<SUBMISSION>
<ACCESSION-NUMBER>0001036050-00-001305
<TYPE>S-1/A
<PUBLIC-DOCUMENT-COUNT>24
<FILING-DATE>20000713
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>3 DIMENSIONAL PHARMACEUTICALS INC
<CIK>0000914201
<ASSIGNED-SIC>2834
<IRS-NUMBER>232716487
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-1/A
<ACT>33
<FILE-NUMBER>333-37606
<FILM-NUMBER>672183
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>665 STOCKTON DRIVE
<STREET2>SUITE 104
<CITY>EXTON
<STATE>PA
<ZIP>19341
<PHONE>6104588959
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>665 STOCKTON DRIVE
<STREET2>SUITE 104
<CITY>EXTON
<STATE>PA
<ZIP>19341
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-1/A
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT
<TEXT>

<PAGE>


   As filed with the Securities and Exchange Commission on July 13, 2000

                                       Registration Statement No. 333-37606
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               ----------------

                              AMENDMENT NO. 1

                                    TO
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     Under
                           The Securities Act of 1933
                               ----------------
                      3-Dimensional Pharmaceuticals, Inc.
             (Exact name of Registrant as specified in its charter)
        Delaware                     2834                    23-2716487
                               (Primary Standard            (IRS Employer
     (State or other              Industrial           Identification Number)
     jurisdiction of       Classification Code No.)
    incorporation or
      organization)
                     Eagleview Corporate Center, Suite 104
                               665 Stockton Drive
                                Exton, PA 19341
                                  610-458-8959
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)
                               ----------------
                           David C. U'Prichard, Ph.D.
                            Chief Executive Officer
                      3-Dimensional Pharmaceuticals, Inc.
                     Eagleview Corporate Center, Suite 104
                               665 Stockton Drive
                                Exton, PA 19341
                                  610-458-8959
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                               ----------------
                                   Copies to:
         Randall B. Sunberg                         Jeffrey E. Cohen
     Morgan, Lewis & Bockius LLP                    Coudert Brothers
         1701 Market Street                    1114 Avenue of the Americas
       Philadelphia, PA 19103                    New York, NY 10036-7703
           (215) 963-5000                            (212) 626-4400
  Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
  If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
  If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
  If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
                        CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                           Proposed
 Title of Each Class of                    Maximum         Proposed      Amount of the
    Securities to Be      Amount to be  Offering Price Maximum Aggregate Registration
       Registered         Registered(2)  Per Share(1)  Offering Price(1)    Fee(3)
--------------------------------------------------------------------------------------
<S>                       <C>           <C>            <C>               <C>
Common Stock, $0.001 par
 value.................     4,600,000       $15.00        $69,000,000       $18,216
--------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee in
    accordance with Rule 457 under the Securities Act of 1933, as amended.

(2) Includes 600,000 shares that the underwriters have the option to purchase
    to cover over-allotments, if any.

(3) The entire filing fee of $18,216 plus an additional $264 was previously
    paid with the initial filing of this Registration Statement.

                               ----------------
  The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus is not complete and may be     +
+changed. We may not sell these securities until the registration statement    +
+filed with the Securities and Exchange Commission becomes effective. This     +
+preliminary prospectus is not an offer to sell these securities nor a         +
+solicitation of an offer to buy these securities in any jurisdiction where    +
+the offer or sale is not permitted.                                           +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

                SUBJECT TO COMPLETION, DATED JULY 13, 2000

PRELIMINARY PROSPECTUS

                             4,000,000 Shares


                 [LOGO OF 3-DIMENSIONAL PHARMACEUTICALS, INC.]


                                  Common Stock

                                  -----------

This is an initial public offering of 4,000,000 shares of common stock of 3-
Dimensional Pharmaceuticals, Inc. We are selling all of the shares of common
stock offered under this prospectus.

We expect the public offering price for our common stock to be between $13 and
$15 per share. There is currently no public market for our common stock. We
have applied to have our common stock approved for listing on the Nasdaq
National Market under the symbol "DDDP".

See "Risk Factors" beginning on page 7 to read about risks that you should
consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved these securities or passed on the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.

                                  -----------

<TABLE>
<CAPTION>
                                                                      Per
                                                                     Share Total
                                                                     ----- -----
<S>                                                                  <C>   <C>
Public offering price............................................... $     $
Underwriting discounts and commissions.............................. $     $
Proceeds to 3-Dimensional Pharmaceuticals, Inc...................... $     $
</TABLE>

                                  -----------

We have granted the underwriters a 30-day option to purchase up to an
additional 600,000 shares of common stock from us at the initial public
offering price less the underwriting discount.

The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares in New York, New York on      , 2000.

                                  -----------

Bear, Stearns & Co. Inc.

                 Chase H&Q

                        U.S. Bancorp Piper Jaffray

                  The date of this prospectus is      , 2000.
<PAGE>

                                    SUMMARY

  Because this is only a summary, it does not contain all the information that
may be important to you. You should read the entire prospectus, especially the
section entitled "Risk Factors," and the financial statements and notes, before
deciding to invest in shares of our common stock.

                                    Overview

  We are a drug discovery company that has developed and integrated a set of
proprietary technologies called DiscoverWorks, which accelerate and improve the
drug discovery process and capitalize on the opportunities presented by the
thousands of new targets for drugs being revealed from the sequencing of the
human genome. Our technologies also facilitate drug discovery for well-
characterized disease targets that have proven difficult using traditional
methods. We believe that our technologies, which apply to virtually any disease
target, produce compounds suitable for development into drugs in a more timely
and cost-effective manner and with a higher probability of success than that
currently achieved using conventional methods. We are using our technologies
both to assist collaborators in discovering drug candidates, and to discover
and develop our own drug candidates, which we currently intend to license at
the pre-clinical or early clinical stage.

  We have incurred substantial operating losses and as of March 31, 2000 had an
accumulated deficit of $48.9 million. We have funded our operations primarily
through private placements of equity securities totaling $72.0 million and
revenues of $16.1 million. Our losses have resulted principally from costs
incurred in research and development activities related to our efforts to
develop our technologies and our internal drug discovery programs and from the
associated administrative costs required to support these efforts.

                               Market Opportunity

  The major steps in the drug discovery process involve producing a "target
protein", which is a protein that because of its function in the body may
underlie a disease process; identifying "hit" compounds that interact with the
particular target protein; synthesizing and testing structurally similar
compounds, or "analogs", to produce "lead" compounds with increased suitability
as potential drugs; and chemically modifying, or "optimizing", such lead
compounds to produce candidates for pre-clinical and clinical development.
Parallel testing seeks to confirm, or "validate", the link between the target
protein and a specific disease.

  Drug discovery has traditionally been a costly and time-consuming process in
which the failure rate remains very high. Pharmaceutical companies are facing
growing challenges to rapid and cost efficient drug discovery as continuing
advances are made in genomics research. While there are approximately 500
currently known biological targets for human therapeutics, it is estimated that
genomics research will facilitate the identification of an additional 5,000 to
10,000 potential targets. In order to take advantage of the wealth of
opportunities presented by genomics research, pharmaceutical companies will
need to generate new lead compounds on a scale commensurate with the increase
in new targets. This will require the use of more advanced and integrated
technologies to rapidly and cost efficiently discover and develop lead
compounds. We expect this to become an increasingly severe bottleneck in the
discovery process. Accordingly, we believe that pharmaceutical companies will
increasingly use the resources of drug discovery companies with advanced
technology capabilities, and license drug candidates developed by others.

                                  Our Solution

  We compete primarily with the internal discovery efforts of major
pharmaceutical companies, as well as with biotechnology and drug discovery
services companies. We believe that our integration or combination of the
following multiple proprietary technologies provides us with competitive
advantages in discovering

                                       1
<PAGE>


chemical leads for new target proteins (the "target-to-lead" process), both
over those pharmaceutical companies that have integrated discovery capabilities
but lack our advanced technologies, and over biotechnology and drug discovery
services companies that lack our integrated discovery capabilities:

  . Target Protein Production. Our technology allows rapid and cost efficient
    production of large amounts of target proteins.

  . 3-D Protein Structure. We are able to determine the 3-D structure of a
    target protein to visualize how compounds bind to the target.

  . Compound Library. Our compound collection, or "library", contains over
    200,000 compounds selected for chemical diversity. We utilize a broad
    range of automated technologies to synthesize new compounds.

  . High-Throughput Screening. Our ThermoFluor process for high-throughput
    screening, which rapidly measures the binding affinity of a large number
    of compounds for a target protein, can be used for virtually any target
    protein.

  . Synthetically Accessible Compounds. Based on our data analysis of
    screening results, we can select and synthesize new compounds with
    improved properties from our database of approximately 2.5 billion
    analogs of the compounds in our library.

  . Data Analysis. Our DirectedDiversity software allows us to
    comprehensively analyze the properties of compounds which have binding
    affinity to a target protein.

  . Structure-Based Compound Optimization. Using 3-D structures of compounds
    bound to the target protein, we introduce rational design into the
    automated synthesis of new compounds with improved properties, based on a
    logical understanding of the site in the target protein at which
    compounds bind.

  . Chemistry-driven target validation. We use our ThermoFluor screening
    technology and our ability to rapidly produce lead compounds for
    chemistry-driven target validation, which is the process of establishing
    the link between a target protein and a disease by testing a compound in
    living organisms.

  We integrated the above technologies as DiscoverWorks in 1998, for use in our
internal programs. While we have used various of the above technologies in
collaborations since 1996, our recently signed Bristol-Myers Squibb
collaboration represents the initial collaborative use of the entire
DiscoverWorks set of technologies.

We believe that using our DiscoverWorks technologies creates the following
principal advantages:

  . Time Reduction. DiscoverWorks reduces an important segment of the R&D
    process, from the setting up of an assay, which is a test to identify
    compounds which interact with a target protein, to the generation of a
    series of lead compounds with potential efficacy in living organisms,
    from fourteen to thirty months at many pharmaceutical companies to as
    little as seven to ten months. We expect this will reduce resources
    required and development costs per target and accelerate time to market
    of successful drugs.

  . Improved Compound Characteristics. Owing to the quality of our library of
    compounds and our ability to use structural information about the target
    protein when optimizing lead compounds, our DiscoverWorks technologies
    enhance our ability to include desirable characteristics in our compounds
    to increase the likelihood of their successful development as drugs.

  In summary, we believe DiscoverWorks has the potential to make better drug
candidates, in a faster and more efficient manner, for almost any given target
protein.

                         GPCR Drug Discovery Technology

  G-Protein Coupled Receptors, or GPCRs, are an important class of target
proteins that exist on the surface of cells, and which account for over $20
billion in estimated annual drug sales. Current drugs on the market target less
than 100 of these receptors. The sequencing of the human genome has revealed an
estimated 1,000

                                       2
<PAGE>


previously unknown GPCRs that are potential new drug targets. To date, no
experimentally derived 3-D structures of any GPCR exist and, therefore,
rational drug design based on the actual 3-D structure of target GPCRs has not
been possible. Recently, we successfully produced high-quality crystals that we
believe will enable us to experimentally determine the first 3-D structure of a
drug target GPCR. We believe that this and other 3-D GPCR structures that we
expect will emerge from our laboratories, together with our supporting
technology in protein production, will prove important to unlocking the
potential of GPCR genomics data for new drug discovery.

                       Collaborative Discovery Agreements

  We recently entered into a broad collaborative discovery and technology
license and transfer agreement with Bristol-Myers Squibb Company. We also have
collaborative discovery agreements with DuPont Pharmaceuticals Company,
Boehringer Ingelheim Pharmaceuticals, Inc., Aventis Crop Protection GmbH, E.I.
DuPont de Nemours, Heska Corporation, Inc. and BioCryst Pharmaceuticals, Inc.

                     Internal Drug Product Candidates

  We have also used our technologies to develop our own drug candidates for
cardiovascular disease and cancer, which we currently intend to license at the
pre-clinical or early clinical stage to pharmaceutical companies for clinical
development and marketing. Of our nine current product development programs,
one is in the clinical stage of development, which involves testing of the drug
candidate in humans in a controlled environment, and eight are in the pre-
clinical stage of development, which involves laboratory testing in non-human
organisms. Our most advanced cardiovascular product candidate is designed to
inhibit the formation of blood clots and is currently in Phase 1 clinical
trials. Our most advanced cancer product candidate is designed to inhibit the
supply of blood to and growth of tumors. This product candidate may be useful
for cardiovascular indications. We have recently licensed this product
candidate to Schering AG, Germany. None of our product candidates have received
regulatory approval or have been commercialized.


    Our Strategy

  Our objective is to be an industry leader in the discovery and optimization
of drug candidates by:

  .  further developing our DiscoverWorks technologies;

  .  developing and commercializing our unique GPCR discovery technology;

  .  developing and expanding our internal drug discovery pipeline to produce
     drug candidates for licensing; and

  .  entering into additional discovery collaborations.

  We also intend to continue to apply our technologies to applications in the
agricultural and veterinary medicine industries.

                             Additional Information

  We were incorporated in the State of Delaware in March 1993. Our executive
offices are located in the Eagleview Corporate Center, 665 Stockton Drive,
Exton, Pennsylvania 19341, and our telephone number is (610) 458-8959. Our web
site is http://www.3dp.com. The information found on our web site is not part
of this prospectus.

                                       3
<PAGE>

                                  THE OFFERING

Common stock offered by
us........................  4,000,000 shares


Common stock to be
outstanding after the
offering..................  18,237,300 shares


Use of proceeds...........  We intend to use the net proceeds from this
                            offering for research and development; acquisition
                            or licensing of targets or technologies; expansion
                            of our facilities; general corporate and working
                            capital purposes; and possible future acquisitions.

Proposed Nasdaq National
Market symbol.............  DDDP

  The number of shares outstanding after this offering excludes, as of June 30,
2000:

  . 2,200,000 shares of our common stock available for issuance under our
    2000 equity compensation plan which will become effective prior to the
    closing of this offering;

  . 2,112,405 shares of our common stock issuable under our current equity
    compensation plan upon exercise of outstanding options at a weighted
    average exercise price of $3.44 per share;

  . warrants to purchase 1,757,366 shares of common stock at a weighted
    average exercise price of $2.52 per share; and

  . warrants to purchase 239,475 shares of series A-1 preferred stock, which
    will either be exercised prior to the closing of this offering at an
    exercise price of $1.00 per share (and therefore be automatically
    converted into shares of common stock at the closing of this offering) or
    become exercisable for 85,527 shares of common stock upon the closing of
    this offering at an exercise price of $2.80 per share.

  Generally, the information in this prospectus, unless otherwise noted:

  . assumes that the over-allotment option is not exercised;

  . reflects a 1-for-2.8 reverse split in our common stock that will take
    effect prior to the closing of this offering;

  . reflects the automatic conversion of all outstanding shares of preferred
    stock into an aggregate of 13,186,602 shares of common stock upon the
    closing of this offering;

  . assumes the amendment and restatement of our certificate of incorporation
    and bylaws to take effect upon the closing of this offering; and

  . assumes the issuance of an estimated 75,556 shares of our common stock
    upon the automatic conversion, at the closing of this offering, of
    $979,000 of convertible promissory notes, plus accrued interest, issued
    in lieu of cash dividends to the holders of our series A-1 preferred
    stock. This estimate is based upon an assumed initial public offering
    price of $14.00 per share and includes interest payable on the promissory
    notes through June 30, 2000.

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

  DirectedDiversity and ThermoFluor are federally registered trademarks of 3-
Dimensional Pharmaceuticals, Inc. or "3DP." We have also applied for a
federally registered trademark for DiscoverWorks. In addition, Proteomica is an
unregistered trademark of 3DP. This prospectus also refers to trade names and
trademarks of other organizations.

                                       4
<PAGE>

                             SUMMARY FINANCIAL DATA

                   (in thousands except per share data)

  The following financial information should be read together with the
financial statements and notes thereto and the "Selected Financial Information"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" sections included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                  Year ended December 31,                     March 31,
                          --------------------------------------------  -----------------------
                           1995     1996     1997     1998      1999     1999         2000
                          -------  -------  -------  -------  --------  -------  --------------
                                                                                 (consolidated)
                                                                             (unaudited)
<S>                       <C>      <C>      <C>      <C>      <C>       <C>      <C>
Statements of Operations
 Data:
Grant and research
 revenue................  $   463  $   967  $ 3,580  $ 5,095  $  4,489  $ 1,379     $ 1,484
                          -------  -------  -------  -------  --------  -------     -------
Costs and expenses
 Research and
  development...........    3,414    4,556    6,517   10,984    12,136    2,975       3,425
 General and
  administrative........    1,122    1,708    3,000    4,458     6,525    1,155       1,537
 Litigation settlement..      --       --       --       --      1,500      --          --
                          -------  -------  -------  -------  --------  -------     -------
 Total costs and
  expenses..............    4,536    6,264    9,517   15,442    20,161    4,130       4,962
                          -------  -------  -------  -------  --------  -------     -------
Loss from operations....   (4,073)  (5,297)  (5,937) (10,347)  (15,672)  (2,751)     (3,478)
Interest income.........       16       14      521      868       328      125          87
Interest expense........     (401)    (580)    (149)    (232)     (625)    (114)       (351)
                          -------  -------  -------  -------  --------  -------     -------
Net loss................  $(4,458) $(5,862) $(5,565) $(9,711) $(15,969) $(2,740)    $(3,742)
Declared and accrued
 cumulative dividends on
 preferred stock........      --       --       --      (144)     (669)    (167)       (167)
                          -------  -------  -------  -------  --------  -------     -------
Net loss applicable to
 common stock...........  $(4,458) $(5,862) $(5,565) $(9,855) $(16,638) $(2,907)    $(3,909)
                          =======  =======  =======  =======  ========  =======     =======
Basic and diluted net
 loss per common share--
 historical.............  $(90.98) $(58.04) $(27.55) $(22.20) $ (27.37) $ (5.01)    $ (5.92)
                          =======  =======  =======  =======  ========  =======     =======
Weighted average common
 shares outstanding--
 historical.............       49      101      202      444       608      580         660
                          =======  =======  =======  =======  ========  =======     =======
Basic and diluted net
 loss per common share--
 pro forma..............                                      $  (1.57)             $  (.36)
                                                              ========              =======
Weighted average common
 shares outstanding--pro
 forma..................                                        10,198               10,288
                                                              ========              =======
</TABLE>

<TABLE>
<CAPTION>
                              As of March 31, 2000
                          ------------------------------
                                 (consolidated)
                                                  Pro
                                        Pro     forma as
                            Actual     Forma    Adjusted
                          ----------- --------  --------
                          (unaudited)
<S>                       <C>         <C>       <C>
Balance Sheet Data:
Cash and cash
 equivalents............   $ 22,063   $ 22,063  $ 73,173
Total assets............     26,805     26,805    77,885
Notes payable--dividends
 and accrued interest...        701        --        --
Long-term debt, less
 current portion........      2,020      2,020     2,020
Redeemable convertible
 preferred stock........     63,550        --        --
Accumulated deficit.....    (48,851)   (48,851)  (48,851)
Total stockholders
 equity (deficit).......    (45,362)    18,889    69,969
</TABLE>

  Pro forma net loss per share assumes all shares of our preferred stock had
been converted into common stock on the date of original issuance and certain
nonvested shares of our common stock, which automatically become vested upon
completion of this offering, were vested as of the original date of issuance.
See our financial statements for a more detailed description.


                                       5
<PAGE>


  Pro forma balance sheet data assumes the automatic conversion of all our
outstanding preferred stock into common stock upon the closing of this offering
and the issuance of an estimated 73,936 shares of our common stock upon the
automatic conversion at the assumed initial public offering price of $14.00 per
share, at the closing of this offering, of $979,000 of convertible promissory
notes, plus accrued interest through March 31, 2000, issued in lieu of cash
payment of dividends to the holders of our series A-1 preferred stock.

  The pro forma as adjusted balance sheet data above further reflects the sale
of 4,000,000 shares of our common stock in this offering at an assumed initial
public offering price of $14.00 per share after deducting estimated
underwriting discounts and commissions and estimated expenses of this offering.
See "Use of Proceeds" and "Capitalization" for a discussion about how we intend
to use the proceeds from this offering and about our capitalization.

                                       6
<PAGE>

                                  RISK FACTORS

  An investment in our common stock offered by this prospectus involves a
substantial risk of loss. You should consider carefully the risks described
below before making an investment decision. The risks and uncertainties
described below are not the only ones facing us. Additional risks and
uncertainties not presently known to us or that we currently consider
immaterial may also impair our operations. The occurrence of any of the
following risks could harm our business. In that case, the trading price of our
common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business

We have a history of net losses and may never achieve or maintain
profitability.

  We have incurred net losses since our inception, including net losses of
approximately $9.7 million for the year ended December 31, 1998, approximately
$16.0 million for the year ended December 31, 1999 and approximately $3.7
million for the three months ended March 31, 2000. As of March 31, 2000, we had
an accumulated deficit of approximately $48.9 million. We may incur additional
losses for at least the next several years. The extent of our future losses
will depend on the rate of growth, if any, of our revenue and on the level of
our expenses. To date, we have derived substantially all of our revenue from
corporate collaborations, license agreements and government grants. We expect
that substantially all of our revenue for the foreseeable future will result
from payments from these sources and from the licensing of our technologies and
of our internally developed pre-clinical and clinical drug candidates. We also
expect to spend significant amounts to enhance our drug discovery technologies
and to fund research and development of drug candidates we develop internally.
Because our operating expenses will increase significantly in the near term, we
will need to generate significant additional revenue to achieve profitability.
In order to generate revenue, we must continue to develop products and
technologies from which we can derive revenue either ourselves or through
existing and future collaborations. Accordingly, we may never achieve
profitability. Even if we do achieve profitability, we may not be able to
sustain or increase profitability on a quarterly or annual basis.

If we fail to obtain necessary funds for our operations, we will be unable to
maintain and improve our technology position and will be unable to develop and
commercialize our drug candidates.

  To date, we have funded our operations primarily through private placements
of equity securities and revenues from corporate collaborations, with
additional revenue from government grants, capital equipment and leasehold
financing, and interest earned on net proceeds of our private placements. At
March 31, 2000, we believe that this cash balance, together with upfront fees
of $23.5 million and committed research funding of approximately $9 million
over the next two years under our collaborative discovery agreement with
Bristol-Myers Squibb Company, and together with the net proceeds of this
offering, will be sufficient to meet our operating and capital requirements for
at least the next two years. However, our present and future capital
requirements depend on many factors, including:

  . the level of research and development investment required to maintain and
    improve our technology position;

  . our ability to enter into new agreements with collaborators or to extend
    the terms of our existing collaborations, and the terms of any agreement
    of this type;

  . our success rate or that of our collaborators in discovery efforts
    associated with milestones and royalties;

  . the timing, willingness and success of our collaborators to commercialize
    our products that would result in milestone payments and in royalties;

  . costs of recruiting and retaining qualified personnel;

                                       7
<PAGE>


  . costs of filing, prosecuting, defending and enforcing patent claims and
    other intellectual property rights;

  . our need or decision to acquire or license complementary technologies or
    new targets, or acquire complementary businesses; and

  . changes in drug candidate development plans needed to address any
    difficulties in clinical studies or in commercialization.

  Should we require additional capital in the future, we do not know whether
additional financing will be available on acceptable terms when needed. We may
raise these funds through public or private equity offerings or debt financings
or through corporate collaborations and licensing arrangements.

  If we raise additional capital by issuing equity securities, our existing
stockholders' percentage ownership will be reduced and they may experience
substantial dilution. Any equity securities issued may also provide for rights,
preferences or privileges senior to holders of our common stock. If we raise
additional funds by issuing debt securities, these debt securities would have
rights, preferences and privileges senior to holders of our common stock and
the terms of the debt securities issued could impose significant restrictions
on our operations. If we raise additional funds through collaborations and
licensing arrangements, we may be required to relinquish some rights to our
technologies or drug candidates, or grant licenses on terms that are not
favorable to us. If adequate funds are not available, we may have to delay or
may not be able to continue developing our drug candidates.

  If additional funds are required to operate our business, these funds may not
be available on terms that we find favorable, if at all. If adequate funds are
not available or are not available on acceptable terms, our ability to fund our
operations, take advantage of opportunities, develop products or technologies
or otherwise respond to competitive pressures could be significantly delayed or
limited and we may need to downsize or halt our operations.

We are developing and using new technologies, and if we are unable to
successfully commercialize these technologies, we will not achieve
profitability.

  Our DiscoverWorks technologies, in particular our DirectedDiversity and
ThermoFluor technologies, represent a new and unproven approach to the
identification and optimization of lead compounds with therapeutic potential.
We have not used these technologies in the development of any compound that has
reached the point of commercialization. The recently signed collaboration with
Bristol-Myers Squibb Company represents the initial collaborative use of the
entire DiscoverWorks set of technologies. In addition, although we began using
the entire DiscoverWorks set of technologies in our internal programs in 1998,
we did not use our ThermoFluor technology in our most advanced internal
programs. Our technologies may not result in the successful identification,
optimization or development of compounds that are safe or efficacious. Because
the development of new pharmaceutical products is highly uncertain, our drug
discovery technologies may not produce any commercially successful compounds.
Failure to validate our technologies through the successful discovery of
compounds that become commercialized would hinder our ability to license drug
candidates developed by us internally and to market successfully our
technologies and services.

  Historically, due to the highly proprietary nature of drug discovery and
development efforts, and the desire to obtain maximum patent and other
proprietary protection for their programs, pharmaceutical and biotechnology
companies have conducted molecular target screening and lead compound
identification and optimization within their own internal research departments.
To succeed, we must convince these companies that our technologies and
capabilities justify retaining us to work on drug discovery programs on their
behalf or the licensing by them of our technologies. To date, we have entered
into only six collaborations involving DirectedDiversity technology, including
three signed within the last four months. Under the terms of a settlement
agreement with Scriptgen Pharmaceuticals, Inc., we acquired a limited license
to Scriptgen's ATLAS (Any Target Liquid Affinity Screen) assay technology and
Scriptgen was granted a limited license to the method claims of our ThermoFluor
screening technology. Neither of these licenses was exclusive. The

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settlement agreement precludes us, until March 7, 2003, from using our
ThermoFluor screening technology in the Hepatitis C Virus "infection" area as
part of collaborative agreements or as part of our internal drug programs. In
addition, the settlement agreement precludes us from using our ThermoFluor
screening technology as part of more than one collaboration agreement in the
area of "infection" until March 7, 2003, and such collaborative agreement must
be limited to a maximum of 3 anti-viral targets. Our recent collaboration
agreement with Bristol-Myers Squibb Company constitutes the one permitted
collaboration agreement in the area of infection. The settlement with Scriptgen
does not restrict use of our ThermoFluor screening technology by us for our
internal drug discovery efforts, or for purposes of collaborative agreements
outside the area of "infection" other than the limitation with respect to the
Hepatitis C Virus "infection". Only two of our existing collaborations involve
the use of our ThermoFluor screening technology. Our ability to succeed will
depend upon the acceptance by potential collaborators of our systems, services
and technologies as effective discovery tools.

  As we further develop, integrate, and use our DiscoverWorks technologies,
previously unforeseen or unexpected limitations or defects may emerge with
these technologies. In addition, operators using these technologies may require
substantial training in new technical skills. These potential complications
could delay or limit the use of our technologies, substantially increase the
anticipated cost of development, result in a breach by us of our contractual
obligations to our collaborators and others, or render us unable to use our
technologies at the quality and capacity levels required for success. Any
complication or delay could harm our ability to gain market acceptance for our
technologies and services and, in the case of a breach of a contractual
obligation, could subject us to litigation.

  In addition, we may not be successful in our efforts to develop certain
aspects of our technologies and, as a result, we may not be able to
successfully commercialize these technologies. For example, if we are not
successful in determining the 3-D structure of the b\\2\\-adrenergic receptor,
a GPCR known to be involved in the physiological actions of the hormone
adrenalin, or of other GPCRs, this would significantly limit the usefulness of
our GPCR technology and might result in the commercial failure of this
technology.

If we do not update and enhance our technologies, they will become obsolete.

  Technological change occurs rapidly in the pharmaceutical market, and our
future success will depend on our ability to update and enhance our
technologies. Because DiscoverWorks integrates many technologies, we may find
it difficult to stay abreast of the rapid change in each of the areas
DiscoverWorks encompasses. If we fail to stay at the forefront of technological
change we will be unable to compete effectively. In particular, our
DirectedDiversity technology for optimizing the properties of lead compounds
and our ThermoFluor technology for high-throughput screening involve areas
where many companies are actively developing new technologies. Because the
pharmaceutical and biotechnology industries currently perceive high-throughput
screening and optimizing of lead compounds to represent critical bottlenecks in
the discovery process, our competitors are using substantial resources to
develop new technologies to reduce these bottlenecks. Accordingly, advances in
existing technological approaches or our current or future competitors'
development of different approaches may render our technologies obsolete.

The drug candidates we are developing internally are at an early stage of
development, and they may fail in later development or commercialization.

  Our most advanced compound is currently in Phase 1 clinical trials. All of
the compounds that we are currently developing will require significant
additional research, formulation and manufacture development, and pre-clinical
and extensive clinical testing prior to regulatory approval and
commercialization. Pre-clinical and clinical studies of our products under
development may not display the safety and efficacy necessary to obtain
regulatory approvals. Pharmaceutical and biotechnology companies have suffered
significant setbacks in advanced clinical trials, even after experiencing
promising results in earlier trials. Products that appear to be promising at
early stages of development may not reach the market or be marketed
successfully for a number of reasons, including the following:

  . researchers may find that the product is ineffective or has harmful side
    effects during later pre-clinical testing or clinical trials;

                                       9
<PAGE>


  . the product may fail to receive necessary regulatory approval or
    clearance;

  . the product may be too difficult to manufacture on a large scale;

  . the product may be too expensive to manufacture or market;

  . the product may not achieve broad market acceptance;

  . others may hold proprietary rights that will prevent the product from
    being marketed; or

  . others may market equivalent or superior products.

  We do not expect that we will make commercially available any products we are
developing internally or in association with our collaborators for at least
several years, if at all. We and our collaborators may not succeed in our
research and product development efforts and we may not be able to launch any
successfully commercialized products. Further, after commercial introduction of
a new product, discovery of problems through adverse event reporting could
result in restrictions on the product, including recall or withdrawal from the
market and, in certain cases, civil or criminal penalties resulting from
actions by regulatory authorities or damage from product liability judgment.

We are dependent on our collaborators, and our failure to successfully manage
our existing and future collaborations and license arrangements could prevent
us or our collaborators from developing and commercializing our products.

  Our strategy depends upon the maintenance of our existing collaborations and
licensing arrangements as well as the formation of new collaborations and
licensing arrangements, principally with pharmaceutical and biotechnology
companies. We may fail to maintain our existing collaborations or licensing
arrangements, or establish additional collaborative or licensing arrangements,
on terms favorable to us. In addition, our current or future collaborations or
licensing arrangements may not be successful or we may be unable to
successfully manage these collaborations or licensing arrangements. As a
result, we could become involved in disputes that might result in, among other
things, a significant strain on our management resources, legal claims
involving significant time and expense, a loss of capital and a loss of current
or future collaborators. Several other factors could harm our present or future
collaborations or licensing arrangements:

  . we do not achieve our research and development objectives under our
    collaborative agreements;

  . conflicts arise with our collaborators as to rights to intellectual
    property to technologies or product candidates either we or they develop;

  . we enter into additional collaboration agreements that potentially
    conflict with the business objectives of our collaborators;

  . our collaborators become competitors of ours or enter into agreements
    with our competitors; or

  . consolidation in our target markets limits the number of potential
    collaborators.

  In addition, if we exclusively license any aspect of our technologies to one
or more collaborators, we will limit our ability to license this technology to
other parties. This may limit our ability to enter into future collaborations
or licensing arrangements.

  Since we do not currently possess the resources necessary to complete
development and commercialization of our internal drug candidates, we expect to
rely on and continue to enter into licensing arrangements for the further
development and commercialization of our drug candidates. These drug candidates
will require significant pre-clinical and/or clinical development efforts, the
receipt of the requisite regulatory approvals and the successful manufacturing
and marketing of the drugs. With the exception of certain aspects of pre-
clinical and early clinical development, we do not intend to perform any of
these activities. A party to whom we license a drug candidate may not devote
sufficient resources to the development, manufacture, marketing or sale of
these products. We will have limited or no control over the resources that any
third party may devote to our projects.

                                       10
<PAGE>


  Any of our present or future collaborators may breach or terminate their
agreements with us or otherwise fail to conduct their collaborative activities
successfully and in a timely manner. In addition, we may dispute the
application of payment provisions under any of our collaboration agreements. If
we fail to enter into or maintain collaborative agreements, or if any of these
events occur, we may not be able to commercialize our technologies or develop
and commercialize our drug candidates.

If our collaborators fail to advance compounds arising from the use of our
technologies to develop and commercialize pharmaceutical products, our business
will suffer.

  Our future revenue will depend in part on the realization of milestone
payments and royalties, if any, triggered by our collaborators' successful
development and commercialization of lead compounds identified through the use
of our technologies or of lead compounds that we develop internally and
license. The agreements with our collaborators do not obligate them to develop
or commercialize lead compounds identified through the use of our technologies.
Our development and commercialization of lead compounds will therefore depend
not only on our and our collaborators' achievement of development objectives,
but also on each collaborator's own financial, competitive, marketing and
strategic considerations, such as the relative advantages of other companies'
products, including relevant patent and proprietary positions. If a
collaborator fails to develop or commercialize a lead compound identified
through the use of our technologies, or if a compound that a collaborator
develops is determined to be unsafe or of no therapeutic benefit, we will not
receive any future milestone payments or royalties for that compound, and we
may have only limited or no rights to independently develop and commercialize
that compound.

If the third-party expert clinical investigators and clinical research
organizations we intend to rely on to conduct any of our future clinical trials
do not perform in an acceptable or timely manner, our clinical trials could be
delayed or unsuccessful.

  We do not have the ability to independently conduct clinical studies and
obtain regulatory approvals for our drug candidates and, to the extent our
collaborators do not perform these functions, we intend to rely on third-party
expert clinical investigators and clinical research organizations to perform
these functions. If we cannot locate, and enter into favorable agreements with,
acceptable third parties, or if these third parties do not successfully carry
out their contractual duties, meet expected deadlines and follow regulatory
guidelines, including clinical laboratory and manufacturing guidelines, then we
will not obtain required approvals and will be unable to commercialize our drug
candidates on a timely basis, if at all.

If we or our collaborators are unable to manufacture or contract with third
parties to manufacture drug candidates in sufficient quantities and at an
acceptable cost, we or our collaborators may be unable to complete clinical
trials and commercialize these drug candidates.

  Our or our collaborators' completion of any pre-clinical trials for our drug
candidates involving large quantities of chemical compounds, or any future
clinical trials and commercialization of drug candidates, will require access
to, or development of, facilities to manufacture a sufficient supply of our
drug candidates. We do not have the facilities or experience to manufacture the
quantities of drug candidates necessary for any such trials or commercial
purposes on our own and do not intend to develop or acquire facilities for the
manufacture of such quantities of drug candidates in the foreseeable future. We
currently intend, instead, to rely on third-party contract manufacturers.

  In addition, because we intend to license drug candidates for further
development and commercialization, once a drug candidate is licensed, we must
rely on our collaborators' abilities to manufacture, or have manufactured, the
quantities necessary for further development and commercialization of these
drug candidates.

                                       11
<PAGE>

  Our manufacturing strategy presents the following risks:

  . we, or our collaborators, may not be able to locate acceptable
    manufacturers or enter into favorable long-term agreements with them;

  . third parties may fail to successfully manufacture our drug candidates or
    to manufacture them in a cost effective and/or timely manner;

  . we have not tested the manufacturing processes for our drug candidates in
    quantities needed for clinical trials or commercial sales;

  . delays in scale-up to commercial quantities could delay clinical studies,
    regulatory submissions and commercialization of drug candidates;

  . we may not have intellectual property rights, or may have to share
    intellectual property rights, to many improvements in the manufacturing
    processes or new manufacturing processes for our drug candidates;

  . our drug candidates require a long lead time to manufacture and the
    manufacturing process is complex; and

  . manufacturers of our drug candidates are subject to the FDA's current
    Good Manufacturing Practices regulations, or cGMPs, and similar foreign
    standards and we and our collaborators do not have control over
    compliance with these regulations by third-party manufacturers.

  Any of these factors could delay clinical trials or commercialization of drug
candidates developed and commercialized by us or by our collaborators, entail
higher costs and result in us or our collaborators being unable to effectively
sell any products.

If we, or our collaborators, do not obtain and maintain required regulatory
approvals, we will be unable to commercialize our product candidates.

  Although to date we have not been the subject of any regulatory actions
affecting our actions, regulation by governmental entities in the United States
and other countries could impact the development, production and marketing of
any pharmaceutical products that we or our collaborators develop. The nature
and the extent to which such regulation may apply will vary depending on the
nature of any such pharmaceutical products. In particular, the United States
Food and Drug Administration, or FDA, and foreign regulatory authorities apply
rigorous pre-clinical and clinical testing and other approval requirements to
pharmaceutical products for use in humans and animals. Various federal and, in
some cases, state statutes and regulations and similar statutes and regulations
of foreign jurisdictions also govern or influence the manufacturing, safety,
labeling, storage, recordkeeping, promotion, advertising and marketing of such
pharmaceutical products. Companies spend a large amount of time and resources
obtaining these approvals and complying with appropriate federal and foreign
statutes and regulations. Both we and our collaborators may be unable to
successfully complete the pre-clinical and clinical development of, and file
new drug applications, or NDAs, with the FDA for any drug candidate. In
addition the FDA may not grant approval on a timely basis, if at all, for any
drug candidate. Any failure by our collaborators or licensees to obtain, or any
delay in obtaining, regulatory approval could adversely affect our ability to
receive milestone payments or royalty revenues. Even if our collaborators or
licensees obtain FDA regulatory approvals, material changes to an approved
product, such as manufacturing changes or additional labeling claims, require
further FDA review and approval. Once obtained, the FDA may withdraw any
approval. Further, if we, our collaborators, our contract research
organizations or our contract manufacturers fail to comply with applicable FDA
and other regulatory requirements at any stage during the regulatory process,
the FDA may impose sanctions, including delays, warning letters, fines, product
recalls or seizures, injunctions, refusal of the FDA to review pending market
approval applications or supplements to approval applications, total or partial
suspension of production, civil penalties, withdrawals of previously approved
marketing applications, or criminal prosecutions. In addition, foreign
regulatory requirements governing human and animal clinical trials and
marketing approval for pharmaceutical products govern our and our
collaborators' marketing outside the United States. The requirements governing
the conduct of clinical trials, product licensing, pricing and reimbursement
may vary from country to country, adding to the overall expense of drug
development.

                                       12
<PAGE>

If we are unable to build sales, marketing and distribution capabilities or
enter into agreements with third parties to perform these functions, we will
not be able to commercialize any of our drug candidates.

  We currently have no sales, marketing or distribution capabilities to
commercialize our drug candidates. In order to commercialize any of our drug
candidates, we must either internally develop sales, marketing and distribution
capabilities or make arrangements with third parties to perform these services.
We intend to rely for the foreseeable future on collaborations with licensees
of our compounds to market any of our drug candidates which receive regulatory
approvals in the future.

  To market any of our drug products directly, we would have to develop a
marketing and sales force with technical expertise and supporting distribution
capabilities and we may not be able to do so. To promote any of our drug
products through third parties, we would have to locate acceptable third
parties for these functions and enter into agreements with them on acceptable
terms and we may not be able to do so. If we enter into co-promotion or other
licensing arrangements, any product revenues would likely be lower than if we
directly marketed and sold our products, and any revenues we may receive would
depend upon the efforts of third parties, which efforts may not be successful.
If these third parties do not succeed in carrying out their contractual duties
or do not meet expected deadlines, our sales would suffer and we might not be
profitable.

Our ability to compete in the market may decline if we do not adequately
protect our proprietary technologies, or lose some of our intellectual property
rights as a result of, or otherwise become involved in, expensive lawsuits or
administrative proceedings.

  Our intellectual property consists of patents, copyrights, trade secrets, and
trademarks. As of July 7, 2000, 14 U.S. patents and 8 foreign patents relating
to our technologies and compounds have issued, and 41 U.S. patent applications
(including non-provisional and provisional applications) and 134 foreign patent
applications are pending. Our success depends in part on our ability to obtain
patents and maintain adequate protection of our intellectual property for our
technologies and products in the United States and other countries. We
currently do not have any issued patents for any of our lead compounds for any
of our internal programs and we may be unable to obtain any issued patents for
any patent applications we have filed or may file in the future for such
compounds.

  Our commercial success depends in part on avoiding infringing patents and
proprietary rights of third parties and developing and maintaining a
proprietary position with regard to our own technologies, products and
business. The patent positions of pharmaceutical companies, including our
patent position, involve complex legal and factual questions, and whether a
company will be able to enforce its patent cannot always be predicted with
certainty. Even if we obtain patents, we may lose them in part or in whole as a
result of lawsuits or administrative proceedings, or competitors may otherwise
challenge or circumvent them. We cannot be sure that relevant patents have not
been issued, or that relevant publications or actions by others have not
occurred, that could block our ability to obtain patents or to operate as we
would like. Others may develop similar technologies or duplicate technologies
that we have developed. We are aware of the existence of claims in a granted
patent and published patent applications in some countries that, if valid, may
block our ability to commercialize products or processes in those countries if
we are unable to circumvent or license them. As to those patents that we have
licensed, our rights depend on maintaining our obligations to the licensor
under the applicable license agreement and we may be unable to do so.

  Extensive litigation regarding patents and other intellectual property rights
characterizes our industry. Many companies have employed intellectual property
litigation as a way to gain a competitive advantage. If we became involved in
litigation or interference proceedings declared by the United States Patent and
Trademark Office, or oppositions or other intellectual property proceedings
outside of the United States, to defend our intellectual property rights or as
a result of alleged infringement of the rights of others, we might have to
spend significant amounts of time and money. We are aware of a significant
number of patents and patent applications relating to our technologies filed
by, or issued to, third parties. Should any of our competitors have filed
patent applications or obtained patents that claim inventions that we also
claim, we may have to participate in an

                                       13
<PAGE>


interference proceeding to determine priority of invention and, thus, the right
to a patent for these inventions or discoveries in the United States. We could
incur substantial costs from such a proceeding even if the outcome is
favorable. Even if successful on priority grounds, an interference may result
in loss of claims based on patentability grounds raised in the interference.
The litigation or proceedings could divert our management time and efforts.
Even unsuccessful claims could result in significant legal fees and other
expenses, diversion of management time and disruption in our business.
Uncertainties resulting from initiation and continuation of any patent or
related litigation could harm our ability to compete.

  An adverse ruling arising out of any intellectual property dispute, including
but not limited to an adverse decision as to the priority of our inventions,
would undercut or invalidate our intellectual property position. An adverse
ruling could also subject us to significant liability for damages, prevent us
from using processes or products, or require us to license disputed rights from
third parties. Although patent and intellectual property disputes in the
biotechnology area are often settled through licensing or similar arrangements,
costs associated with these arrangements may be substantial and could include
ongoing royalties. We may not be able to obtain any necessary licenses on
satisfactory terms, if at all.

  From time to time we have received letters from third parties suggesting that
we may want to consider licensing patents held by such third parties. We
believe that we have defenses to any infringement claim with respect to such
patents. However, we cannot be certain that one or more of the third parties
will not initiate litigation alleging that our technologies infringe claims of
such patents or that a court would not find such claims valid and infringed.

  We have funded specific technologies with U.S. government grants. For
instance, we developed our ThermoFluor screening technology using funds from a
grant awarded by the National Institute for General Medical Sciences at the
National Institutes of Health, and portions of our GPCR technology using funds
from grants awarded by the National Institute for General Medical Sciences at
the National Institutes of Health. We elected to retain title in these
technologies, subject to a nonexclusive, nontransferable, irrevocable, paid-up
license to the U.S. government to practice or have practiced for or on behalf
of the government any technology developed with these funds.

Confidentiality agreements with employees and others may not adequately prevent
disclosure of trade secrets and other proprietary information.

  In order to protect our proprietary technology and processes, we also rely in
part on trade secret protection for our confidential and proprietary
information. Our policy is to execute confidentiality agreements with our
employees and consultants upon the commencement of an employment or consulting
arrangement with us. These agreements require that all confidential information
that the individual develops or that we make known to the individual during the
course of the individual's relationship with us be kept confidential and not
disclosed to third parties. These agreements also provide that inventions that
the individual conceives in the course of rendering services to us shall be our
exclusive property. Such individual may, nonetheless, disclose proprietary
information, others may independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to our trade
secrets and we may be unable to meaningfully protect our trade secrets. Costly
and time-consuming litigation could be necessary to enforce and determine the
scope of our proprietary rights, and failure to obtain or maintain trade secret
protection could adversely affect our competitive business position.

If our competitors develop and market drug discovery technologies or drug
candidates faster than we do or that are superior to our drug discovery
technologies or drug candidates, our commercial opportunities will be reduced
or eliminated.


  We compete both in the markets for drug discovery technologies and services
and the markets for pharmaceutical products. Our principal competitors are the
internal drug discovery departments of our

                                       14
<PAGE>


pharmaceutical company customers and potential customers. Many of our customers
and potential customers have developed or acquired or are developing or are
acquiring integrated drug discovery capabilities that use combinatorial
chemistry (the science of modifying a central core structure by adding
different chemical groups connected to the core at different positions), chemi-
informatics software (software for handling chemistry data), structure-based
drug design (the science of creating drug molecules from knowledge of the
structural features of the site on the target protein at which drugs bind) and
high-throughput screening. In addition, many of these companies have large
collections of compounds that they have previously synthesized, purchased from
chemical supply catalogs or obtained from other sources against which they may
screen new targets.

  We also compete with biotechnology and drug discovery services companies,
academic and scientific institutions, governmental agencies, and public and
private research organizations. Our technology platform integrates many
technologies, including combinatorial chemistry, chemi-informatics software,
structure-based drug design and high-throughput screening. We face competition
based on numerous factors, including size, diversity and ease of use of
compound libraries, speed and cost of identifying and optimizing potential lead
compounds and patent position, from companies offering one or more technology
components of the discovery process. Companies such as Aurora Biosciences
Corporation and Evotec BioSystems AG have developed ultra-high throughput
screening capabilities. In addition, several competitors, including Scriptgen
Pharmaceuticals, Inc., Novalon Pharmaceutical Corporation and Cetek Corporation
have developed alternative approaches to screening protein targets of unknown
function that are competitive with our "any target" ThermoFluor technology.
There are many companies that provide combinatorial chemistry services for lead
generation and optimization that compete with our DiscoverWorks technologies
and discovery services. Competitors such as Pharmacopeia, Inc., ArQule, Inc.
and Discovery Partners, Inc. use computer methods to assist in the design of
large screening libraries and synthesize them using combinatorial or parallel
chemical synthesis methods, which are competitive with our DirectedDiversity
technology. Competitors such as Tripos, Inc. and MDL Information Systems, Inc.
are computer software companies that offer chemi-informatics and other software
and database services to support drug discovery, which are competitive with the
software components of our DirectedDiversity chemi-informatics technology.
Competitors such as Vertex Pharmaceuticals Inc., Millenium Pharmaceuticals,
Inc. and Axys Pharmaceuticals, Inc. extensively use structure-based drug design
or genomics technologies integrated with combinatorial chemistry and other drug
discovery technologies. These entities compete with us either on their own or
in collaborations.

  While we believe that our integration of proprietary technologies for drug
discovery provides us with a competitive advantage over many of our
competitors, we expect that many of our competitors will seek to integrate and
improve their technologies to provide discovery capabilities similar or
superior to those provided by us.

  For drug candidates developed internally which we seek to license, we face,
and will continue to face, intense competition from organizations such as large
pharmaceutical and biotechnology companies. Competition with any of the
programs in our internal drug discovery pipeline may arise from current or
future drug candidates in the same therapeutic class or other classes of
therapeutic agents or other methods of preventing or reducing the incidence of
disease. Any drug candidate that is successfully developed may compete with
existing therapies that have long histories of safe and effective use.

  Due to perceived shortcomings of available agents and the large market
potential, competition to develop a safe, orally active antithrombotic agent
(an agent which inhibits the formation of blood clots) is intense, with many
discovery programs in process, including programs in clinical development by
AstraZeneca PLC and BASF. In addition, our orally active urokinase inhibitor
for the inhibition of cancer metastasis (development of secondary tumors in
other organs of the body during the spread of cancer) and tumor angiogenesis
(development of new blood vessels that allow the further growth of tumors) and
for cardiovascular indications faces competition from a number of agents and
approaches currently under development.

                                       15
<PAGE>


  Our other research programs in small molecule drug discovery (a small
molecule drug is a molecule that has a molecular weight of about 500 or less,
and is not a protein or a peptide) also face strong competition. Many other
companies are working in these areas and they may achieve earlier or greater
success than we may be able to achieve.

  Our current and anticipated future research programs and services that focus
on the discovery of small molecule drugs that target GPCRs are also in a highly
competitive area. Most major pharmaceutical companies have extensive drug
discovery programs that target one or more GPCRs, and many biotechnology
companies have developed proprietary positions for particular GPCR receptors or
screening technologies. We also face competition, and anticipate accelerated
competition, in the area of structural analysis of target proteins identified
as a result of the sequencing of the human genome, where academic laboratories
and possibly companies, either on their own or in collaboration with others,
are seeking to determine the structures of GPCRs, and databases of GPCR
structures are being created in competition with the GPCR structural and other
databases we expect to develop.

  Most of our competitors, either alone, or together with their collaborators,
have substantially greater research and development capabilities and financial,
scientific, operational, marketing and sales resources than we do, as well as
significantly more experience in research and development, clinical trials,
regulatory matters, manufacturing, marketing and sales. These competitors and
other companies may have already developed or may in the future develop new
technologies or products that compete with ours or which could render our
technologies and products obsolete. In addition, our competitors may succeed in
obtaining broader patent protection, receiving FDA approval for products or
developing and commercializing products or technologies before us. We also
compete with these organizations in recruiting and retaining qualified
scientific and management personnel.

If we lose our key personnel or are unable to attract and retain qualified
personnel as necessary, it could delay our product development programs and
harm our research and development efforts.

  We are highly dependent on the principal members of our scientific and
management staff, including David C. U'Prichard, our Chief Executive Officer,
and F. Raymond Salemme, our President and Chief Scientific Officer. If we lose
the services of one or more of these persons, we may be unable to achieve our
business objectives. Our future success also will depend in part on the
continued service of our other key scientific, software, engineering and
management personnel and our ability to identify, hire and retain additional
personnel. We have maintained key area life insurance on Dr. Salemme since the
Company's inception in 1993, but we do not maintain key area life insurance on
any of our other employees. Intense competition exists for qualified personnel
in the areas of our activities, and we may not be able to continue to attract
and retain such personnel necessary for the development of our business. All of
our key employees are required to sign non-competition agreements with us.
Failure to attract and retain key personnel could have a material adverse
effect on our business, financial condition and results of operations.


We expect that our quarterly results of operations will fluctuate, and this
fluctuation could cause our stock price to decline, causing investor losses.

  To date, substantially all of our revenue has been from corporate
collaborations, license agreements and government grants. We expect that a
significant portion of our revenues for the foreseeable future will be
comprised of this funding as well as milestone payments. The timing of revenue
in the future will depend largely upon the signing of collaborative research
and development or technology licensing agreements or the licensing of drug
candidates for further development and payment of fees, milestone payments and
royalty revenues as a result. In any one fiscal quarter we may receive multiple
or no payments from our collaborators. As a result, operating results may vary
substantially from quarter to quarter. Revenue for any given period may be
greater or less than revenue in the immediately preceding period or in the
comparable period of the prior year. Our operating results may also fluctuate
due to other factors, including the following:

  . termination of collaborations and licensing arrangements;

                                       16
<PAGE>


  . the ability and willingness of collaborators to develop and commercialize
    milestone and royalty-bearing products within expected timelines and the
    resulting demand for any commercialized products;

  . our ability to enter into new collaborative agreements, or to extend the
    terms of our existing collaborative agreements, and the terms of any
    agreement of this type;

  . our ability or that of our collaborators to successfully satisfy all
    pertinent regulatory requirements;

  . the level of our expenditures on research and development and the level
    of other operating expenses; and

  . general and industry specific economic conditions, which may affect our
    collaborators' research and development expenditures.

  If revenue declines or does not grow as anticipated due to the expiration of
collaborative agreements, failure to obtain new agreements or grants, lower-
than-expected milestone or royalty payments or other factors, we may not be
able to correspondingly reduce our operating expenses. A large portion of our
expenses, including expenses for facilities, equipment and personnel, are
relatively fixed. Failure to achieve anticipated levels of revenue could
therefore significantly harm our operating results for a particular fiscal
period.

  Due to the possibility of fluctuations in our revenue and expenses, we
believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance. Our operating results in some
quarters may not meet the expectations of stock market analysts and investors.
In that case, our stock price may decline.

If we use or our collaborators use biological and hazardous materials in a
manner that causes injury, we may be liable for damages.

  Both we and our collaborators conduct research and development activities
which involve the controlled use of potentially harmful biological materials as
well as hazardous materials, chemicals and various radioactive compounds. We
use a wide range of solvents and other chemicals in order to discover new drug
candidates. We also generate biological waste products such as bacterial cells
and analyzed blood products during drug discovery programs. In addition,
several of our biological studies use small quantities of radioactive isotopes
of hydrogen, iodine, carbon, sulfur and phosphorus. We cannot completely
eliminate the risk of accidental contamination or injury from the use, storage,
handling or disposal of these materials. In the event of contamination or
injury, we could be held liable for damages that result, and any liability
could exceed our resources. We do not have liability insurance coverage for
contamination or injury. We also do not have mass tort insurance coverage or
environmental insurance coverage. We believe we are currently in compliance
with OSHA (Office of Occupational Health and Safety), the NRC (Nuclear
Regulatory Commission) and other Federal and local regulatory requirements with
respect to the use, monitoring and disposal of chemical and biological waste
products. The cost of compliance with these laws and regulations could be
significant.

We may be sued for product liability.

  Because we are involved in the drug discovery process, our business exposes
us to potential product liability risks, when and if drug candidates are
commercialized. We may not be able to avoid product liability claims. Product
liability insurance for the pharmaceutical industry is generally expensive, if
it is available at all. If we are unable to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims, we may be unable to commercialize our product candidates. We
currently maintain products/professional liability insurance with coverage
which we believe is customary and appropriate for businesses such as that of
the Company. If a plaintiff brings a successful product liability claim against
us in excess of our insurance coverage, if any, we may incur substantial
liabilities and our business may fail.

                                       17
<PAGE>


If we engage in any acquisition or business combination, we will incur a
variety of risks that could adversely affect our business operations.

  Although we are not currently discussing any business combination, in the
past we have considered and we will continue to consider in the future, if and
when any appropriate opportunities become available, strategic business
initiatives intended to further the development of our business, including
acquiring businesses, technologies or products or entering into a business
combination with another company. If we do pursue such a strategy, we could,
among other things:

  . issue equity securities that would dilute current stockholders'
    percentage ownership, incur substantial debt, or both;

  . spend substantial operational, financial and management resources in
    integrating new businesses, technologies and products;

  . assume substantial actual or contingent liabilities; or

  . merge, or otherwise enter into a business combination with, another
    company in which our stockholders would receive cash or shares of the
    other company, or a combination of both. In such case, many stockholders
    may disagree with the terms of such business combination or may view the
    sufficiency of the consideration to be received to be inadequate, or
    both.

  In addition, any future acquisitions or business combinations might
negatively impact our business relations with a collaborator and could lead to
a termination of our agreement with such collaborator. Further, recent proposed
accounting changes relating to accounting for acquisitions could result in a
negative impact on our results of operations. Any of the above could harm our
business.

Risks Related to This Offering

Our common stock has never been publicly traded and we cannot predict the
extent to which a trading market will develop.

  Prior to this offering, there has been no public market for our common stock.
If you purchase shares of our common stock in this offering, you will not pay a
price that was established in a competitive market. Rather, you will pay a
price that we negotiated with representatives of the underwriters. That price
may vary significantly from the price for our common stock in the public
trading market for our common stock, should one develop. Although we have
applied to list the shares on the Nasdaq National Market, we cannot guarantee
that after this offering an active trading market in our stock will develop or
continue.

You will incur immediate and substantial dilution of the book value of your
shares.

  The offering price of our common stock is substantially higher than the net
tangible pro forma book value per share of our outstanding common stock. As a
result, investors purchasing common stock in this offering will incur immediate
and substantial dilution in the net tangible book value of their common stock
of $10.11 per share. In the past, we issued options and warrants to acquire
capital stock at prices significantly below the assumed offering price. There
will be further dilution to investors when any of these outstanding options and
warrants are exercised.

If a large number of shares of our common stock are sold after this offering,
or if there is the perception that such sales could occur, the market price of
our common stock may decline.

  The market price of our common stock could decline due to sales of a large
number of shares in the market after this offering or the perception that such
sales could occur, including sales or distributions of shares by our large
stockholders. These sales could also make it more difficult for us to raise
funds through offerings of equity securities in the future at a time and price
that we believe is appropriate, and could also make it more difficult for us to
pay in stock for any acquisitions we may decide to pursue in the future.

                                       18
<PAGE>


  Upon the completion of this offering, we will have 18,237,300 shares of
common stock outstanding, assuming no exercise of options or warrants and
assuming no exercise of the underwriters' over-allotment option. Of these
outstanding shares of common stock, the 4,000,000 shares sold in this offering
will be freely tradeable, without restriction under the Securities Act of 1933,
as amended, unless purchased by our "affiliates." The remaining 14,237,300
shares of common stock held by existing stockholders are "restricted
securities" and may be resold in the public market only if registered or
covered by an exemption from registration, such as Rule 144 under the
Securities Act.

  Immediately following the completion of this offering, holders of 13,186,602
shares of common stock will be entitled to registration rights. Upon
registration, these shares may be freely sold in the public market.

  All of our officers, directors and stockholders beneficially owning at least
1% of our outstanding shares have agreed, under lock-up agreements, that they
will not, directly or indirectly, offer, sell or agree to sell, or otherwise
dispose of any shares of our common stock or convertible securities in the
public market without the prior written consent of Bear, Stearns & Co. Inc. for
a period of 180 days after the date of this prospectus. Upon expiration of the
lock-up agreements, the shares of common stock previously subject to such lock-
up agreements and currently outstanding will be immediately eligible for
resale, subject to the requirements of Rule 144.

  We may issue additional shares:

  . to employees, directors and consultants;

  . in connection with corporate alliances;

  . in connection with acquisitions; and

  . to raise capital.

As a result of these factors, a substantial number of shares of our common
stock could be sold in the public market at any time.

Our certificate of incorporation and Delaware law contain provisions that could
discourage a third party from making a takeover offer that could be beneficial
to us and our stockholders.

  Various provisions of our certificate of incorporation and bylaws and
Delaware law could delay or prevent a third party from acquiring shares of our
common stock or replacing members of our board of directors. For example, our
certificate of incorporation provides for the division of our board of
directors into three classes. In addition, our certificate of incorporation
prevents our stockholders from acting by written consent and provides that
special meetings of the stockholders may be called only by our chairman or by a
majority of our board of directors. Our board of directors has the power to
issue up to five million shares of preferred stock without stockholder
approval. This preferred stock could have rights, including voting rights, that
would be superior to those of our common stock, and our board of directors has
the power to determine these rights. These provisions may make it more
difficult for a third party to acquire a majority of our outstanding voting
stock or to replace a majority of our board of directors.

  In addition, we are subject to Section 203 of the Delaware General
Corporation Law which contains provisions imposing restrictions on the ability
of stockholders to take action to acquire control of us or otherwise engage in
transactions with us. Section 203 coupled with the provisions of our
certificate of incorporation and bylaws may discourage transactions in which
our stockholders might otherwise receive a premium for their shares over the
then current price and may limit our stockholders' ability to approve
transactions that they think are in their best interests.

Because our officers, directors, principal stockholders and affiliates will own
approximately 46% of our outstanding common stock following the offering, they
could control our actions in a manner that conflicts with our interests and the
interests of our other stockholders.

                                       19
<PAGE>


  Upon the completion of this offering, our officers, directors, principal
stockholders and affiliates will own approximately 9,416,218 shares, or 46%, of
our outstanding common stock. The interests of these controlling stockholders
could conflict with the interests of our other stockholders. For example, if
these controlling stockholders choose to act together, they may be able to
exert considerable influence over us, including in the election of directors
and the approval of actions submitted to our stockholders. This concentration
of ownership may also have the effect of discouraging third-party offers to
acquire our company or of delaying or preventing a change in control of our
company.

The net proceeds from this offering may be allocated in ways with which you and
other stockholders may not agree.

  Management will have significant flexibility in applying the net proceeds of
this offering and could use these proceeds for purposes other than those
contemplated at the time of the offering.

We do not expect to pay dividends in the foreseeable future and stockholders
must rely on stock appreciation for any return on their investment.

  We do not intend to pay any cash dividends on our common stock for the
foreseeable future. As a result, only the appreciation, if any, of the price of
our common stock will provide a return to investors.

                                       20
<PAGE>

                           FORWARD-LOOKING STATEMENTS

  This prospectus contains forward-looking statements under the captions
"Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and elsewhere. These forward-
looking statements include, among others, statements about the following:

  . anticipated losses and expenditures;

  . anticipated revenues from corporate collaborations, licensing agreements,
    government grants, products and/or services;

  . development and commercialization of existing and new technologies;

  . ability to license drug candidates we develop internally;

  . ability to market our technologies and services;

  . potential determination of the 3-D structure of the [FORMULA APPEARS HERE]
    adrenergic receptor, known to be involved in the physiological actions of
    the hormone adrenalin, or of any other GPCR;

  . the status of our regulatory process for 3DP-4815 and our other product
    candidates;

  . our intentions concerning and our reliance on collaborations and license
    arrangements;

  . development and commercialization of product candidates by us or our
    collaborators and licensors (including lead compounds identified by
    collaborators or licensors through the use of our technologies or
    developed internally by us and then licensed);

  . our intention to rely on third-party expert clinical investigators and
    clinical research organizations;

  . our intention, or our collaborators' intention, to rely on third parties
    for manufacturing, sales, marketing and distribution;

  . ability of us, or our collaborators, to obtain and maintain required
    regulatory approvals for product candidates;

  . our competition;

  . our intellectual property rights;

  . our growth rate and ability to manage growth;

  . our ability to meet capital requirements for at least the next two years;

  . our intentions regarding use of proceeds;

  . our intentions concerning payment of dividends; and

  . our ability to broadly exploit our integrated DiscoverWorks technologies.

  When used in this prospectus, the terms "believe," "anticipate," "estimate,"
"expect," "seek," "intend," "could," "will," "predict," "plan," "potential,"
"continue," and "may", or the negative of these terms or other similar
terminology, are generally intended to identify "forward-looking statements."
Our forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or
achievements, to be materially different from any future results, performance
or achievements express or implied by these forward-looking statements. We
discuss these factors in more detail elsewhere in this prospectus, including
under the captions "Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business." You
should not place undue reliance on our forward-looking statements. We do not
intend to update any of these factors or to publicly announce the result of any
revisions to any of these forward-looking statements.


                                       21
<PAGE>

                                USE OF PROCEEDS

  We estimate our net proceeds from the sale of our common stock in this
offering will be approximately $51.1 million, or approximately $58.9 million if
the underwriters' over-allotment option is exercised in full. This estimate is
based upon an assumed initial public offering price of $14.00 per share after
deducting estimated underwriting discounts and commissions and estimated
offering expenses.

  We expect to use these proceeds for the following purposes:

  . 40% for further research and development of our drug discovery
    technologies and programs;

  . 15% for acquisition or licensing of targets or technologies;

  . 15% for expansion of our facilities; and

  . 30% for general corporate and working capital purposes.

  In addition, a portion of the net proceeds may be used to acquire businesses
that are comparable to ours. We currently have no agreements with respect to
any material acquisitions.

  The amounts and timing of our actual expenditures for each purpose may vary
significantly depending upon numerous factors, including:

  . the scope of development efforts for our drug discovery technologies and
    programs;

  . the timing of regulatory approvals;

  . our ability to enter into new and maintain current collaborative or
    licensing arrangements, as well as their timing and terms;

  . the progress and success of drug candidates we develop internally and our
    ability to license them;

  . competition;

  . the progress and success of our research and development collaborations
    and the receipt and variability of funding, milestone payments and
    royalties from our collaborators;

  . the market acceptance of any products introduced by us or our
    collaborators;

  . time and cost of defending and enforcing patent and other intellectual
    property claims;

  . future revenue growth, if any; and

  . the amount of cash, if any, we generate from operations.

  We will retain broad discretion in the allocation of the net proceeds of this
offering. Pending the uses described above, we intend to invest the net
proceeds of this offering in short-term, investment-grade, interest-bearing
securities.

                                DIVIDEND POLICY

  Under our certificate of incorporation, from and after October 1998, the
holders of our series A-1 preferred stock were entitled to receive a 10%
dividend per annum, payable in equal quarterly installments. In connection
therewith, we have declared and paid aggregate dividends of $979,000 through
the first quarter of 2000. These dividends were paid by issuing each holder of
our series A-1 preferred stock a convertible promissory note payable for the
amount of the holder's portion of the declared dividend. These notes bear
interest at 10% per annum. We have also declared and paid dividends of
approximately $167,000 for the quarter ended June 30, 2000. In addition we will
accrue approximately $1,800 per day in additional dividends for each day
between July 1, 2000 and the completion of this offering, which we intend to
pay in cash. As of June 30, 2000, the $979,000 principal amount and accrued
interest of $79,000 on the promissory notes outstanding at the time of the
closing of our initial public offering will be automatically converted into
shares of our common stock valued at the initial public offering price. We
estimate that as of June 30, 2000, 75,556 shares of common stock would be
issued upon such conversion. This estimate is based upon an assumed initial
public offering price of $14.00 per share. Our series A-2, series A-3, series
A-4 and series A-5 preferred stockholders are also entitled to receive a 10%
dividend per annum payable in equal installments from and after the fifth
anniversary of the date each such series was originally issued. We do not
intend to pay any cash dividends, other than the obligations described above,
in the foreseeable future.

                                       22
<PAGE>

                                 CAPITALIZATION

  You should read this table together with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and the notes to those statements included elsewhere in this
prospectus. This table states as of March 31, 2000 (consolidated):

  . our actual capitalization;

  . our pro forma capitalization, assuming the automatic conversion of all of
    our outstanding preferred stock into common stock upon the closing of
    this offering and the issuance of an estimated 73,936 shares of common
    stock issuable at the assumed initial public offering price of $14.00 per
    share upon the automatic conversion at the initial public offering price,
    at the closing of this offering, of $979,000 of convertible promissory
    notes, plus accrued interest, issued in lieu of cash payment of
    dividends, to the holders of our series A-1 preferred stock; and

  . our pro forma as-adjusted capitalization is our pro forma capitalization
    as adjusted to give effect to the sale of 4,000,000 shares of our common
    stock in this offering at an assumed initial public offering price of
    $14.00 per share after deducting estimated underwriting discounts and
    commissions and estimated expenses of this offering.

<TABLE>
<CAPTION>
                                                      As of March 31, 2000
                                                   ----------------------------
                                                         (consolidated)
                                                                         Pro
                                                               Pro     Forma As
                                                    Actual    Forma    Adjusted
                                                   --------  --------  --------
                                                     (in thousands, except
                                                          share data)
<S>                                                <C>       <C>       <C>
Notes payable--dividends and accrued interest....  $    701  $    --   $    --
Long-term debt, less current portion.............     2,020     2,020     2,020
                                                   --------  --------  --------
 Total long-term debt............................     2,721     2,020     2,020
                                                   --------  --------  --------
Redeemable convertible preferred stock--
 34,897,488 actual, none pro forma and pro forma
 as adjusted outstanding.........................    63,550       --        --
                                                   --------  --------  --------

Stockholders' Equity (Deficit):
Convertible preferred stock--par--1,400,000
 actual, none pro forma and pro forma as adjusted
 outstanding.....................................         1       --        --
Common stock--par--936,045 actual, 13,973,369 pro
 forma and 17,973,369 pro forma as adjusted
 outstanding.....................................         1        14        18
Additional paid in capital.......................     4,600    68,839   119,915
Notes receivable from officers...................      (589)     (589)     (589)
Deferred compensation............................      (524)     (524)     (524)
Accumulated deficit..............................   (48,851)  (48,851)  (48,851)
                                                   --------  --------  --------
 Total stockholders' equity (deficit)............   (45,362)   18,889    69,969
                                                   --------  --------  --------
Total capitalization.............................  $ 20,909  $ 20,909    71,989
                                                   ========  ========  ========
</TABLE>

  This table assumes no exercise of stock options or warrants outstanding as of
March 31, 2000. As of March 31, 2000, there were options outstanding under our
current equity compensation plan to purchase 2,084,255 shares with a weighted
average exercise price of $3.16 per share; warrants to purchase 1,757,366
shares of common stock at a weighted average exercise price of $2.52 per share;
and warrants to purchase 239,475 shares of series A-1 preferred stock, which
will either be exercised prior to the closing of this offering at an exercise
price of $1.00 per share or become exercisable for 85,527 shares of common
stock upon the closing of this offering at an exercise price of $2.80 per
share.

                                       23
<PAGE>

                                    DILUTION

  As of March 31, 2000, our pro forma net tangible book value was $18.9
million, or $1.35 per share. Pro forma net tangible book value per share is
determined by dividing pro forma net tangible book value (total tangible assets
less total liabilities) by the pro forma number of shares of common stock after
giving effect to the automatic conversion of all outstanding shares of
preferred stock into an aggregate of 12,963,388 shares of common stock upon the
closing of this offering and the issuance of an estimated 73,936 shares of our
common stock upon the automatic conversion at the initial public offering
price, at the closing of this offering, of $979,000 of convertible promissory
notes, plus accrued interest, issued in lieu of cash payment of dividends to
the holders of our series A-1 preferred stock.

  Without taking into effect any changes in pro forma net tangible book value
after March 31, 2000, after giving effect to the sale of the common stock
offered hereby at an assumed offering price of $14.00 per share and after
deducting estimated underwriting discounts and commissions and estimated
offering expenses, the pro forma as adjusted net tangible book value would have
been $70.0 million, or $3.89 per share. This represents an immediate increase
in pro forma net tangible book value of $2.54 per share of common stock to our
recent stockholders and an immediate dilution of $10.11 or 72% per share to new
investors who purchase shares in this offering. The following table illustrates
this dilution.

<TABLE>
   <S>                                                          <C>      <C>
   Assumed offering price per share............................          $14.00
   Historical net tangible book value per share................ $(48.49)
   Increase in net tangible book value per share attributable
    to the conversion of outstanding preferred stock and
    promissory notes ..........................................   49.84
                                                                -------
   Pro forma net tangible book value per share before the
    offering...................................................    1.35
   Increase per share attributed to new investors..............    2.54
                                                                -------
   Pro forma net tangible book value per share after this
    offering...................................................            3.89
                                                                         ------
   Dilution in net tangible book value per share to new
    investors..................................................          $10.11
                                                                         ======
</TABLE>

  If the underwriters exercise their over-allotment option in full, the pro
forma as-adjusted net tangible book value per share after the offering would be
$4.19 per share, the increase in pro forma net tangible book value per share to
existing stockholders would be $2.84 per share and the dilution in pro forma
net tangible book value to new investors would be $9.81 per share.

  The following table summarizes, on a pro forma as adjusted basis as of March
31, 2000, the differences between the total consideration paid and the average
price per share paid by the existing stockholders and the new investors with
respect to the number of shares of common stock purchased from us based on an
assumed initial public offering price of $14.00 per share:

<TABLE>
<CAPTION>
                                Shares       Total Consideration
                          ------------------ -------------------- Average Price
                            Number   Percent    Amount    Percent   Per Share
                          ---------- ------- ------------ ------- -------------
<S>                       <C>        <C>     <C>          <C>     <C>
Existing stockholders.... 13,973,369  77.74% $ 69,006,644  55.20%    $ 4.94
New public investors.....  4,000,000  22.26    56,000,000  44.80      14.00
                          ----------  -----  ------------  -----
    Total................ 17,973,369  100.0% $125,006,644  100.0%
                          ==========  =====  ============  =====
</TABLE>

  These tables do not assume exercise of stock options or warrants outstanding
as of March 31, 2000.

  As of March 31, 2000, there were 2,084,255 shares issuable upon exercise of
outstanding stock options at a weighted average exercise price of $3.16 per
share. As of March 31, 2000, there were 1,757,366 shares of common stock
issuable upon the exercise of outstanding warrants, at a weighted average
exercise price of $2.52 per share and 239,475 shares of series A-1 preferred
stock issuable upon the exercise of outstanding warrants, which will either be
exercised prior to the closing of this offering at an exercise price of $1.00
per share or become exercisable for 85,527 shares of common stock upon the
closing of this offering at an exercise price of $2.80 per share. To the extent
that any of these options or warrants are exercised, there will be further
dilution to new investors.

                                       24
<PAGE>

                         SELECTED FINANCIAL INFORMATION

                   (in thousands except per share data)

  The selected financial data set forth below are derived from our financial
statements. Our statements of operations data for the years ended December 31,
1997, 1998 and 1999 and our balance sheet data at December 31, 1998 and 1999,
are derived from our financial statements that have been audited by Richard A.
Eisner & Company, LLP, which are included elsewhere in this prospectus, and are
qualified by reference to such financial statements. The statement of
operations data for the years ended December 31, 1995 and 1996 and the balance
sheet data as of December 31, 1995, 1996 and 1997 are derived from our audited
financial statements, which are not included in this prospectus. The statement
of operations data for the three-months ended March 31, 2000 and 1999 and the
balance sheet data as of March 31, 2000, are derived from our unaudited
financial statements prepared on the same basis as our audited financial
statements and, in the opinion of our management, include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation
of our financial position and results of operations. The results of operations
for an interim period are not necessarily indicative of results to be expected
for a full year. The selected financial information set forth below should be
read together with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our financial statements and related notes
appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                  Year ended December 31,                     March 31,
                          --------------------------------------------  -----------------------
                           1995     1996     1997     1998      1999     1999         2000
                          -------  -------  -------  -------  --------  -------  --------------
                                                                                 (consolidated)
<S>                       <C>      <C>      <C>      <C>      <C>       <C>      <C>
Statements of Operations
 Data:
Grant and research
 revenue................  $   463  $   967  $ 3,580  $ 5,095  $  4,489  $ 1,379     $ 1,484
                          -------  -------  -------  -------  --------  -------     -------
Costs and expenses
 Research and
  development...........    3,414    4,556    6,517   10,984    12,136    2,975       3,425
 General and
  administrative........    1,122    1,708    3,000    4,458     6,525    1,155       1,537
 Litigation settlement..       --       --       --       --     1,500       --          --
                          -------  -------  -------  -------  --------  -------     -------
 Total costs and
  expenses..............    4,536    6,264    9,517   15,442    20,161    4,130       4,962
                          -------  -------  -------  -------  --------  -------     -------
Loss from operations....   (4,073)  (5,297)  (5,937) (10,347)  (15,672)  (2,751)     (3,478)
Interest income.........       16       14      521      868       328      125          87
Interest expense........     (401)    (580)    (149)    (232)     (625)    (114)       (351)
                          -------  -------  -------  -------  --------  -------     -------
Net loss................  $(4,458) $(5,862) $(5,565) $(9,711) $(15,969) $(2,740)    $(3,742)
Declared and accrued
 cumulative dividends on
 preferred stock........       --       --       --     (144)     (669)    (167)       (167)
                          -------  -------  -------  -------  --------  -------     -------
Net loss applicable to
 common stock...........  $(4,458) $(5,862) $(5,565) $(9,855) $(16,638) $(2,907)    $(3,909)
                          =======  =======  =======  =======  ========  =======     =======
Basic and diluted net
 loss per common share--
 historical.............  $(90.98) $(58.04) $(27.55) $(22.20) $ (27.37) $ (5.01)    $ (5.92)
                          =======  =======  =======  =======  ========  =======     =======
Weighted average common
 shares outstanding--
 historical.............       49      101      202      444       608      580         660
                          =======  =======  =======  =======  ========  =======     =======
Basic and diluted net
 loss per common share--
 pro forma..............                                      $  (1.57)             $  (.36)
                                                              ========              =======
Weighted average common
 shares outstanding--pro
 forma..................                                        10,198               10,288
                                                              ========              =======
</TABLE>

<TABLE>
<CAPTION>
                                      As of December 31,                   March 31,
                          -----------------------------------------------  ---------
                           1995      1996      1997      1998      1999      2000
                          -------  --------  --------  --------  --------  ---------
                                                                   (consolidated)
<S>                       <C>      <C>       <C>       <C>       <C>       <C>
Balance Sheet Data:
Cash, cash equivalents
 and marketable
 securities.............  $   547  $  1,312  $  8,953  $  9,726  $  7,620  $ 22,063
Total assets............    2,954     3,401    12,646    15,712    12,480    26,805
Notes payable--dividends
 and accrued interest...                                    144       685       701
Long-term debt, less
 current portion........    1,077       575       820     3,270     2,330     2,020
Convertible notes and
 accrued interest.......       --        --        --        --    10,115        --
Long-term portion of
 settlement accrual.....       --        --        --        --       500        --
Redeemable convertible
 preferred stock........    6,610    12,015    24,461    34,834    34,834    63,550
Accumulated deficit.....   (8,001)  (13,864)  (19,429)  (29,140)  (45,109)  (48,851)
Total capital
 deficiency.............   (7,858)  (11,198)  (15,702)  (25,384)  (41,748)  (45,362)
</TABLE>

  See our financial statements for a description of the computation of the
historical and pro forma net loss per share and the number of shares used in
the historical and pro forma per share calculations in "Statements of
Operations Data" above.

                                       25
<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  The following discussion of our financial condition and results of operations
should be read together with the financial statements and the notes to those
statements and other financial information included elsewhere in this
prospectus. This discussion contains certain statements of a forward-looking
nature that involve risks and uncertainties. As a result of many factors, such
as those set forth under "Risk Factors" and elsewhere in this prospectus, our
actual results may differ materially from those anticipated by such forward-
looking statements.

Overview

  We are a drug discovery company that has developed and integrated a set of
proprietary technologies called DiscoverWorks which accelerate and improve the
drug discovery process and capitalize on the opportunities for drug discovery
presented by the thousands of new targets for drugs being revealed from the
sequencing of the human genome. Our technologies also facilitate drug discovery
for well-characterized disease targets that have proven difficult. We believe
that our technologies, which apply to virtually any disease target, produce
compounds suitable for development into drugs in a more timely and cost-
effective manner and with a higher probability of success than that currently
achieved using conventional methods. We are using our technologies both to
assist collaborators in discovering drug candidates, and to discover and
develop our own drug candidates, which we currently intend to license at the
pre-clinical or early clinical stage.

  To date, substantially all of our revenue has been from corporate
collaborations, license agreements and government grants. Revenue from our
corporate collaborations and our licensing agreements consists of nonrefundable
initial, or "up front", fees, ongoing research and development funding,
potential milestone payments and royalties upon the sale of designated
products. Royalties from sales of products are not expected for at least
several years, if at all. We recognize revenue from corporate collaborations,
including periodic payments for research and development activities and related
nonrefundable technology access fees and/or technology or software licensing
fees, over the period that we perform research and development activities under
the terms of these agreements. Revenue from nonrefundable up-front fees for the
licensing of technology, products or software under agreements that do not
require us to perform research or development activities or other significant
future performance obligations is recognized at the time the agreement is
executed or the software is delivered. Revenue resulting from the achievement
of milestone events stipulated in the agreements is recognized when the
milestone is achieved. Up-front fees and other amounts received in excess of
revenue recognized are recorded as deferred income.

  We have incurred substantial operating losses since our inception in 1993. As
of March 31, 2000, our accumulated deficit was $48.9 million. We have funded
our operations primarily through private placements of equity securities
totaling $72.0 million and revenues of $16.1 million. Our losses have resulted
principally from costs incurred in research and development activities related
to our efforts to develop our technologies and our internal drug discovery
programs and from the associated administrative costs required to support these
efforts. We expect to incur additional operating losses over the next several
years as we continue to develop our technologies and fund internal product
research and development. Our ability to achieve profitability is dependent on
the progress and commercialization of drug candidates from existing internal
programs and collaborations and our ability to initiate and develop new
internal programs and enter into additional collaborations with favorable
economic terms. Payments either under collaborative agreements or related to
the licensing of drug candidates we develop internally will be subject to
significant fluctuation in both timing and amount and therefore our results of
operations for any period may not be comparable to the results of operations
from any other period.

Results of Operations

 Three Months Ended March 31, 2000 and 1999

  Revenue. Our revenue for the three months ended March 31, 2000 was $1.5
million as compared to $1.4 million for the three months ended March 31, 1999.
Revenues in 2000 included $1.4 million from corporate collaborations, including
revenue from new agreements with DuPont Pharmaceuticals Company and Boehringer

                                       26
<PAGE>


Ingelheim Pharmaceuticals, Inc., and continued funding from Aventis and Heska
Corporation and $0.1 million from government grants. Revenues in the first
quarter of 1999 included $1.4 million from corporate collaborations, including
revenues from Wyeth-Ayerst, Merck KGaA, and Heska Corporation.

  Research and Development Expenses. Our research and development expenses
increased $0.4 million, to $3.4 million for the three months ended March 31,
2000 from $3.0 million for the three months ended March 31, 1999. This increase
was connected to the expansion of research efforts in our internal programs,
including clinical testing of our lead internal compound, the commencement of
collaborative discovery programs and investment in our core technologies, with
related increases in expenses for personnel, equipment and lab supplies for all
of these activities.

  General and Administrative Expenses. Our general and administrative expenses
increased $0.3 million, to $1.5 million for the three months ended March 31,
2000 from $1.2 million for the three months ended March 31, 1999. The increase
was primarily connected to increased management and administrative personnel
expenses and legal and professional fees incurred in connection with litigation
over intellectual property, which we settled in March 2000, and the expansion
of our operations and business development efforts.

  Other Income (Expenses). Interest income was approximately $0.1 million for
the first quarter of both 2000 and 1999. Interest expense increased $0.3
million to $0.4 million.

 Years Ended December 31, 1999 and 1998

  Revenue. Our revenue for 1999 was $4.5 million as compared to $5.1 million in
1998. Revenues in 1999 included $4.3 million from corporate collaborations,
including revenue from a new agreement with Aventis, continued funding from
Wyeth-Ayerst, Merck KGaA, Heska Corporation and E.I. DuPont de Nemours and $0.2
million from government grants. Revenues in 1998 included $4.5 million from
corporate collaborations, including funding from Wyeth-Ayerst, Merck KGaA, and
Heska Corporation, and $0.6 million from government grants. The decrease in
revenue for 1999 is primarily connected to the completion in August 1998 of
funding from an Advanced Technology Program (ATP) award sponsored by the
National Institute of Standards and Technology, which commenced in August of
1995, and a reduction in revenues from Wyeth-Ayerst. Revenues from the ATP and
Wyeth-Ayerst programs decreased from 1998 to 1999 by $0.3 million and $0.7
million, respectively. Our agreements with Wyeth-Ayerst and Merck KGaA ended in
1999.

  Research and Development Expenses. Our research and development expenses
increased $1.1 million, to $12.1 million for 1999 from $11.0 million for 1998.
This increase was correlated to the expansion of research efforts in our
internal programs, including preclinical testing of our lead internal compound,
the commencement of collaborative discovery programs, investment in our core
technologies and associated increases in expenses for personnel, facility
expansion, equipment and lab supplies.

  General and Administrative Expenses. Our general and administrative expenses
increased $2.0 million, to $6.5 million for 1999 from $4.5 million for 1998.
The increase was primarily correlated to increased management and
administrative personnel expenses and legal and professional fees incurred in
connection with litigation involving our ThermoFluor technology, which we
settled in March 2000, the expansion of our operations and business development
efforts. In connection with the settlement of litigation, we accrued an expense
of $1.5 million in 1999. Under the terms of a settlement agreement with
Scriptgen Pharmaceuticals, Inc. relating to an action that Scriptgen brought
against us in the United States District Court for the District of Delaware on
October 13, 1998 for our alleged infringment of two patents, we acquired a
limited license to Scriptgen's ATLAS (Any Target Ligand Affinity Screen) assay
technology and Scriptgen was granted a limited license to the method claims of
our ThermoFluor assay technology. Neither of these licenses is exclusive. Under
this agreement, we paid Scriptgen $0.5 million and will make two additional
payments of $0.5 million in September 2000 and March 2001. In exchange for
these payments, Scriptgen will release us from all claims of infringement with
respect to those two patents. The settlement agreement restricts us, for a
period of three years, from specified activities in connection with screening
drugs useful for treating "infection" (defined as

                                       27
<PAGE>


relating to drugs whose principal aim is to treat or cure infectious disease in
humans). As part of this settlement agreement, until March 7, 2003, we are
precluded from using our ThermoFluor screening technology in the Hepatitis C
Virus "infection" area as part of collaborative agreements or as part of our
internal drug programs. In addition, we are precluded from using our
ThermoFluor screening technology as part of more than one collaboration
agreement in the area of "infection" until March 7, 2003, and such
collaborative agreement must be limited to a maximum of 3 anti-viral targets.
Our recent collaboration with Bristol-Myers Squibb Company constitutes the one
permitted collaboration agreement in the area of infection. The settlement with
Scriptgen, however, does not restrict use of our ThermoFluor screening
technology for our internal drug discovery efforts, or for purposes of
collaborative agreements outside the area of "infection", other than the
limitation with respect to Hepatitis C Virus "infection". In addition, if our
use of ThermoFluor facilitates the discovery of a drug used to treat infectious
disease, we are obligated to pay Scriptgen a royalty based on revenue from the
sale of such a drug.

  Other Income (Expenses). Interest income decreased $0.6 million, to $0.3
million for 1999 from $0.9 million for 1998. This was correlated to lower
average cash balances during 1999. Interest expense increased $0.4 million, to
$0.6 million in 1999 from $0.2 million in 1998. The increase in interest
expense was primarily attributable to an increase in short-term borrowings from
certain of our investors.

  Provision for Income Taxes. We incurred net operating losses for the years
ended December 31, 1999 and 1998, and, accordingly, we did not pay any federal
income taxes. As of December 31, 1999, we had federal net operating loss
carryforwards of approximately $40.4 million, which expire through 2019. Our
utilization of the net operating losses may be subject to substantial annual
limitations under Section 382 of the Internal Revenue Code. The annual
limitations may result in the expiration of net operating losses prior to
utilization. We have not recorded a benefit from our net operating loss
carryforwards because we believe that it is uncertain that we will have
sufficient income from future operations to realize the carryforwards prior to
their expiration. Accordingly, we have established a valuation allowance
against the deferred tax asset arising from the carryforwards.

 Years Ended December 31, 1998 and 1997

  Revenue. Our revenue for 1998 was $5.1 million as compared to $3.6 million in
1997. Revenues in 1998 included $4.5 million from corporate collaborations,
including revenue from Wyeth-Ayerst, Merck KGaA, and Heska Corporation, and
$0.6 million from government grants. Revenues in 1997 included $2.5 million
from corporate collaborations, including the initiation of the agreement with
Wyeth-Ayerst, funding from Merck KGaA, and $1.1 million from government grants.
The increase in revenue from corporate collaborations was primarily connected
to the full year of funding under the Heska agreement. The decrease in grant
revenue is primarily connected to the completion in August 1998 of funding from
an Advanced Technology Program (ATP) award, sponsored by the National Institute
of Standards and Technology which commenced in August of 1995.

  Research and Development Expenses. Our research and development expenses
increased $4.5 million to $11.0 million for 1998 from $6.5 million for 1997.
This increase was connected to the expansion of research efforts in our
internal programs, including preclinical testing of our lead inhibitor of the
enzyme thrombin (thrombin inhibitor) compounds, the commencement of
collaborative discovery programs, investment in our core technologies, and
associated increases in expenses for personnel, facility expansion, equipment
and lab supplies.

  General and Administrative Expenses. Our general and administrative expenses
increased $1.5 million to $4.5 million for 1998 from $3.0 million for 1997. The
increase was primarily connected to increased management and administrative
personnel expenses and legal and professional fees incurred in connection with
the expansion of our operations and business development efforts.

  Other Income (Expenses). Interest income increased $0.4 million to $0.9
million for 1998 from $0.5 million for 1997. This was connected to higher
average cash balances during 1998. Interest expense increased $0.1 million to
$0.2 million in 1998 from $0.1 million in 1997. The increase in interest
expense was primarily connected to an increase in short-term borrowings from
certain of our investors.

                                       28
<PAGE>

  Provision for Income Taxes. We incurred net operating losses for 1998 and
1997, and, accordingly, we did not pay any federal income taxes.

Liquidity and Capital Resources

  At March 31, 2000, we had cash and cash equivalents of $22.1 million and
working capital of $16.7 million. In addition, on July 7, 2000 we signed a
collaborative discovery and technology agreement with Bristol-Myers Squibb
Company and expect to receive by August 7, 2000 up-front fees of $23.5 million.
We have funded our operations to date primarily through private placements of
equity securities with aggregate proceeds of approximately $72.0 million,
revenues from corporate collaborations totaling $12.9 million, government
grants totaling $3.2 million, capital equipment and leasehold improvement
financing totaling $7.8 million and interest earned on the net proceeds of our
private placements. Our operating activities used funds totaling $10.6 million,
$8.4 million and $3.8 million in 1999, 1998 and 1997, respectively.

  To date, substantially all of our revenue has been from corporate license
agreements and government grants. We expect that substantially all of our
revenue for the foreseeable future will come from similar sources as well as
from interest income. In addition, our ability to achieve profitability will be
dependent upon our ability to enter into additional corporate collaborations
and license any internally developed products. There can be no assurance that
we will be able to negotiate additional collaborative agreements in the future
on acceptable terms, if at all, or that such current or future collaborative
agreements will be successful and provide us with expected benefits. We believe
that the net proceeds from this offering, expected revenue from collaborations
and license arrangements, existing capital resources and interest income should
be sufficient to fund anticipated levels of operations for at least the next
two years.

Recently Issued Accounting Standards

  In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Financial
Instruments and for Hedging Activities," which will be effective for our fiscal
year 2001. This statement establishes accounting and reporting standards
requiring that every derivative instrument, including derivative instruments
embedded in other contracts, be recorded in the balance sheet as either an
asset or liability measured at its fair value. The statement also requires that
changes in the derivative's fair value be recognized in earnings unless
specific hedge accounting criteria are met. SFAS 133 is not anticipated to have
a significant impact on our operating results or financial condition when
adopted, since we currently do not engage in hedging activities.

Quantitative and Qualitative Disclosures About Market Risk

  Our exposure to market risk for changes in interest rates relates primarily
to the increase or decrease in the amount of interest income we can earn on our
investment portfolio and on the increase or decrease in the amount of interest
expense we must pay with respect to our various outstanding debt instruments.
Our risk associated with fluctuating interest expense is limited to our capital
lease obligations, the underlying interest rates of which are closely tied to
market rates, and our investments in interest rate sensitive financial
instruments. Under our current policies, we do not use interest rate derivative
instruments to manage exposure to interest rate changes. We seek to ensure the
safety and preservation of our invested principal funds by limiting default
risk, market risk and reinvestment risk. We seek to minimize the risk of
default by investing in investment grade securities. A hypothetical 100 basis
point adverse move in interest rates along the entire interest rate yield curve
would not materially affect the fair value of our interest rate sensitive
financial instruments at December 31, 1998, December 31, 1999 or March 31,
2000. Declines in interest rates over time will, however, reduce our interest
income while increases in interest rates over time will increase our interest
expense.

                                       29
<PAGE>

                                  OUR BUSINESS

Overview

  We are a drug discovery company that has developed and integrated a set of
proprietary technologies called DiscoverWorks, which accelerate and improve the
drug discovery process and capitalize on the opportunities presented by the
thousands of new targets for drugs being revealed from the sequencing of the
human genome. Our technologies also facilitate drug discovery for well-
characterized disease targets that have proven difficult using traditional
methods. We believe that our technologies, which apply to virtually any disease
target, produce compounds suitable for development into drugs in a more timely
and cost-effective manner and with a higher probability of success than that
currently achieved using conventional methods. We are using our technologies
both to assist collaborators in discovering drug candidates, and to discover
and develop our own drug candidates, which we currently intend to license at
the pre-clinical or early clinical stage.

Industry Background

  Drugs are chemical compounds that change the activity of biological target
proteins associated with particular disease states to achieve the desired
therapeutic effect. Using traditional approaches, it has been estimated
generally to take from five to seven years from the initial identification of a
protein as a suitable target for a drug to the production of a drug candidate
ready to go into clinical trials. The major steps in the drug discovery process
following identification of the biological target involve (a) hit
identification, (b) lead generation, (c) lead optimization and (d) target
validation, each of which is described below.

  Hit identification: This involves the screening of large collections of
compounds to identify those compounds that interact with the biological target
(which may be an enzyme, receptor or other protein). A compound that interacts
with a target protein is referred to as a "hit." In order to identify hits, the
following steps are undertaken:

  . production ("cloning and expression") of sufficient quantities of the
    target protein to facilitate high throughput screening;

  . design and development of a high throughput screen specific to the target
    protein; and

  . screening the target protein against collections or "libraries" of
    compounds.

  Lead generation: This involves the chemical modification of hits by repeated
cycles of synthesis and testing of analogs to produce "leads," which are
compounds with improved chemical characteristics, thereby increasing their
suitability as potential drugs.

  Lead optimization: This involves the further optimization of leads by
additional repeated modification to produce drug development candidates with
optimized characteristics for further preclinical and clinical development.

  Target validation: In parallel to the above steps in the discovery process,
"target validation" studies seek to establish the link between the target
protein and the particular clinical disease. These tests usually involve
correlating changes in the level of the target protein in cells or animals with
changes in cell biology or animal physiology characteristic of the disease
state. This "biology-driven" target validation, which is generally employed
today in the pharmaceutical industry, is in contrast to "chemistry-driven"
target validation, where the role of the target protein in disease is
determined by testing a target-specific compound in living organism models.

                                       30
<PAGE>


  Drug discovery has traditionally been a costly and time-consuming process in
which the failure rate remains very high. Pharmaceutical companies are facing
growing challenges to rapid and cost efficient drug discovery as continuing
advances are made in genomics research. While there are approximately 500
currently known biological targets for human therapeutics, it is estimated that
genomics research will facilitate the identification of an additional 5,000 to
10,000 potential targets. In order to take advantage of the wealth of
opportunities presented by genomics research, pharmaceutical companies will
need to generate new lead compounds on a scale commensurate with the increase
in new targets. This will require the use of more advanced and integrated
technologies to rapidly and cost efficiently discover and develop lead
compounds. We expect this to become an increasingly severe bottleneck in the
discovery process. Accordingly, we believe that pharmaceutical companies will
increasingly use the resources of drug discovery companies with advanced
technology capabilities, and license drug candidates developed by others.

  Although advances in recent years have improved the drug discovery process,
there remain serious bottlenecks, which can include:

  . an inability to produce in a reasonable time sufficient quantities of the
    target protein for high throughput screening and concurrent 3-D structure
    analysis of the target protein;

  . the need to establish a different high-throughput screen for each new
    target, which typically can take from two to six months;

  . an inability to rapidly generate leads from initial hits, a process which
    typically can take one to two years;

  . the need for large resources in the lead optimization process;

  . an inability to incorporate desirable drug-like attributes into leads,
    and to validate target proteins, sufficiently early in the optimization
    process; and

  . the time-consuming and resource-intensive nature of the biology-driven
    target validation process.


               Expected Increase in New Targets Available to the
               Pharmaceutical Industry Through Genomics Research

                                    [GRAPH]
  Illustration captioned "Expected Increase in New Targets Available to the
Pharmaceutical Industry Through Genomics Research." This illustration shows two
funnels. The funnel on the left illustrates the current situation and is labeled
"NOW (- 500 Targets Currently Known to the Pharmaceutical Industry)"
The funnel on the right illustrates the anticipated increase in targets
resulting from genomics research and is labeled "NEXT 5 YEARS (5,000-10,000 New
Targets Expected to be Available to the Pharmaceutical Industry Through Genomic
Research)". Between the funnels are listed the five steps in the drug discovery
process: "Discovery," "Pre-clinical Development," "Clinical Development,"
"Regulatory Approval" and "Marketed Drugs." The mouth of the discovery funnel on
the right is larger than that of the funnel on the left to illustrate the
anticipated increase in drug targets.


Our Integrated DiscoverWorks Solution

  We believe we provide a unique solution to the problems of efficiency and
productivity in drug discovery in the era following the sequencing of the human
genome, by integrating the use of an array of advanced tools

                                       31
<PAGE>


with proprietary information technology to more efficiently discover new drugs
and harness the opportunities presented by genomics. Our DiscoverWorks
technologies include the following technologies and capabilities:

  . Target Protein Production. Our proprietary protein expression and
    refolding technology allows for the rapid, cost-efficient production of
    large quantities of a wide-range of target proteins, including important
    proteins embedded in the membrane of cells such as GPCR targets.

  . 3-D Protein Structure. We are able to determine the 3-D structure of
    target proteins by using x-ray crystallography, which is performed by
    forming crystals of the target protein and analyzing how the crystals
    scatter x-rays. The 3-D view of the target protein is useful for
    designing targeted compound libraries or using a computer to screen our
    database of compounds accessible for automated chemical synthesis, to
    examine the way they fit to the 3-D protein structure.

  . Compound Library. We have a highly diverse Probe Library of over 200,000
    actual compounds pre-designed for pharmaceutical acceptability, and
    available for automated high throughput screening on demand. Our
    compounds are individually synthesized using combinatorial chemistry
    methods, where a central core structure is modified by the addition of
    different chemical groups connected to the core at different positions.

  . High-Throughput Screening. Our proprietary ThermoFluor high-throughput
    screening technology provides a direct means to quantitatively assess
    binding of potential drug compounds to virtually any target protein,
    including those derived from genomics. ThermoFluor screening does not
    require knowledge of a target's detailed biochemical function, as is
    required to set-up and use conventional screening assays. ThermoFluor
    screens can be set up for virtually any target protein in less than one
    week. The ThermoFluor screen can also be used to rapidly determine
    whether a target protein is suitable for small molecule drug discovery
    (i.e., whether the target protein is "drugable").

  . Synthetically Accessible Compounds. We have a virtual library stored in
    our computers of approximately 2.5 billion new analogs of the Probe
    Library compounds. We call this virtual library our "Synthetically
    Accessible Library" because each of the compounds therein can be
    generated in physical form using protocols for the automated synthesis of
    compounds, or "automated chemistry synthesis protocols", developed and
    verified in our laboratories.

  . Data Analysis. Our DirectedDiversity software allows us to
    comprehensively track and analyze the properties of compounds which have
    binding affinity to a target protein. Each of the compounds in our Probe
    Library and Synthetically Accessible Library has been indexed using a
    comprehensive set of approximately 500 characteristics of each molecule,
    such as bond lengths and angles, facilitating the rapid selection and
    synthesis of compounds with desired properties. In DiscoverWorks, we
    initially screen our Probe Library using the ThermoFluor screen to find
    hits. We then generate leads from these hits by synthesizing in
    succession and testing libraries of up to 1,000 compounds selected from
    our virtual library based on the compounds showing in their chemical
    structure a feature or features of a previous hit.

  . Structure-based Compound Optimization. We have integrated into our
    DiscoverWorks platform structure-based drug design technology that uses
    X-ray crystallography to directly visualize how compounds bind to a
    target protein. This technology allows the atom-by-atom modification of
    hits to produce leads with improved potency and specificity, and permits
    us to incorporate 3-D structural information into the intelligent
    selection of sub-collections (or "sub-libraries") of the Probe Library
    directed to specific families of target proteins, as well as the
    intelligent design of focused libraries for lead generation. Our
    structure analysis capabilities are enhanced by our ability to make large
    amounts of proteins through our proprietary protein production
    technology.

  . Chemistry-driven Target Validation. Our DiscoverWorks technologies
    provide us with two ways to validate new genomics targets early in the
    discovery process:

   . by using ThermoFluor screening of new, unvalidated target proteins
     against reference compound libraries to establish the biochemical or
     physiological properties of the target, and


                                       32
<PAGE>


   . by allowing us to rapidly produce potent and specific leads to validate
     the significance of a new target through assessment of the activity of
     these leads in disease models.


  We believe that our technologies offer an important solution to the resource
and productivity dilemmas facing drug discovery in the era following sequencing
of the human genome by providing the following advantages:

  . Time Reduction. DiscoverWorks reduces an important segment of the R&D
    process, from the setting up of an assay, which is a test to identify
    compounds which interact with a target protein, to the generation of a
    series of lead compounds with potential efficacy in living organisms,
    from fourteen to thirty months at many pharmaceutical companies to as
    little as seven to ten months. We expect this will reduce resources
    required and development costs per target and accelerate time to market
    of successful drugs.



                    Time Reduction in the Discovery Process

                                    [GRAPH]

  Illustration captioned "Time Reduction in the Discovery Process." This
illustration consists of two arrows, representing hypothetical timelines for the
development of a Prototype NCE Lead by, respectively, 3DP's DiscoverWorks
technology and conventional drug discovery technology. The first arrow, titled
"3-Dimensional Pharmaceuticals DiscoverWorks Technology," depicts two time
periods, a period of "less than 1 month," with the caption "ThermoFluor High-
Throughput Screening Setup and Probe Library Screening" and a period of "6-9
months," with the caption "DirectedDiversity Lead Generation." The first arrow
points toward the words "Prototype NCE Lead 7-10 Months Total Time." The second
arrow, titled "Conventional Pharmaceutical Industry Technology," depicts two
time periods, a period of "2-6 months," with the caption "Conventional High-
Throughput Screening Setup and Library Screening," and a period of "12-24
months," with the caption "Conventional Lead Generation." The second arrow
points toward the words "Prototype NCE Lead 14-30 Months Total Time."


  . Improved Compound Characteristics. Owing to the quality of our library of
    compounds and our ability to use structural information about the target
    protein when optimizing lead compounds, our DiscoverWorks technologies
    enhance our ability to include desirable characteristics in our compounds
    to increase the likelihood of their successful development as drugs.

  We believe our technology drives value creation through the reduction of risk
in discovery and early development by facilitating better, more timely
decisions. We expect our technology, with its broad applicability, to increase
in value as the genomics revolution expands the number of new molecular
targets.

Our Strategy

  Our objective is to be an industry leader in discovery and optimization of
new drug candidates. The main elements of our strategy are to:

  . Maintain and improve technology position: We intend to continue to pursue
    technological innovation to enable us to have the most advanced and
    reliable drug discovery processes and tools, both for our

                                       33
<PAGE>

   collaborations and for our internal development programs. To date, the key
   proprietary technologies used in DiscoverWorks have been invented by us.
   We intend to continue to patent or otherwise protect our technological
   innovations to maintain our strong intellectual property position. We also
   intend to expand our libraries of drug compounds and associated drug
   property databases to facilitate the rapid discovery of new drug
   candidates.

   A key component of our strategy is the development and commercialization
   of our technology for structural analysis of GPCRs, which we believe
   represents a significant market opportunity. We believe that our
   breakthrough work in GPCR production and 3-D structure determination has
   the potential to drive multiple discovery collaborations with
   pharmaceutical and biotechnology companies, as well as expand our internal
   development pipeline. We intend to extend our technology platform by
   determining new GPCR 3-D structures and developing a database of GPCR
   structural models.

  . Expand internal drug discovery programs: Our strategy is to license
    internally developed drug candidates at the pre-clinical or early
    clinical stage, so that we utilize our resources on the stages of R&D
    where we can add the greatest value. Our current internal drug discovery
    programs are focused on cardiovascular and cancer indications. We intend
    to expand our internal development programs to focus on GPCR targets for
    central nervous system and metabolic diseases and other biological
    targets in high-value therapeutic markets. We intend to form
    collaborations with major genomics and biotechnology companies to supply
    high-quality genomics targets to add to our portfolio of target proteins.

  . Pursue additional collaborative R&D agreements: We intend to continue to
    enter into collaborative R&D agreements with leading companies based on
    our DiscoverWorks technologies, which are capable of providing our
    partners with an entire range of drug discovery services from target
    expression through generation of leads, which we can further optimize to
    produce an IND candidate.

  . Deploy our technologies across diverse markets: We intend to continue to
    deploy our DiscoverWorks technologies in the pharmaceutical, agricultural
    and veterinary medicine industries. Discoveries or products made for any
    particular market may find use in other markets, resulting in enhanced
    revenues.

Evolution of Our Integrated Platform

  Our company was founded in 1993. Originally we focused on connecting
combinatorial chemistry and structure-based drug design to improve the lead
generation and optimization stages of drug discovery. To facilitate this
process, we developed and integrated proprietary chemi-informatic and process
control software systems for combinatorial chemistry, which we call
DirectedDiversity. Our first patent for DirectedDiversity was issued in 1995
and our DirectedDiversity software has been continually enhanced since then.
With the anticipated increase in previously unknown targets due to the
sequencing of the human genome, we also sought to develop a flexible way to
screen the activity of compounds at almost any type of molecular target, which
we call ThermoFluor. Our first patent for ThermoFluor was issued in February
2000. We integrated the above technologies as DiscoverWorks in 1998, for use in
our internal programs. With the recent settlement of a lawsuit with Scriptgen,
we are able to broadly exploit our integrated DiscoverWorks technologies. While
we have used various of the above technologies in collaborations since 1996,
the recently signed Bristol-Myers Squibb Company collaboration represents the
initial collaborative use of the entire DiscoverWorks set of technologies.

Our DiscoverWorks Technology Platform

  DiscoverWorks is a highly integrated, multi-dimensional platform for drug
discovery that links our ThermoFluor high-throughput screening technology,
Probe and Synthetically Accessible Libraries, DirectedDiversity chemi-
informatics and combinatorial chemistry capabilities and structure-based drug
design expertise. Starting from the DNA sequence of a new molecular target, we
have developed complete capabilities required to generate Prototype NCE Leads.
Our DiscoverWorks technologies can efficiently assimilate and

                                       34
<PAGE>

process vast quantities of data produced from the combination of combinatorial
chemistry and high-throughput screening, and can be rapidly and efficiently
scaled to meet virtually any anticipated demand. Our DiscoverWorks process
integrates the following technologies:

 Target Protein Production

  We believe that timely large-scale production of target proteins is essential
for effective use of quantitative high-throughput screening technology. We have
extensive experience in cloning, engineering and expressing target proteins
using a wide array of bacterial, insect cell and mammalian cell expression
systems. In addition, we have developed proprietary technology for refolding
proteins that allows the rapid, parallel production of target proteins derived
from the sequencing of the human genome. We believe that we can produce less
expensively and more efficiently large quantities of membrane protein and other
target proteins that are difficult to make, in order to facilitate high-
throughput screening and target protein 3-D structure analysis.

 ThermoFluor and Other High-Throughput Screening Technologies

  Our proprietary ThermoFluor high-throughput screening process measures the
binding affinity of a large number of compounds to a target protein.
ThermoFluor is based on a physical effect common to all functionally active
proteins. Proteins, which constitute the vast majority of molecular targets,
are highly organized structures that melt at different defined temperatures. By
measuring the shift in melting temperature of the protein-drug complex caused
by drug binding (how a compound interacts with a protein), it is possible to
estimate the binding affinity of the drug. As a result, ThermoFluor can be
applied with equal effectiveness to virtually all varieties of enzymes,
receptors, growth factors, antibodies, cell adhesion molecules (molecules that
influence contact between cells) which affect contact between cells, and other
target proteins. We have developed ThermoFluor in an automated computer
workstation format using 384 well assay plates, with integrated data processing
and database connectivity. We intend to continue to develop ThermoFluor to
incorporate miniaturization technology and enhance throughput.

  ThermoFluor is able to directly discover leads for targets with unknown
biological function, including the thousands of new targets being identified
through genome sequencing. Conventional high-throughput screening techniques
rely on readouts that reflect specific biological activities and thus are
generally time-consuming to set up and difficult to employ in the case of
targets with unknown biological function. We believe that ThermoFluor
significantly shortens the time required for high throughput screen development
and compound library screening from two to six months for conventional assays
to one month or less. This time savings results from the uniform ThermoFluor
assay approach, as opposed to the need to develop a custom assay for each new
conventional high-throughput screen. The ThermoFluor assay developed and used
for high- throughput screening can also be applied during lead generation and
optimization, thus in many instances avoiding the need to set up subsequent
assays, and offering additional time and cost savings in the discovery process.
The technology is also portable and can be scaled up to screen very large
numbers of compounds at many targets.

  We can also complement ThermoFluor with additional capabilities in high-
throughput screening using conventional robot-assisted receptor binding assays
(measuring the binding affinity of compounds to receptor proteins) or enzyme
assays.

 DirectedDiversity Probe Library

  In order to initiate our DiscoverWorks discovery process, we have constructed
a DirectedDiversity Probe Library incorporating more than 200,000 individually
synthesized "drug-like" compounds designed to include the following desirable
properties:

  . diversity of chemical structures;

  . comprehensive representation of all 3-D molecular shapes that we believe
    are useful for targeting drug binding sites on proteins; and

  . possession of the structural and physicochemical features commonly found
    in orally-active, small molecule marketed drugs.

                                       35
<PAGE>


  As opposed to the compound libraries used by many pharmaceutical companies,
which may include compounds of unknown structure or which may lack certain
desired characteristics for drug candidates, our Probe Library has been
carefully assembled to reflect the parameters above, thereby optimizing its
value as a screening library. Prior to including a compound in our Probe
Library, we extensively analyze and accumulate information on the compound,
including a comprehensive set of approximately 500 molecular descriptors
(physiochemical characteristics of a molecule such as bond lengths and angles).
The Probe Library includes sub-libraries directed toward classes of enzyme
targets called serine proteases and metalloproteases, GPCRs and several other
receptor classes with broad therapeutic relevance.

 DirectedDiversity Synthetically Accessible Library

  To complement our Probe Library, we have generated a Synthetically Accessible
Library of approximately 2.5 billion compounds that are analogs of the
compounds in our Probe Library. Each of the compounds in the Synthetically
Accessible Library can be generated in physical form using automated chemistry
synthesis protocols developed and verified in our laboratories. For a typical
optimization cycle, we select a focused library of approximately 1,000
compounds from our Synthetically Accessible Library and synthesize them within
two to three weeks. As with our Probe Library, each of the compounds in our
Synthetically Accessible Library is indexed using a comprehensive set of
approximately 500 molecular characteristics.

 DirectedDiversity Chemi-informatics Software and Databases

  Using the 500 molecular characteristics referred to above and artificial
intelligence computer procedures, or intelligent algorithms, our patented
DirectedDiversity chemi-informatics software helps assure that properties
important in drug development, such as potency, selectivity, bio-availability,
or the extent of uptake of a drug into the body, and minimal toxicity, are
factored into compound selection for inclusion in a focused library, and more
broadly the Prototype NCE Lead generation and further lead optimization
processes. Starting with hits from the Probe Library, our chemists use our
proprietary software and graphics interfaces to rapidly retrieve thousands of
compounds from our Synthetically Accessible Library which conform to the range
of desired properties. Each selected compound can then be synthesized for
future biological testing. Through our ability to rapidly select and synthesize
a focused library of compounds in each optimization cycle, our chemists can
test many optimization hypotheses in parallel, with all information tracked and
captured by the DirectedDiversity software for use in future compound synthesis
and testing cycles and other discovery programs. The combination of the
detailed chemical description of each of our compounds and the biological
screening data that is generated provides a valuable drug property database for
lead generation and further optimization.

  We believe our DiscoverWorks process is more efficient than traditional
methods due to the quality of both the compounds in our Probe Library and the
compounds from our Synthetically Accessible Library that we synthesize,
combined with the selection and feedback capabilities of our DirectedDiversity
chemi-informatics software and drug property databases. In contrast,
traditional approaches to library generation using combinatorial chemistry are
less directed and information-rich. Moreover, generation of leads derived from
conventional screening hits may require the development of new synthetic
procedures to make analogs, either because synthetic methods for generating
analogs have not previously been developed or the hit has an unknown chemical
structure which must be first determined in order to develop analogs.
Accordingly, an unnecessary expenditure of time and effort may be required in
the discovery process, and the compounds thereby produced may lack required
properties for orally active drugs. We estimate that a Prototype NCE Lead can
typically be generated using our technology in as little as six to nine months,
with five cycles of focused library design, synthesis and biological testing.
This compares to an estimated traditional lead generation process of 12 to 24
months which often requires more synthesis and testing cycles.

 Automated Chemical Synthesis Technologies

  We have a broad range of modern parallel synthetic technologies, which
enables us to synthesize approximately 10,000 compounds per month. We believe
this compound production is sufficient to support multiple concurrent discovery
programs and can be readily expanded.

                                       36
<PAGE>

 Structure-Based Drug Design Technology

  We have integrated into our DiscoverWorks platform structure-based drug
design technology that uses X-ray crystallography to directly visualize how
lead compounds bind to a target protein. Structure-based drug design allows the
atom-by-atom modification of leads to produce chemically new compounds with
high potency and specificity toward a given target protein. We have established
a state-of-the-art facility for protein production, crystallization, X-ray
crystallography and computational chemistry to carry out 3-D structure
determination of target proteins and their bound complexes with lead compounds.
To date, our scientists have carried out in excess of 100 structure
determinations of protein complexes in our laboratories. The integration of
DirectedDiversity technology with structure-based drug design allows us to
automate and multiplex (automate the synthesis of many compounds in parallel)
the rational design and chemical synthesis of compounds, enabling the
simultaneous investigation and optimization of multiple drug properties.

  We recently joined a consortium of major pharmaceutical companies who have
formed the Industrial Macromolecular Crystallography Association (IMCA) and
developed a facility for collecting data obtained from examining the scattering
patterns of X-rays as they interact with a protein crystal using the unique
properties of the Advanced Photon Source at the Argonne National Laboratory.
The Advanced Photon Source is among the most brilliant X-ray sources in the
world and greatly extends our capabilities for determining new structures and
rapidly carrying out structure-based design programs. By joining IMCA, 3DP
becomes the only biotechnology company that currently has direct and guaranteed
access to synchrotron X-ray data collection facilities. Other members of IMCA
include Merck & Co., Glaxo-Wellcome, SmithKline Beecham, Pharmacia, Eli Lilly
and Company, Schering-Plough, Pfizer, Warner-Lambert, Abbott Laboratories,
Bristol-Myers Squibb Company, and Procter & Gamble.

 Chemistry-Driven Target Validation

  Our chemistry-driven target validation process relies on the any-target
capability of our ThermoFluor screen, coupled with our ability to generate
Prototype NCE Leads rapidly. We have two methods of chemistry-driven target
validation: (1) ThermoFluor screening of new, unvalidated target proteins with
reference libraries of compounds designed specifically to classify biochemical
function and physiological properties of target proteins and (2) use of
DiscoverWorks technology to rapidly produce potent and specific leads to assess
and validate the significance of a new target protein in disease models. By
capitalizing on our ability, using DiscoverWorks, to produce a Prototype NCE
Lead in less time than with conventional drug discovery we can perform
chemistry-driven validation of new genomics targets early in the discovery
process. This provides an advantage compared to the more prolonged and
resource-intensive strategies of validating target proteins either by chemistry
driven validation as performed in conventional drug discovery, or by biological
means of validation.

 GPCR Technology Program

  G-protein coupled receptors, or GPCRs, are an important class of target
proteins that exist on the surface membrane of all cells, and are associated
with a wide range of therapeutic categories, including asthma, inflammation,
obesity, cancer, and cardiovascular, metabolic, gastrointestinal and central
nervous system diseases. There are estimated to be over 1,000 GPCRs in the
human genome with potential therapeutic utility. GPCRs have been historically
valuable drug targets, but to date there are less than 200 well-characterized
GPCRs with known ligands (compounds which specifically bind to the GPCR), of
which only half are currently targets of commercial drugs. To date, the
industry has been unable to utilize an important drug discovery tool,
structure-based drug design using x-ray crystallography, to develop drugs
targeting either new or well-characterized GPCRs. This is due to the inability
of the industry to crystallize GPCR targets and thereby derive three-
dimensional X-ray structures that provide a direct view of the drug-binding
site.

  Since 1995, we have been working to crystallize and determine the 3-D
structure of GPCRs. We believe that successful GPCR structure determination
will constitute a major breakthrough in drug discovery for this

                                       37
<PAGE>

key group of drug target proteins. Currently, it is estimated that the less
than 100 GPCRs targeted by commercial drugs account for over $20 billion in
annual worldwide drug sales. These include major drug classes such as
antipsychotics, antihistamines, beta-blockers, anti-migraine drugs, anti-ulcer
drugs and analgesics, and blockbuster drugs such as Claritin, Zantac, Cozaar,
Zyprexa and Tenormin. Both the characterized GPCRs with known ligands but for
which no commercial drugs have yet been developed, and the approximately 1,000
uncharacterized GPCRs with possible therapeutic utility, represent potentially
important drug targets.

  Our GPCR 3-D structure determination program has four principal milestones:

  1. production of the large amounts of pure GPCR protein required to make
     crystals;

  2. production of crystals of the target GPCR that will provide high quality
     X-ray structural data;

  3. collection of high quality X-ray structural data from such crystals; and

  4. computer processing of such X-ray structural data to determine the 3-D
     molecular structure (physical structure of molecules) of such GPCR in
     order to facilitate structure-based drug design.

  To date, we have been successful in achieving the first three milestones, and
we are progressing toward the final objective for our initial GPCR target, the
[FORMULA APPEARS HERE] adrenergic receptor, which has an important role in
asthma and central nervous system diseases, and has been the subject of
extensive biochemical studies. We have successfully developed proprietary
protein expression and refolding technology to produce large amounts of GPCRs
for discovery efforts. A patent application has been filed for a component of
this technology and we intend to file additional patent applications for other
components of this technology. Our scientists have since been able to produce
stable, high-quality crystals of the [FORMULA APPEARS HERE] adrenergic GPCR that
have provided high-resolution X-ray scattering data, which we believe will allow
for the first time the determination of the 3-D molecular structure of a GPCR
target.

  GPCR Drug Discovery: We believe our GPCR technology presents a new
opportunity to exploit this broad and important range of drug targets,
benefiting both our internal discovery programs and pharmaceutical and
biotechnology company collaborations. We believe that our GPCR technology, on
the basis of our anticipated successful 3-D molecular structure determination,
will enable for the first time the application of structure-based drug design,
based on actual structure of the target protein structure, or molecular
structure, for both existing and new GPCR targets leading to:

  . more precisely designed drugs with fewer side effects than many existing
    GPCR drugs, such as antipsychotics;

  . drugs with lower addiction risk than existing GPCR drugs for pain, such
    as morphine;

  . small molecule, orally active drugs for GPCR targets for which the only
    currently known ligands are peptides or proteins that, as drugs, would
    need to be given by injection; and

  . drugs targeting the approximately 1,000 identified GPCRs which are
    potentially therapeutically relevant, but for which ligands have not yet
    been discovered.

  To expedite drug discovery using GPCR target proteins, our current Probe
Library contains more than 20,000 synthesized compounds which have been
designed based upon structural features of commercially successful GPCR drugs,
for utility against GPCR target proteins. In addition, our Synthetically
Accessible Library contains a corresponding collection of approximately 200
million analogs of these compounds.

  GPCR Structural Genomics: If we successfully determine the [FORMULA APPEARS
HERE] adrenergic GPCR structure, we plan to create a database containing model
3-D structures of all other GPCRs whose gene sequences have been identified in
the human genome. We believe that this "3-D homology database" will facilitate
discovery of new drugs that act at any of the estimated 1,000 uncharacterized
GPCRs that are potential new drug target proteins.

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<PAGE>


In addition, we plan to expand the database and enhance its accuracy and
utility for drug discovery, through the 3-D structure analysis of additional
diverse GPCR target proteins, GPCRs complexed with different types of receptor
ligands, and GPCRs complexed with various signal transduction proteins. We will
utilize this structural genomics database for our internal programs, and we
will offer access to this database to collaborative partners. As part of our
collaborative agreement, BMS has become the first subscriber for our planned
Proteomica GPCR structure database, agreeing to pay us an upfront fee of $1.5
million by August 7, 2000 and ongoing user fees based on the content of the
database.

  Our membership in the IMCA provides access to a facility for collecting X-ray
scattering data using the unique properties of the Advanced Photon Source, a
dedicated very high energy X-ray source located at the Argonne National
Laboratory. Access to this facility greatly extends our capabilities for
determining new GPCR structures and rapidly carrying out structure-based design
programs.

Our Drug Discovery Collaborations

  We seek to enter into discovery collaborations and joint discovery programs
with pharmaceutical, biotechnology, agrochemical and veterinary medicine
companies. These arrangements can take various forms ranging from comprehensive
programs to licensing agreements for portions of our libraries, or specific R&D
arrangements that utilize our technologies for lead identification, lead
generation and/or lead optimization purposes. Our technologies are flexible and
have applicability for virtually any therapeutic area.

  Our collaboration strategy is aimed at capitalizing on the trend within the
pharmaceutical industry to outsource major components of the drug discovery
process that can be more effectively provided by companies that have unique
and/or focused technologies. We also seek collaborations with biotechnology
companies that may lack the chemical screening, synthesis and/or optimization
capabilities that our technology platform offers. These collaborations allow us
to leverage the investment we have made in our technology platform and provide
funding for our internal drug development efforts. A summary of our drug
discovery collaborations is provided below.

 Bristol-Myers Squibb Company

  In July 2000, we entered into a collaboration with Bristol-Myers Squibb
Company, or BMS, under which we will use our DiscoverWorks technologies to
assist BMS in the discovery and development of new human drugs for specific
biological targets. In the initial three-year term of the research
collaboration, BMS will supply at least 30 biological targets and we will
create chemical libraries and screen such libraries against these targets.
Thereafter, the parties will agree upon which organization will conduct
subsequent lead optimization and development activities of active hits toward
creating pre-clinical drug candidates. Patentable subject matter resulting from
this collaboration will be assigned according to U.S. practice for identifying
inventorship. In addition to its collaboration in this research, BMS will be
primarily responsible for pre-clinical and clinical development, and for
marketing and sales of any resulting products.

  BMS may terminate research activities with 90 days notice, without cause, but
must pay any remaining costs of the initial research term or one-half of the
remaining cost of any extended term. Following the end of the initial research
or any extended research term, either party may terminate the agreement on 30
days notice if no compound is being optimized or developed under the
collaborative agreement. Otherwise, the agreement will remain in effect for 10
years from the first commercial sale of a product identified from the research
program or until the expiration of patent rights relating to such product.

  We have also granted BMS non-exclusive perpetual licenses under our
DirectedDiversity patent rights for the duration of the rights and non-
exclusive perpetual licenses under our ThermoFluor technology and Protein
Expression and Refolding Technology for use by BMS in their research and
development programs in exchange for licensing fees. BMS also has the
opportunity to purchase from us ThermoFluor instruments. In addition, BMS has
become the first subscriber for our planned Proteomica GPCR structure database.
Ongoing user fees are based on the content of the database and are contingent
upon our successful determination of one or more GPCR structures.

                                       39
<PAGE>




  We will receive upfront licensing and technology access fees amounting to
$23.5 million, and committed research funding of $14.4 million over the first
three years of the collaboration as well as payments for any purchases of
ThermoFlour instruments. In addition, we will receive milestone payments
through the clinical development stages, and royalty payments on sales of any
resulting products, with the amount at each level determined based on our
involvement in the related optimization and development activities. For each
compound, depending on whether stipulated pre-clinical and clinical milestones
are met and depending on our level of contribution to the development of the
compound, we could receive milestone payments aggregating up to $4.5 million to
$15 million.

 DuPont Pharmaceuticals Company

  In February 2000, we entered into a collaboration with DuPont Pharmaceuticals
Company, or DuPont Pharmaceuticals, to use our DirectedDiversity technology to
assist DuPont Pharmaceuticals in the discovery of new human and veterinary
pharmaceutical compounds for specific biological targets. The initial research
term of the collaborative discovery and lead optimization agreement is until
December 31, 2001, subject to extension by DuPont. Under our agreement, we will
generate custom combinatorial chemistry libraries based on molecules and
information provided by DuPont Pharmaceuticals and will optimize those
molecules into preclinical drug candidates. DuPont Pharmaceuticals is
responsible for preclinical and clinical development, and marketing and sales
of the resulting products. We have received upfront fees and research funding
aggregating approximately $0.8 million and we will also receive committed
additional research funding of approximately $1.5 million over the initial term
of the collaboration. We could also receive milestone payments of up to $6
million, depending on whether stipulated milestones are met, for the first
product developed and could receive additional milestones if subsequent
products are developed. We are also entitled to receive royalties on sales of
licensed products. We have agreed not to work with anyone other than DuPont on
compounds acting through the targets of the research program during the term of
the program and for one year thereafter.

  DuPont Pharmaceuticals may terminate the agreement upon 90 days notice,
provided they pay the balance of any financial support due for the remainder of
the term of the research program.

  We have also entered into a separate agreement granting DuPont
Pharmaceuticals a nonexclusive site license to use our DirectedDiversity
patents in support of their internal and collaborative research programs.

 Boehringer Ingelheim Pharmaceuticals, Inc.

  Effective December 1999, we entered into a collaboration agreement with
Boehringer Ingelheim Pharmaceuticals, Inc., or BIPI, to use our
DirectedDiversity technology to assist BIPI in the discovery of new drugs for
specific biological targets in humans. The initial research term of our
collaboration is two years, subject to annual extensions by BIPI. Under our
agreement, we have agreed to generate custom combinatorial chemistry libraries
based on molecules and information provided by BIPI and will optimize those
molecules into preclinical development candidates. BIPI is responsible for
preclinical and clinical development, and marketing and sales of the resulting
products. We have received upfront fees and research funding aggregating
approximately $1.2 million and we will also receive committed additional
research funding of approximately $2.1 million over the initial term of the
collaboration. We could also receive milestone payments of up to $2.4 million,
depending on whether stipulated milestones are met, for the first product
developed and are eligible to receive additional milestones if subsequent
products are developed. We are also entitled to receive royalties on sales of
resulting products.

  BIPI may terminate the agreement upon 30 days written notice provided it pays
us, in most circumstances, an early termination fee if it terminates the
agreement prior to the end of any term.

 Aventis Crop Protection GmbH

  In October 1999, we entered into a collaboration with Hoechst Schering AgrEvo
GmbH, now a part of Aventis Crop Protection GmbH, or Aventis, to use our
DirectedDiversity technology to assist Aventis in the

                                       40
<PAGE>


discovery of compounds applicable to plant and pest management and animal
health. The initial term of our agreement is two years. Under our agreement, we
have agreed to provide libraries of diverse compounds to Aventis, and will use
our DirectedDiversity technologies to optimize active compounds identified from
Aventis' screening of the compound libraries. Aventis will receive the
exclusive worldwide right to commercialize products in the fields of plant and
pest management and animal health discovered during the course of the
collaboration. We will retain rights for uses of compounds outside of the
agrochemical commercial area. We have received upfront fees and research
funding aggregating approximately $1.0 and we will also receive additional fees
for payment for delivery of compounds, research and development funding and
license fees totaling $2.7 million. We could also receive milestone payments of
up to $1.75 million, depending on whether stipulated milestones are met, for
each compound developed. We will also receive royalties on sales of resulting
products. If we enter into a business collaboration with a company that has
substantial activity in the plant and pest management or animal health field
and is a significant competitor of Aventis, Aventis may either terminate our
agreement or require us to take reasonable actions to ensure that Aventis'
confidential or proprietary information is not disclosed to such company.

 E.I. DuPont de Nemours

  In October 1998, we entered into a collaborative research and license
agreement with the Agricultural Products Division of E.I. DuPont de Nemours, or
DuPont, under which we are using our DirectedDiversity chemi-informatics
software and Synthetically Accessible Library to assist DuPont in the discovery
and development of new agrochemicals. We have received technology licensing
fees and milestone payments aggregating $0.4 million and are eligible to
receive additional technology licensing fees during the term of the
collaboration. We could also receive milestone payments of up to $3.7 million,
depending on whether stipulated milestones are met and depending on our level
of contribution to the optimization of the compound. In addition, we will
receive royalties on the sale of any products developed through this
collaboration. We have advanced in this collaboration from initial hits to more
potent compounds identified from our libraries.

  The initial research term of the agreement is three years. DuPont may
terminate the research program under the agreement at any time, but such
termination will not affect either DuPont's obligation to pay us license fees
under the agreement or our obligation to provide DuPont with access to
DirectedDiversity computer workstations.

 Heska Corporation

  In December 1997, we entered into a research and license agreement with Heska
Corporation, or Heska, to use our DirectedDiversity technology to assist in the
discovery and development of new veterinary therapeutic agents. Under our
agreement, we also granted Heska the exclusive worldwide right to license the
veterinary therapeutic products developed for sale worldwide. Under our
agreement, we have received up-front payments and research funding totaling
approximately $2.7 million. Our agreement originally had a two-year research
term expiring in December 1999, which was extended until July 2000. We
anticipate that after July, Heska will continue to develop the candidate
compounds identified internally from our collaboration. We could receive
milestone payments of up to $10.5 million, depending on whether stipulated
milestones are met, for the first product developed and are eligible to receive
additional milestones if subsequent products are developed. We will also
receive royalties on sales of resulting products.

 BioCryst Pharmaceuticals, Inc.

  In October 1996, we entered into a research collaboration with BioCryst
Pharmaceuticals, Inc., to share resources and technology to develop inhibitors
of key serine protease enzymes that represent promising targets for inhibiting
the activation of "complements" (plasma proteins that work to eliminate
microorganisms and other antigens from tissues and blood). This pathway plays a
major role in mediating a broad range of immunological diseases. In June 1999,
we updated and renewed our original agreement to concentrate on selected
complement enzymes as targets for the design of inhibitors. Under our
agreement, we are each

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<PAGE>


responsible for our own research costs. If a drug candidate emerges as a result
of our joint research, we will then negotiate the product development and
commercialization rights and responsibilities. Under this collaboration, we
have generated Prototype NCE Leads which are currently being optimized further
through evaluation in living organisms and for which we have filed patent
applications. The initial term of the agreement is one year, subject to
automatic annual renewal. Either of us may terminate the agreement at any time
upon 60 days written notice. The agreement was further renewed in June 2000 for
an additional year.

Our Internal Drug Candidate Programs

  We have developed a promising pipeline of small molecule, orally active
development candidates in the areas of cardiovascular disease and cancer. Our
current strategy with respect to our internal pipeline is to advance compounds
to late-stage pre-clinical or early stage clinical trials, and then to license
such compounds to pharmaceutical companies for further development and
commercialization. We believe that by focusing our efforts on pre-clinical
development and the early stages of clinical development, we can use our
resources on the stages of drug research and development where we can add the
greatest value.

  As of the date of this prospectus, we had nine internal pipeline programs in
various stages of discovery and development. 3DP-4815, our most advanced
cardiovascular compound, is an oral thrombin inhibitor presently in Phase 1
clinical trials. Our most advanced cancer compound, which also has
cardiovascular utility, is an orally bioavailable urokinase inhibitor. We have
recently licensed the urokinase inhibitor program to Schering AG, Germany. As
illustrated below, many of our development candidates have utility across
therapeutic areas.


<TABLE>
<CAPTION>
    Molecular Target      Therapeutic Area           Indication                    Status
-----------------------------------------------------------------------------------------------
  <S>                     <C>               <C>                              <C>
         Thrombin          Cardiovascular               Thrombosis              Phase 1 Trial
-----------------------------------------------------------------------------------------------
        Urokinase              Cancer                  Solid Tumors             Pre-clinical
       (licensed to        Cardiovascular      Restenosis, Atherosclerosis
  Schering AG, Germany)
-----------------------------------------------------------------------------------------------
     AvB3/AvB5                Cancer                  Solid Tumors             Pre-clinical
                           Bone Disorders              Osteoporosis
                           Cardiovascular               Restenosis
-----------------------------------------------------------------------------------------------
          C1s-1             Inflammation        Lupus, Autoimmune Diseases      Pre-clinical
    (in collaboration      Cardiovascular             Bypass Surgery
      with BioCryst)          Pulmonary         Adult Respiratory Distress
                                                      Syndrome (ARDS)
-----------------------------------------------------------------------------------------------
           FXa             Cardiovascular               Thrombosis           Prototype NCE Lead
-----------------------------------------------------------------------------------------------
          PAI-1            Cardiovascular        Adjunct to tPA Therapy,     Prototype NCE Lead
                               Cancer         Prophylaxis of Cardiovascular
                                                         Disease
                                                       Solid Tumors
-----------------------------------------------------------------------------------------------
       hdm2 (mdm2)             Cancer           Adjunct to Chemotherapy &         Screening
                                                        Radiation
-----------------------------------------------------------------------------------------------
          MMP-2                Cancer                  Solid Tumor                Screening
                           Cardiovascular      Restenosis, Congestive Heart
                                                 Failure, Atherosclerosis
-----------------------------------------------------------------------------------------------
      VEGF Receptor            Cancer                  Solid Tumor                Screening
</TABLE>


                                       42
<PAGE>


  To date, our internal program pipeline has been based on biological targets
in high-value therapeutic areas that are well known in the pharmaceutical
industry, and have either been recently validated and/or have proved difficult
targets for the industry to develop into commercially attractive products. We
believe that our discovery success to date, in particular our progress with
historically difficult targets such as thrombin, PAI-1 and [FORMULA APPEARS
HERE] illustrates the capabilities of our technology platform.

  The worldwide market for pharmaceuticals is approximately $60 billion
annually and is expected to grow substantially given expectations of improved
therapies which will arise from genomics and other scientific advances and the
demographics of an aging and longer-living global population. Despite the scale
of R&D operations within large pharmaceutical companies, most will continue to
license a significant portion of the drugs that they eventually sell. The
market for pre-clinical/early clinical candidates from our internal programs is
therefore significant and is expected to continue to grow.

 Cardiovascular Disease and Cancer Discovery Programs

  Our initial cardiovascular disease focus is on the enzymes that act together
to form blood clots. This focus is derived from our expertise in serine
protease enzyme drug targets which are well-suited for structure-based drug
design and our other DiscoverWorks capabilities. We have assembled a portfolio
of molecular targets involved in such cardiovascular conditions as thrombosis,
restenosis (reocclusion of blood vessels), angina and atherosclerosis, and
which are also involved in the vascular remodeling (changes in blood vessel
structure) and angiogenesis (the formation of blood vessels that are required
to feed a growing tumor) which underlie the progression of cancer. Our
principal cardiovascular targets include inhibitors of thrombin, FXa and PAI-1.

  Our anticancer efforts are aimed at inhibiting cellular processes that
facilitate tumor progression and angiogenesis for a majority of cancer types,
which we believe may result in broadly useful anticancer agents. These cellular
processes include cell activation, growth and migration, adhesion and focal
proteolysis (the enzymatic digestion of proteins to facilitate cell migration)
which are involved in metastasis (the spread of tumor cells away from the
original tumor), and angiogenesis. In addition, we are initiating programs that
target molecules involved in cell-cycle regulation and apoptosis (cell death).
Many of the agents under development are anticipated to have crossover utility
in cardiovascular disease. Our principal cancer targets include urokinase,
[FORMULA APPEARS HERE] proteins that regulate contact between cells
(integrins), a binding protein in cancer cells called hdm2 (MDM2) and a
metalloprotease called MMP-2.

 Key Cardiovascular Disease Drug Candidates

  Oral Thrombin Inhibitor: Our most advanced cardiovascular drug discovery
program focuses on the development of potent, selective, and orally active
inhibitors of thrombin for arterial and venous thrombosis. The only oral
anticoagulant currently marketed is warfarin (Coumadin and generic versions).
We have designed our compounds to work by a different mechanism of action from
warfarin, which we believe will provide an enhanced safety profile without the
need for monitoring.

  Following our initial work on the thrombin inhibitor program, in June 1997 we
entered into a license agreement with Wyeth-Ayerst Laboratories for the further
development and marketing of our small molecule thrombin inhibitors. During the
following two years, we collaborated with Wyeth-Ayerst on research and
development activities. On June 1, 1999, the parties agreed to terminate the
agreement with all rights returning to us. We believe that the termination was
influenced by Wyeth-Ayerst's shift in focus away from the cardiovascular
therapeutic area.

  3DP-4815 was discovered through the close integration of structure-based drug
design and DirectedDiversity combinatorial chemistry and represents a new class
of orally bioavailable thrombin inhibitors. 3DP-4815 is a low molecular weight,
homogenous, compound without any asymmetic center that potently and reversibly
inhibits thrombin with excellent specificity. 3DP-4815 is orally bioavailable
and

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<PAGE>

efficacious in several animal models. We filed an Investigatory New Drug
Application ("IND") with the FDA for 3DP-4815 in December 1999 and initiated
Phase 1 clinical trials in January 2000. Unlike many agents, where the
beneficial effect is first indicated in extensive Phase 2 trials to establish
efficacy in the targeted disease, the effectiveness of agents in inhibiting
blood clotting is readily measured in Phase 1 trials on healthy volunteers. To
date, in Phase 1 3DP-4815 appears to exhibit good safety and tolerability
characteristics.

  Throughout the pre-clinical development phase for 3DP-4815, we have actively
pursued the discovery of additional compounds in the thrombin inhibitor
program, and have identified new classes of compounds that differ significantly
in their chemical structures and pharmacokinetic properties from 3DP-4815.
These may offer the opportunity for backups to 3DP-4815, or additional
therapeutic types of oral antithrombotic agents differentiated by their
pharmacokinetic and other properties.

  We are currently evaluating the possibility of licensing this compound to a
pharmaceutical company for additional clinical development and
commercialization, and have had discussions with several companies in this
regard.

  PAI-1 Antagonist: The pharmaceutical industry in the last decade has
recognized the potential commercial importance of an antagonist of a protein
that induces blood clotting called plasminogen activator inhibitor-1 (PAI-1) as
a drug that will reduce blood clotting, but the target has proved difficult for
traditional high throughput screening and discovery efforts. PAI-1 has also
been identified as an independent prognostic (predictive) factor associated
with decreased long term survival for metastatic cancer, and therefore PAI-1
antagonists may be of use in treating cancer. We have discovered new
antagonists of PAI-1 through screening our Probe Library using ThermoFluor, and
are currently performing tests to improve the characteristics in the lead
series.

 Key Cancer Disease Drug Candidates

  Urokinase Inhibitor for Cancer Therapy: Our most advanced cancer discovery
program targets the inhibition of urokinase plasminogen activator (uPA or
Urokinase). An inhibitor of uPA provides a new therapeutic approach to cancer
treatment following surgical removal of tumors, through its ability to inhibit
angiogenesis and metastasis. An expanding body of evidence supports the
identification of uPA as a target for agents that control the spread and growth
of cancer. In addition, uPA has been identified as a target for agents that
prevent restenosis and atherosclerosis.

  Urokinase is a serine protease enzyme that is related to thrombin, but has a
different site on the enzyme molecule that binds substrate (active site
structure), and a different order of potency of substrates and inhibitors
compared to thrombin. Our urokinase inhibitor discovery program draws
substantially from the knowledge base developed in our thrombin inhibitor
program. We have advanced our urokinase inhibitor program using focused
libraries and structure-based drug design, and have discovered proprietary,
potent, orally active, small molecule inhibitors of urokinase. Our pre-clinical
lead compounds have been shown to inhibit tumor cell invasion associated with
prostate cancer and melanoma, to inhibit migration of blood vessel muscle
cells, without causing cells to die and to have oral bioavailability. We
believe that our urokinase inhibitor has potential application as a stand alone
agent or in combination with other compounds under development or currently
marketed as part of a multi-drug therapy regimen.

