Document:

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                                                                    Exhibit 10.5

                                                                  EXECUTION COPY

                   DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

                           dated as of August 19, 1997

                                     Between

                              MEDCO RESEARCH, INC.

                                       and

                          DISCOVERY THERAPEUTICS, INC.

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Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as *. A complete version of this exhibit has been filed
separately with the Securities and Exchange Commission.
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                                TABLE OF CONTENTS

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SECTION 1. DEFINITIONS...........................................................................  1

         1.1      "Affiliate(s)".................................................................  1
         1.2      "Commercialization"............................................................  1
         1.3      "Co-Promoted Product"..........................................................  2
         1.4      "Contract Period"..............................................................  2
         1.5      "Discontinued Compound"........................................................  2
         1.6      "Effective Date of this Agreement".............................................  2
         1.7      "Exclusive License"............................................................  2
         1.8      "FDA"..........................................................................  2
         1.9      "FDA Approval".................................................................  2
         1.10     "First Commercial Sale"........................................................  2
         1.11     "Improvements".................................................................  2
         1.12     "IND"..........................................................................  2
         1.13     "Licensed Compounds"...........................................................  2
         1.14     "Licensed Patent Rights".......................................................  3
         1.15     "Licensed Processes"...........................................................  3
         1.16     "Licensed Processes Information"...............................................  3
         1.17     "Licensed Product".............................................................  4
         1.18     "NDA"..........................................................................  4
         1.19     "Net Sales"....................................................................  4
         1.20     "Non-Selected Compound"........................................................  5
         1.21     "Patent Costs".................................................................  5
         1.22     "Pharm Stress".................................................................  5
         1.23     "Product Development"..........................................................  5
         1.24     "Proprietary Information"......................................................  5
         1.25     "Research and Development".....................................................  6
         1.26     "Selected Compound"............................................................  6
         1.27     "Technology Transfer"..........................................................  6
         1.28     "Territory"....................................................................  6
         1.29     "Third Party Royalties"........................................................  6
         1.30     "United States"................................................................  6

SECTION 2. GRANTS, LICENSES AND FURTHER ASSISTANCE...............................................  6

         2.1      Exclusive License Grants.......................................................  6
         2.2      Provisions of Licensed Processes Information and Improvements..................  6
         2.3      Sublicenses....................................................................  7

SECTION 3. DRUG DEVELOPMENT......................................................................  7

         3.1      Steering Committee.............................................................  7
         3.2      Selected Compounds.............................................................  7
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<TABLE>
<S>                                                                                         <C>
         3.3      MRE Research and Development Commitment.................................   8
         3.4      Regulatory Filings......................................................   8
         3.5      Development Costs.......................................................   8
         3.6      Non-Selected Compounds..................................................   9
         3.7      Discontinued Compounds..................................................   9
         3.8      Limitations on DTI's Commercialization of Non-Selected and
                  Discontinued Compounds..................................................   9

SECTION 4. PAYMENTS AND ROYALTIES.........................................................  10

         4.1      Payments by MRE.........................................................  10
         4.2      Payments by DTI.........................................................  11
         4.3      Royalty Term............................................................  11

SECTION 5. DTI CO-PROMOTION RIGHTS; DISCONTINUED COMPOUNDS................................  12

         5.1      Option to Co-Promote....................................................  12
         5.2      Cost Sharing............................................................  12
         5.3      Product Development and Commercialization...............................  12
         5.4      Profit Sharing..........................................................  13
         5.5      Termination of Co-Promotion by DTI......................................  14
         5.6      Termination of Co-Promotion by MRE......................................  14

SECTION 6. ROYALTY RECORDS AND PAYMENTS...................................................  15

         6.1      Reports.................................................................  15
         6.2      Royalty Payments........................................................  15
         6.3      Withholding Taxes.......................................................  15
         6.4      Audit...................................................................  15
         6.5      Sublicensee Payments....................................................  16
         6.6      One Royalty.............................................................  16
         6.7      Sales to Affiliates and Sublicensees....................................  16

SECTION 7. PATENT PROSECUTION AND MAINTENANCE.............................................  16

         7.1      DTI Responsibility......................................................  16
         7.2      Abandonment.............................................................  17
         7.3      Payment of Patent Costs.................................................  17

SECTION 8. CONFIDENTIALITY................................................................  17

         8.1      Confidentiality.........................................................  17
         8.2      Duration................................................................  18

SECTION 9. REPRESENTATIONS AND WARRANTIES.................................................  18

         9.1      DTI Representations.....................................................  18
         9.2      MRE Obligations Conditional.............................................  20
</TABLE>

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<TABLE>
<S>                                                                                         <C>
         9.3      MRE's Representations...................................................  20

SECTION 10. ADVERSE PATENTS OR OWNERSHIP..................................................  20

         10.1     Third Party Patents.....................................................  20
         10.2     Co-Promoted Products....................................................  21

SECTION 11. INFRINGEMENT..................................................................  21

         11.1     Infringement Actions....................................................  21
         11.2     Rights During Pendency of Infringement..................................  22
         11.3     DTI Assignment of Pre-Effective Date Rights.............................  22

SECTION 12. INDEMNIFICATION...............................................................  23

         12.1     Indemnification.........................................................  23
         12.2     Procedure...............................................................  23
         12.3     Survival................................................................  24

SECTION 13. FORCE MAJEURE.................................................................  24

         13.1     Force Majeure...........................................................  24

SECTION 14. FIRST REFUSAL RIGHTS..........................................................  24

         14.1     MRE's First Refusal Rights..............................................  24

SECTION 15. TERM AND TERMINATION..........................................................  25

         15.1     Term....................................................................  25
         15.2     Termination for Cause...................................................  25
         15.3     Termination by MRE......................................................  25
         15.4     Consequences of Termination.............................................  25
         15.5     Survival................................................................  26

SECTION 16. MISCELLANEOUS PROVISIONS......................................................  26

         16.1     Notices.................................................................  26
         16.2     Modifications...........................................................  27
         16.3     Waiver..................................................................  27
         16.4     Assignment..............................................................  27
         16.5     Severability............................................................  27
         16.6     Governing Law...........................................................  28
         16.7     Headings................................................................  30
         16.8     Choice of Forum.........................................................  28
         16.9     Publicity...............................................................  28
         16.10    Entire Agreement........................................................  28
</TABLE>

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                   DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

         This Agreement, made as of August 19, 1997, is by and between MEDCO
RESEARCH, INC. ("MRE"), a Delaware corporation having its principal place of
business at 85 T.W. Alexander Drive, P.O. Box 13886, Research Triangle Park,
North Carolina 27709, and DISCOVERY THERAPEUTICS, INC. ("DTI"), a Delaware
corporation having its principal place of business at 2028 Dabney Road, Suite
E-17, Richmond, VA 23230-3311.

         WHEREAS, DTI is the sole owner of the Licensed Patent Rights (as
hereinafter defined) and has developed and is the sole owner of the Proprietary
Information (as hereinafter defined) covering and/or relating to the Licensed
Processes (as hereinafter defined); and

         WHEREAS, MRE desires to obtain throughout the world the exclusive
license under the Licensed Patent Rights, Licensed Processes Information and
Improvements and DTI is willing to grant such license to MRE, all subject to the
terms and conditions set forth in this Agreement;

         NOW, THEREFORE, in consideration of the foregoing premises, which are
hereby incorporated into and hereby made a part of the terms and conditions of
this Agreement, and the mutual covenants recited hereinafter, it is agreed as
follows:

                                   SECTION 1.
                                   DEFINITIONS

         Whenever used in this Agreement, the following terms shall have the
meanings defined in this Section:

         1.1      "Affiliate(s)" means any person or entity that directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with any other entity or person. For this purpose
"control" means the ownership or control of 50% or more of the outstanding
voting securities of a person or entity or, in the case of a partnership, the
power to appoint or elect 50% or more of the members of the board or management
or executive committee (or similar governing body) of the partnership, or the
power otherwise to direct or cause the direction of the management and policies
of such person or entity, whether through the ownership of voting stock or
similar rights, the holding of office, by contract or otherwise.

         1.2      "Commercialization" means the manufacturing, distribution,
marketing and sales activities contemplated by the Commercialization Plans
approved pursuant to Section 5.3.

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         1.3      "Co-Promoted Product" means a Licensed Product for which DTI
has, as set forth in Section 5.1, acquired co-promotion rights.

         1.4      "Contract Period" means the period beginning with the
Effective Date of this Agreement and ending on the date on which this Agreement
shall terminate in accordance with its terms.

         1.5      "Discontinued Compound" means either a Selected Compound as to
which MRE has filed an IND or an Co-Promoted Product as to which MRE has given
written notice to DTI of its decision to cease Research and Development or
Product Development.

         1.6      "Effective Date of this Agreement" means the date first
written above.

         1.7      "Exclusive License" means a license under the Licensed Patent
Rights and Licensed Process Information and Proprietary Information whereby
MRE's rights shall be sole and exclusive and shall operate to exclude all others
including DTI.

         1.8      "FDA" shall mean the governmental agency in each country in
the Territory responsible for granting in such Territory the approval to
manufacture and market therein a pharmaceutical product.

         1.9      "FDA Approval" means the approval granted by the FDA to
manufacture and market a pharmaceutical product on a commercial basis in each
country in the Territory.

         1.10     "First Commercial Sale" means the first bona fide sale of a
pharmaceutical product to a non-Affiliate third person, as evidenced by an
invoice to such third person, following FDA Approval in such country.

         1.11     "Improvements" means any findings, developments, discoveries,
inventions, additions, modifications, formulations or changes made by DTI or its
Affiliates and licensees during the Contract Period which are necessary or
useful to the development or commercialization of a Licensed Compound, Licensed
Product and/or a Licensed Process, including without limitation, new or improved
methods of administration, improved side effect profiles, new medical
indications and improvements in the synthesis or manufacturing processes.

         1.12     "IND" means an Investigational New Drug Application for
initiating clinical trials in the United States or any corresponding
application, registration or certification in any other country in the
Territory.

         1.13     "Licensed Compounds" means those compounds covered by the
Licensed Patent Rights.

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         1.14     "Licensed Patent Rights" means:

                  (a)      All the patents and applications for patent that are
identified in Exhibit B, as well as all continuations, continuations-in-part,
divisions and renewals thereof, all patents which may be granted thereon, and
all reissues and extensions thereof, and all foreign counterparts; and

                  (b)      All applications for patent which may be filed any
time during the Contract Period covering Improvements, as well as continuations,
continuations-in-part, divisions and renewals thereof, all patents which may be
granted thereon, and all reissues and extensions thereof, and all foreign
counterparts, all to the extent such rights may be licensed by DTI or by any DTI
Affiliate to MRE without payment of consideration to any third party. If such
rights are subject to payment of consideration to a third party, they shall be
included in Licensed Patent Rights only if MRE undertakes in writing to make
payment of such consideration after full disclosure of the relevant
circumstances.

         1.15     "Licensed Processes" means the processes, methods and uses
covered by the Licensed Patent Rights.

         1.16     "Licensed Processes Information" means all technical and
business information, including without limitation all analyses, techniques,
technology, inventions, developments, know-how, experience, expertise, trade
secrets, processes, test results and other data (including raw data) and other
technical or business information which as of the Effective Date or at any time
during the Contract Period DTI or any DTI Affiliate owns, has the right to use
or otherwise possesses which pertain to or are useful in the evaluation,
development, testing, registration, manufacture, use or sale of Licensed
Compounds, Licensed Products and/or Licensed Processes, specifically including,
but not limited to, the following:

                  (a)      All available know-how, data (including raw data),
and other information concerning the stability, synthesis, manufacture,
chemistry, pharmacology, toxicology, efficacy and clinical use of Licensed
Compounds and/or Licensed Products for use in Licensed Processes;

                  (b)      All available information and data concerning the
effects, side effects and adverse reactions of Licensed Compounds and/or
Licensed Products in Licensed Processes which have been reported to or are known
by DTI;

                  (c)      Copies of all available papers relating to Licensed
Compounds and Licensed Products and/or Licensed Processes filed in and/or
received in patent offices in all

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countries in which patent protection was, is or will be sought for Licensed
Compounds, Licensed Products and/or Licensed Processes; and

                  (d)      All other available know-how, data and information
necessary or useful in obtaining FDA Approval or relevant to either the safety
and efficacy or the compounding, manufacturing, packaging, marketing,
distribution and/or sale of Licensed Compounds and/or Licensed Products for use
in Licensed Processes.

         1.17     "Licensed Product" means any pharmaceutical product the
development, manufacture, use or sale of which would be prohibited but for the
Exclusive Licenses granted by DTI to MRE herein.

         1.18     "NDA" means a New Drug Application, Product License
Application or its equivalent in the United States or any corresponding
application in any other country in the Territory.

         1.19     "Net Sales" means the actual gross receipts derived by a party
or its Affiliates from sales by it to non-Affiliated third parties in the
Territory of the subject Licensed Product, less each and all of the following
deductions allowed or paid with respect thereto, where applicable: credits and
allowances for price adjustments, billing errors and the rejection or return of
the subject Product or Compound previously sold; rebates and cash discounts to
purchasers allowed and taken; commissions allowed or paid to brokers or agents;
transportation, insurance, handling, shipping charges and export packaging;
taxes, tariffs, customs, duties and other governmental charges levied on or
measured by the sale of the subject Product or Compound, whether absorbed by
such person or paid by the purchaser so long as such person's price is reduced
thereby, but not franchise or income taxes of any kind whatsoever; the amount of
Third Party Royalties; all normal and customary trade and quantity discounts,
Medicaid rebates, administrative fees to managed health care organizations,
governmental control sales rebates or charges, and chargebacks and reporting
rebates paid to wholesalers and other distributors; and sales, use or other
excise taxes or governmental charges levied on or measured by sales, including
value added taxes but excluding taxes based on income; provided, however, that
if any subject Product or Compound is sold in combination with other additional
therapeutically active ingredients, Net Sales for any such combination products
shall be computed by multiplying the Net Sales of such combination product, as
defined above, by a fraction, the numerator of which shall be the retail price
(if available, otherwise the fair market value) of the subject Licensed

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Product contained in the combination product and the denominator of which shall
be the retail prices of such Licensed Product and all other therapeutically
active ingredients.

         1.20     "Non-Selected Compound" means (a) a Licensed Compound MRE has
not selected for clinical development during the Discovery and Development term
(as defined in Section 3.2), or (b) a Selected Compound as to which MRE has not
either (i) initiated animal toxicology studies within two (2) years of being
designed by MRE as a Selected Compound, or (ii) filed an IND within three (3)
years of such designation.

         1.21     "Patent Costs" means the legal, filing and other costs and
expenses of preparing, filing, prosecuting and maintaining all patent
applications and patents now or hereafter filed or issued, respectively, in the
Territory relating to the Licensed Patent Rights.

         1.22     "Pharm Stress" means the use of a pharmaceutical product as an
alternative to exercise in conjunction with stress cardiac diagnostic procedures
(e.g., stress thallium scintigraphy, stress echocardiography, etc.).

         1.23     "Product Development" means (i) the work conducted primarily
with the intent and for the purpose of formulating, and the entire development
process with respect to, a Licensed Product or Licensed Compound for use in a
Licensed Process, including the methods validation, the acquisition or synthesis
of raw materials, pharmacological tests and other activities in connection with
the manufacture and production of clinical trial material and finished
pharmaceutical dosages in commercial quantities, (ii) the preparation and
compilation of all the required data and information in a format appropriate and
ready for submission as "Chemistry, Manufacture and Control" data to the FDA,
(iii) document preparation and (iv) all other things customarily done in the
product development of pharmaceuticals by the holder of the exclusive right to
manufacture and market the subject pharmaceutical, excluding the payment of
Third Party Royalties and the work covered by Patent Costs.

         1.24     "Proprietary Information" means and collectively includes all
Licensed Processes Information (a) which is owned by DTI or which it has the
right to disclose to MRE as of the Effective Date of this Agreement or (b) which
is subsequently developed or acquired by DTI, its employees, consultants, agents
or Affiliates, in each case to the extent that such Information, as of the date
of disclosure to MRE, was not known to MRE or any of its Affiliates, disclosed
in published literature or available to the public.

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         1.25     "Research and Development" means toxicology studies,
pre-clinical and clinical trials, IND and NDA filings with the FDA, applications
for trademark and all other things customarily done in the research and
development of a pharmaceutical, excluding the work covered by Patent Costs and
the payment of Third Party Royalties.

         1.26     "Selected Compound" means a Licensed Compound which MRE, by
written notice given to DTI at any time during the Discovery and Development
Term (as defined in Section 3.2), has selected as a candidate for clinical
development pursuant to Section 3.2.

         1.27     "Technology Transfer" shall mean the continuous providing by
DTI to MRE of Licensed Processes Information throughout the Contract Period.

         1.28     "Territory" means the entire world.

         1.29     "Third Party Royalties" means any royalties or other
compensation payable by a party to a third party with respect to developing,
making, having made, using or selling the subject Licensed Product or
Co-Promoted Product.

         1.30     "United States" means the United States of America, and its
territories and possessions.

                                   SECTION 2.
                     GRANTS, LICENSES AND FURTHER ASSISTANCE

         2.1      Exclusive License Grants. Subject to the terms and conditions
of this Agreement, DTI hereby grants MRE for itself and its Affiliates an
Exclusive License, with the right to sublicense, under the Licensed Patent
Rights and Licensed Processes Information and Improvements to develop, test,
make, have made, use, sell, offer to sell, import and export Licensed Products
in the Territory for use in Licensed Processes, subject to DTI's limited rights
of co-promotion as set forth in Section 5.

         2.2      Provisions of Licensed Processes Information and Improvements.
Within 15 days following the Effective Date of this Agreement, DTI will disclose
to MRE all the then extant Licensed Processes Information and Improvements.
Thereafter, DTI shall continue to disclose throughout the Contract Period all
additional Licensed Processes Information and Improvements within 15 days after
the development or discovery thereof by DTI or any DTI Affiliate or upon the
same becoming under the control or in the possession of DTI and its Affiliates.
All such disclosures shall be at DTI's sole cost and expense.

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         2.3      Sublicenses. The right of MRE to grant sublicenses under
Section 2.1 of this Agreement is subject to the conditions that:

                  (a)      Each sublicense shall be consistent with all relevant
and applicable terms and conditions of this Agreement;

                  (b)      MRE shall remain responsible to DTI for all of the
obligations under this Agreement applicable to the sublicensee's activities;

                  (c)      Each sublicense shall provide for its termination
concurrent with termination of MRE's license rights from DTI; and

                  (d)      MRE shall provide DTI a complete copy of each
sublicense agreement granting rights to Licensed Products within thirty (30)
days of its execution, and DTI agrees to retain the contents thereof as a
confidential information as provided in Section 8 hereof.

                                   SECTION 3.
                                DRUG DEVELOPMENT

         3.1      Steering Committee. Promptly after the Effective Date of this
Agreement, DTI and MRE will each appoint two (2) representatives to serve on a
Steering Committee. One of the representatives of MRE shall be the Chairman of
the Steering Committee. Action of the Steering Committee shall be by majority
vote; provided, however, that any deadlock shall be resolved by the decision of
the Committee Chairman in his sole discretion. The purpose of the Steering
Committee shall be to receive from each party information with respect to all
material scientific, technical, regulatory and other matters falling within the
scope of Research and Development and Product Development. The Steering
Committee will meet periodically at such time and place as agreed to by both
parties. Each party shall bear its own meeting and travel expenses, and each
party may designate successor Steering Committee members on notice to the other
party.

         3.2      Selected Compounds. During the period from the Effective Date
of this Agreement to the * anniversary of such Effective Date (the "Discovery
and Development Term"), MRE shall have the sole and exclusive right, but not the
obligation, to clinically investigate and develop in any manner such of the
Licensed Compounds as it, in its sole discretion, shall select by written notice
to DTI given at any time or from time to time during the Discovery and
Development Term (the "Selected Compounds"). MRE shall provide copies of

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the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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such notices to the members of the Steering Committee. DTI will cooperate with
MRE in the Research and Development of the Selected Compounds as MRE shall
reasonably request; and except as otherwise expressly provided in this
Agreement, DTI shall not be obligated to perform any work or render any services
for MRE unless DTI in its sole discretion wishes to do so on such terms as it
and MRE shall mutually agree. During the Discovery and Development Term DTI will
not perform any Research and Development on any Licensed Compound except with
MRE's prior written approval.

         3.3      MRE Research and Development Commitment. During the Discovery
and Development Term, with respect to each Selected Compound MRE shall commit
such financial and other resources, if any, as MRE in its sole discretion deems
appropriate, and MRE shall not be required to expend any minimum amount of money
or effort on the Research and Development of, nor to file an IND or NDA with
respect to, any Selected Compound. MRE shall direct the Research and
Development, if any, of each Selected Compound in any manner, and with such
commitment of financial and other resources as it in its sole discretion deems
appropriate.

         3.4      Regulatory Filings. In the event MRE, in the exercise of its
sole discretion, determines to proceed with clinical development of a Selected
Compound, DTI at its sole cost and expense shall provide to MRE such available
information as MRE requests for filing an IND and, if further requested by MRE
after its determination in the exercise of its sole discretion to file an NDA,
an NDA with respect to any Selected Compound. In the event MRE requests that DTI
complete certain sections of the information packages needed for any such IND or
NDA filing, including but not limited to acute, subacute and chronic toxicology
studies, DTI, in its sole discretion, may agree to do such work on such terms as
it and MRE shall mutually agree. MRE shall be the sponsor of any IND and NDA
filed with respect to a Selected Compound.

         3.5      Development Costs. Subject to DTI's obligations to MRE in the
event DTI elects co-promotion rights in accordance with Section 5 hereof, MRE
shall pay all costs associated with the Research and Development and Product
Development of Selected Compounds and Licensed Products, including without
limitation all Research and Development and Product Development activities
rendered by DTI at MRE's request. When MRE shall identify appropriate
manufacturing sites, DTI at its sole cost and expense shall effectuate the
Technology Transfer and in so doing, DTI shall be required only to generate
extant information.

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         3.6      Non-Selected Compounds. The rights granted to MRE under
Section 2.1 shall revert to DTI with respect to the following compounds
(hereinafter all such compounds shall be referred to as the "Non-Selected
Compounds"): (i) those Licensed Compounds which MRE did not select for clinical
development during the Discovery and Development Term and (ii) those Selected
Compounds with respect to which MRE has not (a) initiated animal toxicology
studies within two (2) years of being designated a "Selected Compound" and (b)
filed an IND within three (3) years of such selection.

         3.7      Discontinued Compounds. The rights granted to MRE under
Section 2.1 shall revert to DTI with respect to the following compounds
(hereinafter, such compounds shall be referred to as "Discontinued Compounds"):
Those Selected Compounds or Co-Promoted Products as to which MRE has given
written notice to DTI of its decision to discontinue Research and Development or
Product Development.

