Document:

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                                                                    Exhibit 10.2

                                                                    CONFIDENTIAL

CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTION.

                             JOINT VENTURE AGREEMENT

                                      AMONG

                         GRELAN PHARMACEUTICAL CO., LTD.

                                       AND

                        BIONUMERIK PHARMACEUTICALS, INC.

                                 AUGUST 30, 2000
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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                             <C>
Recitals....................................................................     1

1.  Definitions.............................................................     2
    1.1   BNP7787 Products..................................................     2
    1.2   Karenitecin Products..............................................     2
    1.3   Mercedes Products.................................................     2
    1.4   PDE4 Products.....................................................     2
    1.5   COX-2 Products....................................................     3
    1.6   Venture Products BN...............................................     3
    1.7   Venture Products GR...............................................     3
    1.8   Venture Products..................................................     3
    1.9   BioNumerik Improvements...........................................     3
    1.10  Grelan Improvements...............................................     3
    1.11  Improvements......................................................     3
    1.12  BioNumerik Patent Rights..........................................     4
    1.13  Grelan Patent Rights..............................................     4
    1.14  Patent Rights.....................................................     4
    1.15  Patents...........................................................     4
    1.16  Know-How..........................................................     4
    1.17  Affiliate(s)......................................................     4
    1.18  Confidential Information..........................................     5
    1.19  Effective Date....................................................     5
    1.20  Government Regulatory Approvals...................................     5
    1.21  IND Submission....................................................     5
    1.22  New Drug Application Approval or NDA Approval.....................     5
    1.23  Steering Committee................................................     5
    1.24  Stock Purchase Agreement..........................................     6
    1.25  Sublicensee.......................................................     6
    1.26  Territory.........................................................     6
    1.27  Trademarks........................................................     6

2.  LICENSE GRANTS BY BIONUMERIK............................................     6
    2.1   Research and Development Grant....................................     6
    2.2   Grant to Market, Sell and Distribute..............................     6

3.  LICENSE GRANTS AND TRANSFER BY GRELAN...................................     7
    3.1   Research and Development Grant....................................     7
    3.2   Grant to Market, Sell and Distribute..............................     7
    3.3   Transfer Regarding Rights Under Existing BNP7787 Agreement........     7

4.  SUBLICENSES AND OTHER DISTRIBUTION METHODS FOR VENTURE PRODUCTS.........     8
    4.1   Distribution Methods and Branch Office............................     8
    4.2   Identification of Sublicensees....................................     8
    4.3   Right to Grant Sublicenses........................................     8
    4.4   Division of Sublicensing Fees and Other Payments..................     9
    4.5   Third Party Offers or Statements of Interest......................     9
</TABLE>

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<TABLE>
<S>                                                                             <C>
5.  RIGHTS OF FIRST REFUSAL FOR VENTURE PRODUCTS BN AND DEVELOPMENT RIGHTS..     9
    5.1   Right of First Refusal............................................     9
    5.2   Development Rights................................................    10
    5.3   Development Outside Territory.....................................    10

6.  INFORMATION SHARING AND DEVELOPMENT COSTS...............................    11
    6.1   Pre-Clinical Studies..............................................    11
    6.2   Government Approvals and Clinical Trials..........................    11
    6.3   Copies and Provision of Information...............................    13
    6.4   Supplies of Product for Pre-Clinical Studies and Clinical Trials..    14
    6.5   Provision of Know-How.............................................    14

7.  MANUFACTURING RIGHTS FOR VENTURE PRODUCTS AND

    PURCHASE OF APPROVED PRODUCTS BY THE VENTURE............................    15
    7.1   Manufacturing Rights for Venture Products BN .....................    15
    7.2   Manufacturing Rights for Venture Products GR .....................    16
    7.3   Distribution and Sale of Venture Products ........................    17
    7.4   Commercial Supply Arrangements ...................................    18
    7.5   Product Labeling .................................................    18

8.  STEERING COMMITTEE .....................................................    18
    8.1   Formation and Composition.........................................    18
    8.2   Duties............................................................    19
    8.3   Meetings..........................................................    19
    8.4   Recommendation Regarding Management...............................    19
    8.5   Identification of Consultants.....................................    19

9.  DEVELOPMENT AND COMMERCIALIZATION PLAN..................................    19
    9.1   General Diligence Efforts.........................................    19
    9.2   Target Development and Commercialization Plan.....................    19

10. PATENT MATTERS..........................................................    20
    10.1  BioNumerik Patent Maintenance ....................................    20
    10.2  Grelan Patent Maintenance and Assistance .........................    20
    10.3  No Present Notification of Infringement- BioNumerik ..............    21
    10.4  No Present Notification of Infringement- Grelan ..................    21
    10.5  Enforcement of Patents and Proprietary Rights ....................    21

11. IMPROVEMENTS............................................................    22
    11.1  BioNumerik Improvements Included..................................    22
    11.2  Grelan Improvements Included......................................    23
    11.3  Joint Improvements................................................    23
    11.4  Sublicense of Improvements........................................    23

12. TRADEMARKS AND TRADEMARK RIGHT..........................................    24
    12.1  ..................................................................    24
    12.2  ..................................................................    24
    12.3  ..................................................................    24
</TABLE>

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<TABLE>
<S>                                                                             <C>
13. CONFIDENTIALITY.........................................................    24
    13.1  Confidential and Proprietary Information..........................    24
    13.2  Matters Not Included as Confidential Information..................    25
    13.3  Survival of Confidentiality.......................................    26

14. PROVISION FOR VENTURE FUNDING...........................................    26

15. ACCOUNTING..............................................................    26

16. USE OF NAMES............................................................    27

17. INDEMNIFICATION.........................................................    28
    17.1  BioNumerik Indemnification........................................    28
    17.2  Grelan Indemnification............................................    28
    17.3  KI Pharma Indemnification ........................................    28

18. DURATION AND TERMINATION OF AGREEMENT...................................    29
    18.1  Duration..........................................................    29
    18.2  Termination.......................................................    29
    18.3  Effect of Expiration or Termination...............................    30

19. BIONUMERIK REPRESENTATIONS & WARRANTIES.................................    32
    19.1  Due Organization and Authority....................................    32
    19.2  Safety of Product(s)..............................................    32
    19.3  No Pending Action Against BioNumerik..............................    32

20. Grelan Representations and Warranties...................................    33
    20.1  Due Organization and Authority....................................    33
    20.2  Safety of Product(s)..............................................    33
    20.3  No Pending Action Against Grelan..................................    33

21. ASSIGNMENTS.............................................................    33
    21.1  Assignment Restrictions...........................................    33
    21.2  Sale of Business..................................................    34
    21.3  Assignment to Affiliates..........................................    33

22. MISCELLANEOUS...........................................................    34
    22.1  Regulatory Communications.........................................    34
    22.2  Adverse Events....................................................    35
    22.3  Liability Insurance...............................................    35
    22.4  Litigation........................................................    35
    22.5  Auditors..........................................................    35
    22.6  Marketing Analysis and Reports....................................    35
    22.7  Notice / Reports..................................................    36
    22.8  Severability......................................................    36
    22.9  Counterparts......................................................    36
    22.10 Warranty Disclaimer...............................................    37
    22.11 Force Majeure.....................................................    37
    22.12 Arbitration.......................................................    37
</TABLE>

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<S>                                                                             <C>
    22.13 Export Controls...................................................    38
    22.14 Construction / Jurisdiction / Official Language...................    38

23. ENTIRE AGREEMENT........................................................    38

24. CAPTIONS................................................................    39

SIGNATURES..................................................................    39

ATTACHMENT A-1..............................................................    41
ATTACHMENT A-2..............................................................    42
ATTACHMENT A-3..............................................................    43
ATTACHMENT A-4..............................................................    44
ATTACHMENT A-5..............................................................    45
ATTACHMENT B-1..............................................................    46
ATTACHMENT B-2..............................................................    47
ATTACHMENT C ...............................................................    48
ATTACHMENT D................................................................    50
ATTACHMENT E................................................................    52
ATTACHMENT F................................................................    54
ATTACHMENT G................................................................    72
</TABLE>

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                                    AGREEMENT

      THIS JOINT VENTURE AGREEMENT ("Agreement") is made and entered into
effective as of August 30, 2000, by and between BIONUMERIK PHARMACEUTICALS,
INC., a Texas corporation, with its office located at 8122 Datapoint Drive,
Suite 1250, San Antonio, Texas 78229, U.S.A. (hereinafter referred to as
"BIONUMERIK") and GRELAN PHARMACEUTICAL CO., LTD., a Japanese corporation having
its place of business at Ogura Bldg. 5F, Nihonbashi Kobunacho 6-6, Chuo-ku,
Tokyo 103-0024, Japan (hereinafter referred to as "GRELAN").

                                R E C I T A L S:

      WHEREAS, GRELAN and BIONUMERIK intend to create a Delaware limited
liability company to be called KI Pharmaceuticals, L.L.C. (hereinafter referred
to as "KI PHARMA" or the "Venture") for the purpose of developing, marketing,
distributing, manufacturing and selling certain specified products in the
territory of Japan.

      WHEREAS, as described in the organization documents of KI PHARMA, KI
PHARMA will be owned 50% by BIONUMERIK, 49% by GRELAN, and 1% by Dr. Hashime
Kanazawa.

      WHEREAS, additional information describing the ownership, management,
officers, allocation of profits, and other allocations and distributions
regarding KI PHARMA will be contained in an Operating Agreement of KI PHARMA
(the "Operating Agreement"), the terms of which will be agreed to by BIONUMERIK
and GRELAN.

      WHEREAS, GRELAN and BIONUMERIK are parties to a collaboration agreement
dated as of May 28, 1996 and amended as of June 8, 1999 regarding the BNP7787
Products (as defined below) and related technology (the "Existing Agreement")
and the parties wish that GRELAN transfer certain rights it has thereunder to KI
PHARMA, without prejudice to any and all rights GRELAN or BIONUMERIK may retain,
and thereafter the Existing Agreement is immediately terminated, as described in
detail in Section 3.3 below.
<PAGE>
      WHEREAS, following creation of KI PHARMA and signing of the Operating
Agreement, KI PHARMA will agree to be bound by the terms of this Agreement.

      WHEREAS, the parties wish to enter into this Agreement to evidence the
license and transfer of certain rights to KI PHARMA and to specify certain
commitments, rights and obligations of the parties in connection with the
Venture.

      WHEREAS, the licenses and other rights granted by GRELAN and BIONUMERIK
herein are granted subject to the obligations to make payments and take other
actions provided by the parties herein.

      NOW, THEREFORE, in consideration of the terms, conditions and agreements
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:

      1. DEFINITIONS. When used in this Agreement, each of the following defined
terms shall have the meanings set forth in this Section. There are other terms
defined in this Agreement parenthetically, and such terms shall have the
meanings apparent from the context in which such terms are parenthetically
defined.

            1.1 "BNP7787 Products" means the compounds, pharmaceutical
formulations, and technology described in Attachment A-1 hereto.

            1.2 "Karenitecin Products" means the compounds, pharmaceutical
formulations, and technology described in Attachment A-2 hereto.

            1.3 "[**]" means the pharmaceutical formulations and related
technology described in Attachment A-3 hereto.

            1.4 "PDE4 Products" means the compounds, pharmaceutical
formulations, and technology described in Attachment A-4 hereto.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       2
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            1.5   "COX-2 Products" means the compounds, pharmaceutical
formulations, and technology described in Attachment A-5 hereto.

            1.6   "Venture Products BN" means the [**].

            1.7   "Venture Products GR" means the [**].

            1.8 "Venture Products" means the Venture Products BN and the Venture
Products GR.

            1.9 "BioNumerik Improvements" means any and all inventions,
developments, discoveries and improvements directly relating to Venture
Products, including, without limitation, formulae, specifications, designs,
chemical and physical data, clinical data, and information concerning synthesis,
processes, formulations, applications, toxicity, operations, regulatory affairs
and marketing, that are developed by or for BIONUMERIK subsequent to the date of
this Agreement and during the term of this Agreement, subject in all cases to
any restrictions that may exist on the ability of BIONUMERIK to license such
inventions, developments, discoveries or improvements to KI PHARMA and/or
GRELAN, as applicable, in or outside the Territory.

            1.10 "Grelan Improvements" means any and all inventions,
developments, discoveries, and improvements directly relating to Venture
Products, including, without limitation, formulae, specifications, designs,
chemical and physical data, clinical data, and information concerning synthesis,
processes, formulations, applications, toxicity, operations, regulatory affairs
and marketing, that are developed by or for GRELAN subsequent to the date of
this Agreement and during the term of this Agreement, subject in all cases to
any restrictions that may exist on the ability of GRELAN to license such
inventions, developments, discoveries or improvements to KI PHARMA and/or
BIONUMERIK, as applicable, in or outside the Territory.

            1.11   "Improvements" means the BioNumerik Improvements and the
Grelan Improvements.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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            1.12 "BioNumerik Patent Rights" means those exclusive rights granted
in Japan to BIONUMERIK, that follow from any of the patent applications referred
to in Attachment B-1 hereto or from any reissue, reexamination, continuation,
divisional, continuation-in-part, utility model, or any other patent application
in Japan of BIONUMERIK whose claimed subject matter covers any of the Venture
Products BN, processes to make any of the Venture Products BN, or their use.
BIONUMERIK's current patent applications in Japan relating to the Venture
Products BN and their uses are identified in Attachment B-1 hereto.

            1.13 "Grelan Patent Rights" means those exclusive rights granted in
Japan to GRELAN, that follow from any of the patent applications referred to in
Attachment B-2 hereto or from any reissue, reexamination, continuation,
divisional, continuation-in-part, utility model, or any other patent application
in Japan of GRELAN whose claimed subject matter covers any of the Venture
Products GR, processes to make any of the Venture Products GR, or their use.
GRELAN's current patent applications in Japan relating to the Venture Products
GR and their uses are identified in Attachment B-2 hereto.

            1.14 "Patent Rights" means the BioNumerik Patent Rights and the
Grelan Patent Rights.

            1.15 "Patents" means those patents embodying the Patent Rights in
the Territory.

            1.16 "Know-How" means all data and information owned by BIONUMERIK
and/or GRELAN, as the case may be, and directly relating to the Venture
Products, including, without limitation, formulae, specifications, designs,
chemical and physical data, clinical data, information concerning synthesis,
processes, formulations, applications, administration to patients, clinical
protocols, toxicity, operations, regulatory affairs and marketing, that have
been developed by or for BIONUMERIK and/or GRELAN, as the case may be, on or
before the date of this Agreement and which is useful in the development,
manufacture or sale of the Venture Product(s) in the Territory, subject in all
cases to any restrictions that may exist on the ability of BIONUMERIK and
GRELAN, as applicable, to license such Know-How to KI PHARMA, BIONUMERIK and/or
GRELAN, as applicable, in or outside the Territory.

            1.17 "Affiliates " means, with respect to each party, any
organization, company, firm, or other entity which controls, is controlled by,
or is under common control with said party. A company shall be deemed to have
control of another if it owns directly or indirectly a majority of the voting
shares of or is entitled directly or indirectly to appoint a majority of the
directors of the other company.

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            1.18 "Confidential Information" means all information which is of a
confidential and proprietary nature, including without limitation, trade
secrets, inventions and unpatented Know-How and Improvements and related
technology, and any and all material information which any of the parties hereto
may acquire concerning the financial, business and marketing goals and plans of
the other parties, including the terms of this Agreement.

            1.19 "Effective Date" means the first date after which all of the
following have occurred: (a) KI PHARMA has been formed, (b) the Operating
Agreement has been signed by GRELAN, BIONUMERIK and Dr. Hashime Kanazawa, (c)
the Stock Purchase Agreement (hereinafter defined) has been signed by GRELAN and
BIONUMERIK and GRELAN has purchased BIONUMERIK preferred stock in accordance
with the terms of the Stock Purchase Agreement, and (d) KI PHARMA has agreed to
be bound as an additional party to this Agreement.

            1.20 "Government Regulatory Approvals" means all government
approvals, health registrations and/or permits, including NDA Approvals,
required for import into or manufacture in the Territory and sale and
distribution in the Territory of Venture Products.

            1.21 "IND Submission" with respect to a Venture Product means
submission of an Investigational New Drug regulatory application ("Chiken
Todoke" corresponding to an IND application in the U.S.) to authorities for
approval to initiate any new phase of human trials of the product in a
jurisdiction in the Territory.

            1.22 "New Drug Application Approval" or "NDA Approval" means
approval from the Japanese Ministry of Health and Welfare or other applicable
regulatory body, as the case may be, of a New Drug Application which authorizes
or allows the import to or manufacture in the Territory of and sale in the
Territory of a Venture Product.

            1.23 "Steering Committee" means the Steering Committee of KI PHARMA,
as such committee is further described in Section 8 hereof.

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            1.24 "Stock Purchase Agreement" means that certain Stock Purchase
Agreement to be entered into by GRELAN and BIONUMERIK providing for the purchase
by GRELAN of U.S. $4 million of BioNumerik Series G Preferred Stock.

            1.25 "Sublicensee" means an entity to whom KI PHARMA has granted
pursuant to Section 4.3 or 5.1 a sublicense to develop, market, sell, distribute
or otherwise commercially dispose of Venture Products within the Territory,
based on KI PHARMA's exclusive license set forth in Sections 2.2 and 3.2 and its
rights transferred by GRELAN under Section 3.3.

            1.26 "Territory" means Japan and any of its possessions or
territories.

