Document:

<PAGE>   1
                                  EXHIBIT 10.7

                                   COVER PAGE

         The capitalized terms in this Lease shall have the meanings ascribed to
them below, and each reference to such term in the Lease shall incorporate such
meaning therein as if fully set forth therein.

LANDLORD:           ASC NORTH FULTON ASSOCIATES JOINT VENTURE, a Georgia joint
                    venture, with its principal office located at 4497 Park
                    Drive, Norcross, Georgia 30093

TENANT:             HORIZON PHARMACEUTICAL CORPORATION, a corporation duly
                    organized and existing under the laws of the State of
                    Delaware.

LEASED PREMISES:    (a)  Address:  660 Hembree Parkway

                    (b)  Suite :  106

                    (c)  Rentable Area:  24,300 square feet

                    (d)  Pro Rata Share:  25.71%

                    (e)  Project:  Northmeadow Distribution III

TERM:               Five (5) years

COMMENCMENT
DATE:               September 1, 1998

TERMINATION
DATE:               August 31, 2003

BASE RENT
(PER YEAR):         $176,175.00

BASE YEAR:          1998

SECURITY DEPOSIT:   $2,470.98

TENANT'S AGENT:     Zac Antonio
                    MZA Real Estate Services

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<PAGE>   2

                       HORIZON PHARMACEUTICAL CORPORATION

                                 LEASE AGREEMENT
                                TABLE OF CONTENTS

<TABLE>
SECTION                                                                            PAGE
-------                                                                            ----
<S>                                                                                <C>

 1.     LEASED PREMISES ......................................................       1

 2.     TERM .................................................................       1

 3.     RENTAL ...............................................................       1

 4.     DELAY IN DELIVERY ....................................................       3

 5.     USE OF LEASED PREMISES ...............................................       3

 6.     UTILITIES ............................................................       4

 7.     ACCEPTANCE OF PREMISES ...............................................       4

 8.     ALTERATIONS, MECHANICS' LIENS ........................................       4

 9.     QUIET CONDUCT/QUIET ENJOYMENT ........................................       5

10.     FIRE INSURANCE, HAZARDS ..............................................       5

11.     LIABILITY INSURANCE ..................................................       6

12.     INDEMNIFICATION ......................................................       6

13.     WAIVER OF CLAIMS .....................................................       7

14.     REPAIRS ..............................................................       7

15.     SIGNS, LANDSCAPING ...................................................       8

16.     ENTRY BY LANDLORD ....................................................       8

17.     TAXES AND INSURANCE INCREASE .........................................       8

18.     ABANDONMENT ..........................................................      10

19.     DESTRUCTION ..........................................................      10

20.     ASSIGNMENT AND SUBLETTING ............................................      11

21.     INSOLVENCY OF TENANT .................................................      11

22.     BREACH BY TENANT .....................................................      12

23.     ATTORNEYS' FEES/COLLECTION CHARGES ...................................      13
</TABLE>

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<PAGE>   3

STATE OF GEORGIA

FULTON COUNTY

         This Lease Agreement is made this 28th day of June, 1998, by and
between ASC NORTH FULTON ASSOCIATES JOINT VENTURE, a Georgia joint venture,
hereinafter referred to as "Landlord," and HORIZON PHARMACEUTICAL CORPORATION,
hereinafter referred to as "Tenant."

                                 LEASED PREMISES

         1.01     Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the property hereinafter referred to as the LEASED PREMISES,
described as approximately 24,300 rentable square feet of office/warehouse at
660 Hembree Parkway, Suite 106, Roswell, Georgia 30076, Fulton County, in
Northmeadow Business Park, as shown on the plan attached hereto as Exhibit "A"
and by reference incorporated herein. The building in which the Leased Premises
are located is herein referred to as the "Building;" and the real property on
which the building is situated is herein referred to as the "Land."

                                      TERM

         2.01     TO HAVE AND TO HOLD said Leased Premises for a term of five
(5) years, commencing on September 1, 1998, and continuing until midnight on
August 31, 2003.

                                     RENTAL

         3.01     As rental for the Leased Premises, Tenant agrees to pay to
Landlord, without offset or abatement, Base Rental as set forth below:

<TABLE>
     <S>                                     <C>                 <C>
     September 1, 1998 - August 31, 2000     $14,681.25/month    $176,175.00/year
     September 1, 2000 - August 31, 2001     $15,121.69/month    $181,460.28/year
     September 1, 2001 - August 31, 2002     $15,575.34/month    $186,904.08/year
     September 1, 2002 - August 31, 2003     $16,042.60/month    $192,511.20/year
</TABLE>

on or before the first day of each calendar month beginning on September 1, 1998
and thereafter for the remainder of the term, together with any other additional
rental as hereinafter set forth. Tenant shall pay interest at a rate of twelve
percent (12%) per annum on all late payments of rent, however, monthly rent
shall not be deemed late or past due unless said rent has not been paid to
Landlord on or before the fifth day of each calendar month provided however,
Landlord's acceptance of a late payment shall be accorded Tenant, if necessary,
only twice during any consecutive twelve (12) month period of the Term, and an
event of default shall be deemed to have immediately occurred upon the third
(3rd) failure by Tenant to make a timely payment as aforesaid within any
consecutive twelve (12) month period of the Term. If the Lease shall commence on
any date other than the first day of a calendar month, or end on any date, other
than the last day of a calendar month, rent for such month shall be prorated.
Tenant has

                                      -3-
<PAGE>   4

deposited with Landlord, upon delivery of this Lease Agreement, an amount equal
to Fourteen Thousand Six Hundred Eighty-one and 25/100 Dollars ($14,681.25)
Dollars, which is to be applied as first month's Base Rental. Landlord shall
hold an amount equal to Two Thousand Four Hundred Seventy and 98/100 ($2,470.98)
Dollars from Tenant's previous lease agreement, and upon execution of this
Lease, shall apply said amount to be held as a refundable security deposit for
this Lease. Landlord may apply all or any part of the security deposit to cure
any default by Tenant hereunder and Tenant shall promptly restore to the
security deposit all amounts so applied upon invoice therefor. If Tenant shall
fully perform each provision of this Lease, any portion of the security deposit
which has not been appropriated by Landlord in accordance with the provisions
hereof shall be returned to Tenant, without interest, within thirty (30) days
after the expiration of the term of this Lease.

         3.02     The rental provided in paragraph 3.01 "Rental" above, includes
an allowance ("Allowance") in the amount of $12.75 per square foot contained in
the Leased Premises, which is the sum of Three Hundred Nine Thousand Eight
Hundred Twenty-five and no/100 Dollars ($309,825.00) for the construction of
tenant improvements on the basis set forth in the plans and specifications
attached, or to be attached, hereto in Exhibit "B". In the event the cost of
tenant improvements exceeds the cost of tenant improvement Allowance, the excess
shall be paid by Tenant within thirty (30) days of Tenant's receipt of
Landlord's notice. Notwithstanding the foregoing, in the event Landlord
anticipates that the cost of tenant improvements will exceed the cost of tenant
improvement Allowance, by ten percent (10%) or more, Landlord shall give written
notice to Tenant of the projected cost overruns. Tenant shall have three (3)
days to advise Landlord of any objections to the notice, if Tenant does not so
advise Landlord within such period, Tenant shall be deemed to have approved such
cost overruns and the excess shall be paid by Tenant within thirty (30) days of
Tenant's receipt of Landlord's notice.

         3.03     In addition to the Base Rental, Tenant agrees to pay Landlord
as additional rental, its pro rata share of the amounts described in
subparagraphs (a) and (b) below. Each year during the term hereof, Landlord
shall give Tenant written notice of its estimate of the amount of common area
maintenance charges and common area utility charges (collectively "Charges") for
the Leased Premises for the calendar year. Tenant shall, thereafter, during that
calendar year, pay to Landlord one-twelfth (1/12) of the amount set forth in
said statement at such time as its monthly installments of Base Rental hereunder
are due and payable. At such time as Landlord is able to determine the actual
Charges for such calendar year, Landlord shall deliver to Tenant a statement
thereof and in the event the estimated Charges differ from the actual Charges,
any adjustment necessary shall be made to additional rental payments next coming
due under this paragraph.

                  (a)      Landlord agrees to maintain those areas around the
Building and in the Project, including parking areas, planted areas, signs and
landscaped areas which are from time to time designated by Landlord. Tenant
agrees to pay to Landlord as additional rental its pro rata share of all ground
maintenance charges and other common area charges and expenses for the Building
and the Land ("CAM Charges"). The term "grounds maintenance" shall include,
without limitation, all landscaping, planting, lawn and grounds care, all
repairs and maintenance to the grounds, signs and other common areas around the
Building and in the Project and to all sidewalks, driveways, loading areas and
parking areas. CAM Charges shall not include items of

                                      -4-
<PAGE>   5
capital nature. Tenant's pro rata share of CAM Charges for the first year of the
Lease term are estimated to be $.36 per square foot contained in the Leased
Premises. Notwithstanding the provisions of this Section 3.03 in no event shall
any increase in the CAM Charges exceed ten percent (10%) over CAM Charges for
the preceding year.

                  (b)      In the event any utilities furnished to the Building
or the Leased Premises are not separately metered, Tenant shall pay to Landlord,
as additional rental, Tenant's pro rata share of the gas, water, electricity,
fuel, irrigation costs, light and heat, garbage collection services and for all
other sanitary services rendered to the Leased Premises used by Tenant. Tenant's
prorated amount shall be determined on the basis of the size of the Leased
Premises, unless Landlord determines that Tenant's use of the Leased Premises
justifies a disproportionate allocation of utility costs to Tenant.

         3.04     Tenant agrees to pay as additional rent to Landlord, upon
demand, its pro rata share of any utility surcharges, or any other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any Federal, State,
Municipal or local governmental authorities in connection with the use or
occupancy of the Leased Premises, unless such costs are caused by the usage of
other tenants.

                         DELAY IN DELIVERY OF POSSESSION

         4.01     If Landlord, for any reason whatsoever, cannot deliver
possession of the Leased Premises to Tenant at the commencement of the term of
this Lease, this Lease shall not be void or voidable, nor shall Landlord be
liable to Tenant for any loss or damage resulting therefrom, but in that event
there shall be a proportionate reduction of rent covering the period between the
commencement of the term and the time when Landlord can deliver possession. If
delay is longer than three (3) months, Landlord will provide Tenant such space
(not exceeding in area the Leased Premises) as Landlord may have available,
until the Leased Premises can be completed, at no charge to Tenant. The term of
this Lease shall be extended by such delay.

                             USE OF LEASED PREMISES

         5.01     The Leased Premises may be used and occupied only for general
manufacturing and assembly, testing, warehousing and distribution, showroom and
offices and for no other purpose or purposes, without Landlord's prior written
consent. Tenant shall promptly comply at its sole expense with all laws,
ordinances, orders, and regulations affecting the Leased Premises and their
cleanliness, safety, occupation and use. Tenant shall not do or permit anything
to be done in or about the Leased Premises that will in any way increase the
fire insurance upon the building. Tenant will not perform any act or carry on
any practices that may injure the building or be a nuisance or menace to tenants
of adjoining premises. Tenant shall not cause, maintain or permit any outside
storage on or about the Lease Premises, including pallets or other refuse. The
rear loading areas of the Tenant's unit must be clean and unobstructed. On or
before the Commencement Date, Tenant shall take possession of, and, thereafter,
continuously occupy the Leased Premises during the term of this Lease, and
operate thereon the normal business operations of Tenant.

                                      -5-
<PAGE>   6
         5.02     Tenant shall, at Tenant's sole cost and expense, comply fully
with all environmental laws and regulations, and all other legal requirements,
applicable to Tenant's operations at, on or within, or to Tenant's use and
occupancy of, the Leased Premises. Tenant shall not (either with or without
negligence) cause or permit the escape, disposal or release of any biologically
or chemically active or other hazardous substances, or materials. Tenant shall
not allow the storage or use of such substances or materials in any manner not
sanctioned by law or by the highest standards prevailing in the industry for the
storage and use of such substances or materials, nor allow to be brought into
the Project any such materials or substances except to use in the ordinary
course of Tenant's business, and then only after written notice is given to
Landlord of the identity of such substances or materials. Without limitation,
hazardous substances and materials shall include those described in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Section 6901 et seq., any applicable state or local
laws and the regulations adopted under these acts. If any lender or governmental
agency shall ever require testing to ascertain whether or not there has been any
release of hazardous materials, then the reasonable costs thereof shall be
reimbursed by Tenant to Landlord upon demand as additional charges if such
requirement applies to the Leased Premises. In addition, Tenant shall execute
affidavits, representations and the like from time to time at Landlord's request
concerning Tenant's best knowledge and belief regarding the presence of
hazardous substances or materials on the Leased Premises. In all events, Tenant
shall indemnify Landlord in the manner elsewhere provided in this Lease from any
release of hazardous materials on the Leased Premises occurring while Tenant is
in possession, or elsewhere if caused by Tenant or persons acting under Tenant.
The within covenants shall survive the expiration or earlier termination of the
lease term.

                                    UTILITIES

         6.01     Landlord shall not be liable in the event of any interruption
in the supply of any utilities unless the interruption in supply of utilities is
caused by the negligence of Landlord, its agents, servants or employees (but
Landlord shall not be responsible for the actions of independent contractors).
In the event Landlord is responsible for an interruption in the supply of
utilities as provided herein, and such interruption adversely affects Tenant's
ability to conduct its business in the Leased Premises for more than two
consecutive business days, Tenant shall be entitled to an abatement of base
rental for each day after the second business day during which the interruption
continues as its sole remedy for such interruption. Tenant agrees that it will
not install any equipment which will exceed or overload the capacity of any
utility facilities and that if any equipment installed by Tenant shall require
additional utility facilities, the same shall be installed by Tenant at Tenant's
expense in accordance with plans and specifications approved in writing by
Landlord. Tenant shall be solely responsible for and shall pay all charges for
use or consumption of sanitary sewer, water, gas, electricity and any other
utility services serving the Leased Premises. In the event Landlord determines
that it is advisable to separately meter any utility services provided to the
Leased Premises, Landlord shall have the right to install a sub-meter and bill
Tenant for the actual cost thereof, which shall be paid to Landlord within
fifteen (15) days following billing.

                                      -6-
<PAGE>   7

                          ACCEPTANCE OF LEASED PREMISES

         7.01     By entry hereunder, Tenant acknowledges that it has examined
the Leased Premises and accepts the same as being in the condition called for by
this Lease, subject to punchlist items, and as suited for the uses intended by
Tenant. Upon delivery of possession of the Leased Premises to Tenant, Tenant
agrees to execute and deliver to Landlord a Tenant's Acceptance of Premises, in
the form attached hereto as Exhibit "C".

                          ALTERATIONS, MECHANICS' LIENS

         8.01     Alterations may not be made to the Leased Premises without
prior written consent of Landlord, and, unless otherwise agreed by Landlord and
Tenant, any alterations of the Leased Premises excepting movable furniture and
trade fixtures shall at Landlord's option become part of the realty and belong
to Landlord.

         8.02     Should Tenant desire to alter the Leased Premises and Landlord
gives written consent to such alterations, at Landlord's option, Tenant shall
contract with a contractor approved by Landlord for the construction of such
alterations.

         8.03     Notwithstanding anything in paragraph 8.02 above, Tenant may,
upon written consent of Landlord, install trade fixtures, machinery or other
trade equipment in conformance with all applicable laws, statues, ordinances,
rules, regulations, and the same may be removed upon the termination of this
Lease provided Tenant shall not be in default under any of the terms and
conditions of this Lease, and the Leased Premises are not damaged by such
removal. Tenant shall return the Leased Premises on the termination of this
Lease in the same condition as when rented to Tenant, reasonable wear and tear
only excepted. Tenant shall keep the Leased Premises, the building and property
in which the Leased Premises are situated free from any liens arising out of any
work performed for, materials furnished to, or obligations incurred by Tenant.
All such work provided for above, shall be done at such times and in such manner
as Landlord may from time to time designate. Tenant shall give Landlord written
notice five (5) days prior to employing any laborer or contractor to perform
work resulting in an alteration of the Leased Premises so that Landlord may post
a notice of non-responsibility.

                          QUIET CONDUCT/QUIET ENJOYMENT

         9.01     Tenant shall not commit, or suffer any waste upon the Leased
Premises, or any nuisance, or other act or thing which may disturb the quiet
enjoyment of any other tenant in the Building or any building in the project in
which the Leased Premises are located.

         9.02     So long as Tenant is not in default in the payment of rent, or
other charges or in the performance of any of the other terms, covenants, or
conditions of the Lease, Tenant shall not be disturbed by Landlord or anyone
claiming by, through or under Landlord in Tenant's possession, enjoyment, use
and occupancy of the Leased Premises during the original or any renewal term of
the Lease or any extension or modification thereof.

                                      -7-
<PAGE>   8
                             FIRE INSURANCE, HAZARDS

         10.01    No use shall be made or permitted to be made of the Leased
Premises, nor acts done which might increase the existing rate of insurance upon
the building or cause the cancellation of any insurance policy covering the
building, or any part thereof, nor shall Tenant sell, or permit to be kept, used
or sold, in or about the Leased Premises, any article which may be prohibited by
the Standard form of fire insurance policies. Tenant shall, at its sole cost and
expense, comply with any and all requirements pertaining to the Leased Premises,
of any insurance organization or company, necessary for the maintenance of
reasonable fire and public liability insurance, covering the Leased Premises,
building and appurtenances.

         10.02    Tenant shall maintain in full force and effect on all of its
inventory, fixtures and equipment in the Lease Premises a policy or policies of
fire and extended coverage insurance with standard coverage endorsement to the
extent of at least eighty percent (80%) of their insurable value. During the
term of this Lease the proceeds from any such policy or policies of insurance
shall be used for the repair or replacement of the fixtures, and Landlord will
sign all documents necessary or proper in connection with the settlement of any
claim or loss by Tenant. Landlord will not carry insurance on Tenant's
possessions. Tenant shall furnish Landlord with a certificate of such policy
within thirty (30) days of the commencement of this Lease, and whenever
required, shall satisfy Landlord that such policy is in full force and effect.

