Document:

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                                                                   Exhibit 10.24

DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT

by and between

                                 CIMA LABS INC.

and

                                               SCHWARZ PHARMA, INC.

dated as of June 30, 2000

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                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                             Page
<S>                                                                                                          <C>
SECTION 1    DEFINITIONS                                                                                       2
SECTION 2    GRANT OF LICENSES; LICENSE OPTION                                                                 6
2.1    Grant of Licenses.......................................................................................6
2.2    Sublicenses.............................................................................................7
2.3    Marketing, Distribution and Sale........................................................................7
2.4    Additional Development Option...........................................................................7
2.5    Minimum Annual Net Sales................................................................................8
SECTION 3    PRODUCT DEVELOPMENT ..............................................................................8
3.1    Obligations of CIMA.....................................................................................8
3.2    Obligations of Schwarz..................................................................................8
3.3    License of Schwarz Technology...........................................................................8
3.4    Regulatory Matters......................................................................................8
SECTION 4    ROYALTY, COST OF GOODS AND MILESTONE PAYMENTS ....................................................9
4.1    Royalty and Milestone Payments..........................................................................9
4.2    Records and Audit.......................................................................................9
4.3    Quarterly Reports of Royalties.........................................................................10
SECTION 5    SUPPLY OF PRODUCT ...............................................................................10
5.1    Supply of Product......................................................................................10
5.2    Identification.........................................................................................11
5.3    Trade, Sample and Placebo Product Price................................................................12
5.4    Forecasts, Delivery and Quality........................................................................12
5.5    Rejection and Replacement..............................................................................12
5.6    Invoice and Payment....................................................................................13
5.7    Supply Disruption; Alternate Manufacturing Site........................................................13
SECTION 6    CONDITIONS PRECEDENT TO THE CLOSING; CLOSING DATE ...............................................13
6.1    Conditions Precedent to Schwarz?s Obligations..........................................................13
6.2    Conditions Precedent to CIMA?s Obligations.............................................................14
6.3    Closing Date...........................................................................................15
SECTION 7    REPRESENTATIONS AND WARRANTIES OF CIMA ..........................................................15
7.1    Organization, Power and Authority......................................................................16
7.2    Due Authority; No Breach...............................................................................16
7.3    Intellectual Property..................................................................................16
7.4    Technology Rights......................................................................................17
7.5    Litigation.............................................................................................17
7.6    Governmental Approval..................................................................................17
7.7    Brokerage..............................................................................................17
SECTION 8    REPRESENTATIONS AND WARRANTIES OF SCHWARZ .......................................................17
8.1    Organization, Power and Authority......................................................................17
8.2    Due Authority; No Breach...............................................................................18
</TABLE>

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<TABLE>

<S>                                                                                                           <C>
8.3   Brokerage...............................................................................................18
8.4   Litigation..............................................................................................18
8.5   Governmental Approval...................................................................................19
SECTION 9    ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES                                               19
9.1   Governmental Filings....................................................................................19
9.2   Compliance with Law.....................................................................................19
9.3   Recall..................................................................................................19
9.4   Confidentiality.........................................................................................20
9.5   Expenses................................................................................................21
9.6   Reasonable Efforts......................................................................................21
9.7   Publicity...............................................................................................21
9.8   Cooperation.............................................................................................21
9.9   Competition; No Sale for Resale.........................................................................21
9.10  Conflicting Rights......................................................................................22
9.11  Patent and Trademark Maintenance........................................................................22
9.12  Infringement; Enforcement of Proprietary Rights.........................................................24
9.13  Supply of Product.......................................................................................24
9.14  Liability Insurance.....................................................................................24
9.15  Referral of Orders and Inquiries........................................................................25
9.16  Deemed Breach of Covenant...............................................................................25
SECTION 10   INDEMNIFICATION                                                                                  25
10.1  Indemnification.........................................................................................25
10.2  Notice and Opportunity To Defend........................................................................26
10.3  Indemnification Payment Obligation......................................................................27
10.4  Indemnification Payment Adjustments.....................................................................27
10.5  Indemnification Payment.................................................................................27
10.6  Survival................................................................................................27
SECTION 11   TERMINATION                                                                                      28
11.1   Termination............................................................................................28
SECTION 12   MISCELLANEOUS                                                                                    29
12.1  Successors and Assigns..................................................................................29
12.2  Notices.................................................................................................29
12.3  Waiver; Remedies........................................................................................30
12.4  Survival of Representations.............................................................................30
12.5  Independent Contractors.................................................................................30
12.6  Entire Agreement........................................................................................30
12.7  Amendment...............................................................................................30
12.8  Counterparts............................................................................................30
12.9  Governing Law...........................................................................................31
12.10 Arbitration.............................................................................................31
12.11 Captions................................................................................................31
12.12 No Third-Party Rights...................................................................................31
12.13 Severability............................................................................................31
12.14 Attachments.............................................................................................31
12.15 Force Majeure...........................................................................................31
</TABLE>

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                                    SCHEDULES
<TABLE>

<S>                        <C>
Schedule 2.4               [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
                           OMITTED FILED SEPARATELY WITH THE SECURITIES AND
                           EXCHANGE COMMISSION.***] Extended Release Term Sheet
Schedule 2.5               Minimum Annual Net Sales Targets
Schedule 3.1               Development Schedule
Schedule 4.1(a)            Royalty Rates
Schedule 4.1(b)            Milestone Payments
Schedule 5.1(b)            Schwarz Purchase Order
Schedule 5.3               Cost of Goods
Schedule 5.4(d)            Quality Assurance Addendum
Schedule 9.9(a)            Competitive Products
</TABLE>

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DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT

         This DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT ("this Agreement"),
dated as of June 30, 2000, is by and between CIMA LABS INC., a Delaware
corporation ("CIMA"), and SCHWARZ PHARMA, INC., a Delaware corporation
("Schwarz").

                               W I T N E S S E T H

         WHEREAS, CIMA is engaged, among other things, in the business of
research, development, manufacturing and commercialization of pharmaceutical
products through its proprietary drug delivery technologies;

         WHEREAS, Schwarz is engaged, among other things, in the business of
marketing and selling of pharmaceutical products;

         WHEREAS, subject to the terms and conditions set forth in this
Agreement, CIMA and Schwarz wish to collaborate in the development,
registration, marketing and sale of a certain prescription product; and

         WHEREAS, subject to the terms and conditions set forth in this
Agreement, CIMA wishes to license to Schwarz and Schwarz wishes to license from
CIMA rights to CIMA's DuraSolv(R) technology for use with such prescription
product.

         NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

                                    SECTION 1

DEFINITIONS

         For purposes of this Agreement, the following terms shall have the
meanings set forth below:

         "Activities" shall mean the development, manufacturing, marketing,
selling and distributing of the Product in the Territory as contemplated by this
Agreement.

         "Affiliates" shall mean, with respect to any Person, any Persons
directly or indirectly controlling, controlled by, or under common control with,
such other Person. For purposes hereof, the term controlled" (including the
terms "controlled by" and "under common control with"), as used with respect to
any Person, shall mean the direct or indirect ability or power to direct or
cause the direction of management policies of such Person or otherwise direct
the affairs of such Person, whether through ownership of voting securities or
otherwise.

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         "Annual Net Sales" shall mean, for any Year, the Net Sales for such
Year.

         "API" shall mean the active ingredient [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***].

         "cGMP" shall mean current Good Manufacturing Practices, as determined
by the FDA from time to time.

         "CIMA" shall have the meaning given in the preamble and shall include
its Affiliates.

         "CIMA Intellectual Property" shall mean, collectively, (1) the CIMA
Patents, (2) the CIMA Technology, (3) the CIMA Trademarks, and (4) the CIMA
Marketing Materials.

         "CIMA Marketing and Market Research Data" shall mean, with respect to
the Product, all CIMA marketing data, studies, market research data and reports
that pertain to the Product, and any further market research data whose
disclosure to Schwarz is not prohibited by confidentiality obligations under
agreements, dated prior to the date hereof, between CIMA and Persons who are not
Affiliates of CIMA.

         "CIMA Marketing Materials" shall mean all labeling, marketing and
promotional materials and inserts currently used by CIMA that are useful in
connection with the Activities.

         "CIMA Patents" shall mean United States patent no. 6024981 (Rapidly
Dissolving Robust Dosage Form) and any patents and patent applications resulting
therefrom, including any extension, reissue, renewal, reexamination or
continuation-in-part of such patent or patent application.

         "CIMA Technology" shall mean all of CIMA's Patents, trade secrets,
technology, know-how and all other information necessary for the manufacture of
the Product including, without limitation, that related to CIMA's DuraSolv(R)
technology.

         "CIMA Trademarks" shall mean the CIMA(R), DuraSolv(R) and Meltabs(R)
trademarks.

         "Closing Date" shall have the meaning given in Section 6.3 hereof.

         "Damages" shall mean any and all actions, costs, losses, lost profits,
claims, liabilities, fines, penalties, demands, damages and expenses, court
costs, and reasonable fees and disbursements of counsel, consultants and expert
witnesses incurred by a party hereto (including interest which may be imposed in
connection therewith).

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         "Defective" shall mean, as to the Product, the failure of such to
strictly conform to the Specifications, this Agreement and all applicable law,
including, without limitation, PDMA.

         "Development Schedule" shall mean the schedule of development
activities set forth on Schedule 3.1 hereto.
         "FDA" shall mean the United States Food and Drug Administration.

         "Force Majeure" shall mean acts of God, explosion, fire, flood,
tornadoes, thunderstorms, earthquake or tremor, war whether declared or not,
civil strife, riots, embargo, losses or shortages of power, labor stoppage,
substance shortages, damage to or loss or product in transit, currency
restrictions, or events caused by reason of laws, regulations or orders by any
government, governmental agency or instrumentality or by an other supervening or
unforeseeable circumstances reasonably beyond the control of each party.

         "GAAP" shall mean generally accepted accounting practices in the United
States as in effect from time to time.

         "Indemnified Party" shall have the meaning given in Section 10.2
hereof.

         "Indemnifying Party" shall have the meaning given in Section 10.2
hereof.

         "Launch" shall mean the date when the Product is first made
commercially available by Schwarz.

         "[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***]" shall mean a pharmaceutical
product containing [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***], either alone or in
combination with other pharmaceutical active ingredients.

         "[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Extended Release"
shall mean a pharmaceutical product containing [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] of the active ingredient [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] in an extended release dosage form consisting of a
fast-dissolving tablet using the CIMA Technology.

         "Licensed Assets" shall have the meaning set forth in Section 2.1
hereof.

                                      -4-

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         "Net Sales" shall mean, with respect to the Product, the gross amount
invoiced to unrelated third parties for the Product in the Territory, less:

         (a)      trade and reasonable and customary cash discounts allowed;

         (b)      refunds, rebates, chargebacks, retroactive price adjustments
                  and any other allowances which effectively reduce the net
                  selling price; and

         (c)      returns, credits and allowances.

Such amounts shall be determined from books and records maintained in accordance
with GAAP, consistently applied.

         "PDMA" shall mean the Prescription Drug Marketing Act of 1987, as
amended from time to time, together with any rules or regulations promulgated
thereunder.

         "Person" shall mean a natural person, a corporation, a partnership, a
trust, a joint venture, a limited liability company, any governmental authority
or any other entity or organization.

         "Product" shall mean a pharmaceutical product containing
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] of the active ingredient
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***], in a fast-dissolving tablet using the
CIMA Technology, as more specifically described below:

              Active ingredient and potency: [***CONFIDENTIAL TREATMENT
                  REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***]
              Tablet size:  1/4"
              Tablet weight:  50 - 120 mg
              Flavor:  Mint
              Color:  White
              Tablet disintegration:  30 seconds or less
              Intagliation (Engraving):  [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***]

         "Promotional Materials" shall mean any advertising and promotional
labeling bearing a name (trade name or generic name) used in the promotion of
the Product, including, without limitation, promotional materials produced by or
on behalf of Schwarz (examples include, but are not limited to, journal ads,
brochures, service items, managed care pull through sheets, formulary

                                      -5-

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presentations, price lists, monographs, Internet pages and telephone or
television advertisements) and materials produced by outside sources (examples
include, but are not limited to, medical reprints, textbooks and CME materials)
to the extent funded by, created in cooperation with, reviewed, or distributed
by Schwarz. The definition of Promotional Materials shall also include press
releases and other releases of information to the media regarding the Product.

