10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2002

o Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______

Commission File Number 0-24424

CIMA LABS INC.
(Exact name of registrant as specified in its charter)

Delaware	41-1569769
(State or other jurisdiction of	(I.R.S. Employer Identification Number)
incorporation or organization)
10000 Valley View Road, Eden Prairie, MN 55344-9361 (Address of principal executive offices and zip code)	(952) 947-8700 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

                   Yes    [X]       No       [  ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, $.01 par value	14,214,589
(Class)	(Outstanding at August 2, 2002)

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
	Item 1. Financial Statements
		Balance Sheets
		Statements of Operations
		Statements of Cash Flows
		Notes to Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risks
PART II - OTHER INFORMATION
	Item 4. Submission of Matters to Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
EX-10.1 Development, License and Supply Agreement
EX-10.2 Development and License Agreement
EX-10.3 Supply Agreement
EX-99.1 Certification of Chief Executive Officer
EX-99.1 Certification of Chief Financial Officer

INDEX
CIMA LABS INC.

PART I. FINANCIAL INFORMATION	Page No.
Item 1. Financial Statements (Unaudited)
Balance Sheets - June 30, 2002 and December 31, 2001.	3
Statements of Operations - Three and six months ended June 30, 2002 and June 30, 2001.	5
Statements of Cash Flows - Six months ended June 30, 2002 and June 30, 2001.	6
Notes to Financial Statements.	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	10
Item 3. Quantitative and Qualitative Disclosures about Market Risks.	27
PART II. OTHER INFORMATION
Items 1, 2, 3 and 5 have been omitted since all items are inapplicable or answers negative.
Item 4. Submission of Matters to a Vote of Security Holders	28
Item 6. Exhibits and Reports on Form 8-K	29
Signature	30

All other trademarks used in this report are the property of their respective owners. We have registered “CIMA®,” “CIMA LABS INC.®,” “OraSolv®,” “OraVescent®,” “DuraSolv®” and “PakSolv®” as trademarks with the U.S. Patent and Trademark Office. We also use the trademarks “OraSolv®SR/CR,” “OraVescent®SL/BL” and “OraVescent®SS.” “Triaminic®” and “Softchews®” are trademarks of Novartis. “Zomig®,” “Zomig-ZMT™” and “Rapimelt™” are trademarks of AstraZeneca. “Remeron®” and “SolTab™” are trademarks of Organon. “Tempra®” is a registered trademark of a Canadian affiliate of Bristol-Myers Squibb. “FirsTabs™” is a trademark of Bristol-Myers Squibb. “NuLev™” is a trademark of Schwarz P harma. “Actiq®” is a registered trademark of Anesta Corporation. “Claritin®” and “Reditabs®” are registered trademarks of Schering Corporation. “Maxalt-MLT®” is a registered trademark of Merck & Co., Inc. “Zydis®” is a registered trademark of Cardinal Health, Inc. “FlashDose®” is a registered trademark of Biovail Corporation. “WOWTab®” is a registered trademark of Yamanouchi Pharma Technologies, Inc. “Flashtab®” is a registered trademark of Ethypharm.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheets
CIMA LABS INC.

	June 30,			December 31,
	2002			2001
	(Unaudited)			(See note)
Assets
Current assets:
Cash and cash equivalents	$	7,417,959		$	1,879,647
Available-for-sale securities		48,358,111			20,085,284
Trade accounts receivable, net		8,870,329			8,963,105
Interest receivable		1,551,303			2,127,151
Inventories, net		3,991,295			3,770,807
Deferred taxes		700,000			700,000
Prepaid expenses		428,967			170,516
Total current assets		71,317,964			37,696,510
Other assets:
Available-for-sale securities		88,280,875			127,539,806
All other, net		8,384,568			5,933,652
Total other assets		96,665,443			133,473,458
Property and equipment:
Property, plant and equipment		55,056,501			37,490,871
Accumulated depreciation		(11,187,782	)		(9,729,963	)
		43,868,719			27,760,908
Total assets	$	211,852,126		$	198,930,876
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	7,979,819		$	1,607,378
Accrued expenses		2,260,853			1,771,849
Deferred revenue		543,334			775,000
Total current liabilities		10,784,006			4,154,227
Stockholders’ equity:
Convertible preferred stock, $.01 par value; 5,000,000 shares
authorized; none outstanding		-			-
Common stock, $.01 par value; 60,000,000 shares authorized;
14,810,995 and 14,739,116 shares issued and outstanding
(including 619,425 and 533,700 treasury shares), respectively		148,110			147,391
Additional paid-in capital		239,343,563			237,271,364
Accumulated deficit		(19,431,118	)		(27,003,219	)
Accumulated other comprehensive income		1,007,457			2,217,364
Treasury stock		(19,999,892	)		(17,856,251	)
Total stockholders’ equity		201,068,120			194,776,649
Total liabilities and stockholders’ equity	$	211,852,126		$	198,930,876

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Note: The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

See accompanying notes.

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Statements of Operations
CIMA LABS INC.
(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2002			2001			2002			2001
Revenues:
Net sales	$	4,638,800		$	4,600,935		$	8,876,264		$	7,897,109
Product development fees and licensing		3,060,348			2,043,100			5,367,601			3,911,317
Royalties		2,500,855			1,414,750			4,339,016			2,206,411
		10,200,003			8,058,785			18,582,881			14,014,837
Operating expenses:
Cost of goods sold		3,811,641			4,116,781			7,167,768			6,718,205
Research and product development		2,486,930			1,363,820			4,538,923			2,850,048
Selling, general and administrative		1,943,474			1,310,008			3,420,155			2,427,647
		8,242,045			6,790,609			15,126,846			11,995,900
Operating income		1,957,958			1,268,176			3,456,035			2,018,937
Other income:
Investment income		1,935,188			2,383,589			3,671,273			4,887,723
Other income (expense)		2,550			(115	)		5,496			(1,245	)
		1,937,738			2,383,474			3,676,769			4,886,478
Income before provision for income taxes		3,895,696			3,651,650			7,132,804			6,905,415
Provision for income taxes (benefit)		(271,800	)		157,510			(439,297	)		234,921
Net income	$	4,167,496		$	3,494,140		$	7,572,101		$	6,670,494
Net income per share:
Basic	$	.29		$	.24		$	.53		$	.46
Diluted	$	.28		$	.22		$	.52		$	.43
Weighted average shares outstanding:
Basic		14,168,694			14,605,909			14,164,072			14,524,699
Diluted		14,630,735			15,647,303			14,630,575			15,542,942
See accompanying notes.

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Statements of Cash Flows
CIMA LABS INC.

(Unaudited)

	For the Six Months Ended
	June 30,
	2002			2001
Operating activities:
Net income	$	7,572,101		$	6,670,494
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		1,531,214			1,086,050
Income tax benefit on stock options exercised		1,664,000			2,700,000
Deferred income taxes		(2,445,598	)		(2,700,000	)
Gain on sale of investment securities		(473,960	)		-
Changes in operating assets and liabilities:
Accounts receivable		92,776			1,336,260
Interest receivable		575,848			(1,314,509	)
Inventories		(220,488	)		(2,302,947	)
Other assets		(230,326	)		(79,221	)
Accounts payable		6,372,442			1,368,138
Accrued expenses and other		489,001			281,712
Deferred revenue		(231,666	)		8,333
Net cash provided by operating activities		14,695,344			7,054,310
Investing activities:
Purchases of property, plant and equipment		(17,565,631	)		(5,957,491	)
Patents and trademarks		(106,837	)		(168,894	)
Purchases of available-for-sale securities		(49,040,740	)		(119,763,794	)
Proceeds from sales of available-for-sale securities		59,290,897			36,960,661
Net cash used in investing activities		(7,422,311	)		(88,929,518	)
Financing activities:
Proceeds from exercises of stock options		312,640			2,788,606
Purchases of treasury stock		(2,143,641	)		-
Issuance of common stock related to employee stock purchase plan		96,280			-
Net cash (used in) provided by financing activities		(1,734,721	)		2,788,606
Increase (decrease) in cash and cash equivalents		5,538,312			(79,086,602	)
Cash and cash equivalents at beginning of period		1,879,647			91,587,716
Cash and cash equivalents at end of period	$	7,417,959		$	12,501,114
See accompanying notes.

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CIMA LABS INC.
Notes to Financial Statements
(Unaudited)

1. Basis of Presentation
CIMA LABS INC. (the “Company”), a Delaware corporation, develops and manufactures fast-dissolve and enhanced-absorption oral drug delivery systems. OraSolv and DuraSolv, the Company’s leading proprietary fast-dissolve technologies, are oral dosage forms incorporating taste-masked active drug ingredients into tablets, which dissolve quickly in the mouth without chewing or the need for water. The Company develops applications for technologies that are licensed to pharmaceutical company partners. The Company currently manufactures and packages five pharmaceutical brands incorporating its proprietary fast-dissolve technologies. Revenues are comprised of three components: net sales of products it manufactures; product development fees and licensing revenues for development activities conducted through collaborative agreements with pharmaceutical companies; and royalties on the sales of products sold by pharmaceutical companies under license from the Company.

The accompanying unaudited financ ial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. These financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, which are considered necessary for fair presentation have been included. Operating results for the three and six month periods ended June 30, 2002, are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. For further information, you should refer to the audited financial statements and accompanying notes contained in our Annual Report on Form 10-K for the year ended December 31, 2001.

2. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that may affect the amounts we report in our financial statements and accompanying notes. Actual results could differ from those estimates.

3. Cash Equivalents and Investments
The Company’s investments in available-for-sale securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive income as a separate component of stockholders’ equity. As of June 30, 2002, the amortized cost and estimated market value of available-for-sale securities, all of which have contractual maturities of three years or less, are as follows:

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	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
As of June 30, 2002:
Asset backed securities	$	28,595,681	$	265,062	$	8,201	$	28,852,542
Commercial paper		3,733,506		-		190		3,733,316
Corporate bonds and notes		70,225,247		568,436		90,514		70,703,169
Euro notes		14,075,663		322,874		23,653		14,374,884
Floating rate notes		15,641,940		5,298		47,413		15,599,825
U.S. government securities		3,359,492		15,758		-		3,375,250
Totals – June 30, 2002	$	135,631,529	$	1,177,428	$	169,971	$	136,638,986
As of December 31, 2001:
Asset backed securities	$	30,476,440	$	377,781	$	14,235	$	30,839,986
Corporate bonds and notes		85,770,912		1,371,649		52,536		87,090,025
Euro notes		14,392,231		537,290		-		14,929,521
Floating rate notes		12,696,395		17,283		-		12,713,678
U.S. government securities		2,071,748		-		19,868		2,051,880
Totals – December 31, 2001	$	145,407,726	$	2,304,003	$	86,639	$	147,625,090

4. Income Per Share
Income per share for the three and six months ended June 30, 2002, and 2001 are summarized in the following table:

	Three Months Ended				Six Months Ended
	June 30, 2002		June 30, 2001		June 30, 2002		June 30, 2001
Numerator:
Net income	$	4,167,496	$	3,494,140	$	7,572,101	$	6,670,494
Denominator:
Denominator for basic earnings per share – weighted average shares        outstanding		14,168,694		14,605,909		14,164,072		14,524,699
Effect of dilutive stock options		462,041		1,041,394		466,503		1,018,243
Denominator for diluted earnings per share – weighted average shares     outstanding		14,630,735		15,647,303		14,630,575		15,542,942
Basic earnings per share	$	.29		.24	$	.53	$	.46
Diluted earnings per share	$	.28		.22	$	.52	$	.43

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5. Comprehensive Income
Comprehensive income consists of net income and net unrealized gains (losses) on available-for-sale securities.

	Three Months Ended					Six Months Ended
	June 30, 2002			June 30, 2001		June 30, 2002			June 30, 2001
Net income	$	4,167,496		$	3,494,140	$	7,572,101		$	6,670,494
Unrealized (loss) gain on available-for-sale securities		(183,336	)		127,737		(1,209,907	)		1,667,028
Total comprehensive income	$	3,984,160		$	3,621,877	$	6,362,194		$	8,337,522

6. Inventories
Inventories are stated at the lower of cost (first in, first out) or fair market value.

	June 30, 2002		December 31, 2001
Raw materials	$	3,247,086	$	3,659,288
Work in process		57,805		-
Finished products		686,404		111,519
	$	3,991,295	$	3,770,807

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements

We make many statements in this Quarterly Report on Form 10-Q under the captions Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Factors That Could Affect Future Results and elsewhere, which are forward-looking and are not based on historical facts. These statements relate to our future plans, objectives, expectations and intentions. We may identify these statements by the use of words such as believe, expect, will, anticipate, intend, plan and other similar expressions. These forward-looking statements involve a number of risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we discuss in Factors That Could Affect Future Results and elsewhere in this report. These forward-looking statements speak only as of the date of this report, and we caution you not to rely on these statements wit hout considering the risks and uncertainties associated with these statements and our business that are addressed in this report.

These forward-looking statements include statements relating to the expected growth in operating revenues in the second half of 2002; the timing of expected improvements to our Eden Prairie manufacturing facility; the timing for completion of improvements to our Brooklyn Park R&D center, including the construction of a second site for manufacturing; future expense levels; the timing of availability of products; expected demand for products using our technologies; the adequacy of our production capacity; and future research and development activities relating to our current or new technologies. We are not under any duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results, except as required by law.

Overview

We develop and manufacture pharmaceutical products based on our proprietary OraSolv and DuraSolv fast dissolve technologies. We currently manufacture five pharmaceutical brands utilizing our fast dissolve technologies: three prescription and two over-the-counter brands. These products include Triaminic Softchews for Novartis, Tempra FirsTabs for a Canadian affiliate of Bristol-Myers Squibb, AstraZeneca’s Zomig-ZMT and its equivalent for non-U.S. markets, Remeron SolTab for Organon and NuLev for Schwarz Pharma. The FDA is currently reviewing Wyeth’s (formerly known as American Home Products) regulatory submission for an orally disintegrating dosage form of loratadine that we developed. We are also currently developing other oral drug delivery technologies for ourselves and for others. We operate within a single business segment, the development and manufacture of fast dissolve and enhanced-absorption oral drug delivery systems. Our revenues ar e comprised of three components, including net sales of products we manufacture for pharmaceutical companies using our proprietary fast dissolve technologies, product development fees and licensing revenues for development activities we conduct through collaborative agreements with pharmaceutical companies, and royalties on the sales of our products which are sold by pharmaceutical companies under licenses from us.

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Revenues from product sales and from royalties will fluctuate from quarter to quarter and from year to year depending on, among other factors, demand by consumers for the products we produce, new product introductions, the seasonal nature of some of the products we produce to treat seasonal ailments, pharmaceutical company ordering patterns and our production schedules. Revenues from product development fees and licensing revenue will fluctuate depending on, among other factors, the number of new collaborative agreements that we enter into, the number and timing of product development milestones that we achieve under our collaborative agreements and the level of our development activity conducted for pharmaceutical companies.

Critical Accounting Policies and Estimates

General
The following discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, inventories, income taxes, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from thes e estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Revenue Recognition

We recognize revenue in accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101, or SAB 101, “Revenue Recognition in Financial Statements.” SAB 101 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an agreement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectibility is reasonably assured. Revenues from our business activities are recognized from net sales of manufactured products upon shipment; from product development fees as the contracted services are rendered; from product development milestones upon completion and acceptance; from up-front product development license fees as they are amortized over the expected development term of the proposed products; and from royalties on the sales of products sold by pharmaceutical companies under license from us. The determination of SAB 101 c riteria (3) and (4) for each source of revenue is based on our judgments regarding the fixed nature and collectibility of each source of revenue. Revenue recognized for any reporting period could be adversely affected should changes in conditions cause us to determine that these criteria are not met for certain future transactions.

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Deferred Taxes

The carrying value of our net deferred tax assets assumes that we will be able to generate sufficient taxable income in the United States, based on management’s current estimates and assumptions. We record a valuation allowance to reduce the carrying value of our net deferred tax assets to the amount that is more likely than not to be realized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the requirements for the valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax asset would increase net income in the period such determination is made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the net deferred tax asset would decrease net income in the period such determination is made. On a quarterly basis, we evaluate the realizability of our deferred tax assets and assess the requirements for a valuation allowance. For the six months ended June 30, 2002, we have recorded an $11.5 million valuation allowance related to our net deferred tax assets of $20.1 million, compared to a valuation allowance of $16.2 million related to our net deferred tax assets of $22.4 million for the year ended December 31, 2001.

Results of Operations

Three and Six Month Periods Ended June 30, 2002 and 2001

Components of revenue, expenses, and net income as a percentage of total operating revenue for the three and six month periods ended June 30 were as follows:

	Three months ended June 30,				Six months ended June 30,
	2002		2001		2002		2001
Net sales	45	%	57	%	48	%	56	%
Product development fees & licensing revenues	30	%	25	%	29	%	28	%
Royalty revenues	25	%	18	%	23	%	16	%
Cost of goods sold	37	%	51	%	39	%	48	%
Research & product development expenses	24	%	17	%	24	%	20	%
Selling, general & administrative expenses	19	%	16	%	18	%	17	%
Net income	41	%	43	%	41	%	48	%

Operating Revenues. Total operating revenues for the second quarter ended June 30, 2002 were $10.2 million, an increase of $2.1 million, or 27%, over the same period in 2001, and for the first half of 2002, total operating revenues were $18.6 million, an increase of $4.6 million, or 33%, over same period in 2001. The second quarter and first half increases in total operating revenue resulted from increases in all three of our revenue components: (1) royalties on the sales of our products which are sold by pharmaceutical companies under licenses from us, (2) product development fees and licensing revenue, and (3) revenues from the sales of products we manufacture.

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Revenues from net sales of products we manufacture in the second quarter of 2002 were $4.6 million, an increase of $38,000, or 1%, over the same period of 2001, and for the first half of 2002, revenues from net sales of products we manufacture were $8.9 million, an increase of $1.0 million, or 12%, over the same period of 2001. The second quarter and first half increases were primarily due to higher manufacturing volumes of Remeron SolTab for Organon that were partially offset by lower sales of Triaminic Softchews for Novartis. As a category, sales of branded prescription products increased; representing 81% and 77% of our total product sales in the second quarter and first half of 2002, respectively, compared with 50% and 60% in last year’s second quarter and first half, respectively. Triaminic Softchews are expected to account for a higher proportion of manufacturing volumes in the third quarter, which is typically the peak quarter for this over - -the-counter product due to its seasonal nature.

Revenues from product development fees and licensing were $3.1 million in the second quarter of 2002, an increase of $1.0 million, or 50%, from the same period of 2001, and for the first half of 2002, revenues from product development fees and licensing were $5.4 million, an increase of $1.5 million, or 37%, from the same period of 2001. These increases resulted from agreements for proposed new products, our achievement of certain milestones under existing agreements, and an overall increase in development activity. Revenues from product development fees and licensing included amortization of deferred revenue of $206,000 and $282,000 in the second quarter and first half of 2002, respectively, compared to $13,000 and $92,000 in the same periods of 2001, respectively. For full-year 2002, we expect combined revenues attributable to product development fees and licensing revenues to increase by approximately 20 to 25% from 2001 levels.

Revenues from royalties were $2.5 million in the second quarter of 2002, an increase of $1.1 million or 77% over the same period of 2001, and for the first half of 2002, revenues from royalties were $4.3 million, an increase of $2.1 million, or 97%, over the same period of 2001. The increases were due primarily to increased end-customer sales by Organon of Remeron SolTab and increased end-customer sales by AstraZeneca of Zomig Rapimelt (the non-U.S. equivalent of Zomig-ZMT) in Europe and Zomig-ZMT in the United States. For full-year 2002, we expect royalties to increase by approximately 100% from 2001 levels.

Cost of goods sold. Cost of goods sold was $3.8 million in the second quarter of 2002, a decrease of $305,000 from $4.1 million in the second quarter of 2001, and cost of goods sold in the first half of 2002 increased to $7.2 million from $6.7 million for the same period of 2001. The second quarter decrease of $305,000 was principally due to an improved mix in the products we manufactured and shipped compared to the same period last year. The first half of 2002 cost of goods sold increase of $450,000 was due mainly to higher production volumes and higher levels of depreciation expense over the same period in 2001. For 2002, we expect cost of goods sold to increase from 2001 in terms of dollar amounts, but decrease as a percentage of net sales of products we manufacture.

Gross profits on product sales were $827,000 and $1.7 million in the second quarter and first half of 2002, respectively, compared to $484,000 and $1.2 million in the same periods of 2001, respectively. The second quarter and first half improvements were principally due

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to increased production volumes of higher margin branded prescription products. Gross profits on product sales were 18% and 19% of total product sales in the second quarter and first half of 2002, respectively, compared to 11% and 15% for the same periods in 2001, respectively, reflecting the increased mix of branded prescription products. For full-year 2002, we expect gross profits on product sales to increase from 2001 levels in terms of dollar amounts and as a percentage of product sales.

Research and product development expenses. Research and product development expenses were $2.5 million in the second quarter of 2002, an increase of $1.1 million, or 82%, over the same period of 2001, and for the first half of 2002, these expenses were $4.5 million, an increase of $1.7 million, or 59%, over the same period of 2001. These increases were due primarily to additional staffing, development activity for our proprietary products, including OraVescent fentanyl, and infrastructure investments. For full-year 2002, we expect research and product development expenses to increase by approximately 50% from 2001 levels due to a significant increase in development work for our collaborative pharmaceutical company partners, as well as development efforts related to our proprietary products

Selling, general and administrative expenses. Selling, general and administrative expenses were $1.9 million in the second quarter of 2002, an increase of $633,000, or 48%, over the same period of 2001. Selling, general and administrative expenses of $3.4 million for the first half of 2002 increased $1.0 million, or 41%, over the same period of 2001. These increases were due primarily to costs associated with increased professional staffing. In the second quarter of 2002, selling, general and administrative expenses included approximately $200,000 of one-time executive recruitment and relocation costs. For full-year 2002, we expect selling, general and administrative expenses to increase approximately 40% from 2001 levels as we continue to make investments in people and systems to support our anticipated growth.

Other income (expense). Other income was $1.9 million in the second quarter of 2002, a decrease of $446,000, over the same period of 2001. For the first half of 2002 other income of $3.7 million decreased $1.2 million from the same period of 2001. Other income consists primarily of investment income comprised of interest earned on securities and gains realized on the sale of securities. The decreases from 2001 were due primarily to lower levels of cash available for investment and from lower interest rates on our investments. For full-year 2002, we expect other income to decrease in the range of 35 to 40% from 2001 levels due to lower interest rates and expected capital expenditures, which will reduce the level of cash available for investment.

Liquidity and Capital Resources

We have financed our operations to date primarily through private and public sales of equity securities, other income, and from operating revenues consisting of product sales, product development fees and licensing revenues, and royalties.

Working capital increased from $33.5 million at December 31, 2001, to $60.5 million at June 30, 2002. The increase of $27.0 million resulted primarily from the reclassification of $28.3 million of non-current available-for-sale securities to current available-for-sale

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securities when the maturities of those securities became less than one year. Cash and available-for-sale securities, including both current and non-current securities, were $144.1 million at June 30, 2002, compared to $149.5 million at December 31, 2001. This decrease of $5.4 million resulted from $17.6 million of capital expenditures made by the Company (including $5.7 million used to purchase our Eden Prairie corporate headquarters and manufacturing facility), and common stock repurchases of $2.1 million, partially offset by $14.7 million of cash generated from our operating activities. We invest excess cash in interest-bearing money market accounts and investment grade securities.

During the next six months, we plan to spend approximately $15.0 to $20.0 million to add granulation capabilities and expand taste-masking capacity to our Eden Prairie manufacturing facility, expand and renovate our Brooklyn Park R&D center, and to initiate work on a second manufacturing site, which will be located at our Brooklyn Park R&D center. We expect this second manufacturing site, which will include a bottling production line, to be operational in the second half of 2003. In addition, we expect to fund additional product development activities related to our OraVescent technology and to develop proprietary products using our OraSolv and DuraSolv technologies. We may also acquire technologies that complement our current portfolio of oral drug delivery technologies. We believe that our cash and cash equivalents and available-for-sale securities, together with expected revenues from operations, will be sufficient to meet our anticipated capital requirements for the foreseeable future. However, we may require additional funds to support our working capital requirements or for other purposes and may seek to raise such additional funds through public or private equity financings or from other sources. We cannot be certain that additional financing will be available on terms favorable to us, or at all, or that any additional financing will not be dilutive.

Factors That Could Affect Future Results

Certain statements made in this Quarterly Report on Form 10-Q are forward-looking statements based on our current expectations, assumptions, estimates and projections about our business and our industry. These forward-looking statements involve risks and uncertainties. Our business, financial condition and results of operations could differ materially from those anticipated in these forward-looking statements as a result of certain factors, as more fully described below and elsewhere in this Form 10-Q. You should consider carefully the risks and uncertainties described below, which are not the only ones facing our company. Additional risks and uncertainties also may impair our business operations.

The Loss Of One Of Our Major Customers Could Reduce Our Revenues Significantly.
Revenues from AstraZeneca, Organon and Novartis together represented approximately 70% of our total operating revenues for both the quarter ended June 30, 2002, and for the six months ended June 30, 2002, compared to 85% and 84% for the corresponding periods in 2001. The loss of any one of these customers could cause our revenues to decrease significantly, resulting in losses from our operations. If we cannot broaden our customer base, we will continue to depend on a few customers for the majority of our revenues. We may be unable to negotiate favorable business terms with customers that represent a significant portion of our revenues. If we cannot, our revenues and

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gross profits may not grow as expected and may be insufficient to allow us to achieve sustained profitability.

We Rely On Third Parties To Market, Distribute And Sell The Products Incorporating Our Drug Delivery Technologies And Those Third Parties May Not Perform.
Our pharmaceutical company partners market and sell the products we develop and manufacture. If one or more of our pharmaceutical company partners fails to pursue the marketing of our products as planned, our revenues and gross profits may not reach our expectations, or may decline. We often cannot control the timing and other aspects of the development of products incorporating our technologies because our pharmaceutical company partners may have priorities that differ from ours. Therefore, our commercialization of products under development may be delayed unexpectedly. Because we incorporate our drug delivery technologies into the oral dosage forms of products marketed and sold by our pharmaceutical company partners, we do not have a direct marketing channel to consumers for our drug deli very technologies. The marketing organizations of our pharmaceutical company partners may be unsuccessful, or they may assign a low level of priority to the marketing of our products that is different from our priorities. Further, they may discontinue marketing the products that incorporate our drug delivery technologies. If marketing efforts for our products are not successful, our revenues may fail to grow as expected or may decline.

If We Do Not Enter Into Additional Collaborative Agreements with Pharmaceutical Companies, We May Not Be Able To Achieve Sustained Profitability.
We depend upon collaborative agreements with pharmaceutical companies to develop, test and obtain regulatory approval for, and commercialize oral dosage forms of, active pharmaceutical ingredients using our drug delivery technologies. The number of products that we successfully develop under these collaborative agreements will affect our revenues. If we do not enter into additional agreements in the future, or if our current or future agreements do not result in successful marketing of our products, our revenues and gross profits may be insufficient to allow us to achieve sustained profitability.

      We face additional risks related to our collaborative agreements, including the risks that:

• any existing or future collaborative agreements may not result in additional commercial products;

• additional commercial products that we may develop may not be successful;

• we may not be able to meet the milestones established in our current or future collaborative agreements;

• we may not be able to successfully develop new drug delivery technologies that will be attractive in the future to potential pharmaceutical company partners; and

• our pharmaceutical company partners may exercise their limited rights to terminate their collaborative agreement with us.

If We Cannot Increase Our Production Capacity, We May Be Unable To Meet Expected Demand For Our Products And We May Lose Revenues.
We must increase our production capacity to meet expected demand for our products. We currently have two production lines and are planning to add a bottling line and other manufacturing equipment in 2003. If we are unable to increase our production capacity as

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scheduled, we may be unable to meet expected demand for our products, we may lose revenues and we may not be able to maintain our relationships with our pharmaceutical company partners. Production lines in the pharmaceutical industry generally take 16 to 24 months to complete due to the long lead times required for precision production equipment to be manufactured and installed, as well as the required testing and validation process that must be completed once the equipment is installed. We may not be able to increase our production capacity quickly enough to meet the requirements of our pharmaceutical company partners.

If We Do Not Properly Manage Our Growth, We May Be Unable To Sustain The Level Of Revenues We Have Attained Or Effectively Pursue Additional Business Opportunities.
Compared to the corresponding periods a year earlier, our operating revenues increased 34% and 33% for the year ended December 31, 2001, and for the six month period ended June 30, 2002, respectively, placing significant strain on our management, administrative and operational resources. If we do not properly manage the growth we have recently experienced and expect in the future, our revenues may decline or we may be unable to pursue sources of additional revenues. To properly manage our growth, we must, among other things, implement additional (and improve existing) administrative, financial and operational systems, procedures and controls on a timely basis. We will also need to expand our finance, administrative and operations staff. We may not be able to complete the improveme nts to our systems, procedures and controls necessary to support our future operations in a timely manner. We may not be able to hire, train, integrate, retain, motivate and manage required personnel and may not be able to successfully identify, manage and pursue existing and potential market opportunities. Improving our systems and increasing our staff will increase our operating expenses. If we fail to generate additional revenue in excess of increased operating expenses in any fiscal period we may incur losses, or our losses may increase in that period.

We May Be Unable To Achieve Our Anticipated Revenues and Profits Because The Markets For The Products We Develop And Manufacture For Our Pharmaceutical Company Partners Are Subject To Market Risks From The Introduction of Generic Prescription Products, The Pricing Strategies Of Generic Competitors And From Regulatory Strategies That Could Switch A Prescription Product To An Over-The-Counter Product.
In January 2002, Mylan Laboratories and Teva Pharmaceutical Industries announced that they received tentative approval from the FDA for mirtazapine tablets, which are expected to be generic substitutes for Organon’s Remeron standard tablets. In March 2002, Akzo Nobel NV, Organon’s parent company, reported that Organon sued seven generic pharmaceutical companies, including Teva and Mylan, for the infringement of Organon’s U.S. patent for Remeron (mirtazapine standard tablets). In May 2002, Organon announced that it sued Barr Laborato ries, Inc. for infringing on its U.S. patent for Remeron SolTab (mirtazapine orally disintegrating tablets). The U.S. market launch of generic mirtazapine standard tablets by Mylan Laboratories, Teva Pharmaceutical Industries, and five other unnamed generic pharmaceutical companies, as well as the U.S. market launch of generic orally disintegrating mirtazapine tablets by Barr Laboratories, is subject to final FDA approval, which could occur after the resolution of all legal issues related to Organon’s patent rights. Organon is vigorously defending its patent rights, which it believes apply through June 2017. There can be no assurance that Organon’s market for Remeron SolTab would not be negatively affected by generic mirtazapine competition due to the potential impact of lower product pricing

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resulting from generic competition from either or both standard and orally disintegrating tablets. Due to the large number of variables and high degree of uncertainty, we are unable to predict the timing for the market introduction of a generic mirtazapine standard tablet or a generic mirtazapine orally disintegrating tablet, or the effect of such generic product introductions on our business.

Another pharmaceutical active that involves a high degree of uncertainty is loratadine, which is currently a prescription product. We have developed for Wyeth (formerly known as American Home Products) a fast dissolve formulation of loratadine for both the prescription pharmaceutical and the over-the-counter markets, which Wyeth expects to market as a competitive product to Claritin Reditabs in 2003, unless Schering Corporation, the loratadine patent holder, is successful in its efforts to secure extended exclusive rights to market Claritin. In August 2002, Schering Corporation received a summary judgement from a United States District Court that invalidates their patent. Schering Corporation is expected to appeal this Court’s decision.

In May 2001, a joint committee of the FDA’s Nonprescription Drugs Advisory Committee and Pulmonary-Allergy Drugs Advisory Committee made a non-binding recommendation that loratadine, the active drug ingredient in Claritin, has a safety profile acceptable for over-the-counter marketing. In March 2002, Schering Corporation announced that the FDA has accepted for filing its application to switch all formulations of Claritin to over-the-counter products. In April 2002, the FDA’s Nonprescription Advisory Committee endorsed Claritin (loratadine) for over-the-counter treatment in chronic idiopathic urticaria, or chronic hives of unknown cause. We have developed for Wyeth a fast dissolve formulation of loratadine for the over-the-counter market, which Wyeth is expected to launch in the U.S. market, subject to the FDA’s approval to switch loratadine to the over-the-counter market and the resolution of certain legal and patent issues brought by Sc hering Corporation in their efforts to secure extended exclusive rights to market loratadine.

The ongoing litigation against Wyeth and others by Schering Corporation to prevent or delay the market entry of a loratadine product, as well as Schering Corporation’s application to switch loratadine to the over-the-counter market, could affect our anticipated revenues and profits. The potential switch of loratadine from the prescription market to the over-the-counter market affects pricing, distribution channels, advertising, insurance reimbursement and a variety of other marketing and regulatory factors. The effects of a delayed market entry of Wyeth’s generic alternative to Claritin Reditabs and the potential switch from the prescription market to the over-the-counter market involve a high degree of uncertainty and we are unable to predict the effect of such changes on our business.

We May Experience Significant Delays In Expected Product Releases While Our Pharmaceutical Company Partners Seek Regulatory Approvals For The Products We Develop And, If They Are Not Successful In Obtaining The Approvals, We May Be Unable To Achieve Our Anticipated Revenues And Profits.
The federal government, principally the U.S. Food and Drug Administration, and state and local government agencies regulate all new pharmaceutical products, including our existing products and those under development. Our pharmaceutical company partners may experience significant delays in expected product releases while attempting to obtain regulatory approval for the products we develop. If

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they are not successful, our revenues and profitability may decline. We cannot control, and our pharmaceutical company partners cannot control, the timing of regulatory approval for the products we develop.

Applicants for FDA approval often must submit extensive clinical data and supporting information to the FDA. Varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of a drug product. Changes in FDA approval policy during the development period, or changes in regulatory review for each submitted new drug application, also may cause delays or rejection of an approval. Even if the FDA approves a product, the approval may limit the uses or “indications” for which a product may be marketed, or may require further studies. The FDA also can withdraw product clearances and approvals for failure to comply with regulatory requirements or if unforeseen problems follow initial marketing.

Manufacturers of drugs also must comply with applicable good manufacturing practices requirements. If we cannot comply with applicable good manufacturing practices, we may be required to suspend the production and sale of our products, which would reduce our revenues and gross profits. We may not be able to comply with the applicable good manufacturing practices and other FDA regulatory requirements for manufacturing as we expand our manufacturing operations.

If our products are marketed in foreign jurisdictions, we, and the pharmaceutical company partners with which we are developing our technologies, must obtain required regulatory approvals from foreign regulatory agencies and comply with extensive regulations regarding safety and quality. If approvals to market our products are delayed, if we fail to receive these approvals, or if we lose previously received approvals, our revenues would be reduced. We may be required to incur significant costs in obtaining or maintaining foreign regulatory approvals.

Our Commercial Products Are Subject To Continuing Regulations And We May Be Subject To Adverse Consequences If We Fail To Comply With Applicable Regulations.
Even if our products receive regulatory approval, either in the U.S. or internationally, we will continue to be subject to extensive regulatory requirements. These regulations are wide-ranging and govern, among other things:

• adverse drug experience reporting regulations;

• product promotion;

• product manufacturing, including good manufacturing practice requirements; and

• product changes or modifications.

If we fail to comply or maintain compliance with these laws and regulations, we may be fined or barred from selling our products. If the FDA determines that we are not complying with the law, it can:

• issue warning letters;

• impose fines;

• seize products or order recalls;

• issue injunctions to stop future sales of products;

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• refuse to permit products to be imported into, or exported out of, the U.S.;

• totally or partially suspend our production;

• withdraw previously approved marketing applications; and

• initiate criminal prosecutions.

We Have A Single Manufacturing Facility And We May Lose Revenues And Be Unable To Maintain Our Relationships With Our Pharmaceutical Company Partners If We Lose Its Production Capacity.
We manufacture all our products on our existing production lines in our Eden Prairie facility. If our existing production lines or facility becomes incapable of manufacturing products for any reason, we may be unable to meet production requirements, we may lose revenues and we may not be able to maintain our relationships with our pharmaceutical company partners. Without our existing production lines, we would have no other means of manufacturing products incorporating our drug delivery technologies until we were able to restore the manufacturing capability at our facility or develop an alternative manufacturing facility. Although we carry business interruption insurance to cover lost revenues and profits in an amount we consider adequate, this insurance does not cover all possible situations. In addition, our business interruption insurance would not compensate us for the loss of opportunity and potential adverse impact on relations with our existing pharmaceutical company partners resulting from our inability to produce products for them. Although we currently plan to add a second manufacturing site at our Brooklyn Park, Minnesota facility to reduce this risk, we may encounter unforeseen difficulties or delays in doing so.

We Rely On Single Sources For Some Of Our Raw Materials And We May Lose Revenues And Be Unable To Maintain Our Relationships With Our Pharmaceutical Company Partners If Those Materials Were Not Available.
We rely on single suppliers for some of our raw materials and packaging supplies. If these raw materials or packaging supplies were no longer available we may be unable to meet production requirements, we may lose revenues and we may not be able to maintain our relationships with our pharmaceutical company partners. Without adequate supplies of raw materials or packaging supplies, our manufacturing operations may be interrupted until another supplier could be identified, its products validated and trading terms with it negotiated. We may not be able to identify an alternative supplier in a timely manner, or at all. Furthermore, we may not be able to negotiate favorable terms with an alternative supplier. Any disruptions in our manufacturing operations from the loss of a supplier could potentially damage our relations with our pharmaceutical company partners.

If We Cannot Develop Additional Products, Our Ability To Increase Our Revenues Would Be Limited.
We intend to continue to enhance our current technologies and pursue additional proprietary drug delivery technologies. If we are unable to do so, we may be unable to achieve our objectives of revenue growth and sustained profitability. Even if enhanced or additional technologies appear promising during various stages of development, we may not be able to develop commercial applications for them because:

• the potential technologies may fail clinical studies;

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• we may not find a pharmaceutical company willing to adopt the technologies;

• it may be difficult to apply the technologies on a commercial scale; or

• the technologies may be uneconomical to market.

If We Cannot Keep Pace With The Rapid Technological Change And Meet The Intense Competition In Our Industry, We May Lose Business.
Our success depends, in part, on maintaining a competitive position in the development of products and technologies in a rapidly evolving field. If we cannot maintain competitive products and technologies, our current and potential pharmaceutical company partners may choose to adopt the drug delivery technologies of our competitors. Fast dissolve tablet technologies that compete with our OraSolv and DuraSolv technologies include the Zydis technology developed by R.P. Scherer Corporation, a wholly-owned subsidiary of Cardinal Health, Inc., the WOWTab technology developed by Yamanouchi Pharma Technologies, the Flashtab technology developed by Ethypharm and the FlashDose technology developed by Fuisz Technologies Ltd., a wholly-owned subsidiary of Biovail Corporation. We also compete generally with other drug deliver y, biotechnology and pharmaceutical companies engaged in the development of alternative drug delivery technologies or new drug research and testing. Many of these competitors have substantially greater financial, technological, manufacturing, marketing, managerial and research and development resources and experience than we do and represent significant competition for us.

Our competitors may succeed in developing competing technologies or obtaining governmental approval for products before us. The products of our competitors may gain market acceptance more rapidly than our products. Developments by competitors may render our products, or potential products, noncompetitive or obsolete.

If We Cannot Adequately Protect Our Technology And Proprietary Information, We May Be Unable To Sustain A Competitive Advantage.
Our success depends, in part, on our ability to obtain and enforce patents for our products, processes and technologies and to preserve our trade secrets and other proprietary information. If we cannot do so, our competitors may exploit our innovations and deprive us of the ability to realize revenues and profits from our developments. We have been granted more than fourteen patents on our drug delivery and packaging systems in the U.S., which will expire beginning in 2010.

Any patent applications we may have made or may make relating to our potential products, processes and technologies may not result in patents being issued. Our current patents may not be valid or enforceable. They may not protect us against competitors that challenge our patents, obtain patents that may have an adverse effect on our ability to conduct business or are able to circumvent our patents. Further, we may not have the necessary financial resources to enforce our patents.

To protect our trade secrets and proprietary technologies and processes, we rely, in part, on confidentiality agreements with our employees, consultants and advisors. These agreements may not provide adequate protection for our trade secrets and other proprietary information in the event of any unauthorized use or disclosure, or if others lawfully develop the information.

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Third Parties May Claim That Our Technologies, Or The Products In Which They Are Used, Infringe On Their Rights And We May Incur Significant Costs Resolving These Claims.
Third parties may claim that the manufacture, use or the sale of our drug delivery technologies infringe on their patent rights. If such claims are asserted, we may have to seek licenses, defend infringement actions or challenge the validity of those patents in court. If we cannot obtain required licenses, are found liable for infringement or are not able to have these patents declared invalid, we may be liable for significant monetary damages, encounter significant delays in bringing products to market or be precluded from participating in the manufacture, use or sale of products or methods of drug delivery covered by the patents of others. We may not have identified, or be able to identify in the future, U.S. and foreign patents that pose a risk of potential infringement c laims.

We enter into collaborative agreements with pharmaceutical companies to apply our drug delivery technologies to drugs developed by others. Ultimately, we receive license revenues and product development fees, as well as revenues from, and royalties on, the sale of products incorporating our technology. The drugs to which our drug delivery technologies are applied are generally the property of the pharmaceutical companies. Those drugs may be the subject of patents or patent applications and other forms of protection owned by the pharmaceutical companies or third parties. If those patents or other forms of protection expire, are challenged or become ineffective, sales of the drugs by the collaborating pharmaceutical company may be restricted or may cease.

Because We Have A Limited Operating History, Potential Investors In Our Stock May Have Difficulty Evaluating Our Prospects.
We recorded the first commercial sales of products using our fast dissolve technologies in early 1997. Accordingly, we have only a limited operating history, which may make it difficult for you and other potential investors to evaluate our prospects. The difficulty investors may have in evaluating our prospects may cause volatile fluctuations, including decreases, in the market price of our common stock as investors react to information about our prospects. Since 1997, we have generated revenues from product development fees and licensing arrangements, sales of products using our fast dissolve technologies and royalties. We are currently making the transition from research and product development operations with limited production to commercial operations with expanding production capabilities in addition to research and product development activities. Our business and prospects, therefore, must be evaluated in light of the risks and uncertainties of a company with a limited operating history and, in particular, one in the pharmaceutical industry.

If We Are Not Profitable In The Future, The Value Of Our Stock May Fall.
Although we were profitable for the year ended December 31, 2001, and the six months ended June 30, 2002, we have accumulated aggregate net losses from inception of approximately $19.4 million. If we are unable to sustain profitable operations in future periods, the market price of our stock may fall. The costs for research and product development of our drug delivery technologies and general and administrative expenses have been the principal causes of our losses. Our ability to achieve sustained profitable operations depends on a number of factors, many of which are beyond our direct control. These factors include:

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• the demand for our products;

• our ability to manufacture our products efficiently and with the required quality;

• our ability to increase our manufacturing capacity;

• the level of product and price competition;

• our ability to develop additional commercial applications for our products;

• our ability to control our costs; and

• general economic conditions.

We May Require Additional Financing, Which May Not Be Available On Favorable Terms Or At All And Which May Result In Dilution Of The Equity Interest Of An Investor.
We may require additional financing to fund the development and possible acquisition of new drug delivery technologies and to increase our production capacity beyond what is currently anticipated. If we cannot obtain financing when needed, or obtain it on favorable terms, we may be required to curtail any plans to develop or acquire new drug delivery technologies or may be required to limit the expansion of our manufacturing capacity. We believe our cash and cash equivalents, and expected revenues from operations will be sufficient to meet our anticipated capital requirements for the foreseeable future. However, we may elect to pursue additional financing at any time to more aggressively pursue development of new drug delivery technologies and expand manufacturing capacity beyond that currently planned.

Other factors that will affect future capital requirements and may require us to seek additional financing include:

• the level of expenditures necessary to develop and, or, acquire new products or technologies;

• the progress of our research and product development programs;

• the need to construct a larger than currently anticipated manufacturing facility, or additional manufacturing facilities, to meet demand for our products;

• the results of our collaborative efforts with current and potential pharmaceutical company partners; and

• the timing of, and amounts received from, future product sales, product development fees and licensing revenue and royalties.

Demand For Some Of Our Products Is Seasonal, And Our Sales And Profits May Suffer During Periods When Demand Is Light.
Certain non-prescription products that we manufacture for our pharmaceutical company partners treat seasonal ailments such as colds, coughs and allergies. Our pharmaceutical company partners may choose to not market those products in off-seasons and our sales and profits may decline in those periods as a result. For full-year 2001 and for the first six months of 2002, operating revenues from Novartis, which included revenues related to Triaminic, a seasonal cold, cough and allergy product, represented 33% and 16%, respectively, of our total operating revenues for such periods. We may not be successful in developing a mix of products to reduce these seasonal variations.

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If The Marketing Claims Asserted About Our Products Are Not Approved, Our Revenues May Be Limited.
Once a drug product incorporating our technologies is approved by the FDA, the Division of Drug Marketing, Advertising and Communication, the FDA’s marketing surveillance department within the Center for Drug Evaluation and Research, must approve marketing claims asserted about it by our pharmaceutical company partners. If our pharmaceutical company partners fail to obtain from the Division of Drug Marketing acceptable marketing claims for a product incorporating our drug technology, our revenues from that product may be limited. Marketing claims are the basis for a product’s labeling, advertising and promotion. The claims our pharmaceutical company partners are asserting about our drug delivery technology, or the drug product itself, may not be approved by the Division of Drug Marketing.

We May Face Product Liability Claims Related To Participation In Clinical Trials Or The Use Or Misuse Of Our Products.
The testing, manufacturing and marketing of products using our drug delivery technologies may expose us to potential product liability and other claims resulting from their use. If any such claims against us are successful, we may be required to make significant compensation payments. Any indemnification that we have obtained, or may obtain, from contract research organizations or pharmaceutical companies conducting human clinical trials on our behalf may not protect us from product liability claims or from the costs of related litigation. Similarly, any indemnification we have obtained, or may obtain, from pharmaceutical companies with which we are developing our drug delivery technologies may not protect us from product liability claims from the consumers of those products or from the costs of related litigation. If we are subject to a product liability claim, our product liability insurance may not reimburse us, or be sufficient to reimburse us, for any expenses or losses we may suffer. A successful product liability claim against us, if not covered by, or if in excess of, our product liability insurance, may require us to make significant compensation payments, which would be reflected as expenses on our statement of operations and reduce our earnings.

Anti-Takeover Provisions Of Our Corporate Charter Documents, Delaware Law And Our Stockholders’ Rights Plan May Affect The Price Of Our Common Stock.
Our corporate charter documents, Delaware law and our stockholders’ rights plan include provisions that may discourage or prevent parties from attempting to acquire us. These provisions may have the effect of depriving our stockholders of the opportunity to sell their stock at a price in excess of prevailing market prices in an acquisition of us by another company. Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the rights, preferences and privileges of those shares without any further vote or action by our stockholders. The rights of holders of our common stock may be adversely affected by the rights of the holders of any preferred stock that may be issued in the future. Additional provisions of our certificate of incorporat ion and bylaws could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting common stock. These include provisions that limit the ability of stockholders to call special meetings or remove a director for cause.