                               LIABILITY INSURANCE

         11.01    Tenant, at its own expense, shall provide and keep in force
with companies acceptable to Landlord public liability insurance for the benefit
of Landlord and Tenant jointly against liability for bodily injury and property
damage in the amount of not less than Three Million Dollars ($3,000,000.00) in
respect to injuries to or death of more than one person in any one occurrence,
in the amount of not less than One Million Dollars ($1,000,000.00) in respect to
injuries to or death of any one person, and in the amount of not less than One
Million Dollars ($1,000,000.00) per occurrence in respect to damage to property,
such limits to be for any greater amounts as may be reasonably indicated by
circumstances from time to time existing. Tenant shall furnish Landlord with a
certificate of such policy within thirty (30) days of the commencement date of
this Lease and whenever required shall satisfy Landlord that such policy is in
full force and effect. Such policy shall name Landlord as an additional insured
and shall be primary and non-contributing with any insurance carried by
Landlord. The policy shall contain a contractual liability endorsement. The
policy shall further provide that it shall not be canceled or altered without
twenty (20) days prior written notice to Landlord.

                                 INDEMNIFICATION

         12.01    Tenant shall indemnify and hold harmless Landlord against and
from any and all claims arising from Tenant's use of the Leased Premises (other
than those arising solely from willful misconduct or negligence of Landlord or
its agents or employees), or the conduct of its business or from any activity,
work, or thing done, permitted or suffered by the Tenant in or about the Leased
Premises, and shall further indemnify and hold harmless Landlord against and
from any and all claims arising from any breach or default in the performance of
any obligation

                                      -8-
<PAGE>   9
on Tenant's part to be performed under the terms of this Lease, or arising from
any act, neglect, fault or omission of the Tenant, or of its agents or
employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in or about such claim or any action or proceeding brought
relative thereto and in case any action or proceeding be brought against
Landlord by reason of any such claim, Tenant upon notice from Landlord shall
defend the same at Tenant's expense by counsel, chosen by Tenant and who is
reasonably acceptable to Landlord. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons in or about the Leased Premises from any cause whatsoever
except that which is caused by the willful misconduct or negligence of Landlord
or its agents or employees or by the failure of Landlord to observe any of the
terms and conditions of this Lease and Tenant hereby waives all claims in
respect thereof against Landlord.

         12.02    Landlord shall indemnify Tenant and hold Tenant harmless
against and from all claims arising from the negligence or willful misconduct of
Landlord, its agents, employees or contractors, with respect to the Leased
Premises that is not insured against or required to be insured against and
recoverable under the insurance policies Tenant is required to maintain under
this Lease.

         12.03    The obligation of Landlord and Tenant under this paragraph
arising by reason of any occurrence taking place during the term of this Lease
shall survive the termination or expiration of this Lease.

                                WAIVER OF CLAIMS

         13.01    Tenant, as a material part of the consideration to be rendered
to Landlord, hereby waives all claims against Landlord for damages to goods,
wares and merchandise in, upon or about the Leased Premises and for injury to
Tenant, its agents, employees, invitees, or third persons in or about the Leased
Premises from any cause arising at any time unless such damage is due to
Landlord's negligent act or omission and such damage is caused by an occurrence
which is not an insurable hazard under a standard fire and broad form coverage
insurance which is reasonably available to Tenant for inuring such property of
Tenant at the time of the loss. The parties acknowledge that it is not their
intent to relieve Landlord from liability to Tenant, but rather that Tenant
benefit from available insurance coverage without subjecting Landlord to
liability for losses that could have been insured against by Tenant and without
subjecting Landlord to subrogation claims of any insurer.

                                     REPAIRS

         14.01    Tenant shall, at its sole cost, keep and maintain the Leased
Premises and appurtenances and every part thereof (excepting exterior walls and
roofs which Landlord agrees to repair) including by way of illustration and not
by way of limitation all windows, and skylights, doors, any store front and the
interior of the Leased Premises, including all plumbing, heating, air
conditioning, sewer, electrical systems and all fixtures and all other similar
equipment serving the Leased Premises in good and sanitary order, condition, and
repair. Tenant shall be responsible for all pest control within the Leased
Premises, including, but not limited to the eradication of any ants or termites
should infestation be observed during the term of the

                                      -9-
<PAGE>   10
Lease. Tenant shall, at its sole cost, keep and maintain all utilities, fixtures
and mechanical equipment used by Tenant in good order, condition, and repair.
All windows shall be washed and cleaned as often as necessary to keep them clean
and free from smudges and stains. In the event Tenant fails to maintain the
Leased Premises as required herein or fails to commence repairs (requested by
Landlord in writing) within thirty (30) day after such request, or fails
diligently to proceed thereafter to complete such repairs, Landlord shall have
the right in order to preserve the Leased Premises or portion thereof, and/or
the appearance thereof, to make such repairs or have a contractor make such
repairs and charge Tenant for the cost thereof as additional rent, together with
interest at the rate of twelve percent (12%) per annum from the date of making
such payments.

         14.02    Landlord agrees to keep in good repair the roof, foundations,
and exterior walls of the Leased Premises except repairs rendered necessary by
the negligence of Tenant, its agents, employees or invitees. Landlord gives to
Tenant exclusive control of Leased Premises and shall be under no obligations to
inspect said Leased Premises. Tenant shall promptly report in writing to
Landlord any defective condition known to it which Landlord is required to
repair, and Landlord shall move with reasonable diligence to repair such item.
Failure to report such defects shall make Tenant responsible to Landlord for any
liability incurred by Landlord by reason of such defects.

         14.03    Tenant shall obtain upon occupancy and keep current during the
lease term a service maintenance contract on the heating, ventilation and air
conditioning (HVAC) equipment serving the Leased Premises. The contract shall be
between Tenant and a dealer-authorized company acceptable to Landlord, and shall
at a minimum provide for an equipment check and tune-up service each spring and
fall, and filter and lubrication service every three months. A copy of said
contract shall be provided to Landlord, as well as any modification, extension,
renewal or replacement thereof.

                               SIGNS, LANDSCAPING

         15.01    Landlord shall have the right to control landscaping and
Tenant shall make no alterations or additions to the landscaping. Landlord shall
have the right to approve the placing of signs and the size and quality of the
same. Tenant shall place no exterior signs on the Leased Premises without the
prior written consent of Landlord. Any signs not in conformity with the Lease
may be immediately removed by Landlord.

                                ENTRY BY LANDLORD

         16.01    Tenant shall permit Landlord and Landlord's agents to enter
the Leased Premises, with reasonable prior notice to Tenant and with Tenant's
reasonable consent regarding the extent and timing of such entry, for the
purpose of inspecting the same or for the purpose of maintaining the building,
or for the purpose of making repairs, alterations, or additions to any portion
of the building, including the erection and maintenance of such scaffolding,
canopies, fences and props as my be required, or for the purpose of posting
notices of non-responsibility for alterations, additions, or repairs, or placing
upon the building any usual or ordinary "for sale" signs, without any rebate of
rent and without any liability to Tenant for any loss of occupation or

                                      -10-
<PAGE>   11
quiet enjoyment of the Leased Premises thereby occasioned; and shall permit
Landlord at any time within six (6) months prior to the expiration of this Lease
and with prior notice to Tenant, to enter the Leased Premises for the purpose of
showing the Leased Premises to prospective tenants, without any rebate of rent
and without any liability to Tenant for any loss of occupation or quiet
enjoyment of the Leased Premises thereby occasioned, and to place upon the
Leased Premises any usual or ordinary "to let" or "to lease" signs. For each of
the aforesaid purposes, Landlord shall at all times have and retain a key with
which to unlock all of the exterior doors about the Leased Premises.

                          TAXES AND INSURANCE INCREASE

         17.01    Tenant shall pay before delinquency any and all taxes,
assessments, license fees, and public charges levied, assessed, or imposed and
which become payable during the Lease upon Tenant's fixtures, furniture,
appliances and personal property installed or located in the Leased Premises.

         17.02    Tenant shall pay, as additional rental during the term of this
Lease and any extension or renewal thereof, the amount by which all taxes (as
herein defined) for each tax year exceeds all taxes for 1998. In the event the
Leased Premises are less than the area of the entire property assessed for such
taxes for any such tax year, then the tax for any such year applicable to the
Leased Premises shall be determined by proration on the basis that the rental
floor area of the Leased Premises bears to the rentable floor area of the entire
property assessed. The term "taxes" shall include all ad valorem taxes, special
assessments, and governmental charges assessed against the Building or the Land;
and such term shall also include any reasonable expenses, including fees and
disbursements of attorneys, tax consultants, arbitrators, appraisers, experts
and other witnesses, incurred by Landlord in contesting any taxes or the
assessed valuation of all or any part of the Building or the Land. If the final
year of the lease term fails to coincide with the tax year, then any excess for
the tax year during which the term ends shall be reduced by the pro rata part of
such tax year beyond the lease term. The agent's commission shall not apply to
any such additional rental resulting from the provisions of this paragraph.

         17.03    Tenant agrees to pay the amount for all taxes levied upon or
measured by the rent payable hereunder, whether as a so-called sales tax,
transaction privilege tax, excise tax, or otherwise (but no income taxes of
Landlord shall be payable by Tenant). Such taxes shall be due and payable at the
same time as and in addition to each payment of rent.

         17.04    Commencing in the year 1999 and during each remaining year of
the lease term or any extension or renewal thereof, in the event that the
insurance premiums payable by the Landlord for insurance coverage on the
property are increased, whether such increase is due to an increase in the
valuation of the building, or in the applicable rate of insurance, then Tenant
agrees to pay Landlord as additional rental, Tenant's pro rata share of the
increase in said insurance premiums over the base amount paid in the year 1998.
The term "insurance" shall include all fire and extended coverage insurance on
the Building and all liability insurance coverage on the common areas of the
Building, and the grounds, sidewalks, driveways and parking areas on the Land,
together with such other insurance coverages, including, but not limited to,
rent interruption insurance, as are from time to time obtained by Landlord.
Tenant's

                                      -11-
<PAGE>   12
pro rata share shall be based on the square footage of the Leased Premises
leased to Tenant (as specified in paragraph 1.01 hereof) compared to the total
square footage of leasable space in the entire building. If during the final
year of the Lease, or any extension or renewal thereof, the term does not
coincide with the year upon which the insurance rate is determined, the increase
in premiums for the portion of that year shall be prorated according to the
number of months during which Tenant is in possession of the Leased Premises.

         17.05    On or about January 1 of each calendar year during the term of
this Lease, Landlord shall provide Tenant with a good faith estimate of the
amount by which taxes and insurance will exceed the base amounts during such
calendar year. Tenant shall thereafter pay one-twelfth (1/12) of its pro rata
share of such increase at such time as its monthly installments of Base Rental
hereunder are due and payable. When the actual bills have been received by
Landlord, Landlord shall notify Tenant of the actual taxes and insurance for
such calendar year. If Tenant has paid more than it would have paid had the
actual bills been known, Landlord shall credit such excess against the next
additional rent payments coming due; if Tenant has not paid enough, Tenant shall
pay the remainder to Landlord within fifteen (15) days following receipt of a
statement from Landlord.

         17.06    The provisions of paragraphs 17.01, 17.02, 17.03, 17.04 and
17.05 hereof shall survive the expiration or earlier termination of this Lease.

                                   ABANDONMENT

         18.01    Tenant shall not abandon the Leased Premises at any time
during the term of this Lease; and if Tenant shall abandon, or surrender the
Leased Premises, or be dispossessed by process of law, or otherwise, any
personal property belonging to Tenant and left on the Leased Premises shall, at
the option of the Landlord, be deemed abandoned and be and become the property
of Landlord.

         18.02    Tenant shall have the right to vacate as long as (a) rental is
kept current, (b) security and maintenance is kept at acceptable levels and (c)
as long as any insurance rider required in the State of Georgia which maintains
the required protection is provided by Tenant.

                                   DESTRUCTION

         19.01    If the Leased Premises or any portion thereof are destroyed by
storm, fire, lightning, earthquake or other casualty, Tenant shall immediately
notify Landlord. In the event the Leased Premises cannot, in Landlord's
judgment, be restored within one hundred twenty (120) days of the date of such
damage or destruction, this Lease shall terminate as of the date of such
destruction, and all rent and other sums payable by Tenant hereunder shall be
accounted for as between Landlord and Tenant as of that date. Landlord shall
notify Tenant within thirty (30) days of the date of the damage or destruction
whether the Leased Premises can be restored within one hundred twenty (120)
days. If this Lease is not terminated as provided in this paragraph, Landlord
shall, to the extent insurance proceeds payable on account of such damage or
destruction are available to Landlord (with the excess proceeds belonging to
Landlord), within a reasonable time, repair, restore, rebuild, reconstruct or
replace the damaged or destroyed portion

                                      -12-
<PAGE>   13
of the Leased Premises to a condition substantially similar to the condition
which existed prior to the damage or destruction. Provided, however, that with
respect to Tenant improvements, Landlord shall only be required to repair,
restore, rebuild, reconstruct and replace the Landlord's Work shown on Exhibit
"B", and Tenant shall, at its sole cost and expense, upon completion of the
Landlord's Work, repair, restore, rebuild, reconstruct and replace, as required,
any and all improvements installed in the Leased Premises by Tenant and all
trade fixtures, personal property, inventory, signs and other contents in the
Leased Premises, and all other repairs not specifically required of Landlord
hereunder, in a manner and to at least the condition existing prior to the
damage. Tenant's obligation to pay Base Rent shall abate until Landlord has
repaired, restored, rebuilt, reconstructed or replaced the Leased Premises, as
required herein, in proportion to the part of the Leased Premises which are
unusable by Tenant. If the damage or destruction is due to the act, neglect,
fault or omission of Tenant, there shall be no rent abatement except to the
extent of rent loss insurance. In the event of any dispute between Landlord and
Tenant relative to the provisions of this paragraph, they may each select an
arbitrator, the two arbitrators so selected shall select a third arbitrator and
the three arbitrators so selected shall hear and determine the controversy and
their decision thereon shall be final and binding on both Landlord and Tenant
who shall bear the cost of such arbitration equally between them. Landlord shall
not be required to repair any property installed in the Leased Premises by
Tenant. Tenant waives any right under applicable laws inconsistent with the
terms of this paragraph and in the event of a destruction Landlord agrees to
offer Tenant comparable space, to the extent such space is readily available,
within the project in which the Leased Premises are located on the same terms as
this Lease. Notwithstanding the provisions of this paragraph, if any such damage
or destruction occurs within the final one (1) year of the term hereof, then
Landlord, in its sole discretion, my, without regard to the aforesaid 90-day
period, terminate this Lease by written notice to Tenant.

                            ASSIGNMENT AND SUBLETTING

         20.01    Landlord shall have the right to transfer and assign, in whole
or in part its rights and obligations in the building and property that are the
subject of this Lease. Tenant shall not assign this Lease or sublet all or any
part of the Leased Premises without the prior written consent of the Landlord,
which shall not be unreasonably withheld. In the event of any assignment or
subletting, Tenant shall nevertheless at all time, remain fully responsible and
liable for the payment of the rent and for compliance with all of its other
obligations under the terms, provisions and covenants of this Lease. If all or
any part of the Leased Premises re then assigned or sublet, Landlord, in
addition to any other remedies provided by this Lease or provided by law, may at
its option, collect directly from the assignee or subtenant all rents becoming
due to Tenant by reason of the assignment or sublease. Any collection directly
by Landlord from the assignee or subtenant shall not be construed to constitute
a novation or a release of Tenant from the further performance of its
obligations under this Lease. In the event that Tenant sublets the Leased
Premises or any part thereof, or assigns this Lese and at any time receives rent
and/or other consideration which exceeds that which Tenant would at that time be
obligated to pay to Landlord, Tenant shall pay to Landlord 100% of the gross
excess in such rent as such rent is received by Tenant and 100% of any other
consideration received by Tenant from such subtenant in connection with such
sublease or, in the case of any assignment of this Lease by Tenant, Landlord
shall receive 100% of any consideration paid to Tenant by such assignee in

                                      -13-
<PAGE>   14
connection with such assignment. In addition, should Landlord agree to an
assignment or sublease agreement, Tenant will pay to Landlord on demand the sum
of $500.00 to partially reimburse Landlord for its costs, including reasonable
attorneys' fees, incurred in connection with processing such assignment or
subletting request.

         20.02    Notwithstanding the foregoing, Tenant may freely transfer and
assign this Lease or sublet all or any portion of the Leased Premises (i) to any
affiliate or subsidiary of Tenant or (ii) in connection with any merger,
consolidation or sale of assets of Tenant, without having to obtain any consent
or approval of Landlord; provided, however that any such assignment or
subletting shall not result in Tenant being released or discharged from any
liability under this Lese except to the extent Tenant ceases to exist following
any such merger or consolidation. Tenant shall provide Landlord with written
notice of such assignment or subletting prior to or promptly following the
effective date of such assignment or subletting.

                              INSOLVENCY OF TENANT

         21.01    Either (a) the appointment of a trustee to take possession of
all or substantially all of the assets of Tenant, or (b) a general assignment by
Tenant for the benefit of creditors, or (c) any action taken or suffered by
Tenant under any insolvency or bankruptcy act shall, if any such appointments,
assignments or action continues for a period of sixty (60) days, constitute a
breach of this Lease by Tenant, and Landlord may at its election without notice,
terminate this Lease and in that event be entitled to immediate possession of
the Leased Premises and damages as provided below.

                                BREACH BY TENANT

         22.01    In the event of a monetary which is not cured within five (5)
days of receipt of written notice by Tenant of such default or in the event of
nonmonetary default by Tenant which is not cured within fifteen (15) days of
receipt of written notice by Tenant of such default, provided however, if the
default cannot reasonably be cured within such fifteen (15) day period, Tenant
shall not be in default if Tenant commences to cure the default within the
fifteen (15) day period and diligently and in good faith continues to cure the
default until completion. Landlord in addition to any and all other rights or
remedies that it may have hereunder, at law or in equity shall have the right to
either terminate this Lease or from time to time, without terminating this Lease
relet the Leased Premises or any part thereof for the account and in the name of
Tenant or otherwise, for any such term or terms and conditions as Landlord in
its sole discretion may deem advisable with the right to make reasonable
alterations and repairs to the Leased Premises. Tenant shall pay to Landlord, as
soon as ascertained, the costs and expenses incurred by Landlord in such
reletting or in making such reasonable alterations and repairs. Should such
rentals received from time to time from such reletting during any month be less
than that agreed to be paid during that month by Tenant hereunder, the Tenant
shall pay such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly.

