Document:

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                           CNH EQUIPMENT TRUST 2000-A

                            ADMINISTRATION AGREEMENT

                                      among

                           CNH EQUIPMENT TRUST 2000-A,
                                   as Issuer,

                                       and

                            CASE CREDIT CORPORATION,
                                as Administrator,

                                       and

                         HARRIS TRUST AND SAVINGS BANK,
                              as Indenture Trustee.

                            Dated as of March 1, 2000

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                                TABLE OF CONTENTS

SECTION                                                                     PAGE

1.  DUTIES OF THE ADMINISTRATOR................................................2
    (a)  Duties with Respect to the Indenture and the Depository Agreement.....2
    (b)  Duties with Respect to the Trust......................................5
    (c)  Non-Ministerial Matters...............................................7

2.  RECORDS....................................................................7

3.  COMPENSATION...............................................................7

4.  ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER.......................8

5.  INDEPENDENCE OF THE ADMINISTRATOR..........................................8

6.  NO JOINT VENTURE...........................................................8

7.  OTHER ACTIVITIES OF THE ADMINISTRATOR......................................8

8.  TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF THE ADMINISTRATOR............8

9.  ACTION UPON TERMINATION, RESIGNATION OR REMOVAL...........................10

10.  NOTICES..................................................................11

11.  AMENDMENTS...............................................................11

12.  SUCCESSORS AND ASSIGNS...................................................12

13.  GOVERNING LAW............................................................13

14.  HEADINGS.................................................................13

15.  COUNTERPARTS.............................................................13

16.  SEVERABILITY.............................................................13

17.  NOT APPLICABLE TO CASE CREDIT CORPORATION IN OTHER CAPACITIES............13

18.  LIMITATION OF LIABILITY OF THE TRUSTEE AND THE INDENTURE TRUSTEE.........13

                                        i

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                                TABLE OF CONTENTS
                                   (continued)
SECTION                                                                     PAGE

19.  THIRD-PARTY BENEFICIARY..................................................14

20.  INDEMNIFICATION..........................................................14

                                       ii
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     ADMINISTRATION  AGREEMENT  dated as of March 1, 2000,  among CNH  EQUIPMENT
TRUST 2000-A, a Delaware business trust (the "ISSUER"), CASE CREDIT CORPORATION,
a Delaware corporation, as administrator (the "ADMINISTRATOR"), and HARRIS TRUST
AND  SAVINGS  BANK,  an  Illinois  banking  corporation,  not in its  individual
capacity but solely as Indenture Trustee (the "INDENTURE TRUSTEE").

                                    RECITALS

     WHEREAS,  the Issuer is issuing:  (a) 6.178% Class A-1 Asset Backed  Notes,
6.80% Class A-2 Asset Backed Notes,  7.14% Class A-3 Asset Backed  Notes,  7.34%
Class A-4 Asset Backed Notes  (together,  the "CLASS A NOTES") and 7.32% Class B
Asset Backed Notes (the "CLASS B NOTES," and,  together  with the Class A Notes,
the "NOTES") pursuant to the Indenture,  dated as of the date hereof (as amended
and  supplemented  from time to time in accordance with the provisions  thereof,
the  "INDENTURE"),  between the Issuer and the  Indenture  Trustee  (capitalized
terms used herein and not otherwise  defined herein are defined in Appendix A to
the Indenture);

     WHEREAS,  the Issuer has entered into certain agreements in connection with
the issuance of the Notes and of certain beneficial  ownership  interests of the
Issuer,  including:  (i) a Sale and  Servicing  Agreement,  dated as of the date
hereof (as amended and  supplemented  from time to time, the "SALE AND SERVICING
AGREEMENT"),  among the  Issuer,  Case  Credit  Corporation,  as  servicer  (the
"SERVICER"),  and CNH Receivables Inc., a Delaware  corporation,  as seller (the
"SELLER"),  (ii) a Depository  Agreement,  dated March 16, 2000 (the "DEPOSITORY
AGREEMENT"),  among the Issuer, the Indenture Trustee, the Administrator and The
Depository Trust Company, (iii) the Indenture and (iv) a Trust Agreement,  dated
as of the date  hereof  (the  "TRUST  AGREEMENT"),  between  the  Seller and the
Trustee  (the  Sale and  Servicing  Agreement,  the  Depository  Agreement,  the
Indenture and the Trust Agreement being hereinafter  referred to collectively as
the "RELATED AGREEMENTS");

     WHEREAS, pursuant to the Related Agreements, the Issuer and the Trustee are
required to perform  certain  duties in connection  with:  (a) the Notes and the
collateral therefor pledged pursuant to the Indenture (the "Collateral") and (b)
the beneficial ownership interests in the Issuer (the registered holders of such
interests being referred to herein as the "OWNERS");

     WHEREAS,  the  Issuer  and the  Trustee  desire  to have the  Administrator
perform  certain of the duties of the Issuer and the Trustee  referred to in the
preceding clause, and to provide such additional  services  consistent with this

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Agreement and the Related Agreements as the Issuer and the Trustee may from time
to time request;

     WHEREAS,  the  Administrator  has the  capacity  to  provide  the  services
required  hereby and is willing to perform such  services for the Issuer and the
Trustee on the terms set forth herein;

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

   1.  DUTIES OF THE ADMINISTRATOR.

     (a) DUTIES WITH RESPECT TO THE INDENTURE AND THE DEPOSITORY AGREEMENT.  The
Administrator shall perform all of its duties as Administrator and the duties of
the Issuer and the Trustee  under the  Depository  Agreement.  In addition,  the
Administrator  shall consult with the Trustee regarding the duties of the Issuer
and the  Trustee  under such  documents.  The  Administrator  shall  monitor the
performance  of the Issuer and shall advise the Trustee when action is necessary
to comply with the Issuer's or the Trustee's  duties under such  documents.  The
Administrator  shall  prepare  for  execution  by the Issuer or shall  cause the
preparation  by  other  appropriate  persons  of all  such  documents,  reports,
filings,  instruments,  certificates and opinions as it shall be the duty of the
Issuer or the Trustee to prepare, file or deliver pursuant to such documents. In
furtherance  of the  foregoing,  the  Administrator  shall take all  appropriate
action  that is the duty of the Issuer or the  Trustee to take  pursuant to such
documents,  including, without limitation, such of the foregoing as are required
with  respect  to the  following  matters  (references  in this  Section  are to
sections of the Indenture):

          (i) the duty to cause  the  Note  Register  to be kept and to give the
     Indenture Trustee notice of any appointment of a new Note Registrar and the
     location, or change in location, of the Note Register (Section 2.4);

          (ii) the fixing or causing to be fixed of any  specified  record  date
     and the notification of the Indenture  Trustee and Noteholders with respect
     to special payment dates, if any (Section 2.7(c));

          (iii) the preparation of or obtaining of the documents and instruments
     required  for  authentication  of the Notes and delivery of the same to the
     Indenture Trustee (Section 2.2);

          (iv)  the  preparation,   obtaining  or  filing  of  the  instruments,
     opinions,  certificates and other documents required for the release of the
     Collateral (Section 2.9);

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          (v) the maintenance of an office in the Borough of Manhattan,  City of
     New York, for registration of transfer or exchange of Notes (Section 3.2);

          (vi) the duty to cause  newly  appointed  Paying  Agents,  if any,  to
     deliver to the Indenture Trustee the instrument  specified in the Indenture
     regarding funds held in trust (Section 3.3);
          (vii) the  direction to the Paying  Agents to deposit  moneys with the
     Indenture Trustee (Section 3.3);

          (viii) the obtaining and preservation of the Issuer's qualification to
     do business in each jurisdiction in which such qualification is or shall be
     necessary to protect the validity and enforceability of the Indenture,  the
     Notes, the Collateral and each other  instrument and agreement  included in
     the Trust Estate (Section 3.4);

          (ix)  the  preparation  of  all  supplements,   amendments,  financing
     statements,  continuation statements,  instruments of further assurance and
     other  instruments,  in  accordance  with  Section  3.5 of  the  Indenture,
     necessary to protect the Trust Estate (Section 3.5);

          (x) the delivery of the Opinion of Counsel on the Closing Date and the
     annual  delivery of Opinions of Counsel,  in accordance with Section 3.6 of
     the  Indenture,  as to the Trust  Estate,  and the annual  delivery  of the
     Officers'  Certificate  and certain other  statements,  in accordance  with
     Section 3.9 of the Indenture, as to compliance with the Indenture (Sections
     3.6 and 3.9);

