Document:

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                                                                   EXHIBIT 10.21

                     NONEXCLUSIVE PATENT LICENSE AGREEMENT

This Nonexclusive Patent License Agreement is made and effective as of February
11, 2000 (the "Effective Date"), by and between 3-Dimensional Pharmaceuticals,
Inc., a corporation having its principal place of business at Eagleview
Corporate Center, 665 Stockton Drive, Suite 104, Exton, PA 19341 ("3DP"), and
DuPont Pharmaceuticals Company (a wholly-owned subsidiary of E. I. DuPont de
Nemours & Co. ("DuPont")) having its principal place of business at Centre Road,
Chestnut Run Plaza, Building 721, Wilmington DE 19880 ("DPC"). 3DP and DPC may
be referred to herein as a "Party" or, collectively, as the "Parties".

WHEREAS, 3DP has developed and patented certain DirectedDiversity(R) technology
for generating chemical compounds having desired biological, chemical and other
properties;

WHEREAS, DPC is engaged in research and development of biologically active
compounds for the treatment of human disease;

WHEREAS, DPC wishes to license certain patent rights from 3DP on a nonexclusive
basis;

WHEREAS, the parties desire to enter into this Agreement to set forth the
licensing terms for such rights;

NOW, THEREFORE, in consideration of the various promises and undertakings set
forth herein, and intending to be legally bound, the Parties agree as follows:

Article 1  DEFINITIONS

The terms in this Agreement with initial letters capitalized, whether used in
the singular or the plural, shall have the meaning set forth below or, if not
listed below, the meaning designated in places throughout this Agreement.

     1.1  "Affiliate" means any corporation or other business entity which
          controls, is controlled by, or is under common control with 3DP or
          DPC. A corporation or other entity shall be regarded as in control of
          another corporation or entity if it owns or directly or indirectly
          controls at least 50% of the voting stock or other ownership interest
          of the other corporation or entity (or alternatively, if it owns the
          maximum such ownership interest permitted by law), or if it possesses,
          directly or indirectly, the power to direct or cause the direction of
          the management and policies of the corporation or other entity or the
          power to elect or appoint at least 50% of the members of the governing
          body of the corporation or other entity.

     1.2  "Agreement" means the present agreement including its Appendices.
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     1.3  "Confidential Information" means all information that has or could
          have commercial value or other utility in a Party's business, or the
          unauthorized disclosure of which could be detrimental to the Party's
          interests, including confidential information, inventions, know-how,
          data and materials relating to the Licensed Patents, and shall include
          without limitation research, technical, clinical development,
          manufacturing, marketing, financial, personnel and other business
          information and plans, whether in oral, written, graphic or electronic
          form.

     1.4  "DPC" means DuPont Pharmaceuticals Company as identified above.

     1.5  "DPC Site" means a Site which is a DPC Site or a Site of a DPC
          Affiliate which is involved in pharmaceutical (including diagnostic
          imaging) research and development.

     1.6  "DuPont" means E. I. DuPont de Nemours & Co. as identified above.

     1.7  "Effective Date" means the effective date of this Agreement as set
          forth above.

     1.8  "Field" means the research and development of chemical materials for
          use in pharmaceutical and diagnostic products. With respect to the
          Other DuPont Site described in Section 3.3, the Parties shall agree to
          the applicable definition of Field.

     1.9  "Improvements" means any inventions, discoveries, improvements or
          enhancements, whether or not patented or patentable, relating to the
          subject matter claimed in the Licensed Patents.

     1.10 "Licensed Patents" means all U.S. and foreign patent applications or
          issued patents identified in Appendix A, and any U.S. and foreign
                                       ----------
          patent applications or issued patents claiming Improvements made by
          3DP in respect thereof, including any provisionals, divisionals,
          continuations, continuations-in-part, reissues and extensions derived
          therefrom, such as patent term restorations, supplementary protection
          certificates, etc., to the foregoing that may be filed by or granted
          to 3DP during the term of this Agreement.

     1.11 "Other DuPont Site" means a Site which is a DuPont Site or a Site of a
          DuPont Affiliate which is not a DPC Site and is not involved in
          pharmaceutical (including diagnostic imaging) research and
          development.

     1.12 "Site" means a discrete research facility, for example, a building or
          building complex at which DPC or an Affiliate of DPC conducts internal
          research and development activities, in a geographic location distinct
          from other research facilities of DPC or an Affiliate of DPC.

     1.13 "Site License Fee" shall have the meaning set forth in Section 3.2
          below.

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     1.14 "Third Party" means an individual, corporation or other entity other
          than the Parties and their Affiliates.

     1.15 "3DP" means 3-Dimensional Pharmaceuticals, Inc. as identified above.

Article 2  GRANT OF LICENSE

     2.1  Nonexclusive Patent License. 3DP hereby grants DPC (and its
          ---------------------------
          Affiliates, but only to the extent specifically permitted herein) a
          nonexclusive license, without any right to sublicense, under the
          Licensed Patents in the Field but only in Direct Support of DPC's (or
          its Affiliate's as permitted herein) internal and collaborative
          research and development activities. As used herein, "Direct Support"
          means that DPC (or its Affiliates as permitted herein) may operate
          under the Licensed Patents to identify compounds with activity against
          targets that have been selected through DPC's (or its Affiliate's as
          permitted herein) internal research and development programs or to
          identify compounds for which DPC (or its Affiliates as permitted
          herein) will pay for a share of the development costs or receives at
          least a 10% royalty (or equivalent revenue share) or has any rights of
          commercialization. In accordance with the foregoing, it is
          acknowledged and understood that DPC and its Affiliates are not
          permitted under the license granted herein to compete with 3DP by
          providing combinatorial chemistry services to third parties on a fee-
          for-service basis.

          The rights granted hereunder may be extended by DPC to one (1) Other
          DuPont Site, provided that in such event DuPont or its Affiliate shall
          be bound in the same way as DPC with respect to all the terms and
          conditions of this Agreement. In such event DuPont (or its Affiliate
          as permitted herein) shall have a nonexclusive license, without any
          right to sublicense, under the Licensed Patents in the Field but only
          in Direct Support of DuPont's (or its Affiliate's as permitted herein)
          internal and collaborative research and development activities. As
          used in this paragraph, "Direct Support" means that DuPont (or its
          Affiliate as permitted herein) may operate under the Licensed Patents
          to identify compounds with activity against targets that have been
          selected through DuPont's (or its Affiliate's as permitted herein)
          internal research and development programs or to identify compounds
          for which DuPont (or its Affiliate as permitted herein) will pay for a
          share of the development costs or receives at least a 10% royalty (or
          equivalent revenue share) or has any rights of commercialization.

     2.2  Limitations on License Grant. Except as permitted under Section 2.1,
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          DPC (and any of its Affiliates, to the extent permitted below) may not
          operate under the Licensed Patents on behalf of any Third Parties such
          as, for example, in connection with providing research or development
          services to any Third Party on a contractual basis. The foregoing
          license

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          grant is further limited to on-site activities at one or more actual
          DPC Sites, and does not include or permit off-site or remote access
          through the internet or otherwise. In addition, the foregoing license
          does not permit activities by DPC or DuPont or their Affiliates under
          this Agreement that are covered by that certain Collaborative Research
          and License Agreement, effective on October 12, 1998, between 3DP and
          E. I. DuPont de Nemours & Co.

     2.3  Term and Renewal. The initial term of this Agreement shall expire on
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          April 1, 2000. However, this Agreement may be renewed by DPC on an
          annual basis by payment of the Site License Fees as set forth in
          Section 3.2.

     2.4  Non-Assertion. During the term of this Agreement and so long as DPC
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          has not committed any material breach with respect to any obligation
          hereunder, 3DP will not assert any patent or patent application
          against DPC to prevent DPC from practicing the rights granted to DPC
          under Article 2 hereof.

Article 3  FINANCIAL TERMS

     3.1  License Fee. In consideration of the grant of rights under Article 2
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          of this Agreement, DPC agrees to pay an initial nonrefundable license
          fee of [**] within thirty (30) days of the Effective Date of this
          Agreement. This initial license fee shall be creditable against the
          first annual Site License Fee payable in accordance with Section 3.2.

     3.2  Individual Site License Fees. DPC shall pay a DPC Site License Fee
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          of [**] (to which the [**] initial license fee paid under Section
          3.1 is a credit) when a DPC Site is activated by DPC. For purposes
          of this Agreement, the term "activate a DPC Site" shall mean that
          DPC desires to operate under the license at a DPC Site. If DPC does
          not first activate a DPC Site by April 1, 2000, DPC will pay 3DP a
          second nonrefundable license fee of [**] on that date, that is also
          creditable to the first DPC Site License Fee of [**], and DPC will
          then have until July 1, 2000 to first activate a DPC Site. If DPC
          does not first activate a DPC Site by July 1, 2000, the license
          granted hereunder shall automatically terminate. The date DPC
          activates a DPC Site shall be the "Site Activation Date" for such
          Site.

          Should DPC choose to extend the license to additional DPC Sites, DPC
          will pay an annual DPC Site License Fee of [**] for a total of [**]
          DPC Sites, and [**] for a total of [**] DPC Sites. Such DPC Sites
          may include [**] as set forth in Section 3.3 below. At such time
          that DPC has activated [**] (and DPC is paying an annual DPC Site
          License Fee of [**]), additional DPC Sites may be activated at [**].
          At such time that DPC activates a DPC Site, DPC shall identify such
          Site to 3DP and the Site Activation Date for such Site. These Site
          License Fees are due when DPC commences operations under the
          Licensed Patents at any Site (i.e., upon the Site Activation Date)
          and DPC shall pay to 3DP an annual Site License Fee for each Site
          for each year DPC desires to maintain the license at such Site,
          which Site License Fee shall be payable on the anniversary of the
          Site Activation Date in accordance with the annual invoice to be
          sent by 3DP to DPC. Until such time as DPC is operating under the
          Licensed Patents at [**] DPC Sites, DPC may not transfer a Site
          License from one DPC Site to another DPC Site more than once per
          year, except in the case where DPC is permanently discontinuing
          operations at the DPC Site.

     3.3  Location of DPC Sites. The location(s) of the DPC Site(s) may include
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          the Wilmington Experimental Station, to the extent that DPC conducts
          research and development activities there, and other DPC Sites to be
          determined at DPC's sole discretion. Notwithstanding the foregoing,
          DPC may permit one (1) Other DuPont Site to operate under the Licensed
          Patents subject to the approval of 3DP, such approval not to be
          unreasonably withheld. Once approved, DPC may not transfer the license
          to another Other DuPont Site without the approval of 3DP, such
          approval not to be unreasonably withheld. Any such Other DuPont Site
          shall be considered to be a DPC Site for the purpose of determining
          License Fees, and operations under the Licensed Patents at any such
          Site shall be subject to all of the other terms and conditions of this
          Agreement.

     3.4  Mode of Payment. All license payments to 3DP hereunder shall be made
          ---------------
          by wire transfer of United States Dollars in the requisite amount to
          such bank account as 3DP may designate by notice to DPC. Payments
          shall be free and clear of any taxes, fees or charges, to the extent
          applicable.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

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     3.5  Most Favored Licensee Provision.  If 3DP grants substantially
          -------------------------------
          similar license rights in the Field as described herein to a Third
          Party after the Effective Date of this Agreement on more favorable
          financial terms to the Third Party than applicable to DPC hereunder,
          then 3DP agrees to apply those more favorable financial terms under
          this license to DPC thereafter. 3DP shall promptly notify DPC in
          writing if it has executed or does execute any license with a Third
          Party of substantially similar license rights as described herein
          containing financial terms which are more favorable to the Third Party
          than the financial terms applicable to DPC under this Agreement. For
          purposes of this Section 3.5, "substantially similar license rights"
          does not include a nonexclusive grant of license rights under the
          Licensed Patents where such grant is (i) solely during the term of a
          specified research and development collaboration and (ii) solely for
          use in support of the specified research and development collaboration
          or for use in connection with specified targets or a limited
          therapeutic class.

          Upon the written request of DPC and not more than once in each
          calendar year, 3DP shall permit an independent certified public
          accounting firm of nationally recognized standing selected by DPC and
          acceptable to 3DP (which acceptance by 3DP shall not be unreasonably
          withheld), at DPC's expense, to have access during normal business
          hours to such records of 3DP as may be reasonably necessary to verify
          3DP's compliance with the provisions of this Section 3.5. The
          accounting firm shall enter into an acceptable and customary
          confidentiality agreement with 3DP obligating the accounting firm to
          retain in confidence all information of 3DP which it obtains in
          performing such audits hereunder, and such audit shall be subject to
          3DP's third party confidentiality obligations. Such accounting firm
          shall report to DPC and 3DP whether or not 3DP is in compliance with
          this Section 3.5. If 3DP is not in compliance with this Section 3.5,
          such accounting firm shall disclose the financial terms of the Third
          Party license which contains more favorable financial terms than those
          applicable to DPC hereunder. In no event shall such accounting firm
          disclose the identity of the Third Party with whom 3DP has entered
          into a license.

     3.6  License for Use in Support of Combichem Collaborators. In 1999,
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          DuPont acquired CombiChem, Inc., which is now an Affiliate of DPC. In
          the event that DPC desires to operate under the Licensed Patents for
          the benefit of a Third Party that entered into a collaborative
          research agreement with CombiChem, Inc. prior to the Effective Date
          (a "CCHM Collaborator") and such activity is not permitted under the
          grant of rights under Article 2 hereof, then upon request by DPC, 3DP
          shall grant to DPC a nonexclusive license, without any right to
          sublicense, under the Licensed Patents in the Field to permit DPC to
          operate under the Licensed Patents at a DPC Site for the benefit of
          such CCHM Collaborator. In consideration of each such grant of rights
          to DPC, DPC shall pay to 3DP an annual license fee of [**] for each
          year DPC desires to operate under the Licensed Patents for the benefit
          of each such CCHM Collaborator. Each such annual fee shall be payable
          within 30 days of the grant of the applicable license and (to the
          extent the license is desired by DPC to be continued) within 30 days
          of the anniversary date of the grant of such license. DPC shall be
          limited under this Section 3.6 to a maximum of [**] such CCHM
          Collaborators, and shall identify such CCHM Collaborators to 3DP in
          advance.

**Certain portions of this Exhibit have been ommitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

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Article 4  OBLIGATIONS OF DPC

     4.1  Annual Reports. DPC shall provide 3DP with written annual reports
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          within sixty (60) days after the end of each calendar year during the
          term of this Agreement to identify the DPC (or Affiliate's) Sites that
          are operating under the Licensed Patents.

Article 5  CONFIDENTIALITY

     5.1  Confidentiality Obligations. The Parties agree that, for the term of
          ---------------------------
          this Agreement and for ten (10) years thereafter, either Party that
          receives Confidential Information (a "Receiving Party") from the other
          Party (a "Disclosing Party") shall keep completely confidential and
          shall not publish or otherwise disclose and shall not use for any
          purpose (except as expressly permitted hereunder) any Confidential
          Information furnished to it by the "Disclosing Party" pursuant to this
          Agreement (including without limitation, know-how), except to the
          extent that it can be established by the Receiving Party that such
          Confidential Information:

          (a)  was already known to the Receiving Party, other than under an
               obligation of confidentiality from the Disclosing Party;

          (b)  was generally available to the public or otherwise part of the
               public domain at the time of its disclosure to the Receiving
               Party;

          (c)  became generally available to the public or otherwise part of the
               public domain after its disclosure and other than through any act
               or omission of the Receiving Party in breach of this Agreement;

          (d)  was subsequently lawfully disclosed to the Receiving Party by a
               Third Party;

          (e)  can be shown by written records to have been independently
               developed by the Receiving Party without reference to the
               Confidential Information received from the Disclosing Party and
               without breach of any of the provisions of this Agreement; or

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

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          (f)  the disclosing party has specifically agreed in writing that the
               receiving party may disclose.

          The obligations of confidentiality and non-use set forth in this
          Section 6.1 shall also apply to biological material and chemical
          compounds and associated information (including without limitation
          know-how) disclosed by one Party to the other prior to or during the
          term of this Agreement; provided however, that such obligation of
          confidentiality and non-use shall not apply with respect to compounds
          which are assigned to DPC or exclusively licensed to DPC by 3DP.

     5.2  Written Assurances and Permitted Uses of Confidential Information.

          (a)  The Receiving Party may disclose Confidential Information to the
               extent the Receiving Party is compelled to disclose such
               information by a court or other tribunal of competent
               jurisdiction, provided however, that in such case the Receiving
               Party shall immediately give notice to the Disclosing Party so
               that the Disclosing Party may seek a protective order or other
               remedy from said court or tribunal. In any event, the Receiving
               Party shall disclose only that portion of the Confidential
               Information that, in the opinion of its legal counsel, is legally
               required to be disclosed and will exercise reasonable efforts to
               ensure that any such information so disclosed will be accorded
               confidential treatment by said court or tribunal.

          (b)  To the extent it is reasonably necessary or appropriate to
               fulfill its obligations and exercising its rights under this
               Agreement, the Parties may disclose Confidential Information to
               their Affiliates on a need-to-know basis on condition that such
               Affiliates agree to keep the Confidential Information
               confidential for the same time periods and to the same "extent as
               the Party is required to keep the Confidential Information
               confidential under this Agreement.

          (c)  The existence and the terms and conditions of this Agreement
               which the Parties have not specifically agreed to disclose
               pursuant to this Section 5.2 shall be treated by each Party as
               Confidential Information of the other Party.