         22.02    No such reletting of the Leased Premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a notice of
such intention be given to Tenant or unless the termination thereof be decreed
by a court of competent jurisdiction. Notwithstanding

                                      -14-
<PAGE>   15
any such reletting without termination, Landlord may immediately or at any time
thereafter terminate this Lease, and this Lease shall be deemed to have been
terminated upon receipt by Tenant of notice of such termination; upon such
termination Landlord shall recover from Tenant all damages that Landlord may
suffer by reason of such termination including, without limitation, all
arrearages in rentals, costs, charges, additional rentals, and reimbursements,
the cost (including court costs and attorneys' fees actually incurred) of
recovering possession of the Leased Premises, the actual or estimated (as
reasonably estimated by Landlord) cost of any alteration of or repair to the
Leased Premises which is necessary or proper to prepare the same for reletting
and, in addition thereto, Landlord shall have and recover from Tenant the
difference between the present value (discounted at a rate per annum equal to
the discount rate of the Federal Reserve Bank of Atlanta at the time the Event
of Default occurs) of the rental to be paid by Tenant for the remainder of the
lease term, and the present value (discounted at the same rate) of the rental
for the Leased Premises for the remainder of the lease term, taking into account
the cost, time and other factors necessary to relet the Leased Premises;
provided, however, that such payment shall not constitute penalty or forfeiture,
but shall constitute full liquidated damages due to Landlord as a result of
Tenant's default. Landlord and Tenant acknowledge that Landlord's actual damages
in the event of a default by Tenant under this Lease will be difficult to
ascertain, and that the liquidated damages provided above represent the parties'
best estimate of such damages. The parties expressly acknowledge that the
foregoing liquidated damages are intended not as a penalty, but as full
liquidated damages, as permitted by Section 13-6-7 of the Official Code of Ga.
Annotated.

                                 ATTORNEY'S FEES

         23.01    If Landlord and Tenant litigate any provision of this Lease or
the subject matter of this Lese, the unsuccessful litigant will pay to the
successful litigant all costs and expenses, including reasonable attorneys' fees
and court costs, incurred by the successful litigant at trial and on any appeal.
If, without fault, either Landlord or Tenant is made a party to any litigation
instituted by or against the other, the other will indemnify the faultless one
against all loss, liability, and expense, including reasonable attorneys' fees
and court costs, incurred by it in connection with such litigation.

                                  CONDEMNATION

         24.01    If, at any time during the term of this Lease, title to the
entire Leased Premises should become vested in a public or quasi-public
authority by virtue of the exercise of expropriation, appropriation,
condemnation or other power in the nature of eminent domain, or by voluntary
transfer from the owner of the Leased Premises under threat of such a taking
then this Lease shall terminate as of the time of such vesting of title, after
which neither party shall be further obligated to the other except for
occurrence antedating such taking. The same results shall follow if less than
the entire Leased Premises be thus taken, or transferred in lieu of such a
taking, but to such extent that it would be legally and commercially impossible
for Tenant to occupy the portion of the Leased Premises remaining, and
impossible for Tenant to reasonably conduct his trade or business therein.

                                      -15-
<PAGE>   16
         24.02    Should there be such a partial taking or transfer in lieu
thereof, but not to such an extent as to make such continued occupancy and
operation by Tenant an impossibility, then this Lease shall continue on all of
its same terms an conditions subject only to an equitable reduction in rent
proportionate to such taking.

         24.03    In the event of any such taking or transfer, whether of the
entire Leased Premises, or a portion thereof, it is expressly agreed and
understood that all sums awarded, allowed or received in connection therewith
shall belong to Landlord, and any rights otherwise vested in Tenant are hereby
assigned to Landlord, and Tenant shall have no interest in or claim to any such
sums or any portion thereof, whether the same be for the taking of the property
or for damages, or otherwise; provided, however, that Landlord shall make no
claim which shall diminish or adversely affect any award claimed or received by
Tenant. Nothing herein shall be construed, however, to preclude Tenant from
prosecuting any claim directly against the condemning authority for loss of
business, moving expenses, damage to, and cost of, trade fixtures, furniture and
other personal property belonging to Tenant; provided, however, that Tenant
shall make no claim which shall diminish or adversely affect any award claimed
or received by Landlord.

                                     NOTICES

         25.01    All notices, statements, demands, requests, consents,
approvals, authorization, offers, agreements, appointments, or designations
under this Lease by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party, (i) by depositing same in
the United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested; (ii) by recognized
overnight, third party prepaid courier service (such as Federal Express),
required signed receipt; (iii) by delivering the same in person to such party;
or (iv) by prepaid telegram, telecopy or telex with delivery of an original copy
of any such notice delivered pursuant to (ii) or (iii) above to be received no
later than the next business day. Notice personally delivered or sent by courier
service, telegram, telecopy or telex shall be effective upon receipt. Any notice
mailed in the foregoing manner shall be effective three (3) business days after
its deposit in the United States mail. Either party may change its address for
notices by giving notice to the other as provided above. For purposes of notice,
the addresses of the parties shall be as follows:

                  (a)      To Tenant at the Leased Premises, with a copy to such
                           other place as Tenant may from time to time designate
                           by notice to Landlord;

                  (b)      To Landlord, addressed to Landlord at 4497 Park
                           Drive, Norcross, Georgia 30093, with a copy to such
                           other place as Landlord may from time to time
                           designate by notice to Tenant.

                                     WAIVER

         26.01    The waiver by Landlord of any breach of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of such term,
covenant, or condition or any subsequent breach of the same or any other term,
covenant, or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any

                                      -16-
<PAGE>   17
preceding breach by Tenant of any term, covenant, or condition of this Lease,
other than the failure of Tenant to pay the particular rental so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent.

                             EFFECT OF HOLDING OVER

         27.01    If Tenant should remain in possession of the Leased Premises
after the expiration of the lease term and without executing new lease, then
such holding over shall be construed as a tenancy from month to month, subject
to all the conditions, provisions, and obligations of this Lese insofar as the
same are applicable to a month to month tenancy, except that the rent payable
pursuant to subparagraph 3.01 hereof shall be 150% of the rent payable pursuant
to subparagraph 3.01.

                                  SUBORDINATION

         28.01    This Lease, at Landlord's option, shall be subordinate to any
ground lease, first priority mortgage, first priority deed of trust, or first
priority security deed now or hereafter placed upon the real property of which
the Leased Premises are a part and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof.

         28.02    Tenant agrees to execute any documents required to effectuate
such subordination or to make this Lease prior to the lien of any such ground
lease, mortgage, deed of trust, or security deed, as the case may be, including
specifically a subordination, non-disturbance and attornment agreement in the
form hereto attached as Exhibit "D", and failing to do so within ten (10) days
after written demand, does hereby make, constitute and irrevocably appoint
Landlord as Tenant's attorney in fact and in Tenant's name, place and stead, to
do so. If requested to do so, Tenant agrees to attorn to any person or other
entity that acquires title to the real property encompassing the Leased
Premises, whether through judicial foreclosure, sale under power, or otherwise,
and to any assignee of such person or other entity.

                              ESTOPPEL CERTIFICATE

         29.01    Upon ten (10) days notice from Landlord to Tenant, Tenant
shall deliver a certificate dated as of the first day of the calendar month in
which such notice is received, executed by an appropriate officer, partner or
individual, in the form as Landlord may require and stating but not limited to
the following: (i) the commencement date of this Lease; (ii) the space occupied
by Tenant hereunder; (iii) the expiration date hereof; (iv) a description of any
renewal or expansion options; (v) the amount of rental currently and actually
paid by Tenant under this Lease; (vi) the nature of any default or claimed
default hereunder by Landlord and (vii) that Tenant is not in default hereunder
nor has any event occurred which with the passage of time or the giving of
notice would become a default by Tenant hereunder.

                                      -17-
<PAGE>   18
                                     PARKING

         30.01    Tenant shall be entitled to park in common with other tenants
of Landlord, at no additional cost to Tenant. Tenant agrees not to overburden
the parking facilities and agrees to cooperate with Landlord and other tenants
in the use of parking facilities. Landlord reserves the right in its absolute
discretion to determine whether parking facilities are becoming crowded and, in
such event, to allocate parking spaces among Tenant and other tenants. There
will be no assigned parking unless Landlord, in its sole discretion, may deem
advisable. Tenant agrees to park all Tenant' trucks in the parking spaces
provided at the rear of the building. "Parking" as used herein means the use by
Tenant's employees, its visitors, invitees, and customers for the parking of
motor vehicles for such periods of time as are reasonably necessary in
connection with use of and/or visits to the Leased Premises. No vehicle may be
repaired or serviced in the parking area and any vehicle deemed abandoned by
Landlord will be towed from the project and all costs therein shall be borne by
the Tenant. All driveways, ingress and egress, and all parking spaces are for
the joint use of all tenants. No area outside of the Leased Premises shall be
used by Tenant for storage without Landlord's prior written permission. There
shall be no parking permitted on any of the streets or roadways located in
Northmeadow Business Park.

                              MORTGAGEE PROTECTION

         31.01    In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any beneficiary of a deed or
trust or holder of a security deed or mortgage covering the Leased Premises
whose address shall have been furnished it, and shall offer such beneficiary or
holder thirty (30) days following such notice (with the effective time of such
notice as set forth in Section 25.01) to cure the default.

                              PROTECTIVE COVENANTS

         32.01    This Lease is subject to the Protective Covenants of
Northmeadow Business Park, and to such rules and regulations as may hereafter be
adopted and promulgated. In addition, Tenant shall comply with all covenants,
restrictions and other matters of record in the deed records of the county in
which the Leased Premises are located which affect or encumber the Leased
Premises, the Building or the Land.

                                   RELOCATION

         33.01    Intentionally deleted.

                              BROKERAGE COMMISSIONS

         34.01    Tenant's Agent and Landlord's Agent (collectively, "Agent")
shall each be entitled to receive a commission in the amounts, and upon the
terms and conditions, contained in a commission agreement between Landlord and
such parties.

         34.02    Tenant warrants and represents to Landlord that, other than
Agent, no other party is entitled, as a result of the actions of Tenant, to
commission or other fee resulting from the execution of this Lease; and in the
event Tenant extends or renews this Lease, or expands the Leased Premises, and
Tenant's Agent is entitled to a commission under the above-referenced

                                      -18-
<PAGE>   19
commission agreement, Tenant shall pay all commissions and fees payable to any
party (other than Tenant's Agent) engaged by Tenant to represent Tenant in
connection therewith. Landlord warrants and represents to Tenant that, except as
set forth above, no other party is entitled, as a result of the actions of
Landlord, to a commission or other fee resulting from the execution of this
Lease. Landlord and Tenant agree to indemnify and hold each other harmless from
any loss, cost, damage or expense (including reasonable attorneys' fees)
incurred by the nonindemnifying party as a result of the untruth or
incorrectness of the foregoing warranty and representation, or failure to comply
with the provisions of this subparagraph.

         34.03    Tenant's Agent is representing Tenant in connection with this
Lease, and is not representing Landlord. Landlord's Agent, or employees of
Landlord or its affiliates, are representing Landlord and are not representing
Tenant.

         34.04    The parties acknowledge that certain officers, directors,
shareholders, or partners of Landlord or its general partner(s), are licensed
real estate brokers and/or salesmen under the laws of the State of Georgia.
Tenant consents to such parties acting in such dual capacities.

                            MISCELLANEOUS PROVISIONS

         A.       Whenever the singular number is used in this Lease and when
required by the context, the same shall include the plural, and the masculine
gender shall include the feminine and neuter genders, and the word "person"
shall include corporation, firm or association. If there be more than one
tenant, the obligations imposed upon Tenant under this Lease shall be joint and
several.

         B.       The headings or titles to paragraphs of this Lease are for
convenience only and shall have no effect upon the construction or
interpretation of any part of this Lease.

         C.       This instrument contains all of the agreements and conditions
made between the parties to this Lease and may not be modified orally or in any
other manner than by agreement in writing signed by all parties to this Lease.

         D.       Where the consent of a party is required, such consent will
not be unreasonably withheld.

         E.       This Lease shall create the relationship of Landlord and
Tenant between Landlord and Tenant; no estate shall pass out of Landlord; Tenant
has only a usufruct, not subject to levy and/or sale and not assignable by
Tenant except as provided in paragraph 20.01 hereof.

         F.       Except as otherwise expressly stated, each payment required to
be made by Tenant shall be in addition to and not in substitution for other
payments to be made by Tenant.

         G.       All covenants and agreements to be performed by Tenant under
any of the terms of this Lease shall be performed by Tenant at Tenant's sole
cost and expense, unless otherwise provided herein, and without any abatement of
rent.

                                      -19-
<PAGE>   20
         H.       No payment by Tenant or receipt by Landlord of a lesser amount
than any installment or payment of rent due shall be deemed to be other than on
account of the amount due, and no endorsement or statement on any check or
payment of rent shall be deemed an accord and satisfaction. Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such installment or payment of rent, or pursue any other remedies
available to Landlord.

         I.       Subject to paragraph 20, the terms and provisions of this
Lease shall be binding upon and inure to the benefit of the heirs, executors,
administrators, successors, and assigns of Landlord and Tenant. In the event of
any conveyance by Landlord of its interest in and to the Leased Premises, the
Building or the Land, all obligations under this Lease of the conveying party
shall cease and Tenant shall thereafter look solely to the party to whom the
Leased Premises were conveyed for performance of all Landlord's duties and
obligations under this Lease.

         J.       Tenant acknowledges and agrees that Landlord shall not provide
guards or other security protection for the Leased Premises and that any and all
security protection shall be the sole responsibility of Tenant.

         K.       This Lease shall be governed by Georgia law.

         L.       Time is of the essence of each term and provision of this
Lease.

         M.       Upon the request of Landlord, Tenant shall join in the
execution of a memorandum or so-called "short form" of this Lease for the
purpose of recordation. Upon the request of Tenant, Landlord shall join in the
execution of a memorandum or so-called "short form" of this Lease for the
purpose of recordation. Said memorandum or short form of this Lease shall
describe the parties, the Leased Premises and the lease term, and shall
incorporate this Lease by reference.

         N.       Landlord's liability for performance of its obligations under
the terms of this Lease shall be limited to its interest in the Leased Premises.

                    (SIGNATURES CONTAINED ON FOLLOWING PAGE)

                                      -20-
<PAGE>   21
         IN WITNESS WHEREOF, the parties hereto who are individuals have set
their hands and seals, and the parties who are corporations have caused this
instrument to be duly executed by its proper officers and its corporate seal to
be affixed, as of the day and year first above written.

Signed, sealed and delivered as to   LANDLORD:
Landlord, in the presence of:
                                     ASC NORTH FULTON  ASSOCIATES  JOINT
                                     VENTURE,  a Georgia joint venture

                                     By:  Metropolitan Life Insurance Company,
----------------------------------        a New York Corporation, (successor-by-
                                          merger to New England Mutual Life
                                          Insurance Company, a Massachusetts
                                          corporation) on behalf of its
                                          Developmental Properties Account
                                          ("DPA")

----------------------------------
Notary Public                        By:  AEW Real Estate Advisors, Inc., a
                                          Massachusetts corporation (f/k/a
                                          Copley Real Estate  Advisors, Inc.)
                                          its asset manager and advisor hereunto
                                          duly authorized.

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Its:
                                          -------------------------------------

Signed, sealed and delivered as to   TENANT:
Tenant, in the presence of:
                                     HORIZON PHARMACEUTICAL CORPORATION

                                     By:
----------------------------------      ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Its:
                                          -------------------------------------

----------------------------------   ATTEST:
Notary Public

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Its:
                                          -------------------------------------
                                                    (Corporate Seal)

                                      -21-
<PAGE>   22
                                   EXHIBIT "C"

                             ACCEPTANCE OF PREMISES

Tenant:________________________________________________________________________

Landlord:______________________________________________________________________

Date Lease Signed:_____________________________________________________________

Term of Lease:_________________________________________________________________

Address of Leased Premises:  Suite __________ containing approximately ________

square feet, located at:

                        _______________________________________________________

                        _______________________________________________________

Commencement Date:_____________________________________________________________

Expiration Date:_______________________________________________________________

The above described premises are accepted by Tenant as suitable for the purpose
for which they were let. The above described lease term commences and expires on
the dates set forth above. Tenant acknowledges that it has received from
Landlord ______________ number of keys to the Leased Premises. It is understood
that there is a punch list which will be completed after move-in and will be an
exhibit to the Tenant Estoppel.

TENANT                                               LANDLORD

--------------------------------          ------------------------------------
    (Type Name of Tenant)                        (Type Name of Landlord)

By:                                       By:
   -----------------------------             ---------------------------------
          (Signature)                                   (Signature)

--------------------------------          ------------------------------------
    (Type Name and Title)                         (Type Name and Title)

<PAGE>   23

                                   EXHIBIT "D"

             SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

         THIS AGREEMENT, made as of the __________ day of _____________________,
________, between _________________________ with offices at ____________________
_____________________________________ ("Tenant") and ___________________________
(herein, together with its successors, transferees and assigns, the
"Mortgagee");

                              W I T N E S S E T H:

         WHEREAS, Mortgagee is about to or has heretofore granted to
_________________, a Georgia limited partnership (the "owner") a first mortgage
loan, which loan is secured by a security deed (herein "Mortgage") dated as of
____________________, 199___ and duly recorded on _____________________, 199___
in the land records of Fulton County, Georgia; and

         WHEREAS, the Mortgage is to be a first and prior lien upon the Owner's
fee estate in the real property described in Exhibit "A" annexed hereto
("Mortgaged Premises"); and

         WHEREAS, Tenant is occupying a portion of the Mortgaged Premises under
a lease dated as of _____________________, 199____ in which Owner is Landlord
(the "Lease") covering that portion of the Mortgaged Premises therein more
particularly described (the "Leased Premises"); and

         WHEREAS, Tenant desires to be assured of its continued and undisturbed
occupancy of the Leased Premises should the Mortgage be foreclosed or the
Mortgaged Premises sold pursuant to any power of sale contained therein and
Mortgagee is agreeable thereto.

         NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and in further consideration of the sum of ONE DOLLAR ($1.00)
each to the other in hand paid, the receipt whereof is hereby acknowledged,
Tenant and Mortgagee mutually covenant and agree as follows:

         FIRST:   The Lease and all Tenant's rights, interest and estate therein
and thereunder are hereby made subject and subordinate to the lien of the
Mortgage and to any extensions, renewals, replacements, modifications, additions
or consolidations thereof and to all rights, title and interest of Mortgagee and
its successors and assigns therein and thereunder.