         "Quarter" shall mean, as the case may be, the three months ending on
March 31, June 30, September 30 or December 31 in any Year.

         "Schwarz" shall have the meaning given in the preamble and shall
include its Affiliates.

         "Schwarz Technology" shall mean all of Schwarz's patents, trade
secrets, technology, know-how and all other information necessary to the
manufacture of the Product including, without limitation, that related to
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***].

         "Schwarz Trademarks" shall have the meaning given in Section 9.11(c).

         "Specifications" shall mean, at any time, the specifications for the
Product that are included in the Quality Assurance Addendum set forth on
Schedule 5.4(d).

         "Territory" shall mean the fifty (50) states, the District of Columbia
and the territories and possessions comprising the United States of America,
including Puerto Rico.

         "Year" shall mean a calendar year during the term of this Agreement.

                                    SECTION 2

GRANT OF LICENSES; LICENSE OPTION

         2.1      Grant of Licenses.

                  (1)     CIMA hereby grants to Schwarz an exclusive, subject to
         Section 2.5, license for the term of this Agreement under the following
         assets to develop, manufacture, market, distribute and sell the
         Product, for all indications and for all agreed upon product line
         extensions, in the Territory (such assets are referred to herein
         collectively as the "Licensed Assets"):

                           (i) all current and future regulatory filings,
                  approvals, registrations and governmental authorizations that
                  relate to the Product in the Territory;

                                      -6-

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                      (ii)  the CIMA Intellectual Property; and

                      (iii) the CIMA Marketing and Market Research Data.

                  (2) CIMA grants to Schwarz an exclusive, royalty bearing
         license to use the CIMA Trademarks to market, distribute and sell the
         Product, during the term of this Agreement, for all indications and for
         all agreed upon product line extensions in the Territory.

                  (3) The license to Schwarz will be exclusive in that CIMA will
         not grant any licenses of the Licensed Assets of the CIMA trademarks to
         any other Person with respect to the Product or any other
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***] products during the
         term of this Agreement except as provided in Section 2.5.

         2.2 Sublicenses. Schwarz shall have the right to extend the licenses
granted pursuant to this Section 2 in whole or in part to any Affiliate of
Schwarz, provided that Schwarz is not then in default with respect to any of its
obligations to CIMA under this Agreement. All the terms and provisions of this
Agreement shall apply to the Affiliate to which this license has been extended
to the same extent as they apply to Schwarz, and the operations of the Affiliate
shall be deemed to be the operations of Schwarz and Schwarz shall account
therefor and be responsible for the performance of such Affiliate of all of its
obligations hereunder. In addition, Schwarz shall have the right to extend the
licenses granted pursuant to this Section 2 in whole or in part to Persons who
are not Affiliates of Schwarz with the prior written consent of CIMA, such
consent not to be unreasonably withheld or delayed.

         2.3 Marketing, Distribution and Sale. After the Launch, Schwarz shall
use its commercially reasonable efforts to market, distribute and sell the
Product in the Territory. Such efforts shall be consistent with industry norms,
given the product profile, product potential and the state of the market at
Launch.

         2.4 Additional Development Option. Schwarz shall have the one-time
option to cause CIMA to collaborate with Schwarz for the development of
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] Extended Release utilizing the CIMA
Technology (the "Additional Development Option"). Schwarz may exercise the
Additional Development Option by delivering to CIMA an Additional Development
Option Notification (an "ADO Notification") at any time prior to December 31,
2001. The ADO Notification shall set forth the specifications for the product
that Schwarz proposes to develop and the principal terms under which Schwarz
proposes to undertake such development. Upon receipt of an ADO Notification by
CIMA, Schwarz and CIMA shall use their commercially reasonable efforts to

                                      -7-

<PAGE>   11

finalize a Development, License and Supply Agreement substantially in the form
and substance of this Agreement within sixty (60) days after CIMA's receipt of
such ADO Notification; provided, however, that the terms of any such
Development, License and Supply Agreement in respect of [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] Extended Release shall incorporate the terms reflected
on Schedule 2.4 hereto.

         2.5 Minimum Annual Net Sales. Subject to Section 4.1(c), Schwarz shall
endeavor to meet or exceed the minimum Annual Net Sales targets set forth on
Schedule 2.5 hereto. Any provision in this Agreement to the contrary
notwithstanding (but still subject to Section 4.1(c)), in the event that Schwarz
fails to meet the minimum Annual Net Sales targets set forth on Schedule 2.5
hereto, CIMA's sole remedy for such failure shall be, subject to Section 4.1(c),
to (i) convert the exclusive licenses granted in Sections 2.1 to non-exclusive
licenses, and/or (ii) reduce the list of pharmaceutical products on Schedule
9.9(a) to those pharmaceutical products that contain [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] as their primary active ingredient. In the event that Schwarz
fails to meet the minimum Annual Net Sales targets set forth on Schedule 2.5
hereto, CIMA may exercise any remedies it is entitled to pursuant to this
Section 2.5, if at all, by the delivery of written notice thereof to Schwarz.

                                    SECTION 3

PRODUCT DEVELOPMENT

         3.1 Obligations of CIMA. CIMA shall be responsible for the satisfactory
performance of each of the development activities set forth on Schedule 3.1 at
least by the times set forth on Schedule 3.1.

         3.2 Obligations of Schwarz. Schwarz shall, in a timely fashion, supply
CIMA with sufficient quantities of API for CIMA to perform the development
activities described on Schedule 3.1 and the supply activities described in
Sections 5.1 and 5.5.

         3.3 License of Schwarz Technology. Schwarz hereby grants to CIMA a
non-exclusive license under the Schwarz Technology so that CIMA may carry out
its obligations under Section 3.1. Such license may not be sublicensed without
the prior written consent of Schwarz.

         3.4 Regulatory Matters. All Product supplied to Schwarz shall be
produced under cGMP and in accordance with the Specifications. CIMA shall
furnish Schwarz with a Certificate of Analysis with a cGMP statement to
demonstrate that each shipment of Product has been manufactured under cGMP and
other FDA guidelines and in accordance with the Specifications. In addition,
Schwarz reserves the right, at its own expense, to audit the facility of CIMA,

                                      -8-

<PAGE>   12

including its processes, records and other facets of the operation as may be
necessary to assure that all applicable regulations have been complied with, and
the Specifications have been met. CIMA shall permit duly authorized
representatives of Schwarz to audit all manufacturing and processing operations
at reasonable times with a prior appointment. The right to audit shall commence
with the effective date of this Agreement. These audits will be conducted to
assure compliance with all pertinent acts, regulations, and guidelines
promulgated by the FDA and other regulatory authorities, as well as standards
then in effect in the regulatory environment. Such audits will be permitted
during normal business hours and will be performed with a minimum of disruption.

                                    SECTION 4

ROYALTY, COST OF GOODS AND MILESTONE PAYMENTS

         4.1      Royalty and Milestone Payments.

         (1) Schwarz shall make royalty payments to CIMA, at the times, in the
amounts and subject to the conditions set forth on Schedule 4.1(a).

         (2) Schwarz shall make milestone payments to CIMA as set forth on
Schedule 4.1(b).

         (3) In the event of (i) any patent infringement, illegality or severe
side effect profile, that, in each case, has a materially adverse effect on the
Product, and/or (ii) the occurrence of an interruption in the supply of the
Product for a period of 120 days or more, then, in each case, the obligation of
Schwarz to make any payments pursuant to Sections 4.1(a) or 4.1(b) or Schedules
4.1(a) or 4.1(b) or to meet any minimum Annual Net Sales targets pursuant to
Section 2.5 or Schedule 2.5 shall, in each case, terminate and be deemed waived
by CIMA and shall be promptly renegotiated in good faith by Schwarz and CIMA.
Any renegotiated obligations pursuant to this Section 4.1(c) shall be
retroactively effective to the date the applicable event described above
occurred.

         4.2 Records and Audit. Schwarz and its Affiliates shall keep full, true
and accurate books of account containing all particulars that may be necessary
for the purpose of showing the amounts payable to CIMA hereunder. Such books of
account shall be kept at Schwarz's principal place of business or the principal
place of business of the appropriate Affiliate of Schwarz to which this
Agreement relates. Such books and the supporting data shall be open, at all
reasonable times and upon reasonable notice during the term of this Agreement
and for 2 years after its termination, to the inspection by a firm of certified
public accountants selected by CIMA and reasonably acceptable to Schwarz, for
the limited purpose of verifying Schwarz's royalty statements; provided,
however, that such examination shall not take place more often than once each
Year and shall not cover more than the preceding 3 Years, with no right to audit
any period

                                      -9-

<PAGE>   13
previously audited. Except as otherwise provided in this Section, the
cost of any such examination shall be paid by CIMA. In the event that any such
inspection reveals a deficiency in excess of 5% of the reported royalty for the
period covered by the inspection, Schwarz shall promptly pay CIMA the
deficiency, plus interest at the rate of 8% per annum, and shall reimburse CIMA
for the fees and expenses paid to such accountants in connection with their
inspection. In the event that any such inspection reveals a deficiency that is
less than 5% of the reported royalty for the period covered by the inspection,
Schwarz shall promptly pay CIMA the deficiency, plus interest at the rate of 8%
per annum. The parties agree that neither party shall be required to retain
books and records with respect to the above other than books and records
relating to the current Year and the immediately preceding 3 Years.

         4.3 Quarterly Reports of Royalties. In any Year, Schwarz shall, within
60 days after the end of each Quarter, deliver to CIMA true and accurate
reports, certified by an authorized official of Schwarz, setting forth the
actual Annual Net Sales and total royalties due under Section 4.1(a) for such
Year. If no royalties are due, Schwarz shall so report.

                                    SECTION 5

                                SUPPLY OF PRODUCT

         5.1      Supply of Product.

         (1) For the term of this Agreement, or for as long as CIMA manufactures
the Product, whichever is shorter, Schwarz agrees to purchase from CIMA and CIMA
agrees to supply Schwarz with all of Schwarz's requirements for the Product,
Product samples and Product placebos for their subsequent use, sale, lease or
transfer by Schwarz.

         (2) Schwarz agrees to initiate purchases of the Product, Product
samples and Product placebos hereunder by issuing CIMA binding purchase orders
not less than 90 days prior to the required shipping date set forth therein.
CIMA agrees to accept any order issued in accordance with this Section 5.1(b)
and to meet the delivery dates specified thereon. All purchase orders hereunder
shall be on Schwarz's standard purchase order form (a copy of which is attached
as Schedule 5.1(b) hereto and which shall not, for purposes of this Agreement
only, be modified in any material respect without CIMA's prior written consent,
such consent not to be unreasonably withheld or delayed) and shall be directed
to CIMA at the address set forth below. The terms and conditions of purchase
enumerated on the reverse side of such standard purchase order form shall
prevail over any inconsistent or conflicting language as may exist on invoices,
confirmation or order acknowledgment forms of CIMA, provided, however, that in
the event any terms thereof are in conflict, or are inconsistent with any terms
of this Agreement, the terms and conditions hereof shall prevail. No Product
delivered by CIMA shall have a shelf life that is more than two months less than
the maximum shelf life of such product; and, in any case, all Product delivered
by

                                      -10-

<PAGE>   14

CIMA shall have at least 22 months of shelf life remaining upon delivery to
Schwarz (other than batches that were under investigation and batches for
validation which shall have at least 18 months of shelf life remaining upon
delivery to Schwarz).

         (3) Purchase order quantities shall be in batch sizes of 1,000,000
tablets per batch unless otherwise mutually agreed by the parties. The delivery
quantity of blistered tablets shall not exceed 4,000,000 tablets in any calendar
month; provided that this limitation shall not apply to bulk tablets.