         3.8      Limitations on DTI's Commercialization of Non-Selected and
Discontinued Compounds.

                  (a)      DTI shall have the right to develop, make, use and
sell, with the right to sublicense, any Non-Selected Compound, Discontinued
Compound provided such Non-Selected or Discontinued Compound, in the opinion of
MRE, does not have any indication or field of use equivalent to that of a
Selected Compound, Licensed Product or Co-Promoted Product and will not compete
directly or indirectly with any Selected Compound, Licensed Product or
Co-Promoted Product (such as by being usable for any indication, whether or not
FDA Approved, which is the same as the FDA Approved field of use or indication
therefor).

                  (b)      Notwithstanding anything to the contrary contained
herein, if at any time MRE documents to DTI that a commercialized Non-Selected
Compound or Discontinued Compound is being used for a field of use or
indication, whether or not FDA Approved, which is the same as the FDA Approved
field of use or indication or for a Selected Compound, Licensed Product or
Co-Promoted Product, MRE shall engage a nationally recognized independent
accounting firm to estimate the amount of revenue MRE has lost and will lose in
the future as a result of such use. DTI agrees that MRE shall be entitled to
recover the amount thereof from DTI first through offsets against license fees,
milestones, royalties or other monies payable to DTI pursuant to this Agreement,
and secondly through royalties on sales of the subject Non-Selected or
Discontinued Compound and last, if the foregoing is insufficient, through a

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reasonable mechanism to be mutually agreed by the parties. In addition to such
recovery, MRE shall be entitled to seek injunctive relief enjoining the further
manufacture and sale of the subject Non-Selected Compound or Discontinued
Compound, without the need for MRE to post a bond or other security.

                                   SECTION 4.
                             PAYMENTS AND ROYALTIES

         4.1      Payments by MRE. In consideration of the Exclusive License
granted to it hereunder, during the Contract Period MRE shall pay or cause to be
paid to DTI:

                  (a)      A non-refundable license fee of * on the Effective
Date of this Agreement;

                  (b)      * in quarterly installments of * commencing on
October 1, 1997;

                  (c)      * within sixty (60) days following filing of the
first IND for a Selected Compound for which there is no hold placed by the FDA
on initiating the clinical trial;

                  (d)      * within sixty (60) days following filing of the
first IND for a different Selected Compound for which there is no hold placed by
the FDA on initiating the clinical trial;

                  (e)      * within sixty (60) days following filing of the
first IND for one other different Selected Compound for which there is no hold
placed by the FDA on initiating the clinical trial;

                  (f)      * within thirty (30) days following the first dosing
of the first patient in a randomized controlled pivotal trial of a Selected
Compound;

                  (g)      * within thirty (30) days following the first FDA
Approval of an NDA for a Selected Compound;

                  (h)      Subject to the provisions of Section 10.1(b), for
sales by MRE or a MRE Affiliate when MRE or a MRE Affiliate sells a Licensed
Product in a country in the Territory where there are Licensed Patent Rights, a
royalty of * of Net Sales; and

                  (i)      Subject to the provisions of Section 10.1(b), for
sales of a Licensed Product by a MRE sublicensee or a MRE Affiliate sublicensee
in countries in the Territory where there are Licensed Patent Rights, (1) * of
all license fees, milestone payments and royalties received by MRE or a MRE
Affiliate from its sublicensees for such sales or as consideration for Licensed
Product rights for all FDA Approved indications with the exception

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of Pharm Stress, and (2) * of the royalties received by MRE from its
sublicensees on their Net Sales of Licensed Products for which the FDA Approved
indication is Pharm Stress.

         4.2      Payments by DTI. DTI shall pay to MRE:

                           (i)      For sales of a Discontinued Compound in the
                  Territory by DTI or a DTI Affiliate, a royalty of * of Net
                  Sales; and

                           (ii)     For sales of a Discontinued Compound by a
                  DTI sublicensee or a DTI Affiliate sublicensee, * of all
                  license fees, milestone payments and royalties received by DTI
                  or a DTI Affiliate from its sublicensee for such sales or as
                  consideration for the right to sell such Discontinued Product.

         4.3      Royalty Term.

                  (a)      As to each country in the Territory, the period
during which MRE shall be obligated to make payments to DTI required by Section
4.1 relating to sales by it, its Affiliates or sublicensees of a Licensed
Product shall end upon expiration, lapsing or final holding of the invalidity,
unenforceability or noninfringement by a decision of a court or governmental
agency of competent jurisdiction from which no appeal can be or has been taken
within the time allotted for appeal of the last patent claim within the Licensed
Patent rights covering that Licensed Product which would be infringed within
that country by MRE or its Affiliate or sublicensee but for the Exclusive
License granted pursuant to this Agreement, or upon the admission of the holder
of such last claim that it is invalid or unenforceable through reissue,
disclaimer or otherwise. When the payment period ends as to any country pursuant
to this Agreement, it is understood and agreed that MRE, its Affiliates and
sublicensees, if any, may make, have made, use, sell and/or distribute such
Licensed Product in that country in perpetuity with no further obligation to
make any payments to DTI therefor.

                  (b)      As to each country in the Territory, the period
during which DTI shall be obligated to make payments to MRE required by Section
4.2 relating to sales by it, its Affiliates or sublicensees of a Discontinued
Product shall end upon expiration, lapsing or final holding of the invalidity,
unenforceability or noninfringement by a decision of a court or governmental
agency of competent jurisdiction from which no appeal can be or has been taken
within the time allotted for appeal of the last patent claim covering that
Discontinued Product, or upon the admission of the holder of such last claim
that it is invalid or unenforceable through reissue, disclaimer or otherwise.
When the payment period ends as to any country pursuant to this

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Agreement, it is understood and agreed that DTI, its Affiliates and
sublicensees, if any, may make, have made, use, sell and/or distribute such
Discontinued Product in that country in perpetuity with no further obligation to
make any payments to MRE therefor.

                                   SECTION 5.
                 DTI CO-PROMOTION RIGHTS; DISCONTINUED COMPOUNDS

         5.1      Option to Co-Promote. Subject to the last sentence in this
Section 5.1, DTI shall have the option to elect to co-promote in the United
States each Licensed Product and thereby forego the receipt of, and release MRE
from its obligation hereunder to pay DTI, royalties on Net Sales in the United
States on such Product. In the event DTI wishes to exercise such option as to
any Licensed Product DTI must give to MRE written notice (a "Notice of
Election") of DTI's election to co-promote the specified Licensed Product in the
United States. Such Notice must be given within thirty (30) days following MRE's
filing of the IND therefor. Time shall be of the essence with respect to the
giving of such Notice. Anything in this Agreement to the contrary
notwithstanding, (a) DTI shall not have the right to sublicense any such
co-promotion rights and (b) DTI shall have no co-promotion option or rights with
respect to either the Licensed Compound identified on Exhibit A hereto as
WRC-0470 or any Licensed Product for use in Licensed Processes whose FDA
Approved indication is Pharm Stress.

         5.2      Cost Sharing. By duly giving a Notice of Election, DTI agrees
to pay to MRE, within forty-five (45) days after receipt of the invoice from
MRE, (a) * of the cumulated costs of Research and Development and Product
Development paid or incurred by MRE for the subject Co-Promoted Product prior to
MRE's receipt of the Notice of Election therefor, (b) on a quarterly basis going
forward, * of all costs therefore of (i) Research and Development and Product
Development judged by MRE in its sole discretion to be required for the U.S.
regulatory approval thereof and (ii) Commercialization in the United States.

         5.3      Product Development and Commercialization. Within thirty (30)
days following the delivery of DTI's Notice of Election for a Co-Promoted
Product, the parties will each appoint two (2) representatives as members of a
"Product Committee" (the "Product Committee"). Within three (3) months after
delivery of DTI's Notice of Election, such Product Committee will begin drafting
the initial development plan for the subject Co-Promoted Product (the
"Development Plan"). The parties shall request the Committee to complete such
Plan no later

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than three (3) months after the IND therefor is filed. The Committee will review
and, if warranted, revise such Plan for such Product every twelve (12) months
thereafter. The President of MRE shall have final decision-making authority over
the contents of each final Development Plan. Subject to the provisions of
Sections 5.5 and 5.6, all costs set forth in the Development Plans shall be
shared equally by the parties; and MRE shall invoice DTI therefor on a quarterly
basis, and DTI shall pay MRE the invoiced amount within forty-five (45) days
after the invoice date. MRE shall be the sponsor of every IND and NDA filed with
respect to a Co-Promoted Product. Thirty (30) days following the filing of the
NDA for such Product, the Product Committee shall become a Commercialization
Committee, the Development Plans shall become Commercialization Plans and the
President of MRE shall have final decision-making authority over the contents of
the Commercialization Plans; provided, however, that MRE shall be solely
responsible for the execution of the Commercialization Plan for each Co-Promoted
Product, including without limitation the manufacture, packaging, distribution
and booking of sales of each Co-Promoted Product and calculation of the Net
Profit with respect thereto pursuant to Section 5.4.

         5.4      Profit Sharing. Subject to DTI's performance of its
obligations pursuant to Sections 5.2 and 5.3 and the provisions of Section 5.5,
DTI shall have the right to receive from MRE * of the Net Profit from the sale
of each Co-Promoted Product in the United States, determined by MRE in
accordance with generally accepted accounting principles. The provisions of
Section 6 shall apply to such payments of Net Profit as if they were royalty
payments, except that MRE shall make such payments to DTI no later than 90 days
after the end of MRE's fiscal year. As used in this Section 5.4, "Net Profit"
means, in connection with sales of a Co-Promoted Product in the United States,
(i) all monies received by MRE or DTI or their respective Affiliates, less all
costs which are permitted in accordance with the terms of the Commercialization
Plan therefor approved pursuant to Section 5.3 and are actually incurred,
including without limitation manufacturing, regulatory, sales/marketing,
distribution, financing, travel, shipping and courier costs, and taxes other
than income taxes, and less all Third Party Royalties to the extent not included
in such Plan, and (ii) all other monies, including license fees, milestone
payments and similar monies of whatsoever description, received by MRE as
consideration for granting to a sublicensee rights to a Co-Promoted Product in
the United States.

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         5.5      Termination of Co-Promotion by DTI. DTI shall have the right
at any time to terminate the right, title and interest it acquired pursuant to
Section 5.1 in a Co-Promoted Product either (a) by failing to make, within
forty-five (45) days of the date due, any payment to MRE required by Section 5.2
or (b) by delivering to MRE written notice of termination. In the event of such
termination, DTI's co-promotion rights with respect to such Product shall
forthwith and forever cease and terminate, it shall not be entitled to any
refund or credit for any prior payments of costs of Research and Development,
Product Development or Commercialization with respect thereto nor shall it have
any liability to MRE for the one quarterly payment it failed to make or for
payment of any such future costs; provided, however, that anything to the
contrary in this Section 5.5 notwithstanding, such former Co-Promoted Product
shall be deemed a Licensed Product and MRE shall pay DTI royalties with respect
thereto in accordance with the provisions of Section 4.1.

         5.6      Termination of Co-Promotion by MRE. MRE shall have the right
at any time to terminate its right, title and interest in a Co-Promoted Product
by giving to DTI written notice of termination. In the event of such
termination, such Product shall be deemed a Discontinued Compound which DTI
shall have the sole right to develop, make, use and sell, with the right to
sublicense, provided such Compound, in the opinion of MRE, does not have any
indication or field of use equivalent to that of a Selected Compound and will
not compete directly or indirectly with any Selected Compound in development or
in the marketplace (such as by being usable for any indication, whether or not
FDA Approved, which is the same as the FDA Approved indication for a Selected
Compound). Anything to the contrary in this Section 5.6 notwithstanding, DTI
shall make payments to MRE with respect to such Compound in accordance with the
provisions of Section 4.2. MRE shall not be entitled to any refund or credit for
any prior payment of costs of Research and Development, Product Development or
Commercialization with respect thereto nor shall it have any liability to DTI
for payment of any such costs which are payable, regardless of when accrued,
following the date of its giving such notice of termination.

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<PAGE>

                                   SECTION 6.
                          ROYALTY RECORDS AND PAYMENTS

         6.1      Reports. Beginning sixty (60) days after the first calendar
quarter in which either Net Sales are first made of a Discontinued Compound or
Licensed Product or a party receives monetary proceeds from a sublicensee
requiring payment to the other party pursuant to Section 4, and sixty (60) days
after the end of any subsequent calendar quarter during the Contract Period, a
party shall deliver or cause to be delivered to the other party a written report
showing by country the sales of such Compound or Product or monetary proceeds so
received by it during the preceding quarterly period and showing the calculation
of Net Sales and the amount payable as royalties or otherwise pursuant to
Section 4. Concurrently with the submission of each such written report, the
party shall pay or cause to be paid to the other party the amount of royalties
or other monies shown to be due thereon, subject to the other provisions of this
Agreement.

         6.2      Royalty Payments. All royalty and other payments to be made by
one party to the other shall be paid in United States dollars in the United
States to such party at the address set forth in Section 16.1. For converting
into United States dollars a royalty accrued in another currency, the conversion
rate shall be the closing commercial buying rate of exchange for United States
dollars and such other currency as published in the Wall Street Journal, East
Coast Edition, as of the close of business on the last business day of the
applicable quarter of the royalty period for which payment is being made;
provided, however, that if for any reason conversion into United States dollars
cannot be made in a country in the Territory, payment may be made in the
currency of such country by deposit in the name of the payee in a bank and
account designated by it in such country.

         6.3      Withholding Taxes. All taxes assessed or imposed against or
required to be withheld from royalty payments due a party shall be deducted from
amounts payable hereunder and shall be paid on behalf of such party to
appropriate fiscal or tax authorities by the other party, which shall forward
the tax receipts it receives evidencing payment of such taxes to the party on
whose behalf such taxes were paid.

         6.4      Audit. MRE and DTI each shall, and shall cause their
Affiliates and sublicensees to, keep and maintain accurate records in sufficient
detail to enable the royalties payable hereunder to be calculated. Upon written
request from a party, the other party or its sublicensees

                                       15

<PAGE>

shall permit, upon reasonable prior written notice and during normal business
hours, a nationally recognized independent accounting firm within the "big six"
to have access, but not more often than once in any calendar year, to such
records within three (3) years after the royalty period to which such records
relate to verify the accuracy of the other party's royalty reports and payments
for such period. The party selecting and retaining such independent accounting
firm shall give concurrently to the other party a copy of the report of such
firm and shall cause such firm not to disclose to it or any other person or
entity any information except that which should properly be contained in a
royalty report required under this Agreement. The royalty-paying party shall
reimburse the other party for 50% of the reasonable costs of such audit if an
underpayment of royalties of more than 5% is revealed in the period audited.

         6.5      Sublicensee Payments. Each party agrees that any sublicensee
of the other party may pay, on behalf of such other party, any obligation of
such other party under Section 4 of this Agreement and that such payment shall
be received in lieu of payment by and in satisfaction of the obligation of such
other party; and any such sublicensee shall be bound by the other provisions of
this Section 6. Failure in payment by a sublicensee shall not excuse the
sublicensing party from its obligation to make the payments it is required to
make to the other party under Section 4.

         6.6      One Royalty. A royalty shall be paid only once on account of a
sale to a third party, even if the manufacture, use or sale is or shall be
covered by multiple Licensed Patent Rights.

         6.7      Sales to Affiliates and Sublicensees. No royalties shall be
payable on sales between a party and its Affiliates or permitted sublicensees.

                                   SECTION 7.
                       PATENT PROSECUTION AND MAINTENANCE

         7.1      DTI Responsibility. DTI shall instruct its patent counsel to
keep MRE currently advised in writing of all communications from the various
patent offices, provide MRE with copies of pending patent applications and all
related correspondence and consult with MRE, at MRE's reasonable request, and
consider MRE's comments and suggestions relative to the responses thereto. DTI
will promptly notify MRE in writing of and file for patent protection on the
Licensed Patent Rights and Improvements existing as of the Effective Date (if it
has not

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<PAGE>

previously done so) or arising during the Contract Period in the United States,
Canada, the European Union, and Japan. If MRE requests additional filings in any
other foreign jurisdictions, DTI shall make filings in such countries provided
MRE agrees in writing to pay all Patent Costs in such jurisdictions. DTI shall
use its best efforts to prosecute all patent applications it files pursuant to
this Agreement. DTI shall pay on a timely basis all fees and other costs and
expenses which are necessary to maintain in effect all patents which have issued
as the Effective Date of this Agreement or which may issue thereafter with
respect to the Licensed Patent Rights and Improvements.

         7.2      Abandonment. DTI shall not permit any applications for patent
within the Licensed Patent Rights or Improvements to become abandoned (unless
such application is being abandoned in favor of a continuation,
continuation-in-part or similar application) without giving MRE written notice
and an opportunity to assume prosecution of any such application for patent as
early as possible, which in no event shall be less than ninety (90) days prior
to the day on which it will become abandoned. DTI shall reasonably assist and
cooperate, at MRE's expense, in the prosecution of any patent applications as to
which MRE assumes the prosecution pursuant to this subparagraph and shall
execute such patent assignment documents as MRE shall request. MRE shall have
all of DTI's right, title and interest in and to all the Licensed Patent rights
in such country as are set forth in such application, and MRE and its Affiliates
and sublicensees shall not be obligated to pay DTI royalties on sales of any
Licensed Product covered by any patent as to which MRE has assumed the
prosecution pursuant to this Section 7.2.

         7.3      Payment of Patent Costs. DTI shall pay all Patent Costs except
as provided in Section 7.1 and where MRE has assumed the prosecution of a
patent.

                                   SECTION 8.
                                 CONFIDENTIALITY

         8.1      Confidentiality. MRE shall hold in confidence all Proprietary
Information which it obtains from DTI, DTI shall hold in confidence the contents
of all MRE sublicensing agreements it receives from MRE pursuant to Section 2.2
and all information it obtains from MRE relating to the Research and
Development, Product Development and Commercialization of Selected Compounds;
and DTI and MRE each shall hold in confidence all information they learn in
connection with the Research and Development, Product Development and

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<PAGE>

Commercialization of Co-Promoted Products. MRE may, however, disclose
Proprietary Information in a limited manner at MRE's sole discretion, if in
MRE's judgment such disclosure would be in the furtherance of the purposes of
this Agreement, to its Affiliates, sublicensees, governmental authorities,
consultants and/or agents, provided that in the case of Affiliates,
sublicensees, consultants and/or agents they agree in writing before disclosure
to be bound by the confidentiality obligations of this paragraph. Any
information which is properly included within Proprietary Information on the
date it is obtained by MRE shall cease to be regarded as such and MRE, its
affiliates and sublicenses shall be released from the provisions of this
paragraph on the date when, through no fault or omission of MRE, its Affiliates
or sublicensees such information becomes (a) disclosed in published literature,
(b) otherwise available to the public, or (c) disclosed or received by MRE or
any of its Affiliates or sublicensees in good faith from a third party who has a
right to disclose the same.

         8.2      Duration. The obligations of confidentiality in Section 8.1
shall be in effect for five (5) years after the expiration of the last to expire
patent within the Licensed Patent Rights.

                                   SECTION 9.
                         REPRESENTATIONS AND WARRANTIES

         9.1      DTI Representations. DTI hereby represents and warrants to MRE
as follows:

                  (a)      DTI is the sole assignee of and has good and
marketable title in and to the Licensed Patent Rights and Proprietary
Information and has the complete and sole right to license them to MRE. No third
person has acquired, owns or possesses any right, title or interest in or to the
Licensed Patent Rights in the Territory, and DTI has not authorized any others
to practice the Licensed Patent Rights in the Territory. Exhibit B lists all
developments, patent applications filed and patents issued within the Territory
on or before the Effective Date of this Agreement within the Licensed Patent
Rights.

                  (b)      There are no patents owned by others and no trade
secret or proprietary rights of others known to DTI on the Effective Date which
would be infringed or violated by developing, making, using, selling, or
distributing the Licensed Products and/or Licensed Compounds for use in Licensed
Processes by MRE, its Affiliates and/or sublicensees anywhere in the world. The
Licensed Patent Rights have not been obtained through any activity, omission or
representation that would limit or destroy the validity of any one or more of
such Rights; and

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<PAGE>

DTI has no knowledge or information that would impact the validity and/or
enforceability thereof;

         (c)      There are no adverse actions, suits or claims pending against
DTI or anyone in privy with DTI in any court or by or before any governmental
body or agency with respect to Licensed Compounds, Licensed Products, Licensed
Processes, Licensed Patent Rights or Proprietary Information, and no such
actions, suits or claims have been threatened against DTI or anyone in privy
with it.

         (d)      MRE and/or any sublicensees shall not be obligated to make
payments of any kind to any person, firm, corporation or entity other than DTI
in connection with MRE's acquiring the Exclusive Licenses that have been granted
or that may be granted in Section 2 hereof, and DTI is not aware, as of the
Effective Date of this Agreement, of any third party to whom MRE is or may be
obligated to make payments of any kind in connection with MRE's, its Affiliates'
and/or any sublicensees' developing, making, having made, using, selling, and/or
distributing Licensed Products and/or Licensed Compounds for use in Licensed
Processes for as long as the licenses granted to MRE hereunder remain in effect.

         (e)      Neither DTI, any of its Affiliates or agents nor anyone acting
on its behalf, shall disclose Proprietary Information to third parties or commit
any other act or take any action whatsoever to adversely affect, compromise or
destroy the value of the Proprietary Information, Licensed Patent Rights or the
licenses granted hereunder.

         (f)      DTI is a corporation duly organized, validly, existing and in
good standing under the laws of the State of Delaware.

         (g)      DTI has the full legal right, power and authority without the
consent of any other person, to execute, deliver, consummate and perform this
Agreement, to grant licenses set forth herein and to carry out the transactions
contemplated hereby, and it has made no commitments or obligations to any third
party inconsistent herewith.

         (h)      This Agreement is the lawful, valid and legally binding
obligation of DTI, enforceable in accordance with its terms, except as
performance may be limited by bankruptcy, insolvency, rearrangement,
reorganization or similar debtor relief legislation affecting the rights of
creditors generally and subject to the application of general principles of
equity.

         (i)      The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby shall not result in the
creation of any lien, charge, security

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<PAGE>

interest or encumbrance on the Licensed Patent Rights and are not prohibited by
and do not violate or conflict with the charter or bylaws of DTI, or any
contract or other instrument by which DTI is bound, or any law, regulation or
judgment to which DTI is subject.

         9.2      MRE Obligations Conditional. MRE's obligations pursuant to
this Agreement are conditioned upon the foregoing DTI representations and
warranties being true and correct as of the date hereof and at all other times
that MRE is obligated, or may become obligated, to make payments to DTI pursuant
to the terms of this Agreement.

