Confidential Treatment Request Filed With The Secretary Of The Securities And Asset Purchase Agreement - OSI PHARMACEUTICALS INC - 8-16-1999

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Confidential Treatment Request Filed With The Secretary Of The Securities And Asset Purchase Agreement - OSI PHARMACEUTICALS INC - 8-16-1999 Powered By Docstoc
					Portions of Exhibit 2.1 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

ASSET PURCHASE AGREEMENT between CADUS PHARMACEUTICAL CORPORATION and OSI PHARMACEUTICALS, INC.

July 30, 1999

ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT made as of the 30th day of July 1999, by and between CADUS PHARMACEUTICAL CORPORATION, a Delaware corporation ("Seller"), and OSI PHARMACEUTICALS, INC., a Delaware corporation ("Buyer"). W I T N E S S E T H: WHEREAS, upon the terms and conditions set forth herein, Seller desires to sell and Buyer desires to purchase certain assets and to assume certain of the liabilities of Seller; and WHEREAS, certain terms used in this Agreement are defined in Section 9.10 hereof. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Purchase and Sale of Assets. 1.1. Purchase and Sale of Assets. Upon the terms and subject to the conditions set forth in this Agreement, on the date hereof, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any and all Liens (other than Permitted Liens) the assets of Seller described below (collectively, the "Assets"): (a) Fixtures, Furniture, Equipment, etc. The fixtures, furniture, furnishings, machinery, accessories, computers and peripheral devices, laboratory, office and other equipment, appliances and vehicles and any replacement and spare parts for any such assets set forth on Schedule 1.1(a) hereto (the "Fixed Assets"); (b) Inventory and Supplies. The laboratory and office supplies, wherever located, set forth on Schedule 1.1(b) hereto (collectively, the "Inventory");

(c) Leases. All of Seller's rights under the Leases set forth on Schedule 5.6 hereto;

ASSET PURCHASE AGREEMENT between CADUS PHARMACEUTICAL CORPORATION and OSI PHARMACEUTICALS, INC.

July 30, 1999

ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT made as of the 30th day of July 1999, by and between CADUS PHARMACEUTICAL CORPORATION, a Delaware corporation ("Seller"), and OSI PHARMACEUTICALS, INC., a Delaware corporation ("Buyer"). W I T N E S S E T H: WHEREAS, upon the terms and conditions set forth herein, Seller desires to sell and Buyer desires to purchase certain assets and to assume certain of the liabilities of Seller; and WHEREAS, certain terms used in this Agreement are defined in Section 9.10 hereof. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Purchase and Sale of Assets. 1.1. Purchase and Sale of Assets. Upon the terms and subject to the conditions set forth in this Agreement, on the date hereof, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any and all Liens (other than Permitted Liens) the assets of Seller described below (collectively, the "Assets"): (a) Fixtures, Furniture, Equipment, etc. The fixtures, furniture, furnishings, machinery, accessories, computers and peripheral devices, laboratory, office and other equipment, appliances and vehicles and any replacement and spare parts for any such assets set forth on Schedule 1.1(a) hereto (the "Fixed Assets"); (b) Inventory and Supplies. The laboratory and office supplies, wherever located, set forth on Schedule 1.1(b) hereto (collectively, the "Inventory");

(c) Leases. All of Seller's rights under the Leases set forth on Schedule 5.6 hereto; (d) Contracts and Agreements, etc. All of Seller's rights under the contracts and agreements (the "Purchased Contracts") set forth on Schedule 1.1(d) hereto; (e) Security Deposits and Claims Against Third Parties. The security deposits with third parties set forth on Schedule 1.1(e) hereto and all claims against third parties relating to items included in the Assets;

ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT made as of the 30th day of July 1999, by and between CADUS PHARMACEUTICAL CORPORATION, a Delaware corporation ("Seller"), and OSI PHARMACEUTICALS, INC., a Delaware corporation ("Buyer"). W I T N E S S E T H: WHEREAS, upon the terms and conditions set forth herein, Seller desires to sell and Buyer desires to purchase certain assets and to assume certain of the liabilities of Seller; and WHEREAS, certain terms used in this Agreement are defined in Section 9.10 hereof. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Purchase and Sale of Assets. 1.1. Purchase and Sale of Assets. Upon the terms and subject to the conditions set forth in this Agreement, on the date hereof, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any and all Liens (other than Permitted Liens) the assets of Seller described below (collectively, the "Assets"): (a) Fixtures, Furniture, Equipment, etc. The fixtures, furniture, furnishings, machinery, accessories, computers and peripheral devices, laboratory, office and other equipment, appliances and vehicles and any replacement and spare parts for any such assets set forth on Schedule 1.1(a) hereto (the "Fixed Assets"); (b) Inventory and Supplies. The laboratory and office supplies, wherever located, set forth on Schedule 1.1(b) hereto (collectively, the "Inventory");

(c) Leases. All of Seller's rights under the Leases set forth on Schedule 5.6 hereto; (d) Contracts and Agreements, etc. All of Seller's rights under the contracts and agreements (the "Purchased Contracts") set forth on Schedule 1.1(d) hereto; (e) Security Deposits and Claims Against Third Parties. The security deposits with third parties set forth on Schedule 1.1(e) hereto and all claims against third parties relating to items included in the Assets; (f) Prepaid Expenses, etc. The prepaid expenses set forth on Schedule 1.1(f); (g) Intellectual Property. All the Intellectual Property relating to the Compounds being sold to Buyer hereunder and all other Intellectual Property set forth on Schedule 1.1(g); (h) Know-How and Technical Information. All lab journals and notebooks, inventions, trade secrets, know-how (including, without limitation, proprietary know-how and use of application know-how), product designs, manufacturing, bio-engineering and other drawings, technical information, safety information, bio-engineering data and design and bio-engineering specifications, research records, similar data and formulas and processes existing on the date hereof and owned by Seller covering the Assets; (i) Permits. All of Seller's rights under the Permits set forth on Schedule 1.1(i); (j) Compound Library. All of Seller's rights, including, without limitation, all Patent Rights, in its library of Compounds, including, without limitation, all Compounds whose biological activity was identified by Seller prior to the date hereof under Seller's GPCR Directed Chemistry Program;

(c) Leases. All of Seller's rights under the Leases set forth on Schedule 5.6 hereto; (d) Contracts and Agreements, etc. All of Seller's rights under the contracts and agreements (the "Purchased Contracts") set forth on Schedule 1.1(d) hereto; (e) Security Deposits and Claims Against Third Parties. The security deposits with third parties set forth on Schedule 1.1(e) hereto and all claims against third parties relating to items included in the Assets; (f) Prepaid Expenses, etc. The prepaid expenses set forth on Schedule 1.1(f); (g) Intellectual Property. All the Intellectual Property relating to the Compounds being sold to Buyer hereunder and all other Intellectual Property set forth on Schedule 1.1(g); (h) Know-How and Technical Information. All lab journals and notebooks, inventions, trade secrets, know-how (including, without limitation, proprietary know-how and use of application know-how), product designs, manufacturing, bio-engineering and other drawings, technical information, safety information, bio-engineering data and design and bio-engineering specifications, research records, similar data and formulas and processes existing on the date hereof and owned by Seller covering the Assets; (i) Permits. All of Seller's rights under the Permits set forth on Schedule 1.1(i); (j) Compound Library. All of Seller's rights, including, without limitation, all Patent Rights, in its library of Compounds, including, without limitation, all Compounds whose biological activity was identified by Seller prior to the date hereof under Seller's GPCR Directed Chemistry Program; 3

(k) GPCR Directed Chemistry Program. All of Seller's rights including, without limitation, all Patent Rights, in the GPCR Directed Chemistry Program and the materials listed on Schedule 1.1(k); (l) Addresses. All business post office boxes and business telephone numbers for the Leased Property; (m) Insurance Proceeds. All insurance proceeds arising out of or related to damage, destruction or loss of any of the Assets to the extent of any damage or destruction that remains unrepaired, or to the extent any Asset remains unreplaced as of the date hereof; (n) Other Assets. All other intangible and tangible assets related to the Assets, including, without limitation: (i) all supplier information and correspondence relating to the Purchased Contracts;(ii) all research, statistical, records, files, reports and other documents and data; (iii) all research results and other know-how; and (iv) all other materials, books, records, files and data, in whatever form contained, relating to the Assumed Liabilities. 1.2. Excluded Assets. Notwithstanding any other provision of this Agreement, Seller shall not sell, assign or transfer to Buyer, and Buyer shall not purchase from Seller, any of the following assets (collectively, the "Excluded Assets"): (a) Corporate Records. (i) All books, records and other assets of Seller relating solely to corporate level activities, including, without limitation, corporate minute books, stock ledgers, tax records, financial and employment records and other corporate books and records of Seller, and (ii) all books and records of Seller which are not related to the Assets or Assumed Liabilities; (b) Corporate Name. All rights in and to the corporate name of Seller; 4

(c) SIBIA Judgment. All monies in escrow in connection with the judgment of SIBIA Neurosciences, Inc. ("SIBIA") against Seller;

(k) GPCR Directed Chemistry Program. All of Seller's rights including, without limitation, all Patent Rights, in the GPCR Directed Chemistry Program and the materials listed on Schedule 1.1(k); (l) Addresses. All business post office boxes and business telephone numbers for the Leased Property; (m) Insurance Proceeds. All insurance proceeds arising out of or related to damage, destruction or loss of any of the Assets to the extent of any damage or destruction that remains unrepaired, or to the extent any Asset remains unreplaced as of the date hereof; (n) Other Assets. All other intangible and tangible assets related to the Assets, including, without limitation: (i) all supplier information and correspondence relating to the Purchased Contracts;(ii) all research, statistical, records, files, reports and other documents and data; (iii) all research results and other know-how; and (iv) all other materials, books, records, files and data, in whatever form contained, relating to the Assumed Liabilities. 1.2. Excluded Assets. Notwithstanding any other provision of this Agreement, Seller shall not sell, assign or transfer to Buyer, and Buyer shall not purchase from Seller, any of the following assets (collectively, the "Excluded Assets"): (a) Corporate Records. (i) All books, records and other assets of Seller relating solely to corporate level activities, including, without limitation, corporate minute books, stock ledgers, tax records, financial and employment records and other corporate books and records of Seller, and (ii) all books and records of Seller which are not related to the Assets or Assumed Liabilities; (b) Corporate Name. All rights in and to the corporate name of Seller; 4

(c) SIBIA Judgment. All monies in escrow in connection with the judgment of SIBIA Neurosciences, Inc. ("SIBIA") against Seller; (d) Cash. All of Seller's cash and cash equivalents and accounts and notes receivable (including an account receivable of $18,005.38 from Solvay Pharmaceuticals B.V.); (e) Stock or Other Interests. All of the shares or other equity interests of any corporation or other entity and any partnership or joint venture owned, directly or indirectly, by Seller; (f) Living Chip Technology. All rights in the Living Chip Technology; (g) Software. All rights in the Software owned by the Seller (with respect to certain of which Buyer is obtaining a license); (h) Functional Genomics Program. All of Seller's rights in the Functional Genomics Program; (i) Excluded Fixed Assets. The fixed assets set forth on Schedule 1.2(i); (j) Excluded Inventory. The laboratory and office supplies and similar materials set forth on Schedule 1.2(j) (the "Excluded Inventory"); (k) Excluded Contracts. All of Seller's rights under the contracts and agreements set forth on Schedule 1.2(k) (the "Excluded Contracts"); (l) Excluded Security Deposits. The security deposits with third parties set forth on Schedule 1.2(l); (m) Excluded Prepaid Expenses. The prepaid expenses set forth on Schedule 1.2(m); (n) Excluded Intellectual Property. All Intellectual Property being licensed to Buyer pursuant to the Technology License Agreement and the Patent License Agreement (with

(c) SIBIA Judgment. All monies in escrow in connection with the judgment of SIBIA Neurosciences, Inc. ("SIBIA") against Seller; (d) Cash. All of Seller's cash and cash equivalents and accounts and notes receivable (including an account receivable of $18,005.38 from Solvay Pharmaceuticals B.V.); (e) Stock or Other Interests. All of the shares or other equity interests of any corporation or other entity and any partnership or joint venture owned, directly or indirectly, by Seller; (f) Living Chip Technology. All rights in the Living Chip Technology; (g) Software. All rights in the Software owned by the Seller (with respect to certain of which Buyer is obtaining a license); (h) Functional Genomics Program. All of Seller's rights in the Functional Genomics Program; (i) Excluded Fixed Assets. The fixed assets set forth on Schedule 1.2(i); (j) Excluded Inventory. The laboratory and office supplies and similar materials set forth on Schedule 1.2(j) (the "Excluded Inventory"); (k) Excluded Contracts. All of Seller's rights under the contracts and agreements set forth on Schedule 1.2(k) (the "Excluded Contracts"); (l) Excluded Security Deposits. The security deposits with third parties set forth on Schedule 1.2(l); (m) Excluded Prepaid Expenses. The prepaid expenses set forth on Schedule 1.2(m); (n) Excluded Intellectual Property. All Intellectual Property being licensed to Buyer pursuant to the Technology License Agreement and the Patent License Agreement (with 5

respect to which Buyer shall herewith license from Seller the rights therein provided), and the Intellectual Property set forth on Schedule 1.2(n); 2. Assumption of Liabilities. 2.1. Assumption of Liabilities by Buyer. Buyer shall assume and thereafter pay, perform, satisfy and discharge only the following obligations and liabilities of Seller to the extent that they are to be performed on or after the date hereof (collectively, the "Assumed Liabilities"): (a) Obligations Under Certain Agreements. The liabilities and obligations of Seller under the Leases and the Purchased Contracts, in each case, only to the extent that such Leases and Purchased Contracts have been validly assigned to Buyer hereunder (excluding any liability or obligation for breaches thereof arising out of or related to events or occurrences prior to the date hereof) and, in addition, Buyer shall assume payment obligations under the Facility Lease which have accrued since July 1, 1999 which amount to $133,223.08 as of the date hereof; (b) Employee Obligations. The liabilities and obligations of Seller with respect to Transferred Employees as listed on Schedule 7.2(a) hereto including, without limitation, certain obligations with respect to COBRA as described in Section 7.2(e); (c) Future Liabilities. All liabilities and obligations arising out of the operation by Buyer of the Assets after the date hereof. 2.2. Excluded Liabilities. Buyer is not assuming or agreeing to pay, perform, assume or discharge, or otherwise

respect to which Buyer shall herewith license from Seller the rights therein provided), and the Intellectual Property set forth on Schedule 1.2(n); 2. Assumption of Liabilities. 2.1. Assumption of Liabilities by Buyer. Buyer shall assume and thereafter pay, perform, satisfy and discharge only the following obligations and liabilities of Seller to the extent that they are to be performed on or after the date hereof (collectively, the "Assumed Liabilities"): (a) Obligations Under Certain Agreements. The liabilities and obligations of Seller under the Leases and the Purchased Contracts, in each case, only to the extent that such Leases and Purchased Contracts have been validly assigned to Buyer hereunder (excluding any liability or obligation for breaches thereof arising out of or related to events or occurrences prior to the date hereof) and, in addition, Buyer shall assume payment obligations under the Facility Lease which have accrued since July 1, 1999 which amount to $133,223.08 as of the date hereof; (b) Employee Obligations. The liabilities and obligations of Seller with respect to Transferred Employees as listed on Schedule 7.2(a) hereto including, without limitation, certain obligations with respect to COBRA as described in Section 7.2(e); (c) Future Liabilities. All liabilities and obligations arising out of the operation by Buyer of the Assets after the date hereof. 2.2. Excluded Liabilities. Buyer is not assuming or agreeing to pay, perform, assume or discharge, or otherwise be responsible for, any liabilities of Seller, fixed or contingent, known or unknown, other than the Assumed Liabilities, whether arising before or after the date hereof (collectively, the "Excluded Liabilities"), including, without limitation, any of the following items to the extent they are not Assumed Liabilities: 6

(a) Costs. Obligations in respect of costs or expenses incurred by Seller in connection with the transactions contemplated hereby; (b) Payables. Obligations for any accounts payable except as set forth in Section 2.1(a); (c) Affiliate Obligations. Obligations of Seller with respect to any balance due from Seller to any Affiliate of Seller; (d) Contractual Obligations. Obligations under any agreement to which Seller is a party to the extent that the benefits of such agreement are not assigned to Buyer; (e) Tax Liabilities. Any liabilities of Seller for any Taxes with respect to any Tax period ending on or prior to the date hereof (or for any Tax period ending after the date hereof to the extent allocable (determined in a manner consistent with Section 7.6 hereof) to the portion of such period beginning before and ending on the date hereof); (f) Severance Obligations. Any liability of Seller with respect to severance obligations for employees whose employment terminated on or prior to the date hereof; and (g) Other Liabilities. Any liability or obligation of Seller, whether absolute or contingent, due or to become due, not expressly assumed by Buyer herein. 3. Consideration for Transfer of the Assets. 3.1. Purchase Price. In consideration for the sale and transfer of the Assets, on the terms and subject to the conditions set forth in this Agreement, Buyer agrees to (i) pay in cash by wire transfer of immediately available funds the sum of $1,500,000 plus prepaid expenses and deposits of $74,096, and (ii) assume the Assumed Liabilities (collectively, the "Purchase Price").

(a) Costs. Obligations in respect of costs or expenses incurred by Seller in connection with the transactions contemplated hereby; (b) Payables. Obligations for any accounts payable except as set forth in Section 2.1(a); (c) Affiliate Obligations. Obligations of Seller with respect to any balance due from Seller to any Affiliate of Seller; (d) Contractual Obligations. Obligations under any agreement to which Seller is a party to the extent that the benefits of such agreement are not assigned to Buyer; (e) Tax Liabilities. Any liabilities of Seller for any Taxes with respect to any Tax period ending on or prior to the date hereof (or for any Tax period ending after the date hereof to the extent allocable (determined in a manner consistent with Section 7.6 hereof) to the portion of such period beginning before and ending on the date hereof); (f) Severance Obligations. Any liability of Seller with respect to severance obligations for employees whose employment terminated on or prior to the date hereof; and (g) Other Liabilities. Any liability or obligation of Seller, whether absolute or contingent, due or to become due, not expressly assumed by Buyer herein. 3. Consideration for Transfer of the Assets. 3.1. Purchase Price. In consideration for the sale and transfer of the Assets, on the terms and subject to the conditions set forth in this Agreement, Buyer agrees to (i) pay in cash by wire transfer of immediately available funds the sum of $1,500,000 plus prepaid expenses and deposits of $74,096, and (ii) assume the Assumed Liabilities (collectively, the "Purchase Price"). 7

3.2. Allocation of Purchase Price. The parties to this Agreement agree to allocate the Purchase Price as adjusted hereunder for all purposes (including financial, accounting and tax purposes) in accordance with the allocation schedule attached hereto as Schedule 3.2. Seller and Buyer shall jointly complete and separately file Form 8594 with their respective federal income tax returns for the current tax year in accordance with such allocation schedule. Neither Seller nor Buyer shall take a position on any tax return or before any governmental agency charged with the collection of any such tax that is any manner inconsistent with the terms of such allocation unless compelled to take an inconsistent position by such governmental agency. 4. Additional Documents. 4.1. Deliveries by Seller. Concurrently with the execution of this Agreement, Seller shall deliver to Buyer: (a) a duly executed Bill of Sale; (b) a duly executed Assignment of Patents; (c) a duly executed Assignment and Assumption of Contracts; (d) duly executed consents to assignment and assignments of the contracts and leases set forth on Schedule 5.3 hereof, including, without limitation, the consent to assignment and assignment of the Solvay Agreement, the GECC Lease and the Facility Lease; (e) a duly executed waiver of the default under the GECC Lease; (f) an opinion of Morrison Cohen Singer & Weinstein, LLP in form and substance satisfactory to Buyer; (g) an opinion of Richards, Layton & Finger, in the form and substance satisfactory to Buyer;

3.2. Allocation of Purchase Price. The parties to this Agreement agree to allocate the Purchase Price as adjusted hereunder for all purposes (including financial, accounting and tax purposes) in accordance with the allocation schedule attached hereto as Schedule 3.2. Seller and Buyer shall jointly complete and separately file Form 8594 with their respective federal income tax returns for the current tax year in accordance with such allocation schedule. Neither Seller nor Buyer shall take a position on any tax return or before any governmental agency charged with the collection of any such tax that is any manner inconsistent with the terms of such allocation unless compelled to take an inconsistent position by such governmental agency. 4. Additional Documents. 4.1. Deliveries by Seller. Concurrently with the execution of this Agreement, Seller shall deliver to Buyer: (a) a duly executed Bill of Sale; (b) a duly executed Assignment of Patents; (c) a duly executed Assignment and Assumption of Contracts; (d) duly executed consents to assignment and assignments of the contracts and leases set forth on Schedule 5.3 hereof, including, without limitation, the consent to assignment and assignment of the Solvay Agreement, the GECC Lease and the Facility Lease; (e) a duly executed waiver of the default under the GECC Lease; (f) an opinion of Morrison Cohen Singer & Weinstein, LLP in form and substance satisfactory to Buyer; (g) an opinion of Richards, Layton & Finger, in the form and substance satisfactory to Buyer; 8

(h) a duly executed non-exclusive license to use certain Intellectual Property of Seller to fulfill its obligations under the Solvay Agreement in form and substance satisfactory to Buyer (the "Technology License Agreement"); (i) a duly executed software license to use certain software owned by Seller in form and substance satisfactory to Buyer (the "Software License Agreement"); (j) a duly executed license relating to certain patent applications (the "Patent License Agreement"); and (k) an opinion of Lahive & Cockfield, patent counsel to Seller, in form and substance satisfactory to Buyer. 4.2. Deliveries by Buyer. Concurrently with the execution of this Agreement, Buyer shall deliver to Seller: (a) a duly executed Assumption Agreement and Assignment and Assumption Agreements of the GECC Lease, the Facility Lease and the Solvay Agreement; (b) a wire transfer to such account(s) as shall be designated in writing by Seller in an amount equal to $1,508,819.08, representing the $1,500,000 Purchase Price plus (i) prepaid expenses and deposits of $74,096, (ii) July rent under the Facility Lease of $133,223.08 paid by Seller on behalf of Buyer, and (iii) the maintenance fee under the Technology License Agreement of $28,500, and minus $227,000 due to Buyer under the research agreement described below; (c) an opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP in form and substance satisfactory to Seller; (d) a duly executed research agreement in form and substance acceptable to Seller pursuant to which Seller shall pay Buyer $227,000 on the date hereof; and 9

(h) a duly executed non-exclusive license to use certain Intellectual Property of Seller to fulfill its obligations under the Solvay Agreement in form and substance satisfactory to Buyer (the "Technology License Agreement"); (i) a duly executed software license to use certain software owned by Seller in form and substance satisfactory to Buyer (the "Software License Agreement"); (j) a duly executed license relating to certain patent applications (the "Patent License Agreement"); and (k) an opinion of Lahive & Cockfield, patent counsel to Seller, in form and substance satisfactory to Buyer. 4.2. Deliveries by Buyer. Concurrently with the execution of this Agreement, Buyer shall deliver to Seller: (a) a duly executed Assumption Agreement and Assignment and Assumption Agreements of the GECC Lease, the Facility Lease and the Solvay Agreement; (b) a wire transfer to such account(s) as shall be designated in writing by Seller in an amount equal to $1,508,819.08, representing the $1,500,000 Purchase Price plus (i) prepaid expenses and deposits of $74,096, (ii) July rent under the Facility Lease of $133,223.08 paid by Seller on behalf of Buyer, and (iii) the maintenance fee under the Technology License Agreement of $28,500, and minus $227,000 due to Buyer under the research agreement described below; (c) an opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP in form and substance satisfactory to Seller; (d) a duly executed research agreement in form and substance acceptable to Seller pursuant to which Seller shall pay Buyer $227,000 on the date hereof; and 9

(e) a non-exclusive license from Seller to Buyer relating to certain patents sold to Buyer hereunder. 5. Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows: 5.1. Seller's Organization and Authority; No Subsidiaries. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and lawful authority to carry on its business as is currently being conducted and has all necessary licenses and permits material to such business as it is currently being conducted, and to own, operate and lease the Assets. Seller is duly qualified or licensed to do business as a foreign corporation and is in good standing as a foreign corporation in each jurisdiction in which the ownership, operation or lease of the Assets or the conduct of its business or location of its properties requires qualification or licensing to do business as a foreign corporation and in which the failure to qualify could have a material adverse effect on the Assets. Seller has heretofore made available to Buyer complete and correct copies of its Certificate of Incorporation and By-laws. Seller has no subsidiaries. 5.2. Authorization. Seller has all requisite corporate power and authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform fully its obligations hereunder. The execution, delivery and performance of this Agreement by Seller and the consummation by Seller of the transactions contemplated hereby have been duly authorized by all necessary corporate action of Seller. This Agreement constitutes, and each document and instrument contemplated by this Agreement to be executed by Seller when executed and delivered in accordance with the provisions hereof shall constitute, the valid and legally binding obligation of Seller, enforceable against Seller in 10

accordance with its terms, subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally; and (ii) general principles of equity

(e) a non-exclusive license from Seller to Buyer relating to certain patents sold to Buyer hereunder. 5. Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows: 5.1. Seller's Organization and Authority; No Subsidiaries. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and lawful authority to carry on its business as is currently being conducted and has all necessary licenses and permits material to such business as it is currently being conducted, and to own, operate and lease the Assets. Seller is duly qualified or licensed to do business as a foreign corporation and is in good standing as a foreign corporation in each jurisdiction in which the ownership, operation or lease of the Assets or the conduct of its business or location of its properties requires qualification or licensing to do business as a foreign corporation and in which the failure to qualify could have a material adverse effect on the Assets. Seller has heretofore made available to Buyer complete and correct copies of its Certificate of Incorporation and By-laws. Seller has no subsidiaries. 5.2. Authorization. Seller has all requisite corporate power and authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform fully its obligations hereunder. The execution, delivery and performance of this Agreement by Seller and the consummation by Seller of the transactions contemplated hereby have been duly authorized by all necessary corporate action of Seller. This Agreement constitutes, and each document and instrument contemplated by this Agreement to be executed by Seller when executed and delivered in accordance with the provisions hereof shall constitute, the valid and legally binding obligation of Seller, enforceable against Seller in 10

accordance with its terms, subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). 5.3. Freedom to Contract. Subject to receipt of the consents and approvals described on Schedule 5.3 hereof, the execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby will not: (i) violate or conflict with any provision of the certificate of incorporation or bylaws or other charter documents of Seller, each as amended, (ii) violate any of the terms, conditions or provisions of any law, rule, statute, regulation, order, writ, injunction, judgment or decree of any court, Governmental Entity or regulatory agency to which Seller may be subject, or (iii) conflict with or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any material note, bond, indenture, debenture, security agreement, trust agreement, lien, mortgage, lease, agreement, license, franchise, permit, guaranty, joint venture agreement or other agreement, instrument or obligation, oral or written, to which Seller is a party (whether as an original party or as an assignee or successor) or by which Seller or any of its respective properties are bound. Except as set forth on Schedule 5.3 hereof and such reports under and such other compliance with the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations thereunder as may be required in connection with this Agreement and the transactions contemplated thereby, no authorization, approval, order, license, permit, franchise or third party consent, and no registration, declaration or filing with any court or Governmental Entity, is required in 11

connection with Seller's execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 5.4. SEC Documents; Financial Statements; Prepaid Expenses; Prepayments. Seller has made available to Buyer a true and complete copy of its Annual Report on Form 10-K and Amendment No. 1 to Form 10-K for the year ended December 31, 1998 and Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (the "Seller SEC Documents"). As of their respective dates, none of the Seller SEC Documents contained any untrue

accordance with its terms, subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). 5.3. Freedom to Contract. Subject to receipt of the consents and approvals described on Schedule 5.3 hereof, the execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby will not: (i) violate or conflict with any provision of the certificate of incorporation or bylaws or other charter documents of Seller, each as amended, (ii) violate any of the terms, conditions or provisions of any law, rule, statute, regulation, order, writ, injunction, judgment or decree of any court, Governmental Entity or regulatory agency to which Seller may be subject, or (iii) conflict with or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any material note, bond, indenture, debenture, security agreement, trust agreement, lien, mortgage, lease, agreement, license, franchise, permit, guaranty, joint venture agreement or other agreement, instrument or obligation, oral or written, to which Seller is a party (whether as an original party or as an assignee or successor) or by which Seller or any of its respective properties are bound. Except as set forth on Schedule 5.3 hereof and such reports under and such other compliance with the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations thereunder as may be required in connection with this Agreement and the transactions contemplated thereby, no authorization, approval, order, license, permit, franchise or third party consent, and no registration, declaration or filing with any court or Governmental Entity, is required in 11

connection with Seller's execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 5.4. SEC Documents; Financial Statements; Prepaid Expenses; Prepayments. Seller has made available to Buyer a true and complete copy of its Annual Report on Form 10-K and Amendment No. 1 to Form 10-K for the year ended December 31, 1998 and Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (the "Seller SEC Documents"). As of their respective dates, none of the Seller SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading except in the case of any Seller SEC Document, any statement or omission therein that has been corrected or otherwise disclosed or updated on a subsequent Seller SEC Document. The financial statements of the Seller included in the Seller SEC Documents complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with applicable requirements of GAAP (subject to, in the case of the unaudited statements, year-end audit adjustments and any other adjustments described therein, which will not be material, either individually or in the aggregate) the financial position of Seller as of their respective dates and the results of operations and the cash flows of Seller for the periods presented therein. As of the date hereof, Seller has not received any prepayments or advance payments under the 12

Solvay Agreement or any other Purchased Contract for work which has not been substantially performed as of the date hereof. 5.5. No Material Adverse Change. Except as set forth on Schedule 5.5 hereto, since March 31, 1999, there has not been any change which would materially impair the ability of Seller to perform its obligations under this Agreement or which would have a material adverse effect on the Assets. 5.6. Real Estate; Leases. Seller does not own any real property. Schedule 5.6 hereto sets forth a list and summary description of all real property and personal property leased or used by Seller in connection with its business (the "Leased Property"). Schedule 5.6 also sets forth a list of each contract pursuant to which Seller has

connection with Seller's execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 5.4. SEC Documents; Financial Statements; Prepaid Expenses; Prepayments. Seller has made available to Buyer a true and complete copy of its Annual Report on Form 10-K and Amendment No. 1 to Form 10-K for the year ended December 31, 1998 and Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (the "Seller SEC Documents"). As of their respective dates, none of the Seller SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading except in the case of any Seller SEC Document, any statement or omission therein that has been corrected or otherwise disclosed or updated on a subsequent Seller SEC Document. The financial statements of the Seller included in the Seller SEC Documents complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with applicable requirements of GAAP (subject to, in the case of the unaudited statements, year-end audit adjustments and any other adjustments described therein, which will not be material, either individually or in the aggregate) the financial position of Seller as of their respective dates and the results of operations and the cash flows of Seller for the periods presented therein. As of the date hereof, Seller has not received any prepayments or advance payments under the 12

Solvay Agreement or any other Purchased Contract for work which has not been substantially performed as of the date hereof. 5.5. No Material Adverse Change. Except as set forth on Schedule 5.5 hereto, since March 31, 1999, there has not been any change which would materially impair the ability of Seller to perform its obligations under this Agreement or which would have a material adverse effect on the Assets. 5.6. Real Estate; Leases. Seller does not own any real property. Schedule 5.6 hereto sets forth a list and summary description of all real property and personal property leased or used by Seller in connection with its business (the "Leased Property"). Schedule 5.6 also sets forth a list of each contract pursuant to which Seller has leased any Leased Property (the "Leases"). Seller has heretofore delivered to Buyer true and correct copies of all such Leases. Each of the Leases is valid and effective in accordance with its terms, and there is not, under any of the Leases, any existing default by Seller, or to Seller's knowledge, by any other party, or, to Seller's knowledge, any event with notice, lapse of time, or both, which would constitute a default which in any case or in the aggregate could have a material adverse effect on the Assets, except as set forth on Schedule 5.6. 5.7. Title to and Condition of Assets; Encumbrances, etc. Seller has and will convey to Buyer, good and marketable title to all of the Assets, free and clear of any mortgage, pledge, security interest, title defect or objection, lien, charge, claim, restriction, option, commitment or encumbrance of any kind (collectively, "Liens"), except for Permitted Liens and Liens set forth on Schedule 5.7 hereto. The assets contained in the Assets being conveyed hereunder, other than the Excluded Assets, together with the license agreements described in Sections 4.1(h), (i) and (j), respectively, constitute all of the rights, properties and assets 13

necessary to permit Buyer to effectively utilize and exploit the Assets. All of the Assets owned, leased or used by Seller are in good operating condition and repair (except for normal wear and tear), and are suitable for the purposes used. Schedule 5.7(a) hereof sets forth a true and complete listing of each of the Fixed Assets having a net book value, as of March 31, 1999, in excess of $5,000. Schedule 5.7(b) hereof sets forth a true and complete listing of each of the Fixed Assets which are not being conveyed to Buyer by Seller. Except as set forth on Schedule 5.7 hereto, no third party has any rights to purchase any of the Assets, or any interest therein or portion thereof, including rights of first offer or first refusal.

Solvay Agreement or any other Purchased Contract for work which has not been substantially performed as of the date hereof. 5.5. No Material Adverse Change. Except as set forth on Schedule 5.5 hereto, since March 31, 1999, there has not been any change which would materially impair the ability of Seller to perform its obligations under this Agreement or which would have a material adverse effect on the Assets. 5.6. Real Estate; Leases. Seller does not own any real property. Schedule 5.6 hereto sets forth a list and summary description of all real property and personal property leased or used by Seller in connection with its business (the "Leased Property"). Schedule 5.6 also sets forth a list of each contract pursuant to which Seller has leased any Leased Property (the "Leases"). Seller has heretofore delivered to Buyer true and correct copies of all such Leases. Each of the Leases is valid and effective in accordance with its terms, and there is not, under any of the Leases, any existing default by Seller, or to Seller's knowledge, by any other party, or, to Seller's knowledge, any event with notice, lapse of time, or both, which would constitute a default which in any case or in the aggregate could have a material adverse effect on the Assets, except as set forth on Schedule 5.6. 5.7. Title to and Condition of Assets; Encumbrances, etc. Seller has and will convey to Buyer, good and marketable title to all of the Assets, free and clear of any mortgage, pledge, security interest, title defect or objection, lien, charge, claim, restriction, option, commitment or encumbrance of any kind (collectively, "Liens"), except for Permitted Liens and Liens set forth on Schedule 5.7 hereto. The assets contained in the Assets being conveyed hereunder, other than the Excluded Assets, together with the license agreements described in Sections 4.1(h), (i) and (j), respectively, constitute all of the rights, properties and assets 13

necessary to permit Buyer to effectively utilize and exploit the Assets. All of the Assets owned, leased or used by Seller are in good operating condition and repair (except for normal wear and tear), and are suitable for the purposes used. Schedule 5.7(a) hereof sets forth a true and complete listing of each of the Fixed Assets having a net book value, as of March 31, 1999, in excess of $5,000. Schedule 5.7(b) hereof sets forth a true and complete listing of each of the Fixed Assets which are not being conveyed to Buyer by Seller. Except as set forth on Schedule 5.7 hereto, no third party has any rights to purchase any of the Assets, or any interest therein or portion thereof, including rights of first offer or first refusal. 5.8. Material Contracts. Seller has heretofore made available to Buyer (i) true and complete copies of all written contracts, agreements, commitments, arrangements, leases (including with respect to personal property), policies and other instruments to which it is a party or by which it is bound which (A) require payments to be made in excess of $25,000 per year, (B) is a Purchased Contract, or (C) is necessary for the proper use of the Assets (collectively, "Material Contracts"), and (ii) a written description of each Material Contract of which Seller is aware that has not been reduced to writing. Each of the Material Contracts is listed on Schedule 5.8. None of the Material Transfer Agreements listed as an Excluded Contract on Schedule 1.2(k) through which Seller has received materials relates to the GPCR Directed Chemistry Program or Seller's performance under the Solvay Agreement except, for the Material Transfer Agreements with Yale University and Albert Einstein College of Medicine of Yeshiva University. Seller is not, or has not received any written notice that any other party is, in default in any respect under any Purchased Contract, except as listed on Schedule 5.8 and except for those defaults which would not, either individually or in the aggregate, have a material adverse effect with respect to Seller; and, to Seller's knowledge, 14

there has not occurred any event or events that with the lapse of time or the giving of notice or both would constitute such a material default, except as listed on Schedule 5.8 and except for those defaults which would not, either individually or in the aggregate, have a material adverse effect with respect to Seller. Seller has not received notice of or has knowledge of any termination or threatened termination of a Purchased Contract, except as set forth on Schedule 5.8. 5.9. Permits. Schedule 5.9 hereto lists all currently existing licenses, permits, certificates, franchises and other

necessary to permit Buyer to effectively utilize and exploit the Assets. All of the Assets owned, leased or used by Seller are in good operating condition and repair (except for normal wear and tear), and are suitable for the purposes used. Schedule 5.7(a) hereof sets forth a true and complete listing of each of the Fixed Assets having a net book value, as of March 31, 1999, in excess of $5,000. Schedule 5.7(b) hereof sets forth a true and complete listing of each of the Fixed Assets which are not being conveyed to Buyer by Seller. Except as set forth on Schedule 5.7 hereto, no third party has any rights to purchase any of the Assets, or any interest therein or portion thereof, including rights of first offer or first refusal. 5.8. Material Contracts. Seller has heretofore made available to Buyer (i) true and complete copies of all written contracts, agreements, commitments, arrangements, leases (including with respect to personal property), policies and other instruments to which it is a party or by which it is bound which (A) require payments to be made in excess of $25,000 per year, (B) is a Purchased Contract, or (C) is necessary for the proper use of the Assets (collectively, "Material Contracts"), and (ii) a written description of each Material Contract of which Seller is aware that has not been reduced to writing. Each of the Material Contracts is listed on Schedule 5.8. None of the Material Transfer Agreements listed as an Excluded Contract on Schedule 1.2(k) through which Seller has received materials relates to the GPCR Directed Chemistry Program or Seller's performance under the Solvay Agreement except, for the Material Transfer Agreements with Yale University and Albert Einstein College of Medicine of Yeshiva University. Seller is not, or has not received any written notice that any other party is, in default in any respect under any Purchased Contract, except as listed on Schedule 5.8 and except for those defaults which would not, either individually or in the aggregate, have a material adverse effect with respect to Seller; and, to Seller's knowledge, 14

there has not occurred any event or events that with the lapse of time or the giving of notice or both would constitute such a material default, except as listed on Schedule 5.8 and except for those defaults which would not, either individually or in the aggregate, have a material adverse effect with respect to Seller. Seller has not received notice of or has knowledge of any termination or threatened termination of a Purchased Contract, except as set forth on Schedule 5.8. 5.9. Permits. Schedule 5.9 hereto lists all currently existing licenses, permits, certificates, franchises and other authorizations or inspections (collectively, "Permits") of any Governmental Entity which, to Seller's knowledge, are necessary to the ownership or use of the Assets, all of which Permits are possessed by or granted to Seller. Except as disclosed on Schedule 5.9, all the Permits are in full force and effect and no proceeding is pending or, to Seller's knowledge, threatened seeking the revocation or limitation of any such Permits. 5.10. Employee Matters. (a) (i) Except as set forth on Part I of Schedule 5.10(a) hereof, Seller does not or has not, within the last two years, for the benefit of current or former employees, maintain, administer or contribute to any "employee benefit plans" ("Benefit Plans") within the meaning of Section 3(3) of ERISA. (ii) Except as set forth on Part II of Schedule 5.10(a) hereof, Seller does not have any: (A) employment contracts (or any related agreements); (B) severance arrangements, (C) bonus or other incentive compensation arrangements; (D) fringe benefit or perquisite plans or arrangements; (E) deferred compensation arrangements; (F) non-competition arrangements; or (G) other material remunerative arrangements ("Employee Arrangements"). 15

(iii) Seller has provided Buyer copies or descriptions of such plans, contracts and arrangements set forth on Schedule 5.10(a). All Benefit Plans and other plans, contracts and arrangements set forth on Schedule 5.10(a) are and have been maintained in material compliance with their terms and all requirements of applicable law. (iv) Part III of Schedule 5.10(a) sets forth all of the outstanding options granted by Seller (the "Options") to Transferred Employees and the exercise prices thereof;

there has not occurred any event or events that with the lapse of time or the giving of notice or both would constitute such a material default, except as listed on Schedule 5.8 and except for those defaults which would not, either individually or in the aggregate, have a material adverse effect with respect to Seller. Seller has not received notice of or has knowledge of any termination or threatened termination of a Purchased Contract, except as set forth on Schedule 5.8. 5.9. Permits. Schedule 5.9 hereto lists all currently existing licenses, permits, certificates, franchises and other authorizations or inspections (collectively, "Permits") of any Governmental Entity which, to Seller's knowledge, are necessary to the ownership or use of the Assets, all of which Permits are possessed by or granted to Seller. Except as disclosed on Schedule 5.9, all the Permits are in full force and effect and no proceeding is pending or, to Seller's knowledge, threatened seeking the revocation or limitation of any such Permits. 5.10. Employee Matters. (a) (i) Except as set forth on Part I of Schedule 5.10(a) hereof, Seller does not or has not, within the last two years, for the benefit of current or former employees, maintain, administer or contribute to any "employee benefit plans" ("Benefit Plans") within the meaning of Section 3(3) of ERISA. (ii) Except as set forth on Part II of Schedule 5.10(a) hereof, Seller does not have any: (A) employment contracts (or any related agreements); (B) severance arrangements, (C) bonus or other incentive compensation arrangements; (D) fringe benefit or perquisite plans or arrangements; (E) deferred compensation arrangements; (F) non-competition arrangements; or (G) other material remunerative arrangements ("Employee Arrangements"). 15

(iii) Seller has provided Buyer copies or descriptions of such plans, contracts and arrangements set forth on Schedule 5.10(a). All Benefit Plans and other plans, contracts and arrangements set forth on Schedule 5.10(a) are and have been maintained in material compliance with their terms and all requirements of applicable law. (iv) Part III of Schedule 5.10(a) sets forth all of the outstanding options granted by Seller (the "Options") to Transferred Employees and the exercise prices thereof; (b) There are no collective bargaining or other agreements between Seller and any union or other employee organizations relating to employees of Seller whether such agreements are with Seller, or with any independent contractor or management company providing employees to Seller. (c) Except as set forth on Schedule 5.10(c) hereof, neither Seller nor any member of Seller's Group has, within the preceding six years, contributed to, or had an obligation to contribute to, any "employee pension benefit plan" within the meaning of Section 3(2) of ERISA which is subject to Title IV of ERISA. As used in the preceding sentence, "Seller's Group" includes any person who is, or was at the relevant time, a member of the same "controlled group of corporations" as Seller (within the meaning of Section 414(b) of the Code), or under "common control" with Seller (within the meaning of Section 414(c) of the Code). Seller has not, within the preceding six years, maintained or contributed to a multiemployer pension plan, as defined in Section 3(37) of ERISA, is not liable for any withdrawal or partial withdrawal liability with respect to any multiemployer or pension plan and neither Seller nor Buyer will become liable therefor as a result of the transactions contemplated hereby. (d) (i) There are no material controversies pending or, to Seller's knowledge, threatened, between Seller and any of the Transferred Employees, prospective employees, former 16

employees or retirees; and (ii) Seller has paid in full all wages, salaries, commissions, bonuses, benefits and other compensation due and payable to its Transferred Employees, including those arising under any policy, practice, agreement, program, statute or other law.

(iii) Seller has provided Buyer copies or descriptions of such plans, contracts and arrangements set forth on Schedule 5.10(a). All Benefit Plans and other plans, contracts and arrangements set forth on Schedule 5.10(a) are and have been maintained in material compliance with their terms and all requirements of applicable law. (iv) Part III of Schedule 5.10(a) sets forth all of the outstanding options granted by Seller (the "Options") to Transferred Employees and the exercise prices thereof; (b) There are no collective bargaining or other agreements between Seller and any union or other employee organizations relating to employees of Seller whether such agreements are with Seller, or with any independent contractor or management company providing employees to Seller. (c) Except as set forth on Schedule 5.10(c) hereof, neither Seller nor any member of Seller's Group has, within the preceding six years, contributed to, or had an obligation to contribute to, any "employee pension benefit plan" within the meaning of Section 3(2) of ERISA which is subject to Title IV of ERISA. As used in the preceding sentence, "Seller's Group" includes any person who is, or was at the relevant time, a member of the same "controlled group of corporations" as Seller (within the meaning of Section 414(b) of the Code), or under "common control" with Seller (within the meaning of Section 414(c) of the Code). Seller has not, within the preceding six years, maintained or contributed to a multiemployer pension plan, as defined in Section 3(37) of ERISA, is not liable for any withdrawal or partial withdrawal liability with respect to any multiemployer or pension plan and neither Seller nor Buyer will become liable therefor as a result of the transactions contemplated hereby. (d) (i) There are no material controversies pending or, to Seller's knowledge, threatened, between Seller and any of the Transferred Employees, prospective employees, former 16

employees or retirees; and (ii) Seller has paid in full all wages, salaries, commissions, bonuses, benefits and other compensation due and payable to its Transferred Employees, including those arising under any policy, practice, agreement, program, statute or other law. (e) Schedule 5.10(e) hereof contains a correct and complete list of (i) the names and current annual compensation rates of all Transferred Employees and consultants; (ii) the names and amounts, if any, paid, accrued or to be paid to all Transferred Employees or former employees under any severance, bonus, incentive or similar plans; and (iii) all vacation and sick pay accrued or anticipated to be accrued in respect of Transferred Employees. 5.11. Litigation. Except as set forth on Schedule 5.11 hereof, there is no action, suit, inquiry, litigation, proceeding or investigation by or before any referee, mediator or arbitrator, or any court or governmental or other regulatory or administrative agency or commission, pending or, to Seller's knowledge, threatened, against or involving Seller in respect of the Assets or Seller's business. Except as set forth on Schedule 5.11 hereof, Seller is not subject to any judgment, order or decree entered in any lawsuit or proceeding that might adversely affect Buyer's rights in the Assets or Buyer's ability to effectively utilize and exploit the Assets after the date hereof. 5.12. Compliance with Law. (a) Except as described on Schedule 5.12 hereof, Seller has complied in all material respects with, and is not in violation of any, law, ordinance or governmental rule or regulation (including, without limitation, any applicable business and zoning ordinances) to which the Assets are subject; and (b) Except as set forth on Schedule 5.12 hereof, Seller has not received any claim or notice of any violation of any building, zoning, fire, health, employment or 17

employees or retirees; and (ii) Seller has paid in full all wages, salaries, commissions, bonuses, benefits and other compensation due and payable to its Transferred Employees, including those arising under any policy, practice, agreement, program, statute or other law. (e) Schedule 5.10(e) hereof contains a correct and complete list of (i) the names and current annual compensation rates of all Transferred Employees and consultants; (ii) the names and amounts, if any, paid, accrued or to be paid to all Transferred Employees or former employees under any severance, bonus, incentive or similar plans; and (iii) all vacation and sick pay accrued or anticipated to be accrued in respect of Transferred Employees. 5.11. Litigation. Except as set forth on Schedule 5.11 hereof, there is no action, suit, inquiry, litigation, proceeding or investigation by or before any referee, mediator or arbitrator, or any court or governmental or other regulatory or administrative agency or commission, pending or, to Seller's knowledge, threatened, against or involving Seller in respect of the Assets or Seller's business. Except as set forth on Schedule 5.11 hereof, Seller is not subject to any judgment, order or decree entered in any lawsuit or proceeding that might adversely affect Buyer's rights in the Assets or Buyer's ability to effectively utilize and exploit the Assets after the date hereof. 5.12. Compliance with Law. (a) Except as described on Schedule 5.12 hereof, Seller has complied in all material respects with, and is not in violation of any, law, ordinance or governmental rule or regulation (including, without limitation, any applicable business and zoning ordinances) to which the Assets are subject; and (b) Except as set forth on Schedule 5.12 hereof, Seller has not received any claim or notice of any violation of any building, zoning, fire, health, employment or 17

environmental laws, codes, ordinances, rules or regulations relating to Seller's properties, premises, business or employees. 5.13. Intellectual Property. Schedule 5.13 sets forth an accurate and complete list (showing in each case the registered or other owner, registration number, and registration or other expiration date, if any) of all Patent Rights protecting the Assets (the "Intellectual Property"). With respect to the Intellectual Property: (i) Except as set forth on Part I of Schedule 5.13 (which Schedule sets forth the nature of Seller's rights (or grant of rights), or any limitations thereon, the owner of such rights (or the licensee or grantee of such rights and the nature of such grant), and listing the relevant agreement(s) pursuant to which Seller obtained (or granted) such rights), Seller has sole and exclusive right, title and interest in and to the Intellectual Property or the sole and exclusive right to use the Intellectual Property. (ii) Except as set forth on Part I of Schedule 5.13, Seller's rights in the Intellectual Property are free and clear of any Liens and there are no agreements or arrangements in effect with respect to the marketing, distribution, licensing, sale, resale or promotion of the Intellectual Property between Seller and any other person. (iii) Except as set forth on Part II of Schedule 5.13, with respect to the Intellectual Property (i) no action, suit, proceeding or investigation is pending or threatened; (ii) to Seller's knowledge, none of the Intellectual Property owned or used by Seller, and none of the Intellectual Property owned by third parties and used by Seller, interferes with, infringes upon, conflicts with or otherwise violates the rights of others or is being interfered with or infringed upon by others, and none is subject to any outstanding order, decree, judgment, stipulation or charge; (iii) no royalty, commission or similar arrangements require any further payment by 18

Seller, (iv) Seller has not agreed to indemnify any person for or against any infringement of or by the Intellectual

environmental laws, codes, ordinances, rules or regulations relating to Seller's properties, premises, business or employees. 5.13. Intellectual Property. Schedule 5.13 sets forth an accurate and complete list (showing in each case the registered or other owner, registration number, and registration or other expiration date, if any) of all Patent Rights protecting the Assets (the "Intellectual Property"). With respect to the Intellectual Property: (i) Except as set forth on Part I of Schedule 5.13 (which Schedule sets forth the nature of Seller's rights (or grant of rights), or any limitations thereon, the owner of such rights (or the licensee or grantee of such rights and the nature of such grant), and listing the relevant agreement(s) pursuant to which Seller obtained (or granted) such rights), Seller has sole and exclusive right, title and interest in and to the Intellectual Property or the sole and exclusive right to use the Intellectual Property. (ii) Except as set forth on Part I of Schedule 5.13, Seller's rights in the Intellectual Property are free and clear of any Liens and there are no agreements or arrangements in effect with respect to the marketing, distribution, licensing, sale, resale or promotion of the Intellectual Property between Seller and any other person. (iii) Except as set forth on Part II of Schedule 5.13, with respect to the Intellectual Property (i) no action, suit, proceeding or investigation is pending or threatened; (ii) to Seller's knowledge, none of the Intellectual Property owned or used by Seller, and none of the Intellectual Property owned by third parties and used by Seller, interferes with, infringes upon, conflicts with or otherwise violates the rights of others or is being interfered with or infringed upon by others, and none is subject to any outstanding order, decree, judgment, stipulation or charge; (iii) no royalty, commission or similar arrangements require any further payment by 18

Seller, (iv) Seller has not agreed to indemnify any person for or against any infringement of or by the Intellectual Property; (v) to Seller's knowledge, there is no patent, invention or application therefor or similar property which would infringe upon any of the Intellectual Property; and (vi) all registrations of items of Intellectual Property owned by Seller registered under applicable law are valid and in force, and in the case of applications, all patent applications with respect to Patent Rights are pending and in good standing, without challenge of any kind. (iv) Except as set forth on Part III of Schedule 5.13, none of the Intellectual Property, including any agreements or arrangements pursuant to which Seller has rights in third party Intellectual Property, is subject to any extensions, renewals, taxes or fees due within 90 days after the date hereof. (v) Except as set forth on Schedule 5.13, Seller is not subject to any judgment, order, writ, injunction or decree of any court or any Federal, state, local or other governmental agency or instrumentality, domestic or foreign, or any arbitrator, nor is a party to any contract which restricts or impairs the use of any Intellectual Property. (vi) During the preceding five years, Seller has not been known by or done business under any other name not listed on Schedule 5.13. 5.14. Trade Secrets. Seller has provided Buyer access to all information with respect to the Assets in the nature of confidential ideas, know-how, trade secrets or proprietary information that may provide Seller with an advantage over competitors who do not know or use it, including formulae, patterns, inventions, processes, designs, devices, compilations of information and/or data, copyrightable material and technical information and other proprietary information of Seller with respect to the Assets (the "Technical Information"). With respect to the Technical Information: (i) it is owned solely and exclusively by Seller and Seller is solely 19

responsible for its development; (ii) it has been maintained and protected with appropriate proprietary notices (including without limitation, notice of ownership), confidentiality and non-disclosure agreements and such other measures as necessary to properly protect and prevent disclosure to unauthorized parties of the proprietary, trade secret and/or confidential information contained therein; (iii) all Technical Information and any copies

Seller, (iv) Seller has not agreed to indemnify any person for or against any infringement of or by the Intellectual Property; (v) to Seller's knowledge, there is no patent, invention or application therefor or similar property which would infringe upon any of the Intellectual Property; and (vi) all registrations of items of Intellectual Property owned by Seller registered under applicable law are valid and in force, and in the case of applications, all patent applications with respect to Patent Rights are pending and in good standing, without challenge of any kind. (iv) Except as set forth on Part III of Schedule 5.13, none of the Intellectual Property, including any agreements or arrangements pursuant to which Seller has rights in third party Intellectual Property, is subject to any extensions, renewals, taxes or fees due within 90 days after the date hereof. (v) Except as set forth on Schedule 5.13, Seller is not subject to any judgment, order, writ, injunction or decree of any court or any Federal, state, local or other governmental agency or instrumentality, domestic or foreign, or any arbitrator, nor is a party to any contract which restricts or impairs the use of any Intellectual Property. (vi) During the preceding five years, Seller has not been known by or done business under any other name not listed on Schedule 5.13. 5.14. Trade Secrets. Seller has provided Buyer access to all information with respect to the Assets in the nature of confidential ideas, know-how, trade secrets or proprietary information that may provide Seller with an advantage over competitors who do not know or use it, including formulae, patterns, inventions, processes, designs, devices, compilations of information and/or data, copyrightable material and technical information and other proprietary information of Seller with respect to the Assets (the "Technical Information"). With respect to the Technical Information: (i) it is owned solely and exclusively by Seller and Seller is solely 19

responsible for its development; (ii) it has been maintained and protected with appropriate proprietary notices (including without limitation, notice of ownership), confidentiality and non-disclosure agreements and such other measures as necessary to properly protect and prevent disclosure to unauthorized parties of the proprietary, trade secret and/or confidential information contained therein; (iii) all Technical Information and any copies thereof shall be delivered to Buyer on the date hereof; and (iv) Seller has no knowledge of any violation of any trade secret rights or other Intellectual Property rights with respect to such Technical Information. 5.15. Software and Information Systems. Schedule 5.15 sets forth an accurate and complete list of all computer software programs and other information systems, in any media, including, without limitation, all program specifications, charts, procedures, input data, databases, compilations, routines, tool sets, compilers, higher level or "proprietary" languages, report layouts and formats, record file layouts, diagrams, functional specifications and narrative descriptions, flow charts and related documentation and materials, whether in source code, object code or human readable form, and all other related material used by Seller (the "Software") and identifies (i) Software that is owned by Seller, and (ii) Software that is licensed to Seller, the licensor of the licensed Software, and, if different, the owner thereof, any other Software in which Seller has any right of use, possessory or proprietary rights, and the manner in which Seller acquired rights and the owner of the Software. With respect to the Software: (a) Except as set forth on Schedule 5.15, the Software owned by Seller is not subject to any transfer, assignment, source code escrow agreement or reversion; the Software licensed to Seller is not subject to any contractual site, equipment, or other operational limitations; 20

Software developed by Seller internally or acquired by Seller has been developed without the aid or use of any consultants, agents, independent contractors or persons (other than employees of Seller) who did not assign all ownership to Seller; and Software commissioned for development by Seller has been developed subject to written agreements whereby the ownership of the software vested immediately in Seller and to the extent that vesting did not occur, the developer is required to assign all ownership to Seller without further consideration.

responsible for its development; (ii) it has been maintained and protected with appropriate proprietary notices (including without limitation, notice of ownership), confidentiality and non-disclosure agreements and such other measures as necessary to properly protect and prevent disclosure to unauthorized parties of the proprietary, trade secret and/or confidential information contained therein; (iii) all Technical Information and any copies thereof shall be delivered to Buyer on the date hereof; and (iv) Seller has no knowledge of any violation of any trade secret rights or other Intellectual Property rights with respect to such Technical Information. 5.15. Software and Information Systems. Schedule 5.15 sets forth an accurate and complete list of all computer software programs and other information systems, in any media, including, without limitation, all program specifications, charts, procedures, input data, databases, compilations, routines, tool sets, compilers, higher level or "proprietary" languages, report layouts and formats, record file layouts, diagrams, functional specifications and narrative descriptions, flow charts and related documentation and materials, whether in source code, object code or human readable form, and all other related material used by Seller (the "Software") and identifies (i) Software that is owned by Seller, and (ii) Software that is licensed to Seller, the licensor of the licensed Software, and, if different, the owner thereof, any other Software in which Seller has any right of use, possessory or proprietary rights, and the manner in which Seller acquired rights and the owner of the Software. With respect to the Software: (a) Except as set forth on Schedule 5.15, the Software owned by Seller is not subject to any transfer, assignment, source code escrow agreement or reversion; the Software licensed to Seller is not subject to any contractual site, equipment, or other operational limitations; 20

Software developed by Seller internally or acquired by Seller has been developed without the aid or use of any consultants, agents, independent contractors or persons (other than employees of Seller) who did not assign all ownership to Seller; and Software commissioned for development by Seller has been developed subject to written agreements whereby the ownership of the software vested immediately in Seller and to the extent that vesting did not occur, the developer is required to assign all ownership to Seller without further consideration. (b) Except as set forth on Schedule 5.15 Seller's rights in the Software owned by Seller are free and clear of any Liens. (c) Seller has received no notice of any violation of patent, trade secret rights, copyrights or other proprietary rights with respect to any Software and knows of no basis therefor. (d) The Software owned by Seller and related systems in their current form are Year 2000 Compliant. "Year 2000 Compliant" means that the Software owned by Seller and the hardware systems used or relied on in Seller's business is designed to be used prior to, during and after the calendar year 2000 A.D., and Software owned by Seller will accurately receive, provide and process data/time data (including, without limitation, calculating, comparing and sequencing) from, into and between the 20th and 21st centuries, including the years 1999 and 2000, and leap year calculations and will not malfunction, cease to function, or provide invalid or incorrect results as a result of data/time data, to the extent that other information technology used in combination with Software owned by Seller, properly exchanges date/time data with it. (e) To Seller's knowledge, the Software contains no timer, virus, copy protection device, disabling code, clock, counter or other limiting design or routine that causes the Software (or any operation thereof) to become erased, inoperable, impaired, or otherwise incapable of being used in the full manner for which it was contemplated for use under this 21

Agreement to such an extent that such erasure, inoperability, impairment or incapability of use would result in a material adverse effect. 5.16. Tax Matters.

Software developed by Seller internally or acquired by Seller has been developed without the aid or use of any consultants, agents, independent contractors or persons (other than employees of Seller) who did not assign all ownership to Seller; and Software commissioned for development by Seller has been developed subject to written agreements whereby the ownership of the software vested immediately in Seller and to the extent that vesting did not occur, the developer is required to assign all ownership to Seller without further consideration. (b) Except as set forth on Schedule 5.15 Seller's rights in the Software owned by Seller are free and clear of any Liens. (c) Seller has received no notice of any violation of patent, trade secret rights, copyrights or other proprietary rights with respect to any Software and knows of no basis therefor. (d) The Software owned by Seller and related systems in their current form are Year 2000 Compliant. "Year 2000 Compliant" means that the Software owned by Seller and the hardware systems used or relied on in Seller's business is designed to be used prior to, during and after the calendar year 2000 A.D., and Software owned by Seller will accurately receive, provide and process data/time data (including, without limitation, calculating, comparing and sequencing) from, into and between the 20th and 21st centuries, including the years 1999 and 2000, and leap year calculations and will not malfunction, cease to function, or provide invalid or incorrect results as a result of data/time data, to the extent that other information technology used in combination with Software owned by Seller, properly exchanges date/time data with it. (e) To Seller's knowledge, the Software contains no timer, virus, copy protection device, disabling code, clock, counter or other limiting design or routine that causes the Software (or any operation thereof) to become erased, inoperable, impaired, or otherwise incapable of being used in the full manner for which it was contemplated for use under this 21

Agreement to such an extent that such erasure, inoperability, impairment or incapability of use would result in a material adverse effect. 5.16. Tax Matters. (a) Seller has duly and timely filed or caused to be filed (or, if not filed, has obtained valid extensions to file) all material Federal, state, local and foreign income, franchise, excise, payroll, sales and use, property and withholding tax returns, reports, estimates and information and other statements or returns (collectively, "Tax Returns") required to be filed by or on behalf of it pursuant to any applicable Federal, state, local or foreign tax laws for all years and periods for which such Tax Returns have become due. All such Tax Returns were correct in all material respects as filed and correctly reflect in all material respects the Federal, state, local and foreign income, franchise, excise, payroll, sales and use, property, withholding and other taxes, duties, imposts and governmental charges (and charges in lieu of any thereof), together with interest, additions to tax and penalties (collectively, "Taxes") required to be paid or collected by (or allocable to) the Seller. (b) There are no Liens for Taxes upon any property of Seller except for Permitted Liens. All amounts required to be withheld by Seller from its employees for income taxes, social security and other payroll Taxes have been collected and withheld, and paid to the respective governmental agencies, or set aside in accounts for such purpose, or accrued, reserved against and entered upon Seller's books and records. (c) No written currently unresolved claim has ever been made by a taxing authority in a jurisdiction where Seller does not file Tax Returns that Seller is or may be subject to Taxes assessed by such jurisdiction. 22

(d) Seller (i) has paid or caused to be paid all material Taxes required to be paid by it through the date hereof and (ii) has properly and fully accrued on its financial statements referred to in Section 5.4 above, all material Taxes for any period from the date of the last reporting period covered by any Tax Returns up to and including

Agreement to such an extent that such erasure, inoperability, impairment or incapability of use would result in a material adverse effect. 5.16. Tax Matters. (a) Seller has duly and timely filed or caused to be filed (or, if not filed, has obtained valid extensions to file) all material Federal, state, local and foreign income, franchise, excise, payroll, sales and use, property and withholding tax returns, reports, estimates and information and other statements or returns (collectively, "Tax Returns") required to be filed by or on behalf of it pursuant to any applicable Federal, state, local or foreign tax laws for all years and periods for which such Tax Returns have become due. All such Tax Returns were correct in all material respects as filed and correctly reflect in all material respects the Federal, state, local and foreign income, franchise, excise, payroll, sales and use, property, withholding and other taxes, duties, imposts and governmental charges (and charges in lieu of any thereof), together with interest, additions to tax and penalties (collectively, "Taxes") required to be paid or collected by (or allocable to) the Seller. (b) There are no Liens for Taxes upon any property of Seller except for Permitted Liens. All amounts required to be withheld by Seller from its employees for income taxes, social security and other payroll Taxes have been collected and withheld, and paid to the respective governmental agencies, or set aside in accounts for such purpose, or accrued, reserved against and entered upon Seller's books and records. (c) No written currently unresolved claim has ever been made by a taxing authority in a jurisdiction where Seller does not file Tax Returns that Seller is or may be subject to Taxes assessed by such jurisdiction. 22

(d) Seller (i) has paid or caused to be paid all material Taxes required to be paid by it through the date hereof and (ii) has properly and fully accrued on its financial statements referred to in Section 5.4 above, all material Taxes for any period from the date of the last reporting period covered by any Tax Returns up to and including the date hereof. (e) There is no pending or potential audit, dispute or claim concerning any Tax Return or Tax liability of Seller now in progress or, to the Seller's best knowledge, threatened against Seller. (f) Seller is not and has not been a party to any Tax sharing agreement. (g) Seller has never been included in a consolidated, unitary, combined or other such Tax Return with another entity. Seller has no liability for the Taxes of any other person (other than Seller) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) as a transferee or successor by contract or otherwise. 5.17. Insurance. Seller has not made any claims under any insurance policies for loss or damages to any of the Assets prior to the date hereof. 5.18. Environmental Matters. (a) Seller is in material compliance with all Environmental Laws applicable to Seller's business. There are no Environmental Claims relating to the Assets pending or, to Seller's knowledge, threatened against or involving Seller. (b) Except as set forth on Schedule 5.18 hereof, (i) no underground tank or other underground storage receptacle for Hazardous Substances is currently located at any Leased Property and there have been no releases of any Hazardous Substances at any Leased Property. True and correct copies of all Environmental Reports have been made available to Buyer. 23

(d) Seller (i) has paid or caused to be paid all material Taxes required to be paid by it through the date hereof and (ii) has properly and fully accrued on its financial statements referred to in Section 5.4 above, all material Taxes for any period from the date of the last reporting period covered by any Tax Returns up to and including the date hereof. (e) There is no pending or potential audit, dispute or claim concerning any Tax Return or Tax liability of Seller now in progress or, to the Seller's best knowledge, threatened against Seller. (f) Seller is not and has not been a party to any Tax sharing agreement. (g) Seller has never been included in a consolidated, unitary, combined or other such Tax Return with another entity. Seller has no liability for the Taxes of any other person (other than Seller) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) as a transferee or successor by contract or otherwise. 5.17. Insurance. Seller has not made any claims under any insurance policies for loss or damages to any of the Assets prior to the date hereof. 5.18. Environmental Matters. (a) Seller is in material compliance with all Environmental Laws applicable to Seller's business. There are no Environmental Claims relating to the Assets pending or, to Seller's knowledge, threatened against or involving Seller. (b) Except as set forth on Schedule 5.18 hereof, (i) no underground tank or other underground storage receptacle for Hazardous Substances is currently located at any Leased Property and there have been no releases of any Hazardous Substances at any Leased Property. True and correct copies of all Environmental Reports have been made available to Buyer. 23

5.19. Broker's Fees. Except as set forth on Schedule 5.19 hereto, the Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement. 6. Representations and Warranties of Buyer. Buyer represents and warrants to, and covenants and agrees with, Seller as follows: 6.1. Organization and Authority. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the full corporate power and lawful authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby, and to perform its obligations under this Agreement. 6.2. Authorization of Agreement. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by all necessary corporate action of Buyer. This Agreement constitutes, and each document and instrument contemplated by this Agreement to be executed by Buyer, when executed and delivered in accordance with the provisions hereof shall be, the valid and legally binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). 6.3. Freedom to Contract. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby will not (i) violate or conflict with any provisions of the certificate of incorporation or by-laws, each as amended, of Buyer, (ii) violate any of the terms, conditions or provisions of any law,

5.19. Broker's Fees. Except as set forth on Schedule 5.19 hereto, the Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement. 6. Representations and Warranties of Buyer. Buyer represents and warrants to, and covenants and agrees with, Seller as follows: 6.1. Organization and Authority. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the full corporate power and lawful authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby, and to perform its obligations under this Agreement. 6.2. Authorization of Agreement. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by all necessary corporate action of Buyer. This Agreement constitutes, and each document and instrument contemplated by this Agreement to be executed by Buyer, when executed and delivered in accordance with the provisions hereof shall be, the valid and legally binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). 6.3. Freedom to Contract. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby will not (i) violate or conflict with any provisions of the certificate of incorporation or by-laws, each as amended, of Buyer, (ii) violate any of the terms, conditions or provisions of any law, 24

rule, statute, regulation, order, writ, injunction, judgment or decree of any court, Governmental Entity or regulatory agency, or (iii) conflict with or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, indenture, debenture, security agreement, trust agreement, lien, mortgage, lease, agreement, license, franchise, permit, guaranty, joint venture agreement or other agreement, instrument or obligation, oral or written, to which Buyer is a party (whether as an original party or as an assignee or successor) or by which any of its properties is bound. Except as set forth on Schedule 6.3 hereof, no authorization, approval, order, license, permit, franchise or consent, and no registration, declaration or filing with any court or Governmental Entity is required in connection with Buyer's execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby. 6.4. Litigation. There are no actions, suits, proceedings or investigations pending, or, to the knowledge of Buyer, threatened, nor has notice of any such items been received by Buyer, in any court or before any Governmental Entity, against or affecting Buyer which could have a material adverse effect on the financial condition or business of Buyer or could restrict or limit Buyer's ability to execute and deliver this Agreement and perform its obligations hereunder. 6.5. SEC Documents. Buyer has previously furnished to Seller an Annual Report on Form 10-K for the fiscal year ended September 30, 1998, and the Quarterly Reports on Form 10-Q as filed with the SEC for the quarters ended December 31, 1998 and March 31, 1999 (collectively, the "Buyer SEC Documents"). As of their respective dates, the Buyer SEC 25

Documents (including all documents incorporated by reference therein) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except in the case of any Buyer

rule, statute, regulation, order, writ, injunction, judgment or decree of any court, Governmental Entity or regulatory agency, or (iii) conflict with or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, indenture, debenture, security agreement, trust agreement, lien, mortgage, lease, agreement, license, franchise, permit, guaranty, joint venture agreement or other agreement, instrument or obligation, oral or written, to which Buyer is a party (whether as an original party or as an assignee or successor) or by which any of its properties is bound. Except as set forth on Schedule 6.3 hereof, no authorization, approval, order, license, permit, franchise or consent, and no registration, declaration or filing with any court or Governmental Entity is required in connection with Buyer's execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby. 6.4. Litigation. There are no actions, suits, proceedings or investigations pending, or, to the knowledge of Buyer, threatened, nor has notice of any such items been received by Buyer, in any court or before any Governmental Entity, against or affecting Buyer which could have a material adverse effect on the financial condition or business of Buyer or could restrict or limit Buyer's ability to execute and deliver this Agreement and perform its obligations hereunder. 6.5. SEC Documents. Buyer has previously furnished to Seller an Annual Report on Form 10-K for the fiscal year ended September 30, 1998, and the Quarterly Reports on Form 10-Q as filed with the SEC for the quarters ended December 31, 1998 and March 31, 1999 (collectively, the "Buyer SEC Documents"). As of their respective dates, the Buyer SEC 25

Documents (including all documents incorporated by reference therein) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except in the case of any Buyer SEC Document, any statement or omission therein that has been corrected or otherwise disclosed or updated in a subsequent Buyer SEC Document. 6.6. Assays. Buyer represents and warrants that it does not intend to use any assays to be acquired or licensed from Seller, including those assays that are part of the GPCR Directed Chemistry Program, in a method to identify and select compounds infringing any of the claims of United States Patent No. 5,401,629, so long as such claim(s) remain outstanding and in effect. 7. Additional Agreements between the Parties. 7.1. Fees and Expenses. (a) Except as otherwise provided in this Section 7.1 and except with respect to claims for damages incurred as a result of the material breach of this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense. (b) The prevailing party in any legal action undertaken to enforce this Agreement or any provision hereof shall be entitled to recover from the other party the costs and expenses (including attorney's and expert witness fees and expenses) incurred in connection with such action. (c) Seller shall pay any and all fees in connection with obtaining the consent to assignment of the GECC Lease. 26

7.2. Employment Matters. (a) Buyer (hereafter sometimes referred to as "Employer") shall, at annual salaries comparable to their current salaries, offer employment to each of Seller's employees (the "Employees") listed on Schedule 7.2(a) hereto together with benefits currently provided by Buyer to comparable employees of Buyer (but excluding any

Documents (including all documents incorporated by reference therein) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except in the case of any Buyer SEC Document, any statement or omission therein that has been corrected or otherwise disclosed or updated in a subsequent Buyer SEC Document. 6.6. Assays. Buyer represents and warrants that it does not intend to use any assays to be acquired or licensed from Seller, including those assays that are part of the GPCR Directed Chemistry Program, in a method to identify and select compounds infringing any of the claims of United States Patent No. 5,401,629, so long as such claim(s) remain outstanding and in effect. 7. Additional Agreements between the Parties. 7.1. Fees and Expenses. (a) Except as otherwise provided in this Section 7.1 and except with respect to claims for damages incurred as a result of the material breach of this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense. (b) The prevailing party in any legal action undertaken to enforce this Agreement or any provision hereof shall be entitled to recover from the other party the costs and expenses (including attorney's and expert witness fees and expenses) incurred in connection with such action. (c) Seller shall pay any and all fees in connection with obtaining the consent to assignment of the GECC Lease. 26

7.2. Employment Matters. (a) Buyer (hereafter sometimes referred to as "Employer") shall, at annual salaries comparable to their current salaries, offer employment to each of Seller's employees (the "Employees") listed on Schedule 7.2(a) hereto together with benefits currently provided by Buyer to comparable employees of Buyer (but excluding any severance benefits). Those Employees accepting an offer and commencing employment with Employer are herein referred to as "Transferred Employees." Seller will render reasonable assistance and provide reasonable information to assist Employer in including Transferred Employees on Employer's payroll. Seller shall provide to Buyer copies of all employment records covering the Transferred Employees. (b) Seller shall assign to Buyer, effective as of the date hereof, all insurance policies, and related agreements with respect to welfare plans (as such term is defined under ERISA) of Seller and Seller shall obtain all necessary consents to such assignments. Seller shall assume, retain responsibility for and continue to pay, in accordance with the terms of the applicable employer benefit plans, any hospital, medical or other health care, life insurance, short and long-term disability, travel accident or other plan benefits and expenses for each Employee or former employee of Seller (including each Transferred Employee) with respect to claims incurred by each such employee or his or her covered dependents prior to or on the date hereof or other costs in respect of any such plan coverage for periods prior to or on the date hereof. For purposes of this Section 7.2, any hospital, medical, dental or other health care claim will be deemed incurred when the services giving rise to the claim are performed and any other claim will be deemed incurred when the event that is the basis of the claim first occurred. (c) Seller shall be liable for any amounts to which any Employee or former Employee becomes entitled under any severance or bonus policy, plan, agreement, arrangement 27

or program (whether or not covered by ERISA) maintained by Seller which exists or arises or may be deemed to exist or arise under the terms thereof or any applicable law, including, but not limited to those provided for in severance agreements for certain employees of Seller.

