
Galactose-6-phosphate              5/5              5.2              2.0              3.0                        40.5%
Glucose-6-phosphate                5/5              5.4              2.0              3.8                        50.3%
Fructose-1,6-diphosphate           5/5              5.4              2.4              3.4                        54.0%
Glucose-1-phosphate                5/5              5.2              3.0              3.8                        75.5%
D-mannose                          5/5              5.2              2.9              4.4                        84.5%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

Legend to Table III:
Experimental details as in Table I. "Disease Severity" represents product of
mean clinical score and mean length of disease.

<TABLE>
<S>                                                      <C>             <C>

                                                                         (HANSENULA HOLSTII) as described by
                  TABLE IV                                20              Bretthauer et al. (7), that contains
----------------------------------------------------                     mannose phosphate residues.
Inhibition of Adoptively Transferred EAE by Yeast                        The pentasaccharide is an isolated
                Mannan                                                   monophosphomanno-pentaose fragment, 6-
----------------------------------------------------                     phospho-mannose-a(1-3)-{mannose-a-(1-
                       Mean     Mean    Mean Length                      3)}2-mannose-a-(1-2)-mannose, of the
             No. with   Day   Clinical    Disease         25             exocellular phosphomannan produced by
Treatment    EAE/Total Onset    Score     (days)                         PICHIA HOLSTII (HANSENULA HOLSTII)
----------------------------------------------------                     described by Bretthauer et al. (7).
Expt. 1                                                                     In these experiments, details of which
-------                                                                  were as in Table I, the number of cells
Control         5/5     4.8     3.5        4.0                           transferred was 25x106 /rat, while the
Yeast mannan    0/6     0       0          0              30             dose of compound administered was 10
Expt. 2                                                                  mg/rat delivered over a 7 day period by
-------                                                                  mini-osmotic pumps, commencing on day 3
Control         4/4     5.0     3.1        3.7                           after cell transfer.  The results are set
Yeast mannan    0/4     0       0          0                             out in Table VI.
----------------------------------------------------

Legend to Table IV:                                       35                              TABLE VI
Yeast mannan from SACCHAROMYCES CEREVISIAE (Baker's                      --------------------------------------------------
yeast).  Experimental details as in Table I.                                          Control      PPME   Pentasaccharide
                                                                         --------------------------------------------------
                                                                         EAE/Total      5/5         3/5        1/5
                                                                         --------------------------------------------------
                                                          40

                                                                                            EXAMPLE 3

                                                                         Suppression of Passive Adjuvant Arthritis
                                                                            (DA x Lew)F rats were immunized with
                                                          45             M.BUTYRICUM in light mineral oil given in
                TABLE V                                                  each foot.  Ten days later spleens were
---------------------------------------------------                      removed and incubated as single cell
  Histological analysis of EAE Inhibition in Rats                        suspension tissue culture medium in +5
      Receiving Mannose-6-Phosphate and Mannan                           ug/ml ConA for 75 hrs.  Cells were
  -----------------------------------------------                        harvested, washed and transferred i.v. at
                    No. Sections    No.   Lesions/        50             65 x 10 6 cells/rat into (DA x Lew)F
Treatment             scanned    Lesions   section                       recipients.
---------------------------------------------------                      Treated rats were implanted on the day
Expt. 1                                                                  they received cells with miniosmotic
-------                                                                  pumps which delivered 6 mg/rat/day of
Control 1                10        110      11.0                         mannose-6-phosphate for 14 days.  Control
Control 2                 8        206      25.7          55             rats were sham operated.  The results are
Mannose-6-phosphate 1    18          0       0                           shown in Table VII as % of pre-cell
Mannose-6-phosphate 2    15          0       0                           injection foot size. {Average for group;
Expt. 2                                                                  n=4 (mannose-6-phosphate); n=6
-------                                                                  (control)}.
Control 1                15        284      19.0          60
Control 2                12        303      25.0                                              TABLE VII
Yeast mannan 1           18         30       1.1                         ------------------------------------------------------
Yeast mannan 2           15         92       6.7
---------------------------------------------------                             Day       Mannose-6-Phosphate        Control
                                                          65             ------------------------------------------------------
Legend to Table V:                                                               4               97.3%                106.4%
Rats were killed 9 days after cell transfer and                                  6              105.8%                129.7%
sections of the lower thoracic-upper lumbar spinal                               7              102.8%                149.7%
cord examined for inflammatory lesions.                                          9              108.4%                148.5%
Animals treated as in Table I.                                                  11              107.6%                184.2%
                                                                                14              117.4%                220.1%
                                                                         ------------------------------------------------------

                   EXAMPLE 2                                                                   EXAMPLE 4
Inhibition of EAE
   In further experiments using the EAE model of                         Effect on Delayed-Type Hypersensitivity (DTH)
Example 1, other mannose phosphate-containing                               C57B1 mice were sensitised by i.v. injection 105
compounds were used, including PPME and a pentasac-                      of washed sheep red blood cells.  5 days later they
charide.                                                                 were
   PPME is the purified high molecular weight,
acid-resistant fragment, (polysaccharide core
fraction) of the isolated exocellular phosphomannan
produced by PICHIA HOLSTII

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                    5,506,210

                      7                                                                        8

<S>                                                  <C>                 <C>
challenged in the right hind footpad                                       3.  A method according to claim 2,
with SRBC.  Each mouse was given a 0.25                                  wherein said active agent is mannose-6-
ml injection i/p at the same time of                                     phosphate.
either saline, mannose-6-phosphate or                                      4.  A method according to claim 2,
the 1,2,3,4-tetraacetate of mannose-6-                5                  wherein said active agent is fructose-1-
phosphate and all injections were                                        phosphate.
repeated a further 6 times at approx.                                      5.  A method according to claim 2,
31/2 hour intervals.  The dose in each                                   wherein said active agent is fructose-6-
injection of mannose-6-phosphate was                                     phosphate.
0.15 mg and of 1,2,3,4-tetraacetate of               10                    6.  A method according to claim 1,
mannose-6-phosphate was also 0.15 mg.                                    wherein said organic ester is an acetate.
At 24 hours after challenge the DTH                                        7.  A method according to claim 6,
swelling was measured.  Mannose-6-                                       wherein said organic ester is the
phosphate reduced the swelling by 52.5%,                                 1,2,3,4-tetracetate of mannose-6-
and the 1,2,3,4-tetraacetate of mannose-             15                  phosphate.
6-phosphate by 91.5%, as compared with                                     8.  A method according to claim 1,
the saline controls.                                                     wherein said oligosac-charide or
                                                                         polysaccharide is the D-mannose
                                                                         polysaccharide (mannan) from
REFERENCES                                           20                  SACCHAROMYCES CEREVISIAE.
                                                                           9.  A method according to claim 1,
1. vonFigura, K. and Hasilik, A. (1986),                                 wherein said oligosac-charide or
ANN, REV.      BIOCHEM. 55; 167.                                         polysaccharide is the purified high
2. West, C.M. (1986). MOL. CELL,BIOCHEM.                                 molecular weight, acid-resistant fragment
72; 3.                                               25                  (polysaccharide core fraction) of the
3. Hickman, S. and Neufeld, E.F. (1972).                                 exocellular phosphomannan produced by
BIOCHEM.      BIOPHYS. RES. COMM. 49:                                    PICHIA HOLSTII (HANSENULA HOLSTII), or an
992.                                                                     oligosaccharide fragment derived
4. Varki, A. and Kornfeld, S. (1983).                                    therefrom.
J.BIOL. CHEM.      258: 2808.                        30                    10.  A method according to claim 9,
5. Fischer, H.D., Creek, K. E. and Sly,                                  wherein said oligosac-charide fragment is
W. S. (1982). J.      BIOL. CHEM. 257:                                   the monophosphomannopentaose fragment, 6-
9938.                                                                    phospho-mannose-a(1-3)-{mannose-a(1-3)}2.
6. Steiner, A. W. and Rome, L. H.                                        mannose-a-(1-2)-mannose.
(1982). ARCH, BIOCHEM.        BIOPHYS.               35                    11.  A method according to claim 1,
214: 681.                                                                wherein said treatment comprises
7. Brettbauer, R. K. Kaczorowski, G. J.                                  treatment of inflammatory disease of the
and Weise, M. J.,                                                        central nervous system.
    (1973), BIOCHEMISTRY 12(7): 1251.                                      12.  A method according to claim 1,
    We claim:                                        40                  wherein said treatment comprises
   1.  A method of treatment of                                          treatment of arthritis.
arthritis, of inflammatory disease of                                      13.  A method according to claim 1,
the central nervous system, to control                                   wherein said treatment comprises
the delayed type hypersensitivity                                        treatment to control the delayed-type
reaction, or of the inflammatory process             45                  hypersensitivity reaction.
associated with rejection of organ                                        14.  A method according to claim 1,
transplants in a warm-blooded animal,                                    wherein said treatment comprises
which comprises administering to the                                     treatment of rheumatoid arthritis.
warm-blooded animal in need thereof a                                      15.  A method according to claim 1,
therapeutically effective amount of at                                   wherein the treatment is of the
least one active agent selected from the                                 inflammatory process associated with the
group consisting of phosphomannoses,                                     rejection of organ transplants.
phosphofructoses and pharmaceutically                                      16.  A method of treating arthritis in
acceptable salts and organic esters                                      an animal subject, which comprises
thereof, oligosaccharides containing                                     administering to the subject a
phosphomannose residues, polysaccharides                                 therapeutically effective amount of
containing phosphomannose residues, and                                  mannose-6-phosphate or a pharmaceutically
pharmaceutically acceptable salts and organic                            acceptable salt or organic ester thereof.
esters thereof, oligosaccharides containing                                17.  A method of treating inflammatory
phosphomannose residues, polysaccharides                                 disease of the central nervous system in an
containing phosphomannose residues, and                                  animal subject, which comprises administering
pharmaceutically acceptable salts and                                    to the subject a therapeutically effective
organic esters thereof, said active agent                                amount of mannose-6-phosphate, fructose-1-
being an antagonist or competitive                                       phosphate, or a pharmaceutically acceptable
inhibitor of the natural ligand of a                                     salt or organic ester thereof.
mannose phosphate receptor.
   2.  A method according to claim 1,
wherein said active agent is selected from                                           *   *   *   *   *
the group consisting of mannose-6-
phosphate, fructose-1-phosphate, fructose-
6-phosphate, and fructose-1,6-diphosphate.