         SECOND:  In the event, however, proceedings shall ever be instituted by
Mortgagee to foreclose or liquidate the Mortgage, the Tenant's possession of its
leased portion of the Mortgaged Premises shall not be disturbed by the
foreclosure proceedings and the Mortgaged Premises shall be sold at any
foreclosure sale subject to Tenant's possession on condition that:

<PAGE>   24

         (a)      there shall be, at the time of commencement of foreclosure
                  proceedings, as well as all subsequent times, no default by
                  Tenant in the due and timely observance and performance of any
                  covenant and agreement in the Lease to be observed and
                  performed by Tenant; and

         (b)      the Tenant shall not have entered into any agreement modifying
                  any term, condition or agreement of the Mortgagee-approved
                  Lease without the prior written consent of Mortgagee.

         THIRD:   Tenant shall attorn to Mortgagee while Mortgagee is in
possession of the Mortgaged Premises, or to a Receiver appointed in any action
or proceeding to foreclosure the Mortgage. In the event of the completion of
foreclosure proceedings and sale of the Mortgaged Premises or in the event the
Mortgagee should otherwise acquire possession of the Mortgaged Premises, the
Tenant will promptly upon demand attorn to the purchaser at the foreclosure sale
or to the Mortgagee, as the case may be, and will recognize such purchaser or
the Mortgagee as the Tenant's landlord. The Tenant agrees to execute and
deliver, at any time and from time to time, upon the request of the Mortgagee or
the purchaser at the foreclosure sale, as the case may be, any instrument which
may be necessary or appropriate to such successor landlord to evidence such
attornment. The Tenant shall, upon demand of the Mortgagee or any Receiver or
purchaser at the foreclosure sale, pay to the Mortgagee or to such Receiver or
purchaser, as the case may be, all rental monies then due or as they thereafter
become due.

         FOURTH:  Upon the attornment provided for in preceding Paragraph THIRD
the Tenant's occupancy shall thereafter be in full force and effect as under a
direct Lease between Mortgagee, the Receiver or the purchaser at the foreclosure
sale, as the case may be, and Tenant. It is specifically understood and agreed
that Mortgagee or any such Receiver or purchaser shall not be:

         (a)      liable for any act, omission, negligence or default of any
                  prior landlord, or

         (b)      subject to any offsets, claims or defenses which Tenant might
                  have against any prior landlord; or

         (c)      bound by any rent or additional rent which Tenant might have
                  paid for more than one month in advance to any prior landlord;
                  or

         (d)      bound by any amendment or modification of the Lease made
                  without the prior written consent of the Mortgagee.

         FIFTH:   On and after the date Tenant in good standing attorns to
Mortgagee or any Receiver or subsequent owner in pursuance of its agreement
herein set forth, Mortgagee, the Receiver or such subsequent owner will
undertake and perform all subsequent obligations of the Landlord as set forth in
the Lease for the benefit of and undisturbed occupancy of Tenant under the
Lease.

<PAGE>   25

         SIXTH:   Tenant agrees it will not amend, modify nor abridge the Lease
in any way, nor cancel or surrender the same without prior written approval of
the Mortgagee other than by reason of a continued uncured material default of
the landlord under the Lease, nor will the Lease ever merge into the fee in the
event that Mortgagee acquires fee title to the Mortgaged Premises.

         SEVENTH: Any notices or other communication to be given hereunder by
either party shall be in writing and shall be deemed to have been sufficiently
given or served for all purposes if sent by registered or certified mail with
return receipt requested to the other party hereto at its address above stated
or such other address of which written notification has been timely given to the
other party.

         EIGHTH:  Mortgagee has and shall have the continuing right to execute
and record in the Land Records of Fulton County, Georgia at any time, in its
unilateral discretion, a Declaration of Subordination for the purpose of thereby
subordinating its rights, title and interest in and under the Mortgage to the
rights, title and interest of Tenant under the Lease. Such Declaration of
Subordination shall, at Mortgagee's election, operate, function and be in full
force and effect for whatever period of time Mortgagee declares therein that it
shall be in force not exceeding the term of the Lease and any extensions thereof
and the said Declaration may be voided unilaterally by Mortgagee when it so
elects.

         NINTH:   Tenant waives any and all rights it may have to execute and
record after the date hereof any document purporting to again or further
subordinate its right, title or interest under the Lease to the lien of either
the Mortgage or any other mortgage or deed of trust or any ground lease or any
agreement modifying or amending the Mortgage except with the written consent of
Mortgagee.

         TENTH:   This Agreement cannot be changed orally but only in writing
signed by both parties hereto.

         ELEVENTH: This Agreement may be recorded by either party at its own
expense in the Land Records of Fulton County, Georgia whenever, in its sole
discretion, either party elects so to do.

         TWELFTH: All of the terms, covenants and conditions hereof shall run
with the Mortgaged Premises and shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.

<PAGE>   26

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

SIGNED, SEALED AND DELIVERED                 TENANT:
in the presence of:

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

                                             By:
----------------------------------              -------------------------------

                                             MORTGAGEE:

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

                                             By:
----------------------------------              -------------------------------

         The undersigned Owner of the leased and mortgaged premises hereby
consents to the foregoing Agreement and agrees to be bound by and subject to the
terms thereof.

                                             By:
                                                -------------------------------

<PAGE>   27

                                   EXHIBIT "E"

                              SPECIAL STIPULATIONS

Right of First Refusal #1 (Suite 114):

         Landlord hereby grants to Tenant the right of first refusal to lease
all of the adjacent space containing 5,400 rentable square feet, known as Suite
114, (the "Adjacent Space #1") upon the terms and conditions contained herein.

         So long as Tenant is not then in default under the Lease, Landlord will
notify Tenant when it has made a proposal to lease any portion of the Adjacent
Space #1 to a third party (other than BellSouth Entertainment, Inc.) and the
terms and conditions upon which it is willing to lease such space.

         Tenant shall provide written notice to Landlord, as to Tenant's
decision to lease or not to lease that portion of the Adjacent Space #1 within
seven (7) business days after Landlord's notice to Tenant is received. If Tenant
does not provide written notice or indicates that it will not exercise its right
of first refusal, this right will expire and Landlord shall have no future
obligations to Tenant with regard to that portion of the Adjacent Space #1 which
was subject to such notice.

         If Tenant does provide such notice to lease the Adjacent Space #1 for a
term not to exceed the remaining initial term of this Lease, Landlord and Tenant
will execute a lease for the Adjacent Space #1 within a reasonable time after
Landlord's receipt of Tenant's notice of intent to lease on all the same terms
as this Lease except for the rental terms, and other matters which shall be
mutually agreed upon by Landlord and Tenant.

         This right of first refusal to lease the Adjacent Space #1 is personal
to Horizon Pharmaceutical Corporation and may not be assigned in connection with
an assignment of this Lease or otherwise, except for an assignment as
contemplated in Section 20.02.

         This right is subordinate to the rights to BellSouth Entertainment,
Inc. to lease the space as contained in that certain Lease Agreement by and
between ASC North Fulton Associates Joint Venture and BellSouth Entertainment,
Inc. dated July 2, 1997.

Right of First Refusal #2 (Suite 100):

         Landlord hereby grants to Tenant the right of first refusal to lease
all of the adjacent space, known as Suite 100 (the "Adjacent Space #2") upon the
terms and conditions contained herein.

         So long as Tenant is not then in default under the Lease, Landlord will
notify Tenant when it has made a proposal to lease any portion of the Adjacent
Space #2 to a third party (other

<PAGE>   28
than Accu-tech Corporation) and the terms and conditions upon which it is
willing to lease such space.

         Tenant shall provide written notice to Landlord, as to Tenant's
decision to lease or not to lease that portion of the Adjacent Space #2 within
seven (7) business days after Landlord's notice to Tenant is received. If Tenant
does not provide written notice or indicates that it will not exercise its right
of first refusal, this right will expire and Landlord shall have no future
obligations to Tenant with regard to that portion of the Adjacent Space #2 which
was subject to such notice.

         If Tenant does provide such notice to lease the Adjacent Space #2 for a
term not to exceed the remaining initial term of this Lease, Landlord and Tenant
will execute a lease for the Adjacent Space #2 within a reasonable time after
Landlord's receipt of Tenant's notice of intent to lease on all the same terms
as this Lease except for the rental terms, and other matters which shall be
mutually agreed upon by Landlord and Tenant.

         This right of first refusal to lease the Adjacent Space #2 is personal
to Horizon Pharmaceutical Corporation and may not be assigned in connection with
an assignment of this Lease or otherwise.

         This right is subordinate to the rights of Accu-tech Corporation to
lease the space as contained in that certain Lease Agreement by and between ASC
North Fulton Associates Joint Venture and Accu-tech Corporation dated January
26, 1998.

Option to Renew:

         Tenant shall have the option to renew this Lease Agreement for one (1)
five (5) year term provided that Tenant gives written notice to Landlord of its
intention to renew at least one hundred eighty (180) days prior to the end of
the then current term thereof. Renewal shall be upon the same terms and
conditions as contained herein except that the annual base rental shall be the
fair market rental value (but in no event less than the current rental rate
under the Lease) which shall be determined as follows:

         (a) Landlord and Tenant will have fifteen (15) days after Landlord
receives the renewal notice within which to agree on the then-fair market rental
value of the Leased Premises as defined in paragraph (c) below for the renewal
period. If they agree on the base monthly rent for the renewal period within
fifteen (15) days, they will amend this Lease by stating the base monthly rental
for the renewal period.

         (b) If they are unable to agree on the base monthly rental for the
renewal period within fifteen (15) days and Tenant has not rescinded its option
to renew during said fifteen (15) day period, then the base monthly rental for
the renewal period will be the then-fair market rental value of the Leased
Premises as determined in accordance with paragraph (d) below.

         (c) The "then-fair market rental value of the Leased Premises" means
what a Landlord under no compulsion to lease the Leased Premises and a Tenant
under no compulsion

<PAGE>   29
to lease the Leased Premises would determine as rents for
the renewal period, as of the commencement of the renewal period, taking into
consideration the uses permitted under this Lease, the quality, size, design,
and location of the Leased Premises, and the rent for comparable buildings
located in the vicinity of the Leased Premises. The then-fair market rental
value of the Leased Premises for the renewal period will not be less than that
provided during the initial term.

         (d) Within seven (7) days after the expiration of the fifteen (15) day
period set forth in paragraph (b) above, Landlord and Tenant will each appoint a
real estate appraiser to appraise the then-fair market rental value of the
Leased Premises. The two appraisers will meet promptly and attempt to set the
then-fair market rental value of the Leased Premises. If they are unable to
agree within thirty (30) days, they will select a third appraiser within ten
(10) days to set the then-fair market rental value of the Leased Premises.
Landlord and Tenant will bear one-half (1/2) of the cost of appointing the third
appraiser and of paying the third appraiser's fee.

         (e) Within thirty (30) days after the selection of the third appraiser,
a majority of the appraisers will set the then-fair market rental value of the
Leased Premises. If a majority of the appraisers are unable to set the then-fair
market rental value of the Leased Premises within thirty (30) days after
selection of the third appraiser, the three appraisals will be averaged and the
average will be the then-fair market rental value of the Leased Premises.

         (f) It is expressly understood that Tenant shall have no option to
renew this Lease for the renewal term if at the time of the attempted exercise
of such option or at the commencement of such renewal term this Lease is not
then in full force and effect or if Tenant is then in default of any terms and
conditions of this Lease.<PAGE>   1
                                                                    EXHIBIT 10.8

                        CONFIDENTIAL TREATMENT REQUESTED

                  Confidential Portions of This Agreement Which Have Been
         Redacted Are Marked With Brackets ("[***]"). The Omitted Material Has
         Been Filed Separately With The Securities and Exchange Commission.

                    PRODUCT DEVELOPMENT AND SUPPLY AGREEMENT

     THIS AGREEMENT (the "Agreement") is entered into as of March 25, 1999 (the
"Effective Date") by and between Penwest Pharmaceuticals Co., a Washington
corporation with a principal place of business at 2981 Route 22, Patterson, New
York 12563 ("Penwest"), and Horizon Pharmaceutical Corporation, a Delaware
corporation with a principal place of business at 660 Hembree Parkway, Suite
106, Roswell, Georgia 30076 ("Horizon").

     A. Whereas Penwest has developed a controlled-release agent covered by one
or more patents, patent applications, know-how and other proprietary technology,
which agent Penwest markets under the name "TIMERx" ("TIMERx"), and Penwest is
the owner of certain patents covering controlled release formulations of the
active ingredient [***];

     B. Whereas Horizon is interested in developing for manufacture and
marketing a pharmaceutical product incorporating [***] in a solid-dosage
controlled-release delivery system for oral administration in humans; and

     C. Whereas the parties desire to engage in certain research, development,
and testing activities designed to determine if Penwest's TIMERx
controlled-release system can be adapted and combined with [***] to make a
controlled-release version of [***] for oral solid-dosage administration in
humans in a 24 hour release form in a 200 mg dosage strength and, if such
activities are successful, Horizon desires to contract for a supply of TIMERx
for use in the manufacture of such a controlled-release form of [***], and
Penwest is willing to supply the same, provided that Horizon agrees to obtain
all of its requirements for controlled-release agents for [***] products in the
form of TIMERx from Penwest as provided herein;

     NOW, THEREFORE, the parties hereby agree as follows:

1.Definitions.

     1.1 "Affiliate" shall mean any corporation, company, partnership, joint
venture and/or firm which controls, is controlled by, or is under common control
with a specified person or entity. For purposes of this Section 1.1, "control"
shall mean (a) in the case of corporate entities, direct or indirect ownership
of at least fifty percent (50%) of the stock or shares having the right to vote
for the election of directors, and (b) in the case of non-corporate entities,
direct or indirect ownership of at least fifty percent (50%) of the equity
interest with the power to direct the management and policies of such
non-corporate entities.
<PAGE>   2
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

     1.2 "Approval Date" shall mean the date on which the Designated Product is
first approved by the FDA for commercial sale in oral solid-dosage form for
administration in humans, pursuant to an NDA.

     1.3 "Capable Entity" shall mean any third party that, in Penwest's
reasonable judgment, (a) has, as applicable, (i) a sales force in the Exclusive
Territory that exceeds Horizon's sales force therein, (ii) annual sales that
exceed those of Horizon, (iii) a financial capacity to market the Designated
Product that exceeds that of Horizon and (iv) a capacity to manufacture the
Designated Product in finished form that exceeds that of Horizon, and (b) does
not manufacture, market or promote any oral, controlled-release drug delivery
product.

     1.4 "Certification Period" shall mean the period beginning on the
Submission Date and ending on the earlier of:

          1.4.1 the Approval Date; or

          1.4.2 the termination of this Agreement as provided herein.

     1.5 "Confidential Information" shall mean all information, technology and
know-how disclosed hereunder that is, at the relevant time hereunder, protected
or required to be protected by both parties hereto as confidential information
pursuant to Article 8 hereof.

     1.6 "Covered Infringement" shall have the meaning set forth for such term
in Section 9.1.

     1.7 "Designated Product" shall mean the solid-dosage form of a
controlled-release pharmaceutical for oral administration in humans that
combines a racemic mixture of [***] with TIMERx and other excipients, as more
fully described in Exhibit A, which exhibit is subject to modifications as
Penwest and Horizon may mutually agree during the Development Period.

     1.8 "Development Period" shall mean the period from the Effective Date
through the Submission Date or the earlier termination of this Agreement as
provided herein.

     1.9 "Development Tasks" shall have the meaning set forth for such term in
Section 3.4.

     1.10 "DMF" shall mean Drug Master File with respect to Formulated TIMERx as
defined in 21 CFR 300 et seq., including amendments and supplements which will
be filed by Penwest.

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

     1.12  "Formulated  TIMERx"  shall mean  TIMERx and certain  additives  in a
formulation  to be developed  hereunder  specifically  for use in the Designated
Product.
<PAGE>   3
     1.13 "Horizon Test and Regulatory Data" shall mean any and all test data,
test designs and protocols, clinical studies and results thereof, government
licenses and applications therefor, government certifications and findings, and
related materials, information and rights (including without limitation
information regarding bioavailability and bioequivalence, and any adverse drug
reactions), developed, commissioned or otherwise obtained by Horizon or any of
its Affiliates or sublicensees during the term of this Agreement (or, with
respect to such sublicensees, during the term of the respective sublicenses)
relating to TIMERx, TIMERx Improvements, the Designated Product, Penwest
Patents, Penwest Technology, and/or Penwest's Confidential Information, together
with all intellectual property and other rights and interests of Horizon and its
Affiliates or sublicensees thereto and therein, worldwide.

     1.14 "Horizon Trademarks" shall mean trademarks which are the exclusive
property of and which shall remain at all times the exclusive property of
Horizon or its Affiliates.

     1.15 "IMS Data" shall mean data published in the IMS Retail Perspective(,
published by IMS America, Ltd.

     1.16 "IND" shall mean an investigational new drug application filed with
the FDA.

     1.17 "Inpharmakon" shall mean Inpharmakon Corporation.

     1.18 "Indication" shall mean the treatment and/or prophylaxis of migraine.

     1.19 "Joint Developments" shall mean any and all inventions, improvements,
modifications, alterations, or enhancements, other than TIMERx Improvements,
that are made jointly by Horizon or any of its Affiliates or sublicensees, on
the one hand, and Penwest or any of its Affiliates or sublicensees, on the other
hand, in the course of this Agreement, together with all United States and
foreign intellectual property and other rights and interests of the parties and
their respective Affiliates thereto and therein, including without limitation
patents, trade secrets, copyright, periods of market exclusivity, and other
related rights or interests, to the extent the same remain protected by any such
rights and interests from being used freely by others; provided, however, that
none of the Penwest Test and Regulatory Data or Horizon Test and Regulatory Data
shall be considered Joint Developments.

     1.20 "License Term" shall mean the cumulative period covered by the
Development Period, the Certification Period, and the Marketing Period.

     1.21 "Marketing Period" shall have the meaning set forth for such term in
Section 5.1.

     1.22 "Minimum Sales" shall have the meaning set forth for such term in
Exhibit G.

     1.23 "NDA" shall mean a new drug application filed with the FDA.

     1.24 "Net Sales" shall have the meaning set forth for such term in Exhibit
B.
<PAGE>   4
     1.25 "Penwest Patents" shall mean:

          1.25.1 those patents and patent applications listed in Exhibit C and
     all divisions, continuations, reissues, or extensions thereof, any periods
     of marketing exclusivity relating thereto, and any letters patent that
     issue thereon; and

          1.25.2 Penwest's rights in and to any United States patents or patent
     applications other than those included in Section 1.20.1, obtained and in
     force during the License Term covering any inventions included in the
     Penwest Technology.