7.2. Employment Matters. (a) Buyer (hereafter sometimes referred to as "Employer") shall, at annual salaries comparable to their current salaries, offer employment to each of Seller's employees (the "Employees") listed on Schedule 7.2(a) hereto together with benefits currently provided by Buyer to comparable employees of Buyer (but excluding any severance benefits). Those Employees accepting an offer and commencing employment with Employer are herein referred to as "Transferred Employees." Seller will render reasonable assistance and provide reasonable information to assist Employer in including Transferred Employees on Employer's payroll. Seller shall provide to Buyer copies of all employment records covering the Transferred Employees. (b) Seller shall assign to Buyer, effective as of the date hereof, all insurance policies, and related agreements with respect to welfare plans (as such term is defined under ERISA) of Seller and Seller shall obtain all necessary consents to such assignments. Seller shall assume, retain responsibility for and continue to pay, in accordance with the terms of the applicable employer benefit plans, any hospital, medical or other health care, life insurance, short and long-term disability, travel accident or other plan benefits and expenses for each Employee or former employee of Seller (including each Transferred Employee) with respect to claims incurred by each such employee or his or her covered dependents prior to or on the date hereof or other costs in respect of any such plan coverage for periods prior to or on the date hereof. For purposes of this Section 7.2, any hospital, medical, dental or other health care claim will be deemed incurred when the services giving rise to the claim are performed and any other claim will be deemed incurred when the event that is the basis of the claim first occurred. (c) Seller shall be liable for any amounts to which any Employee or former Employee becomes entitled under any severance or bonus policy, plan, agreement, arrangement 27

or program (whether or not covered by ERISA) maintained by Seller which exists or arises or may be deemed to exist or arise under the terms thereof or any applicable law, including, but not limited to those provided for in severance agreements for certain employees of Seller. (d) Buyer shall be liable for the amount of any vacation, sick or other compensatory pay owed or which might be owed to any Transferred Employees as of the date hereof, without taking into account the transaction contemplated by this Agreement. (e) Buyer shall provide COBRA continuation coverage (as required under IRC Section 4980B(f) and ERISA Sections 601 through 609) for all Employees, including, without limitation, the non-Transferred Employees provided they are listed in Schedule 7.2(e). Seller shall reimburse Buyer for the costs of the COBRA continuation coverage provided to certain non-Transferred Employees at no charge (and Seller shall specify to Buyer which employees are to receive such no charge COBRA continuation coverage and the number of months of such coverage). The costs of such coverage shall equal the dollar value of the claims incurred (as defined in Section 7.2(b) hereof), administrative charges with respect thereto and the cost of stop-loss coverage or similar insurance with respect to such coverage. 7.3. Post-Closing Obligations and Further Assurances. From and after the date hereof, Seller, on the one hand, and Buyer, on the other hand, agree to execute and deliver such further documents and instruments and to do such other acts and things as Buyer or Seller, as the case may be, may reasonably request in order to effectuate the transactions contemplated by this Agreement. Immediately following the date hereof, the Seller shall fully cooperate and act in good faith to effectively transfer the Assets to the Buyer as expeditiously as possible. Seller shall use its commercially reasonable efforts to remove the Excluded Assets from the Leased Property as soon as practicable after the date hereof, and in any event, not 28

later than the close of business on August 26, 1999 (the "Transition Period"). During such Transition Period, certain non-Transferred Employees (who remain employees of Seller) may remain on the Leased Property to effect the transition and to perform Seller's responsibilities under the Research Agreement. In connection with

or program (whether or not covered by ERISA) maintained by Seller which exists or arises or may be deemed to exist or arise under the terms thereof or any applicable law, including, but not limited to those provided for in severance agreements for certain employees of Seller. (d) Buyer shall be liable for the amount of any vacation, sick or other compensatory pay owed or which might be owed to any Transferred Employees as of the date hereof, without taking into account the transaction contemplated by this Agreement. (e) Buyer shall provide COBRA continuation coverage (as required under IRC Section 4980B(f) and ERISA Sections 601 through 609) for all Employees, including, without limitation, the non-Transferred Employees provided they are listed in Schedule 7.2(e). Seller shall reimburse Buyer for the costs of the COBRA continuation coverage provided to certain non-Transferred Employees at no charge (and Seller shall specify to Buyer which employees are to receive such no charge COBRA continuation coverage and the number of months of such coverage). The costs of such coverage shall equal the dollar value of the claims incurred (as defined in Section 7.2(b) hereof), administrative charges with respect thereto and the cost of stop-loss coverage or similar insurance with respect to such coverage. 7.3. Post-Closing Obligations and Further Assurances. From and after the date hereof, Seller, on the one hand, and Buyer, on the other hand, agree to execute and deliver such further documents and instruments and to do such other acts and things as Buyer or Seller, as the case may be, may reasonably request in order to effectuate the transactions contemplated by this Agreement. Immediately following the date hereof, the Seller shall fully cooperate and act in good faith to effectively transfer the Assets to the Buyer as expeditiously as possible. Seller shall use its commercially reasonable efforts to remove the Excluded Assets from the Leased Property as soon as practicable after the date hereof, and in any event, not 28

later than the close of business on August 26, 1999 (the "Transition Period"). During such Transition Period, certain non-Transferred Employees (who remain employees of Seller) may remain on the Leased Property to effect the transition and to perform Seller's responsibilities under the Research Agreement. In connection with such transfer, the parties acknowledge that the Schedules to this Agreement may be amended by the parties hereto after the date hereof to clarify or supplement the content of such Schedules. Following the date hereof, the parties will cooperate with each other in connection with any tax audits and in the defense of any legal proceedings relating to Seller's business or the Assets to the extent such cooperation does not cause unreasonable expense, unless such expense is borne by the requesting party. 7.4. Consents. Seller and Buyer shall use reasonable best efforts to obtain at the earliest practicable date, by instruments in form and substance reasonably satisfactory to Buyer, all consents and approvals referred to in Schedule 5.3 hereof. If any consent is not obtained prior to the date hereof, Seller shall, to the extent reasonably possible, keep the agreement in effect and shall give Buyer the benefit of the agreement following the date hereof to the same extent as if Seller had not been prevented from assigning such agreement to Buyer, including enforcement for the benefit of Buyer of any and all rights of Seller against any third party arising out of breach or cancellation by such third party, provided that Buyer will bear all costs and expenses of any such enforcement proceeding, and Buyer shall perform the obligations and assume the liabilities under the agreement relating to the benefit obtained by Buyer. Nothing in this Agreement shall be construed as an attempt to assign any agreement or other instrument that is by its terms not assignable without the consent of the other party and such consent is not obtained. 29

7.5. Public Announcements. Each party to this Agreement shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or any transaction contemplated hereby and shall not issue any such press release or make any such public statement without the prior consent of the other party (unless required by law), which consent shall not be unreasonably withheld. The parties hereto further agree to issue a joint press release on the date hereof in the form annexed hereto as Exhibit A.

later than the close of business on August 26, 1999 (the "Transition Period"). During such Transition Period, certain non-Transferred Employees (who remain employees of Seller) may remain on the Leased Property to effect the transition and to perform Seller's responsibilities under the Research Agreement. In connection with such transfer, the parties acknowledge that the Schedules to this Agreement may be amended by the parties hereto after the date hereof to clarify or supplement the content of such Schedules. Following the date hereof, the parties will cooperate with each other in connection with any tax audits and in the defense of any legal proceedings relating to Seller's business or the Assets to the extent such cooperation does not cause unreasonable expense, unless such expense is borne by the requesting party. 7.4. Consents. Seller and Buyer shall use reasonable best efforts to obtain at the earliest practicable date, by instruments in form and substance reasonably satisfactory to Buyer, all consents and approvals referred to in Schedule 5.3 hereof. If any consent is not obtained prior to the date hereof, Seller shall, to the extent reasonably possible, keep the agreement in effect and shall give Buyer the benefit of the agreement following the date hereof to the same extent as if Seller had not been prevented from assigning such agreement to Buyer, including enforcement for the benefit of Buyer of any and all rights of Seller against any third party arising out of breach or cancellation by such third party, provided that Buyer will bear all costs and expenses of any such enforcement proceeding, and Buyer shall perform the obligations and assume the liabilities under the agreement relating to the benefit obtained by Buyer. Nothing in this Agreement shall be construed as an attempt to assign any agreement or other instrument that is by its terms not assignable without the consent of the other party and such consent is not obtained. 29

7.5. Public Announcements. Each party to this Agreement shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or any transaction contemplated hereby and shall not issue any such press release or make any such public statement without the prior consent of the other party (unless required by law), which consent shall not be unreasonably withheld. The parties hereto further agree to issue a joint press release on the date hereof in the form annexed hereto as Exhibit A. 7.6. Tax Matters. Notwithstanding anything else to the contrary in this Agreement: (a) Seller agrees to retain responsibility for, and agrees to pay when due (except while and to the extent being contested in good faith), any and all Taxes of every nature and description of Seller or otherwise relating to the Assets for any taxable period or portion of a taxable period, which period or portion ends on or prior to the date hereof. Buyer agrees to retain responsibility for, and agrees to pay when due (except while and to the extent being contested in good faith), any and all Taxes of every nature and description of Buyer or otherwise relating to the Assets for any taxable period or portion of a taxable period, which portion or period begins after the date hereof. Any Taxes which are imposed on the Assets (including personal property taxes) or which are otherwise imposed on a periodic basis relating to any Tax period which begins before and ends after the date hereof shall be allocated between the parties on a pro-rata basis over the period for which such Taxes are levied, or if it cannot be determined over what period such taxes are being levied, over the fiscal period of the relevant taxing authority, in each case irrespective of the lien or assessment date of such Taxes. As promptly as practicable after the date hereof, each party shall present to the other a calculation as to the amount of such Taxes paid by such party and the pro-rata portion owed by the other, which shall be paid within ten (10) days. 30

(b) All sales, tax, use tax, compensating use tax and transfer tax (including any penalties and interest) incurred in connection with this Agreement and the consummation of the transaction contemplated hereby shall be paid by Buyer when due. (c) Each of the parties will, at its own expense, file all necessary Tax Returns and other documentation with respect to those Taxes for which it is responsible hereunder and, if required by law, the other party will join in the execution of any such Tax Return and other documentation.

7.5. Public Announcements. Each party to this Agreement shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or any transaction contemplated hereby and shall not issue any such press release or make any such public statement without the prior consent of the other party (unless required by law), which consent shall not be unreasonably withheld. The parties hereto further agree to issue a joint press release on the date hereof in the form annexed hereto as Exhibit A. 7.6. Tax Matters. Notwithstanding anything else to the contrary in this Agreement: (a) Seller agrees to retain responsibility for, and agrees to pay when due (except while and to the extent being contested in good faith), any and all Taxes of every nature and description of Seller or otherwise relating to the Assets for any taxable period or portion of a taxable period, which period or portion ends on or prior to the date hereof. Buyer agrees to retain responsibility for, and agrees to pay when due (except while and to the extent being contested in good faith), any and all Taxes of every nature and description of Buyer or otherwise relating to the Assets for any taxable period or portion of a taxable period, which portion or period begins after the date hereof. Any Taxes which are imposed on the Assets (including personal property taxes) or which are otherwise imposed on a periodic basis relating to any Tax period which begins before and ends after the date hereof shall be allocated between the parties on a pro-rata basis over the period for which such Taxes are levied, or if it cannot be determined over what period such taxes are being levied, over the fiscal period of the relevant taxing authority, in each case irrespective of the lien or assessment date of such Taxes. As promptly as practicable after the date hereof, each party shall present to the other a calculation as to the amount of such Taxes paid by such party and the pro-rata portion owed by the other, which shall be paid within ten (10) days. 30

(b) All sales, tax, use tax, compensating use tax and transfer tax (including any penalties and interest) incurred in connection with this Agreement and the consummation of the transaction contemplated hereby shall be paid by Buyer when due. (c) Each of the parties will, at its own expense, file all necessary Tax Returns and other documentation with respect to those Taxes for which it is responsible hereunder and, if required by law, the other party will join in the execution of any such Tax Return and other documentation. 7.7. Living Chip Technology Equipment. Simultaneously with the purchase by Buyer of all equipment leased under the GECC Lease, Seller shall purchase the equipment used in connection with the Living Chip Technology set forth on Schedule 7.7 hereto for a purchase price equal to 11% of the purchase price paid by Buyer to GECC for all the equipment. Prior to such purchase, Seller shall pay 11% of the payments under the GECC Lease paid by Buyer to GECC. 7.8. Royalties and Milestone Payments. Seller shall pay to Buyer (a) milestone payments of up to $3 million in the aggregate with respect to the first pharmaceutical product developed by Buyer under the GPCR Directed Chemistry Program (the "Initial GPCR Product") and under the Solvay Agreement (the "Initial Solvay Product"), and (b) royalties on either the Initial GPCR Product or the Initial Solvay Product, whichever is commercialized first. The following milestones shall be paid upon the occurrence, if ever, of the following events: (A) $1 million upon Buyer's execution of an agreement with a third party collaborator for the development and commercialization of the Initial GPCR Product (the "First GPCR Event"), (B) $2 million upon commencement of Phase III clinical trials of the Initial GPCR Product, (C) $1 million upon commencement of Phase III clinical trials of the Initial Solvay 31

Product (the "First Solvay Event"), and (D) $2 million upon the first sale of the Initial Solvay Product in any of United States, Canada, Great Britain, Japan, France, Germany, Italy and others; provided, however, in no event shall Seller be entitled to more than $3 million in the aggregate in milestone payments. For example, if Seller has received the $1 million upon the First GPCR Event and $1 million upon the First Solvay Event, then upon the next milestone to occur, Seller shall only be entitled to a payment of $1 million. In addition to the milestone

(b) All sales, tax, use tax, compensating use tax and transfer tax (including any penalties and interest) incurred in connection with this Agreement and the consummation of the transaction contemplated hereby shall be paid by Buyer when due. (c) Each of the parties will, at its own expense, file all necessary Tax Returns and other documentation with respect to those Taxes for which it is responsible hereunder and, if required by law, the other party will join in the execution of any such Tax Return and other documentation. 7.7. Living Chip Technology Equipment. Simultaneously with the purchase by Buyer of all equipment leased under the GECC Lease, Seller shall purchase the equipment used in connection with the Living Chip Technology set forth on Schedule 7.7 hereto for a purchase price equal to 11% of the purchase price paid by Buyer to GECC for all the equipment. Prior to such purchase, Seller shall pay 11% of the payments under the GECC Lease paid by Buyer to GECC. 7.8. Royalties and Milestone Payments. Seller shall pay to Buyer (a) milestone payments of up to $3 million in the aggregate with respect to the first pharmaceutical product developed by Buyer under the GPCR Directed Chemistry Program (the "Initial GPCR Product") and under the Solvay Agreement (the "Initial Solvay Product"), and (b) royalties on either the Initial GPCR Product or the Initial Solvay Product, whichever is commercialized first. The following milestones shall be paid upon the occurrence, if ever, of the following events: (A) $1 million upon Buyer's execution of an agreement with a third party collaborator for the development and commercialization of the Initial GPCR Product (the "First GPCR Event"), (B) $2 million upon commencement of Phase III clinical trials of the Initial GPCR Product, (C) $1 million upon commencement of Phase III clinical trials of the Initial Solvay 31

Product (the "First Solvay Event"), and (D) $2 million upon the first sale of the Initial Solvay Product in any of United States, Canada, Great Britain, Japan, France, Germany, Italy and others; provided, however, in no event shall Seller be entitled to more than $3 million in the aggregate in milestone payments. For example, if Seller has received the $1 million upon the First GPCR Event and $1 million upon the First Solvay Event, then upon the next milestone to occur, Seller shall only be entitled to a payment of $1 million. In addition to the milestone payments, Seller shall be entitled to a ** royalty on net sales (as such term is defined in the applicable agreement or as otherwise negotiated in good faith by Buyer or a licensee thereof) of either the Initial GPCR Product or the Initial Solvay Product, whichever is first commercialized. Any royalty payments due from Buyer to Seller shall be paid within 60 days after the end of each calendar quarter during which the royalty payment accrued. Each such payment shall be accompanied by a statement indicating the net sales during such quarterly period and the amount of royalty due. Seller shall have the right, through an independent accountant, to examine books and records relating to or relevant to the computations of net sales at any reasonable time during business hours after notifying Buyer of its desire to do so. Such examination shall be conducted no more often than once each year. 8. Indemnification. 8.1. Survival of Representations and Warranties. All representations and warranties of the parties hereto shall survive the execution and delivery of this Agreement, and shall thereafter expire on the date which is eighteen (18) months after the date hereof, provided that ** This portion has been redacted pursuant to a request for confidential treatment. 32

such expiration shall not affect any claims for indemnification made prior to the date which is eighteen (18) months after the date hereof; and provided, further, that all representations and warranties contained in Section 5.16 shall survive for the applicable statute of limitations. 8.2. Indemnification by Seller. Seller shall indemnify Buyer and hold it harmless at all times from and after the date

Product (the "First Solvay Event"), and (D) $2 million upon the first sale of the Initial Solvay Product in any of United States, Canada, Great Britain, Japan, France, Germany, Italy and others; provided, however, in no event shall Seller be entitled to more than $3 million in the aggregate in milestone payments. For example, if Seller has received the $1 million upon the First GPCR Event and $1 million upon the First Solvay Event, then upon the next milestone to occur, Seller shall only be entitled to a payment of $1 million. In addition to the milestone payments, Seller shall be entitled to a ** royalty on net sales (as such term is defined in the applicable agreement or as otherwise negotiated in good faith by Buyer or a licensee thereof) of either the Initial GPCR Product or the Initial Solvay Product, whichever is first commercialized. Any royalty payments due from Buyer to Seller shall be paid within 60 days after the end of each calendar quarter during which the royalty payment accrued. Each such payment shall be accompanied by a statement indicating the net sales during such quarterly period and the amount of royalty due. Seller shall have the right, through an independent accountant, to examine books and records relating to or relevant to the computations of net sales at any reasonable time during business hours after notifying Buyer of its desire to do so. Such examination shall be conducted no more often than once each year. 8. Indemnification. 8.1. Survival of Representations and Warranties. All representations and warranties of the parties hereto shall survive the execution and delivery of this Agreement, and shall thereafter expire on the date which is eighteen (18) months after the date hereof, provided that ** This portion has been redacted pursuant to a request for confidential treatment. 32

such expiration shall not affect any claims for indemnification made prior to the date which is eighteen (18) months after the date hereof; and provided, further, that all representations and warranties contained in Section 5.16 shall survive for the applicable statute of limitations. 8.2. Indemnification by Seller. Seller shall indemnify Buyer and hold it harmless at all times from and after the date hereof against and in respect to any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, damages, losses, liabilities, taxes and deficiencies and penalties and interest thereon and costs and expenses, including reasonable attorneys' fees and expenses (collectively, "Losses") resulting from (a) any misrepresentation, breach of warranty, or nonfulfillment of any covenant or agreement of Seller in this Agreement, (b) the Excluded Liabilities, (c) any claim arising from or relating to the operation of Seller's business prior to the date hereof (to the extent that the foregoing have not been expressly assumed by Buyer hereunder), and (d) any Losses suffered or incurred in enforcing this indemnity, provided that it is ultimately determined that Buyer is entitled to such indemnity. 8.3. Indemnification by Buyer. Buyer indemnifies Seller and holds it harmless at all times from and after the date hereof against and in respect to any and all Losses resulting from (a) any misrepresentation, breach of warranty or nonfulfillment of any covenant or agreement of Buyer in this Agreement, (b) the Assumed Liabilities, (c) any Losses suffered or incurred in enforcing this indemnity, provided that it is ultimately determined that Seller is entitled to such indemnity, and (d) any failure on its part to pay the Taxes described in Section 7.6(b) hereof. 8.4. Notice to the Indemnitor. Promptly after the assertion of any claim by a third party or occurrence of any event which may give rise to a claim for indemnification from an indemnitor (the "Indemnitor") under this Section, an indemnified party (the "Indemnified 33

Party") shall notify the Indemnitor in writing of such claim (the "Claims Notice"). The Claims Notice shall describe the asserted liability in reasonable detail, and shall indicate the amount (estimated, if necessary and to the extent feasible) of the Loss that has been or may be suffered by the Indemnified Party. Failure by the Indemnified Party to give a Claims Notice to the Indemnitor in accordance with the provisions of this Section 8.4 shall not relieve

such expiration shall not affect any claims for indemnification made prior to the date which is eighteen (18) months after the date hereof; and provided, further, that all representations and warranties contained in Section 5.16 shall survive for the applicable statute of limitations. 8.2. Indemnification by Seller. Seller shall indemnify Buyer and hold it harmless at all times from and after the date hereof against and in respect to any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, damages, losses, liabilities, taxes and deficiencies and penalties and interest thereon and costs and expenses, including reasonable attorneys' fees and expenses (collectively, "Losses") resulting from (a) any misrepresentation, breach of warranty, or nonfulfillment of any covenant or agreement of Seller in this Agreement, (b) the Excluded Liabilities, (c) any claim arising from or relating to the operation of Seller's business prior to the date hereof (to the extent that the foregoing have not been expressly assumed by Buyer hereunder), and (d) any Losses suffered or incurred in enforcing this indemnity, provided that it is ultimately determined that Buyer is entitled to such indemnity. 8.3. Indemnification by Buyer. Buyer indemnifies Seller and holds it harmless at all times from and after the date hereof against and in respect to any and all Losses resulting from (a) any misrepresentation, breach of warranty or nonfulfillment of any covenant or agreement of Buyer in this Agreement, (b) the Assumed Liabilities, (c) any Losses suffered or incurred in enforcing this indemnity, provided that it is ultimately determined that Seller is entitled to such indemnity, and (d) any failure on its part to pay the Taxes described in Section 7.6(b) hereof. 8.4. Notice to the Indemnitor. Promptly after the assertion of any claim by a third party or occurrence of any event which may give rise to a claim for indemnification from an indemnitor (the "Indemnitor") under this Section, an indemnified party (the "Indemnified 33

Party") shall notify the Indemnitor in writing of such claim (the "Claims Notice"). The Claims Notice shall describe the asserted liability in reasonable detail, and shall indicate the amount (estimated, if necessary and to the extent feasible) of the Loss that has been or may be suffered by the Indemnified Party. Failure by the Indemnified Party to give a Claims Notice to the Indemnitor in accordance with the provisions of this Section 8.4 shall not relieve the Indemnitor of its obligations hereunder except to the extent that the Indemnitor has been actually prejudiced by such failure. 8.5. Rights of Parties to Settle or Defend. The Indemnitor may elect to compromise or defend, at its own expense, by its own counsel and to the extent an election with respect to such compromise or defense is available to the Indemnified Party, any asserted liability. If the Indemnitor elects to compromise or defend such asserted liability, it shall within thirty (30) calendar days (or sooner, if the nature of the asserted liability so requires) notify the Indemnified Party of its intent to do so, and the Indemnified Party shall cooperate, at the expense of the Indemnitor, in the compromise of, or defense against, such asserted liability. If the Indemnitor elects to defend any claim, the Indemnified Party shall make available to the Indemnitor any books, records or other documents within its control that are necessary or appropriate for such defense. If the Indemnitor elects not to compromise or defend the asserted liability, fails to notify the Indemnified Party of its election as herein provided or contests its obligation to indemnify under this Agreement, the Indemnified Party may pay, compromise or defend (at the expense of the Indemnitor) such asserted liability as the Indemnified Party considers appropriate. The parties agree to cooperate fully with one another in the defense, settlement or comprise of any asserted liability. Notwithstanding the foregoing, neither the Indemnitor nor the Indemnified Party may settle or compromise any claim over the 34

objection of the other; provided that consent to settlement or compromise shall not be unreasonably withheld. In any event, the Indemnified Party and the Indemnitor may participate, at their own expense, in the defense of such asserted liability. 8.6. Limitations on Indemnification.

Party") shall notify the Indemnitor in writing of such claim (the "Claims Notice"). The Claims Notice shall describe the asserted liability in reasonable detail, and shall indicate the amount (estimated, if necessary and to the extent feasible) of the Loss that has been or may be suffered by the Indemnified Party. Failure by the Indemnified Party to give a Claims Notice to the Indemnitor in accordance with the provisions of this Section 8.4 shall not relieve the Indemnitor of its obligations hereunder except to the extent that the Indemnitor has been actually prejudiced by such failure. 8.5. Rights of Parties to Settle or Defend. The Indemnitor may elect to compromise or defend, at its own expense, by its own counsel and to the extent an election with respect to such compromise or defense is available to the Indemnified Party, any asserted liability. If the Indemnitor elects to compromise or defend such asserted liability, it shall within thirty (30) calendar days (or sooner, if the nature of the asserted liability so requires) notify the Indemnified Party of its intent to do so, and the Indemnified Party shall cooperate, at the expense of the Indemnitor, in the compromise of, or defense against, such asserted liability. If the Indemnitor elects to defend any claim, the Indemnified Party shall make available to the Indemnitor any books, records or other documents within its control that are necessary or appropriate for such defense. If the Indemnitor elects not to compromise or defend the asserted liability, fails to notify the Indemnified Party of its election as herein provided or contests its obligation to indemnify under this Agreement, the Indemnified Party may pay, compromise or defend (at the expense of the Indemnitor) such asserted liability as the Indemnified Party considers appropriate. The parties agree to cooperate fully with one another in the defense, settlement or comprise of any asserted liability. Notwithstanding the foregoing, neither the Indemnitor nor the Indemnified Party may settle or compromise any claim over the 34

objection of the other; provided that consent to settlement or compromise shall not be unreasonably withheld. In any event, the Indemnified Party and the Indemnitor may participate, at their own expense, in the defense of such asserted liability. 8.6. Limitations on Indemnification. (a) The indemnification obligations of the Indemnitor pursuant to Sections 8.2 or 8.3 (other than Section 8.3(d)) hereof shall not be effective until the aggregate dollar amount of all Claims which would otherwise be indemnifiable by such Indemnitor pursuant to this Agreement exceeds $15,000 (the "Indemnitor's Threshold Amount"). The indemnification obligations of the Indemnitor pursuant to this Agreement (other than those arising under Section 8.3(d) hereof) shall be effective only with respect to Claims in excess of the Indemnitor's Threshold Amount and only until the dollar amount paid in respect of the Claims indemnified against under or related to this Agreement aggregates to an amount equal to $1,500,000. (b) Payments by the Indemnitor shall be limited to the amount of any Losses that remain after deducting therefrom (i) any Tax benefit to the Indemnified Party or any affiliate thereof that results in a cash benefit in the Tax year that the Loss is deducted; and (ii) any insurance proceeds and any indemnity, contribution or other similar payment recoverable by the Indemnified Party or any of its affiliates from any third party with respect thereto. 9. Miscellaneous. 9.1. Entire Agreement. This Agreement (together with the Schedules hereto and the other agreements contemplated by this Agreement in Section 4 hereof) and the Confidentiality Agreement contain, and are intended as, a complete statement of all of the terms of the 35

arrangements between the parties with respect to the matters provided for, and supersedes any previous agreements and understandings between the parties with respect to those matters. 9.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

objection of the other; provided that consent to settlement or compromise shall not be unreasonably withheld. In any event, the Indemnified Party and the Indemnitor may participate, at their own expense, in the defense of such asserted liability. 8.6. Limitations on Indemnification. (a) The indemnification obligations of the Indemnitor pursuant to Sections 8.2 or 8.3 (other than Section 8.3(d)) hereof shall not be effective until the aggregate dollar amount of all Claims which would otherwise be indemnifiable by such Indemnitor pursuant to this Agreement exceeds $15,000 (the "Indemnitor's Threshold Amount"). The indemnification obligations of the Indemnitor pursuant to this Agreement (other than those arising under Section 8.3(d) hereof) shall be effective only with respect to Claims in excess of the Indemnitor's Threshold Amount and only until the dollar amount paid in respect of the Claims indemnified against under or related to this Agreement aggregates to an amount equal to $1,500,000. (b) Payments by the Indemnitor shall be limited to the amount of any Losses that remain after deducting therefrom (i) any Tax benefit to the Indemnified Party or any affiliate thereof that results in a cash benefit in the Tax year that the Loss is deducted; and (ii) any insurance proceeds and any indemnity, contribution or other similar payment recoverable by the Indemnified Party or any of its affiliates from any third party with respect thereto. 9. Miscellaneous. 9.1. Entire Agreement. This Agreement (together with the Schedules hereto and the other agreements contemplated by this Agreement in Section 4 hereof) and the Confidentiality Agreement contain, and are intended as, a complete statement of all of the terms of the 35

arrangements between the parties with respect to the matters provided for, and supersedes any previous agreements and understandings between the parties with respect to those matters. 9.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 9.3. Headings. The section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement. 9.4. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given when delivered personally, mailed by registered mail, return receipt requested, sent by recognized overnight delivery service or, to the extent receipt is confirmed, by telecopy, telefax, or other electronic transmission service to the parties at the following addresses (or to such other address as a party may have specified by notice given to the other party pursuant to this provision): If to Seller, to: Cadus Pharmaceutical Corporation Attention: President c/o Icahn Associates 767 Fifth Avenue New York, New York 10153 with copies to: Morrison Cohen Singer & Weinstein, LLP 750 Lexington Avenue New York, New York 10022 Attention: Salomon R. Sassoon, Esq. Telecopy No.: (212) 735-8708

arrangements between the parties with respect to the matters provided for, and supersedes any previous agreements and understandings between the parties with respect to those matters. 9.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 9.3. Headings. The section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement. 9.4. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given when delivered personally, mailed by registered mail, return receipt requested, sent by recognized overnight delivery service or, to the extent receipt is confirmed, by telecopy, telefax, or other electronic transmission service to the parties at the following addresses (or to such other address as a party may have specified by notice given to the other party pursuant to this provision): If to Seller, to: Cadus Pharmaceutical Corporation Attention: President c/o Icahn Associates 767 Fifth Avenue New York, New York 10153 with copies to: Morrison Cohen Singer & Weinstein, LLP 750 Lexington Avenue New York, New York 10022 Attention: Salomon R. Sassoon, Esq. Telecopy No.: (212) 735-8708 Telephone No.: (212) 735-8600 If to Buyer, to: OSI Pharmaceuticals, Inc. 106 Charles Lindbergh Boulevard 36

Uniondale, New York 11533 Attention: President Telecopy No.: (516) 222-0114 Telephone No.: (516) 222-0023 with copies to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Attention: Joel I. Papernik, Esq. Telecopy No.: (212) 697-6686 Confirmation No.: (212) 661-6500 9.5. Separability. If at any time any of the covenants or the provisions contained herein shall be deemed invalid or unenforceable by the laws of the jurisdiction wherein it is to be enforced, by reason of being vague or unreasonable as to duration, geographic scope, scope of activities restricted or for any other reason, such covenants or provisions shall be considered divisible as to such portion and such covenants or provisions shall

Uniondale, New York 11533 Attention: President Telecopy No.: (516) 222-0114 Telephone No.: (516) 222-0023 with copies to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Attention: Joel I. Papernik, Esq. Telecopy No.: (212) 697-6686 Confirmation No.: (212) 661-6500 9.5. Separability. If at any time any of the covenants or the provisions contained herein shall be deemed invalid or unenforceable by the laws of the jurisdiction wherein it is to be enforced, by reason of being vague or unreasonable as to duration, geographic scope, scope of activities restricted or for any other reason, such covenants or provisions shall be considered divisible as to such portion and such covenants or provisions shall become and be immediately amended and reformed to include only such covenants or provisions as are enforceable by the court or other body having jurisdiction of this Agreement; and the parties agree that such covenants or provisions, as so amended and reformed, shall be valid and binding as though the invalid or unenforceable portion had not been included herein. 9.6. Amendment; Waiver. No provision of this Agreement may be amended or modified except by an instrument or instruments in writing signed by the parties hereto. No waiver of any provision hereof shall be construed as a waiver of any other provision. Any waiver must be in writing. 9.7. Assignment and Binding Effect. Neither of the parties hereto may assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of 37

the other. All of the terms and provisions of this Agreement shall be binding on, and shall inure to the benefit of, the respective successors and permitted assigns of the parties. 9.8. No Benefit to Others. The representations, warranties, covenants and agreements contained in this Agreement are for the sole benefit of the parties hereto and their respective successors and assigns and they shall not be construed as conferring and are not intended to confer any rights on any other persons. 9.9. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and each party may become a party hereto by executing a counterpart hereof. This Agreement and any counterpart so executed shall be deemed to be one and the same instrument. 9.10. Certain Definitions. The following terms, as used herein, have the following meanings: "Affiliate" means with respect to any person or entity, means any person or entity directly or indirectly controlling, controlled by or under common control with such person or entity. "Balance Sheet" shall mean the Balance Sheet of Seller at March 31, 1999 from Seller's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999. "Business Day" means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York on which banking institutions located in such state are closed. "Compounds" means any compound, or derivative or synthesis thereof owned by Seller. 38

the other. All of the terms and provisions of this Agreement shall be binding on, and shall inure to the benefit of, the respective successors and permitted assigns of the parties. 9.8. No Benefit to Others. The representations, warranties, covenants and agreements contained in this Agreement are for the sole benefit of the parties hereto and their respective successors and assigns and they shall not be construed as conferring and are not intended to confer any rights on any other persons. 9.9. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and each party may become a party hereto by executing a counterpart hereof. This Agreement and any counterpart so executed shall be deemed to be one and the same instrument. 9.10. Certain Definitions. The following terms, as used herein, have the following meanings: "Affiliate" means with respect to any person or entity, means any person or entity directly or indirectly controlling, controlled by or under common control with such person or entity. "Balance Sheet" shall mean the Balance Sheet of Seller at March 31, 1999 from Seller's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999. "Business Day" means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York on which banking institutions located in such state are closed. "Compounds" means any compound, or derivative or synthesis thereof owned by Seller. 38

"Copyrights" means United States and foreign copyrights, copyrightable works, and mask works, whether registered or unregistered, and pending applications to register the same and all agreements, contracts, licenses, sublicenses, assignments and indemnities that relate or pertain to any of the forgoing. "Environmental Claims" means all accusations, allegations, notices of violation, Liens, claims, demands, suits, or causes of action for any damage, including, without limitation, personal injury, property damage (including, without limitation, any depreciation or diminution of property values), lost use of property or consequential damages, based upon Environmental Laws or principles of common law relating to pollution or exposure to Hazardous Substances. By way of example only (and not by way of limitation), Environmental Claims include (i) actions alleging actual or threatened damages to natural resources and seeking recovery pursuant to Environmental Laws, (ii) claims for nuisance or its statutory equivalent, (iii) claims for the recovery of response costs, or administrative or judicial orders directly related to the performance of investigations, responses or remedial actions under any Environmental Law, (iv) requirements to implement "corrective action" pursuant to any order or permit issued pursuant to the Resource Conservation and Recovery Act, as amended, or similar provisions of applicable state law, (v) claims based upon Environmental Laws or principles of common law relating to pollution or exposure to Hazardous Substances for restitution, contribution, or indemnity, (vi) fines, penalties or liens of any kind against property based upon Environmental Laws or principles of common law relating to pollution or exposure to Hazardous Substances, (vii) claims based upon Environmental Laws or principles of common law relating to pollution or exposure to Hazardous Substances for injunctive relief or other orders or notices of violation from federal, state or local agencies or courts and (viii) with regard to any present or former employees, claims relating to 39

exposure to or injury from Hazardous Substances based upon principles of common law relating to pollution or exposure to Hazardous Substances. "Environmental Laws" means all applicable federal, state, district and local laws, all rules or regulations promulgated thereunder, and all orders, consent orders or judgments issued, promulgated or entered pursuant thereto, relating to pollution or protection of the environment (including, without limitation, ambient air, surface

"Copyrights" means United States and foreign copyrights, copyrightable works, and mask works, whether registered or unregistered, and pending applications to register the same and all agreements, contracts, licenses, sublicenses, assignments and indemnities that relate or pertain to any of the forgoing. "Environmental Claims" means all accusations, allegations, notices of violation, Liens, claims, demands, suits, or causes of action for any damage, including, without limitation, personal injury, property damage (including, without limitation, any depreciation or diminution of property values), lost use of property or consequential damages, based upon Environmental Laws or principles of common law relating to pollution or exposure to Hazardous Substances. By way of example only (and not by way of limitation), Environmental Claims include (i) actions alleging actual or threatened damages to natural resources and seeking recovery pursuant to Environmental Laws, (ii) claims for nuisance or its statutory equivalent, (iii) claims for the recovery of response costs, or administrative or judicial orders directly related to the performance of investigations, responses or remedial actions under any Environmental Law, (iv) requirements to implement "corrective action" pursuant to any order or permit issued pursuant to the Resource Conservation and Recovery Act, as amended, or similar provisions of applicable state law, (v) claims based upon Environmental Laws or principles of common law relating to pollution or exposure to Hazardous Substances for restitution, contribution, or indemnity, (vi) fines, penalties or liens of any kind against property based upon Environmental Laws or principles of common law relating to pollution or exposure to Hazardous Substances, (vii) claims based upon Environmental Laws or principles of common law relating to pollution or exposure to Hazardous Substances for injunctive relief or other orders or notices of violation from federal, state or local agencies or courts and (viii) with regard to any present or former employees, claims relating to 39

exposure to or injury from Hazardous Substances based upon principles of common law relating to pollution or exposure to Hazardous Substances. "Environmental Laws" means all applicable federal, state, district and local laws, all rules or regulations promulgated thereunder, and all orders, consent orders or judgments issued, promulgated or entered pursuant thereto, relating to pollution or protection of the environment (including, without limitation, ambient air, surface water, ground water, land surface, or subsurface strata), including, without limitation, (i) laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, industrial materials, wastes or other hazardous or toxic substances into the environment and (ii) laws relating to the identification, generation, manufacture, processing, distribution, use, treatment, storage, disposal, recovery, transport or other handling of pollutants, contaminants, chemicals, industrial materials, wastes or other hazardous or toxic substances. Environmental Laws shall include, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the Toxic Substances Control Act, as amended, the Hazardous Materials Transportation Act, as amended, the Resource Conservation and Recovery Act, as amended ("RCRA"), the Clean Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as amended, the Occupational Safety and Health Act, as amended, and all analogous laws promulgated or issued by any state or other Governmental Entity. "Environmental Reports" means any and all written analyses, summaries or explanations, in the possession or control of Seller, of (a) the condition of the environment on or about the Leased Property or (b) Seller's compliance with Environmental Laws. 40

"ERISA" means the Employee Retirement and Income Security Act of 1974, as amended. "Facility Lease" means the lease of the premises at 777 Old Saw Mill River Road, Tarrytown, New York, between Keren Limited Partnership and Seller dated June 20, 1995, as amended. "Functional Genomics Program" means all rights related to the activities conducted by Seller in collaboration with Genome Therapeutics Corporation, including, but not limited to, the putative G protein-coupled receptors identified (in whole or in part) within the collaboration and the laboratory and bioinformatics technology owned or

exposure to or injury from Hazardous Substances based upon principles of common law relating to pollution or exposure to Hazardous Substances. "Environmental Laws" means all applicable federal, state, district and local laws, all rules or regulations promulgated thereunder, and all orders, consent orders or judgments issued, promulgated or entered pursuant thereto, relating to pollution or protection of the environment (including, without limitation, ambient air, surface water, ground water, land surface, or subsurface strata), including, without limitation, (i) laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, industrial materials, wastes or other hazardous or toxic substances into the environment and (ii) laws relating to the identification, generation, manufacture, processing, distribution, use, treatment, storage, disposal, recovery, transport or other handling of pollutants, contaminants, chemicals, industrial materials, wastes or other hazardous or toxic substances. Environmental Laws shall include, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the Toxic Substances Control Act, as amended, the Hazardous Materials Transportation Act, as amended, the Resource Conservation and Recovery Act, as amended ("RCRA"), the Clean Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as amended, the Occupational Safety and Health Act, as amended, and all analogous laws promulgated or issued by any state or other Governmental Entity. "Environmental Reports" means any and all written analyses, summaries or explanations, in the possession or control of Seller, of (a) the condition of the environment on or about the Leased Property or (b) Seller's compliance with Environmental Laws. 40

"ERISA" means the Employee Retirement and Income Security Act of 1974, as amended. "Facility Lease" means the lease of the premises at 777 Old Saw Mill River Road, Tarrytown, New York, between Keren Limited Partnership and Seller dated June 20, 1995, as amended. "Functional Genomics Program" means all rights related to the activities conducted by Seller in collaboration with Genome Therapeutics Corporation, including, but not limited to, the putative G protein-coupled receptors identified (in whole or in part) within the collaboration and the laboratory and bioinformatics technology owned or licensed by Seller to perform such identification. The Functional Genomics Program explicitly includes all the proprietary software created by Seller in Java and Perl and the contents of any proprietary collection of information that the software accesses, except the information (and programs designed to access such information) related to Seller's Compounds or the results of screening Seller's Compounds. The Functional Genomics Program further includes all the intellectual property owned or licensed by Seller related to methods and compositions used to identify surrogate or natural ligands to molecular targets, where the natural ligand to such target is unknown. "GECC Lease" means the Master Lease Agreement dated November 14, 1997 between Seller and General Electric Capital Corporation. "Governmental Entity" means any domestic or foreign administrative agency, bureau, board, commission, officer, authority, department or other governmental body or agency. "GPCR Directed Chemistry Program" means ** ** This portion has been redacted pursuant to a request for confidential treatment. 41

"Hazardous Substances" means all pollutants, contaminants, chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or otherwise hazardous substances or materials (whether solids, liquids or gases) subject to regulation, control or remediation under Environmental Laws. By way of example only, the term

"ERISA" means the Employee Retirement and Income Security Act of 1974, as amended. "Facility Lease" means the lease of the premises at 777 Old Saw Mill River Road, Tarrytown, New York, between Keren Limited Partnership and Seller dated June 20, 1995, as amended. "Functional Genomics Program" means all rights related to the activities conducted by Seller in collaboration with Genome Therapeutics Corporation, including, but not limited to, the putative G protein-coupled receptors identified (in whole or in part) within the collaboration and the laboratory and bioinformatics technology owned or licensed by Seller to perform such identification. The Functional Genomics Program explicitly includes all the proprietary software created by Seller in Java and Perl and the contents of any proprietary collection of information that the software accesses, except the information (and programs designed to access such information) related to Seller's Compounds or the results of screening Seller's Compounds. The Functional Genomics Program further includes all the intellectual property owned or licensed by Seller related to methods and compositions used to identify surrogate or natural ligands to molecular targets, where the natural ligand to such target is unknown. "GECC Lease" means the Master Lease Agreement dated November 14, 1997 between Seller and General Electric Capital Corporation. "Governmental Entity" means any domestic or foreign administrative agency, bureau, board, commission, officer, authority, department or other governmental body or agency. "GPCR Directed Chemistry Program" means ** ** This portion has been redacted pursuant to a request for confidential treatment. 41

"Hazardous Substances" means all pollutants, contaminants, chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or otherwise hazardous substances or materials (whether solids, liquids or gases) subject to regulation, control or remediation under Environmental Laws. By way of example only, the term Hazardous Substances includes petroleum, urea formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides, herbicides, asbestos, sludge, slag, acids, metals, solvents and waste waters. "Living Chip Technology" means all rights related to the license agreement and sponsored research agreements between Seller and the Massachusetts Institute of Technology involving the laboratory of Professor Ian Hunter, including, but not limited to, the grant application to the National Institute of Standards and Technology for the Advanced Technology Program and the work product of Seller's employees and consultants related to such license agreement and sponsored research agreements. "Patent Rights" means United States and foreign patents, patent applications, continuations, continuations-in-part, divisions, reissues, patent disclosures, inventions (whether or not patented) or improvements thereto, and all agreements, contracts, licenses, sublicenses, assignments and indemnities that relate or pertain to any of the foregoing. "Permitted Liens" means liens or other encumbrances securing taxes, assessments, governmental charges or levies, or the claims of materialmen, carriers, landlords and like persons, all of which are not yet due and payable or are being contested in good faith. "SEC" shall mean the U.S. Securities and Exchange Commission. "Seller's knowledge" means the best knowledge of the executive employees of Seller after due inquiry, which shall include making reasonable inquiries of Seller's employees, but shall not require the executive employees to actively seek out information from third parties. 42

"Hazardous Substances" means all pollutants, contaminants, chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or otherwise hazardous substances or materials (whether solids, liquids or gases) subject to regulation, control or remediation under Environmental Laws. By way of example only, the term Hazardous Substances includes petroleum, urea formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides, herbicides, asbestos, sludge, slag, acids, metals, solvents and waste waters. "Living Chip Technology" means all rights related to the license agreement and sponsored research agreements between Seller and the Massachusetts Institute of Technology involving the laboratory of Professor Ian Hunter, including, but not limited to, the grant application to the National Institute of Standards and Technology for the Advanced Technology Program and the work product of Seller's employees and consultants related to such license agreement and sponsored research agreements. "Patent Rights" means United States and foreign patents, patent applications, continuations, continuations-in-part, divisions, reissues, patent disclosures, inventions (whether or not patented) or improvements thereto, and all agreements, contracts, licenses, sublicenses, assignments and indemnities that relate or pertain to any of the foregoing. "Permitted Liens" means liens or other encumbrances securing taxes, assessments, governmental charges or levies, or the claims of materialmen, carriers, landlords and like persons, all of which are not yet due and payable or are being contested in good faith. "SEC" shall mean the U.S. Securities and Exchange Commission. "Seller's knowledge" means the best knowledge of the executive employees of Seller after due inquiry, which shall include making reasonable inquiries of Seller's employees, but shall not require the executive employees to actively seek out information from third parties. 42

"Solvay Agreement" means the Research Collaboration and License Agreement dated as of November 1, 1995 between Seller and Solvay Duphar B.V. "Taxes" shall mean all foreign, federal, state and local income, profits, franchise, gross receipts, payroll, sales, employment, use, property, transfer, excise, estimated, stamp, alternative or add-on minimum, environmental, withholding and any other taxes, duties, assessments, governmental charges or levies, together with all interest, penalties and other additions imposed with respect to such amounts. "Tax Return" shall mean any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. 9.11. Capitalized Terms. The following capitalized terms are defined in the following sections of this Agreement:
Term ---Affiliate Assets Assumed Liabilities Balance Sheet Benefit Plans Business Day Buyer Buyer SEC Documents Section ------9.10 1.1 2.1 12.10 5.10(a) 9.10 Preamble 6.6

"Solvay Agreement" means the Research Collaboration and License Agreement dated as of November 1, 1995 between Seller and Solvay Duphar B.V. "Taxes" shall mean all foreign, federal, state and local income, profits, franchise, gross receipts, payroll, sales, employment, use, property, transfer, excise, estimated, stamp, alternative or add-on minimum, environmental, withholding and any other taxes, duties, assessments, governmental charges or levies, together with all interest, penalties and other additions imposed with respect to such amounts. "Tax Return" shall mean any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. 9.11. Capitalized Terms. The following capitalized terms are defined in the following sections of this Agreement:
Term ---Affiliate Assets Assumed Liabilities Balance Sheet Benefit Plans Business Day Buyer Buyer SEC Documents CERCLA Claims Notice Copyrights Employee Arrangements Employer Environmental Claims Environmental Laws Section ------9.10 1.1 2.1 12.10 5.10(a) 9.10 Preamble 6.6 9.10 8.4 9.10 5.10(a) 7.2(a) 9.10 9.10

43
Environmental Reports ERISA Exchange Act Excluded Assets Excluded Contracts Excluded Inventory Excluded Liabilities First GPCR Event First Solvay Event Fixed Assets 9.10 9.10 5.3 1.2 1.2(k) 1.2(j) 2.2 7.8 7.8 1.1(a)

Environmental Reports ERISA Exchange Act Excluded Assets Excluded Contracts Excluded Inventory Excluded Liabilities First GPCR Event First Solvay Event Fixed Assets Functional Genomics Program GAAP GPCR Directed Chemistry Program Governmental Entity Hazardous Substances Indemnified Party Indemnitor Indemnitor's Threshold Amount Initial GPCR Product Initial Solvay Product Intellectual Property Inventory Leased Property Leases Liabilities Liens Living Chip Technology Losses Material Contracts Option

9.10 9.10 5.3 1.2 1.2(k) 1.2(j) 2.2 7.8 7.8 1.1(a) 9.10 5.4 9.10 9.10 9.10 8.4 8.4 8.6 7.8 7.8 5.13 1.1(b) 5.6 5.6 5.6 5.7 9.10 8.2 5.18 5.10(a)

44
Patent License Agreement Patent Rights Permits Permitted Liens Purchased Contracts 4(j) 9.10 5.9 9.10 1.1(d)

Patent License Agreement Patent Rights Permits Permitted Liens Purchased Contracts Purchase Price RCRA Seller Securities Act Seller's Group Seller SEC Documents SIBIA Software Software License Agreement Taxes Tax Return Technical Information Technology License Agreement Trademarks Transferred Employees Transition Period Year 2000 Compliant

4(j) 9.10 5.9 9.10 1.1(d) 3.1 9.10 Preamble 5.4 5.10(c) 5.4 1.2(c) 5.15 4.1(i) 5.16 5.16 5.14 4.1(h) 9.10 7.8 7.3 5.15

9.12. Interpretation. Article titles, headings to sections and any table of contents are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation hereof. The Schedules and Exhibits referred to herein shall be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein. As used herein, "include", "includes" and "including" are deemed to be followed by "without limitation" whether or not they are in fact followed by such words or 45

words of like import; the singular includes the plural and vice versa; references to any agreement or other document are to such agreement or document as amended and supplemented from time to time. IN WITNESS WHEREOF, the undersigned have executed this Asset Purchase Agreement as of the date first above written. CADUS PHARMACEUTICAL CORPORATION
By: /s/ ---------------------------------Name: Title:

words of like import; the singular includes the plural and vice versa; references to any agreement or other document are to such agreement or document as amended and supplemented from time to time. IN WITNESS WHEREOF, the undersigned have executed this Asset Purchase Agreement as of the date first above written. CADUS PHARMACEUTICAL CORPORATION
By: /s/ ---------------------------------Name: Title:

OSI PHARMACEUTICALS, INC.
By: /s/ ---------------------------------Name: Title:

46
List of Schedules Schedule 1.1(a) Schedule 1.1(b) Schedule 1.1(d) Schedule 1.1(e) Schedule 1.1(f) Schedule 1.1(g) Schedule 1.1(i) Schedule 1.1(k) Schedule 1.2(i) Schedule 1.2(j) Schedule 1.2(k) Schedule 1.2(l) Schedule 1.2(m) Schedule 1.2(n) Schedule 3.2 Schedule 5.3 Schedule 5.5 Schedule 5.6 Schedule 5.7(a) Schedule 5.7(b) Schedule 5.8 Fixed Assets Inventory Purchased Contracts Security Deposits Prepaid Expenses Intellectual Property Permits GPCR Directed Chemistry Program Excluded Fixed Assets Excluded Inventory Excluded Contracts Excluded Security Deposits Excluded Prepaid Expenses Excluded Intellectual Property Allocation of Purchase Price Consents and Approvals Material Adverse Change Material Liabilities Liens, Fixed Assets Excluded Fixed Assets Material Contracts

List of Schedules Schedule 1.1(a) Schedule 1.1(b) Schedule 1.1(d) Schedule 1.1(e) Schedule 1.1(f) Schedule 1.1(g) Schedule 1.1(i) Schedule 1.1(k) Schedule 1.2(i) Schedule 1.2(j) Schedule 1.2(k) Schedule 1.2(l) Schedule 1.2(m) Schedule 1.2(n) Schedule 3.2 Schedule 5.3 Schedule 5.5 Schedule 5.6 Schedule 5.7(a) Schedule 5.7(b) Schedule 5.8 Schedule 5.9 Schedule 5.10(a) Schedule 5.10(c) Schedule 5.10(e) Fixed Assets Inventory Purchased Contracts Security Deposits Prepaid Expenses Intellectual Property Permits GPCR Directed Chemistry Program Excluded Fixed Assets Excluded Inventory Excluded Contracts Excluded Security Deposits Excluded Prepaid Expenses Excluded Intellectual Property Allocation of Purchase Price Consents and Approvals Material Adverse Change Material Liabilities Liens, Fixed Assets Excluded Fixed Assets Material Contracts Licenses and Permits Benefit Plans and Employee Arrangements Pension Plans Employee Salaries, Bonuses & Vacation Pay Litigation Compliance with Law Intellectual Property Software and Information Systems

Schedule 5.11 Schedule 5.12 Schedule 5.13 Schedule 5.15

Schedule 5.18 Schedule 5.19 Schedule 6.3 Schedule 7.2(a)

Environmental Matters Broker's Fees Consents and Approvals Employment Matters

48

Schedule 5.18 Schedule 5.19 Schedule 6.3 Schedule 7.2(a)

Environmental Matters Broker's Fees Consents and Approvals Employment Matters

48

OSI PHARMACEUTICALS, INC. NON-QUALIFIED STOCK OPTION PLAN FOR FORMER EMPLOYEES OF CADUS PHARMACEUTICAL CORP. 1. Purpose OSI Pharmaceuticals, Inc. (the "Company") has acquired certain of the assets of Cadus Pharmaceutical Corp. ("Cadus"). In connection therewith, the Company has adopted this Non-Qualified Stock Option Plan for Former Employees of Cadus Pharmaceutical Corp. (the "Plan") as an incentive to induce [certain] former employees of Cadus to accept employment with, or become associated with, the Company or a parent or subsidiary of the Company, and to encourage them to acquire a proprietary interest in the Company through the ownership of common stock, par value $.01 per share (the "Common Stock"), of the Company. Such ownership will provide them with a more direct stake in the future welfare of the Company. No option granted under the Plan shall be considered an "incentive stock option" as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). As used herein, the term "parent" or "subsidiary" shall mean any present or future corporation which is or would be a "parent corporation" or "subsidiary corporation" of the Company as the term is defined in Section 424 of the Code (determined as if the Company were the employer corporation). 2. Administration of the Plan The Plan shall be administered by a committee (the "Committee") as appointed from time to time by the Board of Directors of the Company, which may be the Compensation Committee of the Board of Directors. Except as otherwise specifically provided herein, no person, other than members of the Committee, shall have any discretion as to decisions regarding the Plan. The Company may engage a third party to administer routine matters under the Plan, such as establishing and maintaining accounts for Plan participants and facilitating transactions by participants pursuant to the Plan. In administering the Plan, the Committee may adopt rules and regulations for carrying out the Plan. The interpretations and decisions made by the Committee with regard to any question arising under the Plan shall be final and conclusive on all persons participating or eligible to participate in the Plan. Subject to the provisions of the Plan, the Committee shall determine the terms of all options granted pursuant to the Plan, including, but not limited to, the persons to whom, and the time or times at which, grants shall be made, the number of shares to be covered by each option, the duration of options, the exercisability of options, and the option price.

3. Shares of Stock Subject to the Plan Except as provided in paragraphs 6(h), 6(i) and 7 hereof, the number of shares that may be issued or transferred pursuant to the exercise of options granted under the Plan shall not exceed 415,000 shares of Common Stock. Such shares may be authorized and unissued shares or previously issued shares acquired or to be acquired by the Company and held in treasury. 4. Eligibility

OSI PHARMACEUTICALS, INC. NON-QUALIFIED STOCK OPTION PLAN FOR FORMER EMPLOYEES OF CADUS PHARMACEUTICAL CORP. 1. Purpose OSI Pharmaceuticals, Inc. (the "Company") has acquired certain of the assets of Cadus Pharmaceutical Corp. ("Cadus"). In connection therewith, the Company has adopted this Non-Qualified Stock Option Plan for Former Employees of Cadus Pharmaceutical Corp. (the "Plan") as an incentive to induce [certain] former employees of Cadus to accept employment with, or become associated with, the Company or a parent or subsidiary of the Company, and to encourage them to acquire a proprietary interest in the Company through the ownership of common stock, par value $.01 per share (the "Common Stock"), of the Company. Such ownership will provide them with a more direct stake in the future welfare of the Company. No option granted under the Plan shall be considered an "incentive stock option" as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). As used herein, the term "parent" or "subsidiary" shall mean any present or future corporation which is or would be a "parent corporation" or "subsidiary corporation" of the Company as the term is defined in Section 424 of the Code (determined as if the Company were the employer corporation). 2. Administration of the Plan The Plan shall be administered by a committee (the "Committee") as appointed from time to time by the Board of Directors of the Company, which may be the Compensation Committee of the Board of Directors. Except as otherwise specifically provided herein, no person, other than members of the Committee, shall have any discretion as to decisions regarding the Plan. The Company may engage a third party to administer routine matters under the Plan, such as establishing and maintaining accounts for Plan participants and facilitating transactions by participants pursuant to the Plan. In administering the Plan, the Committee may adopt rules and regulations for carrying out the Plan. The interpretations and decisions made by the Committee with regard to any question arising under the Plan shall be final and conclusive on all persons participating or eligible to participate in the Plan. Subject to the provisions of the Plan, the Committee shall determine the terms of all options granted pursuant to the Plan, including, but not limited to, the persons to whom, and the time or times at which, grants shall be made, the number of shares to be covered by each option, the duration of options, the exercisability of options, and the option price.

3. Shares of Stock Subject to the Plan Except as provided in paragraphs 6(h), 6(i) and 7 hereof, the number of shares that may be issued or transferred pursuant to the exercise of options granted under the Plan shall not exceed 415,000 shares of Common Stock. Such shares may be authorized and unissued shares or previously issued shares acquired or to be acquired by the Company and held in treasury. 4. Eligibility Options may be granted only to directors, officer, employees and consultants who are former employees of Cadus. 5. Granting of options No options pursuant to this Plan may be granted after ten years from the date of the closing of the Asset Purchase Agreement by and between the Company and Cadus. The date of the grant of any option shall be the date on which the Committee authorizes the grant of such option. 6. Options

3. Shares of Stock Subject to the Plan Except as provided in paragraphs 6(h), 6(i) and 7 hereof, the number of shares that may be issued or transferred pursuant to the exercise of options granted under the Plan shall not exceed 415,000 shares of Common Stock. Such shares may be authorized and unissued shares or previously issued shares acquired or to be acquired by the Company and held in treasury. 4. Eligibility Options may be granted only to directors, officer, employees and consultants who are former employees of Cadus. 5. Granting of options No options pursuant to this Plan may be granted after ten years from the date of the closing of the Asset Purchase Agreement by and between the Company and Cadus. The date of the grant of any option shall be the date on which the Committee authorizes the grant of such option. 6. Options Options shall be evidenced by stock option agreements in such form, consistent with the Plan, as the Committee shall approve from time to time, which agreements need not be identical and shall be subject to the following terms and conditions: (a) Option Price. The purchase price under each option shall be specified by the Committee, but shall in no case be less than the greater of 50% of the Fair Market Value of the Common Stock at the time the option is granted and the par value of such Common Stock. (b) Medium and Time of Payment. Stock purchased pursuant to the exercise of an option shall at the time of purchase be paid for in full in cash, or, upon conditions established by the Committee, by delivery of shares of Common Stock owned by the recipient. If payment is made by the delivery of shares, the value of the shares delivered shall be the Fair Market Value of such shares on the date of exercise of the option. In addition, unless otherwise provided by the Committee, an "in the money" option may be exercised on a "cashless" basis in exchange for the issuance to the optionee (or other person entitled to exercise the option) of the largest whole number of shares having an aggregate value equal to the value of such option on the date of exercise. For this purpose, the value of the shares delivered by the Company and the value of the option being exercised shall be determined based on the Fair Market Value of the Common Stock on the date of exercise of the option. Upon receipt of payment and such documentation as the 2

Company may deem necessary to establish compliance with the Securities Act of 1933, as amended (the "Securities Act"), the Company shall, without stock transfer tax to the optionee or other person entitled to exercise the option, deliver to the person exercising the option a certificate or certificates for such shares. It shall be a condition to the performance of the Company's obligation to issue or transfer Common Stock upon exercise of an option or options that the optionee pay, or make provision satisfactory to the Company for the payment of, any taxes (other than stock transfer taxes) the Company is obligated to collect with respect to the issue or transfer of Common Stock upon such exercise, including any federal, state, or local withholding taxes. (c) Waiting Period. The waiting period and time for exercising an option shall be prescribed by the Committee in each particular case; provided, however, that no option may be exercised after 10 years from the date it is granted. (d) Rights as a Stockholder. A recipient of options shall have no rights as a stockholder with respect to any shares issuable or transferable upon exercise thereof until the date a stock certificate is issued to him for such shares. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.