         9.3      MRE's Representations. MRE hereby represents and warrants to
DTI as follows:

                  (a)      MRE is a corporation duly organized, validly,
existing and in good standing under the laws of the State of Delaware.

                  (b)      This Agreement is the lawful, valid and legally
binding obligation of MRE, enforceable in accordance with its terms, except as
performance may be limited by bankruptcy, insolvency, rearrangement,
reorganization or similar debtor relief legislation affecting the rights of
creditors generally and subject to the application of general principles of
equity.

                                   SECTION 10.
                          ADVERSE PATENTS OR OWNERSHIP

         10.1     Third Party Patents. In the event that in a country in the
Territory a third party claims either that an issued patent in which it has
rights contains patent claims covering Licensed Products, Improvements, Licensed
Compounds and/or Licensed Processes or that it has an ownership right or
interest in Licensed Patent Rights, Improvements or Proprietary Information, MRE
shall have the right, at MRE's sole election, either:

                  (a)      directly or indirectly through its Affiliates and
sublicensees, to suspend or stop manufacture, use and sale of Licensed Products
or development of Licensed Compounds for use in Licensed Processes under this
Agreement in such country and to stop all royalty and other payments due to DTI
under Sections 4.1(h) and (i) for such country upon giving DTI one (1) month's
notice; or

                  (b)      to continue to manufacture, use and/or sell Licensed
Products and/or Licensed Compounds for use in Licensed Processes directly or
through its Affiliates and sublicensees and stand suit for patent infringement
or against claims by a third party to

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<PAGE>

ownershiprights or interest in the Licensed Patent Rights, Improvements or
Proprietary Information, at its own risk and expense.

         In addition to the foregoing options of MRE, MRE shall have the right
to obtain a license for the subject country within the Territory from any such
third party on such terms as MRE, in its sole discretion, shall negotiate, and
in any such event MRE shall be entitled and permitted to offset against and
deduct from the royalties and other compensation payable to DTI under Sections
4.1(h) and (i) hereof with respect to sales in the subject country within the
Territory 100% of the Third Party Royalties which MRE, its Affiliates and/or
sublicensees shall become obligated to pay to said third party under such
license if the third party's patent claims cover the composition of matter of a
Licensed Product. Unused credits may be carried forward and offset against
subsequent payments to DTI under such Sections.

         10.2     Co-Promoted Products. In the event a third party's claims
described in Section 10.1 relate to a Co-Promoted Product, MRE shall have the
right to obtain a license from any such third party on such terms as MRE, in its
sole discretion, shall negotiate, and in any such event the royalties and other
compensation payable to such third party shall be shared equally by MRE and DTI.

                                   SECTION 11.
                                  INFRINGEMENT

         11.1     Infringement Actions. DTI and MRE shall promptly notify each
other of any infringement of the Licensed Patent Rights and/or unauthorized use
of any Licensed Compounds, Licensed Products, Co-Promoted Products or Licensed
Processes which may come to their respective attention. MRE shall have the sole
right to take whatever steps MRE, in its sole discretion, deems appropriate with
respect to such infringement and/or unauthorized use including, but not limited
to, granting a sublicense to the infringing party or instituting a suit and
ultimately settling same. Should MRE determine to institute a suit, then it may
do so in its own name and/or the name of DTI and it may seek any and all
damages, whether they have accrued prior or subsequent to the Effective Date of
this Agreement. In the event that MRE fails to take any such steps within ninety
(90) days of the date on which it first became aware of the infringement and/or
unauthorized use involved, and if the Licensed Patent Rights at issue cover a
Licensed Product or Co-Promoted being actively developed or commercialized by
MRE at the

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<PAGE>

time, DTI shall then upon ninety (90) days written notice to MRE have the sole
right to institute suit, in its own name and/or in MRE's name, with respect to
the infringement and/or unauthorized use involved. With respect to any suit that
may be brought or instituted as provided in this Section, it is understood and
agreed that the party that brings or institutes such suit shall bear solely all
costs and expenses associated therewith and shall be entitled to retain and keep
(notwithstanding any other provisions of this Agreement to the contrary) any and
all sums received, obtained, collected or recovered whether by judgment,
settlement or otherwise, as a result of such suit; provided, however, that the
costs, expenses and recoveries in any such suit relating to a Co-Promoted
Product shall be shared equally by DTI and MRE. In addition, with respect to any
suit for infringement of the Licensed Patent Rights or unauthorized use of the
Licensed Compounds, Licensed Products, Co-Promoted Products or Licensed
Processes, the party that did not institute suit shall render all reasonable
assistance to the party that did institute suit at the suing party's expense,
including, but not limited to, executing all documents as may be reasonably
requested by the party that did institute suit.

         11.2     Rights During Pendency of Infringement. While acts of
infringement of Licensed Patent Rights are ongoing in a country in the
Territory:

                  (a)      If MRE or a MRE Affiliate or sublicensee has
instituted suit for such infringement, MRE and its Affiliates and sublicensees
will be relieved from the obligation to pay royalties to DTI for any and all
royalties for the making, use and/or sale of Licensed Products or Licensed
Compounds for use in Licensed Processes by it or on its behalf in that country
during the pendency of such action.

                  (b)      If DTI has instituted suit for such infringement in a
country and if the alleged infringer's product has attained more than * of
MRE's, its Affiliate's or sublicensee's sales in such country during any
calendar quarter, then no amount shall be payable by MRE, or its Affiliate or
sublicensee to DTI pursuant to Section 4.1 for sale of the Licensed Products
and/or Licensed Compounds for use in Licensed Processes in such country for so
long as the alleged infringer's product is sold therein.

         11.3     DTI Assignment of Pre-Effective Date Rights. DTI hereby
assigns to MRE DTI's right to institute suit for any infringement of the
Licensed Patent Rights and/or unauthorized use of the Proprietary Information
that occurred prior to the Effective Date of this Agreement, including the right
to retain and keep any and all sums received, obtained, collected or recovered

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by judgment, settlement or otherwise as a result of such suit. DTI agrees to
inform MRE of all such prior infringement and unauthorized uses, their type and
duration and to assist MRE in prosecuting any action brought by MRE pursuant to
the provisions of this paragraph.

                                   SECTION 12.
                                 INDEMNIFICATION

         12.1     Indemnification. Each party shall indemnify, defend and hold
harmless the other party and its directors, officers, employees, and agents and
their respective successors, heirs, assigns and sublicensees, against any
liability, damage, loss or expense (including reasonable attorneys' fees and
expenses of investigation and litigation) incurred by or imposed upon the
persons to be indemnified or any one of them in connection with any claims,
suits, actions, demands or judgments arising our of the untruth, inaccuracy or
any breach of any representation, warranty, agreement, term, condition or
covenant made by such party in this Agreement. MRE also shall indemnify DTI and
its directors, officers, employees, and agents against any liability, damage,
loss or expense (including reasonable attorneys' fees and expenses of
investigation and litigation) incurred by or imposed upon the persons to be
indemnified or any one of them in connection with any claims, suits, actions,
demands or judgments arising out of any injury or death of persons or damage to
property resulting from the development or commercialization of Licensed
Products (but not Co-Promoted Products) by MRE except where such injury, death
or damage arose from the negligence or malfeasance of any entity or person to be
indemnified.

         12.2     Procedure. A person or entity seeking indemnification
hereunder (the "Indemnitee") shall notify the party from whom such
indemnification is sought (the "Indemnitor") within a reasonable time in writing
of any action, claim or liability in respect of which the Indemnitee intends to
claim such indemnification, provided that the failure to give timely notice to
the Indemnitor shall not release the Indemnitor from any liability to the
Indemnitee to the extent the Indemnitor is not prejudiced thereby. The
Indemnitor shall have the right, by prompt notice to the Indemnitee, to assume
the defense of such claim with counsel reasonably satisfactory to the Indemnitee
and at the sole cost of the Indemnitor, and if the Indemnitor so assumes such
defense, the Indemnitee may participate therein through counsel of its choice,
but at the sole cost of the Indemnitee. If the Indemnitor does not so assume the
defense of such claim, the Indemnitee may assume such defense with counsel of
its choice and at

                                       23

<PAGE>

the sole cost of the Indemnitor. The party not assuming the defense of any such
claim shall render all reasonable assistance to the party assuming such defense,
and all out-of-pocket costs of such assistance shall be for the account of the
Indemnitor. No such claim shall be settled other than by the party defending the
same, and then only with the consent of the other party, which shall not be
unreasonably withheld; provided that the Indemnitee shall have no obligation to
consent to any settlement of any such claim which imposes on the Indemnitee any
liability or obligation which cannot be assumed and performed in full by the
Indemnitor.

         12.3     Survival. This Section 12 shall survive expiration or
termination of this Agreement.

                                   SECTION 13.
                                  FORCE MAJEURE

         13.1     Force Majeure. Neither DTI nor MRE shall be liable to the
other for failure due to force majeure to perform any of its obligations under
this Agreement. As used in this Agreement, "force majeure" shall mean: Acts of
God; acts, regulations or laws of any government; war; civil commotion; strike,
lock-out, or labor disturbances; destruction of production facilities and
materials by fire, earthquake or storm; failure of public utilities or common
carriers; and any other cause or causes beyond the control of that party.

                                   SECTION 14.
                              FIRST REFUSAL RIGHTS

         14.1     MRE's First Refusal Rights. DTI shall give written notice to
MRE promptly after it acquires or develops any composition, method or process
relating to adenosine A2a agonists after the Effective Date of this Agreement.
MRE shall have the right of first refusal with respect to DTI's proposed grant
to any bona fide third party of any right, title or interest of DTI in or to
either any such composition, method or process or to any Non-Selected Compound
or Discontinued Compound (a "Grant of DTI Rights"). Accordingly, DTI shall give
written notice to MRE (the "Notice of First Refusal Rights") of the terms and
conditions (the "Third Party Terms") on which it has agreed, subject to MRE's
right of first refusal, to make any Grant of DTI Rights, which Notice shall
identify the proposed third party recipient of such Grant unless DTI is
prohibited from doing so by a confidentiality agreement or by law (the "Named
Third Party"). MRE shall have (10) business days to notify DTI that it wishes to
acquire the Grant of

                                       24

<PAGE>

DTI Rights on the Third Party Terms and an additional (30) business days
thereafter to enter into a definitive agreement with DTI on the Third Party
Terms. If MRE does not meet such conditions through no fault of DTI, DTI shall
be free to make a Grant of DTI Rights, but only to the Named Third Party and
only on the same terms and conditions as the Third Party Terms specified in the
Notice of First Refusal Rights. If either the actual Third Party Terms or the
Named Third Party varies from those specified in the Notice of First Refusal,
DTI shall be required to give to MRE a new Notice of First Refusal Rights, and
MRE shall have another opportunity to exercise its first refusal rights as
provided above. Any violation of this Section 14 shall entitle MRE to seek
injunctive relief, in addition to any other remedies available to MRE under this
Agreement or by law, without the need for MRE to post a bond or other security.

                                   SECTION 15.
                              TERM AND TERMINATION

         15.1     Term. This Agreement shall become effective on the date first
above written and shall continue until the expiration of the last to expire
patent in the Licensed Patent Rights, unless terminated earlier by one of the
parties hereto in accordance with its terms.

         15.2     Termination for Cause. A party may terminate this Agreement by
giving to the other party sixty (60) days prior written notice following:

                  (a)      the bankruptcy or the insolvency of the other party;
or

                  (b)      the breach of any material provision of this
Agreement by the other party if the breach is not cured within thirty (30) days
after written notice thereof to the party in default.

         15.3     Termination by MRE. MRE may surrender and thereby terminate
the license granted hereunder as to any Licensed Compound or Licensed Product
for use in a Licensed Process and as to any country in the Territory at any time
upon thirty (30) days prior written notice to DTI, and such termination shall
terminate all sublicenses granted under such license. MRE shall have no
financial liability or obligation to DTI as a result of such termination other
than the payment to DTI of royalties and other monies related to the subject
Licensed Compound or Product which accrued prior to the effective date of such
termination.

         15.4     Consequences of Termination. Termination, expiration,
cancellation or abandonment of this Agreement through any means and for any
reason shall not relieve the

                                       25

<PAGE>

parties of any obligation accruing prior thereto and shall be without prejudice
to the rights and remedies of either party with respect to any antecedent breach
of any of the provisions of this Agreement. Notwithstanding any other provision
of this Agreement, neither party shall be liable to the other for any
consequential, incidental, special or indirect damages whatsoever. Upon
termination of this Agreement, MRE shall transfer and assign to DTI any and all
data, information, regulatory filings and other information in MRE's possession
pertaining to Licensed Compounds, Licensed Products and Licensed Processes.

         15.5     Survival. In the event of termination or expiration of this
Agreement for any reason, the provisions hereof relating to confidentiality and
indemnification shall survive, and each party shall remain obligated to pay to
the other all monetary obligations hereunder which accrued prior to the
effective date of termination. In the event of termination of this Agreement for
any reason, MRE and its Affiliates and its sublicensees shall have the right to
sell any inventory of Licensed Products remaining after the effective date of
such termination, providing royalties are paid to DTI which otherwise would be
payable during the term of this Agreement.

                                   SECTION 16.
                            MISCELLANEOUS PROVISIONS

         16.1     Notices. All notices hereunder shall be in writing and shall
be delivered personally or mailed by registered or certified mail, postage
prepaid, or by electronic facsimile or delivery service for which receipt is
given, to a party at the following address:

                  in case of MRE, to:

                           Medco Research, Inc.
                           85 T.W. Alexander Drive
                           P.O. Box 13886
                           Research Triangle Park, NC 27709
                           Attn: Roger D. Blevins, Ph.D., President
                           Facsimile No: (919) 549-7515

                  with a copy to:

                           Hofheimer Gartlir & Gross, LLP
                           633 Third Avenue
                           New York, NY 10017
                           Attn: Richard G. Klein, Esq.
                           Facsimile No: (212) 661-3132

                  and in the case of DTI to:

                                       26

<PAGE>

                  Discovery Therapeutics Inc.
                  2028 Dabney Road - Suite E-17
                  Richmond, VA 23230-3311
                  Attn: Donald A. McAfee, Ph.D., President
                  Facsimile No: (804) 358-2451

or such other address as a party hereafter shall furnish to the other party by
written notice given as herein provided. Such notice shall be effective upon
receipt if personally delivered, delivered by electronic means or delivery
service, or on the third business day following the date of mailing.

         16.2     Modifications. No waiver or modifications of any of the terms
of this Agreement shall be valid unless in writing and signed by an authorized
representative of both parties hereto or by the party against whom enforcement
thereof may be sought.

         16.3     Waiver. Failure by either party to enforce any rights under
this Agreement shall not be construed as a waiver of such rights nor shall a
waiver by either party of any breach of any provision hereof by the other party
be construed as constituting a continuing waiver of any succeeding breach of
such provision or as a waiver of the provision itself.

         16.4     Assignment. Neither party shall assign this Agreement or any
part hereof without the prior written consent of the other party, provided that
a party may assign any or all of its rights and obligations to its Affiliates.
The transfer or sale of substantially the entire business or assets of a party
to which this Agreement pertains, or merger or consolidation of a party with
another company, shall be deemed an assignment of this Agreement but shall not
require the prior consent of the other party. Any assignee shall assume all
obligations of its assignor under this Agreement. No assignment shall relieve
any party of responsibility for the performance of any accrued obligation which
such party then has hereunder.

         16.5     Severability. This Agreement is subject to the restrictions,
limitations, terms and conditions of all applicable laws, governmental
regulations, approvals and clearances. If any term or provision of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect by any court or tribunal of competent jurisdiction in a final
non-appealable order or an order from which the allotted time to appeal has
expired, such invalidity, illegality or unenforceability shall not affect any
other term or provision hereof and this Agreement shall be interpreted and
construed as if such term or provision, to the extent the same shall have been
held to be invalid, illegal or unenforceable, had never been contained herein.

                                       27

<PAGE>

         16.6     Governing Law. All matters affecting the interpretation,
validity, and performance of this Agreement shall be governed by the internal
laws of the State of New York, exclusive of its choice of law rules, but the
scope and validity of Licensed Patents in any specific country shall be governed
by the applicable laws of the country granting the patent in question.

         16.7     Headings. The titles of the Sections contained herein are for
convenience only and shall not be considered in construing the meaning or
interpretation of this Agreement or any of its terms.

         16.8     Choice of Forum. The parties hereby irrevocably submit to the
exclusive jurisdiction of any United States District court sitting in the City
of New York. No suit, action or proceeding arising out of or relating to this
Agreement shall be brought before or removed to any other court.

         16.9     Publicity. Unless agreed to by the other party, which
agreement will not be unreasonably withheld, no party shall originate or issue,
any publicity, news release or other public announcement, written or oral,
whether to the public press, its stockholders or otherwise, relating to the
execution or delivery of this Agreement or any amendment hereto or the
performance of any of its terms or said party's receipt of any monies hereunder,
save only such announcement as in the opinion of legal counsel to the party
making such announcement is required by law to be made. The party making such
announcement shall give the other party a reasonable opportunity to review such
announcement before it is made. The parties acknowledge that MRE and DTI each
may file this Agreement with any governmental agency having jurisdiction over
the respective party in such matters and requiring the filing of this Agreement
with such governmental agency pursuant to applicable regulations.

         16.10    Entire Agreement. Neither party has relied or will rely on any
representation or agreement of the other except to the extent set forth herein,
and neither party shall be bound by or charged with any oral, written or implied
agreements, representations, warranties, understandings, commitments or
obligations not specifically set forth herein. This Agreement, together with the
exhibits hereto, constitute the entire agreement between the parties relating to
the Licensed Compounds, Licensed Products, Co-Promoted Products and Licensed
Processes, and all previous correspondence, agreements or arrangements between
the parties, written or oral, relating thereto, including without limitation
their prior confidentiality agreements, are hereby canceled and superseded.

                                       28

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers the day and year first
above written.

MEDCO RESEARCH, INC.                          DISCOVERY THERAPEUTICS, INC.

By:   /s/ Roger D. Blevins                    By:   /s/ Donald A. McAfee
   -----------------------------------           ----------------------------

Title:    President                           Title:    President

Date:__________________________________       Date:___________________________

                                       29

<PAGE>

                                    Exhibit A
                           Discovery Therapeutics Inc.
                       Adenosine A\\2A\\ Agonist Agonists
                    Proprietary Compound Library July 1, 1997
*

--------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
--------------------------------------------------------------------------------

<PAGE>
                                                                  EXECUTION COPY

                                    EXHIBIT B
                           DISCOVERY THERAPEUTICS INC.
                 ADENOSINE A(2A) AGONIST PROGRAM PATENT SUMMARY
                            U.S. AND FOREIGN FILINGS

DTI DOCKET NO. W-0467

     Title: 2-Aralkoxy and 2-Alkoxy Adenosine Derivatives as Cardiac
            Vasodilators and Antihypertensive Agents

      Country    Application No.   Filing Date          Status (Issue Date)
    ---------------------------------------------------------------------------
       U.S.       07/482,282         2/20/90       Granted: 5,140,015 (8/18/92)
    (Reissue)     08/098,180         7/26/93                 Allowed
    ---------------------------------------------------------------------------
    Australia      73255/91          2/14/91                 Pending
    ---------------------------------------------------------------------------
     Canada       2,074,853          7/29/92                 Pending
    ---------------------------------------------------------------------------
      EPO        91-904813.2         2/14/91                 Pending
    ---------------------------------------------------------------------------
     Japan        505571/91          2/14/91                 Pending
    ---------------------------------------------------------------------------

DTI DOCKET NO. W-0497

     Title: 2-Hydrazoadenosines and Their Utility for the Treatment of Vascular
            Conditions

      Country    Application No.   Filing Date          Status (Issue Date)
    ---------------------------------------------------------------------------
       U.S.       07/873,440         4/24/92       Granted: 5,278,150 (1/11/94)
    ---------------------------------------------------------------------------
     Canada        2093502            4/6/93                 Pending
    ---------------------------------------------------------------------------
      EPO        93-106460.4         4/21/93                 Pending
    ---------------------------------------------------------------------------
     Japan       116663/1993         4/21/93                 Pending
    ---------------------------------------------------------------------------

DTI DOCKET NO. W-0502

     Title: Diagnostic Uses of Hydrazinoadenosines

      Country    Application No.   Filing Date          Status (Issue Date)
    ---------------------------------------------------------------------------
      U.S.       08/119,774         9/10/93       Granted: 5,477,857 (12/26/95)
    ---------------------------------------------------------------------------
      PCT*      PCT/US94/08847       8/5/94                  Pending
    ---------------------------------------------------------------------------
      *designates Australia, Canada, Japan, EPC countries

DTI DOCKET NO. W-0511

     Title: Compositions and Methods for the Prevention of Restenosis following
            Revascularization Procedures

      Country    Application No.   Filing Date          Status (Issue Date)
    ---------------------------------------------------------------------------
      U.S.      To Be Assigned      6/18/97                  Pending
    ---------------------------------------------------------------------------
      PCT         To Be Filed         --                       --
    ---------------------------------------------------------------------------<PAGE>

                                                                    Exhibit 10.6

                           EXCLUSIVE LICENSE AGREEMENT

                                     between

                          DISCOVERY THERAPEUTICS, INC.

                                       and

                                SCHWARZ PHARMA AG

--------------------------------------------------------------------------------
Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as *. A complete version of this exhibit has been filed
separately with the Securities and Exchange Commission.
--------------------------------------------------------------------------------

<PAGE>

                                    AGREEMENT

         Effective as of July 16, 1998 (the "Effective Date"), Discovery
Therapeutics, Inc., a Delaware corporation having a principal place of business
at 2028 Dabney Road, Suite E-17, Richmond, VA 23230-3311, U.S.A. ("DTI") and
Schwarz Pharma AG, a corporation having a principal place of business at
Alfred-Nobel-Stra(beta)e 10, 40789 Monheim, Germany ("Schwarz"), agree as
follows:

                                   Witnesseth

         Whereas, DTI owns certain patents, patent applications and know-how
relating to DTI's proprietary dopamine receptor agonist N-0923 and various other
compounds;

         Whereas, DTI has, over the past ten years, successfully advanced N-0923
through substantial preclinical and clinical development including a Phase IIb
clinical trial (TDS-0923-004);

         Whereas, Schwarz desires an exclusive license under such patents,
patent applications, and know-how to make, use and sell Licensed Products in all
countries of the world except Japan for the therapeutic treatment of disease in
humans;

         Whereas, DTI and Schwarz have executed a Letter Agreement dated May 6,
1998 to confirm the mutual understanding, with lump sum payment to DTI by
Schwarz in the amount of * creditable against the License fee, that the parties
will negotiate in good faith to finalize a License Agreement pertaining to
worldwide rights (except in Japan) to Licensed Products.