     1.26 "Penwest Technology" shall mean any technology and know-how belonging
to Penwest from time to time during the term of this Agreement that directly
relate to, and/or are necessary for the production of, the Designated Product,
and Penwest's rights therein and thereto.

     1.27 "Penwest Test and Regulatory Data" shall mean any and all test data,
test designs and protocols, clinical studies and results thereof, government
licenses and applications therefor, government certifications and findings, and
related materials, information and rights (including without limitation
information regarding bioavailability and any adverse drug reactions),
developed, commissioned or otherwise obtained by Penwest or any of its
Affiliates during the term of this Agreement relating to TIMERx, Penwest
Patents, Penwest Technology, and/or Penwest's Confidential Information, together
with all intellectual property and other rights and interests of Penwest and its
Affiliates thereto and therein in the Territory.

     1.28 "Penwest Trademark(s)" shall mean those names, symbols and/or
characters described in Exhibit D hereto, as the same may be amended from time
to time during the terms of this Agreement by Penwest on at least six (6)
months' prior written notice to Horizon, that are owned and registered (or are
registrable) by Penwest and that have been designated by it for use in
conjunction with Horizon's packaging and promotion of the Designated Product
hereunder, pursuant to Section 6.10.

     1.29 "Project Contact(s)" shall mean the persons appointed by each party to
serve as contact persons between the parties during the Development Period and
the Certification Period. The initial Project Contact for Penwest is Mr. Michael
Mallon and the initial Project Contact for Horizon is Mr. Bala Venkataraman.
Each party shall promptly notify the other party of any substitution of other
personnel as its Project Contact. Each party may select and supervise its other
project staff as needed.

     1.30 "Royalties" (or "Royalty") shall mean the royalties payable to Penwest
pursuant to Article 5 hereof.

     1.31 "Sales Differential" shall have the meaning set forth for such term in
Section 11.2.2.
<PAGE>   5
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

     1.32 "Specifications" shall mean such standards and analytical methods
established and mutually agreed to in writing by Penwest and Horizon as are
reasonably necessary or appropriate to assure the identity, strength, quality
and purity of the TIMERx and Formulated TIMERx, as set forth in Exhibit E, which
(a) shall be mutually agreed to by the parties hereto, and (b) may be modified
from time to time by mutual agreement of the parties hereto.

     1.33 "Submission Date" shall mean the date on which Horizon submits to the
FDA an NDA for the Designated Product (in any dosage strength).

     1.34 "Territory" shall mean Canada, the United States, Mexico and their
respective territories and possessions.

     1.35 "TIMERx Improvements" shall mean any and all improvements,
modifications, alterations, or enhancements to any of the inventions covered by
the Penwest Patents or included in the Penwest Technology or Penwest's
Confidential Information, that are developed, owned, or controlled by Horizon or
any of its Affiliates or sublicensees, either alone or jointly with Penwest or
any of its Affiliates or sublicensees, or in which Horizon or any of its
Affiliates or sublicensees otherwise has any rights or interests during the term
of this Agreement (or, with respect to such sublicensees, during the term of the
respective sublicenses) together with all United States and foreign intellectual
property and other rights and interests of Horizon and its Affiliates and
sublicensees thereto and therein, including without limitation patents, trade
secrets, copyright, periods of market exclusivity, and other related rights or
interests, to the extent the same remain protected by any such rights and
interests from being used freely by others.

     1.36 "Unit Price" shall mean [***] U.S. dollars (US$[***]) per kilogram of
Formulated TIMERx, subject to adjustment no more often than once annually to
reflect any increase in the Pharmaceutical Producers' Price Index.

2. Grant of Licenses and Transfer of Technology.

     2.1 Grants by Penwest.

          2.1.1 Penwest hereby grants to Horizon an exclusive, royalty-bearing
     license, under the Penwest Patents, the Penwest Technology, the Joint
     Developments, the TIMERx Improvements and Penwest's Confidential
     Information disclosed to Horizon hereunder, to manufacture, use and sell
     and register the Designated Product in the Territory during the License
     Term. Such license does not extend to (a) the making of TIMERx or
     Formulated TIMERx, but does cover the incorporation of Formulated TIMERx
     into the Designated Product, or (b) any metabolite, isolated enantiomer or
     non-racemic mixture of [***]. Horizon shall have the right to grant
     sublicenses of its rights hereunder to any Affiliate(s) of Horizon (and
     this Agreement shall thereby be binding upon and inure to the benefit of
     such Affiliate(s) within the area of such sublicense), but shall otherwise
     have no right to grant sublicenses hereunder without the prior written
     consent of Penwest. Such consent of Penwest shall be based on whether, as
     of the time the proposed sublicense is to be granted, the proposed

<PAGE>   6
     sublicensee is a Capable Entity, unless Horizon is able to demonstrate to
     Penwest's reasonable satisfaction that such proposed sublicensee, based on
     the particular characteristics of such proposed sublicensee, including but
     not limited to the region of the Territory in which such proposed
     sublicensee would operate, is a suitable sublicensee despite its failure to
     qualify as a Capable Entity. Penwest shall, throughout the License Term,
     promptly notify Horizon of all Penwest Patents referred to in Section
     1.20.2 and provide Horizon with access to all of the same, solely for use
     within the scope of the license stated in this section.

          2.1.2 Penwest hereby grants to Horizon and its Affiliates (with the
     right to sublicense only as such right is granted under Section 2.1.1) a
     nonexclusive, paid-up license under all rights of Penwest and its
     Affiliates in and to the Penwest Test and Regulatory Data to use the same
     as is necessary for purposes of complying with governmental requirements,
     but solely with respect to the Designated Product for marketing or use in
     the Territory. Penwest hereby consents to Horizon's and its Affiliates' and
     such sublicensees' cross-referencing the DMF as is necessary for the filing
     of an NDA for the Designated Product hereunder.

          2.1.3 Penwest hereby grants to Horizon and its Affiliates an exclusive
     license (with the right to sublicense only as such right is granted under
     Section 2.1.1) under any and all rights of Penwest in and to the Penwest
     Trademark(s), to use the Penwest Trademark(s) solely in connection with the
     manufacture, distribution, and sale of the Designated Product in the
     Territory for the term of this Agreement.

     2.2 Grants by Horizon.

          2.2.1 Horizon hereby grants to Penwest and its Affiliates a
     nonexclusive, paid-up, license, with the right to sublicense, under any and
     all patents, patent applications, trade secrets, copyrights, and other
     intellectual property rights of any sort owned or controlled by Horizon or
     its Affiliates or sublicensees, to make and have made anywhere in the
     world, and to use and sell to Horizon and its Affiliates and permitted
     sublicensees Formulated TIMERx for use in the Designated Product during the
     License Term, if and to the extent such license is necessary for Penwest to
     do so as agreed hereunder.
<PAGE>   7
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

          2.2.2 Horizon shall grant to Penwest and its Affiliates a
     nonexclusive, paid-up license, with the right to sublicense, under all
     rights of Horizon and its Affiliates and sublicensees in and to that
     portion of the Horizon Test and Regulatory Data that is disclosed or
     provided to Penwest hereunder, granting to Penwest the right to use the
     same for purposes of complying with governmental requirements of any
     country, other than with respect to the Designated Product for marketing or
     use in the Territory. Horizon shall consent to Penwest's and its
     Affiliates' and sublicensees' cross-referencing, in any filings that are
     essentially the equivalent of the sorts of filings that are termed NDA
     filings if made with the FDA, made by them within the scope of such
     license, any NDA filing made or FDA master file created by Horizon or its
     Affiliates or sublicensees relating to or containing any of the Horizon
     Test and Regulatory Data. Such license under this Section 2.2.2 shall
     survive any termination or expiration of the term of this Agreement, except
     a termination under Section 11.5 due to an uncured breach by Penwest.
     Horizon shall, throughout the License Term and solely for use within the
     scope of such license, promptly provide to Penwest copies of all of the
     Horizon Test and Regulatory Data in or coming into Horizon's possession or
     otherwise reasonably available to it.

     2.3 Penwest Technology Transfer to Horizon. Penwest shall, at its expense,
exert reasonable efforts to make knowledgeable personnel reasonably available
within thirty (30) days from the date of Horizon's written request, to consult
with Horizon to the extent necessary to enable Horizon to produce Designated
Product for Horizon and its Affiliates pursuant to this Agreement; provided,
however, that Horizon shall reimburse Penwest, at the rate of one thousand U.S.
dollars (US$1,000) per person per day, for Penwest personnel costs associated
with any such consultation that is not performed at Penwest. The parties
understand and agree that Horizon's performance under this Agreement depends
upon the communication of the Penwest Technology, and that, if for any reason,
it is not possible to transfer such technology to Horizon, this will not lead to
liability on Horizon's part. The Penwest Technology will be deemed to have been
successfully transferred upon completion of scale-up on production-scale
equipment and demonstration of dissolution results comparable to those obtained
for pilot scale batches.

     2.4 Product Development Outside the Territory. In the event that, during
the License Term, either party hereto approaches the other party with a proposal
that development of the Designated Product be undertaken outside the Territory,
such other party agrees to reasonably consider negotiating a separate agreement
with such party concerning such development, provided that any such negotiation
shall take into account a variety of factors including but not limited to the
parties' respective costs relating to, and proceeds realized from, the
development of the Designated Product.

     2.5 Horizon's Rights with Respect to Other TIMERx Products.

          2.5.1 During the License Term, with respect to any product that (a) is
     not the Designated Product and (b) combines TIMERx and [***], not including
     any metabolite, isolated enantiomer or non-racemic mixture of [***] for any
     therapeutic or prophylactic use(s) in humans, Penwest and Horizon agree to
     discuss collaborations concerning the development and commercialization of
     such product in the Territory. When Penwest recognizes the possibility for
<PAGE>   8
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

     developing any such product, it shall present such information to Horizon
     in writing and Horizon shall have a period of forty-five (45) days in which
     to initiate good faith negotiations concerning a potential collaboration
     with respect to such product. If Horizon initiates such negotiations, the
     parties shall have a period of ninety (90) days in which to execute a
     definitive agreement, the terms and conditions of which shall govern any
     collaboration between the parties with respect to such product. If either
     (a) a negotiation concerning a potential collaboration with respect to any
     such product is not initiated, or (b) the parties cannot agree to the terms
     of a collaboration witH respect to such product, then Penwest shall have
     the exclusive right, either alone or in collaboration with a third party,
     to undertake the development and commercialization of such product, unless
     (i) such product is for use for the Indication or (ii) Horizon demonstrates
     to Penwest's reasonable satisfaction that such product is likely to be used
     off-label for the Indication, in which case Penwest shall not have the
     right, either alone or in collaboration with a third party, to undertake
     the development and commercialization of such product in the Territory.

          2.5.2 During the License Term, with respect to any product that (a) is
     not the Designated Product and (b) combines TIMERx and any metabolite,
     isolated enantiomer or non-racemic mixture of [***] for any therapeutic or
     prophylactic use(s) in humans, Penwest agrees promptly to notify Horizon in
     writing when Penwest recognizes the possibility for developing such product
     in the Territory. Horizon shall have a period of forty-five (45) days
     following such notification in which to provide to Penwest a written
     request that Penwest refrain from pursuing the development and
     commercialization of such product in the Territory. If (a) Horizon makes
     such request and (b) (i) such product is for use for the Indication or (ii)
     within thirty (30) days following Penwest's receipt of such request,
     Horizon demonstrates to Penwest's reasonable satisfaction that such product
     is likely to be used off-label for the Indication in the Territory, Penwest
     shall refrain from pursuing the development and commercialization of such
     product in the Territory either on its own or with a third party. If
     Horizon (a) fails to provide such request or (b) makes such request but (i)
     such product is not for the Indication or (ii) Horizon fails to make such
     demonstration, then Penwest shall have the right to pursue the development
     and commercialization of such product in the Territory either on its own or
     with a third party.

     2.6 Penwest Use of TIMERx. Horizon acknowledges that (a) subject to other
provisions of this Agreement, Penwest and its Affiliates, for themselves and for
others, apply, and will seek to apply, TIMERx and Formulated TIMERx to products
in and outside of the Territory and (b) subject to Sections 2.5.1 and 2.5.2, no
provision hereof, and no exclusivity hereunder, shall prevent Penwest from so
applying TIMERx, Formulated TIMERx or other oral, controlled release drug
delivery technology, so long as the end product is not the Designated Product
hereunder for commercial use and/or sale in the Territory; provided, however,
that, subject to Sections 2.5.1 and 2.5.2, Penwest hereby affirms that, in the
Territory, neither it nor its Affiliates shall apply, for themselves or for
others, TIMERx, Formulated TIMERx or other oral, controlled release drug
delivery technology to products containing [***].

     2.7 Commercially Reasonable Efforts. During License Term, each of Penwest
and Horizon shall exert their continuing commercially reasonable efforts to
perform their respective tasks hereunder in order to create and produce the
<PAGE>   9
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

Designated Product, and each shall cooperate with the other in such efforts. It
is understood that the exertion of a party's commercially reasonable efforts
shall mean that this project will receive a priority at least as high as any of
such party's other drug development efforts. Each party shall, promptly and
throughout the term of this Agreement, provide to the other all necessary
information in or coming into its possession or reasonably available to it for
such purposes. Notwithstanding anything else to the contrary contained herein,
nothing shall require either party to disclose confidential information for
which such party has an obligation of confidentiality to a third party.

3. Development Period.

     3.1 Initial Fee. In consideration of Penwest's entering into this
Agreement, Horizon shall pay Penwest two (2) non-refundable, non-creditable
payments of [***] U.S. dollars (US$[***]) each, (a) the first such payment to be
made on the Effective Date, and (b) the second such payment to be made within
seventy-five (75) days following the Effective Date.

     3.2 Non-Competition by Horizon. As additional inducement to Penwest to
enter into this Agreement, Horizon hereby affirms that, other than (a)
confidentiality agreements not binding either party to any further agreement and
(b) that certain Collaboration Agreement between Horizon and Inpharmakon, dated
October 31, 1998, it currently has no agreement or arrangement with any party
other than Penwest for or including the development, design, testing,
certification, manufacture or marketing by it or such other party (or the
Affiliate(s) of either) in the Territory of any controlled-release product that
incorporates [***], and agrees that it will refrain from entering into any such
agreement or arrangement (other than such confidentiality agreements) for the
term of this Agreement.

     3.3 Development Period Obligations. Each party understands and agrees that
the other does not warrant or commit that the Designated Product will be
successfully developed, and neither party shall have any liability or
responsibility to the other or to third parties for any such failure of the
development process hereunder, except to the extent such failure results from
said party's intentional misconduct, gross negligence, or material breach of its
duties or obligations as set forth herein.

     3.4 Development Period Schedule and Milestones. During the Development
Period, Penwest and Horizon shall use their commercially reasonable efforts to
perform their respective tasks set forth in the Development Tasks and Success
Criteria contained in Exhibit F hereto (the "Development Tasks") within the
estimated time periods set forth for such tasks therein in order to create and
produce the Designated Product. (The schedule laid out in Exhibit F shall serve
as a general guide for the parties' personnel in pursuing such tasks, but,
except as provided in Section 11.2, strict conformance to such schedule shall
not be an independent criterion of success.) Each party shall bear its own costs
associated with the Development Tasks, except as is otherwise specified in
Exhibit F and Section 3.7. The parties hereby agree to the following:
<PAGE>   10
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

          3.4.1 Within [***] days following the successful completion of
     preformulation, formulation, dissolution testing, and biostudy formulation
     finalization with respect to the Designated Product, Horizon shall pay
     Penwest a non-refundable, non-creditable milestone payment of [***] U.S.
     dollars (US$[***]).

          3.4.2 Within [***] days following the successful completion of a
     proof-of-principal biostudy for the Designated Product, Horizon shall pay
     Penwest a non-refundable, non-creditable milestone payment of [***] U.S.
     dollars (US$[***]).

     3.5 Governmental Requirements. Subject to Section 2.4, in all countries of
the Territory where the Designated Product is being developed, manufactured,
used and/or sold by Horizon, its Affiliates and/or sublicensees, Horizon shall
be responsible for, and hereby agrees to conduct or arrange for, at the expense
of Horizon, substantial compliance with all material and relevant governmental
requirements imposed in the Territory with respect to such development,
manufacture, use, and/or sale.

     3.6 Reports by Project Contacts. Each party's Project Contact shall provide
written reports to the other party's Project Contact at least monthly throughout
the Development Period, stating in detail all efforts made and in process, and
all significant progress achieved and difficulties encountered in the
development effort since the last such report. Each party's Project Contact
shall also be available throughout the Development Period to answer any
reasonable questions from the other party's Project Contact. The parties shall
cooperate reasonably during the Development Period such that the sites for
meetings among their respective personnel shall be alternated between the
parties' facilities to the extent practicable.

     3.7 Supply of Materials. The price for any Formulated TIMERx purchased by
Horizon from Penwest during the Development Period shall be determined as set
forth in Section 6.2. Penwest shall supply, at its own expense, all TIMERx that
it requires for the conduct of its own Development Period activities hereunder.
Penwest shall manufacture, at its own expense, a clinical batch of the
Designated Product for the first proof-of-principal biostudy. Horizon shall pay
to Penwest [***] U.S. dollars (US$[***]) for each clinical batch of the
Designated Product for any additional proof-of-principal biostudy.

4. Certification Period.

     4.1 Filing of NDA. During the Certification Period, Horizon shall be
responsible for the preparation of all documentation necessary for the filing of
an NDA for the Designated Product and shall file such NDA. Each party
understands and agrees that the other does not warrant or commit that the
Designated Product will be successfully certified for marketing by the FDA, and
neither party shall have any liability or responsibility to the other or to
third parties for any such failure of the certification process hereunder,
except to the extent such failure results from said party's intentional
misconduct, gross negligence, or material breach of its duties or obligations as
set forth herein.

<PAGE>   11
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

     4.2 Certification Period Milestones. Horizon agrees to pay Penwest, within
[***] days following the filing by Horizon of an NDA for the Designated Product,
a non-refundable, non-creditable milestone payment of [***] U.S. dollars
(US$[***]).

     4.3 Reports by Project Contacts. Horizon's Project Contact shall provide
written reports to Penwest's Project Contact at least quarterly throughout the
Certification Period, stating in reasonable detail all efforts made and in
process, and all significant progress achieved and difficulties encountered in
the certification effort since the last such report. Horizon's Project Contact
also shall be available throughout the Certification Period to answer any
reasonable questions from Penwest's Project Contact.