We are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the

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transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a “business combination” includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an “interested stockholder” is a person who, either alone or together with affiliates and associates, owns (or within the past three years, did own) 15% or more of the corporation’s voting stock.

We also have a stockholders’ rights plan, commonly referred to as a poison pill, which makes it difficult, if not impossible, for a person to acquire control of us without the consent of our board of directors.

Our Stock Price Has Been Volatile And May Continue To Be Volatile.
The trading price of our common stock has been, and is likely to continue to be, highly volatile. The market value of your investment in our common stock may fall sharply at any time due to this volatility. In the year ended December 31, 2001, the closing sale price for our common stock ranged from $30.05 to $85.75. For the six months ended June 30, 2002, the closing sale price for our common stock ranged from $18.94 to $35.45. The market prices for securities of drug delivery, biotechnology and pharmaceutical companies historically have been highly volatile. Factors that could adversely affect our stock price include:

• fluctuations in our operating results;

• announcements of technological collaborations, innovations or new products by us or our competitors;

• governmental regulations;

• developments in patent or other proprietary rights owned by us or others;

• public concern as to the safety of drugs developed by us or others;

• the results of pre-clinical testing and clinical studies or trials by us or our competitors;

• litigation;

• decisions by our pharmaceutical company partners relating to the products incorporating our technologies;

• actions by the FDA in connection with submissions related to the products incorporating our technologies; and

• general market conditions.

Our Operating Results May Fluctuate, Causing Our Stock Price To Fall.
Fluctuations in our operating results may lead to fluctuations, including declines, in our stock price. Our operating results may fluctuate from quarter to quarter and from year to year depending on:

• demand by consumers for the products we produce;

• new product introductions;

• the seasonal nature of the products we produce to treat seasonal ailments;

• pharmaceutical company ordering patterns;

• our production schedules;

• the number of new collaborative agreements that we enter into;

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• the number and timing of product development milestones that we achieve under collaborative agreements;

• the level of our development activity conducted for, and at the direction of, pharmaceutical companies under collaborative agreements; and

• the level of our spending on new drug delivery technology development and technology acquisition, and internal product development.

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Item 3. Quantitative and Qualitative Disclosures about Market Risks

The Company is subject to interest rate and foreign currency risks. Our investments in fixed-rate debt securities, which are classified as available-for-sale at June 30, 2002, have remaining maturities ranging from 3 to 36 months and thus are exposed to the risk of fluctuating interest rates. Available-for-sale securities had a market value of $136.6 million at June 30, 2002, and represented 64% of total assets. The primary objective of our investment activities is to preserve capital. We have not used derivative financial instruments in our investment portfolio.

We performed a sensitivity analysis assuming a hypothetical 10% adverse movement in interest rates applicable to fixed rate investments maturing during the next twelve months that are subject to reinvestment risk. As of June 30, 2002, the analysis indicated that these hypothetical market movements would not have a material effect on our financial position, results of operations or cash flow.

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PART II - OTHER INFORMATION

Item 4. Submission of Matters to Vote of Security Holders

The Annual Meeting of the Stockholders of the Company was held on Wednesday, June 5, 2002. There were 14,149,929 shares of the Company’s common stock entitled to vote and a total of 13,222,905 shares were represented at the Annual Meeting. Two matters were submitted to the stockholders for approval: (1) the election of six directors and (2) the ratification of the selection of Ernst & Young LLP as the independent public accountants for the Company.

Six nominees, namely John M. Siebert, Ph.D., Terrence W. Glarner, Steven B. Ratoff, Joseph R. Robinson, Ph.D., John F. Chappell, and Steven D. Cosler, were duly elected as directors of the Company until the next annual meeting of stockholders. Each nominee received at least ninety-eight percent of the votes cast in favor of his election. Further results of the voting were as follows:

	Votes Cast
	for the	Votes
Director	Director	Withheld
John M. Siebert, Ph.D.	13,193,334	129,571
Terrence W. Glarner	13,065,463	257,442
Steven B. Ratoff	13,115,736	207,169
Joseph R. Robinson, Ph.D.	13,218,009	104,896
John F. Chappell	13,196,811	126,094
Steven D. Cosler	13,109,673	213,232

There were no abstentions and no broker non-votes.

The proposal to approve the selection of Ernst & Young LLP as the independent public accountants for the Company was approved by the Company’s stockholders. A total of 12,890,503 shares of the Company’s common stock were voted in favor of the proposal, 427,161 shares of the Company’s common stock were voted against the proposal and holders of 5,241 shares of the Company’s common stock abstained from voting. There were no broker non-votes. The proposal to approve the selection of Ernst & Young LLP as the independent public accountants for the Company received approximately ninety-seven percent of the vote cast.

28

Item 6. Exhibits and Reports on Form 8-K

(a)	Exhibits
	Exhibit	Description of Document	Method of Filing
	3.1	Fifth Restated Certificate of Incorporation of CIMA, as amended.	(1)
	3.2	Third Restated Bylaws of CIMA.	(2)
	4.1	Form of Certificate for Common Stock.	(3)
	4.2	Amended and Restated Rights Agreement dated June 26, 2001, between CIMA and Wells Fargo Bank Minnesota, N.A. as Rights Agent.	(4)
	10.1	Development, License and Supply Agreement made as of May 20, 2002, by and between CIMA and Schering-Plough Ltd.*	Filed herewith
	10.2	Development and License Agreement dated June 18, 2002, between CIMA and WYETH (formerly known as American Home Products Corporation), acting through its Wyeth Consumer Healthcare Division.*	Filed herewith
	10.3	Supply Agreement dated June 18, 2002, between CIMA and WYETH (formerly known as American Home Products Corporation), acting through its Wyeth Consumer Healthcare Division.*	Filed herewith
	99.1	Certification of Chief Executive Officer	Filed herewith
	99.2	Certification of Chief Financial Officer	Filed herewith

*	Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.
(1)	Filed as an exhibit to CIMA’s Registration Statement on Form S-8, filed June 13, 2001, File No. 333-62954, and incorporated herein by reference.
(2)	Filed as an exhibit to CIMA’s Quarterly Report on Form 10-Q for the period ended June 30, 1999, File No. 333-62954, and incorporated herein by reference.
(3)	Filed as an exhibit to CIMA’s Registration Statement on Form S-1, File No. 33-80194, and incorporated herein by reference.
(4)	Incorporated by reference to Exhibit 1 to CIMA’s Amendment No. 1 to Registration Statement on Form 8-A/A, filed July 18, 2001, File No. 0-24424.
(b)	Reports on Form 8-K
No reports on Form 8-K were filed for the quarter ended June 30, 2002.

29

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			CIMA LABS INC.
			Registrant
Date	August 9, 2002	By	/s/David A. Feste
			David A. Feste
			Chief Financial Officer
			(principal financial and accounting officer,
			duly authorized to sign on behalf of the
			registrant)

30

EX-10.1

                                                                    EXHIBIT 10.1

                    DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT

                                 BY AND BETWEEN

                                 CIMA LABS INC.

                                       AND

                              SCHERING-PLOUGH LTD.

                                TABLE OF CONTENTS



                                                                                                  Page
                                                                                               
ARTICLE I - DEFINITIONS.........................................................................   2

ARTICLE II - LICENSE; DISCLOSURE OF INFORMATION DEVELOPMENT AND
COMMERCIALIZATION...............................................................................   9

   2.1   EXCLUSIVE LICENSE GRANT................................................................   9
   2.2   DISCLOSURE OF INFORMATION..............................................................  10
   2.3   DEVELOPMENT PROGRAM....................................................................  10
   2.4   SPECIFICATIONS AND BULK SPECIFICATIONS.................................................  10
   2.5   COMPLETION OF DEVELOPMENT PROGRAM......................................................  11
   2.6   SCHERING COOPERATION IN DEVELOPMENT PROGRAM............................................  11
   2.7   COSTS OF DEVELOPMENT PROGRAM...........................................................  11
   2.8   REPORTING RELATING TO DEVELOPMENT PROGRAM..............................................  11
   2.9   LIAISONS FOR DEVELOPMENT PROGRAM.......................................................  11
   2.10  DELIVERY OF ACTIVE INGREDIENT FOR DEVELOPMENT PROGRAM..................................   12
   2.11  SHIPMENT OF LICENSED PRODUCT FOR DEVELOPMENT PROGRAM...................................   12
   2.12  OUTSIDE SERVICES AGREEMENT.............................................................   12

ARTICLE III - PAYMENTS; ROYALTIES AND REPORTS...................................................  12

   3.1   CONSIDERATION FOR LICENSE..............................................................  12
   3.2   ROYALTIES..............................................................................  13
   3.3   REPORTS AND PAYMENT OF ROYALTY.........................................................  15
   3.4   MAINTENANCE OF RECORDS; AUDITS.........................................................  16

ARTICLE IV - PATENTS............................................................................  17

   4.1   FILING, PROSECUTION AND MAINTENANCE OF PATENTS.........................................  17
   4.2   OPTION OF SCHERING TO PROSECUTE AND MAINTAIN PATENTS...................................  17
   4.3   ENFORCEMENT............................................................................  18
   4.4   INFRINGEMENT AND THIRD PARTY LICENSES..................................................  19
   4.5   THIRD PARTY INFRINGEMENT SUIT..........................................................  20
   4.6   ABANDONMENT............................................................................  21
   4.7   IDENTIFICATION OF CIMA ON PACKAGING OF LICENSED PRODUCT................................  21

ARTICLE V - QUALITY CONTROL AND REGULATORY COMPLIANCE...........................................  21

   5.1   FACILITY COMPLIANCE AND RELATED MATTERS................................................  21
   5.2   QUALITY CONTROL PROGRAM................................................................  22
   5.3   APPROVAL FOR MANUFACTURING CHANGES; THIRD PARTY MANUFACTURING..........................  22
   5.4   RETENTION OF SAMPLES...................................................................  22
   5.5   BATCH FAILURE..........................................................................  22
   5.6   NOTIFICATION OF REGULATORY INSPECTIONS.................................................  23
   5.7   INSPECTION BY SCHERING.................................................................  23
   5.8   ENVIRONMENTAL AND OTHER LAWS...........................................................  23

ARTICLE VI - PRODUCT RECALL.....................................................................  24

   6.1   NOTIFICATION AND RECALL................................................................  24
   6.2   RECALL EXPENSES........................................................................  24

ARTICLE VII - APPROVAL SUPPORT; REGULATORY MATTERS..............................................  25


                                      -i-

                                                                                               
   7.1   APPROVAL SUPPORT.......................................................................  25
   7.2   FILING AND MAINTENANCE OF THE HEALTH REGISTRATIONS.....................................  25
   7.3   REGULATORY ASSISTANCE FOR MAINTAINING FILINGS..........................................  26
   7.4   SPECIFICATIONS AND BULK SPECIFICATIONS; AMENDMENTS.....................................  26
   7.5   COMPLAINTS OR ADVERSE EXPERIENCES......................................................  26
   7.6   RECORD KEEPING.........................................................................  27
   7.7   CIMA APPROVALS.........................................................................  28

ARTICLE VIII - SUPPLY OF BULK ACTIVE AND RAW MATERIALS..........................................  28

   8.1   SCHERING OBLIGATION....................................................................  28
   8.2   CIMA OBLIGATION........................................................................  29
   8.3   ACCEPTANCE OF BULK ACTIVE..............................................................  29
   8.4   STORAGE AND FORMULATION OF BULK ACTIVE AND RAW MATERIALS; OWNERSHIP OF BULK ACTIVE.....  29
   8.5   YIELD LOSSES...........................................................................  29

ARTICLE IX - SUPPLY OF MANUFACTURED PRODUCT.....................................................  29

   9.1   SUPPLY OF SCHERING'S REQUIREMENTS......................................................  29
   9.2   GOOD FAITH FORECASTS...................................................................  30
   9.3   PURCHASE ORDERS........................................................................  30
   9.4   STOPPAGE DUE TO GOOD CAUSE.............................................................  31
   9.5   SCHERING OPTION TO MANUFACTURE.........................................................  31

ARTICLE X - DELIVERY AND RELATED MATTERS........................................................  33

   10.1  CERTIFICATE OF ANALYSIS................................................................  33
   10.2  RISK OF LOSS...........................................................................  33
   10.3  STORAGE................................................................................  33
   10.4  DELAY AND FAILURE TO SUPPLY............................................................  33
   10.5  REJECTION..............................................................................  34

ARTICLE XI - PAYMENT............................................................................  35

   11.1  PRICE..................................................................................  35
   11.2  PRICE ADJUSTMENT.......................................................................  35
   11.3  MAXIMUM PRICE INCREASE.................................................................  37
   11.4  TAXES..................................................................................  37

ARTICLE XII - CONFIDENTIALITY AND PUBLICATION...................................................  37

   12.1  CONFIDENTIALITY........................................................................  37
   12.2  NO PUBLICITY...........................................................................  39
   12.3  PUBLICATION............................................................................  39
   12.4  ORAL DISCLOSURE OF PROPRIETY INFORMATION...............................................  40

ARTICLE XIII - REPRESENTATIONS AND WARRANTIES...................................................  40

   13.1  REPRESENTATIONS AND WARRANTIES OF EACH PARTY...........................................  40
   13.2  CIMA'S REPRESENTATIONS AND WARRANTIES..................................................  41
   13.3  CIMA COVENANTS.........................................................................  42
   13.4  SCHERING'S REPRESENTATIONS AND WARRANTIES..............................................  43
   13.5  SCHERING COVENANTS.....................................................................  44
   13.6  COVENANTS OF EACH PARTY................................................................  44
   13.7  CONTINUING REPRESENTATIONS.............................................................  44
   13.8  NO INCONSISTENT AGREEMENTS.............................................................  44
   13.9  REPRESENTATION BY LEGAL COUNSEL.......................................................   44

ARTICLE XIV - INDEMNIFICATION AND LIMITATION ON LIABILITY.......................................  45



                                      -ii-

                                                                                               
   14.1     INDEMNIFICATION BY SCHERING.........................................................  45
   14.2     INDEMNIFICATION BY CIMA.............................................................  45
   14.3     CONDITIONS TO INDEMNIFICATION.......................................................  45
   14.4     SETTLEMENTS.........................................................................  46
   14.5     LIMITATION OF LIABILITY.............................................................  46
   14.6     INSURANCE...........................................................................  46

ARTICLE XV - TERM AND TERMINATION...............................................................  46

   15.1     TERM AND EXPIRATION.................................................................  46
   15.2     TERMINATION BY SCHERING.............................................................  47
   15.3     TERMINATION.........................................................................  47
   15.4     EFFECT OF TERMINATION...............................................................  49

ARTICLE XVI - MISCELLANEOUS.....................................................................  49

   16.1     ASSIGNMENT..........................................................................  50
   16.2     GOVERNING LAW.......................................................................  50
   16.3     WAIVER..............................................................................  50
   16.4     INDEPENDENT RELATIONSHIP............................................................  50
   16.5     EXPORT CONTROL......................................................................  51
   16.6     ENTIRE AGREEMENT; AMENDMENT.........................................................  51
   16.7     NOTICES.............................................................................  51
   16.8     PROVISIONS FOR INSOLVENCY...........................................................  52
   16.9     FORCE MAJEURE.......................................................................  54
   16.10    SEVERABILITY........................................................................  54
   16.11    COUNTERPARTS........................................................................  55
   16.12    CAPTIONS............................................................................  55
   16.13    RECORDING...........................................................................  55
   16.14    FURTHER ACTIONS.....................................................................  55



APPENDIX A - CHEMICAL FORMULA OF [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

APPENDIX B - BULK SPECIFICATIONS FOR BULK ACTIVE

APPENDIX C - DEVELOPMENT PROGRAM

APPENDIX D - LICENSED PATENTS RIGHTS

APPENDIX E - COPY OF OUTSIDE SERVICES AGREEMENT

APPENDIX F - PACKAGING COMPONENTS FOR LICENSED PRODUCT

APPENDIX G - PRICE OF LICENSED PRODUCT SUPPLIED BY CIMA FOR COMMERCIAL USE

APPENDIX H - SPECIFICATIONS FOR LICENSED PRODUCT

APPENDIX I - ADVERSE EVENT REPORTING PROCEDURES FOR PRODUCTS

                                      -iii-

SAFETY AGREEMENT APPENDIX I

SAFETY AGREEMENT APPENDIX 2

APPENDIX J - STORAGE CONDITIONS

APPENDIX K - EXPENSE GUIDELINES

APPENDIX L - KEY SCHERING MARKETS

APPENDIX M - ARBITRATION PROVISIONS

                                      -iv-

         THIS DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT (the "Agreement") is
made as of the last date on the signature page hereof (the "Effective Date") by
and between CIMA LABS INC., a Delaware corporation having its principal place of
business at 10,000 Valley View Road, Eden Prairie, Minnesota 55344 (hereinafter
referred to as "CIMA") and Schering-Plough Ltd., a corporation duly organized
and existing under the laws of Switzerland, with an office at Toepferstrasse 5,
CH 6004 Lucerne, Switzerland (hereinafter referred to as "Schering"). CIMA and
Schering are sometimes referred to herein individually as a party and
collectively as the parties. References to "Schering" and "CIMA" shall include
their respective Affiliates (as hereinafter defined).

         WHEREAS, CIMA and its Affiliates have developed a fast-dissolving drug
delivery system and possess confidential technology, manufacturing know-how and
experience related thereto; and

         WHEREAS, Schering and its Affiliates have developed a proprietary
pharmaceutical product, [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***], which will be
sold in various finished pharmaceutical dosage forms by Schering; and

         WHEREAS, the parties have entered into an Outside Services Agreement
(as defined below), under which CIMA has performed and will perform certain
development work relating to the Licensed Product (as defined below); and

         WHEREAS, the parties desire to enter into an agreement whereby, subject
to the terms of this Agreement, CIMA shall continue to develop the Licensed
Product for Schering including, without limitation, scale-up and validation of
the manufacturing process, and shall provide data necessary to support an NDA
for the Licensed Product and shall manufacture the Licensed Product for
Schering; and

         WHEREAS, Schering, together with its Affiliates, possess extensive
capabilities in the development and commercialization of pharmaceutical products
on a worldwide basis; and

         WHEREAS, Schering desires to obtain and CIMA is willing to grant to
Schering, an exclusive license under the Licensed Patent Rights (as hereinafter
defined) and to use the CIMA Know-How (as hereinafter defined) in combination
with the Active Ingredient (as hereinafter defined) upon the terms and
conditions set forth herein; and

                                      -1-

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, Schering and CIMA hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         As used in this Agreement, the following capitalized terms, whether
used in the singular or plural, shall have the respective meanings set forth
below:

         1.1      The term "Active Ingredient" shall mean [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***], having the chemical formula contained in Appendix A,
and its pharmaceutically acceptable salts.

         1.2      The term "Approved Facility" shall mean that FDA approved
facility of CIMA located at 10,000 Valley View Road, Eden Prairie, Minnesota, to
be used by CIMA in its performance of this Agreement or such other facility as
may be approved by Schering in accordance with Section 5.1, including, all of
the equipment, machinery and facilities of CIMA at such location that are to be
used in the Manufacturing and storage of Licensed Product.

         1.3      The term "Affiliate" shall mean any individual or entity
directly or indirectly controlling, controlled by or under common control with,
a party to this Agreement. For purposes of this Agreement, the direct or
indirect ownership of fifty percent (50%) or more of the outstanding voting
securities of an entity, or the right to receive fifty percent (50%) or more of
the profits or earnings of an entity shall be deemed to constitute control. Such
other relationship as in fact results in actual control over the management,
business and affairs of an entity shall also be deemed to constitute control.

         1.4      The term "Bulk Active(s)" shall mean the Active Ingredient in
bulk form and meeting the Bulk Specifications.

         1.5      The term "Bulk Specifications" shall mean the specifications
and quality control testing procedures for the Bulk Active set forth in Appendix
B hereto, as amended from time to time, in accordance with the terms of this
Agreement.

         1.6      The term "Calendar Quarter" shall mean the respective periods
of three (3) consecutive calendar months ending on March 31, June 30, September
30 or December 31, for so long as this Agreement is in effect.

                                      -2-

         1.7      The term "Calendar Year" shall mean each successive period of
twelve (12) months commencing on January 1 and ending on December 31, for so
long as this Agreement is in effect.

         1.8      The term "CIMA Know-How" shall mean any of CIMA's or its
Affiliates' proprietary information and materials relating to the research,
development, registration, or Manufacture of Licensed Product which during the
Term of this Agreement are in CIMA's or its Affiliates' possession or control,
through license or otherwise, and which are not generally known or become known
during the Term of the Agreement. CIMA Know-How shall include, without
limitation, discoveries, methods, knowledge, Improvements, processes, formulas,
data, ideas, experience, inventions, know-how, technology, trade secrets,
manufacturing procedures, purification and isolation techniques, test data and
other intellectual property, patentable or otherwise, developed by or on behalf
of CIMA relating to the OraSolv Technology or its use in combination with the
Active Ingredient.

         1.9      The term "CIMA Trademark" shall mean any trademark(s)
proposed, chosen, owned or controlled by CIMA or its Affiliates.

         1.10     The term "CMC" shall mean the chemistry, manufacturing, and
controls section(s) and data in the Health Registrations that cover the chemical
composition of the Licensed Product and its components and the control and
Manufacturing process for the Licensed Product, as amended or supplemented from
time to time.

         1.11     The term "Development Program" shall mean all development work
undertaken under the Outside Services Agreement or hereunder by or on behalf of
CIMA or its Affiliates with respect to development of Licensed Product
including, without limitation, the work set forth in Appendix C hereto, as well
as all development work undertaken by Schering or its Affiliates as set forth in
Appendix C hereto, as such Appendix C may be amended by mutual written agreement
of the parties hereto.

         1.12     The term "EXW" shall mean Ex Works as that term is used in
Incoterms 2000.

         1.13     The term "FDA" shall mean the United States Food and Drug
Administration or any successor agency thereof.

         1.14     The term "FDCA" shall mean the Federal Food, Drug and Cosmetic
Act, 21 U.S.C. [sec]301-397, as amended.

         1.15     The term "First Commercial Sale" shall mean, with respect to
any Licensed Product, the first sale for end use of such Licensed Product.

                                      -3-

         1.16     The term "GMPs" shall mean current good manufacturing
practices for the methods to be used in, and the facilities and controls to be
used for, the manufacture, processing, packing and holding of drugs, all as set
forth from time to time by the FDA and any other relevant Regulatory Authorities
in the Territory.

         1.17     The term "Health Registrations" shall mean the technical,
medical and scientific licenses, registrations, authorizations and/or approvals
of the Licensed Product (including the prerequisite manufacturing approvals or
authorizations, marketing authorization based upon such approvals and pricing,
third party reimbursement and labeling approvals related thereto) that are
required by any national, supra-national (e.g., the European Commission or the
Council of the European Union), regional, state or local regulatory agency,
department, bureau or other governmental entity in the Territory, for the
Manufacture, distribution, use or sale of Licensed Product in the Territory, as
amended or supplemented from time to time. With respect to the United States,
the term Health Registrations shall include, without limitation, an
"Investigational New Drug Application" or a "New Drug Application," as defined
in 21 C.F.R. pt. 312 and 21 C.F.R. pt. 314 respectively, for the Licensed
Product, as amended or supplemented from time to time.

         1.18     The term "Improvement" shall mean any enhancement in the
formulation, ingredients, preparation, presentation, means of delivery, dosage,
packaging of, manufacture, or any new or expanded therapeutic indications(s) for
the Licensed Product, in each case which is developed prior to or during the
Term of this Agreement by or on behalf of CIMA or by or on behalf of Schering,
as applicable.

         1.19     The term "Independent Auditor" shall mean a nationally
recognized certified public accounting firm, provided, however, no certified
public accounting firm shall be engaged for the purpose of determining a Price
adjustment if that firm has, or at any time within the last five (5) years prior
to such engagement has had, any business relations or affiliations with either
Schering or CIMA.

         1.20     The term "IND" shall mean an investigational new drug
application submitted to the FDA or its equivalent in countries outside the
United States, approval of which permits the clinical investigation of Licensed
Product.

         1.21     The term "Law" or "Laws" shall mean all applicable federal,
state, local or foreign statutes or laws and shall be deemed also to refer to
all rules and regulations promulgated thereunder by any Regulatory Authorities
in the Territory, unless context requires otherwise. Any reference to a
particular statute, law, rule or regulation will be interpreted to include any
revision of or

                                      -4-

successor to such statute, law, rule or regulation regardless of how it is
numbered or classified.

         1.22     The term "Licensed Patent Rights" shall mean all claims of any
patent applications or issued patents in the Territory, whether in existence as
of the date of this Agreement, or filed or issued during the Term of this
Agreement, to which CIMA and/or its Affiliates has or acquires any right and
which cover the manufacture, use or sale of Licensed Product, including, without
limitation, the United States and foreign patent applications and issued patents
which:

                  (a)   are listed, as of the effective date of this Agreement,
         in Appendix D which is attached hereto and made a part hereof and which
         shall be periodically updated by written notice from CIMA to Schering
         in a timely fashion during the term of the Agreement;

                  (b)   relate to the OraSolv Technology or the CIMA Know-How;

                  (c)   arise out of or are developed during and under the
         performance of the Development Program by CIMA or its Affiliates;
         and/or

                  (d)   cover any patentable Improvement of any of the
         foregoing.

Licensed Patent Rights shall include any reissues, reexaminations, extensions
(or other governmental actions which provide exclusive rights to the patent
holder in the patented subject matter beyond the original patent expiration
date), substitutions, confirmations, registrations, revalidations, additions,
continuations, continuations-in-part, or divisions of or to any patent
applications or issued patents described in (a)-(d) of this Section.

         1.23     The term "Licensed Product" shall mean any dosage form
utilizing any material elements of the CIMA Know-How, and/or the Licensed Patent
Rights, in its Manufacture or use, and which contains the Active Ingredient as a
pharmaceutically active ingredient.

         1.24     The term "Manufacture", "Manufactured" or "Manufacturing"
shall mean the manufacture, formulating, finishing (including packaging),
filling, and quality control testing (including in-process, release, and
stability testing) of the Licensed Product.

         1.25     The term "NDA" shall mean a New Drug Application, Product
License Application or its equivalent filed with the FDA seeking approval to
market and sell a Licensed Product in the United States.

                                      -5-

         1.26     The term "Net Sales" shall mean the sales invoiced by
Schering, its Affiliates or sublicensees on all sales of Licensed Product to an
unaffiliated third party (whether an end-user, a distributor or otherwise), and
exclusive of intercompany transfers or sales in the Territory, less the
reasonable and customary deductions utilized in the pharmaceutical industry,
from such gross amounts including:

         (i)      normal and customary trade, cash and quantity discounts,
allowances and credits;

         (ii)     credits or allowances actually granted for damaged goods,
returns or rejections of Licensed Product and retroactive price reductions;

         (iii)    sales or similar taxes (including duties or other governmental
charges levied on, absorbed or otherwise imposed on the sale of Licensed Product
including, without limitation, value added taxes or other governmental charges
otherwise measured by the billing amount, when included in billing);

         (iv)     freight, postage, shipping, customs duties and insurance
charges; and

         (v)      charge back payments and rebates granted to managed health
care organizations or to federal, state and local governments, their agencies,
and purchasers and reimbursers or to trade customers, including but not limited
to, wholesalers and chain and pharmacy buying groups.

         1.27     The term "OraSolv Technology" shall mean the fast-dissolving
drug delivery system described in U.S. Patent 5,178,878 and U.S. Patent
Application 08/468,913 including, formulations, materials, methods and other
technologies which are owned by CIMA or licensed to CIMA with the right to grant
sublicenses.

         1.28     The term "Outside Services Agreement" shall mean the Outside
Services Agreement by and between the parties effective May 21, 2001, as amended
by the Amendment #1 to Outside Services Agreement entered into on September 25,
2001 and Amendment #2 to Outside Services Agreement entered into on December 3,
2001, copies of which are attached hereto as Appendix E, as amended from time to
time.

         1.29     The term "Packaging Insert" shall mean the written materials
approved by the FDA and required to be inserted into any packaged Licensed
Product utilized by patients after approval of all Health Registrations
necessary to sell the Licensed Product in the Territory.

                                      -6-

         1.30     The term "Packaging Components" shall mean the packaging
materials meeting the specifications described on Appendix F, to be provided by
CIMA for the packaging of Licensed Product Manufactured by CIMA after approval
of all Health Registrations necessary to sell the Licensed Product in the
Territory.

         1.31     The term  "Price" shall mean the price of Licensed Product
supplied to Schering by CIMA as set forth on Appendix G hereto.

         1.32     The term "Proprietary Information" shall mean CIMA Know-How,
Schering Know-How and all other scientific, clinical, regulatory, marketing,
financial and commercial information or data, whether communicated in writing,
verbally or electronically, which is provided by one party to the other party in
connection with this Agreement.

         1.33     The term "Raw Materials" shall mean, inter alia, all raw
materials, components, and excipients, other than Bulk Active or Active
Ingredient, useful or necessary for the Manufacture of the Licensed Product in
accordance with this Agreement.

         1.34     The term "Regulatory Authority" shall mean the applicable
government regulatory authority in each country in the Territory involved in
granting the Health Registrations for the Licensed Product. Such term includes,
without limitation, the FDA and any successor thereto.

         1.35     The term "Requirements" shall mean all quantities of the
Licensed Product that shall be required by Schering for clinical trial materials
(including for new indications) and for distribution, marketing (including
samples) or other research and development activities, and sale of the Licensed
Product in the Territory during the term hereof.

         1.36     The term "Schering Know-How" shall mean any of Schering's or
its Affiliates' information and materials relating to the research, development,
registration, manufacture, marketing, use or sale of Active Ingredient, Bulk
Active and/or Licensed Product which during the Term of this Agreement are in
Schering's or its Affiliates' possession or control, through license or
otherwise, and which are not generally known, including without limitation such
information and materials that become known as a result of the Development
Program during the Term of this Agreement. Schering Know-How shall include,
without limitation, discoveries, methods, knowledge, Improvements, processes,
formulas, data, ideas, experience, inventions, know-how, technology, trade
secrets, manufacturing procedures, purification and isolation techniques, test
data and other intellectual property, patentable or otherwise, developed by or
on behalf of Schering or its Affiliates relating to Licensed

                                      -7-

Product, which relate primarily to the Active Ingredient or the therapeutic
class [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of the Licensed Product,
including without limitation, test procedures and other new technologies derived
therefrom. Without limitation, Schering Know How shall include the
Specifications, the Bulk Specifications, the CMC, the production monograph
setting forth the master batch records and quality control testing, and all
other data, ideas, inventions, instructions, processes, formulae, expert opinion
and information which are owned or controlled by Schering or its Affiliates as
of the effective date of this Agreement or during the Term of this Agreement and
which are necessary for the Manufacture of the Licensed Product.

         1.37     The term "Schering Trademark" shall mean any trademark(s)
proposed, chosen, owned or controlled by Schering or its Affiliates for use with
Active Ingredient and/or the Licensed Product in the Territory.

         1.38     The term "Specifications" means the specifications and quality
control testing procedures for the Licensed Product as set forth in Appendix H
hereto, as amended from time to time in accordance with the terms of this
Agreement.

         1.39     The term "Supply Failure" shall mean CIMA's inability to
Manufacture enough Licensed Product to deliver in a timely manner at least
seventy-five percent (75%) of the Licensed Product actually ordered by Schering
in accordance with the most recent forecast for the specified period.

         1.40     The term "Territory" shall mean all of the countries and
territories in the world.

         1.41     The term "Term" shall mean the period commencing on the
Effective Date and unless terminated earlier pursuant to the relevant provisions
of Article XV shall continue on a country by country basis until the later of
(i) ten (10) years after the First Commercial Sale of the Licensed Product in
such country or (ii) the expiration of the last to expire of the Licensed Patent
Rights in such country incorporating a Valid Claim.

         1.42     The term "Valid Claim" shall mean a composition of matter or
method of use claim, or equivalent thereof, of an issued and unexpired patent in
the Territory covering Licensed Product(s) included within the Licensed Patent
Rights, which (i) has not been revoked or held unenforceable or invalid by a
decision of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal; or

                                      -8-

(ii) has not been abandoned, disclaimed, denied or admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise.

         1.43     The term "Yield Losses" or "Yield Loss" shall mean the
percentage of Bulk Active that is lost or wasted during Manufacturing and not
included in the Licensed Product.

                                   ARTICLE II
                       LICENSE; DISCLOSURE OF INFORMATION
                        DEVELOPMENT AND COMMERCIALIZATION

         2.1      Exclusive License Grant.

                  (a)   License to Patent Rights of CIMA. CIMA hereby grants to
         Schering, as of the Effective Date, an exclusive license, exclusive
         even as to CIMA, in the Territory under the Licensed Patent Rights, and
         to use CIMA Know-How to develop, make, have made, import, export, use,
         distribute, market, promote, offer for sale and sell Licensed
         Product(s). Any Improvements shall be included in CIMA Know-How or
         Licensed Patent Rights, as the case may be, for all purposes of this
         Agreement. Without limiting the foregoing, CIMA hereby grants Schering
         an irrevocable, worldwide, paid-up, exclusive license to use CIMA
         Know-How or other intellectual property rights relating to the
         Development Program and Manufacture of Licensed Product that are
         necessary for Schering's filings for the purpose of obtaining and
         maintaining the Health Registrations in the Territory for the Licensed
         Product, including but not limited to the Manufacturing of Licensed
         Product as provided in the Health Registrations. Notwithstanding the
         foregoing, Schering has granted certain rights to Manufacture Licensed
         Product to CIMA, which rights are set forth in Section 2.1 (c) below.

                  (b)   Right to Sublicense. The licenses granted to Schering
         under Section 2.1(a) shall include the right to grant sublicenses to
         Affiliates. Schering shall provide CIMA with notice of any sublicense
         to an Affiliate. In addition, in the event that Schering exercises its
         option rights to Manufacture Licensed Product(s) under Section 9.5 of
         this Agreement, Schering shall also have the right, with the written
         consent of CIMA, which consent shall not be unreasonably withheld or
         delayed, to grant sublicenses to any third party to Manufacture the
         Licensed Product(s) for Schering and its Affiliates by providing CIMA
         with sixty (60) days' prior written notice of the proposed sublicense.

                  (c)   License to Manufacture. Notwithstanding the provisions
         of Section 2.1 (a) above, Schering hereby grants to CIMA an exclusive

                                      -9-

         license, exclusive even as to Schering, in the Territory, to
         Manufacture Licensed Product(s) during the Term for the sale of
         Licensed Product(s) to Schering in accordance with the terms of this
         Agreement, subject only to Schering's option rights to Manufacture
         Licensed Product(s) under Section 9.5 of this Agreement.

         2.2      Disclosure of Information. Promptly after the Effective Date,
CIMA shall disclose to Schering in writing, or via electronic media acceptable
to Schering, all CIMA Know-How not previously disclosed to Schering as
reasonably necessary in order to enable Schering to exploit its rights granted
under Section 2.1 of this Agreement. In addition, during the Term of this
Agreement CIMA shall promptly disclose to Schering in writing, or via electronic
media acceptable to Schering, CIMA Know-How relating to any Improvements. Such
CIMA Know-How and other information shall be automatically deemed to be within
the scope of the licenses granted herein without payment of any additional
compensation. Notwithstanding the foregoing, the parties recognize that CIMA
will Manufacture the Licensed Product until such time as Schering exercises its
option rights under Section 9.5, and CIMA shall not be obligated to provide CIMA
Know-How relating to the Manufacture of the Licensed Product, except as
necessary for Schering to file and maintain any Health Registrations, until such
time as Schering exercises its option rights under Section 9.5.

         2.3      Development Program.

                  (a)   Outside Services Agreement. The parties acknowledge and
         agree that all development activities set forth in the Outside Services
         Agreement through Phase IVa, Pilot Scale Biobatch and Definitive
         Stability Batches: Manufacture and Stability, as described on
         Attachment B-1 of the Outside Services Agreement, have been or shall be
         performed pursuant to and under the terms of the Outside Services
         Agreement.

                  (b)   Other Development. All development activities relating
         to Phase IVb, Full Scale Demonstration and Stability Batches:
         Manufacture and Stability, as described on Appendix C, and thereafter
         (Phase V and Phase VI) shall be performed pursuant to and under the
         terms of this Agreement, including all activities set forth on Appendix
         C.

         2.4      Specifications and Bulk Specifications. The Specifications for
the Licensed Product set forth in Appendix H and the Bulk Specifications set
forth in Appendix B hereof may be amended at any time by Schering in accordance
with Section 7.4 of this Agreement.

                                      -10-

         2.5      Completion of Development Program. CIMA and/or its Affiliates
shall use diligent efforts to carry out in a timely fashion its obligations
under the Development Program, except if CIMA has obtained the prior written
approval of Schering to modify a portion of the Development Program. The terms
of the Development Program may only be changed by written agreement of both
parties hereto.

         2.6      Schering Cooperation in Development Program. Schering and/or
its Affiliates shall use diligent efforts, at its sole cost and expense, to
carry out all tests and clinical trials set forth in the Development Program.
CIMA shall supply Schering in a timely fashion and at no additional cost to
Schering with the quantities of Licensed Product set forth in the Development
Program as shall be reasonably required to carry out such tests and clinical
trials. Quantities of Licensed Product provided for this purpose in excess of
those set forth in Appendix C hereto shall be purchased from CIMA by Schering at
a cost equal to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] (U.S.) per batch
(minimum of 100,000 tablets per batch).

         2.7      Costs of Development Program. Except for the cost of Bulk
Active, which is to be supplied to CIMA at no cost by Schering pursuant to this
Agreement, the cost of tooling unique to the Licensed Product described in
Appendix G (which costs shall be set forth in another written agreement), and
the costs specifically set forth on Appendix C as costs for which Schering shall
be responsible, CIMA shall be responsible for all direct and indirect costs and
expenses of personnel and for materials, plant and equipment which CIMA and/or
its Affiliates employs or utilizes in carrying out its obligations under the
Development Program, including, without limitation, (1) the cost of any work
performed by its personnel and/or third parties retained by CIMA under the
Development Program, and (2) all transportation, hotel and other travel expenses
incurred by CIMA's or its Affiliates' employees, agents and third party
contractors while carrying out tasks under the Development Program.

         2.8      Reporting Relating to Development Program. CIMA shall keep
Schering informed of its progress under the Development Program by way of
periodic meetings and telephone conferences and, upon Schering's request, by
means of periodic written summary reports. In addition, Schering will have
reasonable access to CIMA's facilities and relevant records during and after the
Development Program to monitor the progress of the Development Program.

         2.9      Liaisons for Development Program. CIMA and Schering shall
each designate one (1) senior employee as technical liaison to handle all
technical matters and communications relating to the Development Program.

                                      -11-

         2.10     Delivery of Active Ingredient for Development Program.
Schering has provided CIMA with certain Schering Know-How relating to the Active
Ingredient and shall provide CIMA with any additional Schering Know-How in
Schering's possession as CIMA shall reasonably request and Schering shall
reasonably agree is necessary to enable CIMA to perform the Development Program.
Schering shall also supply to CIMA, at no cost, sufficient quantities of Bulk
Active, reasonably required for CIMA to carry out its activities under the
Development Program as required by Section 2.3(b) and Appendix C hereof. CIMA
agrees to advise Schering, at least sixty (60) days in advance of the requested
delivery thereof, of its requirements for the Bulk Active.

         2.11     Shipment of Licensed Product for Development Program. CIMA
shall ship each batch of Licensed Product for the Development Program within
five (5) calendar days of Manufacture and receipt by CIMA of shipping
instructions from Schering. Within five (5) calendar days of Manufacture of each
batch of Licensed Product, CIMA shall prepare, and deliver to Schering, all
documentation relating to the individual batch of Licensed Product that is
required by any Regulatory Authority for Schering and/or CIMA to demonstrate
that the Manufacture of the batch of Licensed Product complies with Laws and
Specifications.

         2.12     Outside Services Agreement. All services performed under
the Outside Services Agreement by CIMA relating to the Development Program
shall be performed in compliance with all applicable Laws.

                                   ARTICLE III
                         PAYMENTS; ROYALTIES AND REPORTS

         3.1      Consideration for License. In partial consideration for the
licenses granted to Schering hereunder, Schering shall make the following
payments to CIMA on the first occurrence of the indicated triggering events.

             $250,000           Within five (5) days after
                                execution of this Agreement

             $250,000           [***CONFIDENTIAL TREATMENT
                                REQUESTED, PORTION OMITTED
                                FILED SEPARATELY WITH THE
                                SECURITIES AND EXCHANGE
                                COMMISSION.***] (already paid
                                01/23/02)

                                      -12-

            [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
            OMITTED FILED SEPARATELY WITH THE SECURITIES AND
            EXCHANGE COMMISSION.***]

Each of the milestones payments set forth in this Section 3.1 shall be payable
once upon the initial achievement of such event and no amounts shall be due
hereunder for subsequent or repeated achievement of such event.

         3.2      Royalties.

                  (a)   Royalty Rates. In further consideration for the licenses
         granted to Schering hereunder, starting on a country by country basis
         with the First Commercial Sale of Licensed Product in the country,
         Schering shall pay to CIMA, royalties of [***CONFIDENTIAL TREATMENT
         REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
         EXCHANGE COMMISSION.***] of annual Net Sales of Licensed Product in the
         Territory.

                  (b)   Term and Scope of Royalty Obligations. Subject to the
         terms of Sections 4.3(b) and 14.1, royalties on each Licensed Product
         at the rate set forth in Section 3.2(a) shall continue on a country by
         country basis until the later of (i) ten (10) years from the First
         Commercial Sale of the first Licensed Product in the country or (ii)
         the expiration of the last applicable Licensed Patent Right
         incorporating a Valid Claim. No royalties shall be due upon the sale or
         other transfer among Schering, its Affiliates or sublicensees, but in
         such cases the royalty shall be due and calculated upon Schering's or
         its Affiliates' or its sublicensees' Net Sales to the first independent
         third party. No royalties shall accrue on the disposition of Licensed
         Product by Schering, its Affiliates or its sublicensees as donations
         (for example, to non-profit institutions or government agencies for a
         non-commercial purpose), or at minimal pricing for charitable purposes
         to financially disadvantaged patients, directly or indirectly, through
         Schering's "Commitment to Care" and successor programs, professional
         samples, or Licensed Product provided at no cost to any third party or
         for clinical studies.

                  (c)   Third Party Licenses. In the event that patent licenses
         from third parties are required by Schering, its Affiliates and
         sublicensees in order to use the OraSolv Technology to develop, make,
         have made, import, export, use, distribute, promote, market, offer for
         sale or sell Licensed Product(s) (hereinafter "Third Party Patent
         Licenses"), then the royalty rates set forth in Section 3.2(a) shall be
         adjusted such that the royalty rate for Net Sales of Licensed Product
         which Schering is obligated

                                      -13-

         to pay CIMA shall be reduced by [***CONFIDENTIAL TREATMENT REQUESTED,
         PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***] in royalties which Schering is obligated to pay under
         Third Party Patent Licenses obtained pursuant to Section 4.4, provided,
         however, that the royalty rate hereunder shall not be reduced by more
         than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. By way of
         example and for avoidance of doubt, if Schering is obligated to pay
         royalties to CIMA on Net Sales of a Licensed Product and is also
         obligated to pay a [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
         OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***] percent [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
         OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***] royalty on sales of the same Licensed Product under a
         Third Party Patent License in order to use the OraSolv Technology, then
         the royalty rate under this Agreement would be reduced by
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. For further example,
         if the third party royalty obligation in the above example were
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***] percent
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***], the calculated
         royalty rate would be reduced by [***CONFIDENTIAL TREATMENT REQUESTED,
         PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***]. Schering acknowledges that such reductions will be
         triggered only to the extent necessary for Schering to use the OraSolv
         Technology, and there will be no reductions for royalties unrelated to
         the use of the OraSolv Technology that Schering may be required to pay
         in connection with the Licensed Product(s).

                  (d)   Cap on Reductions. No provision of this Agreement shall
         be interpreted to permit Schering to reduce any individual royalty
         payment due CIMA by more than [***CONFIDENTIAL TREATMENT REQUESTED,
         PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***].

                                      -14-

         3.3      Reports and Payment of Royalty.

                  (a)   Royalties Paid Quarterly. Within sixty (60) calendar
         days following the close of each Calendar Quarter, following the First
         Commercial Sale of a Licensed Product, Schering shall furnish to CIMA a
         written report for the Calendar Quarter showing the Net Sales of
         Licensed Product sold by Schering, its Affiliates and its sublicensees
         in the Territory during such Calendar Quarter and the royalties payable
         under this Agreement for such Calendar Quarter. Simultaneously with the
         submission of the written report, Schering shall pay to CIMA, for the
         account of Schering or the applicable Affiliate or sublicensee, as the
         case may be, a sum equal to the aggregate royalty due for such Calendar
         Quarter calculated in accordance with this Agreement (reconciled for
         any previous overpayments or underpayments).

                  (b)   Maximum Royalties. If the royalties set forth herein are
         higher than the maximum royalties permitted by the Laws (without
         reference to deductibility for tax purposes) in any country in the
         Territory, the royalty payable for sales in such country shall be equal
         to the maximum permitted royalty under such Laws.

                  (c)   Tax Withholding. If any taxes, withholding or otherwise,
         are levied by any taxing authority in connection with accrual or
         payment of any royalties payable under this Agreement, Schering shall
         have the right to pay such taxes to the local tax authorities on behalf
         of CIMA and the payment to CIMA of the net amount due after reduction
         by the amount of such taxes, together with evidence of payment of such
         taxes, shall fully satisfy Schering's royalty obligations under this
         Agreement. Withholding payments made by Schering pursuant to this
         Section 3.3(c) shall be made based upon financial information provided
         to Schering by CIMA, and to the extent that such information is
         incorrect CIMA shall be liable for any deficiency, and any fine,
         assessment or penalty imposed by any taxing authority in the Territory
         for any deficiency in the amount of any such withholding or the failure
         to make such withholding payment. If Schering is required to pay any
         such deficiency, or any fine, assessment or penalty for any such
         deficiency, CIMA shall promptly reimburse Schering for such payments,
         which shall not be included in the calculation of Net Sales.

                  (d)   Method of Payment. Payments to be made by Schering to
         CIMA under this Agreement shall be paid by bank wire transfer in
         immediately available funds to such bank account as is designated in
         writing by CIMA from time to time. Royalty payments shall be made in
         United States dollars.