          (d)  If a Party is required to make any disclosure of the other
               Party's Confidential Information, it will give at least thirty
               (30) days written, advance notice to the latter Party of such
               disclosure requirement. If a Party is required to disclose
               Confidential Information to comply with applicable laws or
               governmental regulations, including but not limited to submitting
               information to tax authorities or to comply with any discovery or
               similar request for production of documents in litigation or
               similar alternative

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               dispute resolution proceedings, such party may make such
               disclosure provided it gives prompt notice to the other Party,
               and provided it makes all reasonable efforts to comply with all
               administrative or other procedures or to establish a reasonable
               protective or similar order under which the confidential nature
               of the information will be maintained.

     5.3  Permitted Disclosures for Business Development Purposes.
          -------------------------------------------------------
          Notwithstanding the foregoing, or any other provision in this
          Agreement to the contrary, 3DP may describe the financial terms of
          this Agreement in confidence, in connection with capital raising or
          financing activities, provided however, that any such recipient of
          such disclosure shall agree in writing to keep such terms confidential
          for the same time periods and to the same extent as 3DP is required to
          keep Confidential Information confidential under this Agreement.
          Furthermore, DPC acknowledges that 3DP may be obligated to disclose
          terms of this Agreement and make public a copy of this Agreement in
          the event it becomes a public company as required by applicable U.S.
          law; provided however, that the terms and copy of this Agreement shall
          be redacted such that the extent of any such disclosure shall be
          limited to that which in the opinion of 3DP's legal counsel is legally
          required to be disclosed.

Article 6  PATENTS AND INFRINGEMENT

     6.1  Licensed Patents. 3DP shall prepare, file, prosecute and maintain the
          ----------------
          Licensed Patents at 3DP's expense and in a manner deemed appropriate
          in 3DP's sole judgment.  3DP agrees to keep DPC fully advised of the
          status of all Licensed Patents, upon reasonable written request from
          DPC.

     6.2  Infringement of the Licensed Patents by Third Parties. In the event
          -----------------------------------------------------
          that DPC becomes aware of any infringement by Third Parties of any of
          the Licensed Patents, subject to any confidentiality obligations DPC
          may have, DPC shall promptly notify 3DP. 3DP shall respond to any such
          infringement by Third Parties in a manner deemed appropriate by 3DP in
          its sole judgment.

     6.3  Third Party Patent Rights.  If any warning letter or other notice of
          -------------------------
          infringement is received by a Party, or action, suit or proceeding is
          brought against a Party alleging infringement of a patent of any Third
          Party with respect to operations under the Licensed Patents, the
          Parties shall promptly discuss and decide the best way to respond.

Article 7  REPRESENTATIONS AND WARRANTIES

     7.1  Authority. Each Party represents and warrants that it has the full
          ---------
          right, power and authority to execute, deliver and perform its
          obligations pursuant to this Agreement.

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     7.2  No Conflicts.  Each Party represents and warrants that the execution,
          ------------
          delivery and performance of this Agreement does not conflict with, or
          constitute a breach or default under any of its charter or
          organizational documents, any law, order, judgment or governmental
          rule or regulation applicable to it, or any material agreement,
          contract, commitment or instrument to which it is a party.

     7.3  No Existing Third Party Rights. The Parties represent and warrant that
          ------------------------------
          their obligations under this Agreement are not encumbered by any
          rights granted by either Party to any Third Parties, which are or may
          be inconsistent with the rights and licenses granted in this
          Agreement.

     7.4  No Unauthorized Operations Under Licensed Patents.  DPC represents and
          -------------------------------------------------
          warrants that it will not operate under the Licensed Patents at any
          Site not identified to 3DP pursuant to Article 3 of this Agreement.

     7.5  Continuing Representations. The representations and warranties of each
          --------------------------
          Party contained in this Article 7 shall survive the execution and
          delivery of this Agreement and shall remain true and correct at all
          times during the term of this Agreement with the same effect as if
          made on and as of such later date.

     7.6  Disclaimer of Warranties.  3DP MAKES NO REPRESENTATIONS AND EXTENDS NO
          ------------------------
          WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH
          RESPECT TO THE LICENSED PATENTS INCLUDING, BUT NOT LIMITED TO,
          WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     7.7  3DP represents and warrants that Appendix A is accurate and complete
                                           ----------
          and identifies all patent rights owned by 3DP as of the Effective Date
          which are necessary for the use of the methods and technology claimed
          in the Licensed Patents in accordance with the license granted
          hereunder.

     7.8  DPC represents and warrants that as of the Effective Date, DPC is not
          operating under a valid, enforceable claim within the Licensed
          Patents. DPC further represents and warrants that it will not operate
          under a valid, enforceable claim within the Licensed Patents at any
          Site unless and until DPC activates a Site License pursuant to Section
          3.2 for that Site.

Article 8  TERM AND TERMINATION

     8.1  Term. This Agreement shall commence upon the Effective Date and
          ----
          terminate on April 1, 2000 unless extended pursuant to the provisions
          of Sections 2.3 and 3.2 of this Agreement.

     8.2  Termination for Breach. The failure by a Party to comply with any of
          ----------------------
          the material obligations contained in this Agreement shall entitle the
          other

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          Party to give notice to have the default cured. If such default is not
          cured within sixty (60) days after the receipt of such notice, or
          diligent steps are not taken to cure if by its nature such default
          could not be cured within sixty (60) days, the notifying Party shall
          be entitled, without prejudice to any of its other rights conferred on
          it by this Agreement, and in addition to any other remedies that may
          be available to it, to terminate this Agreement, provided, however,
          that such right to terminate shall be stayed in the event that, during
          such sixty (60) day period, the Party alleged to have been in default
          shall have: (a) initiated arbitration in accordance with Section 9.1,
          below, with respect to the alleged default, and (b) diligently and in
          good faith cooperated in the prompt resolution of such arbitration
          proceedings.

     8.3  No Waiver. The right of a Party to terminate this Agreement, as
          ---------
          provided in Section 8.2, shall not be affected in any way by its
          waiver or failure to take action with respect to any prior default.

     8.4  Insolvency or Bankruptcy.

          (a)  Either Party may, in addition to any other remedies available by
               law or in equity, terminate this Agreement by written notice to
               the other Party in the event the latter Party shall have become
               insolvent or bankrupt, or shall have an assignment for the
               benefit of its creditors, or there shall have been appointed a
               trustee or receiver of the other Party or for all or a
               substantial part of its property or any case or proceeding shall
               have been commenced or other action taken by or against the other
               Party in bankruptcy or seeking reorganization, liquidation,
               dissolution, winding-up, arrangement or readjustment of its debts
               or any other relief under any bankruptcy, insolvency,
               reorganization or other similar act or law of any jurisdiction
               now or hereafter in effect, or there shall have been issued a
               warrant of attachment, execution, distraint or similar process
               against any substantial part of the property of the other Party,
               and any such event shall have continued for 90 days undismissed,
               unbonded and undischarged.

          (b)  All rights and licenses granted under or pursuant to this
               Agreement by DPC or 3DP are, and shall otherwise be deemed to be,
               for purposes of Section 365(n) of the U.S. Bankruptcy Code,
               licenses of right to "Intellectual property" as defined under
               Section 101 of the U.S. Bankruptcy Code. The Parties agree that
               the Parties as licensees of such rights under this Agreement,
               shall retain and may fully exercise all of their rights and
               elections under the U.S. Bankruptcy Code. The Parties further
               agree that, in the event of the commencement of a bankruptcy
               proceeding by or against either

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               Parties under the U.S. Bankruptcy Code, the Parties hereto which
               is not a party to such proceeding shall be entitled to a complete
               duplicate of (or complete access to, as appropriate) any such
               intellectual property and all embodiments of such intellectual
               property, and same, if not already in their possession, shall be
               promptly delivered to them (i) upon any such commencement of a
               bankruptcy proceeding upon their written request therefor, unless
               the Party subject to such proceedings elects to continue to
               perform all of their obligations under this Agreement or (ii) if
               not delivered under (i) above, upon the rejection of this
               Agreement by or on behalf of the Party subject to such proceeding
               upon written request therefor by a nonsubject Party.

     8.5  Termination by DPC. Subject to Section 8.6, DPC shall have the right
          ------------------
          to terminate the license granted hereunder upon written notice to 3DP
          or by failure to pay at least 1 annual Site License Fee in accordance
          with Sections 2.3 and 3.2.

     8.6  Survival of Obligations.  The termination or expiration of this
          -----------------------
          Agreement shall not relieve the Parties of any obligations accruing
          prior to such termination, and any such termination shall be without
          prejudice to the rights of either Party against the other. The
          provisions of Sections 3.4 and 6.4 and Articles 4, 5, 9, 10 and 11
          shall survive any termination of this Agreement.

Article 9 DISPUTE RESOLUTION

     9.1  Dispute Resolution.  Any dispute concerning or arising out of this
          ------------------
          Agreement or concerning the existence or validity hereof, shall be
          determined by the following procedure.

          (a)  Both Parties understand and appreciate that their long term
               mutual interest will be best served by affecting a rapid and fair
               resolution of any claims or disputes which may arise out of
               services performed under this contract or from any dispute
               concerning the terms of this Agreement. Therefore, both Parties
               agree to use their best efforts to resolve all such disputes as
               rapidly as possible on a fair and equitable basis. Toward this
               end, both Parties agree to develop and follow a process for
               presenting, rapidly assessing, and settling claims on a fair and
               equitable basis which takes into account the precise subject and
               nature of the dispute.

          (b)  If any dispute or claim arising under this Agreement cannot be
               readily resolved by the Parties pursuant to the process described
               above, then the Parties agree to refer the matter to a panel
               consisting of the Chief Executive Officer ("CEO") of each Party
               or their designees for review and a non-binding resolution. A
               copy of

                                       11
<PAGE>

               the terms of this Agreement, agreed upon facts (and areas of
               disagreement), and concise summary of the basis for each side's
               contentions will be provided to both such CEOs who shall review
               the same, confer, and attempt to reach a mutual resolution of the
               issue.

          (c)  If the matter has not been resolved utilizing the foregoing
               process, and the Parties are unwilling to accept the non-binding
               decision of the indicated panel, either or both Parties may elect
               to pursue definitive resolution through binding arbitration,
               which the Parties agree to accept in lieu of litigation or other
               legally available remedies (with the exception of injunctive
               relief where such relief is necessary to protect a Party from
               irreparable harm pending the outcome of any such arbitration
               proceeding). Binding arbitration shall be settled in accordance
               with the Rules of Conciliation and Arbitration of the
               International Chamber of Commerce by a panel of three arbitrators
               chosen in accordance with these Rules. This Agreement shall be
               governed by and construed in accordance with the substantive laws
               of the State of Delaware without regard to the conflicts of laws
               provisions of Delaware. The arbitration will be held in
               Wilmington, Delaware. Judgment upon the award rendered may be
               entered in any court having jurisdiction and the Parties hereby
               consent to the said jurisdiction and venue, and further
               irrevocably waive any objection which either Party may have now
               or hereafter to the laying of venue of any proceedings in said
               courts and to any claim that such proceedings have been brought
               in an inconvenient forum, and further irrevocably agree that a
               judgment or order in any such proceeding shall be conclusive and
               binding upon the Parties and may be enforced in the courts of any
               other jurisdiction.

Article 10  INDEMNIFICATION

          (a)  Indemnification of 3DP. DPC shall indemnify and defend 3DP and
               its Affiliates and the directors, officers, employees, agents and
               counsel of 3DP and such Affiliates and the successors and assigns
               of any of the foregoing (the "3DP Indemnitees"), and hold the 3DP
               Indemnitees harmless from and against any and all losses
               resulting from any claim, suit or proceeding brought by a Third
               Party against a 3DP Indemnitee, arising from or occurring as a
               result of the operations by DPC under the Licensed Patents; or
               the manufacture, import, use, offer for sale or sale of products
               developed in whole or in part through the operations by DPC under
               the Licensed Patents; except to the extent any such claim, suit
               or proceeding results from the breach of any of the provisions of
               this Agreement, negligence or willful misconduct of 3DP.

                                       12
<PAGE>

     10.2      Procedure. Any of the 3DP Indemnitees that intends to claim
               ---------
               indemnification under this Article 10 shall promptly notify DPC
               (the "Indemnitor") in writing of any loss in respect of which the
               3DP Indemnitee intends to claim such indemnification, and the
               Indemnitor shall have the right to participate in, and, to the
               extent the Indemnitor so desires, to assume the defense thereof
               with counsel mutually satisfactory to the Parties; provided,
               however, that a 3DP Indemnitee shall have the right to retain its
               own counsel, with the fees and expenses to be paid by the
               Indemnitee, if representation of such Indemnitee by the counsel
               retained by the Indemnitor would be inappropriate due to actual
               or potential differing interests between such 3DP Indemnitee and
               the Indemnitor in such proceeding. The Indemnitor shall control
               the defense and/or settlement of any such loss, and the indemnity
               agreement in this Article 10 shall not apply to amounts paid in
               connection with any loss if such payments are made without the
               consent of the Indemnitor, which consent shall not be withheld
               unreasonably. The failure to deliver written notice to the
               Indemnitor within a reasonable time after the commencement of any
               such action, if prejudicial to its ability to defend such action,
               shall relieve such Indemnitor of any liability to the 3DP
               Indemnitee under this Article 10. At the Indemnitor's request,
               the 3DP Indemnitee under this Article 10, and its employees and
               agents, shall cooperate fully with the Indemnitor and its legal
               representatives in the investigation of any loss covered by this
               indemnification and provide true, correct and complete
               information with respect thereto.

Article 11  MISCELLANEOUS

     11.1      Entire Agreement.  This Agreement and its Appendices constitute
               ----------------
               and contain the entire understanding and agreement of the Parties
               respecting the subject matter of this Agreement and cancels and
               supersedes any all prior negotiations, correspondence,
               understandings and agreements between the Parties, whether oral
               or written, regarding such subject matter.

     11.2      Further Actions.  Each Party agrees to execute, acknowledge and
               ---------------
               deliver such further instruments and to do all such other acts as
               may be necessary or appropriate in order to carry out the
               purposes and intent of this Agreement.

     11.3      Binding Effect.  This Agreement and the rights granted herein
               --------------
               shall be binding upon and shall inure to the benefit of 3DP, DPC
               and their successors and permitted assigns .

     11.4      Assignment.  This Agreement may be assigned by either Party in
               ----------
               connection with the sale or transfer of substantially all of its
               assets that relate to this Agreement, or in the event of its
               merger or consolidation or

                                       13
<PAGE>

               change of control or similar transaction. Any permitted assignee
               shall assume all obligations of its assignor under this
               Agreement.

     11.5      No Implied Licenses.  No rights to any other patents, know-how or
               -------------------
               technical information, or other intellectual property rights,
               other than as explicitly identified herein, are granted or deemed
               granted by this Agreement. No right, expressed or implied, is
               granted by this Agreement to a Party to use in any manner the
               name or any other trade name or trademark of the other Party in
               connection with the performance of this Agreement.

     11.6      No Waiver.  No waiver, modification or amendment of any provision
               ---------
               of this Agreement shall be valid or effective unless made in
               writing and signed by a duly authorized officer of each Party. No
               waiver, modification or amendment of any provision of this
               Agreement shall be valid or effective unless made in writing and
               signed by a duly authorized officer of each Party. The failure of
               either Party to assert a right hereunder or to insist upon
               compliance with any term or condition of this Agreement shall not
               constitute a waiver of that right or excuse a similar subsequent
               failure to perform any such term or condition.

     11.7      Force Majeure.  The failure of a Party to perform any obligation
               -------------
               under this Agreement by reason of acts of God, acts of
               governments, riots, wars, strikes, accidents or deficiencies in
               materials or transportation or other causes of a similar
               magnitude beyond its control shall not be deemed to be a breach
               of this Agreement.

     11.8      Independent Contractors.  Both Parties are independent
               -----------------------
               contractors under this Agreement. Nothing contained in this
               Agreement is intended nor is to be construed so as to constitute
               3DP or DPC as partners or joint venturers with respect to this
               Agreement. Neither Party shall have any express or implied right
               or authority to assume or create any obligations on behalf of or
               in the name of the other Party or to bind the other Party to any
               other contract, agreement, or undertaking with any Third Party.

     11.9      Notices and Deliveries.  Any formal notices, request, delivery,
               ----------------------
               approval or consent required or permitted to be given under this
               Agreement shall be in writing and shall be deemed to have been
               sufficiently given when it is received, whether delivered in
               person, transmitted by facsimile with contemporaneous
               confirmation, or delivery by registered letter (or its
               equivalent) or delivery by certified overnight courier service,
               to the Party to which it is directed at its address shown below
               or such other address as such Party shall have last given by
               notice to the other Parties.

                                       14
<PAGE>

               If to DPC:

               Vice President, Product Planning and Acquisitions
               DuPont Pharmaceuticals Company
               974 Centre Road, Chestnut Run Plaza
               Wilmington, DE 19805
               Fax: 302-992-3040

               with a copy to:

               Associate General Counsel
               Legal Division
               DuPont Pharmaceuticals Company
               974 Centre Road, Chestnut Run Plaza, WR1028
               Wilmington, DE 19805
               Fax: 302-992-3999

               If to 3DP:

               3-Dimensional Pharmaceuticals, Inc.
               Eagleview Corporate Center
               665 Stockton Drive, Suite 104
               Exton, PA 10341

               ATTN:  Chief Executive Officer

               with a copy to:

               Morgan, Lewis & Bockius LLP
               1701 Market Street
               Philadelphia, PA 19103

               ATTN: David R. King, Esq.

     11.10     Public Announcements. The Parties shall consult with each other
               --------------------
               and reach mutual written agreement before making any public
               announcement concerning this Agreement or its subject matter. A
               joint press release to announce the signing of this Agreement is
               attached as Appendix B to this Agreement, and the Parties agrees
                           ----------
               to coordinate the dissemination of this press release.
               Notwithstanding the foregoing, the Parties may disclose the
               existence and general nature of this Agreement and may make
               disclosures for purposes of satisfying legal and regulatory
               requirements in accordance with Article 5; however, neither Party
               shall use the name of the other Party for promotional purposes.