         (4) Schwarz shall provide the amount of API that CIMA requires to
perform its obligations pursuant to Schedule 3.1 and Sections 5.1 and 5.5 at no
charge to CIMA sixty (60) days prior to date of tablet manufacture, as well as
one (1) month of safety stock. API must conform to Schwarz's then current raw
materials specifications. CIMA shall not be accountable for production or
shipment delays due to lack of API.

         (5) EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THE PRODUCT WILL BE
SUPPLIED BY CIMA WITH NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTY OF MERCHANTABLILITY OR FITNESS FOR A PARTICULAR PURPOSE.

         5.2 Identification. Schwarz may market the Product under its name, with
its packaging and logo; Schwarz will, however, identify CIMA as the supplier in
a fair manner, reasonably acceptable to CIMA. CIMA will bear all the costs of
labeling the Product so as to appropriately display the Schwarz name provided
Schwarz supplies all the appropriate graphics, designs, logos and related and
appropriate artwork; provided that Schwarz shall reimburse CIMA for any costs
incurred by CIMA in making changes to the packaging required to manufacture the
Product in accordance with changes to the PDMA or other applicable law or
changes required by Schwarz, including, but not limited to plate and die charges
due to label changes and product identification requirements, and for any
packaging components rendered obsolete by the changes. In addition, CIMA shall
pay for all initial one-time, set-up charges incurred by CIMA in respect of
packaging the Product. Schwarz may use CIMA's name and derivations thereof in
promoting, marketing and selling the Product in the Territory; provided,
however, that the particular formulation of any reference to CIMA's name in any
promotional material shall be subject to CIMA's review and consent; and
provided, further, that once the formulation of any such reference has been
reviewed and consented to by CIMA, any subsequent reference to CIMA's name using
such formulation shall not be subject to the further review or consent of CIMA.
All samples shall be clearly marked "for sample use only" or some similar
phrasing suggested by Schwarz.

         5.3 Trade, Sample and Placebo Product Price. CIMA shall supply Product,
Product samples and Product placebos to Schwarz at the price set forth on
Schedule 5.3.

                                      -11-

<PAGE>   15

         5.4      Forecasts, Delivery and Quality.

         (1)      Schwarz shall provide CIMA with 12-month non-binding forecasts
within 15 days after the end of each Quarter. Such forecasts shall be revised
and extended in each succeeding Quarter.

         (2)      Delivery of the Product, Product samples and Product placebos
shall be in accordance with the means of transportation, destination and dates
set forth in Schwarz's purchase order. Delivery shall be F.O.B. point of origin,
freight collect.

         (3)      All deliveries of the Product hereunder shall include a
Certificate of Analysis provided by the quality control manager of CIMA
attesting to the fact that such the Product (i) has been manufactured by a
process which complies with cGMP and (ii) are of quality which is in accordance
with criteria established in the Specifications and all FDA requirements.

         (4)      The Product, Product samples and Product placebos supplied
hereunder shall have been manufactured by a process which complies with the
quality assurance addendum set forth on Schedule 5.4(d).

         5.5      Rejection and Replacement.

         (1)      In the event Schwarz determines that any Product, Product
samples or Product placebos as manufactured and/or packaged by CIMA is
Defective, then, within 30 days after delivery of such Product, Product samples
or Product placebos to Schwarz (or, in the event that such Product, Product
samples or Product placebos is Defective as a result of a latent defect, within
30 days of the discovery of such latent defect), Schwarz shall provide to CIMA a
written notice of rejection, specifying in reasonable detail the manner in which
the Product is Defective (the "Notice of Rejection"). If no written Notice of
Rejection is given to CIMA by Schwarz within such 30 day period, such Product,
Product samples or Product placebos shall be deemed to have been accepted by
Schwarz, provided, however, that nothing contained in this Section 5.5(a) shall
be deemed to relieve CIMA of its obligations under the warranties set forth in
Section 7 below.

         (2)      Upon receipt of a Notice of Rejection from Schwarz and in
order to minimize any hardship to Schwarz's customers, CIMA shall use its best
efforts to promptly supply to Schwarz a quantity of replacement Product, Product
samples or Product placebos meeting the Specifications equal to the size of the
lot which Schwarz claims was Defective so that such replacement Product shall be
received by Schwarz within 30 days following CIMA's receipt of Schwarz's Notice
of Rejection. All actual and documented costs and expenses directly relating to
any rejection and replacement pursuant to this Section 5.5 shall be paid by
CIMA.

                                      -12-

<PAGE>   16

         5.6      Invoice and Payment. Upon shipment of any Product, Product
samples or Product placebos, CIMA shall be entitled to submit invoices therefor
to Schwarz, and Schwarz agrees to remit payment within 45 days from receipt of
the invoice.

         5.7      Supply Disruption; Alternate Manufacturing Site.

                  (1)    CIMA shall use its best efforts to supply Schwarz with
         the Product in a timely manner in accordance with the orders and
         forecasts received by CIMA pursuant to Sections 5.1(b) and 5.4(a),
         respectively. In any consecutive 120 day period, should CIMA fail to
         supply Schwarz with any of the Product ordered for such 120 day period
         pursuant to Section 5.1(b), Schwarz shall have the right to require
         CIMA to transfer the manufacture of the Product to Schwarz's Seymour
         facility or other designated facility. CIMA will assume all costs of
         such transfer. Should CIMA cure its failure to supply, CIMA shall have
         the right to resume the manufacture of the Product and Schwarz and CIMA
         shall, at CIMA's expense, transfer the manufacture of the Product back
         to CIMA within a commercially reasonable amount of time.

                  (2)    CIMA and Schwarz shall, as soon as practicable
         following the date of Launch, qualify a manufacturing plant designated
         by Schwarz as an alternate FDA approved manufacturing and packaging
         site for the Product. The costs of obtaining such approval shall be
         borne equally by CIMA and Schwarz.

         5.8      CIMA's Obligation to Continue Manufacture. If this Agreement
terminates or expires through no breach of Schwarz, CIMA shall reasonably
cooperate with Schwarz in transferring the manufacture of the product to
Schwarz, its Affiliate or a third-party appointed by Schwarz, the parties shall
develop a schedule for the transfer of the manufacture of the Product and CIMA
shall continue to supply the Product to Schwarz pursuant to the terms of this
Agreement until twenty-four (24) months from the date this Agreement is
terminated or expires pursuant to Section 11.1.

                                    SECTION 6

CONDITIONS PRECEDENT TO THE CLOSING; CLOSING DATE

         6.1      Conditions Precedent to Schwarz's Obligations. Subject to
waiver as set forth in Section 12.3, all obligations of Schwarz to close the
transactions contemplated under this Agreement are subject to the fulfillment or
satisfaction of each of the following conditions precedent:

                  (1)    Representations and Warranties True as of the Closing
         Date. The representations and warranties of CIMA contained in this
         Agreement or in any schedule,

                                      -13-

<PAGE>   17
         certificate or document delivered by CIMA to Schwarz pursuant to the
         provisions hereof shall have been true on the date hereof and shall be
         true on the Closing Date with the same effect as though such
         representations and warranties were made as of such date.

                  (2)    Compliance with this Agreement. CIMA shall have
         performed and complied with all agreements and conditions required by
         this Agreement to be performed or complied with by it prior to or by
         the Closing Date.

                  (3)    Closing Certificate. Schwarz shall have received a
         certificate from CIMA, executed by an officer of CIMA, certifying in
         such detail as Schwarz may reasonably request that the conditions
         specified in Sections 6.1(a) and 6.1(b), above, have been fulfilled and
         certifying that CIMA has obtained all consents and approvals required
         hereunder.

                  (4)    No Threatened or Pending Litigation. On the Closing
         Date, no suit, action or other proceeding, or injunction or final
         judgment relating thereto, shall, to the best of CIMA's knowledge, be
         threatened or be pending before any court or governmental or regulatory
         official, body or authority in which it is sought to restrain or
         prohibit or to obtain damages or other relief in connection with this
         Agreement or the consummation of the transactions contemplated hereby,
         and no investigation that might result in any such suit, action or
         proceeding shall be pending or, to the best of CIMA's knowledge,
         threatened.

         6.2      Conditions Precedent to CIMA's Obligations. Subject to waiver
         as set forth in Section 12.3, all obligations of CIMA to close the
         transactions contemplated under this Agreement are subject to the
         fulfillment or satisfaction of each of the following conditions
         precedent:

                  (1)    Representations and Warranties True as of the Closing
         Date. The representations and warranties of Schwarz contained in this
         Agreement or in any schedule, certificate or document delivered by
         Schwarz to CIMA pursuant to the provisions hereof shall have been true
         on the date hereof and shall be true on the Closing Date with the same
         effect as though such representations and warranties were made as of
         such date.

                  (2)    Compliance with this Agreement. Schwarz shall have
         performed and complied with all agreements and conditions required by
         this Agreement to be performed or complied with by it prior to or by
         the Closing Date.

                  (3)    Closing Certificate. CIMA shall have received a
         certificate from Schwarz, executed by an officer of Schwarz, certifying
         in such detail as CIMA may reasonably request that the conditions
         specified in Sections 6.2(a) and 6.2(b), above, have been

                                      -14-

<PAGE>   18

         fulfilled and certifying that Schwarz has obtained all consents and
         approvals required hereunder.

                  (4)    No Threatened or Pending Litigation. On the Closing
         Date, no suit, action or other proceeding, or injunction or final
         judgment relating thereto, shall, to the best of Schwarz's knowledge,
         be threatened or be pending before any court or governmental or
         regulatory official, body or authority in which it is sought to
         restrain or prohibit or to obtain damages or other relief in connection
         with this Agreement or the consummation of the transactions
         contemplated hereby, and no investigation that might result in any such
         suit, action or proceeding shall be pending or, to the best of
         Schwarz's knowledge, threatened.

         6.3      Closing Date.

                  (1)    Subject to Section 6.3(b), below, the closing of the
         transactions contemplated by this Agreement shall take place at 10:00
         a.m., local time, on June 30, 2000, or on such other date as may be
         mutually agreed upon in writing by the parties (the "Closing Date"), at
         the offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York
         10019.

                  (2)    Each party hereby agrees to use its best efforts to
         consummate the transactions contemplated herein, as modified, on or
         before June 30, 2000; provided, however, that if the parties are unable
         to close the transactions contemplated hereby by August 31, 2000, or
         such later date as shall be mutually agreed to in writing by CIMA and
         Schwarz, then all of the rights and obligations of the parties under
         this Agreement shall terminate without liability.

                                    SECTION 7

REPRESENTATIONS AND WARRANTIES OF CIMA

         CIMA hereby represents and warrants to Schwarz that:

         7.1      Organization, Power and Authority. CIMA is a corporation duly
organized and validly existing under the laws of the State of Delaware. CIMA has
all necessary corporate power and authority to enter into, and be bound by the
terms and conditions of, this Agreement, and to license the Licensed Assets and
the CIMA Trademarks to Schwarz pursuant hereto.

        7.2       Due Authority; No Breach. The execution, delivery and
performance by CIMA of this Agreement and each agreement or instrument
contemplated by this Agreement, and the performance of the transactions
contemplated hereby and thereby, have been duly authorized by

                                      -15-

<PAGE>   19

all necessary corporate action by CIMA. This Agreement is, and each agreement or
instrument contemplated by this Agreement, when executed and delivered by CIMA
in accordance with the provisions hereof, will be (assuming the due execution
and delivery hereof and thereof by Schwarz) the legal, valid and binding
obligation of CIMA, in each case enforceable against CIMA in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, or similar laws from time to time in
effect which affect the enforcement of creditors' rights generally and by legal
and equitable limitations on the availability of specific performance and other
equitable remedies against CIMA. All persons who have executed this Agreement on
behalf of CIMA, or who will execute on behalf of CIMA any agreement or
instrument contemplated by this Agreement, have been duly authorized to do so by
all necessary corporate action. Neither the execution and delivery of this
Agreement or any such other agreement or instrument by CIMA, nor the performance
of the obligations contemplated hereby and thereby, will (i) conflict with or
result in any violation of or constitute a breach of any of the terms or
provisions of, or result in the acceleration of any obligation under, or
constitute a default under any provision of the articles of incorporation or
by-laws of CIMA or any material contract or any other material obligation to
which CIMA is a party or to which it is subject or bound, or (ii) violate any
judgment, order, injunction, decree or award of any court, administrative
agency, arbitrator or governmental body against, or affecting or binding upon,
CIMA or upon the securities, property or business of CIMA, or (iii) constitute a
violation by CIMA of any applicable law or regulation of any jurisdiction as
such law or regulation relates to CIMA, or to the property or business of CIMA
except for such conflict, acceleration, default, breach or violation that is not
reasonably likely to have a material adverse effect on CIMA's ability to perform
its obligations under this Agreement or under any agreement or instrument
contemplated hereby.