Company may deem necessary to establish compliance with the Securities Act of 1933, as amended (the "Securities Act"), the Company shall, without stock transfer tax to the optionee or other person entitled to exercise the option, deliver to the person exercising the option a certificate or certificates for such shares. It shall be a condition to the performance of the Company's obligation to issue or transfer Common Stock upon exercise of an option or options that the optionee pay, or make provision satisfactory to the Company for the payment of, any taxes (other than stock transfer taxes) the Company is obligated to collect with respect to the issue or transfer of Common Stock upon such exercise, including any federal, state, or local withholding taxes. (c) Waiting Period. The waiting period and time for exercising an option shall be prescribed by the Committee in each particular case; provided, however, that no option may be exercised after 10 years from the date it is granted. (d) Rights as a Stockholder. A recipient of options shall have no rights as a stockholder with respect to any shares issuable or transferable upon exercise thereof until the date a stock certificate is issued to him for such shares. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. (e) Non-Assignability of Options. Except as may otherwise be specifically provided by the Committee, no option shall be assignable or transferable by the recipient except by will or by the laws of descent and distribution. During the lifetime of a recipient, except as may otherwise be specifically provided by the Committee, options shall be exercisable only by such recipient. If the Committee approves provisions in any particular case allowing for assignment or transfer of an option, then such option will nonetheless be subject to a six-month holding period commencing on the date of grant during which period the recipient will not be permitted to assign or transfer such option, unless the Committee further specifically provides for the assignability or transferability of such option during this period. See paragraph 8 hereof for restrictions on sale of shares. (f) Effect of Termination of Employment. If a recipient's employment (or service as an officer, director or consultant) shall terminate for any reason, other than death or Retirement (as defined below), the right of the recipient to exercise any option otherwise exercisable on the date of such termination shall expire unless such right is exercised within a period of 90 days after the date of such termination. The term "Retirement" shall mean the voluntary termination of employment (or service as an officer, director or consultant) by a recipient who has attained the age of 55 and who has completed at least five years of service 3

with the Company. If a recipient's employment (or service as an officer, director or consultant) shall terminate because of death or Retirement, the right of the recipient to exercise any option otherwise exercisable on the date of such termination shall be unaffected by such termination and shall continue until the normal expiration of such option. Option rights shall not be affected by any change of employment as long as the recipient continues to be employed by either the Company or a parent or subsidiary of the Company. In no event, however, shall an option be exercisable after the expiration of its original term as determined by the Committee pursuant to subparagraph 6(c) above. The Committee may, if it determines that to do so would be in the Company's best interests, provide in a specific case or cases for the exercise of options which would otherwise terminate upon termination of employment with the Company for any reason, upon such terms and conditions as the Committee determines to be appropriate. Nothing in the Plan or in any option agreement shall confer any right to continue in the employ of the Company or any parent or subsidiary of the Company or interfere in any way with the right of the Company or any parent or subsidiary of the Company to terminate the employment of a recipient at any time. (g) Leave of Absence. In the case of a recipient on an approved leave of absence, the Committee may, if it determines that to do so would be in the best interests of the Company, provide in a specific case for continuation of options during such leave of absence, such continuation to be on such terms and conditions as the Committee determines to be appropriate, except that in no event shall an option be exercisable after 10 years from the date it is granted. (h) Recapitalization. In the event that dividends payable in Common Stock during any fiscal year of the Company exceed in the aggregate five percent of the Common Stock issued and outstanding at the beginning of the year, or in the event there is during any fiscal year of the Company one or more splits, subdivisions, or combinations of

with the Company. If a recipient's employment (or service as an officer, director or consultant) shall terminate because of death or Retirement, the right of the recipient to exercise any option otherwise exercisable on the date of such termination shall be unaffected by such termination and shall continue until the normal expiration of such option. Option rights shall not be affected by any change of employment as long as the recipient continues to be employed by either the Company or a parent or subsidiary of the Company. In no event, however, shall an option be exercisable after the expiration of its original term as determined by the Committee pursuant to subparagraph 6(c) above. The Committee may, if it determines that to do so would be in the Company's best interests, provide in a specific case or cases for the exercise of options which would otherwise terminate upon termination of employment with the Company for any reason, upon such terms and conditions as the Committee determines to be appropriate. Nothing in the Plan or in any option agreement shall confer any right to continue in the employ of the Company or any parent or subsidiary of the Company or interfere in any way with the right of the Company or any parent or subsidiary of the Company to terminate the employment of a recipient at any time. (g) Leave of Absence. In the case of a recipient on an approved leave of absence, the Committee may, if it determines that to do so would be in the best interests of the Company, provide in a specific case for continuation of options during such leave of absence, such continuation to be on such terms and conditions as the Committee determines to be appropriate, except that in no event shall an option be exercisable after 10 years from the date it is granted. (h) Recapitalization. In the event that dividends payable in Common Stock during any fiscal year of the Company exceed in the aggregate five percent of the Common Stock issued and outstanding at the beginning of the year, or in the event there is during any fiscal year of the Company one or more splits, subdivisions, or combinations of shares of Common Stock resulting in an increase or decrease by more than five percent of the shares outstanding at the beginning of the year, the number of shares available under the Plan shall be increased or decreased proportionately, as the case may be, and the number of shares deliverable upon the exercise thereafter of any options theretofore granted shall be increased or decreased proportionately, as the case may be, without change in the aggregate purchase price. Common Stock dividends, splits, subdivisions, or combinations during any fiscal year that do not exceed in the aggregate five percent of the Common Stock issued and outstanding at the beginning of such year shall be ignored for purposes of the Plan. All adjustments shall be made as of the day such action necessitating such adjustment becomes effective. (i) Sale or Reorganization. In case the Company is merged or consolidated with another corporation, or in case the property or stock of the Company is acquired by another corporation, or in case of a separation, 4

reorganization, or liquidation of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company hereunder, shall either (i) make appropriate provisions for the protection of any outstanding options by the substitution on an equitable basis of appropriate stock of the Company, or appropriate stock or options of the merged, consolidated, or otherwise reorganized corporation, or (ii) give written notice to optionees that their options, which will become immediately exercisable notwithstanding any waiting period otherwise prescribed by the Committee, must be exercised within 30 days of the date of such notice or they will be terminated. (j) General Restrictions. Each option granted under the Plan shall be subject to the requirement that, if at any time the Board of Directors shall determine, in its discretion, that the listing, registration, or qualification of the shares issuable or transferable upon exercise thereof upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the granting of such option or the issue, transfer, or purchase of shares thereunder, such option may not be exercised in whole or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. The Company shall not be obligated to sell or issue any shares of Common Stock in any manner in contravention of the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations of the Securities and Exchange Commission, any state securities law, the rules and regulations promulgated thereunder or the rules and regulations of any securities exchange or over the counter market on

reorganization, or liquidation of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company hereunder, shall either (i) make appropriate provisions for the protection of any outstanding options by the substitution on an equitable basis of appropriate stock of the Company, or appropriate stock or options of the merged, consolidated, or otherwise reorganized corporation, or (ii) give written notice to optionees that their options, which will become immediately exercisable notwithstanding any waiting period otherwise prescribed by the Committee, must be exercised within 30 days of the date of such notice or they will be terminated. (j) General Restrictions. Each option granted under the Plan shall be subject to the requirement that, if at any time the Board of Directors shall determine, in its discretion, that the listing, registration, or qualification of the shares issuable or transferable upon exercise thereof upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the granting of such option or the issue, transfer, or purchase of shares thereunder, such option may not be exercised in whole or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. The Company shall not be obligated to sell or issue any shares of Common Stock in any manner in contravention of the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations of the Securities and Exchange Commission, any state securities law, the rules and regulations promulgated thereunder or the rules and regulations of any securities exchange or over the counter market on which the Common Stock is listed or in which it is included for quotation. The Board of Directors may, in connection with the granting of each option, require the individual to whom the option is to be granted to enter into an agreement with the Company stating that as a condition precedent to each exercise of the option, in whole or in part, he shall, if then required by the Company, represent to the Company in writing that such exercise is for investment only and not with a view to distribution, and also setting forth such other terms and conditions as the Committee may prescribe. Such agreements may also, in the discretion of the Committee, contain provisions requiring the forfeiture of any options granted and/or Common Stock held, in the event of the termination of employment or association, as the case may be, of the optionee with the Company. Upon any forfeiture of Common Stock pursuant to an agreement authorized by the preceding sentence, the Company shall pay consideration for such Common Stock to the optionee, pursuant to any such agreement, without interest thereon. (k) "Fair Market Value." Fair Market Value for all purposes under the Plan shall mean the closing price of shares of Common Stock, as reported in 5

The Wall Street Journal, in the NASDAQ National Market Issues or similar successor consolidated transactions reports (or a similar consolidated transactions report for the exchange on which the shares of Common Stock are then trading) for the relevant date, or if no sales of shares of Common Stock were made on such date, the average of the high and low sale prices of shares as reported in such composite transaction report for the preceding day on which sales of shares were made. If the shares are not listed on a national securities exchange or included for quotation in the NASDAQ National Market System at the time Fair Market Value is to be determined, then Fair Market Value shall be determined by the Committee in good faith pursuant to such method as to the Committee deems appropriate and equitable. Under no circumstances shall the Fair Market Value of a share of Common Stock be less than its par value. 7. Termination and Amendment of the Plan The Board of Directors or the Committee shall have the right to amend, suspend, or terminate the Plan at any time; provided, however, that no such action shall affect or in any way impair the rights of a recipient under any option right theretofore granted under the Plan; and, provided, further, that unless first duly approved by the stockholders of the Company entitled to vote thereon at a meeting (which may be the annual meeting) duly called and held for such purpose, except as provided in subparagraphs 6(h) and 6(i), no amendment or change shall be made in the Plan increasing the total number of shares which may be issued or transferred under the Plan, materially increasing the benefits to Plan participants or modifying the requirements as to eligibility for participation in the Plan.

The Wall Street Journal, in the NASDAQ National Market Issues or similar successor consolidated transactions reports (or a similar consolidated transactions report for the exchange on which the shares of Common Stock are then trading) for the relevant date, or if no sales of shares of Common Stock were made on such date, the average of the high and low sale prices of shares as reported in such composite transaction report for the preceding day on which sales of shares were made. If the shares are not listed on a national securities exchange or included for quotation in the NASDAQ National Market System at the time Fair Market Value is to be determined, then Fair Market Value shall be determined by the Committee in good faith pursuant to such method as to the Committee deems appropriate and equitable. Under no circumstances shall the Fair Market Value of a share of Common Stock be less than its par value. 7. Termination and Amendment of the Plan The Board of Directors or the Committee shall have the right to amend, suspend, or terminate the Plan at any time; provided, however, that no such action shall affect or in any way impair the rights of a recipient under any option right theretofore granted under the Plan; and, provided, further, that unless first duly approved by the stockholders of the Company entitled to vote thereon at a meeting (which may be the annual meeting) duly called and held for such purpose, except as provided in subparagraphs 6(h) and 6(i), no amendment or change shall be made in the Plan increasing the total number of shares which may be issued or transferred under the Plan, materially increasing the benefits to Plan participants or modifying the requirements as to eligibility for participation in the Plan. 8. Restriction on Sale of Shares No stock acquired by an optionee upon exercise of an option granted hereunder may be disposed of by the optionee (or other person eligible to exercise the option) within six months from the date such option was granted, unless otherwise provided by the Committee. 9. Effective Date of the Plan This Plan shall become effective upon the closing of the Asset Purchase Agreement by and between the Company and Cadus. The Plan shall terminate after ten years from the date of the closing of the Asset Purchase Agreement by and between the Company and Cadus, or on such earlier date as the Board of Directors or the Committee may determine. Any option outstanding at the termination date shall remain outstanding until it has either expired or has been exercised. 6

10. Compliance with Rule 16b-3 With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors. To the extent any provision of the Plan or action by the Committee (or any other person on behalf of the Committee or the Company) fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 7

Portions of this Exhibit 10.1 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

COLLABORATIVE RESEARCH AGREEMENT This amended and restated COLLABORATIVE RESEARCH AGREEMENT (this "Agreement") is entered into as of April 23, 1999, by and among PFIZER INC ("Pfizer"), a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017, OSI PHARMACEUTICALS, INC.,

10. Compliance with Rule 16b-3 With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors. To the extent any provision of the Plan or action by the Committee (or any other person on behalf of the Committee or the Company) fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 7

Portions of this Exhibit 10.1 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

COLLABORATIVE RESEARCH AGREEMENT This amended and restated COLLABORATIVE RESEARCH AGREEMENT (this "Agreement") is entered into as of April 23, 1999, by and among PFIZER INC ("Pfizer"), a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017, OSI PHARMACEUTICALS, INC., formerly known as ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation, having its principal place of business at 106 Charles Lindbergh Blvd., Uniondale, New York 11553, and ANADERM RESEARCH CORP. ("Anaderm"), a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017. W I T N E S S E T H: WHEREAS, Anaderm was organized to discover, produce, purchase and market new compounds or new uses for known compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of skin and hair pigmentation; WHEREAS, OSI has developed proprietary gene transcription and gene expression modulation technology and high throughput screening systems which may be used to identify and develop novel drugs, and is contributing chemical capabilities to synthesize analogs and make bulk compounds for exploratory purposes; WHEREAS, Pfizer has the capacity to undertake research for the discovery and evaluation of compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of hair and skin pigmentation, and also has the capability for clinical evaluation, manufacturing and marketing of such compounds;

WHEREAS, Anaderm, OSI and Pfizer wish to enter into a research collaboration to identify and develop compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of hair and skin pigmentation; and WHEREAS, Pfizer, OSI and Anaderm entered into a Collaborative Research Agreement dated as of April 23, 1996 (the "1996 Agreement"), which they now wish to be amended and restated by this Agreement. NOW, THEREFORE, the parties agree as follows: ARTICLE 1 - DEFINITIONS Whenever used in this Agreement, the terms defined in this article (ARTICLE 1) shall have the meanings specified. 1.1. "Affiliate" means any corporation or other legal entity owning, directly or indirectly, 50% or more of the voting capital shares or similar voting securities of Anaderm, OSI or Pfizer; or any corporation or other legal entity 50% or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by

Portions of this Exhibit 10.1 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

COLLABORATIVE RESEARCH AGREEMENT This amended and restated COLLABORATIVE RESEARCH AGREEMENT (this "Agreement") is entered into as of April 23, 1999, by and among PFIZER INC ("Pfizer"), a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017, OSI PHARMACEUTICALS, INC., formerly known as ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation, having its principal place of business at 106 Charles Lindbergh Blvd., Uniondale, New York 11553, and ANADERM RESEARCH CORP. ("Anaderm"), a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017. W I T N E S S E T H: WHEREAS, Anaderm was organized to discover, produce, purchase and market new compounds or new uses for known compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of skin and hair pigmentation; WHEREAS, OSI has developed proprietary gene transcription and gene expression modulation technology and high throughput screening systems which may be used to identify and develop novel drugs, and is contributing chemical capabilities to synthesize analogs and make bulk compounds for exploratory purposes; WHEREAS, Pfizer has the capacity to undertake research for the discovery and evaluation of compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of hair and skin pigmentation, and also has the capability for clinical evaluation, manufacturing and marketing of such compounds;

WHEREAS, Anaderm, OSI and Pfizer wish to enter into a research collaboration to identify and develop compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of hair and skin pigmentation; and WHEREAS, Pfizer, OSI and Anaderm entered into a Collaborative Research Agreement dated as of April 23, 1996 (the "1996 Agreement"), which they now wish to be amended and restated by this Agreement. NOW, THEREFORE, the parties agree as follows: ARTICLE 1 - DEFINITIONS Whenever used in this Agreement, the terms defined in this article (ARTICLE 1) shall have the meanings specified. 1.1. "Affiliate" means any corporation or other legal entity owning, directly or indirectly, 50% or more of the voting capital shares or similar voting securities of Anaderm, OSI or Pfizer; or any corporation or other legal entity 50% or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by Anaderm, OSI or Pfizer. However, a foreign corporation or other legal entity shall be considered an Affiliate of Anaderm, OSI or Pfizer, if Anaderm, OSI or Pfizer, respectively, owns the maximum amount of voting securities of such corporation or entity that a U.S. company is permitted to own under the laws of the applicable foreign country and such maximum amount is at least forty percent. 1.2. "Anaderm Confidential Information" means all information about any element of Anaderm Technology which is disclosed by Anaderm to OSI or Pfizer, orally or in writing, and designated "Confidential" in writing by Anaderm no later than 30 days after the time of disclosure to OSI or Pfizer, to the extent that such information as of the date of disclosure to

COLLABORATIVE RESEARCH AGREEMENT This amended and restated COLLABORATIVE RESEARCH AGREEMENT (this "Agreement") is entered into as of April 23, 1999, by and among PFIZER INC ("Pfizer"), a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017, OSI PHARMACEUTICALS, INC., formerly known as ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation, having its principal place of business at 106 Charles Lindbergh Blvd., Uniondale, New York 11553, and ANADERM RESEARCH CORP. ("Anaderm"), a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017. W I T N E S S E T H: WHEREAS, Anaderm was organized to discover, produce, purchase and market new compounds or new uses for known compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of skin and hair pigmentation; WHEREAS, OSI has developed proprietary gene transcription and gene expression modulation technology and high throughput screening systems which may be used to identify and develop novel drugs, and is contributing chemical capabilities to synthesize analogs and make bulk compounds for exploratory purposes; WHEREAS, Pfizer has the capacity to undertake research for the discovery and evaluation of compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of hair and skin pigmentation, and also has the capability for clinical evaluation, manufacturing and marketing of such compounds;

WHEREAS, Anaderm, OSI and Pfizer wish to enter into a research collaboration to identify and develop compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of hair and skin pigmentation; and WHEREAS, Pfizer, OSI and Anaderm entered into a Collaborative Research Agreement dated as of April 23, 1996 (the "1996 Agreement"), which they now wish to be amended and restated by this Agreement. NOW, THEREFORE, the parties agree as follows: ARTICLE 1 - DEFINITIONS Whenever used in this Agreement, the terms defined in this article (ARTICLE 1) shall have the meanings specified. 1.1. "Affiliate" means any corporation or other legal entity owning, directly or indirectly, 50% or more of the voting capital shares or similar voting securities of Anaderm, OSI or Pfizer; or any corporation or other legal entity 50% or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by Anaderm, OSI or Pfizer. However, a foreign corporation or other legal entity shall be considered an Affiliate of Anaderm, OSI or Pfizer, if Anaderm, OSI or Pfizer, respectively, owns the maximum amount of voting securities of such corporation or entity that a U.S. company is permitted to own under the laws of the applicable foreign country and such maximum amount is at least forty percent. 1.2. "Anaderm Confidential Information" means all information about any element of Anaderm Technology which is disclosed by Anaderm to OSI or Pfizer, orally or in writing, and designated "Confidential" in writing by Anaderm no later than 30 days after the time of disclosure to OSI or Pfizer, to the extent that such information as of the date of disclosure to 2

OSI or Pfizer is not (i) known to the recipient (i.e., OSI or Pfizer) other than by virtue of a prior confidential disclosure to the recipient by Anaderm, or

WHEREAS, Anaderm, OSI and Pfizer wish to enter into a research collaboration to identify and develop compounds for use in humans for the prevention or treatment of baldness and wrinkles and for the control of hair and skin pigmentation; and WHEREAS, Pfizer, OSI and Anaderm entered into a Collaborative Research Agreement dated as of April 23, 1996 (the "1996 Agreement"), which they now wish to be amended and restated by this Agreement. NOW, THEREFORE, the parties agree as follows: ARTICLE 1 - DEFINITIONS Whenever used in this Agreement, the terms defined in this article (ARTICLE 1) shall have the meanings specified. 1.1. "Affiliate" means any corporation or other legal entity owning, directly or indirectly, 50% or more of the voting capital shares or similar voting securities of Anaderm, OSI or Pfizer; or any corporation or other legal entity 50% or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by Anaderm, OSI or Pfizer. However, a foreign corporation or other legal entity shall be considered an Affiliate of Anaderm, OSI or Pfizer, if Anaderm, OSI or Pfizer, respectively, owns the maximum amount of voting securities of such corporation or entity that a U.S. company is permitted to own under the laws of the applicable foreign country and such maximum amount is at least forty percent. 1.2. "Anaderm Confidential Information" means all information about any element of Anaderm Technology which is disclosed by Anaderm to OSI or Pfizer, orally or in writing, and designated "Confidential" in writing by Anaderm no later than 30 days after the time of disclosure to OSI or Pfizer, to the extent that such information as of the date of disclosure to 2

OSI or Pfizer is not (i) known to the recipient (i.e., OSI or Pfizer) other than by virtue of a prior confidential disclosure to the recipient by Anaderm, or (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained by the recipient from a Third Party free from any obligation of secrecy to Anaderm. "Anaderm Confidential Information" shall include, without limitation and subject to the foregoing exceptions (i) through (iii), any agreements between Anaderm and Third Parties and any information contained in such agreements that Anaderm provides to OSI or Pfizer. 1.3. "Anaderm Patent Rights" means Anaderm's rights in all Inventions within Anaderm Technology, including the worldwide rights in all applications for letters patent on Inventions that are encompassed within Anaderm Technology, including all continuations, continuations-in-part, divisionals, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues, Supplementary Protection Certificates and extensions thereof. "Anaderm Patent Rights" includes any rights in Inventions that are acquired by Anaderm pursuant to Article 7 of this Agreement.

OSI or Pfizer is not (i) known to the recipient (i.e., OSI or Pfizer) other than by virtue of a prior confidential disclosure to the recipient by Anaderm, or (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained by the recipient from a Third Party free from any obligation of secrecy to Anaderm. "Anaderm Confidential Information" shall include, without limitation and subject to the foregoing exceptions (i) through (iii), any agreements between Anaderm and Third Parties and any information contained in such agreements that Anaderm provides to OSI or Pfizer. 1.3. "Anaderm Patent Rights" means Anaderm's rights in all Inventions within Anaderm Technology, including the worldwide rights in all applications for letters patent on Inventions that are encompassed within Anaderm Technology, including all continuations, continuations-in-part, divisionals, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues, Supplementary Protection Certificates and extensions thereof. "Anaderm Patent Rights" includes any rights in Inventions that are acquired by Anaderm pursuant to Article 7 of this Agreement. 1.4. "Anaderm Technology" means all Technology that pertains to the Field or to the Dermatology Indications, that is or was developed or created by employees of, or consultants to Anaderm, alone or jointly with one or more Third Parties or with Pfizer or OSI, or that is or was acquired by Anaderm by purchase, license, assignment or other means from one or more Third Parties or from Pfizer or OSI. 1.5. An "Analog" of a compound refers to a compound which is selected to be screened for activity in modulating a certain biological mechanism or response, based on its structural similarity to a compound which was found to exhibit activity in modulating the same biological mechanism or response. 3

1.6. An "Analog" of an OSI compound refers to a compound which is selected to be screened for activity in modulating a certain biological mechanism or response, based on its structural similarity to a compound Owned By OSI, where ownership of the compound is determined as set forth in Section 1.33 below, where the OSI compound was found to exhibit activity in modulating the same biological mechanism or response. 1.7. An "Analog" of a Pfizer compound refers to a compound which is selected to be screened for activity in modulating a certain biological mechanism or response, based on its structural similarity to a compound Owned By Pfizer where ownership of the compound is determined as set forth in Section 1.33 below, where the Pfizer compound was found to exhibit activity in modulating the same biological mechanism or response. 1.8. An "Analog" of a compound from a Pfizer Selected Library refers to a compound which is selected to be screened for activity in modulating a certain biological mechanism or response, based on its structural similarity to a compound from a Pfizer Selected Library where such compound from the Pfizer Selected Library was found to exhibit activity in modulating the same biological mechanism or response. 1.9. "Class 1 Compound" means, in each case pertaining to the Field or the Dermatology Indications, any compound that is invented, or for which a New Use is invented, or an Analog of a Class 3 Compound made, by one or more persons in the course of participating in the Research Program as an employee or otherwise on behalf of (e.g., as a consultant for or student of) Anaderm, Pfizer, OSI or NYU, as to which no Third Party other than NYU is entitled to royalties from Anaderm upon commercialization. 1.10. "Class 2 Compound" means, in each case pertaining to the Field or the Dermatology Indications, any compound that is invented, or for which a New Use is invented, 4

or an Analog of a Class 3 Compound made, by one or more persons in the course of participating in the Research Program as an employee or otherwise on behalf of (eg., as a consultant for or a student of) Anaderm, Pfizer, NYU or OSI, and in which an entity other than Anaderm, Pfizer, OSI or NYU has the right to receive a royalty from Anaderm if such compound or New Use is commercialized, such as, for example, a New Use for a

1.6. An "Analog" of an OSI compound refers to a compound which is selected to be screened for activity in modulating a certain biological mechanism or response, based on its structural similarity to a compound Owned By OSI, where ownership of the compound is determined as set forth in Section 1.33 below, where the OSI compound was found to exhibit activity in modulating the same biological mechanism or response. 1.7. An "Analog" of a Pfizer compound refers to a compound which is selected to be screened for activity in modulating a certain biological mechanism or response, based on its structural similarity to a compound Owned By Pfizer where ownership of the compound is determined as set forth in Section 1.33 below, where the Pfizer compound was found to exhibit activity in modulating the same biological mechanism or response. 1.8. An "Analog" of a compound from a Pfizer Selected Library refers to a compound which is selected to be screened for activity in modulating a certain biological mechanism or response, based on its structural similarity to a compound from a Pfizer Selected Library where such compound from the Pfizer Selected Library was found to exhibit activity in modulating the same biological mechanism or response. 1.9. "Class 1 Compound" means, in each case pertaining to the Field or the Dermatology Indications, any compound that is invented, or for which a New Use is invented, or an Analog of a Class 3 Compound made, by one or more persons in the course of participating in the Research Program as an employee or otherwise on behalf of (e.g., as a consultant for or student of) Anaderm, Pfizer, OSI or NYU, as to which no Third Party other than NYU is entitled to royalties from Anaderm upon commercialization. 1.10. "Class 2 Compound" means, in each case pertaining to the Field or the Dermatology Indications, any compound that is invented, or for which a New Use is invented, 4

or an Analog of a Class 3 Compound made, by one or more persons in the course of participating in the Research Program as an employee or otherwise on behalf of (eg., as a consultant for or a student of) Anaderm, Pfizer, NYU or OSI, and in which an entity other than Anaderm, Pfizer, OSI or NYU has the right to receive a royalty from Anaderm if such compound or New Use is commercialized, such as, for example, a New Use for a compound that is discovered using screens owned by an entity other than Anaderm, Pfizer, OSI or NYU. 1.11. "Class 3 Compound" means any compound pertaining to the Field or the Dermatology Indications, that is invented or for which a New Use is invented by an entity other than Anaderm, Pfizer, OSI or NYU, and of which Anaderm becomes aware. Class 3 Compounds also include compounds invented by Third Parties outside the Research Program and licensed to Anaderm or Pfizer, compounds invented by a business acquired by Pfizer or an Affiliate of Pfizer after the Effective Date, and compounds pertaining to the Field or the Dermatology Indications (which may or may not have utility outside of the Field and outside such subject areas) that are invented, developed or discovered by Pfizer in the course of research conducted by Pfizer, solely or jointly with a Third Party, outside of the Field and outside of the Research Program, but shall not include Analogs of Class 3 Compounds that are made during the course of the Research Program. 1.12. "Contract Period" means the period beginning on the Effective Date and ending three years from the Effective Date. 1.13. "Dermatology Indications" means proliferative and inflammatory disorders of the skin such as acne, psoriasis, dandruff, itching and eczema. 1.14. "Effective Date" means April 23, 1999. 5

1.15. "Field" means the (a) stimulation or control of hair growth, (b) prevention or reversal of wrinkling of the skin, or (c) alteration of skin or hair pigmentation, in each case in human subjects. Technology, as defined herein, shall be considered to "pertain to the Field" if either: (a) it is a compound having activity within the Field; (b) it is a New Use for a compound having activity within the Field; or (c) it is useful for discovering compounds within the

or an Analog of a Class 3 Compound made, by one or more persons in the course of participating in the Research Program as an employee or otherwise on behalf of (eg., as a consultant for or a student of) Anaderm, Pfizer, NYU or OSI, and in which an entity other than Anaderm, Pfizer, OSI or NYU has the right to receive a royalty from Anaderm if such compound or New Use is commercialized, such as, for example, a New Use for a compound that is discovered using screens owned by an entity other than Anaderm, Pfizer, OSI or NYU. 1.11. "Class 3 Compound" means any compound pertaining to the Field or the Dermatology Indications, that is invented or for which a New Use is invented by an entity other than Anaderm, Pfizer, OSI or NYU, and of which Anaderm becomes aware. Class 3 Compounds also include compounds invented by Third Parties outside the Research Program and licensed to Anaderm or Pfizer, compounds invented by a business acquired by Pfizer or an Affiliate of Pfizer after the Effective Date, and compounds pertaining to the Field or the Dermatology Indications (which may or may not have utility outside of the Field and outside such subject areas) that are invented, developed or discovered by Pfizer in the course of research conducted by Pfizer, solely or jointly with a Third Party, outside of the Field and outside of the Research Program, but shall not include Analogs of Class 3 Compounds that are made during the course of the Research Program. 1.12. "Contract Period" means the period beginning on the Effective Date and ending three years from the Effective Date. 1.13. "Dermatology Indications" means proliferative and inflammatory disorders of the skin such as acne, psoriasis, dandruff, itching and eczema. 1.14. "Effective Date" means April 23, 1999. 5

1.15. "Field" means the (a) stimulation or control of hair growth, (b) prevention or reversal of wrinkling of the skin, or (c) alteration of skin or hair pigmentation, in each case in human subjects. Technology, as defined herein, shall be considered to "pertain to the Field" if either: (a) it is a compound having activity within the Field; (b) it is a New Use for a compound having activity within the Field; or (c) it is useful for discovering compounds within the Field. 1.16. "Human Therapeutic Product" means any Rx or OTC Drug Product for an indication within the Field or the Dermatology Indications. "Drug Product", as used herein, means a product that contains one or more therapeutically active compounds or that relates to a method of administering or using one or more. therapeutically active compounds. "Human Therapeutic Product" does not include Rx veterinary or OTC veterinary Drug Products. 1.17. "Human Therapeutic Product based on a Class 1 Compound" means a Human Therapeutic Product that contains or relates to a method of administering or using a Class 1 Compound. 1.18. A Human Therapeutic Product is considered to be "based on" a Class 1 Compound that is identified by screening a Pfizer Selected Library if the Human Therapeutic Product contains, or relates to a method of administering or using, a Class 1 Compound identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 1.19. "Human Therapeutic Product based on a Class 2 Compound" means a Human Therapeutic Product that contains or relates to a method of administering or using a Class 2 Compound. 6

1.20. A Human Therapeutic Product is considered to be "based on" a Class 2 Compound that is identified by screening a Pfizer Selected Library if the Human Therapeutic Product contains, or relates to a method of administering or using, a Class 2 Compound identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library.

1.15. "Field" means the (a) stimulation or control of hair growth, (b) prevention or reversal of wrinkling of the skin, or (c) alteration of skin or hair pigmentation, in each case in human subjects. Technology, as defined herein, shall be considered to "pertain to the Field" if either: (a) it is a compound having activity within the Field; (b) it is a New Use for a compound having activity within the Field; or (c) it is useful for discovering compounds within the Field. 1.16. "Human Therapeutic Product" means any Rx or OTC Drug Product for an indication within the Field or the Dermatology Indications. "Drug Product", as used herein, means a product that contains one or more therapeutically active compounds or that relates to a method of administering or using one or more. therapeutically active compounds. "Human Therapeutic Product" does not include Rx veterinary or OTC veterinary Drug Products. 1.17. "Human Therapeutic Product based on a Class 1 Compound" means a Human Therapeutic Product that contains or relates to a method of administering or using a Class 1 Compound. 1.18. A Human Therapeutic Product is considered to be "based on" a Class 1 Compound that is identified by screening a Pfizer Selected Library if the Human Therapeutic Product contains, or relates to a method of administering or using, a Class 1 Compound identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 1.19. "Human Therapeutic Product based on a Class 2 Compound" means a Human Therapeutic Product that contains or relates to a method of administering or using a Class 2 Compound. 6

1.20. A Human Therapeutic Product is considered to be "based on" a Class 2 Compound that is identified by screening a Pfizer Selected Library if the Human Therapeutic Product contains, or relates to a method of administering or using, a Class 2 Compound identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 1.21. "Human Therapeutic Product based on a Class 3 Compound" means a Human Therapeutic Product that contains or relates to a method of administering or using a Class 3 Compound. 1.22. "Invention" means an invention (i.e., a conception and actual or constructive reduction to practice of an idea) that is deemed patentable by a party to this Agreement. 1.23. "Lead Compound" means a Class 1 or Class 2 Compound that has been preliminarily assessed by Anaderm to be effective or potentially effective, or to be a compound for which a New Use is effective or potentially effective, in treating an indication within the Field or the Dermatology Indications. 1.24. "Net Sales" means the gross sales by Anaderm or Pfizer or an Affiliate or Co-developer of Anaderm or Pfizer, or by a licensee or sublicensee of Pfizer, for arm's-length sales to a Third Party or Third Parties, excluding NYU, of Human Therapeutic Products, less transportation expenses, normal returns and allowances (actually paid or allowed), rebates, customary discounts and sales or other taxes based on the sales prices, but not including taxes assessed against income derived from such sales. The term "Co-developer" refers to a Person that, pursuant to an agreement with Pfizer or Anaderm, shares with Pfizer or Anaderm, respectively, the right to market a Human Therapeutic Product based on a Class 1 or Class 2 Compound. 7

1.25. "New Use", as used throughout this Agreement, means new therapeutic indications for known compounds, new compositions containing known compounds and new methods of administering known compounds, and includes, e.g., combination therapies involving the administration of two or more known therapeutically active compounds or new compositions containing one or more known therapeutically active compounds. 1.26. "NYU" means New York University, having a principal place of business at 550 First Avenue, New York,

1.20. A Human Therapeutic Product is considered to be "based on" a Class 2 Compound that is identified by screening a Pfizer Selected Library if the Human Therapeutic Product contains, or relates to a method of administering or using, a Class 2 Compound identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 1.21. "Human Therapeutic Product based on a Class 3 Compound" means a Human Therapeutic Product that contains or relates to a method of administering or using a Class 3 Compound. 1.22. "Invention" means an invention (i.e., a conception and actual or constructive reduction to practice of an idea) that is deemed patentable by a party to this Agreement. 1.23. "Lead Compound" means a Class 1 or Class 2 Compound that has been preliminarily assessed by Anaderm to be effective or potentially effective, or to be a compound for which a New Use is effective or potentially effective, in treating an indication within the Field or the Dermatology Indications. 1.24. "Net Sales" means the gross sales by Anaderm or Pfizer or an Affiliate or Co-developer of Anaderm or Pfizer, or by a licensee or sublicensee of Pfizer, for arm's-length sales to a Third Party or Third Parties, excluding NYU, of Human Therapeutic Products, less transportation expenses, normal returns and allowances (actually paid or allowed), rebates, customary discounts and sales or other taxes based on the sales prices, but not including taxes assessed against income derived from such sales. The term "Co-developer" refers to a Person that, pursuant to an agreement with Pfizer or Anaderm, shares with Pfizer or Anaderm, respectively, the right to market a Human Therapeutic Product based on a Class 1 or Class 2 Compound. 7

1.25. "New Use", as used throughout this Agreement, means new therapeutic indications for known compounds, new compositions containing known compounds and new methods of administering known compounds, and includes, e.g., combination therapies involving the administration of two or more known therapeutically active compounds or new compositions containing one or more known therapeutically active compounds. 1.26. "NYU" means New York University, having a principal place of business at 550 First Avenue, New York, New York 10016. 1.27. "NYU Agreement" means the Research and Licensing Agreement between Anaderm, NYU and Pfizer having an effective date of April 23, 1999. 1.28. "OSI Compound File" means compounds maintained by OSI, including compounds from the library licensed to OSI by The Dow Chemical Company (Midland, Michigan) that OSI has the right to use for screening in the Research Program. 1.29. "OSI Confidential Information" means all information about any element of OSI Technology which is disclosed by OSI to Anaderm or Pfizer, orally or in writing, and designated "Confidential" in writing by OSI no later than 30 days after the time of disclosure to Anaderm or Pfizer to the extent that such information as of the date of disclosure to Anaderm or Pfizer is not (i) known to the recipient (i.e., Anaderm or Pfizer) other than by virtue of a prior confidential disclosure to the recipient by OSI, or (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained by the recipient from a Third Party free from any obligation of secrecy to OSI. 1.30. "OSI Patent Rights" means OSI's rights in all Inventions within OSI Technology, including the worldwide rights in all applications for letters patent on Inventions that are encompassed within OSI Technology, including all continuations, continuations-in8

part, divisionals, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues, Supplementary Protection Certificates and extensions thereof. "OSI Patent Rights" includes any rights in

1.25. "New Use", as used throughout this Agreement, means new therapeutic indications for known compounds, new compositions containing known compounds and new methods of administering known compounds, and includes, e.g., combination therapies involving the administration of two or more known therapeutically active compounds or new compositions containing one or more known therapeutically active compounds. 1.26. "NYU" means New York University, having a principal place of business at 550 First Avenue, New York, New York 10016. 1.27. "NYU Agreement" means the Research and Licensing Agreement between Anaderm, NYU and Pfizer having an effective date of April 23, 1999. 1.28. "OSI Compound File" means compounds maintained by OSI, including compounds from the library licensed to OSI by The Dow Chemical Company (Midland, Michigan) that OSI has the right to use for screening in the Research Program. 1.29. "OSI Confidential Information" means all information about any element of OSI Technology which is disclosed by OSI to Anaderm or Pfizer, orally or in writing, and designated "Confidential" in writing by OSI no later than 30 days after the time of disclosure to Anaderm or Pfizer to the extent that such information as of the date of disclosure to Anaderm or Pfizer is not (i) known to the recipient (i.e., Anaderm or Pfizer) other than by virtue of a prior confidential disclosure to the recipient by OSI, or (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained by the recipient from a Third Party free from any obligation of secrecy to OSI. 1.30. "OSI Patent Rights" means OSI's rights in all Inventions within OSI Technology, including the worldwide rights in all applications for letters patent on Inventions that are encompassed within OSI Technology, including all continuations, continuations-in8

part, divisionals, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues, Supplementary Protection Certificates and extensions thereof. "OSI Patent Rights" includes any rights in Inventions that are acquired by OSI pursuant to Article 7 of this Agreement. 1.31. "OSI Technology" means all Technology that pertains to the Field or to the Dermatology Indications, including Technology that relates to high throughput screening or to transcriptional modulation of gene expression of the gene encoding a target, including all improvements thereto and the use of such Technology to develop transcription-based drugs, that is or was developed or created by employees of or consultants to OSI, or an OSI Affiliate, alone or jointly with one or more Third Parties or with Anaderm or Pfizer, or that is or was acquired by OSI by purchase, license, assignment or other means from one or more Third Parties or from Anaderm or Pfizer. 1.32. "OTC" means drugs sold over-the-counter without prescription. 1.33. A compound shall be considered to be "Owned By" Pfizer, Anaderm or OSI, throughout this Agreement, if such compound was provided to a participant in the Research Program by Pfizer, Anaderm or OSI, respectively, for use in conducting the Research Program, or if Pfizer, Anaderm or OSI, respectively, has rights in such compound in the United States under the patent laws (i.e., if such compound is an Invention that is owned, in whole or in part, by such party) or is claimed in a patent application or patent that is owned, in whole or in part, by such party) or the laws governing the protection of trade secrets and confidential business information. For purposes of this Agreement, compounds in the Pfizer Compound file shall be considered to be Owned By Pfizer and, with the following exception, compounds in the OSI Compound File shall be considered to be Owned By OSI. A compound 9

shall be considered to be "Owned By" Pfizer, but not "Owned By" OSI, if the compound is part of both the Pfizer Compound File and the OSI Compound File.

part, divisionals, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues, Supplementary Protection Certificates and extensions thereof. "OSI Patent Rights" includes any rights in Inventions that are acquired by OSI pursuant to Article 7 of this Agreement. 1.31. "OSI Technology" means all Technology that pertains to the Field or to the Dermatology Indications, including Technology that relates to high throughput screening or to transcriptional modulation of gene expression of the gene encoding a target, including all improvements thereto and the use of such Technology to develop transcription-based drugs, that is or was developed or created by employees of or consultants to OSI, or an OSI Affiliate, alone or jointly with one or more Third Parties or with Anaderm or Pfizer, or that is or was acquired by OSI by purchase, license, assignment or other means from one or more Third Parties or from Anaderm or Pfizer. 1.32. "OTC" means drugs sold over-the-counter without prescription. 1.33. A compound shall be considered to be "Owned By" Pfizer, Anaderm or OSI, throughout this Agreement, if such compound was provided to a participant in the Research Program by Pfizer, Anaderm or OSI, respectively, for use in conducting the Research Program, or if Pfizer, Anaderm or OSI, respectively, has rights in such compound in the United States under the patent laws (i.e., if such compound is an Invention that is owned, in whole or in part, by such party) or is claimed in a patent application or patent that is owned, in whole or in part, by such party) or the laws governing the protection of trade secrets and confidential business information. For purposes of this Agreement, compounds in the Pfizer Compound file shall be considered to be Owned By Pfizer and, with the following exception, compounds in the OSI Compound File shall be considered to be Owned By OSI. A compound 9

shall be considered to be "Owned By" Pfizer, but not "Owned By" OSI, if the compound is part of both the Pfizer Compound File and the OSI Compound File. 1.34. "Person" means any individual, estate, trust, partnership, joint venture, association, firm, corporation, company, or other entity. 1.35. "Pfizer Compound File" means the compounds maintained by Pfizer's Central Research Division. 1.36. "Pfizer Confidential Information" means all information about any element of Pfizer Technology which is disclosed by Pfizer to OSI or Anaderm, orally or in writing, and designated "Confidential" in writing by Pfizer no later than 30 days after the time of disclosure to OSI or Anaderm to the extent that such information as of the date of disclosure to OSI or Anaderm is not (i) known to the recipient (i.e., OSI or Anaderm) other than by virtue of a prior confidential disclosure to the recipient by Pfizer, or (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained by the recipient from a Third Party free from any obligation of secrecy to Pfizer. "Pfizer Confidential Information" shall include, without limitation and subject to the foregoing exceptions (i) through (iii), any agreements between Pfizer and Third Parties and any information contained in such agreements that Pfizer provides to OSI or Anaderm. 1.37. "Pfizer Patent Rights" means the rights of Pfizer and its Affiliates other than Anaderm in all Inventions within Pfizer Technology, including worldwide rights in all applications for letters patent on Inventions that are encompassed within Pfizer Technology, including all continuations, continuations-in-part, divisionals, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues, Supplementary Protection Certificates, and extensions thereof. "Pfizer Patent Rights" includes any rights in Inventions 10

that are acquired by Pfizer or any of its Affiliates other than Anaderm pursuant to Article 7 of this Agreement. 1.38. "Pfizer's Rights of First Refusal" means "Pfizer's Right of First Refusal for Initial Development" and "Pfizer's Right of First Refusal for Further Development", as these terms are defined in Article VII of the Stockholders' Agreement.

shall be considered to be "Owned By" Pfizer, but not "Owned By" OSI, if the compound is part of both the Pfizer Compound File and the OSI Compound File. 1.34. "Person" means any individual, estate, trust, partnership, joint venture, association, firm, corporation, company, or other entity. 1.35. "Pfizer Compound File" means the compounds maintained by Pfizer's Central Research Division. 1.36. "Pfizer Confidential Information" means all information about any element of Pfizer Technology which is disclosed by Pfizer to OSI or Anaderm, orally or in writing, and designated "Confidential" in writing by Pfizer no later than 30 days after the time of disclosure to OSI or Anaderm to the extent that such information as of the date of disclosure to OSI or Anaderm is not (i) known to the recipient (i.e., OSI or Anaderm) other than by virtue of a prior confidential disclosure to the recipient by Pfizer, or (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained by the recipient from a Third Party free from any obligation of secrecy to Pfizer. "Pfizer Confidential Information" shall include, without limitation and subject to the foregoing exceptions (i) through (iii), any agreements between Pfizer and Third Parties and any information contained in such agreements that Pfizer provides to OSI or Anaderm. 1.37. "Pfizer Patent Rights" means the rights of Pfizer and its Affiliates other than Anaderm in all Inventions within Pfizer Technology, including worldwide rights in all applications for letters patent on Inventions that are encompassed within Pfizer Technology, including all continuations, continuations-in-part, divisionals, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues, Supplementary Protection Certificates, and extensions thereof. "Pfizer Patent Rights" includes any rights in Inventions 10

that are acquired by Pfizer or any of its Affiliates other than Anaderm pursuant to Article 7 of this Agreement. 1.38. "Pfizer's Rights of First Refusal" means "Pfizer's Right of First Refusal for Initial Development" and "Pfizer's Right of First Refusal for Further Development", as these terms are defined in Article VII of the Stockholders' Agreement. 1.39. "Pfizer Selected Library" means a Selected Library within the Pfizer Compound File. 1.40. "Pfizer Technology" means all Technology that pertains to the Field that is or was developed or created by employees of, or consultants to Pfizer, alone or jointly with one or more Third Parties or with OSI or Anaderm, or that is or was acquired by Pfizer by purchase, license, assignment or other means from one or more Third Parties or from OSI or Anaderm, excluding Technology acquired by Pfizer pursuant to its acquisition of an entity or business that relates to, in whole or in part, or incorporates the discovery, development, purchase or marketing of one or more Drug Products for an indication within the Field or the Dermatology Indications. 1.41. "Research Program" means research conducted in the Field or Dermatology Indications by OSI, Pfizer, NYU or Anaderm, or any Affiliates thereof, as determined and overseen by a joint management team from Pfizer and OSI, during the Contract Period pursuant to this Agreement and the Stockholders' Agreement, with the exception of research conducted by Pfizer pursuant to Section 3.2.3 or Section 3.4.2 of this Agreement. 1.42. "Rights in an Invention" or "rights in an Invention" means all proprietary rights in an Invention worldwide, including the worldwide rights in all patent applications for letters patent on such Invention, including all continuations, continuations-in-part, divisionals, 11

renewals and patents of addition thereof and all letters patent granted thereon and all reissues, Supplementary Protection Certificates, and extensions thereof.

that are acquired by Pfizer or any of its Affiliates other than Anaderm pursuant to Article 7 of this Agreement. 1.38. "Pfizer's Rights of First Refusal" means "Pfizer's Right of First Refusal for Initial Development" and "Pfizer's Right of First Refusal for Further Development", as these terms are defined in Article VII of the Stockholders' Agreement. 1.39. "Pfizer Selected Library" means a Selected Library within the Pfizer Compound File. 1.40. "Pfizer Technology" means all Technology that pertains to the Field that is or was developed or created by employees of, or consultants to Pfizer, alone or jointly with one or more Third Parties or with OSI or Anaderm, or that is or was acquired by Pfizer by purchase, license, assignment or other means from one or more Third Parties or from OSI or Anaderm, excluding Technology acquired by Pfizer pursuant to its acquisition of an entity or business that relates to, in whole or in part, or incorporates the discovery, development, purchase or marketing of one or more Drug Products for an indication within the Field or the Dermatology Indications. 1.41. "Research Program" means research conducted in the Field or Dermatology Indications by OSI, Pfizer, NYU or Anaderm, or any Affiliates thereof, as determined and overseen by a joint management team from Pfizer and OSI, during the Contract Period pursuant to this Agreement and the Stockholders' Agreement, with the exception of research conducted by Pfizer pursuant to Section 3.2.3 or Section 3.4.2 of this Agreement. 1.42. "Rights in an Invention" or "rights in an Invention" means all proprietary rights in an Invention worldwide, including the worldwide rights in all patent applications for letters patent on such Invention, including all continuations, continuations-in-part, divisionals, 11

renewals and patents of addition thereof and all letters patent granted thereon and all reissues, Supplementary Protection Certificates, and extensions thereof. 1.43. "Rx" means a prescription drug. 1.44. "Selected Library" means a set of compounds selected based on their known ability to modulate or utility in modulating, or a reasonable expectation of their ability to modulate or utility in modulating, a particular biological mechanism or response. For purposes of this definition, the ability to modulate or utility in modulating a biological mechanism or response refers to any type of modulation of the biological mechanism or response, including, e.g., the ability to act as an agonist, partial agonist, reverse agonist, inhibitor, or antagonist of the biological mechanism or response. Thus, compounds grouped within the same Selected Library need not all have the same effect on the biological mechanism or response. For example, some compounds within the Selected Library may agonize, whereas other compounds within the same Selected Library may antagonize, the same biological mechanism or response. 1.45. The "Stockholders' Agreement" means the Amended and Restated Stockholders Agreement among Anaderm, Pfizer, OSI, NYU, ** , having an effective date of April 23, 1999. ** This portion has been redacted pursuant to a request for confidential treatment. 12

1.46. "Technology" means and includes all technology and technical information that pertains to the discovery or development of pharmacologically active compounds or Rx and OTC products for use in humans, including all laboratory notebooks, research plans, inventions, cultures, strains, vectors, genes and gene fragments and their sequences, cell lines, hybridoma cell lines, monoclonal and polyclonal antibodies, proteins and protein fragments, non-protein chemical structures and methods for synthesis, structure-activity relationships, computer models of chemical structures, computer software, assay methodology, processes, materials and methods for production,

renewals and patents of addition thereof and all letters patent granted thereon and all reissues, Supplementary Protection Certificates, and extensions thereof. 1.43. "Rx" means a prescription drug. 1.44. "Selected Library" means a set of compounds selected based on their known ability to modulate or utility in modulating, or a reasonable expectation of their ability to modulate or utility in modulating, a particular biological mechanism or response. For purposes of this definition, the ability to modulate or utility in modulating a biological mechanism or response refers to any type of modulation of the biological mechanism or response, including, e.g., the ability to act as an agonist, partial agonist, reverse agonist, inhibitor, or antagonist of the biological mechanism or response. Thus, compounds grouped within the same Selected Library need not all have the same effect on the biological mechanism or response. For example, some compounds within the Selected Library may agonize, whereas other compounds within the same Selected Library may antagonize, the same biological mechanism or response. 1.45. The "Stockholders' Agreement" means the Amended and Restated Stockholders Agreement among Anaderm, Pfizer, OSI, NYU, ** , having an effective date of April 23, 1999. ** This portion has been redacted pursuant to a request for confidential treatment. 12

1.46. "Technology" means and includes all technology and technical information that pertains to the discovery or development of pharmacologically active compounds or Rx and OTC products for use in humans, including all laboratory notebooks, research plans, inventions, cultures, strains, vectors, genes and gene fragments and their sequences, cell lines, hybridoma cell lines, monoclonal and polyclonal antibodies, proteins and protein fragments, non-protein chemical structures and methods for synthesis, structure-activity relationships, computer models of chemical structures, computer software, assay methodology, processes, materials and methods for production, recovery and purification of natural products, formulas, plans, specifications, characteristics and equipment designs, but does not mean and does not include nontechnical information such as marketing plans that relate solely to marketing or finance. 1.47. "Territory" means all the countries of the world. 1.48. "Therapeutically Active Compound" means a compound that exhibits a biological or pharmacological activity. 1.49. "Third Party" means a party other than Pfizer, Anaderm or OSI. 1.50. "Valid Claim" means a claim of an issued patent within OSI Patent Rights, Pfizer Patent Rights or Anaderm Patent Rights, including patents in which OSI, Pfizer or Anaderm, respectively, has rights as a licensee pursuant to Article 7 of the Agreement, so long as such claim shall not have been disclaimed by the owner or owners of such patent, and shall not have been held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 13

ARTICLE 2 - AMENDMENT AND RESTATEMENT OF THE 1996 AGREEMENT Each of Pfizer, OSI and Anaderm hereby agrees that the 1996 Agreement, all prior Amendments thereto, and all prior funding commitments made by any of the parties in relation thereto, in their entirety, are hereby amended and restated by this Agreement which shall apply in substitution therefor. 14

1.46. "Technology" means and includes all technology and technical information that pertains to the discovery or development of pharmacologically active compounds or Rx and OTC products for use in humans, including all laboratory notebooks, research plans, inventions, cultures, strains, vectors, genes and gene fragments and their sequences, cell lines, hybridoma cell lines, monoclonal and polyclonal antibodies, proteins and protein fragments, non-protein chemical structures and methods for synthesis, structure-activity relationships, computer models of chemical structures, computer software, assay methodology, processes, materials and methods for production, recovery and purification of natural products, formulas, plans, specifications, characteristics and equipment designs, but does not mean and does not include nontechnical information such as marketing plans that relate solely to marketing or finance. 1.47. "Territory" means all the countries of the world. 1.48. "Therapeutically Active Compound" means a compound that exhibits a biological or pharmacological activity. 1.49. "Third Party" means a party other than Pfizer, Anaderm or OSI. 1.50. "Valid Claim" means a claim of an issued patent within OSI Patent Rights, Pfizer Patent Rights or Anaderm Patent Rights, including patents in which OSI, Pfizer or Anaderm, respectively, has rights as a licensee pursuant to Article 7 of the Agreement, so long as such claim shall not have been disclaimed by the owner or owners of such patent, and shall not have been held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 13

ARTICLE 2 - AMENDMENT AND RESTATEMENT OF THE 1996 AGREEMENT Each of Pfizer, OSI and Anaderm hereby agrees that the 1996 Agreement, all prior Amendments thereto, and all prior funding commitments made by any of the parties in relation thereto, in their entirety, are hereby amended and restated by this Agreement which shall apply in substitution therefor. 14

3. ARTICLE 3 - RIGHTS AND RESTRICTIONS OF PARTIES 3.1. Rights of Anaderm. 3.1.1. Class 1 and Class 2 Compounds. Subject to Pfizer's Rights of First Refusal, as set forth in Article VII of the Stockholders' Agreement, and to any rights of Third Parties, as referred to in Section 1.10 of this Agreement, Anaderm shall have the right to develop and market Class 1 and Class 2 Compounds or New Uses independently within the Territory, or to enter into licensing, joint venture, or other arrangements with Third Parties, as set forth in Section 7.4 of the Stockholders' Agreement for indications in the Field. 3.1.2. Certain Discoveries Outside the Field. Subject to Pfizer's Rights of First Refusal, as set forth in Article VII of the Stockholders' Agreement, and to any rights of Third Parties, as referred to in Section 1.10 of this Agreement, Anaderm shall have the right to develop and market Class 1 and Class 2 Compounds or New Uses independently within the Territory, or to enter into licensing, joint venture, or other arrangements with Third Parties, as set forth in Section 7.4 of the Stockholders' Agreement for the following indications outside the Field: proliferative and inflammatory disorders of the skin such as acne, psoriasis, dandruff, itching and eczema (the "Dermatology Indications"). 3.1.3. Class 3 Compounds. Anaderm shall have the right to bring to the attention of Pfizer opportunities to license in rights in Human Therapeutic Products that are based on Class 3 Compounds. If Anaderm is able to demonstrate to Pfizer the commercial value of any such products, Anaderm may negotiate a compensation arrangement with Pfizer. Anaderm shall not license in rights in a Human Therapeutic Product based on a Class 3 Compound without Pfizer's written approval.

ARTICLE 2 - AMENDMENT AND RESTATEMENT OF THE 1996 AGREEMENT Each of Pfizer, OSI and Anaderm hereby agrees that the 1996 Agreement, all prior Amendments thereto, and all prior funding commitments made by any of the parties in relation thereto, in their entirety, are hereby amended and restated by this Agreement which shall apply in substitution therefor. 14

3. ARTICLE 3 - RIGHTS AND RESTRICTIONS OF PARTIES 3.1. Rights of Anaderm. 3.1.1. Class 1 and Class 2 Compounds. Subject to Pfizer's Rights of First Refusal, as set forth in Article VII of the Stockholders' Agreement, and to any rights of Third Parties, as referred to in Section 1.10 of this Agreement, Anaderm shall have the right to develop and market Class 1 and Class 2 Compounds or New Uses independently within the Territory, or to enter into licensing, joint venture, or other arrangements with Third Parties, as set forth in Section 7.4 of the Stockholders' Agreement for indications in the Field. 3.1.2. Certain Discoveries Outside the Field. Subject to Pfizer's Rights of First Refusal, as set forth in Article VII of the Stockholders' Agreement, and to any rights of Third Parties, as referred to in Section 1.10 of this Agreement, Anaderm shall have the right to develop and market Class 1 and Class 2 Compounds or New Uses independently within the Territory, or to enter into licensing, joint venture, or other arrangements with Third Parties, as set forth in Section 7.4 of the Stockholders' Agreement for the following indications outside the Field: proliferative and inflammatory disorders of the skin such as acne, psoriasis, dandruff, itching and eczema (the "Dermatology Indications"). 3.1.3. Class 3 Compounds. Anaderm shall have the right to bring to the attention of Pfizer opportunities to license in rights in Human Therapeutic Products that are based on Class 3 Compounds. If Anaderm is able to demonstrate to Pfizer the commercial value of any such products, Anaderm may negotiate a compensation arrangement with Pfizer. Anaderm shall not license in rights in a Human Therapeutic Product based on a Class 3 Compound without Pfizer's written approval. 15

3.2. Restrictions as to OSI and Anaderm. 3.2.1. During the Contract Period, OSI shall not conduct drug discovery research itself or sponsor any research other than research conducted pursuant to the Research Program, as defined in this Agreement, if such research pertains to the Field or to the Dermatology Indications; provided, however, that OSI may sponsor or engage in such research with the written consent of a majority of the members of the Board of Directors of Anaderm. Research conducted by OSI outside of the Field and outside the Dermatology Indications, which results in a serendipitous discovery of a compound or New Use within the Field or the Dermatology Indications, shall not be considered a breach of this exclusivity provision. OSI may, however, conduct its own research in all areas outside the Field and outside the Dermatology Indications without restriction, including research with respect to compounds from the OSI compound file which OSI has made available to the Research Program and any Analogs of such compounds, unless any such compound or Analog has been shown to be a Therapeutically Active Compound in the Field or the Dermatology Indications. However, OSI may conduct its own research outside the Field and outside the Dermatology Indications with respect to a compound that has been shown to be a Therapeutically Active Compound in the Field or the Dermatology Indications with the written consent of a majority of the members of the Board of Directors of Anaderm. 3.2.2. Other Cosmeceutical Business Of Anaderm. In the event that Anaderm participates in, either through equity ownership, collaborative arrangement, license or otherwise, or financially benefits from, through royalties, finder's fees or otherwise, any acquisition by Pfizer during the Contract Period of an entity or business that relates to, in whole or in part, or incorporates the discovery, development, purchase or marketing of one or

3. ARTICLE 3 - RIGHTS AND RESTRICTIONS OF PARTIES 3.1. Rights of Anaderm. 3.1.1. Class 1 and Class 2 Compounds. Subject to Pfizer's Rights of First Refusal, as set forth in Article VII of the Stockholders' Agreement, and to any rights of Third Parties, as referred to in Section 1.10 of this Agreement, Anaderm shall have the right to develop and market Class 1 and Class 2 Compounds or New Uses independently within the Territory, or to enter into licensing, joint venture, or other arrangements with Third Parties, as set forth in Section 7.4 of the Stockholders' Agreement for indications in the Field. 3.1.2. Certain Discoveries Outside the Field. Subject to Pfizer's Rights of First Refusal, as set forth in Article VII of the Stockholders' Agreement, and to any rights of Third Parties, as referred to in Section 1.10 of this Agreement, Anaderm shall have the right to develop and market Class 1 and Class 2 Compounds or New Uses independently within the Territory, or to enter into licensing, joint venture, or other arrangements with Third Parties, as set forth in Section 7.4 of the Stockholders' Agreement for the following indications outside the Field: proliferative and inflammatory disorders of the skin such as acne, psoriasis, dandruff, itching and eczema (the "Dermatology Indications"). 3.1.3. Class 3 Compounds. Anaderm shall have the right to bring to the attention of Pfizer opportunities to license in rights in Human Therapeutic Products that are based on Class 3 Compounds. If Anaderm is able to demonstrate to Pfizer the commercial value of any such products, Anaderm may negotiate a compensation arrangement with Pfizer. Anaderm shall not license in rights in a Human Therapeutic Product based on a Class 3 Compound without Pfizer's written approval. 15

3.2. Restrictions as to OSI and Anaderm. 3.2.1. During the Contract Period, OSI shall not conduct drug discovery research itself or sponsor any research other than research conducted pursuant to the Research Program, as defined in this Agreement, if such research pertains to the Field or to the Dermatology Indications; provided, however, that OSI may sponsor or engage in such research with the written consent of a majority of the members of the Board of Directors of Anaderm. Research conducted by OSI outside of the Field and outside the Dermatology Indications, which results in a serendipitous discovery of a compound or New Use within the Field or the Dermatology Indications, shall not be considered a breach of this exclusivity provision. OSI may, however, conduct its own research in all areas outside the Field and outside the Dermatology Indications without restriction, including research with respect to compounds from the OSI compound file which OSI has made available to the Research Program and any Analogs of such compounds, unless any such compound or Analog has been shown to be a Therapeutically Active Compound in the Field or the Dermatology Indications. However, OSI may conduct its own research outside the Field and outside the Dermatology Indications with respect to a compound that has been shown to be a Therapeutically Active Compound in the Field or the Dermatology Indications with the written consent of a majority of the members of the Board of Directors of Anaderm. 3.2.2. Other Cosmeceutical Business Of Anaderm. In the event that Anaderm participates in, either through equity ownership, collaborative arrangement, license or otherwise, or financially benefits from, through royalties, finder's fees or otherwise, any acquisition by Pfizer during the Contract Period of an entity or business that relates to, in whole or in part, or incorporates the discovery, development, purchase or marketing of one or 16

more Drug Products for indications within the Field or the Dermatology Indications, OSI shall not receive royalties from the sales of any Human Therapeutic Product that was developed by such entity or business or any Human Therapeutic Product that contains or relates to a method of administering or using a compound that was invented or developed, or for which a New Use was invented or developed by such entity or business. 3.2.3. Pfizer Discoveries Outside the Field and Outside the Research Program. Pfizer shall have the sole rights to

3.2. Restrictions as to OSI and Anaderm. 3.2.1. During the Contract Period, OSI shall not conduct drug discovery research itself or sponsor any research other than research conducted pursuant to the Research Program, as defined in this Agreement, if such research pertains to the Field or to the Dermatology Indications; provided, however, that OSI may sponsor or engage in such research with the written consent of a majority of the members of the Board of Directors of Anaderm. Research conducted by OSI outside of the Field and outside the Dermatology Indications, which results in a serendipitous discovery of a compound or New Use within the Field or the Dermatology Indications, shall not be considered a breach of this exclusivity provision. OSI may, however, conduct its own research in all areas outside the Field and outside the Dermatology Indications without restriction, including research with respect to compounds from the OSI compound file which OSI has made available to the Research Program and any Analogs of such compounds, unless any such compound or Analog has been shown to be a Therapeutically Active Compound in the Field or the Dermatology Indications. However, OSI may conduct its own research outside the Field and outside the Dermatology Indications with respect to a compound that has been shown to be a Therapeutically Active Compound in the Field or the Dermatology Indications with the written consent of a majority of the members of the Board of Directors of Anaderm. 3.2.2. Other Cosmeceutical Business Of Anaderm. In the event that Anaderm participates in, either through equity ownership, collaborative arrangement, license or otherwise, or financially benefits from, through royalties, finder's fees or otherwise, any acquisition by Pfizer during the Contract Period of an entity or business that relates to, in whole or in part, or incorporates the discovery, development, purchase or marketing of one or 16

more Drug Products for indications within the Field or the Dermatology Indications, OSI shall not receive royalties from the sales of any Human Therapeutic Product that was developed by such entity or business or any Human Therapeutic Product that contains or relates to a method of administering or using a compound that was invented or developed, or for which a New Use was invented or developed by such entity or business. 3.2.3. Pfizer Discoveries Outside the Field and Outside the Research Program. Pfizer shall have the sole rights to any compounds, Technologies or Inventions pertaining to the Field (which may or may not also be used to treat indications outside of the Field) that are invented, developed or discovered by Pfizer, solely or jointly with a Third Party, in the course of its research or other activities outside the Field and outside the Research Program. Such compounds, Technologies and Inventions may be developed and exploited by Pfizer in its sole discretion without the need for permission by Anaderm and without benefit to Anaderm. ** . 3.3. Restrictions as to Pfizer. Subject to Section 3.4.3 below, during the Contract Period, ** . ** This portion has been redacted pursuant to a request for confidential treatment. 17

3.4. Rights of Pfizer. 3.4.1. Inventions Based on Pfizer Compounds. As provided for more specifically in Article 7 of this Agreement, Pfizer shall own all Inventions made in the course of conducting the Research Program that are either compounds Owned By Pfizer, or compositions containing one or more such compounds, or methods of administering, making or using one or more such compounds. 3.4.2. Pfizer's Right to Conduct Research in the Dermatology Indications. Pfizer shall have the right during the Contract Period to perform or sponsor research in the area of the Dermatology Indications that is independent of any research conducted by Anaderm, Pfizer, OSI or NYU pursuant to this Agreement and the Stockholders' Agreement. 3.4.3. Non-interference With Other Pfizer Business. This Agreement shall in no way restrict the operations of,

more Drug Products for indications within the Field or the Dermatology Indications, OSI shall not receive royalties from the sales of any Human Therapeutic Product that was developed by such entity or business or any Human Therapeutic Product that contains or relates to a method of administering or using a compound that was invented or developed, or for which a New Use was invented or developed by such entity or business. 3.2.3. Pfizer Discoveries Outside the Field and Outside the Research Program. Pfizer shall have the sole rights to any compounds, Technologies or Inventions pertaining to the Field (which may or may not also be used to treat indications outside of the Field) that are invented, developed or discovered by Pfizer, solely or jointly with a Third Party, in the course of its research or other activities outside the Field and outside the Research Program. Such compounds, Technologies and Inventions may be developed and exploited by Pfizer in its sole discretion without the need for permission by Anaderm and without benefit to Anaderm. ** . 3.3. Restrictions as to Pfizer. Subject to Section 3.4.3 below, during the Contract Period, ** . ** This portion has been redacted pursuant to a request for confidential treatment. 17

3.4. Rights of Pfizer. 3.4.1. Inventions Based on Pfizer Compounds. As provided for more specifically in Article 7 of this Agreement, Pfizer shall own all Inventions made in the course of conducting the Research Program that are either compounds Owned By Pfizer, or compositions containing one or more such compounds, or methods of administering, making or using one or more such compounds. 3.4.2. Pfizer's Right to Conduct Research in the Dermatology Indications. Pfizer shall have the right during the Contract Period to perform or sponsor research in the area of the Dermatology Indications that is independent of any research conducted by Anaderm, Pfizer, OSI or NYU pursuant to this Agreement and the Stockholders' Agreement. 3.4.3. Non-interference With Other Pfizer Business. This Agreement shall in no way restrict the operations of, interfere with, impede or otherwise adversely influence Pfizer's current business, including, without limitation, the operations of its divisions, subsidiaries and Affiliates other than Anaderm, or any business or operations acquired or undertaken by Pfizer during the Contract Period. 3.5. Inventions Based on OSI Compounds. OSI shall own all Inventions made in the course of conducting the Research Program that are either: (i) compounds from the OSI Compound File which compounds are not also present in the Pfizer Compound File; or (ii) compositions containing one or more such compounds; or (iii) methods of administering, making or using one or more such compounds. 3.6. Best Efforts. Anaderm or Pfizer shall use its reasonable best efforts, within the confines of their respective corporate policies and commercial interests, to commercialize any 18