                                      -15-

                  (e)   Binding Records. Upon the expiration of [***CONFIDENTIAL
         TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION.***] following the end of any
         Calendar Year, the calculation of royalties payable under this
         Agreement with respect to such year shall be binding and conclusive
         upon the parties, and Schering and its Affiliates and its sublicensees
         shall be released from any liability or accountability with respect to
         royalties for such Calendar Year. Nothing in this Section shall limit
         the parties' rights under Section 3.4.

                  (f)   Notice of First Sale. Schering shall provide CIMA with
         notice of the First Commercial Sale of the Licensed Product in the
         Territory within a reasonable period of time following such sale.

         3.4      Maintenance of Records; Audits.

                  (a)   Record Keeping by Schering. Schering and its Affiliates
         shall keep complete and accurate records in sufficient detail to enable
         the royalties payable hereunder to be determined. Upon forty-five (45)
         days' prior written notice from CIMA, Schering shall permit an
         independent certified public accounting firm of nationally recognized
         standing selected by CIMA and acceptable to Schering, at CIMA's
         expense, to have access during normal business hours to examine
         pertinent books and records of Schering and/or its Affiliates as may be
         reasonably necessary to verify the accuracy of the royalty reports
         hereunder. The public accounting firm must agree in writing with
         Schering to be bound by confidentiality obligations no more onerous
         than those set forth in this Agreement. The examination shall be
         limited to pertinent books and records for any Calendar Year ending not
         more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] prior to
         the date of such request. An examination under this Section 3.4(a)
         shall not occur more than once in any Calendar Year, and shall not
         exceed one month in duration, unless otherwise agreed by Schering in
         writing. Schering may designate competitively sensitive information
         which such auditor may not disclose to CIMA, provided, however, that
         such designation shall not encompass the auditor's conclusions. The
         accounting firm shall disclose to CIMA only whether the royalty reports
         are correct or incorrect and the specific details concerning any
         discrepancies and such other information as may be reasonably necessary
         to resolve any dispute over the auditor's conclusions. No other
         information shall be provided to CIMA. All such accounting firms shall
         sign a confidentiality agreement (in form and substance reasonably
         acceptable to Schering) as to any of Schering's or its Affiliate's
         confidential information which they are provided, or to

                                      -16-

         which they have access, while conducting any audit pursuant to this
         Section 3.4(a).

                  (b)   Underpayments/Overpayments. If such accounting firm
         correctly concludes that additional royalties were owed during such
         period, Schering shall pay the additional royalties within thirty (30)
         days of the date CIMA delivers to Schering such accounting firm's
         written report so correctly concluding. If such underpayment exceeds
         five percent (5%) of the royalty correctly due CIMA then the fees
         charged by such accounting firm for the work associated with the
         underpayment audit shall be paid by Schering. Any underpayment shall
         include interest at the prime rate quoted in the Wall Street Journal
         from the date such payment was originally due by Schering. Any
         overpayments by Schering will be credited against future royalty
         obligations. In the event that Schering disagrees with the audit report
         and the chief financial officers of Schering and CIMA fail to resolve
         such disagreement, the dispute will be resolved through the dispute
         resolution mechanism set forth in Section 16.2.

                                   ARTICLE IV
                                     PATENTS

         4.1      Filing, Prosecution and Maintenance of Patents. Subject to
Section 4.2, CIMA agrees to diligently file, prosecute and maintain in all of
the countries listed in Appendix D, any Licensed Patent Rights owned in whole or
in part by CIMA and licensed to Schering under this Agreement. CIMA shall give
Schering an opportunity to review the text of the applications that relate to
the Licensed Product, before filing, shall consult with Schering with respect
thereto, and shall supply Schering with a copy of the applications as filed,
together with notice of its filing date and serial number. CIMA shall keep
Schering advised of the status of all actual and prospective patent filings that
relate to the Licensed Product, including grant of any such patent, and upon the
written request of Schering shall provide advance copies of any substantive
papers related to the filing, prosecution and maintenance of such patent filings
that relate to the Licensed Product.

         4.2      Option of Schering to Prosecute and Maintain Patents. CIMA
shall give ninety (90) days' notice to Schering of any desire to cease
prosecution and/or maintenance of a particular Licensed Patent Right and, in
such case, shall permit Schering, at its sole discretion, to continue
prosecution or maintenance at its own expense. If Schering elects to continue
prosecution or maintenance, CIMA shall execute such documents and perform such
acts, at Schering's expense, as may be reasonably necessary to effect an
assignment of such Licensed Patent Rights to Schering. Any such assignment shall
be

                                      -17-

completed in a timely manner to allow Schering to continue such prosecution or
maintenance. Any patents or patent applications so assigned shall thereafter not
be considered Licensed Patent Rights.

         4.3      Enforcement. In the event that either Schering or CIMA becomes
aware of any infringement within the Territory of any issued patent within the
Licensed Patent Rights, it will notify the other party in writing to that
effect. Any such notice shall include evidence to support an allegation of
infringement by such third party.

                  (a)   Discontinuance of Infringement. Provided that Schering
         has not commenced exercise of its rights under Section 4.3(b), CIMA
         shall have the right, but not the obligation, to obtain a
         discontinuance of such infringement or bring suit against the third
         party. CIMA shall bear all the expenses of any suit brought by it.
         Schering shall have the right, prior to commencement of the trial, suit
         or action brought by CIMA, to join any such suit or action, and in such
         event shall pay one-half of the costs of such suit or action. In the
         event that Schering has joined in the action and shared in the costs
         thereof as set forth above, no settlement, consent judgment or other
         voluntary final disposition of the suit may be entered into without the
         consent of Schering, which consent shall not be unreasonably withheld.
         In the event that Schering has not joined the suit or action, Schering
         will reasonably cooperate with CIMA in any such suit or action and
         shall have the right to consult with CIMA and be represented by its own
         counsel at its own expense, provided that CIMA shall periodically
         reimburse Schering for its reasonable out-of-pocket costs (excluding
         the costs of retaining its own outside counsel) incurred in cooperating
         with CIMA. Any recovery or damages derived from a suit which Schering
         has joined and shared costs shall be used first to reimburse each of
         CIMA and Schering for its documented out-of-pocket legal expenses
         relating to the suit, with any remaining amounts to be shared equally
         by the parties. Any recovery of damages derived from a suit which
         Schering has not joined shall be retained by CIMA. In the event that a
         third party has joined in any such suit or action, the parties agree
         that any costs, or recovery of damages, will be shared equitably by
         CIMA, Schering and such third party.

                  (b)   Continuance of Infringement. If, within three (3) months
         from the date of notice of infringement, CIMA has not commenced, or if
         commenced is not actively pursuing, legal action against an infringer
         as specified in Subsection 4.3(a), and such infringement is continuing,
         then Schering shall have the right [***CONFIDENTIAL TREATMENT
         REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
         EXCHANGE COMMISSION.***] on a country by country

                                      -18-

         basis, for any country(ies) in the Territory where the infringement
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***] provided, however,
         that [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] shall not
         be [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] by more
         than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of the
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***] in the respective
         country. Schering shall have [***CONFIDENTIAL TREATMENT REQUESTED,
         PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***] until said infringement ceases and, thereafter, the
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***] In addition, Schering
         shall have the right, but not the obligation, to bring suit against
         such infringer under the Licensed Patent Rights and join CIMA as a
         party plaintiff, provided that Schering shall bear all the expenses of
         such suit. CIMA will cooperate with Schering in any suit for
         infringement of a Licensed Patent Right brought by Schering against a
         third party, and shall have the right to consult with Schering and to
         participate in and be represented by its own counsel in such litigation
         at its own expense. Schering shall periodically reimburse CIMA for its
         reasonable out-of-pocket costs (excluding CIMA's costs of retaining its
         own counsel) incurred in cooperating with Schering. Schering shall
         incur no liability to CIMA as a consequence of such litigation or any
         unfavorable decision resulting therefrom, including any decision
         holding any of the Licensed Patent Rights invalid or unenforceable. In
         the event that Schering recovers any sums in such litigation by way of
         damages or in settlement thereof, such recovery shall be (i) first
         applied to reimburse Schering for its documented out-of-pocket legal
         expenses relating to the suit, (ii) then applied to reimburse Schering
         for any lost sales in the Territory during the pendency of such suit
         (which shall be deemed for purposes hereof to be equal to the sales of
         infringing products during such period), (iii) then applied to
         reimburse CIMA for royalty reductions by Schering and (iv) shall
         thereafter be retained by Schering.

         4.4      Infringement and Third Party Licenses. In the event that
Schering's, its Affiliates' or its sublicensees' use of the OraSolv Technology
in connection with making, having made, importing, exporting, using,
distributing, marketing, promoting, offering for sale or selling Licensed

                                      -19-

Product(s) infringes, will infringe or is alleged by a third party to infringe a
third party's patent, the party becoming aware of same shall promptly notify the
other.

         If Schering in good faith concludes that such use of the OraSolv
Technology infringes or may infringe a third party's patent, Schering shall
negotiate with said third party for a suitable license or assignment. In the
event that such negotiation results in a consummated agreement, then any lump
sum payment made thereunder shall be paid by Schering [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] but only to the extent of [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] in any Calendar Quarter. [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] shall be [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] any
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] CIMA [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] Any [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] can be
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] to subsequent quarters. Schering shall
periodically advise CIMA of the status of negotiations under this Section 4.4,
and CIMA may provide its comments regarding the negotiations to Schering, with
Schering determining, in its sole discretion, whether to incorporate such
comments of CIMA into its negotiations with the third party.

         4.5      Third Party Infringement Suit. In the event that a third party
sues Schering alleging that Schering's, its Affiliates' or its sublicensees' use
of the OraSolv Technology in connection with making, having made, importing,
exporting, using, distributing, marketing, promoting, offering for sale or
selling Licensed Product(s) infringes or will infringe said third party's
patent, then Schering shall defend such suit and, during the period in which
such suit is pending, Schering shall have the right to apply up to
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] of the royalties due CIMA on sales of
the allegedly infringing Licensed Product against its litigation expenses,
including settlement costs and royalties paid in settlement of any such suit,
provided, however, that in the event Schering recovers any such expenses such
recovery shall be first applied to pay any royalties applied by Schering against

                                      -20-

its litigation expenses. CIMA shall have the right to participate in and be
represented by its own counsel at its own expense. CIMA or its counsel may
provide CIMA's comments regarding the litigation to Schering, and Schering shall
determine, in its sole discretion, whether to incorporate such comments into its
litigation strategy. Schering shall have sole discretion to settle any such
suit, or enter into any consent judgment or other voluntary final disposition of
the suit without the consent of CIMA, except that Schering may not enter into
any such consent judgment or other voluntary final disposition if such consent
judgment or other voluntary final disposition constitutes an admission of CIMA
which will foreclose CIMA from raising the issue in any future litigation,
without the written consent of CIMA, which consent shall not be unreasonably
withheld. Upon Schering's request and in connection with Schering's defense of
any such third party infringement suit, CIMA shall provide reasonable assistance
to Schering for such defense.

         4.6      Abandonment. Subject to Schering's rights pursuant to Section
4.2, CIMA shall at the earliest known date give notice to Schering of the grant
lapse, revocation, surrender, invalidation or abandonment of any Licensed Patent
Rights licensed to Schering for which CIMA is responsible for the filing,
prosecution and maintenance under this Agreement.

         4.7      Identification of CIMA on Packaging of Licensed Product. Any
Licensed Product Manufactured by or on behalf of Schering, if requested in
writing by CIMA, shall reference CIMA's name and patent numbers and/or patent
application numbers, as listed on Appendix D. In addition, CIMA may request that
Schering consent to additional language or markings suggested by CIMA in
writing, in order to assist CIMA in obtaining or preserving CIMA's rights in its
intellectual property. Schering, in its sole discretion, shall determine whether
such additional language or markings shall be added to the packaging. Except as
set forth in this Section, there shall be no other references to CIMA on
packaging of Licensed Product.

                                    ARTICLE V
                    QUALITY CONTROL AND REGULATORY COMPLIANCE

         5.1      Facility Compliance and Related Matters. CIMA shall maintain
the Approved Facility and shall conduct the Development Program and all
Manufacturing in compliance with all Laws, including but not limited to GMPs,
the Specifications, and any written instructions provided by Schering, at all
times during the Term of this Agreement. CIMA shall be responsible for all costs
and expenses related to the compliance of the Approved Facility with such Laws,
Specifications, and any written instructions provided by Schering. CIMA agrees
to manufacture the Licensed Product at the Approved Facility, and not to change
the location thereof without Schering's prior written consent,

                                      -21-

which consent shall not be unreasonably withheld or delayed. In the event CIMA
gains access to a second manufacturing facility and Schering desires that CIMA
Manufacture Licensed Product at the second manufacturing facility as well as at
the Approved Facility, Schering will reimburse CIMA for all reasonable expenses
associated with establishing the second manufacturing facility to Manufacture
Licensed Product. The parties shall agree in advance in writing to the costs
reimbursable to CIMA under this Section.

         5.2      Quality Control Program. CIMA shall maintain a quality control
program consistent with GMPs, as required by the applicable Regulatory
Authorities in the Territory. CIMA shall, within thirty (30) days of the date of
this Agreement, provide Schering with a written description of such program
establishing that it has met such GMPs, which may be amended or supplemented
from time to time; provided that CIMA gives Schering prompt written notice of
such amendments or supplements.

         5.3      Approval for Manufacturing Changes; Third Party Manufacturing.
CIMA shall not make any changes in any materials, equipment or methods of
production or testing used in the Manufacture of the Licensed Product without
Schering's prior written consent, which consent shall not be unreasonably
withheld or delayed. CIMA shall notify Schering promptly in writing of any such
changes that may be required by GMPs or other applicable Laws in the Territory.
CIMA agrees not to contract with any third party to conduct any part or all of
the Manufacturing or testing of the Licensed Product without Schering's prior
written consent.

         5.4      Retention of Samples. CIMA shall retain a sufficient quantity
of each batch of Licensed Product to perform at least two full sets of quality
control tests (which shall be in addition to the quality control testing
performed by CIMA prior to delivery). CIMA shall maintain samples of each batch
in a suitable storage facility until at least the first anniversary of the end
of the approved shelf life of all Licensed Product from such batch, or such
longer period as may be required under applicable Laws. All such samples shall
be available for inspection and testing by Schering or a third party chosen by
Schering at its sole discretion, including but not limited to any Affiliate,
upon reasonable notice.

         5.5      Batch Failure. CIMA agrees to notify Schering within
seventy-two (72) hours of discovery after any batch failure which could result
in CIMA's inability to meet Schering's requested delivery dates, or of learning
of any failure of any batch of Licensed Product to meet Specifications. CIMA
shall notify Schering within seventy-two (72) hours after any failure of a
released batch during stability testing. CIMA shall provide Schering with an

                                      -22-

investigative report setting forth the reasons for the batch failure within
seven (7) days of such batch failure.

         5.6      Notification of Regulatory Inspections. CIMA agrees to notify
Schering within forty-eight (48) hours after the initiation of any inquiries,
notifications, or inspection activity by any Regulatory Authority in regard to
the Licensed Product. In furtherance and not in limitation of the foregoing,
CIMA shall notify Schering prior to the commencement of any inspection activity
by any Regulatory Authority in regard to or potentially related to the Licensed
Product, unless such inspection activity is an unannounced inspection. Schering
shall have the right to be present at any such inspection, subject to such
limitations or restrictions as CIMA may reasonably require to maintain trade
secrets of CIMA or confidential information of its customers. Further, CIMA
shall provide a reasonable description to Schering of any such governmental
inquiries, notifications or inspections promptly (but in no event later than
five (5) calendar days) after such visit or inquiry. CIMA shall furnish to
Schering, (a) within two (2) days after receipt, any report or correspondence
issued by the Regulatory Authority in connection with such visit or inquiry,
including but not limited to, any FDA Form 483, Establishment Inspection Report,
or warning letter, and (b) copies of any and all responses or explanations to
any Regulatory Authority relating to items set forth above, in each case purged
only of trade secrets of CIMA or confidential information of its customers prior
to the submission of such responses or explanations to any Regulatory Authority
by CIMA.

         5.7      Inspection by Schering. Schering shall have the right, during
normal business hours and with reasonable advance notice, to visit the Approved
Facility for the purpose of observing the Manufacturing, testing, and storage of
the Licensed Product, and to inspect for compliance with Laws. CIMA's quality
assurance, environmental and other departments shall cooperate with Schering, as
necessary and useful, in any inspection conducted pursuant to this Section 5.7.

         5.8      Environmental and Other Laws. Except as otherwise set forth in
this Section 5.8, in carrying out its obligations under this Agreement, CIMA
shall have sole responsibility for compliance with all applicable Laws,
including without limitation environmental and health and safety Laws, as
amended from time to time. CIMA shall immediately notify Schering in writing of
any event, including the receipt of any notice, warning, citation, finding,
report or service of process or the occurrence of any release, spill, upset, or
discharge of hazardous wastes or substances, relating to the Manufacture of the
Licensed Product that may give rise to liability on the part of CIMA under the
Laws or this Agreement. In the event Schering conducts an environmental
inspection of CIMA's facility for the purpose of determining compliance with

                                      -23-

environmental Laws, Schering shall share the results of any such environmental
inspection with the Laws and does not constitute a waiver of any right otherwise
available to Schering.

                                   ARTICLE VI
                                 PRODUCT RECALL

         6.1      Notification and Recall. In the event that any Regulatory
Authority issues or requests a recall or takes similar action in connection with
the Licensed Product, or in the event either party hereto determines an event,
incident or circumstance has occurred that may result in the need for a recall
or market withdrawal, the party notified of or determining the need for such
recall or similar action shall, within twenty-four (24) hours, advise the other
party thereof by telephone or facsimile. Following notification of a recall,
within forty-eight (48) hours, the parties shall discuss whether or not to
conduct a recall, and if so, the timing of the recall, the breadth, extent and
level of customer to which the recall shall reach, the strategies and
notifications to be used, and other related issues. In the event that the
parties cannot agree on any such decision, the issue shall be resolved by
Schering.

         6.2      Recall Expenses.

                  (a)   CIMA shall bear the expenses of any recall to the extent
         it results from a breach of its obligations hereunder. Such obligation
         shall only apply to Licensed Product Manufactured by CIMA that is not
         in compliance with Specifications or written instructions of Schering.
         Such expenses of recall shall include, without limitation and without
         duplication, the expenses of notification and destruction or return of
         the recalled Licensed Product, Schering's costs relating to the
         testing, packaging, and shipping of the recalled Licensed Product, the
         agreed upon cost to Schering for the Bulk Active, as set forth in
         Section 6.2 (b) below, and the cost of Package Inserts supplied by
         Schering and used in the Manufacture of the recalled Licensed Product.
         In addition, CIMA shall within sixty (60) days replace any such
         Licensed Product. If CIMA is unable to replace any such Licensed
         Product within sixty (60) days (or at any time that CIMA fails to
         deliver the replacement Licensed Product at an agreed upon date, as set
         forth below), Schering shall have the right, at its sole discretion, to
         extend the timeframe for delivery of replacement Licensed Product to a
         mutually agreed upon date, or, in the alternative, to require CIMA to
         reimburse Schering for all expenses of notification and destruction or
         return of the recalled Licensed Product set forth above, as well as the
         sum paid by Schering to CIMA for the Manufacture of the recalled
         Licensed Product. Such reimbursement shall be made, if

                                      -24-

         requested by Schering, within thirty (30) days of such notice. CIMA
         shall not be liable for, and Schering hereby waives any right to, any
         claim by Schering for consequential, incidental, special, or punitive
         damages, including all claims for lost profits or lost opportunities
         resulting from any such recall. The rights of Schering under this
         Section 6.2 shall be in addition to, and not in lieu of, any other
         rights not inconsistent with this Agreement that Schering may have
         under this Agreement or at law.

                  (b)   In order to avoid any issues or disputes regarding the
         cost of Bulk Active, including but not limited to damages, the parties
         agree that CIMA's sole obligation with respect to reimbursement to
         Schering by CIMA for the cost of Bulk Active under this Agreement shall
         be to pay Schering [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
         OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***] per gram in order to partially compensate Schering for
         its cost of Bulk Active. In such event, Schering shall provide CIMA
         with replacement Bulk Active within a reasonable period of time, it
         being understood that Schering and its Affiliates have a limited supply
         of Bulk Active.

                                   ARTICLE VII
                      APPROVAL SUPPORT; REGULATORY MATTERS

         7.1      Approval Support. CIMA shall produce stability batches and
validation batches of the Licensed Product, engage in various development
activities and perform various tests as reasonably necessary to support
Schering's Health Registrations in the Territory, including without limitation,
being prepared for the pre-approval inspections by the Regulatory Authorities
and performing the other activities as set forth in Appendix C hereto.

         7.2      Filing and Maintenance of the Health Registrations. Schering
shall be the sole owner of all Health Registrations. Schering shall have
responsibility for the preparation and filing of the Health Registrations,
including the CMC, with the applicable Regulatory Authorities. The Health
Registrations shall include a designation of CIMA and the Approved Facility as a
Manufacturer and Manufacturing site of the Licensed Product. Schering shall
provide CIMA with a copy of those sections of the CMC applicable to CIMA to the
extent necessary to facilitate its Manufacture of the Licensed Product in
accordance with this Agreement and the Health Registrations. In the event
Schering subsequently modifies any relevant Health Registration (or the CMC
related to the Manufacture of the Licensed Product), it shall notify CIMA of any
modifications that affect CIMA's obligations under this Agreement and provide it
with copies of applicable sections, or summaries of, such Health Registration
(or CMC) supplements or amendments.

                                      -25-

         7.3      Regulatory Assistance for Maintaining Filings. CIMA shall
provide Schering with such information and assistance as Schering may reasonably
require for purposes of applying for and maintaining all relevant Health
Registrations for the Licensed Product including without limitation, providing
Schering with any or all reports, authorizations, certificates, methodologies,
specifications and other documentation in the possession or under the control of
CIMA relating to the Development Program and Manufacture of Licensed Product
that are reasonably necessary for Schering's filings. CIMA shall not provide
such information, data or other intellectual property rights, as they relate to
the Licensed Product, to any third party or use such information, data or other
intellectual property rights relating to the Licensed Product for any purpose
other than performing its obligations under this Agreement.

         7.4      Specifications and Bulk Specifications; Amendments. Schering
reserves the right upon thirty (30) day's notice to amend and/or supplement the
Specifications and/or Bulk Specifications unilaterally for the purpose of
complying with GMPs or applicable Health Registrations, incorporating
Improvements, or for any other reasonable business purpose. Schering will
provide CIMA with prompt notice of changes in the Specifications and/or Bulk
Specifications required by Regulatory Authorities. Subject to agreement on the
respective responsibilities of the parties for equitable costs associated with
implementing any changes, CIMA shall implement any changes in the Specifications
and/or Bulk Specifications within a mutually agreed upon and reasonable time
frame. The costs of implementing changes in the Specifications and/or Bulk
Specifications shall be agreed by the parties in advance in writing. Without
limiting the foregoing, with respect to amendments of the Specifications and/or
Bulk Specifications required by Regulatory Authorities that are not specific to
the Licensed Product, such costs shall be allocated to Schering equitably and in
a manner generally consistent with other customers of CIMA.

         7.5      Complaints or Adverse Experiences. CIMA agrees to notify
Schering by phone within twenty-four (24) hours (and in writing within
forty-eight (48) hours) of the receipt of any complaints and reports of adverse
drug events ("AEs") associated with the Manufacture of Licensed Product by CIMA.

         With respect to complaints and reports of adverse drug events ("AEs")
associated with the Manufacture of Licensed Product by CIMA, Schering shall have
primary responsibility for fielding, investigating and responding to all
Licensed Product complaints and AEs. CIMA's quality assurance department shall
cooperate with Schering, as necessary and useful, to investigate such complaints
or AEs and to provide such information including without limitation, providing
Schering with the information and complying with the policy set forth on
Appendix I hereto, as amended from time to time by

                                      -26-

Schering, or assistance as is requested by Schering in order to support
Schering's compliance with AE's, field alert and other reporting requirements
imposed by the Regulatory Authorities. The parties shall exchange reports on the
resolution of complaints monthly, or more frequently if requested by Schering.
CIMA shall cooperate with Schering in investigating and responding to Licensed
Product complaints and CIMA shall assume all responsibility for investigating
and preparing initial responses to complaints or AEs which are determined to
result from the Manufacture of the Licensed Product by CIMA and shall provide
responses, which shall include any revisions of the initial responses, to
Schering for submission to the Regulatory Authority. CIMA shall report to
Schering on a monthly basis, or more frequently if requested by Schering, on all
actions that CIMA is taking, if necessary, to prevent future complaints of the
same type. In the event the parties' expenses to undertake the activities
described in this paragraph result in, or may result in, extraordinary costs of
investigation or testing (other than expenses associated with the resolution of
Manufacturing problems of CIMA), Schering and CIMA agree to negotiate whether to
incur, and how to allocate, such costs.

         7.6      Record Keeping.

                  (a)   Development Program and Manufacturing Records. CIMA
         shall maintain all records necessary to comply with the Laws and in
         accordance with the Health Regulations, including but not limited to
         those relating to the Development Program and the Manufacturing of
         Licensed Product. Without limitation, CIMA shall prepare and adhere to
         batch process documentation consistent in accordance with Laws, its
         normal procedures, and Section 7.6(b) below. All such records shall be
         maintained for the longest period as may be required by the Laws;
         provided, however, that all records relating to the Manufacture,
         stability and quality control of each batch of the Licensed Product
         shall be retained at least until the first anniversary of the end of
         the approved shelf life for all Licensed Product from such batch. Prior
         to destruction of any record relating to the Licensed Product, CIMA
         shall give notice to Schering, which shall have the right to request
         delivery of such record to Schering at Schering's expense.

                  (b)   Batch Documentation and Master Batch Record. Prior to
         the Manufacture of any Licensed Product, CIMA shall prepare a form of
         master batch record, which must be approved by Schering in writing
         before any Manufacture of any Licensed Product.

         Such documentation shall include, without limitation, copies of batch
records, a statement setting forth that the batch of Licensed Product was
Manufactured in compliance with GMP's, release information and

                                      -27-

recertification dates for all Active Ingredient and Raw Materials, batch
reconciliation and yield calculations, applicable variance reports, and such
other information as may be reasonably requested by Schering from time to time
("Batch Documentation"). An authorized employee in CIMA's Quality Assurance
department shall sign all Batch Documentation, and print his or her name, title
and contact information.

                  (c)   Deliveries to Schering. All Batch Documentation, as
         well as the Master Batch Record, relating to the Development Program
         shall be sent to:

                        Schering-Plough Research Institute 2015 Galloping Hill
                        Road, K-11-2, J3 Kenilworth, New Jersey 07033 Attention:
                        Stanley Zweibel, Manager of Operations.

                  (d)   All Batch Documentation, as well as the Master Batch
         Record, relating to the commercial supply of Licensed Product in the
         United State shall be sent to:

                        Schering Corporation 2000 Galloping Hill Road, K-2-1
                        Kenilworth, New Jersey 07033 Attention: Tom Jacobs,
                        Manager of Operations.

         7.7      CIMA Approvals. Except as otherwise specifically set forth in
this Agreement, CIMA shall be responsible for obtaining and maintaining all
approvals, licenses and permits from the Regulatory Authorities and any other
governmental authorities required in connection with the performance of its
obligations hereunder.

                                  ARTICLE VIII
                     SUPPLY OF BULK ACTIVE AND RAW MATERIALS

         8.1      Schering Obligation. Schering shall supply to CIMA, at
Schering's sole expense, the Bulk Active and Package Inserts, or procure the
supply of the Bulk Active and Package Inserts for CIMA, at Schering's sole
expense, in quantities sufficient to Manufacture the Licensed Product for which
Schering has placed firm orders pursuant to Article IX hereof, subject to
Schering's ability to obtain a sufficient supply of the Bulk Active. Schering
will supply CIMA with the Bulk Active and Package Inserts no less than ninety
(90) days prior to the date of Manufacture. Schering shall notify CIMA in the
event that a shortage of the Bulk Active is likely to impact Schering's ability
to supply pursuant to this Section 8.1.

                                      -28-

         8.2      CIMA Obligation. Other than Package Inserts, CIMA shall be
responsible for procuring the supply of all Raw Materials and Packaging
Components that comply with the Specifications as well as the specifications for
packaging as set forth on Appendix F, that are necessary for the Manufacture of
Licensed Product in accordance with this Agreement.

         8.3      Acceptance of Bulk Active. Each delivery of Bulk Active to
CIMA will be accompanied by a certificate of analysis and CIMA shall not
incorporate any Bulk Active into the Manufacture of the Licensed Product that is
not accompanied by a certificate of analysis. Before incorporating any Bulk
Active into the Manufacture of the Licensed Product, CIMA shall conduct such
quality control inspection and testing as it deems necessary, which tests shall
include those tests set forth in the Bulk Specifications and/or written
instructions provided by Schering from time to time. CIMA shall promptly (and in
any event within twenty (20) business days of delivery of Bulk Active) notify
Schering of any defective Bulk Active which does not meet the Bulk
Specifications. Absent any such notification, CIMA shall be deemed to have
accepted the Bulk Active supplied by Schering as of the date of delivery.

         8.4      Storage and Formulation of Bulk Active and Raw Materials;
Ownership of Bulk Active. CIMA shall store the Bulk Active and Raw Materials
used in the Manufacture of the Licensed Product under suitable conditions at the
Approved Facility, including those set forth on Appendix J, as amended from time
to time by Schering, at its reasonable discretion. The Bulk Active shall at all
times remain the property of Schering, and CIMA shall indemnify and hold
harmless Schering against any expenses, claims, demands or costs arising out of
any loss or damage to the Bulk Active after it has been delivered to CIMA, to
the extent that such losses or damages result from the negligent or intentional
acts of CIMA, its employees and/or agents, except for Yield Losses which the
parties agree are acceptable, as set forth below.

         8.5      Yield Losses. CIMA shall use its commercially reasonable
efforts to minimize Yield Losses. The parties shall agree in writing upon the
Yield Loss of the Bulk Active that shall not be exceeded on an annual basis.
CIMA shall be responsible for excess Yield Loss. Periodically, but not less than
annually, CIMA shall provide Schering with a written accounting of the
disposition of each lot of Bulk Active provided by Schering, utilizing a format
mutually agreed upon by the parties.

                                   ARTICLE IX
                         SUPPLY OF MANUFACTURED PRODUCT

         9.1      Supply of Schering's Requirements. Subject to the terms and
conditions of this Agreement, including Schering's obligations to provide Bulk

                                      -29-

Active, CIMA shall Manufacture and supply to Schering, and Schering shall
purchase from CIMA, Schering's Requirements of Licensed Product.

         9.2      Good Faith Forecasts. At the time of an NDA filing (or
Supplemental NDA filing), Schering shall provide CIMA with a written eighteen
(18) month forecast estimating Schering's monthly Requirements of the Licensed
Product, broken down to set forth Requirements by dosage strength (and the
desired delivery dates therefor). Thereafter, on or before the first day of each
calendar quarter during the Term hereof, Schering shall provide CIMA with an
updated written rolling forecast estimating Schering's monthly Requirements of
the Licensed Product (and the desired delivery dates therefor) for the
succeeding eighteen (18) month period. Such rolling forecasts shall include the
forecast from the previously forecasted fifteen (15) month period in addition to
a forecast for the new calendar quarter added. Such estimates shall be prepared
in good faith, but shall not be binding on Schering. Schering shall not be
responsible for any loss or expense incurred by CIMA arising from such
forecasts.

         9.3      Purchase Orders. Schering shall issue to CIMA firm purchase
orders for each delivery, not later than three (3) months prior to the
forecasted delivery date, and provide CIMA with the Bulk Active no later than
ninety (90) days prior to the forecasted delivery date. The quantities ordered
shall not be less than seventy-five percent (75%) nor more than one hundred
twenty-five percent (125%) of the quantities set forth in the preceding
quarterly good faith forecast. Subject to the terms of this Agreement, Schering
shall be obligated to purchase, and CIMA shall be obligated to sell, such
quantities of the Licensed Product as are set forth in the purchase order, on
the delivery schedule set forth therein. In the event that the terms of any such
purchase order are not consistent with this Agreement, the terms of this
Agreement shall prevail. In the event that the amount of the purchase order
exceeds 125% of the most recent good faith forecast, then CIMA shall make all
commercially reasonable efforts to modify its production schedule so as to
deliver such additional quantities of Licensed Product to Schering as soon as
practicable. CIMA shall promptly confirm receipt of the purchase order as well
as the delivery dates contained in the purchase order by written acknowledgment.
If CIMA provides Schering with written notice of issues relating to the delivery
schedule set forth in the purchase order, the parties agree to negotiate in good
faith to modify the delivery dates to reasonably accommodate CIMA's
manufacturing schedule and Schering's requested delivery schedule, provided that
nothing in this paragraph shall be interpreted to modify or eliminate the
parties' respective obligations to purchase or sell, as the case may be the
quantities of Licensed Product (not be less than seventy-five percent (75%) nor
more than one hundred twenty-five percent (125%)) set forth in the preceding
quarterly good faith forecast.

                                      -30-

         9.4      Stoppage Due to Good Cause. Upon Schering's written notice,
CIMA shall stop a scheduled production run of the Licensed Product, provided
that such request is based upon good cause. Good cause is deemed to include
CIMA's failure to comply, or its inability to assure compliance with, any Laws,
including but not limited to any GMPs, the Specifications, or any written
instructions provided by Schering. Exercise by Schering of its rights under this
Section 9.4 shall not prejudice any other rights or remedies that Schering may
have at law or under this Agreement.

         9.5      Schering Option to Manufacture.

                  (a)   Option Notice. At any time on or after the third
         anniversary of the First Commercial Sale of the Licensed Product in any
         country, Schering, at its sole discretion, shall have the option to
         assume all Manufacturing of the Licensed Product. Schering shall
         provide CIMA with a minimum of six (6) months' prior written notice of
         its exercise of such option (the "Option Notice"). CIMA shall provide
         information concerning the process and personnel time for a technology
         transfer. This will allow the parties to address the issue of payment,
         if any, for personnel time of CIMA relating to the transfer.

                  (b)   Protocol. Following CIMA's receipt of the Option Notice,
         the parties shall establish a mutually acceptable protocol for transfer
         of the CIMA Know-How necessary to enable Schering to assume
         responsibility for the Manufacture of the Licensed Product. This shall
         include, among other things, the identification of all machinery
         necessary to Manufacture the Licensed Product, the time necessary for
         the machinery to be delivered, installed and validated, the training
         necessary to Manufacture the Licensed Product, the estimated transfer
         period for the CIMA Know-How ("Transfer Period") and the criteria for
         determining when the CIMA Know-How has been successfully transferred
         (the "Protocol"). Both parties shall diligently follow the Protocol,
         and advise the other party in a timely manner of any difficulties
         encountered. The Protocol shall be modified only in writing, and the
         parties agree to modify the Protocol as necessary to accomplish the
         transfer of the CIMA Know-How. During the Transfer Period and
         throughout the Term of this Agreement, CIMA shall provide such
         reasonable assistance to Schering as is necessary for Schering to
         Manufacture the Licensed Product.

                  (c)   Technical Liaison. CIMA and Schering shall each
         designate one (1) senior employee as technical liaison to handle all
         technical matters and communications relating to the transfer and
         implementation of Manufacturing technology during the Transfer Period.

                                      -31-

                  (d)   Transfer Payments. In the event of Schering's exercise
         of its option under this Section 9.5, Schering shall pay CIMA the
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***] fee set forth in
         Section 3.1. The payment of the [***CONFIDENTIAL TREATMENT REQUESTED,
         PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***] fee shall be made as follows:

                  [***CONFIDENTIAL TREATMENT        Within thirty (30) days
                  REQUESTED, PORTION OMITTED        after Schering's delivery of
                  FILED SEPARATELY WITH THE         the Option Notice
                  SECURITIES AND EXCHANGE
                  COMMISSION.***]
                  [***CONFIDENTIAL TREATMENT        Within thirty (30) days
                  REQUESTED, PORTION OMITTED        after establishment of the
                  FILED SEPARATELY WITH THE         Protocol
                  SECURITIES AND EXCHANGE
                  COMMISSION.***]
                  [***CONFIDENTIAL TREATMENT        Within thirty (30) days of
                  REQUESTED, PORTION                Schering completing three
                  OMITTED FILED SEPARATELY          full-size validation
                  WITH THE SECURITIES               batches for each Licensed
                  AND EXCHANGE                      Product that comply with all
                  COMMISSION.***]                   Laws

                  Schering's royalty obligation set forth in Section 3.2 shall
         continue in accordance with the terms of this Agreement and payment of
         the payments set forth in this Section 9.5 shall not impact Schering's
         obligation to pay such royalties.

                  (e)   Except for direct personnel costs and reasonable out of
         pocket costs incurred by CIMA in connection with its obligations under
         this Section 9.5 and agreed upon in writing in advance of the Transfer
         Period by the parties, Schering shall not be responsible for any costs
         incurred by CIMA relating to the Transfer Period. CIMA shall comply
         with Schering's guidelines for reimbursement of expenses set forth on
         Appendix K.

                  (f)   After the Transfer Period has been completed,
         notwithstanding anything else to the contrary contained in this
         Agreement, Schering may, without any additional payments to CIMA,

                                      -32-

         subcontract Manufacture of the Licensed Product to a third party at any
         time, including but not limited to Affiliates of Schering, and provide
         a limited nontransferable license to any such third party to the CIMA
         Know-How, solely to fulfill its Manufacturing obligations to Schering.

                  (g)   Nothing in this Section 9.5 shall be interpreted to
         provide Schering with any rights to utilize the CIMA Know-How other
         than for those license rights set forth in Section 2.1, or to amend the
         parties' confidentiality obligations set forth in Article XII.

                                    ARTICLE X
                          DELIVERY AND RELATED MATTERS

         10.1     Certificate of Analysis. CIMA shall provide Schering with each
shipment of Licensed Product a certificate from CIMA's quality assurance
department that includes the results of quality control testing in accordance
with the Specifications and which indicates that the Licensed Product contained
in the shipment meets the specifications set forth in the Specifications.

         10.2     Risk of Loss. Delivery of each shipment of the Licensed
Product shall be made EXW. CIMA shall arrange for transportation of the Licensed
Product to a destination designated by Schering and by a common carrier
designated by Schering.

         CIMA shall clear the shipment for export and obtain, at its own risk
and expense, any export license or other official authorization and carry out,
where applicable, all customs formalities necessary for the export of the
Product. Schering shall obtain, at its own risk and expense, any import license
or other official authorization required and carry out, where applicable, all
customs formalities for the import of the Product. Title to and risk of loss of
the Licensed Product shall pass to Schering at the time of delivery to the
carrier. CIMA shall promptly invoice Schering for all Licensed Product shipped.

         10.3     Storage. CIMA, at its own expense, for a period not to exceed
fifteen (15) days, shall maintain adequate and reasonably segregated facilities
for storage of the Licensed Product pending delivery to the designated carrier
pursuant to Section 10.2 hereof.

         10.4     Delay and Failure to Supply.

                  (a)   In the event that CIMA shall have reason to believe that
         it will be unable to supply Schering with the full quantity of the
         Licensed Product forecasted to be ordered or actually ordered by
         Schering in a timely manner, CIMA shall promptly (and in any event
         within thirty (30)

                                      -33-

         business days) notify Schering thereof. If CIMA shall so notify
         Schering, or if CIMA shall fail to provide Schering with adequate
         assurances of timely performance upon Schering's request therefor
         (regardless of whether past performance has complied herewith or not),
         Schering and CIMA shall promptly meet to discuss how to thereafter
         supply Schering's Requirements in a timely manner.

                  (b)   In the event of a Supply Failure, CIMA shall exercise
         diligent efforts to resume production as quickly as possible and shall
         notify Schering in writing upon resumption of production, whereupon it
         shall supply Schering with such modified requirements for the Licensed
         Product as Schering may have for the remaining Term of this Agreement.

                  (c)   Notwithstanding the foregoing, the parties agree that
         a Supply Failure shall be a material breach of this Agreement.

         10.5     Rejection. Schering shall promptly (and in any event within
forty-five (45) days after delivery) notify CIMA of any Licensed Product which
did not, at the time of delivery to the carrier designated by Schering, comply
with the covenants in Section 13.3(a). If Schering claims that any shipment of
Licensed Product did not, at the time of delivery to the carrier designated by
Schering, meet the representations and warranties in Section 13.2, or covenants
set forth in Sections 13.3 (and in any event within forty-five (45) days after
discovery), Schering shall promptly notify CIMA. If CIMA agrees with Schering's
claim, CIMA at its option shall either replace such Licensed Product or
reimburse Schering for any payment Schering may have made to CIMA for such
Licensed Product and for any out-of-pocket expense Schering may have incurred
with respect thereto prior to its discovery of the defect, including without
limitation shipping, insurance and taxes. In either case, CIMA shall reimburse
or credit Schering (as Schering shall elect), at the agreed upon cost to
Schering, for the Bulk Active as set forth in Section 6.2(b), destruction costs,
and the cost of Package Inserts, used in the non-conforming Licensed Product. If
Schering and CIMA are unable to agree as to whether such Licensed Product met
the warranties or whether CIMA complied with the covenants, the parties shall
cooperate to have the Licensed Product in dispute analyzed by an independent
testing laboratory of recognized repute jointly selected by Schering and CIMA.
If the Licensed Product is determined to meet the Specifications, then Schering
shall bear the cost of the independent laboratory testing and pay for the
Licensed Product in accordance with this Agreement. If the Licensed Product is
determined not to have met the Specifications at time of delivery, then CIMA
shall bear the cost of the independent laboratory testing. In addition, CIMA
shall either replace the rejected Licensed Product within sixty (60) days after
the date of such determination, at no cost to Schering, or refund or credit, as
designated by Schering, the price paid for such Licensed Product plus any

                                      -34-

applicable delivery charges, including, without limitation, shipping, insurance
and taxes, within sixty (60) days after written notice from Schering. If CIMA is
unable to replace any such Licensed Product within sixty (60) days (or at any
time that CIMA fails to deliver the replacement Licensed Product at an agreed
upon date, as set forth below), Schering shall have the right, at its sole
discretion, to extend the timeframe for delivery of replacement Licensed Product
to a mutually agreed upon date, or, in the alternative, to require CIMA to
reimburse Schering for the price paid for such Licensed Product plus
out-of-pocket expense Schering may have incurred. Such reimbursement shall be
made, if requested by Schering, within thirty (30) days of such notice. In
either case, CIMA shall reimburse or credit Schering (as Schering shall elect),
at the agreed upon cost to Schering, for the Bulk Active (as set forth in
Section 6.2(b)) and Package Inserts used in the non-conforming Licensed Product,
as well as destruction costs. Such laboratory costs, refund, credit or
replacement shall constitute CIMA's sole and exclusive liability for claims
under this Section 10.5.

                                   ARTICLE XI
                                     PAYMENT

         11.1     Price. The Price to be paid by Schering to CIMA for the
Licensed Product for commercial supply of the Licensed Product shall be as set
forth on Appendix G hereto, as adjusted pursuant to this Article XI, and shall
be made in United States dollars within thirty (30) days from date of invoice
therefor.

         11.2     Price Adjustment.

                  (a)   The Price shall be effective from the first date that
         CIMA Manufactures Licensed Product pursuant to Article IX
         ("Manufacturing Date") and shall be effective through December 31,
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. Thereafter, subject
         to Section 11.2 (c) hereof, the Price shall be subject to an annual
         review, initiated by CIMA as set forth below. Such annual review shall
         take into account any increase or decrease in CIMA's costs of labor,
         raw materials and/or components directly allocable to the Manufacture
         of the Licensed Product ("Raw Materials"), and Overhead, with all such
         allocable costs being calculated in an equitable manner, in accordance
         with CIMA's accounting principles and reasonably acceptable to Schering
         at the time of execution of this Agreement, consistent with generally
         accepted accounting principles, and on the same basis and utilizing the
         same criteria as for other pharmaceutical products of CIMA that are
         subject to similar pricing adjustments.

                                      -35-

                  CIMA shall determine the amount of any increase or decrease by
         no later than the following February 28, and CIMA shall notify Schering
         of such amount in writing at that time. If Schering disagrees with the
         price adjustment, Schering shall notify CIMA in writing on or before
         March 31, and the parties shall discuss and resolve any issues relating
         to the price adjustment. Licensed Product delivered to Schering between
         January 1 and February 28 each year, and during any time period that
         the parties are resolving issues relating to the price adjustment,
         shall be invoiced to Schering at the price applicable to Licensed
         Product delivered to Schering during the immediately preceding calendar
         year. Then on or about February 28 of each year, or within thirty (30)
         days following the parties' resolution of issues relating to the price
         adjustment, CIMA shall transmit to Schering a corrected invoice for
         Licensed Product delivered between January 1 and February 28 of each
         year, and during any time period that the parties were resolving issues
         relating to the price adjustment, taking into account the final amount
         of any such price increase or decrease, and setting forth the
         applicable additional charges or credits.

                  (b)   Without limiting the foregoing, the parties hereto
         acknowledge that significant cost reductions may be available to CIMA
         through improvements in the technology for Manufacturing the Licensed
         Product, through negotiated changes in applicable regulatory standards
         or specifications with Regulatory Authorities or otherwise. In the
         event that any cost reductions are realized, then the parties shall
         agree on a mechanism by which the benefits of such cost reductions are
         equitably allocated to the parties, taking account of their relative
         contributions to the cost reduction. Further, CIMA agrees to use
         commercially reasonable efforts to obtain competitive prices for Raw
         Materials, materials used in the manufacture of Packaging Components,
         and services from any qualified third party vendor.

                  (c)   If, within thirty (30) days following CIMA's receipt of
         Schering's notice that Schering disagrees with the suggested price
         adjustment, the parties are unable to reach agreement on a Price
         adjustment, Schering shall appoint an Independent Auditor, who shall be
         reasonably acceptable to CIMA, to determine the adjusted Price. The
         Independent Auditor's determination of the adjusted Price shall reflect
         any net increase or decrease in CIMA's costs of labor, Raw Materials,
         and Overhead. CIMA shall promptly make its cost documentation available
         on a confidential basis to the Independent Auditor, and both parties
         shall submit in writing to the Independent Auditor a proposed adjusted
         Price. The parties agree that the determination by the Independent
         Auditor of the adjusted Price shall be final and binding, subject to
         Section 11.3

                                      -36-

         hereof. The fees and disbursements of the Independent Auditor shall be
         borne by the party whose proposed adjusted Price differs most from the
         adjusted Price as determined by the Independent Auditor.

         11.3     Maximum Price Increase. Any increase or decrease in the costs
of Raw Materials, as such term is defined in Section 11.2, shall be passed
directly on to Schering by CIMA, and Schering shall be responsible for the
entire increase in such costs, subject to Schering's audit and other rights set
forth in Section 11.2(c), or, alternatively, Schering shall receive the entire
benefit from any decrease in such costs. In no event shall the weighted average
percentage of increased costs attributable to CIMA's Overhead and labor costs
combined, stated as a percentage of the then-current Price, exceed the lesser of
either (i) the increase, if any, in the national Producer's Price Index, as
reported in the Wall Street Journal, for the calendar year immediately preceding
the proposed price increase; or (ii) [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***].