         Now, therefore, in consideration of the above premises and covenants
contained herein, the parties agree as follows:

1.       DEFINITIONS

         1.1      "Additional Products" means Licensed Products other than the
Initial Product.

         1.2      "Additional Product Development Plan" means the plan for
development of Additional Products described in Section 3.4(b).

         1.3      "Affiliate" means any entity that directly or indirectly Owns,
is Owned by or is under common Ownership with, a party to this Agreement. "Own"
or "Ownership" means direct or indirect possession of at least fifty percent
(50%) of the outstanding voting securities of a corporation or a comparable
equity interest in any other type of entity, or means substantial control of a
corporation.

         1.4      "Compounds" means:

                  (a)      *;

                  (b)      *;

--------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
--------------------------------------------------------------------------------

<PAGE>

                  (c)      *; and

                  (d)      *.

         1.5      "Development Plan" means the Initial Product Development Plan,
as revised from time to time, pursuant to Section 3.5(a), and the Additional
Product Development Plan, collectively.

         1.6      "DTI Know-How" means all information, trade secrets, data,
inventions and know-how that is (i) owned by or licensed to DTI (with the right
to sublicense) during the term of this Agreement and (ii) necessary or useful to
the manufacture, use or sale of Licensed Products.

         1.7      "DTI Patent(s)" means all patent applications (including
divisionals, continuations and continuations in part) and issued patents
(including inventors' certificates, reissues, reexaminations, extensions or
other governmental actions which extend any of the subject matter of a patent,
and any substitutions, confirmations, registrations or additions of or to any of
the foregoing) owned by or licensed to DTI (with the right to sublicense) during
the term of this Agreement which claim inventions necessary or useful to the
manufacture, use or sale of Licensed Products, including any patent applications
and patents to which DTI acquires rights after the Effective Date, and including
without limitation any patents and patent applications that are jointly owned by
DTI, including but not limited to any future patents related to the transdermal
formulation of Compounds invented and owned jointly by DTI and LTS, and
excluding any patent applications pending before or patents issued by the patent
authorities in Japan. The DTI Patents (ex Japan) in existence as of the
Effective Date are set forth on Exhibit A.

         1.8      "FDA" means the United States Food and Drug Administration or
its equivalent outside the United States.

         1.9      "Field" means therapeutic treatment of disease in humans.

         1.10     "Initial Product" means the first Licensed Product sold by
Schwarz, its Affiliate or its sublicensee in the Territory.

         1.11     "Initial Product Development Plan" means the plan for
development of the Initial Product described in Section 3.4(a).

         1.12     "Licensed Product(s)" means any form or dosage of a Compound,
delivered by any mode of administration, including inter alia, a transdermal
patch formulation produced by LTS.

         1.13     "LTS" means Lohmann Therapie-Systeme headquartered in
Andernach, Germany.

         1.14     "Major Countries" means the United States, the United Kingdom,
France, Germany and Italy.

--------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
--------------------------------------------------------------------------------

                                        2

<PAGE>

         1.15     "Net Sales" means gross amounts invoiced by Schwarz and/or its
Affiliate or sublicensee(s) for sales of Licensed Product(s) produced hereunder
(excluding without limitation Licensed Product(s) used in clinical trials) to a
third party, less the sum of the following items:

                  (a)      Sales, excise taxes and custom duties paid or allowed
by the selling party;

                  (b)      Refunds, allowances or credit for returns or recalled
Licensed Product;

                  (c)      Normal and customary trade, quantity and cash
discounts and allowances actually allowed;

                  (d)      Transportation, freight and insurance allowances; and

                  (e)      Rebates actually granted to wholesalers,
administrative fees in lieu of rebates paid to managed care and similar
institutions, chargebacks and retroactive price adjustments.

No deductions shall be made for commissions paid to individuals whether they be
with independent sales agencies or regularly employed by Schwarz, and/or its
sublicensee(s) and on its or their payroll or for cost of collections. Licensed
Products shall be considered "sold" when billed out or invoiced. Sale or
transfer to an Affiliate or Sublicensee for re-sale by such Affiliate or
Sublicensee shall not be considered a sale for the purpose of this provision,
but the resale by such Affiliate or Sublicensee to a third party shall be a sale
for such purposes.

         1.16     "Regulatory Approval" means all approvals by the regulatory
agency in the relevant country of the Territory necessary to market and sell a
Licensed Product, including all pricing approvals.

         1.17     "Schwarz Technology" means, to the extent necessary or useful
to make, use or sell a Licensed Product, all patents and patent applications and
information, trade secrets, data, inventions and know-how, owned by or licensed
to Schwarz (with the right to sublicense) during the term of this Agreement.

         1.18     "Territory" means all countries of the world other than Japan.

2.       LICENSE GRANT

         2.1      License to Schwarz. DTI hereby grants and Schwarz hereby
accepts an exclusive license, with the right to sublicense, under the DTI
Patent(s) and DTI Know-How to develop, make, have made, import use, market,
offer for sale and sell Licensed Product(s) in the Field in the Territory. If
requested by Schwarz, DTI shall furnish to Schwarz or to such representative(s)
or patent attorney(s) as Schwarz may designate all papers and documents
necessary to permit Schwarz to register the exclusive license under the DTI
Patents with the patent office in such countries of the Territory as may be
required by regulation or otherwise. Schwarz shall bear all expenses of
registering such license.

         2.2      Sublicenses

                                        3

<PAGE>

                  (a)      Subject to Section 5.1(b), Schwarz shall have the
right to grant sublicenses to any party with respect to any rights conferred
upon Schwarz under this Agreement, provided, however, that (i) any such
sublicense shall be subject in all respects to the restrictions, exceptions,
royalty and other payment obligations, reports, and other provisions contained
in this Agreement, and (ii) Schwarz shall notify DTI of the identity of such
sublicensee promptly on execution of the sublicense.

                  (b)      Schwarz agrees to forward to DTI a copy of any and
all sublicense agreements promptly upon execution by the parties.

         2.3      License Grant to DTI in Countries Excluded From the Territory.
Subject to the conditions and limitation set forth herein, Schwarz hereby grants
to DTI an exclusive (even as to Schwarz), paid-up license, under the Schwarz
Technology, to develop, make, have made, import, use, offer for sale or sell
Licensed Products in any country that becomes excluded from the Territory during
the term of this Agreement, except as specified section 4.2(b). Schwarz shall
also, to the extent it has the right to do so, sublicense to DTI any third party
licenses to which Schwarz has rights, to the extent that such rights are
necessary or useful to make, use and sell the Licensed Products, and DTI shall
thereafter assume the cost of maintaining such licenses.

         2.4      Disclosure of Know-How. Promptly following the Effective Date,
DTI shall disclose to Schwarz all DTI Know-How. In addition, DTI shall make
available to Schwarz, upon reasonable notice and during normal business hours,
the reasonable assistance of DTI's employees who are knowledgeable about the DTI
Know-How in order to facilitate Schwarz' efforts to develop and commercialize
Licensed Products. DTI shall provide such assistance for a period of 1 year from
the Effective Date, and Schwarz may, at its election, extend its right yearly to
receive such DTI assistance until the last regulatory filing necessary to obtain
marketing approval is made. Schwarz shall reimburse DTI for such assistance at
the rate equivalent to 1 FTE * annually, payable in quarterly installments, but
may terminate its right to receive DTI's assistance at any time. DTI will, at
its own expense, transfer to Schwarz all active INDs (and equivalent regulatory
submissions in other countries) for all Licensed Compounds, together with all
regulatory files and related documentation associated with such submissions. DTI
will make such transfer no later than 3 months after the Effective Date,
provided however, that if transfer is delayed due to actions, lack of action, or
policies of FDA, then the period for transfer shall be extended by the length of
the relevant delay.

         2.5      Covenant Not to Launch Competitive Product. In consideration
for the rights granted and sums paid pursuant to this Agreement, neither party
shall, during the term of this Agreement, conduct, fund, license or participate
in, directly or indirectly through one or more third parties, the development,
distribution or commercialization in any country, of any transdermal patch
containing a dopamine receptor agonist as an active ingredient for use in the
Field other than the Licensed Products.

3.       PRODUCT DEVELOPMENT

         3.1      General. Schwarz shall be responsible for the development of,
and obtaining Regulatory Approval for, the Licensed Products in the Territory.
Subject to the Development

--------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
--------------------------------------------------------------------------------

                                        4

<PAGE>

Plan described in Sections 3.4 and 3.5, Schwarz shall have the final
decision-making authority with respect to all aspects of the development of the
Licensed Products.

         3.2      Engagement of Third Parties. In the course of performing its
development obligations under this Agreement, Schwarz may engage third parties
to perform certain development activities, provided that (i) DTI is informed of
the use and identity of third parties for the relevant activity, and (ii)
Schwarz obtains contractual undertakings from such third parties (including in
particular with respect to quality assurance, compliance with law, and
confidentiality) which are customary in the pharmaceutical industry for the
relevant activity.

         3.3      Development Committee. Promptly after the Effective Date, the
parties shall form a Development Committee which shall consist of two (2)
representatives of each party with expertise in such disciplines as clinical,
regulatory affairs, manufacturing or marketing, provided that Schwarz shall, in
addition, appoint an additional representative who shall serve as the
chairperson of the Development Committee. All decisions of the Development
Committee shall be made by a majority vote of the five (5) representatives on
the Development Committee. The Development Committee shall meet regularly (but
in no event less than semi-annually) at such times and at such locations as
shall be mutually agreed by the parties. The Development Committee shall
coordinate development activities in accordance with the Development Plan
including, but not limited to, the choice of contract research organization
(CRO), consultants, third party contract manufacturers and assignment of
development activities including the design and execution of studies to expand
labeling claims, develop new formulations and other product changes and
communication with FDA and other third parties. At least 10 business days prior
to each regularly scheduled meeting of the Development Committee, Schwarz shall
provide a written report to the Development Committee concerning its progress
with respect to the Development Plan and shall also provide minutes of each
meeting of the Development Committee, which shall include: (a) progress and
results since the previous meeting; (b) critical issues or problems encountered
or anticipated; and (c) a statement of goals for the scheduled activities.

         3.4      Development Plan.

                  (a)      Initial Product. Within 6 months of the Effective
Date of this Agreement, the Development Committee will provide DTI with an
Initial Product Development Plan setting forth Schwarz's anticipated development
program for the Initial Product in the Territory, including target dates for key
clinical and regulatory events in the Major Countries. Such plan shall specify
the dates by which Schwarz shall enroll the first patient in a pivotal Phase III
study and file for regulatory approval in the first Major Country (these two
dates are hereafter referred to as the Critical Target Dates). Such plan shall
be finalized by the Development Committee and approved by DTI not later than 7
months after the Effective Date. Exhibit F contains a reasonable preliminary
plan which has been reviewed by both parties.

                  (b)      Additional Products. In the event Schwarz elects to
develop and commercialize any Additional Products, it shall notify DTI. The
Development Committee shall provide DTI with an Additional Product Development
Plan setting forth the anticipated development program for such Additional
Products in the Territory, including target dates for key clinical and
regulatory events in the Major Countries. Such Additional Product

                                        5

<PAGE>

Development Plan shall be finalized by the Development Committee and approved by
DTI not later than 6 months after the date of Schwarz's notice to DTI.

         3.5      Diligence.

                  (a)      Development Efforts. Schwarz shall use commercially
reasonable efforts to carry out development of the Initial Product in accordance
with the Development Plan, and the Additional Products, if any, in accordance
with the Additional Product Development Plan. If Schwarz determines that it will
be unable to accomplish any of the key clinical events identified in the
relevant Development Plan within 6 months of the date specified in such
Development Plan, it shall promptly notify the Development Committee, and it
shall develop a revised Development Plan for the relevant Licensed Product. This
revised plan shall set new Critical Target Dates. As per Section 3.1, Schwarz
shall have the final decision making authority with respect to all aspects of
any revised Development Plan, except that DTI must agree to any change in the
Critical Target Dates, such agreement not to be unreasonably withheld. In the
event DTI does not agree to the Critical Target Dates set forth in the revised
plan, then the most recently approved Critical Target Dates shall apply and
Schwarz may, at its election, proceed under Section 3.5(c).

                  (b)      Extended Delay. With respect to the most recently
approved Critical Target Dates, if Schwarz does not initiate Phase III trials
within 12 months of the date specified in the Development Plan or file for
Regulatory Approval of the Licensed Product in any Major Country within 18
months of the date specified for such filing in the Development Plan then this
shall be considered a dispute and shall be resolved according to the process set
forth in Section 3.5(c). In the event that Schwarz is held to the Critical
Target Dates, and does not agree to meet these dates, then DTI may terminate
Schwarz's rights under this Agreement with respect to Licensed Products in the
Major Country in question, in which case such Major Country shall be deleted
from the Territory. In such event, Schwarz shall promptly transfer to DTI all
INDs or their non-U.S. equivalent (as applicable) and other relevant regulatory
filings as it may hold with respect to Licensed Products in such country, and
any information as Schwarz may possess which is useful to gain Regulatory
Approval for and to commercialize the Licensed Products in such country. Such
transfer shall be without cost to DTI, provided however, that DTI shall pay any
governmental filing or transfer fees that may be required. Schwarz shall also,
to the extent it has the right to do so, sublicense to DTI any third party
licenses to which Schwarz has rights, to the extent that such rights are
necessary or useful to make, use and sell the Licensed Products, and DTI shall
thereafter assume the cost of maintaining such licenses. As used in this
Section, initiation of Phase III trials shall mean enrollment of the first
patient.

                  (c)      Disputes Regarding Critical Target Dates. If the
parties are unable to reach agreement as to the Critical Target Dates in any
Development Plan, then either party may submit the issue for binding arbitration
before an expert or expert panel in the field of clinical drug development
(rather than before a judge or an attorney) under this Section 3.5(c). Such
expert may be mutually agreed by the parties, but if no such expert is agreed
upon within ten (10) days after the written notice from one party to the other,
then each party shall promptly select one expert, and those two experts shall
select a third expert, which shall comprise the panel. The panel shall meet with
the parties within fifteen (15) days of selection to examine the Development
Plan and shall hear the views and proposals of each party. Within ten (10) days

                                        6

<PAGE>

thereafter, it shall render its binding decision by majority vote, as to whether
the Development Plan is reasonable under all of the circumstances. The parties
shall share equally in the cost of the expert or expert panel, including any
fees and expenses payable to the experts. If the expert or expert panel
determines that the Development Plan is not reasonable, then Schwarz will be
held to the Critical Target Dates set forth in the most recently approved
Development Plan, subject to any modifications agreed to by DTI.

         3.6      Drug Approval Applications. Schwarz shall be responsible for
preparing and filing for Regulatory Approval of the Licensed Products in the
Territory. Schwarz will file the drug approval applications in its own name and
shall be responsible for prosecuting them. After filing for Regulatory Approval,
Schwarz shall use commercially reasonable efforts to obtain such approval in
each country of the Territory where it has decided to seek Regulatory Approval.
Schwarz shall keep DTI reasonably informed as to the progress of such drug
approval applications and of any issues raised by the relevant regulatory
agencies together with Schwarz' proposed response. Schwarz shall report to DTI
concerning its progress in obtaining Regulatory Approval on a periodic basis,
but not less than every (6) months. In the event any regulatory agency threatens
or initiates any action to remove a Licensed Product from the market in any
country of the Territory, Schwarz shall immediately notify DTI of such
communication. DTI shall use commercially reasonable efforts to cooperate with
Schwarz in Schwarz's performance of its obligations under this Section 3.6
including preparation for and participation with Schwarz when meeting with
regulatory authorities.

         3.7      Replacement of Compounds. If during its development of the
Initial Product Schwarz determines that the Compound which is the active
ingredient in the Initial Product (the "Original Compound") is not suitable for
further development into a therapeutic product for use in humans, for safety,
efficacy, or other reasons, Schwarz may then substitute a different Compound in
place of the Original Compound. In such event, the parties shall discuss
appropriate changes to the Development Plan to accommodate the changes in the
regulatory schedule necessitated by such substitution. If the parties are unable
to agree on such changes, either party may proceed in accordance with Section
3.5(c).

     3.8 Exchange of Information Between the Parties. Subject to the obligations
of confidentiality set forth in this Agreement and promptly following the
Effective Date, DTI shall provide to Schwarz all material documents in DTI's
possession as of the Effective Date describing preclinical, clinical, chemical,
pharmacological, toxicological, assay, control, and manufacturing data and other
information which is useful for development, registration and commercialization
of Licensed Products in the Territory, obtained by DTI in its study of Licensed
Products. Following the Effective Date, each party shall own all data generated
by such party and agrees to provide the other with all material information
available to such party concerning the Licensed Products, subject to any
contractual restrictions on disclosure.

         3.9      Exchange of Information Among Licensees. Subject to the
obligations of confidentiality set forth in this Agreement and its agreement
with its other licensees, DTI will use its best efforts to facilitate full and
open exchange of information among its licensees, including but not limited to
post-market surveillance information. Prior to disclosing any data generated by
Schwarz to other licensees of DTI, DTI shall discuss the conditions of
disclosure with Schwarz in good faith and shall obtain Schwarz approval for such
disclosure, such approval

                                        7

<PAGE>

not to be unreasonably withheld. Exhibit B lists all third parties with which
DTI has developed agreements with respect to the Compounds.

         3.10     Exchange of Adverse Event Information. Without delay, each
party agrees to provide the other party and any other licensees or sublicensees
with any serious adverse event information of which it becomes aware, including
but not limited to post-market surveillance information, which may be required
to be provided to regulatory authorities in any jurisdiction. Such information
shall be provided as soon as possible, and all non-serious adverse event
information shall be exchanged between the parties at least quarterly. DTI shall
disclose to Schwarz the names of all DTI's licensees in order to allow the
exchange of information provided for in this Section 3.10 between Schwarz and
DTI's licensees.

4.       COMMERCIALIZATION

         4.1      General. Schwarz shall be responsible for commercializing the
Licensed Products in the Territory. Decisions regarding matters such as
advertising and promotion shall be the sole responsibility of Schwarz, provided
however that Schwarz's commercialization activities shall be consistent with
Schwarz' activities in commercializing pharmaceutical other products of similar
market potential, profit potential or strategic value, based on conditions then
prevailing.

         4.2      Failure to Launch.

                  (a)      If Schwarz or its sublicensee does not launch a
Licensed Product in a Major Country in the Territory within 12 months of
obtaining Regulatory Approval for such Licensed Product in such Major Country,
or sooner notifies DTI that it will not launch in such Major Country, Schwarz's
rights under this Agreement shall terminate upon the earlier of such notice or
the 1 year anniversary of the grant of Regulatory Approval, and DTI shall be
free to commercialize Licensed Products in such Major Country without any
further obligation to Schwarz. In such event, Schwarz shall promptly transfer to
DTI all INDs, applications for Regulatory Approval and Regulatory Approvals, or
their non-U.S. equivalents (as applicable) as it may hold with respect to
Licensed Products in such Major Country, and any information as Schwarz may
possess which is useful to gain Regulatory Approval for and to commercialize the
Licensed Products in such Major Country. Such transfer shall be without cost to
DTI, provided however that DTI shall pay any governmental filing or transfer
fees that may be required.

                  (b)      If Schwarz elects not to launch a Licensed Product in
a country in the Territory other than a Major Country because Schwarz has
concluded in good faith that Licensed Products distributed in such country will
be imported into other countries of the Territory where Schwarz has retained
exclusive rights, then Schwarz will not be obligated to launch such Licensed
Product in such country and DTI shall not launch Licensed Product in such
country.

         4.3      Pricing and Product Distribution. Schwarz shall set prices for
Licensed Products in the Territory and shall obtain all pricing approvals as may
be required. Schwarz shall also be responsible for distribution of the Licensed
Products in the Territory.

         4.4      Advertising and Promotion. Schwarz will prepare or have
prepared all advertising and education materials for the Licensed Product in the
Territory.

                                        8

<PAGE>

         4.5      Trademarks. Schwarz shall be responsible for developing and
registering trademarks for the Licensed Products, and shall own all such
trademarks. To facilitate worldwide brand recognition, Schwarz shall, to the
extent practicable in Schwarz' sole discretion, market and sell the Licensed
Products under a single trademark throughout the Territory. Schwarz agrees to
consult with DTI's licensees set forth on Exhibit B to endeavor to coordinate
its trademark selection with the trademarks selected by such other licensees.

5.       PAYMENTS AND ROYALTIES

         5.1      Fees.

                  (a)      License Fee. Schwarz shall pay to DTI a noncreditable
license issue fee of * upon execution of this Agreement. Such payment shall be
nonrefundable, and the * lump sum payment made by Schwarz to DTI pursuant to the
Letter Agreement between the parties dated May 6, 1998 shall be deducted from
this License Fee.

                  (b)      Sublicense Fees. DTI has engaged in discussions,
prior to the Effective Date, with entities listed on Exhibit C. In the event
Schwarz grants a sublicense to any of the entities (or their Affiliates) set
forth on Exhibit C, Schwarz shall pay to DTI * of all non-royalty consideration
(excluding sums received for the purchase of equity or to fund research and
development activities) Schwarz receives as a result of such sublicense.

         5.2      Milestones. Schwarz shall pay to DTI the following amounts
within thirty (30) days of the first achievement, by any Licensed Product, of
the respective milestone event set forth below and shall not pay again for
subsequent Licensed Products:

<TABLE>
<CAPTION>
             Milestone Event                           Payment
<S>                                                    <C>
Commencement of Phase III clinical trial                  *
(enrollment of first patient)

First issuance of joint DTI-LTS patent in                 *
any Major Country of the Territory

NDA Approval                                              *

Regulatory Approval in the first three                    *
non-US Major Countries
</TABLE>

Milestone payments shall be noncreditable and shall be nonrefundable.

         5.3      Earned Royalties. In addition, Schwarz shall pay DTI a running
royalty on annual Net Sales of all Licensed Products according to the following
marginal rates:

                  (a)      For annual Net Sales of Licensed Products up to * of
such Net Sales; and

--------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
--------------------------------------------------------------------------------

                                        9

<PAGE>

                  (b)      For the portion of annual Net Sales of Licensed
Products in excess of * and not exceeding * of such Net Sales; and

                  (c)      For the portion of annual Net Sales of Licensed
Products in excess of * of such Net Sales.

                  (d)      As of the effective date of this Agreement, the
parties anticipate Schwarz will consummate a supply agreement with LTS. In such
case the parties may decide that Schwarz shall pay to LTS some or all of
royalties pursuant to Section 6.2 and reduce its royalty payments to DTI
accordingly.