Human Therapeutic Product based on a Class 1 or Class 2 Compound for which Anaderm or Pfizer, respectively, has the exclusive right to develop. 3.7. Status Reports. Anaderm or Pfizer, depending on which party is developing a particular Lead Compound or Human Therapeutic Product pursuant to this Agreement and the Stockholders' Agreement, shall, upon request, provide OSI with a written report of the status of the development of such Lead Compound or Human Therapeutic Product annually, beginning one year after the filing of an IND application for such Lead Compound or Human Therapeutic Product and continuing until either development of such Lead Compound or Human Therapeutic Product has been discontinued or there has been a commercial sale of such Human Therapeutic Product in the United States. Anaderm or Pfizer, respectively, shall also notify OSI in writing within sixty (60)

3.4. Rights of Pfizer. 3.4.1. Inventions Based on Pfizer Compounds. As provided for more specifically in Article 7 of this Agreement, Pfizer shall own all Inventions made in the course of conducting the Research Program that are either compounds Owned By Pfizer, or compositions containing one or more such compounds, or methods of administering, making or using one or more such compounds. 3.4.2. Pfizer's Right to Conduct Research in the Dermatology Indications. Pfizer shall have the right during the Contract Period to perform or sponsor research in the area of the Dermatology Indications that is independent of any research conducted by Anaderm, Pfizer, OSI or NYU pursuant to this Agreement and the Stockholders' Agreement. 3.4.3. Non-interference With Other Pfizer Business. This Agreement shall in no way restrict the operations of, interfere with, impede or otherwise adversely influence Pfizer's current business, including, without limitation, the operations of its divisions, subsidiaries and Affiliates other than Anaderm, or any business or operations acquired or undertaken by Pfizer during the Contract Period. 3.5. Inventions Based on OSI Compounds. OSI shall own all Inventions made in the course of conducting the Research Program that are either: (i) compounds from the OSI Compound File which compounds are not also present in the Pfizer Compound File; or (ii) compositions containing one or more such compounds; or (iii) methods of administering, making or using one or more such compounds. 3.6. Best Efforts. Anaderm or Pfizer shall use its reasonable best efforts, within the confines of their respective corporate policies and commercial interests, to commercialize any 18

Human Therapeutic Product based on a Class 1 or Class 2 Compound for which Anaderm or Pfizer, respectively, has the exclusive right to develop. 3.7. Status Reports. Anaderm or Pfizer, depending on which party is developing a particular Lead Compound or Human Therapeutic Product pursuant to this Agreement and the Stockholders' Agreement, shall, upon request, provide OSI with a written report of the status of the development of such Lead Compound or Human Therapeutic Product annually, beginning one year after the filing of an IND application for such Lead Compound or Human Therapeutic Product and continuing until either development of such Lead Compound or Human Therapeutic Product has been discontinued or there has been a commercial sale of such Human Therapeutic Product in the United States. Anaderm or Pfizer, respectively, shall also notify OSI in writing within sixty (60) days of abandoning development of any such Lead Compound or Human Therapeutic Product. ARTICLE 4 - FUNDING OF RESEARCH 4.1. OSI Staffing of Anaderm-Sponsored Research. OSI agrees to use its reasonable best efforts to employ and allocate at least the number of full-time research scientists to conduct its drug discovery efforts under the Research Program during each of the three years of the Contract Period, as set forth in Appendix A. Thus, OSI agrees to use its reasonable best efforts to employ and allocate an annual average of at least ** full-time research scientists to conduct its drug discovery efforts under the Research Program during the first year of the ** This portion has been redacted pursuant to a request for confidential treatment. 19

Contract Period; to employ an annual average of at least ** full-time research scientists to conduct its drug discovery efforts under the Research Program during the second year of the Contract Period; and to employ an annual average of at least ** full-time research scientists to conduct its drug discovery efforts under the Research Program during the third year of the Contract Period. At least 25% of the full-time research scientists employed

Human Therapeutic Product based on a Class 1 or Class 2 Compound for which Anaderm or Pfizer, respectively, has the exclusive right to develop. 3.7. Status Reports. Anaderm or Pfizer, depending on which party is developing a particular Lead Compound or Human Therapeutic Product pursuant to this Agreement and the Stockholders' Agreement, shall, upon request, provide OSI with a written report of the status of the development of such Lead Compound or Human Therapeutic Product annually, beginning one year after the filing of an IND application for such Lead Compound or Human Therapeutic Product and continuing until either development of such Lead Compound or Human Therapeutic Product has been discontinued or there has been a commercial sale of such Human Therapeutic Product in the United States. Anaderm or Pfizer, respectively, shall also notify OSI in writing within sixty (60) days of abandoning development of any such Lead Compound or Human Therapeutic Product. ARTICLE 4 - FUNDING OF RESEARCH 4.1. OSI Staffing of Anaderm-Sponsored Research. OSI agrees to use its reasonable best efforts to employ and allocate at least the number of full-time research scientists to conduct its drug discovery efforts under the Research Program during each of the three years of the Contract Period, as set forth in Appendix A. Thus, OSI agrees to use its reasonable best efforts to employ and allocate an annual average of at least ** full-time research scientists to conduct its drug discovery efforts under the Research Program during the first year of the ** This portion has been redacted pursuant to a request for confidential treatment. 19

Contract Period; to employ an annual average of at least ** full-time research scientists to conduct its drug discovery efforts under the Research Program during the second year of the Contract Period; and to employ an annual average of at least ** full-time research scientists to conduct its drug discovery efforts under the Research Program during the third year of the Contract Period. At least 25% of the full-time research scientists employed and allocated to the Research Program in each of the three years of the Contract Period will be Ph.D. research scientists. 4.2. Funding of OSI's Drug Discovery Efforts Under The Research Program. Subject to the provisions of Sections 4.3 and 4.4 and the termination provisions of Article 9, below, and in consideration for OSI's staffing of its drug discovery efforts under the Research Program, as set forth in Section 4.1 above, Anaderm agrees to provide funding to OSI to support OSI's conducting of its drug discovery efforts under the Research Program, as defined in this Agreement. Thus, Anaderm agrees to pay OSI ** for the first year of the Contract Period; ** for the second year of the Contract Period; and ** for the third year of the Contract Period. Such payments shall be made in quarterly installments and shall be due and payable to OSI within thirty days of the first day of each quarter. In the event that this Agreement is terminated at any time during the first year of the Contract Period under Section 9.2(ii) below as a result of Anaderm having discontinued its business or having become insolvent or bankrupt during that time period, Pfizer shall be obligated to pay the balance of funds, if any, owed to OSI under this Section (Section 4.2) to cover the remainder of the first year, but only the first year, of the Contract Period. ** This portion has been redacted pursuant to a request for confidential treatment. 20

4.3. Right Of Pfizer To Terminate Funding. The obligation to continue funding OSI's drug discovery efforts in the second and third years of the Contract Period under Section 4.2 above shall remain solely within the discretion of Pfizer which, in consultation with Anaderm and OSI, will determine at the end of the first and second years of the Contract Period whether satisfactory progress has been made by Anaderm and OSI in the Research Program during the past year. If Pfizer determines at the end of the first or second year that satisfactory progress has not been made by Anaderm or OSI in the Research Program during the past year, and decides to terminate funding of OSI's drug discovery efforts under the Research Program, then Pfizer will provide, within thirty (30) days of

Contract Period; to employ an annual average of at least ** full-time research scientists to conduct its drug discovery efforts under the Research Program during the second year of the Contract Period; and to employ an annual average of at least ** full-time research scientists to conduct its drug discovery efforts under the Research Program during the third year of the Contract Period. At least 25% of the full-time research scientists employed and allocated to the Research Program in each of the three years of the Contract Period will be Ph.D. research scientists. 4.2. Funding of OSI's Drug Discovery Efforts Under The Research Program. Subject to the provisions of Sections 4.3 and 4.4 and the termination provisions of Article 9, below, and in consideration for OSI's staffing of its drug discovery efforts under the Research Program, as set forth in Section 4.1 above, Anaderm agrees to provide funding to OSI to support OSI's conducting of its drug discovery efforts under the Research Program, as defined in this Agreement. Thus, Anaderm agrees to pay OSI ** for the first year of the Contract Period; ** for the second year of the Contract Period; and ** for the third year of the Contract Period. Such payments shall be made in quarterly installments and shall be due and payable to OSI within thirty days of the first day of each quarter. In the event that this Agreement is terminated at any time during the first year of the Contract Period under Section 9.2(ii) below as a result of Anaderm having discontinued its business or having become insolvent or bankrupt during that time period, Pfizer shall be obligated to pay the balance of funds, if any, owed to OSI under this Section (Section 4.2) to cover the remainder of the first year, but only the first year, of the Contract Period. ** This portion has been redacted pursuant to a request for confidential treatment. 20

4.3. Right Of Pfizer To Terminate Funding. The obligation to continue funding OSI's drug discovery efforts in the second and third years of the Contract Period under Section 4.2 above shall remain solely within the discretion of Pfizer which, in consultation with Anaderm and OSI, will determine at the end of the first and second years of the Contract Period whether satisfactory progress has been made by Anaderm and OSI in the Research Program during the past year. If Pfizer determines at the end of the first or second year that satisfactory progress has not been made by Anaderm or OSI in the Research Program during the past year, and decides to terminate funding of OSI's drug discovery efforts under the Research Program, then Pfizer will provide, within thirty (30) days of the end of the first and second years, respectively, (i.e., within 30 days following each of April 23, 2000 and April 23, 2001), 30-day prior written notification to both OSI and Anaderm of the decision to terminate such funding, and this Agreement will be terminated pursuant to the termination provisions of Sections 9.2 and 9.4 below. Upon termination on the thirtieth (30th) day following the written notification referred to above, no further obligation by Pfizer or Anaderm will exist to make any additional payments to OSI under Section 4.2 above; provided, however, that Pfizer or Anaderm shall be subject to the obligations set forth in Section 9.4 below. If Pfizer determines at the end of the first and second years of the Contract Period that satisfactory progress has been made by Anaderm and OSI in the Research Program during the past year, or if Pfizer fails to make a determination under this Section (Section 4.3) by the end of such 30-day period, then the Contract Period will continue. All payments previously made by Anaderm or Pfizer to OSI under Section 4.2 above, at the time of termination under this Section (Section 4.3), covering periods beyond the termination date will be deducted from payments made to OSI under Section 9.4 below. 21

4.4. OSI Failure to Satisfy Staffing Requirements. Notwithstanding the provisions of Section 4.2 above, if OSI fails to employ or allocate at least the annual average number of full-time research scientists to conduct its drug discovery efforts under the Research Program during any of the three years of the Contract Period as set forth in Appendix A, then the funding owed to OSI by Anaderm for that year under the terms of Section 4.2 will be proportionately reduced, and such reduction will be subtracted from the amount due and payable to OSI in the following year under Section 4.2 or Section 9.4, as appropriate, or shall otherwise be refunded by OSI to Anaderm or Pfizer. For example, in the first year of the Contract Period, if the annual average number of full-time research scientists employed and allocated by OSI to its drug discovery efforts under the Research Program is ** , rather than ** as set forth in Appendix A, then the amount of funding actually owed to OSI by Anaderm

4.3. Right Of Pfizer To Terminate Funding. The obligation to continue funding OSI's drug discovery efforts in the second and third years of the Contract Period under Section 4.2 above shall remain solely within the discretion of Pfizer which, in consultation with Anaderm and OSI, will determine at the end of the first and second years of the Contract Period whether satisfactory progress has been made by Anaderm and OSI in the Research Program during the past year. If Pfizer determines at the end of the first or second year that satisfactory progress has not been made by Anaderm or OSI in the Research Program during the past year, and decides to terminate funding of OSI's drug discovery efforts under the Research Program, then Pfizer will provide, within thirty (30) days of the end of the first and second years, respectively, (i.e., within 30 days following each of April 23, 2000 and April 23, 2001), 30-day prior written notification to both OSI and Anaderm of the decision to terminate such funding, and this Agreement will be terminated pursuant to the termination provisions of Sections 9.2 and 9.4 below. Upon termination on the thirtieth (30th) day following the written notification referred to above, no further obligation by Pfizer or Anaderm will exist to make any additional payments to OSI under Section 4.2 above; provided, however, that Pfizer or Anaderm shall be subject to the obligations set forth in Section 9.4 below. If Pfizer determines at the end of the first and second years of the Contract Period that satisfactory progress has been made by Anaderm and OSI in the Research Program during the past year, or if Pfizer fails to make a determination under this Section (Section 4.3) by the end of such 30-day period, then the Contract Period will continue. All payments previously made by Anaderm or Pfizer to OSI under Section 4.2 above, at the time of termination under this Section (Section 4.3), covering periods beyond the termination date will be deducted from payments made to OSI under Section 9.4 below. 21

4.4. OSI Failure to Satisfy Staffing Requirements. Notwithstanding the provisions of Section 4.2 above, if OSI fails to employ or allocate at least the annual average number of full-time research scientists to conduct its drug discovery efforts under the Research Program during any of the three years of the Contract Period as set forth in Appendix A, then the funding owed to OSI by Anaderm for that year under the terms of Section 4.2 will be proportionately reduced, and such reduction will be subtracted from the amount due and payable to OSI in the following year under Section 4.2 or Section 9.4, as appropriate, or shall otherwise be refunded by OSI to Anaderm or Pfizer. For example, in the first year of the Contract Period, if the annual average number of full-time research scientists employed and allocated by OSI to its drug discovery efforts under the Research Program is ** , rather than ** as set forth in Appendix A, then the amount of funding actually owed to OSI by Anaderm during the first year shall be equal to ** (i.e., ** ), and the amount of the reduction from ** shall be deducted from the amount due and payable to OSI for the second year of funding under the terms of Section 4.2 above or under Section 9.4, as appropriate. OSI shall give Anaderm and Pfizer a right of access to its books, records and personnel for three years from the date of each payment made to OSI under Section 4.2 above, upon notice, during regular business hours and to the extent reasonably necessary, to allow an accurate determination of the annual average number of full-time research scientists actually employed or allocated by OSI to conduct its drug discovery efforts under the Research Program during any of the three years of the Contract Period. ** This portion has been redacted pursuant to a request for confidential treatment. 22

4.5. During the Contract Period, OSI shall provide Anaderm and Pfizer, upon request, with quarterly written reports describing OSI's employment and allocation of research scientists during the previous quarter to conduct its drug discovery efforts under the Research Program. Such written reports shall provide sufficient detail to allow Anaderm or Pfizer to determine whether OSI's staffing obligations under this Agreement, as set forth in Appendix A, are being satisfied. ARTICLE 5 - ROYALTIES 5.1. Amount Of OSI Royalties 5.1.1. OSI Royalty Rate For Sale Of A Human Therapeutic Product Based On A Class 1 Compound. Subject

4.4. OSI Failure to Satisfy Staffing Requirements. Notwithstanding the provisions of Section 4.2 above, if OSI fails to employ or allocate at least the annual average number of full-time research scientists to conduct its drug discovery efforts under the Research Program during any of the three years of the Contract Period as set forth in Appendix A, then the funding owed to OSI by Anaderm for that year under the terms of Section 4.2 will be proportionately reduced, and such reduction will be subtracted from the amount due and payable to OSI in the following year under Section 4.2 or Section 9.4, as appropriate, or shall otherwise be refunded by OSI to Anaderm or Pfizer. For example, in the first year of the Contract Period, if the annual average number of full-time research scientists employed and allocated by OSI to its drug discovery efforts under the Research Program is ** , rather than ** as set forth in Appendix A, then the amount of funding actually owed to OSI by Anaderm during the first year shall be equal to ** (i.e., ** ), and the amount of the reduction from ** shall be deducted from the amount due and payable to OSI for the second year of funding under the terms of Section 4.2 above or under Section 9.4, as appropriate. OSI shall give Anaderm and Pfizer a right of access to its books, records and personnel for three years from the date of each payment made to OSI under Section 4.2 above, upon notice, during regular business hours and to the extent reasonably necessary, to allow an accurate determination of the annual average number of full-time research scientists actually employed or allocated by OSI to conduct its drug discovery efforts under the Research Program during any of the three years of the Contract Period. ** This portion has been redacted pursuant to a request for confidential treatment. 22

4.5. During the Contract Period, OSI shall provide Anaderm and Pfizer, upon request, with quarterly written reports describing OSI's employment and allocation of research scientists during the previous quarter to conduct its drug discovery efforts under the Research Program. Such written reports shall provide sufficient detail to allow Anaderm or Pfizer to determine whether OSI's staffing obligations under this Agreement, as set forth in Appendix A, are being satisfied. ARTICLE 5 - ROYALTIES 5.1. Amount Of OSI Royalties 5.1.1. OSI Royalty Rate For Sale Of A Human Therapeutic Product Based On A Class 1 Compound. Subject to the provisions of Section 5.1.2 below, in consideration for OSI fulfilling its obligations under this Agreement, Anaderm or Pfizer shall pay to OSI a royalty of ** percent ** of Net Sales (the "OSI Royalty") of any Human Therapeutic Product based on a Class 1 Compound or, subject to the provisions of Section 5.1.3 of this Agreement, a Class 2 Compound, that is marketed by Anaderm, Pfizer, an Affiliate or Co-developer of Anaderm or Pfizer or a licensee or sublicensee of Pfizer, respectively, pursuant to Article VII of the Stockholders' Agreement. The OSI Royalty shall be paid to OSI on a product by product, country by country basis, notwithstanding the termination provisions of Article 9 of this Agreement, for a period of ten years beginning with the first commercial sale of any such Human Therapeutic Product in a particular country, unless at the end of such ten year period there exists in that country a Valid Claim to either such Human Therapeutic ** This portion has been redacted pursuant to a request for confidential treatment. 23

Product or a compound or composition contained in it, or a method or process employed in making it, or to a method of use for which such Human Therapeutic Product is being marketed in that country, in which case the OSI Royalty shall continue to be paid during the period in which any such Valid Claim exists in that country. 5.1.2. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.1 above, the OSI Royalty, as defined in that section, shall be ** of Net Sales of any Human Therapeutic Product based on a Class 1 Compound, rather than the ** set forth in that section, when such Class 1 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer

4.5. During the Contract Period, OSI shall provide Anaderm and Pfizer, upon request, with quarterly written reports describing OSI's employment and allocation of research scientists during the previous quarter to conduct its drug discovery efforts under the Research Program. Such written reports shall provide sufficient detail to allow Anaderm or Pfizer to determine whether OSI's staffing obligations under this Agreement, as set forth in Appendix A, are being satisfied. ARTICLE 5 - ROYALTIES 5.1. Amount Of OSI Royalties 5.1.1. OSI Royalty Rate For Sale Of A Human Therapeutic Product Based On A Class 1 Compound. Subject to the provisions of Section 5.1.2 below, in consideration for OSI fulfilling its obligations under this Agreement, Anaderm or Pfizer shall pay to OSI a royalty of ** percent ** of Net Sales (the "OSI Royalty") of any Human Therapeutic Product based on a Class 1 Compound or, subject to the provisions of Section 5.1.3 of this Agreement, a Class 2 Compound, that is marketed by Anaderm, Pfizer, an Affiliate or Co-developer of Anaderm or Pfizer or a licensee or sublicensee of Pfizer, respectively, pursuant to Article VII of the Stockholders' Agreement. The OSI Royalty shall be paid to OSI on a product by product, country by country basis, notwithstanding the termination provisions of Article 9 of this Agreement, for a period of ten years beginning with the first commercial sale of any such Human Therapeutic Product in a particular country, unless at the end of such ten year period there exists in that country a Valid Claim to either such Human Therapeutic ** This portion has been redacted pursuant to a request for confidential treatment. 23

Product or a compound or composition contained in it, or a method or process employed in making it, or to a method of use for which such Human Therapeutic Product is being marketed in that country, in which case the OSI Royalty shall continue to be paid during the period in which any such Valid Claim exists in that country. 5.1.2. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.1 above, the OSI Royalty, as defined in that section, shall be ** of Net Sales of any Human Therapeutic Product based on a Class 1 Compound, rather than the ** set forth in that section, when such Class 1 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 5.1.3. OSI Royalty Rate For Sale Of A Human Therapeutic Product Based On A Class 2 Compound. Subject to the provisions of Section 5.1.4 below, in the event that Anaderm, Pfizer, an Affiliate or Co-developer of Anaderm or Pfizer, or a licensee or sublicensee of Pfizer markets a Human Therapeutic Product based on a Class 2 Compound, and such compound is subject to a royalty encumbrance with respect to a Third Party other than NYU, the OSI Royalty, in lieu of the ** referred to in Section 5.1.1 above, shall be equal to ** percent ** of Net Sales of the Human Therapeutic Products based on such Class 2 Compound, where ** and ** is equal to the total percentage of Net Sales that is owed to one or more such Third Parties (i.e., the total royalty encumbrance). ** This portion has been redacted pursuant to a request for confidential treatment. 24

5.1.4. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.3 above, the OSI Royalty, as defined in that section, shall be equal to ** percent ** of Net Sales of a Human Therapeutic Product based on a Class 2 Compound, where ** , and ** is as defined in Section 4.1.3 above, rather than ** , as set forth in that section, when such Class 2 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library.

Product or a compound or composition contained in it, or a method or process employed in making it, or to a method of use for which such Human Therapeutic Product is being marketed in that country, in which case the OSI Royalty shall continue to be paid during the period in which any such Valid Claim exists in that country. 5.1.2. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.1 above, the OSI Royalty, as defined in that section, shall be ** of Net Sales of any Human Therapeutic Product based on a Class 1 Compound, rather than the ** set forth in that section, when such Class 1 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 5.1.3. OSI Royalty Rate For Sale Of A Human Therapeutic Product Based On A Class 2 Compound. Subject to the provisions of Section 5.1.4 below, in the event that Anaderm, Pfizer, an Affiliate or Co-developer of Anaderm or Pfizer, or a licensee or sublicensee of Pfizer markets a Human Therapeutic Product based on a Class 2 Compound, and such compound is subject to a royalty encumbrance with respect to a Third Party other than NYU, the OSI Royalty, in lieu of the ** referred to in Section 5.1.1 above, shall be equal to ** percent ** of Net Sales of the Human Therapeutic Products based on such Class 2 Compound, where ** and ** is equal to the total percentage of Net Sales that is owed to one or more such Third Parties (i.e., the total royalty encumbrance). ** This portion has been redacted pursuant to a request for confidential treatment. 24

5.1.4. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.3 above, the OSI Royalty, as defined in that section, shall be equal to ** percent ** of Net Sales of a Human Therapeutic Product based on a Class 2 Compound, where ** , and ** is as defined in Section 4.1.3 above, rather than ** , as set forth in that section, when such Class 2 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 5.1.5. Deduction From OSI Royalty Where A Flat Fee Payment Has Been Made To A Third Party. In cases where a Third Party has received a flat fee payment from Anaderm for intellectual property rights purchased to support the development of a Class 1 or Class 2 Compound, or a Human Therapeutic Product based on a Class 1 or Class 2 Compound, or a New Use, where such payment is independent of the funding of OSI's drug discovery efforts under the Research Program pursuant to Section 4.2 above, ** percent ** of any royalty owed to OSI under Sections 5.1.1 - 5.1.4 above, for the sale or licensing of such Class 1 or Class 2 Compound, or Human Therapeutic Product based on such Class 1 or Class 2 Compound, or New Use thereof, shall be deducted by Anaderm from the royalty otherwise owed to OSI under those sections, but only until the total amount deducted by Anaderm equals ** of the total of the flat fee payment made to such Third Party, after which the royalty owed to OSI will return to the full amount defined in those sections, as appropriate. ** This portion has been redacted pursuant to a request for confidential treatment. 25

5.1.6. Licensing by Anaderm. Subject to the provisions of Section 5.1.7 below, in the event that Pfizer elects not to exercise Pfizer's Rights of First Refusal and Anaderm determines to license a Class 1 or Class 2 Compound to a Third Party other than NYU rather than exploit it, OSI shall receive ** of any payments received by Anaderm under such license arrangements in lieu of the OSI Royalty. 5.1.7. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.6 above, when Anaderm licenses a Class 1 or Class 2 Compound to a Third Party pursuant to that section, the payments owed by Anaderm to OSI shall be ** of any payments received by Anaderm under such license arrangements, rather than the ** set forth in that section, when such Class 1 or Class 2 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library.

5.1.4. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.3 above, the OSI Royalty, as defined in that section, shall be equal to ** percent ** of Net Sales of a Human Therapeutic Product based on a Class 2 Compound, where ** , and ** is as defined in Section 4.1.3 above, rather than ** , as set forth in that section, when such Class 2 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 5.1.5. Deduction From OSI Royalty Where A Flat Fee Payment Has Been Made To A Third Party. In cases where a Third Party has received a flat fee payment from Anaderm for intellectual property rights purchased to support the development of a Class 1 or Class 2 Compound, or a Human Therapeutic Product based on a Class 1 or Class 2 Compound, or a New Use, where such payment is independent of the funding of OSI's drug discovery efforts under the Research Program pursuant to Section 4.2 above, ** percent ** of any royalty owed to OSI under Sections 5.1.1 - 5.1.4 above, for the sale or licensing of such Class 1 or Class 2 Compound, or Human Therapeutic Product based on such Class 1 or Class 2 Compound, or New Use thereof, shall be deducted by Anaderm from the royalty otherwise owed to OSI under those sections, but only until the total amount deducted by Anaderm equals ** of the total of the flat fee payment made to such Third Party, after which the royalty owed to OSI will return to the full amount defined in those sections, as appropriate. ** This portion has been redacted pursuant to a request for confidential treatment. 25

5.1.6. Licensing by Anaderm. Subject to the provisions of Section 5.1.7 below, in the event that Pfizer elects not to exercise Pfizer's Rights of First Refusal and Anaderm determines to license a Class 1 or Class 2 Compound to a Third Party other than NYU rather than exploit it, OSI shall receive ** of any payments received by Anaderm under such license arrangements in lieu of the OSI Royalty. 5.1.7. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.6 above, when Anaderm licenses a Class 1 or Class 2 Compound to a Third Party pursuant to that section, the payments owed by Anaderm to OSI shall be ** of any payments received by Anaderm under such license arrangements, rather than the ** set forth in that section, when such Class 1 or Class 2 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 5.1.8. Licensing by Pfizer. If Pfizer decides to negotiate an agreement with a Third Party pursuant to which Pfizer would grant such Third Party a license under Pfizer's rights in a Lead Compound or Human Therapeutic Product, which rights Pfizer acquired from Anaderm pursuant to its Rights of First Refusal, for the purposes of developing a Lead Compound and developing and marketing a Human Therapeutic Product, and Pfizer determines that payment of the OSI Royalty, as defined in Sections 5.1.1 through 5.1.4 of this Agreement, would render the proposed licensing arrangement commercially unfeasible to Pfizer, then Pfizer shall negotiate with OSI in good faith to determine the amount of royalties or other compensation that OSI will receive from such arrangement. ** This portion has been redacted pursuant to a request for confidential treatment. 26

5.2. Notification to OSI of Third Party Licenses. Anaderm or Pfizer shall notify OSI in writing of the following within sixty (60) days of the granting by Anaderm or Pfizer or any of their Affiliates, respectively, of a license to a Third Party (including but not limited to a Co-developer) under Anaderm's, Pfizer's or such Affiliate's rights in a Lead Compound or Human Therapeutic Product: (a) the name of the party or Affiliate that has granted the license; (b) the name of the licensee or Co-developer (or sublicensee, as the case may be); (c) the names of any Lead Compounds and Human Therapeutic Products in which rights were licensed; and (d) the royalty to be paid pursuant to the license. Anaderm or Pfizer will provide OSI, upon request, with a copy of any such license agreement.

5.1.6. Licensing by Anaderm. Subject to the provisions of Section 5.1.7 below, in the event that Pfizer elects not to exercise Pfizer's Rights of First Refusal and Anaderm determines to license a Class 1 or Class 2 Compound to a Third Party other than NYU rather than exploit it, OSI shall receive ** of any payments received by Anaderm under such license arrangements in lieu of the OSI Royalty. 5.1.7. Limitation Based On Use Of A Pfizer Selected Library. Notwithstanding the terms of Section 5.1.6 above, when Anaderm licenses a Class 1 or Class 2 Compound to a Third Party pursuant to that section, the payments owed by Anaderm to OSI shall be ** of any payments received by Anaderm under such license arrangements, rather than the ** set forth in that section, when such Class 1 or Class 2 Compound was identified by screening, and is part of, a Pfizer Selected Library, or by screening Analogs of a compound from a Pfizer Selected Library. 5.1.8. Licensing by Pfizer. If Pfizer decides to negotiate an agreement with a Third Party pursuant to which Pfizer would grant such Third Party a license under Pfizer's rights in a Lead Compound or Human Therapeutic Product, which rights Pfizer acquired from Anaderm pursuant to its Rights of First Refusal, for the purposes of developing a Lead Compound and developing and marketing a Human Therapeutic Product, and Pfizer determines that payment of the OSI Royalty, as defined in Sections 5.1.1 through 5.1.4 of this Agreement, would render the proposed licensing arrangement commercially unfeasible to Pfizer, then Pfizer shall negotiate with OSI in good faith to determine the amount of royalties or other compensation that OSI will receive from such arrangement. ** This portion has been redacted pursuant to a request for confidential treatment. 26

5.2. Notification to OSI of Third Party Licenses. Anaderm or Pfizer shall notify OSI in writing of the following within sixty (60) days of the granting by Anaderm or Pfizer or any of their Affiliates, respectively, of a license to a Third Party (including but not limited to a Co-developer) under Anaderm's, Pfizer's or such Affiliate's rights in a Lead Compound or Human Therapeutic Product: (a) the name of the party or Affiliate that has granted the license; (b) the name of the licensee or Co-developer (or sublicensee, as the case may be); (c) the names of any Lead Compounds and Human Therapeutic Products in which rights were licensed; and (d) the royalty to be paid pursuant to the license. Anaderm or Pfizer will provide OSI, upon request, with a copy of any such license agreement. 5.3. OSI Royalty Exclusion. OSI shall not receive any royalty from sales of Human Therapeutic Products based on Class 3 Compounds. 5.4. Payment Dates. Royalties due to OSI shall be paid by Anaderm or Pfizer on Net Sales within sixty days after the end of each calendar quarter in which such Net Sales are made. Such payments shall be accompanied by a statement showing the Net Sales of each Human Therapeutic Product on which such payment is based and a calculation of the amount of royalties due. Payments due to OSI pursuant to Section 5.1.6 or 5.1.7 of this Agreement shall be paid by Anaderm within sixty (60) days after receipt by Anaderm of the payment from a Third Party upon which the payment due OSI is based. Anaderm and Pfizer shall use their reasonable best efforts to obtain royalty payments due to them or their Affiliates based on Net Sales of Human Therapeutic Products by their Co-developers (and, in the case of Pfizer, its licensees and sublicensees). 5.5. Accounting. No royalties on Net Sales shall be payable on sales transactions between or among Anaderm and its Affiliates or Pfizer and its Affiliates; the final vendee sale 27

to a Third Party (other than NYU) alone shall be used for the purpose of determining the royalty payments due hereunder. The Human Therapeutic Product subject to royalty payment shall be deemed sold when invoiced, or if not invoiced, when the same shall be shipped or delivered to the Third Party. All taxes, assessments and fees of any nature levied or incurred on account of any payments accruing under this Agreement, by national, state or local governments, will be assumed and paid by Anaderm or Pfizer, depending on which party is marketing the

5.2. Notification to OSI of Third Party Licenses. Anaderm or Pfizer shall notify OSI in writing of the following within sixty (60) days of the granting by Anaderm or Pfizer or any of their Affiliates, respectively, of a license to a Third Party (including but not limited to a Co-developer) under Anaderm's, Pfizer's or such Affiliate's rights in a Lead Compound or Human Therapeutic Product: (a) the name of the party or Affiliate that has granted the license; (b) the name of the licensee or Co-developer (or sublicensee, as the case may be); (c) the names of any Lead Compounds and Human Therapeutic Products in which rights were licensed; and (d) the royalty to be paid pursuant to the license. Anaderm or Pfizer will provide OSI, upon request, with a copy of any such license agreement. 5.3. OSI Royalty Exclusion. OSI shall not receive any royalty from sales of Human Therapeutic Products based on Class 3 Compounds. 5.4. Payment Dates. Royalties due to OSI shall be paid by Anaderm or Pfizer on Net Sales within sixty days after the end of each calendar quarter in which such Net Sales are made. Such payments shall be accompanied by a statement showing the Net Sales of each Human Therapeutic Product on which such payment is based and a calculation of the amount of royalties due. Payments due to OSI pursuant to Section 5.1.6 or 5.1.7 of this Agreement shall be paid by Anaderm within sixty (60) days after receipt by Anaderm of the payment from a Third Party upon which the payment due OSI is based. Anaderm and Pfizer shall use their reasonable best efforts to obtain royalty payments due to them or their Affiliates based on Net Sales of Human Therapeutic Products by their Co-developers (and, in the case of Pfizer, its licensees and sublicensees). 5.5. Accounting. No royalties on Net Sales shall be payable on sales transactions between or among Anaderm and its Affiliates or Pfizer and its Affiliates; the final vendee sale 27

to a Third Party (other than NYU) alone shall be used for the purpose of determining the royalty payments due hereunder. The Human Therapeutic Product subject to royalty payment shall be deemed sold when invoiced, or if not invoiced, when the same shall be shipped or delivered to the Third Party. All taxes, assessments and fees of any nature levied or incurred on account of any payments accruing under this Agreement, by national, state or local governments, will be assumed and paid by Anaderm or Pfizer, depending on which party is marketing the Human Therapeutic Product, and, in the case of payments accruing under Section 5.1.6 or 5.1.7 of this Agreement, by Anaderm, except taxes levied thereon as income to OSI, and, if such taxes are required to be withheld by Anaderm or Pfizer, they will be deducted from such payments due to OSI and will be paid by Anaderm or Pfizer, respectively, for the account of OSI, and a receipt therefor secured and sent to OSI. 5.6. Records. Anaderm or Pfizer, depending on which party is marketing the Human Therapeutic Product, shall keep for three years from the date of each payment of royalties complete and accurate records of sales by Anaderm or Pfizer or an Affiliate of Anaderm or Pfizer, respectively, of each Human Therapeutic Product in sufficient detail to allow the accruing royalties to be determined accurately. OSI shall have the right, for a period of three years after receiving any report or statement with respect to royalties due and payable, to appoint, at its expense, an independent certified public accountant reasonably acceptable to Anaderm or Pfizer, respectively, to inspect the relevant records of Anaderm or Pfizer, respectively, to verify such report or statement. Any of the "Big 6" accounting firms are hereby deemed to be acceptable. Anaderm or Pfizer, respectively, shall make its records available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon reasonable notice 28

from OSI, to the extent reasonably necessary to verify the accuracy of the reports and payments. With respect to each of Anaderm, Pfizer and OSI, such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales in any given period. Anaderm or Pfizer, respectively, shall use its reasonable best efforts to make available to OSI the information, records and reports referred to in this section (Section 5.6) that relate to sales by a licensee, sublicensee or Co-developer of such party. OSI agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course

to a Third Party (other than NYU) alone shall be used for the purpose of determining the royalty payments due hereunder. The Human Therapeutic Product subject to royalty payment shall be deemed sold when invoiced, or if not invoiced, when the same shall be shipped or delivered to the Third Party. All taxes, assessments and fees of any nature levied or incurred on account of any payments accruing under this Agreement, by national, state or local governments, will be assumed and paid by Anaderm or Pfizer, depending on which party is marketing the Human Therapeutic Product, and, in the case of payments accruing under Section 5.1.6 or 5.1.7 of this Agreement, by Anaderm, except taxes levied thereon as income to OSI, and, if such taxes are required to be withheld by Anaderm or Pfizer, they will be deducted from such payments due to OSI and will be paid by Anaderm or Pfizer, respectively, for the account of OSI, and a receipt therefor secured and sent to OSI. 5.6. Records. Anaderm or Pfizer, depending on which party is marketing the Human Therapeutic Product, shall keep for three years from the date of each payment of royalties complete and accurate records of sales by Anaderm or Pfizer or an Affiliate of Anaderm or Pfizer, respectively, of each Human Therapeutic Product in sufficient detail to allow the accruing royalties to be determined accurately. OSI shall have the right, for a period of three years after receiving any report or statement with respect to royalties due and payable, to appoint, at its expense, an independent certified public accountant reasonably acceptable to Anaderm or Pfizer, respectively, to inspect the relevant records of Anaderm or Pfizer, respectively, to verify such report or statement. Any of the "Big 6" accounting firms are hereby deemed to be acceptable. Anaderm or Pfizer, respectively, shall make its records available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon reasonable notice 28

from OSI, to the extent reasonably necessary to verify the accuracy of the reports and payments. With respect to each of Anaderm, Pfizer and OSI, such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales in any given period. Anaderm or Pfizer, respectively, shall use its reasonable best efforts to make available to OSI the information, records and reports referred to in this section (Section 5.6) that relate to sales by a licensee, sublicensee or Co-developer of such party. OSI agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent it is necessary for OSI to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law. The failure of OSI to request verification of any report or statement during said three-year period shall be considered acceptance of the accuracy of such report, and Anaderm or Pfizer, respectively, shall have no obligation to maintain records pertaining to such report or statement beyond said three-year period. The results of the inspection shall be provided in a written report by the independent certified public accountant to Anaderm or Pfizer setting forth the basis for its conclusions, and shall be binding on all parties; except that where Anaderm or Pfizer can show that the conclusions of the report are erroneous as based on a material error occurring during the inspection or otherwise committed during the preparation of the report by the independent certified public accountant, then upon Anaderm or Pfizer bringing such material error to the attention of OSI, OSI shall request the independent certified public accountant to re-evaluate the report and modify it accordingly. 29

ARTICLE 6 - TREATMENT OF CONFIDENTIAL INFORMATION 6.1. Confidentiality. 6.1.1. Each of Pfizer, OSI and Anaderm recognizes that the other parties' Confidential Information (i.e., Anaderm Confidential Information, OSI Confidential Information, and Pfizer Confidential Information) constitutes highly valuable proprietary, confidential information. Each of Pfizer, OSI and Anaderm agrees that during the Contract Period and for five years thereafter, they and their Affiliates will keep confidential all Confidential Information that is disclosed to them or to their Affiliates pursuant to this Agreement, and that neither they nor any of their Affiliates will disclose the others' Confidential Information to any Third Party during that time, except as permitted below. Each of Pfizer, OSI and Anaderm agree that any disclosure of the others' Confidential Information to any officer, employee or agent of the others, or of any of their respective Affiliates, shall be made only to the extent necessary to carry out their respective responsibilities under this Agreement and shall be limited

from OSI, to the extent reasonably necessary to verify the accuracy of the reports and payments. With respect to each of Anaderm, Pfizer and OSI, such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales in any given period. Anaderm or Pfizer, respectively, shall use its reasonable best efforts to make available to OSI the information, records and reports referred to in this section (Section 5.6) that relate to sales by a licensee, sublicensee or Co-developer of such party. OSI agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent it is necessary for OSI to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law. The failure of OSI to request verification of any report or statement during said three-year period shall be considered acceptance of the accuracy of such report, and Anaderm or Pfizer, respectively, shall have no obligation to maintain records pertaining to such report or statement beyond said three-year period. The results of the inspection shall be provided in a written report by the independent certified public accountant to Anaderm or Pfizer setting forth the basis for its conclusions, and shall be binding on all parties; except that where Anaderm or Pfizer can show that the conclusions of the report are erroneous as based on a material error occurring during the inspection or otherwise committed during the preparation of the report by the independent certified public accountant, then upon Anaderm or Pfizer bringing such material error to the attention of OSI, OSI shall request the independent certified public accountant to re-evaluate the report and modify it accordingly. 29

ARTICLE 6 - TREATMENT OF CONFIDENTIAL INFORMATION 6.1. Confidentiality. 6.1.1. Each of Pfizer, OSI and Anaderm recognizes that the other parties' Confidential Information (i.e., Anaderm Confidential Information, OSI Confidential Information, and Pfizer Confidential Information) constitutes highly valuable proprietary, confidential information. Each of Pfizer, OSI and Anaderm agrees that during the Contract Period and for five years thereafter, they and their Affiliates will keep confidential all Confidential Information that is disclosed to them or to their Affiliates pursuant to this Agreement, and that neither they nor any of their Affiliates will disclose the others' Confidential Information to any Third Party during that time, except as permitted below. Each of Pfizer, OSI and Anaderm agree that any disclosure of the others' Confidential Information to any officer, employee or agent of the others, or of any of their respective Affiliates, shall be made only to the extent necessary to carry out their respective responsibilities under this Agreement and shall be limited to the maximum extent possible that is consistent with such responsibilities. Each party shall take such action, and shall cause its Affiliates to take such action, to preserve the confidentiality of the others' Confidential Information as it would customarily take to preserve the confidentiality of its own Confidential Information. 6.1.2. Neither Pfizer, OSI, Anaderm, nor any of their Affiliates, shall use the Confidential Information of any of the other parties during the Contract Period and for five years thereafter, under any circumstances without written permission of such other parties, and in any manner or for any purpose other than as necessary to fulfill their responsibilities under this Agreement. Pfizer and Anaderm may, however, disclose such Confidential Information to government agencies to the extent necessary or desirable to secure governmental approval for 30

development, clinical testing or marketing of Lead Compounds or Human Therapeutic Products based on Class 1 or Class 2 Compounds, and, with respect to clinical testing of the same, to preclinical and clinical investigators where necessary or desirable to the extent normal and usual in the custom of the trade and under a secrecy agreement with essentially the same confidentiality provisions as those contained herein. In addition, Pfizer or Anaderm may disclose Confidential Information that relates to an Invention within the Field or the Dermatology Indications made by Pfizer, Anaderm, or OSI during the course of the Research Program on which Anaderm chooses to file a patent application pursuant to Section 7.6.1 of this Agreement, where such Confidential Information is disclosed to the United States Patent and Trademark Office or any of the other patent offices worldwide in the course of filing, prosecuting and maintaining such patent application and any resulting patents in any patent office proceeding (e.g., in response to an office action, or in an appeal, reissue, reexamination, interference, opposition, or prior use proceedings, among others), where Anaderm deems the disclosure of such

ARTICLE 6 - TREATMENT OF CONFIDENTIAL INFORMATION 6.1. Confidentiality. 6.1.1. Each of Pfizer, OSI and Anaderm recognizes that the other parties' Confidential Information (i.e., Anaderm Confidential Information, OSI Confidential Information, and Pfizer Confidential Information) constitutes highly valuable proprietary, confidential information. Each of Pfizer, OSI and Anaderm agrees that during the Contract Period and for five years thereafter, they and their Affiliates will keep confidential all Confidential Information that is disclosed to them or to their Affiliates pursuant to this Agreement, and that neither they nor any of their Affiliates will disclose the others' Confidential Information to any Third Party during that time, except as permitted below. Each of Pfizer, OSI and Anaderm agree that any disclosure of the others' Confidential Information to any officer, employee or agent of the others, or of any of their respective Affiliates, shall be made only to the extent necessary to carry out their respective responsibilities under this Agreement and shall be limited to the maximum extent possible that is consistent with such responsibilities. Each party shall take such action, and shall cause its Affiliates to take such action, to preserve the confidentiality of the others' Confidential Information as it would customarily take to preserve the confidentiality of its own Confidential Information. 6.1.2. Neither Pfizer, OSI, Anaderm, nor any of their Affiliates, shall use the Confidential Information of any of the other parties during the Contract Period and for five years thereafter, under any circumstances without written permission of such other parties, and in any manner or for any purpose other than as necessary to fulfill their responsibilities under this Agreement. Pfizer and Anaderm may, however, disclose such Confidential Information to government agencies to the extent necessary or desirable to secure governmental approval for 30

development, clinical testing or marketing of Lead Compounds or Human Therapeutic Products based on Class 1 or Class 2 Compounds, and, with respect to clinical testing of the same, to preclinical and clinical investigators where necessary or desirable to the extent normal and usual in the custom of the trade and under a secrecy agreement with essentially the same confidentiality provisions as those contained herein. In addition, Pfizer or Anaderm may disclose Confidential Information that relates to an Invention within the Field or the Dermatology Indications made by Pfizer, Anaderm, or OSI during the course of the Research Program on which Anaderm chooses to file a patent application pursuant to Section 7.6.1 of this Agreement, where such Confidential Information is disclosed to the United States Patent and Trademark Office or any of the other patent offices worldwide in the course of filing, prosecuting and maintaining such patent application and any resulting patents in any patent office proceeding (e.g., in response to an office action, or in an appeal, reissue, reexamination, interference, opposition, or prior use proceedings, among others), where Anaderm deems the disclosure of such Confidential Information necessary to support patentability of the disclosed invention. Each party, upon the written request of any other party, will return all the Confidential Information disclosed to it or any of its Affiliates by the requesting party pursuant to this Agreement, including all copies and extracts of documents, within 60 days of such a request made after the termination of this Agreement. 6.1.3. Each of Pfizer, OSI and Anaderm represents that all of their respective employees, the employees of their Affiliates, and all other persons (e.g., consultants) participating in the Research Program on their respective behalves who will have access to Pfizer Confidential Information, OSI Confidential Information or Anaderm Confidential Information will be bound, for a period beginning not later than commencement of their 31

participation in the Research Program and ending five (5) years after termination of the Contract Period, by agreements to maintain such information in confidence. 6.2. Publication. Except as required to pursue patent protection, the parties hereto agree not to publish the results obtained in the course of the Research Program without the prior written approval of Anaderm. After receipt of any proposed publication by Anaderm, written approval or disapproval shall be provided within thirty (30) days for a manuscript, an abstract for presentation at, or inclusion in the proceedings of a scientific meeting, or a transcript of an oral presentation to be given at a scientific meeting. Approval decisions shall be made in

development, clinical testing or marketing of Lead Compounds or Human Therapeutic Products based on Class 1 or Class 2 Compounds, and, with respect to clinical testing of the same, to preclinical and clinical investigators where necessary or desirable to the extent normal and usual in the custom of the trade and under a secrecy agreement with essentially the same confidentiality provisions as those contained herein. In addition, Pfizer or Anaderm may disclose Confidential Information that relates to an Invention within the Field or the Dermatology Indications made by Pfizer, Anaderm, or OSI during the course of the Research Program on which Anaderm chooses to file a patent application pursuant to Section 7.6.1 of this Agreement, where such Confidential Information is disclosed to the United States Patent and Trademark Office or any of the other patent offices worldwide in the course of filing, prosecuting and maintaining such patent application and any resulting patents in any patent office proceeding (e.g., in response to an office action, or in an appeal, reissue, reexamination, interference, opposition, or prior use proceedings, among others), where Anaderm deems the disclosure of such Confidential Information necessary to support patentability of the disclosed invention. Each party, upon the written request of any other party, will return all the Confidential Information disclosed to it or any of its Affiliates by the requesting party pursuant to this Agreement, including all copies and extracts of documents, within 60 days of such a request made after the termination of this Agreement. 6.1.3. Each of Pfizer, OSI and Anaderm represents that all of their respective employees, the employees of their Affiliates, and all other persons (e.g., consultants) participating in the Research Program on their respective behalves who will have access to Pfizer Confidential Information, OSI Confidential Information or Anaderm Confidential Information will be bound, for a period beginning not later than commencement of their 31

participation in the Research Program and ending five (5) years after termination of the Contract Period, by agreements to maintain such information in confidence. 6.2. Publication. Except as required to pursue patent protection, the parties hereto agree not to publish the results obtained in the course of the Research Program without the prior written approval of Anaderm. After receipt of any proposed publication by Anaderm, written approval or disapproval shall be provided within thirty (30) days for a manuscript, an abstract for presentation at, or inclusion in the proceedings of a scientific meeting, or a transcript of an oral presentation to be given at a scientific meeting. Approval decisions shall be made in accordance with Pfizer's corporate policy regarding publications, and approval shall not be unreasonably withheld. 6.3. Disclosure of Inventions. Each party shall promptly inform the others about any Invention within the Field or the Dermatology Indications that is conceived or reduced to practice, in whole or in part, in the course of carrying out the Research Program by their respective employees, Affiliates, or other parties participating in the Research Program on their respective behalves. Each party shall also promptly inform Pfizer or OSI about any Invention outside the Field and outside the Dermatology Indications, if such Invention is based on a compound owned by Pfizer or OSI, respectively, or an Analog of such a compound (i.e., any Invention that relates to such a compound or Analog of such a compound, or to a composition containing such a compound or Analog of such a compound, or to a method of making, administering or using such a compound or Analog of such a compound). This Agreement shall not be construed to obligate any party to disclose to the other parties any other Inventions outside the Field and outside the Dermatology Indications. 32

ARTICLE 7 - INTELLECTUAL PROPERTY RIGHTS 7.1. Grant of Technology Licenses. All grants of licenses in Technology under this section (Section 7.1) are subject to the provisions of Sections 7.2 and 7.3 of this Agreement, which relate to the transfer of rights in Inventions. 7.1.1. License in OSI Technology. OSI grants Anaderm, NYU and Pfizer and its Affiliates an exclusive license in the Territory, during the Contract Period and without the right to sublicense, under OSI's rights in OSI Technology, including that which is acquired by OSI from Third Parties during the Contract Period. This

participation in the Research Program and ending five (5) years after termination of the Contract Period, by agreements to maintain such information in confidence. 6.2. Publication. Except as required to pursue patent protection, the parties hereto agree not to publish the results obtained in the course of the Research Program without the prior written approval of Anaderm. After receipt of any proposed publication by Anaderm, written approval or disapproval shall be provided within thirty (30) days for a manuscript, an abstract for presentation at, or inclusion in the proceedings of a scientific meeting, or a transcript of an oral presentation to be given at a scientific meeting. Approval decisions shall be made in accordance with Pfizer's corporate policy regarding publications, and approval shall not be unreasonably withheld. 6.3. Disclosure of Inventions. Each party shall promptly inform the others about any Invention within the Field or the Dermatology Indications that is conceived or reduced to practice, in whole or in part, in the course of carrying out the Research Program by their respective employees, Affiliates, or other parties participating in the Research Program on their respective behalves. Each party shall also promptly inform Pfizer or OSI about any Invention outside the Field and outside the Dermatology Indications, if such Invention is based on a compound owned by Pfizer or OSI, respectively, or an Analog of such a compound (i.e., any Invention that relates to such a compound or Analog of such a compound, or to a composition containing such a compound or Analog of such a compound, or to a method of making, administering or using such a compound or Analog of such a compound). This Agreement shall not be construed to obligate any party to disclose to the other parties any other Inventions outside the Field and outside the Dermatology Indications. 32

ARTICLE 7 - INTELLECTUAL PROPERTY RIGHTS 7.1. Grant of Technology Licenses. All grants of licenses in Technology under this section (Section 7.1) are subject to the provisions of Sections 7.2 and 7.3 of this Agreement, which relate to the transfer of rights in Inventions. 7.1.1. License in OSI Technology. OSI grants Anaderm, NYU and Pfizer and its Affiliates an exclusive license in the Territory, during the Contract Period and without the right to sublicense, under OSI's rights in OSI Technology, including that which is acquired by OSI from Third Parties during the Contract Period. This exclusive license is solely for the purpose of conducting the Research Program in the Field in accordance with the terms of this Agreement, and is subject to OSI's retention of rights of equivalent scope for itself during the Contract Period solely for use in conducting the Research Program. Upon expiration of the Contract Period, the exclusive license in the Field will become non-exclusive and solely for the purpose of developing and marketing Lead Compounds and Human Therapeutic Products. OSI further grants Anaderm, NYU and Pfizer and its Affiliates a non-exclusive license in the Territory, during the Contract Period and without right to sublicense, under OSI's rights in OSI Technology, including that which is acquired by OSI from Third Parties during the Contract Period, solely for the purpose of conducting the Research Program in the Dermatology Indications in accordance with the terms of this Agreement. The non-exclusive licenses in the Field and in the Dermatology Indications referred to in this Section (Section 7.1.1) shall not expire in any country, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to any Invention within Anaderm Patent Rights or Pfizer Patent Rights, 33

and, if at the end of such ten year period a Valid Claim to any such Invention exists in such country, the term of the license shall continue until no such Valid Claim exists in that country. 7.1.2. License in Anaderm Technology. Anaderm grants OSI and Pfizer and their Affiliates an exclusive license in the Territory, during the Contract Period and without the right to sublicense, under Anaderm's rights in Anaderm Technology, including that which is acquired by Anaderm from Third Parties during the Contract Period. This license is solely for the purpose of conducting the Research Program in accordance with the terms of this

ARTICLE 7 - INTELLECTUAL PROPERTY RIGHTS 7.1. Grant of Technology Licenses. All grants of licenses in Technology under this section (Section 7.1) are subject to the provisions of Sections 7.2 and 7.3 of this Agreement, which relate to the transfer of rights in Inventions. 7.1.1. License in OSI Technology. OSI grants Anaderm, NYU and Pfizer and its Affiliates an exclusive license in the Territory, during the Contract Period and without the right to sublicense, under OSI's rights in OSI Technology, including that which is acquired by OSI from Third Parties during the Contract Period. This exclusive license is solely for the purpose of conducting the Research Program in the Field in accordance with the terms of this Agreement, and is subject to OSI's retention of rights of equivalent scope for itself during the Contract Period solely for use in conducting the Research Program. Upon expiration of the Contract Period, the exclusive license in the Field will become non-exclusive and solely for the purpose of developing and marketing Lead Compounds and Human Therapeutic Products. OSI further grants Anaderm, NYU and Pfizer and its Affiliates a non-exclusive license in the Territory, during the Contract Period and without right to sublicense, under OSI's rights in OSI Technology, including that which is acquired by OSI from Third Parties during the Contract Period, solely for the purpose of conducting the Research Program in the Dermatology Indications in accordance with the terms of this Agreement. The non-exclusive licenses in the Field and in the Dermatology Indications referred to in this Section (Section 7.1.1) shall not expire in any country, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to any Invention within Anaderm Patent Rights or Pfizer Patent Rights, 33

and, if at the end of such ten year period a Valid Claim to any such Invention exists in such country, the term of the license shall continue until no such Valid Claim exists in that country. 7.1.2. License in Anaderm Technology. Anaderm grants OSI and Pfizer and their Affiliates an exclusive license in the Territory, during the Contract Period and without the right to sublicense, under Anaderm's rights in Anaderm Technology, including that which is acquired by Anaderm from Third Parties during the Contract Period. This license is solely for the purpose of conducting the Research Program in accordance with the terms of this Agreement and is subject to Anaderm's retention of rights of equivalent scope for itself during the Contract Period solely for use in conducting the Research Program, as well as Anaderm's retention of the right to send compounds to Third Parties for the purpose of screening, formulating or testing said compounds such as, e.g., by conducting efficacy or toxicity studies, in support of the Research Program. Upon expiration of the Contract Period, such license, as to Pfizer and its Affiliates, will become non-exclusive and solely for the purposes of developing and marketing Lead Compounds and Human Therapeutic Products, and shall not expire in any country, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to an Invention within Pfizer Patent Rights or Anaderm Patent Rights, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the license shall continue until no such Valid Claim exists in that country. 7.1.3. License in Pfizer Compounds. Pfizer grants Anaderm and OSI an exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use, solely for the purpose of screening such compounds for indications 34

within the Field in the course of conducting the Research Program, any compounds that Pfizer makes available for use in the Research Program pursuant to Section II of the Stockholders' Agreement. Pfizer grants Anaderm and OSI a non-exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use any such Pfizer compounds solely for the purpose of screening such compounds for indications within the Dermatology Indications, and synthesizing and screening Analogs of such compounds, in the course of conducting the Research Program.

and, if at the end of such ten year period a Valid Claim to any such Invention exists in such country, the term of the license shall continue until no such Valid Claim exists in that country. 7.1.2. License in Anaderm Technology. Anaderm grants OSI and Pfizer and their Affiliates an exclusive license in the Territory, during the Contract Period and without the right to sublicense, under Anaderm's rights in Anaderm Technology, including that which is acquired by Anaderm from Third Parties during the Contract Period. This license is solely for the purpose of conducting the Research Program in accordance with the terms of this Agreement and is subject to Anaderm's retention of rights of equivalent scope for itself during the Contract Period solely for use in conducting the Research Program, as well as Anaderm's retention of the right to send compounds to Third Parties for the purpose of screening, formulating or testing said compounds such as, e.g., by conducting efficacy or toxicity studies, in support of the Research Program. Upon expiration of the Contract Period, such license, as to Pfizer and its Affiliates, will become non-exclusive and solely for the purposes of developing and marketing Lead Compounds and Human Therapeutic Products, and shall not expire in any country, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to an Invention within Pfizer Patent Rights or Anaderm Patent Rights, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the license shall continue until no such Valid Claim exists in that country. 7.1.3. License in Pfizer Compounds. Pfizer grants Anaderm and OSI an exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use, solely for the purpose of screening such compounds for indications 34

within the Field in the course of conducting the Research Program, any compounds that Pfizer makes available for use in the Research Program pursuant to Section II of the Stockholders' Agreement. Pfizer grants Anaderm and OSI a non-exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use any such Pfizer compounds solely for the purpose of screening such compounds for indications within the Dermatology Indications, and synthesizing and screening Analogs of such compounds, in the course of conducting the Research Program. 7.1.4. License in OSI Compounds. OSI grants Anaderm and Pfizer an exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use, solely for the purpose of screening such compounds for indications within the Field in the course of conducting the Research Program, any compounds that OSI makes available for use in the Research Program pursuant to Section II of the Stockholders' Agreement. No Third Parties shall be allowed to screen OSI compounds or Analogs of OSI compounds without the prior written consent of OSI. OSI grants Anaderm and Pfizer a non-exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use any such OSI compounds solely for the purpose of screening such compounds for indications within the Dermatology Indications, and synthesizing and screening Analogs of such compounds, in the course of conducting the Research Program. 7.2. Rights in Inventions Within the Field or The Dermatology Indications. 7.2.1. Subject only to the provisions of Sections 7.2.2 and 7.2.3 below, OSI shall assign to Anaderm its worldwide rights in any Invention within the Field or the Dermatology Indications that is made in the course of its participation in the Research Program and that relates to a Therapeutically Active Compound, a composition containing a 35

Therapeutically Active Compound, or a New Use for a Therapeutically Active Compound, except with respect to Inventions based on compounds Owned By OSI or Analogs of compounds Owned By OSI. Pfizer shall do the same, except with respect to Inventions based on compounds Owned By Pfizer or Analogs of compounds Owned By Pfizer. OSI and Pfizer grant Anaderm an exclusive license in the Territory, including the right to

within the Field in the course of conducting the Research Program, any compounds that Pfizer makes available for use in the Research Program pursuant to Section II of the Stockholders' Agreement. Pfizer grants Anaderm and OSI a non-exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use any such Pfizer compounds solely for the purpose of screening such compounds for indications within the Dermatology Indications, and synthesizing and screening Analogs of such compounds, in the course of conducting the Research Program. 7.1.4. License in OSI Compounds. OSI grants Anaderm and Pfizer an exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use, solely for the purpose of screening such compounds for indications within the Field in the course of conducting the Research Program, any compounds that OSI makes available for use in the Research Program pursuant to Section II of the Stockholders' Agreement. No Third Parties shall be allowed to screen OSI compounds or Analogs of OSI compounds without the prior written consent of OSI. OSI grants Anaderm and Pfizer a non-exclusive license, under its rights, without the right to sublicense, in the Territory, during the Contract Period, to use any such OSI compounds solely for the purpose of screening such compounds for indications within the Dermatology Indications, and synthesizing and screening Analogs of such compounds, in the course of conducting the Research Program. 7.2. Rights in Inventions Within the Field or The Dermatology Indications. 7.2.1. Subject only to the provisions of Sections 7.2.2 and 7.2.3 below, OSI shall assign to Anaderm its worldwide rights in any Invention within the Field or the Dermatology Indications that is made in the course of its participation in the Research Program and that relates to a Therapeutically Active Compound, a composition containing a 35

Therapeutically Active Compound, or a New Use for a Therapeutically Active Compound, except with respect to Inventions based on compounds Owned By OSI or Analogs of compounds Owned By OSI. Pfizer shall do the same, except with respect to Inventions based on compounds Owned By Pfizer or Analogs of compounds Owned By Pfizer. OSI and Pfizer grant Anaderm an exclusive license in the Territory, including the right to sublicense, under their rights in all Inventions within the Field or the Dermatology Indications, that are made in the course of their participation in the Research Program and that do not relate to a Therapeutically Active Compound, a composition containing a Therapeutically Active Compound or a New Use for a Therapeutically Active Compound, to use such Inventions for the purposes of conducting the Research Program and developing and marketing Lead Compounds and Human Therapeutic Products. The term of such exclusive licenses shall not expire in any country, with respect to any particular Invention, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to such Invention, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the license shall continue until no such Valid Claim exists in that country. The foregoing grants of exclusive licenses to Anaderm by OSI and Pfizer are also subject, during the Contract Period, to OSI's and Pfizer's retention of rights of equivalent scope for themselves, for use solely in conducting the Research Program. 7.2.2. OSI shall assign to Pfizer its worldwide rights in any Invention that is made in the course of its participation in the Research Program and that relates to a compound Owned By Pfizer or an Analog of such a compound, a composition containing such a 36

compound or Analog, or a New Use for such a compound or Analog. Pfizer grants Anaderm an exclusive license in the Territory, including the right to sublicense without restriction, under its rights in any Inventions pertaining to the Field or the Dermatology Indications that are assigned to it pursuant to this section (Section 7.2), for the purposes of conducting the Research Program and developing and marketing Lead Compounds and Human Therapeutic Products. Such exclusive license is subject, during the Contract Period, to Pfizer's retention of rights of equivalent scope, solely for the purpose of conducting the Research Program. The term of such exclusive