  In May 2000, we entered into a license and research agreement with Schering
AG, Germany in which Schering AG, Germany obtained, for human therapeutic uses,
exclusive worldwide rights to our urokinase inhibitor compounds. Under our
agreement, we will be responsible for further research and optimization of the
compounds and Schering AG, Germany will be responsible for development,
marketing and sales of the resulting products. During the initial two year
research and development term we will receive payments for research funding
totaling $5 million. We could also receive milestone payments of up to
approximately $23 million, depending on whether stipulated milestones are met,
for the first product developed in a therapeutic area, and we are eligible to
receive further milestones for additional therapeutic areas. After the initial
research term, Schering AG, Germany may terminate the agreement at any time on
90 days' notice. In connection with

                                       44
<PAGE>


the agreement, we issued 625,000 shares of our series D preferred stock to an
affiliate of Schering AG, Germany for $5 million.

  Antagonists of [FORMULA APPEARS HERE] and [FORMULA APPEARS HERE] Integrins:
The integrin adhesion proteins [FORMULA APPEARS HERE] and [FORMULA APPEARS
HERE] which are receptors for vitronectin and osteopontin, important proteins
that regulate contact between cells, are essential modulators or mediators of
angiogenesis and of the adhesion of cells of the inner layer of the walls of
blood vessels in tumor angiogenesis, atherosclerosis, restenosis and
osteoporosis. We have applied our proprietary technology to the discovery of
potent and selective small molecule antagonists of [FORMULA APPEARS HERE] and
[FORMULA APPEARS HERE] and discovered several independent lead series of
compounds. Our lead compounds have been shown to inhibit cellular processes
that require functioning of [FORMULA APPEARS HERE] and [FORMULA APPEARS HERE]
integrins, such as cell adhesion or attachment, and migration of endothelial
cells which form blood vessels and cells that form smooth muscle. In addition,
our lead compounds are not cytotoxic and have been shown not to kill cells.


 Other Internal Discovery Programs

  In addition to programs in cardiovascular disease and cancer, we plan to use
our GPCR technology as the basis for initiation of additional programs for
central nervous system and metabolic diseases.

Intellectual Property

  Protection of our intellectual property is a strategic priority for our
business. Our ability to protect and use our intellectual property rights in
the continued development and commercialization of our technologies and drug
candidates, operate without infringing the proprietary rights of others and
prevent others from infringing on our proprietary rights is crucial to our
continued success. We will be able to protect our proprietary rights from
unauthorized use by third parties only to the extent that our proprietary
rights are covered by valid and enforceable patents, trademarks or copyrights,
or are effectively maintained as trade secrets, know-how or other proprietary
information. We currently rely on a combination of patents and pending patent
applications, some of which we license and most of which we own, trademarks,
copyrights, trade secrets, know-how and proprietary information to protect our
interests in continuing to develop and commercialize our technologies and drug
candidates.

  We devote significant resources to obtaining, enforcing and defending
patents, as well as developing and protecting our other proprietary
information. Our comprehensive patent strategy is to augment our broad
proprietary portfolio by continuing to actively seek patents for our
technologies and compounds. We have already obtained patents or filed patent
applications on a number of our technologies and on certain of the compounds we
have developed. We also have certain proprietary trade secrets and know-how
that are not patentable or for which we have chosen to maintain secrecy rather
than file for patent protection.

  We have taken security measures to protect our trade secrets, proprietary
know-how and technologies and confidential information and continue to explore
further methods of protection. We have executed confidentiality agreements with
our employees and consultants upon the commencement of an employment or
consulting arrangement with us. These agreements require that all confidential
information developed or made known to the individual by us during the course
of the individual's relationship with us be kept confidential and not disclosed
to third parties. These agreements also provide that inventions conceived by
the individual in the course of rendering services to us shall be our exclusive
property. We also attempt to limit access to, and dissemination of, our
confidential information.

  Our intellectual property estate is as follows:

 Drug Discovery Program Patents

  We have eight issued U.S. patents, two Australian patents, one New Zealand
patent, and one South African patent covering our drug discovery program
inventions.

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<PAGE>


  The patents cover various compounds, methods of making compounds,
pharmaceutical compositions, and methods of using the compounds for inhibiting
proteases and for treating particular disease states. The proteases that are
inhibited include, but are not limited to, thrombin, factor Xa, urokinase,
complement and other protease inhibitors, integrins and certain other targets.
Disease states include cardiovascular diseases and cancer as described in the
section entitled "Our Internal Drug Candidate Programs." The U.S. patents are
directed to distinct families of new compounds.

  We also have 20 pending U.S. patent applications, three of which have
received a notice of allowance from the U.S. patent office, and 96 pending
foreign patent applications also covering compounds, methods of making
compounds, pharmaceutical compositions, and methods of using the compounds for
inhibiting proteases and for treating particular disease states.

  We currently do not have any issued patents for any of our lead compounds for
any of our internal programs and we may be unable to obtain any issued patents
for any patent applications we have filed or may file in the future for such
compounds.

 DirectedDiversity Combinatorial Chemistry Process Patents

  Our DirectedDiversity technology is protected by four issued U.S. patents.
Collectively, these patents provide apparatus and process patent coverage for
the automated, semi-automated and/or manual computer directed selection,
synthesis, testing, and refinement of compounds in chemical libraries,
including the computer codes that allow implementation of this process.

  In October 1995, we were issued our first U.S. patent covering our
DirectedDiversity technology. The patent covers the use of semi-automated
feedback control for refining the properties of combinatorial libraries for all
applications in which suitable properties can be measured (e.g., drugs,
herbicides, paints, scents, solvents, advanced materials, etc.). A second U.S.
patent related to our DirectedDiversity technology was issued in November 1996
covering the automatic generation of new drug leads through computer-
controlled, iterative robotic synthesis and analysis of chemical libraries. Our
third U.S. patent, issued in November 1997, covers additional features of our
DirectedDiversity technology, including inventions related to computer software
for semi-automatic and automatic generation of compounds of interest. We
received our fourth U.S. patent for DirectedDiversity, covering the generation
of new drug leads through computer-controlled, iterative robotic synthesis and
analysis of chemical libraries, in May 1999.

  We also have two Australian patents and two Israeli patents covering our
DirectedDiversity technology described above.

  Additionally, we have six pending U.S. patent applications and 18 pending
foreign patent applications. In addition to our DirectedDiversity technology
described above, these patent applications cover new methods for handling large
multidimensional data sets. Within our DirectedDiversity technology, these
methods are utilized for visualizing chemical compound
similarity/dissimilarity, for lead identification, and for lead optimization.
The methods for handling large multi-dimensional data sets have applications
beyond our DirectedDiversity technology. Two of these pending U.S. patent
applications and one of these pending foreign patent applications cover
apparatuses, processes, and software inventions for quickly and efficiently
searching large chemical libraries, as well as other inventions relating to
data mining (searching data for relationships).

 ThermoFluor Patents

  We have two U.S. patents covering our ThermoFluor screening and protein
characterization technology, process and instruments. One U.S. patent covers
methods for screening compounds for binding to proteins and nucleic acids, and
the other covers an instrument for implementing our patented methods for
screening compounds.


                                       46
<PAGE>


  We also have ten pending U.S. patent applications and nineteen pending
foreign patent applications covering this technology. The pending applications
cover methods for screening for biochemical conditions that stabilize proteins
and nucleic acids, methods for screening for biochemical conditions that
facilitate protein crystallization, methods for screening for biochemical
conditions that promote recombinant protein folding, and methods for screening
for lead compounds that bind to a target receptor. The pending applications
also cover "functional genomics," that include methods for screening proteins
of unknown function in order to determine the function of newly discovered
proteins.

  Under the terms of a settlement agreement with Scriptgen Pharmaceuticals,
Inc. relating to an action that Scriptgen brought against us in the United
States District Court for the District of Delaware on October 13, 1998 for our
alleged infringment of two patents, we acquired a limited license to
Scriptgen's ATLAS (Any Target Ligand Affinity Screen) assay technology and
Scriptgen was granted a limited, license to the method claims of our
ThermoFluor assay technology. Neither of these licenses is exclusive. Under
this agreement, we paid Scriptgen $0.5 million and will make two additional
payments of $0.5 million in September 2000 and March 2001. In exchange for
these payments, Scriptgen will release us from all claims of infringement with
respect to those two patents. The settlement agreement restricts us, for a
period of three years, from specified activities in connection with screening
drugs useful for treating "infection" (defined as relating to drugs whose
principal aim is to treat or cure infectious disease in humans). As part of
this settlement agreement, until March 7, 2003, we are precluded from using our
ThermoFluor screening technology in the Hepatitis C Virus "infection" area as
part of collaborative agreements or as part of our internal drug programs. In
addition, we are precluded from using our ThermoFluor screening technology as
part of more than one collaboration agreement in the area of "infection" until
March 7, 2003, and such collaborative agreement must be limited to a maximum of
3 anti-viral targets. Our recent collaboration with BMS constitutes the one
permitted collaboration agreement in the area of infection. The settlement with
Scriptgen, however, does not restrict use of our ThermoFluor screening
technology for our internal drug discovery efforts, or for purposes of
collaborative agreements outside the area of "infection", other than the
limitation with respect to Hepatitis C Virus "infection". In addition, if our
use of ThermoFluor facilitates the discovery of a drug used to treat infectious
disease, we are obligated to pay Scriptgen a royalty based on revenue from the
sale of such a drug.

 GPCR Technology Estate

  We have made significant discoveries in the area of GPCR technology which are
useful for drug discovery. Two patent applications concerning components of
this technology have been filed and we intend to file additional patent
applications for other components of this technology.

                                       47
<PAGE>

 U.S. Government Grants

  We have been awarded a number of U.S. government grants to fund a variety of
internal scientific programs and undertake exploratory research. Under these
grants, we retain ownership of all intellectual property and commercial rights
generated during these projects, subject to a non-transferable, paid-up license
to practice, for or on behalf of the United States, inventions made with
federal funds. This license is not exclusive and is retained by the U.S.
government as provided by applicable statutes and regulations. We have received
the following award and government grants from the National Institutes of
Health (Small Business Innovative Research "SBIR" grants) and the National
Institute of Standards and Technology (Advanced Technology Program "ATP" award)
during the past several years that have totaled approximately $4.2 million:

<TABLE>
<CAPTION>
                                                                 Grant/Award
Grant/Award Title                                                    Date
-----------------                                               --------------
<S>                                                             <C>
Automated Receptor Screening by Thermal Physical Assays
 (SBIR)(Phase 1)...............................................       May 1995

Crystallization and Structural Determination of G-Coupled
 Protein Receptors (ATP).......................................    August 1995

Protein Engineering by Thermal Physical Assays (SBIR)(Phase
 1)............................................................ September 1995

Automated Receptor Screening by Thermal Physical Assays
 (SBIR)(Phase 2)............................................... September 1996

Four Helix Bundle Analog of a G-Protein Coupled Receptor
 (SBIR)(Phase 1)...............................................  February 1999

Expression of G-Protein Coupled Receptors for Structure
 Determination (SBIR)(Phase 1)................................. September 1999

Four Helix Bundle Analog of a G-Protein Coupled Receptor
 (SBIR)(Phase 2)...............................................     March 2000
</TABLE>

  The sponsoring agencies make decisions annually on continuations of multi-
year awards based on the availability of funds from the United States Congress
and our satisfactory performance under each award or grant.

Government Regulation

  The U.S. FDA and comparable regulatory agencies in state and local
jurisdictions and in foreign countries impose substantial requirements on the
development, manufacture and marketing of pharmaceutical candidates. These
agencies and other federal, state and local entities regulate research and
development activities and the testing, manufacture, quality control, safety,
effectiveness, labeling, storage, record-keeping, approval, promotion and
advertising of our drug candidates and those of our collaborative partners.
Obtaining marketing approvals and later complying with ongoing statutory and
regulatory requirements are costly and time-consuming. Any failure by us or our
collaborators, licensors or licensees to obtain, or any delay in obtaining,
regulatory approvals or in complying with other requirements could adversely
affect the commercialization of drug candidates and our ability to receive
upfront payments, milestone payments or royalty revenues.

  The steps required before a new drug candidate for humans may be distributed
commercially in the U.S. generally include:

  . conducting appropriate preclinical laboratory evaluations of the drug
    candidate's chemistry, formulation and stability, and preclinical studies
    to assess the potential safety and efficacy of the product candidate;

  . submitting the results of these evaluations and tests to the FDA, along
    with manufacturing information and analytical data, in an investigational
    new drug application (IND);

  . making the IND effective after the resolution of any safety or regulatory
    concerns of the FDA;

  . obtaining approval of Institutional Review Boards, or IRBs, to introduce
    the drug into humans in clinical studies;

  . conducting adequate and well-controlled human clinical trials that
    establish the safety and efficacy of the drug candidate for the intended
    use, typically in the following sequential, or slightly overlapping,
    stages:

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<PAGE>

    Phase 1: The drug candidate is initially introduced into healthy human
    subjects or patients and tested for safety, dose tolerance, absorption,
    metabolism, distribution and excretion;

    Phase 2: The drug candidate is studied in patients to identify possible
    adverse effects and safety risks, to determine dosage tolerance and the
    optimal dosage, and to collect some efficacy data;

    Phase 3: The drug candidate is studied in an expanded patient
    population at multiple clinical study sites to confirm efficacy and
    safety at the optimized dose, by measuring a primary endpoint
    established at the outset of the study; and

    Phase 4: The FDA may in some circumstances require post-marketing
    studies to delineate additional information about a drug's risks,
    benefits and optimal use.

  . submitting the results of preliminary research, preclinical studies, and
    clinical trials as well as chemistry, manufacturing and control and
    labeling information on the drug candidate to the FDA in an NDA; and

  . obtaining FDA approval of the NDA prior to any commercial sale or
    shipment of the drug candidate.

  The steps required before a new animal drug may be distributed commercially
in the U.S. are similar to the foregoing. The major differences are that
additional safety issues need to be addressed if the target animal(s) will
contribute or be part of human food, and the requisite clinical study
requirements for animal drugs are oftentimes less expensive than that for human
drugs. Also, there are no user fees for NADAs.

  Upon approval, a drug candidate may be marketed only in those dosage forms
and for those indications approved in the NDA/NADA. In addition to obtaining
FDA approval for each indication to be treated with each product candidate,
each foreign and domestic drug candidate manufacturing establishment must
register with the FDA, list its product candidates with the FDA, comply with
cGMPs and permit and pass manufacturing plant inspections by the FDA. Moreover,
the submission of applications for approval may require additional time to
complete manufacturing stability studies. Foreign companies that manufacture
drug candidates for distribution in the United States also must list their
product candidates with the FDA and comply with cGMPs. They are also subject to
periodic inspection by the FDA or by local authorities under agreement with the
FDA. Moreover, approval of drug candidates may be delayed by certain market
exclusivity and patent protections awarded to other parties concerning similar
products or drug candidates.

  Any drug candidates that we or our collaborators manufacture or distribute
under FDA approvals are subject to extensive continuing regulation by the FDA,
including recordkeeping requirements and reporting of adverse experiences with
the product candidate. Additionally, if we or our collaborators propose any
modifications to a product, including changes in indication, manufacturing
process, manufacturing facility or labeling, we or our collaborators may be
required to submit an NDA/NADA supplement to the FDA.

  Failure to comply subjects the manufacturer to possible FDA action, such as
Warning Letters, suspension of manufacturing, seizure of the product, voluntary
recall or withdrawal of a product or injunctive action, as well as possible
civil or criminal penalties. We currently rely on, and intend to continue to
rely on, third parties to manufacture our compounds and product candidates.
These third parties will be required to comply with cGMPs.

  Products manufactured in the United States for distribution abroad will be
subject to FDA regulations regarding export, as well as to the requirements of
the country to which they are shipped. These latter requirements are likely to
cover the conduct of clinical trials, the submission of marketing applications,
and all aspects of manufacturing and marketing. Such requirements can vary
significantly from country to country. As part of our strategic relationships,
our collaborators may be responsible for the foreign regulatory approval
process for our product candidates, although we may be legally liable for
noncompliance.

  We and our collaborators are also subject to various federal, state and local
laws, rules, regulations and policies relating to safe working conditions,
laboratory and manufacturing practices, the experimental use of animals and the
use and disposal of hazardous or potentially hazardous substances used in
connection with our

                                       49
<PAGE>


research work. Also, the availability and levels of government or third party
payor reimbursement for our products and those of our collaborators/licensees
that involve our technology will have a considerable impact on our revenues and
business. The availability of government and third party reimbursement for
drugs is subject to ongoing debate and change. For example, the U.S. Congress
is actively debating whether and how to provide prescription drug benefit to
Medicare beneficiaries. Government and third party payors are continuously
striving to reduce reimbursement levels for healthcare products, and these cost
control initiatives may be applied to our products or those of our
collaborators/licensees. Further, changes in government reimbursement are
oftentimes adopted by other payors.

  The extent of government regulation which might result from future
legislation or administrative action cannot be accurately predicted. As a
result, the actual effect of these developments on our business is uncertain
and unpredictable.

Competition

  We compete both in the markets for drug discovery technologies and services
and the markets for pharmaceutical products. Our principal competitors are the
internal drug discovery departments of our pharmaceutical company customers and
potential customers. Many of our customers and potential customers have
developed or acquired or are developing or are acquiring integrated drug
discovery capabilities that use combinatorial chemistry, chemi-informatics
software, structure-based drug design and high throughput screening. In
addition, many of these companies have large collections of compounds that they
have previously synthesized, purchased from chemical supply catalogs or
obtained from other sources against which they may screen new targets.

  We also compete with biotechnology and drug discovery services companies,
academic and scientific institutions, governmental agencies, and public and
private research organizations. Our technology platform integrates many
technologies, including combinatorial chemistry, chemi-informatics software,
structure-based drug design and high-throughput screening. We face competition
based on numerous factors, including size, diversity and ease of use of
compound libraries, speed and cost of identifying and optimizing potential lead
compounds and patent position from companies offering one or more technology
components of the discovery process. Companies such as Aurora Biosciences
Corporation and Evotec BioSystems AG have developed ultra-high throughput
screening capabilities. In addition, several competitors, including Scriptgen
Pharmaceuticals, Inc., Novalon Pharmaceutical Corporation and Cetek Corporation
have developed alternative approaches to screening protein targets of unknown
function that are competitive with our "any target" ThermoFluor technology.
There are many companies that provide combinatorial chemistry services for lead
generation and optimization that compete with our DiscoverWorks technologies
and discovery services. Competitors such as Pharmacopeia, Inc. ArQule, Inc. and
Discovery Partners, Inc. use computer methods to assist in the design of large
screening libraries and synthesize them using combinatorial or parallel
chemical synthesis methods, which are competitive with our DirectedDiversity
technology. Competitors such as Tripos Inc. and MDL Information Systems, Inc.
are computer software companies that offer chemi-informatics and other software
and database services to support drug discovery, which are competitive with the
software components of our DirectedDiversity chemi-informatics technology.
Competitors such as Vertex Pharmaceuticals, Inc., Millenium Pharmaceuticals,
Inc. and Axys Pharmaceuticals, Inc. extensively use structure-based drug design
or genomics technologies integrated with combinatorial chemistry and other drug
discovery technologies. These entities compete with us either on their own or
in collaborations.

  While we believe that our integration of proprietary technologies for drug
discovery provides us with a competitive advantage over many of our
competitors, and intend to further develop our integrated "target-to-lead"
technologies, we recognize that many of our competitors will seek to integrate
and improve their technologies to provide discovery capabilities similar or
superior to those provided by us.


  For drug candidates that we seek to license from our internal drug discovery
pipeline, we face, and will continue to face, intense competition from
organizations such as large pharmaceutical and biotechnology

                                       50
<PAGE>


companies. Competition with any of the programs in our internal drug discovery
pipeline may arise from current or future drug candidates in the same
therapeutic class or other classes of therapeutic agents or other methods of
preventing or reducing the incidence of disease. In addition, any drug
candidate that is successfully developed may compete with existing therapies
that have long histories of safe and effective use.

  Due to perceived shortcomings of available agents and the large market
potential, competition to develop a safe, orally active antithrombotic agent is
intense, with many discovery programs in process, including programs in
clinical development by AstraZeneca PLC and BASF. In addition, we are aware of
several other programs targeting additional proteins in the coagulation process
which could be competitive with our thrombin inhibitor, including programs of
Schering AG, Germany and AstraZeneca PLC targeting Factor Xa. In addition, we
are aware of an oral heparin program of Emisphere Technologies, Inc. believed
to be in Phase 2 which may also compete with our thrombin inhibitor. In
addition, oral agents that effect blood platelet activation could provide
competitive therapeutic approaches to oral inhibitors of the coagulation
process. We are aware of such drug development programs at Merck and Co., Inc.,
SmithKline Beecham and Schering-Plough Corporation, among others.

  Our orally active urokinase inhibitor for the inhibition of cancer metastasis
and tumor angiogenesis faces competition from a number of agents and approaches
under development. We are aware of competing urokinase inhibitor programs at
Abbott Laboratories, Axys Pharmaceuticals, Inc., Corvas International, Inc. and
Pfizer Inc. We are also aware of programs aimed at developing compounds that
are antagonists of the receptor for urokinase that could compete with our oral
urokinase inhibitor. There are also a number of alternative approaches to
controlling angiogenesis or metastasis including the use of a) inhibitors of
matrix metalloproteases, which are protease enzymes that destroy the matrix
material that binds cells together, including programs by British Biotech plc
(in alliance with Schering-Plough), Bristol-Myers Squibb Company, Pharmacia
Corporation and Pfizer Inc., b) inhibitors of cellular tyrosine kinases,
including programs by Cephalon Inc. and Sugen Inc., and c) other therapeutic
proteins or monoclonal antibodies, which are antibodies that are produced from
a single cell type, that target a variety of processes in cancer cells.

  Our other research programs in small molecule drug discovery are also in
highly competitive areas. Many other companies are working in these areas and
they may achieve earlier or greater success than we may be able to achieve.

  Our current and anticipated future research programs and services that focus
on the discovery of small molecule drugs that target GPCRs are also in a highly
competitive area. Most major pharmaceutical companies have extensive drug
discovery programs that target one or more GPCRs, and many biotechnology
companies have developed propriety positions on particular GPCR receptors or
screening technologies. Competition has also arisen and is anticipated to
accelerate in the area of structural genomics, which is the science of
understanding the 3-dimensional structure of proteins that are produced by
genes discovered through the sequencing of the human genome. In this area,
academic laboratories and possibly certain companies, either on their own or in
collaboration with others, are seeking to determine the molecular structures of
GPCRs, and databases of GPCR molecular structures may be created in competition
with the GPCR structural genomics and other databases we expect to develop.

  Most of our competitors, either alone, or together with their collaborators,
have substantially greater research and development capabilities and financial,
scientific, operational, marketing and sales resources than we do, as well as
significantly more experience in research and development, clinical trials,
regulatory matters, manufacturing, marketing and sales. These competitors and
other companies may have already developed or may in the future develop new
technologies or products that compete with ours or which could render our
technologies and products obsolete. In addition, our competitors may succeed in
obtaining broader patent protection, receiving FDA approval for products or
developing and commercializing products or technologies before us. We also
compete with these organizations in recruiting and retaining qualified
scientific and management personnel.


                                       51
<PAGE>

Clinical Testing Strategy

  We do not have the ability to independently conduct clinical studies and
obtain regulatory approvals for our drug candidates. To the extent our
collaborators do not perform these functions, we intend to rely on third party
expert clinical investigators and clinical research organizations to perform
these functions.

Manufacturing Strategy

  We are an early stage drug discovery company and, accordingly, do not at this
stage require commercial scale manufacturing capabilities. We currently rely,
and anticipate continuing to do so for the foreseeable future, on internal
capabilities for synthesis of the small amounts of chemical compounds required
for the discovery phases of our internal programs and external collaborations.

  Completion of any preclinical trials for our drug candidates involving large
quantities of chemical compounds, or any future clinical trials and
commercialization of our drug candidates by us or our collaborators, will
require access to, or development of, facilities to manufacture a sufficient
supply of our drug candidates. We do not have the facilities or experience to
manufacture the quantities of drug candidates necessary for any such trials or
commercial purposes on our own and do not intend to develop or acquire
facilities for the manufacture of such quantities of drug candidates in the
foreseeable future. We currently intend, instead, to rely on third-party
contract manufacturers.

  In addition, because we intend to license drug candidates for further
development and commercialization, once a drug candidate is licensed, we must
rely on our collaborators' ability to manufacture, or have manufactured, the
quantities necessary for further development and commercialization of these
drug candidates.

Marketing and Sales

  We market and sell our DiscoverWorks drug discovery services and
technologies, and license drug candidates from our internal drug discovery
programs, through a direct marketing effort to potential customers in the
pharmaceutical, agrochemical, and biotechnology industries. Since we are an
early-stage company, we do not have an established sales and marketing effort,
but have solicited our collaborative partners primarily through the efforts of
our management team. We also make presentations at trade shows and have an
internet web site that describes our products and services.

  We currently have no sales, marketing or distribution capabilities to
commercialize our drug candidates. In order to commercialize any of our drug
candidates, we must either internally develop sales, marketing and distribution
capabilities or make arrangements with third parties to perform these services.
We intend to rely for the foreseeable future on collaborations with licensees
of our compounds to market any of our drug candidates which receive regulatory
approvals in the future.

Employees

  As of June 30, 2000, we had 93 full-time employees, 48 of whom hold Ph.D.
degrees. Of these employees, 77 were engaged in research and development and 16
were engaged in business development, finance and general administration. Our
scientific staff includes: 18 molecular and cell biologists, 14 structural
biologists, biophysicists and enzymologists, 33 chemists and 12 computer
scientists and engineers. Many of our employees have extensive experience in
drug discovery at major pharmaceutical companies. None of our employees are
represented by labor unions or covered by collective bargaining agreements. We
have not experienced any work stoppages, consider our employee relations to be
good and believe that we enjoy a strong corporate culture, built on cooperation
among our various departments, which we view as a key element in our
interdisciplinary approach to research.

                                       52
<PAGE>

Center Gatefold

The gatefold consists of four pages.

The first page contains (under the 3-Dimensional Pharmaceuticals logo) four
illustrations. In the center of the page is a large illustration of a double-
strand of DNA coding for a target protein with an accompanying caption reading:
"We discover and optimize drug candidates through employment of our
DiscoverWorks technologies. We believe our DiscoverWorks technologies produce
compounds that can be developed into drugs in a more timely and cost effective
manner, and with a higher probability of success, than is currently achieved
using more conventional methods. Our DiscoverWorks technologies have
application to our target markets--the pharmaceutical, veterinary and
agrochemical industries--and to drug discovery projects which we are developing
internally."

The second and third pages of the gatefold constitute a unit entitled "The
DiscoverWorks Lead Generation Process." This two-page unit includes nine small
illustrations, arranged in a circle, each with an accompanying caption. The
nine illustrations, counter-clockwise from the upper left-hand corner, are as
follows:

First illustration: illustration of the 3-D molecular structure of a protein
target, with an accompanying caption reading:
"3-D Protein Structure
We are able to determine the 3-D structure of a target protein to visualize
how compounds bind to the target, and to aid in the design of our compound
library."

Second illustration: illustration of stackable plates containing an inventory
of compounds, with an accompanying caption reading:
"Compound Library
Our Library contains over 200,000 compounds selected for chemical diversity."

Third illustration: illustration of a double strand of DNA coding for a target
protein, with an accompanying caption reading:
"Target Protein Production
Our technology allows rapid production of large amounts of target proteins."

Fourth illustration: illustration of an automated ThermoFluor high-throughput
screening station, with an accompanying caption reading:
"High-Throughput Screening
Our ThermoFluor high-throughput screening process measures the binding affinity
of a large number of compounds to a target protein."

Fifth illustration: illustration of a computer visualizing and analyzing data,
with an accompanying caption reading:
"Data Analysis
Our DirectedDiversity software allows us to comprehensively analyze the
properties of a compound which demonstrate binding affinity to a target
protein."
<PAGE>

Sixth illustration: illustration of a chemical compound in a gelatin capsule,
with an accompanying caption reading:
"Drug Candidates
We are able to generate a drug candidate suitable for testing in living
organisms in 7-10 months, through repeated cycles of testing, data analysis and
synthesis."

Seventh illustration: illustration of several chemical compounds bound to a
target protein, with an accompanying caption reading:
"Structure-Based Library Optimization
Using 3-D structures of compounds bound to the target protein we introduce
rational design into the automated synthesis of new compounds with improved
properties."

Eighth illustration: illustration of a computer screen showing molecular
structures selected using our proprietary software, with an accompanying
caption reading:
"Synthetically Accessible Compounds
Based on our data analysis, we can select and synthesize new compounds with
improved properties from our database of approximately 2.5 billion analogs of
the compounds in our library."

Ninth illustration: illustration of an automated chemical synthesizer, with an
accompanying caption reading:
"Automated Synthesis of Compounds
We utilize a broad range of automated technologies to synthesize new
compounds."

The fourth page of the gatefold is entitled: "Innovative Target Structure
Analysis and Drug Design". This page consists of two large illustrations placed
diagonally from the top left hand side of the page to the bottom right hand
side of the page. The first illustration depicts a protein crystal. The second
illustration depicts a 3-D protein structure. In the lower left hand side of
the page is set forth the following three paragraphs of text:

"We measure the way a crystal of the target protein scatters x-rays in order to
determine the protein's 3-D structure. Knowledge of the 3-D structure
facilitates rational design of drugs."

"Recently, we produced high quality crystals which we believe will enable us to
determine experimentally the first 3-D structure of a drug target G-protein
coupled receptor (GPCR). GPCRs are an important class of target proteins that
exist on the surface membrane of cells."

"Until now, drug design based on the actual structure of GPCRs has not been
possible. We intend to develop an extensive GPCR 3-D structural database to
support drug discovery."
<PAGE>

Facilities

  Our executive offices and research and development facility are located in
Exton, Pennsylvania. We lease approximately 30,000 square feet of space. Our
facility is leased through June 2008. To meet our expected growth needs, we are
also negotiating for additional space for use in expansion of our research
capabilities.

Legal Proceedings

  We are not currently a party to any material legal proceedings.

                                       53
<PAGE>

                                   MANAGEMENT

Executive Officers and Directors

  The following table contains information about our directors and executive
officers as of June 30, 2000:

<TABLE>
<CAPTION>
Name                       Age Position
----                       --- --------
<S>                        <C> <C>
David C. U'Prichard,
 Ph.D....................   52 Chief Executive Officer, Director
F. Raymond Salemme,
 Ph.D....................   55 President and Chief Scientific Officer, Director
Michael J. Wassil........   49 Vice President and Chief Financial Officer
Roger F. Bone, Ph.D......   42 Vice President, Biochemistry
David G. Fehr............   54 Vice President, Technology Operations
Scott M. Horvitz.........   41 Vice President, Finance and Administration
Richard M. Soll, Ph.D....   44 Vice President, Chemistry
Paul M. K. Weiss, Ph.D...   42 Vice President, Technology and Product Licensing
Kevin M. Mullin..........   38 Vice President, Human Resources
Stephen Bunting, Ph.D....   47 Director
Bernard Canavan,
 M.D.(2).................   64 Director
James H. Cavanaugh,
 Ph.D.(1)................   63 Director
Zola P. Horovitz,
 Ph.D.(1)(2).............   65 Director
David R. King(2).........   50 Director
Joshua Ruch(1)...........   50 Director
Harold R. Werner.........   52 Director
</TABLE>
--------
(1) Member of compensation committee.
(2) Member of audit committee.

  Dr. David C. U'Prichard joined us in September 1999 as our CEO. Most
recently, Dr. U'Prichard served as President of Research and Development at
SmithKline Beecham. While at SmithKline Beecham, Dr. U'Prichard oversaw the
entry of approximately ten compounds into global development, the international
registration of the diabetes drug Avandia and the entry of four compounds into
Phase III trials and six compounds into early clinical trials; additionally, he
instituted several major restructuring efforts at the company. Prior to
SmithKline Beecham, he worked for ICI/Zeneca from 1986 to 1997. Dr. U'Prichard
was also instrumental in the launch of Nova Pharmaceuticals in 1983, following
an academic career as the Associate Professor of Pharmacology and Neurobiology
at Northwestern University Medical School (1978-83), and his postdoctoral
fellowship at Johns Hopkins University (1975-78). Dr. U'Prichard received his
Ph.D. in Pharmacology from the University of Kansas, and his B.S. in
Pharmacology with first-class honors from the University of Glasgow, Scotland.
He has held academic appointments at Northwestern University, Johns Hopkins
University and the University of Pennsylvania and has an honorary professorship
at the University of Glasgow. He is also an author of more than 100 primary and
review publications and was a founding co-editor of Molecular Neurobiology, co-
editor of Epinephrine in the Central Nervous System and has served as a member
of various editorial boards.

  Dr. F. Raymond Salemme founded our company in 1993 and currently serves as
President and Chief Scientific Officer. Prior to founding 3DP, Dr. Salemme held
research management positions at various pharmaceutical companies including:
Senior Director, Biophysics and Computational Chemistry at Sterling Winthrop;
Research Leader, Protein Structure Group for DuPont Merck Pharmaceuticals,
Inc.; and Research Leader, Protein Structure Group at DuPont Company. In 1983,
Dr. Salemme founded the Genex Protein Engineering Division, among the first
industrial groups to use three-dimensional structural tools as the basis for
engineering proteins. From 1973 to 1983, Dr. Salemme was Professor of
Biochemistry at the University of Arizona. Dr. Salemme received a B.A. in
Molecular Biophysics from Yale University and a Ph.D. in Chemistry from the
University of California, San Diego, specializing in protein X-ray
crystallography. Dr. Salemme is a member of numerous professional societies,
and serves on several national and international scientific review

                                       54
<PAGE>

committees and journal editorial boards. Dr. Salemme has authored over 75
scientific publications and patents in the areas of structural biology,
biomaterials, computer modeling of proteins and structure-based drug design.
Dr. Salemme is a co-inventor of our DirectedDiversity chemi-informatics process
control technology and our ThermoFluor assay technology.

  Mr. Michael J. Wassil joined us in September 1997 as Vice President and Chief
Financial Officer. Prior thereto, from 1995 to 1997, Mr. Wassil was President
and founder of Med Tech Advisers, Inc. From 1983 to 1994, Mr. Wassil held
various positions at Interspec, Inc. (ISPC). Since 1987, Mr. Wassil served as
Executive Vice President, Chief Financial Officer and Secretary. In 1993 he
also became General Manager of Interspec's international operations. In 1994,
Interspec, Inc. was acquired by Advanced Technology Laboratories Inc. (ATLI) at
which point Mr. Wassil became Vice President and Chief Financial Officer of
ATL--Interspec. From 1978 to 1983, Mr. Wassil held several financial and
operating positions at Rorer Group Inc. Mr. Wassil began his career in 1972
with Price Waterhouse. A Certified Public Accountant, Mr. Wassil received his
B.S. in Finance from King's College. He is also a Director of Telefactor
Corporation and the Eastern Technology Council.

  Dr. Roger F. Bone joined us in 1993 and currently serves as Vice President,
Biochemistry. Prior thereto, Dr. Bone held several research positions at Merck
and Company from 1990 to 1993, and conducted his postdoctoral fellowship at the
University of California from 1985 to 1989. Dr. Bone received his Ph.D. in
Biochemistry from the University of North Carolina and his B.S. in Chemistry
from Purdue University.

  Mr. David G. Fehr joined us in January 1998 as Vice President, Technology
Operations. Mr. Fehr previously served from 1987 to 1993 as Vice President,
Development and Manager of Systems Integration at Bell & Howell Publication
Systems Company. Prior thereto, Mr. Fehr was Manager, Analytical Systems
Development at BF Goodrich Company. Mr. Fehr received his B.S. degree in
Physics, his M.S. in Industrial Administration from Carnegie-Mellon University,
and his M.S. in Physics from the University of California, San Diego.

  Mr. Scott M. Horvitz has served as Vice President, Finance and Administration
since our inception. From 1991 to 1993, Mr. Horvitz held various positions at
Magainin Pharmaceuticals Inc. and most recently served as Executive Director,
Finance and Human Resources. From 1983 to 1991, Mr. Horvitz was with the firm
of Richard A. Eisner and Company, LLP, Certified Public Accountants, where he
most recently served as a Senior Audit Manager specializing in venture-
financed, technology start-up companies. Mr. Horvitz holds a B.S. in Accounting
from the State University of New York at Albany and is a Certified Public
Accountant.

  Dr. Richard M. Soll joined us in 1994 and currently serves as Vice President,
Chemistry. From 1983 to 1994, Dr. Soll held various positions at Wyeth-Ayerst
Research and Ayerst Laboratories, most recently serving as a Principal
Scientist, Medicinal Chemistry. Dr. Soll conducted his postdoctoral fellowship
at Harvard University, and he received his Ph.D. in synthetic organic chemistry
from Dartmouth College and his B.S. in chemistry from the University of
Massachusetts.

  Dr. Paul M. K. Weiss joined us in December 1997 and currently serves as Vice
President, Technology and Product Licensing. From 1993 to 1997, Dr. Weiss held
various positions at American Home Products Corporation and Wyeth-Ayerst
Laboratories, including Director-Licensing, Director-Business Development and
Research, and Manager-Business Development. Prior thereto, Dr. Weiss was
employed by Columbia Research Laboratories as International Director of Product
Development and R&D Coordinator. Dr. Weiss received his Ph.D. in Biochemistry
and his M.B.A. from the University of Wisconsin Madison, and his B.S. in
Biochemistry from Carleton University Institute of Biochemistry in Ottawa,
Ontario.

  Mr. Kevin M. Mullin joined us in June 2000 as Vice President, Human
Resources. From 1999 to June 2000, Mr. Mullin was Vice President, Global Human
Resources at PR Newswire. From 1997 to 1999, Mr. Mullin served as Executive
Director, Strategic Planning at Covance, Inc. From 1991 to 1997, Mr. Mullin was
Director, Human Resources and Operations, Merck Vaccine Business at Merck &
Co., Inc. Prior thereto,

                                       55
<PAGE>


Mr. Mullin served as Vice President, Human Resources & Community Relations at
Taylor Health System and was Director, Management Consulting Services at
Coopers & Lybrand. Mr. Mullin earned his M.S. in Human Resources Management
from Villanova University and his B.A. in Business and Economics from Princeton
University.

  Dr. Stephen Bunting joined us as a director in November 1997. Dr. Bunting has
been a director of Abingworth Management Limited in London, UK since March 1987
and has been in the venture capital business for over 17 years during which he
has been involved in over 50 investments in the biotechology and medical area.
He has served on the boards of many life science companies including Aurora
Biosciences, Cantab Pharmaceuticals (UK), Devgen (Belgium), Genetic Therapy and
Hexagen (UK).

  Dr. Bernard Canavan joined us as a director in March 1997. Dr. Canavan
recently retired from American Home Products Corporation where he held the
position of President and Chief Operating Officer. Dr. Canavan started his
pharmaceutical career with Wyeth Limited Canada in 1969 as Medical Director. He
left Wyeth Canada in 1975 as President. He then joined Wyeth International Ltd.
as Executive Assistant to the President and in 1980 became President of Wyeth
International. In 1984 he took over as President of Wyeth Laboratories in
charge of Pharmaceutical Operations. From 1990 to 1994 he was President and COO
of American Home Products Corporation. Dr. Canavan is on the board of the
following companies: Magainin Pharmaceuticals, and Shire Pharmaceuticals Group
Plc.

  Dr. James H. Cavanaugh joined us as a director in May 1996 and has served as
our Chairman since August 1998. Dr. Cavanaugh is the President of HealthCare
Ventures LLC. Prior to HealthCare Ventures, he was President of SmithKline &
French Laboratories--U.S., the pharmaceutical division of SmithKline Beecham
Corporation. Previously, he served as President of SmithKline's clinical
laboratory business and as President of Allergan International. Prior to his
industry experience, Dr. Cavanaugh served as Staff Assistant to President Nixon
for Health Affairs and as Deputy Director of the Domestic Council. Under
President Ford, he was appointed Deputy Assistant to the President for Domestic
Affairs and Deputy Chief of the White House Staff. Before then, he served as
Deputy Assistant Secretary for Health and Scientific Affairs in the U.S.
Department of Health, Education and Welfare, and as Special Assistant to the
Surgeon General of the U.S. Public Health Service. He was a Special Consultant
to President Reagan and served as a member of the President's Export Council.
Preceding his government service, Dr. Cavanaugh was a member of the faculty of
the Graduate College and the College of Medicine at the University of Iowa,
where he received his Master's and Doctorate degrees. Dr. Cavanaugh currently
serves on the Boards of Trustees of the National Committee for Quality Health
Care (Chairman, 1988) and The National Center for Genome Resources, and as
Trustee Emeritus of the California College of Medicine. He has served on the
Board of Directors of the Pharmaceutical Research and Manufacturers
Association, Unihealth America, and the Proprietary Association. He was a
Founding Director of the Marine National Bank in Santa Ana, California. Dr.
Cavanaugh serves on the Board of the following companies: Diversa Corporation,
MedImmune Inc. and Shire Pharmaceuticals Group Plc.

  Dr. Zola P. Horovitz joined us as a director in September 1996. Dr. Horovitz
recently retired from Bristol-Myers Squibb, last serving as Vice President of
Business Development and Planning. Previously, he spent 31 years with The
Squibb Institute for Medical Research in Princeton, New Jersey, last serving as
Vice President of Research Planning & Scientific Liaison. Dr. Horovitz recently
served as Commissioner of the New Jersey Cancer Research Commission. He has
been an active member of many industry organizations, including the American
Society for Pharmacology & Experimental Therapies, British Pharmacological
Society, American Pharmaceutical Association, International Society of
Biochemical Pharmacology, and the New York Academy of Sciences, among others.
Additionally, he is a Fellow of the New Jersey Academy of Sciences, American
Foundation for Pharmaceutical Education, Academy of Pharmaceutical Sciences,
and the American Association for the Advancement of Science. Dr. Horovitz
earned a B.S. in Pharmacy and an M.S. and Ph.D. in Pharmacology from the
University of Pittsburgh. He is a registered pharmacist in the state of
Pennsylvania and has published more than 90 books, articles and abstracts in
the areas of pharmacology and drug research and development. Dr. Horovitz
serves on the Board of the following companies: BioCryst Pharmaceuticals, Inc.,

                                       56
<PAGE>

Diacrin, Inc., Magainin Pharmaceuticals Inc., Avigen, Inc., Clinicor, Inc.,
Synaptic Pharmaceuticals Corporation, Shire Pharmaceuticals Group Plc and
HeavenlyDoor.Com.

  Mr. David R. King joined us as a director in April 2000. Since 1981, Mr. King
has been a partner in the Business and Finance Section of the law firm of
Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. Mr. King's practice
focuses on biotechnology and emerging growth companies and he has extensive
experience in corporate and securities law matters. Mr. King serves on the
Board of Cephalon, Inc. He is a graduate of the University of Pennsylvania and
Harvard Law School.

  Mr. Joshua Ruch joined us as a director in March 1997. Mr. Ruch is Chairman
and Chief Executive Officer of Rho Management Company, Inc., an investment
advisory firm. Mr. Ruch has been employed by Rho Management Company in various
capacities since its inception in 1981. Mr. Ruch holds an M.B.A. from the
Harvard Graduate School of Business Administration.

  Mr. Harold R. Werner joined us as a director at our inception. Mr. Werner is
a Managing Director of HealthCare Ventures LLC. Mr. Werner has over twenty-five
years of experience in planning, development and financing of health care
technology. Prior to the founding of the HealthCare Ventures family of funds in
1985, Mr. Werner served as Director of New Ventures for Johnson & Johnson
Development Corporation, responsible for corporate venture capital and
strategic planning activities. These responsibilities included outside
investments and licenses for Johnson & Johnson in biotechnology,
pharmaceuticals, vision care, diagnostics and other high-technology areas of
health care. Previously, he was Senior Vice President of Robert S. First, Inc.,
and was responsible for managing its European and, later, U.S. health care
management consulting business. Mr. Werner received his B.S. (high honors) and
M.S. degrees in engineering from Princeton University and an M.B.A. from the
Harvard Graduate School of Business Administration.

Board Of Directors

  Upon or prior to the closing of this offering, our board of directors will be
divided into the following three classes, with the members of the respective
classes serving for staggered three-year terms:

  . Class 1 directors, whose terms expire at the annual meeting of
    stockholders to be held in 2001;

  . Class 2 directors, whose terms expire at the annual meeting of
    stockholders to be held in 2002; and

  . Class 3 directors, whose terms expire at the annual meeting of
    stockholders to be held in 2003.

  Dr. Bunting, Dr. Horovitz and Mr. Werner will be our Class 1 directors, Dr.
Salemme, Dr. Canavan and Mr. Ruch will be our Class 2 directors, and Dr.
U'Prichard, Dr. Cavanaugh and Mr. King will be our Class 3 directors. At each
annual meeting of stockholders following this offering, our stockholders will
elect the successors to directors whose terms have expired to serve from the
time of election and qualification until the third annual meeting following
election.

  All directors were nominated and elected as directors by the holders of our
common and preferred stock as provided in provisions of our certificate of
incorporation, our bylaws and our current stockholders agreement. These
provisions of our stockholders agreement will terminate upon the completion of
this offering. Each of the individuals will remain as a director until
resignation or until the stockholders elect their replacements as provided in
our certificate of incorporation.

  Our executive officers are appointed by the board of directors and serve
until their successors have been duly elected and qualified. There are no
family relationships among any of our executive officers or directors.

                                       57
<PAGE>

Audit Committee

  We have established an audit committee. Our audit committee consists of three
independent directors. Our audit committee is responsible for reviewing with
management our financial controls and accounting and reporting activities. In
addition, our audit committee is also responsible for reviewing the
qualifications of our independent auditors, making recommendations to the board
of directors regarding the scope, fees and results of any audit and reviewing
any non-audit services and related fees. David R. King, one of our directors
and a current member of the audit committee, is a partner at Morgan, Lewis &
Bockius LLP, a law firm which has provided legal services for us in each of our
last three fiscal years.

Compensation Committee and Compensation Committee Interlocks and Insider
Participation

  We have established a compensation committee. Our compensation committee is
responsible for the evaluation, approval and administration of all salary,
incentive compensation, benefit plans and other forms of compensation for our
officers, directors and other employees, including bonuses and options granted
under our Equity Compensation Plan. None of the Compensation Committee members
has served as an officer or employee of us or our subsidiary.

  For information on recent purchases of our capital stock by the members of
our compensation committee or their respective affiliates, see the description
under "Certain Relationships and Related Transactions" included in this
prospectus.

Director Compensation

  Drs. Canavan and Horovitz and Mr. King each receive $10,000 per year as
consideration for their services as directors. Drs. Canavan and Horovitz are
entitled to receive consulting fees of $1,500 per day of additional service,
although no such consulting services have been rendered to date. Additionally,
Drs. Canavan and Horovitz each have received grants of options to purchase
17,857 shares of our common stock under our equity compensation plan in
connection with their service as directors. Mr. King received a restricted
stock grant in connection with his service as a director of 7,143 shares of
common stock for an aggregate purchase price of $45,000. All of the option
grants and restricted stock grants for our directors vest in equal annual
installments over a period of four years. Our non-employee directors are
reimbursed for expenses in connection with attendance at board and committee
meetings.

                                       58
<PAGE>

Scientific Advisory Board

  In addition to our in-house scientific resources, we have assembled a
Scientific Advisory Board of seven members with expertise in the areas of
protein structure-function relationships, computer-aided drug design, protein
modeling, intracellular signaling and molecular regulation of the immune
system. The Scientific Advisory Board meets as a group two to three times a
year to review our research, development and clinical activities. We also
consult with our scientific advisors throughout the year. Each member of the
Scientific Advisory Board has an individual consulting agreement under which he
is compensated by cash and/or by options to purchase shares of our common
stock. These consulting agreements also provide for confidentiality, assignment
of inventions and certain noncompetition provisions. None of our scientific
advisors is employed by us, and they may have commitments to, or consulting or
advisory contracts with, their employers or other entities that may conflict or
compete with their obligations to us. Our scientific advisors include:

<TABLE>
<CAPTION>
Name                      Title/Affiliation
----                      -----------------
<S>                       <C>
Don C. Wiley, Ph.D,       John L. Loeb Professor of Biochemistry and
 Chairman...............  Biophysics at Harvard University

Stephen J. Benkovic,      Evan Pugh Professor and Eberly Chair in
 Ph.D...................  Chemistry, The Pennsylvania State University

Jeremy M. Berg, Ph.D....  Professor and Director of the Department of
                          Biophysics and Biophysical Chemistry at the
                          Johns Hopkins University School of Medicine

Dale L. Boger, Ph.D.....  Richard and Alice Cramer Professor of Chemistry,
                          The Scripps Research Institute

Ralph F. Hirschmann,      Makineni Professor of Bioorganic Chemistry,
 Ph.D. .................  University of Pennsylvania

Michael Levitt, Ph.D....  Chairman, Department of Structural Biology at
                          Stanford University

Victor J. Marder, M.D...  Director of the Vascular Medicine Program at
                          Orthopaedic Hospital/UCLA

Clarence E. Schutt,
 Ph.D...................  Professor of Chemistry at Princeton University
</TABLE>

                                       59
<PAGE>

Executive Compensation

  The following table contains the compensation awarded or paid, or earned or
accrued for services rendered to us, in all capacities during the fiscal year
ended December 31, 1999 by our Chief Executive Officer and the four other most
highly compensated officers whose total salary and bonus exceeded $100,000 in
fiscal 1999. As provided in SEC rules, the compensation described in the table
does not include medical, group life insurance or other benefits which are
available generally to all our salaried employees and perquisites and other
personal benefits which do not exceed the lesser of $50,000 or 10% of the
officers' total salary and bonus disclosed in this table. We refer to these
officers as our named executive officers in other parts of this prospectus.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                    Long-Term
                                                                   Compensation
                                                                   ------------
                                                  Annual            Number of
                                               Compensation         Securities
                                     Fiscal --------------------    Underlying
Name and Principal Position           Year  Salary($)   Bonus($)     Options
---------------------------          ------ ---------   --------   ------------
<S>                                  <C>    <C>         <C>        <C>
David C. U'Prichard, Ph.D...........  1999    92,330(1)   36,932     737,143
 Chief Executive Officer
F. Raymond Salemme, Ph.D............  1999   245,549     95,723(2)    10,204
 President and Chief Scientific
 Officer
Michael J. Wassil...................  1999   166,005     55,405(3)     7,398
 Vice President and Chief Financial
 Officer
Scott M. Horvitz....................  1999   150,491     40,097(4)     7,015
 Vice President, Finance and
 Administration
Roger F. Bone, Ph.D.................  1999   146,475     32,957        5,612
 Vice President, Biochemistry
</TABLE>
--------
(1) Dr. U'Prichard's employment with us began on September 20, 1999.

(2) Includes loan forgiveness of $29,565 and year end bonus of $66,158.

(3) Includes loan forgiveness of $22,204 and year end bonus of $33,201.

(4) Includes loan forgiveness of $6,261 and year end bonus of $33,836.

                               1999 Option Grants

  The following table contains information concerning stock options granted to
our named executive officers during the fiscal year ended December 31, 1999.

<TABLE>
<CAPTION>
                                      Individual Grants
                         --------------------------------------------
                                                                      Potential Realizable
                                                                        Value at Assumed
                                                                              Rates
                         Number of  Percentage of                        of Stock Price
                         Securities Total Options Exercise              Appreciation for
                         Underlying  Granted to    Price                   Option Term
                          Options   Employees in    (per   Expiration ---------------------
Name                      Granted    Fiscal Year   share)     Date        5%        10%
----                     ---------- ------------- -------- ---------- ---------- ----------
<S>                      <C>        <C>           <C>      <C>        <C>        <C>
David C. U'Prichard,
 Ph.D...................  136,054       15.37      $2.94    09/17/09  $2,702,654 $4,540,457
                          478,231       54.03       2.94    09/17/09   9,499,840 15,959,728
                          122,857       13.88       7.28    09/17/09   1,907,299  3,566,837
F. Raymond Salemme,
 Ph.D...................   10,204        1.15       2.94    04/09/09     202,696    340,530
Michael J. Wassil.......    7,398         .84       2.94    04/09/09     146,955    246,884
Scott M. Horvitz........    7,015         .79       2.94    04/09/09     139,357    234,119
Roger F. Bone, Ph.D.....    5,612         .63       2.94    04/09/09     111,483    187,291
</TABLE>

                                       60
<PAGE>

                Aggregated Option Exercises In Last Fiscal Year
                       And Fiscal Year-End Option Values

  The following table contains information concerning year end option values
for the 1999 fiscal year for the executive officers named in the Summary
Compensation Table above. The value of unexercised in-the-money options is
calculated based on a value equal to an assumed initial public offering price
of $14.00 per share.

<TABLE>
<CAPTION>
                           Number of Securities
                          Underlying Unexercised   Value of Unexercised in-
                                Options at           the-Money Options at
                             December 31, 1999         December 31, 1999
                         ------------------------- -------------------------
Name                     Exercisable Unexercisable Exercisable Unexercisable
----                     ----------- ------------- ----------- -------------
<S>                      <C>         <C>           <C>         <C>
David U'Prichard,
 Ph.D. .................       --       737,142(1) $      --    $7,619,600
F. Raymond Salemme,
 Ph.D...................   126,786      128,508     1,427,969    1,471,668
Michael J. Wassil.......    36,112       44,304       404,397      495,001
Scott M. Horvitz........    15,495       14,623       204,868      170,725
Roger F. Bone, Ph.D.....    15,874       36,556       202,492      453,770
</TABLE>
--------

(1)  Under Dr. U'Prichard's offer letter with us, which permitted early
     exercise of the above options prior to vesting for a period of six months
     following the date of grant, Dr. U'Prichard exercised 176,871 options in
     March 2000. The shares Dr. U'Prichard acquired through exercise are
     subject to restrictions which lapse over the same period as the
     predecessor stock options would have vested.

                               2000 Option Grants

  The following table contains information concerning stock options granted to
our named executive officers in the year 2000 as of June 30, 2000.

<TABLE>
<CAPTION>
                                        Individual Grants
                         -----------------------------------------------
                                                                             Potential
                                                                         Realizable Value
                                                                            at Assumed
                                                                             Rates of
                         Number of  Percentage of                           Stock Price
                         Securities Total Options                        Appreciation for
                         Underlying  Granted to    Exercise                 Option Term
                          Options   Employees in     Price    Expiration -----------------
Name                      Granted    Fiscal Year  (per share)    Date       5%      10%
----                     ---------- ------------- ----------- ---------- -------- --------
<S>                      <C>        <C>           <C>         <C>        <C>      <C>
David C. U'Prichard,
 Ph.D. .................   13,393       3.52%        $6.30     03/31/10  $221,043 $401,952
F. Raymond Salemme,
 Ph.D. .................   22,321       5.86%        $6.30     03/31/10   368,405  669,920
Michael J. Wassil.......    4,643       1.22%        $6.30     03/31/10    76,628  139,343
Scott M. Horvitz........   15,000       3.94%        $6.30     03/31/10   247,568  450,186
Roger F. Bone, Ph.D.....   16,429       4.31%        $6.30     03/31/10   271,146  493,061
</TABLE>

  The figures in the two tables above represent options granted under our
Equity Compensation Plan. We granted options to purchase 885,204 shares of our
common stock in 1999 and as of June 30, 2000 have granted options to purchase
380,893 shares of our common stock in 2000. All options were granted at an
exercise price equal to or greater than the fair market value of the common
stock on the date of grant as determined by our board of directors.

  In determining the fair value of our common stock, the Board has sought to
value the common stock based on its knowledge of our business such as our
financial position, the stage of our business development activities, the
availability to us of capital, our competitive environment, technical and
operational risks and the terms of issuances of preferred stock.

  The potential realizable value of our options is calculated based on the ten-
year term of the option at the time of grant. The 5% and 10% assumed rates of
appreciation are mandated by the rules promulgated by the

                                       61
<PAGE>


Securities and Exchange Commission and do not represent our estimate or
projection of our future stock price. The potential realizable values at 5% and
10% appreciation are calculated by:

  . multiplying the number of shares of common stock subject to a given
    option by the assumed initial public offering price of $14.00 per share;

  . assuming that the aggregate stock value derived from that calculation
    compounds at the annual 5% or 10% rate shown in the table until the
    expiration of the options; and

  . subtracting from that result the aggregate option exercise price.

The gains shown do not include deductions for taxes or other expenses
associated with the exercise of the option or the sale of the underlying
shares. The actual value realized may be greater or less than the potential
realizable value set forth in the above tables.

  The options granted to our employees typically vest in 25% increments on each
of the four annual anniversaries of the date of grant. The options granted to
our consultants generally vest in 33% increments on each of the three annual
anniversaries of the date of the grant or under specified performance goals
over a ten-year term. Options granted to the persons listed above expire 10
years from the grant date.

  We have never granted stock appreciation rights.

Equity Compensation Plans

 Equity Compensation Plan




  We maintain the Equity Compensation Plan, approved by our board of directors
and our stockholders. The Equity Compensation Plan provides for the grant of
incentive stock options, nonqualified stock options, and restricted stock
grants to our officers, employees, non-employee directors, members of the
Scientific Advisory Board, and independent contractors and consultants who
perform services for us. As of June 30, 2000, 2,112,405 shares are issuable
upon the exercise of options outstanding under the plan and 970,865 shares have
been issued under the Equity Compensation Plan, including 252,317 shares
subject to repurchase. We will not make any additional grants under the Equity
Compensation Plan after the closing of this offering.

 2000 Equity Compensation Plan

  We also will maintain the 2000 Equity Compensation Plan, which is to be
approved by our board of directors and our stockholders, and to become
effective prior to the closing of this offering. The 2000 Plan provides for
grants of incentive stock options, nonqualified stock options, stock awards,
and performance units to our employees, non-employee directors, advisors and
consultants (including members of our Scientific Advisory Board).

  General. The 2000 Plan authorizes up to 2,200,000 shares of our common stock
for issuance under the terms of the 2000 Plan. The maximum number of shares for
which any individual may receive grants in any calendar year is 700,000 shares.
If options granted under the 2000 Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered for any reason without being exercised, or
if stock awards or performance units are forfeited, the shares of common stock
underlying the grants will again be available for purposes of the 2000 Plan. No
options, stock awards or performance units have been granted under the 2000
Plan.

  Administration of the 2000 Plan. The compensation committee of the board of
directors administers and makes grants under the 2000 Plan.

                                       62
<PAGE>


  Grants. Grants under the 2000 Plan may consist of:

  . incentive stock options

  . nonqualified stock options

  . stock awards

  . performance units

  Eligibility for Participation. Grants may be made to any of our employees,
members of our board of directors, and consultants and advisors who perform
services for us (including members of our Scientific Advisory Board).

  Options. The exercise price of options will be determined by the compensation
committee, and may be equal to or greater than the fair market value of our
stock on the date the option is granted.

  Grantees may pay the exercise price of options:

  . in cash

  . with the approval of the compensation committee, by delivering shares of
    our stock owned by the grantee and having a fair market value on the date
    of exercise equal to the exercise price of the option

  . by payment through a broker

  . by such other method as the compensation committee may approve

  Options will become exercisable according to the terms determined by the
compensation committee and specified in the grant instrument. The compensation
committee may accelerate the exercisability of any or all outstanding options
at any time for any reason.

  The compensation committee will determine the term of each option, up to a
maximum ten-year term. The term of an incentive stock option granted to an
employee who owns more than 10% of the total voting power of our stock may not
exceed five years from the date of grant.

  Stock Awards. The compensation committee may issue shares of stock that are
subject to restrictions or no restrictions. If a grantee's employment or
service terminates during the restriction period or if any other conditions are
not met, the stock awards will terminate as to all shares on which restrictions
are still applicable, and the shares must be immediately returned to us, unless
the compensation committee determines otherwise.

  Performance Units. The compensation committee may make grants of performance
units to participants. The compensation committee will determine the terms and
conditions for performance units. Performance units may be payable in cash or
in shares of our stock, or a combination of the two, provided that the cash
portion may not exceed 50% of the amount to be distributed at the end of the
performance period. The measure of a performance unit will be equal to the fair
market value of a share of our stock.

  Performance-Based Compensation. The compensation committee may grant
performance units and stock awards that are intended to be "performance-based
compensation" under section 162(m) of the Internal Revenue Code. In that event,
the compensation committee will establish in writing the objective performance
goals that must be met and other conditions of the grant at or soon after the
beginning of the performance period. The performance goals may relate to the
employee's business unit or to our performance as a whole, or any combination
of the two. The compensation committee will use objectively determinable
performance goals based on one or more of the following criteria: stock price,
earnings per share, net earnings, operating earnings, return on assets,
shareholder return, return on equity, growth in assets, unit volume, sales,
market share, scientific goals, pre-clinical or clinical goals, regulatory
approvals, or strategic business criteria consisting of one or more objectives
based on meeting specified revenue goals, market penetration goals, geographic
business expansion goals, cost targets, goals relating to acquisitions or
divestitures, or strategic partnerships.

                                       63
<PAGE>


  After the announcement of our financial results for a performance period, the
compensation committee will certify and announce the results for the
performance period. The compensation committee may provide for payment of
grants in the event of death or disability of a grantee, or under other
circumstances. With respect to stock awards and performance units granted as
"performance-based compensation," not more than 700,000 shares of our stock may
be granted to an employee for any year in a performance period.

  Deferrals. The compensation committee may allow grantees to defer the receipt
of cash or shares that would otherwise be payable under the 2000 Plan.

  Certain Corporate Changes. If all or substantially all of our assets are sold
or exchanged, we are to be dissolved or liquidated, or we are a party to a
merger or consolidation with another corporation in which we will not be the
surviving corporation, then, unless the compensation committee provides
otherwise in the grant letter, (i) each grantee will have the right to exercise
the entire portion of his or her grant not previously exercised within ten days
after written notice of the transaction is given to grantees and any options
not exercised after the ten day period will be forfeited; (ii) the restrictions
and conditions on outstanding stock awards will immediately lapse; and (iii)
payment will be made in settlement of outstanding performance units in an
amount determined by the compensation committee.

  If we are a party to a merger or consolidation in which we are the surviving
corporation, then the compensation committee may provide each grantee notice of
such event, and if such notice is given, unless the compensation committee
determines otherwise in the grant letter, (i) each grantee will have the right
to exercise the entire portion of his or her grant not previously exercised
within ten days after written notice of the transaction is given to grantees
and any options not exercised after the ten day period will be forfeited; (ii)
the restrictions and conditions on outstanding stock awards will immediately
lapse; and (iii) payment will be made in settlement of outstanding performance
units in an amount determined by the compensation committee.

  In addition, the compensation committee may provide in a grant letter
specific provisions that are applicable in the event of a corporate
transaction, and the compensation committee may accelerate the exercisability
or vesting of grants in the event of any corporate transaction, allow the
assumption or substitution of grants by a surviving corporation and the
continuation of such grants, or take other actions with respect to outstanding
grants.

  Foreign Grantees. For grantees who are subject to taxation in countries
outside the United States, the compensation committee may make grants on such
terms and conditions as the compensation committee deems appropriate to comply
with the laws of applicable countries.







  Transferability. Grants are generally not transferable by the grantee, except
in the event of death. However, the compensation committee may permit grantees
to transfer nonqualified stock options to family members or one or more trusts
or other entities for the benefit of, or owned by, family members, on terms
approved by the compensation committee. The compensation committee may also
permit the transfer of nonqualified stock options pursuant to a domestic
relations order.

  Amendment and Termination of the 2000 Plan. The board of directors may amend
or terminate the 2000 Plan at any time. However, shareholder approval is
required for any change that is required to be approved by the shareholders
under section 162(m) or section 422 of the Internal Revenue Code or by
applicable stock exchange requirements. Also, if performance units or stock
awards are granted as "performance-based compensation," our stockholders must
approve the 2000 Plan no later than the first stockholders meeting that occurs
in the fifth year following the year in which our stockholders previously
approved the provisions of the 2000 Plan relating to "Performance-based
Compensation," if required by section 162(m) of the Internal Revenue Code or
the regulations thereunder. The 2000 Plan will terminate on the day immediately
preceding the tenth anniversary of its effective date, unless the board of
directors terminates the 2000 Plan earlier or extends it with approval of our
shareholders.

                                       64
<PAGE>


  Adjustment Provisions. Upon a merger, spinoff, stock split, reclassification,
or other transaction identified in the 2000 Plan, the compensation committee
may appropriately adjust:

  . the maximum number shares available for grants under the 2000 Plan and to
    any individual

  . the number and kind of shares covered by outstanding grants

  . the exercise price per share or the applicable market value of grants

  Section 162(m). Section 162(m) of the Internal Revenue Code imposes a
$1,000,000 limit on the amount a public corporation can deduct for federal
income tax purposes for compensation paid to its chief executive officer or any
of its four other most highly compensated officers in any year. This limit
generally applies to all compensation, including amounts received upon the
exercise of stock options and the value of shares or cash paid pursuant to
other grants. An exception exists, however, for "performance-based
compensation." The 2000 Plan is intended to allow grants to meet the
requirements of "performance-based compensation."

  Stock options generally will meet the requirements of performance-based
compensation. Not all stock awards and performance units are considered
performance-based compensation under section 162(m). As described above under
"Performance-Based Compensation," the compensation committee may grant stock
awards and performance units that are based on the attainment of objective
performance goals and are intended to meet the requirements of "performance-
based compensation" under section 162(m).

Employment, Change of Control and Termination of Employment Arrangements

  All of our employees, including our officers, are given employment offer
letters providing for their base compensation as well as potential additional
compensation in the form of bonuses or equity compensation under our equity
compensation plan. Some of the employment offer letters also provide for
severance payments covering periods of up to six months. In addition, our
equity compensation plan, as described elsewhere in this prospectus, contains
provisions concerning accelerated vesting of options and restricted stock in
connection with certain corporate changes. Except for such accelerated vesting
of their options or restricted stock upon such changes, none of our officers,
except for Dr. U'Prichard, has any compensatory plan or arrangement whereby a
resignation, retirement or other termination or a change in control could
result in payments to such officer exceeding $100,000.

  In addition, in September 1999, we entered into an employment offer letter
with David C. U'Prichard, Ph.D., our Chief Executive Officer. As provided in
his employment offer letter, Dr. U'Prichard's annual compensation was initially
set at a base salary of $325,000 and a target bonus of 40% of his base salary.
In addition, we granted Dr. U'Prichard options to purchase 614,286 shares of
common stock at an exercise price of $2.94 per share and options to purchase
122,857 shares of our common stock at an exercise price of $7.28. These options
vest 25% per year, beginning on the first anniversary of the grant date. During
the six months following the date of grant, such options may be exercised early
(i.e., without regard to the vesting provisions applicable to such options) and
the purchase price of such options may be paid by delivery of a promissory
note, bearing interest at the minimum rate necessary to avoid imputed interest,
with interest and principal being repayable in four equal installments on the
first four anniversaries of the date such options were granted. See "Certain
Relationships and Related Transactions". In general, early vesting provisions
would apply in the case of certain corporate changes, as provided in our equity
compensation plan, however, if a certain transaction occurs within the first
year of his date of hire, his early vesting rights under the plan would be
limited. In the event that, within two years of the date such options were
granted, there is a sale of substantially all our assets or a merger where we
are not the surviving entity, and such options are not assumed, the minimum
worth of all such options which are vested will be deemed to be not less than
$1.5 million, as determined by our board of directors, and we will, if
necessary, make a cash payment to Dr. U'Prichard. In the event Dr. U'Prichard's
employment is terminated without cause, he will receive a severance
compensation equal to his base salary and payment of health insurance premiums
for up to 12 months or until he begins new full-time employment (except in the
nonprofit sector), whichever occurs first, and a payment in each month of such
period of an

                                       65
<PAGE>

additional amount equal to one-twelfth of his prior year's bonus, if any
(annualized in respect of the bonus payment for 1999), times the portion of the
current fiscal year that has expired up to the date of his termination. In
addition, with respect to the 25% of his options vesting on the next
anniversary following termination, such options will be deemed to have been
subject to vesting in equal monthly portions during the twelve months prior to
such anniversary. If such a termination without cause occurs within 12 months
after a sale of our company, then the continued salary referred to in the
preceding sentence will be paid in a lump sum, and Dr. U'Prichard will be
entitled to a further lump-sum payment equal to the prior year's bonus payment,
annualized in respect of the bonus payment for 1999.


                                       66
<PAGE>

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Management and Others

  We have issued 36,922,488 shares of preferred stock since our inception. Each
share of outstanding preferred stock will convert into 13,186,602 shares of
common stock upon the closing of this offering.

  Series A-5 Preferred Stock Financing. In March 2000, we issued 9,572,248
shares of series A-5 preferred stock for $3.00 per share to eleven accredited
investors. Included in the amount were 3,451,165 shares issued upon the
conversion of the November 1999 Bridge Financing. Investors owning 5% or more
of our shares and directors and officers who participated in this transaction
include:

<TABLE>
<CAPTION>
                                                         Number of Shares of
                                   Number of Shares of    Common Stock upon
                                       Series A-5      Conversion of Series A-5
Investor                             Preferred Stock       Preferred Stock
--------                           ------------------- ------------------------
<S>                                <C>                 <C>
HealthCareVentures III, L.P. .....      1,067,100               381,107
HealthCareVentures IV, L.P. ......        313,366               111,916
HealthCareVentures V, L.P.........      1,022,253               365,090
Rho Management Trust II...........      1,702,016               607,863
Abingworth Bioventures SICAV......        576,459               205,878
Biotech Growth S.A. ..............      3,878,170             1,385,061
</TABLE>

  Dr. Cavanaugh and Mr. Werner, two of our directors, are general partners of
HealthCare Partners III, L.P., HealthCare Partners IV, L.P. and HealthCare
Partners V, L.P., which are the general partners of HealthCare Ventures III,
L.P., HealthCare Ventures IV, L.P. and HealthCare Ventures V, L.P.,
respectively. In this prospectus we refer to HealthCare Ventures III, L.P.,
HealthCare Ventures IV, L.P. and HealthCare Ventures V, L.P., collectively, as
funds affiliated with HealthCare Ventures.

  Mr. Ruch, one of our directors, is the Chairman and Chief Executive Officer
of Rho Management Company, Inc., financial advisor to Rho Management Trust II.

  Dr. Bunting, one of our directors, is a director of Abingworth Management
Limited in London, UK. Abingworth Management Limited is the investment adviser
to Abingworth Bioventures SICAV.

  1999 Bridge Loan Financing. In November 1999, we issued and sold $10,000,000
of secured convertible promissory notes to eight accredited investors. The
promissory notes carried an interest rate of prime plus one percent per year
and under their terms automatically converted into 3,451,165 shares of series
A-5 preferred stock in March 2000. In connection with this financing, we issued
warrants to purchase 1,250,000 shares of our common stock at an exercise price
of $3.50 per share. Investors owning 5% or more of our capital stock and
directors and officers who participated in this transaction include:

<TABLE>
<CAPTION>
                                                             Number of Shares of
                                                                Common Stock
Investor                                     Promissory Note Underlying Warrants
--------                                     --------------- -------------------
<S>                                          <C>             <C>
HealthCare Ventures III, L.P. ..............   $3,092,000          386,500
HealthCare Ventures IV, L.P. ...............      908,000          113,500
Rho Management Trust II.....................    3,000,000          375,000
Abingworth Bioventures SICAV................      884,732          110,591
Biotech Growth S.A. ........................    1,578,706          197,338
</TABLE>

  Series A-4 Preferred Stock Financing. In January 1998, we issued 4,000,000
shares of series A-4 preferred stock for $2.60 per share to Biotech Growth S.A.

                                       67
<PAGE>


  Series A-3 Preferred Stock Financing. In March 1997 we issued 10,304,264
shares of series A-3 preferred stock for $1.21 per share to twelve accredited
investors. Investors owning 5% or more of our shares and directors and officers
who participated in this transaction include:

<TABLE>
<CAPTION>
                                                               Number of Shares
                                                               of Common Stock
                                           Number of Shares of upon Conversion
                                               Series A-3       of Series A-3
Investor                                     Preferred Stock   Preferred Stock
--------                                   ------------------- ----------------
<S>                                        <C>                 <C>
HealthCareVentures III, L.P. .............        318,608          113,789
HealthCareVentures IV, L.P. ..............         93,563           33,415
Rho Management Trust II...................      2,640,089          942,889
Abingworth Bioventures SICAV..............      2,060,853          736,019
State of Michigan Retirement Systems......      2,473,023          883,223
</TABLE>

  1996 Bridge Loan Financing. In September 1996, we issued and sold $500,000 of
promissory notes to five accredited investors. The promissory notes carried an
interest rate of ten percent per year. In March 1997, we repaid the notes,
together with accrued interest of $23,014. In connection with this financing,
in March 1997 we issued warrants to purchase 35,714 shares of our common stock
at an exercise price of $0.03 per share. Investors owning 5% or more of our
capital stock and directors and officers who participated in this transaction
include:
<TABLE>
<CAPTION>
                                                             Number of Shares of
                                                                Common Stock
Investor                                     Promissory Note Underlying Warrants
--------                                     --------------- -------------------
<S>                                          <C>             <C>
HealthCare Ventures III, L.P. ..............    $316,288           22,592
HealthCare Ventures IV, L.P. ...............      92,882            6,635
Rho Management Trust II.....................      74,709            5,336
</TABLE>

Other Agreements With Officers And Directors

  In February 1997, we made a loan of $106,250 at 6.28% to F. Raymond Salemme,
Ph.D., our President and Chief Scientific Officer, to purchase 151,786 shares
of our restricted stock awarded to him under our equity compensation plan for a
purchase price of $0.70 per share. In September 1997, we made a loan of $75,000
at 6.14% to Michael J. Wassil, our Vice President and Chief Financial Officer,
to purchase 26,786 shares of our restricted stock awarded to him under our
equity compensation plan for a purchase price of $2.80 per share. Our
compensation committee has the discretion to forgive the loans to Dr. Salemme
and Mr. Wassil. Over the last two years, our compensation committee has
forgiven the loans at a rate of 25% of the outstanding principal and interest
per year. As of March 31, 2000, the outstanding principal amount of Dr.
Salemme's loan was $26,563 and the outstanding principal amount of Mr. Wassil's
loan was $37,500. In March 2000, we made a loan of $519,505 at 6.69% to David
C. U'Prichard, Ph.D., our Chief Executive Officer, to exercise options to
purchase 176,871 shares of our restricted stock at a purchase price of $2.94
per share, as provided under the terms of his employment offer letter. These
shares are subject to repurchase restrictions which lapse over the same period
as the predecessor stock options would have vested.

  Drs. Canavan and Horovitz, two of our directors, each have received grants of
options to purchase 17,857 shares of our common stock under our current equity
compensation plan in connection with their service as directors. In addition,
Mr. King, one of our directors, received a restricted stock grant in April 2000
in connection with his service as a director of 7,143 shares of common stock
for an aggregate purchase price of $45,000. All of the option grants and
restricted stock awards for our directors vest in equal annual installments
over a period of four years.

Certain Business Relationships

  David R. King, one of our directors, is a partner at Morgan, Lewis & Bockius
LLP, a law firm which has provided legal services for us in each of our last
three fiscal years.

                                       68
<PAGE>

                             PRINCIPAL STOCKHOLDERS

  The following table contains information with respect to the beneficial
ownership of our common stock as of June 30, 2000, and after the sale of shares
in this offering, by:

  . each person or entity who beneficially owns more than 5% of our stock;

  . each of our named executive officers;

  . each of our directors; and

  . all of our directors and executive officers as a group.

  Unless otherwise indicated, the address for each stockholder is care of 3-
Dimensional Pharmaceuticals, Inc., 665 Stockton Drive, Exton, Pennsylvania
19341. Beneficial ownership is determined according to the rules of the SEC
governing the determination of beneficial ownership of securities.

  Under the rules of the SEC, a person is deemed to be a beneficial owner of a
security if that person has or shares voting power, which includes the power to
vote or to direct the voting of such security, or investment power, which
includes the power to dispose of or to direct the disposition of such security.
A person is also deemed to be a beneficial owner of any securities for which
that person has a right to acquire beneficial ownership within 60 days. Under
these rules, more than one person may be deemed a beneficial owner of the same
securities and a person may be deemed to be the beneficial owner of securities
as to which such person has no economic interest.
<TABLE>
<CAPTION>
                                                         Percentage of Shares
                                                          Beneficially Owned
                                                         ----------------------
                                       Number of Shares    Before      After
Name and Address of Beneficial Owner  Beneficially Owned  Offering    Offering
------------------------------------  ------------------ ----------  ----------
<S>                                   <C>                <C>         <C>
5% Stockholders
Funds Affiliated with HealthCare          4,542,260           30.09%      23.79%
 Ventures(1)........................
 44 Nassau Street
 Princeton, New Jersey 08542
Rho Management Trust II(2)..........      2,640,360           17.94%      14.11%
 152 West 57th street
 New York, NY 10019
State of Michigan Retirement                883,223            6.20%       4.84%
 Systems............................
 Department of Treasury, Treasury
 Building
 30 West Allegan
 East Lansing, Michigan 48922
Abingworth Bioventures SICAV(3).....      1,052,489            7.34%       5.74%
 c/o Sanne & Cie
 Boite Postale 566
 L-2015 Luxembourg
Biotech Growth S.A.(4)..............      3,010,970           20.86%      16.33%
 c/o Bellevue Asset Management AG
 Graftenauweg 4
 CH-6301 Zug
 Switzerland
</TABLE>

                                       69
<PAGE>

<TABLE>
<CAPTION>
                                                       Percentage of Shares
                                                        Beneficially Owned
                                                       ----------------------
                                     Number of Shares    Before      After
Directors and Executive Officers    Beneficially Owned  Offering    Offering
--------------------------------    ------------------ ----------  ----------
<S>                                 <C>                <C>         <C>
David C. U'Prichard, Ph.D. ........       176,871            1.24%      *
F. Raymond Salemme, Ph.D.(5).......       504,740            3.50%       2.74%
Michael J. Wassil(6)...............        65,760           *           *
Roger F. Bone, Ph.D.(7)............        61,354           *           *
David G. Fehr(8)...................        29,592           *           *
Scott M. Horvitz(9)................        70,369           *           *
Kevin M. Mullin....................           --            *           *
Richard M. Soll, Ph.D.(10).........        56,269           *           *
Paul M.K. Weiss, Ph.D..............        19,175           *           *
Stephen Bunting, Ph.D.(3)..........     1,052,489            7.34%       5.74%
Bernard Canavan, M.D.(11)..........         8,036           *           *
James H. Cavanaugh, Ph.D.(1).......     4,542,260           30.09%      23.79%
Zola P. Horovitz, Ph.D.(12)........         8,036           *           *
David R. King......................         7,143           *           *
Joshua Ruch(2).....................     2,640,360           17.94%      14.11%
Harold R. Werner(1)................     4,542,260           30.09%      23.79%
                                        ---------       ----------  ----------
All executive officers and              9,416,218           58.53%      46.88%
 directors as a group (16
 persons)..........................
</TABLE>
--------
 *  less than one percent

(1) Includes 3,228,951 shares held by HealthCare Ventures III, L.P., including
    661,923 shares issuable upon exercise of warrants exercisable within 60
    days and 40,759 shares issuable at the initial public offering price upon
    the automatic conversion of $528,364 of convertible promissory notes, plus
    accrued interest in lieu of cash payment of dividends. Also includes
    948,219 shares held by HealthCare Ventures IV, L.P., including 194,382
    shares issuable upon exercise of warrants exercisable within 60 days and
    11,970 shares issuable at the initial public offering price upon the
    automatic conversion of $155,160 of convertible promissory notes, plus
    accrued interest in lieu of cash payment of dividends. Also includes
    365,090 shares held by HealthCare Ventures V, L.P., James H. Cavanaugh,
    Ph.D. and Harold R. Werner are General Partners of the general partner of
    each of the above-listed investment funds, and share investment and voting
    power over these shares with the other General Partners of each of the
    general partners of these funds, none of whom are affiliated with us. Dr.
    Cavanaugh and Mr. Werner disclaim beneficial ownership of such shares
    except to the extent of their pecuniary interest therein.

(2) Includes 2,640,360 shares held by Rho Management Trust II, including
    476,829 shares issuable upon exercise of warrants exercisable within 60
    days and 7,053 shares issuable at the initial public offering price upon
    the automatic conversion of $91,422 of convertible promissory notes, plus
    accrued interest in lieu of cash payment of dividends. Joshua Ruch is the
    Chairman and Chief Executive Officer of Rho Management Company, Inc.,
    financial advisor to Rho Management Trust II. Mr. Ruch disclaims beneficial
    ownership of such shares except to the extent of his pecuniary interest
    therein.

(3) Includes 1,052,489 shares held by Abingworth Bioventures SICAV, including
    110,591 shares issuable upon exercise of warrants exercisable within 60
    days. Stephen Bunting, Ph.D. is a director of Abingworth Management
    Limited, the investment adviser to Abingworth Bioventures SICAV. Dr.
    Bunting is neither a director nor an officer of Abingworth Bioventures
    SICAV. Dr. Bunting disclaims beneficial ownership of such shares except to
    the extent of his pecuniary interest in Abingworth Bioventures SICAV.

(4) Includes 197,338 shares issuable upon exercise of warrants exercisable
    within 60 days. Biotech Growth S.A. is a wholly owned subsidiary of BB
    Biotech A.G.

(5) Includes 199,830 shares of common stock issuable upon the exercise of stock
    options exercisable within 60 days.

(6) Includes 38,974 shares of common stock issuable upon the exercise of stock
    options exercisable within 60 days.

(7) Includes 32,279 shares of common stock issuable upon the exercise of stock
    options exercisable within 60 days.

                                       70
<PAGE>


(8) Includes 26,020 shares of common stock issuable upon the exercise of stock
    options exercisable within 60 days.

(9) Includes 20,369 shares of common stock issuable upon the exercise of stock
    options exercisable within 60 days.

(10) Includes 55,376 shares of common stock issuable upon the exercise of stock
     options exercisable within 60 days.

(11) All 8,036 shares of common stock are issuable upon the exercise of stock
     options exercisable within 60 days.

(12) Includes 6,250 shares of common stock issuable upon the exercise of stock
     options exercisable within 60 days.

                                       71
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

  The following description reflects the amendment and restatement of our
certificate of incorporation and our bylaws to become effective upon the
closing of this offering.

  Our authorized capital stock consists of 50 million shares, of which 45
million shares are common stock, par value $.001 per share, and 5 million
shares are preferred stock, par value $.001 per share, which our board of
directors has the power and authority to designate into classes or series.
Immediately after the sale of the shares of common stock in this offering, we
will have 18,237,300 shares of common stock outstanding and no shares of
preferred stock outstanding. The following is a summary of various provisions
of our common stock and preferred stock.

Common Stock

  The following summarizes the rights of holders of our common stock:

 Voting:

  . one vote for each share held of record on all matters submitted to a vote
    of stockholders

  . no cumulative voting rights

  . election of directors by plurality of votes cast

  . approval of all other matters except the amendment or repeal of Article
    Six of our certificate of incorporation or the alteration of our bylaws,
    by majority of votes cast

 Dividends:

  . subject to preferential dividend rights of outstanding shares of
    preferred stock, if any, common stockholders are entitled to receive
    declared dividends

  . the board of directors may only declare dividends out of legally
    available funds

 Additional Rights:

  . subject to the preferential liquidation rights of outstanding shares of
    preferred stock, if any, common stockholders are entitled to receive
    ratably net assets, available after the payment of all debts and
    liabilities, upon our liquidation, dissolution or winding up

  . no preemptive rights

  . no subscription rights

  . no redemption rights

  . no sinking fund rights

  . no conversion rights

  The rights and preferences of common stockholders are subject to the rights
of the holders of any series of preferred stock we may issue in the future.

Preferred Stock

  We may, by resolution of our board of directors, and without any further vote
or action by our stockholders, authorize and issue, subject to limitations
prescribed by law, up to an aggregate of five million shares of preferred
stock. The preferred stock may be issued in one or more classes or series of
shares of any class or series. With respect to any classes or series, the board
of directors may determine the designation and the number of shares,
preferences, limitations and special rights, including dividend rights,
conversion rights, voting rights, redemption rights and liquidation
preferences.

                                       72
<PAGE>


  Prior to this offering, we had 6,686,986 shares of series A-1 preferred
stock, 4,333,990 shares of series A-2 preferred stock, 10,304,264 shares of
series A-3 preferred stock, 4,000,000 shares of A-4 preferred stock, 9,572,248
shares of series A-5 preferred stock, 1,000,000 shares of series B preferred
stock, 400,000 shares of series C preferred stock and 625,000 shares of series
D preferred stock issued and outstanding. Upon the completion of this offering,
all of our outstanding shares of preferred stock will automatically convert
into a total of 13,186,602 shares of common stock.

Registration Rights

  Following completion of this offering and following the expiration of
applicable lock-up periods in connection with the offering, holders of
13,186,602 shares of common stock will have the right to require us to register
their shares under the Securities Act of 1933. The holders of at least 50% of
the shares of our common stock to be issued upon the conversion of our
outstanding series A preferred stock and certain warrants to acquire common
stock may require that we file up to four registration statements under the
Securities Act. In addition, when we are qualified to use Form S-3, each of
these holders may request an unlimited number of registrations on Form S-3.
Beginning 12 months after the effective date of this offering, the holder of
the shares of our common stock to be issued upon the conversion of our
outstanding series B preferred stock may request that we file one registration
statement. Subject to the preference rights of the holders of common stock to
be issued upon the conversion of the series A preferred stock and subject to
certain limitations, beginning 12 months after the effective date of this
offering, the holders of the shares of our common stock to be issued upon the
conversion of our outstanding series C or D preferred stock may require that we
file one registration statement. They may also request that we file an
unlimited number of registrations on Form S-3, subject to preference rights of
the holders of common stock to be issued upon the conversion of the series A
preferred stock. Upon such a request, we generally will be required to use our
best efforts to effect any such registration. In addition, if we propose to
register any of our common stock, either for our own account or the account of
stockholders, we are required to notify the holders described above and,
subject to certain limitations, to include in such registration the shares of
our common stock acquired upon conversion of the preferred stock requested to
be included. Registration of shares of common stock pursuant to the exercise of
these registration rights would result in such shares becoming freely tradable
without restriction under the Securities Act of 1933 immediately upon the
effectiveness of such registration and may adversely affect our stock price. In
addition, we are generally obligated to bear the expenses, other than
underwriting discounts and sales commissions, of any such registration. The
registration rights associated with the series A preferred stock terminate on
December 31, 2007. The registration rights associated with the series B and C
preferred stock terminate six years following the effective date of this
offering and the registration rights associated with the series D preferred
stock terminate three years following such date.

Stockholders' Meeting

  Our next annual meeting of stockholders will be held in 2001.

Limitations on Liability

  Our certificate of incorporation limits or eliminates the liability of our
directors to us or our stockholders for monetary damage to the fullest extent
permitted by the Delaware General Corporation Law. As permitted by the Delaware
General Corporation Law, our certificate of incorporation provides that our
directors will not be personally liable to us or our stockholders for monetary
damages for a breach of fiduciary duty as a director, except for liability:

  . for any breach of such person's duty of loyalty;

  . for acts or omissions not in good faith or involving intentional
    misconduct or a knowing violation of law;

  . for unlawful payments of dividends or unlawful stock repurchases or
    redemptions; and

  . for any transaction resulting in receipt by such person of an improper
    personal benefit.

                                       73
<PAGE>

  Our certificate of incorporation also contains provisions indemnifying our
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law.

  We currently have directors' and officers' liability insurance to provide our
directors and officers with insurance coverage for losses arising from claims
based on breaches of duty, negligence, errors and other wrongful acts.

Anti-Takeover Effects of Provisions of Charter Documents and Delaware Law

  Upon the closing of this offering our certificate of incorporation will
provide for the division of our board of directors into three classes. Each
class must be as nearly equal in number as possible. Additionally, each class
must serve a three-year term. The terms of each class are staggered so that
each term ends in a different year over a three-year period. A director may
only be removed for cause and only by the vote of more than 50% of the shares
entitled to vote for the election of directors. Our certificate of
incorporation prohibits stockholder action by written consent and provides that
special meetings of the stockholders may be called only by our chairman or by a
majority of our board of directors.

  Our certificate of incorporation also provides that our board of directors
may establish the rights of, and cause us to issue, substantial amounts of
preferred stock without the need for stockholder approval. Further, our board
of directors may determine the terms, conditions, rights, privileges and
preferences of the preferred stock. Our board is required to exercise its
business judgment when making such determinations. Our board of directors' use
of the preferred stock may inhibit the ability of third parties to acquire us.
Additionally, our board may use the preferred stock to dilute the common stock
of entities seeking to obtain control of us. The rights of the holders of
common stock will be subject to, and may be adversely affected by, any
preferred stock that may be issued in the future. Our preferred stock provides
desirable flexibility in connection with possible acquisitions, financings and
other corporate transactions. However, it may have the effect of discouraging,
delaying or preventing a change in control of us. We have no present plans to
issue any shares of preferred stock. Our bylaws require that stockholders give
advance notice to our secretary of any nominations for director or other
business to be brought by stockholders at any stockholders' meeting. In
addition, our certificate of incorporation requires an affirmative vote of at
least 80% of our stockholders to amend our bylaws or to amend certain
provisions of our certificate of incorporation.

  The existence of these provisions in our certificate of incorporation and
bylaws could make it more difficult for third parties to acquire or attempt to
acquire control of us or substantial amounts of our common stock. These
provisions may also have the effect of preventing changes in our management.

  After this offering is completed, Section 203 of the Delaware General
Corporation Law will apply to us. Section 203 of the Delaware General
Corporation Law generally prohibits specific business combinations between a
Delaware corporation and an interested stockholder. An interested stockholder
is generally defined as a person who, together with any affiliates or
associates of such person, beneficially owns, or within three years did own,
directly or indirectly, 15% or more of the outstanding voting shares of a
Delaware corporation. The statute broadly defines business combinations to
include:

  . mergers;

  . consolidations;

  . sales or other dispositions of assets having an aggregate value in excess
    of 10% of the consolidated assets of the corporation or aggregate market
    value of all outstanding stock of the corporation; and

  . certain transactions that would increase the interested stockholder's
    proportionate share ownership in the corporation.

                                       74
<PAGE>

  The statute prohibits any such business combination for a period of three
years commencing on the date the interested stockholder becomes an interested
stockholder, unless:

  . the business combination is approved by the corporation's board of
    directors prior to the date the interested stockholder becomes an
    interested stockholder;

  . the interested stockholder acquired at least 85% of the voting stock of
    the corporation, other than stock held by directors who are also officers
    or by certain employee stock plans, in the transaction in which it
    becomes an interested stockholder; and

  . the business combination is approved by a majority of the board of
    directors and by the affirmative vote of at least two-thirds of the
    outstanding voting stock that is not owned by the interested stockholder.

  The Delaware General Corporation Law contains provisions enabling a
corporation to avoid Section 203's restrictions if stockholders holding a
majority of the corporation's voting stock approve an amendment to the
corporation's certificate of incorporation or bylaws to avoid the restrictions.
In addition, the restrictions contained in Section 203 are not applicable to
any of our existing stockholders. We have not and do not currently intend to
elect out of the application of Section 203 of the Delaware General Corporation
Law.

Nasdaq National Market

  We have applied to list our common stock on the Nasdaq National Market under
the trading symbol DDDP.

Transfer Agent and Registrar

  The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.

                        SHARES ELIGIBLE FOR FUTURE SALE

  Prior to this offering, there has been no public market for our common stock.
Future sales of substantial amounts of our common stock in the public market
could adversely affect prevailing market prices. Since no shares will be
available for sale shortly after this offering because of the contractual and
legal restrictions on resale described below, sales of substantial amounts of
common stock in the public market after these restrictions lapse could
adversely affect the prevailing market price and our ability to raise equity
capital in the future.

  Upon completion of this offering, we will have outstanding an aggregate of
18,237,300 shares of common stock, assuming no exercise of the underwriters'
over-allotment option, excluding 2,112,405 shares issuable upon exercise of
outstanding options. Of these shares, all of the 4,000,000 shares sold in this
offering will be freely tradable without restriction or further registration
under the Securities Act of 1933, unless such shares are purchased by
affiliates as that term is defined in Rule 144 under the Securities Act. The
remaining shares of common stock, excluding 2,112,405 shares issuable upon
exercise of outstanding options, held by existing stockholders are restricted
securities as that term is defined in Rule 144 under the Securities Act.
Restricted shares may be sold in the public market only if registered or if
they qualify for an exemption from registration described below under Rules
144, 144(k) or 701 promulgated under the Securities Act.

  Beginning 180 days after the date of this prospectus, substantially all
restricted shares subject to lock-up agreements between the underwriters and
most of our stockholders, including officers and directors, will become
eligible for sale in the public market under Rule 144(k), Rule 144 or Rule 701.
The lock-up agreements provide that the stockholders will not, directly or
indirectly, sell or otherwise dispose of any shares of common stock without the
prior written consent of Bear, Stearns & Co. Inc. for a period of 180 days from
the date of this prospectus. Bona fide gifts by individuals to immediate family
members or transfers by a

                                       75
<PAGE>

partnership to its partners are excepted from the restrictions of the lock-up
agreements, provided the transferee agrees to be bound by similar restrictions.
Bear, Stearns & Co. Inc. may release all or any portion of the securities
subject to the lock-up agreements without notice.

Rule 144

  Under Rule 144, beginning 90 days after the date the registration statement
of which this prospectus is a part is declared effective, a person, or persons
whose shares are aggregated, who has beneficially owned restricted shares for
at least one year, which includes the holding period of any prior owner other
than an affiliate, would generally be entitled to sell within any three-month
period a number of shares that does not exceed the greater of:

  . 1% of the outstanding shares of our common stock then outstanding, which
    will equal approximately 182,373 shares immediately after this offering;
    or

  . the average weekly trading volume of our common stock on the Nasdaq
    National Market during the four calendar weeks preceding the filing of a
    notice on Form 144 with respect to such sale.

  Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us.

Rule 144(k)

  Under Rule 144(k), a person who was not an affiliate of ours at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years, which includes the holding period
of any prior owner except an affiliate, is entitled to sell such shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144.

Rule 701

  In general, under Rule 701 of the Securities Act, any of our employees,
consultants or advisors, other than affiliates, who purchase or receives shares
from us in connection with a compensatory stock purchase plan or option plan or
other written agreement will be eligible to resell such shares beginning 90
days after the effective date of the registration statement of which this
prospectus is a part, subject only to the manner of sale provisions of Rule
144, and by affiliates under Rule 144 without compliance with its holding
period.

Registration Rights

  Upon completion of this offering, the holders of 13,186,602 shares of common
stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the Securities Act. When these shares are
registered under the Securities Act, they will be freely tradable unless held
by affiliates.

Equity Compensation Plans

  We intend to file registration statements under the Securities Act covering
2,112,045 shares of common stock issuable under our current equity compensation
plan upon exercise of outstanding options and 2,200,000 shares of common stock
available for issuance under our 2000 equity compensation plan, following the
closing of this offering. Thereafter, shares which are issued under these plans
will, subject to Rule 144 volume limitations applicable to affiliates, be
available for sale in the open market.

                                       76
<PAGE>

                                  UNDERWRITING

  Subject to the terms and conditions set forth in an agreement among the
underwriters and us, each of the underwriters named below, through their
representatives, Bear, Stearns & Co. Inc., Chase Securities Inc. and U.S.
Bancorp Piper Jaffray Inc., have severally agreed to purchase from us the
aggregate number of shares of our common stock set forth opposite its name
below:

<TABLE>
<CAPTION>
                                                                        Number
   Underwriter                                                         Of Shares
   -----------                                                         ---------
   <S>                                                                 <C>
   Bear, Stearns & Co. Inc............................................
   Chase Securities Inc...............................................
   U.S. Bancorp Piper Jaffray Inc.....................................
                                                                          ---
       Total..........................................................
                                                                          ===
</TABLE>

  The underwriting agreement provides that the obligations of the several
underwriters are subject to approval of various legal matters by their counsel
and to various other conditions, including delivery of legal opinions by our
counsel, the delivery of a letter by our independent auditors and the accuracy
of the representations and warranties made by us in the underwriting agreement.
Under the underwriting agreement, the underwriters are obliged to purchase and
pay for all of the above shares of our common stock if any are purchased.

Public Offering Price

  The underwriters propose to offer the shares of common stock directly to the
public at the offering price set forth on the cover page of this prospectus and
at that price less a concession not in excess of $   per share of common stock
to other dealers who are members of the National Association of Securities
Dealers, Inc. The underwriters may allow, and those dealers may reallow,
concessions not in excess of $   per share of common stock to other dealers.
After this offering, the offering price, concessions and other selling terms
may be changed by the underwriters. Our common stock is offered subject to
receipt and acceptance by the underwriters and subject to other conditions,
including the right to reject orders in whole or in part. The underwriters have
informed us that the underwriters do not expect to confirm sales of common
stock to any accounts over which they exercise discretionary authority.

  The following table summarizes the per share and total public offering price
of the shares of common stock in the offering, the underwriting compensation to
be paid to the underwriters by us and the proceeds of the offering, before
expenses, to us. The information presented assumes either no exercise or full
exercise by the underwriters of their over-allotment option.

<TABLE>
<CAPTION>
                                                               Total
                                                      ------------------------
                                                 Per  Without Over- With Over-
                                                Share   Allotment   Allotment
                                                ----- ------------- ----------
<S>                                             <C>   <C>           <C>
Public offering price.......................... $         $            $
Underwriting discounts and commissions payable
 by us.........................................
Proceeds, before expenses, to us...............
</TABLE>

  The underwriting discount and commission per share is equal to the public
offering price per share of our common stock less the amount paid by the
underwriters to us per share of common stock.

  We estimate total expenses payable by us in connection with this offering,
other than the underwriting discounts and commissions referred to above, will
be approximately $1.0 million.


                                       77
<PAGE>

Over-Allotment Option To Purchase Additional Shares

  We have granted a 30-day over-allotment option to the underwriters to
purchase up to an aggregate of 600,000 additional shares of our common stock
exercisable at the offering price less the underwriting discounts and
commissions, each as set forth on the cover page of this prospectus. If the
underwriters exercise this option in whole or in part, then each of the
underwriters will be obligated to purchase additional shares of common stock in
proportion to their respective purchase commitments as shown in the table set
forth above, subject to various conditions.

Indemnification And Contribution

  The underwriting agreement provides that we will indemnify the underwriters
against liabilities specified in the underwriting agreement under the
Securities Act or will contribute to payments that the underwriters may be
required to make in respect of those liabilities.

Lock-Up Agreements

  Our directors and officers and stockholders beneficially holding at least 1%
of our outstanding shares have agreed that they will not offer, sell or agree
to sell, directly or indirectly, or otherwise dispose of any shares of common
stock in the public market without the prior written consent of Bear, Stearns &
Co. Inc. for a period of 180 days from the date of this prospectus. Bona fide
gifts by individuals to immediate family members or transfers by a partnership
to its partners are excepted from the restrictions of the lock-up agreements,
provided the transferee agrees to be bound by similar restrictions.

  In addition, we have agreed that for a period of 180 days from the date of
this prospectus, we will not, without the prior written consent of Bear,
Stearns & Co. Inc., offer, sell or otherwise dispose of any shares of common
stock, except that we may issue, and grant options to purchase, shares of
common stock and restricted stock under our equity compensation plan. During
this lock-up period, subject to various conditions, we may also issue
additional equity securities in connection with collaborative and licensing
arrangements or to pay for possible acquisitions, so long as the recipients of
such securities are also subject to the 180 day lock-up period.

Nasdaq National Market Quotation

  Prior to this offering, there has been no public market for our common stock.
As a result, the initial offering price for the common stock will be determined
by negotiations between us and the representatives of the underwriters. Among
the factors to be considered in those negotiations, the primary factors will be
our results of operations in recent periods, estimates of our prospects and the
industry in which we compete, an assessment of our management, the general
state of the securities markets at the time of this offering and the prices of
similar securities of generally comparable companies. We have applied for
approval for the quotation of our common stock on the Nasdaq National Market,
under the symbol "DDDP." We cannot assure you, however, that an active or
orderly trading market will develop for the common stock or that the common
stock will trade in the public market after this offering at or above the
initial offering price.

Stabilization, Syndicate Short Position And Penalty Bids

  In order to facilitate this offering, persons participating in this offering
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock during and after this offering. Specifically, the
underwriters may over-allot or otherwise create a short position in the common
stock for their own account by selling more shares of common stock than we have
actually sold to them. The underwriters may elect to cover any such short
position by purchasing shares of common stock in the open market and may impose

                                       78
<PAGE>


penalty bids, under which selling concessions allowed to syndicate members or
other broker-dealers participating in this offering are reclaimed if shares of
common stock previously distributed in this offering are repurchased in
connection with stabilization transactions or otherwise. The effect of these
transactions may be to stabilize or maintain the market price at a level above
that which might otherwise prevail in the open market. The imposition of a
penalty bid may also affect the price of the common stock to the extent that it
discourages resales of the common stock. No representation is made as to the
magnitude or effect of any such stabilization or other transactions. Such
transactions may be effected on the Nasdaq National Market or otherwise and, if
commenced, may be discontinued at any time.

Directed Share Program

  At our request, the underwriters have reserved for sale at the initial public
offering price up to 200,000 shares of common stock to be sold in this offering
for sale to our directors, officers, employees, business associates, business
and legal advisors, vendors and related persons. Purchases of reserved shares
are to be made through an account at Bear, Stearns & Co. Inc. according to
Bear, Stearns & Co. Inc.'s procedures for opening an account and transacting in
securities. The number of shares available for sale to the general public will
be reduced to the extent that any reserved shares are purchased. Any reserved
shares not purchased by our directors, officers, employees, business
associates, business and legal advisors, vendors and related persons will be
offered by the underwriters to the general public on the same terms as the
other shares offered by this prospectus.

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

  Bear, Stearns & Co. Inc. was previously retained by us to identify and
provide advice with respect to potential transactions. Bear, Stearns & Co. Inc.
would be entitled to a fee, based on the value of the transaction as defined in
the engagement letter, if there is an agreement in respect of a covered
transaction prior to December 31, 2000.

                                       79
<PAGE>

                                 LEGAL MATTERS

  The validity of the shares of common stock offered hereby will be passed upon
for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. Certain
legal matters will be passed upon for the Underwriters by Coudert Brothers, New
York, New York.

                                    EXPERTS

  Our financial statements and schedule included in this prospectus and
elsewhere in the registration statement as of December 31, 1999 (consolidated)
and 1998 and for the years ended December 1999, 1998 and 1997 have been audited
by Richard A. Eisner & Company, LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein and
therein in reliance on said reports given upon the authority of said firm as
experts in accounting and auditing.

                        ADDITIONAL INFORMATION ABOUT US

  We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 with respect to the common stock offered hereby. This
prospectus, which constitutes a part of the registration statement, does not
contain all of the information set forth in the registration statement or the
exhibits and schedules which are part of the registration statement. For
further information with respect to us and our common stock, reference is made
to the registration statement and the exhibits and schedules. You may read and
copy any document we file at the Securities and Exchange Commission's public
reference facilities in Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information about the public reference rooms. Our Securities and
Exchange Commission filings are also available to the public from the
Securities and Exchange Commission's web site at http://www.sec.gov. Upon
completion of this offering, we will become subject to the information and
periodic reporting requirements of the Securities Exchange Act and, in
accordance therewith, will file periodic reports, proxy statements and other
information with the Securities and Exchange Commission. Such periodic reports,
proxy statements and other information will be available for inspection and
copying at the Securities and Exchange Commission's public reference rooms and
the web site of the Securities and Exchange Commission referred to above.

                                       80
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                                    Contents

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Financial Statements

  Independent auditors' report............................................ F-2

  Balance sheets as of March 31, 2000 (consolidated) (unaudited) and
   December 31, 1999 (consolidated) and 1998.............................. F-3

  Statements of operations for the three-month periods ended March 31,
   2000 (consolidated) and 1999 (unaudited) and the years ended December
   31, 1999, 1998 and 1997................................................ F-4

  Statements of changes in capital deficiency for the three-month period
   ended March 31, 2000 (consolidated) (unaudited) and the years ended
   December 31, 1999, 1998 and 1997....................................... F-5

  Statements of cash flows for the three-month periods ended March 31,
   2000 (consolidated) and 1999 (unaudited) and the years ended December
   31, 1999, 1998 and 1997................................................ F-6

  Notes to financial statements........................................... F-7
</TABLE>

                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
3-Dimensional Pharmaceuticals, Inc.
Exton, Pennsylvania

  We have audited the accompanying balance sheets of 3-Dimensional
Pharmaceuticals, Inc. as of December 31, 1999 (consolidated) and 1998, and the
related statements of operations, changes in capital deficiency and cash flows
for each of the years in the three-year period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

  In our opinion, the financial statements enumerated above present fairly, in
all material respects, the financial position of 3-Dimensional Pharmaceuticals,
Inc. as of December 31, 1999 (consolidated) and 1998, and the results of
operations and cash flows for each of the years in the three-year period ended
December 31, 1999 in conformity with generally accepted accounting principles.

Richard A. Eisner & Company, LLP

New York, New York
February 25, 2000

With respect to last paragraph of Note G [1]

March 31, 2000

With respect to Note B [12]

July   , 2000

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

  The foregoing report is in the form that will be signed upon the completion
of the 1-for-2.8 reverse stock split and the change in authorized shares
described in Note B [12] to the financial statements.

Richard A. Eisner & Company, LLP

New York, New York

July 11, 2000


                                      F-2
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                           Pro Forma                       December 31,
                           March 31,    March 31,    --------------------------
                             2000          2000          1999          1998
                          -----------  ------------  ------------  ------------
                          (unaudited)
                           (Note P)    (unaudited)
                                            (consolidated)
<S>                       <C>          <C>           <C>           <C>
ASSETS
Current assets:
  Cash and cash
   equivalents..........  $22,063,000  $ 22,063,000  $  7,645,000  $  2,439,000
  Marketable
   securities...........                                              7,287,000
  Prepaid expenses and
   other current
   assets...............      298,000       298,000       243,000       271,000
  Grants and contracts
   receivable...........      257,000       257,000        94,000       378,000
                          -----------  ------------  ------------  ------------
   Total current
    assets..............   22,618,000    22,618,000     7,982,000    10,375,000
Property and equipment,
 net....................    3,997,000     3,997,000     4,314,000     5,210,000
Other assets............      190,000       190,000       184,000       127,000
                          -----------  ------------  ------------  ------------
                          $26,805,000  $ 26,805,000  $ 12,480,000  $ 15,712,000
                          ===========  ============  ============  ============
LIABILITIES AND CAPITAL
 DEFICIENCY
Current liabilities:
  Accounts payable and
   accrued expenses.....  $ 1,917,000     1,917,000  $  2,737,000  $  1,272,000
  Deferred income.......    1,839,000     1,839,000       888,000       543,000
  Current portion of
   long-term debt.......    1,140,000     1,140,000     1,139,000     1,033,000
  Current portion of
   settlement accrual...    1,000,000     1,000,000     1,000,000
                          -----------  ------------  ------------  ------------
   Total current
    liabilities.........    5,896,000     5,896,000     5,764,000     2,848,000
  Notes payable--
   dividends and accrued
   interest.............                    701,000       685,000       144,000
  Long-term debt, less
   current portion......    2,020,000     2,020,000     2,330,000     3,270,000
  Convertible notes
   payable and accrued
   interest.............                               10,115,000
  Long-term portion of
   settlement accrual...                                  500,000
                          -----------  ------------  ------------  ------------
                            7,916,000     8,617,000    19,394,000     6,262,000
                          -----------  ------------  ------------  ------------
Commitment and
 contingency (Notes L
 and M)
Redeemable Convertible
 Series A preferred
 stock--$.001 par value;
 35,136,963 shares
 authorized, 34,897,488,
 25,325,240 and
 25,325,240 issued and
 outstanding at March
 31, 2000 and December
 31, 1999 and 1998,
 respectively (aggregate
 liquidating preference
 $63,721,218 at March
 31, 2000 and
 $35,004,474 at December
 31, 1999 and 1998) (No
 shares outstanding pro
 forma).................                 63,550,000    34,834,000    34,834,000
                                       ------------  ------------  ------------
Capital deficiency:
  Convertible preferred
   stock--$.001 par
   value; 6,000,000
   shares authorized in
   aggregate, 1,400,000
   issued and
   outstanding at March
   31, 2000 and December
   31, 1999 and 1998
   (aggregate
   liquidating
   preference
   $3,250,000) (No
   shares outstanding
   pro forma)...........                      1,000         1,000         1,000
  Common stock--$.001
   par value; 15,994,613
   shares authorized,
   936,045, 745,418, and
   733,979 shares
   outstanding at March
   31, 2000 and December
   31, 1999 and 1998,
   respectively
   (13,973,369 shares
   outstanding pro
   forma)...............       14,000         1,000         1,000         1,000
  Additional paid-in
   capital..............   68,839,000     4,600,000     3,429,000     3,875,000
  Notes receivable from
   officers.............     (589,000)     (589,000)      (70,000)     (121,000)
  Deferred
   compensation.........     (524,000)     (524,000)
  Accumulated deficit...  (48,851,000)  (48,851,000)  (45,109,000)  (29,140,000)
                          -----------  ------------  ------------  ------------
   Total capital
    deficiency..........   18,889,000   (45,362,000)  (41,748,000)  (25,384,000)
                          -----------  ------------  ------------  ------------
                          $26,805,000  $ 26,805,000  $ 12,480,000  $ 15,712,000
                          ===========  ============  ============  ============
</TABLE>

                       See notes to financial statements

                                      F-3
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                              Three Months Ended
                                  March 31,                  Year ended December 31,
                          --------------------------  ---------------------------------------
                               2000         1999          1999          1998         1997
                          -------------- -----------  ------------  ------------  -----------
                          (consolidated)
                                 (unaudited)
<S>                       <C>            <C>          <C>           <C>           <C>
Grant and research
 revenue................   $ 1,484,000   $ 1,379,000  $  4,489,000  $  5,095,000  $ 3,580,000
                           -----------   -----------  ------------  ------------  -----------
Costs and expenses:
  Research and
   development..........     3,425,000     2,975,000    12,136,000    10,984,000    6,517,000
  General and
   administrative.......     1,537,000     1,155,000     6,525,000     4,458,000    3,000,000
  Litigation
   settlement...........                                 1,500,000
                           -----------   -----------  ------------  ------------  -----------
                             4,962,000     4,130,000    20,161,000    15,442,000    9,517,000
                           -----------   -----------  ------------  ------------  -----------
Loss from operations....    (3,478,000)   (2,751,000)  (15,672,000)  (10,347,000)  (5,937,000)
Interest income.........        87,000       125,000       328,000       868,000      521,000
Interest expense........      (351,000)     (114,000)     (625,000)     (232,000)    (149,000)
                           -----------   -----------  ------------  ------------  -----------
Net loss................    (3,742,000)   (2,740,000)  (15,969,000)   (9,711,000)  (5,565,000)
Declared and accrued
 cumulative dividends on
 preferred stock........      (167,000)     (167,000)     (669,000)     (144,000)
                           -----------   -----------  ------------  ------------  -----------
Net loss applicable to
 common stock...........   $(3,909,000)  $(2,907,000) $(16,638,000) $ (9,855,000) $(5,565,000)
                           ===========   ===========  ============  ============  ===========
Basic and diluted net
 loss per common share--
 historical.............   $     (5.92)  $     (5.01) $     (27.37) $     (22.20) $    (27.55)
                           -----------   -----------  ------------  ------------  -----------
Weighted average common
 shares outstanding--
 historical.............       660,000       580,000       608,000       444,000      202,000
                           -----------   -----------  ------------  ------------  -----------
Basic and diluted net
 loss per common share--
 pro forma..............   $      (.36)               $      (1.57)
                           ===========                ============
Weighted average common
 shares outstanding--pro
 forma..................    10,288,000                  10,198,000
                           ===========                ============
</TABLE>



                       See notes to financial statements

                                      F-4
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                  STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY

<TABLE>
<CAPTION>
                     Preferred Stock   Common Stock
                     ---------------- ---------------- Additional      Notes                                   Total
                                Par              Par    Paid-in     Receivable     Deferred   Accumulated     Capital
                      Shares   Value   Shares   Value   Capital    From Officers Compensation   Deficit      Deficiency
                     --------- ------ --------  ------ ----------  ------------- ------------ ------------  ------------
<S>                  <C>       <C>    <C>       <C>    <C>         <C>           <C>          <C>           <C>
Balance--December
 31, 1996..........  1,000,000 $1,000  416,474  $1,000 $2,663,000                             $(13,864,000) $(11,199,000)
Common stock issued
 pursuant to
 exercise of stock
 options, warrants
 and stock grants..                    394,810            325,000     (310,000)                                   15,000
Issuance of Series
 C preferred stock,
 net of offering
 costs of $12,000..    400,000                            988,000                                                988,000
Forgiveness of
 loans made to
 officer...........                                                     59,000                                    59,000
Net loss for the
 year..............                                                                             (5,565,000)   (5,565,000)
                     --------- ------ --------  ------ ----------   ----------    ---------   ------------  ------------
Balance--December
 31, 1997..........  1,400,000  1,000  811,284   1,000  3,976,000     (251,000)                (19,429,000)  (15,702,000)
Common stock issued
 pursuant to
 exercise of stock
 options, warrants
 and stock grants..                    105,790             93,000                                                 93,000
Common stock
 reacquired from
 former chief
 executive
 officer...........                   (183,095)          (116,000)      67,000                                   (49,000)
Dividend declared
 on Series A-1
 preferred.........                                      (144,000)                                              (144,000)
Compensation charge
 in connection with
 acceleration of
 vesting terms on
 restricted shares
 and options.......                                        66,000                                                 66,000
Forgiveness of
 loans made to
 officer...........                                                     63,000                                    63,000
Net loss for the
 year..............                                                                             (9,711,000)   (9,711,000)
                     --------- ------ --------  ------ ----------   ----------    ---------   ------------  ------------
Balance--December
 31, 1998..........  1,400,000  1,000  733,979   1,000  3,875,000     (121,000)                (29,140,000)  (25,384,000)
Common stock issued
 pursuant to
 exercise of stock
 options...........                     11,439             11,000                                                 11,000
Value of options
 issued as
 compensation to
 consultants.......                                        18,000                                                 18,000
Value of warrants
 issued in
 connection with
 Bridge loan.......                                        26,000                                                 26,000
Dividends declared
 on Series A-1
 preferred.........                                      (501,000)                                              (501,000)
Forgiveness of
 loans made to
 officers..........                                                     51,000                                    51,000
Net loss for the
 year..............                                                                            (15,969,000)  (15,969,000)
                     --------- ------ --------  ------ ----------   ----------    ---------   ------------  ------------
Balance--December
 31, 1999..........  1,400,000  1,000  745,418   1,000  3,429,000      (70,000)                (45,109,000)  (41,748,000)
Common stock issued
 pursuant to
 exercise of stock
 options, warrants
 and stock grants..                    190,627            536,000     (519,000)                                   17,000
Value of options
 issued to
 consultants.......                                       111,000                                                111,000
Deferred
 compensation
 charge in
 connection with
 option grant......                                       524,000                 $(524,000)                           0
Net loss for the
 period............                                                                             (3,742,000)   (3,742,000)
                     --------- ------ --------  ------ ----------   ----------    ---------   ------------  ------------
Balance--March 31,
 2000 (unaudited)..  1,400,000 $1,000  936,045  $1,000 $4,600,000   $(589,000)    $(524,000)  $(48,851,000) $(45,362,000)
                     ========= ====== ========  ====== ==========   ==========    =========   ============  ============
</TABLE>
                       See notes to financial statements

                                      F-5
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                             Three Months Ended
                                 March 31,                 Year Ended December 31,
                         --------------------------  --------------------------------------
                              2000         1999          1999         1998         1997
                         -------------- -----------  ------------  -----------  -----------
                         (consolidated)
                                (unaudited)
<S>                      <C>            <C>          <C>           <C>          <C>
Cash flows from
 operating activities:
Net loss...............   $(3,742,000)  $(2,740,000) $(15,969,000) $(9,711,000) $(5,565,000)
Adjustments to
 reconcile net loss to
 net cash used in
 operating activities:
 Depreciation and
  amortization.........       364,000       405,000     1,565,000    1,486,000      860,000
 Amortization of
  premium of short-term
  investments..........                      11,000        19,000       62,000       43,000
 Valuation of options
  and warrants.........       111,000                      44,000
 Interest paid with
  preferred stock......       353,000                                                23,000
 Compensation charge in
  connection with
  acceleration of
  vesting of options
  and stock and other..                                    51,000      129,000       59,000
 Changes in:
  Grants and contracts
   receivable..........      (163,000)       46,000       284,000      (78,000)    (247,000)
  Other assets.........       (60,000)     (202,000)      (24,000)     273,000     (461,000)
  Accounts payable and
   accrued expenses....      (917,000)      (64,000)    1,620,000      106,000      356,000
  Settlement accrual...      (500,000)                  1,500,000
  Deferred income......       951,000      (194,000)      345,000     (675,000)   1,217,000
                          -----------   -----------  ------------  -----------  -----------
   Net cash used in
    operating
    activities.........    (3,603,000)   (2,738,000)  (10,565,000)  (8,408,000)  (3,715,000)
                          -----------   -----------  ------------  -----------  -----------
Cash flows from
 investing activities:
 Purchases of
  investment
  securities...........                                             (8,334,000)  (9,558,000)
 Sale and maturities of
  investment
  securities...........                   1,500,000     7,267,000    7,500,000    3,000,000
 Acquisition of
  subsidiary, net of
  $25,000 cash
  acquired.............                                    (5,000)
 Capital expenditures..       (48,000)      (84,000)     (278,000)  (3,999,000)    (686,000)
                          -----------   -----------  ------------  -----------  -----------
   Net cash provided by
    (used in) investing
    activities.........       (48,000)    1,416,000     6,984,000   (4,833,000)  (7,244,000)
                          -----------   -----------  ------------  -----------  -----------
Cash flows from
 financing activities:
 Proceeds from sale of
  stock and exercise of
  options and
  warrants.............    18,899,000                      11,000   10,490,000   13,235,000
 Payment for stock
  repurchased..........                                                (49,000)
 Loans made to officers
  for purchase of
  stock................      (519,000)                                             (310,000)
 Proceeds from issuance
  of long-term debt and
  notes payable........                                              3,924,000
 Proceeds from issuance
  of short-term debt...                                10,000,000
 Reduction of long-term
  debt and notes
  payable..............      (311,000)     (323,000)   (1,224,000)  (1,123,000)    (840,000)
                          -----------   -----------  ------------  -----------  -----------
   Net cash (used in)
    provided by
    financing
    activities.........    18,069,000      (323,000)    8,787,000   13,242,000   12,085,000
                          -----------   -----------  ------------  -----------  -----------
Net increase (decrease)
 in cash and cash
 equivalents...........    14,418,000    (1,645,000)    5,206,000        1,000    1,126,000
Cash and cash
 equivalents--beginning
 of period.............     7,645,000     2,439,000     2,439,000    2,438,000    1,312,000
                          -----------   -----------  ------------  -----------  -----------
Cash and cash
 equivalents--end of
 period................   $22,063,000   $   794,000  $  7,645,000  $ 2,439,000  $ 2,438,000
                          ===========   ===========  ============  ===========  ===========
Supplemental
 disclosures of cash
 flow information:
 Cash paid for
  interest.............   $    95,000   $   110,000  $    446,000  $   232,000  $   139,000
 Noncash investing and
  financing activities:
 Equipment purchased
  under capital
  leases...............                 $   390,000  $    390,000               $ 1,044,000
 Dividend declared but
  not paid.............                 $   167,000  $    501,000  $   144,000
 Note receivable
  exchanged for common
  stock................                                            $    67,000
 Notes payable
  (including interest
  due of $23,000)
  exchanged for
  redeemable preferred
  stock................                                                         $   523,000
 Notes payable
  (including interest
  due of $353,000)
  exchanged for
  redeemable preferred
  stock................   $10,353,000
</TABLE>

                       See notes to financial statements

                                      F-6
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                         NOTES TO FINANCIAL STATEMENTS

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

NOTE A--DESCRIPTION OF BUSINESS

  3-Dimensional Pharmaceuticals, Inc. (the "Company") was incorporated on March
11, 1993. The Company is integrating advanced technologies in structural
biology, combinatorial chemistry, high throughput screening and computerized
drug design, for the cost-effective discovery of small molecule
pharmaceuticals.

  The Company has incurred net losses since inception and may incur additional
losses for at least the next several years. Through March 31, 2000,
substantially all of the Company's revenue has been derived from corporate
collaborations, license agreements and government grants. The Company expects
that substantially all of its revenue for the foreseeable future will result
from payments from these sources and from the outlicensing of technologies and
of internally developed preclinical and clinical drug candidates. The Company
expects to spend significant amounts to enhance its drug discovery technologies
and to fund research and development of its internal pipeline of drug
candidates. In order to achieve profitability the Company must continue to
develop products and technologies from which it can derive revenue, including
through existing and future collaborations. Accordingly, the Company may never
achieve profitability.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] Principles of Consolidation

  The consolidated financial statements at December 31, 1999 and March 31, 2000
and for the three months ended March 31, 2000 include the accounts of the
Company and its wholly-owned subsidiary which was acquired in 1999 for
approximately $30,000 (including cost of acquisition). The subsidiary is an
inactive entity incorporated in Germany which had cash of $25,000 and no
liabilities at the date of acquisition. All material intercompany balances and
transactions have been eliminated in consolidation. Financial statements for
1998 and 1997 include only the accounts of the Company as it had no
subsidiaries during such years.

[2] Cash and cash equivalents and marketable securities:

  The Company considers all highly liquid investment instruments purchased with
a maturity of three months or less to be cash equivalents.

  Marketable securities include investments with original maturities of greater
than three months having a remaining maturity of less than 24 months. These
marketable securities are treated for accounting purposes as available-for-sale
and as such are reported at their fair market values. At December 31, 1998 the
securities are carried at amortized cost which approximates fair market value.

[3] Property and equipment:

  Property and equipment are recorded at cost and depreciated using the
straight-line method over estimated useful lives of 2 to 5 years. Equipment
acquired under capital lease agreements is amortized over the term of the
lease. Leasehold improvements are amortized over the lesser of the economic
useful life of the improvement or the term of the lease.

[4] Concentration of credit risk:

  The Company invests its excess cash in U.S. and U.S. Government agency
securities and debt instruments of financial institutions and corporations with
strong credit ratings. The Company has established guidelines regarding
diversification of its investments and their maturities which should maintain
safety and liquidity. The

                                      F-7
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

Company has not experienced any losses on its investments. At December 31,
1998, marketable securities consisted of corporate debt securities with
maturities of one year or less.

[5] Research and development:

  Research and development costs are expensed as incurred.


[6] Revenue recognition:

  Revenue from corporate collaborations, is recognized over the period that the
Company performs research and development activities under the terms of the
agreements. Such revenue includes periodic payments for research and
development activities and related nonrefundable up-front technology access
fees and/or technology or software licensing fees. Revenue from nonrefundable
up-front fees for the licensing of technology, products or software under
agreements which do not require the Company to perform research or development
activities or other significant future performance obligations is recognized at
the time the agreement is executed or the software is delivered. Revenue
resulting from the achievement of milestone events stipulated in the agreements
is recognized when the milestone is achieved. Up-front fees and other amounts
received in excess of revenue recognized are recorded as deferred income.

  In the year ended December 31, 1999, the Company changed its method of
recognizing revenue with respect to nonrefundable up-front fees received under
corporate collaboration research agreements to the method described above to
conform with the requirements of an accounting bulletin on revenue recognition
issued by the staff of the Securities and Exchange Commission in December 1999
and retroactively restated its prior years financial statements to reflect the
application of the new method. Prior to the change the Company recognized
revenue from such fees upon the execution of the agreement.

[7] Accounting for stock-based compensation:

  The Company accounts for its stock-based compensation plans under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." In
October 1995, the Financial Accounting Standards Board issued Statement No.
123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which
establishes a fair value-based method of accounting for stock-based
compensation plans. The Company has adopted the disclosure-only alternative
under SFAS No. 123, which requires disclosure of the pro forma effects on net
loss and net loss per share as if stock-based employee compensation was
measured under SFAS No. 123, as well as certain other information (see Note
J[2]). The Company accounts for stock based compensation to nonemployees using
the fair value method in accordance with SFAS No. 123 and Emerging Issues Task
Force (EITF) 96-18. The Company has recognized deferred stock compensation
related to certain stock option grants (see Note J[2]).

[8] Use of estimates:

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

                                      F-8
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

[9] Per share data:

  Historical basic and diluted net loss per common share is computed by
dividing the net loss increased by declared and accrued cumulative dividends on
the Series A-1 preferred stock for the period by the weighted average number of
common shares outstanding during the period, exclusive of outstanding common
stock which are subject to repurchase and are nonvested. As their effects would
be anti-dilutive, shares of common stock issuable upon conversion of preferred
stock and exercise of outstanding options and warrants as well as outstanding
common shares which are nonvested during the periods were not included in
computing diluted net loss per common share. Securities and the related number
of common shares not included in the diluted computation that could potentially
dilute basic earnings per share, if any, in the future are as follows:

<TABLE>
<CAPTION>
                                                           Dilutive Potential
                                                              Common Shares
                                                         -----------------------
                                                         March 31,  December 31,
                                                            2000        1999
                                                         ---------- ------------
   <S>                                                   <C>        <C>
   Preferred stock (see below).......................... 12,963,388   9,544,729
   Options..............................................  2,084,255   2,022,860
   Warrants.............................................  1,842,893   1,842,893
   Common stock--subject to repurchase..................    245,174     114,955
                                                         ----------  ----------
                                                         17,135,710  13,525,437
                                                         ==========  ==========
</TABLE>

  The preferred stock will automatically convert into common stock on a 1 for
 .36 basis and certain nonvested common stock will automatically become vested
upon completion of an initial public offering of the Company's common stock.
Accordingly, pro forma basic and diluted net loss per common share has been
calculated by dividing net loss by the weighted average outstanding common
shares as if the preferred stock were converted into common stock, and certain
nonvested common stock was vested, as of the original date of issuance. Unpaid
cumulative dividends converted into notes payable together with accrued
interest will also automatically convert into common stock upon completion of
an initial public offering based on the initial public offering price. No
common stock issuable in connection therewith have been included in the pro
forma computation as their effect could not be significant.

[10] Comprehensive loss:

  Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" requires the reporting of all changes in equity of an enterprise that
result from recognized transactions and other economic events of the period
other than transactions with owners in their capacity as owners. The Company
had no such other comprehensive items to report.

[11] Unaudited interim financial statements:

  The financial information presented as of March 31, 2000 and for the three-
month periods ended March 31, 2000 and 1999 is unaudited, but in the opinion of
management contains all adjustments (consisting only of normally recurring
adjustments) necessary for a fair presentation of such financial information.
Results of operations for interim periods are not necessarily illustrative of
those to be achieved for full fiscal years.

[12] Stock split

  On July  , 2000, the Company expects to receive board and stockholder consent
for a 1-for-2.8 reverse stock split of the Company's common stock, to become
effective prior to the effective date of the initial public

                                      F-9
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

offering. All common share data have been retroactively restated to reflect the
reverse stock split. In addition, the certificate of incorporation will be
amended prior to the effective date to authorize 45,000,000 shares of common
stock and 5,000,000 shares of preferred stock.

NOTE C--RESEARCH AND COLLABORATION AGREEMENTS

  In August 1995, the Company commenced a research project in which it was the
recipient of a three-year Advanced Technology Program ("ATP") award totalling
up to $2 million. The ATP is sponsored by the National Institute of Standards
and Technology. During 1998, the project was completed and all available
funding was utilized.

  In September 1996, the Company commenced a research project in which it was
the recipient of a two-year Small Business Innovative Research ("SBIR") award
totalling $750,000. The SBIR is sponsored by the National Institute of Health.
During 1998, the project was completed and all available funding was utilized.

  In October 1996, the Company entered into a research collaboration with Merck
KGaA ("Merck"). During the initial two year term of the agreement and one year
extension, Merck provided research and development funding of approximately
$2.7 million. In addition, Merck agreed to pay the Company product development
milestone payments and royalties on the sales of certain resulting products. No
such payments were received. In 1996, Merck made an equity investment in the
Company, purchasing 1,000,000 shares of preferred stock at $2.25 per share. The
agreement expired in October 1999.

  In June 1997, the Company entered into license agreements with Wyeth-Ayerst
Laboratories ("Wyeth"), for the development and marketing of the Company's
small molecule thrombin inhibitors. On June 1, 1999 the parties agreed to
terminate the agreements with all rights to the program returning to the
Company. Upon the signing of the original agreements, Wyeth made a $1 million
equity investment in the Company, consisting of 400,000 shares of preferred
stock at $2.50 per share. During the term of the agreements, the Company
received up-front fees and research funding aggregating approximately $5.6
million.

  In December 1997, the Company entered into a research collaboration with
Heska Corporation ("Heska") to assist in the discovery and development of new
veterinary therapeutic agents. The agreement originally had a two year research
term which has been extended until July 2000. The Company has received up-front
payments and research funding aggregating approximately $2.5 million. In
addition, the Company could receive milestone payments of up to $10.5 million,
depending on whether stipulated milestones are met, for the first product
developed and could receive additional milestones if subsequent products are
developed. In addition, the Company will receive royalties on sales of
resulting products.

  In October 1998, the Company entered into a collaborative research and
license agreement with the Agricultural Products Division of E.I. DuPont de
Nemours ("DuPont") which allows DuPont to utilize the Company's
DirectedDiversity technology to develop and refine agrochemicals. The Company
has received up-front license fees and milestone payments of $.4 million and is
eligible to receive additional technology licensing fees during the term of the
collaboration. The Company could also receive milestone payments aggregating up
to $3.7 million depending on whether stipulated milestones are met and
depending on the Company's level of contribution to the optimization of the
compound. In addition, the Company will receive royalties on the sales of any
resulting products.

  In October 1999, the Company entered into a research collaboration and
license agreement with AgrEvo GmbH, now part of Aventis Crop Protection GmbH
("Aventis") under which the Company will utilize its DirectedDiversity
Technology in the discovery of compounds applicable to plant and pest
management and

                                      F-10
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

animal health. The initial term of the agreement is for two years. Under the
terms of the agreement, the Company received an upfront payment and research
funding of approximately $1.0 million and is eligible to receive additional
fees for payment for delivery of compounds, research and development funding
and license fees totaling $2.7 million. The Company could receive milestone
payments of up to $1.75 million, depending on whether stipulated milestones are
met, for each compound developed. The Company will also receive royalties on
sales of resulting products.

  In December 1999, the Company entered into a collaboration with Boehringer
Ingelheim Pharmaceuticals, Inc. ("BIPI") to use our DirectedDiversity
technology to assist BIPI in the discovery of new drugs for specific biological
targets in humans. In February 2000 BIPI exercised its option and entered into
an agreement with a research initial term of two years. The Company has
received upfront fees and research funding aggregating approximately $1.2
million and will receive additional committed research funding of approximately
$2.1 million over the initial term of the collaboration. The Company could also
receive milestone payments up to $2.4 million, depending on whether stipulated
milestones are met, for the first product developed and are eligible to receive
additional milestones if subsequent products are developed. The Company is also
entitled to receive royalties on the sales of resulting products.

  On February 11, 2000, the Company entered into a collaboration with DuPont
Pharmaceuticals Company ("DuPont Pharmaceuticals") under which the Company
would utilize its DirectedDiversity technology to develop new drugs for
specific biological targets. The Company has received upfront fees and research
funding aggregating approximately $0.6 million and will receive additional
committed research funding of approximately $1.8 million over the initial
research term of the collaboration. The Company could also receive milestone
payments of up to $6 million, depending on whether stipulated milestones are
met, for the first product developed and could receive additional milestones if
subsequent products are developed. The Company is also entitled to royalty
payments on any resulting products. The Company also entered into an additional
agreement, which gives Dupont Pharmaceuticals an option for a non-exclusive
license to the Company's DirectedDiversity patents in support of their internal
and collaborative research programs.

  On March 1, 2000, the Company was awarded and commenced a research project in
which it was the recipient of a two-year Small Business Innovative Research
("SBIR") Award totaling up to $1 million. The SBIR is sponsored by the National
Institutes of Health.

  Revenue from foreign corporate collaborators comprised 25%, 23%, 17% and 20%
of total collaboration revenues for the three months ended March 31, 2000 and
the years ended December 31, 1999, 1998 and 1997, respectively.

NOTE D--PROPERTY AND EQUIPMENT

  Property and equipment, stated at cost, is summarized as follows:

<TABLE>
<CAPTION>
                                                            December 31,
                                             March 31,  ---------------------
                                                2000       1999       1998
                                             ---------- ---------- ----------
   <S>                                       <C>        <C>        <C>
   Laboratory equipment, computer software
    and office equipment.................... $7,122,000 $7,075,000 $6,438,000
   Leasehold improvements...................  2,340,000  2,340,000  2,308,000
                                             ---------- ---------- ----------
                                              9,462,000  9,415,000  8,746,000
   Less accumulated depreciation and
    amortization............................  5,465,000  5,101,000  3,536,000
                                             ---------- ---------- ----------
                                             $3,997,000 $4,314,000 $5,210,000
                                             ========== ========== ==========
</TABLE>


                                      F-11
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

NOTE E--NOTES RECEIVABLE FROM OFFICERS

  At December 31, 1999 the Company has notes receivable from three officers
aggregating $70,000 which are collateralized by the officers' beneficial
interest in an aggregate of 59,375 shares of common stock of the Company. Under
the terms of the notes, interest accrues on the unpaid principal at
approximately 6% per annum. Principal and accrued interest is to be paid in
four equal installments on the anniversary dates of the loans. In February
1998, 1999 and 2000, the Company forgave the first, second and third
installments of the principal and interest due on two of the loans. In
September 1998 and 1999, the Company forgave the first and second installment
on the third loan. In connection with forgiving certain portions of principal
and interest related to these loans, compensation expense was recorded in 1999
and 1998, respectively, in the amount of approximately $58,000 and $77,000.

  The notes mature as follows:

<TABLE>
   <S>                                                                   <C>
   2000................................................................. $19,000
   2001.................................................................  51,000
</TABLE>

  In March 2000, the Company made a loan to an additional officer in the amount
of $519,000 to purchase 176,871 restricted shares of the Company's common
stock. The loan is collateralized by the officer's beneficial interest in such
shares. Under the terms of the note, interest accrues on the unpaid principal
at approximately 7% per annum. Principal and accrued interest is to be paid in
four equal installments, with the first installment due six months from the
date of the loan and later installments due on the anniversary dates of the
first loan payment.

  Notes receivable from officers are classified as a portion of capital
deficiency.

NOTE F--ACCOUNTS PAYABLE AND ACCRUED EXPENSES

  Accounts payable and accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                              December 31,
                                               March 31,  ---------------------
                                                  2000       1999       1998
                                               ---------- ---------- ----------
   <S>                                         <C>        <C>        <C>
   Professional fees.......................... $  981,000 $1,454,000 $  186,000
   Equipment..................................    119,000    120,000    100,000
   Payroll and related expenses...............    366,000    739,000    393,000
   Trade......................................    451,000    424,000    593,000
                                               ---------- ---------- ----------
                                               $1,917,000 $2,737,000 $1,272,000
                                               ========== ========== ==========
</TABLE>

NOTE G--DEBT

[1] Convertible notes payable:

  On November 18, 1999, the Company closed on a convertible note financing for
$10 million. The notes bear interest at the rate of prime + 1% per annum (9.5%
through December 31, 1999). Principal and interest are due on the first
anniversary of the closing date (the "Maturity Date"). If prior to the Maturity
Date, the Company raises an additional $10 million through the sale of
preferred stock, the notes and any unpaid accrued interest will convert into
the preferred stock on the same terms and conditions as given to the new
investors. In

                                      F-12
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

the event of any consolidation or merger of the Company or in the event of any
sale of substantially all of the assets of the Company, at the election of the
holders of the notes the Company will (a) repay any unpaid amount, or (b)
convert the notes into preferred stock with terms substantially comparable to
the currently outstanding Series A-4 preferred stock. In the event that the
holders of the notes elect for the notes to be repaid, (option (a) above), the
Company must pay the holder of the notes a premium equal to 25% of the
outstanding principal amount of the notes. The Company has granted to the
buyers of the notes a security interest in certain property and assets of the
Company, including all accounts, equipment and fixtures and all patents, patent
licenses, trademarks and trademark licenses. This security interest was
terminated upon conversion of the notes in March 2000 into Series A-5 preferred
shares (see below) and all rights granted under the security interest have
reverted to the Company. In connection with this transaction, the Company
issued warrants to purchase 1,250,000 shares of common stock exercisable at
$3.50 per share for a period of one year. The Company recorded a noncash
interest charge in connection with these warrants of $26,000 for the year ended
December 31, 1999.

  On March 31, 2000, the Company raised $18.4 million through the sale of
6,121,083 shares of Series A-5 preferred stock at $3.00 per share. In
connection therewith, the holders of the convertible notes of $10 million of
principal converted their notes and $353,000 of accrued interest into 3,451,165
of Series A-5 preferred shares. Accordingly, the convertible notes and accrued
interest of $115,000 have been reclassified to noncurrent liabilities as of
December 31, 1999.

[2] Long-term debt:

  Long-term debt, including capital lease obligations was as follows:

<TABLE>
<CAPTION>
                                                              December 31,
                                               March 31,  ---------------------
                                                  2000       1999       1998
                                               ---------- ---------- ----------
   <S>                                         <C>        <C>        <C>
   Loans payable.............................. $2,676,000 $2,889,000 $3,290,000
   Capital lease obligations (Note I).........    484,000    580,000  1,013,000
                                               ---------- ---------- ----------
                                                3,160,000  3,469,000  4,303,000
   Current portion of long-term debt..........  1,140,000  1,139,000  1,033,000
                                               ---------- ---------- ----------
   Long-term debt............................. $2,020,000 $2,330,000 $3,270,000
                                               ========== ========== ==========
</TABLE>

  During 1998 and 1999, the Company entered into a series of 48-month loans to
finance an aggregate of $4,005,000 of laboratory equipment, office equipment
and certain tenant improvements at interest rates varying between 10.68% and
11.65%. The loans are payable in monthly installments of principal and interest
aggregating $98,000 with final payments in 2002 and 2003 aggregating $362,000
and $39,000. Borrowings related to the purchase of laboratory and office
equipment are collateralized by the equipment.

  Long-term debt at December 31, 1999 is payable as follows:

<TABLE>
   <S>                                                                <C>
   2000.............................................................. $1,139,000
   2001..............................................................  1,231,000
   2002..............................................................  1,052,000
   2003..............................................................     47,000
                                                                      ----------
   Total............................................................. $3,469,000
                                                                      ==========
</TABLE>

                                      F-13
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)


NOTE H--FAIR VALUE OF FINANCIAL INSTRUMENTS

  Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments," requires the Company to disclose estimated
fair value for its financial instruments. The carrying amounts reported in the
balance sheet for cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses approximate fair value because of the short-term
duration of those items. The carrying amounts of convertible notes, debt and
notes payable--dividends approximate fair value because the interest rates on
such debt approximate the market rate.

NOTE I--CAPITAL LEASE OBLIGATIONS

  The Company has entered into a series of 48-month lease agreements to finance
$3,183,000 of laboratory and office equipment purchases. All of the equipment
leased under these agreements are accounted for as capital leases. The net book
value of the equipment held under capital leases was $463,000, $555,000 and
$993,000 at March 31, 2000, December 31, 1999 and 1998, respectively.