</TABLE>

<PAGE>

                        SCHEDULE "C" - RESEARCH PROJECTS
                        --------------------------------

<PAGE>

                                   APPENDIX C
          DEVELOPMENT PROGRAM FOR NEUTRICEUTICAL AND COSMETIC AGENTS.

MAJOR ITEMS
-----------

SCALE-UP

      Bulk isolation and purification for "batch" preparations
      Time 2 months (+ 2 weeks)
                        -

      a) Along the way to full scale production pilot batches will be QA'd
      and combined for immediate use in all tests

      b) Target is for 250 g batch sizes

ARTHRITIS TRIALS

      Time 6 months

      This includes:  1) Ethics Committee approval (application in by 29/1/99)
                      2) Re-establishing model (active and passive)
                      3) Delivery and dose-finding studies including
                          i)   Gavage
                          ii)  Drinking water
                          iii) Food
                          iv)  confirmation by mini-osmotic pump delivery

SKIN TRIALS

      Time 6 - 8 months

      This includes:  1) Formulation preparations (negotiations now going)
                      2) Evaluate dermal delivery formulations
                      3) Establishing a model for quick delivery assessment
                      4) Establish a wrinkle model and test materials

<PAGE>

                              MILESTONES SCHEDULE
                              -------------------

0-3 MONTHS

         Preparation of batch material for all subsequent testing.
         Produce formulations for skin testing
         Commence trials in animal models of rheumatoid arthritis

3-6 MONTHS

         Test skin formulations for penetration and effect
         Complete rheumatoid arthritis animal studies

6-9 MONTHS

         Begin skin toxicity studies
         File skin cosmetic patent (material and formulation coverage)

9-12 MONTHS

         Complete skin toxicity studies
         Commence animal wrinkle model studies

12 MONTHS-

         Complete wrinkle model studies

<PAGE>

                              BASIS OF PROCEDURES
                              -------------------

PREPARATION OF BULK MATERIAL
We will  require  bulk  preparations  of PM5 for all of our  studies,  including
formulation  for skin  delivery  and  dose-finding  studies in both  models.  We
haven't done bulk  preparations.  We anticipate some minor teething problems but
nothing  insurmountable in the immediate term. We will get some idea of batch to
batch  variability as we scale up.  Because of equipment  limitations we plan to
standardise  on 250 g preps.  The  biggest  batch we have ever  prepared is 5 g.
Meanwhile we are running several smaller scale preps per week. We will have this
sorted within 6 to 8 weeks.

ARTHRITIS
We have run the  arthritis  model  previously,  indeed this earlier work forms a
crucial  part of the  original  patent.  We can run both the active and  passive
forms of the disease.  The  advantages  of the  passively-transferred  arthritis
include  consistency of disease between  individual animals (and between groups)
and the ability to control the  severity of the disease  (through  the number of
cells transferred).  The disadvantages include the additional work load and time
involved and the  increased  numbers of animals  required.  So,  obviously,  the
advantages  of the active form are the reverse  and include  reduced  effort and
time, as well as fewer animal numbers required.  The attendant  disadvantages of
active  arthritis are having very little  control over the disease  severity and
therefore  variations both within and between groups.  The other major advantage
from the therapeutic  point is that the passive form of the disease is more like
the real clinical situation, ie the only time patients present is when they have
symptoms  (in other  words  after the  disease  is  established).  So, the human
clinical situation is that only the efferent (clinical disease) is treated,  not
the afferent or induction  phase of  arthritis.  The bottom line is that we will
run both to start with and make an early decision regarding dose-finding studies
etc. We will know whether or not this is going to be a "goer" within 6 months.

SKIN TRIALS
In the  first  instance  we need  to have a  delivery  method.  We have  started
negotiations with Soltec Ltd. for preparing various formulations. We also have a
verbal agreement with Lipoderm in Canada to do formulations for us. We intend to
do some very preliminary  studies with these formulations (such as dose it go in
and come out of the vehicle  intact etc) and as quickly as possible put labelled
material  into  those  showing  promise in order to  measure  skin  penetration.
Preliminary tolerance and dose-finding studies will be carried out as soon as we
have the material  formulated.  It will most likely take 6 months to get to this
stage.

Further  testing will require  animal  models and (believe it or not) there is a
"wrinkly mouse" model available. This, of course, is a bit further down the road
but we will be  planning  to set this up while the other  work is going.  In the
mean time we will also try a few other simple  approaches by looking at a simple
model of  fibroblast  migration  in skin,  probably by direct  injection  in the
immediate  term but topical as soon as we have  formulated  material.  This work
will be running in parallel with the kinetic topical formulation work.

<PAGE>

                       SCHEDULE "D" - ANUTECH LICENCE AND
                       ----------------------------------
                        RESEARCH & DEVELOPMENT AGREEMENT
                        --------------------------------

<PAGE>

                           PRAXIS Pharmaceuticals Inc.

                                       and

                                ANUTECH Pty. Ltd.

                       ----------------------------------

                                     LICENCE
                                       and
                             RESEARCH & DEVELOPMENT
                                    AGREEMENT

                       ----------------------------------

                                                                Corporate Centre
                                                               ANUTECH Pty. Ltd.
                                                                   ANUTECH Court
                                                  Cnr Barry Drive and Daley Road
                                                                 Acton, ACT 2601
                                                                       Australia
                                                             Tel: (02) 6249 2236
                                                             Fax: (02) 6257 1433

<PAGE>

THIS AGREEMENT is made on the 27th day of October 1997

BETWEEN:

              ANUTECH  PTY LTD,  ACN 008 548 650 with its  registered  office at
              ANUTECH Court, Cnr Barry Drive and Daley Road,  Acton,  Australian
              Capital Territory, Australia 2601 ("ANUTECH").

And:          Praxis Pharmaceuticals Inc., a company incorporated in Nevada with
              its registered office at 1 East First Street,  Reno,  Nevada,  USA
              ("Praxis").

RECITALS:

A.       Praxis  was  incorporated  on 20 June 1997 with the  intention  that it
         raise capital, acquire intellectual property and research,  develop and
         commercialise pharmaceuticals.

B.       ANUTECH is the commercial agent of the Australian  National  University
         ("ANU"),  and enters into this  Agreement as agent for and on behalf of
         ANU.

C.       ANU possesses  intellectual  property in the area of phosphosugars  and
         their analogues as anti-inflammatory agents.

D.       Praxis  wishes to license  the ANU  intellectual  property  in order to
         undertake further research and development and commercialisation of the
         intellectual property.

E.       In  accordance  with  the  terms  and  conditions  set  forth  in  this
         agreement,  ANUTECH is  willing to grant such a licence to Praxis  with
         its  term  dependant  on  Praxis  achieving  certain  capital  raising,
         research and commercialisation milestones.  ANUTECH will also undertake
         a program of research and development on behalf of Praxis.

IT IS AGREED AS FOLLOWS:

1.       DEFINITIONS AND INTERPRETATION
---------------------------------------

1.1      In this  Agreement,  unless  there is something  inconsistent  with the
         context,  the following terms and expressions  shall have the following
         meanings:

         "Agreement" means this agreement.

         "ANU Intellectual Property" means  the following  intellectual property
         owned by the ANU:

         (a)  Know-how  and  expertise  in relation to  phosphosugars  and their
              anti-inflammatory activity; and

         (b)  the  patents  and  patent  applications  set  out in  Schedule  1,
              including  all  divisions,  continuations,  continuations-in-part,
              renewals, extensions and additions thereof.

         "Commencement Date"  means the 27th day of October 1997.

         "Confidential Information" means any information whether written, oral,
         electronic  or in any other form which is  disclosed  by a party or its
         representatives, is claimed as confidential to itself and which relates
         to  the  ANU  Intellectual  Property,   Research,   Results,  Products,
         Agreement and business of the parties. It includes all copies and notes
         generated from the disclosure but does not include information which:

         (a)  is in the public domain at the time of disclosure;

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

         (b)  becomes a part of the public  domain after  disclosure,  otherwise
              than as a result of any  unauthorised  activity and/or omission on
              the part of the recipient;

         (c)  the  recipient  can prove is already in its own  possession at the
              time of disclosure and which was not acquired from the other party
              directly or indirectly;

         (d)  is  rightfully  acquired  from a third party who did not obtain it
              under an obligation of confidentiality; or

         (e)  is legally  required to be disclosed - the party  required to make
              disclosure  shall  notify  the other to allow that party to assert
              whatever exclusions available to it under such law.