Therapeutically Active Compound, or a New Use for a Therapeutically Active Compound, except with respect to Inventions based on compounds Owned By OSI or Analogs of compounds Owned By OSI. Pfizer shall do the same, except with respect to Inventions based on compounds Owned By Pfizer or Analogs of compounds Owned By Pfizer. OSI and Pfizer grant Anaderm an exclusive license in the Territory, including the right to sublicense, under their rights in all Inventions within the Field or the Dermatology Indications, that are made in the course of their participation in the Research Program and that do not relate to a Therapeutically Active Compound, a composition containing a Therapeutically Active Compound or a New Use for a Therapeutically Active Compound, to use such Inventions for the purposes of conducting the Research Program and developing and marketing Lead Compounds and Human Therapeutic Products. The term of such exclusive licenses shall not expire in any country, with respect to any particular Invention, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to such Invention, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the license shall continue until no such Valid Claim exists in that country. The foregoing grants of exclusive licenses to Anaderm by OSI and Pfizer are also subject, during the Contract Period, to OSI's and Pfizer's retention of rights of equivalent scope for themselves, for use solely in conducting the Research Program. 7.2.2. OSI shall assign to Pfizer its worldwide rights in any Invention that is made in the course of its participation in the Research Program and that relates to a compound Owned By Pfizer or an Analog of such a compound, a composition containing such a 36

compound or Analog, or a New Use for such a compound or Analog. Pfizer grants Anaderm an exclusive license in the Territory, including the right to sublicense without restriction, under its rights in any Inventions pertaining to the Field or the Dermatology Indications that are assigned to it pursuant to this section (Section 7.2), for the purposes of conducting the Research Program and developing and marketing Lead Compounds and Human Therapeutic Products. Such exclusive license is subject, during the Contract Period, to Pfizer's retention of rights of equivalent scope, solely for the purpose of conducting the Research Program. The term of such exclusive license shall not expire in any country, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to any such Invention, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the exclusive license shall continue until no such Valid Claim exists in that country. 7.2.3. OSI grants Anaderm an exclusive license in the Territory, including the right to sublicense without restriction, under its rights in any Inventions pertaining to the Field or the Dermatology Indications that relate to a compound Owned By OSI or an Analog of such a compound, a composition containing such a compound or Analog of such a compound, or a New Use for such a compound or an Analog of such a compound, for the purposes of conducting the Research Program and developing and marketing Lead Compounds and Human Therapeutic Products. Such exclusive license is subject, during the Contract Period, to OSI's retention of rights of equivalent scope, solely for the purpose of conducting the Research Program. The term of such exclusive license shall not expire in any country, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of 37

the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to any such Invention, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the exclusive license shall continue until no such Valid Claim exists in that country. 7.3. Rights in Inventions Outside the Field and The Dermatology Indications. Neither OSI, Anaderm nor Pfizer shall be obligated to assign or license their rights in any Invention made in the course of conducting the Research Program, where such Invention does not relate to the Field or to the Dermatology Indications, or to a compound owned by Pfizer, OSI or Anaderm, or an Analog of such a compound, a composition containing such a

compound or Analog, or a New Use for such a compound or Analog. Pfizer grants Anaderm an exclusive license in the Territory, including the right to sublicense without restriction, under its rights in any Inventions pertaining to the Field or the Dermatology Indications that are assigned to it pursuant to this section (Section 7.2), for the purposes of conducting the Research Program and developing and marketing Lead Compounds and Human Therapeutic Products. Such exclusive license is subject, during the Contract Period, to Pfizer's retention of rights of equivalent scope, solely for the purpose of conducting the Research Program. The term of such exclusive license shall not expire in any country, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to any such Invention, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the exclusive license shall continue until no such Valid Claim exists in that country. 7.2.3. OSI grants Anaderm an exclusive license in the Territory, including the right to sublicense without restriction, under its rights in any Inventions pertaining to the Field or the Dermatology Indications that relate to a compound Owned By OSI or an Analog of such a compound, a composition containing such a compound or Analog of such a compound, or a New Use for such a compound or an Analog of such a compound, for the purposes of conducting the Research Program and developing and marketing Lead Compounds and Human Therapeutic Products. Such exclusive license is subject, during the Contract Period, to OSI's retention of rights of equivalent scope, solely for the purpose of conducting the Research Program. The term of such exclusive license shall not expire in any country, notwithstanding the termination provisions of Article 9 of this Agreement, prior to 10 years from the date of 37

the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to any such Invention, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the exclusive license shall continue until no such Valid Claim exists in that country. 7.3. Rights in Inventions Outside the Field and The Dermatology Indications. Neither OSI, Anaderm nor Pfizer shall be obligated to assign or license their rights in any Invention made in the course of conducting the Research Program, where such Invention does not relate to the Field or to the Dermatology Indications, or to a compound owned by Pfizer, OSI or Anaderm, or an Analog of such a compound, a composition containing such a compound or Analog, or a method of making, using or administering such a compound or Analog. 7.4. Actual or Threatened Infringement. 7.4.1. When information comes to the attention of OSI, Anaderm or Pfizer, or any of their Affiliates, to the effect that any patent in which a party to this Agreement owns rights (either pursuant to this Agreement or otherwise) and which claims either (a) a Human Therapeutic Product based on a Class 1 or Class 2 Compound that is being developed or marketed by Anaderm or Pfizer or an Affiliate of Pfizer (excluding Anaderm), or (b) a compound or composition contained in such a Human Therapeutic Product, or (c) a Class 1 or Class 2 compound being developed by Anaderm or Pfizer or an Affiliate of Pfizer as a Lead Compound pursuant to Article VII of the Stockholders' Agreement or for which a New Use, as defined in Section 1.25 of this Agreement, is being developed by Anaderm or Pfizer or an Affiliate of Pfizer (excluding Anaderm), has been or is threatened to be unlawfully infringed, the party or Affiliate thereof that becomes aware of such information shall promptly bring it to 38

the attention of the other parties to this Agreement. Pfizer, or an Affiliate of Pfizer (excluding Anaderm), within 90 days after all parties have been made aware of such information, regardless of which party is developing or marketing the compound or product to which the allegedly infringed patent relates, shall have the right, but not the obligation, at its own risk and expense and using counsel of its choice, to take such action as it may deem necessary to prosecute or prevent such unlawful infringement and to notify the parties to this Agreement of the commencement of any suit, action, proceeding or assertion of infringement that it initiates. Neither Pfizer nor any of its Affiliates, however, shall be obligated to inform OSI or Anaderm prior to taking any such action if such

the first commercial sale in that country of a Human Therapeutic Product the manufacture, use or sale of which by a Third Party would infringe a Valid Claim to any such Invention, and, if at the end of such ten year period a Valid Claim to such Invention exists in such country, the term of the exclusive license shall continue until no such Valid Claim exists in that country. 7.3. Rights in Inventions Outside the Field and The Dermatology Indications. Neither OSI, Anaderm nor Pfizer shall be obligated to assign or license their rights in any Invention made in the course of conducting the Research Program, where such Invention does not relate to the Field or to the Dermatology Indications, or to a compound owned by Pfizer, OSI or Anaderm, or an Analog of such a compound, a composition containing such a compound or Analog, or a method of making, using or administering such a compound or Analog. 7.4. Actual or Threatened Infringement. 7.4.1. When information comes to the attention of OSI, Anaderm or Pfizer, or any of their Affiliates, to the effect that any patent in which a party to this Agreement owns rights (either pursuant to this Agreement or otherwise) and which claims either (a) a Human Therapeutic Product based on a Class 1 or Class 2 Compound that is being developed or marketed by Anaderm or Pfizer or an Affiliate of Pfizer (excluding Anaderm), or (b) a compound or composition contained in such a Human Therapeutic Product, or (c) a Class 1 or Class 2 compound being developed by Anaderm or Pfizer or an Affiliate of Pfizer as a Lead Compound pursuant to Article VII of the Stockholders' Agreement or for which a New Use, as defined in Section 1.25 of this Agreement, is being developed by Anaderm or Pfizer or an Affiliate of Pfizer (excluding Anaderm), has been or is threatened to be unlawfully infringed, the party or Affiliate thereof that becomes aware of such information shall promptly bring it to 38

the attention of the other parties to this Agreement. Pfizer, or an Affiliate of Pfizer (excluding Anaderm), within 90 days after all parties have been made aware of such information, regardless of which party is developing or marketing the compound or product to which the allegedly infringed patent relates, shall have the right, but not the obligation, at its own risk and expense and using counsel of its choice, to take such action as it may deem necessary to prosecute or prevent such unlawful infringement and to notify the parties to this Agreement of the commencement of any suit, action, proceeding or assertion of infringement that it initiates. Neither Pfizer nor any of its Affiliates, however, shall be obligated to inform OSI or Anaderm prior to taking any such action if such action would thereby be delayed and prejudice its right to obtain the relief sought, for example, where such action is a motion for a temporary restraining order or a claim of patent infringement based on the filing of an ANDA by a generic drug company. If Pfizer decides not to take action, it shall notify Anaderm and OSI in a timely fashion so as to allow either of these parties to take such action if they choose to do so. Pfizer shall furnish Anaderm and OSI, upon request, with a copy of each nonprivileged material communication relating to the alleged infringement. If Pfizer or the relevant Affiliate of Pfizer, as the case may be, determines that it is necessary or desirable for either Anaderm or OSI to join any such suit, action or proceeding, then Anaderm or OSI shall, at Pfizer's expense, execute all papers and perform such other acts as may be reasonably required to permit Pfizer or the relevant Affiliate of Pfizer to act in their respective names, or to join them, respectively, as parties, if required by law, in which event Pfizer shall hold the party or parties requested to be joined free, clear and harmless from any and all costs and expenses of such suit, action or proceeding, including attorney's fees. If Pfizer or any of its Affiliates other than Anaderm brings a suit in accordance with the above terms, it shall have the right 39

first to reimburse itself out of any sums recovered in such suit or in its settlement for all reasonable costs and expenses of every kind and character, including reasonable attorney's fees, involved in the prosecution of any suit, and fifty percent (50%) of any funds that shall remain from said recovery shall be distributed to the parties receiving royalties on the Net Sales of the Human Therapeutic Product to which the infringed claim or claims relate, in amounts proportional to the relative amounts of their respective royalties, and the remaining fifty (50%) percent shall belong, respectively, to Pfizer or the Affiliate of Pfizer that brought the suit. 7.4.2. If, within ninety (90) days after Pfizer or an Affiliate of Pfizer other than Anaderm gives notice to Anaderm or OSI of the information relating to the alleged infringement or receiving notice of such information from

the attention of the other parties to this Agreement. Pfizer, or an Affiliate of Pfizer (excluding Anaderm), within 90 days after all parties have been made aware of such information, regardless of which party is developing or marketing the compound or product to which the allegedly infringed patent relates, shall have the right, but not the obligation, at its own risk and expense and using counsel of its choice, to take such action as it may deem necessary to prosecute or prevent such unlawful infringement and to notify the parties to this Agreement of the commencement of any suit, action, proceeding or assertion of infringement that it initiates. Neither Pfizer nor any of its Affiliates, however, shall be obligated to inform OSI or Anaderm prior to taking any such action if such action would thereby be delayed and prejudice its right to obtain the relief sought, for example, where such action is a motion for a temporary restraining order or a claim of patent infringement based on the filing of an ANDA by a generic drug company. If Pfizer decides not to take action, it shall notify Anaderm and OSI in a timely fashion so as to allow either of these parties to take such action if they choose to do so. Pfizer shall furnish Anaderm and OSI, upon request, with a copy of each nonprivileged material communication relating to the alleged infringement. If Pfizer or the relevant Affiliate of Pfizer, as the case may be, determines that it is necessary or desirable for either Anaderm or OSI to join any such suit, action or proceeding, then Anaderm or OSI shall, at Pfizer's expense, execute all papers and perform such other acts as may be reasonably required to permit Pfizer or the relevant Affiliate of Pfizer to act in their respective names, or to join them, respectively, as parties, if required by law, in which event Pfizer shall hold the party or parties requested to be joined free, clear and harmless from any and all costs and expenses of such suit, action or proceeding, including attorney's fees. If Pfizer or any of its Affiliates other than Anaderm brings a suit in accordance with the above terms, it shall have the right 39

first to reimburse itself out of any sums recovered in such suit or in its settlement for all reasonable costs and expenses of every kind and character, including reasonable attorney's fees, involved in the prosecution of any suit, and fifty percent (50%) of any funds that shall remain from said recovery shall be distributed to the parties receiving royalties on the Net Sales of the Human Therapeutic Product to which the infringed claim or claims relate, in amounts proportional to the relative amounts of their respective royalties, and the remaining fifty (50%) percent shall belong, respectively, to Pfizer or the Affiliate of Pfizer that brought the suit. 7.4.2. If, within ninety (90) days after Pfizer or an Affiliate of Pfizer other than Anaderm gives notice to Anaderm or OSI of the information relating to the alleged infringement or receiving notice of such information from Anaderm or OSI, or an Affiliate thereof, neither Pfizer nor any of its Affiliates notifies Anaderm and OSI of its intent to bring suit or take other action against the alleged infringer, Anaderm shall have the right, but not the obligation, to bring suit or take other action against such alleged infringer, and may through joinder add Pfizer, an Affiliate of Pfizer or OSI as a party, if appropriate, in which case Anaderm shall hold the party or parties so joined free, clear and harmless from any and all costs and expenses of such litigation, including attorney's fees, and any sums recovered in any such suit or in its settlement shall belong to Anaderm; provided, however, that fifty percent (50%) of any such sums recovered in such suit or settlement, after deduction of the costs and expenses of litigation, including attorney's fees paid, shall be distributed to the parties receiving royalties on the Net Sales of the Human Therapeutic Product to which the allegedly infringed claim or claims relate, in amounts proportional to the relative amounts of their respective royalties, and the remaining fifty percent (50%) shall belong to Anaderm. 40

7.4.3. All parties to this Agreement agree to cooperate with and lend assistance, as appropriately requested or required by law, to any of the other parties that initiate a lawsuit or other action against an alleged infringer pursuant to this section (Section 7.4). Each party shall have the right to be represented by counsel of its own selection and at its own expense in any suit instituted by the other under the terms of this section. If either Anaderm or Pfizer lacks standing to bring any such suit, action or proceeding, then the other shall do so at the request and expense of the requesting party. The obligations of all parties under this section shall remain in effect, notwithstanding the termination provisions of Article 9 of this Agreement, until the statute of limitations applicable to every action that could be taken pursuant to this section to hold the allegedly infringing party accountable under the law has expired and until every such pending action has been resolved by a decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 7.5. Response to Infringement Claims. The parties to this Agreement agree that they and their Affiliates will

first to reimburse itself out of any sums recovered in such suit or in its settlement for all reasonable costs and expenses of every kind and character, including reasonable attorney's fees, involved in the prosecution of any suit, and fifty percent (50%) of any funds that shall remain from said recovery shall be distributed to the parties receiving royalties on the Net Sales of the Human Therapeutic Product to which the infringed claim or claims relate, in amounts proportional to the relative amounts of their respective royalties, and the remaining fifty (50%) percent shall belong, respectively, to Pfizer or the Affiliate of Pfizer that brought the suit. 7.4.2. If, within ninety (90) days after Pfizer or an Affiliate of Pfizer other than Anaderm gives notice to Anaderm or OSI of the information relating to the alleged infringement or receiving notice of such information from Anaderm or OSI, or an Affiliate thereof, neither Pfizer nor any of its Affiliates notifies Anaderm and OSI of its intent to bring suit or take other action against the alleged infringer, Anaderm shall have the right, but not the obligation, to bring suit or take other action against such alleged infringer, and may through joinder add Pfizer, an Affiliate of Pfizer or OSI as a party, if appropriate, in which case Anaderm shall hold the party or parties so joined free, clear and harmless from any and all costs and expenses of such litigation, including attorney's fees, and any sums recovered in any such suit or in its settlement shall belong to Anaderm; provided, however, that fifty percent (50%) of any such sums recovered in such suit or settlement, after deduction of the costs and expenses of litigation, including attorney's fees paid, shall be distributed to the parties receiving royalties on the Net Sales of the Human Therapeutic Product to which the allegedly infringed claim or claims relate, in amounts proportional to the relative amounts of their respective royalties, and the remaining fifty percent (50%) shall belong to Anaderm. 40

7.4.3. All parties to this Agreement agree to cooperate with and lend assistance, as appropriately requested or required by law, to any of the other parties that initiate a lawsuit or other action against an alleged infringer pursuant to this section (Section 7.4). Each party shall have the right to be represented by counsel of its own selection and at its own expense in any suit instituted by the other under the terms of this section. If either Anaderm or Pfizer lacks standing to bring any such suit, action or proceeding, then the other shall do so at the request and expense of the requesting party. The obligations of all parties under this section shall remain in effect, notwithstanding the termination provisions of Article 9 of this Agreement, until the statute of limitations applicable to every action that could be taken pursuant to this section to hold the allegedly infringing party accountable under the law has expired and until every such pending action has been resolved by a decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 7.5. Response to Infringement Claims. The parties to this Agreement agree that they and their Affiliates will cooperate with any one or both of the other such parties in defense of any suit, action or proceeding against any such party or any Affiliate or sublicensee of any such party alleging the infringement of the intellectual property rights of a Third Party other than NYU by reason of the manufacture, use or sale of a Human Therapeutic Product based on a Class 1 or Class 2 compound. The cooperation and involvement of all three parties, and their Affiliates, in defense of any such lawsuit shall be at the expense of the party that is developing and/or marketing the Human Therapeutic Product or compound the manufacture, use or sale of which gave rise to the claim of infringement (the "developing/marketing party"). However, the developing/marketing party shall not be responsible for paying any costs or fees or expenses associated with the involvement of another party or Affiliate thereof in any such 41

lawsuit if the allegedly infringing activities that gave rise to the lawsuit resulted from the negligence or breach of a warranty in this Agreement or the Stockholders' Agreement of such other party or Affiliate. Any party to this Agreement against which such a lawsuit, action, proceeding or claim of infringement is brought shall give the other parties prompt written notice of it and shall furnish the other parties with a copy of each nonprivileged material communication relating to the alleged infringement. In consideration of the developing/marketing party's provision of costs, fees and expenses for the defense of any other party or Affiliate thereof joined in such a lawsuit or other legal proceeding, and the developing/marketing party's agreement which it hereby gives to the other parties and their Affiliates to indemnify and hold them and their directors, officers, employees and agents harmless with respect to all damages assessed against them and arising out of such action, all parties hereby grant to Pfizer or Anaderm, whichever is the developing/marketing party, all authority (including the right to exclusive control of the

7.4.3. All parties to this Agreement agree to cooperate with and lend assistance, as appropriately requested or required by law, to any of the other parties that initiate a lawsuit or other action against an alleged infringer pursuant to this section (Section 7.4). Each party shall have the right to be represented by counsel of its own selection and at its own expense in any suit instituted by the other under the terms of this section. If either Anaderm or Pfizer lacks standing to bring any such suit, action or proceeding, then the other shall do so at the request and expense of the requesting party. The obligations of all parties under this section shall remain in effect, notwithstanding the termination provisions of Article 9 of this Agreement, until the statute of limitations applicable to every action that could be taken pursuant to this section to hold the allegedly infringing party accountable under the law has expired and until every such pending action has been resolved by a decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 7.5. Response to Infringement Claims. The parties to this Agreement agree that they and their Affiliates will cooperate with any one or both of the other such parties in defense of any suit, action or proceeding against any such party or any Affiliate or sublicensee of any such party alleging the infringement of the intellectual property rights of a Third Party other than NYU by reason of the manufacture, use or sale of a Human Therapeutic Product based on a Class 1 or Class 2 compound. The cooperation and involvement of all three parties, and their Affiliates, in defense of any such lawsuit shall be at the expense of the party that is developing and/or marketing the Human Therapeutic Product or compound the manufacture, use or sale of which gave rise to the claim of infringement (the "developing/marketing party"). However, the developing/marketing party shall not be responsible for paying any costs or fees or expenses associated with the involvement of another party or Affiliate thereof in any such 41

lawsuit if the allegedly infringing activities that gave rise to the lawsuit resulted from the negligence or breach of a warranty in this Agreement or the Stockholders' Agreement of such other party or Affiliate. Any party to this Agreement against which such a lawsuit, action, proceeding or claim of infringement is brought shall give the other parties prompt written notice of it and shall furnish the other parties with a copy of each nonprivileged material communication relating to the alleged infringement. In consideration of the developing/marketing party's provision of costs, fees and expenses for the defense of any other party or Affiliate thereof joined in such a lawsuit or other legal proceeding, and the developing/marketing party's agreement which it hereby gives to the other parties and their Affiliates to indemnify and hold them and their directors, officers, employees and agents harmless with respect to all damages assessed against them and arising out of such action, all parties hereby grant to Pfizer or Anaderm, whichever is the developing/marketing party, all authority (including the right to exclusive control of the defense of any such suit, action or proceeding and the exclusive right to compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding), and agree to provide Pfizer or Anaderm, respectively, with all information and assistance necessary to defend or settle any such suit, action or proceeding, except that any such compromise, litigation, settlement, or other disposition shall not require an admission of fault on the part of any such other party or Affiliate thereof, or require any such other party or Affiliate to incur any obligation or liability or take or refrain from taking any action except as otherwise obligated hereunder without such party's advance written consent. The obligations of all parties under this section shall remain in effect, notwithstanding the termination provisions of Article 9 of this Agreement, until the statute of limitations applicable to every action that could be taken pursuant to this section to hold the 42

allegedly infringing party accountable under the law has expired and until every such pending action has been resolved by a decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 7.6. Filing, Prosecution and Maintenance of Patent Rights. 7.6.1. Anaderm shall have the right, at its expense and using counsel of its choice, to prepare, file and prosecute patent applications and to maintain and apply for extensions, Supplementary Protection Certificates and reissues of patents worldwide on Inventions within the Field or the Dermatology Indications, that were made by any of the parties in the course of their participation in the Research Program and that relate to either a Therapeutically

lawsuit if the allegedly infringing activities that gave rise to the lawsuit resulted from the negligence or breach of a warranty in this Agreement or the Stockholders' Agreement of such other party or Affiliate. Any party to this Agreement against which such a lawsuit, action, proceeding or claim of infringement is brought shall give the other parties prompt written notice of it and shall furnish the other parties with a copy of each nonprivileged material communication relating to the alleged infringement. In consideration of the developing/marketing party's provision of costs, fees and expenses for the defense of any other party or Affiliate thereof joined in such a lawsuit or other legal proceeding, and the developing/marketing party's agreement which it hereby gives to the other parties and their Affiliates to indemnify and hold them and their directors, officers, employees and agents harmless with respect to all damages assessed against them and arising out of such action, all parties hereby grant to Pfizer or Anaderm, whichever is the developing/marketing party, all authority (including the right to exclusive control of the defense of any such suit, action or proceeding and the exclusive right to compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding), and agree to provide Pfizer or Anaderm, respectively, with all information and assistance necessary to defend or settle any such suit, action or proceeding, except that any such compromise, litigation, settlement, or other disposition shall not require an admission of fault on the part of any such other party or Affiliate thereof, or require any such other party or Affiliate to incur any obligation or liability or take or refrain from taking any action except as otherwise obligated hereunder without such party's advance written consent. The obligations of all parties under this section shall remain in effect, notwithstanding the termination provisions of Article 9 of this Agreement, until the statute of limitations applicable to every action that could be taken pursuant to this section to hold the 42

allegedly infringing party accountable under the law has expired and until every such pending action has been resolved by a decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 7.6. Filing, Prosecution and Maintenance of Patent Rights. 7.6.1. Anaderm shall have the right, at its expense and using counsel of its choice, to prepare, file and prosecute patent applications and to maintain and apply for extensions, Supplementary Protection Certificates and reissues of patents worldwide on Inventions within the Field or the Dermatology Indications, that were made by any of the parties in the course of their participation in the Research Program and that relate to either a Therapeutically Active Compound, a composition containing a Therapeutically Active Compound or a New Use for a Therapeutically Active Compound, as well as on any Inventions in which it has rights as an owner/assignee pursuant to this article (Article 7). Pfizer and OSI hereby grant Anaderm the authority to perform the above patent-related tasks, at Anaderm's expense, with respect to such Inventions in which they, respectively, have rights as an owner/assignee pursuant to this article and agree to execute any and all forms required to be submitted in the various patent offices worldwide to render such transfer of authority effective in all countries in which patent protection will be sought. 7.6.2. Anaderm shall diligently perform, or have diligently performed on its behalf, the patent-related tasks referred to under Section 7.6.1 above, and shall provide copies of any documents related to the performance of such tasks to any other party to this Agreement that requests them. 7.6.3. The rights and obligations under this section (Section 7.6) shall not expire, notwithstanding the termination provisions of Article 9 of this Agreement, with respect 43

to a particular Invention, until all licenses of rights in such Invention pursuant to this Agreement have expired. ARTICLE 8 - ACQUISITION OF RIGHTS FROM THIRD PARTIES. During the Contract Period, each of OSI, Pfizer and Anaderm shall promptly notify the others in writing of any and all opportunities of which it is aware to acquire in any manner from Third Parties, Technology or patents which may be useful in, or may relate to, the Research Program. Anaderm shall decide if such rights shall be

allegedly infringing party accountable under the law has expired and until every such pending action has been resolved by a decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 7.6. Filing, Prosecution and Maintenance of Patent Rights. 7.6.1. Anaderm shall have the right, at its expense and using counsel of its choice, to prepare, file and prosecute patent applications and to maintain and apply for extensions, Supplementary Protection Certificates and reissues of patents worldwide on Inventions within the Field or the Dermatology Indications, that were made by any of the parties in the course of their participation in the Research Program and that relate to either a Therapeutically Active Compound, a composition containing a Therapeutically Active Compound or a New Use for a Therapeutically Active Compound, as well as on any Inventions in which it has rights as an owner/assignee pursuant to this article (Article 7). Pfizer and OSI hereby grant Anaderm the authority to perform the above patent-related tasks, at Anaderm's expense, with respect to such Inventions in which they, respectively, have rights as an owner/assignee pursuant to this article and agree to execute any and all forms required to be submitted in the various patent offices worldwide to render such transfer of authority effective in all countries in which patent protection will be sought. 7.6.2. Anaderm shall diligently perform, or have diligently performed on its behalf, the patent-related tasks referred to under Section 7.6.1 above, and shall provide copies of any documents related to the performance of such tasks to any other party to this Agreement that requests them. 7.6.3. The rights and obligations under this section (Section 7.6) shall not expire, notwithstanding the termination provisions of Article 9 of this Agreement, with respect 43

to a particular Invention, until all licenses of rights in such Invention pursuant to this Agreement have expired. ARTICLE 8 - ACQUISITION OF RIGHTS FROM THIRD PARTIES. During the Contract Period, each of OSI, Pfizer and Anaderm shall promptly notify the others in writing of any and all opportunities of which it is aware to acquire in any manner from Third Parties, Technology or patents which may be useful in, or may relate to, the Research Program. Anaderm shall decide if such rights shall be acquired. Anaderm shall use its best efforts to locate, and acquire rights to, Technology within the Field. ARTICLE 9 - TERMINATION 9.1. Term. This Agreement shall have a term of three years from the Effective Date, and shall terminate on that date unless renewed by written agreement of all of the parties. 9.2. Termination for Cause. At any time prior to expiration of this Agreement, any party may terminate this Agreement forthwith for cause, as "cause" is described below, by giving written notice to the other parties, such termination to be effective thirty (30) days after the giving of such notice. Cause for termination by a party to this Agreement shall be deemed to exist: (i) if any other party materially breaches or defaults in the performance or observance of any of the provisions of this Agreement and such material breach or default is not cured within sixty (60) days after the giving of notice by the party specifying such material breach or default; or (ii) if either OSI, Pfizer or Anaderm discontinues its business or becomes insolvent or bankrupt; or (iii) if any representation or warranty by any other party or any of their officers, under or in connection with this Agreement, shall prove to have been incorrect in any 44

material respect when made; or (iv) with respect to the right of Pfizer to terminate under Section 4.3 above, if Pfizer decides to terminate funding; or (v) with respect to the rights of Pfizer and Anaderm to terminate, if there is a Change Of Control Of OSI (as

to a particular Invention, until all licenses of rights in such Invention pursuant to this Agreement have expired. ARTICLE 8 - ACQUISITION OF RIGHTS FROM THIRD PARTIES. During the Contract Period, each of OSI, Pfizer and Anaderm shall promptly notify the others in writing of any and all opportunities of which it is aware to acquire in any manner from Third Parties, Technology or patents which may be useful in, or may relate to, the Research Program. Anaderm shall decide if such rights shall be acquired. Anaderm shall use its best efforts to locate, and acquire rights to, Technology within the Field. ARTICLE 9 - TERMINATION 9.1. Term. This Agreement shall have a term of three years from the Effective Date, and shall terminate on that date unless renewed by written agreement of all of the parties. 9.2. Termination for Cause. At any time prior to expiration of this Agreement, any party may terminate this Agreement forthwith for cause, as "cause" is described below, by giving written notice to the other parties, such termination to be effective thirty (30) days after the giving of such notice. Cause for termination by a party to this Agreement shall be deemed to exist: (i) if any other party materially breaches or defaults in the performance or observance of any of the provisions of this Agreement and such material breach or default is not cured within sixty (60) days after the giving of notice by the party specifying such material breach or default; or (ii) if either OSI, Pfizer or Anaderm discontinues its business or becomes insolvent or bankrupt; or (iii) if any representation or warranty by any other party or any of their officers, under or in connection with this Agreement, shall prove to have been incorrect in any 44

material respect when made; or (iv) with respect to the right of Pfizer to terminate under Section 4.3 above, if Pfizer decides to terminate funding; or (v) with respect to the rights of Pfizer and Anaderm to terminate, if there is a Change Of Control Of OSI (as defined in Section 9.3 below). 9.3. For purposes of this Agreement, a "Change Of Control Of OSI" shall be deemed to have taken place: (i) if a Third Party becomes the beneficial owner of shares having fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of OSI; or (ii) if, as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a) the persons who were directors of OSI before the transaction shall cease to constitute a majority of the Board of Directors of OSI or any successor of OSI, or (b) there is a sale, exchange or other disposition of all or substantially all of OSI's assets to a Third Party. Within thirty (30) days following the Change Of Control Of OSI, OSI shall provide notice thereof to the other parties to this Agreement. 45

9.4. Phase Out of OSI Funding Upon Termination. In the event of expiration of this Agreement pursuant to Section 9.1 above, or a termination by Pfizer pursuant to Section 9.2(iv) or by OSI pursuant to Section 9.2 above, OSI shall be funded to conduct research for three additional years pursuant to a research program approved either by Anaderm or Pfizer that does not conflict with any other then-existing obligations of OSI, and on the basis hereinafter provided. For the first 12 months following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . For the second year following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . For the third year following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . In consideration for this funding, OSI, during the first, second and third years of the phase out period, shall commit a number of man-hours to conducting research pursuant to the approved research program previously referred to in this Section (Section 9.4), which number of man-hours is at least **

material respect when made; or (iv) with respect to the right of Pfizer to terminate under Section 4.3 above, if Pfizer decides to terminate funding; or (v) with respect to the rights of Pfizer and Anaderm to terminate, if there is a Change Of Control Of OSI (as defined in Section 9.3 below). 9.3. For purposes of this Agreement, a "Change Of Control Of OSI" shall be deemed to have taken place: (i) if a Third Party becomes the beneficial owner of shares having fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of OSI; or (ii) if, as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a) the persons who were directors of OSI before the transaction shall cease to constitute a majority of the Board of Directors of OSI or any successor of OSI, or (b) there is a sale, exchange or other disposition of all or substantially all of OSI's assets to a Third Party. Within thirty (30) days following the Change Of Control Of OSI, OSI shall provide notice thereof to the other parties to this Agreement. 45

9.4. Phase Out of OSI Funding Upon Termination. In the event of expiration of this Agreement pursuant to Section 9.1 above, or a termination by Pfizer pursuant to Section 9.2(iv) or by OSI pursuant to Section 9.2 above, OSI shall be funded to conduct research for three additional years pursuant to a research program approved either by Anaderm or Pfizer that does not conflict with any other then-existing obligations of OSI, and on the basis hereinafter provided. For the first 12 months following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . For the second year following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . For the third year following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . In consideration for this funding, OSI, during the first, second and third years of the phase out period, shall commit a number of man-hours to conducting research pursuant to the approved research program previously referred to in this Section (Section 9.4), which number of man-hours is at least ** (first year post-termination), ** (second year post-termination), and ** ** This portion has been redacted pursuant to a request for confidential treatment. 46

(third year post-termination), respectively, of the number of OSI man-hours spent participating in the Research Program pursuant to this Agreement during the last twelve (12) months prior to termination, or to an amount mutually agreed to by the parties. 9.5. Provisions that Survive Termination. The following provisions of this Agreement will survive termination pursuant to this article and will remain in force for the period specified in the sections of the Agreement in which they appear: (a) the obligations of Pfizer and Anaderm to provide notices or status reports to OSI pursuant to Section 3.7; (b) all of Article 5, relating to the payment of royalties; (c) the confidentiality obligations set forth in Sections 6.1.1 - 6.1.3; (d) the grant of exclusive and nonexclusive licenses pursuant to Article 7; (e) the obligations of all parties with respect to patent infringement matters pursuant to Sections 7.4 and 7.5; (f) the rights and obligations of all parties with respect to the filing, prosecution and maintenance of patent rights

9.4. Phase Out of OSI Funding Upon Termination. In the event of expiration of this Agreement pursuant to Section 9.1 above, or a termination by Pfizer pursuant to Section 9.2(iv) or by OSI pursuant to Section 9.2 above, OSI shall be funded to conduct research for three additional years pursuant to a research program approved either by Anaderm or Pfizer that does not conflict with any other then-existing obligations of OSI, and on the basis hereinafter provided. For the first 12 months following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . For the second year following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . For the third year following the date of termination, Anaderm or Pfizer shall fund OSI's research cost at the rate of the lesser of: (a) ** of the actual amount funded by Anaderm during the 12 months prior to such termination, adjusted for inflation; or (b) ** . In consideration for this funding, OSI, during the first, second and third years of the phase out period, shall commit a number of man-hours to conducting research pursuant to the approved research program previously referred to in this Section (Section 9.4), which number of man-hours is at least ** (first year post-termination), ** (second year post-termination), and ** ** This portion has been redacted pursuant to a request for confidential treatment. 46

(third year post-termination), respectively, of the number of OSI man-hours spent participating in the Research Program pursuant to this Agreement during the last twelve (12) months prior to termination, or to an amount mutually agreed to by the parties. 9.5. Provisions that Survive Termination. The following provisions of this Agreement will survive termination pursuant to this article and will remain in force for the period specified in the sections of the Agreement in which they appear: (a) the obligations of Pfizer and Anaderm to provide notices or status reports to OSI pursuant to Section 3.7; (b) all of Article 5, relating to the payment of royalties; (c) the confidentiality obligations set forth in Sections 6.1.1 - 6.1.3; (d) the grant of exclusive and nonexclusive licenses pursuant to Article 7; (e) the obligations of all parties with respect to patent infringement matters pursuant to Sections 7.4 and 7.5; (f) the rights and obligations of all parties with respect to the filing, prosecution and maintenance of patent rights pursuant to Section 7.6; (g) the phase out of OSI funding pursuant to Section 9.4; (h) the indemnification provisions of Article 10; and (i) the choice of governing law pursuant to Section 12.2. ARTICLE 10 - INDEMNIFICATION BY ANADERM OR PFIZER ** ** This portion has been redacted pursuant to a request for confidential treatment. 47

(third year post-termination), respectively, of the number of OSI man-hours spent participating in the Research Program pursuant to this Agreement during the last twelve (12) months prior to termination, or to an amount mutually agreed to by the parties. 9.5. Provisions that Survive Termination. The following provisions of this Agreement will survive termination pursuant to this article and will remain in force for the period specified in the sections of the Agreement in which they appear: (a) the obligations of Pfizer and Anaderm to provide notices or status reports to OSI pursuant to Section 3.7; (b) all of Article 5, relating to the payment of royalties; (c) the confidentiality obligations set forth in Sections 6.1.1 - 6.1.3; (d) the grant of exclusive and nonexclusive licenses pursuant to Article 7; (e) the obligations of all parties with respect to patent infringement matters pursuant to Sections 7.4 and 7.5; (f) the rights and obligations of all parties with respect to the filing, prosecution and maintenance of patent rights pursuant to Section 7.6; (g) the phase out of OSI funding pursuant to Section 9.4; (h) the indemnification provisions of Article 10; and (i) the choice of governing law pursuant to Section 12.2. ARTICLE 10 - INDEMNIFICATION BY ANADERM OR PFIZER ** ** This portion has been redacted pursuant to a request for confidential treatment. 47

ARTICLE 11 - REPRESENTATIONS, WARRANTIES AND COVENANTS OSI, Pfizer and Anaderm each represents, warrants and covenants as follows: 11.1. It is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and has all requisite power and authority, corporate or otherwise, to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement. 11.2. The execution, delivery and performance by it of this Agreement have been duly authorized by all necessary corporate action and do not and will not (a) require any consent or approval of its stockholders, (b) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to it or any provision of its charter or bylaws or (c) result in a breach of or constitute a default under any material agreement, mortgage, lease, license, permit or other instrument or obligation to which it is a party or by which it or its properties may be bound or affected. 11.3. This Agreement is a legal, valid and binding obligation of it and is enforceable against it in accordance with its terms and conditions, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws, from time to time in effect, affecting creditor's rights generally.

ARTICLE 11 - REPRESENTATIONS, WARRANTIES AND COVENANTS OSI, Pfizer and Anaderm each represents, warrants and covenants as follows: 11.1. It is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and has all requisite power and authority, corporate or otherwise, to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement. 11.2. The execution, delivery and performance by it of this Agreement have been duly authorized by all necessary corporate action and do not and will not (a) require any consent or approval of its stockholders, (b) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to it or any provision of its charter or bylaws or (c) result in a breach of or constitute a default under any material agreement, mortgage, lease, license, permit or other instrument or obligation to which it is a party or by which it or its properties may be bound or affected. 11.3. This Agreement is a legal, valid and binding obligation of it and is enforceable against it in accordance with its terms and conditions, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws, from time to time in effect, affecting creditor's rights generally. 11.4. It is not presently under and it will not incur in the future any obligation to any Person, contractual or otherwise, that is conflicting or inconsistent in any respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations under this Agreement. 48

11.5. It has good and marketable title to or valid leases or licenses for, all of its properties, rights and assets necessary for the fulfillment of its responsibilities and the Research Program, subject to no claim of any Third Party other than the relevant lessors or licensors. 11.6. It shall use its diligent efforts to perform its obligations under this Agreement. 11.7. OSI, Pfizer and Anaderm represent that their respective employees, and those of their Affiliates, that will participate in the Research Program and all other parties that will participate in the Research Program on their behalf pursuant to this Agreement will have a contractual obligation throughout the course of their participation in the Research Program to assign to OSI, Pfizer, or Anaderm, respectively, their rights in any Inventions made in the course of their participation in the Research Program. 11.8. OSI represents that it has exclusive rights, including the right to sublicense, to use the compounds within the OSI Compound File that are from the library licensed to OSI by The Dow Chemical Company, and Analogs thereof, to make, have made, use, evaluate, screen, sell, and have sold Human Therapeutic Products in the Field and in the Dermatology Indications. ARTICLE 12 - MISCELLANEOUS 12.1. Notices. All notices shall be mailed via certified mail, return receipt requested, or courier, addressed as follows, or to such other address as may be designated from time to time:
If to Pfizer: To Pfizer at its address as set forth at the beginning of this Agreement Attention: Paul S. Miller, Esq. Senior Vice President and

49

11.5. It has good and marketable title to or valid leases or licenses for, all of its properties, rights and assets necessary for the fulfillment of its responsibilities and the Research Program, subject to no claim of any Third Party other than the relevant lessors or licensors. 11.6. It shall use its diligent efforts to perform its obligations under this Agreement. 11.7. OSI, Pfizer and Anaderm represent that their respective employees, and those of their Affiliates, that will participate in the Research Program and all other parties that will participate in the Research Program on their behalf pursuant to this Agreement will have a contractual obligation throughout the course of their participation in the Research Program to assign to OSI, Pfizer, or Anaderm, respectively, their rights in any Inventions made in the course of their participation in the Research Program. 11.8. OSI represents that it has exclusive rights, including the right to sublicense, to use the compounds within the OSI Compound File that are from the library licensed to OSI by The Dow Chemical Company, and Analogs thereof, to make, have made, use, evaluate, screen, sell, and have sold Human Therapeutic Products in the Field and in the Dermatology Indications. ARTICLE 12 - MISCELLANEOUS 12.1. Notices. All notices shall be mailed via certified mail, return receipt requested, or courier, addressed as follows, or to such other address as may be designated from time to time:
If to Pfizer: To Pfizer at its address as set forth at the beginning of this Agreement Attention: Paul S. Miller, Esq. Senior Vice President and

49
General Counsel, Pfizer Inc. 235 East 42nd Street, 21st Fl. New York, N.Y. 10017-5755 If to OSI: To OSI at its address as set forth at the beginning of this Agreement Attention: Colin Goddard Chief Executive Officer, OSI Pharmaceuticals, Inc., 106 Charles Lindergh Blvd., Uniondale, New York 11553

If to Anaderm:

To Anaderm at its address as set forth at the beginning of this Agreement Attention: ** President, Anaderm Research Corp. 235 East 42nd Street., 13th Fl. New York, N.Y. 10017-5755 cc: Paul S. Miller, Esq. Senior Vice President and General Counsel, Pfizer Inc. 235 East 42nd Street, 21st Fl. New York, N.Y. 10017-5755

Notices shall be deemed given as of the date of receipt. 12.2. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York.

General Counsel, Pfizer Inc. 235 East 42nd Street, 21st Fl. New York, N.Y. 10017-5755 If to OSI: To OSI at its address as set forth at the beginning of this Agreement Attention: Colin Goddard Chief Executive Officer, OSI Pharmaceuticals, Inc., 106 Charles Lindergh Blvd., Uniondale, New York 11553

If to Anaderm:

To Anaderm at its address as set forth at the beginning of this Agreement Attention: ** President, Anaderm Research Corp. 235 East 42nd Street., 13th Fl. New York, N.Y. 10017-5755 cc: Paul S. Miller, Esq. Senior Vice President and General Counsel, Pfizer Inc. 235 East 42nd Street, 21st Fl. New York, N.Y. 10017-5755

Notices shall be deemed given as of the date of receipt. 12.2. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York. ** This portion has been redacted pursuant to a request for confidential treatment. 50

12.3. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. 12.4. Publicity. Except as required by law, no party hereto may disclose the existence of this Agreement or any of Anaderm's activities without the prior written approval of Anaderm. 12.5. Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 12.6. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 12.7. Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any party at any time or times to require performance of any provision, except as otherwise specifically provided in this Agreement, shall in no manner affect its rights at a later time to enforce the same. 12.8. Third Party Beneficiaries. NYU is an intended third party beneficiary to this Agreement solely to the extent that it is granted certain rights in intellectual property pursuant to Article 7. No other Person not a party to this Agreement, including any employee of any party to this Agreement, or of any Affiliate thereof, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties as partners with each other or any Person. 51

12.3. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. 12.4. Publicity. Except as required by law, no party hereto may disclose the existence of this Agreement or any of Anaderm's activities without the prior written approval of Anaderm. 12.5. Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 12.6. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 12.7. Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any party at any time or times to require performance of any provision, except as otherwise specifically provided in this Agreement, shall in no manner affect its rights at a later time to enforce the same. 12.8. Third Party Beneficiaries. NYU is an intended third party beneficiary to this Agreement solely to the extent that it is granted certain rights in intellectual property pursuant to Article 7. No other Person not a party to this Agreement, including any employee of any party to this Agreement, or of any Affiliate thereof, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties as partners with each other or any Person. 51

12.9. Assignment and Successors. This Agreement may not be assigned by any party, in whole or in part, except to a purchaser of all or substantially all of its assets or to any successor corporation resulting from any merger or consolidation with or into such corporation. 12.10. Force Majeure. The parties to this Agreement shall be excused from any required performance to the extent that, and for so long as, such performance is rendered impossible or unfeasible due to any catastrophes or other major event beyond their reasonable control, including, without limitation, war, riot, insurrection, laws, proclamations, edicts, ordinances, regulations, strikes, lock-outs, other serious labor disputes, floods, fires, explosions or other natural disasters. When such events have abated, the parties' respective obligations and rights shall resume. 52

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. ANADERM RESEARCH CORP.
By /s/ -----------------------------------------Title: President and Chief Executive Officer

OSI PHARMACEUTICALS, INC.
By /s/ -----------------------------------------Title: President and Chief Executive Officer

12.9. Assignment and Successors. This Agreement may not be assigned by any party, in whole or in part, except to a purchaser of all or substantially all of its assets or to any successor corporation resulting from any merger or consolidation with or into such corporation. 12.10. Force Majeure. The parties to this Agreement shall be excused from any required performance to the extent that, and for so long as, such performance is rendered impossible or unfeasible due to any catastrophes or other major event beyond their reasonable control, including, without limitation, war, riot, insurrection, laws, proclamations, edicts, ordinances, regulations, strikes, lock-outs, other serious labor disputes, floods, fires, explosions or other natural disasters. When such events have abated, the parties' respective obligations and rights shall resume. 52

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. ANADERM RESEARCH CORP.
By /s/ -----------------------------------------Title: President and Chief Executive Officer

OSI PHARMACEUTICALS, INC.
By /s/ -----------------------------------------Title: President and Chief Executive Officer

PFIZER INC
By /s/ -----------------------------------------Title Executive Vice President

53

APPENDIX A ** ** This portion has been redacted pursuant to a request for confidential treatment.

Portions of Exhibit 10.2 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

ANADERM RESEARCH CORP.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. ANADERM RESEARCH CORP.
By /s/ -----------------------------------------Title: President and Chief Executive Officer

OSI PHARMACEUTICALS, INC.
By /s/ -----------------------------------------Title: President and Chief Executive Officer

PFIZER INC
By /s/ -----------------------------------------Title Executive Vice President

53

APPENDIX A ** ** This portion has been redacted pursuant to a request for confidential treatment.

Portions of Exhibit 10.2 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

ANADERM RESEARCH CORP. Amended and Restated Stockholders' Agreement dated April 23, 1999 (in substitution for the Stockholders' Agreement dated April 23, 1996, as amended on September 10, 1998)

TABLE OF CONTENTS ARTICLE I - DEFINITIONS........................................................2 ARTICLE II - CAPITAL CONTRIBUTIONS.............................................5 2.1. Capital Contributions.............................................5 2.2. Non Disclosure....................................................7 ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES................7 3.1. Amendment and Restatement of Original Stockholders' Agreement.....7

APPENDIX A ** ** This portion has been redacted pursuant to a request for confidential treatment.

Portions of Exhibit 10.2 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

ANADERM RESEARCH CORP. Amended and Restated Stockholders' Agreement dated April 23, 1999 (in substitution for the Stockholders' Agreement dated April 23, 1996, as amended on September 10, 1998)

TABLE OF CONTENTS ARTICLE I - DEFINITIONS........................................................2 ARTICLE II - CAPITAL CONTRIBUTIONS.............................................5 2.1. Capital Contributions.............................................5 2.2. Non Disclosure....................................................7 ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES................7 3.1. Amendment and Restatement of Original Stockholders' Agreement.....7 3.2. Shares Subject to Agreement.......................................7 3.3. General Restriction on Transfer...................................7 3.4. Permitted Transfers...............................................8 ARTICLE IV - CORPORATE GOVERNANCE..............................................8 4.1. Board of Directors................................................8 4.2. Nomination and Election of Directors..............................9 4.3. Board of Directors................................................9 4.4. Officers of the Company...........................................9 4.5. Quorum of the Board..............................................10 4.6. Action by the Board of Directors.................................10 4.7. Quorum of Stockholders...........................................11 4.8. Action by Stockholder............................................11 ARTICLE V - DISPOSITION OF SHARES.............................................12 5.1. Right of First Refusal...........................................12 5.2. Involuntary Transfers............................................15 5.3. Put and Call Rights..............................................16 5.4. Fair Value.......................................................18 5.5. Tag Along Rights.................................................20 5.6. Take Along Right.................................................22 5.7. Stock Purchase Assignment........................................23 ARTICLE VI - PREEMPTIVE RIGHTS................................................23 6.1. Preemptive Rights................................................23 ARTICLE VII - DEVELOPMENT OF A LEAD COMPOUND..................................24 7.1. Pfizer's Right of First Refusal for Initial Development..........24 7.2. Pfizer's Right of First Refusal for Further Development..........26 7.3. Development by Pfizer............................................26 7.4. Development by the Company.......................................28 7.5. Analog Manufacture...............................................29 7.6. Approval of Analog Production and Screening......................29 7.7. Assignment of Analog Rights......................................29

Portions of Exhibit 10.2 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

ANADERM RESEARCH CORP. Amended and Restated Stockholders' Agreement dated April 23, 1999 (in substitution for the Stockholders' Agreement dated April 23, 1996, as amended on September 10, 1998)

TABLE OF CONTENTS ARTICLE I - DEFINITIONS........................................................2 ARTICLE II - CAPITAL CONTRIBUTIONS.............................................5 2.1. Capital Contributions.............................................5 2.2. Non Disclosure....................................................7 ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES................7 3.1. Amendment and Restatement of Original Stockholders' Agreement.....7 3.2. Shares Subject to Agreement.......................................7 3.3. General Restriction on Transfer...................................7 3.4. Permitted Transfers...............................................8 ARTICLE IV - CORPORATE GOVERNANCE..............................................8 4.1. Board of Directors................................................8 4.2. Nomination and Election of Directors..............................9 4.3. Board of Directors................................................9 4.4. Officers of the Company...........................................9 4.5. Quorum of the Board..............................................10 4.6. Action by the Board of Directors.................................10 4.7. Quorum of Stockholders...........................................11 4.8. Action by Stockholder............................................11 ARTICLE V - DISPOSITION OF SHARES.............................................12 5.1. Right of First Refusal...........................................12 5.2. Involuntary Transfers............................................15 5.3. Put and Call Rights..............................................16 5.4. Fair Value.......................................................18 5.5. Tag Along Rights.................................................20 5.6. Take Along Right.................................................22 5.7. Stock Purchase Assignment........................................23 ARTICLE VI - PREEMPTIVE RIGHTS................................................23 6.1. Preemptive Rights................................................23 ARTICLE VII - DEVELOPMENT OF A LEAD COMPOUND..................................24 7.1. Pfizer's Right of First Refusal for Initial Development..........24 7.2. Pfizer's Right of First Refusal for Further Development..........26 7.3. Development by Pfizer............................................26 7.4. Development by the Company.......................................28 7.5. Analog Manufacture...............................................29 7.6. Approval of Analog Production and Screening......................29 7.7. Assignment of Analog Rights......................................29

i

7.8. 7.9.

Development of Lead Compound for Different Indications...........29 Request to Cease Lead Compound Development.......................30

ARTICLE VIII - LEGENDING OF SECURITIES........................................30 8.1. Legends..........................................................30 ARTICLE IX - TERMINATION AND SURVIVAL OF PROVISIONS...........................31 9.1. Termination......................................................31

ANADERM RESEARCH CORP. Amended and Restated Stockholders' Agreement dated April 23, 1999 (in substitution for the Stockholders' Agreement dated April 23, 1996, as amended on September 10, 1998)

TABLE OF CONTENTS ARTICLE I - DEFINITIONS........................................................2 ARTICLE II - CAPITAL CONTRIBUTIONS.............................................5 2.1. Capital Contributions.............................................5 2.2. Non Disclosure....................................................7 ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES................7 3.1. Amendment and Restatement of Original Stockholders' Agreement.....7 3.2. Shares Subject to Agreement.......................................7 3.3. General Restriction on Transfer...................................7 3.4. Permitted Transfers...............................................8 ARTICLE IV - CORPORATE GOVERNANCE..............................................8 4.1. Board of Directors................................................8 4.2. Nomination and Election of Directors..............................9 4.3. Board of Directors................................................9 4.4. Officers of the Company...........................................9 4.5. Quorum of the Board..............................................10 4.6. Action by the Board of Directors.................................10 4.7. Quorum of Stockholders...........................................11 4.8. Action by Stockholder............................................11 ARTICLE V - DISPOSITION OF SHARES.............................................12 5.1. Right of First Refusal...........................................12 5.2. Involuntary Transfers............................................15 5.3. Put and Call Rights..............................................16 5.4. Fair Value.......................................................18 5.5. Tag Along Rights.................................................20 5.6. Take Along Right.................................................22 5.7. Stock Purchase Assignment........................................23 ARTICLE VI - PREEMPTIVE RIGHTS................................................23 6.1. Preemptive Rights................................................23 ARTICLE VII - DEVELOPMENT OF A LEAD COMPOUND..................................24 7.1. Pfizer's Right of First Refusal for Initial Development..........24 7.2. Pfizer's Right of First Refusal for Further Development..........26 7.3. Development by Pfizer............................................26 7.4. Development by the Company.......................................28 7.5. Analog Manufacture...............................................29 7.6. Approval of Analog Production and Screening......................29 7.7. Assignment of Analog Rights......................................29

i

7.8. 7.9.

Development of Lead Compound for Different Indications...........29 Request to Cease Lead Compound Development.......................30

ARTICLE VIII - LEGENDING OF SECURITIES........................................30 8.1. Legends..........................................................30 ARTICLE IX - TERMINATION AND SURVIVAL OF PROVISIONS...........................31 9.1. Termination......................................................31 9.2. Survival.........................................................31 ARTICLE X - REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS....................31 10.1. Representations and Warranties of Each Stockholder...............31 ARTICLE XI - INSUFFICIENT SURPLUS AND INSOLVENCY..............................33

TABLE OF CONTENTS ARTICLE I - DEFINITIONS........................................................2 ARTICLE II - CAPITAL CONTRIBUTIONS.............................................5 2.1. Capital Contributions.............................................5 2.2. Non Disclosure....................................................7 ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES................7 3.1. Amendment and Restatement of Original Stockholders' Agreement.....7 3.2. Shares Subject to Agreement.......................................7 3.3. General Restriction on Transfer...................................7 3.4. Permitted Transfers...............................................8 ARTICLE IV - CORPORATE GOVERNANCE..............................................8 4.1. Board of Directors................................................8 4.2. Nomination and Election of Directors..............................9 4.3. Board of Directors................................................9 4.4. Officers of the Company...........................................9 4.5. Quorum of the Board..............................................10 4.6. Action by the Board of Directors.................................10 4.7. Quorum of Stockholders...........................................11 4.8. Action by Stockholder............................................11 ARTICLE V - DISPOSITION OF SHARES.............................................12 5.1. Right of First Refusal...........................................12 5.2. Involuntary Transfers............................................15 5.3. Put and Call Rights..............................................16 5.4. Fair Value.......................................................18 5.5. Tag Along Rights.................................................20 5.6. Take Along Right.................................................22 5.7. Stock Purchase Assignment........................................23 ARTICLE VI - PREEMPTIVE RIGHTS................................................23 6.1. Preemptive Rights................................................23 ARTICLE VII - DEVELOPMENT OF A LEAD COMPOUND..................................24 7.1. Pfizer's Right of First Refusal for Initial Development..........24 7.2. Pfizer's Right of First Refusal for Further Development..........26 7.3. Development by Pfizer............................................26 7.4. Development by the Company.......................................28 7.5. Analog Manufacture...............................................29 7.6. Approval of Analog Production and Screening......................29 7.7. Assignment of Analog Rights......................................29

i

7.8. 7.9.

Development of Lead Compound for Different Indications...........29 Request to Cease Lead Compound Development.......................30

ARTICLE VIII - LEGENDING OF SECURITIES........................................30 8.1. Legends..........................................................30 ARTICLE IX - TERMINATION AND SURVIVAL OF PROVISIONS...........................31 9.1. Termination......................................................31 9.2. Survival.........................................................31 ARTICLE X - REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS....................31 10.1. Representations and Warranties of Each Stockholder...............31 ARTICLE XI - INSUFFICIENT SURPLUS AND INSOLVENCY..............................33 ARTICLE XII - MISCELLANEOUS...................................................34 12.1. Notices..........................................................34 12.2. Entire Agreement.................................................37 12.3. Governing Law....................................................38 APPENDIX A....................................................................40

ii

7.8. 7.9.

Development of Lead Compound for Different Indications...........29 Request to Cease Lead Compound Development.......................30

ARTICLE VIII - LEGENDING OF SECURITIES........................................30 8.1. Legends..........................................................30 ARTICLE IX - TERMINATION AND SURVIVAL OF PROVISIONS...........................31 9.1. Termination......................................................31 9.2. Survival.........................................................31 ARTICLE X - REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS....................31 10.1. Representations and Warranties of Each Stockholder...............31 ARTICLE XI - INSUFFICIENT SURPLUS AND INSOLVENCY..............................33 ARTICLE XII - MISCELLANEOUS...................................................34 12.1. Notices..........................................................34 12.2. Entire Agreement.................................................37 12.3. Governing Law....................................................38 APPENDIX A....................................................................40

ii

ANADERM RESTATED AND AMENDED STOCKHOLDERS' AGREEMENT THIS RESTATED AND AMENDED STOCKHOLDERS'AGREEMENT ("Agreement") is made as of the 23rd day of April 1999, among ANADERM RESEARCH CORP., a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017 (the "Company"), PFIZER INC., a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017 ("Pfizer"), OSI PHARMACEUTICALS, INC., a Delaware corporation, formerly known as Oncogene Science, Inc., having its principal place of business at 106 Charles Lindbergh Boulevard, Uniondale, New York 11553 ("OSI"), NEW YORK UNIVERSITY, a New York corporation, having a principal place of business at 550 First Avenue, New York, New York 10016 ("NYU"), ** , each having a business address at New York University Medical Center, 550 First Avenue, New York, New York 10016 ** collectively referred to herein as the "NYU Faculty Members"). Pfizer, OSI, NYU and the NYU Faculty Members shall collectively be referred to herein as the "Stockholders". WHEREAS, the Company was organized to discover, develop and market pharmaceutical products for the prevention or treatment of baldness and wrinkles, and for the control of skin and hair pigmentation; and ** This portion has been redacted pursuant to a request for confidential treatment.

WHEREAS, the Stockholders entered into a Stockholders' Agreement dated April 23, 1996 as amended by the Amendment to the Stockholders' Agreement dated September 10, 1998 (together the "Original Stockholders' Agreement") which they now wish to be amended and restated by this Agreement; WHEREAS, the NYU Faculty Members have exercised their options under the Stock Option Agreement defined in the Original Stockholders' Agreement; WHEREAS, the Stockholders have entered into a subscription agreement dated February 27, 1998 (the "Subscription Agreement") which provided for additional Stockholder capital contributions to the Company by certain of the Stockholders in exchange for shares in the Company; and WHEREAS, the parties to this Agreement believe it is in their mutual best interest to provide for continuity and harmony in the management and the policies of the Company and therefore the parties hereto wish to amend and restate the Original Stockholders' Agreement as set out below. NOW, THEREFORE, in consideration of the agreements and covenants contained herein and for other valuable

ANADERM RESTATED AND AMENDED STOCKHOLDERS' AGREEMENT THIS RESTATED AND AMENDED STOCKHOLDERS'AGREEMENT ("Agreement") is made as of the 23rd day of April 1999, among ANADERM RESEARCH CORP., a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017 (the "Company"), PFIZER INC., a Delaware corporation, having its principal place of business at 235 East 42nd Street, New York, New York 10017 ("Pfizer"), OSI PHARMACEUTICALS, INC., a Delaware corporation, formerly known as Oncogene Science, Inc., having its principal place of business at 106 Charles Lindbergh Boulevard, Uniondale, New York 11553 ("OSI"), NEW YORK UNIVERSITY, a New York corporation, having a principal place of business at 550 First Avenue, New York, New York 10016 ("NYU"), ** , each having a business address at New York University Medical Center, 550 First Avenue, New York, New York 10016 ** collectively referred to herein as the "NYU Faculty Members"). Pfizer, OSI, NYU and the NYU Faculty Members shall collectively be referred to herein as the "Stockholders". WHEREAS, the Company was organized to discover, develop and market pharmaceutical products for the prevention or treatment of baldness and wrinkles, and for the control of skin and hair pigmentation; and ** This portion has been redacted pursuant to a request for confidential treatment.

WHEREAS, the Stockholders entered into a Stockholders' Agreement dated April 23, 1996 as amended by the Amendment to the Stockholders' Agreement dated September 10, 1998 (together the "Original Stockholders' Agreement") which they now wish to be amended and restated by this Agreement; WHEREAS, the NYU Faculty Members have exercised their options under the Stock Option Agreement defined in the Original Stockholders' Agreement; WHEREAS, the Stockholders have entered into a subscription agreement dated February 27, 1998 (the "Subscription Agreement") which provided for additional Stockholder capital contributions to the Company by certain of the Stockholders in exchange for shares in the Company; and WHEREAS, the parties to this Agreement believe it is in their mutual best interest to provide for continuity and harmony in the management and the policies of the Company and therefore the parties hereto wish to amend and restate the Original Stockholders' Agreement as set out below. NOW, THEREFORE, in consideration of the agreements and covenants contained herein and for other valuable consideration, receipt of which is hereby acknowledged, it is mutually agreed and covenanted by and among the parties to this Agreement as follows: ARTICLE I - DEFINITIONS As used in this Agreement or any of the Schedules or Exhibits hereto, the following terms have the meanings indicated. All capitalized terms used but not defined herein shall have the same meanings ascribed to them, respectively, in the Research Agreements (as defined in this Article 1), as such may be amended from time to time. 2

1.1 "Affiliate" means any corporation or other legal entity owning, directly or indirectly, 50% or more of the voting capital shares or similar voting securities of the Company, OSI or Pfizer, or any corporation or other legal entity 50% or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by the Company, OSI or Pfizer. However, a foreign corporation or other legal entity shall be considered an Affiliate of the Company, OSI or Pfizer, if the Company, OSI or Pfizer, respectively, owns the maximum amount of voting securities of such corporation or entity that a U. S. company is permitted to own under the laws of the applicable foreign country and such maximum amount is at least 40%.

WHEREAS, the Stockholders entered into a Stockholders' Agreement dated April 23, 1996 as amended by the Amendment to the Stockholders' Agreement dated September 10, 1998 (together the "Original Stockholders' Agreement") which they now wish to be amended and restated by this Agreement; WHEREAS, the NYU Faculty Members have exercised their options under the Stock Option Agreement defined in the Original Stockholders' Agreement; WHEREAS, the Stockholders have entered into a subscription agreement dated February 27, 1998 (the "Subscription Agreement") which provided for additional Stockholder capital contributions to the Company by certain of the Stockholders in exchange for shares in the Company; and WHEREAS, the parties to this Agreement believe it is in their mutual best interest to provide for continuity and harmony in the management and the policies of the Company and therefore the parties hereto wish to amend and restate the Original Stockholders' Agreement as set out below. NOW, THEREFORE, in consideration of the agreements and covenants contained herein and for other valuable consideration, receipt of which is hereby acknowledged, it is mutually agreed and covenanted by and among the parties to this Agreement as follows: ARTICLE I - DEFINITIONS As used in this Agreement or any of the Schedules or Exhibits hereto, the following terms have the meanings indicated. All capitalized terms used but not defined herein shall have the same meanings ascribed to them, respectively, in the Research Agreements (as defined in this Article 1), as such may be amended from time to time. 2

1.1 "Affiliate" means any corporation or other legal entity owning, directly or indirectly, 50% or more of the voting capital shares or similar voting securities of the Company, OSI or Pfizer, or any corporation or other legal entity 50% or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by the Company, OSI or Pfizer. However, a foreign corporation or other legal entity shall be considered an Affiliate of the Company, OSI or Pfizer, if the Company, OSI or Pfizer, respectively, owns the maximum amount of voting securities of such corporation or entity that a U. S. company is permitted to own under the laws of the applicable foreign country and such maximum amount is at least 40%. 1.2 "Anaderm Royalty" shall have the meaning given to such term in Section 7.3 hereof. 1.3 "Common Stock" shall mean the common stock of the Company, but unless otherwise indicated, any reference to shares of Common Stock outstanding shall not include shares of Common Stock underlying unexercised options, warrants, rights or convertible securities of the Company (unless such reference states that such amount is determined after giving effect to such exercise or conversion, until such options, warrants or rights have been duly exercised or convertible securities duly converted.). 1.4 "Drug Product" means a product that contains one or more therapeutically active compounds or that relates to a method of administering or using one or more therapeutically active compounds. 1.5 "Fair Value" means the price per share of Common Stock determined in accordance with Section 5.4. 3

1.6 "Field" means the (a) stimulation or control of hair growth, (b) prevention or reversal of wrinkling of the skin, or (c) alteration of skin or hair pigmentation, in each case in human subjects. 1.7 "Involuntary Transfer" means any involuntary sale, transfer, encumbrance or other disposition by, or in which, any Stockholder is deprived or divested of any right, title or interest in or to its shares of Common Stock,

1.1 "Affiliate" means any corporation or other legal entity owning, directly or indirectly, 50% or more of the voting capital shares or similar voting securities of the Company, OSI or Pfizer, or any corporation or other legal entity 50% or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by the Company, OSI or Pfizer. However, a foreign corporation or other legal entity shall be considered an Affiliate of the Company, OSI or Pfizer, if the Company, OSI or Pfizer, respectively, owns the maximum amount of voting securities of such corporation or entity that a U. S. company is permitted to own under the laws of the applicable foreign country and such maximum amount is at least 40%. 1.2 "Anaderm Royalty" shall have the meaning given to such term in Section 7.3 hereof. 1.3 "Common Stock" shall mean the common stock of the Company, but unless otherwise indicated, any reference to shares of Common Stock outstanding shall not include shares of Common Stock underlying unexercised options, warrants, rights or convertible securities of the Company (unless such reference states that such amount is determined after giving effect to such exercise or conversion, until such options, warrants or rights have been duly exercised or convertible securities duly converted.). 1.4 "Drug Product" means a product that contains one or more therapeutically active compounds or that relates to a method of administering or using one or more therapeutically active compounds. 1.5 "Fair Value" means the price per share of Common Stock determined in accordance with Section 5.4. 3

1.6 "Field" means the (a) stimulation or control of hair growth, (b) prevention or reversal of wrinkling of the skin, or (c) alteration of skin or hair pigmentation, in each case in human subjects. 1.7 "Involuntary Transfer" means any involuntary sale, transfer, encumbrance or other disposition by, or in which, any Stockholder is deprived or divested of any right, title or interest in or to its shares of Common Stock, including, without limitation, any transfer in connection with a divorce, death, bankruptcy (whether voluntary or involuntary), reorganization, insolvency or similar proceeding, distraint, levy, attachment, execution or other involuntary event of any nature whatsoever. 1.8 "NYU Research Agreement" means the Research and Licensing Agreement dated as of April 23, 1999 among the Company, NYU and Pfizer. 1.9 "OSI Compound File" means compounds maintained by OSI. 1.10 "OSI Research Agreement" means the Collaborative Research Agreement dated as of April 23, 1999, among the Company, OSI and Pfizer. 1.11 "Permitted Transferee" shall have the meaning given to such term in Section 3.4. 1.12 "Pfizer Compound File" means the compounds maintained by Pfizer's Central Research Division. 1.13 "Pfizer Selected Library" means a Selected Library within the Pfizer Compound File. 1.14 "Research Agreements" means the OSI Research Agreement and the NYU Research Agreement. 4

1.15 "Third Party" means a party other than Pfizer, Anaderm, OSI, NYU or an Affiliate of Pfizer, OSI or Anaderm. 1.16 "Transferred Shares" shall have the meaning set out in Section 5.2.