          (xi) the  identification  to the  Indenture  Trustee  in an  Officers'
     Certificate  of a Person with whom the Issuer has contracted to perform its
     duties under the Indenture (Section 3.7(b));

          (xii)  the  notification  of the  Indenture  Trustee  and  the  Rating
     Agencies of a Servicer Default pursuant to the Sale and Servicing Agreement
     and, if such  Servicer  Default  arises from the failure of the Servicer to
     perform  any of its  duties  under the Sale and  Servicing  Agreement,  the
     taking of all reasonable  steps  available to remedy such failure  (Section
     3.7(d));

          (xiii) the  preparation  and  obtaining of documents  and  instruments
     required  for the  release of the  Issuer  from its  obligations  under the
     Indenture (Section 3.10(b));

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          (xiv) the delivery of notice to the Indenture Trustee of each Event of
     Default  and each  default  by the  Servicer  or Seller  under the Sale and
     Servicing Agreement (Section 3.19);

          (xv) the monitoring of the Issuer's obligations as to the satisfaction
     and  discharge  of  the  Indenture  and  the  preparation  of an  Officers'
     Certificate and the obtaining of the Opinion of Counsel and the Independent
     Certificate relating thereto (Section 4.1);

          (xvi) the  compliance  with any  written  directive  of the  Indenture
     Trustee  with  respect  to the sale of the Trust  Estate in a  commercially
     reasonable  manner  if an Event  of  Default  shall  have  occurred  and be
     continuing (Section 5.4);

          (xvii) the  furnishing  to the  Indenture  Trustee  with the names and
     addresses of  Noteholders  during any period when the Indenture  Trustee is
     not the Note Registrar (Section 7.1);

          (xviii) the preparation,  execution and filing with the Commission and
     the Indenture Trustee of documents required to be filed on a periodic basis
     with,  and  summaries  thereof as may be required by rules and  regulations
     prescribed by, the Commission and the  transmission of such  summaries,  as
     necessary, to the Noteholders (Section 7.3);

          (xix) the opening of one or more  accounts in the  Trust's  name,  the
     preparation  of Issuer  Orders,  Officers'  Certificates  and  Opinions  of
     Counsel and all other  actions  necessary  with respect to  investment  and
     reinvestment of funds in the Trust Accounts (Sections 8.2 and 8.3);

          (xx) the  preparation of an Issuer  Request and Officers'  Certificate
     and the obtaining of an Opinion of Counsel and Independent Certificates, if
     necessary,  for the release of the Trust Estate as defined in the Indenture
     (Sections 8.4 and 8.5);

          (xxi) the  preparation  of Issuer Orders and the obtaining of Opinions
     of Counsel with respect to the execution of supplemental indentures and the
     mailing to the  Noteholders  of notices with  respect to such  supplemental
     indentures (Sections 9.1, 9.2 and 9.3);

          (xxii) the  execution  and  delivery  of new Notes  conforming  to any
     supplemental indenture (Section 9.6);

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          (xxiii) the  notification of Noteholders of redemption of the Notes or
     the duty to cause  the  Indenture  Trustee  to  provide  such  notification
     (Section 10.2);

          (xxiv) the  preparation  of all  Officers'  Certificates,  Opinions of
     Counsel and  Independent  Certificates  with respect to any requests by the
     Issuer to the  Indenture  Trustee  to take any action  under the  Indenture
     (Section 11.1(a));

          (xxv) the preparation and delivery of Officers'  Certificates  and the
     obtaining of  Independent  Certificates,  if necessary,  for the release of
     property from the lien of the Indenture (Section 11.1(b));

          (xxvi) the  preparation  and delivery to Noteholders and the Indenture
     Trustee of any  agreements  with  respect to  alternate  payment and notice
     provisions (Section 11.6); and

          (xxvii) the recording of the Indenture, if applicable (Section 11.15).

     (b) DUTIES WITH RESPECT TO THE TRUST.  (i) In addition to the duties of the
Administrator   set  forth  above,   the   Administrator   shall   perform  such
calculations,  and shall  prepare for  execution by the Issuer or the Trustee or
shall cause the preparation by other appropriate  persons of all such documents,
reports,  filings,  instruments,  certificates and opinions,  as it shall be the
duty of the Issuer or the Trustee to perform,  prepare, file or deliver pursuant
to the Related  Agreements,  and at the  request of the  Trustee  shall take all
appropriate  action  that it is the duty of the  Issuer or the  Trustee  to take
pursuant to the Related Agreements.  Subject to Section 5 of this Agreement, and
in  accordance  with the  directions  of the Trustee,  the  Administrator  shall
administer,  perform or supervise the  performance  of such other  activities in
connection  with the Collateral  (including  the Related  Agreements) as are not
covered by any of the foregoing  and as are  expressly  requested by the Trustee
and are reasonably within the capability of the Administrator.

          (ii)  Notwithstanding  anything  in  this  Agreement  or  the  Related
     Agreements  to the  contrary,  if any  Certificates  are held by any Person
     other  than  the  Depositor  the  Administrator  shall be  responsible  for
     promptly  notifying  the Trustee in the event that any  withholding  tax is
     imposed on the Trust's  payments (or  allocations of income) to an Owner as
     contemplated  in Section  5.2(c) of the Trust  Agreement.  Any such  notice
     shall specify the amount of any  withholding tax required to be withheld by
     the Trustee pursuant to such provision.

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          (iii)  Notwithstanding  anything  in  this  Agreement  or the  Related
     Agreements to the contrary,  the  Administrator  shall be  responsible  for
     performance  of the duties of the  Trustee  (if any) set forth in  Sections
     5.5(a),  (b),  (c) and (d),  the  penultimate  sentence  of Section 5.5 and
     Section 5.6(a) of the Trust  Agreement with respect to, among other things,
     accounting and reports to Owners; PROVIDED, HOWEVER, that the Trustee shall
     retain  responsibility  for the distribution of the Schedule K-1s necessary
     to enable each Owner to prepare its Federal and State income tax returns.

          (iv)  If any  Certificates  are  held by any  Person  other  than  the
     Depositor,  the Administrator shall satisfy its obligations with respect to
     clauses (ii) and (iii) by retaining, at the expense of the Trust payable by
     the Servicer,  a firm of  independent  certified  public  accountants  (the
     "ACCOUNTANTS")  acceptable to the Trustee,  which Accountants shall perform
     the obligations of the Administrator  thereunder. In connection with clause
     (ii),  the  Accountants  will provide  prior to March 16, 2000, a letter in
     form and  substance  satisfactory  to the  Trustee  as to  whether  any tax
     withholding  is then  required  and,  if  required,  the  procedures  to be
     followed with respect thereto to comply with the  requirements of the Code.
     The  Accountants  shall be required  to update the letter in each  instance
     that  any  additional  tax  withholding  is  subsequently  required  or any
     previously required tax withholding shall no longer be required.

          (v) The  Administrator  shall perform the duties of the  Administrator
     specified in Section 10.2 of the Trust  Agreement  required to be performed
     in connection with the resignation or removal of the Trustee, and any other
     duties expressly  required to be performed by the  Administrator  under the
     Trust Agreement.

          (vi)  In  carrying  out  the  foregoing  duties  or any  of its  other
     obligations  under  this  Agreement,   the  Administrator  may  enter  into
     transactions  with or otherwise deal with any of its affiliates;  PROVIDED,
     HOWEVER,  that the terms of any such  transactions  or dealings shall be in
     accordance  with any  directions  received from the Issuer and shall be, in
     the Administrator's  opinion, no less favorable to the Issuer than would be
     available from unaffiliated parties.

          (vii) The  Administrator  hereby  agrees to  execute  on behalf of the
     Issuer all such documents, reports, filings, instruments,  certificates and
     opinions as it shall be the duty of the Issuer to prepare,  file or deliver
     pursuant to the Basic Documents or otherwise by law.