         "DOLLAR", "DOLLAR"  or "$" means  Australian  dollars  unless otherwise
         indicated.

         "FIELD" means the use of phosphosugars for treatment of:

         (a)  inflammatory skin conditions;

         (b)  inflammation resulting from abdominal/pelvic surgery; and

         (c)  ocular inflammation;

         and expressly excludes:

         (d)  topical application for wound care; and

         (e)  use of fructose-1,6-diphosphate,  administered non-topically,  for
              the  treatment or  prophylaxis  of ischaemic  disorders in humans,
              which includes transplantation and immunosuppression.

         "INTELLECTUAL PROPERTY" shall mean all or any of the following:

         (a)  Trade Marks: means any trade mark or trade name whether registered
              or not under,  or by reference  to which,  a Product or service is
              known;

         (b)  Patents:  meaning any patents or patent applications including all
              divisions,  continuations,  renewals,  extensions  and  patents of
              addition  thereof  which have been or are in the future  filed and
              granted as a patent;

         (c)  Copyright  subsisting  in any form or manner  whether  written  or
              stored in any form  (whether  visible  or not)  including  without
              limitation brochures,  design logos, insignia,  computer programs,
              software, firmware and hardware;

         (d)  Designs (whether or not registered);

         (e)  Know-How:   meaning   the   unpatented,   technical   information,
              processes,  formulae,  technical and technological  documentation,
              reports,  computer programs,  biological materials,  procedures or
              methods,  all  current  and  accumulated  knowledge,   skills  and
              experience;

         "NET SALES" means:

         (a)  for an arms  length  sale of any  Product  means the gross  amount
              invoiced by Praxis, its subsidiaries,  joint venturers,  licensees
              or agents less the following:

              (i)  transport and  insurance related charges actually allowed and
                   taken;

              (ii) trade,  quantity  or  cash  discounts  or  rebates   actually
                   allowed and taken;

              (iii)credits  or  allowances  given  or made on  account  of price
                   adjustments,  recalls or destruction  requested or made by an
                   appropriate government agency; and

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

              (iv) any tax (excluding  income tax),  excise or other  government
                   charge upon or measured by the sale, transportation, delivery
                   or use of the  Product  included  in  such  amount  which  is
                   actually incurred.

         (b)  for a non-arms  length  sale,  means the most  recent Net Sales at
              which  Praxis,  its  subsidiaries,  joint  venturers  licensees or
              agents has sold similar  quantities  of Products in an arms length
              sale.

         "PRODUCTS"  means any matter,  article or thing which  incorporates  or
         arises  from the whole or partial use of ANU  Intellectual  Property or
         Results.

         "QUARTER" means each  consecutive 3 month period that ends on 31 March,
         30 June, 30 September and 31 December each year.

         "RESEARCH BUDGET" means the budget as set out in Schedule 2 and amended
         by the  Research  Management  Committee  from time to time  pursuant to
         clause 9 (Research Management Committee).

         "RESEARCH  LEADER" means Dr.  William B. Cowden or such other person or
         persons as may be nominated by ANUTECH and agreed by Praxis .

         "RESEARCH"  means the objectives  and program of research  described in
         Schedule 3 and  undertaken  on behalf Praxis by ANUTECH or ANU pursuant
         to clause 7 (The Research).

         "RESULTS"  means  all  Intellectual   Property,   materials  (including
         substances,  compounds,  biological  material,  products,  samples  and
         devices)  and   information   (including   trade  secrets,   processes,
         techniques,  designs, plans, data, test results, findings,  evaluations
         and  reports)  generated  as a  result  of or in  connection  with  the
         Research

         "SUBLICENSE  FEES" means all  payments to Praxis in  consideration  for
         rights to the ANU Intellectual Property,  Results and Products pursuant
         to a sublicence, assignment, joint venture, strategic alliance or other
         arrangement.

         Sublicence Fees shall not include:

         (a)  fees for research and development  undertaken by ANU including for
              example preclinical research and clinical studies; nor

         (b)  the royalty percentage above that is required to be paid by Praxis
              pursuant to clause 3 (License Consideration).

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

1.2      In this Agreement unless the contrary intention appears:

         (a)  a  reference  to  a  clause,  schedule,  attachment,  annexure  or
              appendix is a reference  to a clause of or  schedule,  attachment,
              annexure or  appendix to this  Agreement  and  references  to this
              Agreement include any recital,  schedule annexure,  attachment, or
              appendix;

         (b)  a reference to this Agreement or another  instrument  includes any
              variation or replacement of either of them;

         (c)  a reference  to a statute,  ordinance,  code or other law includes
              regulations  and other  instruments  under it and  consolidations,
              amendments, re-enactments or replacements of any of them;

         (d)  the singular includes the plural and vice versa;

         (e)  if a period of time is specified and dates from a given day or the
              day of an act or event,  it is to be calculated  exclusive of that
              day;

         (f)  if an event must occur on a stipulated day which is not a business
              day, then the stipulated day will be taken to be the next business
              day;

         (g)  headings  are  inserted  for  convenience  and do not  affect  the
              interpretation of this Agreement;

         (h)  words  importing any one gender shall mean and include  masculine,
              feminine and/or neuter where appropriate;

         (i)  words importing natural persons shall (where appropriate) mean and
              include  corporations  and  unincorporated  associations  and vice
              versa;

         (j)  schedules and  attachments  form part of and are  incorporated  in
              this Agreement.

1.3      For the  avoidance of doubt the recitals to this  Agreement  shall form
         part of this  Agreement and in the event of any  inconsistency  between
         the  recitals  and the other  provisions  of this  Agreement  the other
         provisions of this Agreement shall prevail.

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

2.       GRANT OF LICENCE
-------------------------

2.1      ANUTECH  grants to Praxis an  exclusive,  worldwide  licence to use and
         exploit  ANU  Intellectual  Property  and  Results  within  the  Field,
         including  the  right to  sublicense  pursuant  to  clause 6 (Right  to
         Sublicense).

3.       LICENCE CONSIDERATION
------------------------------

3.1      In  consideration  for the  grant  of the  licence  Praxis  will pay to
         ANUTECH:

         (i)  a 10% royalty on Net Sales of Products by Praxis;

         (ii) 50% of all royalty  income on Net Sales of Products  received from
              sublicensees;

         (iii) 15% of all Sublicence Fees.

4.       LICENCE TERM
---------------------

4.1      The term of the Licence  commences upon the Commencement Date until the
         expiration  of the  last  to  expire  of the  patents  covered  by this
         agreement,  unless otherwise  earlier  terminated  pursuant to clause 5
         (Performance of Praxis) or clause 20  (Termination)  or extended by the
         written agreement of the parties.

5.       PERFORMANCE OF PRAXIS
------------------------------

5.1      If Praxis fails to comply with the  following  performance  milestones,
         ANUTECH has at its election the right to  terminate  this  Agreement in
         accordance with clause 20 (Termination).

5.2      Capital raising milestones:

         (a)  On or before 31 July 1998,  Praxis shall raise capital of at least
              $700,000 for use under this Agreement.

         (b)  On or before 31 July 1999,  Praxis shall raise capital of at least
              an additional $1,000,000 for use under this Agreement.

5.3      Research milestones

         Pursuant  to the  Research  Milestones  as set out in Schedule 3 Praxis
         shall:

         (a)  achieve the Aims within the Start and Finish dates; and

         (b)  ensure  that  sufficient  research  funds  are made  available  to
              undertake the Research.

5.4      Commercialisation milestones

         Praxis shall use best  efforts to  commercialise  the ANU  Intellectual
         Property  and Results by  undertaking  an ongoing and active  research,
         developmental,  manufacturing,  marketing, licensing or capital raising
         program,  as appropriate,  directed toward the  exploitation of the ANU
         Intellectual Property and Results within the Field.

         Part of these best efforts includes Praxis providing to ANUTECH as soon
         as  practicable  a business  plan (and any  updates  thereafter)  which
         addresses  Praxis's  capacities,  objectives  and strategies for such a
         commercialisation program.

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

         Praxis shall also provide ANUTECH with an annual written report (on the
         anniversary of the Commencement Date) on its progress towards achieving
         these commercialisation milestones.

6.       RIGHT TO SUBLICENSE
----------------------------

         ANUTECH  grants to  Praxis  the right to  sublicence  ANU  Intellectual
         Property and Results within the Field, subject to:

         (a)  the  prior  written   approval  of  ANUTECH  which  shall  not  be
              unreasonably withheld;

         (b)  the sublicensee  being bound to similar terms as contained in this
              Agreement; and

         (c)  the royalty and  Sublicence  Fee stream  provided  for in clause 3
              (Licence Consideration) are reserved.

7.       THE RESEARCH
---------------------

7.1      ANUTECH  shall  procure  that  researchers  from the ANU or where  else
         required,  shall carry out  Research on behalf of Praxis in  accordance
         with the terms of this Agreement and pursuant to the general outline of
         the Research Milestones.