  Future lease payments as of December 31, 1999 are as follows:

<TABLE>
<CAPTION>
      Year Ending
      December 31,                                                      Amount
      ------------                                                     --------
      <S>                                                              <C>
        2000.......................................................... $383,000
        2001..........................................................  251,000
                                                                       --------
      Total minimum lease payments....................................  634,000
      Less amounts representing interest..............................   54,000
                                                                       --------
      Present value of future lease payments at end of year........... $580,000
                                                                       ========
</TABLE>

  Under these agreements, the Company granted its leasing companies warrants
expiring in 2004 to purchase 187,625 shares of Series A-1 preferred stock at an
exercise price of $1.00 per share and 4,500 shares of common stock at an
exercise price of $7.00 per share. The value of these warrants was not
considered significant at the dates of grant.

NOTE J--REDEEMABLE PREFERRED STOCK AND EQUITY SECURITIES

[1] Preferred stock:

  In March 1997, the Company issued 10,304,264 shares of Series A-3 preferred
stock for $1.21 per share for aggregate proceeds of $12,446,000, net of
expenses.

  In January 1998, the Company issued 4,000,000 shares of Series A-4 preferred
stock for $2.60 per share for aggregate proceeds of $10,372,000, net of
expenses.

  As set forth in Note G, on March 31, 2000, the Company issued 6,121,083
shares of Series A-5 preferred stock for $3.00 per share for aggregate proceeds
of $18,363,000, net of expenses. In addition, an additional 3,451,165 shares
were issued upon the conversion of $10,000,000 of notes plus $353,000 of
accrued interest.


                                      F-14
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

  Redeemable convertible preferred Series A consists of:

<TABLE>
<CAPTION>
                                                            December 31,
                                            March 31,  -----------------------
                                              2000        1999        1998
                                           ----------- ----------- -----------
<S>                                        <C>         <C>         <C>
Redeemable convertible Series A-1--$.001
 par value;
 6,926,461 shares authorized, 6,686,986
 shares issued and outstanding,
 (liquidating preference $6,686,986)...... $ 6,611,000 $ 6,611,000 $ 6,611,000
Redeemable convertible Series A-2--$.001
 par value;
 4,333,990 shares authorized, 4,333,990
 shares issued and outstanding,
 (liquidating preference $5,417,488)......   5,405,000   5,405,000   5,405,000
Redeemable convertible Series A-3--$.001
 par value;
 10,304,264 shares authorized, 10,304,264
 shares issued and outstanding,
 (liquidating preference $12,500,000).....  12,446,000  12,446,000  12,446,000
Redeemable convertible Series A-4--$.001
 par value;
 4,000,000 shares authorized, 4,000,000
 shares issued and outstanding,
 (liquidating preference $10,400,000).....  10,372,000  10,372,000  10,372,000
Redeemable convertible Series A-5, $.001
 par value;
 9,572,248 shares authorized, 9,572,248
 shares issued and outstanding,
 (liquidating preference $28,716,744).....  28,716,000
                                           ----------- ----------- -----------
                                           $63,550,000 $34,834,000 $34,834,000
                                           =========== =========== ===========
</TABLE>

  Convertible preferred stock consists of convertible Series B--$.001 par
value, 1,000,000 shares authorized, 1,000,000 shares issued and outstanding,
liquidating preference of $2,250,000 and convertible Series C--$.001 par value,
5,000,000 shares authorized, 400,000 shares issued and outstanding, liquidating
preference of $1,000,000.

  The Series A-1, A-2, A-3, A-4, A-5, B, and C preferred shares have a
liquidation preference of $1.00, $1.25, $1.21, $2.60, $3.00, $2.25 and $2.50
per share, respectively, plus an amount equal to any accrued but unpaid
cumulative dividends and any declared but unpaid dividends. The Series A-1, A-
2, A-3, A-4 and A-5 shares are redeemable at the option of the stockholder in
25% annual increments commencing on March 12, 2002 at their original purchase
price, plus an amount equal to any accrued but unpaid cumulative dividends and
any declared but unpaid dividends. The shares of all series are convertible
into common shares of the Company on a 1 to .36 basis, after giving effect to
reverse common stock split in July, 2000 (see note B[12]) subject to certain
adjustments based on future issuances of common stock. In addition, all
outstanding Series A, B and C preferred shares will automatically convert into
common shares of the Company on a 1 to 1 basis upon completion of an initial
public offering of the Company's common stock. The shares of all series are
entitled to one vote per share. The Series A shares provide for cumulative
dividends of 10% per share per annum (based on the original issue price), first
commencing for the Series A-1 shares on October 14, 1998. The Series A-2
through A-5 shares, which were issued from 1996 through 2000, provide for 10%
annual cumulative dividends from and after the fifth anniversary of the date
each such series was originally issued.

  In December 1998, the Company declared a 10% per share dividend (based on the
original issue price) payable on January 1, 1999 for the Series A-1 shares for
the portion of the quarterly period beginning October 14, 1998 and ending
December 31, 1998. Thereafter the Company has declared dividends at each
calendar quarter through September 30, 1999. The Company's board did not
declare a dividend at December 31, 1999, therefore dividends of $167,000 were
in arrears at year-end 1999. On April 20, 2000, the Company's board declared a
dividend for $334,000 covering the period beginning October 1, 1999 and ending

                                      F-15
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

March 31, 2000 and issued a note payable for such dividend. All dividends
declared during 1999 were paid during 1999 by issuing to each holder of Series
A-1 stock a note payable for the amount of the declared dividend. The notes
bear interest at 10% per annum and principal and interest are due no later than
five years from the date of issuance. Principal and interest are convertible
into common stock at the closing date of an initial public offering ("IPO"), as
defined, at the IPO price.

[2] Equity compensation plan:

  The Company's equity compensation plan (the "Plan"), as amended, provides for
the issuance of restricted stock and the granting of both incentive stock
options and nonqualified stock options to purchase a total of 2,883,929 shares
of common stock. The options vest over various periods, not exceeding five
years, and expire no later than ten years from date of grant. On March 30,
2000, the Company increased the number of shares under the Plan by 446,428 to
3,330,357 shares of common stock.

  The Plan is administered by a committee of the Board of Directors. The
committee has the authority to determine the term during which an option may be
exercised (provided that no option may have a term of more than 10 years), the
exercise price of an option and the rate at which options may be exercised.
Incentive stock options may be granted only to employees of the Company.
Nonqualified stock options may be granted to employees, directors, or
consultants of the Company. For incentive stock options, the exercise price may
not be less than the fair value of the stock on the date of grant.

  The Company applies APB 25 in accounting for its employee stock options
awards, which requires the recognition of compensation expense for the
difference between the estimated market value of the underlying common stock
and the exercise price of the option at the grant date.

  Pro forma information regarding net loss and loss per share is required by
SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that statement. The
weighted average fair value of options granted during years ended December 31,
1999 and 1998 is estimated to be $.35 and $.30, respectively. The fair value of
these options was estimated at the date of grant using the Black-Scholes
option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                          Three Months
                                              Ended            Year Ended
                                            March 31,         December 31,
                                         --------------- -----------------------
                                          2000    1999    1999    1998    1997
                                         ------- ------- ------- ------- -------
   <S>                                   <C>     <C>     <C>     <C>     <C>
   Risk-free interest rate..............   6%     5.5%    6.6%    5.5%     6%
   Expected life........................ 6 years 6 years 6 years 6 years 7 years
   Expected volatility..................   10%     10%     10%     10%     10%
   Dividend yield.......................   0%      0%      0%      0%      0%
</TABLE>

                                      F-16
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)


  Had compensation cost for the Company's stock options been determined based
upon the fair value at the grant date for awards under the Plan consistent with
the methodology prescribed under SFAS No. 123, the Company's net loss and net
loss per share would be as follows:

<TABLE>
<CAPTION>
                          Three Months Ended                Year Ended
                               March 31,                   December 31,
                         ----------------------  -----------------------------------
                            2000        1999        1999         1998        1997
                         ----------  ----------  -----------  ----------  ----------
<S>                      <C>         <C>         <C>          <C>         <C>
Net loss:
  Historical............ $3,742,000  $2,740,000  $15,969,000  $9,711,000  $5,565,000
  Pro forma.............  3,877,000   2,847,000   16,398,000   9,880,000   5,670,000
Basic and diluted net
 loss per share:
  Historical............ $    (5.92) $    (5.01) $    (27.37) $   (22.20) $   (27.55)
  Pro forma............. $    (6.13) $    (5.20) $    (28.07) $   (22.58) $   (28.07)
</TABLE>

  The following table summarizes information about stock option activity
  during the periods indicated:

<TABLE>
<CAPTION>
                                    Incentive Options   Nonqualified Options
                                    ------------------- ------------------------
                                               Weighted               Weighted
                                               Average                Average
                                               Exercise               Exercise
                                     Shares     Price     Shares       Price
                                    ---------  -------- -----------  -----------
<S>                                 <C>        <C>      <C>          <C>
Balance--December 31, 1996.........   247,079   $0.554       69,321   $   0.400
Granted............................   628,756    1.862       19,643       1.159
Exercised..........................   (22,774)   0.498       (5,964)      0.235
Terminated.........................   (25,523)   0.652
                                    ---------           -----------

Balance--December 31, 1997.........   827,538   $1.540       83,000   $   0.588
Granted............................   406,639    2.940       88,808       2.940
Exercised..........................   (85,540)   0.750      (11,321)      0.221
Terminated.........................  (128,488)   2.250
                                    ---------           -----------

Balance--December 31, 1998......... 1,020,149    2.080      160,487       1.918
Granted............................   157,585    2.940      727,619       3.674
Exercised..........................   (11,439)   0.966
Terminated.........................   (31,541)   2.648
                                    ---------           -----------

Balance--December 31, 1999......... 1,134,754    2.195      888,106       3.354
Granted............................   213,036    6.255       63,393       6.30
Exercised..........................   (45,389)   2.495     (145,238)      2.906
Terminated.........................   (24,407)   2.363
                                    ---------           -----------

Balance--March 31, 2000............ 1,277,994    2.856      806,261       3.668
                                    =========           ===========
</TABLE>

                                      F-17
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

  In addition to the stock option activity, the Company issued net of 183,095
and 18,750 shares that were reacquired in 1998 and 1994, respectively, 566,190
shares of restricted stock at $.03-$2.94 per share under the Plan through March
31, 2000.

  As of March 31, 2000 and December 31, 1999, options and restricted stock for
314,336 and 119,929 common shares, respectively, were available for future
grant under the Plan.

  At March 31, 2000 and December 31, 1999, the weighted average remaining
contractual life of options outstanding was 8.33 years and 7.95 years,
respectively.

  The following table presents information relating to stock options
outstanding and exercisable at December 31, 1999 and March 31, 2000:

<TABLE>
<CAPTION>
                                             December 31, 1999
                          -------------------------------------------------------
                                 Options Outstanding         Options Exercisable
                          ---------------------------------- --------------------
                                        Weighted
                                         Average    Weighted             Weighted
                                        Remaining   Average              Average
                            Number     Contractual  Exercise   Number    Exercise
                          Outstanding Life in Years  Price   Exercisable  Price
                          ----------- ------------- -------- ----------- --------
<S>                       <C>         <C>           <C>      <C>         <C>
Incentive stock options:
  $0.03 to $2.80........     627,375      7.15       $1.590    328,288    $1.523
  $2.83 to $2.94........     507,379      8.58       $2.94     103,086    $2.94
                           ---------                           -------
                           1,134,754                 $2.195    431,374    $1.862
                           =========                 ======    =======    ======
Nonqualified stock
 options:
  $0.03 to $2.80........      71,679      5.85       $0.649     61,560    $0.574
  $2.83 to $7.28........     816,427      9.56       $3.592     53,837    $2.94
                           ---------                           -------
                             888,106                 $3.354    115,397    $1.677
                           =========                 ======    =======    ======
</TABLE>

<TABLE>
<CAPTION>
                                             March 31, 2000
                           ---------------------------------------------------
                                Options Outstanding       Options Exercisable
                           ------------------------------ --------------------
                                       Weighted
                                        Average  Weighted             Weighted
                                       Remaining Average              Average
                             Number     Life in  Exercise   Number    Exercise
Range of Exercise Price    Outstanding   Years    Price   Exercisable  Price
-----------------------    ----------- --------- -------- ----------- --------
<S>                        <C>         <C>       <C>      <C>         <C>
Incentive stock options:
  $0.03 to $2.80..........    607,301    6.91     $1.604    341,577    $1.495
  $2.83 to $6.30..........    670,693    8.80     $3.707    154,027     $2.94
                            ---------                       -------
                            1,277,994             $2.856    495,604    $1.943
                            =========             ======    =======    ======
Nonqualified stock
 options:
  $0.03 to $2.80..........     69,297    5.55     $0.644     63,940    $0.579
  $2.83 to $7.28..........    736,963    9.34     $3.953     55,838    $ 2.94
                            ---------                       -------
                              806,260             $3.668    117,778    $1.660
                            =========             ======    =======    ======
</TABLE>

  In 1998, the Company entered into an agreement with a former officer in which
the Company repurchased 94,866 shares of common stock, which collateralized a
note receivable held by the Company. In addition, the

                                      F-18
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

Company also accelerated vesting on 32,425 shares of restricted stock and
incentive stock options in connection with the termination of this officer. In
connection with this modification of terms to the original grants, the Company
recorded a charge to compensation expense of $66,000 as of the date of
termination.

  During the three months ended March 31, 2000 in connection with the grant of
options to employees, the Company recorded deferred stock compensation of
$524,000, representing the difference between the exercise price and the
estimated market value of the Company's common stock on the date such stock
options were granted. Deferred compensation is included as a component of
stockholders deficit and is being amortized to expense over the vesting period
of the stock options.

[3] Warrants:

  At March 31, 2000 and December 31, 1999, the Company has outstanding warrants
to purchase common shares, all of which are exercisable, as follows:

<TABLE>
<CAPTION>
                                                                       Number of
                                                                        Common
      Exercise                                              Expiration  Shares
      Price                                                    Date    Reserved
      --------                                              ---------- ---------
      <S>                                                   <C>        <C>
       $3.50...............................................    2000    1,250,000
       $0.03...............................................    2005      107,143
       $0.03...............................................    2006      360,009
       $0.03...............................................    2007       35,714
       $7.00...............................................    2004        4,500
                                                                       ---------
                                                                       1,757,366
                                                                       =========
</TABLE>

  In addition at March 31, 2000 and December 31, 1999 the Company has
outstanding warrants to purchase 239,475 shares of Series A-1 preferred stock
at an exercise price of $1.00 per share which become convertible into 85,527
shares of common stock.

  The weighted average exercise price at March 31, 2000 and December 31, 1999
was $2.52. At March 31, 2000 and December 31, 1999, the weighted average
remaining contractual life of warrants outstanding was 2.30 and 2.55 years,
respectively.

[4] Common stock subject to repurchase:

  As of March 31, 2000 and December 31, 1999, respectively, 245,174 and 114,955
shares of common stock are subject to repurchase by the Company. The shares are
subject to repurchase at the Company's option at the original purchase prices,
ranging from $.70 to $2.94, in the event that the purchaser's relationship with
the Company is terminated. The number of shares subject to repurchase by the
Company decreases by 25% on the one-year anniversary of the sale, and further
reduces upon later anniversary dates. In addition, 45,982 shares of the 245,174
shares subject to repurchase, vest with the purchaser at the completion of the
Company's initial public offering.

NOTE K--401(K) PLAN

  The Company maintains a defined contribution 401(k) plan available to
eligible employees. Employee contributions are voluntary and are determined on
an individual basis, limited to the maximum amount allowable under federal tax
regulations. The Company at its discretion may make certain contributions to
the

                                      F-19
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

plan. However, no such contributions have been made through December 31, 1999
and for the three-month period ended March 31, 2000.

NOTE L--COMMITMENT

  During 1995, the Company entered into a 10-year operating lease for office
and laboratory facilities. In November 1997, the Company amended and restated
its lease to provide additional office and laboratory space. The amended and
restated lease will expire in June 2008. In connection with this transaction,
the Company agreed to pay for one half of the anticipated leasehold improvement
costs. The Company's portion of these costs was approximately $900,000, which
has been recorded as leasehold improvements, to be amortized over the term of
the lease. The amended and restated lease provides for minimum annual rentals
as follows:

<TABLE>
<CAPTION>
                            Year Ending
                            December 31,                                Amount
                            ------------                              ----------
<S>                                                                   <C>
      2000........................................................... $  516,000
      2001...........................................................    516,000
      2002...........................................................    516,000
      2003...........................................................    516,000
      2004...........................................................    516,000
      Thereafter.....................................................  1,545,000
                                                                      ----------
                                                                      $4,125,000
                                                                      ==========
</TABLE>

  The lease provides for escalations for increases in real estate taxes and
certain operating expenses.

  Rent expense was $129,000, $129,000, $516,000, $401,000 and $267,000 for the
three months ended March 31, 2000 and 1999 and the years ended December 31,
1999, 1998 and 1997, respectively.

NOTE M--CONTINGENCY

  In October 1998, a complaint was filed in the United States District Court
for the District of Delaware, by Scriptgen Pharmaceuticals, Inc. alleging that
the Company infringed two Scriptgen U.S. Patents. On March 7, 2000 (the
"Effective Date"), the Company and Scriptgen entered into a Settlement
Agreement for a total of $1.5 million for settlement of the litigation. The
amount is payable by the Company in three equal installments of $500,000 on
each of the following dates: (a) the Effective Date; (b) six months after the
Effective Date; and (c) the first anniversary of the Effective Date. The amount
payable was accrued as of December 31, 1999.

NOTE N--INCOME TAXES

  At December 31, 1999 the Company has a net operating loss carryforward and a
research and development credit carryforward for federal income tax purposes of
approximately $40,370,000 and $831,000, respectively, which expires through
2019.

  Temporary differences at December 31, 1999 and March 31, 2000 result
primarily from certain operating expenses, which were capitalized and amortized
as start-up costs for federal income tax purposes and expensed for financial
reporting purposes. At December 31, 1999 and March 31, 2000 the Company has
deferred tax assets of approximately $19,168,000 and $20,894,000, respectively.
The Company has not recorded a benefit from its net operating loss or research
and development credit carryforwards or capitalized start-up costs,

                                      F-20
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

                           December 31, 1999 and 1998
  (Unaudited with respect to March 31, 2000 and the three-month periods ended
                            March 31, 2000 and 1999)

because realization of the benefit is uncertain and, therefore, a valuation
allowance of $19,168,000 and $20,894,000 has been provided for the deferred tax
asset at December 31, 1999 and March 31, 2000, respectively. The difference
between the statutory tax rate of 34% and the Company's effective tax rate of
0% is due to the increase in the valuation allowance of $6,805,000 (1999),
$4,040,000 (1998), $2,415,000 (1997), $1,726,000 (3 months--2000) and $997,000
(3 months--1999).

  The Company may be subject to an annual limitation on the utilization of its
net operating loss and research and development tax credit carryforwards under
Section 382 of the Internal Revenue Code.

NOTE O--SUBSEQUENT EVENT (UNAUDITED)

 Schering AG

  In May 2000, the Company entered into a license and research agreement with
Schering AG, Germany, in which Schering AG obtained, for human therapeutic
uses, exclusive worldwide rights to our urokinase inhibitor compounds. During
the initial two year research and development term the Company is to receive
payments for research funding totaling $5 million. In addition, the Company is
eligible to receive milestone payments up to approximately $23 million,
depending on whether stipulated milestones are met, for the first product
developed in a therapeutic area and future milestones for additional
therapeutic areas and royalties on the sales of resulting products. In
connection with the agreement, an affiliate of Schering AG made a $5 million
equity investment consisting of 625,000 shares of Series D preferred stock at
$8.00 per share.

 Bristol-Myers Squibb Company

  In July 2000, the Company entered into a collaboration with Bristol-Myers
Squibb Company, or BMS, under which the Company will use its DiscoverWorks
technologies to assist BMS in the discovery and development of new human drugs
for specific biological targets. In the initial three-year term of the research
collaboration, BMS will supply at least 30 biological targets and the Company
will create chemical libraries and screen such libraries against these targets.
Thereafter, the parties will agree upon which organization will conduct
subsequent lead optimization and development activities of active hits toward
creating pre-clinical drug candidates. Patentable subject matter resulting from
this collaboration will be assigned according to U.S. practice for identifying
inventorship. In addition to its collaboration in this research, BMS will be
primarily responsible for pre-clinical and clinical development, and for
marketing and sales of any resulting products.

  BMS may terminate research activities with 90 days notice, without cause, but
must pay any remaining costs of the initial research term or one-half of the
remaining cost of any extended term. Following the end of the initial research
or any extended research term, either party may terminate the agreement on 30
days notice if no compound is being optimized or developed under the
collaborative agreement. Otherwise, the agreement will remain in effect for 10
years from the first commercial sale of a product identified from the research
program or until the expiration of patent rights relating to such product.

  The Company has also granted BMS non-exclusive licenses under
DirectedDiversity patent rights for the duration of the rights and non-
exclusive perpetual licenses under ThermoFluor and Protein Expression and
Refolding Technology for use by BMS in their research and development programs
in exchange for licensing fees. BMS also has the opportunity to purchase from
us ThermoFluor instruments. In addition, BMS has subscribed to the Company's
planned Proteomica G-Protein Coupled Receptor ("GPCR") structure database. BMS
will pay user fees based on the content of the database which are contingent
upon the Company's successful determination of one or more GPCR structures.

                                      F-21
<PAGE>




  The Company will receive upfront licensing and technology access fees
amounting to $23.5 million, and committed research funding of $14.4 million
over the first three years of the collaboration as well as payments for any
purchases of ThermoFlour instruments. In addition, the Company will receive
milestone payments through the clinical development stages, and royalty
payments on sales of any resulting products, with the amount at each level
determined based on our involvement in the related optimization and development
activities. For each compound, depending on whether all pre-clinical and
clinical milestones are met, we could receive milestone payments aggregating up
to between $4.5 million and $15 million, depending on our level of contribution
to the development of the compound.

NOTE P--PRO FORMA BALANCE SHEET (UNAUDITED)

  The pro forma balance sheet at March 31, 2000 reflects the conversion of (a)
the outstanding Series A, B and C preferred shares, (b) notes payable of
$645,000 issued in payment of Series A-1 preferred stock dividends together
with accrued interest of $56,000, and (c) accrued Series A-1 cumulative
dividends of $334,000 which were declared and for which notes were issued on
April 20, 2000 covering the period October 1, 1999 through March 31, 2000, into
13,037,324 shares of common stock as if such conversion had taken place at such
date. The preferred shares will automatically convert into common shares of the
Company on a 1 to .36 basis upon completion of an IPO of the Company's common
stock. Principal and accrued interest on the notes which automatically convert
at the completion of the IPO are assumed to convert into 73,936 common shares
based on an estimated IPO price of $14.00.

                                      F-22
<PAGE>

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

You should only rely on the information contained in this prospectus. We have
not authorized any person to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of our common stock only in jurisdictions where offers and sales
are permitted. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this pro-
spectus or any sale of our common stock.

Until       , 2000, all dealers that effect transactions of these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a pro-
spectus when acting as underwriters and with respect to their unsold allotments
or subscriptions.

                             --------------------
                               TABLE OF CONTENTS
                             --------------------

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
Summary..................................................................   1
Risk Factors.............................................................   7
Forward-Looking Statements...............................................  21
Use of Proceeds..........................................................  22
Dividend Policy..........................................................  22
Capitalization...........................................................  23
Dilution.................................................................  24
Selected Financial Information...........................................  25
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  26
Our Business.............................................................  30
Management...............................................................  54
Certain Relationships and Related Transactions...........................  67
Principal Stockholders...................................................  69
Description of Capital Stock.............................................  72
Shares Eligible for Future Sale..........................................  75
Underwriting.............................................................  77
Legal Matters............................................................  80
Experts..................................................................  80
Additional Information About Us..........................................  80
Financial Statements..................................................... F-1
</TABLE>

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


                 [LOGO OF 3-DIMENSIONAL PHARMACEUTICALS, INC.]

                             4,000,000 Shares

                                  Common Stock

                             --------------------
                                   PROSPECTUS
                             --------------------

                            Bear, Stearns & Co. Inc.

                                   Chase H&Q

                           U.S. Bancorp Piper Jaffray

                                        , 2000

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

  The expenses (other than underwriting discounts and commissions) payable in
connection with this offering are as follows:

<TABLE>
   <S>                                                              <C>
   Securities and Exchange Commission registration fee............. $   18,480
   NASD filing fee.................................................      7,500
   Nasdaq filing fee...............................................    100,000
   Printing and engraving expenses.................................    200,000
   Legal fees and expenses.........................................    400,000
   Accounting fees and expenses....................................    100,000
   Blue Sky fees and expenses (including legal fees)...............     10,000
   Transfer agent and rights agent and registrar fees and
    expenses.......................................................     25,000
   Miscellaneous...................................................    139,020
                                                                    ----------
     Total......................................................... $1,000,000
                                                                    ==========
</TABLE>
--------
*To be filed by amendment

  All expenses are estimated except for the SEC fee and the NASD fee.

Item 14. Indemnification of Directors and Officers

  The Registrant's Certificate of Incorporation permits indemnification to the
fullest extent permitted by Delaware law. The Registrant's bylaws require the
Registrant to indemnify any person who was or is an authorized representative
of the Registrant, and who was or is a party or is threatened to be made a
party to any corporate proceeding, by reason of the fact that such person was
or is a director or officer of the Registrant, against all liability and loss
suffered and expenses reasonably incurred by such person in connection with
such proceeding. Such indemnification is mandatory under the Registrant' bylaws
as to expenses reasonably incurred. Delaware law also permits indemnification
in connection with a proceeding brought by or in the right of the Registrant to
procure a judgment in its favor. Insofar as indemnification for liabilities
arising under the Act may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in that Act and is
therefore unenforceable. The Registrant currently has a directors' and
officers' liability insurance policy.

  The Underwriting Agreement provides that the underwriters are obligated,
under certain circumstances, to indemnify directors, officers, and controlling
persons of the Registrant against certain liabilities, including liabilities
under the Act. Reference is made to the form of Underwriting Agreement which
will be filed by amendment as Exhibit 1.1 hereto.

Item 15. Recent Sales of Unregistered Securities

  Since our inception, we have issued the following securities that were not
registered under the Act (all amounts are on a pre-split basis and are as of
June 30, 2000):

  Since our inception, we have issued an aggregate of 2,730,395 shares of
common stock, par value $0.001 per share. These shares include 11,974 shares of
common stock issued in July 1996 at a purchase price per share of $0.01 for a
total of $120, 1,113,088 shares of common stock issued upon exercise of options
granted under our equity compensation plan at a weighted average exercise price
of $0.62 per share and 2,170,500

                                      II-1
<PAGE>

shares of common stock issued in the form of restricted stock grants under our
equity compensation plan at a weighted average purchase price of $0.24 per
share, of which 565,167 shares have been repurchased by the Company. All such
sales and issuances were deemed to be exempt from registration under Section
4(2) of the Act and/or Rule 701, or Regulation D or Regulation S promulgated
thereunder.

  Since our inception we have also issued an aggregate of 36,922,488 shares of
preferred stock, par value of $0.001 per share. These shares include (i)
6,686,986 shares of series A-1 preferred stock prior to 1996 at a purchase
price per share of $1.00, for a total of approximately $6.7 million; (ii)
4,333,990 shares of series A-2 preferred stock issued in October 1996 at a
purchase price per share of $1.25, for a total of approximately $5.4 million;
(iii) 10,304,264 shares of series A-3 preferred stock issued in March 1997 at a
purchase price per share of $1.21, for a total of approximately $12.5 million;
(iv) 4,000,000 shares of series A-4 issued in January 1998 at a purchase price
per share of $2.60 for a total of approximately $10.4 million; (v) 9,572,248
shares of series A-5 preferred stock issued in March 2000 at a purchase price
per share of $3.00, for a total of approximately $28.7 million, which amount
includes 3,451,165 shares issued upon the conversion of convertible promissory
notes issued in November 1999; (vi) 1,000,000 shares of series B preferred
stock issued in October 1996 at a purchase price per share of $2.25 for a total
of approximately $2.3 million; (viii) 400,000 shares of series C preferred
stock issued in June 1997 at a purchase price per share of $2.50 for a total of
approximately $1.0 million; and (ix) 625,000 shares of series D preferred stock
issued in May 2000 at a purchase price per share of $8.00 for a total of
approximately $5.0 million. All such sales and issuances were deemed to be
exempt from registration under the Securities Act by virtue of Section 4(2),
Regulation D or Regulation S promulgated thereunder.

  Since our inception, we have issued warrants to purchase a total of 4,932,600
shares of common stock and 239,475 shares of series A-1 preferred stock which
will either be exercised prior to the completion of this offering or become
exercisable for 239,475 shares of common stock upon the completion of this
offering.

  The warrants we have issued consist of warrants to purchase a total of
1,320,000 shares of common stock issued prior to 1997 at an exercise price of
$0.01 per share, including warrants to purchase 11,974 shares which were
exercised in July 1996, and warrants to purchase (i) 3,500,000 shares of common
stock at an exercise price of $1.25 per share issued in November 1999; (ii)
12,600 shares of common stock at an exercise price of $2.50 per share issued in
June 1997; (iii) 239,475 shares of series A-1 preferred stock, which will
either be exercised prior to the completion of this offering or become
exercisable for 239,475 shares of common stock at an exercise price of $1.00
per share reissued in July 1998; and (iv) 100,000 shares of common stock at an
exercise price of $0.01 per share issued in March 1997. All such sales and
issuances were deemed to be exempt from registration under the Securities Act
by virtue of Section 4(2), Regulation D or Regulation S promulgated thereunder.

  Under our equity compensation plan, as of June 30, 2000, 5,914,735 shares are
issuable upon the exercise of options outstanding under the plan at a weighted
average exercise price of $1.23 per share and 2,718,421 shares have been issued
under the plan, including 706,488 shares subject to repurchase at a weighted
average purchase price of $0.92 per share. For a more detailed description of
our equity compensation plan, see Management--Equity Compensation Plan. In
granting the options and selling the underlying securities upon exercises of
the options, we are relying upon exemption from registration set forth in
Section 4(2) of the Act and/or Rule 701, Regulation D or Regulation S
promulgated thereunder.

                                      II-2
<PAGE>

Item 16. Exhibits and Financial Statement Schedules

  (a) Exhibits:

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------
 <C>     <S>
  1.1    Form of Underwriting Agreement.#

  3.1    Seventh Restated Certificate of Incorporation of the Company, which is
         currently in effect.*

  3.2    Bylaws of the Company, which are currently in effect.*

  3.3    Form of Eighth Restated Certificate of Incorporation of the Company,
         to be filed prior to the closing of this offering.#

  3.4    Form of Ninth Restated Certificate of Incorporation of the Company, to
         become effective upon the closing of this offering.#

  3.5    Form of Amended and Restated Bylaws of the Company, to become
         effective upon the closing of this offering.#

  4.1    Form of Common Stock Certificate of Company.*

  5.1    Opinion of Morgan, Lewis & Bockius LLP.*

 10.1    3-Dimensional Pharmaceuticals, Inc. Equity Compensation Plan, as
         amended.*

 10.2    Third Amended and Restated Stockholders' Agreement by and among the
         Company and the Stockholders identified therein, dated March 31,
         2000.!

 10.3    Series B Preferred Stock Purchase Agreement between the Company and
         Merck KgaA, dated October 11, 1996.!

 10.4    Series C Preferred Stock Purchase Agreement between the Company and
         American Home Products Corporation, dated June 13, 1997.!

 10.5    Series D Preferred Stock Purchase Agreement between the Company and
         Schering Berlin Venture Corporation, dated May 17, 2000.*

 10.6    Warrant to Purchase Common Stock of the Company issued to HealthCare
         Ventures III, L.P., dated November 18, 1999.!

 10.7    Warrant to Purchase Common Stock of the Company issued to HealthCare
         Ventures IV, L.P., dated November 18, 1999.!

 10.8    Warrant to Purchase Common Stock of the Company issued to Rho
         Management Trust II, dated November 18, 1999.!

 10.9    Warrant to Purchase Common Stock of the Company issued to Aetna Life
         Insurance Company, dated November 18, 1999.!

 10.10   Warrant to Purchase Common Stock of the Company issued to Henry
         Rothman, dated November 18, 1999.!

 10.11   Warrant to Purchase Common Stock of the Company issued to Abingworth
         Bioventures SICAV, dated November 18, 1999.!

 10.12   Warrant to Purchase Common Stock of the Company issued to Sentron
         Medical, Inc., dated November 18, 1999.!

 10.13   Warrant to Purchase Common Stock of the Company issued to Biotech
         Growth S.A., dated November 18, 1999.!
</TABLE>


                                      II-3
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------
 <C>     <S>
 10.14   Employment Offer Letter to David C. U'Prichard, dated September 1,
         1999.*

 10.15   Settlement Agreement between the Company and Scriptgen
         Pharmaceuticals, Inc., dated March 7, 2000.!@

 10.16   Research Collaboration Agreement between the Company and Biocryst
         Pharmaceuticals, Inc., dated October 18, 1996, and Amendment No.1
         thereto, dated October 18, 1996.!@

 10.17   Collaborative Discovery and Lead Optimization Agreement between the
         Company and Boehringer Ingelheim Pharmaceuticals, Inc., dated December
         17, 1999.!@

 10.18   Collaborative Research and License Agreement between the Company and
         Hoechst Schering AgrEvo GmbH, now a part of Aventis Crop Science CmbH,
         dated October 18, 1999.!@

 10.19   Collaborative Research and License Agreement between the Company and
         E.I. DuPont de Nemours & Co., dated October 12, 1998.!@

 10.20   Collaborative Discovery and Lead Optimization Agreement between the
         Company and DuPont Pharmaceuticals Company, dated February 11, 2000.*@

 10.21   Nonexclusive Patent License Agreement between the Company and DuPont
         Pharmaceuticals Company, dated February 11, 2000.*@

 10.22   Research and License Agreement between the Company and the Heska
         Corporation, dated December 18, 1997, and Amendment No.1 thereto,
         dated December 18, 1997.!@

 10.23   License and Research Agreement between the Company and Schering AG,
         Germany, dated May 17, 2000.*@

 10.24   Master Loan and Security Agreement between the Company and Phoenixcor,
         Inc., dated June 18, 1998.*

 10.25   Amended and Restated Lease for Combination Office/Laboratory/Light
         Manufacturing Space at Eagleview Corporate Center Lot 28 between the
         Company and Eagleview Technology Partners, dated December 12, 1997.#

 10.26   Master Lease Agreement between the Company and Transamerica Business
         Credit Corporation, dated June 12, 1997.*

 10.27   Warrant to Purchase Common Stock of the Company issued to Transamerica
         Business Credit Corporation, dated June 12, 1997.*

 10.28   Master Lease Agreement, Loan Agreement and Subordination Agreement
         between the Company and Comdisco, Inc., dated March 7, 1994.*

 10.29   Warrant to Purchase Series A Preferred Stock, originally dated March
         7, 1994 and reissued to CDC Realty, Inc., dated July 21, 1998.*

 10.30   Warrant to Purchase Series A Preferred Stock, originally dated March
         7, 1994 and reissued to Gregory Stento, dated July 21, 1998.*

 10.31   Warrant to Purchase Series A Preferred Stock, originally dated April
         25, 1995 and reissued to Comdisco, Inc., dated July 21, 1998.*

 10.32   Warrant to Purchase Series A Preferred Stock, originally dated April
         25, 1995 and reissued to Gregory Stento, dated July 21, 1998.*

 10.33   Form of Warrant to Purchase Common Stock (along with Schedule of
         Holders of Certain Warrants to Purchase Common Stock).*
</TABLE>


                                      II-4
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                               Description
 -------                              -----------
 <C>     <S>
 10.34   3-Dimensional Pharmaceuticals, Inc. 2000 Equity Compensation Plan, to
         become effective prior to the closing of this offering.*

 10.35   DiscoverWorks(TM) Drug Discovery Collaboration Agreement and related
         DiscoverWorks Nonexclusive License and Purchase Agreement, GPCR
         License and User Agreement and PERT Internal Use License and Option
         Agreement between the Company and Bristol-Myers Squibb Company, dated
         July 7, 2000.#@

 21.1    Subsidiaries of the Registrant.*

 23.1    Consent of Richard A. Eisner & Company, LLP.*

 23.2    Consent of Morgan, Lewis & Bockius LLP (to be included in Exhibit
         5.1).*

 24.1    Power of Attorney (included on signature page).!

 27.1    Financial Data Schedule.*
</TABLE>

--------
*  Filed herewith.
#  To be filed by amendment.

!  Previously filed.
@  Confidential treatment will be requested with respect to portions of this
   exhibit. Omitted portions will be filed separately with the Securities and
   Exchange Commission.

  (b) Financial Statement Schedules

     Schedule II--Valuation and Qualifying accounts.

  All other information for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission is either
included in the financial statements or is not required under the related
instructions or is inapplicable, and therefore has been omitted.

Item 17. Undertakings.

  Insofar as indemnification for liabilities arising under the Securities Act
of 1933, the Act, may be permitted to directors, officers and controlling
persons of the registrant pursuant to provisions described in Item 14 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities, (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding), is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

  The undersigned registrant hereby undertakes (1) to provide to the
underwriter at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser; (2) for purposes
of determining any liability under the Act, the information omitted from the
form of prospectus filed as part of a registration statement in reliance upon
Rule 430(A) and contained in the form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be
part of this registration statement as of the time it was declared effective;
and (3) that for the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

                                      II-5
<PAGE>


                                SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Exton, Pennsylvania, on July 13, 2000.

                                          3-Dimensional Pharmaceuticals, Inc.

                                                /s/ David C. U'Prichard

                                          By______________________________

                                                  David C. U'Prichard

                                                Chief Executive Officer

  Pursuant to the requirements of the Securities Exchange Act of 1933, this
Amendment No.1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----

<S>                                    <C>                        <C>
       /s/ David C. U'Prichard         Chief Executive Officer       July 13, 2000
______________________________________  and Director (Principal
         David C. U'Prichard            Executive Officer)

        /s/ Michael J. Wassil          Vice President and Chief      July 13, 2000
______________________________________  Financial Officer
          Michael J. Wassil             (Principal Financial
                                        Officer)

         /s/ Scott M. Horvitz          Vice President, Finance       July 13, 2000
______________________________________  and Administration
           Scott M. Horvitz             (Principal Accounting
                                        Officer)

        /s/ F. Raymond Salemme         President, Chief              July 13, 2000
______________________________________  Scientific Officer and
          F. Raymond Salemme            Director

                  *                    Director                      July 13, 2000
______________________________________
           Stephen Bunting

                  *                    Director                      July 13, 2000
______________________________________
           Bernard Canavan

                  *                    Director                      July 13, 2000
______________________________________
          James H. Cavanaugh

                  *                    Director                      July 13, 2000
______________________________________
           Zola P. Horovitz

                  *                    Director                      July 13, 2000
______________________________________
            David R. King

                  *                    Director                      July 13, 2000
______________________________________
             Joshua Ruch

                  *                    Director                      July 13, 2000
______________________________________
           Harold R. Werner
</TABLE>

  /s/ David C. U'Prichard

*By_________________________

    David C. U'Prichard

 Attorney-in-fact and Agent

                                      II-6
<PAGE>

                  INDEPENDENT AUDITORS' REPORT ON SCHEDULE II

Board of Directors and Stockholders
3-Dimensional Pharmaceuticals, Inc.

  Our audits were conducted for the purpose of forming an opinion on the basic
financial statements of 3-Dimensional Pharmaceuticals, Inc. as of December 31,
1999 (consolidated) and 1998 and for each of the years in the three-year period
ended December 31, 1999 taken as a whole. The information included on Schedule
II is presented for purposes of additional analysis and is not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole. Also, such schedule presents
fairly the information set forth therein in compliance with the applicable
accounting regulations of the Securities and Exchange Commission.

New York, New York
February 25, 2000
<PAGE>

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                 Schedule II--Valuation and Qualifying Accounts
                                 (in thousands)

<TABLE>
<CAPTION>
        Column A           Column B           Column C             Column D   Column E
        --------          ---------- --------------------------- ------------ ---------
                          Balance at Charged in    Charge to                   Balance
                          Beginning  Costs and  Other Accounts-- Deductions-- at End of
      Description         of Period   Expenses      Describe       Describe    Period
      -----------         ---------- ---------- ---------------- ------------ ---------
<S>                       <C>        <C>        <C>              <C>          <C>
Accumulated depreciation
 and amortization:
  Year ended December
   31, 1997.............   $ 1,190     $  860        $  --          $  --      $ 2,050
  Year ended December
   31, 1998.............     2,050      1,486           --             --        3,536
  Year ended December
   31, 1999.............     3,536      1,565           --             --        5,101
Tax asset valuation
 allowance:
  Year ended December
   31, 1997.............   $ 5,908     $2,415        $  --          $  --      $ 8,323
  Year ended December
   31, 1998.............     8,323      4,040           --             --       12,363
  Year ended December
   31, 1999.............    12,363      6,805           --             --       19,168
</TABLE>

                                       2
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------
 <C>     <S>
  1.1    Form of Underwriting Agreement.#

  3.1    Seventh Restated Certificate of Incorporation of the Company, which is
         currently in effect.*

  3.2    Bylaws of the Company, which are currently in effect.*

  3.3    Form of Eighth Restated Certificate of Incorporation of its Company;
         to be filed prior to the closing of this offering.#

  3.4    Form of Ninth Restated Certificate of Incorporation of the Company, to
         become effective upon the closing of this offering.#
  3.5    Form of Amended and Restated Bylaws of the Company, to become
         effective upon the closing of this offering.#

  4.1    Form of Common Stock Certificate of Company.*

  5.1    Opinion of Morgan, Lewis & Bockius LLP.*

 10.1    3-Dimensional Pharmaceuticals, Inc. Equity Compensation Plan, as
         amended.*

 10.2    Third Amended and Restated Stockholders' Agreement by and among the
         Company and the Stockholders identified therein, dated March 31,
         2000.!

 10.3    Series B Preferred Stock Purchase Agreement between the Company and
         Merck KgaA, dated October 11, 1996.!

 10.4    Series C Preferred Stock Purchase Agreement between the Company and
         American Home Products Corporation, dated June 13, 1997.!

 10.5    Series D Preferred Stock Purchase Agreement between the Company and
         Schering Berlin Venture Corporation, dated May 17, 2000.*

 10.6    Warrant to Purchase Common Stock of the Company issued to HealthCare
         Ventures III, L.P., dated November 18, 1999.!

 10.7    Warrant to Purchase Common Stock of the Company issued to HealthCare
         Ventures IV, L.P., dated November 18, 1999.!

 10.8    Warrant to Purchase Common Stock of the Company issued to Rho
         Management Trust II, dated November 18, 1999.!

 10.9    Warrant to Purchase Common Stock of the Company issued to Aetna Life
         Insurance Company, dated November 18, 1999.!

 10.10   Warrant to Purchase Common Stock of the Company issued to Henry
         Rothman, dated November 18, 1999.!

 10.11   Warrant to Purchase Common Stock of the Company issued to Abingworth
         Bioventures SICAV, dated November 18, 1999.!

 10.12   Warrant to Purchase Common Stock of the Company issued to Sentron
         Medical, Inc., dated November 18, 1999.!

 10.13   Warrant to Purchase Common Stock of the Company issued to Biotech
         Growth S.A., dated November 18, 1999.!

 10.14   Employment Offer Letter to David C. U'Prichard, dated September 1,
         1999.*

 10.15   Settlement Agreement between the Company and Scriptgen
         Pharmaceuticals, Inc., dated March 7, 2000.!@
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------
 <C>     <S>
 10.16   Research Collaboration Agreement between the Company and Biocryst
         Pharmaceuticals, Inc., dated October 18, 1996, and Amendment No.1
         thereto, dated October 18, 1996.!@

 10.17   Collaborative Discovery and Lead Optimization Agreement between the
         Company and Boehringer Ingelheim Pharmaceuticals, Inc., dated December
         17, 1999.!@

 10.18   Collaborative Research and License Agreement between the Company and
         Hoechst Schering AgrEvo GmbH, now a part of Aventis Crop Science CmbH,
         dated October 18, 1999.!@

 10.19   Collaborative Research and License Agreement between the Company and
         E.I. DuPont de Nemours & Co., dated October 12, 1998.!@

 10.20   Collaborative Discovery and Lead Optimization Agreement between the
         Company and DuPont Pharmaceuticals Company, dated February 11, 2000.*@

 10.21   Nonexclusive Patent License Agreement between the Company and DuPont
         Pharmaceuticals Company, dated February 11, 2000.*@

 10.22   Research and License Agreement between the Company and the Heska
         Corporation, dated December 18, 1997, and Amendment No.1 thereto,
         dated December 18, 1997.!@

 10.23   License and Research Agreement between the Company and Schering AG,
         Germany, dated May 17, 2000.*@

 10.24   Master Loan and Security Agreement between the Company and Phoenixcor,
         Inc., dated June 18, 1998.*

 10.25   Amended and Restated Lease for Combination Office/Laboratory/Light
         Manufacturing Space at Eagleview Corporate Center Lot 28 between the
         Company and Eagleview Technology Partners, dated December 12, 1997.#

 10.26   Master Lease Agreement between the Company and Transamerica Business
         Credit Corporation, dated June 12, 1997.*

 10.27   Warrant to Purchase Common Stock of the Company issued to Transamerica
         Business Credit Corporation, dated June 12, 1997.*

 10.28   Master Lease Agreement, Loan Agreement and Subordination Agreement
         between the Company and Comdisco, Inc., dated March 7, 1994.*

 10.29   Warrant to Purchase Series A Preferred Stock, originally dated March
         7, 1994 and reissued to CDC Realty, Inc., dated July 21, 1998.*

 10.30   Warrant to Purchase Series A Preferred Stock, originally dated March
         7, 1994 and reissued to Gregory Stento, dated July 21, 1998.*

 10.31   Warrant to Purchase Series A Preferred Stock, originally dated April
         25, 1995 and reissued to Comdisco, Inc., dated July 21, 1998.*

 10.32   Warrant to Purchase Series A Preferred Stock, originally dated April
         25, 1995 and reissued to Gregory Stento, dated July 21, 1998.*

 10.33   Form of Warrant to Purchase Common Stock (along with Schedule of
         Holders of Certain Warrants to Purchase Common Stock).*

 10.34   3-Dimensional Pharmaceuticals, Inc. 2000 Equity Compensation Plan, to
         become effective prior to the closing of this offering.*
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                               Description
 -------                              -----------
 <C>     <S>
 10.35   DiscoverWorksTM Drug Discovery Collaboration Agreement and related
         DiscoverWorks Nonexclusive License and Purchase Agreement, GPCR
         License and User Agreement and PERT Internal Use License and Option
         Agreement between the Company and Bristol-Myers Squibb Company, dated
         July 7, 2000.#@

 21.1    Subsidiaries of the Registrant.*

 23.1    Consent of Richard A. Eisner & Company, LLP.*

 23.2    Consent of Morgan, Lewis & Bockius LLP (to be included in Exhibit
         5.1).*

 24.1    Power of Attorney (included on signature page).!

 27.1    Financial Data Schedule.*
</TABLE>

--------
*  Filed herewith.
#  To be filed by amendment.

!  Previously filed.
@  Confidential treatment will be requested with respect to portions of this
   exhibit. Omitted portions will be filed separately with the Securities and
   Exchange Commission.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>SEVENTH RESTATED CERTIFICATE OF INCORPORATION
<TEXT>

<PAGE>

                                                                     Exhibit 3.1

                 SEVENTH RESTATED CERTIFICATE OF INCORPORATION
                                      OF
                      3-DIMENSIONAL PHARMACEUTICALS, INC.

     3-DIMENSIONAL PHARMACEUTICALS, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "General Corporation Law"), hereby certifies as follows:

     FIRST: The name of the Corporation is 3-Dimensional Pharmaceuticals, Inc.
The Certificate of Incorporation of the Corporation was originally filed by the
Corporation with the Secretary of State of the State of Delaware on March 11,
1993, a Certificate of Amendment to the Certificate of Incorporation was filed
by the Corporation with the Secretary of State of Delaware on September 29, 1993
and a Restated Certificate of Incorporation (the "First Restated Certificate of
Incorporation") was filed by the Corporation with the Secretary of State of
Delaware on October 13, 1993. Certificates of Amendment to the First Restated
Certificate of Incorporation were filed with the Secretary of State of Delaware
on December 13, 1993, April 21, 1994, December 12, 1994, May 16, 1995, May 26,
1995, August 14, 1995, December 12, 1995, December 27, 1995, February 8, 1996,
June 20, 1996 and September 25, 1996. A Second Restated Certificate of
Incorporation was filed by the Corporation with the Secretary of State of
Delaware on October 11, 1996. A Third Restated Certificate of Incorporation was
filed by the Corporation with the Secretary of State of Delaware on March 12,
1997. A Fourth Restated Certificate of Incorporation was filed by the
Corporation with the Secretary of State of Delaware on June 12, 1997.
Certificates of Amendment to the Fourth Restated Certificate of Incorporation
were filed with the Secretary of State of Delaware on August 6, 1997 and
November 14, 1997. The Fifth Restated Certificate of Incorporation was filed by
the Corporation with the Secretary of State of Delaware on December 31, 1997.
Certificates of Amendment to the Fifth Restated Certificate of Incorporation
were filed on October 12, 1999 and November 18, 1999. The Sixth Restated
Certificate of Incorporation was filed by the Corporation with the Secretary of
State of Delaware on March 31, 2000.

     SECOND: This Seventh Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of the
Corporation. This Seventh Restated Certificate of Incorporation was duly adopted
in accordance with the provisions of Sections 242 and 245 and was approved by
written consent of the stockholders of the Corporation given in accordance with
the provisions of Section 228 of the General Corporation Law (prompt notice of
such action having been given to those stockholders who did not consent in
writing).

     THIRD: The text of the Certificate of Incorporation of the Corporation is
hereby restated and amended to read in its entirety as follows:

                                 ARTICLE FIRST
                                 -------------

                                      Name
                                      ----
<PAGE>

      The name of the Corporation is 3-Dimensional Pharmaceuticals, Inc.



                                       2
<PAGE>

                                ARTICLE SECOND
                                --------------

                               Registered Agent
                               ----------------

     The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.

                                  ARTICLE THIRD
                                  -------------

                                    Purpose
                                    -------

     The Corporation is organized to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law.

                                ARTICLE FOURTH
                                --------------

                                 Capital Stock
                                 -------------

     The Corporation shall have the authority to issue 97,994,126 shares of all
classes of stock, consisting of 6,926,461 shares of Series A-1 Preferred Stock,
$.001 par value (formerly denominated the Series A Preferred Stock) (the "Series
A-1 Preferred Stock"), 4,333,990 shares of Series A-2 Preferred Stock, $.001 par
value (the "Series A-2 Preferred Stock"), 10,304,264 shares of Series A-3
Preferred Stock, $.001 par value (the "Series A-3 Preferred Stock"), 4,000,000
shares of Series A-4 Preferred Stock, $.001 par value (the "Series A-4 Preferred
Stock," 9,572,248 shares of Series A-5 Preferred Stock, $.001 par value, (the
"Series A-5 Preferred Stock") and collectively with the Series A-1 Preferred
Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock and Series A-4
Preferred Stock, the "Series A Preferred Stock"), 1,000,000 shares of Series B
Preferred Stock, $.001 par value (the "Series B Preferred Stock"), 5,000,000
shares of Series C Preferred Stock, $.001 par value (the "Series C Preferred
Stock,") 625,000 shares of Series D Preferred Stock, $.001 par value (the
"Series D Preferred Stock,") and collectively with the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock the "Preferred Stock"), and 56,232,163 shares of Common Stock,
$.001 par value ("Common Stock").

     Unless otherwise provided, all Section references in this Article Fourth
shall refer to Sections of this Article Fourth.

A.   SERIES A PREFERRED STOCK
     ------------------------

     The Series A Preferred Stock shall have the following designations, powers,
preferences, relative, participating, optional or other special rights,
qualifications, limitations and restrictions:

1.   Dividends


                                       3
<PAGE>

     a. Dividends are payable on the Series A Preferred Stock, when, as and if
declared by the Board of Directors.


     b. So long as any Series A Preferred Stock is outstanding the Corporation
shall not declare or pay any dividend or make any distribution (whether in cash,
shares of capital stock of the Corporation or other property) on shares of its
Common Stock unless prior thereto or simultaneously therewith (A) all dividends
and distributions previously declared on the Series A Preferred Stock and (B)
any cumulative dividends in accordance with Section A.1(d) shall have been paid
or the Corporation shall have irrevocably deposited or set aside cash or
obligations the payment of which is backed by the full faith and credit of the
United States ("United States Obligations") sufficient for the payment thereof.


     c. If the Board of Directors declares dividends or other distributions
(other than on Liquidation (as hereinafter defined in Section A.2(a))) on the
Common Stock in cash, property or securities (including Common Stock) of the
Corporation (or subscription or other rights to purchase or acquire securities
(including Common Stock) of the Corporation), the Board of Directors shall
simultaneously declare a dividend or distribution at the same rate and in the
same form on the Series A Preferred Stock, so that the Series A Preferred Stock
participates equally with the Common Stock in such dividend or distribution. For
purposes of determining its proportional share of the dividend or distribution,
each share of the Series A Preferred Stock shall be deemed to be that number of
shares of Common Stock into which such share of Series A Preferred Stock is then
convertible, rounded to the nearest one-tenth of a share.


     d. From and after (i) with respect to the Series A-1 Preferred Stock,
October 14, 1998, (ii) with respect to the Series A-2 Preferred Stock, the fifth
anniversary of the Original Series A-2 Issuance Date (as hereinafter defined in
Section A.5(d)(i)), (iii) with respect to the Series A-3 Preferred Stock, the
fifth anniversary of the Original Series A-3 Issuance Date (as hereinafter
defined in Section A.5(d)(i)), (iv) with respect to the Series A-4 Preferred
Stock, the fifth anniversary of the Original Series A-4 Issuance Date (as
hereinafter defined in Section A.5(d)(i)), and (v) with respect to the Series
A-5 Preferred Stock, the fifth anniversary of the Original Series A-5 Issuance
Date (as hereinafter defined in Section A.5(d)(i), the applicable Series A
Preferred Stock will be entitled to dividends at the rate of ten (10%) per share
per annum (or such greater amount of dividends as such Series A Preferred Stock
would be entitled to if such Series A Preferred Stock were converted into Common
Stock), of the applicable Original Series A Purchase Price (as hereinafter
defined in Section A.2(a)), as adjusted for any combinations or divisions or
similar recapitalization affecting the Series A Preferred Stock after the
applicable Original Series A Issuance Date (as hereinafter defined in Section
A.5(d)(i)), payable in equal quarterly installments on the first day of January,
April, July and October (and any dividends payable to holders of Series A
Preferred Stock which are not paid shall be cumulative). If less then the full
dividend is declared on all of the shares of Series A Preferred Stock which are
then entitled to dividends, then

                                       4
<PAGE>

a dividend must be declared ratably on the Series A-1 Preferred Stock, the
Series A-2 Preferred Stock, the Series A-3 Preferred Stock, the Series A-4
Preferred Stock and the Series A-5 Preferred Stock. Nothing in this Section
A.1(d) shall be deemed to limit the rights of the Series A Preferred Stock under
Sections A.1(b) and A.1(c).


2.   Rights on Liquidation, Dissolution, Winding-Up.
     ----------------------------------------------

     a. In the event of any liquidation, dissolution or winding-up of the
affairs of the Corporation (collectively, a "Liquidation"), whether voluntary or
involuntary, before any payment of cash or distribution of other property shall
be made to the holders of the Common Stock (the "Common Stockholders") or any
other class or series of stock ranking on Liquidation junior to the Series A
Preferred Stock, the holders of Series A Preferred Stock ("Series A Preferred
Stockholders"), shall be entitled to receive out of the assets of the
Corporation legally available for distribution to its stockholders, an amount
equal to the applicable Original Series A Purchase Price (as defined below) per
share (as appropriately adjusted for any combinations or divisions or similar
recapitalization affecting the Series A Preferred Stock after the applicable
Original Series A Issuance Date) (the "Liquidation Preference"), whether from
capital, surplus or earnings, plus an amount equal to any accrued but unpaid
cumulative dividends thereon and any declared but unpaid dividends thereon. As
used herein, the "Original Series A Purchase Price" for the Series A-1 Preferred
Stock is $1.00 per share, the "Original Series A Purchase Price" for the Series
A-2 Preferred Stock is $1.25 per share, the "Original Series A Purchase Price"
for the Series A-3 Preferred Stock is $1.21309 per share, the "Original Series A
Purchase Price" for the Series A-4 Preferred Stock is $2.60 per share and the
"Original Series A Purchase Price" for the Series A-5 Preferred Stock at $3.00
per share.


     b. If, upon any Liquidation, the assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the Series A
Preferred Stockholders, the holders of the Series B Preferred Stock (the "Series
B Preferred Stockholders"), the holders of the Series C Preferred Stock (the
"Series C Preferred Stockholders") and the holders of the Series D Preferred
Stock (the "Series D Preferred Stockholders") the full amounts to which they
shall be entitled, the Series A Preferred Stockholders, the Series B Preferred
Stockholders, the Series C Preferred Stockholders and the Series D Preferred
Stockholders shall share ratably in any distribution of assets in proportion to
the respective amounts which would be payable to them in respect of the shares
held by them if all amounts payable to them in respect of such were paid in full
pursuant to Section A.2(a), Section B.2(a), Section C.2(a) and Section D.2(a).


     c. In the event of any Liquidation, after payment shall have been made to
the Series A Preferred Stockholders, the Series B Preferred Stockholders, the
Series C Preferred Stockholders and the Series D Preferred Stockholders of the
full amount to which each shall be entitled pursuant to Section A.2(a), Section
B.2(a), Section C.2(a) and Section D.2(a), respectively, with respect to each
other class or series of

                                       5
<PAGE>

capital stock (other than Common Stock) ranking on Liquidation junior to the
Series A Preferred Stock (in descending order of seniority), the Series A
Preferred Stockholders, as a class, shall be entitled to receive an amount equal
(and in like kind) to the aggregate preferential amount fixed for each such
junior class or series of capital stock, which amount shall be distributed among
the Series A Preferred Stockholders based on the number of shares of Common
Stock into which such shares of Series A Preferred Stock are then convertible.
If, upon any Liquidation, the assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the Series A
Preferred Stockholders and a class or series of capital stock (other than the
Common Stock) junior to the Series A Preferred Stock the full amounts to which
they shall be entitled pursuant to the immediately preceding sentence, the
holders of the Series A Preferred Stock and such other class or series of
capital stock shall share ratably in any distribution of assets according to the
respective preferential amounts fixed for the Series A Preferred Stock (pursuant
to Section A.2(a)) and such junior class or series of capital stock which would
be payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.


        d. In the event that after payment of the full amount to which the
holders of Series A Preferred Stock shall be entitled as aforesaid, cash or
other property remains, such remaining proceeds shall be distributed pro rata
among the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock and the Common Stock. For purposes
of determining its proportional share of the cash or other property, each share
of the Series A Preferred Stock shall be deemed to be that number of shares of
Common Stock into which such share of Series A Preferred Stock is then
convertible, rounded to the nearest one-tenth of a share.


     3. Merger, Consolidation, etc.
        --------------------------

        In the event the Corporation shall sell, lease or otherwise dispose of
all or substantially all of the assets of the Corporation or merge or
consolidate another corporation into or with the Corporation (other than a
merger or consolidation in which the Series A Preferred Stockholders receive
securities of the surviving corporation having substantially similar rights to
the Series A Preferred Stock and in which the stockholders of the Corporation
immediately prior to such a transaction are holders of at least a majority of
the voting securities of the surviving corporation immediately thereafter), then
the proceeds of or any property deliverable from such transaction shall be
distributed among the holders of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Common Stock according to the provisions of Section A.2 as if such
transaction were a Liquidation, unless the treatment of such a transaction as a
Liquidation pursuant to this Section A.3 is waived in writing by the Series A
Preferred Stockholders of record that hold at least two-thirds of the
outstanding Series A Preferred Stock. Such waiver by the Series A Preferred
Stockholders shall be binding upon the holders of the Series B Preferred Stock,
Series C Preferred Stock, the Series D Preferred Stock and Common Stock.

                                       6
<PAGE>

     4. Voting.
        ------

     a.   General. In addition to the rights otherwise provided for herein or by
          -------
law, the Series A Preferred Stockholders shall be entitled to vote, together
with the Series B Preferred Stockholders, Series C Preferred Stockholders, the
Series D Preferred Stock and Common Stockholders, as one class on all matters
submitted to a vote of stockholders, in the same manner and with the same effect
as the Common Stockholders. In any such vote, each share of Series A Preferred
Stock shall entitle the holder thereof to one vote per share for each share of
Common Stock (including fractional shares) into which each share of Series A
Preferred Stock is then convertible, rounded to the nearest one-tenth of a
share.


     b.   Election of Board of Directors.

          (i) (A) In addition to the rights specified in Section A.4(a), the
holders of a majority in voting power of the Series A-1 Preferred Stock, Series
A-2 Preferred Stock, Series A-4 Preferred Stock and Series A-5 Preferred Stock,
voting together as a separate class, shall have the exclusive right to elect to
the Board of Directors of the Corporation that number of directors which shall
be equal to a majority of the total number of directors on the Board of
Directors (the "Series A-1/A-2/A-4/A-5 Directors"). In any election of Series A-
1/A-2/A-4/A-5 Directors pursuant to this Section A.4(b), each outstanding share
of Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-4 Preferred
Stock and Series A-5 Preferred Stock shall entitle the holder thereof to the
number of votes per share that equals the number of shares of Common Stock
(including fractional shares) into which each such share is then convertible,
rounded up to the nearest one-tenth of a share. The voting rights of the holders
of Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-4 Preferred
Stock and Series A-5 Preferred Stock contained in this Section A.4(b) may be
exercised at a special meeting of the holders of Series A-1 Preferred Stock,
Series A-2 Preferred Stock, Series A-4 Preferred Stock and Series A-5 Preferred
Stock called as provided in accordance with the By-laws of the Corporation, at
any annual or special meeting of the stockholders of the Corporation, or by
written consent of the holders of Series A-1 Preferred Stock, Series A-2
Preferred Stock, Series A-4 Preferred Stock and Series A-5 Preferred Stock in
lieu of a meeting. The Series A-1/A-2/A-4/A-5 Directors elected pursuant to this
Section A.4(b) shall serve from the date of their election and qualification
until their successors have been duly elected and qualified.


              (B) In addition to the rights specified in Section A.4(a), the
holders of a majority in voting power of the Series A-3 Preferred Stock, voting
together as a separate class, shall have the exclusive right to elect two
directors to the Board of Directors of the Corporation (the "Series A-3
Directors"), one of which Series A-3 Directors shall be nominated by Rho
Management Trust II and one of which shall be nominated by Abingworth
Bioventures SICAV. In any election of Series A-3 Directors pursuant to this
Section A.4(b), each share of Series A-3 Preferred Stock shall entitle the
holder thereof to the number of votes per share that equals the number of shares
of Common Stock (including fractional shares) into which each such share is then


                                       7
<PAGE>

convertible, rounded up to the nearest one-tenth of a share. The voting rights
of the holders of Series A-3 Preferred Stock contained in this Section A.4(b)
may be exercised at a special meeting of the holders of Series A-3 Preferred
Stock called as provided in accordance with the By-laws of the Corporation, at
any annual or special meeting of the stockholders of the Corporation, or by
written consent of the holders of Series A-3 Preferred Stock in lieu of a
meeting. The Series A-3 Directors elected pursuant to this Section A.4(b) shall
serve from the date of their election and qualification until their successors
have been duly elected and qualified.

        (ii) A vacancy in the directorships to be elected pursuant to Section
A.4(b)(i) (including any vacancy created on account of an increase in the number
of directors on the Board of Directors) may be filled only by vote at a meeting
called in accordance with the By-laws of the Corporation or written consent in
lieu of a meeting in accordance with Section A.4(b)(i).


     c. Protective Provisions. So long as any Series A Preferred Stock is
        ---------------------
outstanding, the Corporation shall not, without the written consent in lieu of a
meeting, or the affirmative vote at a meeting called for such purpose, of Series
A Preferred Stockholders of record that hold at least a majority of the
outstanding Series A Preferred Stock, voting as a separate class:


        (i) authorize, issue or agree to authorize or issue any shares of
capital stock of the Corporation, any right or options to receive any capital
stock, or any security convertible into or exchangeable for capital stock,
except in each case, pursuant to the Equity Compensation Plan of the
Corporation;


        (ii) change as a whole, by subdivision or combination in any manner, the
number of shares of the Common Stock then outstanding into a different number of
shares, with or without par value, without making the identical change as a
whole in the number of shares of Series A Preferred Stock then outstanding;


        (iii) amend, alter or repeal, in any manner whatsoever, the
designations, powers, preferences, relative, participating, optional or other
special rights, qualifications, limitations and restrictions of the Series A
Preferred Stock;


        (iv) sell, abandon, transfer, lease or otherwise dispose of all or
substantially all of the properties or assets of the Corporation or any of its
subsidiaries;


        (v) declare or pay any dividend or make any distribution (whether in
cash, shares of capital stock of the Corporation, or other property) on shares
of its capital stock other than the Series A Preferred Stock;


                                       8
<PAGE>

             (vi) merge or consolidate with or into, or permit any subsidiary of
the Corporation to merge or consolidate with or into, any other corporation,
corporations or other entity or entities, or effect any transaction or series of
related transactions in which more than 50% of the voting power of the
Corporation is transferred;


             (vii) voluntarily dissolve, liquidate or wind-up or carry out any
partial liquidation or distribution or transaction in the nature of a partial
liquidation or distribution;


             (viii) increase the number of shares of any series of Preferred
Stock of the Corporation authorized to be issued;


             (ix) reclassify any shares of the Corporation's capital stock as
shares ranking senior to or on parity with the Series A Preferred Stock with
respect to rights on Liquidation, redemption or for the payment of any dividend
or distribution other than in Liquidation;


             (x) amend, alter or repeal any provision of the Certificate of
Incorporation of the Corporation;


             (xi) amend or repeal any provisions of the By-laws of the
Corporation so as to adversely affect the rights of the holders of the Series A
Preferred Stock; or


             (xii) directly or indirectly, redeem, purchase or otherwise acquire
for value (including through an exchange), or set apart money or other property
for any mandatory purchase or other analogous fund for the redemption, purchase
or acquisition of, any shares of Common Stock, except pursuant to (A) Section
A.6 hereof, or (B) the terms of any grant made under the Equity Compensation
Plan of the Corporation or other stock compensation plans for employees and
others who render services to the Corporation.


     5. Conversion.
        ----------

        a.   Right to Convert
             ----------------

             (i) Any Series A Preferred Stockholder shall have the right, at any
time or from time to time, prior to the closing date (the "Closing Date") of the
Company's first Public Offering (as hereinafter defined) to convert any or all
of its shares of Series A Preferred Stock into that number of fully paid and
nonassessable shares of Common Stock for each share of Series A Preferred Stock
equal to the quotient of the

                                       9
<PAGE>

Liquidation Preference divided by the applicable Series A Preferred Conversion
Price for that share (as defined in Section A.5(d)) (as last adjusted and then
in effect) rounded to the nearest one-tenth of a share.

          (ii) (A) Any Series A Preferred Stock that remains unconverted on the
Closing Date shall be automatically converted without notice and without any
action on the part of the holder thereof into shares of Common Stock on the
Closing Date in accordance with the preceding sentence. After the Closing Date
all rights of holders of shares of Series A Preferred Stock with respect to
Series A Preferred Stock, except the right to receive shares of Common Stock in
accordance with this Section, shall cease and the shares of Series A Preferred
Stock shall no longer be deemed to be outstanding, whether or not the
Corporation has received the certificates representing such shares.


               (B) A Public Offering is defined as an Underwritten Offering (as
hereinafter defined) by the Corporation of authorized but unissued shares of
Common Stock resulting in gross proceeds to the Company (before deducting
underwriting commissions and expenses of the offering) of not less than
$15,000,000 or such greater amount as is required to meet applicable listing
standards; provided that, with respect to the automatic conversion of the Series
A Preferred Stock, a Public Offering shall be at a price per share of not less
than $3.75 (as adjusted for stock splits, stock combinations, stock dividends
and similar transactions). An Underwritten Offering is defined as a firm
commitment offering by one or more underwriters in an offering registered under
the Securities Act of 1933, as amended (the "Securities Act").

               (C) The Corporation shall promptly send by first-class mail,
postage prepaid, to each Series A Preferred Stockholder at such holder's address
appearing on the Corporation's records a copy of (i) each registration statement
filed by the Corporation under the Securities Act and each amendment thereof and
each exhibit and schedule thereto and (ii) each order of the Securities and
Exchange Commission declaring any such registration statement to be effective.

               (D) Holders of Series A Preferred Stock converted into shares of
Common Stock pursuant to this Section A.5 shall be entitled to payment of any
accrued but unpaid cumulative dividends and any declared but unpaid dividends
payable with respect to such shares of Series A Preferred Stock, up to and
including the Series A Conversion Date (as hereinafter defined in Section
A.5(b)) or the Closing Date, as the case may be.

     b.   Mechanics of Conversion
          -----------------------

          (i) Any Series A Preferred Stockholder that exercises its right to
convert its shares of Series A Preferred Stock into Common Stock shall deliver
the certificate(s) for the shares to be converted ("Series A Preferred
Certificate"), duly endorsed or assigned in blank to the Corporation, during
regular business hours, at the office of the transfer agent of the Corporation,
if any, at the principal place of business of the Corporation or at such other
place as may be designated by the Corporation.

                                      10
<PAGE>

          (ii) Each Series A Preferred Certificate shall be accompanied by
written notice stating that such holder elects to convert such shares and
stating the name or names (with address) in which the certificate(s) for the
shares of Common Stock ("Common Certificate") are to be issued. Such conversion
shall be deemed to have been effected on the date when the aforesaid delivery is
made ("Series A Conversion Date").


          (iii) As promptly as practicable thereafter, the Corporation shall
issue and deliver to or upon the written order of such holder, at the place
designated by such holder, a Common Certificate(s) for the number of full shares
of Common Stock to which such holder is entitled and a check or cash for any
fractional interest in a share of Common Stock, as provided in Section A.5(c)
below, and for any accrued but unpaid cumulative dividends and any declared but
unpaid dividends, payable with respect to the converted shares of Series A
Preferred Stock, up to and including the Series A Conversion Date or the Closing
Date, as the case may be.


          (iv) The person in whose name each Common Certificate is to be issued
shall be deemed to have become a stockholder of record of Common Stock on the
applicable Series A Conversion Date or the Closing Date, as the case may be,
unless the transfer books of the Corporation are closed on that date, in which
event such holder shall be deemed to have become a stockholder of record on the
next succeeding date on which the transfer books are open; provided, that the
Series A Preferred Conversion Price shall be that in effect on the Series A
Conversion Date or the Closing Date, as the case may be.


          (v) Upon conversion of only a portion of the shares covered by a
Series A Preferred Certificate, the Corporation, at its own expense, shall issue
and deliver to or upon the written order of the holder of such Series A
Preferred Certificate, a new Series A Preferred Certificate representing the
number of unconverted shares of Series A Preferred Stock from the Series A
Preferred Certificate so surrendered.


     c.   Issuance of Common Stock on Conversion
          --------------------------------------

          (i) If a Series A Preferred Stockholder shall surrender more than one
Series A Preferred Certificate for conversion at any one time, the number of
such shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of Series A Preferred Stock so
surrendered.


          (ii) No fractional shares of Common Stock shall be issued upon
conversion of shares of Series A Preferred Stock. The Corporation shall pay a
cash adjustment for such fractional interest in an amount equal to the then
Current Market Price (as hereinafter defined) of a share of Common Stock
multiplied by such fractional interest.


                                      11
<PAGE>

     d. Conversion Price; Adjustment. The Series A Preferred Conversion Price
        ----------------------------
for the Series A-1 Preferred Stock, the Series A-2 Preferred Stock, the Series
A-3 Preferred Stock, the Series A-4 Preferred Stock or Series A-5 Preferred
Stock, as the case may be, shall initially be equal to the Liquidation
Preference for such series and shall be subject to adjustment from time to time
as follows:


     (i) If the Corporation shall at any time or from time to time after the
date of original issuance of the first share of the Series A-1 Preferred Stock
(the "Original Series A-1 Issuance Date"), the date of original issuance of the
first share of the Series A-2 Preferred Stock (the "Original Series A-2 Issuance
Date"), the date of original issuance of the first share of the Series A-3
Preferred Stock (the "Original Series A-3 Issuance Date"), the date of original
issuance of the first share of the Series A-4 Preferred Stock (the "Original
Series A-4 Issuance Date") or the date of original issuance of the first share
of Series A-5 Preferred Stock (the "Original Series A-5 Issuance Date") (each of
the Original Series A-1 Issuance Date, the Original Series A-2 Issuance Date,
the Original Series A-3 Issuance Date, the Original Series A-4 Issuance Date and
the Original Series A-5 Issuance Date are sometimes referred to as an "Original
Series A Issuance Date") issue any shares of Additional Stock (as hereinafter
defined in Section A.5 (d)(ii)), without consideration or for a consideration
per share of Common Stock or underlying Common Stock, as the case may be, less
than the applicable Series A Preferred Conversion Price in effect for such
Series A Preferred Stock immediately prior to such issue, the Series A Preferred
Conversion Price in effect for such series of Series A Preferred Stock
immediately prior to each such issue shall be adjusted to a price for such
series of Series A Preferred Stock determined by multiplying the applicable
Series A Preferred Conversion Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of shares of Common Stock which the aggregate
consideration received by the Corporation for all such Additional Stock so
issued would purchase at such Series A Preferred Conversion Price in effect
immediately prior to the issuance of such Additional Stock, and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of such Additional Stock; provided
that, for the purpose of this clause (i), all shares of Common Stock (except as
otherwise provided in this clause (i)) issuable upon conversion of all
outstanding shares of Series A Preferred Stock shall be deemed to be
outstanding, and immediately after any shares of Additional Stock are deemed to
be issued pursuant to paragraph (C) of this clause (i), such shares of
Additional Stock shall be deemed to be outstanding. For the purposes of any
adjustment of the Series A Preferred Conversion Price pursuant to this clause
(i), the following provisions shall be applicable:


     (A) In the case of the issuance of Common Stock in whole or in part for
cash, the consideration shall be deemed to be the amount of cash paid therefor,
plus the value of any property other than cash received by the Corporation as
provided in paragraph (B) of this clause (i), less any discounts, commissions or
other expenses allowed, paid or incurred by the Corporation for any underwriting
or otherwise in connection with the issuance and sale thereof.

                                      12
<PAGE>

     (B) In the case of the issuance of Common Stock for consideration in whole
or in part in property or consideration other than cash, the value of such
property or consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors of the
Corporation, irrespective of any accounting treatment; provided, however, that
                                                       --------  -------
such fair market value shall not exceed the aggregate Current Market Price of
the shares of Common Stock being issued, less any cash consideration paid for
such shares.


     (C) In the case of the issuance of (I) options to purchase or rights to
subscribe for Common Stock, (II) securities convertible into or exchangeable for
Common Stock or (III) options to purchase or rights to subscribe for such
convertible or exchangeable securities:


         (1) the aggregate maximum number of shares of Common Stock deliverable
upon exercise of such options to purchase, or rights to subscribe for Common
Stock shall be deemed to have been issued at the time such options or rights
were issued and for a consideration equal to the consideration (determined in
the manner provided in paragraphs (A) and (B) above), if any, received by the
Corporation upon the issuance of such options or rights plus the minimum
purchase price provided in such options or rights for the Common Stock covered
thereby;


         (2) the aggregate maximum number of shares of Common Stock deliverable
upon conversion of, or in exchange for, any such convertible or exchangeable
securities or upon the exercise of options to purchase, or rights to subscribe
for, such convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to the consideration received by the Corporation for any such securities and
related options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional consideration, if any, to be
received by the Corporation upon the conversion or exchange of such securities
or the exercise of any related options or rights (determined in the manner
provided in paragraphs (A) and (B) above); and


         (3) if there is any decrease in the conversion or exercise price of, or
any increase in the number of shares to be received upon exercise, conversion or
exchange of any such options, rights or convertible or exchangeable securities
(other than a change resulting from the antidilution provisions thereof), the
applicable Series A Preferred Conversion Price shall be automatically lowered to
reflect such change.


     (ii) "Additional Stock" shall mean any shares of Common Stock, other than
Excluded Stock (as hereinafter defined), or any shares of preferred


                                      13
<PAGE>

stock or other securities convertible into, exchangeable for or exercisable for
shares of Common Stock, other than Excluded Stock.


     (iii) "Excluded Stock" shall mean

           (A) The Series A Preferred Stock and Common Stock issued upon
conversion of any shares of Series A Preferred Stock;


           (B) Securities issued pursuant to the acquisition of another
corporation, partnership, joint venture, trust or other entity by the
Corporation by merger, consolidation, stock acquisition, reorganization, or
otherwise whereby the Corporation, or its stockholders of record immediately
prior to the effectiveness of such transaction, directly or indirectly own at
least the majority of the voting power of such other entity or the resulting or
surviving corporation immediately after such transaction;


           (C) Common Stock issued to employees, consultants or others who
provide services to the Corporation, pursuant to any options to purchase or
rights to subscribe for such Common Stock granted pursuant to the Equity
Compensation Plan of the Corporation or other stock compensation plans for
employees and others who render services to the Corporation, as approved by the
Corporation's Board of Directors, giving effect to appropriate adjustment to
prevent dilution thereof;


           (D) Warrants issued pursuant to (1) the Loan Agreement entered into
among the Corporation as borrower and certain Series A Preferred Stockholders as
lenders in December 1994, (2) the Loan Agreement entered into among the
Corporation as borrower and certain Series A Preferred Stockholders as lenders
in August 1995, (3) the Loan Agreement entered into among the Corporation as
borrower and certain Series A Preferred Stockholders as lenders in December
1995, (4) the Loan Agreement entered into among the Corporation as borrower and
certain Series A Preferred Stockholders as lenders in February 1996, (5) the
Loan Agreement entered into among the Corporation as borrower and certain Series
A Preferred Stockholders as lenders in June 1996 and (6) the Loan Agreement
entered into among the Corporation as borrower and certain Series A Preferred
Stockholders as lenders in September 1996, and Common Stock issued upon exercise
of such warrants;


           (E) The Series B Preferred Stock and Common Stock issued upon
conversion of any shares of Series B Preferred Stock;


           (F) The Series C Preferred Stock and Common Stock issued upon
conversion of any shares of Series C Preferred Stock;

                                      14
<PAGE>

          (G) The Series D Preferred Stock and Common Stock issued upon
conversion of any shares of Series D Preferred Stock;


          (H) Warrants issued in connection with the Master Lease Agreement
entered into between the Corporation as borrower and Transamerica Business
Credit Corporation as lender in June 1997 and Common Stock issued upon exercise
of such warrants; and


          (I) Securities authorized by the affirmative vote of at least 75% of
the Corporation's Board of Directors then in office to be issued in connection
with (x) bridge loan financings from institutional and/or other accredited
investors or (y) corporate partnering transactions or other strategic alliances
with pharmaceutical or other companies related to the Corporation's business.


          (iv) If the Corporation shall at any time after the applicable
Original Series A Issuance Date fix a record date for the subdivision or split-
up of shares of Common Stock, then, following the record date fixed for the
determination of holders of Common Stock entitled to receive such subdivision or
split-up (or the date of such subdivisions or split-up, if no record date is
fixed), the applicable Series A Preferred Conversion Price shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of the Series A Preferred Stock shall be increased in
proportion to such increase in outstanding shares.


          (v) If, at any time after the applicable Original Series A Issuance
Date, the number of shares of Common Stock outstanding is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date fixed for such combination (or the date of such combination, if no
record date is fixed), the applicable Series A Preferred Conversion Price shall
be appropriately increased so that the number of shares of Common Stock issuable
on conversion of each share of Series A Preferred Stock shall be decreased in
proportion to such decrease in outstanding shares.


          (vi) If, at any time after the applicable Original Series A Issuance
Date, there shall be any capital reorganization, or any reclassification of the
capital stock of the Corporation (other than a change in par value or from par
value to no par value or from no par value to par value or as a result of a
stock dividend or subdivision, split-up or combination of shares), or the
consolidation or merger of the Corporation with or into another corporation
(other than a consolidation or merger described in Section A.3 hereof or in
which the Corporation is the continuing corporation and which does not result in
any change in the powers, designations, preferences and rights (or the
qualifications, limitations or restrictions, if any) of the Series A Preferred
Stock) (an "Extraordinary Transaction"), the applicable Series A Preferred
Conversion Price with respect to the Series A Preferred Stock outstanding after
the Extraordinary

                                      15
<PAGE>

Transaction shall be adjusted to provide that the shares of Series A Preferred
Stock outstanding immediately prior to the effectiveness of the Extraordinary
Transaction shall be convertible into the kind and number of shares of stock or
other securities or property of the Corporation or of the corporation resulting
from or surviving such Extraordinary Transaction which the holder of the number
of shares of Common Stock deliverable (immediately prior to the effectiveness of
the Extraordinary Transaction) upon conversion of such Series A Preferred Stock
would have been entitled to receive upon such Extraordinary Transaction. The
provisions of this Section A.5(d)(vi) shall similarly apply to successive
Extraordinary Transactions.


     (vii) All calculations under this Section A.5(d) shall be made to the
nearest one-tenth of a cent ($.001) or to the nearest one-tenth of a share, as
the case may be.


     (viii) As used herein, the "Current Market Price" at any date of one share
of Common Stock shall be deemed to be the average of the daily closing prices
for the thirty (30) consecutive business days ending on the fifth (5th) business
day before the day in question (as adjusted for any stock dividend, split-up,
combination or reclassification that took effect during such thirty (30)
business day period) as follows:


            (A) If the Common Stock is listed or admitted for trading on a
national securities exchange, the closing price for each day shall be the last
reported sales price regular way or, in case no such reported sales took place
on such day, the average of the last reported bid and asked prices regular way,
in either case, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading.


            (B) If the Common Stock is not at the time listed or admitted for
trading on any such exchange, then such price as shall be equal to the last
reported sale price, or, if there is no such sale price, the average of the last
reported bid and asked prices, as reported by the National Association of
Securities Dealers Automated Quotations System ("NASDAQ") on such day.


            (C) If, on any day in question, the security shall not be listed or
admitted to trading on a national securities exchange or quoted on the NASDAQ,
then such price shall be equal to the last reported bid and asked prices on such
day as reported by the National Quotation Bureau, Inc. or any similar reputable
quotation and reporting service, if such quotation is not reported by the
National Quotation Bureau, Inc.


            (D) If the Common Stock is not traded in such manner that the
quotations referred to in this clause (viii) are available for the period
required



                                      16
<PAGE>

hereunder, the Current Market Price shall be determined by the Board of
Directors of the Corporation.


          (ix) In any case in which the provisions of this Section A.5(d) shall
require that an adjustment shall become effective immediately after a record
date for an event, the Corporation may defer until the occurrence of that event
(A) issuing to the holder of any share of Series A Preferred Stock converted
after such record date and before the occurrence of such event the additional
shares of capital stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of capital stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount in cash in lieu of a fractional share of
capital stock pursuant to Section A.5(c) above; provided, however, that the
                                                --------  -------
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares, in
such case, upon the occurrence of the event requiring such adjustment.


     e.   Notice of Adjustments
          ---------------------

          (i) Whenever the Series A Preferred Conversion Price shall be adjusted
as provided in Section A.5(d) above, the Corporation shall file, at its
principal office, at the office of the transfer agent for the Series A Preferred
Stock, if any, or at such other place as may be designated by the Corporation, a
statement, signed by its President and by its Chief Financial Officer, showing
in detail the facts requiring such adjustment and the Series A Preferred
Conversion Price that shall be in effect after such adjustment. The Corporation
shall also cause a copy of such statement to be sent by first-class, certified
mail, return receipt requested, postage prepaid, to each Series A Preferred
Stockholder at such holder's address appearing on the Corporation's records.
Where appropriate, such copy may be given in advance and may be included as part
of a notice required to be mailed under the provisions of clause (ii) below.

          (ii) In the event the Corporation shall propose to file a registration
statement under the Securities Act for a Public Offering or to take any action
of the types described in clauses (i), (iv), (v) or (vi) of Section A.5(d)
above, the Corporation shall give notice to each Series A Preferred Stockholder,
in the manner set forth in Section A.5(e)(i) above, which shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. The notice shall also set forth such facts as are
reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Series A Preferred
Conversion Price and the number, kind or class of shares or other securities or
property which shall be deliverable or purchasable upon the occurrence of such
action or deliverable upon conversion of shares of Series A Preferred Stock. In
the case of any action which would require the fixing of a record date, such
notice shall be given at least ten (10) days prior to the date so fixed, and in
case of all other action, such notice shall be given at least fifteen (15) days
prior to the taking of such proposed action. Failure to give


                                      17
<PAGE>

such notice, or any defect therein, shall not affect the legality or validity of
any such action.


     f. Transfer Taxes. The Corporation shall pay all documentary, stamp or
        --------------
other transactional taxes (excluding income taxes) attributable to the issuance
or delivery of shares of capital stock of the Corporation upon conversion of any
shares of Series A Preferred Stock; provided, however, that the Corporation
shall not be required to pay any taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificate for such shares
in a name other than that of the holder of the shares of Series A Preferred
Stock in respect of which such shares are being issued.


     g. Reservation of Common Stock. The Corporation shall at all times reserve,
        ---------------------------
free from preemptive rights, out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of
Series A Preferred Stock, sufficient shares of Common Stock to provide for the
conversion of all outstanding shares of Series A Preferred Stock.


     h. Status of Common Stock. All shares of Common Stock which may be issued
        ----------------------
in connection with the conversion provisions set forth herein will, upon
issuance by the Corporation, be validly issued, fully paid and nonassessable,
free from preemptive rights and free from all taxes, liens or charges with
respect thereto created or imposed by the Corporation.


     6.   Redemption.
          ----------

          a. (i) At the request of the holders of a majority of the Series A
Preferred Stock, excluding the Series A-5 Preferred Stockholders, then
outstanding (each, a "Holder" and collectively, the "Holders") made, from time
to time, at any date after March 12, 2002, the fifth anniversary of the Original
Series A-3 Issuance Date ("Fifth Anniversary Date") (the date fixed for any such
redemption, as determined pursuant to Section A.6(b) hereof, being a "Redemption
Date"), the Corporation shall redeem (unless otherwise prevented by law), at a
redemption price per share equal to the Liquidation Preference, plus an amount
equal to any accrued but unpaid cumulative dividends thereon and any declared
but unpaid dividends thereon, up to 25% of the shares of Series A Preferred
Stock held by the Holders on the Fifth Anniversary Date (the "Holders' Shares"),
and after each of the sixth, seventh and eighth anniversaries of the Original
Series A-3 Issuance Date, the foregoing redemption rights and obligations shall
extend to an additional 25% of the Holders' Shares. If any Holder transfers
shares of the Series A Preferred Stock after the Fifth Anniversary Date, the
foregoing redemption rights, to the extent not previously exercised by the
Holder, shall be allocated by the Corporation among the transferor and
transferees of such Holder's Shares, pro rata, each being entitled to redeem 25%
of the shares of the Series A Preferred Stock then held by such transferor or
transferee. The payment to be made to each Holder on the Redemption Date is
hereinafter referred to as the "Redemption Payment."

                                      18
<PAGE>

        (ii) At the request of the holders of a majority of the Series A-5
Preferred Stock then outstanding made, from time to time, at any date after the
fifth anniversary of the Original Series A-5 Issuance Date ("Fifth A-5
Anniversary Date"), the Corporation shall redeem (unless otherwise prevented by
law), at a redemption price per share equal to the Liquidation Preference, plus
an amount equal to any accrued but unpaid cumulative dividends thereon and any
declared but unpaid dividends thereon, up to 25% of the shares of Series A-5
Preferred Stock held by the holders on the Fifth A-5 Anniversary Date (the "A-5
Holders' Shares"), and after each of the sixth, seventh and eighth anniversaries
of the Original Series A-3 Issuance Date, the foregoing redemption rights and
obligations shall extend to an additional 25% of the A-5 Holders' Shares. If any
holder transfers shares of the Series A-5 Preferred Stock after the Fifth
Anniversary Date, the foregoing redemption rights, to the extent not previously
exercised by the holder, shall be allocated by the Corporation among the
transferor and transferees of such A-5 Holder's Shares, pro rata, each being
entitled to redeem 25% of the shares of the Series A-5 Preferred Stock then held
by such transferor or transferee.

     b. (i) Promptly after receipt of any such request, the Company shall fix a
date for redemption (the "Redemption Date") which shall be not less than 60 days
after the notice from the Holders requesting redemption. On and after the
Redemption Date, all rights of any Series A Preferred Stockholder with respect
to the shares of Series A Preferred Stock redeemed on that Redemption Date,
except the right to receive the Redemption Payment as provided herein, shall
cease, and such shares shall no longer be deemed to be outstanding, whether or
not the Corporation has received the certificates representing such shares, on
the condition that the Corporation pays or irrevocably deposits or sets aside
cash in an amount equal to, the Redemption Payment.


        (ii) Notice of the redemption of any shares of the Series A Preferred
Stock shall be mailed by first-class mail to each holder of record of such
shares at the address for such holder shown on the Corporation records, not less
than 30 nor more than 60 days prior to the Redemption Date; provided, however,
                                                            --------  -------
that neither the failure to mail any such notice nor any defects contained in
any such notice shall affect the validity of the proceedings for the redemption
of any of the shares to be redeemed. If less than all the shares owned by a
Holder are to be redeemed, the notice shall specify the number of shares and the
certificate numbers thereof which are to be redeemed.

     c. Notwithstanding anything to the contrary contained in this Section A.6,
the Corporation shall not be obligated to acquire any shares on any Redemption
Date to the extent that the acquisition thereof would violate any law, statute,
rule, regulation, policy or guideline promulgated by any federal, state, local
or foreign governmental authority applicable to the Corporation, provided that
the Corporation shall use all legally permissible methods in the reduction of
capital and revaluation of assets, including appraisal, in order to obtain a
legal source of funds with which to pay the Redemption Payment and shall acquire
such shares as soon as permitted by applicable laws, statutes, rules,
regulations, policies and guidelines.


                                      19
<PAGE>

     7.   Miscellaneous.
          -------------

            a. Shares of Series A Preferred Stock are not subject to or entitled
to the benefit of a sinking fund.


            b. Redeemed shares of Series A Preferred Stock shall not be reissued
but shall be retired. Upon the retirement of redeemed shares the capital of the
Corporation shall be reduced.


            c. The shares of the Series A Preferred Stock shall not have any
preferences, voting powers or relative, participating, optional, preemptive or
other special rights except as set forth above in this Certificate of
Incorporation of the Corporation, as amended from time to time.


B.   SERIES B PREFERRED STOCK
     ------------------------

            The Series B Preferred Stock shall have the following designations,
powers, preferences, relative, participating, optional or other special rights,
qualifications, limitations and restrictions:

     1.     Dividends.
            ---------

            a. Dividends are payable on the Series B Preferred Stock, when, as
and if declared by the Board of Directors.


            b. So long as any Series B Preferred Stock is outstanding the
Corporation shall not declare or pay any dividend or make any distribution
(whether in cash, shares of capital stock of the Corporation or other property)
on shares of its Common Stock unless prior thereto or simultaneously therewith
any dividends and distributions previously declared on the Series B Preferred
Stock shall have been paid or the Corporation shall have irrevocably deposited
or set aside cash or United States Obligations sufficient for the payment
thereof.


            c. If the Board of Directors declares dividends or other
distributions (other than on Liquidation) on the Common Stock in cash, property
or securities (including Common Stock) of the Corporation (or subscription or
other rights to purchase or acquire securities (including Common Stock) of the
Corporation), the Board of Directors shall simultaneously declare a dividend or
distribution at the same rate and in the same form on the Series B Preferred
Stock so that the Series B Preferred Stock participates equally with the Series
A Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock
and the Common Stock in such dividend or distribution. For purposes of
determining its proportional share of the dividend or distribution, each share
of the Series B Preferred Stock shall be deemed to be that number of shares of
Common


                                      20
<PAGE>

Stock into which such share of Series B Preferred Stock is then convertible,
rounded to the nearest one-tenth of a share.


     2.   Rights on Liquidation, Dissolution, Winding-up.
          ----------------------------------------------

          a. In the event of any Liquidation, whether voluntary or involuntary,
before any payment of cash or distribution of other property shall be made to
the Common Stockholders or any other class or series of stock ranking on
Liquidation junior to the Series B Preferred Stock, the Series B Preferred
Stockholders, subject to the rights of any series of preferred stock ranking
senior to the Series A Preferred Stock and the Series B Preferred Stock, shall
be entitled to receive out of the assets of the Corporation legally available
for distribution to its stockholders, $2.25 per share (as appropriately adjusted
for any combinations or divisions or similar recapitalizations affecting the
Series B Preferred Stock after the Original Series B Issuance Date (as
hereinafter defined)) (the "Series B Liquidation Preference"), whether from
capital, surplus or earnings, plus an amount equal to any declared but unpaid
dividends thereon. Upon the occurrence of a Liquidation, the Series B Preferred
Stock shall rank pari passu with the Series A Preferred Stock, the Series C
                 ---- -----
Preferred Stock, the Series D Preferred Stock and any other series of preferred
stock hereinafter created which ranks pari passu with the Series A Preferred
                                      ---- -----
Stock (the "Pari Passu Preferred Stock").
            ---- -----

          b. If, upon any Liquidation, the assets of the Corporation available
for distribution to its stockholders shall be insufficient to pay the Series A
Preferred Stockholders, the Series B Preferred Stockholders, the Series C
Preferred Stockholders, the Series D Preferred Stockholders and the holders of
Pari Passu Preferred Stock the full amounts to which they shall be entitled, the
---- -----
Series A Preferred Stockholders, the Series B Preferred Stockholders, the Series
C Preferred Stockholders, the Series D Preferred Stockholders and the holders of
Pari Passu Preferred Stock shall share ratably in any distribution of assets in
---- -----
proportion to the amounts payable to them if all amounts payable with respect to
such shares on Liquidation were paid in full.


          c. In the event of any Liquidation, so long as the Series A Preferred
Stockholders are entitled to distributions pursuant to Section A.2(c) and such
distributions have been paid in full, and after payment shall have been made to
the Series A Preferred Stockholders, the Series B Preferred Stockholders, the
Series C Preferred Stockholders, the Series D Preferred Stockholders and the
holders of Pari Passu Preferred Stock of the full amount to which they shall be
           ---- -----
entitled pursuant to Section B.2(a), with respect to each other class or series
of capital stock (other than Common Stock) ranking on Liquidation junior to the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stockholders and the Pari Passu Preferred Stock
                                                   ---- -----
(in descending order of seniority), the Series A Preferred Stockholders, the
Series B Preferred Stockholders, the Series C Preferred Stockholders, the Series
D Preferred Stockholders and the holders of Pari Passu Preferred Stock, as a
                                            ---- -----
class, shall be entitled to receive an amount equal (and in like kind) to the
aggregate preferential amount


                                      21
<PAGE>

fixed for each such junior class or series of capital stock, which amount shall
be distributed among the Series A Preferred Stockholders, the Series B Preferred
Stockholders, the Series C Preferred Stockholders, the Series D Preferred
Stockholders and the holders of Pari Passu Preferred Stock in an equal amount
                                ---- -----
per share of the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stockholders and the Pari Passu
                                                                      ---- -----
Preferred Stock then outstanding. If, upon any Liquidation, the assets of the
Corporation available for distribution to its stockholders shall be insufficient
to pay the Series A Preferred Stockholders, the Series B Preferred Stockholders,
the Series C Preferred Stockholders, the Series D Preferred Stockholders and the
holders of Pari Passu Preferred Stock and a class or series of capital stock
           ---- -----
(other than the Common Stock) junior to the Series A Preferred Stock, the Series
B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stockholders and the Pari Passu Preferred Stock the full amounts to which they
                     ---- -----
shall be entitled pursuant to the immediately preceding sentence, the Series A
Preferred Stockholders, the Series B Preferred Stockholders, the Series C
Preferred Stockholders, the Series D Preferred Stockholders and the holders of
Pari Passu Preferred Stock and such other class or series of capital stock shall
---- -----
share ratably in any distribution of assets according to the respective
preferential amounts fixed for the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stockholders and the Pari Passu Preferred Stock and such junior class or series
                     ---- -----
of capital stock which would be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to such shares
were paid in full.


          d. In the event that after payment of the full amount to which the
Series A Preferred Stockholders, the Series B Preferred Stockholders, the Series
C Preferred Stockholders, the Series D Preferred Stockholders and the holders of
Pari Passu Preferred Stock shall be entitled as aforesaid, cash or other
---- -----
property remains, such remaining proceeds shall be distributed pro rata among
                                                               --- ----
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stockholders, the Pari Passu Preferred
                                                          ---- -----
Stock and the Common Stock. For purposes of determining its proportional share
of the cash or other property, each share of the Series B Preferred Stock shall
be deemed to be that number of shares of Common Stock into which such share of
Series B Preferred Stock is then convertible, rounded to the nearest one-tenth
of a share.


     3.   Voting.
          ------

          a. General. In addition to the rights otherwise provided for herein or
             -------
by law, the Series B Preferred Stockholders shall be entitled to vote, together
with the Series A Preferred Stockholders, the Series C Preferred Stockholders,
the Series D Preferred Stockholders the holders of any other class or series
entitled to vote on such matters and the Common Stockholders, as one class on
all matters submitted to a vote of stockholders, in the same manner and with the
same effect as the Series A Preferred Stockholders, the Series C Preferred
Stockholders, the Series D Preferred Stockholders and the Common Stockholders.
In any such vote, each share of Series B Preferred Stock




                                      22
<PAGE>

shall entitle the holder thereof to one vote per share for each share of Common
Stock (including fractional shares) into which each share of Series B Preferred
Stock is then convertible, rounded to the nearest one-tenth of a share.


          b. Protective Provision. So long as any Series B Preferred Stock is
             --------------------
outstanding, the Corporation shall not, without the written consent in lieu of a
meeting, or the affirmative vote at a meeting called for such purpose, of Series
B Preferred Stockholders of record that hold at least a majority of the
outstanding Series B Preferred Stock, voting as a separate class, amend, alter
or repeal, in any manner whatsoever, the designations, powers, preferences,
relative, participating, optional or other special rights, qualifications,
limitations and restrictions of the Series B Preferred Stock.


     4.   Conversion.
          ----------
          a.   Right to Convert.
               ----------------
               (i) Any Series B Preferred Stockholder shall have the right, at
any time or from time to time, prior to the Closing Date of the Corporation's
first Underwritten Offering in which all of the then outstanding shares of
Series A Preferred Stock are converted in connection therewith, to convert any
or all of its shares of Series B Preferred Stock into that number of fully paid
and nonassessable shares of Common Stock for each share of Series B Preferred
Stock equal to the quotient of the Series B Liquidation Preference divided by
the Series B Preferred Conversion Price for that share (as defined in Section
B.4(d)) (as last adjusted and then in effect) rounded to one-tenth of a share.


               (ii) (A) Any Series B Preferred Stock that remains unconverted on
the Closing Date shall be automatically converted without notice and without any
action on the part of the holder thereof into shares of Common Stock on the
Closing Date in accordance with Section B.4(a)(i). After the Closing Date all
rights of holders of shares of Series B Preferred Stock with respect to Series B
Preferred Stock, except the right to receive shares of Common Stock in
accordance with this Section B.4, shall cease and the shares of Series B
Preferred Stock shall no longer be deemed to be outstanding, whether or not the
Corporation has received the certificates representing such shares.


                    (B) The Corporation shall promptly send by first-class mail,
postage prepaid, to each Series B Preferred Stockholder at such holder's address
appearing on the Corporation's records a copy of (i) each registration statement
filed by the Corporation under the Securities Act and each amendment thereof and
each exhibit and schedule thereto and (ii) each order of the Securities and
Exchange Commission declaring any such registration statement to be effective.


                    (C) Holders of Series B Preferred Stock converted into
shares of Common Stock pursuant to this Section B.4 shall be entitled to payment
of any



                                      23
<PAGE>

declared but unpaid dividends payable with respect to such shares of Series B
Preferred Stock, up to and including the Series B Conversion Date (as defined in
Section B.4(b) below) or the Closing Date, as the case may be.

     b.   Mechanics of Conversion.
          -----------------------

         (i)   Any Series B Preferred Stockholder that exercises its right to
convert its shares of Series B Preferred Stock into Common Stock shall deliver
the certificate(s) for the shares to be converted ("Series B Preferred
Certificate"), duly endorsed or assigned in blank to the Corporation, during
regular business hours, at the office of the transfer agent of the Corporation,
if any, at the principal place of business of the Corporation or at such other
place as may be designated by the Corporation.


         (ii)  Each Series B Preferred Certificate shall be accompanied by
written notice stating that such holder elects to convert such shares and
stating the name or names (with address) in which the Common Certificates are to
be issued. Such conversion shall be deemed to have been effected on the date
when the aforesaid delivery is made ("Series B Conversion Date").


         (iii) As promptly as practicable thereafter, the Corporation shall
issue and deliver to or upon the written order of such holder, at the place
designated by such holder, a Common Certificate(s) for the number of full shares
of Common Stock to which such holder is entitled and a check or cash for any
fractional interest in a share of Common Stock, as provided in Section B.4(c)
below, and for any declared but unpaid dividends, payable with respect to the
converted shares of Series B Preferred Stock, up to and including the Series B
Conversion Date or the Closing Date, as the case may be.



         (iv)  The person in whose name each Common Certificate is to be issued
shall be deemed to have become a stockholder of record of Common Stock on the
applicable Series B Conversion Date or the Closing Date, as the case may be,
unless the transfer books of the Corporation are closed on that date, in which
event such holder shall be deemed to have become a stockholder of record on the
next succeeding date on which the transfer books are open; provided, that the
                                                           --------
Series B Preferred Conversion Price shall be that in effect on the Series B
Conversion Date or the Closing Date, as the case may be.


         (v)   Upon conversion of only a portion of the shares covered by a
Series B Preferred Certificate, the Corporation, at its own expense, shall issue
and deliver to or upon the written order of the holder of such Series B
Preferred Certificate, a new Series B Preferred Certificate representing the
number of unconverted shares of Series B Preferred Stock from the Series B
Preferred Certificate so surrendered.



                                      24
<PAGE>

     c.   Issuance of Common Stock on Conversion.
          --------------------------------------
          (i) If a Series B Preferred Stockholder shall surrender more than one
Series B Preferred Certificate for conversion at any one time, the number of
such shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of Series B Preferred Stock so
surrendered.


          (ii) No fractional shares of Common Stock shall be issued upon
conversion of shares of Series B Preferred Stock. The Corporation shall pay a
cash adjustment for such fractional interest in an amount equal to the then
Current Market Price of a share of Common Stock multiplied by such fractional
interest.


      d.  Conversion Price; Adjustment. The Series B Preferred Conversion Price
          ----------------------------
shall initially be equal to the Series B Liquidation Preference and shall be
subject to adjustment from time to time as follows:


          (i)   If the Corporation shall at any time after the original issuance
of the first share of Series B Preferred Stock (the "Original Series B Issuance
Date") fix a record date for the subdivision or split-up of shares of Common
Stock, then, following the record date fixed for the determination of holders of
Common Stock entitled to receive such subdivision or split-up (or the date of
such subdivisions or split-up, if no record date is fixed), the Series B
Preferred Conversion Price shall be appropriately decreased so that the number
of shares of Common Stock issuable on conversion of each share of the Series B
Preferred Stock shall be increased in proportion to such increase in outstanding
shares.

          (ii)  If, at any time after the Original Series B Issuance Date, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date fixed
for such combination (or the date of such combination, if no record date is
fixed), the Series B Preferred Conversion Price shall be appropriately increased
so that the number of shares of Common Stock issuable on conversion of each
share of Series B Preferred Stock shall be decreased in proportion to such
decrease in outstanding shares.


          (iii) If, at any time after the Original Series B Issuance Date, there
shall be any Extraordinary Transaction, the Series B Preferred Conversion Price
with respect to the Series B Preferred Stock outstanding after the Extraordinary
Transaction shall be adjusted to provide that the shares of Series B Preferred
Stock outstanding immediately prior to the effectiveness of the Extraordinary
Transaction shall be convertible into the kind and number of shares of stock or
other securities or property of the Corporation or of the corporation resulting
from or surviving such Extraordinary Transaction which the holder of the number
of shares of Common Stock deliverable (immediately prior to the effectiveness of
the Extraordinary Transaction) upon conversion of such Series B Preferred Stock
would have been entitled to receive upon


                                      25
<PAGE>

such Extraordinary Transaction. The provisions of this Section B.4(d)(iii) shall
similarly apply to successive Extraordinary Transactions.


          (iv) All calculations under this Section B.4(d) shall be made to the
nearest one-tenth of a cent ($.001) or to the nearest one-tenth of a share, as
the case may be.


          (v) In any case in which the provisions of this Section B.4(d) shall
require that an adjustment shall become effective immediately after a record
date for an event, the Corporation may defer until the occurrence of that event
(A) issuing to the holder of any share of Series B Preferred Stock converted
after such record date and before the occurrence of such event the additional
shares of capital stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of capital stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount in cash in lieu of a fractional share of
capital stock pursuant to Section B.4(c) above; provided, however, that the
                                                --------  -------
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares, in
such case, upon the occurrence of the event requiring such adjustment.


     e.   Notice of Adjustments.
          ---------------------

          (i)  Whenever the Series B Preferred Conversion Price shall be
adjusted as provided in Section B.4(d) above, the Corporation shall file, at its
principal office, at the office of the transfer agent for the Series B Preferred
Stock, if any, or at such other place as may be designated by the Corporation, a
statement, signed by its President and by its Chief Financial Officer, showing
in detail the facts requiring such adjustment and the Series B Preferred
Conversion Price that shall be in effect after such adjustment. The Corporation
shall also cause a copy of such statement to be sent, by first-class, certified
mail, return receipt requested, postage prepaid, to each Series B Preferred
Stockholder at such holder's address appearing on the Corporation's records.
Where appropriate, such copy may be given in advance and may be included as part
of a notice required to be mailed under the provisions of clause (ii) below.


          (ii) In the event the Corporation shall propose to file a registration
statement under the Securities Act for a Public Offering or to take any action
of the types described in clauses (i), (ii) or (iii) of Section B.4(d) above,
the Corporation shall give notice to each Series B Preferred Stockholder, in the
manner set forth in Section B.4(e)(i) above, which shall specify the record
date, if any, with respect to any such action and the date on which such action
is to take place. The notice shall also set forth such facts as are reasonably
necessary to indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Series B Preferred Conversion Price
and the number, kind or class of shares or other securities or property which
shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of shares of Series B Preferred Stock. In the case
of any


                                      26
<PAGE>

action which would require the fixing of a record date, such notice shall be
given at least ten (10) days prior to the date so fixed, and in case of all
other action, such notice shall be given at least fifteen (15) days prior to the
taking of such proposed action. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any such action.


          f. Transfer Taxes. The Corporation shall pay all documentary, stamp or
             --------------
other transactional taxes (excluding income taxes) attributable to the issuance
or delivery of shares of capital stock of the Corporation upon conversion of any
shares of Series B Preferred Stock; provided, however, that the Corporation
                                    --------  -------
shall not be required to pay any taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificate for such shares
in a name other than that of the holder of the shares of Series B Preferred
Stock in respect of which such shares are being issued.


          g. Reservation of Common Stock. The Corporation shall at all times
             ---------------------------
reserve, free from preemptive rights, out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of Series B Preferred Stock, sufficient shares of Common Stock to provide
for the conversion of all outstanding shares of Series B Preferred Stock.


          h. Status of Common Stock. All shares of Common Stock which may be
             ----------------------
issued in connection with the conversion provisions set forth herein will, upon
issuance by the Corporation, be validly issued, fully paid and nonassessable,
free from preemptive rights and free from all taxes, liens or charges with
respect thereto created or imposed by Corporation.


     5.   Miscellaneous.
          -------------

          a. Shares of Series B Preferred Stock are not subject to or entitled
to redemption or the benefit of a sinking fund.


          b. Converted shares of Series B Preferred Stock shall not be reissued
but shall be retired. Upon the retirement of converted shares the capital of the
Corporation shall be reduced.


          c. The shares of the Series B Preferred Stock shall not have any
preferences, voting powers or relative, participating, optional, preemptive or
other special rights except as set forth above in this Certificate of
Incorporation of the Corporation, as amended from time to time.


                                      27
<PAGE>

C.   SERIES C PREFERRED STOCK
     ------------------------

         The Series C Preferred Stock shall have the following designations,
powers, preferences, relative, participating, optional or other special rights,
qualifications, limitations and restrictions:

     1.  Dividends.
         ---------
         a. Dividends are payable on the Series C Preferred Stock, when, as and
if declared by the Board of Directors.


         b. So long as any Series C Preferred Stock is outstanding the
Corporation shall not declare or pay any dividend or make any distribution
(whether in cash, shares of capital stock of the Corporation or other property)
on shares of its Common Stock unless prior thereto or simultaneously therewith
any dividends and distributions previously declared on the Series C Preferred
Stock shall have been paid or the Corporation shall have irrevocably deposited
or set aside cash or United States Obligations sufficient for the payment
thereof.


         c. If the Board of Directors declares dividends or other distributions
(other than on Liquidation) on the Common Stock in cash, property or securities
(including Common Stock) of the Corporation (or subscription or other rights to
purchase or acquire securities (including Common Stock) of the Corporation), the
Board of Directors shall simultaneously declare a dividend or distribution at
the same rate and in the same form on the Series C Preferred Stock so that the
Series C Preferred Stock participates equally with the Series A Preferred Stock,
the Series B Preferred Stock and the Common Stock in such dividend or
distribution. For purposes of determining its proportional share of the dividend
or distribution, each share of the Series C Preferred Stock shall be deemed to
be that number of shares of Common Stock into which such share of Series C
Preferred Stock is then convertible, rounded to the nearest one-tenth of a
share.


     2.  Rights on Liquidation, Dissolution, Winding-up.
         ----------------------------------------------

         a. In the event of any Liquidation, whether voluntary or involuntary,
before any payment of cash or distribution of other property shall be made to
the Common Stockholders or any other class or series of stock ranking on
Liquidation junior to the Series C Preferred Stock, the Series C Preferred
Stockholders, subject to the rights of any series of preferred stock ranking
senior to the Series A Preferred Stock and the Series C Preferred Stock, shall
be entitled to receive out of the assets of the Corporation legally available
for distribution to its stockholders, $2.50 per share (as appropriately adjusted
for any combinations or divisions or similar recapitalizations affecting the
Series C Preferred Stock after the Original Series C Issuance Date (as
hereinafter defined)) (the "Series C Liquidation Preference"), whether from
capital, surplus or earnings, plus an amount equal to any declared but unpaid
dividends thereon. Upon the occurrence of a


                                      28
<PAGE>

Liquidation, the Series C Preferred Stock shall rank pari passu with the Series
                                                     ---- -----
A Preferred Stock, the Series B Preferred Stock and the Pari Passu Preferred
                                                        ---- -----
Stock.


     b. If, upon any Liquidation, the assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the Series A
Preferred Stockholders, the Series B Preferred Stockholders, the Series C
Preferred Stockholders and the holders of Pari Passu Preferred Stock the full
                                          ---- -----
amounts to which they shall be entitled, the Series A Preferred Stockholders,
the Series B Preferred Stockholders, the Series C Preferred Stockholders and the
holders of Pari Passu Preferred Stock shall share ratably in any distribution of
           ---- -----
assets in proportion to the amounts payable to them if all amounts payable with
respect to such shares on Liquidation were paid in full.


     c. In the event of any Liquidation, so long as the Series A Preferred
Stockholders are entitled to distributions pursuant to Section A.2(c) and such
distributions have been paid in full, and after payment shall have been made to
the Series A Preferred Stockholders, the Series B Preferred Stockholders, the
Series C Preferred Stockholders and the holders of Pari Passu Preferred Stock of
                                                   ---- -----
the full amount to which they shall be entitled pursuant to Section C.2(a), with
respect to each other class or series of capital stock (other than Common Stock)
ranking on Liquidation junior to the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Pari Passu Preferred Stock
                                                      ---- -----
(in descending order of seniority), the Series A Preferred Stockholders, the
Series B Preferred Stockholders, the Series C Preferred Stockholders and the
holders of Pari Passu Preferred Stock, as a class, shall be entitled to receive
           ---- -----
an amount equal (and in like kind) to the aggregate preferential amount fixed
for each such junior class or series of capital stock, which amount shall be
distributed among the Series A Preferred Stockholders, the Series B Preferred
Stockholders, the Series C Preferred Stockholders and the holders of Pari Passu
                                                                     ---- -----
Preferred Stock in an equal amount per share of the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock and the Pari Passu
                                                                   ---- -----
Preferred Stock then outstanding. If, upon any Liquidation, the assets of the
Corporation available for distribution to its stockholders shall be insufficient
to pay the Series A Preferred Stockholders, the Series B Preferred Stockholders,
the Series C Preferred Stockholders and the holders of Pari Passu Preferred
                                                       ---- -----
Stock and a class or series of capital stock (other than the Common Stock)
junior to the Series A Preferred Stock, the Series B Preferred Stock, the Series
C Preferred Stock and the Pari Passu Preferred Stock the full amounts to which
                          ---- -----
they shall be entitled pursuant to the immediately preceding sentence, the
Series A Preferred Stockholders, the Series B Preferred Stockholders, the Series
C Preferred Stockholders and the holders of Pari Passu Preferred Stock and such
                                            ---- -----
other class or series of capital stock shall share ratably in any distribution
of assets according to the respective preferential amounts fixed for the Series
A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock
and the Pari Passu Preferred Stock and such junior class or series of capital
        ---- -----
stock which would be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares were paid
in full.


                                      29
<PAGE>

          d. In the event that after payment of the full amount to which the
Series A Preferred Stockholders, the Series B Preferred Stockholders, the Series
C Preferred Stockholders and the holders of Pari Passu Preferred Stock shall be
                                            ---- -----
entitled as aforesaid, cash or other property remains, such remaining proceeds
shall be distributed pro rata among the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Pari Passu Preferred Stock
                                                   ---- -----
and the Common Stock. For purposes of determining its proportional share of the
cash or other property, each share of the Series C Preferred Stock shall be
deemed to be that number of shares of Common Stock into which such share of
Series C Preferred Stock is then convertible, rounded to the nearest one-tenth
of a share.


     3.   Voting.
          ------

          a. General. In addition to the rights otherwise provided for herein or
             -------
by law, the Series C Preferred Stockholders shall be entitled to vote, together
with the Series A Preferred Stockholders, the Series B Preferred Stockholders,
the holders of any other class or series entitled to vote on such matters and
the Common Stockholders, as one class on all matters submitted to a vote of
stockholders, in the same manner and with the same effect as the Series A
Preferred Stockholders, the Series B Preferred Stockholders and the Common
Stockholders. In any such vote, each share of Series C Preferred Stock shall
entitle the holder thereof to one vote per share for each share of Common Stock
(including fractional shares) into which each share of Series C Preferred Stock
is then convertible, rounded to the nearest one-tenth of a share.


          b. Protective Provision. So long as any Series C Preferred Stock is
             --------------------
outstanding, the Corporation shall not, without the written consent in lieu of a
meeting, or the affirmative vote at a meeting called for such purpose, of Series
C Preferred Stockholders of record that hold at least a majority of the
outstanding Series C Preferred Stock, voting as a separate class, amend, alter
or repeal, in any manner whatsoever, the designations, powers, preferences,
relative, participating, optional or other special rights, qualifications,
limitations and restrictions of the Series C Preferred Stock.


     4.   Conversion.
          ----------

          a. Right to Convert.
             ----------------
            (i) Any Series C Preferred Stockholder shall have the right, at any
time or from time to time, prior to the Closing Date of the Corporation's first
Underwritten Offering in which all of the then outstanding shares of Series A
Preferred Stock are converted in connection therewith, to convert any or all of
its shares of Series C Preferred Stock into that number of fully paid and
nonassessable shares of Common Stock for each share of Series C Preferred Stock
equal to the quotient of the Series C Liquidation Preference divided by the
Series C Preferred Conversion Price for that share (as defined in Section
C.4(d)) (as last adjusted and then in effect) rounded to one-tenth of a share.


                                      30
<PAGE>

          (ii) (A) Any Series C Preferred Stock that remains unconverted on the
Closing Date shall be automatically converted without notice and without any
action on the part of the holder thereof into shares of Common Stock on the
Closing Date in accordance with Section C.4(a)(i). After the Closing Date all
rights of holders of shares of Series C Preferred Stock with respect to Series C
Preferred Stock, except the right to receive shares of Common Stock in
accordance with this Section C.4, shall cease and the shares of Series C
Preferred Stock shall no longer be deemed to be outstanding, whether or not the
Corporation has received the certificates representing such shares.


               (B) The Corporation shall promptly send by first-class mail,
postage prepaid, to each Series C Preferred Stockholder at such holder's address
appearing on the Corporation's records a copy of (i) each registration statement
filed by the Corporation under the Securities Act and each amendment thereof and
each exhibit and schedule thereto and (ii) each order of the Securities and
Exchange Commission declaring any such registration statement to be effective.


               (C) Holders of Series C Preferred Stock converted into shares of
Common Stock pursuant to this Section C.4 shall be entitled to payment of any
declared but unpaid dividends payable with respect to such shares of Series C
Preferred Stock, up to and including the Series C Conversion Date (as defined in
Section C.4(b) below) or the Closing Date, as the case may be.


     b. Mechanics of Conversion.
        -----------------------

          (i) Any Series C Preferred Stockholder that exercises its right to
convert its shares of Series C Preferred Stock into Common Stock shall deliver
the certificate(s) for the shares to be converted ("Series C Preferred
Certificate"), duly endorsed or assigned in blank to the Corporation, during
regular business hours, at the office of the transfer agent of the Corporation,
if any, at the principal place of business of the Corporation or at such other
place as may be designated by the Corporation.


          (ii) Each Series C Preferred Certificate shall be accompanied by
written notice stating that such holder elects to convert such shares and
stating the name or names (with address) in which the Common Certificates are to
be issued. Such conversion shall be deemed to have been effected on the date
when the aforesaid delivery is made ("Series C Conversion Date").


          (iii) As promptly as practicable thereafter, the Corporation shall
issue and deliver to or upon the written order of such holder, at the place
designated by such holder, a Common Certificate(s) for the number of full shares
of Common Stock to which such holder is entitled and a check or cash for any
fractional interest in a share of Common Stock, as provided in Section C.4(c)
below, and for any declared but unpaid


                                      31
<PAGE>

dividends, payable with respect to the converted shares of Series C Preferred
Stock, up to and including the Series C Conversion Date or the Closing Date, as
the case may be.


          (iv) The person in whose name each Common Certificate is to be issued
shall be deemed to have become a stockholder of record of Common Stock on the
Series C Conversion Date or the Closing Date, as the case may be, unless the
transfer books of the Corporation are closed on that date, in which event such
holder shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open; provided, that the Series
                                                      --------
C Preferred Conversion Price shall be that in effect on the Series C Conversion
Date or the Closing Date, as the case may be.


          (v) Upon conversion of only a portion of the shares covered by a
Series C Preferred Certificate, the Corporation, at its own expense, shall issue
and deliver to or upon the written order of the holder of such Series C
Preferred Certificate, a new Series C Preferred Certificate representing the
number of unconverted shares of Series C Preferred Stock from the Series C
Preferred Certificate so surrendered.


     c. Issuance of Common Stock on Conversion.
        --------------------------------------
          (i) If a Series C Preferred Stockholder shall surrender more than one
Series C Preferred Certificate for conversion at any one time, the number of
such shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of Series C Preferred Stock so
surrendered.


          (ii) No fractional shares of Common Stock shall be issued upon
conversion of shares of Series C Preferred Stock. The Corporation shall pay a
cash adjustment for such fractional interest in an amount equal to the then
Current Market Price of a share of Common Stock multiplied by such fractional
interest.


     d. Conversion Price; Adjustment. The Series C Preferred Conversion Price
        ----------------------------
shall initially be equal to the Series C Liquidation Preference and shall be
subject to adjustment from time to time as follows:


          (i) If the Corporation shall at any time or from time to time after
the date of original issuance of the first share of the Series C Preferred Stock
(the "Original Series C Issuance Date") issue any shares of Additional Stock,
without consideration or for a consideration per share of Common Stock or
underlying Common Stock, as the case may be, less than the Series C Preferred
Conversion Price in effect for such Series C Preferred Stock immediately prior
to such issue, the Series C Preferred Conversion Price in effect for the Series
C Preferred Stock immediately prior to each such issue shall be adjusted to a
price for the Series C Preferred Stock determined by multiplying the Series C
Preferred Conversion Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to



                                      32
<PAGE>

such issue plus the number of shares of Common Stock which the aggregate
consideration received by the Corporation for all such Additional Stock so
issued would purchase at such Series C Preferred Conversion Price in effect
immediately prior to the issuance of such Additional Stock, and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of such Additional Stock; provided
that, for the purpose of this clause (i), all shares of Common Stock (except as
otherwise provided in this clause (i)) issuable upon conversion of all
outstanding shares of Series C Preferred Stock shall be deemed to be
outstanding, and immediately after any shares of Additional Stock are deemed to
be issued pursuant to paragraph (C) of this clause (i), such shares of
Additional Stock shall be deemed to be outstanding. For the purposes of any
adjustment of the Series C Preferred Conversion Price pursuant to this clause
(i), the following provisions shall be applicable:


        (A) In the case of the issuance of Common Stock in whole or in part for
cash, the consideration shall be deemed to be the amount of cash paid therefor,
plus the value of any property other than cash received by the Corporation as
provided in paragraph (B) of this clause (i), less any discounts, commissions or
other expenses allowed, paid or incurred by the Corporation for any underwriting
or otherwise in connection with the issuance and sale thereof.


        (B) In the case of the issuance of Common Stock for consideration in
whole or in part in property or consideration other than cash, the value of such
property or consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors of the
Corporation, irrespective of any accounting treatment; provided, however, that
                                                       --------  -------
such fair market value shall not exceed the aggregate Current Market Price of
the shares of Common Stock being issued, less any cash consideration paid for
such shares.


        (C) In the case of the issuance of (I) options to purchase or rights to
subscribe for Common Stock, (II) securities convertible into or exchangeable for
Common Stock or (III) options to purchase or rights to subscribe for such
convertible or exchangeable securities:


            (1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase, or rights to subscribe
for Common Stock shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in paragraphs (A) and (B) above), if any,
received by the Corporation upon the issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;


                                      33
<PAGE>

                        (2) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of, or in exchange for, any such convertible
or exchangeable securities or upon the exercise of options to purchase, or
rights to subscribe for, such convertible or exchangeable securities and
subsequent conversion or exchange thereof shall be deemed to have been issued at
the time such securities were issued or such options or rights were issued and
for a consideration equal to the consideration received by the Corporation for
any such securities and related options or rights (excluding any cash received
on account of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(determined in the manner provided in paragraphs (A) and (B) above); and

                        (3) if there is any decrease in the conversion or
exercise price of, or any increase in the number of shares to be received upon
exercise, conversion or exchange of any such options, rights or convertible or
exchangeable securities (other than a change resulting from the antidilution
provisions thereof), the Series C Preferred Conversion Price shall be
automatically lowered to reflect such change.

         (ii)    In the event that the price per share to the public of the
Common Stock (the "Series C Per Share Price") in the Corporation's first firm
commitment offering by one or more underwriters of authorized but unissued
shares of Common Stock registered under the Securities Act is less than $2.50
per share (as adjusted for stock splits, stock combinations, stock dividends and
similar transactions), the Series C Preferred Conversion Price for the Series C
Preferred Stock shall be adjusted on the Closing Date to the Series C Per Share
Price (and thereafter subject to further adjustment pursuant to Section
C.4(d)(i) above).

         (iii)   If the Corporation shall at any time after the Original Series
C Issuance Date fix a record date for the subdivision or split-up of shares of
Common Stock, then, following the record date fixed for the determination of
holders of Common Stock entitled to receive such subdivision or split-up (or the
date of such subdivisions or split-up, if no record date is fixed), the Series C
Preferred Conversion Price shall be appropriately decreased so that the number
of shares of Common Stock issuable on conversion of each share of the Series C
Preferred Stock shall be increased in proportion to such increase in outstanding
shares.

         (iv)    If, at any time after the Original Series C Issuance Date, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date fixed
for such combination (or the date of such combination, if no record date is
fixed), the Series C Preferred Conversion Price shall be appropriately increased
so that the number of shares of Common Stock issuable on conversion of each
share of Series C Preferred Stock shall be decreased in proportion to such
decrease in outstanding shares.

                                      34
<PAGE>

         (v)     If, at any time after the Original Series C Issuance Date,
there shall be any Extraordinary Transaction, the Series C Preferred Conversion
Price with respect to the Series C Preferred Stock outstanding after the
Extraordinary Transaction shall be adjusted to provide that the shares of Series
C Preferred Stock outstanding immediately prior to the effectiveness of the
Extraordinary Transaction shall be convertible into the kind and number of
shares of stock or other securities or property of the Corporation or of the
corporation resulting from or surviving such Extraordinary Transaction which the
holder of the number of shares of Common Stock deliverable (immediately prior to
the effectiveness of the Extraordinary Transaction) upon conversion of such
Series C Preferred Stock would have been entitled to receive upon such
Extraordinary Transaction. The provisions of this Section C.4(d)(v) shall
similarly apply to successive Extraordinary Transactions.

         (vi)    All calculations under this Section C.4(d) shall be made to the
nearest one-tenth of a cent ($.001) or to the nearest one-tenth of a share, as
the case may be.

         (vii)   In any case in which the provisions of this Section C.4(d)
shall require that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the occurrence of that
event (A) issuing to the holder of any share of Series C Preferred Stock
converted after such record date and before the occurrence of such event the
additional shares of capital stock issuable upon such conversion by reason of
the adjustment required by such event over and above the shares of capital stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount in cash in lieu of a fractional share of
capital stock pursuant to Section C.4(c) above; provided, however, that the
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares, in
such case, upon the occurrence of the event requiring such adjustment.

     e.  Notice of Adjustments.
         ---------------------

         (i)     Whenever the Series C Preferred Conversion Price shall be
adjusted as provided in Section C.4(d) above, the Corporation shall file, at its
principal office, at the office of the transfer agent for the Series C Preferred
Stock, if any, or at such other place as may be designated by the Corporation, a
statement, signed by its President and by its Chief Financial Officer, showing
in detail the facts requiring such adjustment and the Series C Preferred
Conversion Price that shall be in effect after such adjustment. The Corporation
shall also cause a copy of such statement to be sent, by first-class, certified
mail, return receipt requested, postage prepaid, to each Series C Preferred
Stockholder at such holder's address appearing on the Corporation's records.
Where appropriate, such copy may be given in advance and may be included as part
of a notice required to be mailed under the provisions of clause (ii) below.

                                      35
<PAGE>

                       (ii)   In the event the Corporation shall propose to file
a registration statement under the Securities Act for a Public Offering or to
take any action of the types described in clauses (i), (iii), (iv) or (v) of
Section C.4(d) above, the Corporation shall give notice to each Series C
Preferred Stockholder, in the manner set forth in Section C.4(e)(i) above, which
shall specify the record date, if any, with respect to any such action and the
date on which such action is to take place. The notice shall also set forth such
facts as are reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Series C
Preferred Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable or purchasable upon the
occurrence of such action or deliverable upon conversion of shares of Series C
Preferred Stock. In the case of any action which would require the fixing of a
record date, such notice shall be given at least ten (10) days prior to the date
so fixed, and in case of all other action, such notice shall be given at least
fifteen (15) days prior to the taking of such proposed action. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
any such action.

              f.  Transfer Taxes. The Corporation shall pay all documentary,
                  --------------
stamp or other transactional taxes (excluding income taxes) attributable to the
issuance or delivery of shares of capital stock of the Corporation upon
conversion of any shares of Series C Preferred Stock; provided, however, that
                                                      --------  -------
the Corporation shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the holder of the shares of Series
C Preferred Stock in respect of which such shares are being issued.

              g.  Reservation of Common Stock. The Corporation shall at all
                  ---------------------------
times reserve, free from preemptive rights, out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series C Preferred Stock, sufficient shares of Common Stock to
provide for the conversion of all outstanding shares of Series C Preferred
Stock.

              h.  Status of Common Stock. All shares of Common Stock which may
                  ----------------------
be issued in connection with the conversion provisions set forth herein will,
upon issuance by the Corporation, be validly issued, fully paid and
nonassessable, free from preemptive rights and free from all taxes, liens or
charges with respect thereto created or imposed by Corporation.

     5.   Miscellaneous.
          -------------

              a.  Shares of Series C Preferred Stock are not subject to or
entitled to redemption or the benefit of a sinking fund.

                                      36
<PAGE>

            b.   Converted shares of Series C Preferred Stock shall not be
reissued but shall be retired. Upon the retirement of converted shares the
capital of the Corporation shall be reduced.

            c.   The shares of the Series C Preferred Stock shall not have any
preferences, voting powers or relative, participating, optional, preemptive or
other special rights except as set forth above in this Certificate of
Incorporation of the Corporation, as amended from time to time.

D. SERIES D PREFERRED STOCK
   ------------------------

            The Series D Preferred Stock shall have the following designations,
powers, preferences, relative, participating, optional or other special rights,
qualifications, limitations and restrictions:

     1.     Dividends.
            ---------

            a.     Dividends are payable on the Series D Preferred Stock, when,
as and if declared by the Board of Directors.

            b.     So long as any Series D Preferred Stock is outstanding the
Corporation shall not declare or pay any dividend or make any distribution
(whether in cash, shares of capital stock of the Corporation or other property)
on shares of its Common Stock unless prior thereto or simultaneously therewith
any dividends and distributions previously declared on the Series D Preferred
Stock shall have been paid or the Corporation shall have irrevocably deposited
or set aside cash or United States Obligations sufficient for the payment
thereof.

            c.     If the Board of Directors declares dividends or other
distributions (other than on Liquidation) on the Common Stock in cash, property
or securities (including Common Stock) of the Corporation (or subscription or
other rights to purchase or acquire securities (including Common Stock) of the
Corporation), the Board of Directors shall simultaneously declare a dividend or
distribution at the same rate and in the same form on the Series D Preferred
Stock so that the Series D Preferred Stock participates equally with the Series
A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock
and the Common Stock in such dividend or distribution. For purposes of
determining its proportional share of the dividend or distribution, each share
of the Series D Preferred Stock shall be deemed to be that number of shares of
Common Stock into which such share of Series D Preferred Stock is then
convertible, rounded to the nearest one-tenth of a share.

                                      37
<PAGE>

     2.   Rights on Liquidation, Dissolution, Winding-up.
          ----------------------------------------------

          a.    In the event of any Liquidation, whether voluntary or
involuntary, before any payment of cash or distribution of other property shall
be made to the Common Stockholders or any other class or series of stock ranking
on Liquidation junior to the Series D Preferred Stock, the Series D Preferred
Stockholders, subject to the rights of any series of preferred stock ranking
senior to the Series A Preferred Stock and the Series D Preferred Stock, shall
be entitled to receive out of the assets of the Corporation legally available
for distribution to its stockholders, $8.00 per share (as appropriately adjusted
for any combinations or divisions or similar recapitalizations affecting the
Series D Preferred Stock after the Original Series D Issuance Date (as
hereinafter defined)) (the "Series D Liquidation Preference"), whether from
capital, surplus or earnings, plus an amount equal to any declared but unpaid
dividends thereon. Upon the occurrence of a Liquidation, the Series D Preferred
Stock shall rank pari passu with the Series A Preferred Stock, the Series B
                 ---- -----
Preferred Stock of the Series C Preferred Stock and the Pari Passu Preferred
                                                        ---- -----
Stock.

          b.    If, upon any Liquidation, the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay the
Series A Preferred Stockholders, the Series B Preferred Stockholders, the Series
C Preferred Stockholders, the Series D Preferred Stockholders and the holders of
Pari Passu Preferred Stock the full amounts to which they shall be entitled, the
---- -----
Series A Preferred Stockholders, the Series B Preferred Stockholders, the Series
C Preferred Stockholders, the Series D Preferred Stockholders and the holders of
Pari Passu Preferred Stock shall share ratably in any distribution of assets in
---- -----
proportion to the amounts payable to them if all amounts payable with respect to
such shares on Liquidation were paid in full.

          c.    In the event of any Liquidation, so long as the Series A
Preferred Stockholders are entitled to distributions pursuant to Section A.2(c)
and such distributions have been paid in full, and after payment shall have been
made to the Series A Preferred Stockholders, the Series B Preferred
Stockholders, the Series C Preferred Stockholders, the Series D Preferred
Stockholders and the holders of Pari Passu Preferred Stock of the full amount to
which they shall be entitled pursuant to Section D.2(a), with respect to each
other class or series of capital stock (other than Common Stock) ranking on
Liquidation junior to the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Pari
                                                                          ----
Passu Preferred Stock (in descending order of seniority), the Series A Preferred
-----
Stockholders, the Series B Preferred Stockholders, the Series C Preferred
Stockholders, the Series D Preferred Stockholders and the holders of Pari Passu
                                                                     ---- -----
Preferred Stock, as a class, shall be entitled to receive an amount equal (and
in like kind) to the aggregate preferential amount fixed for each such junior
class or series of capital stock, which amount shall be distributed among the
Series A Preferred Stockholders, the Series B Preferred Stockholders, the Series
C Preferred Stockholders, the Series D Preferred Stockholders and the holders of
Pari Passu Preferred Stock in an equal amount per share of the Series A
---- -----
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stockholders and

                                      38
<PAGE>

the Pari Passu Preferred Stock then outstanding. If, upon any Liquidation, the
    ---- -----
assets of the Corporation available for distribution to its stockholders shall
be insufficient to pay the Series A Preferred Stockholders, the Series B
Preferred Stockholders, the Series C Preferred Stockholders, the Series D
Preferred Stockholders and the holders of Pari Passu Preferred Stock and a class
                                          ---- -----
or series of capital stock (other than the Common Stock) junior to the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stockholders and the Pari Passu Preferred Stock the full
                                        ---- -----
amounts to which they shall be entitled pursuant to the immediately preceding
sentence, the Series A Preferred Stockholders, the Series B Preferred
Stockholders, the Series C Preferred Stockholders, the Series D Preferred
Stockholders and the holders of Pari Passu Preferred Stock and such other class
                                ---- -----
or series of capital stock shall share ratably in any distribution of assets
according to the respective preferential amounts fixed for the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stockholders and the Pari Passu Preferred Stock and such
junior class or series of capital stock which would be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full.

             d.  In the event that after payment of the full amount to which the
Series A Preferred Stockholders, the Series B Preferred Stockholders, the Series
C Preferred Stockholders, the Series D Preferred Stockholders and the holders of
Pari Passu Preferred Stock shall be entitled as aforesaid, cash or other
---- -----
property remains, such remaining proceeds shall be distributed pro rata among
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stockholders, the Pari Passu Preferred
                                                          ---- -----
Stock and the Common Stock. For purposes of determining its proportional share
of the cash or other property, each share of the Series D Preferred Stock shall
be deemed to be that number of shares of Common Stock into which such share of
Series D Preferred Stock is then convertible, rounded to the nearest one-tenth
of a share.

     3.      Voting.
             ------

             a.  General. In addition to the rights otherwise provided for
                 -------
herein or by law, the Series D Preferred Stockholders shall be entitled to vote,
together with the Series A Preferred Stockholders, the Series B Preferred
Stockholders, the Series C Preferred Stockholders and the holders of any other
class or series entitled to vote on such matters and the Common Stockholders, as
one class on all matters submitted to a vote of stockholders, in the same manner
and with the same effect as the Series A Preferred Stockholders, the Series B
Preferred Stockholders, the Series C Preferred Stockholders and the Common
Stockholders. In any such vote, each share of Series D Preferred Stock shall
entitle the holder thereof to one vote per share for each share of Common Stock
(including fractional shares) into which each share of Series D Preferred Stock
is then convertible, rounded to the nearest one-tenth of a share.

                                      39
<PAGE>

             b.   Protective Provision. So long as any Series D Preferred Stock
                  --------------------
is outstanding, the Corporation shall not, without the written consent in lieu
of a meeting, or the affirmative vote at a meeting called for such purpose, of
Series D Preferred Stockholders of record that hold at least a majority of the
outstanding Series D Preferred Stock, voting as a separate class, amend, alter
or repeal, in any manner whatsoever, the designations, powers, preferences,
relative, participating, optional or other special rights, qualifications,
limitations and restrictions of the Series D Preferred Stock.

       4.    Conversion.
             ----------

             a.   Right to Convert.
                  ----------------

                  (i)   Any Series D Preferred Stockholder shall have the right,
at any time or from time to time, prior to the Closing Date of the Corporation's
first Underwritten Offering in which all of the then outstanding shares of
Series A Preferred Stock are converted in connection therewith, to convert any
or all of its shares of Series D Preferred Stock into that number of fully paid
and nonassessable shares of Common Stock for each share of Series D Preferred
Stock equal to the quotient of the Series D Liquidation Preference divided by
the Series D Preferred Conversion Price for that share (as defined in Section
D.4(d)) (as last adjusted and then in effect) rounded to one-tenth of a share.

                  (ii)  (A)  Any Series D Preferred Stock that remains
unconverted on the Closing Date shall be automatically converted without notice
and without any action on the part of the holder thereof into shares of Common
Stock on the Closing Date in accordance with Section D.4(a)(i). After the
Closing Date all rights of holders of shares of Series D Preferred Stock with
respect to Series D Preferred Stock, except the right to receive shares of
Common Stock in accordance with this Section D.4, shall cease and the shares of
Series D Preferred Stock shall no longer be deemed to be outstanding, whether or
not the Corporation has received the certificates representing such shares.

                        (B)  The Corporation shall promptly send by first-class
mail, postage prepaid, to each Series D Preferred Stockholder at such holder's
address appearing on the Corporation's records a copy of (i) each registration
statement filed by the Corporation under the Securities Act and each amendment
thereof and each exhibit and schedule thereto and (ii) each order of the
Securities and Exchange Commission declaring any such registration statement to
be effective.

                        (C)  Holders of Series D Preferred Stock converted into
shares of Common Stock pursuant to this Section D.4 shall be entitled to payment
of any declared but unpaid dividends payable with respect to such shares of
Series D Preferred Stock, up to and including the Series D Conversion Date (as
defined in Section D.4(b) below) or the Closing Date, as the case may be.

                                      40
<PAGE>

              b.   Mechanics of Conversion.
                   -----------------------

                   (i)    Any Series D Preferred Stockholder that exercises its
right to convert its shares of Series D Preferred Stock into Common Stock shall
deliver the certificate(s) for the shares to be converted ("Series D Preferred
Certificate"), duly endorsed or assigned in blank to the Corporation, during
regular business hours, at the office of the transfer agent of the Corporation,
if any, at the principal place of business of the Corporation or at such other
place as may be designated by the Corporation.

                   (ii)   Each Series D Preferred Certificate shall be
accompanied by written notice stating that such holder elects to convert such
shares and stating the name or names (with address) in which the Common
Certificates are to be issued. Such conversion shall be deemed to have been
effected on the date when the aforesaid delivery is made ("Series D Conversion
Date").

                   (iii)  As promptly as practicable thereafter, the Corporation
shall issue and deliver to or upon the written order of such holder, at the
place designated by such holder, a Common Certificate(s) for the number of full
shares of Common Stock to which such holder is entitled and a check or cash for
any fractional interest in a share of Common Stock, as provided in Section
D.4(c) below, and for any declared but unpaid dividends, payable with respect to
the converted shares of Series D Preferred Stock, up to and including the Series
D Conversion Date or the Closing Date, as the case may be.