         11.4     Taxes. Schering shall pay any applicable taxes or duties
relating to Bulk Active. CIMA and Schering agree to cooperate in order to
minimize, in the manner permitted under applicable tax and customs Laws, the
taxes (including value-added taxes) and duties associated with the importation
and/or exportation of the Bulk Active and the Licensed Product, as the case may
be.

                                   ARTICLE XII
                         CONFIDENTIALITY AND PUBLICATION

         12.1     Confidentiality.

                  (a)   Nondisclosure Obligation. Each of CIMA and Schering
         shall use only in accordance with this Agreement and shall not disclose
         to any third party any Proprietary Information received by it from the
         other party, without the prior written consent of the other party. The
         foregoing obligations shall survive the expiration or termination of
         this Agreement for a period of ten (10) years. These obligations shall
         not apply to Proprietary Information that:

                        (i)   is known by the receiving party at the time of its
                  receipt, and not through a prior disclosure by the disclosing
                  party, as documented by business records;

                        (ii)  is at the time of disclosure or thereafter
                  becomes published or otherwise part of the public domain
                  without breach of this Agreement by the receiving party;

                                      -37-

                        (iii) is subsequently disclosed to the receiving party
                  by a third party who has the right to make such disclosure;

                        (iv)  is developed by the receiving party independently
                  of Proprietary Information or other information received from
                  the disclosing party and such independent development can be
                  documented by the receiving party;

                        (v)   is disclosed to any institutional review board of
                  any entity conducting clinical trials or any governmental or
                  other regulatory agencies in order to obtain patents or to
                  gain approval to conduct clinical trials or to market Active
                  Ingredient and/or Licensed Product, but such disclosure may be
                  made only to the extent reasonably necessary to obtain such
                  patents or authorizations; or

                        (vi)  is required by Law, or order of any governmental
                  authority or agency to be disclosed by a party, provided that
                  notice is promptly delivered to the other party in order to
                  provide an opportunity to seek a protective order or other
                  similar order with respect to such Proprietary Information and
                  thereafter the disclosing party discloses to the requesting
                  entity only the minimum Proprietary Information required to be
                  disclosed in order to comply with the request, whether or not
                  a protective order or other similar order is obtained by the
                  other party.

                  (b)   Disclosure to Agents. Notwithstanding the provisions of
         Section 12.1(a) and subject to the other terms of this Agreement,
         Schering shall have the right to disclose CIMA Proprietary Information
         to Schering's sublicensees, agents, consultants, Affiliates or other
         third parties (collectively "Agents") in accordance with this Section
         12.1(b). Such disclosure shall be limited only to those Agents directly
         involved in the research, development, manufacturing, marketing or
         promotion of Licensed Product(s) (or for such Agents to determine their
         interest in performing such activities) in accordance with this
         Agreement. Any such Agents must agree in writing to be bound by
         confidentiality and non-use obligations essentially the same as those
         contained in this Agreement. The term of confidentiality and non-use
         obligations for such Agents shall be no less than ten (10) years
         following the termination or expiration of this Agreement. Schering
         shall be responsible for any breach of this confidentiality provision
         by its agents.

                  (c)   Disclosure to a Third Party. Notwithstanding anything
         herein to the contrary, CIMA shall not disclose, provide or transfer to
         any

                                      -38-

         third party without the prior written approval of Schering (i) any
         Schering Know-How, or (ii) any CIMA Know-How relating to the
         combination of the OraSolv Technology and Active Ingredient.

         12.2     No Publicity. A party may not use the name of the other party
in any publicity or advertising and, except as provided in Section 12.1, may not
issue a press release or otherwise publicize or disclose any information related
to the existence of this Agreement or the terms or conditions hereof, without
the prior written consent of the other party. The parties shall agree on a form
and timing of the initial press release that may be used by either party to
describe this Agreement. Nothing in the foregoing, however, shall prohibit a
party from making such disclosures to the extent deemed necessary under
applicable federal or state securities laws or any rule or regulation of any
nationally recognized securities exchange including, without limitation, NASDAQ.
In such event, however, the disclosing party shall use good faith efforts to
consult with the other party prior to such disclosure and, where applicable,
shall request confidential treatment to the extent available.

         12.3     Publication. Schering and CIMA each acknowledge the potential
benefit in publishing results of certain studies to obtain recognition within
the scientific community and to advance the state of scientific knowledge. Each
party also recognizes the mutual interest in obtaining valid patent protection
and in protecting business interests and trade secret information. No
publication of a party's Proprietary Information may be made by the other party
without the prior written consent of such party. The parties agree that
Schering, its Affiliates, employees or consultants shall be free to make any
publication which does not disclose CIMA's Proprietary Information, and CIMA
shall be free to make any publication which does not (i) disclose Schering's
Proprietary Information; or (ii) substantially relate to the Licensed Product or
the Active Ingredient. In the event that any proposed publication (as defined
below) discloses Proprietary Information, the following procedure shall apply:
either party, its Affiliates, employees or consultants wishing to make a
publication shall deliver to the other party a copy of the proposed written
publication or an outline of an oral disclosure at least sixty (60) days prior
to submission for publication or presentation. For purposes of this Agreement,
the term "publication" shall include, without limitation, abstracts and
manuscripts for publication, slides and texts of oral or other public
presentations, and texts of any transmission through any electronic media, e.g.
any computer access system such as the Internet or World Wide Web. The reviewing
party shall have the right (i) to propose modifications to the publication for
patent reasons, trade secret reasons or business reasons or (ii) to request
delay of the publication or presentation in order to protect patentable
information. If the reviewing party requests a delay, the publishing party shall
delay submission or presentation for a period not less than eighteen

                                      -39-

(18) months from the filing date of the first patent application covering the
information contained in the proposed publication or presentation. If the
reviewing party requests modifications to the publication, the publishing party
shall edit such publication to prevent disclosure of trade secret or proprietary
business information prior to submission of the publication or presentation.

         12.4     Oral Disclosure of Propriety Information. When Propriety
Information is disclosed in a manner other than in writing, it shall be reduced
to written form, marked "Confidential" and transmitted to the receiving party
within twenty (20) business days of disclosure to the receiving party.

                                  ARTICLE XIII
                         REPRESENTATIONS AND WARRANTIES

         13.1     Representations and Warranties of Each Party. Each of CIMA and
Schering hereby represents and warrants to the other party hereto as follows:

                  (a)   it is a corporation or entity duly organized and validly
         existing under the laws of the state or other jurisdiction of its
         incorporation or formation;

                  (b)   the execution, delivery and performance of this
         Agreement by such party has been duly authorized by all requisite
         corporate action;

                  (c)   it has the power and authority to execute and deliver
         this Agreement and to perform its obligations hereunder;

                  (d)   the execution, delivery and performance by such party of
         this Agreement and its compliance with the terms and provisions hereof
         does not and will not conflict with or result in a breach of any of the
         terms and provisions of or constitute a default under (i) a loan
         agreement, guaranty, financing agreement, agreement affecting a product
         or other agreement or instrument binding or affecting it or its
         property; (ii) the provisions of its charter or operative documents or
         bylaws; or (iii) any order, writ, injunction or decree of any court or
         governmental authority entered against it or by which any of its
         property is bound;

                  (e)   except for the Health Registrations required to market
         the Licensed Product in the Territory, the execution, delivery and
         performance of this Agreement by such party does not require the
         consent, approval or authorization of, or notice, declaration, filing
         or registration with, any governmental or regulatory authority and the
         execution, delivery or performance of this Agreement will not violate
         any Law applicable to such party; and

                                      -40-

                  (f)   this Agreement has been duly authorized, executed and
         delivered and constitutes such party's legal, valid and binding
         obligation enforceable against it in accordance with its terms subject,
         as to enforcement, to bankruptcy, insolvency, reorganization and other
         laws of general applicability relating to or affecting creditors'
         rights and to the availability of particular remedies under general
         equity principles.

         13.2     CIMA's Representations and Warranties. CIMA hereby represents
and warrants to Schering as follows:

                  (a)   the Licensed Patent Rights are subsisting and are not
         invalid or unenforceable, in whole or in part, in countries set forth
         on Appendix L, and, to the best knowledge of CIMA, are subsisting and
         are not invalid or unenforceable, in whole or in part, in any other
         country;

                  (b)   it has the full right, power and authority to grant all
         of the right, title and interest in the licenses granted under Article
         II hereof;

                  (c)   In the countries set forth on Appendix L, and, to the
         best knowledge of CIMA, in countries other than countries set forth on
         Appendix L, it is the sole and exclusive owner of the Licensed Patent
         Rights, all of which are free and clear of any liens, charges and
         encumbrances, other than license rights granted to other parties which
         are not inconsistent with the license rights granted hereunder, and no
         other person, corporate or other private entity, or governmental entity
         or subdivision thereof, has or shall have any claim of ownership with
         respect to the Licensed Patent Rights or CIMA Know-How, whatsoever;

                  (d)   To the best of its knowledge, it is the sole and
         exclusive owner of the CIMA Know-How, all of which is free and clear of
         any liens, charges and encumbrances, other than license rights granted
         to other parties which are not inconsistent with the license rights
         granted hereunder, and no other person, corporate or other private
         entity, or governmental entity or subdivision thereof, has or shall
         have any claim of ownership or use of the CIMA Know-How which in any
         manner interferes with or will interfere with the ability of Schering
         to practice the Licensed Patent Rights;

                  (e)   it has not assigned, transferred, conveyed or otherwise
         encumbered, and during the Term of this Agreement will not assign,
         transfer, convey or otherwise encumber, its right, title and interest
         in the Licensed Patent Rights in any manner that interferes with or
         will interfere with the ability of Schering to practice the Licensed
         Patent Rights;

                                      -41-

                  (f)   it has not assigned, transferred, conveyed or otherwise
         encumbered, and during the Term of this Agreement will not assign,
         transfer, convey or otherwise encumber, its right, title and interest
         in the CIMA Know-How in any manner that interferes with or will
         interfere with the ability of Schering to practice the Licensed Patent
         Rights;

                  (g)   to the best of its knowledge, as of the date hereof, the
         Licensed Patent Rights and CIMA Know-How, and the development,
         manufacture, use, distribution, marketing, promotion and sale of
         Licensed Product, do not interfere or infringe on any intellectual
         property rights owned or possessed by any third party;

                  (h)   to the best of its knowledge, as of the date hereof,
         there are no third party pending patent applications which, if issued,
         may cover the use of the OraSolv Technology in connection with
         development, manufacture, use or sale of Licensed Product;

                  (i)   to the best of its knowledge, as of the date hereof,
         there are no claims, judgments or settlements against or owed by CIMA,
         or pending or threatened claims or litigation, relating to the Licensed
         Patent Rights or CIMA Know-How;

                  (j)   as of the date hereof, it has no knowledge of any
         circumstances that would materially and adversely affect the commercial
         utility of the Licensed Product and/or the use of the OraSolv
         Technology in combination with Active Ingredient, or that would render
         Schering liable to a third party for patent infringement as a
         consequence of Schering's sale of Licensed Product;

                  (k)   there are no collaborative, licensing, material
         transfer, supply, distributorship or marketing agreements or
         arrangements or other similar agreements to which it or any of its
         Affiliates are party relating to the combination of the OraSolv
         Technology and Active Ingredient, nor has it granted any rights to any
         third party with respect to such combination; and

                  (l)   as of the date hereof, it is in compliance in all
         material respects with any agreements with third parties which provide
         for intellectual property rights applicable to the development,
         manufacture, use or sale of the OraSolv Technology.

         13.3     CIMA Covenants. CIMA hereby agrees as follows:

                  (a)   at the time of delivery of the Licensed Product to the
         designated carrier pursuant to this Agreement, the Licensed Product

                                      -42-

         shall (i) have been Manufactured, stored and shipped in accordance with
         applicable Laws in the Territory; (ii) have been Manufactured in
         accordance with the Specifications, any written instructions provided
         by Schering, and the CMC; (iii) not be adulterated or misbranded under
         the FDCA or the Laws; and (iv) be in good and usable condition;

                  (b)   it will have good and marketable title, free and clear
         of any liability, pledge, lien, restriction, claim, charge, security
         interest or other encumbrance, to all Licensed Product delivered to the
         designated carrier pursuant to this Agreement;

                  (c)   it and/or its Affiliates shall neither use nor seek to
         register any trademarks which are confusingly similar to any Schering
         Trademark, or any other trademarks, trade names, trade dress or logos
         used in connection with the Licensed Product;

                  (d)   it will inform Schering in writing immediately if it or
         any person who is performing services hereunder is debarred or is the
         subject of a conviction described in [sec]306 of the FDCA, or if any
         action, suit, claim, investigation, or legal or administrative
         proceeding is pending or, to the best of CIMA's knowledge, is
         threatened, relating to the debarment or conviction of CIMA or any
         person performing services hereunder; and

                  (e)   during the Term of this Agreement, it will use best
         efforts not to diminish the rights under the Licensed Patent Rights and
         CIMA Know-How licensed to Schering hereunder, including, without
         limitation, by not committing or permitting any actions or omissions
         which would cause the breach of any agreements between itself and third
         parties which provide for intellectual property rights applicable to
         the development, manufacture, use or sale of the OraSolv Technology in
         connection with the Licensed Product(s) and that it will provide
         Schering promptly with notice of any such alleged breach.

         13.4     Schering's Representations and Warranties. Schering hereby
represents and warrants to CIMA as follows:

                  (a)   to the best of its knowledge, it is the sole and
         exclusive owner and/or licensee of all rights to Active Ingredient
         which is free and clear of any liens, charges and encumbrances, and no
         other person, corporate or other private entity, or governmental entity
         or subdivision thereof, has or shall have any claim of ownership with
         respect to Active Ingredient, whatsoever;

                                      -43-

                  (b)   to the best of its knowledge, Active Ingredient and the
         development, manufacture, use, distribution, marketing, promotion and
         sale of Active Ingredient does not interfere or infringe on any
         intellectual property rights owned or possessed by any third party;

                  (c)   there are no claims, judgments or settlements against or
         owed by Schering or pending or threatened claims or litigation relating
         to Active Ingredient; and

                  (d)   it will launch the Licensed Product within a
         commercially reasonable period of time after approval of all Health
         Registrations necessary to sell the Licensed Product in the Territory.

         13.5     Schering Covenants. Schering hereby agrees that it will use
diligent efforts for obtaining and maintaining all Health Registrations
necessary to sell the Licensed Product in the Territory and launch the Licensed
Product within a commercially reasonable period of time after approval of all
Health Registrations necessary to sell the Licensed Product in the Territory.

         13.6     Covenants of Each Party. Each of the parties hereby agrees as
follows:

                  (a)   it shall comply with all applicable Laws relating to its
         activities under this Agreement; and

                  (b)   during the Term of this Agreement it will not use in any
         capacity, in connection with any services to be performed under this
         Agreement, any individual who has been debarred pursuant to the FDCA or
         been excluded from participating in a federal health care program,
         including, without limitation, the Medicare or Medicaid programs.

         13.7     Continuing Representations. The representations and warranties
of each party contained in Sections 13.1, 13.2 and 13.4 shall survive the
execution of this Agreement and shall remain true and correct after the date
hereof with the same effect as if made as of the date hereof.

         13.8     No Inconsistent Agreements. Neither party has in effect and
after the Effective Date neither party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its obligations under
this Agreement.

         13.9     Representation by Legal Counsel. Each party hereto represents
that it has been represented by legal counsel in connection with this Agreement
and acknowledges that it has participated in the drafting hereof. In
interpreting and applying the terms and provisions of this Agreement, the

                                      -44-

parties agree that no presumption shall exist or be implied against the party
which drafted such terms and provisions.

                                   ARTICLE XIV
                   INDEMNIFICATION AND LIMITATION ON LIABILITY

         14.1     Indemnification by Schering. Schering shall indemnify, defend
and hold harmless CIMA and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, a "CIMA Indemnified Party")
from and against any and all liability, loss, damage, cost, and expense
(including reasonable attorneys' fees) (collectively, a "Liability"), subject to
the limitations in Section 14.5 which the CIMA Indemnified Party may incur,
suffer or be required to pay resulting from or arising out of (i) Schering's
negligent acts and/or omissions related to the marketing, distribution and sale
of the Active Ingredient or Licensed Product, (ii) the sale or use of the
Licensed Product, except to the extent that such liability is attributable to
the CIMA Know-How and/or the Licensed Patent Rights, or (iii) any breach of
Schering's covenants, representations and warranties hereunder by Schering, its
Affiliates or sublicensees. Notwithstanding the foregoing, Schering shall have
no obligation under this Agreement to indemnify, defend or hold harmless any
CIMA Indemnified Party with respect to claims, demands, costs or judgments which
result from willful misconduct or negligent acts or omissions of CIMA, its
Affiliates, or any of their respective employees, officers, directors or agents.

         14.2     Indemnification by CIMA. CIMA shall indemnify, defend and hold
harmless Schering and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, a "Schering Indemnified Party")
from and against any Liability, subject to the limitations in Section 14.5,
which the Schering Indemnified Party may incur, suffer or be required to pay
resulting from or arising in connection with (i) Schering's use of the CIMA
Know-How and/or the Licensed Patent Rights (subject to Schering's rights under
Section 4.5) (ii) negligent acts and/or omissions by CIMA and/or its Affiliates
related to the development or Manufacture of Licensed Product by CIMA or the
failure of Licensed Product Manufactured by CIMA to meet the Specifications set
forth in Appendix H hereto, or (iii) any breach of CIMA's covenants,
representations and warranties hereunder. Notwithstanding the foregoing, CIMA
shall have no obligation under this Agreement to indemnify, defend or hold
harmless any Schering Indemnified Party with respect to claims, demands, costs
or judgments which result from willful misconduct or negligent acts or omissions
of Schering, its Affiliates, or any of their respective employees, officers,
directors or agents.

         14.3     Conditions to Indemnification. The obligations of the
indemnifying party under Sections 14.1 and 14.2 are conditioned upon the
delivery of

                                      -45-

written notice to the indemnifying party of any potential Liability promptly
after the indemnified party becomes aware of such potential Liability; provided,
however, that any delay on the part of a party to provide notice to the
indemnifying party shall not relieve the indemnifying party of its obligation to
indemnify unless the indemnifying party has been materially prejudiced by such
delay. The indemnifying party shall have the right to assume the defense of any
suit or claim related to the Liability if it has assumed responsibility for the
suit or claim in writing; however, if in the reasonable judgment of the
indemnified party, such suit or claim involves an issue or matter which could
have a materially adverse effect on the business operations or assets of the
indemnified party, the indemnified party may waive its rights to indemnity under
this Agreement and control the defense or settlement thereof, but in no event
shall any such waiver be construed as a waiver of any indemnification rights
such party may have at law or in equity. If the indemnifying party defends the
suit or claim, the indemnified party may participate in (but not control) the
defense thereof at its sole cost and expense.

         14.4     Settlements. Neither party may settle a claim or action
related to a Liability without the consent of the other party, if such
settlement would impose any monetary obligation on the other party or require
the other party to submit to an injunction or otherwise limit the other party's
rights under this Agreement. Any payment made by a party to settle any such
claim or action shall be at its own cost and expense.

         14.5     Limitation of Liability. With respect to any claim by one
party against the other arising out of the performance or failure of performance
of the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct damages only and in
no event shall a party be liable for, punitive, exemplary or consequential
damages.

         14.6     Insurance. Each party acknowledges and agrees that during the
Term of this Agreement it shall maintain adequate insurance and/or a
self-insurance program for liability insurance, including products liability and
contractual liability insurance, to cover such party's obligations under this
Agreement. Each party shall provide the other party with evidence of such
insurance and/or self-insurance program, upon request.

                                   ARTICLE XV
                              TERM AND TERMINATION

         15.1     Term and Expiration. This Agreement shall be effective as of
the Effective Date and unless terminated earlier by mutual written agreement of
the parties or pursuant to Sections 15.2 or 15.3 below, the Term of this

                                      -46-

Agreement shall continue in effect in each country in the Territory until the
later of (i) ten (10) years after the First Commercial Sale of the Licensed
Product in each such country or (ii) expiration of the last to expire Licensed
Patent Right incorporating a Valid Claim in each such country. Upon expiration
of this Agreement due to expiration of the last to expire Licensed Patent Right
incorporating a Valid Claim, Schering's licenses pursuant to Section 2.1 and 2.2
shall become fully paid-up, perpetual licenses, provided, however, that CIMA's
exclusive right to Manufacture shall continue unless Schering has exercised its
option to Manufacture under Section 9.5 of this Agreement.

         15.2     Termination by Schering.

                  (a)   Notwithstanding anything contained herein to the
         contrary, Schering shall have the unilateral right to terminate this
         Agreement, without cause, at any time by giving ninety (90) days
         advance written notice to CIMA, or one hundred and eighty (180) days
         advance written notice at any time after the first good faith forecast
         provided by Schering pursuant to Section 9.2. In the event of the
         exercise by Schering of such termination rights, the rights and
         obligations hereunder, including any payment obligations not due and
         owing as of the termination date shall terminate and all rights to
         Licensed Patent Rights and CIMA Know-How shall revert to CIMA.

                  (b)   In the event the ownership or control of CIMA is to be
         acquired by a pharmaceutical company, CIMA shall promptly notify
         Schering in writing to that effect, and to the extent practicable and
         within CIMA's control, it shall provide such notice not less than sixty
         (60) days prior to such transfer of control. For the avoidance of
         doubt, CIMA shall have the obligation to disclose to any such
         pharmaceutical company that it is obligated to provide the notice set
         forth in this Section, and CIMA shall not provide, in any such
         agreement with a pharmaceutical company, that such notice will be
         delayed or omitted. Schering shall have the unilateral right, but not
         the obligation, by giving sixty (60) days' advance written notice to
         CIMA to terminate this Agreement following receipt of such notice. Such
         right shall terminate one hundred and twenty (120) days following
         Schering's receipt of notice of such transfer of control. CIMA shall
         use best efforts to ensure that such acquiring party does not have any
         access to any of Schering's Proprietary Information. For purposes of
         this section, control shall mean the ability to control the management
         decisions of CIMA, and the direct or indirect acquisition of thirty
         percent (30%) or more of CIMA's stock shall be deemed control.

                                      -47-

         15.3     Termination.

                  (a)   Termination for Cause. This Agreement may be terminated
         by written notice by either party at any time during the Term of this
         Agreement:

                        (i)   subject to Section 16.2, if the other party is in
                  breach of its material obligations hereunder and has not cured
                  such breach within ninety (90) days after notice requesting
                  cure of the breach with reasonable detail of the particulars
                  of the alleged breach or initiated actions reasonably expected
                  to cure the cited failure within ninety (90) days of receiving
                  notice and thereafter diligently pursued such actions to cure
                  the failure (even if requiring longer than the ninety (90)
                  days set forth in this subsection); or

                        (ii)  upon the filing or institution of bankruptcy,
                  reorganization, liquidation or receivership proceedings, or
                  upon an assignment of a substantial portion of the assets for
                  the benefit of creditors by the other party, or in the event a
                  receiver or custodian is appointed for such party's business,
                  or if a substantial portion of such party's business is
                  subject to attachment or similar process; provided, however,
                  that in the case of any involuntary bankruptcy proceeding such
                  right to terminate shall only become effective if the
                  proceeding is not dismissed within sixty (60) days after the
                  filing thereof.

                  (b)   Effect of Termination for Cause on License.

                        (i)   Termination by Schering under Section 15.3(a)(i).
                  In the event Schering terminates this Agreement under Section
                  15.3(a)(i) Schering's licenses pursuant to Sections 2.1 and
                  2.2 shall continue so long as Schering is not in default of
                  its payment obligations hereunder (including royalty
                  payments), subject to such offset as may be awarded to
                  Schering as damages for CIMA's breach of this Agreement in
                  accordance with the dispute resolution provisions set forth in
                  Section 16.2. Notwithstanding the foregoing, nothing in this
                  Section shall be interpreted to eliminate or restrict any
                  rights Schering has or may have relating to a default by CIMA
                  under applicable Laws.

                        (ii)  Other Terminations. In the event of a termination
                  of this Agreement for any reason other than by Schering under
                  Section 15.3(a)(i), then the rights and licenses granted to
                  Schering under Sections 2.1 and 2.2 of this Agreement shall
                  terminate and

                                      -48-

                  all rights to Licensed Patent Rights and CIMA Know-How shall
                  revert to CIMA.

                        (iii) Effect of Bankruptcy. In the event Schering
                  terminates this Agreement under Section 15.3(a)(ii) or this
                  Agreement is otherwise terminated under Section 15.3(a)(ii),
                  the parties agree that Schering, as a licensee of rights to
                  intellectual property under this Agreement, shall retain and
                  may fully exercise all of its rights and elections under Title
                  11, including as set forth in Section 16.8 hereof.

                        (iv)  Return of Bulk Active and Proprietary Information.
                  Upon termination or expiration of this Agreement for any
                  reason, or at Schering's request at any time during this
                  Agreement, CIMA shall promptly deliver to Schering all unused
                  Bulk Active and Licensed Product, all documentation and all
                  copies thereof in whatever form or media in its possession or
                  control relating to Bulk Specifications, CMCs, Specifications,
                  Schering Know-How and all other Proprietary Information of
                  Schering and any and all other documents and materials (and
                  all copies thereof) in its possession or control containing
                  any Proprietary Information of Schering.

         15.4     Effect of Termination. Expiration or termination of the
Agreement shall not relieve the parties of any obligation accruing prior to such
expiration or termination, and the provisions of Articles XII and XIV shall
survive the expiration of the Agreement. Any expiration or early termination of
this Agreement shall be without prejudice to the rights of either party against
the other accrued or accruing under this Agreement prior to termination,
including the obligation to pay royalties for Licensed Product(s) sold prior to
such termination. Schering shall have the right to continue to sell its existing
inventory of Licensed Product(s) and, if this Agreement is terminated by
Schering pursuant to Section 15.3(a)(i), Schering's other payment obligations
shall survive, including royalties to CIMA, on sales of Licensed Product(s) in
accordance with this Agreement, subject to such offset as may be awarded to
Schering as damages for CIMA's breach of this Agreement in accordance with the
dispute resolution provisions set forth in Section 16.2. Notwithstanding the
foregoing, nothing in this Section shall be interpreted to eliminate or restrict
any rights Schering has or may have relating to a default by CIMA under
applicable Laws.

                                   ARTICLE XVI
                                  MISCELLANEOUS

                                      -49-

         16.1     Assignment. Except as set forth in this Section 16.1, neither
this Agreement nor any or all of the rights and obligations of a party hereunder
shall be assigned, delegated, sold, transferred, sublicensed (except as
otherwise provided herein) or otherwise disposed of, by operation of law or
otherwise, to any third party other than an Affiliate of such party, without the
prior written consent of the other party, and any attempted assignment,
delegation, sale, transfer, sublicense or other disposition, by operation of law
or otherwise, of this Agreement or of any rights or obligations hereunder
contrary to this Section 16.1 shall be a material breach of this Agreement by
the attempting party, and shall be void and without force or effect. Schering
may, upon written notice to CIMA, assign to an Affiliate(s) any or all of its
(i) obligations to pay royalties to CIMA; or (ii) option and other rights to
Manufacture Licensed Product pursuant to Section 9.5 of this Agreement, except
that no such assignment shall release Schering from its liability to pay
royalties, or payments relating to Schering's exercise of its option to
Manufacture Licensed Product, should the Affiliate default in its obligations.
The forgoing notwithstanding, either party may, without such consent, assign the
Agreement and its rights and obligations hereunder to an Affiliate or in
connection with the transfer or sale of all or substantially all of its assets
related to the division or the subject business, or in the event of its merger
or consolidation or change in control or similar transaction. This Agreement
shall be binding upon, and inure to the benefit of, each party, its Affiliates,
and its permitted successors and assigns. Each party shall be responsible for
the compliance by its Affiliates with the terms and conditions of this
Agreement.

         16.2     Governing Law. This Agreement shall be governed, interpreted
and construed in accordance with the laws of the State of New Jersey, without
giving effect to conflict of law principles. Subject to the terms of this
Agreement, all disputes under this Agreement shall be governed by binding
arbitration pursuant to the mechanism set forth in Appendix M attached hereto
and incorporated hereby.

         16.3     Waiver. Any delay or failure in enforcing a party's rights
under this Agreement or any waiver as to a particular default or other matter
shall not constitute a waiver of such party's rights to the future enforcement
of its rights under this Agreement, nor operate to bar the exercise or
enforcement thereof at any time or times thereafter, excepting only as to an
express written and signed waiver as to a particular matter for a particular
period of time.

         16.4     Independent Relationship. Nothing herein contained shall be
deemed to create an employment, agency, joint venture or partnership
relationship between the parties hereto or any of their agents or employees, or
any other legal arrangement that would impose liability upon one party for the
act or failure to act of the other party. Neither party shall have any power to

                                      -50-

enter into any contracts or commitments or to incur any liabilities in the name
of, or on behalf of, the other party, or to bind the other party in any respect
whatsoever.

         16.5     Export Control. This Agreement is made subject to any
restrictions concerning the export of products or technical information from the
United States of America which may be imposed upon or related to CIMA or
Schering from time to time by the government of the United States of America.
Furthermore, each party agrees that it will not export, directly or indirectly,
any technical information acquired from the other party under this Agreement or
any products using such technical information to any country for which the
United States government or any agency thereof at the time of export requires an
export license or other governmental approval, without first obtaining the
written consent to do so from the Department of Commerce or other agency of the
United States government when required by an applicable statute or regulation.

         16.6     Entire Agreement; Amendment. This Agreement, including the
Attachments hereto and all the covenants, promises, agreements, warranties,
representations, conditions and understandings sets forth the complete, final
and exclusive agreement between the parties and supersedes and terminates all
prior and contemporaneous agreements and understandings between the parties,
whether oral or in writing. There are no covenants, promises, agreements,
warranties, representations, conditions or understandings, either oral or
written, between the parties other than as are set forth herein. No subsequent
alteration, amendment, change, waiver or addition to this Agreement shall be
binding upon the parties unless reduced to writing and signed by an authorized
officer of each party. No understanding, agreement, representation or promise,
not explicitly set forth herein, has been relied on by either party in deciding
to execute this Agreement.

         16.7     Notices. Any notice required or permitted to be given or sent
under this Agreement shall be hand delivered or sent by express delivery service
or certified or registered mail, postage prepaid, or by facsimile transmission
(with written confirmation copy by registered first-class mail) to the parties
at the addresses and facsimile numbers indicated below.

         If to CIMA, to:                    CIMA LABS INC.
                                            10,000 Valley View Road
                                            Eden Prairie, Minnesota 55344
                                            Attn.:   President and CEO
                                            Fax No.: (952) 947-8711

                                      -51-

         If to Schering, to:                Schering-Plough Ltd.
                                            Toepferstrasse 5, CH 6004
                                            Lucerne, Switzerland
                                            Attention: President

                  with copies to:           Schering Corporation
                                            2000 Galloping Hill Road
                                            Kenilworth, New Jersey 07033
                                            Attn.: Vice President, Business
                                            Development
                                            Fax No.: (908) 298-7366

                                            Schering Corporation
                                            2000 Galloping Hill Road
                                            Kenilworth, New Jersey 07033
                                            Attn.: Law Department - Senior Legal
                                                   Director, Licensing
                                            Fax No.: (908) 298-2739

with copies of any notices regarding commercial supply of Licensed Product in
the United States to:

                                            Schering Corporation
                                            1095 Morris Avenue
                                            Union, NJ 07083
                                            Attn.: Vice President Materials
                                                   Management
                                            Fax No.: 908-629-3062

         Any such notice shall be deemed to have been received on the date
actually received. Either party may change its address or its facsimile number
by giving the other party written notice, delivered in accordance with this
Section.

         16.8     Provisions for Insolvency. All rights and licenses granted
under or pursuant to this Agreement by CIMA to Schering are, for all purposes of
Section 365(n) of Title 11 of the United States Code ("Title 11"), licenses of
rights to "intellectual property" as defined in Title 11.

                  (a)   Effect on Licenses. CIMA agrees that Schering, as
         licensee of such rights under this Agreement shall retain and may fully
         exercise all of its rights and elections under Title 11. CIMA agrees
         during the Term of this Agreement to create and maintain current copies
         or, if not amenable to copying, detailed descriptions or other
         appropriate embodiments, to the extent feasible, of all such
         intellectual property. If a

                                      -52-

         case is commenced by or against CIMA under Title 11, CIMA (in any
         capacity, including debtor-in-possession) and its successors and
         assigns (including, without limitation, a Title 11 Trustee) shall,

                        (i)   as Schering may elect in a written request,
                  immediately upon such request:

                              (A)   perform all of the obligations provided in
                        this Agreement to be performed by CIMA including, where
                        applicable and without limitation, providing to
                        Schering portions of such intellectual property
                        (including embodiments thereof) held by CIMA and such
                        successors and assigns or otherwise available to them;
                        or

                              (B)   provide to Schering all such intellectual
                        property (including all embodiments thereof) held by
                        CIMA and such successors and assigns or otherwise
                        available to them; and

                        (ii)  not interfere with the rights of Schering under
                  this Agreement, or any agreement supplemental hereto, to such
                  intellectual property (including such embodiments), including
                  any right to obtain such intellectual property (or such
                  embodiments) from another entity.

                  (b)   Rights to Intellectual Property. If a Title 11 case is
         commenced by or against CIMA, and this Agreement is rejected as
         provided in Title 11, and Schering elects to retain its rights
         hereunder as provided in Title 11, then CIMA (in any capacity,
         including debtor-in-possession) and its successors and assigns
         (including, without limitation, a Title 11 Trustee) shall provide to
         Schering all such intellectual property (including all embodiments
         thereof) held by CIMA and such successors and assigns, or otherwise
         available to them, immediately upon Schering's written request.
         Whenever CIMA or any of its successors or assigns provides to Schering
         any of the intellectual property licensed hereunder (or any embodiment
         thereof) pursuant to this Section 16.8, Schering shall have the right
         to perform the obligations of CIMA hereunder with respect to such
         intellectual property, but neither such provision nor such performance
         by Schering shall release CIMA from any such obligation or liability
         for failing to perform it.

                  (c)   Schering's Rights. All rights, powers and remedies of
         Schering provided herein are in addition to and not in substitution for
         any and all other rights, powers and remedies now or hereafter existing
         at law or in equity (including, without limitation, Title 11) in the
         event of

                                      -53-

         the commencement of a Title 11 case by or against CIMA. Schering, in
         addition to the rights, powers and remedies expressly provided herein,
         shall be entitled to exercise all other such rights and powers and
         resort to all other such remedies as may now or hereafter exist at law
         or in equity (including, without limitation, Title 11) in such event.
         The parties agree that they intend the foregoing Schering rights to
         extend to the maximum extent permitted by Law, including, without
         limitation, for purposes of Title 11:

                        (i)   the right of access to any intellectual property
                  (including all embodiments thereof) of CIMA, or any third
                  party with whom CIMA contracts to perform an obligation of
                  CIMA under this Agreement, and, in the case of the third
                  party, which is necessary for the development, registration,
                  manufacture and marketing of Active Ingredient and/or Licensed
                  Product; and

                        (ii)  the right to contract directly with any third
                  party described in (i) to complete the contracted work.

         16.9     Force Majeure. Failure of any party to perform its obligations
under this Agreement (except the obligation to make payments when properly due)
shall not subject such party to any liability or place them in breach of any
term or condition of this Agreement to the other party if such failure is due to
any cause beyond the reasonable control of such non-performing party ("force
majeure"). Causes of non-performance constituting force majeure shall include,
without limitation, acts of God, fire, explosion, flood, drought, war, riot,
sabotage, embargo, strikes or other labor trouble, failure in whole or in part
of suppliers to deliver on schedule materials, equipment or machinery,
interruption of or delay in transportation, a national health emergency or
compliance with any order or regulation of any government entity acting with
color of right. The party affected shall promptly notify the other party of the
condition constituting force majeure as defined herein and shall exert
reasonable efforts to eliminate, cure and overcome any such causes and to resume
performance of its obligations with all possible speed. If a condition
constituting force majeure as defined herein exists for more than ninety (90)
consecutive days, the parties shall meet to negotiate a mutually satisfactory
resolution to the problem, if practicable.

         16.10    Severability. If any provision of this Agreement is declared
illegal, invalid or unenforceable by a court having competent jurisdiction, it
is mutually agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by order of such court, provided, however, that in the
event that the terms and conditions of this Agreement are materially altered,
the parties will, in good faith, renegotiate the terms and conditions of this

                                      -54-

Agreement to reasonably substitute such invalid or unenforceable provisions in
light of the intent of this Agreement.

         16.11    Counterparts. This Agreement shall become binding when any one
or more counterparts hereof, individually or taken together, shall bear the
signatures of each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against either
party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.

         16.12    Captions. The captions of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.

         16.13    Recording. Each party shall have the right, at any time, to
record, register, or otherwise notify relevant portions of this Agreement in
appropriate governmental or regulatory offices anywhere in the world, and each
party shall provide reasonable assistance to the other in effecting such
recording, registering or notifying and in obtaining or maintaining such
confidential treatment as may be reasonably available.

         16.14    Further Actions. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all other acts, as may be reasonably
necessary or appropriate in order to carry out the purposes and intent of this
Agreement including, without limitation, any filings with any antitrust agency
which may be required.

         IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized representatives of the parties as of the dates set forth below.

CIMA LABS INC.                            SCHERING-PLOUGH LTD.

By:     /s/  John M. Siebert              By:     /s/  David Poorvin
   ----------------------------------        --------------------------------
        John M. Siebert                           David Poorvin

Title:  President & CEO                   Title: Prokurist
      -------------------------------            ----------------------------

Date: May 20, 2002                        Date:  May 17, 2002
      -------------------------------           -----------------------------

                                      -55-

                                   APPENDIX A

        CHEMICAL FORMULA OF [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
   OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

                                      -1-

                                   APPENDIX B

                       BULK SPECIFICATIONS FOR BULK ACTIVE

Specifications for [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

Specification Number [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

Date [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.***] Supercedes: [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***]

        Test                 Acceptance Limits               Procedure Reference

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                    SECURITIES AND EXCHANGE COMMISSION.***]

                                      -1-

                                   APPENDIX C

                               DEVELOPMENT PROGRAM

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***]

                    DEVELOPMENT ACTIVITIES, COSTS AND TIMING

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THREE PAGES OMITTED.***]

                                      -1-

                                   APPENDIX D

                             LICENSED PATENTS RIGHTS



- ---------------------------------------------------------------------------------------------------------
   Patent or Patent                     Patents by Country                     Expiration
  Application Title
- ---------------------------------------------------------------------------------------------------------
                                                                         
"Effervescent Dosage                  U.S. Patent 5,178,878                    January 12, 2010
Form with                                                                      US
Microparticles" - US                  Australian Patent 646,232

"Effervescent Dosage                  Canada Patent 2,061,917
Form and Method of
Administering Same" -                 EU Patent 494,972 issued in Austria
EU                                    [E145,551], Belgium, Denmark, France,
Australian & Canada                   Great Britain, Germany [69029273.2],
                                      Italy, Spain [2,097,155], Sweden, and
                                      Switzerland.

                                      Japanese patent
                                      application (2-514500)
"Effervescent Dosage                  filed August 29, 1990                    Unknown
Form and Method of
Administering Same" -
US
- ---------------------------------------------------------------------------------------------------------
"Blister Package and                  U.S. Patent 6,155,423                    April 1, 2018 US
Packaged Tablet"
                                      Australian Patent No.
                                      732,118 issued April 12,
                                      2001

                                      Foreign applications were
                                      also filed on April 1, 1998
                                      in: Canada (2,284,132)
                                      European Patent Office
                                      (98913352.5) (EP 1,015,351 A1) Japan
                                      (541,960/1998)

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


                                      -1-



- ---------------------------------------------------------------------------------------------------------
                                                                         
"Apparatus for                        U.S. Patent 6,269,615                    March 9, 2019 US
Handling and
Packaging Friable                     Australian Patent No.
Tablets"                              734,383 issued
                                      September 27, 2001

                                      Foreign applications were
                                      also filed on March 9,
                                      1999 in: European Patent
                                      Office (99914893.5) (EP
                                      1,107,411 A1) Japan
                                      (535,554/2000)

- ---------------------------------------------------------------------------------------------------------
"Apparatus for                        U.S. Patent 6,311,462                    March 9, 2019
Handling and                                                                   US
Packaging Friable                     No foreign counterparts
Tablets"
CIMA 3.0-028 DIV
- ---------------------------------------------------------------------------------------------------------


"( )" indicates an application number

"[ ]" indicates a patent number

                                      -2-

                                   APPENDIX E

                           OUTSIDE SERVICES AGREEMENT

         AGREEMENT effective as of the last date of signature hereof ("Effective
Date"), by and between Schering-Plough Research Institute, 2015 Galloping Hill
Road, Kenilworth, New Jersey 07033 ("SPRI") and CIMA Labs, Inc., 10000 Valley
View Road, Eden Prairie, MN 55344, and its Affiliates ("CIMA") for services to
be performed by CIMA.

         In consideration of CIMA's engagement hereunder, the parties hereto
agree to the following terms and conditions. CIMA will provide to SPRI research
services including but not limited to feasibility studies for [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] orally disintegrating tablet in CIMA's ODT drug
delivery technology as set forth in Phase IB and Phase II of Attachment B (the
"Project"). The Project shall be subject to the following terms and conditions:

         1.     CIMA will perform the Project for SPRI during the term of this
Agreement at such times as are reasonably available to CIMA and in response to
SPRI's needs. In addition, SPRI shall have the option to expand the Project to
include the additional services provided for in Attachment C (attached hereto),
at the cost set forth in such Attachment C, by providing written notice to CIMA
to that effect.

         2.     The term of this Agreement shall be retroactively effective from
April 1, 2001, and continue until March 31, 2002 and may be extended or modified
by written agreement by both SPRI and CIMA.

         3.     This Agreement and/or any service to be performed hereunder
shall be immediately terminable at any time by SPRI upon ten (10) days' written
notice to CIMA. Upon the delivery of such notice by SPRI, CIMA shall immediately
cease work on the Project, deliver to SPRI all work in progress, and return all
Confidential Information (as defined in paragraph 7) with respect thereto. Upon
termination, SPRI's sole obligation to CIMA shall be to pay any monies due and
owing up to the time of termination for services actually performed and all
reasonable expenses actually incurred.

         4.     SPRI will pay CIMA for services performed hereunder pursuant to
detailed invoices to be provided by CIMA. In addition, CIMA shall be reimbursed
for all reasonable and customary travel expenses, if any, incurred in the
performance of such services for SPRI. Requests for

                                      -1-

payment for services and/or travel reimbursement shall be submitted upon
completion on detailed invoices, with original supporting documentation
attached. All reimbursements will be subject to SPRI's Reimbursement Policy
(Attachment A). The total payment for services rendered and travel reimbursement
shall not exceed [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. All invoices will
be paid by SPRI within thirty (30) days of receipt.

         5.     SPRI or its authorized agents shall have the right to audit
financial documentation (e.g., time logs) relating to the Project to verify
amounts billed under this Agreement. "Pass-through" costs (i.e., direct third
party costs that may be billed to SPRI) shall not include any overhead or profit
and must be supported by original invoices (not merely itemized or referenced in
a billing).

         6.     In connection with services to SPRI, CIMA will have access to
certain valuable materials and technical information and data which SPRI
considers to be confidential and proprietary. This will include information
relating to research and development and commercial plans of SPRI and affiliated
companies of Schering-Plough Corporation (the corporate parent of SPRI).

         7.     During the term of this Agreement and for a period of five (5)
years thereafter (including following any termination or expiration), CIMA
agrees to retain in confidence and to refrain from disclosing and/or using for
its benefit or the benefit of any third party, any and all information and/or
data disclosed to CIMA as a result of its services under this Agreement and/or
obtained by CIMA or its representatives while visiting SPRI's facilities and any
and all data and/or analyses and studies arising or derived from such
information and/or data ("Confidential Information"). This restriction shall not
apply to Confidential Information: (i) which is or becomes public knowledge
(through no fault of CIMA or its representatives); or (ii) which is lawfully
made available to CIMA by an independent third party (and such lawful
availability can be properly demonstrated by CIMA); or (iii) which is already in
its possession at the time of initial receipt from SPRI (and such prior
possession can be properly demonstrated by CIMA); or (iv) which is independently
developed by CIMA or its representatives (and such independent development can
be properly demonstrated by CIMA); or (v) which is required by law, regulation,
rule, act or order of any governmental authority or agency to be disclosed by
CIMA provided, however, that CIMA gives SPRI sufficient advance written notice
to permit it to seek a protective order or other similar order with

                                      -2-

respect to such information and thereafter CIMA discloses only the minimum
Confidential Information required to be disclosed in order to comply, whether or
not a protective order or other similar order is obtained by SPRI.

         8.     CIMA agrees that it will not, without the prior written
permission of SPRI, use information and data received by it under paragraphs 6
or 7 hereof for any purpose other than in carrying out this Agreement CIMA
further agrees not to submit for publication any paper containing such
information or data without the prior written permission of SPRI's legal
department.

         Neither party may use the name of the other party in any publicity or
advertising nor issue a press release or otherwise publicize or disclose any
information related to the existence of this Agreement or the terms and
conditions hereof, without the prior written consent of the other party.

         9.     CIMA agrees to promptly inform SPRI in writing of any event or
circumstance which could reasonably affect its ability to perform hereunder in
the manner contemplated by SPRI.

         10.    Intellectual Property

                a.       In this Agreement, "SPRI Intellectual Property
                         Rights" means any intellectual and industrial
                         property (including, without limitation, any ideas,
                         trade secrets, inventions, discoveries, copyright
                         material or confidential know-how) relating to the
                         Compound (including the Compound itself) or any other
                         compound, product, technology, design, process, or
                         method existing, created, discovered, conceived or
                         under development prior to the date of this Agreement
                         first written above owned or licensed by SPRI or any
                         of its associated companies and which is used in or
                         disclosed for the purposes of the study.

b.       In this Agreement "CIMA Intellectual Property Rights" means any
         intellectual and industrial property (including, without limitation,
         any ideas, trade secrets, inventions, discoveries, copyright material
         or confidential know-how) relating to the technology (including the
         technology itself) or any other product, technology, design, process,

                                      -3-

         or method existing, created, discovered, conceived or under development
         prior to the date of this agreement first written above, owned or
         licensed by CIMA or any of its associated companies and which is used
         in or disclosed for the purposes of the study.

c.       In this Agreement, "SPRI Intellectual Property Discoveries" means any
         intellectual property (including, without limitation, any invention,
         discovery or confidential know-how) which arises in the course of the
         study (i) relating to the Compound, SPRI Intellectual Property Rights
         and the Formulation (but not including CIMA Intellectual Property
         Rights); or (ii) arises from SPRI information protected under clause 7
         above or work carried out by SPRI.

d.       In this Agreement, "CIMA Intellectual Property Discoveries" means any
         intellectual property (including, without limitation, any ideas, trade
         secrets, inventions, discoveries, copyright material or confidential
         know-how) which may be made or discovered by any of CIMA's employees or
         other members of its staff relating to technology and which arises in
         the course of any study carried out under this Agreement and which is
         not SPRI Intellectual Property Rights or SPRI Intellectual Property
         Discoveries.

                e.       Ownership

                         (i)      SPRI Intellectual Property Rights and SPRI
                                  Intellectual Property Discoveries shall
                                  belong absolutely to SPRI and shall not be
                                  used by CIMA in any way other than for the
                                  purposes of carrying out the study.

