Document:

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                                                                   Exhibit 10.20

                       MANUFACTURING AND SUPPLY AGREEMENT

                                  By and among

                  LEK PHARMACEUTICAL AND CHEMICAL COMPANY, D.D.

                                       And

                            LEK PHARMACEUTICALS INC.

                                       And

                                   POZEN INC.

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                                TABLE OF CONTENTS
                                                                            PAGE
<S>                                                                         <C>
SECTION 1.    Term .....................................................      1

SECTION 2.    Development of Manufacturing Process and DMFs for
              Product ..................................................      1

SECTION 3.    Manufacture and Purchase of Product ......................      2

SECTION 4.    Exclusivity Obligations ..................................      3

SECTION 5.    Purchase Price; Additional Consideration .................      3

SECTION 6.    Warranties ...............................................      4

SECTION 7.    Delivery .................................................      5

SECTION 8.    Acceptance Testing; Rejection ............................      5

SECTION 9.    Confidential Information .................................      7

SECTION 10.   Process Implementation; Quality Control ..................      9

SECTION 11.   Drug Master File; Regulatory Matters .....................     10

SECTION 12.   Indemnification; Insurance ...............................     11

SECTION 13.   Cancellation .............................................     13

SECTION 14.   Termination ..............................................     14

SECTION 15.   Effects of Cancellation or Termination ...................     15

SECTION 16.   Waiver ...................................................     15

SECTION 17.   Assignment ...............................................     15

SECTION 18.   Relationship of the Parties ..............................     16

SECTION 19.   Further Assurances .......................................     16

SECTION 20.   Use of Party's Name ......................................     16

SECTION 21.   Applicable Law ...........................................     16

SECTION 22.   Dispute Resolution .......................................     16

SECTION 23.   Entire Agreement .........................................     16
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                       MANUFACTURING AND SUPPLY AGREEMENT

         This Agreement (the "Agreement") is made this _____ day of October,
2001 (the "Effective Date") by and among Lek Pharmaceutical And Chemical
Company, d.d., a corporation organized under the laws of Slovenia with its
principal offices located at Verovskova 57, 1526 Ljubljana, Slovenia ("Lek"),
Lek Pharmaceuticals Inc., a Delaware corporation with its principal offices
located at 115 North Third St., Suite 301, in Wilmington, North Carolina 28401,
USA ("LPI"), and POZEN INC., a Delaware corporation with its principal offices
at 6330 Quadrangle Drive, Suite 240, in Chapel Hill, North Carolina 27517, USA
("POZEN") (each individually a "Party" and collectively the "Parties").

         Definitions:

         When used in this Agreement, the terms listed in Exhibit A will have
the meaning as defined therein.

         SECTION 1.  Term. Subject to earlier termination according to the
provisions of Sections 13 and 14 hereunder, the initial term of this Agreement
will commence on the Effective Date and will continue until the fifteenth (15th)
anniversary of the Date of First Commercial Sale of the Finished Product (the
"Initial Term"). Thereafter, the term will extend and be automatically renewed
for ******** (each an "Extension Term") unless canceled or terminated according
to the provisions in Sections 13 and 14 hereunder.

         SECTION 2.  Development of Manufacturing Process and DMFs for Product.

             (a) Lek will use commercially reasonable efforts to develop a
Manufacturing Process for X Product that satisfies the ******** parameters of
the Specifications in Exhibit B-2 in accordance with the project plan attached
hereto as Exhibit D, and POZEN will fund the cost of development of such
Manufacturing Process according to the development budget set forth in Exhibit
D. Lek will file the DMFs for such X Product with the U.S. and European
regulatory authorities, and upon request of POZEN or its Licensees, with other
regulatory authorities where required for the marketing and sale of the Finished
Product.

             (b) Lek will manufacture and deliver to POZEN and its Licensees
quantities of X Product ("Development Quantities") required to support the
filing of the X Product DMFs for the US, Europe and other portions of the
Territory where the Finished Product containing X Product will be marketed, in
accordance with the project plan attached hereto as Exhibit D. The price for the
Development Quantities of X Product manufactured by Lek under this Agreement
will be ******** per kilogram, less the amount of the development funding
provided by POZEN to Lek pursuant to Section 2(a) above, and will be paid to Lek
in United States dollars not later than thirty (30) days from the date of
receipt of the invoice which will be submitted at the time of delivery.

             (c) Lek will provide POZEN with monthly written status reports
describing the progress made in the development of the manufacturing process for
the X Product compared against the project plan attached as Exhibit D.

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          (d)    Lek will use commercially reasonable efforts to perform the
project plan as attached hereto as Exhibit G, and will provide POZEN with data
and documentation on Y Product required to support the filing by POZEN or its
Licensees for Regulatory Approvals of Finished Product containing Y Product for
the US, Europe and other portions of the Territory where the Finished Product
containing Y Product will be marketed. Lek will provide monthly written status
reports describing the progress made compared against the project plan in
Exhibit G.

          (e)    Lek will provide POZEN with reasonable assistance in response
to requests for technical or scientific information and documentation, including
information and documentation to support the filing in the US, Europe and other
portions of the Territory where the Finished Product will be marketed, for
Regulatory Approvals of Finished Product, and making available personnel to meet
with representatives of POZEN, its Licensees or Regulatory Authorities, as may
be required by POZEN in connection with this Agreement.

      SECTION 3. Manufacture and Purchase of Product.

          (a)    Subject to the terms and conditions set forth herein, Lek will
use commercially reasonable efforts to manufacture and deliver quantities of
Product ordered by POZEN and its Licensees on the delivery dates specified in
the purchase orders, as set forth in this Agreement.

          (b)    ********

          (c)    The manufacture of Product will be conducted at the Lek
Facility using the Manufacturing Process. LPI will coordinate shipments of
Products to POZEN and its Licensees and will be responsible for invoicing POZEN
and/or its Licensees.

          (d)    In performing its obligations regarding the manufacture of
Product, Lek will strictly adhere to all Applicable Laws (including cGMPs),
Regulatory Approvals, and the CMCs and DMFs contained or referenced therein.

          (e)    No later than one hundred and eighty (180) days prior to the
estimated Date of First Commercial Sale of each Finished Product, POZEN is
obliged to provide Lek, in a format similar to the example outlined in Exhibit
C, with a non-binding ******** forecast prepared in good faith of the quantities
of Product to be manufactured by Lek and a delivery schedule for the shipments
of Product under this Agreement. Thereafter, as needed, but at least thirty (30)
days prior to the beginning of each calendar quarter, POZEN will provide Lek
with an updated ******** forecast of Product quantity requirements and delivery
schedule.

          (f)    Product will be ordered by POZEN pursuant to written purchase
orders, which will be sent to LPI with not less than one hundred (100) days'
lead time prior to the delivery date specified in such purchase order. Lek and
LPI will be obligated to fill orders of quantities that do not exceed the most
recent forecast for the scheduled delivery period by more than ********.

          (g)    If POZEN requires and orders Product in excess of the amounts
permitted to be ordered pursuant to subsection (f) above, such excess Product
will be supplied by Lek at

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a mutually agreeable delivery date taking into consideration Lek's manufacturing
resources, lead time for additional raw materials required, and commitments to
other customers.

          (h)    Lek will advise POZEN of the smallest batch size that Lek can
manufacture of the X Product. Unless otherwise agreed by the Parties, POZEN will
place all orders for X Product in quantities corresponding to full batch sizes.
Upon request of POZEN, Lek will submit a project proposal for reducing the batch
size to quantities specified by POZEN in its request. ********.

          (i)    If Lek fails to supply the quantities of Product ordered by
POZEN as provided herein, POZEN will have the right to engage a third party to
manufacture the Product, ********.

    SECTION 4.   Exclusivity Obligations.

          (a)    Exclusive Relationship. During the term of this Agreement, Lek
will manufacture X Product solely and exclusively for POZEN and/ or its
Licensees, and POZEN will purchase exclusively, and will use commercially
reasonable efforts to include in any license agreement with its Licensees an
obligation of each Licensee to purchase directly or through POZEN, X Product
exclusively from Lek through LPI for the Licensee's portion of the Territory,
except as expressly set forth in this Agreement or otherwise may be agreed
between the Parties in writing.

          (b)    ********.

          (c)    ********.

    SECTION 5.   Purchase Price; Additional Consideration.

          (a)    The initial price for the Product manufactured by Lek under
this Agreement will be ******** per kilogram of X Product supplied after the
Development Quantities and ********* per kilogram of Y Product and will be paid
to Lek in United States dollars not later than thirty (30) days from the date of
receipt of the invoice. The price may be adjusted between October 1 and October
31 of each year and such adjustment will be made effective January 1 for the
following calendar year by the lesser of (i) ******** or (ii) the increase or
decrease in the Producer Price Index, Pharmaceutical Preparations, Ethical
(Prescription), series code PCU-2834 #1, published by the United States
Department of Labor, Bureau of Labor Statistics, or comparable successor index
(or some other index agreed to in writing by the Parties) during the most recent
******** period preceding each ******** for which such data are available,
provided that POZEN is notified of such adjustment in writing (including the
calculation and data period on which such adjustment is based) by ********
preceding the year in which the price adjustment is effective. The first price
adjustment may be made effective ********. Lek will use commercially reasonable
efforts to keep prices in line with actual increases in cost,********.

          (b)    ********, POZEN will pay to LPI an additional consideration of
******** on Net Sales by POZEN, its affiliates or Licensees ******** ("Additonal
Consideration"); ********.

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          (c)    Payments of Additional Consideration for the sale of Finished
Product containing X Product supplied by Lek through LPI will be made to LPI
within ten (10) days of receipt of each royalty payment by POZEN from its
Licensees. Within thirty (30) days of entering into any license agreement with a
Licensee, POZEN will notify LPI in writing of such Licensee's royalty payment
schedule under such license agreement. Each payment of Additional Consideration
will be accompanied by a report of Net Sales of Finished Product containing X
Product supplied by LPI in sufficient detail to permit confirmation of the
accuracy of the payment of Additional Consideration made. LPI will have the
right to cause an independent, certified public accountant reasonably acceptable
to POZEN to audit those of POZEN's records required for the purpose of verifying
any amounts payable under this Agreement for the previous year. ********. Such
audits by LPI may be exercised ********, within ninety (90) days of the close of
the previous calendar year, during normal business hours upon reasonable prior
written notice to POZEN. Further, POZEN will secure from its Licensees the right
to audit or have audited such Licensees' records, and to make the findings of
such audits available to LPI in connection with LPI's exercise of its audit
rights under this subsection (c) subject to an agreement on confidentiality
between LPI and such Licensee. Adjustments will be made by the Parties to
reflect the results of such audits within thirty (30) days of the date on which
audit results are made available to the Parties.

          (d)    If during any payment period during which Additional
Consideration is owed and for ******** after the termination or expiration of
this Agreement, the adjustments to gross sales result in a Net Sales amount that
is a negative number, LPI will repay to POZEN within ten (10) days after receipt
of such Net Sales report an amount corresponding to the amount of Additional
Consideration that POZEN would have had to pay to LPI if such negative Net Sales
number had been positive. ********.

       SECTION 6. Warranties.

          (a)    Lek and LPI warrant that (i) Product manufactured hereunder
will (A) conform to the Specifications, the applicable DMF and Applicable Laws,
including, without limitation, U.S. cGMP regulations and equivalent foreign
country requirements as applicable, (B) be accompanied by a certificate of
analysis ("Certificate of Analysis") prepared by Lek stating the ********
delivered Product to be in compliance, until the applicable Product expiration
date, with the Specifications, (C) comply with current USP and EP monographs and
ICH guidelines, (D) not be adulterated or misbranded within the meaning of the
United States Food, Drug and Cosmetic Act, as amended ("FD&C Act") and (E) not
be an article that may not be introduced into interstate commerce under the
provisions of Sections 404 or 505 of the FD&C Act (the "Product Warranty"); and
(ii) as of the Effective Date, the manufacturing process used in the manufacture
of Product by Lek or LPI hereunder, does not infringe the intellectual property
rights of any person or entity or constitute a misappropriation of the trade
secrets or other intellectual property rights of any person or entity ********
(the "IP Warranty"), and that (iii) during the term of this Agreement, the
Manufacturing Process and associated data and information in the DMFs (or such
corresponding portions of regulatory filings as may be required in a given
country, ********) for the Y Product and the X Product conform to the
requirements of the Regulatory Authorities in the ******** and other portions of
the Territory where the Finished Product will be marketed (parts (i), (ii),
(iii) above comprise the "Limited Warranty").

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          (b)  POZEN will advise Lek of any other country in the Territory in
which it intends to effect a commercial launch of the Finished Product. Lek and
LPI will thereafter advise POZEN whether they are willing to make the
representation contained in clause (ii) of sub-paragraph (a) with respect to
such country in the Territory. In the event Lek has satisfied itself that the
Manufacturing Process used in the manufacture of Product by Lek hereunder, does
not infringe upon the intellectual property rights of any person or entity or
constitute a misappropriation of the trade secrets or other intellectual
property rights of any person or entity in any country in addition to those set
forth in clause (ii) of subparagraph (a), Lek will promptly notify POZEN thereof
and the country list in clause (ii) of this sub-paragraph will thereafter be
deemed to be amended to include such country.

          (c)  OTHER THAN THE LIMITED WARRANTY ABOVE, LEK MAKES NO WARRANTIES,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

          (d)  During the term of the Agreement, if and when a third party is
granted or asserts intellectual property rights related to the Manufacturing
Process, Lek will evaluate such intellectual property and will either (i)
confirm to POZEN and its Licensees that such process does not infringe any such
third party intellectual property, or (ii) use commercially reasonable efforts
to (1) develop an alternative noninfringing process in a timely fashion and
according to the terms provided in Section 10(b) and/or 10(c), as applicable, or
(2) take such other action as may be necessary to make such process
non-infringing.

    SECTION 7. Delivery. LPI will deliver Product DDU (Incoterms 2000) at the
U.S. or European facility designated by POZEN, according to the schedule and in
the amounts specified in the purchase orders provided by POZEN and under the
provisions set out in Section 2 or 3, as applicable. Lek will test each batch of
Product and supply POZEN with a Certificate of Analysis confirming that such
batch meets the Specifications.

    SECTION 8. Acceptance Testing; Rejection. If a shipment of a lot of Product
or any portion thereof fails to conform to the Product Warranty, then POZEN will
have the right to reject such nonconforming shipment of the Product or the
nonconforming portion thereof, as the case may be, in accordance with the
following:

          (a)  Patent Defect.

               (i) POZEN will give written notice to Lek and LPI of its
rejection (or its Licensee's or customer's rejection) hereunder, within sixty
(60) days after delivery by LPI to POZEN's or its Licensee's or customer's
designated facilities of any shipment of any Product containing a Patent Defect,
specifying the grounds for such rejection and, if such rejection is made for
failure of the Product to conform to Specifications, deliver to Lek samples of
the rejected Product.

               (ii) After receipt of such notice and samples from POZEN, Lek
will be permitted, for a period of fourteen (14) business days, to analyze the
Product rejected by POZEN

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for nonconformity to the Specifications, and to present its findings with
respect to such Product to POZEN. If the parties cannot agree on whether the
Product in question conforms to such Specifications within fourteen (14)
business days of Lek's receipt of POZEN's written notice of rejection, an
independent laboratory or independent consultant selected by POZEN from the list
attached hereto as Exhibit F (as amended from time to time by the parties in
writing) ********, will analyze both POZEN's and Lek's samples of the Product in
question. Each Party may have representatives present during the independent
analysis. The definitive results of such analysis by the independent laboratory
or independent consultant will be binding on the parties.

              (iii) If the shipment of Product in question is determined to be
nonconforming with respect to the Specifications or otherwise fails to conform
to the Product Warranties, such nonconforming Product will be held for Lek's
disposition, or will be returned to Lek (unless prohibited by Regulatory
Authorities), ********, as directed by Lek, ********. Lek will then use its
commercially reasonable efforts to replace each nonconforming shipment of
Product, or the nonconforming portion thereof on a batch-by-batch basis, with
conforming Product as soon as reasonably practicable after receipt of notice of
rejection thereof or will promptly provide POZEN with a credit therefor, at
POZEN's election. If the Product was improperly rejected, POZEN will be required
to accept ******** such Product and ********.

          (b) Latent Defect.

              (i)   If Lek becomes aware of a Latent Defect in any shipment of
Product, Lek will immediately notify POZEN as to the shipment involved, and, at
POZEN's election, such Product will be deemed rejected as of the date of such
notice, and Lek will use commercially reasonable efforts to replace each
nonconforming shipment, or the nonconforming portion thereof, with conforming
Product as soon as reasonably practicable after receipt of notice of rejection
thereof, or will promptly provide POZEN with a credit therefor, at POZEN's
election.

              (ii)  POZEN will give written notice to Lek of its rejection (or
its customer's or Licensee's rejection) hereunder, within thirty (30) days after
POZEN's (or its customer's or Licensee's) discovery that a shipment of any
Product contains a Latent Defect, specifying the grounds for such rejection, and
if such rejection is made for failure of the Product to conform to
Specifications, deliver to Lek samples of the rejected Product.

              (iii) After receipt of such notice and samples from POZEN, Lek
will be permitted, for a period of fourteen (14) business days, to analyze the
Product rejected by POZEN for nonconformity to the Specifications, and to
present its findings with respect to such Product to POZEN. If the parties
cannot agree on whether the Product in question conforms to such Specifications
within fourteen (14) business days of Lek's receipt of POZEN's written notice of
rejection, an independent laboratory or independent consultant selected by POZEN
from the list attached hereto as Exhibit F (as amended from time to time by the
parties in writing) ********, will analyze both POZEN's and Lek's samples of the
Product in question. Each Party may have representatives present during the
independent analysis. The definitive results of such analysis by the independent
laboratory or independent consultant will be binding on the parties.

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               (iv) If the shipment of Product in question is determined to be
nonconforming with respect to the Specifications or otherwise fails to conform
to the Product Warranties, such nonconforming Product will be held for Lek's
disposition, or will be returned to Lek, ********, as directed by Lek, ********.
Lek will then use its commercially reasonable efforts to replace each
nonconforming shipment of Product, or the nonconforming portion thereof on a
batch-by-batch basis, with conforming Product as soon as reasonably practicable
after receipt of notice of rejection thereof or will promptly provide POZEN with
a credit therefor, at POZEN's election. If the Product was improperly rejected,
POZEN will be required to accept ******** such Product ********.

          (c)  Recalls. In the event a Party believes it may be necessary to
conduct a recall, field correction, market withdrawal, stock recovery, or other
similar action with respect to any Product that was sold by LPI to POZEN under
this Agreement or thereafter by POZEN and/or its Licensees to their customers (a
"Recall"), Lek and POZEN will consult with each other as to how best to proceed,
it being understood and agreed that the final decision as to any such Recall
with respect to Finished Product will be made by POZEN or its Licensees, and the
final decision as to any such Recall with respect to Product that has not yet
been processed into Finished Product will be made by Lek. The Party whose
actions resulted in the Recall, if attributable to a Party, will bear any and
all associated costs and expenses in connection with any such Recall. If the
Recall is attributable to a breach of warranty by Lek or LPI or the failure of
Product supplied by Lek or LPI to meet Specifications, any and all associated
costs and expenses incurred as a result of such Recall will be borne by Lek. If
the Recall is attributable to a determination by the FDA that the Finished
Product is no longer safe and effective or due to adverse drug events which are
not attributable to a breach of warranty by Lek or LPI or the failure of Product
supplied by Lek or LPI to meet Specifications, any and all associated costs and
expenses incurred as a result of such Recall will be borne by POZEN. In the
event neither Party's actions are attributable, directly or indirectly, to the
Recall, and the Recall is not attributed to adverse drug events or a
determination by the FDA that the Finished Product is no longer safe and
effective any and all associated costs and expenses incurred as a result of such
Recall will be borne by the parties in proportion to their respective revenues
from Net Sales in that country of the Territory.

          (d)  Adverse Drug Events. Any adverse drug event or reaction complaint
reports or any other reports or information indicating that the Product within
any Finished Product has any toxicity, sensitivity reactions, or is otherwise
alleged to cause illness or injury of any kind or is adulterated or misbranded
will be reported promptly by POZEN to Lek, or as otherwise may be required under
any applicable laws, rules or regulations, with copies of any such written
reports, and Lek will thereafter expeditiously investigate the information
contained in such reports and communicate such results promptly to POZEN upon
conclusion of such investigation.

    SECTION 9. Confidential Information.