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     (c)  Non-Ministerial  Matters.  (i) With  respect  to  matters  that in the
reasonable judgment of the Administrator are non-ministerial,  the Administrator
shall not take any action unless  within a reasonable  time before the taking of
such action the  Administrator  shall have  notified the Trustee of the proposed
action  and  the  Trustee  shall  not  have  withheld  consent  or  provided  an
alternative   direction.   For   the   purpose   of  the   preceding   sentence,
"non-ministerial matters" shall include, without limitation:

               (A)  the amendment of or any supplement to the Indenture;

               (B) the  initiation of any claim or lawsuit by the Issuer and the
compromise  of any  action,  claim or lawsuit  brought by or against  the Issuer
(other than in connection with the collection of the Receivables);

               (C)  the  amendment,   change  or  modification  of  the  Related
Agreements;

               (D) the  appointment  of  successor  Note  Registrars,  successor
Paying  Agents  and  successor   Trustees  pursuant  to  the  Indenture  or  the
appointment of successor  Administrators or successor Servicers,  or the consent
to the assignment by the Note  Registrar,  Paying Agent or Indenture  Trustee of
its obligations under the Indenture; and

               (E) the removal of the Indenture Trustee.

        (ii)  Notwithstanding  anything  to the  contrary  in this  Agreement,
     the Administrator shall not be obligated to, and shall not: (x) make any
     payments to the Noteholders under the Related Agreements, (y) sell the
     Trust Estate pursuant to Section  5.4 of the  Indenture  or (z) take any
     other  action that the Issuer directs the Administrator not to take on
     its behalf.

     2. RECORDS.  The Administrator shall maintain  appropriate books of account
and records relating to services performed hereunder, which books of account and
records shall be accessible for inspection by the Issuer,  the Indenture Trustee
and the Depositor at any time during normal business hours.

     3. COMPENSATION. As compensation for the performance of the Administrator's
obligations  under this Agreement and as reimbursement  for its expenses related
thereto,  the  Administrator  shall be entitled  to $500 per quarter  payable in
arrears on each Payment Date, which payment shall be solely an obligation of the
Issuer.

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     4. ADDITIONAL  INFORMATION TO BE FURNISHED TO THE ISSUER. The Administrator
shall  furnish  to the  Issuer  from  time to time such  additional  information
regarding the Collateral as the Issuer shall reasonably request.

     5. INDEPENDENCE OF THE  ADMINISTRATOR.  For all purposes of this Agreement,
the Administrator shall be an independent contractor and shall not be subject to
the supervision of the Issuer or the Trustee with respect to the manner in which
it accomplishes the performance of its obligations  hereunder.  Unless expressly
authorized by the Issuer,  the Administrator  shall have no authority to act for
or  represent  the Issuer or the  Trustee in any way  (other  than as  permitted
hereunder)  and shall  not  otherwise  be  deemed an agent of the  Issuer or the
Trustee.

     6. NO  JOINT  VENTURE.  Nothing  contained  in this  Agreement:  (i)  shall
constitute the  Administrator and either of the Issuer or the Trustee as members
of  any  partnership,  joint  venture,  association,  syndicate,  unincorporated
business  or other  separate  entity,  (ii)  shall be  construed  to impose  any
liability  as such on any of them or (iii)  shall be  deemed to confer on any of
them any  express,  implied or apparent  authority  to incur any  obligation  or
liability on behalf of the others.

     7. OTHER ACTIVITIES OF THE ADMINISTRATOR.  Nothing herein shall prevent the
Administrator  or its Affiliates from engaging in other  businesses or, in their
sole discretion,  from acting in a similar capacity as an administrator  for any
other Person even though such Person may engage in business  activities  similar
to those of the Issuer, the Trustee or the Indenture Trustee.

     8. TERM OF AGREEMENT;  RESIGNATION  AND REMOVAL OF THE  ADMINISTRATOR.  (a)
This Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.

     (b)  Subject  to  Section  8(e),  the  Administrator  may resign its duties
hereunder by providing the Issuer,  the Indenture  Trustee and the Servicer with
at least 60 days' prior written notice.

     (c)  Subject to  Section  8(e),  the  Issuer  may remove the  Administrator
without cause by providing  the  Administrator,  the  Indenture  Trustee and the
Servicer with at least 60 days' prior written notice.

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     (d)  Subject  to  Section  8(e),  at the sole  option  of the  Issuer,  the
Administrator may be removed immediately upon written notice of termination from
the Issuer to the  Administrator,  the Indenture Trustee and the Servicer if any
of the following events shall occur:

          (i) the  Administrator  shall default in the performance of any of its
     duties under this Agreement  and,  after notice of such default,  shall not
     cure such default  within ten days (or, if such default  cannot be cured in
     such time,  shall not give within ten days such  assurance of cure as shall
     be reasonably satisfactory to the Issuer);

          (ii) a court having  jurisdiction in the premises shall enter a decree
     or order for relief,  and such decree or order shall not have been  vacated
     within 60 days, in respect of the  Administrator  in any  involuntary  case
     under any  applicable  bankruptcy,  insolvency  or other similar law now or
     hereafter in effect or appoint a receiver, liquidator, assignee, custodian,
     trustee,  sequestrator  or similar  official for the  Administrator  or any
     substantial  part of its property or order the winding-up or liquidation of
     its affairs; or

          (iii) the  Administrator  shall  commence a  voluntary  case under any
     applicable bankruptcy,  insolvency or other similar law now or hereafter in
     effect, shall consent to the entry of an order for relief in an involuntary
     case under any such law, or shall consent to the appointment of a receiver,
     liquidator, assignee, trustee, custodian,  sequestrator or similar official
     for  the  Administrator  or any  substantial  part of its  property,  shall
     consent to the taking of possession by any such official of any substantial
     part of its property,  shall make any general assignment for the benefit of
     creditors or shall fail generally to pay its debts as they become due.

     The  Administrator  agrees that if any of the events  specified  in clauses
(ii) or (iii) of this  subsection  shall  occur,  it shall give  written  notice
thereof to the Issuer,  the Servicer and the Indenture Trustee within seven days
after the happening of such event.

      (e) Upon the Administrator's receipt of notice of termination, pursuant to
Sections 8(c) or (d), or the Administrator's resignation in accordance with this
Agreement, the predecessor Administrator shall continue to perform its functions
as Administrator  under this Agreement,  in the case of termination,  only until
the date specified in such  termination  notice or, if no such date is specified
in a notice of  termination,  until  receipt of such  notice and, in the case of
resignation,  until the later of: (x) the date 45 days from the  delivery to the
Issuer,  the  Indenture  Trustee  and the  Servicer  of  written  notice of such
resignation  (or written  confirmation  of such notice) in accordance  with this
Agreement and (y)
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the date upon which the predecessor  Administrator shall become unable to act as
Administrator,  as  specified  in the  notice of  resignation  and  accompanying
Opinion of Counsel. In the event of the Administrator's  termination  hereunder,
the Issuer shall appoint a successor  Administrator  acceptable to the Indenture
Trustee,  and the  successor  Administrator  shall accept its  appointment  by a
written  assumption in form  acceptable to the Indenture  Trustee.  In the event
that a  successor  Administrator  has not been  appointed  at the time  when the
predecessor  Administrator has ceased to act as Administrator in accordance with
this Section,  the Indenture Trustee without further action shall  automatically
be appointed the  successor  Administrator  and the  Indenture  Trustee shall be
entitled to the compensation  specified in Section 3. Notwithstanding the above,
the  Indenture  Trustee  shall,  if it shall be  unable  so to act,  appoint  or
petition  a  court  of  competent   jurisdiction   to  appoint  any  established
institution  having a net worth of not less than  $50,000,000  and whose regular
business  shall  include the  performance  of functions  similar to those of the
Administrator, as the successor to the Administrator under this Agreement.

     (f) Upon appointment,  the successor Administrator (including the Indenture
Trustee  acting  as  successor  Administrator)  shall  be the  successor  in all
respects  to the  predecessor  Administrator  and  shall be  subject  to all the
responsibilities,  duties and liabilities  arising  thereafter  relating thereto
placed  on  the  predecessor   Administrator   and  shall  be  entitled  to  the
compensation  specified  in  Section  3  and  all  the  rights  granted  to  the
predecessor Administrator by the terms and provisions of this Agreement.

     (g)  Except  when  and if the  Indenture  Trustee  is  appointed  successor
Administrator,  the  Administrator  may not resign unless it is prohibited  from
serving as such by law as  evidenced  by an  Opinion  of Counsel to such  effect
delivered  to  the  Indenture   Trustee.   No  resignation  or  removal  of  the
Administrator pursuant to this Section shall be effective until: (i) a successor
Administrator  shall have been  appointed by the Issuer and (ii) such  successor
Administrator  shall  have  agreed in  writing  to be bound by the terms of this
Agreement in the same manner as the Administrator is bound hereunder.