            1.27 "Trademarks" means (i) the brand name(s) selected by KI PHARMA,
with the approval of BIONUMERIK and GRELAN, for Venture Products in the
Territory, and (ii) all Katakana or Hiragana transliterations of the names
referenced above, and all equivalents thereof, for use with Venture Products.

      2. LICENSE GRANTS BY BIONUMERIK.

             2.1 Research and Development Grant. Effective as of the Effective
Date, BIONUMERIK hereby grants to KI PHARMA and GRELAN an exclusive license
under the BioNumerik Patent Rights, Know-How and BioNumerik Improvements to
conduct and have conducted research and development of the Venture Products BN
in the Territory for the purpose of obtaining Government Regulatory Approvals in
the Territory.

            2.2 Grant to Market, Sell and Distribute. Effective as of the
Effective Date, BIONUMERIK hereby grants to KI PHARMA an exclusive license under
the BioNumerik Patent Rights, Know-How, BioNumerik Improvements and Trademarks
to import Venture Products BN into the Territory and/or market, sell, distribute
or otherwise commercially dispose of Venture Products BN in the Territory during
the term of this Agreement. Except as otherwise provided in this Agreement, (a)
BIONUMERIK shall not, without prior written consent from GRELAN, directly or
indirectly, except through KI PHARMA, import Venture Products BN into the
Territory nor distribute or sell Venture Products BN in the Territory, and (b)
KI PHARMA and GRELAN without prior written consent from BIONUMERIK shall not
directly or

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indirectly manufacture Venture Products BN in the Territory or develop,
manufacture, promote, distribute or sell Venture Products BN outside the
Territory or export Venture Products BN from the Territory.

      3. LICENSE GRANTS AND TRANSFER BY GRELAN.

            3.1 Research and Development Grant. Effective as of the Effective
Date, GRELAN hereby grants to KI PHARMA an exclusive license under the Grelan
Patent Rights, Know-How and Grelan Improvements to conduct and have conducted
research and development of the Venture Products GR in the Territory for the
purpose of obtaining Government Regulatory Approvals in the Territory.

            3.2 Grant to Market, Sell and Distribute. Effective as of the
Effective Date, GRELAN hereby grants to KI PHARMA an exclusive license under the
Grelan Patent Rights, Know-How, Grelan Improvements and Trademarks to market,
sell, distribute or otherwise commercially dispose of Venture Products GR in the
Territory during the term of this Agreement. Except as otherwise provided in
this Agreement, (a) GRELAN shall not directly or indirectly, except through KI
PHARMA, distribute or sell Venture Products GR in the Territory, and (b) KI
PHARMA and BIONUMERIK shall not directly or indirectly develop or manufacture
Venture Products GR in the Territory, import Venture Products GR into the
Territory or develop, manufacture, promote, distribute or sell Venture Products
GR outside the Territory or export Venture Products GR from the Territory.

            3.3 Transfer Regarding Rights Under Existing BNP7787 Agreement.
Effective as of the Effective Date, GRELAN hereby transfers to KI PHARMA all
rights with respect to the import, marketing, sale, distribution or disposal of
the BNP7787 Products under the Existing Agreement. Following the Effective Date,
all other rights and obligations under such Existing Agreement shall terminate,
provided that (i) BIONUMERIK shall have no obligation to repay any amounts
previously paid by GRELAN under such Existing Agreement, (ii) BIONUMERIK shall
continue after the Effective Date to have the right to use all data and results
obtained from the pre-clinical and non-clinical studies and clinical trials
obtained by GRELAN under the Existing Agreement up to the execution of this
Agreement, and (iii) the confidentiality obligations of GRELAN and BIONUMERIK
contained in the Existing Agreement shall remain and continue in full force and
effect in accordance with their terms. In addition, GRELAN shall have the right
to negotiate in the future with KI PHARMA to obtain an exclusive sublicense to
market, sell, promote and distribute (a) the BNP7787 Products in the Territory,
and (b) the PDE4 Products and the COX-2 Products in the Territory and GRELAN
shall retain the exclusive right to develop (i) the BNP7787

                                       7
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Products in the Territory and (ii) the PDE4 Products and the COX-2 Products in
the Territory, subject in all cases to GRELAN's performance of product
development in the Territory and the approval rights contained in Section 4.3
hereof (including BIONUMERIK's right to approve the terms of any sublicense by
KI PHARMA to GRELAN of the right to market, sell, promote, distribute or
otherwise commercially dispose of the BNP7787 Products in the Territory).

      4. SUBLICENSES AND OTHER DISTRIBUTION METHODS FOR VENTURE PRODUCTS.

            4.1 Distribution Methods and Branch Office. The method in which KI
PHARMA will market, sell, distribute or otherwise commercially dispose of
Venture Products in the Territory is described in Section 7.3 hereof. If KI
PHARMA establishes or otherwise owns an Affiliate in the Territory, such
Affiliate may become a Sublicensee, subject to the prior written consent of the
parties hereto. A Japanese branch office or other office of KI PHARMA will be
established as quickly as possible after the Effective Date, in the premises of
GRELAN in Nihonbashi, Chuo-ku, Tokyo, Japan.

            4.2 Identification of Sublicensees. [**] (or another designated
qualified senior management employee of GRELAN), at the request of the Steering
Committee, will have the responsibility to identify and present to KI PHARMA
potential third parties to sublicense certain Venture Products for the
Territory.

            4.3 Right to Grant Sublicenses. KI PHARMA shall have the right to
grant sublicenses to market, sell, distribute or otherwise commercially dispose
of Venture Products within the Territory subject to the following conditions:
(i) the parties hereto shall discuss in good faith with respect to the timing of
a formal request and authorization to pursue any potential sublicense by KI
PHARMA with respect to Venture Products but BIONUMERIK shall have the right to
decide such timing with respect to Venture Products BN, and GRELAN shall have
the right to decide such timing with respect to Venture Products GR; (ii) in
addition, (a) BIONUMERIK will have the final right and authority to accept or
refuse any potential Sublicensee for Venture Products BN in the Territory, and
(b) GRELAN will have the final right and authority to accept or refuse any
potential Sublicensee for Venture Products GR in the Territory; provided that if
GRELAN is the potential Sublicensee for a particular Venture Product GR, then
the

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       8
<PAGE>
Steering Committee shall have the final right and authority to accept or refuse
such sublicense, and provided further that BIONUMERIK and GRELAN shall not
refuse such Sublicensees unreasonably.

             4.4 Division of Sublicensing Fees and Other Payments. In
consideration for the valuable nature of the Patent Rights, Know-How and
Improvements and the access to potential new partners they will give to KI
PHARMA, (i) in the event a sublicense fee or other up-front or milestone payment
amount due on or before the relevant NDA Approval (collectively, the "Up-front
Payment") is paid by any Sublicensee or other third party for distribution,
marketing and/or sales rights to a Venture Product BN in the Territory, then
[**], and (ii) in the event the Up-front Payment is paid by any Sublicensee or
other third party for distribution, marketing and/or sales rights to a Venture
Product GR in the Territory, then [**]. All royalty payments due after the
relevant NDA Approval (the "Royalties") and any additional amounts received from
any Sublicensee or other third party in connection with a Venture Product being
sold by or for the benefit of KI PHARMA [**].

             4.5 Third Party Offers or Statements of Interest. If a third party
makes a statement of interest or offer to sublicense a Venture Product in the
Territory to any of the parties hereto, then the notified party shall notify the
other parties hereto with respect to the indication of interest or offer and
shall provide the other parties hereto with copies of any correspondence and a
summary of any meeting regarding such matter.

      5. RIGHTS OF FIRST REFUSAL FOR VENTURE PRODUCTS BN AND DEVELOPMENT RIGHTS.

             5.1 Right of First Refusal. Subject to the conditions contained in
Section 4.3, effective as of the Effective Date GRELAN is hereby granted by KI
PHARMA a right of first refusal to negotiate to obtain a license for itself for
any Venture Products BN that KI PHARMA proposes to license to third parties. The
first refusal right granted herein with respect to each particular product will
expire forty- five (45) days after GRELAN's receipt of a written notice from KI
PHARMA identifying such Venture Product BN proposed to be licensed to a third
party. If no proposal to obtain a license for such product is made to KI PHARMA
by GRELAN within such time period, GRELAN's right of first refusal shall

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       9
<PAGE>
terminate with respect to such product. In the event GRELAN does make a proposal
for the product within such time period, then KI PHARMA, GRELAN, and BIONUMERIK
will negotiate in good faith during the remainder of such 45 day notice period
and for an additional 90 day period (the "Negotiation Period") in an effort to
enter into a license agreement for such product on mutually agreeable terms. If
a license has not been executed by the end of the Negotiation Period, then (i)
the negotiations shall be deemed deadlocked and KI PHARMA shall, upon the
request of BIONUMERIK, use best efforts to seek another potential licensee with
respect to such product, and (ii) KI PHARMA shall be free to enter into such
third party license, provided the terms of such license are no more favorable to
such third party licensee than the terms last proposed to GRELAN.

            5.2 Development Rights. Effective as of the Effective Date, KI
PHARMA shall have the right, with the right to sublicense, to develop all
Venture Products in the Territory in accordance with the terms of this Agreement
and with the assistance of GRELAN as provided herein. Unless otherwise agreed by
the parties, BIONUMERIK will have the right to develop all Venture Products BN
outside of the Territory and GRELAN will have the right to develop all Venture
Products GR outside of the Territory. BIONUMERIK shall be solely responsible for
its licensing or development activities concerning Venture Products BN outside
the Territory.

            5.3 Development Outside Territory. Upon future mutual written
agreement by BIONUMERIK and GRELAN and if such rights are then available, KI
PHARMA may market, sell and distribute certain specified Venture Products in
other parts of Asia in addition to Japan. Notwithstanding the foregoing, GRELAN
shall remain free to license the rights to Venture Products GR outside of the
Territory in its sole discretion without the consent or approval of KI PHARMA or
BIONUMERIK; and BIONUMERIK shall remain free to license the rights to Venture
Products BN outside the Territory in its sole discretion without the consent or
approval of KI PHARMA or GRELAN. In addition to the foregoing, nothing in this
Agreement shall impact or restrict (a) the ability of GRELAN to develop, market,
sell, distribute, license, or otherwise commercially dispose of Venture Products
GR outside of the Territory in its sole discretion without the consent or
approval of KI PHARMA or BIONUMERIK, or (b) the ability of BIONUMERIK to
develop, market, sell, distribute, license, or otherwise commercially dispose of
Venture Products BN outside of the Territory in its sole discretion without the
consent or approval of KI PHARMA or GRELAN.

                                       10
<PAGE>
      6. INFORMATION SHARING AND DEVELOPMENT COSTS.

            6.1 Pre-Clinical Studies. GRELAN agrees at its sole expense to
sponsor and conduct (or have sponsored and conducted) all necessary additional
pre-clinical and non-clinical studies and tests required by the Japanese
Ministry of Health and Welfare (the "MHW") or other local regulatory agency in
the Territory in connection with commencing and conducting human clinical trials
with respect to the Venture Products in the Territory and with respect to the
manufacture (or importation into the Territory), sale and distribution of
Venture Products in the Territory. BIONUMERIK will provide free of charge to KI
PHARMA and GRELAN all pre-clinical data, clinical research protocols, and
clinical trials data and information previously or hereafter developed by
BIONUMERIK that were used and/or are necessary to support United States Food and
Drug Administration ("FDA") regulatory submissions to support regulatory
applications for the Venture Products BN in the Territory. GRELAN will provide
free of charge to KI PHARMA and BIONUMERIK all pre-clinical data, clinical
research protocols, and clinical trials data and information previously or
hereafter developed by GRELAN that are necessary to support regulatory
submissions to support regulatory applications for the Venture Products GR in
the Territory.

            6.2 Government Approvals and Clinical Trials.

                  6.2.1. GRELAN agrees to (a) conduct or cause to be conducted
all clinical trials and other studies of any nature of the Venture Products
necessary or desirable for efficiently obtaining Government Regulatory Approvals
in the Territory and (b) prepare and submit all documents necessary or desirable
for obtaining Government Regulatory Approvals in the Territory. GRELAN shall be
solely responsible for paying the costs of such clinical development and
regulatory approvals described in the previous sentence and GRELAN shall
reimburse KI PHARMA for all costs of any such clinical development and
regulatory approvals paid by KI PHARMA. If permitted by laws in the Territory,
the Government Regulatory Approvals for Venture Products shall be obtained in
the name of KI PHARMA, and GRELAN shall provide such additional assistance as
may be necessary to assure that such Approvals are obtained in the name of KI
PHARMA. Such assistance shall include, without limitation, acting as an agent of
KI PHARMA where necessary to facilitate the regulatory process. If the
Government Regulatory Approvals are not permitted to be obtained by KI PHARMA in
the name of KI PHARMA, then, with the consent of GRELAN and BIONUMERIK (which
consent will not be unreasonably withheld) such approvals will be obtained in
the name of GRELAN. To the extent permitted by laws in the Territory,

                                       11
<PAGE>
BIONUMERIK agrees to assist and support the process of obtaining the Government
Regulatory Approvals by providing input and assistance from Dr. Frederick H.
Hausheer regarding the design and conduct of preclinical experiments, clinical
protocols and trials, preparation of regulatory submissions and review, analysis
and presentation of laboratory and other non-clinical data. BIONUMERIK shall
have the right to review all draft and final clinical protocols prior to
initiation of any clinical trial in the Territory for Venture Products BN.

                  6.2.2. GRELAN shall provide BIONUMERIK and KI PHARMA with
copies of all data and developments which arise from research and development
carried out on the Venture Products pursuant to Sections 6.1 and 6.2.1. KI
PHARMA shall have ownership (including reservation of the right to use in the
Territory in accordance with this Agreement) of all data and results obtained by
GRELAN or KI PHARMA from the pre-clinical and non-clinical studies and clinical
trials pursuant to Sections 6.1 and 6.2.1 (the "Data and Results"). Unless
otherwise agreed by the parties hereto, without any further payment, BIONUMERIK
is granted the non-exclusive right, with the right to sublicense, to use the
Data and Results related to Venture Products BN outside the Territory for the
purpose of supporting pre-clinical studies, clinical trials and product
regulatory approval and development in areas outside the Territory. Unless
otherwise agreed by the parties hereto, without any further payment, GRELAN is
granted the non-exclusive right, with the right to sublicense, to use the Data
and Results related to Venture Products GR outside the Territory for the purpose
of supporting pre-clinical studies, clinical trials and product regulatory
approval and development in areas outside the Territory. In addition, without
any further payment, KI PHARMA and GRELAN may use the Data and Results to
support the development, sale and distribution of Venture Products in the
Territory (and in other parts of Asia subject to Section 5.3) in accordance with
this Agreement during the term of this Agreement.

                   6.2.3. BIONUMERIK shall comply with applicable Japanese
Pharmaceutical Law and any other applicable governmental requirements in the
Territory regarding manufacture in and import into the Territory and development
and marketing in the Territory of the Venture Products, with relation to actions
by BIONUMERIK.

                                       12
<PAGE>
            6.3 Copies and Provision of Information.

                  6.3.1. KI PHARMA and GRELAN will keep BIONUMERIK regularly and
fully informed of the preclinical and clinical process regarding the Venture
Products. KI PHARMA and GRELAN also shall keep BIONUMERIK regularly and fully
informed of the status of the Government Regulatory Approvals process on a
current basis and furnish BIONUMERIK, upon BIONUMERIK's reasonable request, with
English version copies of all important documents, data and other information
supplied to or received from the Japanese Government or other approval authority
in connection with the applications for the Government Regulatory Approvals.
Upon receipt of each Government Regulatory Approval, KI PHARMA and GRELAN shall
promptly furnish BIONUMERIK English version copies or other satisfactory
evidence thereof.

                  6.3.2. BIONUMERIK shall provide KI PHARMA and GRELAN with
copies of all information generated or controlled by it in the course of
satisfying regulatory requirements in the United States and/or Europe related to
any Venture Products BN that may be useful or necessary in obtaining Government
Regulatory Approvals in the Territory, such as IND applications, annual reports,
protocol amendments, IND amendments, and related documents ("IND and Related
Information"). If BIONUMERIK grants a license for commercial distribution of any
Venture Products BN in areas outside the Territory, BIONUMERIK agrees to use its
best efforts to provide in any agreement hereinafter signed with respect to such
license that the licensee under such license shall provide KI PHARMA and GRELAN
with all data and information generated by such licensee with respect to such
products for supporting the development of such products in the Territory.
GRELAN shall provide KI PHARMA and BIONUMERIK with copies of all information
generated or controlled by it in the course of satisfying regulatory
requirements in the United States and/or Europe related to Venture Products GR
that may be useful or necessary in obtaining Governmental Regulatory Approvals
in the Territory, such as IND and Related Information. If GRELAN grants a
license for commercial distribution of any Venture Products GR in areas outside
the Territory, GRELAN agrees to use its best efforts to provide in any agreement
hereinafter signed with respect to such license that the licensee under such
license shall provide KI PHARMA and BIONUMERIK with all data and information
generated by such licensee with respect to such products for supporting the
development of such products in the Territory. In the event a prospective
licensee for the commercial distribution of Venture Products in areas outside
the Territory will not agree to the sharing of all data and information as
provided above, each of BIONUMERIK and GRELAN will consult with KI PHARMA prior
to signing any license agreement with such party and each of BIONUMERIK and

                                       13
<PAGE>
GRELAN will use its best efforts to facilitate and provide an opportunity for
discussion among GRELAN, BIONUMERIK and such prospective licensee with respect
to a mutually satisfactory arrangement for the sharing of data and information.
For purposes of this provision, "best efforts" shall mean those reasonable
commercial efforts that would be used by reasonable business persons in a
similar situation.