          (a) During the term of this Agreement and seven (7) years after
termination of the Agreement, all Confidential Information furnished by POZEN to
Lek or LPI, or by Lek or LPI to POZEN, relating to the subject matter hereof,
will be kept confidential by the party receiving said confidential information
and the party receiving said Confidential Information will

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not make use of said Confidential Information, except for purposes authorized by
the Agreement, nor disclose the same to any person or firm unless previously
authorized in writing to do so; provided, however, that the party receiving said
Confidential Information may disclose same to its responsible officers,
employees, consultants and Licensees who require said information for the
purposes contemplated by this Agreement, provided that said officers, employees
and consultants and Licensees have assumed obligations of confidentiality not
less stringent than those contained herein.

          (b) Any other provision hereof to the contrary notwithstanding, it is
expressly understood and agreed by the parties hereto that the obligations of
confidence and non-use herein assumed will not apply to any information which:

              (i)   is lawfully, at the time of disclosure or thereafter so
becomes, a part of the public domain;

              (ii)  was otherwise in the receiving party's lawful possession
prior to disclosure, as shown by its written record;

              (iii) is hereafter lawfully disclosed to the receiving party by a
third party who is not in violation of an obligation of confidentiality to the
disclosing party relative to said information;

              (iv)  is, by mutual agreement of the parties hereto, released from
a confidential status; or

              (v)   results from research and development by the receiving Party
without use and by persons without access to Confidential Information of the
other Party as shown by competent evidence including, but not limited to,
records contemporaneously maintained with such research and development.

          (c) Either Party may disclose Confidential Information of the other
if required by legal process; provided, in each case the receiving Party timely
informs the disclosing Party and uses its best efforts to limit the content of
the disclosure, limit the disclosure to those specific legal parties requesting
such information, maintain confidentiality to the extent possible and permit the
disclosing Party to attempt by appropriate legal means to limit such disclosure
in terms of content and recipient.

          (d) POZEN or its Licensees may disclose Lek Confidential Information,
including, without limitation, the DMFs, to government or other regulatory
authorities to the extent that such disclosure is reasonably necessary to obtain
marketing authorization for products containing DHE. POZEN or its Licensees may
disclose Lek Confidential Information (other than the DMFs) to other
manufacturers in the supply chain of the Finished Product for the sole purpose
of the manufacture of the Finished Product, provided that such third party
manufacturers are bound by confidentiality obligations not less stringent than
those contained herein, and that Lek is made a third party beneficiary of such
confidentiality agreements. POZEN and its Licensees will have the right to
access and reference the X Product DMF and the Y Product DMF solely for the
purpose of developing and commercializing products containing DHE.

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          (e) Additionally, POZEN may disclose this Agreement (i) to
prospective licensees provided such prospective licensees have a legal
obligation to protect the confidentiality of said disclosure and (ii) as may be
required by applicable law in connection with securities or other public
filings.

SECTION 10. Process Implementation; Quality Control.

          (a) With respect to each Finished Product, Lek will permit
representatives of POZEN or its designees, upon sixty (60) days prior notice,
(i) two (2) times per year prior to and for two (2) years after final Regulatory
Approval to market such Finished Product and (ii) one (1) time per year
thereafter during the term of this Agreement, to inspect the Lek Facility, batch
records, standard operating procedures and all other records reasonably relating
to the Product manufacturing process. Such inspections will take place during
regular business hours and with the least possible disruption of Lek's
operations. POZEN will discuss the results of any inspection with Lek. Any
inspection by POZEN, if it occurs, does not relieve Lek of its sole obligation
to comply with all Applicable Laws and does not constitute a waiver of any right
otherwise available to POZEN. In the event that Lek's Quality Control is
preparing for another previously confirmed audit with the FDA or other
Regulatory Authority, POZEN's audit pursuant to this subsection (a) may be
postponed for a reasonable period. POZEN will have the right to request copies
of and/or examine all batch records generated in the manufacture, storage and
shipment of Product under this Agreement.

          (b) Lek will provide POZEN with written notice of any planned change
that is pertinent to the manufacture, testing, or storage of Product, including
but not limited to changes in the Manufacturing Process, Specifications, or
analytical methods. Within thirty (30) days from the date of receipt of such
written notice from Lek, POZEN will notify Lek if such planned change in POZEN's
reasonable judgment requires notification of a Regulatory Authority or
additional testing of Product or Finished Product. If POZEN so notifies Lek, the
Parties will develop a change implementation plan (including, without
limitation, a regulatory strategy related thereto) within sixty (60) days from
the date of POZEN's notice to Lek, and Lek will implement such planned change
only after the completion of such change implementation plan. Any such change
implementation plan will take into account the time required for any actions or
filings required to comply with applicable regulatory requirements. In the event
POZEN does not provide Lek with such written notice within the designated thirty
(30) day period, Lek is free to proceed with its planned change.

          (c) When required or requested to do so by a Regulatory Authority,
POZEN may in writing modify the Specifications in Exhibit B, or request a change
in the Manufacturing Process, and the Parties will agree to a specific written
procedure and the costs necessary to implement any such changes related to the
Specifications or Manufacturing Process. Additionally, POZEN may, from time to
time, in writing suggest other modifications of the Specifications in Exhibit B
or the Manufacturing Process, and in the case of Lek's approval (which will not
be unreasonably withheld), the Parties will agree to a specific written
procedure and the costs necessary to implement such other changes to the
Specifications.

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           (d) Lek will submit to POZEN the DMF annual reports, including
information on changes within any DMF, within thirty (30) days of any such
reports and/or filing any such changes with any Regulatory Authority.

   SECTION 11.  Drug Master File; Regulatory Matters.

           (a) Lek will develop a Manufacturing Process and file a X Product DMF
that satisfies the ******** parameters of the Specifications in Exhibit B-2 in
those countries where POZEN or its Licensees intend to file a Finished Product
containing the X Product for Regulatory Approval. POZEN and/or its Licensees
will advise Lek in writing of the countries in which it intends to file for
Regulatory Approval of a Finished Product containing the X Product at least
twelve months prior to filing. In the event that significant deviations from the
Specifications in Exhibit B-2 are necessary to meet regulatory requirements in a
specific country, the Parties will agree to a specific written procedure to
modify the Specifications in Exhibit B-2 and the costs necessary to implement
any such changes.

           (b) Lek will at all times during the term of this Agreement maintain
the DMFs in current and active status, and will regularly provide the Regulatory
Authorities with all reports and information necessary to keep such DMFs current
and in force.

           (c) Lek will inform POZEN of the results of any inspection of the Lek
Facility by a Regulatory Authority that is pertinent to the manufacture,
testing, or storage of Product or which could affect the manufacture and supply
of the Product by Lek or LPI, regardless of whether such inspection was
conducted in connection with the Product manufacture, at the conclusion of each
calendar year. If such an inspection is in connection with the Product
manufacture, Lek will additionally provide POZEN with a copy of the Regulatory
Authority final report within three (3) days of Lek's receipt of such report.
Notwithstanding the foregoing, Lek will within three (3) days of receipt provide
POZEN with copies of any Form No. 483 notification, Enforcement Inspection
Reports, Notice of Adverse Finding, or their analogous forms from any Regulatory
Authorities ("Warning Letters") and any subsequent responses by Lek or the
Regulatory Authorities relating to the manufacture of Product or the Lek
Facility. Lek will have the right to redact from any documentation provided to
POZEN under this subsection (c) any information that is specific to products
other than the Products. In addition to the audit as provided in Section 10(a),
in the event that (i) Lek receives any Warning Letters relating to the Lek
Facility or (ii) POZEN has properly rejected a shipment of Product in accordance
with the rejection procedures of Section 8(a) or (b) (including, if necessary,
after following the independent laboratory testing procedures set forth therein)
for failure to meet Specifications or otherwise to conform with the Product
Warranties, POZEN will have the right to conduct an additional audit according
to the terms specified in Section 10(a).

           (d) Lek will notify POZEN of any production issues or other
information of which Lek becomes aware which may cause the Product to no longer
conform with Regulatory Approvals or Applicable Laws or materially affect the
ability of Lek or LPI to supply Product in accordance with this Agreement. Lek
agrees to inform POZEN within three (3) days of receipt of notice of inquiry or
inspection activity by any Regulatory Authority from a country in which POZEN or
its Licensees plan to submit or have submitted dossiers for Regulatory Approval
in regard to Product, and will provide POZEN with copies of any written
communications received

                                       10

<PAGE>

from Regulatory Authorities related to the manufacture of Product. Lek will
furnish to POZEN any proposed response to inquiries from Regulatory Authorities
in sufficient time to give POZEN a reasonable opportunity to review, discuss,
and comment on the inquiry and the proposed response. Lek will consider POZEN's
comments and appropriately address POZEN's concerns in its response.

           (e) Neither Party will use in any capacity, in connection with any
manufacturing or other services to be performed under this Agreement, any
individual who has been debarred pursuant to the U.S. Federal Food, Drug and
Cosmetic Act or who is subject to an action, suit, claim, investigation or legal
or administrative proceeding that could reasonably be expected to lead to a
debarment of Lek, POZEN or any person performing manufacturing or other services
hereunder. Either Party will, if so requested by the other Party, prepare and
submit a certification statement as necessary to satisfy the requirements of the
U.S. Federal Food, Drug and Cosmetic Act. Either Party agrees to immediately
inform the other Party in writing if any person who is performing services
hereunder is debarred or if such person becomes subject to an action, suit,
claim, investigation or legal or administrative proceeding that could lead to a
debarment of such person.

           (f) The Parties agree that a difference of opinion may reasonably
exist as to the interpretation of the regulatory requirements applicable to the
Product and its manufacture. If such difference of opinion exists between the
Parties at any time during the term of this Agreement, the Parties will discuss
in good faith how to reconcile such differences. If the Parties are unable to
come to an agreement thereon after good faith negotiations, POZEN will have the
right to require Lek to make such changes to the Product and its manufacture,
and to provide such data and documentation as it reasonably believes necessary
to comply with regulatory requirements. Lek will use commercially reasonable
efforts to comply with POZEN's request. ********.

   SECTION 12. Indemnification; Insurance.

           (a) Lek's Indemnity Obligations. Except as set forth in Section 12(d)
below, Lek will indemnify, defend and hold harmless POZEN and its affiliates and
Licensees, and their respective successors and permitted assigns (and the
respective officers, directors, stockholders, partners and employees of each),
from and against any and all losses, liabilities, claims, actions, proceedings,
damages and expenses (including without limitation reasonable attorneys' fees
and expenses) (herein "Damages") resulting from any third party claims or suits
arising out of (i) any breach by Lek of any warranty, representation, covenant
or obligation hereunder, (ii) a claim that the manufacturing process used to
manufacture the Product infringes the intellectual property rights of a third
party in the ********, and such other countries as may be included within clause
(ii) of the Limited Warranty in Section 6(a) with agreement between the parties
as provided in Section 6(b), or (iii) product liability claims relating to
Product supplied by Lek hereunder to the extent such claims arise out of a
failure of the Product to conform to the Product Warranties.

           (b) POZEN's Indemnity Obligations. Except as set forth in Section
12(d) below, POZEN will indemnify, defend and hold harmless Lek and its
affiliates, and their respective successors and permitted assigns (and the
respective officers, directors, stockholders,

                                       11

<PAGE>

partners and employees of each) from and against any and all Damages resulting
from any third party claims or suits arising out of (i) any breach by POZEN of
any warranty, representation, covenant or obligation hereunder, (ii) a claim
that the manufacture, marketing, use, distribution or sale of Finished Products
(other than the manufacturing process used to manufacture the Product contained
therein) infringes the intellectual property rights of a third party, or (iii)
product liability claims relating to Finished Product sold or distributed by
POZEN or its Licensees (except to the extent that Lek is obligated to indemnify
POZEN pursuant to Section 12(a)).

           (c) Indemnification Procedures. A Party (the "indemnitee") that
intends to claim indemnification under this Section 12 will notify the other
Party (the "indemnitor") promptly in writing of any action, claim or liability
in respect of which the indemnitee believes it is entitled to claim
indemnification, provided that the failure to give timely notice to the
indemnitor will not release the indemnitor from any liability to the indemnitee
except to the extent the indemnitor is prejudiced thereby. No such claim will be
settled other than by the Party defending the same, and then only with the
consent of the other Party which will not be unreasonably withheld; provided
that the indemnitee will have no obligation to consent to any settlement of any
such action or claim which imposes on the indemnitee any liability or obligation
which cannot be assumed and performed in full by the indemnitor, and the
indemnitee will have no right to withhold its consent to any settlement of any
such action or claim if the settlement involves only the payment of money by the
indemnitor or its insurer.

           (d) Limitations on Indemnification. Notwithstanding any contrary
provision herein:

               (i) Neither Party will be entitled to indemnification with
respect to any claim or suit to the extent such claim or suit results from (A)
its own negligence or willful misconduct, or (B) any action to which it has
consented in writing; and

               (ii) NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY PUNITIVE,
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, INCLUDING DAMAGES FOR LOST
PROFITS, LOSS OF OPPORTUNITY OR USE OF ANY KIND, SUFFERED BY THE OTHER PARTY,
WHETHER IN CONTRACT, TORT OR OTHERWISE.

           (e) Product Liability Insurance.

               (i) Lek and POZEN will each maintain comprehensive product
liability insurance to cover its indemnification obligation provided in Section
12 in the annual aggregate amount of ********, combined single limit for bodily
injury and property damage per occurrence and up to ******** immediately prior
to the Date of First Commercial Sale for costs associated with a recall, per
occurrence and in the annual aggregate. Each of Lek and POZEN will maintain such
insurance during the term of this Agreement and thereafter for so long as it
customarily maintains insurance for itself for similar products and activities.
Each of Lek and POZEN will cause the other to be named as an additional insured
under such insurance. Each of Lek and POZEN will provide the other with at least
thirty (30) days notice of any cancellation, termination or change in such
insurance. Each Party shall provide the other Party with

                                       12

<PAGE>

certification from its insurance company indicating its compliance with the
requirements of this Section 12(e) ("Certificate of Insurance") as soon as is
reasonably practicable. Each Party shall provide to the other Party an updated
Certificate of Insurance on an annual basis during the term of this Agreement.

               (ii) ********.

   SECTION 13. Cancellation.

           (a) By Lek or POZEN. Either Lek or POZEN may cancel this Agreement by
providing written notice to the other Party at least ******** prior to the end
of the Initial Term or any Extension Term.

           (b) By Lek.

               (i)   At any time following the ********* anniversary of the Date
of First Commercial Sale, Lek may cancel this Agreement upon ******** written
notice to POZEN if Lek decides to permanently cease the manufacture of DHE.

               (ii)  If Lek provides notice of termination as provided in
subsection (i) above, Lek will have the right to accelerate the delivery of
Product to be supplied prior to the termination date in such quantities as
determined by POZEN's and its Licensees' forecasted requirements for each year
of the notice period, provided that the quantities of Product delivered to cover
such requirements for a particular year of the notice period will have a shelf
life of at least three (3) years as of the year of the notice period for which
such Product is required by POZEN or its Licensee. If a ******** shelf life is
not attainable, Lek will deliver the Product in each remaining year of this
Agreement according to the normal delivery schedule procedure outlined in this
Agreement or to a delivery schedule otherwise agreed upon by the Parties.

               (iii) Promptly upon providing notice of termination as provided
in subsection (i) above, Lek will transfer both the open and closed portion of
the DMF, which uses ergotamine tartrate as the starting material for the
manufacturing process of the Product, to POZEN and/or its Licensees to be used
in accordance with Section 9 hereof. The Parties will agree to a specific
written procedure and the costs necessary to implement such transfer to POZEN.
Lek will make its employees available to POZEN for a period of ******** after
the transfer of the DMF to consult with POZEN or its designated contract
manufacturer on the implementation of the manufacturing process. If such
consulting activity requires travel by Lek employees to the new manufacturing
site, POZEN will reimburse Lek for time and reasonable travel expenses based on
Lek's standard hourly rate.

               (iv)  Upon cancellation of this Agreement by Lek under this
subsection (b), Lek will continue to supply POZEN with ergotamine tartrate under
terms mutually agreed by the parties, and if Lek decides to permanently cease
the manufacture of ergotamine tartrate, Lek will transfer the technical data
package relating to the manufacture of ergotamine tartrate to POZEN and/or its
Licensees to be used subject to Section 9 hereof, in addition to the DMF
transferred by Lek pursuant to subsection (b)(iii) above.

                                       13

<PAGE>

           (c) By POZEN.

               (i)   POZEN may cancel this Agreement upon written notice to Lek
if POZEN or its Licensees decide to abandon the filing of all Regulatory
Approvals or to withdraw the Finished Product in all countries of the Territory.
Such cancellation will be effective immediately without further obligation
except for any Product in process or unshipped Product either of which have been
manufactured by Lek at POZEN's request as substantiated by POZEN's purchase
orders prior to receipt of the notice of cancellation and except as detailed
below in this Section 13(c)(i). In any such case, POZEN will provide Lek with as
much notice as reasonably possible regarding the possibility of cancellation.
*********.

               (ii)  POZEN may cancel this Agreement upon written notice to Lek
in the event that Lek fails to supply ******** the Product ordered by POZEN in
accordance with Section 3(f) ******** after the scheduled delivery ********.

               (iii) POZEN may cancel this Agreement upon written notice to Lek
in the event that (1) Lek is unable (A) to develop a manufacturing process for X
Product meeting the Specifications in Exhibit B-2 by ********, or (B) to modify
such process ******** after a change of such Specifications may be required to
be made or requested by POZEN for regulatory or competitive marketing reasons,
********.

               (iv)  At any time following the ******** anniversary of the Date
of First Commercial Sale, POZEN may cancel this Agreement upon ******** written
notice to Lek.

               (v)   Upon termination by POZEN pursuant to subsection (iii), if
Lek within ******** thereafter develops a manufacturing process for X DHE that
is substantially similar to the X Product as described in the Specifications
provided in Exhibit B-2, Lek will notify POZEN thereof in writing and will offer
POZEN to enter into an exclusive supply agreement for such product on terms not
less favorable to POZEN than those provided for with respect to the X Product in
this Agreement. If POZEN is interested in entering into such agreement, the
Parties will negotiate and execute a substantially similar supply agreement for
such product ******** thereafter. If POZEN declines to enter into such
relationship or does not respond to Lek's offer ******** after receipt thereof,
Lek will be free to sell such product to third parties without further
obligation to POZEN.

   SECTION 14. Termination.

           (a) Default. If either Party materially defaults in the performance
of a material provision of this Agreement, and does not remedy that default to
the other Party's reasonable satisfaction ******** after receipt of a notice of
default, the Party not in default may terminate this Agreement. Termination of
this Agreement pursuant to this Section 14(a) will not affect any other rights
or remedies that may be available to the nondefaulting Party.

           (b) Bankruptcy. Either Party may terminate this Agreement in the
event the other Party is declared bankrupt or insolvent, or makes an assignment
for the benefit of its creditors, or if a receiver is appointed or any
proceedings are commenced, voluntary or involuntary, by or against such bankrupt
or insolvent Party under any bankruptcy or similar law

                                       14

<PAGE>

(other than a reorganization under Chapter 11 of the United States Bankruptcy
Code or any successive provision), and, if instituted by a third party against a
Party, such status is not cured within sixty (60) days from its occurrence.

          (c) Force Majeure. Neither Party will be held liable or responsible
for failure or delay in fulfilling or performing any of its obligations under
this Agreement in case such failure or delay is due to any condition beyond the
reasonable control of the affected Party including, without limitation, Acts of
God, strikes or other labor disputes, war, riot, earthquake, hurricane, fire,
flood, governmental regulations or actions (a "Force Majeure Event"). Such
excuse will continue only as long as the Force Majeure Event continues;
provided, that if the Force Majeure Event continues for a period of more than
one hundred eighty (180) days, the other Party will have the right to terminate
this Agreement with written notice effective upon receipt. The Party affected by
the Force Majeure Event will give immediate notice to the other Party of the
extent and nature thereof and will use its best efforts to mitigate the
consequences of the occurrence of such Force Majeure Event.

     SECTION 15. Effects of Cancellation or Termination.

          (a) Accrued Obligations. The cancellation or termination of this
Agreement will not affect any payment obligation, fulfillment of purchase order
obligation or other obligation that accrued prior thereto with the exception of
the obligations specifically excused in Sections 13 and 14.

          (b) Transfer of Manufacturing Information. If and when Lek gives
notice of termination of this Agreement pursuant to Section 13(b)(i), Lek will
provide POZEN with a complete copy of the DMFs and reference standards necessary
to transfer manufacturing (synthesis) and analytical methods associated with the
Product to another manufacturer, and POZEN, its Licensees, or their respective
contract manufacturers will have the right to practice the manufacturing process
described in such DMFs to manufacture the Finished Product as of the Effective
Date of such termination.

          (c) Survival. The rights and obligations of the Parties under Section
6, 9, 11, 12, 15, 16, 20, 21, 22 and 23 of this Agreement will survive any
termination or expiration of this Agreement.