                         (ii)     CIMA Intellectual Property Rights and CIMA
                                  Intellectual Property Discoveries shall
                                  belong absolutely to CIMA and shall not be
                                  used by SPRI in any way other than for the
                                  purposes contemplated by the parties under
                                  this Agreement. For the avoidance of doubt,
                                  SPRI shall not commercialize the resultant
                                  formulation, without a license to CIMA's
                                  Intellectual Property Rights.

                                      -4-

                         (iii)    Each party agrees, at the request of the
                                  other, to do all acts and execute all
                                  documents necessary and/or desirable to give
                                  effect to the provisions of sub-clauses
                                  10(e)(i) and (ii) above at the cost of the
                                  party making the request and each party
                                  shall inform the other promptly of any
                                  results arising out of the study relating to
                                  the other's Intellectual Property Rights
                                  which may be patentable and provide full
                                  details thereof.

                         (iv)     Other than as contemplated in this
                                  Agreement, each party acknowledges that they
                                  are granted no other right to license to
                                  use, exploit or otherwise derive any
                                  advantage from the other's Intellectual
                                  Property Rights under this Agreement.

         11.    CIMA warrants and represents that as of the date of this
Agreement CIMA (i) has the authority to execute this Agreement; and (ii) is not
a party to any oral or written contract or understanding with any third party
that is inconsistent with this Agreement and/or its performance hereunder, or
that will in any way limit or conflict with its ability to fulfill the terms of
this Agreement. CIMA further represents that it will not enter into any such
agreement during the term of this Agreement.

         12.    CIMA understands and agrees that in its relationship with SPRI
under this Agreement, CIMA is not a SPRI employee but, instead, CIMA is acting
in the capacity of an independent contractor and has no authority to represent
or act on behalf of SPRI. SPRI shall assume no liability for any damages and/or
losses which may result from CIMA's negligence or from the performance of CIMA's
services and obligations hereunder, and CIMA shall indemnify and hold SPRI, its
officers, directors and employees harmless from and against any suits, claims,
actions and/or liabilities arising from CIMA's breach of any of CIMA's
obligations under this Agreement or from CIMA's negligent acts, omissions or
failure to act and CIMA hereby acknowledges that CIMA is totally responsible for
the payment of any and all taxes, including any quarterly estimated payments,
applicable to CIMA's performance hereunder.

                CIMA understands and agrees that it is not entitled to
participate in any of the employee benefit plans, including but not limited to
the group health insurance plan, the Schering-Plough Retirement Plan, the
Schering-Plough Employees' 401K Savings Plan, the Schering-

                                      -5-

Plough Employees' Profit-Sharing Incentive Plan, and the Schering-Plough Stock
Incentive Plan. CIMA further understands and agrees that, if it is found to be a
common law or statutory employee by (i) the Internal Revenue Service; (ii) any
other taxing authority; (iii) any regulatory authority; or (iv) a court of law,
then CIMA hereby waives any right of eligibility which might thereby accrue to
CIMA to participate in the aforesaid benefit plans of SPRI.

                CIMA agrees that during the term of this Agreement and for a
period of six (6) months thereafter, it shall neither directly nor indirectly
solicit for employment, or otherwise retain employees of SPRI, whom CIMA has met
as a result of CIMA's performance of services for SPRI.

         13.    CIMA warrants that all services shall be performed in a
professional and workmanlike manner. If the scope of the Project pertains to
programming and/or software maintenance, CIMA warrants and represents that all
software shall have logic pertaining to dates which will enable SPRI to identify
and use the century portion of date fields without special processing; thus
enabling the software to calculate and to store dates accurately including and
following January 1, 2000.

         14.    This Agreement shall be construed in accordance with New Jersey
law without regard to its conflict of laws, rules or principles. It is
understood and agreed that both parties hereby submit to the jurisdiction of New
Jersey state and federal courts.

         15.    CIMA represents and warrants that neither it nor its
representatives or employees involved with the Project have been debarred
pursuant to the Federal Food, Drug and Cosmetic Act, or excluded from a federal
health care program.

         16.    CIMA warrants and represents that CIMA has insurance sufficient
to cover CIMA's obligations and/or any liability assumed by CIMA under this
Agreement. CIMA shall produce proof of such insurance within thirty (30) days of
SPRI's request.

         17.    CIMA shall not assign this Agreement to any person, firm,
partnership, corporation or other entity (including by operation of law,
judicial process or otherwise) without the prior written consent of SPRI, which
consent may be withheld for any reason. SPRI shall be entitled to assign this
Agreement to any of its subsidiaries, affiliates, and/or its parent corporation,
or any of such parent corporation's subsidiaries

                                      -6-

and/or affiliates (including by operation of law, judicial process
or otherwise) without the prior written consent of CIMA.

         18.    No term, condition or other provision of any attachment(s) or
addenda to this Agreement shall supersede any term, condition or other provision
of this Agreement and the Reimbursement Policy, and with respect to any
inconsistency or ambiguity, this Agreement, together with the Reimbursement
Policy shall control. This Agreement represents the entire understanding of the
parties and hereby supersedes all prior understandings and agreements, whether
oral or written, between the parties with respect to the services to be
performed. This Agreement may only be amended by a written instrument signed by
both parties.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed, by duly authorized representatives, as of the last date written below.

CIMA LABS, INC.                              SCHERING-PLOUGH RESEARCH INSTITUTE

By:/s/John M. Siebert                        By: /s/ Lisbeth Hume
   ---------------------                         ------------------------------

Name:  John M. Siebert                       Name:  L. Hume, Ph.D.

Title: President and CEO                     Title: Group Director SPC
                                                    Development Operations

Date:  27 April 2001                         Date:  May 21, 2001

                                      -7-

                                  ATTACHMENT A

                              REIMBURSEMENT POLICY

In accordance with SPRI's standard policies and procedures, the following are
types of expenses for which SPRI will not reimburse, unless expressly agreed to
in a prior writing by the parties:

- -        Commuting expenses to and/or from the CIMA's place of business or
         residence (excluding commuting to and/or from airport for
         SPRI-requested business).

- -        First-class or business-class air travel

- -        Add-on costs with respect to outside services

- -        Mark-up for the work product of outside professionals, including but
         not limited to freelancers

- -        Meals (excluding meals while traveling for SPRI-requested business).

- -        Administrative and/or overhead percentages

- -        Agency presentations for new business

- -        Gifts to SPRI's employees

- -        Entertainment of SPRI's employees

- -        Mark-up on any out-of-pocket expenses

         Note: This list sets forth the major items for which SPRI will not
         reimburse CIMA and is meant to be merely illustrative and not
         exhaustive. All CIMA expenses shall be reviewed with respect to the
         reasonableness of such expenses.

                                      -1-

                                  ATTACHMENT B

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] Development Activities, Costs and
Timing: Outside Services Agreement



- -------------------------------------------------------------------------------
Phase    Activity                                  Anticipated        Costs ($)
                                              Completion/Duration
                                                             
- -------------------------------------------------------------------------------
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. TWO PAGES OMITTED***]
- -------------------------------------------------------------------------------


                                      -1-

                                  ATTACHMENT C

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***]

Product:          [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

Format:           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] only

Quantity:         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

Delivery date:    [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

Ship to:          Jim Kou, Schering-Plough

Cost:             [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

                                      -1-

                                  Amendment #1

THIS AMENDMENT #1 to Outside Services Agreement is entered into as of this 25th
day of September, 2001.

Whereas, CIMA LABS Inc. ("CIMA") and Schering-Pough Research Institute ("SPRI")
have entered into an Outside Services Agreement with an Effective Date of May
21, 2001 ("Outside Services Agreement") regarding research on the development of
a pharmaceutical product containing [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***];

Whereas, CIMA has been conducting research and development activities according
to Attachment B of the Outside Services Agreement; and

Whereas, CIMA and SRI have determined that changes to the Outside Services
Agreement, including the inclusion of development milestone payments, are
desirable;

Therefore, for good and valid consideration, the Parties agree to amend the
Outside Services Agreement as follows:

         1)       In Paragraph 4 line 1 - after "services performed" insert "or
                  milestones achieved";

         2)       In Paragraph 4 after the first sentence - insert "In the event
                  that the pilot biostudy conducted by SPRI indicates that
                  CIMA's [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                  FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                  COMMISSION.***] oral disintegration table prototype is
                  bioequivalent to SPRI's [***CONFIDENTIAL TREATMENT REQUESTED,
                  PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
                  EXCHANGE COMMISSION.***] solid oral dosage form, SPRI shall
                  pay CIMA a milestone payment ("Milestone Payment") of
                  [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]";

         3)       In Paragraph 4, change "[***CONFIDENTIAL TREATMENT
                  REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***] to [***CONFIDENTIAL
                  TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***]"; and

         4)       In Paragraph 4 in the last sentence - after "thirty (30) days
                  of receipt" insert ", provided, however that the Milestone
                  Payment shall be due and payable, within five (5) days after
                  the execution of a development, license and supply agreement
                  for a pharmaceutical product containing [***CONFIDENTIAL
                  TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***] between CIMA and
                  Schering Corporation.

         5)       In all other respects, the terms and conditions of the Outside
                  Services Agreement remain in full force and effect.
                  Capitalized terms in this Amendment shall have the same
                  meaning as in the Outside Services Agreement.

         CIMA LABS Inc.                       Schering-Plough Research Institute

                                      -1-

         By:     /s/ John M. Siebert            By:    /s/ Cecil B. Pickett
              ---------------------------           ----------------------------
              Signature                             Signature

                 John M. Siebert                       Cecil B. Pickett
              ---------------------------           ----------------------------
              (Print or Type Name)                  (Print or Type Name)

         Title:  President & CEO              Title:   Acting President
               --------------------------           ----------------------------

                        25 September 01

                                      -2-

                   Amendment #2 to Outside Services Agreement

THIS AMENDMENT #2 to the Outside Services Agreement is entered into as of this
3rd day of December, 2001.

Whereas, CIMA LABS Inc. (CIMA) and Schering-Plough Research Institute (SPRI)
have entered into an Outside Services Agreement with an Effective Date of May
21, 2001 (Outside Services Agreement) regarding research on the development of a
pharmaceutical product containing [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***];

Whereas, the Outside Services Agreement was subsequently amended by Amendment #1
to the Outside Services Agreement dated September 25, 2001;

Whereas, CIMA has been conducting research and development activities according
to Attachment B of the Outside Services Agreement as amended; and

Whereas, CIMA and SPRI have determined that further changes to the Outside
Services Agreement, including the payment of a development milestone payment and
additional development activities, are desirable;

Therefore, for good and valid consideration, the Parties agree to further amend
the Outside Services Agreement as follows:

         1)       Attachment B is replaced with Attachment B-1 of this
                  Amendment;

         2)       In the second preamble paragraph replace "Phase 1B and Phase
                  II of Attachment B" with "Phase IIa, Phase IIb, Phase III and
                  Phase IVa of Attachment B-1";

         3)       In Paragraph 4, change "[***CONFIDENTIAL TREATMENT
                  REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***] to [***CONFIDENTIAL
                  TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***]" ; and

         4)       In Paragraph 4 in the last sentence delete "the Milestone
                  Payment shall be due and payable, upon the completion of a
                  development, license and supply agreement for a pharmaceutical
                  product containing [***CONFIDENTIAL TREATMENT REQUESTED,
                  PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
                  EXCHANGE COMMISSION.***] between CIMA and Schering
                  Corporation." and replace with "the Milestone Payment shall be
                  payable thirty (30) days from the date of execution by SPRI of
                  this Amendment #2."

         5)       In all other respects, the terms and conditions of the Outside
                  Services Agreement, as amended by Amendment #1, remain in full
                  force and effect. Capitalized terms in this Amendment #2 shall
                  have the same meaning as in the Outside Services Agreement and
                  Amendment #1.

         CIMA LABS Inc.                      Schering-Plough Research Institute

         By:    /s/ John M. Siebert          By:    /s/ Cecil B. Pickett
              ---------------------------         -----------------------------
              Signature                           Signature

                John M. Siebert                     Cecil B. Pickett
              ---------------------------         -----------------------------

                                      -3-

                (Print or Type Name)                (Print or Type Name)

         Title:    President & CEO            Title:    Acting President
                -------------------------           ---------------------------

         Date:     3 Dec 2001                 Date:     1/7/02
                -------------------------           ---------------------------

                                      -4-

                                 ATTACHMENT B-1

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

                    DEVELOPMENT ACTIVITIES, COSTS AND TIMING
                                 05 DECEMBER 01



- -------------------------------------------------------------------------------
Phase             Activity                  Anticipated             Costs ($)
                                            Completion/
                                              Duration
                                                           
- -------------------------------------------------------------------------------



[*** CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. TWO PAGES OMITTED.***]


                                      -5-

                                   APPENDIX F

                    PACKAGING COMPONENTS FOR LICENSED PRODUCT

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

                                      -1-

                                   APPENDIX G

PRICE OF LICENSED PRODUCT SUPPLIED BY CIMA FOR COMMERCIAL USE

Estimated prices per OraSolv(R) tablet



- -------------------------------------------------------------------------
  Type            Potency           Packaging         Price/tab ($) in
                                  Configuration           Cartons*
- -------------------------------------------------------------------------
            
 Samples       [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                COMMISSION.***]
- -------------------------------------------------------------------------
 Trade         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                COMMISSION.***]
- -------------------------------------------------------------------------


NOTE: Price per tablet is an estimate and assumes that Schering will provide
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] for manufacturing of tablets and package
inserts. Price per tablet is based on a 550 kilogram batch (~3,000,000 tablets)
and a five (5) batch minimum order. Final price will be determined upon final
formulation and packaging configuration of the Product.

*   Tablet Prices for the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
    FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] tablets
    will not exceed the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
    FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] price
    quoted herein. Final [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
    FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] prices
    will be determined upon final formulation and packaging configuration of
    these Products.

**  If the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
    SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] format is used
    there will be an additional tooling charge of up to

                                      -1-

    [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH
    THE SECURITIES AND EXCHANGE COMMISSION.***] for each tablet size.

                                      -2-

                                   APPENDIX H

                       SPECIFICATIONS FOR LICENSED PRODUCT

Specifications for [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]



- -------------------------------------------------------------------------------------------------
                             
Physical Appearance             [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                                SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

- -------------------------------------------------------------------------------------------------
Identity                        [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                                SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

- -------------------------------------------------------------------------------------------------
Assay                           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                                SEPARATELY WITH THE SECURITIES AND EXCHANGE
                                COMMISSION.***]label claim

- -------------------------------------------------------------------------------------------------
Uniformity of Dosage Units      Meets the requirements of the current USP for Content
                                Uniformity of Compressed Tablets

- -------------------------------------------------------------------------------------------------
Dissolution                     To be determined prior to regulatory submission

- -------------------------------------------------------------------------------------------------
Degradation Products            To be determined prior to regulatory submission

- -------------------------------------------------------------------------------------------------
Tablet Disintegration           Not more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
                                OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                                COMMISSION.***]
- -------------------------------------------------------------------------------------------------


                                      -1-

                                   APPENDIX I

                 ADVERSE EVENT REPORTING PROCEDURES FOR PRODUCTS

1.0      PURPOSE

         The purpose of this agreement is to describe the procedures and define
the responsibilities which Schering and CIMA, will employ to ensure that adverse
event notification and reporting requirements meet current health agency
regulations and guidelines worldwide.

         Schering and CIMA (the "Parties") understand and agree that these
procedures are intended to comply with 21 CFR 310.305(a), 312.32, 314.80(b), and
314.98 concerning standard written procedures for adverse event reporting in the
United States and Laws applicable to Adverse Event (AE) and Adverse Drug
Reaction (ADR) reporting outside the US. References within this document to AEs
also include ADRs as appropriate. These procedures may be amended by the Parties
at any time by mutual written agreement to ensure that they fully and accurately
reflect the procedures in place for surveillance, receipt, evaluation and
reporting of adverse drug experiences by the Pharmacovigilance departments of
the Parties and comply with applicable Laws in the countries in which the
product is marketed and/or is under investigation. In that regard, upon the
written request of either Party, the Parties shall meet to renegotiate in good
faith, all or some of these procedures. Notwithstanding the foregoing, the
procedures set forth in this Attachment shall not be construed as restricting
either Party's ability to take action that it deems to be appropriate or
required of it under applicable Law.

         All defined terms used in this agreement are intended to be interpreted
in a manner consistent with the corresponding definitions in ICH E2A1 and E2C,
and with FDA regulations and guidelines (Appendix 1).

2.0      EXCHANGE OF ADVERSE EVENT INFORMATION

         The language of all exchanges of AE information will be English. Each
party can also elect not to receive documents.

         2.1      Spontaneous Reports - Marketed Product.

- -------------------------
(1) Directive 75/319 EEC chapter Va - Pharmacovigilance and EC valid guidelines
    such as Notice to Marketing Authorization Holders - Pharmacovigilance guide,
    and CPMP/ICH-guidelines - CPMP/ICH/287/95 (E2A), CPMP/ICH/377/95 (E2B)
    CPMP/ICH/288/95 (E2C).

                                      -1-

                  a)    Each party will send the other party for all Serious
         Adverse Events reported to it regardless of source (other than from
         disclosure by or on behalf of the other Party) a completed
         CIOMS/MEDWATCH within eight calendar days after the first person in the
         receiving party (Schering or CIMA) is first made aware of it, or source
         documents within two calendar days after the first person in the
         receiving party (Schering or CIMA) is made aware of it by Fax. This
         applies to initial and all follow-up information.

                  If both parties have the capabilities, by mutual agreement,
         data exchange can be done electronically.

                  b)    Each party will send the other party for all Non-Serious
         Adverse Events regardless of source (other than from disclosure by or
         on behalf of the other Party) a CIOMS/MEDWATCH line listing, by fax or
         courier mail, for all initial and follow-up Non-Serious adverse events
         on a monthly basis. If both parties have the capabilities, by mutual
         agreement, data exchange can be done electronically.

         2.2      Serious Adverse Events (SAEs) from Clinical Studies

                  a)    For Fatal or Life-threatening adverse events reported to
         a party regardless of source (other than from disclosure by or on
         behalf of the other Party) the party will send to the other party a
         completed CIOMS/MEDWATCH within three calendar days after the first
         person in the receiving party (Schering or CIMA) is first made aware of
         it, by fax or source documents within Two calendar days after the first
         person in the receiving party (Schering or CIMA) is first made aware of
         it via Fax. . This applies to initial and all follow-up information.

                  If both parties have the capabilities, by mutual agreement,
         data exchange can be done electronically.

                  b)    Each party will send the other party for all Serious
         Adverse Events reported to it regardless of source (other than from
         disclosure by or on behalf of the other Party) a completed
         CIOMS/MEDWATCH within eight calendar days after the first person in the
         receiving party (Schering or CIMA) is first made aware of it, or source
         documents within two calendar days after the first person in the
         receiving party (Schering or CIMA) is first made aware of it by Fax.
         This applies to initial and all follow-up information.

                                      -2-

                  If both parties have the capabilities, by mutual agreement,
data exchange can be done electronically.

                  c)    Non-serious AE reports from Clinical Studies will not be
         exchanged between the Parties'  Pharmacovigilance departments.

         2.3      Pregnancy Reports. All reports of drug exposure to a pregnancy
(male or female partner using the product) received by either party, including
both, those reports associated with an adverse event and those reports not
associated with an adverse event, will be exchanged. Serious AE's will be
treated as explained in sections 2.1 and 2.2. If a non-serious AE or no adverse
event is involved and the report is simply one of a pregnancy in a patient or
partner on a S-P product the report is to be sent to DSS within 7 calendar days.
The pregnancy will be followed to term by the reporting group and/or DSS to
obtain the outcome of the pregnancy (Pregnancy Register).

         2.4      Animal Studies. A written report for AEs for animal studies
which suggest a potential significant risk for humans shall be forwarded to the
other Party via fax within two working days of receipt by the Party making the
report.

3.0      ASSESSMENT OF ADVERSE EVENTS

         3.1      Spontaneous Reports - Marketed Product. N/A.

         3.2      Serious AEs from Clinical Studies. Causality: Each party
will be responsible for the causality assessment of AEs in their own clinical
studies.

4.0      REPORTING RESPONSIBILITIES

         Each party will send via fax to the other party a copy of all reports
sent to Health Authorities within one day of transmission to the Heath
Authority, except for those already sent to the other party. For example, but
not limited to, PSUR, Periodic reports, etc.

         4.1      Spontaneous Reports-Marketed Product. Each party will have the
responsibility for the reporting of AEs to Health Authorities where they hold
the Marketing Authorization.

         4.2      Product in Clinical Trials. Each party will have the
responsibility for the reporting of AEs to Health Authorities and its
investigators in those territories where they are conducting clinical trials.
Alterations in this

                                      -3-

procedure may be agreed upon by both parties in writing at any time during the
Term of this Agreement.

5.0      QUESTIONS FROM HEALTH AUTHORITIES

         Each Party will be responsible for responding to Health Authorities
where they hold the Marketing Authorization. Each party will immediately (within
2 working days) advise the other Party of any Product safety communication
received from a health authority and consult with the other Party with respect
to any proposed change to product warnings, labeling or an Investigator's
Brochure involving safety issues, including, but not limited to, safety issues
agreed to by the Parties. Each party will send the other party a copy of
correspondence sent to the Health Authority when sent to the Health Authority.

6.0      LITERATURE REVIEW

         Each party will be responsible for reviewing all published/unpublished
articles in the territories where they are the Marketing Authorization holder or
are conducting clinical trials. All adverse events identified in the literature
will be processed as described in Section 2.1 and Section 2.2.

7.0      SIGNALING

         Each Party will signal unexpected adverse events from their databases.
Each party will notify the other in writing of any proposed safety changes in
U.S. and/or core labeling documents for discussion and comment prior to
implementation of the label change.

8.0      AUDIT

         Each Party agrees to maintain accurate and complete records of all
adverse events relating to product(s) and submissions to government authorities
relating thereto (collectively, "Records"). Each party agrees to permit
representatives of the other party to examine and audit the Records, during
normal business hours and at no charge, upon reasonable written notice;
provided, however, that such audit must be reasonable in scope and in
relationship to the adverse events for the product(s). Both parties shall have
the opportunity to participate in any post-audit meeting and receive a copy of
any audit report relating thereto; and provided further that, if either party

                                      -4-

seeks to use the services of a Third Party in such an audit, the Third Party
must be acceptable to both Parties and be willing to comply with reasonable
requirements of the party being audited, such as signing a confidentiality
agreement.

9.0      TERM

         This Agreement will become active as of the latest date signed below
and supersedes all previous agreements for the exchange of AE information. This
Agreement will remain in effect until such time that a new agreement is
negotiated by the parties and approved by the Law Department and DSS. This
agreement will survive the termination of the contract that it is attached to up
until the point that the product is no longer being sold.

10.0     MISCELLANEOUS

         a)     Definitions: Each party accepts the definitions in the Safety
Agreement Appendix  1 for the interchange AE information.

         b)     Contact List: Each party will supply the required information
found in the Safety Agreement Appendix 2 and will notify the other party within
five working days via fax of any changes to this information.

         c)     Amendments to the license contract: Each party will notify the
other party's safety contact of any amendments, extensions, terminations of the
License contract within five working days via Fax.

         d)     Amendments to this safety agreement: Both parties by mutual
agreement may add written amendments to this agreement covering arrangements for
the handling of other safety issues (e.g. labeling, periodic safety update
report preparation, exceptional issues in one or more countries etc.).

                                      -5-

                           SAFETY AGREEMENT APPENDIX 1

                                   DEFINITIONS

A.       MARKETED DRUG

         Refers to a human drug, biological product, or device that is being
commercialized anywhere in the world. This includes products sold "under
license".

B.       ADVERSE EVENT (AE)

         1.     Any undesirable medical occurrence (and for devices, any
malfunction with or without an accompanying untoward medical occurrence), in a
patient or clinical investigation subject administered a pharmaceutical
product/biologic (at any dose), or device. An AE can therefore be any
unfavorable and unintended sign (including an abnormal laboratory finding, for
example), symptom or disease temporally associated with the use of a medicinal
product whether or not considered related to the medicinal product:

         -  occurring in the course of the use of a drug, biological product or
            device
         -  associated with, or observed in conjunction with product overdose,
            whether accidental or intentional,
         -  associated with, or observed in conjunction with product abuse,
            and/or
         -  associated with, or observed in conjunction with product withdrawal.

         2. Any failure of expected pharmacological or biologic therapeutic
action (with the exception of such failure occurring in a clinical trial).

C.       ADVERSE DRUG REACTION (ADR)

         1.     Post-marketing: A response to a drug which is noxious and
unintended and which occurs at doses normally used in man for prophylaxis,
diagnosis, or therapy of disease or for the modification of physiological
functions.

         2.     In the pre-approval clinical experience with a new medicinal
product or its new usages: any response to a medicinal product which is noxious
or unintended, and which occurs at any dose used or tested in humans for
prophylaxis, diagnosis, or therapy of disease, or for the modification of
physiologic function.

                                      -6-

D.       SERIOUS ADVERSE EVENT (SAE) is an event meeting one or both of the
following definitions:

         1.     Definition = FDA Definition Serious. Any adverse drug experience
occurring at any dose that results in any of the following outcomes: Death, a
life-threatening adverse drug experience, inpatient hospitalization or
prolongation of existing hospitalization, a persistent or significant
disability/incapacity, or a congenital anomaly/birth defect. Important medical
events that may not result in death, be life-threatening, or require
hospitalization may be considered serious when, based upon appropriate medical
judgment, they may jeopardize the patient or subject and may require medical or
surgical intervention to prevent one of the outcomes listed in this definition.
Examples of such medical events include allergic bronchospasm requiring
intensive treatment in an emergency room or at home, blood dyscrasias or
convulsions that do not result in inpatient hospitalization, or the development
of drug dependency or drug abuse.

         2.     Serious Adverse Event (experience) or Reaction Definition from
ICH E2A. Any untoward medical occurrence that at any dose:

         -  results in death,
         -  is life-threatening,
         -  requires inpatient hospitalization or prolongation of existing
            hospitalization,
         -  results in persistent or significant disability/incapacity, or is a
            congenital anomaly/birth defect.

E.       NON-SERIOUS ADVERSE EVENT

         Any AE which does not meet the criteria for serious.

F.       UNEXPECTED ADVERSE EVENT (UNLABELED)

         1.     Marketed Product. Any AE, the nature, severity or frequency of
which is inconsistent with the most current SmPC for within the EU; US PI for
within the US; or Local Package Insert for countries outside the EU/US. This
includes reports of adverse events which add significant information on the
specificity of an already known adverse event. Events considered more severe or
specific than those in the SmPC, US PI or Local PI constitute unexpected events.
For example:

                a)   Acute renal failure is labeled, with a report of
         interstitial nephritis (nephritis is not labeled).

                                      -7-

                b)   Hepatitis with new report of fulminant hepatitis (fulminant
         hepatitis is not labeled).

         2.     Product in Clinical Trials.

                a)   Based on the Investigator Brochure (IB)

                b)   Any adverse event, the nature, severity or frequency of
         which is not consistent with information in the most current SmPC
         (Phase IV studies for indications approved in the SmPC) or IB (Phase
         I-III or Phase IV studies for indications not approved in the SmPC), as
         described above.

G.       STUDY DURATION

         Adverse events will be collected for the duration of all studies. Study
completion (closure) is defined as later of:

         -  the last dose of the study medication,
         -  the last visit by the subject or patient or,
         -  the last subject or patient contact (e.g., phone contact) with the
            Investigator or designee as defined in the protocol.

SAEs that occur within 30 days after this closure must be reported. For survival
studies, only deaths (not all serious AE's), that occur after the 30 day period
(study completion for each patient) need be reported.

H.       RELATED OR POSSIBLY OR PROBABLY RELATED TO THE "BIOMEDICAL RESEARCH"

         For the purposes of this agreement, all events attributed to the trial
or study or imposed by it, including drugs (study drugs, placebo, concomitant
drugs given for the study or "no treatment"), investigations performed and the
conditions in which they are carried out. Events which are not related to the
biomedical research are those which are due to the underlying disease being
treated. That is, events are considered possibly or probably related to the
biomedical research if they cannot be clearly attributed to the underlying
disease. Thus, any event in the trial which is due to the study drug, to
placebo, to concomitant medications, to a trial procedure, to a trial
investigation or any other "constraint" imposed by the trial is to be reported
as an adverse event.

I.       INVESTIGATIONAL DRUG, BIOLOGICAL PRODUCT, OR DEVICE

         A drug, biological product or device in clinical trials. This includes
clinical trials being conducted for new indications with marketed products.

                                      -8-

J.       CLINICAL INVESTIGATION/TRIAL/STUDY

         All experiments or systematic studies in which a drug is administered
or dispensed to or used in dosing one or more human subjects.

K.       SIGNALING

         The purpose of signaling is to identify "possible signals" which need
further review and consideration for possible label changes. These events are
generally unexpected (unlabeled). These events may or may not be serious and may
or may not be due to or caused by the drug.

L.       INITIAL RECEIPT DATE

         The day the regulatory clock starts and is the earliest date that an
employee, agent, representative etc. of either party, first becomes aware of the
event.

                                      -9-

SAFETY AGREEMENT APPENDIX 2

CONTACT PEOPLE FOR EXCHANGE OF SAFETY INFORMATION:

Schering Plough or Affiliate

Company Name:



- ----------------------------------------------------------------------------------------------
                   Primary                                  Back-up
- ----------------------------------------------------------------------------------------------
                                                      
NAME               Taiwo Omolodun                           Kathy Rodriguez

- ----------------------------------------------------------------------------------------------
TITLE              Manager, Drug Surveillance               Manager, Training and
                                                            Compliance
- ----------------------------------------------------------------------------------------------
PHONE NUMBER 1     973-921-7415                             973-921-7452

- ----------------------------------------------------------------------------------------------
PHONE NUMBER 2

- ----------------------------------------------------------------------------------------------
FAX NUMBER 1       973-921-7424                             973-921-7425

- ----------------------------------------------------------------------------------------------
FAX NUMBER 2

- ----------------------------------------------------------------------------------------------
E-MAIL 1           Taiwo.Omolodun@spcorp.com                Kathy.Rodriguez@spcorp.com

- ----------------------------------------------------------------------------------------------
E-MAIL 2

- ----------------------------------------------------------------------------------------------
MAILING ADDRESS    Schering Plough Research Institute       Schering Plough Research Institute

- ----------------------------------------------------------------------------------------------
                   50 Lawrence Road                         50 Lawrence Road

- ----------------------------------------------------------------------------------------------
                   Springfield, NJ                          Springfield, NJ

- ----------------------------------------------------------------------------------------------
                   07081-0735                               07081-0735

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


                                      -10-

LICENSE PARTNER OR AFFILIATE

Company Name:



- ------------------------------------------------------------------------------------------------------------------------------
                            Primary                                         Back-up
- ------------------------------------------------------------------------------------------------------------------------------
                                                                      
NAME                        Ken Manning                                     Jackie Torfin

- ------------------------------------------------------------------------------------------------------------------------------
TITLE                       Vice President, Quality                         Director, Quality Systems

- ------------------------------------------------------------------------------------------------------------------------------
PHONE NUMBER 1              952-947-8714                                    952-947-8773

- ------------------------------------------------------------------------------------------------------------------------------
PHONE NUMBER 2              952-947-8707 (after hours at CIMA)              952-947-8707 - after hours at CIMA
                            [***CONFIDENTIAL TREATMENT REQUESTED,           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
                             PORTION OMITTED                                OMITTED FILED SEPARATELY WITH THE SECURITIES AND
                            FILED SEPARATELY WITH THE                       EXCHANGE COMMISSION.***] (emergencies only)
                            SECURITIES AND EXCHANG
                            COMMISSION.***] (emergencies only)

- ------------------------------------------------------------------------------------------------------------------------------
FAX NUMBER 1                952-947-8770                                    952-947-8948

- ------------------------------------------------------------------------------------------------------------------------------
FAX NUMBER 2                                                                952-947-8770

- ------------------------------------------------------------------------------------------------------------------------------
E-MAIL 1                    kenm@cimalabs.com                               Jackiet@cimalabs.com

- ------------------------------------------------------------------------------------------------------------------------------
E-MAIL 2

- ------------------------------------------------------------------------------------------------------------------------------
MAILING ADDRESS             10000 Valley View Road                          10000 Valley View Road
                            Eden Prairie, MN 55344                          Eden Prairie, MN 55344
- ------------------------------------------------------------------------------------------------------------------------------

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

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

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


                                      -11-

                                   APPENDIX J

                               STORAGE CONDITIONS

         A recertification period of [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] has been assigned for [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***]. An assessment for the extension of the [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] recertification period will be made when additional
data become available.

                                      -1-

                                   APPENDIX K

                               EXPENSE GUIDELINES

In accordance with Schering's standard policies and procedures, the following
are types of expenses for which Schering will not reimburse, unless expressly
agreed to in a prior writing by the parties:

- -  Taxi/Sedans/Limousines to and/or from Schering, to and/or from Company's
   place of business (excluding taxis to and/or from airports for
   Schering-requested business)

- -  First-class or business-class air travel

- -  Add-on costs with respect to outside services

- -  Mark-up on the work product of outside professionals, including but not
   limited to freelancers

- -  Lunches and dinners

- -  Administrative and/or overhead percentages

- -  Presentations for new business

- -  Gifts to Schering employees

- -  Entertainment of Schering employees

- -  Mark-up on out-of-pocket expenses

Note: This list sets forth the major items for which Schering will not
      reimburse Company and is meant to be merely illustrative and not
      exhaustive. All Company expenses shall be reviewed with respect to the
      reasonableness of such expenses.

                                      -1-

                                   APPENDIX L

                              KEY SCHERING MARKETS

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***]

                                      -1-

                                   APPENDIX M

                             ARBITRATION PROVISIONS

         (a)    Scope. Subject to and in accordance with the terms of this
Agreement and this Appendix M, all differences, disputes, claims or
controversies arising out of or in any way connected or related to this
Agreement, whether arising before or after the expiration of the term of this
Agreement, and including, without limitation, its negotiation, execution,
delivery, enforceability, performance, breach, discharge, interpretation and
construction, existence, validity and any damages resulting therefrom or the
rights, privileges, duties and obligations of the parties under or in relation
to this Agreement (including any dispute as to whether an issue is arbitrable)
shall be referred to binding arbitration in accordance with the rules set forth
herein and of the American Arbitration Association, as in effect at the time of
the arbitration. The time frames set forth herein shall control the timing of
the arbitration procedure.

         (b)    Parties to Arbitration. For the purposes of each arbitration
under this Agreement, Schering shall constitute one party to the arbitration and
CIMA shall constitute the other party to the arbitration.

         (c)    Notice of Arbitration. A party requesting arbitration hereunder
(the "Requesting Party") shall give a notice of arbitration to the other party
(the "Non-requesting Party") containing a concise description of the matter
submitted for arbitration (a "Notice of Arbitration"). Notice of Arbitration
shall be delivered to the other party in accordance with Section 16.7 of the
Agreement.

         (d)    Response. The Non-requesting Party must respond in writing
within thirty (30) days of receiving a Notice of Arbitration with an
explanation, including references to the relevant provisions of the Agreement.
The Non-requesting Party may add additional issues to be resolved.

         (e)    Meeting. Within fifteen (15) days of receipt of the response
from the Non-requesting Party pursuant to Paragraph (d), the parties shall meet
and discuss in good faith options for resolving the dispute. The Requesting
Party must initiate the scheduling of this resolution meeting. Each party shall
make available appropriate personnel to meet and confer with the other party
during such fifteen (15) day period.

         (f)    Selection of Arbitrator. Any and all disputes that cannot be
resolved pursuant to Paragraphs (c), (d) and (e) shall be submitted to an
arbitrator (the "Arbitrator") to be selected by mutual agreement of the parties.
The Arbitrator shall be a retired judge of a state or federal court, to be
chosen

                                      -1-

from a list of such retired judges to be prepared jointly by the parties within
fifteen days following the response, with each party entitled to submit the
names of three such retired judges for inclusion in the list, provided that to
the extent the dispute involves issues of patent law the parties shall limit
such list to judges from federal courts having jurisdiction over patent law
issues. Upon completion of the list, the parties shall decide within ten (10)
days thereafter which of the retired judges will be selected as the Arbitrator.
No Arbitrator appointed or selected hereunder shall be an employee, director or
shareholder of, or otherwise have any current or previous relationship with, any
party or its respective Affiliates. If the parties fail to agree on the
selection of the Arbitrator within the allotted time frame, the Arbitrator shall
be designated by the then President of the American Arbitration Association.

         (g)    Powers of Arbitrator. The Arbitrator may determine all questions
of law and jurisdiction (including questions as to whether a dispute is
arbitrable) and all matters of procedure relating to the arbitration, except
that the Arbitrator shall be bound by the time frames set forth herein in
connection with such arbitration. The Arbitrator shall have the right to grant
legal and equitable relief (including injunctive relief and to award costs
(including reasonable legal fees and costs of arbitration) and interest. Nothing
contained herein shall be construed to permit the Arbitrator to award punitive,
exemplary or any similar damages.

         (h)    Arbitration Procedure. The arbitration shall take place in the
City of Chicago, Illinois at such place and time, consistent with the time
frames set forth herein, as the Arbitrator may fix for the purpose of hearing
the evidence and representations that the parties may present. The law
applicable to the arbitration shall be the law of the State of New Jersey. No
later than twenty (20) business days after hearing the representations and
evidence of the parties, the Arbitrator shall make its determination in writing
and deliver one copy to each of the parties.

         (i)    Discovery and Hearing. During the meeting referred to in
Paragraph (e), the parties shall negotiate in good faith the scope and schedule
of discovery, relating to depositions, document production and other discovery
devices, taking into account the nature of the dispute submitted for resolution.
If the parties are unable to reach agreement as to the scope and schedule of
discovery, the Arbitrator may order such discovery as it deems necessary. The
parties and the Arbitrator must adhere to the following schedule: (1) all
discovery shall be completed within sixty (60) days from the date of the
selection of the Arbitrator, and (2) the arbitration hearing shall commence no
earlier than twenty (20) business days and no later than thirty (30) business
days after completion of such discovery. At the arbitration hearing, the parties
may present testimony (either live witness or deposition), subject to
cross-examination, and documentary evidence. To the extent practicable taking
into account the nature of the dispute submitted for resolution and the
availability

                                      -2-

of the Arbitrator, the hearing shall be conducted over a period not to exceed
thirty (30) consecutive business days, with each party entitled to approximately
half of the allotted time.

         (j)    Witness Lists. At least fifteen (15) business days prior to the
date set for the hearing, each party shall submit to each other party and the
Arbitrator a list of all documents on which such party intends to rely in any
oral or written presentation to the Arbitrator and a list of all witnesses, if
any, such party intends to call at such hearing and a brief summary of each
witness' testimony. Each party shall be given the opportunity to depose any such
designated witnesses not already deposed during the discovery phase. At least
five (5) business days prior to the hearing, each party must submit to the
Arbitrator and serve on each other party a proposed findings of fact and
conclusions of law on each issue to be resolved. Following the close of
hearings, the parties shall each submit such post-hearing briefs to the
Arbitrator addressing the evidence and issues to be resolved as may be required
or permitted by the Arbitrator.

         (k)    Confidentiality. The arbitration proceedings shall be
confidential and, except as required by Law, no party shall make, or instruct
the Arbitrator to make, any public announcement with respect to the proceedings
or decision of the Arbitrator without the prior written consent of the other
party. The existence of any dispute submitted to arbitration and the award of
the Arbitrator shall be kept in confidence by the parties and the Arbitrator,
except as required in connection with the enforcement of such award or as
otherwise required by Law.

         (l)    Awards and Appeal. Subject to the provisions of this Appendix M,
the decision of the Arbitrator shall be final and binding upon the parties in
respect of all matters relating to the arbitration, the conduct of the parties
during the proceedings, and the final determination of the issues in the
arbitration. There shall be no appeal from the final determination of the
Arbitrator to any court, except in the case of fraud or bad faith on the part of
the Arbitrator or any party to the arbitration proceeding in connection with the
conduct of such proceedings. Judgment upon any award rendered by the Arbitrator
may be entered in any court having jurisdiction thereof.

         (m)    Costs of Arbitration. The costs of any arbitration hereunder
shall be borne by the parties in the manner specified by the Arbitrator in its
determination.

         (n)    Performance of the Agreement. During the pendency of the
arbitration proceedings, the parties shall continue to fully perform their
respective obligations under the Agreement. Any aspects of such performance
which encompass the matter which is the subject of such arbitration proceedings
shall be performed by the parties in accordance with Schering's

                                      -3-

position with respect to such matter. For purposes of this Paragraph (n) the
term "pendency of the arbitration proceeding" shall mean the period starting on
the date on which arbitration proceedings are commenced by a party in accordance
with Paragraph (c) of this Appendix M and ending on the date on which the
Arbitrator delivers its final determination in writing to the parties.

                                      -4-

EX-10.2

                                                                   EXHIBIT 10.2

                        DEVELOPMENT AND LICENSE AGREEMENT

                                     BETWEEN

                                 CIMA LABS INC.

                                       AND

                                      WYETH

                               ACTING THROUGH ITS

                       WYETH CONSUMER HEALTHCARE DIVISION

                                       FOR

              NON-PRESCRIPTION RAPID DISSOLVING LORATADINE TABLETS

                                TABLE OF CONTENTS

                                                                             
ARTICLE I  DEFINITIONS........................................................   1

ARTICLE II  GRANT OF RIGHTS; EXCLUSIVITY......................................   5

ARTICLE III  DEVELOPMENT ACTIVITIES...........................................   6

ARTICLE IV  DILIGENCE OBLIGATIONS.............................................   7

ARTICLE V  ROYALTY PAYMENTS TO CIMA...........................................   8

ARTICLE VI  REPRESENTATIONS AND WARRANTIES....................................   9

ARTICLE VII  INDEMNIFICATION..................................................  11

ARTICLE VIII  CONFIDENTIALITY.................................................  12

ARTICLE IX  TECHNOLOGY AND DATA OWNERSHIP RIGHTS; INFRINGEMENT................  14

ARTICLE X  TERM AND TERMINATION...............................................  17

ARTICLE XI  EFFECT OF EXPIRATION AND TERMINATION..............................  18

ARTICLE XII  TRADEMARKS.......................................................  19

ARTICLE XIII  PRESS RELEASES AND PUBLICATIONS.................................  20

ARTICLE XIV  MISCELLANEOUS....................................................  21

EXHIBIT A - CIMA PATENTS

EXHIBIT B - ADVERSE EXPERIENCE REPORTING PROCEDURES



                                      -i-

                        DEVELOPMENT AND LICENSE AGREEMENT

         THIS AGREEMENT dated the 18th day of June 2002 between CIMA LABS INC.,
a corporation organized and existing under the laws of the State of Delaware
with offices located at 10000 Valley View Road, Eden Prairie, Minnesota 55344
(hereafter, together with its Affiliates, referred to as "CIMA"), and WYETH
(formerly known as American Home Products Corporation), acting through its Wyeth
Consumer Healthcare Division, a corporation organized and existing under the
laws of the State of Delaware with offices located at Five Giralda Farms,
Madison, New Jersey 07940 ("WCH").

                               W I T N E S S E T H

         WHEREAS, CIMA and Wyeth, acting through its ESI Lederle Division
("ESI"), entered into a Development and License Agreement, dated January 14,
2000 (the "Original Development and License Agreement"); and

         WHEREAS, CIMA and WCH wish to amend the Original Development and
License Agreement to remove the OTC Field (as defined herein) and to enter into
this Development and License Agreement which relates only to the OTC Field, all
on the terms and subject to the conditions set forth herein.

         NOW, THEREFORE, in consideration of the representations, warranties and
covenants set forth herein, the parties hereto agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1      "ACTIVE INGREDIENT" means ethyl 4-(8-chloro-5,
6-dihydro-11H-benzo [5,6] cyclohepta [1,2-b] pyridin-11-ylid-ene)-1
piperidinecarboxylate, known as loratadine.

         1.2      "ADVERSE EXPERIENCE" means the definition in the current 21
CFR Sections 312.32 and 314.80, as in effect from time to time.

         1.3      "AFFILIATE" means (i) any Person which at the time of
determination is directly or indirectly controlled by any party hereto; (ii) any
Person which at the time of determination directly or indirectly controls any
party hereto; or (iii) any Person which is under the direct or indirect control
of any such Person as described in subparagraphs (i) or (ii). "Control" in this
Section means ownership of greater than fifty percent (50%) of the voting stock
or other voting interests in the Person in question.

         1.4      "AGENCY" means any governmental regulatory authority
responsible for granting approvals, including Regulatory Approvals and/or
Pricing Approvals, for the sale of the Product in the OTC Field in a country in
the Territory.

         1.5      "ANDA" means an Abbreviated New Drug Application, as defined
in the United States Federal Food, Drug and Cosmetic Act, as amended, and
applicable FDA rules and regulations.

         1.6      "CIMA PATENTS" shall mean those Patents and Patent
applications owned or Controlled by CIMA during the Term of this Agreement that
claim the Product, its manufacture or method of use, the DuraSolv(TM) technology
or the OraSolv(R) technology, including the Patents and Patent applications
which are set forth on Exhibit A hereto.

         1.7      "COMMERCIALLY REASONABLE EFFORTS" means efforts and resources
normally used by a party for a compound or product owned by it or to which it
has rights, which is of similar market potential at a similar stage in its
product life, taking into account the competitiveness of the marketplace, the
proprietary position of the compound or product, the regulatory structure
involved, the profitability of the applicable products, and other relevant
factors. It is anticipated that the level of effort and resources may change at
different times during the product life cycle of a compound or product.

         1.8      "COMPETING PRODUCT" means a rapid dissolving solid dosage form
product containing 10 mg of Active Ingredient as the only active ingredient
(other than the Product) that competes with the Product in the OTC Field in the
Territory.

         1.9      "CONTROL" or "CONTROLLED" in the context of intellectual
property rights means rights to intellectual property sufficient to allow a
grant of rights to a party.

         1.10     "EFFECTIVE DATE" means January 14, 2000.

         1.11     "FDA" means the United States Food and Drug Administration, or
any successor thereto.