         7.3      Intellectual Property. CIMA is the lawful owner of the
Licensed Assets and CIMA Trademarks, CIMA can license the Licensed Assets and
CIMA Trademarks without the consent of any third party, there is no pending or
overtly threatened claim against CIMA asserting that any of the Licensed Assets
and CIMA Trademarks infringes or violates the rights of third parties or that
Schwarz, by practicing under the Licensed Assets and CIMA Trademarks in
performing the Activities, would violate any of the intellectual property rights
of any third party, and nothing has come to the attention of CIMA which has, or
reasonably should have, led CIMA to believe that any of the Licensed Assets and
CIMA Trademarks infringes or violates the right of third parties. CIMA has not
given any notice to any third parties asserting infringement by such third
parties upon any of the Licensed Assets and CIMA Trademarks. CIMA is not aware
of and has not received any communications challenging the ownership, validity
or effectiveness of any of the Licensed Assets and CIMA Trademarks. CIMA has not
granted any right to any third party relating to the Activities which would
violate the terms of or conflict with the rights granted to Schwarz pursuant to
this Agreement.

                                      -16-

<PAGE>   20

         7.4      Technology Rights. The CIMA Technology, when combined with the
Schwarz Technology, includes all the technology, patents, know-how, trade
secrets and other intellectual property necessary to manufacture the Product.

         7.5      Litigation. There are no pending or, to the best of CIMA's
knowledge, threatened judicial, administrative or arbitral actions, claims,
suits or proceedings pending as of the date hereof against CIMA relating to the
Activities, the Licensed Assets or the CIMA Trademarks which, either
individually or together with any other, would have a material adverse effect on
the Activities, the Licensed Assets, the CIMA Trademarks or the ability of CIMA
to perform its obligations under this Agreement or any agreement or instrument
contemplated hereby. There are no pending, and CIMA does not presently
contemplate bringing, any actions or suits relating to the Activities, the
Licensed Assets or the CIMA Trademarks against others.

         7.6      Governmental Approval. No consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any governmental
authority is required in connection with the execution, delivery and performance
of this Agreement, or any agreement or instrument contemplated by this
Agreement, by CIMA or the performance by CIMA of its obligations contemplated
hereby and thereby.

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

                                    SECTION 8

REPRESENTATIONS AND WARRANTIES OF SCHWARZ

         Schwarz represents and warrants to CIMA that:

         8.1      Organization, Power and Authority. Schwarz is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Schwarz has all necessary corporate power and authority to
enter into, and be bound by the terms and conditions of, this Agreement, to
license the Licensed Assets, the Patents and the CIMA Technology from CIMA, and
to license the Schwarz Technology to CIMA pursuant hereto.

         8.2      Due Authority; No Breach. The execution, delivery and
performance by Schwarz of this Agreement, and each agreement or instrument
contemplated by this Agreement, and the performance of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action by Schwarz. This Agreement is, and each agreement or instrument
contemplated by this Agreement, when executed and delivered by Schwarz in
accordance with the

                                      -17-

<PAGE>   21

provisions hereof, will be (assuming due execution and delivery hereof and
thereof by CIMA) the legal, valid and binding obligation of Schwarz, in each
case enforceable against Schwarz in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or similar laws from time to time in effect which affect the
enforcement of creditors' rights generally and by legal and equitable
limitations on the availability of specific performance and other equitable
remedies against Schwarz. All persons who have executed this Agreement on behalf
of Schwarz, or who will execute on behalf of Schwarz any agreement or instrument
contemplated by this Agreement, have been duly authorized to do so by all
necessary corporate action. Neither the execution and delivery of this Agreement
by Schwarz, or any such other agreement or instrument by Schwarz, nor the
performance of the obligations contemplated hereby and thereby, will (i)
conflict with or result in any violation of or constitute a breach of any of the
terms or provisions of, or result in the acceleration of any obligation under,
or constitute a default under any provision of its articles of incorporation or
by-laws or any material contract or any other material obligation to which
Schwarz is a party or to which it is subject or bound, or (ii) violate any
judgment, order, injunction, decree or award of any court, administrative
agency, arbitrator or government body against, or affecting or binding upon,
Schwarz or upon the securities, property or business of Schwarz, or (iii)
constitute a violation by Schwarz of any applicable law or regulation of any
jurisdiction as such law or regulation relates to Schwarz or to the property or
business of Schwarz, except for such conflict, acceleration, default, breach or
violation that is not reasonably likely to have a material adverse effect on
Schwarz's ability to perform its obligations under this Agreement or any
agreement or instrument contemplated hereby.

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

         8.4      Litigation. There are no pending or, to the best of Schwarz's
knowledge, threatened judicial, administrative or arbitral actions, claims,
suits or proceedings pending as of the date hereof against Schwarz which, either
individually or together with any other, will have a material adverse effect on
the ability of Schwarz to perform its obligations under this Agreement or any
agreement or instrument contemplated hereby or affect adversely the grant to
CIMA of the non-exclusive license of the Schwarz Technology pursuant to Section
3.3.

         8.5      Governmental Approval. No consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any governmental
authority is required in connection with the execution, delivery and performance
of this Agreement, or any agreement or instrument contemplated by this
Agreement, by Schwarz or the performance by Schwarz of its obligations
contemplated hereby and thereby.

                                  -18-

<PAGE>   22

                                    SECTION 9

ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES

         9.1      Governmental Filings. CIMA and Schwarz each agree to prepare
and file whatever filings, listings, requests or applications are required to be
filed with any governmental authority in connection with this Agreement or the
Product and to cooperate with one another as reasonably necessary to accomplish
the foregoing.

         9.2      Compliance with Law. Schwarz and CIMA shall each comply with
all federal, state and local laws and regulations applicable to developing,
approving, manufacturing, marketing and selling the Product in the Territory,
the Licensed Assets, the Patents and the Technology or the performance of their
respective obligations hereunder. CIMA and Schwarz each shall keep all records
and reports required to be kept by applicable laws and regulations, and each
shall make its facilities available at reasonable times during business hours
for inspection by representatives of governmental agencies. CIMA and Schwarz
each shall notify the other within forty-eight (48) hours of receipt of any
notice or any other indication whatsoever of any FDA or other governmental
agency inspection, investigation or other inquiry, or other material notice or
communication of any type, involving the Product. Schwarz and CIMA shall
cooperate with each other during any such inspection, investigation or other
inquiry including, but not limited to, allowing upon request a representative of
the other to be present during the applicable portions of any such inspection,
investigation or other inquiry and providing copies of all relevant documents.
Schwarz and CIMA shall discuss any written response to observations or
notifications received in connection with any such inspection, investigation or
other inquiry and each shall give the other an opportunity to comment upon any
proposed response before it is made. In the event of disagreement concerning the
form or content of such response, however, CIMA shall be responsible for
deciding the appropriate form and content of any response with respect to any of
its cited activities and Schwarz shall be responsible for deciding the
appropriate form and content of any response with respect to any of its cited
activities.

         9.3      Recall. Schwarz and CIMA shall consult with one another as to
all decisions concerning recall or withdrawal of the Product from the market,
including, but not limited to, determining whether or not to make any such
recall or withdrawal, the timing and scope thereof, and the means of conducting
any recall or withdrawal. The party requesting any recall or withdrawal must
receive the prior written consent of the other party, such consent not to be
unreasonably withheld, prior to initiating such recall or withdrawal. No consent
shall be necessary if the recall or withdrawal is requested by the FDA or other
governmental authority. CIMA shall bear the costs (including but not limited to,
shipping and product credits) for any recall or withdrawal primarily due to the
failure of the product integrity of the Product, including but not limited to,
CIMA's failure to comply with this Agreement, cGMP, the PDMA or the
Specifications. The costs for any other recall or withdrawal shall be the
responsibility of Schwarz.

                                      -19-
<PAGE>   23

         9.4      Confidentiality. Schwarz shall treat as confidential the
Licensed Assets, the Patents, the CIMA Technology, and all other information of
CIMA of which Schwarz becomes aware in connection with this Agreement
(collectively, "CIMA Proprietary Information"). Schwarz shall neither disclose
CIMA Proprietary Information to any third party nor use CIMA Proprietary
Information for any purpose other than as set forth in this Agreement. CIMA
shall treat as confidential the Schwarz Technology and all other information of
Schwarz of which CIMA becomes aware in connection with this Agreement
(collectively, "Schwarz Proprietary Information"). CIMA shall neither disclose
Schwarz Proprietary Information to any third party nor use Schwarz Proprietary
Information for any purpose other than as set forth in this Agreement.

         Nothing contained herein will in any way restrict or impair either
party's (the "Using Party's") right to use, disclose or otherwise deal with any
Proprietary Information of the other party which:

                  (1)    at the time of disclosure is known to the public or
          thereafter becomes known to the public by publication or otherwise
          through no fault of the Using Party;

                  (2)    the Using Party can establish was in its possession
          prior to the time of the disclosure and was not obtained directly or
          indirectly from the other party;

                  (3)    is independently made available as a matter of right
          to the Using Party by a third party who is not thereby in violation of
          a confidential relationship with the other party;

                  (4)    is developed by the Using Party independently of the
          Proprietary Information received from the other party and the Using
          Party can establish such development; or

                  (5)    is information required to be disclosed by legal or
         regulatory process; provided, in each case the Using Party timely
         informs the other party and uses reasonable efforts to limit the
         disclosure and maintain confidentiality to the extent possible and
         permits the other party to intervene and contest or attempt to limit
         the disclosure.

Schwarz shall obtain no right or license of any kind under the CIMA Proprietary
Information except as set forth in this Agreement. CIMA shall obtain no right or
license of any kind under the Schwarz Proprietary Information except as set
forth in this Agreement.

         9.5      Expenses. CIMA and Schwarz shall each bear their own direct
and indirect expenses incurred in connection with the negotiation and
preparation of this Agreement and, except as set forth in this Agreement, the
performance of the obligations contemplated hereby.

                                      -20-

<PAGE>   24

         9.6      Reasonable Efforts. CIMA and Schwarz each hereby agrees to use
all reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done all things necessary or proper to make effective the
transactions contemplated by this Agreement, including such actions as may be
reasonably necessary to obtain approvals and consents of governmental Persons
and other Persons.

         9.7      Publicity. The parties agree that no publicity release or
announcement concerning the transactions contemplated hereby shall be issued
without the advance written consent of the other, except as such release or
announcement may be required by law, in which case the party making the release
or announcement shall, before making any such release or announcement, afford
the other party a reasonable opportunity to review and comment upon such release
or announcement.

         9.8      Cooperation. If either party shall become engaged in or
participate in any investigation, claim, litigation or other proceeding with any
third party, including the FDA, relating in any way to the Product or any of the
Licensed Assets, the Patents or the Technology, the other party shall cooperate
in all reasonable respects with such party in connection therewith, including,
without limitation, using its reasonable efforts to make available to the other
such employees who may be helpful with respect to such investigation, claim,
litigation or other proceeding, provided that, for purposes of this provision,
reasonable efforts to make available any employee shall be deemed to mean
providing a party with reasonable access to any such employee at no cost for a
period of time not to exceed 24 hours (e.g., three 8-hour business days).
Thereafter, any such employee shall be made available for such time and upon
such terms and conditions (including, but not limited to, compensation) as the
parties may mutually agree.