                  6.3.3 GRELAN and KI PHARMA will provide BIONUMERIK with
marketing, pricing, patent, product and distribution information regarding the
Venture Products and any potentially competitive products in the Territory,
except to the extent restricted by law, other licenses or similar agreements to
which GRELAN is a party. BIONUMERIK and KI PHARMA will provide GRELAN with
marketing, pricing, patent, product and distribution information regarding the
Venture Products and any potentially competitive products outside the Territory,
except to the extent restricted by law, other licenses or similar agreements to
which BIONUMERIK is a party.

            6.4 Supplies of Product for Pre-Clinical Studies and Clinical
Trials. If requested by KI PHARMA and/or GRELAN, all supplies of Venture
Products BN required by GRELAN and/or KI PHARMA in order to conduct the studies
described in Sections 6.1 and 6.2 shall be furnished by BIONUMERIK to GRELAN
and/or KI PHARMA at a price equal to [**]. In accordance with Sections 6.1 and
6.2, GRELAN shall be responsible for paying all such costs described in this
Section 6.4.

            6.5 Provision of Know-How. As soon as practicable after the
Effective Date, and on a regular basis thereafter during the term of this
Agreement, each of BIONUMERIK and GRELAN will, subject to the confidentiality
and other limitations contained herein, provide its Know-How and will thereafter
provide its Improvements to KI PHARMA (and GRELAN as well in the case where
BIONUMERIK will provide such Know-How and Improvements) for the purpose of
enabling GRELAN and KI PHARMA to conduct the studies described in Sections 6.1
and 6.2, and otherwise to support Government Regulatory Approvals and the
marketing of Venture Products in the Territory in accordance with the terms of
this Agreement.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       14
<PAGE>
7.    MANUFACTURING RIGHTS FOR VENTURE PRODUCTS AND PURCHASE OF
      APPROVED PRODUCTS BY THE VENTURE.

            7.1 Manufacturing Rights for Venture Products BN.

                   7.1.1  BIONUMERIK will retain all manufacturing rights for
Venture Products BN. Any other terms and conditions regarding the sale or
provision of Venture Products BN by BIONUMERIK to KI PHARMA or a designated
third party will be separately agreed by the parties hereto after taking into
account the scenarios and illustrations contained on Attachment C hereto and the
other factors and considerations described in this Section. BIONUMERIK has the
right to manufacture Venture Products BN directly or to establish a contract
with a third party manufacturer to supply KI PHARMA or the designated third
party licensee for product distribution in the Territory. GRELAN shall help
BIONUMERIK to identify and recommend key qualified GMP manufacturers) in the
Territory who would be appropriate as such manufacturer. Upon receiving the
appropriate Government Regulatory Approvals for any Venture Products BN, KI
PHARMA (or if agreed to by the parties hereto, a KI PHARMA subsidiary or
affiliate or a designated third party) will directly purchase Venture Products
BN from BIONUMERIK at a specified sales price (the "BioNumerik Sales Price") in
accordance with the Supply Arrangements referred to in Section 7.4. The
BioNumerik Sales Price will be decided by the parties hereto in good faith
taking into account the following factors and considerations:

                   [**];

                   [**];

                   [**];

                   [**]; and

                   [**].

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       15
<PAGE>
                  [**]:

                  [**]

                  [**].

            7.2 Manufacturing Rights for Venture Products GR.

                  7.2.1 GRELAN will retain all manufacturing rights for Venture
Products GR. Any other terms and conditions regarding the sale or provision of
Venture Products GR by GRELAN to KI PHARMA will be separately agreed by the
parties hereto after taking into account the scenarios and illustrations
contained on Attachment C hereto and the other factors and considerations
described in this Section. GRELAN has the right to manufacture Venture Products
GR directly or to establish a contract with a third party manufacturer to supply
KI PHARMA or the designated third party licensee for product distribution in the
Territory. Upon receiving the appropriate Government Regulatory Approvals for
any Venture Products GR, KI PHARMA (or if agreed to by the parties hereto, a KI
PHARMA subsidiary or affiliate or a designated third party) will directly
purchase Venture Products GR from GRELAN at a specified sales price (the "Grelan
Sales Price") in accordance with the Supply Arrangements referred to in Section
7.4. The Grelan Sales Price will be decided by the parties hereto in good faith
taking into account the following factors and considerations:

                   [**];

                   [**];

                   [**];

                   [**]

                   [**].

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       16
<PAGE>
                   [**]

                   [**]

                   [**]

             7.3   Distribution and Sale of Venture Products.

             Based on the foregoing considerations, Venture Products will be
distributed and sold through one or more of the following methods:

                   [**]

                   [**]

                   [**]

[**]

             7.4 Commercial Supply Arrangements. Within [**] months prior to the
estimated time of the first commercial sale of a particular Venture Product in
the Territory, GRELAN (if such product is a Venture Product GR) or BIONUMERIK
(if such product is a Venture Product BN) shall enter into a commercial supply
agreement or make other appropriate arrangements (the "Supply Arrangements ")
with KI PHARMA to be negotiated in good faith by KI PHARMA, BIONUMERIK and
GRELAN and to reflect such terms and conditions as shall be reasonably necessary
to provide adequate supply of such Venture Product for sale and distribution in
the Territory.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       17
<PAGE>
          7.5 Product Labeling. Unless otherwise agreed to by GRELAN, all
labeling for Venture Products GR shall recognize that such products are
distributed under license from GRELAN. Unless otherwise agreed to by BIONUMERIK,
all labeling for Venture Products BN shall recognize that such products are
distributed under license from BIONUMERIK. One or more of KI PHARMA, GRELAN and
BIONUMERIK may be named on labeling for specified Venture Products as may be
agreed from time to time by all the parties hereto.

      8. STEERING COMMITTEE.

             8.1 Formation and Composition. Promptly following the Effective
Date, a Steering Committee of KI PHARMA will be established with responsibility
for the overall management of the development, manufacture, licensing
activities, distribution and marketing of the Venture Products in the Territory
in accordance with the terms of this Agreement. The Steering Committee shall be
comprised of two members, one appointed by GRELAN and one appointed by
BIONUMERIK, both of whom shall be cochairmen of the Steering Committee and
"Managers" of KI PHARMA (as defined in the Operating Agreement). Each Steering
Committee member should be a senior qualified full-time employee who serves as a
manager for his respective company and who has extensive knowledge of
pharmaceutical operations. [**] will be the founding Steering Committee members
who will co-chair the Steering Committee.

             8.2 Duties. The Steering Committee shall have such duties and
responsibilities as are provided in the Operating Agreement. No Steering
Committee member shall be removed and no new Steering Committee member shall be
appointed unless such removal or appointment is consented to by both GRELAN and
BIONUMERIK.

             8.3 Meetings. The Steering Committee will meet at least quarterly
(in Japan, U.S. or by telephone, video conference or internet - by mutual
consent) to review the progress of the development of Venture Products in the
Territory.

             8.4 Recommendation Regarding Management. The Steering Committee
will recommend management and key personnel to KI PHARMA for development,
manufacturing, regulatory, marketing, distribution and sale of Venture Products
in the Territory, at their request.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       18
<PAGE>
            8.5 Identification of Consultants. If needed, the Steering Committee
shall identify third party consultants and contractors to assist in the
development of the Venture Products in the Territory.

      9. DEVELOPMENT AND COMMERCIALIZATION PLAN.

            9.1 General Diligence Efforts. The parties hereto agree to use their
best efforts to commercialize or cause to be commercialized the Venture Products
in the Territory as soon as reasonably practicable.

            9.2 Target Development and Commercialization Plan. In addition to
the above general diligence requirements, KI PHARMA shall meet the target
development and commercialization plan for Venture Products. The target
development and commercialization plan for the BNP7787 Products is set forth in
Attachment D hereto, and those for the other Venture Products shall be decided
by the parties hereto as soon as reasonably practical. These target development
and commercialization plans will be updated on a semi-annual basis by the
Steering Committee. If any of the specified targets are not met with respect to
a particular Venture Product, and such targets continue to remain unmet for a
period of [**] or greater following notice to the parties by any party
hereunder, then the parties hereto shall discuss and decide in good faith how to
solve the problem. [**]. An extension of the time to meet the development
performance requirements in the previous sentence may be granted upon mutual
agreement between GRELAN and BIONUMERIK.

      10. PATENT MATTERS.

             10.1 BioNumerik Patent Maintenance. BIONUMERIK will be responsible
for prosecuting and maintaining Patents for Venture Products BN at its own
expense and BIONUMERIK will own all Patent Rights for Venture Products BN.
BIONUMERIK shall advise GRELAN as to the progress of its patent applications and
registrations in Japan relating to Venture Products BN from time to time. In
addition, BIONUMERIK will advise GRELAN as to patent strategy and prosecution
outside the Territory with respect to Venture Products BN.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       19
<PAGE>
             10.2. GRELAN Patent Maintenance and Assistance. GRELAN will be
responsible for prosecuting and maintaining Patents for Venture Products GR at
its own expense and GRELAN will own all Patent Rights for Venture Products GR.
GRELAN shall advise BIONUMERIK as to the progress of its patent applications and
registrations in Japan relating to the Venture Products GR from time to time. In
addition, GRELAN will advise BIONUMERIK as to patent strategy and prosecution in
the Territory with respect to Venture Products BN.

              10.3. No Present Notification of Infringement-BioNumerik. Except
as described in Attachment E hereto, BIONUMERIK represents and warrants to KI
PHARMA and GRELAN that BIONUMERIK has not received any notification of, and has
no knowledge that the use by KI PHARMA and GRELAN of the Know-How or the
manufacture, use or sale of the Venture Products BN infringes any third party
patent rights in the Territory. If during the term of this Agreement an
infringement action should be brought in the Territory by a third party against
KI PHARMA or GRELAN or their Affiliates or sublicensees claiming that the use of
the Know-How or the Improvement relating to the Venture Products BN or the
manufacture, use or sale of the Venture Products BN licensed hereunder infringes
any patent rights of the third party in the Territory, KI PHARMA and/or GRELAN
will promptly inform BIONUMERIK of such fact in writing and BIONUMERIK agrees to
consult with KI PHARMA and GRELAN in order to decide together the course of
action which should be taken in such case. Each of the parties hereto agrees to
cooperate fully in any defense against such infringement action. All legal
expenses and costs (including attorneys' fee) in such defense shall be borne
[**].

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       20

<PAGE>

            10.4. No Present Notification of Infringement- Grelan. Except as
described in Attachment E hereto, GRELAN represents and warrants to KI PHARMA
and BIONUMERIK that GRELAN has not received any notification of, and has no
knowledge that the use by KI PHARMA and GRELAN of the Know-How or the
manufacture, use or sale of the Venture Products GR infringes any third party
patent rights in the Territory. If during the term of this Agreement an
infringement action should be brought in the Territory by a third party against
KI PHARMA or GRELAN or their Affiliates or sublicensees claiming that the use of
the Know-How or the Improvement relating to the Venture Products GR or the
manufacture, use or sale of the Venture Products GR licensed hereunder infringes
any patent rights of the third party in the Territory, KI PHARMA and/or GRELAN
will promptly inform BIONUMERIK of such fact in writing and GRELAN agrees to
consult with KI PHARMA and BIONUMERIK in order to decide together the course of
action which should be taken in such case. Each of the parties hereto agrees to
cooperate fully in any defense against such infringement action. All legal
expenses and costs (including attorneys' fee) in such defense shall be borne
[**].

            10.5. Enforcement of Patents and Proprietary Rights.

                  (a)   If allowable by law, KI PHARMA, as exclusive licensee
for the Venture Products in the Territory, shall have power to institute and
prosecute proceedings or suits ("Suits") for

infringement of the Patent Rights and/or Patents and proprietary rights
regarding Venture Products in the Territory. BIONUMERIK may join and, if
required by law, BIONUMERIK will join as party plaintiff in such Suits regarding
Venture Products BN. In addition, KI PHARMA shall not institute or settle any
Suit regarding Venture Products BN without the consent of BIONUMERIK (which
consent will not be unreasonably withheld) and BIONUMERIK may assume control of
any Suit regarding Venture Products BN at its own expense by giving notice to KI
PHARMA and agreeing to be responsible for all further costs of such Suit. GRELAN
may join and, if required by law, GRELAN will join as party plaintiff in such
Suits regarding Venture Products GR. In addition, KI PHARMA shall not institute
or settle any Suit regarding Venture Products GR without the consent of GRELAN
(which consent will not be unreasonably withheld) and GRELAN may assume control
of any Suit regarding Venture Products GR at its own expense by giving notice to
KI PHARMA and agreeing to be responsible for all further costs of such Suit.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       21
<PAGE>
                  (b)   Except as otherwise expressly provided herein, all legal
expenses and costs (including attorneys' fee) in such Suits and all other
third-party patent litigation regarding the Venture Products in the Territory
(the "Legal Expenses") will be borne 50% by GRELAN and 50% by BIONUMERIK.

                  (c)   All recoveries in any Suit (including attorneys' fee)
and all other third-party patent litigation regarding the Venture Products in
the Territory (regardless of which party actually receives such recovery) shall
be applied first in or toward satisfaction of all expenses borne by GRELAN and
BIONUMERIK in connection with such Suit or other patent litigation. If any
surplus remains it shall (i) be paid in full to BIONUMERIK if the Suit or other
patent litigation is related to Venture Products BN or (2) be paid in full to
GR-ELAN if the Suit or other patent litigation is related to Venture Products
GR.

                  (d)   KI PHARMA shall give BIONUMERIK and GRELAN full and
complete access to all information BIONUMERIK or GRELAN reasonably request
related to the Suits.

      11.   IMPROVEMENTS.

            11.1  BioNumerik Improvements Included. Following the Effective Date
and during the term of this Agreement, without any further payment, BIONUMERIK
shall promptly and fully disclose and grant (a) an exclusive royalty-free
license to KI PHARMA to use any BioNumerik Improvements in the Territory for the
purpose of development and commercialization of the Venture Products in the
Territory

in accordance of this Agreement, and (b) a non-exclusive royalty free license to
GRELAN to use such Improvements in the Territory for the purpose of development
of Venture Products in the Territory in accordance with this Agreement. In
addition, BIONUMERIK hereby grants GRELAN effective as of the Effective Date (a)
a non-exclusive, perpetual, fully paid-up royalty-free license, with the right
to sublicense, to use all BioNumerik Improvements related only to Venture
Products GR outside the Territory for the purpose of development and
commercialization of such products outside the Territory, and (b) a
nonexclusive, perpetual (but only after the expiration or termination of this
Agreement), fully paid-up royaltyfree license, with the right to sublicense, to
use such BioNumerik Improvements related only to Venture Products GR in the
Territory for the purpose of development and commercialization of such products
in the Territory.

                                       22
<PAGE>
            11.2. Grelan Improvements Included. Following the Effective Date and
during the term of this Agreement, without any further payment, GRELAN shall
promptly and fully disclose and grant an exclusive royalty-free license to KI
PHARMA to use any Grelan Improvements in the Territory for the purpose of
development and commercialization of Venture Products in the Territory in
accordance with this Agreement. In addition, GRELAN hereby grants to BIONUMERIK
effective as of the Effective Date (a) a non-exclusive, perpetual, fully paid-up
royalty-free license, with the right to sublicense, to use all Grelan
Improvements related only to Venture Products BN outside the Territory for the
purpose of development and commercialization of such products outside the
Territory and (b) a non-exclusive, perpetual (but only after the expiration or
termination of this Agreement), fully paid-up royalty-free license, with the
right to sublicense, to use such Grelan Improvements related only to Venture
Products BN in the Territory for the purpose of development and
commercialization of such products in the Territory.

            11.3. Joint Improvements. Any new intellectual property generated by
KI PHARMA shall be jointly owned by BIONUMERIK and GRELAN on an equal basis.
Each of BIONUMERIK and GRELAN hereby agrees to license its interest in such
intellectual property in the manner provided in Sections 11.1 and 11.2.

            11.4. Sublicense of Improvements. The sublicense by KI PHARMA of the
rights to any BioNumerik Improvements in the Territory shall require the written
prior approval of BIONUMERIK, and the sublicense by KI PHARMA of the rights to
any Grelan Improvements in the Territory shall require the written prior
approval of GRELAN.

                                       23
<PAGE>
      12.   TRADEMARKS AND TRADEMARK RIGHTS.

            12.1. KI PHARMA shall register and maintain the Trademarks for the
benefit and at the expense of KI PHARMA for use in and association with Venture
Products in the Territory. GRELAN agrees to assist in such registration, if
requested by KI PHARMA or BIONUMERIK. KI PHARMA shall sell the Venture Products
only under the Trademarks.

            12.2. GRELAN shall be the exclusive owner of all Trademarks and
trademark registrations associated with Venture Products GR, and BIONUMERIK
shall be the exclusive owner of all Trademarks and trademark registrations
associated with Venture Products BN. GRELAN shall remain free to use and grant
rights to the use of the Trademarks outside of the Territory with respect to
Venture Products GR. BIONUMERIK shall remain free to use and grant rights to the
use of the Trademarks outside of the Territory with respect to Venture Products
BN.

            12.3. KI PHARMA shall maintain the quality control standards set
forth by GRELAN and BIONUMERIK from time to time with respect to the Trademarks;
and KI PHARMA will ensure that any Sublicensee using the Trademarks in the
Territory shall be subject to similar standards of quality control.