                   (iv)   The person in whose name each Common Certificate is to
be issued shall be deemed to have become a stockholder of record of Common Stock
on the Series D Conversion Date or the Closing Date, as the case may be, unless
the transfer books of the Corporation are closed on that date, in which event
such holder shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open; provided, that the Series
D Preferred Conversion Price shall be that in effect on the Series D Conversion
Date or the Closing Date, as the case may be.

                   (v)    Upon conversion of only a portion of the shares
covered by a Series D Preferred Certificate, the Corporation, at its own
expense, shall issue and deliver to or upon the written order of the holder of
such Series D Preferred Certificate, a new Series D Preferred Certificate
representing the number of unconverted shares of Series D Preferred Stock from
the Series D Preferred Certificate so surrendered.

              c.   Issuance of Common Stock on Conversion.
                   --------------------------------------

                   (i)    If a Series D Preferred Stockholder shall surrender
more than one Series D Preferred Certificate for conversion at any one time, the
number of such shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series D Preferred
Stock so surrendered.

                                      41
<PAGE>

                   (ii)   No fractional shares of Common Stock shall be issued
upon conversion of shares of Series D Preferred Stock. The Corporation shall pay
a cash adjustment for such fractional interest in an amount equal to the then
Current Market Price of a share of Common Stock multiplied by such fractional
interest.

              d.   Conversion Price; Adjustment. The Series D Preferred
                   ----------------------------
Conversion Price shall initially be equal to the Series D Liquidation Preference
and shall be subject to adjustment from time to time as follows:

                   (i)    If the Corporation shall at any time after the date of
original issuance of the first share of Series D Preferred Stock (the "Original
Series D Issuance Date") fix a record date for the subdivision or split-up of
shares of Common Stock, then, following the record date fixed for the
determination of holders of Common Stock entitled to receive such subdivision or
split-up (or the date of such subdivisions or split-up, if no record date is
fixed), the Series D Preferred Conversion Price shall be appropriately decreased
so that the number of shares of Common Stock issuable on conversion of each
share of the Series D Preferred Stock shall be increased in proportion to such
increase in outstanding shares.

                   (ii)   If, at any time after the Original Series D Issuance
Date, the number of shares of Common Stock outstanding is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date fixed for such combination (or the date of such combination, if no
record date is fixed), the Series D Preferred Conversion Price shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of Series D Preferred Stock shall be decreased in
proportion to such decrease in outstanding shares.

                   (iii)  If, at any time after the Original Series D Issuance
Date, there shall be any Extraordinary Transaction, the Series D Preferred
Conversion Price with respect to the Series D Preferred Stock outstanding after
the Extraordinary Transaction shall be adjusted to provide that the shares of
Series D Preferred Stock outstanding immediately prior to the effectiveness of
the Extraordinary Transaction shall be convertible into the kind and number of
shares of stock or other securities or property of the Corporation or of the
corporation resulting from or surviving such Extraordinary Transaction which the
holder of the number of shares of Common Stock deliverable (immediately prior to
the effectiveness of the Extraordinary Transaction) upon conversion of such
Series D Preferred Stock would have been entitled to receive upon such
Extraordinary Transaction. The provisions of this Section D.4(d)(v) shall
similarly apply to successive Extraordinary Transactions.

                   (iv)   All calculations under this Section D.4(d) shall be
made to the nearest one-tenth of a cent ($.001) or to the nearest one-tenth of a
share, as the case may be.

                                      42
<PAGE>

                   (v)    In any case in which the provisions of this Section
D.4(d) shall require that an adjustment shall become effective immediately after
a record date for an event, the Corporation may defer until the occurrence of
that event (A) issuing to the holder of any share of Series D Preferred Stock
converted after such record date and before the occurrence of such event the
additional shares of capital stock issuable upon such conversion by reason of
the adjustment required by such event over and above the shares of capital stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount in cash in lieu of a fractional share of
capital stock pursuant to Section D.4(c) above; provided, however, that the
                                                --------  -------
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares, in
such case, upon the occurrence of the event requiring such adjustment.

             e.    Notice of Adjustments.
                   ---------------------

                   (i)    Whenever the Series D Preferred Conversion Price shall
be adjusted as provided in Section D.4(d) above, the Corporation shall file, at
its principal office, at the office of the transfer agent for the Series D
Preferred Stock, if any, or at such other place as may be designated by the
Corporation, a statement, signed by its President and by its Chief Financial
Officer, showing in detail the facts requiring such adjustment and the Series D
Preferred Conversion Price that shall be in effect after such adjustment. The
Corporation shall also cause a copy of such statement to be sent, by first-
class, certified mail, return receipt requested, postage prepaid, to each Series
D Preferred Stockholder at such holder's address appearing on the Corporation's
records. Where appropriate, such copy may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
clause (ii) below.

                   (ii)   In the event the Corporation shall propose to file a
registration statement under the Securities Act for a Public Offering or to take
any action of the types described in clauses (i), (ii) or (iii) of Section
D.4(d) above, the Corporation shall give notice to each Series D Preferred
Stockholder, in the manner set forth in Section D.4(e)(i) above, which shall
specify the record date, if any, with respect to any such action and the date on
which such action is to take place. The notice shall also set forth such facts
as are reasonably necessary to indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the Series D Preferred
Conversion Price and the number, kind or class of shares or other securities or
property which shall be deliverable or purchasable upon the occurrence of such
action or deliverable upon conversion of shares of Series D Preferred Stock. In
the case of any action which would require the fixing of a record date, such
notice shall be given at least ten (10) days prior to the date so fixed, and in
case of all other action, such notice shall be given at least fifteen (15) days
prior to the taking of such proposed action. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of any such action.

                                      43
<PAGE>

              f.   Transfer Taxes. The Corporation shall pay all documentary,
                   --------------
stamp or other transactional taxes (excluding income taxes) attributable to the
issuance or delivery of shares of capital stock of the Corporation upon
conversion of any shares of Series D Preferred Stock; provided, however, that
                                                      --------  -------
the Corporation shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the holder of the shares of Series
D Preferred Stock in respect of which such shares are being issued.

              g.   Reservation of Common Stock. The Corporation shall at all
                   ---------------------------
times reserve, free from preemptive rights, out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series D Preferred Stock, sufficient shares of Common Stock to
provide for the conversion of all outstanding shares of Series D Preferred
Stock.

              h.   Status of Common Stock. All shares of Common Stock which may
                   ----------------------
be issued in connection with the conversion provisions set forth herein will,
upon issuance by the Corporation, be validly issued, fully paid and
nonassessable, free from preemptive rights and free from all taxes, liens or
charges with respect thereto created or imposed by Corporation.

       5.     Miscellaneous.
              -------------

              a.   Shares of Series D Preferred Stock are not subject to or
entitled to redemption or the benefit of a sinking fund.

              b.   Converted shares of Series D Preferred Stock shall not be
reissued but shall be retired. Upon the retirement of converted shares the
capital of the Corporation shall be reduced.

              c.   The shares of the Series D Preferred Stock shall not have any
preferences, voting powers or relative, participating, optional, preemptive or
other special rights except as set forth above in this Certificate of
Incorporation of the Corporation, as amended from time to time.

E.     COMMON STOCK
       ------------

       1.  Voting.
           ------

              Series A Preferred Stockholders, Series B Preferred Stockholders,
Series C Preferred Stockholders, Series D Preferred Stockholders, any other
class or series of capital stock entitled to vote and Common Stockholders shall
vote together as one class on all matters submitted to a vote of stockholders,
except that Series A Preferred Stockholders are entitled, in addition, to vote
as a separate class on the matters described in Section A.4(b) and (c), and
except further that Series B Preferred Stockholders, Series C Preferred
Stockholders and Series D Preferred Stockholders are entitled, in addition,

                                      44
<PAGE>

to vote as a separate class on the matters described in Section B.3(b), Section
C.3(b) and in Section D.3(b), respectively. Each Common Stockholder shall be
entitled to one vote for each share of Common Stock held on all matters as to
which Common Stockholders shall be entitled to vote. The number of authorized
shares of Common Stock may be increased or decreased (but not below the number
of shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the Common Stock, the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, Series D Preferred Stockholders
and any other class or series of capital stock entitled to vote, irrespective of
the provisions of Section 242(b)(2) of Title 8 of the Delaware Code.

     2.   Other Rights.
          ------------

          Subject to the foregoing, the Common Stock shall have all rights of
common stock under Title 8 of the Delaware Code, as the same shall be amended
from time to time.

                                 ARTICLE FIFTH
                                 -------------

                                   Directors
                                   ---------

          The number of directors of the Corporation shall be such number as
from time to time shall be fixed by, or in the manner provided in, the By-laws
of the Corporation. Unless and except to the extent that the By-laws of the
Corporation otherwise require, the election of directors of the Corporation need
not be by written ballot.


                                 ARTICLE SIXTH
                                 -------------

                                    By-Laws
                                    -------

          The Board of Directors of the Corporation is expressly authorized and
empowered, in addition to the stockholders of the Corporation, to adopt, amend
and repeal the By-laws of the Corporation.


                                ARTICLE SEVENTH
                                ---------------

                         Compromises and Arrangements
                         ----------------------------

          Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
Section 291 of the General Corporation Law or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under


                                      45
<PAGE>

Section 279 of the General Corporation Law, order a meeting of creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as such court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, then such compromise or arrangement and such
reorganization shall, if sanctioned by the court to which such application has
been made, be binding on all the creditors or class of creditors, and/or on all
of the stockholders or class of stockholders of the Corporation, as the case may
be, and also on the Corporation.


                                ARTICLE EIGHTH
                                --------------

                            Limitation of Liability
                            -----------------------

          No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that nothing contained in this ARTICLE EIGHTH shall
          --------  -------
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section 174 of the General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. No amendment to or repeal of this ARTICLE EIGHTH shall apply
to or have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.


                                 ARTICLE NINTH
                                 -------------

                             Amendments and Repeal
                             ---------------------

          The Corporation reserves the right at any time, and from time to time,
to amend, alter, change or repeal any provision contained in this Certificate of
Incorporation in accordance with this Certificate of Incorporation. All rights
conferred upon the stockholders of the Corporation are granted subject to this
reservation.

                                      46
<PAGE>

          IN WITNESS WHEREOF, said Board of Directors of 3-Dimensional
Pharmaceuticals, Inc. has caused this Seventh Restated Certificate of
Incorporation to be signed by its Chief Executive Officer and attested by its
Secretary, this _______ day of April, 2000.


                                            3-DIMENSIONAL PHARMACEUTICALS, INC.



                                            By: /s/ David C. U'Prichard
                                               ---------------------------------
                                               David C. U'Prichard
                                               Chief Executive Officer

ATTEST:

/s/ Scott Horvitz
-------------------------
Scott Horvitz
Secretary


                                      47
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>BYLAWS OF THE COMPANY
<TEXT>

<PAGE>

                                                                     EXHIBIT 3.2

                                   B Y L A W S

                                       OF

                       3-DIMENSIONAL PHARMACEUTICALS, INC.

                            (a Delaware Corporation)



                                    ARTICLE I

                             Offices and Fiscal Year

                  SECTION 1.01. Registered Office.--The registered office of the
                                -----------------
corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware until otherwise established by resolution of the board of directors,
and a certificate certifying the change is filed in the manner provided by
statute.

                  SECTION 1.02. Other Offices.--The corporation may also have
                                -------------
offices at such other places within or without the State of Delaware as the
board of directors may from time to time determine or the business of the
corporation requires.

                  SECTION 1.03. Fiscal Year.--The fiscal year of the corporation
                                -----------
shall end on the 31st of December in each year.


                                   ARTICLE II

                           Notice - Waivers - Meetings

                  SECTION 2.01. Notice, What Constitutes.--Whenever, under the
                                ------------------------
provisions of the Delaware General Corporation Law ("GCL") or the certificate of
incorporation or of these bylaws, notice is required to be given to any director
or stockholder, it shall not be construed to mean personal notice, but such
notice may be given in writing, by mail or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier service, charges
prepaid, or by facsimile transmission to the address (or to the telex, TWX,
facsimile or telephone number) of the person appearing on the books of the
corporation, or in the case of directors, supplied to the corporation for the
purpose of notice. If the notice is sent by mail, telegraph or courier service,
it shall be deemed to be given when deposited in the United States

                                      -1-
<PAGE>

mail or with a telegraph office or courier service for delivery to that person
or, in the case of telex or TWX, when dispatched, or in the case of facsimile
transmission, when received.

            SECTION 2.02. Notice of Meetings of Board of Directors.--Notice of a
                          ----------------------------------------
regular meeting of the board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone,
telex, TWX or facsimile transmission) or 48 hours (in the case of notice by
telegraph, courier service or express mail) or five days (in the case of notice
by first class mail) before the time at which the meeting is to be held. Every
such notice shall state the time and place of the meeting. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
board need be specified in a notice of the meeting.

            SECTION 2.03. Notice of Meetings of Stockholders.--Written notice
                          ----------------------------------
of the place, date and hour of every meeting of the stockholders, whether annual
or special, shall be given to each stockholder of record entitled to vote at the
meeting not less than ten nor more than 60 days before the date of the meeting.
Every notice of a special meeting shall state the purpose or purposes thereof.
If the notice is sent by mail, it shall be deemed to have been given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at the address of the stockholder as it appears on the records of
the corporation.

            SECTION 2.04. Waivers of Notice.
                          -----------------

            (a) Written Waiver.--Whenever notice is required to be given under
                --------------
any provisions of the GCL or the certificate of incorporation or these bylaws, a
written waiver, signed by the person or persons entitled to the notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders, directors, or members of a committee of
directors need be specified in any written waiver of notice of such meeting.

            (b) Waiver by Attendance.--Attendance of a person at a meeting,
                --------------------
either in person or by proxy, shall constitute a waiver of notice of such
meeting, except where a person attends a meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
because the meeting was not lawfully called or convened.

            SECTION 2.05. Exception to Requirements of Notice.
                          -----------------------------------

            (a) General Rule.--Whenever notice is required to be given, under
                ------------
any provision of the GCL or of the certificate of incorporation or these bylaws,
to any person with whom communication is unlawful, the giving of such notice to
such person shall not be required and there shall be no duty to apply to any
governmental authority or agency for a license or permit to give such notice to
such person. Any action or meeting which shall be taken or held without notice
to any such person with whom communication is unlawful shall have the same force
and effect as if such notice had been duly given.

                                      -2-
<PAGE>

            (b) Stockholders Without Forwarding Addresses.--Whenever notice is
                -----------------------------------------
required to be given, under any provision of the GCL or the certificate of
incorporation or these bylaws, to any stockholder to whom (i) notice of two
consecutive annual meetings, and all notices of meetings or of the taking of
action by written consent without a meeting to such person during the period
between such two consecutive annual meetings, or (ii) all, and at least two,
payments (if sent by first class mail) of dividends or interest on securities
during a 12 month period, have been mailed addressed to such person at his
address as shown on the records of the corporation and have been returned
undeliverable, the giving of such notice to such person shall not be required.
Any action or meeting which shall be taken or held without notice to such person
shall have the same force and effect as if such notice had been duly given. If
any such person shall deliver to the corporation a written notice setting forth
the person's then current address, the requirement that notice be given to such
person shall be reinstated.

            SECTION 2.06. Conference Telephone Meetings.--One or more directors
                          -----------------------------
may participate in a meeting of the board, or of a committee of the board, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this section shall constitute presence in
person at such meeting.


                                   ARTICLE III

                            Meetings of Stockholders

            SECTION 3.01. Place of Meeting.--All meetings of the stockholders of
                          ----------------
the corporation shall be held at the registered office of the corporation, or at
such other place within or without the State of Delaware as shall be designated
by the board of directors in the notice of such meeting.

            SECTION 3.02. Annual Meeting.--The board of directors may fix and
                          --------------
designate the date and time of the annual meeting of the stockholders, but if no
such date and time is fixed and designated by the board, the meeting for any
calendar year shall be held on the Second Monday of March in such year, if not a
legal holiday under the laws of Delaware, and, if a legal holiday, then on the
next succeeding business day, not a Saturday, at 10:00 o'clock A.M., and at said
meeting the stockholders then entitled to vote shall elect directors and shall
transact such other business as may properly be brought before the meeting.

            SECTION 3.03. Special Meetings.--Special meetings of the
                          ----------------
stockholders of the corporation may be called at any time by the chairman of the
board, a majority of the board of directors, the president, or at the request,
in writing, of stockholders entitled to cast at least a majority of the votes
that all stockholders are entitled to cast at the particular meeting. At any
time, upon the written request of any person or persons who have duly called a
special meeting, which written request shall state the purpose or purposes of
the meeting, it shall be the duty of

                                      -3-
<PAGE>

the secretary to fix the date of the meeting which shall be held at such date
and time as the secretary may fix, not less than ten nor more than 60 days after
the receipt of the request, and to give due notice thereof. If the secretary
shall neglect or refuse to fix the time and date of such meeting and give notice
thereof, the person or persons calling the meeting may do so.

            SECTION 3.04. Quorum, Manner of Acting and Adjournment.
                          ----------------------------------------

            (a) Quorum.--The holders of a majority of the shares entitled to
                ------
vote, present in person or represented by proxy, shall constitute a quorum at
all meetings of the stockholders except as otherwise provided by the GCL, by the
certificate of incorporation or by these bylaws. If a quorum is not present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum is present or represented. At any such adjourned
meeting at which a quorum is present or represented, the corporation may
transact any business which might have been transacted at the original meeting.
If the adjournment is for more than 30 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.

            (b) Manner of Acting.--Directors shall be elected by a plurality of
                ----------------
the votes of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. In all matters other than the
election of directors, the affirmative vote of the majority of shares present in
person or represented by proxy at the meeting and entitled to vote thereon shall
be the act of the stockholders, unless the question is one upon which, by
express provision of the applicable statute, the certificate of incorporation or
these bylaws, a different vote is required in which case such express provision
shall govern and control the decision of the question. The stockholders present
in person or by proxy at a duly organized meeting can continue to do business
until adjournment, notwithstanding withdrawal of enough stockholders to leave
less than a quorum.

            SECTION 3.05. Organization.--At every meeting of the stockholders,
                          ------------
the chairman of the board, if there be one, or in the case of a vacancy in the
office or absence of the chairman of the board, one of the following persons
present in the order stated: the vice chairman, if one has been appointed, the
president, the vice presidents in their order of rank or seniority, a chairman
designated by the board of directors or a chairman chosen by the stockholders
entitled to cast a majority of the votes which all stockholders present in
person or by proxy are entitled to cast, shall act as chairman, and the
secretary, or, in the absence of the secretary, an assistant secretary, or in
the absence of the secretary and the assistant secretaries, a person appointed
by the chairman, shall act as secretary.

            SECTION 3.06. Voting.
                          ------

                                      -4-
<PAGE>

                  (a) General Rule.--Unless otherwise provided in the
                      ------------
certificate of incorporation, each stockholder shall be entitled to one vote, in
person or by proxy, for each share of capital stock having voting power held by
such stockholder.

                  (b)  Voting and Other Action by Proxy.--
                       --------------------------------

                           (1) A stockholder may execute a writing authorizing
                  another person or persons to act for the stockholder as proxy.
                  Such execution may be accomplished by the stockholder or the
                  authorized officer, director, employee or agent of the
                  stockholder signing such writing or causing his or her
                  signature to be affixed to such writing by any reasonable
                  means including, but not limited to, by facsimile signature. A
                  stockholder may authorize another person or persons to act for
                  the stockholder as proxy by transmitting or authorizing the
                  transmission of a telegram, cablegram, or other means of
                  electronic transmission to the person who will be the holder
                  of the proxy or to a proxy solicitation firm, proxy support
                  service organization or like agent duly authorized by the
                  person who will be the holder of the proxy to receive such
                  transmission if such telegram, cablegram or other means of
                  electronic transmission sets forth or is submitted with
                  information from which it can be determined that the telegram,
                  cablegram or other electronic transmission was authorized by
                  the stockholder.

                           (2) No proxy shall be voted or acted upon after three
                  years from its date, unless the proxy provides for a longer
                  period.

                           (3) A duly executed proxy shall be irrevocable if it
                  states that it is irrevocable and if, and only so long as, it
                  is coupled with an interest sufficient in law to support an
                  irrevocable power. A proxy may be made irrevocable regardless
                  of whether the interest with which it is coupled is an
                  interest in the stock itself or an interest in the corporation
                  generally.

                  SECTION 3.07. Consent of Stockholders in Lieu of Meeting.--Any
                                ------------------------------------------
action required to be taken at any annual or special meeting of stockholders of
the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted and shall be delivered to the corporation by delivery to
its registered office in Delaware, its principal place of business, or an
officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Every written consent
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within 60 days of the earliest dated consent delivered in the
manner required in this section to the corporation, written consents signed by a

                                      -5-
<PAGE>

sufficient number of holders to take action are delivered to the corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.

                  SECTION 3.08. Voting Lists.--The officer who has charge of the
                                ------------
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting. The list shall be arranged in alphabetical order, showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.

                  SECTION 3.09. Inspectors of Election.
                                ----------------------

                  (a) Appointment.--All elections of directors shall be by
                      -----------
written ballot, unless otherwise provided in the certificate of incorporation;
the vote upon any other matter need not be by ballot. In advance of any meeting
of stockholders the board of directors may appoint inspectors, who need not be
stockholders, to act at the meeting. If inspectors are not so appointed, the
chairman of the meeting may, and upon the demand of any stockholder or his proxy
at the meeting and before voting begins shall, appoint inspectors. The number of
inspectors shall be either one or three, as determined, in the case of judges
appointed upon demand of a stockholder, by stockholders present entitled to cast
a majority of the votes which all stockholders present are entitled to cast
thereon. No person who is a candidate for office shall act as an inspector. In
case any person appointed as an inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment made by the board of directors in
advance of the convening of the meeting, or at the meeting by the chairman of
the meeting.

                  (b) Duties.--If inspectors are appointed, they shall determine
                      ------
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum and the authenticity,
validity and effect of proxies, shall receive votes or ballots, shall hear and
determine all challenges and questions in any way arising in connection with the
right to vote, shall count and tabulate all votes, shall determine the result,
and shall do such acts as may be proper to conduct the election or vote with
fairness to all stockholders. If there be three inspectors of election, the
decision, act or certificate of a majority shall be effective in all respects as
the decision, act or certificate of all.

                                      -6-
<PAGE>

                  (c) Report.--On request of the chairman of the meeting or of
                      ------
any stockholder or his proxy, the inspectors shall make a report in writing of
any challenge or question or matter determined by them, and execute a
certificate of any fact found by them.


                                   ARTICLE IV

                               Board of Directors

                  SECTION 4.01. Powers.--All powers vested by law in the
                                ------
corporation shall be exercised by or under the authority of, and the business
and affairs of the corporation shall be managed under the direction of, the
board of directors.

                  SECTION 4.02. Number and Term of Office.--The board of
                                -------------------------
directors shall consist of such number of directors, not less than three nor
more than twelve, as may be determined from time to time by resolution of the
board of directors. Each director shall hold office until the expiration of the
term for which he or she was selected and until a successor shall have been
elected and qualified or until his or her earlier death, resignation or removal.
Directors need not be residents of Delaware or stockholders of the corporation.

                  SECTION 4.03. Vacancies.--Vacancies and newly created
                                ---------
directorships resulting from any increase in the authorized number of directors
elected by all of the stockholders having a right to vote as a single class may
be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall hold
office until their successors are elected and qualified or until their earlier
death, resignation or removal. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. Whenever
the holders of any class or classes of stock or series thereof are entitled to
elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.

                  SECTION 4.04. Resignations.--Any director may resign at any
                                ------------
time upon written notice to the corporation. The resignation shall be effective
upon receipt thereof by the corporation or at such subsequent time as shall be
specified in the notice of resignation and, unless otherwise specified in the
notice, the acceptance of the resignation shall not be necessary to make it
effective.

                                      -7-
<PAGE>

                  SECTION 4.05. Removal.--Any director or the entire board of
                                -------
directors may be removed, with or without cause, by the holders of shares
entitled to cast a majority of the votes which all stockholders are entitled to
cast at an election of directors.

                  SECTION 4.06. Organization.--At every meeting of the board of
                                ------------
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the vice chairman of the board,
if there be one, the president, the vice presidents in their order of rank and
seniority, or a chairman chosen by a majority of the directors present, shall
preside, and the secretary, or, in the absence of the secretary, an assistant
secretary, or in the absence of the secretary and the assistant secretaries, any
person appointed by the chairman of the meeting, shall act as secretary.

                  SECTION 4.07. Place of Meeting.--Meetings of the board of
                                ----------------
directors shall be held at such place within or without the State of Delaware as
the board of directors may from time to time determine, or as may be designated
in the notice of the meeting.

                  SECTION 4.08. Regular Meetings.--Regular meetings of the board
                                ----------------
of directors shall be held without notice at such time and place as shall be
designated from time to time by resolution of the board of directors.

                  SECTION 4.09. Special Meetings.--Special meetings of the board
                                ----------------
of directors shall be held whenever called by the president or by two or more of
the directors.

                  SECTION 4.10. Quorum, Manner of Acting and Adjournment.
                                ----------------------------------------

                  (a) General Rule.--At all meetings of the board a majority of
                      ------------
the total number of directors then in office shall constitute a quorum for the
transaction of business. The vote of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
except as may be otherwise specifically provided by the GCL or by the
certificate of incorporation. If a quorum is not present at any meeting of the
board of directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum is present.

                  (b) Unanimous Written Consent.--Unless otherwise restricted by
                      -------------------------
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors may be taken without a meeting, if all
members of the board consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the board.

                  SECTION 4.11. Executive and Other Committees.
                                ------------------------------

                                      -8-
<PAGE>

                  (a) Establishment.--The board of directors may, by resolution
                      -------------
adopted by a majority of the whole board, establish an Executive Committee and
one or more other committees, each committee to consist of one or more
directors. The board may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a committee
and the alternate or alternates, if any, designated for such member, the member
or members of the committee present at any meeting and not disqualified from
voting, whether or not they constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of any such absent or disqualified
member.

                  (b) Powers.--The Executive Committee, if established, and any
                      ------
such other committee to the extent provided in the resolution establishing such
committee shall have and may exercise all the power and authority of the board
of directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to amending the certificate of incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board of directors as provided in
Section 151(a) of the GCL, fix the designation and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of shares of any series), adopting an agreement of merger or
consolidation under Section 251 or 252 of the GCL, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
bylaws of the corporation. The Executive Committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock and to adopt
a certificate of ownership and merger pursuant to Section 253 of the GCL. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee so
formed shall keep regular minutes of its meetings and report the same to the
board of directors when required.

                  (c) Committee Procedures.--The term "board of directors" or
                      --------------------
"board," when used in any provision of these bylaws relating to the organization
or procedures of or the manner of taking action by the board of directors, shall
be construed to include and refer to the Executive Committee or other committee
of the board.

                  SECTION 4.12. Compensation of Directors.--Unless otherwise
                                -------------------------
restricted by the certificate of incorporation, the board of directors shall
have the authority to fix the compensation of directors.

                                      -9-
<PAGE>

                                    ARTICLE V

                                    Officers

                  SECTION 5.01. Number, Qualifications and Designation.--The
                                --------------------------------------
officers of the corporation shall be chosen by the board of directors and shall
be a president, one or more vice presidents, a secretary, a treasurer, and such
other officers as may be elected in accordance with the provisions of section
5.03 of this Article. Any number of offices may be held by the same person.
Officers may, but need not, be directors or stockholders of the corporation. The
board of directors may elect from among the members of the board a chairman of
the board and a vice chairman of the board who shall be officers of the
corporation. The chairman of the board or the president, as designated from time
to time by the board of directors, shall be the chief executive officer of the
corporation.

                  SECTION 5.02. Election and Term of Office.--The officers of
                                ---------------------------
the corporation, except those elected by delegated authority pursuant to section
5.03 of this Article, shall be elected annually by the board of directors, and
each such officer shall hold office for a term of one year and until a successor
is elected and qualified, or until his or her earlier resignation or removal.
Any officer may resign at any time upon written notice to the corporation.

                  SECTION 5.03. Subordinate Officers, Committees and
                                ------------------------------------
Agents.--The board of directors may from time to time elect such other officers
------
and appoint such committees, employees or other agents as it deems necessary,
who shall hold their offices for such terms and shall exercise such powers and
perform such duties as are provided in these bylaws, or as the board of
directors may from time to time determine. The board of directors may delegate
to any officer or committee the power to elect subordinate officers and to
retain or appoint employees or other agents, or committees thereof, and to
prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.

                  SECTION 5.04. The Chairman and Vice Chairman of the
                                -------------------------------------
Board.--The chairman of the board, if there be one, or in the absence of the
-----
chairman, the vice chairman of the board, if there be one, shall preside at all
meetings of the stockholders and of the board of directors, and shall perform
such other duties as may from time to time be assigned to them by the board of
directors.

                  SECTION 5.05. The President.--The president shall have general
                                -------------
supervision over the business and operations of the corporation, subject,
however, to the control of the board of directors. The president shall, in
general, perform all duties incident to the office of president, and such other
duties as from time to time may be assigned by the board of directors and, if
the chairman of the board is the chief executive officer, the chairman of the
board.

                                      -10-
<PAGE>

                  SECTION 5.06. The Vice Presidents.--The vice presidents shall
                                -------------------
perform the duties of the president in the absence of the president and such
other duties as may from time to time be assigned to them by the board of
directors or by the president.

                  SECTION 5.07. The Secretary.--The secretary, or an assistant
                                -------------
secretary, shall attend all meetings of the stockholders and of the board of
directors and shall record the proceedings of the stockholders and of the
directors and of committees of the board in a book or books to be kept for that
purpose; shall see that notices are given and records and reports properly kept
and filed by the corporation as required by law; shall be the custodian of the
seal of the corporation and see that it is affixed to all documents to be
executed on behalf of the corporation under its seal; and, in general, shall
perform all duties incident to the office of secretary, and such other duties as
may from time to time be assigned by the board of directors or the president.

                  SECTION 5.08. The Treasurer.--The treasurer, or an assistant
                                -------------
treasurer, shall have or provide for the custody of the funds or other property
of the corporation; shall collect and receive or provide for the collection and
receipt of moneys earned by or in any manner due to or received by the
corporation; shall deposit all funds in his or her custody as treasurer in such
banks or other places of deposit as the board of directors may from time to time
designate; whenever so required by the board of directors, shall render an
account showing his or her transactions as treasurer and the financial condition
of the corporation; and, in general, shall discharge such other duties as may
from time to time be assigned by the board of directors or the president.

                  SECTION 5.09. Officers' Bonds.--No officer of the corporation
                                ---------------
need provide a bond to guarantee the faithful discharge of the officer's duties
unless the board of directors shall by resolution so require a bond in which
event such officer shall give the corporation a bond (which shall be renewed if
and as required) in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of office.

                  SECTION 5.10. Salaries.--The salaries of the officers and
                                --------
agents of the corporation elected by the board of directors shall be fixed from
time to time by the board of directors.


                                  ARTICLE VI

                     Certificates of Stock, Transfer, Etc.

                  SECTION 6.01. Form and Issuance.
                                -----------------

                  (a) Issuance.--The shares of the corporation shall be
                      --------
represented by certificates unless the board of directors shall by resolution
provide that some or all of any class or series of

                                      -11-
<PAGE>

stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until the certificate is surrendered to the
corporation. Notwithstanding the adoption of any resolution providing for
uncertificated shares, every holder of stock represented by certificates and
upon request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the corporation by, the chairman or
vice chairman of the board of directors, or the president or vice president, and
by the treasurer or an assistant treasurer, or the secretary or an assistant
secretary, representing the number of shares registered in certificate form.

                  (b) Form and Records.--Stock certificates of the corporation
                      ----------------
shall be in such form as approved by the board of directors. The stock record
books and the blank stock certificate books shall be kept by the secretary or by
any agency designated by the board of directors for that purpose. The stock
certificates of the corporation shall be numbered and registered in the stock
ledger and transfer books of the corporation as they are issued.

                  (c) Signatures.--Any of or all the signatures upon the stock
                      ----------
certificates of the corporation may be a facsimile. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any share certificate shall have ceased to be such officer,
transfer agent or registrar, before the certificate is issued, it may be issued
with the same effect as if the signatory were such officer, transfer agent or
registrar at the date of its issue.

                  SECTION 6.02. Transfer.--Transfers of shares shall be made on
                                --------
the share register or transfer books of the corporation upon surrender of the
certificate therefor, endorsed by the person named in the certificate or by an
attorney lawfully constituted in writing. No transfer shall be made which would
be inconsistent with the provisions of Article 8, Title 6 of the Delaware
Uniform Commercial Code-Investment Securities.

                  SECTION 6.03. Lost, Stolen, Destroyed or Mutilated
                                ------------------------------------
Certificates.--The board of directors may direct a new certificate of stock or
------------
uncertificated shares to be issued in place of any certificate theretofore
issued by the corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates, the board of directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or the legal
representative of the owner, to give the corporation a bond sufficient to
indemnify against any claim that may be made against the corporation on account
of the alleged loss, theft or destruction of such certificate or the issuance of
such new certificate or uncertificated shares.

                  SECTION 6.04. Record Holder of Shares.--The corporation shall
                                -----------------------
be entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable

                                     -12-
<PAGE>

or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.

                  SECTION 6.05. Determination of Stockholders of Record.
                                ---------------------------------------

                  (a) Meetings of Stockholders.--In order that the corporation
                      ------------------------
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than 60 nor less than ten days before the
date of such meeting. If no record date is fixed by the board of directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting.

                  (b) Consent of Stockholders.--In order that the corporation
                      -----------------------
may determine the stockholders entitled to consent to corporate action in
writing without a meeting, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, and which date shall not be
more than ten days after the date upon which the resolution fixing the record
date is adopted by the board of directors. If no record date has been fixed by
the board of directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is required by the GCL, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the board of directors and prior action by
the board of directors is required by the GCL, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the board of
directors adopts the resolution taking such prior action.

                  (c) Dividends.--In order that the corporation may determine
                      ---------
the stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights of the stockholders entitled to exercise
any rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the board of directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
60 days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the

                                     -13-
<PAGE>

close of business on the day on which the board of directors adopts the
resolution relating thereto.


                                  ARTICLE VII

                  Indemnification of Directors, Officers and
                       Other Authorized Representatives

                  SECTION 7.01. Indemnification of Authorized
                                -----------------------------
Representatives in Third Party Proceedings.--The corporation shall indemnify any
------------------------------------------
person who was or is an authorized representative of the corporation, and who
was or is a party, or is threatened to be made a party to any third party
proceeding, by reason of the fact that such person was or is an authorized
representative of the corporation, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such third party proceeding if such person acted in good faith
and in a manner such person reasonably believed to be in, or not opposed to, the
best interests of the corporation and, with respect to any criminal third party
proceeding, had no reasonable cause to believe such conduct was unlawful. The
termination of any third party proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the authorized representative did not act in
good faith and in a manner which such person reasonably believed to be in or not
opposed to, the best interests of the corporation, and, with respect to any
criminal third party proceeding, had reasonable cause to believe that such
conduct was unlawful.

                  SECTION 7.02. Indemnification of Authorized
                                -----------------------------
Representatives in Corporate Proceedings.--The corporation shall indemnify any
----------------------------------------
person who was or is an authorized representative of the corporation and who was
or is a party or is threatened to be made a party to any corporate proceeding,
by reason of the fact that such person was or is an authorized representative of
the corporation, against expenses actually and reasonably incurred by such
person in connection with the defense or settlement of such corporate proceeding
if such person acted in good faith and in a manner reasonably believed to be in,
or not opposed to, the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such corporate proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such authorized representative is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.

                  SECTION 7.03. Mandatory Indemnification of Authorized
                                ---------------------------------------
Representatives.--To the extent that an authorized representative or other
---------------
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any third party or corporate proceeding


                                     -14-
<PAGE>

or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses actually and reasonably incurred by such person in
connection therewith.

                  SECTION 7.04. Determination of Entitlement to
                                -------------------------------
Indemnification.--Any indemnification under section 7.01, 7.02 or 7.03 of this
---------------
Article (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
authorized representative or other employee or agent is proper in the
circumstances because such person has either met the applicable standard of
conduct set forth in section 7.01 or 7.02 or has been successful on the merits
or otherwise as set forth in section 7.03 and that the amount requested has been
actually and reasonably incurred. Such determination shall be made:

                           (1) by the board of directors by a majority vote of a
                  quorum consisting of directors who were not parties to such
                  third party or corporate proceeding; or

                           (2) if such a quorum is not obtainable, or even if
                  obtainable, a quorum of disinterested directors so directs, by
                  independent legal counsel in a written opinion; or

                           (3)  by the stockholders.

                  SECTION 7.05. Advancing Expenses.--Expenses actually and
                                ------------------
reasonably incurred in defending a third party or corporate proceeding shall be
paid on behalf of an authorized representative by the corporation in advance of
the final disposition of such third party or corporate proceeding upon receipt
of an undertaking by or on behalf of the authorized representative to repay such
amount if it shall ultimately be determined that the authorized representative
is not entitled to be indemnified by the corporation as authorized in this
Article. The financial ability of any authorized representative to make a
repayment contemplated by this section shall not be a prerequisite to the making
of an advance. Expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.

                  SECTION 7.06.  Definitions.--For purposes of this Article:
                                 -----------

                           (1) "authorized representative" shall mean any and
                  all directors and officers of the corporation and any person
                  designated as an authorized representative by the board of
                  directors of the corporation (which may, but need not, include
                  any person serving at the request of the corporation as a
                  director, officer, employee or agent of another corporation,
                  partnership, joint venture, trust or other enterprise);

                           (2) "corporation" shall include, in addition to the
                  resulting corporation, any constituent corporation (including
                  any constituent of a constituent) absorbed in a consolidation
                  or merger which, if its separate existence had continued,
                  would

                                     -15-
<PAGE>

                  have had power and authority to indemnify its directors,
                  officers, employees or agents, so that any person who is or
                  was a director, officer, employee or agent of such constituent
                  corporation, or is or was serving at the request of such
                  constituent corporation as a director, officer, employee or
                  agent of another corporation, partnership, joint venture,
                  trust or other enterprise, shall stand in the same position
                  under the provisions of this Article with respect to the
                  resulting or surviving corporation as such person would have
                  with respect to such constituent corporation if its separate
                  existence had continued;

                           (3) "corporate proceeding" shall mean any threatened,
                  pending or completed action or suit by or in the right of the
                  corporation to procure a judgment in its favor or
                  investigative proceeding by the corporation;

                           (4) "criminal third party proceeding" shall include
                  any action or investigation which could or does lead to a
                  criminal third party proceeding;

                           (5)  "expenses" shall include attorneys' fees and
                  disbursements;

                           (6)  "fines" shall include any excise taxes assessed
                  on a person with respect to an employee benefit plan;

                           (7) "not opposed to the best interests of the
                  corporation" shall include actions taken in good faith and in
                  a manner the authorized representative reasonably believed to
                  be in the interest of the participants and beneficiaries of an
                  employee benefit plan;

                           (8)  "other enterprises" shall include employee
                  benefit plans;

                           (9)  "party" shall include the giving of testimony
                  or similar involvement;

                           (10) "serving at the request of the corporation"

                  shall include any service as a director, officer or employee
                  of the corporation which imposes duties on, or involves
                  services by, such director, officer or employee with respect
                  to an employee benefit plan, its participants, or
                  beneficiaries; and

                           (11) "third party proceeding" shall mean any
                  threatened, pending or completed action, suit or proceeding,
                  whether civil, criminal, administrative, or investigative,
                  other than an action by or in the right of the corporation.

                  SECTION 7.07. Insurance.--The corporation may purchase and
                                ---------
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any


                                     -16-
<PAGE>

liability asserted against the person and incurred by the person in any such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power or the obligation to indemnify such person
against such liability under the provisions of this Article.

                  SECTION 7.08. Scope of Article.--The indemnification of
                                ----------------
authorized representatives and advancement of expenses, as authorized by the
preceding provisions of this Article, shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office. The indemnification and advancement of
expenses provided by or granted pursuant to this Article shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be an authorized representative and shall inure to the benefit of the heirs,
executors and administrators of such a person.

                  SECTION 7.09. Reliance on Provisions.--Each person who shall
                                ----------------------
act as an authorized representative of the corporation shall be deemed to be
doing so in reliance upon rights of indemnification provided by this Article.


                                 ARTICLE VIII

                              General Provisions

                  SECTION 8.01. Dividends.--Subject to the restrictions
                                ---------
contained in the GCL and any restrictions contained in the certificate of
incorporation, the board of directors may declare and pay dividends upon the
shares of capital stock of the corporation.

                  SECTION 8.02. Contracts.--Except as otherwise provided in
                                ---------
these bylaws, the board of directors may authorize any officer or officers
including the chairman and vice chairman of the board of directors, or any agent
or agents, to enter into any contract or to execute or deliver any instrument on
behalf of the corporation and such authority may be general or confined to
specific instances.

                  SECTION 8.03. Corporate Seal.--The corporation shall have a
                                --------------
corporate seal, which shall have inscribed thereon the name of the corporation,
the year of its organization and the words "Corporate Seal, Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.

                  SECTION 8.04. Deposits.--All funds of the corporation shall be
                                --------
deposited from time to time to the credit of the corporation in such banks,
trust companies, or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the board of directors shall from time to
time determine.

                                     -17-
<PAGE>

                  SECTION 8.05.  Corporate Records.
                                 -----------------

                  (a) Examination by Stockholders.--Every stockholder shall,
                      ---------------------------
upon written demand under oath stating the purpose thereof, have a right to
examine, in person or by agent or attorney, during the usual hours for business,
for any proper purpose, the stock ledger, list of stockholders, books or records
of account, and records of the proceedings of the stockholders and directors of
the corporation, and to make copies or extracts therefrom. A proper purpose
shall mean a purpose reasonably related to such person's interest as a
stockholder. In every instance where an attorney or other agent shall be the
person who seeks the right to inspection, the demand under oath shall be
accompanied by a power of attorney or such other writing which authorizes the
attorney or other agent to so act on behalf of the stockholder. The demand under
oath shall be directed to the corporation at its registered office in Delaware
or at its principal place of business. Where the stockholder seeks to inspect
the books and records of the corporation, other than its stock ledger or list of
stockholders, the stockholder shall first establish (1) that the stockholder has
complied with the provisions of this section respecting the form and manner of
making demand for inspection of such documents; and (2) that the inspection
sought is for a proper purpose. Where the stockholder seeks to inspect the stock
ledger or list of stockholders of the corporation and has complied with the
provisions of this section respecting the form and manner of making demand for
inspection of such documents, the burden of proof shall be upon the corporation
to establish that the inspection sought is for an improper purpose.

                  (b) Examination by Directors.--Any director shall have the
                      ------------------------
right to examine the corporation's stock ledger, a list of its stockholders and
its other books and records for a purpose reasonably related to the person's
position as a director.

                  SECTION 8.06. Amendment of Bylaws.--These bylaws may be
                                -------------------
altered, amended or repealed or new bylaws may be adopted either (1) by vote of
the stockholders at a duly organized annual or special meeting of stockholders,
or (2) by vote of a majority of the board of directors at any regular or special
meeting of directors if such power is conferred upon the board of directors by
the certificate of incorporation.

                                     -18-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>FORM OF COMMON STOCK CERTIFICATE OF COMPANY
<TEXT>

<PAGE>

                                                                     Exhibit 4.1
                     [3-DIMENSIONAL PHARMACEUTICALS LOGO]

                      3-DIMENSIONAL PHARMACEUTICALS, INC.
             INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

     COMMON STOCK                                            CUSIP _________
                                                                 SEE REVERSE FOR
                                                             CERTAIN DEFINITIONS

THIS
CERTIFIES
THAT


is the owner of

           FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK
                              PAR VALUE $0.001 OF

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

(hereinafter called the "Corporation"), transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney, upon
surrender of this Certificate properly endorsed. This Certificate and the shares
represented hereby are issued and shall be held subject to all the provisions of
the Certificate of Incorporation, as amended, and the Bylaws of the Corporation,
as amended (copies of which are on file at the office of the Transfer Agent), to
all of which the holder of this Certificate by acceptance hereof assents.

     This Certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.

     Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Date:


Secretary                                          Chief Executive Officer
                  [3-DIMENSIONAL
                  PHARMACEUTICALS SEAL]

                                                   COUNTERSIGNED AND REGISTERED:
                                         AMERICAN STOCK TRANSFER & TRUST COMPANY
                                                   (New York, NY) TRANSFER AGENT
                                                                   AND REGISTRAR
                                       BY
                                                            AUTHORIZED SIGNATURE
<PAGE>

     A FULL STATEMENT OF THE RELATIVE RIGHTS, INTERESTS, PREFERENCES AND
     RESTRICTIONS OF EACH CLASS OF STOCK WILL BE FURNISHED BY THE CORPORATION TO
     ANY STOCKHOLDER UPON WRITTEN REQUEST, WITHOUT CHARGE.

     The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

     TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ______Custodian_______
     TEN ENT -- as tenants by the entireties              (Cust)         (Minor)
     JT TEN  -- as joint tenants with right of     under Uniform Gifts to Minors
                survivorship and not as tenants      Act_______________________
                in common                                       (State)

    Additional abbreviations may also be used though not in the above list.

     FOR VALUE RECEIVED, _____________hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE

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

--------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE

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

_________________________________________________________________________Shares

of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney

to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated________________________


                                  ----------------------------------------------
                                NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
                                     CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
                                THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
                                               WITHOUT ALTERATION OR ENLARGEMENT
                                                         OR ANY CHANGE WHATEVER.


                   Signature(s) Guaranteed______________________________________

                    THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR
                 INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
                      AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
                 GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 12 AD. 13.
<PAGE>

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>OPINION OF MORGAN LEWIS & BOCKIUS LLP
<TEXT>

<PAGE>
                                                                     Exhibit 5.1

                    [LETTERHEAD OF MORGAN, LEWIS & BOCKIUS]



July 12, 2000



3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center, Suite 104
665 Stockton Drive
Exton, PA  19341


Re:  Public Offering of 4,600,000 Shares of Common Stock,
     $0.001 Par Value Per Share, of 3-Dimensional Pharmaceuticals, Inc.
     ------------------------------------------------------------------

Ladies and Gentlemen:

We have acted as counsel to 3-Dimensional Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the subject
registration statement on Form S-1 (as such may be amended or supplemented, the
"Registration Statement"), filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act"), to register up
to 4,600,000 shares (the "Shares") of Common Stock, par value $0.001 per share
(the "Common Stock") to be sold in a public offering (the "Offering"), including
600,000 shares of Common Stock issuable pursuant to an over-allotment option
granted to the Underwriters, all of which shares are authorized but heretofore
unissued.

In rendering the opinion set forth below, we have reviewed (a) the Registration
Statement; (b) the Company's Certificate of Incorporation, as amended to date;
(c) the Company's Bylaws, as amended to date; (d) certain records of the
Company's corporate proceedings as reflected in its minute and stock books; (e)
the Form of Underwriting Agreement filed as Exhibit 1.1 to the Registration
Statement (the "Underwriting Agreement"), to be executed by the Company and
Bear, Sterns & Co. Inc., Chase Securities Inc. and U.S. Bancorp Piper Jaffray
Inc. as representatives of the underwriters for the Offering (the
"Underwriters"); and (f) such records, documents, statutes and decisions as we
have deemed relevant.  In our examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as
<PAGE>

                    [LETTERHEAD OF MORGAN, LEWIS & BOCKIUS]

3-Dimensional Pharmaceuticals, Inc.
July 12, 2000
Page 2


originals and the conformity with the original of all documents submitted to us
as copies thereof.

Based upon the foregoing, and in reliance thereon, we are of the opinion that
the Shares to be sold by the Company as described in the Registration Statement,
upon approval by the pricing committee duly authorized by the Company's Board of
Directors, when and to the extent purchased by the Underwriters in accordance
with the Underwriting Agreement, will be validly issued, fully paid and
nonassessable.

We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the prospectus constituting a part thereof,
and any amendment thereto.  In giving such opinion and consent, we do not
thereby admit that we are acting within the category of persons whose consent is
required under Section 7 of the Act or the rules or regulations of the
Securities and Exchange Commission promulgated thereunder.


Very truly yours,

/s/ Morgan, Lewis & Bockius LLP
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>AMENDED EQUITY COMPENSATION PLAN
<TEXT>

<PAGE>

                                                                    Exhibit 10.1


                       3-DIMENSIONAL PHARMACEUTICALS, INC.
                            EQUITY COMPENSATION PLAN
                 (Amended and Restated as of September 17, 1999)


                  The purpose of the Equity Compensation Plan (the "Plan") of
3-Dimensional Pharmaceuticals, Inc. (the "Company") is to promote the interests
of the Company by providing incentives to (i) designated officers and other
employees of the Company or a Subsidiary Corporation (as defined herein), (ii)
non-employee members of the Board of Directors (the "Board") or the Scientific
Advisory Board (the "SAB") of the Company and (iii) independent contractors and
consultants (who may be individuals or entities) who perform services for the
Company, to encourage them to acquire a proprietary interest, or to increase
their proprietary interest, in the Company. The Company believes that the Plan
will cause participants to contribute materially to the growth of the Company,
thereby benefitting the Company's stockholders. For purposes of the Plan, the
terms "Parent Corporation" and "Subsidiary Corporation" shall have the meanings
set forth in subsections (e) and (f) of Section 424 of the Internal Revenue Code
of 1986, as amended (the "Code").

1.   Administration
     --------------

                  The Plan shall be administered and interpreted by the Board or
a committee of the Board consisting of not less than two persons. If the
Company's stock becomes publicly traded in a public offering as described in
Section 16(b) (a "Public Offering"), the Plan shall thereafter be administered
by a committee consisting of "outside directors" under Section 162(m) of the
Code, and the committee may consist of "non-employee directors" as defined under
Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act") or any
successor provisions. The term "Committee" shall refer to the Board or any
committee designated by the Board pursuant to this Section 1, as the case may
be. The Committee shall have the sole authority to determine (i) who is eligible
to receive Grants (as defined in Section 2 below) under the Plan, (ii) the type,
size and terms of each Grant under the Plan, (iii) the time when each Grant will
be made and the duration of any exercise or restriction period; (iv) any
restrictions on resale applicable to the shares to be issued or transferred
pursuant to the Grant; and (v) any other matters arising under the Plan. The
Committee may, if it so desires, base any of the foregoing determinations upon
the recommendations of management of the Company. The Committee shall have full
power and authority to administer and interpret the Plan and to adopt or amend
such rules, regulations, agreements and instruments as it may deem appropriate
for the proper administration of the Plan. The Committee's interpretations of
the Plan and all determinations made by the Committee pursuant to the powers
vested in it hereunder shall be conclusive and binding on all persons having any
interests in the Plan or in any Grants under the Plan. No person acting under
this subsection shall be held liable for any action or determination made in
good faith with respect to the Plan or any Grant under the Plan.
<PAGE>

2.   Grants
     ------

                  Incentives under the Plan shall consist of Incentive Stock
Options (as defined in Section 5(b) below), Nonqualified Stock Options (as
defined in Section 5(b) below) or Restricted Stock Grants (as defined in Section
6 below) (hereinafter collectively referred to as "Grants"). All Grants shall be
subject to the terms and conditions set forth herein and to such other terms and
conditions of any nature as long as they are not inconsistent with the Plan as
the Committee deems appropriate and specifies in writing to the participant (the
"Grant Letter"). The Committee shall approve the form and provisions of each
Grant Letter. Grants under any section of the Plan need not be uniform as among
the participants receiving the same type of Grant, and Grants under two or more
sections of the Plan may be combined in one Grant Letter.

3.   Shares Subject to the Plan
     --------------------------

                  (a) The aggregate number of shares of the Common Stock, par
value $.001 ("Common Stock"), of the Company that may be issued or transferred
under the Plan is 8,075,000 shares, subject to adjustment pursuant to Section
3(b) below. Such shares may be authorized but unissued shares or reacquired
shares. After a Public Offering, the maximum aggregate number of shares of
Company Stock that shall be subject to Grants made under the Plan to any
individual during any calendar year shall be 1,000,000 shares. If and to the
extent that options granted under the Plan terminate, expire or are canceled
without having been exercised (including shares cancelled as part of an exchange
of Grants), or if any shares of restricted stock are forfeited, the shares
subject to such Grant shall again be available for subsequent Grants under the
Plan.

                  (b) If any change is made to the Common Stock (whether by
reason of merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination of shares, or exchange of shares or any other
change in capital structure made without receipt of consideration), then unless
such event or change results in the termination of all outstanding Grants under
the Plan, the Committee shall preserve the value of the outstanding Grants by
adjusting the maximum number and class of shares issuable under the Plan to
reflect the effect of such event or change in the Company's capital structure,
and by making appropriate adjustments to the number and class of shares, the
exercise price of each outstanding option and otherwise, except that any
fractional shares resulting from such adjustments shall be eliminated by
rounding any portion of a share equal to .500 or greater up, and any portion of
a share equal to less than .500 down, in each case to the nearest whole number.

4.   Eligibility for Participation
     -----------------------------

                  Officers and other employees of the Company or a Subsidiary
Corporation, non-employee members of the Board or SAB, and independent
contractors and consultants who perform services for the Company shall be
eligible to participate in the Plan (hereinafter referred to individually as an
"Eligible Participant" and collectively as "Eligible Participants"). Only
Eligible Participants who are officers or other employees of the Company or a
Subsidiary Corporation shall


                                       2
<PAGE>

be eligible to receive Incentive Stock Options. All Eligible Participants shall
be eligible to receive Nonqualified Stock Options and Restricted Stock Grants.
The Committee shall select from among the Eligible Participants those who will
receive Grants (the "Grantees") and shall determine the number of shares of
Common Stock subject to each Grant. The Committee may, if it so desires, base
any such selections or determinations upon the recommendations of management of
the Company. Nothing contained in the Plan shall be construed to limit in any
manner whatsoever the right of the Company to grant rights or options to acquire
Common Stock or awards of Common Stock otherwise than pursuant to the Plan.

5.   Stock Options
     -------------

                  (a)      Number of Shares. The Committee, in its sole
discretion, shall determine the number of shares of Common Stock that will be
subject to each option.

                  (b)      Type of Option and Option Price.

                           (1) The Committee may grant options qualifying as
     incentive stock options within the meaning of Section 422 of the Code
     ("Incentive Stock Options") and other stock options ("Nonqualified Stock
     Options"), in accordance with the terms and conditions set forth herein, or
     may grant any combination of Incentive Stock Options and Nonqualified Stock
     Options (hereinafter referred to collectively as "Stock Options"). The
     option price per share of an Incentive Stock Option shall be the fair
     market value (as defined herein) of a share of Common Stock on the date of
     grant. If the Grantee of an Incentive Stock Option is the owner of Common
     Stock (as determined under section 424(d) of the Code) who possesses more
     than 10% of the total combined voting power of all classes of stock of the
     Company or a Parent Corporation or Subsidiary Corporation, the option price
     per share in the case of an Incentive Stock Option shall not be less than
     110% of the fair market value of a share of Common Stock on the date of
     grant.

                           (2) For all valuation purposes under the Plan, the

     fair market value of a share of Common Stock shall be determined in
     accordance with the following provisions:

                                    (A) If the Common Stock is not at the time
                  listed or admitted to trading on any stock exchange but is
                  traded either on the over-the-counter market or listed on the
                  Nasdaq National Market segment of The Nasdaq Stock Market, the
                  fair market value shall be the closing selling price of one
                  share of Common Stock on the date in question as such price is
                  reported by the NASDAQ system or any successor system. If
                  there is no reported closing selling price for the Common
                  Stock on the date in question, then the closing selling price
                  on the next preceding date for which such quotation exists
                  shall be determinative of fair market value.

                                       3
<PAGE>

                                    (B) If the Common Stock is at the time
                  listed or admitted to trading on any stock exchange, then the
                  fair market value shall be the closing selling price of one
                  share of Common Stock on the date in question on the stock
                  exchange determined by the Committee to be the primary market
                  for the Common Stock, as such prices are officially quoted on
                  such exchange. If there is no reported closing selling price
                  of Common Stock on such exchange on the date in question, then
                  the fair market value shall be the closing selling price on
                  the next preceding date for which such quotation exists.

                                    (C) If the Common Stock is at the time
                  neither listed nor admitted to trading on any stock exchange
                  nor traded in the over-the-counter market (or, if the
                  Committee determines that the value as determined pursuant to
                  Section 5(b)(2)(A) or (B) above does not reflect fair market
                  value), then the Committee shall determine fair market value
                  after taking into account such factors as it deems
                  appropriate.

                  (c) Exercise Period. The Committee shall determine the option
exercise period of each Stock Option. The exercise period shall not exceed ten
years from the date of grant.

                  (d) Vesting of Options and Restrictions on Shares. The vesting
period for Stock Options shall commence on the date of grant (or such date as
may be specified by the Committee) and shall end on the date or dates,
determined by the Committee, that shall be specified in the Grant Letter. The
Committee may impose upon the shares of Common Stock issuable upon the exercise
of a Stock Option such restrictions as it deems appropriate and specifies in the
Grant Letter. During any period in which such restrictions apply, the provisions
of Section 6(d) below shall be applicable to such shares, and the Committee, in
such circumstances as it deems equitable, may determine that all such
restrictions shall lapse.

                  (e) Manner of Exercise. A Grantee may exercise a Stock Option
by delivering a duly completed notice of exercise to the Committee, together
with payment of the option price.

                  (f) Termination of Employment, Disability or Death.

                           (1) If a Grantee ceases to be an Eligible Participant
         for any reason (other than, in the case of an individual, the death of
         such individual) any Stock Option which is otherwise exercisable by the
         Grantee shall terminate unless exercised within three months after the
         date on which the Grantee ceases to be an Eligible Participant (or
         within such other period of time, which may be longer or shorter than
         three months, as may be specified in the Grant Letter), but in any
         event no later than the date of expiration of the option exercise
         period, except that in the case of an individual Grantee who is
         disabled within the meaning of Section 105(d)(4) of the Code, such
         period shall be one year rather than three months (except as otherwise
         provided in the Grant Letter).


                                       4
<PAGE>

                           (2) In the event of the death of an individual
         Grantee while he or she is an Eligible Participant or within not more
         than three months after the date on which the Grantee ceases to be an
         Eligible Participant (or within such other period of time, which may be
         longer or shorter than three months, as may be specified in the Grant
         Letter), any Stock Option which was otherwise exercisable by the
         Grantee at the date of death may be exercised by the Grantee's personal
         representative at any time prior to the expiration of one year from the
         date of death, but in any event no later than the date of expiration of
         the option exercise period.

                  (g) Satisfaction of Option Price. The Grantee shall pay the
option price (i) in cash, (ii) with the consent of the Committee in its sole
discretion, by delivering shares of Common Stock already owned by the Grantee
and having a fair market value on the date of exercise equal to the option price
or a combination of cash and shares of Common Stock, or (iii) in such other
manner as the Committee may designate in the Grant Letter, including without
limitation by tendering the Grantee's recourse promissory note on such terms as
may be specified by the Committee. The Grantee shall pay the option price and
the amount of withholding tax due, if any, at the time of exercise. Shares of
Common Stock shall not be issued or transferred upon any purported exercise of a
Stock Option until the option price and the withholding obligation are fully
paid.

                  (h) Limits on Incentive Stock Options. Each Grant of an
Incentive Stock Option shall provide that:

                      (1)  the Stock Option is not transferable by the Grantee,
         except by will or the laws of descent and distribution;

                      (2)  the Stock Option is exercisable, during the Grantee's
         lifetime, only by the Grantee; and

                      (3)  the aggregate fair market value of the stock on
         the date of the grant with respect to which Incentive Stock Options are
         exercisable for the first time by a Grantee during any calendar year
         under the Plan and under any other stock option plan of the Company and
         its parent and subsidiary corporations shall not exceed $100,000.

6.       Restricted Stock Grants
         -----------------------

                  The Committee may issue shares of Common Stock to an Eligible
Participant on terms approved by the Committee (a "Restricted Stock Grant"). The
following provisions are applicable to Restricted Stock Grants:

                  (a) General Requirements. Shares of Common Stock issued
pursuant to Restricted Stock Grants will be issued in consideration for cash or
services rendered having a value, as determined by the Board, at least equal to
the par value thereof. If Restricted Stock is to be purchased by a Grantee, the
Grantee may pay the purchase price in the form of cash or, if and to the extent
that the Committee so permits, by tendering the Grantee's recourse promissory
note on such

                                       5
<PAGE>

terms as may be specified by the Committee. All conditions and restrictions
imposed under each Restricted Stock Grant, and the period of years during which
the Restricted Stock Grant will remain subject to such restrictions, shall be
set forth in the Grant Letter and designated therein as the "Restriction
Period." All restrictions imposed under any Restricted Stock Grant shall lapse
on such date or dates as the Committee may approve until the restrictions have
lapsed as to 100% of the shares. In addition, the Committee, in circumstances
that it deems equitable, may determine as to any or all Restricted Stock Grants,
that all the restrictions shall lapse, notwithstanding any Restriction Period.

                  (b) Number of Shares. The Committee, in its sole discretion,
shall determine the number of shares of Common Stock that will be granted in
each Restricted Stock Grant.

                  (c) Requirement of Relationship with Company. If the Grantee's
relationship with the Company (as an employee, non-employee member of the Board
or SAB, independent contractor or consultant, as the case may be) terminates
during the period designated in the Grant Letter as the Restriction Period, the
Restricted Stock Grant shall terminate as to all shares covered by the Grant as
to which restrictions on transfer have not lapsed, and such shares shall be
immediately returned to the Company. The Committee may, in its sole discretion,
provide for complete or partial exceptions to the provisions of this Section
6(c).

                  (d) Restrictions on Transfer and Legend on Stock Certificate.
During the Restriction Period, a Grantee may not sell, assign, transfer, pledge
or otherwise dispose of the shares of Common Stock to which such Restriction
Period applies except to a Successor Grantee pursuant to Section 7 below. Each
certificate representing a share of Common Stock issued or transferred under a
Restricted Stock Grant shall contain a legend giving appropriate notice of the
restrictions in the Grant. The Grantee shall be entitled to have the legend
removed from the stock certificate or certificates representing any such shares
as to which all restrictions have lapsed.

7.       Transferability of Options and Grants
         -------------------------------------

                  (a) Except as provided below, only a Grantee (or, in the case
of an individual Grantee, his or her authorized legal representative) may
exercise rights under a Grant. Except as provided below, no individual Grantee
may transfer those rights except by will or by the laws of descent and
distribution. Upon the death of an individual Grantee, the personal
representative or other person entitled to succeed to the rights of the Grantee
("Successor Grantee") may exercise such rights. A Successor Grantee shall
furnish proof satisfactory to the Company of such person's right to receive the
Grant under the Grantee's will or under the applicable laws of descent and
distribution.

                  (b) Transfer of Nonqualified Stock Options. Notwithstanding
the foregoing, the Committee may provide, in a Grant Letter, that a Grantee may
transfer Nonqualified Stock Options to family members or other persons or
entities according to such terms as the Committee may determine, provided that
the transferred Option shall continue to be subject to the same terms and
conditions as were applicable to the Option immediately before the transfer.

                                       6
<PAGE>

8.       Certain Corporate Changes
         -------------------------

                  (a) Sale or Exchange of Assets, Dissolution or Liquidation, or
Merger or Consolidation Where the Company Does Not Survive. If all or
substantially all of the assets of the Company are to be sold or exchanged, the
Company is to be dissolved or liquidated, or the Company is a party to a merger
or consolidation with another corporation in which the Company will not be the
surviving corporation, then, at least ten days prior to the effective date of
such event, the Company shall give each Grantee with any outstanding Grants
written notice of such event. Unless the Committee provides otherwise in the
Grant Letter, each such Grantee shall thereupon have the right to exercise in
full any installments of such Grants not previously exercised (whether or not
the right to exercise such installments has accrued pursuant to such Grants),
within ten days after such written notice is sent by the Company, and any
installments of such Grants not so exercised shall thereafter lapse and be of no
further force or effect.

                  (b) Merger or Consolidation Where the Company Survives. If the
Company is a party to a merger or consolidation in which the Company will be the
surviving corporation, then the Committee may, in its sole discretion, elect to
give each Grantee with any outstanding Grants written notice of such event. If
such notice is given, unless the Committee provides otherwise in the Grant
Letter, each such Grantee shall thereupon have the right to exercise in full any
installments of such Grants not previously exercised (whether or not the right
to exercise such installments has accrued pursuant to such Grants), within ten
days after such written notice is sent by the Company, and any installments of
such Grants not so exercised shall thereafter lapse and be of no further force
or effect.

                  (c) Committee Discretion. Notwithstanding the foregoing, the
Committee may provide in a Grant Letter specific provisions that are applicable
to a Grant in the event of a corporate transaction, and the Committee may also
accelerate the exercisability or vesting of Grants in the event of a corporate
transaction or allow the assumption or substitution of Grants by a surviving
corporation, as the Committee deems appropriate.

9.       Amendment and Termination of the Plan
         -------------------------------------

                  (a) Amendment. The Board may amend or terminate the Plan at
any time; provided, however, that, after a Public Offering, the Board shall not
amend the Plan without shareholder approval if such approval is required by
Section 162(m) of the Code.

                  (b) Termination of Plan. The Plan shall terminate on the tenth
anniversary of its effective date (as set forth in Section 16 below) unless
earlier terminated by the Board or unless extended by the Board with the
approval of the stockholders.

                  (c) Termination and Amendment of Outstanding Grants. A
termination or amendment of the Plan that occurs after a Grant is made shall not
result in the termination or amendment of the Grant unless the Grantee consents
or unless the Committee acts under Section

                                       7
<PAGE>

17(b) below. The termination of the Plan shall not impair the power and
authority of the Committee with respect to an outstanding Grant. Whether or not
the Plan has terminated, an outstanding Grant may be terminated or amended under
Section 17(b) below or may be amended by agreement of the Company and the
Grantee which is consistent with the Plan.

10.      Funding of the Plan
         -------------------

                  The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under the Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.

11.      Rights of Eligible Participants
         -------------------------------

                  Nothing in the Plan shall entitle any Eligible Participant or
other person to any claim or right to any Grant under the Plan. Neither the Plan
nor any action taken hereunder shall be construed as giving any Eligible
Participant or Grantee any rights to be retained by the Company in any capacity,
whether as an employee, non-employee member of the Board or SAB, independent
contractor, consultant or otherwise.

12.      Withholding of Taxes
         --------------------

                  The Company shall have the right to deduct from all Grants
paid in cash any federal, state or local taxes required by law to be withheld
with respect to such Grants paid in cash. In the case of Grants paid in Common
Stock, the Company shall have the right to require the Grantee to pay to the
Company the amount of any taxes which the Company is required to withhold in
respect of such Grants or to take whatever action it deems necessary to protect
the interests of the Company in respect of such tax liabilities, including,
without limitation, withholding a portion of the shares of Common Stock
otherwise deliverable pursuant to the Plan. The Company's obligation to issue or
transfer shares of Common Stock upon the exercise of a Stock Option or the
acceptance of a Restricted Stock Grant shall be conditioned upon the Grantee's
compliance with the requirements of this section to the satisfaction of the
Committee.

13.      Agreements with Grantees
         ------------------------

                  Each Grant made under the Plan shall be evidenced by a Grant
Letter containing such terms and conditions as the Committee shall approve.

14.      Requirements for Issuance of Shares
         -----------------------------------

                  No Common Stock shall be issued or transferred under the Plan
unless and until all applicable legal requirements have been complied with to
the satisfaction of the Committee. The Committee shall have the right to
condition any Stock Option or Restricted Stock Grant on the

                                       8
<PAGE>

Grantee's undertaking in writing to comply with such restrictions on any
subsequent disposition of the shares of Common Stock issued or transferred
thereunder as the Committee shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.

15.      Headings
         --------

                  The section headings of the Plan are for reference only. In
the event of a conflict between a section heading and the content of a section
of the Plan, the content of the section shall control.

16.      Effective Dates
         ---------------

                  (a) Effective Date of the Plan.  The Plan was originally
effective as of August 31, 1993.

                  (b) Public Offering. The provisions of the Plan that refer to
a Public Offering, or that refer to, or are applicable to persons subject to,
Section 16 of the Exchange Act or Section 162(m) of the Code, shall be
effective, if at all, upon the initial registration of Common Stock under
Section 12(g) of the Exchange Act, and shall remain effective thereafter for so
long as such Stock is registered.

17.      Miscellaneous
         -------------

                  (a) Substitute Grants. The Committee may make a Grant to an
employee, a non-employee director, or an independent contractor or consultant of
another corporation, if such person shall become an Eligible Participant by
reason of a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or a Subsidiary Corporation
and such other corporation. Any such Grant shall be made in substitution for a
stock option or restricted stock grant granted by the other corporation
("Substituted Stock Incentives"), but the terms and conditions of the substitute
Grant may vary from the terms and conditions required by the Plan and from those
of the Substituted Stock Incentives. The Committee shall prescribe the
provisions of the substitute Grants.

                  (b) Compliance with Law. The Plan, the exercise of Grants and
the obligations of the Company to issue or transfer shares of Common Stock under
Grants shall be subject to all applicable laws and required approvals by any
governmental or regulatory agencies. With respect to persons subject to Section
16 of the Exchange Act, it is the intent of the Company that the Plan and all
transactions under the Plan shall comply with all applicable conditions of Rule
16b-3 or any successor provisions under the Exchange Act. The Committee may
revoke any Grant if it is contrary to law or modify any Grant to bring it into
compliance with any valid and mandatory government regulations. The Committee
may also adopt rules regarding the withholding of taxes on payments to Grantees.
The Committee may, in its sole discretion, agree to limit its authority under
this section.

                                       9
<PAGE>

                  (c) Ownership of Stock. A Grantee or Successor Grantee shall
have no rights as a stockholder with respect to any shares of Common Stock
covered by a Grant until the shares are issued or transferred to the Grantee or
Successor Grantee on the stock transfer records of the Company.


                                       10
<PAGE>

                                                                    Exhibit 10.1
                                                             Amendment to Equity
                                                               Compensation Plan



                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                            Secretary's Certificate
                            -----------------------

                                March 31, 2000


          I, Scott M. Horvitz, do hereby certify that I am the Secretary of 3-
Dimensional Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and
that, as such, I am authorized to execute this certificate on behalf of the
Company and do further certify that:

          1.    Attached hereto as Exhibit A is a true and correct copy of all
resolutions of the Board of Directors of the Company relating to the
transactions contemplated by the Series A-5 Preferred Stock Purchase Agreement
(the "Agreement"), dated March 31, 20000 (the "Agreement"), between the Company
and the Buyers as defined in the Agreement. All of the resolutions contained in
Exhibit A were duly adopted at a special telephonic meeting of the Board of
Directors of the Company held on March 30, 2000, none of such resolutions has
been rescinded or amended in any respect, and all are in full force and effect
on the date hereof.

          2.    Attached hereto as Exhibit B is a true and correct copy of all
resolutions of the stockholders of the Company relating to the transactions
contemplated by the Agreement. The resolutions contained in Exhibit B were duly
adopted by Consent of Series B Preferred, Series C Preferred and Common
Stockholders of the Company dated March 31, 2000 and by Consent of Series A-1,
Series A-2, Series A-3 and Series A-4 Preferred Stockholders of the Company
dated March 31, 2000, respectively, none of such resolutions has been rescinded
or amended in any respect, and all are in full force and effect on the date
hereof.

          3.    A certified copy of the Sixth Restated Certificate of
Incorporation of the Company (the "Certificate of Incorporation") is attached
hereto as Exhibit C.

          4.    Attached hereto as Exhibit D is a true and correct copy of the
Bylaws of the Company, which are in full force and effect on the date hereof.

          IN WITNESS WHEREOF, I have hereunto set my hand on the date first set
forth above.


                                    /s/ Scott M. Horvitz
                                    ------------------------------
                                    Scott M. Horvitz
                                    Secretary
<PAGE>

                                                                   Exhibit A

                      3-DIMENSIONAL PHARMACEUTICALS, INC.
                 RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS


Equity Compensation Plan and Amendment and Restatement of Restated Certificate
-----------------------------------------------------------------------------
of Incorporation
----------------

          RESOLVED, that an amendment to the Amended and Restated Equity
     Compensation Plan of the Company (the "Plan") increasing by 1,250,000
     shares the number of shares of Common Stock that may be issued or
     transferred under the Plan and the grant of 750,000 options to employees
     and consultants of the Company (the "Plan Amendment") is hereby approved
     and adopted; and it is further

          RESOLVED, that the Board of Directors hereby proposes and deems
     it advisable that the Company's Fifth Restated Certificate of
     Incorporation, (the "Restated Certificate"), be amended and restated in its
     entirety as set forth in the Sixth Restated Certificate of Incorporation
     attached as Exhibit A hereto (the "Amendment and Restatement") (as so
                 ---------
     amended, the "Amended and Restated Certificate"); and it is further

          RESOLVED, that the officers of the Company be and they are
     hereby authorized and directed to submit the Plan Amendment and the
     Amendment and Restatement for consideration by the stockholders entitled to
     vote in respect thereof; and it is further

          RESOLVED, that upon the approval of the Plan Amendment and the
     Amendment and Restatement by the stockholders in accordance with Section
     242 of the Delaware General Corporation Law, the proper officers of the
     Company be and they are hereby authorized and directed to prepare, execute
     and file the Amended and Restated Certificate with the Secretary of State
     of the State of Delaware.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>STOCK PURCHASE AGREEMENT
<TEXT>

<PAGE>

                                                                    EXHIBIT 10.5

                   SERIES D PREFERRED STOCK PURCHASE AGREEMENT

     This Series D Preferred Stock Purchase Agreement (the "Agreement") is
entered into as of May 17, 2000 by and between 3-Dimensional Pharmaceuticals,
Inc., a Delaware corporation, having its principal place of business at
Eagleview Corporate Center, 665 Stockton Drive, Suite 104, Exton, Pennsylvania
19341 ("3-DP"), and Schering Berlin Venture Corporation, a Delaware corporation,
having its principal place of business at 340 Changebridge Road, Montville, New
Jersey 07058 ("Schering").

                                   Background
                                   ----------

     3-DP and Schering AG, a company organized and existing under the laws of
the Federal Republic of Germany, having its principal place of business at 13342
Berlin, Germany ("Schering AG") have entered into a License and Research
Agreement (the "License Agreement") dated as of the date hereof. In connection
with the License Agreement, Schering AG has agreed to make the Stock Purchase
(as defined below) through its affiliate, Schering. This Agreement sets forth
the agreement of 3-DP and Schering with respect to the Stock Purchase. Certain
defined terms used herein and not defined herein shall have the respective
meanings given to such terms in the License Agreement.

                                   Witnesseth:
                                   ----------

     In consideration of the representations and covenants and obligations
expressed herein, and intending to be legally bound, the parties agree as
follows:

1.   Definitions. As used in this Agreement, the following terms have the
     -----------
meanings specified or referred to in this Section 1.

     "Business Day" means any day that is not a Saturday or Sunday or a day
      ------------
on which banks located in the City of New York, New York are authorized or
required to be closed.

     "Certificate of Incorporation" means the Restated Certificate, as amended
      ----------------------------
from time to time.

     "Closing" shall have the meaning set forth in Section 3.
      -------

     "Closing Date" shall have the meaning set forth in Section 3.
      ------------

     "Commission" means the U.S. Securities and Exchange Commission.
      ----------

     "Common Stock" means the common stock, par value $.001 per share, of 3-DP.
      ------------
<PAGE>

     "Conversion Shares" means the shares of Common Stock issuable upon
      -----------------
conversion of the Series D Preferred Shares.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.
      ------------

     "IPO" means 3-DP's initial distribution of Common Stock for cash in a firm
      ---
commitment underwritten public offering to the general public pursuant to a
registration statement filed with and declared effective by the Commission
pursuant to the Securities Act.

     "IPO Effective Date" means the date upon which the IPO Registration
      ------------------
Statement is declared effective by the Commission.

     "IPO Registration Statement" means the registration statement filed by 3-DP
      --------------------------
with the Commission to register the Common Stock to be sold in the IPO.

     "Material Adverse Effect" shall have the meaning set forth in Section 4.1.
      -----------------------

     "NASDAQ" shall mean the National Association of Securities Dealers
      ------
Automated Quotations System.

     "Preferential Registration Rights" shall have the meaning set forth in
      --------------------------------
Section 6.3.1.

     "Registrable Securities" means the Conversion Shares as adjusted for stock
      ----------------------
splits, stock dividends, combinations and others recapitalizations.

     "Restated Certificate" shall have the meaning set forth in Section 2.1.
      --------------------

     "Securities" means the Series D Preferred Shares and the Conversion Shares.
      ----------

     "Securities Act" means the Securities Act of 1933, as amended.
      --------------

     "Series D Preferred Shares" means the shares of Series D Preferred Stock
      -------------------------
issued and issuable pursuant to the terms of this Agreement and the Certificate
of Incorporation.

     "Series D Preferred Stock" means the Series D preferred stock, par value
      ------------------------
$.001 per share, of 3-DP.

     "Stockholders' Agreement" means the Amended and Restated Stockholders'
      -----------------------
Agreement dated as of March 31, 2000 among 3-DP and certain stockholders of
3-DP.

     "Stock Purchase" shall have the meaning set forth in Section 2.2.
      --------------

2.   Authorization and Purchases and Sales of Series D Preferred Stock.

                                       2
<PAGE>

     2.1 Authorization. The Series D Preferred Stock to be issued or issuable to
         -------------
Schering hereunder shall have the voting powers, dividend rights, liquidation
rights, designations, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations and restrictions thereof,
set forth in 3-DP's Seventh Restated Certificate of Incorporation in the form of
Exhibit 2.1 attached hereto and incorporated herein (the "Restated
-----------
Certificate").

     2.2 Stock Purchase. Subject to the terms and conditions hereof, at the
         --------------
Closing, (i) Schering will purchase from 3-DP and 3-DP will sell to Schering,
625,000 Series D Preferred Shares at a purchase price of $8.00 per share for an
aggregate purchase price of $5,000,000 (the "Stock Purchase"), payable by
Schering by wire transfer in immediately available funds to the account of 3-DP,
and (ii) 3-DP will deliver or cause to be delivered to Schering a duly executed
certificate representing the Series D Preferred Shares in proper form for
transfer, with appropriate transfer stamps, if any, affixed.

3.   Closing. The closing (the "Closing") of the Stock Purchase shall be held at
     -------
the offices of Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia,
Pennsylvania, on May 17, 2000, or, if the conditions to the Closing set forth in
Articles 9 and 10 shall not have been satisfied by such date, as soon as
practicable after such conditions shall have been satisfied. The date on which
the Closing shall occur is hereinafter referred to as the "Closing Date".

4.   Representations and Warranties of 3-DP. 3-DP represents and warrants to
     --------------------------------------
Schering as of the date hereof and as of the Closing Date as follows:

     4.1 Organization and Standing. 3-DP has been duly incorporated and is
         -------------------------
validly existing as a corporation in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to carry on its
business as now conducted. 3-DP is duly qualified to transact business and is in
good standing in each jurisdiction in which the failure so to qualify would be
reasonably expected to have a material adverse effect on the business,
operations, properties, assets, prospects or condition (financial or otherwise)
of 3-DP (a "Material Adverse Effect").

     4.2 Corporate Power; Authorization. 3-DP has all requisite legal and
         ------------------------------
corporate power and has taken all requisite corporate action to execute and
deliver this Agreement, to sell and issue the Securities and to carry out and
perform all of its obligations hereunder. This Agreement has been duly
authorized, executed and delivered on behalf of 3-DP and constitutes the legal,
valid and binding agreement of 3-DP, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the enforcement of creditors' rights
generally, (ii) as limited by equitable principles generally and (iii) rights to
indemnification and contribution hereunder may be limited by applicable law. The
consummation of the transactions contemplated herein and the fulfillment of the
terms hereof will not result in a breach of any of the terms or provisions of,
or constitute a default under, any license, any judgment, order or decree or
statute, law, ordinance, rule or regulation applicable to 3-DP or its properties
or assets, 3-DP's Certificate of Incorporation or 3-

                                       3
<PAGE>

DP's bylaws except such terms or provisions as will have been waived prior to
the Closing. In addition, the consummation of the transactions contemplated
herein and the fulfillment of the terms hereof will not result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which 3-DP is a
party or by which it is bound other than any such items that, individually or in
the aggregate would not have a Material Adverse Effect and except such terms or
provisions as will have been waived prior to the Closing .

     4.3 Capitalization. As of the Closing Date, the authorized capital stock of
         --------------
3-DP is 97,994,126 shares, consisting of 6,926,461 shares of Series A-1
Preferred Stock, 4,333,990 shares of Series A-2 Preferred Stock, 10,304,264
shares of Series A-3 Preferred Stock, 4,000,000 shares of Series A-4 Preferred
Stock, 9,572,248 shares of Series A-5 Preferred Stock, 1,000,000 shares of
Series B Preferred Stock, 5,000,000 shares of Series C Preferred Stock, 625,000
shares of Series D Preferred Stock and 56,232,163 shares of Common Stock. As of
the Closing Date, 6,686,986 shares of Series A-1 Preferred Stock were issued and
outstanding, 4,333,990 shares of Series A-2 Preferred Stock were issued and
outstanding, 10,304,264 shares of Series A-3 Preferred Stock were issued and
outstanding, 4,000,000 shares of Series A-4 Preferred Stock were issued and
outstanding, 9,572,248 shares of Series A-5 Preferred Stock were issued and
outstanding, 1,000,000 shares of Series B Preferred Stock were issued and
outstanding, 400,000 shares of Series C Preferred Stock were issued and
outstanding, 625,000 shares of Series D Preferred Stock were issued and
outstanding and 2,645,881 shares of Common Stock were issued and outstanding.
Except as disclosed in Schedule 4.3 and except for the transactions expressly
                       ------------
contemplated hereby, since March 31, 2000, 3-DP has not issued any shares of
Common Stock or Series D Preferred Stock, granted any options or issued
restricted stock (except for stock options granted and restricted stock issued
under 3-DP's employee, consultant and director stock option plans), warrants,
rights (including conversion or preemptive rights, except for stock purchased
under 3-DP's stock purchase plans), or similar rights to any person or entity to
purchase or acquire any rights with respect to any shares of capital stock of
3-DP. The outstanding shares of Series A-1 Preferred Stock, Series A-2 Preferred
Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock, Series A-5
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable; and none of such outstanding shares was
issued in violation of the preemptive rights, purchase option, call, right of
first refusal or similar rights, if any, of any stockholder of 3-DP.

          4.3.1.(a) Securities; Conversion Shares. 3-DP has full corporate power
                    -----------------------------
and authority to sell the Securities on the terms and conditions contemplated
herein, and when so sold against payment therefor as provided herein, the
Securities will be validly authorized and issued, fully paid and nonassessable
and will have the rights, preferences and privileges described in the
Certificate of Incorporation and, assuming the accuracy of Schering's
representations and warranties contained in Section 5.1 and 5.2, will be issued
in compliance with all applicable federal and state securities laws. The
issuance and delivery of the Securities is not subject to preemptive or any
similar rights of any stockholders of 3-DP or any liens or

                                       4
<PAGE>

encumbrances arising through 3-DP, except such preemptive or similar rights as
will have been waived prior to the Closing hereunder; and when the Conversion
Shares are issued in accordance with the Certificate of Incorporation, they will
be validly issued and outstanding, fully paid and nonassessable and free of any
liens or encumbrances arising through 3-DP or any of its affiliates and will be
issued in compliance with all applicable federal and state securities laws.

          4.3.1.(b) Subsidiaries. Except as set forth on Schedule 4.3.1.(b),
                    ------------                         ------------------
3-DP does not currently own or control, directly or indirectly, any interest in
any other corporation, partnership, association or other business entity, and
3-DP is not a member of or participant in any partnership, joint venture or
similar person.

     4.4 Compliance with Other Instruments. The execution, delivery and
         ---------------------------------
performance of this Agreement and of the transactions contemplated hereby will
not result in a breach of any of the terms or provisions of, or constitute a
default under, any license, any judgment, order or decree or statute, law,
ordinance, rule or regulation applicable to 3-DP or its properties or assets,
3-DP's Certificate of Incorporation or 3-DP's bylaws except such terms or
provisions as will have been waived prior to the Closing. In addition, the
consummation of the transactions contemplated herein and the fulfillment of the
terms hereof will not result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which 3-DP is a party or by which it is bound other
than any such items that, individually or in the aggregate would not have a
Material Adverse Effect and except such terms or provisions as will have been
waived prior to the Closing .

     4.5 Governmental Consents. Except as set forth in Schedule 4.5, no consent,
         ---------------------                         ------------
approval, license, permit, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority is required on the part of 3-DP in connection with
3-DP's valid execution, delivery and performance of this Agreement. The filings
under state securities laws, if any, will be effected by 3-DP at its cost within
the applicable stipulated statutory period.

     4.6 Financial Statements. Attached hereto as Schedule 4.6 are year-end
         --------------------                     ------------
audited financial statements of 3-DP for the fiscal year ended December 31, 1998
and year-end unaudited financial statements of 3-DP for the fiscal year ended
December 31, 1999 (the "Financial Statements"). The Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated therein, except
as may be indicated therein or in the notes thereto, and fairly present the
financial condition of 3-DP as of the respective dates thereof and the results
of its operations and statements of cash flows for the periods then ended,
subject, in the case of unaudited financial statements, to normal year-end
adjustments. Except as reflected in the Financial Statements, 3-DP has no
liabilities or obligations of any nature, whether absolute, contingent or
accrued, unasserted or otherwise, that would have a Material Adverse Effect.

     4.7 Absence of Certain Changes. Except as set forth in Schedule 4.7, since
         --------------------------                         ------------
December 31, 1999, there has been no:

                                       5
<PAGE>

          4.7.1 change in the business, operations, properties, assets,
prospects or condition (financial or otherwise) of 3-DP, except changes in the
ordinary course of business that have not, individually or in the aggregate,
resulted in and are not reasonably expected to result in a Material Adverse
Effect;

          4.7.2 damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties or
financial condition of 3-DP;

          4.7.3 waiver or compromise by 3-DP of a material right or of a
material debt owed to it;

          4.7.4 satisfaction or discharge of any lien, claim or encumbrance by
3-DP, except in the ordinary course of business and which is not material to the
business, properties or financial condition of 3-DP;

          4.7.5 material change to a material contract or arrangement by which
3-DP or any of its assets is bound or subject;

          4.7.6 sale, assignment or transfer to a third party of any material
patents, trademarks, copyrights, trade secrets or other intangible assets for
compensation which is less than fair value;

          4.7.7 mortgage, pledge, transfer of a security interest in, or lien,
created by 3-DP, with respect to any of its material properties or assets,
except liens for taxes not yet due or payable; or

          4.7.8 declaration, setting aside or payment or other distribution in
respect of any of 3-DP's capital stock.

     4.8  Contracts. 3-DP is not, and has no actual knowledge that any other
          ---------
party is, in default under or in respect of any contract, commitment or
agreement to which 3-DP is a party or by which any of its assets or properties
are bound, the result of which default would be reasonably expected to have a
Material Adverse Effect. No party to any contract, commitment or agreement would
be authorized or permitted to terminate its obligations thereunder by reason of
the execution and delivery of this Agreement or any of the transactions
contemplated herein, except with respect to such terms and conditions thereof as
shall have been waived prior to the Closing.

     4.9  Compliance. 3-DP has complied with, and is not in default under or in
          ----------
violation of, its Certificate of Incorporation, bylaws or any law, statute,
ordinance, rule or regulation or other governmental restriction, order, judgment
or decree directly applicable to 3-DP, except where the failure to comply or any
such default or violation would not be reasonably expected to have a Material
Adverse Effect. 3-DP has not received notice of any possible or actual violation
of any applicable law, statute, ordinance, rule, regulation or other
governmental restriction, order,

                                       6
<PAGE>

judgment or decree the result of which violation would be reasonably expected to
have a Material Adverse Effect.

     4.10 Litigation. Except as set forth in Schedule 4.10, there is no action,
          ----------                         -------------
suit, proceeding or investigation pending or, to 3-DP's knowledge, currently
threatened against 3-DP which questions the validity of this Agreement or the
right of 3-DP to enter into this Agreement or to consummate the transactions
contemplated hereby. There is no action, suit, proceeding or investigation
pending or, to 3-DP's knowledge, currently threatened against 3-DP, which
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would be reasonably expected to have a Material Adverse
Effect.

     4.11 Permits. 3-DP has complied with, and is not in default in any respect
          -------
under, all governmental franchises, permits, licenses, and any similar authority
necessary for the conduct of its business as now being conducted by it, except
where the failure to so comply or such default would not be reasonably expected
to have a Material Adverse Effect.

     4.12 Taxes. 3-DP has filed all federal, state and other tax returns which
          -----
are required to be filed and has heretofore paid all taxes which have become due
and payable, except where the failure to file or pay would not be reasonably
expected to have a Material Adverse Effect. The provision for taxes on the
balance sheet as of December 31, 1999 is sufficient for the payment of all
material accrued and unpaid taxes of 3-DP with respect to the period then ended.

     4.13 Title. 3-DP owns no real properties. 3-DP has good and valid title to
          -----
all other properties (personal and mixed, tangible and intangible) that it
purports to own and a valid leasehold interest in all properties that it has
leased.

     4.14 Intellectual Property. Except as set forth in Schedule 4.14(a), to the
          ---------------------                         ----------------
knowledge of 3-DP and in 3-DP's reasonable opinion, 3-DP owns, or possesses
adequate rights to use, all of its patents, patent rights, trademarks, trade
secrets, know-how and proprietary techniques (including processes and
substances, service marks, trade names and copyrights) owned or used by it in
the conduct of its business as presently conducted, except where the failure to
own or possess such patents, patent rights, trademarks, trade secrets, know-how
or proprietary techniques would not be reasonably expected to have a Material
Adverse Effect. Except as set forth in Schedule 4.14(b), 3-DP has not received
                                       ----------------
any notice of infringement of or conflict with asserted rights of others with
respect to any patents, patent rights, trademarks, trade secrets, know-how or
proprietary techniques which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would be reasonably expected to have a
Material Adverse Effect.

     4.15 Investment Company Act. 3-DP is not an "investment company" within the
          ----------------------
meaning of the Investment Company Act of 1940, as amended.

5.   Representations and Warranties of Schering. Schering represents and
     ------------------------------------------
warrants to 3-DP as of the date hereof and as of the Closing Date as follows:

                                       7
<PAGE>

     5.1 Investment Representations. Schering has had an opportunity to ask
         --------------------------
questions, review documents and gather information about 3-DP and, based upon
such information and the representations and warranties made herein being true
and correct in all material respects, has acquired sufficient information about
3-DP to reach an informed and knowledgeable decision to acquire the Series D
Preferred Shares. Schering has such business and financial experience as is
required to give it the capacity to protect its own interests in connection with
the purchase of the Series D Preferred Shares. Schering is an "accredited
investor" as defined in Rule 501(a) under the Securities Act.

     5.2 Investment Intent. Schering is acquiring the Securities for investment
         -----------------
for its own account only and not with a view to, or for resale in connection
with, any "distribution" thereof within the meaning of the Securities Act.
Schering understands that the Securities have not been registered under the
Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of Schering's investment intent as
expressed herein. Schering is familiar with Rule 144 under the Securities Act,
as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.

     5.3 No Legal, Tax or Investment Advice. Schering understands that nothing
         ----------------------------------
in this Agreement or any other materials presented to Schering in connection
with the acquisition and sale of the Securities constitutes legal, tax or
investment advice. Schering has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its acquisition of the Securities.

     5.4 Corporate Power; Authority. Schering has all requisite legal and
         --------------------------
corporate power and has taken all requisite corporate action to execute, deliver
and perform it obligations under this Agreement. This Agreement has been duly
authorized, executed and delivered on behalf of Schering and constitutes the
legal, valid and binding agreement of Schering, enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally, (ii) as limited by equitable principles generally
and (iii) rights to indemnification and contribution hereunder may be limited by
applicable law.

6.   Restrictions on Transfer and Registration Rights.
     ------------------------------------------------

     6.1 Restrictions on Transferability. The Securities shall not be
         -------------------------------
transferable in the absence of a registration under the Securities Act or an
exemption therefrom or in the absence of compliance with any term of this
Agreement. 3-DP shall be entitled to give stop transfer instructions to the
transfer agent with respect to the Securities in order to enforce the foregoing
restrictions. The following provisions shall govern the transfer of the
Securities (except if the transferred Securities are freely tradable pursuant to
an effective registration statement or Rule 144):

                                       8
<PAGE>

          6.1.1 Schering, and Schering shall require that any other holder of
any Securities by acceptance thereof, agrees that, prior to any such transfer of
any Securities, such holder will give written notice to 3-DP of such holder's
intention to effect such transfer and to comply in all other respects with the
provisions of this Section 6.1. Unless waived by 3-DP and unless the related
transfer is to an entity that directly or indirectly controls or is controlled
by or under common control with the holder, each such notice shall be
accompanied by an opinion of counsel for such holder (who may be the inside or
staff counsel employed by such holder), stating that registration under the
Securities Act and applicable state securities laws in connection with such
transfer is not required and stating the factual and statutory bases relied upon
by counsel. The following provisions shall then apply:

               6.1.1.(a) If in the opinion of counsel for 3-DP the proposed
transfer of such Securities may be effected without registration or
qualification under the Securities Act and any applicable state securities laws,
then the registered holder of such Securities shall be entitled to transfer such
Securities in accordance with the intended method of disposition specified in
the statement delivered by such holder to 3-DP.

               6.1.1.(b) If in the opinion of counsel for 3-DP the proposed
transfer of such Securities may not be effected without registration under the
Securities Act or registration or qualification under any applicable state
securities laws, the registered holder of such Securities shall not be entitled
to transfer such Securities until the requisite registration or qualification is
effective.

               6.1.1.(c) If Securities are sold or otherwise transferred
hereunder with the restrictive legends thereon, any such transferee of such
Securities shall agree in writing to be bound by the restrictions on transfer
set forth in this Section 6 prior to the transfer of the Securities.

          6.1.2 Each certificate evidencing the Securities issued upon such
transfer (and each certificate evidencing any untransferred balance of such
Securities) shall bear the legend set forth in Section 6.2 hereof unless (i) in
the opinion of counsel (reasonably acceptable to 3-DP) addressed to 3-DP the
registration of future transfers is not required by the applicable provisions of
the Securities Act or applicable state securities laws; (ii) 3-DP shall have
waived the requirement of such legend; or (iii) in the opinion of counsel to
3-DP, such transfer shall have been made in connection with an effective
registration statement filed pursuant to the Securities Act or in compliance
with the requirements of Rule 144 or Rule 144A (or similar or successor rule)
promulgated under the Securities Act, and in compliance with applicable state
securities laws.

     6.2  Restrictive Legends.
          -------------------

          6.2.1 Each certificate representing Securities shall bear
substantially the following legend (in addition to any legends required under
applicable securities laws):

                                       9
<PAGE>

          THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
          INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
          REGISTRATION OR AN EXEMPTION THEREFROM, PURSUANT TO CERTAIN PROCEDURES
          SET FORTH IN THE SERIES D PREFERRED STOCK PURCHASE AGREEMENT BETWEEN
          THE ORIGINAL PURCHASER AND 3-DP (COPIES OF WHICH MAY BE OBTAINED FROM
          3-DP).

          6.2.2 Whenever such restrictions on transfer pursuant to this Section
6 shall terminate, Schering shall be entitled to receive from 3-DP without
expense a new certificate or certificates for the Securities not bearing the
legends set forth in this Section 6.

     6.3  Registration of Securities.
          --------------------------

          6.3.1 Demand Registration. Subject to the preferential registration
                -------------------
rights of the holders of Series A Preferred Stock set forth in the Stockholders'
Agreement attached hereto as Exhibit 6.3.1, as the same may be amended from time
                             -------------
to time (the "Preferential Registration Rights"), Schering will have the right,
on one occasion after the expiration of 12 calendar months after the IPO
Effective Date, to require 3-DP to file a registration statement (the "Demand
Registration Statement") with the Commission under the Securities Act to
register the resale of the Registerable Securities. 3-DP shall use its best
efforts to promptly effect the registration under the Securities Act of all the
Registerable Securities that Schering requests to be registered. The Company
shall not be obligated to file and cause to become effective any Demand
Registration Statement within a period not to exceed four months after the date
of a request for registration pursuant to this Section 6.3.1 if, at the time of
such request, the filing of such Demand Registration Statement would, as
determined in good faith by a majority of the Board, be seriously detrimental to
3-DP or its stockholders or adversely affect a material financing project or a
material proposed or pending acquisition, merger or other similar corporate
transaction to which 3-DP is or imminently expects to be a party, in which case
registration shall take place as soon as practicable thereafter.

          6.3.2 S-3 Registrations. Subject to the Preferential Registration
                -----------------
Rights, Schering will have the right, at any time after the expiration of 12
calendar months after the IPO Effective Date, to require 3-DP to file one or
more shelf registration statements on Form S-3 (each, a "Form S-3 Registration
Statement") with the Commission under the Securities Act to register for resale
the Registerable Securities in an underwritten transaction. 3-DP shall use its
best efforts to promptly effect the registration under the Securities Act of all
the Registerable Securities that Schering requests to be registered. The Company
shall not be obligated to file and cause to become effective any Form S-3
Registration Statement within a period not to exceed four months after the date
of a request for registration pursuant to this Section 6.3.2 if, at the time of
such request, the filing of such Form S-3 Registration Statement would, as
determined in good faith by a majority of the Board, be seriously detrimental to
3-DP or its stockholders or adversely affect a material financing project or a
material proposed or pending acquisition, merger or other

                                       10
<PAGE>

similar corporate transaction to which 3-DP is or imminently expects to be a
party, in which case registration shall take place as soon as practicable
thereafter, provided that such right of 3-DP to delay a request for registration
may be exercised by 3-DP not more than once in any one-year period.

          6.3.3 Piggyback Registration. Subject to the Preferential Registration
                ----------------------
Rights, if 3-DP at any time proposes to register any of its securities under the
Securities Act (other than a registration effected on either Form S-4 or S-8, or
similar or successor forms) for the purpose of selling such securities to the
public whether for its own account or for the account of any of its security
holders or both, 3-DP shall each such time promptly give written notice within a
30 days to Schering of its intention so to do. Upon the written request of
Schering given within 15 days after receipt of such notice (which request shall
state the number of Registerable Securities to be disposed of by Schering and,
if such offering is not underwritten, the intended method of disposition of such
Registerable Securities by Schering), 3-DP will use its best efforts to cause
promptly all Registerable Securities for which registration or qualification is
requested under the Securities Act or any other applicable federal or state law
or regulation so as to permit the sale or other disposition thereof in
accordance with Schering's written request. If the registration is to be
effected in connection with an underwritten offering,

                6.3.3.(a) Schering shall be required to sell the Registerable
Securities through the underwriter(s);

                6.3.3.(b) Schering (together with 3-DP) shall enter into an
underwriting agreement with the managing underwriter in the form customarily
used by such underwriter, which is reasonably acceptable to Schering; and

                6.3.3.(c) if the managing underwriter thereof determines that
the total number of shares of the Common Stock to be sold in such offering
should be limited due to market conditions, subject to the Preferential
Registration Rights, the reduction in the total number of shares offered shall
be made by first excluding any shares of selling stockholders who are not
holders of contractual rights to have such shares registered under the
Securities Act, and then, if necessary, by excluding pro rata (based on the
number of shares to be registered by each of such security holders) the
Registerable Securities to be sold by Schering and the holders of other
contractual rights to have such shares registered pursuant to agreements
comparable to this Section 6.3.3 before any reduction is made in the total
number of shares to be sold pursuant thereto by 3-DP and any holders of
Preferential Registration Rights.

     6.4  Registration Procedures.
          -----------------------

                                       11
<PAGE>

          6.4.1 The Company shall pay all Registration Expenses (as hereinafter
defined) in connection with any registration, qualification or compliance
hereunder, and Schering shall pay all Selling Expenses (as hereinafter defined).
"Registration Expenses" shall mean all expenses, except for Selling Expenses,
incurred by 3-DP in complying with the registration provisions of this
Agreement, including without limitation all federal and state registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for 3-DP, blue sky fees and expenses and the expense of
any special audits incident to or required by any such registration. "Selling
Expenses" shall mean all selling commissions, underwriting fees and stock
transfer taxes applicable to the Registerable Securities and all fees and
disbursements of counsel for Schering.

          6.4.2 Whenever required under Article 6.3 to effect the registration
of any Registerable Securities, 3-DP will promptly: (i) prepare and file with
the Commission a registration statement and such amendments and supplements to
the registration statement and the prospectus used in connection with the
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of the Registerable Securities
and keep such registration statement effective until the securities covered by
such registration statement have been sold, but in no event longer than 180 days
(subject to the right and obligation of 3-DP to promptly advise the selling
stockholder of applicable periods when the prospectus is not current and,
therefore, may not be used, in which case 3-DP covenants to use its reasonable
efforts to promptly take such actions necessary to permit sale thereunder); (ii)
furnish such number of prospectuses and other documents incident thereto,
including any amendment of or supplement to the prospectus, as Schering from
time to time may reasonably request; (iii) provide a transfer agent and
registrar for all Registerable Securities registered pursuant to the
registration statement and a CUSIP number for all such Registerable Securities,
in each case not later than the effective date of such registration; and (iv)
file the documents required of 3-DP and otherwise use its best efforts to
maintain requisite blue sky clearance in (A) all jurisdictions in which any of
the Registerable Securities is originally sold and (B) all other states
specified in writing by Schering, provided as to clause (B), however, that 3-DP
shall not be required to qualify to do business or consent to service of process
in any state in which it is not now so qualified or has not so consented.

          6.4.3 Schering shall furnish to 3-DP such information regarding it and
the distribution proposed by it as 3-DP may reasonably request in writing and as
shall be reasonably required in connection with any registration, qualification
or compliance described herein. Schering shall represent that such information
is true and complete in all material respects.

     6.5  Expiration of Registration Rights. Notwithstanding anything to the
          ---------------------------------
contrary contained herein, the registration rights granted hereunder and 3-DP's
obligations under this Section 6 will expire upon the expiration of the two-year
period commencing 12 months after the IPO Effective Date.

     6.6  Indemnification and Contribution.
          --------------------------------

                                       12
<PAGE>

          6.6.1 The Company agrees to indemnify and hold harmless Schering and
its successors, assigns, officers, directors, employees, stockholders, agents
and affiliates from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which Schering may become subject
(under the Securities Act or otherwise) insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon, any claim by a third party, including any governmental agency,
asserting any untrue statement of a material fact or omission of a material fact
contained in a registration statement, on the effective date thereof, or arise
out of any failure by 3-DP to fulfill any undertaking included in such
registration statement, including but not limited to 3-DP's duty to update, and
3-DP will, as incurred, reimburse Schering for any damages or legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim; provided, however, that 3-DP shall not be
                                      --------  -------
liable in any such case to the extent that such loss, claim, damages or
liability arises out of, or is based upon (i) an untrue statement made in such
registration statement in reliance upon and in conformity with information
furnished to 3-DP by Schering or an affiliate for use in preparation of such
registration statement or (ii) any untrue statement in any prospectus that is
corrected in any subsequent prospectus that was delivered to Schering prior to
the pertinent sale or sales by Schering.

          6.6.2 Schering agrees to indemnify and hold harmless 3-DP and its
successors, assigns, officers, directors, employees, stockholders, agents and
affiliates from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which 3-DP may become subject
(under the Securities Act or otherwise) insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon any claim by a third party asserting (i) an untrue statement made
in such registration statement in reliance upon and in conformity with
information furnished to 3-DP by Schering or an affiliate of Schering for use in
preparation of such registration statement, provided that Schering shall not be
liable in any such case for (i) any untrue statement included in any prospectus
which statement has been corrected, in writing, by Schering and delivered to
3-DP before the sale from which such loss occurred or (ii) any untrue statement
in any prospectus that is corrected in any subsequent prospectus that was
delivered to Schering prior to the pertinent sale or sales by Schering, and
Schering will, as incurred, reimburse 3-DP for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim.

          6.6.3 Promptly after receipt by any indemnified person of a notice of
a claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 6.6, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified person.

                                       13
<PAGE>

After notice from the indemnifying person to such indemnified person of the
indemnifying person's election to assume the defense thereof, the indemnifying
person shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the defense
thereof, provided that if there exists or shall exist a conflict of interest
that would make it inappropriate in the reasonable judgment of the indemnified
person for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel at the expense of such
indemnifying person.

     The obligations of 3-DP and Schering under this Section 6 shall be in
addition to any liability which 3-DP and Schering may otherwise have.

          6.6.4 If the indemnification provided for in this Section 6.6 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any lose, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties, relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

     6.7  Transfer of Registration Rights. The right to sell Registrable
          -------------------------------
Securities pursuant to a registration statement described herein may not be
assigned or transferred by Schering other than to an entity that directly or
indirectly controls or is controlled by or under common control with Schering.

     6.8  Lock-Up Upon IPO. Schering agrees that, in the event 3-DP proposes to
          ----------------
conduct an IPO at a time at which Schering beneficially owns 3-DP's Common
Stock, Schering will agree to be a party and subject to any lock-up agreement
proposed by the managing underwriter(s) for the IPO with respect to the sale,
transfer, conversion or other disposition of the Registrable Securities, which
lock-up agreement will contain no more restrictive terms and conditions than
those to which 3-DP's then current directors, officers and stockholders who
beneficially own 5% or greater of the Common Stock will be subject in connection
therewith and in no event shall the period of such lock-up exceed 180 days from
the effective date of the IPO.

7.   Filings and Authorizations. 3-DP and Schering, as promptly as practicable,
     --------------------------
(a) will make, or cause to be made, all filings and submissions under laws,
rules and regulations applicable to them as may be required for them to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement, and (b) will use reasonable efforts to obtain, or

                                       14
<PAGE>

cause to be obtained, all authorizations, approvals, consents and waivers from
all governmental authorities necessary to be obtained by them in order for them
so to consummate such transactions.

8.   Conditions to Obligation of Each Party to Effect the Transactions
     -----------------------------------------------------------------
Contemplated by this Agreement. The obligation of each party to effect the
------------------------------
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing of the following conditions:

     8.1 all governmental and other consents and approvals, if any, necessary to
permit the consummation of the transactions contemplated by this Agreement shall
have been obtained; and

     8.2 no stop order or other order enjoining the sale of the Series D
Preferred Shares to be purchased and sold at the Closing shall have been issued
and no proceedings for such purpose shall be pending or, to the knowledge of
3-DP, threatened by the Commission or any commissioner of corporations or
similar officer of any state having jurisdiction over this transaction, and no
preliminary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission nor any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority shall be in
effect that would restrain or otherwise prevent the consummation of the
transactions contemplated by this Agreement.

9.   Conditions to Schering's Obligations.
     ------------------------------------

     9.1  Closing. The obligations of Schering under this Agreement to purchase
          -------
the Series D Preferred Shares to be purchased pursuant to Section 2.2 of this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions by 3-DP, the waiver of which shall not be effective without
the consent of Schering thereto:

          9.1.1 Representations and Warranties. The representations and
                ------------------------------
warranties of 3-DP contained in Section 4 shall be true and correct on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date.

          9.1.2 Performance. 3-DP shall have performed and complied in all
                -----------
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing, and all corporate or other proceedings in connection with
the transactions contemplated at the Closing and all documents incident thereto
shall be reasonably satisfactory in form and in substance to Schering.

          9.1.3 Compliance Certificate. An officer of 3-DP shall have delivered
                ----------------------
to Schering a certificate certifying that the conditions specified in Sections
9.1.1 and 9.1.2 have been fulfilled.

                                       15
<PAGE>

          9.1.4 The License Agreement. 3-DP and Schering AG shall have entered
                ---------------------
into the License Agreement.

          9.1.5 Opinion of Company Counsel. Schering shall have received an
                --------------------------
opinion from Morgan, Lewis & Bockius LLP, counsel to 3-DP, dated as of the
Closing Date, in substantially the form of Exhibit 9.1.5.
                                           -------------

          9.1.6 Certificate. 3-DP shall have furnished to Schering a
                -----------
certificate, signed by an authorized officer of 3-DP, certifying: (i) the due
organization and good standing of 3-DP; (ii) the corporate resolutions of 3-DP
authorizing the transactions contemplated by this Agreement; and (iii) the
incumbency of officers of 3-DP executing this Agreement and the other
instruments or certificates delivered upon the Closing.

          9.1.7 Share Certificate. 3-DP shall have furnished to Schering a
                -----------------
certificate or certificates representing the Series D Preferred Shares to be
purchased and sold at the Closing pursuant to Section 2.2 (free and clear of all
liens, claims and other encumbrances except as otherwise provided herein).

          9.1.8 Restated Certificate. 3-DP shall have adopted and filed with the
                --------------------
Secretary of State of Delaware the Restated Certificate on or before the
Closing.

          9.1.9 Consents. 3-DP shall have furnished to Schering a copy of the
                --------
signed consents a waiver of preemptive rights from other holders of 3-DP stock
that are necessary to consummate the issuance of the Securities.

          9.1.10 No Conflict. No statute, rule, regulation, executive order,
                 -----------
decree, temporary restraining order, preliminary or permanent injunction or
other order enacted, entered, promulgated, enforced or issued by any applicable
governmental entity or other legal restraint or prohibition preventing the
acquisition of the Securities shall be in effect.

          9.1.11 Other Documentation. 3-DP shall have furnished to Schering such
                 -------------------
other instruments and documents, in form and substance reasonably acceptable to
Schering, as may be necessary to effect the Closing.

10.  Conditions to 3-DP's Obligations.
     --------------------------------

     10.1 Closing. The obligations of 3-DP under this Agreement to sell the
     ------------
Series D Preferred Shares to be sold pursuant to Section 2.2 of this Agreement
are subject to the fulfillment on or before the Closing of each of the following
conditions by Schering, the waiver of which shall not be effective without the
consent of 3-DP thereto:

          10.1.1 Representations and Warranties. The representations and
                 ------------------------------
warranties of Schering contained in Section 5 shall be true on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date.

                                       16
<PAGE>

          10.1.2 Performance. Schering shall have performed and complied in all
                 -----------
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing, and all corporate or other proceedings in connection with
the transactions contemplated at the Closing and all documents incident thereto
shall be reasonably satisfactory in form and in substance to 3-DP.

          10.1.3 Compliance Certificate. An officer of Schering shall have
                 ----------------------
delivered to 3-DP a certificate certifying that the conditions specified in
Sections 10.1.1 and 10.1.2 have been fulfilled.

          10.1.4 Payment of Purchase Price. Schering shall have delivered the
                 -------------------------
purchase price required to be paid at the Closing.

          10.1.5 License Agreement. 3-DP and Schering AG shall have entered into
                 -----------------
the License Agreement.

          10.1.6 Other Documentation. Schering shall have furnished to 3-DP such
                 -------------------
other instruments and documents, in form and substance reasonably acceptable to
3-DP, as may be necessary to effect the Closing.

11.  Covenants. 3-DP covenants and agrees that prior to the consummation of
     ---------
3-DP's IPO and so long as Schering shall own any Securities, it will perform and
observe the following covenants and provisions:

     11.1 Corporate Existence. Do or cause to be done all things necessary to
          -------------------
preserve, renew and keep in full force and effect its legal existence.

     11.2 Reporting Requirements. Furnish to Schering:
          ----------------------

          11.2.1 Monthly Reports: as soon as available and in any event within
                 ---------------
45 days after the end of each calendar month, balance sheets, statements of
income and retained earnings and a summary statement of monthly cash flow and
expenses of 3-DP and its subsidiaries for such month and for the period
commencing at the end of the previous fiscal year and ending with the end of
such month, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, and including
comparisons to the monthly budget and an analysis of the variances from the
budget or plan, prepared in accordance with generally accepted accounting
principles consistently applied, subject to year-end audit adjustment.

          11.2.2 Annual Reports: as soon as available, a copy of the annual
                 --------------
audit report for such year for 3-DP and its subsidiaries, including therein
consolidated and consolidating balance sheets of 3-DP and its subsidiaries as of
the end of such fiscal year and consolidated and consolidating statements of
income and retained earnings and of changes in financial position of 3-DP and
its subsidiaries for such fiscal year, setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year, all such
consolidated statements to be duly

                                       17
<PAGE>

certified by an independent public accountant of recognized national standing
approved by the Board of Directors.

          11.2.3 Notice of Adverse Changes: promptly after the occurrence
                 -------------------------
thereof and in any event within 15 Business Days after it becomes aware of each
occurrence, notice of any material adverse change in the business, operations,
properties, assets, prospects or condition (financial or otherwise) of 3-DP.

12.  Miscellaneous.
     -------------

     12.1 Expenses. 3-DP and Schering shall each pay its own expenses incurred
          --------
in connection with the negotiation, execution and performance of this Agreement.

     12.2 Waivers and Amendments. With the written consent of 3-DP and the
          ----------------------
record holders of more than fifty percent of the Securities then outstanding,
the terms of this Agreement may be waived or amended.

     12.3 Governing Law. This Agreement shall be governed in all respects by the
          -------------
laws of the State of New York without giving effect to the conflicts of law
provisions thereof.

     12.4 Survival. The representations, warranties, covenants and agreements
          --------
made herein and in any certificate delivered pursuant hereto shall survive any
investigation made by 3-DP or Schering and the Closing.

     12.5 Successors and Assigns. The provisions hereof shall inure to the
          ----------------------
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto (specifically including successors in
interest to Securities).

     12.6 Entire Agreement. This Agreement constitutes the full and entire
          ----------------
understanding and agreement between the parties with regard to the subject
hereof.

     12.7 Notices, etc. All notices and other communications required or
          -------------
permitted hereunder shall be effective upon receipt and shall be in writing and
may be delivered in person, overnight delivery service or U.S. mail, in which
event it may be mailed by first-class, certified or registered, postage prepaid,
addressed (a) if to Schering, at P.O. Box 1000, Montville, New Jersey 07045-1000
Attention General Counsel or at such other address as Schering shall have
furnished to 3-DP in writing, with a copy to Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, NY 10019-7475, attention: Peter S. Wilson,
facsimile: 212-474-3700, or (b) if to 3-DP, at its address set forth at the
beginning of this Agreement, attention: Scott Horvitz, facsimile: 610-458-8258,
or at such other address as 3-DP shall have furnished to Schering in writing.

     12.8 Severability of this Agreement. If any provision of this Agreement
          ------------------------------
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

                                       18
<PAGE>

     12.9 Titles and Subtitles. The titles of the paragraphs and subparagraphs
          --------------------
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

     12.10 Counterparts. This Agreement may be executed in any number of
           ------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

     12.11 Publicity. 3-DP, Schering AG and Schering shall not originate any
           ---------
written publicity, news release, or other announcement or statement relating to
this Agreement (the "Written Disclosure") without the prior prompt review and
written approval of the other party, which approval shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing provisions of this Section
12.11, any party may make any public Written Disclosure it believes in good
faith based upon the advice of counsel is required by applicable law or any
listing or trading agreement concerning its publicly traded securities, provided
that prior to making such Written Disclosure, the disclosing party shall provide
the other party with a copy of the materials proposed to be disclosed and
provide the receiving party with at least two (2) business days to review the
proposed Written Disclosure.

                                       19
<PAGE>

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

                                    3-DIMENSIONAL PHARMACEUTICALS, INC.



                                    By:/s/ David C. U'Prichard
                                       -------------------------------------
                                         David C. U'Prichard


                                    SCHERING BERLIN VENTURE CORPORATION


                                    By:/s/ Illegible
                                       -------------------------------------
                                          Name:
                                          Title:

                                       20
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>EMPLOYMENT OFFER TO DAVID U'PRICHARD
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.14

3-Dimensional
Pharmaceuticals, Inc.                          Eagleview Corporate Center
                                               665 Stockton Drive, Suite 104
                                               Exton, PA 19341

                                               Phone: 610-458-8959
                                               Fax:   610-458-8249
                                                 Re-Executed Copy

September 1, 1999


David C. U'Prichard, Ph.D.
121 Pine Street
Philadelphia, PA   19106

Dear David:

On behalf of the Board of Directors, I am pleased to offer you the position of
Chief Executive Officer with 3-Dimensional Pharmaceuticals, Inc. ("3DP" or
"Company") under the following terms:

You will report to the Board of Directors of the Company and join the Board as a
Director of the Company.

Your base salary will be $27,083 per month ($325,000/year).

You will be granted stock options to purchase an aggregate number of 2,064,000
shares of 3DP common stock (equal to approximately 6% of the current fully
diluted equity of the Company), with options to purchase 1,720,000 of such
shares having an exercise price equal to the fair value (currently $1.05) of the
underlying common stock on the date of grant, and options to purchase the
remaining 344,000 of such shares having an exercise price of $2.60 per share.
(To the maximum extent permissible, these will be incentive stock options under
the Internal Revenue Code.) As with all 3DP options, the grant will be subject
to execution of a stock option agreement in the form specified by the Board and
to approval of 3DP's stockholders to any increase in the number of shares that
may be issued under the Company's Equity Compensation Plan. The stock option
grant will be made after the stockholders approve an increase in the number of
shares authorized for issuance under the Plan to allow the grant, and will be
subject to such approval.

These options will vest at the rate of 25% per year beginning on the first
anniversary of the grant and will have a term of 10 years, subject to the terms
of the stock option agreement.

You have asked the Company to permit you to exercise these options by delivery
of one or more promissory notes with unvested shares to be subject to a
repurchase right by the Company at the strike price. The Company is willing to
permit you to do so within six months of joining the
<PAGE>

Company, subject to negotiation of documentation satisfactory to the Company, on
the following general terms and conditions:

 . The promissory notes will bear interest at the minimum rate necessary to avoid
  imputed interest.
 . The promissory notes will be secured by the shares
  purchased, and be full recourse to you.
 . Interest and principal on the promissory notes must be paid in four equal
  installments on the first four
  anniversary dates of your employment, and in full upon a sale of the Company.
 . The Company must be satisfied that the exercise of the options in this
  manner does not adversely affect its eligibility for pooling treatment.

If a sale of substantially all the assets of the Company or a merger where the
Company is not the surviving entity occurs with Merck KGaA or its affiliates
(together, "Merck") within 6 months after your date of hire, and while you are
employed by the Company, 25% of your options will vest. If such a sale or merger
with Merck occurs within 6 to 12 months after your date of hire, and while you
are employed by the Company, 50% of your options will vest. If such transaction
with Merck occurs within 1 year after your date of hire at a value greater than
$350 million and while you are employed by the Company, an additional 25% of
your options will vest. Subject to the terms of the Plan, if such a sale or
merger during the first year with any party other than Merck, or with any party
occurs after the first year, and while you are employed by the Company, all of
your options will vest.

In any case, if a sale of substantially all the assets of the Company or a
merger where the Company is not the surviving entity occurs within the two years
after your date of hire and your options are not assumed, and while you are
employed by the Company, the minimum value of your vested options (fair market
value of securities subject to the options, less the strike price) shall not be
less than $1.5 million dollars, as determined by the Board. If necessary, the
Company will make an additional cash payment to you to make up the difference.

For the purposes of the above, a transaction will be deemed to have occurred
when the Company enters into a definitive written agreement for such
transaction, provided that the transaction is consummated and that you continue
to be an employee of the Company through consummation of the transaction.

You will be eligible for the benefits package available from time to time to
Company executives (please note that Company benefits are subject to change at
the Company's discretion). In lieu of providing you with health insurance, the
Company is willing to pay while you are employed the amount that you owe
(approximately $2,600 per quarter) under the SmithKline Executive Medical Plan
until June 30, 2001. In addition the Company will reimburse you up to $2,500 for
personal tax planning in connection with this Agreement.

You will be eligible to participate in a cash bonus program for 1999 up to 40%
of base salary paid in 1999, as established by the Board. Please note that
future bonus programs and stock option grants are at the discretion of the
Board.
<PAGE>

You will be an "at will" employee of the Company. In the unlikely event of
termination of employment by the Company without cause, you will be entitled to
(i) continuation of your base salary and payment of your health insurance
premiums for up to 12 months or until you begin new full-time employment (except
in the non-profit sector), whichever occurs first, (ii) payment in each month of
such period of an additional amount equal to one-twelfth of your prior year's
bonus, if any (annualized in respect of the bonus payment for 1999), times the
portion of the current fiscal year that has expired up to the date of your
termination and (iii) the Company will treat the stock options described in this
letter as if each of the installments vesting on the first, second, third and
fourth anniversaries of the grant had instead vested in equal monthly portions
at the end of each of the 12 months ending on such vesting date. If such a
termination without cause occurs within 12 months after a sale of the Company,
then the continued salary referred to in the preceding sentence shall be paid in
a lump sum, and you will be entitled to a further lump sum payment equal to the
prior year's bonus payment, annualized in respect of the bonus payment for 1999.

3DP may have already provided you with certain of its confidential business or
scientific information, which it expects you to keep confidential and to use
only to further 3DP's legitimate business interests. If you have not already
signed the Company's standard agreement to keep 3DP's business and scientific
information confidential, you will be required to do so at the start of your
employment. Just as 3DP expects you to keep confidential its business or
scientific information, 3DP also expects you to honor your obligations to your
former employers with respect to maintaining the confidentiality of their
business or scientific information.

We look forward to your joining us at 3-Dimensional Pharmaceuticals, Inc., and
in participating in what will be an exciting experience in building 3DP into an
industry leader in drug discovery. Please indicate your acceptance of this
offer, which is for at will employment, by your signature below not later than
September 3, 1999. Please do not hesitate to call me concerning any questions
that you may have.

David, we look forward to working with you.

Sincerely,

/s/ James J. Cavanaugh

James H. Cavanaugh, Ph.D.
Chairman of the Board

JHC:mma/cas
Enclosures

cc:  3DP CEO Search Committee

Accepted:  /s/ David C. U'Prichard                   Date:    September 2, 1999
           ---------------------------------                -------------------
<PAGE>

Agreeable Starting Date:  September 20, 1999
                          ------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.20
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>COLLABORATIVE DISCOVERY AND LEAD OPTIMIZATION AGMT.
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.20


                          COLLABORATIVE DISCOVERY
                        AND LEAD OPTIMIZATION AGREEMENT


     This Collaborative Discovery and Lead Optimization Agreement (the
"Agreement") is made and effective as of February 11, 2000 (the "Effective
Date"), by and between 3-Dimensional Pharmaceuticals, Inc., a corporation having
its principal place of business at Eagleview Corporate Center, 665 Stockton
Drive, Suite 104, Exton, PA 19341, U.S.A. (" 3DP"), and DuPont Pharmaceuticals
Company (a wholly-owned subsidiary of E. I. DuPont de Nemours & Co. ("DuPont"))
having its principal place of business at Centre Road, Chestnut Run Plaza,
Building 721, Wilmington DE 19880 ("DPC"). 3DP and DPC may be referred to herein
as a "Party" or, collectively, as the "Parties".

     WHEREAS, 3DP is engaged in discovery research for a variety of biologically
active compounds and the development of technologies to facilitate such
research, and 3DP has patented systems for generating chemical compounds having
desired pharmaceutical properties;

     WHEREAS, DPC is engaged in research and development of human therapeutic
products;

     WHEREAS, 3DP and DPC desire to enter into a research and development
collaboration identify qualified lead compounds active against selected targets
and suitable for medicinal chemistry optimization that may be developed and
commercialized by DPC;

     NOW, THEREFORE, in consideration of the various promises and undertakings
set forth herein, the Parties agree as follows:


ARTICLE 1.   DEFINITIONS

     The terms in this Agreement with initial letters capitalized, whether used
in the singular or the plural, shall have the meaning set forth below or, if not
listed below, the meaning designated in places throughout this Agreement.

     1.1     "Active Compound" means a 3DP Compound or Derivative Compound that
has been formally selected by DPC for preclinical and/or clinical development.

     1.2     "Affiliate" means (i) any corporation or business entity of which
at least 50% of the securities or other ownership interests representing the
equity, the voting stock or general partnership interest are owned, controlled
or held, directly or indirectly, by 3DP or DPC; or (ii) any corporation or
business entity which, directly or indirectly, owns, controls or holds at least
50% of the securities or other ownership interests representing the equity, the
voting stock or, if applicable, the general partnership interest, of 3DP or DPC.

     1.3     "Agreement" means the present agreement including its Appendices.

     1.4     "Confidential Information" means all information that has or could
have commercial value or other utility in a Party's business, or the
unauthorized disclosure of which could be detrimental to the Party's interests,
including confidential information, inventions,
<PAGE>

know-how, data and materials relating to the Research Program or to the Licensed
Products, and shall include without limitation research, technical, clinical
development, manufacturing, marketing, financial, personnel and other business
information and plans, whether in oral, written, graphic or electronic form.

     1.5     "Custom Accessible Library" means any DirectedDiversity? Chemical
Library produced by 3DP using 3DP DirectedDiversity?  Technology and structure
activity data provided by DPC.

     1.6     "Combination Product" means a Licensed Product which includes one
or more active ingredients other than an Active Compound.

     1.7     "Derivative Compound" means any compound other than a 3DP Compound,
but which: [**]

     1.8     "DirectedDiversity? Chemical Library" means a computer-generated
library of compounds containing integrated structure-activity and synthesis
data.

     1.9     "DPC" means DuPont Pharmaceuticals Company as identified above.

     1.10    "DuPont" means E. I. DuPont de Nemours & Co. as identified above.

     1.11    "Effective Date" means the effective date of this Agreement as set
forth above.

     1.12    "Field" means [**]

     1.13    "Licensed Product" means any commercial product containing an
Active Compound.

     1.14    "First Commercial Sale" shall mean, with respect to a given
Licensed Product, the first sale for use or consumption by the public of such
Licensed Product in a country after all required approvals, including marketing
and pricing approvals, have been granted by the applicable governmental drug
regulatory agency of such country.

     1.15    "FTE" means a full time equivalent scientist (i.e., one full-time
or multiple part-time scientists aggregating to one full-time scientist)
employed by 3DP and assigned to work on the Research Program with such time and
effort to constitute one scientist working on the Research Program on a full
time basis consistent with normal business and scientific practice (at least 40
hours per week of dedicated effort; on an annual basis, at least 40 hours per
week of dedicated effort for at least 48 weeks per year). In no event, does an
FTE include a subcontractor.


** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                       2
<PAGE>

     1.16    "NDA" means an application for the final approval required for
authorization for marketing of a Licensed Product in a given country (including
applicable regulatory, marketing and pricing approval) in accordance with the
applicable laws and regulations of a given country. In the U.S., NDA means a New
Drug Application or its equivalent in the Food and Drug Administration or
successor agency.

     1.17    "Net Sales" means the aggregate gross invoiced sales price of
Licensed Product sold in the Territory by DPC, its Affiliates and any licensees
or sublicensees, to an independent third party, including but not limited to
distributors, in bona fide, arms-length transactions, after deduction of the
following items (to the extent actually incurred or reasonably estimated and
accrued and to the extent not already deducted in the amount invoiced): (i)
customary trade, quantity and case discounts, wholesaler-charge backs, or
rebates (including rebates to governmental agencies); (ii) customary credits or
allowances for rejection or return of previously sold Licensed Products; (iii)
any direct tax, duties, surcharges or government charge (other than an income
tax) levied on the sale, transportation or delivery of a Licensed Product and
borne by the seller thereof; (iv) retroactive price reductions; and (iv) any
charge for freight or insurance if separately stated.

     In the circumstance where all the active ingredients of a Combination
Product are also sold separately and in identical strengths to those contained
in the Combination Product, then the following shall apply:

     Net Sales shall be calculated as set forth above on the basis of the gross
invoice price of a Licensed Product containing the same weight of Active
Compound sold independently [ A ] divided by the sum of the gross invoice price
of each of the active ingredients contained in the Combination Product sold
independently [ B + A ], multiplied by the gross invoice price of the
Combination Product, as shown by the following formula:

     Net Sales =     [A]  x [gross invoice price of the Combination Product]
                   -------
                   [B + A]

     In the event the Active Compound and/or any of the other active ingredients
of a Combination Product are not sold separately in identical strengths to those
contained in the Combination Product, then the Parties agree to negotiate in
good faith the calculation of Net Sales with regard to such Combination Product
based upon the relative value of the active ingredients as determined by the
Parties hereto in good faith.

     1.18    "Patents" means all U. S. patent applications or issued patents,
including provisionals, divisionals, continuations, continuations-in-part,
reissues and extensions derived therefrom, such as patent term restorations,
supplementary protection certificates, etc., as well as all foreign patents and
foreign patent counterparts to the foregoing.

     1.19    "Qualified Lead Compound" means a 3DP Compound or a Derivative
Compound that satisfies the criteria established by the Research Steering
Committee.

     1.20    "Research Plan" means the detailed description of the research and
development activities of the Parties for particular Targets in the performance
of the Research Program. The

                                       3
<PAGE>

Research Plan shall be prepared by the RSC and shall be updated in writing
as changes are made to the Research Plan.

     1.21    "Research Program" means the collaborative discovery and
optimization activities of the Parties, as described in Article 2, that are
intended to lead to the discovery of small molecule Qualified Lead Compounds
that have an agreed upon level of activity against a Target and are suitable for
medicinal chemistry optimization and commercial development by DPC.

     1.22    "Research Program Patents" shall mean [**]

     1.23    "Research Steering Committee" or " RSC" means the committee to be
formed pursuant to Article 3 of this Agreement.

     1.24    "Target" means a [**]

     1.25    "Territory" means the entire world.

     1.26    "Third Party" means an individual, corporation or other entity
other than the Parties and their Affiliates.

     1.27    "3DP" means 3-Dimensional Pharmaceuticals, Inc. as identified
above.

     1.28    "3DP Accessible Library" means any DirectedDiversity?  Chemical
Library that is generated by 3DP outside of the Research Program.

     1.29    "3DP Compound" means any compound that is synthesized by 3DP during
the term of the Research Program and acts through a Target.

     1.30    "3DP DirectedDiversity? Technology" means 3DP Patents and
proprietary know-how that relate to generating and utilizing a
DirectedDiversity? Chemical Library, including but not limited to U.S. Patent
Nos. 5,463,564; 5,574,656; and 5,684,711 and 5,901,069. This term does not
include the SAR models as described in Article 2 of this Agreement.

     1.31    "3DP Patents" means any Patents owned or controlled by 3DP by
assignment, license or otherwise, which 3DP has the right to license or
sublicense to DPC, other than Research Program Patents.

     1.32    "Valid Claim" means a claim of a Patent that has not lapsed or
become abandoned or been declared invalid or unenforceable by a court or agency
of competent jurisdiction from which no appeal can be or has been taken.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       4
<PAGE>

Article 2. RESEARCH PROGRAM

     2.1     General Project Description. The Parties contemplate that the
Research Program will include the following steps and activities:

             (a)    DPC will furnish to 3DP the structure and activity data on
                    chemical compounds screened against a Target, including both
                    compounds that are active ("Hits") and compounds that are
                    inactive against the Target.

             (b)    3DP will use its DirectedDiversity?  Technology to compute a
                    chemical descriptor matrix to describe and map the compounds
                    for which DPC provides data.  3DP also will develop a
                    Structure Activity Relationship (" SAR") model based on
                    this descriptor matrix for Hits.

             (c)    3DP will compare the SAR model with compounds in 3DP
                    Accessible Libraries, and 3DP will identify [**] compounds
                    to be synthesized by 3DP and supplied to DPC for testing.
                    3DP will supply between [**] milligrams of each such
                    compound in 96 deep well plates (about 80 compounds per
                    plate). [**]

             (d)    3DP will provide DPC with a secure internet based
                    communication channel to provide activity or other compound
                    related data to 3DP.

             (e)    3DP will develop an improved SAR model based on the testing
                    data provided by DPC.  This improved SAR will be used to
                    perform iterative rounds of selection and synthesis of
                    compounds from 3DP Accessible Libraries, and/or to develop
                    Custom Accessible Libraries from which compounds will be
                    selected and synthesized, and/or to perform preliminary
                    medicinal chemistry optimization and synthesis.  Such
                    compounds will be supplied to DPC for additional testing in
                    furtherance of the Research Program.

     2.2     Production of Qualified Lead Compounds. 3DP will iterate the steps
of the foregoing Section 2. 1 (e) until [**] Qualified Lead Compounds have been
identified for a Target.

     2.3     Production of Active Compounds. 3DP will chemically modify
Qualified Lead Compounds as may be appropriate with the objective of generating
compounds which will be selected as Active Compounds by DPC.

     2.4     Development of Active Compounds. DPC will conduct the preclinical
and clinical tests as it deems appropriate for the commercial development of
Active Compounds in the Field that are developed from Qualified Lead Compounds.


** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       5
<PAGE>

     2.5     Initial Term and Extension of Research Program. The initial term of
the Research Program shall run until December 31, 2001. DPC may extend the term
of the Research Program for up to 3 additional 1-year periods on an annual basis
by notifying 3DP in writing at least ninety (90) days prior to the end of the
initial term or any extended one-year term then in effect.

     2.6     Additional and Alternative Targets. DPC, through the Research
Steering Committee, shall have the option to bring forward a total of up to [**]
Targets at any one time or to propose changing Targets.

     2.7     Research Efforts. Each party shall use good faith commercially
reasonable and diligent efforts (as defined below) to perform its
responsibilities in the performance of the Research Program.  DPC will provide
funding to 3DP as set forth in Section 4.1 during the ten-n of the Research
Program to support qualified FTEs at 3DP, which funding by DPC shall be
contingent upon 3DP providing and retaining at least [**] such qualified FTEs
assigned to the performance of the Research Program.  As used herein, the term
"commercially reasonable and diligent efforts" will mean, unless the Parties
agree in writing otherwise, those efforts consistent with the exercise of
prudent scientific and business judgment in accordance with industry standards,
as applied to other programs of similar scientific and commercial potential.

     Throughout the term of the Research Program, including any extensions
thereof, 3DP shall assign the number of FTE qualified scientists specified in
the Research Plan to perform the work set forth in the Research Plan.  The
mixture of skills and levels of such FTEs shall be appropriate to the scientific
objectives of the Research Program and 3DP shall provide information about these
FTEs to the RSC upon request.  Unless the RSC agrees otherwise in writing, at
least 50% of such FTE support shall be Ph.D. level scientists.  The scientists
comprising such FTEs and their percentage of time devoted to working on the
Research Program shall be identified in Research Plan.  In the event that DPC
has reasonable concerns regarding any scientist assigned by 3DP to the Research
Program, such concerns shall be communicated to and addressed by the RSC.  The
Parties shall proceed diligently with the work set out in the Research Plan by
using their respective good faith commercially reasonable and diligent efforts.

     Other than the research funding provided by DPC to 3DP under Section 4.1
hereof, and except as otherwise specifically agreed in writing by 3DP and DPC,
each party shall be responsible for all costs and expenses it incurs in its
performance of the Research Program.

     2.8     Disclosure of Results; Reports. The results of all work performed
by the Parties as part of the Research Program shall be promptly disclosed to
the other Party as such results are obtained. The Parties will exchange at a
minimum quarterly written reports (with copies to the RSC) presenting a
meaningful summary of the work performed on the Research Program. In addition,
on reasonable request by DPC, 3DP will make presentations of its activities
under this Agreement to inform DPC of the details of the work done under this
Agreement.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       6
<PAGE>

     Know-how and other information regarding the Research Program disclosed by
one Party to the other Party pursuant hereto may be used only in accordance with
the rights granted under this Agreement.  Within 30 days following the end of
each calendar quarter, the Parties shall each exchange and provide to the RSC a
written report summarizing in reasonable detail the work performed by it under
the Research Program during the preceding calendar quarter.

Article 3. RESEARCH PROGRAM GOVERNANCE

     3.1     Research Steering Committee.  3DP and DPC agree to establish a
Research Steering Committee, and shall each designate three (3) members selected
by their respective R&D management to form this Research Steering Committee.
The Research Steering Committee shall be responsible for:

             (a)    Adopting, reviewing and amending the Research Plan to
                    implement the Research Program, subject to DPC approval.
                    The Research Plan for the first Target agreed to by the
                    Parties is described in Appendix A.
                                            ----------

             (b)    Monitoring the progress of research in the Research Program.

             (c)    Reviewing initial Target and any subsequent Target
                    selection.

             (d)    Agreeing on and adopting criteria for the designation of
                    Qualified Lead Compounds.  As an example, the Parties
                    contemplate that to satisfy such criteria in the case of
                    Hits that inhibit a Target with an [**], a Qualified Lead
                    Compound would require a [**] relatively more selective
                    against a Target than against related molecules, and be
                    patentable.  The criteria for the designation of Qualified
                    Lead Compounds shall be set forth in the Research Plan.

             (e)    Selecting Qualified Lead Compounds to be advanced for
                    biological testing.

             (f)    Reviewing and approving publications and other public
                    disclosures related to the subject matter of the Research
                    Program.

     3.2     RSC Meetings. The RSC shall meet in-person or by teleconference on
a calendar quarter basis or more frequently as necessary as may be agreed upon,
with each party to bear all travel and related costs for its representatives.
Minutes of the meetings of the RSC will be generated and circulated to its
members within 2 weeks following the RSC meeting.

     3.3     RSC Decision-Making Process. Each member of the RSC shall have one
vote, and decisions by the RSC shall be made by a majority vote. The Parties
shall attempt to resolve any disagreement among members of the RSC within the
RSC based on the efficient achievement of the objectives of this Agreement. Any
disagreement which cannot be resolved by a majority vote of the RSC shall be
referred to the appropriate officers of 3DP and DPC for resolution as set forth
in Article 12. It is the intent of the Parties to resolve issues through the RSC
whenever possible and to refer issues to the officers of 3DP and DPC only when
resolution through the RSC cannot be achieved.


**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       7
<PAGE>

     3.4     Management of Matters Outside the Jurisdiction of the Research
Steering Committee.  Matters outside the scope of the Research Program and
internal to each Party are not under the purview of the Research Steering
Committee.  Such matters include, but are not limited to the following: internal
personnel policies and programs, budgeting, finance, commercial and marketing
strategies, and business decisions. However, the Parties agree to communicate
with each other promptly on those matters which, while outside the scope of the
Research Program, nevertheless may reasonably be expected to influence the
conduct or term of the Research Program or the intended commercialization of any
Qualified Lead Compounds.

ARTICLE 4. FINANCIAL TERMS

     4.1     Technology Access and FTE Reimbursement Fees.

             [**] In the event that 3DP provides less than the number of FTEs as
             specified above in support of the Research Program, the foregoing
             payments will be reduced in proportion to the level of FTE support
             actually provided by 3DP in support of the Research Program. Such
             research funding shall be payable by DPC to 3DP in four quarterly
             installments during the term of the Research Program within 30 days
             of the start of the calendar quarter. Any payment for a portion of
             a quarterly period shall be made on a pro rata basis. Except as
             provided in this Section 4.1, or as may be agreed from time to time
             by the parties in writing, 3DP and DPC will each bear all of its
             own expenses incurred in connection with the Collaboration.
             Depending on the total number of Targets designated and the number
             of 3DP FTEs reasonably necessary to meet the objectives of this
             Agreement, DPC and 3DP shall negotiate in good faith with respect
             to additional compensation to 3DP in a form to be agreed upon by
             the Parties, such as a lump sum payment or support by DPC for
             additional FTEs at 3DP. The Parties agree that the rate of
             compensation per FTE year shall be indexed annually to the U.S.
             Consumer Price Index (CPI) and adjusted for payments beginning with
             the first quarter of the year 2001.

     4.2     Extended Term Fees.  The level of reimbursement for FTEs in any
extended term of the Research Program extending after December 31, 2002 shall be
negotiated in good faith by the Parties, and shall at least reflect any increase
to the FTE support level and any changes in the CPI in accordance with Section
 4. 1 (b).

     4.3     Fees for Early Termination of the Research Program. If DPC
terminates this Agreement without cause pursuant to Section 9.2 prior to the end
of the initial term or any extended term of the Research Program, it agrees to
pay to 3DP the balance of any financial support otherwise due for that term of
the Research Program.