     SECTION 16. Waiver. Failure of either Party to insist in any instance on
the strict performance of any covenant, term, provision or condition hereunder,
or to exercise any option herein contained, will not be construed as a waiver of
such covenant, term, provision, condition or option in any other instance.

     SECTION 17. Assignment. This Agreement may not be assigned by a Party
without the prior written consent of the other Parties except that a Party may
assign this Agreement without the other Parties' consent to any entity that
acquires substantially all of its stock, assets or business. In addition, POZEN
may assign this Agreement without Lek's or LPI's consent, in whole or in part,
to (i) any affiliate of POZEN, defined as any corporation controlled by, or
under common control with, POZEN, or (ii) any partnership or joint venture or
other entity directly or indirectly controlled by, or under common control with,
POZEN, or (iii) a

                                       15

<PAGE>

Licensee that has the right to commercialize the Finished Product, and that is
not a company listed in Exhibit E. Any permitted assignee will assume all
obligations of its assignor under this Agreement.

     SECTION 18. Relationship of the Parties. The relationship between Lek and
LPI, on the one hand, and POZEN, on the other hand, created by this Agreement is
solely that of independent contractors. This Agreement does not create an
agency, partnership or joint venture and nothing in this Agreement authorizes a
Party to act for, represent or bind any other or any of its affiliates, except
to the extent expressly provided in this Agreement.

     SECTION 19. Further Assurances. Lek, LPI and POZEN agree to execute,
acknowledge and deliver all further documents, and perform all other acts
reasonably necessary and appropriate to fulfill the purposes of this Agreement.

     SECTION 20. Use of Party's Name. Neither Party may use the other Party's
name, trade names or trademarks in any manner without the express written
consent of that Party. Notwithstanding the above, as may be required by
applicable law, the Parties and their affiliates will be permitted to use the
other Party's name and to disclose the existence and terms of this Agreement in
connection with securities or other public filings. POZEN may additionally
disclose this Agreement in connection with its financing and licensing
activities.

     SECTION 21. Applicable Law. This Agreement will be construed and enforced
in accordance with the laws of the United States of America, State of North
Carolina, without regard to its conflict of laws provisions and without regard
to the United Nations Convention on the International Sale of Goods.

     SECTION 22. Dispute Resolution. Any material disputes or disagreements
between the Parties arising hereunder will be referred to the Chief Executive
Officer of POZEN, the President of the Board of Management of Lek and the
President and CEO of LPI or their designees for good faith resolution for a
period of thirty (30) days. If the Parties are not able to settle their dispute
or disagreement during such thirty (30) day period, such dispute or disagreement
will be settled by arbitration in accordance with the then existing Commercial
Arbitration Rules of the American Arbitration Association. Upon request by a
Party, arbitration will be by a panel of three arbitrators within thirty (30)
days of such arbitration request. Lek and LPI will jointly select one
arbitrator, POZEN will select one arbitrator, and the third will be mutually
agreed upon in writing by the Parties. In any such arbitration, the Parties will
select a panel with relevant experience in the pharmaceutical industry. Judgment
upon the award rendered by the panel will be final and nonappealable and may be
entered in any court having jurisdiction thereof. The parties will be entitled
to all discovery in like manner as if the arbitration were a civil suit in the
federal district courts located in Wilmington, North Carolina. Any arbitration
will be held in Wilmington, North Carolina, unless the parties hereto mutually
agree in writing to another place. The prevailing Party in any arbitration
action to enforce or interpret this Agreement will be entitled to recover
reasonable costs and attorneys' fees from the non-prevailing Party.

     SECTION 23. Entire Agreement. This Agreement, with its attached Exhibits,
constitutes the entire agreement between the Parties concerning this subject
matter and

                                       16

<PAGE>

supersedes all previous agreements, whether written or oral. This Agreement may
not be modified orally, and no modification will be effective unless in writing
signed by duly authorized representatives of both Parties. Any preprinted
provision on any forms used by a Party in connection with shipments hereunder
(e.g., purchase orders, acknowledgments, invoices, etc.) will be of no effect
despite any provision to the contrary, unless that provision specifically refers
to and purports to modify this Agreement and that writing is signed by duly
authorized representatives of Lek, LPI and POZEN.

                                       17

<PAGE>

     In Witness Whereof, the Parties have executed this Agreement effective as
of the Effective Date.

Lek Pharmaceutical and Chemical       POZEN INC.
Company, D.D.

By:_____________________________      By:____________________________________

Name:___________________________      Name: John R. Platchetka, Pharm.D.
                                           ----------------------------------
Title:__________________________      Title: Chairman, President and CEO
                                             --------------------------------

Lek Pharmaceuticals Inc.              POZEN INC.

By:_____________________________      By:____________________________________

Name: Paul Kleutghen                  Name: Kristina M. Adomonis
     ---------------------------           ----------------------------------

Title: President & CEO                Title: Senior Vice President, Business
      --------------------------             --------------------------------
                                             Development
                                      ---------------------------------------

             [Signature Page to Manufacturing and Supply Agreement]

<PAGE>

                                    Exhibit A

                                   DEFINITIONS

     "Applicable Laws" means any laws, rules, regulations, guidelines or
guidance documents applicable to the manufacture of Product, including cGMPs of
the U.S. Federal Food and Drug Administration and the European Union, any
applicable environmental, health and safety laws relating to the manufacture of
Product, and any other laws, regulations or guidelines applicable to the
performance of this Agreement.

     "cGMP" or "cGMPs" means the current good manufacturing practices and
quality systems regulations promulgated by Regulatory Authorities, as amended
from time to time.

     "CMC" means the chemistry, manufacturing and controls section(s) and data
in a Regulatory Approval which specifies part or all of the following: the
chemical composition of Product, its components and the control and
manufacturing process for Product, including any references to DMFs.

     "Confidential Information" means all information, including but not limited
to data, know-how, formulations, product concepts, sample materials, business
and technical information, financial data, and deal terms, whether in written
form or disclosed orally, visually and/or in another tangible form, identified
as "Confidential" at the time of such disclosure.

     "Date of First Commercial Sale" means the date after the grant of
Regulatory Approval on which the Finished Product is first sold to an
independent third party.

     "DDU (Incoterms 2000)" means the delivery term "Delivered Duty Unpaid"
devised and published by the International Chamber of Commerce and attached
hereto as Exhibit H.

     "DHE" means the active ingredient dihydroergotamine mesylate U.S.P., E.P
and conforming to ICH guidelines, all as amended from time to time.

     "DMF" means the Y Product DMF or the X Product DMF, as applicable, and
"DMFs" means the Y Product DMF and the X Product DMF.

     "Europe" means Albania, Andorra, Austria, Belgium, Belarus,
Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, Estonia,
Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy,
Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Monaco,
Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, San Marino,
Serbia/Montenegro, Kosovo, Slovakia, Slovenia, Spain, Sweden, Switzerland,
Turkey, Ukraine, United Kingdom, and Vatican City, and any successor states on
their respective territories.

     "Finished Product" means a finished product which incorporates Product
manufactured and supplied to POZEN by Lek, formulated and packaged for sale to
the trade.

                                      A-1.

<PAGE>

     "Latent Defect" means any instance where a shipment of a Product fails to
conform to the applicable Specifications or fails to conform to the warranties
given by Lek herein, and such failure would not be discoverable upon reasonable
physical inspection or standard testing of such Product upon receipt by POZEN or
its licensee or customer in accordance with standard operating procedures for
the pharmaceutical industry.

     "Lek Facility" means the facility of LEK Pharmaceutical and Chemical
Company d.d., Pharmaceutical Active Substance Production Division, in 61234
Menges, Kolodvorska 27, Slovenia.

     "Licensee" means a third party licensed by POZEN to develop, manufacture
and/or commercialize the Finished Products.

     "Manufacturing Process" means the manufacturing process for X Product or Y
Product as described in the applicable DMF.

     "Manufacturing Approvals" means all applications, licenses, permits, and
other authorizations, other than Regulatory Approvals, which are required for
the manufacture of Product in compliance with Applicable Laws.

     "Net Sales" means the actual amount invoiced for sale of Finished Product
after deducting the following: (i) discounts, rebates (including
government-mandated rebates), retroactive price reductions, samples and/or
allowances actually allowed or granted from the billed amount, (ii) credits or
allowances actually granted upon claims, rejections or returns, including
recalls, and (iii) taxes, duties or other governmental charges levied on or
measured by the billing amount; provided that if POZEN licenses the right to
commercialize the Finished Product to a third party, Net Sales will have the
meaning as defined in the license agreement with such third party, which
definition will be comparable to the term as defined above.

     "Y Product" means DHE conforming to the specifications in Exhibit B-1.

     "Y Product DMF" means the set of documents referred to in Applicable Laws
as "Drug Master File", filed with the U.S. Food and Drug Administration as DMF
No. 3022, and any applicable European equivalent, as updated from time to time,
which is required for some portion of the manufacture and testing of Y Product
for clinical use and commercial sale.

     "North America" means the USA, Canada, Mexico, Guatemala, Belize, El
Salvador, Honduras, Nicaragua, Costa Rica, Panama, and the island countries and
dependencies of the Caribbean.

     "Patent Defect" means any instance where a lot of a Product fails to
conform to the applicable Specifications or fails to conform to the warranties
given by Lek herein, and such failure is discoverable upon reasonable physical
inspection or standard testing of such Product upon receipt by POZEN or its
licensee or customer in accordance with standard operating procedures for the
pharmaceutical industry.

     "Product" means X Product or Y Product in bulk form.

                                      A-2.

<PAGE>

     "Purchase Price" means the price for Product payable by POZEN to Lek
pursuant to Section 5(a).

     "X Product" means X form of DHE, conforming to the specifications for X DHE
in Exhibit B-2 attached hereto.

     "X Product DMF" means the set of documents referred to in Applicable Laws
as "Drug Master File", to be filed with the U.S. Food and Drug Administration,
and any applicable European equivalent, as updated from time to time, which is
required for some portion of the manufacture and testing of X Product for
clinical use and commercial sale.

     "Regulatory Approvals" means all Investigational New Drugs (INDs), new drug
approvals, marketing approvals, and all other permits required for conducting
clinical trials with, and for selling, the Finished Product in a particular
country.

     "Regulatory Authority" means the competent government regulatory authority
responsible for granting the Regulatory Approvals or the Manufacturing Approval
in the applicable country or jurisdiction.

     "Specifications" means the specifications for the Y Product and the X
Product as defined in Exhibits B-1 and B-2, respectively, and the applicable
DMF, including (as applicable) statements of pharmaceutical manufacturing,
filling, storage and quality control procedures, and labeling and packaging
specifications, and other written instructions of POZEN notified to Lek from
time to time. The parties acknowledge that there may be more than one form of a
Product and that each such form will have its own Specifications.

     "Territory" means all countries of the world.

                                      A-3.

<PAGE>

                                    Exhibit B

                                 SPECIFICATIONS

<PAGE>

                                   Exhibit B-1

                                    ********

<PAGE>

                                   Exhibit B-2

                                    ********

<PAGE>

                                    Exhibit C

                      ******** Forecast & Delivery Schedule

                      ********

<PAGE>

                                    Exhibit D

                                    X PRODUCT

           MANUFACTURING PROCESS DEVELOPMENT MILESTONES AND MILESTONE
                                    PAYMENTS

                                    ********

<PAGE>

                                    Exhibit E

                                 Lek Competitors

                                    ********

<PAGE>

                                    Exhibit F

                          Approved Testing Laboratories

                                    *********

<PAGE>

                                    Exhibit G

                 Development Plan relating to DMF for Y Product

                                    *********

<PAGE>

                                    Exhibit H

                              DDU (Incoterms 2000)

                                    ********<PAGE>

                                                                  EXHIBIT 10.21

                                 LEASE AGREEMENT

                                 by and between

                         THE EXCHANGE AT MEADOWMONT LLC

                                    LANDLORD

                                       and

                                   POZEN INC.

                                     TENANT

                         Dated as of: November 21, 2001
                                      -----------

                                                                     HDL/JEB
                                                                     -------
                                                                    INITIALS

<PAGE>

ARTICLE 1 - LEASED PREMISES                                                1

1.01     Leased Premises.                                                  1

ARTICLE 2 - BASIC LEASE PROVISIONS                                         1

2.01     Basic Lease Provisions.                                           1

ARTICLE 3 - TERM AND POSSESSION                                            2

3.01     Term.                                                             2

3.02     Commencement.                                                     2

3.03     Tenant's Delay.                                                   3

3.04     Tenant's Possession.                                              3

3.05     Acceptance of Leased Premises.                                    3

3.06     Holdover.                                                         3

ARTICLE 4 - RENT AND SECURITY FOR THE LEASE                                3

4.01     Base Rent.                                                        3

4.02     Payment of Rent.                                                  4

4.03     Additional Rent.                                                  4

4.04     Operating Expense and Real Estate Tax Adjustment.                 4

4.05     Cost of Living Adjustment.                                        6

4.06     Security for the Lease.                                           6

4.07     Late Charge.                                                      6

ARTICLE 5 - SERVICES                                                       7

5.01     Services.                                                         7

ARTICLE 6 - USE AND OCCUPANCY                                              7

6.01     Use.                                                              7

6.02     Care of the Leased Premises.                                      7

6.03     Entry for Repairs and Inspection.                                 7

6.04     Compliance with Laws; Rules of Building.                          8

6.05     Access to Building.                                               8

6.06     Peaceful Enjoyment.                                               8

6.07     Relocation.                                                       8

ARTICLE 7 - CONSTRUCTION, ALTERATIONS AND REPAIRS                          8

                                                                    HDL/JEB
                                                                    -------
                                                                   Initials

<PAGE>

7.01     Construction.                                                     8

7.02     Alterations.                                                      8

7.03     Repairs by Landlord.                                              9

7.04     Repairs by Tenant.                                                9

ARTICLE 8 - CONDEMNATION, CASUALTY, INSURANCE AND INDEMNITY                9

8.01     Condemnation.                                                     9

8.02     Damages from Certain Causes.                                      9

8.03     Fire Clause.                                                     10

8.04     Insurance Policies.                                              10

8.05     Hold Harmless.                                                   10

8.06     Waiver of Subrogation Rights.                                    10

8.07     Limitation of Landlord's Personal Liability.                     11

ARTICLE 9 - LANDLORD'S LIEN, DEFAULT, REMEDIES AND SUBORDINATION          11

9.01     Lien for Rent.                                                   11

9.02     Default by Tenant.                                               11

9.03     Non Waiver.                                                      11

9.04     Attorney's Fees.                                                 11

9.05     Subordination; Estoppel Certificate.                             11

9.06     Attornment.                                                      12

9.07     Accord and Satisfaction.                                         12

ARTICLE 10 - ASSIGNMENT AND SUBLEASE                                      12

10.01    Assignment or Sublease.                                          12

10.02    Assignment by Landlord.                                          12

ARTICLE 11 - NOTICES AND MISCELLANEOUS                                    12

11.01    Notices.                                                         13

11.02    Miscellaneous.                                                   13

ARTICLE 12 - ENTIRE AGREEMENT AND LIMITATION OF WARRANTIES                15

12.01    ENTIRE AGREEMENT AND LIMITATION OF WARRANTIES.                   15

                                                                      HDL/JEB
                                                                      -------
                                                                     Initials

<PAGE>

                                    EXHIBITS
                                    --------

      A-1       -       Floor Plan(s) of the Leased Premises

      A-2       -       The Land

      A-3       -       The Project

      B         -       Acceptance of Leased Premises Memorandum

      C         -       Workletter Agreement

      C-1       -       Schematic Space Plan

      D         -       Building Rules

      E         -       Form of Estoppel Certificate

      F         -       HVAC Schedule

      G         -       Renewal Options

      H         -       First Offer Rights

      I         -       Janitorial Specifications

                                                                   HDL/JEB
                                                                   -------
                                                                  Initials

<PAGE>

                                 LEASE AGREEMENT

         THIS LEASE AGREEMENT (this "Lease") is made and entered into on this
21st day of November, 2001, by and between The Exchange at Meadowmont LLC, a
North Carolina limited liability company ("Landlord"), and Pozen Inc., a
Delaware corporation authorized to conduct business in the State of North
Carolina ("Tenant"), on the terms and conditions set forth below.

                           ARTICLE 1 - LEASED PREMISES

         1.01   Leased Premises.

         Landlord leases to Tenant and Tenant leases from Landlord the space
(the "Leased Premises") set forth in Subsections (a) and (b) of the Basic Lease
                                     -----------------------
Provisions below and shown on the floor plan(s) attached hereto as Exhibit A-1
                                                                   -----------
upon the terms and conditions set forth in this Lease. The office building in
which the Leased Premises are located, the land on which the office building is
located (the "Land", described on Exhibit A-2 attached hereto), the parking
                                  -----------
facilities and all improvements and appurtenances to the building are
collectively referred to as the "Building". The Building and any larger complex
of which the Building is a part are collectively referred to as the "Project",
as shown on the map attached hereto as Exhibit A-3.
                                       -----------

                       ARTICLE 2 - BASIC LEASE PROVISIONS

         2.01   Basic Lease Provisions.

         The following provisions set forth various basic terms of this Lease
and are sometimes referred to as the "Basic Lease Provisions".

                (a)   Building Name:                  Exchange West
                      Address:                        1414 Raleigh Road
                                                      Chapel Hill, North
                                                      Carolina  27517

                (b)   Floor(s):                       Fourth (4th)
                      Suite #:                        400
                      Square Feet Area:               17,009

                (c)   Total Area of Building:         133,820  square feet

                (d)   Annual Base Rent:               see chart below (see chart
                                                      below  per square foot)
                      Monthly Base Rent:              see chart below

<TABLE>
<CAPTION>
       -----------------------------------------------------------------------------------------------------------------------
                Dates             Price Per Square Foot   Square      Aggregate Rent for Time         Monthly Base Rent
                                       (rounded)           Feet             Specified
       -----------------------------------------------------------------------------------------------------------------------
        <S>                       <C>                      <C>        <C>                             <C>
        2/15/02 through 6/30/02     $20.95 but Base Rent    17,009           $      0.00                   $   0.00
                                           abated
       -----------------------------------------------------------------------------------------------------------------------
         7/1/02 through 7/31/02     $20.95 but Base Rent    17,009  $5,246.73 (blended rate for 17  $5,246.73 (for 17 days)
                                  abated for first 14 days                      days)
                                     + $20.95 Base Rent
                                  reduced to $6.75 for 17
                                            days

       -----------------------------------------------------------------------------------------------------------------------
         8/1/02 through 2/28/03     $20.95 but Base Rent    17,009           $ 66,972.92                   $9,567.56
                                      reduced to $6.75
       -----------------------------------------------------------------------------------------------------------------------
         3/1/03 through 3/31/03     $20.95 but Base Rent    17,009  $7,317.72 (blended rate for 1          $7,317.72
                                    reduced to $6.75 for                        month)
                                   first 14 days + $21.38
                                   minus Rent Credit (as
                                  defined in Section 4.01)
                                             ------------
                                        for 17 days
       -----------------------------------------------------------------------------------------------------------------------
         4/1/03 through 8/31/03   $21.38 minus Rent Credit  17,009           $ 27,324.55                   $ 5,464.91
       -----------------------------------------------------------------------------------------------------------------------
         9/1/03 through 9/30/03    $21.38 minus remaining   17,009  $19,083.47 (blended rate for 1         $19,083.47
                                   balance of Rent Credit                       month)
                                    for first 14 days +
                                 $21.38/sq. ft. for 16 days
       -----------------------------------------------------------------------------------------------------------------------
        10/1/03 through 2/29/04            $21.38           17,009           $151,493.50                   $30,298.70
       -----------------------------------------------------------------------------------------------------------------------
         3/1/04 through 2/28/05            $21.81           17,009           $371,047.56                   $30,920.63
       -----------------------------------------------------------------------------------------------------------------------
         3/1/05 through 2/28/06            $22.27           17,009           $378,734.64                   $31,561.22
       -----------------------------------------------------------------------------------------------------------------------
         3/1/06 through 2/28/07            $22.73           17,009           $386,652.36                   $32,221.03
       -----------------------------------------------------------------------------------------------------------------------
         3/1/07 through 2/29/08            $23.21           17,009           $394,807.56                   $32,900.63
       -----------------------------------------------------------------------------------------------------------------------
         3/1/08 through 2/28/09            $23.71           17,009           $403,207.44                   $33,600.62
       -----------------------------------------------------------------------------------------------------------------------
         3/1/09 through 2/28/10            $24.21           17,009           $411,859.32                   $34,321.61
       -----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                        HDL/JEB
                                                                        --------
                                                                        Initials

<PAGE>

<TABLE>
               <S>   <C>                                <C>
               (e)   Base Operating Expense Factor:     $4.75 per square foot
                     Base Real Estate Tax Stop          $2.00 per square foot