      13.   CONFIDENTIALITY.

            13.1. Confidential and Proprietary Information. Each party hereto
acknowledges that in order for the parties to carry out their respective
obligations under this Agreement, it may be necessary for the parties to
disclose to each other certain Confidential Information. Each party hereto
agrees:

                  13.1.1. To ensure that it does not reveal or make available to
any third party any Confidential Information of any other party, except as such
disclosure may be expressly authorized by this Agreement or otherwise
specifically approved in writing by the party against whom such disclosure is
sought and to ensure that it will treat such Confidential Information of each
other party in the same manner as it treats its own Confidential Information,
such treatment to be at least the degree that a reasonable person would perform
under similar circumstances;

                                       24
<PAGE>
                  13.1.2. To ensure that Affiliates, sublicensees, employees,
agents, associates or other persons to whom such disclosure may be made or who
may otherwise have access to such Confidential Information of any other party
have agreed in writing to safeguard and maintain such Confidential Information
of the other party or parties in confidence;

                  13.1.3. To ensure that Confidential Information of the other
party or parties is not used for the receiving party's benefit except as such
benefits are expressly contemplated herein;

                  13.1.4. To prohibit the Confidential Information of the other
party or parties from being duplicated in any manner; except as is reasonably
necessary to perform the tasks and obligations contemplated under this
Agreement; and

                  13.1.5. To prohibit the Confidential Information of the other
party or parties from being published in any form without the express written
consent of the disclosing party.

            13.2. Matters not Included as Confidential Information.
Notwithstanding anything herein to the contrary, the defined term "Confidential
Information" and the obligations of nondisclosure, nonuse and confidentiality
relating thereto shall not include any information or data which:

                  13.2.1. Is or becomes known to the general public through no
action or fault of the receiving party;

                  13.2.2. Was already known to the receiving party prior to the
date of disclosure hereunder, as evidenced by the written records of that party,
without any obligation of confidentiality;

                  13.2.3. Is or becomes known to the receiving party without any
obligation of confidentiality from a third party having the right to disclose
the same, and not having a confidential relationship with the disclosing party
with respect thereto; or

                  13.2.4. Is necessary for the receiving party or its Affiliates
to disclose to a governmental authority or any agency thereof on a
non-confidential basis, in order to pursue Government Regulatory Approvals or
other regulatory approvals as contemplated by this Agreement or for other

                                       25
<PAGE>
purposes related to the intent of this Agreement; provided, however, that the
receiving party shall notify the disclosing party before disclosing such
Confidential Information.

            13.3. Survival of Confidentiality. The obligations of this Section
13 with respect to Confidential Information shall continue during the term of
this Agreement and for 10 years after the termination or expiration of this
Agreement.

      14.   PROVISION FOR VENTURE FUNDING.

      GRELAN and BIONUMERIK shall provide KI PHARMA with reasonable funding in
proportion to their ownership interest in KI PHARMA immediately before such
funding so that KI PHARMA is adequately funded for its ongoing business and
taxes. Such funding shall be provided or obtained in such form and in such
manner as may be agreed between GRELAN and BIONUMERIK, but for the avoidance of
doubt, may include contribution of additional capital, member loans or member
guarantees for borrowing from third parties. [**].

      15.   ACCOUNTING.

            KI PHARMA shall keep and shall cause its Sublicensees to keep
written (English) records and reports relating to the transactions covered by
this Agreement. As soon as practicable after the end of each fiscal year of KI
PHARMA, and in any event within 60 days thereafter, KI PHARMA shall prepare or
cause to be prepared, audited financial statements of KI PHARMA as of the end of
and for such fiscal year, including balance sheets, statements of operations,
and statements of cash flow, all of which will be prepared in accordance with
generally accepted accounting principles consistently applied during the periods
covered thereby and setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and audited by
independent public accountants of internationally recognized standing selected
by KI PHARMA, BIONUMERIK, and GRELAN. As soon as practicable after the end of
the first, second, and third quarterly accounting periods in each fiscal year of
KI PHARMA and in any event within

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       26
<PAGE>
30 days thereafter, KI PHARMA shall prepare or cause to be prepared, a balance
sheet of KI PHARMA as of the end of each such quarterly period, and statements
or operations and statements of cash flow of KI PHARMA, for such period and for
the current fiscal year to date, prepared in accordance with generally accepted
accounting principles consistently applied during the periods covered thereby
(other than for accompanying notes), subject to changes resulting from year-end
audit adjustments, and setting forth in each case the comparative figures for
the previous fiscal year, all in reasonable detail. All such prepared
documentation referred to herein will be provided by KI PHARMA to BIONUMERIK and
GRELAN without charge. Upon the request of either BIONUMERIK or GRELAN, and on
reasonable notice, KI PHARMA shall and shall cause its Affiliates and
Sublicensees to permit, at the expense of the requesting party (BIONUMERIK or
GRELAN, as the case may be), an independent certified public accountant
reasonably acceptable to KI PHARMA and the requesting party, to have access
during reasonable business hours to such records as may be necessary to (a)
obtain any additional information and records as may be required to prepare
audited financial information for KI PHARMA or as may be otherwise required to
comply with financial reporting and disclosure requirements of such party, and
(b) determine the correctness of any fee or payment statements and actual
payments made under this Agreement. Each of BIONUMERIK and GRELAN undertakes and
agrees that neither BIONUMERIK nor GRELAN nor any certified public accountant
selected by either of them pursuant to this Section shall disclose any
information so obtained except as required by law or to the extent necessary to
enforce this Agreement.

      16.   USE OF NAMES. The parties hereto understand that each of BIONUMERIK,
GRELAN, and KI PHARMA may disclose certain matters pertaining to this Agreement
which may include the names of KI PHARMA, GRELAN and BIONUMERIK, and the subject
matter of this Agreement, if and to the extent that such disclosure is required
by the applicable securities laws or other applicable laws and regulations;
provided, however, that if such disclosure is made in the form of public
statements, whether oral or written, including, but not limited to, shareholder
reports, communications with stock market analysts, press releases or other
communications with the media, the disclosing party must obtain the prior
written approval of the other parties (which approval shall not be unreasonably
withheld) and further provided that no incorrect, exaggerated or misleading
statements shall be disclosed.

                                       27
<PAGE>
      17.   INDEMNIFICATION.

            17.1. BioNumerik Indemnification. BIONUMERIK agrees to defend,
indemnify and hold harmless GRELAN and KI PHARMA from and against any and all
(a) product liability and related costs and expenses (including attorney fees)
arising out of Venture Products BN supplied by BIONUMERIK and (b) all other
claims, damages or costs, including attorney fees, arising out of manufacturing
defects of any Venture Products supplied by BIONUMERIK, or the negligence,
failure to follow established good manufacturing practices or International
Conference on Harmonization (ICH) guidelines, or non-compliance with applicable
laws and regulations in the Territory on the part of BIONUMERIK.

            17.2. Grelan Indemnification. GRELAN agrees to defend, indemnify and
hold harmless BIONUMERIK and KI PHARMA from and against any and all (a) product
liability and related costs and expenses (including attorney fees) arising out
of Venture Products GR supplied by GRELAN and (b) all other claims, damages or
costs, including attorney fees, arising out of manufacturing defects of any
Venture Products supplied by GRELAN, or the negligence, failure to follow
established good manufacturing practices or ICH guidelines, or non-compliance
with applicable laws and regulations in the Territory on the part of GRELAN.

            17.3. KI Pharma Indemnification. Notwithstanding the provisions of
Sections 17.1 and 17.2, KI PHARMA shall defend, indemnify and hold harmless
BIONUMERIK and GRELAN from and against any and all third party related claims,
damages or costs including attorney fees arising out of the failure by KI PHARMA
to distribute the Venture Products manufactured by BIONUMERIK or GRELAN in
accordance with applicable legal and regulatory requirements, the negligence of
KI PHARMA with respect to the Venture Products, or the non-compliance by KI
PHARMA with applicable laws and regulations in the Territory.

                                       28
<PAGE>
      18.   DURATION AND TERMINATION OF AGREEMENT.

            18.1  Duration.

                  18.1.1(a) Unless otherwise terminated as set forth below, this
Agreement shall terminate upon the earlier to occur of (i) such time following
commercialization of the Venture Products, that Venture Products are no longer
being sold and/or distributed by KI PHARMA or its Sublicensees in the Territory
and (ii) 25 years after the effective date hereof.

                  18.1.1(b) This Agreement shall also immediately terminate if
the Effective Date does not occur within three months after the date of this
Agreement. In the event of termination pursuant to this Section 18.1.1(b), the
obligations and rights of the parties under this Agreement shall terminate,
except that the confidentiality obligations under Section 13 shall survive and
continue, and the rights and obligations under Section 17 and Section 22.12
shall survive and continue.

            18.2  Termination.

                  18.2.1. The parties hereto shall be able to terminate this
Agreement in the following events:

                        (a)   If a party to this Agreement shall materially
breach, materially default or otherwise materially fail to perform under the
terms of this Agreement or the Operating Agreement or any material
representation or warranty made by such party herein proves to have been
incorrect or misleading in any material respect when made, the other party or
parties may terminate this Agreement by giving 60 days advance written notice,
unless the breach, default or failure is cured within such notice period.

                        (b)   If GRELAN or BIONUMERIK shall become bankrupt or
insolvent or any proceeding is commenced to place its business in the hands of a
receiver, assignee or trustee in bankruptcy, or any proceeding is commenced for
company reorganization (kaisha kosei), arrangement (seiri), civil rehabilitation
(minjisaisei), dissolution (kaisan) and liquidation (seisan), whether
voluntarily or otherwise, and such proceedings are not dismissed within ninety
(90) days of the commencement of any such proceeding, then the party that is not
bankrupt, insolvent or subject to such proceeding may terminate this Agreement
upon 30 days advance written notice.

                                       29
<PAGE>
                        (c)   If, following the Effective Date, KI PHARMA is
dissolved, either GRELAN or BIONUMERIK may terminate this Agreement upon 30 days
advance written notice.

                        (d)   If a third party Competitor (defined below)
acquires a Controlling Interest (defined below) in GRELAN, then BIONUMERIK may
terminate this Agreement by giving 60 days advance written notice.

                        (e)   If a third party Competitor (defined below)
acquires a Controlling Interest (defined below) in BIONUMERIK, then GRELAN may
terminate this Agreement by giving 60 days advance written notice.

                        (f)   For purposes hereof, "Competitor" shall mean a
[**].

                        (g)   For purposes hereof, "Controlling Interest" shall
mean (a) the ownership, whether directly or indirectly, of a majority of the
voting stock or equity interests, or substantially all of the assets or business
of a party, or (b) the ability, whether directly or indirectly, to appoint a
majority of the directors or other governing body of a party.

            18.3. Effect of Expiration or Termination. Termination is not the
sole remedy under this Agreement and termination of this Agreement for any
reason or the expiration of this Agreement shall not affect obligations or
rights of any party incurred or accrued prior to such termination or expiration.
The termination of this Agreement shall not affect the right of any party to
recover damages from any breach of this Agreement.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       30
<PAGE>
                  18.3.1 In the event of the expiration of this Agreement
pursuant to Section 18.1.1(a), or in the event of a valid termination of this
Agreement by either GRELAN or BIONUMERIK pursuant to Section 18.2.1 (c) or by KI
PHARMA pursuant to Section 18.2.1(a), the obligations and rights of the parties
under this Agreement shall terminate, except that the confidentiality
obligations under Section 13 shall survive and continue, the ownership and the
rights granted under Section 6.2.2 with respect to the Data and Results
resulting or obtained prior to such expiration or termination shall survive and
continue, the perpetual rights granted under Section 11 with respect to the
Improvements and KI PHARMA's new intellectual property resulting or obtained
prior to the expiration or termination shall survive and continue, and the
rights and obligations under Section 17 and Section 22.12 shall survive and
continue.

                  18.3.2 In the event of a valid termination of this Agreement
by GRELAN pursuant to Section 18.2.1(a), Section 18.2.1(b), or Section
18.2.1(e), then notwithstanding any provisions contrary to this Section 18.3.2,
(i) all licenses granted hereunder (whether contingent or perpetual) to the
Venture Products GR, and to the Grelan Improvements, Grelan Patent Rights, and
Know-How provided by GRELAN shall terminate, (ii) all licenses granted hereunder
(whether contingent or perpetual) to the Venture Products BN, and to the
BioNumerik Improvements, BioNumerik Patent Rights, and Know-How provided by
BIONUMERIK shall survive and continue without being affected, except that any
such licenses which are stated to be exclusive shall become non-exclusive after
such termination and the amounts of Upfront Payment and Royalties payable by KI
PHARMA for such products shall be reasonably adjusted as may be agreed to by the
parties hereto in good faith, and (iii) all rights, title and interest in the
Venture Products GR shall revert to GRELAN. For the avoidance of doubt, GRELAN
and BIONUMERIK shall retain the right to use the Data and Results as provided in
Section 6.2.2.

                  18.3.3. In the event of a valid termination of this Agreement
by BIONUMERIK pursuant to Section 18.2.1(a), Section 18.2.1(b), or Section
18.2.1(d), then notwithstanding any provisions contrary to this Section 18.3.3,
(i) all licenses granted hereunder (whether contingent or perpetual) to the
Venture Products BN, and to the BioNumerik Improvements, BioNumerik Patent
Rights, and Know-How provided by BIONUMERIK shall terminate, (ii) all licenses
granted hereunder (whether contingent or perpetual) to the Venture Products GR,
and to the Grelan Improvements, Grelan Patent Rights, and Know-How provided by
GRELAN shall survive and continue without being affected, except that any such
licenses which are stated to be exclusive shall become non-exclusive after such
termination and the amounts of Up-front Payment and Royalties payable by KI
PHARMA for such products shall be reasonably adjusted as may be agreed to by the
parties hereto in good faith, and (iii) all rights, title and interest in the

                                       31
<PAGE>
Venture Products BN shall revert to BIONUMERIK. For the avoidance of doubt,
BIONUMERIK and GRELAN shall retain the right to use the Data and Results as
provided in Section 6.2.2.

      19.   BIONUMERIK REPRESENTATIONS & WARRANTIES.

            19.1  Due Organization and Authority. BIONUMERIK represents and
warrants: (i) that it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and has the corporate power
and authority to execute, deliver and carry out the terms and provisions of this
Agreement; (ii) that the execution, delivery and performance of this Agreement
by BIONUMERIK shall not require the consent of any third party (other than any
shareholder consents to be obtained prior to the Effective Date), and shall not
cause a breach or violation under any fiduciary, contractual, statutory or
judicial obligation or restraint to which BIONUMERIK is subject or bound; (iii)
that the person executing this Agreement on behalf of BIONUMERIK is duly
authorized to do so to bind the corporation, and (iv) that attached hereto as
Attachment F are audited Financial Statements of BIONUMERIK at and for the year
ended March 31, 2000, which Financial Statements are true and correct in all
material respects.

            19.2  Safety of Product(s). BIONUMERIK represents and warrants that
it has not received any notification of, and has no knowledge that there is now
pending or that there have been any United States judicial or administrative
orders to ban the development or use of any Venture Products BN and that
BIONUMERIK has no knowledge of any adverse reactions or test results encountered
or discovered regarding the use of any Venture Products BN which would render
such products unsuitable or unsafe for the purpose contemplated by this
Agreement, that have not been disclosed to GRELAN.

            19.3  No Pending Action Against BioNumerik. BIONUMERIK represents
and warrants that to its knowledge there is no action or proceeding pending
against BIONUMERIK relating to the Venture Products BN, and to its knowledge
there is no basis for or threat of any action or proceeding relating to the
Venture Products BN, which might result in a material adverse change in the
business or financial condition of BIONUMERIK which could adversely affect the
rights of GRELAN and KI PHARMA under this Agreement or the development of the
Venture Products.

                                       32
<PAGE>
      20.   GRELAN REPRESENTATIONS AND WARRANTIES.

            20.1  Due Organization and Authority. GRELAN represents and
warrants: (i) that it is a corporation duly organized, validly existing and in
good standing under the laws of Japan and has the corporate power and authority
to execute, deliver and carry out the terms and provisions of this Agreement;
(ii) that the execution, delivery and performance of this Agreement by GR-ELAN
shall not require the consent of any third party and shall not cause a breach or
violation under any fiduciary, contractual, statutory or judicial obligation or
restraint to which GRELAN is subject or bound; and (iii) that the person
executing this Agreement on behalf of GRELAN is duly authorized to do so to bind
GRELAN.

            20.2  Safety of Product(s). GRELAN represents and warrants that it
has not received any notification of, and has no knowledge that there is now
pending or that there have been any Japan judicial or administrative orders to
ban the development or use of any Venture Products GR and that GRELAN has no
knowledge of any adverse reactions or test results encountered or discovered
regarding the use of any Venture Products GR which would render such products
unsuitable or unsafe for the purpose contemplated by this Agreement, which have
not been disclosed to BIONUMERIK.

            20.3  No Pending Action Against Grelan. GRELAN represents and
warrants that to its knowledge there is no action or proceeding pending against
GRELAN relating to the Venture Products GR, and to its knowledge there is no
basis for or threat of any action or proceeding relating to the Venture Products
GR, which might result in a material adverse change in the business or financial
condition of GRELAN which could adversely affect the rights of BIONUMERIK or KI
PHARMA under this Agreement or the development of the Venture Products.

      21.   ASSIGNMENTS.

            21.1  Assignment Restrictions. Subject to Sections 21.2 and 21.3
below and excluding the sublicense rights expressly granted herein, no party
shall have the right to assign or delegate this Agreement, or any of its rights
or obligations under this Agreement without the express written consent of the
other parties, such consent not to be unreasonably withheld, and said assignment
or delegation without such consent shall be null and void for all purposes.