     (h) The appointment of any successor  Administrator shall be effective only
after  satisfaction of the Rating Agency  Condition with respect to the proposed
appointment.

     9. ACTION UPON  TERMINATION,  RESIGNATION  OR  REMOVAL.  Promptly  upon the
effective date of termination of this Agreement pursuant to Section 8(a), or the
resignation  or removal of the  Administrator  pursuant to Section  8(b) or (c),
respectively,  the  Administrator  shall  be  entitled  to be paid  all fees and
reimbursable   expenses  accruing  to  it  to  the  date  of  such  termination,
resignation or removal.  The Administrator shall forthwith upon such termination
pursuant to

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Section 8(a) deliver to the Issuer all property and  documents of or relating to
the  Collateral  then in the custody of the  Administrator.  In the event of the
resignation  or removal of the  Administrator  pursuant to Section  8(b) or (c),
respectively,  the  Administrator  shall  cooperate  with  the  Issuer  and  the
Indenture  Trustee and take all reasonable  steps requested to assist the Issuer
and the  Indenture  Trustee in making an orderly  transfer  of the duties of the
Administrator.

         10.  NOTICES. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:

         (a)  if to the Issuer or the Trustee, to:

                           CNH Equipment Trust 2000-A
                           c/o The Bank of New York
                           101 Barclay Street, Floor 12E
                           New York, New York 10286
                           Attn: Corporate Trust Administration - Asset Backed
                           Finance Unit

         (b)      if to the Administrator, to:

                           Case Credit Corporation
                           233 Lake Avenue
                           Racine, Wisconsin 53403
                           Attention: Treasurer

         (c)      if to the Indenture Trustee, to:

                           Harris Trust and Savings Bank
                           311 West Monroe Street, 12th Floor
                           Chicago, Illinois 60606
                           Attention: Indenture Trust Department

or to such other  address as any party  shall  have  provided  to the other
parties in  writing.  Any notice  required to be in writing  hereunder  shall be
deemed given if such notice is mailed by certified  mail,  postage  prepaid,  or
hand-delivered to the address of such party as provided above.

     11.  AMENDMENTS.  This  Agreement  may be  amended  from  time to time by a
written  amendment duly executed and delivered by the Issuer,  the Administrator
and the Indenture Trustee,  with the written consent of the Trustee, but without
the consent of any of the  Noteholders  or the  Certificateholders,  to cure any
ambiguity,  to correct or  supplement  provisions  of this  Agreement or for the
purpose of adding any provisions to or changing in any manner or eliminating any

                                       11
<PAGE>

of the  provisions of this Agreement or of modifying in any manner the rights of
the  Noteholders  or  the  Certificateholders;   PROVIDED,  HOWEVER,  that  such
amendment  shall not, as evidenced by an Opinion of Counsel  satisfactory to the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.

     This  Agreement  may also be amended  from time to time by the Issuer,  the
Administrator  and the  Indenture  Trustee  with the written  consent of (w) the
Trustee,  (x) Noteholders  holding Notes  evidencing not less than a majority of
the Note Balance and (y) the Holders of Certificates  evidencing not less than a
majority of the Certificate Balance, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or  of  modifying  in  any  manner  the  rights  of  the   Noteholders   or  the
Certificateholders;  PROVIDED,  HOWEVER,  that  no  such  amendment  shall:  (i)
increase  or reduce in any  manner the  amount  of, or  accelerate  or delay the
timing of,  collections  of payments on Receivables  or  distributions  that are
required to be made for the benefit of the Noteholders or the Certificateholders
or (ii) reduce the aforesaid percentage of the Holders of Notes and Certificates
that are required to consent to any such  amendment,  without the consent of the
holders  of all the  outstanding  Notes and  Certificates.  Notwithstanding  the
foregoing, the Administrator may not amend this Agreement without the permission
of the Depositor, which permission shall not be unreasonably withheld.

     Promptly  after the execution of any such  amendment or consent (or, in the
case of the Rating Agencies,  10 days prior thereto),  the  Administrator  shall
furnish  written  notification  of the substance of such amendment or consent to
each Certificateholder, the Trustee and each of the Rating Agencies.

     It shall not be necessary for the consent of the  Certificateholders or the
Noteholders  pursuant  to this  Section to approve  the  particular  form of any
proposed amendment or consent,  but it shall be sufficient if such consent shall
approve the substance thereof.

     12.  SUCCESSORS  AND  ASSIGNS.  This  Agreement  may not be assigned by the
Administrator  unless such  assignment is previously  consented to in writing by
the Issuer and the Trustee and subject to the  satisfaction of the Rating Agency
Condition in respect thereof.  An assignment with such consent and satisfaction,
if accepted  by the  assignee,  shall bind the  assignee  hereunder  in the same
manner as the Administrator is bound hereunder.  Notwithstanding  the foregoing,
this Agreement may be assigned by the  Administrator  without the consent of the
Issuer or the Trustee to a corporation or other organization that is a successor
(by merger, consolidation or purchase of assets) to the Administrator,  provided
that such  successor  organization  executes  and  delivers to the  Issuer,  the
Trustee and the  Indenture  Trustee an  agreement in which such  corporation  or
other

                                       12
<PAGE>

organization agrees to be bound hereunder by the terms of said assignment in the
same manner as the  Administrator is bound hereunder.  Subject to the foregoing,
this Agreement shall bind any successors or assigns of the parties  hereto.

     13. Governing Law. This Agreement shall be construed in accordance with the
laws  of the  State  of New  York,  without  reference  to its  conflict  of law
provisions,  and the obligations,  rights and remedies of the parties  hereunder
shall be determined in accordance with such laws.

     14.   HEADINGS.   The  section  headings  hereof  have  been  inserted  for
convenience  of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.

     15.  COUNTERPARTS.  This Agreement may be executed in counterparts,  all of
which when so executed shall together constitute but one and the same agreement.

     16.  SEVERABILITY.  Any provision of this  Agreement  that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

     17.  NOT APPLICABLE TO CASE CREDIT CORPORATION IN OTHER CAPACITIES. Nothing
in this Agreement shall affect any obligation  Case Credit  Corporation may have
in any other capacity.

     18.  LIMITATION OF LIABILITY OF THE TRUSTEE AND THE INDENTURE  TRUSTEE. (a)
Notwithstanding  anything contained herein to the contrary,  this instrument has
been  countersigned by The Bank of New York, not in its individual  capacity but
solely in its capacity as Trustee of the Issuer,  and in no event shall The Bank
of New York, in its individual  capacity,  or any beneficial owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder,  as to all of which recourse shall be
had solely to the assets of the Issuer.  For all purposes of this Agreement,  in
the  performance  of any duties or  obligations  of the Issuer  thereunder,  the
Trustee  shall be subject  to, and  entitled to the  benefits  of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.

     (b)  Notwithstanding  anything  contained  herein  to  the  contrary,  this
Agreement has been  countersigned  by Harris Trust and Savings Bank,  not in its
individual  capacity  but solely as  Indenture  Trustee,  and in no event  shall
Harris  Trust and  Savings  Bank  have any  liability  for the  representations,
warranties,

                                       13
<PAGE>

covenants,  agreements or other  obligations  of the Issuer  hereunder or in any
of the certificates, notices or agreements  delivered pursuant hereto, as to all
of which recourse shall be had solely to the assets of the Issuer.

     19.  THIRD-PARTY  BENEFICIARY.  The Trustee is a third-party beneficiary to
this  Agreement  and is entitled to the rights and  benefits  hereunder  and may
enforce the provisions hereof as if it were a party hereto.

     20.  INDEMNIFICATION. The Administrator shall indemnify the Trustee and the
Indenture Trustee (and their officers, directors, employees and agents) for, and
hold  them  harmless  against,  any  losses,  liability  or  expense,  including
attorneys' fees reasonably  incurred by them, incurred without negligence or bad
faith on their part,  arising out of or in connection with: (i) actions taken by
either of them pursuant to instructions  given by the Administrator  pursuant to
this  Agreement  or  (ii)  the  failure  of the  Administrator  to  perform  its
obligations  hereunder.  The indemnities contained in this Section shall survive
the  termination  of  this  Agreement  and the  resignation  or  removal  of the
Administrator, the Trustee or the Indenture Trustee.