         1.12     "FTO STATUS" means that (i) final Regulatory Approval (which
includes without limitation WCH's consumer labeling and packaging) and, if
applicable, Pricing Approval to market the Product have been obtained, (ii) all
legal claims, actions, proceedings and appeals with respect to the Product have
been finally resolved in WCH's and in CIMA'S favor, and (iii) all relevant
patents have expired, been declared invalid or determined by WCH not to be
infringed by the Product.

         1.13     "GOOD CLINICAL PRACTICE" or "GCP" means the then current
standards for clinical trials for pharmaceuticals, as set forth in the United
States Federal Food, Drug and Cosmetic Act and applicable regulations
promulgated thereunder, as amended from time to time, and such standards of good
clinical practice as are required by the European Union and other organizations
and governmental agencies in countries in which Product is intended to be sold,
to the extent such standards are not inconsistent with United States GCP.

         1.14     "GOOD LABORATORY PRACTICE" or "GLP" means the then current
standards for laboratory activities for pharmaceuticals, as set forth in the
United States Federal Food, Drug and Cosmetic Act and applicable regulations
promulgated thereunder, as amended from time to time,

                                      -2-

and such standards of good laboratory practice as are required by the European
Union and other organizations and governmental agencies in countries in which
Product is intended to be sold, to the extent such standards are not
inconsistent with United States GLP.

         1.15     "GOOD MANUFACTURING PRACTICE" or "GMP" means the then current
standards for the manufacture of pharmaceuticals, as set forth in the United
States Federal Food, Drug and Cosmetic Act and applicable regulations
promulgated thereunder, as amended from time to time, and such standards of good
manufacturing practices as are required by the European Union and other
organizations and governmental agencies in countries in which Product is
intended to be sold, to the extent such standards are not inconsistent with
United States GMP.

         1.16     "JOINT PATENT RIGHTS" has the meaning set forth in Section
9.1(b).

         1.17     "LAUNCH DATE" means the date of first commercial shipment of
the Product in the OTC Field by WCH or its Affiliates or their respective
subdistributors to Third Parties in a country in the Territory.

         1.18     "MARKET" means each country (i.e., United States, United
Kingdom, France, etc.) within the Territory that requires Regulatory Approval
for the sale of Product within that country.

         1.19     "NDA" means a New Drug Application, as defined in the United
States Federal Food, Drug and Cosmetic Act, as amended, and applicable FDA rules
and regulations.

         1.20     "NET SALES" means the gross invoice price for Product sold by
WCH or its Affiliates or sublicensees or subcontractors to a Third Party
customer less the reasonable and customary accrual-basis deductions from such
gross amounts for: (i) normal and customary trade, cash and other discounts,
allowances and credits actually allowed and taken directly with respect to sales
of Product; (ii) credits or allowances actually granted for damaged goods,
returns or rejections of Product; (iii) sales or similar taxes (including duties
or other governmental charges levied on, absorbed or otherwise imposed directly
on the sales of Product, including, without limitation, value added taxes or
other governmental charges otherwise measured by the billing amount) which are
included in billing amount, and excluding any taxes imposed on or measured by
the net income or profits of the selling party; (iv) uncollectable accounts; (v)
charge back payments and rebates granted to managed health care organizations or
to federal, state and local governments, their agencies and purchasers and
reimbursers or to trade customers, including but not limited to, wholesalers and
chain and pharmacy buying groups; and (vi) rebates (or equivalents thereof) that
are granted to or charged by national, state, provincial or local governmental
authorities in countries other than the United States. Such amounts shall be
determined from the books and records of WCH, its Affiliates and their
respective sublicensees and subdistributors maintained in accordance with U.S.
generally accepted accounting principles consistently applied, and such amounts
shall be calculated using the same accounting principles used for other WCH
products. Sales between or among WCH, its Affiliates and its sublicensees and
subdistributors shall be excluded from the computation of Net Sales if such
Affiliates or sublicensees and subdistributors are not end-users, but Net Sales
shall include the subsequent final sales to Third Parties by any such Affiliates
or sublicensees or subdistributors. Where (i)

                                      -3-

Product is sold by WCH, its Affiliates or its sublicensees and subdistributors
other than in an arms-length sale or as one of a number of items without a
separate invoiced price; or (ii) consideration for Product shall include any
non-cash element, the Net Sales applicable to any such transaction shall be
deemed to be WCH's average Net Sales for the applicable quantity of the Product
at that time.

         1.21     "OTC FIELD" means the area of non-prescription (i.e., not
requiring, by law or regulation, a prescription from a medical doctor) and/or
over-the-counter sales for all human pharmaceutical uses.

         1.22     "PATENTS" means all patents and patent applications, and all
additions, divisions, continuations, continuations in-part, pipeline protection,
substitutions, reissues, reexamination certificates, extensions, registrations,
patent term extensions, supplementary protection certificates and renewals of
any of the above.

         1.23     "PERSON" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency thereof.

         1.24     "PRICING APPROVAL" means any approval for price or
reimbursement as may be necessary or appropriate as a prerequisite for marketing
the Product in the OTC Field in a particular country of the Territory.

         1.25     "PRODUCT" means rapid dissolving tablets containing 10
milligrams Active Ingredient meeting the Specifications. The Product shall be
pharmaceutically equivalent and bioequivalent to CLARITIN(R) REDITABS containing
10 milligrams Active Ingredient.

         1.26     "REGULATORY APPROVAL" means the product license or marketing
approval necessary as a prerequisite for marketing the Product in the OTC Field
in a particular country in the Territory.

         1.27     "REGULATORY DOCUMENTS" means all regulatory submissions,
Regulatory Approvals and Pricing Approvals.

         1.28     "SPECIFICATIONS" means the specifications for the Product as
set forth in ANDA 75-822 and NDA 21-375, as may be amended from time to time by
the parties in the course of Product development and in accordance with the
regulatory submissions and/or Regulatory Approvals, or as otherwise required by
any Agency.

         1.29     "SUPPLY AGREEMENT" means the Supply Agreement for the
exclusive supply of Product by CIMA to WCH for the OTC Field between the parties
signed contemporaneously with this Agreement.

         1.30     "TECHNICAL INFORMATION" means (a) techniques and data,
including ideas, inventions (including patentable inventions), practices,
methods, knowledge, know-how, trade secrets, skill, experience, documents,
apparatus, clinical and regulatory strategies, test data,

                                      -4-

including pharmacological, toxicological and clinical test data, analytical and
quality control data, manufacturing, patent data or descriptions relating to
Product, and (b) chemical formulations, compositions of matter, product samples
and assays relating to Product.

         1.31     "TERM" has the meaning set forth in Section 10.1.

         1.32     "TERRITORY" means the world.

         1.33     "THIRD PARTY" means any Person other than a party to this
Agreement or an Affiliate of a party to this Agreement.

         1.34     "$" means United States dollars.

                                   ARTICLE II
                          GRANT OF RIGHTS; EXCLUSIVITY

         2.1      GRANT OF RIGHTS. During the Term of this Agreement and
thereafter as provided in Section 11.3(b), CIMA hereby grants to WCH, an
exclusive license under the CIMA Patents and Technical Information, and CIMA's
interest in Joint Patent Rights, to market, promote, use, distribute, sell, have
sold and to import and export Product for the OTC Field within the Territory,
provided that CIMA grants only a non-exclusive license under U.S. Patent No.
5,225,197 and corresponding patents throughout the world. In addition to the
foregoing, WCH shall have an exclusive license under the CIMA Patents and
Technical Information, and CIMA's interest in the Joint Patent Rights, to make
(and to have made) Product for the OTC Field in the Territory subject to, and in
accordance with, the provisions of Section 11.3(b) and the applicable provisions
of the Supply Agreement.

         2.2      SUBLICENSE RIGHTS. The rights granted to WCH hereunder include
the right to sublicense all or part of such rights to WCH Affiliates and/or
Third Parties in all or part of the Territory; provided that (a) the terms and
conditions of such grant of sublicense rights (i) are consistent with and do not
violate the terms and conditions of this Agreement, and (ii) provide WCH with
the right and obligation to enforce such terms and conditions; (b) WCH remains
primarily liable and responsible for the performance of any such Affiliates and
Third Parties according to the terms of this Agreement; and (c) if WCH grants a
sublicense to a Third Party, then WCH shall promptly notify CIMA of the identity
of the Third Party; provided, however, that any sublicense of the rights
contained in Section 2.9 of the Supply Agreement shall be subject to the prior
written consent of CIMA, such consent not to be unreasonably withheld or
delayed.

         2.3      EXCLUSIVITY. During the Term of this Agreement, with respect
to countries not subject to European Union ("EU") competition law, neither party
shall manufacture, license, distribute or sell any Competing Product for the OTC
Field in the Territory. With respect to countries of the Territory subject to EU
competition law, during the Term of this Agreement, neither party shall
manufacture or distribute any Competing Product for the OTC Field in the
Territory. Notwithstanding anything contained in this Section 2.3, nothing
contained herein shall prevent WCH or any Affiliate of WCH from acquiring an
interest in a business (the "Acquired Business") which is developing, has
developed or is selling any Competing Product for the OTC

                                      -5-

Field in the Territory (the "Competing Operations") where the annual revenues of
the Competing Operations do not exceed twenty percent (20%) of the aggregate
annual revenues of the Acquired Business.

         2.4      RIGHT OF FIRST REFUSAL. If during the Term CIMA determines to
develop any other product containing Active Ingredient, CIMA shall notify WCH,
in writing. WCH may elect, by written notice provided to CIMA within sixty (60)
days after receipt of CIMA's notice, to negotiate an agreement with CIMA under
which WCH would obtain exclusive rights to such product for the OTC Field. In
the event WCH elects to negotiate such an agreement, the parties shall use their
Commercially Reasonable Efforts to negotiate, in good faith, such an agreement
within ninety (90) days (or such longer period of time as the parties may
mutually agree upon in writing) after WCH has provided CIMA with such written
notice. If the parties have not signed a definitive agreement prior to the end
of such ninety (90) day period (or such longer period of time as the parties may
mutually agree upon in writing), CIMA shall be free to enter into an agreement
with any third party with respect to such product.

                                   ARTICLE III
                             DEVELOPMENT ACTIVITIES

         3.1      DEVELOPMENT AND REGISTRATION RESPONSIBILITIES FOR THE PRODUCT.
Each party shall comply with all applicable GLP, GCP and GMP in the conduct of
the development of the Product. CIMA shall (a) be responsible for conducting the
ongoing development work for Product; (b) design and conduct all dosage form,
formulation, process, and chemistry manufacturing and control ("CMC") and
related technical studies on Product, including preparation of dosage form CMC
regulatory documents; and (c) conduct scale-up activities for the manufacture
and registration of Product in the United States. WCH shall be responsible for
and shall file, own and maintain all submissions for Regulatory Approval and
Regulatory Approvals of Product for the OTC Field in the United States. CIMA
shall be responsible for providing the CMC and related technical components of
such submissions for registration within the United States, as jointly
determined by the parties, and WCH shall be responsible for formatting such
documentation for, and submitting such documentation to, the appropriate
Agencies in the United States. The applications for Regulatory Approval shall be
filed with CIMA as approved manufacturer. The parties shall cooperate with, and
assist, each other in connection with their activities hereunder including
addressing regulatory questions, and preparing updates and supplements to
regulatory filings for Product for the OTC Field in the United States. WCH,
however, shall be responsible for all communications with the FDA and
post-Regulatory Approval regulatory requirements for Product for the OTC Field
in the United States, including pharmacovigilance and Adverse Drug Experience
reporting, unless otherwise agreed in advance in writing by the parties.

         3.2      FUNDING OF PRODUCT DEVELOPMENT. WCH shall pay to CIMA, within
thirty (30) days of receipt of CIMA's invoice, development costs on successful
completion of the development activities for the Product agreed to be performed
by the parties and in amounts not to exceed the budgeted amounts agreed to by
the parties therefor. It is understood that any development activities for which
CIMA has been reimbursed by WCH and/or ESI prior to June 18, 2002 shall not be
subsequently invoiced to WCH hereunder.

                                      -6-

         3.3      APPROVAL SUPPORT FOR TERRITORIES OUTSIDE THE UNITED STATES.
CIMA shall produce stability batches and validation batches of the Product,
engage in various development activities and perform various tests as reasonably
necessary to support WCH's registrations outside the United States, including
without limitation being prepared for the pre-approval inspections by
appropriate regulatory authorities and performing the other activities in
support of such registrations. WCH shall compensate CIMA for such activities
based on CIMA's usual and customary charge for such activities.

                                   ARTICLE IV
                              DILIGENCE OBLIGATIONS

         4.1      PERFORMANCE OBLIGATIONS. WCH shall, subject to supply by CIMA
of launch quantities of Product, use Commercially Reasonable Efforts to launch
Product in the United States in the OTC Field within three (3) months following
the Product having FTO Status for the OTC Field in the United States. If CIMA
believes that the Product should be launched outside of the United States, CIMA
agrees to give written notice to WCH of the Market in the OTC Field where CIMA
desires to have the Product launched and WCH will advise CIMA within ninety (90)
days after receipt of such notice whether it desires to launch the Product in
the Market. If WCH gives CIMA notice that it desires to launch a Product in the
OTC Field in a Market, WCH shall, subject to supply by CIMA of launch quantities
of Product, use Commercially Reasonable Efforts to launch Product in such Market
in the OTC Field within five (5) months following the Product having FTO Status
for the OTC Field in such Market. In the event WCH gives CIMA notice that it
does not desire to launch the Product in a Market or fails to launch Product in
the OTC Field in a Market as required by this Section 4.1, CIMA shall have, as
its sole and exclusive remedy, the right upon written notice to WCH to convert
the exclusive licenses granted hereunder with respect to CIMA Patents and
Technical Information in such Market to non-exclusive unless within thirty (30)
days after such written notice WCH launches Product in the OTC Field in such
Market.

         4.2      RECORD KEEPING. Each party shall record, to the extent
practical and customary in the industry, all Technical Information relating to
the Product development in written form, which writing shall be signed, dated
and witnessed, consistent with standard practices of each party. All such
written records of the parties shall be maintained in a form sufficient to
satisfy Regulatory Agencies.

         4.3      ADVERSE DRUG EXPERIENCES. To the extent either party receives
any information regarding Adverse Drug Experiences related to the use of the
Product, such party shall promptly provide the other party with such information
in accordance with the Adverse Event Reporting Procedures set forth in Exhibit B
hereto (as may be amended from time to time upon written agreement of the
parties).

                                      -7-

                                    ARTICLE V
                            ROYALTY PAYMENTS TO CIMA

         5.1      ROYALTIES PAYABLE BY WCH.

                  (a)      Following the Launch Date of Product in the OTC Field
in any country in the Territory, WCH shall pay to CIMA, on a quarterly basis, a
royalty of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] on Net Sales of the
Product in the OTC Field during the previous quarter.

                  (b)      WCH shall either (i) pay to CIMA quarterly royalties
on Net Sales of Product sold by any Third Party sublicensee, or (ii) provide in
such sublicense that such sublicensee shall pay to WCH quarterly royalties on
Net Sales of Product sold by such sublicensee, in either case at the royalty
rate set forth in Section 5.1(a), and provided that in either case, WCH shall
remain liable for the timely payment of all such quarterly royalties.

         5.2      ROYALTY REPORTS. During the Term of this Agreement following
the Launch Date of Product in any country, WCH shall, within forty-five (45)
days after each calendar quarter for sales of Product in the OTC Field in the
United States and within sixty (60) days after each calendar quarter for sales
of Product in the OTC Field outside the United States, furnish to CIMA a written
quarterly report showing (i) the gross sales of Product in the OTC Field sold by
WCH and its Affiliates and sublicensees during the reporting period and the
calculation of Net Sales from such gross sales; (ii) the royalties and other
payments which shall have accrued hereunder in respect of such sales; (iii)
withholding taxes, if any, required by law to be deducted in respect of such
royalty payments; (iv) the Launch Date(s) of Product in the OTC Field in any
country(ies) during the reporting period; and (v) the exchange rates used in
determining the amount of payment hereunder. Payments accrued in such quarter
shall be paid to CIMA no later than the respective time periods for the United
States (45 days) and other countries (60 days) for submission of royalty reports
after each calendar quarter for sales of Product in a country. In addition, WCH
shall provide CIMA with a non-binding estimate of its annual Net Sales of
Product by quarter ninety (90) days prior to the Launch Date of Product in the
OTC Field. Thereafter, prior to September 30th in any year following the Launch
of Product, WCH shall provide CIMA with non-binding estimates of its annual Net
Sales of Product by quarter for the following year.

         5.3      INSPECTION OF RECORDS. The parties shall maintain at their
offices, accurate and complete books and records consistent with sound business
and accounting practices and in such form and in such detail as to enable the
amount of payments payable under this Agreement by the respective party to be
determined. WCH and CIMA shall permit an independent certified accountant
(subject to obligations of confidentiality) appointed by the other party and
reasonably acceptable to WCH or CIMA (as applicable), at the other party's
expense, to examine such books and records at all reasonable times for the sole
purpose of (i) verifying WCH's or CIMA's (as applicable) reports and accounting
submitted to the other party hereunder and (ii) determining the correctness of
payments. In the event of any underpayment of any payment by at least five
percent (5%), the costs of such inspection shall be borne by the party who made
such

                                      -8-

underpayment and such underpayment shall be forthwith paid by such party to the
other party with a penalty at the rate specified in Section 5.5 from the date
such payment was originally due until payment.

         5.4      PAYMENTS. Each party shall make all payments due to the other
party hereunder in $ by wire transfer in immediately available funds to an
account designated by the payee party.

         5.5      LATE PAYMENTS. The parties shall pay a penalty on unpaid
amounts overdue by more than thirty (30) calendar days at a rate equal to one
and one-half percent (1.5%) per month for each month a payment is past due. Such
penalty shall not exceed eighteen percent (18%) per year.

         5.6      EXCHANGE RATES. All royalty payments to be made pursuant to
this Agreement shall be made in $. Amounts based on Net Sales in currencies
other than $ shall be converted to $ at the WCH financial statement exchange
rate applied by WCH on a consistent basis in WCH's own financial accounting on
the date such payment is due, in accordance with U.S. generally accepted
accounting principles, consistently applied.

         5.7      WITHHOLDINGS. Any and all income or similar taxes imposed or
levied on account of the receipt of payments under this Agreement which are
required to be withheld shall be paid by WCH on behalf of CIMA and shall be paid
to the proper taxing authority. Proof of payment shall be secured, if available,
and sent to CIMA by WCH as evidence of such payment in such form as required by
the tax authorities having jurisdiction over WCH. Such taxes shall be deducted
from the payments that would otherwise be remittable by WCH. WCH shall take
reasonable measures including providing evidence of payment to assist CIMA in
obtaining credit for such taxes against CIMA's United States tax liabilities.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

         6.1      REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each of CIMA and
WCH hereby represents and warrants to the other party hereto as follows:

                  (a)      it is a corporation or entity duly organized and
                           validly existing under the laws of the state or other
                           jurisdiction of incorporation or formation;

                  (b)      the execution, delivery and performance of this
                           Agreement by such party has been duly authorized by
                           all requisite corporate action and does not require
                           any shareholder action or approval;

                  (c)      it has the power and authority to execute and deliver
                           this Agreement and to perform its obligations
                           hereunder; and

                  (d)      the execution, delivery and performance by such party
                           of this Agreement and its compliance with the terms
                           and provisions hereof does not and will not conflict
                           with or result in a breach of any of the terms and
                           provisions of

                                      -9-

                           or constitute a default under (i) a loan agreement,
                           guaranty, financing agreement, agreement affecting a
                           product or other agreement or instrument binding or
                           affecting it or its property; (ii) the provisions of
                           its charter or operative documents or bylaws; or
                           (iii) any order, writ, injunction or decree of any
                           court or governmental authority entered against it or
                           by which any of its property is bound.

         6.2      REPRESENTATIONS AND WARRANTIES OF CIMA. In addition to the
representations and warranties made by CIMA under Section 6.1 above, CIMA hereby
further represents and warrants to WCH that:

                  (a)      as of the Effective Date, the CIMA Patents are
                           existing and, to the best of its knowledge, are not
                           invalid or unenforceable, in whole or in part;

                  (b)      it has the full right, power and authority to grant
                           all of the right, title and interest in the licenses
                           granted under Article II hereof;

                  (c)      it has not, prior to the Effective Date, previously
                           assigned, transferred, conveyed or otherwise
                           encumbered its right, title and interest in Product,
                           or the CIMA Patents, or Technical Information, with
                           respect to which WCH has been granted a license or
                           other rights hereunder in the OTC Field in the
                           Territory, provided that CIMA has granted, and may in
                           the future grant, licenses to Third Parties under
                           such CIMA Patents and Technical Information which
                           licenses do not conflict with the rights granted to
                           WCH under this Agreement;

                  (d)      it is the sole and exclusive owner of the CIMA
                           Patents and Technical Information existing as of the
                           Effective Date, all of which are free and clear of
                           any liens, charges and encumbrances, except as
                           provided in Section 6.2(c), and no other person,
                           corporate or other private entity, or governmental
                           entity or subdivision thereof, has or shall have any
                           claim of ownership with respect to the CIMA Patents
                           or Technical Information in the Territory, provided
                           that CIMA has only a non-exclusive license under U.S.
                           Patent No. 5,225,197 and its corresponding foreign
                           counterparts;

                  (e)      to the best of its knowledge the CIMA Patents and
                           Technical Information do not, as of the Effective
                           Date, interfere or infringe on any valid intellectual
                           property rights owned or possessed by any Third Party
                           in the Territory, provided that whereas WCH is aware
                           of the possibility of interference between one or
                           more of the CIMA Patents and United States Patent
                           5,464,632 (the "632 Patent"), and WCH is aware of
                           patents corresponding to said 632 Patent in other
                           jurisdictions, no such representation is made with
                           respect to said 632 Patent or with respect to any
                           corresponding patent;

                                      -10-

                  (f)      as of the Effective Date, there are no claims,
                           judgments or settlements against or owed by CIMA or,
                           to the best of its knowledge, pending or threatened
                           claims or litigation relating to the CIMA Patents or
                           Technical Information;

                  (g)      during the Term of this Agreement it will use
                           Commercially Reasonable Efforts not to diminish the
                           rights under the CIMA Patents and Technical
                           Information licensed to WCH hereunder by not
                           committing or permitting any actions or omissions
                           which would cause the breach of any agreements
                           between itself and Third Parties which provide for
                           intellectual property rights applicable to the
                           development, manufacture, use or sale of Product,
                           that it will provide WCH promptly with notice of any
                           such alleged breach, and that as of the Effective
                           Date, it is in compliance in all material respects
                           with any agreements with Third Parties relating to
                           the CIMA Patents and Technical Information.

         6.3      REPRESENTATION BY LEGAL COUNSEL. Each party hereto represents
that it has been represented by legal counsel in connection with this Agreement
and acknowledges that it has participated in the drafting hereof. In
interpreting and applying the terms and provisions of this Agreement, the
parties agree that no presumption shall exist or be implied against the party
which drafted such terms and provisions.

                                   ARTICLE VII
                                 INDEMNIFICATION

         7.1      INDEMNIFICATION BY WCH. Except as provided in Section 9.3, WCH
shall indemnify, defend and hold harmless CIMA and its Affiliates, and each of
its and their respective employees, officers, directors and agents (each a "CIMA
Indemnified Party") from and against any and all liability, loss, damage, cost
and expense (including reasonable attorney's fees) (collectively, a "Liability")
which the CIMA Indemnified Party may incur, suffer or be required to pay
resulting from or arising in connection with (i) the breach by WCH of any
representation, warranty or covenant contained in this Agreement, or (ii) the
manufacture, promotion, distribution, use, testing, marketing, sale or other
disposition of Product by WCH, its Affiliates or sublicensees. Notwithstanding
the foregoing, WCH shall have no obligation under this Agreement to indemnify,
defend or hold harmless any CIMA Indemnified Party with respect to claims,
demands, costs or judgments which result from either (x) the failure of Product
supplied by CIMA or its Affiliates to comply with the Specifications or the
applicable Regulatory Approvals or (y) the willful misconduct or negligent acts
or omissions of CIMA, its Affiliates, or any of their respective employees,
officers, directors or agents.

         7.2      INDEMNIFICATION BY CIMA. Except as provided in Section 9.3,
CIMA shall indemnify, defend and hold harmless WCH and its Affiliates, and each
of its and their respective employees, officers, directors and agents (each, an
"WCH Indemnified Party") from and against any Liability which the WCH
Indemnified Party may incur, suffer or be required to pay resulting from or
arising in connection with the breach by CIMA of any representation, warranty or
covenant contained in this Agreement. Notwithstanding the foregoing, CIMA shall
have no

                                      -11-

obligation under this Agreement to indemnify, defend, or hold harmless any WCH
Indemnified Party with respect to claims, demands, costs or judgments which
result from the willful misconduct or negligent acts or omissions of WCH, its
Affiliates, or any of their respective employees, officers, directors or agents.

         7.3      CONDITIONS TO INDEMNIFICATION. The obligations of the
indemnifying party under Sections 7.1 and 7.2 are conditioned upon delivery of
written notice to the indemnifying party of any potential Liability promptly
after the indemnified party becomes aware of such potential Liability, provided,
however, that the failure to give such notice promptly shall not impair a
party's rights to indemnification under this Article VII unless the delay in
providing such notice has a material adverse effect on the ability of the
indemnifying party to defend against such Liability. The indemnifying party
shall have the right to assume the defense of any suit or claim related to the
Liability if it has assumed responsibility for the suit or claim in writing;
however, if in the reasonable judgment of the indemnified party, such suit or
claim involves an issue or matter which could have a materially adverse effect
on the business operations or assets of the indemnified party, the indemnified
party may waive its rights to indemnity under this Agreement and control the
defense or settlement thereof, but in no event shall any such waiver be
construed as a waiver of any rights such party may have against any Third Party
at law or in equity. If the indemnifying party defends the suit or claim, the
indemnified party may participate in (but not control) the defense thereof at
its sole cost and expense.

         7.4      SETTLEMENTS. Neither party may settle a claim or action
related to a Liability without the consent of the other party, if such
settlement would impose any monetary obligation on the other party or require
the other party to submit to an injunction or otherwise limit the other party's
rights under this Agreement. Any payment made by a party to settle any such
claim or action shall be at its own cost and expense except in the event that
such payment was made with the prior written consent of the indemnifying party,
in which case such payment will be subject to the indemnification obligations of
the parties as set forth in this Article VII.

         7.5      INSURANCE. CIMA shall carry in full force and effect product
liability insurance in respect of Product in the amount of One Million Dollars
($1,000,000) per occurrence and in the aggregate and policies of Ten Million
Dollars ($10,000,000) of excess coverage in the aggregate. WCH shall obtain and
carry in full force and effect product liability insurance, or be self insured,
in respect of Product in the amount of One Million Dollars ($1,000,000) per
occurrence and in the aggregate and policies of Ten Million Dollars
($10,000,000) of excess coverage in the aggregate.

                                  ARTICLE VIII
                                 CONFIDENTIALITY

         8.1      NONDISCLOSURE. During the Term of this Agreement and for a
period of five (5) years thereafter, all proprietary and confidential business,
technical, scientific and/or regulatory information, including Technical
Information, disclosed to the receiving party or its Affiliates (herein
collectively, the "Receiving Party") by the other party or its Affiliates
(herein collectively, the "Disclosing Party") hereunder or under the existing
Confidentiality Agreement between the parties which is marked as confidential at
the time of disclosure, or if disclosed or

                                      -12-

obtained orally or visually (or otherwise in a non-written form), was described
or summarized in a writing or other tangible form and identified as confidential
and forwarded to the Receiving Party within thirty (30) days of such disclosure
(collectively, "Confidential Information") shall be deemed to be confidential
and shall be treated as such by the Receiving Party and shall not be disclosed,
in whole or in part, by the Receiving Party to any other Person except as
expressly set forth herein, and shall be used only for the purposes of this
Agreement. Notwithstanding the foregoing, these mutual obligations of
confidentiality shall not apply to any information to the extent that such
information is:

                  (i)      independently developed by such party as documented
                           by prior written records outside the scope and not in
                           violation of this Agreement;

                  (ii)     legally in the public domain at the time of its
                           receipt or thereafter legally becomes part of the
                           public domain through no fault of the recipient;

                  (iii)    received without an obligation of confidentiality
                           from a Third Party having the right to disclose such
                           information;

                  (iv)     released from the restrictions of this Article VIII
                           by the express written consent of the Disclosing
                           Party; or

                  (v)      as may be required for securing Regulatory Approval,
                           or as may be required to be disclosed to an Agency or
                           as otherwise required by a court order or any law or
                           regulation (including as may be required in
                           connection with any filings made with the Securities
                           and Exchange Commission or by the disclosure policies
                           of a major stock exchange in the Territory);
                           provided, however, that at the other party's request,
                           the disclosing party shall request that the relevant
                           legal or regulatory authority, or major stock
                           exchange, treat as confidential any Confidential
                           Information of either party included in any such
                           disclosure and generally use diligent efforts to seek
                           confidential treatment where available.

         8.2      SCOPE OF CONFIDENTIALITY. CIMA and WCH agree to limit the
disclosure of any Technical Information and other Confidential Information
received hereunder to such Affiliates, officers and employees as are necessary
to carry out the provisions of this Agreement and who are likewise bound by
provisions equivalent to this Article VIII, except that, with CIMA's written
consent, which shall not be unreasonably withheld or delayed, WCH may disclose
Confidential Information of CIMA to consultants, to distributors, and to actual
or potential sublicensees and subdistributors, provided that they are likewise
bound by confidentiality provisions similar to, or more stringent than, those
set forth in this Article VIII. The parties shall take reasonable measures to
assure that no unauthorized use or disclosure is made by Persons to whom access
to such Confidential Information is granted. Unauthorized use or disclosure by
any person who has been given access to Confidential Information by a Receiving
Party hereunder shall be deemed to be unauthorized use or disclosure by such
Receiving Party, and the Receiving Party shall be responsible to the Disclosing
Party hereunder.

                                      -13-

                                   ARTICLE IX
               TECHNOLOGY AND DATA OWNERSHIP RIGHTS; INFRINGEMENT

         9.1      OWNERSHIP OF DATA AND TECHNICAL INFORMATION.

                  (a)    CIMA shall solely own all formulation, system design,
CMC and manufacturing process data and documents that arise out of the
development program ("CIMA Data"), and WCH shall execute such documents and take
such actions as are necessary to implement the foregoing. WCH shall solely own
all clinical data and documents arising from the development program for Product
funded by WCH ("WCH Data"), and CIMA shall execute such documents and take such
actions as are necessary to implement the foregoing. WCH agrees to disclose to
CIMA, on an ongoing basis, in writing, all WCH Data, provided that CIMA shall
not be permitted to use such WCH Data except for internal research purposes, and
further provided that CIMA shall not disclose such WCH Data to any Third Party.

                  (b)    Inventorship of any inventions acquired or developed in
connection with the development program shall be determined by reference to
United States patent laws pertaining to inventorship. Accordingly, if an
invention is made in connection with the development program by one (1) or more
employees or consultants of each party, it shall be deemed to be a "Joint
Invention." If one or more claims included in an issued Patent or pending patent
application which is filed in a patent office in the Territory claim such Joint
Invention, the following rules shall govern ownership of such Patent or patent
application: (i) Joint Inventions which relate specifically to loratadine and/or
administration of loratadine shall be the sole property of WCH; (ii) Joint
Inventions which relate to rapidly-dissolving dosage forms shall be the sole
property of CIMA but shall be included in the CIMA Patents and shall be subject
to the license granted hereunder; and (iii) any other Joint Inventions shall be
jointly owned by CIMA and WCH as joint patent rights hereunder ("Joint Patent
Rights"). If an invention is made in connection with the development program
solely by an employee or consultant of a party, it shall be solely owned by such
party, and any Patent filed claiming such solely owned invention shall also be
solely owned by such party. Each party shall require its employees and
consultants to disclose to it any inventions relating to the Product in writing
promptly after conception, and each party shall, subsequent to any such
disclosures to it by its employees or consultants, promptly disclose such
inventions to the other party. Each party shall ensure that its employees and
consultants shall assign his/her interest in such invention(s) to his/her
respective party employer, as the case may be, and such rights shall therefore
vest in the respective party employer to whom the inventor assigns his/her
rights. CIMA shall use Commercially Reasonable Efforts to obtain and maintain
CIMA Patents for the CIMA DuraSolv(TM) technologies in the United States,
Germany and the United Kingdom. The parties shall mutually agree upon how and
where to file and prosecute any Joint Patent Rights, the maintenance of any
ensuing Joint Patent Rights, and how to license, enforce, defend and protect any
such Joint Patent Rights and how to share the costs relating thereto.

                                      -14-

         9.2      INFRINGEMENT.

                  (a)    Each party shall promptly report in writing to the
other party during the Term of this Agreement any known infringement or
suspected infringement of any of the CIMA Patents in the Territory by
manufacture, use or sale of a Product on a commercial scale in derogation of the
rights granted to WCH hereunder (hereinafter, a "Related Infringement") of which
it becomes aware, and shall provide the other party with all available evidence
supporting said infringement or suspected infringement.

                  (b)    Except as provided in paragraph (d) below, CIMA shall
have the right to initiate an infringement or other appropriate suit anywhere in
the Territory against any Third Party who at any time has infringed, or is
suspected of infringing, any of the CIMA Patents. CIMA shall give WCH sufficient
advance notice of its intent to file any suit on account of a Related
Infringement and the reasons therefor, and shall provide WCH with an opportunity
to make suggestions and comments regarding such suit. CIMA shall keep WCH
promptly informed, and shall from time to time consult with WCH regarding the
status of any such suit on account of a Related Infringement and shall provide
WCH with copies of all documents filed in, and all written communications
relating to, such suit.

                  (c)    CIMA shall have the sole and exclusive right to select
counsel for any suit referred to in subsection (b) above and shall, except as
provided below, pay all expenses of the suit, including without limitation
attorneys' fees and court costs. WCH, in its sole discretion, may elect, within
sixty (60) days after the commencement of such litigation on account of a
Related Infringement, to contribute to the costs incurred by CIMA in connection
with such litigation and, if it so elects, any damages, royalties, settlement
fees or other consideration received by CIMA as a result of such litigation
shall be shared by CIMA and WCH pro rata based on their respective sharing of
the costs of such litigation provided that such pro rata share shall not exceed
fifty percent (50%) unless CIMA has consented to a higher share in writing. In
the event that WCH elects not to contribute to the costs of such litigation,
CIMA shall be entitled to retain any damages, royalties, settlement fees or
other consideration for infringement resulting therefrom. If necessary, WCH
shall join as a party to the suit but shall be under no obligation to
participate except to the extent that such participation is required as the
result of being a named party to the suit. WCH shall offer reasonable assistance
to CIMA therewith at no charge to CIMA except for reimbursement of reasonable
out-of-pocket expenses incurred in rendering such assistance. WCH shall have the
right to participate and be represented in any such suit by its own counsel at
its own expense. CIMA shall not settle any such suit on terms which grant any
license to any other party in derogation of the rights granted to WCH hereunder
without obtaining the prior written consent of WCH, which consent shall not be
unreasonably withheld.

                  (d)    In the event that CIMA elects not to initiate an
infringement or other appropriate suit pursuant to subsection (b) above on
account of a Related Infringement after reasonable efforts to abate such Related
Infringement without litigation have failed, but in no event later than ninety
(90) days after WCH's notice to CIMA under Section 9.2(a), CIMA shall promptly
advise WCH of its intent not to initiate such a suit, WCH shall have the right,
at the expense of WCH, of initiating an infringement or other appropriate suit
against the party or parties committing such Related Infringement. In exercising
its rights pursuant to this subsection

                                      -15-

(d), WCH shall have the sole and exclusive right to select counsel and shall,
except as provided below, pay all expenses of the suit including without
limitation attorneys' fees and court costs. CIMA, in its sole discretion, may
elect, within sixty (60) days after the commencement of such litigation, to
contribute to the costs incurred by WCH in connection with such litigation, and,
if it so elects, any damages, royalties, settlement fees or other consideration
received by WCH as a result of such litigation shall be shared by WCH and CIMA
pro rata based on their respective sharing of the costs of such litigation
provided that such pro rata share shall not exceed fifty percent (50%) unless
WCH has consented to a higher share in writing.

                  In the event that CIMA elects not to contribute to the costs
of such litigation, WCH shall be entitled to retain any damages, royalties,
settlement fees or other consideration for infringement resulting therefrom. If
necessary, CIMA shall join as a party to the suit but shall be under no
obligation to participate except to the extent that such participation is
required as a result of being named a party to the suit. At WCH's request, CIMA
shall offer reasonable assistance to WCH in connection therewith at no charge to
WCH except for reimbursement of reasonable out-of-pocket expenses incurred and a
reasonable allocation of salary and wages based on time spent by CIMA employees
in rendering such assistance. CIMA shall have the right to participate and be
represented in any such suit by its own counsel at its own expense.

         9.3      CLAIMED INFRINGEMENT.

                  (a)    In the event that a Third Party at any time provides
written notice of a claim to, or brings an action, suit or proceeding against,
either party or any of their respective Affiliates, claiming infringement of its
patent rights, based upon an assertion or claim arising out of the filing of an
NDA in the OTC Field by WCH for Product, or the use, manufacture, distribution
or sale of Product in the OTC Field, such party shall promptly notify the other
party of the claim or the commencement of such action, suit or proceeding,
enclosing a copy of the claim and/or all papers served.

                  (b)    If a Third Party at any time brings an action, suit or
proceeding against WCH and/or CIMA and/or their Affiliates, claiming
infringement of its patent rights (i) based upon the filing of an NDA in the OTC
Field by WCH for Product in the Territory or (ii) based on U.S. Patent No.
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] (provided that CIMA has complied with
its obligations under Section 2.8(a) of the Supply Agreement), WCH shall be
responsible for the defense costs and expenses, including attorney's fees
thereof. WCH shall have the right to use counsel of its own choice and shall
control the defense of any such action, suit or proceeding. If CIMA desires to
have additional counsel of its own choice participate in the defense, CIMA shall
be solely responsible for the costs and expenses of its counsel. WCH shall have
the authority to settle any such action, suit or proceeding with the prior
written consent of CIMA, such consent not to be unreasonably withheld or
delayed. If WCH receives any payment(s) as part of the settlement of any such
threatened or actual action, suit or proceeding, then after deduction of WCH's
costs and expenses, including attorney's fees, the balance (if any) of such
payment(s) shall be split eighty percent (80%) to WCH and twenty percent (20%)
to CIMA.

                                      -16-

                  (c)    Except as expressly provided in Section 9.3(b), if a
Third Party at any time brings an action, suit or proceeding against WCH and/or
its Affiliates, claiming infringement of its patent rights (i) based upon an
assertion or claim arising out of the manufacture of Product or (ii) based on an
assertion that the Product infringes U.S. Patent No. [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] (provided that CIMA failed to comply with its obligations
pursuant to Section 2.8(a) of the Supply Agreement), CIMA shall be responsible
for and indemnify and hold harmless WCH for any and all costs and expenses
associated with such legal actions including, without limitation, damages,
settlement payments, attorneys' fees and court costs. WCH shall offer reasonable
assistant to CIMA in connection therewith at no charge to the other party except
for reimbursement of reasonable out-of-pocket expenses incurred in rendering
such assistance.

                  (d)    Except as expressly provided in Sections 9.3(b) or
9.3(c), if a Third Party at any time brings an action, suit or proceeding
against WCH and/or its Affiliates, claiming infringement of its patent rights,
based upon an assertion or claim arising out of the use, importation,
distribution, offer for sale or sale of Product for the OTC Field in the
Territory, the parties shall share equally responsibility for any and all costs
and expenses associated with such legal actions including, without limitation,
damages, settlement payments, attorneys' fees and court costs. Each party shall
offer reasonable assistance to the other party in connection therewith at no
charge to the other party except for reimbursement of reasonable out-of-pocket
expenses incurred in rendering such assistance.

                  (e)    This Section 9.3 states the entire responsibility of
the parties to each other in the case of any claimed infringement or violation
of any Third Party's patent rights.

                                    ARTICLE X
                              TERM AND TERMINATION

         10.1     TERM. This Agreement shall be effective as of the Effective
Date, and, unless sooner terminated by mutual agreement or pursuant to any other
provision of this Agreement, shall continue in full force and effect, on a
country-by-country basis, until the later to occur of (a) ten (10) years from
the Launch Date of Product in such country, or (b) expiration of the last to
expire of the CIMA Patents in each such country (the "Term").

         10.2     TERMINATION FOR DEFAULT. Each party may terminate this
Agreement if the other party commits a material breach of any material
obligation under this Agreement and fails to remedy such breach within sixty
(60) days after receipt of notice in writing from such party, or other longer
period of time if mutually agreed; provided that if the defaulting party
initiates steps within the sixty (60) day notice period to remedy or cure the
breach, unless the parties mutually agree otherwise, such termination shall
become effective only if the breach is not remedied within one hundred and
twenty (120) days after the initial notice from the non-defaulting party. For
purposes of clarification, unless otherwise mutually agreed by the parties in
writing, in no event shall a defaulting party have longer than one hundred
twenty (120) days to remedy a material breach under this Section.

                                      -17-

         10.3     TERMINATION BY WCH. WCH shall have the right, in its sole
discretion, to terminate this Agreement at any time upon six (6) months' prior
written notice to CIMA.

                                   ARTICLE XI
                      EFFECT OF EXPIRATION AND TERMINATION

         11.1     EXPIRATION. Upon expiration (but not termination) of this
Agreement, WCH shall have the fully paid-up, royalty free, perpetual,
irrevocable, non-exclusive right, itself and/or through its Affiliates, to make,
have made, promote, market, distribute, sell, have sold, import and export
Product for the OTC Field pursuant to the Regulatory Documents and Technical
Information (including manufacturing know-how).

         11.2     DEVELOPMENT COMMITMENTS. In the event that CIMA terminates
this Agreement pursuant to Section 10.2 or WCH terminates this Agreement
pursuant to Section 10.3, all development commitments (internal and external) of
CIMA incurred or committed up through the effective date of such termination
shall become due and payable to CIMA by WCH on the effective date of such
termination.

         11.3     TRANSFER OF DOCUMENTS.

                  (a)    In the event that CIMA terminates this Agreement
pursuant to Section 10.2 or WCH terminates this Agreement pursuant to Section
10.3, (i) WCH promptly but no later than within forty-five (45) days of such
termination, shall assign and transfer to CIMA all WCH Data as relates to
Product and (ii) WCH shall, within sixty (60) days of a request by CIMA, execute
all documents necessary to assign to CIMA and/or its Affiliates all Regulatory
Documents in the countries in the Territory where the Agreement has been
terminated which relate to Product for the OTC Field. In the event that no such
assignment may legally be made in any country in the Territory, WCH shall
continue to maintain such Regulatory Documents and provide to CIMA and/or CIMA's
Affiliates and/or their designees continuing access and/or the right to
cross-reference all such Regulatory Documents. Upon CIMA's request, WCH shall
within the same period deliver to CIMA or its designees full copies (both paper
and electronic, where available) of any Regulatory Documents in WCH's or its
Affiliates' possession or control. In such event, CIMA shall pay to WCH
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] of CIMA's gross profit (including
payments to CIMA by the Third Parties) on Product for the OTC Field in the
Territory, payable quarterly with supporting documentation, sold by CIMA or a
Third Party marketing partner up to the total of WCH's out-of-pocket costs for
Product development, consisting of raw materials, biostudy costs, and amounts
paid under Section 3.2 or by ESI pursuant to the Original Development and
License Agreement for product development costs.

                  (b)    In the event that WCH terminates this Agreement
pursuant to Section 10.2, CIMA shall grant to WCH the exclusive right to, and
shall use Commercially Reasonable Efforts to transfer to WCH, the CIMA Data and
manufacturing know-how used by CIMA that is reasonably necessary to enable WCH
to develop and register Product in the OTC Field in the Territory, and to enable
WCH either itself or through a contract manufacturer to manufacture

                                      -18-

Product. WCH shall pay CIMA, on a country-by-country basis, a royalty on Product
for the OTC Field sold by WCH thereafter equal to [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] of WCH's Net Sales during the Term.

                  (c)    After the Term WCH shall have a fully paid-up,
irrevocable, non-exclusive right in the Territory to use the data and documents
and other Technical Information arising out of the development program for
Product in the OTC Field that are owned by CIMA (including any and all Technical
Information relating primarily to the manufacture of the Product, including all
manufacturing know-how) and CIMA shall use Commercially Reasonable Efforts to
transfer to WCH the manufacturing know-how that is reasonably necessary to
enable WCH to make and have made Product for the OTC Field.

         11.4     NO DAMAGES UPON EXPIRATION OR TERMINATION. Except as otherwise
set forth in this Agreement, neither party shall be entitled to any compensation
whatsoever as a result of expiration or termination of this Agreement, but
without limiting either party's damages for any breach of this Agreement.

         11.5     CONTINUING OBLIGATIONS. Termination or expiration of this
Agreement for any reason shall be without prejudice to any obligations which
shall have accrued to the benefit of either party prior to such termination or
expiration. Upon termination or expiration of this Agreement, any payments owed
to the other party on or before the effective date of termination shall be due
within thirty (30) days of the effective date of such termination or expiration.
The following provisions of this Agreement shall survive expiration or
termination hereof: Article VII, VIII, Section 9.1, Section 9.3, Articles XI and
XIV.

                                   ARTICLE XII
                                   TRADEMARKS

         12.1     USE OF CIMA'S TRADEMARK BY WCH. WCH shall market the Product
in the OTC Field under its own tradename. However, WCH may refer to CIMA's
DuraSolv(TM) trademarks (the "Marks") as applicable on the package, internal
leaflet and promotional material of the Product by printing "Produced with CIMA
DuraSolv(TM) technology" or word DuraSolv(TM). For this purpose CIMA grants to
WCH and its Affiliates a non-exclusive license to use CIMA's DuraSolv(TM)
trademarks during the Term. Prior to printing, WCH (or an Affiliate) shall send
CIMA a sample of the packaging, internal leaflet and related promotional
material for CIMA's prior approval of WCH's use of the Marks.

         12.2     TRADEMARK OWNERSHIP AND USE.

                  (a)    WCH recognizes CIMA's exclusive ownership of and title
in and to the Marks, and shall not at any time do or permit to be done any act
or thing which would in any way impair the rights of CIMA in and to the Marks or
in any trademark registration application therefor, and shall not at any time
claim any right of interest in or to the Marks or the aforesaid trademark
application therefor.

                                      -19-

                  (b)    WCH agrees that during the term of the Agreement and
after its termination, however occurring, that WCH shall not:

                         (i)      use the Marks or any other mark confusingly
                                  similar thereto in connection with any goods
                                  not covered by this Agreement which would be
                                  likely to cause confusion between the parties;
                                  or

                         (ii)     apply for or seek registration anywhere in the
                                  world, at any time, for the Marks or any other
                                  mark confusingly similar thereto; or

                         (iii)    commit or do any act which might prejudice
                                  or adversely affect the validity of the Marks
                                  or CIMA's ownership thereof or dilute or
                                  diminish the value of the Marks to CIMA.