               (f)   Parking:                           4 spaces per 1,000 square feet of space
                     Monthly Rent per Parking Space:    N/A

               (g)   Term:                              8 Year(s)   0 Month(s) 0 Day(s)

               (h)   Target Commencement Date:          February 15, 2002
                     Target Expiration Date:            February 28, 2010

               (i)   Security for the Lease:            Letter of Credit - see Section 4.06
                                                                               ------------

               (j)   Permitted Use:                     General business use

               (k)   Addresses for notices and other communications under this
                     Lease:

                     Landlord                           Tenant
                     --------                           ------
                     The Exchange at Meadowmont LLC     Pozen Inc.
                     c/o Capital Associates             1414 Raleigh Road, Suite 400
                     1100 Crescent Green, Suite 115     Chapel Hill, North Carolina  27517
                     Cary, North Carolina 27511         Attn:  Matt Czajkowski
                     (919) 233-9901                     Ph: (919) 490-0012

               (l)   Broker:                            Capital Associates
                     Co-Broker:                         MetaSystems, Inc., d/b/a MetaPartners
</TABLE>

                         ARTICLE 3 - TERM AND POSSESSION

         3.01  Term.

         This Lease shall be and continue in full force and effect for the term
set forth in Subsection 2.01(g). Subject to the remaining provisions of this
             ------------------
Article, the Term shall commence on the Target Commencement Date shown in
Subsection 2.01(h) and shall expire, without notice to Tenant, on the Target
------------------
Expiration Date shown in Subsection 2.01(h); provided, however, that if the
                         ------------------
Commencement Date is other than the first (1/st/) day of the month, the
Expiration Date shall nevertheless be the last day of the last month of the
Term. Such term, as it may be modified, renewed and extended pursuant to Exhibit
                                                                         -------
G, is herein called the "Term".
-

         3.02     Commencement.

         Subject to Section 3.03 hereof, if on the Target Commencement Date any
                    ------------
of the work described in Exhibit C that is required to be performed by Landlord
                         ---------
at Landlord's expense (or by Landlord at Tenant's expense pursuant to paragraph
1 of Exhibit C) to prepare the Leased Premises for occupancy has not been
     ---------
substantially completed, or if Landlord is unable to tender possession of the
Leased Premises to Tenant on the Target Commencement Date due to any other
reason beyond the reasonable control of Landlord, the hereinafter defined
Commencement Date (and commencement of installments of Base Rent), shall be
postponed until the work to be performed in the Leased Premises at Landlord's
expense (or by Landlord at Tenant's expense pursuant to paragraph 1 of Exhibit
                                                                       -------
C) is substantially completed, and the postponement shall operate to extend the
-
Expiration Date in order to give full effect to the stated duration of the Term,
provided, however, in no event shall Base Rent payments by Tenant commence prior
to February 15, 2002. Except as set forth below, the deferment of installments
of Base Rent shall be Tenant's exclusive remedy for postponement of the
Commencement Date, and Tenant shall have no, and waives any, claim against
Landlord because of any such delay. If the postponement shall continue for more
than forty-five (45) days beyond the Target Commencement Date, and such
postponement is due to delay(s) within Landlord's reasonable control to cure,
Landlord shall permit Tenant to occupy the Leased Premises when it is ready for
total occupancy Base Rent free for one (1) day for each day during the time
which the Leased Premises is not ready for total occupancy after forty-five (45)
days beyond the Target Commencement Date; provided, however, that the Target
Commencement Date shall be extended one (1) day for each day of delay caused by
Tenant, the Town of Chapel Hill, North Carolina, acts of God, strikes, labor
disputes, riots, war or insurrection, or any other delay(s) not within
Landlord's reasonable control. If the postponement shall continue for more than
sixty (60) days beyond the Target Commencement Date, and such postponement is
due to delay(s) within Landlord's reasonable control to cure, Landlord shall
permit Tenant to occupy the Leased Premises when it is ready for total occupancy
Base Rent free for two (2) days for each day during the time which the Leased
Premises is not ready for total occupancy after sixty (60) days beyond the
Target Commencement Date; provided, however, that the Target Commencement Date
shall be extended one (1) day for each day of delay caused by Tenant, the Town
of Chapel Hill, North Carolina, acts of God, strikes, labor disputes, riots, war
or insurrection, or any other delay(s) not within Landlord's reasonable control.
The Leased Premises shall be deemed to be ready for total occupancy upon the
issuance by the Town of Chapel Hill, North Carolina, of a certificate of
occupancy. Landlord agrees to exercise reasonable best efforts in completing the
Upfit (as defined in Exhibit C), including obtaining any permits from the Town
                     ---------
of Chapel Hill, North Carolina, in order to complete the Upfit by the Target
Commencement Date.

                                                                        HDL/JEB
                                                                        --------
                                                                        Initials

                                       2

<PAGE>

         3.03   Tenant's Delay.

         No delay in the completion of the Leased Premises resulting from delay
or failure on the part of Tenant in furnishing information or other matters
required in Exhibit C, and no delay resulting from the completion of work, if
            ---------
any, that is to be performed at Tenant's expense pursuant to paragraph 3 of
Exhibit C, shall delay the Commencement Date, Expiration Date or commencement of
---------
payment of Rent (as defined in Subsection 4.02 below).
                               ---------------

         3.04   Tenant's Possession.

         Except as specifically set forth in Exhibit C, paragraph 7, if, prior
                                             ---------
to the Commencement Date, Tenant shall enter into possession of all or any part
of the Leased Premises, the Term, the payment of monthly installments of Base
Rent and all other obligations of Tenant to be performed during the Term shall
commence on, and the Commencement Date shall be deemed to be, the date of such
entry; provided, no such early entry shall operate to change the Expiration
Date.

         3.05   Acceptance of Leased Premises.

         Tenant shall confirm its acceptance of the Leased Premises by execution
of the Acceptance of Leased Premises Memorandum attached hereto as Exhibit B. If
                                                                   ---------
the actual commencement date ("Commencement Date") and actual expiration date
("Expiration Date") are different from the Target Commencement Date and the
Target Expiration Date, respectively, as set forth in Subsection 2.01(h),
                                                      ------------------
Landlord and Tenant shall execute an amendment to the Lease setting forth such
actual dates. If such amendment is not executed, the Commencement Date and
Expiration Date shall be conclusively deemed to be the Target Commencement Date
and the Target Expiration Date set forth in Subsection 2.01(h).
                                            ------------------

         3.06   Holdover.

         If Tenant shall remain in possession of the Leased Premises after the
expiration or earlier termination of this Lease without the execution of a new
lease or an amendment to this Lease extending the Term, Tenant shall become a
tenant-at-sufferance, and for a period of sixty (60) days after such termination
or expiration, as the case may be, shall pay daily rent at one hundred fifty
percent (150%) of the per day Rent (as defined in Section 4.02) payable with
                                                  ------------
respect to the last full calendar month immediately prior to the end of the Term
or termination of this Lease, but otherwise shall be subject to all of the
terms, conditions, provisions and obligations of this Lease and such tenancy may
be terminated at any time on seven (7) days' prior written notice. After such
sixty (60) day period Tenant shall continue to be a tenant-at-sufferance,
terminable on one (1) day's notice, and shall pay daily rent at double the per
day Rent payable with respect to the last full calendar month immediately prior
to the end of the Term or termination of this Lease, but otherwise shall be
subject to all of the obligations of Tenant under this Lease. Tenant shall
indemnify Landlord (i) against all claims for damages by any other tenant to
whom Landlord may have leased all or any part of the Leased Premises effective
upon the termination or expiration of this Lease, and (ii) for all other losses,
costs and expenses, including consequential damages and reasonable attorneys'
fees, sustained or incurred by reason of such holding over.

                   ARTICLE 4 - RENT AND SECURITY FOR THE LEASE

         4.01   Base Rent.

         Tenant agrees to pay to Landlord rent ("Base Rent") throughout the Term
in the amount of the Annual Base Rent set forth in Subsection 2.01(d). Unless
                                                   ------------------
otherwise set forth in this Lease, Base Rent shall be payable in monthly
installments in the amount set forth in Subsection 2.01(d) ("Monthly Base Rent")
                                        ------------------
in advance and without demand, deduction or offset, on the first day of each and
every calendar month during the Term. If the Commencement Date is not the first
day of a month, Tenant shall be required to pay on the Commencement Date a pro
rata portion of the Monthly Base Rent for the first partial month of the Term.
Notwithstanding the foregoing, the payment of Base Rent shall be waived for the
first (1/st/) five (5) months of the Term (as calculated from the Target
Commencement Date), and Tenant shall thereafter commence paying Base Rent in the
sixth (6/th/) month of the Term, which Base Rent shall be reduced to Six Dollars
and Seventy-five Cents ($6.75) per square foot contained in the Leased Premises
through the end of the thirteenth (13/th/) month of the Term. Notwithstanding
the foregoing, Landlord shall provide Tenant with an additional Base Rent credit
in an amount equal to the rent being paid by Tenant to another landlord at
Tenant's subleased spaces at Quadrangle V (approximately 5,938 square feet of
space leased, expiring February 28, 2003, and approximately 1,286 square feet of
space leased, expiring December 31, 2002, such subleased spaces to be deemed
"Tenant's Other Premises" herein), in an amount equal to One Hundred Forty-nine
Thousand Two Dollars and Seventy-one Cents ($149,002.71) (the "Rent Credit"),
which Rent Credit shall be applied in equal monthly installments of Twenty-four
Thousand Eight Hundred Thirty-three Dollars and Seventy-nine Cents ($24,833.79)
against Tenant's Base Rent from the fourteenth (14/th/) month of the Term
through the end of the nineteenth (19/th/) month of the Term. In the event that
Tenant's Other Premises (i) are partially or fully leased with a rent-paying
tenant, or (ii) the landlord for Tenant's Other Premises relieves Tenant of any
or all of Tenant's rental obligations for Tenant's Other Premises for any reason
whatsoever on or before the expiration dates of such lease or sublease agreement
as set forth herein, then the amount of the Rent Credit shall be reduced by the
amount of the rent any new tenant is paying for Tenant's Other Premises or the
amount of relief the landlord has granted to Tenant, as the case may be, and the
Base Rent chart set forth in Subsection 2.01(d) of the Lease shall be amended
                             ------------------
accordingly. Beginning in the twentieth (20/th/) month of the Lease, Tenant
shall commence paying full Base Rent. The rental abatement, rent reduction and
Rent Credit (subject to adjustment as set forth above), and Base Rent payment
due dates are all illustrated in the chart contained in Subsection 2.01(d) of
                                                        ------------------
the Lease.

                                                                        HDL/JEB
                                                                        -------
                                                                        Initials

<PAGE>

         4.02     Payment of Rent.

         As used in this Lease, "Rent" shall mean the Base Rent, Additional Rent
(defined below) and all other amounts required to be paid by Tenant in this
Lease. The Rent shall be paid at the times and in the amounts provided herein in
legal tender of the United States of America to Landlord at its address
specified in Subsection 2.01(k) above, or to such other person or at such other
             ------------------
address as Landlord may from time to time designate in writing. The Rent shall
be paid without notice, demand, abatement, deduction or offset except as may be
expressly set forth in this Lease.

         4.03     Additional Rent.

         The term "Additional Rent" shall mean the total of the "Operating
Expense and Real Estate Tax Adjustment", as such term is defined below, and any
other amounts in addition to Base Rent which Tenant is required to pay to
Landlord under this Lease.

         4.04     Operating Expense and Real Estate Tax Adjustment.

         If the Operating Expenses (defined below) or the real estate taxes for
the Building for any calendar year, expressed on a per square foot basis, exceed
the Base Operating Expense Factor or the Base Real Estate Tax Stop each of which
is specified in Subsection 2.01(e), Tenant shall pay to Landlord increased Rent
                ------------------
(an "Operating Expense and Real Estate Tax Adjustment") in an amount equal to
the product of such excess times the square footage of the Leased Premises as
stated in Subsection 2.01(b). The Operating Expense and Real Estate Tax
          ------------------
Adjustment shall be payable in monthly installments on the first day of each
calendar month based on Landlord's estimate of the Operating Expenses and real
estate taxes for the then current year. Landlord may at any time give Tenant
written notice specifying Landlord's estimate of the Operating Expenses or real
estate taxes for the then current calendar year or the subsequent calendar year
and specifying the Operating Expense and Real Estate Tax Adjustment to be paid
by Tenant for each such year, and Tenant shall adjust its payments accordingly
beginning with the monthly installment immediately following Landlord's notice.
Within one hundred twenty (120) days after the end of each calendar year,
Landlord shall give written notice to Tenant specifying the actual Operating
Expenses and real estate taxes for the prior calendar year and any necessary
adjustment to the Operating Expense and Real Estate Tax Adjustment paid by
Tenant for that calendar year. Tenant shall pay any deficit amount to Landlord
within thirty (30) days after receipt of Landlord's written notice. Any excess
payment by Tenant for the prior calendar year shall be refunded to Tenant within
sixty (60) days of the delivery of Landlord's written notice. (Any excess
payment during the last year of the Term shall be refunded to Tenant within
thirty (30) days of the delivery of Landlord's written notice.) Notwithstanding
the foregoing, if the Operating Expenses or real estate taxes in calendar year
2002 exceed the Base Operating Expense Factor or the Base Real Estate Tax Stop
set forth in Subsection 2.01(e), Tenant shall not be required to pay any
             ------------------
Operating Expense and Real Estate Tax Adjustment for calendar year 2002, and if
the Operating Expenses or real estate taxes in calendar year 2002 are below the
Base Operating Expense Factor or the Base Real Estate Tax Stop, Landlord shall
not be required to refund any sums to Tenant for calendar year 2002. Further
notwithstanding, Operating Expenses which are controllable by Landlord shall not
increase annually by more than six percent (6%) per year for purposes of
determining Tenant's annual Operating Expense and Real Estate Tax Adjustment.
There shall be no such limitation with respect to real estate taxes, insurance
or utilities. Tenant shall have the right, one (1) time per year, upon written
notice to Landlord, within ninety (90) days of receipt of the Operating Expense
and real estate tax statement, to have Landlord's books and records relating
solely to Operating Expenses and real estate taxes contained in that statement,
reviewed. If Landlord's calculation of Operating Expenses or real estate taxes
fails to comply with the requirements of this Section 4.04 or contains any other
                                              ------------
error, as determined by the review, Tenant's past payments of Operating Expenses
or real estate taxes for the subject year shall be adjusted in accordance with
the results of the review, and appropriate payments shall be made by Landlord or
Tenant, as the case may be, within forty-five (45) days after completion of the
review. All books and records necessary to accomplish any review permitted under
this section shall be retained by Landlord for a period of one (1) year, and
shall be made available to the person conducting the review at the Building,
Project or the office of Landlord's property manager, during normal business
hours. All of Landlord's and Tenant's costs of the review shall be paid by
Tenant unless the review reveals that Operating Expenses and real estate taxes
were misstated by seven and one-half percent (7.5%) or more in the calendar year
reviewed, in which case Landlord shall reimburse Tenant for its costs of the
review. The provisions of this paragraph shall survive the cancellation or
termination of this Lease.

         The term "Operating Expenses" shall mean, except as otherwise specified
in this definition, all expenses, costs, and disbursements of every kind and
nature, computed on an accrual basis, which Landlord shall pay or become
obligated to pay because of or in connection with the ownership and operation of
the Building, or Landlord's efforts to reduce Operating Expenses to the extent
that they reduce Operating Expenses in the current or future years, but not to
exceed the total cost of the expenditure, including, without limitation: (1)
wages and salaries of all employees to an extent commensurate with such
employees' involvement in the operation, repair, replacement, maintenance, and
security of the Building, including, without limitation, amounts attributable to
the employer's Social Security Tax, unemployment taxes, and insurance, and any
other amount which may be levied on such wages and salaries, and the cost of all
insurance and other employee benefits related thereto; (2) all supplies and
materials used in the operation, maintenance, repair, replacement and security
of the Building; (3) the rental costs of any and all leased capital improvements
and the annual costs of any and all capital improvements made to the Building
which, although capital in nature, can reasonably be expected to reduce the
normal operating costs of the Building, to the extent of the lesser of such
expected reduction in Operating Expenses or the annual cost of such capital
improvements, as well as all capital improvements made in order to comply with
any legal requirement hereafter promulgated by any governmental authority
including, but not limited to, requirements relating to the environment, energy,
conservation, public safety, access for the disabled or security, as amortized
over the useful life of such improvements by Landlord for federal income tax
purposes; (4) the cost of all utilities, other than the cost of electricity
supplied to tenants of the Building which is separately metered and reimbursed
to Landlord by such tenants; (5) the cost of all maintenance and service
agreements with respect to the operation of the Building or any part thereof,
including, without limitation, management fees, alarm service, equipment, window
cleaning, elevator maintenance, landscape maintenance, and parking area
maintenance and operation; (6) the cost of all insurance relating to the
Building, including, without limitation, casualty and liability insurance
applicable to the Building and Landlord's

                                                                       HDL/JEB
                                                                       -------
                                                                      Initials

                                       4

<PAGE>

personal property used in connection therewith; (7) all taxes and assessments
and governmental charges except for real estate taxes for the Building, whether
federal, state, county, or municipal, and whether by taxing districts or
authorities presently taxing or by others, subsequently created or otherwise,
including all taxes levied or assessed against or for leasehold improvements and
any other taxes and assessments attributable to the Building and/or the
operation thereof, together with the reasonable cost (including attorneys,
consultants and appraisers) of any negotiation, contest or appeal pursued by
Landlord in an effort to reduce any such tax, assessment or charge, excluding,
however, federal and state taxes on Landlord's income, but including all rental,
sales, use and occupancy taxes or other similar taxes, if any, levied or imposed
by any city, state, county, or other governmental body having jurisdiction; and
(8) the cost of all repairs, replacements, removals and general maintenance with
respect to the Building. Specifically excluded from Operating Expenses are
expenses for capital improvements made to the Building, other than capital
improvements described in clause (3) of this definition and except for items
which, though capital for accounting purposes, are properly considered
maintenance and repair items, such as painting of common areas, replacement of
carpet in elevator lobbies and like items; expenses for repair, replacement and
general maintenance paid by proceeds of insurance or by Tenant or other third
parties; alterations attributable solely to tenants of the Building other than
Tenant; depreciation of the Building; leasing commissions; and federal and state
income taxes imposed on Landlord.

         Notwithstanding anything to the contrary in the definition of Operating
Expenses set forth in the Lease, Operating Expenses shall not include the
following:

         (i)    any ground lease rental;

         (ii)   capital expenditures required by Landlord's failure to comply
         with laws enacted on or before the date the Building's temporary
         certificate of occupancy or the equivalent is validly issued; provided,
         however, the capital expenditures incurred by Landlord and required by
         laws enacted after the date the Building's temporary certificate of
         occupancy or the equivalent is validly issued shall be amortized over
         the useful life of such capital expenditures, and such amortization
         amount shall be considered an Operating Expense;

         (iii)  costs incurred by Landlord for the repair of damage to the
         Building, to the extent Landlord is reimbursed by insurance proceeds;

         (iv)   expenses in connection with services or other benefits which are
         not available to Tenant or for which Tenant is charged directly but
         which are not provided to another tenant or occupant of the Building;

         (v)    any cost associated with leasing or marketing other space in the
         Project, including tenant improvements, advertising, lease commissions,
         legal fees to negotiate the lease, space planning or marketing
         material;

         (vi)   interest, principal, points and fees on debts or amortization on
         any mortgage or mortgages or any other debt instrument encumbering the
         Building or the property on which the Building stands;

         (vii)  Landlord's general corporate overhead and general and
         administrative expenses, other than charges for property management and
         in-house labor provided for maintenance of the property;

         (viii) electric power costs for which any tenant directly contracts
         with the local public service company;

         (ix)   costs incurred in connection with upgrading the Building to
         comply with handicap, life, fire and safety codes in effect prior to
         the date the temporary certificate of occupancy for the Building or the
         equivalent is issued;

         (x)    tax penalties incurred as a result of Landlord's negligence or
         inability or unwillingness to make payments when due;

         (xi)   costs arising from Landlord's charitable or political
         contributions;

         (xii)  costs arising from earthquake insurance to the extent coverage
         exceeds the coverage carried by landlords of other buildings comparable
         to the Building;

         (xiii) federal and state income and franchise taxes of Landlord or any
         other such taxes not in the nature of real estate taxes, except taxes
         on rent;

         (xiv)  costs of selling, financing, syndicating or hypothecating the
         interest of Landlord in the Building, Land, or Project;

         (xv)   legal and other costs associated with the mortgaging,
         refinancing or sale of the Building or any interest therein;

         (xvi)  any costs and expenses related to or incurred in connection with
         disputes with tenants of the Building or Land or any lender for the
         Building or Land; and

         (xvii) salaries, wages or other compensation paid to officers or
         executives of Landlord above the level of property manager in their
         respective capacities.