     4.4 Supply of Materials. During the Certification Period, Horizon shall
provide, at its own expense, all [***] and other materials and manufacturing and
testing services reasonably required to support the testing and certification
effort. Horizon shall purchase from Penwest, in accordance with the terms set
forth in Section 6.2, all Formulated TIMERx that Horizon requires for the
conduct of Horizon's Certification Period activities hereunder. Penwest shall
supply, at its own expense, all TIMERx that it requires for the conduct of its
own Certification Period activities hereunder.

5. Marketing Period.

     5.1 Term of Marketing Period. The Marketing Period shall extend from the
Approval Date until fifteen (15) years thereafter, unless this Agreement is
terminated earlier pursuant to Article 11. The Marketing Period may be renewed
by agreement of the parties for one (1) or more additional terms of five (5)
years each, provided that such agreement is reached at least one hundred eighty
(180) days prior to the expiration of this Agreement or any such additional
term.

     5.2 Reasonable Commercial Efforts by Horizon. Subject to the granting of
all necessary governmental approvals or concurrences to sell the Designated
Product, Horizon hereby agrees to market, promote and sell the Designated
Product throughout the Territory. Each party understands and agrees that the
other does not warrant or commit that the Designated Product will be
successfully marketed, and neither party shall have any liability or
responsibility to the other or to third parties for any such failure of the
development process hereunder, except to the extent such failure results from
said party's intentional misconduct, gross negligence, or material breach of its
duties or obligations as set forth herein.

     5.3 Amount of Royalties. Horizon hereby agrees to pay to Penwest royalties
on Net Sales made during the Marketing Period ("Royalties"), as follows:
<PAGE>   12
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

          5.3.1 [***] of Net Sales on all Net Sales until cumulative Net Sales
     of [***] U.S. dollars (US$[***]) have been attained;

          5.3.2 [***] of Net Sales on all Net Sales after cumulative Net Sales
     of [***] U.S. dollars (US$[***]) have been attained until cumulative Net
     Sales of [***] US. dollars (US$[***]) have been attained; and

          5.3.3 [***] of Net Sales on all Net Sales after Net Sales of [***]
     U.S. dollars (US$[***]) have been attained.

Such Royalties shall be reduced by [***] (e.g. a [***] Royalty would become a
[***] Royalty) with respect to Net Sales of a Designated Product as to which (a)
no license to Penwest Patents or to patent applications or patents included in
the Joint Developments or TIMERx Improvements hereunder is applicable to the
manufacture, sale or use of such Designated Product, or (b) a license to a
patent application included in the Penwest Patents, Joint Developments or TIMERx
Improvements is applicable to the manufacture, sale or use of such Designated
Product, but no patent has yet issued thereon; provided, however, that, with
respect to Section 5.3.3(b), (i) as of the date of issue of any such patent, the
unreduced Royalty shall become payable on all subsequent Net Sales of such
Designated Product and (ii) within ten (10) days following such date, Horizon
shall pay to Penwest an amount equal to the unreduced Royalty that would have
been payable on Net Sales of such Designated Product up until such date less the
total amount of Royalties already paid on such sales.

     5.4 Payment of Royalties. All Royalties payable pursuant to this Agreement
shall be due quarterly within sixty (60) days following the end of each calendar
quarter for Net Sales in such calendar quarter. Each such payment shall be
accompanied by a statement of Net Sales for the quarter and the calculation of
Royalties payable hereunder. All Royalties and all other amounts which are
overdue under this Agreement shall bear interest at the rate of one and one-half
percent (11/2%) per month from the date due through the date of payment. Horizon
shall keep and shall cause its Affiliates and its and their sublicensees to keep
complete, true and accurate records for the purpose of showing the derivation of
all Royalties payable to Penwest under this Agreement. Penwest's duly accredited
representatives (which representatives are approved for such purpose by Horizon,
which approval shall not be unreasonably withheld nor shall it be revocable by
Horizon following the start of any inspection hereunder) shall have the right to
inspect, copy, and audit such records at any time during reasonable business
hours upon reasonable prior notice to Horizon or any of its Affiliates or
sublicensees, respectively, but such right shall not be exercised more often
than once annually (it being understood that a single exercise of such right may
include a series of related or continuing inspections, copying and audits). Any
such audit shall be at the expense of Penwest, unless the audit reveals that,
with respect to the period under audit, less than ninety-five percent (95%) of
the Royalties due to Penwest hereunder have been reported, in which event
Horizon shall pay or reimburse Penwest for the reasonable expenses of such
audit, in addition to Penwest's other remedies for such underpayment. In the
event that any such audit reveals that, with respect to the period under audit,
Horizon has paid to Penwest Royalties in excess of those due hereunder, Horizon
shall be entitled to offset the full amount of such excess payment against
future Royalties due to Penwest.
<PAGE>   13
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

     5.5  Marketing  Period  Milestones.  Horizon also agrees to pay Penwest the
following non-refundable, non-creditable milestone payments:

          5.5.1 within [***] days  following  the first  commercial  sale of the
     Designated Product, [***] U.S. dollars (US$[***]); and

          5.5.2 [***] following the first commercial sale of the Designated
     Product, [***] U.S. dollars (US$[***]).

     5.6 Form of Payment. All monies due hereunder shall be paid in United
States Dollars to Penwest in Patterson, New York, USA. Said payment may be made
at Horizon's option by check or wire transfer.

6. Supply of Formulated TIMERx.

     6.1 Supply and Requirements of Formulated TIMERx. During the term of this
Agreement, Penwest shall supply Horizon and its Affiliates and sublicensees, in
accordance with the terms set forth in Section 6.2, with sufficient quantities
of Formulated TIMERx to meet their reasonable requirements for TIMERx, and
Horizon shall purchase, all of its requirements, and shall ensure that its
Affiliates and sublicensees purchase all of their requirements, for
controlled-release agents for [***] products that are essentially equivalent to
the Designated Product in the form of Formulated TIMERx from Penwest.

     6.2 Price of TIMERx. The price for all Formulated TIMERx sold hereunder
shall equal the Unit Price multiplied by the number of kilograms of Formulated
TIMERx purchased; provided, however, that the price for the first [***]
kilograms of Formulated TIMERx sold during the Development Period and/or the
Certification Period shall be [***] U.S. dollars (US$[***]) multiplied by the
number of kilograms of Formulated TIMERx purchased. All sales of Formulated
TIMERx hereunder shall be F.O.B. Patterson, New York, and Horizon shall bear all
transportation, insurance, taxes, duties, and other costs and risks of loss,
spoilage and damage associated with the shipping and delivery of Formulated
TIMERx to Horizon or its Affiliates or sublicensees. Horizon shall pay for all
Formulated TIMERx purchased from Penwest hereunder within thirty (30) days after
receipt by Horizon or any of its Affiliates or sublicensees of an invoice and
the Formulated TIMERx shipped by Penwest.

     6.3 Changes to Penwest DMF. Penwest warrants that it will not change or
modify its DMF, the Specifications, or its method of manufacture for Formulated
TIMERx without prior written consent from Horizon, which consent shall not be
unreasonably withheld.

     6.4 Quality Control. Penwest shall perform quality control tests with
respect to each lot or batch of Formulated TIMERx as required by the FDA as set
forth in the DMF, such testing to be at the expense of (a) Penwest to the extent
such testing pertains to TIMERx or Formulated TIMERx and (b) Horizon to the
extent such testing pertains to [***]. In addition, Penwest may perform such
<PAGE>   14
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

other tests as Penwest deems necessary in accordance with its applicable
policies. No other or special tests by Penwest with respect to the raw materials
or Formulated TIMERx will be required during the License Term, unless and to the
extent that Horizon establishes that any such other or special tests are
required in order to obtain or maintain FDA approval to market the Designated
Product in the Territory, in which case any such other or special tests that are
to be performed by Penwest shall be agreed to by Penwest, such testing to be at
the expense of (a) Penwest to the extent such testing pertains to TIMERx or
Formulated TIMERx and (b) Horizon to the extent such testing pertains to [***].
Penwest shall, promptly upon completion of any such other or special tests,
deliver to Horizon a copy of the results of such other or special tests. Each
shipment of the Formulated TIMERx shall:

          6.4.1 be accompanied by a Certificate of Analysis and a Certificate of
     Origin;

          6.4.2  meet  all  present   applicable   FDA   requirements   and  the
     Specifications; and

          6.4.3 be manufactured, packaged, stored and shipped in conformance
     with the Specifications and current Good Manufacturing Practices or other
     relevant regulations and requirements promulgated by the FDA and applicable
     to Formulated TIMERx.

     6.5 Non-Acceptance of Formulated TIMERx by Horizon. Within a reasonable
period but not more than thirty (30) days after receipt, Horizon shall analyze
each shipment of the Formulated TIMERx. If Horizon considers any such shipment
not to conform to the Specifications, Horizon shall notify Penwest immediately
and provide Penwest with the relevant analysis. If Penwest does not agree, the
parties shall submit such disagreement to the arbitration of one mutually
accepted neutral analytical laboratory. The cost of the neutral analytical
laboratory shall be borne by the party whose testing results are determined to
have been in error. If Penwest or the neutral analytical laboratory agrees with
Horizon, Penwest shall not have any obligation to Horizon other than to
accomplish the following:

     i)   at its own  expense  accept  return of any  shipment  not  accepted or
          reimburse  Horizon  for  the  cost  of  disposal  or  destruction,  at
          Horizon's option; and

     ii)  use commercially reasonable efforts to replace the non-conforming
          shipment with conforming Formulated TIMERx.

     6.6 Horizon Access to Penwest Facilities. Horizon shall have the right to
enter into Penwest's manufacturing facilities and the manufacturing facilities
of its Affiliates and sublicensees, of any, at times agreed by the parties
and/or to take other appropriate methods to check the quality of the Formulated
TIMERx manufactured or offered by Penwest and its Affiliates and sublicensees,
of any, from time to time during the term of this Agreement after reasonable
prior notice to Penwest and its Affiliates and sublicensees, if any.
<PAGE>   15
     6.7 Forecasting of Orders by Horizon. Throughout the term of this
Agreement, Horizon shall deliver to Penwest, and shall ensure that its
Affiliates and sublicensees, if any, deliver to Penwest, a firm written order
stating their requirements for Formulated TIMERx for each calendar quarter to be
used for production of the Designated Product for commercial use or sale (a
"Firm Order") no less than ninety (90) days in advance of each required delivery
date during such calendar quarter (each a "Firm Order Quarter"). Horizon shall
be responsible for purchasing from Penwest one hundred percent (100%) of the
quantity of Formulated TIMERx specified in each such Firm Order. The first Firm
Order shall be submitted immediately following the reasonable determination by
Horizon that the NDA for the Designated Product will be approved by the FDA and
shall be accompanied by a written, non-binding estimate of Horizon's
requirements for Formulated TIMERx to be used for production of the Designated
Product for commercial use or sale (an "Estimated Order") during the next three
(3) calendar quarters following the first Firm Order Quarter. On or before the
first day of (a) the calendar quarter following the first Firm Order Quarter and
(b) each Firm Order Quarter thereafter, Horizon shall deliver to Penwest an
Estimated Order covering the three (3) calendar quarters following each such
Firm Order Quarter.

     6.8 Adherence to Estimated Orders. Unless the parties otherwise agree in
writing, Penwest shall not be obligated to supply Horizon with quantities of
Formulated TIMERx during any calendar quarter in excess of one hundred forty
percent (140%) of the quantity estimated in Horizon's most recent Estimated
Order applicable to that quarter. Horizon shall be responsible for purchasing
from Penwest in each calendar quarter at least seventy-five percent (75%) of the
quantity estimated in Horizon's most recent Estimated Order applicable to that
quarter.

     6.9 Product Safety; Government Inspections. Each party shall promptly
notify the other of any fact, circumstance, condition or knowledge dealing with
TIMERx, Formulated TIMERx or the Designated Product of which the party becomes
aware that bears upon the safety or efficacy of TIMERx, Formulated TIMERx or the
Designated Product. Each party shall immediately notify the other of any
inspection or audit relating to TIMERx, Formulated TIMERx or the Designated
Product by any governmental regulatory authority in the Territory. If a
representative of the governmental authority takes samples in connection with
such audit or inspection, the parties shall immediately provide each other, as
appropriate, with samples from the same batch. The party in receipt of such
notice shall provide the other party, within seventy-two (72) hours, with copies
of all relevant documents, including but not limited to FDA Forms 482, 483,
warning letters and other correspondence and notifications as such other party
may reasonably request. Penwest and Horizon agree to cooperate with each other
during any inspection, investigation or other inquiry by the FDA or other
governmental entity, including but not limited to providing information and/or
documentation, as requested by the FDA or other governmental entity. To the
extent permissible, Penwest and Horizon also agree to discuss any responses to
observations or notifications received and to give the other party an
opportunity to comment on any proposed response before it is made. In the event
of disagreement concerning the content or form of such response, Horizon shall
be responsible for deciding the appropriate form and content of any response
with respect to any of its cited activities and Penwest shall be responsible for
deciding the appropriate form and content of any response with respect to any of
<PAGE>   16
its cited activities. Each party shall inform the other of all comments
and conclusions received from the governmental authority.

     6.10 Packaging of Designated Product; Use of Penwest Trademark(s). Horizon
shall manufacture and package the Designated Product in accordance with all
applicable laws and regulations in the Territory. Provided that the Penwest
Trademark(s) remain registered in the Territory, and that Penwest undertakes
reasonable efforts to protect and defend the same in the Territory, Horizon
agrees, upon and only upon Penwest's request, to market the Designated Product
in the Territory in conjunction with the appropriate Penwest Trademark(s). In
the event that Penwest so requests, the parties agree to the following:

          6.10.1 Horizon acknowledges that all Penwest Trademark(s) and all
     rights therein or registrations thereof, worldwide, shall belong
     exclusively to Penwest, and Penwest shall use all reasonable efforts to
     obtain and maintain registrations for the Penwest Trademark(s) in the
     Territory. All use of the Penwest Trademark(s) as contemplated in this
     Agreement by Horizon shall accrue to the benefit of Penwest. Neither
     Horizon nor its Affiliates or sublicensees shall (a) make use of any of the
     Penwest Trademark(s) except to identify and promote the Designated Product
     as contemplated hereunder for sale in the Territory, or (b) continue using
     the Penwest Trademark(s) after termination or expiration of this Agreement,
     nor after the removal or alteration of any such Penwest Trademark(s) from
     Exhibit D, except to complete sale of reasonable quantities of inventory of
     the Designated Product on hand at the time of termination or expiration, or
     at the time of such removal or alteration.

          6.10.2 Horizon shall cooperate with Penwest, at Penwest's request and
     at Penwest's expense, to protect the interest of Penwest in the Penwest
     Trademark(s), and shall neither attempt to register nor authorize others to
     register the Penwest Trademark(s) without the prior written consent of
     Penwest in each instance.

          6.10.3 Horizon shall use, and shall ensure that its Affiliates and
     sublicensees, if any, use, all appropriate notices of trademark status of
     the Penwest Trademark(s), including the "(tm)" designation (or the (r)
     symbol for registered marks), in all labeling and promotional materials and
     shall otherwise conform with, and shall ensure that its Affiliates and
     sublicensees, if any, conform with, all policies and notices of Penwest's
     rights in the Penwest Trademark(s) and for the protection of the Penwest
     Trademark(s), including without limitation the inclusion of an appropriate
     footnote acknowledging the use of the Penwest Trademark(s) under license.

          6.10.4 Representative samples of the Designated Product and any
     advertising, promotional materials or packaging related thereto shall be
     provided by Horizon to Penwest, at Horizon's expense, at least thirty (30)
     days prior to the first use or sale thereof, quarterly thereafter and at
     other times upon the reasonable written request of Penwest. So long as
     Horizon is using the Penwest Trademark(s) in the Territory, Penwest shall
     have the right to enter into Horizon's manufacturing facilities and the
     manufacturing facilities of its Affiliates and sublicensees, if any, at

<PAGE>   17

     times agreed by the parties and/or to take other appropriate methods to
     check the quality of the Designated Product manufactured or offered by
     Horizon and its Affiliates and sublicensees, if any, from time to time
     during the term of this Agreement after reasonable prior notice to Horizon
     and its Affiliates and sublicensees, if any. If at any time or times
     Penwest determines that the quality of the Designated Product manufactured
     or offered by Horizon and its Affiliates and sublicensees, if any, or the
     packaging or promotional materials therefor, does not comply with Penwest
     standards as communicated in writing from time to time to Horizon and its
     Affiliates and sublicensees, if any, Penwest (a) shall so notify Horizon
     and its Affiliates and sublicensees, if any, in writing and (b) if Horizon
     and/or its Affiliates and sublicensees, as the case may be, has not cured
     such non-compliance within sixty (60) days following such notice, shall
     have the right (as its only remedy as to trademark matters) to suspend or
     prohibit the use of the Penwest Trademark(s), immediately upon written
     notice to Horizon and its Affiliates and sublicensees; provided, however,
     that Penwest need not give such opportunity to cure any non-compliance that
     has been the subject of more than two such notices on prior occasions
     during the preceding twelve (12) months.

7. Ownership of Technology and Intellectual Property.

     7.1 Ownership of Intellectual Property. Horizon agrees to assign and ensure
that each of its Affiliates and sublicensees, if applicable, assigns its rights
in and to any and all TIMERx Improvements to Penwest. All right, title, and
interest in and to any and all Joint Developments shall be owned jointly by
Horizon and Penwest, and, except as specifically provided in this Agreement,
each party shall have the full right to practice and license such Joint
Developments, without obligation to obtain the approval of or to make payment of
any kind to the other party in respect thereof. Horizon shall have the right to
obtain, at its sole expense, and shall solely own any trademarks relating to the
Designated Product, subject to the approval of Penwest, which approval shall not
be unreasonably withheld. Neither party makes any grant of rights by
implication.

     7.2 Prosecution and Maintenance of Intellectual Property. Penwest shall be
responsible for the filing and prosecution of any and all patent applications
with respect, in whole or in part, to its own intellectual property and for the
maintenance of any available patent protection with respect thereto; provided,
however, that Penwest does not represent that any such patent protection will be
available or continuous hereunder.

     7.3 Marking of Patented Products. Horizon agrees to mark and to have marked
by its Affiliates and sublicensees (if any) every Designated Product
manufactured, used or sold by it or its Affiliates or sublicensees in the
Territory, in accordance with the laws of the United States relating to the
marking of patented articles with notices of patent.