                                       14

<PAGE>

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

                               CNH EQUIPMENT TRUST 2000-A

                               By: THE BANK OF NEW YORK,
                                   not in its individual capacity but solely as
                                   Trustee on behalf of the Issuer

                                        /s/ Erwin Soriano
                                   By:_________________________
                                       Name: Erwin Soriano
                                       Title:   Assistant Treasurer

                                HARRIS TRUST AND SAVINGS BANK,
                                    not in its individual capacity but solely as
                                    Indenture Trustee

                                         /s/ Rory Nowakowski
                                   By:____________________________
                                       Name:  Rory Nowakowski
                                       Title:    Assistant Vice President

                                CASE CREDIT CORPORATION,
                                    as Administrator

                                         /s/ Ralph A. Than
                                   By:_____________________________
                                        Name:        Ralph A. Than
                                        Title:       Vice President and
                                                     Treasurer
Accepted and agreed:

THE BANK OF NEW YORK,
         not in its individual capacity but
         solely as Trustee under the Trust Agreement

    /s/ Erwin Soriano
By:________________________
   Name:   Erwin Soriano
   Title:     Assistant Treasurer

                                       15Exhibit 4.4
                                     [FORM]

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
           ACQUIRED FOR INVESTMENT AND NEITHER SUCH SECURITIES NOR THE
           SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR THE SECURITIES
               ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED
    UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAW.
        SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
        SUCH REGISTRATION OR UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM
          THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID
                                      ACT.

                          DISCOVERY LABORATORIES, INC.

          Unit Purchase Option for the Purchase of Units Consisting of
                       Shares of Common Stock and Warrants

                                No.___   _____ Option Units

         FOR  VALUE   RECEIVED,   Discovery   Laboratories,   Inc.,  a  Delaware
corporation (the "Company"),  hereby certifies that  ______________ , or his/her
assigns,  is entitled to purchase from the Company,  at any time or from time to
time commencing on December 28, 1999 and prior to 5:00 P.M., New York City time,
on December 28, 2004, up to _____ Units,  each Unit  consisting of (a) one share
of Common Stock of the Company, par value $.001 per share, (the "Common Stock"),
and (b) one warrant  (the "Class D Warrants")  exercisable  at any time prior to
July 27,  2004,  for the  purchase  of one share of Common  Stock at a per share
exercise price of $1.33,  for an aggregate  Unit purchase price of  $___________
(computed  on the basis of $1.331  per Unit).  (Hereinafter,  (i) said Units are
referred to as the  "Units",  (ii) said Class D Warrants  are referred to as the
"Warrants",  (iii) the Common Stock included in the Units and  purchasable  upon
exercise of the Warrants,  is referred to as the "Common Stock", (iv) the shares
of the  Common  Stock  purchasable  hereunder  or under  any  other  Option  (as
hereinafter  defined) (or the shares of any capital stock purchasable  hereunder
or under  any  other  Option in lieu of Common  Stock)  are  referred  to as the
"Common Shares", (v) the shares of Common Stock purchasable upon exercise of the
Warrants  hereunder  or under any other  Option are  referred to as the "Warrant
Shares",  (vi) the aggregate  purchase price payable for the Units  hereunder is
referred to as the "Aggregate Option Price",  (vii) the price payable (initially
$1.331 per Unit,  subject to  adjustment)  for each of the Units,  hereunder  is
referred to as the "Per Unit  Price",  (viii) this Option,  all similar  Options
issued on the date hereof and all warrants hereafter

935424.1

<PAGE>

issued in exchange or  substitution  for this Option or such similar Options are
referred to as the  "Options"  and (ix) the holder of this Option is referred to
as the "Holder" and the holder of this Option and all other Options are referred
to as the  "Holders"  and  Holders  of more  than  fifty  percent  (50%)  of the
outstanding  Options  are  referred to as the  "Majority  of the  Holders."  The
Aggregate  Option  Price is not  subject  to  adjustment.  The Per Unit Price is
subject  to  adjustment  as  hereinafter  provided;  in the  event  of any  such
adjustment,  the number of Common Shares or Warrant Shares,  as the case may be,
deliverable  upon exercise of this Option shall be adjusted in  accordance  with
paragraph 3(i) below.

         This Option,  together with options of like tenor,  constituting in the
aggregate  Options to purchase _____ Units, was originally  issued pursuant to a
placement agency agreement between the Company and Paramount  Capital,  Inc., as
placement agent (the "Placement  Agent") in connection with a private  placement
(the  "Offering")  of 4.9 Units  (the  "Offering  Units"),  each  Offering  Unit
consisting  of Common Stock and Class D Warrants for which the  Placement  Agent
acted as Placement Agent.

         1. Exercise of Option.
            ------------------

         (a) This Option may be exercised,  in whole at any time or in part from
time to time,  commencing on December 28, 1999 and prior to 5:00 P.M.,  New York
City time, on December 28, 2004 by the Holder:

          (i) by the surrender of this Option (with the subscription form at the
     end hereof  duly  executed)  at the address  set forth in  Subsection  9(a)
     hereof,  together with proper payment of the Aggregate Option Price, or the
     proportionate  part  thereof  if this  Option is  exercised  in part,  with
     payment for the number of Units made by  certified  or official  bank check
     payable to the order of the Company; or

          (ii) by the surrender of this Option (with the cashless  exercise form
     at the end hereof duly executed) (a "Cashless Exercise") at the address set
     forth in  Subsection  9(a)  hereof.  The  exchange of the Option shall take
     place on the date specified in the Cashless Exercise Form or, if later, the
     date  the  Cashless  Exercise  Form  is  surrendered  to the  Company  (the
     "Exchange Date").  Such presentation and surrender shall be deemed a waiver
     of the  Holder's  obligation  to pay the  Aggregate  Option  Price,  or the
     proportionate  part  thereof if this Option is  exercised  in part.  In the
     event of a Cashless  Exercise  this  Option  shall  represent  the right to
     subscribe for and acquire the number of Units  (rounded to the next highest
     integer)  equal to (x) the  number  of Units  specified  by the  Holder  in
     his/her  Cashless  Exercise Form (the "Total  Number")  (such number not to
     exceed  the  maximum  number of Units  subject  to this  Option,  as may be
     adjusted  from  time to time)  less (y) the  number  of Units  equal to the
     quotient  obtained by dividing  (A) the product of the Total Number and the
     existing Per Unit Price by (B) the Market Price Per Unit. "Market Price Per
     Unit"  shall  mean  first,  if there is a trading  market as  indicated  in
     Subsection (A) below for the Units, such Market Price Per Unit and if there
     is no such  trading  market in the Units,  then Market Price Per Unit shall
     equal the sum of the aggregate Market Price of all shares of Common

935424.1

<PAGE>

     Stock (on per share basis,  the "Market  Price Per Share of Common  Stock")
     and Warrants (on a per warrant basis, the "Market Price Per Warrant") which
     comprise a Unit, with the meanings indicated in Subsections (B) through (F)
     below:

               (A) If the Units are listed on a national  securities exchange or
          listed or admitted to unlisted trading  privileges on such exchange or
          listed  for  trading  on the  Nasdaq  National  Market  or the  Nasdaq
          Smallcap Market, the Market Price Per Unit shall be the average of the
          last  reported  sale  prices (or if no last sale,  the last quoted ask
          price) of the Units on such  exchange  or market for the five  trading
          days immediately preceding the Exchange Date; or

               (B) If the  Common  Stock or  Warrants,  as the case may be,  are
          listed on a national  securities  exchange  or  admitted  to  unlisted
          trading  privileges  on such  exchange  or listed  for  trading on the
          Nasdaq National Market or the Nasdaq Smallcap Market, the Market Price
          Per Share of Common Stock, or Market Price Per Warrant,  respectively,
          shall be the average of the last  reported  sale prices (or if no last
          sale,  the last  quoted ask price) of the  Common  Stock or  Warrants,
          respectively,  on such  exchange or market for the five  trading  days
          immediately preceding the Exchange Date; or

               (C) If the Common Stock or Warrants,  as the case may be, are not
          so listed or admitted to unlisted trading privileges, the Market Price
          Per Share of Common Stock, or Market Price Per Warrant,  respectively,
          shall be the last  reported  sale price (or if no last sale,  the last
          quoted   ask  price)  of  the  Common   Stock  or   Warrants   in  the
          over-the-counter  market as reported by the National  Quotation Bureau
          or similar  organization  or in the Pink  Sheets for the  trading  day
          immediately preceding the Exchange Date; or

               (D) If the Common  Stock is not so listed or admitted to unlisted
          trading privileges and the sale price is (or if no last sale, the last
          quoted  ask  price) not so  reported,  the  Market  Price Per Share of
          Common Stock shall be the fair market value as determined by agreement
          between  the Board of  Directors  of the Company and a Majority of the
          Holders; or

               (E) If neither  clause (B) nor (C) applies to the Warrants,  then
          the  Market  Price  Per  Warrant  shall  be an  amount  equal  to  the
          difference  between  (i) the  Market  Price Per Share of Common  Stock
          which may be received upon the exercise of the Warrants, as determined
          in paragraphs (B), (C) and (D) above,  and (ii) the per share exercise
          price of the Warrants then in effect.