1.6 "Field" means the (a) stimulation or control of hair growth, (b) prevention or reversal of wrinkling of the skin, or (c) alteration of skin or hair pigmentation, in each case in human subjects. 1.7 "Involuntary Transfer" means any involuntary sale, transfer, encumbrance or other disposition by, or in which, any Stockholder is deprived or divested of any right, title or interest in or to its shares of Common Stock, including, without limitation, any transfer in connection with a divorce, death, bankruptcy (whether voluntary or involuntary), reorganization, insolvency or similar proceeding, distraint, levy, attachment, execution or other involuntary event of any nature whatsoever. 1.8 "NYU Research Agreement" means the Research and Licensing Agreement dated as of April 23, 1999 among the Company, NYU and Pfizer. 1.9 "OSI Compound File" means compounds maintained by OSI. 1.10 "OSI Research Agreement" means the Collaborative Research Agreement dated as of April 23, 1999, among the Company, OSI and Pfizer. 1.11 "Permitted Transferee" shall have the meaning given to such term in Section 3.4. 1.12 "Pfizer Compound File" means the compounds maintained by Pfizer's Central Research Division. 1.13 "Pfizer Selected Library" means a Selected Library within the Pfizer Compound File. 1.14 "Research Agreements" means the OSI Research Agreement and the NYU Research Agreement. 4

1.15 "Third Party" means a party other than Pfizer, Anaderm, OSI, NYU or an Affiliate of Pfizer, OSI or Anaderm. 1.16 "Transferred Shares" shall have the meaning set out in Section 5.2. 1.17 "Valid Claim" shall have the meaning given to such term in either of the Research Agreements, as applicable. 1.18 For purposes of this Agreement, a Human Therapeutic Product is considered to be "based on" a Lead Compound which is identified by screening a Pfizer Selected Library if the Human Therapeutic Product contains, or relates to a method of administering or using a Lead Compound identified by screening, and is part of, a Pfizer Selected Library or by screening Analogs of a compound from a Pfizer Selected Library. ARTICLE II - CAPITAL CONTRIBUTIONS 2.1. Capital Contributions. (a) As of the date of this Agreement, the capital structure of the Company is:
SHARES OF COMMON STOCK ** TOTAL ISSUED SHARES ---------** **

OWNERSHIP INTEREST ** **

** This portion has been redacted pursuant to a request for confidential treatment.

1.15 "Third Party" means a party other than Pfizer, Anaderm, OSI, NYU or an Affiliate of Pfizer, OSI or Anaderm. 1.16 "Transferred Shares" shall have the meaning set out in Section 5.2. 1.17 "Valid Claim" shall have the meaning given to such term in either of the Research Agreements, as applicable. 1.18 For purposes of this Agreement, a Human Therapeutic Product is considered to be "based on" a Lead Compound which is identified by screening a Pfizer Selected Library if the Human Therapeutic Product contains, or relates to a method of administering or using a Lead Compound identified by screening, and is part of, a Pfizer Selected Library or by screening Analogs of a compound from a Pfizer Selected Library. ARTICLE II - CAPITAL CONTRIBUTIONS 2.1. Capital Contributions. (a) As of the date of this Agreement, the capital structure of the Company is:
SHARES OF COMMON STOCK ** TOTAL ISSUED SHARES ---------** **

OWNERSHIP INTEREST ** **

** This portion has been redacted pursuant to a request for confidential treatment. 5

(b) Capital Contribution. In order to provide additional funding for the Company, Pfizer shall have the right (but not the obligation) to subscribe in cash from time to time for additional shares of Common Stock at the price of ** per share, up to a maximum of ** shares of Common Stock and the Company shall issue such additional shares as subscribed by Pfizer. Any share subscription by Pfizer under this section shall not be subject to the provisions of Article 6 herein, which the parties hereto hereby waive on behalf of themselves and their successors and assigns in accordance with this Agreement. (c) Other Capital Contributions. In addition to the capital contributions provided for in this section, additional contributions may be made to the capital of the Company in accordance with the General Corporation Law of the State of Delaware, subject to the provisions of Section 6.1 hereof. (d) The Pfizer Compound File and Other Support by Pfizer for the Company. To support the Company's research activities and subject as set out below, Pfizer may from time to time at its discretion permit the Company to use certain compounds from the Pfizer Compound File as it exists from time to time, solely for screening purposes in connection with the Research Program provided that the selection of compounds for use in screening satisfies the Company's research goals and is consistent with Pfizer corporate policy. Prior to implementing any screens, the Company will propose screens to Pfizer and Pfizer shall have the right to approve such screens. At any time after Pfizer has made available to the

** This portion has been redacted pursuant to a request for confidential treatment. 6

(b) Capital Contribution. In order to provide additional funding for the Company, Pfizer shall have the right (but not the obligation) to subscribe in cash from time to time for additional shares of Common Stock at the price of ** per share, up to a maximum of ** shares of Common Stock and the Company shall issue such additional shares as subscribed by Pfizer. Any share subscription by Pfizer under this section shall not be subject to the provisions of Article 6 herein, which the parties hereto hereby waive on behalf of themselves and their successors and assigns in accordance with this Agreement. (c) Other Capital Contributions. In addition to the capital contributions provided for in this section, additional contributions may be made to the capital of the Company in accordance with the General Corporation Law of the State of Delaware, subject to the provisions of Section 6.1 hereof. (d) The Pfizer Compound File and Other Support by Pfizer for the Company. To support the Company's research activities and subject as set out below, Pfizer may from time to time at its discretion permit the Company to use certain compounds from the Pfizer Compound File as it exists from time to time, solely for screening purposes in connection with the Research Program provided that the selection of compounds for use in screening satisfies the Company's research goals and is consistent with Pfizer corporate policy. Prior to implementing any screens, the Company will propose screens to Pfizer and Pfizer shall have the right to approve such screens. At any time after Pfizer has made available to the

** This portion has been redacted pursuant to a request for confidential treatment. 6

Company a compound for screening under this Section 2.1(d), Pfizer may require that the Company immediately return such compound if Pfizer has designated it as a clinical candidate or a backup to a clinical candidate and the Company shall, if requested in writing by Pfizer, forthwith cease all development of such compound and return the same to Pfizer. (e) The OSI Compound File. To support the Company's research activities, OSI may from time to time at its discretion permit the Company to use certain compounds from the OSI Compound File as it exists from time to time, solely for screening purposes in connection with the Research Program, provided that the selection of compounds for use in screening satisfies the Company's research goals and is consistent with OSI corporate policy. 2.2. Non Disclosure. Pfizer shall not be obliged to disclose information relating to a Pfizer compound or Pfizer Selected Library, including but not limited to chemical structures, methods of synthesis, structure-activity relationships, materials and methods for production, recovery and purification. ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES 3.1. Amendment and Restatement of Original Stockholders' Agreement. Each of the Stockholders hereby acknowledges and agrees that the Original Stockholders' Agreement in its entirety is hereby amended and restated by this Agreement which shall apply in substitution therefor. 3.2. Shares Subject to Agreement. Each of the Stockholders hereby agrees that all shares of Common Stock held on the date hereof or acquired at any time hereafter by such Stockholder shall be subject to the provisions set forth in this Agreement. 3.3. General Restriction on Transfer. Each Stockholder hereby agrees not to sell, assign, hypothecate, transfer, pledge, encumber, give away, or otherwise dispose of any shares 7

of Common Stock that such Stockholder holds on the date hereof or acquires at any time hereafter except

Company a compound for screening under this Section 2.1(d), Pfizer may require that the Company immediately return such compound if Pfizer has designated it as a clinical candidate or a backup to a clinical candidate and the Company shall, if requested in writing by Pfizer, forthwith cease all development of such compound and return the same to Pfizer. (e) The OSI Compound File. To support the Company's research activities, OSI may from time to time at its discretion permit the Company to use certain compounds from the OSI Compound File as it exists from time to time, solely for screening purposes in connection with the Research Program, provided that the selection of compounds for use in screening satisfies the Company's research goals and is consistent with OSI corporate policy. 2.2. Non Disclosure. Pfizer shall not be obliged to disclose information relating to a Pfizer compound or Pfizer Selected Library, including but not limited to chemical structures, methods of synthesis, structure-activity relationships, materials and methods for production, recovery and purification. ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES 3.1. Amendment and Restatement of Original Stockholders' Agreement. Each of the Stockholders hereby acknowledges and agrees that the Original Stockholders' Agreement in its entirety is hereby amended and restated by this Agreement which shall apply in substitution therefor. 3.2. Shares Subject to Agreement. Each of the Stockholders hereby agrees that all shares of Common Stock held on the date hereof or acquired at any time hereafter by such Stockholder shall be subject to the provisions set forth in this Agreement. 3.3. General Restriction on Transfer. Each Stockholder hereby agrees not to sell, assign, hypothecate, transfer, pledge, encumber, give away, or otherwise dispose of any shares 7

of Common Stock that such Stockholder holds on the date hereof or acquires at any time hereafter except pursuant to and in compliance with the terms and conditions of this Agreement. The Company hereby agrees that it will not transfer or recognize any transfer of Common Stock except in compliance with the terms of this Agreement. All certificates representing shares of Common Stock of the Company shall be legended in accordance with Article VIII hereof. 3.4. Permitted Transfers. Notwithstanding any provision to the contrary in this Article III, any Stockholder may, upon prior notice thereof to the Company, transfer title to its shares of Common Stock to (i) a trust established by such Stockholder, if the sole beneficiaries of such trust are the Stockholder, the Stockholder's spouse or the Stockholder's children, (ii) an Affiliate of such Stockholder or, (iii) in the case of any transfer of shares of Common Stock pursuant to Article 5 to Pfizer (each a "Permitted Transferee"), provided that in the case of each of the foregoing, such Permitted Transferee executes an instrument satisfactory to the Company agreeing to be bound by the terms and provisions of this Agreement. ARTICLE IV - CORPORATE GOVERNANCE 4.1. Board of Directors. In accordance with the By-Laws of the Company and Section 141 of the General Corporation Law of the State of Delaware, the Board of Directors shall be responsible for the governance of the Company. On the date hereof the Board of Directors consists of ** persons as provided in Section 4.3. At any time after the date hereof, the number of directors may be increased or decreased as provided in the Company By-Laws.

** This portion has been redacted pursuant to a request for confidential treatment. 8

of Common Stock that such Stockholder holds on the date hereof or acquires at any time hereafter except pursuant to and in compliance with the terms and conditions of this Agreement. The Company hereby agrees that it will not transfer or recognize any transfer of Common Stock except in compliance with the terms of this Agreement. All certificates representing shares of Common Stock of the Company shall be legended in accordance with Article VIII hereof. 3.4. Permitted Transfers. Notwithstanding any provision to the contrary in this Article III, any Stockholder may, upon prior notice thereof to the Company, transfer title to its shares of Common Stock to (i) a trust established by such Stockholder, if the sole beneficiaries of such trust are the Stockholder, the Stockholder's spouse or the Stockholder's children, (ii) an Affiliate of such Stockholder or, (iii) in the case of any transfer of shares of Common Stock pursuant to Article 5 to Pfizer (each a "Permitted Transferee"), provided that in the case of each of the foregoing, such Permitted Transferee executes an instrument satisfactory to the Company agreeing to be bound by the terms and provisions of this Agreement. ARTICLE IV - CORPORATE GOVERNANCE 4.1. Board of Directors. In accordance with the By-Laws of the Company and Section 141 of the General Corporation Law of the State of Delaware, the Board of Directors shall be responsible for the governance of the Company. On the date hereof the Board of Directors consists of ** persons as provided in Section 4.3. At any time after the date hereof, the number of directors may be increased or decreased as provided in the Company By-Laws.

** This portion has been redacted pursuant to a request for confidential treatment. 8

4.2. Nomination and Election of Directors. As long as Pfizer owns a majority of the outstanding shares of Common Stock, the Stockholders agree that Pfizer shall have the right to nominate and appoint all members of the Board of Directors save, for so long as OSI remains a Stockholder, one, who shall be nominated by OSI. Pfizer and OSI each hereby agree to vote their respective shares of Common Stock for the election of the nominees of Pfizer and (if applicable) OSI in accordance with this Section 4.2. Should OSI cease to be a Stockholder, it shall promptly obtain the resignation of its nominated director and tender such resignation to the Company. 4.3. Board of Directors. The Stockholders hereby agree that on the date hereof the Board of Directors of the Company shall consist of the following five persons, each of whom is nominated by the Stockholder set forth opposite such directors name:
Name of Director ---------------** Nominated by: ------------**

4.4. Officers of the Company. The Stockholders acknowledge that the Board of Directors of the Company has elected, in accordance with the By-Laws, the following persons as officers of the Company in the positions set forth opposite their respective names:
Name ---** ---------Office -----**

** This portion has been redacted pursuant to a request for confidential treatment.

4.2. Nomination and Election of Directors. As long as Pfizer owns a majority of the outstanding shares of Common Stock, the Stockholders agree that Pfizer shall have the right to nominate and appoint all members of the Board of Directors save, for so long as OSI remains a Stockholder, one, who shall be nominated by OSI. Pfizer and OSI each hereby agree to vote their respective shares of Common Stock for the election of the nominees of Pfizer and (if applicable) OSI in accordance with this Section 4.2. Should OSI cease to be a Stockholder, it shall promptly obtain the resignation of its nominated director and tender such resignation to the Company. 4.3. Board of Directors. The Stockholders hereby agree that on the date hereof the Board of Directors of the Company shall consist of the following five persons, each of whom is nominated by the Stockholder set forth opposite such directors name:
Name of Director ---------------** Nominated by: ------------**

4.4. Officers of the Company. The Stockholders acknowledge that the Board of Directors of the Company has elected, in accordance with the By-Laws, the following persons as officers of the Company in the positions set forth opposite their respective names:
Name ---** ---------Office -----**

** This portion has been redacted pursuant to a request for confidential treatment. 9

4.5. Quorum of the Board. No action shall be taken at any meeting of the Board of Directors of the Company, unless at least a majority of the entire Board shall be present. For purposes of a quorum, any director may be present at any meeting in person, by means of telephone or similar communications equipment by means of which each person participating in the meeting can hear and speak to each other or, to the extent permitted by applicable law, by proxy. 4.6. Action by the Board of Directors. If a quorum exists, any action taken by the Board of Directors shall be authorized by the affirmative vote of a majority of those members of Board of Directors present at the meeting; provided, however, that: (a) with respect to action taken by the Board of Directors pursuant to Section 3.3 of the OSI Research Agreement concerning restrictions as to other research conducted by Pfizer in the Field, any such action shall require authorization by all of the members of the Board of Directors, and (b) the affirmative vote of ** members of the Board of Directors is required to take the following actions (unless, in the case of (vii) and (viii) such expenditures are provided for in the annual budget): (i) to authorize, issue or enter into any agreement providing for the issuance (contingent or otherwise) of any equity securities or any notes or debt securities containing equity features (including, without limitation, any notes or debt securities convertible into or exchangeable for equity securities) save that this sub-paragraph (i) shall not apply to any issue or agreement to issue additional shares of Common Stock to Pfizer under Section 2.1(b) of this Agreement;

** This portion has been redacted pursuant to a request for confidential treatment. 10

4.5. Quorum of the Board. No action shall be taken at any meeting of the Board of Directors of the Company, unless at least a majority of the entire Board shall be present. For purposes of a quorum, any director may be present at any meeting in person, by means of telephone or similar communications equipment by means of which each person participating in the meeting can hear and speak to each other or, to the extent permitted by applicable law, by proxy. 4.6. Action by the Board of Directors. If a quorum exists, any action taken by the Board of Directors shall be authorized by the affirmative vote of a majority of those members of Board of Directors present at the meeting; provided, however, that: (a) with respect to action taken by the Board of Directors pursuant to Section 3.3 of the OSI Research Agreement concerning restrictions as to other research conducted by Pfizer in the Field, any such action shall require authorization by all of the members of the Board of Directors, and (b) the affirmative vote of ** members of the Board of Directors is required to take the following actions (unless, in the case of (vii) and (viii) such expenditures are provided for in the annual budget): (i) to authorize, issue or enter into any agreement providing for the issuance (contingent or otherwise) of any equity securities or any notes or debt securities containing equity features (including, without limitation, any notes or debt securities convertible into or exchangeable for equity securities) save that this sub-paragraph (i) shall not apply to any issue or agreement to issue additional shares of Common Stock to Pfizer under Section 2.1(b) of this Agreement;

** This portion has been redacted pursuant to a request for confidential treatment. 10

(ii) to directly or indirectly redeem, purchase or otherwise acquire, any of the Company's equity securities; (iii) to make any amendments, modifications or changes to the Certificate of Incorporation or By-Laws of the Company, the OSI Research Agreement or the NYU Research Agreement; (iv) to hire, fire and determine the amount of compensation paid to Officers of the Company; (v) to sell, lease or otherwise dispose of more than 25% of the Company's assets in any transaction or series of transactions; (vi) to merge or consolidate with any person or entity; (vii) to create, incur, assume or suffer to exist any indebtedness exceeding in the aggregate $10,000 outstanding at any time other than in the ordinary course of business; or (viii) to make any capital expenditures exceeding $10,000 with respect to any single capital expenditure or $250,000 in the aggregate during any twelve-month period. 4.7. Quorum of Stockholders. No action shall be taken at any meeting of stockholders of the Company unless at least a majority of the holders of the outstanding shares of Common Stock entitled to vote are present in person or by proxy. 4.8. Action by Stockholder. If a quorum exists, any corporate action taken at a meeting of the stockholders, except as otherwise set forth herein and except as may be required by law, shall be authorized by the affirmative vote of a majority of the votes cast at a meeting of stockholders by the holders of shares of Common Stock entitled to vote thereon. 11

ARTICLE V - DISPOSITION OF SHARES

(ii) to directly or indirectly redeem, purchase or otherwise acquire, any of the Company's equity securities; (iii) to make any amendments, modifications or changes to the Certificate of Incorporation or By-Laws of the Company, the OSI Research Agreement or the NYU Research Agreement; (iv) to hire, fire and determine the amount of compensation paid to Officers of the Company; (v) to sell, lease or otherwise dispose of more than 25% of the Company's assets in any transaction or series of transactions; (vi) to merge or consolidate with any person or entity; (vii) to create, incur, assume or suffer to exist any indebtedness exceeding in the aggregate $10,000 outstanding at any time other than in the ordinary course of business; or (viii) to make any capital expenditures exceeding $10,000 with respect to any single capital expenditure or $250,000 in the aggregate during any twelve-month period. 4.7. Quorum of Stockholders. No action shall be taken at any meeting of stockholders of the Company unless at least a majority of the holders of the outstanding shares of Common Stock entitled to vote are present in person or by proxy. 4.8. Action by Stockholder. If a quorum exists, any corporate action taken at a meeting of the stockholders, except as otherwise set forth herein and except as may be required by law, shall be authorized by the affirmative vote of a majority of the votes cast at a meeting of stockholders by the holders of shares of Common Stock entitled to vote thereon. 11

ARTICLE V - DISPOSITION OF SHARES 5.1. Right of First Refusal (a) If NYU or any NYU Faculty Member (the "NYU Seller") desires to sell, transfer or otherwise dispose of any or all of his or its shares of Common Stock, such NYU Seller may offer to sell such shares (the "Offered Shares") to an unaffiliated Third Party for all cash payable at the closing of such sale, subject to the Company's rights as hereinafter set forth, or offer to sell such Offered Shares to the Company directly. The NYU Seller shall give written notice thereof (an "Offering Notice") to the Company, with a copy to each of the other Stockholders, which Offering Notice shall state or contain (i) the name of such NYU Stockholder, (ii) the number of Offered Shares, (iii) the name, address and the amount of cash proposed to be paid by a prospective purchaser pursuant to a bona fide offer (the "Offer Price"), if any, and all the other terms and conditions relating to such bona fide offer. The delivery by any NYU Seller of an Offering Notice shall constitute a binding offer by the NYU Seller to sell to the Company, and the Company shall thereupon have the right, but not the obligation, to purchase any or all, of the Offered Shares at the Offer Price (the applicable price being herein referred to as the "Purchase Price"); provided, however, that such Purchase Price shall be paid in accordance with Section 5.1(g) hereof. Within thirty (30) days after the Company's receipt of the Offering Notice, the Company shall notify the NYU Seller in writing of its acceptance or rejection of the offer to purchase the Offered Shares. (b) In the event that the Company elects to purchase all of the Offered Shares, the closing shall take place in accordance with Section 5.1(g) hereof. (c) In the event that the Company rejects the offer to purchase the Offered Shares from the NYU Seller or elects to purchase fewer than all of the Offered Shares, the 12

ARTICLE V - DISPOSITION OF SHARES 5.1. Right of First Refusal (a) If NYU or any NYU Faculty Member (the "NYU Seller") desires to sell, transfer or otherwise dispose of any or all of his or its shares of Common Stock, such NYU Seller may offer to sell such shares (the "Offered Shares") to an unaffiliated Third Party for all cash payable at the closing of such sale, subject to the Company's rights as hereinafter set forth, or offer to sell such Offered Shares to the Company directly. The NYU Seller shall give written notice thereof (an "Offering Notice") to the Company, with a copy to each of the other Stockholders, which Offering Notice shall state or contain (i) the name of such NYU Stockholder, (ii) the number of Offered Shares, (iii) the name, address and the amount of cash proposed to be paid by a prospective purchaser pursuant to a bona fide offer (the "Offer Price"), if any, and all the other terms and conditions relating to such bona fide offer. The delivery by any NYU Seller of an Offering Notice shall constitute a binding offer by the NYU Seller to sell to the Company, and the Company shall thereupon have the right, but not the obligation, to purchase any or all, of the Offered Shares at the Offer Price (the applicable price being herein referred to as the "Purchase Price"); provided, however, that such Purchase Price shall be paid in accordance with Section 5.1(g) hereof. Within thirty (30) days after the Company's receipt of the Offering Notice, the Company shall notify the NYU Seller in writing of its acceptance or rejection of the offer to purchase the Offered Shares. (b) In the event that the Company elects to purchase all of the Offered Shares, the closing shall take place in accordance with Section 5.1(g) hereof. (c) In the event that the Company rejects the offer to purchase the Offered Shares from the NYU Seller or elects to purchase fewer than all of the Offered Shares, the 12

NYU Seller shall deliver written notice thereof (the "Second Notice") to each of the other Stockholders with a copy to the Company, within ten (10) days after the NYU Seller's receipt of the Company's response to its offer. The Second Notice shall state or contain (i) the number of Offered Shares, (ii) the number of Offered Shares which the Company has agreed to purchase, if any, (iii) the number of Offered Shares available for sale to the other Stockholders, and (iv) the name, address and the Offer Price proposed to be paid by the prospective purchaser. The delivery by any NYU Seller of a Second Notice shall constitute a binding offer by the NYU Seller to sell to the Company and the other Stockholders, and the Company and the other Stockholders shall thereupon have the right, but not the obligation, to purchase in the aggregate, all, but not less than all, of the Offered Shares at the Purchase Price; provided, however that such Purchase Price shall be paid in accordance with Section 5.1(g) hereof. (d) Any Stockholder (other than the NYU Seller) electing to purchase Offered Shares shall deliver to the NYU Seller, with a copy to the Company, within twenty (20) days after the Second Notice is sent to the Stockholders (the "Acceptance Period"), a notice (an "Acceptance Notice") of such Stockholder's election stating the maximum number of Offered Shares which such Stockholder desires to purchase (such Stockholder's "Elected Share Number"). The giving of such Acceptance Notice shall irrevocably commit the Stockholder giving such notice (an "Electing Stockholder") to purchase the Elected Share Number (or any lesser number thereof as may be determined as hereinafter provided).

NYU Seller shall deliver written notice thereof (the "Second Notice") to each of the other Stockholders with a copy to the Company, within ten (10) days after the NYU Seller's receipt of the Company's response to its offer. The Second Notice shall state or contain (i) the number of Offered Shares, (ii) the number of Offered Shares which the Company has agreed to purchase, if any, (iii) the number of Offered Shares available for sale to the other Stockholders, and (iv) the name, address and the Offer Price proposed to be paid by the prospective purchaser. The delivery by any NYU Seller of a Second Notice shall constitute a binding offer by the NYU Seller to sell to the Company and the other Stockholders, and the Company and the other Stockholders shall thereupon have the right, but not the obligation, to purchase in the aggregate, all, but not less than all, of the Offered Shares at the Purchase Price; provided, however that such Purchase Price shall be paid in accordance with Section 5.1(g) hereof. (d) Any Stockholder (other than the NYU Seller) electing to purchase Offered Shares shall deliver to the NYU Seller, with a copy to the Company, within twenty (20) days after the Second Notice is sent to the Stockholders (the "Acceptance Period"), a notice (an "Acceptance Notice") of such Stockholder's election stating the maximum number of Offered Shares which such Stockholder desires to purchase (such Stockholder's "Elected Share Number"). The giving of such Acceptance Notice shall irrevocably commit the Stockholder giving such notice (an "Electing Stockholder") to purchase the Elected Share Number (or any lesser number thereof as may be determined as hereinafter provided). (e) In the event the Company, together with the Electing Stockholders, have not elected to purchase, in the aggregate, all of the Offered Shares, then the NYU Seller may sell the Offered Shares to the prospective purchaser at the Offer Price for cash consideration 13

payable at closing and on the other terms and conditions specified in the Offering Notice, and such sale shall take place within sixty (60) days after the expiration of the Acceptance Period; provided, however that such prospective purchaser shall execute an instrument satisfactory to the Company agreeing to be bound by the terms and provisions of this Agreement (including this Article 5). References herein to Stockholders and to shares of Common Stock held or owned by any Stockholder shall be deemed to include any such prospective purchaser that purchases Common Stock hereunder and such shares held or owned by such prospective purchaser, respectively. If such sale has not taken place within sixty (60) days following the expiration of the Acceptance Period, all the provisions contained in this Agreement shall again be in effect with respect to such Offered Shares. (f) If all of the Offered Shares offered to the Stockholders have been fully subscribed for by the Company and the Electing Stockholders pursuant to Section 5.1(e), then the Company shall send to the NYU Seller, within five days after the expiration of the Acceptance Period, a written notice to such effect and shall include in such notice the name of each Electing Stockholder, the number of such Offered Shares allocated to such Electing Stockholder and the Company for purchase and the closing date of the purchase and sale of the Offered Shares. In the event the Offered Shares available to the Electing Stockholders are oversubscribed for, the number of Offered Shares each Electing Stockholder shall be allocated shall be determined pro rata based on the percentage that each Electing Stockholder's shares of Common Stock bears to the total outstanding shares of Common Stock. (g) In the event that the Company and/or the Electing Stockholders, as the case may be, elect to purchase all of the Offered Shares under this Section 5.1, the closing of the purchase and sale of the Offered Shares shall take place at the principal executive offices of 14

the Company within thirty (30) days following the date the notice to such effect is given by the Company to the NYU Seller pursuant to Sections 5.1(a), 5.1(c) or 5.1(f) (whichever is applicable), or at such other place, on such other date, or both, as the NYU Seller, the Company and the Electing Stockholders, as applicable, may agree upon in writing. The Purchase Price payable by the Electing Stockholders and/or the Company hereunder shall be paid either (i) in full by cash or certified

payable at closing and on the other terms and conditions specified in the Offering Notice, and such sale shall take place within sixty (60) days after the expiration of the Acceptance Period; provided, however that such prospective purchaser shall execute an instrument satisfactory to the Company agreeing to be bound by the terms and provisions of this Agreement (including this Article 5). References herein to Stockholders and to shares of Common Stock held or owned by any Stockholder shall be deemed to include any such prospective purchaser that purchases Common Stock hereunder and such shares held or owned by such prospective purchaser, respectively. If such sale has not taken place within sixty (60) days following the expiration of the Acceptance Period, all the provisions contained in this Agreement shall again be in effect with respect to such Offered Shares. (f) If all of the Offered Shares offered to the Stockholders have been fully subscribed for by the Company and the Electing Stockholders pursuant to Section 5.1(e), then the Company shall send to the NYU Seller, within five days after the expiration of the Acceptance Period, a written notice to such effect and shall include in such notice the name of each Electing Stockholder, the number of such Offered Shares allocated to such Electing Stockholder and the Company for purchase and the closing date of the purchase and sale of the Offered Shares. In the event the Offered Shares available to the Electing Stockholders are oversubscribed for, the number of Offered Shares each Electing Stockholder shall be allocated shall be determined pro rata based on the percentage that each Electing Stockholder's shares of Common Stock bears to the total outstanding shares of Common Stock. (g) In the event that the Company and/or the Electing Stockholders, as the case may be, elect to purchase all of the Offered Shares under this Section 5.1, the closing of the purchase and sale of the Offered Shares shall take place at the principal executive offices of 14

the Company within thirty (30) days following the date the notice to such effect is given by the Company to the NYU Seller pursuant to Sections 5.1(a), 5.1(c) or 5.1(f) (whichever is applicable), or at such other place, on such other date, or both, as the NYU Seller, the Company and the Electing Stockholders, as applicable, may agree upon in writing. The Purchase Price payable by the Electing Stockholders and/or the Company hereunder shall be paid either (i) in full by cash or certified check at the closing of such purchase, or (ii) one-third of the Purchase Price shall be paid in cash or by certified check at the closing; and the balance of the Offer Price shall be payable on the first and second anniversaries of such closing in two equal annual installments, together with interest from the closing calculated on the amount of such installment at the prime rate, as in effect from time to time during the period prior to the payment of such installment, as published by Citibank N.A. 5.2. Involuntary Transfers If any Involuntary Transfer of Common Stock takes place, the following procedures shall apply: (a) Any Stockholder deprived or divested of any shares of Common Stock by Involuntary Transfer (the "Transferor") shall promptly give written notice thereof in reasonable detail to the Company. Any person or entity that takes or proposes to take any ownership interest in such shares of Common Stock (the "Transferred Shares") as a result of such Involuntary Transfer (the "Transferee") shall hold such interest subject to the rights of the Company as set forth in Section 5.2(b). (b) For a period of 180 days following the earlier to occur of receipt of the notice referred to in Section 5.2(a) or discovery of any Involuntary Transfer, the Company may purchase the Transferred Shares in accordance with Section 5.2(c), subject to the terms 15

set forth herein. If the Company elects to purchase the Transferred Shares, the Company shall notify the Transferee of its rights hereunder and specify the number of Transferred Shares to be purchased.

the Company within thirty (30) days following the date the notice to such effect is given by the Company to the NYU Seller pursuant to Sections 5.1(a), 5.1(c) or 5.1(f) (whichever is applicable), or at such other place, on such other date, or both, as the NYU Seller, the Company and the Electing Stockholders, as applicable, may agree upon in writing. The Purchase Price payable by the Electing Stockholders and/or the Company hereunder shall be paid either (i) in full by cash or certified check at the closing of such purchase, or (ii) one-third of the Purchase Price shall be paid in cash or by certified check at the closing; and the balance of the Offer Price shall be payable on the first and second anniversaries of such closing in two equal annual installments, together with interest from the closing calculated on the amount of such installment at the prime rate, as in effect from time to time during the period prior to the payment of such installment, as published by Citibank N.A. 5.2. Involuntary Transfers If any Involuntary Transfer of Common Stock takes place, the following procedures shall apply: (a) Any Stockholder deprived or divested of any shares of Common Stock by Involuntary Transfer (the "Transferor") shall promptly give written notice thereof in reasonable detail to the Company. Any person or entity that takes or proposes to take any ownership interest in such shares of Common Stock (the "Transferred Shares") as a result of such Involuntary Transfer (the "Transferee") shall hold such interest subject to the rights of the Company as set forth in Section 5.2(b). (b) For a period of 180 days following the earlier to occur of receipt of the notice referred to in Section 5.2(a) or discovery of any Involuntary Transfer, the Company may purchase the Transferred Shares in accordance with Section 5.2(c), subject to the terms 15

set forth herein. If the Company elects to purchase the Transferred Shares, the Company shall notify the Transferee of its rights hereunder and specify the number of Transferred Shares to be purchased. (c) The closing for any sale of Transferred Shares to the Company shall take place at the Company's principal executive office not later than sixty (60) days after the Transferee receives the notice referred to in Section 5.2(b) or 14 days after the determination of Fair Value, whichever is later. The purchase price payable by the Company for any Transferred Shares purchased hereunder shall be the Fair Value of such Transferred Shares. (d) In the event that the Company does not purchase all or any of the Transferred Shares pursuant to Section 5.2, the Transferee shall take and hold all rights and interests in any Transferred Shares that are not so purchased subject to the terms of this Agreement. 5.3. Put and Call Rights (a) On the terms and subject to the conditions set forth in Section 5.3, from the date of this Agreement until December 31, 1999, any of OSI, NYU and each of the NYU Faculty Members separately may require the Company or Pfizer to purchase all but not less than all of the shares of Common Stock held by each such Stockholder at the price set forth immediately below which is based on the formula attached hereto as Appendix A and agreed to by all of the Stockholders (the "Fixed Put Right"). The formula attached hereto as Appendix A was negotiated among OSI, Pfizer and the Company and thus it and the resulting Fixed Put Right Prices do not necessarily reflect the fair market value of the Company or the Common Stock as they might be determined pursuant to Section 5.4 or otherwise. Upon the exercise of the Fixed Put Right by each of OSI, NYU and/or each of the NYU Faculty, each exercising 16

Stockholder agrees to acknowledge in writing that it has been provided access to and has obtained all of the information that it has requested from Pfizer and the Company in connection with its negotiation of such formula and the resulting Fixed Put Right Prices.

set forth herein. If the Company elects to purchase the Transferred Shares, the Company shall notify the Transferee of its rights hereunder and specify the number of Transferred Shares to be purchased. (c) The closing for any sale of Transferred Shares to the Company shall take place at the Company's principal executive office not later than sixty (60) days after the Transferee receives the notice referred to in Section 5.2(b) or 14 days after the determination of Fair Value, whichever is later. The purchase price payable by the Company for any Transferred Shares purchased hereunder shall be the Fair Value of such Transferred Shares. (d) In the event that the Company does not purchase all or any of the Transferred Shares pursuant to Section 5.2, the Transferee shall take and hold all rights and interests in any Transferred Shares that are not so purchased subject to the terms of this Agreement. 5.3. Put and Call Rights (a) On the terms and subject to the conditions set forth in Section 5.3, from the date of this Agreement until December 31, 1999, any of OSI, NYU and each of the NYU Faculty Members separately may require the Company or Pfizer to purchase all but not less than all of the shares of Common Stock held by each such Stockholder at the price set forth immediately below which is based on the formula attached hereto as Appendix A and agreed to by all of the Stockholders (the "Fixed Put Right"). The formula attached hereto as Appendix A was negotiated among OSI, Pfizer and the Company and thus it and the resulting Fixed Put Right Prices do not necessarily reflect the fair market value of the Company or the Common Stock as they might be determined pursuant to Section 5.4 or otherwise. Upon the exercise of the Fixed Put Right by each of OSI, NYU and/or each of the NYU Faculty, each exercising 16

Stockholder agrees to acknowledge in writing that it has been provided access to and has obtained all of the information that it has requested from Pfizer and the Company in connection with its negotiation of such formula and the resulting Fixed Put Right Prices. Fixed Put Right Prices ** ** (b) On the terms and subject to the conditions set forth in Section 5.3, at any time subsequent to April 23, 2000, any of OSI, NYU and each of the NYU Faculty Members may require the Company or Pfizer to purchase all but not less than all of the shares of Common Stock held by each such Stockholder at a price equal to the Fair Value of such shares (the "Put Right"), subject to the limitations set forth in Section 11.1. (c) On the terms and subject to the conditions set forth in this Section 5.3, at any time subsequent to April 23, 2002, the Company, or Pfizer, as the case may be, may require OSI, NYU or any NYU Faculty Member to sell to the Company all but not less than all of the shares of Common Stock held by such Stockholder at a price equal to the Fair Value of such shares (the "Call Right"). (d) Any of OSI, NYU or any NYU Faculty Member may exercise the Fixed Put Right or the Put Right, as the case may be, by delivering to the Company, or Pfizer, as the case may be, with a copy to Pfizer, (if applicable), written notice setting forth the number of shares of Common Stock held by such Stockholder. The Company may exercise the Call Right with respect to OSI, NYU or any NYU Faculty Member by delivering to such Stockholder written notice setting forth the terms of the proposed purchase of Common Stock.

** This portion has been redacted pursuant to a request for confidential treatment. 17

Stockholder agrees to acknowledge in writing that it has been provided access to and has obtained all of the information that it has requested from Pfizer and the Company in connection with its negotiation of such formula and the resulting Fixed Put Right Prices. Fixed Put Right Prices ** ** (b) On the terms and subject to the conditions set forth in Section 5.3, at any time subsequent to April 23, 2000, any of OSI, NYU and each of the NYU Faculty Members may require the Company or Pfizer to purchase all but not less than all of the shares of Common Stock held by each such Stockholder at a price equal to the Fair Value of such shares (the "Put Right"), subject to the limitations set forth in Section 11.1. (c) On the terms and subject to the conditions set forth in this Section 5.3, at any time subsequent to April 23, 2002, the Company, or Pfizer, as the case may be, may require OSI, NYU or any NYU Faculty Member to sell to the Company all but not less than all of the shares of Common Stock held by such Stockholder at a price equal to the Fair Value of such shares (the "Call Right"). (d) Any of OSI, NYU or any NYU Faculty Member may exercise the Fixed Put Right or the Put Right, as the case may be, by delivering to the Company, or Pfizer, as the case may be, with a copy to Pfizer, (if applicable), written notice setting forth the number of shares of Common Stock held by such Stockholder. The Company may exercise the Call Right with respect to OSI, NYU or any NYU Faculty Member by delivering to such Stockholder written notice setting forth the terms of the proposed purchase of Common Stock.

** This portion has been redacted pursuant to a request for confidential treatment. 17

(e) Unless otherwise agreed to by the Company, or Pfizer, as the case may be, and the selling Stockholder(s), the closing of any purchase of Common Stock pursuant to the exercise of any Fixed Put Right, Put Right or any Call Right hereunder shall take place at the principal executive offices of the Company within sixty (60) days after the delivery of the notice referred to in Section 5.3(d) or, where applicable, 14 days after determination of Fair Value, whichever is later. With respect to the Put Right or Call Right, the Company or Pfizer, as the case may be, shall pay the Fair Value of such shares either (i) in full by cash or certified check at the closing, or (ii) one-third of the total amount due shall be paid in cash or by certified check at the closing, and the balance of the amount due shall be payable on the first and second anniversaries of such closing in two equal installments, together with interest on the amount of such installments from the date of closing calculated at the prime rate, as in effect from time to time during the period prior to the payment of such installment, as published by Citibank, N.A. If the Company or Pfizer elects to pay in installments under (ii) herein, the Company or Pfizer, as the case may be, shall execute a promissory note for the benefit of the Stockholders exercising their put and call rights concerning the first and second anniversary payments. In the case of an exercise of any Fixed Put Right, the Company or Pfizer (if applicable), shall pay the applicable price of such shares set forth in Section 5.3(a) in full by cash or certified check at the closing. 5.4. Fair Value Fair Value shall be calculated as follows: (a) During a 15 day period following the date on which a Put or Call Right is exercised under Section 5.3, the party or parties exercising such option ("Exerciser) (or its or their personal representative) and the Board of Directors of the Company and/or the 18

(e) Unless otherwise agreed to by the Company, or Pfizer, as the case may be, and the selling Stockholder(s), the closing of any purchase of Common Stock pursuant to the exercise of any Fixed Put Right, Put Right or any Call Right hereunder shall take place at the principal executive offices of the Company within sixty (60) days after the delivery of the notice referred to in Section 5.3(d) or, where applicable, 14 days after determination of Fair Value, whichever is later. With respect to the Put Right or Call Right, the Company or Pfizer, as the case may be, shall pay the Fair Value of such shares either (i) in full by cash or certified check at the closing, or (ii) one-third of the total amount due shall be paid in cash or by certified check at the closing, and the balance of the amount due shall be payable on the first and second anniversaries of such closing in two equal installments, together with interest on the amount of such installments from the date of closing calculated at the prime rate, as in effect from time to time during the period prior to the payment of such installment, as published by Citibank, N.A. If the Company or Pfizer elects to pay in installments under (ii) herein, the Company or Pfizer, as the case may be, shall execute a promissory note for the benefit of the Stockholders exercising their put and call rights concerning the first and second anniversary payments. In the case of an exercise of any Fixed Put Right, the Company or Pfizer (if applicable), shall pay the applicable price of such shares set forth in Section 5.3(a) in full by cash or certified check at the closing. 5.4. Fair Value Fair Value shall be calculated as follows: (a) During a 15 day period following the date on which a Put or Call Right is exercised under Section 5.3, the party or parties exercising such option ("Exerciser) (or its or their personal representative) and the Board of Directors of the Company and/or the 18

receiving party of the exercise notice, as the case may require, shall each submit to the other party or parties a proposal as to the fair market value of each share of Common Stock. If the differential between the highest proposal and the lowest proposal is not more than 10%, then the Fair Value shall be equal to the average of such proposals; or (b) In the event that the differential between the highest and lowest proposals under clause (a) above is more than 10% or if only one or no proposal is submitted under clause (a) above, then within ten business days after the submission of such proposals, the Board of Directors shall select and retain a qualified independent appraiser of closely held businesses (the "Appraiser). If the Exerciser, or, if the Exerciser is the Company, the receiving party does not submit written notice contesting the selection of the qualified independent appraiser within ten business days of being so informed of such selection, then the Board of Director's selection shall be final. If the Exerciser or, if the Exerciser is the Company, the receiving party timely submits such notice, then the Board of Directors shall request the American Arbitration Association in the City of New York to appoint promptly the Appraiser. The Exerciser(s) (or his or their personal representative), on the one hand, and the Board of Directors of the Company and/or the receiving party or parties of the exercise notice, as the case may require, on the other hand, shall each submit to the Appraiser such party's respective proposal as to the Fair Value (which proposal shall be the same proposal, if any, submitted under clause (a) above), together with such supporting data as such party deems relevant. The Appraiser shall then conduct its own evaluation of such opinions and such data, and shall conduct such independent procedures and investigation as the Appraiser shall deem necessary in order to form an opinion as to the fair market value of each share of Common Stock. In determining fair market value, the Appraiser shall assume that (i) the Company is 19

sold as a going concern in an organized auction, (ii) there is no discount for minority ownership, and (iii) there is a market for shares of the Company. The Appraiser shall within 30 days of receipt of the relevant parties' proposals, determine the Fair Value, which shall be within the range proposed by the Exerciser and the Board of Directors and/or receiving party. The Appraiser shall forthwith upon determination of Fair Value, give written notice of its determination to the Exerciser (or its personal representative), the receiving party and the Company. Unless the Board of Directors of the Company otherwise decides, the fees and expenses of the Appraiser shall

receiving party of the exercise notice, as the case may require, shall each submit to the other party or parties a proposal as to the fair market value of each share of Common Stock. If the differential between the highest proposal and the lowest proposal is not more than 10%, then the Fair Value shall be equal to the average of such proposals; or (b) In the event that the differential between the highest and lowest proposals under clause (a) above is more than 10% or if only one or no proposal is submitted under clause (a) above, then within ten business days after the submission of such proposals, the Board of Directors shall select and retain a qualified independent appraiser of closely held businesses (the "Appraiser). If the Exerciser, or, if the Exerciser is the Company, the receiving party does not submit written notice contesting the selection of the qualified independent appraiser within ten business days of being so informed of such selection, then the Board of Director's selection shall be final. If the Exerciser or, if the Exerciser is the Company, the receiving party timely submits such notice, then the Board of Directors shall request the American Arbitration Association in the City of New York to appoint promptly the Appraiser. The Exerciser(s) (or his or their personal representative), on the one hand, and the Board of Directors of the Company and/or the receiving party or parties of the exercise notice, as the case may require, on the other hand, shall each submit to the Appraiser such party's respective proposal as to the Fair Value (which proposal shall be the same proposal, if any, submitted under clause (a) above), together with such supporting data as such party deems relevant. The Appraiser shall then conduct its own evaluation of such opinions and such data, and shall conduct such independent procedures and investigation as the Appraiser shall deem necessary in order to form an opinion as to the fair market value of each share of Common Stock. In determining fair market value, the Appraiser shall assume that (i) the Company is 19

sold as a going concern in an organized auction, (ii) there is no discount for minority ownership, and (iii) there is a market for shares of the Company. The Appraiser shall within 30 days of receipt of the relevant parties' proposals, determine the Fair Value, which shall be within the range proposed by the Exerciser and the Board of Directors and/or receiving party. The Appraiser shall forthwith upon determination of Fair Value, give written notice of its determination to the Exerciser (or its personal representative), the receiving party and the Company. Unless the Board of Directors of the Company otherwise decides, the fees and expenses of the Appraiser shall be paid equally by the Exerciser (or its personal representative) and the Company. (c) If Fair Value is being calculated on Transferred Shares pursuant to an involuntary transfer under Section 5.2, the 15-day period referred to in (a) above starts on the day after the Company gives notice to the Transferee of its intention to purchase such Transferred Shares. The Transferee shall act as the Exerciser and submit a Fair Value proposal. 5.5. Tag Along Rights (a) In the event that one or more Stockholders propose to sell or otherwise dispose of shares representing more than fifty percent of the outstanding shares of Common Stock then outstanding (the "Majority Stockholders") in one or a series of transactions to any Third Party (other than a Permitted Transferee), such Majority Stockholders shall not consummate or enter into any agreement to consummate such sale unless such Third Party purchaser offers to purchase from each other Stockholder the number of shares of such other Stockholder's Common Stock as determined in accordance with Section 5.5(b) at the same price and on the same other terms as such purchaser offered to purchase such shares from the 20

Majority Stockholders ("Tag Along Rights"). Any Stockholder proposing to sell or otherwise dispose of its Common Stock to a Third Party purchaser pursuant to Section 5.5 shall agree, and be able, to transfer to such purchaser good and marketable title to the shares that such Stockholder proposes to sell, free and clear of all liens, claims and encumbrances. (b) The maximum number of shares of Common Stock that any Stockholder may require any Third Party to purchase pursuant to Section 5.5(a) shall be the total number of shares of Common Stock owned by each such

sold as a going concern in an organized auction, (ii) there is no discount for minority ownership, and (iii) there is a market for shares of the Company. The Appraiser shall within 30 days of receipt of the relevant parties' proposals, determine the Fair Value, which shall be within the range proposed by the Exerciser and the Board of Directors and/or receiving party. The Appraiser shall forthwith upon determination of Fair Value, give written notice of its determination to the Exerciser (or its personal representative), the receiving party and the Company. Unless the Board of Directors of the Company otherwise decides, the fees and expenses of the Appraiser shall be paid equally by the Exerciser (or its personal representative) and the Company. (c) If Fair Value is being calculated on Transferred Shares pursuant to an involuntary transfer under Section 5.2, the 15-day period referred to in (a) above starts on the day after the Company gives notice to the Transferee of its intention to purchase such Transferred Shares. The Transferee shall act as the Exerciser and submit a Fair Value proposal. 5.5. Tag Along Rights (a) In the event that one or more Stockholders propose to sell or otherwise dispose of shares representing more than fifty percent of the outstanding shares of Common Stock then outstanding (the "Majority Stockholders") in one or a series of transactions to any Third Party (other than a Permitted Transferee), such Majority Stockholders shall not consummate or enter into any agreement to consummate such sale unless such Third Party purchaser offers to purchase from each other Stockholder the number of shares of such other Stockholder's Common Stock as determined in accordance with Section 5.5(b) at the same price and on the same other terms as such purchaser offered to purchase such shares from the 20

Majority Stockholders ("Tag Along Rights"). Any Stockholder proposing to sell or otherwise dispose of its Common Stock to a Third Party purchaser pursuant to Section 5.5 shall agree, and be able, to transfer to such purchaser good and marketable title to the shares that such Stockholder proposes to sell, free and clear of all liens, claims and encumbrances. (b) The maximum number of shares of Common Stock that any Stockholder may require any Third Party to purchase pursuant to Section 5.5(a) shall be the total number of shares of Common Stock owned by each such Stockholder multiplied by the percentage that the total number of shares of Common Stock to be purchased by the Third Party bears to the total number of outstanding shares of Common Stock. (c) Prior to any sale under Section 5.5(a), the Majority Stockholders shall notify the Company and each of the other Stockholders in writing of such proposed sale, setting forth (i) the number of shares of Common Stock that such Stockholder proposes to sell, (ii) the name and address of the Third Party purchaser; and (iii) the amount of consideration (including the value of any non-cash consideration) offered by the Third Party purchaser. Within ten (10) days after receiving the foregoing notice, any Stockholder may elect to exercise its Tag Along Rights by delivering written notice to the Majority Stockholders of such Stockholder's election to sell the shares of Common Stock offered for sale pursuant to Section 5.5. If none of the Stockholders so notifies the Majority Stockholders within the foregoing ten (10) day period, then the Majority Stockholders shall have the right to effect the proposed sale of such shares for a period of sixty (60) days thereafter on substantially the same terms and conditions as such shares were offered to the other Stockholders. 21

5.6. Take Along Right (a) If Pfizer, and for so long as OSI's percentage ownership of Common Stock outstanding is greater than ten percent, OSI (the "Control Group") approve any sale of the Company by merger, consolidation, sale of the Company's assets, sale of Common Stock or otherwise, to any person other than a member of the Control Group or an Affiliate of a member of the Control Group, each of the other Stockholders hereby agree to consent to, vote for and raise no objections against, such sale. If such sale is structured as a sale of all of the outstanding Common Stock, each other Stockholder hereby agrees to sell all of its shares of Common Stock on the terms

Majority Stockholders ("Tag Along Rights"). Any Stockholder proposing to sell or otherwise dispose of its Common Stock to a Third Party purchaser pursuant to Section 5.5 shall agree, and be able, to transfer to such purchaser good and marketable title to the shares that such Stockholder proposes to sell, free and clear of all liens, claims and encumbrances. (b) The maximum number of shares of Common Stock that any Stockholder may require any Third Party to purchase pursuant to Section 5.5(a) shall be the total number of shares of Common Stock owned by each such Stockholder multiplied by the percentage that the total number of shares of Common Stock to be purchased by the Third Party bears to the total number of outstanding shares of Common Stock. (c) Prior to any sale under Section 5.5(a), the Majority Stockholders shall notify the Company and each of the other Stockholders in writing of such proposed sale, setting forth (i) the number of shares of Common Stock that such Stockholder proposes to sell, (ii) the name and address of the Third Party purchaser; and (iii) the amount of consideration (including the value of any non-cash consideration) offered by the Third Party purchaser. Within ten (10) days after receiving the foregoing notice, any Stockholder may elect to exercise its Tag Along Rights by delivering written notice to the Majority Stockholders of such Stockholder's election to sell the shares of Common Stock offered for sale pursuant to Section 5.5. If none of the Stockholders so notifies the Majority Stockholders within the foregoing ten (10) day period, then the Majority Stockholders shall have the right to effect the proposed sale of such shares for a period of sixty (60) days thereafter on substantially the same terms and conditions as such shares were offered to the other Stockholders. 21

5.6. Take Along Right (a) If Pfizer, and for so long as OSI's percentage ownership of Common Stock outstanding is greater than ten percent, OSI (the "Control Group") approve any sale of the Company by merger, consolidation, sale of the Company's assets, sale of Common Stock or otherwise, to any person other than a member of the Control Group or an Affiliate of a member of the Control Group, each of the other Stockholders hereby agree to consent to, vote for and raise no objections against, such sale. If such sale is structured as a sale of all of the outstanding Common Stock, each other Stockholder hereby agrees to sell all of its shares of Common Stock on the terms approved by the Control Group and to take all reasonable actions requested by the Control Group or the purchaser in connection with the consummation of any such sale ("Take Along Right"). As consideration for the sale of such Stockholders' shares of Common Stock, each Stockholder will receive for each share of Common Stock cash and the fair market value of any non-cash consideration in the same amount as the Control Group receives for the sale of each share of Common Stock. (b) If the closing of any sale of Common Stock pursuant to Section 5.6(a) has not been effected within 180 days after the Control Group first approves of such sale, the obligation of any Stockholder to participate in such sale shall terminate and the provisions of Section 5.6 shall be reinstated. (c) Nothing contained in Section 5.6 shall obligate the Control Group to consummate any sale or the Company hereunder, and the Control Group may abandon any such sale at any time. If any such proposed sale is abandoned, the Control Group shall promptly send written notice thereof to each of the other Stockholders. 22

5.7. Stock Purchase Assignment. Any right or obligation of the Company under Article 5 of this Agreement to purchase Common Stock of a Stockholder may be assigned by the Company to Pfizer. Pfizer shall not be under any legal obligation to accept such assignment unless it so agrees in writing. ARTICLE VI - PREEMPTIVE RIGHTS 6.1. Preemptive Rights.

5.6. Take Along Right (a) If Pfizer, and for so long as OSI's percentage ownership of Common Stock outstanding is greater than ten percent, OSI (the "Control Group") approve any sale of the Company by merger, consolidation, sale of the Company's assets, sale of Common Stock or otherwise, to any person other than a member of the Control Group or an Affiliate of a member of the Control Group, each of the other Stockholders hereby agree to consent to, vote for and raise no objections against, such sale. If such sale is structured as a sale of all of the outstanding Common Stock, each other Stockholder hereby agrees to sell all of its shares of Common Stock on the terms approved by the Control Group and to take all reasonable actions requested by the Control Group or the purchaser in connection with the consummation of any such sale ("Take Along Right"). As consideration for the sale of such Stockholders' shares of Common Stock, each Stockholder will receive for each share of Common Stock cash and the fair market value of any non-cash consideration in the same amount as the Control Group receives for the sale of each share of Common Stock. (b) If the closing of any sale of Common Stock pursuant to Section 5.6(a) has not been effected within 180 days after the Control Group first approves of such sale, the obligation of any Stockholder to participate in such sale shall terminate and the provisions of Section 5.6 shall be reinstated. (c) Nothing contained in Section 5.6 shall obligate the Control Group to consummate any sale or the Company hereunder, and the Control Group may abandon any such sale at any time. If any such proposed sale is abandoned, the Control Group shall promptly send written notice thereof to each of the other Stockholders. 22

5.7. Stock Purchase Assignment. Any right or obligation of the Company under Article 5 of this Agreement to purchase Common Stock of a Stockholder may be assigned by the Company to Pfizer. Pfizer shall not be under any legal obligation to accept such assignment unless it so agrees in writing. ARTICLE VI - PREEMPTIVE RIGHTS 6.1. Preemptive Rights. (a) Except as permitted by Section 2.1(b) herein, after the date hereof, the Company shall not issue any additional shares of Common Stock ("New Shares") to any person or entity (the "New Stockholder") unless the Company grants to all Stockholders the right to subscribe for and purchase the same aggregate number of additional shares of Common Stock (the "Preemptive Shares") as the number of New Shares, at the same price and upon the same terms as the New Shares are being offered. The Company shall determine the number of Preemptive Shares to be offered to each Stockholder by multiplying the total number of Preemptive Shares by the percentage that each such Stockholder's shares of Common Stock bears to the total number of shares of Common Stock outstanding immediately prior to the issuance of New Shares and Preemptive Shares hereunder. Notwithstanding the foregoing, there shall be no preemptive rights by reason of any underwritten public offering. (b) Prior to the issuance of any New Shares pursuant to Section 6.1, the Company shall give each Stockholder written notice setting forth the terms upon which such Stockholder may purchase Preemptive Shares hereunder. (c) After receiving the notice described in Section 6.1(b), any Stockholder may exercise its preemptive rights hereunder by replying in writing within twenty (20) days 23

after the date of such notice that such Stockholder agrees to purchase the Preemptive Shares offered pursuant to Section 6.1. Each Stockholder may exercise preemptive rights with respect to all, but not less than all, of the Preemptive Shares that such Stockholder has the right to purchase pursuant to Section 6. 1.

5.7. Stock Purchase Assignment. Any right or obligation of the Company under Article 5 of this Agreement to purchase Common Stock of a Stockholder may be assigned by the Company to Pfizer. Pfizer shall not be under any legal obligation to accept such assignment unless it so agrees in writing. ARTICLE VI - PREEMPTIVE RIGHTS 6.1. Preemptive Rights. (a) Except as permitted by Section 2.1(b) herein, after the date hereof, the Company shall not issue any additional shares of Common Stock ("New Shares") to any person or entity (the "New Stockholder") unless the Company grants to all Stockholders the right to subscribe for and purchase the same aggregate number of additional shares of Common Stock (the "Preemptive Shares") as the number of New Shares, at the same price and upon the same terms as the New Shares are being offered. The Company shall determine the number of Preemptive Shares to be offered to each Stockholder by multiplying the total number of Preemptive Shares by the percentage that each such Stockholder's shares of Common Stock bears to the total number of shares of Common Stock outstanding immediately prior to the issuance of New Shares and Preemptive Shares hereunder. Notwithstanding the foregoing, there shall be no preemptive rights by reason of any underwritten public offering. (b) Prior to the issuance of any New Shares pursuant to Section 6.1, the Company shall give each Stockholder written notice setting forth the terms upon which such Stockholder may purchase Preemptive Shares hereunder. (c) After receiving the notice described in Section 6.1(b), any Stockholder may exercise its preemptive rights hereunder by replying in writing within twenty (20) days 23

after the date of such notice that such Stockholder agrees to purchase the Preemptive Shares offered pursuant to Section 6.1. Each Stockholder may exercise preemptive rights with respect to all, but not less than all, of the Preemptive Shares that such Stockholder has the right to purchase pursuant to Section 6. 1. (d) If any Stockholder fails to reply in accordance with Section 6.1(c), the Company shall have ninety (90) days thereafter to consummate the sale of Common Stock to a New Stockholder pursuant to Section 6. 1. If the Company has not consummated such sale within such ninety (90) day period, the Company may not sell shares of common stock subsequently to any New Stockholder without first offering the Stockholders preemptive rights with respect to such shares in the manner provided for in Section 6.1. (e) If the offering price for any New Shares consists of any consideration other than cash, then the price at which the Stockholders shall be offered preemptive rights hereunder with respect to any Preemptive Shares shall be determined by an independent appraiser selected by the Company. Any Stockholder purchasing Preemptive Shares hereunder shall pay the purchase price therefor to the Company in cash; provided, however, that after obtaining the consent of the Board of Directors of the Company, OSI may give consideration other than cash if the value of such non-cash consideration is determined by such independent appraiser to be at least equal to the amount of consideration proposed to be paid by the New Stockholder for the New Shares hereunder. ARTICLE VII - DEVELOPMENT OF A LEAD COMPOUND 7.1. Pfizer's Right of First Refusal for Initial Development. (a) If the Company makes a preliminary assessment that any compound that was invented, or for which a New Use was invented, by any person in the course of such 24

person's participation in the Research Program is or may be effective in treating any indication in the Field or the

after the date of such notice that such Stockholder agrees to purchase the Preemptive Shares offered pursuant to Section 6.1. Each Stockholder may exercise preemptive rights with respect to all, but not less than all, of the Preemptive Shares that such Stockholder has the right to purchase pursuant to Section 6. 1. (d) If any Stockholder fails to reply in accordance with Section 6.1(c), the Company shall have ninety (90) days thereafter to consummate the sale of Common Stock to a New Stockholder pursuant to Section 6. 1. If the Company has not consummated such sale within such ninety (90) day period, the Company may not sell shares of common stock subsequently to any New Stockholder without first offering the Stockholders preemptive rights with respect to such shares in the manner provided for in Section 6.1. (e) If the offering price for any New Shares consists of any consideration other than cash, then the price at which the Stockholders shall be offered preemptive rights hereunder with respect to any Preemptive Shares shall be determined by an independent appraiser selected by the Company. Any Stockholder purchasing Preemptive Shares hereunder shall pay the purchase price therefor to the Company in cash; provided, however, that after obtaining the consent of the Board of Directors of the Company, OSI may give consideration other than cash if the value of such non-cash consideration is determined by such independent appraiser to be at least equal to the amount of consideration proposed to be paid by the New Stockholder for the New Shares hereunder. ARTICLE VII - DEVELOPMENT OF A LEAD COMPOUND 7.1. Pfizer's Right of First Refusal for Initial Development. (a) If the Company makes a preliminary assessment that any compound that was invented, or for which a New Use was invented, by any person in the course of such 24

person's participation in the Research Program is or may be effective in treating any indication in the Field or the Dermatology Indications, such compound shall be considered a Lead Compound and the Company shall promptly present such compound or New Use to Pfizer. Within sixty (60) days of such presentation, Pfizer may notify the Company in writing of Pfizer's election to (i) make an additional capital contribution to the Company to enable the Company to further develop such Lead Compound or New Use, or (ii) negotiate the terms pursuant to which Pfizer may collaborate with the Company in the development of such Lead Compound or New Use, or acquire all of the Company's rights and interests in such Lead Compound or New Use. Any rights acquired by Pfizer from the Company hereunder with respect to any Lead Compound are subject to the royalty fees payable to OSI and NYU under the Research Agreements and the royalty fees payable to the Company under Section 7.3 hereof. (b) If Pfizer makes any additional capital contribution to the Company pursuant to Section 7.1(a)(i), any additional shares of Common Stock issued in exchange therefor are subject to the preemptive rights provisions of Section 6.1. (c) If Pfizer elects not to exercise its right of first refusal pursuant to Section 7.1(a), or if Pfizer fails to pursue diligently the development of any Lead Compound or New Use with respect to which it has obtained rights under Section 7.1(a)(ii), which determination shall be made by the Board of Directors of the Company, then the Company may further develop and market such Lead Compound or New Use independently, or the Company may enter into licensing, joint venture or other arrangements with third parties to facilitate such development. 25

7.2. Pfizer's Right of First Refusal for Further Development. (a) If any Lead Compound or New Use developed by the Company with respect to which Pfizer has made a capital contribution pursuant to Section 7.1(a)(i) reaches the stage where the Company has decided to submit an application to the Food and Drug Administration for designation of such Lead Compound or New Use as an

person's participation in the Research Program is or may be effective in treating any indication in the Field or the Dermatology Indications, such compound shall be considered a Lead Compound and the Company shall promptly present such compound or New Use to Pfizer. Within sixty (60) days of such presentation, Pfizer may notify the Company in writing of Pfizer's election to (i) make an additional capital contribution to the Company to enable the Company to further develop such Lead Compound or New Use, or (ii) negotiate the terms pursuant to which Pfizer may collaborate with the Company in the development of such Lead Compound or New Use, or acquire all of the Company's rights and interests in such Lead Compound or New Use. Any rights acquired by Pfizer from the Company hereunder with respect to any Lead Compound are subject to the royalty fees payable to OSI and NYU under the Research Agreements and the royalty fees payable to the Company under Section 7.3 hereof. (b) If Pfizer makes any additional capital contribution to the Company pursuant to Section 7.1(a)(i), any additional shares of Common Stock issued in exchange therefor are subject to the preemptive rights provisions of Section 6.1. (c) If Pfizer elects not to exercise its right of first refusal pursuant to Section 7.1(a), or if Pfizer fails to pursue diligently the development of any Lead Compound or New Use with respect to which it has obtained rights under Section 7.1(a)(ii), which determination shall be made by the Board of Directors of the Company, then the Company may further develop and market such Lead Compound or New Use independently, or the Company may enter into licensing, joint venture or other arrangements with third parties to facilitate such development. 25

7.2. Pfizer's Right of First Refusal for Further Development. (a) If any Lead Compound or New Use developed by the Company with respect to which Pfizer has made a capital contribution pursuant to Section 7.1(a)(i) reaches the stage where the Company has decided to submit an application to the Food and Drug Administration for designation of such Lead Compound or New Use as an Investigational New Drug, or to pursue clinical testing of such Lead Compound or New Use in humans, the Company shall present such Lead Compound or New Use to Pfizer. Within sixty (60) days of such presentation, Pfizer shall notify the Company in writing if Pfizer elects to negotiate the terms under which it may acquire the Company's rights and interest in such Lead Compound or New Use. Any such rights acquired by Pfizer are subject to the royalty fees payable to OSI and NYU under the Research Agreements and the royalty fees payable to the Company under Article 7.3 hereof. (b) If Pfizer elects not to exercise its right of first refusal pursuant to Section 7.2(a), then the Company may further develop and market such Lead Compound or New Use independently, or by entering into licensing, joint venture or other arrangements with third parties to facilitate such development. 7.3. Development by Pfizer. (a) If Pfizer acquires rights in any Lead Compound pursuant to Section 7.1 or 7.2 hereof, Pfizer shall pay to the Company a royalty equal to: (i) ** of the Net Sales of any Human Therapeutic Product based on such Lead Compound; or (ii) ** of the Net Sales of any Human Therapeutic Product where the Lead Compound has been identified by screening

** This portion has been redacted pursuant to a request for confidential treatment. 26

and is part of a Pfizer Selected Library or by screening of Analogs of a compound from a Pfizer Selected Library (the "Anaderm Royalty".) The Anaderm Royalty shall be in addition to, and not in lieu of, any royalties or other payments that may be due to NYU or OSI under the Research Agreements. The Anaderm Royalty shall be paid

7.2. Pfizer's Right of First Refusal for Further Development. (a) If any Lead Compound or New Use developed by the Company with respect to which Pfizer has made a capital contribution pursuant to Section 7.1(a)(i) reaches the stage where the Company has decided to submit an application to the Food and Drug Administration for designation of such Lead Compound or New Use as an Investigational New Drug, or to pursue clinical testing of such Lead Compound or New Use in humans, the Company shall present such Lead Compound or New Use to Pfizer. Within sixty (60) days of such presentation, Pfizer shall notify the Company in writing if Pfizer elects to negotiate the terms under which it may acquire the Company's rights and interest in such Lead Compound or New Use. Any such rights acquired by Pfizer are subject to the royalty fees payable to OSI and NYU under the Research Agreements and the royalty fees payable to the Company under Article 7.3 hereof. (b) If Pfizer elects not to exercise its right of first refusal pursuant to Section 7.2(a), then the Company may further develop and market such Lead Compound or New Use independently, or by entering into licensing, joint venture or other arrangements with third parties to facilitate such development. 7.3. Development by Pfizer. (a) If Pfizer acquires rights in any Lead Compound pursuant to Section 7.1 or 7.2 hereof, Pfizer shall pay to the Company a royalty equal to: (i) ** of the Net Sales of any Human Therapeutic Product based on such Lead Compound; or (ii) ** of the Net Sales of any Human Therapeutic Product where the Lead Compound has been identified by screening

** This portion has been redacted pursuant to a request for confidential treatment. 26

and is part of a Pfizer Selected Library or by screening of Analogs of a compound from a Pfizer Selected Library (the "Anaderm Royalty".) The Anaderm Royalty shall be in addition to, and not in lieu of, any royalties or other payments that may be due to NYU or OSI under the Research Agreements. The Anaderm Royalty shall be paid to the Company, notwithstanding the termination provisions of Article 9 of this Agreement, for a period of ten years beginning with the first commercial sale of such Human Therapeutic Product in any country, unless at the end of such ten year period there exists in that country a Valid Claim of an issued patent to such Human Therapeutic Product, a compound or composition contained therein, a method or process employed in making such Human Therapeutic Product, or a method of use for which such Human Therapeutic Product is being marketed in that country, in which case Pfizer shall continue to pay the Anaderm Royalty to the Company on Net Sales of such Human Therapeutic Compound in such country during the period in which such Valid Claim exists in that country. (b) If Pfizer decides to negotiate an agreement with a Third Party pursuant to which Pfizer would grant such Third Party a license under Pfizer's rights in any Lead Compound or Human Therapeutic Product, which rights Pfizer acquired from the Company pursuant to its Rights of First Refusal under Section 7.1 or 7.2 hereof, and Pfizer determines that payment of the Anaderm Royalty would render the proposed licensing arrangement commercially unfeasible to Pfizer, then Pfizer may negotiate with the Company in good faith to determine the amount of royalties or other compensation that the Company will receive in lieu of the Anaderm Royalty from such arrangement. 27

7.4. Development by the Company. (a) Subject to the provisions of section 7.4 (b) and 7.4(c) below, in the event that Pfizer elects not to exercise its Rights of First Refusal with respect to any Lead Compound or New Use pursuant to Section 7.1 or 7.2 hereof and the Company decides to license such Lead Compound or New Use to a Third Party, any payments received

and is part of a Pfizer Selected Library or by screening of Analogs of a compound from a Pfizer Selected Library (the "Anaderm Royalty".) The Anaderm Royalty shall be in addition to, and not in lieu of, any royalties or other payments that may be due to NYU or OSI under the Research Agreements. The Anaderm Royalty shall be paid to the Company, notwithstanding the termination provisions of Article 9 of this Agreement, for a period of ten years beginning with the first commercial sale of such Human Therapeutic Product in any country, unless at the end of such ten year period there exists in that country a Valid Claim of an issued patent to such Human Therapeutic Product, a compound or composition contained therein, a method or process employed in making such Human Therapeutic Product, or a method of use for which such Human Therapeutic Product is being marketed in that country, in which case Pfizer shall continue to pay the Anaderm Royalty to the Company on Net Sales of such Human Therapeutic Compound in such country during the period in which such Valid Claim exists in that country. (b) If Pfizer decides to negotiate an agreement with a Third Party pursuant to which Pfizer would grant such Third Party a license under Pfizer's rights in any Lead Compound or Human Therapeutic Product, which rights Pfizer acquired from the Company pursuant to its Rights of First Refusal under Section 7.1 or 7.2 hereof, and Pfizer determines that payment of the Anaderm Royalty would render the proposed licensing arrangement commercially unfeasible to Pfizer, then Pfizer may negotiate with the Company in good faith to determine the amount of royalties or other compensation that the Company will receive in lieu of the Anaderm Royalty from such arrangement. 27

7.4. Development by the Company. (a) Subject to the provisions of section 7.4 (b) and 7.4(c) below, in the event that Pfizer elects not to exercise its Rights of First Refusal with respect to any Lead Compound or New Use pursuant to Section 7.1 or 7.2 hereof and the Company decides to license such Lead Compound or New Use to a Third Party, any payments received in connection with such license arrangement, less any associated expenses, shall be paid as follows: ** to the Company, ** to OSI under the OSI Research Agreement, ** to NYU under the NYU Research Agreement, and ** to Pfizer. (b) Notwithstanding the provisions of Section 7.4(a) above, and subject to the provisions of Section 7.4(c) below, in cases where the Lead Compound or New Use that is licensed to a Third Party was identified (i) by screening a Pfizer Selected Library and the Lead Compound is part of the Pfizer Selected Library or the New Use is based on a Lead Compound that is part of the Pfizer Selected Library, or (ii) by screening Analogs of a compound from a Pfizer Selected Library, any payments received in connection with such license arrangement, less any associated expenses, shall be paid as follows: ** to the Company, ** to OSI; ** to NYU; and ** to Pfizer. (c) Notwithstanding the provisions of Sections 7.4(a) and (b) above, no royalties shall be owed to NYU under this Section 7.4 unless NYU or any of the NYU Principal Investigators or other employees or students of NYU participating in the Research Program pursuant to the NYU Research Agreement has made an Inventive Contribution during the course of participating in

** This portion has been redacted pursuant to a request for confidential treatment. 28

the Research Program with respect to the Lead Compound or New Use licensed to the Third Party. ** 7.5. Analog Manufacture. The Company may make or have made Analogs of compounds provided to it in a Pfizer Scientific Library or as part of the Pfizer Compound File, and, as between Pfizer and the Company, the Company shall own all such Analogs not already owned by Pfizer. The Company shall make all such Analogs and mixtures of such Analogs available to Pfizer for screening and analoging.