7.2      Praxis  and  ANUTECH  wish to retain  flexibility  in  relation  to the
         Research.  The scope,  priority  and  emphasis of the  Research  may be
         changed,  altered or added to from time to time by written agreement of
         the Research Management Committee.

7.3      Research  shall commence on 1 November 1997 and continue until at least
         December  2000,  whereupon the parties will negotiate in good faith for
         its continuation or completion.

7.4      Throughout the Research,  the Research Leader,  will be responsible for
         the conduct,  general  management,  and  supervision  of the  Research.
         Through the  Research  Leader,  ANUTECH will ensure there is a high and
         consistent level of communication and cooperation between and among all
         personnel  engaged in the Research,  and that the Research is conducted
         in a diligent  professional  manner  commensurate  with high scientific
         standards and practices and in accordance with all applicable statutory
         and other legal  requirements  as well as all relevant good  laboratory
         practices.

7.5      ANUTECH shall ensure that the Research Leader and any personnel engaged
         in the Research enter into appropriate  confidentiality agreements in a
         form  consistent  with  the  confidentiality   obligations  under  this
         Agreement.

7.7      ANUTECH shall prepare and submit to the Research  Management  Committee
         written reports at quarterly intervals  throughout the Research,  or at
         such other  intervals  as may be agreed.  The reports  shall set out in
         reasonable  and  informative   detail,   particulars  of  the  research
         undertaken during the period,  accomplishments and inventions (if any),
         difficulties  encountered (if any) and possible  future  directions for
         the  Research.  ANUTECH  and the  Research  Project  Leader may provide
         informal   reports  of  any  progress,   difficulties   encountered  or
         inventions to Praxis as they occur during the term of the Agreement.

7.6      ANUTECH and the research team are  independent  contractors and are not
         employees,   agents,  officers  or  partners  of  Praxis.  The  parties
         acknowledge  that Dr Bill Cowden and Dr Brett  Charlton are part of the
         research team as well as shareholders  and officers of Praxis therefore
         the  parties  will ensure that any  conflicts  of interest  are managed
         appropriately.

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

8.       PAYMENT OF RESEARCH FUNDS
----------------------------------

8.1      In consideration of ANUTECH's conduct of the Research,  Praxis will pay
         ANUTECH  quarterly  in  advance  and in  accordance  with  the  initial
         Research Budget in Schedule 2.

8.2      Subsequent  Research  Budgets shall be determined on an annual basis by
         the Research Management Committee. Such budgets shall include funds for
         at least the following:

         (a)  salaries  and  salary  related  expenses  for  research  team  and
              consultants;

         (b)  salary increments;

         (c)  consumables, equipment, sundry items and animals; and

         (d)  administrative and overhead costs for the ANU and ANUTECH.

8.3      ANUTECH  shall  ensure  that  funds  paid by  Praxis  pursuant  to this
         Agreement  are only used and applied in  accordance  with that which is
         contemplated by this Agreement.

8.4      ANUTECH  shall  maintain  accounts  of all  income and  expenditure  in
         relation to the Research according to standard  accounting  principles.
         ANUTECH  shall  provide  to  Praxis  on a  quarterly  basis,  financial
         statements on income, commitments and expenditure.

9.       RESEARCH MANAGEMENT COMMITTEE
--------------------------------------

9.1      A Research Management Committee shall be established:

         (a)  it shall comprise one  representative  nominated by each party and
              such  other  persons  as may be  nominated  and  agreed  to by the
              parties from time to time for the purpose of  providing  expertise
              to the committee;

         (b)  be chaired by the person nominated by ANUTECH; and

         (c)  meet quarterly or at such other intervals as agreed by all members
              of the  committee,  either in person  at such  location(s)  as are
              agreed and/or via telephone conference;

9.2      The functions of the Research Management Committee will be to:

         (a)  monitor and discuss the progress of the Research and if necessary,
              to determine amendments to the Research direction;

         (b)  review and determine the annual Research Budgets;

         (c)  review any issues of disclosure of  Confidential  Information  and
              publications;

         (d)  discuss  generally  any  patent  applications,   patents  and  new
              inventions; and

         (e)  consider and manage any conflicts of interest.

9.3      The decisions of the Research  Management Committee shall be binding on
         the parties.

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

10.      OWNERSHIP
------------------

10.1     The following shall be owned by the ANU and licensed to Praxis pursuant
         to the terms of this Agreement:

         (a)  Results;

         (b)  improvements to ANU Intellectual Property ; and

         (c)  new patents and patent  applications  arising  from the  Research,
              Results and use of ANU Intellectual Property.

10.2     ANU shall have a non-determinable right to use the Results but only for
         its own on-going internal research.

11.      PROTECTION OF PATENTS
------------------------------

11.1     With  respect to the  existing ANU  Intellectual  Property  patents and
         patent applications:

         (a)  the parties shall  cooperate in the prosecution and maintenance of
              the  patents  and patent  applications  with the  relevant  patent
              offices;

         (b)  from the Commencement Date, one third of any past and future costs
              and expenses  incurred in their  filing,  maintenance  and renewal
              shall be borne by Praxis;

         (c)  Praxis may select the countries in which patent  applications  are
              to be filed in the name of the ANU; and

         (d)  if  Praxis  decides  not  to  request  patent  protection  for  an
              invention in any country, ANU may file or maintain at its own cost
              patent applications which Praxis has declined to file or maintain,
              and such patent  applications or granted patents shall lie outside
              the provision of this Agreement.

11.2     With respect to any new patentable inventions arising from the Research
         and use of ANU Intellectual Property:

         (a)  Praxis  may  request  ANUTECH  to  file  and  prosecute  a  patent
              application,  in ANU's name,  for the  invention or agree to treat
              the invention as a trade secret;

         (b)  the parties shall  cooperate in the prosecution and maintenance of
              the  patents  and patent  applications  with the  relevant  patent
              offices;

         (c)  all  costs  and  expenses  incurred  in  filing,  maintaining  and
              renewing  the  patents and patent  applications  shall be borne by
              Praxis;

         (d)  Praxis may select the countries in which patent  applications  are
              to be filed in the name of the ANU; and

         (e)  if  Praxis  decides  not  to  request  patent  protection  for  an
              invention in any country, ANU may file or maintain at its own cost
              patent applications which Praxis has declined to file or maintain,
              and such patent  applications or granted patents shall lie outside
              the provision of this Agreement.

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

12.    INFRINGEMENT AND ENFORCEMENT OF PATENTS
----------------------------------------------

12.1     Infringement
         In the  event of any  patent,  the  subject  of this  Agreement,  being
         infringed  Praxis may at its own cost and in its own name litigate such
         infringement  and may settle or  compromise  such  litigation in such a
         manner as Praxis shall  determine  provided  that Praxis shall  consult
         with ANUTECH in good faith in relation to those proceedings.

12.2     Enforcement
         In the event that  litigation  is taken or  threatened by a third party
         against  any rights  associated  with any  patents  the subject of this
         Agreement,  the parties  shall consult in good faith and use their best
         endeavours  mutually to determine the manner in which these proceedings
         are to be defended or resisted and to act  accordingly  provided always
         that the parties shall first seek the opinion of counsel experienced in
         such matters.

12.3     Praxis shall be entitled to retain any recovery from the  litigation or
         settlement.  Praxis  shall pay to ANUTECH a royalty  pursuant to clause
         3.1 (iii) to the  extent  that such  recovery  by  Praxis  exceeds  its
         expenses.

12.4     In any  litigation,  ANUTECH  shall  cooperate  with  Praxis  in making
         available all relevant records, papers,  information and the like which
         may be relevant and in its possession.

12.5     Nothing  herein shall  preclude  ANUTECH from defending or pursuing any
         such actions.

13.      REPORTS, PAYMENTS AND ACCOUNTING
-----------------------------------------

13.1     Within 30 days after the first day of January,  April, July and October
         of each year,  Praxis  shall  provide  to  ANUTECH a true and  accurate
         royalty  report.  This  royalty  report will cover  payments  due under
         clause 3 (Licence Consideration) and specify:

         (a)  the total  quantity of Products  sold or provided by it and by its
              sublicensees;

         (b)  the Net Sales price at which the Products were sold or provided;

         (c)  the calculation of the royalty due;

         (d)  the total royalties so calculated and due to ANUTECH; and

         (e)  the amount of Sublicence Fees and the royalty due.

13.2     For the term of this  Agreement and  simultaneous  with the delivery of
         each such royalty  report,  Praxis shall pay to ANUTECH the royalty and
         any other  payments due under this  Agreement for the period covered by
         such report.

         Praxis  shall be  responsible for  all payments that are due to ANUTECH
         but have not been paid by Praxis's sublicensees to Praxis.

13.3     All  payments  hereunder  by  Praxis  shall be  payable  in  Australian
         Dollars.

13.4     During  the term of this  Agreement,  Praxis  shall keep  complete  and
         accurate  records of its and its  sublicensees  sales of  Products  and
         Sublicence  Fees in  sufficient  detail to enable  compliance  with its
         obligations under this Agreement to be verified.

13.5     Praxis  shall  permit  ANUTECH  or its  representatives,  at  ANUTECH's
         expense, to periodically  examine its books, ledgers and records during
         business  hours and with

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

         48 hours  notice  for the  purpose of and to the  extent  necessary  to
         ensure that Praxis has complied, and is complying, with its obligations
         under this Agreement.