                                                                        HDL/JEB
                                                                        -------
                                                                        Initials

                                       5

<PAGE>

         If, during all or part of any calendar year, the Building is less than
95% occupied, or if Landlord is providing less than 95% of the Building with any
item or items of work or service which would constitute an Operating Expense
hereunder, then the amount of the Operating Expenses and real estate taxes for
such period shall be adjusted to include any and all real estate taxes and any
items enumerated under the definition of Operating Expenses set forth in this
Subsection which Landlord reasonably determines Landlord would have incurred if
the Building had been at least 95% leased and occupied with all tenant
improvements constructed or if Landlord had been providing such item or items of
work or service to at least 95% of the Building. If the actual occupancy of the
Building is between 95% and 100%, then the actual occupancy percentage shall be
used for this computation. If Landlord increases the amount of Operating
Expenses and real estate taxes as set forth above, Landlord shall utilize the
same percentage rate for determining the total square footage of the Building
when determining the Operating Expense and Real Estate Tax Adjustment.

         4.05    Cost of Living Adjustment.

         Intentionally deleted.

         4.06    Security for the Lease.

         Tenant shall deposit with Landlord, on or before fifteen (15) business
days after the full execution of this Lease by Landlord and Tenant, security in
the form of a Letter of Credit (the "Letter of Credit"), as described below, on
the understanding that: (a) the Letter of Credit or any portion thereof may be
drawn upon and applied to the curing of any default beyond applicable cure
periods, or the payment of any damages sustained by Landlord due to Tenant's
failure to perform its obligations, including, but not limited to, alteration
and repair obligations under Article 7 herein, without prejudice to any other
remedy or remedies at law or in equity which Landlord may have on account
thereof, and upon such application Tenant shall promptly cause the Letter of
Credit to be reissued for the full face amount recited below, so the same will
be restored to the amount in effect immediately before Landlord drew on the
Letter of Credit, or at Landlord's election, in the event of any default beyond
applicable cure periods, Landlord may draw upon the full amount of the Letter of
Credit and hold the cash proceeds thereof as security for the Lease, and may
commingle such funds with the other funds of Landlord without being responsible
to Tenant for the payment of any interest thereon, and (b) if Tenant is not in
default, the remaining balance of the proceeds of the Letter of Credit, if any,
shall be returned to Tenant, without interest, within thirty (30) days after the
expiration of the Term and delivery of exclusive possession of the Leased
Premises to Landlord.

         The Letter of Credit shall be an unconditional, irrevocable, clean
Letter of Credit, payable on sight in cash in favor of Landlord, Landlord's
lender or an assignee of Landlord, at Landlord's election, which permits partial
draws, and such Letter of Credit shall be in the amount set forth in the chart
below, subject to adjustment as set forth in this Lease ("Lease Year" shall mean
that twelve [12] month period commencing each March 1st [February 15th for the
first Lease Year][as such may be adjusted pursuant to the Lease] through the
following February 28th of each year of the Term [as such may be adjusted
pursuant to the Lease]):

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Lease Year       Letter of Credit equal to         Letter of Credit amount (without rental abatement or reduction and based upon
                                                   current Leased Premises square footage of 17,009)
--------------------------------------------------------------------------------------------------------------------------------
<S>              <C>                               <C>
Lease Year 1     6 months of Base Rent             $178,169.28
--------------------------------------------------------------------------------------------------------------------------------
Lease Year 2     5 months of Base Rent             $151,493.50
--------------------------------------------------------------------------------------------------------------------------------
Lease Year 3     4 months of Base Rent             $123,682.52
--------------------------------------------------------------------------------------------------------------------------------
Lease Year 4     3 months of Base Rent             $ 94,683.66
through 8
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The Letter of Credit shall be acceptable to Landlord, acting
reasonably, with regard to both form and content and shall be executed by a
third-party nationally recognized banking institution with local offices,
acceptable to Landlord, acting reasonably, and such financial institution shall
have an office in the Research Triangle Park area of North Carolina available as
a designated payment center in order that Landlord may present the Letter of
Credit for same-day payment. The Letter of Credit shall remain in place during
the entire Term of the Lease, shall provide for automatic renewals each year
prior to the expiration of the then existing Letter of Credit, and shall provide
for notification by the issuing institution to the Landlord in the event of the
failure of renewal of the Letter of Credit by the renewal date. Except as
provided for above, if Tenant fails to deliver to Landlord a renewal or
substitute Letter of Credit (in a form and from a financial institution
acceptable to Landlord, acting reasonably) at least thirty (30) days prior to
the then scheduled expiration date of the Letter of Credit held by Landlord,
Landlord may draw upon the Letter of Credit and hold the cash proceeds thereof
as the Security for the Lease, and failure to renew said Letter of Credit or to
provide notice of failure to renew within the required period shall constitute
an event of default under this Lease. Prior to the commencement of any Renewal
Term or Second Renewal Term, Tenant agrees to provide Landlord with its then
current financial statement(s) for Landlord's review pertaining to the need for
a Letter of Credit during any such Renewal Term or Second Renewal Term. Landlord
will keep all such financial information confidential and will not disclose such
information to third parties, unless legally compelled to do so.

         4.07    Late Charge.

         If Tenant fails or refuses to pay any installment of Rent when due,
Landlord, at Landlord's option, shall be entitled to collect a late charge of
five percent (5%) of the amount of the late payment to compensate Landlord for
the additional expense involved in handling delinquent payments and not as
interest; provided, however, that Tenant shall be allowed one (1) late payment
of Rent in each calendar year of the Term, which late payment shall not be
subject to a late charge hereunder so long as such Rent is paid within five (5)
days of the due date. If the payment of a late charge required by this Section
is found to constitute interest notwithstanding the contrary intention of
Landlord and Tenant, the late charge shall be limited to the maximum amount of
interest that lawfully may be collected by Landlord under applicable law, and if
any payment is determined to exceed such lawful amount, the excess shall be
applied to any unpaid Rent then due and payable hereunder and/or credited
against the next succeeding installment of Rent payable

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                        6

<PAGE>

hereunder. If all Rent payable hereunder has been paid in full, any excess shall
be refunded to Tenant. Tenant shall reimburse Landlord for any processing fees
charged to Landlord as a result of Tenant's checks having been returned for
insufficient funds.

                              ARTICLE 5 - SERVICES

         5.01    Services.

         Landlord shall furnish Tenant while occupying the Leased Premises,
subject to curtailment as required by governmental laws, rules or regulations:

         (i) central heat and air conditioning in season, at such times as
         Landlord normally furnishes these services to other tenants in the
         Building and at such temperatures and in such amounts as are considered
         by Landlord, in its reasonable discretion, to be standard, but such
         service on Saturday afternoons, Sundays and holidays to be furnished
         only upon request of Tenant, who shall bear the entire cost thereof as
         provided in Exhibit F attached hereto; (ii) elevator service; (iii)
                     ---------
         routine maintenance and electric lighting service for all public areas
         and special service areas of the Building in the manner and to the
         extent deemed by Landlord to be standard, in its reasonable discretion;
         (iv) janitor service on a five (5) day week basis as set forth in
         Exhibit I; and (v) proper electrical facilities to furnish sufficient
         ---------
         power for personal computers, fax machines, desktop computer printers,
         calculating machines and other machines of similar low electrical
         consumption, but not including electricity required for electronic data
         processing equipment which (singly) consumes more than 0.25 kilowatts
         per hour at a rated capacity or requires a voltage other than 120 volts
         single phase. Tenant shall pay to Landlord, monthly as billed, such
         charges as may be separately metered or as Landlord's engineer shall
         reasonably compute for any electrical service usage in excess of that
         stated above. If Tenant uses any heat generating machines, equipment,
         fixtures or other devices of any nature whatsoever in the Leased
         Premises which affect the temperature otherwise maintained by the
         Building standard air conditioning, Tenant shall pay the additional
         cost necessitated by Tenant's use of such machines, equipment, fixtures
         or other devices, including the cost of installation of any necessary
         additional air conditioning equipment and the cost of operation and
         maintenance thereof.

         Should any of Landlord's equipment or machinery break down, or for any
cause cease to function properly, Landlord shall use reasonable diligence during
normal business hours to repair same promptly, but except as set forth below,
Tenant shall have no claim for rebate of rent or damages on account of any
interruptions in service occasioned thereby or resulting therefrom, unless due
to the gross negligence or willful misconduct of Landlord. Failure by Landlord
to any extent to furnish these services, or any cessation thereof, resulting
from causes beyond the control of Landlord shall not render Landlord liable in
any respect for damages to either person or property, nor be construed as an
eviction of Tenant, nor work an abatement of rent, nor relieve Tenant from its
obligation to fulfill any covenant or agreement hereof.

         If (i) the services which Landlord is obligated to provide are
continuously interrupted for four (4) consecutive business days
("Interruption"), and (ii) Tenant is unable to conduct business in the Leased
Premises, and (iii) Tenant has notified Landlord immediately in writing that
Tenant is unable to conduct its business as reasonably determined by Tenant, and
if the Interruption is due to the gross negligence or willful misconduct of
Landlord, its employees or agents, and such services are not restored by
Landlord, if under Landlord's reasonable control, Tenant shall be entitled to an
abatement of Rent on a day-for-day basis. The abatement shall begin on the fifth
(5th) consecutive business day of the Interruption and shall end automatically
when the services are restored.

                          ARTICLE 6 - USE AND OCCUPANCY

         6.01    Use.

         The Leased Premises are to be used and occupied by Tenant (and its
permitted assignees, subtenants, invitees, customers, and guests) solely for the
purpose specified in Subsection 2.01(j) with no more than one (1) person per two
                     ------------------
hundred fifty (250) square feet of space; provided, however, that Tenant may
change such purpose upon Landlord's prior written agreement, which agreement
will not be unreasonably withheld, conditioned or delayed. Tenant agrees not to
occupy or use, or permit any portion of the Leased Premises to be occupied or
used for any business or purpose which is unlawful, disreputable or deemed to be
extra-hazardous on account of fire or exposure to or interference from
electromagnetic rays and/or fields, or permit anything to be done which would in
any way increase the rate of fire insurance coverage on the Building and/or its
contents. Tenant further agrees to conduct its business and control its agents,
employees, invitees and visitors in such manner as not to create any nuisance,
or interfere with, annoy or disturb any other tenant or Landlord in its
operation of the Building.

         6.02    Care of the Leased Premises.

         Tenant shall not commit or allow to be committed any waste or damage to
any portion of the Leased Premises or the Building and, at the termination of
this Lease, by lapse of time or otherwise, Tenant shall deliver up the Leased
Premises to Landlord in as good a condition as existed on the date of possession
by Tenant, ordinary wear and tear and loss by insured casualty excepted. Upon
such termination of this Lease, Landlord shall have the right to re-enter and
resume possession of the Leased Premises.

         6.03    Entry for Repairs and Inspection.

         Tenant shall , upon reasonable notice by Landlord, except in the case
of an emergency when no notice is required, permit Landlord and its contractors,
agents and representatives to enter into and upon any part of the Leased
Premises at all reasonable hours

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                        7

<PAGE>

to inspect and clean the same, make repairs, alterations and additions thereto,
and nine (9) months prior to the Expiration Date of the Lease, show the same to
prospective tenants or purchasers, and for any other purpose as Landlord may
deem necessary or desirable. Tenant shall not be entitled to any abatement or
reduction of Rent by reason of any such entry. In the event of an emergency,
when entry to the Leased Premises shall be necessary, and if Tenant shall not be
personally present to open and permit entry into the Leased Premises, Landlord
or Landlord's agent may enter the same by master key, code, card or switch, or
may forcibly enter the same, without rendering Landlord or such agents liable
therefor, and without, in any manner, affecting the obligations and covenants of
this Lease.

         6.04    Compliance with Laws; Rules of Building.

         Tenant shall comply with and Tenant shall cause its visitors,
employees, contractors, agents and invitees to comply with, all laws,
ordinances, orders, rules and regulations (state, federal, municipal and other
agencies or bodies having any jurisdiction thereof) relating to the use,
condition or occupancy of the Leased Premises, including, without limitation,
all local, state and federal environmental laws, and the rules of the Building
reasonably adopted and altered by Landlord from time to time, all of which
Building rules will be sent by Landlord to Tenant in writing and shall
thereafter be carried out and observed by Tenant, its employees, contractors,
agents, invitees and visitors. Any changes in the rules of the Building will not
materially interfere with Tenant's use and enjoyment of the Leased Premises. The
initial rules of the Building are attached hereto as Exhibit D.
                                                     ---------

         6.05    Access to Building.

         Subject to the terms and conditions set forth below and in this Lease,
Tenant and its employees shall have access to the Building and the Leased
Premises twenty-four (24) hours a day, three hundred sixty-five (365) days per
year. Landlord shall have the right to limit access to the Building after normal
business hours; provided, Landlord shall have no responsibility to prevent, and
shall not be liable to Tenant for, and shall be indemnified by Tenant against,
liability and loss to Tenant, its agents, employees and visitors, arising out of
losses due to theft, burglary and damage and injury to persons and property
caused by persons gaining access to the Building or Leased Premises, and Tenant
waives and releases Landlord from all liability relating thereto, unless caused
by the gross negligence or willful misconduct of Landlord. Landlord expressly
reserves the right, in its sole discretion, to temporarily or permanently change
the location of, close, block and otherwise alter any entrances, corridors,
skywalks, tunnels, doorways and walkways leading to or providing access to the
Building or any part thereof and otherwise restrict the use of same provided
such activities do not unreasonably impair Tenant's access to and use of the
Leased Premises, Landlord shall not incur any liability whatsoever to Tenant as
a consequence thereof. Such activities shall not be deemed to be a breach of any
of Landlord's obligations hereunder. Landlord agrees to exercise good faith in
notifying Tenant a reasonable time in advance of any alterations, modifications
or other actions of Landlord under this Section.

         6.06    Peaceful Enjoyment.

         Landlord covenants that Tenant shall and may peacefully have, hold and
enjoy the Leased Premises without interference from any party claiming by or
through Landlord, subject to the terms of this Lease, provided Tenant pays the
Rent and other sums required to be paid by Tenant and performs all of Tenant's
covenants and agreements herein contained. It is understood and agreed that this
covenant and any and all other covenants of Landlord contained in this Lease
shall be binding upon Landlord and its successors only with respect to breaches
occurring during its and their respective ownership of Landlord's interest in
the Building. Landlord shall not be responsible for the acts or omissions of any
other tenant or third party that may interfere with Tenant's use and enjoyment
of the Leased Premises; provided, however, that Landlord shall use its best
efforts to enforce the rules and regulations of the Building.

         6.07    Relocation.

         Intentionally deleted.

                ARTICLE 7 - CONSTRUCTION, ALTERATIONS AND REPAIRS

         7.01    Construction.

         Prior to the start of the Term, Landlord shall, at its expense up to
the amount of the Allowance (as defined in Exhibit C), design and construct the
                                           ---------
Upfit (as defined in Exhibit C) in the Leased Premises in accordance with the
                     ---------
Workletter Agreement set forth in Exhibit C. Any cost incurred by Landlord for
                                  ---------
the design and construction of the Upfit in excess of the Allowance shall be
paid by Tenant as stated in Exhibit C.
                            ---------

         7.02    Alterations.

         Tenant shall make no alterations, installations, additions or
improvements in, on or to the Leased Premises without Landlord's prior written
consent, not to be unreasonably withheld. All such work shall be designed and
made in a manner, and by architects, engineers, workmen and contractors,
satisfactory to Landlord, in its reasonable discretion. All alterations,
installations, additions and improvements (including, without limitation,
paneling, partitions, millwork and fixtures) made by or for Tenant to the Leased
Premises shall remain upon and be surrendered with the Leased Premises and
become the property of Landlord at the expiration or termination of this Lease
or the termination of Tenant's right to possession of the Leased Premises;
provided, Landlord may require Tenant to remove any or all of such items that
are not Building standard upon the expiration or termination of this Lease or
the termination of Tenant's right to possession of the Leased Premises in order
to restore the Leased Premises to the condition existing at the time Tenant took
possession. Landlord shall notify Tenant in writing of any such removal
requirement at the time of installation of such non-Building standard items.
Tenant shall bear the costs of removal of Tenant's property from the Building
and of all

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       8

<PAGE>

resulting repairs thereto. Upon removal of such items, Tenant shall restore the
Leased Premises to the condition existing at the time Tenant took possession,
excluding normal wear and tear. Notwithstanding the foregoing, upon the
expiration or earlier termination of this Lease, Tenant shall, at Landlord's
request and upon written notification from Landlord, remove all telephone and
data wiring installed by Tenant from the Leased Premises, and Tenant shall
repair any damage to the Leased Premises caused by any such removal. Tenant
shall bear the costs of removal of Tenant's property from the Building and of
all resulting repairs thereto. All work performed by Tenant with respect to the
Leased Premises shall: (a) not alter the exterior appearance of the Building or
adversely affect the structure, safety, systems or services of the Building; (b)
materially comply with all Building safety, fire and other codes and
governmental and insurance requirements; (c) not result in any usage in excess
of Building standard of water, electricity, gas, heating, ventilating or air
conditioning, (either during or after such work) unless prior written
arrangements satisfactory to Landlord are entered into; (d) be completed
promptly and in a good and workmanlike manner; (e) be performed in such a manner
that does not cause interference or disharmony with any labor used by Landlord,
Landlord's contractors or mechanics or by any other tenant or such other
tenant's contractors or mechanics; and (f) not cause any mechanic's,
materialman's or other similar liens to attach to Tenant's leasehold estate.
Tenant shall not permit, or be authorized to permit, any liens (valid or
alleged) or other claims to be asserted against Landlord or Landlord's rights,
estates and interests with respect to the Building or this Lease in connection
with any work done by or on behalf of Tenant, and Tenant shall indemnify and
hold Landlord harmless against any such liens.

         7.03    Repairs by Landlord.

         Unless otherwise expressly stipulated herein, Landlord shall not be
required to make any improvements or repairs of any kind or character to the
Leased Premises during the Term, except such repairs to Building standard
improvements as may be deemed necessary by Landlord in its reasonable
discretion, for normal maintenance operations. Non-Building standard leasehold
improvements will, at Tenant's written request, be maintained by Landlord at
Tenant's expense, at a cost or charge equal to the costs incurred in such
maintenance plus an additional charge of twelve percent (12%). Notwithstanding
any provisions of this Lease to the contrary, all repairs, alterations or
additions to the base Building and its systems (as opposed to those involving
only Tenant's leasehold improvements), and all repairs, alterations and
additions to Tenant's non-Building standard leasehold improvements which affect
the Building's structural components or major mechanical, electrical or plumbing
systems, made by, for or on behalf of Tenant and any other tenants in the
Building shall be made by Landlord or its contractor only, and, if on behalf of
Tenant, shall be paid for by Tenant in an amount equal to Landlord's costs plus
twelve percent (12%). Landlord shall not be liable to Tenant, except as
expressly provided in this Lease, for any damage or inconvenience, and Tenant
shall not be entitled to any abatement or reduction of rent by reason of any
repairs, alterations or additions made by Landlord under this Lease, unless such
repairs were necessitated due to the gross negligence or willful misconduct of
Landlord.

         7.04    Repairs by Tenant.

         Tenant shall, at its own cost and expense, repair or replace any damage
or injury done to its leasehold improvements or any other part thereof caused by
Tenant or Tenant's agents, contractors, employees, invitees, and visitors. If
Tenant fails to make such repairs or replacements to its leasehold improvements
promptly, Landlord may, at its option after notice to Tenant, make such repairs
or replacements, and Tenant shall repay the cost thereof plus a charge of twelve
percent (12%) to the Landlord on demand. Any damage or injury to the Leased
Premises or the base Building and its systems (as opposed to those involving
only Tenant's leasehold improvements) and any damage or injury to Tenant's
leasehold improvements which affects the Building's structural components or
major mechanical, electrical or plumbing systems caused by Tenant, its agents,
contractors, employees, invitees and visitors, shall be repaired or replaced by
Landlord, but at Tenant's expense plus a charge of twelve percent (12%).

           ARTICLE 8 - CONDEMNATION, CASUALTY, INSURANCE AND INDEMNITY

         8.01    Condemnation.

         If all or substantially all of the Leased Premises is taken by virtue
of eminent domain or for any public or quasi-public use or purpose, this Lease
shall terminate on the date the condemning authority takes possession. If only a
part of the Leased Premises is so taken, or if a portion of the Building not
including the Leased Premises is taken, this Lease shall, at the election of
Landlord, either (i) terminate on the date the condemning authority takes
possession by giving notice thereof to Tenant within thirty (30) days after the
date of such taking of possession or (ii) continue in full force and effect as
to that part of the Leased Premises not so taken, in which case Rent shall be
reduced on a square footage basis by the amount of square footage of the Leased
Premises taken or condemned. All proceeds payable from any taking or
condemnation of all or any portion of the Leased Premises and the Building shall
belong to and be paid to Landlord, and Tenant hereby expressly assigns to
Landlord any and all right, title and interest of Tenant now or hereafter
arising in and to any such awards. Tenant shall have no, and waives any, claim
against Landlord and the Condemnor for the value of any unexpired term. Tenant
shall have the right to pursue a condemnation award but only to the extent that
an award to Tenant (i) is separately stated and (ii) does not diminish any award
to Landlord.