                  (c)    WCH shall use the Marks only in a proper trademark
sense and shall identify the Marks as a registered trademark of CIMA by
including use of the registered trademark symbol(R)or the symbol(TM)in
association with the Marks as specified by CIMA.

                  (d)    WCH agrees that all goodwill resulting from its use of
the Marks shall inure to the exclusive benefit of CIMA.

                  (e)    WCH shall assist CIMA in obtaining or maintaining
registrations for the Marks by supplying specimens, other proofs of use and
other information or documents reasonably necessary to obtain or maintain
registration of the Marks in all jurisdictions within the Territory.

         12.3     QUALITY CONTROL. WCH agrees that, to the extent the Product
is manufactured by a party other than CIMA pursuant to this Agreement, the
Product shall be manufactured in accordance with the Specifications. CIMA shall
have the right to inspect the Products sold in connection with the Marks so that
CIMA can determine that the Products meet the Specifications. If the quality of
any Products is determined not to meet the Specifications, then WCH shall not
use any of the Marks in connection with such Products and WCH shall, at its
option, either (i) destroy such Products or (ii) repackage such Products to
eliminate use of the Marks.

                                  ARTICLE XIII
                         PRESS RELEASES AND PUBLICATIONS

         13.1     PRESS RELEASES. All press releases and public announcements
related to this Agreement shall be approved in advance in writing by the other
party.

         13.2     PUBLICATIONS. The parties shall mutually agree upon
publications and the publication strategy with respect to work undertaken by the
parties relating to Product, and neither party shall publish any result or study
generated or developed under this Agreement except upon review by the other
party at least sixty (60) days prior to submission of an abstract or manuscript
for publication.

                                      -20-

                                   ARTICLE XIV
                                  MISCELLANEOUS

         14.1     FORCE MAJEURE. Neither party shall be liable for delay or
failure to perform its obligations hereunder for so long as that failure or
delay is the result of an event beyond its control which it could not have
avoided by the exercise of reasonable diligence, (a "Force Majeure Event"),
provided that such party uses Commercially Reasonable Efforts to comply with the
terms of this Agreement as soon as practicable. A party asserting a Force
Majeure Event shall notify the other party promptly, giving an indication of the
likely extent and duration thereof.

         14.2     ASSIGNMENT; SUCCESSORS AND ASSIGNS. Neither party shall at
any time, without obtaining the prior written consent of the other party, assign
or transfer this Agreement to any Person. Notwithstanding the foregoing, each
party shall be permitted to assign this Agreement to its Affiliates or to
perform this Agreement, in whole or in part, through its Affiliates, provided
that such party shall be primarily liable and responsible for performance by
such Affiliate hereunder; and each party may also assign this Agreement to any
successor by merger or upon a sale of all or substantially all of the assets or
business to which this Agreement relates. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their successors and permitted
assigns.

         14.3     NOTICES. Any notices required or permitted to be given
hereunder shall be in writing in the English language and shall be delivered by
air courier service (requiring signature upon receipt) or sent by first class
air mail, postage prepaid, or telefax (confirmed by phone conversation with the
recipient) to the addresses set forth below. The parties may change the address
at which notice is to be given by giving notice to the other party as herein
provided. All notices shall be deemed effective upon receipt by the party to
whom it is addressed.

         If to CIMA:

                  CIMA LABS, Inc.
                  10000 Valley View Road
                  Eden Prairie, Minnesota 55344
                  Attention:    President and CEO
                  Telephone:    612-947-8762
                  Telefax:      612-947-8770

         If to WCH:

                  Wyeth Consumer Healthcare
                  Five Giralda Farms
                  Madison, New Jersey 07940
                  Attention:    President
                  Telephone:    973-660-5773
                  Telefax:      973-660-7199

                                      -21-

         With a copy to:

                  Wyeth
                  5 Giralda Farms
                  Madison, New Jersey 07940
                  Attention:    General Counsel
                  Telephone:    973-660-6040
                  Telefax:      973-660-7050

         14.4     GOVERNING LAW. This Agreement and its execution, validity and
interpretation shall be governed in all respects in accordance with the laws of
the State of New York, excluding conflicts of law rules.

         14.5     SEVERABILITY. In the event that any provision of this
Agreement shall be held to be unenforceable, invalid or in contravention of
applicable law, such provision shall be of no effect, and the parties shall
negotiate in good faith to replace such provision with a provision which effects
to the extent possible the original intent of such provision.

         14.6     COMPLETE AGREEMENT; MODIFICATIONS. This Agreement, together
with the Supply Agreement and all Exhibits attached hereto and thereto,
constitutes the entire agreement between the parties with respect to the present
subject matter, all prior negotiations, agreements and understandings being
expressly canceled hereby. This Agreement may be amended only by a written
agreement embodying the full terms of the amendment signed by authorized
representatives of both parties.

         14.7     NO AGENCY. Neither party shall by virtue of this Agreement
have any power to bind the other to any obligation nor shall this Agreement
create any relationship of agency, partnership or joint venture.

         14.8     NO WAIVER. No term or condition of this Agreement shall be
considered waived unless reduced to writing and duly executed by an officer of
the waiving party. Any waiver by any party of a breach of any term or condition
of this Agreement will not be considered as a waiver of any subsequent breach of
this Agreement, of that term or condition or any other term or condition hereof.

         14.9     COUNTERPARTS. This Agreement may be executed in counterparts,
each of which together shall constitute one and the same Agreement.

         14.10    COMPLIANCE ISSUES. The parties acknowledge that the export of
technical data, materials or products is subject to the exporting party
receiving the necessary export licenses and that the parties cannot be
responsible for any delays attributable to export controls which are beyond the
reasonable control of either party. The parties agree that regardless of any
disclosure made by the party receiving an export of any ultimate destination of
any technical data, materials or products, the receiving party will not
re-export, either directly or indirectly, any technical data, material or
products without first obtaining the applicable validated or general license
from the

                                      -22-

United States Department of Commerce, FDA and/or any other agency or department
of the United States Government as required.

         14.11    AMENDMENT OF THE ORIGINAL DEVELOPMENT AND LICENSE AGREEMENT.
The parties agree that, with effect from the Effective Date, the Original
Development and License Agreement is hereby amended to exclude the OTC Field
from its scope and that this Agreement and the Supply Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and thereof for the OTC Field.

                                      -23-

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                         CIMA LABS INC.

                         By:     /s/ John Hontz
                             -----------------------------------------
                             Name:  John Hontz
                             Title: Chief Operating Officer

                         WYETH,
                         acting through its Wyeth Consumer Healthcare Division

                         By:     /s/ Gregory F. Bobyock
                             ------------------------------------------
                             Name:  Gregory F. Bobyock
                             Title: Vice President, Global Business Development

                                      -24-

                                    EXHIBIT A

                                  CIMA PATENTS

1.       United States Patent No. 5,178,878

2.       United States Patent No. 5,225,197

3.       United States Patent No. 6,024,981

4.       All foreign counterparts to the above listed patents and patent
         applications

                                    EXHIBIT B

                     ADVERSE EXPERIENCE REPORTING PROCEDURES

         The parties hereby agree that the following terms will govern
disclosures of each party to the other with respect to adverse event reporting
relating to Product as clinically tested or marketed by or on behalf of either
party.

1.       DEFINITIONS.

         1.1      ADVERSE EXPERIENCE OR EVENT (AE): An AE is defined by WCH as
                  any untoward, undesired, or unplanned event in the form of
                  signs, symptoms, disease, or laboratory or physiological
                  observations occurring in a human being in a temporal
                  relationship to use of an WCH product regardless of causal
                  relationship. This includes:

                  -  any clinically significant worsening of a pre-existing
                     condition;

                  -  an AE occurring from overdose (i.e., a dose higher than
                     that prescribed by a health care professional for clinical
                     reasons) of an WCH product, whether accidental or
                     intentional;

                  -  an AE occurring from abuse (i.e., use for non-clinical
                     reasons) of an WCH product;

                  -  an AE that has been associated with the discontinuation of
                     the use of an WCH product;

                  -  any failure of expected pharmacological action (for
                     spontaneous reports).

                  If there is any doubt whether the information constitutes an
                  AE, the information will be treated as an AE.

         1.2      SERIOUS AE: A serious AE is defined by WCH as an AE occurring
                  at any dose that: results in death; is life-threatening (see
                  below); requires inpatient hospitalization or prolongation of
                  an existing hospitalization; results in a persistent or
                  significant disability or incapacity (see below); results in
                  cancer; results in a congenital anomaly or birth defect.
                  Additionally, IMPORTANT MEDICAL EVENTS that may not result in
                  death, be life-threatening, or require hospitalization may be
                  considered a serious AE when, based upon appropriate medical
                  judgment, they may jeopardize the patient or subject and may
                  require medical or surgical intervention to prevent one of the
                  outcomes listed in this definition. Examples of such medical
                  events include allergic bronchospasm requiring intensive
                  treatment in an emergency room or at home; blood dyscrasias or
                  convulsions that do not result in hospitalization; or the
                  development of drug dependency or abuse.

                  1.2.1    Life-threatening refers to immediate risk of death as
                           the event occurred. A life-threatening experience
                           does not include an experience that, had it occurred
                           in a more severe form, might have caused death but as
                           it actually occurred did not create an immediate risk
                           of death. For example, hepatitis that resolved
                           without evidence of hepatic failure would not be
                           considered life-threatening even though hepatitis of
                           a more severe nature can be fatal. Similarly, an
                           allergic reaction resulting in angioedema of the face
                           would not be life-threatening, even though angioedema
                           of the larynx, allergic bronchospasm, or anaphylaxis
                           can be fatal.

                  1.2.2    Disability is defined as a substantial disruption in
                           a person's ability to conduct normal life functions.

                  1.2.3    For studies, all pregnancies and all overdoses will
                           be reported to GSSE in the same time frame as serious
                           AEs.

                  1.2.4    A serious AE obtained from tests in laboratory
                           animals includes any experience suggesting a
                           significant risk for human subjects, including any
                           findings of mutagenicity, teratogenicity, or
                           carcinogenicity.

                  1.2.5    If there is any doubt whether the information
                           constitutes a serious AE, the information will be
                           treated as a serious AE.

         1.3      NON-SERIOUS AE: is any AE which does not meet the criteria for
                  a serious AE.

         1.4      UNEXPECTED AE: An unexpected AE is one that is not listed in
                  the current product labeling. The current product labeling is
                  either the package insert (for marketed WCH products) or the
                  current investigator's brochure (for investigational WCH
                  products).

                  An unexpected AE includes any event that may be
                  symptomatically and pathophysiologically related to an event
                  listed in the labeling, but differs from the labeled event
                  because of greater severity or specificity. For example,
                  hepatic necrosis would be unexpected (by virtue of greater
                  severity) if the product labeling referred only to elevated
                  hepatic enzymes or hepatitis. Similarly, cerebral
                  thromboembolism and cerebral vasculitis would be unexpected
                  (by virtue of greater specificity) if the labeling only listed
                  cerebral vascular accidents.

         1.5      PRODUCT (DRUG, VACCINE, BIOLOGICAL, DEVICE)-RELATED:  For the
                  purposes of regulatory reporting for investigational products,
                  an AE will be considered "product-related" (i.e.,
                  drug-related, vaccine-related, etc.) for studies if either the
                  investigator, the Medical Monitor, the CR&D Clinical Project
                  Team Medical Monitor (or designee), or the Local Monitor (if
                  applicable) assesses the AE(s) as possibly, probably, or
                  definitely related.

                                     -B-2-

                  1.       An AE will be considered "not product-related" for
                           studies if the investigator AND the medical
                           monitor(s) AND the local monitor (if applicable)
                           assess the AE(s) as probably not related or
                           definitely not related, or "relationship remote."

                  2.       Whenever the investigator's or monitor's assessment
                           is unknown or unclear, the AE(s) will be treated as
                           product-related for the purposes of reporting to
                           regulatory authorities.

         1.6      PROTOCOL-RELATED: AEs from studies that are not
                  product-related may nevertheless be considered by the
                  investigator OR the medical monitor(s) OR the local monitor
                  (if applicable) to be protocol-related. For purposes of
                  reporting to GSSE and regulatory authorities, these will be
                  reported in the same manner as product-related events.

         1.7      ANDA HOLDER is defined as:  An "Applicant" for regulatory
                  approval of a Product in any regulatory jurisdiction,
                  including a holder of a foreign equivalent thereto.

         1.8      Capitalized terms not defined in this Exhibit shall have the
                  meaning assigned thereto in the Agreement.

2.       With respect to the Product or Active Ingredient, the Parties agree as
         follows:

         a.       All initial reports and any follow-up information (oral or
                  written) for any and all Serious AEs as defined above, (other
                  than with respect to animal studies) which become known to
                  either party (other than from disclosure by or on behalf of
                  the other party) must be communicated by telephone, telefax or
                  electronically directly to the other party and/or the ANDA
                  Holder, ("Holder") within forty-eight (48) hours of receipt of
                  the information. Written confirmation of the Serious AE
                  received by such party should be sent to the other party
                  and/or the Holder as soon as it becomes available, but in any
                  event within forty-eight (48) hours of initial report of the
                  Serious AE by such party.

         b.       Both parties shall exchange Medwatch and/or CIOMs forms and
                  other health authority reports within forty-eight (48) hours
                  of submission to any Regulatory Authority.

         c.       All initial reports and follow-up information received for all
                  Non-Serious AEs for marketed Product which become known to a
                  party (other than from disclosure by or on behalf of the other
                  party) must be communicated in writing, by telefax or
                  electronically to the other party within ten (10) days, on
                  Medwatch or CIOMs forms (where possible).

         d.       Each party shall coordinate and cooperate with the other
                  whenever practicable to prepare a single written report
                  regarding all Serious and/or Non-Serious AEs,

                                     -B-3-

                  provided, however, that neither party shall be obligated to
                  delay reporting of any AE in violation of applicable law or
                  regulations regarding the reporting of AEs.

3.       The parties further agree that:

         a.       A written report be forwarded to the other party within
                  forty-eight (48) hours of a receipt by the party making the
                  report, for AEs for animal studies which suggest a potential
                  significant risk for humans;

         b.       Each party will give the other party a report via a print-out
                  or computer disk of all AEs reported to it and its Affiliates
                  relating to the Product or Active Ingredient within the last
                  year, within thirty (30) days of receipt of a request from the
                  other party but not more often than four (4) times a year;

         c.       If either party wishes access to AE Reports of the other party
                  relating to the Product or Active Ingredient, upon request of
                  that party, the other party shall make available its AE
                  records relating to the Product or Active Ingredient
                  (including computer disks) for viewing and copying by the
                  other party. The parties may discuss the transfer of AE
                  Reports by computer disk.

         d.       Disclosure of information hereunder by a party to the other
                  party shall continue as long as either party and/or its
                  Affiliates or designees continue to clinically test or market
                  Product or Active Ingredient.

4.       Each party shall diligently undertake the following further obligations
         where both parties are or will be performing clinical trials with
         respect to the Product or Active Ingredient:

         a.       Upon the Effective Date, each party shall identify individuals
                  who shall be responsible for identifying all AE reporting
                  requirements in all countries of the Territory as set forth in
                  the Agreement, and any amendments thereto;

         b.       To immediately consult with the other party, with respect to
                  the investigation and handling of any serious AE disclosed to
                  it by the other party or by a Third Party and to allow the
                  other party to review the Serious AE and to participate in the
                  follow-up investigation;

         c.       To immediately advise the other party of any Product and/or
                  Active Ingredient safety communication received from a health
                  authority and consult with the other party with respect to any
                  Product and/or Active Ingredient warning, labeling change or
                  change to an investigators' brochure involving safety issues
                  proposed by the other party, including, but not limited to the
                  safety issues agreed to by the parties;

         d.       To diligently handle in a timely manner the follow-up
                  investigation and resolution of each AE reported to it;

                                     -B-4-

         e.       To provide the other party mutually agreed upon audit rights
                  of its AE reporting system and documentation, upon prior
                  notice, during normal business hours, at the expense of the
                  auditing party and under the confidentiality obligations set
                  forth in the Agreement;

         f.       To meet in a timely fashion from time to time as may be
                  reasonably required to implement the adverse event reporting
                  and consultation procedures described in this Exhibit B,
                  including identification of those individuals in each party's
                  Drug Safety group who will be responsible for reporting to and
                  receiving AE information from the other party, and the
                  development of a written standard operating procedure with
                  respect to adverse event reporting responsibilities, including
                  reporting responsibilities to investigators;

         g.       Where possible, to transmit all data electronically;

         h.       To report to each other any addenda, revisions or changes to
                  the Agreement (e.g., change in territories, local regulations,
                  addition of new licensors/licensees to the Agreement, etc.)
                  which might alter the adverse event reporting responsibilities
                  hereunder;

         i.       To utilize English as the language of communication and data
                  exchange between the parties;

         j.       To develop a system of exchange of documents and information
                  in the event that the Agreement involves more than two
                  parties;

         k.       To work together to develop an electronic system to transmit
                  AE data.

5.       The parties may meet after the Effective Date of the Agreement to
         establish a separate agreement for adverse event exchange which will
         supersede this Exhibit B.

                                     -B-5-

EX-10.3

                                                                    EXHIBIT 10.3

                                SUPPLY AGREEMENT

                                     BETWEEN

                                 CIMA LABS INC.

                                       AND

                                      WYETH

                               ACTING THROUGH ITS

                       WYETH CONSUMER HEALTHCARE DIVISION

                                       FOR

              NON-PRESCRIPTION RAPID DISSOLVING LORATADINE TABLETS

                                TABLE OF CONTENTS

                                                                            
ARTICLE I DEFINITIONS........................................................   1

ARTICLE II SUPPLY AND MANUFACTURING..........................................   4

ARTICLE III  [INTENTIONALLY OMITTED].........................................  13

ARTICLE IV  REGULATORY COMPLIANCE............................................  13

ARTICLE V  PAYMENT PROVISIONS................................................  13

ARTICLE VI  REPRESENTATIONS AND WARRANTIES...................................  14

ARTICLE VII  INDEMNIFICATION.................................................  15

ARTICLE VIII  CONFIDENTIALITY................................................  16

ARTICLE IX  TERM AND TERMINATION.............................................  17

ARTICLE X  PUBLICATIONS......................................................  18

ARTICLE XI MISCELLANEOUS.....................................................  18

EXHIBIT A - PRICE

EXHIBIT B - PACKAGING

EXHIBIT C - QUALITY AGREEMENT

EXHIBIT D - ADVERSE EXPERIENCE REPORTING PROCEDURES


                                      -i-

                                SUPPLY AGREEMENT

         THIS AGREEMENT dated the 18th day of June 2002 between CIMA LABS INC.,
a corporation organized and existing under the laws of the State of Delaware
with offices located at 10000 Valley View Road, Eden Prairie, Minnesota
55344-9361 (hereafter, together with its Affiliates, referred to as "CIMA"), and
WYETH (formerly known as American Home Products Corporation), acting through its
Wyeth Consumer Healthcare division, a corporation organized and existing under
the laws of the State of Delaware with offices located at Five Giralda Farms,
Madison, New Jersey 07940 ("WCH").

                               W I T N E S S E T H

         WHEREAS, CIMA and Wyeth, acting through its ESI Lederle Division, have
entered into a Supply Agreement, dated January 14, 2000 (the "Original Supply
Agreement"); and

         WHEREAS, CIMA and WCH wish to amend the Original Supply Agreement to
remove the OTC Field (as defined herein) and to enter into this Supply Agreement
which relates only to the OTC Field, all on the terms and subject to the
conditions set forth herein.

         NOW, THEREFORE, in consideration of the representations, warranties and
covenants set forth herein, the parties hereto agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1     "ACTIVE INGREDIENT" means ethyl 4-(8-chloro-5,6-dihydro-11
H-benzo [5,6] cyclohepta [1,2-b] pyridin-11-ylid-ene)-1 piperidine carboxylate,
known as loratadine.

         1.2     "ADVERSE DRUG EXPERIENCE" means the definition in the current
21 CFR Sections 312.32 and 314.80, as in effect from time to time.

         1.3     "AFFILIATE" means (i) any Person which at the time of
determination is directly or indirectly controlled by any party hereto; (ii) any
Person which at the time of determination directly or indirectly controls any
party hereto; or (iii) any Person which is under the direct or indirect control
of any such Person as described in subparagraphs (i) or (ii). "Control" shall in
this Section mean ownership of greater than fifty percent (50%) of the voting
stock or other voting interests in the Person in question.

         1.4     "AGENCY" means any governmental regulatory authority
responsible for granting approvals, including Regulatory Approvals and/or
Pricing Approvals, for the sale of a Product in the OTC Field in a country in
the Territory.

         1.5     "ANDA" means an Abbreviated New Drug Application, as defined in
the United States Food, Drug and Cosmetic Act, as amended, and applicable FDA
rules and regulations.

         1.6     "API COST PER TABLET" means the actual net price paid per kilo
by CIMA to its Active Ingredient supplier (the "AI Price") plus [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] of the AI Price (to reflect a [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] price yield factor), plus [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] of the AI Price (to cover all related expenses, including
handling and testing), the sum of which is divided by 100,000 (to reflect 10mg
Active Ingredient per tablet). For example, assuming CIMA's cost of Active
Ingredient is [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***], the API Per Tablet
Cost would be [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] per tablet.

         1.7     "CIMA'S MANUFACTURING COST" means CIMA's manufacturing costs
for Finished Product based on a four hundred twenty (420) kilogram batch size
comprised of raw materials (including packaging, but excluding Active
Ingredient), direct labor, and overhead costs allocable to such Finished
Product, as determined in accordance with United States generally accepted
accounting practices consistently applied.

         1.8     "COMMERCIALLY REASONABLE EFFORTS" means efforts and resources
normally used by a party for a compound or product owned by it or to which it
has rights, which is of similar market potential at a similar stage in its
product life, taking into account the competitiveness of the marketplace, the
proprietary position of the compound or product, the regulatory structure
involved, the profitability of the applicable products, and other relevant
factors. It is anticipated that the level of effort and resources may change at
different times during the product life cycle of a compound or product.

         1.9     "CONTROL" or "CONTROLLED" in the context of intellectual
property rights means rights to intellectual property sufficient to allow a
grant of rights without any obligation to any Third Party.

         1.10    "DEVELOPMENT AND LICENSE AGREEMENT" means the Development and
License Agreement for the OTC Field between the parties signed contemporaneously
with this Agreement.

         1.11    "EFFECTIVE DATE" means January 14, 2000.

         1.12    "FACILITY" means CIMA's manufacturing facility located at
10000 Valley View Road, Eden Prairie, Minnesota or any other facility approved
in writing by WCH for the manufacture of Product.

         1.13    "FDA" means the United States Food and Drug Administration,
or any successor thereto.

                                      -2-

         1.14    "FINISHED PRODUCT" means fully finished and packaged Product
meeting the Specifications.

         1.15    "GOOD MANUFACTURING PRACTICE" or "GMP" means the then current
standards for the manufacture of pharmaceuticals, as set forth in the United
States Federal, Food, Drug and Cosmetic Act and applicable regulations
promulgated thereunder, as amended from time to time, and such standards of good
manufacturing practices as are required by the European Union and other
organizations and governmental agencies in countries in which Product is
intended to be sold, to the extent such standards are not inconsistent with
United States GMP.

         1.16    "[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Test" means the
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] for Active Ingredient and Product
provided in writing by WCH to CIMA, as the same may be amended from time to time
by the mutual agreement of the parties.

         1.17    "[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Criteria" means the
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] provided in writing by WCH to CIMA, as
the same may be amended from time to time by the mutual agreement of the
parties.

         1.18    "LABOR" has the meaning set forth in Section 2.16(a).

         1.19    "LAUNCH DATE" means the date of first commercial shipment of a
Product in the OTC Field by WCH or its Affiliates or their respective
subdistributors of Product to Third Parties in a country of the Territory.

         1.20    "NDA" means a New Drug Application, as defined in the United
States Federal Food, Drug and Cosmetic Act, as amended, and applicable FDA rules
and regulations.

         1.21    "OTC Field" means the area of non-prescription (i.e., not
requiring, by law or regulation, a prescription from a medical doctor) and/or
over-the-counter sales for all human pharmaceutical uses.

         1.22    "OVERHEAD" has the meaning set forth in Section 2.16(a).

         1.23    "PERSON" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency thereof.

                                      -3-

         1.24    "PRICING APPROVAL" means any approval for price or
reimbursement as may be necessary or appropriate as a prerequisite for marketing
Product in the OTC Field in a particular country of the Territory.

         1.25    "PRODUCT" means rapid dissolving tablets containing 10
milligrams Active Ingredient meeting the Specifications.

         1.26    "PROFIT" has the meaning set forth in Section 2.16(a).

         1.27    "RAW MATERIALS" has the meaning set forth in Section 2.16(a).

         1.28    "REGULATORY APPROVAL" means the product license or marketing
approval necessary as a prerequisite for marketing Product in the OTC Field in a
particular country in the Territory.

         1.29    "REGULATORY DOCUMENTS" means all regulatory submissions,
Regulatory Approvals and Pricing Approvals.

         1.30    "SPECIFICATIONS" means the specifications for the Product as
set forth in ANDA 75-822 and NDA 21-375, as may be amended from time to time by
the parties in the course of Product development and in accordance with the
regulatory submissions and/or Regulatory Approvals, or as otherwise required by
an Agency.

         1.31    "TECHNICAL INFORMATION" means (a) techniques and data,
including ideas, inventions (including patentable inventions), practices,
methods, knowledge, know-how, trade secrets, skill, experience, documents,
apparatus, clinical and regulatory strategies, test data, including
pharmacological, toxicological and clinical test data, analytical and quality
control data, manufacturing, patent data or descriptions relating to Product,
and (b) chemical formulations, compositions of matter, product samples and
assays relating to Product.

         1.32    "TERM" shall have the meaning set forth in Section 9.1.

         1.33    "TERRITORY" has the meaning set forth in the Development and
License Agreement, as the same may be amended from time to time in accordance
with the provisions thereof.

         1.34    "THIRD PARTY" means any Person other than a party to this
Agreement or an Affiliate of a party to this Agreement.

         1.35    "$" means United States dollars.

                                   ARTICLE II
                            SUPPLY AND MANUFACTURING

         2.1     MANUFACTURING. During the Term of this Agreement, CIMA shall
manufacture and supply WCH with, and WCH shall purchase from CIMA, Product in
accordance with the

                                      -4-

terms specified in this Article II. Subject to Section 2.9, WCH shall
exclusively purchase all of WCH's requirements of Product for the OTC Field in
the Territory from CIMA and CIMA shall exclusively supply Product for the OTC
Field to WCH in the Territory.

         2.2      SUPPLY PRICE.

                  (a)     Quantities of Product shall be delivered to WCH F.O.B.
Origin Freight Collect (latest edition of incoterms) and risk of loss shall pass
at the time of such delivery.

                  (b)     The price for Finished Product (the "Finished Product
Supply Price"), in the packaging set forth in Exhibit B attached hereto, for all
countries of the Territory shall be [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] per tablet (which amount is comprised of the Raw Materials,
Labor, Overhead and Profit components set forth on Exhibit A attached hereto,
based on a four hundred twenty (420) kilogram batch size) plus the API Per
Tablet Cost. For Finished Product shipped to WCH after December 31,
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] and each calendar year thereafter, the
Finished Product Supply Price shall be adjusted for such calendar year for
changes in Raw Materials and Labor costs, but not Overhead or Profit until
January 1, [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***], as provided in
Section 2.16. The Finished Product Supply Price for each country in the
Territory, except the United States, shall be increased for packaging variant
costs, including pre-printed lidding foil costs (if any), at CIMA's actual cost
as determined under Section 2.16. CIMA shall purchase Active Ingredient with
sufficient lead times to fill WCH's firm orders based on forecasts given
pursuant to Section 2.3. CIMA shall provide WCH in writing with the API Cost Per
Tablet (specifying the per kilo AI Price and quantity ordered or to be ordered
at such AI Price) as soon as possible.

                  (c)      WCH may place firm orders for Product having
imprinting, labeling or packaging variants or in less than full batch sizes
(four hundred twenty (420) kilograms), provided that the price for Finished
Product ordered in such variants less than full batch sizes shall be increased
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] per tablet to reimburse CIMA for making
modifications to labeling, imprinting or packaging to accommodate such partial
batch size variants.

                  (d)      Notwithstanding any provision herein to the contrary,
if at any time CIMA makes sales of Product to any person at a price lower than
the price then in effect hereunder for Product, or on payment and delivery terms
more favorable than those in effect hereunder, such lower price and/or more
favorable terms shall be made available to WCH hereunder, with respect to WCH's
inventory of Product as well as future purchases of Product, for so long as CIMA
continues to make sales to such person at such lower price and/or on such more
favorable terms.

                                      -5-

         2.3      FORECASTS.

                  (a)      Upon first NDA submission, WCH shall provide to CIMA
a non-binding rolling three (3) year Product forecast (based on calendar years
and updated at least semi-annually) for long-term manufacturing planning
purposes.

                  (b)      Thereafter, during the Term of this Agreement, WCH
shall provide CIMA on a calendar quarter basis, with a non-binding one (1) year
rolling forecast, providing CIMA with a written estimate of the quantities of
Product required during the next four (4) calendar quarters. Each such quarterly
estimate shall contain an update of the immediately preceding estimate with
respect to the calendar quarters referred to in such preceding estimate.

         2.4      FIRM ORDERS.

                  (a)      WCH shall place a firm order with CIMA for Product
requirements at least one hundred twenty (120) days in advance of the delivery
date for Product for sales by WCH in the United States. WCH shall place a firm
order with CIMA for Product requirements at least six (6) months in advance of
the delivery date for Product for the first order placed for Product in any
country of the Territory other than the United States, or for any order for
Product which would require any modification to the labeling or packaging
thereof; otherwise WCH may place a firm order at least ninety (90) days in
advance of the delivery date for Product. A firm order is a purchase order
authorizing manufacture of the Product. Notwithstanding the foregoing, if a
modification to Product or to the Specifications (exclusive of labeling) is
required for any country in the Territory, CIMA shall have at least six (6)
months from the approval of such modification by the applicable Agency to fill
any firm order for modified Product placed by WCH prior to such required
modification. CIMA shall supply Product to WCH as required hereunder, provided
that WCH provides CIMA with label copy which has been agreed to by both parties
as required hereunder and WCH's order for Product is in accordance with the
terms and conditions of this Agreement. Such order for Product placed by WCH
shall be in accordance with the provisions of this Agreement and made pursuant
to a purchase order in a form mutually acceptable to the parties. CIMA shall
ship Product in such quantities and on the dates specified in WCH's purchase
orders.

                  (b)      Notwithstanding the foregoing, CIMA has the right to
satisfy WCH's firm order requirements pursuant to this Article II by supplying
WCH with Product in full batch quantities provided that CIMA may round up or
down WCH's actual order for Product to the nearest full batch.

         2.5      LIMITS ON FIRM ORDERS. If a firm order made pursuant to
Section 2.4 is greater than one hundred fifty percent (150%) of the one (1) year
rolling forecast received by CIMA for such ninety (90) day period, then CIMA
shall use Commercially Reasonable Efforts, but shall not be obligated, to ship
that portion of the excess over one hundred fifty percent (150%).

         2.6      CANCELLATIONS OF ORDERS. If WCH cancels a firm order made
pursuant to Section 2.4, then WCH shall reimburse CIMA for all costs incurred by
CIMA as a result of such cancellation of such order, including materials, labor,
work in progress, obsolete inventory (including the AI Price for up to the
quantity of Active Ingredient purchased by CIMA to cover

                                      -6-

such canceled purchase order plus an additional two months supply based on WCH's
most recent forecast), disposal and overhead; but this obligation shall not
cover capital costs.

         2.7      PAYMENT TERMS. WCH shall pay invoices for Products delivered
hereunder thirty (30) days after the invoice date. WCH shall pay a penalty on
unpaid amounts overdue by more than thirty (30) days of one and one-half percent
(1.5%) per month for each month a payment is past due. Such penalty shall not
exceed eighteen percent (18%) per year.

         2.8      QUALITY ASSURANCE.

                  (a)      CIMA shall provide samples from each batch of Active
Ingredient to be used in the manufacture of Product and samples from each batch
of Product to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] (or such other
contract laboratory specified by WCH) to perform the [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] Tests to ensure that such Active Ingredient and Product, as the
case may be, meets the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Criteria,
until WCH notifies CIMA in writing that such practice may be suspended. CIMA
shall provide WCH with the results of such [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] Tests. [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] shall bill WCH
directly for such services, and such amounts shall not be included in CIMA's
Manufacturing Cost. If any batch of Active Ingredient or Product fails to meet
the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.***] Criteria, the parties shall be
relieved of their respective obligations hereunder to supply and accept delivery
of Product relating to such failed batch. CIMA shall not use any Active
Ingredient in the manufacture of Product that does not meet the [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] Criteria and shall not ship any Product to WCH that
does not meet the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Criteria. Any batch
of Active Ingredient or Product that does not meet the [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] Criteria shall be disposed of by CIMA as directed by
WCH. WCH shall reimburse CIMA the AI Price for Active Ingredient and the
Finished Product Supply Price for Product (less any amount allocated to Raw
Materials, Labor and Overhead not actually incurred by CIMA in the Manufacture
of such Product) that is deemed unacceptable hereunder solely by reason of its
failure to meet the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Criteria as
determined by such [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED

                                      -7-

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Testing; provided
that CIMA assigns to WCH all of its rights and interest in and to any claim that
it may have against the supplier of Active Ingredient for breach of warranty or
otherwise and CIMA fully cooperates with WCH in pursuing any claim by WCH
against the supplier of Active Ingredient. WCH shall be entitled to retain any
recovery it may receive from the supplier of Active Ingredient with respect to
any such claim.

                  (b)      Prior to the shipment of Product to WCH, CIMA shall
test representative samples of each of the batch(es) to be shipped in accordance
with validated, approved methods of analysis defined in the Specifications. CIMA
shall provide WCH with a Certificate of Analysis for each batch of Product
shipped to WCH stating that the Product so shipped conforms to the
Specifications. The Certificate of Analysis shall be in a format agreed upon by
the parties.

                  (c)      CIMA shall retain production samples and batch
records from each batch of Product for the longer of (i) two (2) years after the
expiry date of each such batch of Product or (ii) the time period required under
GMP. Upon request, CIMA shall provide WCH's Quality Control Department with
production samples of Product and/or copies of completed Batch records.

                  (d)      Master batch process documentation will be prepared
and approved by CIMA as per its normal procedures. The parties agree that
deviations from master batch process documentation may be necessary from time to
time. Such deviations shall be discussed with WCH before any proposed shipment
of Product. Individual batch process documentation shall be photocopied from the
approval master and issued for each batch as per CIMA's routine system. Original
batch records will be filed securely by CIMA. CIMA will perform all in-process
control tests demanded by the approved batch process. The parties shall execute
and deliver to each other a Quality Agreement substantially in the form of
Exhibit C. Each party agrees to perform is respective obligations in accordance
with this Agreement.

                  (e)      (i)    WCH shall have the right to test Product to
verify compliance with Specifications and applicable Regulatory Approvals and
CIMA shall supply WCH with its testing procedures. WCH may, by written notice
provided to CIMA within sixty (60) days of WCH's receipt of a shipment of
Product, reject all or part of such shipment of Product if, based upon the
testing of such Product conducted under this Section 2.8(e), such Product does
not comply with the Specifications or applicable Regulatory Approvals. If WCH
fails to notify CIMA within such sixty (60) day period, that it is rejecting
such Product, WCH shall be deemed to have accepted such Product.

                           (ii)   If CIMA, after good faith consultation with
WCH, disputes any finding by WCH that Product does not comply with the
Specifications or applicable Regulatory Approvals, samples of such Product shall
be forwarded to a Third Party jointly selected by WCH and CIMA for analysis,
which analysis shall be performed in compliance with applicable regulatory
requirements. The findings of such Third Party regarding whether Product
complies with the Specifications and the applicable Regulatory Approvals shall
be binding upon the parties for purposes of this Section 2.8(e). The cost of
such analysis by such Third Party shall be borne by the party whose findings
differed from those generated by such Third Party.

                                      -8-

                           (iii)  If as determined in accordance with this
Section 2.8(e), a shipment of Product does not conform to the Specifications or
applicable Regulatory Approvals, CIMA shall replace such shipment free of charge
(which includes without limitation CIMA paying for the cost of any Active
Ingredient included therein) with a substitute shipment which meets such
Specifications and applicable Regulatory Approvals according to the following
time frame. If the Product is in inventory then conforming Product will be
shipped so as to arrive as soon as practicable. If the Product is not in
inventory, CIMA will take all reasonable steps to ensure expeditious manufacture
of conforming Product which will be shipped on the next shipping day after
completion of manufacture so as to arrive as soon as possible thereafter. In the
event that testing at WCH indicates that Product does not conform with
Specifications or applicable Regulatory Approvals: (I) WCH shall immediately
notify CIMA; (II) WCH and CIMA shall mutually agree on an investigation program
to determine the cause of the discrepancy and the outcome of this investigation
shall be used to determine disposition of the batch; (III) where appropriate,
given the timetable for the agreed upon investigation program, CIMA shall take
all reasonable steps to ensure expeditious manufacture and shipment of
conforming Product; and (IV) shipment of such replacement Product shall take
place the next shipping day following completion of analytical work to
demonstrate conformance with Specifications and applicable Regulatory Approvals.
Shipment shall be by the quickest agreed route. At CIMA's expense and at WCH's
sole option: the non-conforming shipment shall be (A) returned to CIMA; or (B)
disposed of by WCH, upon final determination in accordance with this Section
2.8(e) that it does not meet the Specifications or applicable Regulatory
Approvals.

         2.9      WCH MANUFACTURE RIGHTS DURING THE TERM. Upon WCH's written
request, made at any time after the first ANDA submission, CIMA shall grant to
WCH the exclusive, irrevocable, transferable right to, and shall use
Commercially Reasonable Efforts to transfer to WCH, the manufacturing know-how
used by CIMA that is reasonably necessary to enable WCH to manufacture Product
for the OTC Field. If WCH exercises this right, except as provided below, WCH
shall pay CIMA (a) a [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] technical transfer
fee upon successful completion of the transfer process (defined as manufacture
of validation batches of Product meeting the Specifications), and (b) out of
pocket expenses incurred by CIMA directly related to the technical assistance
needed to facilitate the transfer process. If WCH exercises this right due to
the inability of CIMA to meet WCH firm orders for Product, for any reason other
than a condition of force majeure that lasts less than sixty (60) days, then WCH
shall pay CIMA only out-of-pocket expenses incurred by CIMA directly related to
the technical assistance needed to facilitate the transfer process.

         2.10     NOTIFICATION OF INSPECTIONS. Each party agrees to notify the
other within two (2) business days of its receipt of notification of any
inquiries, notifications, or inspection activity by any Agency, regulatory
authority or other authority in regard to or affecting Product. The recipient
party shall provide a reasonable description to the other party of any such
governmental inquiries, notifications or inspections promptly (but in no event
later than five (5) calendar days) after notification of completion of such
visit or inquiry. The recipient party shall furnish to the other party, (i)
within two (2) business days after receipt any report or correspondence issued
by the Agency or regulatory authority in connection with such visit or inquiry,
including but not

                                      -9-

limited to, any FDA Form 483, Establishment Inspection Reports or warning
letters and (ii) at the same time it provides to any Agency or regulatory
authority, copies of any and all documents, responses or explanations relating
to items set forth above, in each case purged only of trade secrets of the
recipient that are unrelated to the obligations under this Agreement or are
unrelated to Product. In the event such governmental agency or authority
requests or requires any action to be taken to address any citations, the
recipient agrees, after consultation with the other party, to take such action
as necessary to address such citations, and agrees to cooperate with the other
party with respect to any such citation and/or action taken with respect
thereto.

         2.11     INSPECTION BY WCH. CIMA shall permit WCH (at its own expense)
to visit, during normal business hours and with reasonable advance notice CIMA's
manufacturing facility(ies) and warehouse, subject to the confidentiality
provisions of this Agreement, for the purposes of (a) observing the manufacture,
packaging, testing and warehousing of Product and to inspect for compliance with
GMPs, applicable regulatory requirements, the requirements of any applicable
Regulatory Approvals, and environmental monitoring, (b) solving technical or
quality problems, (c) examining the premises, equipment, procedures and
personnel used when producing, testing or controlling Product and (d) all books
and records relating to (a), (b) or (c). CIMA representatives shall be entitled
to accompany WCH representatives on any such inspection.

         2.12     ENVIRONMENTAL AND OTHER LAWS AND REGULATIONS.

                  (a)     In carrying out its obligations under this Agreement,
CIMA shall comply with all applicable environmental, health and safety laws
(current or as amended or added, collectively "Laws"), and shall be solely
responsible for determining how to comply with same. CIMA represents and
warrants that it has the appropriate skills, personnel, equipment, permits or
approvals necessary to perform its services under this Agreement in compliance
with all applicable Laws.

                  (b)     CIMA shall notify WCH, in writing, no later than one
(1) business day after the event, of any circumstances, including the receipt of
any notice, warning, citation, finding, report or service of process, relating
to compliance with the Laws, or the occurrence of any release, spill, upset or
discharge of "Hazardous Substances" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
which relates to CIMA's ability to manufacture or supply Product. WCH reserves
the right to conduct an environmental inspection of CIMA's facility(ies), during
normal business hours and with reasonable advance notice, for the purpose of
determining compliance with this Section 2.12(b), no more frequently than once
per year during the term hereof and under conditions of confidentiality as
provided under Article VIII. Upon CIMA's request, WCH shall share the results of
any environmental inspection with CIMA. Such inspection, if it occurs, does not
relieve CIMA of its sole obligation to comply with the Laws and does not
constitute a waiver of any right otherwise available to WCH.

         2.13     SPECIFICATIONS AMENDMENTS. The Specifications shall be amended
or supplemented to comply with GMPs and to comply with any applicable Agency
directive and may also be amended or supplemented (including, without
limitation, for the purpose of

                                      -10-

incorporating improvements) from time to time. In the event CIMA intends to
amend the Specifications, WCH shall receive prompt advance notice of any such
amendments. No such amendment shall be filed with any applicable Agency or
otherwise become effective without the prior written mutual approval of WCH and
CIMA. In the event that after the parties have initially agreed upon the
Specifications, WCH requests that the Specifications be amended, CIMA shall
receive prompt advance notice of any such amendment for the purpose of
determining what, if any, impact the proposed amendment would have on the
manufacture of Product for WCH hereunder and WCH shall reimburse CIMA for the
actual costs incurred by CIMA (provided that such costs are approved in writing
by WCH prior to being incurred by CIMA) because such amendment requires changes
to be made in the processes, equipment, testing procedures, or components used
to manufacture Product for WCH hereunder. Upon WCH's request, CIMA shall use
Commercially Reasonable Efforts to eliminate animal derived materials from the
Product and WCH shall reimburse CIMA for the actual costs incurred by CIMA
(provided that such are approved in writing by WCH prior to being incurred by
CIMA) in connection therewith. In each case, such costs may include, without
limitation, validation of new processes, equipment and facilities, development
of testing methods and start-up costs. To the extent that any costs incurred by
CIMA in implementing an amendment of the Specifications under this Section have
been reimbursed by WCH such costs shall not be included in CIMA's Direct
Manufacturing Cost.

         2.14     APPROVAL FOR MANUFACTURING CHANGES; THIRD PARTY MANUFACTURING.
CIMA agrees that no changes will be made to any materials, equipment or methods
of production or testing which are specified in the Specifications or any
Regulatory Approval by any Agency for Product without WCH's prior written
approval, which approval shall not be unreasonably withheld. All Product
delivered hereunder shall be manufactured at the Facility. Under no
circumstances will CIMA contract out all or any part of the manufacturing of
Product to a Third Party without prior written approval from WCH.

         2.15     PERMITTED SUBCONTRACTORS. CIMA shall ensure that the permitted
contract manufacturers for the manufacture of Product have sufficient knowledge
and expertise to carry out the manufacture of Product and other subcontracted
responsibilities. In addition, CIMA shall ensure that (i) each such contract
manufacturer shall be in compliance with GMPs and shall be under the inspection
of all relevant Agencies and audited to be in compliance therewith, and (ii) WCH
will have the right to inspect and audit each such subcontractor's facilities
and records as provided in Section 2.11 hereof.

         2.16     CIMA'S MANUFACTURING COST CHANGES.

                  (a)     On January 1, [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***], and on each January 1 thereafter during the Term of this
Agreement, the Finished Product Supply Price shall be adjusted [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] percent [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of any
net change in the cost of (i) raw materials (including

                                      -11-

packaging but excluding Active Ingredient) necessary to the manufacture of
Product (collectively, the "Raw Materials") and (ii) direct labor (collectively,
the "Labor"), in each case actually incurred by CIMA in producing the Product
during the twelve (12) month period ending on the preceding December 31. On
January 1, [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***], the Finished
Product Supply Price shall be adjusted [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] percent [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of any net
change in the overhead costs attributable to the manufacture of Products
determined in accordance with United States generally accepted accounting
practices consistently applied (collectively, the "Overhead") during the
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] year period ending on December 31,
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] and a similar adjustment shall be made
on each January 1 after January 1, [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] during
the remainder of the Term for the twelve (12) month period ending on the
preceding December 31. Such increases shall be effective with respect to
Finished Product delivered to WCH on or after the January 1 effective date of
the applicable price adjustment. CIMA may not propose any increase in the profit
("Profit") component of Finished Product Supply Price prior to January 1,
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***].

                  (b)     On or before July 1, [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***], and on or before each July 1 thereafter during the Term of this
Agreement, CIMA shall provide WCH with a non-binding estimate of the amount by
which the price will increase pursuant to this Section 2.16 on the succeeding
January 1. CIMA shall determine the final amount of any such price increase by
no later than the following February 28, and CIMA shall notify WCH of such
amount in writing at that time. Product delivered to WCH between January 1 and
February 28, [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] (or the same
two-month period thereafter during each year of this Agreement) shall be
invoiced by WCH at the price applicable to Product delivered to WCH during the
immediately preceding calendar year. Then on or about February 28 of each year,
CIMA shall transmit to WCH a corrected invoice for Product delivered between
January 1 and February 28 of each year, taking into account the final amount of
any such price increases, and setting forth the applicable additional charges.

                  (c)     To determine the amount by which the cost of Raw
Materials, Labor and/or Overhead have increased during a period, the Raw
Materials, Labor and/or Overhead

                                      -12-

costs at the beginning of the period shall be compared to the Raw Materials,
Labor and/or Overhead costs at the end of the period, without regard to
intervening fluctuations.

                  (d)     In no event shall any increase in price pursuant to
Section 2.16(a) for Labor, Overhead and Profit exceed, on a percentage basis,
the percentage which the Producer's Price Index, published by the U.S.
Department of Labor, Bureau of Labor Statistics, increased during the period
since the last adjustment under Section 2.16(a).