         5.4      Minimum Royalties

                  (a)      Notwithstanding the provisions of Section 5.3,
Schwarz shall pay DTI minimum annual royalties after launch of the Initial
Product in any country of the Territory in an amount equal to * of Forecast Net
Sales (defined below) multiplied by the applicable royalty rate pursuant to
Section 5.3. For example, if the Forecast Net Sales are $200 million, then the
minimum royalties would be calculated as follows:

         $200,000,000 x * (Net Sales amount on which minimum royalties will be
         calculated)

         *

         Total Minimum Royalties Due: *

All earned royalties paid by Schwarz pursuant to Section 5.3 shall be fully
creditable against minimum royalties.

                  (b)      As used in this Section 5.4, Forecast Net Sales shall
be Schwarz's projected Net Sales for the Licensed Products in the Territory
during the relevant calendar year ("Commercialization Year"), with the first
Commercialization Year being the calendar year of launch of the Initial Product
in the first country of the Territory. Schwarz shall deliver to DTI, not later
than forty-five (45) days prior to launch of the Initial Product in such
country, and thereafter on or before November 15 of each calendar year its
projected Net Sales of Licensed Products in the Territory for the relevant
Commercialization Year. Notwithstanding the foregoing, after the first
Commercialization Year which includes a full calendar year, Schwarz's minimum
royalty obligation shall be calculated on Forecast Net Sales in an amount not
less than * of Schwarz actual Net Sales in the previous Commercialization Year.

                  (c)      Schwarz's minimum royalty obligation shall expire as
to a particular country in the event any of the following occur:

                           (i)      The expiration, lapse or invalidation of the
last remaining DTI patents in such country which contains a valid and unexpired
claim covering the sale of the Initial Product and a third party launches a
generic form of the Initial Product delivered by a transdermal patch;

--------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
--------------------------------------------------------------------------------

                                       10

<PAGE>

                           (ii)     A third party launches a new product
approved for marketing and sale in any country of the Territory for the
treatment of Parkinson's Disease, which achieves a 10% share of the total annual
worldwide sales of products approved for marketing and sale for the treatment of
Parkinson's Disease as reported in the publication Data Monitor or an equivalent
publication.

                           (iii)    Schwarz has paid minimum royalties to DTI
for ten (10) years.

                  (d)      At any time during the term of the Agreement, the
parties agree to renegotiate, in good faith, the conditions of this Section 5.4
in the event of changes including, but not limited to, competition, pricing,
reimbursement, and distribution in the therapeutic treatment of Parkinson's
Disease and or the Parkinson Disease market.

         5.5      Royalties Term. If this Agreement is not terminated in
accordance with other provisions hereof, Schwarz's obligation to pay royalties
hereunder shall continue on a country-by-country and product-by-product basis
until the expiration, lapse or invalidation by a decision of a court or tribunal
of competent jurisdiction from which no appeal is or can be taken of the last
remaining DTI Patent (including any extension thereof) in such country which
contains a valid and unexpired claim covering the sale of the relevant Licensed
Product in such country or the fifteenth (15th) anniversary of the date of the
first commercial sale of Licensed Product(s) in the relevant country of the
Territory, whichever is longer (the "Royalty Term"). For purposes of Section 5.4
and this Section 5.5 "valid and unexpired claim" shall mean a composition of
matter or method of use claim or equivalent thereof, of an issued and unexpired
DTI Patent (or corresponding patent application, provided that the original
application containing such claim has not been pending for more than five (5)
years) in a country covering Licensed Product, which (i) has not been revoked or
held unenforceable or invalid by a decision of a court or other governmental
agency of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal; or (ii) has not been abandoned, disclaimed, denied or
admitted to be invalid or unenforceable through reissue of disclaimer or
otherwise.

         5.6      Third-Party Royalties and Competing Products. DTI shall be
responsible for payment of royalties due to the third parties listed on Exhibit
B under DTI's existing agreements with such third parties. In the event that
Schwarz is obligated to pay a royalty to a third party because the use and sale
of the Licensed Product(s) in a country of the Territory infringes one or more
patents held by such third party claiming subject matter that is also claimed in
the DTI Patents, then Schwarz may reduce the royalties owed to DTI under Section
5.3 for the relevant country by * of the amount of all license fees paid to the
third party, and any royalties paid to the third party in the same calendar
year, provided however, that the royalties otherwise due to DTI in any
particular calendar year shall not be reduced by more than *. In the event that,
and only for so long as, sale of a Competing Product occurs, then the royalties
payable pursuant to section 5.3 shall on a country by county basis, be reduced
by * and the sublicense fees payable pursuant to section 5.1(b) shall be reduced
to *. A Competing Product shall mean any therapeutic product for Parkinson's
disease or its symptoms or related conditions which contains a Licensed Product.

         5.7      Withholding Taxes. Any tax paid or required to be withheld by
Schwarz on account of royalties payable to DTI under this Agreement shall be
deducted from the amount of royalties otherwise due. Schwarz shall secure and
send to DTI written proof of any such taxes

--------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
--------------------------------------------------------------------------------

                                       11

<PAGE>

withheld and paid by Schwarz or its sublicensees for the benefit of DTI. Schwarz
shall reasonably assist DTI in claiming exemption from such deductions or
withholdings under any double taxation or similar agreement or treaty from time
to time in force.

         5.8      Blocked Currency. In each country where the local currency is
blocked and cannot be removed from the country, at the election of Schwarz,
royalties accrued in that country shall be paid to DTI in the country in local
currency by deposit in a local bank designated by DTI.

         5.9      Royalty Payments and Reports. Beginning with the first
commercial sale of a Licensed Product, royalties shall accrue on a calendar
quarter basis, and Schwarz shall pay DTI all such amounts within 30 days
following the end of the relevant quarter. Each royalty payment shall be
accompanied by a report summarizing the number, description, and aggregate sales
of Licensed Products made and the royalty payable thereon according to Section
5.3, including a description of any offsets or credits deducted from such sales,
on a product-by-product and country-by-country basis during the relevant
three-month period. For any given royalty period, Schwarz shall pay to DTI the
royalty at the rate specified in Section 5.3 applicable to the then current
year-to-date Net Sales level. Each statement provided at the end of the fourth
quarter of each year shall contain a reconciliation of actual royalty payments
made during that year and the amount actually owed for such year, and the
resulting amount shall be paid to DTI at the time of such fourth quarter
statement, in accordance with the terms of this Section 5.9.

         5.10     Currency; Exchange Rate. All amounts paid under this Agreement
shall be paid in U.S. dollars to DTI by wire transfer to a financial institution
to be designated by DTI. The royalty on sales by Schwarz or sublicensee(s) of
Licensed Products sold in a currency other than United States Dollars, such
currency shall be converted into United States Dollars using the selling rate of
exchange for the currency of the country from which the royalties are payable as
published by the Wall Street Journal, New York, N.Y., U.S.A., for the last
business day of the quarterly period for which the royalties are due.

         5.11     Accounting. Schwarz agrees to keep and maintain such records,
using generally accepted accounting principles (GAAP), as it normally generates
in the ordinary course of its business for a period of three (3) years showing
the manufacture, sale, use, and other disposition of products sold or otherwise
disposed of under the license herein granted. Such records shall be kept in
sufficient detail to enable the royalties payable hereunder by Schwarz to be
determined. Schwarz further agrees to permit its books and records to be
examined by an independent certified public accountant selected by DTI, at
ordinary business hours with reasonable prior notice to Schwarz and consent by
Schwarz, (not to be unreasonably withheld or delayed), and not more than once
per year, to the extent necessary to verify reports provided for in Section 5.9.
No copies of any Schwarz records shall be copied or retained by such examiner.
Such examination is to be made under appropriate confidentiality restrictions,
at the expense of DTI, except in the event that the results of the audit reveal
an underreporting of royalties due DTI of five percent (5%) or more in any year,
then the audit costs shall be paid by Schwarz.

                                       12

<PAGE>

6.       MANUFACTURING

         6.1      General. Schwarz will be responsible for identifying a
suitable manufacturer, developing commercial manufacturing processes and
supplying clinical and commercial quantities of Licensed Products in the
Territory.

         6.2      Transdermal Patch Product. Schwarz will use commercially
reasonable efforts to negotiate and finalize an agreement with LTS for fill and
finish manufacturing of Transdermal Patch Products prior to the commencement of
any clinical trials with respect to the Licensed Product. DTI will provide
reasonable assistance to Schwarz in concluding such negotiations with LTS.
Schwarz will bear any royalty due LTS pursuant to Section 3.03 of the LTS
Feasibility Agreement dated January 22, 1996, which might become due to LTS as a
result of sales of Licensed Products by Schwarz, its Affiliates or its
Sublicensees. Any such royalties paid shall be fully creditable against
royalties to be paid by Schwarz pursuant to Sections 5.3 and 5.4 of this
Agreement.

         6.3      Quality Assurance. Schwarz shall have day to day
responsibility for commercial manufacturing and formulation issues related to
product safety and regulatory compliance. All Licensed Products used in clinical
and commercial supplies will be manufactured, tested, and released according to
current cGMP's. Schwarz will be responsible for maintaining its facilities and
procedures, including those of third parties, in compliance with cGMP's. Schwarz
will promptly notify DTI of the results of any governmental regulatory
inspections or other governmental regulatory action concerning the facilities or
other manufacturing or formulation issues, and will promptly provide to DTI
copies of all Form 483's (or their non-U.S. equivalents) and compliance related
documentation, including all actions taken by Schwarz in response thereto or as
a result thereof. Any expenses incurred in improving compliance with regulatory
requirements or responding to Form 483's (or their non-U.S. equivalents) or
other compliance related documentation will be the full responsibility of
Schwarz. Schwarz shall indemnify and hold DTI harmless against any claims or
liabilities incurred by DTI as a result of Schwarz' breach of its obligations
under this Section 6.3.

         6.4      Technology Transfer in Event of Termination. Upon termination
by Schwarz of this Agreement (other than a termination for DTI's breach),
Schwarz shall continue to provide for such manufacture of such Licensed Products
to the extent provided prior to notice of such termination, from the time notice
of such termination is provided until such time as DTI is able to secure an
equivalent alternative commercial manufacturing source (provided, however, that
"equivalent" shall not be deemed to require an equivalent cost or price), in the
event that DTI using its best efforts is unable to secure such an alternative
source during the notice period. In no event shall Schwarz be required to
continue such supply for a period of more than one year from the time notice of
such termination is provided. To this end, as of the effective date of such
termination, Schwarz shall use its reasonable commercial efforts to assign all
third party manufacturing contracts to DTI, and the cost charged to DTI for any
manufacturing activities by Schwarz shall be the same as Schwarz's fully
burdened cost during the time that the Agreement was in effect. Further, upon
DTI's request, Schwarz shall provide such technical assistance and Know-how
licenses on a royalty free basis as may reasonably be requested to transfer such
technology as needed by DTI to commence or provide for commercial manufacture of
Licensed Products. Such technical assistance shall be provided at Schwarz's
cost, which cost shall be

                                       13

<PAGE>

reimbursed by DTI. Schwarz shall also, to the extent it has the right to do so,
sublicense to DTI any third party licenses to which Schwarz has rights, to the
extent that such rights are necessary or useful to make, use and sell the
Licensed Products, and DTI shall thereafter assume the cost of maintaining such
licenses, provided, however, that if such Licensed Product is not the Initial
Product and utilizes delivery technology other man a DTI Patent, then such
license shall be upon commercially reasonable terms, including a reasonable
royalty to Schwarz. If the parties cannot agree upon terms for such license,
then either party may submit the issue for resolution pursuant to Section 13 of
this Agreement.

         6.5      Patent Marking. Schwarz shall mark all Licensed Products in
accordance with applicable patent marking requirements for the territory in
which the Products will be sold.

7.       REPRESENTATIONS AND WARRANTIES

         7.1      Warranties.

                  (a)      Each party hereby warrants to the other that:

                           (i)      this Agreement is a legal and valid
obligation binding upon such party and enforceable in accordance with its terms.
The execution, delivery and performance of this Agreement by such party does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it is bound, nor violate any law or regulation
of any court, governmental body or administrative or other agency having
jurisdiction over it. Each party expressly represents and warrants that it has
full power and authority to execute and deliver this agreement and to perform
the obligations contemplated hereby.

                           (ii)     such party owns, in whole or in part, or
controls all patents and know-how that are the subject of the licenses granted
to the other party in this Agreement.

                           (iii)    such party has not, and during the term of
the Agreement will not, grant any right to a third party relating to its
respective patents and know-how in the Field that would conflict with the rights
granted to the other party under this Agreement.

                  (b)      DTI represents and warrants, as of the Effective
Date, that it has not received any notices of infringement with respect to the
Compounds, and to the best of its knowledge the manufacture, use or sale of
products containing a Compound as set forth herein does not infringe any third
party rights which have not been licensed to DTI and by DTI to Schwarz pursuant
to this Agreement.

                  (c)      DTI represents and warrants that to the best of its
knowledge DTI has disclosed to Schwarz all the information in DTI's possession
or control concerning side effects, injury, toxicity or sensitivity reaction and
incidents associated with the use of Licensed Products obtained from any
clinical and non-clinical studies.

         7.2      Negation of Representations. Nothing in this Agreement is or
shall be construed as:

                                       14

<PAGE>

                  (a)      A warranty or representation by DTI as to the
validity or scope of any DTI Patent(s);

                  (b)      A warranty or representation that anything made,
used, sold, or otherwise disposed of under any license granted in this Agreement
is or will be free from infringement of patents, copyrights, and other rights of
third parties;

                  (c)      An obligation to bring or prosecute actions or suits
against third parties for infringement, except to the extent and in the
circumstances described in Section 9.l; or

                  (d)      Granting by implication, estoppel, or otherwise any
licenses or rights under patents or other rights of DTI or other persons other
than DTI Patent(s), regardless of whether such patents or other rights are
dominant or subordinate to any DTI Patent(s).

         7.3      Warranty Disclaimer. Except expressly set forth in this
Agreement, DTI MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE
LICENSED PRODUCT(S) WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER
RIGHTS OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.

8.       INDEMNITY AND INSURANCE

         8.1      Indemnification of DTI by Schwarz. Schwarz agrees to
indemnify, hold harmless and defend DTI and its officers, employees and agents
against any and all third party claims for death, illness, personal injury,
property damage or improper business practices arising out of the use, sale,
handling or other disposition of Licensed Product(s) by Schwarz or
sublicensee(s), or their customers, except to the extent such claims result from
the negligent or intentional misconduct of DTI and its officers, employees and
agents.

         8.2      Indemnification of Schwarz by DTI. DTI agrees to indemnify,
hold harmless and defend Schwarz and its officers, employees and agents against
any and all third party claims for death, illness, personal injury, property
damage and improper business practices arising out of the negligent or
intentional misconduct of DTI and its officers, employees and agents with
respect to the use, sale or other disposition of Licensed Products in the
Territory, except to the extent such claims result from the negligent or
intentional misconduct of Schwarz and its officers, employees and agents.

         8.3      Insurance. In addition to the foregoing, Schwarz shall obtain
appropriate insurance in accordance with standard commercial practices to cover
the indemnity granted in Section 8.1 and such insurance policy shall name DTI as
an additional insured. Such insurance shall be written to cover claims incurred,
discovered, manifested, or made in connection with clinical development and sale
of the Licensed Product(s) in the Territory. Schwarz agrees to provide evidence
of such coverage if requested by DTI.

                                       15

<PAGE>

9.       INFRINGEMENT BY OTHERS; PROTECTION OF PATENTS

         9.1      Infringement of DTI Patents. Each party shall promptly inform
the other of any suspected infringement of any DTI Patent(s) by a third party.
DTI and Schwarz each shall have the right to institute an action for
infringement of the DTI Patent(s) against such third party in accordance with
the following:

                  (a)      If DTI and Schwarz agree to institute suit jointly,
the suit shall be brought in both their names, the out-of-pocket costs,
including but not limited to litigation costs, thereof shall be borne equally
and any recovery or settlement shall be shared equally. Schwarz and DTI shall
work together to manage such litigation with Schwarz having the primary
responsibility for controlling such suits. DTI may, if it so desires, also be
represented by separate counsel of its own selection, the fees for which counsel
shall be paid by DTI;

                  (b)      In the absence of agreement to institute a suit
jointly, Schwarz shall have the first right, but not the obligation, to
institute suit and, at its option, let DTI join as a party plaintiff. Schwarz
shall bear the entire cost of such litigation and shall be entitled to retain
the entire amount of any recovery or settlement. Schwarz shall indemnify DTI
against any order for costs that may be made against DTI in such proceedings,
including photocopying costs and witness travel fees, but expressly excluding
attorneys' fees.

                  (c)      In the absence of agreement to institute a suit
jointly as provided in (a) above, and if Schwarz notifies DTI that it has
decided not to institute a suit as provided in (b) above, DTI may institute
suit, and, at its option, let Schwarz join as a party plaintiff. DTI shall bear
the entire cost of such litigation including attorneys' fees and shall be
entitled to retain the entire amount of any recovery or settlement.

                  (d)      Should either DTI or Schwarz commence a suit under
the provisions of Section 9.1 and thereafter elect to abandon the same, it shall
give timely notice to the other party who may, if it so desires, continue
prosecution of such suit, provided, however, that the sharing of expenses and
any recovery in such suit shall be agreed upon between DTI and Schwarz in
advance of such continuation.

                  (e)      In the event that DTI jointly owns any patent valid
in the Territory with a third party manufacturer, DTI shall use its best efforts
to arrange for such manufacturer to cooperate in any infringement actions in
accordance with the terms of this Section 9.1 and agrees not to prevent any suit
contemplated by Schwarz.

         9.2      Prosecution and Maintenance of DTI Patents.

                  (a)      DTI shall be primarily responsible for prosecuting
and maintaining the DTI Patent(s) in the Territory. DTI shall work with Schwarz
to develop a reasonable patent strategy appropriate for the technology at issue,
and shall permit Schwarz to review and comment on any documents filed with the
relevant patent authorities in the Territory with respect to the DTI Patent(s).
DTI shall notify Schwarz if it intends to abandon any such patent or otherwise
forego any patent rights in the Territory at least sixty (60) days prior to any
relevant deadline. Schwarz shall have the right, at its own expense and under
Schwarz's name, to file and assume prosecution and maintenance of any patent or
patent application abandoned by DTI.

                                       16

<PAGE>

Thereafter, Schwarz shall not be required to pay royalties with respect to such
patent or patent application.

                  (b)      All reasonable costs incurred for prosecuting and
maintaining the DTI Patents in the Territory shall be borne by Schwarz,
including costs of registering this license as provided in Section 2.1, provided
however, that Schwarz shall only be responsible for DTI's share of the costs of
prosecuting and maintaining PCT Appl. No. "US 94/08845." Schwarz shall provide
reasonable support and assistance with such patent prosecution and maintenance.

10.      CONFIDENTIALITY

         10.1     Information. Each party shall keep all information received
from the other party (the "Information") confidential and shall not disclose nor
use the Information without the other party's written consent except to the
extent contemplated by this Agreement. This restriction shall not, however,
prevent disclosure of the Information if and to the extent that disclosure is
required by law, provided that the disclosing party informs the other party
without delay of any such requirement, in order to allow such other party to
object to such disclosure and to seek an appropriate protective order or similar
protection prior to disclosure.

         10.2     Exceptions. The above obligations shall not apply or shall
cease to apply to Information which:

                  (a)      is now, or hereafter becomes, through no act or
failure to act on the part of the receiving party, generally known or available;

                  (b)      is known by the receiving party at the time of
receiving such information, as evidenced by its written records;

                  (c)      is hereafter furnished to the receiving party by a
third party, as a matter of right and without restriction on disclosure;

                  (d)      is independently developed by the receiving party
without any breach of this Section 10; or

                  (e)      is the subject of a written permission to disclose
provided by the disclosing party.

         10.3     Permitted Disclosures. Information may be disclosed for the
purpose of filing, prosecuting and maintaining patents and patent applications,
and for obtaining regulatory approvals, manufacture and sale of Licensed
Products, and to employees, agents, consultants, sublicensees or suppliers of
the recipient party or its affiliates, but only to the extent required to
accomplish the purposes of this Agreement and only if such individuals are
required by law, contract or otherwise not to use or disclose such information
except as permitted by this Agreement. Each party will use at least the same
standard of care as it uses to protect proprietary or confidential information
of its own to ensure that such employees, agents, consultants, sublicensees or
suppliers do not disclose or make any unauthorized use of the Information.

                                       17

<PAGE>

         10.4     Disclosure of Agreement. Except as required by law, neither
DTI nor Schwarz shall release to any third party or publish in any way any
non-public information with respect to the terms of this Agreement or concerning
their cooperation without the prior written consent of the other, which consent
will not be unreasonably withheld or delayed; provided; however that either
party may disclose the terms of this Agreement to the extent required to comply
with applicable laws, including without limitation the rules and regulations
promulgated by the Securities and Exchange Commission. Notwithstanding any other
provision of this Agreement, each party may disclose the terms of this Agreement
to lenders, investment bankers, financial advisors and other financial
institutions of its choice solely for purposes of financing the business
operations of such party, or to potential investors in or acquirers of such
party either (i) upon the written consent of the other party or (ii) if the
disclosing party obtains a signed confidentiality agreement with such intended
recipient with respect to such information, upon terms substantially similar to
those contained in this Section. Notwithstanding the foregoing, the parties will
issue a joint press release in the form attached hereto as Exhibit D which shall
be specified within 60 days of the Effective Date.

11.      TERM AND TERMINATION

         11.1     Term. This Agreement shall commence on the Effective Date and
expire at the end of the Royalty Term under Section 5.5. Upon the expiration
(but not the earlier termination) of the Royalty Term, the licenses granted
hereunder to Schwarz shall convert to an exclusive, as to the territory, fully
paid and royalty-free licenses.

         11.2     Termination by Schwarz. Schwarz may terminate this Agreement
by giving DTI notice in writing as follows:

                  (a)      Upon twelve (12) months prior written notice to DTI,
provided that such notice may not be given prior to the first anniversary of the
date of this Agreement; or;

                  (b)      Upon thirty (30) days prior written notice to DTI if
Schwarz in the exercise of its reasonable judgment, determines that there are
issues concerning the safety, efficacy, or supply of the Licensed Product which
materially adversely affect its medical or competitive commercial viability,
including, without limitation, a clinical hold or other adverse regulatory
action.

         In the event of termination under this Section 11.2(a), Schwarz shall,
during the twelve (12) month period between notice and the effective date of the
termination, continue to fund development activities in accordance with the
Development Plans and shall cooperate with DTI to effect an orderly transition
of such development activities from Schwarz to DTI. Under any termination
Schwarz shall promptly transfer to DTI at DTI's written request all INDs,
applications for Regulatory Approval and Regulatory Approvals, or their non-U.S.
equivalents (as applicable) as it may hold with respect to Licensed Products in
such country, and any information as Schwarz may possess which is useful to gain
Regulatory Approval for and to commercialize the Licensed Products in such
country. Such transfer shall be without cost to DTI, provided however that DTI
shall pay any governmental filing or transfer fees that may be required.