                                       33
<PAGE>
            21.2  Sale of Business. BIONUMERIK or GRELAN may assign its entire
interest in this Agreement to a third party other than a Competitor; provided
that (i) such assignment is part of the sale of all or substantially all of the
assignor's business related to the Venture Products; (ii) the ownership in all
Know-How, Patent Rights, Improvements and Trademarks of the assignor and all
interest of the assignor in KI PHARMA are assigned to such third party
simultaneously and are subject to any additional obligations contained in the
Operating Agreement; (iii) notice of any contemplated assignment is given to the
other party not less than 60 days prior to the effectiveness thereof; (iv)
following receipt of such notice, the assignor, if requested by the other party
and such assignment is contemplated to be made to a Competitor of the other
party, negotiates in good faith with the other party for a period of 40 days
with a view to finding a mutually satisfactory solution; and (v) the assignor
delivers to the other party a copy of the instrument, duly executed by the
parties thereto, effecting such assignment and affirming a complete assumption
by the assignee of the obligations of the assignor hereunder and a recognition
of the rights of the other party.

            21.3  Assignment to Affiliates. This Agreement and the rights and
obligations hereunder shall be assignable, in whole or in part, by BIONUMERIK,
without consent of GRELAN or KI PHARMA, to one or more Affiliates that is not a
Competitor of GRELAN or KI PHARMA and who shall affirm to GRELAN and KI PHARMA a
complete assumption of the obligations assigned; provided that BIONUMERIK shall
guarantee the performance by such Affiliates) of such obligations. This
Agreement and the rights and obligations hereunder shall be assignable, in whole
or in part, by GRELAN, without consent of BIONUMERIK or KI PHARMA, to one or
more Affiliates that is not a Competitor of BIONUMERIK or KI PHARMA and who
shall affirm to BIONUMERIK and KI PHARMA a complete assumption of the
obligations assigned; provided that GRELAN shall guarantee the performance by
such Affiliates) of such obligations.

      22.   MISCELLANEOUS.

            22.1  Regulatory Communications. Each party agrees to notify the
other parties immediately by telephone (with prompt written follow-up in
English) of any inquiry, contact or communication received from any governmental
regulatory agency or other official body which materially and adversely relates
to or impacts upon the Venture Products or any component or ingredient thereof,
and will promptly furnish the other parties with copies of all written
communications relating thereto sent to or received from said regulatory agency.

                                       34
<PAGE>
            22.2  Adverse Events. Each party shall promptly inform the other
parties in writing of any material side effects or adverse events, conditions or
reactions encountered by or reported to them in connection with the Venture
Products which could in any significant way render any of the Venture Products
or any of the components thereof unsafe or unfit.

            22.3  Liability Insurance. KI PHARMA will maintain liability
insurance in amounts that are appropriate to protect against liabilities arising
in connection with the Venture Products in the Territory. GRELAN shall be
responsible for reimbursing KI PHARMA or otherwise bearing the cost of such
insurance with respect to each Venture Product until the time that such product
receives marketing approval in the Territory. After such time, the cost of such
insurance for an approved product in the Territory shall be paid 50% by GRELAN
and 50% by BIONUMERIK.

            22.4  Litigation. KI PHARMA will bear the costs of all non-patent
litigation relating to KI PHARMA and the Venture Products. GRELAN and BIONUMERIK
will each be responsible for reimbursing KI PHARMA or otherwise bearing the cost
of 50% of such litigation costs. KI PHARMA will advise BIONUMERIK with respect
to litigation strategies and operations in the Territory.

            22.5  Auditors. The auditors of KI PHARMA will be Ernst & Young or
another internationally recognized accounting firm approved by KI PHARMA, GRELAN
and BIONUMERIK. The audit report of the auditors will be in English. Each of
GRELAN and BIONUMERIK may select an additional accounting or auditing firm to
review the books and records of KI PHARMA, and all associated costs for such
additional firm will be paid by the party selecting it.

            22.6  Marketing Analysis and Reports. KI PHARMA and/or GRELAN shall
provide such reports and analyses as BIONUMERIK may reasonably request
containing English translations describing the market for and performance of the
Venture Products in the Territory, the market position and promotion of the
Venture Products in the Territory, competitive product information including
pricing and promotional information, and physician and consumer acceptance of
the Venture Products developed or obtained by KI PHARMA and/or GRELAN which
could affect the Venture Products in the Territory or generally. To assist in
the distribution of Venture Products in the Territory, KI PHARMA and/or GRELAN
shall regularly provide BIONUMERIK with information and data which will enable
BIONUMERIK to have a complete understanding of the general and specific markets
relating to the sale of Venture Products in the Territory.

                                       35
<PAGE>
            22.7  Notice / Reports. Any reports, notices or other communications
required or permitted to be given by any party hereto will be given in writing
by personal delivery, courier service or facsimile, or by registered or
certified air mail, postage prepaid, return receipt requested, addressed to each
respective party at the address shown below.

                  If to BIONUMERIK:

                  BioNumerik Pharmaceuticals, Inc.
                  8122 Datapoint Drive, Suite 1250
                  San Antonio, Texas 78229
                  Attn: Frederick H. Hausheer, M.D.
                  Facsimile No.: (210) 614-0643

                  If to GRELAN:

                  Grelan Pharmaceutical Co., Ltd.
                  Ogura Bldg. 5F
                  Nihonbashi Kobunacho 6-6
                  Chuo-ku, Tokyo 103-0024
                  Japan
                  Attn: Hashime Kanazawa, Ph.D.
                  Facsimile No. (81) 3-3281-5980

or to such other address as any party may indicate by proper notice to the other
parties in the same manner as provided herein; provided, however, that the
notices and opinions referred to in or required under Sections 10 and 18 shall
be given by personal delivery, courier service or registered or certified
airmail as mentioned above. All notices are deemed effective on the date of
receipt or, if delivery is not accepted, five (5) days after placement with the
addressee, an overnight courier service or a post office, as applicable.

            22.8  Severability. Should any provision of this Agreement be held
to be invalid, unenforceable, or against public policy, the remaining provisions
hereof shall not be affected thereby. In such event, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible with respect to those provisions
which were held to be invalid, unenforceable or against public policy.

            22.9  Counterparts. This Agreement may be executed in several
counterparts, each of which will be an original, but all of which, when taken
together, will constitute one and the same instrument.

                                       36
<PAGE>
            22.10 Warranty Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS
19 AND 20, NEITHER BIONUMERIK NOR GRELAN MAKES ANY WARRANTY WITH RESPECT TO ANY
TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT
AND EACH OF BIONUMERIK AND GRELAN HEREBY DISCLAIMS WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING. THE PARTIES UNDERSTAND AND AGREE THAT
DEVELOPMENT AND COMMERCIALIZATION OF THE VENTURE PRODUCTS WILL INVOLVE APPROVAL
BY REGULATORY AUTHORITIES AND THAT NO PARTY IS GUARANTEEING THE SAFETY,
EFFICACY, MANUFACTURE OR REGULATORY APPROVAL OF ANY VENTURE PRODUCTS.

            22.11 Force Majeure.

                  22.11.1. Except for the payment of money, no failure or
omission by the parties hereto in the performance of any obligation of this
Agreement shall be deemed a breach of this Agreement nor create any liability,
if the same arises as a result of force majeure, i.e., any cause or causes
beyond the control of the parties, including, but not limited to the following,
which for the purposes of this Agreement, shall be regarded as beyond the
control of the party in question: acts of God; acts, omissions, rules,
regulations, or orders of any governmental authority or any officer, department,
agency or instrumentality thereof; fire; storm; flood; earthquake; accident;
acts of the public enemy; war; rebellion; insurrection; riot; invasion; strikes,
lockouts or shortages of raw materials or other supplies.

                  22.11.2. In the event of such cause intervening, such excuse
of performance shall be only to the extent that such non-performance is beyond
the reasonable control of the party bound by such covenant or obligation; and
the party so affected shall use its best efforts to eliminate or cure or
overcome any of such causes and to resume performance of its covenants and
obligations with all possible speed.

            22.12. Arbitration. All disputes, controversies or differences which
may arise among the parties, out of or in relation to or in connection with this
Agreement or the Operating Agreement, or the breach thereof, shall be finally
settled by arbitration, by the American Arbitration Association in Honolulu,
Hawaii, U.S.A., by a panel of three (3) arbitrators in accordance with the then
current American Arbitration Association International Arbitration Rules,
provided that the arbitrators will first render a preliminary

                                       37
<PAGE>
decision setting forth their grounds for decision and providing at least thirty
(30) days for each of the parties to respond. The parties hereto expressly waive
any right to appeal such decision or to challenge the decision in any court.
Judgment thereof may be entered in any court of competent jurisdiction in the
United States or Japan. This clause shall not be used to prohibit the right of
any party to seek injunctive relief in appropriate circumstances.

            22.13 Export Controls. The parties agree to abide by the United
States and Japanese laws and regulations governing exports of the Venture
Products or any other technology developed or disclosed as a result of this
Agreement. The parties acknowledge that any performance under this Agreement is
subject to any restrictions which may be imposed by the United States and
Japanese laws and regulations governing exports. Each party agrees to provide
the other parties with any assistance, including written assurances, which may
be required by a competent governmental authority and by applicable laws and
regulation as a precondition for any disclosure of technology by the other
parties under the terms of this Agreement. In addition, the parties hereto agree
to take all actions as may reasonably be required to assure compliance with all
applicable requirements of the U.S. Foreign Corrupt Practices Act.

            22.14 Construction / Jurisdiction / Official Language. This
Agreement shall be construed in accordance with the laws of the State of Texas,
U.S.A. Subject to the arbitration provisions contained in Section 22.12, each
party hereto hereby irrevocably consents and submits to the jurisdiction of the
Courts of the State of Texas and of the United States of America for all
purposes in connection with any proceeding which arises out of or relates to
this Agreement. English shall be the official language of this Agreement and any
related agreement provided for hereunder and all communications between the
parties hereto shall be conducted in that language. Each party recognizes that
the parties hereto grant no licenses, by implication or otherwise, except for
the licenses expressly set forth in this Agreement. GRELAN agrees to promptly
provide BIONUMERIK with written English translations of (a) all material
reports, financial statements, and documents relating to the Venture Products or
this Agreement that are in Japanese and (b) other documents that are in Japanese
and relate to the Venture Products or this Agreement as may be reasonably
requested by BIONUMERIK.

      23.   ENTIRE AGREEMENT. This Agreement comprises the entire understanding
and Agreement of the parties hereto with respect to the specific subject matter
of this Agreement, and supersedes all prior agreements or understandings,
written or oral, between the parties hereto with respect to the specific subject
matter of this Agreement. In addition, and except as otherwise expressly
provided

                                       38
<PAGE>
herein, those obligations under the existing confidentiality agreements,
materials transfer agreements, stock purchase agreements, and related agreements
between and among BIONUMERIK and GRELAN, and in certain cases certain third
parties, shall continue in full force and effect in accordance with their terms.
This Agreement may not be amended except by a written instrument signed by
GRELAN and BIONUMERIK.

      24.   CAPTIONS. The captions used in this Agreement are for purposes of
clarification only and are not meant to be construed as part of this Agreement.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.

GRELAN PHARMACEUTICAL CO., LTD.            BIONUMERIK PHARMACEUTICALS, INC.

By:   /s/ H. KANAZAWA                      By:   /s/ FREDERICK H. HAUSHEER, M.D.
   --------------------------------------     ----------------------------------
      Hashime Kanazawa, Ph.D.                    Frederick H. Hausheer, M.D.
      C.O.O. & Vice President - Director.        Chairman & Chief Executive
                                                 Officer

Date: 30th Aug. 2000                         Date: 30th Aug. 2000

                                       39
<PAGE>
                                 ATTACHMENT A-1

      [**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       40
<PAGE>
                                 ATTACHMENT A-2

      [**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       41
<PAGE>
                                 ATTACHMENT A-3

      [**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       42
<PAGE>
                                 ATTACHMENT A-4

      [**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       43
<PAGE>
                                 ATTACHMENT A-5

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       44
<PAGE>
                                                                    CONFIDENTIAL

                                 ATTACHMENT B-1

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       45
<PAGE>
                                                                    CONFIDENTIAL

                                 ATTACHMENT B-2

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       46
<PAGE>
                                  ATTACHMENT C

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       47
<PAGE>
                                                                    CONFIDENTIAL
                                                                 (Grelan's part)

                                  ATTACHMENT D

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       48
<PAGE>
                                  ATTACHMENT E

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       49
<PAGE>
                                                                    CONFIDENTIAL
                                                                 (Grelan's part)

                                  ATTACHMENT E

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       50

<PAGE>
                                                                    CONFIDENTIAL
                                                                 (Grelan's part)

                                  ATTACHMENT F

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       51
<PAGE>
                                                                    CONFIDENTIAL
                                                                 (Grelan's part)

                                  ATTACHMENT G

[**]

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       52<PAGE>
                                                                    Exhibit 10.3

CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTION.

                              OPERATING AGREEMENT

                                       OF

                           KI PHARMACEUTICALS, L.L.C.

                                                       DATED: SEPTEMBER 22, 2000
<PAGE>
                                     INDEX

<TABLE>
<S>                                                                           <C>
Preamble ....................................................................  1

                                   Article I
                          Organization of the Company

1.01   Formation.............................................................  1
1.02   Name..................................................................  1
1.03   Continuation and Term.................................................  2
1.04   Offices...............................................................  2
1.05   Names and Addresses of Members........................................  2
1.06   Business of the Company...............................................  2
1.07   Amendment by Members..................................................  3

                                   Article II
                           Management of the Company

2.01   Management............................................................  3
2.02   Limitations on the Managers' Authority................................  4
2.03   Indemnification of a Manager..........................................  5
2.04   Transactions with a Manager or An Affiliate of a Manager..............  6
2.05   Voting; Quorum........................................................  6
2.06   Steering Committee....................................................  6
2.07   Officers..............................................................  7

                                  Article III
                 Election, Resignation and Removal of a Manager

3.01   Election of A Manager.................................................  8
3.02   Term of Office........................................................  8
3.03   Resignation of A Manager..............................................  9
3.04   Removal of A Manager..................................................  9

                                   Article IV
                             Capital Contributions

4.01   Initial Paid-In Capital............................................... 10
4.02   Additional Capital; Limitation........................................ 10
4.03   Compromise............................................................ 10
</TABLE>

                                      -i-
<PAGE>
<TABLE>
<S>                                                                           <C>
                                   Article V
                         Allocations and Distributions

5.01   Capital Accounts......................................................  11
5.02   Allocation of Profits.................................................  11
5.03   Allocation of Losses..................................................  11
5.04   Other Allocations.....................................................  11
5.05   Special Allocations to Capital Accounts...............................  12
5.06   Distribution of Cash..................................................  13
5.07   Assignments of Interests..............................................  13

                                   Article VI
                       Transfer of Membership Interests;
                             Expulsion; New Members

6.01   Restrictions on Transfer..............................................  14
6.02   Resignation of Members................................................  15
6.03   Rights of First Refusal...............................................  15
6.04   Permitted Transfers...................................................  16
6.05   New Members...........................................................  16
6.06   Expulsion.............................................................  17

                                  Article VII
                          Voting, Quorum, and Meetings

7.01   Voting Power..........................................................  18
7.02   Quorum................................................................  18
7.03   Annual Meeting of Members.............................................  18
7.04   Meetings of Members...................................................  19
7.05   Place of Meeting......................................................  19
7.06   Notice of Meetings....................................................  19
7.07   Action Without a Meeting..............................................  19
7.08   Waiver of Notice......................................................  19
7.09   Avoidance of Deadlocks................................................  20
7.10   Dissolution in the Event of Deadlock..................................  20
</TABLE>

                                      -ii-
<PAGE>
<TABLE>
<S>                                                                           <C>
                                  Article VIII
              Records; Financial and Fiscal Affairs; Tax Reporting

8.01   Records and Accounting................................................  20
8.02   Tax Information.......................................................  21
8.03   Tax Returns...........................................................  21
8.04   Elections.............................................................  21
8.05   Interim Closing of the Books..........................................  21
8.06   Fiscal Year...........................................................  22
8.07   Tax Matters Partner...................................................  22

                                   Article IX
                                  Dissolution

9.01   Events Requiring Dissolution .........................................  22
9.02   Events of Dissociation ...............................................  23
9.03   Rights of Members Upon Continuation...................................  24
9.04   Winding Up............................................................  24
9.05   Authority of Managers After Dissolution ..............................  25
9.06   Distribution .........................................................  25

                                   Article X
                                  Definitions

10.01  Affiliate.............................................................  26
10.02  Agreement.............................................................  26
10.03  Assignee..............................................................  26
10.04  Capital Contribution..................................................  26
10.05  Code..................................................................  27
10.06  Company...............................................................  27
10.07  Interest..............................................................  27
10.08  Losses................................................................  27
10.09  Percentage Interests for Venture Products BN Activities...............  27
10.10  Percentage Interests for Venture Products GR Activities...............  27
10.11  Person................................................................  27
10.12  Profits...............................................................  28
10.13  Treasury Regulations..................................................  28
10.14  Unit..................................................................  28
10.15  Venture Products BN Activities........................................  28
10.16  Venture Products GR Activities........................................  28
10.17  Venture Agreement.....................................................  28
</TABLE>

                                     -iii-
<PAGE>
<TABLE>
<S>                                                                           <C>
                                   Article XI
                                 Miscellaneous

11.01  Notices...............................................................  29
11.02  Possible Restrictions.................................................  29
11.03  Governing Law; Successors.............................................  29
11.04  Entire Agreement......................................................  29
11.05  Headings, etc.........................................................  30
11.06  No Waiver.............................................................  30
11.07  Legends...............................................................  30
11.08  Counterparts..........................................................  30
11.09  Creditors.............................................................  30

Schedule I...................................................................  32
</TABLE>

                                      -iv-
<PAGE>
                              OPERATING AGREEMENT

                                       OF

                           KI PHARMACEUTICALS, L.L.C.