                                       15
<PAGE>

     11.11     Headings. The captions to the sections and articles in this
               --------
               Agreement are not a part of this Agreement, and are included
               merely for convenience of reference only and shall not affect its
               meaning or interpretation.

     11.12     Severability. If any provision of this Agreement becomes or is
               ------------
               declared by a court of competent jurisdiction to be illegal,
               unenforceable or void, this Agreement shall continue in full
               force and effect without said provision, so long as the
               Agreement, taking into account said voided provision(s),
               continues to provide the Parties with the same practical economic
               benefits as the Agreement containing said voided provision(s) did
               on the date of this Agreement. If, after taking into account said
               voided provision(s), the Parties are unable to realize the
               practical economic benefit contemplated on the date of this
               Agreement, the Parties shall negotiate in good faith to amend
               this Agreement to reestablish the practical economic benefit
               provided the Parties on the date of this Agreement.

     11.13     No Consequential Damages.  IN NO EVENT SHALL EITHER PARTY OR ANY
               ------------------------
               OF ITS RESPECTIVE AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY
               OF ITS AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL OR
               CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT,
               NEGLIGENCE, STRICT LIABILITY OR OTHER WISE, INCLUDING, BUT NOT
               LIMITED TO, LOSS OF PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF
               ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH OR OTHER DAMAGES.

     11.14     Applicable Law.  This Agreement shall be governed by and
               --------------
               interpreted in accordance with the laws of the State of Delaware
               without reference to its conflicts of laws provisions.

     11.15     Advice of Counsel.  DPC and 3DP have each consulted with counsel
               -----------------
               of their choice regarding this Agreement, and each acknowledges
               and agrees that this Agreement shall not be deemed to have been
               drafted by one party or another and will be construed
               accordingly.

     11.16     Counterparts.  This Agreement may be executed in counterparts, or
               ------------
               facsimile versions, each of which shall be deemed to be an
               original, and both of which together shall be deemed to be one
               and the same agreement.

                                       16
<PAGE>

In WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized officers as of the day and year first above
written, each copy of which shall for all purposes be deemed to be an original.

3 DIMENSTIONAL                         DUPONT PHARMACEUTIALS
PHARMACEUTICALS, INC.                  COMPANY

By:  /s/ David C. U'Prichard           By: /s/ Paul A. Friedman
   ----------------------------           ------------------------

Name:  David C. U'Prichard, Ph.D.      Name:  Paul A. Friedman, M.D.

Title:  Chief Executive Officer        Title:  President, DuPont Pharmaceuticals
                                               Research Laboratories

                                       17
<PAGE>

                      Appendix A:  Licensed Patent Rights

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
    3DP                Application Number         Filing Date                             Title
    ---                -----------------          -----------                             -----
 Reference             or Patent Number           or Issue Date
 ---------             ----------------           -------------
-------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                    <C>                        <C>
1503.0010000           Patent No. 5,463,564   Issued October 31, 1995    System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.0010001           Patent No. 5,574,656   Issued November 12, 1996   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.0010002           Patent No. 5,684,711   Issued November 4, 1997    System, Method, and Computer Program Product
                                                                         for at Least Partially Automatically Generating
                                                                         Chemical Compounds Having Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.0010003           Patent No. 5,901,069   Issued May 4, 1999         System, Method, and Computer Program Product
                                                                         for at LEAST PARTIALLY AUTOMATICALLY GENERATING
                                                                         Chemical Compounds Having Desired Properties From
                                                                         a List of Potential Chemical Compounds to
                                                                         Synthesize
-------------------------------------------------------------------------------------------------------------------------
1503.0010004           Appl. No. 09/213,156   Filed December 17, 1998    Method of Generating Chemical Compounds
                                                                         Having Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001AU00           Patent No. 688598      Issued September 17, 1998  System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503001AU10            Appl. No. 71886/98     Filed June 12, 1998        System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001CA00           Appl. No. 2,199,264    Filed September 11, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001EP00           Appl. No. 95933748.6   Filed September 11, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001HU00           Appl. No. P9801578     Filed September 11, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001IL00           Patent No. 115292      Issued October 28, 1999    System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001IL10           Patent No. 125017      Issued October 28, 1999    Computer Based System and Method of
                                                                         Automatically Generating Chemical Compounds
-------------------------------------------------------------------------------------------------------------------------
1503.001IN00           Appl. No. 1068CAL95    Filed September 7, 1995    System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001JP00           Appl. No. 510247/1996  Filed September 11, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001PC00           Appl. No.              Filed September 11, 1995   System and Method of Automatically Generating
                       PCT/US95/11365                                    Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001TW00           Appl. No. 84109873     Filed September 26, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
    3DP                Application Number         Filing Date                                Title
    ---                ------------------         -----------                                -----
 Reference              Or Patent Number         or Issue Date
 ---------              ----------------         -------------
-------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                       <C>                       <C>
1503.0200001           Appl. No. 08/963,870      Filed November 4, 1997    System, and Method, and Computer Program Product
                                                                           for Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.0200002           Appl. No. 08/963,872      Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.0200003           Appl. No. 09/073,845      Filed May 7, 1998         System, Method, and Computer Program Product for
                                                                           Representing Proximity Data in a Multi-Dimensional
                                                                           Space
-------------------------------------------------------------------------------------------------------------------------------
[**]
-------------------------------------------------------------------------------------------------------------------------------
1503.020AU01           Appl. No. 54407/98        Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020AU02           Appl. No. 51800/98        Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020CA01           Appl. No. 2,269,669       Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020CA02           Appl. No. 2,270,527       Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020EP01           Appl. No. 97948320.3      Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020EP02           Appl. No. 97946679.4      Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020IL01           Appl. No. 129498          Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020IL02           Appl. No. 129728          Filed May 4, 1997         System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020JP01           Appl. No. 521902/1998     Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020JP02           Appl. No. 521903/1998     Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020PC01           Appl. No.                 Filed November 4, 1997    System, Method, and Computer Program Product for the
                       PCT/US97/20918                                      Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
 -------------------------------------------------------------------------------------------------------------------------------
1503.020PC02           Appl. No.                 Filed November 4, 1997    System, Method, and Computer Program Product for
                       PCT/US97/20919                                      Identifying Chemical Compounds Having Desired
                                                                           Properties.
 -------------------------------------------------------------------------------------------------------------------------------
[**]
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     ** Certain portions of this Exhibit have been omitted based upon a request
     for confidential treatment that has been filed with the Commission. The
     omitted portions have been filed separately with the Commission.

                                       19
<PAGE>

                       Appendix B:  Joint Press Release

FOR IMMEDIATE RELEASE
For 3DP, Contact:                             For DuPont Contact:
-------------------------------------------------------------------------------
Business
Michael J. Wassil                              Thomas R. Barry
Chief Financial Officer                          302-992-5020
(610) 458-6073

Media
Jerry Parrot
Jerry Parrot & Associates
703-757-0950

                   DuPont and 3-Dimensional Pharmaceuticals
                     Announce Drug Discovery Collaboration

  -  DuPont also Licenses 3DP's DirectedDiversity(R) Drug Discovery Patents-

Exton, PA and Wilmington, DE - February XX, 2000 - DuPont Pharmaceuticals
Company, a wholly-owned independent subsidiary of DuPont (NYSE: DD), and 3-
Dimensional Pharmaceuticals, Inc. (3DP) today announced a strategic
collaboration in which 3DP will use its proprietary DirectedDiversity technology
to assist DuPont Pharmaceuticals in the discovery of innovative new drugs for
specific biological targets.

3DP will apply its iterative drug discovery process to generate custom
combinatorial chemistry libraries based on molecules and information provided by
DuPont Pharmaceuticals and will optimize those molecules into preclinical drug
candidates. DuPont Pharmaceuticals will be responsible for preclinical and
clinical development, marketing and sales of the resulting products.

                                       20
<PAGE>

For the initial target, 3DP will receive payments of up to $9 million, including
an up-front technology access fee, research and development funding and
milestone payments. 3DP will also receive royalties on sales of resulting
products and will be eligible to receive additional payments if more than one
target is selected to be included in the collaboration.

The parties also announced an additional agreement in which DuPont
Pharmaceuticals will obtain a non-exclusive license to 3DP's proprietary
DirectedDiversity(R) drug discovery patents.  Under the license agreement,
DuPont Pharmaceuticals will receive a non-exclusive license to 3DP's
DirectedDiversity(R) patents in support of DuPont Pharmaceuticals internal
research Programs, and will pay an annual Site License fee for each DuPont
Pharmaceuticals facility using the technology.

DuPont Pharmaceuticals is committed to aggressive exploration and use of
leading-edge discovery technologies to speed the process of research and
development and to improve the quality of new drugs entering clinical trials,"
said Paul Friedman, M.D., President of DuPont Pharmaceuticals Research
Laboratories.

David C. U'Prichard, Ph.D., Chief Executive Officer of 3-Dimensional
Pharmaceuticals, noted that 3DP's technology platform allows the company to
discover and refine drugs against a wide range of molecular targets more quickly
than conventional approaches.  "DuPont is one of the great pioneering research-
based companies, and we are particularly pleased with this important recognition
of 3DP's proprietary DirectedDiversity(R) drug discovery process.  Our
scientists look forward with great anticipation to working with their colleagues
at DuPont Pharmaceuticals," he said.  "We are confident that the collaboration
we are announcing today will prove productive for both parties".

                                       21
<PAGE>

DirectedDiversity(R) Chemi-Informatic Technology uses proprietary computer
algorithms to design, select and iteratively refine combinatorial libraries of
novel, small-molecule drugs based on screening "hits" obtained from 3DP or other
screening libraries, target-protein 3D structures, or pharmacophore models
derived from lead compounds.

To prime the discovery process, 3DP has synthesized DirectedDiversity(R)
Screening Libraries totaling more than 200,000 individually synthesized drug-
like compounds.  These compounds represent proven pharmacophore classes and
constitute an optimally diverse sampling of the DirectedDiversity(R) Accessible
Compound Libraries, which now total more than 1.5 billion compounds, each of
which is available for on-demand synthesis using parallel synthesis technology.

DirectedDiversity(R) is a major component of 3DP's DiscoverWorks, which
provides a uniquely integrated platform for the high-throughput synthesis,
screening, and optimization of chemical compounds.  DiscoverWorks can be
applied flexibly to a wide range of molecular targets identified through genome
sequencing efforts - even in situations where the target's biological function
is ambiguous or unknown.  DiscoverWorks enhances the efficiency of conventional
drug discovery, making the process more rapid and reliable.

Earlier this year, 3DP received the fourth in a series of patents covering its
DirectedDiversity(R) process.  DirectedDiversity(R) controls and manages the
overall information flow for combinatorial drug discovery and provides the
computational tools needed to optimize drug properties rapidly using parallel
automated chemical synthesis. 3DP has a flexible licensing program available to
those companies interested in obtaining licenses to its DirectedDiversity(R)
patent portfolio.

                                       22
<PAGE>

Based in Wilmington, Delaware, DuPont Pharmaceuticals is a worldwide business
that focuses on research, development and delivery of pharmaceuticals to treat
unmet medical needs in the fight against HIV, cardiovascular disease, central
nervous system disorders, cancer and inflammatory diseases.  The company also is
a leader in medical imaging.

DuPont is a science company, delivering science-based solutions that make a
difference in people's lives in food and nutrition, health care, apparel, home
and construction, electronics, and transportation.  Founded in 1802, the company
operates in 65 countries and has 97,000 employees.

3-Dimensional Pharmaceuticals, Inc. (http://www.3dp.com) is a leading innovator
in drug discovery.  The company has developed a proprietary technology platform
known as DiscoverWorks, which uniquely integrates structure-based drug design,
combinatorial chemistry and high-throughput screening.  DiscoverWorks reduces
discovery costs, increases the rate of success and enhances the ultimate
commercial value of a drug development pipeline. 3DP is using its proprietary
technology both in collaboration with other companies and in its own research
programs, which currently target orally active small-molecule pharmaceuticals to
treat cardiovascular disease and cancer.

                                       23<PAGE>

                                                                   EXHIBIT 10.22

                               AMENDMENT NO. 1 TO
                         RESEARCH AND LICENSE AGREEMENT

     This Amendment No. 1 modifies the Research and License Agreement dated
     December 18, 1997 ("Original Agreement") between Heska Corporation and 3-
     Dimensional Pharmaceuticals Inc.

1.   Expiration. Termination or Extension of Research Term. Section 9.1.2 of the
     -----------------------------------------------------
     Original Agreement is amended to extend the Research Term to July 14, 2000,
     which is six months from the Project Team meeting held on January 14, 2000.

2.   Research Funding.  Section 3 of the Original Agreement is amended to
     ----------------
     include the following:

     During the extended Research Term Heska will pay to 3DP the amount of [**]
     in two equal installments in consideration for 3DP's dedication of [**]
     FTE's during this extension. The first installment of [**] shall be paid
     within 15 days of complete execution of this Amendment. The second
     installment of [**] shall be paid on or before April 14, 2000.

3.   No Other Changes.  Except as expressly modified by this Amendment, all
     provisions of the Original Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, this Amendment has been executed by the duly authorized
representatives of the parties.

SIGNED:

Heska Corporation                       3-Dimensional Pharmaceuticals Inc.

By: /s/ Ronald L. Hendrick              By: /s/ Scott Horvitz
    -------------------------------         ------------------------------
Name: Ronald L. Hendrick                Name: /s/ Scott Horvitz
      -----------------------------           ----------------------------
Title: Executive Vice President,        Title: Executive Vice President,
       Chief Financial Officer                 Finance & Adm.
       ----------------------------            ---------------------------
Date: February 25, 2000                 Date: February 17, 2000
      -----------------------------           ----------------------------

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
<PAGE>

                        RESEARCH AND LICENSE AGREEMENT

     THIS IS A RESEARCH AND LICENSE AGREEMENT ("Agreement") dated as of December
18, 1997 between 3-Dimensional Pharmaceuticals Inc., a Delaware corporation
("3DP"), and the Heska Corporation ("Heska").

                                   BACKGROUND
                                   ----------

     3DP has developed and owns certain patented and proprietary technology
which is registered under the name "DirectedDiversity(R)" and which may be
useful in developing certain compounds.

     Heska desires to fund a research project whereby 3DP will use its
technologies to attempt to develop an array of administered compounds with the
goal of [**] in non-human animals.

     Heska desires to obtain and 3DP desires to grant an exclusive worldwide
license in such compounds, provided that 3DP will retain all rights to the
compounds for all human applications, on the terms and conditions contained
herein.

                                     TERMS
                                     -----

     NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and intending to be legally bound hereby, the parties agree as
follows:

1.   Definitions.  For purposes of this Agreement the following terms shall have
     -----------
the following meanings:

     1.1  "Abbreviated NADA" shall mean the application described at 21 U.S.C.
           ----------------
(S) 360b(n) (1994).

     1.2  "Affiliate" shall mean any corporation, firm, partnership or other
           ---------
entity, which, at the time in question, is directly or indirectly owned by or
controlled by, or under common control with, Heska or 3DP, as the case may be.
For the purposes of this definition, "control" shall mean the ownership,
directly or indirectly, of more than 50% of the voting stock or shareholders'
equity of a corporation or, in the case of a non-corporate entity, the right to
receive more than 50% of either the profits or the assets upon dissolution.

     1.3  "Candidate Compound" shall mean any Test Compound or Derivative
           ------------------
Compound which has demonstrated activity in the Primary Field in Initial
Screening.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       1
<PAGE>

     1.4  "Commercialization" shall mean the process of commercializing a
           -----------------
Development Compound or Heska Compound, including without limitation the
manufacturing, marketing and distribution of the resulting Product or Heska
Product after receipt of applicable Regulatory Approvals.

     1.5  "Companion Animal" shall mean dog or cat.
           ----------------

     1.6  "Competitive Program" shall mean a small molecule drug discovery
           -------------------
program that is based on the compounds that (i) are listed in Exhibit 1.12, (ii)
                                                              ------------
[**], (iii) [**] as the target of such program, which compounds are for use as
[**] but excluding any program relating to [**].

     1.7  "Controlled" shall mean, with respect to a particular Patent, Patent
           ----------
Application, item of Know-How or Material, that a Party (a) owns or has a
license to such Patent, Patent Application, item of Know-How or Material, and
(b) has the ability to grant to the other Party access to and a license or
sublicense, as applicable, to such Patent, Patent Application, item of Know-How
or Material as provided herein at the time such access or license is required to
be granted.

     1.8  "Derivative Compound" shall mean any compound that is an analog,
           -------------------
homolog, isomer or other chemical derivative of a Test Compound and that was
made by Heska based on Heska's knowledge of such Test Compound or information
about its activity in the Fields derived from the Research.  Derivative
Compounds are not Test Compounds.

     1.9  "Development Compound" shall mean any Candidate Compound that has
          --------------------
been selected for Development by Heska pursuant to Section 4.1 for use in the
Primary Field.

     1.10 "Development" shall mean the process of creating data and dossiers for
           -----------
the purposes of obtaining Regulatory Approval for the purpose of
Commercialization of any Development Compound, including without limitation the
conduct of all appropriate target animal studies on such Development Compound.

     1.11 "Effective Date" shall be December __, 1997.
           --------------

     1.12 "Existing Compound" shall mean any of the compounds set forth in
           -----------------
Exhibit 1.12 of this Agreement.
------------

     1.13 "First Commercial Sale" shall mean the first sale by Heska of a
           ---------------------
Product after Regulatory Approval thereof.