         8.02    Damages from Certain Causes.

         Landlord shall not be liable or responsible to Tenant for any loss or
damage to any property or person occasioned by theft, fire, act of God, public
enemy, injunction, riot, strike, insurrection, war, court order, requisition
order of governmental body or authority, or any cause beyond Landlord's control,
or for any damage or inconvenience which may arise through repair or alteration
of any part of the Building, unless caused by the gross negligence or willful
misconduct of Landlord.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       9

<PAGE>

         8.03    Fire Clause.

         In the event of a fire or other casualty in the Leased Premises, Tenant
shall immediately give notice thereof to Landlord. If the Leased Premises or any
portion of the Building is destroyed by fire or other casualty, Landlord shall
have the right to terminate this Lease or to repair the Leased Premises with
reasonable dispatch, subject to delays resulting from adjustment of the loss and
any other cause beyond Landlord's reasonable control; provided, Landlord shall
not be required to repair or replace any furniture, furnishings or other
personal property which Tenant may be entitled to remove from the Leased
Premises or any installations in excess of Building standard, unless such were
part of the Upfit (as defined in Exhibit C). Landlord shall provide written
                                 ---------
notice to Tenant within thirty (30) days after the date of any casualty as to
Landlord's election to terminate or repair. The notice shall provide Landlord's
reasonable estimate as to whether the repair and restoration can be completed
within one hundred eighty (180) days after the date of such notice. In the event
Landlord's notice provides that repair or restoration will take more than one
hundred eighty (180) days after the date of such notice, Tenant shall have the
right to terminate this Lease, provided that Tenant must deliver written notice
of its election to terminate within ten (10) days after receipt of Landlord's
notice thereof. If Tenant fails to deliver such notice in the time period
specified above, Tenant shall be deemed to have waived its right to terminate.
Until Landlord's repairs are completed the Rent shall be abated in proportion to
the portions of the Leased Premises, if any, which are untenantable or unsuited
for the conduct of Tenant's business. Notwithstanding anything contained in this
Section, Landlord shall only be obligated to restore or rebuild the Leased
Premises to the condition that existed immediately prior to the casualty, and
Landlord shall not be required to expend more funds than the amount received by
Landlord from the proceeds of any insurance carried by Landlord, provided
Landlord maintains insurance coverage in accordance with this Lease.

         8.04    Insurance Policies.

         (a)     Tenant shall, at its expense, maintain (i) standard fire and
extended coverage insurance on all of its personal property, including removable
trade fixtures, located in the Leased Premises and on its non-Building standard
leasehold improvements and all other additions and improvements (including
fixtures) made by Tenant; and (ii) a policy or policies of comprehensive general
liability insurance, such insurance to afford minimum protection (which may be
effected by primary and/or excess coverage) of not less than $2,000,000.00 for
personal injury or death in any one occurrence and of not less than
$1,000,000.00 for property damage in any one occurrence, provided, after the
initial Term, Tenant shall carry such greater limits of liability coverage as
Landlord may reasonably request from time to time. All insurance policies
required to be maintained by Tenant shall (a) be issued by and binding upon
solvent insurance companies licensed to conduct business in the State of North
Carolina, (b) have all premiums fully paid on or before the due dates, (c) name
Landlord as an additional insured, and (d) provide that they shall not be
cancelable and/or the coverage thereunder shall not be reduced without at least
ten (10) days advance written notice to Landlord. Tenant shall deliver to
Landlord certified copies of all policies or, at Landlord's option, certificates
of insurance in a form satisfactory to Landlord not less than fifteen (15) days
prior to the Commencement Date or the expiration of current policies.

         (b)     Landlord shall obtain and keep in force during the Term of this
Lease, (i) a policy or policies of insurance covering loss or damage to the
Leased Premises, in the amount of the full replacement value thereof, providing
standard property protection against all perils included within the
classifications of fire, extended coverage, vandalism and malicious mischief,
and (ii) a policy or policies of comprehensive general liability insurance, such
insurance to afford minimum protection (which may be effected by primary or
excess coverage) of not less than $1,000,000.00 for personal injury or death in
any one occurrence and of not less than $1,000,000.00 for property damage in any
one occurrence.

         8.05    Hold Harmless.

         Subject to the provisions of Section 8.06, neither party shall be
                                      ------------
liable to the other party or its respective agents, servants, employees,
contractors, customers or invitees, for any damage to person or property caused
by any act, omission or neglect of such other party and its respective agents,
servants, employees, contractors, customers or invitees, and each party agrees
to indemnify and hold harmless the other party and its partners, members,
managers, agents, directors, officers, and employees from all liability and
claims for any such damage, including, without limitation, court costs,
attorneys' fees and costs of investigation. Any indemnification and hold
harmless obligation is expressly conditioned on the following: (i) that the
indemnifying party shall be notified in writing promptly of any such claim or
demand, and if said claim or demand is made by a third party; (ii) that the
indemnifying party shall have sole control of the defense of any action or
settlement or compromise; and (iii) that Landlord and Tenant shall cooperate
with each other in a reasonable way to facilitate the settlement or defense of
such claim or demand.

         8.06    Waiver of Subrogation Rights.

         Anything in this Lease to the contrary notwithstanding, Landlord and
Tenant each hereby waives to the extent that such waiver will not invalidate any
insurance policy maintained by Landlord or Tenant nor increase any premiums
thereon, any and all rights of recovery, claims, actions or causes of action,
against the other, its agents, members, managers, servants, partners,
shareholders, officers and employees, for any loss or damage that may occur to
the Leased Premises or the Building, or any improvements thereto, or any
personal property of such party therein, by reason of fire, the elements, and
any other cause which is insured against under the terms of the standard fire
and extended coverage insurance policies referred to in Section 8.04 hereof, to
                                                        ------------
the extent that such loss or damage is recovered under said insurance policies,
regardless of cause or origin, including negligence of the other party hereto,
its agents, members, managers, officers, partners, shareholders, servants or
employees, and covenants that no insurer shall hold any right of subrogation
against such other party. If the respective insurers of Landlord and Tenant do
not permit such a waiver without an appropriate endorsement to such party's
insurance policy, Landlord and Tenant covenant and agree to notify the insurers
of the waiver set forth herein and to secure from each such insurer an
appropriate endorsement to its respective insurance policy concerning such
waiver.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       10

<PAGE>

         8.07   Limitation of Landlord's Personal Liability.

         Tenant agrees to look solely to Landlord's interest in the Building and
the Land for the recovery of any judgment against Landlord, and Landlord, its
partners, members, managers, officers, directors and employees, shall never be
personally liable for any such judgment. The provisions contained in the
foregoing sentence are not intended to, and shall not, limit any right that
Tenant might otherwise have to obtain injunctive relief against Landlord or
Landlord's successors in interest or any suit or action in connection with
enforcement or collection of amounts which may become owing or payable under or
on account of liability insurance maintained by Landlord.

        ARTICLE 9 - LANDLORD'S LIEN, DEFAULT, REMEDIES AND SUBORDINATION

         9.01   Lien for Rent.

         Intentionally deleted.

         9.02   Default by Tenant.

         If Tenant shall default in the payment of any Rent or other sum to be
paid by Tenant under this Lease when due; provided, however, that Tenant shall
be allowed one (1) late payment of Rent in each calendar year of the Term, which
late payment shall not be deemed a default hereunder so long as such Rent is
paid within five (5) days of the due date; or Tenant shall default in the
performance of any of the other covenants or conditions which Tenant is required
to observe and to perform under this Lease and such default shall continue for
thirty (30) days after written notice to Tenant; or the interest of Tenant under
this Lease shall be levied on under execution or other legal process; or any
petition shall be filed by or against Tenant to declare Tenant a bankrupt or to
delay, reduce or modify Tenant's debts or obligations; or any petition shall be
filed or other action taken to reorganize or modify Tenant's debts or
obligations; or any petition shall be filed or other action taken to reorganize
or modify Tenant's capital structure; or Tenant is declared insolvent according
to law; or any assignment of Tenant's property shall be made for the benefit of
creditors; or if a receiver or trustee is appointed for Tenant or its property;
or Tenant shall vacate or abandon the Leased Premises or any part thereof at any
time during the Term for a period of fifteen (15) or more continuous days; or
Tenant is a corporation and Tenant shall cease to exist as a corporation in good
standing in the state of its incorporation; or Tenant is a partnership or other
entity and Tenant shall be dissolved or otherwise liquidated; then Landlord may
treat the occurrence of any one or more of the foregoing events as a breach of
this Lease (provided, no such levy, execution, legal process or petition filed
against Tenant shall constitute a breach of this Lease if Tenant shall
vigorously contest the same by appropriate proceedings and shall remove or
vacate the same within thirty (30) days from the date of its creation, service
or filing). Thereupon, at Landlord's option and in addition to all other rights
and remedies provided at law or in equity, Landlord may terminate this Lease and
repossess the Leased Premises and be entitled to recover as damages a sum of
money equal to the total of (a) the cost of recovering the Leased Premises
(including actual attorneys' fees and costs of suit), (b) the unpaid Rent earned
at the time of termination, (c) the present value (discounted at the rate of
eight percent (8%) per annum) of the balance of the rent for the remainder of
the Term less the present value (discounted at the same rate) of the fair market
rental value of the Leased Premises for said period, (d) the amount of any
unamortized leasing commissions, any allowances, and concessions previously made
by Landlord to Tenant, (e) any other sum of money, and damages owed by Tenant to
Landlord and (f) interest on (a) (b) (c) (d) and (e) above at the rate of the
lesser of eighteen percent (18%) per annum or the highest rate allowed by
applicable law. Notwithstanding the foregoing, if events of material default by
Tenant occur more than three (3) times in the aggregate during the Term, even if
the events of default are cured to the satisfaction of Landlord and the Lease is
not terminated, then any option(s) which Tenant may have for the modification of
the Term or of the Leased Premises or otherwise pursuant to this Lease shall
terminate and shall be of no further force or effect.

         9.03   Non Waiver.

         Failure of Landlord to declare any default immediately upon occurrence
thereof, or delay in taking any action in connection therewith, shall not waive
such default and Landlord shall have the right to declare any such default at
any time and take such action as might be lawful or authorized hereunder, either
in law or in equity.

         9.04   Attorney's Fees.

         Should either party hereto institute any action or proceeding in court
to enforce any provision hereof or for damages by reason of any alleged breach
of any provisions of this Lease or for any other judicial remedy, the prevailing
party shall be entitled to receive from the non-prevailing party all actual
reasonable attorneys' fees and all court costs in connection with said
proceeding.

         9.05   Subordination; Estoppel Certificate.

         This Lease is and shall be subject and subordinate to any and all
ground or similar leases affecting the Building, and to all mortgages which may
now or hereafter encumber or affect the Building and to all renewals,
modifications, consolidations, replacements and extensions of any such leases
and mortgages; provided, at the option of any such landlord or mortgagee, this
Lease shall be superior to the lease or mortgage of such landlord or mortgagee.
The provisions of this Section shall be self-operative and shall require no
further consent or agreement by Tenant. Tenant agrees, however, to execute and
return any estoppel certificate, subordination agreement, consent or agreement
reasonably requested by any such landlord or mortgagee, or by Landlord, within
ten (10) business days after receipt of same, including, without limitation, an
estoppel certificate substantially in the form attached hereto as Exhibit E.
                                                                  ---------
Tenant's failure to execute and return such estoppel certificate within such ten
(10) business day period shall constitute a default of the Lease. Tenant shall,
at the request of Landlord or any mortgagee of Landlord secured by a lien on the
Building or any landlord to Landlord under a ground Lease of the Building,
furnish such mortgagee and/or landlord with written notice of any default or
breach by Landlord at least thirty (30) days prior to the exercise by Tenant of
any rights and/or remedies of Tenant hereunder arising out of such default or
breach.

                                       11

<PAGE>

         9.06   Attornment.

         If any ground or similar lease or mortgage is terminated or foreclosed,
Tenant shall, upon request, attorn to the landlord under such lease or the
mortgagee or purchaser at such foreclosure sale, as the case may be, and execute
instrument(s) confirming such attornment provided, that this Lease shall only be
subordinate to those liens, mortgages and ground leases for which Tenant has
received a commercially reasonable non-disturbance agreement. In the event of
such a termination or foreclosure and upon Tenant's attornment as aforesaid,
Tenant will automatically become the tenant of the successor to Landlord's
interest without change in the terms or provisions of this Lease; provided, such
successor to Landlord's interest shall not be bound by (i) any payment of rent
for more than one month in advance except prepayments of Security for the Lease,
if any, or (ii) any amendments or modifications of this Lease made without the
prior written consent of such landlord or mortgagee. Landlord shall use
reasonable efforts to cause any new landlord, if applicable, to acknowledge the
transfer of the Letter of Credit, or the proceeds of the Letter of Credit, as
the case may be.

         9.07   Accord and Satisfaction.

         No payment by Tenant or receipt by Landlord of an amount less than is
due under this Lease shall be deemed to be other than payment towards or on
account of the earliest portion of the amount then due, nor shall any
endorsement or statement on any check or payment in any letter accompanying any
check or payment be deemed an accord and satisfaction, and Landlord may accept
any such check or payment without prejudice to Landlord's right to recover the
balance of such amount or to pursue any other remedy available to Landlord.

                      ARTICLE 10 - ASSIGNMENT AND SUBLEASE

         10.01  Assignment or Sublease.

         Tenant shall not, voluntarily, by operation of law, or otherwise,
assign, transfer, mortgage, pledge, or encumber this Lease or sublease the
Leased Premises or any part thereof, or allow any person other than Tenant, its
employees, agents, servants and invitees, to occupy or use the Leased Premises
or any portion thereof, without the express prior written consent of Landlord,
such consent not to be unreasonably withheld, and any attempt to do any of the
foregoing without such written consent shall be null and void and shall
constitute a default under this Lease. Notwithstanding the foregoing, in no
event shall Tenant assign this Lease or sublease the Leased Premises to any
entity engaged in the commercial real estate business, including, without
limitation, property management or the brokerage, ownership or development of
competitive properties. Landlord's consent to any assignment or sublease
hereunder does not constitute a waiver of its right to consent to any further
assignment or sublease. If Tenant desires to assign this Lease or sublet the
Leased Premises or any part thereof, Tenant shall give Landlord written notice
of such desire at least sixty (60) days in advance of the date on which Tenant
desires to make such assignment or sublease, together with a non-refundable fee
of Five Hundred Dollars ($500.00) (the "Transfer Fee"). Landlord shall then have
a period of thirty (30) days following receipt of such notice within which to
notify Tenant in writing that Landlord elects (a) to terminate this Lease as to
the space so affected as of the date so specified by Tenant, in which event
Tenant shall be relieved of all further obligations hereunder as to such space,
or (b) to permit Tenant to assign this Lease or sublet such space (provided,
however, if the rent agreed upon between Tenant and subtenant is greater than
the Monthly Base Rent that Tenant must pay Landlord, such excess rent shall be
deemed additional rent owed by Tenant and payable to Landlord in the same manner
that Tenant pays the Rent hereunder), or (c) to refuse to consent to Tenant's
assignment or subleasing such space and to continue this Lease in full force and
effect as to the entire Leased Premises. If Landlord should fail to notify
Tenant in writing of such election within the thirty (30) day period, Landlord
shall be deemed to have elected option (c) above. Tenant agrees to pay
Landlord's actual reasonable attorney's fees associated with Landlord's review
and documentation of any requested assignment or sublease hereunder regardless
of whether Landlord consents to any such assignment or sublease. No assignment
or subletting by Tenant shall relieve Tenant of any obligations under this
Lease, and Tenant shall remain fully liable hereunder. If Tenant is not a public
company that is registered on a national stock exchange or that is required to
register its stock with the Securities and Exchange Commission under Section
12(g) of the Securities and Exchange Act of 1934, any change in a majority of
the voting rights or other controlling rights or interests of Tenant shall be
deemed an assignment for the purposes hereof. Notwithstanding the foregoing,
Tenant shall also have the right with prior written notice to Landlord, but
without Landlord's consent, and subject to the conditions contained herein, to
assign the Lease or sublet all or any portion of the Leased Premises to (a) any
entity resulting from a merger or consolidation with Tenant; (b) any entity
succeeding to the business and assets of Tenant; (c) any subsidiary or affiliate
of Tenant; and (d) any entity which is part of or affiliated with Pozen Inc. so
long as such entity or affiliate shall be of at least the same net worth value
and credit worthiness as Tenant, in Landlord's sole reasonable discretion, at
the time of the assignment or sublease, and none of the same shall release
Tenant and Tenant shall remain liable to Landlord for full performance of
Tenant's obligations under this Lease.

         10.02  Assignment by Landlord.

         Landlord shall have the right to transfer and assign, in whole or in
part, all its rights and obligations hereunder and in the Building and all other
property referred to herein, and Landlord agrees to provide Tenant with timely
notice of any such transfer. In such event and upon such transfer (any such
transferee to have the benefit of, and be subject to, the provisions of Section
6.06 and Section 8.07 hereof) no further liability or obligation shall
thereafter accrue against Landlord under this Lease.

                                       12

<PAGE>

                     ARTICLE 11 - NOTICES AND MISCELLANEOUS

         11.01  Notices.

         Except as otherwise provided in this Lease, any statement, notice, or
other communication which Landlord or Tenant may desire or is required to give
to the other shall be in writing and shall be deemed sufficiently given or
rendered if hand delivered, or if sent by registered or certified mail, postage
prepaid, return receipt requested, or Federal Express or similar overnight
courier with evidence of delivery, to the addresses for Landlord and Tenant set
forth in Subsection 2.01(k), or at such other address(es) as either party shall
         ------------------
designate from time to time by ten (10) days prior written notice to the other
party. Tenant shall obtain written acknowledgement from Landlord recognizing any
change in Tenant's address for the purposes of this Section, or such change
shall not be effective as against Landlord.

         11.02  Miscellaneous.

                (a) Pronouns of any gender shall include the other genders, and
either the singular or the plural shall include the other.

                (b) All rights and remedies of Landlord under this Lease shall
be cumulative and none shall exclude any other rights or remedies allowed by
law. This Lease is declared to be a North Carolina contract, and all of the
terms thereof shall be construed according to the laws of the State of North
Carolina.

                (c) This Lease may not be altered, changed or amended, except by
an instrument in writing executed by all parties hereto. Further, the terms and
provisions of this Lease shall not be construed against or in favor of a party
hereto merely because such party is the "Landlord" or the "Tenant" hereunder or
such party or its counsel is the draftsman of this Lease.

                (d) The terms and provisions of Exhibits A-I described herein
                                                ------------
and attached hereto are hereby made a part hereof for all purposes; provided,
however, that, unless otherwise expressly stated, in the event of a conflict
between the terms of this Lease and the terms of any Exhibit attached hereto,
the terms of this Lease shall control.

                (e) If Tenant is a corporation, partnership or other entity,
Tenant warrants that all consents and approvals required of third parties
(including, without limitation, its Board of Directors or partners) for the
execution, delivery and performance of this Lease will be obtained on or before
December 12, 2001, and as of such date Tenant shall have the right and authority
to enter into and perform its covenants contained in this Lease, and to conduct
business in the State of North Carolina.

                (f) Whenever in this Lease there is imposed upon Landlord the
obligation to use its best efforts, reasonable efforts or diligence, Landlord
shall be required to do so only to the extent the same is economically feasible
and otherwise will not impose upon Landlord extreme financial or other business
burdens.

                (g) If any term or provision of this Lease, or the application
thereof to any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall be valid and shall be enforceable to the extent permitted by law.

                (h) If applicable in the jurisdiction where the Leased Premises
are situated, Tenant shall pay and be liable for all rental, sales and use taxes
or other similar taxes, if any, levied or imposed by any city, state, county or
other governmental body having authority, such payments to be in addition to all
other payments required to be paid to Landlord by Tenant under the terms of this
Lease. Any such payment shall be paid concurrently with the payment of the rent
upon which the tax is based as set forth above.

                (i) Landlord and Tenant each agrees not to handle, store or
dispose of any hazardous or toxic waste or substance at the Project which is
prohibited by any federal, state, or local statutes, ordinances or regulations.
Landlord and Tenant each hereby covenants to indemnify and hold the other party,
its successors and assigns, harmless from any loss, damage, claims, costs,
liabilities or cleanup costs arising out of Landlord's or Tenant's, as the case
may be, use, handling, storage or disposal of any such hazardous or toxic wastes
or substances at the Project.