                                    PREAMBLE

      The members of KI Pharmaceuticals, L.L.C. (the "Company") set forth in
Schedule I hereto have adopted this Operating Agreement (this "Agreement") as
follows:

                                   ARTICLE I
                          ORGANIZATION OF THE COMPANY

1.01  FORMATION

      The parties to this Agreement are members of the Company, a limited
liability company organized under the provisions of the Delaware Limited
Liability Company Act, as amended from time to time (the "Act'). A Certificate
of Formation (the "Certificate") was filed on September 20, 2000 with the
Secretary of State of the State of Delaware. The Managers (defined in Section
2.01(a) hereof) may take such further actions as they deem necessary to permit
the Company to conduct business as a limited liability company in any other
jurisdiction.

1.02  NAME

      The name of the Company shall be "KI Pharmaceuticals, L.L.C." The name of
the Company may be changed from time to time by amendment of this Agreement and
the Certificate pursuant to Section 1.07. The Company may transact business
under an assumed name by filing an assumed name certificate in the manner
prescribed by applicable law.

                                      -1-
<PAGE>
1.03  CONTINUATION AND TERM

      The Company was formed upon the issuance by the Secretary of State of
Delaware of a certified copy of the Certificate. The Company shall continue in
existence until the close of the Company's business on December 31, 2030, or
until the earlier dissolution of the Company pursuant to the provisions of this
Agreement.

1.04  OFFICES

      The principal office of the Company shall be determined from time to time
by the Managers. The registered office of the Company required by the Act to be
maintained in the State of Delaware, may be, but need not be, identical with the
principal office. The Company's registered office, registered agent and the
addresses thereof may be changed from time to time by the Managers in accordance
with the Act. The Company may also have offices at such other places, both
within and without the State of Delaware including Japan, as the Managers may
from time to time determine.

1.05  NAMES AND ADDRESSES OF MEMBERS

      The names and addresses of the Members are set forth on Schedule 1;
provided, however, that if Dr. Hashime Kanazawa ceases to be a director,
employee or statutory auditor of Grelan (as defined in 1.07 below) for any
reason whatsoever, his Units in the Company shall be automatically assigned to
Grelan and he shall cease to be a Member without the consent of any other
Members or any other formalities notwithstanding any provision of this
Agreement. He shall take appropriate steps necessary to ensure such assignment
on or before the date of this Agreement and shall continue such steps in full
effect during the term of this Agreement. Changes to the names and addresses of
the Members and the names and addresses of new Members may be identified by an
addendum to this Operating Agreement.

1.06  BUSINESS OF THE COMPANY

      The Company (i) shall engage in the development, marketing, distribution,
manufacture and sale of certain specified products in the territory of Japan and
import of such products to the territory of Japan and (ii) may engage in any
other lawful business permitted under the Act. Any Member, however, shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Company. Neither the Company nor any Member
shall have any rights by virtue of this Agreement in any business ventures of
any Member. The Company shall not conduct in the U.S.A. any commercial
activities which would result in

                                      -2-
<PAGE>
requiring Grelan to file U.S. Federal or state income tax returns solely by
virtue of holding any Interest in the Company.

1.07  AMENDMENT BY MEMBERS

      So long as they are Members, a vote of both BioNumerik Pharmaceuticals,
Inc. ("BioNumerik") and Grelan Pharmaceutical Co., Ltd. ("Grelan") acting in
their capacity as Members, is required to amend this Agreement and any
Certificate.

                                   ARTICLE II
                           MANAGEMENT OF THE COMPANY

2.01  MANAGEMENT

      (a)   The Company will be managed by two (2) Persons (the "Managers")
elected in accordance with Article 111. The conduct of the Company's business
and the management of its affairs will be exercised and conducted solely by
approval of all the Managers in accordance with this Agreement. Members, acting
solely in their capacity as members to the Company, shall not have the authority
to bind the Company. Subject to the provisions of this Article II, any one or
more Managers may act for and on behalf of the Company and execute all
agreements on behalf of the Company and otherwise bind the Company as to third
parties without the consent of all of the Members. In addition to and not in
limitation of any rights and powers conferred by law or other provisions of this
Agreement, and except as limited, restricted or prohibited by the express
provisions of this Agreement, the Managers shall have and may exercise on behalf
of the Company, all powers and rights necessary, proper, convenient or advisable
to effectuate and carry out the purposes, business and objectives of the
Company. The Managers will have general and active supervision and direction
over the day-to-day business operations of the Company and over its officers and
employees.

      (b)   The Managers acting on behalf of the Company shall be reimbursed for
their expenses incurred in carrying out their duties on behalf of the Company,
but no salary or related compensation shall be payable to them in their capacity
as Managers.

      (c)   In exercising their powers, the Managers may (i) rely upon and shall
be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, or document believed by
them to be genuine and to have been signed or

                                      -3-
<PAGE>
presented by the proper party or parties; (ii) consult with counsel, accountants
or experts selected by them and any opinion of an independent counsel,
accountant or expert shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by the Managers in good faith
and in accordance with such opinion; and (iii) execute any of their powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.

2.02  LIMITATIONS ON THE MANAGERS' AUTHORITY

      The Managers shall have no authority to do any act prohibited by law or in
contravention of this Agreement, nor shall the Managers have any authority to do
any of the following without the prior written consent of the Members holding
more than three-fourths (3/4) of the outstanding Units:

      (a)   permit or cause the Company to make any loan to any Manager or
Member or any Affiliate of a Manager or Member;

      (b)   permit or cause the funds of the Company to be comingled with the
funds of any other Person;

      (c)   permit any creditor who makes a nonrecourse loan to the Company to
acquire, at any time as a result of making such loan, any direct or indirect
interest in the profits, capital or property of the Company other than as a
secured creditor;

      (d)   perform any act which would impair or make impossible the ordinary
conduct of the Company's business;

      (e)   sell, lease, exchange or otherwise dispose of all or substantially
all of the assets of the Company, with or without goodwill other than in the
ordinary course of business;

      (f)   merge or consolidate the Company with any other entity;

      (g)   permit or cause the Company to enter into a contract with any of the
Managers, CEO, President or their respective Affiliates;

      (h)   permit or cause the Company to borrow money from any Person other
than any Member;

      (i)   permit or cause the Company to guarantee for the benefit of any
Person or to create a mortgage or any other encumbrance on any of the assets of
the Company for the benefit of any Person;

                                      -4-
<PAGE>
      (j)   permit or cause the Company to use its property to redeem an
Interest;

      (k)   permit or cause the Company to acquire any share or interest in any
company, business or partnership; or

      (l)   permit or cause the Company to acquire land, buildings or movable
fixed assets.

2.03  INDEMNIFICATION OF A MANAGER

      (a)   A Manager shall not be liable to the Company or any Member for any
act or omission based upon errors of judgment or other fault in connection with
the business or affairs of the Company if the Managers (other than the Manager
seeking indemnification) determine that such course of conduct was in the best
interest of the Company and did not result from the gross negligence or willful
misconduct of such Manager.

      (b)   To the fullest extent permitted by law, a Manager shall be
indemnified and held harmless by the Company from and against any and all
losses, claims, damages, settlements and other amounts ("Losses") arising from
any and all claims (including attorneys' fees and expenses, as such fees and
expenses are incurred), demands, actions, suits or proceedings (civil, criminal,
administrative or investigative), in which such Manager may be involved, as a
party or otherwise, by reason of such Manager's management of the affairs of the
Company, whether or not such Manager continued to be such at the time any such
liability or expense is paid or incurred; provided that a Manager shall not be
entitled to the foregoing indemnification if a court of competent jurisdiction
shall have determined that such Losses resulted primarily from the gross
negligence or willful misconduct of such Manager. The termination of a
proceeding by judgment, order, settlement or conviction under a plea of nolo
contendere, or its equivalent, shall not, of itself, create any presumption that
such Losses resulted primarily from the gross negligence or willful misconduct
of a Manager or that the conduct giving rise to such liability was not in the
best interest of the Company. The Company shall also indemnify a Manager who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action by or in the right of the Company to procure a judgment in
its favor by reason of the fact that such Manager is or was an agent of the
Company, against any Losses incurred by such Manager in connection with the
defense or settlement of such action; provided that no Manager shall be entitled
to the foregoing indemnification if a court of competent jurisdiction shall have
determined that any such Losses resulted from the gross negligence or willful
misconduct of such Manager. The Company may advance a Manager any expenses
(including, without limitation, attorneys' fees and expenses) incurred as a
result of any demand, action, suit or proceeding referred to in this paragraph
(b) provided that (i) the legal action relates to the performance of duties or
services by such Manager on behalf of the Company; and (ii) such Manager gives a
full

                                      -5-
<PAGE>
recourse promissory note to the Company for the amounts of such advances payable
in the event that such Manager is determined to be not entitled to
indemnification hereunder.

      (c)   The indemnification provided by paragraph (b) of this Section 2.03
shall not be deemed to be exclusive of any other rights to which a Manager may
be entitled under any agreement, as a matter of law, in equity or otherwise, and
shall continue as to a Manager who has ceased to have an official capacity and
shall inure to the benefit of the heirs, successors and administrators of such
Manager.

      (d)   Any indemnification pursuant to this Section 2.03 will be payable
only from the assets of the Company.

2.04  TRANSACTIONS WITH A MANAGER OR AN AFFILIATE OF A MANAGER

      Subject to the provisions of Section 2.02, a Manager, on behalf of the
Company, may enter into contracts with itself or its Affiliates, provided that
any such transactions shall be on terms no more favorable to the Manager or such
Affiliates than generally afforded to unrelated parties in similar transactions.

2.05  VOTING: QUORUM

      Each Manager shall have one vote. A majority of the number of Managers
fixed by this Agreement shall constitute a quorum for the transaction of
business; provided, that if more than one Manager is appointed and less than a
majority of the Managers are present at a meeting, a majority of the Managers
present may adjourn the meeting from time to time without further notice. If a
quorum is present when a vote is taken, the affirmative vote of a majority of
the Managers present is the act of the Managers unless this Agreement requires
the vote of a greater number of Managers.

2.06  STEERING COMMITTEE

      (a)   The Managers shall appoint a Steering Committee of the Company
comprised of two members: one from among Grelan's senior officers or employees
designated by Grelan and the other one from among BioNumerik's senior officers
or employees designated by BioNumerik. The Steering Committee shall be
responsible for the overall management of the development, manufacture,
licensing activities, distribution and marketing of the Company's products in
the territory of Japan. [**] will be the founding members of the Steering
Committee. They shall co-chair the Steering Committee. Section 2.01

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -6-
<PAGE>
(b) shall apply mutatis mutandis to any payment to them for conducting their
duties as such members of the Steering Committee. Each Steering Committee member
must also be a Manager.

      (b)   No Steering Committee member shall be removed and no new Steering
Committee member shall be appointed unless such removal or appointment is
consented to by both Grelan and BioNumerik, acting in their capacity as Members.

2.07  OFFICERS

      (a)   President, Chief Executive Officer and Secretary. If the Members
holding more than two-thirds (2/3) of the outstanding Units deem it necessary or
appropriate, they may elect a President, a Chief Executive Officer ("CEO"),
and/or a Secretary; provided that the President and the CEO always must be the
Managers concurrently.

      Sections 3.01 (c), and 3.02 to 3.04 shall also apply mutatis mutandis with
respect to the term of office, designation rights, resignation or removal of the
office as President, CEO and Secretary. The President, the CEO and the
Secretary, if any, acting on behalf of the Company shall be reimbursed for their
expenses incurred in carrying out their duties on behalf of the Company, but no
salary or related compensation shall be payable to them.

      (b)   Subordinate Officers. The Managers may appoint such officers (other
than the President, CEO and Secretary) as they deem necessary. One (1) person
may hold any two (2) or more of these offices. The Managers shall appoint such
other officers, in principle, at their first meeting after each annual meeting
of Members. Each officer so appointed shall hold office until his successor
shall have been duly appointed and qualified or until his death, resignation or
removal in the manner hereinafter provided.

      (c)   Resignation of Subordinate Officers. Any officer (other than the
President, CEO and Secretary) may resign at any time by giving written notice
thereof to the Members or to the Managers. Any such resignation shall take
effect at the time specified therein and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.

      (d)   Removal of Subordinate Officers. Any officer (other than the
President, CEO and Secretary) may be removed at any time with or without cause
by the affirmative vote of the Members holding two-thirds (2/3) of the
outstanding Units. The removal of any officer shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
such officer shall not of itself create any contract rights, merely by virtue of
such election or appointment.

                                      -7-
<PAGE>
      (e)   Vacancies of Subordinate Officers. A vacancy in any officer (other
than the President, CEO and Secretary) shall be filled for the unexpired portion
of the term by the Managers.

      (f)   Salaries of Subordinate Officers. The salary or compensation of
officers (other than the President, CEO and Secretary), if any, shall be
established from time to time by the Managers. The Managers may delegate to any
committee or officer the power to fix from time to time the salary or other
compensation of officers (other than the President, CEO and Secretary) appointed
in accordance with the provisions of this Article.

                                  ARTICLE III
                 ELECTION, RESIGNATION AND REMOVAL OF A MANAGER

3.01  ELECTION OF A MANAGER

      (a)   A Manager of the Company shall be elected by a vote of Members
holding more than two-thirds (2/3) of the outstanding Units; provided, however,
that each Member who has together with its Affiliates more than one-third (1 /3)
of the outstanding Units shall have the right to designate one Manager, and the
other Members shall exercise their votes to approve such designation. The
founding Managers shall be [**] until the expiration of their term of office, or
their resignation, removal or death.

      (b)   The total number of Managers may be increased by a vote of Members
holding more than three-fourths (3/4) of the outstanding Units. Any Member who
has together with its Affiliates more than one-third (1/3) of the outstanding
Units shall have the right to designate one-half of the number of Managers to be
increased and the other Members shall exercise their votes to approve such
designation.

      (c)   If a Manager resigns or is removed in accordance with Section 3.03
or 3.04 or dies, the Members shall call a meeting to elect a replacement Manager
within 30 days after the occurrence of such resignation, removal or death. The
Member who designated such resigned, removed or dead Manager shall have the
right to designate replacement thereof, and the other Members shall exercise
their vote to approve such designation.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -8-
<PAGE>
3.02  TERM OF OFFICE

      (a)   The term of office of Managers shall expire at the close of the
first annual meeting of Members occurring at least two (2) years after their
assumption of office. A Manager may be re-elected upon the expiration of his
term of office.

      (b)   The term of office of a Manager elected to fill a vacancy or elected
due to an increase in the number of Managers shall be concurrent with the term
of office of the other Managers in office at that time.

3.03  RESIGNATION OF A MANAGER

      A Manager may resign as a manager of the Company upon 30 days prior
written notice to all Members.

3.04  REMOVAL OF A MANAGER

      A Manager may be removed at any time with or without cause by the vote of
Members holding more than two-thirds (2/3) of the outstanding Units.

                                      -9-
<PAGE>
                                   ARTICLE IV
                             CAPITAL CONTRIBUTIONS

4.01  INITIAL PAID-IN CAPITAL

      Each Member has made to the Company the Capital Contribution and has
received the Units set forth opposite its name on Schedule I hereto.

4.02  ADDITIONAL CAPITAL; LIMITATION

      No Member shall be required to satisfy any negative Capital Account. If
the Members holding more than two-thirds (2/3) of the outstanding Units
determine that additional capital is necessary, each Member shall contribute
such additional capital and receive additional Units as determined by the
Members holding more than two-thirds (2/3) of the outstanding Units in an amount
equal to the Member's pro rata share of the total Capital Contributions before
any other Persons are solicited for Capital Contributions; [**] In addition to
the foregoing, Grelan shall be required to make additional capital contributions
in an amount equal to [**], until such time that product revenues are obtained
from the Venture Products. For purposes of this Agreement, the terms "Venture
Products," "Venture Products BN," "Venture Products GR" and "Territory" shall
have the meanings ascribed to them in the Venture Agreement. No Member shall
have any liability to the Company, to the other Members, or to the creditors of
the Company on account of any deficit balance in its Capital Account except to
the extent such deficit arises from the failure of such Member to contribute the
full amount of its Capital Contribution. No Member shall have the right to
demand or receive the return of such Member's Capital Contribution to the
Company. No Member shall be entitled to interest on any Capital Contribution or
on such Member's Capital Account.

4.03  COMPROMISE

      The Managers may compromise any obligation of a Member to make a Capital
Contribution or return money or other property paid or distributed in violation
of the Act.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -10-
<PAGE>
                                   ARTICLE V
                         ALLOCATIONS AND DISTRIBUTIONS

5.01  CAPITAL ACCOUNTS

      The Company shall maintain in its books and records, in accordance with
Section 1.704-1(b)(2)(iv) of the Treasury Regulations, a capital account for
each Member and Assignee (a "Capital Account"). Each Member's Capital Account
shall be increased by (1)(a) the amount of money contributed by such Member to
the Company, (b) the fair market value of property or other consideration
contributed by such Member to the Company (net of liabilities secured by such
contributed property that the Company is considered to assume or take under
Section 752 of the Code), and (c) allocations to such Member of Company income
and gain (or items thereof), and is decreased by (2)(w) the amount of money
distributed to such Member by the Company, (x) the fair market value of property
or other consideration distributed to such Member by the Company (net of
liabilities secured by such distributed property that such Member is considered
to assume or take under Section 752 of the Code), (y) allocations to such Member
of expenditures of the Company described in Section 705(a)(2)(B) of the Code,
and (z) allocations of Company loss and deduction (or items thereof). For
purposes of this Article, a Member who has more than one Interest in the Company
shall have a single Capital Account that reflects all such Interests, regardless
of the class of Interests owned by such Member and regardless of the time or
manner in which such Interests were acquired. All Capital Accounts are to be
determined in accordance with the rules set forth in Section 1.704-1(b)(2)(iv)
of the Treasury Regulations.