7.4. Development by the Company. (a) Subject to the provisions of section 7.4 (b) and 7.4(c) below, in the event that Pfizer elects not to exercise its Rights of First Refusal with respect to any Lead Compound or New Use pursuant to Section 7.1 or 7.2 hereof and the Company decides to license such Lead Compound or New Use to a Third Party, any payments received in connection with such license arrangement, less any associated expenses, shall be paid as follows: ** to the Company, ** to OSI under the OSI Research Agreement, ** to NYU under the NYU Research Agreement, and ** to Pfizer. (b) Notwithstanding the provisions of Section 7.4(a) above, and subject to the provisions of Section 7.4(c) below, in cases where the Lead Compound or New Use that is licensed to a Third Party was identified (i) by screening a Pfizer Selected Library and the Lead Compound is part of the Pfizer Selected Library or the New Use is based on a Lead Compound that is part of the Pfizer Selected Library, or (ii) by screening Analogs of a compound from a Pfizer Selected Library, any payments received in connection with such license arrangement, less any associated expenses, shall be paid as follows: ** to the Company, ** to OSI; ** to NYU; and ** to Pfizer. (c) Notwithstanding the provisions of Sections 7.4(a) and (b) above, no royalties shall be owed to NYU under this Section 7.4 unless NYU or any of the NYU Principal Investigators or other employees or students of NYU participating in the Research Program pursuant to the NYU Research Agreement has made an Inventive Contribution during the course of participating in

** This portion has been redacted pursuant to a request for confidential treatment. 28

the Research Program with respect to the Lead Compound or New Use licensed to the Third Party. ** 7.5. Analog Manufacture. The Company may make or have made Analogs of compounds provided to it in a Pfizer Scientific Library or as part of the Pfizer Compound File, and, as between Pfizer and the Company, the Company shall own all such Analogs not already owned by Pfizer. The Company shall make all such Analogs and mixtures of such Analogs available to Pfizer for screening and analoging. 7.6. Approval of Analog Production and Screening. Pfizer shall have the right to approve the choice of any Third Party selected by the Company to produce and screen Analogs of Pfizer compounds. No Third Parties shall be allowed to screen OSI Compounds or Analogs of OSI Compounds without the prior written consent of OSI. 7.7. Assignment of Analog Rights. If Pfizer elects to develop and market a Human Therapeutic Product outside the Field that contains an Analog of a Pfizer compound that was made by or on behalf of the Company pursuant to Section 7.5 of this Agreement, and is not contained in a Human Therapeutic Product that is being marketed by the Company or a Third Party licensee of the Company, the Company shall assign its rights in such Analog to Pfizer for royalties and/or other compensation negotiated in good faith. 7.8. Development of Lead Compound for Different Indications. If Pfizer and the Company express interest in developing the same Lead Compound for different indications, Pfizer shall have the right, subject to certain restrictions referred to in Section 7.9 of this

** This portion has been redacted pursuant to a request for confidential treatment. 29

Agreement, to request in writing that the Company cease all development of said Lead Compound, and the

the Research Program with respect to the Lead Compound or New Use licensed to the Third Party. ** 7.5. Analog Manufacture. The Company may make or have made Analogs of compounds provided to it in a Pfizer Scientific Library or as part of the Pfizer Compound File, and, as between Pfizer and the Company, the Company shall own all such Analogs not already owned by Pfizer. The Company shall make all such Analogs and mixtures of such Analogs available to Pfizer for screening and analoging. 7.6. Approval of Analog Production and Screening. Pfizer shall have the right to approve the choice of any Third Party selected by the Company to produce and screen Analogs of Pfizer compounds. No Third Parties shall be allowed to screen OSI Compounds or Analogs of OSI Compounds without the prior written consent of OSI. 7.7. Assignment of Analog Rights. If Pfizer elects to develop and market a Human Therapeutic Product outside the Field that contains an Analog of a Pfizer compound that was made by or on behalf of the Company pursuant to Section 7.5 of this Agreement, and is not contained in a Human Therapeutic Product that is being marketed by the Company or a Third Party licensee of the Company, the Company shall assign its rights in such Analog to Pfizer for royalties and/or other compensation negotiated in good faith. 7.8. Development of Lead Compound for Different Indications. If Pfizer and the Company express interest in developing the same Lead Compound for different indications, Pfizer shall have the right, subject to certain restrictions referred to in Section 7.9 of this

** This portion has been redacted pursuant to a request for confidential treatment. 29

Agreement, to request in writing that the Company cease all development of said Lead Compound, and the Company shall forthwith comply with such written request. 7.9. Request to Cease Lead Compound Development. The right of Pfizer to request that the Company cease development of any Lead Compound will terminate three (3) months after the date on which Pfizer is informed, pursuant to Section 7.2(a) of the Agreement, of the Company's decision to apply to the FDA for designation of said Lead Compound as an Investigational New Drug. ARTICLE VIII - LEGENDING OF SECURITIES 8.1. Legends. Each certificate representing shares of Common Stock issued after the date hereof shall bear a legend in substantially the form set forth below: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A RESTATED AND AMENDED STOCKHOLDERS AGREEMENT, DATED APRIL 23, 1999, AMONG THE COMPANY AND THE STOCKHOLDERS OF THE COMPANY SPECIFIED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. THE SALE, TRANSFER OR OTHER DISPOSITION OF THESE SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT ALSO CONTAINS PROVISIONS RELATING TO THE COMPOSITION OF THE BOARD OF DIRECTORS OF THE COMPANY AND THE EXERCISE OF VOTING RIGHTS OF THE HOLDERS OF THE SECURITIES REPRESENTED HEREBY." 30

ARTICLE IX - TERMINATION AND SURVIVAL OF PROVISIONS

Agreement, to request in writing that the Company cease all development of said Lead Compound, and the Company shall forthwith comply with such written request. 7.9. Request to Cease Lead Compound Development. The right of Pfizer to request that the Company cease development of any Lead Compound will terminate three (3) months after the date on which Pfizer is informed, pursuant to Section 7.2(a) of the Agreement, of the Company's decision to apply to the FDA for designation of said Lead Compound as an Investigational New Drug. ARTICLE VIII - LEGENDING OF SECURITIES 8.1. Legends. Each certificate representing shares of Common Stock issued after the date hereof shall bear a legend in substantially the form set forth below: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A RESTATED AND AMENDED STOCKHOLDERS AGREEMENT, DATED APRIL 23, 1999, AMONG THE COMPANY AND THE STOCKHOLDERS OF THE COMPANY SPECIFIED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. THE SALE, TRANSFER OR OTHER DISPOSITION OF THESE SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT ALSO CONTAINS PROVISIONS RELATING TO THE COMPOSITION OF THE BOARD OF DIRECTORS OF THE COMPANY AND THE EXERCISE OF VOTING RIGHTS OF THE HOLDERS OF THE SECURITIES REPRESENTED HEREBY." 30

ARTICLE IX - TERMINATION AND SURVIVAL OF PROVISIONS 9.1. Termination. This Agreement shall terminate (a) as to any party when such party ceases to be a Stockholder, or (b) upon the earlier to occur of (i) the date upon which the parties then bound by this Agreement consent in writing to terminate this Agreement; (ii) the date as of which there remains only one Stockholder of the Company; and (iii) the dissolution or liquidation of the Company. 9.2. Survival. Notwithstanding the termination of the Agreement under 9.1, the royalty provisions, if applicable, contained in Article 7 and Sections 2.1(d), 2.1(e) and 2.2 herein, shall survive with respect to any and all parties terminated. ARTICLE X - REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS 10.1. Representations and Warranties of Each Stockholder. Each Stockholder represents and warrants to the other parties, solely with respect to itself, that: (a) If such Stockholder is a corporation, partnership or trust, (i) such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (ii) such party has all requisite corporate, partnership or trust power and authority to execute, deliver and perform this Agreement; and (iii) such party has taken all corporate, partnership or trust action required to duly authorize such execution, delivery and performance. 31

(b) If such Stockholder is a natural person, he or she has full legal capacity, right, power and authority to execute,

ARTICLE IX - TERMINATION AND SURVIVAL OF PROVISIONS 9.1. Termination. This Agreement shall terminate (a) as to any party when such party ceases to be a Stockholder, or (b) upon the earlier to occur of (i) the date upon which the parties then bound by this Agreement consent in writing to terminate this Agreement; (ii) the date as of which there remains only one Stockholder of the Company; and (iii) the dissolution or liquidation of the Company. 9.2. Survival. Notwithstanding the termination of the Agreement under 9.1, the royalty provisions, if applicable, contained in Article 7 and Sections 2.1(d), 2.1(e) and 2.2 herein, shall survive with respect to any and all parties terminated. ARTICLE X - REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS 10.1. Representations and Warranties of Each Stockholder. Each Stockholder represents and warrants to the other parties, solely with respect to itself, that: (a) If such Stockholder is a corporation, partnership or trust, (i) such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (ii) such party has all requisite corporate, partnership or trust power and authority to execute, deliver and perform this Agreement; and (iii) such party has taken all corporate, partnership or trust action required to duly authorize such execution, delivery and performance. 31

(b) If such Stockholder is a natural person, he or she has full legal capacity, right, power and authority to execute, deliver and perform this Agreement. (c) This Agreement has been duly executed and delivered by such Stockholder and constitutes a binding obligation of such Stockholder enforceable in accordance with its terms, except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally, or by principles governing the availability of equitable remedies. (d) Neither the execution, delivery or performance by such Stockholder of this Agreement, nor the consummation by such Stockholder of the transactions contemplated hereby, does or will (with the giving of notice or the passage of time or both) conflict in any material respect with, or constitute a material default under, (i) if such party is a corporation, partnership or other entity, the Certificate of Incorporation, Bylaws, partnership agreement or other organizational or governing documents of such party, (ii) any judgment to or by which such party is or may be subject, bound or affected, or (iii) any applicable law or obligation to which such Stockholder is bound. (e) No judgment has been issued, and no action or proceeding has been instituted or, to the knowledge of such Stockholder, threatened, against or otherwise involving such Stockholder, (i) to set aside or modify any authorization of the execution, delivery and performance by such Stockholder of this Agreement, (ii) to enjoin or prevent the execution, delivery or performance by such Stockholder of this Agreement, or (iii) seeking damages in connection with the execution, delivery or performance by such Stockholder of this Agreement. 32

ARTICLE XI - INSUFFICIENT SURPLUS AND INSOLVENCY 11.1 Notwithstanding anything contained herein to the contrary, the Company shall not be obligated to purchase, redeem, receive, take or otherwise acquire shares of Common Stock of a selling Stockholder if the capital of the Company is impaired or would become impaired thereby. If the Company's capital is or would become impaired

(b) If such Stockholder is a natural person, he or she has full legal capacity, right, power and authority to execute, deliver and perform this Agreement. (c) This Agreement has been duly executed and delivered by such Stockholder and constitutes a binding obligation of such Stockholder enforceable in accordance with its terms, except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally, or by principles governing the availability of equitable remedies. (d) Neither the execution, delivery or performance by such Stockholder of this Agreement, nor the consummation by such Stockholder of the transactions contemplated hereby, does or will (with the giving of notice or the passage of time or both) conflict in any material respect with, or constitute a material default under, (i) if such party is a corporation, partnership or other entity, the Certificate of Incorporation, Bylaws, partnership agreement or other organizational or governing documents of such party, (ii) any judgment to or by which such party is or may be subject, bound or affected, or (iii) any applicable law or obligation to which such Stockholder is bound. (e) No judgment has been issued, and no action or proceeding has been instituted or, to the knowledge of such Stockholder, threatened, against or otherwise involving such Stockholder, (i) to set aside or modify any authorization of the execution, delivery and performance by such Stockholder of this Agreement, (ii) to enjoin or prevent the execution, delivery or performance by such Stockholder of this Agreement, or (iii) seeking damages in connection with the execution, delivery or performance by such Stockholder of this Agreement. 32

ARTICLE XI - INSUFFICIENT SURPLUS AND INSOLVENCY 11.1 Notwithstanding anything contained herein to the contrary, the Company shall not be obligated to purchase, redeem, receive, take or otherwise acquire shares of Common Stock of a selling Stockholder if the capital of the Company is impaired or would become impaired thereby. If the Company's capital is or would become impaired by purchasing the Common Stock of the selling Stockholder, the Company shall notify all of the Stockholders in writing of such impairment, and indicate that the Company is precluded from making such purchase. Upon receiving such notices, the Company's remaining Stockholders shall be deemed to have been offered the shares of the selling Stockholder on the same terms as such shares would have been offered to the Company. The Company shall determine the number of shares deemed to have been offered to each Stockholder by multiplying the total number of shares by the percentage that each such remaining Stockholder's shares of Common Stock bears to the total number of shares of Common Stock held by the non-selling Stockholders at the date of the notice. The price of which such Stockholders would pay for such shares shall be Fair Value in the case of a sale or transfer pursuant to Section 5.2 or 5.3, or, in the case of a sale pursuant to Section 5.1, the purchase price provided for in such section. Any Stockholder may purchase such shares by paying the purchase price therefor within sixty (60) days after delivery of the notice from the Company ("Closing"). The purchasing Stockholder shall pay the Fair Value of such shares or purchase price referred to in Section 5.1 either (i) in full by cash or certified check at the Closing, or (ii) one-third of the total amount due shall be paid in cash or certified check at the Closing, and the balance of the amount due shall be payable on the first and second anniversaries of such closing in two equal installments, together with interest on the amount of such installments from the date of Closing calculated at 33

the prime rate, as in effect from time to time during the period prior to the payment of such installment, as published by Citibank, N.A. The selling Stockholder shall retain all right, title and interest in and to any shares of Common Stock that are not purchased by the other Stockholders. ARTICLE XII - MISCELLANEOUS 12.1. Notices. All notices, requests, consents, demands, elections and other communications required or permitted hereunder shall be in writing and shall be given to the intended recipient at the following address:

ARTICLE XI - INSUFFICIENT SURPLUS AND INSOLVENCY 11.1 Notwithstanding anything contained herein to the contrary, the Company shall not be obligated to purchase, redeem, receive, take or otherwise acquire shares of Common Stock of a selling Stockholder if the capital of the Company is impaired or would become impaired thereby. If the Company's capital is or would become impaired by purchasing the Common Stock of the selling Stockholder, the Company shall notify all of the Stockholders in writing of such impairment, and indicate that the Company is precluded from making such purchase. Upon receiving such notices, the Company's remaining Stockholders shall be deemed to have been offered the shares of the selling Stockholder on the same terms as such shares would have been offered to the Company. The Company shall determine the number of shares deemed to have been offered to each Stockholder by multiplying the total number of shares by the percentage that each such remaining Stockholder's shares of Common Stock bears to the total number of shares of Common Stock held by the non-selling Stockholders at the date of the notice. The price of which such Stockholders would pay for such shares shall be Fair Value in the case of a sale or transfer pursuant to Section 5.2 or 5.3, or, in the case of a sale pursuant to Section 5.1, the purchase price provided for in such section. Any Stockholder may purchase such shares by paying the purchase price therefor within sixty (60) days after delivery of the notice from the Company ("Closing"). The purchasing Stockholder shall pay the Fair Value of such shares or purchase price referred to in Section 5.1 either (i) in full by cash or certified check at the Closing, or (ii) one-third of the total amount due shall be paid in cash or certified check at the Closing, and the balance of the amount due shall be payable on the first and second anniversaries of such closing in two equal installments, together with interest on the amount of such installments from the date of Closing calculated at 33

the prime rate, as in effect from time to time during the period prior to the payment of such installment, as published by Citibank, N.A. The selling Stockholder shall retain all right, title and interest in and to any shares of Common Stock that are not purchased by the other Stockholders. ARTICLE XII - MISCELLANEOUS 12.1. Notices. All notices, requests, consents, demands, elections and other communications required or permitted hereunder shall be in writing and shall be given to the intended recipient at the following address: if to the Company: Anaderm Research Corp. 235 East 42nd Street New York, NY 10017-5755 Att: ** Tel: 212-573-3770 Fax: 212-808-6495 with copies to: Pfizer Inc. 235 East 42nd Street New York, NY 10017-5755 Att: Office of General Counsel Tel: 212-573-3637 Fax: 212-573-1445 Squadron, Ellenoff, Plesent & Sheinfeld 551 Fifth Avenue New York, NY 10176 Att: Joel I. Papernik, Esq. Tel: 212-476-8364 Fax: 212-697-6686

the prime rate, as in effect from time to time during the period prior to the payment of such installment, as published by Citibank, N.A. The selling Stockholder shall retain all right, title and interest in and to any shares of Common Stock that are not purchased by the other Stockholders. ARTICLE XII - MISCELLANEOUS 12.1. Notices. All notices, requests, consents, demands, elections and other communications required or permitted hereunder shall be in writing and shall be given to the intended recipient at the following address: if to the Company: Anaderm Research Corp. 235 East 42nd Street New York, NY 10017-5755 Att: ** Tel: 212-573-3770 Fax: 212-808-6495 with copies to: Pfizer Inc. 235 East 42nd Street New York, NY 10017-5755 Att: Office of General Counsel Tel: 212-573-3637 Fax: 212-573-1445 Squadron, Ellenoff, Plesent & Sheinfeld 551 Fifth Avenue New York, NY 10176 Att: Joel I. Papernik, Esq. Tel: 212-476-8364 Fax: 212-697-6686

** This portion has been redacted pursuant to a request for confidential treatment. 34

If to Pfizer: Pfizer Inc. 235 East 42nd Street New York, NY 10017-5755 Att: Office of General Counsel Tel: 212-573-3637 Fax: 212-573-1445 If to OSI: OSI Pharmaceuticals, Inc. 106 Charles Lindbergh Blvd. Uniondale, NY 11553 Att: Gary E. Frashier Tel: 516-222-0023 Fax: 516-745-6429

If to Pfizer: Pfizer Inc. 235 East 42nd Street New York, NY 10017-5755 Att: Office of General Counsel Tel: 212-573-3637 Fax: 212-573-1445 If to OSI: OSI Pharmaceuticals, Inc. 106 Charles Lindbergh Blvd. Uniondale, NY 11553 Att: Gary E. Frashier Tel: 516-222-0023 Fax: 516-745-6429 If to NYU: NYU Medical Center 550 First Avenue New York, NY 10016 Att: ** Tel: 212-263-8191 Fax: 212-263-8189 with a copy to: ** NYU Medical Center 550 First Avenue, MSB 153 New York, NY 10016 Tel: 212-263-7921 Fax: 212-545-8846

** This portion has been redacted pursuant to a request for confidential treatment. 35

If to ** : ** c/o NYU Medical Center 550 First Avenue New York, NY 10016 Tel: 212-263-8191 Fax: 212-263-8189 If to ** : ** c/o NYU Medical Center 550 First Avenue New York, NY 10016 Tel: 212-263-8191 Fax: 212-263-8189

If to ** : ** c/o NYU Medical Center 550 First Avenue New York, NY 10016 Tel: 212-263-8191 Fax: 212-263-8189 If to ** : ** c/o NYU Medical Center 550 First Avenue New York, NY 10016 Tel: 212-263-8191 Fax: 212-263-8189 If to ** : ** c/o NYU Medical Center 550 First Avenue New York, NY 10016 Tel: 212-263-8191 Fax: 212-263-8189 If to ** : ** c/o NYU Medical Center 550 First Avenue New York, NY 10016 Tel: 212-263-8191 Fax: 212-263-8189 Any such notice, request, consent, demand, election or other communication shall be deemed to have been duly given if personally delivered or sent by registered or certified mail,

** This portion has been redacted pursuant to a request for confidential treatment. 36

return receipt requested, by Federal Express, Express Mail or similar overnight delivery service or by telegram, telex or facsimile transmission confirmed by letter, and will be deemed given, unless earlier received (i) if sent by certified or registered mail, return receipt requested, five calendar days after being deposited in the United States mail, postage prepaid; (ii) if sent by overnight delivery service for next business day delivery, the next business day after being entrusted to such service, with delivery charges prepaid or charged to the sender's account; (iii) if sent by telegram or telex or facsimile transmission, on the date sent, provided confirmatory notice is sent by any other method specified in clause (i), (ii) or (iv); and (iv) if delivered by hand, on the date of delivery. 12.2. Entire Agreement. This Agreement, together with the Appendices hereto and the Research Agreements, constitute the entire understanding among the parties hereto relating to the subject matter hereof. This Agreement may not be amended except by a writing signed by all parties hereto. No discharge, or waiver, in whole or in part, of any of its provisions shall be valid, unless in writing, signed by the party against whom the same is sought to be enforced. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their legal successors, the latter being deemed to include, without limitation, all executors, administrators, receivers, committees, other personal representatives, transferees of interest pursuant hereto, and all other legal successors, and shall, in addition, be binding upon all persons who, whether in breach of this Agreement or otherwise, have

return receipt requested, by Federal Express, Express Mail or similar overnight delivery service or by telegram, telex or facsimile transmission confirmed by letter, and will be deemed given, unless earlier received (i) if sent by certified or registered mail, return receipt requested, five calendar days after being deposited in the United States mail, postage prepaid; (ii) if sent by overnight delivery service for next business day delivery, the next business day after being entrusted to such service, with delivery charges prepaid or charged to the sender's account; (iii) if sent by telegram or telex or facsimile transmission, on the date sent, provided confirmatory notice is sent by any other method specified in clause (i), (ii) or (iv); and (iv) if delivered by hand, on the date of delivery. 12.2. Entire Agreement. This Agreement, together with the Appendices hereto and the Research Agreements, constitute the entire understanding among the parties hereto relating to the subject matter hereof. This Agreement may not be amended except by a writing signed by all parties hereto. No discharge, or waiver, in whole or in part, of any of its provisions shall be valid, unless in writing, signed by the party against whom the same is sought to be enforced. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their legal successors, the latter being deemed to include, without limitation, all executors, administrators, receivers, committees, other personal representatives, transferees of interest pursuant hereto, and all other legal successors, and shall, in addition, be binding upon all persons who, whether in breach of this Agreement or otherwise, have or claim an interest in the shares of the Company or are in possession of a certificate representing shares in the Company, or any other evidence of an interest in the shares of the Company. 37

12.3. Governing Law. This Agreement shall be governed by, and interpreted and construed in accordance with, the laws of the State of New York, without regard to its conflict of law provisions. 38

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. ANADERM RESEARCH CORP.
By: /s/ -----------------------------------------Name: ** Title: President and CEO

PFIZER INC.
By: /s/ -----------------------------------------Name: Paul S. Miller Title: Executive Vice President And General Counsel

OSI PHARMACEUTICALS, INC.
By: /s/ -----------------------------------------Name: Colin Goddard, Ph.D. Title: President and CEO

NEW YORK UNIVERSITY
By: /s/

12.3. Governing Law. This Agreement shall be governed by, and interpreted and construed in accordance with, the laws of the State of New York, without regard to its conflict of law provisions. 38

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. ANADERM RESEARCH CORP.
By: /s/ -----------------------------------------Name: ** Title: President and CEO

PFIZER INC.
By: /s/ -----------------------------------------Name: Paul S. Miller Title: Executive Vice President And General Counsel

OSI PHARMACEUTICALS, INC.
By: /s/ -----------------------------------------Name: Colin Goddard, Ph.D. Title: President and CEO

NEW YORK UNIVERSITY
By: /s/ -----------------------------------------Name: ** Title: **

** ** ** ** ** This portion has been redacted pursuant to a request for confidential treatment.

APPENDIX A

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. ANADERM RESEARCH CORP.
By: /s/ -----------------------------------------Name: ** Title: President and CEO

PFIZER INC.
By: /s/ -----------------------------------------Name: Paul S. Miller Title: Executive Vice President And General Counsel

OSI PHARMACEUTICALS, INC.
By: /s/ -----------------------------------------Name: Colin Goddard, Ph.D. Title: President and CEO

NEW YORK UNIVERSITY
By: /s/ -----------------------------------------Name: ** Title: **

** ** ** ** ** This portion has been redacted pursuant to a request for confidential treatment.

APPENDIX A As used in Section 5.3(a) of the Agreement, the formula to calculate the Fixed Put Right for each Stockholder is ** through and including April 23, 1999.

APPENDIX A As used in Section 5.3(a) of the Agreement, the formula to calculate the Fixed Put Right for each Stockholder is ** through and including April 23, 1999.

** This portion has been redacted pursuant to a request for confidential treatment.

Portions of Exhibit 10.3 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

DEVELOPMENT AGREEMENT This DEVELOPMENT AGREEMENT is entered into as of April 1, 1999 (the "Effective Date") by and between PFIZER INC, a Delaware corporation, having an office at 235 East 42nd Street, New York, New York 10017 and its Affiliates ("Pfizer"), and OSI PHARMACEUTICALS, INC., a Delaware corporation, having an office at 106 Charles Lindbergh Blvd., Uniondale, New York 11553-3649 and its Affiliates ("OSI Pharmaceuticals"); WHEREAS, OSI Pharmaceuticals desires to develop compounds derived from the Collaborative Research Agreement between Pfizer and OSI Pharmaceuticals, dated April 1, 1996, under Pfizer's and OSI Pharmaceutical's right, title and interest in the patent rights of the compounds listed in Exhibit A ("Compounds"), so that OSI Pharmaceuticals can conduct preclinical research and clinical trials, for such compounds to assess the treatment of psoriasis and related dermal pathology; and WHEREAS, Pfizer is willing to grant a license; Therefore, in consideration of the mutual covenants and promises set forth in this Agreement, the parties agree as follows: 1. Definitions. The capitalized terms used in this Agreement shall have the meanings specified for such terms in this Section 1. 1.1 "1996 Agreement" means the Collaborative Research Agreement between Pfizer and OSI Pharmaceuticals effective April 1, 1996 and the letter amendments to such Agreement including the letter amendments dated July 25, 1997 and November 3, 1997. 1.2 "Net Sales" means the gross amount invoiced by Pfizer or OSI Pharmaceuticals, their respective Affiliates, or any sublicensee of Pfizer of OSI Pharmaceuticals for sales to a third party or parties of Products, less normal and customary trade discounts actually allowed, rebates, returns, credits, taxes the legal incidence of which is on the purchaser and separately shown on Pfizer's or OSI Pharmaceuticals' or any sublicensee of either party's invoices and 1

transportation, insurance and postage charges, if prepaid by Pfizer or OSI Pharmaceuticals or any sublicensee of either party and billed on Pfizer's or OSI Pharmaceuticals' or any sublicensee of either party's invoices as a separate item. 1.3 "Product" means any pharmaceutical product developed in the course of the Development Program, the

Portions of Exhibit 10.3 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

DEVELOPMENT AGREEMENT This DEVELOPMENT AGREEMENT is entered into as of April 1, 1999 (the "Effective Date") by and between PFIZER INC, a Delaware corporation, having an office at 235 East 42nd Street, New York, New York 10017 and its Affiliates ("Pfizer"), and OSI PHARMACEUTICALS, INC., a Delaware corporation, having an office at 106 Charles Lindbergh Blvd., Uniondale, New York 11553-3649 and its Affiliates ("OSI Pharmaceuticals"); WHEREAS, OSI Pharmaceuticals desires to develop compounds derived from the Collaborative Research Agreement between Pfizer and OSI Pharmaceuticals, dated April 1, 1996, under Pfizer's and OSI Pharmaceutical's right, title and interest in the patent rights of the compounds listed in Exhibit A ("Compounds"), so that OSI Pharmaceuticals can conduct preclinical research and clinical trials, for such compounds to assess the treatment of psoriasis and related dermal pathology; and WHEREAS, Pfizer is willing to grant a license; Therefore, in consideration of the mutual covenants and promises set forth in this Agreement, the parties agree as follows: 1. Definitions. The capitalized terms used in this Agreement shall have the meanings specified for such terms in this Section 1. 1.1 "1996 Agreement" means the Collaborative Research Agreement between Pfizer and OSI Pharmaceuticals effective April 1, 1996 and the letter amendments to such Agreement including the letter amendments dated July 25, 1997 and November 3, 1997. 1.2 "Net Sales" means the gross amount invoiced by Pfizer or OSI Pharmaceuticals, their respective Affiliates, or any sublicensee of Pfizer of OSI Pharmaceuticals for sales to a third party or parties of Products, less normal and customary trade discounts actually allowed, rebates, returns, credits, taxes the legal incidence of which is on the purchaser and separately shown on Pfizer's or OSI Pharmaceuticals' or any sublicensee of either party's invoices and 1

transportation, insurance and postage charges, if prepaid by Pfizer or OSI Pharmaceuticals or any sublicensee of either party and billed on Pfizer's or OSI Pharmaceuticals' or any sublicensee of either party's invoices as a separate item. 1.3 "Product" means any pharmaceutical product developed in the course of the Development Program, the manufacture, use, sale, offer for sale or import of which would infringe any Valid Claim within the Patent Rights in the absence of a license. 1.4 "Sublicensee" shall mean a third party who has been granted a sublicense to make, use, sell, offer for sale or import Products. 1.5 "Area" shall mean the development of Compounds directed to the treatment or prevention of psoriasis and related dermal pathologies such as eczema. 1.6 "Affiliate" means any corporation or other legal entity owning, directly or indirectly, fifty percent (50%) or more of the voting capital shares or similar voting securities of Pfizer or OSI Pharmaceuticals; any corporation or other legal entity fifty percent (50%) or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by Pfizer or OSI Pharmaceuticals or any corporation or other legal entity fifty

DEVELOPMENT AGREEMENT This DEVELOPMENT AGREEMENT is entered into as of April 1, 1999 (the "Effective Date") by and between PFIZER INC, a Delaware corporation, having an office at 235 East 42nd Street, New York, New York 10017 and its Affiliates ("Pfizer"), and OSI PHARMACEUTICALS, INC., a Delaware corporation, having an office at 106 Charles Lindbergh Blvd., Uniondale, New York 11553-3649 and its Affiliates ("OSI Pharmaceuticals"); WHEREAS, OSI Pharmaceuticals desires to develop compounds derived from the Collaborative Research Agreement between Pfizer and OSI Pharmaceuticals, dated April 1, 1996, under Pfizer's and OSI Pharmaceutical's right, title and interest in the patent rights of the compounds listed in Exhibit A ("Compounds"), so that OSI Pharmaceuticals can conduct preclinical research and clinical trials, for such compounds to assess the treatment of psoriasis and related dermal pathology; and WHEREAS, Pfizer is willing to grant a license; Therefore, in consideration of the mutual covenants and promises set forth in this Agreement, the parties agree as follows: 1. Definitions. The capitalized terms used in this Agreement shall have the meanings specified for such terms in this Section 1. 1.1 "1996 Agreement" means the Collaborative Research Agreement between Pfizer and OSI Pharmaceuticals effective April 1, 1996 and the letter amendments to such Agreement including the letter amendments dated July 25, 1997 and November 3, 1997. 1.2 "Net Sales" means the gross amount invoiced by Pfizer or OSI Pharmaceuticals, their respective Affiliates, or any sublicensee of Pfizer of OSI Pharmaceuticals for sales to a third party or parties of Products, less normal and customary trade discounts actually allowed, rebates, returns, credits, taxes the legal incidence of which is on the purchaser and separately shown on Pfizer's or OSI Pharmaceuticals' or any sublicensee of either party's invoices and 1

transportation, insurance and postage charges, if prepaid by Pfizer or OSI Pharmaceuticals or any sublicensee of either party and billed on Pfizer's or OSI Pharmaceuticals' or any sublicensee of either party's invoices as a separate item. 1.3 "Product" means any pharmaceutical product developed in the course of the Development Program, the manufacture, use, sale, offer for sale or import of which would infringe any Valid Claim within the Patent Rights in the absence of a license. 1.4 "Sublicensee" shall mean a third party who has been granted a sublicense to make, use, sell, offer for sale or import Products. 1.5 "Area" shall mean the development of Compounds directed to the treatment or prevention of psoriasis and related dermal pathologies such as eczema. 1.6 "Affiliate" means any corporation or other legal entity owning, directly or indirectly, fifty percent (50%) or more of the voting capital shares or similar voting securities of Pfizer or OSI Pharmaceuticals; any corporation or other legal entity fifty percent (50%) or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by Pfizer or OSI Pharmaceuticals or any corporation or other legal entity fifty percent (50%) or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by a corporation or other legal entity which owns, directly or indirectly, fifty percent (50%) or more of the voting capital shares or similar voting securities of Pfizer or OSI Pharmaceuticals. 1.7 "Development Program" is the preclinical and clinical program in the Area conducted by OSI

transportation, insurance and postage charges, if prepaid by Pfizer or OSI Pharmaceuticals or any sublicensee of either party and billed on Pfizer's or OSI Pharmaceuticals' or any sublicensee of either party's invoices as a separate item. 1.3 "Product" means any pharmaceutical product developed in the course of the Development Program, the manufacture, use, sale, offer for sale or import of which would infringe any Valid Claim within the Patent Rights in the absence of a license. 1.4 "Sublicensee" shall mean a third party who has been granted a sublicense to make, use, sell, offer for sale or import Products. 1.5 "Area" shall mean the development of Compounds directed to the treatment or prevention of psoriasis and related dermal pathologies such as eczema. 1.6 "Affiliate" means any corporation or other legal entity owning, directly or indirectly, fifty percent (50%) or more of the voting capital shares or similar voting securities of Pfizer or OSI Pharmaceuticals; any corporation or other legal entity fifty percent (50%) or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by Pfizer or OSI Pharmaceuticals or any corporation or other legal entity fifty percent (50%) or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by a corporation or other legal entity which owns, directly or indirectly, fifty percent (50%) or more of the voting capital shares or similar voting securities of Pfizer or OSI Pharmaceuticals. 1.7 "Development Program" is the preclinical and clinical program in the Area conducted by OSI Pharmaceuticals pursuant to this Agreement, attached as Exhibit B. 1.8 "Effective Date" is April 1, 1999. 1.9 "Technology" means and includes all materials, technology, technical information, know-how, expertise and trade secrets within the Area. 1.10 "Program Technology" means Technology that is or was developed by employees of or consultants to Pfizer or OSI Pharmaceuticals solely or jointly with each other in the course of performing research and fulfilling their respective obligations to this Agreement. 1.11 "Confidential Information" means all information about any element of the Development Program or Program Technology which is disclosed by OSI Pharmaceuticals or Pfizer to the other and designated "Confidential" in writing by at the time of disclosure or within thirty (30) days following disclosure, to the extent that such information as of the date of disclosure to the receiving party is not (i) known other than by virtue of a prior confidential 2

disclosure to the receiving party by OSI Pharmaceuticals or Pfizer; or (ii) disclosed in published literature, or otherwise generally known to the public through no fault or omission of the receiving party; or (iii) obtained from a third party free from any obligation of confidentiality to the disclosing party. 1.12 "Valid Claim" means a claim within Patent Rights so long as such claim shall not have been disclaimed and shall not have been held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 1.13 "Patent Rights" shall mean all patent rights in and to inventions within Program Technology including all the Valid Claims of patent applications, whether domestic or foreign, claiming such patentable inventions, including all continuations, continuations-in-part, divisions, and renewals, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof. 1.14 "Developing Party" shall mean the party granted a license in Section 3.2 or 3.3 as the case may be.

disclosure to the receiving party by OSI Pharmaceuticals or Pfizer; or (ii) disclosed in published literature, or otherwise generally known to the public through no fault or omission of the receiving party; or (iii) obtained from a third party free from any obligation of confidentiality to the disclosing party. 1.12 "Valid Claim" means a claim within Patent Rights so long as such claim shall not have been disclaimed and shall not have been held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 1.13 "Patent Rights" shall mean all patent rights in and to inventions within Program Technology including all the Valid Claims of patent applications, whether domestic or foreign, claiming such patentable inventions, including all continuations, continuations-in-part, divisions, and renewals, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof. 1.14 "Developing Party" shall mean the party granted a license in Section 3.2 or 3.3 as the case may be. 1.15 "Licensor" shall mean the party granting the license in Section 3.2 or 3.3, as the case may be. 2. Development Program. 2.1 Purpose. OSI Pharmaceuticals shall conduct a Development Program, which is attached as Exhibit B. The Development Program shall include preclinical and clinical research, through and including Phase II clinical trials, on the Compounds to assess their safety and efficacy to be developed as therapeutic agents for the treatment of psoriasis and other related dermal pathologies. 3. Grant of Licenses, Term, Rights and Obligations. 3.1 License granted to OSI Pharmaceuticals for the Development Program. Pfizer grants to OSI Pharmaceuticals an exclusive, except for Pfizer, license to make and use the Compounds for all research purposes for the performance of the Development Program other than the sale or manufacture for sale of products or processes. 3.2 License granted to Pfizer under the Patents and Program Technology. At the end of the Development Program, Pfizer will have three (3) months from the receipt of the data 3

package from the clinical studies, described in Exhibit B, delivered by OSI Pharmaceuticals to Pfizer, to notify OSI Pharmaceuticals of Pfizer's intention to continue development and commercialization of each Compound. If Pfizer notifies OSI Pharmaceuticals of its intention to continue development and commercialization of one or more of such Compounds, Pfizer shall have an exclusive, world-wide license, with the right to grant sublicenses, to make, use, sell, offer for sale and import Products under all of OSI Pharmaceuticals' right, title and interest in the Patent Rights and Program Technology with respect to such Compounds subject to the terms and conditions of this Agreement. 3.3. License granted to OSI Pharmaceuticals under the Patents and Program Technology. If Pfizer fails to notify OSI Pharmaceuticals that it intends to develop and commercialize any such Compound, such failure shall serve to grant to OSI Pharmaceuticals an exclusive, world-wide, royalty-bearing license, including the right to grant sublicenses, to manufacture, use, sell, offer for sale and import Products under all Pfizer's right, title and interest in the Patent Rights in such Compounds, subject to the terms and conditions of this Agreement; provided, however, that OSI Pharmaceuticals may, within three (3) months of the expiration of the three (3) month period described in Section 3.2, refuse to accept any or all such licenses in which case the parties shall have the rights and duties with respect to such Patent Rights set forth in the 1996 Agreement. 3.4 Term of Licenses. The term of the grant set forth in Section 3.1 shall commence on the Effective Date and shall terminate in each country on the date of the last to expire of the Patent Rights in that country. The term of the grant set forth in Section 3.2 and 3.3 shall begin when accepted in Section 3.2, or at the end of the refusal period in Section 3.3 and shall terminate in each country on the date of the last to expire of the Patent Rights in that country.

package from the clinical studies, described in Exhibit B, delivered by OSI Pharmaceuticals to Pfizer, to notify OSI Pharmaceuticals of Pfizer's intention to continue development and commercialization of each Compound. If Pfizer notifies OSI Pharmaceuticals of its intention to continue development and commercialization of one or more of such Compounds, Pfizer shall have an exclusive, world-wide license, with the right to grant sublicenses, to make, use, sell, offer for sale and import Products under all of OSI Pharmaceuticals' right, title and interest in the Patent Rights and Program Technology with respect to such Compounds subject to the terms and conditions of this Agreement. 3.3. License granted to OSI Pharmaceuticals under the Patents and Program Technology. If Pfizer fails to notify OSI Pharmaceuticals that it intends to develop and commercialize any such Compound, such failure shall serve to grant to OSI Pharmaceuticals an exclusive, world-wide, royalty-bearing license, including the right to grant sublicenses, to manufacture, use, sell, offer for sale and import Products under all Pfizer's right, title and interest in the Patent Rights in such Compounds, subject to the terms and conditions of this Agreement; provided, however, that OSI Pharmaceuticals may, within three (3) months of the expiration of the three (3) month period described in Section 3.2, refuse to accept any or all such licenses in which case the parties shall have the rights and duties with respect to such Patent Rights set forth in the 1996 Agreement. 3.4 Term of Licenses. The term of the grant set forth in Section 3.1 shall commence on the Effective Date and shall terminate in each country on the date of the last to expire of the Patent Rights in that country. The term of the grant set forth in Section 3.2 and 3.3 shall begin when accepted in Section 3.2, or at the end of the refusal period in Section 3.3 and shall terminate in each country on the date of the last to expire of the Patent Rights in that country. 4. Milestone Payments, Royalties, Payments of Royalties, Accounting for Royalties, Records. 4.1.1 The Developing Party shall pay to the Licensor a royalty based on the Net Sales of each Product. Such royalty shall be paid with respect to each country of the world from the date of the first commercial sale (the date of the invoice of the Developing Party or any sublicensee of the Developing Party with respect to such sale) of such Product in each such country until the expiration of the last Patent Right to expire with respect to each such country and each such Product. 4

4.1.2 If the manufacture and sale of a Product takes place in countries which there are no Patent Rights, the Developing Party will pay to the Licensor a royalty based on the Net Sales of each Product in each such country for ten (10) years after the first commercial sale of such Product in such country. 4.2 Royalty Rates. 4.2.1 If Pfizer is the Developing Party, the royalty paid by Pfizer, to OSI Pharmaceuticals shall be ** percent ** of the Net Sales of each Product. It is understood that the royalty rate specified in this Section 4.2.1 is subject to reduction as provided in Sections 4.4 and 4.8 below. Those sections of this Agreement or any other sections to the contrary notwithstanding, the royalty paid to OSI Pharmaceuticals with respect to Net Sales of a Product shall not be reduced to less than ** percent ** of such Net Sales; provided, however, that if a Product is made and sold, in a country in which there are no Patent Rights, then the royalty paid by Pfizer to OSI Pharmaceuticals shall be ** percent ** of the Net Sales with respect to such Products, according to the term described in Section 4.1.2, and no reductions of royalties pursuant to Section 4.8 shall be made. 4.2.2 If OSI Pharmaceuticals is the Developing Party, the royalty paid by OSI Pharmaceuticals to Pfizer shall be ** percent ** of the Net Sales of each Product. If a Product is made or sold, in a country in which there are no Patent Rights, then the royalty paid by OSI Pharmaceuticals to Pfizer shall be ** percent ** of the Net Sales with respect to such Products, according to the term described in Section 4.1.2. 4.4 Renegotiation of Royalty Rates. The parties acknowledge that the royalty rates set forth in Section 4.1 are based on the expectation that Products will be administered to human patients. If Pfizer identifies or develops for animal patients with respect to a

4.1.2 If the manufacture and sale of a Product takes place in countries which there are no Patent Rights, the Developing Party will pay to the Licensor a royalty based on the Net Sales of each Product in each such country for ten (10) years after the first commercial sale of such Product in such country. 4.2 Royalty Rates. 4.2.1 If Pfizer is the Developing Party, the royalty paid by Pfizer, to OSI Pharmaceuticals shall be ** percent ** of the Net Sales of each Product. It is understood that the royalty rate specified in this Section 4.2.1 is subject to reduction as provided in Sections 4.4 and 4.8 below. Those sections of this Agreement or any other sections to the contrary notwithstanding, the royalty paid to OSI Pharmaceuticals with respect to Net Sales of a Product shall not be reduced to less than ** percent ** of such Net Sales; provided, however, that if a Product is made and sold, in a country in which there are no Patent Rights, then the royalty paid by Pfizer to OSI Pharmaceuticals shall be ** percent ** of the Net Sales with respect to such Products, according to the term described in Section 4.1.2, and no reductions of royalties pursuant to Section 4.8 shall be made. 4.2.2 If OSI Pharmaceuticals is the Developing Party, the royalty paid by OSI Pharmaceuticals to Pfizer shall be ** percent ** of the Net Sales of each Product. If a Product is made or sold, in a country in which there are no Patent Rights, then the royalty paid by OSI Pharmaceuticals to Pfizer shall be ** percent ** of the Net Sales with respect to such Products, according to the term described in Section 4.1.2. 4.4 Renegotiation of Royalty Rates. The parties acknowledge that the royalty rates set forth in Section 4.1 are based on the expectation that Products will be administered to human patients. If Pfizer identifies or develops for animal patients with respect to a Product or Products which represents a commercial opportunity for Pfizer in the area of animal health, the parties may negotiate a new royalty rate for such Product to account for development costs and changes in the cost of goods, selling price and projected annual Net Sales.

** This portion has been redacted pursuant to a request for confidential treatment. 5

4.5 Payment Dates. Royalties shall be paid on Net Sales within sixty (60) days after the end of each calendar quarter in which such Net Sales are made. Such payments shall be accompanied by a statement showing the Net Sales of each Product by the Developing Party or any sublicensee of such in each country, the applicable royalty rate for such Product, and a calculation of the amount of royalty due, including any offsets. 4.6 Accounting. The Net Sales used for computing the royalties payable to the Licensor by the Developing Party, shall be computed and paid in US dollars by wire transfer in immediately available funds to a U.S. account designated by the receiving party, or by other mutually acceptable means. For purposes of determining the amount of royalties due, the amount of Net Sales in any foreign currency shall be computed by (a) converting such amount into U.S. dollars at the prevailing commercial rate of exchange for purchasing dollars with such foreign currency as published in the Wall Street Journal for the close of the last business day of the calendar quarter for which the relevant royalty payment is to be made by the payor and (b) deducting the amount of any governmental tax, duty, charge, or other fee actually paid in respect of such conversion into, and remittance of U.S. dollars. 4.7 Records. The party that is paying such royalties shall keep for three (3) years from the date of each payment of royalties complete and accurate records of sales by such party of each Product in sufficient detail to allow the accruing royalties to be determined accurately. The receiving party shall have the right for a period of three (3) years after

4.5 Payment Dates. Royalties shall be paid on Net Sales within sixty (60) days after the end of each calendar quarter in which such Net Sales are made. Such payments shall be accompanied by a statement showing the Net Sales of each Product by the Developing Party or any sublicensee of such in each country, the applicable royalty rate for such Product, and a calculation of the amount of royalty due, including any offsets. 4.6 Accounting. The Net Sales used for computing the royalties payable to the Licensor by the Developing Party, shall be computed and paid in US dollars by wire transfer in immediately available funds to a U.S. account designated by the receiving party, or by other mutually acceptable means. For purposes of determining the amount of royalties due, the amount of Net Sales in any foreign currency shall be computed by (a) converting such amount into U.S. dollars at the prevailing commercial rate of exchange for purchasing dollars with such foreign currency as published in the Wall Street Journal for the close of the last business day of the calendar quarter for which the relevant royalty payment is to be made by the payor and (b) deducting the amount of any governmental tax, duty, charge, or other fee actually paid in respect of such conversion into, and remittance of U.S. dollars. 4.7 Records. The party that is paying such royalties shall keep for three (3) years from the date of each payment of royalties complete and accurate records of sales by such party of each Product in sufficient detail to allow the accruing royalties to be determined accurately. The receiving party shall have the right for a period of three (3) years after receiving any report or statement with respect to royalties due and payable to appoint at its expense an independent certified public accountant reasonably acceptable to the payor to inspect the relevant records of the payor to verify such report or statement. The payor shall make its records available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon reasonable notice from the recipient of royalties, to the extent reasonably necessary, to verify the accuracy of the reports and payments. Such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales in any given period. Both parties agree to hold in strict confidence all information concerning royalty payments and reports, and all information learned 6

in the course of any audit or inspection, except to the extent necessary for the payee to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law. The failure of the payee to request verification of any report or statement during said three-year period shall be considered acceptance of the accuracy of such report, and the payor shall have no obligation to maintain records pertaining to such report or statement beyond said three-year period. The results of each inspection, if any, shall be binding on both parties. 4.8 Milestone Payments. If Pfizer is the Developing Party, then Pfizer shall pay to OSI Pharmaceuticals, within sixty (60) days of the completion of each event set forth below ("Event"), the payment listed opposite that Event. Payments shall be made in US dollars by wire transfer in immediately available funds to a U.S. bank account designated by OSI Pharmaceuticals, or other mutually acceptable means. Pfizer shall be obligated to make each payment only once with respect to each Compound. All payments made by Pfizer pursuant to this Section 4.8 with respect to a Product are non-refundable but shall be credited against all sums due to OSI Pharmaceuticals pursuant to Section 4.2.1 of this Agreement with respect to Net Sales of such Product; provided, however, that the sums due pursuant to Section 4.2.1 in any calendar year with respect to such Product shall not be reduced by virtue of this credit by more than ** percent **:
Event ----Notification by Pfizer to OSI Pharmaceuticals of intent to develop and commercialize Product NDA/PLA Submission in any country NDA/PLA Approval in any country Amount ------

1.

** ** **

2. 3.

in the course of any audit or inspection, except to the extent necessary for the payee to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law. The failure of the payee to request verification of any report or statement during said three-year period shall be considered acceptance of the accuracy of such report, and the payor shall have no obligation to maintain records pertaining to such report or statement beyond said three-year period. The results of each inspection, if any, shall be binding on both parties. 4.8 Milestone Payments. If Pfizer is the Developing Party, then Pfizer shall pay to OSI Pharmaceuticals, within sixty (60) days of the completion of each event set forth below ("Event"), the payment listed opposite that Event. Payments shall be made in US dollars by wire transfer in immediately available funds to a U.S. bank account designated by OSI Pharmaceuticals, or other mutually acceptable means. Pfizer shall be obligated to make each payment only once with respect to each Compound. All payments made by Pfizer pursuant to this Section 4.8 with respect to a Product are non-refundable but shall be credited against all sums due to OSI Pharmaceuticals pursuant to Section 4.2.1 of this Agreement with respect to Net Sales of such Product; provided, however, that the sums due pursuant to Section 4.2.1 in any calendar year with respect to such Product shall not be reduced by virtue of this credit by more than ** percent **:
Event ----Notification by Pfizer to OSI Pharmaceuticals of intent to develop and commercialize Product NDA/PLA Submission in any country NDA/PLA Approval in any country Amount ------

1.

** ** **

2. 3.

** This portion has been redacted pursuant to a request for confidential treatment. 7

For the purposes of the foregoing, "NDA/PLA" shall mean a New Drug Application or Product License Application or other application for authority to market a Product filed with the U.S. FDA or a counterpart health regulatory agency in another country. 4.9 Development Costs. Upon written notification by Pfizer to OSI Pharmaceuticals of Pfizer's intent to develop and commercialize any Product, Pfizer shall reimburse to OSI Pharmaceuticals all reasonable costs associated with Phase I and Phase II clinical trials pursuant to the Development Program within sixty (60) days. 5. Legal Action. 5.1 Actual or Threatened Disclosure or Infringement. When information comes to the attention of the Developing Party to the effect that any Patent Rights relating to a Product have been or are threatened to be unlawfully infringed, the Developing Party shall have the right at its expense to take such action as it may deem necessary to prosecute or prevent such unlawful infringement, including the right to bring or defend any suit, action or proceeding involving any such infringement. The Developing Party shall notify the Licensor promptly of the receipt of any such information and of the commencement of any such suit, action or proceeding. If the Developing Party determines that it is necessary or desirable for the Licensor to join any such suit, action or proceeding, the Licensor shall, at the Developing Party's expense, execute all papers and perform such other acts as may be reasonably required to permit the Developing Party to commence such action, suit or proceeding in which case the Developing Party shall hold Licensor free, 8

clear and harmless from any and all costs and expenses of litigation, including attorneys fees. If the Developing

For the purposes of the foregoing, "NDA/PLA" shall mean a New Drug Application or Product License Application or other application for authority to market a Product filed with the U.S. FDA or a counterpart health regulatory agency in another country. 4.9 Development Costs. Upon written notification by Pfizer to OSI Pharmaceuticals of Pfizer's intent to develop and commercialize any Product, Pfizer shall reimburse to OSI Pharmaceuticals all reasonable costs associated with Phase I and Phase II clinical trials pursuant to the Development Program within sixty (60) days. 5. Legal Action. 5.1 Actual or Threatened Disclosure or Infringement. When information comes to the attention of the Developing Party to the effect that any Patent Rights relating to a Product have been or are threatened to be unlawfully infringed, the Developing Party shall have the right at its expense to take such action as it may deem necessary to prosecute or prevent such unlawful infringement, including the right to bring or defend any suit, action or proceeding involving any such infringement. The Developing Party shall notify the Licensor promptly of the receipt of any such information and of the commencement of any such suit, action or proceeding. If the Developing Party determines that it is necessary or desirable for the Licensor to join any such suit, action or proceeding, the Licensor shall, at the Developing Party's expense, execute all papers and perform such other acts as may be reasonably required to permit the Developing Party to commence such action, suit or proceeding in which case the Developing Party shall hold Licensor free, 8

clear and harmless from any and all costs and expenses of litigation, including attorneys fees. If the Developing Party brings a suit, it shall have the right first to reimburse itself out of any sums recovered in such suit or in its settlement for all costs and expenses, including attorney's fees, related to such suit or settlement, and twenty-five percent (25%) of any funds that shall remain from said recovery shall be paid to Licensor and the balance of such funds shall be retained by the Developing Party. If the Developing Party does not, within one hundred twenty (120) days after giving notice to the Licensor of the above-described information, notify the Licensor of the Developing Party's intent to bring suit against any infringer, the Licensor shall have the right to bring suit for such alleged infringement, but it shall not be obligated to do so, and may join the Developing Party as party plaintiff, if appropriate, in which event the Licensor shall hold the Developing Party free, clear and harmless from any and all costs and expenses of such litigation, including attorney's fees, and any sums recovered in any such suit or in its settlement shall belong to the Licensor. However, twenty-five percent (25%) of any such sums received by the Licensor, after deduction of all costs and expenses related to such suit or settlement, including attorney's fees paid, shall be paid to the Developing Party. Each party shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted by the other for infringement under the terms of this Section. If the Developing Party lacks standing and the Licensor has standing to bring any such suit, action or proceeding, then the Licensor shall do so at the request of the Developing Party and at the Developing Party's expense. 5.2 Defense of Infringement Claims. The Licensor will cooperate with the Developing Party at the Developing Party's expense in the defense of any suit, action or proceeding against the Developing Party or any sublicensee of the Developing Party alleging the infringement of the intellectual property rights of a third party by reason of the use of Patent Rights in the manufacture, use or sale of a Product. The Developing Party shall give the Licensor prompt written notice of the commencement of any such suit, action or proceeding or claim of infringement and will furnish the Licensor a copy of each communication relating to the alleged infringement. The Licensor shall give to the Developing Party all authority (including the right to exclusive control of the defense of any such suit, action or proceeding and the exclusive right after consultation with the Licensor, to compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding), at the Developing Party's expense, and shall provide all information and assistance necessary to defend or settle any such suit, action or proceeding; provided, however, the Developing Party shall obtain the Licensor's prior consent to such part of any settlement which contemplates payment or other action by the Licensor or has a material adverse effect on the Licensor's business. If the parties agree that the Licensor should institute or join any suit, action or proceeding pursuant to this Section, the Developing Party

clear and harmless from any and all costs and expenses of litigation, including attorneys fees. If the Developing Party brings a suit, it shall have the right first to reimburse itself out of any sums recovered in such suit or in its settlement for all costs and expenses, including attorney's fees, related to such suit or settlement, and twenty-five percent (25%) of any funds that shall remain from said recovery shall be paid to Licensor and the balance of such funds shall be retained by the Developing Party. If the Developing Party does not, within one hundred twenty (120) days after giving notice to the Licensor of the above-described information, notify the Licensor of the Developing Party's intent to bring suit against any infringer, the Licensor shall have the right to bring suit for such alleged infringement, but it shall not be obligated to do so, and may join the Developing Party as party plaintiff, if appropriate, in which event the Licensor shall hold the Developing Party free, clear and harmless from any and all costs and expenses of such litigation, including attorney's fees, and any sums recovered in any such suit or in its settlement shall belong to the Licensor. However, twenty-five percent (25%) of any such sums received by the Licensor, after deduction of all costs and expenses related to such suit or settlement, including attorney's fees paid, shall be paid to the Developing Party. Each party shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted by the other for infringement under the terms of this Section. If the Developing Party lacks standing and the Licensor has standing to bring any such suit, action or proceeding, then the Licensor shall do so at the request of the Developing Party and at the Developing Party's expense. 5.2 Defense of Infringement Claims. The Licensor will cooperate with the Developing Party at the Developing Party's expense in the defense of any suit, action or proceeding against the Developing Party or any sublicensee of the Developing Party alleging the infringement of the intellectual property rights of a third party by reason of the use of Patent Rights in the manufacture, use or sale of a Product. The Developing Party shall give the Licensor prompt written notice of the commencement of any such suit, action or proceeding or claim of infringement and will furnish the Licensor a copy of each communication relating to the alleged infringement. The Licensor shall give to the Developing Party all authority (including the right to exclusive control of the defense of any such suit, action or proceeding and the exclusive right after consultation with the Licensor, to compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding), at the Developing Party's expense, and shall provide all information and assistance necessary to defend or settle any such suit, action or proceeding; provided, however, the Developing Party shall obtain the Licensor's prior consent to such part of any settlement which contemplates payment or other action by the Licensor or has a material adverse effect on the Licensor's business. If the parties agree that the Licensor should institute or join any suit, action or proceeding pursuant to this Section, the Developing Party may, at the Developing Party's expense, join the Licensor as a defendant if necessary or desirable, and the Licensor shall execute all documents and take all other actions, including giving testimony, which may reasonably be required in connection with the prosecution of such suit, action or proceeding. 9

5.3 Hold Harmless. The Licensor agrees to defend, protect, indemnify and hold harmless the Developing Party and any sublicensee of the Developing Party, from and against any loss or expense arising from any proven claim of a third party that it has been granted rights by the Licensor that the Developing Party or any sublicensee of the Developing Party in exercising their rights granted to the Developing Party by the Licensor pursuant to this Agreement, has infringed upon such rights granted to such third party by the Licensor. 5.4 Third Party Licenses. If the manufacture, use or sale by the Developing Party of a Product in any country would, in the opinion of both the Developing Party and the Licensor, infringe a patent owned by a third party, the Developing Party and the Licensor, upon mutual consent, shall attempt to obtain a license under such patent at the Developing Party's expense. If such license is obtained under such patent, fifty percent (50%) of any payments made by the Developing Party to such third party shall be deductible from royalty payments due from the Developing Party to the Licensor pursuant to this Agreement; provided, however, that in no event shall royalties payable to the Licensor be lower than ** percent ** of Net Sales as a result of all such deductions. All such computations, payments, and adjustments shall be on a country by country and patent by patent basis.

5.3 Hold Harmless. The Licensor agrees to defend, protect, indemnify and hold harmless the Developing Party and any sublicensee of the Developing Party, from and against any loss or expense arising from any proven claim of a third party that it has been granted rights by the Licensor that the Developing Party or any sublicensee of the Developing Party in exercising their rights granted to the Developing Party by the Licensor pursuant to this Agreement, has infringed upon such rights granted to such third party by the Licensor. 5.4 Third Party Licenses. If the manufacture, use or sale by the Developing Party of a Product in any country would, in the opinion of both the Developing Party and the Licensor, infringe a patent owned by a third party, the Developing Party and the Licensor, upon mutual consent, shall attempt to obtain a license under such patent at the Developing Party's expense. If such license is obtained under such patent, fifty percent (50%) of any payments made by the Developing Party to such third party shall be deductible from royalty payments due from the Developing Party to the Licensor pursuant to this Agreement; provided, however, that in no event shall royalties payable to the Licensor be lower than ** percent ** of Net Sales as a result of all such deductions. All such computations, payments, and adjustments shall be on a country by country and patent by patent basis. 6. Representation and Warranty. The Developing Party and the Licensor represent and warrant to each other that it has the right to grant the licenses granted pursuant to this Agreement, and that the licenses so granted do not conflict with or violate the terms of any other agreements between the Licensor, or the Developing Party and any other third party. ** This portion has been redacted pursuant to a request for confidential treatment. 10

7. Treatment of Confidential Information. 7.1 Confidentiality. 7.1.1 Pfizer and OSI Pharmaceuticals each recognize that the other's Confidential Information constitutes highly valuable, confidential information. Subject to each party's rights and obligations pursuant to this Agreement, Pfizer and OSI Pharmaceuticals each agree that during the term of the Development Agreement and for five (5) years thereafter, it will keep confidential, and will cause its Affiliates or Sublicensees to keep confidential, all OSI Pharmaceuticals Confidential Information or Pfizer Confidential Information, as the case may be, that is disclosed to it or to any of its Affiliates pursuant to this Agreement. Neither Pfizer, its Affiliates nor OSI Pharmaceuticals shall use Confidential Information of the other party except as expressly permitted under this Agreement. For all purposes of this Section 7, it is understood that Program Technology shall be deemed Confidential Information of both parties. 7.1.2 Subject to Pfizer's rights and obligations pursuant to this Agreement, Pfizer and OSI Pharmaceuticals each agree that any disclosure of the other's Confidential Information to any officer, employee or agent of the other party or of any of its Affiliates shall be made only if and to the extent necessary to carry out its responsibilities under this Agreement and shall be limited to the maximum extent possible consistent with such responsibilities. Subject to each party's rights and obligations pursuant to this Agreement, Pfizer and OSI Pharmaceuticals each agree not to disclose the other's Confidential Information to any third parties under any circumstance without written permission from the other party. Each party shall take such action, and shall cause its Affiliates or Sublicensees to take such action, to preserve the confidentiality of each other's Confidential Information as it would customarily take to preserve the confidentiality of its own Confidential Information. Each party, upon the other's request, will return all the Confidential Information disclosed to it by the other party pursuant to this Agreement, including all copies and extracts of documents, within sixty (60) days of the request upon the termination of this Agreement except for one (1) copy which may be kept for the purpose of complying with continuing obligations under this Agreement.