               (F) If the Company and the  Majority of the Holders are unable to
          reach  agreement on any  valuation  matter,  such  valuation  shall be
          submitted to and  determined  by a nationally  recognized  independent
          investment  bank selected by the Board of Directors of the Company and
          the Majority of the Holders (or, if such

935424.1

<PAGE>

          selection  cannot be agreed upon promptly,  or in any event within ten
          days,  then such  valuation  shall be made by a nationally  recognized
          independent   investment   banking  firm   selected  by  the  American
          Arbitration  Association  in New  York  City in  accordance  with  its
          rules), the costs of which valuation shall be paid for by the Company.

          (b) If this  Option is  exercised  in part,  the Holder is entitled to
     receive a new Option covering the Units,  which have not been exercised and
     setting  forth  the  proportionate  part  of  the  Aggregate  Option  Price
     applicable to such Units.  Upon surrender of this Option,  the Company will
     (i) issue a certificate or  certificates  in the name of the Holder for the
     largest  number of whole  shares of the Common  Stock and Warrants to which
     the Holder shall be entitled and, if this Option is exercised in whole,  in
     lieu of any fractional  shares of the Common Stock or Warrants to which the
     Holder shall be entitled,  pay to the Holder cash in an amount equal to the
     fair value of such fractional shares  (determined in such reasonable manner
     as the Board of Directors of the Company shall determine), and (ii) deliver
     the other  securities and properties  receivable  upon the exercise of this
     Option,  or the  proportionate  part thereof if this Option is exercised in
     part, pursuant to the provisions of this Option.

          (c) This Option  shall be  exercisable  only for Units  consisting  of
     Warrants and Common Shares at the then applicable Per Unit Price (including
     any adjustment pursuant to Section 3 below).

          (d)  Notwithstanding   anything  to  the  contrary  contained  in  the
     Warrants,  the  following  provisions  shall apply in  connection  with the
     exercise  of the  Warrants  issuable  upon  exercise  of this Option by the
     Holder:

               (i) if all  outstanding  Warrants  are  redeemed  by the  Company
          pursuant  to  Section 7 thereof  or have been  exercised  prior to the
          exercise of this  Option,  the Holder shall be entitled to receive the
          Common  Stock  otherwise   issuable  upon  exercise  of  the  Warrants
          underlying  this option (or the portion of this Option  exercised)  by
          giving written notice of exercise of such Warrants simultaneously with
          exercise  of this  Option,  which  notice  shall  specify  whether the
          Warrants  are being such  exercised  for a cash payment or by cashless
          exercise  and the  number  shares  of  Common  Stock as to which  such
          Warrants are being  exercised,  and if the exercise is for cash, shall
          be accompanied  by the payment  required on exercise of such Warrants.
          If all of the  outstanding  Warrants  have been  redeemed  pursuant to
          Section 7 thereof or have been exercised prior to the exercise of this
          Option and the Holder does not  exercise the  Warrants  issuable  upon
          exercise hereof  simultaneously with exercise of this Option, then the
          Holder on  exercise of this  Option  shall only  receive the number of
          shares of the Common Stock  included in the Units issuable on exercise
          of this Option (or the portion of this Option exercised) and shall not
          be issued any Warrants.

935424.1

<PAGE>

               (ii)  Notwithstanding  anything to the contrary  contained in the
          Warrants, the Holder may exercise the Warrants by cashless exercise by
          using the same  formula as set forth for  exercise  of this  Option by
          cashless exercise in Section 1(a)(ii) of this Option (except that, for
          this  purpose,  any  reference to the Warrants or the Market Price Per
          Warrant in Section 1(a)(ii) shall be inapplicable).

         2.  Reservation  of  Warrant  Shares and Common  Shares;  Listing.  The
Company agrees that, prior to the expiration of this Option, the Company will at
all times (a) have authorized and in reserve,  and will keep  available,  solely
for  issuance and delivery  upon the  exercise of this  Option,  the Units,  the
Warrants and the Common Shares  underlying  such Units and other  securities and
properties  as from time to time shall be  receivable  upon the exercise of this
Option, free and clear of all restrictions on sale or transfer, other than under
Federal or state  securities  laws, and free and clear of all preemptive  rights
and rights of first  refusal and (b) have  authorized  and in reserve,  and will
keep  available,  solely for issuance or delivery upon exercise of the Warrants,
the shares of Common Stock,  the Warrant  Shares and the Common Shares and other
securities  and  properties as from time to time shall be  receivable  upon such
exercise,  free and clear of all  restrictions  on sale or transfer,  other than
under Federal or state  securities  laws,  and free and clear of all  preemptive
rights  and  rights  of first  refusal;  and (c) if the  Company  is  listed  or
hereafter lists its Common Stock on any national securities exchange, the Nasdaq
National Market or the Nasdaq Smallcap Market,  use its best efforts to keep the
Common Shares authorized for listing on such exchange upon notice of issuance.

         3. Protection Against Dilution.
            ---------------------------

         (a) The  anti-dilution  provisions  of the Warrants  shall  protect the
Holder from  dilution of the  purchase  rights  represented  by the Warrants (it
being  understood  for this  purpose  that the Holder shall be deemed to own the
Warrants   commencing   on  December  28,   1999);   provided,   however,   that
notwithstanding  anything to the contrary  contained in the Warrants,  if all of
the Warrants have been  redeemed or exercised  prior to exercise of this Option,
the Holder  shall not be entitled  to any  adjustment  in the Per Share  Warrant
Price  pursuant to Section  3(c) of the  Warrants  as a result of any  issuances
subsequent to the date of the  redemption of the Warrants  pursuant to Section 7
of the Warrants.  In addition,  the  following  anti-dilution  provisions  shall
protect the Holder from dilution resulting from the issuance of Common Stock and
other securities:

                  (i) If the Company shall issue or distribute to the holders of
         shares  of  Common  Stock  evidence  of  its  indebtedness,  any  other
         securities  of the  Company  or any  cash,  property  or  other  assets
         (excluding a subdivision, combination or reclassification,  or dividend
         or  distribution  payable  in shares of Common  Stock,  referred  to in
         Subsection  3(a)(ii),   and  also  excluding  cash  dividends  or  cash
         distributions paid out of net profits legally available therefor in the
         full amount thereof (any such non-excluded  event being herein called a
         "Common Stock Special Dividend")), the Per Unit Price shall be adjusted
         by multiplying the Per Unit Price then in effect by a fraction, (A) the
         numerator of which shall be (x) the then current

935424.1

<PAGE>

         Market  Price Per Share of Common Stock in effect on the record date of
         such  issuance  or  distribution  less (y) the fair  market  value  (as
         determined  in good faith by the  Company's  Board of Directors) of the
         evidence of indebtedness, cash, securities or property, or other assets
         issued or distributed in such Common Stock Special Dividend  applicable
         to one share of Common Stock and (B) the  denominator of which shall be
         the then  current  Market  Price Per Share of Common Stock in effect on
         the record date of such issuance or  distribution.  An adjustment  made
         pursuant to this Subsection 3(a)(i) shall become effective  immediately
         after the record date of any such Common Stock Special Dividend.

                  (ii)  If the  Company  shall  (A)  pay a  dividend  or  make a
         distribution  on its  capital  stock in  shares of  Common  Stock,  (B)
         subdivide its outstanding  shares of Common Stock into a greater number
         of shares,  (C) combine its  outstanding  shares of Common Stock into a
         smaller number of shares or (D) issue by reclassification of its Common
         Stock any shares of capital  stock of the  Company,  the Per Unit Price
         shall be adjusted by multiplying the Per Unit Price by a fraction,  the
         numerator  of which  shall be the  number of Common  Shares  which this
         Option was  exercisable for prior to such action and the denominator of
         which shall be the number of Common  Shares  which a Holder  would have
         owned immediately  following such action had such Option been exercised
         immediately  prior  to  the  record  or  effective  date  therefor.  An
         adjustment  made  pursuant to this  Subsection  3(a)(ii)  shall  become
         effective  immediately  after the record date in the case of a dividend
         or  distribution  and  shall  become  effective  immediately  after the
         effective   date  in  the  case  of  a   subdivision,   combination  or
         reclassification.