     1.14 "Fields" shall mean the Primary Field and the Other Fields.
           ------

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       2
<PAGE>

     1.15 "FDA" shall mean the U.S. Food and Drug Administration.
           ---

     1.16 "FTE" shall mean a full-time scientific or technical personnel
           ---
equivalent who (i) has a Ph.D. and at least 2 years, or a master's degree and at
least 3 years, of experience in the pharmaceutical or combinatorial chemistry
industry or (ii) has been approved by the Project Team.

     1.17 "FTE Year" shall mean one or more FTEs working for the summed
           --------
equivalent of one year on the Research, excluding administrative or management
time.

     1.18 "Heska Compound" shall mean any Derivative Compound or Test Compound,
           --------------
which Derivative Compound or Test Compound is developed by Heska for use in the
Other Fields.

     1.19 "Heska Intellectual Property" shall mean (a) the Heska Patents; and
           ---------------------------
(b) all Know-How and Materials existing as of the Effective Date that are
Controlled by Heska and that are necessary for or reasonably useful to any
aspect of the Research activities to be conducted by 3DP hereunder, including
without limitation the manufacture of Test Compounds; and (c) all Results that
are made, created, developed or generated solely by employees, directors,
agents, consultants or others working on behalf of Heska; and (d) any and all
intellectual property rights (other than Patents or Patent Applications)
appurtenant to the Results described in subsection (c).

     1.20 "Heska Patents" shall mean (a) all Patents and Patent Applications
           -------------
existing as of the Effective Date that are Controlled by Heska and that claim
any aspect of the Research activities to be conducted by 3DP hereunder,
including without limitation the manufacture of Test Compounds; and (b) all
Patents and Patent Applications that claim any inventions in the Results that
are made, created, developed or generated solely by employees, directors,
agents, consultants or others working on behalf of Heska.

     1.21 "Heska Product" shall mean any product (including any formulation
           -------------
thereof) containing a Heska Compound, which product is marketed and sold for use
in the Other Fields and not in the Primary Field.

     1.22 "Initial Screening" shall mean the initial efficacy screens of Test
           -----------------
Compounds and Derivative Compounds for use in the Primary Field performed by
Heska on suitable screening models (such as an artificial dog model) pursuant to
Section 2.2.2.

     1.23 "Initial Animal Studies" shall mean target non-human animal safety and
           ----------------------
efficacy studies performed by Heska pursuant to Section 2.2.4 on the Candidate
Compounds for use in the Primary Field to prepare the data needed to select
Development Compounds.

     1.24 "Joint Intellectual Property" shall mean (a) all Results that are
           ---------------------------
made, created, developed or generated jointly by employees, directors, agents,
consultants or others working on behalf of Heska and

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       3
<PAGE>

by employees, directors, agents, consultants or others working on behalf of 3DP;
and (b) any and all intellectual property rights appurtenant to the Results
described in subsection (a), including without limitation any and all Patents or
Patent Applications that claim inventions in such Results.

     1.25 "Joint Patents" shall mean all Patents and Patent Applications
           -------------
included in the Joint Intellectual Property.

     1.26 "Know-How" shall mean any and all information, expertise, data,
           --------
results, techniques, methods, trade secrets, know-how, ideas, inventions,
discoveries, developments, concepts, formulas, designs, specifications or
procedures.

     1.27 "Licensed Product" shall mean any product (including any formulation
           ----------------
thereof) containing any Development Compound, which product is sold for use in
the Primary Field and is claimed by a Valid Claim.

     1.28 "Materials" shall mean all chemical, biological and physical tangible
           ---------
materials, as well as any other materials ordinarily engendered by such tangible
materials.

     1.29 "NADA" shall mean a New Animal Drug Application as provided in the
           ----
Federal Food, Drug and Cosmetic Act, 21 U.S.C. (S) 360b(b) (1994).

     1.30 "NADA Approval" shall mean the order issued by the Secretary approving
           -------------
a NADA or an Abbreviated NADA.

     1.31 "Net Sales" shall mean, with respect to a Product sold, the invoiced
           ---------
sales price of such Product billed to third party purchasers who are not
Affiliates or sublicensees of Heska, less actual amounts for (a) credits,
allowances, discounts and rebates to, and charge backs from the account of, such
independent customers for damages or rejected Product or out of date Product
returned in accordance with Heska policies; (b) freight and insurance costs as
set forth on the invoice for transporting such Products to such customers; (c)
quantity and trade discounts and other price reductions and commissions paid to
third parties with respect to the sale of Products; (d) sales, use, value-added
and other direct taxes incurred; and (e) customs, duties, surcharges and other
governmental charges incurred in connection with the exportation or importation
of the Products. Sales between or among Heska and its Affiliates or permitted
sublicensees shall be excluded from the computation of Net Sales.  Net Sales
shall include the subsequent final sales to Third Parties by such Affiliates or
permitted sublicensees.  In the event that a Product is sold or distributed for
use in combination with or as a component of another product or products (a
"Combination Product"), the calculation of "Net Sales" from such Combination
Product shall be determined by multiplying the Net Sales of the Combination
Product by a fraction, the numerator of which is the fair market value of the
Product in such Combination Product, and the denominator of which is the sum of
the fair market value of the Product and the fair market value of the other
products in the Combination Product.  In the event that a Product is sold or
distributed as part of a bundle of other

                                       4
<PAGE>

products where the bundle is sold at one total price and there is no separate
invoiced selling price for the Product along (a "Bundled Product"), the
calculation of "Net Sales" for the Product sold in such Bundle Product shall be
determined by multiplying the Net Sales for the Bundled Product (calculated as
provided above for the total invoiced price for such Bundled Product), by a
fraction, the numerator of which is the fair market value of the Product
included in such Bundled Product and the denominator is the sum of the fair
market values of all the products, including the Product, included in such
Bundled Product. As used herein, the "fair market value" of a particular product
shall be the average invoiced selling price for such product when sold alone
during the quarter for which Net Sales are being calculated hereunder, if such
amount can be calculated, and otherwise will be the amount that the selling
party reasonably could expect to charge for an independent sale of such product
to a willing third party purchaser during such period.

     1.32 "Other Fields" shall mean any use of a compound other than (a) in or
           ------------
on a human, or (b) in the Primary Field.

     1.33 "Party" or "Parties" shall mean, respectively, 3DP or Heska, and 3DP
           -----      -------
and Heska.

     1.34 "Patent" or "Patents" shall mean an issued United States or foreign
           ------      -------
patent or supplementary protection certificate, including all provisional
applications, substitutions, extensions, reissues, reexaminations, renewals,
patents of addition, divisionals, continuations, continuations-in-part and
inventors' certificates and all foreign counterparts of the foregoing.

     1.35 "Patent Application" shall mean an application for a Patent.
           ------------------

     1.36 "Pivotal Animal Study" shall mean any test performed for regulatory
           --------------------
submission by Heska or other studies in preparation for such submission pursuant
to Section 4.2 on non-human animals to establish the safety and efficacy of a
Development Compound.

     1.37 "Post Launch Year" shall mean, for any Product, the 12-month period
           ----------------
beginning on the first day that the Product first receives Regulatory Approval
and ending on the first anniversary and each 12-month period thereafter.

     1.38 "Primary Field" shall mean any use of a compound in or on a [**].
           -------------

     1.39 "Product" shall mean a Licensed Product or Heska Product.
           -------

     1.40 "Project Team" shall be the Project Team established by the Parties
           ------------
pursuant to Section 5.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       5
<PAGE>

     1.41 "Project Year" shall mean any of the 12-month periods during the
           ------------
Research Term beginning on the Effective Date or on an anniversary thereof.

     1.42 "Regulatory Approval" shall mean, with respect to any country, filing
           -------------------
for and receipt of all regulatory agency registrations, approvals, licenses or
marketing authorizations required from the applicable Regulatory Authorities for
the marketing and sale of a Product for the indication for which it is being
marketed in such country, including but not limited to, any NADA Approvals.
"Regulatory Approval" shall also include pricing or reimbursement approval, to
the extent that such approval is required from a Regulatory Authority to legally
place the Product on the market in such countries.

     1.43 "Regulatory Authority" shall mean the Governmental authority or entity
           --------------------
responsible for authorizing the placement on the market in any country or
territory in the Territory of any Product for commercial sale.

     1.44 "Regulatory Filings" shall mean all applications, filings, materials,
           ------------------
studies, data and documents of any nature whatsoever filed with, prepared in
connection with or necessary to support any application for a Regulatory
Approval from a Regulatory Authority in any country or territory in the
Territory.

     1.45 "Research" shall mean all the research activities conducted by 3DP and
           --------
Heska pursuant to Section 2.2 and the Research Plan.

     1.46 "Research Funding" shall mean the funding provided under Section 3 of
           ----------------
this Agreement by Heska to 3DP for 3DP's efforts in conducting the Research.

     1.47 "Research Plan" shall mean the research plan for the Research prepared
           -------------
by and agreed upon by the Project Team pursuant to Section 2.1, as amended from
time to time by written agreement of the entire Project Team.

     1.48 "Research Term" shall have the meaning attributed to it in Section
           -------------
9.1.2.

     1.49 "Results" shall mean any and all Know-How and Materials that are made,
           -------
created, or reduced to practice in the course of, or as a result of, the
Research, as well as any and all reports resulting from testing conducted
pursuant to the Research during the Research Term.

     1.50 "Royalty Expiration Date" of a Product shall mean, on a country-by-
           -----------------------
country basis, the later to occur of:

          1.50.1  the expiration date of the last to expire Valid Claim of a
Patent Right in such country that claims the Product, its manufacture, or its
use; and

                                       6
<PAGE>

          1.50.2  the expiration date of the ten-year period commencing on the
Effective Date.

     1.51 "Subsequent Development Compound" shall mean each Candidate Compound,
           -------------------------------
excluding Replacement Compounds as defined in Section 8.1, on which Heska
conducts Development for use in the Primary Field as a Development Compound in
addition to the Development Compound first selected for Development pursuant to
Section 4.1.

     1.52 "Territory" shall mean all the countries and territories of the world.
           ---------

     1.53 "Test Compound" shall mean any compound discovered, synthesized or
           -------------
produced by 3DP pursuant to or in the course of the Research that has the
potential for activity or efficacy in the Primary Field.  It is understood that
a Test Compound, as defined herein, may also meet the definition for Candidate
Compound, Development Compound, Heska Compound or Product, and any such Test
Compound will in such event be deemed to be, for purposes of this Agreement, a
Test Compound as well as a Candidate Compound, Development Compound, Heska
Compound or Product, as applicable.

     1.54 "3DP Intellectual Property" shall mean  (a) the 3DP Patents; and (b)
           -------------------------
all Know-How and Materials existing as of the Effective Date that are Controlled
by 3DP and that are necessary for or reasonably useful to any aspect of the
Research, Development and Commercialization activities to be conducted by Heska
or its Affiliates or sublicensees pursuant to this Agreement, including without
limitation the manufacture and use of Test Compounds and the sale of Products;
and (c) all Results that are made, created, developed or generated solely by
employees, directors, agents, consultants or others working on behalf of 3DP;
and (d) any and all intellectual property rights (other than Patents or Patent
Applications) appurtenant to the Results described in subsection (c).

     1.55 "3DP Patents" shall mean (a) all Patents and Patent Applications
           -----------
existing as of the Effective Date that are Controlled by 3DP and that claim any
aspect of the Research, Development and Commercialization activities to be
conducted by Heska or its Affiliates or sublicensees pursuant to this Agreement,
including without limitation the manufacture and use of Test Compounds and the
sale of Products; and (b) all Patents and Patent Applications that claim any
inventions in the Results that are made, created, developed or generated solely
by employees, directors, agents, consultants or other working on behalf of 3DP.

     1.56 "Third Party" shall mean any person other than a Party or its
           -----------
Affiliate.

     1.57 "Valid Claim" shall mean a claim which (i) in the case of any
           -----------
unexpired United States or foreign Patent, shall not have been donated to the
public, disclaimed, nor held invalid or unenforceable by a court of competent
jurisdiction in an unappealed or unappealable decision, or (ii) in the case of
any United States or foreign Patent Application, shall not have been canceled,
withdrawn, or abandoned without being refiled in another Patent Application or
finally rejected by an administrative agency action from which no appeal can be
taken, or shall have been pending for more than four years.  For purposes of
this definition,

                                       7
<PAGE>

time periods shall be measured cumulatively for claims in a later filed Patent
Application in a country which are substantially the same as claims in an
earlier filed Patent Application in that country. If a claim of a Patent
Application that ceased to be a Valid Claim under clause (ii) due to the passage
of time later issues as part of a Patent described within clause (i) then it
shall again be considered to be a Valid Claim effective as of the issuance of
such Patent.

2.   Research
     --------

     2.1  Preparation of Research Plan.  Within sixty days after execution of
          ----------------------------
this Agreement, the Parties'  representatives on the Project Team shall prepare
a detailed research plan which shall set forth the Parties' respective
obligations and responsibilities in connection with the Agreement through the
selection of a Development Compound under Section 4.1.  Once the Project Team
has prepared the proposed research plan, it shall submit the proposed research
plan to the appropriate members of management of both Parties for their review.
Once the Parties mutually agree in writing that the proposed research plan is in
an acceptable form, the proposed research plan shall become the Research Plan
for purposes of this Agreement.  Upon selection of the Development Compounds by
Heska pursuant to Section 4.2, the Project Team shall meet only as needed to
perform the functions as set forth in Section 5.2.

     2.2  Research and Initial Screening.  During the Research Term, pursuant to
          ------------------------------
the Research Plan and subject to the provisions of this Agreement, the parties
will undertake the following Research:

          2.2.1  3DP will use combinatorial or analog chemistry to discover,
synthesize or produce Test Compounds for use in the Primary Field until a
Development Compound is selected by Heska under Section 4.1.

          2.2.2  3DP will provide Heska with up to [**] quantities of any
synthesized Test Compounds for evaluation in the Initial Screening.  Test
Compounds will be validated by 3DP to be at least 80% pure.  3DP will provide to
Heska information regarding the structure and purity of such Test Compounds as
soon as practicable or as otherwise directed by the Project Team.  Upon receipt
by Heska from 3DP of any Test Compounds, Heska will perform the Initial
Screening of such Test Compounds.  Heska may also perform Initial Screening of
Heska Compounds.  Test Compounds showing activity for use in the Primary Field
in the Initial Screening will be designated Candidate Compounds.

          2.2.3  After the identification of Candidate Compounds that Heska
believes have a likelihood of success in the Primary Field, Heska will provide
3DP notice of such Candidate Compounds selected by Heska (up to a total of ten
compounds), and 3DP will promptly use commercially reasonable efforts to obtain
a written opinion of independent patent counsel selected by 3DP, and reasonably

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       8
<PAGE>

acceptable to Heska, as to whether such Candidate Compounds may infringe on the
issued patents, if any, that, in the reasonable opinion of such counsel, are
relevant to such Candidate Compounds (the "Relevant Patents").  Heska may
provide such notice on more than one occasion, until such time as Heska has
received written opinions, subject to qualifications reasonably acceptable to
Heska, of the patent counsel that a total of ten of such identified Candidate
Compounds do not infringe the Relevant Patents.  Promptly after Heska has
received such written opinion, subject to qualifications reasonably acceptable
to Heska, that one or more of such selected Candidate Compounds do not infringe
the Relevant Patents, 3DP will use commercially reasonable efforts to produce
within a reasonable time after Heska's written request five grams of each of the
Candidate Compounds identified as non-infringing in such opinion, for Heska to
use in the Initial Animal Studies for purposes of identifying Development
Compounds.  If additional quantities of a selected Candidate Compound are
required for any purpose, the cost to produce the additional amounts of such
selected Candidate Compounds will be borne by Heska.  The quantities of
Candidate Compounds produced by 3DP for Heska hereunder shall be at least 99%
pure and shall be accompanied by a certificate of analysis.

          2.2.4  Within sixty days after receipt of the required quantities of
all selected Candidate Compounds from 3DP pursuant to Section 2.2.3, Heska will
use commercially reasonable efforts to initiate and conduct Initial Animal
Studies on Candidate Compounds until a Development Compound has been selected by
Heska pursuant to Section 4.1. In the event that Heska does not initiate such
Initial Animal Studies within such time period, then Heska shall promptly give
written notice thereof to 3DP, including a reasoned scientific or commercial
rationale for Heska's decision. Heska shall use commercially reasonable efforts
to conduct and complete the Initial Animal Studies promptly after receipt of the
required quantifies of the selected Candidate Compounds. If Heska fails to
complete such Initial Animal Studies within nine months after receiving all such
Candidate Compounds from 3DP, Heska shall either (a) provide to 3DP written
documentation that Heska is using diligent efforts to complete such Initial
Animal Studies promptly, and continue all such efforts as necessary to complete
such studies as soon as practicable thereafter, or (b) provide to 3DP the
scientific, technical, regulatory or other substantial reasons for Heska's
inability, in such time period, to commence or complete such studies, along with
a written plan for overcoming the problems caused thereby and for completing
such studies, and shall use all reasonable efforts to complete such studies as
soon as practicable thereafter. If Heska fails to comply with the foregoing in
such time frame, at 3DP's election and upon written notice to Heska, all rights
of Heska in the Candidate Compounds shall revert to 3DP and Heska shall have no
further rights thereto. In the event that, upon completion of the Initial Animal
Studies on the first set of ten selected Candidate Compounds provided by 3DP,
Heska determines that none of such compounds is appropriate for selection as
Development Compounds for Development for use in the Primary Field, then, upon
Heska's request, 3DP will generate and provide to Heska additional Test
Compounds, and after testing such compounds Heska may select additional
Candidate Compounds, which will be identified by written notice to 3DP as
provided in Section 2.2.3 above, and the testing procedures, including all
applicable time frames, set forth in Sections 2.2.3 and 2.2.4 will be repeated
for such additional selected Candidate Compounds. Heska will pay 3DP, at 3DP's
actual cost, for (i) any Candidate Compounds in excess of the five grams
provided pursuant to Section 2.3.3 of the first ten

                                       9
<PAGE>

selected Candidate Compounds, and (ii) any quantity of any Test Compound in
excess of 2 milligrams of such Test Compound.