8. Confidentiality

     8.1   Non-Disclosure  of  Confidential   Information.   In  the  course  of

<PAGE>   18

performance under this Agreement, a party may disclose to the other Confidential
Information belonging to such party in writing, orally or by demonstration or
sample, which information is marked or stated in writing at or within thirty
(30) days after its disclosure to be "confidential" or "trade secret"
information. All such Confidential Information of a party shall be maintained in
confidence by the other and shall not be used by the other party for any purpose
except as authorized hereunder. Each party shall exercise, and shall cause its
Affiliates, sublicensees, consultants, agents and employees to exercise, a
reasonable degree of care and at least the same degree of care as it uses to
protect its own confidential information of similar nature to preserve the
confidentiality of such information of the other party. Each party shall
safeguard such information against disclosure to third parties, including
without limitation employees and persons working or consulting for such party
that do not have an established, current need to know such information for
purposes authorized under this Agreement. This obligation of confidentiality
does not apply to information and material that:

          8.1.1 were properly in the possession of the receiving party, without
     any restriction on use or disclosure, prior to receipt from the other
     party;

          8.1.2 are at the time of disclosure hereunder in the public domain by
     public use, publication, or general knowledge;

          8.1.3 become general or public knowledge through no fault of the
     receiving party or its Affiliates or sublicensees following disclosure
     hereunder;

          8.1.4 are properly obtained by the receiving party from a third party
     not under a confidentiality obligation to the disclosing party hereto;

          8.1.5 consist merely of an idea or conception for the combination of
     one or more active drug ingredients with a controlled-release agent such as
     TIMERx; or

          8.1.6 are required to be disclosed by order of any court or
     governmental authority.

     8.2 Non-Disclosure of Terms of or Work Under Agreement. Neither party shall
make any disclosure, public announcement or other publication regarding this
Agreement (whether as to the existence, conditions or terms thereof) or the
development work or projects performed hereunder or the results thereof,
including but not limited to the results of any clinical trial involving the
Designated Product, without the prior, written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, that either party
may disclose the terms and conditions of this Agreement (a) as required, in the
opinion of counsel to the disclosing party, by any court, administrative agency,
or other governmental body, after making all reasonable efforts to protect the
confidentiality thereof and providing notice to the disclosing party, (b) as
otherwise required by law, (c) in confidence, to legal counsel, accountants,
banks, and financing sources and their advisors, (d) in confidence, in
connection with the enforcement of this Agreement or rights under this

<PAGE>   19

Agreement, or (e) in confidence, in connection with a merger or acquisition or
proposed merger or proposed acquisition. Each party shall ensure that its
Affiliates, sublicensees, consultants, agents and employees comply with the
provisions of this Section 8.2.

9. Infringement.

     9.1 Notice and Prevention of Infringement. Penwest shall (a) promptly
inform Horizon of any suspected infringement of any of the Penwest Patents or
Penwest Trademark(s) or the infringement or misappropriation of any of the
Penwest Technology, the Joint Developments or TIMERx Improvements by a third
party, to the extent such infringement involves the manufacture, use or sale of
the Designated Product in the Territory ("Covered Infringement") and (b)
consistent with its policies as to its TIMERx patent and trade secret portfolio
generally, exert reasonable efforts to monitor and to attempt to stop any
Covered Infringement. Horizon shall promptly inform Penwest of any suspected
infringement of any of the Penwest Patents or Penwest Trademark(s) or
infringement or misappropriation of any of the Penwest Technology, the Joint
Developments or TIMERx Improvements, whether or not the same involves a Covered
Infringement.

     9.2 Penwest Action Against Infringers. If the suspected infringement or
misappropriation does not involve a Covered Infringement, Penwest may take, or
refrain from taking, any action it chooses, with written notice to Horizon, and
Horizon shall have no right to take any action with respect to such suspected
infringement or misappropriation, nor to any recoveries with respect thereto. If
the suspected infringement or misappropriation involves a Covered Infringement,
Penwest shall, within thirty (30) days of the first notice referred to in
Section 9.1, inform Horizon whether or not Penwest intends to institute suit
against such third party with respect to a Covered Infringement. Horizon shall
not take any steps toward instituting suit against any third party involving a
Covered Infringement until Penwest has informed Horizon of its intention
pursuant to the previous sentence, and then only in accordance with the terms
set forth in Sections 9.2.2 and 9.3.

          9.2.1 If Penwest notifies Horizon that it intends to institute suit
     against a third party with respect to a Covered Infringement, and Horizon
     does not agree to join in such suit as provided in Section 9.2.2, Penwest
     may bring such suit on its own and shall in such event bear all costs of,
     and shall exercise all control over, such suit Horizon agrees to, at its
     expense, provide any assistance to and cooperate as reasonably necessary
     with Penwest to institute and/or maintain any such suit with respect to any
     Covered Infringement. Recoveries, if any, whether by judgment, award,
     decree or settlement, shall belong solely to Penwest.

          9.2.2 If Penwest notifies Horizon that it intends to institute suit
     against such third party with respect to a Covered Infringement, and
     Horizon notifies Penwest within thirty (30) days after receipt of such
     notice that Horizon desires to institute suit jointly, the suit shall be
     brought jointly in the names of both parties and all costs thereof shall be

<PAGE>   20

     borne equally. Recoveries, if any, whether by judgment, award, decree or
     settlement, shall, after the reimbursement of each of Penwest and Horizon
     for its share of the joint costs in such action, be shared between Penwest
     and Horizon equally; provided, however, that any portion of such net
     recoveries that constitutes the equivalent of, or damages or payments in
     lieu of, defendant's net sales shall not be shared equally, but shall
     belong to Horizon and be added to Horizon's Net Sales for the purpose of
     determining Royalties payable to Penwest.

10. Representations, Warranties and Indemnities.

     10.1 Authority to Enter into Agreement; Validity of Patents; Debarment.
Each party represents and warrants to the other that, to the best of its current
knowledge, it has the full right and authority to enter into this Agreement and
to grant the licenses granted herein. Each party believes, to the best of its
current knowledge, that any existing patents licensed by it to the other party
under this Agreement are valid. Each party represents and warrants to the other
that neither it nor any of its officers, directors, or employees performing
services under this Agreement has been debarred, or convicted of a crime which
could lead to debarment, under the Generic Drug Enforcement Act of 1992, 21
United States Code 306(a) and (b). In the event that either party, or any of its
officers, directors, or employees performing services under this Agreement, (a)
becomes debarred or receives notice of action or threat of action with respect
to its debarment or (b) becomes the object of any investigation or subject of
any report regarding such party, or any of its officers, directors, or employees
performing services under this Agreement, in connection with any activity that
could result in debarment or suspension or refusal of approval, including
without limitation any inspection report, warning letter, notice of opportunity
for hearing in a case of debarment, or any other Justice Department, FDA or
other federal or state government inquiry or action bearing on potentially
illegal activities, such party shall notify the other party immediately.

     10.2 Penwest Warranties to TIMERx. Penwest represents and warrants that any
Formulated TIMERx supplied by it to Horizon hereunder for use in the Designated
Product, at the point of delivery (a) has been manufactured in accordance with
cGMP, (b) will conform to the Specifications, and (c) to the best of Penwest's
current knowledge, will not infringe upon an article patent of any third party.

PENWEST MAKES NO REPRESENTATIONS OR WARRANTIES AS TO ANY TIMERx OR FORMULATED
TIMERx SUPPLIED BY IT TO HORIZON EXCEPT AS ARE EXPLICITLY STATED HEREIN.

     10.3 Government Licenses, Permits and Authorizations. Each party represents
and warrants to the other party that it has obtained and will at all times
during the term of this Agreement, hold and comply with all licenses, permits
and authorizations necessary to perform this Agreement and to test, manufacture,
market, export, and import the products and assistance to be provided by it
hereunder, as now or hereafter required under any applicable statutes, laws,
ordinances, rules and regulations of the United States and any applicable
foreign, state, and local governments and governmental entities.
<PAGE>   21

     10.4 Government Regulatory Requirements. Horizon warrants that any
Designated Product manufactured, marketed or distributed by Horizon or its
Affiliates or sublicensees shall meet and be manufactured, packaged, labeled,
sold, and promoted in accordance with all applicable regulatory requirements
within the Territory.

     10.5 Indemnification by Penwest Against Infringement Claims. Penwest shall
indemnify, defend and hold Horizon and its Affiliates and sublicensees harmless
from any claim, action or damages arising out of any alleged infringement by
reason of the manufacture, use, sale or distribution by Horizon of the
Designated Product to the extent such infringement would apply as well to the
manufacture, sale or distribution of TIMERx alone. If Horizon or its Affiliate
or sublicensee, by reason of its manufacture, sale or distribution of the
Designated Product, is accused of infringing the patent of a third party, and
such claim of infringement, as framed by the claimant, would apply as well to
the manufacture, sale or distribution of TIMERx alone, Horizon shall immediately
so notify Penwest and provide Penwest with all available information, and the
parties shall consult reasonably as to the proper course of action. If Penwest
and Horizon jointly determine that such claim is likely to prevail, or if an
arbitrator hereunder or a court of competent jurisdiction so determines, Horizon
shall be entitled to offset against any Royalties payable to Penwest hereunder
the full amount of any third party royalties for which Horizon or its Affiliate
or sublicensee becomes liable. For any given year following the Approval Date,
such offset shall not reduce the Royalties payable to Penwest to less than (a)
if such Royalties have not been reduced pursuant to Section 5.3, fifty percent
(50%) of the Royalty amount otherwise due Penwest absent such offset, or (b) if
such Royalties have been reduced pursuant to Section 5.3, twenty-five percent
(25%), of the Royalty amount otherwise due Penwest absent such offset and
reduction; provided, however, that Horizon may carry forward any unutilized
portion of such offset to future years.

     10.6 Indemnification by Penwest Against Other Third Party Claims. Penwest
shall indemnify, defend and hold Horizon and its Affiliates and sublicensees
harmless from any and all third-party claims (other than infringement claims) to
the extent arising from, in connection with, based upon, by reason of, or
relating in any way to:

          10.6.1 Penwest's contributions to the formulation or development of
     the Formulated TIMERx and the Specifications therefor hereunder;

          10.6.2 any failure of the Formulated TMERx supplied by Penwest to
     Horizon hereunder for use in the Designated Product to conform to the
     Specifications; or

          10.6.3 any failure of Penwest to comply with its obligation under
     Section 6.9 to notify Horizon of any information coming into Penwest's
     possession and bearing on the safety of TIMERx or the Designated Product;

and, with respect to Sections 10.6.1, 10.6.2 and 10.6.3, not arising from any
other aspect of the Designated Product or its formulation, development, supply,

<PAGE>   22

production, manufacture, sale, delivery, distribution or use, or from any act or
omission of Horizon with respect to the Formulated TIMERx following its delivery
to Horizon hereunder.

     10.7 Indemnification by Horizon Against Other Third Party Claims. Horizon
shall indemnify, defend and hold Penwest harmless from any and all third-party
claims to the extent arising from, in connection with, based upon, by reason of,
or relating in any way to, the formulation, development, supply, production,
manufacture, sale, delivery, distribution or use of the Designated Product,
except for any matters which are covered by Penwest's indemnities under Sections
10.5 and 10.6.

     10.8 Indemnification by Horizon Against Infringement Claims. Horizon shall
indemnify, defend and hold Penwest harmless from and against any patent claims
or litigation (and all damages and expenses associated therewith, including
without limitation reasonable attorneys fees and other costs of defense and of
the preparation of a defense, at all stages of proceedings) based on any feature
of the Designated Product or its formulation, independent of the TIMERx
component by itself. Penwest shall cooperate and assist Horizon reasonably with
the defense of any such claims or litigation. It is understood that neither
Horizon nor Penwest shall have the right to force the other into any settlement
or compromise of any such litigation, nor to dictate the terms thereof.

     10.9 Indemnification Disclaimer. Notwithstanding anything to the contrary
set forth elsewhere herein, neither Horizon nor Penwest shall be obligated to
indemnify the other party for claims or liabilities to the extent arising from
such other party's, or its Affiliates', sublicensees' or assigns', gross
negligence, intentional misconduct, or material breach of its duties,
obligations, warranties or representations set forth herein.

     10.10 Indemnified Parties; Notice and Defense of Third Party Claims.
Whenever indemnification is provided for a party under this Agreement with
respect to any claim or action, such right of indemnification shall extend also
to the indemnified party's Affiliates, officers, directors, shareholders,
successors, assigns, agents, employees, and insurers to the extent the same
become subject to such claim or action in such capacity. The party seeking
indemnification shall provide the indemnifying party with written notice of such
claim or action within ten (10) days of its receipt thereof and shall afford the
indemnifying party the right to control the defense and settlement of such claim
or action. The party seeking indemnification shall provide reasonable assistance
to the indemnifying party in the defense of such claim or action. If the
defendants in any such action include both Horizon and Penwest and either party
concludes that there may be legal defenses available to it which are different
from, additional to, or inconsistent with, those available to the other, that
party shall have the right to select separate counsel to participate in the
defense of such action on its behalf, and such party shall thereafter bear the
cost and expense of such separate defense. Should the indemnifying party
determine not to defend such claim or action, the other party shall have the
right to maintain the defense of such claim or action and the indemnifying party
agrees to provide reasonable assistance to it in the defense of such claim or
action. Neither party to this Agreement shall settle or defend such claim or
action in a way that prejudices or adversely affects the other party to this

<PAGE>   23

Agreement without the prior approval of such other party (which approval shall
not be unreasonably withheld).

     10.11 Disputes Concerning Indemnification. Any dispute concerning
indemnification shall be determined by arbitration in accordance with Section
12.10 of this Agreement.

     10.12 LIMITATION OF WARRANTIES. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS, IMPLIED OR ARISING BY LAW, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A
REPRESENTATION OR WARRANTY (A) BY PENWEST AS TO THE PATENTABILITY, VALIDITY
(EXCEPT AS STATED IN SECTION 10.1), OR SCOPE OF ANY PENWEST PATENTS, PENWEST
TECHNOLOGY, PENWEST'S CONFIDENTIAL INFORMATION, JOINT DEVELOPMENTS, OR PENWEST
TEST AND REGULATORY DATA; OR (B) BY HORIZON AS TO THE PATENTABILITY, VALIDITY
(EXCEPT AS STATED IN SECTION 10.1), OR SCOPE OF ANY TIMERX IMPROVEMENTS, JOINT
DEVELOPMENTS, OR HORIZON TEST AND REGULATORY DATA.

     10.13 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, NEITHER PARTY SHALL UNDER ANY CIRCUMSTANCES BE LIABLE FOR ANY
THIRD PARTY CLAIMS (OTHER THAN THE INDEMNIFICATIONS STATED IN THIS ARTICLE 10)
OR FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES INCLUDING ANY
LOST PROFITS OR SAVINGS, ARISING FROM ANY BREACH OF WARRANTY OR THE PERFORMANCE
OR BREACH OF ANY OTHER PROVISION OF THIS AGREEMENT OR THE USE OR INABILITY TO
USE TIMERx, FORMULATED TIMERx, THE DESIGNATED PRODUCT, PENWEST PATENTS, PENWEST
TECHNOLOGY, PENWEST'S CONFIDENTIAL INFORMATION, JOINT DEVELOPMENTS, PENWEST TEST
AND REGULATORY DATA, TIMERX IMPROVEMENTS, OR HORIZON TEST AND REGULATORY DATA,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
<PAGE>   24
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

     10.14 Insurance Coverage. Each party shall, at its own cost and expense,
obtain and maintain from a qualified insurance company comprehensive general
liability and products liability insurance coverage during the term of this
Agreement (and any subsequent period of sale or distribution pursuant to Section
11.6). Such insurance shall be in an amount no less than [***] U.S. dollars
(US$[***]) combined single limit for each occurrence for bodily injury and/or
property damage. Each party agrees to provide the other party with a certificate
of insurance evidencing such insurance within thirty (30) days after the
Effective Date and again thereafter from time to time as reasonably requested by
such other party.

11. Term and Termination.

     11.1 Term. The term of this Agreement shall begin on the Effective Date and
shall, unless extended or earlier terminated as provided herein, continue until
fifteen (15) years following the Approval Date.

     11.2 Termination by Penwest. Penwest may at its option terminate this
Agreement upon thirty (30) days' prior written notice to Horizon if:

          11.2.1 Horizon fails to:

               11.2.1.1 file an IND for the Designated Product within [***]
          following the Effective Date, unless Horizon's failure to do so is
          attributable to Penwest;

               11.2.1.2 initiate a program of clinical trials for the Designated
          Product within [***] following successful completion of
          preformulation, formulation, dissolution testing and biostudy
          formulation finalization with respect to the Designated Product,
          unless Horizon's failure to do so is attributable to Penwest; 11.2.1.3
          complete a program of clinical trials for the Designated Product
          within [***] following the initiation of such program, unless
          Horizon's failure to do so is attributable to Penwest;

               11.2.1.4 file an NDA for the Designated Product within [***]
          following the successful completion of a program of clinical trials
          for the Designated Product, unless Horizon's failure to do so is
          attributable to Penwest; or

               11.2.1.5 commercially launch the Designated Product within [***]
          following approval by the FDA of an NDA for the Designated Product,
          unless Horizon's failure to do so is attributable to Penwest.; or

          11.2.2 Horizon fails to meet the relevant Minimum Sales, as specified
     in Exhibit G, for any two (2) consecutive years following the Approval
     Date, unless (a) the sum of the Minimum Sales for all years since the
     Approval Date less the sum of Horizon's Net Sales for such years (the
     "Sales Differential") is equal to or less than zero, or (b) if the Sales
     Differential is greater than zero Horizon makes, within such thirty (30)
     day period, an additional payment to Penwest equal to the product of (i)

<PAGE>   25
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

     the Sales Differential and (ii) the applicable royalty percentage set forth
     in Section 5.3.

     11.3 Termination by Horizon. Horizon shall have the right, at its option,
to terminate this Agreement:

          11.3.1 at any time prior to the first anniversary of the Effective
     Date upon ninety (90) days' prior notice to Penwest, if Horizon, despite
     its commercially reasonable efforts, expects to be unable to meet the
     Minimum Sales specified in Exhibit G for the first year following the
     Approval Date; provided, however, that Horizon shall pay Penwest an early
     termination fee of [***] U.S. dollars (US$[***]) at the time of any
     exercise of Horizon's option to terminate for this reason; or

          11.3.2 upon ninety (90) days' prior written notice to Penwest, if
     Horizon fails to meet the relevant Minimum Sales, as specified in Exhibit
     G, for any two (2) consecutive years following the Approval Date.