13.6     In the event that the difference  between the amount of royalty due and
         the amount of royalty  actually  paid  exceeds 5% then Praxis shall pay
         the amount of the underpayment plus the cost of such examination.

13.7     If Praxis  fails to pay  ANUTECH an amount  due under  this  Agreement,
         Praxis shall upon notification pay to ANUTECH the amount owing together
         with interest, such interest to be at the rate applicable to overdrafts
         charged by the  Commonwealth  Bank of Australia at the date of payment,
         calculated daily from the due date or the date the shortfall in payment
         was  effective,  as the case may be. The payment of such interest shall
         not  preclude  ANUTECH  from  exercising  any other  rights it may have
         because any payment is overdue.

14.      CONFIDENTIALITY

14.1     The parties  acknowledge that the Confidential  Information is valuable
         to the  party  in  question  and  each  party  undertakes  to keep  the
         Confidential  Information  secret  and  to  protect  and  preserve  the
         confidential nature and secrecy of the Confidential Information.

14.2.    The recipient of Confidential Information must:

         (a)  keep it confidential;

         (b)  use it only for the purposes of the Agreement;

         (c)  not disclose it to any person other than:

              (i)    to those of the recipient's employees or legal advisers who
                     have a need to know and who have  first been  directed  and
                     have   undertaken   orally  or  in   writing   to  keep  it
                     confidential; or

              (ii)   to other people,  such as contractors,  visitors and agents
                     who have a need to know and who have  agreed in  writing to
                     keep it confidential in accordance with this Agreement

         (d)  not copy it or any part of it other than as strictly necessary for
              the  purposes  of this  Agreement  and must  mark  any  such  copy
              "Confidential";

         (e)  promptly  comply  with any request by the  discloser  to return or
              destroy any or all copies of Confidential Information; and

         (f)  implement security practices against any unauthorised copying, use
              or disclosure of the Confidential Information.

14.3     Each party shall take:

         (a)  reasonable  efforts  to ensure  that any  person who has access to
              Confidential  Information  does  not make  any  unauthorised  use,
              reproduction or disclosure of that information; and

         (b)  reasonable  steps  to  enforce  the  confidentiality   obligations
              imposed or  required  to be imposed by this  agreement,  including
              diligently prosecuting at its cost any breach or threatened breach
              of such  confidentiality  obligations  by a person  to whom it has
              disclosed Confidential Information and, where appropriate,  making
              applications for interim or interlocutory relief.

14.4     The  provisions  of this clause 14 shall  continue to have effect for a
         period of four (4) years after termination or expiry of this Agreement.

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

14.5.    Upon the  termination  or expiry of this  agreement  the  recipient  of
         Confidential  Information  shall deliver (or with the discloser's prior
         consent,  destroy  or erase) to the  discloser  all  material  forms of
         Confidential  Information  in its or  its  representatives  possession,
         power or control.  The return of  Confidential  Information  under this
         clause  does not release  either  party or their  representatives  from
         their confidentiality obligations under this clause.

15.      PUBLICATION
--------------------

15.1     If  ANUTECH or its  employees  or agents  wish to publish or  otherwise
         disclose any information  contained in the ANU Intellectual Property or
         Results,  other than in  accordance  with clause 14  (Confidentiality),
         including by way of written  disclosure  or any oral  disclosure at any
         seminar,  lecture  or  other  meeting  ("Publication"),  the  following
         procedures shall be observed:

         (a)  ANUTECH  shall submit the  Publication  to Praxis 30 days prior to
              disclosure;

         (b)  within the 30 day period Praxis will consider  whether to agree to
              the Publication and shall advise ANUTECH what part (if any) of the
              information it does not wish published;

         (c)  if Praxis does not advise ANUTECH within the 30 day period that it
              objects to the Publication it shall be deemed to have consented to
              the Publication;

         (d)  if  Praxis  does  advise   ANUTECH  of  its  objection   then  the
              information in question will not be published:

                (i)   until  the  date  upon  which  the   complete   Australian
                      specification  in relation  thereto becomes open to public
                      inspection at the Australian Patents Office; and

                (ii)inthe case of  information  which is not patentable or which
                      it is not  proposed  to  patent,  for so long  as  further
                      confidential  research or development work or potential or
                      actual  commercial  exploitation is being actively pursued
                      in relation thereto but in any case not to exceed 2 years;

         (e)  where  appropriate,  ANUTECH  will make proper  acknowledgment  of
              Praxis.

16.      USE OF NAME
--------------------

16.1     Any  proposed  use of a  party's  name by the  other  in any  published
         material  (including  prospectus  information)  must be approved by the
         other party in writing prior to release of that published material.

17.      INDEMNITY AND INSURANCE
--------------------------------

17.1     Praxis  hereby agrees to defend,  indemnify and hold harmless  ANUTECH,
         ANU and their  employees from and against any and all demands,  claims,
         liabilities,  damages,  costs and expenses which may be brought against
         or incurred by ANUTECH,  ANU and their employees as a result of the use
         to  which  Praxis  or its  sublicensees  make of the  ANU  Intellectual
         Property,  Results and Products  the subject of the licence  granted in
         this  Agreement,  other  than to the  extent (if any) that the same are
         caused  solely by the gross  negligence  of  ANUTECH,  ANU or of any of
         their employees.

         The  indemnity  above shall also apply to actions that may arise out of
         the capital  raising  that Praxis  undertakes  for the purposes of this
         Agreement.

17.2     From the date  that any  Product  arising  out of the ANU  Intellectual
         Property is first applied for  therapeutic  human use (and for the term
         or foreseeable term of the human

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

        use) Praxis undertakes to hold product liability  insurance to the value
        of at least $100,000,000.00

17.3     Praxis  shall at all times  maintain  in full force and effect  general
         liability insurance with limits of not less than $10,000,000.00.

17.4     Such policies shall name ANUTECH and the ANU as additional insureds and
         shall be purchased from a reputable  insurer.  Certificates  evidencing
         the coverage shall be provided to ANUTECH.

18.      WARRANTIES

18.1     Right to enter Agreement

         Each Party  hereby  warrants  to the other that it has the full  right,
         power,  authority  and  liberty  to enter  into this  Agreement  and to
         perform all of its respective  duties and obligations  hereunder.  Each
         party  warrants  to the other  that it is not  under any other  duty or
         obligation which is contrary to or inconsistent  with any of its duties
         and obligations hereunder.

18.2     No contrary agreements

         Each party hereby warrants to the other that it will not enter into any
         agreement,  arrangement or understanding  with any third party which is
         contrary to or inconsistent with any of that party's rights, duties and
         obligations under this Agreement.

18.3     Status of ANUTECH

         ANUTECH  warrants and covenants  that it enters into this  Agreement as
         agent for and on behalf of ANU having  full power and  authority  so to
         do, and with the  express  consent of ANU,  to the intent that each and
         every  of the  warranties,  covenants,  terms  and  conditions  of this
         Agreement are given by and bind both ANUTECH in its own right and ANU.

18.4     Due diligence

         Praxis  warrants that it has undertaken a due diligence  examination of
         the ANU Intellectual  Property  licensed in this agreement and warrants
         that it satisfied  itself as to ANU's rights to and the validity of the
         ANU  Intellectual  Ptoperty,  in  particular  the  patents  and  patent
         applications set out in Schedule 1.

18.5     ANU Intellectual Property

         To the best of its knowledge  ANUTECH  warrants and  covenants  that in
         respect of ANU Intellectual Property either:

         (a)  ANU is the sole legal and beneficial owner; or

         (b)  ANU  has such  rights to  the ANU  Intellectual Property,  as will
              enable ANUTECH to perform its obligations under this Agreement.

         ANUTECH  makes no  warranty as to whether  the US Patent  5520926  (and
         corresponding  international  patents or  applications)  in the name of
         British   Technology  Group  Limited  infringes  the  ANU  Intellectual
         Property.

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

18.5     Results achieving purpose

         ANUTECH  makes no  representations  or warranties as to the accuracy or
         completeness of the Results  generated by ANUTECH,  or their capability
         to achieve a particular purpose.

18.5     Fundamental Terms

         Each party acknowledges that the warranties contained in this clause 18
         (Warranties) are fundamental terms of this Agreement.

19.    ASSIGNMENT, TRANSFER

19.1     This  Agreement may not be assigned or otherwise  transferred by Praxis
         without the prior written  consent of ANUTECH.  An assignment is deemed
         to include a change in greater than 50% beneficial  ownership of shares
         in  Praxis  with the  exception  of such a change in share  holding  in
         Praxis through capital raising.

19.2     Any permitted  assignee  shall assume all  obligations  of its assignor
         under this Agreement.

19.3     No  assignment   shall  relieve  Praxis  of   responsibility   for  the
         performance  of  any  accrued   obligation(s)  which  Praxis  then  has
         hereunder.

20.      TERMINATION

20.1     A party may terminate this Agreement upon 30 days written notice to the
         other  party on the  occurrence  of any of the  following  by the other
         party:

         (a)  upon or after the bankruptcy,  insolvency,  dissolution or winding
              up of such party  (other  than  dissolution  or winding up for the
              purposes of reconstruction or amalgamation); or

         (b)  the  failure of such party to comply  with its  obligations  under
              this agreement,  if such default is not cured (if capable of being
              cured) within 30 days of the party not in default giving notice of
              the default; or

         (c)  if the  representations  and warranties  made under this Agreement
              prove inaccurate or false in any material respect.