                  (e)     At WCH's request, the parties shall informally discuss
the factors that contributed to any price adjustment hereunder.

                                   ARTICLE III
                             [INTENTIONALLY OMITTED]

                                   ARTICLE IV
                              REGULATORY COMPLIANCE

         4.1      ADVERSE DRUG EXPERIENCES. In order for the parties to comply
with their respective responsibilities under this Article IV and otherwise
relating to the reporting of Adverse Drug Experiences, to the extent either
party receives any information regarding Adverse Drug Experiences related to use
of Product, such party shall promptly provide the other party with such
information in accordance with the Adverse Event Reporting Procedures set forth
in Exhibit D hereto (as may be amended from time to time upon written agreement
of the parties).

         4.2      PRODUCT COMPLAINTS. WCH shall be solely responsible for
interacting with the public with respect to customer complaints regarding
Product quality. With respect to any such complaints, each party shall have the
responsibility for promptly conducting an investigation of any activities
conducted by it under this Agreement which may be relevant to the complaint.
Each party shall inform the other party of the nature, scope and details of any
such complaint which requires an investigation by the other party, and each
party shall promptly report the results of such investigation to the other
party. Either party shall cooperate in any investigation by the other party of
each such complaint which involves the parties' duties under this Agreement.

         4.3      COMPLIANCE ISSUES. The parties acknowledge that the export of
technical data, materials or products is subject to the exporting party
receiving the necessary export licenses and that the parties cannot be
responsible for any delays attributable to export controls which are beyond the
reasonable control of either party. The parties agree that regardless of any
disclosure made by the party receiving an export of any ultimate destination of
any technical data, materials or products, the receiving party will not
re-export either directly or indirectly, any technical data, material or
products without first obtaining the applicable validated or general license
from the United States Department of Commerce.

                                    ARTICLE V
                               PAYMENT PROVISIONS

                                      -13-

         5.1      INSPECTION OF RECORDS. The parties shall maintain at their
offices, accurate and complete books and records consistent with sound business
and accounting practices and in such form and in such detail as to enable the
amount of payments payable under this Agreement by the respective party to be
determined. WCH and CIMA shall permit an independent certified accountant
(subject to obligations of confidentiality) appointed by the other party and
reasonably acceptable to WCH or CIMA (as applicable), at the other party's
expense, to examine such books and records at all reasonable times for the sole
purpose of (i) verifying WCH's or CIMA's (as applicable) reports and accounting
submitted to the other party hereunder and (ii) determining the correctness of
payments. In the event of any underpayment of any payment by at least five
percent (5%), the costs of such inspection shall be borne by the party who made
such underpayment and such underpayment shall be forthwith paid by such party to
the other party with a penalty at the rate specified in Section 2.7 from the
date such payment was originally due until payment.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

         6.1      REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each of CIMA and
WCH hereby represents and warrants to the other party hereto as follows:

                  (a)     it is a corporation or entity duly organized and
validly existing under the laws of the state or other jurisdiction of
incorporation or formation;

                  (b)     the execution, delivery and performance of this
Agreement by such party has been duly authorized by all requisite corporate
action and does not require any shareholder action or approval;

                  (c)     it has the power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; and

                  (d)     the execution, delivery and performance by such party
of this Agreement and its compliance with the terms and provisions hereof does
not and will not conflict with or result in a breach of any of the terms and
provisions of or constitute a default under (i) a loan agreement, guaranty,
financing agreement, agreement affecting a product or other agreement or
instrument binding or affecting it or its property; (ii) the provisions of its
charter or operative documents or bylaws; or (iii) any order, writ, injunction
or decree of any court or governmental authority entered against it or by which
any of its property is bound.

         6.2      REPRESENTATIONS AND WARRANTIES OF CIMA. In addition to the
representations and warranties made by CIMA under Section 6.1 above, CIMA hereby
further represents and warrants to WCH that:

                  (a)     At the time of delivery of Product to the specified
point of delivery, Product shall (i) have been manufactured, stored and shipped
in accordance with GMPs, as applicable, and all other applicable laws, rules,
regulations or requirements in effect at the time of manufacture in the country
of manufacture (for example, in accordance with the procedures

                                      -14-

described in the applicable Regulatory Approval); (ii) conform to the
Specifications; (iii) meet the provisions of the Specifications; (iv) not be
adulterated or misbranded as provided for under any applicable law, order or
regulation in effect in the country of manufacture and the country in which
Product is being sold; (v) have a minimum shelf life of approved expiry minus
three (3) months; and (vi) have been shipped in accordance with approved
procedures agreed between WCH and CIMA.

                  (b)    It shall have good and marketable title to all Product
delivered to WCH.

         6.3      NO INCONSISTENT AGREEMENTS. Neither party has in effect and
after the Effective Date neither party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its obligations under
this Agreement.

         6.4      REPRESENTATION BY LEGAL COUNSEL. Each party hereto represents
that it has been represented by legal counsel in connection with this Agreement
and acknowledges that it has participated in the drafting hereof. In
interpreting and applying the terms and provisions of this Agreement, the
parties agree that no presumption shall exist or be implied against the party
which drafted such terms and provisions.

                                   ARTICLE VII
                                 INDEMNIFICATION

         7.1      INDEMNIFICATION BY WCH. WCH shall indemnify, defend and hold
harmless CIMA and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each a "CIMA Indemnified Party") from
and against any and all liability, loss, damage, cost and expense (including
reasonable attorney's fees) (collectively, a "Liability") which the CIMA
Indemnified Party may incur, suffer or be required to pay resulting from or
arising in connection with (i) the breach by WCH of any representation, warranty
or covenant contained in this Agreement, or (ii) subject to Sections 9.3(c) and
9.3(d) of the Development and License Agreement, the manufacture, promotion,
distribution, use, testing, marketing, sale or other disposition of Product by
WCH, its Affiliates or sublicensees. Notwithstanding the foregoing, WCH shall
have no obligation under this Agreement to indemnify, defend or hold harmless
any CIMA Indemnified Party with respect to claims, demands, costs or judgments
which result from either (x) the failure of Product supplied by CIMA or its
Affiliates to comply with the Specifications or the applicable Regulatory
Approvals or (y) the willful misconduct or negligent acts or omissions of CIMA,
its Affiliates, or any of their respective employees, officers, directors or
agents.

         7.2      INDEMNIFICATION BY CIMA. CIMA shall indemnify, defend and hold
harmless WCH and its Affiliates, and each of its and their respective employees,
officers, directors and agents (each, an "WCH Indemnified Party") from and
against any Liability which the WCH Indemnified Party may incur, suffer or be
required to pay resulting from or arising in connection with the breach by CIMA
of any representation, warranty or covenant contained in this Agreement.
Notwithstanding the foregoing, CIMA shall have no obligation under this
Agreement to indemnify, defend, or hold harmless any WCH Indemnified Party with
respect to claims, demands, costs of judgments which result from the willful
misconduct or negligent acts

                                      -15-

or omissions of WCH, its Affiliates, or sublicensees or any of their respective
employees, officers, directors or agents.

         7.3      CONDITIONS TO INDEMNIFICATION. The obligations of the
indemnifying party under Sections 7.1 and 7.2 are conditioned upon delivery of
written notice to the indemnifying party of any potential Liability promptly
after the indemnified party becomes aware of such potential Liability, provided,
however, that the failure to give such notice promptly shall not impair a
party's rights to indemnification under this Article VII unless the delay in
providing such notice has a material adverse effect on the ability of the
indemnifying party to defend against such Liability. The indemnifying party
shall have the right to assume the defense of any suit or claim related to the
Liability if it has assumed responsibility for the suit or claim in writing;
however, if in the reasonable judgment of the indemnified party, such suit or
claim involves an issue or matter which could have a materially adverse effect
on the business operations or assets of the indemnified party, the indemnified
party may waive its rights to indemnity under this Agreement and control the
defense or settlement thereof, but in no event shall any such waiver be
construed as a waiver of any indemnification rights such party may have at law
or in equity. If the indemnifying party defends the suit or claim, the
indemnified party may participate in (but not control) the defense thereof at
its sole cost and expense.

         7.4      SETTLEMENTS. Neither party may settle a claim or action
related to a Liability without the consent of the other party, if such
settlement would impose any monetary obligation on the other party or require
the other party to submit to an injunction or otherwise limit the other party's
rights under this Agreement. Any payment made by a party to settle any such
claim or action shall be at its own cost and expense except in the event that
such payment was made with the prior written consent of the indemnifying party,
in which case such payment will be subject to the indemnification obligations of
the parties as set forth in this Article VII.

         7.5      INSURANCE. CIMA shall obtain and carry in full force and
effect product liability insurance in respect of Product in the amount of One
Million Dollars ($1,000,000) per occurrence and in the aggregate and policies of
Ten Million Dollars ($10,000,000) of excess coverage in the aggregate. WRH shall
obtain and carry in full force and effect product liability insurance, or be
self insured, in respect of Product in the amount of One Million Dollars
($1,000,000) per occurrence and in the aggregate and policies of Ten Million
Dollars ($10,000,000) of excess coverage in the aggregate.

                                  ARTICLE VIII
                                 CONFIDENTIALITY

         8.1      NONDISCLOSURE. During the Term of this Agreement and for a
period of five (5) years thereafter, all proprietary and confidential business,
technical, scientific and/or regulatory information, including Technical
Information, disclosed to the receiving party or its Affiliates (herein
collectively, the "Receiving Party") by the other party or its Affiliates
(herein collectively, the "Disclosing Party") hereunder or under the existing
Confidentiality Agreement between the parties, which is marked as confidential
at the time of disclosure, or if disclosed or obtained orally or visually (or
otherwise in a non-written form), was described or summarized in a writing or
other tangible form and identified as Confidential and forwarded to the
Receiving

                                      -16-

Party within thirty (30) days of such disclosure (collectively, "Confidential
Information"), shall be deemed to be confidential and shall be treated as such
by the Receiving Party and shall not be disclosed, in whole or in part, by the
Receiving Party to any other Person except as expressly set forth herein, and
shall be used only for the purposes of this Agreement. Notwithstanding the
foregoing, these mutual obligations of confidentiality shall not apply to any
information to the extent that such information is:

                  (i)      independently developed by such party as documented
                           by prior written records outside the scope and not in
                           violation of this Agreement;

                  (ii)     legally in the public domain at the time of its
                           receipt or thereafter legally becomes part of the
                           public domain through no fault of the recipient;

                  (iii)    received without an obligation of confidentiality
                           from a Third Party having the right to disclose such
                           information;

                  (iv)     released from the restrictions of this Article VIII
                           by the express written consent of the Disclosing
                           Party; or

                  (v)      as may be required for securing Regulatory Approval,
                           or as may be required to be disclosed to an Agency or
                           as otherwise required by a court order or any law or
                           regulation (including, as may be required in
                           connection with any filings made with the Securities
                           and Exchange Commission or by the disclosure policies
                           of a major stock exchange in the Territory);
                           provided, however, that at the other party's request,
                           the disclosing party shall request that the relevant
                           legal or regulatory authority, or major stock
                           exchange, treat as confidential any Confidential
                           Information of either party included in any such
                           disclosure and generally use diligent efforts to seek
                           confidential treatment where available.

         8.2      SCOPE OF CONFIDENTIALITY. CIMA and WCH agree to limit the
disclosure of any Technical Information and other Confidential Information
received hereunder to such Affiliates, employees, consultants and distributors
as are necessary to carry out the provisions of this Agreement and who are
likewise bound by provisions equivalent to this Article VIII, except that, WCH
may disclose Confidential Information to actual or potential sublicensees and
subdistributors, provided that they are likewise bound by confidentiality
provisions similar to, or more stringent than, those set forth in this Article
VIII. The parties shall take reasonable measures to assure that no unauthorized
use or disclosure is made by Persons to whom access to such Confidential
Information is granted.

                                   ARTICLE IX
                              TERM AND TERMINATION

         9.1      TERM. This Agreement shall be effective as of the Effective
Date, and, unless sooner terminated by mutual agreement or pursuant to any other
provision of this Agreement, shall continue in full force and effect in each
country of the Territory for a period of ten (10)

                                      -17-

years after the Launch Date of Product in the United States which shall be
deemed to occur no later than six (6) months after obtaining Regulatory Approval
in the United States. If the Development and License Agreement is terminated for
any reason other than expiration, then this Agreement shall automatically
terminate.

         9.2      TERMINATION FOR DEFAULT. Each party may terminate this
Agreement as a whole if the other party commits a material breach of any
material obligation under this Agreement and fails to remedy such breach within
sixty (60) days after receipt of notice in writing from such party, or such
longer period of time if mutually agreed.

         9.3      TERMINATION BY WCH. WCH shall have the right, in its sole
discretion, to terminate this Agreement at any time during the Term of this
Agreement upon six (6) months' prior written notice to CIMA.

         9.4      NO DAMAGES UPON EXPIRATION OR TERMINATION. Except as otherwise
set forth in this Agreement, neither party shall be entitled to any compensation
whatsoever as a result of expiration or termination of this Agreement, but
without limiting either party's damages for any breach of this Agreement.

         9.5      CONTINUING OBLIGATIONS. Termination or expiration of this
Agreement for any reason shall be without prejudice to any obligations which
shall have accrued to the benefit of either party prior to such termination or
expiration. Upon termination or expiration of this Agreement, any payments owed
to the other party on or before the effective date of termination shall be due
within thirty (30) days of the effective date of such termination or expiration.
The following provisions of this Agreement shall survive expiration or
termination hereof: Articles VII, VIII, IX and XI.

                                    ARTICLE X
                                  PUBLICATIONS

         10.1     PUBLICATIONS. The parties shall mutually agree upon
publications and the publication strategy with respect to work undertaken by the
parties relating to Product, and neither party shall publish any result or study
generated or developed under this Agreement except upon review by the other
party at least sixty (60) days prior to submission of an abstract or manuscript
for publication.

                                   ARTICLE XI
                                  MISCELLANEOUS

         11.1     FORCE MAJEURE. Neither party shall be liable for delay or
failure to perform its obligations hereunder for so long as that failure or
delay is the result of an event beyond its control which it could not have
avoided by the exercise of reasonable diligence, (a "Force Majeure Event"),
provided that such party uses Commercially Reasonable Efforts to comply with the
terms of this Agreement as soon as practicable. A party asserting a Force
Majeure Event shall notify the other party promptly, giving an indication of the
likely extent and duration thereof.

                                      -18-

         11.2     ASSIGNMENT; SUCCESSORS AND ASSIGNS. Neither party shall at
any time, without obtaining the prior written consent of the other party, assign
or transfer this Agreement to any Person. Notwithstanding the foregoing, each
party shall be permitted to assign this Agreement to its Affiliates or to
perform this Agreement, in whole or in part, through its Affiliates, provided
that such party shall be primarily liable and responsible for performance by
such Affiliate hereunder; and each party may also assign this Agreement to any
successor by merger or upon a sale of all or substantially all of its assets or
business to which this Agreement relates. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their successors and permitted
assigns.

         11.3     NOTICES. Any notices required or permitted to be given
hereunder shall be in writing in the English language and shall be delivered by
international courier service (requiring signature upon receipt) or sent by
first class air mail, postage prepaid, or telefax (confirmed by phone
conversation with the recipient) to the addresses set forth below. The parties
may change the address at which notice is to be given by giving notice to the
other party as herein provided. All notices shall be deemed effective upon
receipt by the party to whom it is addressed.

         If to CIMA:

                  CIMA Labs. Inc.
                  10000 Valley View Road
                  Eden Prairie, Minnesota 55344
                  Attention:    President and CEO
                  Telephone:    612-947-8762
                  Telefax:      612-947-8770

         If to WCH:

                  Wyeth Consumer Healthcare Division
                  Wyeth
                  Five Giralda Farms
                  Madison, New Jersey 07940
                  Attention:    President
                  Telephone:    973-660-5773
                  Telefax:      973-660-7199

         With a copy to:

                  Wyeth
                  5 Giralda Farms
                  Madison, New Jersey 07940
                  Attention:    General Counsel
                  Telephone:    973-660-6040
                  Telefax:      973-660-7050

                                      -19-

         11.4     GOVERNING LAW AND JURISDICTION. This Agreement and its
execution, validity and interpretation shall be governed in all respects in
accordance with the laws of the State of New York, excluding conflicts of law
rules.

         11.5     SEVERABILITY. In the event that any provision of this
Agreement shall be held to be unenforceable, invalid or in contravention of
applicable law, such provision shall be of no effect, and the parties shall
negotiate in good faith to replace such provision with a provision which effects
to the extent possible the original intent of such provision.

         11.6     COMPLETE AGREEMENT; MODIFICATIONS. This Agreement, together
with the Development and License Agreement and all Exhibits attached hereto and
thereto, constitutes the entire Agreement between the parties with respect to
the present subject matter, all prior negotiations, agreements and
understandings being expressly canceled hereby. This Agreement may be amended
only by a written agreement embodying the full terms of the amendment signed by
authorized representatives of both parties.

         11.7     NO AGENCY. Neither party shall by virtue of this Agreement
have any power to bind the other to any obligation nor shall this Agreement
create any relationship of agency, partnership or joint venture.

         11.8     NO WAIVER. No term or condition of this Agreement shall be
considered waived unless reduced to writing and duly executed by an officer of
the waiving party. Any waiver by any party of a breach of any term or condition
of this Agreement will not be considered as a waiver of any subsequent breach of
this Agreement, of that term or condition or any other term or condition hereof.

         11.9     COUNTERPARTS. This Agreement may be executed in counterparts,
each of which together shall constitute one and the same Agreement.

         11.10    AMENDMENT OF THE ORIGINAL SUPPLY AGREEMENT. The parties agree
that, with effect from the Effective Date, the Original Supply Agreement is
hereby amended to exclude the OTC Field from its scope and that this Agreement
and the Development and License Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and thereof for
the OTC Field.

                                      -20-

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                       CIMA LABS INC

                       By:    /s/ John Hontz
                             --------------------------------------------------
                             Name: John Hontz
                             Title:   Chief Operating Officer

                         WYETH,
                         acting through its Wyeth Consumer Healthcare Division

                         By:  /s/ Gregory F. Bobyock
                             --------------------------------------------------
                             Name: Gregory F. Bobyock
                             Title: Vice President, Global Business Development

                                      -21-

                                    EXHIBIT A

                                      PRICE

Finished Product Supply
  Price per Tablet                                   Components
                          API Cost Per    Raw
                             Tablet *   Materials    Labor   Overhead    Profit

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                    SECURITIES AND EXCHANGE COMMISSION.***]

* Assumes a net purchase price of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] per
kilo of Active Ingredient.

                                    EXHIBIT B

                                    PACKAGING

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
 SECURITIES AND EXCHANGE COMMISSION.***]

                                    EXHIBIT C

                                QUALITY AGREEMENT

                                  [Wyeth LOGO]

                                QUALITY AGREEMENT

Quality Agreement for:

This document constitutes the quality agreement for purchase of PRODUCT, a
pharmaceutical product manufactured for Wyeth. Also described is the FDA
approved product application under which the product will be manufactured as
well as the operations to blister, label, carton, test, release and distribute
the product to Wyeth.

It defines the individual responsibilities of Wyeth and the Supplier, and in
particular defines who is responsible for the cGMP aspects of manufacturing and
specifies the way in which the Qualified Person releasing product batches for
sale ensures that they comply with the FDA approved product application.

The quality agreement takes the form of a detailed check list of all the
activities associated with pharmaceutical production, analysis, release,
distribution. Responsibility for each activity is assigned to either Wyeth,
Supplier or Not Applicable in the appropriate tick box. It is then appended to
the legal contract which covers the commercial and other aspects of the
agreement between the parties.

WYETH CONSUMER HEALTHCARE,             SUPPLIER
DIVISION OF WYETH
555 East Lancaster Avenue
St. David's, PA 19087, USA

Position: _______________________      Position: _______________________

Name:____________________________      Name:____________________________

Signature:_______________________      Signature:_______________________

Date:____________________________      Date:____________________________

Position: _______________________      Position:

Name:____________________________      Name:____________________________

Signature:_______________________      Signature:_______________________

Date:____________________________      Date:____________________________



- ---------------------------------------------------------------------------------------------------------------------------------
                                          RESPONSIBILITIES                                     NOT          WYETH      SUPPLIER
                                                                                           APPLICABLE
- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
1        COMPLIANCE REQUIREMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
1.1      Warrant that PRODUCT will be manufactured, tested, packaged, and held
         in accordance with all applicable FDA requirements and/or applicable
         regulatory agencies.

- ---------------------------------------------------------------------------------------------------------------------------------
1.2      Manufacture and package product in strict adherence to the approved drug
         application.

- ---------------------------------------------------------------------------------------------------------------------------------
1.3      Permit audits of all relevant premises, procedures, and documentation by Wyeth,
         and permit inspection by Regulatory Authorities.

- ---------------------------------------------------------------------------------------------------------------------------------
1.4      Not to subcontract any of the work to a third party without prior agreement.

- ---------------------------------------------------------------------------------------------------------------------------------
1.5      Have copies available for inspection of all supplements, annual
         reports, annual product reviews, correspondence to approved drug
         application on CMC or labeling issues for products supplied to WA
         during periodic inspections of Suppliers facilities and systems.

- ---------------------------------------------------------------------------------------------------------------------------------
1.6      Supplier shall not file any amendment or supplement to it's ANDA that
         would significantly impact Supplier's ability to supply the PRODUCT to
         Wyeth in the manner described in the supply agreement, without prior
         written notice to Wyeth for their product.

- ---------------------------------------------------------------------------------------------------------------------------------
1.7      Supplier shall notify Wyeth of any FDA Form 483s, Warning Letters or
         the like from applicable regulatory agencies within seven (7) days of
         receipt and subsequent responses(s) relating to the product or
         facilities used to produce, test, or package the product.

- ---------------------------------------------------------------------------------------------------------------------------------
1.8      Copies of responses to regulatory agencies request(s) for product
         sample, batch records, or notice of inspections for product supplied
         for Wyeth will be provide within seven (7) days of correspondence
         forwarded to the agency.

- ---------------------------------------------------------------------------------------------------------------------------------
1.9      Notify Wyeth within 24 hours of any recall and / or confirmed stability
         failure for product supplied to Wyeth.

- ---------------------------------------------------------------------------------------------------------------------------------
1.10     Represent that it is not debarred under the U. S. Generic Drug Enforcement Act of
         1992 or employ or use the services of any individual who is debarred or who has
         engaged in activities that could lead to being debarred.

- ---------------------------------------------------------------------------------------------------------------------------------
1.11     Perform and maintain all validation current including but not limited to: process,
         analytical method, cleaning, computer, packaging, sanitization.

- ---------------------------------------------------------------------------------------------------------------------------------
1.12     Conduct operations in compliance with applicable environmental, occupational
         health and safety laws and regulations.

- ---------------------------------------------------------------------------------------------------------------------------------
1.13     Investigate and resolve all medical and non-medical product complaints. (Refer to
         Schedule "Reporting Adverse Drug Experiences").

- ---------------------------------------------------------------------------------------------------------------------------------
1.14     Notify Wyeth of any requests for information, notices of violations or
         other communication from a government agency relating to environmental,
         occupational health and safety compliance.

- ---------------------------------------------------------------------------------------------------------------------------------
1.15     Notify Wyeth of any incident affecting compliance to environmental, occupational
         health and safety laws.

- ---------------------------------------------------------------------------------------------------------------------------------
1.16     Conduct stability testing according to ANDA protocol

- ---------------------------------------------------------------------------------------------------------------------------------
1.17     Product Stability Monitoring as filed in ANDA and "Annual Stability
         Reports" will be made available for annual inspection by WA.

- ---------------------------------------------------------------------------------------------------------------------------------
1.18     Issue and follow up on FDA Field Alerts

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


                                       -C-2-


- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
1.19     Complaints - Product Quality and Adverse Drug Experience

- ---------------------------------------------------------------------------------------------------------------------------------
                  Collection and logging

- ---------------------------------------------------------------------------------------------------------------------------------
                  Investigation and issue of reports

- ---------------------------------------------------------------------------------------------------------------------------------
                  Follow up corrective action

- ---------------------------------------------------------------------------------------------------------------------------------
1.20     Annual product review:  Manufacturing and Analytical Testing

- ---------------------------------------------------------------------------------------------------------------------------------
1.21     Final Annual Product Review that includes results from 1.19 and 1.20.

- ---------------------------------------------------------------------------------------------------------------------------------
1.22     Product Recall

- ---------------------------------------------------------------------------------------------------------------------------------
                  Decision to initiate recall

- ---------------------------------------------------------------------------------------------------------------------------------
                  Communicate decision to initiate recall

- ---------------------------------------------------------------------------------------------------------------------------------
                  Approval of wording of notification to appropriate regulatory agencies

- ---------------------------------------------------------------------------------------------------------------------------------
                  Notification to appropriate regulatory agencies

- ---------------------------------------------------------------------------------------------------------------------------------
                  Management of recall

- ---------------------------------------------------------------------------------------------------------------------------------
                  Reconciliation of returned product

- ---------------------------------------------------------------------------------------------------------------------------------
1.23     Responsibility to Authorities

- ---------------------------------------------------------------------------------------------------------------------------------
               Liaison with Regulatory Authorities on product inquires

- ---------------------------------------------------------------------------------------------------------------------------------
               Maintain safety /hazard and handling data on product and raw materials

- ---------------------------------------------------------------------------------------------------------------------------------
               Liaison with Heath and Safety Authorities

- ---------------------------------------------------------------------------------------------------------------------------------
               Liaison with Environmental Protection Authorities (Pollution Prevention)

- ---------------------------------------------------------------------------------------------------------------------------------
2        PRODUCTION AND TESTING OF BULK TABLET PRODUCT
- ---------------------------------------------------------------------------------------------------------------------------------
2.1      Master Formula

- ---------------------------------------------------------------------------------------------------------------------------------
2.2      Product specification

- ---------------------------------------------------------------------------------------------------------------------------------
2.3      Batch identification system for bulk tablet product manufacture

- ---------------------------------------------------------------------------------------------------------------------------------
2.4      Qualification, approval of additional active pharmaceutical ingredient (API)
         supplier(s).

- ---------------------------------------------------------------------------------------------------------------------------------
2.5      Procurement of API's,  (include. Certificates of analysis, COA).

- ---------------------------------------------------------------------------------------------------------------------------------
2.6      Storage of API's.

- ---------------------------------------------------------------------------------------------------------------------------------
2.7      Sampling of API's

- ---------------------------------------------------------------------------------------------------------------------------------
2.8      Test method for API's, including method validation.

- ---------------------------------------------------------------------------------------------------------------------------------
2.9      Analysis of API's (include documentation, COA)

- ---------------------------------------------------------------------------------------------------------------------------------
2.10     Release of API's

- ---------------------------------------------------------------------------------------------------------------------------------
2.11     Retain reference samples of API's, including samples of periodic
         re-tests, for one (1) year beyond product expiry date.
- ---------------------------------------------------------------------------------------------------------------------------------


                                       -C-3-


- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
2.12     Qualification, approval of inactive substance suppliers.

- ---------------------------------------------------------------------------------------------------------------------------------
2.13     Procurement of inactive substances (include COA)

- ---------------------------------------------------------------------------------------------------------------------------------
2.14     Storage of inactive substances

- ---------------------------------------------------------------------------------------------------------------------------------
2.14     Sampling of inactive substances

- ---------------------------------------------------------------------------------------------------------------------------------
2.15     Test method and method validation for inactive substances

- ---------------------------------------------------------------------------------------------------------------------------------
2.16     Analysis of inactive substances (include documentation, COA)

- ---------------------------------------------------------------------------------------------------------------------------------
2.17     Release of inactive substances

- ---------------------------------------------------------------------------------------------------------------------------------
2.18     Retain reference samples of inactive substances, including samples of
         periodic re-tests, for one (1) year beyond product expiry date.

- ---------------------------------------------------------------------------------------------------------------------------------
2.19     Process Validation

- ---------------------------------------------------------------------------------------------------------------------------------
2.20     Cleaning Validation

- ---------------------------------------------------------------------------------------------------------------------------------
2.21     Bill of Materials (BOM) for bulk tablet manufacturing

- ---------------------------------------------------------------------------------------------------------------------------------
2.22     Manufacturing Instructions (Production Operating Instructions)

- ---------------------------------------------------------------------------------------------------------------------------------
2.23     Production of bulk tablet material (include batch documentation)

- ---------------------------------------------------------------------------------------------------------------------------------
2.24     Document, investigate and resolve deviations from approved
         manufacturing instructions or specifications. All deviations shall be
         recorded and justified. Supply a copy to Wyeth of all incident reviews
         and/or out-of-spec results that correspond with the given batch.

- ---------------------------------------------------------------------------------------------------------------------------------
2        PRODUCTION AND TESTING OF BULK TABLET PRODUCT

- ---------------------------------------------------------------------------------------------------------------------------------
2.25     Bulk tablet product sampling plan

- ---------------------------------------------------------------------------------------------------------------------------------
2.26     Sampling of bulk tablet product

- ---------------------------------------------------------------------------------------------------------------------------------
2.27     Test method and method validation for bulk tablet product

- ---------------------------------------------------------------------------------------------------------------------------------
2.28     Analysis of bulk tablet product

- ---------------------------------------------------------------------------------------------------------------------------------
2.29     Certificate of analysis for bulk tablet product

- ---------------------------------------------------------------------------------------------------------------------------------
2.30     Equipment and instrument maintenance and calibration.

- ---------------------------------------------------------------------------------------------------------------------------------
2.31     Stability testing of product in bulk tablet storage according to ANDA protocol

- ---------------------------------------------------------------------------------------------------------------------------------
2.32     Maintain all batch records for a minimum of one year beyond product expiry date.
         Validation batch production and testing records should be kept permanently

- ---------------------------------------------------------------------------------------------------------------------------------
2.33     Release of bulk tablet product by QA

- ---------------------------------------------------------------------------------------------------------------------------------
3.       STORAGE AND TRANSPORTATION OF BULK PRODUCT AND WASTE DISPOSAL

- ---------------------------------------------------------------------------------------------------------------------------------
3.1      Storage of bulk product up to packaging or delivery to Wyeth

- ---------------------------------------------------------------------------------------------------------------------------------
3.2      Storage of bulk product tablets.

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


                                       -C-4-


- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
3.3      Storage of bulk product according to labeled storage conditions

- ---------------------------------------------------------------------------------------------------------------------------------
3.4      Transportation of bulk product to Wyeth or designated third party.

- ---------------------------------------------------------------------------------------------------------------------------------
3.5      Disposal of waste

- ---------------------------------------------------------------------------------------------------------------------------------
3.6      Disposal of special waste, e.g. toxic waste, solvents, etc. (specify nature of
         waste and special disposal methods required)

         ____________________________________________

         ____________________________________________

         ____________________________________________

- ---------------------------------------------------------------------------------------------------------------------------------
4.       PACKAGING OF FINISHED PRODUCT

- ---------------------------------------------------------------------------------------------------------------------------------
4.1      Finished product specification

- ---------------------------------------------------------------------------------------------------------------------------------
4.2      Batch identification system for finished product

- ---------------------------------------------------------------------------------------------------------------------------------
4.3      Artwork and labeling text (blister, carton, leaflet, label, etc.)

- ---------------------------------------------------------------------------------------------------------------------------------
4.4      Labeling review and approval

- ---------------------------------------------------------------------------------------------------------------------------------
4.5      Specifications for packaging materials

- ---------------------------------------------------------------------------------------------------------------------------------
4.6      Test methods and method validation for packaging materials

- ---------------------------------------------------------------------------------------------------------------------------------
4.7      Qualification and approval of packaging components and labeling suppliers

- ---------------------------------------------------------------------------------------------------------------------------------
4.8      Procurement of packaging materials

- ---------------------------------------------------------------------------------------------------------------------------------
4.9      Analysis of packaging materials

- ---------------------------------------------------------------------------------------------------------------------------------
4.10     Release of packaging materials

- ---------------------------------------------------------------------------------------------------------------------------------
4.11     Retain samples of packaging materials for one year past product expiry date.

- ---------------------------------------------------------------------------------------------------------------------------------
4.12     Validation of packaging process

- ---------------------------------------------------------------------------------------------------------------------------------
4.13     Bill of Materials (BOM) for packaging

- ---------------------------------------------------------------------------------------------------------------------------------
4.14     Packaging Instructions (POI for packaging)

- ---------------------------------------------------------------------------------------------------------------------------------
4.15     Packaging operations (include documentation)

- ---------------------------------------------------------------------------------------------------------------------------------
4.16     In-process control instructions

- ---------------------------------------------------------------------------------------------------------------------------------
4.17     In-process controls during packaging (include documentation)

- ---------------------------------------------------------------------------------------------------------------------------------
4.18     Finished product sampling plan

- ---------------------------------------------------------------------------------------------------------------------------------
4.19     Sampling of finished product including retain samples, stability
         sample, release samples, customer sample.

- ---------------------------------------------------------------------------------------------------------------------------------
4.20     Retain reference samples of finished product for one year past product expiry date

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


                                       -C-5-


- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
4.21     Reconciliation of packaging materials

- ---------------------------------------------------------------------------------------------------------------------------------
4.22     Equipment and instrument maintenance and calibration

- ---------------------------------------------------------------------------------------------------------------------------------
4.23     Document, investigate and resolve any deviation from approved packaging
         instructions or specifications.

- ---------------------------------------------------------------------------------------------------------------------------------
5.       TESTING AND RELEASE OF FINISHED PRODUCT

- ---------------------------------------------------------------------------------------------------------------------------------
5.1      Test method and method validation for finished product

- ---------------------------------------------------------------------------------------------------------------------------------
5.2      Equipment and instrument maintenance and calibration

- ---------------------------------------------------------------------------------------------------------------------------------
5.3      Analysis of finished product by QA

- ---------------------------------------------------------------------------------------------------------------------------------
5.4      Release of finished product by QA

- ---------------------------------------------------------------------------------------------------------------------------------
5.5      -   Certificate of analysis for finished product testing. Supplier to supply
             Cof A which contains info needed:
         -   Written description of tablet.
         -   Test Name
         -   Release Specification
         -   Results
         -   Bulk hold expiration date
         -   Expiration date when packaged in final container.

- ---------------------------------------------------------------------------------------------------------------------------------
6.       DOCUMENTATION

- ---------------------------------------------------------------------------------------------------------------------------------
6.1      -   Provide Certificate of Compliance including: No In Process OOS data.
         -   No Investigation Reports issued against lot or See attached IR# ________.
         -   Batch records have been audited and approved by Supplier QA.
         -   All raw materials used in the MFG of this batch have been QA approved and sourced from
             approved suppliers.
         -   Manufacture Date: ________.
         -   Bulk Retest Date: ________.
         -   Expiration when PKG in final container: ________.
         -   Manufacturing and testing was conducted against approved procedures.

- ---------------------------------------------------------------------------------------------------------------------------------
6.2      -   Provide the following documentation to Wyeth for batches:
         -   C of A
         -   Cof C as part of the C of A
         -   Packaging Records (Blistering)
                  Line Clearance
                  Assembly instructions
                  In Process test results
                  Component Check-in
                  Yield/reconciliation calculations.
         -   Packaging Records (Cartoning)
         -   Representative Packaged Product Samples (AQL sampling)

- ---------------------------------------------------------------------------------------------------------------------------------
6.3      Accountabilities for all critical manufacturing steps. Any
         accountability outside pre-established limits must be investigated and
         a copy of the investigation included with batch records.
- ---------------------------------------------------------------------------------------------------------------------------------


                                       -C-6-

                                    EXHIBIT D

                     ADVERSE EXPERIENCE REPORTING PROCEDURES

         The parties hereby agree that the following terms will govern
disclosures of each party to the other with respect to adverse event reporting
relating to Product as clinically tested or marketed by or on behalf of either
party.

1.       DEFINITIONS.

         1.1      ADVERSE EXPERIENCE OR EVENT (AE): An AE is defined by WCH as
                  any untoward, undesired, or unplanned event in the form of
                  signs, symptoms, disease, or laboratory or physiological
                  observations occurring in a human being in a temporal
                  relationship to use of an WCH product regardless of causal
                  relationship. This includes:

                  -  any clinically significant worsening of a pre-existing
                     condition;

                  -  an AE occurring from overdose (i.e., a dose higher than
                     that prescribed by a health care professional for clinical
                     reasons) of an WCH product, whether accidental or
                     intentional;

                  -  an AE occurring from abuse (i.e., use for non-clinical
                     reasons) of an WCH product;

                  -  an AE that has been associated with the discontinuation of
                     the use of an WCH product;

                  -  any failure of expected pharmacological action (for
                     spontaneous reports).

                  If there is any doubt whether the information constitutes an
                  AE, the information will be treated as an AE.

         1.2      SERIOUS AE: A serious AE is defined by WCH as an AE occurring
                  at any dose that: results in death; is life-threatening (see
                  below); requires inpatient hospitalization or prolongation of
                  an existing hospitalization; results in a persistent or
                  significant disability or incapacity (see below); results in
                  cancer; or results in a congenital anomaly or birth defect.
                  Additionally, IMPORTANT MEDICAL EVENTS that may not result in
                  death, be life-threatening, or require hospitalization may be
                  considered a serious AE when, based upon appropriate medical
                  judgment, they may jeopardize the patient or subject and may
                  require medical or surgical intervention to prevent one of the
                  outcomes listed in this definition. Examples of such medical
                  events include allergic bronchospasm requiring intensive
                  treatment in an emergency room or at home; blood dyscrasias or
                  convulsions that do not result in hospitalization; or the
                  development of drug dependency or abuse.

                  1.2.1    Life-threatening refers to immediate risk of death as
                           the event occurred. A life-threatening experience
                           does not include an experience that, had it occurred
                           in a more severe form, might have caused death but as
                           it actually occurred did not create an immediate risk
                           of death. For example, hepatitis that resolved
                           without evidence of hepatic failure would not be
                           considered life-threatening even though hepatitis of
                           a more severe nature can be fatal. Similarly, an
                           allergic reaction resulting in angioedema of the face
                           would not be life-threatening, even though angioedema
                           of the larynx, allergic bronchospasm, or anaphylaxis
                           can be fatal.

                  1.2.2    Disability is defined as a substantial disruption in
                           a person's ability to conduct normal life functions.

                  1.2.3    For studies, all pregnancies and all overdoses will
                           be reported to GSSE in the same time frame as serious
                           AEs.

                  1.2.4    A serious AE obtained from tests in laboratory
                           animals includes any experience suggesting a
                           significant risk for human subjects, including any
                           findings of mutagenicity, teratogenicity, or
                           carcinogenicity.

                  1.2.5    If there is any doubt whether the information
                           constitutes a serious AE, the information will be
                           treated as a serious AE.

         1.3      NON-SERIOUS AE: is any AE which does not meet the criteria for
                  a serious AE.

         1.4      UNEXPECTED AE: An unexpected AE is one that is not listed in
                  the current product labeling. The current product labeling is
                  either the package insert (for marketed WCH products) or the
                  current investigator's brochure (for investigational WCH
                  products).

                  An unexpected AE includes any event that may be
                  symptomatically and pathophysiologically related to an event
                  listed in the labeling, but differs from the labeled event
                  because of greater severity or specificity. For example,
                  hepatic necrosis would be unexpected (by virtue of greater
                  severity) if the product labeling referred only to elevated
                  hepatic enzymes or hepatitis. Similarly, cerebral
                  thromboembolism and cerebral vasculitis would be unexpected
                  (by virtue of greater specificity) if the labeling only listed
                  cerebral vascular accidents.

         1.5      PRODUCT (DRUG, VACCINE, BIOLOGICAL, DEVICE)-RELATED:  For the
                  purposes of regulatory reporting for investigational products,
                  an AE will be considered "product-related" (i.e.,
                  drug-related, vaccine-related, etc.) for studies if either the
                  investigator, the Medical Monitor, the CR&D Clinical Project
                  Team Medical Monitor (or designee), or the Local Monitor (if
                  applicable) assesses the AE(s) as possibly, probably, or
                  definitely related.

                                      -D-2-

                  1.       An AE will be considered "not product-related" for
                           studies if the investigator AND the medical
                           monitor(s) AND the local monitor (if applicable)
                           assess the AE(s) as probably not related or
                           definitely not related, or "relationship remote."

                  2.       Whenever the investigator's or monitor's assessment
                           is unknown or unclear, the AE(s) will be treated as
                           product-related for the purposes of reporting to
                           regulatory authorities.

         1.6      PROTOCOL-RELATED: AEs from studies that are not
                  product-related may nevertheless be considered by the
                  investigator or the medical monitor(s) or the local monitor
                  (if applicable) to be protocol-related. For purposes of
                  reporting to GSSE and regulatory authorities, these will be
                  reported in the same manner as product-related events.

         1.7      NDA HOLDER is defined as: An "Applicant" as defined in 21 CFR
                  Part 314.3(b), for regulatory approval of a Product in any
                  regulatory jurisdiction, including a holder of a foreign
                  equivalent thereto.

         1.8      IND HOLDER is defined as: A "Sponsor" as defined in 21 CFR
                  Part 313.1(b) of an investigational new drug in any regulatory
                  jurisdiction, including a holder of a foreign equivalent
                  thereto.

         1.9      Capitalized terms not defined in this Exhibit shall have the
                  meaning assigned thereto in the Agreement.

2.       With respect to the Product or Active Ingredient, the Parties agree as
         follows:

         a.       All initial reports and any follow-up information (oral or
                  written) for any and all Serious AEs as defined above, (other
                  than with respect to animal studies) which become known to
                  either Party (other than from disclosure by or on behalf of
                  the other Party) must be communicated by telephone, telefax or
                  electronically directly to the other Party and/or the NDA
                  Holder, IND Holder (individually and collectively referred to
                  as "Holders") within forty-eight (48) hours of receipt of the
                  information. Written confirmation of the Serious AE received
                  by such Party should be sent to the other Party and/or the
                  Holders as soon as it becomes available, but in any event
                  within forty-eight (48) hours of initial report of the Serious
                  AE by such Party.

         b.       Both Parties shall exchange Medwatch and/or CIOMs forms and
                  other health authority reports within forty-eight (48) hours
                  of submission to any Regulatory Authority.

         c.       All initial reports and follow-up information received for all
                  Non-Serious AEs for marketed Product which become known to a
                  Party (other than from disclosure by or on behalf of the other
                  Party) must be communicated in writing, by telefax or

                                      -D-3-

                  electronically to the other Party within ten (10) days, on
                  Medwatch or CIOMs forms (where possible).

         d.       Each Party shall coordinate and cooperate with the other
                  whenever practicable to prepare a single written report
                  regarding all Serious and/or Non-Serious AEs, provided,
                  however, that neither Party shall be obligated to delay
                  reporting of any AE in violation of applicable law or
                  regulations regarding the reporting of AEs.

3.       The Parties further agree that:

         a.       A written report be forwarded to the other Party within
                  forty-eight (48) hours of a receipt by the Party making the
                  report, for AEs for animal studies which suggest a potential
                  significant risk for humans;

         b.       Each Party will give the other Party a report via a print-out
                  or computer disk of all AEs reported to it and its Affiliates
                  relating to the Product or Active Ingredient within the last
                  year, within thirty (30) days of receipt of a request from the
                  other Party but not more often than four (4) times a year;

         c.       If either Party wishes access to AE Reports of the other Party
                  relating to the Product or Active Ingredient, upon request of
                  that Party, the other Party shall make available its AE
                  records relating to the Product or Active Ingredient
                  (including computer disks) for viewing and copying by the
                  other Party. The Parties may discuss the transfer of AE
                  Reports by computer disk.

         d.       Disclosure of information hereunder by a Party to the other
                  Party shall continue as long as either Party and/or its
                  Affiliates or designees continue to clinically test or market
                  Product or Active Ingredient.

4.       Each Party shall diligently undertake the following further obligations
         where both Parties are or will be commercializing the Product or Active
         Ingredient pursuant to the Agreement and/or performing clinical trials
         with respect to the Product or Active Ingredient:

         a.       Upon the Effective Date, each Party shall identify individuals
                  who shall be responsible for identifying all AE reporting
                  requirements in all countries of the Territory as set forth in
                  the Agreement, and any amendments thereto;

         b.       To immediately consult with the other Party, with respect to
                  the investigation and handling of any Serious AE disclosed to
                  it by the other Party or by a Third Party and to allow the
                  other Party to review the Serious AE and to participate in the
                  follow-up investigation;

         c.       To immediately advise the other Party of any Product and/or
                  Active Ingredient safety communication received from a health
                  authority and consult with the other Party with respect to any
                  Product and/or Active Ingredient warning, labeling

                                      -D-4-

                  change or change to an investigators' brochure involving
                  safety issues proposed by the other Party, including, but not
                  limited to the safety issues agreed to by the Parties;

         d.       To diligently handle in a timely manner the follow-up
                  investigation and resolution of each AE reported to it;

         e.       To provide the other Party mutually agreed upon audit rights
                  of its AE reporting system and documentation, upon prior
                  notice, during normal business hours, at the expense of the
                  auditing Party and under the confidentiality obligations set
                  forth in the Agreement;

         f.       To meet in a timely fashion from time to time as may be
                  reasonably required to implement the adverse event reporting
                  and consultation procedures described in this Exhibit D,
                  including identification of those individuals in each Party's
                  Drug Safety group who will be responsible for reporting to and
                  receiving AE information from the other Party, and the
                  development of a written standard operating procedure with
                  respect to adverse event reporting responsibilities, including
                  reporting responsibilities to investigators;

         g.       Where possible, to transmit all data electronically;

         h.       To report to each other any addenda, revisions or changes to
                  the Agreement (e.g., change in territories, local regulations,
                  addition of new licensors/licensees to the Agreement, etc.)
                  which might alter the adverse event reporting responsibilities
                  hereunder;

         i.       To utilize English as the language of communication and data
                  exchange between the Parties;

         j.       To develop a system of exchange of documents and information
                  in the event that the Agreement involves more than two
                  Parties; and

         k.       To work together to develop an electronic system to transmit
                  AE data.

5.       The Parties may meet after the Effective Date of the Agreement to
         establish a separate agreement for adverse event exchange which will
         supersede this Exhibit D.

                                      -D-5-

EX-99.1

                                                                    Exhibit 99.1

                                 CIMA LABS INC.

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of CIMA LABS INC. (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, John M.
Siebert, President and Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act
of 2002, that:

         (1)     The Report fully complies with the requirements of section
                 13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2)     The information contained in the Report fairly presents, in
                 all material respects, the financial condition and results of
                 operations of the Company.

Date:  8/13/2002                          /s/ John M. Siebert
                                         ------------------------------------
                                          John M. Siebert,
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)

EX-99.2

                                                                   Exhibit 99.2

                                 CIMA LABS INC.

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of CIMA LABS INC. (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, David
A. Feste, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002,
that:

         (1)     The Report fully complies with the requirements of section
                 13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2)      The information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Company.

Date:  8/13/2002                              /s/ David A. Feste
                                            -----------------------------------
                                              David A. Feste,
                                              Chief Financial Officer
                                              (Principal Financial Officer)