         11.3     Termination for Material Breach. If either party commits a
material breach of this Agreement and such breach is not cured within * after
written notice thereof by the non-

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                                       18

<PAGE>

breaching party, or if such breach is incapable of cure during the applicable
notice period, the breaching party fails to make good faith efforts to cure such
breach, the non-breaching party may terminate this Agreement upon expiration of
the notice period.

         11.4     Effect of Termination by DTI for Material Breach. In the event
of a termination by DTI under Section 11.3, all licenses to Schwarz under this
Agreement shall terminate. In addition:

                  (a)      Schwarz and DTI shall cooperate to ensure that the
development and commercialization of Licensed Products in the Territory
continues with a minimum of delay resulting from the transfer of rights back to
DTI. In particular, Schwarz shall provide to DTI all available preclinical and
clinical data and regulatory documents in its possession or control, and shall
promptly assign or cause to be assigned to DTI, or its designee, every
government approval, clearance, registration or permit relating to the Licensed
Products obtained by Schwarz in the Territory. In the event such assignment is
not permitted by law, Schwarz will cooperate in the cancellation of such
government approval, clearance, registration or permit standing in its name and
the reissuance of such government approval, clearance, registration or permit to
DTI or its designee. Schwarz shall take all such other actions and execute such
other instruments, assignments and documents as may be necessary to effect the
transfer of rights hereunder to DTI.

                  (b)      If Schwarz has already commenced manufacturing of the
Licensed Product, Schwarz shall continue to provide for manufacture of the
Licensed Products to the extent necessary to meet market demand, from the
effective date of such termination until such time as DTI is able to secure an
equivalent alternative commercial manufacturing source, as requested by DTI,
provided, however, that cost to DTI shall not be considered as a constituent
factor of such equivalency, and further provided, that Schwarz shall in no event
be required to continue to manufacture for more than * after the notice of such
termination or in quantities in excess of those being produced at the time of
such termination. The cost charged to DTI for any manufacturing activities by
Schwarz shall be the same as Schwarz's fully burdened cost during the time that
the Agreement was in effect. As of the effective date of such termination, all
third party manufacturing contracts for manufacture of Licensed Products shall
be assigned to DTI, to the extent that Schwarz has the right to do so, and DTI
will assume payment for third party royalties, if any. In addition, upon DTI's
request, Schwarz shall provide such technical assistance and know-how licenses
on a royalty-free basis as may reasonably be requested to transfer such
technology as is needed by DTI to commence or provide for commercial manufacture
of Licensed Product. If any technology needed by DTI to commence or provide for
commercial manufacture of Licensed Product is covered by one or more patents
owned or controlled by Schwarz, DTI shall receive a fully paid-up, royalty-free,
non-exclusive worldwide license to practice any and all such patents for the
purposes contemplated in this Section 11.4, with the right to grant sublicenses.

         11.5     Accrued Obligations. Except where expressly provided for
otherwise in this Agreement, termination of this Agreement shall not relieve the
Parties hereto of any liability, including any obligation to make payments
hereunder, which accrued hereunder prior to the effective date of such
termination, nor preclude any Party from pursuing all rights and remedies it may
have hereunder or at law or in equity with respect to any breach of this
Agreement nor prejudice any Party's right to obtain performance of any
obligation.

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the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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                                       19

<PAGE>

         11.6     Effect of Termination by Schwarz for Material Breach. If
Schwarz terminates this Agreement pursuant to Section 11.3, it shall continue to
be obligated during the termination notice period to perform all of its
obligations under this Agreement; provided that Schwarz shall have not
obligation to make any milestone payments pursuant to Section 5.2 with respect
to any milestone achieved during the termination notice period.

         11.7     Surviving Obligations. Surviving any termination are:

                  (a)      Schwarz's obligation to pay accrued royalties up to
the effective date of termination;

                  (b)      any cause of action or claim of Schwarz or DTI,
accrued or to accrue, because of any breach or default by the other party; and

                  (c)      the provisions of Sections (3.5(c), 3.10, 4.5, 5.6,
5.7, 5.8, 5.9, 5.10, 5.11, 6.4, 11.2, 11.4, 11.5, 11.6, 11.7, 13 and 14.3 and
Articles 7, 8, 10 and 13).

         11.8     Bankruptcy. All rights and licenses granted under or pursuant
to this Agreement by DTI to Schwarz are, and shall otherwise be deemed to be,
for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101(52) of the Bankruptcy Code.
The parties agree that Schwarz, as a licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections
under the Bankruptcy Code. The parties further agree that in the event of the
commencement of a bankruptcy proceeding by or against DTI under the Bankruptcy
Code, Schwarz shall be entitled to a complete duplicate of, or complete access
to, as appropriate, any such intellectual property and all embodiments of such
intellectual property, and same, if not already in its possession, shall be
promptly delivered to Schwarz (i) upon any such commencement of a bankruptcy
proceeding upon written request therefor by Schwarz unless DTI elects to
continue to perform all of its obligations under this Agreement, or (ii) if not
delivered under (i) above, upon the rejection of this Agreement by or on behalf
of DTI upon written request therefor by Schwarz.

12.      ASSIGNMENT

         This Agreement may not be assigned by either party without the prior
written consent of the other party except to an Affiliate or in connection with
a merger, consolidation or sale of all or substantially all of the line of
business to which this Agreement relates. This Agreement shall be binding upon
and inure to the benefit of all successors and permitted assigns of the parties.

13.      DISPUTE RESOLUTION

         13.1     Discussion. In the event of any dispute between the parties
regarding their respective rights or obligations under this Agreement, each
party agrees to discuss such matter in good faith in an effort to resolve the
dispute without resort to formal dispute resolution procedures. At any time,
either party may call a meeting between an Executive Board member of Schwarz and
the Chief Executive Officer of DTI to attempt to resolve the dispute. Such
meeting shall be held not later than thirty (30) days after it is requested in
writing by either party in New York, New York. If such dispute cannot be
resolved through such procedures within

                                       20

<PAGE>

forty-five (45) days of the date either party requests a meeting of the officers
designated above, then either party may request an arbitration proceeding as
provided in Section 13.2.

         13.2     Alternative Dispute Resolution. Any dispute controversy or
claim arising out of or relating to the validity, construction, enforceability
or performance of this Agreement, including disputes relating to an alleged
breach or to termination of this Agreement and including any claim of inducement
by fraud or otherwise, but excluding (i) any dispute, controversy or claim
arising out of or relating to the validity, enforceability, or infringement of
any DTI Patent or any Schwarz Patent and (ii) any dispute which is expressly
prohibited herein from being resolved by this mechanism, shall be settled by
binding Alternative Dispute Resolution ("ADR") by Mediation and Arbitration in
the manner described below:

         13.3     Mediation.

                  (a)      Any such dispute, controversy or claim which would,
but for this provision, be submitted to arbitration shall, before submission to
arbitration, first be mediated through non-binding mediation in accordance with
the Model Procedures for the Mediation of Business Disputes promulgated by the
Center for Public Resources ("CPR") then in effect, except where those rules
conflict with these provisions, in which case these provisions control. The
mediation shall be conducted in the United States and shall be attended by a
senior executive with authority to resolve the dispute from each of the
operating companies that are parties.

                  (b)      The mediator shall be an attorney specializing in
business litigation who has at least 15 years of experience as a lawyer with a
law firm of over 25 lawyers or was a judge of a court of general jurisdiction
and who shall be appointed from the list of neutrals maintained by CPR.

                  (c)      The Parties shall promptly confer in an effort to
select a mediator by mutual agreement. In the absence of such an agreement, the
mediator shall be selected from a list generated by CPR with each party having
the right to exercise challenges for cause and two peremptory challenges within
72 hours of receiving the CPR list.

                  (d)      The mediator shall confer with the Parties to design
procedures to conclude the mediation within no more than 45 days after
initiation. Under no circumstances shall the commencement of arbitration under
Section 13.4 be delayed more than 45 days by the mediation process specified
herein.

                  (e)      Each party agrees to all applicable statutes of
limitation during the mediation process and not to use the period or pendancy of
the mediation to disadvantage the other party procedurally or otherwise. No
statements made to either side during the mediation may be used by the other
during any subsequent arbitration.

                  (f)      Each party has the right to pursue provisional relief
from any court such as attachment, preliminary injunction, replevin, etc., to
avoid irreparable harm, maintain the status quo, or preserve the subject matter
of the arbitration, even though mediation has not been commenced or completed.

                                       21

<PAGE>

         13.4     Arbitration. Except as provided in paragraph (c) below, any
dispute, controversy or claim arising out of or relating to the validity,
construction, enforceability or performance of this Agreement which is not
resolved by mediation, including disputes relating to alleged breach or to
termination of this Agreement, other than disputes which are expressly
prohibited herein from being resolved by this mechanism, shall be settled by
binding Alternative Dispute Resolution ("ADR")in the manner described below:

                  (a)      If a party intends to begin an ADR to resolve a
dispute, such party shall provide written notice (the "ADR Request") to counsel
for the other party informing such other party of such intention and the issues
to be resolved. From the date of the ADR Request and until such time as any
matter has been finally settled by ADR, the running of the time periods
contained in Article 14 as to which party must cure a breach of this Agreement
shall be suspended as to the subject matter of the dispute.

                  (b)      Within ten (10) business days after the receipt of
the ADR Request, the other party may, by written notice to the counsel for the
party initiating ADR, add additional issues to be resolved.

                  (c)      Any dispute regarding the validity or enforceability
of a patent or trademark applicable to a Product shall be submitted to a court
of competent jurisdiction in the country in which such patent or trademark right
exists.

         13.5     Procedure. The ADR shall be conducted pursuant to
JAMS/ENDISPUTE Rules A and C, attached hereto as Exhibit E. Notwithstanding
those rules, the following provisions shall apply to the ADR hereunder.

                  (a)      Arbitrator. The arbitration shall be conducted by a
single arbitrators ("the Arbitrator"). The Arbitrator shall be selected from a
pool of retired independent federal judges to be presented to the Parties by
JAMS/ENDISPUTE. Neither party shall engage in ex parte contact with the
arbitrator.

                  Proceedings. The time periods set forth in the JAMS/ENDISPUTE
rules shall be followed, unless a party can demonstrate to the Arbitrator that
the complexity of the issues or other reasons warrant the extension of one or
more of the time tables. In such case, the panel may extend such time tables,
but in no event shall the time tables being extended so that the ADR proceeding
extends more than 18 months from its beginning to the Award. In regard to such
time tables, that Parties (i) acknowledge that the issues that may arise in any
dispute involving this Agreement may involve a number of complex matters and
(ii) confirm their intention that each party will have the opportunity to
conduct complete discovery with respect to all material issues involved in a
dispute within the framework provided above. The Arbitrator shall not award
punitive damages to either party and the Parties shall be deemed to have waived
any right to such damages. The Arbitrator shall, in rendering its decision,
apply the substantive law of the State of Delaware, without regard to its
conflict of laws provisions, except that the interpretation of and enforcement
of this Section shall be governed by the Federal Arbitration Act. The Arbitrator
shall apply the Federal Rules of Evidence to the hearing. The proceeding shall
take place in the United States. The fees of the Arbitrators and JAMS/ENDISPUTE
shall be paid by the losing party, which shall be designated by the Arbitrator.
If the Arbitrator is

                                       22

<PAGE>

                  (b)      unable to designate a losing party, it shall so state
and the fees shall be split equally between the Parties.

                  (c)      Award. The Arbitrator is empowered to award any
remedy allowed by law, including money damages, prejudgment interest and
attorneys' fees, and to grant final, complete, interim, or interlocutory relief,
including injunctive relief but excluding punitive damages.

                  (d)      Confidentiality. The ADR proceeding shall be
confidential and the Panel shall issue appropriate protective orders to
safeguard each party's Confidential Information. Except as required by law, no
party shall make (or instruct the Panel to make) any public announcement with
respect to the proceedings or decision of the Panel without prior written
consent of each other party. The existence of any dispute submitted to ADR, and
the award, shall be kept in confidence by the parties and the Panel, except as
required in connection with the enforcement of such award or as otherwise
required by applicable law.

14.      GENERAL

         14.1     Notices. All notices under this Agreement shall be deemed to
have been fully given when done in writing and deposited in the United States
mail, registered or certified, or sent by express courier (receipt confirmed)
and addressed as follows:

               To DTI:                2028 Dabney Road
                                      Suite E-17
                                      Richmond, VA 23230-3311
                                      Attention: Chief Executive Officer

               With a copy to:        Cooley Godward LLP
                                      5 Palo Alto Square
                                      3000 El Camino Real
                                      Palo Alto, California 94306
                                      Attn: Alan C. Mendelson, Esq.

               To Schwarz:            Schwarz Pharma AG
                                      Alfred Nobel-Strasse 10
                                      40789 Monheim, Germany
                                      Attention: President

               With two copies to:    Schwarz Pharma USA
                                      6140 West Executive Drive
                                      Mequon, Wisconsin 53092
                                      Attn: Chief Executive Officer
                                      Attn: General Counsel

Either party may change its address upon written notice to the other party.

         14.2     Entire Agreement. This Agreement embodies the entire
understanding between the parties relating to the subject matter hereof and
supersedes all prior understandings and

                                       23

<PAGE>

agreements, whether written or oral. None of the terms of this Agreement can be
amended or waived except by an instrument in writing executed by authorized
representatives of each party.

         14.3     Governing Law. This Agreement shall be governed by the laws of
the State of Delaware, without regard to conflict of laws principles.

         14.4     Severability. Any of the provisions of this Agreement which
are determined to be invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or unenforceable the remaining
provisions hereof or affecting the validity or enforceability of any of the
terms of this Agreement in any other jurisdiction.

         14.5     Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

                                       24

<PAGE>

         In Witness Whereof, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.

Discovery Therapeutics, Inc.            Schwarz Pharma AG

Signature: /s/ Donald A. McAfee         Signature: /s/ K. Langer; /s/ L. Ekman
           --------------------                    ---------------------------
Name: Donald A. McAfee                  Name: K. Langer; L. Ekman

Title: President and CEO                Title: Finances & Technical Operations;
                                        Research & Development; Member of
                                        Executive Board

Date: July 17/th/, 1998                 Date: July 17, 1998

                                       25

<PAGE>

                                    EXHIBIT A

DTI PATENTS

U.S. Patent No. 4,564,628

U.S. Patent No. 4,888,308

European Patent No. 0168505

Canada Patent No. 1,248,357

Canada Patent No. 1,338,508

S. Korea Patent Appl. No. 700272/1990

U.S. Patent No. 5,302,596

PCT Appl. No. US94/08845

<PAGE>

                                    Exhibit B

                             THIRD PARTY AGREEMENTS

         Licensee

         *

         Other Relationships

         *

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<PAGE>

                                    Exhibit C

                            PROSPECTIVE DTI LICENSEES

         Prospective Licensee                                 Territory

         *

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the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>

                                    Exhibit D

                                  PRESS RELEASE

<PAGE>

                                    EXHIBIT E
                                 JAMS/ENDISPUTE
                                  COMPREHENSIVE
                                ARBITRATION RULES
                                 AND PROCEDURES

<TABLE>
<S>                                                                                               <C>
Rule 1.    Scope of Rules .......................................................................  1
Rule 2.    Party-Agreed Procedures ..............................................................  1
Rule 3.    Amendment of Rules ...................................................................  1
Rule 4.    Conflict with Law ....................................................................  1
Rule 5.    Commencing an Arbitration ............................................................  1
Rule 6.    Preliminary and Other Administrative Conferences/Optional Appeal Procedure ...........  2
Rule 7.    Number of Arbitrators and Appointment of Chairperson .................................  3
Rule 8.    Service ..............................................................................  3
Rule 9.    Notice of Claims .....................................................................  3
Rule 10.   Interpretation of Rules and Jurisdictional Challenges ................................  4
Rule 11.   Representation .......................................................................  4
Rule 12.   Withdrawal from Arbitration ..........................................................  4
Rule 13.   Ex Parte Communications ..............................................................  5
Rule 14.   Arbitrator Selection and Replacement .................................................  5
Rule 15.   Exchange of Information ..............................................................  6
Rule 16.   Summary Disposition of a Claim or Issue ..............................................  7
Rule 17.   Scheduling of Hearing ................................................................  7
Rule 18.   Pre-Hearing Submissions ..............................................................  7
Rule 19.   Securing Witnesses and Documents for the Arbitration Hearing .........................  8
Rule 20.   The Arbitration Hearing ..............................................................  8
Rule 21.   Waiver of Hearing ....................................................................  9
Rule 22.   The Award ............................................................................  9
Rule 23.   Optional Appeal Procedure ............................................................ 10
Rule 24.   Enforcement of the Award ............................................................. 11
Rule 25.   Confidentiality and Privacy .......................................................... 11
Rule 26.   Waiver of Objection .................................................................. 11
Rule 27.   Settlement and Consent Award ......................................................... 11
Rule 28.   Sanctions ............................................................................ 12
Rule 29.   Disqualification of the Arbitrator as a Witness or Party and Exclusion of Liability .. 12
Rule 30.   Fees ................................................................................. 12
Rule 31.   Bracketed (or High-Low) Arbitration Option ........................................... 12
Rule 32.   "Final Offer (or Baseball)" Arbitration Option ....................................... 13
</TABLE>

Rule 1.  Scope of Rules

The JAMS/ENDISPUTE Comprehensive Arbitration Rules and Procedures ("Rules")
govern binding Arbitrations of disputes or claims that are administered by
JAMS/ENDISPUTE and in which any disputed claim or counterclaim exceeds $250,000,
not including interest.

Rule 2.  Party-Agreed Procedures

The Parties may agree on any procedures not specified herein that are consistent
with the applicable law. The Parties will promptly notify the JAMS/ENDISPUTE
Case Administrator of any Party-agreed procedures and will confirm these
procedures in writing. The Party-agreed procedures will be enforceable as if
contained in these Rules. These Rules will control any matters not changed by
the Party-agreed procedures.

Rule 3.  Amendment of Rules

JAMS/ENDISPUTE may amend these Rules without notice. The Rules in effect on the
date of the commencement of an Arbitration (as defined in Rule 5) will apply to
that Arbitration, unless the Parties have specified that another version of the
Rules will apply.

Rule 4.  Conflict with Law

If any of these Rules, or a modification of these Rules agreed on by the
Parties, is discovered to be in conflict with a mandatory provision of
applicable law, the provision of law will govern, and no other Rule will be
affected.

Rule 5.  Commencing an Arbitration

JAMS/ENDISPUTE Comprehensive Arbitration is commenced by one of the following:

<PAGE>

(a)      the submission to JAMS/ENDISPUTE by all Parties of a fully executed
post-dispute Arbitration Agreement; or

(b)      the submission to JAMS/ENDISPUTE of a pre-dispute written contractual
provision requiring the Parties to arbitrate the dispute or claim, along with
either written evidence of the intent of all Parties to comply with the
requirement or a written demand by one Party that the other Party(ies) comply
with evidence that such written demand has been served on the other Party(ies)
in accordance with either the pre-dispute written contractual provision or Rule
8, including, if appropriate, proof of service in accordance with the Federal
Rules of Civil Procedure; or

(c)      the oral agreement of all Parties to participate in an Arbitration
conducted pursuant to these Rules.

The Arbitration process is considered commenced when JAMS/ENDISPUTE confirms in
writing that the above requirements for commencement have been met. The date of
commencement of the Arbitration is the date of JAMS/ENDISPUTE's commencement
letter.

In the event of an oral agreement to participate in an Arbitration, even if the
Arbitration is commenced with the issuance of a JAMS/ENDISPUTE commencement
letter, the Arbitration Hearing will not take place until all Parties have
executed an Arbitration Agreement.

If a Party that is a signatory to a pre-dispute written contractual provision
fails to agree to participate in the Arbitration process, JAMS/ENDISPUTE will
confirm in writing the failure to respond or participate and, pursuant to Rule
20, will schedule, and provide appropriate notice of a Hearing or other
opportunity for the Party demanding the Arbitration to demonstrate its
entitlement to relief.

                         Return to index at top of page.

Rule 6.  Preliminary and Other Administrative Conferences/Optional Appeal
Procedure

(a)      A Case Administrator/1/ may conduct a preliminary conference with the
Parties by telephone. This conference may occur within fourteen (14) calendar
days after the date of commencement of the Arbitration if the Arbitration was
commenced under the circumstances described in Section (b) of Rule 5. This
conference may occur within seven (7) calendar days after the date of
commencement of the Arbitration in all other circumstances. Unless the Parties
agree otherwise, if for any reason the conference does not take place within the
time specified above, the Case Administrator will proceed with the Arbitrator
selection process pursuant to Rule 14 as if the preliminary conference had, in
fact, been held.

The Case Administrator will answer any questions regarding these rules and will
discuss procedural matters such as the pleading or notice of claim sequence,
Arbitrator selection, a schedule for discovery, if any, and the expectations of
the Parties as to the length of time the Arbitration Hearing is likely to
require. The Parties may agree to a date for the hearing subject to Arbitrator
availability. In the absence of agreement, the date[s] of the hearing will be
set by the Arbitrator pursuant to Rule 17.

At the request of a Party and in the absence of Party agreement, the Case
Administrator may make a determination regarding the location of the Hearing,
subject to Arbitrator review. In determining the location of the Hearing, the
Case Administrator will take into account such factors as the convenience of the
Parties and witnesses as well as the relative resources of the Parties.

(b)      At any subsequent time, the Case Administrator may convene, or the
Parties may request, additional conferences to discuss administrative or
procedural matters.

(c)      At either the Preliminary Conference or at subsequent conferences, the
Parties and the Case Administrator may identify any substantive, evidentiary,
procedural or discovery-related disputes that

--------------------------
(1) All decisions to be made under these Rules by the Case Administrator will be
made under the supervision of the Senior Neutral or other "lead neutral" in the
particular JAMS/ENDISPUTE office.

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should be considered in a conference with the Arbitrator(s). In addition, at
either the Preliminary conference or subsequent conferences, the Case
Administrator may offer the assistance of JAMS/ENDISPUTE in exploring settlement
through mediation or other non-binding alternative dispute resolution processes.

(d)      During the Preliminary Conference, the Case Administrator may ask the
Parties if they agree to ire Optional Appeal Procedure set forth in Rule 23. All
Parties must agree in writing for the Optional Procedure be effective. Once a
Party has agreed to the Optional Appeal Procedure, it cannot unilaterally
withdraw from it, unless it withdraws, pursuant to Rule 12, from the
Arbitration. The Parties may subsequently agree to the Optional Appeal Procedure
at any time prior to the Arbitration Award becoming final pursuant to Rule 22.