     4.4     Milestone Payments.  DPC agrees to make milestone payments as set
forth below upon the first occurrence of each milestone event for each 3DP
Compound and Derivative Compound.  Subject to the conditions set forth below,
the milestone payments as set forth below shall be paid only one time for any
particular 3DP Compound or Derivative Compound (regardless, for example, of the
number of clinical trials conducted and NDA approvals obtained for that
particular 3DP Compound or Derivative Compound). The amounts set forth below
apply


**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       8
<PAGE>

to 3DP Compounds and the applicable payments due for Derivative Compounds shall
be [**] of the milestone payment amounts set forth below:

             [**]

     4.5     Royalty on Net Sales of Licensed Products.  DPC agrees to pay an
annual royalty based on Net Sales of Licensed Products.  Royalty payments shall
be due on December 31 of each calendar year in which Net Sales are generated.

             [**]

     4.6     Royalty Reduction.  The royalty amounts set forth above shall be
reduced by [**] on a country-by-country basis at any such time that there is no
Patent pending or in effect that claims a particular Licensed Product in such
country.  For purposes of this Section 4.6, the royalty otherwise due in such
country shall be decreased by [**].

     4.7     Royalty Period. The royalty payments set forth above shall be
payable for each Licensed Product on a product-by-product and country-by-country
basis from the time of First Commercial Sale of Licensed Product in such country
until the later of (i) [**] years from the time of First Commercial Sale of
Licensed Product in such country or (ii) until the last to expire patent
containing a Valid Claim providing marketing exclusivity with respect to such
Licensed Product.

     4.8     Royalty Conditions. The royalties under this Article shall be
subject to the following conditions:

                    (i)   that only one royalty shall be due with respect to the
                    same unit of Licensed Product;

                    (ii)  that no royalties shall be due upon the sale or other
                    transfer among DPC, its Affiliates or licensees, but in such
                    cases the royalty shall be due and calculated upon DPC's or
                    its Affiliate's or licensee's Net Sales of Licensed Product
                    to the first independent third party;

                    (iii) no royalties shall accrue on the disposition of
                    Licensed Product in reasonable quantities by DPC, its
                    Affiliates or licensees as part of an expanded access
                    program or as bona fide samples or as donations to non-
                    profit institutions or government agencies for non-
                    commercial purposes; and

                    (iv) notwithstanding the above royalty rates, upon DPC's
                    request, the parties agree to discuss in good faith a
                    reduction of such royalty rate in any given country in the
                    event the available patent protection materially decreases
                    the commercial viability of the Licensed Product under such
                    royalty rate.

     4.9     Third Party Patents. In the event that during the term of the
royalty obligation for a Licensed Product under this Article IV, a third party
shall control a patent or patents in any country covering the sale of a Licensed
Product, and in the reasonable judgment of DPC, it would


**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       9
<PAGE>

be impractical or impossible for DPC (or its Affiliates or licensees or
sublicensees) to continue to sell the Licensed Product without obtaining a
royalty bearing license from such third party, then DPC shall be entitled to a
credit against the royalties due hereunder with respect to such country in an
amount equal to [**] of the royalty otherwise due under this Agreement, arising
from the sale of the Licensed Product in said country. However, the foregoing
royalty credit shall only be available when the total royalty obligation owed by
DPC (or its Affiliates or licensees or sublicensees) to unaffiliated third
parties exceeds [**] of Net Sales of Licensed Product.

     4.10    Mode of Payment. All payments to 3DP hereunder shall be made by
wire transfer of United States Dollars in the requisite amount to such bank
account as 3DP may from time to time designate by notice to DPC. Milestone
payments shall be made with in sixty days of occurrence of the relevant
milestone event and royalty payments for a given calendar year shall be made
with in sixty days following the end of the calendar year. Payments shall be
free and clear of any taxes (other than withholding and other taxes imposed on
3DP), fees or charges, to the extent applicable. For purposes of computing
royalty payments for Net Sales made outside of the United States, such royalties
shall be converted into U.S. Dollars, by applying the rate of exchange as used
by DPC's global accounting system which reflects the average exchange rate for
the applicable payment period.

     4.11    Records Retention. With respect to any products for which royalties
are due pursuant to Section 4.6, DPC and its Affiliates and any licensees or
sublicentees shall keep records, for two (2) years, of such Net Sales in
sufficient detail to confirm the accuracy of the royalty calculations hereunder.
At the request of 3DP, DPC shall permit an independent certified accountant of
nationally recognized standing appointed by 3DP and reasonably acceptable to
DPC, at reasonable times and upon reasonable notice, to examine these records
solely to the extent necessary to verify such calculations. Such investigation
shall be at the expense of 3DP unless it reveals a discrepancy in DPC's favor of
more than ten percent, in which event it shall be at DPC's expense.

     4.12    Taxes.  The Party receiving royalties and other payments under this
Agreement shall pay any and all taxes levied on account of such payment.  If any
taxes are required to be withheld by the paying Party, it shall: (a) deduct such
taxes from the remitting payment, (b) timely pay the taxes to the proper taxing
authority, and (c) send proof of payment to the other Party and certify its
receipt by the taxing authority within sixty (60) days following such payment.

Article 5. EXCLUSIVITY, OWNERSHIP OF ACCESSIBLE LIBRARIES AND LICENSE OF
RIGHTS

     5.1     Exclusivity. During the term of the Research Program and for a
period of 1 year thereafter 3DP shall work exclusively with DPC, and shall not
work independently of DPC, either alone or with any third party, with respect to
(i) the modeling, design, synthesis, screening and testing of compounds which
act through any Target, and (ii) the screening and testing of compounds in
assays to detect compounds which act through any Target.

     5.2     Ownership of 3DP Accessible Libraries and 3DP Patents; License
Grant to DPC Under 3DP Patents. 3DP shall own all 3DP Accessible Libraries. In
the case where any Qualified Lead Compound, Active Compound or Licensed Product
resulting from the Research


**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       10
<PAGE>

     Program that is developed by DPC is claimed in a 3DP Patent based on
research outside of the Research Program, 3DP hereby grants to DPC a fully paid
up, worldwide, exclusive license, with right to sublicense, in the Field under
such patent to develop, make, have made, use, sell, offer for sale, have sold,
import and have imported Licensed Products, provided that 3DP is not
contractually prohibited under a written agreement with a third party from
granting such an exclusive license. In the event that 3DP is so contractually
prohibited from granting such an exclusive license, 3DP shall grant to DPC as
broad a scope of license as it is permitted (for example, a non-exclusive
license) and 3DP shall use its reasonable best efforts to negotiate with such
third party to remove such contractual prohibition so as to allow 3DP to grant
DPC the foregoing exclusive license under such 3DP Patents.

     5.3     Unblocking License Grant to DPC. Subject to the limitation set
forth in Section 5.2 and subject to the other terms and conditions of this
Agreement, 3DP hereby grants to DPC a worldwide, nonexclusive license, with
right to sublicense, to develop, make, have made, use, sell, offer for sale,
have sold, import and have imported 3DP Compounds, Derivative Compounds, and
Licensed Products, under any 3DP patent rights which would otherwise be
infringed by DPC but for this license.

     5.4     Ownership of Custom Accessible Library Compounds.  DPC shall own
Custom Accessible Libraries and the compounds they contain that are produced in
the course of the Research Program.  However, DPC agrees to grant 3DP a fully
paid up, nonexclusive, worldwide license in order to use chemical process
methodologies developed for the synthesis of Custom Accessible Library compounds
for 3DP discovery programs.

     5.5     Grant-back of Rights to 3DP Outside of the Field After Termination
of the Research Program. [**]

     5.6     Non-assertion by DPC. [**]

Article 6. CONFIDENTIAL INFORMATION

     6.1     Confidentiality Obligations. The Parties agree that, for the term
of this Agreement and for ten (10) years thereafter, either Party that receives
Confidential Information (a "Receiving Party") from the other Party (a
"Disclosing Party") shall keep completely confidential and shall not publish or
otherwise disclose and shall not use for any purpose (except as expressly
permitted hereunder) any Confidential Information furnished to it by the
"Disclosing Party" pursuant to this Agreement (including without limitation,
know-how), except to the extent that it can be established by the Receiving
Party that such Confidential Information:

**Certain portions of this Exhibit have been ommitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                       11
<PAGE>

             (a)    was already known to the Receiving Party, other than under
                    an obligation of confidentiality from the Disclosing Party;

             (b)    was generally available to the public or otherwise part of
                    the public domain at the time of its disclosure to the
                    Receiving Party;

             (c)    became generally available to the public or otherwise part
                    of the public domain after its disclosure and other than
                    through any act or omission of the Receiving Party in breach
                    of this Agreement;

             (d)    was subsequently lawfully disclosed to the Receiving Party
                    by a Third Party;

             (e)    can be shown by written records to have been independently
                    developed by the Receiving Party without reference to the
                    Confidential Information received from the Disclosing Party
                    and without breach of any of the provisions of this
                    Agreement; or

             (f)    the disclosing party has specifically agreed in writing that
                    the receiving party may disclose.

     The obligations of confidentiality and non-use set forth in this Section
6.1 shall also apply to biological material and chemical compounds and
associated information (including without limitation know-how) disclosed by one
Party to the other prior to or during the term of this Agreement; provided
however, that such obligation of confidentiality and non-use shall not apply
with respect to compounds which are assigned to DPC or exclusively licensed to
DPC by 3DP.

     6.2     Written Assurances and Permitted Uses of Confidential Information.

             (a)    Each Party shall inform its employees and consultants who
perform substantial work on the Research Program, of the obligations of
confidentiality specified in Section 6.1 and all such persons shall be bound by
the terms of confidentiality set forth therein.

             (b)    The Receiving Party may disclose Confidential Information to
the extent the Receiving Party is compelled to disclose such information by a
court or other tribunal of competent jurisdiction, provided however, that in
such case the Receiving Party shall immediately give notice to the Disclosing
Party so that the Disclosing Party may seek a protective order or other remedy
from said court or tribunal. In any event, the Receiving Party shall disclose
only that portion of the Confidential Information that, in the opinion of its
legal counsel, is legally required to be disclosed and will exercise reasonable
efforts to ensure that any such information so disclosed will be accorded
confidential treatment by said court or tribunal.

             (c)    To the extent it is reasonably necessary or appropriate to
fulfill its obligations and exercising its rights under this Agreement, DPC may
disclose Confidential Information to its Affiliates, licensees and sublicensees
on a need-to-know basis on condition that such Affiliates, licensees and parent
companies agree to keep the Confidential Information confidential for the same
time periods and to the same extent as DPC is required to keep the

                                       12
<PAGE>

Confidential Information confidential under this Agreement.

          (d)       DPC or its licensees and 3DP may disclose such Confidential
Information to government or other regulatory authorities to the extent that
such disclosure is reasonably necessary to obtain patents covering any 3DP
Compound, Derivative Compound or Product or authorizations to conduct clinical
trials with and to commercially market any Product.

          (e)       The existence and the terms and conditions of this
Agreement which the Parties have not specifically agreed to disclose pursuant to
this Section 6.2 shall be treated by each Party as Confidential Information of
the other Party.

          (f)       If a Party is required to make any disclosure of the other
Party's Confidential Information, it will give at least thirty (30) days
written, advance notice to the latter Party of such disclosure requirement. If a
Party is required to disclose Confidential Information to comply with applicable
laws or governmental regulations, including but not limited to submitting
information to tax authorities or to comply with any discovery or similar
request for production of documents in litigation or similar alternative dispute
resolution proceedings, such party may make such disclosure provided it gives
prompt notice to the other Party, and provided it makes all reasonable efforts
to comply with all administrative or other procedures or to establish a
reasonable protective or similar order under which the confidential nature of
the information will be maintained.

     6.3  Permitted Disclosures for Business Development Purposes.
Notwithstanding the foregoing, or any other provision in this Agreement to the
contrary, 3DP may describe the financial terms of this Agreement in confidence,
in connection with capital raising or financing activities, or in connection
with a potential acquisition of 3DP, provided however, that any such recipient
of such disclosure shall agree in writing to keep such terms confidential for
the same time periods and to the same extent as 3DP is required to keep
Confidential Information confidential under this Agreement. Furthermore, DPC
acknowledges that 3DP may be obligated to disclose terms of this Agreement and
make public a copy of this Agreement in the event it becomes a public company as
required by applicable U.S. law; provided however, that the terms and copy of
this Agreement shall be redacted such that the extent of any such disclosure
shall be limited to that which in the opinion of 3DP's legal counsel is legally
required to be disclosed.

Article 7. PATENTS AND INTELLECTUAL PROPERTY

     7.1  Title to Patents.

          (a)       Subject to the other provisions of this Agreement, all
                    Research Program Patents shall be owned by DPC, to the
                    extent that they claim: (1) Custom Accessible Libraries
                    synthesized by 3DP and based on SAR provided by DPC; (2)
                    Qualified Lead Compounds; (3) Active Compounds and (4)
                    Licensed Products. All other Research Program Patents shall
                    be individually or jointly owned, depending on the inventive
                    contributions of each Party. Inventorship will be determined
                    under U.S. patent law.

          (b)       In accordance with the grant of rights under this Agreement,
                    all employees and consultants who are inventors on any
                    patents arising

                                       13
<PAGE>

                    under work carried out under the Research Program shall
                    assign to such Party or Parties all inventions made by such
                    persons during the course of performing the Research
                    Program.

     7.2  Filing of Patent Applications and Expenses.

          (a)       DPC has the night but not the obligation to pursue and
                    maintain Research Program Patents that it owns, at its own
                    cost. 3DP has the right but not the obligation to pursue and
                    maintain Research Program Patents that it owns, at its own
                    cost.

          (b)       Where there is co-ownership of any Research Program Patents,
                    the Parties will decide who is in the best position to file
                    and pursue patent applications, and shall regularly provide
                    each other with copies of all filings and other material
                    submissions and correspondence with the patent offices, in
                    sufficient time to allow for review and comment.  The costs
                    of prosecuting and maintaining patent applications that are
                    jointly owned shall be shared equally by the Parties.

     7.3  Enforcement of Patents.

          (a)       If either Party considers that a Valid Claim of any of the
                    Research Program Patents claiming the manufacture, use or
                    sale of Active Compounds or Licensed Products is being
                    infringed by a Third Party, it shall notify the other Party
                    and provide it with any evidence of such infringement which
                    is reasonably available. DPC shall have the right but not
                    the obligation, at it own expense, to attempt to remove such
                    infringement by commercially appropriate steps, including a
                    lawsuit. If required by law, 3DP shall join such suit as a
                    party, at DPC's expense. In the event DPC fails to take
                    commercially appropriate steps with respect to such
                    infringement within six months following notice of such
                    infringement, 3DP shall have the night to do so at its
                    expense, provided that DPC shall not be required to enforce
                    such Research Program Patents against more than one entity
                    or in more than one country at any one time.

          (b)       Any amounts recovered by DPC pursuant to subsection (a),
                    above, whether by settlement or judgment shall be reported
                    as Net Sales for the purpose of calculating any applicable
                    royalties to 3DP, after deduction of DPC's reasonable
                    expenses in making such recovery. If 3DP enforces such
                    patents pursuant to subsection (a), then any amounts
                    recovered by 3DP shall be retained by 3DP.

          (c)       The Party not enforcing the Research Program Patents
                    pursuant to subsections (a) above, shall provide reasonable
                    assistance to the other Party, including providing access to
                    relevant documents and other evidence and making its
                    employees available, subject to the enforcing Party's
                    reimbursement of any out-of-pocket expenses incurred by the
                    other Party.

                                       14
<PAGE>

          (d)       If either Party considers that a Valid Claim of any of the
                    jointly owned Research Program Patents other than those
                    Research Program Patents covered by subsections (a) above,
                    is being infringed by a Third Party, it shall notify the
                    other Party and provide it with any evidence of such
                    infringement which is reasonably available. The Parties
                    agree to discuss in good faith the enforcement of any such
                    jointly owned Research Program Patents. If such Patents are
                    enforced by either Party, the Party not enforcing such
                    Research Program Patents shall provide reasonable assistance
                    to the other Party, including providing access to relevant
                    documents and other evidence and making its employees
                    available, subject to the enforcing Party's reimbursement of
                    any out-of-pocket expenses incurred by the other Party.

     7.4  Third Party Patent Rights.  If any warning letter or other notice of
infringement is received by a Party, or action, suit or proceeding is brought
against a Party alleging infringement of a patent of any Third Party in the
manufacture, use or sale of an Active Compound or Licensed Product or in the
conduct of the Research Program, the Parties shall promptly discuss and decide
the best way to respond.

Article 8. INDEMNIFICATION

     8.1  Indemnification by DPC. DPC shall indemnify, defend and hold 3DP and
its agents, employees and directors (the " 3DP Indemnitees") harmless from and
against any and all liability, damage, loss, cost or expense (including
reasonable attorneys' fees) arising out of Third Party claims or lawsuits
related to (a) DPC's performance of its obligations under this Agreement; or (b)
the manufacture, use or sale of Licensed Products by DPC and its Affiliates,
sublicensees, distributors and agents, except to the extent such claims or suits
result from the breach of any of the provisions of this Agreement, negligence or
willful misconduct of the 3DP Indemnitees. Upon the assertion of any such claim
or suit, the 3DP Indemnitees shall promptly notify DPC thereof and DPC shall
appoint counsel reasonably acceptable to the 3DP Indemnitees to represent the
3DP Indemnitees with respect to any claim or suit for which indemnification is
sought. The 3DP Indemnities shall not settle any such claim or suit without the
prior written consent of DPC, unless they shall have first waived their rights
to indemnification hereunder.

     8.2  Indemnification By 3DP.  3DP shall indemnify, defend and hold DPC and
its agents, employees and directors (the "DPC Indemnitees") harmless from and
against any and all liability, damage, loss, cost or expense (including
reasonable attorneys' fees) arising out of Third Party claims or lawsuits
related to 3DP's performance of its obligations under this Agreement, except to
the extent that such claims or suits result from the breach of any of the
provisions of this Agreement, negligence or willful misconduct of the DPC
Indemnitees. Upon the assertion of any such claim or suit, the DPC Indemnitees
shall promptly notify 3DP thereof and 3DP shall appoint counsel reasonably
acceptable to the 3DP Indemnitees to represent the DPC Indemnitees with respect
to any claim or suit for which indemnification is sought. The DPC Indemnitees
shall not settle any such claim or suit without the prior written consent of
3DP, unless they shall have first waived their rights to indemnification
hereunder.

Article 9. TERM AND TERMINATION

                                       15
<PAGE>

     9.1  Term.  This Agreement shall commence upon the Effective Date.  The
term of the Research Program shall expire on December 31, 2001 unless extended
as provided under Section 2.5.  This Agreement otherwise shall terminate upon
expiration of the last Research Program Patent owned by DPC that claims Active
Compounds or Licensed Products.

     9.2  Termination of the Research Program Without Cause.  DPC may terminate
the Research Program upon ninety (90) days advance written notice during the
initial or any extended term of the Research Program.  However, termination fees
may be due as provided in Section 4.3.

     9.3  Breach. The failure by a Party to comply with any of the material
obligations contained in this Agreement shall entitle the other Party to give
notice to have the default cured.  If such default is not cured within sixty
(60) days after the receipt of such notice, or diligent steps are not taken to
cure if by its nature such default could not be cured within sixty (60) days,
the notifying Party shall be entitled, without prejudice to any of its other
rights conferred on it by this Agreement, and in addition to any other remedies
that may be available to it, to terminate this Agreement, provided, however,
that such right to terminate shall be stayed in the event that, during such 60
day period, the Party alleged to have been in default shall have: (i) initiated
arbitration in accordance with Section 12. 1, below, with respect to the alleged
default, and (ii) diligently and in good faith cooperated in the prompt
resolution of such arbitration proceedings.

     9.4  No Waiver.  The right of a Party to terminate this Agreement, as
provided in Section 9.3, shall not be affected in any way by its waiver or
failure to take action with respect to any prior default.

     9.5  Insolvency or Bankruptcy.

          (a)       Either Party may, in addition to any other remedies
                    available by law or in equity, terminate this Agreement by
                    written notice to the other Party in the event the latter
                    Party shall have become insolvent or bankrupt, or shall have
                    an assignment for the benefit of its creditors, or there
                    shall have been appointed a trustee or receiver of the other
                    Party or for all or a substantial part of its property or
                    any case or proceeding shall have been commenced or other
                    action taken by or against the other Party in bankruptcy or
                    seeking reorganization, liquidation, dissolution, winding-
                    up, arrangement or readjustment of its debts or any other
                    relief under any bankruptcy, insolvency, reorganization or
                    other similar act or law of any jurisdiction now or
                    hereafter in effect, or there shall have been issued a
                    warrant of attachment, execution, distraint or similar
                    process against any substantial part of the property of the
                    other Party, and any such event shall have continued for 90
                    days undismissed, unbonded and undischarged.

          (b)       All rights and licenses granted under or pursuant to this
                    Agreement by DPC or 3DP are, and shall otherwise be deemed
                    to be, for purposes of-Section 365(n) of the U.S. Bankruptcy
                    Code, licenses of right to "Intellectual property" as
                    defined under Section 101 of the U.S. Bankruptcy Code.  The
                    Parties agree that the Parties as licensees of such

                                       16
<PAGE>

                    rights under this Agreement, shall retain and may fully
                    exercise all of their rights and elections under the U.S.
                    Bankruptcy Code. The Parties further agree that, in the
                    event of the commencement of a bankruptcy proceeding by or
                    against either Parties under the U.S. Bankruptcy Code, the
                    Parties hereto which is not a party to such proceeding shall
                    be entitled to a complete duplicate of (or complete access
                    to, as appropriate) any such intellectual property and all
                    embodiments of such intellectual property, and same, if not
                    already in their possession, shall be promptly delivered to
                    them (i) upon any such commencement of a bankruptcy
                    proceeding upon their written request therefor, unless the
                    Party subject to such proceedings elects to continue to
                    perform all of their obligations under this Agreement or
                    (ii) if not delivered under (i) above, upon the rejection of
                    this Agreement by or on behalf of the Party subject to such
                    proceeding upon written request therefor by a nonsubject
                    Party.

     9.6  Consequences of Termination.  Upon termination or expiration of the
Research Program portion of this Agreement, each Party shall promptly return all
records and materials relevant to the Research Program in its possession or
control containing the other Party's Confidential Information and to which the
former Party does not retain rights hereunder.  Upon termination of this
Agreement, all remaining records and materials in its possession or control
containing the other Party's Confidential Information and to which the former
Party does not retain rights hereunder shall promptly be returned.

     9.7  Survival of Obligations.  The termination or expiration of this
Agreement shall not relieve the Parties of any obligations accruing prior to
such termination, and any such termination shall be without prejudice to the
rights of either Party against the other. The provisions of Articles 4 - 8,
Sections 9.4, 9.6, 9.7 and Articles 12 and 13 shall survive any termination of
this Agreement.

Article 10. DEVELOPMENT, REGULATORY AND COMMERCIALIZATION RESPONSIBILITIES

     10.1 Development, Regulatory and Commercialization Responsibilities.  DPC
shall be responsible for all development, regulatory filings and related
submissions that are made in connection with the commercialization of Licensed
Products, and all commercialization activities with respect to Licensed
Products, and shall do so at DPC's sole discretion and expense.

Article 11. REPRESENTATIONS AND WARRANTIES

     11.1 Authority.  Each Party represents and warrants that it has the full
right, power and authority to execute, deliver and perform this Agreement.

     11.2 Commercially Reasonable Efforts.  DPC represents and warrants that it
will use good faith commercially reasonable and diligent efforts to develop and
to commercialize Active Compounds and Licensed Products, consistent with sound
business judgment.

     11.3 No Conflicts.  Each Party represents and warrants that the execution,
delivery and performance of this Agreement does not conflict with, or constitute
a breach or default under

                                       17
<PAGE>

any of its charter or organizational documents, any law, order, judgment or
governmental rule or regulation applicable to it, or any material agreement,
contract, commitment or instrument to which it is a party.

     11.4 No Existing Third Party Rights.  The Parties represent and warrant
that their obligations under this Agreement are not encumbered by any rights
granted by either Party to any Third Parties, which are or may be inconsistent
with the rights and licenses granted in this Agreement.

     11.5 Continuing Representations.  The representations and warranties of
each Party contained in this Article 11 shall survive the execution and delivery
of this Agreement and shall remain true and correct at all times during the term
of this Agreement with the same effect as if made on and as of such later date.

     11.6 No Warranty as to Commercial Success.  3DP offers no warranty that use
of the 3DP DirectedDiversity? Technology under this Agreement will result in the
discovery or the successful commercialization of a Licensed Product for use
against the Target in the Field.

Article 12. DISPUTE RESOLUTION

     12.1 Dispute Resolution.  Any dispute concerning or arising out of this
          ------------------
Agreement or concerning the existence or validity hereof, shall be determined by
the following procedure.

          (a)  Both Parties understand and appreciate that their long term
mutual interest will be best served by affecting a rapid and fair resolution of
any claims or disputes which may arise out of services performed under this
contract or from any dispute concerning the terms of this Agreement. Therefore,
both Parties agree to use their best efforts to resolve all such disputes as
rapidly as possible on a fair and equitable basis. Toward this end, both Parties
agree to develop and follow a process for presenting, rapidly assessing, and
settling claims on a fair and equitable basis which takes into account the
precise subject and nature of the dispute.

          (b)  If any dispute or claim arising under this Agreement cannot be
readily resolved by the Parties pursuant to the process described above, then
the Parties agree to refer the matter to a panel consisting of the Chief
Executive Officer ("CEO") of each Party or their designees for review and a non-
binding resolution.  A copy of the terms of this Agreement, agreed upon facts
(and areas of disagreement), and concise summary of the basis for each side's
contentions will be provided to both such CEOs or their designees who shall
review the same, confer, and attempt to reach a mutual resolution of the issue.

          (c)  If the matter has not been resolved utilizing the foregoing
process, and the Parties are unwilling to accept the non-binding decision of the
indicated panel, either or both Parties may elect to pursue definitive
resolution through binding arbitration, which the Parties agree to accept in
lieu of litigation or other legally available remedies (with the exception of
injunctive relief where such relief is necessary to protect a Party from
irreparable harm pending the outcome of any such arbitration proceeding).
Binding arbitration shall be settled in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by a panel
of three arbitrators chosen in accordance with these Rules.  This Agreement
shall be governed by and construed in accordance with the substantive laws of
the

                                       18
<PAGE>

State of Delaware without regard to the conflicts of laws provisions of
Delaware. The arbitration will be held in Wilmington, Delaware. Judgment upon
the award rendered may be entered in any court having jurisdiction and the
Parties hereby consent to the said jurisdiction and venue, and further
irrevocably waive any objection which either Party may have now or hereafter to
the laying of venue of any proceedings in said courts and to any claim that such
proceedings have been brought in an inconvenient forum, and further irrevocably
agree that a judgment or order in any such proceeding shall be conclusive and
binding upon the Parties and may be enforced in the courts of any other
jurisdiction.

Article 13. MISCELLANEOUS PROVISIONS

     13.1 Entire Agreement of the Parties.  This Agreement and its Appendices
constitute and contain the entire understanding and agreement of the Parties
respecting the subject matter of this Agreement and cancels and supersedes any
all prior negotiations, correspondence, understandings and agreements between
the Parties, whether oral or written, regarding such subject matter.

     13.2 Further Actions.  Each Party agrees to execute, acknowledge and
deliver such further instruments and to do all such other acts as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

     13.3 Binding Effect.  This Agreement and the rights granted herein shall be
binding upon and shall inure to the benefit of 3DP, DPC and their successors and
permitted assigns.

     13.4 Assignment.  This Agreement may be assigned by either Party in
connection with the sale or transfer of substantially all of its assets that
relate to this Agreement, or in the event of its merger or consolidation or
change of control or similar transaction.  Any permitted assignee shall assume
all obligations of its assignor under this Agreement.  If 3DP acquires, is
acquired by, merges with or otherwise combines with a company that has
substantial activities in the Field and is a significant competitor of DPC, DPC
may require 3DP to take reasonable actions necessary to ensure that any of DPC's
Confidential Information, trade secrets or proprietary information is not
disclosed to personnel within such company directly involved in such competitive
activities.

     13.5 No Implied Licenses.  No rights to any Patents, know-how or technical
information, or other intellectual property rights, other than as explicitly
identified herein, are granted or deemed granted by this Agreement.  No right,
expressed or implied, is granted by this Agreement to a Party to use in any
manner the name or any other trade name or trademark of the other Party in
connection with the performance of this Agreement.

     13.6 No Waiver.  No waiver, modification or amendment of any provision of
this Agreement shall be valid or effective unless made in writing and signed by
a duly authorized officer of each Party.  The failure of either Party to assert
a right hereunder or to insist upon compliance with any term or condition of
this Agreement shall not constitute a waiver of that right or excuse a similar
subsequent failure to perform any such term or condition.

     13.7 Force Majeure.  The failure of a Party to perform any obligation under
this Agreement by reason of acts of God, acts of governments, riots, wars,
strikes, accidents or

                                       19
<PAGE>

deficiencies in materials or transportation or other causes of a similar
magnitude beyond its control shall not be deemed to be a breach of this
Agreement.

     13.8 Independent Contractors.  Both Parties are independent contractors
under this Agreement.  Nothing contained in this Agreement is intended nor is to
be construed so as to constitute 3DP or DPC as partners or joint venturers with
respect to this Agreement.  Neither Party shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of the other Party or to bind the other Party to any other contract,
agreement, or undertaking with any Third Party.

     13.9 Notices and Deliveries.  Any formal notices, request, delivery,
approval or consent required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been sufficiently given when it is
received, whether delivered in person, transmitted by facsimile with
contemporaneous confirmation, or delivery by registered letter (or its
equivalent) or delivery by certified overnight courier service, to the Party to
which it is directed at its address shown below or such other address as such
Party shall have last given by notice to the other Parties.

                         If to DPC:


                         Vice President, Product Planning and Acquisitions
                         DuPont Pharmaceuticals Company
                         974 Centre Road, Chestnut Run Plaza
                         Wilmington, DE 19805
                         Fax: 302-992-3040

                         with a copy to:
                         Associate General Counsel
                         Legal Division
                         DuPont Pharmaceuticals Company
                         974 Centre Road, Chestnut Run Plaza, WR1028 Wilmington,
                         DE 19805
                         Fax: 302-992-3999

                         If to 3DP:

                         3-Dimensional Pharmaceuticals, Inc.
                         Eagleview Corporate Center
                         665 Stockton Drive, Suite 104
                         Exton, PA 10341

                         ATTN: Chief Executive Officer with a copy to:

                                       20
<PAGE>

                         Morgan, Lewis & Bockius LLP
                         1701 Market Street
                         Philadelphia, PA 19103

                         ATTN: David R. King, Esq.

     13.10     Public Announcements.  The Parties shall consult with each other
and reach mutual written agreement before making any public announcement
concerning this Agreement or its subject matter. A joint press release to
announce the signing of this Agreement is attached as Appendix B to this
                                                      ----------
Agreement, and the Parties agrees to coordinate the dissemination of this press
release. Notwithstanding the foregoing, the Parties may disclose the existence
and general nature of this Agreement and may make disclosures for purposes of
satisfying legal and regulatory requirements in accordance with Article 6;
however, neither Party shall use the name of the other Party for promotional
purposes.

     13.11     Headings.  The captions to the sections and articles in this
Agreement are not a part of this Agreement, and are included merely for
convenience of reference only and shall not affect its meaning or
interpretation.

     13.12     Severability.  If any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision, so long as the Agreement, taking into account said voided
provision(s), continues to provide the Parties with the same practical economic
benefits as the Agreement containing said voided provision(s) did on the date of
this Agreement.   If, after taking into account said voided provision(s), the
Parties are unable to realize the practical economic benefit contemplated on the
date of this Agreement, the Parties shall negotiate in good faith to amend this
Agreement to reestablish the practical economic benefit provided the Parties on
the date of this Agreement.

     13.13     No Consequential Damages.  IN NO EVENT SHALL EITHER PARTY OR ANY
OF ITS RESPECTIVE AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS
AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER
IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHER WISE,
INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, OR CLAIMS OF
CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH OR OTHER DAMAGES.

     13.14     Applicable Law.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware without
reference to its conflicts of laws provisions.

     13.15     Advice of Counsel.  DPC and 3DP have each consulted with counsel
of their choice regarding this Agreement, and each acknowledges and agrees that
this Agreement shall not be deemed to have been drafted by one party or another
and will be construed accordingly.

     13.16     Counterparts.  This Agreement may be executed in counterparts, or
facsimile versions, each of which shall be deemed to be an original, and both of
which together shall be deemed to be one and the same agreement.

                                       21
<PAGE>

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first above
written, each copy of which shall for all purposes be deemed to be an original.


<TABLE>
<CAPTION>
3 DIMENSIONAL                              DUPONT PHARMACEUTICALS
PHARMACEUTICALS, INC.                      COMPANY
<S>                                        <C>

By: /s/  David C. U'Prichard               By: /s/ Paul A. Friedman, M.D.
   ------------------------------             ---------------------------
Name:  David C. U'Prichard, Ph.D.          Name:   Paul A. Friedman, M.D.

Title:  Chief Executive Officer            Title:  President, DuPont Pharmaceuticals
                                                   Research Laboratories
</TABLE>

                                       22
<PAGE>

Appendix A [**]












**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.


<PAGE>

                       Appendix B - Joint Press Release


FOR IMMEDIATE RELEASE

For 3DP, Contact:                               For DuPont, Contact:
--------------------------------------------------------------------------------

Business
Michael J. Wassil                               Thomas R. Barry
Chief Financial Officer                         302-992-5020
610-458-6073

Media
Jerry Parrott
Jerry Parrott & Associates
703-757-0950

                   DuPont and 3-Dimensional Pharmaceuticals
                     Announce Drug Discovery Collaboration

  - DuPont also Licenses 3DP's DirectedDiversity(R) Drug Discovery Patents -


Exton, PA and Wilmington, DE - February XX, 2000 - DuPont Pharmaceuticals
Company, a wholly-owned independent subsidiary of DuPont (NYSE: DD), and 3-
Dimensional Pharmaceuticals, Inc. (3DP) today announced a strategic
collaboration in which 3DP will use its proprietary DirectedDiversity(R)
technology to assist DuPont Pharmaceuticals in the discovery of innovative new
drugs for specific biological targets.

3DP will apply its iterative drug discovery process to generate custom
combinatorial chemistry libraries based on molecules and information provided by
DuPont Pharmaceuticals and will optimize those molecules into preclinical drug
candidates. DuPont Pharmaceuticals will be responsible for preclinical and
clinical development, marketing and sales of the resulting products.

For the initial target, 3DP will receive payments of up to $9 million, including
an up-front technology access fee, research and development funding and
milestone payments. 3DP will also receive royalties on sales of resulting
products and will be eligible to receive additional payments if more than one
target is selected to be included in the collaboration.

The parties also announced an additional agreement in which DuPont
Pharmaceuticals will obtain a nonexclusive license to 3DP's proprietary
DirectedDiversity drug discovery patents. Under
<PAGE>

the license agreement, DuPont Pharmaceuticals will receive a non-exclusive
license to 3DP's DirectedDiversity patents in support of DuPont Pharmaceuticals
internal research programs, and will pay an annual Site License fee for each
DuPont Pharmaceuticals facility using the technology,

"DuPont Pharmaceuticals is committed to aggressive exploration and use of
leading-edge discovery technologies to speed the process of research and
development and to improve the quality of new drugs entering clinical trials,"
said Paul Friedman, M.D., President of DuPont Pharmaceuticals Research
Laboratories.

David C. U'Prichard, Ph.D., Chief Executive Officer of 3-Dimensional
Pharmaceuticals, noted that 3DP's technology platform allows the company to
discover and refine drugs against a wide range of molecular targets more quickly
than conventional approaches. "DuPont is one of the great pioneering research
based companies, and we are particularly pleased with this important recognition
of 3DP's proprietary DirectedDiversity drug discovery process.  Our scientists
look forward with great anticipation to working with their colleagues at DuPont
Pharmaceuticals," he said. "We are confident that the collaboration we are
announcing today will prove productive for both parties."

DirectedDiversity(R) Chemi-Informatic Technology uses proprietary computer
algorithms to design, select and iteratively refine combinatorial libraries of
novel, small-molecule drugs based on screening "hits" obtained from 3DP or other
screening libraries, target-protein 3D structures, or pharmacophore models
derived from lead compounds.

To prime the discovery process, 3DP has synthesized DirectedDiversity(R)
Screening Libraries totaling more than 200,000 individually synthesized drug-
like compounds. These compounds represent proven pharmacophore classes and
constitute an optimally diverse sampling of the DirectedDiversity(R) Accessible
Compound Libraries, which now total more than 1.5 billion compounds, each of
which is available for on-demand synthesis using parallel synthesis technology.

DirectedDiversity(R) is a major component of 3DP's DiscoverWorks(TM), which
provides a uniquely integrated platform for the high-throughput synthesis,
screening, and optimization of chemical compounds. DiscoverWorks(TM) can be
applied flexibly to a wide range of molecular targets
<PAGE>

identified through genome sequencing efforts -even in situations where the
target's biological function is ambiguous or unknown. DiscoverWorks(R) enhances
the efficiency of conventional drug discovery, making the process more rapid and
reliable.

Earlier this year, 30P received the fourth in a series of patents covering its
DirectedDiversity(R) process.  DirectedDiversity(R) controls and manages the
overall information flow for combinatorial drug discovery and provides the
computational tools needed to optimize drug properties rapidly using parallel
automated chemical synthesis. 3DP has a flexible licensing program available to
those companies interested in obtaining licenses to its DirectedDiversity(R)
patent portfolio.

Based in Wilmington, Delaware, DuPont Pharmaceuticals is a worldwide business
that focuses on research, development and delivery of pharmaceuticals to treat
unmet medical needs in the fight against HIV, cardiovascular disease, central
nervous system disorders, cancer and inflammatory diseases.  The company also is
a leader in medical imaging.

DuPont is a science company, delivering science-based solutions that make a
difference in people's lives in food and nutrition, health care, apparel, home
and construction, electronics, and transportation.  Founded in 1802, the company
operates in 65 countries and has 97,000 employees.

3-Dimensional Pharmaceuticals, Inc. (http://www.3dp.com) is a leading innovator
in drug discovery.   The company has developed a proprietary technology platform
known as DiscoverWorks, which uniquely integrates structure-based drug design,
combinatorial chemistry and high-throughput screening.  DiscoverWorks reduces
discovery costs, increases the rate of success and enhances the ultimate
commercial value of a drug development pipeline.  3DP is using its proprietary
technology both in collaboration with other companies and in its own research
programs, which currently target orally active small-molecule pharmaceuticals to
treat cardiovascular disease and cancer.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>10
<FILENAME>0010.txt
<DESCRIPTION>NONEXCLUSIVE PATENT LICENSE AGREEMENT
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.21

                     NONEXCLUSIVE PATENT LICENSE AGREEMENT

This Nonexclusive Patent License Agreement is made and effective as of February
11, 2000 (the "Effective Date"), by and between 3-Dimensional Pharmaceuticals,
Inc., a corporation having its principal place of business at Eagleview
Corporate Center, 665 Stockton Drive, Suite 104, Exton, PA 19341 ("3DP"), and
DuPont Pharmaceuticals Company (a wholly-owned subsidiary of E. I. DuPont de
Nemours & Co. ("DuPont")) having its principal place of business at Centre Road,
Chestnut Run Plaza, Building 721, Wilmington DE 19880 ("DPC"). 3DP and DPC may
be referred to herein as a "Party" or, collectively, as the "Parties".

WHEREAS, 3DP has developed and patented certain DirectedDiversity(R) technology
for generating chemical compounds having desired biological, chemical and other
properties;

WHEREAS, DPC is engaged in research and development of biologically active
compounds for the treatment of human disease;

WHEREAS, DPC wishes to license certain patent rights from 3DP on a nonexclusive
basis;

WHEREAS, the parties desire to enter into this Agreement to set forth the
licensing terms for such rights;

NOW, THEREFORE, in consideration of the various promises and undertakings set
forth herein, and intending to be legally bound, the Parties agree as follows:


Article 1  DEFINITIONS

The terms in this Agreement with initial letters capitalized, whether used in
the singular or the plural, shall have the meaning set forth below or, if not
listed below, the meaning designated in places throughout this Agreement.

     1.1  "Affiliate" means any corporation or other business entity which
          controls, is controlled by, or is under common control with 3DP or
          DPC. A corporation or other entity shall be regarded as in control of
          another corporation or entity if it owns or directly or indirectly
          controls at least 50% of the voting stock or other ownership interest
          of the other corporation or entity (or alternatively, if it owns the
          maximum such ownership interest permitted by law), or if it possesses,
          directly or indirectly, the power to direct or cause the direction of
          the management and policies of the corporation or other entity or the
          power to elect or appoint at least 50% of the members of the governing
          body of the corporation or other entity.

     1.2  "Agreement" means the present agreement including its Appendices.
<PAGE>

     1.3  "Confidential Information" means all information that has or could
          have commercial value or other utility in a Party's business, or the
          unauthorized disclosure of which could be detrimental to the Party's
          interests, including confidential information, inventions, know-how,
          data and materials relating to the Licensed Patents, and shall include
          without limitation research, technical, clinical development,
          manufacturing, marketing, financial, personnel and other business
          information and plans, whether in oral, written, graphic or electronic
          form.

     1.4  "DPC" means DuPont Pharmaceuticals Company as identified above.

     1.5  "DPC Site" means a Site which is a DPC Site or a Site of a DPC
          Affiliate which is involved in pharmaceutical (including diagnostic
          imaging) research and development.

     1.6  "DuPont" means E. I. DuPont de Nemours & Co. as identified above.

     1.7  "Effective Date" means the effective date of this Agreement as set
          forth above.

     1.8  "Field" means the research and development of chemical materials for
          use in pharmaceutical and diagnostic products. With respect to the
          Other DuPont Site described in Section 3.3, the Parties shall agree to
          the applicable definition of Field.

     1.9  "Improvements" means any inventions, discoveries, improvements or
          enhancements, whether or not patented or patentable, relating to the
          subject matter claimed in the Licensed Patents.

     1.10 "Licensed Patents" means all U.S. and foreign patent applications or
          issued patents identified in Appendix A, and any U.S. and foreign
                                       ----------
          patent applications or issued patents claiming Improvements made by
          3DP in respect thereof, including any provisionals, divisionals,
          continuations, continuations-in-part, reissues and extensions derived
          therefrom, such as patent term restorations, supplementary protection
          certificates, etc., to the foregoing that may be filed by or granted
          to 3DP during the term of this Agreement.

     1.11 "Other DuPont Site" means a Site which is a DuPont Site or a Site of a
          DuPont Affiliate which is not a DPC Site and is not involved in
          pharmaceutical (including diagnostic imaging) research and
          development.

     1.12 "Site" means a discrete research facility, for example, a building or
          building complex at which DPC or an Affiliate of DPC conducts internal
          research and development activities, in a geographic location distinct
          from other research facilities of DPC or an Affiliate of DPC.

     1.13 "Site License Fee" shall have the meaning set forth in Section 3.2
          below.

                                       2
<PAGE>

     1.14 "Third Party" means an individual, corporation or other entity other
          than the Parties and their Affiliates.

     1.15 "3DP" means 3-Dimensional Pharmaceuticals, Inc. as identified above.

Article 2  GRANT OF LICENSE

     2.1  Nonexclusive Patent License. 3DP hereby grants DPC (and its
          ---------------------------
          Affiliates, but only to the extent specifically permitted herein) a
          nonexclusive license, without any right to sublicense, under the
          Licensed Patents in the Field but only in Direct Support of DPC's (or
          its Affiliate's as permitted herein) internal and collaborative
          research and development activities. As used herein, "Direct Support"
          means that DPC (or its Affiliates as permitted herein) may operate
          under the Licensed Patents to identify compounds with activity against
          targets that have been selected through DPC's (or its Affiliate's as
          permitted herein) internal research and development programs or to
          identify compounds for which DPC (or its Affiliates as permitted
          herein) will pay for a share of the development costs or receives at
          least a 10% royalty (or equivalent revenue share) or has any rights of
          commercialization. In accordance with the foregoing, it is
          acknowledged and understood that DPC and its Affiliates are not
          permitted under the license granted herein to compete with 3DP by
          providing combinatorial chemistry services to third parties on a fee-
          for-service basis.

          The rights granted hereunder may be extended by DPC to one (1) Other
          DuPont Site, provided that in such event DuPont or its Affiliate shall
          be bound in the same way as DPC with respect to all the terms and
          conditions of this Agreement. In such event DuPont (or its Affiliate
          as permitted herein) shall have a nonexclusive license, without any
          right to sublicense, under the Licensed Patents in the Field but only
          in Direct Support of DuPont's (or its Affiliate's as permitted herein)
          internal and collaborative research and development activities. As
          used in this paragraph, "Direct Support" means that DuPont (or its
          Affiliate as permitted herein) may operate under the Licensed Patents
          to identify compounds with activity against targets that have been
          selected through DuPont's (or its Affiliate's as permitted herein)
          internal research and development programs or to identify compounds
          for which DuPont (or its Affiliate as permitted herein) will pay for a
          share of the development costs or receives at least a 10% royalty (or
          equivalent revenue share) or has any rights of commercialization.

     2.2  Limitations on License Grant. Except as permitted under Section 2.1,
          ----------------------------
          DPC (and any of its Affiliates, to the extent permitted below) may not
          operate under the Licensed Patents on behalf of any Third Parties such
          as, for example, in connection with providing research or development
          services to any Third Party on a contractual basis. The foregoing
          license

                                       3
<PAGE>

          grant is further limited to on-site activities at one or more actual
          DPC Sites, and does not include or permit off-site or remote access
          through the internet or otherwise. In addition, the foregoing license
          does not permit activities by DPC or DuPont or their Affiliates under
          this Agreement that are covered by that certain Collaborative Research
          and License Agreement, effective on October 12, 1998, between 3DP and
          E. I. DuPont de Nemours & Co.

     2.3  Term and Renewal. The initial term of this Agreement shall expire on
          ----------------
          April 1, 2000. However, this Agreement may be renewed by DPC on an
          annual basis by payment of the Site License Fees as set forth in
          Section 3.2.

     2.4  Non-Assertion. During the term of this Agreement and so long as DPC
          -------------
          has not committed any material breach with respect to any obligation
          hereunder, 3DP will not assert any patent or patent application
          against DPC to prevent DPC from practicing the rights granted to DPC
          under Article 2 hereof.

Article 3  FINANCIAL TERMS

     3.1  License Fee. In consideration of the grant of rights under Article 2
          -----------
          of this Agreement, DPC agrees to pay an initial nonrefundable license
          fee of [**] within thirty (30) days of the Effective Date of this
          Agreement. This initial license fee shall be creditable against the
          first annual Site License Fee payable in accordance with Section 3.2.

     3.2  Individual Site License Fees. [**]

     3.3  Location of DPC Sites. The location(s) of the DPC Site(s) may include
          ---------------------
          the Wilmington Experimental Station, to the extent that DPC conducts
          research and development activities there, and other DPC Sites to be
          determined at DPC's sole discretion. Notwithstanding the foregoing,
          DPC may permit one (1) Other DuPont Site to operate under the Licensed
          Patents subject to the approval of 3DP, such approval not to be
          unreasonably withheld. Once approved, DPC may not transfer the license
          to another Other DuPont Site without the approval of 3DP, such
          approval not to be unreasonably withheld. Any such Other DuPont Site
          shall be considered to be a DPC Site for the purpose of determining
          License Fees, and operations under the Licensed Patents at any such
          Site shall be subject to all of the other terms and conditions of this
          Agreement.

     3.4  Mode of Payment. All license payments to 3DP hereunder shall be made
          ---------------
          by wire transfer of United States Dollars in the requisite amount to
          such bank account as 3DP may designate by notice to DPC. Payments
          shall be free and clear of any taxes, fees or charges, to the extent
          applicable.



**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                       4
<PAGE>

     3.5  Most Favored Licensee Provision.  [**]

          Upon the written request of DPC and not more than once in each
          calendar year, 3DP shall permit an independent certified public
          accounting firm of nationally recognized standing selected by DPC and
          acceptable to 3DP (which acceptance by 3DP shall not be unreasonably
          withheld), at DPC's expense, to have access during normal business
          hours to such records of 3DP as may be reasonably necessary to verify
          3DP's compliance with the provisions of this Section 3.5. The
          accounting firm shall enter into an acceptable and customary
          confidentiality agreement with 3DP obligating the accounting firm to
          retain in confidence all information of 3DP which it obtains in
          performing such audits hereunder, and such audit shall be subject to
          3DP's third party confidentiality obligations. Such accounting firm
          shall report to DPC and 3DP whether or not 3DP is in compliance with
          this Section 3.5. If 3DP is not in compliance with this Section 3.5,
          such accounting firm shall disclose the financial terms of the Third
          Party license which contains more favorable financial terms than those
          applicable to DPC hereunder. In no event shall such accounting firm
          disclose the identity of the Third Party with whom 3DP has entered
          into a license.

     3.6  [**]

**Certain portions of this Exhibit have been ommitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                       5
<PAGE>

          [**]

Article 4  OBLIGATIONS OF DPC

     4.1  Annual Reports. DPC shall provide 3DP with written annual reports
          --------------
          within sixty (60) days after the end of each calendar year during the
          term of this Agreement to identify the DPC (or Affiliate's) Sites that
          are operating under the Licensed Patents.

Article 5  CONFIDENTIALITY

     5.1  Confidentiality Obligations. The Parties agree that, for the term of
          ---------------------------
          this Agreement and for ten (10) years thereafter, either Party that
          receives Confidential Information (a "Receiving Party") from the other
          Party (a "Disclosing Party") shall keep completely confidential and
          shall not publish or otherwise disclose and shall not use for any
          purpose (except as expressly permitted hereunder) any Confidential
          Information furnished to it by the "Disclosing Party" pursuant to this
          Agreement (including without limitation, know-how), except to the
          extent that it can be established by the Receiving Party that such
          Confidential Information:

          (a)  was already known to the Receiving Party, other than under an
               obligation of confidentiality from the Disclosing Party;

          (b)  was generally available to the public or otherwise part of the
               public domain at the time of its disclosure to the Receiving
               Party;

          (c)  became generally available to the public or otherwise part of the
               public domain after its disclosure and other than through any act
               or omission of the Receiving Party in breach of this Agreement;

          (d)  was subsequently lawfully disclosed to the Receiving Party by a
               Third Party;

          (e)  can be shown by written records to have been independently
               developed by the Receiving Party without reference to the
               Confidential Information received from the Disclosing Party and
               without breach of any of the provisions of this Agreement; or


**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                       6
<PAGE>

          (f)  the disclosing party has specifically agreed in writing that the
               receiving party may disclose.

          The obligations of confidentiality and non-use set forth in this
          Section 6.1 shall also apply to biological material and chemical
          compounds and associated information (including without limitation
          know-how) disclosed by one Party to the other prior to or during the
          term of this Agreement; provided however, that such obligation of
          confidentiality and non-use shall not apply with respect to compounds
          which are assigned to DPC or exclusively licensed to DPC by 3DP.

     5.2  Written Assurances and Permitted Uses of Confidential Information.

          (a)  The Receiving Party may disclose Confidential Information to the
               extent the Receiving Party is compelled to disclose such
               information by a court or other tribunal of competent
               jurisdiction, provided however, that in such case the Receiving
               Party shall immediately give notice to the Disclosing Party so
               that the Disclosing Party may seek a protective order or other
               remedy from said court or tribunal. In any event, the Receiving
               Party shall disclose only that portion of the Confidential
               Information that, in the opinion of its legal counsel, is legally
               required to be disclosed and will exercise reasonable efforts to
               ensure that any such information so disclosed will be accorded
               confidential treatment by said court or tribunal.

          (b)  To the extent it is reasonably necessary or appropriate to
               fulfill its obligations and exercising its rights under this
               Agreement, the Parties may disclose Confidential Information to
               their Affiliates on a need-to-know basis on condition that such
               Affiliates agree to keep the Confidential Information
               confidential for the same time periods and to the same "extent as
               the Party is required to keep the Confidential Information
               confidential under this Agreement.

          (c)  The existence and the terms and conditions of this Agreement
               which the Parties have not specifically agreed to disclose
               pursuant to this Section 5.2 shall be treated by each Party as
               Confidential Information of the other Party.

          (d)  If a Party is required to make any disclosure of the other
               Party's Confidential Information, it will give at least thirty
               (30) days written, advance notice to the latter Party of such
               disclosure requirement. If a Party is required to disclose
               Confidential Information to comply with applicable laws or
               governmental regulations, including but not limited to submitting
               information to tax authorities or to comply with any discovery or
               similar request for production of documents in litigation or
               similar alternative

                                       7
<PAGE>

               dispute resolution proceedings, such party may make such
               disclosure provided it gives prompt notice to the other Party,
               and provided it makes all reasonable efforts to comply with all
               administrative or other procedures or to establish a reasonable
               protective or similar order under which the confidential nature
               of the information will be maintained.

     5.3  Permitted Disclosures for Business Development Purposes.
          -------------------------------------------------------
          Notwithstanding the foregoing, or any other provision in this
          Agreement to the contrary, 3DP may describe the financial terms of
          this Agreement in confidence, in connection with capital raising or
          financing activities, provided however, that any such recipient of
          such disclosure shall agree in writing to keep such terms confidential
          for the same time periods and to the same extent as 3DP is required to
          keep Confidential Information confidential under this Agreement.
          Furthermore, DPC acknowledges that 3DP may be obligated to disclose
          terms of this Agreement and make public a copy of this Agreement in
          the event it becomes a public company as required by applicable U.S.
          law; provided however, that the terms and copy of this Agreement shall
          be redacted such that the extent of any such disclosure shall be
          limited to that which in the opinion of 3DP's legal counsel is legally
          required to be disclosed.

Article 6  PATENTS AND INFRINGEMENT

     6.1  Licensed Patents. 3DP shall prepare, file, prosecute and maintain the
          ----------------
          Licensed Patents at 3DP's expense and in a manner deemed appropriate
          in 3DP's sole judgment.  3DP agrees to keep DPC fully advised of the
          status of all Licensed Patents, upon reasonable written request from
          DPC.

     6.2  Infringement of the Licensed Patents by Third Parties. In the event
          -----------------------------------------------------
          that DPC becomes aware of any infringement by Third Parties of any of
          the Licensed Patents, subject to any confidentiality obligations DPC
          may have, DPC shall promptly notify 3DP. 3DP shall respond to any such
          infringement by Third Parties in a manner deemed appropriate by 3DP in
          its sole judgment.

     6.3  Third Party Patent Rights.  If any warning letter or other notice of
          -------------------------
          infringement is received by a Party, or action, suit or proceeding is
          brought against a Party alleging infringement of a patent of any Third
          Party with respect to operations under the Licensed Patents, the
          Parties shall promptly discuss and decide the best way to respond.

Article 7  REPRESENTATIONS AND WARRANTIES

     7.1  Authority. Each Party represents and warrants that it has the full
          ---------
          right, power and authority to execute, deliver and perform its
          obligations pursuant to this Agreement.

                                       8
<PAGE>

     7.2  No Conflicts.  Each Party represents and warrants that the execution,
          ------------
          delivery and performance of this Agreement does not conflict with, or
          constitute a breach or default under any of its charter or
          organizational documents, any law, order, judgment or governmental
          rule or regulation applicable to it, or any material agreement,
          contract, commitment or instrument to which it is a party.

     7.3  No Existing Third Party Rights. The Parties represent and warrant that
          ------------------------------
          their obligations under this Agreement are not encumbered by any
          rights granted by either Party to any Third Parties, which are or may
          be inconsistent with the rights and licenses granted in this
          Agreement.

     7.4  No Unauthorized Operations Under Licensed Patents.  DPC represents and
          -------------------------------------------------
          warrants that it will not operate under the Licensed Patents at any
          Site not identified to 3DP pursuant to Article 3 of this Agreement.

     7.5  Continuing Representations. The representations and warranties of each
          --------------------------
          Party contained in this Article 7 shall survive the execution and
          delivery of this Agreement and shall remain true and correct at all
          times during the term of this Agreement with the same effect as if
          made on and as of such later date.

     7.6  Disclaimer of Warranties.  3DP MAKES NO REPRESENTATIONS AND EXTENDS NO
          ------------------------
          WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH
          RESPECT TO THE LICENSED PATENTS INCLUDING, BUT NOT LIMITED TO,
          WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     7.7  3DP represents and warrants that Appendix A is accurate and complete
                                           ----------
          and identifies all patent rights owned by 3DP as of the Effective Date
          which are necessary for the use of the methods and technology claimed
          in the Licensed Patents in accordance with the license granted
          hereunder.

     7.8  DPC represents and warrants that as of the Effective Date, DPC is not
          operating under a valid, enforceable claim within the Licensed
          Patents. DPC further represents and warrants that it will not operate
          under a valid, enforceable claim within the Licensed Patents at any
          Site unless and until DPC activates a Site License pursuant to Section
          3.2 for that Site.

Article 8  TERM AND TERMINATION

     8.1  Term. This Agreement shall commence upon the Effective Date and
          ----
          terminate on April 1, 2000 unless extended pursuant to the provisions
          of Sections 2.3 and 3.2 of this Agreement.

     8.2  Termination for Breach. The failure by a Party to comply with any of
          ----------------------
          the material obligations contained in this Agreement shall entitle the
          other

                                       9
<PAGE>

          Party to give notice to have the default cured. If such default is not
          cured within sixty (60) days after the receipt of such notice, or
          diligent steps are not taken to cure if by its nature such default
          could not be cured within sixty (60) days, the notifying Party shall
          be entitled, without prejudice to any of its other rights conferred on
          it by this Agreement, and in addition to any other remedies that may
          be available to it, to terminate this Agreement, provided, however,
          that such right to terminate shall be stayed in the event that, during
          such sixty (60) day period, the Party alleged to have been in default
          shall have: (a) initiated arbitration in accordance with Section 9.1,
          below, with respect to the alleged default, and (b) diligently and in
          good faith cooperated in the prompt resolution of such arbitration
          proceedings.

     8.3  No Waiver. The right of a Party to terminate this Agreement, as
          ---------
          provided in Section 8.2, shall not be affected in any way by its
          waiver or failure to take action with respect to any prior default.

     8.4  Insolvency or Bankruptcy.

          (a)  Either Party may, in addition to any other remedies available by
               law or in equity, terminate this Agreement by written notice to
               the other Party in the event the latter Party shall have become
               insolvent or bankrupt, or shall have an assignment for the
               benefit of its creditors, or there shall have been appointed a
               trustee or receiver of the other Party or for all or a
               substantial part of its property or any case or proceeding shall
               have been commenced or other action taken by or against the other
               Party in bankruptcy or seeking reorganization, liquidation,
               dissolution, winding-up, arrangement or readjustment of its debts
               or any other relief under any bankruptcy, insolvency,
               reorganization or other similar act or law of any jurisdiction
               now or hereafter in effect, or there shall have been issued a
               warrant of attachment, execution, distraint or similar process
               against any substantial part of the property of the other Party,
               and any such event shall have continued for 90 days undismissed,
               unbonded and undischarged.

          (b)  All rights and licenses granted under or pursuant to this
               Agreement by DPC or 3DP are, and shall otherwise be deemed to be,
               for purposes of Section 365(n) of the U.S. Bankruptcy Code,
               licenses of right to "Intellectual property" as defined under
               Section 101 of the U.S. Bankruptcy Code. The Parties agree that
               the Parties as licensees of such rights under this Agreement,
               shall retain and may fully exercise all of their rights and
               elections under the U.S. Bankruptcy Code. The Parties further
               agree that, in the event of the commencement of a bankruptcy
               proceeding by or against either

                                       10
<PAGE>

               Parties under the U.S. Bankruptcy Code, the Parties hereto which
               is not a party to such proceeding shall be entitled to a complete
               duplicate of (or complete access to, as appropriate) any such
               intellectual property and all embodiments of such intellectual
               property, and same, if not already in their possession, shall be
               promptly delivered to them (i) upon any such commencement of a
               bankruptcy proceeding upon their written request therefor, unless
               the Party subject to such proceedings elects to continue to
               perform all of their obligations under this Agreement or (ii) if
               not delivered under (i) above, upon the rejection of this
               Agreement by or on behalf of the Party subject to such proceeding
               upon written request therefor by a nonsubject Party.

     8.5  Termination by DPC. Subject to Section 8.6, DPC shall have the right
          ------------------
          to terminate the license granted hereunder upon written notice to 3DP
          or by failure to pay at least 1 annual Site License Fee in accordance
          with Sections 2.3 and 3.2.

     8.6  Survival of Obligations.  The termination or expiration of this
          -----------------------
          Agreement shall not relieve the Parties of any obligations accruing
          prior to such termination, and any such termination shall be without
          prejudice to the rights of either Party against the other. The
          provisions of Sections 3.4 and 6.4 and Articles 4, 5, 9, 10 and 11
          shall survive any termination of this Agreement.

Article 9 DISPUTE RESOLUTION

     9.1  Dispute Resolution.  Any dispute concerning or arising out of this
          ------------------
          Agreement or concerning the existence or validity hereof, shall be
          determined by the following procedure.

          (a)  Both Parties understand and appreciate that their long term
               mutual interest will be best served by affecting a rapid and fair
               resolution of any claims or disputes which may arise out of
               services performed under this contract or from any dispute
               concerning the terms of this Agreement. Therefore, both Parties
               agree to use their best efforts to resolve all such disputes as
               rapidly as possible on a fair and equitable basis. Toward this
               end, both Parties agree to develop and follow a process for
               presenting, rapidly assessing, and settling claims on a fair and
               equitable basis which takes into account the precise subject and
               nature of the dispute.

          (b)  If any dispute or claim arising under this Agreement cannot be
               readily resolved by the Parties pursuant to the process described
               above, then the Parties agree to refer the matter to a panel
               consisting of the Chief Executive Officer ("CEO") of each Party
               or their designees for review and a non-binding resolution. A
               copy of

                                       11
<PAGE>

               the terms of this Agreement, agreed upon facts (and areas of
               disagreement), and concise summary of the basis for each side's
               contentions will be provided to both such CEOs who shall review
               the same, confer, and attempt to reach a mutual resolution of the
               issue.

          (c)  If the matter has not been resolved utilizing the foregoing
               process, and the Parties are unwilling to accept the non-binding
               decision of the indicated panel, either or both Parties may elect
               to pursue definitive resolution through binding arbitration,
               which the Parties agree to accept in lieu of litigation or other
               legally available remedies (with the exception of injunctive
               relief where such relief is necessary to protect a Party from
               irreparable harm pending the outcome of any such arbitration
               proceeding). Binding arbitration shall be settled in accordance
               with the Rules of Conciliation and Arbitration of the
               International Chamber of Commerce by a panel of three arbitrators
               chosen in accordance with these Rules. This Agreement shall be
               governed by and construed in accordance with the substantive laws
               of the State of Delaware without regard to the conflicts of laws
               provisions of Delaware. The arbitration will be held in
               Wilmington, Delaware. Judgment upon the award rendered may be
               entered in any court having jurisdiction and the Parties hereby
               consent to the said jurisdiction and venue, and further
               irrevocably waive any objection which either Party may have now
               or hereafter to the laying of venue of any proceedings in said
               courts and to any claim that such proceedings have been brought
               in an inconvenient forum, and further irrevocably agree that a
               judgment or order in any such proceeding shall be conclusive and
               binding upon the Parties and may be enforced in the courts of any
               other jurisdiction.

Article 10  INDEMNIFICATION

          (a)  Indemnification of 3DP. DPC shall indemnify and defend 3DP and
               its Affiliates and the directors, officers, employees, agents and
               counsel of 3DP and such Affiliates and the successors and assigns
               of any of the foregoing (the "3DP Indemnitees"), and hold the 3DP
               Indemnitees harmless from and against any and all losses
               resulting from any claim, suit or proceeding brought by a Third
               Party against a 3DP Indemnitee, arising from or occurring as a
               result of the operations by DPC under the Licensed Patents; or
               the manufacture, import, use, offer for sale or sale of products
               developed in whole or in part through the operations by DPC under
               the Licensed Patents; except to the extent any such claim, suit
               or proceeding results from the breach of any of the provisions of
               this Agreement, negligence or willful misconduct of 3DP.

                                       12
<PAGE>

     10.2      Procedure. Any of the 3DP Indemnitees that intends to claim
               ---------
               indemnification under this Article 10 shall promptly notify DPC
               (the "Indemnitor") in writing of any loss in respect of which the
               3DP Indemnitee intends to claim such indemnification, and the
               Indemnitor shall have the right to participate in, and, to the
               extent the Indemnitor so desires, to assume the defense thereof
               with counsel mutually satisfactory to the Parties; provided,
               however, that a 3DP Indemnitee shall have the right to retain its
               own counsel, with the fees and expenses to be paid by the
               Indemnitee, if representation of such Indemnitee by the counsel
               retained by the Indemnitor would be inappropriate due to actual
               or potential differing interests between such 3DP Indemnitee and
               the Indemnitor in such proceeding. The Indemnitor shall control
               the defense and/or settlement of any such loss, and the indemnity
               agreement in this Article 10 shall not apply to amounts paid in
               connection with any loss if such payments are made without the
               consent of the Indemnitor, which consent shall not be withheld
               unreasonably. The failure to deliver written notice to the
               Indemnitor within a reasonable time after the commencement of any
               such action, if prejudicial to its ability to defend such action,
               shall relieve such Indemnitor of any liability to the 3DP
               Indemnitee under this Article 10. At the Indemnitor's request,
               the 3DP Indemnitee under this Article 10, and its employees and
               agents, shall cooperate fully with the Indemnitor and its legal
               representatives in the investigation of any loss covered by this
               indemnification and provide true, correct and complete
               information with respect thereto.

Article 11  MISCELLANEOUS

     11.1      Entire Agreement.  This Agreement and its Appendices constitute
               ----------------
               and contain the entire understanding and agreement of the Parties
               respecting the subject matter of this Agreement and cancels and
               supersedes any all prior negotiations, correspondence,
               understandings and agreements between the Parties, whether oral
               or written, regarding such subject matter.

     11.2      Further Actions.  Each Party agrees to execute, acknowledge and
               ---------------
               deliver such further instruments and to do all such other acts as
               may be necessary or appropriate in order to carry out the
               purposes and intent of this Agreement.

     11.3      Binding Effect.  This Agreement and the rights granted herein
               --------------
               shall be binding upon and shall inure to the benefit of 3DP, DPC
               and their successors and permitted assigns .

     11.4      Assignment.  This Agreement may be assigned by either Party in
               ----------
               connection with the sale or transfer of substantially all of its
               assets that relate to this Agreement, or in the event of its
               merger or consolidation or

                                       13
<PAGE>

               change of control or similar transaction. Any permitted assignee
               shall assume all obligations of its assignor under this
               Agreement.

     11.5      No Implied Licenses.  No rights to any other patents, know-how or
               -------------------
               technical information, or other intellectual property rights,
               other than as explicitly identified herein, are granted or deemed
               granted by this Agreement. No right, expressed or implied, is
               granted by this Agreement to a Party to use in any manner the
               name or any other trade name or trademark of the other Party in
               connection with the performance of this Agreement.

     11.6      No Waiver.  No waiver, modification or amendment of any provision
               ---------
               of this Agreement shall be valid or effective unless made in
               writing and signed by a duly authorized officer of each Party. No
               waiver, modification or amendment of any provision of this
               Agreement shall be valid or effective unless made in writing and
               signed by a duly authorized officer of each Party. The failure of
               either Party to assert a right hereunder or to insist upon
               compliance with any term or condition of this Agreement shall not
               constitute a waiver of that right or excuse a similar subsequent
               failure to perform any such term or condition.

     11.7      Force Majeure.  The failure of a Party to perform any obligation
               -------------
               under this Agreement by reason of acts of God, acts of
               governments, riots, wars, strikes, accidents or deficiencies in
               materials or transportation or other causes of a similar
               magnitude beyond its control shall not be deemed to be a breach
               of this Agreement.

     11.8      Independent Contractors.  Both Parties are independent
               -----------------------
               contractors under this Agreement. Nothing contained in this
               Agreement is intended nor is to be construed so as to constitute
               3DP or DPC as partners or joint venturers with respect to this
               Agreement. Neither Party shall have any express or implied right
               or authority to assume or create any obligations on behalf of or
               in the name of the other Party or to bind the other Party to any
               other contract, agreement, or undertaking with any Third Party.

     11.9      Notices and Deliveries.  Any formal notices, request, delivery,
               ----------------------
               approval or consent required or permitted to be given under this
               Agreement shall be in writing and shall be deemed to have been
               sufficiently given when it is received, whether delivered in
               person, transmitted by facsimile with contemporaneous
               confirmation, or delivery by registered letter (or its
               equivalent) or delivery by certified overnight courier service,
               to the Party to which it is directed at its address shown below
               or such other address as such Party shall have last given by
               notice to the other Parties.

                                       14
<PAGE>

               If to DPC:

               Vice President, Product Planning and Acquisitions
               DuPont Pharmaceuticals Company
               974 Centre Road, Chestnut Run Plaza
               Wilmington, DE 19805
               Fax: 302-992-3040

               with a copy to:

               Associate General Counsel
               Legal Division
               DuPont Pharmaceuticals Company
               974 Centre Road, Chestnut Run Plaza, WR1028
               Wilmington, DE 19805
               Fax: 302-992-3999


               If to 3DP:

               3-Dimensional Pharmaceuticals, Inc.
               Eagleview Corporate Center
               665 Stockton Drive, Suite 104
               Exton, PA 10341

               ATTN:  Chief Executive Officer

               with a copy to:

               Morgan, Lewis & Bockius LLP
               1701 Market Street
               Philadelphia, PA 19103

               ATTN: David R. King, Esq.

     11.10     Public Announcements. The Parties shall consult with each other
               --------------------
               and reach mutual written agreement before making any public
               announcement concerning this Agreement or its subject matter. A
               joint press release to announce the signing of this Agreement is
               attached as Appendix B to this Agreement, and the Parties agrees
                           ----------
               to coordinate the dissemination of this press release.
               Notwithstanding the foregoing, the Parties may disclose the
               existence and general nature of this Agreement and may make
               disclosures for purposes of satisfying legal and regulatory
               requirements in accordance with Article 5; however, neither Party
               shall use the name of the other Party for promotional purposes.

                                       15
<PAGE>

     11.11     Headings. The captions to the sections and articles in this
               --------
               Agreement are not a part of this Agreement, and are included
               merely for convenience of reference only and shall not affect its
               meaning or interpretation.

     11.12     Severability. If any provision of this Agreement becomes or is
               ------------
               declared by a court of competent jurisdiction to be illegal,
               unenforceable or void, this Agreement shall continue in full
               force and effect without said provision, so long as the
               Agreement, taking into account said voided provision(s),
               continues to provide the Parties with the same practical economic
               benefits as the Agreement containing said voided provision(s) did
               on the date of this Agreement. If, after taking into account said
               voided provision(s), the Parties are unable to realize the
               practical economic benefit contemplated on the date of this
               Agreement, the Parties shall negotiate in good faith to amend
               this Agreement to reestablish the practical economic benefit
               provided the Parties on the date of this Agreement.

     11.13     No Consequential Damages.  IN NO EVENT SHALL EITHER PARTY OR ANY
               ------------------------
               OF ITS RESPECTIVE AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY
               OF ITS AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL OR
               CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT,
               NEGLIGENCE, STRICT LIABILITY OR OTHER WISE, INCLUDING, BUT NOT
               LIMITED TO, LOSS OF PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF
               ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH OR OTHER DAMAGES.

     11.14     Applicable Law.  This Agreement shall be governed by and
               --------------
               interpreted in accordance with the laws of the State of Delaware
               without reference to its conflicts of laws provisions.

     11.15     Advice of Counsel.  DPC and 3DP have each consulted with counsel
               -----------------
               of their choice regarding this Agreement, and each acknowledges
               and agrees that this Agreement shall not be deemed to have been
               drafted by one party or another and will be construed
               accordingly.

     11.16     Counterparts.  This Agreement may be executed in counterparts, or
               ------------
               facsimile versions, each of which shall be deemed to be an
               original, and both of which together shall be deemed to be one
               and the same agreement.

                                       16
<PAGE>

In WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized officers as of the day and year first above
written, each copy of which shall for all purposes be deemed to be an original.


3 DIMENSTIONAL                         DUPONT PHARMACEUTIALS
PHARMACEUTICALS, INC.                  COMPANY


By:  /s/ David C. U'Prichard           By: /s/ Paul A. Friedman
   ----------------------------           ------------------------

Name:  David C. U'Prichard, Ph.D.      Name:  Paul A. Friedman, M.D.

Title:  Chief Executive Officer        Title:  President, DuPont Pharmaceuticals
                                               Research Laboratories

                                       17
<PAGE>

                      Appendix A:  Licensed Patent Rights


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
    3DP                Application Number         Filing Date                             Title
    ---                -----------------          -----------                             -----
 Reference             or Patent Number           or Issue Date
 ---------             ----------------           -------------
-------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                    <C>                        <C>
1503.0010000           Patent No. 5,463,564   Issued October 31, 1995    System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.0010001           Patent No. 5,574,656   Issued November 12, 1996   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.0010002           Patent No. 5,684,711   Issued November 4, 1997    System, Method, and Computer Program Product
                                                                         for at Least Partially Automatically Generating
                                                                         Chemical Compounds Having Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.0010003           Patent No. 5,901,069   Issued May 4, 1999         System, Method, and Computer Program Product
                                                                         for at LEAST PARTIALLY AUTOMATICALLY GENERATING
                                                                         Chemical Compounds Having Desired Properties From
                                                                         a List of Potential Chemical Compounds to
                                                                         Synthesize
-------------------------------------------------------------------------------------------------------------------------
1503.0010004           Appl. No. 09/213,156   Filed December 17, 1998    Method of Generating Chemical Compounds
                                                                         Having Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001AU00           Patent No. 688598      Issued September 17, 1998  System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503001AU10            Appl. No. 71886/98     Filed June 12, 1998        System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001CA00           Appl. No. 2,199,264    Filed September 11, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001EP00           Appl. No. 95933748.6   Filed September 11, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001HU00           Appl. No. P9801578     Filed September 11, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001IL00           Patent No. 115292      Issued October 28, 1999    System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001IL10           Patent No. 125017      Issued October 28, 1999    Computer Based System and Method of
                                                                         Automatically Generating Chemical Compounds
-------------------------------------------------------------------------------------------------------------------------
1503.001IN00           Appl. No. 1068CAL95    Filed September 7, 1995    System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001JP00           Appl. No. 510247/1996  Filed September 11, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001PC00           Appl. No.              Filed September 11, 1995   System and Method of Automatically Generating
                       PCT/US95/11365                                    Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
1503.001TW00           Appl. No. 84109873     Filed September 26, 1995   System and Method of Automatically Generating
                                                                         Chemical Compounds with Desired Properties
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
    3DP                Application Number         Filing Date                                Title
    ---                ------------------         -----------                                -----
 Reference              Or Patent Number         or Issue Date
 ---------              ----------------         -------------
-------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                       <C>                       <C>
1503.0200001           Appl. No. 08/963,870      Filed November 4, 1997    System, and Method, and Computer Program Product
                                                                           for Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.0200002           Appl. No. 08/963,872      Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.0200003           Appl. No. 09/073,845      Filed May 7, 1998         System, Method, and Computer Program Product for
                                                                           Representing Proximity Data in a Multi-Dimensional
                                                                           Space
-------------------------------------------------------------------------------------------------------------------------------
[**]
-------------------------------------------------------------------------------------------------------------------------------
1503.020AU01           Appl. No. 54407/98        Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020AU02           Appl. No. 51800/98        Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020CA01           Appl. No. 2,269,669       Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020CA02           Appl. No. 2,270,527       Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020EP01           Appl. No. 97948320.3      Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020EP02           Appl. No. 97946679.4      Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020IL01           Appl. No. 129498          Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020IL02           Appl. No. 129728          Filed May 4, 1997         System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020JP01           Appl. No. 521902/1998     Filed November 4, 1997    System, Method, and Computer Program Product for
                                                                           Identifying Chemical Compounds Having Desired
                                                                           Properties
-------------------------------------------------------------------------------------------------------------------------------
1503.020JP02           Appl. No. 521903/1998     Filed November 4, 1997    System, Method, and Computer Program Product for the
                                                                           Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
-------------------------------------------------------------------------------------------------------------------------------
1503.020PC01           Appl. No.                 Filed November 4, 1997    System, Method, and Computer Program Product for the
                       PCT/US97/20918                                      Visualization and Interactive Processing and
                                                                           Analysis of Chemical Data
 -------------------------------------------------------------------------------------------------------------------------------
1503.020PC02           Appl. No.                 Filed November 4, 1997    System, Method, and Computer Program Product for
                       PCT/US97/20919                                      Identifying Chemical Compounds Having Desired
                                                                           Properties.
 -------------------------------------------------------------------------------------------------------------------------------
[**]
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     ** Certain portions of this Exhibit have been omitted based upon a request
     for confidential treatment that has been filed with the Commission. The
     omitted portions have been filed separately with the Commission.

                                       19
<PAGE>

                       Appendix B:  Joint Press Release



FOR IMMEDIATE RELEASE
For 3DP, Contact:                             For DuPont Contact:
-------------------------------------------------------------------------------
Business
Michael J. Wassil                              Thomas R. Barry
Chief Financial Officer                          302-992-5020
(610) 458-6073

Media
Jerry Parrot
Jerry Parrot & Associates
703-757-0950

                   DuPont and 3-Dimensional Pharmaceuticals
                     Announce Drug Discovery Collaboration

  -  DuPont also Licenses 3DP's DirectedDiversity(R) Drug Discovery Patents-

Exton, PA and Wilmington, DE - February XX, 2000 - DuPont Pharmaceuticals
Company, a wholly-owned independent subsidiary of DuPont (NYSE: DD), and 3-
Dimensional Pharmaceuticals, Inc. (3DP) today announced a strategic
collaboration in which 3DP will use its proprietary DirectedDiversity technology
to assist DuPont Pharmaceuticals in the discovery of innovative new drugs for
specific biological targets.

3DP will apply its iterative drug discovery process to generate custom
combinatorial chemistry libraries based on molecules and information provided by
DuPont Pharmaceuticals and will optimize those molecules into preclinical drug
candidates. DuPont Pharmaceuticals will be responsible for preclinical and
clinical development, marketing and sales of the resulting products.

                                       20
<PAGE>

For the initial target, 3DP will receive payments of up to $9 million, including
an up-front technology access fee, research and development funding and
milestone payments. 3DP will also receive royalties on sales of resulting
products and will be eligible to receive additional payments if more than one
target is selected to be included in the collaboration.

The parties also announced an additional agreement in which DuPont
Pharmaceuticals will obtain a non-exclusive license to 3DP's proprietary
DirectedDiversity(R) drug discovery patents.  Under the license agreement,
DuPont Pharmaceuticals will receive a non-exclusive license to 3DP's
DirectedDiversity(R) patents in support of DuPont Pharmaceuticals internal
research Programs, and will pay an annual Site License fee for each DuPont
Pharmaceuticals facility using the technology.

DuPont Pharmaceuticals is committed to aggressive exploration and use of
leading-edge discovery technologies to speed the process of research and
development and to improve the quality of new drugs entering clinical trials,"
said Paul Friedman, M.D., President of DuPont Pharmaceuticals Research
Laboratories.

David C. U'Prichard, Ph.D., Chief Executive Officer of 3-Dimensional
Pharmaceuticals, noted that 3DP's technology platform allows the company to
discover and refine drugs against a wide range of molecular targets more quickly
than conventional approaches.  "DuPont is one of the great pioneering research-
based companies, and we are particularly pleased with this important recognition
of 3DP's proprietary DirectedDiversity(R) drug discovery process.  Our
scientists look forward with great anticipation to working with their colleagues
at DuPont Pharmaceuticals," he said.  "We are confident that the collaboration
we are announcing today will prove productive for both parties".

                                       21
<PAGE>

DirectedDiversity(R) Chemi-Informatic Technology uses proprietary computer
algorithms to design, select and iteratively refine combinatorial libraries of
novel, small-molecule drugs based on screening "hits" obtained from 3DP or other
screening libraries, target-protein 3D structures, or pharmacophore models
derived from lead compounds.

To prime the discovery process, 3DP has synthesized DirectedDiversity(R)
Screening Libraries totaling more than 200,000 individually synthesized drug-
like compounds.  These compounds represent proven pharmacophore classes and
constitute an optimally diverse sampling of the DirectedDiversity(R) Accessible
Compound Libraries, which now total more than 1.5 billion compounds, each of
which is available for on-demand synthesis using parallel synthesis technology.

DirectedDiversity(R) is a major component of 3DP's DiscoverWorks, which
provides a uniquely integrated platform for the high-throughput synthesis,
screening, and optimization of chemical compounds.  DiscoverWorks can be
applied flexibly to a wide range of molecular targets identified through genome
sequencing efforts - even in situations where the target's biological function
is ambiguous or unknown.  DiscoverWorks enhances the efficiency of conventional
drug discovery, making the process more rapid and reliable.

Earlier this year, 3DP received the fourth in a series of patents covering its
DirectedDiversity(R) process.  DirectedDiversity(R) controls and manages the
overall information flow for combinatorial drug discovery and provides the
computational tools needed to optimize drug properties rapidly using parallel
automated chemical synthesis. 3DP has a flexible licensing program available to
those companies interested in obtaining licenses to its DirectedDiversity(R)
patent portfolio.

                                       22
<PAGE>

Based in Wilmington, Delaware, DuPont Pharmaceuticals is a worldwide business
that focuses on research, development and delivery of pharmaceuticals to treat
unmet medical needs in the fight against HIV, cardiovascular disease, central
nervous system disorders, cancer and inflammatory diseases.  The company also is
a leader in medical imaging.

DuPont is a science company, delivering science-based solutions that make a
difference in people's lives in food and nutrition, health care, apparel, home
and construction, electronics, and transportation.  Founded in 1802, the company
operates in 65 countries and has 97,000 employees.

3-Dimensional Pharmaceuticals, Inc. (http://www.3dp.com) is a leading innovator
in drug discovery.  The company has developed a proprietary technology platform
known as DiscoverWorks, which uniquely integrates structure-based drug design,
combinatorial chemistry and high-throughput screening.  DiscoverWorks reduces
discovery costs, increases the rate of success and enhances the ultimate
commercial value of a drug development pipeline. 3DP is using its proprietary
technology both in collaboration with other companies and in its own research
programs, which currently target orally active small-molecule pharmaceuticals to
treat cardiovascular disease and cancer.

                                       23
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>11
<FILENAME>0011.txt
<DESCRIPTION>LICENSE AND RESEARCH AGREEMENT
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.23

                        LICENSE AND RESEARCH AGREEMENT

LICENSE AND RESEARCH AGREEMENT (the "Agreement") dated as of May 17, 2000 (the
"Effective Date") by and between 3-DIMENSIONAL PHARMACEUTICALS, INC., a Delaware
corporation having its principal place of business at 665 Stockton Drive, Suite
104, Exton, PA 19341-1151, USA (hereinafter referred to as "3DP") and SCHERING
AG, a corporation organized and existing under the laws of Germany having its
principal place of business at 13342, Berlin, Germany (hereinafter referred to
as "Schering"). 3DP and Schering are sometimes referred to herein individually
as a "Party" and collectively as the "Parties".

WHEREAS:

(A)  3DP has identified a class of non-peptidic, potent urokinase plasminogen
     activator (uPA) inhibitors with potential application in various
     therapeutic fields, and has the right to grant rights and licenses under
     patent applications, patents and know-how relating to such class of
     inhibitors.

(B)  3DP is interested in continuing to carry out research to evaluate further
     uPA inhibitors and Schering is willing to fund such research on the terms
     and subject to the conditions hereinafter set out.

(C)  Schering is interested in obtaining from 3DP certain rights and licenses to
     the patent applications, patents and know-how relating to the above-
     mentioned class of uPA inhibitors already identified by 3DP and to any
     compounds identified during the course of the above-mentioned research, and
     3DP is willing to grant such rights and licenses to Schering under the
     terms and subject to the conditions hereinafter set out.

                                                                               1
<PAGE>

(D)  Schering Berlin Venture Corporation and 3DP have entered into a Stock
     Purchase Agreement of even date herewith (the "Stock Purchase Agreement").

NOW THEREFORE, in consideration of the mutual covenants set forth in this
Agreement and other good and valuable consideration the sufficiency of which is
hereby acknowledged, the Parties agree as follows:


                                   ARTICLE 1

                                  DEFINITIONS

The following terms, when capitalized, shall have the following meanings (such
meanings to be equally applicable to both the singular and the plural forms of
the terms defined) as used in this Agreement:

1.1  "3DP Know-How" means all Know-How, whether currently existing or developed
     during the course of the Research Term or within six (6) months thereafter
     that relates to the research, development, utilization, manufacture, use or
     sale of a Licensed Compound or Licensed Product. Notwithstanding anything
     herein to the contrary, 3DP Know-How shall exclude 3DP Patents and 3DP Non-
     uPA Inhibitor Patents.

1.2  "3DP Non-uPA Inhibitor Compounds" mean compounds and data relating to such
     compounds discovered during the Research Program by 3DP or an Affiliate
     which do not constitute uPA Inhibitors but which the Joint Research
     Committee considers have some biological activity of interest to the
     Research Program or are of potential commercial interest to Schering.

1.3  "3DP Non-uPA Inhibitor Patents means Patents Controlled by 3DP which
     claim Non-uPA Inhibitor Compounds.

                                                                               2
<PAGE>

1.4  "3DP Patents" means: (i) Patents in Schedule A; (ii) Patents to be filed by
     3DP that claim 3DP's orally available uPA Inhibitor lead series, [**] and
     derivatives thereof, as described in the Outline Research Plan; and (iii)
     Patents that claim New Compounds. Notwithstanding anything herein to the
     contrary, 3DP Patents shall exclude any 3DP Know-How, Improvements and 3DP
     Non-uPA Inhibitor Patents.

1.5  "3DP Technology" means 3DP Know-How and 3DP Patents.

1.6  "Accept", "Accepted" or "Acceptance" as used with respect to a Lead
     Candidate, Back-Up or Follow-Up means a Lead Candidate, Back-Up or Follow-
     Up, respectively, that has fulfilled the Biological Criteria agreed upon by
     the Parties pursuant to Section 2.3 and which Schering has decided to
     develop either as an Accepted Lead Candidate or as an Accepted Back-Up or
     Accepted Follow-Up thereof.

1.7  "Accepted Back-Up" means a Back-Up which has fulfilled the Biological
     Criteria agreed upon by the Parties pursuant to Section 2.3 and which
     Schering has decided to develop as a Back-Up to an Accepted Lead Candidate.

1.8  "Accepted Follow-Up" means a Follow-Up which has fulfilled the Biological
     Criteria agreed upon by the Parties pursuant to Section 2.3 and which
     Schering has decided to develop as a Follow-Up to an Accepted Lead
     Candidate.

1.9  "Accepted Lead Candidate" means a Lead Candidate which has fulfilled the
     Biological Criteria agreed upon by the Parties pursuant to Section 2.3 and
     which Schering has decided to develop as a Licensed Product in a specified
     Separate Therapeutic Area.

___________________

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                                                               3
<PAGE>

1.10 "Affiliate" means any person, corporation, partnership, firm, joint venture
     or other entity which, directly or indirectly, through one or more
     intermediaries, controls, is controlled by or is under common control with
     3DP or Schering, as the case may be. As used in this definition, "control"
     means the possession of the power to direct or cause the direction of the
     management and policies of an entity, whether through the ownership of the
     outstanding voting securities or by contract or otherwise.

1.11 "Annual Worldwide Net Sales" means the total worldwide Net Sales of a
     Licensed Product in a Separate Therapeutic Area in a Sales Year or in the
     First Sales Year as applicable.

1.12 "Audit Disagreement" shall have the meaning set forth in Section 9.2.

1.13 "Back-Up" shall mean a Licensed Compound that is intended to be reserved as
     a back-up for an Accepted Lead Candidate and is not intended to be
     developed or commercialized unless development and/or commercialization of
     such Accepted Lead Candidate is terminated by Schering.

1.14 "Base Compound" means a uPA Inhibitor existing at the Effective Date which:
     (i) falls within the claims of the Patents referenced in Schedule A or
     falls within the same Chemical Class as such compounds; or (ii) falls
     within 3DP's orally available uPA Inhibitor lead series, [**] and
     derivatives thereof, as described in the Outline Research Plan.

1.15 "Biological Criteria" means the criteria for acceptance of a Lead
     Candidate, Back-Up or Follow-up to be agreed upon by the Parties pursuant
     to Section 2.3.

____________________

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                                                               4
<PAGE>

1.16 "Chemical Class": Compounds shall be deemed to fall within the same
     Chemical Class if one compound is a homolog, isomer, analog or first order
     derivative of another compound. A compound is a "homolog" of another
     compound if it differs from that compound by a methylene group or an
     ethylene group or a similar or equivalent group that does not affect the
     relationship of the functional groups in the compound that give rise to its
     activity as a uPA Inhibitor. An "isomer" is a compound differing from
     another compound by positional isomery, geometric isomery or stereochemical
     isomery. An "analog" is a compound which differs from another compound by
     the replacement of a single group within the latter compound. A compound is
     a "first order derivative" of another compound if it is derived from that
     compound by a single chemical reaction.

1.17 "Control" or "Controlled" means possession of the ability to grant a
     license or sublicense of patent rights, know-how or other intangible rights
     as provided for herein without violating the terms of any agreement or
     other arrangement with any Third Party.

1.18 "Drug Approval Application" means an application for Regulatory Approval
     required to be approved before commercial sale or use of a Licensed Product
     as a drug in a regulatory jurisdiction, including, but not limited to, for
     the purposes of Regulatory Approval in the United States, a New Drug
     Application and all supplements filed pursuant to the requirements of the
     FDA (including all documents, data and other information concerning a
     Licensed Product which are necessary for, or included in, FDA approval to
     market the Licensed Product), and, for the purposes of Regulatory Approval
     in the EU, applications for Regulatory Approval to the EMEA.

1.19 "EMEA" means the European Medicines Evaluation Agency or any
     successor agency.

                                                                               5
<PAGE>

1.20 "EU" means the countries which are members of the European Union as such
     membership may change from time to time.

1.21 "FDA" means the United States Food and Drug Administration or any successor
     agency.

1.22 "Field" means all uses of Licensed Products for the prevention, treatment,
     cure or mitigation of all disease states, conditions, disorders and
     indications in humans.

1.23 "First Commercial Sale" means the date on which Schering or an Affiliate or
     sublicensee of Schering first sells commercially, pursuant to a Regulatory
     Approval, a Licensed Product in any country, provided that if such first
     commercial sale has occurred in a country for which pricing or
     reimbursement approval is necessary for widespread sale and no more than a
     reasonable minimal amount of Licensed Product has been sold in such country
     prior to grant of such pricing or reimbursement approval, then such sale
     shall not be deemed a First Commercial Sale until such pricing or
     reimbursement approval has been obtained.

1.24 "First Sales Year" means the period between the date of First Commercial
     Sale of a Licensed Product in a Separate Therapeutic Area in the first
     country in the Territory in which such Licensed Product is sold in such
     Separate Therapeutic Area and the end of the calendar year in which such
     First Commercial Sale is made.

1.25 "Follow-Up" shall mean a Licensed Compound which is proposed by either
     Party for Acceptance as a follow-up to an Accepted Lead Candidate to be
     developed or commercialized for the same Separate Therapeutic Area for
     which the Accepted Lead Candidate is then being developed or
     commercialized; provided, however, that a Licensed Compound which
     constitutes the Follow-Up cannot be the same

                                                                               6
<PAGE>

     Licensed Compound as is already being developed or commercialized as a Lead
     Candidate.

1.25 "Improvements" shall mean Patents and Know-How that are based on research
     conducted by 3DP outside of the Research Program and that are specifically
     and directly related to Licensed Products, to the extent that such Patents
     and Know-How are Controlled by 3DP. For the avoidance of doubt, Patents and
     Know-How claiming New Compounds shall be considered 3DP Patents and 3DP
     Know-How rather than Improvements.

1.26 "IND" means the investigational new drug application relating to one or
     more Licensed Products required to be filed with the FDA pursuant to 21 CFR
     Part 312, including any amendments thereto. References herein to an IND
     shall include, to the extent applicable, any comparable applications
     outside the US such as, for example, the CTX in the EU.

1.27 "Joint Patents" shall have the meaning set forth in Section 7.3.

1.28 "Joint Research Committee" means the committee established pursuant
     to Section 2.3.

1.29 "Know-How" means all data, technical information, know-how, experience,
     inventions, discoveries, trade secrets, compositions of matter and methods,
     and whether or not patentable or confidential, to the extent that such
     Know-How is Controlled by a Party or its Affiliates.

1.30 "Lead Candidate" means a Licensed Compound which is proposed by either
     Party for Acceptance as an Accepted Lead Candidate pursuant to Section 2.6.

1.31 "Licensed Compound" means a Base Compound or a New Compound.

                                                                               7
<PAGE>

1.32 "Licensed Product" means a product in finished dosage form containing a
     Licensed Compound as active ingredient for use in the Field.

1.33 "Major Market Country" means the US, Japan and any country of the European
     Union.

1.34 "Net Sales" means the amount invoiced by Schering, its Affiliates or
     sublicensees for sales of a Licensed Product to Third Parties less the
     following deductions applicable to the Licensed Product for:

     (i)    transportation charges and insurance charges paid by Schering;

     (ii)   sales and excise taxes or customs duties paid by Schering or any
            other governmental charges imposed upon the sale of the Licensed
            Product and paid by Schering;

     (iii)  fees paid to distributors, consignees or agents in connection with
            the sale of the Licensed Product;

     (iv)   reasonable rebates and premiums granted or allowed in connection
            with the sale of a Licensed Product;

     (v)    allowances or credits to customers on account of governmental
            requirements, price differences, rejection, outdating, returns or
            recalls of the Licensed Product;

     (vi)   quantity discounts, cash discounts or chargebacks granted in
            connection with the sale of the Licensed Product;

     (vii)  provisions for price reductions; and

     (viii) costs of customer programs such as cost effectiveness or patient
            assistance studies or programs designed to aid in patient compliance
            with medication schedules in connection with the sale of a Licensed
            Product.

                                                                               8
<PAGE>

     For the purpose of calculating Net Sales, the Parties recognize that (a)
     Schering's customers may include persons in the chain of commerce who enter
     into agreements with Schering as to price even though title to the Licensed
     Product does not pass directly from Schering to such customers and even
     though payment for such Licensed Product is not made by such customers
     directly to Schering and (b) in such cases, chargebacks paid by Schering to
     or through a Third Party (such as a wholesaler) can be deducted by Schering
     from gross revenue in order to calculate Net Sales.  Any deductions above
     which involve a payment by Schering shall be taken as a deduction against
     aggregate sales for the period in which the payment or deduction is made.

     In the event a Licensed Product is sold in the form of a combination
     product containing one or more active ingredients in addition to a Licensed
     Product, Net Sales for such combination product will be adjusted by
     multiplying actual Net Sales of such combination product by the fraction
     A / (A+B) where A is the invoice price of the Licensed Product, if sold
     separately, and B is the invoice price of any other active ingredient or
     ingredients in the combination, if sold separately. If, on a country-by-
     country basis, the other active ingredient or ingredients in the
     combination are not sold separately in that country, Net Sales shall be
     calculated by multiplying actual Net Sales of such combination product by
     the fraction A / C where A is the invoice price of the Licensed Product if
     sold separately, and C is the invoice price of the combination product. If,
     on a country by country basis, neither the Licensed Product nor the other
     active component or components of the combination product is sold
     separately in said country, Net Sales shall be determined between the
     parties in good faith.

1.35 "New Compound" means: (i) any uPA Inhibitor and members of the same
     Chemical Class which is identified, discovered, created or synthesized by
     3DP or an Affiliate in the course of the Research Program; (ii) any
     chemical entity, and any member of the same Chemical Class as such chemical
     entity, that is identified, discovered, created or synthesized by 3DP or an
     Affiliate and is

                                                                               9
<PAGE>

     discovered during the Research Term, but outside of the Research Program,
     to be a uPA Inhibitor, to the extent that such chemical entity is
     Controlled by 3DP or an Affiliate; and (iii) any chemical entity, and any
     member of the same Chemical Class as such chemical entity that is
     identified, discovered, created or synthesized by 3DP or an Affiliate and
     is discovered to be a uPA Inhibitor after the end of the Research Term but
     within six (6) months thereafter, to the extent that such chemical entity
     is Controlled by 3DP or an Affiliate.

1.36 "Patents" mean all patents and patent applications and all patent
     applications hereafter filed, including any continuation, continuation-in-
     part, division, provisional or any substitute applications, any patent
     issued with respect to any such patent applications, any reissue,
     reexamination, renewal or extension (including any supplemental patent
     certificate) of any such patent, and any confirmation patent or
     registration patent or patent of addition based on any such patent, and all
     foreign counterparts of any of the foregoing, to the extent that such
     Patents are Controlled by a Party and its Affiliates.

1.37 "Patent Expenses" means the fees, expenses and disbursements and outside
     counsel fees, and payments to Third Party agents incurred in connection
     with the preparation, filing, prosecution and maintenance of 3DP Patents or
     Joint Patents covering a Licensed Compound or Licensed Product in the
     Field, including costs of patent interference and opposition proceedings
     and actions at law and equity against Third Parties for patent
     infringement.

1.38 "Pivotal Clinical Trial" means a clinical trial designed by Schering or an
     Affiliate or sublicensee which is essential to demonstrate efficacy and
     without which the relevant New Drug Application to the FDA (or equivalent
     in another Major Market Country) would lack adequate and well-controlled
     proof of efficacy likely to be acceptable to the regulatory authorities for
     the grant of marketing approval of a Licensed Product  set by the
     regulatory authorities in the Major Market Country for which the clinical
     trial is designed.

                                                                              10
<PAGE>

1.39 "Regulatory Approval" means any approvals (including pricing and
     reimbursement approvals), product and/or establishment licenses,
     registrations or authorizations of any federal, state or local regulatory
     agency, department, bureau or other governmental entity, necessary for the
     manufacture, use storage, importation, export, transport or sale of
     Licensed Compound or Licensed Product in a regulatory jurisdiction.

1.40 "Research Plan" means the Outline Research Plan (as described in Section
     2.4) for identifying, conceiving, synthesizing, structurally characterizing
     and/or otherwise discovering or optimizing one or more Licensed Compounds
     agreed upon by the Parties and attached to this Agreement as Part I of
     Schedule B; together with the First Year Research Plan and Second Year
     Research Plan to be agreed to between the Parties pursuant to Section 2.4
     and to be attached to this Agreement as Part II and Part III of Schedule B,
     respectively.

1.41 "Research Program" means research activities undertaken pursuant to this
     Agreement as described in the Research Plan, associated with the discovery
     or creation of Base Compounds and New Compounds, including in vitro studies
     of Licensed Compounds, in vivo animal studies for research purposes only
     and related activities.

1.42 "Research Term" means a twenty-four month period commencing on the
     Effective Date.

1.43 "Research Year" means a twelve-month period during the Research Term
     commencing on the Effective Date and ending on an anniversary thereof.

1.44 "Sales Year" means a full calendar year during which any Licensed Product
     is sold in any country of the world in a Separate Therapeutic Area.

                                                                              11
<PAGE>

1.45 "Separate Therapeutic Area" means a broad category of disease(s),
     condition(s) or disorder(s) generally regarded, by virtue of their common
     pathology, area of impact or otherwise, as therapeutically/medically
     distinct from other such categories.  For avoidance of doubt and without
     limitation, examples of Separate Therapeutic Areas are: oncology;
     cardiovascular system; central and peripheral nervous systems;
     endocrinology; dermatology and inflammation.

1.46 "Territory" means all countries of the world.

1.47 "Third Party" means any entity other than 3DP or Schering and their
     respective Affiliates and sublicensees.

1.48 "Urokinase Plasminogen Activator (uPA) Inhibitor" means a compound that has
     [**]

1.49 "US" or "United States" means the United States of America, its territories
     and possessions, including the District of Columbia, the Commonwealth of
     Puerto Rico, the US Virgin Islands, Guam, and all other places under the
     jurisdiction of the United States of America.

________________
**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                                                              12
<PAGE>

1.50 "Valid Claim" means any claim of an issued, unexpired patent which shall
     not have been abandoned, withdrawn, canceled or disclaimed, nor held
     invalid or unenforceable by a court of competent jurisdiction in an
     unappealed or unappealable decision.

                                   ARTICLE 2

                               RESEARCH PROGRAM

2.1  Commencement: The Research Program will commence on the Effective Date and
     will continue (unless earlier terminated pursuant to Article 10 below) for
     the Research Term. 3DP shall perform its responsibilities under the
     Research Program in accordance with the terms of the Research Plan. The
     objective of the Research Program is to identify Licensed Compounds which
     may become Lead Candidates for development and commercialization by
     Schering.

2.2  Research Funding: Schering shall fund the Research Program in the amount of
     [**] for each Research Year. Payments for each Research Year will be made
     quarterly in advance. In addition, Schering shall reimburse 3DP the
     documented costs payable to any Third Party in connection with activities
     under the Research Program where such activities and the costs therefor
     have been approved in advance in writing by Schering. The Parties consider
     that the performance of the Research Program as currently envisaged will
     not require the payment of any such costs to Third Parties. No activities
     may be delegated by 3DP under the Research Program without the prior
     written consent of Schering except as agreed to by the Joint Research
     Committee. All payments shall be made in US dollars to the credit of such
     bank account as may be designated by 3DP in writing to Schering. Any
     payments which fall due on a date which is a legal holiday in the

________________
**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                                                              13
<PAGE>

     State of Pennsylvania or in Berlin, Federal Republic of Germany, may be
     made on the next following day which is not a legal holiday.

2.3  Joint Research Committee:

     (a)   Composition and Purposes:  Upon the execution of this Agreement, 3DP
           ------------------------
     and Schering will establish a Joint Research Committee which shall consist
     of six members, three designated by 3DP and three designated by Schering.
     The  Joint Research Committee shall meet formally at least quarterly or
     with such other frequency, and at such time and location, as may be
     established by the Joint Research Committee, for the following purposes:

     (i)   To review and approve, if appropriate, revisions to the Research
           Plan;

     (ii)  To monitor and review the progress of the Research Program and to
           consider whether any amendment of the Research Program should be
           recommended to the Parties;

     (iii) To review Licensed Compounds proposed by either Party for further
           preclinical testing;

     (iv)  To review and approve Biological Criteria for the Acceptance of Lead
           Candidates, Back-Ups and Follow-Ups;

     (v)   To decide whether and how a Licensed Compound proposed by either
           Party as a potential Lead Candidate, Back-Up or Follow-up should be
           assessed in accordance with the Biological Criteria.

     (vi)  To discuss matters relating to publications and Patents.

     (b)   Decision Making:  The objective of the Joint Research Committee shall
           ---------------
     be to reach agreement by consensus on all matters within the scope of the
     Research Plan.  However, all decisions to be made under this Agreement will
     be made by majority vote in the Joint Research Committee, and if the Joint
     Research Committee cannot agree on any matter (a "Disputed Matter"), the
     Disputed Matter shall be referred to the Chief Executive Officer of 3DP and
     the President

                                                                              14
<PAGE>

     of Schering's Affiliate, Berlex Biosciences, for resolution. If the
     Disputed Matter is not then resolved, Schering's decision shall be final
     and binding.

     (c)  Powers:  Each Party shall retain the rights, powers and discretion
          ------
     granted to it under this Agreement and the Joint Research Committee shall
     not be delegated or vested with any such rights, powers or discretion
     except as expressly provided in the Agreement.  The Joint Research
     Committee shall not have the power to amend or modify this Agreement, which
     may only be amended or modified as provided in Section 12.11.

2.4  Research Plan: 3DP and Schering have agreed upon an outline for a two (2)
     year Research Plan (the "Outline Research Plan") for identifying,
     conceiving, synthesizing, structurally characterizing and/or otherwise
     discovering one or more Licensed Compounds that are commercially viable
     candidates for development as drugs in the Field. The Outline Research Plan
     is attached hereto as Part I of Schedule B. Within forty five (45) days of
     the Effective Date, the Joint Research Committee shall adopt a more
     detailed research plan which describes the research activities to be
     carried out in the first Research Year (the "First Year Research Plan",
     such plan to be consistent with the Outline Research Plan and to be
     attached hereto as Part II of Schedule B. Three months before the end of
     the first Research Year, 3DP and Schering will agree upon a detailed
     research plan which describes the research activities for the second
     Research Year (the "Second Year Research Plan"), such plan to be consistent
     with the Outline Research Plan and to be attached hereto as Part III of
     Schedule B. The Joint Research Committee will be responsible for overseeing
     implementation of the Research Plan. Amendments to the Research Plan shall
     be effective only if agreed in writing by both Parties in accordance with
     the provisions of this Agreement. The Research Plan also shall establish a
     Research Project Team that shall be responsible for implementing the
     Research Plan. The Parties will allocate for the performance of the
     Research Plan the resources, in terms of personnel, equipment, materials
     etc., necessary to perform the Research

                                                                              15
<PAGE>

     Program, such resources to be at least equal to the amounts stipulated in
     the Research Plan.

2.5  Biological Criteria: The Parties have agreed upon provisional biological
     criteria attached hereto as part of the Outline Research Plan as the basis
     for the determination of Biological Criteria under this Agreement. The
     Parties shall, within forty-five (45) days of signature of this Agreement,
     finalize the Biological Criteria, for the Lead Candidate.

2.6  Selection of Lead Candidates, Back-Ups and Follow-Ups:

     (a)  Either Party may propose a Licensed Compound for selection and
          evaluation as a Lead Candidate, Back-Up or Follow-up . If the Joint
          Research Committee decides that such Licensed Compound should be
          evaluated, the Parties will assess whether the Biological Criteria
          have been met. If a Licensed Compound is Accepted, Schering shall be
          free to proceed with the development of such Licensed Compound.

     (b)  In the event that the Parties agree that the Biological Criteria have
          not been met, 3DP shall, at Schering's request and as part of the
          Research Program, carry out such optimization of the Lead Candidate,
          Back-Up or Follow-Up as Schering may reasonably request with a view to
          qualifying such Lead Candidate, Back-Up or Follow-Up to meet the
          Biological Criteria. If the Parties disagree as to whether the
          Biological Criteria have been met in any case, this dispute will be
          dealt with in the same way as Disputed Matters pursuant to Section
          2.3(b) above. Both Parties will use all reasonable efforts in good
          faith to come to agreement on whether the Biological Criteria have
          been met.

2.7  Reversion of Rights to Compounds that are Not Accepted by Schering: When a
     Lead Candidate, Back-Up or Follow-Up is recommended by the Joint Research
     Committee for evaluation and both Parties agree that such Lead Candidate or
     Back-Up or Follow-Up meets all Biological Criteria, Schering may, at its
     absolute discretion, either: (i) Accept the Lead Candidate, Back-Up or

                                                                              16
<PAGE>

     Follow-Up and pay the milestone payment due pursuant to Section 4.1.1; or
     (ii) decline to Accept such compound, in which case Schering agrees to
     negotiate in good faith with 3DP at that time to provide a release of
     rights to 3DP to pursue clinical development of such compound(s) in
     Separate Therapeutic Areas designated by 3DP and which Schering confirms
     are not of interest to Schering. The parties contemplate that the royalty
     and milestone terms of this Agreement would be applicable to such release
     of rights by Schering.

2.8  Reversion of Rights to Compounds Whose Development is Terminated by
     Schering. If Schering, having Accepted a Lead Candidate, Back-Up or Follow-
     Up decides, at any stage, to terminate pharmaceutical development of such
     Lead Candidate, Back-Up or Follow-Up, Schering agrees to negotiate in good
     faith with 3DP at such time to provide a release of rights to 3DP to pursue
     development of such Licensed Compound(s) in Separate Therapeutic Areas
     designated by 3DP and which Schering confirms are not of interest to
     Schering. The parties contemplate that the royalty and milestone terms of
     this Agreement would be applicable to such release of rights by Schering.
     Any product developed by 3DP pursuant to Sections 2.7 or 2.8 of this
     Agreement will be developed in such a way that it cannot be directly
     substituted for off label uses for any Licensed Product being developed or
     commercialized by Schering.

2.9  Designation of Separate Therapeutic Areas.  If:

     (i)   3DP has requested a release of rights pursuant to Sections 2.7 or 2.8
           above to pursue development of a designated Licensed Compound in a
           designated Separate Therapeutic Area; and

     (ii)  Schering has refused to release such rights on the basis that the
           designated Separate Therapeutic Area is of interest to Schering; and

     (iii) Schering is not, within two years of the request for release of
           rights by 3DP, either developing or commercializing a Licensed
           Compound or Licensed Product in such designated Separate Therapeutic
           Area or

                                                                              17
<PAGE>

           developing or commercializing such designated Licensed Compound in
           another Separate Therapeutic Area;

     then 3DP may renew its request for a release of rights to such designated
     Licensed Compound in such designated Separate Therapeutic Area and Schering
     shall negotiate in good faith with 3DP at such time to provide a release of
     rights to 3DP to pursue development of such designated Licensed Compound in
     such designated Separate Therapeutic Area.

2.10 Rights to Non-uPA Inhibitors. To the extent that 3DP or an Affiliate
     Controls any Non-uPA Inhibitor Compounds, 3DP agrees to negotiate in good
     faith with Schering to grant an exclusive, worldwide, sublicensable license
     to Schering to pursue development and commercialization of such Non-uPA
     Inhibitor Compounds in one or more Separate Therapeutic Areas in the Field.
     The parties contemplate that the research funding, royalty and milestone
     terms of this Agreement would be applicable to any such license to
     Schering. In the event that Schering wishes to develop such Non-uPA
     Inhibitors together with a Third Party partner, Schering agrees to first
     negotiate in good faith with 3DP as a potential partner for the development
     of Non-uPA Inhibitor Compounds. In the event that 3DP is not able to grant
     to Schering a license to any Non-uPA Inhibitor Compound as provided above,
     then 3DP undertakes, during the term of this Agreement, not to develop or
     commercialize or permit the development or commercialization of such Non-
     uPA Inhibitor Compound for any Separate Therapeutic Area for which Schering
     develops or commercializes a Licensed Compound or Licensed Product.

2.11 Research Funding: 3DP will utilize the research funding provided by
     Schering pursuant to Section 2.2 above exclusively for the performance of
     the Research Program.

2.12 Research Exclusivity: During the Research Term, the Parties agree to
     cooperate exclusively with each other in carrying out research and
     development relating to uPA Inhibitors. Neither Party shall, during the
     Research Term, carry

                                                                              18
<PAGE>

     out any research in the Field relating to the discovery of uPA Inhibitors
     except pursuant to this Agreement unless the Parties mutually agree
     otherwise in writing. Neither Party shall enter into any agreement with a
     Third Party which would prevent it from performing its obligations under
     this Agreement.


                                   ARTICLE 3

                                LICENSE RIGHTS

3.1  Grant to Schering:

     (a)  3DP hereby grants to Schering an exclusive, worldwide, sublicensable
          license under the 3DP Technology to research, develop, make, have
          made, use, sell and import for sale Licensed Compounds and Licensed
          Products in the Field. A list of the 3DP Patents identified as of the
          Effective Date is attached hereto as Schedule A. Such list shall be
          modified from time to time to reflect any changes to the 3DP Patents
          acquired by or coming under the Control of 3DP or its Affiliates
          during the term of this Agreement or within a period of six (6) months
          thereafter.

     (b)  3DP also hereby grants to Schering a nonexclusive, worldwide,
          sublicensable license under Non-uPA Inhibitor Patents to carry out
          research and development in respect of uPA Inhibitor Compounds during
          the Research Program and to use any results of such research and
          development for the development, manufacture or commercialization of
          Licensed Compounds and Licensed Products.

     (c)  3DP also hereby grants to Schering a nonexclusive, worldwide,
          sublicensable license under Improvements that are Controlled by 3DP
          during the term of this Agreement to research, develop, make, have
          made, use, sell and import for sale Licensed Products in the Field.

                                                                              19
<PAGE>

     (d)  3DP agrees not to develop or commercialize outside of the Field any
          Licensed Compound or Licensed Product that is being developed or
          marketed by Schering without the prior written approval of Schering,
          such approval not to be unreasonably withheld by Schering.

3.2  License Following Expiration: Following the Royalty Expiration Date
     specified in Section 5.1(b) below, and provided that this Agreement has not
     been terminated by Schering under Section 10.2(a) or by 3DP under Section
     10.2(b) or 10.2(c), Schering shall, in each country of the world, have an
     exclusive (even as to 3DP), paid-up, sub-licensable license under 3DP Know-
     How to research, develop, make, have made, use, sell and import for sale
     Licensed Compounds and Licensed Products.

3.3  Transfer of Information: 3DP shall promptly identify and make available to
     the Joint Research Committee, and to Schering upon request, all information
     in 3DP's possession or coming into its possession during the course of this
     Agreement relating to Licensed Compounds, Licensed Products and methods of
     manufacturing the same, which appears to be reasonably necessary or useful
     for exercise by Schering of the rights granted hereunder. Such information
     shall include copies of all Patents, copyrights, copyright registrations
     and applications therefor and all other manifestations of the intellectual
     property embodied in the Licensed Compounds and Licensed Products, whether
     in human or machine readable form.

                                   ARTICLE 4

                         MILESTONE PAYMENTS; DILIGENCE

4.1  Schering will make the following milestone payments to 3DP within 30
     (thirty) days of achievement of any of the following milestones with
     respect to a Licensed Compound or Licensed Product.

                                                                              20
<PAGE>

[**]


______________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                                                              21
<PAGE>

[**]


______________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                                                              22
<PAGE>

[**]


4.2     Diligence: If a Lead Candidate or Follow-Up is Accepted by Schering,
        Schering shall use reasonable commercial efforts to develop and
        commercialize a


______________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.


                                                                              23
<PAGE>

     Licensed Product containing such Lead Candidate or Follow-Up, such efforts
     to be comparable to the efforts expended by Schering on its proprietary
     compounds of equivalent potential. Schering may discharge its obligations
     pursuant to this Section 4.2 through a sub-licensee or Affiliate.


                                   ARTICLE 5

                                   ROYALTIES

5.1  Royalties

     (a)  General: In further consideration of the rights and licenses granted
          -------
          to Schering under Article III of this Agreement, Schering agrees,
          subject to Sections 5.1(b) and 5.4, to pay to 3DP the following
          royalties on Net Sales of Licensed Products:

          [**]





     (b)  Royalty Term: Except where expressly provided otherwise in this
          Agreement, all royalties to 3DP shall be paid, on a country-by-country
          basis, from the date of the First Commercial Sale of a Licensed
          Product in

_____________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                                                              24
<PAGE>

          a particular country until the later (the "Royalty Expiration Date")
          of (i) ten (10) years from the First Commercial Sale in such country
          and (ii) the last to expire of any 3DP Patent which includes a Valid
          Claim in such country; provided, however, that if a Licensed Product
          is sold in any country in which 3DP does not have a Valid Claim which
          would prevent the sale of a generic form of such Licensed Product, the
          royalty obligations set forth in Section 5.1(a) with respect to Net
          Sales attributable to the sale of the Licensed Product in such country
          shall be reduced by [**] of the royalty that would otherwise be
          payable with respect to Net Sales attributable to the sale of the
          Licensed Product in such country.


5.2  Royalty Reports And Payments: Schering shall make royalty payments to 3DP
     quarterly within sixty (60) days after the end of each calendar quarter in
     which Net Sales occurred. A report summarizing the Net Sales of Licensed
     Products in each Separate Therapeutic Area on a country-by-country basis
     ("Quarterly Report") shall be delivered to 3DP within sixty (60) days
     following the end of each calendar quarter for which royalties are due. A
     separate report summarizing the Annual Worldwide Net Sales of each Licensed
     Product in each Separate Therapeutic Area (the "Annual Report") shall be
     delivered to 3DP within sixty (60) days of the end of the First Sales Year
     and each subsequent Sales Year.

5.3  Adjustment Of Royalty Rates: The royalty rate applicable to Net Sales of a
     Licensed Product in a Separate Therapeutic Area in the First Sales Year
     shall be deemed to be [**.] If Annual Worldwide Net Sales for such First
     Sales Year are equal to or exceed [**] Schering shall, within sixty (60)
     days of the end of the First Sales Year, pay to 3DP in respect of such Net
     Sales an amount equal to the difference between the royalty amount paid by
     Schering for such Net Sales and the amount which would have been payable if
     the applicable royalty rate had been [**.] The royalty rate applicable to
     Net Sales of a Licensed Product in a

_____________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                                                              25
<PAGE>

     Separate Therapeutic Area in the second and all subsequent Sales Years
     shall be deemed to be the rate actually applicable after adjustment for the
     preceding Sales Year. Within sixty (60) days of the end of each Sales Year,
     Schering shall pay to 3DP or 3DP shall pay to Schering, as the case may be,
     the difference (if any) between the royalty amount paid in respect of such
     Annual Worldwide Net Sales in the preceding Sales Year and the amount which
     would have been payable if the royalty rate actually applicable after
     adjustment had been paid in respect of such Annual Worldwide Net Sales for
     such preceding Sales Year.

     For example, if Annual Worldwide Net Sales of a specific Licensed Product
     in a Separate Therapeutic Area in Sales Year 2 were [**,] the deemed
     royalty rate for Annual Worldwide Net Sales for that Licensed Product in
     Sales Year 3 will be [**.] If, in fact, Annual Worldwide Net Sales in Year
     3 were [**,] Schering shall, within sixty days of the end of Sales Year 3,
     pay to 3DP an extra [**] royalty on Annual Worldwide Net Sales of such
     Licensed Product in Sales Year 3, and the deemed royalty rate for Annual
     Worldwide Net Sales of such Licensed Product in Sales Year 4 will be [**.]

5.4  Third Party Royalty Obligations: If, as a result of a judgment in favor of
     or settlement with a Third Party pursuant to Section 7.6, Schering is
     required to pay monies to a Third Party in order to develop, manufacture or
     sell a Licensed Product in any country, [**] of any such monies may be set
     off against the royalties otherwise due to 3DP hereunder. Notwithstanding
     the foregoing, the permitted set-off may not decrease the royalty otherwise
     owed by Schering to 3DP by more than [**].

5.5  Payments; Interest: Any payments due under this Agreement shall be due on
     such date as specified in this Agreement and, in the event such date is a
     day on which commercial banks are not authorized to conduct business in
     either Pennsylvania, US or Berlin, Federal Republic of Germany, then the
     next


_____________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                                                              26
<PAGE>

     succeeding business day, and shall be made by wire transfer to a designated
     bank account of 3DP.

     Any failure by Schering to make a payment within five days after the date
     when due shall obligate Schering to pay interest to 3DP at a rate per annum
     equal to the Prime Rate as publicly announced by Bank America on Reuters
     Screen "USPRIME1" on the due date or the next business day computed on the
     basis of a 356/360 year, the interest period commencing on the due date and
     ending on the payment day, such interest to be due and payable upon tender
     of the payment.

5.6  Taxes: 3DP shall pay any and all taxes levied on account of research
     payments, milestone payments or royalties it receives under this Agreement.
     If laws or regulations require that taxes be withheld, Schering will (i)
     deduct those taxes from the remittable royalty, (ii) timely pay the taxes
     to the proper taxing authority, and (iii) send proof of payment to 3DP
     within thirty (30) days of receipt of confirmation of payment from the
     relevant taxing authority.

5.7  Payments To Or Reports By Affiliates: Any payment required under any
     provision of this Agreement to be made to either Party or any report
     required to be made by either Party shall be made to or by an Affiliate of
     that Party if designated by that Party as the appropriate recipient or
     reporting entity without relieving such Party from responsibility for such
     payment or report.

5.8  Payment Currency: Payments by Schering under this Agreement shall be made
     in US dollars. The calculation of royalty payments is based on Euro and
     converted into US dollars. Except for Net Sales in the United States, where
     payments are based on Net Sales in countries other than the member states
     of the European Currency Union, the amount of such Net Sales expressed in
     the currency of each country shall be converted into Euros at the exchange
     rate of the last date of the applicable calendar quarter. The applicable
     exchange rate

                                                                              27
<PAGE>

     will be the Euro foreign exchange reference spot rate published on the last
     business day of the applicable calendar quarter by the European Central
     Bank, Frankfurt/Main. If no Euro foreign exchange reference spot rate is
     determined for the relevant currency, the Parties shall agree upon another
     reference rate. Finally, the payable Euro amount shall be converted into US
     dollars by the Euro foreign exchange reference spot rate published by the
     European Central Bank, Frankfurt/Main, at the last business day of the
     applicable calendar quarter. These Euro foreign exchange reference spot
     rates are currently published by Reuters on screen "ECB37".


                                   ARTICLE 6

                                CONFIDENTIALITY

6.1  Confidentiality; Exceptions: Except to the extent expressly authorized by
     this Agreement or otherwise agreed in writing, the Parties agree that the
     receiving Party and its employees (who shall be bound in writing to observe
     the confidentiality provisions of this Agreement) shall keep confidential
     and shall not publish or otherwise disclose or use for any purpose other
     than as provided for in this Agreement any Know-How and other information
     and materials furnished to it by the other Party pursuant to this Agreement
     or any information or Know-How developed during the course of the
     collaboration hereunder, or any provisions of this Agreement that are the
     subject of an effective order of the U.S Securities and Exchange Commission
     granting confidential treatment pursuant to the Securities Act of 1934, as
     amended (collectively, "Confidential Information"), except to the extent
     that it can be established by the receiving Party that such Confidential
     Information:

     (i)  was already known to the receiving Party, other than under an
          obligation of confidentiality, at the time of disclosure by the other
          Party;

                                                                              28
<PAGE>

     (ii)  was generally available to the public or otherwise part of the public
           domain at the time of its disclosure to the receiving Party;

     (iii) became generally available to the public or otherwise part of the
           public domain after its disclosure and other than through any act or
           omission of the receiving Party in breach of this Agreement;

     (iv)  was disclosed to the receiving Party, other than under an obligation
           of confidentiality, by a Third Party who had no obligation to the
           disclosing Party not to disclose such information to others.

6.2        Authorized Disclosure: Each Party may disclose Confidential
     Information hereunder to the extent such disclosure is reasonably necessary
     in filing or prosecuting patent applications, prosecuting or defending
     litigation, complying with applicable governmental regulations, or
     conducting research under this Agreement provided that, if a Party is
     required by law or regulation to make any such disclosures of the other
     Party's Confidential Information it will, except where impracticable for
     necessary disclosures, for example in the event of medical emergency, give
     reasonable advance notice to the other Party of such disclosure requirement
     and, except to the extent inappropriate in the case of patent applications,
     will use its reasonable efforts to secure confidential treatment of such
     Confidential Information required to be disclosed. In addition, and with
     prior written notice to the other Party of each Third Party with whom a
     confidential disclosure agreement is being entered into, each Party shall
     be entitled to disclose, under a binder of confidentiality, Confidential
     Information to any Third Party for the purpose of carrying out the purposes
     of this Agreement and, in the case of 3DP, in connection with the seeking
     of equity financing. Where materiality of disclosure requires a press
     release or other disclosure pertaining to this Agreement by one Party, the
     disclosing Party shall give the other Party a copy of the proposed
     disclosure and afford that Party at least two (2) business days. In
     addition, Schering may use and disclose Confidential Information for all
     purposes related to the exercise of Schering's rights under this Agreement
     provided that Schering takes the same care in respect of such


                                                                              29
<PAGE>

     Confidential Information as it does in respect of its own confidential
     information. Not withstanding the foregoing, each Party acknowledges that
     the other may be obligated to disclose terms of this Agreement and make
     public a copy of this Agreement in the event it becomes a public company as
     required by applicable U.S. law; provided however, that the terms and copy
     of this Agreement shall be redacted such that the extent of any such
     disclosure shall be limited to that which in the reasonable opinion of the
     disclosing Party's legal counsel is legally required. Each Party will
     provide a copy of such disclosure to the other.

6.3  Survival: This Article 6 shall survive the termination or expiration of
     this Agreement for a period of five (5) years.

6.4  Termination Of Prior Agreement: This Agreement supersedes the
     Confidentiality Agreement between 3DP and Schering dated as of June 25,
     1999. All information exchanged between the Parties under the said
     Confidentiality Agreement shall be deemed to be Confidential Information
     and shall be subject to the terms of this Article 6, and shall be included
     within the definition of Confidential Information.

6.5  Publications: In consultation with 3DP, Schering shall determine the
     overall strategy for publication in support of the Product in the
     Territory.

6.6  Publicity Review: Subject to the other provisions of this Article 6, no
     Party shall originate any written publicity, news release, or other
     announcement or statement relating to this Agreement or to performance
     hereunder or the existence of an arrangement between the Parties
     (collectively "Written Disclosure") without the prior prompt review and
     written approval of the other Party, which approval shall not be
     unreasonably withheld or delayed. Notwithstanding the foregoing provisions
     of this Section 6.6, any Party may make any public Written Disclosure it
     believes in good faith based upon the advice of counsel is required by
     applicable law or any listing or trading agreement concerning its publicly
     traded

                                                                              30
<PAGE>

     securities, provided that prior to making such Written Disclosure, the
     disclosing Party shall provide the other Party with a copy of the materials
     proposed to be disclosed and provide the receiving Party with at least two
     (2) business days to review the proposed Written Disclosure. Each Party
     agrees to issue press releases as soon as it reasonably can, on or after
     the Effective Date, subject to expedited review and approval by the other
     Party, such approval not to be unreasonably withheld.


                                   ARTICLE 7

             OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS


7.1  Ownership: Each Party shall solely own, and it alone shall have the right
     to apply for, Patents for any inventions made solely by that Party's
     employees or consultants in the course of performing work under this
     Agreement. Inventions made jointly by employees or consultants of 3DP and
     Schering shall be jointly owned by Schering and 3DP. All such inventions
     and Joint Patents are subject to the license granted by 3DP to Schering
     pursuant to Article 3 of this Agreement.

7.2  Disclosure Of Joint Inventions: Any patent application disclosing
     inventions made jointly by the Parties shall be provided by one Party to
     the other reasonably in advance of the intended date for submission of such
     application to a governmental patent authority.

7.3  Patent Filings

     (a)  Each Party, at its sole discretion, cost and responsibility, shall
     prepare, file, prosecute and maintain Patents to cover discoveries and
     inventions made solely by its own employees or consultants relating to
     Licensed Compounds or Licensed Products and use commercially reasonable
     efforts to file initially all such applications in the appropriate forum
     under the circumstances wherein such a Party determines it is commercially
     reasonable to do so. If 3DP decides not to

                                                                              31
<PAGE>

     file or, having filed, to abandon a Patent in a particular country it shall
     notify Schering and, at Schering's request, assign all rights in respect to
     such Patent to Schering. Schering shall file, prosecute and maintain
     Patents to cover inventions relating to the discovery, evaluation,
     manufacture, use or sale of the Licensed Compounds or Licensed Products
     that are made jointly by personnel of 3DP and Schering in the course of the
     Agreement (herein referred to as "Joint Patents"). The determination of the
     countries in which to file Joint Patents shall be made by Schering. In
     consultation with 3DP, and taking reasonably into account any rights
     retained by 3DP under such Joint Patents, Schering shall have the right to
     direct and control all material actions relating to the prosecution or
     maintenance of Joint Patents in the Territory, including interference
     proceedings, reexaminations, reissue opposition and revocation proceedings.

     (b)  The Parties agree to use commercially reasonable efforts to ensure
     that any Patent filed outside the United States prior to a filing in the
     United States will be in a form sufficient to establish the date of
     original filing as a priority date for the purposes of a subsequent filing
     in the United States. Schering shall bear all costs related to the filing
     of Joint Patents. The Parties agree to use commercially reasonable efforts
     to ensure that any Patent filed in the United States prior to filings
     outside of the United States will be in a form sufficient to establish the
     date of original filing as a priority date for the purpose of a subsequent
     filing in any contracting state of the Paris Convention.


7.4  Third Party Patents: Each Party agrees to bring to the attention of the
     other Party any Third Party Patent it discovers or has discovered and which
     relates to the subject matter of this Agreement.

7.5  Enforcement Rights:

     (a)  Notification of Infringement:  If either Party learns of any
          ----------------------------
     infringement or threatened infringement by a Third Party of 3DP Patents,
     Schering Patents or

                                                                              32
<PAGE>

     Joint Patents in the Field, such Party shall promptly notify the other
     Party and shall provide such other Party with all available evidence of
     such infringement.

     (b)  Enforcement in the Territory:  Schering shall have the right but not
          ----------------------------
     the obligation to institute, prosecute and control at its own expense any
     action or proceeding with respect to infringement of any 3DP Patents or
     Joint Patents covering the research, manufacture, use, importation, sale or
     offer for sale of Licensed Compounds or Licensed Products in the Field, by
     counsel of its own choice. 3DP shall have the right, at its own expense, to
     be represented in any action by counsel of its own choice. If Schering
     fails to bring such an action or proceeding or otherwise take appropriate
     action to abate such infringement within a period of one hundred eighty
     (180) days of notice by 3DP to Schering requesting action, 3DP will have
     the right but not the obligation to bring and control any such action or
     proceeding relating to 3DP Patents by counsel of its own choice and
     Schering will have the right to be represented in any such action by
     counsel of its own choice and at its own expense. If one Party brings any
     such action or proceeding, the other Party agrees to be joined as a party
     plaintiff if necessary to prosecute the action or proceeding and to give
     the first Party commercially reasonable assistance and authority to file
     and prosecute the suit. Any damages or other monetary awards recovered
     pursuant to this Section 7.5(b) shall be allocated first to the reasonable
     costs and expenses of the Party bringing suit, then to the reasonable costs
     and expenses, if any, of the other Party. In the event that Schering brings
     such action, any amounts remaining shall be distributed as follows:
     compensatory damages shall be treated as Net Sales in the country and
     calendar quarter received and punitive and exemplary damages shall be paid
     equally to Schering and 3DP. In the event that 3DP brings such action, any
     damages or other monetary awards recovered shall be divided equally between
     the Parties.

     (c)  Settlement with a Third Party: The Party that controls the prosecution
          -----------------------------
     of a given action shall also have the right to control settlement of such
     action,

                                                                              33
<PAGE>

     provided however, that if one Party controls, no settlement shall be
     entered into without the written consent of the other Party (which consent
     shall not be unreasonably withheld) if such settlement would materially and
     adversely affect the interests of the other Party.

7.6  Defense And Settlement Of Third Party Claims: If a Third Party asserts that
     a patent owned by it is infringed by any Licensed Compound or any Licensed
     Product or by the exercise by Schering of any of the rights licensed under
     Article 3 above, Schering will have the right but not the obligation to
     defend against any such assertions at its cost and expense but no
     settlement may be entered into without the written consent of 3DP, which
     shall not be unreasonably withheld. The costs of any such settlement
     (including, without limitation, damages, expense reimbursements,
     compliance, future royalties or other amounts) and of any amount awarded
     against Schering shall be paid by Schering [**] under this Agreement
     according to the provisions of Section 5.4.

7.7  Patent Expenses: All worldwide Patent Expenses with respect to 3DP Patents
     shall be borne by 3DP and all worldwide Patent Expenses with respect to
     Joint Patents shall be borne by Schering, subject in both cases to the
     terms of this Agreement.

7.8  Trademarks: Schering shall be responsible for the selection, registration
     and maintenance of all trademarks which it employs in connection with the
     Licensed Products and shall own and control such trademarks and pay any
     costs in connection therewith. 3DP recognizes the exclusive ownership by
     Schering of the proprietary Schering name, logotype or trademark furnished
     by Schering (including Schering's Affiliates) for use in connection with
     the Licensed Product. 3DP shall not, either while this Agreement is in
     effect or at any time thereafter, register, use or attempt to obtain any
     right in or to any such name, logotype or


_____________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                                                              34
<PAGE>

       trademark or in and to any name, logotype or trademark confusingly
       similar thereto. Only Schering will be authorized to initiate, at its own
       discretion and at its own cost, legal proceedings against any
       infringement or threatened infringement of the trademarks applicable to
       the Licensed Product.

7.9    Use Of Names: Neither Party shall use the name of the other Party in
       relation to this transaction in any public announcement, press release or
       other public document without the written consent of such other Party,
       which consent shall not be unreasonably withheld or delayed, provided
       however, that either Party may use the name of the other Party in any
       document filed with any regulatory agency or authority, including the FDA
       and the Securities and Exchange Commission, in which case Schering shall
       be referred to as "Schering AG, Germany". The Parties agree not to use
       the name of the other Party in relation to this transaction in any press
       release, public announcement or other public document without the
       approval of such other Party, which approval shall not be unreasonably
       withheld or delayed.

7.10   No Trademark Rights: Except as otherwise provided herein, no right,
       express or implied, is granted by the Agreement to use in any manner the
       name "Schering" or "3DP" or any other trade name or trademark of the
       other Party or its Affiliates in connection with the performance of the
       Agreement.


                                   ARTICLE 8

                        REPRESENTATIONS AND WARRANTIES

8.1    Representations And Warranties

       (a) Each of the Parties hereby represents and warrants to the other Party
       as follows:

                                                                              35
<PAGE>

           (i)   This Agreement is a legal and valid obligation binding upon
                 such Party and enforceable in accordance with its terms. The
                 execution, delivery and performance of this Agreement by such
                 Party does not conflict with any agreement, instrument or
                 understanding, oral or written, to which it is a party or by
                 which it is bound, nor to such Party's knowledge, violate any
                 law or regulation of any court, governmental body or
                 administrative or other agency having jurisdiction over it; and

           (ii)  3DP has not granted and during the term of the Agreement will
                 not grant any right to any Third Party relating to the 3DP
                 Patents, 3DP Know-How and Joint Patents which would conflict
                 with the rights granted to Schering hereunder.

     (b)   3DP hereby represents and warrants to Schering that 3DP:

           (i)   Has provided, shown or offered to Schering all material
                 information in its possession or control or of which it is
                 aware as of the Effective Date, concerning efficacy, side
                 effects, injury, toxicity or sensitivity, reaction and
                 incidents of severity thereof, associated with any clinical
                 use, studies, investigations or tests with the Licensed
                 Compounds.

           (ii)  Has conducted or has caused its contractors or consultants to
                 conduct research, and will in the future conduct, the Research
                 Program in accordance with applicable United States law, and
                 the scientific standards applicable to the conduct of research
                 in the US.

          (iii)  Has employed and will in the future employ individuals of
                 appropriate education, knowledge, and experience to conduct or
                 oversee the conduct of the Research Program.

                                                                              36
<PAGE>

          (iv)   As of the Effective Date, except as it may have previously
                 disclosed to Schering in writing: (i) 3DP has not received any
                 notices of infringement or any written communications from
                 Third Parties relating in any way to a possible infringement
                 with respect to any potential or actual Licensed Compounds; and
                 (ii) 3DP is not aware that the manufacture, use or sale of Base
                 Compounds or the conduct of the Research Program in accordance
                 with the attached outline of the Research Plan would infringe
                 any valid claims of any Third Party patent rights.

          (v)    As of the Effective Date, it is not aware of any prior act or
                 any fact which causes it to conclude that any 3DP Patent is
                 invalid or unenforceable.

          (vi)   As of the Effective Date, 3DP is not party to any Third Party
                 agreement under which a Third Party acquires rights of any kind
                 to the Base Compounds, or to any identified uPA Inhibitors
                 owned by 3DP at the Effective Date. The 3DP Technology which is
                 subject to the license granted pursuant to Section 3.1 is the
                 sole property of 3DP and is not subject to any license obtained
                 by 3DP from a Third Party. There are no royalties, milestones
                 or other financial obligations payable to any Third Party by
                 3DP in connection with the ownership, use or licensing of the
                 3DP Technology.

          (vii)  3DP owns all rights to the 3DP Technology free and clear of any
                 liens, encumbrances or rights to repurchase.

          (viii) During the term hereof, 3DP will not grant a lien on this
                 Agreement or on any of 3DP's rights or obligations hereunder or
                 on the 3DP Technology.

          (ix)   The rights licensed to Schering under this Agreement are not
                 subject to any existing licenses from Third Parties in which
                 3DP is the licensee.

                                                                              37
<PAGE>

          (x)    During the Research Term, neither 3DP nor its Affiliates shall
                 enter into any agreements which have the effect of knowingly
                 removing from the Control of 3DP or its Affiliates any uPA
                 Inhibitor which, before the date of such third party agreement,
                 was Controlled by 3DP or an Affiliate.


8.2  Indemnification for Breaches of Representations and Warranties: Without
     prejudice to any other right or remedy available to either Party arising
     out of the breach by the other of any of the representations and warranties
     set out at Section 8.1 above, each Party hereby agrees to indemnify, defend
     and hold the other Party and its shareholders, directors, officers, agents
     and employees harmless from and against any and all losses resulting
     directly or indirectly from the breach of any representation or warranty
     made by such Party hereunder. In the event that a Party is seeking
     indemnification under this Section 8.2, it shall inform the other Party of
     a claim as soon as reasonably practicable after it receives notice of the
     claim, shall permit the indemnifying Party to assume direction and control
     of the defense of the claim (including the right to settle the claim solely
     for monetary consideration), and shall cooperate as requested (at the
     expense of the indemnifying Party) in defense of the claim.

8.3       Performance by Affiliates: The Parties recognize that each Party may
perform some or all of its obligations under this Agreement through Affiliates,
provided however, that each Party shall remain responsible for and be a
guarantor of the performance by its Affiliates and shall cause its Affiliates to
comply with the provisions of this Agreement in connection with such
performance.


                                   ARTICLE 9


                           ROYALTY REPORTS AND AUDITS


                                                                              38
<PAGE>

9.1  Royalty Records: Schering will maintain complete and accurate records which
     are relevant to the calculation of Net Sales and royalties on a country-by-
     country basis and Annual Worldwide Net Sales under this Agreement and such
     records shall be open during reasonable business hours for a period of
     three (3) years from creation of individual records for examination at
     3DP's expense and not more often than once each year by a firm of certified
     public accountants selected by 3DP and reasonably acceptable to Schering,
     for the sole purpose of verifying for 3DP the correctness of calculations
     and classifications of such Net Sales or royalty calculations or Annual
     Worldwide Net Sales made under this Agreement. 3DP shall bear its own costs
     related to such audit; provided that, for any underpayments greater than
     five (5) percent by Schering, Schering shall pay 3DP the amount of
     underpayment, interest as provided for in Section 5.4 from the time the
     amount was due and 3DP's out-of-pocket expenses. For any underpayments less
     than five (5) percent by Schering found under this Section, Schering shall
     pay 3DP the amount of underpayment. Any overpayments by Schering will be
     credited to future royalties. Any records or accounting information
     received from the Schering shall be Confidential Information for purposes
     of Article 6. Results of any such audit shall be provided to both Parties,
     subject to Article 6.

9.2  If there is a dispute between the Parties following any audit performed
     pursuant to Section 9.1, either Party may refer the issue (an "Audit
     Disagreement") to an independent certified public accountant for
     resolution. In the event an Audit Disagreement is submitted for resolution
     by either Party, the Parties shall comply with the following procedures:

     (i)   The Party submitting the Audit Disagreement for resolution shall
           provide written notice to the other that it is invoking the
           procedures of this Section 9.2.


                                                                              39
<PAGE>

     (ii)   Within thirty (30) business days of the giving of such notice, the
            Parties shall jointly select a recognized international accounting
            firm to act as an independent expert to resolve such Audit
            Disagreement;
     (iii)  The Audit Disagreement submitted for resolution shall be described
            by the Parties to the independent expert, which description may be
            in written or oral form, within ten (10) days of the selection of
            such independent expert.
     (iv)   The independent expert shall render a decision on the matter as soon
            as practicable.
     (v)    The decision of the independent expert shall be final and binding
            unless such Audit Disagreement involves alleged fraud, breach of
            this Agreement or construction or interpretation of any of the terms
            and conditions hereof;
     (vi)   All fees and expenses of the independent expert, including any Third
            Party support staff or other costs incurred with respect to carrying
            out the procedures specified at the direction of the independent
            expert in connection with such Audit Disagreement, shall be borne by
            each Party in inverse proportion to the disputed amounts awarded to
            the Party by the independent expert through such decision (e.g.
            Party A disputes $100, the independent expert awards Party A $60,
            then Party A pays forty percent (40%) and Party B pays sixty percent
            (60%) of the independent expert's costs.)