                (j) Tenant may, at its sole cost and expense, record a
memorandum of Lease in a form acceptable to Landlord, with Landlord's prior
written consent.

                (k) Landlord agrees to provide Tenant with the number of parking
spaces set forth in Subsection 2.01(f) of this Lease (which number includes
                    ------------------
Tenant's pro rata share of the total number of spaces designated for handicapped
or visitors required for the Building), at no additional charge. Tenant agrees
to notify Landlord promptly of any additional parking needs which needs shall be
considered on a case-by-case basis.

                (l) "Square feet" or "square foot" as used in this Lease
includes the area contained within the space occupied by Tenant (as measured by
the June 7, 1996, BOMA standard for measuring OFFICE AREA on a multi-tenant
basis), increased by a common area percentage factor of fifteen percent (15%).

                (m) Landlord agrees to pay to the Broker and Co-Broker, if any,
named in Subsection 2.01(l), a real estate brokerage commission only as set
         ------------------
forth in separate listing and/or commission agreement(s). Landlord and Tenant
each hereby represent and warrant to the other that they have not employed any
other agents, brokers or other parties in connection with this Lease, and each
agrees that it shall hold the other harmless from and against any and all claims
of all other agents, brokers or other parties claiming by, through or under the
respective indemnifying party.

                                       13

<PAGE>

                (n) Tenant understands and agrees that the property manager for
the Building is the agent of Landlord and is acting at all times in the best
interest of Landlord. Any and all information pertaining to this Lease that is
received by the property manager shall be treated as though received directly by
Landlord.

                (o) This Lease may be executed in any number of counterparts,
each of which shall be an original, but all of which taken together shall
constitute one and the same instrument.

                (p) During the Term of the Lease, Tenant shall provide Landlord,
upon ten (10) days' written notice, a true, accurate and complete copy of
Tenant's financial statements, including income and expense statements and
balance sheets, which shall reflect the most recent quarter and most recent
year-end at the time of such review.

                (q) Upon execution by Tenant, this Lease shall be binding upon
Tenant, its legal representatives and successors, and, to the extent assignment
may be approved by Landlord hereunder, Tenant's assigns. Upon execution by
Landlord, this Lease shall be binding upon Landlord, its legal representatives,
successors and assigns. This Lease shall inure to the benefit of Landlord and
Tenant, their representatives, successors and assigns.

                (r) Landlord shall, as part of the Upfit (as defined in Exhibit
                                                                        -------
C), and paid for out of the Allowance, in accordance with the workletter set
--
forth in Exhibit C, include Tenant's name and suite number only on (i) the
         ---------
Building directory located inside the Building, and (ii) a Building-standard
suite sign to be located at the entrance to the Leased Premises. In addition to
the foregoing, and as part of the Upfit, paid for out of the Allowance, and
provided Landlord has received final approval by any local governing
authorities, Landlord shall make available to Tenant one (1) panel on one (1)
side of Tenant's choice for the installation of Tenant's name on the Building's
exterior, multi-tenant pylon sign located at the front of the Building, using
the Building standard font, font size, materials, etc., and such design,
construction and size and materials shall all be subject to Landlord's prior
approval. This right for additional signage may not be exercised by any
subtenant of Tenant or assignee of the Lease, unless agreed to by Landlord, in
its sole discretion.

                (s) Landlord represents and warrants, to the best of its
knowledge and based upon no independent investigation that, as of the date of
this Lease, Landlord has complied with all laws, ordinances, orders, rules and
regulations (state, federal, municipal and other agencies or bodies having any
jurisdiction thereof) relating to the use, condition or occupancy of the
Building, and the Building will be suitable for the purpose for which it is let,
and will be in good repair and condition. Landlord further agrees to use its
best efforts to cause the Upfit (as defined in Section 7.01) to be constructed
                                               -------------
in a good and workmanlike manner.

                                       14

<PAGE>

           ARTICLE 12 - ENTIRE AGREEMENT AND LIMITATION OF WARRANTIES

         12.01  ENTIRE AGREEMENT AND LIMITATION OF WARRANTIES.

                TENANT AGREES THAT THIS LEASE AND THE EXHIBITS ATTACHED HERETO
CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES AND ALL PRIOR CORRESPONDENCE,
MEMORANDA, AGREEMENTS AND UNDERSTANDINGS (WRITTEN AND ORAL) ARE MERGED INTO AND
SUPERSEDED BY THIS LEASE AND THERE ARE AND WERE NO VERBAL REPRESENTATIONS,
WARRANTIES, UNDERSTANDINGS, STIPULATIONS, AGREEMENTS OR PROMISES MADE BY
LANDLORD IN CONNECTION WITH THIS LEASE. TENANT FURTHER AGREES THAT THERE ARE NO,
AND TENANT EXPRESSLY WAIVES ANY AND ALL WARRANTIES WHICH EXTEND BEYOND THOSE
EXPRESSLY SET FORTH IN THIS LEASE OR IMPLIED WARRANTIES OF MERCHANTABILITY,
HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT
OF THIS LEASE.

                IN TESTIMONY WHEREOF, the parties hereto have executed this
Lease as of the date aforesaid.

                          LANDLORD:

                          The Exchange at Meadowmont LLC, a North Carolina
                          limited liability company (SEAL)

                          By: Capital Associates Management, LLC, a North
                          Carolina limited liability company (SEAL)

                                  By: /s/  Hugh D. Little                 (SEAL)
                                      ------------------------------------
                                           Hugh D. Little, Manager

                        TENANT:

                        Pozen Inc., a Delaware corporation

                        By: /s/  John E. Barnhardt
                            ------------------------------------------------
(Corporate Seal)
                        Name: John E. Barnhardt
                              ----------------------------------------------

                        Title: Vice President Finance and Administration
                               ---------------------------------------------

Attest:

By: /s/ Fred D. Hutchison
    ---------------------------------------
         __________ Secretary

                                       15

<PAGE>

                                   EXHIBIT A-1

                                  FLOOR PLAN(S)
                                  -------------

1414 Raleigh Road, Suite 400
Chapel Hill, North Carolina  27517

   14,790   Occupied Square Feet
   x 1.15   Common Area Percentage Factor
   ------
   17,009   Square Feet

   [_] = Leased Premises

                                                                         HDL/JEB
                                                                         -------
                                                                        Initials

                                       16

<PAGE>

                                   EXHIBIT A-2

                                    THE LAND
                                    --------

     BEGINNING at an iron pipe located in the southwesterly margin of the
right-of-way of North Carolina Highway 54, said point being located North 81
(degrees) 31' 52" West 557.59 feet and North 62 (degrees) 26' 38" West 614.21
feet from the NCSHC monument 28 JS 1 having North Carolina grid coordinates
N=238,829.733 and E=608,673.605; running thence from said true beginning point
South 27 (degrees) 33' 38" West 500.58 feet to a point; runs thence North 63
(degrees) 5' 0" West 352.11 feet to a point; runs thence North 64 (degrees) 47'
45" West 179.94 feet to a point; runs thence North 59 (degrees) 39' 48" West
140.55 feet to a point; runs thence North 57 (degrees) 2' 27" West 399.02 feet
to a point; runs thence North 30 (degrees) 5' 57" East 155.34 feet to a point;
runs thence North 0 (degrees) 13' 20" East 351.57 feet to a point located in the
southwesterly margin of NC Highway 54; runs thence along the margin of said
highway South 62 (degrees) 26' 38" East 280.19 feet to a point; runs thence
South 54 (degrees) 18' 59" East 41.25 feet to a point; runs thence South 17
(degrees) 26' 48" East 41.25 feet to a point; runs thence South 62 (degrees) 26'
29" East 73 feet to a point; runs thence North 72 (degrees) 33' 21" East 41.24
feet to a point; runs thence South 70 (degrees) 34' 36" East 41.25 feet to a
point; runs thence South 62 (degrees) 26' 38" East 730.91 feet to the point and
place of Beginning and being all of Parcel 8 containing 12.659 acres as shown on
that Minor Subdivision Plat prepared by the John R. McAdams Company, Inc. dated
November 13, 1997 and last revised February 28, 2000.

                                                                         HDL/JEB
                                                                         -------
                                                                        Initials

                                       17

<PAGE>

                                   EXHIBIT A-3

                                   THE PROJECT
                                   -----------

                                                                         HDL/JEB
                                                                         -------
                                                                        Initials

                                       18

<PAGE>

                                    EXHIBIT B

                    ACCEPTANCE OF LEASED PREMISES MEMORANDUM
                    ----------------------------------------

Landlord and Tenant hereby agree that:

1.   Except for those items shown on the attached "punch list", which Landlord
     shall use reasonable and diligent efforts to remedy within thirty (30) days
     after the date hereof, Landlord has fully completed the construction work
     required of Landlord under the terms of the Lease and the workletter
     attached as Exhibit C thereto, subject to Landlord's representation of the
                 ---------
     condition of the Leased Premises as set forth in Subsection 11.02 (s) of
                                                      --------------------
     this Lease.

2.   The Leased Premises are tenantable, Landlord has no further obligation for
     construction (except as specified above), and Tenant acknowledges that the
     Leased Premises are satisfactory in all respects.

     All other terms and conditions of the Lease are hereby ratified and
acknowledged to be unchanged.

     Agreed and Executed this ______ day of _______________________, 20___.

                                           TENANT:

                                           Pozen Inc., a Delaware corporation

                                           By:__________________________________
(Corporate Seal)
                                           Name:  ______________________________

                                           Title:  _____________________________

Attest:

By:  _________________________________
         __________ Secretary

                                                                         HDL/JEB
                                                                         -------
                                                                        Initials

                                       19

<PAGE>

                                    EXHIBIT C

                              WORKLETTER AGREEMENT
                              --------------------

1. Upfit. Landlord shall provide Tenant with a tenant improvement allowance (the
   -----
"Allowance") in the amount necessary to pay for all costs incurred by Landlord
for the architectural and engineering (plumbing, mechanical and electrical)
design and construction of the Upfit, as shown on the Schematic Space Plan,
Exhibit C-1, which is attached hereto and incorporated herein by reference in
-----------
its entirety (the "Upfit"). Notwithstanding the foregoing, Tenant shall, upon
receipt of Landlord's invoice therefor, which Landlord shall deliver to Tenant
at the time the Leased Premises are substantially complete, reimburse Landlord
in the amount equal to One Hundred Twenty Thousand Dollars ($120,000.00) for a
portion of the construction costs for the Leased Premises.

2. Design. All partitions, doors, hardware, ceiling tile, window coverings,
   ------
plumbing, HVAC, lighting fixtures, switches, outlets and life safety items shall
be designed in Landlord's standard manner. Carpet, paint, wall covering, and
millwork shall be selected and designed in Landlord's standard manner and from
Landlord's standard finishes, unless otherwise requested by Tenant, in
accordance with Paragraph 4 herein. Tenant shall furnish to Landlord all other
information and technical data reasonably necessary for the construction and the
preparation of any detailed plans within four (4) business days of Landlord's
request therefor, or as otherwise agreed to by Tenant and Landlord, so as not to
delay any design and construction of the Upfit.

3. Approval of Plans. The Schematic Space Plan, which is attached hereto as
   -----------------
Exhibit C-1, shall hereinafter be referred to as the "Plans", and the Plans are
-----------
herein deemed to be approved by Tenant and Landlord. Any subsequent changes or
modifications to the Plans requested by Tenant shall be made and accepted in
writing by Landlord and Tenant and shall constitute an amendment to the Lease,
and Tenant shall pay for any additional sums caused by such changes or
modifications to the Plans immediately upon receipt of Landlord's invoice
therefor.

4. Construction. After Tenant pays any and all excess costs as set forth in
   ------------
Paragraph 3 herein, if applicable, and prior to the start of the Term, Landlord
shall be entitled to cause, and shall cause, the general contractor designated
by Landlord to construct the Upfit in accordance with the Plans. Tenant shall
permit Landlord (or Landlord's general contractor) to construct the Upfit during
normal working hours and in the general contractor's standard manner.

5. Delay. Except as otherwise set forth in this Lease, the Commencement Date,
   -----
Expiration Date, and commencement of installments of Monthly Base Rent will not
be postponed or delayed as a result of any delay from any cause attributable to
Tenant, its agents, consultants, contractors, subcontractors or employees,
including but not limited to, Tenant's approval of pricing (by November 15,
2001), selection of finishes (by December 3, 2001) and approval of construction
drawings (by December 5, 2001).

6.  Intentionally deleted.

7. Tenant's Access to Leased Premises. Landlord will permit Tenant and its
   ----------------------------------
agents reasonable access to the Leased Premises during normal business hours
fourteen (14) days prior to the Target Commencement Date for the purpose of
installing telephone and computer cabling, equipment, fixtures and other
personal property and such entry and use of the Leased Premises shall not
constitute acceptance of the Leased Premises nor Tenant's acknowledgment of the
Commencement Date of the Lease, unless Tenant commences the operation of any
portion of its business therein. This right of entry onto the Leased Premises is
a license from Landlord to Tenant which is subject to revocation in the event
that Tenant or its employees, contractors or agents causes or is the cause of
any labor dispute, delay or damage during such period which results from,
whether directly or indirectly, the installation or delivery of the foregoing,
or otherwise breaches any term, covenant or condition of this Lease. Prior to
Tenant's entry onto the Leased Premises in accordance herewith, Tenant shall
demonstrate to Landlord that it has obtained the insurance required and is in
compliance with Section 8.04 of the Lease. Under no circumstances shall Landlord
                ------------
be liable or responsible for and Tenant agrees to assume all risk of loss or
damage to such telephone and computer cabling, equipment, fixtures and other
personal property and to indemnify, defend and hold Landlord harmless from any
liability, loss or damage arising from any damage to the property of Landlord,
or its contractors, employees or agents, and any death or personal injury to any
person or persons to the extent caused by, attributable to or arising out of,
whether directly or indirectly, Tenant's entry onto the Leased Premises or the
delivery, placement, installation, or presence of the telephone and computer
cabling, equipment, fixtures and other personal property, except to the extent
that such loss or damage is caused solely by Landlord's willful misconduct or
gross negligence or the willful misconduct or gross negligence of Landlord's
contractors, agents or employees.

8. Warranties. Landlord shall cause the repair or replacement of any defects in
   ----------
material or workmanship in the Upfit installed by Landlord for a period of one
(1) year after the date of substantial completion of the Leased Premises, or the
duration of any manufacturer's warranty, whichever is longer, provided Tenant
notifies Landlord of such defect as soon as reasonably practicable after the
date Tenant discovers such defect. LANDLORD MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, IN CONNECTION WITH THE UPFIT EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 8. Tenant's sole remedy for the breach of
any applicable warranty shall be the remedy set forth in this Section 8. Tenant
agrees that no other remedy, including without limitation, incidental or
consequential damages for lost profits, injury to person or property or any
other incidental or consequential loss, shall be available to Tenant.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       20

<PAGE>

9. Compliance with Certain Requirements. At any time before, during, and after
   ------------------------------------
construction, Landlord may require changes to the Plans and construction in
order to comply with applicable building codes, other governmental requirements,
and insurance requirements. Neither Landlord's nor Tenant's approval of the
Plans is a warranty that the Plans comply with applicable building codes, other
governmental requirements, and insurance requirements.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       21

<PAGE>

                                   EXHIBIT C-1

                              SCHEMATIC SPACE PLAN
                              --------------------

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       22

<PAGE>

                                    EXHIBIT D

                                 BUILDING RULES
                                 --------------

         (1)    The sidewalks, walks, plaza entries, corridors, concourses,
ramps, staircases, escalators and elevators shall not be obstructed or used by
Tenant, or the employees, agents, servants, visitors or licensees of Tenant, for
any purpose other than ingress and egress to and from the Leased Premises. No
bicycle or motorcycle shall be brought into the Building or kept on the Leased
Premises without the prior written consent of Landlord.

         (2)    No freight, furniture or bulky matter of any description shall
be received into the Building or carried into the elevators except in such a
manner, during such hours and using such elevators and passageways as may be
approved by Landlord, and then only upon having been scheduled in advance. Any
hand trucks, carryalls or similar appliances used for the delivery or receipt of
merchandise or equipment shall be equipped with rubber tires, side guards and
such other safeguards as Landlord shall require.

         (3)    Landlord shall have the right to prescribe the weight, position
and manner of installation of safes, concentrated filing/storage systems or
other heavy equipment which shall, if considered necessary by Landlord, be
installed in a manner which shall insure satisfactory weight distribution. All
damage done to the Building by reason of a safe or any other article of Tenant's
office equipment being on the Leased Premises shall be repaired at the expense
of Tenant. The time, routing and manner of moving safes or other heavy equipment
shall be subject to prior written approval by Landlord.

         (4)    Only persons authorized by Landlord shall be permitted to
furnish newspaper, ice, drinking water, towels, barbering, shoe shining,
janitorial services, floor polishing and other similar services and concessions
to Tenant, and only at hours and under regulations fixed by Landlord. Tenant
shall use no other method of heating or cooling than that supplied by Landlord.

         (5)    Tenant, and the employees, agents, servants, visitors or
licensees of Tenant, shall not at any time place, leave or discard any rubbish,
paper, articles or objects of any kind whatsoever outside the doors of the
Leased Premises or in the corridors or passageways of the Building. No animals,
except for dogs trained to assist disabled persons, shall be brought or kept in
or about the Leased Premises or the Building without the prior written consent
of Landlord.

         (6)    Landlord shall have the right to prohibit any advertising by
Tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability for offices, and, upon written notice from
Landlord, Tenant shall refrain from or discontinue such advertising. Landlord
shall have the right to use Tenant's name in advertising announcements.

         (7)    Tenant shall not place, or cause or allow to be placed, any sign
or lettering whatsoever, in or about the Leased Premises except in and at such
places as may be designated by Landlord and consented to by Landlord in writing.
All lettering and graphics on corridor doors and walls shall conform to the
Building standard prescribed by Landlord. No trademark shall be displayed on
corridor doors and walls in any event, except on any floor fully leased by
Tenant. Tenant may display trademarks on interior walls and doors of the Leased
Premises. Landlord shall provide and maintain an alphabetical directory board in
the ground floor lobby of the Building.

         (8)    Canvassing, soliciting or peddling in the Building is prohibited
and Tenant shall cooperate to prevent same.

         (9)    Landlord shall have the right to exclude any person from the
Building other than during customary business hours, and any person in the
Building shall be subject to identification by employees and agents of Landlord.
All persons in or entering the Building shall be required to comply with the
security policies of the Building. If Tenant desires any additional security
services for the Leased Premises, Tenant shall have the right (only with the
advance written consent of Landlord) to obtain such additional services at
Tenant's sole cost and expense. Tenant shall keep doors to unattended areas
locked and shall otherwise exercise reasonable precautions to protect property
from theft, loss, or damage. Landlord shall not be responsible for the theft,
loss or damage of any property.

         (10)   Only workers employed, designated or approved by Landlord may be
employed for repairs, installations, alterations, painting, material moving and
other similar work that may be done in or on the Leased Premises.

         (11)   Tenant shall not do any cooking or conduct any restaurant,
luncheonette, automat or cafeteria for the sale or service of food or beverages
to its employees or to others, nor shall Tenant provide any vending machines
without the prior written consent of Landlord. Tenant may, however, operate
coffee bars by and for its employees and invitees.

         (12)   Tenant shall not bring or permit to be brought or kept in or on
the Leased Premises any inflammable, combustible, corrosive, caustic, poisonous,
toxic or explosive substance or any substance deemed to be a hazardous substance
under applicable environmental laws, or cause or permit any odors to permeate or
emanate from the Leased Premises.

         (13)   Tenant shall not mark, paint, drill into or in any way deface
any part of the Building or the Leased Premises. No boring, driving of nails or
screws, cutting or stringing of wires shall be permitted, except with the prior
written consent of Landlord, and as Landlord may direct. Tenant shall not
install coat hooks or identification plates on doors nor any resilient tile or
similar floor covering in the Leased Premises except with the prior written
approval of Landlord. The use of cement or other similar adhesive material is
expressly prohibited.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       23

<PAGE>

         (14)   Tenant shall not place any additional locks or bolts of any kind
on any door in the Building or the Leased Premises or change or alter any lock
on any door therein in any respect. Landlord shall furnish two (2) keys for each
lock on exterior doors to the Leased Premises and shall, on Tenant's request and
at Tenant's expense, provide additional duplicate keys. Tenant shall not make
any duplicate keys. All keys shall be returned to Landlord upon the termination
of the Lease, and Tenant shall give to Landlord the explanation of the
combination of all safes, vaults and combination locks in the Leased Premises.
Landlord may at all times keep a pass key to the Leased Premises. All entrance
doors to the Leased Premises shall be left locked when the Leased Premises are
not in use.