     2.3  Research Manpower Estimates.  During the first Project Year, 3DP will
          ---------------------------
require its personnel to conduct the Research for an equivalent of [**] Years.
During the second Project Year, 3DP will require its personnel to conduct the
Research for an equivalent of up to [**] years as determined by the Project
Team.  Any revisions to the number of FTE hours needed to complete the Research
shall be authorized by the Project Team.

     2.4  Records.   The Parties will maintain records of their own activities
          -------
and conduct in the course of the Research (or cause such records to be
maintained) pursuant to the Research Plan in sufficient detail and in good
scientific manner as will properly reflect all work done and results achieved in
the performance of the Research (including, but not limited to, all data in the
form required under any applicable governmental regulations and as directed by
the Project Team).  Each Party shall allow the other Party, at the other Party's
sole cost, to have reasonable access to all pertinent materials and data
generated by or on behalf of such Party in connection with the Research to the
extent such Party reasonably needs such materials and data to perform its duties
under this Agreement.

     2.5  Compliance with Laws.  All activities undertaken in connection with
          --------------------
the Research shall be carried out in compliance with federal, state and local
laws, regulations and guidelines and professional standards governing the
conduct of the Research at the site where it is being conducted in the
Territory.

     2.6  Exclusivity of Research.  During the Research Term, neither Party
          -----------------------
will, except pursuant to this Agreement, conduct or fund, either by itself or at
a Third Party, any research or Development activity specifically intended to
identify, discover, synthesize or develop compounds using any of the Existing
Compounds as leads for, or as the basis for, chemical discovery for use in the
Primary Field.

3.   Research Funding.  During the Research Term, Heska shall provide the
     ----------------
following funding ("Research Funding") to 3DP to enable 3DP to carry out 3DP's
responsibilities under the Research Plan in accordance with this Section 3. For
the first Project Year, Heska will pay 3DP a minimum of [**] in four equal
quarterly installments, in consideration for 3DP's dedication of the equivalent
of [**] to the Research of [**]. For the second Project Year, Heska will pay 3DP
an amount, on a quarterly basis, equal to the pro rata amount of FTE Years to be
conducted by 3DP on Research during such quarter, as determined by the Project
Team, at [**], up to a maximum for the year of [**] in consideration of the
Research effort by 3DP during such second year. The first installment shall be
paid on the Effective Date and subsequent installments shall be paid on the date
three months after the last payment. Heska shall bear its own costs and expenses
incurred in performing its responsibilities under the Research in accordance
with this Section 3. All payments of Research Funding shall be made by Heska to
3DP in U.S. Dollars by wire transfer of immediately available funds to the
account specified in Exhibit 3 or to such other account notified to Heska by 3DP
                     ---------
from time to time in a written notice to Heska.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       10
<PAGE>

4.   Pivotal Animal Studies, Development and Commercialization
     ---------------------------------------------------------

     4.1  Selection of Development Compounds.  Within one hundred eighty days
          ----------------------------------
after completion of the Initial Animal Studies pursuant to Section 2.2.4
(including testing required on additional Candidate Compounds), Heska shall
select one or more Candidate Compounds as Development Compounds for use in the
Primary Field.  If the results of the Initial Animal Studies indicate that
additional testing needs to be completed before Heska is able to select
Development Compounds (including testing required on additional Candidate
Compounds), Heska shall so indicate to 3DP in writing and shall use reasonably
commercial efforts to conduct such additional required testing promptly; in such
event, the foregoing one hundred eighty day period will commence at the
completion of such additional studies.  Heska shall provide 3DP with written
notice during the applicable time period of the Candidate Compounds it has
selected as Development Compounds, and shall indicate the non-human animal
species in which it intends to use such Development Compounds.  In the event
that Heska selects a Development Compound for use in any additional non-human
animal species, it shall immediately notify 3DP in writing of such decision.  If
Heska fails to select any Development Compounds within one hundred eighty days
after completion of all required Initial Animal Studies, Heska shall provide to
3DP the scientific, technical, regulatory or other substantial reasons for
Heska's inability, in such time period, to select at least one Development
Compound, along with a written plan for overcoming the problems caused thereby,
selecting a Development Compound and commencing Development, and shall use all
reasonable efforts to do so as soon as practicable thereafter.  If Heska fails
to comply with the foregoing in such time frame, then at 3DP's election and upon
written notice to Heska, all rights of Heska in the Candidate Compounds shall
revert to 3DP and Heska will have no further rights thereto.  If, during such
time period, Heska has selected at least one Development Compound for
Development in one non-human animal species, Heska may decide at any time during
the term of this Agreement to engage in Development of such Development Compound
for use in the Fields in additional non-human animal species, or select
Subsequent Development Compounds for Development in the Fields, provided that
Heska shall provide 3DP with written notice immediately upon reaching such
decision.

     4.2  Development.  After selection of Development Compounds, Heska will use
          -----------
commercially reasonable efforts to design, initiate and conduct Pivotal Animal
Studies in the Primary Field and shall be deemed the sponsor of all such Pivotal
Animal Studies as defined in applicable regulations.  At Heska's request, 3DP
will supply to Heska, at 3DP's actual cost to be paid by Heska, sufficient
Development Compounds to Heska in order for Heska to conduct the Pivotal Animal
Studies.  If Heska is unable to initiate Pivotal Animal Studies on at least one
Development Compound within one hundred eighty days after selection of a
Development Compound under Section 4.1, Heska shall provide to 3DP the
scientific, technical, regulatory or other substantial reasons for Heska's
inability, in such time period, to commence such Pivotal Animal Studies, along
with a written plan for overcoming the problems caused thereby and for
commencing such Pivotal Animal Studies promptly thereafter, and shall use all
reasonable efforts to commence such Pivotal Animal Studies as soon as
practicable thereafter.  If Heska fails to comply with the foregoing in such
time frame, then at 3DP's election and upon written notice to Heska, all rights
of Heska

                                       11
<PAGE>

in Test Compounds and the Development Compounds shall revert to 3DP, Heska will
have no further rights thereto and this Agreement will terminate.

     4.3  Commercialization of Development Compound.  Within ninety days after
          -----------------------------------------
the first Regulatory Approval of a Development Compound, Heska shall provide
written notice to 3DP of Heska's decision regarding whether to undertake
Commercialization in the Primary Field of the Development Compound.  If Heska
decides to undertake Commercialization in the Primary Field of a Development
Compound, such notice to 3DP shall identify the countries and territories within
the Territory in which Heska intends to pursue such Commercialization.  Heska
will commence Commercialization in the Primary Field of such Development
Compound within twelve months after such decision and will use commercially
reasonable efforts to conduct such Commercialization. If Heska fails to commence
such Commercialization of the Development Compound within twelve months after
Regulatory Approval, Heska will provide to 3DP the scientific, technical or
regulatory or other substantial reasons for Heska's inability, in such time
period, to commence such Commercialization, along with a written plan for
overcoming the problems caused thereby and for commencing such Commercialization
promptly thereafter, and shall use all reasonable efforts to commence such
Commercialization as soon as practicable thereafter.  If Heska fails to comply
with the foregoing in such time frame, then at 3DP's election and upon written
notice to Heska, all rights of Heska in such Development Compounds shall revert
to 3DP and Heska will have no further rights thereto.

     4.4  Cessation of Commercialization by Heska. If Heska has commenced
          ---------------------------------------
Commercialization in accordance with Section 4.3, Heska's right to market the
resulting Licensed Product and any other Licensed Product for use in the Primary
Field hereunder shall be worldwide so long as Heska is conducting
Commercialization of a Licensed Product in the United States.  If Heska ceases
(other than due to government or legal action) Commercialization of all Licensed
Products in the United States, it shall immediately notify 3DP in writing, and
Heska shall use good faith efforts to find a sublicensee reasonably acceptable
to 3DP to conduct Commercialization of at lease one Licensed Product in such
countries in the Territory where Heska or its Affiliates or existing
sublicensees are not conducting Commercialization of Licensed Products,
including without limitation the United States.  If Heska does not enter in to
such a sublicensing arrangement for such countries within six months after
Heska's termination of Commercialization of Licensed Products in the United
States, then the Parties shall work together during the six months immediately
following such six-month period to locate an acceptable sublicensing
arrangement.  If, after such additional six-month time period, Heska has not
entered into such a sublicensing arrangement, then all rights of Heska in the
Licensed Products shall revert to 3DP and Heska shall have no further rights
thereto in such countries where none of Heska, its Affiliates or sublicensees is
marketing Licensed Products, except that in the event that 3DP locates a
sublicensee after Heska's rights have terminated or commences marketing such
Licensed Products, 3DP will pay to Heska an amount equal to [**] of any
royalties or other license fees or milestone payments received by 3DP under any
license granted

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       12
<PAGE>

by 3DP to commercialize such Licensed Product in such countries for use in the
Primary Field or, if sold directly by 3DP or its Affiliates, [**] of the Net
Sales of Licensed Products made by 3DP or its Affiliates, until such time that
the total of such payments to Heska equal the amounts paid by Heska to 3DP
pursuant to Section 8.1 and 8.2 as of the date that Heska ceases
Commercialization of the Licensed Products in the United States.

     4.5  Responsibility for and Costs of Pivotal Animal Studies, Development
          -------------------------------------------------------------------
and Commercialization.  Heska shall be solely responsible for the implementation
---------------------
of Pivotal Animal Studies and Development and Commercialization of Development
Compounds and Products, as the case may be, at Heska's cost except as otherwise
provided herein.  3DP will provide or disclose to Heska all Results and 3DP
Intellectual Property relating to Test Compounds reasonably needed to conduct
such Development and Commercialization.

     4.6  Development and Commercialization Summaries.  For each Development
          -------------------------------------------
Compound or Licensed Product for which Heska has begun to pursue Development or
Commercialization and for which Heska has not ceased pursuing Development or
Commercialization, Heska shall keep 3DP informed periodically with summary
reports on the proposed design and the conduct of any Clinical Trials, including
summaries of proposed study protocols, other clinical or investigative research
and other Regulatory Filings for such Development Compound or Product, and shall
provide to 3DP copies of all toxicological data and reports of Development and
Commercialization efforts.  Heska shall provide such reports each year in
meetings as reasonably requested by 3DP, and each party shall be responsible for
its own costs with regard to such meeting.

     4.7  3DP Right of First Negotiation.  During the two year period commencing
          ------------------------------
on the Effective Date, Heska hereby grants to 3DP a right of first negotiation
according to the terms of this Section regarding entering into collaborations or
other agreements for Competitive Programs, excluding (i) any program entered
into pursuant to exercise by [**] of rights [**], or (ii) any [**] (the
"Excluded Programs").  If Heska desires to enter into an agreement with a third
party to conduct such a Competitive Program other than an Excluded Program,
Heska will give 3DP written notice of such desire, specifying the specific
targets to be pursued in such Competitive Program.  3DP shall have twenty days
in which to provide Heska written notice that it desires to enter into such an
agreement, in which case the Parties shall meet promptly thereafter and
negotiate in good faith the terms of such an agreement, for a period of up to
ninety days, with the understanding that Heska may also negotiate with Third
Parties during such period regarding the terms of such an agreement so long as
Heska does not enter into such an agreement with any Third Party during the
period.  If 3DP does not provide such written notice, or if the Parties are
unable to execute such an agreement by the end of the ninety day negotiation
period, for a period of nine months, Heska may enter into such an agreement with
a third party without again complying with this Section,

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       13
<PAGE>

5.   Project Team.
     ------------

     5.1  Membership of Project Team.  The Parties shall select a team to direct
          --------------------------
the Research which shall consist of six members, three of whom shall be
appointed by Heska and three of whom shall be appointed by 3DP (the "Project
Team"). Each Party shall notify the other in writing if it substitutes any
member of the Project Team.

     5.2  Meetings of Project Team.  The Project Team shall meet (at their
          ------------------------
option, telephonically, by video conference or in person) at such times and
places as it may select but in no event shall the Project Team meet less
frequently than quarterly.

     5.3  Responsibilities of Project Team.  The Project Team shall be
          --------------------------------
responsible for:

          5.3.1  reviewing, approving and amending the Research Plan;

          5.3.2  monitoring the progress of the Research;

          5.3.3  reviewing and approving publications in accordance with Section
11.5;

          5.3.4  monitoring and assisting the drafting, filing and prosecution
of Patents and Patent Applications in accordance with Section 12.2; and

          5.3.5  allocating resources for the Research budget as established in
Section 2.3.

     5.4  Quorum; Voting.  The presence of at least four members, two of whom
          --------------
shall have been selected by each Party, shall constitute a quorum for purposes
of consideration and action by the Project Team. Any decision taken by the
Project Team shall at all times be unanimous.   In the event that the Project
Team is not able to reach agreement on any issue, the matter may be approved or
settled in accordance with Section 17.3, and any requirement for approval by the
Project Team under this Agreement shall be satisfied by approval in accordance
with Section 17.3.

     5.5  Reports and Conferences.  During the Research Term and any time during
          -----------------------
which a Party is conducting activities under Sections 4.1, 4.2 and 4.3, 3DP and
Heska shall provide the Project Team with written project reports during each
calendar quarter concerning their efforts with respect to Research, Development
and Commercialization, including any change in plans in the Research,
Development or Commercialization activities or any adverse effects of any Test
Compound or Derivative Compound and shall also provide a final written report
concerning the Research within forty-five (45) days after the end of the
Research Term or such activities or earlier termination of this Agreement.

                                       14
<PAGE>

6.   Ownership of Intellectual Property
     ----------------------------------

     6.1  3DP Intellectual Property.  3DP has and shall have and retain
          -------------------------
exclusive right, title and interest in and to:  (a) any and all Patents, Patent
Applications, Know-How, Materials or other intellectual property owned by 3DP on
the Effective Date; (b) any and all Results which are made, reduced to practice,
or created solely by employees, directors, agents, consultants or others working
on behalf of 3DP; (c) any and all intellectual property rights (including
without limitation Patents and Patent Applications, except to the extent
provided in Section 12.2.3) appurtenant to or claiming the Results described in
subsection (b); and (d) any and all Know-How, Materials and intellectual
property rights made, created or reduced to practice by or on behalf of 3DP
independent of this Agreement.

     6.2  Heska Intellectual Property.  Heska has and shall have and retain
          ---------------------------
exclusive right, title and interest in and to:  (a) any and all Patents, Patent
Applications, Know-How, Materials or other intellectual property owned by Heska
on the Effective Date; (b) any and all Results  which are made, reduced to
practice, or created solely by employees, directors, agents, consultants or
others working on behalf of Heska; (c) any and all intellectual property rights
(including without limitation Patents and Patent Applications) appurtenant to or
claiming the Results described in subsection (b); and (d) any and all Know-How,
Materials and intellectual property rights made, created or reduced to practice
by or on behalf of Heska independent of this Agreement.

     6.3  Joint Intellectual Property.  Each Party has and shall retain an
          ---------------------------
undivided one-half interest in all right, title and interest in and to the Joint
Intellectual Property, subject to the licenses and other rights granted
hereunder.

     6.4  Independent Rights.  Each Party shall retain exclusive right, title
          ------------------
and interest in and to all its other inventions, developments, know-how, patent
rights and other intellectual property that are not 3DP Intellectual Property
Rights, Heska Intellectual Property Rights or Joint Intellectual Property
Rights, independent of and not subject to any provision of this Agreement.

7.   Licenses.
     --------

     7.1  Licenses from 3DP to Heska.  Subject to all the terms and conditions
          --------------------------
of this Agreement:

          7.1.1  Research License.  3DP hereby grants to Heska, for the term of
                 ----------------
this Agreement, the exclusive (except as to 3DP), worldwide right and license
under the 3DP Intellectual Property and 3DP's interest in the Joint Intellectual
Property to use the Test Compounds solely for the purpose of conducting Research
on the Test Compounds solely for use in the Fields, including without limitation
the right to prepare Heska Compounds for Research hereunder.

          7.1.2  Production and Use License. 3DP hereby grants to Heska, for the
                 --------------------------
term of this Agreement, an exclusive, worldwide, royalty-bearing right and
license under the 3DP Intellectual Property and 3DP's interest in the Joint
Intellectual Property to engage in Development, and to use, sell, have sold,
import and offer to sell and engage in the Commercialization of any Test
Compound,

                                       15
<PAGE>

3DP's interest in the Joint Intellectual Property to use the Test Compounds
solely for the purpose of conducting Research on the Test Compounds solely for
use in the Fields, including without limitation the right to prepare Heska
Compounds for Research hereunder.

          7.1.2  Production and Use License. 3DP hereby grants to Heska, for the
                 --------------------------
term of this Agreement, an exclusive, worldwide, royalty-bearing right and
license under the 3DP Intellectual Property and 3DP's interest in the Joint
Intellectual Property to engage in Development, and to use, sell, have sold,
import and offer to sell and engage in the Commercialization of any Test
Compound, Derivative Compound or Licensed Product for use in the Fields and any
Heska Compound or Heska Product for use in the Other Fields throughout the
Territory. Subject to the provisions of Section 17.7 and Section 7.1.4, Heska
shall have the right to grant sublicenses, subject to and upon terms consistent
with this Agreement, under the license granted in this Section 7.1.2, provided
that Heska shall remain primarily liable under this Agreement.