                                  ARTICLE 10

                             TERM AND TERMINATION

10.1 Term: This Agreement shall commence as of the Effective Date and, unless
     sooner terminated as provided herein shall continue in effect until such
     time as no royalties are payable under Article 5 hereunder to 3DP, provided
     that the license to 3DP Know-How granted pursuant to Section 3.2 shall
     survive such termination.


                                                                              40
<PAGE>

10.2 Termination

     (a)  Termination at Will:  Schering will have the right to terminate this
          --------------------
          Agreement for the world or on a country-by-country basis at any time
          after the expiry of the Research Term and be fully released of all
          obligations hereunder (except as expressly provided for herein) by
          ninety (90) days' notice given at any time, and 3DP shall thereafter
          retain full rights to use any data and information generated, up to
          the date of termination, by 3DP, Schering, or jointly pertaining to
          the Licensed Compound and the Licensed Product.

     (b)  Termination for Material Breach: Failure by Schering or 3DP to comply
          --------------------------------
          with any of the respective material obligations and conditions
          contained in this Agreement shall entitle the other Party to give the
          Party in default notice requiring it to cure such default. If such
          default is not cured within ninety (90) days after receipt of such
          notice, the notifying Party shall be entitled (without prejudice to
          any of its other rights conferred by this Agreement) to terminate this
          Agreement or, in the event of an uncured material breach by 3DP
          exercise the rights of Schering set forth in Section 10.2(e) by giving
          a notice to take effect immediately. The right of either Party to
          terminate this Agreement as hereinabove provided shall not be affected
          in any way by its waiver of, or failure to take action with respect
          to, any previous default.

     (c)  Termination for Insolvency: In the event that one of the Parties
          ---------------------------
          hereto shall go into liquidation, a receiver or a trustee be appointed
          for the property or estate of that Party and said receiver or trustee
          is not removed within sixty (60) days, or the Party makes an
          assignment for the benefit of creditors (collectively, a "Bankruptcy
          Event"), and whether any of the aforesaid Bankruptcy Events be the
          outcome of the voluntary act of that Party or otherwise, the other
          Party shall be entitled to terminate this


                                                                              41
<PAGE>

          Agreement (or in the event 3DP suffers such a Bankruptcy Event,
          Schering may exercise its rights described in Section 10.2(e))
          forthwith by giving a written notice to 3DP).

     (d)  Effect of Termination:  In the event that this Agreement is terminated
          ---------------------
          by Schering in one or more countries or in its entirety in accordance
          with Section 10.2(a), or this Agreement is terminated by 3DP pursuant
          to Sections 10.2(b) or (c) either in one country or in its entirety,
          Schering will, with respect to each country to which the termination
          applies:

          (i)     deliver to 3DP the 3DP Know-How and assign to 3DP any rights
                  in the 3DP Technology, if any, in either case relating solely
                  to the country that is the subject of the termination;

          (vii)   not use the 3DP Know-How as long as it has to be kept
                  confidential pursuant to Article 6 hereof in such country;

          (viii)  not infringe any of the 3DP Patents in such country; and

          (ix)    provide 3DP with the right to utilize and commercialize the
                  3DP Technology notwithstanding the existence of any Patents
                  that are Controlled by Schering or its Affiliates that cover
                  such 3DP Technology.

     (e)  Effect of Termination by Schering Pursuant to Sections 10.2(b) and
          ------------------------------------------------------------------
          (c): In the event of a Bankruptcy Event or a material default
          ---
          described in Sections 10.2(b) and (c) by 3DP, which default is not
          cured as provided therein, Schering may elect, in lieu of terminating
          this Agreement (and without prejudice to any claim for damages arising
          out of such material default) to declare the license granted pursuant
          to this Agreement to be irrevocable. From the date of receipt of
          notice of such election, 3DP shall have no further rights or
          obligations (except for those arising under Article 6) under this
          Agreement except that 3DP's right to receive financial


                                                                              42
<PAGE>

          payments by Schering pursuant to the terms of this Agreement will
          remain in full force and effect.

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

     (g)  Surviving Rights: The rights and obligations set forth in this
          ----------------
          Agreement shall extend beyond the term or termination of the Agreement
          only to the extent expressly provided for herein, or the extent that
          the survival of such rights or obligations are necessary to permit
          their complete fulfillment or discharge.


                                  ARTICLE 11

                                INDEMNIFICATION

11.1      Indemnification: With respect to Licensed Products (determined on a
     country by country basis):

     (a)  Except as specified below, Schering hereby agrees to save, defend and
          hold 3DP and its directors, officers, agents and employees harmless
          from and against any and all suits, claims, actions, demands,
          liabilities, expenses and/or losses, including reasonable legal
          expenses and attorneys' fees (collectively "Losses") resulting from
          the development or commercial sale of the Licensed Products except to
          the extent such Losses result from the


                                                                              43
<PAGE>

          negligence or willful misconduct of 3DP or a breach by 3DP of any of
          its material obligations under this Agreement or of any representation
          or warranty under Article 8, in which case 3DP hereby agrees to save,
          defend and hold Schering and its directors, officers, agents and
          employees harmless from any and all such Losses.


                                                                              44
<PAGE>

     (b) Each indemnified Party agrees to give the indemnifying Party prompt
         written notice of any Loss or discovery of fact upon which such
         indemnified Party intends to base a request for indemnification under
         Section 11.1(a). Each Party shall furnish promptly to the other copies
         of all papers and official documents received in respect of any Loss.
         With respect to any Loss relating solely to the payment of money
         damages and which will not result in the indemnified Party becoming
         subject to injunctive or other relief or otherwise adversely affecting
         the business of the indemnified Party in any manner, and as to which
         the indemnifying Party shall have acknowledged in writing the
         obligation to indemnify the indemnified Party hereunder, the
         indemnifying Party shall have the sole right to defend, settle or
         otherwise dispose of such Loss, on such terms as the indemnifying
         Party, in its sole discretion, shall deem appropriate. The indemnifying
         Party shall obtain the written consent of the indemnified Party which
         shall not be unreasonably withheld or delayed, prior to ceasing to
         defend, settling or otherwise disposing of any Loss if as a result
         thereof the indemnified Party would become subject to injunctive or
         other equitable relief, or any remedy other than the payment of money
         which is the responsibility of the indemnifying Party. The indemnifying
         Party shall not be liable for any settlement or other disposition of a
         Loss by the indemnified Party which is reached without the written
         consent of the indemnifying Party. The reasonable costs and expenses,
         including reasonable fees and disbursements of counsel incurred by any
         indemnified Party in connection with any Loss, shall be reimbursed on a
         quarterly basis by the indemnifying Party, without prejudice to the
         indemnifying Party's right to contest the indemnified Party's right to
         indemnification and subject to refund in the event the indemnifying
         Party is ultimately held not to be obligated to indemnify the
         indemnified Party.

                                                                             45
<PAGE>

                                  ARTICLE 12

                                 MISCELLANEOUS

12.1 ASSIGNMENT:

     (b)  Either Party may assign any of its rights or obligations under this
          Agreement in any country to any of its Affiliates, provided that such
          assignment shall not relieve the assigning Party of its
          responsibilities for performance of its obligations under this
          Agreement .

     (c)  This Agreement shall be binding upon and inure to the benefit of the
          successors and permitted assigns of the Parties. Any assignment not in
          accordance with this Agreement shall be void.

12.2 RETAINED RIGHTS: Nothing in this Agreement shall limit in any respect the
     right of either Party to conduct research and development and to market
     products using such Party's technology other than as herein expressly
     provided.

12.3 FURTHER ACTIONS: Each Party agrees to execute, acknowledge and deliver such
     further instruments, and to do all such other acts as may be necessary or
     appropriate in order to carry out the purposes and intent of this
     Agreement.

12.4      NOTICES: All notices hereunder shall be in writing and shall be deemed
     given if delivered personally or two days after mailed by registered or
     certified mail (return receipt requested), postage prepaid, or sent by
     express courier service to the Parties at the following addresses (or at
     such other address for a Party as shall be specified by like notice;
     provided that notices of a change of address shall be effective only upon
     receipt thereof).


                                                                              46
<PAGE>

     (a)  If to 3DP

          3-Dimensional Pharmaceuticals, Inc.
          Eagleview Corporate Center
          665 Stockton Drive, Suite 104
          Exton, PA 10341

          ATTN: Chief Executive Officer

          with a copy to:

          Morgan, Lewis & Bockius LLP
          1701 Market Street
          Philadelphia, PA 19103

          ATTN: David R. King, Esq.


     (a)  If to Schering:

          Schering Aktiengesellschaft
          13342 Berlin
          Germany,
          Attention: Legal Department

          with a copy to:

          Berlex Biosciences
          15049 San Pablo Avenue
          P.O. Box 4099
          Richmond, CA 94804-0099
          Attention: President

12.5 Waiver:  Except as specifically provided for herein, the waiver from time
     to time by either of the Parties of any of their rights or their failure to
     exercise any

                                                                              47
<PAGE>

      remedy shall not operate or be construed as a continuing waiver of same or
      any other of such Party's rights or remedies provided in this Agreement.

12.6  Severability: If any term, covenant or condition of this Agreement or the
      application thereof to any Party or circumstances shall, to any extent or
      in any country, be held to be invalid or unenforceable, then (i) the
      remainder of this Agreement, or the application of such term, covenant or
      condition of this Agreement shall be valid and be enforced to the fullest
      extent permitted by law; and (ii) the Parties hereto covenant and agree to
      renegotiate any such term, covenant or application thereof in good faith
      in order to provide a reasonably acceptable alternative to the term,
      covenant or condition of this Agreement or the application thereof that is
      invalid or unenforceable, it being the intent of the Parties that the
      basic purposes of this Agreement are to be effected.

12.7  Ambiguities: Ambiguities, if any, in this Agreement shall not be construed
      against any Party, irrespective of which Party may be deemed to have
      authored the ambiguous provision.

12.8      Governing Law and Jurisdiction:  This Agreement shall be governed by
      and interpreted under the laws of the State of New York as applied to
      contracts entered into and performed entirely in New York by New York
      residents. Any lawsuit concerning this Agreement shall be brought in the
      state or federal courts of New York.

12.9  Headings: The sections and paragraph headings contained herein are for the
      purposes of convenience only and are not intended to define or limit the
      contents of said sections or paragraphs.

12.10 Counterparts: This Agreement may be executed in one or more counterparts
      (and by facsimile), each of which shall be deemed an original but all of
      which together shall constitute one and the same instrument.


                                                                             48
<PAGE>

12.11 Entire Agreement; Amendments: This Agreement, including all Exhibits
      attached hereto and thereto, and all documents delivered concurrently
      herewith and therewith, set forth all the covenants, promises, agreements,
      warranties, representations, conditions and understandings between the
      Parties hereto and supersede and terminate all prior agreements and
      understandings between the Parties. There are no covenants, promises,
      agreements, warranties, representations, conditions or understandings,
      either oral or written, between the Parties other than as set forth herein
      and therein. No subsequent alteration, amendment, change or addition to
      this Agreement shall be binding upon the Parties hereto unless reduced to
      writing and signed by the respective authorized officers of the Parties.
      This Agreement, including without limitation the exhibits, schedules and
      attachments thereto, are intended to define the full extent of the legally
      enforceable undertakings of the Parties hereto, and no promise or
      representation, written or oral, which is not set forth explicitly herein
      or therein is intended by either Party to be legally binding. Both Parties
      acknowledge that in deciding to enter into the Agreement and to consummate
      the transaction contemplated hereby neither has relied upon any statement
      or representations, written or oral, other than those explicitly set forth
      herein.

12.12 Expenses: Except as otherwise specified in this Agreement, all costs and
      expenses including, without limitation, fees and disbursements of counsel,
      financial advisors and accountants, travel, lodging, meals and
      entertainment incurred in connection with this Agreement and the
      transactions contemplated hereby shall be paid by the Party incurring such
      costs and expenses.

12.13 Independent Contractors: The status of the parties under this Agreement
      shall be that of independent contractors. Neither Party shall have the
      right to enter into any agreements on behalf of the other Party, nor shall
      it represent to any person that it has any such right or authority.
      Nothing in this Agreement shall be construed as establishing a partnership
      or joint venture relationship between the


                                                                             49
<PAGE>

      Parties. This Agreement is not intended to be a partnership between 3DP
      and Schering for federal, state or local income tax purposes.

IN WITNESS WHEREOF 3DP and Schering have caused this agreement to be executed as
of the date first written above by their respective officers thereunto duly
authorized.


SIGNED for and on behalf of
SCHERING AKTIENGESELLSCHAFT



/S/ G. Stock                            /S/ J.F. Kapp
------------                            -------------

Name:  Prof. Dr. G. Stock               Name:  Dr. J.F. Kapp

Title:  Member of Executive             Title:  Head of Strategic Business
        Board of Directors                      Unit Therapeutics

Date:                                   Date:



SIGNED for and on behalf of
3-DIMENSIONAL PHARMACEUTICALS, INC.



/S/ David U'Prichard
--------------------

Name:  Dr. David U'Prichard

Title:  Chief Executive Officer

Date:

                                                                            50
<PAGE>

                                  Schedule A

Patents
       Appl. No./     Filing Date/ Country      Title         SKGF Docket Status
             Patent No. or   Issue Date                            Number

                                  Publication

[**]











_____________________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.

                                                                              51
<PAGE>

                                   Schedule B

                                     Part I

                             Outline Research Plan
[**]











_____________________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.


                                                                              52
<PAGE>

[**]











_____________________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.


                                                                              53
<PAGE>

[**]











_____________________________
**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.


                                                                              54
<PAGE>

[**]












_____________________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.


                                                                              55
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>12
<FILENAME>0012.txt
<DESCRIPTION>MASTER LOAN AND SECURITY AGREEMENT
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.24


                  MASTER LOAN AND SECURITY AGREEMENT NO. 7110
                  -------------------------------------------

                               PHOENIXCOR, INC.
                               ---------------

                      MASTER LOAN AND SECURITY AGREEMENT
                      ----------------------------------

     This Master Loan and Security Agreement is entered into as of the 18th day
of June, 1998 by and between Phoenixcor, Inc., a Delaware corporation, having
its principal place of business at 65 Water Street, South Norwalk, Connecticut
06854 (the "Lender") and 3-Dimensional Pharmaceuticals, Inc. a Delaware
corporation having its principal place of business at Eagleview Corporate
Center, 665 Stockton Drive, suite 104, Exton, PA 19341 (the "Borrower". The
Lender and Borrower agree as follows:

     1.   THE LOANS. Subject to the terms and conditions of this Agreement, the
          ---------
Lender will make one or more loans to the Borrower upon the terms and conditions
set forth in this Agreement and each schedule which may be executed from time to
time by the parties hereto and identified as a schedule to this Agreement
(individually, a "Schedule" and collectively, the "Schedules") and all
amendments, riders and supplements hereto and thereto. This Agreement and each
Schedule which may be executed pursuant hereto shall constitute a separate and
distinct Loan (each a "Loan" and collectively, the "Loans") repayable as
provided in this Agreement and the applicable Schedule.

     2.   REPAYMENT OF LOANS. Borrower agrees to repay each Loan in the number
          ------------------
and the amount of successive monthly or quarterly installments (which shall be
inclusive of interest, unless otherwise indicated) reflected in the applicable
Schedule The advance payment with respect to a Schedule, if any, shall be due
and payable upon execution of the Schedule. The first periodic installment
(after excluding the advance payment, if any) with respect to a Schedule shall
be due on the first (1st) day of the month following the advance of the Loan
proceeds by Lender (the "Commencement Date"). The remaining periodic installment
payments shall be due and payable on the same day of each successive month (or
quarter, if quarterly payments are provided for in the Schedule). However, the
parties may select another Commencement Date by noting the same in the Special
Provisions section of the Schedule or by a separate writing signed by Lender and
Borrower in which case the first periodic installment payment shall be due on
such date. The Borrower authorizes the Lender to insert the Commencement Date in
each Schedule, determined in accordance with the foregoing provisions. Unless
otherwise specifically provided for in this Agreement or a Schedule, no Loan may
be prepaid.

                                       1
<PAGE>

     3.   SECURITY INTEREST. To secure payment when due of the Loan described in
          -----------------
the applicable Schedule, any interim fundings against such Loan, the performance
of all other obligations of the Borrower under this Agreement and the applicable
Schedule and the payment and performance of any and all other Schedules, debts,
obligations and liabilities of Borrower to Lender whether direct, contingent or
joint and several, now existing or hereafter arising, and any renewals,
extensions and modifications of such debts, obligations and liabilities,
Borrower hereby conveys, assigns and grants to Lender a continuing security
interest in and to (i) the equipment described in the applicable Schedule and
all amendments, riders and supplements thereto including all present and future
additions, attachments, replacements, accessions and accessories thereto (the
"Equipment"), and all substitutions and proceeds thereof including all proceeds
of insurance thereon, and (ii) all other equipment, inventory, accounts,
receivables, goods and assets of any and every kind including, but not limited
to, all items of intangible property, wherever located now or hereafter
belonging -to Borrower or in which Borrower has any interest, and all proceeds
of the foregoing including insurance proceeds all of the above, collectively,
the "Collateral".

     BORROWER GRANTS LENDER THE AUTHORITY TO FILE THIS AGREEMENT AND EACH
SCHEDULE OR A CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION THEREOF AS A FINANCING
STATEMENT UNDER THE UNIFORM COMMERCIAL CODE WITH RESPECT TO ALL SECURITY
INTERESTS CREATED HEREBY OR THEREBY.

     4.   FINANCING AGREEMENT.  THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT.
          -------------------
BORROWER ACKNOWLEDGES THAT THE EQUIPMENT HAS BEEN OR WILL BE SELECTED AND
ACQUIRED SOLELY BY BORROWER AND THAT LENDER HAS NOT AND DOES NOT MAKE ANY
WARRANTY WITH RESPECT TO ITS CONDITION, MERCHANTABILITY, SUITABILITY, CAPACITY
OR FITNESS FOR ANY PARTICULAR PURPOSE.

     5.   UNCONDITIONAL OBLIGATION TO PAY, LATE PAYMENTS, ETC. All payments due
          ---------------------------------------------------
under a Schedule or hereunder shall be paid to Lender or its assigns without
notice or demand and without abatement, offset, defense or counterclaim, at
Lender's principal office shown above, or such other place as Lender or its
assignee may designate in writing to Borrower. Borrower's obligation to pay the
installments and other payments due under a Schedule or hereunder shall be
absolute and unconditional and shall not be affected by reason of (i) any defect
in, lack of fitness for use of, damage to, loss of possession or use of or
destruction of, all or any of the Equipment described in such Schedule; (ii) the
prohibition or other restriction against Borrower's use of said

                                       2
<PAGE>

Equipment; or (iii) for any other cause, it being the agreement of the parties
that the Loan and any other amount payable by Borrower under a Schedule or
hereunder shall continue to be payable in all events in the manner and at the
times provided in the Schedule and this Agreement.

     All Loans shall become immediately due and payable in their entirety upon
the occurrence of any Event of Default (as defined below). If any periodic
installment payment or other payment is more than five (5) days late, Lender
may, at its election, and subject to prior exercise of its right of
acceleration, accept the payment in arrears and Borrower shall pay, as
liquidated damages, a late charge equal to two (2%) percent per month (computed
on the basis of a thirty (30) day month) on each defaulted payment from the due
date thereof. In no event shall any amount payable to Lender as interest,
including any sum held by a court of competent jurisdiction to be "interest"
under applicable law, exceed, with respect to any period of time, the highest
rate of interest permitted by applicable law. Any amount received by Lender
determined to be in excess of the highest rate of interest received by Lender
shall be refunded to Borrower.

     6.   REPRESENTA11ONS AND WARRANTIES. Borrower warrants and represents as
          ------------------------------
follows as of the date hereof and as of the date of execution of each Schedule:
(i) unless it is an individual or sole proprietorship, Borrower is duty
organized, validly existing and in good standing under applicable law and is
duly qualified to do business wherever necessary to carry on its business and
operations and to own Its property; (ii) Borrower has full power and authority
to execute, deliver and perform its obligations under this Agreement and the
Schedules; (iii) the execution and delivery of this Agreement and the Schedules
has been authorized by all requisite corporate (or partnership or company)
action; (iv) the execution, delivery and performance of this Agreement and, the
Schedules do not and will not constitute a breach, default or violation of or
under Borrower's articles of incorporation, by laws (partnership or limited
liability company agreement) or any other agreement, law, order, lease, judgment
or injunction to which it is a party or may be bound; (v) the Equipment is (or,
on the applicable date the Loan proceeds are advanced, will be) lawfully owned
by Borrower, free and dear of all liens, encumbrances and security interests and
Borrower will warrant and defend title thereto against all claims; (vi) no
consent or approval of, notice to, or filing with any governmental authority is
required for Borrower to sign, deliver and perform under this Agreement and each
Schedule; (vii) Borrower has not granted and will not grant to any one other
than Lender a security interest in the Equipment and no Financing Statement or
other instrument affecting the Equipment nor rights therein, bearing the
signature of, or otherwise authorized by, Borrower is on file in any public
office; (viii)

                                       3
<PAGE>

there are no suits or proceedings pending or threatened, in court or before any
commission, board or other administrative agency against or affecting Borrower
which could, in the aggregate, have a material adverse effect on Borrower, its
business or operations, or its ability to perform its obligations under this
Agreement or the Schedules; (ix) all financial statements delivered and to be
delivered to Lender in connection with the Loans are and will be true and
correct in all material respects and have been and will be prepared in
accordance with generally accepted accounting principles, and since the date of
the most recent financial statements, there has been no material adverse change
in Borrower's financial affairs or business operations and (x) Borrower has
filed all tax returns required to be filed prior to the date of this Agreement
taking into account any extension of time to file granted or permitted by the
taxing authority and Borrower has paid or adequately provided for all taxes
payable by it.

     7.   INDEMNIFICATION BY BORROWER. Borrower shall exonerate and indemnify
          ---------------------------
Lender against and hold it harmless from, any and all claims, actions, suits,
proceedings, losses, judgments, damages and liabilities, including reasonable
attorneys' fees and other costs and expenses in connection therewith or incident
thereto, for death of or injury to any person whomsoever and for any loss of or
damage to or destruction of any property whatsoever and irrespective of the
legal basis of such claim or action including the doctrine of strict liability
in tort or any similar doctrine, caused by or arising out of or allegedly caused
by or arising out of, or in any way connected with or resulting from or
allegedly resulting from any of the Equipment, including, without limiting the
generality of the foregoing, the manufacture, selection, delivery, possession,
use, operation, storage or maintenance at any time during the term hereof.
Borrower shall also exonerate and indemnify Lender against and hold it harmless
from any and all claims, actions, suits proceedings, losses, damages and
liabilities, including reasonable attorney's fees, which Lender may suffer by
reason of any patent infringement or alleged patent infringement in connection
with the ownership, use or operation of the Equipment. This covenant of
indemnity shall continue in full force and effect notwithstanding termination of
this Agreement and all Schedules.

     8.   INSURANCE. Borrower shall, at its sole cost and expense, procure and
          ---------
maintain, so long as Borrower is indebted to Lender on any Loan or on any other
liability (I) insurance insuring the Equipment against all risks of physical
loss, theft, damage and destruction with extended coverage in an amount equal to
the greater of (a) the amount of the Loan under the applicable Schedule or (b)
the full replacement value of the Equipment with loss payable solely to Lender
(and its assigns) and Borrower as their interests may appear and (ii) personal
injury liability and property damage insurance with respect to the Equipment and
the use thereof in such amounts as may be

                                       4
<PAGE>

reasonably acceptable to Lender, and naming Lender (and its assigns) as
additional insured. All insurers and coverages must be reasonably satisfactory
to Lender. Borrower shall deposit said policy or policies or duplicates thereof
or certificates of insurance with Lender and said policies shall provide that
the policies may not be cancelled or altered without at least thirty (30) days
prior notice to Lender and that the coverage shall not be invalidated against
Lender because of any violation of any condition or warranty contained in any
policy or application therefor by Borrower or by reason of any action or
inaction of Borrower.

     9.   USE, REPAIRS. LOSS AND DAMAGE. Borrower agrees to maintain the
          -----------------------------
Equipment in good condition and repair and in accordance with the manufacturer's
instructions, manuals and warranties (if any) and the requirements of any
applicable insurance and any governmental authority having jurisdiction.
Borrower shall pay for all fuel, service, inspection, overhaul, replacements,
substitutions, material and labor necessary or desirable for the proper use,
repair, operation and maintenance of the Equipment. All risks of loss, theft,
damage or destruction of the Equipment shall be borne by Borrower and Borrower
shall promptly notify Lender in writing of any such loss, theft, damage or
destruction. In the event of any damage to the Equipment (unless the same is
damaged beyond repair) Borrower shall, at its expense, place the same in good
repair, condition and working order. If the Equipment set forth in a schedule or
Schedules is determined by Lender to be lost, stolen or damaged beyond repair,
or should said Equipment be confiscated, seized or the use and title thereof
requisitioned to someone other than Borrower, Borrower shall immediately pay to
Lender in addition to unpaid installments, late charges and other sums past due,
an amount equal to the then remaining periodic installments due under the
Schedule or Schedules covering the said Equipment discounted to present value at
the rate of six (6%) percent per annum, less the net amount of the recovery, if
any, received by Lender from insurance on the Equipment.

     10.  BORROWER'S ADDITIONAL COVENANTS. Borrower hereby covenants and agrees
          -------------------------------
as follows: (i) the Equipment will at all times be used only for business or
commercial purposes and will be retained in Borrower's possession at its
principal address set forth above (and not moved therefrom without Lender's
prior written consent) unless otherwise specifically provided in a Schedule and,
if another location is provided in a Schedule, the Equipment will be retained at
and not moved from such other location without Lender's prior written consent;
(ii) Borrower will keep the Equipment free and dear of liens, rights of
distraint, charges and encumbrances or claims of the owner (or lessor) of the
real estate in which the same is installed and any purchaser or present or
future creditor obtaining a lien on such real estate and will, upon Lender's
request, obtain and deliver a waiver of any

                                       5
<PAGE>

of the foregoing as to the Equipment in recordable form supplied by the Lender
(iii) except for the security interest granted hereby, Borrower will keep the
Equipment free and clear of any security interest, lien or encumbrance and will
not sell, lease, assign (by operation of law or otherwise), exchange or
otherwise dispose of any of the Equipment; (iv) at the request of Lender,
Borrower will affix conspicuous tags or plates on the Equipment containing a
notation with Lender's name and will join Lender in execution of one or more
Financing Statements pursuant to the Uniform Commercial Code to establish and
maintain its security interest in the Collateral, in form satisfactory to
Lender, and will pay any filing fees and/or costs with respect thereto and for
lien searches; (v) Borrower authorizes Lender to file one or more Financing
Statements covering the Collateral without Borrower's signature thereto for the
purposes of continuation and/or termination of existing Financing Statements;
(vi) Borrower will immediately notify Lender in writing of any change in its
place(s) of business or the adoption or change of any trade name or fictitious
business names and will execute any additional Financing Statements as Lender
may request to perfect and maintain its security interest, but such notice shall
not be deemed an authorization to move the Collateral without the prior written
consent of Lender (vii) if any part of the Collateral is subject to a
certificate of title law, Borrower will cause Lender's security interest to be
noted thereon and promptly deliver such certificate of title to Lender (viii)
Borrower will allow Lender and its representatives free access to the Collateral
at all times during normal business hours, for purposes of inspection and,
following an Event of Default, Lender shall have the right to demonstrate and
show the Collateral to others; and (ix) Borrower will furnish to Lender (and
will cause any guarantor of Borrower's obligations hereunder to furnish to
Lender) (a) its unaudited quarterly Financial Statements within thirty (30) days
after the end of its first three quarters in each fiscal year, (b)its certified
annual Financial Statements within ninety (90) days after the close of its
fiscal year, prepared by an independent certified public accountant in
accordance with generally accepted accounting principles and (C) all other
financial information and reports that Lender may from time to time reasonably
request, including income tax returns of Borrower and any guarantor of
Borrower's obligations hereunder.

     11.  CROSS COLLATERALIZAT1ON. Without in any way limiting the provisions of
          -----------------------
Section 3, as additional security for the Borrower's obligations under this
Agreement and any Schedule, Borrower grants to Lender a further security
interest in (I) all of the Equipment and Collateral set forth in every other
Schedule and (ii) all machinery, equipment, goods and other collateral covered
by any other lease, security agreement or loan and security agreement or other
contract (collectively, the "other agreements") between the Borrower and the
Lender

                                       6
<PAGE>

whether such other agreements are now in existence or hereafter come into
existence and whether such other agreements were originally documented in the
name of Lender or assigned to Lender, and Borrower assigns to the Lender as
security for its obligations under this Agreement and each Schedule, all of its
rights, title and interest in surplus money to which Borrower may be entitled
upon the sale or liquidation of the Equipment and Collateral set forth in every
other Schedule and the machinery, equipment, goods and other collateral covered
by the other agreements.

     Anything above to the contrary notwithstanding, the benefit of the
foregoing cross collateral provisions shall apply to the benefit of the Lender
and any assignees holding a Schedule to this Agreement only to the extent that
the Lender or such assignee is also the holder of one or more Schedules or other
agreements and only to the extent that the Lender or such assignee has retained
or received an assignment of the property described in such other Schedule(s) or
other agreements.

     12.  TAXES AND OTHER CHARGES. Borrower agrees to pay promptly when due all
          -----------------------
registration, title, license and other fees and assessments and all sales, use,
gross receipts, ad valorum, property and any and all other taxes imposed by any
State, Federal, local or foreign government upon this Agreement or upon the
ownership, shipment, delivery, use or operation of the Equipment or any
Collateral or upon or measured by any payments due hereunder (other than taxes
on or measured solely by the net income of Lender) and any fines, penalties and
interest thereon.

     13.  BORROWER'S FAILURE TO PAY TAXES. INSURANCE, ETC. Should Borrower fail
          -----------------------------------------------
to make any payment or do any act as herein provided (including, but not limited
to, payment of taxes or for insurance), Lender shall have the right, but not the
obligation, and without releasing Borrower from any obligation hereunder, to
make or do the same, and to pay any sum due in connection therewith or to
contest or compromise any encumbrance, charge or lien and in exercising any such
rights, incur any liability and expend whatever amounts in its absolute
discretion it may deem necessary therefor. All sums so incurred or expended by
Lender shall be payable by Borrower on demand with interest at the rate of two
(2%) percent per month.

     14.  DEFAULT. The occurrence of any one of the following shall constitute
          -------
an Event of Default hereunder and under each Schedule: (I) Borrower fails to pay
any periodic installment payment, or other amount due hereunder or under any
Schedule, when the same becomes due and payable on or before the fifth (5th) day
following the receipt of written notice of non-payment; (ii) Borrower removes,
sells, transfers, encumbers, or parts with

                                       7
<PAGE>

possession of the Equipment or any items of Equipment or attempts to do any of
the foregoing; (iii) Borrower fails to maintain in force the required insurance
on or in connection with any Equipment in compliance herewith or fails to
provide loss payable protection to Lender in form satisfactory to Lender (iv)
any representation or warranty made by Borrower herein or in any other agreement
between the parties or in any statement given to Borrower shall be materially
untrue; (v) Borrower fails to observe or perform any of the other obligations
required to be observed or permitted by Borrower hereunder or under any Schedule
or other obligation or indebtedness of Borrower to Lender otherwise owing or due
by Borrower to Lender in any other agreement now or hereafter executed between
the parties hereto, and such failure shall continue uncured for twenty (20) days
after written notice thereof to Borrower; (vi) Borrower (a) fails to pay any
indebtedness for borrowed money of the Borrower or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) or (b) fails to perform or observe any term,
covenant, or condition on its part to be performed or observed under any
agreement or instrument relating to such indebtedness for borrowed money when
required to have been performed or observed, if the effect of such failure to
perform or observe is to accelerate or permit the acceleration of such
indebtedness, or if any such indebtedness shall be declared to be due or payable
or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; (vii) if Borrower leases the
premises where the Equipment is located, a breach of such lease by Borrower and
the commencement of an action by the landlord to evict Lessee or to repossess
the premises; (viii) Borrower sells, leases or disposes of any of its assets
except in the ordinary course of its business and except for the disposition of
any obsolete property not useful to Borrower; (ix) Borrower ceases doing
business as a going concern, makes an assignment for the benefit of creditors,
admits in writing its inability to pay its debts as they become due, files a
voluntary petition in bankruptcy, is adjudicated a bankrupt or an insolvent,
files a petition seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar arrangement under
any present or future statute, law or regulation or files an answer admitting
the material allegations of a petition filed against it in any such proceeding,
consents to or acquiesces in the appointment of a trustee, custodian, receiver
or liquidator of it or of all or any substantial part of its assets or
properties, or if Borrower takes any action looking to its dissolution or
liquidation, or an order for relief is entered under the Bankruptcy Code against
Borrower; (x) if within sixty (60) days after the commencement of any
proceedings against Borrower seeking reorganization, arrangement, readjustment
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such proceedings, shall not have

                                       8
<PAGE>

been dismissed or if within sixty (60) days after the appointment, without
Borrower's acquiescence, of any trustee, custodian, receiver or liquidator of it
or of all or any substantial part of Its assets and properties, such appointment
shall not be vacated;(xi) Borrower sells all or substantially all of its assets
or consolidates with or merges into any other entity or Borrower's stockholders,
partners or members sell all or substantially all of their stock or partnership
or membership interests without Lender's prior written consent, which consent
shall not be unreasonably withheld if, in Lender's reasonable business judgment,
the surviving or acquiring entity in the event of such merger or consolidation
has a financial and credit standing equal to or greater than that of Borrower;
or (xii) a guarantor of Borrower's obligations hereunder dies or is dissolved,
or a petition in bankruptcy is filed by or against such guarantor of Borrower's
obligations hereunder or such guarantor defaults in observing or performing any
obligation owing under any guaranty or other agreement with Lender now or
hereafter executed and such default continues uncured for twenty (20) days after
written notice to Borrower and such guarantor.

     15.  REMEDIES. Upon the occurrence of an Event of Default, or at any time
          --------
thereafter, Lender shall have the right to recover from Borrower, as liquidated
damages for loss of a bargain and not as a penalty, a sum equal to the aggregate
of the following: (a) all unpaid periodic installment payments and other sums
due under this Agreement and the applicable Schedule to the date of default plus
late charges, if any, (b) the present value (using a six (6%) percent per annum
discount rate) of all remaining installments due under this Agreement and each
Schedule; and (C) interest on the aggregate of the amounts specified in (a) and
(b) from the date of default at the rate of two (2%) percent per month. In
addition, Lender shall have the right to recover from Borrower any expenses paid
or incurred by Lender in connection with the enforcement of Its rights under
this Agreement and each Schedule and the repossession, transport, insuring,
holding, repair, preparing for sale and subsequent sale, lease or other
disposition of the Collateral including attorney fees and legal expenses as
provided below (collectively, "Repossession Expenses"). BORROWER AND LENDER
WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON THIS AGREEMENT OR RELATING TO THE COLLATERAL. The Lender shall have all of
the rights and remedies of a Secured Party under the Uniform Commercial Code and
Lender is hereby authorized and empowered, with the aid and assistance of any
person or persons, to enter any premises where the Collateral or any part
thereof is, or may be, placed, and to assemble and/or remove same and/or to
render it unusable and sell and dispose of such Collateral at one or more public
or private sales upon at least seven (7) days written notice to Borrower for
such sale. The Lender toward the payment of the

                                       9
<PAGE>

Repossession Expenses shall apply the proceeds of each such sale; the liquidated
damages specified above and other indebtedness secured hereby. Should the
proceeds of any such sale be insufficient to fully pay all the items above
mentioned Borrower hereby covenants and agrees to pay any deficiency to the
Lender but nothing herein contained shall be construed to require Lender to sell
any Collateral before seeking damages from Borrower. If Lender employs counsel
for the purpose of effecting collection of any monies due hereunder (whether or
not Lender has retaken the Collateral or any part hereof) or for the purpose of
recovering the Collateral, or for the purpose of protecting Lender's interest
because of any default of Borrower or because Lender is named as a party to a
legal proceeding commenced against Borrower, whether or not Borrower is in
default, Borrower agrees to pay Lender's reasonable attorney's fees and legal
costs and expenses inclusive of those incurred in connection with bankruptcy
proceedings, including relief from stay motions, cash collateral motions and
disputes concerning any proposed disclosure statement and/or bankruptcy plan.
The Lender may require Borrower to assemble the Collateral and make it available
to Lender at a place to be designated by Lender which is reasonably convenient
to both parties. All rights and remedies hereunder are cumulative and not
exclusive and a waiver by Lender of any breach by Borrower of the terms,
covenants, and conditions hereof shall not constitute a waiver of future
breaches or defaults, and no failure or delay on the part of Lender in
exercising any of its options, powers, rights or remedies, or partial or single
exercise thereof, shall constitute a waiver thereof. If any court of competent
jurisdiction determines that any provision of this Section 15 is invalid or
unenforceable in any jurisdiction, in whole or in part, such determination, as
to such jurisdiction, shall not prohibit Lender from enforcing its rights and
establishing its damages sustained as the result of any breach of this Agreement
in accordance with the laws of such jurisdiction.

     16.  ASSIGNMENT. Lender may grant security interests in or otherwise assign
          ----------
or transfer (or grant participations in) all or any part of this Agreement or
any Loan or Schedules hereto or any installments or other sums due or to become
due hereunder, without Borrower's consent. In the event Lender transfers any
Schedule, Lender shall deliver a copy of this Agreement to the assignee along
with the manually executed copy of the transferred Schedule marked "Original".
In such event, (i) the copy of this Agreement together with the said Original
Schedule shall constitute chattel paper under the Uniform Commercial Code, (ii)
the terms of this Agreement shall be deemed incorporated in the transferred
Schedule and (iii) the assignee holding the assigned Schedule (which together
with the copy of this Agreement shall constitute a single agreement) shall be
the Lender of the Loan set forth in such assigned Schedule secured by the
Collateral described therein and may exercise its rights

                                       10
<PAGE>

and remedies with respect thereto separately and independently of the holder of
this Agreement and any other Schedules. Unless specifically transferred by
Lender to the assignee in Lender's assignment to the assignee, the assignee
shall not have any interest in the portion of the Collateral described in
Section 3 (ii) of this Agreement. In the event Lender transfers any Schedule,
Borrower agrees that the right of the assignee to receive installment payments
and other amounts payable under the assigned Schedule as well as any other right
of the assignee shall not be subject to any defense, set-off or counterclaim
which Borrower may have against Lender. Upon Lender's giving notice to Borrower
of any such assignment, Borrower shall promptly acknowledge its obligations
hereunder to the assignee, and shall comply with the written directions or
demands of such assignee, shall make all installment payments and other payments
due with respect to the assigned Schedule as such assignee may direct in writing
and shall send all notices provided for or permitted under this Agreement with
respect to such Schedule to such assignee. Following any such assignment the
term "Lender" shall, as to the assigned Schedule, be deemed to refer to Lender's
assignee, but no such assignee shall be deemed to assume any obligation or duty
imposed upon Lender hereunder and Borrower shall look only to Lender for
performance thereof. As used in this Section 16, "assign" shall be deemed to
include a pledge, sale of, or grant of a mortgage on, or a Security interest in,
any of the Collateral or a Schedule by Lender and the term "assignee" shall be
deemed to refer to the recipient of such pledge, hypothecation, sale, mortgage,
or security Interest. This Agreement and Borrower's interest herein and in any
Schedule shall not be transferable or assignable by Borrower without the
Lender's express prior written consent and any such purported assignment by
Borrower other than in compliance with the provisions of this Section 16 shall
be null and void ab initio.

     17.  SECURITY DEPOSIT. Lender may, at its option, apply the Security
          ----------------
Deposit, if any is indicated in a Schedule, to cure any default of Borrower,
whereupon Borrower shall promptly restore such Security Deposit to its original
amount. Lender may also apply the Security Deposit to any sums owing by Borrower
under Section 15 hereof including the liquidated damages. Lender shall return to
Borrower any unapplied Security Deposit without interest upon full payment and
performance of Borrower's obligations hereunder and under all Schedules hereto.

     18.  GENERAL PROVISIONS. THE OBLIGATION OF THE LENDER TO MAKE ONE OR MORE
          ------------------
LOANS HEREUNDER IS SUBJECT TO LENDER'S CREDIT APPROVAL COLLATERAL APPRAISALS AND
SUCH OTHER CRITERIA AS LENDER MAY IN ITS SOLE AND ABSOLUTE DISCRETION DETERMINE.
No person except a duly authorized officer of Lender shall have any power to

                                       11
<PAGE>

modify, amend or waive any of the provisions hereof. All the Borrower's
covenants herein shall survive the termination of this Agreement. Notices
hereunder shall be in writing and shall be deemed given when personally
delivered, delivered by overnight carrier or sent by facsimile to a party's
facsimile number, or three days after having been mailed to the other party at
the address specified for each herein or to such other address as either party
may, from time to time, provide, in writing to the other party. Forbearance or
indulgence by Lender in any regards shall not constitute a waiver of the
covenant or condition to be performed by Borrower to which the same may apply.
The section headings are for convenience and are not a part of this Agreement
The Lender is authorized and empowered to date this Agreement and the Schedules
and to fill in blank spaces in accordance with the terms of the transaction,
including, but not limited to, dates, serial numbers, Equipment descriptions and
the assignment of an account number. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
permitted assigns of the parties, and shall be subject to modification only by
agreement in writing between the parties. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. THIS
AGREEMENT AND THE RIGHTS AND OBUGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT. This
agreement may not be terminated, modified or amended, nor shall any waiver of
any provisions herein be deemed to have occurred regardless of the action or
non-action of the Lender in connection therewith except upon written agreement
of the parties. THIS AGREEMENT, THE SCHEDULES HERETO AND ANY OTHER WRITTEN
AGREEMENTS EXECUTED SIMULTANEOUSLY HEREWITH OR SIMULTANEOUSLY WITH THE EXECUTION
OF A SCHEDULE SUPERSEDE ANY PRIOR PORPOSAL LETTERS, COMMITMENT LETTERS OR
NEGOTIATIONS AND THERE ARE NO ORAL COVENANTS OR AGREEMENTS. This Agreement and
any Schedule shall not be binding upon the Lender until accepted and executed on
behalf of Lender at its South Norwalk, Connecticut office.

"LENDER"                                 "BORROWER"

PHOENIXCOR, INC.                         3-DIMENSIONAL PHARMACEUTICALS, INC.

/s/ Thomas J. Williams                   /s/ Scott Horvitz
---------------------------              ------------------------

BY: Thomas J. Williams                   BY: Scott Horvitz
   ------------------------                 ---------------------

TITLE: Executive Vice President          TITLE: Vice President, Finance
      -------------------------                ------------------------

                                       12
<PAGE>

                                   EXHIBIT A
                    EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM


                SCHEDULE TO MASTER LOAN AND SECURITY AGREEMENT
                ----------------------------------------------

MASTER LOAN AND SECURITY AGREEMENT NO.7110           DATED: June 18, 1998
                                      ----                  -------------
SCHEDULE NO.01                                       DATED: June 18, 1998
            --                                              -------------
<TABLE>
<S>                                          <C>
-----------------------------------------------------------------------------------------------
LENDER:      PHOENIXCOR, INC.                BORROWER:     3-Dimensional Pharmaceuticals, Inc.
             65 WATER STREET                               Eagleview Corporate Center,
             SOUTH NORWALK, CT 06854                       665 Stockton Drive, Suite 104
                                                           Exton, PA 19341
</TABLE>

Equipment Location (if other than above address of Borrower): n/a
                                                              ---

     Lender and Borrower have entered into a Master Loan and Security
Agreement No. 7110 dated June 18, 1998 (the "Master Loan Agreement") which is
incorporated herein and this is a Schedule to the Master Loan Agreement. All
words and terms used herein and not specifically defined herein shall have the
same meanings as set forth in the Master Loan Agreement.

     1.   THE LOAN AND LOAN REPAYMENT. As requested by Borrower and pursuant
to the Master Loan Agreement, Lender agrees to lend to Borrower the sum of one
                                                                           ---
million six hundred forty-eight thousand two hundred six dollars and three
--------------------------------------------------------------------------
cents. Borrower agrees to repay the Loan in successive installments (which
-----
installment payments are inclusive of interest) as set forth in the following
Schedule:

<TABLE>
<S>                                                        <C>
                                    SCHEDULE
-----------------------------------------------------------------------------------------------
Advance Payment Amount:                                    $40,671.13
Number of Installments (Exclusive of Advance Payment):     46
Payment Period:                                             X Monthly ___Quarterly
                                                           ---
Periodic Installment Payment Amount Per Period:            $40,671.13;
                                                           -----------
         Followed by One Monthly Installment Payment of    $164,820.60
                                                           -----------

-----------------------------------------------------------------------------------------------
Commencement Date: July 1, 1998                            Security Deposit (if any): none
Special Provisions: (if any): none
</TABLE>

     2.   SECURITY. As security for Borrower's obligations under this Schedule
and the obligations contained in the Master Loan Agreement, the Borrower gives
and grants to the Lender a security interest in the Equipment described in the
attached Exhibit A.

     3.   LOAN DISBURSEMENT. Borrower hereby authorizes Lender to disburse the
Loan proceeds advanced pursuant to this Schedule as follows:

     $1,648,206.03         To: 3-Dimensional Pharmaceuticals, Inc.
     -------------             -----------------------------------
     $1,648,206.03         TOTAL PROCEEDS
     -------------

By execution hereof, the signer certifies that he/she is a duly authorized
officer, partner or proprietor of Borrower and that he/she had read, accepted
and duly executed this Schedule to the Master Loan Agreement on behalf of
Borrower.

                                3-Dimensional Pharmaceuticals, Inc., (Borrower)
                                ------------------------------------

                                BY:_________________________________
                                ____________________________________
                                Print Name and Title

ACCEPTED AT LENDER'S OFFICE AT
SOUTH NORWALK, CONNECTICUT

PHOENIXCOR, INC. (Lender)

BY: _____________________

                                      13
<PAGE>

                                   EXHIBIT A
                    EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM

_________________________
Print Name and Title

                                      14
<PAGE>

                                   EXHIBIT A


         The following description of property supplements, and is part,
Schedule No. 01 dated June 18, 1998 to Master Loan and Security Agreement No.
7110 dated June 18, 1998 between the undersigned Borrower and Phoenixcor, Inc.
and may be attached to said Loan Schedule and any related UCC Financing
Statements, Acceptance or Delivery Certificate or other document describing the
property:



                         See Attached Exhibit A Schedule




All property listed above complete with any and all attachments, accessions,
additions, replacements, improvements, modifications and substitutions thereto
and therefor and all proceeds including insurance proceeds thereof and
therefrom.

PHOENIXCOR, INC.                   3-Dimensional Pharmaceuticals, Inc.
----------------                   -----------------------------------
(Lender)                           (Borrower)


BY: /s/ Thomas J. Williams         BY: /s/ Scott Horvitz
   ------------------------           ----------------------

TITLE: Executive Vice President    TITLE: Vice President, Finance
      -------------------------          ------------------------

                                      15
<PAGE>

<TABLE>
<CAPTION>
                   EXHIBIT A
    EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM
--------------------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
Equip Location       Exton, PA  19341
--------------------------------------------------------------------------------------------------------------------------
Supplier             Description                            Qty        Serial No.  Price        Extended     Sub-Total
                                                                                                  Price
--------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                                    <C>        <C>         <C>          <C>           <C>
Advanced Chemtech    1 lock, ASM, 96 Well H/C Rv, Tfe       1               97176  5,500.00     5,500.00
                     Shipping & Handling                                                           40.00       5,540.00

--------------------------------------------------------------------------------------------------------------------------
Beckman              JLA-10.500 Rotor Assy                  1             97U1767  6,120.00     6,120.00
                     Insurance                                                                     18.36
                     Freight & Handling                                                            24.97       6,163.33
--------------------------------------------------------------------------------------------------------------------------
BMG Lab              Polar star                             1                      45,000.00   45,000.00
                     Incubation Chamber POLARstar           1                       3,000.00    3,000.00
                     Reagent Injector POLARstar             2                       3,500.00    7,000.00
                     Robotics Plate Transport               1                           0.00        0.00
                     Shipping & Handling                                              125.00      125.00      55,125.00
--------------------------------------------------------------------------------------------------------------------------
Bodhan Automation    AWS-100S Weighting Workstation         1                      15,500.00   15,500.00
                                                                                                  758.67      16,258.67
--------------------------------------------------------------------------------------------------------------------------
CAVARO               Automated Tip Washing Stations         3            62113804   2,590.00    7,770.00
                                                                         62114804
                                                                         66340804

                     Automated Tip Washing Station          1                       7,210.00    7,210.00      14,980.00
--------------------------------------------------------------------------------------------------------------------------
Charbdis             Filtration Reactor Kit, 96 wells, red  2                       3,157.50    6,315.00
                     Filtration Reactor Kit, 96 wells,      2
                     green                                                          3,157.50    6,315.00
                     Filtration Reactor Kit, 96 wells,      1
                     purple                                                         3,157.50    3,157.50
                     Filt Rxn & Vac Man, Kit, 96 wells,     1
                     purple                                                         4,210,00    4,210.00
                     M-T Filt Rxn Kit 96 wells, blue        1                       4,407.50    4,407.50
                     M-T Filt Rxn Kit                       1                       4,407.50    4,407.50
                     M-T Filt Rxn Kit 96 wells, green       1                       4,407.50    4,407.50
                     M-T Filt Rxn Kit 96 wells, purple      1                       4,307.50    4,307.50
                     M-T Filt Rxn Kit 96 wells, red                                 4,307.50    4,307.50
                                                  Discount                                       -922.85
                     Shipping & Handling                                                           82.75      45,302.40
                     ILIAD PS Personal Synthesis System     1                      44,000.00   44,000.00
                     Julabo FP-50P System                   1                       8,000.00    8,000.00
                     Shipping and Handling                                                      1,019.55      53,019.55
                     Calypso 4X Shaker System               1                       7,500.00    7,500.00
                     Shipping and Handling                                                        249.21       7,749.21
--------------------------------------------------------------------------------------------------------------------------
Coulter              Dual Threshold Packed                  1                      12,675.00   12,675.00
                     PKG Reaent Starter Kit                 1                         367.00      367.00
                     Delivery, Sys, Integration                                                   350.00      13,392.00

<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
Equip Location       Exton, PA  19341
-----------------------------------------------------------------------------------------------------------------------------
Supplier             Description                                  PO No.       Invoice     Invoice     PD        Ck
                                                                               No.         Date        CK #      Amount
-----------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                                          <C>          <C>          <C>        <C>      <C>
Advanced Chemtech    1 lock, ASM, 96 Well H/C Rv, Tfe             ZW972158     42647-IN     11/3/97    cc7703   $ 5,735.00
                     Shipping & Handling

-----------------------------------------------------------------------------------------------------------------------------
Beckman              JLA-10.500 Rotor Assy                        BS972397   323276Cl01    12/12/97    cc785    $ 8,078.33
                     Insurance                                    972397A
                     Freight & Handling
-----------------------------------------------------------------------------------------------------------------------------
BMG Lab              Polar star                                   DG980744         1198     3/20/98   cc8649    $55,125.00
                     Incubation Chamber POLARstar
                     Reagent Injector POLARstar
                     Robotics Plate Transport
                     Shipping & Handling
-----------------------------------------------------------------------------------------------------------------------------
Bodhan Automation    AWS-100S Weighting Workstation               DD980821         9093     5/26/98

-----------------------------------------------------------------------------------------------------------------------------
CAVARO               Automated Tip Washing Stations               JK980683        68062     4/17/98
                                                                  JK980683         6802     4/17/98    8807


                     Automated Tip Washing Station
-----------------------------------------------------------------------------------------------------------------------------
Charbdis             Filtration Reactor Kit, 96 wells, red        DD972201      1711030    11/26/97    cc702    $45,302.40
                     Filtration Reactor Kit, 96 wells,
                     green
                     Filtration Reactor Kit, 96 wells,
                     purple
                     Filt Rxn & Vac Man, Kit, 96 wells,
                     purple
                     M-T Filt Rxn Kit 96 wells, blue
                     M-T Filt Rxn Kit
                     M-T Filt Rxn Kit 96 wells, green
                     M-T Filt Rxn Kit 96 wells, purple
                     M-T Filt Rxn Kit 96 wells, red
                                                     Discount
                     Shipping & Handling
                     ILIAD PS Personal Synthesis System           DH972296      I712005    12/10/97    cc7868   $53,019.55
                     Julabo FP-50P System
                     Shipping and Handling
                     Calypso 4X Shaker System                     DH972296      I801004     1/14/98    cc8005   $ 7,599.21
                     Shipping and Handling
-----------------------------------------------------------------------------------------------------------------------------
Coulter              Dual Threshold Packed                        CM981302       259951     5/19/98
                     PKG Reaent Starter Kit
                     Delivery, Sys, Integration
</TABLE>

                                      16
<PAGE>

                                   EXHIBIT A
                    EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
Equip Location       Exton, PA  19341
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Extended         Sub-
Supplier             Description                                    Qty   Serial No.  Price          Price         Total    PO No.
====================================================================================================================================
<S>                  <C>                                            <C>   <C>         <C>         <C>            <C>       <C>
Culligan             Softener Including Installation                 1                2,858.00     2,858.00       2,858.00  BW98062
===================================================================================================================================
DELL                 Dell 6400 P11/MT Workstation 410 Base           1                5,455.00     5,455.00                 DA98124
                     W/Integrated 3 Com Fast Etherlink XL
                     10/100MB/s Sound blaster Compatible
                     Audio Keyboard, 384MB ECC Ram 3 Dimms, 2/nd/
                     Processor for Wkstn 400 MHZ, CD-Rom  Dr.
                     For Win NT, Vdio Card, Monitor, 9/1GBSCSI
                     1, Vdu2W 7200 RPM Hr Dr. Wkstn 410, 3.5"
                     1.44MB Floppy & Diagnostics, Windows NT
                     OPTI 40CD, Cd Documentation
                     Freight                                                                         100.00       5,555.00
===================================================================================================================================
Document             Phaser 350 24MB Version 600x300 wppm            1                1,975.00     1,975.00       1,975.00  JS971615
===================================================================================================================================
Executone Info       Telephone System Upgrade                        1                            30,549.31                JP971768
System               228 Cabnet, 10 Modcel 18 phones, 10
                     Model 32 Phones, Co Car, Station Cards,
                     Expansion of Voicemail, including                                                           30,549.31
                     cable & Hardware
                     12 Port Single Line Card                        1                1,316.00     1,316.00
                     Tri Out Power Supply                            1
                     Sales Tax                                                                        78.96       1,394.96
===================================================================================================================================

Fisher Scientific    Vacuum Pump 5.6 CFM DL                          1                1,725.00     1,725.00
                     Vacuum Pump 115 Vac 60HZ                        1                1,028.50     1,028.50       2,753.50

                     Centrifuge MDL, 5415c 115V                      1                1,805.06     1,805.06       1,805.06

                     Rotvapor 29/42 R124C                            1                3,950.00     3,950.00
                     Balance 2100G x 0.1G Std.                       1                1,603.82     1,603.82
                     Balance Std. LV 210GXD-1MG                      1                2,416.01     2,416.01
                     Vacuum Pump 5.6 CFM MDL                         1                1,162.92     1,162.92       9,132.75

                     Rotvapor 29/42                                  1                3,971.91     3,971.91       3,971.91

                     Refrig Circtr Rm6B 115V                         2                1,879.90     3,759.80       3,759.80

                     Vacuum Pump 5.6 CFM MDL                         1                1,380.00     1,380.00       1,380.00

                     Vaccum Ovel Mdl 285A 120V                       1                1,780.68     1,780.68
                     Microlab 1000 Plus Comp                         1                5,477.53     5,477.53       7,258.21

                     Rotvapor 24/40                                  3                3,688.20    11,064.60
                     Pump Diaphrm Cor Res 171                        3                  632.00     1,896.00
                     Complete Vacuum Rack Sys                        1                2,060.40     2,060.40
                     Refrig/Freezer                                  1                1,111.64     1,111.64

<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
                     Exton, PA  19341
Equip Location       Exton, PA  19341
----------------------------------------------------------------------------------------------------------------------
                                                                     Invoice       Invoice         PD            Ck
Supplier             Description                                     No.           Date          CK #        Amount
======================================================================================================================
<S>                  <C>                                             <C>           <C>           <C>        <C>
Culligan             Softener Including Installation                 33337          3/31/98      cc8664     $2,858.00
======================================================================================================================
DELL                 Dell 6400 P11/MT Workstation 410 Base           159159961      5/12/98
                     W/Integrated 3 Com Fast Etherlink XL
                     10/100MB/s Sound blaster Compatible
                     Audio Keyboard, 384MB ECC Ram 3 Dimms, 2/nd/
                     Processor for Wkstn 400 MHZ, CD-Rom Dr.
                     For Win NT, Vdio Card, Monitor, 9/1GBSCSI
                     1, Vdu2W 7200 RPM Hr Dr. Wkstn 410, 3.5"
                     1.44MB Floppy & Diagnostics, Windows NT
                     OPTI 40CD, Cd Documentation Freight
======================================================================================================================
Document             Phaser 350 24MB Version 600x300 wppm            206818         7/12/98      cc8110     $2,569.39
======================================================================================================================
Executone Info       Telephone System Upgrade                        174471        10/28/97      cc7733     $16,802.12
System               228 Cabnet, 10 Modcel 18 phones, 10                                         cc7374     $13,747.19
                     Model 32 Phones, Co Car, Station Cards,
                     Expansion of Voicemail, including
                     cable & Hardware
                     12 Port Single Line Card                        175082        11/25/97      cc7990      $1,471.28
                     Tri Out Power Supply
                     Sales Tax
======================================================================================================================
                                                                     278404103      11/3/97      cc7734      $28,926.16
Fisher Scientific    Vacuum Pump 5.6 CFM DL                          197
                     Vacuum Pump 115 Vac 60HZ
                                                                     278404051      5/18/98
                     Centrifuge MDL, 5415c 115V                      598
                                                                     478404093      10/2/97      cc7519      $23,160.39
                     Rotvapor 29/42 R124C                            97
                     Balance 2100G x 0.1G Std.
                     Balance Std. LV 210GXD-1MG
                     Vacuum Pump 5.6 CFM MDL
                                                                     278404103      11/3/97
                     Rotvapor 29/42                                  197
                                                                     278404101     10/16/97      cc7629       $7,847.45
                     Refrig Circtr Rm6B 115V                         597
                                                                     278404103      11/3/98
                     Vacuum Pump 5.6 CFM MDL                         197
                                                                     278404111     11/17/97      cc7738      $13,669.26
                     Vaccum Ovel Mdl 285A 120V                       597
                     Microlab 1000 Plus Comp
                                                                     278404033       4/2/98      cc8676      $22,986.01
                     Rotvapor 24/40                                  198
                     Pump Diaphrm Cor Res 171
                     Complete Vacuum Rack Sys
                     Refrig/Freezer
</TABLE>

                                      17
<PAGE>

                                   EXHIBIT A
                    EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
Equip Location       Exton, PA  19341
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Extended        Sub-
Supplier             Description                           Qty        Serial No.    Price          Price        Total       PO No.
-----------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                                   <C>    <C>              <C>          <C>           <C>         <C>
                     Oven Isotemp Std 5 Cuft                1                       1,005.74      1,005.74          1
                     Vacuum Pump DDC200 115/2               1                        2223.48      2,223.48     19,361.86

                     Air Pnel 4-man w/e O. monitor          1                       1,450.00      1,450.00      1,450.00
===================================================================================================================================
                                                                    GDBPPRO300PI    3,398.00      3,398.00                 DA980145
Gateway 2000         GP6-300 System x/MMX                   1                  C
                     Freight and handling                                                            60.00      3,458.00
                     GP6-333 System                         1             1001261   2,994.00      2,994.00                 VK980502
                     Freight & Handling                                                              95.00      3,089.00
===================================================================================================================================
Harrison Res.        Chromatiotron Complete w/pump          1                       4,245.00
===================================================================================================================================
Hemco Corp.          36" Stainless Steel Island Canopy      1                       1,560.00      1,560.00                 BW980551
                     Vinyl Canopy Strip Wall                8                          25.00        200.00      1,760.00
===================================================================================================================================
Jobin Vyon           Flurolog 3 System                      1                      46,000.00     46,000.00                 6P980604
Instruments          Software, Datamax                      1                       2,195.00      2,195.00
Instruments          Software, Datamax Standard Version     1                       1,295.00      1,295.00
                     22.5 Front Face Viewing Accessory      1                       2,100.00      2,100.00
                     Fiber Optic Platform assy              1                       6,995.00      6,995.00
                     Micromax Microwell Plate reader        1                       5,280.00      5,280.00
                     Dual Auto Polarizer                    1                                         0.00
                     Sample Compartment Accessory
                     Electronics                            2                         200.00        400.00
                     Sample Cell                            1                         320.00        320.00
                     Cuvette, Small Quartz for 1931B        1                         200.00        200.00
                     Micro Cell                             1                         160.00        160.00
                     Adapter                                1                       6,300.00      6,300.00
                     One time only purchased sample         1                       1,300.00      1,300.00
                     Heater/cooler
                     Temperature Control Interface Kit      1                       2,200.00      2,200.00
                                                  Discount                                       -8,905.00
                     Packaging & Handling                                                           693.00     66,533.00
===================================================================================================================================
IPSi                 Dolphin 512K Flash 512 Ram Scanners    4           03722DLP    1,455.00      5,820.00                 FJ971257
                     Dolphin Home Base                      4                327      355.00      1,420.00
                                                                                     1416
                                                                                     1485
                     Batch Simplicity "c" Code              1                         855.00        855.00      8,095.00
                     Programming Sftw
                     Dolphin                                4           01098DLP    1,455.00      5,820.00                 EJ981047
                                                                        03002DLP
                                                                        10854DLP
                                                                        12519DLP
                     Dolphin Home Base                      4           06687DHB      355.00      1,420.00
                                                                        06830DHB
                                                                        06866DHB
                                                                        06869DHB
                     Shipping & Handling                                                             30.00      7,270.00

<CAPTION>
---------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
Equip Location       Exton, PA  19341
---------------------------------------------------------------------------------------------------------------
                                                                Invoice       Invoice        PD           Ck
Supplier             Description                                   No.        Date         CK #       Amount
---------------------------------------------------------------------------------------------------------------
<S>                  <C>                                        <C>           <C>          <C>       <C>
                     Oven Isotemp Std 5 Cuft
                     Vacuum Pump DDC200 115/2
                                                                278404043
                     Air Pnel 4-man w/e O. monitor              098            5/1/98
===============================================================================================================
                                                                               2/3/98      cc8402    $3,458.00
Gateway 2000         GP6-300 System x/MMX                       26569538
                     Freight and handling
                     GP6-333 System                             28248838       3/2/98      cc8535    $3,089.00
                     Freight & Handling
===============================================================================================================
Harrison Res.        Chromatiotron Complete w/pump
===============================================================================================================
Hemco Corp.          36" Stainless Steel Island Canopy          P27667         4/9/98      cc8685    $1,838.61
                     Vinyl Canopy Strip Wall
===============================================================================================================
Jobin Vyon           Flurolog 3 System                          100142640     5/22/98
Instruments          Software, Datamax
Instruments          Software, Datamax Standard Version
                     22.5 Front Face Viewing Accessory
                     Fiber Optic Platform assy
                     Micromax Microwell Plate reader
                     Dual Auto Polarizer
                     Sample Compartment Accessory
                     Electronics
                     Sample Cell
                     Cuvette, Small Quartz for 1931B
                     Micro Cell
                     Adapter
                     One time only purchased sample
                     Heater/cooler
                     Temperature Control Interface Kit
                                                  Discount
                     Packaging & Handling
===============================================================================================================
IPSi                 Dolphin 512K Flash 512 Ram Scanners        101097-02    10/10/97      cc7637    $8,095.00
                     Dolphin Home Base


                     Batch Simplicity "c" Code
                     Programming Sftw
                     Dolphin                                    042898-01     4/28/98



                     Dolphin Home Base



                     Shipping & Handling
</TABLE>

                                      18
<PAGE>

                                    EXHIBIT A
                     EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
Equip Location       Exton, PA  19341
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Extended
Supplier             Description                            Qty        Serial No.  Price           Price      Sub-Total    PO No.
===================================================================================================================================
<S>                  <C>                                    <C>     <C>            <C>          <C>           <C>          <C>
LF Systems           Stainless Steel Table w/Mer Top        1                      1,129.00     1,129.00       1,129.00    Fl971643
===================================================================================================================================
Mac Warehouse        32MB 168 PIN EDO DIMM                  1                        125.00       125.00                   JS971769
                     32 MB 168 PIN EDO DIMM                 1                        125.00       125.00
                     Daynaport E/PCI-T Ethernet Card        2                         44.00        88.00         338.00
                     Power MAC 4400/200 32MB/2GB            1        SXA7220J29GG  1,510.00     1,510.00                   JS971969
                     Mon Apple Multscan 1SAV 15"            1        SCY73227Y6UC    370.00       370.00       1,880.00
                     Mon Poweruser 17                       2                        419.00       838.00         838.00    Js971969
                                                                    60F58A7370029
                     Supermac C600E/200                     1                  24  1,150.00     1,150.00       1,150.00    JS971969
                                                                    60F58A7370029
                     Supermac C600E/200                     1                  77  1,150.00     1,150.00       1,150.00    JS971969
                     MT0903 MON Sony Trinitron Multiscan    1         S017146223B    870.00       870.00         870.00    JS971785
                     MEM PNY 32MB                           1                        300.00       300.00                   JS971823
                     Etherlink 111                          1                        250.00       250.00
                     Carrying Case Notepac - Black          1                         32.00        32.00
                     Portable Printer/Scanner               1                        285.00       285.00         867.00
                     Lap Pro 440CDX                         1           S87209112  2,299.00     2,299.00       2,299.00    JS971823
                                                                      SA735BNX2H0
                     CPU Presario 4824 P2/233               1                  80  2,295.00     2,295.00                   JS971971
                     MON Sony 200SF 17"                     1         SO18164189N    685.00       685.00       2,980.00
                     CPU Compac Deskpro 2000                1       S6738BK72$581  1,380.00     1,380.00       1,380.00    JS972042
                     Power Base 240MH Tower                 1             1491944  1,170.00     1,170.00                   JS972154
                     Mon Poweruser 17                       1                        409.00       409.00      $1,579.00
                     Mon Princeton 17"                      1           872131088    435.00       435.00         435.00    JCS97229
                     Power Base 240MHX Tower                1             1494262  1,170.00     1,170.00       1,170.00    JSC97229
                     Starmax 300MT 603E                     1            STO75817    888.00       888.00       JS(72470    JS972470
                     Mon Princeton 17"                      1           872131078    435.00       435.00       1,323.00
                     Superstack II Switch 3000              1                      2,129.00     2,129.00                   JS972471
                     Superstack II 1000 Baxe TX             1                      1,085.00     1,085.00
                     FE104 4 port 100 Base TX Hub w/uplink  1                        179.95       179.95
                     Surgestation Pro 8                     3                         29.00        87.00       3,480.95
                     Mon Princeton 17"                      2                        435.00       870.00                   JS972496
                     Bundle HP Laserjet Powerprint          1                        445.00       445.00       1,315.00
                     Powerbook 2400C/180                    1        S157310PZAJN  2,865.00     2,854.00       2,865.00    JS972496
                     Starmax 300MT                          1            ST075428    888.00       888.00         888.00    JS972496
                     Bundle HP Laserjet Powerprint          1                        445.00       445.00         445.00    JS972496
                     Starmax 5500MT                         1            ST074693  1,550.00     1,550.00       1,550.00    JCS97258
                     Starmax 5500MT                         2            ST074682  1,550.00     3,100.00                   JCS97258
                                                                         ST070269                   0.00
                     Shipping                                                                      10.00       3,110.00
                     Power Mac 4400/200 32MB                1        SXB7462649GG  1,490.00     1,490.00                   JS980028
                     Mon Princeton 17"                      1          1172162285    435.00       435.00       1,925.00
                     Mon Princeton 17"                      2                        135.00       270.00                   JS980028
                     Daynapot Adapter                       5                         61.00       305.00         575.00

<CAPTION>
--------------------------------------------------------------------------------------------------------------
Equip Location       3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
                     Exton, PA  19341
--------------------------------------------------------------------------------------------------------------
Supplier             Description                                 Invoice     Invoice         PD          Ck
                                                                 No.         Date          CK #      Amount
==============================================================================================================
<S>                  <C>                                         <C>        <C>          <C>       <C>
LF Systems           Stainless Steel Table w/Mer Top             5851        9/19/97     cc7421     $1,129.00
==============================================================================================================
Mac Warehouse        32MB 168 PIN EDO DIMM                       A7012370    9/16/97     cc7423    $16,815.55
                     32 MB 168 PIN EDO DIMM
                     Daynaport E/PCI-T Ethernet Card
                     Power MAC 4400/200 32MB/2GB                 A7019854    9/16/97          "
                     Mon Apple Multscan 1SAV 15"
                     Mon Poweruser 17                            A7117534    9/17/97          "
                                                                             9/23/97          "
                     Supermac C600E/200                          A738334
                     Supermac C600E/200                          A7383334    9/23/97          "
                     MT0903 MON Sony Trinitron Multiscan         A7366438    9/23/97          "
                     MEM PNY 32MB                                A72758378   9/22/97          "
                     Etherlink 111
                     Carrying Case Notepac - Black
                     Portable Printer/Scanner
                     Lap Pro 440CDX                              A7287345    9/22/97          "
                                                                             10/9/97     cc7538     $5,680.50
                     CPU Presario 4824 P2/233                    A8069577
                     MON Sony 200SF 17"
                     CPU Compac Deskpro 2000                     A8385890   10/16/97     cc7645     $4,641.40
                     Power Base 240MH Tower                      A8983462   10/30/97          "
                     Mon Poweruser 17
                     Mon Princeton 17"                           B0366369   11/17/97     cc7746     $8,153.15
                     Power Base 240MHX Tower                     B0377168   11/17/97          "
                     Starmax 300MT 603E                          B1252782    12/9/97     cc7910    $19,147.80
                     Mon Princeton 17"
                     Superstack II Switch 3000                   B1233253    12/9/97          "
                     Superstack II 1000 Baxe TX
                     FE104 4 port 100 Base TX Hub w/uplink
                     Surgestation Pro 8
                     Mon Princeton 17"                           B1369743    12/11/97         "
                     Bundle HP Laserjet Powerprint
                     Powerbook 2400C/180                         B136855     12/11/97         "
                     Starmax 300MT                               B1394055    12/12/97         "
                     Bundle HP Laserjet Powerprint               B1597533    12/17/97         "
                     Starmax 5500MT                              B1768522    12/22/97    cc8037     $5,829.85
                     Starmax 5500MT                              B1828326    12/23/97         "

                     Shipping
                     Power Mac 4400/200 32MB                     2146488       1/7/98    cc8164    $16,129.30
                     Mon Princeton 17"
                     Mon Princeton 17"                           2141414       1/7/98         "
                     Daynapot Adapter
</TABLE>

                                      19
<PAGE>

                                    EXHIBIT A
                     EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                    3-Dimensional Pharmaceuticals, Inc.
                    665 Stockton Drive, Suite 104
Equip Location      Exton, PA  19341
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                Extended
Supplier            Description                             Qty        Serial No.  Price          Price       Sub-Total    PO No.
-----------------------------------------------------------------------------------------------------------------------------------
<S>                 <C>                                     <C>      <C>           <C>          <C>           <C>          <C>
                                                                      SXB7460YX9G
                    Power Mac 4400/200 32MB                  1                  G  1,490.00     1,490.00       1,490.00    JS980028
                    Mon Princeton 17"                        1         1172162295    435.00       435.00         435.00    JS980028
                                                                      SXB7460W69G
                    Power Mac 440/200 32MB                   1                  g  1,490.00     1,490.00                   JS980029
                    Mon Princeton 17"                        1         1172162297    435.00       435.00       1,925.00
                    64MB 168 PIN EDO DIMM                    1                       135.00       135.00         135.00    Js980029
                    Powerbook 3400C/180 16 MB                1       SCK7062377ZQ  3,050.00     3,050.00       3,050.00    JS980062
                    64MB Memory Moldule for Powerbook 3400   1                       298.00       298.00                   JS980062
                    VST Powerbook 3400 Lithium 10N           3                       130.00       390.00
                    Battery
                    Charger F/Powerbook                      2                       140.00       280.00         968.00    JS980062
                    Power Mac 4400/200 32MB                  2       SXB7461N69Gg  1,490.00     2,980.00                   JS980116
                                                                     SXB74614D9GG
                    Mon Princeton 17" Monitor                1         1172162324    435.00       435.00
                    Mon Sony 200GS 17"                       1        So180197701    640.00       640.00       4,055.00
                    64 MB 168 PIN EDO DIMM                   2                       135.00       270.00         270.00    Js980116
                    Mon Princeton 17"                        1         1172162283    435.00       435.00         435.00    JS980188
                                                                      SBX7461NP9G
                    Power Mac 4400/200                       1                  G  1,490.00     1,490.00       1,490.00    JS980188
                    Daynaport Adapter                        1                        61.00        61.00                   JS980188
                    64 MB 168 PIN EDO DIMM                   1                       135.00       135.00         196.00
                    PRN HP Laser Jet                         1                       125.00     1,425.00                   JS980239
                    Shipping                                                                       19.95       1,444.95
                                                                      SXB7460YR9G
                    Power Mac 4400/200                       1                  G  1,490.00     1,490.00                   JS980312
                    Mon Princeton 17"                        1         1172162375    435.00       435.00       1,925.00
                                                                      SXB74014V9W
                    Power Mac 4400/200                       1                  7  1,285.00     1,285.00       1,285.00    Js980495
                    Mon Puser 17"                            1                       369.00       369.00         369.00    JS980495
                    64MB 168 PIN EDO DIMM                    1                       160.00       160.00                   JS980495
                    Etherx PCI 10/100 Card                   1                        43.00        43.00         203.00
                    Power Mac 6500/250 32MB                  1                     1,398.00     1,398.00                   JS980496
                    Mon Puser 17"                            1                       369.00       369.00       1,767.00
                    Etherx PCI 10/100 Card                   1                        43.00        43.00                   JS980496
                    64 MB 168 PIN EDO DIMM                   1                       160.00       160.00         203.00
                                                                      SXB7460YY9G
                    Power Mac 4400/200 32MG/2GB1             1                  g  1,525.00     1,525.00       1,525.00    JS980497
                    Mon Puser 17"                            1                       369.00       369.00         369.00    JS980497
                    64 MB 168 PIN EDO DIMM                   1                       160.00       160.00                   JS980497
                    Etherx PCI 10/100 Card                   1                        43.00        43.00
                    Zip Drive 100MB SCSI                     1                       130.00       130.00         333.00
                    In Focus Litepro 730                     1        IS2C8525406  8,700.00     8,700.00          8,700    JS980503
                    Power Mac 6500/250 32MB                  1       SXB7460GEAWM  1,398.00     1,398.00                   JS980573

<CAPTION>
-----------------------------------------------------------------------------------------------------------
Equip Location      3-Dimensional Pharmaceuticals, Inc.
                    665 Stockton Drive, Suite 104
                    Exton, PA  19341
-----------------------------------------------------------------------------------------------------------
Supplier            Description                                 Invoice     Invoice         PD         Ck
                                                                No.         Date          CK #     Amount
-----------------------------------------------------------------------------------------------------------
<S>                 <C>                                         <C>         <C>         <C>      <C>
                    Power Mac 4400/200 32MB                     B2307379    1/12/98          "
                    Mon Princeton 17"                           B2305951    1/12/98          "

                    Power Mac 440/200 32MB                      B2146645    1/7/98           "
                    Mon Princeton 17"
                    64MB 168 PIN EDO DIMM                       B2148880    1/7/98           "
                    Powerbook 3400C/180 16 MB                   B2215531    1/8/98           "
                    64MB Memory Moldule for Powerbook 3400      2220291     1/8/98           "
                    VST Powerbook 3400 Lithium 10N
                    Battery
                    Charger F/Powerbook                         B2220291    1/8/98
                    Power Mac 4400/200 32MB                     B2542090    1/16/98     cc8204   $10,498.05

                    Mon Princeton 17" Monitor
                    Mon Sony 200GS 17"
                    64 MB 168 PIN EDO DIMM                      B2530228    1/16/98          "
                    Mon Princeton 17"                           B2679728    1/20/98          "

                    Power Mac 4400/200                          B2868446    1/23/98          "
                    Daynaport Adapter                           B2733954    1/21/98          "
                    64 MB 168 PIN EDO DIMM
                    PRN HP Laser Jet                            B3071305    1/28/98          "
                    Shipping

                    Power Mac 4400/200                          B3366820    2/4/98      cc8289   $14,865.75
                    Mon Princeton 17"

                    Power Mac 4400/200                          B4048351    2/20/98          "
                    Mon Puser 17"                               B4052114    2/20/98          "
                    64MB 168 PIN EDO DIMM                       B4038030    2/20/98          "
                    Etherx PCI 10/100 Card
                    Power Mac 6500/250 32MB                     B4055513    2/20/98          "
                    Mon Puser 17"
                    Etherx PCI 10/100 Card                      B4046256    2/20/98
                    64 MB 168 PIN EDO DIMM

                    Power Mac 4400/200 32MG/2GB1                B4045654    2/20/98          "
                    Mon Puser 17"                               B4052486    2/20/98
                    64 MB 168 PIN EDO DIMM                      B40384651   2/20/98          :
                    Etherx PCI 10/100 Card
                    Zip Drive 100MB SCSI
                    In Focus Litepro 730                        B45131917   3/4/98      cc8559   $19,591.25
                    Power Mac 6500/250 32MB                     B4521472    3/4/98           "
</TABLE>

                                      20
<PAGE>

                                    EXHIBIT A
                     EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Equip Location    3-Dimensional Pharmaceuticals, Inc.
                  665 Stockton Drive, Suite 104
                  Exton, PA  19341
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Extended
Supplier          Description                                Qty        Serial No.  Price          Price       Sub-Total    PO No.
-----------------------------------------------------------------------------------------------------------------------------------
<S>               <C>                                        <C>     <C>           <C>         <C>            <C>          <C>
                  Mon Puser 17"                              1                       369.00       369.00       1,767.00
                  64 MB 168 PIN EDO DIMM                     1                       160.00       160.00         160.00    JS980573

                  Power Mac 6500/2250 32MB                   1       SXB7453VMAWM  1,398.00    $1,398.00                   JS980649
                  Mon Puser 17"                              1                       369.00       369.00       1,767.00
                  64 MB 168 PIN EDO DIMM                     1                       160.00       160.00                   JS980649
                  Etherx PCI 10/100 Card                     1                        43.00        43.00         203.00
                  Power Mac G3/266MHZ                        1       SXB807419AZ3  2,415.00     2,415.00      24,415.00    JS980650
                  Mon Puser 17                               1                       369.00       369.00         369.00    JS980650
                  Mem Puser 128MB Sdram                      1                       375.00       375.00                   JS980650
                  Etherx PCI 10/100 Card                     1                        43.00        43.00
                  Shipping & Handling                                                              24.45         442.45
                  Accessbuilder 4000 8 Prot Asyne Module     1                     1,500.00     1,500.00       1,500.00    JS980655
                  Accessbuilder 4200 Ethernet Base System    1                     1,675.00     1,675.00       1,675.00    JS980655
                  Power Mac 6500/225 32MB                    1       SXB74978Z9CL  1,215.00     1,215.00                   JS980731
                  Mon Puser 17"                              1                       368.00       368.00       1,583.00
                  Superstack II Switch Gigabit Enet SX
                  Module                                     1                     1,970.00     1,970.00       1,970.00    JS980735
                  Superstack II Switch                       1                     2,400.00     2,400.00                   JS980735
                  Superstack II Switch Gigabit Enet SX
                  Module                                     1                     1,920.00     1,920.00
                  Shipping & Handling                                                              21.20       4,341.20
                  Superstack II Switch 3000                  1                     1,500.00     1,500.00                   JS980735
                  Shipping & Handling                                                              17.45       1,517.45

                  Power MAC G3/233/MHZ                       1        SXB8115FRBB  1,598.00     1,598.00       1,598.00    JS980899
                  Mon Puser 17"                              1                       369.00       369.00         369.00    JS980899
                  CPU Compac Deskpro 2000                    1      S6740BK82P043  1,109.00     1,109.00                   JS980945
                  Shipping  & Handling                                                             17.85       1,126.85
                  Mon Hitachi MC7515 19"                     1          V8B000581    885.00       885.00         885.00    JS980988

                  Power Mac 4400/200                         1       SXB7461XF9GG  1,175.00     1,175.00       1,175.00    JS980988
                  Netserver/8 Plus Enter Lan w/ integrated   1                     2,829.00     2,829.00                   JS980986
                  Shipping & Handling                                                             $15.15       2,844.15
                  Supermac C600VPC/240/w/Scanner             1           V8800592  1,249.00     1,249.00                   JS981211
                  Mon Hitachi                                1                       885.00       885.00       2,134.00
                  64 MB 168 PIN EDO DIMM                     1                       105.00       105.00                   JS981211
                  Etherx PCI 10/100 Card                     1                        48.00        48.00         153.00

                  Power Mac G3/200MHZ                        1       SXA81715CD6M  3,185.00     3,185.00       3,185.00    JS981212
                  Mem Puser 128 MB Sdram F/Power Mac G-3     1                       265.00       265.00                   JS981212
                  Etherx PCI 10/100 Card                     1                        48.00        48.00         313.00
                  Mon Puser 17"                              1                       319.00       319.00         319.00    JS981257
                  64MB 168 PIN EDO DMM                       1                       105.00       105.00                   JS981257
                  Etherx PCI 10/100 Card                     1                        48.00        48.00         153.00

<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Equip Location    3-Dimensional Pharmaceuticals, Inc.
                  665 Stockton Drive, Suite 104
                  Exton, PA  19341
-----------------------------------------------------------------------------------------------------------------
                                                                            Invoice         PD         Ck
Supplier          Description                                 Invoice No.   Date          CK #     Amount
-----------------------------------------------------------------------------------------------------------------
<S>               <C>                                         <C>          <C>         <C>        <C>
                  Mon Puser 17"
                  64 MB 168 PIN EDO DIMM                      B4496022     3/4/98           "

                  Power Mac 6500/2250 32MB                    B4755104     3/10/98          "
                  Mon Puser 17"
                  64 MB 168 PIN EDO DIMM                      B4780078     3/10/98          "
                  Etherx PCI 10/100 Card
                  Power Mac G3/266MHZ                         B4759536     3-10-98          "
                  Mon Puser 17                                B4765418     3-10-98          "
                  Mem Puser 128MB Sdram                       B4757316     3/10/98
                  Etherx PCI 10/100 Card
                  Shipping & Handling
                  Accessbuilder 4000 8 Prot Asyne
                  Module                                      B5103270     3/18/98     cc8596     $29,291.03
                  Accessbuilder 4200 Ethernet Base System     B5242110     3/20/98          "
                  Power Mac 6500/225 32MB                     B5202031     3/19/98          "
                  Mon Puser 17"
                  Superstack II Switch Gigabit Enet SX
                  Module                                      B5203138     3/19/98          :
                  Superstack II Switch                        B6506679     4/17/98
                  Superstack II Switch Gigabit Enet SX
                  Module
                  Shipping & Handling
                  Superstack II Switch 3000                   B6548481     4/20/98          "
                  Shipping & Handling
                  Power MAC G3/233/MHZ                        B6088207     4/7/98
                  Mon Puser 17"                               B6091102     4/798            "
                  CPU Compac Deskpro 2000                     B6214779     4/9/98           "
                  Shipping  & Handling
                  Mon Hitachi MC7515 19"                      B6405971     4/30/98
                  Power Mac 4400/200                          B6425805     4/15/98          "
                  Netserver/8 Plus Enter Lan w/ integrated    B7458102     5/12/98          "
                  Shipping & Handling
                  Supermac C600VPC/240/w/Scanner              B7256076     5/6/98           "
                  Mon Hitachi
                  64 MB 168 PIN EDO DIMM                      B7220676     5/6/98
                  Etherx PCI 10/100 Card
                  Power Mac G3/200MHZ                         B7252653     5/6/98
                  Mem Puser 128 MB Sdram F/Power Mac G-3      B7236243     5/6/98
                  Etherx PCI 10/100 Card
                  Mon Puser 17"                               B7524226     5/13/98
                  64MB 168 PIN EDO DMM                        B7506876     5/13/98
                  Etherx PCI 10/100 Card
</TABLE>

                                      21
<PAGE>

                                   EXHIBIT A
                    EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
Equip Location       Exton, PA  19341
--------------------------------------------------------------------------------------------------------------------------------
                                                                                              Extended
Supplier             Description                            Qty    Serial No.      Price       Price        Sub-Total
--------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                                    <C>    <C>           <C>          <C>           <C>
                     Supermac C600 VPC/240 w/Scanner        1                    1,249.00     1,249.00       1,249.00
                     Supermax C600VPC/240 w/Scanner         1                    1,249.00     1,249.00       1,240.00
                     64M13 168 PIN EDO DIMM                                        150.00       150.00
                     Etherx PCI 10/100 Card                 1                       48.00        48.00         153.00
                     Mon Puser 17"                          1                      319.00       319.00         319.00
                     Powerbook 1400c                        1                    1,870.00     1,870.00       1,870.00

                     24MB Memory Module for Powerbook 1400  1                       88.00        88.00
                     Internal Zip Drive                     1                      209.00       209.00
                     336 PC Card Ethernet Modem             1                      278.00       278.00
                     Shipping & Handling                                                         13.80         588.00
                     Power MAC G3/23/MHZ                    1     Sxb8110phhbsq  1,880.00     1,880.00       1,880.00
                     Mon Hitachi 17"                        1            T7K001    549.00       549.00         549.00

                     Mem Puser 64MB Sdram F/power Mac G3    1                      135.00       135.00
                     Etherx PCI 10/100 Card                 1                       48.00        48.00         183.00
Matix Tech.          Platemate 4 Position                   1      I-00003224   40,900.00
                     Tip Wash Station                       1                    2,600.00     2,600.00
                     Adapter                                1                      335.00       335.00
                     Tip magazine 96/284, 25UL              1                      495.00       495.00
                     Shipping & Handling                                                        192.82      44,522.82
MICRON               Milennia XKU 300                       1                    4,197.00     4,197.00
Dimitris Agra.       Shipping & Handling                                                         65.00
Equip Location       3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
--------------------------------------------------------------------------------------------------------------------------------
                     Exton, PA  19341
================================================================================================================================
                                                                                              Extended
Supplier             Description                            Qty    Serial No.      Price       Price        Sub-Total
--------------------------------------------------------------------------------------------------------------------------------
                     Taxes                                                                     255.72        4,517.72
--------------------------------------------------------------------------------------------------------------------------------
Micron               Sys ATO Model BOM                      1    1216147-0001  $3,922.00    $3,922.00
--------------------------------------------------------------------------------------------------------------------------------
                     Sys ATO Model BOM                      1    1216146-0001  $3,471.00    $,3471.00        7,393.00
--------------------------------------------------------------------------------------------------------------------------------
                     Micron Compute ATO Model               1                  $3,849.00    $3,849.00
--------------------------------------------------------------------------------------------------------------------------------
                     Shipping & Handling                                                       $99.00        3,948.00
--------------------------------------------------------------------------------------------------------------------------------
                     ATO Computer Model BOM                 1    1128302-0001  $2,686.00    $2,686.00
--------------------------------------------------------------------------------------------------------------------------------
                     Shipping & Handling                                                       $99.00        2,785.00
================================================================================================================================
Molecular            RoMomax Instrument Refurb.             2         RB00532  $7,388.00   $14,776.00
Devices                                                               RB00533                   $0.00
                     Shipping & Handling                                                      $200.00       14,976.00
Molecular            RoMomax Instrument Refurb.             1         RB00541  $7,388.00    $7,388.00       $7,388.00
================================================================================================================================
New Brunswick        Innova 4080 120V                       1      8901312640  $5,200.00    $5,200.00
                     Sticky Mat Roll, Gr                    1                    $264.00      $264.00
                     Freight                                                                   $50.15       $5,514.15
                     Innova 4080 120V                       1       890312648  $5,200.00    $5,200.00
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                     3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
Equip Location       Exton, PA  19341
-------------------------------------------------------------------------------------------------------------------------------
                                                                           Invoice     Invoice     PD        Ck
Supplier             Description                              PO No.       No.         Date        CK #      Amount
-------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                                      <C>          <C>         <C>         <C>       <C>
                     Supermac C600 VPC/240 w/Scanner          JS981257     B7509052    5/13/98
                     Supermax C600VPC/240 w/Scanner           JS981258     B7509060    5/13/98
                     64M13 168 PIN EDO DIMM                   JS981258     B7513179    5/13/98
                     Etherx PCI 10/100 Card
                     Mon Puser 17"                            JS981258     B7540222    5/13/98
                     Powerbook 1400c                          Js981298     B7528276    5/13/98

                     24MB Memory Module for Powerbook 1400    JS981298     B7498181    5/13/98
                     Internal Zip Drive
                     336 PC Card Ethernet Modem
                     Shipping & Handling
                     Power MAC G3/23/MHZ                      JS981299     B7510142    5/13/98
                     Mon Hitachi 17"                          Js981299     B7523707    5/13/98

                     Mem Puser 64MB Sdram F/power Mac G3      JS981299     B7504921    5/13/98
                     Etherx PCI 10/100 Card                   JS981299     B7504921    5/13/98
Matix Tech.          Platemate 4 Position                     JS980687     71489       3/16/98     cc8697    $48,868.34
                     Tip Wash Station
                     Adapter
                     Tip magazine 96/284, 25UL
                     Shipping & Handling
MICRON               Milennia XKU 300                         DA971700                             Cc7589    $5,521.57
Dimitris Agra.       Shipping & Handling
Equip Location       3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
-------------------------------------------------------------------------------------------------------------------------------
                     Exton, PA  19341
===============================================================================================================================
                                                                           Invoice     Invoice     PD        Ck
Supplier             Description                              PO No.       No.         Date        CK #      Amount
-------------------------------------------------------------------------------------------------------------------------------
                     Taxes
-------------------------------------------------------------------------------------------------------------------------------
Micron               Sys ATO Model BOM                        JS980983     1863973     5/8/98
-------------------------------------------------------------------------------------------------------------------------------
                     Sys ATO Model BOM
-------------------------------------------------------------------------------------------------------------------------------
                     Micron Compute ATO Model                 JK980095     1606148     1/17/98     cc8345    $10,102.00
-------------------------------------------------------------------------------------------------------------------------------
                     Shipping & Handling
-------------------------------------------------------------------------------------------------------------------------------
                     ATO Computer Model BOM                   JS980211     1636289     1/30/98
-------------------------------------------------------------------------------------------------------------------------------
                     Shipping & Handling
-------------------------------------------------------------------------------------------------------------------------------
Molecular            RoMomax Instrument Refurb.               JK980686     134071      3/20/98     cc8704    $23,889.00
Devices
                     Shipping & Handling
Molecular            RoMomax Instrument Refurb.               JK980686     134061      4/6/98      cc8704    $23,889.00
-------------------------------------------------------------------------------------------------------------------------------
New Brunswick        Innova 4080 120V                         ZW980278     204135      3/17/98     cc8759    $5,514.15
                     Sticky Mat Roll, Gr
                     Freight
                     Innova 4080 120V                         ZW981045     205470      5/1/98
</TABLE>

                                      22
<PAGE>

                                   EXHIBIT A
                    EQUIPMENT SCHEDULE 3-DIMENSIONAL PHARM

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Equip Location       3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
                     Exton, PA  19341
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                Extended
Supplier             Description                           Qty      Serial No.       Price       Price       Sub-Total     PO No.
----------------------------------------------------------------------------------------------------------------------------------
                     Sticky Mat Roll, GR                    1                     $   264.00   $   264.00
                     Freight                                                                   $    64.04      5,528.04
----------------------------------------------------------------------------------------------------------------------------------
Nonius               Fixed Oil Cooled Cathode               1                     $ 7,629.60     7,629.60      7,629.60   MM980214
----------------------------------------------------------------------------------------------------------------------------------
RCh                  Raid Rack Mount Conversion/expansion   1                     $17,066.00   $17,066.00                 JS980126
                     8-4404
                     Shipping & Handling                                                       $   486.55     17,552.55
                     DLT7700, 15 Cartridge racount mini     1                     $20,836.00   $20,836.00                 JS980678
                     library
                     9.1 GB Ultra Wide Option Disk          1                     $ 1,351.00   $ 1,351.00
                     Bracket                                1                     $   210.00   $   210.00
                     Shipping & Handling                                                       $   164.00     22,561.00
----------------------------------------------------------------------------------------------------------------------------------
Robbins              1_____-96 Flexchem 1 ML Tall 115V      1                     $22,500.00   $22,500.00                 ZW980778
                     Freight                                                                   $    81.90     22,581.90
----------------------------------------------------------------------------------------------------------------------------------
Savant               Speedvac w/bleeder valve 115V          1                     $ 1,890.00   $ 1,890.00                 JR980778
                     Freight                                                                   $    17.55      1,907.55
                     Rotor F/Marsh Plates w/4 Carriers     1                     $ 1,260.00   $ 1,260.00                 ZW980181
                     Freight                                                                   $     9.30      1,269.30
----------------------------------------------------------------------------------------------------------------------------------
Techne, Inc.         Genius 120V 384 Well                   2                     $ 4,152.00   $ 8,304.00    $ 8,304.00   JK980685
----------------------------------------------------------------------------------------------------------------------------------
-----------------
----Vacuubrand       Model MZ2C Diaphragm Pump              1      20523904-97    $ 1,965.00   $ 1,965.00                 JJ981261
                     Freight                                                      $    15.45     1,980.45
Equip Location       3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
                     Exton, PA
                                                                                                Extended
Supplier             Description                            Qty     Serial No.    Price           Price        Sub-Total   PO No.

Water Mgnt           Comro-800P Reverse Osmosis Unit        1                     $ 2,408.54   $ 2,408.54                 BW980064
                     Pressure Storage Tank                  2                     $   829.92   $ 1,659.84      4,068.38

                     TOTAL                                                                                   699,733.78
----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
------------------------------------------------------------------------------------------------------------
Equip Location       3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
                     Exton, PA  19341
------------------------------------------------------------------------------------------------------------
                                                              Invoice       Invoice     PD        Ck
Supplier             Description                              No.           Date        CK #      Amount
------------------------------------------------------------------------------------------------------------
                     Sticky Mat Roll, GR
                     Freight
------------------------------------------------------------------------------------------------------------
<S>                  <C>                                      <C>          <C>          <C>       <C>
Nonius               Fixed Oil Cooled Cathode                      73977    3/18/98     cc8709    $ 9,786.88
------------------------------------------------------------------------------------------------------------
RCh                  Raid Rack Mount Conversion/expansion          82538
                     8-4404                                                 1/20/98     cc8140    $17,552.55
                     Shipping & Handling
                     DLT7700, 15 Cartridge racount mini            82603
                     library                                                 4/3/98     cc8729    $22,561.00
                     9.1 GB Ultra Wide Option Disk
                     Bracket
                     Shipping & Handling
------------------------------------------------------------------------------------------------------------
Robbins              1_____-96 Flexchem 1 ML Tall 115V          10087744    4/30/98
                     Freight
------------------------------------------------------------------------------------------------------------
Savant               Speedvac w/bleeder valve 115V                145626   10/31/97     cc7754    $13,057.55
                     Freight
                     Rotor F/Marsh Plates w/4 Carriers           148963     2/5/98     cc8317    $ 1,066.13
                     Freight
------------------------------------------------------------------------------------------------------------
Techne, Inc.         Genius 120V 384 Well                         239669    3/13/98     cc8588    $ 8,304.00
------------------------------------------------------------------------------------------------------------
-----------------                                                    558    5/14/98
----Vacuubrand       Model MZ2C Diaphragm Pump
                     Freight
Equip Location       3-Dimensional Pharmaceuticals, Inc.
                     665 Stockton Drive, Suite 104
                     Exton, PA
                                                                             Invoice     PD       Ck
Supplier             Description                                 Invoice     Date        Ck #     Amount
                                                                 No.
Water Mgnt           Comro-800P Reverse Osmosis Unit            802063.1    2/1/98      cc8483    $ 4,519.97
                     Pressure Storage Tank

                     TOTAL
------------------------------------------------------------------------------------------------------------
</TABLE>

                                      23
<PAGE>

                           PAYMENT ADJUSTMENT RIDER

     Rider to Schedule No. 01 dated June 18, 1998 to Master Loan and Security
                           --       -------------
Agreement No. 7110 dated June 18, 1998 (THE "CONTRACT") Between 3-Dimensional
              ----       -------------                          -------------
Pharmaceuticals, Inc. as Borrower (THE "OBLIGOR") AND PHOENIXCOR, INC. as Lender
---------------------
("P.C.")

     19.  Purpose. This Rider sets forth the terms of adjustment to the payments
          -------
set forth in the Contract.

     20.  Definitions. The following terms shall have the following meanings
          -----------
herein:

          (a)  "Adjustment Date" shall mean the date P.C. disburses any portion
of the proceeds of the Contract.

          (b)  "Final T-Note Average" shall mean the average of the yields on
U.S. Treasury Notes maturing in 4 years, as published by the Dow Jones Telerate
Access Service, Page 19901, for the close of business on each business day of
the two full calendar weeks immediately preceding the week containing the
Adjustment Date.

          (c)  "Preliminary Payments" shall mean the payments set forth in the
Contract, consisting of ($40,671.13 due upon execution followed by) 46
consecutive (monthly or quarterly) payments in the amount of $40,671.13
commencing 30 days after the adjustment Date, followed by one monthly payment of
$164,820.60.

          (d)  "Preliminary T-Note Average" shall mean 5.41%.
                                                       -----

     21.  Adjustment of Payments. The Preliminary Payments were calculated based
          ----------------------
on a spread over the Preliminary T-Note Average. If the Adjustment Date occurs
after June 17, 1998 and the Final T-Note Average exceeds the Preliminary T-Note
Average, then the Preliminary Payments shall be revised. For each increase or
decrease of one (1) basis point (i.e., 1/100 of 1%) in the Final T-Note Average
above the Preliminary T-Note Average, the Preliminary Payments shall be revised
as follows (complete below as applicable):

 .    The $40,671.13 payment due upon execution shall remain unchanged.
         ----------

 .    Each of the 46 payments in the amount of $40,671.13 shall increase or
                 --                           ----------
decrease by $8.24.

Immediately after the determination of the revised payments due under the
Contract, Obligor shall, at the request of P.C., execute an acknowledgement
reflecting the revised payment schedule and, if requested by P.C., a Replacement
Contract containing the agreed to payments, but the failure of P.C. to make such
a request or the failure of Obligor to execute the acknowledgement or
Replacement Contract shall in no way diminish Obligor's obligations hereunder.

     22.  P.C.'s Requirements. The commencement of the Contract is subject to
satisfaction of all documentation and credit requirements of P.C. If such
requirements are not satisfied by the Adjustment Date, then at P.C.'s option,
the Adjustment Date shall be the date when such requirements are satisfied.

The calculation of the Contract payments under this Rider will supersede any
prior proposal or quotation.

     IN WITNESS WHEREOF, the parties have executed this Rider simultaneously
with the Contract.

PHOENIXCOR, INC.                        3-Dimensional Pharmaceuticals, Inc.


By:  /s/ Thomas J. Williams             By:  /s/ Scott Horvitz
     ____________________________            _______________________________

TITLE: Executive Vice President         TITLE: Vice President, Finance
       __________________________              _____________________________


                                      24
<PAGE>

                SCHEDULE TO MASTER LOAN AND SECURITY AGREEMENT

MASTER LOAN AND SECURITY AGREEMENT NO.7110             DATED: June 18, 1998
                                      ----                    -------------
SCHEDULE NO.02                                         DATED: September 25, 1998
            --                                                ------------------
--------------------------------------------------------------------------------
LENDER:   PHOENIXCOR, INC.      BORROWER:   3-Dimensional Pharmaceuticals, Inc.
          65 WATER STREET                   Eagleview Corporate Center,
          SOUTH NORWALK, CT 06854           665 Stockton Drive, Suite 104
                                            Exton, PA 19341


Equipment Location (if other than above address of Borrower): n/a
                                                              ---

     Lender and Borrower have entered into a Master Loan and Security Agreement
No. 7110 dated June 18, 1998 (the "Master Loan Agreement") which is incorporated
    ----       -------------
herein and this is a Schedule to the Master Loan Agreement. All words and terms
used herein and not specifically defined herein shall have the same meanings as
set forth in the Master Loan Agreement.

     1.   THE LOAN AND LOAN REPAYMENT. As requested by Borrower and pursuant to
the Master Loan Agreement, Lender agrees to lend to Borrower the sum of one
                                                                        ---
million two hundred twenty-three thousand eight hundred eighty-three dollars and
--------------------------------------------------------------------------------
ninety-six cents. Borrower agrees to repay the Loan in successive installments
----------------
(which installment payments are inclusive of interest) as set forth in the
following Schedule:

                                   SCHEDULE
--------------------------------------------------------------------------------
Advance Payment Amount:                                  $30,200.56
Number of Installments (Exclusive of Advance Payment):   46
Payment Period:                                           X Monthly ___Quarterly
                                                         ---
Periodic Installment Payment Amount Per Period:          $30,200.56;
         Followed by One Monthly Installment Payment of  $122,388.40
--------------------------------------------------------------------------------
Commencement Date:  September 29, 1998                   Security Deposit (if
Special Provisions: (if any): none                       any): none


     2.   SECURITY. As security for Borrower's obligations under this Schedule
and the obligations contained in the Master Loan Agreement, the Borrower gives
and grants to the Lender a security interest in the Equipment described in the
attached Exhibit A.

     3.   LOAN DISBURSEMENT. Borrower hereby authorizes Lender to disburse the
Loan proceeds advanced pursuant to this Schedule as follows:

     $1,223,883.96         To: 3-Dimensional Pharmaceuticals, Inc.
     -------------             -----------------------------------
     $1,223,883.96         TOTAL PROCEEDS
     -------------

By execution hereof, the signer certifies that he/she is a duly authorized
officer, partner or proprietor of Borrower and that he/she had read, accepted
and duly executed this Schedule to the Master Loan Agreement on behalf of
Borrower.

                                 3-Dimensional Pharmaceuticals, Inc., (Borrower)
                                 -------------------------------------

                                 BY:
                                     ___________________________________________

                                 _______________________________________________
                                 Print Name and Title

ACCEPTED AT LENDER'S OFFICE AT
SOUTH NORWALK, CONNECTICUT

PHOENIXCOR, INC. (Lender)

BY:
    _______________________

Print Name and Title

                                      25
<PAGE>

                                   EXHIBIT A


     The following description of property supplements, and is part, Schedule
No. 02 dated September 25, 1996 to Master Loan and Security Agreement No. 7110
dated June 18, 1998 between the undersigned Borrower and Phoenixcor, Inc. and
may be attached to said Loan Schedule and any related UCC Financing Statements,
Acceptance or Delivery Certificate or other document describing the property:


                   See Attached Exhibit A Equipment Schedule


All property listed above complete with any and all attachments, accessions,
additions, replacements, improvements, modifications and substitutions thereto
and therefor and all proceeds including insurance proceeds thereof and
therefrom.

PHOENIXCOR, INC.                          3-Dimensional Pharmaceuticals, Inc.
----------------                          -----------------------------------
(Lender)                                  (Borrower)

BY: /s/ Thomas J. Williams                By:  /s/ Scott Horvitz
    ______________________                    _________________________________
TITLE: Executive Vice President           TITLE: Vice President, Finance
       ________________________                  ______________________________

                                      26
<PAGE>

<TABLE>
<CAPTION>
3-Dimensional Pharmaceutical, Inc.
Eagleview Corporate Center                                     3-Dimensional Pharmaceuticals, Inc.                        Exhibit A
665 Stockton Drive, Suite 104                                           Equipment Financing                         Schedule No. 02
Exton, PA  19341
-----------------------------------------------------------------------------------------------------------------------------------
QTY                EQUPIMENT                REQ.   PURCHASE     INVOICE        CATALOG          SERIAL         SUPPLIER/VENDOR
                 DESCRIPTION                       ORDER #        NO.            NO.             NO.
-----------------------------------------------------------------------------------------------------------------------------------
<S>   <C>                                   <C>    <C>          <C>           <C>             <C>            <C>
 2    PC Computer System - Millennia        KJ     981356       1893896              Sys1                    Micron Electronics,
      400                                                                                                    Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              JK     981356       1893896
-----------------------------------------------------------------------------------------------------------------------------------
 1    CPU Compaq Deskpro 2000 P/233MMX      JS     981369       B8647117           CP5250     S6808BNT2P474  MicroWarehouse
-----------------------------------------------------------------------------------------------------------------------------------
 3    17' Sony Monitor 200 PS               DA     981480       B8200503           MT2134       SO170134012  MacWarehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              DA     981480
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 0010017376
-----------------------------------------------------------------------------------------------------------------------------------
 3    GP6-400 System                        DA     981481       31854580          1001495         001001737  Gateway 2000, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              DA     981481
-----------------------------------------------------------------------------------------------------------------------------------
 2    17" Power User Monitor                JS     981577                                                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    17" Power User Monitor                JS     981577       B7524226          MON0629                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 2    17" Power User Monitor                JS     981577       B9116443          MON0629                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    17" Power User Monitor                JS     981577       B8900169          MON0629                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    64MB SDRAM Memory                     JS     981577       B8604167          CHP0542                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Power Mac G#/233MHX 32MB RAM          JS     981577       B8584575          CPU0956      SXB8201WJCY3  Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Etherx PCI card                       JS     981577       B8604167          DEC2256                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    17" Power User Monitor                JS     981577       B8584575          MON0629                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Executone Phone System Upgrade        EJ     981582       179169                                       Executone
                                                                                                             Information Systems
-----------------------------------------------------------------------------------------------------------------------------------
 1    Micron Computer - Millenia 400 PC     JM     981717       4001541; YS1, 1271117-001                    Micron Electronics,
                                                                                                             Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              JM     981717                                                    Micron Electronics,
                                                                                                             Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 1    Discount                              JM     981717                                                    Micron Electronics,
                                                                                                             Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 1    Power Mac G3/233/MHZ                  JS     981834       B9560723           CPU0956     SXA8181JQCY3  Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    17" Power Uwer Monitor                JS     981834       B9560723            MT1514                   Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    17" Power User Monitor                JS     981834       B9450723            MT1514                   Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Memory for G3                         JS     981834       B9557620           CHP0542                   Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              JS     981834                                                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Memory for G3                         JS     981836       B9559485           CHP0542                   Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Power Mac G3/233MHZ                   JS     981836       B9554056           CPU0956     SXA81825UCY3  Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    17" Power User Monitor                JS     981836       B9554056           MT 1514                   Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              JS     981836                                                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Memory for G3                         JS     981`837      B9564287           CHP0542                   Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Power Mac G3/233MHZ                   JS     981837       B9559030           CPU0956     SXAB182NUCY3  Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    17" Power Uwer Monitor                JS     981837       B9559030            MT1514                   Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              JS     981837                                                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Minolta Copier                        SO     981912       8072006048         1161311     3,111,086.00  Minolta Business
                                                                                    Ep6001                   System, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 1    Minolta Fax                           SO     981913       9082006049    4266111Fax2500  11,113,839.00  Minolta Business
                                                                                                             Systems, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 1    Power Book G3/233/MHZ                 JS     982039       CO215327           CPU1162     SCK8250MGD3C  Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Memory for G3 Power Book              JS     982039       CO214387           CHP9822                   Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              JS     982039                                                    Mac Warehouse
-----------------------------------------------------------------------------------------------------------------------------------
 1    Dell PC Pentium II Minitower          GP     982046       171984651         220-0437                   Del Computer
      System                                                                                                 Corporation
-----------------------------------------------------------------------------------------------------------------------------------
 1    Shipping                              GP     982046                                                    Dell Computer
-----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
-----------------------------------------------------------------------------------
                   EQUPIMENT                  EQUIPMENT     EQUIPMENT       PAID -
QTY              DESCRIPTION                 COST - Each       COST        CHECK #
-----------------------------------------------------------------------------------
<S>   <C>                                  <C>            <C>             <C>
 2    PC Computer System - Millennia       4,510.00        9,020.00        9116
      400
-----------------------------------------------------------------------------------
 1    Shipping                               268.00          268.00        9116
-----------------------------------------------------------------------------------
 1    CPU Compaq Deskpro 2000 P/233MMX     1,099.00        1,099.00        9117
-----------------------------------------------------------------------------------
 3    17' Sony Monitor 200 PS                755.00        2,265.00        9111
-----------------------------------------------------------------------------------
 1    Shipping                                55.55           55.55        9111
-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------
 3    GP6-400 System                       2,886.00        8,658.00        9091
-----------------------------------------------------------------------------------
 1    Shipping                               285.00          285.00        9111
-----------------------------------------------------------------------------------
 2    17" Power User Monitor                (329.95)        (659.90)       9111
-----------------------------------------------------------------------------------
 1    17" Power User Monitor                (290.29)        (290.29)       9111
-----------------------------------------------------------------------------------
 2    17" Power User Monitor                 329.95          659.90        9111
-----------------------------------------------------------------------------------
 1    17" Power User Monitor                 319.00          319.00        9111
-----------------------------------------------------------------------------------
 1    64MB SDRAM Memory                      130.00          130.00        9111
-----------------------------------------------------------------------------------
 1    Power Mac G#/233MHX 32MB RAM         1,598.00        1,598.00        9111
-----------------------------------------------------------------------------------
 1    Etherx PCI card                         48.00           48.00        9111
-----------------------------------------------------------------------------------
 1    17" Power User Monitor                 319.00          319.00        9111
-----------------------------------------------------------------------------------
 1    Executone Phone System Upgrade      42,484.63       42,484.63        9201
-----------------------------------------------------------------------------------
 1    Micron Computer - Millenia 400 PC    4,071.00        4,071.00        9591
-----------------------------------------------------------------------------------
 1    Shipping                               124.00          124.00        9591
-----------------------------------------------------------------------------------
 1    Discount                               (20.00)         (20.00)       9591
-----------------------------------------------------------------------------------
 1    Power Mac G3/233/MHZ                 1,598.00        1,598.00        9728
-----------------------------------------------------------------------------------
 1    17" Power Uwer Monitor                 289.95          289.95        9728
-----------------------------------------------------------------------------------
 1    17" Power User Monitor                  98.00           98.00        9728
-----------------------------------------------------------------------------------
 1    Memory for G3                           98.00           98.00        9728
-----------------------------------------------------------------------------------
 1    Shipping                                26.40           26.40        9728
-----------------------------------------------------------------------------------
 1    Memory for G3                           98.00           98.00        9728
-----------------------------------------------------------------------------------
 1    Power Mac G3/233MHZ                  1,598.00        1,598.00        9728
-----------------------------------------------------------------------------------
 1    17" Power User Monitor                 289.95          289.95        9728
-----------------------------------------------------------------------------------
 1    Shipping                                26.40           26.40        9728
-----------------------------------------------------------------------------------
 1    Memory for G3                           98.00           98.00        9728
-----------------------------------------------------------------------------------
 1    Power Mac G3/233MHZ                  1,598.00        1,598.00        9728
-----------------------------------------------------------------------------------
 1    17" Power Uwer Monitor                 289.95          289.95        9728
-----------------------------------------------------------------------------------
 1    Shipping                                26.40           26.40        9278
-----------------------------------------------------------------------------------
 1    Minolta Copier                      22,458.97       22,458.97        9592
-----------------------------------------------------------------------------------
 1    Minolta Fax                          1,690.70        1,690.70        9592
-----------------------------------------------------------------------------------
 1    Power Book G3/233/MHZ                2,200.00        2,200.00        9728
-----------------------------------------------------------------------------------
 1    Memory for G3 Power Book               198.00          198.00        9728
-----------------------------------------------------------------------------------
 1    Shipping                                 9.90            9.90        9728
-----------------------------------------------------------------------------------
 1    Dell PC Pentium II Minitower         3,075.00        3,075.00        9552
      System
-----------------------------------------------------------------------------------
 1    Shipping                                90.00           90.00        9552
-----------------------------------------------------------------------------------
</TABLE>

                                      27
<PAGE>

<TABLE>
<S>   <C>                                   <C>    <C>          <C>            <C>              <C>            <C>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Corporation
----------------------------------------------------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ 32MB              JS     982209       CO711820            CPU0958                    Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ 32MB              JS     982209       CO707117            CPU0958      SXB824550CY5  Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
1     Memory for G3                         JS     982209       CO722496            CHP0542                    Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
1     Memory for G3                         JS     982209       CO712182                                       Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ 32MB              JS     982427       C1490119            CPU0957      SXZ8241TNCY4  Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
1     64 MB Memory                          JS     982427       C1489889            CHP0429                    Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
1     17" Daytek Monitor                    JS     982427       C1469428             MT2377     DV9805J100015  Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
1     Shipping                              JS     982427                                                      Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
1     Shipping                              JS     982427                                                      Mac Warehouse
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Office equipment
                                                                                                               and Furniture
----------------------------------------------------------------------------------------------------------------------------------
1     2 Position Thermal Sample Changer     GP     980604       100143202           FL-1012                    Instruments,
                                                                                                               S.A./SPEX
----------------------------------------------------------------------------------------------------------------------------------
1     Robomax Refurbished                   JK     980686       135661           9000-0157R           RB00518  Molecular Devices
                                                                                                               Corporation
----------------------------------------------------------------------------------------------------------------------------------
1     Robomax Refurbished                   JK     980686       135487          9000-0157-R           RB00521  Molecular Devices
                                                                                                               Corporation
----------------------------------------------------------------------------------------------------------------------------------
1     Glassware Washer Electric Heat &      B      980743       13927                                          Lancer, USA Inc.
      Jet Racks
----------------------------------------------------------------------------------------------------------------------------------
1     Master Track Shelving System          DG     980853       6009              OHT 13.25                    Labrepco
----------------------------------------------------------------------------------------------------------------------------------
2     SGI 02 Workstations                   JS     981200       82678          W10-195S-4G64                   RCH Products, Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     Buchi Rotvapor 29/42 joint            JJ     981247       U81347156            954742                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Freezer Isotmp 51CFT                  DG     981296       U81732622          13990146                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Refrig/Freezer CFC-Free 115V          CM     981297       U81334377         13986106A                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Origin 2000 Computer Server           JS     981300       82684                                          RCH Products, Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     Flash 12I + 401 Cartridge Column      SM     981303       7626           SF-120-15170                    Biotage
      System
----------------------------------------------------------------------------------------------------------------------------------
1     Vacuum pump 5.6 CFM MDL M             NS     981342       U81418666           012578C                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Balance STD-LV                        NS     981379       U81419068           1909377                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Balance 2100G* 0.01G STD              NS     981379       U81419068            191886                    Fisher Scientiifc
----------------------------------------------------------------------------------------------------------------------------------
1     Bio Safety Cabinet & Single           CM     981406       2707980                                        Forma Scientific
      Chmbr. Incubator
----------------------------------------------------------------------------------------------------------------------------------
1     Rotavapor 24/40 R124C                 SK     981428       U81487170            954741                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Vacum pump 5.6 CFM MDL M              MP     981430       U81487156            12578C                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     ESI Probe                             BT     981461       S-022750-012                                   Finnegan Corporation
----------------------------------------------------------------------------------------------------------------------------------
1     Finigan LCQ System                    BT     981461       S-02750-011             LCQ                    Finegan Corporation
----------------------------------------------------------------------------------------------------------------------------------
1     Microscope w/Imaging System           CM     981466       62006                 90700            411921  Optical Apparatus
                                                                                                               Co., Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     Gilson 215 Liquid handler             BT     981468       156757                                         Gilson, Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     HPLC System for Mass Spectrometer     BT     981469       188439                                         Shimadzu Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Speedvac w/Bleeder Valve              MP     981483       153461                SC110                    Savant Instruments,
                                                                                                               Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     Hydra-96 Flexchem Dispenser           ZW     981496       10089843          1029-B1-1       MD985980629  Robbins Scientific
                                                                                                               Corp.
----------------------------------------------------------------------------------------------------------------------------------
1     Genius Block Flat Plate               JK     981529       240790              7022519                    Techne Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     Genesis RSP 200/8 Liquid Handler      JK     981548       136113              10-065A              3143  TECAN
----------------------------------------------------------------------------------------------------------------------------------
1     Genesis RSP 20/8 Liquid Handler       DG     981549       136070              10-065A              3142  TECAN
----------------------------------------------------------------------------------------------------------------------------------
1     Fraction Collector, CF1               MP     981590       A81634063           1118737                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Freezer Isotmp                        DG     981607       U81837970          13990128                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Freezer Isotmp                        DG     981607       A81695421          13990128                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Vacuum Pump                           ZA     981608       AB81695427           118220                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Rotavapor 24/40 R 124C(2)             SM     981612       A81706949            954741                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
<S>   <C>                                        <C>            <C>             <C>
-------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ 32MB                   1,929.00       129.00          9728
-------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ 32MB                   1,929.00       1,929.00        9728
-------------------------------------------------------------------------------------
1     Memory for G3                              98.00          98.00           9728
-------------------------------------------------------------------------------------
1     Memory for G3                              98.00          98.00           9728
-------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ 32MB                   1,169.00       1,619.00 NP
-------------------------------------------------------------------------------------
1     64 MB Memory                               98.00          98.00 NP
-------------------------------------------------------------------------------------
1     17" Daytek Monitor                         255.00         255.00 NP
-------------------------------------------------------------------------------------
1     Shipping                                   34.50          34.50 NP
-------------------------------------------------------------------------------------
1     Shipping                                   63.00          63.00 NP
-------------------------------------------------------------------------------------
                                                                112,317.01
-------------------------------------------------------------------------------------
1     2 Position Thermal Sample Changer          3,410.00       3,410.00 NP
-------------------------------------------------------------------------------------
1     Robomax Refurbished                        7,488.00       7,488.00        9258
-------------------------------------------------------------------------------------
1     Robomax Refurbished                        7,488.00       7,488.00        9120
-------------------------------------------------------------------------------------
1     Glassware Washer Electric Heat &           70,126.68      70,126.68       9246
      Jet Racks
-------------------------------------------------------------------------------------
1     Master Track Shelving System               5,571.00       5,571.00        9722
-------------------------------------------------------------------------------------
2     SGI 02 Workstations                        18,599.83      37,199.65       8914
-------------------------------------------------------------------------------------
1     Buchi Rotvapor 29/42 joint                 3,950.00       3,950.00        9153
-------------------------------------------------------------------------------------
1     Freezer Isotmp 51CFT                       5,812.00       5,812.00        9558
-------------------------------------------------------------------------------------
1     Refrig/Freezer CFC-Free 115V               1,59.97        1,159.97        9153
-------------------------------------------------------------------------------------
1     Origin 2000 Computer Server                116,673.00     116,673.00      9005
-------------------------------------------------------------------------------------
1     Flash 12I + 401 Cartridge Column           3,055.00       3,055.00        8943
      System
-------------------------------------------------------------------------------------
1     Vacuum pump 5.6 CFM MDL M                  1,725.00       1,725.00        9153
-------------------------------------------------------------------------------------
1     Balance STD-LV                             2,443.47       2,443.47        9153
-------------------------------------------------------------------------------------
1     Balance 2100G* 0.01G STD                   1,660.17       1,660.17        9153
-------------------------------------------------------------------------------------
1     Bio Safety Cabinet & Single                3,668.20       3,668.20        9161
      Chmbr. Incubator
-------------------------------------------------------------------------------------
1     Rotavapor 24/40 R124C                      3.668.20       3,668.20        9161
-------------------------------------------------------------------------------------
1     Vacum pump 5.6 CFM MDL M                   1,371.15       1,371.15        9153
-------------------------------------------------------------------------------------
1     ESI Probe                                  6,870.00       6,870.00        9219
-------------------------------------------------------------------------------------
1     Finigan LCQ System                         146,500.00     146,500.00      9219
-------------------------------------------------------------------------------------
1     Microscope w/Imaging System                45,208.00      45,208.00       9604
-------------------------------------------------------------------------------------
1     Gilson 215 Liquid handler                  21,442.25      21,442.25       9224
-------------------------------------------------------------------------------------
1     HPLC System for Mass Spectrometer          26,932.60      26,932.60       9282
-------------------------------------------------------------------------------------
1     Speedvac w/Bleeder Valve                   1,985.00       1,985.00        9134
-------------------------------------------------------------------------------------
1     Hydra-96 Flexchem Dispenser                22,325.00      22,325.00       9277
-------------------------------------------------------------------------------------
1     Genius Block Flat Plate                    1,943.00       1,943.00        9140
-------------------------------------------------------------------------------------
1     Genesis RSP 200/8 Liquid Handler           126,539.60     119,777.60      9778
-------------------------------------------------------------------------------------
1     Genesis RSP 20/8 Liquid Handler            126,010.60     126,010.60      9778
-------------------------------------------------------------------------------------
1     Fraction Collector, CF1                    1,418.05       1,418.05        9310
-------------------------------------------------------------------------------------
1     Freezer Isotmp                             (4,815.28)     (4,815.28)      9310
-------------------------------------------------------------------------------------
1     Freezer Isotmp                             4,815.28       4,815.28        9310
-------------------------------------------------------------------------------------
1     Vacuum Pump                                2,100.41       2,100.41        9310
-------------------------------------------------------------------------------------
1     Rotavapor 24/40 R 124C(2)                  7,376.40       7,376.40        9310
-------------------------------------------------------------------------------------
</TABLE>

                                      28
<PAGE>

<TABLE>
<S>   <C>                                   <C>    <C>          <C>             <C>               <C>          <C>
----------------------------------------------------------------------------------------------------------------------------------
1     Balance                               SM     9816123      A81706949           1909377                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Imersion Cooler                       SM     981612       A8170649            1326473                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
2     Balance/STD-LV 210Gx0.1MG             DR     981614       U81700928           1909377                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
4     Vaccum Pump 5.6 CFM MDL M             DR     981614       U81700928           012578C                    Fishcer Scientific
----------------------------------------------------------------------------------------------------------------------------------
2     Dynamax SD-1 Pump System              SK     981617       038 265609B     R0071050032                    Varian
                                                                                                               Chromatography
                                                                                                               Systems
----------------------------------------------------------------------------------------------------------------------------------
1     Innova Heating Shaker Model 4080      MP     981618       207120           M1192-0004         890312655  New Brunswick
                                                                                                               Scientific Co.
----------------------------------------------------------------------------------------------------------------------------------
2     Rotavapor 24/40 R124C(2)              DR     981630       A81695367            954741                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Vacuum Pump                           SK     981721       A81767916            01100A                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Refrigerator/Freezer                  SK     981721       A81767916         13986106A                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Vacuum Oven                           MP     981722       A81767897         13262285A                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Speedvac Component System 110V        MP     981756       153983                 SS22                    Savant Instruments
----------------------------------------------------------------------------------------------------------------------------------
1     Liquid Handler with Pump              MP     981757       157618              2510121                    Gilson, Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     Shipping                              MP     981757       157808                                         Gilson, Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     4 x 750 Rotor for marathon 3000       KR     981769       H81821526           4976008                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Marathon 3000 Centrifuge              KR     981769       H81821526          49773000                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Centrifuge MDL 5415C 115V             KR     981769       H81821526            540010                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     Analytical Balance                    KR     981769       H81821526         01913503C                    Fisher Scientific
----------------------------------------------------------------------------------------------------------------------------------
1     PTC-100-60 W Hot Bonnet               MC     9819902      50516              PTC-1160             18213  M.J. Research, Inc.
----------------------------------------------------------------------------------------------------------------------------------
2     Genius 384 Well System                JK     981964       241179                20000                    Techne Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     MZ 2C Diaphragm Pump                  NS     981992       609                  696244       20910011-98  Vacuubrand
----------------------------------------------------------------------------------------------------------------------------------
1     Speedvac w/Bleeder Valve              NS     982044       155122                SC100                    Savant Instruments,
                                                                                                               Inc.
----------------------------------------------------------------------------------------------------------------------------------
1     Master Track Shelving System          JK     982146       N0030523                                       Melles Griot
----------------------------------------------------------------------------------------------------------------------------------
1     Evaporative Light Scattering          SE     982261       4439               SED55001                    Richard Scientific
      Detector
----------------------------------------------------------------------------------------------------------------------------------
1     X-Ray System                                                                                             Comdisco
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
1     Server, Cleint, and Jukebox           JM     981361       3754                                           Software Moguls,
      License                                                                                                  Inc.
----------------------------------------------------------------------------------------------------------------------------------

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

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

<CAPTION>
<S>   <C>                                        <C>            <C>             <C>
-------------------------------------------------------------------------------------
1     Balance                                    2,443.47       2,443.47        9310
-------------------------------------------------------------------------------------
1     Imersion Cooler                            1,039.79       1,039.79        9310
-------------------------------------------------------------------------------------
2     Balance/STD-LV 210Gx0.1MG                  2,443.47       4,886.94        9310
-------------------------------------------------------------------------------------
4     Vaccum Pump 5.6 CFM MDL M                  1,215.34       4,861.36        9310
-------------------------------------------------------------------------------------
2     Dynamax SD-1 Pump System                   20,446.18      40,892.36       9298
-------------------------------------------------------------------------------------
1     Innova Heating Shaker Model 4080           5,350.00       5,350.00        9309
-------------------------------------------------------------------------------------
2     Rotavapor 24/40 R124C(2)                   3,679.93       7,359.86        9310
-------------------------------------------------------------------------------------
1     Vacuum Pump                                1,568.31       1,568.31        9310
-------------------------------------------------------------------------------------
1     Refrigerator/Freezer                       1,111.64       1,111.64        9310
-------------------------------------------------------------------------------------
1     Vacuum Oven                                1,691.67       1,691.67        9310
-------------------------------------------------------------------------------------
1     Speedvac Component System 110V             10,950.75      10,950.75       9279
-------------------------------------------------------------------------------------
1     Liquid Handler with Pump                   13,595.75      13,595.75       9224
-------------------------------------------------------------------------------------
1     Shipping                                                                  9562
-------------------------------------------------------------------------------------
1     4 x 750 Rotor for marathon 3000            2,361.11       2,361.11        9558
-------------------------------------------------------------------------------------
1     Marathon 3000 Centrifuge                   3,538.50       3,538.50        9558
-------------------------------------------------------------------------------------
1     Centrifuge MDL 5415C 115V                  1,676.12       1,676.12        9558
-------------------------------------------------------------------------------------
1     Analytical Balance                         1,871.88       1,871.88        9558
-------------------------------------------------------------------------------------
1     PTC-100-60 W Hot Bonnet                    4,811.00       4,811.00        9737
-------------------------------------------------------------------------------------
2     Genius 384 Well System                     4,152.00       8,304.00        9626
-------------------------------------------------------------------------------------
1     MZ 2C Diaphragm Pump                       1,965.00       1,965.00        9635
-------------------------------------------------------------------------------------
1     Speedvac w/Bleeder Valve                   1,985.00       1,985.00        9619
-------------------------------------------------------------------------------------
1     Master Track Shelving System               1,645.05       1,645.05        9776
-------------------------------------------------------------------------------------
1     Evaporative Light Scattering               14,950.00      14,950.00       9753
      Detector
-------------------------------------------------------------------------------------
1     X-Ray System                               83,483.75      83,483.75
-------------------------------------------------------------------------------------
                                                                1,046.443.95
-------------------------------------------------------------------------------------
1     Server, Cleint, and Jukebox                13,595.00      13,595.00       8917
      License
-------------------------------------------------------------------------------------
                                                                13,595.00
-------------------------------------------------------------------------------------
                                                                1,172,355.96
-------------------------------------------------------------------------------------
</TABLE>

                                      29
<PAGE>

                           PAYMENT ADJUSTMENT RIDER
                           ------------------------

     Rider to Schedule No. 02 dated September 25, 1998 to Master Loan and
Security Agreement No. 7110 dated June 18, 1998 (the "CONTRACT") Between 3-
Dimensional Pharmaceuticals, Inc. as Borrower (the "OBLIGOR") AND PHOENIXCOR,
INC. as Lender ("P.C.").

     23.  Purpose. This Rider sets forth the terms of adjustment to the payments
          -------
set forth in the Contract.

     24.  Definitions. The following terms shall have the following meanings
          -----------
herein:

          (a)  "Adjustment Date" shall mean the date P.C. disburses any portion
of the proceeds of the Contract.

          (b)  "Final T-Note Average" shall mean the average of the yields on
the U.S. Treasury Notes maturing in 4 years, as published by the Dow Jones
Telerate Access Service, Page 19901, for the close of business on each business
day of the two full calendar weeks immediately preceding the week containing the
Adjustment Date.

          (c)  "Preliminary Payments" shall mean the payments set forth in the
Contract, consisting or ($30,200.56 due upon execution followed by) 46
consecutive (monthly or quarterly) payments in the amount of $30,200.56
commencing 30 days after the Adjustment Date, following by one monthly payment
of $122,388.40.

          (d)  "Preliminary T-Note Average" shall mean 5.41%.

     25.  Adjustment of Payments. The Preliminary Payments were calculated based
          ----------------------
on a spread over the Preliminary T-Note Average. If the Adjustment Date occurs
after June 17, 1998 and the Final T-Note Average exceeds the Preliminary T-Note
Average, then the Preliminary Payments shall be revised. For each increase or
decrease of one (1) basis point (i.e., 1/100 of 1%) in the Final T-Note Average
above the Preliminary T-Note Average, the Preliminary Payments shall be revised
as follows (complete below as applicable):

 .    The $30,200.56 payment due upon execution shall remain unchanged.

 .    Each of the 46 payments in the amount of $30,200.56 shall increase or
     decrease by $6.12.

Immediately after the determination of the revised payments due under the
Contract, Obligor shall, at the request of P.C. execute an acknowledgement
reflecting the revised payment schedule and, if requested by P.C. a Replacement
Contract containing the agreed to payments, but the failure of P.C. to make such
a request or the failure of Obligor to execute the acknowledgement or
Replacement Contract shall in no way diminish Obligor's obligations hereunder.

     26.  P.C.'s Requirements. The Commencement of the contract is subject to
satisfaction of all documentation and credit requirements of P.C. If such
requirements are not satisfied by the Adjustment Date, then at P.C.'s option,
the Adjustment Date shall be the date when such requirements are satisfied.

The calculation of the Contract Payments under this Rider will supersede any
prior proposal or quotation.

     IN WITNESS WHEREOF, the parties have executed this Rider simultaneously
with the Contract.

PHOENIXCOR, INC.                          3-Dimensional Pharmaceuticals, Inc.

By: _______________________________       By: _________________________________

Title: ____________________________       Title: ______________________________

                                      30
<PAGE>

                           PAYMENT ADJUSTMENT RIDER
                           ------------------------

     Rider to Schedule No. 02 dated September 25, 1998 to Master Loan and
Security Agreement No. 7110 dated June 18, 1998 (the "CONTRACT") Between
3-Dimensional Pharmaceuticals, Inc. as Borrower (the "OBLIGOR") AND PHOENIXCOR,
INC. as Lender ("P.C.").

     27.  Purpose. This Rider sets forth the terms of adjustment to the payments
          -------
set forth in the Contract.

     28.  Definitions. The following terms shall have the following meanings
          -----------
herein:

          (a)  "Adjustment Date" shall mean the date P.C. disburses any portion
of the proceeds of the Contract.

          (b)  "Final T-Note Average" shall mean the average of the yields on
the U.S. Treasury Notes maturing in 4 years, as published by the Dow Jones
Telerate Access Service, Page 19901, for the close of business on each business
day of the two full calendar weeks immediately preceding the week containing the
Adjustment Date.

          (c)  "Preliminary Payments" shall mean the payments set forth in the
Contract, consisting or ($30,200.56 due upon execution followed by) 46
consecutive (monthly or quarterly) payments in the amount of $30,200.56
commencing 30 days after the Adjustment Date, following by one monthly payment
of $122,388.40.

          (d)  "Preliminary T-Note Average" shall mean 5.41%.

     29.  Adjustment of Payments. The Preliminary Payments were calculated based
          ----------------------
on a spread over the Preliminary T-Note Average. If the Adjustment Date occurs
after June 17, 1998 and the Final T-Note Average exceeds the Preliminary T-Note
Average, then the Preliminary Payments shall be revised. For each increase or
decrease of one (1) basis point (i.e., 1/100 of 1%) in the Final T-Note Average
above the Preliminary T-Note Average, the Preliminary Payments shall be revised
as follows (complete below as applicable):

 .    The $30,200.56 payment due upon execution shall remain unchanged.

 .    Each of the 46 payments in the amount of $30,200.56 shall increase or
     decrease by $6.12.

Immediately after the determination of the revised payments due under the
Contract, Obligor shall, at the request of P.C. execute an acknowledgement
reflecting the revised payment schedule and, if requested by P.C. a Replacement
Contract containing the agreed to payments, but the failure of P.C. to make such
a request or the failure of Obligor to execute the acknowledgement or
Replacement Contract shall in no way diminish Obligor's obligations hereunder.

     30.  P.C.'s Requirements. The Commencement of the contract is subject to
satisfaction of all documentation and credit requirements of P.C. If such
requirements are not satisfied by the Adjustment Date, then at P.C.'s option,
the Adjustment Date shall be the date when such requirements are satisfied.

The calculation of the Contract Payments under this Rider will supersede any
prior proposal or quotation.

     IN WITNESS WHEREOF, the parties have executed this Rider simultaneously
with the Contract.

PHOENIXCOR, INC.                          3-Dimensional Pharmaceuticals, Inc.

By: _______________________________       By: _________________________________

Title: ____________________________       Title: ______________________________

                                      31
<PAGE>

                               PHOENIXCOR, INC.
                                65 WATER STREET
                            SOUTH NORWALK, CT 07854
                    203-855-0030 (PHONE) 203-866-3593 (FAX)


3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center, 665 Stockton Drive, suite 104
Exton, PA 19341

     Re: Equipment Schedule #02 dated September 25, 1998

Ladies and Gentlemen:

Phoenixcor, Inc. requires insurance coverage with companies and in form
satisfactory to it as one of the conditions to enter into the above described
lease or loan with your Company covering the Equipment listed on the attached
schedule or exhibit. This insurance must be carried throughout the term of the
lease/loan. Please sign and return this letter. Please forward a copy of this
letter to your insurance company to process a certificate with the following
requirements:

PROPERTY COVERAGE:
-----------------
 .    Covering all risks of physical loss, damage, destruction or theft of the
     Equipment, with extended coverage.
 .    Loss payable to PHOENIXCOR, INC. AND ITS ASSIGNS.
 .    In an amount equal to not less than the Equipment's full replacement
     value of $1,223,883.96.

LIABILITY COVERAGE:
------------------
 .    $5,000,000.00 combined single limit for each occurrence general liability
     coverage.
 .    Naming PHOENIXCOR, INC. AND ITS ASSIGNS as Additional Insured

PROPERTY AND LIABLITY COVERAGE:
------------------------------
 .    The Equipment should be described specifically or by reference to an
     attached schedule or exhibit or by reference to the above lease or loan
     and account number.
 .    Carrier should be rated A-, VIII (or better) by A.M. Best Company.
 .    Notices to Phoenixcor, Inc. are to be sent to 65 water Street, South
     Norwalk, Connecticut 06854.

Attached is a sample insurance certificate. Additional provisions may be
required for vehicles or other specialized collateral or if otherwise applicable
to the transaction.

ADDIITONAL POLICY PROVISIONS:
----------------------------
 .    The polices must provide that they will not be canceled or altered without
     thirty (30) days prior written notice to PHOENIXCOR, INC.
 .    The policies insuring against loss, damage, destruction or theft must
     provide that the coverage will not be invalidated against PHOENIX, INC. AND
     ITS ASSIGNS because of any violation of any condition or warranty contained
     in any policy or application therefor by the insured or others.

Please feel free to contact or have your insurance agent contact Joan Kossoff at
your earliest convenience. Please be aware that failure to have an insurance
certificate in effect that meets the above requirements will delay the
commencement and/or funding of the above lease or loan.

Very truly yours,                        AGREED TO AND ACCEPTED BY;
PHOENIXCOR, INC.                         3 Dimensional Pharmaceuticals, Inc.

                                         BY: _______________________________

                                         TITLE: ____________________________

                                      32
<PAGE>

                                     CHART

                                      33
<PAGE>

                               LANDLORD'S WAIVER
                               -----------------

     THIS LANDLORD'S WAIVER is made June 30, 1998, by EAGLEVIEW TECHNOLOGY
PARTNERS, having an address c/o The Hankin Group at 717 Constitution Drive,
Eagleview Corporate Center, Exton, PA 19341 ("Landlord"), in favor PHOENIXCOR,
INC., having an address at 65 Water Street, South Norwalk, CT 06854 ("Secured
Party"), against the following background.

                                  BACKGROUND
                                  ----------

     A.   By Office Lease Agreement dated December 12, 1997 (as amended,
"Lease"), Landlord leased to 3-DIMENSIONAL PHARMACEUTICALS, INC. ("Tenant")
certain premises containing approximately 30,411 square feet ("Premise") within
a building know as Eagleview Corporate Center, 665 Stockton Drive, Exton, PA
19341.

     B.   Secured Party has or may extend credit to Tenant, and as security
therefor, Tenant has or is about to grant to Secured Party a security interest
(the "Priority Security Interest") in the following collateral, some or all of
which may now or hereafter be located at the Premises: the equipment and other
items of personal property as described in the Schedules attached to that
certain Master Loan and Security Agreement between Security Party and Tenant,
including all present and future additions, attachments, replacements,
accessoions and accessories thereto (all of the foregoing, together with all
products and proceeds thereof and all improvements and replacements thereof and
additions thereto, but specifically excluding the "Trade Fixtures" as defined
under Section 7(f)(ii) of the Lease, are herein collectively called the
"Collateral").

     NOW, THEREFORE, for value received and intending to be legally bound
hereby, Landlord and Secured Party agree as follows:

     1.   Landlord hereby waives, relinquishes and releases to the Secured Party
any and all liens, security interests, claims, demands and rights, including
without limitation the right to levy or distraint for unpaid rent, which
Landlord now has or hereafter may have with respect to the Collateral, except
the right to levy upon such Collateral in execution of any judgment obtained by
Landlord against Tenant, the lien of which levy shall be subordinate to the
Priority Security Interest.

     2.   Landlord agrees that the Collateral shall at all times be considered
personal property and shall not become fixtures, real estate or part of the
Premises.

     3.   Landlord agrees that Secured Party may, after notice to Landlord and
at a time approved by Landlord (which approval shall not be unreasonably
withheld or delayed), enter upon the Premises and remove the Collateral.
Security Party shall reimburse Landlord for the reasonable cost of repairing any
damage done to the Premises as a result of Secured Party's removal of the
Collateral.

     4.   Secured Party shall indemnify, defend and hold harmless Landlord from
(a) all direct costs incurred by Landlord arising solely from the removal of the
Collateral and the exercise of Secured Party's rights under this Agreement and
the Master Loan and Security Agreement, and (b) any and all claims, actions,
damages, liabilities and expenses in connection with bodily injury or property
damage occasioned by Secured Party's entry on the Premises and/or removal of the
Collateral. Tenant hereby releases Landlord from any and all claims, suits and
damages that Tenant may now or hereafter have arising out of or relating to the
Secured Party's removal of the Collateral and exercise of its rights and
remedies under this Waiver and the Master Loan and Security Agreement.