         9.9      Competition; No Sale for Resale.

                  (1)    CIMA agrees that, commencing on the Closing Date and
         continuing for the period ending five (5) years after the term of this
         Agreement, it shall not directly or indirectly, engage in any activity
         in competition with the Activities in the Territory. Subject to Section
         2.5, such prohibited activity shall include, without limitation, using
         or licensing to any third party for use, the Licensed Assets or CIMA
         Trademarks in connection with (i) any pharmaceutical product listed on
         Schedule 9.9(a)(i) in the Territory during the period commencing on the
         Closing Date and ending at the end of the term of this Agreement;
         provided, however, that the non-competition period with respect to any
         pharmaceutical product containing the active ingredient
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***] shall continue for an
         additional five (5) years after the term of this Agreement or (ii) any
         pharmaceutical product listed on Schedule 9.9(a)(ii) in the Territory
         during the period commencing on the Closing Date and ending five (5)
         years after the Closing. It is further understood that the remedies at
         law are inadequate in the case of any breach of this covenant and that
         Schwarz

                                      -21-

<PAGE>   25

         shall be entitled to equitable relief, including the remedy of specific
         performance, with respect to any breach of such covenant.

                  (2)    Neither Schwarz nor any sublicensee of Schwarz shall
         knowingly sell any Product to anyone in the Territory for subsequent
         distribution or resale outside the Territory and each shall take all
         reasonable precautions to prevent such distribution or resale outside
         the Territory. CIMA shall not knowingly sell any Product to anyone in
         the Territory or outside the Territory for subsequent distribution or
         resale in the Territory and CIMA shall take all reasonable precautions
         to prevent such distribution or resale in the Territory.

         9.10     Conflicting Rights.  CIMA shall not grant any right to any
third party relating to the Activities which would violate the terms of or
conflict with the rights granted to Schwarz pursuant to this Agreement.

         9.11     Patent and Trademark Maintenance.

                  (1)    CIMA shall be solely responsible for filing,
         prosecuting, and maintaining all of the CIMA Patents, and CIMA shall
         pay the costs associated therewith. CIMA shall file, prosecute, and
         maintain all CIMA Patents so as to fully continue the benefits under
         the licenses granted to Schwarz hereunder. CIMA may, however,
         discontinue prosecuting and maintaining any CIMA Patent if (i) CIMA has
         a valid business reason to do so, and (ii) obtains the prior written
         approval of Schwarz, such approval not to be unreasonably withheld or
         delayed.

                  (2)    CIMA shall be solely responsible for filing,
         prosecuting, and maintaining all CIMA Trademarks, and CIMA shall pay
         the costs associated therewith. All registrations, variations, logos,
         goodwill and other rights under or acquired through use of the CIMA
         Trademarks shall accrue and belong to CIMA. Except as provided herein,
         Schwarz shall have no rights to use the CIMA Trademarks. Schwarz will
         not use in its business, in or outside of the Territory, any other mark
         or name which is similar to or nearly resembles any of the CIMA
         Trademarks in use by CIMA to indicate the source and origin of the CIMA
         Technology as to be likely to cause deception or confusion. Schwarz
         recognizes that CIMA is the owner of all CIMA Trademarks used in
         commerce to indicate the source of the CIMA Technology and agrees that
         the CIMA Trademarks shall remain vested in CIMA both during the term of
         this Agreement and thereafter. Schwarz shall not contest the validity
         of the CIMA Trademarks or CIMA's ownership of the CIMA Trademarks. Use
         of the CIMA Trademarks by Schwarz in conjunction with the manufacture,
         use, and sale of the Product and all goodwill related thereto shall
         inure to the benefit of CIMA for purposes of building the longevity and
         extent of use of the CIMA Trademarks.

                                      -22-

<PAGE>   26

                  (3)    Schwarz shall be solely responsible for filing,
         prosecuting, and maintaining all trademarks it develops or owns for the
         Product (the "Schwarz Trademarks"), and Schwarz shall pay the costs
         associated therewith. All registrations, variations, logos, goodwill
         and other rights under or acquired through use of the Schwarz
         Trademarks shall accrue and belong to Schwarz. CIMA shall have no
         rights to use the Schwarz Trademarks, including, without limitation, in
         connection with any product subsequently developed by CIMA pursuant to
         Section 2.4. CIMA will not use in its business, in or outside of the
         Territory, any other mark or name which is similar to or nearly
         resembles the Schwarz Trademarks in use by Schwarz in a manner that is
         likely to cause deception or confusion. CIMA recognizes that Schwarz is
         the owner of all of the Schwarz Trademarks used in commerce to indicate
         the source of the Product and agrees that the Schwarz Trademarks shall
         remain vested in Schwarz both during the term of this Agreement and
         thereafter. CIMA shall not contest the validity of the Schwarz
         Trademarks or Schwarz's ownership of the Schwarz Trademarks. Use of the
         Schwarz Trademarks by Schwarz in conjunction with the manufacture, use,
         and sale of the Product and all goodwill related thereto shall inure to
         the benefit of Schwarz for purposes of building the longevity and
         extent of use of the Schwarz Trademarks.

                  (4)    Schwarz and CIMA agree that, where applicable, all
         packaging of the Product shall identify (i) the number of the CIMA
         Patents and CIMA as the owner thereof and (ii) Schwarz as the owner of
         the Schwarz Trademarks.

                  (5)    Any improvements to the CIMA Technology (whether or not
         patentable) shall be owned solely by CIMA.

                  (6)    Any improvements to the Schwarz Technology (whether
         or not patentable) shall be owned solely by Schwarz.

                  (7)    Schwarz shall have full ownership rights to the Product
         and, with the exception of any improvements to the CIMA Technology as
         contemplated by Section 9.11(e), any patents, know-how or other
         intellectual property that relate to the Product and are discovered
         during the development process contemplated hereby.

                  (8)    Any provisions in this Agreement to the contrary
         notwithstanding, Schwarz acknowledges that, for all purposes, CIMA is
         the owner of the CIMA Technology and CIMA acknowledges that, for all
         purposes, Schwarz is the owner of the Schwarz Technology.

         9.12     Infringement; Enforcement of Proprietary Rights.

                  (1)    Infringement of Patent Rights. Each party shall
         promptly notify the other of any alleged infringement by third parties
         of any CIMA Patent and provide any

                                      -23-

<PAGE>   27

         information available to that party relating to such alleged
         infringement. CIMA shall have the responsibility to investigate such
         alleged infringement and act diligently, at its own expense, to end any
         infringement of such rights that materially affect Schwarz's rights
         pursuant to this Agreement, including, but not limited to, bringing
         suit against such third party infringer. In the event that CIMA does
         not bring suit against such third party infringer, Schwarz may, at its
         own expense, bring suit against such third party infringer on CIMA's
         behalf.

                  (2)    Procedures. No settlement, consent judgment or other
         voluntary final disposition of any suit contemplated by Section 9.12(a)
         may be entered into without the consent of each party, which consent
         shall not be unreasonably withheld or delayed. Any recovery of damages
         in any such suit shall be retained by the party bearing the costs of
         such suit. In the event of any infringement suit against a third party
         brought by either party pursuant to this Section 9.12, the party not
         bringing such suit shall cooperate in all respects, execute any
         documents reasonably necessary to permit the other party to prosecute
         such suit, and to the extent reasonable shall make available its
         employees and relevant records to provide evidence for such suit.

                  (3)    Infringement of Third Party Rights. If, during the term
         of this Agreement, any third party (other than an Affiliate of Schwarz)
         claims that Schwarz's marketing or selling of the Product hereunder
         infringes on a third party patent based upon claims that dominate
         claims in the Patents, within 120 days after notice by Schwarz, CIMA
         shall procure for Schwarz the right to exercise all rights licensed
         under this Agreement without any additional payment therefor by
         Schwarz.

         9.13     Supply of Product. CIMA shall maintain sufficient capacity
throughout the term of this Agreement to meet the requirements of Schwarz for
the supply of Product hereunder.

         9.14     Liability Insurance. At and after Launch, CIMA shall use its
best efforts to obtain and carry in full force and effect product liability
insurance in respect of the Product in the amount of $10,000,000 per occurrence,
$10,000,000 in the aggregate. At and after Launch, Schwarz shall use its best
efforts to obtain and carry in full force and effect product liability insurance
in respect of the Product in the amount of $10,000,000 per occurrence,
$10,000,000 in the aggregate.

         9.15     Referral of Orders and Inquiries. CIMA shall refer all Persons
sending orders or making inquiries regarding the Product within the Territory to
Schwarz and shall promptly notify Schwarz of the name of each such Person and
the nature of the inquiry of such Person.

         9.16     Deemed Breach of Covenant. Neither CIMA nor Schwarz shall be
deemed to be in breach of any covenant contained in this Section 9 if such
party's deemed breach is the result of any action or inaction on the part of the
other party.

                                      -24-

<PAGE>   28

                                   SECTION 10

INDEMNIFICATION

         10.1     Indemnification.

         (1)      CIMA shall indemnify, defend and hold Schwarz (and its
directors, officers, employees, and Affiliates) harmless from and against any
and all Damages incurred or suffered by Schwarz (and its directors, officers,
employees, and Affiliates) as a consequence of:

                           (1) any breach of any representation or warranty made
                  by CIMA in this Agreement or any agreement, instrument or
                  document delivered by CIMA pursuant to the terms of this
                  Agreement;

                           (2) any failure to perform duly and punctually any
                  covenant, agreement or undertaking on the part of CIMA
                  contained in this Agreement;

                           (3) any act or omission of CIMA with respect to the
                  operation of CIMA's business, or the handling, manufacturing,
                  sale, consumption or use of the Product by CIMA; or

                           (iv) the infringement of the Licensed Assets, the
                  Patent or the Technology of any patent, trademark, copyright,
                  trade secret or other intellectual property right of any
                  person other than CIMA or Schwarz.

         (2)      Schwarz shall indemnify, defend and hold CIMA (and its
directors, officers, employees, and Affiliates) harmless from and against any
and all Damages incurred or suffered by CIMA (and its directors, officers,
employees, and Affiliates) as a consequence of:

                           (1) any breach of any representation or warranty made
                  by Schwarz in this Agreement or any agreement, instrument or
                  document delivered by Schwarz pursuant to the terms of this
                  Agreement;

                           (2) any failure to perform duly and punctually any
                  covenant, agreement or undertaking on the part of Schwarz
                  contained in this Agreement; or

                           (3) any act or omission of Schwarz with respect to
                  the operation of Schwarz's business or the handling,
                  manufacturing, sale, consumption or use of the Product by
                  Schwarz, including Schwarz's supply of API hereunder.