          7.1.3  Manufacturing License. Subject to the limitations herein, 3DP
                 ---------------------
hereby grants to Heska, for the term of the Agreement, an exclusive, worldwide
right and license under the 3DP Intellectual Property and 3DP's interest in the
Joint Intellectual Property to make and have made any Test Compound, Derivative
Compound or Licensed Product for use in the Fields or any Heska Compound or
Heska Product for use within the Other Fields throughout the Territory.  Subject
to the provisions of Section 17.7 and Section 7.1.4, Heska shall have the right
to grant sublicenses, subject to and upon terms consistent with this Agreement,
under the license granted in this Section 7.1.3, provided that Heska shall
remain primarily liable under this Agreement.

          7.1.4  Limitation of Grant. Notwithstanding the foregoing Sections
                 -------------------
7.1.1, 7.1.2 and 7.1.3, and except for the licenses granted to Heska in Sections
7.1.1, 7.1.2 and 7.1.3, 3DP shall retain all of its rights, title and interest
to the 3DP Intellectual Property and 3DP's interest in the Joint Intellectual
Property , including without limitation the right to develop, make, have made,
use and sell, import and offer to sell any compound, product or composition of
matter for human use. Without limiting the foregoing, nothing in Section 7.1.1,
7.1.2 or 7.1.3 shall be deemed to grant to Heska, and 3DP shall retain, any
rights to the Test Compounds, 3DP Intellectual Property or 3DP's interest in the
Joint Intellectual Property for use in or on a human.   Nothing contained in any
provision of this Agreement shall be deemed to grant to Heska any rights in
3DP's proprietary technology known as DirectedDiversity(R), its proprietary
technology known as ThermoFluor(R), or its other proprietary technology useful
for the creation of combinatorial chemical libraries, the processes for the
chemical synthesis of compounds and optimization of their properties, except to
the extent, if any, necessary for the manufacture of Test Compounds as permitted
by Section 7.1.3.

          7.1.5  Exclusivity in the Fields. 3DP agrees that Heska shall have
                 -------------------------
exclusive rights to use the Test Compounds in the Fields during the term of and
in accordance with the terms of this Agreement, and that 3DP may not make, use,
sell, promote, market or license or otherwise permit or authorize any other
party to make, use, sell, promote, or market the Test Compounds for any use

                                       16
<PAGE>

in the Fields during the term of this Agreement except as permitted by Section
4. 3DP covenants that it shall expressly prohibit any licensees of 3DP or its
Affiliates who are licensed to make, use or sell any Test Compounds for use in
or on humans from making, using, selling, promoting, or marketing the Test
Compounds for any use in the Fields.

     7.2  Licenses from Heska to 3DP.
          --------------------------

          7.2.1  License for Research and Development.  Heska hereby grants to
                 ------------------------------------
3DP, for the Research Term, an exclusive (except as to Heska), worldwide right
and license under the Heska Intellectual Property and an exclusive (except as to
Heska) worldwide right and license under Heska's interest in Joint Intellectual
Property to engage in the Research contemplated by this Agreement.

          7.2.2  Human Use.  Heska hereby grants to 3DP, for the term of this
                 ---------
Agreement, the exclusive, worldwide right and license, under the Results
comprising toxicological data for Test Compounds included in Heska's
Intellectual Property and under Heska's interest in Joint Intellectual Property
to use, make, have made, sell, have sold, import and offer to sell and engage in
the Commercialization of any Test Compound for use in or on humans.  Subject to
the provisions of Section 17.7 and Section 7.2,2,  3DP shall have the right to
grant sublicenses under the license granted in this Section 7.2.1, provided that
3DP shall remain primarily liable to Heska under this Agreement.

          7.2.3  Limitation of Grant.  Notwithstanding the foregoing Sections
                 -------------------
7.2.1, and except for the licenses granted to 3DP in Section 7.2.1, Heska shall
retain all of its rights, title and interest to the Heska Intellectual Property
and Heska's interest in the Joint Intellectual Property, including without
limitation the right to develop, make, have made, use and sell, import and offer
to sell any compound, product or composition of matter for use in the Fields.
Without limiting the foregoing, nothing in Section 7.2.2 shall be deemed to
grant 3DP, and Heska shall retain, any rights to Heska Intellectual Property or
Heska's interest in Joint Intellectual Property for any use in the Fields.

8.   Milestone Payments and Royalties.
     --------------------------------

     8.1  One-time Milestone Payments.  Heska shall make one-time milestone
          ---------------------------
payments to 3DP as follows:

          8.1.1  [**] payment, upon the Effective Date, for 3DP's development of
the 3DP Intellectual Property to be used over the Research Term, which payment
shall be non-refundable.

          8.1.2  [**] upon the selection by Heska pursuant to Section 4.1 of the
[**] Development Compound by Heska for use in the Primary Field.

          8.1.3  [**] upon the selection by Heska pursuant to Section 4.1 of the
[**] Development Compound by Heska for use in the other animal species in the
Primary Field.

          8.1.4  [**] within 15 days after the date on which a Regulatory Agency
has accepted the [**] complete application for Regulatory Approval of a Licensed
Product for use in the Primary Field.

          8.1.5  [**] within 15 days after the date on which a Regulatory Agency
has accepted the [**] complete application for Regulatory Approval of a Licensed
Product for use in the Primary Field in the other animal species.

          8.1.6  [**] upon the [**] Commercial Sale in the United States of any
Licensed Product for use in the Primary Field.

          8.1.7  [**] upon the [**] Commercial Sale in Europe of a Licensed
Product for use in the Primary Field.

          8.1.8  [**] upon the [**] Commercial Sale in the United States of any
Licensed Product for use in the Primary Field in the other animal species.

In the event that Heska or its Affiliates or sublicensees are conducting
Development on a particular Development Compound, and such Development efforts
cease for any reason (other than Regulatory Approval), and Heska or its
Affiliates or sublicensees subsequently select a different Development Compound
(the "Replacement Compound") and commence Development on such Replacement
Compound to replace the Development Compound that was dropped from Development,
then Heska shall

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       17
<PAGE>

not be obligated to pay any of the milestone payments set forth in Section 8.1.2
through 8.1.5 for achievement of the milestone events set forth therein by the
Replacement Compound if such payments were previously made by Heska as a result
of achievement of such milestone events by such Development Compound that was
dropped from Development.

     8.2  Additional Milestones.  Heska shall make additional milestone payments
          ---------------------
to 3DP with respect to Subsequent Development Compounds as follows:

          8.2.1  [**] upon the selection by Heska pursuant to Section 4.1 of
each Subsequent Development Compound and commencement of Development for use in
the Primary Field.

          8.2.2  [**] upon the [**] Commercial Sale of each Licensed Product
containing a Subsequent Development Compound for use in the Primary Field.

          8.2.3  [**] upon the [**] Commercial Sale of each Licensed Product
containing a Subsequent Development Compound for use in the other animal species
in the Primary Field anywhere in the Territory.

In the event that Heska or its Affiliates or sublicensees are conducting
Development on a particular Subsequent Development Compound, and such
Development efforts cease for any reason (other than Regulatory Approval), and
Heska or its Affiliates or sublicensees subsequently select a different
Subsequent Development Compound (the "Subsequent Replacement Compound") and
commence Development on such Subsequent Replacement Compound to replace the
Subsequent Development Compound that was dropped from Development, then Heska
shall not be obligated to pay the milestone payments set forth in Section 8.2
for achievement of the milestone events set forth therein by the Subsequent
Replacement Compound to the extent such payments were previously made by Heska
as a result of achievement of such milestone events by such Subsequent
Development Compound that was dropped from Development.

     8.3  Milestones for Heska Products.  Heska shall pay to 3DP [**] upon the
          -----------------------------
First Commercial Sale of each Heska Product for use in the Other Fields anywhere
in the Territory.

     8.4  Combined Milestone Payments.  Heska shall make the following one-time
          ---------------------------
payments to 3DP upon the occurrence of the following events:

          8.4.1  [**] upon the [**] achievement of [**] in Net Sales in any
Post-Launch Year of all Licensed Products containing a particular Development
Compound for use in a particular animal in the Primary Field in the Territory.

          8.4.2  [**] upon the [**] achievement of [**] in Net Sales in any
Post-Launch Year of all Licensed Products containing a particular Development
Compound for use in the other animal species in the Primary Field in the
Territory.

     8.5  Royalties.  As consideration for the licenses and rights granted by
          ---------
3DP to Heska under this Agreement, Heska shall pay to 3DP during the period
ending on the applicable Royalty Expiration Date the following royalties:

          8.5.1  [**] of annual Net Sales of all Licensed Products in the
Territory until such time that such aggregate annual Net Sales of Licensed
Products throughout the Territory (including the U.S.) in each Post Launch Year
equal [**].

          8.5.2  [**] of that portion of the annual Net Sales of all Licensed
Products in the Territory in each Post Launch Year that exceed [**] up to
aggregate Net Sales of Licensed Products throughout the Territory in such Post
Launch Year equal [**].

          8.5.3  [**] of that portion of the annual Net Sales of all Licensed
Products in the Territory in each Post Launch Year that exceed [**].

          8.5.4  [**] of annual Net Sales in the Territory of Heska Products.

     8.6  Royalty Reductions.  Royalties payable under Section 8.5 with respect
          ------------------
to a Product in a country where such Product is not claimed by a Valid Claim
within the 3DP Patents or Joint Patents, shall be reduced by [**].  In addition,
in the event that Heska or its Affiliate or sublicenses is required to obtain a
license under a Patent owned by a Third Party in order to manufacture or sell a
Product, Heska may deduct from the royalty amounts otherwise owed to 3DP based
on sales of such Product [**] of the

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       18
<PAGE>

amount of royalties paid to such Third Party based on sale of such Product,
provided that such deduction may not reduce the royalty payment made in any one
quarter by more than [**] of the amount otherwise owed.

     8.7  Records.  Heska shall keep, and require its Affiliates and
          -------
sublicensees to keep, complete and accurate records, on a country-by-country
basis, of Net Sales of Products and the calculation of royalties with respect
thereto, separately showing the calculation of all adjustments.

     8.8  Royalty Reports.  Heska shall deliver to 3DP written reports,
          ---------------
consistent with U.S. generally accepted accounting principles, within forty-five
(45) days after the close of each calendar quarter, showing separately for each
Product or Development Compound in each such quarter:

          8.8.1 gross sales by Heska its Affiliates and sublicensees, broken
down by both units sold and revenue and the calculation of Net Sales;

          8.8.2  details of the quantities sold in each country;

          8.8.3  royalties due to 3DP pursuant to Section 8; and

          8.8.4  the exchange rates used in determining the amount of U.S.
dollars and the basis for such determination.

     8.9  Royalty Payments.  Within 45 days after the end of each calendar
          ----------------
quarter during which royalties accrue on a Product pursuant to this Section 8 on
account of Net Sales, Heska shall pay to 3DP the total amount of royalties due
to 3DP for the previous calendar period, with such royalties to be accompanied
by a report for the previous calendar period described in this Section. All
payments of royalties made by Heska shall be made in U.S. Dollars by wire
transfer of immediately available funds to the account specified in Exhibit 3 or
                                                                    ---------
to such other account as 3DP may specify to Heska from time to time in a written
notice to Heska.

9.   Term and Termination
     --------------------

     9.1  Term.
          -----

          9.1.1  Expiration of Agreement.  Unless otherwise terminated, this
                 -----------------------
Agreement shall expire upon the last Royalty Expiration Date.  Upon such
expiration, Heska shall have a non-exclusive, worldwide, perpetual, irrevocable
license under the 3DP Intellectual Property and 3DP's interest under the Joint
Intellectual Property to make, have made, use, sell, import and offer for sale
all Test Compounds, Derivative Compounds and Licensed Products for use in the
Fields and Heska Compounds and Heska Products for use in the Other Fields and
3DP shall have a non-exclusive, worldwide, perpetual, irrevocable license, with
the right to sublicense, under Heska's interest in the Joint Intellectual
Property and under any

                                       19
<PAGE>

Results comprising toxicological data for Test Compounds included in the Heska
Intellectual Property to develop, commercialize, make, have made, use, sell,
import and offer for sale any Test Compounds for use in or on humans.

          9.1.2  Expiration, Termination or Extension of Research Term.  The
                 -----------------------------------------------------
Research Term shall be for an initial period of two years from the Effective
Date.  The Research Term may be terminated prior to its expiration or extended
beyond its expiration by written agreement of the Parties.

     9.2  Termination
          -----------

          9.2.1  Termination for Default.  If either Party breaches any material
                 -----------------------
provision of this Agreement and if such breach is not corrected within 45 days
after the non-breaching Party gives notice of the breach to the breaching Party,
in the case of a breach consisting of the non-payment of money, or 90 days after
the non-breaching Party gives notice of the default to the breaching Party, in
the case of any other breach, the non-breaching Party may terminate this
Agreement immediately by giving notice of the termination, effective on the date
of the notice; provided, however, that if any such non-monetary breach is not
               --------  -------
capable of being cured within the aforesaid 90-day period, so long as the
breaching Party commences to cure the breach promptly after receiving notice of
the breach from the non-breaching Party and thereafter diligently prosecutes the
cure to completion as soon as is practicable, the non-breaching Party may not
terminate this Agreement unless the breaching Party, notwithstanding such
efforts, is unable to cure the breach within 180 days after the other Party
gives notice of the default, in which case the non-breaching Party may terminate
this Agreement immediately by giving notice of the termination, effective on the
date of the notice.

          9.2.2  Rights in Event of Bankruptcy.
                 -----------------------------

                 9.2.2.1 Notwithstanding the bankruptcy of a Party, or the
impairment of performance by a Party of its obligations under this Agreement as
a result of bankruptcy or insolvency of the Party, the other Party shall be
entitled to retain the license rights and licenses granted herein, subject to
such Party's performance of all its obligations under the Agreement and to the
Party's rights to terminate this Agreement for reasons other than bankruptcy or
insolvency as expressly provided in this Agreement.

                 9.2.2.2 All license rights and licenses granted under or
pursuant to this Agreement under Patents and other intellectual property rights,
including know-how and trade secrets, by one Party to the other Party are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101(52) of the U.S. Bankruptcy Code. Each Party agrees that the other
Party as a licensee of such rights under this Agreement, shall retain and may
fully exercise all of its rights and elections under the U.S. Bankruptcy Code,
subject to performance by such electing Party of its preexisting obligations
under this Agreement.

                                       20
<PAGE>

           9.2.3 Voluntary Termination of License Rights. Heska may
                 ---------------------------------------
terminate the license rights granted to it by 3DP under Section 7.1 of this
Agreement with respect to any particular country or countries in the Territory
or with respect to a particular Test Compound or Licensed Product by giving 3DP
at least thirty (30) days written notice thereof.

           9.2.4 Mutual Termination. By written agreement, the Parties may
                 ------------------
at any time terminate this Agreement on mutually acceptable terms.

10.  Rights and Duties upon Termination
     ----------------------------------

     10.1  Monies Paid or Due. Upon the termination of this Agreement, 3DP shall
           ------------------
have the right to retain all payments previously received from Heska, subject to
the resolution, by audit or by settlement pursuant to Section 17.3 below, of any
dispute regarding such payments, and each Party shall pay to the other all sums
accrued hereunder which are then due.

     10.2  Remaining Product.  In the event that this Agreement is terminated
           -----------------
early for any reason, Heska shall notify 3DP of the amounts of each Product that
Heska, its Affiliates, sublicensees and distributors then have on hand in the
applicable country or countries, and, at 3DP's election Heska and its
sublicensees and distributors may sell the Product in that country or countries
if Heska pays royalties thereon in accordance with Section 8.

     10.3  Termination of Licenses. Any early termination of this Agreement
           -----------------------
shall terminate all licenses granted to Heska under Section 7.1 with respect to
the applicable country or countries, with full reversion to 3DP of all 3DP's
interest and rights in the 3DP Intellectual Property in such country or
countries.

     10.4  Sublicenses. Any termination of this Agreement will terminate all
           -----------
sublicenses granted by Heska under the license rights granted to Heska
hereunder.

     10.5  Survival of Rights. In the event of the termination of this Agreement
           ------------------
prior to its expiration, the obligations of the Parties theretofore accrued
under this Agreement shall survive, and the rights and obligations of the
Parties under this Section 10 and Sections [6, 7, 8, 10, 11, 13, 15, 16 and 17]
shall survive in accordance with the terms of such Sections.

     10.6  Rights Not Exclusive. All rights to terminate, and rights upon
           --------------------
termination, provided for either Party in this Agreement are in addition to
other remedies in law or equity which may be available to either Party.

11.  Exchange of Information and Confidentiality
     -------------------------------------------

     11.1  Requirement of Confidentiality. This Agreement contemplates the
           ------------------------------
exchange of certain confidential and proprietary information orally and in
writing both inside and outside the Fields by one Party

                                       21
<PAGE>

(the "Disclosing Party") to the other Party (the "Receiving Party") during the
term of this Agreement (the "Confidential Information") and the development of
certain confidential and proprietary information in the Fields in the course of
the Research collaboration by the Parties hereunder, including, without
limitation, Test Compounds and Results (the "Research Information") (the
Confidential Information and Research Information are collectively referred to
hereinafter as the "Information"). Such information shall be marked
"Confidential" and any information disclosed orally shall be deemed not to be
Information unless notified in writing by the Disclosing Party to the Receiving
Party within thirty (30) days of the oral disclosure. With respect to
Information, each Party, shall:

          11.1 1 use the Information only for the purpose of performing its
duties or exercising its rights under this Agreement and for no other purpose,
subject to the terms and conditions of this Agreement;

          11.1.2 safeguard the Information against disclosure to others with
the same degree of care as it exercises with its own data of a similar nature,
but not less than a reasonable degree of care; and

          11.1.3 not disclose the Information to others (except to its
employees, consultants, Affiliates, or sublicensees, or the employees or
consultants of an Affiliate or sublicensee, who have a need to know such
Information in order to perform or supervise Research or otherwise exercise the
Party's rights under this Agreement and who are bound to the Receiving Party by
a like obligation of confidentiality and restriction on use) without the express
written consent of the other Party.