     5.   In the event the Premises are vacated by Tenant, Landlord shall incur
no liability by reason of Landlord's action or inaction with respect to the
Collateral, and, within forty-five (45) days following notice from Landlord,
Secured Party shall remove all Collateral from the Premises and shall release
its security interest of record, if applicable. If within such forty-five (45)
day period Secured Party fails to (a) remove the Collateral or notify Landlord
in writing that Secured Party has abandoned such property and (b) release its
security interest of record, if applicable, then thereafter Secured Party shall
be deemed to be a tenant of the Premises under all of the terms and conditions
of the Lease until such time as the Collateral is removed and Secured Party
shall pay to Landlord, in advance, rent and operating expenses (as described in
the Lease) at the rates then applicable under the

                                      34
<PAGE>

Lease for each day that the Collateral remains in the Premises and (ii) Landlord
may remove the Collateral and Secured Party shall reimburse Landlord,
immediately following Landlord's demand, for the costs of such removal and
reasonable storage costs for the Collateral. Notwithstanding the foregoing, in
addition to the remedies set forth above, in the event that following vacation
of the Premises by Tenant, Secured Party shall fail to remove the Collateral
from the Premises and release its security interest of record or notify Landlord
in writing that Secured Party has abandoned the same and released its security
of interest of record, then Secured Party shall reimburse Landlord for
reasonable storage costs for the Collateral beginning as of the date of
Landlord's notice to Secured Party that the Premises have been vacated by
Tenant.

     6.   In the event of Secured Party's refusal in accordance with the
foregoing to pay Landlord or to release its security interest of record, if
applicable, all legal expenses incurred by Landlord in enforcing its rights
hereunder shall be paid for by Secured Party.

     7.   This Landlord's Waiver shall be void and of no legal effect unless,
within thirty (30) days after the date it has been signed by Landlord, (a)
Tenant acknowledges its agreement with the foregoing by signing this Landlord's
Waiver, (b) Secured Party signs this Landlord's Waiver, and (c) a fully signed
and dated original hereof is delivered to Landlord at the address stated in the
heading of this instrument. All notices to Secured Party shall be given at the
address for Secured Party stated in the heading of this instrument. All notices
shall be effective on the two business days after the date sent by certified
mail, return receipt requested, postage prepaid, or the next business day after
being send by Federal Express or similar nationally recognized overnight
courier.

     IN WITNESS WHEREOF, the Landlord has duly executed and delivered this
Landlord's Waiver as of the day and date first above written.

                                             LANDLORD:

WITNESS:                                     EAGLEVIEW TECHNOLOGIES PARTNERS

BY:      ______________________________      BY:   ____________________________
Name:                                        Name:
Title:                                       Title:

                                             SECURED PARTY:

WITNESS:                                     PHOENIXCOR, INC.

BY:      ______________________________      BY:   ____________________________
Name:                                        Name:
Title:                                       Title:

Agreed to by:

3-DIMENSIONAL PHARMACEUTICALS, INC.

By:      ______________________________
Name:
Title:

                                      35
<PAGE>

                                     DEED
                                     ----

     THIS INDENTURE made the 28/th/ day of March in the year of our Lord one
thousand nine hundred ninety-five (1995), between THE HANKIN GROUP, a
Pennsylvania partnership, hereinafter called the Grantor, of the one part,

                                      AND
     CHESTER COUNT DEVELOPMENT COUNCIL, a Pennsylvania nonprofit corporation,
hereinafter called the Grantee, of the other party,

     WITNESSETH, that the said Grantor, for and in consideration of the sum of
One Dollar, lawful money of the United States of America, and other good and
valuable consideration unto it well and truly paid by the said Grantee, at or
before the sealing and delivery, hereof, the receipt where of is hereby
acknowledged, has granted, bargained and sold, aliened, enfeoffed, released and
confirmed, and by these presents does grant, bargain and sell, alien, enfeoff,
release and confirm unto the said Grantee, its Successors and Assigns,

     ALL THAT CERTAIN PARCEL OF LAND with buildings and improvements thereon
erected situate in Uwchlan Township, Chester County, Pennsylvania know as Lot
#28, Eagleview Corporate Center, more fully bounded and described in Exhibit "A"
attached hereto.

     TOGETHER with all and singular, the structures, improvements, ways,
streets, alleys, passages, waters, watercourses, mineral rights and timber
rights, if any, liberties, privileges, hereditaments and appurtenances,
whatsoever thereunto belonging, or in any wise appertaining, and the reversions
and remainders, rents, issues and profits thereof; and all the estate, right,
title, interest, property, claim and demand whatsoever of it the said Grantor in
law as in equity, or otherwise howsoever, of, in and to the same and every part
thereof.

     TO HAVE AND TO HOLD, the said parcel of land above described, with the
improvements and structures thereon erected and the hereditaments and premises
hereby granted, or mentioned and intended so to be, with the appurtenances, unto
the said Grantee, its Successors and Assigns, to and for the only proper use and
behoof of the said Grantee, its Successors and Assigns forever, in fee.

     UNDER AND SUBJECT to the matters of record.

     AND the said Grantor, for itself and its Successors, does by these
presents, covenant, grant and agree, to and with the said Grantee, its
Successors and Assigns, that it, the said Grantor and its Successors, all and
singular the hereditaments and premises hereinabove described and granted, or
mentioned and intended so to be, with appurtenances, unto the said Grantee, its
Successors and Assigns, against it, the said Grantor and its Successors and
Assigns, and against all and every person or persons whomsoever lawfully
claiming or to claim the same or any part thereof, by, from or under Grantor, or
any of them, shall and will, subject as aforesaid, WARRANT and forever DEFEND.

     IN WITNESS WHEREOF, the said Grantor has caused these presents to be
executed and its common or corporate seal to be hereto affixed, duly attested,
dated the day and year first above written.


WITNESS:                                   GRANTOR:

                                           THE HANKIN GROUP, a Partners

____________________________________       By: _______________________________
                                               Robert S. Hankin, Partner

I hereby certify that the address of the above Grantee is:

                                      36
<PAGE>

Chester County Development Council
750 Pottstown Pike
Exton, PA  19341



________________________
On behalf of the Grantee

--------------------------------------------
COMMONWEALTH OF PENNSYLVANIA           :
--------------------------------------------
                                       :  ss
--------------------------------------------
COUNTY OF CHESTER                      :
--------------------------------------------

     On this, the ____ day of ________, before me, a Notary Public, the
Undersigned officer personally appeared, Robert S. Hankin, known to me (or
satisfactorily proven) to be the general partner of The Hankin Group, a
Pennsylvania partnership, and acknowledged that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the partnership as such partner.

     IN WITNESS WHEREOF, I hereunto set my hand and seal.


                                                 _____________________
                                                 Notary Public


My Commission Expires:

                                      37
<PAGE>

                                  EXHIBIT "A"
                                  -----------

     ALL THAT CERTAIN lot or piece of ground with buildings and improvements
thereon arected situate in the Township of Uwchlan, County of Chester,
Commonwealth of Pennsylvania bounded and described according to a Plan or
Subdivision of Eagleview Corporate Center made by Chester Valley Engineers,
Inc., of Paoli, PA dated 2/18/1987 and last revised 3/28/1994, as follows, to
wit:

     Beginning at a point on the Northeast side of Stockton Drive, 60 feet wide,
said point being measured the two following courses and distances from a point
of curve on the Northwest side of an unnamed Boulevard, 60 feet wide, (1) on the
arc of a circle curving to the right having a radius of 30.00 feet the arc
distance of 47.30 feet to a point of tangent on the Northeast side of said
Stockton Drive (2) North 50 degrees 20 minutes 46 seconds West 2358.83 feet to
the point of beginning; thence from said beginning point and along said Stockton
Drive the two following courses and distances (1) North 50 degrees 20 minutes 46
seconds West 315.28 to a point of curve (2) on the arc of a circule curving to
the right having a radius of 320.00 feet the arc distance of 45.90 feet to a
point a corner of remaining lands of Hankin; thence along the same North 39
degrees 19 minutes 02 seconds East 527.95 feet, crossing the bed of a 30 feet
wide sanitary sewere easement, to a point in line of Lot #31 of said Plan;
thence along the same and along the Northeast side of said easement, South 51
degrees 41 minutes 33 seconds East 161.06 feet to a point; thence continuing
along said Lot #31, North 38 degrees 18 minutes 27 seconds East 38.72 feet to a
point a corner of Lot #30 of said Plan; thence along the same South 16 degrees
41 minutes 33 seconds East 234.52 feet to a point; thence continuing along said
Lot #30, South 50 degrees 40 minutes 38 seconds East 6.19 feet to a point a
corner of Lot #28 of said Plan; thence along the same, recrossing said sanitary
sewer easement, South 39 degrees 19 minutes 02 seconds West 443.80 feet to the
first mentioned point and place of beginning.

     CONTAINING:  4.295 acres be, the same more or less.

     BEING Lot #28 of the above mentioned Plan.

     BEING part of the same premises which Bannercroft Clothing Company, Inc. (a
PA Corporation) by Indenture bearing date the 16/th/ day of December, A.D. 1985
and duly recorded at West Chester in the Office for the Recording of Deeds, in
and for the County of Chester on the 19/th/ day of December A.D. 198o5 in Record
Book 166 page 85, granted and conveyed unto The Hankin Grooup, a Partnership, in
fee.

                                      38
<PAGE>

                               PHOENIXCOR, INC.
                                 65 WATER ST.
                             S. NORWALK, CT 06854


June 18, 199
------------

3-Dimensional Plharmaceuticals, Inc.
Eagleview Corporate Center, 685 Stockton Drive, suite 104
Exton, PA 19341

Gentlemen:

          Reference is made to a certain Master Loan and Security Agreement No.
7110 dated June 18, 1998 and all related Schedules between Phoenixcor, Inc as
           -------------
Lender (the "Lender") and 3-Dimensional Pharmaceuticals, Inc. (as Borrower (the
"Borrower").

         Provided that the Borrower is not then in default and never has been in
default under the Contract, and has timely paid at least the first twenty-four
(24) monthly payments due under the Contract (exclusively of any advance payment
due upon execution) Borrower shall have the right, upon at least thirty (30)
days prior written notice to the Lender, to prepay the Contract on the periodic
installment due date designated in such notice by paying to the Lender the sum
of (1) the then outstanding principal balance of the Contract (calculated on a
simple interest basis) plus (ii) a premium of 3% during Year 3 and a premium of
1/5% during Year 4. The premium applicable with the calculated on the then
outstanding principal balance. Year 3 will mean the period consisting of the
25th through the 38th installments under the Contract (exclusive of any advance
payment due upon execution) and subsequent years will refer to the subsequent
twelve monthly payment periods.


                                                    Very truly yours,

                                                    PHOENIXCOR, INC.

AGREED TO:

3-Dimensional Pharmaceuticals, Inc.

BY: __________________

TITLE: _______________

                                      39
<PAGE>

--------------------------------------------------------------------------------
Phoenixcor Schedule 2                                       1/15/99     Page 1
--------------------------------------------------------------------------------

Compound Period.............:    Monthly
Nominal Annual Rate.........:    10.942%
Effective Annual Rate........    11.508%
Periodic Rate................    0.9119%
Daily Rate...................      0.02998%
CASH FLOW DATA

--------------------------------------------------------------------------------
     Event      Start Date          Amount  Number     Period       End Date
--------------------------------------------------------------------------------
1    Loan       10/01/1998    1,223,883.96       1
--------------------------------------------------------------------------------
2    Payment    10/01/1998       30,200.56       1
--------------------------------------------------------------------------------
3    Payment    11/01/1998       29,753.80      46     Monthly    08/01/2002
--------------------------------------------------------------------------------
4    Payment    09/01/2002     122,388,.40       1
--------------------------------------------------------------------------------

AMORTIZATION SCHEDULE - Normal Amortization
--------------------------------------------------------------------------------
        Date          Payment      Interest      Principal       Balance
--------------------------------------------------------------------------------
Loan    10/01/1998                                                  1,223,883.96
--------------------------------------------------------------------------------

1       10/01/1998      30,200.56         0.00       30,200.56      1,193,683.40
--------------------------------------------------------------------------------
2       11/01/1998      29,753.80    10,884.72       18,869.08      1,174,814.37
--------------------------------------------------------------------------------
3       12/01/1998      29,753.80    10,712.66       19,041.14      1,155,773.18
--------------------------------------------------------------------------------
        1998 Totals     89,708.16    21,597.38       68,110.78
--------------------------------------------------------------------------------
4       01/01/1999      29,753.80    10,539.04       19,214.76      1,136,558.42
--------------------------------------------------------------------------------
5       02/01/1999      29,753.80    10,363.82       19,389.98      1,117,168.44
--------------------------------------------------------------------------------
6       03/01/1999      29,753.80    10,187.01       19,566.79      1,097,601.65
--------------------------------------------------------------------------------
7       04/01/1999      29,753.80    10,008.59       19,745.21      1,077,856.44
--------------------------------------------------------------------------------
8       05/01/1999      29,753.80     9,828.54       19,925.26      1,057,931.18
--------------------------------------------------------------------------------
9       06/01/1999      29,753.80     9,646.85       20,106.95      1,037,824.23
--------------------------------------------------------------------------------
10      07/01/1999      29,753.80     9,463.51       20,290.29      1,017,533.94
--------------------------------------------------------------------------------
11      08/01/1999      29,753.80     9,278.49       20,475.31        997,058.63
--------------------------------------------------------------------------------
12      09/01/1999      29,753.80     9,091.78       20,662.02        976,396.61
--------------------------------------------------------------------------------
13      10/01/1999      29,753.80     8,903.37       20,850.43        955,546.18
--------------------------------------------------------------------------------
14      11/01/1999      29,753.80     8,713.25       21,040.55        934,505.63
--------------------------------------------------------------------------------
15      12/01/1999      29,753.80     8,521.38       21,232.42        913,273.21
--------------------------------------------------------------------------------
        1999 Totals                 114,545.63      242,499.97
--------------------------------------------------------------------------------
16      01/01/2000      29,753.80     8,327.77       21,426.03        891,847.18
--------------------------------------------------------------------------------
17      02/01/2000      29,753.80     8,132.40       21,621.40        870,225.78
--------------------------------------------------------------------------------
18      03/01/2000      29,753.80     7,935.24       21,818.56        848,407.22
--------------------------------------------------------------------------------
19      04/01/2000      29,753.80     7,736.29       22,017.51        826,389.71
--------------------------------------------------------------------------------
20      05/01/2000      29,753.80     7,535.52       22,218.28        804,171.43
--------------------------------------------------------------------------------
21      06/01/2000      29,753.80     7,332.92       22,420.88        781,750.55
--------------------------------------------------------------------------------
22      07/01/2000      29,753.80     7,128.47       22,625.33        759,125.22
--------------------------------------------------------------------------------
23      08/01/2000      29,753.80     6,922.16       22,831.64        736,293.58
--------------------------------------------------------------------------------
24      09/01/2000      29,753.80     6,713.97       23,039.83        713,253.75
--------------------------------------------------------------------------------
25      10/01/2000      29,753.80     6,503.88       23,249.92        690,003.83
--------------------------------------------------------------------------------
26      11/01/2000      29,753.80     6,291.87       23,461.93        666,541.90
--------------------------------------------------------------------------------
27      12/01/2000      29,753.80     6.077.93       23,675.87        642,866.03
--------------------------------------------------------------------------------
        2000 Totals     86,638.42    86,638.42      270,407.18
--------------------------------------------------------------------------------
28      01/01/2001      29,753.80     5,862.04       23,891.76        618,974.27
--------------------------------------------------------------------------------

                                      40
<PAGE>

--------------------------------------------------------------------------------
29      02/01/2001       29,753.80     5,644.18      24,109.62       594,864.65
--------------------------------------------------------------------------------
30      03/01/2001       29,753.80     5,424.33      24,329.47       570,535.18
--------------------------------------------------------------------------------
31      04/01/2001       29,753.80     5,202.48      24,551.32       545,983.86
--------------------------------------------------------------------------------
32      05/01/2001       29,753.80     4,978.61      24,775.19       521,208.67
--------------------------------------------------------------------------------
33      06/01/2001       29,753.80     4,752.69      25,001.11       496,207.56
--------------------------------------------------------------------------------
34      07/01/2001       29,753.80     4,524.72      25,229.08       470,978.48
--------------------------------------------------------------------------------
35      08/01/2001       29,753.80     4,294.67      25,459.13       445,519.35
--------------------------------------------------------------------------------
36      09/01/2001       29,753.80     4,062.51      25,691.29       419,828.06
--------------------------------------------------------------------------------
37      10/01/2001       29,753.80     3,828.24      25,925.56       393,902.50
--------------------------------------------------------------------------------
38      11/01/2001       29,753.80     3,591.84      26,161.96       367,740.54
--------------------------------------------------------------------------------
39      12/01/2001       29,753.80     3,353.28      26,400.52       341,340.02
--------------------------------------------------------------------------------
        2001 Totals                   55,519.59     301,526.01       314,698.76
--------------------------------------------------------------------------------
40      01/01/2002       29,753.80     3,112.54      26,641.26       287,814.57
--------------------------------------------------------------------------------
41      02/01/2002       29,753.80     2,869.61      26,884.19       260,685.24
--------------------------------------------------------------------------------
42      03/01/2002       29,753.80     2,624.47      27,129.33       233,308.52
--------------------------------------------------------------------------------
43      04/01/2002       29,753.80     2,377.08      27,376.72       205,682.17
--------------------------------------------------------------------------------
44      05/01/2002       29,753.80     2,127.45      27,626.35       177,803.90
--------------------------------------------------------------------------------
45      06/01/2002       29,753.80     1,875.53      27,878.27       149,671.42
--------------------------------------------------------------------------------
46      07/01/2002       29,753.80     1,621.32      28,132.48       121,282.41
--------------------------------------------------------------------------------
47      08/01/2002       29,753.80     1,364.79      28,389.01             0.00
--------------------------------------------------------------------------------
48      09/01/2002      122,388.40     1,105.99     121,282.41
--------------------------------------------------------------------------------
        2001 Totals     360,418.80    19,078.78     341,340.02
--------------------------------------------------------------------------------
        Grand Totals  1,521,263.76   297,379.80   1,223,883.96
--------------------------------------------------------------------------------

                                      41
<PAGE>

                                   EXHIBIT A


The following description of property supplements, and is part, Schedule No. 03
                                                                             --
to Master Loan and Security Agreement No. 7110 dated June 18, 1998 between the
                                          ----       -------------
undersigned Borrower and Phoenixcor, Inc. and may be attached to said Loan
Schedule and any related UCC Financing Statements, Acceptance or Delivery
Certificate or other document describing the property:





                   See Attached Exhibit A Equipment Schedule




     All property listed above complete with any and all attachments,
accessions, additions, replacements, improvements, modifications and
substitutions there to and therefor and all proceeds including proceeds thereof
and therefrom.

PHOENIXCOR, INC.                        3-Dimensional Pharmaceuticals, Inc.
----------------                        -----------------------------------
(Lender)                                (Borrower)


BY:____________________________         BY:___________________________________

TITLE:_________________________         TITLE:________________________________

                                      42
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center                           3-Dimensional Pharmaceuticals, Inc.
665 Stockton Drive, Suite 104                               Equipment Financing
Exton, PA 19341
---------------------------------------------------------------------------------------------------------------
Qty   Equipment Description   REQ.    PURCHASE    INVOICE        CATALOG     SERIAL NO.     SUPPLIER/VEN
                                      ORDER       NO.            NO.                        DOR
---------------------------------------------------------------------------------------------------------------
<S>   <C>                     <C>     <C>         <C>            <C>         <C>            <C>
1     Conference Room         BW      981471      18539                                     Office Pavillion
      Furniture
---------------------------------------------------------------------------------------------------------------
1     Meridian Office Systems BW      981859      20321                                     Office Pavillion
      Furniture (3)
---------------------------------------------------------------------------------------------------------------
1     Silver Spring Water     BW      982205      111                                       C.J. Civis
      Cooler Filteration
      System
---------------------------------------------------------------------------------------------------------------
1     MEM PUSER 64MB          JS      982209      C0722496       CHP0542                    MacWarehouse
      SDRAM F/POWER
      MAC
---------------------------------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ     JS      982209      C0711820       CPU0958                    MacWarehouse
      and Memory
---------------------------------------------------------------------------------------------------------------
1     MEM PUSER 4MB SDRAM     JS      982209      C0712182       CHP0542                    MacWarehouse
      F/POWER MAC
---------------------------------------------------------------------------------------------------------------
1     Power MAC G3/266MHZ     JS      982209      C0707117       CPU0958                    MacWarehouse
      and Memory
---------------------------------------------------------------------------------------------------------------
1     Wireless Internet       EJ      982413      5325-00        872401      S2038105       InfoSystems
      Connection
---------------------------------------------------------------------------------------------------------------
1     Wireless Internet       EJ      982413      5325-01        872407      S2028126       InfoSystems
      Connection
---------------------------------------------------------------------------------------------------------------
2     Wireless Internet       EJ      982413      5325-02        872109                     InfoSystems
      Connection
---------------------------------------------------------------------------------------------------------------
1     Power MAC G3/266MHZ     JS      982427      C1490119       CPU0957     SXB8241TNCY4   MacWarehouse
      and Memory
---------------------------------------------------------------------------------------------------------------
1     64mb 168 PIN EDO        JS      982427      C1489889       CHPO0429                   MacWarehouse
      DIMM 60NS 2K Refresh
---------------------------------------------------------------------------------------------------------------
1     MON DAYTEK 17# .28MM    JS      982427      C1469428       MT2377      DV9805J100015  MacWarehouse
---------------------------------------------------------------------------------------------------------------
1     Power Mac G3/233MHZ     JS      982427      C1835032       CPU1204     SXB8302KLD8X   MacWarehouse
      and Memory
---------------------------------------------------------------------------------------------------------------
1     MEM PUSER 64MB          JS      982209      C0712182       CHP0542                    MacWarehouse
      SDRAM F/POWER
      MAC
---------------------------------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ     JS      982209      CO707117       CPU0958                    MacWarehouse
      and Memory
---------------------------------------------------------------------------------------------------------------
1     Wireless Internet       EJ      982413      5325-00        872401      S2038105       InfoSystems
      Connection
---------------------------------------------------------------------------------------------------------------
1     Wireless Internet       EJ      982413      5325-01        872407      S2028126       InfoSystems
---------------------------------------------------------------------------------------------------------------

<CAPTION>
--------------------------------------------------------------------------------------------
3-Dimensional Pharmaceuticals                                                    Exhibit A
Eagleview Corporate Center                                                 Schedule No. 03
665 Stockton Drive, Suite 104
Exton, PA 19341
--------------------------------------------------------------------------------------------
<S>   <C>                                 <C>               <C>            <C>
Qty   Equipment Description               EQUIPMENT         EQUIPMENT      PAID-
                                          COST -            COST           CHECK #
                                          Each
---------------------------------------------------------------------------------------------
1     Conference Room                      5,472.04 $       5,472.04 $     9898
      Furniture
--------------------------------------------------------------------------------------------
1     Meridian Office Systems              6,414.25         6,414.25      10230
      Furniture (3)
--------------------------------------------------------------------------------------------
1     Silver Spring Water                  1,266.70         1,266.70       9694
      Cooler Filteration
      System
--------------------------------------------------------------------------------------------
1     MEM PUSER 64MB                          98.00            98.00       9728
      SDRAM F/POWER
      MAC
--------------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ                  1,929.00         1,929.00       9728
      and Memory
--------------------------------------------------------------------------------------------
1     MEM PUSER 4MB SDRAM                     98.00            98.00       9728
      F/POWER MAC
--------------------------------------------------------------------------------------------
1     Power MAC G3/266MHZ                  2.027.00         2.027.00       9728
      and Memory
--------------------------------------------------------------------------------------------
1     Wireless Internet                    1,293.00         1,293.00       9868
      Connection
--------------------------------------------------------------------------------------------
1     Wireless Internet                    1,769.00         1,769.00       9868
      Connection
--------------------------------------------------------------------------------------------
2     Wireless Internet                      121.00           242.00       9868
      Connection
--------------------------------------------------------------------------------------------
1     Power MAC G3/266MHZ                  1,653.50         1,653.50       9884
      and Memory
-------------------------------------------------------------------------------------------
1     64mb 168 PIN EDO                        98.00            98.00       9884
      DIMM 60NS 2K Refresh
--------------------------------------------------------------------------------------------
1     MON DAYTEK 17# .28MM                   318.00           318.00       9884
--------------------------------------------------------------------------------------------
1     Power Mac G3/233MHZ                  1,522.45         1,522.45       9884
      and Memory
--------------------------------------------------------------------------------------------
1     MEM PUSER 64MB                          98.00            98.00       9728
      SDRAM F/POWER
      MAC
--------------------------------------------------------------------------------------------
1     Power Mac G3/266MHZ                  2,027.00         2,027.00       9728
      and Memory
--------------------------------------------------------------------------------------------
1     Wireless Internet                    1,293.00         1,293.00       9868
      Connection
--------------------------------------------------------------------------------------------
1     Wireless Internet                    1,769.00         1,769.00       9868
--------------------------------------------------------------------------------------------
</TABLE>

                                      43
<PAGE>

<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>     <C>        <C>            <C>       <C>            <C>
     Connection
------------------------------------------------------------------------------------------------------------------------------------
2    Wireless Internet     EJ      982413    5325-02        872109                  InfoSystems       121.00     242.00      9868
     Connection
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac G3/266MHZ   JS      982427    C1490119       CPU0957   SXB8241TNC    MacWarehouse      1,653.50   1,653.50    9884
     and Memory                                                       Y4
------------------------------------------------------------------------------------------------------------------------------------
1    64mb 168 PIN EDO      JS      982427    C1489889       CHP02429                MacWarehouse      98.00      98.00       9884
     DIMM 6ONS 2K
     Refresh
------------------------------------------------------------------------------------------------------------------------------------
1    MON KAYTEK 17"        JS      982427    C1469428       MT2377    DV9805J1000   MacWarehouse      318.00     318.00      9884
     28mm                                                             15
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac G3/233MHZ   JS      982537    C1835032       CPU1204   SXB8302KL     MacWarehouse      1,522.45   1,522.45    9884
     & Memory                                                         D8X
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER 64MB        JS      982537    C1792357       CHP5042                 MacWarehouse      98.00      98.00       9884
     SDRAM F/POWER
     MAC
------------------------------------------------------------------------------------------------------------------------------------
1    Sheiving System for   JDF     982587    000705                                 Wolternate        21,782.40  21,782.40   9999
     Chem Storage                                                                   Associates, Inc.
------------------------------------------------------------------------------------------------------------------------------------
1    Sheiving System for   JDF     982587    000724                                 Wolternate        404.48     404.48      9999
     Chem Storage                                                                   Associates, Inc.
------------------------------------------------------------------------------------------------------------------------------------
1    Sheiving System for   JDF     982587    000799                                 Wolternate        2,790.58   2,790.58   10277
     Chem Storage                                                                   Associates, Inc.
------------------------------------------------------------------------------------------------------------------------------------
1    Compaq Presario PC,   JS      982590    C2114320       CP8142                  MacWarehouse      1,906.35   1,906.35    9884
     Memory & Monitor
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER DIMM        JS      982590    C2106086       MY9371                  MacWarehouse      276.75     276.75      9884
     128MB SDRAM
------------------------------------------------------------------------------------------------------------------------------------
1    MON PUSER 17          JS      982590    C2108066       MON0629                 MacWarehouse      264.45     264.45      9884
     .28MM
------------------------------------------------------------------------------------------------------------------------------------
1    Compaq Presario PC    JS      982696    C2295483       CP8142    S6835BX48K    MacWarehouse      1,905.45   1,905.45    9884
     & Memory                                                         304
------------------------------------------------------------------------------------------------------------------------------------
1    Compaq Presario PC    JS      982696    C2295483       CP8142    S6835BX48K    MacWarehouse      1,905.45   1,905.45    9884
     & Memory                                                         040
------------------------------------------------------------------------------------------------------------------------------------
1    Compaq Presario PC    JS      982696    C2295483       CP8142    S6835BX48K    MacWarehouse      1,905.45   1,905.45    9884
     & Memory                                                         096
------------------------------------------------------------------------------------------------------------------------------------
3    MEM PUSER DIMM        JS      982696    C2263721       MY9371                  MacWarehouse      270.00     810.00      9884
     128MB SDRAM
------------------------------------------------------------------------------------------------------------------------------------
3    FAST ETHERLINK XL     JS      982696    C2263721       DEC3165                 MacWarehouse      87.17      261.51      9884
     Pci
------------------------------------------------------------------------------------------------------------------------------------
1    FAST ETHERLINK XL     JS      982696    C2263721       DEC3165                 MacWarehouse      87.19      87.19       9884
     Pci
------------------------------------------------------------------------------------------------------------------------------------
2    (2) Dell ispiron      EJ      982698    182153734      220-0406                Dell              4,279.00   8,558.00    9975
     7000 Computer
------------------------------------------------------------------------------------------------------------------------------------
1    Matrix ES 5000        JS      982719    E0031195       DUP1723                 MacWarehouse      3,840.10   3,840.10    10130
     Backup Power System
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac             JS      982720    C2457349       CPU1204                 MacWarehouse      1,794.40   1,794.40    10130
     G3/266MHZ, Memory
     and Monitor
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER 64MB        J2      982720    C2474146       CHP0542                 MacWarehouse      105.80     105.80      10130
     SDRAM F/POWER MAC
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      44
<PAGE>

<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
<S>  <C>                   <C>     <C>       <C>         <C>       <C>           <C>             <C>           <C>             <C>
1    Power Mac G3/300      JS       982721    C2468999    CPU1202   SXB83702QD    MacWarehouse   2,845.75      2,845.75        10130
     Server, Memory,                                                HY
     Monitor
------------------------------------------------------------------------------------------------------------------------------------
2    MEM PUSER 64MB        JS       982721    C2470490    CHP0542                 MacWarehouse     101.90        203.80        10130
     SDRAM F/POWER
     MAC
------------------------------------------------------------------------------------------------------------------------------------
1    MON PUSER 17          JS       982721    C2448850    MON0629                 MacWarehouse     264.45        264.45        10130
     .28MM
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac             JS       982722    C2467553    CPU1204   SXB8320EFD8                  1,522.45      1,522.45        10130
     G3/266MHZ, Memory                                              X
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER 64MB        JS       982722    C2432060    CHP5042                 MacWarehouse     102.45        102.45        10130
     SDRAM F/POWER MAC
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac G3/300      JS       982810    E0226258    CPU1204   SSG8313HD8    MacWarehouse   1,522.45      1,522.45        10130
     Server, Memory,                                                X
     Monitor
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER 64MB        JS       982810    E0238071    CHP0542                 MacWarehouse     102.85        102.85        10130
     SDRAM F/POWER MAC
------------------------------------------------------------------------------------------------------------------------------------
1    MON OPTQST Q71 17     JS       982810    E0360552    MT2266                  MacWarehouse     258.95        258.95        10130
     .27 MM
------------------------------------------------------------------------------------------------------------------------------------
1    Compaq Deskpro        JS       982811    E0201905    CP7744    S6835BVF2P    MacWarehouse   1,640.20      1,640.20        10130
                                                                        162
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER DIMM        JS       982811    E0216598    MY10230                 MacWarehouse     289.85        298.85        10130
     128MB SDRAM
------------------------------------------------------------------------------------------------------------------------------------
1    MON OPTQST Q71 17"    JS       982811    E0359943    MT2266                  MacWarehouse     258.95        258.95        10130
     .27MM
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac G3/266MHZ   JS       982812    E0218875    CPU1204   SSG321DWD     MacWarehouse   1,522.45      1,522.45        10130
                                                                                       8X
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER 64MB        JS       982812    E0227256    CHP5042                 MacWarehouse     102.85        102.85        10130
     SDRAM F/POWER
     MAC
------------------------------------------------------------------------------------------------------------------------------------
1    MON OPTQST Q71 17"    JS       982812    E0359984    MT2266                  MacWarehouse     258.95        258.95        10130
     .27MM
------------------------------------------------------------------------------------------------------------------------------------
1    Micron Millenia 450   JS       982836    4214349                             Micron         2,673.00      2,673.00        10059
     Mhz Computer System                                                          Electronics
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac G3/266MHZ   JS       982898    E0408047    CPU1204                 MacWarehouse   1,522.45      1,522.45        10130
------------------------------------------------------------------------------------------------------------------------------------
1    MON OPTQUST Q71 17"   JS       982898    E0408047    MT2266                  MacWarehouse     258.95        258.95        10130
     .27MM
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER 64MB        JS       982898    E0401612    CHP5042                 MacWarehouse     102.85        102.85        10130
     SDRAM F/POWER
     MAC
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac G3/266MHZ   JS       982899    E0407833    CPU1204                 MacWarehouse   1,522.45      1,522.45        10130
------------------------------------------------------------------------------------------------------------------------------------
1    MON OPTQST Q71 17"    JS       982899    E0407833    MT2266                  MacWarehouse     258.95        258.95        10130
     .27MM
------------------------------------------------------------------------------------------------------------------------------------
1    MEM PUSER 64MB        JS       982899    E0397141    CHP0542                 MacWarehouse     102.85        102.85        10130
     SDRAM F/POWER
     MAC
------------------------------------------------------------------------------------------------------------------------------------
1    Power Mac G3/266MHZ   JS       982900    E0407817    CPU1204                 MacWarehouse   1,522.45      1,522.45        10130
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      45
<PAGE>

<TABLE>
<S> <C>                   <C> <C>       <C>           <C>        <C>           <C>               <C>         <C>          <C>
----------------------------------------------------------------------------------------------------------------------------------
    G3/266MHZ, Memory
    and Monitor
------------------------------------------------------------------------------------------------------------------------------------
1   MON OPTQST Q71 17"    JS  982900    E0407817      MT2266                   MacWarehouse         258.95       258.95   10130
    .27MM
------------------------------------------------------------------------------------------------------------------------------------
1   MEM PUSER 64MB        JS  982900    E0394379      CHP0542                  MacWarehouse         102.85       102.85   10130
    SDRAM F/POWER MAC
------------------------------------------------------------------------------------------------------------------------------------
1   Power Mac G3/266MHZ   JS  982992    E0738393      CPU1204    SXB8320V5DBX  MacWarehouse       1,516.65     1,516.65   10130
------------------------------------------------------------------------------------------------------------------------------------
1   MON OPTQST Q71 17-    JS  982992    E0773275      MT2266                   MacWarehouse         258.95       258.95   10130
    .27MM
------------------------------------------------------------------------------------------------------------------------------------
1   MEM PUSER 64MB        JS  982992    E0743666      CHP0542                  MacWarehouse          98.00        98.00   10130
    SDRAM F/POWER MAC
------------------------------------------------------------------------------------------------------------------------------------
1   Power Mac G3/266MHZ   JS  983098    E1143510      CPU1204    SXB8360Z1D8X  MacWarehouse       1,529.80     1,529.80   10130
------------------------------------------------------------------------------------------------------------------------------------
1   MON OPTQST Q71 .27MM  JS  083098    E1143510      MT2266     8G83608796    MacWarehouse         249.95       249.95   10130
------------------------------------------------------------------------------------------------------------------------------------
1   MEM PUSER 64MB        JS  983098    E1140565      CHP0542                  MacWarehouse         104.75       104.75   10130
    SDRAM F/POWER MAC
------------------------------------------------------------------------------------------------------------------------------------
1   Compaq Deskpro        JS  983009    E1146836      CP7770     S6834BW43L811 MacWarehouse       1,911.55     1,911.55   10130
------------------------------------------------------------------------------------------------------------------------------------
1   MEM PUSER DIMM        JS  983099    E1160951      MY9371                   MacWarehouse         249.65       249.65   10130
    128MB SDRAM
------------------------------------------------------------------------------------------------------------------------------------
1   SG102 Workstation     CD  983398    82856                                  RCH Products       8,457.50     8,457.50   10316
                                                                                                             ----------
------------------------------------------------------------------------------------------------------------------------------------
                                                                               Office Furniture & Equipment  106,496.25
------------------------------------------------------------------------------------------------------------------------------------
                                                                               Total
------------------------------------------------------------------------------------------------------------------------------------
1   Temperature           DG  98053     16107                                  Jordon Scientific 39,950.00    39,950.00   8923, 9974
    Humidity Cold Room                                                         Products
------------------------------------------------------------------------------------------------------------------------------------
1   Isotemp Refrigerator, DG  981067    278404063098  13990128                 Fisher             4,815.28     4,815.28   9310
    45 Cu Ft
------------------------------------------------------------------------------------------------------------------------------------
1   Freezer 21 Cubic      KR  981769    278404063098  13989100                 Fisher             6,121.35     6,121.35   9712
    Ft, -85 Degrees
------------------------------------------------------------------------------------------------------------------------------------
1   General Purpose       KR  981769    278404063098  13986249G                Fisher             3,172.40     3,172.40   9712
    Refrigerator 49
    Cubic Ft.
------------------------------------------------------------------------------------------------------------------------------------
1   Thermal Cycler        MC  981092    50516         PTC-01160  18,213.00     MJ Research        4,811.00     4,811.00   9737
    w/Hot Bonnet
------------------------------------------------------------------------------------------------------------------------------------
1   Outdoor Storage       JDF 981961    278404073198  1798576B                 Fisher             7,800.00     7,800.00   9712
    Cabinets, 6 Drum
    Capacity
------------------------------------------------------------------------------------------------------------------------------------
1   Custom Enclosures     EG  981962    101610                                 H&K Tool &        33,100.36    33,100.36   10033
    for Thermolluor Units                                                      Machine Co.
------------------------------------------------------------------------------------------------------------------------------------
1   AT 200 Electronic     ZW  982036    278404073198  0191011                  Fisher             4,615.80     4,615.80   9712
    Balance
------------------------------------------------------------------------------------------------------------------------------------
1   Vacuum Pump, 5.6 CFM  TM  982037    278404073198  012578C                  Fisher             1,215.34     1,215.34   9712
------------------------------------------------------------------------------------------------------------------------------------
1   5 Place Magnetic      CR  982038    278404073198  1451104                  Fisher             1,095.36     1,095.36   9712
    Stirrer
------------------------------------------------------------------------------------------------------------------------------------
1   Lead Screw Driven     EG  982083    3168          1SCWLSB                  Bishop-Wisecarver  2,274.99     2,274.99   9829
    Linear Motion System                                                       Corp.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      46
<PAGE>

<TABLE>
<S> <C>                   <C> <C>       <C>           <C>        <C>            <C>                <C>         <C>          <C>
------------------------------------------------------------------------------------------------------------------------------------
1   Vacuum Oven Model     TK  982146    N0030523      037880A                   Melles Groit        1,645.05    1,645.05    9776
    285A
-----------------------------------------------------------------------------------------------------------------------------------
1   Stereo MicroScope -   FL  982202    024339        M996458                   George S.           8,553.80    8,553.80    9558
    MZ8 High Resolution                                                         Maier Co.
-----------------------------------------------------------------------------------------------------------------------------------
1   PC Based Ready Key    BW  982203    3684                                    The Protection     33,219.86   33,219.86    10318
    Alarm System                                                                Bureau
-----------------------------------------------------------------------------------------------------------------------------------
1   Freezer, Ultra Low    BG  982215    3965158       13989232                  Fisher              6,521.35    6,521.35    9953
    25 Cubic Ft
-----------------------------------------------------------------------------------------------------------------------------------
1   Centra CL3R           BG  982215    3988532       537548                    Fisher              3,667.05    3,667.05    9953
    Centrifuge
-----------------------------------------------------------------------------------------------------------------------------------
1   Invaritar C5          CI  982216    278404081498  13262285A                 Fisher              1,808.27    1,808.27    9712
    Telecentric Lens
    System
--------------------------------------------------------------------------------------------------------------------------------
1   Replacement Laser     SE  982313    18947         97-200R    960.00         Kratos              5,500.00    5,500.00    9721
    for Mass Spec                                                               Analytical
----------------------------------------------------------------------------------------------------------------------------------
1   Isotemp Flammable     NS  982349    4726367       13988425D                 Fisher              2,440.88    2,440.88    10285
    Storage Freezer
----------------------------------------------------------------------------------------------------------------------------------
1   Laboratory Table      CM  982371    6244                                    LF Systems          1,388.00    1,388.00    10505
                                                                                Corp.
----------------------------------------------------------------------------------------------------------------------------------
1   Hydra 96 FlexChem     ZW  982508    10093679      029-81-1   MD987121020    Robbins            22,406.90   22,406.90    10246
    Station                                                                     Scientific
                                                                                Corp.
----------------------------------------------------------------------------------------------------------------------------------
1   Rotary Evaporator,    KW  982536    4278366       954711                    Fisher              3,633.00    3,633.00    10117
    Assembly C
----------------------------------------------------------------------------------------------------------------------------------
1   Innova Heating        ZW  982541    209449        M1192-0004 890614963      New Brunswick       5,241.98    5,241.98    9966
    Shaker Model 4080                                                           Scientific
                                                                                Corp.
----------------------------------------------------------------------------------------------------------------------------------
1   Innova Heating        ZW  982541    209449        M1192-0004 890614964      New Brunswick       5,241.98    5,241.98    9966
    Shaker Model 4080                                                           Scientific
                                                                                Corp.
----------------------------------------------------------------------------------------------------------------------------------
1   Thermal Cycler        JK  982549    2411779       2049900                   Techne Inc.         2,132.00    2,132.00    9921
----------------------------------------------------------------------------------------------------------------------------------
1   Cooled CCD Camera     JK  982550    IN-980918                               BioVision          14,419.00   14,419.00    9963
    w/Control Software                                                          Technologies
----------------------------------------------------------------------------------------------------------------------------------
3   (3) Non Cooled CCD    JK  982550    IN-980918                               BioVision           1,077.00    1,077.00    9963
    Camera                                                                      Technologies
----------------------------------------------------------------------------------------------------------------------------------
1   Stainless Steel       FL  982713    6270                                    LF Systems          2,990.00    2,990.00    10204
    Table                                                                       Corp.
----------------------------------------------------------------------------------------------------------------------------------
2   (2) Centrifuge 5415C  KJM 982814    4566010       540010                    Fisher              1,676.12    3,352.24    10285
----------------------------------------------------------------------------------------------------------------------------------
2   (2) Power Supply      KLM 982814    4566010       FB5090                    Fisher              1,498.50    2,997.00    10285
    2000V
----------------------------------------------------------------------------------------------------------------------------------
1   (6) Faucets           BW  982968    6297          L-2714     LVB            LF Systems          1,348.00    1,348.00    10319
                                                                                Corp.
----------------------------------------------------------------------------------------------------------------------------------
1   Turbomolecular        SE  983034    566777        B72201000   986040145     BOC Edwards         3,176.91    3,176.91    10020
    Pump, EXT70                                                                 (Edwards High
                                                                                Vac.)
----------------------------------------------------------------------------------------------------------------------------------
1   Rotary Evaporator     WP  983274    5048115       954741                    Fisher              4,242.00    4,242.00    10323
    24/40
----------------------------------------------------------------------------------------------------------------------------------
1   Impact 2-12 Channel   GP  983453    81175         2011                      Matrix              1,288.35    1,288.35    10320
    12Sul Pipe                                                                  Technologies
                                                                                Corp.
----------------------------------------------------------------------------------------------------------------------------------
1   Roof Top Condensor    BW  983628    16837                                   Jordon Scientific   2,590.00    2,590.00    10322
                                                                                                               ---------
    Unit                                                                        Products
----------------------------------------------------------------------------------------------------------------------------------
                                                                  Laboratory Equipment Total                  252,006.50
----------------------------------------------------------------------------------------------------------------------------------
1   Refrigerated          BW   940140    8049                     17424094H     Jordon              1,139.09    1,139.09    10321
    Incubator                                                                   Commercial
                                                                                Refrigerator
----------------------------------------------------------------------------------------------------------------------------------
1   Renaissance Gravity   BR   940303    4219895    RE21-103      R812109401    Amsco Sterilizer    4,891.05    4,891.05    10321
    Sterilizer                                      -0134                       Company
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      47
<PAGE>

<TABLE>
<S> <C>                   <C> <C>       <C>        <C>         <C>            <C>               <C>          <C>          <C>
--------------------------------------------------------------------------------------------------------------------------------
1   Kompact Maldi III     BR  940355    114994                 0074/01        Schmadzu          26,922.31    26,922.31    10321
    Mass Spec                                                                 Scientific
                                                                              Instruments
--------------------------------------------------------------------------------------------------------------------------------
1   Autosampler           RH  940356    17761      080-0411    0432-047       Hitachi           1,896.31     1,896.31     10321
                                                                              Instruments
--------------------------------------------------------------------------------------------------------------------------------
1   AS4000 Autosampler    RH  940356    177829     080-0411    0463-016       Hitachi           2,014.83     2,014.83     10321
                                                                              Instruments
--------------------------------------------------------------------------------------------------------------------------------
1   Fluoroscence          RH  940356    177829     050-0825    0609-033       Hitachi           1,848.47     1,848.47     10321
    Detector                                                                  Instruments
--------------------------------------------------------------------------------------------------------------------------------
1   HPLC Manager          RH  940356    177829     ANO-0800    0650-004       Hitachi           563.62       563.62       10321
    Software                                                                  Instruments
--------------------------------------------------------------------------------------------------------------------------------
1   PCIA Interface        RH  940358    177829     ANO-0146    173112         Hitachi           128.47       128.47       10321
                                                                              Instruments
--------------------------------------------------------------------------------------------------------------------------------
1   Biological Safety     BR  940459    32988                  61183          Nuaire, Inc.      974.90       974.90       10321
    Cabinet
--------------------------------------------------------------------------------------------------------------------------------
1   G25 Shaking           ID  940582    6251375    1427885     490940588      New Brunswick     1,092.77     1,092.77     10321
    Incubator                                                                 - Fisher
--------------------------------------------------------------------------------------------------------------------------------
1   Blacore System        MP  940608    40565790               33-549-0441    Pharmacia Biotech 22,252.98    22,252.98    10321
                                                                                                             ---------
--------------------------------------------------------------------------------------------------------------------------------
                                                               Comdisco Buyout - Laboratory Equipment Total  63,714.79
                                                                                                             ---------
--------------------------------------------------------------------------------------------------------------------------------
                                                               Lab Equipment & Comdisco Buyout Sub-Total     315,721.29
                                                                                                             ----------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Total     422,217.54
                                                                                                             ----------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      48
<PAGE>

                           PAYMENT ADJUSTMENT RIDER
                           ------------------------

     Rider to Schedule No. 03 to Master Loan and Security Agreement No. 7110
                           --
dated June 18, 1998 (the "CONTRACT") Between 3-Dimensional Pharmaceuticals, Inc.
      -------------                          -----------------------------------
as Borrower (the "OBLIGOR") AND PHOENIXCOR, INC. as Lender ("P.C.").

     1.   Purpose. This Rider sets forth the terms of adjustment of the payments
          -------
set forth in the Contract.

     2.   Definitions. The following terms shall have the following meanings
          -----------
herein:

          (a)  "Adjustment Date" shall mean the date P.C. disburses any portion
of the proceeds of the Contract.

          (b)  "Final T-Note Average" shall mean the average of the yields on
the U.S. Treasury Notes maturing in 4 years, as published by the Dow Jones
Telerate Access Service, Page 19901, for the close of business on each business
day of the two full calendar weeks immediately preceding the week containing the
Adjustment Date.

          (c)  "Preliminary Payments" shall mean the payments set forth in the
Contract, consisting or ($18,349.38 due upon execution followed by) 46
                        -----------
consecutive (monthly or quarterly) payments in the amount of $18,349.38
                                                             ----------
commencing 30 days after the Adjustment Date, following by one monthly payment
of $74,361.35.
   ----------

          (d)  "Preliminary T-Note Average" shall mean 5.41%.
                                                       -----

     3.   Adjustment of Payments. The Preliminary Payments were calculated based
          ----------------------
on a spread over the Preliminary T-Note Average. If the Adjustment Date occurs
after June 17, 1998 and the Final T-Note Average exceeds the Preliminary T-Note
Average, then the Preliminary Payments shall be revised. For each increase or
decrease of one (1) basis point (i.e., 1/100 of 1%) in the Final T-Note Average
above the Preliminary T-Note Average, the Preliminary Payments shall be revised
as follows (complete below as applicable):

 .    The $18,349.38 payment due upon execution shall remain unchanged.
         ----------

 .    Each of the 46 payments in the amount of $18,349.38 shall increase or
                 --                           ----------
     decrease by $3.81.
                 -----

Immediately after the determination of the revised payments due under the
Contract, Obligor shall, at the request of P.C. execute an acknowledgement
reflecting the revised payment schedule and, if requested by P.C. a Replacement
Contract containing the agreed to payments, but the failure of P.C. to make such
a request or the failure of Obligor to execute the acknowledgement or
Replacement Contract shall in no way diminish Obligor's obligations hereunder.

     4.   P.C.'s Requirements. The Commencement of the contract is subject to
satisfaction of all documentation and credit requirements of P.C. If such
requirements are not satisfied by the Adjustment Date, then at P.C.'s option,
the Adjustment Date shall be the date when such requirements are satisfied.

The calculation of the Contract Payments under this Rider will supersede any
prior proposal or quotation.

     IN WITNESS WHEREOF, the parties have executed this Rider simultaneously
with the Contract.

PHOENIXCOR, INC.                 3-Dimensional Pharmaceuticals, Inc.

By: _________________________    By: ________________________________________

Title: ______________________    Title: _____________________________________

                                      49
<PAGE>

                               PHOENIXCOR, INC.
                                65 WATER STREET
                            SOUTH NORWALK, CT 07854
                    203-855-0030 (PHONE) 203-866-3593 (FAX)

                                                               December 29, 1998
3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center, 665 Stockton Drive, suite 104
Exton, PA 19341

         Re:   Equipment Schedule #03

Ladies and Gentlemen:

Phoenixcor, Inc. requires insurance coverage with companies and in form
satisfactory to it as one of the conditions to enter into the above described
lease or loan with your Company covering the Equipment listed on the attached
schedule or exhibit. This insurance must be carried throughout the term of the
lease/loan. Please sign and return this letter. Please forward a copy of this
letter to your insurance company to process a certificate with the following
requirements:

PROPERTY COVERAGE:
-----------------
 .    Covering all risks of physical loss, damage, destruction or theft of the
     Equipment, with extended coverage.
 .    Loss payable to PHOENIXCOR, INC. AND ITS ASSIGNS.
 .    In an amount equal to not less than the Equipment's full replacement value
     of $743,612.54.
        -----------

LIABILITY COVERAGE:
------------------
 .    $2,000,000.00 combined single limit for each occurrence general liability
     -------------
     coverage.
 .    Naming PHOENIXCOR, INC. AND ITS ASSIGNS as Additional Insured

PROPERTY AND LIABILITY COVERAGE:
------------------------------
 .    The Equipment should be described specifically or by reference to an
     attached schedule or exhibit or by reference to the above lease or loan and
     account number.
 .    Carrier should be rated A-, VIII (or better) by A.M. Best Company.
 .    Notices to Phoenixcor, Inc. are to be sent to 65 water Street, South
     Norwalk, Connecticut 06854.

Attached is a sample insurance certificate. Additional provisions may be
required for vehicles or other specialized collateral or if otherwise applicable
to the transaction.

ADDITIONAL POLICY PROVISIONS:
----------------------------
 .    The policies must provide that they will not be canceled or altered without
     thirty (30) days prior written notice to PHOENIXCOR, INC.
 .    The policies insuring against loss, damage, destruction or theft must
     provide that the coverage will not be invalidated against PHOENIX, INC. AND
     ITS ASSIGNS because of any violation of any condition or warranty contained
     in any policy or application therefor by the insured or others.

Please feel free to contact or have your insurance agent contact Joan Kossoff at
your earliest convenience. Please be aware that failure to have an insurance
certificate in effect that meets the above requirements will delay the
commencement and/or funding of the above lease or loan.

Very truly yours,                       AGREED TO AND ACCEPTED BY;

PHOENIXCOR, INC.                        3 Dimensional Pharmaceuticals, Inc.

                                        BY: ____________________________________

                                        TITLE: _________________________________

                                      50
<PAGE>

Insurance Declarations Page

                                      51
<PAGE>

                SCHEDULE TO MASTER LOAN AND SECURITY AGREEMENT
                ----------------------------------------------

MASTER LOAN AND SECURITY AGREEMENT NO.7110             DATED: June 18, 1998
                                      ----                    -------------
SCHEDULE NO.04                                         DATED: March 22, 1999
            --                                                --------------

--------------------------------------------------------------------------------
LENDER:   PHOENIXCOR, INC.         BORROWER: 3-Dimensional Pharmaceuticals, Inc.
          65 WATER STREET                    Eagleview Corporate Center,
          SOUTH NORWALK, CT 06854            665 Stockton Drive, Suite 104
                                             Exton, PA 19341


Equipment Location (if other than above address of Borrower): n/a
                                                              ---

     Lender and Borrower have entered into a Master Loan and Security Agreement
No. 7110 dated June 18, 1998 (the "Master Loan Agreement") which is incorporated
    ----       -------------
herein and this is a Schedule to the Master Loan Agreement. All words and terms
used herein and not specifically defined herein shall have the same meanings as
set forth in the Master Loan Agreement.

     1.   THE LOAN AND LOAN REPAYMENT. As requested by Borrower and pursuant to
the Master Loan Agreement, Lender agrees to lend to Borrower the sum of one
                                                                        ---
million two hundred twenty-three thousand eight hundred eighty-three dollars and
--------------------------------------------------------------------------------
ninety-six cents. Borrower agrees to repay the Loan in successive installments
----------------
(which installment payments are inclusive of interest) as set forth in the
following Schedule:

                                   SCHEDULE
--------------------------------------------------------------------------------
Advance Payment Amount:                                  $9,611.30
                                                         ---------
Number of Installments (Exclusive of Advance Payment):   46
                                                         --
Payment Period:                                           X Monthly ___Quarterly
                                                         ---
Periodic Installment Payment Amount Per Period:          $9,611.30;
                                                         ---------
         Followed by One Monthly Installment Payment of  $38,950.00
                                                         ----------
--------------------------------------------------------------------------------
Commencement Date:  March 24, 1999                       Security Deposit (if
                    --------------
Special Provisions: (if any): none                       any): none
                              ----                             ----

     2.   SECURITY. As security for Borrower's obligations under this Schedule
and the obligations contained in the Master Loan Agreement, the Borrower gives
and grants to the Lender a security interest in the Equipment described in the
attached Exhibit A.

     3.   LOAN DISBURSEMENT. Borrower hereby authorizes Lender to disburse the
Loan proceeds advanced pursuant to this Schedule as follows:

          $389,500.00       To: Bruker Medical.
          -----------           ---------------
          $389,500.00       TOTAL PROCEEDS
          -----------

By execution hereof, the signer certifies that he/she is a duly authorized
officer, partner or proprietor of Borrower and that he/she had read, accepted
and duly executed this Schedule to the Master Loan Agreement on behalf of
Borrower.

                                 3-Dimensional Pharmaceuticals, Inc., (Borrower)
                                 -------------------------------------

                                 BY: _________________________________

                                 _____________________________________
                                 Print Name and Title

ACCEPTED AT LENDER'S OFFICE AT
SOUTH NORWALK, CONNECTICUT

PHOENIXCOR, INC. (Lender)

BY: ____________________________

________________________________
Print Name and Title

                                      52
<PAGE>

                                   EXHIBIT A


     The following description of property supplements, and is part, Schedule
No. 04 to Master Loan and Security Agreement No. 7110 dated June 18, 1998
    --                                           ----       -------------
between the undersigned Borrower and Phoenixcor, Inc. and may be attached to
said Loan Schedule and any related UCC Financing Statements, Acceptance or
Delivery Certificate or other document describing the property:



                   See Attached Exhibit A Equipment Schedule


All property listed above complete with any and all attachments, accessions,
additions, replacements, improvements, modifications and substitutions thereto
and therefor and all proceeds including insurance proceeds thereof and
therefrom.

PHOENIXCOR, INC.                        3-Dimensional Pharmaceuticals, Inc.
----------------                        -----------------------------------
(Lender)                                (Borrower)

BY: __________________________          By: _______________________________

TITLE: _______________________          TITLE: ____________________________

                                      53
<PAGE>

                        Exhibit A to Equipment Schedule
                                Schedule No. 04

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
      Company Name           3-Dimensional
                             Pharmaceutical, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
      Equipment              665 Stickton Drive, Suite
      Location               104 Exton, PA 19341
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Item  Supplier        Equip  Description                 QTY  Serial No.  Price       Ext Price    Invoice      Vendor       PO#
                      Code                                                                         Subtotal     Subtotal
-----------------------------------------------------------------------------------------------------------------------------------
<S>   <C>             <C>    <C>                         <C>  <C>         <C>         <C>          <C>          <C>          <C>
1     Bruker Medical  LAB    Avencetem 400 High           1    BH028898   389,500.00  $389,500.00  $389,500.00  $389,500.00
      Inc.                   Performance Digital NMR
                             Spectrometer Maget/Shim
                             System
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
                             TOTAL                                                                 $389,500.00  $389.500.00
-----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
---------------------------------------------------------------------------------------------------
      Company Name           3-Dimensional
                             Pharmaceutical, Inc.
---------------------------------------------------------------------------------------------------
      Equipment              665 Stickton Drive, Suite
      Location               104 Exton, PA 19341
---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------
Item  Supplier        Equip  Description                     Invoice   Invoice     CK#   Ck Amt
                      Code                                   #         Date
---------------------------------------------------------------------------------------------------
<S>   <C>             <C>    <C>                             <C>       <C>         <C>   <C>
1     Bruker Medical  LAB    Avencetem 400 High              33949     1/18/99           Oz to Pay
      Inc.                   Performance Digital NMR
                             Spectrometer Maget/Shim
                             System
---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------
                             TOTAL
---------------------------------------------------------------------------------------------------
</TABLE>

                                      54
<PAGE>

                           PAYMENT ADJUSTMENT RIDER
                           ------------------------

     Rider to Schedule No. 03 to Master Loan and Security Agreement No. 7110
                           --                                           ----
dated June 18, 1998 (the "CONTRACT") Between 3-Dimensional Pharmaceuticals, Inc.
      -------------                          -----------------------------
as Borrower (the "OBLIGOR") AND PHOENIXCOR, INC. as Lender ("P.C.").

     5.   Purpose. This Rider sets forth the terms of adjustment of the payments
          -------
set forth in the Contract.

     6.   Definitions. The following terms shall have the following meanings
          -----------
herein:

          (a)  "Adjustment Date" shall mean the date P.C. disburses any portion
of the proceeds of the Contract.

          (b)  "Final T-Note Average" shall mean the average of the yields on
the U.S. Treasury Notes maturing in 4 years, as published by the Dow Jones
Telerate Access Service, Page 19901, for the close of business on each business
day of the two full calendar weeks immediately preceding the week containing the
Adjustment Date.

          (c)  "Preliminary Payments" shall mean the payments set forth in the
Contract, consisting or ($9,611.30 due upon execution followed by) 46
                         ---------
consecutive (monthly or quarterly) payments in the amount of $9,611.30
                                                             ---------
commencing 30 days after the Adjustment Date, following by one monthly payment
of $38,950.00.
   ----------

          (d)  "Preliminary T-Note Average" shall mean 5.41%.
                                                       -----

     7.   Adjustment of Payments. The Preliminary Payments were calculated based
          ----------------------
on a spread over the Preliminary T-Note Average. If the Adjustment Date occurs
after June 17, 1998 and the Final T-Note Average exceeds the Preliminary T-Note
Average, then the Preliminary Payments shall be revised. For each increase or
decrease of one (1) basis point (i.e., 1/100 of 1%) in the Final T-Note Average
above the Preliminary T-Note Average, the Preliminary Payments shall be revised
as follows (complete below as applicable):

 .    The $9,611.30 payment due upon execution shall remain unchanged.
         ---------

 .    Each of the 46 payments in the amount of $9,611.30 shall increase or
                 --                           ---------
     decrease by $1.99.
                 -----

Immediately after the determination of the revised payments due under the
Contract, Obligor shall, at the request of P.C. execute an acknowledgement
reflecting the revised payment schedule and, if requested by P.C. a Replacement
Contract containing the agreed to payments, but the failure of P.C. to make such
a request or the failure of Obligor to execute the acknowledgement or
Replacement Contract shall in no way diminish Obligor's obligations hereunder.

     8.   P.C.'s Requirements. The Commencement of the contract is subject to
satisfaction of all documentation and credit requirements of P.C. If such
requirements are not satisfied by the Adjustment Date, then at P.C.'s option,
the Adjustment Date shall be the date when such requirements are satisfied.

The calculation of the Contract Payments under this Rider will supersede any
prior proposal or quotation.

     IN WITNESS WHEREOF, the parties have executed this Rider simultaneously
with the Contract.

PHOENIXCOR, INC.                        3-Dimensional Pharmaceuticals, Inc.

By: _______________________             By: _______________________________

Title: ____________________             Title: ____________________________

                                      55
<PAGE>

                SCHEDULE TO MASTER LOAN AND SECURITY AGREEMENT
                ----------------------------------------------

MASTER LOAN AND SECURITY AGREEMENT NO.7110              DATED: June 18, 1998
                                      ----                     -------------
SCHEDULE NO.03                                          DATED: December 29, 1998
            --                                                 -----------------

--------------------------------------------------------------------------------
LENDER:   PHOENIXCOR, INC.         BORROWER: 3-Dimensional Pharmaceuticals, Inc.
          65 WATER STREET                    Eagleview Corporate Center,
          SOUTH NORWALK, CT 06854            665 Stockton Drive, Suite 104
                                             Exton, PA 19341


Equipment Location (if other than above address of Borrower): n/a
                                                              ---

     Lender and Borrower have entered into a Master Loan and Security Agreement
No. 7110 dated June 18, 1998 (the "Master Loan Agreement") which is incorporated
    ----       -------------
herein and this is a Schedule to the Master Loan Agreement. All words and terms
used herein and not specifically defined herein shall have the same meanings as
set forth in the Master Loan Agreement.

     1.   THE LOAN AND LOAN REPAYMENT. As requested by Borrower and pursuant
to the Master Loan Agreement, Lender agrees to lend to Borrower the sum of seven
                                                                           -----
hundred forty-three thousand six hundred twelve and 54/100 dollars. Borrower
------------------------------------------------------------------
agrees to repay the Loan in successive installments (which installment payments
are inclusive of interest) as set forth in the following Schedule:

                                                          SCHEDULE
--------------------------------------------------------------------------------
Advance Payment Amount:                                  $18,349.38
                                                         ----------
Number of Installments (Exclusive of Advance Payment):   46
                                                         --
Payment Period:                                           X Monthly ___Quarterly
                                                         ---
Periodic Installment Payment Amount Per Period:          $18,349.38;
                                                         ----------
         Followed by One Monthly Installment Payment of  $74,361.25
                                                         ----------

--------------------------------------------------------------------------------
Commencement Date:  December 31, 1998                    Security Deposit (if
                    -----------------
Special Provisions: (if any): none                       any): none
                              ----                             ----

     2.   SECURITY. As security for Borrower's obligations under this Schedule
and the obligations contained in the Master Loan Agreement, the Borrower gives
and grants to the Lender a security interest in the Equipment described in the
attached Exhibit A.

     3.   LOAN DISBURSEMENT. Borrower hereby authorizes Lender to disburse the
Loan proceeds advanced pursuant to this Schedule as follows:

     $743,612.54    To: 3-Dimensional Pharmaceuticals, Inc.
     -----------        -----------------------------------
     $743,612.54    TOTAL PROCEEDS
     -----------

By execution hereof, the signer certifies that he/she is a duly authorized
officer, partner or proprietor of Borrower and that he/she had read, accepted
and duly executed this Schedule to the Master Loan Agreement on behalf of
Borrower.

                                      56
<PAGE>

<TABLE>
<S>                                    <C>
                                       3-Dimensional Pharmaceuticals, Inc., (Borrower)

                                        BY:________________________________________

                                        ___________________________________________
                                        Print Name and Title

ACCEPTED AT LENDER'S OFFICE AT
SOUTH NORWALK, CONNECTICUT

PHOENIXCOR, INC. (Lender)

BY:_________________________________

____________________________________
Print Name and Title
</TABLE>

                                      57
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.26
<SEQUENCE>13
<FILENAME>0013.txt
<DESCRIPTION>MASTER LEASE BETWEEN COMPANY AND TRANSAMERICA
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.26

                            MASTER LEASE AGREEMENT


Lessor:           TRANSAMERICA BUSINESS CREDIT CORPORATION
                  Riverway II
                  West Office Tower
                  West Higgins
                  Rosemont, Illinois  60018

Lessee:           3-DIMENSIONAL PHARMACEUTICALS, INC.
                  Eagleview Corporate Center
                  665 Stockton Drive, Suite 104
                  Exton, Pennsylvania  19341

         The lessor pursuant to this Master Lease Agreement ("Agreement") dated
as of June 12, 1997, is Transamerica Business Credit Corporation ("Lessor"). All
equipment, together with all present and future additions, parts, accessories,
attachments, substitutions, repairs, improvements, and replacements thereof or
thereto, which are the subject of a Lease (as defined in the next sentence)
shall be referred to as "Equipment." Simultaneous with the execution and
delivery of this Agreement, the parties are entering into one or more Lease
Schedules (each, a "Schedule") which refer to and incorporate by reference this
Agreement, each of which constitutes a lease (each, a "Lease") for the Equipment
specified therein. Additional details pertaining to each Lease are specified in
the applicable Schedule. Each Schedule that the parties hereafter enter into
shall constitute a Lease. Lessor has no obligation to enter into any additional
leases with, or extend any future financing to, Lessee.

               1. LEASE. Subject to an upon all of the terms and conditions of
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this Agreement and each Schedule, Lessor hereby agrees to lease to Lessee and
Lessee hereby agrees to lease from Lessor the Equipment for the Term (as defined
in Paragraph 2 below) thereof. The timing and financial scope of Lessor's
obligation to enter into Leases hereunder are limited as set forth in the
Commitment Letter executed by Lessor and Lessee, dated as of May 9, 1997 and
attached hereto as Exhibit A (the "Commitment Letter").

               2. TERM. Each Lease shall be effective and the term of each Lease
                  ----
("Term") shall commence on the commencement date specified in the applicable
Schedule and, unless sooner terminated (as hereinafter provided), shall expire
at the end of the term specified in such Schedule; provided, however, that
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obligations due to be performed by Lessee during the Term shall continue until
they have been performed in full. Schedules will only be executed after the
delivery of the Equipment to Lessee or upon completion of deliveries of items of
such Equipment with aggregate cost of not less than $25,000.00.

               3. RENT. Lessee shall pay as rent to Lessor, for use of the
                  ----
Equipment during the Term or Renewal Term (as defined in Paragraph 8), rental
payments equal to the sum of all rental payments including, without limitation,
security deposits, advance rents, and interim rents payable in the amounts and
on the dates specified in the applicable Schedule ("Rent"). If any Rent or other
amount payable by Lessee is not paid within five days after the day on which it
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becomes payable, Lessee will pay on demand, as a late charge, an amount equal to
5% of such unpaid Rent or other amount but only to the extent permitted by
applicable law. All payments provided for herein shall be payable to Lessor at
its address specified above, or at any other place designated by Lessor.

               4. LEASE NOT CANCELABLE; LESSEE'S OBLIGATIONS ABSOLUTE. No Lease
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may be canceled or terminated except as expressly provided herein. Lessee's
obligation to pay all Rent due or to become due hereunder shall be absolute and
unconditional and shall not be subject to any delay, reduction, set-off,
defense, counterclaim, or recoupment for any reason whatsoever, including any
failure of the Equipment or any representations by the manufacturer or the
vendor thereof. If the Equipment is unsatisfactory for any reason, Lessee shall
make any claim solely against the manufacturer or the vendor thereof and shall,
nevertheless, pay Lessor all Rent payable hereunder.

               5. SELECTION AND USE OF EQUIPMENT. Lessee agrees that it shall be
                  ------------------------------
responsible for the selection and use of, and results obtained from, the
Equipment and any other associated equipment or services.

               6. WARRANTIES. LESSOR MAKES NO REPRESENTATION OR WARRANTY,
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EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION,
THE DESIGN OR CONDITION OF THE EQUIPMENT OR ITS MERCHANTABILITY, SUITABILITY,
QUALITY, OR FITNESS FOR A PARTICULAR PURPOSE, AND HEREBY DISCLAIMS ANY SUCH
WARRANTY. LESSEE SPECIFICALLY WAIVES ALL RIGHTS TO MAKE A CLAIM AGAINST LESSOR
FOR BREACH OF ANY WARRANTY WHATSOEVER. LESSEE LEASES THE EQUIPMENT "AS IS." IN
NO EVENT SHALL LESSOR HAVE ANY LIABILITY, NOR SHALL LESSEE HAVE ANY REMEDY
AGAINST LESSOR, FOR ANY LIABILITY, CLAIM, LOSS, DAMAGE, OR EXPENSE CAUSED
DIRECTLY OR INDIRECTLY BY THE EQUIPMENT OR ANY DEFICIENCY OR DEFECT THEREOF OR
THE OPERATION, MAINTENANCE, OR REPAIR THEREOF OR ANY CONSEQUENTIAL DAMAGES AS
THAT TERM IS USED IN SECTION 2-719(3) OF THE MODEL UNIFORM COMMERCIAL CODE, AS
AMENDED FROM TIME TO TIME ("UCC"). Lessor grants to Lessee, for the sole purpose
of prosecuting a claim, the benefits of any and all warranties made available by
the manufacturer or the vendor of the Equipment to the extent assignable.

               7. DELIVERY. Lessor hereby appoints Lessee as Lessor's agent for
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the sole and limited purpose of accepting delivery of the Equipment from each
vendor thereof. Lessee shall pay any and all delivery and installation charges.
Lessor shall not be liable to Lessee for any delay in, or failure or, delivery
of the Equipment.

               8. RENEWAL. So long as no Event of Default or event which, with
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the giving of notice, the passage of time, or both, would constitute an Event of
Default, shall have occurred and be continuing, or the Lessee shall not have
exercised its purchase option under Paragraph 9 hereof, each Lease will
automatically renew for a term of twelve months (the "Renewal Term") with the
monthly rent to be paid during such Renewal Term equal to 1.0% of the Equipment
Cost set forth on the applicable Schedule payable in advance; provided, however,
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that Obligations due to be performed by the Lessee during the Renewal Term shall
continue until they have been performed in full.

               9.  PURCHASE OPTION. So long as no Event of Default or event
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which, with the giving of notice, the passage of time, or both, would constitute
an Event of Default, shall have occurred and be continuing, Lessee may, upon
written notice to Lessor received at least ninety days before the expiration of
a Term, purchase all, but not less than all, the Equipment covered by the
applicable Lease on the date specified in the applicable Schedule ("Purchase
Date"). The purchase price for such Equipment shall be its fair market value,
which Lessor and Lessee agree shall be 10% of the Equipment Cost as set forth in
the applicable Schedule. Lessee shall pay the cost of any such appraisal. So
long as no Event of Default or event which, with the giving of notice, the
passage of time, or both, would constitute an Event of Default shall have
occurred and be continuing, Lessee may, upon written notice to Lessor received
at least ninety, but not more than one hundred eighty days prior to the
expiration of the Renewal Term, purchase all, but not less than all, the
Equipment covered by the applicable Schedule by the last date of the Renewal
Term (the "Alternative Purchase Date") at a purchase price equal to $1.00 on an
"In-place. In-use" basis. On the Purchase Date or the Alternative Purchase Date,
as the case may be, for any Equipment, Lessee shall pay to Lessor the purchase
price, together with all sales and other taxes applicable to the transfer of the
Equipment and any other amount payable and arising hereunder, in immediately
available funds, whereupon Lessor shall transfer to Lessee, without recourse or
warranty of any kind, express or implied, all of Lessor's right, title, and
interest in and to such Equipment on an "As Is, Where Is" basis.

               10. OWNERSHIP; INSPECTION; MARKING; FINANCING STATEMENTS. Lessee
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shall affix to the Equipment any labels supplied by Lessor indicating ownership
of such Equipment. The Equipment is and shall be the sole property of Lessor.
Lessee shall have no right, title, or interest therein, except as lessee under a
Lease. The Equipment is and shall at all times be and remain personal property
and shall not become a fixture. Lessee shall obtain and record such instruments
and take such steps as may be necessary to prevent any person from acquiring any
rights in the Equipment by reason of the Equipment being claimed or deemed to be
real property. Upon request by Lessor, Lessee shall obtain and deliver to Lessor
valid and effective waivers, in recordable form, by the owners, landlords, and
mortgagees of the real property upon which the Equipment is located or
certificates of Lessee that it is the owner of such real property or that such
real property is neither leased nor mortgaged. Lessee shall make the Equipment
and its maintenance records available for inspection by Lessor at reasonable
times and upon reasonable notice. Lessee shall execute and deliver to Lessor for
filing any UCC financing statements or similar documents Lessor may reasonably
request.

               11. EQUIPMENT USE. Lessee agrees that the Equipment will be
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operated by competent. qualified personnel in connection with Lessee's business
for the purpose for which the Equipment was designed and in accordance with
applicable operating instructions, laws, and government regulations, and that
Lessee shall use all reasonable precautions to prevent loss or damage to the
Equipment from fire and other hazards. Lessee shall procure and maintain in
effect all orders, licenses, certificates, permits, approvals, and consents
required by federal, state, or local laws or by any governmental body, agency,
or authority in connection with the delivery, installation, use, and operation
of the Equipment.
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               12. MAINTENANCE. Lessee, at its sole cost and expense, shall keep
                   -----------
the Equipment in a suitable environment as specified by the manufacturer's
guidelines or the equivalent, shall meet all recertification requirements, and
shall maintain the Equipment in, good condition and working order, ordinary wear
and tear excepted. At the reasonable request of Lessor, Lessee shall furnish all
proof of maintenance.

               13. ALTERATION; MODIFICATIONS; PARTS. Lessee may materially alter
                   --------------------------------
or modify the Equipment only with the prior written consent of Lessor, which
consent shall not be unreasonably withheld. Any material alteration shall be
removed and the Equipment restored to its normal, unaltered condition at
Lessee's expense (without damaging the Equipment's originally intended function
or its value) prior to its return to Lessor. Any part installed in connection
with warranty or maintenance service or which cannot be removed in accordance
with the preceding sentence shall be the property of Lessor.

               14. RETURN OF EQUIPMENT. Except for Equipment that has suffered a
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Casualty Loss (as defined in Paragraph 15 below) and is not required to be
repaired pursuant to Paragraph 15 below or Equipment purchased by Lessee
pursuant to Paragraph 9 above, upon the expiration of the Renewal Term of a
Lease, or upon demand by Lessor pursuant to Paragraph 22 below, Lessee shall
contact Lessor for shipping instructions and, at Lessee's own risk, immediately
return the Equipment, freight prepaid, to a location in the continental United
States specified by Lessor. At the time of such return to Lessor, the Equipment
shall (i) be in the operating order, repair and condition as required by or
specified in the original specifications and warranties of each manufacturer and
vendor thereof, ordinary wear and tear excepted, (ii) meet all recertification
requirements, and (iii) be capable of being promptly assembled and operated by a
third party purchaser or third party lessee without further repair, replacement,
alterations, or improvements, and in accordance and compliance with any and all
statutes, laws, ordinances, rules, and regulations of any governmental authority
or any political subdivision thereof applicable to the use and operation of the
Equipment. Except as otherwise provided under Paragraph 9 hereof, at least
ninety days before the expiration of the Renewal Term, Lessee shall give Lessor
notice of its intent to return the Equipment at the end of such Renewal Term.
During the ninety-day period prior to the end of a Term or the Renewal Term,
Lessor and its prospective purchasers or lessees shall have, upon not less than
two business days' prior written notice to Lessee and during normal business
hours, or at any time and without prior notice upon the occurrence and
continuance of an Event of Default, the right of access to the premises on which
the Equipment is located to inspect the Equipment, and Lessee shall cooperate in
all other reasonable respects with Lessor's remarketing of the Equipment. The
provisions of this Paragraph 14 are of the essence of the Lease, and upon
application to any court of equity having jurisdiction in the premises, Lessor
shall be entitled to a decree against Lessee requiring specific performance of
the covenants of Lessee set forth in this Paragraph 14. If Lessee fails to
return the Equipment when required, the terms and conditions of the Lease shall
continue to be applicable and Lessee shall continue to pay Rent until the
Equipment is received by Lessor.

               15. CASUALTY INSURANCE: LOSS OR DAMAGE. Lessee will maintain, at
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its own expense, liability and property damage insurance relating to the
Equipment, insuring against such risks as are customarily insured against on the
type of equipment leased hereunder by businesses in which Lessee is engaged in
such amounts, in such form, and with insurers satisfactory to Lessor; provided,
                                                                      --------
however, that the amount of insurance against damage or loss
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shall not be less than the greater of (a) the replacement value of the Equipment
and (b) the stipulated loss value of the Equipment specified in the applicable
Schedule ("Stipulated Loss Value"). Each liability insurance policy shall
provide coverage (including, without limitation, personal injury coverage) of
not less than $1,000,000 for each occurrence, and shall name Lessor as an
additional insured; and each property damage policy shall name Lessor as sole
loss payee and all policies shall contain a clause requiring the insurer to give
Lessor at least thirty days' prior written notice of any alteration in the terms
or cancellation of the policy. Lessee shall furnish to Lessor a certificate of
insurance, and upon request, a copy of each insurance policy (with endorsements)
or other evidence satisfactory to Lessor that the required insurance coverage is
in effect; provided, however, Lessor shall have no duty to ascertain the
existence of or to examine the insurance policies to advise Lessee if the
insurance coverage does not comply with the requirements of this Paragraph. If
Lessee fails to insure the Equipment as required, Lessor shall have the right
but not the obligation to obtain such insurance, and the cost of the insurance
shall be for the account of Lessee due as part of the next due Rent. Lessee
consents to Lessor's release, upon its failure to obtain appropriate insurance
coverage, of any and all information necessary to obtain insurance with respect
to the Equipment or Lessor's interest therein.

               Until the Equipment is returned to and received by Lessor as
provided in Paragraph 14 above, Lessee shall bear the entire risk of theft or
destruction of, or damage to, the Equipment including, without limitation, any
condemnation, seizure, or requisition of title or use ("Casualty Loss"). No
Casualty Loss shall relieve Lessee from its obligations to pay Rent except as
provided in clause (b) below. When any Casualty Loss occurs, Lessee shall
immediately notify Lessor and, at the option of Lessee, shall promptly (a) place
such Equipment in good repair and working order; or (b) pay Lessor an amount
equal to the Stipulated Loss Value of such Equipment and all other amounts
(excluding Rent) payable by Lessee hereunder, together with a late charge on
such amounts at a rate per annum equal to the rate imputed in the Rent payments
hereunder (as reasonably determined by Lessor) from the date of the Casualty
Loss through the date of payment of such amounts, whereupon Lessor shall
transfer to Lessee, without recourse or warranty (express or implied), all of
Lessor's interest, if any. in and to such Equipment on an "AS IS, WHERE IS"
basis. The proceeds of any insurance payable with respect to the Equipment shall
be applied, at the option of Lessee, either towards (i) repair of the Equipment
or (ii) payment of any of Lessee's obligations hereunder. Lessee hereby appoints
Lessor as Lessee's attorney-in-fact to make claim for, receive payment of, and
execute and endorse all documents, checks or drafts issued with respect to any
Casualty Loss under any insurance policy relating to the Equipment.

               16. TAXES. Lessee shall pay when due, and indemnify and hold
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Lessor harmless from, all sales, use, excise, and other taxes, charges, and fees
(including, without limitation, income, franchise, business and occupation,
gross receipts, licensing, registration, titling, personal property, stamp and
interest equalization taxes, levies, imposts. duties, charges, or withholdings
of any nature), and any fines, penalties, or interest thereon, imposed or levied
by any governmental body, agency, or tax authority upon or in connection with
the Equipment, its purchase, ownership, delivery, leasing, possession, use, or
relocation of the Equipment or otherwise in connection with the transactions
contemplated by each Lease or the Rent thereunder, excluding taxes on or
measured by the net income of Lessor. Upon request, Lessee will provide proof of
payment. Unless Lessor elects otherwise, Lessor will pay all property taxes on
the Equipment for which Lessee shall reimburse Lessor promptly upon request.
Lessee shall
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timely prepare and file all reports and returns which are required to be made
with respect to any obligation of Lessee under this Paragraph 16. Lessee shall,
to the extent permitted by law, cause all billings of such fees, taxes, levies,
imposts, duties, withholdings, and governmental charges to be made to Lessor in
care of Lessee. Upon request, Lessee will provide Lessor with copies of all such
billings.

               17. LESSOR'S PAYMENT. If Lessee fails to perform its obligations
                   ----------------
under Paragraph 15 or 16 above, or Paragraph 23 below, Lessor shall have the
right to substitute performance, in which case Lessee shall immediately
reimburse Lessor therefor.

               18. GENERAL INDEMNITY. Each Lease is a net lease. Therefore,
                   -----------------
Lessee shall indemnify Lessor and its successors and assigns against, and hold
Lessor and its successors and assigns harmless from, any and all claims,
actions, damages, obligations, liabilities, and all costs and expenses,
including, without limitation, reasonable legal fees incurred by Lessor or its
successors and assigns arising out of each Lease including, without limitation,
the purchase, ownership, delivery, lease, possession, maintenance, condition,
use, or return of the Equipment, or arising by operation of law, except that
Lessee shall not be liable for any claims, actions, damages, obligations, and
costs and expenses determined by a non-appealable, final order of a court of
competent jurisdiction to have occurred as a result of the gross negligence or
willful misconduct of Lessor or its successors and assigns. Lessee agrees that
upon written notice by Lessor of the assertion of any claim, action, damage,
obligation or lien, Lessee shall assume full responsibility for the defense
thereof, provided that Lessor's failure to give such notice shall not limit or
otherwise affect its rights hereunder. Any payment pursuant to this Paragraph
(except for any payment of Rent) shall be of such amount as shall be necessary
so that, after payment of any taxes required to be paid thereon by Lessor,
excluding taxes on or measured by the net income of Lessor, the balance will
equal the amount due hereunder. The provisions of this Paragraph with regard to
matters arising during a Lease shall survive the expiration or termination of
such Lease.

               19. ASSIGNMENT BY LESSEE. Lessee shall not, without the prior
                   --------------------
written consent of Lessor, (a) assign, transfer, pledge, or otherwise dispose of
any Lease or Equipment, or any interest therein; (b) sublease or lend any
Equipment or permit it to be used by anyone other than Lessee, its agents and
its employees; or (c) move any Equipment from the location specified for it in
the applicable Schedule, except that Lessee may move Equipment to another
location within the United States provided that Lessee has delivered to Lessor
(A) prior written notice thereof and (B) duly executed financing statements and
other agreements and instruments (all in form and substance satisfactory to
Lessor) necessary or, in the opinion of the Lessor, desirable to protect
Lessor's interest in such Equipment. Notwithstanding anything to the contrary in
the immediately preceding sentence, Lessee may keep any Equipment consisting of
motor vehicles or rolling stock at any location in the United States.

               20. ASSIGNMENT BY LESSOR. Lessor may assign its interest or grant
                   --------------------
a security interest in any Lease and the Equipment individually or together, in
whole or in part. If Lessee is given written notice of any such assignment, it
shall immediately make all payments of Rent and other amounts hereunder directly
to such assignee. Each such assignee shall have all of the rights of Lessor
under each Lease assigned to it. Lessee shall not assert against any such
assignee any set-off, defense, or counterclaim that Lessee may have against
Lessor or any other person.
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               21. DEFAULT; NO WAIVER. Lessee or any guarantor of any or all of
                   ------------------
the obligations of Lessee hereunder (together with Lessee, the "Lease Parties")
shall be in default under each Lease upon the occurrence of any of the following
events (each, an "Event of Default"): (a) Lessee fails to pay within five days
of when due any amount required to be paid by Lessee under or in connection with
any Lease; (b) any of the Lease Parties fails to perform any other provision
under or in connection with a Lease or violates any of the covenants or
agreements of such Lease Party under or in connection with a Lease and such
failure or violation remains unremedied for fifteen days after the earlier of
the date on which Lessee knew of such failure or violation or the date on which
Lessor has given Lessee notice thereof: (c) any representation made or financial
information delivered or furnished by any of the Lease Parties under or in
connection with a Lease shall prove to have been inaccurate in any material
respect when made; (d) any of the Lease Parties makes an assignment for the
benefit of creditors, whether voluntary or involuntary, or consents to the
appointment of a trustee or receiver, or if either shall be appointed for any of
the Lease Parties or for a substantial part of its property without its consent
and, in the case of any such involuntary proceeding, such proceeding remains
undismissed or unstayed for sixty days following the commencement thereof; (e)
any petition or proceeding is filed by or against any of the Lease Parties under
any Federal or State bankruptcy or insolvency code or similar law and, in the
case of any such involuntary petition or proceeding, such petition or proceeding
remains undismissed or unstayed for sixty days following the filing or
commencement thereof, or any of the Lease Parties takes any action authorizing
any such petition or proceeding; (f) any of the Lease Parties fails to pay when
due any indebtedness for borrowed money or under conditional sales or
installment sales contracts or similar agreements, leases, or obligations
evidenced by bonds, debentures, notes, or other similar agreements or
instruments to any creditor (including Lessor under any other agreement) after
any and all applicable cure periods therefor shall have elapsed if the amount
involved exceeds $250,000 in the aggregate; (g) a judgment in excess of $50,000
shall be rendered against any of the Lease Parties which shall remain unpaid or
unstayed for a period of sixty days; (h) any of the Lease Parties shall
dissolve, liquidate, wind up or cease its business, sell or otherwise dispose of
all or substantially all of its assets, or make any material change in its lines
of business; (i) any of the Lease Parties shall amend or modify its name,
unless, within thirty days after such amendment or modification, such Lease Pam'
delivers to Lessor written notice of such amendment or modification and executed
financing statements (in form and substance satisfactory to the Lessor); (j) any
of the Lease Parties shall merge or consolidate with any other entity except
that any Lease Party may merge with or into any other entity so long as (i) the
survivor of such merger remains in compliance with the terms and conditions of
each Lease, and it' such survivor is not Lessee, then such survivor assumes ail
of the of Lessee under each Lease, including, without limitation, rental payment
obligations, pursuant to assignment and assumption documentation acceptable to
Lessor in its sole discretion, (ii) in the reasonable judgment of Lessor based
on, among other things, a review of all relevant financial statements of the
merging or consolidating Lease Parties, the ability of such survivor to perform
its obligations under each Lease is no worse than that of the non-surviving
entity immediately before such merger or consolidation and (iii) if applicable,
the surviving Lease Party delivers executed financing statement (in form and
substance satisfactory to Lessor); (k) any of the Lease Parties shall suffer any
loss or suspension of any material license, permit, or other right or asset
necessary to the profitable conduct of its business, fail generally to pay its
debts as they mature, or call a meeting for purposes of compromising its debts;
(l) any of the Lease Parties shall deny or disaffirm its

<PAGE>

obligations hereunder or under any of the documents delivered in connection
herewith; or (m) there is a change, other than a change which results from the
sale of newly issued securities to investors, in more than 35% of the ownership
of any equity interests of any of the Lease Parties on the date hereof or more
than 35% of such interests become subject to any contractual, judicial or
statutory lien, charge, security interest, or encumbrance.

               22. REMEDIES. Upon the occurrence and continuation of an Event of
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Default. Lessor shall have the right, in its sole discretion, to exercise any
one or more of the following remedies: (a) terminate each Lease; (b) declare any
and all Rent and other amount; then due and any and all Rent and other amounts
to become due under each Lease (collectively, the "Lease Obligations")
immediately due and payable; (c) take possession of any or all items of
Equipment, wherever located, without demand, notice, court order, or other
process of law, and without liability for entry to Lessee's premises, or
otherwise; (d) demand that Lessee immediately return any or all Equipment to
Lessor in accordance with Paragraph 14 above, and, for each day that Lessee
shall fail to return any item of Equipment, Lessor may demand an amount equal to
the Rent payable for such Equipment in accordance with Paragraph 14 above; (e)
lease, sell, or otherwise dispose of the Equipment in a commercially reasonable
manner, with or without notice and on public or private bid; (t) recover the
following amounts from the Lessee (as damages, including reimbursement of costs
and expenses, liquidated for all purposes and not as a penalty): (i) all costs
and expenses of Lessor reimbursable to it hereunder, including, without
limitation, expenses of disposition of the Equipment, legal fees, and all other
amounts specified in Paragraph 23 below; (ii) an amount equal to the sum of (A)
any accrued and unpaid Rent through the later of (1) the date of the applicable
default, (2) the date that Lessor has obtained possession of the Equipment, or
(3) such other date as Lessee has made an effective tender of possession of the
Equipment to Lessor (the "Default Date") and (B) if Lessor resells or re-lets
the Equipment, Rent at the periodic rate provided for in each Lease for the
additional period that it takes Lessor to resell or re-let all of the Equipment;
(iii) the present value of all future Rent reserved in the Leases and contracted
to be paid over the unexpired Term of the Leases discounted at five percent
compound interest; (iv) the reversionary value of the Equipment as of the
expiration of the Term of the applicable Lease as set forth on the applicable
Schedule; and (v) any indebtedness for Lessee's indemnity under Paragraph 18
above, plus a late charge at the rate specified in Paragraph 3 above, less the
amount received by Lessor, if any, upon sale or re-let of the Equipment; and (g)
exercise any other right or remedy to recover damages or enforce the terms of
the Leases. Upon the occurrence and continuance of an Event of Default or an
event which with the giving of notice or the passage of time, or both. would
result in an Event of Default, Lessor shall have the right, whether or not
Lessor has made any demand or the obligations of Lessee hereunder nave matured,
to appropriate and apply to the payment of the obligations of Lessee hereunder
all security deposits and other deposits (general or special, time or demand,
provisional or final) now or hereafter held by and other indebtedness or
property now or hereafter owing by Lessor to Lessee. Lessor may pursue any other
rights or remedies available at law or in equity, including, without limitation,
rights or remedies seeking damages, specific performance, and injunctive relief.
Any failure of Lessor to require strict performance by Lessee, or any waiver by
Lessor of any provision hereunder or under any Schedule, shall not be construed
as a consent or waiver of any other breach of the same or of any other
provision. Any amendment or waiver of any provision hereof or under any Schedule
or consent to any departure by Lessee herefrom or therefrom shall be in writing
and signed by Lessor.

<PAGE>

               No right or remedy is exclusive of any other provided herein or
permitted by law or equity. All such rights and remedies shall be cumulative and
may be enforced concurrently or individually from time to time.

               23. LESSOR'S EXPENSE. Lessee shall pay Lessor on demand all costs
                   ----------------
and expenses (including reasonable legal fees and expenses) incurred in
connection with the preparation, execution and delivery of this Agreement and
other agreement and transaction contemplated hereby, which expenses shall not
exceed $2,000 without the written consent of Lessee and all costs and expanses
in protecting and enforcing Lessors rights and interests in each Lease and the
Equipment, including, without limitation, legal, collection, and remarketing
fees and expenses incurred by Lessor in enforcing the terms, conditions, or
provisions of each Lease or upon the occurrence and continuation of an Event of
Default.

               24. LESSEE'S WAIVERS. To the extent permitted by applicable law,
                   ----------------
Lessee hereby waives any and all rights and remedies conferred upon a lessee by
Sections 2A-508 through 2A-522 of the UCC; provided, however, that Lessee shall
have the right to recover damages from Lessor for any breach by Lessor of its
obligations under this Agreement. To the extent permitted by applicable law,
Lessee also hereby waives any rights now or hereafter conferred by statute or
otherwise which may require Lessor to sell, lease, or otherwise use any
Equipment in mitigation of Lessor's damages as set forth in Paragraph 22 above
or which may otherwise limit or modify any of Lessor's rights or remedies under
Paragraph 22. Any action by Lessee against Lessor for any default by Lessor
under any Lease shall be commenced within one year after any such cause of
action accrues.

               25. NOTICES; ADMINISTRATION. Except as otherwise provided herein,
                   -----------------------
all notices, approvals, consents, correspondence, or other communications
required or desired to be given hereunder shall be given in writing and shall be
delivered by overnight courier, hand delivery, or certified or registered mail,
postage prepaid, if to Lessor, then to Transamerica Technology Finance Division,
76 Batterson Park Road, Farmington, Connecticut 06032, Attention: Assistant Vice
President, Lease Administration, with a copy to Lessor at Riverway II, West
Office Tower, 9399 West Higgins Road, Rosemont, Illinois 60018, Attention: Legal
Department, if to Lessee, then to 3-Dimensional Pharmaceuticals, Inc., Eagleview
Corporate Center, 665 Stockton Drive, Suite 104, Exton, Pennsylvania 19341,
Attention: Chief Financial Officer or such other address as shall be designated
by Lessee or Lessor to the other party. All such notices and correspondence
shall be effective when received.

               26. REPRESENTATIONS. Lessee represents and warrants to Lessor
                   ---------------
that (a) Lessee is duly organized, validly existing, and in good standing under
the laws of the State of its incorporation; (b) the execution, delivery, and
performance by Lessee of this Agreement are within Lessee's powers, have been
duly authorized by all necessary action, and do not and will not cause a
material violation of (i) Lessee's organizational documents or (ii) any known
law, regulation, rule, or contractual restriction binding on or affecting
Lessee; (c) no authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery, and performance by Lessee of this Agreement; (d) each
Lease constitutes the legal, valid, and binding obligations of Lessee
enforceable against Lessee in accordance with its terms, limited by the effect
of applicable bankruptcy, insolvency, reorganization or similar laws affecting
the enforcement of creditors'
<PAGE>

rights generally; (e) the cost of each item of Equipment does not exceed the
fair and usual price for such type of equipment purchased in like quantity and
reflects all discounts, rebates, and allowances for the Equipment (including,
without limitation, discounts for advertising, prompt payment, testing, or other
services) given to the Lessee by the manufacturer, supplier, or any other
person; and (f) all information supplied by Lessee to Lessor in connection
herewith is correct and does not omit any statement necessary to insure that the
information supplied is not materially misleading.

               27. FURTHER ASSURANCES. Lessee, upon the request of Lessor, will
                   ------------------
execute, acknowledge, record, or file, as the case may be, such further
documents and do such further acts as may be reasonably necessary, desirable, or
proper to carry out more effectively the purposes of this Agreement. Lessee
hereby appoints Lessor as its attorney-in-fact to execute on behalf of Lessee
and authorizes Lessor to file without Lessee's signature any UCC financing
statements and amendments Lessor deems advisable.

               28. FINANCIAL STATEMENTS. Lessee shall deliver to Lessor: (a) as
                   --------------------
soon as available, but not later than 120 days after the end of each fiscal year
of Lessee and its consolidated subsidiaries, the consolidated balance sheet,
income statement, and statements of cash flows and shareholders equity for
Lessee and its consolidated subsidiaries (the "Financial Statements") for such
year, reported on by independent certified public accountants without an adverse
qualification; and (b) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters in any fiscal year of Lessee
and its consolidated subsidiaries, the Financial Statements for such fiscal
quarter together with a certification duly executed by a responsible officer of
Lessee that such Financial Statements have been prepared in accordance with
generally accepted accounting principles and are fairly stated in all material
respects (subject to normal year-end audit adjustments). Lessee shall also
deliver to Lessor as soon as available copies of all press releases and other
similar communications issued by Lessee.

               29. CONSENT TO JURISDICTION. Lessee irrevocably submits to the
                   -----------------------
Jurisdiction of any Illinois state or federal court sitting in Illinois for any
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and Lessee irrevocably agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
Illinois state or federal court.

               30. WAIVER OF JURY TRIAL, LESSEE AND LESSOR IRREVOCABLY WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

               31. FINANCE LEASE. Lessee and Lessor agree that each Lease is a
                   -------------
"Finance Lease" as defined by Section 2A-103(g) of the UCC. Lessee acknowledges
that Lessee has reviewed and approved each written Supply Contract (as defined
by UCC 2A-l03(y)) covering Equipment purchased from each "Supplier" (as defined
by UCC 2A-l03(x)) thereof.

               32. NO AGENCY. Lessee acknowledges and agrees that neither the
                   ---------
manufacturer or supplier, nor any salesman, representative, or other agent of
the manufacturer or supplier, is an agent of Lessor, No salesman,
representative, or agent of the manufacturer or

<PAGE>

supplier is authorized to waive or alter any term or condition of this Agreement
or any Schedule and no representation as to the Equipment or any other matter by
the manufacturer or supplier shall in any way affect Lessee's duty to pay Rent
and perform its other obligations as set forth in this Agreement or any
Schedule.

               33. SPECIAL TAX INDEMNIFICATION. Lessee acknowledges that Lessor,
                   ---------------------------
in determining the Rent due hereunder, has assumed that certain tax benefits as
are provided to an owner of property under the Internal Revenue Code of 1986. as
amended (the "Code"), and under applicable state tax law, including, without
limitation, depreciation deductions under Section 168(b) of the Code, and
deductions under Section 163 of the Code in an amount at least equal to the
amount of interest paid or accrued by Lessor with respect to any indebtedness
incurred by Lessor in financing its purchase of the Equipment. are available to
Lessor as a result of the lease of the Equipment. In the event Lessor is unable
to obtain such tax benefits solely as a result of an act or omission of Lessee,
is required to include in income any amount other than the Rent, or is required
to recognize income in respect of the Rent earlier than anticipated pursuant to
this Agreement. Lessee shall pay Lessor additional rent ("Additional Rent") in a
lump sum in an amount needed to provide Lessor with the same after-tax yield and
after-tax cash flow as would have been realized by Lessor had Lessor (i) been
able to obtain such tax benefits, (ii) not been required to include any amount
in income other than the Rent, and (iii) not been required to recognize income
in respect of the Rent earlier than anticipated pursuant to this Agreement. The
Additional Rent shall be computed by Lessor, which computation shall be binding
on Lessee absent manifest error. Lessor shall provide Lessee with evidence of
the calculation of such Additional Rent. The Additional Rent shall be due
immediately upon written notice by Lessor to Lessee of Lessor's inability to
obtain tax benefits, the inclusion of any amount in income other than the Rent
or the recognition of income in respect of the Rent earlier than anticipated
pursuant to this Agreement. The provisions of this Paragraph 33 shall survive
the termination of this Agreement.

               34. GOVERNING LAW; SEVERABILITY. EACH LEASE SHALL BE GOVERNED BY
                   ---------------------------
THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. IF ANY PROVISION SHALL BE HELD TO BE INVALID OR
UNENFORCEABLE, THE VALIDITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS SHALL
NOT IN ANY WAY BE AFFECTED OR IMPAIRED.

LESSEE ACKNOWLEDGES THAT LESSEE HAS READ THIS AGREEMENT AND THE SCHEDULE HERETO.
UNDERSTANDS THEM, AND AGREES TO BE BOUND BY THEIR TERMS AND CONDITIONS. FURTHER,
LESSEE AND LESSOR AGREE THAT THIS AGREEMENT. THE SCHEDULES DELIVERED IN
CONNECTION HEREWITH FROM TIME TO TIME. AND THE COMMITMENT LETTER ARE THE
COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES.
SUPERSEDING ALL PROPOSALS OR PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER
COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF. SHOULD
THERE EXIST ANY INCONSISTENCY BETWEEN THE TERMS OF THE COMMITMENT LETTER AND
THIS AGREEMENT, THE TERMS OF THIS AGREEMENT SHALL PREVAIL.
<PAGE>

               IN WITNESS WHEREOF, the parties hereto have executed or caused
this Agreement to be duly executed by their duly authorized officers as of the
date first written above.

                                     3-DIMENSIONAL PHARMACEUTICALS, INC.


                                     By: /s/ Scott Horvitz
                                        ----------------------------------------
                                        Name: Scott Horvitz
                                        Title: VP & CFO
                                        Federal Identification Number 23-2716487


                                     TRANSAMERICAN BUSINESS CREDIT CORPORATION


                                     By: /s/ Gary P. Moro
                                        ----------------------------------------
                                        Name: Gary P. Moro
                                        Title: Vice President
                                        Federal Identification Number 23-2716487
<PAGE>

May 9, 1997


                                    Revised

Mr. Scott M. Horvitz
Chief Financial Officer
3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center
665 Stockton Drive. Suite 104
Exton, Pennsylvania 19341

Dear Scott:

     Transamerica Business Credit Corporation - Technology Finance Division
("Lessors") is pleased to offer this commitment (the "Commitment") to lease the
Equipment described below to 3-Dimensional Pharmaceuticals, Inc. ("Lessee").
This Commitment supersedes all prior correspondence. proposals, and oral or
other communications relating to leasing arrangements between Lessee and Lessor.
The outline of this offer is as follows:


Lessee:                            3-Dimensional Pharmaceuticals, Inc.
------
Lessor:                            Transamerica Business Credit Corporation -
------                             Technology Finance Division and/or its
                                   affiliates, successors and assigns.

Guarantor:                         None.
---------
Equipment:                         Laboratory and Office Equipment (all
---------                          equipment subject to Lessor's approval prior
                                   to funding), and will also include, without
                                   limitation, all additions, improvements.
                                   replacements. repairs, appurtenances,
                                   substitutions, and attachments thereto and
                                   all proceeds thereof ("Equipment") and Tenant
                                   Improvements.
Equipment Cost:                    Not to exceed $1,000,000 with Tenant
--------------                     Improvements up to $300,000.
Equipment Location:                Exton, Pennsylvania
------------------
Anticipated Delivery:              Through June 30, 1998.
--------------------
Termination of Commitment:         This commitment will terminate if the first
-------------------------          delivery of Equipment is not completed and
                                   funded on or before June 15, 1997.
Lease Term                         Upon delivery of the Equipment or upon each
----------                         completion of deliveries of items of
Commitment:                        Equipment with aggregate cost of not less
----------                         than $25,000, but in no event shall any
                                   Equipment be delivered later than June 30,
                                   1998.
<PAGE>

Term:                              From each Lease Term Commencement until 48
----                               months from the first day of the month next
                                   following or on the same date as the Lease
                                   Term Commencement if that date is the first
                                   date of the month.
Lease Repayment Terms:             Monthly Rent equal to 2.5226% of Equipment
---------------------              Cost shall be payable monthly, in advance,
                                   plus applicable sales and other taxes. The
                                   first and last months rent shall be payable
                                   in advance. As of the date of each Lease Term
                                   Commencement, the Monthly Rent Payments shall
                                   be fixed for the term.

                                   The Lessor reserves the right to increase the
                                   Monthly Rent Payments as of the date of each
                                   Lease Term Commencement commensurate to the
                                   increase in the weekly average of the
                                   interest rates of three-year U.S. Treasury
                                   Securities from the week ending March 28,
                                   1997 to the week preceding the date of each
                                   Lease Term Commencement, as published in the
                                   Wall Street Journal.
Interim Rent Payments:             In the event that the Lease Term Commencement
---------------------              is not on the first day of the month, Interim
                                   Rent Payments shall accrue from each Lease
                                   Term Commencement until the next following
                                   first day of a month and shall be payable at
                                   the end of that month. Interim Rent Payments
                                   shall be calculated at the daily equivalent
                                   of the currently adjusted Monthly Payment.
Purchase Option:                   The Lessee shall have the option to purchase
---------------                    all (but not less than all) the Equipment at
                                   the expiration of the term of the lease for
                                   the then current Fair Market Value of the
                                   Equipment. Plus applicable sales and other
                                   taxes.

                                   It shall be agreed that the Fair Market Value
                                   will be 10% of Equipment Cost and Tenant
                                   Improvements, plus applicable sales and other
                                   taxes.
Automatic Renewal:                 In the event the Lessee does not exercise the
-----------------                  Purchase Option described above, the lease
                                   shall automatically renew for a term of
                                   twelve months with Monthly Rental equal to
                                   1.0% of the original Equipment Cost payable
                                   monthly in advance. At the expiration of the
                                   renewal period, the Lessee shall have the
                                   option to purchase all (but not less than
                                   all) of the Equipment for $1.00, plus
                                   applicable sales and other taxes.
Documentation:                     The documentation relating to this
-------------                      transaction shall implement the transaction
                                   contemplated by this commitment letter to the
                                   satisfaction of Lessor and its counsel, shall
                                   be fully acceptable to Lessor and its
                                   counsel, and shall contain conditions
                                   precedent,
<PAGE>

                                   representations, warranties and covenants by
                                   Lessee and shall provide for events of
                                   defaults and remedies, all as required by
                                   Lessor for transactions of this type. The
                                   documentation shall include, but not be
                                   limited to, the terms and conditions
                                   described in this commitment letter.
Insurance:                         Prior to any delivery of Equipment, the
---------                          Lessee shall furnish a certificate of
                                   insurance acceptable to the Lessor in amount,
                                   type. and term covering the Equipment
                                   including primary, all risk, physical damage,
                                   property damage and bodily injury with
                                   appropriate loss payee and additional insured
                                   endorsements in favor of the Lessor.
Taxes:                             Sales or use taxes would be added to the
-----                              Equipment Cost or collected on the gross
                                   rentals, as appropriate.
Representations and                There shall be no actual or threatened
-------------------                conflict with, or violation of. any
Additional Covenants:              regulatory statute. standard or rule relating
--------------------               to the Lessee, its present or future
                                   operations, or the Equipment.

                                   All information supplied by the Lessee shall
                                   be correct and shall not omit any statement
                                   necessary to make the information supplied
                                   not be materially misleading. There shall be
                                   no material breach of the representations and
                                   warranties of the Lessee in the Lease. The
                                   representations shall include that the
                                   Equipment Cost of each item of the Equipment
                                   does not exceed the fair and usual price for
                                   such type of Equipment purchased in like
                                   quantity purchased of such item and reflects
                                   all discounts, rebates and allowances for the
                                   Equipment given to Lessee by the
                                   manufacturer, supplier or any other person
                                   including, without limitation, discounts for
                                   advertising, prompt payment, testing or other
                                   services. There shall be no additional
                                   affirmative or negative financial covenants
                                   for this financing.
Conditions Precedent to            1.   No material adverse change in the
-----------------------                 financial condition, operation or
Each Lease Term                         prospects of the Lessee prior to
---------------                         funding. The Lessor reserves its right
Commencement:                           to rescind any unused portion of its
------------                            commitment in the event of a material
                                        adverse change in the financial or
                                        business condition of the Lessee.
                                   2.   Completion of the documentation and
                                        final terms of the proposed financing
                                        satisfactory to Lessor and Lessor's
                                        counsel.
                                   3.   Results of all due diligence, including
                                        lien, judgment and tax searches and
                                        other matters Lessor may request shall
                                        be satisfactory to Lessor and Lessor's
                                        counsel.
<PAGE>

                                   4.   Receipt by Lessor of duly executed Lease
                                        documentation in form and substance
                                        satisfactory to Lessor and its counsel.
                                   5.   Lessor shall receive title and a valid
                                        and perfected first priority lien and
                                        security interest in all Equipment
                                        acquired through the use of this
                                        Commitment and Lessor shall have
                                        received satisfactory evidence that
                                        there are no liens on any Equipment
                                        except as expressly permitted herein.
                                   6.   In consideration of the Lessor providing
                                        a Commitment to the Lessee to lease
                                        equipment under the terms herein, Lessor
                                        shall be granted Warrants to purchase
                                        shares of the common stock of the
                                        Lessee. The aggregate exercise price for
                                        the shares represented by the Warrants
                                        would be 10.5% of the commitment for
                                        Tenant Improvements ($300,000) or
                                        $31,500, and the exercise price per
                                        share shall be $2.50 per share if the
                                        Lessee sells shares in an "arms length"
                                        transaction (including a Corporate
                                        Partnership) of its equity securities at
                                        or above that price on or before June
                                        30, 1997; otherwise the exercise price
                                        shall be $1.25 per share. The Warrants
                                        shall be exercisable from the date of
                                        issuance and have a term of seven years.
                                        Lessor may retain or transfer Warrants
                                        (subject to compliance with applicable
                                        securities laws) or the shares issuable
                                        thereunder, in whole or in part, whether
                                        or not Lessor sells its rights under any
                                        Lease an/or its ownership of equipment
                                        to another Lessor or any participation
                                        therein.
                                   7.   Satisfactory review by Lessor's
                                        Scientific Advisory Board prior to
                                        funding.
                                   8.   Satisfactory review by Lessor of the
                                        1996 audited financial statements prior
                                        to funding.
                                   9.   Landlord Waiver in a form acceptable to
                                        Lessee and its landlord.
                                   10.  UCC-l Fixture Filing.
Fees and Expenses:                 The Lessee shall be responsible for the
-----------------                  Lessor's reasonable expenses (including legal
                                   expenses) in connection with the transaction.
                                   Such expenses shall be limited to $2,000
                                   without the prior written consent of Lessee.
Law:                               This letter and the proposed Lease are
---                                intended to be governed by and construed in
                                   accordance with Illinois law without regard
                                   to its conflict of law provisions.
Indemnity:                         Lessee agrees to indemnify and to hold
---------                          harmless Lessor,
<PAGE>

                                   and its officers, directors and employees
                                   against all claims, damages. liabilities and
                                   expenses which may be incurred by or asserted
                                   against arty such person in connection with
                                   or arising our of this letter and the
                                   transactions contemplated hereby. other than
                                   claims, damages, liability, and expense
                                   resulting from such person's gross negligence
                                   or misconduct.
Confidentiality:                   This letter is delivered to you with the
---------------                    understanding that neither it nor its
                                   substance shall be disclosed publicly or
                                   privately to any third person except those
                                   who are in a confidential relationship to you
                                   (such as your legal counsel and accountants),
                                   or where the same is required by law and then
                                   only on the basis that it not be further
                                   disclosed, which conditions the Lessee, its
                                   Guarantor and its agents agree to be bound by
                                   upon acceptance of this letter.

                                   Without limiting the generality of the
                                   foregoing, none of such persons shall use or
                                   refer to Lessor or to any affiliate name in
                                   any disclosures made in connection with any
                                   of the transactions without Lessor's prior
                                   written consent.
Conditions of Acceptance:          This Commitment Letter is intended to be a
------------------------           summary of the most important elements of the
                                   agreement to enter into a leasing transaction
                                   with Lessee, and it is subject to all
                                   requirements and conditions contained in
                                   Lease documentation proposed by Lessor or its
                                   counsel in the course of closing the lease
                                   described herein. Not every provision that
                                   imposes duties, obligations, burdens, or
                                   limitations on Lessee is contained herein,
                                   but shall be contained in the final Lease
                                   documentation satisfactory to Lessor and its
                                   counsel.

                                   EACH OF THE PARTIES HERETO IRREVOCABLY AND
                                   UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY
                                   JURY IN ANY SUIT, ACTION, PROCEEDING OR
                                   COUNTERCLAIM ARISING OUT OF OR RELATED TO
                                   THIS LETTER OR THE TRANSACTION DESCRIBED IN
                                   THIS LETTER.
Commitment Fee:                    A Commitment Fee equal to 1% of the total
--------------                     Equipment Cost and Tenant Improvements
                                   ($10,000) shall be due the Lessor upon
                                   acceptance of this Commitment. The $10,000
                                   Application Fee previously paid shall be
                                   applied toward the Commitment Fee. The
                                   Commitment Fee shall be first applied to the
                                   cost and expenses incurred by Lessor in
                                   connection with the transaction (subject to
                                   the
<PAGE>

                                   $2000 limit), and the remainder shall be
                                   applied to the second month's rent due under
                                   the Lease.
Commitment Expiration:             This Commitment shall expire on May 9, 1997,
---------------------              unless prior thereto either extended in
                                   writing by the Lessor or accepted as provided
                                   below by the Lessee.

     Should you have any questions, please call me. If you wish to accept this
Commitment, please so indicate by signing and returning the enclosed duplicate
copy of this letter to me by May 14, 1997.

                                      Yours truly,

                                      TRANSAMERICA BUSINESS CREDIT CORPORATION-
                                      TECHNOLOGY FINANCE DIVISION


                                      By: /s/ Gerald A. Michaud
                                          ------------------------------------
                                          Gerald A. Michaud
                                          Senior Vice President - Marketing


Accepted this 9th day of May, 1997


3-DIMENSIONAL PHARMACEUTICALS, INC.


By: /s/ Scott Horvitz
    --------------------------------
        Typed or Printed Name

Title: Vice President and CFO
      ------------------------------
<PAGE>

                            SECRETARY'S CERTIFICATE


          I, _____________________, hereby state that I am the duly elected,
acting and qualified Secretary of 3-Dimensional Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and that:

          (a)  Through a unanimous consent in lieu of a Board of Directors
meeting of the Company, proposed in accordance with its bylaws and the laws of
said State on the ____ day of ___________, 1997, signed by a quorum for the
transaction of business, the following resolutions were duly and regularly
adopted:

          RESOLVED, that the form, terms and provisions of all of the documents
and instruments executed by the Company with and/or in favor of Transamerica
Business Credit Corporation (the "Agreements"), and the transactions
contemplated thereby be, and the same are, in all respects approved, and that
the President, each Vice President and each other officer of the Company (the
"Authorized Persons"), or any of them, be, and they hereby are, authorized,
empowered, and directed to execute and deliver the Agreements and any and all
other agreements, documents, instruments and certificates required or desirable
in connection therewith, if necessary or advisable, with such changes as they
may deem in the best interest of the Company, and their execution and delivery
of the Agreements, and all such other agreements, documents, instruments and
certificates, shall be deemed to be conclusive evidence that the same are in all
respects authorized and approved; and be it further

          RESOLVED, that the actions of any Authorized Person heretofore taken
in furtherance of the Agreements be, and hereby are, approved, adopted and
ratified in all respects.

          (i)  The above resolutions: (a) are not contrary to the Articles or
Certificate of Incorporation or bylaws of the Company and (b) have not been
amended, modified, rescinded or revoked and are in full force and effect on the
date hereof.

          (ii) The following persons are duly qualified and acting officers of
the Company, duly elected to the offices set forth opposite their respective
names, and the signature appearing opposite the name of each such officer is his
authentic signature:

Name                       Office                        Signature
----                       ------                        ---------

Thomas P. Stagnaro         President and                 /s/ Thomas P. Stagnaro
                                                         ----------------------
                           Chief Executive Officer

Scott M. Horvitz           Vice President and            /s/ Scott m. Horvitz
                                                         --------------------
                           Chief Financial Officer
<PAGE>

          IN WITNESS WHEREOF, I have executed this Certificate, this 13th day of
June, 1997.

                                                /s/ Scott Horvitz
                                                -------------------------------
                                                                Secretary


[CORPORATE SEAL]
<PAGE>

July 8, 1997


Mr. Scott M. Horvitz
Chief Financial Officer
3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center
665 Stockton Drive. Suite 104
Exton, Pennsylvania 19341

Re:  Customer No.  1046-001

Dear Scott:

     We would like to thank you for choosing Transamerica Business Credit
Corporation (TBCC) - Technology Finance Division for your recent refinancing.
For your files, we have enclosed copies of the various documents executed by
your organization in connection with the above referenced transactions. These
documents have been executed by Transamerica and should be retained by you in a
safe place.

     Invoices will be sent to you on a monthly basis, with your payments due on
the first day of each month. The remittance ad-dress for payment is 9399 West
Higgins Road, Suite 600, Rosemont, Illinois 60018. Please indicate your customer
numbers on the face of your check.

     Please be advised that you are responsible for the appropriate property tax
filing. Proof of filing and payment of property tax should be provided to TBCC
annually. All future payments should be made on or before the due date indicated
on each invoice. Payments arriving after 5 days of the due date will be subject
to a 5% late charge. All remittances should be sent to the above mentioned
address.

     We appreciate having been given the opportunity to serve you and we look
forward to do so again, in the future. Should you have any questions on your
account, please contact our Lease Administration Department at 860-677-6466 and
we will be delighted to assist you.

Very truly yours,

Transamerica Business Credit Corporation

/s/ Laura Robbins

Laura Robbins
Lease Administrator

Enc.
<PAGE>

                          COLLATERAL ACCESS AGREEMENT
                   TRANSAMERICA BUSINESS CREDIT CORPORATION
                       9399 West Higgins Road, Suite 600
                           Rosemont, Illinois 60018


                                                                   June 17, 1997

The Hankin Group
717 Constitution Drive
Eagleview Corporate Center
P.O. Box 562
Exton, PA 19341
Attn: Mr. Jack Purcell

     Re:  3-Dimensional Pharmaceuticals, Inc.

Ladies and Gentlemen:

          We have been asked by 3-Dimensional Pharmaceuticals, Inc., a Delaware
corporation (the "Company") to finance certain equipment (the "Equipment"),
which will be located at the address identified on Schedule A (the "Premises").
The obligations of the Company to us will be secured by, among other things, the
Equipment. We understand that the Company leases the Premises from you pursuant
to a lease or is the owner of the Premises, which is subject to a lien in favor
of you pursuant to a mortgage (such lease or mortgage being referred to as the
"Agreement").

          In connection with the extensions of credit to be made to the Company,
Transamerica Business Credit Corporation, ("Transamerica") will be making
customary Uniform Commercial Code filings on behalf of Transamerica with respect
to the Equipment. In addition, we request your acknowledgment and cooperation
for preserving and enforcing Transamerica's security interests. To expedite the
consummation of the proposed financing, we would appreciate your execution of
this letter.

          To induce Transamerica to finance the Equipment, and for other good
and valuable consideration, you confirm and acknowledge the following matters to
us:

You will allow us, or our auditors or other designees, reasonable access to the
Premises to inspect the Equipment from time to time. In addition, so long as the
Agreement is in effect and the Company is not in default in its obligations
thereunder, upon our request, you will grant us and our designees access to the
Premises at reasonable times to show the Equipment to potential purchasers and
to remove the Equipment from the Premises.

In the event that the Company defaults in its obligations under the Agreement as
a result of which you elect to terminate the Company's rights to possession
under the Agreement, you will
<PAGE>

notify us in writing of this fact prior to your terminating or exercising
remedies under the Agreement and retaking possession of the Premises, to permit
us the opportunity within ten (10) business days after written notice from you
to us, to remove the Equipment. We will indemnify, defend and save you harmless
from all costs, expenses and damages suffered by you in connection with our
removal of the Equipment. The Equipment shall not include any item which is
within the meaning of the term "Trade Fixtures" as defined in Section 7(f)(ii)
of the Agreement. You hereby confirm and acknowledge to us that, except as to
Trade Fixtures, you do not and will not have any claim to or lien on any of the
Equipment, whether such Equipment constitutes fixtures or personal property.

          We would appreciate your confirming to us your agreement to the
foregoing provisions of this letter by signing and returning to us this letter
at our address shown above.

Very truly yours,

TRANSAMERICA BUSINESS CREDIT
  CORPORATION


By:  /s/ Gary P. Moro
   ------------------------------------
   Name:    Gary P. Moro
   Title:   Vice President - Credit



ACKNOWLEDGED AND AGREED:


By: /s/ Robert S. Hankin
   ------------------------------------
   Name: Robert S. Hankin
   Title. Partner
          The Hankin Group
<PAGE>

                                  SCHEDULE A


Equipment Locations:          Eagleview Corporate Center
                              665 Stockton Drive, Suite 104
                              Exton, Pennsylvania 19341
<PAGE>

                      SCHEDULE TO MASTER LEASE AGREEMENT

                           Dated as of July 1, 1997

                                Schedule No. 1


Lessor Name & Mailing Address               Lessee Name & Mailing Address
Transamerica Business Credit Corporation    3-Dimensional Pharmaceuticals, Inc.
Riverway II                                 Eagleview Corporate Center
West Office Tower                           665 Stockton Drive, Suite 104
9399 West Higgins Road                      Exton, Pennsylvania 1 19341
Rosemont, Illinois  60018

     Equipment Location (if different than Lessee's address above):

     This Schedule covers the following described equipment ("Equipment"):

            See Exhibit II attached hereto and made a part hereof.

     The Equipment is hereby leased pursuant to the provisions of the Master
Lease Agreement between the undersigned Lessee and Lessor dated June 12, 1997
(the "Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions, and modifications. The
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated May 9, 1997, if the Lessor has not received this
Schedule and an Acceptance and Delivery Certificate executed by the Lessee
within five business days from the date first set forth above.

<TABLE>
<S>                                                                             <C>
1.   Term (Number of Months)                                                    48 months
2.   Equipment Cost                                                             $34,586.96
3.   Commencement Date                                                          July 1, 1997
4.   Rate Factor                                                                2.5226% of Equipment Cost
5.   Total Rents                                                                $41,880.00
6.   Advance Rents (first and last)                                             $1,745.00
7.   Monthly rental payments                                                    $872.50
       And the second such rental payments will be due on and subsequent        August 1, 1997
       rental payments will be due on the same day of each month thereafter

8.   Security Deposit                                                           None
9.   In addition to the monthly rental payments  provided for herein,           N O N E
     Lessee shall pay to Lessor, as interim rent, payable on the commencement
     date specified above, an amount equal to 1/30th of the monthly rental
     payment (including monthly sales/use tax) multiplied by the number of days
     from and including the commencement date through the end of the same
     calendar month
</TABLE>
<PAGE>

     Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.

     Except as expressly provided or modified hereby, all the terms and
provisions of the Master Lease Agreement shall remain in full force and effect.

     The Purchase Date shall be June 1, 2001.

     The Stipulated Loss Value of any items of Equipment shall be an amount
equal to the present value of all future Rent discounted at a rate of 8% per
annum plus the Reversionary Value.

     The Reversionary Value of any item of Equipment shall be 10% of Equipment
Cost.

TRANSAMERICA BUSINESS CREDIT            3-DIMENSIONAL PHARMACEUTICALS,
CORPORATION                             INC.
(Lessor)                                (Lessee)


By: /s/ Gary P. Moro                    By:/s/ Scott Horvitz
   --------------------------------        ----------------------------

Title:   Vice President                 Title: VP & CFO
      -----------------------------           -------------------------
<PAGE>

                                  EXHIBIT II


To:

____   Schedule to Master Lease Agreement     ____  Sale and Leaseback Agreement
____   UCC                                    ____  Bill of Sale
____   Collateral Access Agreement


                           Dated as of July 1, 1997

                                    Between

                   TRANSAMERICA BUSINESS CREDIT CORPORATION


Customer Name:                3-DIMENSIONAL PHARMACEUTICALS, INC.
Equipment Locations:          Eagleview Corporate Center
                              665 Stockton Drive, Suite 104
                              Exton, Pennsylvania 19341


     See Rider I to Schedule No. 1 attached hereto and made a part hereof.



Transamerica Business Credit Corporation    3-Dimensional Pharmaceuticals, Inc.
(Lessor)                                    (Lessee)


By: /s/ Gary P. Moro                        By:/s/ Scott Horvitz
   ----------------------------                -------------------------------
                                                    Scott Horvitz

Title:  Vice President                      Title:  Vice President and Chief
      -------------------------                     Financial Officer
<PAGE>


                                     RIDER I
                                TO SCHEDULE NO. 1

                       3Dimensional Pharmaceuticals, inc.
                        Equipment Sale Leaseback Schedule
                                  June 17, 1998

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
QTY        EQUIPMENT                      PURCHASE          INVOICE NO.         CATALOG       SERIAL NO.
          DESCRIPTION                       ORDER                                 NO.
---------------------------------------------------------------------------------------------------------
<S>       <C>                             <C>               <C>                 <C>           <C>
---------------------------------------------------------------------------------------------------------
1         Vacuum Desiccaator Cabiner               970235   278404021597          8644               N/A
---------------------------------------------------------------------------------------------------------
                                        970235 Total
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1         32 MB 168 PIN EDO DIMM                   970513       A0177766        CHP 0396             N/A
---------------------------------------------------------------------------------------------------------
1         Ether FE 10/100 PCI                      970513       A0177766        DEC 1883             N/A
---------------------------------------------------------------------------------------------------------
1         4MB VRAM F/StarMax                       970513       A0177766        CHP 0430             N/A
---------------------------------------------------------------------------------------------------------
1         ViewSonic/Optiquest 17"                  970513       A0177766        BND 1612       461003702
          Monitor
---------------------------------------------------------------------------------------------------------
1         StarMax 3000                             970513       A0187468        CPU 0537        ST005516
---------------------------------------------------------------------------------------------------------
                                        970513 Total
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1         32 MB 168 PIN EDO DIMM                   970514       A0216127        CHP 0396             N/A
---------------------------------------------------------------------------------------------------------
1         Ether FE 10/100 PCI                      970514       A0216127        DEC 1883             N/A
---------------------------------------------------------------------------------------------------------
1         StarMax 3000                             970514       A01209171      CPU 0548         ST016198
---------------------------------------------------------------------------------------------------------
1         Power User 17" Monitor                   970514       A0285403       MON 0378       0461000803
---------------------------------------------------------------------------------------------------------
                                        970514 Total
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1         32 MB 168 PIN EDO DIMM                   970515       A0183533       CHP 0396              N/A
---------------------------------------------------------------------------------------------------------
1         Ether FE 10/100 PCI                      970515       A0183533       DEC 1883              N/A
---------------------------------------------------------------------------------------------------------
1         StarMax 3000                             970515       A0180471       CPU 0537            DS395
---------------------------------------------------------------------------------------------------------
                                        970515 Total
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1         Powerbook 3400C/180                      970550       A0356485       CPU 0578      CK7080MR7ZQ
---------------------------------------------------------------------------------------------------------
                                        970550 Total
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1         Incubator Bod MDL 146D 11                970684        6327202         97990D          1296006
---------------------------------------------------------------------------------------------------------
                                        970684 Total
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1         MaterialsDrier, Valves,                  970709          15387                             N/A
          Adapter
---------------------------------------------------------------------------------------------------------
                                        970709 Total
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1         Campaq Presario CPU                      970756       A1514223         CP4089    SA643HZY2D770
---------------------------------------------------------------------------------------------------------
1         Sony Monitor 17"                         970756       A1514223        MON0417      S017125370B
---------------------------------------------------------------------------------------------------------
                                        970756 Total
---------------------------------------------------------------------------------------------------------

<CAPTION>
-------------------------------------------------------------------------
QTY       SUPPLIER/    PURCHASE DATE    EQUIPMENT    PAID - CHECK #
           VENDOR                         COST
-------------------------------------------------------------------------
<S>       <C>          <C>              <C>          <C>
-------------------------------------------------------------------------
 1        Fisher           2/4/97        $ 1,055.33
                                         ----------
-------------------------------------------------------------------------
                                         $ 1,055.33
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           219.00         6315
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           171.00         6315
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           200.00         6315
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           549.00         6315
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97          ,375.00         6315
                                         ----------
                                           2,514.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           219.00         6404
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           171.00         6404
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97         2,139.00         6404
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           449.00         6404
                                         ----------
-------------------------------------------------------------------------
                                           2,978.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           219.00         6315
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97           171.00         6315
-------------------------------------------------------------------------
 1        MacWarehouse     3/20/97         1,375.00         6315
                                         ----------
-------------------------------------------------------------------------
                                           1,765.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse     3/25/97         4,849.00         6404
                                         ----------
-------------------------------------------------------------------------
                                           4,849.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        Fisher           4/10/97         1,854.43         6550
                                         ----------
-------------------------------------------------------------------------
                                           1,854.43
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        Thermatech       4/16/97         2,979.20         6596
                                         ----------

                                           2,979.20
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse     4/23/97         1,689.00         6564
-------------------------------------------------------------------------
 1        MacWarehouse     4/23/97           765.00         6564
                                         ----------
-------------------------------------------------------------------------
                                           2,454.00
-------------------------------------------------------------------------
</TABLE>
<PAGE>


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
QTY        EQUIPMENT                      PURCHASE          INVOICE NO.         CATALOG       SERIAL NO.
          DESCRIPTION                       ORDER                                 NO.
---------------------------------------------------------------------------------------------------------
<S>       <C>                             <C>               <C>                 <C>         <C>

---------------------------------------------------------------------------------------------------------
 1        Dunatek Dat 8.1 Removable              970823        A1797455           DRI 1652        5401217
          Tape Drive
---------------------------------------------------------------------------------------------------------
                                          970823 Total
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
 1        Campaq P/133 PC Computer               970836        A1883586           CP3448    S6703HVX6D740
---------------------------------------------------------------------------------------------------------
 1        16MB SIMM Kit                          970836        A1888247           MY6271


---------------------------------------------------------------------------------------------------------
                                          970836 Total
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
 1        9.1 GB Ultra Wide Drive                970906           71821        RCH/19WDS         LA691625

---------------------------------------------------------------------------------------------------------
                                          970906 Total
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
 1        Power  Center   Macintosh              971009        A3069549          CPU0465          1437754
          Clone
---------------------------------------------------------------------------------------------------------
 2        64  MB  168  Pin  DIMM                 971009        A2902922          CPU0392              N/A
          Memory
---------------------------------------------------------------------------------------------------------
 1        PCI Graphic Card                       971009        A2902922          DRI1212              N/A
---------------------------------------------------------------------------------------------------------
 1        Superscan 17" Monitor                  971009        A2916575          MON0101        T6l000557
---------------------------------------------------------------------------------------------------------
 1        3COM Ethernet Card                     971009        A2902922          DEC2209              N/A
---------------------------------------------------------------------------------------------------------
 1        Internal Zip Drive                     971009        A2902922          DRI1768              N/A

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

---------------------------------------------------------------------------------------------------------
                                          971009 Total
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
 1        Power  Center   Macintosh              971010        A3069010          CPU0465          1435173
          Clone
---------------------------------------------------------------------------------------------------------
 2        64  MB  168  Pin  DIMM                 971010        A2894665          CPU0392              N/A
          Memory
---------------------------------------------------------------------------------------------------------
 1        PCI Graphic Card                       971010        A2894665          DRI1212              N/A
---------------------------------------------------------------------------------------------------------
 1        Superscan 17" Monitor                  971010        A2882363          MON0101        T6J000263

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

---------------------------------------------------------------------------------------------------------
                                          971009 Total
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
                                          Grand Total

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

<CAPTION>
-------------------------------------------------------------------------
QTY       SUPPLIER/    PURCHASE DATE    EQUIPMENT    PAID - CHECK #
           VENDOR                         COST
-------------------------------------------------------------------------
<S>       <C>          <C>            <C>            <C>
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse    4/13097        1,109.00           6564
                                      -----------
-------------------------------------------------------------------------
                                         1,109.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse    5/1/97         1,290.00           6660
-------------------------------------------------------------------------
 1        MacWarehouse    5/1/97            95.00           6660
                                      -----------
-------------------------------------------------------------------------
                                         1,385.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        RCH Products    5/21/97        2,614.00           6682
                                      -----------
-------------------------------------------------------------------------
                                         2,614.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse    6/2/97         2,470.00    To be Pd. - 6/18/97

-------------------------------------------------------------------------
 2        MacWarehouse    5/28/97          850.00    To be Pd. - 6/18/97

-------------------------------------------------------------------------
 1        MacWarehouse    5/28/97          385.00    To be Pd. - 6/18/97
-------------------------------------------------------------------------
 1        MacWarehouse    5/29/97          730.00    To be Pd. - 6/18/97
-------------------------------------------------------------------------
 1        MacWarehouse    5/28/97           85.00    To be Pd. - 6/18/97
-------------------------------------------------------------------------
 1        MacWarehouse    5/28/97          125.00    To be Pd. - 6/18/97
                                      -----------
-------------------------------------------------------------------------

-------------------------------------------------------------------------
                                         4,645.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
 1        MacWarehouse    6/2/97         2,470.00    To be Pd. - 6/18/97

-------------------------------------------------------------------------
 2        MacWarehouse    5/28/97          850.00    To be Pd. - 6/18/97

-------------------------------------------------------------------------
 1        MacWarehouse    5/28/97          385.00    To be Pd. - 6/18/97
-------------------------------------------------------------------------
 1        MacWarehouse    5/29/97          730.00    To be Pd. - 6/18/97
                                      -----------
-------------------------------------------------------------------------

-------------------------------------------------------------------------
                                         4,435.00
-------------------------------------------------------------------------

-------------------------------------------------------------------------
                                      $ 35,586.96
                                      ===========
-------------------------------------------------------------------------
</TABLE>
<PAGE>

                       ACCEPTANCE AND DELIVERY CERTIFICATE

          3-Dimensional Pharmaceuticals, Inc., as lessee ("Lessee") under the
Master Lease Agreement dated as of June 12, 1997 between Lessee and Transamerica
Business Credit Corporation, as Lessor, does hereby acknowledge the acceptance
and delivery of the equipment listed in Lease Schedule No. 1, such acceptance
and delivery having been made on the 1st day of July, 1997.

                                            3-Dimensional Pharmaceuticals, Inc.

                                            By: /s/ Scott Horvitz
                                                -------------------------------
                                                Name:    Scott Horvitz
                                                Title:   Vice President &
                                                         Chief Financial Officer
<PAGE>

                          SALE AND LEASEBACK AGREEMENT


          THIS SALE AND LEASEBACK AGREEMENT (this "Agreement"), is made as of
June 14, 1997, among 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation
("Seller"), and Transamerica Business Credit Corporation, a Delaware corporation
("Buyer").

                              W I T N E S S E T H :
                              - - - - - - - - - -

          WHEREAS, Seller is the owner of the equipment more particularly
described on Exhibit II hereto (the "Equipment");

          WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the Equipment; and

          WHEREAS, Buyer, as a condition to such purchase, wishes to lease to
Seller and Seller wishes to lease from Buyer the Equipment under the terms and
conditions of the Master Lease Agreement dated as of June 12, 1997 and Schedule
No. 1 thereto (collectively, as amended, supplemented or otherwise modified from
time to time, the "Lease") between Buyer, as lessor, and Seller, as lessee.

          NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

          1.   Amount and Terms of Purchase.
               ----------------------------

                  (a) Subject to the terms and conditions of this Agreement, and
in reliance upon the representations and warranties of the Seller herein set
forth, the Buyer agrees to purchase all of the Seller's right, title and
interest in and to all of the Equipment such that the Buyer will become the
owner of all such Equipment for all purposes whatsoever. The Seller hereby
agrees that the Buyer is under no obligation to purchase any other equipment now
or in the future and shall not assert a claim that the Buyer may have any such
obligation.

                  (b) The price to be paid by the Buyer with respect to the
purchase of the Equipment (the "Purchase Price") is $34,586.96. The Purchase
Price shall be payable to the Seller on the Lease Commencement Date (as defined
in the Lease).

                  (c) The Seller shall pay any and all applicable federal,
state, county or local taxes and any and all present or future taxes or other
governmental charges arising in connection with the sale of the Equipment
hereunder, including sales, use or occupation taxes due upon the purchase by the
Buyer.

                  (d) The purchase of the Equipment shall be evidenced by a bill
of sale, substantially in the form attached hereto as Exhibit A (the "Bill of
Sale"), duly executed by the Seller.
<PAGE>

          2.   Conditions to Purchase.  The obligation of the Buyer to purchase
               ----------------------
the Equipment is subject to the following conditions:

                  (a) The Buyer shall have received this Agreement, duly
executed by the Seller.

                  (b) The Buyer shall have received the Bill of Sale, duly
executed by the Seller.

                  (c) The Buyer shall have received the Lease, duly executed by
the Seller.

                  (d) The Buyer shall have received resolutions of the Board of
Directors of the Seller approving and authorizing the execution, delivery and
performance by the Seller of this Agreement, the Lease and the notices and other
documents to be delivered by the Seller hereunder and thereunder (collectively,
the "Sale and Leaseback Documents").

                  (e) The Buyer shall have received the certificate of title or
similar evidence of ownership with respect to each item of Equipment and Uniform
Commercial Code financing statements covering the Equipment in form and
substance satisfactory to the Buyer, duly executed by the Seller.

                  (f) No material adverse change has occurred with respect to
the business, prospects, properties, results of operations, assets, liabilities
or condition (financial or otherwise) of the Seller and its affiliates, taken as
a whole, since December 31, 1996.

                  (g) The Buyer shall have received all warranties and other
documentation received or executed by Seller in connection with the original
acquisition of the Equipment by the Seller (and by its execution hereof the
Seller hereby assigns to the Buyer all such warranties and other Documentation).

                  (h) The Buyer shall have received such other approvals,
opinions or documents as the Buyer may reasonably request.

          3.   Representation  and Warranties.  To induce the Buyer to enter
               ------------------------------
into this Agreement, the Seller  represents and warrants to the Buyer that:

                  (a) The Seller is duly authorized to execute, deliver and
perform its obligations under each of the Sale and Leaseback Documents and all
corporate action required on its part for the due execution, delivery and
performance of the transactions contemplated herein and therein has been duly
and effectively taken.

                  (b) The execution, delivery and performance by the Seller of
each of the Sale and Leaseback Documents and the consummation of the
transactions contemplated herein and therein does not and will not violate any
material provision of, or result in a material default under, the Seller's
Articles or Certificates of Incorporation or By-laws or any indenture or
agreement to which the Seller is a party or to which its assets are bound or any
order, permit, law, statute, code, ordinance, rule, regulation, certificate or
any other requirement of any governmental authority or regulatory body to which
the Seller is subject, or result in the creation
<PAGE>

or imposition of any mortgage, deed of trust, pledge, security interest, lien or
encumbrance of any kind upon or with respect to the Equipment or any proceeds
thereof, other than those in favor of the Buyer as contemplated by the Sale and
Leaseback Documents.

                  (c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Seller of any of
the Sale and Leaseback Documents to which it is a party.

                  (d) Each Sale and Leaseback Document to which the Seller is a
party constitutes or will constitute, when delivered hereunder, the legal, valid
and binding obligation of the Seller enforceable against the Seller in
accordance with its respective terms, except as such enforceability may be (i)
limited by the effect of applicable bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally or (ii)
subject to the effect of general principles of equity (regardless of whether
such enforceability is considered in a proceeding at equity or at law).

                  (e) There are no actions, suits, or proceedings pending, or,
to the Seller's knowledge, threatened against or affecting the Seller which seek
to enjoin, prohibit or restrain the consummation of any of the transactions
contemplated hereby or by the other Sale and Leaseback Documents.

                  (f) Each item of Equipment is owned by the Seller free and
clear of any liens and encumbrances of any kind or description. Upon purchase of
the Equipment hereunder, the Buyer will acquire good and marketable title in and
to the Equipment.

All representations and warranties herein shall survive the execution of this
Agreement and the purchase of the Equipment.

          4.   Indemnities. The Seller agrees to indemnify, defend, and save
               -----------
harmless the Buyer and its officers, directors, employees, agents, and
attorneys, and each of them (the "Indemnified Parties"), from and against all
claims, actions, suits, and other legal proceedings, damages, costs, interest,
charges, counsel fees and other expenses and penalties (collectively, the
"Indemnified Amounts") which any of the Indemnified Parties may sustain or incur
by reason of or arising out of (i) the Seller's ownership of any Equipment prior
to the date on which such Equipment is sold to the Buyer, or the Seller's acts
or omissions prior to such date under, in connection with or relating to such
Equipment or any of the Sale and Leaseback Documents, (ii) the operation,
maintenance or use of such Equipment prior to such date, (iii) any material
inaccuracy of any of the Seller's representations or warranties contained in any
of the Sale and Leaseback Documents, (iv) the breach of any of the Seller's
covenants contained in any of the Sale and Leaseback Documents, (v) any loss or
damage to any Equipment in excess of the deductible which is not paid by
insurance or (vi) any sales, use, excise and other taxes, charges, and fees
(including, without limitation, income, franchise, business and occupation,
gross receipts, sales, use, licensing, registration, titling, personal property,
stamp and interest equalization taxes, levies, imposts, duties, charges or
withholdings of any nature), and any fines, penalties or interest thereon,
imposed or levied by any governmental body, agency or tax authority upon or in
connection with the Equipment, its acquisition, ownership, delivery, leasing,
<PAGE>

possession, use or relocation or otherwise in connection with the transactions
contemplated by each Sale and Leaseback Document, but excluding taxes on or
measured by the net income of the Buyer. Notwithstanding the foregoing, Seller
shall have no obligation to indemnify Buyer for any Indemnified Amounts which
arise out of Buyer's gross negligence or willful misconduct.