5.02  ALLOCATION OF PROFITS

      The Profits of the Company shall be allocated to the Members as follows:
[**].

5.03  ALLOCATION OF LOSSES

      The Losses of the Company shall be allocated to the Members as follows:
[**].

5.04  OTHER ALLOCATIONS

Except as otherwise provided in this Agreement, allocations of gains,
deductions, and credits shall be allocated to the Members as follows: [**].

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -11-
<PAGE>
5.05  SPECIAL ALLOCATIONS TO CAPITAL ACCOUNTS

      The Capital Accounts of the Members are to be maintained in accordance
with the Code and the Treasury Regulations, including without limitation the
alternative test for economic effect set forth in Section 1.704-1(b)(2)(ii)(d)
of the Treasury Regulations and the minimum gain chargeback provisions of
Section 1.704-2 of the Treasury Regulations. Nothing in this Agreement is
intended to create a deficit restoration obligation or otherwise impose personal
liability on a Member for a deficit in its Capital Account. Without limiting the
generality of the foregoing:

      (a)   If an allocation of loss or other allocation pursuant to Section
5.04 hereof including expenditures described in Section 705(a)(2)(B) of the Code
would cause or increase a deficit in a Member's Capital Account as defined in
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and Section 1.704-2 of
the Treasury Regulations, then the amount of the loss or other allocation which
would have caused or increased a deficit in a Member's Capital Account shall be
allocated instead to the Capital Account of the other Members which would not
have a deficit in their Capital Accounts as a result of the allocation, in
proportion to their respective Interests, or, if no such Members exist, then to
the Members in accordance with their allocation of Profits pursuant to Section
5.02 hereof.

      (b)   If any Member unexpectedly receives any adjustments, allocations, or
distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6) of the
Treasury Regulations, which create or increase a deficit in such Member's
Capital Account, the items of the Company's income and gain for such year and,
if necessary, for subsequent years shall be specially credited to the Capital
Account of such Member in an amount and manner sufficient to eliminate, to the
extent required by the Treasury Regulations, the deficit in the Capital Account
as quickly as possible. Any such allocations shall be made pro rata. It is the
intent that this section be interpreted to comply with the alternate test for
economic effect set forth in Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations.

      (c)   Income and gain attributable to Venture Products BN Activities shall
be allocated [**].

      (d)   Income and gain attributable to Venture Products GR Activities shall
be allocated [**].

      (e)   Operating costs of the Company for any taxable year shall be
allocated [**] to [**] until such time that product revenues are obtained from
Venture Products.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -12-
<PAGE>
      (f)   After giving effect to the allocations set forth in Sections 5.05
(a) - (e), all items of income, gain, loss and deduction arising upon the sale
or deemed sale of all or substantially all of the assets of the Company in
connection with the dissolution of the Company pursuant to Article IX shall be
allocated such that after taking such allocations into effect, to the extent
possible, the balances in the Members' Capital Accounts will be in proportion to
the Members' Interests.

5.06  DISTRIBUTION OF CASH

      (a)   The Managers shall, unless otherwise agreed to by Members holding
more than two-thirds (2/3) of outstanding Units, distribute to the Members any
cash of the Company in excess of working capital requirements or other amounts
that the Managers determine shall be necessary or appropriate for the operation
of the business of the Company, including the receipts derived from and
attributable to Venture Products BN Activities (hereinafter "Venture Products BN
Available Cash") and Venture Products GR Activities (hereinafter "Venture
Products GR Available Cash"), or its winding up and dissolution. Except as
provided in Section 9.06, all such cash distributions shall be made to the
Members in accordance with paragraph (c) of this Section 5.06.

      (b)   The Managers may not distribute to the Members in kind any property
held by the Company.

      (c)   Any distribution of cash pursuant to paragraph (a) of this Section
5.06 shall be made to the Members as follows: [**].

5.07  ASSIGNMENTS OF INTERESTS

      In the case of any assignment of an Interest, the Assignee will have a
beginning Capital Account equal to the Capital Account of the assignor of such
Interest on the effective date of the assignment. For purposes of this Article V
only, the maintenance of Capital Accounts, allocation of profits, losses and
other items, and distributions of cash and other property, all as set forth in
this Article V, shall equally apply to each Assignee and its Capital Account.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -13-
<PAGE>
                                   ARTICLE VI
                       TRANSFER OF MEMBERSHIP INTERESTS;
                             EXPULSION; NEW MEMBERS

6.01  RESTRICTIONS ON TRANSFER

      (a)   Except as otherwise provided for in Sections 1.05 and 6.04, no
Member may, without obtaining the prior written consent of Members holding more
than two-thirds (2/3) of the outstanding Units, sell, assign, dispose of or
transfer (collectively "Transfer") all or any portion of, or any interest or
rights in, the Interests owned by the Member, and no interest holder may
Transfer all, or any portion of, or any interest or rights in, any Interest.
Each Member hereby acknowledges the reasonableness of this prohibition in view
of the purposes of the Company and the relationship of the Members. The Transfer
of any Interest or membership rights in violation of the prohibition contained
in this Section 6.01 shall be deemed invalid, null and void, and of no force or
effect. Any Person to whom an Interest or membership rights are attempted to be
transferred in violation of this Section 6.01 shall not be entitled to vote on
matters coming before the Members, participate in the management of the Company,
act as an agent of the Company, receive distributions from the Company or have
any other rights in or with respect to the Interest.

      (b)   Notwithstanding anything to the contrary in this Section 6.01, no
Member shall in any event Transfer an Interest, or any portion thereof, if such
Transfer would result in a termination of the Company for Federal income tax
purposes or jeopardize the classification of the Company as a partnership for
Federal income tax purposes, or violate or cause the Company to violate, any
applicable law or governmental rule or regulation, including, without
limitation, any applicable Federal or state securities law.

      (c)   Notwithstanding anything to the contrary in this Section 6.01, in no
event shall any assignment of an Interest be made to a minor (except as a
beneficiary of a trust or pursuant to the Uniform Transfers to Minors Act) or an
incompetent (except as a beneficiary of a trust).

      (d)   Each Assignee, as a condition to the admission of such Assignee as a
Member, shall execute and acknowledge such instruments as the Managers shall
determine to be necessary or appropriate to effectuate such admission and to
confirm the agreement of the Assignee to be bound by all the terms and
provisions of this Agreement with respect to such Assignee's Interest. All
reasonable expenses, including attorneys' fees (as such fees are incurred)
incurred by the Company in connection with such admission shall be borne by the
Assignee to the extent such expenses shall not have been paid by the assignor of
the Interest.

                                      -14-
<PAGE>
      (e)   Any Person admitted to the Company as a Member shall be subject to
and bound by all the provisions of this Agreement as if such Person were an
original Member under this Agreement.

      (f)   Any purported assignment of an Interest that is not made in
accordance with this agreement is hereby declared to be null and void and of no
force or effect whatsoever.

      (g)   Each Member agrees that it will not Transfer or pledge or encumber
any Interests during the term of this Agreement to a Person engaged in the
business of discovering, developing, manufacturing and/or selling products for
the treatment of cancer or any other products that directly compete with any
products of the Company or any other products which any other Members are then
developing, manufacturing or marketing for sale in Japan.

6.02  RESIGNATION OF MEMBERS

      A Member may not resign from the Company prior to the dissolution and
winding up of the Company.

6.03  RIGHTS OF FIRST REFUSAL

      Subject to the restrictions on Transfers contained in Section 6.01 above,
if a Member (the "Transferring Member") wishes to Transfer during the term of
this Agreement any or all of its Interests in the Company (the "Transfer
Interests"), the Transferring Member shall first give a written notice (the
"Transfer Notice") to the Company and to the other Members specifying the wish
to transfer the Transfer Interests, the price per Unit at which it wishes to
transfer to the proposed transferee (the "Transfer Price"), the name and address
of the proposed transferee, and containing an irrevocable offer (open to
acceptance for a period of 60 days after the date such Transfer Notice is
received by the Company) to sell the Transfer Interests to the Company and/or
the other Members at the Transfer Price per Unit.

      The Company (or its one designee) and the other Members together shall
have the right to purchase all, but not less than all, of the Transfer Interests
at the Transfer Price per Unit, by giving the Transferring Member written notice
of the determination to purchase such Interests, within [**] days of the
Company's receipt of such Transfer Notice. The Company shall have the first
right to purchase all or a portion of such Transfer Interests. The Members other
than the Transferring Member shall have the right (upon notice to the Company)
to purchase their pro rata portion of any remaining Transfer Interests that the
Company does not propose to purchase.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -15-
<PAGE>
If a Member elects not to purchase any remaining Transfer Interests, the other
Members (other than the Transferring Member) shall have the pro rata right (upon
notice to the Company) to purchase such Interests. The closing of the purchase
of the Transfer Interests and payment for such Interests to the Transferring
Member pursuant to this Section 6.03 shall take place at such location as the
Transferring Member shall designate within 30 days after the Transferring
Member's receipt of the determination to purchase such Interests. Payment for
such Interests shall be made by check or by wire transfer against duly endorsed
certificates representing the Transfer Interests to be purchased. The Transfer
Interests shall be delivered free and clear of all encumbrances other than those
imposed by this Agreement.

      If, at the end of the 60th day after the Transfer Notice is received by
the Company, (i) a notice of acceptance of the offer contained in such Transfer
Notice has not been received by the Transferring Member, or (ii) a notice of
acceptance covering less than all of the Transfer Interests has been received by
the Transferring Member, then the Transferring Member shall have 90 days in
which to transfer to the proposed transferee set forth in the Transfer Notice
any or all of the Transfer Interests at a price not lower than the Transfer
Price per Unit and on terms no more favorable to such transferee than those
contained in the Transfer Notice; provided, however, that such Transfer shall
become effective and such transferee shall become a Member upon the satisfaction
of all the conditions set forth in Section 6.05 (a). If at the end of such 90
day period, the Transferring Member has not completed the transfer of all of the
Transfer Interests, the Transferring Member shall no longer be permitted to
Transfer such Interests pursuant to this Section 6.03 without again complying
with this Section in its entirety. The Transferring Member shall remain liable
to the Company as provided in the Act, regardless of whether such transferee
becomes a Member.

6.04  PERMITTED TRANSFERS

      Notwithstanding the foregoing provisions hereof (but subject to compliance
with Sections 6.01(b) - (g), a Member may Transfer all or a part of its
Interests to an Affiliate; provided that such Transfer shall become effective
and such Affiliate shall become a Member upon the satisfaction of all the
conditions set forth in Section 6.05 (a). The Transferring Member shall remain
liable to the Company as provided in the Act, regardless of whether such
Affiliate becomes a Member.

6.05  NEW MEMBERS

      (a)   New Members of the Company who are Assignees of Interests may be
admitted upon (i) payment of such additional capital as may be required under
Section 4.02; and (ii) signing an addendum to the Agreement, in the form and
substance reasonably satisfactory to the Company, agreeing to be bound to its
terms and reflecting the Capital Contribution of the new Member and the Units
representing the Interest.

                                      -16-
<PAGE>
      (b)   All reasonable expenses, including attorneys' fees (as such fees are
incurred) incurred by the Company in connection with the admission as a new
Member shall be borne by the Assignee to the extent such expenses shall not have
been paid by the assignor of the Interest.

      (c)   New Members of the Company who are not Assignees of Interests may be
admitted upon (i) payment of such additional capital as may be required under
Section 4.02; (ii) the unanimous vote of the Members approving the admission of
the new Member and the amount of the Capital Contribution to be made by the new
Member; (iii) payment of the Capital Contribution to the Company by the new
Member; and (iv) signing an addendum to the Agreement, in the form and substance
reasonably satisfactory to the Company, agreeing to be bound to its terms and
reflecting the Capital Contribution by the new Member and the Units representing
the Interest.

      (d)   New Members who have obtained their Interest from a Transferring
Member shall be only be entitled to the distribution to which the Transferring
Member would be entitled.

6.06  EXPULSION

      A Member may be expelled by the unanimous vote of the other Members if a
Member materially breaches this Agreement or the Venture Agreement, and such
breach has a material adverse impact on the Company or one or more of the other
Members and remains uncured thirty (30) days after receipt by the Member from
the other Members of notice of such breach. If a Member is expelled, it shall be
entitled to receive, within a reasonable time after expulsion, any distribution
to which that Member was entitled under this Agreement immediately preceding
such expulsion and the fair market value of the Member's Interest in the Company
as of the date of expulsion based upon the Member's right to share in
distributions from the Company (the "Expulsion Payment"). The payment of the
Expulsion Payment to an expelled Member shall be on the effective date of the
expulsion by delivery, at the option of the Company, of either [**]. Expulsion
of a Member shall cause it immediately to lose all rights as a Member including
the right to vote its Units or otherwise participate in the management of the
Company. If the Member is a Manager it will be deemed to have resigned its
position as a Manager, other officer and member of the Steering Committee as of
the effective date of the expulsion.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -17-
<PAGE>
                                  ARTICLE VII
                          VOTING, QUORUM, AND MEETINGS

7.01  VOTING POWER

      Each Unit shall be entitled to one vote upon each matter submitted to vote
at a meeting of the Members. If a quorum of the Members is present, the
affirmative vote of the Members holding more than two-thirds (2/3) of the
outstanding Units entitled to vote on the subject matter shall be the act of the
Members, unless the vote of Members holding a greater number is required by the
Act or this Agreement.

7.02  QUORUM

      Members holding more than two-thirds (2/3) of the outstanding Units,
represented in person or by proxy, shall constitute a quorum for the transaction
of business; provided, that if Members holding more than two-thirds (2/3) of the
outstanding Units are not present at a meeting, then the Members holding a
majority of the outstanding Units present at such meeting may adjourn the
meeting from time to time without further notice.

7.03  ANNUAL MEETING OF MEMBERS

      The annual meeting of Members shall be held on such date as the Managers
shall by resolution specify within a period commencing on January 1 and ending
on March 31 in each year, beginning in 2001. At each annual meeting (i) the
approval of the Company's tax returns and financial statements for the relevant
fiscal year, including without limitation the balance sheet, income statement
and allocation of the profit and loss to the Members, and (ii) the re-election
of the Managers whose term of office will expire upon the close of such meeting,
replacement of any other Manager(s) and/or the election of any additional
Manager(s), if necessary, shall take place and such other business shall be
transacted as may be properly presented to such meeting. If the day fixed for
the annual meeting shall be a legal holiday at the place of the meeting, such
meeting shall be held on the next succeeding business day. If the matters
referred to in (i) and (ii) above shall not be transacted at any annual meeting
held on any . day designated herein for such annual meeting, or at the
adjournment thereof, the Managers shall cause such matters to be transacted at a
meeting of the Members as soon thereafter as may be convenient.

                                      -18-
<PAGE>
7.04  MEETINGS OF MEMBERS

      Upon the written request of any Member, the Managers shall call a meeting
of the Members. The Managers may also call a meeting of the Members.

7.05  PLACE OF MEETING

      The Managers may designate any place, either in or out of the State of
Delaware, including Japan, as the place of meeting for any meeting. If no
designation is made the place of meeting shall be the Company's principal
office. Telephonic meetings are permitted.

7.06  NOTICE OF MEETINGS

      Written notice stating the date, time and place of the meeting and a
description of the purpose or purposes for which the meeting is called, shall be
mailed, not fewer than ten (10) nor more than thirty (30) days before the date
of the meeting, by or at the direction of the Managers to each Member of record
entitled to vote at the meeting. If mailed, such notice is effective when mailed
addressed to the Member's address shown in the Company's current record of
Members, with postage prepaid.

7.07  ACTION WITHOUT A MEETING

      Any action required or permitted to be taken by the Members by vote may be
taken without a meeting by written consent of the Members owning the requisite
number of Units required to approve such action. The consent shall set forth the
actions so taken and be signed by the Members owning the requisite Units
required to approve such action.

7.08  WAIVER OF NOTICE

      (a)   A Member may waive any notice required by this Agreement before or
after the date and time stated in the notice. The waiver must be in writing, be
signed by the Member entitled to the notice, and be delivered to the Managers.

      (b)   A Member's attendance at a meeting: (i) waives objection to lack of
notice or defective notice of the meeting, unless the Member at the beginning of
the meeting or promptly upon the Member's arrival objects to holding the meeting
or transacting business at the meeting, and (ii) waives objection to
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the Member objects
to considering the matter when it is presented.

                                      -19-
<PAGE>
7.09  AVOIDANCE OF DEADLOCKS

      The Members agree to act (and will use reasonable efforts to cause the
Managers to act) reasonably and in good faith to avoid Deadlocks (defined below)
at either the Manager or Member level.

7.10  DISSOLUTION IN THE EVENT OF DEADLOCK

      For purposes hereof, a "Deadlock" shall be deemed to exist if a majority
of the Managers or Members holding more than two-thirds (2/3) of the outstanding
Units (or such higher specified percentage of Members or Managers as is required
for approval of a particular matter) are unable to agree on a mutually
satisfactory resolution of any matter relevant to the Company and its operations
for a period of 60 days after such matter has first been proposed by a Member or
Manager, as the case may be.