                                      -25-

<PAGE>   29

         10.2     Notice and Opportunity To Defend. Promptly after receipt by a
party hereto of notice of any claim which could give rise to a right to
indemnification pursuant to Section 10.1. such party (the "Indemnified Party")
shall give the other party (the "Indemnifying Party") written notice describing
the claim in reasonable detail. The failure of an Indemnified Party to give
notice in the manner provided herein shall not relieve the Indemnifying Party of
its obligations under this Section, except to the extent that such failure to
give notice materially prejudices the Indemnifying Party's ability to defend
such claim. The Indemnifying Party shall have the right, at its option, to
compromise or defend, at its own expense and by its own counsel, any such matter
involving the asserted liability of the party seeking such indemnification. If
the Indemnifying Party shall undertake to compromise or defend any such asserted
liability, it shall promptly (and in any event not less than 10 days after
receipt of the Indemnified Party's original notice) notify the Indemnified Party
in writing of its intention to do so, and the Indemnified Party agrees to
cooperate fully with the Indemnifying Party and its counsel in the compromise or
defense against any such asserted liability. All reasonable costs and expenses
incurred in connection with such cooperation shall be borne by the Indemnifying
Party. If the Indemnifying Party elects not to compromise or defend the asserted
liability, fails to notify the Indemnified Party of its election to compromise
or defend as herein provided, fails to admit its obligation to indemnify under
this Agreement with respect to the claim, or, if in the reasonable opinion of
the Indemnified Party, the claim could result in the Indemnified Party becoming
subject to injunctive relief or relief other than the payment of money damages
that could materially adversely affect the ongoing business of the Indemnified
Party in any manner, the Indemnified Party shall have the right, at its option,
to pay, compromise or defend such asserted liability by its own counsel and its
reasonable costs and expenses shall be included as part of the indemnification
obligation of the Indemnifying Party hereunder. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnified Party may settle or
compromise any claim over the objection of the other; provided, however, that
consent to settlement or compromise shall not be unreasonably withheld. In any
event, the Indemnified Party and the Indemnifying Party may participate, at
their own expense, in the defense of such asserted liability. If the
Indemnifying Party chooses to defend any claim, the Indemnified Party shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense. Notwithstanding
anything to the contrary in this Section 10.2, (i) the party conducting the
defense of a claim shall (A) keep the other party informed on a reasonable and
timely basis as to the status of the defense of such claim (but only to the
extent such other party is not participating jointly in the defense of such
claim), and (B) conduct the defense of such claim in a prudent manner, and (ii)
the Indemnifying Party shall not cease to defend, settle or otherwise dispose of
any claim without the prior written consent of the Indemnified Party (which
consent shall not be unreasonably withheld).

         10.3 Indemnification Payment Obligation. No Indemnifying Party will
have any obligations under Sections 10.1(a) or 10.1(b) until the cumulative
aggregate amount of Damages incurred or suffered by the Indemnified Party which
the Indemnifying Party is otherwise subject to under this Agreement exceeds
$50,000 at which time the entire cumulative aggregate amount of

                                      -26-

<PAGE>   30

such Damages shall be covered. The provisions of this Section 10.3 shall not
limit or otherwise affect the obligations of any Indemnifying Party under any
other Section of this Agreement.

         10.4     Indemnification Payment Adjustments. The amount of any Damages
for which indemnification is provided under this Section 10 shall be reduced to
take account of any net tax benefit and shall be increased to take account of
any net tax detriment arising from the incurrence or payment of any such Damages
or from the receipt of any such indemnification payment and shall be reduced by
the insurance proceeds received and any other amount recovered, if any, by the
Indemnified Party with respect to any Damages; provided, however, that an
Indemnified Party shall not be subject to an obligation to pursue an insurance
claim relating to any Damages for which indemnification is sought hereunder. If
any Indemnified Party shall have received any payment pursuant to this Section
10 with respect to any Damages and shall subsequently have received insurance
proceeds or other amounts with respect to such Damages, then such Indemnified
Party shall pay to the Indemnifying Party an amount equal to the difference (if
any) between (i) the sum of the amount of those insurance proceeds or other
amounts received and the amount of the payment by such Indemnifying Party
pursuant to this Section 10 with respect to such Damages and (ii) the amount
necessary to fully and completely indemnify and hold harmless such Indemnified
Party from and against such Damages; provided, however, in no event will such
Indemnified Party have any obligation pursuant to this sentence to pay to such
Indemnifying Party an amount greater than the amount of the payment by such
Indemnifying Party pursuant to this Section 10 with respect to such Damages.

         10.5     Indemnification Payment. Upon the final determination of
liability and the amount of the indemnification payment under this Section 10,
the appropriate party shall pay to the other, as the case may be, within 10
business days after such determination, the amount of any claim for
indemnification made hereunder.

         10.6     Survival. The provisions of Section 10 shall survive any
termination of this Agreement. Each Indemnified Party's rights under Section 10
shall not be deemed to have been waived or otherwise affected by such
Indemnified Party's waiver of the breach of any representation, warranty,
agreement or covenant contained in or made pursuant this Agreement, unless such
waiver expressly and in writing also waives any or all of the Indemnified
Party's right under Section 10.

                                   SECTION 11

TERMINATION

         11.1     Termination. The term of this Agreement shall begin upon the
Closing Date and, unless sooner terminated as hereinafter provided, shall end
upon the expiration of the last Patent to expire or, if later, the expiration of
any other patent resulting from the development process

                                      -27-

<PAGE>   31

contemplated hereby. Notwithstanding the foregoing, this Agreement may be
terminated as follows:

                  (1)    Termination for Insolvency. If either Schwarz or CIMA
         (i) makes a general assignment for the benefit of creditors or becomes
         insolvent; (ii) files an insolvency petition in bankruptcy; (iii)
         petitions for or acquiesces in the appointment of any receiver, trustee
         or similar officer to liquidate or conserve its business or any
         substantial part of its assets; (iv) commences under the laws of any
         jurisdiction any proceeding involving its insolvency, bankruptcy,
         reorganization, adjustment of debt, dissolution, liquidation or any
         other similar proceeding for the release of financially distressed
         debtors; or (v) becomes a party to any proceeding or action of the type
         described above in (iii) or (iv) and such proceeding or action remains
         undismissed or unstayed for a period of more than 60 days, then the
         other party may by written notice terminate this Agreement in its
         entirety with immediate effect.

                  (2)    Termination for Default. Schwarz and CIMA each shall
         have the right to terminate this Agreement for default upon the other's
         failure to comply in any material respect with the terms and conditions
         of this Agreement. At least 60 days prior to any such termination for
         default, the party seeking to so terminate shall give the other written
         notice of its intention to terminate this Agreement in accordance with
         the provisions of this Section 11.1(b), which notice shall set forth
         the default(s) which form the basis for such termination. If the
         defaulting party fails to correct such default(s) within 60 days after
         receipt of notification, then such party immediately may terminate this
         Agreement. This Section 11.1(b) shall not be exclusive and shall not be
         in lieu of any other remedies available to a party hereto for any
         default hereunder on the part of the other party.

                  (3)    Continuing Obligations. Termination of this Agreement
         for any reason shall not relieve the parties of any obligation accruing
         prior thereto with respect to the Product and any ongoing obligations
         hereunder with respect to the remaining Product and shall be without
         prejudice to the rights and remedies of either party with respect to
         any antecedent breach of the provisions of this Agreement. Without
         limiting the generality of the foregoing, no termination of this
         Agreement, whether by lapse of time or otherwise, shall serve to
         terminate the obligations of the parties hereto under Sections 5.8,
         9.3, 9.4, 9.5, 9.7, 9.9(a), 10, 11.1(c) and 12 hereof, and such
         obligations shall survive any such termination.

                                   SECTION 12

MISCELLANEOUS

                                      -28-

<PAGE>   32

         12.1     Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that neither CIMA nor
Schwarz may assign any of its rights, duties or obligations hereunder without
the prior written consent of the other, which consent shall not be unreasonably
withheld, except that no prior written consent shall be required in the event
that a third party acquires substantially all of the assets or outstanding
shares of, or merges with, Schwarz or CIMA, as the case may be.

         12.2     Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or facsimile and confirmed in writing, or
mailed first class, postage prepaid, by registered or certified mail, return
receipt requested (mailed notices and notices sent by facsimile shall be deemed
to have been given on the date received) as follows:

         If to CIMA, as follows:

                  CIMA LABS INC.
                  10000 Valley View Road
                  Eden Prairie, MN  55344
                  Facsimile:  952-947-8770
                  Attention:  President and CEO

         If to Schwarz, as follows:

                  Schwarz Pharma, Inc.
                  6140 West Executive Drive
                  Mequon, Wisconsin  53092
                  Facsimile:  262-242-1641
                  Attention:  General Counsel

or in any case to such other address or addresses as hereafter shall be
furnished as provided in this Section 12.2 by any party hereto to the other
party.

         12.3     Waiver; Remedies. Any term or provision of this Agreement may
be waived at any time by the party entitled to the benefit thereof by a written
instrument executed by such party. No delay on the part of CIMA or Schwarz in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of either CIMA or Schwarz of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. The
indemnification provided in Section 10 shall be the sole remedy available

                                  -29-
<PAGE>   33

for any Damages arising out of or in connection with this Agreement except for
any rights or remedies which the parties hereto may otherwise have in equity.

         12.4     Survival of Representations. Each of the representations and
warranties made in this Agreement shall continue for the term of this Agreement
and shall thereafter be extinguished.

         12.5     Independent Contractors. The parties hereto are independent
contractors and nothing contained in this Agreement shall be deemed to create
the relationship of partners, joint venturers, or of principal and agent,
franchisor and franchisee, or of any association or relationship between the
parties other than as expressly provided in this Agreement. Schwarz acknowledges
that it does not have, and Schwarz shall not make representations to any third
party, either directly or indirectly, indicating that Schwarz has any authority
to act for or on behalf of CIMA or to obligate CIMA in any way whatsoever. CIMA
acknowledges that it does not have, and it shall not make any representations to
any third party, either directly or indirectly, indicating that it has any
authority to act for or on behalf of Schwarz or to obligate Schwarz in any way
whatsoever.

         12.6     Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements or understandings of the parties relating
thereto.

         12.7     Amendment.  This Agreement may be modified or amended only by
written agreement of the parties hereto.

         12.8     Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.

         12.9     Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York excluding any choice of law
rules which may direct the application of the law of another state.

         12.10    Arbitration. Any dispute, controversy or claim arising out of
or in connection with this Agreement shall be determined and settled by
arbitration in New York, New York, pursuant to the Rules of Arbitration then in
effect of the American Arbitration Association. Any award rendered shall be
final and conclusive upon the parties and a judgment thereon may be entered in a
court having competent jurisdiction. Any arbitration hereunder shall be (i)
submitted to an arbitration tribunal comprised of three (3) independent members
knowledgeable in the pharmaceutical industry, one of whom shall be selected by
Schwarz, one of whom shall be selected by CIMA, and one of whom shall be
selected by the other two arbitrators; (ii) allow for the parties to request
discovery pursuant to the rules then in effect under the Federal Rules of Civil
Procedure for a period not to exceed 90 days; and (iii) require the award to be
accompanied

                                      -30-

<PAGE>   34

by findings of fact and a statement of reasons for the decision. Each party
shall bear its own costs and expenses, including attorney's fees incurred in any
dispute which is determined and/or settled by arbitration pursuant to this
Section. Except where clearly prevented by the area in dispute, both parties
agree to continue performing their respective obligations under this Agreement
while the dispute is being resolved. Arbitration shall not prevent any party
from seeking injunctive relief where such remedy is an appropriate form of
remedy under the circumstances.

         12.11 Captions. All section titles or captions contained in this
Agreement, in any Schedule referred to herein or in any Exhibit annexed hereto,
and the table of contents, if any, to this Agreement are for convenience only,
shall not be deemed a part of this Agreement and shall not affect the meaning or
interpretation of this Agreement.

         12.12 No Third-Party Rights. No provision of this Agreement shall be
deemed or construed in any way to result in the creation of any rights or
obligation in any Person not a party or not affiliated with a party to this
Agreement.

         12.13 Severability. If any provision of this Agreement is found or
declared to be invalid or unenforceable by any court or other competent
authority having jurisdiction, such finding or declaration shall not invalidate
any other provision hereof, and this Agreement shall thereafter continue in full
force and effect.

         12.14 Attachments. All Schedules, Exhibits and other attachments to
this Agreement are by this reference incorporated herein and made a part of this
Agreement.

         12.15 Force Majeure. In the event that a party is prevented from
carrying out its obligations under this Agreement by an event of Force Majeure,
then such party's performance of its obligations under this Agreement shall be
excused during the period of such event and for a subsequent reasonable period
of recovery.

                                      -31-

<PAGE>   35

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.

                                             CIMA LABS INC.

                                             By: /s/ John Siebert
                                                --------------------------------
                                                Name:    John Siebert Ph.D.
                                                Title:   President and CEO

                                             SCHWARZ PHARMA, INC.