20.2     Without  limiting clause 20.1 (b), ANUTECH may terminate this Agreement
         upon 30 days written notice to Praxis in the event Praxis:

           (a)    fails to make any payment which is due and payable pursuant to
                  this Agreement and such payment remains unpaid for more than
                  30 days; or

         (b)  fails to achieve any of the  performance  milestones in accordance
              with  clause 5 and such  default is not cured (if capable of being
              cured) within 30 days of ANUTECH giving notice of the default.

20.3     The provisions of this clause 20 and clauses 14  (Confidentiality),  17
         (Indemnity and Insurance), 13 (Reports,  Payments and Accounting) 21.12
         (Governing Law), and 21.9 (Dispute  Resolution)  shall continue in full
         force and effect  notwithstanding  the termination,  any alterations or
         additions to the other provisions of this Agreement.

20.4     Upon  termination of this  Agreement and except as otherwise  expressly
         provided:

         (a)  any  rights or  obligations  of a party  which may have  arisen or
              accrued prior to termination shall not be affected;

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

         (b)  all licences  granted to Praxis under the terms of this  Agreement
              shall  terminate  and Praxis shall cease its  exploitation  of the
              relevant  intellectual  property other than provided for in clause
              20.4 (e);

         (c)  ANUTECH's Research on behalf of Praxis shall terminate;

         (d)  Praxis  shall  promptly  pay to ANUTECH  any amounts due under the
              terms of this Agreement  including  royalties and Sublicence  Fees
              which have accrued as of the date of termination;

         (e)  Praxis may sell all  inventory  of the Product that it may have on
              hand at the date of termination provided that it pays royalties as
              provided in this Agreement.

20.5     If any party  terminates the Agreement and sublicensees are not then in
         default  under  the  terms of their  sublicence  agreements  hereunder,
         ANUTECH  shall  have the right (but not the  obligation)  to assume and
         continue  sublicence  agreements with payments thereunder being made by
         the sublicensees directly to ANUTECH without any further obligations on
         the part of Praxis with respect thereto.

20.6     Waiver by either party of any breach (or a  succession  of breaches) of
         any one or more of the provisions of this  Agreement  shall not deprive
         such party of any right to  terminate  this  Agreement  pursuant to the
         terms of this clause 20 upon the occasion of any subsequent breach.

21.      MISCELLANEOUS PROVISIONS

21.1     Binding obligations

         The duties and obligations  imposed and the benefits  conferred by this
         Agreement  are to be binding  upon and to enure to the  parties  and to
         their respective successors and permitted assigns.

21.2     Other instruments

         Each  party  shall  prepare  and  execute  such other  instruments  and
         documents  and do such  other acts and  things as may be  necessary  or
         desirable  to ensure  each party has such  rights and  interest  as are
         contemplated  for  it by  this  Agreement  or as may  be  necessary  or
         desirable to give full effect to the provisions of this Agreement.

21.3     Whole Agreement

         This Agreement combines the whole understanding of the Parties relating
         to its  subject  matter  and it  supersedes  and  cancels  any  and all
         agreements, understandings or commitments made by the same Parties with
         respect to the same  subject  matter.  Any  purported  representations,
         warranties  or other  promises of the Parties not recorded in it are of
         no effect.

21.4     Amendment

         The  variation or waiver of a provision of this  Agreement or a Party's
         consent to a  departure  from a  provision  by another  Party,  will be
         ineffective unless in writing executed by the Parties. The requirements
         concerning variation or waiver apply to this clause itself.

21.5     No waiver

         No waiver by either party of any breach (or a  succession  of breaches)
         of any one or more of the  provisions  of this  Agreement  by the other
         party  shall be deemed to be a waiver of any  subsequent  breach of the
         same or any other provision.

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

21.6     Illegality

         If any  provision  of this  Agreement  shall be  construed  so as to be
         illegal or invalid the legality or the validity of any other  provision
         shall not be affected thereby. Any legal or invalid provisions shall be
         severable  and all other  provisions  shall  remain  in full  force and
         effect.

21.7     Notices

         A party notifying or giving notice under this Agreement must notify

         (a)  in writing;

         (b)  addressed to the address of the recipients  specified  below or as
              altered by notice given in accordance with this clause; and

         (c)  delivered by hand, facsimile, registered mail or post.

         A notice shall be deemed received:

         (a)  if hand delivered on the date of delivery

         (b)  if sent by facsimile on generation of an  acknowledgment  that the
              transmission has been successfully completed,

         (c)  if sent by registered mail on  acknowledgment  of receipt by or on
              behalf of the recipient

          (d) if dispatched by post, after 5 days including day of posting.

         If a notice is  received  on a day other than a  business  day or after
         4.30 pm on a  business  day,  then it is  deemed  received  on the next
         business day.

         Notice addresses

         ANUTECH Pty Ltd                    Praxis Pharmaceuticals Inc.
         GPO Box 4                          56 Urambi Village
         CANBERRA ACT 2601                  Canberra ACT 2902
         or                                 and
         ANUTECH Court                      c/o Corporate Trust Company of
         Cnr. Barry Drive and Daley Road      Nevada
         ACTON nACT 2601                    1 East First Street, Reno, Nevada
                                            89501, USA
         Facsimile: 02 6257 1433

21.8     Force Majeure

         No party shall be  responsible  or liable to any other  party for,  nor
         shall this  Agreement be terminated as a result of any party's  failure
         to perform any of its  obligations  hereunder,  with the  exception  of
         payment  of  monies  due  and  owing,  if  such  failure  results  from
         circumstances  beyond the  control of such  party,  including,  without
         limitation,  requisition by any  government  authority or the effect of
         any statute,  ordinance or  governmental  order or  regulations,  wars,
         strikes,   lockouts,   riots,  epidemic  disease,  act  of  god,  civil
         commotion, fire, earthquake, storm, failure of public utilities, common
         carriers  or  suppliers,  or any other  circumstances,  whether  or not
         similar to the above causes.  The parties shall use reasonable  efforts
         to avoid or remove any such causes and shall resume  performance  under
         this  Agreement  as soon as  feasible  whenever  such cause is removed;
         provided however that the foregoing shall not be construed to require a
         party to settle any labour  dispute or to commence,  continue or settle
         any litigation.

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

         If after six months the force majeure continues,  the Parties must meet
         in good faith to  discuss  the  situation  and  endeavour  to achieve a
         mutually satisfactory resolution of the problem.

21.9     Dispute resolution

         If a dispute  arises  between  the  Parties  out of or relating to this
         Agreement  (the  "Dispute"),  any Party  seeking to resolve the Dispute
         must do so strictly in accordance  with the  provisions of this clause.
         Compliance with this clause is a condition  precedent to seeking relief
         in any court or tribunal in respect of the Dispute.

         A Party  seeking to resolve the Dispute must notify the  existence  and
         nature of the  Dispute to the other Party  ("the  Notification").  Upon
         receipt of a  Notification  the Parties  must refer  resolution  of the
         Dispute to their respective chief executive officers or their nominees.

         If the Dispute has not been resolved within thirty (30) days of receipt
         of the  Notification  then any  Party  may  refer  the  Dispute  to the
         Australian  Commercial  Dispute Centre Limited  ("ACDC") for mediation.
         The parties must  negotiate in good faith,  and in accordance  with the
         Conciliation Rules of ACDC, to resolve the Dispute.

         If the Dispute has not been resolved within sixty (60) days of referral
         to ACDC either Party is free to initiate proceedings in a court.

21.10    Stamp Duty

         All stamp duty levied upon this agreement shall be paid by Praxis.

21.11    Costs

         Each Party agrees to bear its own legal and other costs and expenses in
         connection  with the preparation and execution of this Agreement and of
         other related documentation.

21.12    Governing law

         This  Agreement  shall be construed in accordance  with and governed by
         the  laws  of the  Australian  Capital  Territory,  Australia,  and the
         parties hereby submit  themselves to the  jurisdiction of the courts in
         and of that Territory.