         (b) No adjustment  in the Per Unit Price shall be required  unless such
adjustment  would  require an  increase  or decrease of at least $0.05 per Unit;
provided, however, that any adjustments which by reason of this Section 3(b) are
not  required to be made shall be carried  forward and taken into account in any
subsequent  adjustment;  provided,  further,  however, that adjustments shall be
required and made in  accordance  with the  provisions  of this Section 3 (other
than this Subsection  3(b)) not later than such time as may be required in order
to preserve the tax-free  nature of a distribution to the Holder of this Option.
All  calculations  under this  Section 3 shall be made to the nearest cent or to
the nearest  1/100th of a share,  as the case may be. Anything in this Section 3
to the  contrary  notwithstanding,  the  Company  shall be entitled to make such
reductions in the Per Unit Price,  in addition to those required by this Section
3, as it in its  discretion  shall deem to be  advisable in order that any stock
dividend,  subdivision of shares or  distribution of rights to purchase stock or
securities  convertible or exchangeable  for stock hereafter made by the Company
to its stockholders shall not be taxable.

         (c) Whenever the Per Unit Price is adjusted as provided in this Section
3 and upon any  modification  of the rights of a Holder of Options in accordance
with this Section 3, the Company shall promptly prepare a brief statement of the
facts requiring such adjustment or modification  and the manner of computing the
same and cause  copies of such  certificate  to be mailed to the  Holders of the
Options.  The Company may, but shall not be obligated to unless requested by the
Holders of

935424.1

<PAGE>

more  than  fifty  percent  (50%) of the  outstanding  Options,  obtain,  at its
expense, a certificate of a firm of independent public accountants of recognized
standing  selected by the Board of Directors (who may be the regular auditors of
the  Company)  setting  forth  the Per Unit  Price and the  number of  Warrants,
Warrant  Shares or Common Shares,  as the case may be, after such  adjustment or
the effect of such  modification,  a brief statement of the facts requiring such
adjustment or modification and the manner of computing the same and cause copies
of such certificate to be mailed to the Holders of the Options.

         (d) If the Board of Directors of the Company shall declare any dividend
or other  distribution  with  respect  to the  Common  Stock  other  than a cash
distribution out of earned surplus, the Company shall mail notice thereof to the
Holders of the  Options not less than 10 days prior to the record date fixed for
determining  stockholders  entitled  to  participate  in such  dividend or other
distribution.

         (e) In case of any capital  reorganization or reclassification,  or any
consolidation  or merger to which the  Company is a party other than a merger or
consolidation in which the Company is the continuing corporation,  or in case of
any sale or  conveyance  to another  entity of the property of the Company as an
entirety  or  substantially  as a  entirety,  or in the  case  of any  statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company), the Holder
of this Option  shall have the right  thereafter  to receive on the  exercise of
this Option the kind and amount of securities,  cash or other property which the
Holder would have owned or have been entitled to receive  immediately after such
reorganization,  reclassification,  consolidation,  merger,  statutory exchange,
sale or  conveyance  had this Option  been  exercised  immediately  prior to the
effective date of such reorganization, reclassification,  consolidation, merger,
statutory  exchange,  sale or  conveyance  and in any such case,  if  necessary,
appropriate  adjustment  shall be made in the  application of the provisions set
forth in this Section 3 with respect to the rights and  interests  thereafter of
the  Holder  of this  Option  to the end that the  provisions  set forth in this
Section 3 shall thereafter  correspondingly be made applicable, as nearly as may
reasonably  be,  in  relation  to any  shares  of stock or other  securities  or
property  thereafter  deliverable  on the  exercise  of this  Option.  The above
provisions  of  this   Subsection  3(e)  shall  similarly  apply  to  successive
reorganizations,    reclassifications,    consolidations,   mergers,   statutory
exchanges,  sales or  conveyances.  The Company  shall require the issuer of any
shares of stock or other  securities or property  thereafter  deliverable on the
exercise  of  this  Option  to be  responsible  for  all of the  agreements  and
obligations  of  the  Company  hereunder.  Notice  of any  such  reorganization,
reclassification,  consolidation, merger, statutory exchange, sale or conveyance
and of said provisions so proposed to be made, shall be mailed to the Holders of
the  Options  not  less  than 30 days  prior  to  such  event.  A sale of all or
substantially  all of the assets of the Company for a  consideration  consisting
primarily  of  securities  shall be deemed a  consolidation  or  merger  for the
foregoing purposes.

         (f) If, as a result of an  adjustment  made pursuant to this Section 3,
the  Holder of any Option  thereafter  surrendered  for  exercise  shall  become
entitled to receive  shares of two or more classes of capital stock or shares of
Common  Stock and other  capital  stock of the  Company,  the Board of Directors
(whose determination shall be conclusive and shall be described in a written

935424.1

<PAGE>

notice  to the  Holder of any  Option  promptly  after  such  adjustment)  shall
determine the  allocation of the adjusted Per Unit Price between or among shares
or such  classes of capital  stock or shares of Common  Stock and other  capital
stock.

         (g) Upon the expiration of any rights, options,  warrants or conversion
privileges,  if such  shall  not  have  been  exercised,  the  number  of  Units
purchasable upon exercise of this Option, to the extent this Option has not then
been exercised,  shall, upon such expiration, be readjusted and shall thereafter
be such as they would have been had they been  originally  adjusted  (or had the
original  adjustment not been required,  as the case may be) on the basis of (i)
the fact that Common Stock, if any, actually issued or sold upon the exercise of
such rights, options, warrants or conversion privileges,  and (ii) the fact that
such shares of Common Stock,  if any, were issued or sold for the  consideration
actually received by the Company upon such exercise plus the  consideration,  if
any,  actually  received by the Company for the  issuance,  sale or grant of all
such  rights,  options,   warrants  or  conversion  privileges  whether  or  not
exercised; provided, however, that no such readjustment shall have the effect of
decreasing  the number of Units  purchasable  upon exercise of this Option by an
amount in excess of the amount of the  adjustment  initially  made in respect of
the  issuance,  sale or grant of such rights,  options,  warrants or  conversion
privileges.

         (h) Whenever the Per Unit Price payable upon exercise of each Option is
adjusted  pursuant to this  Section 3, (i) the number of shares of Common  Stock
included in a Unit shall simultaneously be adjusted by multiplying the number of
shares of Common Stock included in a Unit  immediately  prior to such adjustment
by the Per Unit  Price  in  effect  immediately  prior  to such  adjustment  and
dividing the product so obtained by the Per Unit Price, as adjusted and (ii) the
number of shares of Common Stock or other  securities  issuable upon exercise of
the Warrants  included in the Units and the exercise  price  payable for each of
the Warrant Shares  (initially  $0.50 per Warrant Share,  subject to adjustment)
pursuant to the Warrant terms shall be adjusted in accordance  with the terms of
the Warrant Agreement applicable to holders of such Warrants.

         (i) In case any event shall occur as to which the other  provisions  of
this Section 3 are not strictly  applicable  but as to which the failure to make
any adjustment would not fairly protect the purchase rights  represented by this
Option in accordance  with the essential  intent and principles  hereof then, in
each such  case,  the Board of  Directors  of the  Company  shall in good  faith
determine  the  adjustment,  if any, on a basis  consistent  with the  essential
intent and  principles  established  herein,  necessary to preserve the purchase
rights  represented by the Options.  Upon such  determination,  the Company will
promptly  mail a copy  thereof to the Holder of this  Warrant and shall make the
adjustments described therein.

         4. Fully Paid  Stock;  Taxes.  The  Company  agrees  that the shares of
theCommon  Stock  represented  by each and every  certificate  for Common Shares
delivered  on the  exercise  of this  Option  and the  shares  of  Common  Stock
delivered upon the exercise of the Warrants, shall at the time of such delivery,
be validly issued and outstanding, fully paid and nonassessable, and not subject
to preemptive  rights or rights of first refusal,  and the Company will take all
such actions as may be  necessary to assure that the par value or stated  value,
if any,  per share of the Common Stock is at all times equal to or less than the
then Per Unit Price. The Company further

935424.1

<PAGE>

covenants and agrees that it will pay, when due and payable, any and all Federal
and state stamp, original issue or similar taxes which may be payable in respect
of the issue of any Warrant Share,  Common Share or any  certificate  thereof to
the extent required because of the issuance by the Company of such security.