         (15)   Tenant shall give immediate notice to Landlord in case of theft,
unauthorized solicitation or accident in the Leased Premises or in the Building
or of defects therein or in any fixtures or equipment, or of any known emergency
in the Building.

         (16)   Tenant shall place a water-proof tray under all plants in the
Leased Premises and shall be responsible for any damage to the floors and/or
carpets caused by over-watering such plants.

         (17)   Tenant shall not use the Leased Premises or permit the Leased
Premises to be used for photographic, multilith or multigraph reproductions,
except in connection with its own business and not as a service for others,
without Landlord's prior written permission.

         (18)   Tenant shall not use or permit any portion of the Leased
Premises to be used as an office for a public stenographer or typist, offset
printing, the sale of liquor or tobacco, a barber or manicure shop, an
employment bureau, a labor union office, a doctor's or dentist's office, a dance
or music studio, any type of school, or for any use other than those
specifically granted in this Lease.

         (19)   Tenant shall not advertise for laborers giving the Leased
Premises as an address, nor pay such laborers at a location in the Leased
Premises.

         (20)   Employees of Landlord shall not perform any work or do anything
outside of their regular duties, unless under special instructions from the
management office in the Building.

         (21)   Tenant shall not place a load upon any floor of the Leased
Premises which exceeds the load per square foot which such floor was designed to
carry and which is allowed by law. Business machines and mechanical and
electrical equipment belonging to Tenant which cause noise, vibration,
electrical or magnetic interference, or any other nuisance that may be
transmitted to the structure or other portions of the Building or to the Leased
Premises to such a degree as to be objectionable to Landlord or which interfere
with the use or enjoyment by other tenants of their leased premises or the
public portions of the Building, shall be placed and maintained by Tenant, at
Tenant's expense, in settings of cork, rubber, spring type or other vibration
eliminators sufficient to eliminate noise or vibration.

         (22)   Tenant shall furnish and install a chair mat for each desk chair
in the Leased Premises.

         (23)   No solar screen materials, awnings, draperies, shutters or other
interior or exterior window coverings that are visible from the exterior of the
Building or from the exterior of the Leased Premises within the Building may be
installed by Tenant.

         (24)   Tenant shall not place, install or operate within the Leased
Premises or any other part of the Building any engine, stove or machinery, or
conduct mechanical operations therein, without the written consent of Landlord.

         (25)   No portion of the Leased Premises or any other part of the
Building shall at any time be used or occupied as sleeping or lodging quarters.

         (26)   For purposes of the Lease, holidays shall be deemed to mean and
include the following: (a) New Year's Day; (b) Good Friday; (c) Memorial Day;
(d) Independence Day; (e) Labor Day; (f) Thanksgiving Day and the Friday
following; and (g) Christmas Day.

         (27)   Tenant shall at all times keep the Leased Premises neat and
orderly.

         (28)   All requests for overtime air conditioning or heating should be
submitted in writing to the Building management office by 2:00 P.M. on the last
prior business day.

         (29)   Landlord reserves the right to rescind, add to and amend any
rules or regulations, to add new rules or regulations, and to waive any rules or
regulations with respect to any tenant or tenants.

         (30)   Corridor doors, when not in use, shall be kept closed.

         (31)   All permitted alterations and additions to the Leased Premises
must conform to applicable building and fire codes. Tenant shall obtain approval
from the office of the Building with respect to any such modifications and shall
deliver "as-built" plans therefor to the office of the Building on completion.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       24

<PAGE>

     (32) It is the intent of both Landlord and Tenant that any portion of the
Leased Premises visible to the public hold a high quality professional image at
all times. If, at any time during the Term, Landlord or Landlord's agent deems
such visible area to hold less than a high quality professional image, Landlord
will advise Tenant of desired changes to be made to such area to conform to the
intent of this paragraph. Within three working days, Tenant will cause the
desired changes to be made, or present Landlord with a plan for accomplishing
such changes. Tenant shall have such additional time as is reasonably required
to implement the plan, not to exceed 2 months; provided, however, that if Tenant
is not diligently pursuing the plan for accomplishing such changes within ten
working days, Landlord will provide draperies or blinds for the glassed area at
Tenant's expense; Tenant will keep such draperies or blinds closed at all times.

          The carpet and wall coverings, which are to be located in the lobby of
any Leased Premises that are visible to the public, must be consistent in color
and style with the carpet and wall coverings located in the lobby area of the
Building, and must be approved by Landlord prior to installation.

     (33) The Building has been designated a "non-smoking" building. Tenant and
its employees, agents, servants, visitors and licensees are prohibited from
smoking in the common areas both inside and outside of the Building, except in
those areas designated as smoking areas. Tenant may designate the Leased
Premises a "non-smoking" area, upon such terms as may be approved in advance by
Landlord, at any time during the Term.

     (34) Tenant shall not play nor permit the playing of loud music in the
Leased Premises or common areas.

     (35) No firearms, whether concealed or otherwise, shall be allowed in the
Building at any time.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       25

<PAGE>

                                    EXHIBIT E

                          FORM OF ESTOPPEL CERTIFICATE

The undersigned ____________________________________________________ ("Tenant"),
in consideration of One Dollar ($1.00) and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, hereby certifies to
_______________________________________________________ ("Landlord"), [the
holder or prospective holder of any mortgage covering the property] (the
"Mortgagee") and [the vendee under any contract of sale with respect to the
Property] (the "Purchaser") as follows:

1.  Tenant and Landlord executed a certain Lease Agreement (the "Lease"), dated
__________________, 20_____, covering the _____________ floor(s) shown attached
on the plan annexed hereto as Exhibit A-1 (the "Leased Premises") in the
building located in the _______________________________ known as and by the
street number _______________________________________ (the "Building"), for a
term commencing on ________________________, 20______, and expiring on
____________________________________.

2.  The Lease is in full force and effect and has not been modified, changed,
altered or amended in any respect.

3.  Tenant has accepted and is now in possession of the Leased Premises and is
paying the full Rent under the Lease.

4.  The Base Rent payable under the Lease is $__________________ per month. The
Base Rent and all Additional Rent and other charges required to be paid under
the Lease have been paid for the period up to and including _______________.

5.  Tenant has provided Landlord with the following as Security for the Lease:
______________________________.

6.  No Rent under the Lease has been paid for more than thirty (30) days in
advance of its due date.

7.  All work required under the Lease to be performed by Landlord has been
completed to the full satisfaction of Tenant.

8.  There are no defaults existing under the Lease on the part of either
Landlord or Tenant.

9.  There is no existing basis for Tenant to cancel or terminate the Lease.

10. As of the date hereof, there exist no valid defenses, offsets, credits,
deductions in rent or claims against the enforcement of any of the agreements,
terms, covenants or conditions of the Lease.

11. Tenant affirms that any dispute with Landlord giving rise to a claim against
Landlord is a claim under the Lease only and is subordinate to the rights of the
holder of all first lien mortgages on the Building and shall be subject to all
the terms, conditions and provisions thereof. Any such claims are not offsets to
or defenses against enforcement of the Lease.

12. Tenant affirms that any dispute with Landlord giving rise to a claim against
Landlord is a claim under the Lease only and is subordinate to the rights of the
Purchaser pursuant to any contract of sale. Any such claims are not offsets to
or defenses against enforcement of the Lease.

13. Tenant affirms that any claims pertaining to matters in existence at the
time Tenant took possession and which are known to or which were then readily
ascertainable by Tenant shall be enforced solely by money judgment and/or
specific performance against the Landlord named in the Lease and may not be
enforced as an offset to or defense against enforcement of the Lease.

14. There are no actions, whether voluntary or otherwise, pending against or
contemplated by Tenant under the bankruptcy laws of the United States or any
state thereof.

15. There has been no material adverse change in Tenant's financial condition
between the date hereof and the date of the execution and delivery of the Lease.

16. Tenant acknowledges that Landlord has informed Tenant that an assignment of
Landlord's interest in the Lease has been or will be made to the Mortgagee and
that no modification, revision, or cancellation of the Lease or amendments
thereto shall be effective unless a written consent thereto of the Mortgagee is
first obtained, and that until further notice payments under the Lease may
continue as heretofore.

17. Tenant acknowledges that Landlord has informed Tenant that Landlord has
entered into a contract to sell the Property to Purchaser and that no
modification, revision or cancellation of the Lease or amendments thereto shall
be effective unless a written consent thereto of the Purchaser has been
obtained.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       26

<PAGE>

18. This certification is made to induce Purchaser to consummate a purchase of
the Property and to induce Mortgagee to make and maintain a mortgage loan
secured by the Property and/or to disburse additional funds to Landlord under
the terms of its agreement with Landlord, knowing that said Purchaser and
Mortgagee rely upon the truth of this certificate in making and/or maintaining
such purchase or mortgage or disbursing such funds, as applicable.

19. Except as modified herein, all other provisions of the Lease are hereby
ratified and confirmed.

                                          TENANT:

                                          Pozen Inc., a Delaware corporation

                                          By:__________________________________
(Corporate Seal)
                                          Name: _______________________________

                                          Title: ______________________________

                                          Date: _______________________________
Attest:

By:  _________________________________
         __________ Secretary

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials

                                       27

<PAGE>

                                    EXHIBIT F

                                  HVAC SCHEDULE
                                  -------------

     Subject to the provisions of Section 5.01 of the Lease and excluding
                                  ------------
holidays, as set forth in #26 of Exhibit D, Landlord will furnish Building
                                 ---------
standard heating, ventilating and air conditioning between 8:00 a.m. and 6:00
p.m. on weekdays (from Monday through Friday, inclusive) and Saturdays between
8:00 a.m. and 1:00 p.m. Upon request of Tenant made in accordance with the rules
and regulations for the Building, Landlord will furnish air conditioning and
heating at other times (that is, at times other than the times specified above),
in which event Tenant shall reimburse Landlord for furnishing such services on
the following basis:

     Tenant shall reimburse Landlord at the rate of Twenty-five and No/100
Dollars ($25.00) per hour per air handling unit which is activated to provide
the requested air conditioning or heating service; provided, such rate is based
upon the "Kilowatt Hour rate" (as hereinafter defined) for electricity as of
January 1, 1995 (the "Base Rate"), and if and when the Kilowatt Hour Rate
increases over the Base Rate, the aforesaid rate of Twenty-five and No/100
Dollars ($25.00) per hour per air handling unit thereof shall automatically
increase proportionately. For example, if the Kilowatt Hour Rate increases by
10% over the Base Rate, said rate shall automatically increase by 10%. The
"Kilowatt Hour Rate" shall mean the actual average cost per kilowatt hour
charged by the public utilities providing electricity to the Building, or if
said public utilities shall cease charging for electricity on the basis of a
kilowatt hour, the Kilowatt Hour Rate shall mean the actual average cost per
equivalent unit of measurement substituted therefor by said public utilities.
The Base Rate is hereby stipulated to be $.0600 per kilowatt hour.

     Setback temperatures in the Building will be maintained between a range of
sixty degrees Fahrenheit (60 (degrees)F) during the winter (or heating) months
and eighty-three degrees Fahrenheit (83 (degrees)F) during the summer (or
cooling) months.

                                                                         HDL/JEB
                                                                        --------
                                                                        Initials
                                       28

<PAGE>

                                    EXHIBIT G

                                 RENEWAL OPTIONS
                                 ---------------

     A. As long as (i) Tenant is not in default in the performance of its
covenants under this Lease pursuant to Section 9.02 at the time of exercise of
                                       ------------
this renewal option or at the time of commencement of the renewal, (ii) Tenant
is not in default of the Lease pursuant to Section 9.02, and has not been in
                                           ------------
material default more than three (3) times during the Term, as set forth in
Section 9.02, and (iii) Tenant is in occupancy of the Leased Premises at the
------------
time of exercise of this renewal option and at the time of commencement of the
Renewal Term (as hereinafter defined), then Tenant is granted the option to
renew the Term of this Lease for a period of either five (5) or three (3)
additional years, at Tenant's sole discretion ("Renewal Term"), to commence at
the expiration of the initial Term of this Lease. Tenant shall exercise its
option to renew by delivering written notice of such election including the
length of the Renewal Term, to Landlord at least twelve (12) months prior to the
expiration of the initial Term. The renewal of this Lease shall be upon the same
terms and conditions of this Lease, except (a) the Base Rent during the Renewal
Term shall be the then prevailing Market Base Rent Rate (defined below) for
similar space in the Building or Project at the time the Renewal Term commences,
but in no event less than the Base Rent plus Additional Rent that Tenant is then
paying under the terms of this Lease, (b) Tenant shall have no option to renew
this Lease beyond the expiration of the Second Renewal Term (as defined below),
(c) Tenant shall not have the right to assign its renewal rights to any
subtenant of the Leased Premises or assignee of the Lease, nor may any such
subtenant or assignee exercise such renewal rights, and (d) the leasehold
improvements will be provided in their then existing condition (on an "as is"
basis) at the time the Renewal Term commences, except that Landlord shall
provide Tenant with a refurbishment allowance of Eight Dollars ($8.00) per
square foot contained in the Leased Premises at the time the Renewal Term
commences provided Tenant has renewed the term for an additional five (5) year
period.

     B. In the event Tenant exercises the renewal option set forth above, and as
long as (i) Tenant is not in default in the performance of its covenants under
this Lease pursuant to Section 9.02 at the time of exercise of this renewal
                       ------------
option or at the time of commencement of the renewal, (ii) Tenant is not in
default of the Lease pursuant to Section 9.02, and has not been in material
                                 -------------
default more than three (3) times during the Term, as set forth in Section 9.02,
                                                                   ------------
and (iii) Tenant is in occupancy of the Leased Premises at the time of exercise
of this renewal option and at the time of commencement of the Second Renewal
Term (as hereinafter defined), then Tenant is granted the additional option to
renew the Term of this Lease (the "Second Renewal Option") for a period of three
(3) additional years ("Second Renewal Term"), to commence at the expiration of
the Renewal Term. Tenant shall exercise its option to renew by delivering
written notice of such election to Landlord at least twelve (12) months prior to
the expiration of the Renewal Term. The renewal of this Lease for the Second
Renewal Term shall be upon the same terms and conditions of this Lease, except
(a) the Base Rent during the Second Renewal Term shall be the then prevailing
Market Base Rent Rate (defined below) for similar space in the Building or
Project at the time the Second Renewal Term commences, but in no event less than
the Base Rent plus Additional Rent that Tenant is then paying under the terms of
this Lease, (b) Tenant shall have no option to renew this Lease beyond the
expiration of the Second Renewal Term, (c) Tenant shall not have the right to
assign its renewal rights to any subtenant of the Leased Premises or assignee of
the Lease, nor may any such subtenant or assignee exercise such renewal rights,
and (d) the leasehold improvements will be provided in their then existing
condition (on an "as is" basis) at the time the Second Renewal Term commences.

     As used in this Lease, the term "Market Base Rent Rate" shall mean the
annual rental rate then being charged in Chapel Hill, North Carolina for space
comparable to the space for which the Market Base Rent Rate is being determined
(taking into consideration, but not limited to, use, location and/or floor level
within the applicable building, definition of rentable area, leasehold
improvements provided, quality and location of the applicable building, rental
concessions [such as abatements or Lease assumptions] and the time the
particular rate under consideration became effective). It is agreed that bona
fide written offers to lease the Leased Premises or comparable space made to
Landlord by third parties (at arm's-length) may be used by Landlord as an
indication of Market Base Rent Rate.

     Whenever in this Lease a provision calls for a rental rate to be, or be
adjusted to, the Market Base Rent Rate, Tenant shall continue to pay Base Rent
and the Additional Rent as provided in this Lease.

                                       29

                                                                      HDL/JEB
                                                                      -------
                                                                     Initials

<PAGE>

                                    EXHIBIT H

                               FIRST OFFER RIGHTS
                               ------------------

         A. As long as (i) Tenant is not in default in the performance of its
covenants under this Lease pursuant to Section 9.02 at the time of exercise of
                                       ------------
this expansion option or at the time of commencement of the term for the
additional space, (ii) Tenant is not in default of the Lease pursuant to Section
                                                                         -------
9.02, and has not been in material default more than three (3) times during the
----
Term, as set forth in Section 9.02, and (iii) Tenant is in occupancy of the
                      ------------
Leased Premises at the time of exercise of this expansion option and at the time
of commencement of the term for the additional space, then Landlord hereby
grants to Tenant, but not any assignee or subtenant of Tenant, a right (the
"First Offer Right") during the initial Term of the Lease to lease any
additional square footage that may become available on the fourth (4th) floor of
the Building (the "Space") at the prevailing Market Base Rent Rate (defined
below), upon the following terms and conditions:

         1. On or before one hundred eighty (180) days prior to the expiration
of the existing lease for the Space, including any renewal or extension periods,
Landlord shall provide Tenant with written notice of the availability of the
Space and written terms of the expansion.

         2. Tenant shall then have five (5) business days from the date of
Landlord's notice in which to respond, in writing.

         3. If Tenant does not respond to Landlord's notice within such five (5)
business day period or provides Landlord with written notice that Tenant does
not elect to lease the Space, then the First Offer Right shall terminate with
regard to such Space, and Landlord may thereafter lease such Space to any third
party(ies) at any time and from time to time, and Tenant shall have no further
rights with respect thereto.

         4. If Tenant elects to lease such additional space, Tenant shall
provide Landlord with written notice of such election within five (5) business
days of the date of Landlord's notice. The parties shall then promptly execute
an amendment to the Lease adding such Space and adjusting the Rent. The term of
the Lease with regard to the Space shall commence on Tenant's occupancy of such
Space; provided, however, that in no event shall the commencement date be later
than thirty (30) days after the expiration of the prior tenant's lease. The term
of the Lease for the Space shall expire coterminously with the Term for the
current Leased Premises or three (3) years from the commencement date of the
term for the Space, whichever is later. Tenant shall accept such Space in "AS
IS" condition.

         As used in this Lease, the term "Market Base Rent Rate" shall mean the
annual rental rate then being charged in Chapel Hill, North Carolina for space
comparable to the space for which the Market Base Rent Rate is being determined
(taking into consideration, but not limited to, use, location and/or floor level
within the applicable building, definition of rentable area, leasehold
improvements provided, quality and location of the applicable building, rental
concessions [such as abatements or Lease assumptions] and the time the
particular rate under consideration became effective). It is agreed that bona
fide written offers to lease the Leased Premises or comparable space made to
Landlord by third parties (at arm's-length) may be used by Landlord as an
indication of Market Base Rent Rate.

         B. As long as (i) Tenant is not in default in the performance of its
covenants under this Lease pursuant to Section 9.02 at the time of exercise of
                                       ------------
this expansion option or at the time of commencement of the term for the
additional space, (ii) Tenant is not in default of the Lease pursuant to Section
                                                                         -------
9.02, and has not been in material default more than three (3) times during the
----
Term, as set forth in Section 9.02, and (iii) Tenant is in occupancy of the
                      ------------
Leased Premises at the time of exercise of this expansion option and at the time
of commencement of the term for the additional space, then Landlord hereby
grants to Tenant, but not any assignee or subtenant of Tenant, a second right
(the "Second First Offer Right") to lease between 2,500 and 5,000 additional
square feet of space (the amount of the square footage within that range shall
be determined at Landlord's sole discretion), that Landlord makes available to
Tenant on the fourth (4/th/) floor of the Building (the "Second Space") at the
prevailing Market Base Rent Rate, upon the following terms and conditions:

         1. On or before the end of the thirty-sixth (36/th/) month of the
initial Term of the Lease Tenant shall provide Landlord with notice of its
intent to lease such Second Space.

         2. Landlord to notify Tenant of the specific amount of square footage
to be contained in the Second Space, and an approximate date on which the Second
Space shall become available to Tenant (such date to be between the thirty-sixth
[36/th/] and fifty-fourth [54/th/] months of the initial Term of the Lease).

         3. On or before ninety (90) days prior to the commencement of the term
for the Second Space, Landlord will deliver written notice to Tenant of the
actual delivery date of the Second Space.

         4. Tenant shall accept any such Second Space in "AS IS" condition, and
the terms and conditions of the Lease shall apply to the Second Space.

                                       30

                                                                     HDL/JEB
                                                                     -------
                                                                    Initials

<PAGE>

                                    EXHIBIT I
                                  (page 1 of 2)

                            JANITORIAL SPECIFICATIONS
                            -------------------------

                                       31
                                                                        HDL/JEB
                                                                        -------
                                                                       Initials

<PAGE>

                                    EXHIBIT I
                                  (page 2 of 2)

                            JANITORIAL SPECIFICATIONS
                            -------------------------

                                       32
                                                                     HDL/JEB
                                                                     -------
                                                                    Initials

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