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ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

         IN WITNESS:  this  Agreement  shall be duly executed and shall commence
         from the Commencement Date:-

    The COMMON SEAL of                      )
    PRAXIS PHARMACEUTICALS INC.             )
    was hereunto affixed in accordance      )
    with its Articles of Association        )             /s/ Brett Charlton
                                                     --------------------------
                                                        (Name) - (Position)
    In the presence of :

    /s/ W.B. Cowden
    ---------------------------------
    Signature

    W.B. Cowden
    ---------------------------------
    Name

    The COMMON SEAL of                      )
    ANUTECH PTY LLD                         )
    was hereunto affixed in accordance      )
    with its Articles of Association        )             /s/ John Bell
                                                   ----------------------------
                                                   John Bell - Managing Director
    In the presence of :

    /s/ L. J. Todd
    ---------------------------------
    Signature

    L.J. Todd, Secretary, Anutach Pty. Ltd.
    ---------------------------------------
    Name

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

                                   SCHEDULE 1

                            ANU INTELLECTUAL PROPERTY

PHOSPHOSUGAR-BASED ANTI-INFLAMMATORY AND/OR IMMUNOSUPPRESSIVE DRUGS

o    International Application No. PCT/AU89/00350
o    Inventors - William Cowden, Christopher Parish, David Willenborg
o    Priority date - 18 August 1988
o    International filing date - 18 August 1989
o    ANUTECH reference 140

COUNTRY             APPLICATION NO.         PATENT NO.       STATUS
Australia           41875/89                627500           granted
Europe              89909685.3              0429522          granted
Japan               509079/89                                request examination
USA                 988001                  5506210*         granted
USA-continuation    discontinued

* date of grant = 9 April 1996

NOVEL PHOSPHOSUGARS AND PHOSPHOSUGAR-CONTAINING COMPOUNDS HAVING
ANTIINFLAMMATORY ACTIVITY

o    Inventors - William Cowden, Christopher Parish, David Willenborg
o    Priority date - 18 October 1996
o    ANUTECH reference 278

COUNTRY       APPLICATION NO.       PATENT NO.           STATUS
Australia     PO3098/96
INT                                                      on 18 October 1997

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

                                   SCHEDULE 2

                                 RESEARCH BUDGET

                FIRST YEAR BUDGET: NOVEMBER 1997 - NOVEMBER 1998
                ------------------------------------------------

 SALARIES                             SALARY                   TOTAL
 --------
 Chemist                              $43,000                  $54,825

 OVERHEADS/CONSUMABLES
 ---------------------
 JCSMR overheads (26% on ANU staff)                            $14,255
 ERM                                                           $15,000
 APL fee (15%)                                                 $12,612

 GRAND TOTAL                                                   $96,691

                SECOND YEAR BUDGET: NOVEMBER 1998 - NOVEMBER 1999
                -------------------------------------------------

 SALARIES                            SALARY                    TOTAL
 --------
 Lab Technician                      $35,000                   $44,625
 Animal Technician                   $36,000                   $45,900
 Researcher                          $42,000                   $53,550
 Chemist                             $43,000                   $54,825
 TOTAL SALARIES                                                $338,900

 CONSULTANCY
 -----------
 Clinical Trial Coordinator                                    $50,000
 Research Leader Consultancy                                   $90,000
 TOTAL CONSULTANCY                                             $140,000

 OVERHEADS/CONSUMABLES
 ---------------------
 JCSMR overheads (26% on ANU staff)                            $51,714
 ERM (@$15K/person)                                            $90,000
 Equipment                                                     $50,000
 Animals                                                       $20,000
 Sundry (1)                                                    $5,000
 APL Fee (15%)                                                 $83,342
 TOTAL OVERHEADS                                               $300,056

 GRAND TOTAL                                                   $638,956

 (1) Includes: printing, advertising, postage, courier, books/subscriptions,
 contingency and other miscellaneous items etc

 Payment details are provided below:

 Electronic Transfer:                           Postal Address:

 Bank: National Australia Bank                  ANUTECH Pty Ltd
 Address:   39 London Circuit                   GPO Box 4
            Canberra ACT 2600                   Canberra ACT 2601
            Australia                           Australia
 Account Name: ANUTECH Pty Ltd
 Account No.: 60584 3086
 Branch No.: 082 962

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

                                   SCHEDULE 3

                        RESEARCH AND RESEARCH MILESTONES

THE RESEARCH -
         The research program encompasses both basic and clinical research
         projects in the area of inflammation treatment. The overall aims of
         the program are to develop compounds with greater efficacy than those
         covered currently under the ANU Intellectual Property and to
         demonstrate the efficacy, in animal models (ophthalmic and abdominal
         inflammation), of the drug candidates, and to prove safety and
         efficacy of these agents in human skin inflammatory conditions
         (psoriasis).

THE RESEARCH MILESTONES:
         In broad terms the Research Milestones can be summarised as follows:

1. BASIC RESEARCH

AIMS:    To develop:

         (i) 3 agents  which are  representative  of 3 new classes of  compounds
         with  improved  binding  constants  to the M6P/IGF II  receptor  and to
         assess these in vitro and in vivo.

         (ii) to develop or identify  formulations  for  optimal  delivery in at
         least  one  required  application,  eg for  use in  intra-abdominal  or
         intra-ocular applications

         Start:                              November 1997
         Produce agents:                     November 1998
         In vitro analysis:                  March 1999
         In vivo analysis:                   November 1999
         Identify and test formulation:      March 1999
         Assess final formulation in vivo:   November 1999
         Finish:                             November 1999

2. PRE-CLINICAL

i) Post surgical/infection adhesions
------------------------------------

AIMS:    To  demonstrate efficacy of  lead compounds in  animal models of intra-
         abdominal adhesions

         Start:                              November 1997
         Develop animal models:              May 1998
         Safety studies:                     September 1998
         Efficacy studies:                   May 1999
         Finish:                             June 1999

ii) Ocular inflammation
-----------------------

AIMS:    To  demonstrate efficacy  of lead  compound in  animal models of ocular
         inflammatory conditions

         Start:                              November 1998
         Develop model:                      May 1999
         Safety assessment:                  September 1999
         Efficacy studies:                   September 2000
         Finish:                             September 2000

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.

<PAGE>

3. CLINICAL

i) Psoriasis
------------

AIMS:    To  demonstrate safety and  efficacy of lead compounds in the treatment
         of psoriasis

Phase I/IIa:
         Start:                              January 1998
         Protocol:                           March 1998
         Ethics:                             June 1998
         Recruitment :                       October 1998
         Analysis:                           February 1999
         Finish:                             February 1999

Phase IIb:
         Start:                              May 1999
         Ethics:                             June 1999
         Recruitment :                       January 2000
         Analysis:                           August 2000
         Finish:                             September 2000

Phase III
         Start:                              September 2000
         Finish:                             September 2003

ii) Intra-abdominal adhesions
-----------------------------

Phase I                                      April 1999 - July 2000
Phase II                                     October 2000 - March 2002
Phase III                                    July 2002 - July 2005

iii) Ocular Inflammation
------------------------

Phase I                                      September 2000 - September 2001
Phase II                                     January 2002 - June 2003
Phase III                                    December 2003 - December 2006

--------------------------------------------------------------------------------
ANUTECH Pty Ltd                                     Praxis Pharmaceuticals, Inc.NONSTATUTORY STOCK OPTION
                                ACCEPTANCE LETTER
                                -----------------
                        (also referred to as "Agreement")

TO:  B. Yeshwant Kamath                                     Grant Date:  3/23/98

         We are  pleased to notify you (also  referred  to as  "Optionee")  that
VIDEONICS, INC., a California corporation (the "Company"),  hereby grants to you
an option  ("Option") to purchase all or any part of 320,000 shares (although no
fractional  shares may be  purchased)  of the Common Stock of the Company at the
price of $2.125 per share (the  "Exercise  Price") and  "Optioned  Shares") as a
Nonstatutory  Stock Option authorized by the Board of Directors.  A Nonstatutory
Stock Option is an option not  described in Section 422 of the Internal  Revenue
Code of 1986, as amended (the "Code").

         This Option cannot be exercised  unless you first sign this document in
the place  provided  and return it to the  Assistant  Secretary  of the Company,
James A. McNeill. However, your signing and delivering this letter will not bind
you to purchase  any of the shares  subject to the Option.  Your  obligation  to
purchase  shares  arises  only when you  exercise  this Option in the manner set
forth in Paragraph 1 below.

         1. Term of Option  and  Exercise  of  Option.  Subject to the terms and
conditions of this Acceptance Letter, this Option can be exercised by you during
a period of ten (10)  years from the Grant  Date.  Your  first  vesting  date is
5/31/98,  with 40,000 shares  becoming  vested on that date.  40,000 shares will
vest every six months thereafter until the final vesting date of 11/30/2001,  at
which point all shares will be vested, provided that you have remained a Company
employee  throughout  such period or unless you and the Company  have  otherwise
agreed in a writing singed by an authorized Company officer.

         Any portion of the Option that you do not exercise shall accumulate and
can be  exercised  by you at any time prior to the  exception  of ten (10) years
from the Grant Date.

         This Option may be exercised by delivering  to the Assistant  Secretary
of the Company full payment for an amount equal to the total  Exercise  Price of
such shares being  exercised  and a written  notice in a form  substantially  as
attached  hereto or otherwise  satisfactory  to the  Company,  signed by you and
specifying the number of shares you then desire to purchase.

         Upon receipt of your notice to exercise shares, the Company will advise
you of any additional amount which may be due for federal and state taxes on the
difference  between your Exercise Price and the current fair market value of the
Company's stock on the exercise date. You acknowledge your personal liability to
pay said taxes and that Company has no obligation to deliver any Optioned Shares
or other  payments  to you  upon  the  exercise  of the  Option  and sale of any
Optioned Shares without payment of such taxes.

         Certificates  for  shares  so  purchased  will  be  issued  as  soon as
practicable,  but no fractional  shares shall be  delivered.  As a holder of the
Option,  you shall have no rights of a

<PAGE>

shareholder  with  respect to the  Optioned  Shares until shares shall have been
issued to you upon the exercise of this Option.