Rule 7.  Number of Arbitrators and Appointment of Chairperson

(a)      JAMS/ENDISPUTE Comprehensive Arbitrations will be conducted by one
neutral Arbitrator, unless all Parties agree otherwise.

(b)      In cases involving more than one Arbitrator, the Parties will agree on,
or in the absence of agreement the Case Administrator will designate, a
Chairperson of the Arbitration Panel. The Chairperson will have the authority to
act as a single Arbitrator for the purposes of ruling on all discovery and
procedural matters, including pleading issues, but not with respect to
dispositive, jurisdictional and sanction issues. All references to the
Arbitrator in these Rules will apply to the Chairperson of the Arbitration Panel
where appropriate.

Rule 8.  Service

Service under these Rules will be made by providing one copy of the document
with original signatures to each Party and two copies with original signatures
to the Case Administrator. Service may be made by hand-delivery, overnight
delivery service, U.S. mail or in accordance with the Federal Rules of Civil
Procedure. Service is considered effective upon the date of receipt of the
document or as otherwise set forth in the Federal Rules of Civil Procedure.
Service by facsimile transmission is considered effective upon receipt, but only
if followed within one week of delivery by service of an appropriate number of
copies and originals by one of the other service methods.

Rule 9.  Notice of Claims

(a)      If a matter has been submitted for a JAMS/ENDISPUTE Comprehensive
Arbitration after litigation has been commenced in court regarding the same
claim or dispute, the pleadings in the court case, including the Complaint and
Answer (with affirmative defenses and counter or cross claims), will be served
on JAMS/ENDISPUTE within fourteen (14) days of the date of commencement, and if
served, will be considered part of the record of the Arbitration. It will be
assumed that the existence of such pleadings constitutes appropriate notice to
the Parties of the claims, remedies sought, counter or cross claims and
affirmative defenses that each has. If necessary, such notice may be
supplemented pursuant to Rule 9 (b).

(b)      If a matter has been submitted prior to or in lieu of the filing of the
case in court or prior to the filing of an Answer, the Parties must give each
other notice of all claims, remedies sought, counter or cross claims and
affirmative defenses (including jurisdictional challenges) that each has. Such
notice may be served upon the other Party(ies) and upon JAMS/ENDISPUTE, in the
form of either an appropriate pleading (either a Complaint or Answer) or a
letter. The letter should include a short statement of the factual basis for the
claims, remedies sought, counter or cross claims and affirmative defenses
(including the basis of any jurisdictional challenge).

Notice of claims, remedies sought, counter or cross claims and affirmative
defenses may be served simultaneously, in which case they should be served on
JAMS/ENDISPUTE within fourteen (14) calendar days of the date of commencement of
the Arbitration, or by such other date as the Parties may agree. The Responding
Party(ies) may, however, in its sole discretion, wait to receive the notice of
claim before serving its response, including counter or cross claims or
affirmative defenses. In this case, the response, including counter or cross
claims and affirmative defenses, should be served on the other Party(ies) and

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upon JAMS/ENDISPUTE within fourteen (14) calendar days of having received the
notice of claim. If the Notice of Claim has been served on the Responding
Party(ies) prior to the date of commencement, the response, including counter or
cross claims and affirmative defenses, will be served within fourteen (14)
calendar days from the date of commencement.

Any Party that is a recipient of a counter or cross claim may reply to such
counter or cross claim, including asserting jurisdictional challenges. In this
case, the reply must be served on the other Party(ies) and JAMS/ENDISPUTE within
fourteen (14) calendar days of having received the notice of counter or cross
claim.

No claim, remedy, counter or cross claim or affirmative defense will be
considered by the Arbitrator in the absence of prior notice to the other
Party(ies), unless all Parties agree that such consideration is appropriate
notwithstanding the lack of prior notice.

If any Party fails to respond to a claim or fails to reply to a counter or cross
claim, that Party will be deemed to have denied the claims, counter or cross
claims made against it but to have waived the right to assert other claims or
challenges to jurisdiction.

(c)      Amendments or additions to claims and counter or cross claims may be
made only on application to the Arbitrator, who may allow such changes upon a
showing of good cause and no prejudice to the opposing Party(ies).

Rule 10. Interpretation of Rules and Jurisdictional Challenges

(a)      Once appointed, the Arbitrator will resolve disputes about the
interpretation and applicability of these Rules, including disputes relating to
the duties of the Arbitrator and the conduct of the Arbitration Hearing, except
that in cases involving more than one Arbitrator all such issues that may be
dispositive with respect to a claim will be ruled on by the Arbitration Panel.
The resolution of the issue by the Arbitrator or Panel is final.

Jurisdictional and arbitrability disputes, including disputes over the
existence, validity, interpretation or scope of the agreement under which
Arbitration is sought, may be submitted to and ruled on by the Arbitrator(s),
unless the relevant law requires that a court make such determinations.
Notwithstanding the provisions of Rule 16 (a), the Arbitrator has the authority
to determine jurisdiction and arbitrability prior to conducting a full hearing
on the merits.

(b)      Disputes arising before the appointment of the Arbitrator will be
resolved by the Case Administrator, but only those disputes relating to
jurisdiction and the location and conduct of the Hearing are subject to
subsequent review by the Arbitrator.

(c)      The Arbitrator upon good cause shown, or at his/her own discretion only
when necessary to facilitate the Arbitration, may extend any deadlines stated in
these rules, except the time for rendering the Award.

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Rule 11. Representation

The Parties may be represented by counsel. Such representation is encouraged.
Each Party will promptly notify in writing the Case Administrator and the other
Party(ies) of the name, address and telephone and fax numbers of its counsel.
The attorney for a Party may act on the Party's behalf in complying with these
Rules.

Rule 12. Withdrawal from Arbitration

(a)      No Party may terminate or withdraw from an Arbitration after it
commences (as defined in Rule 5) except by written agreement of all Parties to
the Arbitration.

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(b)      A Party that asserts a claim or counterclaim may unilaterally withdraw
that claim or counterclaim without prejudice by serving written notice on the
other Party(ies) and on the Arbitrator(s). However, the opposing Party(ies) may,
within fourteen (14) calendar days of having received notice of the withdrawal
of the claim or counterclaim, request that the Arbitrator(s) deem that the
withdrawal is with prejudice.

Rule 13. Ex Parte Communications

No Party will have any ex parte communication with the Arbitrator(s) regarding
any issue related to the Arbitration. Any necessary ex parte communication with
JAMS/ENDISPUTE, whether before or after the Arbitration Hearing, will be
conducted through the Case Administrator.

Rule 14. Arbitrator Selection and Replacement

(a)      Unless the Arbitrator(s) has been previously selected by agreement of
the Parties, the Case Administrator at the Preliminary Conference may attempt to
reach agreement among the Parties regarding selection of the Arbitrator(s).

(b)      If the Parties do not agree on an Arbitrator within seven (7) calendar
days of when the Preliminary Conference was or should have been held, the Case
Administrator will send the Parties a list of at least five (5) Arbitrator
candidates. JAMS/ENDISPUTE will also provide each Party with a brief description
of the background and experience of each Arbitrator candidate.

Any Party may, within seven (7) calendar days of receipt of the list of names,
challenge an Arbitrator candidate for cause. The Director of Professional
Services or Senior Judicial Officer or other "lead neutral" of the particular
JAMS/ENDISPUTE office will promptly rule on such challenge, and his or her
decision will be final. If a challenge for cause is upheld, a replacement name
will be sent to the Parties.

Within seven (7) calendar days of the receipt by the Parties of the final list
of names, each Party may strike two (2) names, and will rank the remaining
Arbitrator candidates in order of preference. The remaining Arbitrator candidate
with the highest composite ranking will become the Arbitrator.

If this process does not yield an Arbitrator, JAMS/ENDISPUTE will designate the
Arbitrator.

(c)      If a Party fails to respond to the list of Arbitrator candidates within
seven (7) calendar days of the receipt by the Parties of the final list, the
Case Administrator will deem that Party to have accepted all of the Arbitrator
candidates.

(d)      In cases involving more than two Parties or the selection of more than
one Arbitrator, the Case Administrator's list will include a sufficient number
of candidates to yield the specified number of Arbitrators, while allowing each
Party up to two (2) strikes.

(e)      Entities whose interests are not adverse with respect to the issues in
dispute will be treated as a single Party for purposes of the Arbitrator
selection process. JAMS/ENDISPUTE will determine whether the interests between
entities are adverse for purposes of Arbitrator selection, considering such
factors as whether the entities are represented by the same attorney and whether
the entities are presenting joint or separate positions at the Arbitration.

(f)      If, for any reason, the Arbitrator who is selected is unable to fulfill
the Arbitrator's duties, a successor Arbitrator will be chosen in accordance
with this Rule. If a member of a panel of Arbitrators becomes unable to fulfill
his or her duties after the beginning of a Hearing but before the issuance of an
Award, a new Arbitrator will be chosen in accordance with this Rule unless the
Parties agree to proceed with the remaining two Arbitrators. The Director of
Professional Services or Senior Judicial Officer or other "lead neutral" of the
particular JAMS/ENDISPUTE office will make the final determination as to whether
an Arbitrator is unable to fulfill his or her duties, and his or her decision
will be final.

(g)      Any disclosures that are mandated by applicable law regarding the
selected Arbitrator(s) will be made within fourteen (14) calendar days from the
date of appointment.

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(h)      The obligation of the Arbitrator(s) to make all disclosures that are
mandated by applicable law will continue throughout the Arbitration process. At
any time during the Arbitration process, a Party may challenge the continued
service of an Arbitrator for cause. The challenge must be based upon information
that was not available to the Parties at the time the Arbitrator was selected.
The Director of Professional Services or Senior Judicial Officer or other "lead
neutral" of the particular JAMS/ENDISPUTE office will make the final
determination on such challenge, and his or her decision will be final.

Rule 15. Exchange of Information

(a)      The Parties will cooperate in good faith in the voluntary, prompt and
informal exchange of all non-privileged documents and other information relevant
to the dispute or claim.

(b)      The Parties will exchange copies of all non-privileged documents
relevant to the dispute or a claim, including copies of all documents in their
possession or control on which they rely in support of their positions or which
they intend to introduce as exhibits at the Arbitration Hearing. The Parties
will serve the documents within twenty-one (21) calendar days after all
pleadings or notice of claims have been received, unless otherwise agreed, but
in no event later than fourteen (14)calendar days before the Arbitration
Hearing.

(c)      The Parties will exchange the names of all individuals with knowledge
of be dispute or claim, including all individuals who they may call as witnesses
at the Arbitration Hearing. The Parties wail serve the names of such witnesses
within twenty-one (21) calendar days after all pleadings or notice of claims
have been received, unless otherwise agreed, but in no event later than fourteen
(l4) calendar days before the Arbitration Hearing.

(d)      The Parties will exchange the names of all experts who may be called
upon to testify or whose report may be introduced at the Arbitration Hearing.
The Parties will serve the names of such experts within twenty-one (21)calendar
days after all pleadings or notice of claims have been received, unless
otherwise agreed, but in no event later than fourteen (14) calendar days before
the Arbitration Hearing.

(e)      At any time after all pleadings or notice of claims have been received,
but no later than fourteen (14) calendar days before the Arbitration Hearing,
each Party may take one deposition of an opposing Party or of one individual
under the control of the opposing Party. The Parties will attempt to agree on
the time, location and duration of the deposition, and if the Parties do not
agree these issues will be determined by the Arbitrator. Any Party may conduct
depositions of its own witnesses which may be introduced as evidence at the
Arbitration Hearing if the other Party(ies) was given fair opportunity attend
the deposition and cross-examine the witness.

(f)      Upon the request of any Party, the Arbitrator may conduct a conference
for the purpose of establishing an information exchange schedule or determining
whether any information should be exchanged, including whether any additional
depositions may be taken. If the Arbitrator determines that the requesting Party
has a reasonable need for the requested information, and that the request is not
overly burdensome on the opposing Party(ies), the Arbitrator may order the
additional information exchange. The producing Party(ies) will promptly comply
with any directive of the Arbitrator by the date specified by the Arbitrator
which, in no event, will be later than fourteen (14) calendar days before the
Arbitration Hearing.

(g)      As they become aware of new documents or information, including experts
who may be called upon to testify, all Parties remain under a continuing
obligation to provide relevant, non-privileged documents, to supplement their
identification of witnesses and experts and to honor any informal agreements or
understandings between the Parties regarding documents or information to be
exchanged. Documents that have not been previously exchanged, or witnesses and
experts not previously identified, will not be considered by the Arbitrator(s)
at the Hearing, unless agreed by the Parties.

(h)      The Parties will promptly notify the Case Administrator when an
unresolved dispute exists regarding discovery issues. The Case Administrator may
attempt to facilitate an informal resolution of the dispute by the Parties
themselves. If the dispute is not informally resolved, the Case Administrator
will arrange a

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conference with the Arbitrator, either by telephone or in person, and the
Arbitrator will decide the dispute. With the consent of all Parties, the
Arbitrator may appoint a special master to assist in resolving the dispute.

                         Return to index at top of page.

Rule 16. Summary Disposition of a Claim or Issue

(a)      The Arbitrator(s) may hear and determine a Motion for Summary
Disposition of a particular claim or issue, either by agreement of all
interested Parties or at the request of one Party, provided other interested
Parties have reasonable notice to respond to the request.

(b)      The Case Administrator may obtain the agreement of the Parties on a
briefing schedule and record for the Motion. If no agreement is reached, the
Arbitrator(s) will set the briefing schedule and contents of the record.
Ordinarily, only opening briefs (of no more than 20 double-spaced pages) and
response briefs (of no more than 10 double-spaced pages) will be allowed, in a
sequence to be determined. The briefs may be in the form of a letter.
Ordinarily, oral argument will not be allowed, unless all Parties or the
Arbitrator(s) so request.

(c)      The Arbitrator(s) will apply the same burdens as a court in the
jurisdiction would apply under similar circumstances. With respect to
substantive issues, the Arbitrator(s) will apply the same standard in deciding
the Motion as would be applicable to the Arbitration Award.

Rule 17. Scheduling of Hearing

The Arbitrator, after consulting with the Parties who have appeared, will
determine the date and time of the Hearing. Absent unusual circumstances, the
Arbitration Hearing should begin within ninety (90) calendar days of the
commencement of the Arbitration. The Arbitrator and the Parties will attempt to
schedule consecutive Hearing days if more than one day is necessary.

If a Party has failed to answer a claim and JAMS/ENDISPUTE reasonably believes
that the Party will not participate in the Hearing, the Arbitrator may set the
Hearing Date(s) without consulting with that Party. The non-participating Party
shall be served with a Notice of Hearing at least thirty (30) calendar days
prior to the scheduled date unless the law of the relevant jurisdiction allows
for shorter notice.

Rule 18. Pre-Hearing Submissions

(a)      The Arbitrator may require a pre-Hearing conference for the purposes
both of narrowing the focus of the Arbitration Hearing by stipulations of fact
or joint statements of issues to be determined and of resolving any outstanding
issues relating to the conduct of the Hearing. The pre-Hearing conference may be
conducted by telephone.

(b)      By at least seven (7) calendar days before the Arbitration Hearing, the
Parties will exchange a list of the witnesses they intend to call, including any
experts, a short description of the anticipated testimony of each such witness,
an estimate of the length of the witness's direct testimony, and a list of
exhibits. In addition, at least seven (7) calendar days before the Arbitration
Hearing, the Parties will exchange copies of all exhibits intended to be used at
the Hearing to the extent that any such exhibit has not been previously
exchanged. The Parties should pre-mark exhibits and should attempt themselves to
resolve any disputes regarding the admissibility of exhibits prior to the
Hearing. The list of witnesses, with the description and estimate of length of
their testimony and the copies of all exhibits that the Parties intend to use at
the Hearing, in pre-marked form, should also be provided to JAMS/ENDISPUTE for
transmission to the Arbitrator, whether or not the Parties have stipulated to
the admissibility of all such exhibits.

(c)      The Arbitrator(s) may require that each Party submit concise written
statements of position, including summaries of the facts and evidence a Party
intends to present, discussion of the applicable law and the basis for the
requested Award or denial of relief sought. The statements, which may be in the
form of a letter, should not exceed twenty (20) double-spaced pages in length,
and should be submitted to JAMS/ENDISPUTE, and served upon the other Party(ies),
by at least seven (7) calendar days before the

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Hearing date. Rebuttal statements or other pre-Hearing written submissions may
be permitted or required at the discretion of the Arbitrator(s).

Rule 19. Securing Witnesses and Documents for the Arbitration Hearing

At the request of another Party, all other Parties will produce for the
Arbitration Hearing all witnesses in their employ or under their control without
need of subpoena. The Arbitrator may issue subpoenas for the attendance of
witnesses or the production of documents. In the event a Party or a subpoenaed
person objects to the production of a witness or other evidence, the Party may
file an objection with the Arbitrator, who will promptly rule on the objection,
weighing both the burden on the producing Party and the need of the proponent
for the witness or other evidence.

Rule 20. The Arbitration Hearing

(a)      The Arbitrator(s) will ordinarily conduct the Arbitration Hearing in
the manner set forth in these Rules. The Arbitrator(s) may vary these procedures
if the Arbitrator(s) determines that it is reasonable and appropriate to do so.

(b)      The Arbitrator(s) will determine the order of proof, which will
generally be similar to that of a court trial.

(c)      The Arbitrator(s) will require witnesses to testify under oath if
requested by any Party.

(d)      The Arbitrator(s) will consider evidence that he or she finds relevant
and material to the dispute, giving the evidence such weight as he or she
determines is appropriate. The Arbitrator(s) may be guided in that determination
by the Federal Rules of Evidence or by any other applicable judicial rules of
evidence; however, strict conformity to such rules of evidence is not required,
except that the Arbitrator(s) will apply the law relating to privileges and work
product. The Arbitrator may limit testimony to exclude evidence that would be
immaterial or unduly repetitive, provided that all Parties are afforded the
opportunity to present material and relevant evidence.

(e)      The Arbitrator(s) will receive and consider witnesses' deposition
testimony recorded by transcript or videotape, provided that the other Parties
have had the opportunity to attend and cross-examine. The Arbitrator(s) may in
his or her discretion consider witness affidavits or other recorded testimony
even if the other Parties have not had the opportunity to cross-examine, but
will give that evidence only such weight as the Arbitrator(s) deems appropriate.

(f)      The Parties will not offer as evidence, and the Arbitrator(s) will
neither admit into the record nor consider, prior settlement offers by the
Parties or statements or recommendations made by a mediator or other person in
connection with efforts to resolve the dispute being arbitrated.

(g)      When the Arbitrator(s) determines that all relevant and material
evidence and arguments have been presented, the Arbitrator will declare the
Hearing closed. The Arbitrator(s) may defer the closing of the Hearing until a
date agreed upon by the Arbitrator(s) and the Parties, to permit the Parties to
submit post-Hearing briefs, which may be in the form of a letter, and/or to make
closing arguments. If post-Hearing briefs are to be submitted, or closing
arguments are to be made, the Hearing will be deemed closed upon receipt by the
Arbitrator(s) of such briefs or the making of such closing arguments.

(h)      At any time before the Award is rendered, the Arbitrator(s) may, on his
or her own initiative or on application of a Party for good cause shown, re-open
the Hearing. If the Hearing is re-opened and the re-opening prevents the
rendering of the Award within the time limits specified by these Rules, the time
limits will be extended for an appropriate period of time.

(i)      The Arbitrator(s) may proceed with the Hearing in the absence of a
Party who, after having executed an Arbitration agreement, or who is otherwise
bound to arbitrate, and after having received notice of the Hearing pursuant to
Rule 17, fails to attend. The Arbitrator(s) may not render an Award solely on
the basis of the default or absence of the Party, but will require any
Party(ies) who is present to submit such evidence

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as the Arbitrator(s) may require for the rendering of an Award. If
JAMS/ENDISPUTE reasonably believes that a Party will not attend the Hearing, the
Arbitrator may receive the evidence necessary to render an Award either by a
telephone conference or by affidavit.

(j)      Any Party may request that a stenographic or other record be made of
the Hearing, provided that the requesting Party bear the cost of such
stenographic record and that the original of the record be maintained by the
reporting service so that the other Party(ies) has equal access to it. If a
stenographic or other record is made of the Hearing, the requesting Party(ies)
will provide a copy to the Arbitrator. If the Parties agree to an Optional
Appeal Procedure, they will ensure that a stenographic or other record is made
of the Hearing and will share the cost.

                         Return to index at top of page.

Rule 21. Waiver of Hearing

The Parties may agree to waive the oral Hearing and submit the dispute to the
Arbitrator(s) for an Award based on written submissions and other evidence upon
which the Parties agree.

Rule 22. The Award

(a)      Absent good cause for an extension, the Arbitrator should render the
award within thirty (30) calendar days after the date of the closing of the
Hearing or, if an Arbitration Hearing has been waived, within thirty (30)
calendar days after the receipt by the Arbitrator(s) of all materials specified
by the Parties.

(b)      Where a panel of Arbitrators has heard the dispute, the decision and
Award of a majority of the panel will constitute the Arbitration Award and will
be binding on the Parties.

(c)      Unless the Parties specify a different standard, in determining the
Award the Arbitrator(s) will be guided by principles of law and equity as
applied to the facts found at the Arbitration Hearing, including those facts
relating to custom and agreement between the Parties.

(d)      The Arbitrator(s) is authorized to award any remedy allowed by the
applicable law, including multiple damages, pre- or post judgment interest and
attorneys' fees and expenses, and to grant final or interlocutory relief,
including injunctive relief, unless the Parties have agreed to a narrower scope
of permissible relief. Notwithstanding this authority, the Arbitrator may not
Award punitive damages unless previously agreed by the Parties or unless
punitive damages are required by law to be an available remedy in such cases. In
the Award, the Arbitrator may also assess Arbitration fees and expenses if
provided by agreement of the Parties, allowed by applicable law or pursuant to
Rule 30(c),in favor of either Party.

(e)      The Award will consist of a written statement signed by the
Arbitrator(s) regarding the disposition of each claim and the relief, if any,
awarded as to each claim. Unless all Parties agree otherwise, the Arbitrator(s)
will also provide a concise written statement of the reasons for the Award, but
this statement will not become part of the Award nor be admissible in any
judicial proceeding to enforce or vacate the Award.

(f)      JAMS/ENDISPUTE will issue the Award by serving copies on the Parties.

(g)      Within seven (7) calendar days after service of the Award, any Party,
with written notice to all other Parties, may serve upon the other Party(ies)
and JAMS/ENDISPUTE a request that the Arbitrator(s) correct any computational,
typographical or similar error in an Award, or the Arbitrator(s) may correct
such errors in the Award on his or her own initiative. The Arbitrator(s) will
make any necessary and appropriate correction to the Award within seven (7)
calendar days of receiving a request, provided that the other Party(ies) has a
reasonable opportunity to respond. The corrected Award will be served upon the
Parties.