     11.2 Exemption from Restrictions on Information.  The obligations of
          ------------------------------------------
Section 11.1 shall not apply to Information of the Disclosing Party which:

          11.2.1 the Receiving Party or its Affiliate can demonstrate by written
records was previously known to it;

          11.2.2 is now, or in the future becomes, public knowledge other than
through the acts or omissions of the Receiving Party or its Affiliate;

          11.2.3 is or was lawfully obtained by the Receiving Party or its
Affiliate from sources independent of the Disclosing Party;

          11.2.4 the Receiving Party can demonstrate was independently developed
by or for employees of the Receiving Party or its Affiliate having no knowledge
of such Information; or

          11.2.5 The Receiving Party is required to disclose by law or pursuant
to the direction of a court or government agency; provided the Disclosing Party
is first given a reasonable opportunity to contest such disclosure or seek a
protective order.

                                       22
<PAGE>

     11.3  Permitted Use and Disclosure of Information. Nothing contained herein
           -------------------------------------------
is intended to prevent either Party from using the Information to make
Regulatory Filings and to obtain necessary or appropriate Regulatory Approvals
or to prosecute or obtain Patents and Patent Applications for Products developed
hereunder; provided, however, that the Disclosing Party shall take all
reasonable efforts to prevent disclosure of the Information to Third Parties.
Each Party may use and disclose Information owned by such Party, provided that
such Information is not exclusively licensed to the other Party under this
Agreement.

     11.4  Disclosure of Information Not a License.  The furnishing of the
           ---------------------------------------
Information of the Disclosing Party to the Receiving Party shall not constitute
any grant or license to the Receiving Party under any legal rights now or
hereinafter held by the Disclosing Party.

     11.5  Prior Review of Publications.  Neither Party shall submit for written
           ----------------------------
or oral publication any manuscript, abstract or the like which includes
Information, including without limitation any data or other information relating
to any Test Compound, Product, Development or Commercialization without first
obtaining the prior written consent of the Project Team pursuant to Section
5.3.4 and the other Party.  Such consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, either Party may make publications
relating to such Party's Patent Applications that were filed prior to the
Effective Date without such Party having to obtain the other Party's  consent to
the publication.  The contribution of each Party shall be noted in all
publications or presentations by acknowledgment or co-authorship, whichever is
appropriate.

     11.6  Publicity and News Releases.  Except as may be required by applicable
           ---------------------------
laws, rules or regulations, neither Party will originate any publicity, news
release, or other public announcement or filing, written or oral, whether to the
public press or otherwise, relating to performance hereunder or the existence of
an arrangement between the Parties including this Agreement or any amendment
hereto, without the prior written approval of the other Party which approval
shall not be unreasonably withheld or delayed.  In the event disclosure is
required by applicable law, rules or regulations, then the Party required to so
disclose such information shall, to the extent possible, provide to the other
Party for its approval (such approval not to be unreasonably withheld or
delayed) a written copy of such public announcement at least three business days
prior to disclosure. Notwithstanding the foregoing, (i) the Parties have agreed
to the press releases relating to the entering into of this Agreement agreed
upon by the Parties, copies of which are attached to this Agreement as Exhibit
                                                                       -------
11.6 and (ii) the Parties shall have the right to disclose the material terms of
----
this Agreement to any bona-fide financial partner or potential investor or
acquirer.

     11.7  Period of Confidentiality.  The obligations of this Section 11 shall
           -------------------------
remain in effect during the term of this Agreement and the five-year period
beginning on the termination or expiration date of the term of this Agreement.

     11.8  Injunctive Relief.  3DP and Heska agree that unauthorized disclosure
           -----------------
of Information could result in irreparable harm.  Accordingly, in the event that
either 3DP or Heska breaches its obligations with

                                       23
<PAGE>

respect to Information under the Agreement, the Party injured shall be entitled
to enjoin any further breach and may take such additional action as it deems
necessary and appropriate including seeking damages in any court of competent
jurisdiction.

12.  Inventions, Patents and Patent Prosecution
     ------------------------------------------

     12.  Joint Intellectual Property.
          ---------------------------

          12.1.1  Each Party shall promptly inform the other Party upon the
making of a potentially patentable invention that is Joint Intellectual
Property. The Parties thereafter shall promptly meet to discuss in good faith an
appropriate patent prosecution strategy for such invention. It is the intention
of the Parties whenever possible to divide prosecution of Patent Applications
claiming such inventions so that Heska has the responsibility for prosecution of
Patent Applications that claim uses or applications of the invention in the
Fields and 3DP shall have the responsibility for prosecution of Patent
Applications that claim uses or applications of the invention in or on humans.
Based on such discussions, the Parties will allocate to each Party the agreed
responsibility for filing and prosecution of Patent Applications claiming such
invention.

          12.1.2  3DP shall have the first right, at its own expense and using
in-house or outside legal counsel reasonably acceptable to Heska, to prepare,
file, prosecute, maintain and extend such Patent Applications and Patents
claiming the Joint Intellectual Property as allocated to 3DP by the Parties
under Section 12.1.1, in countries of its choice throughout the world. Heska
shall have the first rights, at its own expense and using in-house or outside
legal counsel reasonably acceptable to 3DP, to prepare, file, prosecute,
maintain and extend such Patent Applications and Patents claiming the Joint
Intellectual Property as allocated to Heska by the Parties under Section 12.1.1,
in countries of its choice throughout the world. Each Party shall consult with
the Project Team concerning the nature and text of such Patent Applications and
prosecution matters related thereto prior to filing of such applications or
responding to any correspondence with patent authorities regarding such
applications.

          12.1.3  If a Party that has the right under Section 12.1.2 to
prosecute certain Patent Applications claiming an invention in the Joint
Intellectual Property declines to file, prosecute or maintain such Patent
Applications or Patents issuing therefrom, such Party will give the other Party
written notice of its election to cease such efforts at least sixty days before
any date that would act as a forfeiture or abandonment of the rights in such
Patent Application or Patent. Thereafter, the other Party may at its expense
undertake the filing, prosecution and maintenance of such abandoned application
or Patent.

          12.1.4  In the event that a Party desires to license to a Third Party
any of such Party's interest in Joint Intellectual Property (to the extent not
already licensed hereunder), such Party shall provide the other Party notice of
such proposed license, in confidence, and agrees to negotiate with such other
Party, if it so requests, to grant such license rights to such Party, provided
that the noticing Party may negotiate with any Third Party at the same time.

                                       24
<PAGE>

     12.2 3DP Intellectual Property.
          -------------------------

          12.2.1  3DP shall promptly inform Heska of any potentially
patentable invention within the Results that may have applicability or utility
in the Primary Field, promptly after making such invention.  Heska shall have
the right to discuss such invention with 3DP and to request the filing and
prosecution of Patent Applications with respect to such invention to the extent
applicable to or useful in the Primary Field, and 3DP shall consider reasonably
all such requests.

          12.2.1  3DP shall have the first right, at its own expense and using
in-house or outside legal counsel reasonably acceptable to Heska, to prepare,
file, prosecute, maintain and extent Patent Applications and Patents claiming
inventions in the Results, in countries of its choice throughout the world. With
respect to any such Patent Applications that have claims that relate to the
Primary Field or have application or utility in the Primary Field, 3DP will
provide Heska the Patent Application a reasonable amount of time prior to filing
(at least 30 days wherever possible) so that Heska may review and give comments
to 3DP, which comments 3DP will reasonably consider. 3DP also will provide Heska
copies of all correspondence and other communications from patent authorities
regarding such Patent Applications and copies of the responses or other
communications proposed to be made by 3DP to such authorities a reasonable
amount of time prior to making such communications so that Heska may review and
give comments to 3DP, which comments 3DP will reasonably consider.

          12.2.2  If 3DP declines to file, prosecute or maintain any Patent
Applications or Patents claiming Results that, in Heska's reasonable belief,
relate to the Primary Field or have application or utility in the Primary Field,
3DP will give Heska written notice of its election to cease such efforts at
least sixty days before any date that would act as a forfeiture or abandonment
of the rights in such Patent Application or Patent.  Thereafter, Heska may at
its expense undertake the filing, prosecution and maintenance of such abandoned
Patent Applications or Patent, and immediately after Heska undertakes such
efforts 3DP shall assign to Heska all right, title and interest in and to such
Patent Application or Patent.

     12.3 Heska Intellectual Property.
          ---------------------------

          12.3.1  Heska shall promptly inform 3DP of any potentially patentable
invention within the Results included in the Heska Intellectual Property that
may have applicability or utility to use of a Test Compound in the Primary
Field, promptly after making such invention.  3DP shall have the right to
discuss such invention with Heska and to request the filing and prosecution of
Patent Applications with respect to such invention to the extent of such
applicability to or utility for use of Test Compounds in the Primary Field, and
Heska shall consider reasonably all such requests.

          12.3.2  Heska shall have the first right, at its own expense and using
in-house or outside legal counsel reasonably acceptable to 3DP, to prepare,
file, prosecute, maintain and extend Patent Applications and Patents claiming
inventions in the Results included in the Heska Intellectual Property, in

                                       25
<PAGE>

countries of its choice throughout the world.  With respect to any such Patent
Applications that have claims that relate to or have application or utility to
use of a Test Compound in the Primary Field, Heska will provide 3DP the Patent
Application a reasonable amount of time (at least thirty days whenever possible)
prior to the filing so that 3DP may review and give comments to Heska, which
comments Heska will reasonably consider.  Heska also will provide 3DP copies of
all correspondence and other communications from patent authorities regarding
such Patent Applications and copies of the responses or other communications
proposed to be made by Heska to such authorities a reasonable amount of time
prior to making such communication so that 3DP may review and give comments to
Heska, which comments Heska will reasonably consider.

     12.4  Assistance.  Each Party shall, at its own expense, provide reasonable
           ----------
assistance, including without limitation making inventors available to discuss
their inventions and appropriate documentation, to the other Party to facilitate
filing of all Patent Applications prosecuted by such other Party pursuant to
this Section 12 and shall execute all documents deemed necessary or desirable
therefore.

13.  Infringement
     ------------

     13.1  Third Party Litigation.  In the event of the institution of any suit
           ----------------------
by a Third Party against 3DP, Heska or their respective Affiliates or
sublicensees for patent infringement involving the manufacture, use, sale,
distribution or marketing of a Development Compound or Licensed Product by
Heska, its Affiliates or sublicensees anywhere in the Territory, the Party sued
shall promptly notify the other Party in writing.  Heska shall defend such suit
at its expense. Any costs and expenses of Heska in defending a suit arising
solely out of the use of 3DP Intellectual Property, and any amounts that Heska
is required to pay to the Third Party in order to settle or otherwise dispose of
such suit or in damages or other amounts finally awarded to such Third Parties
in such suit may be offset by Heska against any amounts that Heska owes to 3DP
under Section 8; provided that Heska may not settle such suit without 3DP's
prior written approval, such approval to not be unreasonably be withheld or
delayed.

     13.2  Infringement.  In the event that 3DP or Heska becomes aware of actual
           ------------
or threatened infringement of 3DP Patents or Joint Intellectual Property
(insofar as they relate to the Heska Compounds, Development Compounds or
Products) anywhere in the Territory, that Party shall promptly so notify the
other Party in writing.  Heska shall have the first right but not the obligation
to bring, at its own expense, an infringement action or file any other
appropriate action or claim against any Third Party related to infringement of
such Patents or Joint Intellectual Property.  If Heska does not commence a
particular infringement action within 90 days after it receives written notice
of such infringement of 3DP Intellectual Property or Joint Intellectual
Property, 3DP, after so notifying Heska in writing, shall be entitled to bring
such infringement action or any other appropriate action or claim at 3DP's
expense.  In any action pursuant to this section, the Party bringing the action
shall have the right to use the name of the other Party in connection therewith,
provided that the Party bringing the action defends, indemnifies and holds
harmless the other Party, its officers, directors, shareholders, employees,
successors and assigns from any loss, damage or liability, including reasonable
attorneys' fees, resulting from the action.

                                       26
<PAGE>

     13.3  Control of Litigation, Assistance and Settlement.  The Party
           ------------------------------------------------
conducting any action pursuant to Section 13.2 shall be entitled to bring and
control the action through counsel of its choice, and, upon request, the other
Party shall cooperate and provide reasonable assistance in any such action
without expense to the requesting Party.  No settlement or consent judgment or
other voluntary final disposition of any suit defended or action brought by one
Party pursuant to this Section may be entered into without the consent of the
other Party if such settlement would require the non-settling Party to be
subject to an injunction or to make a monetary payment or would adversely affect
the non-settling Party's rights under this Agreement or in its intellectual
property.

     13.4  Expenses and Awards.  The damages and awards recovered in an action
           -------------------
brought under Section 13.1 or 13.2 shall be applied as follows:

           13.4.1 first, to reimburse the Party defending or bringing such
action;

           13.4.2 second, to reimburse the expenses of the other Party in
connection with such action; and

           13.4.3 the balance to the Party that controlled the action, which, if
the Party controlling the action is Heska, shall be treated as Net Sales.

     13.5  Obligation to Inform.  The Parties shall keep one another informed of
           --------------------
the status of, and their respective activities regarding, any litigation
concerning any Development Compound or Product.

14.  Audit Rights, Taxes,  Payments and Interest
     -------------------------------------------

     14.1  Audit Rights.
           ------------

           14.1.1 3DP shall have the right, at its expense, through a certified
public accountant reasonably acceptable to Heska and 3DP, to examine the records
required to be maintained by Heska under this Agreement during regular business
hours, and upon reasonable prior notice, before the termination or expiration of
this Agreement and for three years thereafter, provided that such examination
shall not take place more often than once a year and shall not cover such
records for more than the preceding three years, and provided further that such
accountant shall report to 3DP only on the accuracy of royalty statements and
payments.  If the auditor discloses a discrepancy in royalties owed by Heska to
3DP and royalties paid to 3DP which exceeds five percent (5%) of total Net Sales
made until the date of completion of the audit, Heska shall pay the entire
expense of the audit and pay to 3DP the entire amount of the discrepancy plus
interest within 30 days from the date upon which 3DP notified Heska of the
discrepancy.  Interest shall be computed at the rate set forth in Section 14.5.

                                       27
<PAGE>

          14.1.2 Heska shall have the right, at its expense, through a certified
public accountant reasonably acceptable to 3DP and Heska, during regular
business hours and upon reasonable prior notice, to examine 3DP's records of FTE
Years applied to the Research and costs of Test Compounds supplied to Heska at
Heska's expense to determine 3DP's compliance with its obligations as to the
allocation of FTE Years to the Research and to charge Heska its cost for such
Test Compounds, and its records relating to amounts payable to Heska under
Section 4.4 to determine compliance with its obligations under Section 4.4,
before the termination or expiration of this Agreement and for three years
thereafter, provided that such examination shall not take place more often than
once a year and shall not cover such records for more than the preceding three
years, and provided further that such accountant shall report to Heska only on
3DP's allocation of FTE Years or the accuracy of payments under Section 4.4. If
the auditor discloses a discrepancy in amounts owed by 3DP to Heska under
Section 4.4 which exceeds five percent (5%) of total amounts payable until the
date of completion of the audit, 3DP shall pay the entire expense of the audit
and pay to Heska the entire amount of the discrepancy plus interest within 30
days from the date upon which Heska notified 3DP of the discrepancy. Interest
shall be computed at the rate set forth in Section 14.5.

     14.2 Taxes.  Any tax required to be withheld and paid by a Party on account
          -----
of royalties payable to the other Party under this Agreement shall be deducted
from the amount of royalties otherwise due.  The paying Party shall secure and
send to the other Party written proof of any such taxes withheld and paid for
the benefit of the other Party in a form sufficient to satisfy the United States
Internal Revenue Service.

     14.3 Payments in U.S. Dollars.  All dollar amounts set forth in this
          ------------------------
Agreement are references to U.S. dollars.  If Heska is prevented from making any
payment under this Agreement by virtue of the statutes, laws, codes or
governmental regulations of the country from which the payment is to be made,
then such payments may be paid by depositing them in the currency in which
accrued to 3DP's account in a bank acceptable to 3DP in the country whose
currency is involved.

     14.4 Conversions to U.S. Dollars.  Monetary conversions from the currency
          ---------------------------
of a foreign country, in which a Product is sold, into U.S. currency shall be
made at the average spot rate for the purchase of U.S. dollars with such
currency as quoted by Citibank, N.A., New York, New York (or its successor in
interest), at approximately 9 a.m. (New York City time) on the last ten business
days of the calendar quarter with respect to which such revenues were earned.

     14.5 Interest.  Any payment that is not made on or before the date when due
          --------
under this Agreement shall accrue interest thereon from and including such date
and until but excluding the date of payment at the rate of 1.5% (one and one-
half percent) per month or, if such rate is in excess of the rate then permitted
by applicable law, at the highest rate so permitted.

                                       28
<PAGE>

15.  Representations and Warranties
     ------------------------------

     15.1  Each Party represents and warrants to the other Party:

           15.1.1  Corporate Power. Such Party is duly organized and validly
                   ---------------
existing under the laws of the jurisdiction of its formation and has full
corporate power and authority to enter into this Agreement and carry out the
provisions hereof.

           15.1.2  Due Authorization. Such Party is duly authorized to execute
                   -----------------
and deliver this Agreement and to perform its obligations hereunder.