         5. Registration Under Securities Act of 1933.
            -----------------------------------------

         (a) The Holder shall,  with respect to the Common Shares only, have the
right  to  participate  in  the  registration   rights  granted  to  holders  of
Registrable Securities pursuant to Section 5 of the subscription agreements (the
"Subscription  Agreements")  between  such  holders  and the  Company  that were
entered into at the time of the initial sale of the Units. By acceptance of this
Option,  the Holder  agrees to comply  with the  provisions  in Section 5 of the
Subscription Agreement to same extent as if he/she were a party thereto.

         (b) Until all Common  Shares and Warrant  Shares have been sold under a
Registration  Statement or pursuant to Rule 144 under the Act, the Company shall
use its  reasonable  best  efforts  to file  with the  Securities  and  Exchange
Commission all current reports and the information as may be necessary to enable
the  Holder  to  effect  sales of  his/her  shares  in  reliance  upon  Rule 144
promulgated under the Act.

         6. Investment Intent; Limited Transferability.

         (a) The Holder  represents,  by  accepting  this  Option,  that  he/she
understands that this Option and any securities obtainable upon exercise of this
Option have not been registered for sale under Federal or state  securities laws
and are being offered and sold to the Holder  pursuant to one or more exemptions
from the registration requirements of such securities laws. In the absence of an
effective  registration  of  such  securities  or an  exemption  therefrom,  any
certificates  for such  securities  shall bear the legend set forth on the first
page hereof.  The Holder  understands that he/she must bear the economic risk of
his/her investment in this Option and any securities obtainable upon exercise of
this Option for an indefinite period of time, as this Option and such securities
have not been  registered  under Federal or state  securities laws and therefore
cannot  be sold  unless  subsequently  registered  under  such  laws,  unless an
exemption from such registration is available.

         (b) The Holder, by his acceptance of his/her Option,  represents to the
Company  that he/she is acquiring  this Option and will  acquire any  securities
obtainable  upon exercise of this Option for his/her own account for  investment
and not with a view to, or for sale in connection with, any distribution thereof
in  violation  of the Act.  The  Holder  agrees  that this  Option  and any such
securities will not be sold or otherwise  transferred  unless (i) a registration
statement  with  respect to such  transfer  is  effective  under the Act and any
applicable  state securities laws or (ii) such sale or transfer is made pursuant
to one or more exemptions from the Act.

         (c) This Option may not be sold, transferred,  assigned or hypothecated
for six months from the date hereof except (i) to any firm or  corporation  that
succeeds to all or substantially all of the business of Paramount Capital, Inc.,
(ii) to any of the officers, employees, associates or affiliated

935424.1

<PAGE>

companies of Paramount  Capital,  Inc., or of any such successor firm,  (iii) to
any NASD member  participating in the Offering or any officer or employee of any
such  NASD  member  or  (iv)  in the  case of an  individual,  pursuant  to such
individual's  last will and  testament or the laws of descent and  distribution,
and is so  transferable  only upon the books of the Company which it shall cause
to be maintained for such purpose.  The Company may treat the registered  Holder
of this  Option  as he/she  appears  on the  Company's  books at any time as the
Holder for all  purposes.  The Company  shall  permit any Holder of an Option or
his/her duly authorized attorney,  upon written request during ordinary business
hours,  to  inspect  and  copy or make  extracts  from  its  books  showing  the
registered  holders  of  Options.  All  Options  issued  upon  the  transfer  or
assignment  of this Option will be dated the same date as this  Option,  and all
rights of the holder thereof shall be identical to those of the Holder.

         7. Loss, etc., of Option. Upon receipt of evidence  satisfactory to the
Company of the loss,  theft,  destruction  or mutilation of this Option,  and of
indemnity reasonably  satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and  cancellation of this Option,  if mutilated,  the Company
shall  execute  and  deliver to the Holder a new Option of like date,  tenor and
denomination.

         8. Option Holder Not Stockholder.  This Option does not confer upon the
Holder any right to vote or to consent to or receive  notice as a stockholder of
the Company, as such, in respect of any matters whatsoever,  or any other rights
or liabilities as a stockholder, prior to the exercise hereof; this Option does,
however,  confer  certain rights and require  certain  notices to Holders as set
forth herein.

         9.  Communication.  No notice or other  communication under this Option
shall be  effective  unless,  but any  notice  or other  communication  shall be
effective  and shall be deemed to have been given if, the same is in writing and
is mailed by first-class mail, postage prepaid, addressed to:

          (a) the Company at  Discovery  Laboratories,  Inc.,  3359 Durham Road,
     Doylestown,  Pennsylvania,  18901,  Attn: Vice  President,  Finance or such
     other address as the Company has designated in writing to the Holder, or

          (b) the Holder at c/o Paramount Capital, Inc., 787 Seventh Avenue, New
     York,  NY 10019 or other  such  address as the  Holder  has  designated  in
     writing to the Company.

         10.  Headings.  The  headings of this  Option  have been  inserted as a
matter of convenience and shall not affect the construction hereof.

         11.  Applicable  Law.  This Option  shall be governed by and  construed
inaccordance  with the law of the State of New York without giving effect to the
principles of conflicts of law thereof.

935424.1

<PAGE>

         12.  Amendment,  Waiver,  etc.  Except as  expressly  provided  herein,
neither this Option nor any term hereof may be amended,  waived,  discharged  or
terminated other than by a written  instrument  signed by the party against whom
enforcement of any such amendment,  waiver,  discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or  terminated  upon the written  consent of the  Company  and the then  current
Majority of the Holders of the Options only.

935424.1

<PAGE>

         IN WITNESS WHEREOF,  the Company has caused this Option to be signed by
its Vice  President,  Finance  and  attested  by its  Secretary  this ___ day of
February, 2000.

                              DISCOVERY LABORATORIES, INC.

                              By:
                                   Name:  Robert J. Capetola
                                   Title: President and Chief Executive Officer

ATTEST:

              Secretary

935424.1

<PAGE>

                                  SUBSCRIPTION
                                  ------------

         The undersigned, __________________________, pursuant to the provisions
of  the  foregoing   Option,   hereby  agrees  to  subscribe  for  and  purchase
________________ Units of Discovery Laboratories,  Inc., each Unit consisting of
Common  Stock,  $.001 par value,  and Class D Warrants to  purchase  ___________
share(s) of Common Stock,  covered by said Option, and makes payment therefor in
full at the price per share  provided by said  Option.  The  undersigned  hereby
confirms the representations and warranties made by him/her in the Option.

Dated:_______________                                         Signature:

                                                     Address:

                                CASHLESS EXERCISE
                                -----------------

         The undersigned _______________________,  pursuant to the provisions of
the foregoing  Option,  hereby elects to exchange  his/her Option for __________
Units,  each Unit  consisting  of Common  Stock,  $.001 par  value,  and Class D
Warrants  to  purchase  __________  share(s)  of Common  Stock,  pursuant to the
cashless exercise  provisions of the Option. The undersigned hereby confirms the
representations and warranties made by him/her in the Option.

Dated:_______________                                         Signature:

                                                     Address:

                                   ASSIGNMENT
                                   ----------

         FOR VALUE  RECEIVED  ______________________  hereby sells,  assigns and
transfers unto  ____________________________ the foregoing Option and all rights
evidenced    thereby,    and   does    irrevocably    constitute   and   appoint
_____________________,  attorney,  to  transfer  said  Option  on the  books  of
Discovery Laboratories, Inc.

Dated:_______________                                         Signature:

                                                     Address:

935424.1

<PAGE>

                               PARTIAL ASSIGNMENT
                               ------------------

         FOR  VALUE  RECEIVED  ___________________________  hereby  assigns  and
transfers unto ____________________________ the right to purchase ________ Units
of Discovery Laboratories, Inc., each Unit consisting of Common Stock, $.001 par
value, and Class D Warrants to purchase ______________ share(s) of Common Stock,
covered by the foregoing Option, and a proportionate part of said Option and the
rights  evidenced   thereby,   and  does  irrevocably   constitute  and  appoint
____________________,  attorney,  to  transfer  that part of said  Option on the
books of Discovery Laboratories, Inc.

Dated:_________________                              Signature:

                                                     Address:

935424.1

<PAGE>

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