     11.4 Extension of Licenses. Following any expiration or termination of this
Agreement, other than due to an uncured breach on the part of Penwest (but
subject to Section 11.8), Penwest may request that the license to Penwest under
Section 2.2.2 be extended to include (in addition to their coverage as stated in
such section) making, using and selling the Designated Product in the Territory
and the use of Horizon Test and Regulatory Data for purposes of complying with
governmental requirements with respect to the Designated Product for marketing
or use in the Territory, and otherwise continue to be governed by the terms
stated in such section. In the event of such a request by Penwest, Horizon
agrees to enter into good faith negotiations with Penwest concerning a
reasonable payment to be made by Penwest to Horizon in consideration of such an
extension.

     11.5 Termination Due to Breach. In the event that either party materially
breaches any of the terms, conditions or agreements contained in this Agreement
to be kept, observed or performed by it, then the other party may terminate this
Agreement, at its option, by giving the party who committed the breach (a) in
the case of breach of obligations other than the payment of money, ninety (90)
days' notice in writing, unless the notified party within such ninety (90) day
period shall have cured the breach, and (b) in the case of breach of an
obligation for the payment of money, thirty (30) days' notice in writing, unless
the notified party within such thirty (30) day period shall have cured the
breach, including any required payment of interest on previously unpaid amounts
as set forth herein; provided, however, that:

          11.5.1 no termination of this Agreement under this Section 11.5 shall
     become effective during the pendency of a good faith dispute between the
     parties as to the existence of grounds for such a termination, provided
     that the parties are complying with the process in Section 12.10 in good
     faith in order to resolve such dispute, and that such termination shall

<PAGE>   26

     become effective immediately upon any binding determination that such
     grounds did exist at the time the notice of termination was given; and

          11.5.2 if a notice of termination is given pursuant to this Section
     11.5 and it is subsequently determined that grounds for such a notice did
     not exist, the giving of such notice shall not itself constitute a
     repudiation or default under this Agreement, so long as such notice was
     given in the good faith belief that such grounds did exist.

No termination of this Agreement under this Section 11.5 shall impair either
party's right to seek other legal or equitable rights or remedies.

     11.6 Deletion of Inventory Following Termination. In the event of any
expiration or termination of this Agreement, Horizon shall be entitled to sell
and distribute reasonable inventories of Designated Product remaining on hand as
of the effective date of such expiration or termination, provided that such
sales and distribution are otherwise in conformance with this Agreement. Horizon
may continue to make, use or sell such Designated Product only until Horizon has
exhausted remaining raw materials in its possession at the time of expiration or
termination of this Agreement. Net Sales of the Designated Product pursuant to
this Section 11.6 shall be subject to the Royalty payment obligations set forth
in Section 5.3.

     11.7 Termination or Assignment of Sublicensees. Any sublicenses granted by
Horizon or its Affiliates under this Agreement shall provide for termination or
assignment to Penwest, at the option of Penwest, of Horizon's or its Affiliate's
interest therein upon expiration or termination of this Agreement.

     11.8 Survival of Terms. Horizon's obligations regarding payment of
Royalties accrued as of the date of expiration or termination of this Agreement,
and the provisions of Sections 7.1, 8, 10, 11 and 12 hereof shall survive any
expiration or termination of this Agreement.

     11.9 Return of Data and Materials. In the event of any termination or
expiration of this Agreement, (a) Horizon shall return to Penwest all Penwest
data and materials and (b) Penwest shall return to Horizon all Horizon data and
materials, except to the extent such Horizon data and materials are necessary to
permit Penwest to fully exercise its retained rights hereunder.

12. Miscellaneous.

     12.1 Furtherance of Agreement. Each of Penwest and Horizon agrees to duly
execute and deliver, or cause to be duly executed and delivered, such further
instruments and cause to be done such further acts and things as are reasonably
within its control and its responsibilities under this Agreement, including,
without limitation, the filing of such additional assignments, agreements,
documents and instruments, that may be necessary or as the other party hereto

<PAGE>   27

may from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of this Agreement.

     12.2 Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof.

     12.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their Affiliates, successors and permitted
assigns; provided, however, that except for assignments or delegations to
Affiliates of a party (which shall not release such party from any of its rights
or responsibilities hereunder), or as part of the transfer of all or
substantially all assets to a single buyer or pursuant to a merger, sale of all
or substantially all of such party's stock or any similar transaction, or as
otherwise specifically permitted hereunder, neither party shall assign or
delegate any of its rights or obligations hereunder at any time without the
prior written consent of the other party hereto, which consent shall not be
unreasonably withheld. Penwest's decision with respect to such consent shall be
based on whether, as of the time of the proposed assignment, the proposed
assignee is a Capable Entity. Penwest shall notify Horizon of such decision
within sixty (60) days following Penwest's receipt from Horizon of any written
proposal concerning assignment of this Agreement. Notwithstanding the foregoing,
Horizon shall have the right to assign or delegate any of its rights or
oblations hereunder to Inpharmakon without the prior written consent of Penwest;
provided, however, that (a) any such assignment or delegation to Inpharmakon
shall be limited to Horizon's rights and obligations hereunder with respect to
the Designated Product for use for the Indication, and (b) six (6) months
following such assignment or delegation, (i) such right shall become ineffective
and (ii) Horizon shall terminate any such assignment or delegation, unless
Inpharmakon has entered into an agreement with a Capable Entity for development
of the Designated Product. Horizon shall reimburse Penwest for reasonable
attorneys' fees incurred by Penwest in connection with such assignment to
Inpharmakon, whether or not such assignment remains effective and continues
beyond the end of such six (6) month period. In no event shall Horizon assign
rights hereunder unless the proposed assignee agrees to assume those of
Horizon's obligations hereunder that are relevant to the scope of the proposed
assignment, including but not limited to Horizon's due diligence and
confidentiality obligations and Horizon's obligation to pay milestones. Out of
any Assignment-Related Compensation received by Horizon from any third party,
Horizon shall reimburse Penwest for Penwest's costs incurred in connection with
the development of the Designated Product, except to the extent such costs have
already been reimbursed by Horizon through the payment of milestones hereunder.
For the purposes of this Section 12.3, "Assignment-Related Compensation" shall
mean any payments of any kind whatsoever received by Horizon from a third party
in consideration for, or otherwise in connection with, the assignment of all or
any part of Horizon's rights under this Agreement. In the event that this
Agreement is assigned as part of the sale of all or substantially all of the
assets of Horizon, or Horizon is acquired pursuant to a merger, sale of stock or
similar transaction, then, out of the proceeds from such transaction, Horizon
shall reimburse Penwest for Penwest's costs incurred in connection with the

<PAGE>   28

development of the Designated Product, except to the extent such costs have
already been reimbursed by Horizon through the payment of milestones hereunder.

     12.4 Notices. All notices, requests or other communication provided for or
permitted hereunder shall be given in writing and shall be hand delivered or
sent by facsimile, reputable courier or by registered or certified mail, postage
prepaid, return receipt requested, to the address set forth on the signature
page of this Agreement, or to such other address as either party may inform the
other of in writing. Notices will be deemed delivered on the earliest of
transmission by facsimile, actual receipt or three days after mailing as set
forth herein.

     12.5 Modifications; Waivers. No change, modification, extension,
termination or waiver of any obligation, term or provision contained herein
shall be valid or enforceable unless same is reduced to writing and signed by a
duly authorized representative of each of the parties to be bound hereby. No
waiver of any right in any one instance shall constitute a waiver of that right
or of any other right in other instances under this Agreement.

     12.6 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, such provision shall be enforced to the
maximum extent permitted by law and the parties' fundamental intentions
hereunder, and the remaining provisions shall not be affected or impaired.

     12.7 Independent Contractors. Nothing herein contained shall constitute
this a joint venture agreement or constitute either party as the partner,
principal or agent of the other, this being an Agreement between independent
contracting entities. Neither party shall have the authority to bind the other
in any respect whatsoever. Except as provided herein, nothing contained in this
Agreement shall be construed as conferring any right on either party to use any
name, trade name, trademark or other designation of the other party hereto,
unless the express, written permission of such other party has been obtained.

     12.8 Force Majeure. In the event that either party hereto is prevented from
carrying out its obligations under this Agreement by events beyond its
reasonable control, including without limitation acts or omissions of the other
party, acts of God or government, natural disasters or storms, fire, political
strife, labor disputes, failure or delay of transportation, default by suppliers
or unavailability of parts, then such party's performance of its obligations
hereunder shall be excused during the period of such event and for a reasonable
period of recovery thereafter, and the time for performance of such obligations
shall be automatically extended for a period of time equal to the duration of
such event or events.

     12.9 Governing Law. This Agreement  shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York without regard to
its conflict of laws rules.
<PAGE>   29

     12.10 Dispute Resolution. Any dispute, controversy, or claim arising out of
or relating to this Agreement or to a breach thereof, including its
interpretation, performance, or termination, other than any dispute, controversy
or claim concerning patent infringement, validity or enforceability, shall be
finally resolved by arbitration. The arbitration shall be conducted by three (3)
arbitrators, one to be appointed by the party initiating the proceeding within
ten (10) days of filing its claim, one to be appointed within thirty (30) days
thereafter by the other party, and the third being nominated by the two
arbitrators so selected within thirty days thereafter or, if they cannot agree
on a third arbitrator, by the President of the American Arbitration Association.
The arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, which shall administer the
arbitration, and the laws of the State of New York. The arbitration, including
the rendering of the award, shall take place in New York, New York. The decision
of the arbitrators shall be binding upon the parties to this Agreement, and the
expense of the arbitration (including without limitation the award of the
attorneys' fees to the prevailing party) shall be paid as the arbitrators
determine. The decision of the arbitrators shall be final, and judgment thereon
may be entered by any court of competent jurisdiction. Notwithstanding this,
application may be made to any court for a judicial acceptance of the award or
order of enforcement. In the event of any dispute relating to patent
infringement, validity or enforceability, the parties agree to waive their
respective rights to a jury trial.

     IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and acknowledge this Agreement as of the Effective Date.
This Agreement may be executed in one or more counterparts, each of which shall
be an original instrument, but all of which together shall constitute a single
agreement creating one set of rights and obligations.

Horizon Pharmaceutical Corporation:         Penwest Pharmaceuticals Co.:

By ________________________________         By ________________________________
Brent Dixon                                    Tod R. Hamachek
President                                      Chairman and
                                               Chief Executive Officer

Address:                                       Address:
660 Hembree Parkway                            2981 Route 22
Suite 106                                      Patterson, NY  12563
Roswell, GA 30076                              FAX:  (914) 878-3420
FAX: (770) 442-9594                            Attn: Michael T. Mallon
Attn: Brent Dixon

<PAGE>   30
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

                                   Exhibit A

                               DESIGNATED PRODUCT

[***] form of a controlled-release pharmaceutical for oral administration in
humans in a 24 hour release form in a [***] strength that (a) combines a racemic
mixture of [***] with TIMERx and other excipients and (b) is eligible for
approval, or has been approved, by the FDA under an NDA.

<PAGE>   31

                                   Exhibit B

                                   NET SALES

     "Net Sales" shall mean gross invoice price for sales by Horizon or its
Affiliates or sublicensees to unrelated third parties ("Customers"), less
deductions for (to the extent such amounts are included in the gross invoiced
sales price for the Designated Product) (a) statutory or contractual liability
for rebates to any governmental entity, rebates paid pursuant to the Medicaid
Rebate legislation, and any state and local governmental rebate programs; (b)
cash discounts generally available at the time of sale; (c) adjustments for
allowances or credits for returned Designated Product, free Designated Product
provided in lieu of discounts or rebates, damaged Designated Product, commercial
rebates, chargebacks, or trade discounts, whether or not paid directly to the
Customer; and (d) sales, excise, turnover, inventory, value-added, and similar
taxes and duties assessed on the sale of Designated Product. Notwithstanding the
foregoing, no discount, allowance, rebate, management fee, wholesaler
chargeback, or any similar amount however designated, that is given or
associated with the purchase by the Customer or its affiliates or associates of
any product other than the Designated Product, or with the purchase or provision
of any service, shall be taken into consideration in calculating any deductions
from the gross invoice. To the extent any of the amounts described in the
immediately preceding sentence are afforded to a Customer prior to the
calculation of the gross invoice price, such gross invoice price shall be
increased to reflect such amounts, solely for purposes of the calculation of Net
Sales under this Agreement. In the case of Designated Product sold to any
customer together with other products or services, the price of such Designated
Product, solely for purposes of the calculation of Net Sales under this
Agreement, shall be deemed to be no less than the price at which Designated
Product would be sold in a similar transaction to a customer not also purchasing
other products or services.

<PAGE>   32

                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

                                   Exhibit C

                                PENWEST PATENTS

<TABLE>
<CAPTION>

U.S. Patent             Date                            Title                   Inventor
Number

<S>                     <C>                             <C>                     <C>
[***]                   [***]                           [***]                   [***]

</TABLE>

<PAGE>   33

                                   Exhibit D

                              PENWEST TRADEMARK(S)

TIMERx(r) Oral Delivery System

<PAGE>   34

                                   Exhibit E

                                 SPECIFICATIONS

                                (to be attached)

<PAGE>   35

                                   Exhibit F

                         DEVELOPMENT TASKS AND SCHEDULE

                                   (attached)

<PAGE>   36
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

<TABLE>
<CAPTION>

                    TIMERx - [***] Development Plan - DRAFT
                            Effective March 25,1999

ID        Task Name Duration  Start     Finish    December       January   February  March     April
<S>     <C>         <C>       <C>       <C>       <C>            <C>       <C>       <C>       <C>
1         [***]     [***]     [***]                                                            [***]
2         [***]     [***]     [***]                                                            [***]
3         [***]     [***]     [***]                                                            [***]
4         [***]     [***]     [***]                                                            [***]
5         [***]     [***]     [***]                                                            [***]
6         [***]     [***]     [***]                                                            [***]
7         [***]     [***]     [***]                                                            [***]
8         [***]     [***]     [***]                                                            [***]
9         [***]     [***]     [***]                                                            [***]
10        [***]     [***]     [***]                                                            [***]
11        [***]     [***]     [***]                                                            [***]
12        [***]     [***]     [***]                                                            [***]
13        [***]     [***]     [***]                                                            [***]
14        [***]     [***]     [***]                                                            [***]
15        [***]     [***]     [***]                                                            [***]
16        [***]     [***]     [***]                                                            [***]
17        [***]     [***]     [***]                                                            [***]
18        [***]     [***]     [***]                                                            [***]
19        [***]     [***]     [***]                                                            [***]
20        [***]     [***]     [***]                                                            [***]
21        [***]     [***]     [***]                                                            [***]
</TABLE>

<TABLE>

<S>                 <C>       <C>       <C>                 <C>       <C>                 <C>
Project             Task      Graphic   Summary             Graphic   Rolled Up Progress  Graphic
Date:  Thu 3/25/99  Progress  Graphic   Rolled Up Task      Graphic
                    Milestone Graphic   Rolled Up Milestone Graphic
</TABLE>
<PAGE>   37
                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

<TABLE>
<CAPTION>

                    TIMERx - [***] Development Plan - DRAFT
                            Effective March 25,1999

ID        Task Name Duration  Start     Finish    December       January   February  March     April
<S>     <C>         <C>       <C>       <C>       <C>            <C>       <C>       <C>       <C>
22        [***]     [***]     [***]     [***]
23        [***]     [***]     [***]     [***]
24        [***]     [***]     [***]     [***]
25        [***]     [***]     [***]     [***]
26        [***]     [***]     [***]     [***]
</TABLE>

<TABLE>

<S>                 <C>       <C>       <C>                 <C>       <C>                 <C>
Project             Task      Graphic   Summary             Graphic   Rolled Up Progress  Graphic
Date:  Thu 3/25/99  Progress  Graphic   Rolled Up Task      Graphic
                    Milestone Graphic   Rolled Up Milestone Graphic
</TABLE>
<PAGE>   38

<TABLE>

<S>     <C>         <C>       <C>       <C>       <C>            <C>       <C>       <C>
May     June        July      August    September October        November  December  January

</TABLE>

<TABLE>

<S>                 <C>       <C>       <C>                 <C>       <C>                 <C>
Project             Task      Graphic   Summary             Graphic   Rolled Up Progress  Graphic
Date:  Thu 3/25/99  Progress  Graphic   Rolled Up Task      Graphic
                    Milestone Graphic   Rolled Up Milestone Graphic
</TABLE>
<PAGE>   39

<TABLE>

<S>     <C>         <C>       <C>       <C>       <C>            <C>       <C>       <C>
May     June        July      August    September October        November  December  January

</TABLE>

<TABLE>

<S>                 <C>       <C>       <C>                 <C>       <C>                 <C>
Project             Task      Graphic   Summary             Graphic   Rolled Up Progress  Graphic
Date:  Thu 3/25/99  Progress  Graphic   Rolled Up Task      Graphic
                    Milestone Graphic   Rolled Up Milestone Graphic
</TABLE>
<PAGE>   40

<TABLE>

<S>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
February  March     April     May       June      July      August    September October   November

</TABLE>

<TABLE>

<S>                 <C>       <C>       <C>                 <C>       <C>                 <C>
Project             Task      Graphic   Summary             Graphic   Rolled Up Progress  Graphic
Date:  Thu 3/25/99  Progress  Graphic   Rolled Up Task      Graphic
                    Milestone Graphic   Rolled Up Milestone Graphic
</TABLE>
<PAGE>   41
<TABLE>
<CAPTION>

<S>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
February  March     April     May       June      July      August    September October   November

</TABLE>

<TABLE>

<S>                 <C>       <C>       <C>                 <C>       <C>                 <C>
Project             Task      Graphic   Summary             Graphic   Rolled Up Progress  Graphic
Date:  Thu 3/25/99  Progress  Graphic   Rolled Up Task      Graphic
                    Milestone Graphic   Rolled Up Milestone Graphic
</TABLE>
<PAGE>   42

                                        [***] - CONFIDENTIAL TREATMENT REQUESTED

                                   Exhibit G

                                 MINIMUM SALES

The "Minimum Sales" shall be equal to the level of Net Sales of the Designated
Product for each of the years following the Approval Date set forth in the table
below.

               Year                     Minimum Sales
               1                        [***] U.S. dollars
                                        (US$[***])

               2                        [***] U.S. dollars
                                        (US$[***])

               3                        [***] U.S. dollars
                                        (US$[***])

               4 and each               [***] U.S. dollars
               subsequent year          (US$[***])

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}]]