                                             By: /s/ Ron Stratton
                                                 -------------------------------
                                                 Name:    Ron Stratton
                                                 Title:   President and COO

<PAGE>   36

                                                                 Schedule 2.4 to
                                                             Development License
                                                            and Supply Agreement

           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
      SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] EXTENDED
                               RELEASE TERM SHEET

I.  Royalties:                    Tiers of [***CONFIDENTIAL TREATMENT REQUESTED,
                                  PORTION OMITTED FILED SEPARATELY WITH THE
                                  SECURITIES AND EXCHANGE COMMISSION.***], with
                                  Annual Net
                                  Sales thresholds TBD
II. COGs:                         TBD
III. Product Specifications:      TBD
IV.  Development Schedule and Performance Milestones:

                                                           COMPLETION DATE FOR
DEVELOPMENT ACTIVITY PHASES                                DEVELOPMENT PHASE

1)  Prototype Development                                  TBD
Extended release coating & formulation development - Analytical methods
development - Methods validation - Excipient compatibility - Final prototype:
Initiation of accelerated stability study, and a room temperature stability
study.

2)  Stability Data                                         TBD
Acceptable 3 month stability data on prototype batch

3)  Process Optimization                                   TBD
Scale-up, demonstration batch stability, and process validation (finished
product and coated active) - Initial scale-up activities - Full scale
experimental batch - Demonstration batch - Initiation and acceptable 3 month
data from demonstration batch, blister package stability studies as per agreed
upon stability protocol - Process Validation

4)  Process Validation stability                               TBD
Initiation of blister stability studies on process validation batches (total 3
studies) as per agreed upon stability protocol

Milestone Payments

                           (a) Schwarz shall pay to CIMA each of the milestone
payments set forth below (each a "Milestone Payment") promptly after CIMA
demonstrates the Satisfactory Completion (as defined below) of the research and
development milestone (each a "Milestone") set forth opposite such Milestone
Payment:

         Earned upon signing but payable                               ###
             90 days after Effective Date
         Completion of Development

<PAGE>   37

         Activity Phases 1 & 2                                    ###
         Completion of Development of
         Phase 3 (Product acceptable for Launch)                       ###

         ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

                  (b) Promptly after the completion of each Milestone, CIMA
shall notify Schwarz of such completion and shall provide Schwarz sufficient
written materials to allow Schwarz to evaluate whether or not such Milestone has
been Satisfactorily Completed. Unless CIMA satisfactorily completes a Milestone
within 60 days after the deadline therefor, the underlying Milestone shall have
been deemed not to be Satisfactorily Completed for purposes of paragraph (a)
above and Schwarz's obligation to make the related Milestone Payment shall
terminate and be deemed waived by CIMA. For purposes of this term sheet and as
to any Milestone described herein, "Satisfactory Completion" shall mean the
completion of such Milestone in a manner which is (i) appropriate to support the
commercialization of the Product and (ii) consistent with this Agreement.

<PAGE>   38

                                                                 Schedule 2.5 to
                                                             Development License
                                                            and Supply Agreement

                        Minimum Annual Net Sales Targets

Subject to Section 4.1(c), Schwarz shall endeavor to meet or exceed the minimum
Annual Net Sales targets set forth below. References to Years below are to full
calendar years after the Year in which the Product is Launched.
<TABLE>
<CAPTION>

Year                                Minimum Annual Net Sales Target
----                                -------------------------------
<S>                                 <C>
Year 1                                      ###
Year 2                                      ###
Year 3                                      ###
Year 4                                      ###
Year 5                                      ###
</TABLE>

###     - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
          SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

<PAGE>   39

                                                                 Schedule 3.1 to
                                                             Development License
                                                            and Supply Agreement
                              Development Schedule

<TABLE>
<CAPTION>
              ------------------------------------------------------------------- -----------------------------
              <S>                                                                 <C>
                                                                                  COMPLETION DATE FOR
              DEVELOPMENT ACTIVITY PHASES                                         DEVELOPMENT PHASE*
              ------------------------------------------------------------------- -----------------------------
              1)       Prototype Development                                      ###
              ------------------------------------------------------------------- -----------------------------
                    - Formulation development**
                    - Analytical methods development
                    - Methods validation
                    - Excipient compatibility
                    - Final prototype:
                          Initiation of accelerated stability, and a room
                          temperature bulk stability study.
              ------------------------------------------------------------------- -----------------------------
              2)       Acceptable 3 month stability data on prototype batch in    ###
                       blisters and bulk
              ------------------------------------------------------------------- -----------------------------

              3)       Process optimization, scale-up, demonstration batch        ###
                       stability and process validation
              ------------------------------------------------------------------- -----------------------------

                    - Initial scale-up activities
                    - Full scale experimental batch
                    - Demonstration batch
                    - Initiation and acceptable 3  month data from
                         demonstration batch and blister package stability
                         studies as per mutually agreed upon stability protocol
                    -  Process Validation
              ------------------------------------------------------------------- -----------------------------

              4)       Process Validation Stability                               ###
                    -  Initiation of blister stability studies on process
                         validation batches (total 3 studies) as per mutually
                         agreed upon stability protocol
              ------------------------------------------------------------------- -----------------------------
</TABLE>

###     - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
          WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

*These are the completion dates if direct blending or geometric dilution
techniques yield acceptable tablet content uniformity. Otherwise, 8 additional
weeks will be added to the completion date schedules of Development Activity
Phases 1 and 2, and 4 weeks shall be added to the completion date schedule of
Development Activity Phase 3.

**   Schwarz shall increase the applicable milestone referenced in Schedule
     4.1(b) by [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] if any process
     other than milling or geometric dilution are needed to meet the CU
     requirements.

<PAGE>   40

                                                                 Schedule 4.1(a)
                                                      to Development License and
                                                                Supply Agreement

                                  Royalty Rates

      In any Year, Schwarz shall pay to CIMA a percentage of Annual Net Sales,
if any, actually recorded during such Year, as indicated on the following
schedule.

<TABLE>
<CAPTION>

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

                                  ANNUAL NET SALES                           ROYALTY
                      ----------------------------------------- ----------------------------------
                      <S>                                       <C>
                      Less than $4,000,000                                    ###
                      ----------------------------------------- ----------------------------------

                      Greater than $4,000,000,                                ###
                        Less than $15,000,000
                      ----------------------------------------- ----------------------------------

                      Greater than $15,000,000                                ###
                      ----------------------------------------- ----------------------------------
</TABLE>

###      - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
           SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

      Schwarz shall pay the royalty payment due in respect of any Quarter (a
"Quarterly Installment") by remitting a check, together with the report required
by Section 4.3, to CIMA within 60 days after the end of each Quarter during such
Year. For purposes of determining the royalty payment pursuant to this Schedule
4.1(a) the amount of each Quarterly Installment shall be calculated based on
actual Net Sales recorded during such Quarter.

<PAGE>   41

                                                                 Schedule 4.1(b)
                                                         to Development, License
                                                            and Supply Agreement

                               Milestone Payments

      (a) Subject to paragraph (b) of this Schedule 4.1(b), Schwarz shall pay to
CIMA any of the milestone payments set forth below (each a "Milestone Payment")
promptly after CIMA demonstrates the Satisfactory Completion (as defined below)
of the research and development milestone (each a "Milestone") set forth
opposite such Milestone Payment:

<TABLE>

<S>                                                                                    <C>
     Earned on signing and payable within 90 days of the date hereof                   ###

     Timely and satisfactory completion of Development Activity                        ### *
     Phases 1 & 2
                                                                                       ###
     Timely and satisfactory completion of Development Activity
     Phase 3 (Product acceptable for Launch)

     * Schwarz shall increase the applicable milestone referenced in
     Schedule 4.1(b) by ### if any process other than milling or geometric
     dilution are needed to meet the CU requirements.
</TABLE>

###     - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
          WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

      (b) Promptly after the completion of each Milestone, CIMA shall notify
Schwarz of such completion and shall provide Schwarz sufficient written
materials (a "Milestone Notice") to allow Schwarz to evaluate whether or not
such Milestone has been Satisfactorily Completed. Unless CIMA satisfactorily
completes a Milestone within 60 days after the deadline therefor, as stated in
Schedule 3.1, the underlying Milestone shall have been deemed not to be
Satisfactorily Completed for purposes of paragraph (a) above and Schwarz's
obligation to make the related Milestone Payment shall terminate and be deemed
waived by CIMA. As to any Milestone, "Satisfactory Completion" shall mean the
completion of such Milestone in a manner which is (i) appropriate to support the
commercialization of the Product and (ii) consistent with this Agreement.

<PAGE>   42

                                                                 Schedule 5.1(b)
                                                         to Development, License
                                                            and Supply Agreement

                             Schwarz Purchase Order

                                 [See Attached]

<PAGE>   43

                                                              Schedule 5.4(d) to
                                                            Development, License
                                                            and Supply Agreement

                           Quality Assurance Addendum

                      [To be mutually agreed by parties on
                          or prior to October 31, 2000]

<PAGE>   44

                                                                    Schedule 5.3
                                                         to Development, License
                                                            and Supply Agreement

                                  Cost of Goods

      Schwarz shall pay to CIMA the amounts indicated on the following schedule
in respect of CIMA's manufacturing obligations hereunder. Such payment shall be
made in accordance with Section 5.6.

         SAMPLES
<TABLE>
<CAPTION>

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

                                                                        Volumes
         -------------------------------------------- --------------------------------------------
         <S>                                          <C>                    <C>
                                                      20MM max.
                                                      per year
         -------------------------------------------- ---------------------- ---------------------

         costs per tablet                             ###*
         -------------------------------------------- ---------------------- ---------------------
</TABLE>

         PLACEBOS

<TABLE>
<CAPTION>
         -------------------------------------------- --------------------------------------------

                                                                         Volumes
         -------------------------------------------- --------------------------------------------
         <S>                                          <C>

         Bulked, cost per tablet                      ###
         -------------------------------------------- --------------------------------------------
</TABLE>

         TRADE
<TABLE>
<CAPTION>

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

                                                                        Volumes
         -------------------------------------------- --------------------------------------------
         <S>                                          <C>                    <C>

         Configuration                                <30MM                  >30MM
         -------------------------------------------- ---------------------- ---------------------

         Bulked, cost per tablet                      ###                    ###
         -------------------------------------------- ---------------------- ---------------------

         5 cards of 6 cartoned, cost per              ###                    ###
         tablet
         -------------------------------------------- ---------------------- ---------------------

         Bottles of 100, cost per tablet **           ###                    ###
         -------------------------------------------- ---------------------- ---------------------
</TABLE>

###     - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
        WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

              *      To be [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                     FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                     COMMISSION.***] per tablet for the initial 6,132,000
                     tablets.

              **     Complete finished package, only upon installation and
                     validation of bottling line at CIMA's facility.

<PAGE>   45

                                                    Schedules 9.9(a)(i) and (ii)
                                                         to Development, License
                                                            and Supply Agreement

                  COMPETITIVE PRODUCTS UNDER SECTION 9.9(a)(i)

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***]

                  COMPETITIVE PRODUCTS UNDER SECTION 9.9(a)(ii)

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***]<PAGE>   1
                                                                   EXHIBIT 10(b)

                                                      Amended as of May 16, 2000

                   STOCK OPTION PLAN OF DEARBORN BANCORP, INC.

Article I. - Purpose

     The purpose of the Stock Option Plan (the "Plan") of Dearborn Bancorp,
Inc., a Michigan corporation, is to enable key employees of the Company and its
subsidiaries to participate in the Company's future growth and profitability by
offering them long-term performance-based incentive compensation. The Plan also
provides a means through which the Company and its subsidiaries can attract and
retain key employees.

Article II. - Definitions

     2.1 The following terms have the meaning described below when used in the
Plan:

     (a). "Board of Directors" shall mean the Board of Directors of the Company.

     (b)  "Code" shall mean the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time.

     (c)  "Committee" shall mean the Stock Option Committee of the Board of
Directors.

     (d)  "Common Stock" shall mean the Common Stock of the Company.

     (e)  "Company" shall mean Dearborn Bancorp, Inc.

     (f)  "Fair Market Value" shall mean as of any given date the price
established and determined by the Board of Directors, provided, however, if the
Common Stock is traded in the over-the-counter market, fair market value shall
mean the closing price of the Common Stock, in such market rounded, if
necessary, to the next full one cent, or if there is no such price published,
then on the most recent preceding date on which such prices are published.