           15.1.3  Binding Agreement.  This Agreement is a legal and valid
                   -----------------
obligation of such Party and the execution, delivery and performance of this
Agreement by such Party does not and will not conflict with any agreement,
instrument or understanding, oral or written, to which it is a Party or by which
it may be bound, nor violate any law or regulation of any court, governmental
body or administrative or other agency having authority over such Party.

           15.1.4  Authorizations. Such Party has obtained, and will maintain
                   --------------
for the term of the Agreement, all licenses, authorizations, approvals and
reviews required by any federal, state or local governmental authority for
performance of any activities under this Agreement.

           15.1.5  No Agreement. No agreement exists between such Party and a
                   ------------
Third Party as of the Effective Date which would prevent such Party from
performing its obligations under this Agreement or granting to the other Party
the rights granted hereunder, and such Party shall not enter into any such Third
Party agreement that would prevent such Party from performing its obligations
under this Agreement or granting to those other Party the rights granted
hereunder.

     15.2  3DP represents and warrants to Heska that:

          15.2.1  To 3DP's knowledge, based upon its review of the issued
Patents covering the Existing Compounds and its having performed a reasonable
search of relevant published Patents, as of the Effective Date, the conduct of
the Research, including the use of the 3DP Intellectual Property by Heska as
permitted by this Agreement, will not violate the intellectual property rights
of any Third Party and there is a reasonable likelihood that 3DP will be able to
discover, synthesize or produce a reasonable number of Test Compounds that will
not violate the intellectual property rights of any Third Party. Nothing in this
Agreement shall be construed as a representation or warranty that the Patents in
the 3DP Intellectual Property are valid or enforceable, or that they will be
during the term of this Agreement.

     15.3  3DP Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
           ----------------------------
IN THIS AGREEMENT, 3DP MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OR
CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH

                                       29
<PAGE>

RESPECT TO THE 3DP INTELLECTUAL PROPERTY, ANY PATENTS, ANY KNOW-HOW, ANY
DEVELOPMENT COMPOUND, ANY PRODUCT, THE RESEARCH, THE RESULTS OR ANY INFORMATION
DISCLOSED HEREUNDER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, 3DP
DISCLAIMS ANY AND ALL IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, ANY AND
ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT.

     15.4  Heska Disclaimer of Warranties.  EXCEPT AS OTHERWISE EXPRESSLY SET
           ------------------------------
FORTH IN THIS AGREEMENT, HESKA MAKES NO REPRESENTATIONS AND EXTENDS NO
WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO
THE HESKA INTELLECTUAL PROPERTY, ANY PATENTS, ANY KNOW-HOW, ANY DEVELOPMENT
COMPOUND, ANY PRODUCT, THE RESEARCH, THE RESULTS OR ANY INFORMATION DISCLOSED
HEREUNDER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, HESKA DISCLAIMS ANY
AND ALL IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, ANY AND ALL IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-
INFRINGEMENT.

16.  Indemnification and Insurance
     -----------------------------

     16.1  Mutual Indemnification.  Each party (the "Indemnifying Party") agrees
           ----------------------
to indemnify, defend and hold harmless the other, its officers, directors,
shareholders, employees, Affiliates, agents, sublicensees, successors and
assigns (the "Indemnified Parties") from and against any loss, damage, or
liability, including interest and penalties and reasonable attorney's fees, and
any claim, complaint, suit, proceeding or cause of action against an Indemnified
Party resulting from or arising out of:

           16.1.1  any negligent or intentional act by the Indemnifying Party,
its officers, directors, shareholders, employees, Affiliates, agents,
sublicensees successors and assigns;

           16.1.2  any breach by Indemnifying Party of any representation,
warranty, covenant or provision in this Agreement;

     16.2  Indemnification by Heska.  Heska agrees to indemnify, defend and hold
           ------------------------
harmless 3DP, its officers, directors, shareholders, employees, Affiliates,
agents, sublicensees, successors and assigns (the "3DP Indemnified Parties")
from and against any loss, damage, or liability, including interest and
penalties and reasonable attorney's fees, and any claim, complaint, suit,
proceeding or cause of action against an 3DP Indemnified Party resulting from or
arising out of:

                                       30
<PAGE>

          16.2.1  any product liability or other lawsuit, claim, demand or other
action brought with respect to damage or harm caused by a Development Compound
or Product sold by Heska or any of its Affiliates or sublicensees; and

          16.2.2  the death of or injury to any person or persons, damage to
property, or any other claim, proceeding, demand, expense and liability of any
kind whatsoever resulting from the design, testing (including, without
limitation, clinical trials), production, manufacture, shipping, handling, use
(in commerce or otherwise), sale, lease, consumption, promotion or advertisement
of any Development Compound or Product by Heska or any of its Affiliates or
sublicensees.

Heska shall not be responsible or have any obligation hereunder, however, for
the negligent or intentional wrongdoing of any 3DP Indemnified Party.

     16.3 Indemnification by 3DP.  3DP agrees to indemnify, defend and hold
          ----------------------
harmless Heska, its officers, directors, shareholders, employees, Affiliates,
agents, sublicensees, successors and assigns (the "Heska Indemnified Parties")
from and against any loss, damage, or liability, including interest and
penalties and reasonable attorney's fees, and any claim, complaint, suit,
proceeding or cause of action against a Heska Indemnified Party resulting from
or arising out of:

          16.3.1  any product liability or other lawsuit, claim, demand or other
action brought with respect to damage or harm caused by a Product sold by 3DP or
any of its Affiliates or sublicensees; and

          16.3.2  the death of or injury to any person or persons, damage to
property, or any other claim, proceeding, demand, expense and liability of any
kind whatsoever resulting from the design, testing (including, without
limitation, clinical trials), production, manufacture, shipping, handling, use
(in commerce or otherwise), sale, lease, consumption, promotion or advertisement
of any Product by 3DP or any of its Affiliates or sublicensees.

3DP shall not be responsible or have any obligation hereunder, however, for the
negligent or intentional wrongdoing of any Heska Indemnified Party.

     16.4 Insurance.  During the term of this Agreement and for a period of five
          ---------
years thereafter, Heska shall obtain and/or maintain at its sole cost and
expense, product liability insurance in amounts, which are reasonable and
customary in the animal health industry for companies of comparable size and
activities.  Such product liability insurance shall insure against all
liability, including product liability, personal liability, physical injury or
property damage (subject to usual policy exceptions).  Heska shall provide
written proof of the existence of such insurance to 3DP upon request therefor.

     16.  Procedures for Indemnification.  In the event that a Party seeks
          ------------------------------
indemnification under the terms of Sections 16.2 or 16.3, it shall inform the
indemnifying party of the claim as soon as

                                       31
<PAGE>

reasonably practicable after it receives notice of the claim, shall permit the
indemnifying party to assume direction and control of the defense of the claim
(including the right to settle the claim solely for monetary consideration), and
shall cooperate as requested (at the indemnifying party's expense), in the
defense of the claim.

17.  Miscellaneous
     -------------

     17.1  Force Majeure.  If the performance of any part of this Agreement by
           -------------
either Party, including the performance of the Research, or of any obligation
under this Agreement, is prevented, restricted, interfered with or delayed by
reason of any cause beyond the reasonable control of the Party liable to
perform, unless conclusive evidence to the contrary is provided, the Party so
affected shall, upon giving written notice to the other Party, be excused from
such performance to the extent of such prevention, restriction, interference or
delay, provided that the affected Party shall use its best efforts to avoid or
remove such causes of non-performance and shall continue performance with the
utmost dispatch whenever such causes are removed.  When such circumstances
arise, the Parties shall discuss what, if any, modification of the terms of this
Agreement may be required in order to arrive at an equitable solution.

     17.2  Governing Law; Convention on Contracts for the International Sale of
           --------------------------------------------------------------------
Goods.  This Agreement shall be deemed to have been made in the State of New
-----
York, U.S.A., and its form, execution, validity, construction and effect shall
be determined in accordance with the law of First Circuit of the United States
and of the State of New York,  U.S.A., without giving effect to the principles
of conflicts of law thereof.  To the extent that it may otherwise be applicable,
the Parties hereby expressly agree to exclude from the operation of this
Agreement the United Nations Convention on Contracts for the International Sale
of Goods, concluded at Vienna, on April 11, 1980, as amended and as may be
amended further from time to time.

     17.3  Dispute Resolution.  Either Party may initiate the dispute resolution
           ------------------
procedure set forth in this Section 17.3 by providing written notice to the
other Party. Any dispute between the Parties relating to this Agreement shall be
resolved pursuant to the following procedures:

          17.3.1  Any dispute arising out of or in connection with the Research
shall first be submitted to the Project Team for resolution.  The Project Team
shall have 30 days to attempt to resolve the dispute.  The Project Team will set
forth its resolution in writing.

          17.3.2  If the Project Team is unable to resolve the dispute related
to the Research within the 30-day period specified in Section 17.3.1, or if
either Party gives written notice to the other Party of any dispute under this
Agreement that is not related to the Research, the dispute shall automatically
be referred to the President/CEO of 3DP and an executive officer designated by
Heska from time to time (together, the "Officers"), who shall attempt to resolve
the dispute within a reasonable

                                       32
<PAGE>

time, but in no case more than 45 days from the time that the Project Team
forwards its resolution to the Officers. The Officers shall issue their
resolution in writing.

          17.3.3  If the Officers are unable to resolve the dispute, they shall
use best efforts to select and agree upon a neutral arbitrator. If the
executives are unable to agree upon a neutral arbitrator within twenty (20)
days, a neutral arbitrator shall be appointed pursuant to the Commercial
Arbitration Rules of the American Arbitration Association ("AAA") then in
effect. The Officers and the neutral arbitrator shall participate in a meeting
in which the Parties shall work in good faith to resolve the dispute in
question. The meeting shall be held within 15 days after the selection or
appointment of the neutral arbitrator at a time and place to which the Parties
mutually agree, which agreement shall not be unreasonably withheld by the other
Party. The meeting shall be of such duration as the Parties in good faith deem
necessary, but in no event shall it extend beyond two business days. No formal
procedural rules shall govern this meeting. Each of the Parties may make such
oral and written presentations and present such oral and written presentations
and present such documents and other exhibits as it deems appropriate. After
listening to such presentations and examining such documents and other exhibits,
the two Officers, with the assistance of the neutral arbitrator, shall work
together in good faith to resolve the dispute in question. Each Party shall
absorb all of its own expenses in connection with such meeting and shall pay on
e-half of any costs or fees related to the services of the neutral arbitrator.
In the event the dispute is not resolved after such meeting is concluded, the
provisions of Section 17.3.4 below shall apply.

          17.3.4  If any dispute arising out of or in connection with this
Agreement is not resolved pursuant to Section 17.3.4, then the dispute shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the AAA then in effect, as modified below. The Parties will cooperate with each
other in causing the arbitration to be held in as efficient and expeditious a
manner as practicable.

               17.3.4.1       Arbitration shall be initiated by filing a demand
at the office of the AAA at 225 N. Michigan Avenue, Suite 2527, Chicago,
Illinois 60601.

               17.3.4.2       Disputes will be heard and determined by a panel
of three arbitrators. One Party arbitrator will be appointed by each Party to
serve on a panel. One neutral arbitrator will be appointed by the AAA.

               17.3.4.3       Neither Party will communicate separately with any
arbitrator. All communications between a Party and a Party arbitrator or the
neutral arbitrator will be directed to the AAA for transmittal to the
arbitrator.

               17.3.4.4       Any award rendered by the arbitrators shall be
final and binding upon the Parties hereto. Judgment upon the award may be
entered in any court of record of competent jurisdiction.

                                       33
<PAGE>

          17.3.5  Notwithstanding the foregoing provisions, either Party may
initiate and pursue any legal or equitable action to protect its Information,
intellectual property rights and ownership rights and either Party may initiate
and pursue legal action to avoid the expiration of any applicable statute of
limitations by seeking injunctive or other legal or equitable relief in any
court having jurisdiction over such matter.

     17.4  Severability. In the event that any provision of this Agreement shall
           ------------
be held illegal, void or ineffective, the remaining portions hereof shall remain
in full force and effect so long as such remaining portions do not materially
change the intent of this Agreement or the right or obligations of the Parties
hereunder. If any provision of this Agreement is in conflict with any applicable
statute or law in any jurisdiction, then such provision shall be deemed
inoperative in such jurisdiction to the extent of such conflict and the Parties
will renegotiate the affected provisions of this Agreement to resolve any
inequities. It is the intention of the Parties that, if any court or other
tribunal construes any provision or clause of this Agreement, or any portion
thereof, to be illegal, void or unenforceable because of the duration of such
provision or the area or matter covered thereby, such court shall reduce the
duration, area or matter of such provision and enforce such provision in its
reduced form.

     17.5  Entire Agreement, Amendment.  This Agreement constitutes the entire
           ---------------------------
agreement between the Parties relating to the subject matter hereof and
supersedes all previous writings and understandings, whether oral or written,
relating to the subject matter of this Agreement.  This Agreement may not be
amended, supplemented or otherwise modified except by an instrument in writing
signed by both Parties that specifically refers to this Agreement.

     17.6  Notices.  Any notice or other communication required or permitted
           -------
under this Agreement shall be sent by certified mail or courier service, charges
pre-paid, or by facsimile transmission, to the address or facsimile number
specified below:

     If to 3DP:

            3-Dimensional Pharmaceuticals, Inc.
            Eagleview Corporate Center
            665 Stockton Drive, Suite 104
            Exton, PA  19341
            Fax No.:   (610) 458-8258
            Attention:  Thomas P. Stagnaro, President
                        and Chief Executive Officer

                                       34
<PAGE>

     with a copy to:

            Morgan, Lewis & Bockius LLP
            2000 One Logan Square
            Philadelphia, PA  19103
            Fax No.:  (215) 963-5299
            Telephone No.: (215) 953- 5371
            Attention:  David R. King, Esq.

     If to Heska:

            The Heska Corporation
            1825 Sharp Point Drive
            Fort Collins, CO 80525
            Fax No.:  (970) 484-9505
            Telephone No.:  (970) 493-7272
            Attention: Paul Hudnut
                       Vice President of Business Development

     with a copy to:

            Cooley Godward LLP
            Five Palo Alto Square
            3000 El Camino Real
            Palo Alto, California 94306
            Fax No.: (650) 857-0003
            Telephone No.: (650) 857-5000
            Attention: Bob Jones, Esq.

or to such other address or facsimile number as the person may specify in a
notice duly given to the sender as provided herein.  A notice will be deemed to
have been given five days after the date deposited in the United States mail or
with a courier service or, in the case of facsimile transmission, when received.

     17.7  Assignment and Binding Effect. This Agreement and the licenses herein
           -----------------------------
granted shall be binding upon and inure to the benefit of the successors and
assigns of the Parties hereto. Neither Party may assign any of its rights, or
delegate any of its obligations, under this Agreement without the written
consent of the other Party. Notwithstanding the foregoing, either Party may,
without obtaining the consent of the other Party assign this Agreement to any
Affiliate or to any corporation with which it may merge or consolidate, or to
which it may transfer all or substantially all of its assets.

                                       35
<PAGE>

     17.8  Recordation.  Each Party shall have the right during the term of this
           -----------
Agreement to record or register this Agreement in any patent office or other
appropriate facility anywhere in the Territory, and the other Party shall
provide reasonable assistance in effecting such recording.

     17.9  Headings and References.  All section headings contained in this
           -----------------------
Agreement are for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.  Unless the context requires otherwise, all
references in this Agreement to any section, exhibit or appendix shall be deemed
and construed as references to a section of, or an exhibit or appendix to, this
Agreement, and any such exhibits and appendices are hereby incorporated in this
Agreement by such reference.

     17.10 No Agency. It is understood and agreed that each Party shall have the
           ---------
status of an independent contractor under this Agreement and that nothing in
this Agreement shall be construed as authorization for either Party to act as
agent for the other. Members of the Project Team shall remain employees of Heska
or 3DP, as the case may be, and neither Party shall incur any liability for any
act or failure to act by employees of the other Party, including members of any
of the foregoing committees who are employees of the other Party.

     17.11 Counterparts.  This Agreement may be executed in any number of
           ------------
counterparts, each of which shall be an original as against any Party whose
signature appears thereon but all of which together shall constitute but one and
the same instrument.

     17.12 Export Control.  The Parties agree not to remove or export from the
           --------------
United States or reexport from anywhere any Results, 3DP Intellectual Property,
Development Compound or Product to Afghanistan, the Peoples' Republic of China
or any Group Q, S, W, Y or Z country (as specified in Supplement No. 1 to
Section 770 of the U.S. Export Administration Regulations, or a successor
thereto) or otherwise except in compliance with and with all licenses and
approvals required under applicable export laws and regulations, including,
without limitation, those of the U.S. Department of Commerce.

                                       36
<PAGE>

          IN WITNESS WHEREOF, the Parties, through their authorized officers,
have duly executed this Agreement as of the date first written above.

                         3-DIMENSIONAL PHARMACEUTICALS, INC.

                         By:   /s/ Thomas P. Stagnaro
                             ------------------------------------------------
                             Name:      Thomas P. Stagnaro
                             Title:     President & CEO

                         HESKA CORPORATION

                         By:   /s/ Paul Hudnut
                             ------------------------------------------------
                             Name:      Paul Hudnut
                             Title:     Vice President, Business Development

                                       37
<PAGE>

                                 EXHIBIT 1.12
                                 ------------
                                     [**]

**This page and the next two pages of this Exhibit have been omitted based
upon a request for confidential treatment that has been filed with the
Commission. The omitted pages have been filed separately with the Commission.

<PAGE>

                                   EXHIBIT 3
                                 ------------

               3DP BANK ACCOUNT INFORMATION FOR WIRE TRANSFERS

                         Wire Transfer Instructions:

                                    [**]

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

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