(h)      The Award is considered final, for purposes of either the Optional
Appeal Procedure pursuant to Rule 23 or a judicial proceeding to enforce, modify
or vacate the Award pursuant to Rule 24, after seven

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(7)      calendar days of service of the Award, if no request for a correction
is made, or as of the date of service of a corrected Award.

Rule 23. Optional Appeal Procedure

(a)      The Appeal Panel will consist of three neutral members, unless the
Parties agree that there will be one neutral member. Upon receipt by the Case
Administrator of the written agreement of the Parties to the Optional Appeal
Procedure, the Case Administrator will recommend to the Parties an Appeal Panel
and will make any disclosures that are mandated by applicable law regarding the
candidates for the Panel. The Case Administrator will seek the agreement of the
Parties as to the selection of Appeal Panel ___ mbers. If the Parties do not
agree on the composition of the Appeal Panel within seven (7)calendar days of
having received the Case Administrator recommendation for the Appeal Panel, the
Case Administrator will appoint an Appeal Panel.

(b)      The procedure for filing and arguing an Appeal is as follows:

         (i) If all Parties have agreed to the Optional Appeal Procedure, any
         Party may Appeal an Arbitration Award that has been rendered pursuant
         to Rule 22 and has become final. The Appeal must be served, in writing,
         to the Case Administrator and on the opposing Party(ies) within
         fourteen (14) calendar days after the Award has become final. The
         letter or other writing evidencing the Appeal must specify those
         elements of the Award that are being appealed and must contain a brief
         statement of the basis for the Appeal.

         (ii) Within seven (7) calendar days of the service of the Appeal, the
         opposing Party(ies) may serve on the Case Administrator and on the
         opposing Party(ies) a Cross-Appeal with respect to any element of the
         Award. The letter or other writing evidencing the Cross-Appeal must
         specify those elements of the Award that are being Appealed and must
         contain a brief statement of the basis for the Cross-Appeal.

         (iii) The record on Appeal will consist of the stenographic or other
         record of the Arbitration Hearing and all exhibits, deposition
         transcripts and affidavits that had been accepted into the record of
         the Arbitration Hearing by the Arbitrator(s). The Parties will
         cooperate with the Case Administrator in compiling the record on
         Appeal, and the Case Administrator will provide the record to the
         Appeal Panel. No evidence not previously accepted by the Arbitrator(s)
         will be considered by the Appeal Panel, unless the basis of the Appeal
         is non-acceptance by the Arbitrator of certain evidence or unless the
         Appeal Panel determines that there is good cause to re-open the record
         pursuant to Rule 23(d).

         (iv) The Parties may elect to rely on the memoranda or briefs
         previously submitted to the Arbitrator(s). In the absence of such
         election, the Case Administrator will obtain the agreement of the
         Parties on a briefing schedule. If no agreement is reached, the Case
         Administrator will set the briefing schedule. Ordinarily, only opening
         briefs (of no more than 25 double-spaced pages) and response briefs (of
         no more than 15 double-spaced pages) will be allowed. The briefs maybe
         in the form of a letter.

         (v) The Appeal Panel will conduct an oral argument if all Parties
         request such argument or may conduct oral argument, in complex cases or
         unusual circumstances, on its own initiative. If there is to be oral
         argument, the Case Administrator will obtain the agreement of the
         Parties on both the date of such argument and the duration, including
         the allocation of time. In the absence of agreement, the Appeal Panel
         will set the date and duration of the oral argument, including the
         allocation of time.

(c)      Once an Appeal has been timely filed, the Arbitration Award is no
longer considered final for purposes of seeking judicial enforcement,
modification or vacating pursuant to Rule 24.

The Appeal Panel will apply the same standard of review as the first-level
appellate court in the jurisdiction would apply under similar circumstances and
will also apply the grounds for review under the applicable Arbitration review
statute. The Appeal Panel will respect the evidentiary standard set forth in
Rule 20(d). The Panel may affirm, reverse or modify an Award. It may not remand
to the original Arbitrator, but may

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re-open the record in order to review evidence that had been improperly excluded
by the Arbitrator or evidence that is now necessary in light of the Panel's
interpretation of the relevant .substantive law. A three-member Appeal Panel
will make its decision by majority vote and, absent good cause for an extension,
will issue the decision within twenty-one (21) calendar days of the date of the
oral argument, the receipt of the new evidence or receipt of the record and of
all briefs, whichever is applicable or later. Its decision will consist of a
concise written explanation, unless all Parties agree otherwise.

(e)      If a Party refuses to participate in the Optional Appeal Procedure
after having agreed to do so, the Appeal Panel will maintain jurisdiction over
the Appeal and will consider the Appeal as if all Parties were participating,
including retaining the authority to modify any Award or element of an Award
that had previously been entered in favor of the non-participating Party,
assuming it believes that the record, after application of the appropriate
standard of Appeal, justifies such action.

(f)      JAMS/ENDISPUTE will serve the Appeal Panel decision on the Parties.
Upon service of the Appeal Panel decision, the Award will be final for purposes
of judicial review.

Rule 24. Enforcement of the Award

Proceedings to enforce, confirm, modify or vacate an Award will be controlled by
and conducted in conformity with the Federal Arbitration Act, 9 U.S.C. Sec 1 et.
seq. or applicable state law.

Rule 25. Confidentiality and Privacy

(a)      The Parties, the Case Administrator and the Arbitrator will maintain
the confidential nature of the Arbitration proceeding and the Award, including
the Hearing and the written explanation of the Award, except as necessary in
connection with a judicial challenge to or enforcement of an Award, or unless
otherwise required by law or judicial decision.

(b)      The Arbitrator may issue orders to protect the confidentiality of
proprietary information, trade secrets or other sensitive information.

(c)      Subject to the discretion of the Arbitrator or agreement of the
Parties, any person having a direct interest in the Arbitration may attend the
Arbitration Hearing. The Arbitrator will have the discretion to exclude any
non-Party from any part of a Hearing.

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Rule 26. Waiver of Objection

If a Party becomes aware of a violation or failure to comply with these Rules
and fails promptly to object in writing, the objection will be deemed waived,
unless the Arbitrator or Senior Neutral determines that waiver will cause
substantial injustice or hardship.

Rule 27. Settlement and Consent Award

(a)      The Parties may agree, at any stage of the Arbitration process, to
submit the case to JAMS/ENDISPUTE for mediation. The JAMS/ENDISPUTE mediator
assigned to the case will not be an Arbitrator or a member of the Appeal Panel,
unless the Parties so agree pursuant to Rule 27(b).

(b)      The Parties may also agree to seek the assistance of the Arbitrator(s)
in reaching settlement. However, the Parties must confirm in writing that the
assistance of the Arbitrator(s) in such settlement efforts will not disqualify
the Arbitrator(s) from serving as Arbitrator(s) if settlement is not reached nor
will such assistance be argued to a reviewing court as the basis for vacating or
modifying an Award.

(c)      If the Parties inform the Case Administrator in writing that they have
reached a settlement, the Arbitration will be deemed terminated. If the Parties
request, the Arbitrator(s) may set forth the terms of the agreed settlement in
an Award, which will be referred to as a Consent Award, or the Arbitrator may
sign a

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Consent Award prepared by the Parties. The Consent Award will be binding on the
Parties and will be deemed the Award of the Arbitrator for purposes of
enforcement.

Rule 28. Sanctions

The Arbitrator(s) may order appropriate sanctions for failure of a Party to
comply with its obligations under any of these Rules. These sanctions may
include, but are not limited to, assessment of costs, prohibition of certain
evidence, or in extreme cases ruling on an issue submitted to Arbitration
adversely to the Party who has failed to comply.

Rule 29. Disqualification of the Arbitrator as a Witness or Party and Exclusion
of Liability

The Parties will not call the Arbitrator(s), the Case Administrator, Director of
Professional Services, Senior Judicial Officer or any other JAMS/ENDISPUTE
employee or agent as a witness or as an expert in any pending or subsequent
litigation or other proceeding involving the Parties and relating to the dispute
that is the subject of the Arbitration. The Arbitrator(s), Case Administrator,
Director of Professional Services, Senior Judicial Officer and other
JAMS/ENDISPUTE employees and agents are also disqualified as witnesses or
experts. The Parties will defend the Arbitrator(s), Case Administrator, Director
of Professional Services, Senior Judicial Officer and JAMS/ENDISPUTE from any
subpoenas from outside Parties arising from the Arbitration. Neither the
Arbitrator(s), Case Administrator, Director of Professional Services, Senior
Judicial Officer nor JAMS/ENDISPUTE is a necessary party in any litigation or
other proceeding relating to the Arbitration or the subject matter of the
Arbitration, and neither the Arbitrator(s), Case Administrator, Director of
Professional Services, Senior Judicial Officer nor JAMS/ENDISPUTE, including its
employees or agents, will be liable to any Party for any act or omission in
connection with any Arbitration conducted under these Rules.

Rule 30. Fees

(a)      Each Party will pay its pro-rata share of JAMS/ENDISPUTE's fees and
expenses as set forth in the JAMS/ENDISPUTE fee schedule in effect at the time
of the commencement of the Arbitration, unless the Parties agree on a different
allocation of fees and expenses. To the extent possible, the allocation of such
fees and expenses will not be disclosed to the Arbitrator(s). JAMS/ENDISPUTE's
agreement to render services is not only with the Party, but also with the
attorney or other representative of the Party in the Arbitration.

(b)      JAMS/ENDISPUTE requires that the Parties deposit the fees and expenses
for the Arbitration prior to the Hearing and may preclude a Party that has
failed to deposit its pro-rata or agreed-upon share of the fees and expenses
from offering evidence at the Hearing. JAMS/ENDISPUTE may waive the deposit
requirement upon a showing of good cause.

(c)      The Parties are jointly and severally liable for the payment of the
fees and expenses of JAMS/ENDISPUTE. In the event that one Party has not
appeared and the other Party has paid the full amount of the fees, upon request
the Arbitrator will award the defaulting Party's share of the fee obligation
against it and in favor of the Party that has paid. In addition, the Arbitrator
may award against any Party any costs or fees that the Party owes with respect
to the Arbitration.

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Rule 31. Bracketed (or High-Low) Arbitration Option

(a)      At any time before the issuance of the Arbitration Award, the Parties
may agree, in writing, on minimum and maximum amounts of damages that may be
awarded on each claim or on all claims in the aggregate. The Parties will
promptly notify the Case Administrator, and provide to the Case Administrator a
copy of their written agreement setting forth the agreed-upon maximum and
minimum amounts.

(b)      The Case Administrator will not inform the Arbitrator(s) of the
agreement to proceed with this option or of the agreed-upon minimum and maximum
levels, unless all Parties agree that he or she should so inform the
Arbitrator(s).

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(c)      The Arbitrator(s) will render the Award within thirty (30) calendar
days after the date of the closing of the Hearing or, if an Arbitration Hearing
has been waived, within thirty (30) calendar days after the date of the
Arbitrator(s) receipt of all materials specified by the Parties. In rendering
the Award, the Arbitrator(s) will apply the standard set forth in Rule 22(c).
The form of the final Award will be governed by Rule 22(e).

(d)      In the event that the Award of the Arbitrator(s) is in between the
agreed-upon minimum and maximum amounts, the Award will become final as is. In
the event that the Award of the Arbitrator(s) is below the agreed-upon minimum
amount, the final Award issued will be at the agreed-upon minimum amount. In the
event that the Award of the Arbitrator(s) is above the agreed-upon maximum
amount, the final Award issued will be the agreed-upon maximum amount.

Rule 32. "Final Offer (or Baseball)" Arbitration Option

(a)      Upon agreement of the Parties to utilize the option set forth in this
Rule, at least seven (7) calendar days before the Arbitration Hearing, the
Parties will exchange and provide to the Case Administrator written proposals
for the amount of money damages they would offer or demand, as applicable, and
that they believe to be appropriate based on the standard set forth in Rule
22(c). The Case Administrator will promptly provide a copy of the Parties'
proposals to the Arbitrator(s), unless the Parties agree that they should not be
provided to the Arbitrator(s). Anytime prior to the close of the Arbitration
Hearing, the Parties remain free to exchange revised written proposals of offers
or demands, which will supersede all prior proposals. The revised written
proposals will be provided to the Case Administrator who will promptly provide
them to the Arbitrator(s), unless the Parties agree otherwise.

(b)      If the Arbitrator(s) has been informed of the written proposals, in
rendering the Award the Arbitrator(s) will select between the Parties' last
proposals, choosing the proposal that the Arbitrator(s) finds most reasonable
and appropriate in light of the standard set forth in Rule 22(c).

(c)      If the Arbitrator(s) has not been informed of the written proposals,
the Arbitrator will render the Award as if pursuant to Rule 22, except that the
Award will thereafter be adjusted to conform to the closest of the last
proposals, and the closest of the last proposals will become the Award.

(d)      The Arbitrator will render the Award within thirty (30) calendar days
after the date of the closing of the Hearing or, if an Arbitration Hearing has
been waived, within thirty (30) calendar days after the date of the
Arbitrator(s) receipt of all materials specified by the Parties. The form of the
final Award will be governed by Rule 22(e).

---------------------
[/1/] All decisions to be made under these Rules by the Case Administrator will
be made under the supervision of the Director of Professional Services, Senior
Judicial Officer or other "lead neutral" in the particular JAMS/ENDISPUTE
office.

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<PAGE>

                                    EXHIBIT F
                                        *

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<PAGE>

                                 AMENDMENT NO. 1
                                TO THE AGREEMENT
                                     BETWEEN
                          DISCOVERY THERAPEUTICS, INC.
                                       AND
                                SCHWARZ PHARMA AG

         THIS AMENDMENT NO. 1 is entered into as of the 22 day of December,
1999, ("Amendment Effective Date") by and among DISCOVERY THERAPEUTICS, INC., a
Delaware corporation having a princapl place of business at 2028 Dabney Road,
Suite E-17, Richmond, VA 23230-3311 ("DTI") and SCHWARZ PHARMA AG, a corporation
formed under the laws of Germany and having a principle place of business at
Alfred-Nobel-Strasse 10, 40789 Monheim, Germany ("Schwarz").

                                    RECITALS

         WHEREAS, DTI and Schwarz entered into an Agreement dated as of July 16,
1996, for the late-stage development and commercialization of DTI's proprietary
dopamine receptor agonist N-0923 and various other compounds in all countries of
the world except Japan (the "Agreement");

         WHEREAS, DTI and Schwarz desire to amend the Agreement to expand the
territory in which Schwarz has rights to include Japan; and

         WHEREAS, not later than 30 days after the execution of this Amendment,
Schwarz will purchase $5 million worth of Series C Preferred Stock of DTI
pursuant to the Stock Purchase Agreement described herein.

         NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Amendment, DTI and Schwarz hereby amend the Agreement
as follows:

1.       Section 1.18 shall be deleted in its entirety and the following shall
         be inserted in its place:

                  1.18 "Territory" means all countries of the world.

2.       Section 5.2 shall be deleted in its entirety and the following shall be
         inserted in its place:

                  5.2      Milestones. Schwarz shall pay to DTI the following
         amounts within thirty (30) days of the first achievement, by any
         Licensed Product, of the respective milestone event set forth below and
         shall not pay again for subsequent Licensed Products:

<TABLE>
<CAPTION>
             Milestone Event                              Payment
<S>                                                       <C>
Commencement of Phase III clinical trial                     *
(enrollment of first patient)
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
             Milestone Event                              Payment
<S>                                                       <C>
First issuance of joint DTI-LTS patent in                    *
any Major Country of the Territory

Submission to regulatory authority of                        *
Regulatory Approval in Japan

NDA Approval                                                 *

Regulatory Approval in the first three                       *
non-US Major Countries ex Japan

Regulatory Approval in Japan                                 *
</TABLE>

Milestone payments shall be noncreditable and shall be nonrefundable.

3.       Section 5.3 shall be deleted in its entirety and the following shall be
         inserted in its place:

                  5.3      Earned Royalties. In addition, Schwarz shall pay DTI
         a running royalty on annual Net Sales of all Licensed Products
         according to the following marginal rates:

                           (a)      For annual Net Sales of Licensed Products up
         to *, * of such Net Sales; and

                           (b)      For the portion of annual Net Sales of
         Licensed Products in excess of * and not exceeding *, * of such Net
         Sales; and

                           (c)      For the portion of annual Net Sales of
         Licensed Products in excess of * of such Net Sales.

                           (d)      As of the Effective Date of this Agreement,
         the parties anticipate Schwarz will consummate a supply agreement with
         LTS. In such case the parties may decide that Schwarz shall pay to LTS
         some or all of royalties pursuant to Section 6.2 and reduce its royalty
         payments to DTI accordingly.

4.       The following new Section 5.12 shall be added to Article 5 of the
         Agreement:

         5.12     Equity Investment in DTI. Not later than thirty (30) days
after the Amendment Effective Date, the parties shall enter into a Stock
Purchase Agreement pursuant to which Schwarz shall purchase $5 million worth of
Series C Preferred Stock of DTI which shall represent 10% of DTI's capital stock
on a fully diluted basis.

5.       Except as otherwise amended herein, the Agreement shall remain in full
         force and effect.

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6.       This Amendment may be executed in any number of counterparts, each of
         which shall be deemed an original, and all of which taken together
         shall constitute one and the same instrument.

7.       This Amendment shall be effective as of the date first written above.

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment.

DISCOVERY THERAPEUTICS, INC.           SCHWARZ PHARMA AG

By: /s/ Donald A. McAfee               By: /s/ Lars Ekman; P. Schwarz-Schutte
----------------------------           -----------------------------------------
Title: Chairman and CEO                Title: Member of Board; Chairman of Board
----------------------------           -----------------------------------------

                                        3
<PAGE>
            AMENDMENT NO. 2 DATED OCTOBER 21, 2002 TO THE EXCLUSIVE
             LICENSE AGREEMENT BETWEEN ADERIS PHARMACEUTICALS, INC.
                    (FORMERLY DISCOVERY THERAPEUTICS, INC.)
                             AND SCHWARZ PHARMA AG
                         Effective as of July 17, 1998

     WHEREAS, Aderis Pharmaceuticals, Inc. ("Aderis") and Schwarz Pharma AG
("Schwarz") have previously entered into an Exclusive License Agreement, dated
July 17, 1998 relating to the development, manufacturing and commercialization
of a pharmaceutical compound known as Rotigotine ("Agreement"), and

     WHEREAS, Aderis and Schwarz have previously entered into an amendment to
the Agreement, which amendment is dated December 22, 1999 ("First Amendment");

     WHEREAS, Aderis and Schwarz now desire to modify certain terms of the
Agreement in order to facilitate the sublicensing of certain rights under the
Agreement for the Japanese market, to the mutual financial benefit of both
Aderis and Schwarz; and to that end have entered into this Agreement amendment
("Second Amendment");

     NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth below, Aderis and Schwarz mutually agree as follows:

     1. The provisions of this Second Amendment are hereby made a part of the
Agreement and any conflict between the provisions of this Second Amendment and
the Agreement shall be resolved in favor of this Second Amendment. All
capitalized terms used in this Second Amendment, and not defined herein, shall
have the same meanings as given to them in the Agreement.

     2. The following modifications are hereby made to the Agreement:

       (a) A sentence is added to Section 5.3(c) of the Agreement to read as
follows: "However, for any year in which worldwide Net Sales of Licensed
Products exceed * ("Sales Threshold"), the royalty rate applicable for Net Sales
in Japan for that portion of the year after the Sales Threshold has been
attained, shall be *."

       (b) A sentence is added to Section 2.3 of the Agreement to read as
follows: "The Parties agree to specifically exclude from the license granted to
Aderis pursuant to this Section 2.3, Japan and any country as to which Schwarz
has granted to a sub-licensee for Japan rights of first negotiation, first
refusal or option to acquire from Schwarz a sub-license for such country, until
such time as such sub-licensee's rights regarding such countries have terminated
or expired."

       (c) A new Section 11.9 is added to the Agreement to read as follows in
its entirety: "Aderis agrees and acknowledges that, should this Agreement
terminate through no fault of a particular Schwarz sub-licensee, that
sub-licensee, providing that it is not in default under its sublicense from
Schwarz, shall have the right to continue to commercialize any

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<PAGE>

sublicensed Licensed Product as set forth in such sublicense and in this
Agreement, as a direct licensee of Aderis."

       (d) "2. (d) Section 5.5 shall be amended to read as follows: "whichever
is longer (the "Royalty Term"). HOWEVER, IT IS UNDERSTOOD BETWEEN THE PARTIES
THAT THE ROYALTIES DUE ON NET SALES IN JAPAN SHALL BE REDUCED BY * FROM THAT
DATE ONWARDS WHEN SCHWARZ OR ITS SUBLICENSEE IN JAPAN CAN NO LONGER MARKET THE
LICENSED PRODUCT(S) ON AN EXCLUSIVE BASIS DUE TO THE LOSS OF (i) A VALID AND
UNEXPIRED CLAIM OF A DTI PATENT OR A LTS PATENT AND/ OR (ii) EXCLUSIVITY IN FACT
BASED ON APPLICABLE LOCAL LAWS, RULES AND/OR REGULATIONS IN JAPAN; SUCH
ROYALTIES TO BE FURTHER REDUCED BY AN ADDITIONAL * FROM THAT DATE WHERE IN
ADDITION A THIRD PARTY LAUNCHES A PHARMACEUTICAL PRODUCT CONTAINING A COMPOUND
IN PATCH FORMULATION IN JAPAN AND SUCH THIRD PARTY CAPTURES A * OF THE NET SALES
IN JAPAN OR A * IN SALES UNITS IN JAPAN IN ACCORDANCE WITH THE SALES REPORT OF
INTERCONTINENTAL MARKETING SERVICE (IMS) IN THE PREVIOUS FISCAL YEAR OF SCHWARZ
OR ITS SUBLICENSEE. (QUARTERLY IMS SALES FIGURES). For purposes...."

     3. Except as modified by this Second Amendment and the First Amendment, all
provisions of the Agreement shall remain in full force and effect.

     4. This Second Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.

     5. This Second Amendment shall be effective as of the date first written
above.

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the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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                                       2
<PAGE>

     IN WITNESS WHEREOF, the parties have hereto have executed this
Agreement in duplicate originals by their duly authorized officers or
representatives.

ADERIS PHARMACEUTICALS, INC.

Signature: ------------------------------

Name: -----------------------------------

Title: ----------------------------------

Date: -----------------------------------

SCHWARZ PHARMA AG

Signature: /s/ Dr. Iris Low-Friedrich        /s/ Detlef Thielgen
           --------------------------        ----------------------------------
Name: Prof. Dr. Iris Low-Friedrich           Detlef Thielgen

Title: Member of the Executive Board         Member of the Executive Board

Date: October 21, 2002

                                       3

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