     (g)  "Incentive Stock Option" shall mean a stock option granted under
Article VI that is intended to meet the requirements of Section 422 of the Code.

                                       1
<PAGE>   2

     (h) "Non-Qualified Stock Option" shall mean a stock option granted under
Article VI that is not intended to be an Incentive Stock Option.

     (i) "Option" shall mean an Incentive Stock Option or Non-Qualified Stock
Option.

     (j) "Participant" shall mean an eligible employee who has been granted an
Option.

     (k) "Subsidiary" shall mean a corporation a majority of the outstanding
voting capital stock of which is owned by the Company.

Article III. - Administration

     3.1 Stock Option Committee. (a) The Stock Option Committee appointed by the
Board of Directors of the Company shall administer the Plan. The members of the
Committee shall not be eligible to receive an Option under the Plan. The
Committee shall have full power and authority, subject to such orders or
resolutions not inconsistent with the provisions of the Plan as may from time to
time be issued or adopted by the Board of Directors, to grant to eligible
employees Options under Article VI of the Plan, to interpret the provisions of
the Plan and any agreements relating to Options granted under the Plan and to
supervise the administration of the Plan.

     (b) Decisions of Committee. All decisions made by the Committee pursuant
to the provisions of the Plan and related resolutions of the Board of Directors
shall be final, conclusive and binding on all persons, including the Company,
its shareholders and employees, and beneficiaries of employees.

Article IV - Shares Subject to the Plan

     4.1 (a) Number of Shares. Subject to adjustment as provided for in Section
4.1(b), the maximum number of shares of Common Stock with respect to which
Options may be granted shall be 500,000 shares of Common Stock. Shares of Common
Stock shall be made available from the authorized but unissued shares of the
Company. If an Option granted under the Plan shall expire or terminate for any
reason, the shares subject to, but not delivered, under such Option shall be
available for other Options to be issued under the Plan.

                                       2
<PAGE>   3
     (b) Adjustments. All as may be deemed appropriate by the Committee, the
aggregate number of shares of Common Stock which may be issued under the Plan,
the number of shares covered by each outstanding Option, and the price per share
in each Option, shall all be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a subdivision or consolidation of shares or any other capital adjustment, a
stock split, the payment of a stock dividend, or other increase or decrease in
such shares effected without receipt of consideration by the Company.

Article V - Eligibility

     5.1 The persons eligible to participate in the Plan and receive Options
under the Plan shall consist of officers and other key employees of the Company
and its subsidiaries, including directors who are full time employees, as
determined by the Committee.

Article VI - Stock Options

     6.1 Grant of Options. Subject to the limitations of the Plan, the
Committee, after such consultation with and consideration of the recommendations
of management as the Committee considers desirable, shall select from eligible
employees Participants to be granted Options and determine the time when each
Option shall be granted and the number of shares subject to each Option. Options
may be either Incentive Stock Options or Non-Qualified Stock Options. An
employee may be granted multiple options under the Plan. The Committee may not
grant an employee Incentive Stock Options which in the aggregate are first
exercisable during any one calendar year with respect to Common Stock the
aggregate Fair Market Value of which (determined as of the time of grant)
exceeds $100,000.

     6.2 Option Agreements. Each Option under the Plan shall be evidenced by an
option agreement that shall be signed by an officer of the Company and the
Participant and shall contain such provisions as may be approved by the
Committee. Any such option agreement may be amended from time to time as
approved by the Committee and the Participant, provided that the terms of such
option agreement after being amended conform to the terms of the Plan.

                                       3
<PAGE>   4

     6.3 Option Price. The price at which shares may be purchased upon exercise
of an Option shall be not less than one hundred percent (100%) of the Fair
Market Value of such shares on the date such Option is granted.

     6.4 Exercise of Options.

     (a) The period during which each Option may be exercised shall be fixed by
the Committee at the time such Option is granted, but such period in no event
shall expire later than ten (10) years from the date the Option is granted.

     (b) Except as permitted by Sections 6.6 and 7.1, each Option may not be
exercised for a period of six months from the date the Option is granted and
then only during the continuance of the Participant's employment with the
Company or any of its subsidiaries. Subject to the foregoing limitations and the
terms and conditions of the option agreement and unless cancelled prior to
exercise, each Option shall be exercisable in whole or in part in installments
at such time or times as the Committee may prescribe and specify in the
applicable option agreement.

     (c) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment shall be made in cash or, at the discretion of the Committee,
through the delivery of shares of Common Stock of the Company with a value equal
to the total option price or a combination of cash and shares. Any shares so
delivered shall be valued at their Fair Market Value on the exercise date. No
Participant shall be deemed to be a holder of any shares subject to any Option
prior to the issuance of such shares upon exercise of such Option.

     6.5 Non-Transferability of Options. No Option or any rights with respect
thereto shall be subject to any debts or liabilities of a Participant, nor be
assignable or transferable except by Will or the laws of descent and
distribution, nor be exercisable during the Participant's lifetime other than by
the Participant, nor shall Common Stock be issued to or in the name of one other
than the Participant; provided, however, that an Option may after the death or
disability of a Participant be exercised pursuant to Section 6.6(b); and
provided further than any Common Stock issued to a Participant hereunder may at
the request of the Participant be issued in the names of the Participant and one
other person, as joint tenants with right of survivorship and not as tenants in
common, or in the name of a trust for the benefit of the Participant or for the
benefit of the Participant and others.

     6.6 Death and Disability. Subject to the condition that no Option may be
exercised in whole or in part after the expiration of the option period
specified in the applicable option agreement and subject further to the
requirement that a Participant may not exercise an Option within six months
following the grant of the Option:

                                       4
<PAGE>   5

     (a) Except as hereinafter provided, an Option may be exercised by the
Participant only while such Participant is in the employ of the Company or a
subsidiary. In the event that the employment of a Participant to whom an Option
has been granted under the Plan shall terminate (except as set forth below) such
Option may be exercised, to the extent that the Option was exercisable on the
date of termination of employment, only until the earlier of three (3) months
after such termination or the original expiration date of the Option; provided,
however, that if termination of employment results from death or total and
permanent disability, such three (3) month period shall be extended to twelve
(12) months; and provided, further, that any Option held by a Participant whose
employment shall be terminated either (i) for cause as determined by the
Committee or (ii) voluntarily by the Participant and without the consent of the
Company shall, to the extent not theretofore exercised, forthwith terminate.

     (b) In the event of the permanent disability of a Participant as determined
by the Committee, an Option which is otherwise exercisable may be exercised by
the Participant's legal representative or guardian. In the event of the death of
the Participant, an Option which is otherwise exercisable may be exercised by
the person or persons whom the Participant shall have designated in writing on
forms prescribed by and filed with the Committee ("Beneficiaries"), or, if no
such designation has been made, by the person or persons to whom the
Participant's rights shall have passed by Will or the laws of descent and
distribution ("Successors"). The Committee may require an indemnity and/or such
evidence or other assurances as it may deem necessary in connection with an
exercise by a legal representative, guardian, Beneficiary or Successor.

Article VII - General Provisions

     7.1 Change in Control.

     (a) In the case of a Change in Control (as defined below) of the Company,
unless the Committee determines otherwise, each Option then outstanding shall
immediately become exercisable in full.

     (b) Any determination by the Committee made pursuant to this Section may be
made as to all outstanding Options or only as to certain Options specified by
the Committee and any such determinations shall be made in cases covered by
subparagraphs 7.1(c)(i) and (ii) below prior to or as soon as practicable after
the occurrence of such event and in the cases covered by subparagraphs
7.1(c)(iii) or (iv) prior to the occurrence of such event.

                                       5
<PAGE>   6

     (c) A Change in Control shall occur if:

        (i) Any "person" or "group of persons" as such terms are defined in
Section 13(d) and 14(c) of the Securities Exchange Act of 1934 (the "Exchange
Act") directly or indirectly purchases or otherwise becomes the "beneficial
owner" (as defined in the Exchange Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercised immediately, with
the passage of time or subject to any condition) of voting securities
representing thirty percent (30%) or more of the combined voting power of all
outstanding voting securities of the Company,

     (ii) During any period of two consecutive years the individuals who at the
beginning of such period constitute the Board of Directors cease for any reason
to constitute at least the majority of the members thereof unless (1) there are
five or more directors then still in office who were directors at the beginning
of the period and (2) the election or the nomination for election by the
Company's shareholders of each new director was approved by at least two-thirds
(2/3) of the directors then still in office who were directors at the beginning
of the period,

     (iii) The shareholders of the Company shall approve an agreement to merge
or consolidate the Company with or into another corporation as a result of which
less than fifty percent (50%) of the outstanding voting securities of the
surviving or resulting entity are or are to be owned by the former shareholders
of the Company (excluding from former shareholders a shareholder who is or as a
result of the transaction in question, becomes an "affiliate" as defined in Rule
12b-2 under the Exchange Act of any party to such consolidation or merger), or

     (iv) The shareholders of the Company shall approve the sale of all or
substantially all of the Company's business and/or assets to a person or entity
that is not a wholly-owned subsidiary of the Company.

     7.2 No Right of Continued Employment. Neither the establishment of the
Plan, the granting of Options or the payment of any benefits hereunder or any
action of the Company or of the Board of Directors or of the Committee shall be
held or construed to confer upon any person any legal right to be continued in
the employ of the Company or its subsidiaries, each of which expressly reserves
the right to discharge any employee whenever the interest of any such company in
its sole discretion may so require without liability to such company, the Board
of Directors or the Committee except as to any rights that may be expressly
conferred upon such employee under the Plan.

                                       6
<PAGE>   7

     7.3 No Segregation of Cash or Shares. The Company shall not be required to
segregate any shares of Common Stock that may at any time be represented by
Options, and the Plan shall constitute an "unfunded" plan of the Company. No
employee shall have rights with respect to shares of Common Stock prior to the
delivery of such shares. The Company shall not, by any provisions of the Plan,
be deemed to be a trustee of any Common Stock or any other property and the
liabilities of the Company to any employee pursuant to the Plan shall be those
of a debtor pursuant to such contract obligations as are created by or pursuant
to the Plan, and the rights of any employee, former employee or beneficiary
under the Plan shall be limited to those of a general creditor of the Company.

     7.4 Delivery of Shares. No shares shall be delivered pursuant to any
exercise of an Option under the Plan unless the requirements of such laws and
regulations as may be deemed by the Committee to be applicable thereto are
satisfied. All certificates for shares of Common Stock delivered under the Plan
shall be subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

     7.5 Governing Law. The Plan and all determinations made and action taken
pursuant thereto shall be governed by the laws of the State of Michigan and
construed in accordance therewith.

     7.6 Payments and Tax Withholding. The delivery of any shares of Common
Stock under the Plan shall be for the account of the Company and any such
delivery or distribution shall not be made until the recipient shall have made
satisfactory arrangements for the payment of any applicable withholding taxes.

Article VIII - Amendment and Termination

     8.1 Amendment or Termination. The Board of Directors may amend or terminate
the Plan provided, however, that no such amendment or termination shall
adversely affect any Option then in effect unless the prior approval of the
Participant so affected is obtained and provided further that any amendment to
the Plan shall be subject to shareholder approval to the extent necessary to
satisfy the requirements of Section 16 under the Securities Exchange Act of
1934.

                                       7
<PAGE>   8

Article IX - Effectiveness of Plan

     9.1 The Plan was adopted by the Board of Directors on May 17, 1994 subject
to the approval by the shareholders of the Company.

Article X - Severability

     10.1 If any provision of the Plan, or any term or condition of any Option
granted thereunder, is invalid, such provision, term, condition or application
shall to that extent be void (or, in the discretion of the Board of Directors,
such provision, term or condition may be amended so as to avoid such invalidity
or failure), and shall not affect other provisions, terms or conditions or
applications thereof, and to this extent such provisions, terms and conditions
are severable.

                                       8

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