7. Treatment of Confidential Information. 7.1 Confidentiality. 7.1.1 Pfizer and OSI Pharmaceuticals each recognize that the other's Confidential Information constitutes highly valuable, confidential information. Subject to each party's rights and obligations pursuant to this Agreement, Pfizer and OSI Pharmaceuticals each agree that during the term of the Development Agreement and for five (5) years thereafter, it will keep confidential, and will cause its Affiliates or Sublicensees to keep confidential, all OSI Pharmaceuticals Confidential Information or Pfizer Confidential Information, as the case may be, that is disclosed to it or to any of its Affiliates pursuant to this Agreement. Neither Pfizer, its Affiliates nor OSI Pharmaceuticals shall use Confidential Information of the other party except as expressly permitted under this Agreement. For all purposes of this Section 7, it is understood that Program Technology shall be deemed Confidential Information of both parties. 7.1.2 Subject to Pfizer's rights and obligations pursuant to this Agreement, Pfizer and OSI Pharmaceuticals each agree that any disclosure of the other's Confidential Information to any officer, employee or agent of the other party or of any of its Affiliates shall be made only if and to the extent necessary to carry out its responsibilities under this Agreement and shall be limited to the maximum extent possible consistent with such responsibilities. Subject to each party's rights and obligations pursuant to this Agreement, Pfizer and OSI Pharmaceuticals each agree not to disclose the other's Confidential Information to any third parties under any circumstance without written permission from the other party. Each party shall take such action, and shall cause its Affiliates or Sublicensees to take such action, to preserve the confidentiality of each other's Confidential Information as it would customarily take to preserve the confidentiality of its own Confidential Information. Each party, upon the other's request, will return all the Confidential Information disclosed to it by the other party pursuant to this Agreement, including all copies and extracts of documents, within sixty (60) days of the request upon the termination of this Agreement except for one (1) copy which may be kept for the purpose of complying with continuing obligations under this Agreement. 7.2 Publicity. Except as required by law, neither party may disclose the terms of this Agreement without the written consent of the other party, which consent shall not be unreasonably withheld. 11

7.3 Disclosure Required By Law. If either party is requested to disclose Confidential Information in connection with a legal or administrative proceeding or is otherwise required by law to disclose Confidential Information, such party will give the other party prompt notice of such request. The disclosing party may seek an appropriate protective order or other remedy or waive compliance with the provisions of this Agreement. If such party seeks a protective order or other remedy, the other party will cooperate. If such party fails to obtain a protective order or waive compliance with the relevant provisions of this Agreement, the other party will disclose only that portion of Confidential Information which its legal counsel determines it is required to disclose. 7.4 Disclosure of Inventions. Each party shall promptly inform the other about all inventions in the Area that are conceived, made or developed in the course of carrying out the Development Program by employees of, consultants to, either of them solely, or jointly with employees of, or consultants to the other. 7.5 Acquisition of Rights from Third Parties. During the Development Program, OSI Pharmaceuticals and Pfizer shall each promptly notify each other of any and all opportunities to acquire in any manner from third parties, technology or patents or information which may be useful in or relate to the Development Program. In each case, Pfizer and OSI Pharmaceuticals shall decide if such rights should be acquired in connection with the Development Program and, if so, whether by OSI Pharmaceuticals, Pfizer or both. If acquired such rights shall become part of the Confidential Information, Program Technology or Patent Rights, whichever is appropriate, of the acquiring party. Pfizer shall pay all costs of acquiring and maintaining rights to such intellectual property, at Pfizer's sole discretion, provided that OSI Pharmaceuticals shall have no obligation or liability hereunder with respect to such rights in the event Pfizer shall elect not to acquire such rights. 8. Provisions Concerning Filing, Prosecution and Maintenance of Patent Rights. The following provisions relate to the filing, prosecution and maintenance of Patent Rights during the Development Program:

7.3 Disclosure Required By Law. If either party is requested to disclose Confidential Information in connection with a legal or administrative proceeding or is otherwise required by law to disclose Confidential Information, such party will give the other party prompt notice of such request. The disclosing party may seek an appropriate protective order or other remedy or waive compliance with the provisions of this Agreement. If such party seeks a protective order or other remedy, the other party will cooperate. If such party fails to obtain a protective order or waive compliance with the relevant provisions of this Agreement, the other party will disclose only that portion of Confidential Information which its legal counsel determines it is required to disclose. 7.4 Disclosure of Inventions. Each party shall promptly inform the other about all inventions in the Area that are conceived, made or developed in the course of carrying out the Development Program by employees of, consultants to, either of them solely, or jointly with employees of, or consultants to the other. 7.5 Acquisition of Rights from Third Parties. During the Development Program, OSI Pharmaceuticals and Pfizer shall each promptly notify each other of any and all opportunities to acquire in any manner from third parties, technology or patents or information which may be useful in or relate to the Development Program. In each case, Pfizer and OSI Pharmaceuticals shall decide if such rights should be acquired in connection with the Development Program and, if so, whether by OSI Pharmaceuticals, Pfizer or both. If acquired such rights shall become part of the Confidential Information, Program Technology or Patent Rights, whichever is appropriate, of the acquiring party. Pfizer shall pay all costs of acquiring and maintaining rights to such intellectual property, at Pfizer's sole discretion, provided that OSI Pharmaceuticals shall have no obligation or liability hereunder with respect to such rights in the event Pfizer shall elect not to acquire such rights. 8. Provisions Concerning Filing, Prosecution and Maintenance of Patent Rights. The following provisions relate to the filing, prosecution and maintenance of Patent Rights during the Development Program: 8.1 Filing, Prosecution and Maintenance by OSI Pharmaceuticals. With respect to Patent Rights in which OSI Pharmaceuticals employees or consultants, alone or together with Pfizer 12

employees, or consultants are named as inventors, OSI Pharmaceuticals shall have the exclusive right and obligation: (a) to file applications for letters patent on patentable inventions included in Patent Rights; provided, however, that OSI Pharmaceuticals shall consult with Pfizer regarding countries in which such patent applications should be filed and shall file patent applications in those countries where Pfizer requests that OSI Pharmaceuticals file such applications; and, further provided, that OSI Pharmaceuticals, at its option and expense, may file in countries where Pfizer does not request that OSI Pharmaceuticals file such applications; (b) to take all reasonable steps to prosecute all pending and new patent applications included within Patent Rights; (c) to respond to oppositions, nullity actions, re-examinations, revocation actions and similar proceedings filed by third parties against the grant of letters patent for such applications; (d) to maintain in force any letters patent included in Patent Rights by duly filing all necessary papers and paying any fees required by the patent laws of the particular country in which such letters patent were granted; and OSI Pharmaceuticals shall notify Pfizer in a timely manner of any decision to abandon a pending patent application or an issued patent included in Patent Rights. Thereafter, Pfizer shall have the option, at its expense, of continuing to prosecute any such pending patent application or of keeping the issued patent in force. 8.1.1 Copies of Documents. OSI Pharmaceuticals and Pfizer shall provide to each other copies of all patent applications that are part of Patent Rights prior to filing, for the purpose of obtaining substantive comment of the other party's patent counsel. OSI Pharmaceuticals and Pfizer shall also provide to the other copies of all documents relating to prosecution of all such patent applications in a timely manner and shall provide to the other every six (6) months a report detailing the status of all patent applications that are a part of Patent Rights.

employees, or consultants are named as inventors, OSI Pharmaceuticals shall have the exclusive right and obligation: (a) to file applications for letters patent on patentable inventions included in Patent Rights; provided, however, that OSI Pharmaceuticals shall consult with Pfizer regarding countries in which such patent applications should be filed and shall file patent applications in those countries where Pfizer requests that OSI Pharmaceuticals file such applications; and, further provided, that OSI Pharmaceuticals, at its option and expense, may file in countries where Pfizer does not request that OSI Pharmaceuticals file such applications; (b) to take all reasonable steps to prosecute all pending and new patent applications included within Patent Rights; (c) to respond to oppositions, nullity actions, re-examinations, revocation actions and similar proceedings filed by third parties against the grant of letters patent for such applications; (d) to maintain in force any letters patent included in Patent Rights by duly filing all necessary papers and paying any fees required by the patent laws of the particular country in which such letters patent were granted; and OSI Pharmaceuticals shall notify Pfizer in a timely manner of any decision to abandon a pending patent application or an issued patent included in Patent Rights. Thereafter, Pfizer shall have the option, at its expense, of continuing to prosecute any such pending patent application or of keeping the issued patent in force. 8.1.1 Copies of Documents. OSI Pharmaceuticals and Pfizer shall provide to each other copies of all patent applications that are part of Patent Rights prior to filing, for the purpose of obtaining substantive comment of the other party's patent counsel. OSI Pharmaceuticals and Pfizer shall also provide to the other copies of all documents relating to prosecution of all such patent applications in a timely manner and shall provide to the other every six (6) months a report detailing the status of all patent applications that are a part of Patent Rights. 8.1.2 Reimbursement of Costs for Filing Prosecuting and Maintaining Patent Rights. Within thirty (30) days of receipt of invoices from OSI Pharmaceuticals, Pfizer shall reimburse OSI Pharmaceuticals for all the costs of filing, prosecuting, responding to opposition and maintaining patent applications and patents in countries where Pfizer requests that patent 13

applications be filed, prosecuted and maintained. Such reimbursement shall be in addition to other funding payments under this Agreement and shall include such costs of all activities described in 8.1 (a)-(e) above. However, Pfizer may, upon sixty (60) days notice, request that OSI Pharmaceuticals discontinue filing or prosecution of patent applications in any country and discontinue reimbursing OSI Pharmaceuticals for the costs of filing, prosecuting, responding to opposition or maintaining such patent application or patent in any country. OSI Pharmaceuticals shall pay all costs in those countries in which Pfizer requests that OSI Pharmaceuticals not file, prosecute or maintain patent applications and patents, but in which OSI Pharmaceuticals, at its option, elects to do so. 8.1.3 The Developing Party shall have the right to file on behalf of and as an agent for the Licensor all applications for, and take all actions necessary to obtain patent extensions pursuant to 35 USC Section 156 and foreign counterparts with respect to the Patent Rights to the extent that such extensions are available by reason of a Product under this Agreement during the period the Agreement is in effect. The Licensor shall have the obligation to sign, such further documents and take such further actions as may be requested by the Developing Party in this regard, at the Developing Party's expense 8.2 Filing, Prosecution and Maintenance by Pfizer. During the term of the Development Program, with respect to Patent Rights in which Pfizer employees or consultants alone are named as inventors, Pfizer shall have those rights and duties ascribed to OSI Pharmaceuticals in Section 8.1, except that Pfizer will bear all related expenses. 8.3 Filing, Prosecution and Maintenance by the Developing Party. During the term of the grant described in Section 3.2 and 3.3, the Developing Party shall have those rights and duties ascribed to OSI Pharmaceuticals in

applications be filed, prosecuted and maintained. Such reimbursement shall be in addition to other funding payments under this Agreement and shall include such costs of all activities described in 8.1 (a)-(e) above. However, Pfizer may, upon sixty (60) days notice, request that OSI Pharmaceuticals discontinue filing or prosecution of patent applications in any country and discontinue reimbursing OSI Pharmaceuticals for the costs of filing, prosecuting, responding to opposition or maintaining such patent application or patent in any country. OSI Pharmaceuticals shall pay all costs in those countries in which Pfizer requests that OSI Pharmaceuticals not file, prosecute or maintain patent applications and patents, but in which OSI Pharmaceuticals, at its option, elects to do so. 8.1.3 The Developing Party shall have the right to file on behalf of and as an agent for the Licensor all applications for, and take all actions necessary to obtain patent extensions pursuant to 35 USC Section 156 and foreign counterparts with respect to the Patent Rights to the extent that such extensions are available by reason of a Product under this Agreement during the period the Agreement is in effect. The Licensor shall have the obligation to sign, such further documents and take such further actions as may be requested by the Developing Party in this regard, at the Developing Party's expense 8.2 Filing, Prosecution and Maintenance by Pfizer. During the term of the Development Program, with respect to Patent Rights in which Pfizer employees or consultants alone are named as inventors, Pfizer shall have those rights and duties ascribed to OSI Pharmaceuticals in Section 8.1, except that Pfizer will bear all related expenses. 8.3 Filing, Prosecution and Maintenance by the Developing Party. During the term of the grant described in Section 3.2 and 3.3, the Developing Party shall have those rights and duties ascribed to OSI Pharmaceuticals in Section 8.1, and will bear all related expenses. 8.4 Neither party may disclaim a Valid Claim within Patent Rights without the consent of the other. 9. Other Agreements. This Agreement, and the 1996 Research Agreement are the sole agreements with respect to the subject matter and supersede all other agreements and understanding between the parties with respect to same. 14

10. Termination and Disengagement. 10.1 Events of Termination. The following events shall constitute events of termination ("Events of Termination"): (a) Any written representation or warranty by OSI Pharmaceuticals or Pfizer, or any of its officers, made under or in connection with this Agreement shall prove to have been incorrect in any material respect when made; (b) OSI Pharmaceuticals or Pfizer shall fail in any material respect to perform or observe any term, covenant or understanding contained in this Agreement or in any of the other documents or instruments delivered pursuant to, or concurrently with, this Agreement, and any such failure shall remain unremedied for thirty (30) days after written notice to the failing party. 10.2 Termination. Upon the occurrence of any Event of Termination, the party not responsible may, by notice to the other party, terminate this Agreement. 10.3 Upon the occurrence of any Event of Termination, if the Licensor terminates this Agreement, the license granted to the Developing Party will terminate. 10.4 Termination of this Agreement for any reason shall be without prejudice to: (a) the rights and obligations of the parties provided in all Sections (b) the Licensor's right to receive all royalty payments accrued hereunder; or

10. Termination and Disengagement. 10.1 Events of Termination. The following events shall constitute events of termination ("Events of Termination"): (a) Any written representation or warranty by OSI Pharmaceuticals or Pfizer, or any of its officers, made under or in connection with this Agreement shall prove to have been incorrect in any material respect when made; (b) OSI Pharmaceuticals or Pfizer shall fail in any material respect to perform or observe any term, covenant or understanding contained in this Agreement or in any of the other documents or instruments delivered pursuant to, or concurrently with, this Agreement, and any such failure shall remain unremedied for thirty (30) days after written notice to the failing party. 10.2 Termination. Upon the occurrence of any Event of Termination, the party not responsible may, by notice to the other party, terminate this Agreement. 10.3 Upon the occurrence of any Event of Termination, if the Licensor terminates this Agreement, the license granted to the Developing Party will terminate. 10.4 Termination of this Agreement for any reason shall be without prejudice to: (a) the rights and obligations of the parties provided in all Sections (b) the Licensor's right to receive all royalty payments accrued hereunder; or (c) any other remedies which either party may otherwise have. 11. Indemnification. Pfizer and OSI Pharmaceuticals will indemnify each other for damages, settlements, costs, legal fees and other expenses incurred in connection with a claim by a third party against either party based on any action or omission of the indemnifying party's agents, employees, or officers related to its obligations under this Agreement; provided, however, that the foregoing shall not apply (i) if the claim is found to be based upon the negligence, recklessness or willful misconduct of the party seeking indemnification; or (ii) if such party fails to give the other party prompt notice of any claim it receives and such failure materially prejudices the other party with respect to any claim or action to which its obligation pursuant to this Section applies. Notwithstanding the foregoing, Pfizer shall not indemnify OSI Pharmaceuticals for claims arising from the clinical trials performed by OSI Pharmaceuticals pursuant to this Development 15

Agreement and further, the Licensor shall not indemnify the Developing Party for claims arising from the sale of Products or the License Agreement (including without limitation product liability claims) and the Developing Party shall indemnify the Licensor with respect to such claims and to claims arising from Patent Rights and Program Technology. Each party, in its sole discretion, shall choose legal counsel, shall control the defense of such claim or action and shall have the right to settle same on such terms and conditions it deems advisable; provided however, it shall obtain the other party's prior consent to such part of any settlement which requires payment or other action by the other party or is likely to have a material adverse effect on the other party's business. 12. Notices and Reports. 12.1 All notices shall be in writing mailed via certified mail, return receipt requested, courier, or facsimile transmission addressed as follows, or to such other address as may be designated from time to time:
If to Pfizer: Pfizer Inc 235 East 42nd Street New York, NY 10017 Attention: President, Central Research with copy to: General Counsel

Agreement and further, the Licensor shall not indemnify the Developing Party for claims arising from the sale of Products or the License Agreement (including without limitation product liability claims) and the Developing Party shall indemnify the Licensor with respect to such claims and to claims arising from Patent Rights and Program Technology. Each party, in its sole discretion, shall choose legal counsel, shall control the defense of such claim or action and shall have the right to settle same on such terms and conditions it deems advisable; provided however, it shall obtain the other party's prior consent to such part of any settlement which requires payment or other action by the other party or is likely to have a material adverse effect on the other party's business. 12. Notices and Reports. 12.1 All notices shall be in writing mailed via certified mail, return receipt requested, courier, or facsimile transmission addressed as follows, or to such other address as may be designated from time to time:
If to Pfizer: Pfizer Inc 235 East 42nd Street New York, NY 10017 Attention: President, Central Research with copy to: General Counsel OSI Pharmaceuticals Inc. 106 Charles Lindbergh Blvd. Uniondale, New York 11553-3649 Attention: Dr. Colin Goddard

If to OSI Pharmaceuticals:

Notices shall be deemed given as of the date sent. 12.2 Reports. The Developing Party agrees to keep the Licensor informed with respect to activities and progress toward further research, development and commercialization of Products. The Developing Party agrees to provide to the Licensor every six months a summary 16

of such activities and progress. In addition, the Developing Party will provide to the Licensor copies of any data regarding the Products together with copies of any reports or summaries of such data. The Licensor agrees that all such information will be deemed Confidential Information belonging to the Developing Party. 13. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 14. Miscellaneous. 14.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. 14.2 Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 14.3 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 14.4 Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any party at any time or times to require performance of any provisions shall in no manner affect the rights at a later time to enforce the same. No waiver by any party of any condition or of the breach of any term contained in this Agreement, whether by conduct, or otherwise, in any one or more instances, shall be deemed to be, or considered as, a further or continuing waiver of any such condition or of the breach of such term or any other term of this Agreement.

of such activities and progress. In addition, the Developing Party will provide to the Licensor copies of any data regarding the Products together with copies of any reports or summaries of such data. The Licensor agrees that all such information will be deemed Confidential Information belonging to the Developing Party. 13. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 14. Miscellaneous. 14.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. 14.2 Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 14.3 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 14.4 Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any party at any time or times to require performance of any provisions shall in no manner affect the rights at a later time to enforce the same. No waiver by any party of any condition or of the breach of any term contained in this Agreement, whether by conduct, or otherwise, in any one or more instances, shall be deemed to be, or considered as, a further or continuing waiver of any such condition or of the breach of such term or any other term of this Agreement. 14.5 No Third Party Beneficiaries. No third party including any employee of any party to this Agreement, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties partners with each other or any third party. 14.6 Assignment and Successors. This Agreement may not be assigned by either party, except that each party may assign this Agreement and the rights and interests of such 17

party, in whole or in part, to any of its Affiliates, any purchaser of all or substantially all of its assets or to any successor corporation resulting from any merger or consolidation of such party with or into such corporations. 14.7 Force Majeure. Neither Pfizer nor OSI Pharmaceuticals shall be liable for failure of or delay in performing obligations set forth in this Agreement, and neither shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes reasonably beyond the control of Pfizer or OSI Pharmaceuticals. 14.8 Severability. If any provision of this Agreement is or becomes invalid or is ruled invalid by any court of competent jurisdiction or is deemed unenforceable, it is the intention of the parties that the remainder of the Agreement shall not be affected. 18

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.
PFIZER INC OSI PHARMACEUTICALS, INC.

By: /s/ ---------------------------

By: /s/ ----------------------------------------

party, in whole or in part, to any of its Affiliates, any purchaser of all or substantially all of its assets or to any successor corporation resulting from any merger or consolidation of such party with or into such corporations. 14.7 Force Majeure. Neither Pfizer nor OSI Pharmaceuticals shall be liable for failure of or delay in performing obligations set forth in this Agreement, and neither shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes reasonably beyond the control of Pfizer or OSI Pharmaceuticals. 14.8 Severability. If any provision of this Agreement is or becomes invalid or is ruled invalid by any court of competent jurisdiction or is deemed unenforceable, it is the intention of the parties that the remainder of the Agreement shall not be affected. 18

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.
PFIZER INC OSI PHARMACEUTICALS, INC.

By: /s/ --------------------------Title: Vice President

By: /s/ ---------------------------------------Title: President and Chief Executive Officer

cc: Pfizer Inc, Legal Division, Groton, CT 06340 19

Exhibit A ** ** This portion has been redacted pursuant to a request for confidential treatment. 20

Exhibit B ** ** This portion has been redacted pursuant to a request for confidential treatment. 21

AMENDMENT NO. 1 to the Collaborative Agreement dated as of April 19, 1995 between Novartis Pharma AG and OSI Pharmaceuticals, Inc. Novartis Pharma AG of Lichtstrasse 35, CH-4002 Basel, Switzerland and OSI Pharmaceuticals, Inc., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA agree to amend the above mentioned agreement (hereinafter referred to as "1995 Agreement") as follows: The four year time limit to exercise the option set forth in Section 5.7 of the 1995 Agreement will be extended until the end of May and such option right will therefore not expire until May 31, 1999.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.
PFIZER INC OSI PHARMACEUTICALS, INC.

By: /s/ --------------------------Title: Vice President

By: /s/ ---------------------------------------Title: President and Chief Executive Officer

cc: Pfizer Inc, Legal Division, Groton, CT 06340 19

Exhibit A ** ** This portion has been redacted pursuant to a request for confidential treatment. 20

Exhibit B ** ** This portion has been redacted pursuant to a request for confidential treatment. 21

AMENDMENT NO. 1 to the Collaborative Agreement dated as of April 19, 1995 between Novartis Pharma AG and OSI Pharmaceuticals, Inc. Novartis Pharma AG of Lichtstrasse 35, CH-4002 Basel, Switzerland and OSI Pharmaceuticals, Inc., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA agree to amend the above mentioned agreement (hereinafter referred to as "1995 Agreement") as follows: The four year time limit to exercise the option set forth in Section 5.7 of the 1995 Agreement will be extended until the end of May and such option right will therefore not expire until May 31, 1999. BASEL April 13, 1999 UNIONDALE April 13, 1999 Novartis Pharma AG OSI Pharmaceuticals, Inc.
/s/ Dr. I. Csendes Head Licensing Drug Delivery & Out-Licensing /s/ G. Schelling Legal Counsel /s/ Dr. C. Goddard Vice President, Business Development

Exhibit A ** ** This portion has been redacted pursuant to a request for confidential treatment. 20

Exhibit B ** ** This portion has been redacted pursuant to a request for confidential treatment. 21

AMENDMENT NO. 1 to the Collaborative Agreement dated as of April 19, 1995 between Novartis Pharma AG and OSI Pharmaceuticals, Inc. Novartis Pharma AG of Lichtstrasse 35, CH-4002 Basel, Switzerland and OSI Pharmaceuticals, Inc., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA agree to amend the above mentioned agreement (hereinafter referred to as "1995 Agreement") as follows: The four year time limit to exercise the option set forth in Section 5.7 of the 1995 Agreement will be extended until the end of May and such option right will therefore not expire until May 31, 1999. BASEL April 13, 1999 UNIONDALE April 13, 1999 Novartis Pharma AG OSI Pharmaceuticals, Inc.
/s/ Dr. I. Csendes Head Licensing Drug Delivery & Out-Licensing /s/ G. Schelling Legal Counsel /s/ Dr. C. Goddard Vice President, Business Development

Portions of Exhibit 10.5 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

May 31, 1999 OSI PHARMACEUTICALS, INC. and NOVARTIS PHARMA AG AMENDMENT NO. 2 TO COLLABORATIVE AGREEMENT

Exhibit B ** ** This portion has been redacted pursuant to a request for confidential treatment. 21

AMENDMENT NO. 1 to the Collaborative Agreement dated as of April 19, 1995 between Novartis Pharma AG and OSI Pharmaceuticals, Inc. Novartis Pharma AG of Lichtstrasse 35, CH-4002 Basel, Switzerland and OSI Pharmaceuticals, Inc., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA agree to amend the above mentioned agreement (hereinafter referred to as "1995 Agreement") as follows: The four year time limit to exercise the option set forth in Section 5.7 of the 1995 Agreement will be extended until the end of May and such option right will therefore not expire until May 31, 1999. BASEL April 13, 1999 UNIONDALE April 13, 1999 Novartis Pharma AG OSI Pharmaceuticals, Inc.
/s/ Dr. I. Csendes Head Licensing Drug Delivery & Out-Licensing /s/ G. Schelling Legal Counsel /s/ Dr. C. Goddard Vice President, Business Development

Portions of Exhibit 10.5 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

May 31, 1999 OSI PHARMACEUTICALS, INC. and NOVARTIS PHARMA AG AMENDMENT NO. 2 TO COLLABORATIVE AGREEMENT

Amendment No. 2 THIS AMENDMENT is made as of the 31st day of May, 1999 between NOVARTIS PHARMA AG, successor-in-interest to the pharmaceutical business of CIBA-GEIGY LIMITED, of Lichtstrasse 35, CH-4002 Basel, Switzerland (hereinafter referred to as "NOVARTIS") and OSI PHARMACEUTICALS, INC., formerly known as ONCOGENE SCIENCE, INC., of 106 Charles Lindbergh Boulevard, Uniondale, New York

AMENDMENT NO. 1 to the Collaborative Agreement dated as of April 19, 1995 between Novartis Pharma AG and OSI Pharmaceuticals, Inc. Novartis Pharma AG of Lichtstrasse 35, CH-4002 Basel, Switzerland and OSI Pharmaceuticals, Inc., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA agree to amend the above mentioned agreement (hereinafter referred to as "1995 Agreement") as follows: The four year time limit to exercise the option set forth in Section 5.7 of the 1995 Agreement will be extended until the end of May and such option right will therefore not expire until May 31, 1999. BASEL April 13, 1999 UNIONDALE April 13, 1999 Novartis Pharma AG OSI Pharmaceuticals, Inc.
/s/ Dr. I. Csendes Head Licensing Drug Delivery & Out-Licensing /s/ G. Schelling Legal Counsel /s/ Dr. C. Goddard Vice President, Business Development

Portions of Exhibit 10.5 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

May 31, 1999 OSI PHARMACEUTICALS, INC. and NOVARTIS PHARMA AG AMENDMENT NO. 2 TO COLLABORATIVE AGREEMENT

Amendment No. 2 THIS AMENDMENT is made as of the 31st day of May, 1999 between NOVARTIS PHARMA AG, successor-in-interest to the pharmaceutical business of CIBA-GEIGY LIMITED, of Lichtstrasse 35, CH-4002 Basel, Switzerland (hereinafter referred to as "NOVARTIS") and OSI PHARMACEUTICALS, INC., formerly known as ONCOGENE SCIENCE, INC., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA (hereinafter referred to as "OSI"). WHEREAS, NOVARTIS and OSI are partners in a Collaborative Agreement dated as of April 19, 1995 (the "1995 Agreement"), pursuant to which OSI granted to NOVARTIS an exclusive license with the right to grant sublicenses to manufacture, have manufactured, use and sell products containing the Compound (as defined in Clause 1.3 of the 1995 Agreement) for the Licensed Indications (as defined in Clause 1.5 of the 1995 Agreement) (all capitalized items used herein but not defined shall have the meanings described thereto in the 1995 Agreement); and

Portions of Exhibit 10.5 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission.

May 31, 1999 OSI PHARMACEUTICALS, INC. and NOVARTIS PHARMA AG AMENDMENT NO. 2 TO COLLABORATIVE AGREEMENT

Amendment No. 2 THIS AMENDMENT is made as of the 31st day of May, 1999 between NOVARTIS PHARMA AG, successor-in-interest to the pharmaceutical business of CIBA-GEIGY LIMITED, of Lichtstrasse 35, CH-4002 Basel, Switzerland (hereinafter referred to as "NOVARTIS") and OSI PHARMACEUTICALS, INC., formerly known as ONCOGENE SCIENCE, INC., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA (hereinafter referred to as "OSI"). WHEREAS, NOVARTIS and OSI are partners in a Collaborative Agreement dated as of April 19, 1995 (the "1995 Agreement"), pursuant to which OSI granted to NOVARTIS an exclusive license with the right to grant sublicenses to manufacture, have manufactured, use and sell products containing the Compound (as defined in Clause 1.3 of the 1995 Agreement) for the Licensed Indications (as defined in Clause 1.5 of the 1995 Agreement) (all capitalized items used herein but not defined shall have the meanings described thereto in the 1995 Agreement); and WHEREAS, pursuant to the 1995 Agreement, OSI also granted to NOVARTIS an option to acquire from OSI a license to manufacture, use and sell products containing TGF-(beta)3 and other TGF-(beta)s for all other indications not now included in the Licensed Indications; and WHEREAS, the four year time limit to exercise the option was extended until May 31, 1999 by an amendment to the 1995 Agreement ("Amendment 1") dated April 13, 1999; and WHEREAS, OSI and NOVARTIS hereby wish to amend certain terms of the 1995 Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. References. All references in the 1995 Agreement to "CIBA-GEIGY" or "CG" shall be deemed to be references to "NOVARTIS". All references in the 1995 Agreement to "ONCOGENE SCIENCE" shall be deemed to be references to "OSI". 2. Recitals. The recital (F) in the 1995 Agreement shall be deleted in its entirety and replaced with the following: "NOVARTIS also wishes to have the opportunity to acquire from OSI a license to manufacture, use and sell products containing TGF-(beta)3 and other TGF-(beta)s for certain other indications not now included in the Licensed Indications".

3. Definitions. (a) Section 1.5 of the 1995 Agreement shall be deleted in its entirety and replaced with the following:

May 31, 1999 OSI PHARMACEUTICALS, INC. and NOVARTIS PHARMA AG AMENDMENT NO. 2 TO COLLABORATIVE AGREEMENT

Amendment No. 2 THIS AMENDMENT is made as of the 31st day of May, 1999 between NOVARTIS PHARMA AG, successor-in-interest to the pharmaceutical business of CIBA-GEIGY LIMITED, of Lichtstrasse 35, CH-4002 Basel, Switzerland (hereinafter referred to as "NOVARTIS") and OSI PHARMACEUTICALS, INC., formerly known as ONCOGENE SCIENCE, INC., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA (hereinafter referred to as "OSI"). WHEREAS, NOVARTIS and OSI are partners in a Collaborative Agreement dated as of April 19, 1995 (the "1995 Agreement"), pursuant to which OSI granted to NOVARTIS an exclusive license with the right to grant sublicenses to manufacture, have manufactured, use and sell products containing the Compound (as defined in Clause 1.3 of the 1995 Agreement) for the Licensed Indications (as defined in Clause 1.5 of the 1995 Agreement) (all capitalized items used herein but not defined shall have the meanings described thereto in the 1995 Agreement); and WHEREAS, pursuant to the 1995 Agreement, OSI also granted to NOVARTIS an option to acquire from OSI a license to manufacture, use and sell products containing TGF-(beta)3 and other TGF-(beta)s for all other indications not now included in the Licensed Indications; and WHEREAS, the four year time limit to exercise the option was extended until May 31, 1999 by an amendment to the 1995 Agreement ("Amendment 1") dated April 13, 1999; and WHEREAS, OSI and NOVARTIS hereby wish to amend certain terms of the 1995 Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. References. All references in the 1995 Agreement to "CIBA-GEIGY" or "CG" shall be deemed to be references to "NOVARTIS". All references in the 1995 Agreement to "ONCOGENE SCIENCE" shall be deemed to be references to "OSI". 2. Recitals. The recital (F) in the 1995 Agreement shall be deleted in its entirety and replaced with the following: "NOVARTIS also wishes to have the opportunity to acquire from OSI a license to manufacture, use and sell products containing TGF-(beta)3 and other TGF-(beta)s for certain other indications not now included in the Licensed Indications".

3. Definitions. (a) Section 1.5 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "1.5 "Licensed Indications" shall mean: (i) bone, cartilage and tendon repair, and (ii) additional indications deemed to be included in the Licensed Indications pursuant to Clause 5.7 and Clause 5.8, as amended." (b) Section 1.7 of the 1995 Agreement shall be amended so that the language immediately following subsection

Amendment No. 2 THIS AMENDMENT is made as of the 31st day of May, 1999 between NOVARTIS PHARMA AG, successor-in-interest to the pharmaceutical business of CIBA-GEIGY LIMITED, of Lichtstrasse 35, CH-4002 Basel, Switzerland (hereinafter referred to as "NOVARTIS") and OSI PHARMACEUTICALS, INC., formerly known as ONCOGENE SCIENCE, INC., of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA (hereinafter referred to as "OSI"). WHEREAS, NOVARTIS and OSI are partners in a Collaborative Agreement dated as of April 19, 1995 (the "1995 Agreement"), pursuant to which OSI granted to NOVARTIS an exclusive license with the right to grant sublicenses to manufacture, have manufactured, use and sell products containing the Compound (as defined in Clause 1.3 of the 1995 Agreement) for the Licensed Indications (as defined in Clause 1.5 of the 1995 Agreement) (all capitalized items used herein but not defined shall have the meanings described thereto in the 1995 Agreement); and WHEREAS, pursuant to the 1995 Agreement, OSI also granted to NOVARTIS an option to acquire from OSI a license to manufacture, use and sell products containing TGF-(beta)3 and other TGF-(beta)s for all other indications not now included in the Licensed Indications; and WHEREAS, the four year time limit to exercise the option was extended until May 31, 1999 by an amendment to the 1995 Agreement ("Amendment 1") dated April 13, 1999; and WHEREAS, OSI and NOVARTIS hereby wish to amend certain terms of the 1995 Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. References. All references in the 1995 Agreement to "CIBA-GEIGY" or "CG" shall be deemed to be references to "NOVARTIS". All references in the 1995 Agreement to "ONCOGENE SCIENCE" shall be deemed to be references to "OSI". 2. Recitals. The recital (F) in the 1995 Agreement shall be deleted in its entirety and replaced with the following: "NOVARTIS also wishes to have the opportunity to acquire from OSI a license to manufacture, use and sell products containing TGF-(beta)3 and other TGF-(beta)s for certain other indications not now included in the Licensed Indications".

3. Definitions. (a) Section 1.5 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "1.5 "Licensed Indications" shall mean: (i) bone, cartilage and tendon repair, and (ii) additional indications deemed to be included in the Licensed Indications pursuant to Clause 5.7 and Clause 5.8, as amended." (b) Section 1.7 of the 1995 Agreement shall be amended so that the language immediately following subsection (v) shall be as follows: "all to the extent actually allowed, accrued or taken, and as determined in accordance with the standard accounting procedures of the party (i.e., NOVARTIS or OSI) making the Net Sales." (c) Section 1.11 of the 1995 Agreement shall be amended as follows: "1.11 "Products" shall mean pharmaceutical preparations containing the Compound designed for administration to human beings and animals which fall within the scope of the claims of the OSI Patents." 4. Supply of TGF-(beta)s.

3. Definitions. (a) Section 1.5 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "1.5 "Licensed Indications" shall mean: (i) bone, cartilage and tendon repair, and (ii) additional indications deemed to be included in the Licensed Indications pursuant to Clause 5.7 and Clause 5.8, as amended." (b) Section 1.7 of the 1995 Agreement shall be amended so that the language immediately following subsection (v) shall be as follows: "all to the extent actually allowed, accrued or taken, and as determined in accordance with the standard accounting procedures of the party (i.e., NOVARTIS or OSI) making the Net Sales." (c) Section 1.11 of the 1995 Agreement shall be amended as follows: "1.11 "Products" shall mean pharmaceutical preparations containing the Compound designed for administration to human beings and animals which fall within the scope of the claims of the OSI Patents." 4. Supply of TGF-(beta)s. (a) The second sentence of Section 3.3(d) of the 1995 Agreement shall be deleted and replaced with the following: "3.3(d) It is understood that NOVARTIS (i) shall not be obliged to scale up its manufacturing process solely to meet the requirements of OSI and OSI's licensees for research and development purposes and clinical trials, and (ii) shall only be obliged to supply Compound to OSI and OSI's licensees for such purposes as long as it has sufficient Compound for its own consumption. Provided NOVARTIS decides to initiate full development of a Product in the Licensed Indications, it is the intention of NOVARTIS to scale up such process to meet its estimated future requirements. NOVARTIS will use commercially reasonable efforts in designing its processing capacity so that it is adequate to also meet all of OSI's requirements and that of OSI's licensees for commercial quantities of the Compound foreseen at the time of such scale up. If such processing capacity proves to be adequate, NOVARTIS shall use reasonable efforts to also supply OSI and the licensees of OSI." (b) The third sentence of Section 3.3(d) of the 1995 Agreement shall be deleted and replaced with the following:

"3.3(d) Should NOVARTIS fail to do so, or if processing capacity should prove to be inadequate to meet all OSI actual requirements and NOVARTIS should be unwilling to invest in additional capacity, or if NOVARTIS decides not to initiate full development of a Product, it agrees if so requested to grant a license to OSI under the NOVARTIS Patents and NOVARTIS Know-How to produce the Compound on terms to be negotiated in good faith, the financial terms to be reasonable having regard to the cost of supplies of the Compound as at the date of the license negotiations, the cost to OSI of procuring the grant of licenses for any parts of the process covered by Third Party Patents, and the estimated production costs of OSI." (c) At the end of Section 3.3(e) of the 1995 Agreement the following language shall be added: "3.3(e) The parties furthermore agree that in case NOVARTIS decides not to continue the development of the Compound in the Licensed Indications NOVARTIS shall, upon the request of OSI, make available its remaining stock of Compound in accordance with the arrangements hereinafter, whereupon NOVARTIS shall no longer be required to produce further Compound for supply to OSI and OSI's licensees." (d) The second sentence of Section 3.3(f) of the 1995 Agreement shall be deleted and replaced with the following: "3.3(f) Except during the 36-month notification periods or in case of the discontinuance of the development of the Compound in the Licensed Indications as set forth in Sections 3.3(b) and 3.3(e), NOVARTIS shall, in the event that it is unable to supply the Compound to OSI for a period of 90 days by reason of force majeure or otherwise,

"3.3(d) Should NOVARTIS fail to do so, or if processing capacity should prove to be inadequate to meet all OSI actual requirements and NOVARTIS should be unwilling to invest in additional capacity, or if NOVARTIS decides not to initiate full development of a Product, it agrees if so requested to grant a license to OSI under the NOVARTIS Patents and NOVARTIS Know-How to produce the Compound on terms to be negotiated in good faith, the financial terms to be reasonable having regard to the cost of supplies of the Compound as at the date of the license negotiations, the cost to OSI of procuring the grant of licenses for any parts of the process covered by Third Party Patents, and the estimated production costs of OSI." (c) At the end of Section 3.3(e) of the 1995 Agreement the following language shall be added: "3.3(e) The parties furthermore agree that in case NOVARTIS decides not to continue the development of the Compound in the Licensed Indications NOVARTIS shall, upon the request of OSI, make available its remaining stock of Compound in accordance with the arrangements hereinafter, whereupon NOVARTIS shall no longer be required to produce further Compound for supply to OSI and OSI's licensees." (d) The second sentence of Section 3.3(f) of the 1995 Agreement shall be deleted and replaced with the following: "3.3(f) Except during the 36-month notification periods or in case of the discontinuance of the development of the Compound in the Licensed Indications as set forth in Sections 3.3(b) and 3.3(e), NOVARTIS shall, in the event that it is unable to supply the Compound to OSI for a period of 90 days by reason of force majeure or otherwise, use commercially reasonable endeavours to have an alternative plant for the production of the Compound validated within one year from the date of cessation of supply." 5. Development. (a) Section 4.1 of the 1995 Agreement (including subsections 4.1.1, 4.1.2, 4.1.3 and 4.1.4) shall be deleted in its entirety and replaced with the following: "4.1 NOVARTIS shall be solely responsible, at its own expense, for the development of the Products for the Licensed Indications. NOVARTIS shall use reasonable diligence to take all steps necessary for the development of such Products."

(b) The following language shall be added after Section 4.3 of the 1995 Agreement, Section 4.3 then becoming Section 4.3.1: 4.3.2 NOVARTIS hereby acknowledges and notifies OSI that as of May 31, 1999 (the "Discontinuance Date"), NOVARTIS has discontinued development of Products for the indications of oral mucositis and healing of soft tissue wound, including prevention of scarring and fibrosis (such indications being hereinafter referred to as the "Discontinued Indications"). NOVARTIS and OSI agree that all licenses heretofore granted to NOVARTIS with respect to the Discontinued Indications are terminated. With respect to the Discontinued Indications, upon and following the Discontinuance Date, NOVARTIS shall make available to OSI, as more specifically described below, for use by OSI and its licensees, the results of development work carried out up to the Discontinuance Date, including, without limitation, access to NOVARTIS' Investigational New Drug ("IND") filing made with the United States Food and Drug Administration and any equivalent filings made in countries other than the United States. It is understood that results relating to formulation of the Compound and analytical methods developed by NOVARTIS up to the Discontinuance Date shall be excluded from such transfer. NOVARTIS shall make a good faith effort to make available the results of NOVARTIS' development work by delivery of all written materials to OSI within 45 days following the Discontinuance Date and by meeting for one day with representatives of OSI and OSI's licensees at a place and on a date mutually convenient within 45 days following the receipt by NOVARTIS of an agenda of outstanding issues necessary for OSI and/or OSI's licensees to continue work in the Discontinued Indication. NOVARTIS hereby acknowledges and agrees that OSI and/or OSI's licensees may use any of the foregoing results for the purpose of continuing development for indications other than the Licensed Indications subject to the following terms and conditions: (a) with respect to development and sales of a Product for oral mucositis by OSI or a licensee of OSI, OSI shall

(b) The following language shall be added after Section 4.3 of the 1995 Agreement, Section 4.3 then becoming Section 4.3.1: 4.3.2 NOVARTIS hereby acknowledges and notifies OSI that as of May 31, 1999 (the "Discontinuance Date"), NOVARTIS has discontinued development of Products for the indications of oral mucositis and healing of soft tissue wound, including prevention of scarring and fibrosis (such indications being hereinafter referred to as the "Discontinued Indications"). NOVARTIS and OSI agree that all licenses heretofore granted to NOVARTIS with respect to the Discontinued Indications are terminated. With respect to the Discontinued Indications, upon and following the Discontinuance Date, NOVARTIS shall make available to OSI, as more specifically described below, for use by OSI and its licensees, the results of development work carried out up to the Discontinuance Date, including, without limitation, access to NOVARTIS' Investigational New Drug ("IND") filing made with the United States Food and Drug Administration and any equivalent filings made in countries other than the United States. It is understood that results relating to formulation of the Compound and analytical methods developed by NOVARTIS up to the Discontinuance Date shall be excluded from such transfer. NOVARTIS shall make a good faith effort to make available the results of NOVARTIS' development work by delivery of all written materials to OSI within 45 days following the Discontinuance Date and by meeting for one day with representatives of OSI and OSI's licensees at a place and on a date mutually convenient within 45 days following the receipt by NOVARTIS of an agenda of outstanding issues necessary for OSI and/or OSI's licensees to continue work in the Discontinued Indication. NOVARTIS hereby acknowledges and agrees that OSI and/or OSI's licensees may use any of the foregoing results for the purpose of continuing development for indications other than the Licensed Indications subject to the following terms and conditions: (a) with respect to development and sales of a Product for oral mucositis by OSI or a licensee of OSI, OSI shall pay to NOVARTIS (i) ** of any Net Sales made directly by OSI, and/or (ii) ** of any revenue received by OSI from its licensee(s) including, without limitation, revenue generated by licensing fees, milestone payments or royalties;

** This portion has been redacted pursuant to a request for confidential treatment.

(b) with respect to development and sales of a Product for any indications other than oral mucositis or other than any indication included within the Licensed Indications, OSI shall pay to NOVARTIS (i) ** of any Net Sales made directly by OSI, and/or (ii) ** of any revenue received by OSI from its licensee(s), including, without limitation, revenue generated by licensing fees, milestone payments or royalties; and (c) with respect to any indications other than oral mucositis or other than any indication included within the Licensed Indications, if OSI or its licensee(s) completes Phase II clinical trials with respect to a Product and, at such point, seeks a licensee to complete development of the Product and to commercialize the Product, OSI hereby grants to NOVARTIS a right of first negotiation with respect to such a license. OSI and NOVARTIS shall negotiate such a license in good faith taking into consideration the contributions of the parties up to the Discontinuance Date. If the parties fail to enter into such a license, OSI or its licensee may enter into such a license with a third party, provided that OSI or its licensee may not offer more favorable terms to a third party without first offering such favorable terms to NOVARTIS. (d) For the purpose of calculating the royalties Sections 5.2 and 5.3 shall be applicable and Sections 5.4, 5.5 and 5.6 shall apply to all payments made by OSI hereunder." (c) Section 4.5 of the 1995 Agreement shall be deleted in its entirety. 6. Payment of Royalties and for Rights Granted. (a) Section 5.2 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.2 NOVARTIS agrees to pay OSI a royalty of ** of Net Sales of the Products in the Licensed Indications made by NOVARTIS or its sub-licensees during the royalty period. OSI agrees to pay NOVARTIS a royalty of

(b) with respect to development and sales of a Product for any indications other than oral mucositis or other than any indication included within the Licensed Indications, OSI shall pay to NOVARTIS (i) ** of any Net Sales made directly by OSI, and/or (ii) ** of any revenue received by OSI from its licensee(s), including, without limitation, revenue generated by licensing fees, milestone payments or royalties; and (c) with respect to any indications other than oral mucositis or other than any indication included within the Licensed Indications, if OSI or its licensee(s) completes Phase II clinical trials with respect to a Product and, at such point, seeks a licensee to complete development of the Product and to commercialize the Product, OSI hereby grants to NOVARTIS a right of first negotiation with respect to such a license. OSI and NOVARTIS shall negotiate such a license in good faith taking into consideration the contributions of the parties up to the Discontinuance Date. If the parties fail to enter into such a license, OSI or its licensee may enter into such a license with a third party, provided that OSI or its licensee may not offer more favorable terms to a third party without first offering such favorable terms to NOVARTIS. (d) For the purpose of calculating the royalties Sections 5.2 and 5.3 shall be applicable and Sections 5.4, 5.5 and 5.6 shall apply to all payments made by OSI hereunder." (c) Section 4.5 of the 1995 Agreement shall be deleted in its entirety. 6. Payment of Royalties and for Rights Granted. (a) Section 5.2 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.2 NOVARTIS agrees to pay OSI a royalty of ** of Net Sales of the Products in the Licensed Indications made by NOVARTIS or its sub-licensees during the royalty period. OSI agrees to pay NOVARTIS a royalty of ** of Net Sales made directly by OSI of the Products outside the Licensed Indications in accordance with Section 4.3.2 during the royalty period. The royalty period shall be calculated on a country-by-country basis and shall commence on the date of the commercial launch of any of the Products either by NOVARTIS and/or OSI, as applicable, and shall end on the date of expiry of the Patents in the country." ** This portion has been redacted pursuant to a request for confidential treatment.

(b) Section 5.3 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.3 If OSI shall not have applied for any Patent in a particular country or if patent protection for a Product sold either by NOVARTIS and/or OSI, as applicable, is refused or revoked, the rate of royalty payable on Net Sales in that country shall be reduced **. Royalties under this Section 5.3 shall be payable for a period of ten years from the date of commercial launch in the country in question." (c) Section 5.4 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.4 No later than 60 days after the end of each Half Year NOVARTIS and/or OSI shall deliver to the other party a statement showing its and its (sub)licencees' Net Sales of Products invoiced during such Half Year, and in the case of OSI also any revenue from its licencee(s) and shall pay to the other party the amount due on such Net Sales and/or revenue, as applicable." (d) Section 5.5 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.5 NOVARTIS and OSI shall keep accurate records in sufficient detail to enable the amount of payments due hereunder to be calculated and shall maintain such records for a period of two Years after the end of the period to which they relate. NOVARTIS and OSI shall be entitled to have such records examined during normal working hours by an independent firm of accountants to which the other party has no reasonable objection so as to verify the correctness of any payment PROVIDED HOWEVER that such firm of accountants shall only report to the other party the correct amount of Net Sales and the amount of royalty due and in the case of OSI any revenue from licencee(s), and shall keep confidential all other information acquired in the course of such examination."

(b) Section 5.3 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.3 If OSI shall not have applied for any Patent in a particular country or if patent protection for a Product sold either by NOVARTIS and/or OSI, as applicable, is refused or revoked, the rate of royalty payable on Net Sales in that country shall be reduced **. Royalties under this Section 5.3 shall be payable for a period of ten years from the date of commercial launch in the country in question." (c) Section 5.4 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.4 No later than 60 days after the end of each Half Year NOVARTIS and/or OSI shall deliver to the other party a statement showing its and its (sub)licencees' Net Sales of Products invoiced during such Half Year, and in the case of OSI also any revenue from its licencee(s) and shall pay to the other party the amount due on such Net Sales and/or revenue, as applicable." (d) Section 5.5 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.5 NOVARTIS and OSI shall keep accurate records in sufficient detail to enable the amount of payments due hereunder to be calculated and shall maintain such records for a period of two Years after the end of the period to which they relate. NOVARTIS and OSI shall be entitled to have such records examined during normal working hours by an independent firm of accountants to which the other party has no reasonable objection so as to verify the correctness of any payment PROVIDED HOWEVER that such firm of accountants shall only report to the other party the correct amount of Net Sales and the amount of royalty due and in the case of OSI any revenue from licencee(s), and shall keep confidential all other information acquired in the course of such examination." ** This portion has been redacted pursuant to a request for confidential treatment.

(e) Section 5.6 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.6 (a) Royalties and any other payments due hereunder shall be made in US Dollars into such accounts as shall be nominated by the receiving party for that purpose. In the case of NOVARTIS Net Sales in currencies other than in US Dollars, such Net Sales shall first be calculated in the foreign currency, then converted to Swiss Francs and then converted to US Dollars, in each case using a ** exchange rate calculated on the basis of NOVARTIS' ** average exchange rates. NOVARTIS' monthly average exchange rates are currently calculated using the average of Reuters Daily Rates between 09:14 a.m. and 10:00 a.m. on the one hand and the official Frankfurt fixing of the German National Bank rates in the afternoon on the other hand. In the case of OSI Net Sales or revenue in currencies other than US Dollars, royalties and any other payments shall first be calculated in the foreign currency and then converted to US Dollars, in each case using for ** calculation the foreign currency exchange rate published in The Wall Street Journal on the last day of the preceding month. (b) If NOVARTIS or OSI are obliged to deduct withholding tax on any payments to be made hereunder, the payment shall be made net of withholding tax. NOVARTIS and OSI, as applicable, will deliver to the other party receipts or other evidence of payment issued by the relevant tax authorities to enable it to claim any available double taxation relief." (f) The second sentence of Section 5.7 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.7 NOVARTIS is hereby granted an exclusive option to include the treatment of transplant patients (e.g. graft protection), the treatment of ischemia (e.g., angina pectoris and peripheral vascular disease), the treatment of stroke patients, and the treatment of inflammatory bowel disease as additional indications and a nonexclusive option to include any other additional indications relating to the Compound (other than the Discontinued Indications and Licensed Indications) upon making the milestone payment or stock purchase set forth in Section 5.8, as amended, such option to be exercised, if at all, within sixty (60) days of the decision by NOVARTIS to initiate full development of the Product (i.e., Phase IIB or Phase III clinical trials for bone, cartilage or tendon repair, which decision shall be communicated promptly to OSI in writing) or by May 31,

(e) Section 5.6 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.6 (a) Royalties and any other payments due hereunder shall be made in US Dollars into such accounts as shall be nominated by the receiving party for that purpose. In the case of NOVARTIS Net Sales in currencies other than in US Dollars, such Net Sales shall first be calculated in the foreign currency, then converted to Swiss Francs and then converted to US Dollars, in each case using a ** exchange rate calculated on the basis of NOVARTIS' ** average exchange rates. NOVARTIS' monthly average exchange rates are currently calculated using the average of Reuters Daily Rates between 09:14 a.m. and 10:00 a.m. on the one hand and the official Frankfurt fixing of the German National Bank rates in the afternoon on the other hand. In the case of OSI Net Sales or revenue in currencies other than US Dollars, royalties and any other payments shall first be calculated in the foreign currency and then converted to US Dollars, in each case using for ** calculation the foreign currency exchange rate published in The Wall Street Journal on the last day of the preceding month. (b) If NOVARTIS or OSI are obliged to deduct withholding tax on any payments to be made hereunder, the payment shall be made net of withholding tax. NOVARTIS and OSI, as applicable, will deliver to the other party receipts or other evidence of payment issued by the relevant tax authorities to enable it to claim any available double taxation relief." (f) The second sentence of Section 5.7 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.7 NOVARTIS is hereby granted an exclusive option to include the treatment of transplant patients (e.g. graft protection), the treatment of ischemia (e.g., angina pectoris and peripheral vascular disease), the treatment of stroke patients, and the treatment of inflammatory bowel disease as additional indications and a nonexclusive option to include any other additional indications relating to the Compound (other than the Discontinued Indications and Licensed Indications) upon making the milestone payment or stock purchase set forth in Section 5.8, as amended, such option to be exercised, if at all, within sixty (60) days of the decision by NOVARTIS to initiate full development of the Product (i.e., Phase IIB or Phase III clinical trials for bone, cartilage or tendon repair, which decision shall be communicated promptly to OSI in writing) or by May 31, 2003, whichever is earlier."

** This portion has been redacted pursuant to a request for confidential treatment.

(g) Section 5.8 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.8 Within sixty (60) days after the earlier of: (a) the date of the decision by NOVARTIS to initiate full development (as defined in Section 5.7) of a Product for bone, cartilage or tendon repair, or (b) the exercise of the option set out in Section 5.7, NOVARTIS agrees to either make a milestone payment of ** in cash to OSI or to purchase ** of OSI common stock at a per share price equal to ** of the average closing price for the 30-day period ending on the date of purchase. Upon making this milestone payment or completion of the stock purchase, such additional indications relating to the Compound shall be deemed to be included in the Licensed Indications. The retention of the rights to such other indications shall be subject to the provisions of the Stock Purchase Agreement." 7. Termination. Section 9.4 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "9.4 Termination or expiry of this Agreement shall not affect the rights of any party against the other party in respect of any antecedent breach of the terms hereof, nor the rights or obligations of any party pursuant to the provisions of Clauses 4 and 5 with regard to, in each instance, royalty obligations in respect of the Net Sales and/or revenue from licensees up to the date of termination or expiry, Clause 7 in respect of confidentiality and Clause 10 in respect of indemnities."

(g) Section 5.8 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "5.8 Within sixty (60) days after the earlier of: (a) the date of the decision by NOVARTIS to initiate full development (as defined in Section 5.7) of a Product for bone, cartilage or tendon repair, or (b) the exercise of the option set out in Section 5.7, NOVARTIS agrees to either make a milestone payment of ** in cash to OSI or to purchase ** of OSI common stock at a per share price equal to ** of the average closing price for the 30-day period ending on the date of purchase. Upon making this milestone payment or completion of the stock purchase, such additional indications relating to the Compound shall be deemed to be included in the Licensed Indications. The retention of the rights to such other indications shall be subject to the provisions of the Stock Purchase Agreement." 7. Termination. Section 9.4 of the 1995 Agreement shall be deleted in its entirety and replaced with the following: "9.4 Termination or expiry of this Agreement shall not affect the rights of any party against the other party in respect of any antecedent breach of the terms hereof, nor the rights or obligations of any party pursuant to the provisions of Clauses 4 and 5 with regard to, in each instance, royalty obligations in respect of the Net Sales and/or revenue from licensees up to the date of termination or expiry, Clause 7 in respect of confidentiality and Clause 10 in respect of indemnities." 8. Schedules. Schedules 1 and 2 of the 1995 Agreement shall be deleted in their entirety and replaced with the Schedules attached hereto. 9. Miscellaneous. (a) Except as amended hereby, all terms and conditions of the 1995 Agreement shall remain in full force and effect. ** This portion has been redacted pursuant to a request for confidential treatment.

(b) This Amendment shall be construed and applied in accordance with the laws of the State of New York. (c) This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. (d) This Amendment may be executed in two counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above written. OSI PHARMACEUTICALS, INC.
By: /s/ -------------------------------------------Colin Goddard, Ph.D. President & Chief Executive Officer

NOVARTIS PHARMA AG

(b) This Amendment shall be construed and applied in accordance with the laws of the State of New York. (c) This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. (d) This Amendment may be executed in two counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above written. OSI PHARMACEUTICALS, INC.
By: /s/ -------------------------------------------Colin Goddard, Ph.D. President & Chief Executive Officer

NOVARTIS PHARMA AG
By: /s/ -------------------------------------------Gisela Schelling Legal Counsel Ivan Csendes, Ph.D. Head Licensing Drug-Delivery & Out-Licensing Business Development & Licensing

SCHEDULE 1 List of OSI Patents/Applications
Country ------Australia Australia Australia Australia Australia Australia Austria Austria Austria Belgium Belgium Belgium Canada Canada Canada Denmark EPO EPO EPO France France France Germany Germany Germany Application/Patent No. ---------------------600230 620795 668072 659415 657913 51628/93 E83152 384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E) 1274471 549582-2 2084510 536275 (E) 200090 (E) 95109866.4 536275 (E) 200090 (E) 384494 (E) 536275 (E) P3637241.5-08 384494 (E) 536275 (E) Filing Date ----------21.04.1986 19.10.1987 17.05.1990 25.06.1991 25.06.1991 21.09.1993 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 18.04.1986 20.10.1987 25.06.1991 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 Expiry Date ----------21.04.2002 19.10.2003 17.05.2006 25.06.2007 25.06.2007 21.19.2009 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 18.04.2006 20.10.2007 25.06.2011 25.06.2011 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above written. OSI PHARMACEUTICALS, INC.
By: /s/ -------------------------------------------Colin Goddard, Ph.D. President & Chief Executive Officer

NOVARTIS PHARMA AG
By: /s/ -------------------------------------------Gisela Schelling Legal Counsel Ivan Csendes, Ph.D. Head Licensing Drug-Delivery & Out-Licensing Business Development & Licensing

SCHEDULE 1 List of OSI Patents/Applications
Country ------Australia Australia Australia Australia Australia Australia Austria Austria Austria Belgium Belgium Belgium Canada Canada Canada Denmark EPO EPO EPO France France France Germany Germany Germany Greece Greece Ireland Ireland Israel Israel Israel (Div.) Italy Italy Italy Japan Japan Application/Patent No. ---------------------600230 620795 668072 659415 657913 51628/93 E83152 384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E) 1274471 549582-2 2084510 536275 (E) 200090 (E) 95109866.4 536275 (E) 200090 (E) 384494 (E) 536275 (E) P3637241.5-08 384494 (E) 536275 (E) 384494 (E) 536275 (E) 60059 2809/87 78546 84211 103617 20732BE/93 384494 (E) 536275 (E) 2065324 265201/87 Filing Date ----------21.04.1986 19.10.1987 17.05.1990 25.06.1991 25.06.1991 21.09.1993 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 18.04.1986 20.10.1987 25.06.1991 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 20.10.1987 25.06.1991 14.04.1986 19.10.1987 20.04.1986 19.10.1987 20.04.1986 15.04.1986 20.10.1987 25.06.1991 18.04.1986 20.10.1987 Expiry Date ----------21.04.2002 19.10.2003 17.05.2006 25.06.2007 25.06.2007 21.19.2009 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 18.04.2006 20.10.2007 25.06.2011 25.06.2011 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 20.10.2007 25.06.2011 14.04.2006 19.10.2007 20.04.2006 19.10.2007 20.04.2006 15.04.2006 20.10.2007 25.06.2011

SCHEDULE 1 List of OSI Patents/Applications
Country ------Australia Australia Australia Australia Australia Australia Austria Austria Austria Belgium Belgium Belgium Canada Canada Canada Denmark EPO EPO EPO France France France Germany Germany Germany Greece Greece Ireland Ireland Israel Israel Israel (Div.) Italy Italy Italy Japan Japan Japan Liechtenstein Liechtenstein Liechtenstein Luxemborg Application/Patent No. ---------------------600230 620795 668072 659415 657913 51628/93 E83152 384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E) 1274471 549582-2 2084510 536275 (E) 200090 (E) 95109866.4 536275 (E) 200090 (E) 384494 (E) 536275 (E) P3637241.5-08 384494 (E) 536275 (E) 384494 (E) 536275 (E) 60059 2809/87 78546 84211 103617 20732BE/93 384494 (E) 536275 (E) 2065324 265201/87 513051/91 200090 (E) 384494 (E) 536275 (E) 200090 (E) Filing Date ----------21.04.1986 19.10.1987 17.05.1990 25.06.1991 25.06.1991 21.09.1993 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 18.04.1986 20.10.1987 25.06.1991 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 20.10.1987 25.06.1991 14.04.1986 19.10.1987 20.04.1986 19.10.1987 20.04.1986 15.04.1986 20.10.1987 25.06.1991 18.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 Expiry Date ----------21.04.2002 19.10.2003 17.05.2006 25.06.2007 25.06.2007 21.19.2009 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 18.04.2006 20.10.2007 25.06.2011 25.06.2011 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 20.10.2007 25.06.2011 14.04.2006 19.10.2007 20.04.2006 19.10.2007 20.04.2006 15.04.2006 20.10.2007 25.06.2011

15.04.2006 20.10.2007 25.06.2011 15.04.2006

Country ------Luxemborg Luxemborg Netherlands Netherlands Netherlands New Zealand New Zealand Spain Spain Spain Sweden Sweden Switzerland Switzerland Switzerland United Kingdom United Kingdom United Kingdom

Application/Patent No. ---------------------384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E) 215887 222168 554177 8702981 536275 (E) 384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E)

Filing Date ----------20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 18.04.1986 14.10.1987 18.04.1986 19.10.1987 25.06.1991 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991

Expiry Date ----------20.10.2007 25.06.2001 15.04.2006 20.10.2007 25.06.2011 18.04.2002 14.10.2003 18.04.2006 19.10.2007 25.06.2011 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.1987 25.06.2011

Country ------Luxemborg Luxemborg Netherlands Netherlands Netherlands New Zealand New Zealand Spain Spain Spain Sweden Sweden Switzerland Switzerland Switzerland United Kingdom United Kingdom United Kingdom USA USA USA USA USA USA USA USA

Application/Patent No. ---------------------384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E) 215887 222168 554177 8702981 536275 (E) 384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E) 200090 (E) 384494 (E) 536275 (E) 5262319 08/118197 08/2940641 5817625 5635489 5821297 5871724 08/457097

Filing Date ----------20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 18.04.1986 14.10.1987 18.04.1986 19.10.1987 25.06.1991 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 15.04.1986 20.10.1987 25.06.1991 25.06.1990 19.04.1985* 19.04.1985* 21.09.1992 21.09.1992 21.09.1992 21.09.1992 19.04.1985

Expiry Date ----------20.10.2007 25.06.2001 15.04.2006 20.10.2007 25.06.2011 18.04.2002 14.10.2003 18.04.2006 19.10.2007 25.06.2011 20.10.2007 25.06.2011 15.04.2006 20.10.2007 25.06.2011 15.04.2006 20.10.1987 25.06.2011 16.11.2010

06.10.2015 03.06.2014 20.10.2015 16.02.2016

* Effective filing date

SCHEDULE 2 List of Novartis Patents A. Case 4-17861
Country Application/Patent No. Filing Date Expiry Date -------------------------------------------------------------------------------Australia 638075 27.11.1990 27.11.2006 Austria 433225 (EP) 27.11.1990 27.11.2010 Belgium 433225 (EP) 27.11.1990 27.11.2010 Canada 2031430 04.12.1990 04.12.2010 Denmark 433225 (EP) 27.11.1990 27.11.2010 Finland 905956 03.12.1990 03.12.2010 France 433225 (EP) 27.11.1990 27.11.2010 Germany 433225 (EP) 27.11.1990 27.11.2010 Great Britain 89275465 06.12.1989 (priority application; now lapsed) Great Britain 433225 (EP) 27.11.1990 27.11.2010 Greece 433225 (EP) 27.11.1990 27.11.2010 Hungary 8084/1990 05.12.1990 05.12.2010 Ireland 4386/90 05.12.1990 05.12.2010 Israel 96549 05.12.1990 05.12.2010 Italy 433225 (EP) 27.11.1990 27.11.2010 Japan 330871/90 30.11.1990 Korea 9881/90 05.12.1990 Luxembourg 433225 (EP) 27.11.1990 27.11.2010 Mexico 172600 04.12.1990 04.12.2010 Netherlands 433225 (EP) 27.11.1990 27.11.2010 New Zealand 236333 04.12.1990 04.12.1990 Norway 301768 05.12.1990 05.12.2010 Pakistan 132484 10.11.1990 06.12.2005 Philippines 41681 05.12.1990 Philippines 47025 05.12.1990 Philippines 48001 05.12.1990 Portugal 96068 04.12.1990 South Africa 9762/90 05.12.1990 05.12.2010

SCHEDULE 2 List of Novartis Patents A. Case 4-17861
Country Application/Patent No. Filing Date Expiry Date -------------------------------------------------------------------------------Australia 638075 27.11.1990 27.11.2006 Austria 433225 (EP) 27.11.1990 27.11.2010 Belgium 433225 (EP) 27.11.1990 27.11.2010 Canada 2031430 04.12.1990 04.12.2010 Denmark 433225 (EP) 27.11.1990 27.11.2010 Finland 905956 03.12.1990 03.12.2010 France 433225 (EP) 27.11.1990 27.11.2010 Germany 433225 (EP) 27.11.1990 27.11.2010 Great Britain 89275465 06.12.1989 (priority application; now lapsed) Great Britain 433225 (EP) 27.11.1990 27.11.2010 Greece 433225 (EP) 27.11.1990 27.11.2010 Hungary 8084/1990 05.12.1990 05.12.2010 Ireland 4386/90 05.12.1990 05.12.2010 Israel 96549 05.12.1990 05.12.2010 Italy 433225 (EP) 27.11.1990 27.11.2010 Japan 330871/90 30.11.1990 Korea 9881/90 05.12.1990 Luxembourg 433225 (EP) 27.11.1990 27.11.2010 Mexico 172600 04.12.1990 04.12.2010 Netherlands 433225 (EP) 27.11.1990 27.11.2010 New Zealand 236333 04.12.1990 04.12.1990 Norway 301768 05.12.1990 05.12.2010 Pakistan 132484 10.11.1990 06.12.2005 Philippines 41681 05.12.1990 Philippines 47025 05.12.1990 Philippines 48001 05.12.1990 Portugal 96068 04.12.1990 South Africa 9762/90 05.12.1990 05.12.2010 Spain 433225 (EP) 27.11.1990 27.11.2010 Sweden 433225 (EP) 27.11.1990 27.11.2010 Switzerland 433225 (EP) 27.11.1990 27.11.2010 Taiwan 56999NI 13.11.1990 11.06.2007 USA 621502/07 03.12.1990 USA 960309/07 (Cont.) 13.10.1992 USA 201703/08 (Cont. 2) 25.02.1994 USA 5650494 (Cont. 3) 07.06.1995 22.07.2014 USA 789588/08 (Cont. 3/Div) 24.01.1997

SCHEDULE 2 continued B. Case 4-20038
Country Application/Patent No. Filing Date Expiry Date -------------------------------------------------------------------------------Australia 690311 12.07.1995 12.07.2015 Austria 95926857.4 (EP) 12.07.1995 12.07.2015 Belgium 95926857.4 (EP) 12.07.1995 12.07.2015 Canada 2194582 12.07.1995 12.07.2015 Denmark 95926857.4 (EP) 12.07.1995 12.07.2015 Europe 95926857.4 (EP) 12.07.1995 12.07.2015 Europe 94810438.5 (EP) 25.07.1994 (priority application; lapsed) Finland 970229 12.07.1995 12.07.2015 France 95926857.4 (EP) 12.07.1995 12.07.2015 Germany 95926857.4 (EP) 12.07.1995 12.07.2015 Great Britain 95926857.4 (EP) 12.07.1995 12.07.2015 Greece 95926857.4 (EP) 12.07.1995 12.07.2015

SCHEDULE 2 continued B. Case 4-20038
Country Application/Patent No. Filing Date Expiry Date -------------------------------------------------------------------------------Australia 690311 12.07.1995 12.07.2015 Austria 95926857.4 (EP) 12.07.1995 12.07.2015 Belgium 95926857.4 (EP) 12.07.1995 12.07.2015 Canada 2194582 12.07.1995 12.07.2015 Denmark 95926857.4 (EP) 12.07.1995 12.07.2015 Europe 95926857.4 (EP) 12.07.1995 12.07.2015 Europe 94810438.5 (EP) 25.07.1994 (priority application; lapsed) Finland 970229 12.07.1995 12.07.2015 France 95926857.4 (EP) 12.07.1995 12.07.2015 Germany 95926857.4 (EP) 12.07.1995 12.07.2015 Great Britain 95926857.4 (EP) 12.07.1995 12.07.2015 Greece 95926857.4 (EP) 12.07.1995 12.07.2015 Hungary P9700210 12.07.1995 12.07.2015 Ireland 95926857.4 (EP) 12.07.1995 12.07.2015 Israel 114701 24.07.1995 24.07.2015 Italy 95926857.4 (EP) 12.07.1995 12.07.2015 Japan 505400/96 12.07.1995 12.07.2015 Korea-South 700476/97 12.07.1995 12.07.2015 Luxembourg 95926857.4 (EP) 12.07.1995 12.07.2015 Mexico 970656 12.07.1995 12.07.2015 Monaco 95926857.4 (EP) 12.07.1995 12.07.2015 Netherlands 95926857.4 (EP) 12.07.1995 12.07.2015 New Zealand 290373 12.07.1995 12.07.2015 Norway P970325 12.07.1995 12.07.2015 Pakistan 395/95 23.07.1995 23.07.2011 Philippines 50939 18.07.1995 Portugal 95926857.4 (EP) 12.07.1995 12.07.2015 Singapore 37588 12.07.1995 12.07.2015 South Africa 6138/95 24.07.1995 24.07.2015 Spain 95926857.4 (EP) 12.07.1995 12.07.2015 Sweden 95926857.4 (EP) 12.07.1995 12.07.2015 Switzerland 95926857.4 (EP) 12.07.1995 12.07.2015 Taiwan 84107188 11.07.1995 11.07.2015 USA 08/776445 12.07.1995 12.07.2015 USA 09/123233 (Cont.) 28.07.1998 24.01.2017

SCHEDULE 2 continued C. Case 4-20039
Country Application/Patent No. Filing Date Expiry Date -------------------------------------------------------------------------------Australia 699879 12.07.1995 12.07.2015 Austria 95926858.2 12.07.1995 12.07. 2015 Belgium 95926858.2 12.07.1995 12.07. 2015 Canada 2194578 12.07.1995 12.07. 2015 Denmark 95926858.2 12.07.1995 12.07. 2015 Europe 95926858.2 12.07.1995 12.07. 2015 Europe 94810439.3 25.07.1994 (priority application; lapsed) Finland 970258 12.07.1995 12.07.2015 France 95926858.2 12.07.1995 12.07.2015 Germany 95926858.2 12.07.1995 12.07.2015 Great Britain 95926858.2 12.07.1995 12.07.2015 Greece 95926858.2 12.07.1995 12.07.2015 Hungary P9700211 12.07.1995 12.07.2015 Ireland 95926858.2 12.07.1995 12.07.2015 Israel 114702 24.07.1995 24.07.2015

SCHEDULE 2 continued C. Case 4-20039
Country Application/Patent No. Filing Date Expiry Date -------------------------------------------------------------------------------Australia 699879 12.07.1995 12.07.2015 Austria 95926858.2 12.07.1995 12.07. 2015 Belgium 95926858.2 12.07.1995 12.07. 2015 Canada 2194578 12.07.1995 12.07. 2015 Denmark 95926858.2 12.07.1995 12.07. 2015 Europe 95926858.2 12.07.1995 12.07. 2015 Europe 94810439.3 25.07.1994 (priority application; lapsed) Finland 970258 12.07.1995 12.07.2015 France 95926858.2 12.07.1995 12.07.2015 Germany 95926858.2 12.07.1995 12.07.2015 Great Britain 95926858.2 12.07.1995 12.07.2015 Greece 95926858.2 12.07.1995 12.07.2015 Hungary P9700211 12.07.1995 12.07.2015 Ireland 95926858.2 12.07.1995 12.07.2015 Israel 114702 24.07.1995 24.07.2015 Italy 95926858.2 12.07.1995 12.07.2015 Japan 505401/96 12.07.1995 12.07.2015 Korea-South 700477/97 12.07.1995 12.07.2015 Luxembourg 95926858.2 12.07.1995 12.07.2015 Mexico 970657 12.07.1995 12.07.2015 Monaco 95926858.2 12.07.1995 12.07.2015 Netherlands 95926858.2 12.07.1995 12.07.2015 New Zealand 290374 12.07.1995 12.07.2015 Norway P970326 12.07.1995 12.07.2015 Pakistan 396/95 23.07.1995 23.07.2011 Philippines 50956 19.07.1995 Portugal 95926858.2 12.07.1995 12.07.2015 Singapore 36546 12.07.1995 12.07.2015 South Africa 6139/95 24.07.1995 24.07.2015 Spain 95926858.2 12.07.1995 12.07.2015 Sweden 95926858.2 12.07.1995 12.07.2015 Switzerland 95926858.2 12.07.1995 12.07.2015 Taiwan 84107189 11.07.1995 11.07.2015 USA 08/776444 12.07.1995 12.07.2015

ARTICLE 5

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES

9 MOS SEP 30 1999 OCT 01 1998 JUN 30 1999 10,497,363 10,589,676 2,311,889 10,896 0 24,655,762 21,214,524 13,714,797 44,449,348 4,754,754 0 0 0 223,684 36,522,925 44,449,348 915,608 16,500,966

ARTICLE 5

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED

9 MOS SEP 30 1999 OCT 01 1998 JUN 30 1999 10,497,363 10,589,676 2,311,889 10,896 0 24,655,762 21,214,524 13,714,797 44,449,348 4,754,754 0 0 0 223,684 36,522,925 44,449,348 915,608 16,500,966 1,239,443 23,464,625 54,060 0 3,101 (6,360,408) 0 (6,360,408) 0 0 0 (6,360,408) (0.30) (0.30)