         The Company shall not be obligated to deliver any shares  hereunder for
such period as may be required by it with  reasonable  diligence  to comply with
applicable  federal or state  statutes,  laws and  regulations.  As of the Grant
Date,  you  understand  that the Option and the  Optioned  Shares  have not been
registered under the Securities Act of 1933 and the rules and regulations of the
Securities and Exchange Commission ("SEC") promulgated  thereunder.  You further
understand  that absent  such  registration  or the  obtaining  of an  exemption
therefrom,  the Optioned Shares may not be sold or transferred for value. In its
discretion, the Company will use reasonable efforts to cause the Optioned Shares
to be  registered  under a Form S-8,  S-3 or other SEC form  described  for such
purpose within the four (4) year term of the Option vesting period.  You further
understand  that as an  executive  officer  and  director  of the  Company,  any
exercise  of shares  under this Option  shall be subject to the insider  trading
regulations  and rules as are promulgated by the SEC from time to time, and that
violation thereof may create criminal or civil liabilities and penalties.

         2.  Termination  of  Employment.  Subject  to other  written  agreement
between  you and the  Company,  if your full time  employment  with the  Company
terminates  for any reason  other than death or  disability,  this Option may be
exercised  only within  three (3) months of such event to the extent that is was
vested on the date of termination,  but in no event may this Option be exercised
after ten (10) years from the Grant Date. If you are granted a leave of absence,
you shall be deemed to be still in the employ of the  Company,  except  that you
may not exercise the Option  during such leave of absence.  Additional  terms in
your employment  letter modify this clause.  You shall have no right to exercise
any Optioned Shares which have not vested as of the termination date.

         3. Death or  Disability.  If you die or are disabled  while employed by
the  Company,  this  Option  may be  exercised  in  whole or in part by the duly
authorized executor of your last Will or by the duly authorized administrator or
special administrator of your estate, as the case may be, within a period of one
(1) year, or for such longer period as the Company's Board of Directors may fix,
at its discretion, but only to the extent that the Option was vested on the date
of your death or  disability,  again  subject to exercise no more than after ten
(10) years from the Grant Date.  Your estate  shall mean  yourself or your legal
representative  or any person who acquires  the right to exercise an Option,  as
the case may be, by reason of your death or disability.

         4. Non-transferability of Option. This Option shall not be transferable
except by Will or the laws of descent and  distribution,  and this Option may be
exercised during your lifetime only by you. Any purported transfer or assignment
of this Option  shall be void and of no effect,  and in such  circumstance,  the
Company  shall have the right to  terminate  this  Option as of the date of such
purported transfer or assignment.

         5. Method of Exercise. This Option may be exercised with respect to all
or any part of any vested  Optioned  Shares by giving the Company written notice
of such exercise,  specifying the number of shares as to which this Option is so
exercised and accompanied by cash,  check, bank draft, or money order payable to
the order of the  Company  for an amount in

                                       2

<PAGE>

lawful money of the United States equal to the Exercise Price  multiplied by the
number of said shares. You may also exercise the vested Optioned Shares by using
any increase in the value of the Optioned Shares in excess of the Exercise Price
for the number of shares as to which you exercise the Option.  In such instance,
you shall  receive a number of shares equal to the  difference  in value between
fair market on the exercise date and the Exercise Price for the Optioned  Shares
being  exercised,  subject to any  deduction  also being taken as  required  for
income taxes due on the difference which the Company is required to withhold.

         As soon as practical  after receipt of such notice,  and payment of any
taxes due, the Company shall,  without transfer or issue tax or other incidental
expense to you or your successor,  transfer and deliver thereto at the office of
the Company or such other place as may be mutually  agreeable a  certificate  or
certificates for such shares of its common stock;  provided,  however,  that the
time of such  delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with applicable registration
requirements  under  the  Securities  Exchange  Act of  1934,  as  amended,  any
applicable  listing  requirements  of  any  national  securities  exchange,  and
requirements  under any other laws or regulations  applicable to the issuance or
transfer of such shares.

         6.  Adjustments  Upon  Changes in  Capitalization.  In the event of any
change  in the  outstanding  Common  Stock of the  Company  by  reason  of stock
dividends, recapitalization,  mergers, consolidations, split-up, combinations or
exchanges  of  shares  and the  like,  the  aggregate  number or class of shares
subject to this Option  immediately  prior to such event and the Exercise  Price
shall be  appropriately  adjusted by the Board of  Directors  on a  proportional
basis so that the total  Exercise  Price and the economic  benefits to which you
are  entitled  upon  exercise of the Option  shall  remain the same and any such
adjustment  by the Board of  Directors  in good faith shall be  conclusive.  For
example,  if the Company splits its  outstanding  Common Stock 2:1 such that for
every  outstanding  share, one new share is issued,  then the number of Optioned
Shares then  remaining  unexercised  under the Option  shall  double and the per
share  Exercise  Price shall be one-half of the prior  price.  By way of further
example, if the Company combines its outstanding Common Stock in a reverse stock
split on a 1:2 basis such that for every two shares  outstanding  only one share
remains  outstanding,  then the number of Optioned Shares remaining  unexercised
under the Option shall be reduced by half and the per share Exercise Price shall
double.

         7. Tax  Status.  Your  treatment  of shares  purchased  pursuant to the
exercise of the Option thereafter may have significant tax consequences. You may
wish to consult  your tax advisor with  respect to the tax  consequences  to you
upon  exercise of the Option or sale of the stock that you  acquire  pursuant to
this Option. You alone are responsible for any tax liability associated with the
exercise of the Optioned Shares.

         8. Accredited  Investor.  Optionee  represents that he is an accredited
investor  as  defined  in Rule  501(a) of  Regulation  D  promulgated  under the
Securities  Act.  Optionee  hereby  confirms  that the Option (and Common  Stock
issuable  upon  exercise  thereof)  will  be  acquired  for  investment  for the
Optionee's  own account,  not as a nominee or agent,  and not with a view to the
resale or distribution of any part thereof, and that the Optionee has no present
intention of selling,  granting any participation in, or otherwise  distributing
the same. By executing this

                                       3

<PAGE>

Agreement, Optionee further represents that Optionee does not presently have any
contract,  undertaking,  agreement  or  arrangement  with  any  person  to sell,
transfer or grant  participations  to such person or to any third  person,  with
respect to any of the Option or Optioned Shares. The Optionee represents that he
has full power and authority to enter into this Agreement.

         9.  Disclosure  of  Information.  Optionee  has had an  opportunity  to
discuss the Company's business, management,  financial affairs and the terms and
conditions of the offering of the Option with the Company's  management  and has
had an opportunity to review the Company's facilities. Optionee understands that
such discussions, as well as the written information issued by the Company, were
intended to describe the aspects of the Company's  business which it believes to
be material. Optionee is an executive officer of the Company and a member of the
Company's Board of Directors.

         10.  Restricted  Securities.  Optionee  understands that the Option and
Option  Shares have not been  registered  under the  Securities  Act of 1933, as
amended (the "Securities Act").  Optionee understands that the Option and Option
Shares are characterized as "restricted securities" under the federal securities
laws inasmuch as they are being  acquired from the Company in a transaction  not
involving a public offering and that under such laws and applicable  regulations
such  Option and  Option  Shares may be resold  without  registration  under the
Securities Act only in certain limited circumstances. Optionee acknowledges that
the Option and  Option  Shares  must be held  indefinitely  unless  subsequently
registered  under the Securities Act or an exemption from such  registration  is
available. Optionee is aware of the provisions of Rule 144 promulgated under the
Securities  Act which  permit  limited  resale of shares  purchased in a private
placement subject to the satisfaction of certain  conditions,  including,  among
other things,  the existence of a public market for the shares, the availability
of certain current public  information  about the Company,  the resale occurring
not less than one (1) year (two  years for  persons  are  "affiliates")  after a
party  has  purchased  and paid for the  security  to be  sold,  the sale  being
effected  through a "broker's  transaction" or in  transactions  directly with a
"market  maker" (as  provided by Rule 144(f) and the number of shares being sold
during any three-month period not exceeding specified  limitations.  Optionee is
also  aware  that  Rules 701 and 702 under the  Securities  Act may also  enable
Optionee to obtain some liquidity under certain  specified  circumstances  after
Optionee exercises the Option.

         11. Legends. The Optionee understands that the Option and Option Shares
and any securities issued in respect thereof or exchange therefor,  may bear one
or all of the following legends:

                  (a)  "THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  UNDER  THE
SECURITIES  ACT OF 1933.  THEY MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED  OR
HYPOTHECATED  IN THE ABSENCE OF A REGISTRATION  STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES  UNDER SUCH ACT OR AN OPINION OF COUNSEL  SATISFACTORY  TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

                  (b) Any legend  required  by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate
so legended.

                                       4

<PAGE>

         12. Brokers of Finders.  Optionee has not incurred, and will not incur,
directly or  indirectly,  as a result of any action taken by the  Purchaser  any
liability for brokerage or finders' fees or agents'  commissions  or any similar
charges in connection with this Agreement.

                                                     COMPANY:

                                                     VIDEONICS, INC.
                                                     a California corporation

                                                     By: /s/ Michael L. D'Addio
                                                         -----------------------
                                                         Michael L. D'Addio
                                                         Chief Executive Officer

                                                     Address: 1370 Dell Avenue
                                                              Campbell, CA 95008

                                                     EMPLOYEE:

                                                     /s/ B. Yeshwant Kamath
                                                     ---------------------------
                                                             (signature)

                                                     Name: B. Yeshwant Kamath
                                                          ----------------------
                                                                 (print)

                                                     Address:
                                                             -------------------

                                                             -------------------

                                                             -------------------

                                       5

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