      In the event of a Deadlock, [**].

                                  ARTICLE VIII
              RECORDS; FINANCIAL AND FISCAL AFFAIRS; TAX REPORTING

8.01  RECORDS AND ACCOUNTING

      (a)   The books of account of the Company shall be maintained at the
Company's principal place of business. The Company shall prepare its financial
statements using generally accepted accounting principles, consistently applied.

      (b)   The Managers will maintain a current list of the names and last
known addresses of each Member and the other Company records described in
Section 18-305 of the Act at the Company's principal office. Upon request, for
any purpose reasonably related to the Member's interest as a Member, the
Managers will furnish a copy of such information to a Member or its
representative. Any Member may inspect and copy or obtain from the Managers the
financial records of the Company and its tax returns. A Member shall give the
Managers at least ten (10) business day's prior written notice for any
inspection and copying permitted pursuant to this subsection by the Member or
its authorized attorney or agent.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -20-
<PAGE>
8.02  TAX INFORMATION

      The Managers will use their best efforts to cause to be delivered, as soon
as practical after the end of each fiscal year of the Company, to the Members
and Persons who were Members during such fiscal year all information concerning
the Company necessary to enable such Member to prepare such Member's Federal,
state and any other income tax returns for such fiscal year, including a
statement indicating such Member's share of Profits, Losses, deductions and
credits for such fiscal year for Federal, state and other income tax purposes,
and the amount of any distribution made to or for the account of such Member
during such fiscal year pursuant to this Agreement.

8.03  TAX RETURNS

      The Managers shall cause income tax returns for the Company to be prepared
and timely filed in accordance with applicable law; provided, however, that any
such income tax returns shall not be filed unless approved at the relevant
annual meeting of the Members or otherwise approved by Members holding more than
two-thirds (2/3) of the outstanding Units.

8.04  ELECTIONS

      (a)   The Managers, in their discretion, may elect to adjust the basis of
the assets of the Company for Federal income tax purposes in accordance with
Section 754 of the Code in the event of a distribution of Company property as
described in Section 734 of the Code or a transfer by any Member of the Units of
such Member in the Company as described in Section 743 of the Code.

      (b)   The Managers, at any time and from time to time, may also make such
other tax elections as they deem necessary or desirable, in their discretion.

8.05  INTERIM CLOSING OF THE BOOKS

      There shall be an interim closing of the books of account of the Company
(i) at any time a taxable year of the Company shall end pursuant to the Code,
and (ii) at any other time determined by the Managers to be required by good
accounting practice or otherwise appropriate under the circumstances.

                                      -21-
<PAGE>
8.06  FISCAL YEAR

      The fiscal year of the Company shall begin on April I of each year and end
on March 31 of the following year. The fiscal year in which the Company shall
terminate shall end on the date of termination of the Company.

8.07  TAX MATTERS PARTNER

      BioNumerik shall be the "Tax Matters Partner" within the meaning of
Section 6231(a)(7) of the Code and is authorized to exercise the functions of a
Tax Matters Partner under the Code. The Tax Matters Partner shall be reimbursed
for all reasonable expenses associated with its duties as Tax Matters Partner.

                                   ARTICLE IX
                                  DISSOLUTION

9.01  EVENTS REQUIRING DISSOLUTION

      The Company shall be dissolved upon the happening of any of the following
events:

      (a)   termination in accordance with expiration of its period of duration
provided in Section 1.03 hereof;

      (b)   the occurrence of any event which would make unlawful under the laws
of Delaware or the United States of America the continuing existence of the
Company;

      (c)   the unanimous vote of the Members;

      (d)   an event of Dissociation, as defined in Section 9.02, occurring with
respect to any Member unless the business of the Company is continued by the
consent of all of the remaining Members within 90 days after the event of
dissociation;

      (e)   the entry of a decree of judicial dissolution pursuant to Section
18-802 of the Act; or

      (f)   notice of a Deadlock and a request for dissolution as provided in
Section 7.10 hereof;

                                      -22-
<PAGE>
9.02  EVENTS OF DISSOCIATION

      A Member ceases to be a Member of the Company upon the occurrence of any
of the following events:

      (a)   The Member is expelled as a member in accordance with Section 6.06
of this Agreement;

      (b)   The Member (i) makes an assignment for the benefit of creditors,
(ii) files a voluntary petition in bankruptcy, (iii) is adjudged bankrupt or
insolvent or has entered against the Member an order for relief in any
bankruptcy or insolvency proceeding; (iv) files a petition or answer seeking for
that Member any reorganization arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any statute, law, or
regulation, (v) seeks, consents to, or acquiesces in the appointment of a
trustee for, receiver for, or liquidation of the Member or of all or any
substantial part of the Member's properties, or (vi) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against the Member in any proceeding described in this subsection;

      (c)   The continuation of any proceeding against the Member seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law, or regulation, for 120
days after the commencement thereof, or the appointment of a trustee, receiver,
or liquidator for the Member or all or any substantial part of the Member's
properties without the Member's agreement or acquiescence, which appointment is
not vacated or stayed for 120 days or, if the appointment is stayed, for 120
days after the expiration of the stay during which period the appointment is not
vacated;

      (d)   In the case of a Member who is an individual, the individual's, (i)
death (provided that in case of Dr. Kanazawa's death, an event of dissociation
shall occur only if he or his heirs fail to Transfer his Interest to Grelan
pursuant to Section 1.05); or (ii) adjudication by a court of competent
jurisdiction as incompetent to manage the individual's person or property;

      (e)   In the case of a Member who is acting as a Member by virtue of being
a trustee of a trust, the termination of the trust;

      (f)   In the case of a Member that is a partnership or another limited
liability company, the dissolution and commencement of winding up of the
partnership or limited liability company;

                                      -23-
<PAGE>
      (g)   In the case of a Member that is a corporation, the dissolution of
the corporation or the revocation of its charter;

      (h)   In the case of a Member that is an estate, the distribution by the
fiduciary of the estate's entire interest in the Company; or

      (i)   In the case of a Member that is a company organized under the laws
of any country other than the U.S.A. or an individual residing outside the
U.S.A., the Company conducts any commercial activities in the U.S.A. which would
result in requiring such Member to file U.S. Federal or state income tax returns
solely by virtue of holding any Interest in the Company.

9.03  RIGHTS OF MEMBERS UPON CONTINUATION

      If the Company is continued under Section 9.01 (d) hereof following
dissolution:

      (a)   A Person ceasing to be a Member, or the legal representative or
other successor to the Interest of that Member, shall be entitled to receive, in
liquidation of the Member's Interest:

            (1)   The distributions, if any, which that Member is entitled to
      receive under this Agreement; or

            (2)   Within a reasonable time after the Person ceases to be a
      Member, the fair market value of the Interest in the Company as of the
      date the Person ceased to be a Member; and

      (b)   The Members of the Company continuing the business following
dissolution will be deemed to have entered into an operating agreement
containing the same terms and conditions as those contained in this Agreement in
effect immediately prior to the dissolution, except that the Members bound by
the operating agreement shall be only those Members whose Interests are not
required to be liquidated pursuant to this Agreement.

9.04  WINDING UP

      The remaining Members may wind up the affairs of the Company.

                                      -24-
<PAGE>
9.05  AUTHORITY OF MANAGERS AFTER DISSOLUTION

      Following dissolution, if the business or affairs of the Company are not
continued under Section 9.01(d), a Manager can bind the Company:

      (a)   By any act appropriate for winding up the affairs of the Company or
completing transactions unfinished at the time of dissolution, unless the
Manager purporting to act on behalf of the Company does not have the authority
to do so and the person with whom such Manager is dealing has actual knowledge
or actual notice of the absence of authority;

      (b)   In any transaction which would have been binding on the Company had
it not been dissolved; provided, that the person with whom a Manager is dealing
does not have actual knowledge or actual notice of the dissolution; and

      (c)   The foregoing notwithstanding, the Managers and their assignees, in
carrying out such winding up and distribution, shall have full power and
authority to sell the Company's assets, or any part thereof, or to distribute
the same in kind to the Members. Any assets distributed in kind shall be subject
to all agreements relating thereto that, by the terms thereof, survive the
termination of the Company.

9.06  DISTRIBUTION

      The fair market value of the assets of the Company shall be determined by
the Managers, with the fair market value of any assets held by the Company
(other than cash) being determined by an independent appraiser selected by the
Managers. Thereupon, the assets of the Company shall be distributed in the
following manner and order: (i) to the claims of all creditors of the Company,
including Members who are creditors, to the extent permitted by law, in
satisfaction of liabilities of the Company, other than liabilities for
distributions to Members; (ii) to Members and former Members in satisfaction of
liabilities for interim distributions and distributions resulting from expulsion
of a Member, and (iii) after giving effect to the allocations set forth in
Article V hereof, to the Members in proportion to their respective Interests,
provided that in the event of any conflict between Article V and this Section
9.06, this Section 9.06 shall be controlling. Each such Member entitled to a
distribution of any assets of the Company shall receive such Member's share of
such assets in cash or in kind, and the portion of such share that is received
in cash may vary from Member to Member, all as the Managers in their discretion
may decide. If distributions to any Member upon termination of the Company are
insufficient to return to such Member the full amount of such Member's Capital
Contribution, such Member shall have no recourse against the Managers, the
Company or any other Member.

                                      -25-
<PAGE>
                                   ARTICLE X
                                  DEFINITIONS

      As used in this Agreement, the following terms shall have the following
meanings:

10.01

      "Affiliate" shall mean any entity which directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with another entity. A company shall be deemed to have control of
another if it owns directly or indirectly a majority of the voting shares of or
is entitled directly or indirectly to appoint a majority of the directors of the
other company.

10.02

      "Agreement" shall mean this Operating Agreement, as originally executed or
as amended, modified, supplemented or restated from time to time.

10.03

      "Assignee" shall mean, prior to its admittance as a Member, a Person to
whom a Member's Interest was transferred.

10.04

      "Capital Contribution" shall mean in the case of any Member as of any date
of determination, the aggregate amount of cash, property, or services rendered,
or a promissory note or other binding obligation to contribute cash or property
or perform services that such Member shall have contributed to the Company on or
prior to such date and a Member's share of any of the Company's liabilities as
determined in accordance with the Code and Treasury Regulations (or, if such
Member is not the original holder of the Interest of such Member, the Capital
Contribution with respect to the Interest of such Member held by the original
holder of such Interest). In the event that any capital is returned to a Member,
such Member's Capital Contribution shall be adjusted to reflect such return.

                                      -26-
<PAGE>
10.05

      "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time and any successor statute or subsequent codification or recodification
of the federal income tax laws of the United States.

10.06

      "Company" shall mean KI Pharmaceuticals, L.L.C., as such limited liability
company may from time to time be constituted.

10.07

      "Interest" shall mean, in the case of any Member at any time, the ratio
that such Member's Units bears to all outstanding Units. An "Interest" does not
include the right to participate in management of the Company and vote the Units
issued to the Member in respect of the Interest.

10.08

      "Losses" shall mean the net loss of the Company for a given reporting
period, provided, however, that any items which are specifically allocated
pursuant to Section 5.05 shall not be taken into account in computing Losses.

10.09

      "Percentage Interests for Venture Products BN Activities" means [**].

10.10

      "Percentage Interests for Venture Products GR Activities" means [**].

10.11

      "Person" shall mean an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an estate, an unincorporated
organization or any other entity or a government or any department or agency
thereof.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -27-
<PAGE>
10.12

      "Profits" shall mean the net income of the Company for a given reporting
period, provided, however, that any items which are specifically allocated
pursuant to Section 5.05 shall not be taken into account in computing Profits.

10.13

      "Treasury Regulations" shall mean the regulations of the United States
Department of the Treasury pertaining to the income tax, as from time to time in
force.

10.14

      "Unit" shall mean the equity units issued by the Company to its Members in
exchange for Capital Contributions, which represent the Member's Interest in the
Company.

10.15

      "Venture Products BN Activities" means license fees or other up-front or
milestone payment amounts paid by a third party to the Company for distribution,
marketing and/or sales rights to Venture Products BN in the Territory.

10.16

      "Venture Products GR Activities" means license fees or other up-front or
milestone payment amounts paid by a third party to the Company for distribution,
marketing and/or sales rights to Venture Products GR in the Territory.

10.17

      "Venture Agreement" means the Joint Venture Agreement, dated as of August
30, 2000, between Grelan and BioNumerik, and as amended to include the Company
as a party.

                                      -28-
<PAGE>
                                   ARTICLE XI
                                 MISCELLANEOUS

11.01 NOTICES

      Any notice, offer or other communication required or permitted to be given
or made hereunder shall be in writing and will be deemed to have been
sufficiently given or made when mailed by first-class or registered air mail,
postage prepaid or made when delivered personally or by courier service to the
party (or an officer of the party) to whom the same is directed.

11.02 POSSIBLE RESTRICTIONS

      Notwithstanding anything to the contrary contained in this Agreement, in
the event of (a) the enactment (or imminent enactment) of any legislation, (b)
the publication of any temporary or final regulation by the United States
Department of the Treasury, (c) any ruling by the Internal Revenue Service or
(d) any judicial decision, that, in any such case, in the opinion of counsel for
the Company, would result in the taxation of the Company as an association
taxable as a corporation or would otherwise result in the Company being taxed as
an entity for federal income tax purposes, then the Managers may impose such
restrictions as may be required, in the opinion of counsel, to prevent the
Company for federal income tax purposes from being taxed as an association
taxable as a corporation or otherwise as an entity, including, without
limitation, making any amendments to this Agreement as the Managers in their
sole discretion may determine to be necessary or appropriate to impose such
restrictions.

11.03 GOVERNING LAW; SUCCESSORS

      This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware and, subject to the restrictions on
transferability set forth in this Agreement, shall bind and inure to the benefit
of the heirs, executors, personal representatives, successors and assigns of the
parties hereto. The rights and liabilities of the Members under this Agreement
shall be as provided by Delaware law.

11.04 ENTIRE AGREEMENT

      This Agreement is the sole operating agreement of the Company and
constitutes the entire agreement among the parties with respect to the subject
matter hereof; this Agreement supersedes any prior agreements or understandings,
oral or written, among the parties with respect to the limited liability company
formed herein all of which are hereby canceled. This Agreement may not be
modified or amended except as provided in this Agreement.

                                      -29-
<PAGE>
Notwithstanding the foregoing, the Venture Agreement shall remain and continue
in full force and effect after the date hereof in accordance with its terms.

11.05 HEADINGS, ETC.

      The Article and Section headings in this Agreement, and the Table of
Contents included herewith, are inserted for convenience of reference only and
shall not affect interpretation of this Agreement. Whenever the context shall
require, each term stated in either the singular or plural shall include the
singular and the plural, and masculine or neuter pronouns shall include the
masculine, the feminine and the neuter.

11.06 NO WAIVER

      No failure or delay on the part of any Member in exercising any rights
under this Agreement, or in insisting on strict performance of any covenant or
condition contained in this Agreement, shall operate as a waiver of any of such
Member's rights hereunder.

11.07 LEGENDS

      If any certificate evidencing a Member's Units shall be issued, such
certificate shall bear such legend or legends as may be required by applicable
Federal or state laws, or as may be deemed necessary or appropriate by the
Managers to reflect restrictions upon transfer contemplated herein.

11.08 COUNTERPARTS

      This Agreement may be executed in several counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
instrument.

11.09 CREDITORS

      None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditors of the Company.

                                      -30-
<PAGE>
      IN WITNESS WHEREOF, all of the Members have executed this Agreement
effective as of the 22nd day of September, 2000.

                                        GRELAN PHARMACEUTICAL CO., LTD.

                                        By:   /s/ H. KANAZAWA
                                              ----------------------------------
                                              Hashime Kanazawa, Ph.D.
                                              C.O.O. & Vice President - Director

                                        BIONUMERIK PHARMACEUTICALS, INC.

                                        By:   /s/ FREDERICK H. HAUSHEER
                                              ----------------------------------
                                              Frederick H. Hausheer, M.D.
                                              Chairman & Chief Executive Officer

                                        HASHIME KANAZAWA, PH.D.

                                              /s/ H. KANAZAWA
                                        ----------------------------------------

                                      -31-
<PAGE>
                                   SCHEDULE I
                                       TO
                              OPERATING AGREEMENT
                                       OF
                           KI PHARMACEUTICALS, L.L.C.

                         Initial Capital Contributions

<TABLE>
<CAPTION>
Member                              Contribution              Units   Interests
------                              ------------              -----   ---------
<S>                                 <C>                       <C>     <C>
Grelan Pharmaceutical Co., Ltd.     The grant of               490       49%
Ogura Bldg. 5F                      licenses and rights
Nihonbashi Kobunacho 6-6            and the obligations
Chuo-ku, Tokyo 103-0024             to make payments
Japan                               and take other
                                    actions described in
                                    the Venture
                                    Agreement.

BioNumerik Pharmaceuticals, Inc.    The grant of               500       50%
8122 Datapoint Drive, Suite 1250    licenses and rights
San Antonio, Texas 78229            and the obligations
                                    to make payments
                                    and take other
                                    actions described in
                                    the Venture
                                    Agreement.

Hashime Kanazawa, Ph.D.             $1,000.00                  10         1%
Ogura Bldg. 5F
Nihonbashi Kobunacho 6-6
Chuo-ku, Tokyo 103-0024
Japan
</TABLE>

                                      -32-

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