          5.   Remedies. Upon the Seller's receipt of notice from the Buyer of
               --------
Seller's violation of or default under any provision of this Agreement, the
Buyer may (subject to the provisions of the other Sale and Leaseback Documents
and after all applicable grace periods) proceed to protect and enforce its
rights either by suit in equity or by action at law or both, whether for the
specific performance of any covenant or agreement contained herein or in aid of
the exercise of any power granted in any Sale and Leaseback Document; it being
intended that the remedies contained in any Sale and Leaseback Document shall be
cumulative and shall be in addition to every other remedy given under such Sale
and Leaseback Document or now or hereafter existing at law or in equity or by
statute or otherwise.

          6.   Amendments, etc. No amendment or waiver of any provision of this
               ---------------
Agreement, nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Buyer and the
Seller, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

          7.   Notices, etc.  All notices and other communications provided
               ------------
for hereunder shall be in writing and sent:

                           if to the Seller, at its address at:

                           3-Dimensional Pharmaceuticals, Inc.
                           Eagleview Corporate Center
                           665 Stockton Drive, Suite 104
                           Exton, Pennsylvania  19341
                           Attention:  Chief Financial Officer
                           Telephone No.:  (610) 458-6043
                           Telecopy No.:  (610) 458-8258

                           if to the Buyer, at its address at:

                           Transamerica Business Credit Corporation
                           Technology Finance Division
                           76 Batterson Park Road
                           Farmington, Connecticut  06032-2571
                           Attention:  Assistant Vice President,
                                       Lease Administration
                           Telephone No.:  (860) 677-6466
                           Telecopy No.:  (860) 677-6766
<PAGE>

                           with a copy to:

                           Transamerica Business Credit Corporation
                           9399 West Higgins Road
                           Rosemont, Illinois 60018
                           Attention:  Legal Department
                           Telephone No.:  (847) 685-1106
                           Telecopy No.:  (847) 685-1143

     or to such other address as shall be designated by such party in a written
notice to the other party. All such notices shall be deemed given (i) if sent by
certified or registered mail, three days after being postmarked, (ii) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is refused and (iii) if sent by facsimile transmission, when receipt of
such transmission is acknowledged.

          8.   No Waiver; Remedies. No failure on the part of the Buyer to
               -------------------
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

          9.   Benefit.  Neither  party may  transfer,  assign or delegate any
               -------
 of its rights, duties or obligations hereunder without the prior written
consent of the other party.

          10.  Binding Effect. This Agreement shall be binding upon and inure to
               --------------
the benefit of the Seller and the Buyer and their respective successors and
assigns.

          11.  GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
               -------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

          12.  Execution in Counterparts. This Agreement may be executed in any
               -------------------------
number of counterparts, each of which shall constitute an original and all of
which taken together shall constitute one and the same agreement.

          13.  Severability. If one or more of the provisions contained in this
               ------------
Agreement shall be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein, and any other application thereof, shall not in any way be affected or
impaired thereby.

          14.  SUBMISSION TO JURISDICTION. ALL DISPUTES ARISING UNDER OR IN
               --------------------------
CONNECTION WITH THIS AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER SOUNDING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL
COURTS LOCATED IN ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE
TAKEN; PROVIDED, HOWEVER, THAT THE BUYER SHALL HAVE THE RIGHT, TO THE EXTENT
<PAGE>

PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE SELLER OR ITS PROPERTY IN
ANY LOCATION REASONABLY SELECTED BY THE BUYER IN GOOD FAITH TO ENABLE THE BUYER
TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE BUYER. THE SELLER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE BUYER HAS COMMENCED A PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.

          15.  JURY TRIAL. THE PARTIES HERETO EACH HEREBY WAIVE TO THE FULLEST
               ----------
EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers hereunto duly authorized, as of the first date
written above.

                                             3-DIMENSIONAL PHARMACEUTICALS,
                                             INC.


                                             By: /s/ Scott Horvitz
                                                 ---------------------------
                                                 Name: Scott Horvitz
                                                 Title:   Vice President


                                             TRANSAMERICAN BUSINESS CREDIT
                                             CORPORATION


                                             By: /s/ Gary P. Moro
                                                 ---------------------------
                                                  Name: Gary P. Moro
                                                  Title: Vice President

Exhibit II - Equipment
Exhibit A - Bill of Sale
<PAGE>

                                   EXHIBIT A

                                 BILL OF SALE

          KNOW ALL PERSONS BY THESE PRESENTS 3-Dimensional Pharmaceuticals, Inc.
(the "Seller"), for Six Hundred Fifty Seven Thousand, Three Hundred Eighty One
and 28/100 Dollars ($657,381.28) and other valuable consideration to it in hand
paid, receipt of which is hereby acknowledged, does unconditionally, absolutely
and irrevocably grant, sell, assign, transfer and convey unto TRANSAMERICA
BUSINESS CREDIT CORPORATION and its assignees or successors (collectively, the
"Buyer"), all of the Seller's right, title and interest in and to the equipment
described on Exhibit II hereto (collectively, the "Equipment").

          TO HAVE AND TO HOLD said Equipment unto the said Buyer, to and for its
use forever.

          AND, the Seller hereby warrants, covenants and agrees that it (a) has
good and marketable title to the Equipment, free and clear of any liens and
other encumbrances; and (b) will warrant and defend the sale of the Equipment
against any and all persons claiming against such title.

          IN WITNESS WHEREOF the Seller has caused this instrument to be duly
executed and delivered as of this ____ day of _________________, 1997.

                                          3-DIMENSIONAL PHARMACEUTICALS,
                                          INC.

                                          By: /s/ Scott Horvitz
                                              ------------------------
                                              Name: Scott Horvitz
                                              Title: VP & CFO
<PAGE>

                                 BILL OF SALE


          KNOW ALL PERSONS BY THESE PRESENTS 3-Dimensional Pharmaceuticals, Inc.
(the "Seller"), for Six Hundred Fifty Seven Thousand, Three Hundred Eighty One
and 28/100 Dollars ($657,381.28) and other valuable consideration to it in hand
paid, receipt of which is hereby acknowledged, does unconditionally, absolutely
and irrevocably grant, sell, assign, transfer and convey unto TRANSAMERICA
BUSINESS CREDIT CORPORATION and its assignees or successors (collectively, the
"Buyer"), all of the Seller's right, title and interest in and to the equipment
described on Exhibit II hereto (collectively, the "Equipment").

          TO HAVE AND TO HOLD said Equipment unto the said Buyer, to and for its
use forever.

          AND, the Seller hereby warrants, covenants and agrees that it (a) has
good and marketable title to the Equipment, free and clear of any liens and
other encumbrances; and (b) will warrant and defend the sale of the Equipment
against any and all persons claiming against such title.

          IN WITNESS WHEREOF the Seller has caused this instrument to be duly
executed and delivered as of this _____ day of _________________, 1997.

                                           3-DIMENSIONAL PHARMACEUTICALS,
                                           INC.

                                           By: /s/ Scott Horvitz
                                               ------------------------
                                           Name: Scott Horvitz
                                           Title: Vice President
<PAGE>

                          TECHNOLOGY FINANCE DIVISION
                            DOCUMENTATION CHECKLIST

                      3 DIMENSIONAL PHARMACEUTICALS, INC.
                           CUSTOMER NUMBER 1046-002
                                SCHEDULE NO. 2
                           AS OF SEPTEMBER 22, 1997
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                           DATE
                                                                           -----
                                                          DATE            RECEIVED
                                                          ----            --------
               DOCUMENT                                   SENT               D                     COMMENTS
               --------                                   ----               -                     --------
<S>                                                        <C>            <C>         <C>
---------------------------------------------------------------------------------------------------------------------------------

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

---------------------------------------------------------------------------------------------------------------------------------
SCHEDULE NO. 2                                           9-24-97
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
EXHIBIT II - EQUIPMENT                                   9-24-97
---------------------------------------------------------------------------------------------------------------------------------
     RIDER I (EQUIPMENT DESCRIPTION)                                          9-24-97                 RECEIVED.
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
ACCEPTANCE AND DELIVERY CERTIFICATE                      9-24-97
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
SALE AND LEASEBACK AGREEMENT                             9-24-97
---------------------------------------------------------------------------------------------------------------------------------
         BILL OF SALE                                    9-24-97
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
PAY PROCEEDS LETTER                                      9-24-97
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
SALES TAX EXEMPTION CERTIFICATE                                                                       RECEIVED.
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
SUPPLIERS' INVOICES                                                           9-24-97                 RECEIVED.
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
INSURANCE CERTIFICATE
---------------------------------------------------------------------------------------------------------------------------------
         PROPERTY                                                                                     RECEIVED.
---------------------------------------------------------------------------------------------------------------------------------
         LIABILITY                                                                                    RECEIVED.
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
INVOICE FOR ADVANCE RANT                                 9-24-97
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
ADVANCE RENT                                                                                          DEDUCTED FROM PROCEEDS
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
UCC FINANCING STATEMENTS
---------------------------------------------------------------------------------------------------------------------------------
         JURISDICTIONS:
---------------------------------------------------------------------------------------------------------------------------------
         SOS-PA                                          9-24-97
---------------------------------------------------------------------------------------------------------------------------------
         PROTHONOTARY OF CHESTER COUNTY                  9-24-97
---------------------------------------------------------------------------------------------------------------------------------
         REAL ESTATE RECORDS OF CHESTER COUNTY                                9-24-97                 RECEIVED WITH SCH. 01
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
UCC LIEN SEARCH                                                                                       UPDATE RECEIVED 9-24-97
---------------------------------------------------------------------------------------------------------------------------------
JURISDICTIONS:
---------------------------------------------------------------------------------------------------------------------------------
         SOS-PA
---------------------------------------------------------------------------------------------------------------------------------
         PROTHONOTARY OF CHESTER COUNTY
---------------------------------------------------------------------------------------------------------------------------------
         REAL ESTATE RECORDS OF CHESTER COUNTY
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

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

------------------------------------------------------------------------------
ANY INTERVENING LIENS?  CLEAR!
------------------------------------------------------------------------------
<PAGE>

                      SCHEDULE TO MASTER LEASE AGREEMENT

                        Dated as of September 24, 1997

                                Schedule No. 2


Lessor Name & Mailing Address                Lessee Name & Mailing Address
Transamerica Business Credit Corporation     3-Dimensional Pharmaceuticals, Inc.
Riverway II                                  Eagleview Corporate Center
West Office Tower                            665 Stockton Drive, Suite 104
9399 West Higgins Road                       Exton, Pennsylvania 1 19341
Rosemont, Illinois  60018

     Equipment Location (if different than Lessee's address above):

     This Schedule covers the following described equipment ("Equipment"):

          See Exhibit II attached hereto and made a part hereof.

     The Equipment is hereby leased pursuant to the provisions of the Master
Lease Agreement between the undersigned Lessee and Lessor dated June 12, 1997
(the "Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions, and modifications. The
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated May 9, 1997, if the Lessor has not received this
Schedule and an Acceptance and Delivery Certificate executed by the Lessee
within five business days from the date first set forth above.

1. Term (Number of Months)                             48months
2. Equipment Cost                                      $657,381.28
3. Commencement Date                                   September 30, 1997
4. Rate Factor                                         2.5226% of Equipment Cost
5. Total Rents                                         $795,988.80
6. Advance Rents (first and last)                      $33,166.20
7. Monthly rental payments                             $16,583.10
    And the second such rental payments will be due on November 1, 1997
    and subsequent rental payments will be due on the
    same day of each month thereafter
8. Security Deposit                                    None
9. In addition to the monthly rental payments          $552.77
   provided for herein, Lessee shall pay to Lessor,
   as interim rent, payable on the commencement
   date specified above, an amount equal to 1/30th
   of the monthly rental payment (including monthly
   sales/use tax) multiplied by the number of days
   from and including the commencement date through
   the end of the same calendar month
<PAGE>

     Lessee hereby irrevocably authorizes Lessor to insert in this Schedule
the Commencement Date and the due date of the first rental payment.

     Except as expressly provided or modified hereby, all the terms and
provisions of the Master Lease Agreement shall remain in full force and effect.

     The Purchase Date shall be September 1, 2001.

     The Stipulated Loss Value of any items of Equipment shall be an amount
equal to the present value of all future Rent discounted at a rate of 8% per
annum plus the Reversionary Value.

     The Reversionary Value of any item of Equipment shall be 10% of Equipment
Cost.

TRANSAMERICA BUSINESS CREDIT            3-DIMENSIONAL PHARMACEUTICALS,
CORPORATION                             INC.
(Lessor)                                (Lessee)


By:/s/ Meg Lengson                      By:/s/ Scott Horvitz
   -------------------------------         ---------------------------------

Title: Assistant Vice President         Title: Vice President
       ---------------------------             -----------------------------
<PAGE>

                                  EXHIBIT II


To:

 X    Schedule to Master Lease Agreement
---
 X    UCC
---
 X    Collateral Access Agreement
---


                        Dated as of September 24, 1997

                                    Between

                   TRANSAMERICA BUSINESS CREDIT CORPORATION



Customer Name:           3-DIMENSIONAL PHARMACEUTICALS, INC.
Equipment Locations:     Eagleview Corporate Center
                         665 Stockton Drive, Suite 104
                         Exton, Pennsylvania  19341



                     SEE RIDER I FOR EQUIPMENT DESCRIPTION



Transamerica Business Credit Corporation    3-Dimensional Pharmaceuticals, Inc.
(Lessor)                                    (Lessee)


By:/s/ Meg Lengson                           By:/s/ Scott Horvitz
   -------------------------------              -------------------------------
                                                    Scott Horvitz

Title: Assistant Vice President              Title: Vice President
       ---------------------------                  ---------------------------
<PAGE>

                                     RIDER I
                                TO SCHEDULE NO. 1
<TABLE>
<CAPTION>
 X        Master Lease Agreement                                            3-Dimensional Pharmaceuticals, Inc.
              dated June 12, 1997                                           Equipment Sale Leaseback Schedule
 X        Schedule No. 2

  QTY         EQUIPMENT               PURCHASE ORDER       INVOICE NO.      CATALOG NO.         SERIAL NO.   SUPPLIER/
             DESCRIPTION                                                                                      VENDOR
<S>       <C>                        <C>                  <C>             <C>                  <C>        <C>
   1      CPU Board for SGI                       971207         71870     RCH/HU497                  N/A  RCH Products
          Challenge
                                     971207 Total
   1      RAID Array Disk                         971208         71871  RCH/Ultra 7-9                      RCH Products
   1      1 GB Memory for                         971208         71871     RCH/1GBR44                 N/A  RCH Products
          Challenge L
   1      Uninterruptible Power                   971208         71871     BSU1400NET        WS9715682793  RCH Products
          Supply, 1400
   1      Uninterruptible Power                   971208         71871     BSU1400NET        ES9714343935  RCH Products
          Supply, 1400
   1      CD-ROM Recorder                         971208        718871      RCH/CDWR                  N/A  RCH Products
                                     971208 Total
   1      Uninterruptible Power                   971209         71872    RCH/SU200NET       ES9725465959  RCH Products
          Supply, 2200VA
   1      Uninterruptible Power                   971209         71872    RCH/SU200NET       ES9725465960  RCH Products
          Supply, 2200VA
   1      PowerChute Plus for SUN                 971209         71872     RCH/AP9004                 N/A  RCH Products
   1      PowerChute Plus for                     971209         71872     RCH/AP9007                 N/A  RCH Products
          Windows
                                     971209 Total
   1      Uninterruptible Power                   971210         71873    RCH/SU200NET       ES9724459211  RCH Products
          Supply, 2200VA
   1      Uninterruptible Power                   971210         71873    RCH/SU200NET       ES9724459191  RCH Products
          Supply, 2200VA
   2      PowerChute Plus for                     971210         71873     RCH/AP9007                 N/A  RCH Products
          Windows
                                     871210 Total
   1      Superstack II Switch                    971211    370-009302      179416            7WKR057716   Anixler
                                     871211 Total
   1      HPLC System                             971212        168947                             70094E  Shimadzu
                                     971211 Total
   1      Gilson Liquid Handler/                  971213        146795                           259E7179  Gilson
          Autosampler System
                                     971213 Total
   1      Laboratory Wall Cabinets                971215          5840                                N/A  LF Systems
                                                                                                           Corp
                                     971215 Total
   1      Double Mirror Focusing                  971222         30584        7616                    N/A  Charles Supper

<CAPTION>

  X       UCC-1
  X       Sale and Leaseback Agreement

  QTY         EQUIPMENT              PURCHASE    EQUIPMENT       PAID - CHECK #
             DESCRIPTION               DATE        COST
<S>          <C>                     <C>      <C>                <C>
   1      CPU Board for SGI 8/28/97                                   7238
          Challenge                           $  60,000.00
                                              ------------
                                              $  60,000.00
   1      RAID Array Disk            7/15/97     27,224.00            6967
   1      1 GB Memory for            7/15/97     32,248.00            6967
          Challenge L
   1      Uninterruptible Power      7/15/97        787.00            6967
          Supply, 1400
   1      Uninterruptible Power      7/15/97        787.00            6967
          Supply, 1400
   1      CD-ROM Recorder            7/15/97      2,423.00            6967
                                              ------------
                                                 63,469.00
   1      Uninterruptible Power       7/7/97      1,181.00            6967
          Supply, 2200VA
   1      Uninterruptible Power       7/7/97      1,181.00            6967
          Supply, 2200VA
   1      PowerChute Plus for SUN     7/7/97        126.00            6967
   1      PowerChute Plus for         7/7/97                          6967
          Windows                                    55.00
                                              ------------
                                                  2,543.00
   1      Uninterruptible Power       7/7/97      1,181.00            6967
          Supply, 2200VA
   1      Uninterruptible Power       7/7/97      1,181.00            6967
          Supply, 2200VA
   2      PowerChute Plus for         7/7/97                          6967
          Windows                                   110.00
                                              ------------
                                                  2,472.00
   1      Superstack II Switch       7/18/97      2,196.65            7068
                                              ------------
                                                  2,196.65
   1      HPLC System                7/25/97     19,135.10            7238
                                              ------------
                                                  2,196.65
   1      Gilson Liquid Handler/     7/11/97     19,759.00            7140
                                              ------------
          Autosampler System
                                                 19,759.00
   1      Laboratory Wall Cabinets    9/7/97      4,811.00            7235
                                              ------------

                                                  4,811.00
   1      Double Mirror Focusing     7/15/97     19,400.00            6982
                                              ------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

  QTY         EQUIPMENT               PURCHASE ORDER      INVOICE NO.      CATALOG NO.       SERIAL NO.       SUPPLIER/
             DESCRIPTION                                                                                       VENDOR
<S>       <C>                         <C>                  <C>             <C>               <C>           <C>
          System                                                                                           Co.

   1      Power ac 4400/200          971222 Total 971223      A4368957      CPU0611          SXB7190K79GG  Mac Warehouse
          32MB/2GB 12xCD
   1      64MB 168 Pin EDO DIMM                   971223      A4390761      CHP0397                   N/A  Mac Warehouse
   1      4.3 GB Hard Drive                       971223                    DRH1753              17200652  Mac Warehouse
   1      Power User 17" Monitor                  971223                    MONO489             561011394  Mac Warehouse
   1      Ethernet Network Card                   971223                    DEC1652                   N/A  Mac Warehouse

                                     971223 Total
   1      Octane, SGI Workstation,                971225         71878                       0800690B713E  RCH Products
          $10000
   1      Dial and Button Box for                 971225         71878                               2443  RCH Products
          Octane
   1      ONC3/NFS for Irix                       971225         71878                                N/A  RCH Products
          Operating System
   1      ProDev C++ Bundle for                   971225          7187                                N/a  RCH Products
          C++ Development
                                     971225 Total
   2      32MB 168 Pin DIMM 70 NS                 971256      A5164009      CHP0403                   N/A  Mac Warehouse
   3      Power User 15" Monitor                  971256      A5007919      MON0488                        Mac Warehouse
   3      Ethermac PCI Card                       971256      A5007919      DEC2382                   N/A  Mac Warehouse
          10Base-T
   1      32MB 168 Pin DIMM 70 NS                 971256      A5007919      CHP0403                   N/A  Mac Warehouse
   1      SuperMac C500 603E/18OLT                971256      A5040555      CPU0672       50N30A721000364  Mac Warehouse
          16MB 1.2 GB
   1      SuperMac C500 603E/18OLT                971256      A5040555      CPU0672       50N30A721000119  Mac Warehouse
          16MB 1.2GB
   1      SuperMac C500 603E/18OLT                971256      A5040555      CPU0672       50N30A723000615  Mac Warehouse

                                     971256 Total
   1      Laboratory Table,                       971277          5831                                N/A  LF Systems
          Stainless w/Blk Top                                                                              Corp
                                     971277 Total
   1      LCQ MS/DS System                        971317  S-021842-011        LCQ                LC000472  Finigan MAT
   1      ESI Probe for the LCQ                   971317  S-021842-011        201A                    N/A  Finigan MAT
          MS/DS
   1      APCI Probe for the LQC                  971317  S-021842-011        201B                    N/A  Finigan MAT
          MDS/DS
                                     971317 Total
   1      Stereo Emitter & Glasses                971322         71888                              45542  RCH Products
                                     971322 Total
   1      NB Scientific                           971393  278404073197     14-280-15            790454146  Fischer
          Reciprocating Water Bath                                                                         Scientific
   1      Water Bath Gable Cover                  971393  278404073197     14-280-28                  N/A  Fisher
                                                                                                           Scientific
                                     971393 Total
   1      Powerbook 1400CS/117                    971460      A5462593      CPU0522          SQF7020JXBJX  Mac Warehouse
          12/750MB
   1      24MB Memory Module for                  971460      A5472220      CHP0411                   N/A  Mac Warehouse
          Powerbook 140

<CAPTION>
  QTY         EQUIPMENT             PURCHASE      EQUIPMENT       PAID - CHECK #
             DESCRIPTION              DATE          COST
<S>       <C>                       <C>         <C>               <C>
                                                19,400.00
   1      Power Mac 4400/200        7/8/97       1,715.00            7062
          32MB/2GB 12xCD
   1      64MB 168 Pin EDO DIMM     7/8/97         395.00            7062
   1      4.3 GB Hard Drive         7/8/97         999.00            7062
   1      Power User 17" Monitor    7/8/97         430.00            7062
   1      Ethernet Network Card     7/8/97         122.00            7062
                                               ----------
                                                 3,661.00
   1      Octane, SGI Workstation,  7/8/97      58,446.00            6967
          $10000
   1      Dial and Button Box for   7/8/97       2,250.00            6967
          Octane
   1      ONC3/NFS for Irix         7/8/97         595.00            6967
          Operating System
   1      ProDev C++ Bundle for     7/8/97                           6967
          C++ Development                        5,500.00
                                               ----------
                                                66,791.00
   2      32MB 168 Pin DIMM 70 NS   7/29/97        330.00
   3      Power User 15" Monitor    7/24/97        795.00            7104
   3      Ethermac PCI Card         7/24/97        180.00            7104
          10Base-T
   1      32MB 168 Pin DIMM 70 NS   7/24/97        165.00            7104
   1      SuperMac C500 603E/18OLT  7/24/97        949.00            7104
          16MB 1.2 GB
   1      SuperMac C500 603E/18OLT  7/24/97        949.00            7104
          16MB 1.2GB
   1      SuperMac C500 603E/18OLT  7/24/97        949.00
                                               ----------
                                                 4,317.00            7104

   1      Laboratory Table,
          Stainless w/Blk Top       8/21/97      1,129.00            7235
                                               ----------
                                                 1,129.00
   1      LCQ MS/DS System          8/12/97    143,200.00            7239
   1      ESI  Probe for the LCQ    8/12/97     10,000.00            7239
          MS/DS
   1      APCI Probe for the LQC    8/12/97     10,000.00            7239
                                                ---------
          MDS/DS
                                               163,200.00
   1      Stereo Emitter & Glasses  7/16/97        990.00            6967
                                               ----------
                                                   990.00
   1      NB Scientific             7/29/97      2,700.00            7093
          Reciprocating Water Bath
   1      Water Bath Gable Cover    7/29/97        412.00            7093


                                                 3,112.00
   1      Powerbook 1400CS/117      8/5/97       1,645.00            7184
          12/750MB
   1      24MB Memory Module for    8/5/97         185.00            7184
          Powerbook 140
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
  QTY       EQUIPMENT                   PURCHASE ORDER      INVOICE NO.    CATALOG       SERIAL NO.       SUPPLIER/    PURCHASE
           DESCRIPTION                                                       NO.                           VENDOR       DATE
  <S>   <C>                           <C>                   <C>            <C>         <C>              <C>            <C>
   1    Apple Powerbook 1400 8X                    971460      A5472220      ACC2788               N/A  Mac Warehouse    8/5/97
        CD-ROM Module
   1    Etertech Ethernet Card                     971460      A5472220      ACC2482               N/A  Mac Warehouse    8/5/97

                                      971460 Total
   1    SuperMac C500 603E/18OLT                   971461      A5501606      CPU0672   50N30A725001694  Mac Warehouse    8/6/97
        16MB/1.2GB
   1    Monitor Power User 15"                     971461      A5501606      MONO488                    Mac Warehouse    8/6/97

                                      971461 Total
   1    Printer, Epson, Stylus                     971500      A5621438      PR11948       2UUX0012670  Micro            8/8/97
        1500 Wide Carriage                                                                              Warehouse
   1    Monitor, Hitachi, 21"                      971500      A5621438      MON0362         G6H005057  Micro            8/8/97
                                                                                                        Warehouse
   1    CPU, Compaq Deskpro 6000                   971500      A5621438       CP5024     S6719BPP2Q430  Micro            8/8/97
                                                                                                        Warehouse
   1    64MB Memory Module for                     971500      A5796362       MY6945               N/A  Micro            8/8/97
        Deskpro                                                                                         Warehouse
                                      971500 Total
   1    Oil Free Diaphragm Pump,                   971504           333       696244       20062616-97  Vacuubrand,      8/28/97
        Chem(PTFE)                                                                                      Inc.
   1    Incubator, Isotemp 5.0 Cu Ft               971543  278404083197     11690650D         70800248  Fisher           8/14/97
                                                                                                        Scientific
                                      971543 Total
   1    Analytical Balance                         971557  278404083197    01-913-503B      1116283226  Fisher           8/15/97
                                                                                                        Scientific
                                      971557 Total
   1    Lab Fit-out Work - Phase 1                 979999       6/10/97                            N/A  Eagleview        5/31/97
                                                                                                        Constri.
   1    Lab Fit-out Work - Phase 2                 979999       9/16/97                            N/A  Eagleview        8/31/97
                                                                                                        Constr.
                                      979999 Total
   1    SuperMac             C500                  971725      A6776926      CPU0787   50N30A728002565  Mac Warehouse    9/10/97
        603LT/18OLT 16MB
   1    Monitor Power User 15"                     971725      A6776926      MONO488                    Mac Warehouse    9/10/97
   1    32MB 168 Pin DIMM Memory                   971725      A6791693      RDR12126              N/A  Mac Warehouse    9/10/97
        Module
   1    Zip Drive SCSI                             971725      A6791693      CHP0403               N/A  Mac Warehouse    9/10/97

                                      971725 Total
   1    Ultra Wide SCSI Disk                       971756         71942      RCH/E412         JK134135  RCH Products     9/16/97
        Drive System, 4.3GB
   1    Ultra Wide SCSI Disk                       971756         71942      RCH/E412         JK158471  RCH Products     9/16/97
        Drive System, 4.3GB
                                      971756 Total
<CAPTION>
  QTY       EQUIPMENT                                             EQUIPMENT           PAID - CHECK #
           DESCRIPTION                                             COST
  <S>   <C>                                                     <C>                   <C>
   1    Apple Powerbook 1400 8X                                      185.00                7184
        CD-ROM Module
   1    Etertech Ethernet Card                                                             7184
                                                                      85.00
                                                                -----------
                                                                   2,100.00
   1    SuperMac C500 603E/18OLT                                     930.00                7184
        16MB/1.2GB
   1    Monitor Power User 15"                                                             7184
                                                                     265.00
                                                                -----------
                                                                   1,195.00
   1    Printer, Epson, Stylus                                       469.00                7184
        1500 Wide Carriage
   1    Monitor, Hitachi, 21"                                      1,665.00                7184

   1    CPU, Compaq Deskpro 6000                                   3,149.00                7184

   1    64MB Memory Module for                                       405.00                7184
        Deskpro                                                 -----------

                                                                   5,688.00
   1    Oil Free Diaphragm Pump,                                   1,965.00                7237
        Chem(PTFE)
   1    Incubator, Isotemp 5.0 Cu F                                1,192.53                7242
                                                                -----------

                                                                   1,192.53
   1    Analytical Balance                                         2,250.00                7242
                                                                -----------

                                                                   2,250.00
   1    Lab Fit-out Work - Phase 1                                24,225.00                6660

   1    Lab Fit-out Work - Phase 2                               178,310.00                7241
                                                                -----------

                                                                 202,535.00
   1    SuperMac             C500                                    890.00                7243
        603LT/18OLT 16MB
   1    Monitor Power User 15"                                       255.00                7243
   1    32MB 168 Pin DIMM Memory                                     140.00                7243
        Module
   1    Zip Drive SCSI                                                                     7243
                                                                      95.00
                                                                -----------
                                                                   1,380.00
   1    Ultra Wide SCSI Disk                                       1,045.00                7236
        Drive System, 4.3GB
   1    Ultra Wide SCSI Disk                                                               7236
        Drive System, 4.3GB                                        1,045.00
                                                                -----------

                                                                   2,090.00
                                                                -----------

  Grand Total    N/A - NOT APPLICABLE
                 SERIAL  NUMBERS FOR  MONITORS  WILL BE
                 FORWARD - NOT CURRENTLY AVAILABLE              $657,381.28
                                                                ===========
</TABLE>
<PAGE>

                      ACCEPTANCE AND DELIVERY CERTIFICATE

          3-Dimensional Pharmaceuticals, Inc., as lessee ("Lessee") under the
Master Lease Agreement dated as of June 12, 1997 between Lessee and Transamerica
Business Credit Corporation, as Lessor, does hereby acknowledge the acceptance
and delivery of the equipment listed in Lease Schedule No. 2, such acceptance
and delivery having been made on the 30th day of September, 1997.

                                             3-Dimensional Pharmaceuticals, Inc.


                                             By: /s/ Scott Horvitz
                                                 -------------------------------
                                             Name: Scott Horvitz
                                             Title: Vice President

Form4
<PAGE>

                         SALE AND LEASEBACK AGREEMENT

          THIS SALE AND LEASEBACK AGREEMENT (this "Agreement"), is made as of
September 24, 1997, among 3-Dimensional Pharmaceuticals, Inc., a Delaware
corporation ("Seller"), and Transamerica Business Credit Corporation, a Delaware
corporation ("Buyer").

                             W I T N E S S E T H:

          WHEREAS, Seller is the owner of the equipment more particularly
described on Exhibit II hereto (the "Equipment");

          WHEREAS, Seller desires td sell to Buyer and Buyer desires to purchase
from Seller the Equipment; and

          WHEREAS, Buyer, as a condition to such purchase, wishes to lease to
Seller and Seller wishes to lease from Buyer the Equipment under the terms and
conditions of the Master Lease Agreement dated as of June 12, 1997 and Schedule
No. 2 thereto (collectively, as amended, supplemented or otherwise modified from
time to time, the "Lease") between Buyer, as lessor, and Seller, as lessee.

          NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

          16.  Amount and Terms of Purchase.
               ----------------------------

                    (a)  Subject to the terms and conditions of this Agreement,
and in reliance upon the representations and warranties of the Seller herein set
forth, the Buyer agrees to purchase all of the Seller's right, title and
interest in and to all of the Equipment such that the Buyer will become the
owner of all such Equipment for all purposes whatsoever. The Seller hereby
agrees that the Buyer is under no obligation to purchase any other equipment now
or in the future and shall not assert a claim that the Buyer may have any such
obligation.

                    (b)  The price to be paid by the Buyer with respect to the
purchase of the Equipment (the "Purchase Price") is $657,381.28. The Purchase
Price shall be payable to the Seller on the Lease Commencement Date (as defined
in the Lease).

                    (c)  The Seller shall pay any and all applicable federal,
state, county or local taxes and any and all present or future taxes or other
governmental charges arising in connection with the sale of the Equipment
hereunder, including sales, use or occupation taxes due upon the purchase by the
Buyer.

                    (d)  The purchase of the Equipment shall be evidenced by a
bill of sale, substantially in the form attached hereto as Exhibit A (the "Bill
of Sale"), duly executed by the Seller.
<PAGE>

          17.  Conditions to Purchase. The obligation of the Buyer to purchase
               ----------------------
the Equipment is subject to the following conditions:

                    (a)  The Buyer shall have received this Agreement, duly
executed by the Seller.

                    (b)  The Buyer shall have received the Bill of Sale, duly
executed by the Seller.

                    (c)  The Buyer shall have received the Lease, duly executed
by the Seller.

                    (d)  The Buyer shall have received resolutions of the Board
of Directors of the Seller approving and authorizing the execution, delivery and
performance by the Seller of this Agreement, the Lease and the notices and other
documents to be delivered by the Seller hereunder and thereunder (collectively,
the "Sale and Leaseback Documents").

                    (e)  The Buyer shall have received the certificate of title
or similar evidence of ownership with respect to each item of Equipment and
Uniform Commercial Code financing statements covering the Equipment in form and
substance satisfactory to the Buyer, duly executed by the Seller.

                    (f)  No material adverse change has occurred with respect to
the business, prospects, properties, results of operations, assets, liabilities
or condition (financial or otherwise) of the Seller and its affiliates, taken as
a whole, since December 31, 1996.

                    (g)  The Buyer shall have received all warranties and other
documentation received or executed by Seller in connection with the original
acquisition of the Equipment by the Seller (and by its execution hereof the
Seller hereby assigns to the Buyer all such warranties and other Documentation).

                    (h)  The Buyer shall have received such other approvals,
opinions or documents as the Buyer may reasonably request.

          18.  Representation and Warranties.  To induce the Buyer to enter
               -----------------------------
into this Agreement the Seller represents and warrants to the Buyer that:

                    (a)  The Seller is duly authorized to execute, deliver and
perform its obligations under each of the Sale and Leaseback Documents and all
corporate action required on its part for the due execution, delivery and
performance of the transactions contemplated herein and therein has been duly
and effectively taken.

                    (b)  The execution, delivery and performance by the Seller
of each of the Sale and Leaseback Documents and the consummation of the
transactions contemplated herein and therein does not and will not violate any
material provision of, or result in a material default under, the Seller's
Articles or Certificates of Incorporation or By-laws or any indenture or
agreement to which the Seller is a party or to which its assets are bound or any
order, Permit, law, statute, code, ordinance, rule, regulation, certificate or
any other requirement of any governmental authority or regulatory body to which
the Seller is subject, or result in the creation

                                      -2-
<PAGE>

or imposition of any mortgage, deed of trust, pledge, security interest, lien or
encumbrance of any kind upon or with respect to the Equipment or any proceeds
thereof, other than those in favor of the Buyer as. contemplated by the Sale and
Leaseback Documents.

                    (c)  No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Seller of any of
the Sale and Leaseback Documents to which it is a party.

                    (d)  Each Sale and Leaseback Document to which the Seller is
a party constitutes or will constitute, when delivered hereunder, the legal,
valid and binding obligation of the Seller enforceable against the Seller in
accordance with its respective terms, except as such enforceability may be (i)
limited by the effect of applicable bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally or (ii)
subject to the effect of general principles of equity (regardless of whether
such enforceability is considered in a proceeding at equity or at law).

                    (e)  There are no actions, suits, or proceedings pending,
or, to the Seller's knowledge, threatened against or affecting the Seller which
seek to enjoin, prohibit or restrain the consummation of any of the transactions
contemplated hereby or by the other Sale and Leaseback Documents.

                    (f)  Each item of Equipment is owned by the Seller free and
clear of any liens and encumbrances of any kind or description. Upon purchase of
the Equipment hereunder, the Buyer will acquire good and marketable title in and
to the Equipment.

         All representations and warranties herein shall survive the execution
of this Agreement and the purchase of the Equipment.

          19.  Indemnities. The Seller agrees to indemnify, defend, and save
               -----------
harmless the Buyer and its officers, directors, employees, agents, and
attorneys, and each of them (the "Indemnified Parties"), from and against all
claims, actions, suits, and other legal proceedings, damages, costs, interest,
charges, counsel fees and other expenses and penalties (collectively, the
"Indemnified Amounts") which any of the Indemnified Parties may sustain or incur
by reason of or arising out of (i) the Seller's ownership of any Equipment prior
to the date on which such Equipment is sold to the Buyer, or the Seller's acts
or omissions prior to such date under, in connection with or relating to such
Equipment or any of the Sale and Leaseback Documents, (ii) the operation,
maintenance or use of such Equipment prior to such date, (iii) any material
inaccuracy of any of the Seller's representations or warranties contained in any
of the Sale and Leaseback Documents, (iv) the breach of any of the Seller's
covenants contained in any of the Sale and Leaseback Documents, (v) any loss or
damage to any Equipment in excess of the deductible which is not paid by
insurance or (vi) any sales, use, excise and other taxes, charges, and fees
(including, without limitation, income, franchise, business and occupation,
gross receipts, sales, use, licensing, registration, titling, personal property,
stamp and interest equalization taxes, levies, imposts, duties, charges or
withholdings of any nature), and any fines, penalties or interest thereon,
imposed or levied by any governmental body, agency or tax authority upon or in
connection with the Equipment, its acquisition, ownership, delivery, leasing,

                                      -3-
<PAGE>

possession, use or relocation or otherwise in connection with the transactions
contemplated by each Sale and Leaseback Document, but excluding taxes on or
measured by the net income of the Buyer. Notwithstanding the foregoing, Seller
shall have no obligation to indemnify Buyer for any Indemnified Amounts which
arise out of Buyer's gross negligence or willful misconduct.

          20.  Remedies.  Upon the Seller's receipt of notice from the Buyer of
               --------
Seller's violation of or default under any provision of this Agreement, the
Buyer may (subject to the provisions of the other Sale and Leaseback Documents
and after all applicable grace periods) proceed to protect and enforce its
rights either by suit in equity or by action at law or both, whether for the
specific performance of any covena nt or agreement contained herein or in aid of
the exercise of any power granted in any Sale and Leaseback Document; it being
intended that the remedies contained in any Sale and Leaseback Document shall be
cumulative and shall be in addition to every other remedy given under such Sale
and Leaseback Document or now or hereafter existing at law or in equity or by
statute or otherwise.

          21.  Amendments, etc.  No amendment or waiver of any provision of this
               ---------------
Agreement, nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Buyer and the
Seller, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

          22.  Notices, etc.  All notices and other communications provided
               ------------
for hereunder shall be in writing and sent:

                    if to the Seller, at its address at:

                    3-Dimensional Pharmaceuticals, Inc.
                    Eagleview Corporate Center
                    665 Stockton Drive, Suite 104
                    Exton, Pennsylvania 19341
                    Attention: Chief Financial Officer
                    Telephone No.: (610) 458-6043
                    Telecopy No.: (610) 458-8258

                    if to the Buyer, at its address at:

                    Transamerica Business Credit Corporation
                    Technology Finance Division
                    76 Batterson Park Road
                    Farmington, Connecticut 06032-2571
                    Attention: Assistant Vice President,
                         Lease Administration
                    Telephone No.: (860) 677-6466
                    Telecopy No.: (860) 677-6766

                    with a copy to:

                    Transamerica Business Credit Corporation

                                      -4-
<PAGE>

                    9399 West Higgins Road_
                    Rosemont, Illinois 60018
                    Attention: Legal Department
                    Telephone No.: (847) 685-1106
                    Telecopy No.: (847) 685-1143

     or to such other address as shall be designated by such party in a
written notice to the other party. All such notices shall be deemed given (i) if
sent by certified or registered mail, three days after being postmarked, (ii) if
sent by overnight delivery service, when received at the above stated addresses
or when delivery is refused and (iii) if sent by facsimile transmission when
receipt of such transmission is acknowledged.

          23.  No Waiver; Remedies.  No failure on the part of the Buyer to
               -------------------
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

          24.  Benefit.  Neither party may transfer, assign or delegate any of
               -------
its rights, duties or obligations hereunder without the prior written consent of
the other party.

          25.  Binding Effect.  This Agreement shall be binding upon and inure
               --------------
to the benefit of the Seller and the Buyer and their respective successors and
assigns.

          26.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
               -------------
BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF-ILLINOIS WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

          27.  Execution in Counterparts.  This Agreement may be executed in
               -------------------------
any number of counterpart, each of which shall constitute anoriginal and all of
which taken together shall constitute one and the same agreement.

          28.  Severability.  If one or more of the provisions contained in
               ------------
this Agreement shall be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein, and any other application thereof, shall not in any way be affected or
impaired thereby.

          29.  SUBMISSION TO JURISDICTION.  ALL DISPUTES ARISING UNDER OR IN
               --------------------------
CONNECTION WITH THIS AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER SOUNDING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL
COURTS LOCATED IN ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE
TAKEN; PROVIDED, HOWEVER, THAT THE BUYER SHALL HAVE THE RIGHT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE SELLER OR ITS PROPERTY IN
ANY LOCATION REASONABLY SELECTED BY THE BUYER IN GOOD FAITH TO ENABLE THE BUYER
TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE

                                      -5-
<PAGE>

A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE BUYER. THE SELLER WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE BUYER HAS
COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.

          30.  JURY TRIAL.  THE PARTIES HERETO EACH HEREBY WAIVE TO THE FULLEST
               ----------
EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY IN ANYACTION OR PROCEEDING
ARISING UNDER OR IN CONNECTION WITH TIES AGREEMENT.

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers hereunto duly authorized, as of the
first date written above.

                                             3-DIMENSIONAL PHARMACEUTICALS, INC.


                                             By: /s/ Scott Horvitz
                                                 -------------------------------
                                             Name. Scott Horvitz
                                             Title: Vice President

                                             TRANSAMERICA BUSINESS CREDIT
                                             CORPORATION


                                             By: M/s/ Meg Lengson
                                                 -------------------------------
                                             Name: Meg Lengson
                                             Title: Assistant Vice President

Exhibit II- Equipment
Exhibit A- Bill of Sale

                                      -6-
<PAGE>

                                   EXHIBIT A

                                 BILL OF SALE

          KNOW ALL PERSONS BY THESE PRESENTS 3-Dimensional Pharmaceuticals,
Inc. (the "Seller), for Six Hundred Fifty Seven Thousand, Three Hundred Eighty
One and 28/1 00 Dollars ($657,381.28) and other valuable consideration to it in
hand paid, receipt of which is hereby acknowledged, does unconditionally,
absolutely and irrevocably grant, sell, assign, transfer and convey unto
TRANSAMERICA BUSINESS CREDIT CORPORATION and its assignees or successors
(collectively, the "Buyer"), all of the Seller's right, title and interest in
and to the equipment described on Exhibit II hereto (collectively, the
"Equipment").

          TO HAVE AND TO HOLD said Equipment unto the said Buyer, to and for its
use forever.

          AND, the Seller hereby wan-ants, covenants and agrees that it (a) has
good and marketable title to the Equipment, free and clear of any liens and
other encumbrances; and (b) will warrant and defend the sale of the Equipment
against any and all persons claiming against such title.

          IN WITNESS WHEREOF the Seller has caused this instrument to be duly
executed and delivered as of this _______ day of ______________ 1997.

                                             3-DIMENSIONAL PHARMACEUTICALS, INC.


                                             By:  ______________________________
                                             Name:
                                             Title:

                                      -7-
<PAGE>

                                 BILL OF SALE

          KNOW ALL PERSONS BY THESE PRESENTS 3-Dimensional Pharmaceuticals, Inc.
(the "Seller"), for Six Hundred Fifty Seven Thousand, Three Hundred Eighty One
and 28/100 Dollars ($657,381.28) and other valuable consideration to it in hand
paid, receipt of which is hereby acknowledged, does unconditionally, absolutely
and irrevocably grant, sell, assign, transfer and convey unto TRANSAMERICA
BUSINESS CREDIT CORPORATION and its assignees or successors (collectively, the
"Buyer"), all of the Seller's right, title and interest in and to the equipment
described on Exhibit II hereto (collectively, the "Equipment").

          TO HAVE AND TO HOLD said Equipment unto the said Buyer, to and for its
use forever.

          AND, the Seller hereby wan-ants, covenants and agrees that it (a) has
good and marketable title to the Equipment, free and clear of any liens and
other encumbrances; and (b) will warrant and defend the sale of the Equipment
against any and all persons claiming against such title.

          IN WITNESS WHEREOF the Seller has caused this instrument to be duly
executed and delivered as of this 30th day of September, 1997.

                                             3-DIMENSIONAL PHARMACEUTICALS, INC.


                                             By: /s/ Scott Horvitz
                                                 -------------------------------
                                             Name:  Scott Horvitz
                                             Title: Vice President

                                      -8-
<PAGE>

                          TECHNOLOGY FINANCE DIVISION
                            DOCUMENTATION CHECKLIST

                      3 DIMENSIONAL PHARMACEUTICALS, INC.
                           CUSTOMER NUMBER 1046-002
                                SCHEDULE NO. 2
                           AS OF SEPTEMBER 22, 1997

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                           DATE
                       DOCUMENT                           DATE SENT       RECEIVED               COMMENTS
                       --------                           ---------       --------               --------
<S>                                                       <C>             <C>                <C>
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SCHEDULE NO. 2                                             9-24-97
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
EXHIBIT II - EQUIPMENT                                     9-24-97
---------------------------------------------------------------------------------------------------------------------
     RIDER I (EQUIPMENT DESCRIPTION)                                      9-24-97            RECEIVED.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
ACCEPTANCE AND DELIVERY CERTIFICATE                        9-24-97
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SALE AND LEASEBACK AGREEMENT                               9-24-97
---------------------------------------------------------------------------------------------------------------------
         BILL OF SALE                                      9-24-97
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
PAY PROCEEDS LETTER                                        9-24-97
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SALES TAX EXEMPTION CERTIFICATE                                                              RECEIVED.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SUPPLIERS' INVOICES                                                       9-24-97            RECEIVED.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
INSURANCE CERTIFICATE
---------------------------------------------------------------------------------------------------------------------
         PROPERTY                                                                            RECEIVED.
---------------------------------------------------------------------------------------------------------------------
         LIABILITY                                                                           RECEIVED.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
INVOICE FOR ADVANCE RANT                                   9-24-97
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
ADVANCE RENT                                                                                 DEDUCTED FROM PROCEEDS
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
UCC FINANCING STATEMENTS
---------------------------------------------------------------------------------------------------------------------
         JURISDICTIONS:
---------------------------------------------------------------------------------------------------------------------
         SOS-PA                                            9-24-97
---------------------------------------------------------------------------------------------------------------------
         PROTHONOTARY OF CHESTER COUNTY                    9-24-97
---------------------------------------------------------------------------------------------------------------------
         REAL ESTATE RECORDS OF CHESTER COUNTY                            9-24-97            RECEIVED WITH SCH. 01
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
UCC LIEN SEARCH                                                                              UPDATE RECEIVED 9-24-97
---------------------------------------------------------------------------------------------------------------------
JURISDICTIONS:
---------------------------------------------------------------------------------------------------------------------
         SOS-PA
---------------------------------------------------------------------------------------------------------------------
         PROTHONOTARY OF CHESTER COUNTY
---------------------------------------------------------------------------------------------------------------------
         REAL ESTATE RECORDS OF CHESTER COUNTY
---------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -1-
<PAGE>

<TABLE>
<S>                                              <C>             <C>            <C>
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
ANY INTERVENING LIENS?  CLEAR!
---------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -2-
<PAGE>

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Debtor Name (last name first if individual) and mailing address:
3-DIMENSIONAL PHARMACEUTICALS, INC.
665 STOCKTON DRIVE, SUITE 104
EXTON, PA 19341
____2716487
                                                                      1
--------------------------------------------------------------------------
Debtor Name (last name first if individual) and mailing address:




                                                                      1a
--------------------------------------------------------------------------
Debtor Name (last name first if individual) and mailing address:




                                                                      1b
--------------------------------------------------------------------------
Secured  Party(ies) name(s) (last name first if individual) and
for security interest information:

TRANSAMERICA BUSINESS CREDIT CORP.
76 BATTERSON PARK ROAD
FARMINGTON, CT 06032
36-3596947
                                                                      2
--------------------------------------------------------------------------
Assignee(s) of Secured Party name(s) (last name first if
individual) and address for security interest information



                                                                      2a
--------------------------------------------------------------------------
Special Types of Parties (check if applicable):
[_]  The terms "Debtor" and "Secured Party" mean "Lessee" and
     "Lessor," respectively
[_]  The terms "Debtor" and "Secured Party" mean "Consignee"
     and "Consignor", respectively
[_]  Debtor is a Transmitting Utility.
                                                                      3
--------------------------------------------------------------------------
                   SECURED PARTY SIGNATURE(S)
--------------------------------------------------------------------------
This statement is filed with only the Secured Party's signature
to perfect a security interest in collateral (check applicable
boxe(es)):

a.  [_]  acquired after a change of name, identity or corporate
         structure of the Debtor

b.  [_]  as to which the filing has lapsed.

c.  already subject to a security  interest in another county in
    Pennsylvania

[_] .when the collateral was moved to this county

[_]  when the  Debtor's  residence or place of business was
     moved to this county

d.  already subject to a security interest in another jurisdiction

[_] when the collateral was moved to Pennsylvania

    [_] when the Debtor's location was moved to Pennsylvania

e.  [_] which is proceeds of the collateral described in
        block 9, in which a security interest was previously
        perfected (also describe proceeds in block 9, if
        purchased with cash proceeds and not adequately
        described in the original financing statement).

1046-002
                          Secured Party Signature(s)
                 (required only if box(es) is checked above):
 TRANSAMERICA BUSINESS CREDIT CORP.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                                                      4
--------------------------------------------------------------------------
                         FINANCING STATEMENT
                 Uniform Commercial Code Form UCC-1
               IMPORTANT - Please read instructions on
              reverse side of page 4 before completing
--------------------------------------------------------------------------
  Filing No. (stamped by       Date, Time, Filing Office
  filing officer)              (stamped by filing office)




                                                                      5
--------------------------------------------------------------------------
  This Financing Statement is presented for filing pursuant to
  the Uniform Commercial Code, and is to be filed with the (check
  applicable box)

  [_] Secretary of the Commonwealth
  [X] Prothonotary of ___________Chester__________________ County
  [_] real estate records of ______________________________ County

                                                                      6
--------------------------------------------------------------------------
  Number of Additional Sheets (if any):                               7
--------------------------------------------------------------------------
  Optional Special Identification (Max. 10 Characters)                8
--------------------------------------------------------------------------
                             COLLATERAL
--------------------------------------------------------------------------
  Identify collateral by item and/or type:

  SEE EXHIBITS I, II AND RIDER I ATTACHED HERETO AND MADE A
  PART HEREOF.

  C/S/#1046-002
  #145


  [_] (Check only if desired) Products of the collateral are
      also covered.
                                                                      9
--------------------------------------------------------------------------
  Identify related real estate, if applicable.  The collateral is,
  or includes (check appropriate box(es):
  a.  [_]  crops growing or to be grown on
  b.  [_]  good which are or are to become fixtures on
  c.  [_]  mineral or the like (including oil and gas) as extracted on
  d.  [_]  accounts resulting from the sale of minerals or the like (including
           oil and gas) at the wellhead or minehead on

  the following real estate:

  Street Address:

  Described at Book _________ of (check one) [_] Deeds [_] Mortgages,
  at Page(s) ___________ for ______________ County. Uniform Parcel Identifier
  __________________
  [_] Described on Additional Sheet
  Name of record owner (required only if no debtor has an interest of record):

                                                                      10
--------------------------------------------------------------------------
                         DEBTOR SIGNATURE(S)
--------------------------------------------------------------------------
  Debtor Signature(s):
--------------------------------------------------------------------------

         3-DIMENSIONAL PHARMACEUTICALS, INC.
  1
--------------------------------------------------------------------------


  1a
--------------------------------------------------------------------------
  1b                                                                  11
--------------------------------------------------------------------------
  RETURN RECEIPT TO:

  Data File Services, Inc.
  P.O. Box 275
  Van Nuys
  CA                         Phone    800-331-3282
  91408-2750                 Fax      818-909-4717
                                                                      12
--------------------------------------------------------------------------
<PAGE>

                              EXHIBIT I TO UCC-1
                              ------------------



Lessee:    3-Dimensional Pharmaceuticals, Inc.
Lessor:    Transamerica Business Credit Corporation


     The property described on Exhibit II and Rider I attached hereto, which
is leased pursuant to Master Lease Agreement dated Jung 12, 1997 between
above-named Lessee and Lessor, and Schedule No. 2 thereto collectively, the
"Lease'), all replacements, substitutions, additions, attachments, accessions,
parts, fittings and accessories thereto and therefor, whether owned or hereafter
acquired and all proceeds (including insurance proceeds and any sublease and the
rentals and profits thereon) of and from said property. The Secured Party is a
Lessor and the Debtor is a Lessee in respect to the leased property' `and the
Lease is not intended as a security agreement to create a security interest 'm
Lessor. This statement is not to be evidence that the Lease is a security
agreement, but if it is determined to be so for other reasons, this financing
statement is filed to perfect-the Secured Party's security interest in the
property.

LESSOR:                                LESSEE:
TRANSAMEFICA BUSINESS                  3-DIMENSIONAL
CREDIT CORPORATION                     PHARMACEUTICALS, INC.

By:____________________________        By: /s/ Scott Horvitz
                                          --------------------------------
Title:_________________________        Title: VP
                                             -----------------------------
Date:__________________________        Date: Sept. 25, 1997
                                             -----------------------------
<PAGE>

                                  EXHIBIT II


To:
     X    Schedule to Master Lease Agreement
    ---
     X    UCC
    ---
     X    Collateral Access Agreement
    ---


                        Dated as of September 24, 1997

                                    Between

                   TRANSAMERICA BUSINESS CREDIT CORPORATION



Customer Name:             3-DIMENSIONAL PHARMACEUTICALS, INC.
Equipment Locations:       Eagleview Corporate Center
                           665 Stockton Drive, Suite 104
                           Exton, Pennsylvania  19341



                     SEE RIDER I FOR EQUIPMENT DESCRIPTION



Transamerica Business Credit Corporation    3-Dimensional Pharmaceuticals, Inc.
(Lessor)                                    (Lessee)


By:_______________________________          By: /s/Scott Horvitz
                                               --------------------------------
                                                   Scott Horvitz

Title:____________________________          Title:  Vice President

<PAGE>

                                    RIDER I
                               TO SCHEDULE NO. 1


<TABLE>
<CAPTION>
X        Master Lease Agreement dated June 12, 1997                        3-Dimensional Pharmaceuticals, Inc.
X        Schedule No. 2                                                     Equipment Sale Leaseback Schedule

  QTY       EQUIPMENT DESCRIPTION      PURCHASE ORDER      INVOICE NO.    CATALOG NO.       SERIAL NO.
<S>       <C>                        <C>                   <C>            <C>               <C>
   1      CPU Board for SGI                       971207         71870     RCH/HU497                  N/A
          Challenge
                                     971207 Total
   1      RAID Array Disk                         971208         71871   RCH/Ultra 7-9
   1      1 GB Memory for                         971208         71871     RCH/1GBR44                 N/A
          Challenge L
   1      Uninterruptible Power                   971208         71871     BSU1400NET        WS9715682793
          Supply, 1400
   1      Uninterruptible Power                   971208         71871     BSU1400NET        ES9714343935
          Supply, 1400
   1      CD-ROM Recorder                         971208        718871      RCH/CDWR                  N/A
                                     971208 Total
   1      Uninterruptible Power                   971209         71872    RCH/SU200NET       ES9725465959
          Supply, 2200VA
   1      Uninterruptible Power                   971209         71872    RCH/SU200NET       ES9725465960
          Supply, 2200VA
   1      PowerChute Plus for SUN                 971209         71872     RCH/AP9004                 N/A
   1      PowerChute Plus for                     971209         71872     RCH/AP9007                 N/A
          Windows
                                     971209 Total
   1      Uninterruptible Power                   971210         71873    RCH/SU200NET       ES9724459211
          Supply, 2200VA
   1      Uninterruptible Power                   971210         71873    RCH/SU200NET       ES9724459191
          Supply, 2200VA
   2      PowerChute Plus for                     971210         71873     RCH/AP9007                 N/A
          Windows
                                     871210 Total
   1      Superstack II Switch                    971211     370-009302      179416             7WKR057716
                                     871211 Total
   1      HPLC System                             971212        168947                             70094E
                                     971211 Total
   1      Gilson Liquid Handler/                  971213        146795                            259E7179
          Autosampler System
                                     971213 Total
   1      Laboratory Wall Cabinets                971215          5840                                N/A

                                     971215 Total
   1      Double Mirror Focusing                  971222         30584        7616                    N/A
          System
                                     971222 Total
   1      Power Mac 4400/200                     971223      A4368957      CPU0611           SXB7190K79GG
          32MB/2GB 12xCD
   1      64MB 168 Pin EDO DIMM                   971223      A4390761      CHP0397                   N/A

<CAPTION>
                                                                          X        UCC-1
                                                                          X        Sale and Leaseback Agreement


  QTY       EQUIPMENT DESCRIPTION                   SUPPLIER/       PURCHASE      EQUIPMENT       PAID - CHECK #
                                                      VENDOR          DATE          COST
<S>       <C>                                     <C>               <C>         <C>               <C>
   1      CPU Board for SGI                       RCH Products        8/28/97                          7238
          Challenge                                                             $  60,000.00
                                                                                ------------
                                                                                $  60,000.00
   1      RAID Array Disk                         RCH Products        7/15/97      27,224.00           6967
   1      1 GB Memory for                         RCH Products        7/15/97      32,248.00           6967
          Challenge L
   1      Uninterruptible Power                   RCH Products        7/15/97         787.00           6967
          Supply, 1400
   1      Uninterruptible Power                   RCH Products        7/15/97         787.00           6967
          Supply, 1400
   1      CD-ROM Recorder                         RCH Products        7/15/97       2,423.00           6967
                                                                                 -----------
                                                                                   63,469.00
   1      Uninterruptible Power                   RCH Products         7/7/97       1,181.00           6967
          Supply, 2200VA
   1      Uninterruptible Power                   RCH Products         7/7/97       1,181.00           6967
          Supply, 2200VA
   1      PowerChute Plus for SUN                 RCH Products         7/7/97         126.00           6967
   1      PowerChute Plus for                     RCH Products         7/7/97          55.00
          Windows                                                                -----------
                                                                                    2,543.00
   1      Uninterruptible Power                   RCH Products         7/7/97       1,181.00           6967
          Supply, 2200VA
   1      Uninterruptible Power                   RCH Products         7/7/97       1,181.00           6967
          Supply, 2200VA
   2      PowerChute Plus for                     RCH Products         7/7/97         110.00           6967
          Windows                                                                -----------

                                                                                    2,472.00
   1      Superstack II Switch                    Anixler             7/18/97       2,196.65           7068
                                                                                 -----------
                                                                                    2,196.65
   1      HPLC System                             Shimadzu            7/25/97      19,135.10           7238
                                                                                 -----------
                                                                                    2,196.65
   1      Gilson Liquid Handler/                  Gilson              7/11/97      19,759.00           7140
          Autosampler System                                                     -----------

                                                                                   19,759.00
   1      Laboratory Wall Cabinets                LF Systems           9/7/97       4,811.00           7235
                                                  Corp                           -----------

                                                                                    4,811.00
   1      Double Mirror Focusing                  Charles Supper      7/15/97      19,400.00           6982
          System                                  Co.                            -----------

                                                                                   19,400.00
   1      Power Mac 4400/200                      Mac Warehouse        7/8/97       1,715.00           7062
          32MB/2GB 12xCD
   1      64MB 168 Pin EDO DIMM                   Mac Warehouse        7/8/97         395.00           7062
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
QTY   EQUIPMENT DESCRIPTION     PURCHASE ORDER   INVOICE NO.       CATALOG        SERIAL NO.         SUPPLIER/    PURCHASE
                                                                     NO.                              VENDOR        DATE
<S>  <C>                        <C>              <C>               <C>        <C>                 <C>             <C>
 1   4.3 GB Hard Drive                    971223                   DRH1753           17200652     Mac Warehouse    7/8/97
 1   Power User 17" Monitor               971223                   MONO489          561011394     Mac Warehouse    7/8/97
 1   Ethernet Network Card                971223                   DEC1652                N/A     Mac Warehouse    7/8/97

                                  971223 Total
 1  Octane, SGI Workstation,
    $10000                                971225         71878                   0800690B713E     RCH Products     7/8/97
 1  Dial and Button Box for
    Octane                                971225         71878                           2443     RCH Products     7/8/97
 1  ONC3/NFS for Irix                     971225         71878                            N/A     RCH Products     7/8/97
    Operating system
 1  ProDev C++ Bundle for C++             971225          7187                            N/a     RCH Products     7/8/97
    Development

                                  971225 Total
 2  32MB 168 Pin DIMM 70 NS               971256      A5164009     CHP0403                N/A     Mac Warehouse   7/29/97
 3  Power User 15" Monitor                971256      A5007919     MON0488                        Mac Warehouse   7/24/97
 3  Ethermac PCI Card 10Base-T            971256      A5007919     DEC2382                N/A     Mac Warehouse   7/24/97
 1  32MB 168 Pin DIMM 70 NS               971256      A5007919     CHP0403                N/A     Mac Warehouse   7/24/97
 1  SuperMac C500 603E/18OLT              971256      A5040555     CPU0672    50N30A721000364     Mac Warehouse   7/24/97
    16MB  1.2 GB
 1  SuperMac C500 603E/18OLT 16MB         971256      A5040555     CPU0672    50N30A721000119     Mac Warehouse   7/24/97
    1.2GB
 1  SuperMac C500 603E/18OLT              971256      A5040555     CPU0672    50N30A723000615     Mac Warehouse   7/24/97

                                  971256 Total
 1  Laboratory Table, Stainless           971277          5831                            N/A     LF Systems      8/21/97
    w/Blk Top                                                                                     Corp

                                  971277 Total
 1  LCQ MS/DS System                      971317  S-021842-011         LCQ           LC000472     Finigan MAT     8/12/97
 1  ESI Probe for the LCQ MS/DS           971317  S-021842-011        201A                N/A     Finigan MAT     8/12/97
 1  APCI Probe for the LQC MDS/DS         971317  S-021842-011        201B                N/A     Finigan MAT     8/12/97

                                  971317 Total
 1  Stereo Emitter & Glasses              971322         71888                          45542     RCH Products    7/16/97

                                  971322 Total
 1  NB Scientific Reciprocating           971393  278404073197   14-280-15          790454146     Fisher          7/29/97
    Water Bath                                                                                    Scientific
 1  Water Bath Gable Cover                971393  278404073197   14-280-28                N/A     Fisher          7/29/97
                                                                                                  Scientific

                                  971393 Total
 1  Powerbook 1400CS/117 12/750MB         971460      A5462593     CPU0522       SQF7020JXBJX     Mac Warehouse    8/5/97
 1  24MB Memory Module for                971460      A5472220     CHP0411                N/A     Mac Warehouse    8/5/97
    Powerbook 140
 1  Apple Powerbook 1400 8X CD-ROM        971460      A5472220     ACC2788                N/A     Mac Warehouse    8/5/97
    Module
 1  Etertech Ethernet Card                971460      A5472220     ACC2482                N/A     Mac Warehouse    8/5/97

                                  971460 Total
 1  SuperMac C500 603E/18OLT              971461      A5501606     CPU0672    50N30A725001694     Mac Warehouse    8/6/97
    16MB/1.2GB
 1  Monitor Power User 15"                971461      A5501606     MONO488                        Mac Warehouse    8/6/97
                                  971461 Total
 1  Printer, Epson, Stylus 1500           971500      A5621438     PR11948        2UUX0012670     Micro Warehouse  8/8/97
    Wide Carriage

<CAPTION>
QTY   EQUIPMENT DESCRIPTION     EQUIPMENT       PAID - CHECK #
                                   COST
<S>  <C>                        <C>             <C>
 1   4.3 GB Hard Drive                999.00        7062
 1   Power User 17" Monitor           430.00        7062
 1   Ethernet Network Card            122.00        7062
                                  ----------
                                    3,661.00
 1  Octane, SGI Workstation,       58,446.00        6967
    $10000
 1  Dial and Button Box for         2,250.00        6967
    Octane
 1  ONC3/NFS for Irix                 595.00        6967
    Operating system
 1  ProDev C++ Bundle for C++       5,500.00        6967
    Development
                                  ----------
                                   66,791.00
 2  32MB 168 Pin DIMM 70 NS           330.00
 3  Power User 15" Monitor            795.00        7104
 3  Ethermac PCI Card 10Base-T        180.00        7104
 1  32MB 168 Pin DIMM 70 NS           165.00        7104
 1  SuperMac C500 603E/18OLT          949.00        7104
    16MB 1.2 GB
 1  SuperMac C500 603E/18OLT 16M      949.00        7104
    1.2GB
 1  SuperMac C500 603E/18OLT          949.00        7104
                                  ----------
                                    4,317.00
 1  Laboratory Table, Stainless     1,129.00        7235
    w/Blk Top                     ----------
                                    1,129.00
 1  LCQ MS/DS System              143,200.00        7239
 1  ESI Probe for the LCQ MS/DS    10,000.00        7239
 1  APCI Probe for the LQC MDS/D   10,000.00        7239
                                  ----------
                                  163,200.00
 1  Stereo Emitter & Glasses          990.00        6967
                                  ----------
                                      990.00
 1  NB Scientific Reciprocating     2,700.00        7093
    Water Bath
 1  Water Bath Gable Cover            412.00        7093
                                  ----------
                                    3,112.00
 1  Powerbook 1400CS/117 12/750M    1,645.00        7184
 1  24MB Memory Module for            185.00        7184
    Powerbook 140
 1  Apple Powerbook 1400 8X CD-R      185.00        7184
    Module
 1  Etertech Ethernet Card             85.00        7184
                                  ----------
                                    2,100.00
 1  SuperMac C500 603E/18OLT          930.00        7184
    16MB/1.2GB
 1  Monitor Power User 15"            265.00        7184
                                  ----------
                                    1,195.00
 1  Printer, Epson, Stylus 1500       469.00        7184
    Wide Carriage
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
  QTY      EQUIPMENT                 PURCHASE ORDER      INVOICE NO.      CATALOG        SERIAL NO.       SUPPLIER/    PURCHASE
           DESCRIPTION                                                      NO.                             VENDOR       DATE
  <C>   <C>                          <C>                <C>             <C>            <C>              <C>            <C>
   1    Monitor, Hitachi, 21"                   971500      A5621438      MON0362            G6H005057  Micro            8/8/97
                                                                                                        Warehouse
   1    CPU, Compaq Deskpro 6000                971500      A5621438       CP5024        S6719BPP2Q430  Micro            8/8/97
                                                                                                        Warehouse
   1    64MB Memory Module for                  971500      A5796362       MY6945                  N/A  Micro            8/8/97
        Deskpro                                                                                         Warehouse
                                      971500 Total
   1    Oil Free Diaphragm  Pump,               971504           333       696244          20062616-97  Vacuubrand,      8/28/97
        Chem(PTFE)                                                                                      Inc.
   1    Incubator, Isotemp 5.0 Cu Ft            971543  278404083197     11690650D            70800248  Fisher           8/14/97
                                                                                                        Scientific
                                      971543 Total
   1    Analytical Balance                      971557  278404083197    01-913-503B         1116283226  Fisher           8/15/97
                                                                                                        Scientific
                                      971557 Total
   1    Lab Fit-out Work - Phase 1              979999       6/10/97                               N/A  Eagleview        5/31/97
                                                                                                        Constri.
   1    Lab Fit-out Work - Phase 2              979999       9/16/97                               N/A  Eagleview        8/31/97
                                                                                                        Constr.
                                      979999 Total
   1    SuperMac             C500               971725      A6776926      CPU0787      50N30A728002565  Mac Warehouse    9/10/97
        603LT/18OLT 16MB
   1    Monitor Power User 15"                  971725      A6776926      MONO488                       Mac Warehouse    9/10/97
   1    32MB 168 Pin DIMM                       971725      A6791693      RDR12126                 N/A  Mac Warehouse    9/10/97
        Memory Module
   1    Zip Drive SCSI                          971725      A6791693      CHP0403                  N/A  Mac Warehouse    9/10/97

                                      971725 Total
   1    Ultra Wide SCSI Disk                    971756         71942      RCH/E412            JK134135  RCH Products     9/16/97
        Drive System, 4.3GB
   1    Ultra Wide SCSI Disk                    971756         71942      RCH/E412            JK158471  RCH Products     9/16/97
        Drive System, 4.3GB
                                      971756 Total
<CAPTION>
  QTY      EQUIPMENT                                           EQUIPMENT          PAID - CHECK #
           DESCRIPTION                                           COST
  <S>   <C>                                                  <C>                  <C>
   1    Monitor, Hitachi, 21"                                   1,665.00               7184

   1    CPU, Compaq Deskpro 6000                                3,149.00               7184

   1    64MB Memory Module for Deskpro                            405.00               7184
                                                             -----------

                                                                5,688.00
   1    Oil Free Diaphragm  Pump,                               1,965.00               7237
        Chem(PTFE)
   1    Incubator, Isotemp 5.0 Cu Ft                            1,192.53               7242
                                                             -----------

                                                               1,192..53
   1    Analytical Balance                                      2,250.00               7242
                                                             -----------

                                                                2,250.00
   1    Lab Fit-out Work - Phase 1                             24,225.00               6660

   1    Lab Fit-out Work - Phase 2                            178,310.00               7241
                                                             -----------

                                                              202,535.00
   1    SuperMac             C500                                 890.00               7243
        603LT/18OLT 16MB
   1    Monitor Power User 15"                                    255.00               7243
   1    32MB 168 Pin DIMM Memory Module                           140.00               7243
   1    Zip Drive SCSI                                             95.00               7243
                                                             -----------
                                                                1,380.00
   1    Ultra Wide SCSI Disk                                    1,045.00               7236
        Drive System, 4.3GB
   1    Ultra Wide SCSI Disk                                                           7236
        Drive System, 4.3GB                                     1,045.00
                                                             -----------

                                                                2,090.00
                                                             -----------
Grand Total         N/A - NOT APPLICABLE
                    SERIAL NUMBERS FOR MONITORS WILL BE
                    FORWARD - NOT CURRENTLY AVAILABLE        $657,381.28
                                                             ===========
</TABLE>
<PAGE>

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Debtor  Name  (last  name  first  if  individual)  and  mailing address:
3-DIMENSIONAL PHARMACEUTICALS, INC.
665 STOCKTON DRIVE, SUITE 104
EXTON, PA 19341
____2716487
                                                                             1
-------------------------------------------------------------------------------
Debtor Name (last name first if individual) and mailing address:




                                                                             1a
-------------------------------------------------------------------------------
Debtor Name (last name first if individual) and mailing address:




                                                                             1b
-------------------------------------------------------------------------------
Secured  Party(ies) name(s) (last name first if individual) and
for security interest information:
TRANSAMERICA BUSINESS CREDIT CORP.
76 BATTERSON PARK ROAD
FARMINGTON, CT 06032
36-3596947
                                                                             2
-------------------------------------------------------------------------------
Assignee(s) of Secured Party name(s) (last name first if individual) and address
for security interest information




                                                                             2a
-------------------------------------------------------------------------------
Special Types of Parties (check if applicable):
[_] The terms "Debtor" and "Secured Party" mean "Lessee" and "Lessor,"
    respectively
[_] The terms "Debtor" and "Secured Party" mean "Consignee" and "Consignor",
    respectively
[_] Debtor is a Transmitting Utility.
                                                                             3
-------------------------------------------------------------------------------
                          SECURED PARTY SIGNATURE(S)
-------------------------------------------------------------------------------
This statement is filed with only the Secured Party's signature to perfect a
security interest in collateral (check applicable boxe(es)):
a. [_] acquired after a change of name, identity or corporate structure of the
       Debtor
b. [_] as to which the filing has lapsed.
c. already subject to a security  interest in another county in Pennsylvania
[_]    .when the collateral was moved to this county
[_]    when the  Debtor's  residence or place of business was moved to this
       county
d. already subject to a security interest in another jurisdiction
[_]    when the collateral was moved to Pennsylvania
       [_] when the Debtor's location was moved to Pennsylvania
e. [_] which is proceeds of the collateral described in block 9, in which a
       security interest was previously perfected (also describe proceeds in
       block 9, if purchased with cash proceeds and not adequately described in
       the original financing statement).
1046-002
                          Secured Party Signature(s)
                 (required only if box(es) is checked above):
 TRANSAMERICA BUSINESS CREDIT CORP.
-------------------------------------------------------------------------------

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

-------------------------------------------------------------------------------
                                                                             4
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
                              FINANCING STATEMENT
                      Uniform Commercial Code Form UCC-1
                    IMPORTANT - Please read instructions on
                   reverse side of page 4 before completing
-------------------------------------------------------------------------------
  Filing No. (stamped by filing officer)    Date, Time, Filing Office (stamped
                                            by filing office)




                                                                             5
-------------------------------------------------------------------------------
  This Financing Statement is presented for filing pursuant to the Uniform
  Commercial Code, and is to be filed with the (check applicable box)
  [_] Secretary of the Commonwealth
  [X] Prothonotary of      Chester      County
                      -----------------
  [_] real estate records of __________ County
                                                                             6
-------------------------------------------------------------------------------
  Number of Additional Sheets (if any):                                      7
-------------------------------------------------------------------------------
  Optional Special Identification (Max. 10 Characters)                       8
-------------------------------------------------------------------------------
                                  COLLATERAL
-------------------------------------------------------------------------------
  Identify collateral by item and/or type:

  SEE EXHIBITS I, II AND RIDER I ATTACHED HERETO AND MADE A PART HEREOF.

  C/S/#1046-002
  #145



  [_] (Check only if desired) Products of the collateral are also covered.
                                                                             9
-------------------------------------------------------------------------------
  Identify related real estate,  if applicable.  The collateral is,
  or includes (check appropriate box(es):
  a.  [_]  crops growing or to be grown on
  b.  [_]  good which are or  are to become fixtures on
  c.  [_]  mineral or the like (including oil and gas) as extracted on
  d.  [_]  accounts resulting from the sale of minerals or the like (including
           oil and gas) at the wellhead or minehead on

  the following real estate:

  Street Address:

  Described at Book _________ of (check one) |_| Deeds |_| Mortgages, at Page(s)
  ___________ for ______________ County. Uniform Parcel Identifier ___________
  [_] Described on Additional Sheet
  Name of record owner (required only if no debtor has an interest of record):
                                                                             10
-------------------------------------------------------------------------------
                              DEBTOR SIGNATURE(S)
-------------------------------------------------------------------------------
  Debtor Signature(s):
-------------------------------------------------------------------------------

     3-DIMENSIONAL PHARMACEUTICALS, INC.
  1
-------------------------------------------------------------------------------

  1a
-------------------------------------------------------------------------------
  1b                                                                         11
-------------------------------------------------------------------------------
  RETURN RECEIPT TO:

  Data File Services, Inc.
  P.O. Box 275
  Van Nuys
  CA                         Phone    800-331-3282
  91408-2750                 Fax      818-909-4717
                                                                             12
-------------------------------------------------------------------------------

                                       65
<PAGE>

                              EXHIBIT I TO UCC-1
                              ------------------


Lessee:     3-Dimensional Pharmaceuticals, Inc.
Lessor:     Transamerica Business Credit Corporation


     The property described on Exhibit II and Rider I attached hereto, which is
leased pursuant to Master Lease Agreement dated Jung 12, 1997 between above-
named Lessee and Lessor, and Schedule No. 2 thereto collectively, the "Lease"),
all replacements, substitutions, additions, attachments, accessions, parts,
fittings and accessories thereto and therefor, whether owned or hereafter
acquired and all proceeds (including insurance proceeds and any sublease and the
rentals and profits thereon) of and from said property. The Secured Party is a
Lessor and the Debtor is a Lessee in respect to the leased property' ` and the
Lease is not intended as a security agreement to create a security interest `m
Lessor. This statement is not to be evidence that the Lease is a security
agreement, but if it is determined to be so for other reasons, this financing
statement is filed to perfect-the Secured Party's security interest in the
property.

LESSOR:                                    LESSEE:
TRANSAMEFICA BUSINESS                      3-DIMENSIONAL
CREDIT CORPORATION                         PHARMACEUTICALS, INC.

By:____________________________            By: /s/ Scott Horvitz
                                               -------------------------------
Title:_________________________            Title: VP
                                                  ----------------------------
Date:__________________________            Date: Sept. 25, 1997
                                                 -----------------------------

                                       66
<PAGE>

                                   EXHIBIT II
                                   ----------

To:
     X     Schedule to Master Lease Agreement
    ---
     X     UCC
    ---
     X     Collateral Access Agreement
    ---


                        Dated as of September 24, 1997

                                    Between

                   TRANSAMERICA BUSINESS CREDIT CORPORATION



Customer Name:           3-DIMENSIONAL PHARMACEUTICALS, INC.
Equipment Locations:     Eagleview Corporate Center
                         665 Stockton Drive, Suite 104
                         Exton, Pennsylvania 19341



                     SEE RIDER I FOR EQUIPMENT DESCRIPTION



Transamerica Business Credit Corporation    3-Dimensional Pharmaceuticals, Inc.
(Lessor)                                    (Lessee)


By:_____________________________________    By: /s/ Scott Horvitz
                                                --------------------------------
                                                    Scott Horvitz

Title:__________________________________    Title: Vice President
                                                   -----------------------------

                                       67
<PAGE>

                                    RIDER I
                               TO SCHEDULE NO. 1

<TABLE>
<CAPTION>
X        Master Lease Agreement                                            3-Dimensional Pharmaceuticals, Inc.
                 dated June 12, 1997                                        Equipment Sale Leaseback Schedule
X        Schedule No. 2

  QTY       EQUIPMENT DESCRIPTION      PURCHASE ORDER      INVOICE NO.    CATALOG NO.       SERIAL NO.       SUPPLIER/
                                                                                                               VENDOR
<S>       <C>                          <C>                 <C>            <C>               <C>              <C>
   1      CPU    Board    for   SGI               971207         71870     RCH/HU497                  N/A    RCH Products
          Challenge
                                       971207 Total
   1      RAID Array Disk                         971208         71871     RCH/Ultra 7-9                     RCH Products
   1      1 GB Memory for                         971208         71871     RCH/1GBR44                 N/A    RCH Products
          Challenge L
   1      Uninterruptible     Power               971208         71871     BSU1400NET        WS9715682793    RCH Products
          Supply, 1400
   1      Uninterruptible     Power               971208         71871     BSU1400NET        ES9714343935    RCH Products
          Supply, 1400
   1      CD-ROM Recorder                         971208        718871     RCH/CDWR                  N/A     RCH Products

                                       971208 Total
   1      Uninterruptible     Power               971209         71872    RCH/SU200NET       ES9725465959    RCH Products
          Supply, 2200VA
   1      Uninterruptible     Power               971209         71872    RCH/SU200NET       ES9725465960    RCH Products
          Supply, 2200VA
   1      PowerChute Plus for SUN                 971209         71872     RCH/AP9004                 N/A    RCH Products
   1      PowerChute    Plus    for               971209         71872     RCH/AP9007                 N/A    RCH Products
          Windows
                                       971209 Total
   1      Uninterruptible     Power               971210         71873    RCH/SU200NET       ES9724459211    RCH Products
          Supply, 2200VA
   1      Uninterruptible     Power               971210         71873    RCH/SU200NET       ES9724459191    RCH Products
          Supply, 2200VA
   2      PowerChute    Plus    for               971210         71873     RCH/AP9007                 N/A    RCH Products
          Windows
                                       871210 Total
   1      Superstack II Switch                    971211     370-009302      179416             7WKR057716   Anixler
                                       871211 Total
   1      HPLC System                             971212        168947                             70094E    Shimadzu
                                       971211 Total
   1      Gilson  Liquid   Handler/               971213        146795                            259E7179   Gilson
          Autosampler System
                                       971213 Total
   1      Laboratory Wall Cabinets                971215          5840                                N/A    LF     Systems
                                                                                                             Corp
                                       971215 Total
   1      Double  Mirror   Focusing               971222         30584        7616                    N/A    Charles
          System                                                                                             Supper Co.
                                       971222 Total
   1      Power    Mac     4400/200               971223      A4368957      CPU0611           SXB7190K79GG   Mac Warehouse
          32MB/2GB 12xCD

<CAPTION>
                                                      X        UCC-1
                                                      X        Sale and Leaseback Agreement


  QTY       EQUIPMENT DESCRIPTION                 PURCHASE      EQUIPMENT       PAID - CHECK #
                                                    DATE          COST
<S>       <C>                                     <C>         <C>               <C>
   1      CPU    Board    for   SGI
          Challenge                                 8/28/97                           7238
                                                              $  60,000.00
                                                              ------------
   1      RAID Array Disk                                     $  60,000.00
   1      1    GB    Memory     for                 7/15/97      27,224.00            6967
          Challenge L                               7/15/97      32,248.00            6967
   1      Uninterruptible     Power
          Supply, 1400                              7/15/97         787.00            6967
   1      Uninterruptible     Power
          Supply, 1400                              7/15/97         787.00            6967
   1      CD-ROM Recorder
                                                    7/15/97       2,423.00            6967
                                                              ------------
   1      Uninterruptible     Power                              63,469.00
          Supply, 2200VA                            7/7/97        1,181.00            6967
   1      Uninterruptible     Power
          Supply, 2200VA                            7/7/97        1,181.00            6967
   1      PowerChute Plus for SUN
   1      PowerChute    Plus    for                 7/7/97          126.00            6967
          Windows                                   7/7/97           55.00            6967
                                                              ------------

   1      Uninterruptible     Power                               2,543.00
          Supply, 2200VA                            7/7/97        1,181.00            6967
   1      Uninterruptible     Power
          Supply, 2200VA                            7/7/97        1,181.00            6967
   2      PowerChute    Plus    for
          Windows                                   7/7/97          110.00            6967
                                                              ------------


   1      Superstack II Switch                                    2,472.00
                                                    7/18/97       2,196.65            7068
                                                              ------------
   1      HPLC System                                             2,196.65
                                                    7/25/97      19,135.10            7238
                                                              ------------
   1      Gilson  Liquid   Handler/                               2,196.65
          Autosampler System                        7/11/97      19,759.00            7140
                                                              ------------

   1      Laboratory Wall Cabinets                               19,759.00
                                                     9/7/97       4,811.00            7235
                                                              ------------

   1      Double  Mirror   Focusing                               4,811.00
          System                                    7/15/97      19,400.00            6982
                                                              ------------

   1      Power    Mac     4400/200                              19,400.00
          32MB/2GB 12xCD                            7/8/97        1,715.00            7062
</TABLE>

                                  Page 1 of 3
<PAGE>

<TABLE>
<CAPTION>
QTY         EQUIPMENT                  PURCHASE ORDER   INVOICE NO.      CATALOG      SERIAL NO.          SUPPLIER/     PURCHASE
            DESCRIPTION                                                    NO.                             VENDOR         DATE
<S>    <C>                        <C>                  <C>               <C>          <C>               <C>             <C>
 1     64MB 168 Pin EDO DIMM                   971223      A4390761      CHP0397                N/A     Mac Warehouse    7/8/97
 1     4.3 GB Hard Drive                       971223                    DRH1753           17200652     Mac Warehouse    7/8/97
 1     Power User 17" Monitor                  971223                    MONO489          561011394     Mac Warehouse    7/8/97
 1     Ethernet Network Card                   971223                    DEC1652                N/A     Mac Warehouse    7/8/97

                                  971223 Total
 1     Octane,  SGI Workstation,               971225         71878                    0800690B713E     RCH Products     7/8/97
       $10000
 1     Dial and Button Box for                 971225         71878                            2443     RCH Products     7/8/97
       Octane
 1     ONC3/NFS for Irix                       971225         71878                             N/A     RCH Products     7/8/97
       Operating System
 1     ProDev C++ Bundle for                   971225          7187                             N/a     RCH Products     7/8/97
       C++ Development
                                  971225 Total
 2     32MB 168 Pin DIMM 70 NS                 971256      A5164009      CHP0403                N/A     Mac Warehouse    7/29/97
 3     Power User 15" Monitor                  971256      A5007919      MON0488                        Mac Warehouse    7/24/97
 3     Ethermac PCI Card                       971256      A5007919      DEC2382                N/A     Mac Warehouse    7/24/97
       10Base-T
 1     32MB 168 Pin DIMM 70 NS                 971256      A5007919      CHP0403                N/A     Mac Warehouse    7/24/97
 1     SuperMac C500 603E/18OLT                971256      A5040555      CPU0672    50N30A721000364     Mac Warehouse    7/24/97
       16MB 1.2 GB
 1     SuperMac C500 603E/18OLT                971256      A5040555      CPU0672    50N30A721000119     Mac Warehouse    7/24/97
       16MB 1.2GB
 1     SuperMac C500 603E/18OLT                971256      A5040555      CPU0672    50N30A723000615     Mac Warehouse    7/24/97

                                  971256 Total
 1     Laboratory Table,                       971277          5831                             N/A     LF Systems       8/21/97
       Stainless w/Blk Top                                                                              Corp
                                  971277 Total
 1     LCQ MS/DS System                        971317  S-021842-011        LCQ             LC000472     Finigan MAT      8/12/97
 1     ESI  Probe  for  the  LCQ               971317  S-021842-011        201A                 N/A     Finigan MAT      8/12/97
       MS/DS
 1     APCI  Probe  for  the LQC               971317  S-021842-011        201B                 N/A     Finigan MAT      8/12/97
       MDS/DS
                                  971317 Total
 1     Stereo Emitter & Glasses                971322         71888                           45542     RCH Products     7/16/97
                                  971322 Total
 1     NB Scientific                           971393  278404073197     14-280-15         790454146     Fischer          7/29/97
       Reciprocating Water Bath                                                                         Scientific
 1     Water Bath Gable Cover                  971393  278404073197     14-280-28               N/A     Fisher           7/29/97
                                                                                                        Scientific
                                  971393 Total
 1     Powerbook      1400CS/117               971460      A5462593      CPU0522       SQF7020JXBJX     Mac Warehouse    8/5/97
       12/750MB
 1     24MB  Memory  Module  for               971460      A5472220      CHP0411                N/A     Mac Warehouse    8/5/97
       Powerbook 140
 1     Apple  Powerbook  1400 8X               971460      A5472220      ACC2788                N/A     Mac Warehouse    8/5/97
       CD-ROM Module
 1     Etertech Ethernet Card                  971460      A5472220      ACC2482                N/A     Mac Warehouse    8/5/97

                                  971460 Total
 1     SuperMac C500  603E/18OLT               971461      A5501606      CPU0672    50N30A725001694     Mac Warehouse    8/6/97
       16MB/1.2GB
 1     Monitor Power User 15"                  971461      A5501606      MONO488                        Mac Warehouse    8/6/97

<CAPTION>
QTY         EQUIPMENT                  EQUIPMENT         PAID-CHECK #
            DESCRIPTION                   COST
<S>    <C>                            <C>                <C>
 1     64MB 168 Pin EDO DIMM              395.00            7062
 1     4.3 GB Hard Drive                  999.00            7062
 1     Power User 17" Monitor             430.00            7062
 1     Ethernet Network Card              122.00            7062
                                      ----------
                                        3,661.00
 1     Octane,  SGI Workstation,       58,446.00            6967
       $10000
 1     Dial and  Button  Box for        2,250.00            6967
       Octane
 1     ONC3/NFS for Irix                  595.00            6967
       Operating System
 1     ProDev C++ Bundle for            5,500.00            6967
       C++ Development
                                      ----------
                                       66,791.00
 2     32MB 168 Pin DIMM 70 NS            330.00
 3     Power User 15" Monitor             795.00            7104
 3     Ethermac PCI Card                  180.00            7104
       10Base-T
 1     32MB 168 Pin DIMM 70 NS            165.00            7104
 1     SuperMac C500  603E/18OLT          949.00            7104
       16MB 1.2 GB
 1     SuperMac C500  603E/18OLT          949.00            7104
       16MB 1.2GB
 1     SuperMac C500 603E/18OLT           949.00            7104
                                      ----------
                                        4,317.00
 1     Laboratory Table,                1,129.00            7235
                                      ----------
       Stainless w/Blk Top
                                        1,129.00
 1     LCQ MS/DS System               143,200.00            7239
 1     ESI  Probe  for  the  LCQ       10,000.00            7239
       MS/DS
 1     APCI  Probe  for  the LQC       10,000.00            7239
                                      ----------
       MDS/DS
                                      163,200.00
 1     Stereo Emitter & Glasses           990.00            6967
                                      ----------
                                          990.00
 1     NB Scientific Reciprocating      2,700.00            7093
       Water Bath
 1     Water Bath Gable Cover             412.00            7093
                                      ----------
                                        3,112.00

 1     Powerbook      1400CS/117        1,645.00            7184
       12/750MB
 1     24MB  Memory Module for            185.00            7184
       Powerbook 140
 1     Apple Powerbook 1400 8X            185.00            7184
       CD-ROM Module
 1     Etertech Ethernet Card              85.00            7184
                                      ----------
                                        2,100.00

 1     SuperMac C500  603E/18OLT          930.00            7184
       16MB/1.2GB
 1     Monitor Power User 15"             265.00            7184
                                      ----------
</TABLE>

                                   Page 2 o3
<PAGE>

<TABLE>
<CAPTION>
QTY          EQUIPMENT               PURCHASE ORDER      INVOICE NO.    CATALOG NO.       SERIAL NO.         SUPPLIER/
            DESCRIPTION                                                                                       VENDOR
<S>    <C>                         <C>                  <C>             <C>               <C>              <C>
                                   971461 Total
 1     Printer, Epson, Stylus                   971500      A5621438      PR11948           2UUX0012670    Micro
       1500 Wide Carriage                                                                                  Warehouse
 1     Monitor, Hitachi, 21"                    971500      A5621438      MON0362             G6H005057    Micro
                                                                                                           Warehouse
 1     CPU, Compaq Deskpro 6000                 971500      A5621438       CP5024         S6719BPP2Q430    Micro
                                                                                                           Warehouse
 1     64MB Memory Module for                   971500      A5796362       MY6945                   N/A    Micro
       Deskpro                                                                                             Warehouse
                                   971500 Total
 1     Oil Free Diaphragm Pump,                 971504           333       696244           20062616-97    Vacuubrand,
       Chem(PTFE)                                                                                          Inc.
 1     Incubator, Isotemp 5.0                   971543  278404083197     11690650D             70800248    Fisher
       Cu Ft                                                                                               Scientific
                                   971543 Total
 1     Analytical Balance                       971557  278404083197    01-913-503B          1116283226    Fisher
                                                                                                           Scientific
                                   971557 Total
 1     Lab Fit-out Work - Phase 1               979999        6/10/97                               N/A    Eagleview
                                                                                                           Constri.
 1     Lab Fit-out Work - Phase 2               979999             9/16/97                          N/A    Eagleview
                                                                                                           Constr.
                                   979999 Total
 1     SuperMac             C500                971725      A6776926      CPU0787       50N30A728002565    Mac Warehouse
       603LT/18OLT 16MB
 1     Monitor Power User 15"                   971725      A6776926      MONO488                          Mac Warehouse
 1     32MB 168 Pin DIMM                        971725      A6791693      RDR12126                  N/A    Mac Warehouse
       Memory Module
 1     Zip Drive SCSI                           971725      A6791693      CHP0403                   N/A    Mac Warehouse

                                   971725 Total
 1     Ultra Wide SCSI Disk                     971756         71942      RCH/E412             JK134135    RCH Products
       Drive System, 4.3GB
 1     Ultra Wide SCSI Disk                     971756         71942      RCH/E412             JK158471    RCH Products
       Drive System, 4.3GB
                                   971756 Total
                                                        Grand Total    N/A - NOT APPLICABLE
                                                                       SERIAL NUMBERS FOR MONITORS WILL BE FORWARD -
                                                                       NOT CURRENTLY AVAILABLE

<CAPTION>
QTY          EQUIPMENT                PURCHASE      EQUIPMENT     PAID - CHECK #
            DESCRIPTION                 DATE           COST
<S>    <C>                            <C>
                                                     1,195.00
 1     Printer, Epson, Stylus           8/8/97         469.00         7184
       1500 Wide Carriage
 1     Monitor, Hitachi, 21"            8/8/97       1,665.00         7184

 1     CPU, Compaq Deskpro 6000         8/8/97       3,149.00         7184

 1     64MB Memory Module for           8/8/97                        7184
       Deskpro                                         405.00
                                                  -------------
                                                     5,688.00
 1     Oil Free Diaphragm Pump,         8/28/97      1,965.00         7237
       Chem(PTFE)
 1     Incubator, Isotemp 5.0           8/14/97                       7242
       Cu Ft                                         1,192.53
                                                  -------------
                                                     1,192..53
 1     Analytical Balance               8/15/97      2,250.00         7242
                                                  -------------
                                                     2,250.00
 1     Lab Fit-out Work - Phase 1       5/31/97     24,225.00         6660

 1     Lab Fit-out Work - Phase 2       8/31/97    178,310.00         7241
                                                  -------------
                                                   202,535.00
 1     SuperMac             C500        9/10/97        890.00         7243
       603LT/18OLT 16MB
 1     Monitor Power User 15"           9/10/97        255.00         7243
 1     32MB 168 Pin DIMM                9/10/97        140.00         7243
       Memory Module
 1     Zip Drive SCSI                   9/10/97         95.00         7243
                                                  -------------
                                                     1,380.00
 1     Ultra Wide SCSI Disk             9/16/97      1,045.00         7236
       Drive System, 4.3GB
 1     Ultra Wide SCSI Disk             9/16/97                       7236
       Drive System, 4.3GB                           1,045.00
                                                  -------------
                                                     2,090.00
                                                  -------------

                                                  $657,381.28
                                                  =============
</TABLE>

                                   Page 3 o3
<PAGE>

                      SCHEDULE TO MASTER LEASE AGREEMENT

                         Dated as of December 19, 1997

                                Schedule No. 3


Lessor Name & Mailing Address                Lessee Name & Mailing Address
Transamerica Business Credit Corporation     3-Dimensional Pharmaceuticals, Inc.
Riverway II                                  Eagleview Corporate Center
West Office Tower                            665 Stockton Drive, Suite 104
9399 West Higgins Road                       Exton, Pennsylvania 119341
Rosemont, Illinois  60018

     Equipment Location (if different than Lessee's address above):

     This Schedule covers the following described equipment ("Equipment"):

            See Exhibit II attached hereto and made a part hereof.

     The Equipment is hereby leased pursuant to the provisions of the Master
Lease Agreement between the undersigned Lessee and Lessor dated June 12, 1997
(the "Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions, and modifications. The
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated May 9, 1997, if the Lessor has not received this
Schedule and an Acceptance and Delivery Certificate executed by the Lessee
within five business days from the date first set forth above.

<TABLE>
<S>                                                                                  <C>
1.   Term (Number of Months)                                                         48 months
2.   Equipment Cost                                                                  $308,762.00
3.   Commencement Date                                                               December 30, 1997
4.   Rate Factor                                                                     2.5226% of Equipment Cost

5.   Total Rents                                                                     $373,86.80

6.   Advance Rents (first and last)                                                  $15,577.70

7.   Monthly rental payments                                                         $  7,788.85

     And the second such rental payments will be due on and                          January 1, 1998
     subsequent rental payments will be due on the same day of
     each month thereafter

8.   Security Deposit                                                                None

9.   In addition to the monthly rental payments  provided for herein,                $519.86
     Lessee shall pay to Lessor, as interim rent, payable on the commencement
     date specified above, an amount equal to 1/30th of the monthly rental
     payment (including monthly sales/use tax) multiplied by the number of days
     from and including the commencement date through the end of the same
     calendar month
</TABLE>

     Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.

                                                                     Page 1 of 3
<PAGE>

     Except as expressly provided or modified hereby, all the terms and
provisions of the Master Lease Agreement shall remain in full force and effect.

     The Purchase Date shall be December 1, 2001.

     The Stipulated Loss Value of any items of Equipment shall be an amount
equal to the present value of all future Rent discounted at a rate of 8% per
annum plus the Reversionary Value.

     The Reversionary Value of any item of Equipment shall be 10% of Equipment
Cost.

TRANSAMERICA BUSINESS CREDIT             3-DIMENSIONAL PHARMACEUTICALS, INC.
CORPORATION                              (Lessee)
(Lessor)


By: /s/ Robert D. Pomeroy, Jr.           By: /s/ Scott Horvitz
   ----------------------------------       ----------------------------------

Title: Executive Vice President          Title:  VP Finance
      -------------------------------          -------------------------------

                                                         Page 2 of 3
<PAGE>

                                    RIDER I
                               TO SCHEDULE NO. 1
TO:
X    Schedule to Master lease Agreement
X    UCC

         Equipment Location:      3-Dimensional Pharmaceuticals, Inc.
                                  665 Stockton Drive, Suite 104
                                  Exton, PA  19341

<TABLE>
<CAPTION>
QTY         EQUIPMENT DESCRIPTION               PURCHASE   INVOICE     CATALOG             SERIAL NO.       SUPPLIER/ VENDOR
                                                  ORDER       NO.        NO.
<S>  <C>                                     <C>           <C>         <C>            <C>                   <C>
 1   Robotic Workstation (see attached)            970728                  7413       See Invoice           Sagian
                                             970728 Total

 1   AccuCleave-96 Cleavage Station                971206             9700164 AC 96   00106                 Irori
                                             971206 Total

 1   Speedvac Component System                     971985             145663SS22      SC210A-7J440745-1H    Savant
                                                                                                            Instruments
                                             971985 Total

 1   O2  Workstation, 175 MHz, R10000              972101    71983    RCH/0210        0800690C5B20          RCH Products
 1   O2  Workstation, 175 MHz, R10000              972101    71983    RCH/0210        0800690C5B20          RCH Products
 1   Indigo2, R10000 High Impact Stereo            972101    71983    RCH/0210        0800690B9B92          RCH Products
                                             972101 Total

 1   Disk Drive, 9.1 GB, Fast/Wide                 972159    71989    RCH/19WDS       N/A                   RCH Products
 1   Disk Drive, 9.1 GB, Fast/Wide                 972159    71989    RCH/19WDS       N/A                   RCH Products
                                             972159 Total

                                              Grand Total

<CAPTION>
                                          X   Sale and Leaseback Agreement
                                          X   Bill of Sale



QTY         EQUIPMENT DESCRIPTION             PURCHASE          EQUIPMENT      PAID -
                                                DATE              COST         CHECK #
<S>  <C>                                      <C>             <C>              <C>
 1   Robotic Workstation (see attached)                       $2,111,495.00     7745
                                                              -------------
                                                                $211,495.00

 1   AccuCleave-96 Cleavage Station            10/1/97             8,200,00     7752
                                                              -------------
                                                                   8,200.00

 1   Speedvac Component System                11/20/97            10,588.00     7754
                                                              -------------
                                                                  10,588.00

 1   O2  Workstation, 175 MHz, R10000          11/4/97            18,734.00     7700
 1   O2  Workstation, 175 MHz, R10000          11/4/97            18,734.00     7700
 1   Indigo2, R10000 High Impact Stereo        11/4/97            38,097.00     7700
                                                              -------------
                                                                  75,565.00

 1   Disk Drive, 9.1 GB, Fast/Wide             11/3/97             1,457.00     7700
 1   Disk Drive, 9.1 GB, Fast/Wide             11/3/97             1,457.00     7700
                                                              -------------
                                                                   2,914.00

                                                              -------------
                                                                $308,762.00
                                                              =============
</TABLE>

================================================================================
Transamerica Business Credit Corporation      3-Dimensional Pharmaceutical, Inc.

BY: /s/ Robert D. Pomeroy, Jr.            BY: /s/ Scott Horvitz
    --------------------------------          -----------------------

Title:  Executive Vice President          Title:  VP Finance
      ------------------------------            ----------------------

                                                         Page 1 of 3
<PAGE>

                       ACCEPTANCE AND DELIVERY CERTIFICATE


3-Dimensional Pharmaceuticals, Inc., as lessee ("Lessee") under the Master Lease
Agreement dated as of June 12, 1997 between Lessee and Transamerica Business
Credit Corporation, as Lessor, does hereby acknowledge the acceptance and
delivery of the equipment listed in Lease Schedule No. 3, such acceptance and
delivery having been made on the 30th day of December, 1997.



                                          3-Dimensional Pharmaceuticals, Inc.


                                          By: /s/ Scott Horvitz
                                              -----------------------
                                           Name:     Scott Horvitz
                                           Title: Vice President

                                                         Page 1 of 3
<PAGE>

                              PAY PROCEEDS LETTER


December 19, 1997

Transamerica Business Credit Corporation
Riverway 11 - West Office Tower
9399 West Higgins Road
Rosemont,  IL  60018

Ladies and Gentlemen:

               Reference is made to the Master Lease Agreement, dated as of June
12, 1997, and Schedule No. 3, dated as of December 19, 1997, and executed by the
undersigned as Lessee and Transamerica Business Credit Corporation ("Lessor").

The undersigned authorizes and directs Lessor to disburse the proceeds of the
lease as follows:

     Payee                                                                Amount
     -----                                                                ------
1.   Bank Name:                     PNC Bank                         $292,664.44
     Bank Address:                  Philadelphia, PA
     ABA Number:                    0310-0005-3
     For account of:                3-Dimensional Pharmaceutical
     Account Number:                85-110-740-24
     Further Credit to:             Acct. #42-43-213-2042967
     Attention:                     Rosa Fernandez
     Telephone No.:                 908-220-3358

2.   Transamerica Business Credit                                     $16,097.56

                                               TOTAL:                $308,762.00


                                          3-DIMENSIONAL PHARMACEUTICALS, INC.


                                          By: /s/ Scott Horvitz
                                              -----------------
                                           Name: Scott Horvitz
                                           Title: VP Finance

                                                         Page 1 of 3
<PAGE>

                         SALE AND LEASEBACK AGREEMENT


          THIS SALE AND LEASEBACK AGREEMENT (this "Agreement"), is made as of
December 30, 1997, among 3-Dimensional Pharmaceuticals, Inc., a Delaware
corporation ("Seller"), and Transamerica Business Credit Corporation, a Delaware
corporation ( "Buyer").

                             W I T N E S S E T H :
                             - - - - - - - - - -


          WHEREAS, Seller is the owner of the equipment more particularly
described on Exhibit II hereto (the "Equipment");

          WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the Equipment; and

          WHEREAS, Buyer, as a condition to such purchase, wishes to lease to
Seller and Seller wishes to lease from Buyer the Equipment under the terms and
conditions of the Master Lease Agreement dated as of June 12, 1997 and Schedule
No. 3 thereto (collectively, as amended, supplemented or otherwise modified from
time to time, the "Lease") between Buyer, as lessor, and Seller, as lessee.

          NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

          1.   Amount and Terms of Purchase.
               ----------------------------

               (a)  Subject to the terms and conditions of this Agreement, and
in reliance upon the representations and warranties of the Seller herein set
forth, the Buyer agrees to purchase all of the Seller's right, title and
interest in and to all of the Equipment such that the Buyer will become the
owner of all such Equipment for all purposes whatsoever. The Seller hereby
agrees that the Buyer is under no obligation to purchase any other equipment now
or in the future and shall not assert a claim that the Buyer may have any such
obligation.

               (b)  The price to be paid by the Buyer with respect to the
purchase of the Equipment (the "Purchase Price") is $'308,762-00. The Purchase
Price shall be payable to the Seller on the Lease Commencement Date (as defined
in the Lease).

               (c)  The Seller shall pay any and all applicable federal, state,
county or local taxes and any and all present or future taxes or other
governmental charges arising in connection with the sale of the Equipment
hereunder, including sales, use or occupation taxes due upon the purchase by the
Buyer.

                                                         Page 1 of 3
<PAGE>

               (d)  The purchase of the Equipment shall be evidenced by a bill
of sale, substantially in the form attached hereto as Exhibit A (the "Bill of
Sale"), duly executed by the Seller.

          2.   Conditions to Purchase. The obligation of the Buyer to purchase
               ----------------------
the Equipment is subject to the following conditions:

               (a)  The Buyer shall have received this Agreement, duly executed
by the Seller.

               (b)  The Buyer shall have received the Bill of Sale, duly
executed by the Seller.

               (c)  The Buyer shall have received the Lease, duly executed by
the Seller.

               (d)  The Buyer shall have received resolutions of the Board of
Directors of the Seller approving and authorizing the execution, delivery and
performance by the Seller of this Agreement, the Lease and the notices and other
documents to be delivered by the Seller hereunder and thereunder (collectively,
the "Sale and Leaseback Documents").

               (e)  The Buyer shall have received the certificate of title or
similar evidence of ownership with respect to each item of Equipment and Uniform
Commercial Code financing statements covering the Equipment in form and
substance satisfactory to the Buyer, duly executed by the Seller.

               (f)  No material adverse change has occurred with respect to the
business, prospects, properties, results of operations, assets, liabilities or
condition (financial or otherwise) of the Seller and its affiliates, taken as a
whole, since December 31, 1996.

               (g)  The Buyer shall have received all warranties and other
documentation received or executed by Seller in connection with the original
acquisition of the Equipment by the Seller (and by its execution hereof the
Seller hereby assigns to the Buyer all such warranties and other Documentation).

               (h)  The Buyer shall have received such other approvals, opinions
or documents as the Buyer may reasonably request.

          3.   Representation and Warranties. To induce the Buyer to enter into
               -----------------------------
this Agreement, the Seller represents and warrants to the Buyer that:

               (a)  The Seller is duly authorized to execute, deliver and
perform its obligations under each of the Sale and Leaseback Documents and all
corporate action required on its part for the due execution, delivery and
performance of the transactions contemplated herein and therein has been duly
and effectively taken.

                                                                       Page 2 o3
<PAGE>

               (b)  The execution, delivery and performance by the Seller of
each of the Sale and Leaseback Documents and the consummation of the
transactions contemplated herein and therein does not and will not violate any
material provision of, or result in a material default under, the Seller's
Articles or Certificates of Incorporation or By-laws or any indenture or
agreement to which the Seller is a party or to which its assets are bound or any
order, permit, law, statute, code, ordinance, rule, regulation, certificate or
any other requirement of any governmental authority or regulatory body to which
the Seller is subject, or result in the creation or imposition of any mortgage,
deed of trust, pledge, security interest, lien or encumbrance of any kind upon
or with respect to the Equipment or any proceeds thereof, other than those in
favor of the Buyer as contemplated by the Sale and Leaseback Documents.

               (c)  No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Seller of any of
the Sale and Leaseback Documents to which it is a party.

               (d)  Each Sale and Leaseback Document to which the Seller is a
party constitutes or will constitute, when delivered hereunder, the legal, valid
and binding obligation of the Seller enforceable against the Seller in
accordance with its respective terms, except as such enforceability may be (i)
limited by the effect of applicable bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally or (ii)
subject to the effect of general principles of equity (regardless of whether
such enforceability is considered in a proceeding at equity or at law).

               (e)  There are no actions, suits, or proceedings pending, or, to
the Seller's knowledge, threatened against or affecting the Seller which seek to
enjoin, prohibit or restrain the consummation of any of the transactions
contemplated hereby or by the other Sale and Leaseback Documents.

               (f)  Each item of Equipment is owned by the Seller free and clear
of any liens and encumbrances of any kind or description. Upon purchase of the
Equipment hereunder, the Buyer will acquire good and marketable title in and to
the Equipment.

All representations and warranties herein shall survive the execution of this
Agreement and the purchase of the Equipment.

          4.   Indemnities. The Seller agrees to indemnify, defend, and save
               -----------
harmless the Buyer and its officers, directors, employees, agents, and
attorneys, and each of them (the "Indemnified Parties"), from and against all
claims, actions, suits, and other legal proceedings, damages, costs, interest,
charges, counsel fees and other expenses and penalties (collectively, the
"Indemnified Amounts") which any of the Indemnified Parties may sustain or incur
by reason of or arising out of (i) the Seller's ownership of any Equipment prior
to the date on which such Equipment is sold to the Buyer, or the Seller's acts
or omissions prior to such date under, in connection with or relating to such
Equipment or any of the Sale and Leaseback Documents, (ii) the operation,
maintenance or use of such Equipment prior to such date, (iii) any material
inaccuracy of any of the Seller's representations or warranties contained in any
of the Sale and

                                                                       Page 3 o3
<PAGE>

Leaseback Documents, (iv) the breach of any of the Seller's covenants contained
in any of the Sale and Leaseback Documents, (v) any loss or damage to any
Equipment in excess of the deductible which is not paid by insurance or (vi) any
sales, use, excise and other taxes, charges, and fees (including, without
limitation, income, franchise, business and occupation, gross receipts, sales,
use, licensing, registration, titling, personal property, stamp and interest
equalization taxes, levies, imposts, duties, charges or withholdings of any
nature), and any fines, penalties or interest thereon, imposed or levied by any
governmental body, agency or tax authority upon or in connection with the
Equipment, its acquisition, ownership, delivery, leasing, possession, use or
relocation or otherwise in connection with the transactions contemplated by each
Sale and Leaseback Document, but excluding taxes on or measured by the net
income of the Buyer. Notwithstanding the foregoing, Seller shall have no
obligation to indemnify Buyer for any Indemnified Amounts which arise out of
Buyer's gross negligence or willful misconduct.

          5.   Remedies. Upon the Seller's receipt of notice from the Buyer of
               --------
Seller's violation of or default under any provision of this Agreement, the
Buyer may (subject to the provisions of the other Sale and Leaseback Documents
and after all applicable grace periods) proceed to protect and enforce its
rights either by suit in equity or by action at law or both, whether for the
specific performance of any covenant or agreement contained herein or in aid of
the exercise of any power granted in any Sale and Leaseback Document; it being
intended that the remedies contained in any Sale and Leaseback Document shall be
cumulative and shall be in addition to every other remedy given under such Sale
and Leaseback Document or now or hereafter existing at law or in equity or by
statute or otherwise.

          6.   Amendments, etc. No amendment or waiver of any provision of this
               ---------------
Agreement, nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Buyer and the
Seller, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

          7.   Notices, etc. All notices and other communications provided for
               ------------
hereunder shall be in writing and sent:

                           if to the Seller, at its address at:

                           3-Dimensional Pharmaceuticals, Inc.
                           Eagleview Corporate Center
                           665 Stockton Drive, Suite 104
                           Exton, Pennsylvania 19341
                           Attention: Chief Financial Officer
                           Telephone No.: (610) 458-6043
                           Telecopy No.: (610) 458-8258

                           if to the Buyer, at its address at:

                           Transamerica Business Credit Corporation
                           Technology Finance Division
                           76 Batterson Park Road

                                                                       Page 4 o3
<PAGE>

                           Farmington, Connecticut 06032-2571
                           Attention: Assistant Vice President,
                           Lease Administration
                           Telephone No.: (860) 677-6466
                           Telecopy No.: (860) 677-6766

                           with a copy to:

                           Transamerica Business Credit Corporation
                           9399 West Higgins Road
                           Rosemont, Illinois 60018
                           Attention: Legal Department
                           Telephone No.: (847) 685-1106
                           Telecopy No.: (847) 685-1143

or to such other address as shall be designated by such party in a written
notice to the other party. All such notices shall be deemed given (i) if sent by
certified or registered mail, three days after being postmarked, (ii) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is refused and (iii) if sent by facsimile transmission, when receipt of
such transmission is acknowledged.

          8.   No Waiver; Remedies. No failure on the part of the Buyer to
               -------------------
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

          9.   Benefit. Neither party may transfer, assign or delegate any of
               -------
its rights, duties or obligations hereunder without the prior written consent of
the other party.

          10.  Binding Effect. This Agreement shall be binding upon and inure to
               --------------
the benefit of the Seller and the Buyer and their respective successors and
assigns.

          11.  GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
               -------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

          12.  Execution in Counterparts. This Agreement may be executed in any
               -------------------------
number of counterparts, each of which shall constitute an original and all of
which taken together shall constitute one and the same agreement.

          13.  Severability. If one or more of the provisions contained in this
               ------------
Agreement shall be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein, and any other application thereof, shall not in any way be affected or
impaired thereby.

                                                                       Page 5 o3
<PAGE>

          14.  SUBMISSION TO JURISDICTION. ALL DISPUTES ARISING UNDER OR IN
               --------------------------
CONNECTION WITH THIS AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER SOUNDING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL
COURTS LOCATED IN ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE
TAKEN; PROVIDED, HOWEVER, THAT THE BUYER SHALL HAVE THE RIGHT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE SELLER OR ITS PROPERTY IN
ANY LOCATION REASONABLY SELECTED BY THE BUYER IN GOOD FAITH TO ENABLE THE BUYER
TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE BUYER. THE SELLER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE BUYER HAS COMMENCED A PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.

          15.  JURY TRIAL. THE PARTIES HERETO EACH HEREBY WAIVE TO THE FULLEST
               ----------
EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.

                                                                       Page 6 o3
<PAGE>

          IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS Agreement to
be executed by their respective officers hereunto duly authorized, as of the
first date written above.

                               3-DIMENSIONAL PHARMACEUTICALS, INC.


                               By: /s/ Scott Horvitz
                                   ----------------------------------
                                Name: Scott Horvitz
                                Title:  Vice President, Finance and Admin


                               TRANSAMERICA BUSINESS CREDIT CORPORATION


                               By: /s/ Robert D. Pomeroy, Jr.
                                   ----------------------------------
                                Name: Robert D. Pomeroy, Jr.
                                Title: Executive Vice President

Exhibit II - Equipment
Exhibit A - Bill of Sale

                                                                       Page 7 o3
<PAGE>

                                   EXHIBIT A

                                 BILL OF SALE


          KNOW ALL PERSONS BY THESE PRESENTS 3-Dimensional Pharmaceuticals, Inc.
(the "Seller"), for _________________________________________________________
and 00/100 Dollars ($__________) and other valuable consideration to it in hand
paid, receipt of which is hereby acknowledged, does unconditionally, absolutely
and irrevocably grant, sell, assign, transfer and convey unto TRANSAMERICA
BUSINESS CREDIT CORPORATION and its assignees or successors (collectively, the
"Buyer"), all of the Seller's right, title and interest in and to the equipment
described on Exhibit II hereto (collectively, the "Equipment").

          TO HAVE AND TO HOLD said Equipment unto the said Buyer, to and for its
use forever.

          AND, the Seller hereby warrants, covenants and agrees that it (a) has
good and marketable title to the Equipment, free and clear of any liens and
other encumbrances; and (b) will warrant and defend the sale of the Equipment
against any and all persons claiming against such title.

          IN WITNESS WHEREOF the Seller has caused this instrument to be duly
executed and delivered as of this ____ day of _________________  1997.


                              3-DIMENSIONAL PHARMACEUTICALS, INC.


                              By:
                              Name:
                              Title:

                                                                       Page 1 o3
<PAGE>

                                 BILL OF SALE


          KNOW ALL PERSONS BY THESE PRESENTS 3-Dimensional Pharmaceuticals, Inc.
(the "Seller"), for Three Hundred Eighty Thousand, Seven Hundred Sixty Two
and 00/100 Dollars ($309,762.00) and other valuable consideration to it in hand
paid, receipt of which is hereby acknowledged, does unconditionally, absolutely
and irrevocably grant, sell, assign, transfer and convey unto TRANSAMERICA
BUSINESS CREDIT CORPORATION and its assignees or successors (collectively, the
"Buyer"), all of the Seller's right, title and interest in and to the equipment
described on Exhibit II hereto (collectively, the "Equipment").

          TO HAVE AND TO HOLD said Equipment unto the said Buyer, to and for its
use forever.

          AND, the Seller hereby warrants, covenants and agrees that it (a) has
good and marketable title to the Equipment, free and clear of any liens and
other encumbrances; and (b) will warrant and defend the sale of the Equipment
against any and all persons claiming against such title.

          IN WITNESS WHEREOF the Seller has caused this instrument to be duly
executed and delivered as of this 30/th/ day of December, 1997.


                              3-DIMENSIONAL PHARMACEUTICALS, INC.


                              By: /s/ Scott Horvitz
                                  --------------------------
                               Name:
                               Title:

                                                                       Page 1 o3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>14
<FILENAME>0014.txt
<DESCRIPTION>WARRANT TO PURCHASE STOCK DATED JUNE 12, 1997
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.27



THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS.  THEY MAY OT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.


                                      No.
                          STOCK SUBSCRIPTION WARRANT

                          To Purchase Common Stock of

             3-DIMENSIONAL PHARMACEUTICALS, INC.  (the "Company")

                   DATE OF INITIAL ISSUANCE:  June 12, 1997

     THIS CERTIFIES THAT for value received, TRANSAMERICA BUSINESS CREDIT
CORPORATION of its registered assigns (hereinafter called the "Holder") is
entitled to purchase from the Company, at any time during the Term of this
Warrant, Twelve Thousand Six Hundred (12,600) shares of common stock, $0.001 par
value, of the Company (the "Common Stock"), at the Warrant Price, payable as
provided herein.  The exercise of this Warrant shall be subject to the
provisions, limitation and restrictions herein contained, and may be exercised
in whole or in part.

SECTION 1.  Definitions.

     For all purposes of this Warrant, the following terms shall have the
meanings indicated:

     Common Stock - shall mean and include the Company's authorized Common
     ------------
Stock, $0.001 par value, as constituted at the date hereof.

     Exchange Act - shall mean the Securities Exchange Act or 1934, as amended
     ------------
from time to time.

     Securities Act - shall mean the Securities Act of 1933, as amended.
     --------------

     Term of this Warrant - shall mean the period beginning July 1, 1997 and
     --------------------
ending on June 30, 2004.

     Warrant Price - shall initially be $2.50 per share, subject to adjustment
     -------------
in accordance with Section 5 hereof.

     Warrants - shall mean this Warrant and any other Warrant or Warrants issued
     --------
in connection with a Commitment Letter dated May 9, 1997 executed by the Company
and Transamerica Business Credit Corporation (the "Commitment Letter") to the
original holder of this Warrant, of any transferees from such original holder of
this Holder.
<PAGE>

  Warrant Shares - shall mean shares of Common Stock purchased or purchasable by
  --------------
the Holder of this Warrant upon the exercise hereof.

SECTION 2.  EXERCISE OF WARRANT.

     (i)    Procedure for Exercise of Warrant. To exercise this Warrant in whole
or in part (but not as to any fractional share of Common Stock), the Holder
shall deliver to the Company at its office referred to in Section 12 hereof at
any time and from time to time during the Term of this Warrant: (i) the Notice
of Exercise in the form attached hereto, (ii) cash, certified or official bank
check payable to the order of the Company, wire transfer of funds to the
Company's account, or evidence of any indebtedness of the Company to the Holder
(or any combination of any of the foregoing) in the amount of the Warrant Price
for each share being purchased, and (iii) this Warrant. Notwithstanding any
provisions herein to the contrary, if the Current Market Price (as defined in
Section 5) is greater than the Warrant Price (at the date of calculation, as set
forth below), in lieu of exercising this Warrant as hereinabove permitted, the
Holder may elect to receive shares of Common Stock equal to the value (as
determined below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant at the office of the Company referred to in Section 12
hereof, together with the Notice of Exercise, in which event the Company shall
issue to the Holder that number of shares of Common Stock computed using the
following formula:


                               CS=WCS x (CMP-WP)
                                  --------------
                                      CMP

Where

  CS    equals the number of shares of Common Stock to be issued to the Holder

  WCS   equals the number of shares of Common Stock purchasable under the
        Warrant or, if only a portion of the Warrant is being exercised,
        the portion of the Warrant being exercised (at the date of such
        calculation)

  CMP   equal the Current Market Price (at the date of such calculation)

  WP    equals the Warrant Price (as adjusted to the date of such calculation)


In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock so purchased,
registered in the name of the Holder or such other name or names as may be
designated by the Holder, shall be delivered to the Holder hereof within a
reasonable time, not exceeding fifteen (15) days, after the rights represented
by this Warrant shall have been so exercised; and, unless this Warrant has
expired, a new Warrant representing the number of shares (except a remaining
fractional share), if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the Holder hereof within such time.
The person in whose name any certificate for shares of Common Stock is issued
upon exercise of this Warrant shall for all purposes be deemed to have become
the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price and any applicable taxes was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

  2.2  Transfer Restriction Legend.  Each certificate for Warrant Shares shall
bear the following legend (and any additional legend required by (i) any
applicable state securities laws and (ii)
<PAGE>

any securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof unless at the time of exercise such
Warrant Shares shall be registered under the Securities Act:

     "The share represented by this certificate have not been registered under
     the Securities Act of 1933, as amended, or any state securities laws and
     may not be sold or transferred in the absence of such registration or an
     exemption therefrom under said Act and any applicable state securities
     laws."

Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution under a registration statement of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof (which counsel shall be reasonably satisfactory
to counsel for the Company) the securities represented thereby are not, at such
time, required by law to bear such legend.

SECTION 3.  COVENANTS AS TO COMMON STOCK.  The Company covenants and agrees that
all shares of Common Stock that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof.  The Company further covenants and agrees that it will pay
when due and payable any and all federal and state taxes which may be payable in
respect of the issue of this Warrant or any Common Stock or certificates
therefor issuable upon the exercise of this Warrant.  The Company further
covenants and agrees that the Company will at all times have authorized and
reserved, free from preemptive rights, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant.
The Company further covenants and agrees that if any shares of capital stock to
be reserved for the purpose of the issuance of shares upon the exercise of this
Warrant require registration with or approval of any governmental authority
under any federal or state law before such shares may be validly issued or
delivered upon exercise, then the Company will in good faith and as
expeditiously as possible endeavor to secure such registration or approval, as
the case may be.  If and so long as the Common Stock issuable upon the exercise
of this Warrant is listed on any national securities exchange, the Company will,
if permitted by the rules of such exchange, list and keep listed on such
exchange, upon the official notice of issuance, all shares of such Common Stock
issuable upon exercise of this Warrant.

SECTION 4.  ADJUSTMENT OF NUMBER OF SHARES.  Upon each adjustment of the Warrant
Price as provided in Section 5, the Holder shall thereafter be entitled to
purchase, at the Warrant Price resulting from such adjustment, the number of
shares (calculated to the nearest tenth of a share) obtained by multiplying the
Warrant Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Price resulting from such
adjustment.

SECTION 5.  ADJUSTMENT OF WARRANT PRICE.  The Warrant Price shall be subject to
adjustment from time to time as follows:

      (i) If, at any time during the Term of this Warrant, the number of shares
of Common Stock outstanding is increased by a stock dividend payable in shares
of Common Stock or by a subdivision or split-up of shares of Common Stock, then,
following the record date fixed for the determination of holder of Common Stock
entitled to receive such stock dividend, subdivision or split-up, the Warrant
Price shall be appropriately decreased so that the number of shares of Common
Stock issuable upon the exercise hereof shall be increased in proportion to such
increase in outstanding shares.
<PAGE>

      (ii) If, at any time during the Term of this Warrant, the number of shares
of Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date for such combination,
the Warrant Price shall appropriately increase so that the number of shares of
Common Stock issuable upon the exercise hereof shall be decreased in proportion
to such decrease in outstanding shares.

      (iii)  In case, at any time during the Term of this Warrant, the Company
shall declare a cash dividend upon its Common Stock payable otherwise than out
of earnings or earned surplus or shall distribute to holder of its Common Stock
shares of its capital stock (other than Common Stock), stock or other securities
of other persons, evidences of indebtedness issued by the Company or other
persons, assets (excluding cash dividends and distributions) or options or
rights (excluding options to purchase and rights to subscribe for Common Stock
or other securities of the Company convertible into or exchangeable for Common
Stock), then, in each such case, immediately following the record date fixed for
the determination of the holders of Common Stock entitled to receive such
dividend or distribution, the Warrant Price in effect thereafter shall be
determined by multiplying the Warrant Price in effect immediately prior to such
record date by a fraction of which the numerator shall be an amount equal to the
difference of (x) the Current Market Price of one share of Common Stock minus
(y) the fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the stock, securities,
evidences of indebtedness, assets, options or rights so distributed in respect
of one share of Common Stock, and of which the denominator shall be such Current
Market Price.

      (iv) All calculations under this Section 5 shall be made to the nearest
cent or to the nearest one-tenth (1/10) of a share, as the case may be.

      (v) For the purpose of any computation pursuant to this Section 5, the
Current Market Price at any date of one share of Common Stock shall be deemed to
be the average of the daily closing prices for the 15 consecutive business days
ending no more than 5 business days before the day in question (as adjusted for
any stock dividend, split, combination or reclassification that took effect
during such 15 business day period). The closing price for each day shall be the
last reported bid and asked priced regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or as reported by Nasdaq (or if the Common Stock is not at the time
listed or admitted for trading on any such exchange or if prices of the Common
Stock are not reported by Nasdaq then such price shall be equal to the average
of the last reported bid and asked prices on such day as reported by The
National Quotation Bureau Incorporated or any similar reputable quotation and
reporting service, if such quotation is not reported by the National Quotation
Bureau Incorporated); provided, however, that if the Common Stock is not traded
in such manner that the quotations referred to in this clause (v) are available
for the period required hereunder, the Current Market Price shall be determined
in good faith by the Board of Directors of the Company or, if such determination
cannot be made, by a nationally recognized independent investment banking firm
selected by the Board of Directors of the Company (or if such selection cannot
be made, by a nationally recognized independent investment banking firm selected
by the American Arbitration Association in accordance with its rules).

      (vi) Whenever the Warrant Price shall be adjusted as provided in Section
5, the Company shall prepare a statement showing the facts requiring such
adjustment and the Warrant Price that shall be in effect after such adjustment.
The Company shall cause a copy of such statement to be sent by mail, first class
postage prepaid, to each Holder of this Warrant at its, his or her address
appearing on the Company's records. Where appropriate, such copy may be given in
advance and may be included as part of the notice required to be mailed under
the provisions of subsection (viii) of this Section 5.

      (vii) Adjustments made pursuant to clauses (i), (ii) and (iii) above shall
be made on the date such divided, subdivision, split-up, combination or
distribution, as the case may be, is made, and shall
<PAGE>

become effective at the opening of business on the business day next following
the record date for the determination of stockholders entitled to such dividend,
subdivision, split-up, combination or distribution.

      (viii) In the event the Company shall propose to take any action of the
types described in clauses (i), (ii), or (iii) of this Section 5, the Company
shall forward, at the same time and in the same manner, to the Holder of this
Warrant such notice, if any , which the Company shall give to the holders of
capital stock of the Company.

      (ix) In any case in which the provisions of this Section 5 shall require
that an adjustment shall become effective immediately after a record date for an
event, the Company may defer until the occurrence of such event issuing to the
Holder of all or any part of this Warrant which is exercised after such record
date and before the occurrence of such event the additional shares of capital
stock issuable upon such exercise by reason of the adjustment required by such
event over and above the shares of capital stock issuable upon such exercise
before giving effect to such adjustment exercise; provided, however, that the
Company shall deliver to such Holder a due bull or other appropriate instrument
evidencing such Holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.

SECTION 6.  OWNERSHIP.

     6.1    Ownership of This Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Section 6.

     6.2    Transfer and Replacement.  (i)  Subject to the restrictions provided
herein, this Warrant and all rights hereunder are transferable in whole or in
part upon the books of the Company by the Holder hereof in person or by duly
authorized attorney, and a new Warrant or Warrants, of the same tenor as this
Warrant but registered in the name of the transferee or transferees (and in the
name of the Holder, if a partial transfer is effected) shall be made and
delivered by the Company upon surrender of this Warrant duly endorsed, at the
office of the Company referred to in Section 12 hereof. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft or
destruction, and, in such case, of indemnity or security reasonably satisfactory
to it, and upon surrender of this Warrant if mutilated, the Company will make
and deliver a new Warrant of like tenor, in lieu of this Warrant; provided that
if the Holder hereof is an instrumentality of a state or local government or an
institutional holder or a nominee for such an instrumentality or institutional
holder an irrevocable agreement of indemnity by such Holder shall be sufficient
for all purposes of this Section 6, and no evidence of loss or theft or
destruction shall be necessary. This Warrant shall be promptly canceled by the
Company upon the surrender hereof if connection with any transfer or
replacement. Except as otherwise provided above, in the case of the loss, theft
or destruction of a Warrant, the Company shall pay all expenses, taxes and other
charges payable in connection with any transfer or replacement of this Warrant,
other than stock transfer taxes (if any) payable in connection with a transfer
of this Warrant, which shall be payable by the Holder.

      (ii) The transferability of this Warrant and the Warrant Shares are
subject to the following restrictions:

           (a) Registration Restrictions. This Warrant and the Warrant Shares
               -------------------------
have not been registered under the Securities Act by reason of their issuance in
a transaction exempt from the registration requirements of the Securities Act
pursuant to the exemption provided in Section 4(2) thereof,
<PAGE>

and have not been registered under state securities laws by reason or their
issuance in a transaction exempt from such registration requirements. This
Warrant and the Warrant Shares may not be offered for sale, sold, transferred or
otherwise disposed of unless registered under the Securities Act and applicable
state securities laws or exempted from registration. The Company shall be
entitled to give stop transfer instructions to the transfer agent with respect
to the Warrant and the Warrant Shares in order to enforce the foregoing
restriction. The restrictions contained herein shall be binding on any
transferee of this Warrant and the Company may require any such transferee to
execute an instrument agreeing in writing to be so bound by these restrictions
as a condition to transfer.

           (b)  Notice of Transfer and Opinion of Counsel.  The Holder,
                -----------------------------------------
and any other holder of the Warrant by acceptance thereof, agrees that, prior to
any transfer of any Warrant, such holder will give written notice to the Company
of such holder's intention to effect such transfer and to comply in all other
respects with the provisions of this Section 6.2. Each such notice shall contain
(I) a statement setting such Warrant, and (II) unless waived by the Company, an
opinion of counsel for such holder (who may be the inside or staff counsel
employed by such holder), as tot he necessity or non-necessity for registration
under the Securities Act and applicable state securities laws in connection with
such transfer and stating the factual and statutory bases relied upon by
counsel. The following provisions shall then apply:

           (I)  If in the opinion of counsel for the Company the proposed
transfer of such Warrant may be effected without registration or qualification
under the Securities Act and any applicable state securities laws, then the
registration holder of such Warrant shall be entitled to transfer such Warrant
in accordance with the intended method of disposition specified in the statement
delivered by such holder to the Company.

           (II) In the opinion of counsel for the Company the proposed transfer
of such Warrant may not be effected without registration under the Securities
Act or registration or qualification under any applicable state securities laws,
the registered holder of such Warrant shall not be entitled to transfer such
Warrant until the requisite registration or qualification is effective.

SECTION 7.  Mergers, Consolidation, Sales.  In the case of any proposed
            -----------------------------
consolidation or merger of the Company with another entity, or the proposed sale
of all or substantially all of its assets to another person or entity, or any
proposed reorganization or reclassification of the capital stock of the Company
adequate provision shall be made whereby the Holder of this Warrant shall
thereafter have the right to receive upon the basis and upon the terms and
conditions specified herein, in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable hereunder, such shares of stock,
securities or assets as may (by virtue of such consolidation, merger, sale,
reorganization or reclassification) be issued or payable with respect to or in
exchange for the number of shares of such Common Stock purchasable hereunder
immediately before such consolidation, merger, sale, reorganization or
reclassification.  In any such case appropriate provision shall be made with
respect to the rights and interests of the Holder of this Warrant to the end
that the provisions hereof shall thereafter be applicable as nearly as may be,
in relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of this Warrant.

SECTION 8.  Notice of Dissolution or Liquidation.  In case of any distribution
            ------------------------------------
of the assets of the Company in dissolution or liquidation (except under
circumstances when the foregoing Section 7 shall be applicable), the Company
shall give notice thereof to the Holder hereof and shall make no distribution to
shareholders until the expiration of thirty (30) days from the date of mailing
of the aforesaid notice and, in any case, the Holder hereof may exercise this
Warrant within thirty (30) days from the date of the giving of such notice, and
all rights herein granted not so exercised within such thirty-day period shall
thereafter become null and void.
<PAGE>

SECTION 9.  Notice of Extraordinary Dividends.  If the Board of Directors of the
            ---------------------------------
Company shall declare any dividend or other distribution on its Common Stock
except out of earned surplus or by way of a stock dividend payable in shares of
its Common Stock, the Company shall mail notice thereof to the Holder hereof not
less than thirty (30) days prior to the record date fixed for determining
shareholders entitled to participate in such dividend or other distribution, and
the Holder hereof shall not participate in such dividend or other distribution
unless this Warrant is exercised prior to such record date.  The provisions of
this Section 9 shall not apply to distributions made in connection with
transactions covered by Section 7.

SECTION 10.  Fractional Shares.  Fractional shares shall not be issued upon the
             -----------------
exercise of this Warrant but in any case where the Holder would, except for the
provisions of this Section 10, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay a sum in cash equal to the excess of the value of such
fractional share (determined in such reasonable manner as may be prescribed in
good faith by the Board of Directors of the Company) over the Warrant Price for
such fractional share.

SECTION 11.  Special Arrangements of the Company.  The Company covenants and
             -----------------------------------
agrees that during the Term of this Warrant, unless otherwise approved by the
Holder of this Warrant:

       11.1  Will Reserve Shares.  The Company will reserve and set apart
             -------------------
and have available for issuance at all times, free from preemptive or other
preferential rights, the number of shares of authorized but unissued Common
Stock deliverable upon the exercise of this Warrant.

       11.2  Will Not Amend Certificate.  The Company will not amend its
             --------------------------
Certificate of Incorporation to eliminate as an authorized class of capital
stock that class denominated as "Common Stock" on the date hereof.

       11.3  Will Bind Successors.  This Warrant shall be binding upon any
             --------------------
corporation or other person or entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.

SECTION 12.  Notices.  Any notice or other document required or permitted to be
             -------
given or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at Transamerica Technology Finance Division, 76
Batterson Park Road, Farmington, Connecticut 06032.  Attention:  Assistant Vice
President, Lease Administration, with a copy to the Lender at Riverway II, West
Office Tower, 9399 West Higgins Road, Rosemont, Illinois 60018, Attention:
Legal Department or to such other address as shall have been furnished to the
Company in writing by the Holder.  Any notice or other document required or
permitted to be given or delivered to the Company shall be delivered at, or sent
by certified or registered mail to, the Company 3-Dimensional Pharmaceuticals,
Inc., Eagleview Corporate Center, 665 Stockton Drive, Suite 104, Exton,
Pennsylvania 19341, Attention:  Chief Financial Officer or to such other address
as shall have been furnished in writing to the Holder by the Company.  Any
notice so addressed and mailed by registered or certified mail shall be deemed
to be given when so mailed.  Any notice so addressed and otherwise delivered
shall be deemed to be given when actually received by the addressee.

SECTION 13.  No Rights as Stockholder; Limitation of Liability.  This Warrant
             -------------------------------------------------
shall not entitle the Holder to any of the rights of a shareholder of the
Company.  No provision hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Warrant Price
<PAGE>

hereunder or as a shareholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.

SECTION 14.  Law Governing.  THE VALIDITY, INTERPRETATION, AND ENFORCEMENT OF
             -------------
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ILLINOIS WITHOUT GIVING EFFECT OT THE CONFLICT OF LAW PRINCIPLES
THEREOF.

SECTION 15.  Miscellaneous.
             -------------

             (a) This Warrant and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
(or any predecessor in interest thereof) against which enforcement of the same
is sought. The headings in this Warrant are for purposes of reference only and
shall not affect the meaning or construction of any of the provisions hereof.

             (b) All capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Financing Agreement.

  IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 13th day of June, 1997.



                                             3-Dimensional Pharmaceuticals, Inc.



                                             By: /s/ Scott Horvitz
                                                 -------------------------------

                                             Title: Vice President and CFO
                                                    ----------------------------
<PAGE>

                          FORM OF NOTICE OF EXERCISE

               [To be signed only upon exercise of the Warrant]

                    TO BE EXECUTED BY THE REGISTERED HOLDER
                        TO EXERCISE THE WITHIN WARRANT

  The undersigned hereby exercises the right to purchase      shares of Common
Stock which the undersigned is entitled to purchase by the terms of the within
Warrant according to the conditions thereof, and herewith

  [check one]

                               [_]  makes payment of $__________ therefore; or


                               [_]  directs the Company to issue __________
                                    shares, and to withhold shares in lieu of
                                    payment of the Warrant Price, as described
                                    in Section 2.1 of the Warrant.

All shares to be issued pursuant hereto shall be issued in the name of and the
initial address of such person to be entered on the books of the Company shall
be:



    The shares are to be issued in certificates of the following denominations:


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

                                                [Type Name of Holder]

                                                By:___________________________

                                                Title:________________________


  Dated:______________________
<PAGE>

                              FORM OF ASSIGNMENT
                                   (ENTIRE)

              [To be signed only upon transfer of entire Warrant]

                    TO BE EXECUTED BY THE REGISTERED HOLDER
                        TO TRANSFER THE WITHIN WARRANT


  FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers unto
____________________ all rights of the undersigned under and pursuant to the
within Warrant, and the undersigned does hereby irrevocably constitute and
appoint ___________________ Attorney to transfer the said Warrant on the books
of the Company, with full power of substitution.


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

                                               [Type Name of Holder]

                                               By:______________________________

                                               Title:___________________________


  Dated:______________________


  NOTICE

      The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>

                              FORM OF ASSIGNMENT
                                   (PARTIAL)

              [To be signed only upon transfer of entire Warrant]

                    TO BE EXECUTED BY THE REGISTERED HOLDER
                        TO TRANSFER THE WITHIN WARRANT


          FOR VALUE RECEIVED ________________________ hereby sells, assigns and
transfers unto ___________________________ (i) the rights of the undersigned to
purchase shares of Common Stock under and pursuant to the within Warrant, and
(ii) on a non-exclusive basis, all other rights of the undersigned under and
pursuant to the within Warrant, it being understood that the undersigned shall
retain, severally (and not jointly) with the transferee(s) named herein, all
rights assigned on such non-exclusive basis. The undersigned does hereby
irrevocably constitute and appoint _______________________ Attorney to transfer
the said Warrant on the books of the Company, with full power of substitution.




                                                ________________________________

                                                [Type Name of Holder]


                                                By:_____________________________

                                                Title:_________________________

     Date:__________________________

     NOTICE

          The signature to the foregoing Assignment must correspond to the name
as written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.28
<SEQUENCE>15
<FILENAME>0015.txt
<DESCRIPTION>MASTER LEASE AGREEMENT FOR COMDISCO DATED 3/7/94
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.28


                  M A S T E R   L E A S E   A G R E E M E N T

COMDISCO, INC. " LESSOR

MASTER LEASE AGREEMENT dated March 7, 1994 by and between COMDISCO, INC.
("Lessor") and 3-DIMENSIONAL PHARMACEUTICALS, INC. ("Lessee").

IN CONSIDERATION of the mutual agreements described below, the parties agree as
follows (all capitalized terms are defined in Section 14.19):

1.   Property Leased.

     Lessor leases to Lessee all of the Equipment described on each Schedule. IN
the event of a conflict, the terms of a Schedule prevail over this Master Lease.

2.   Term.

     On the Commencement Date, Lessee will be deemed to accept the Equipment,
will be bound to its rental obligations for each item of Equipment and the term
of a Schedule will begin and continue through the initial Term and thereafter
until terminated by either party upon prior written notice received during the
Notice Period. No termination may be effective prior to the expiration of the
Initial Term.

3.   Rent and Payment.

     Rent is due and payable in advance, in immediately available funds, on the
first day of each Rent Interval to the payee and at the location specified in
Lessor's invoice. Interim Rent is due and payable when invoiced. If any payment
is not made when due, Lessee will pay interest at the Overdue Rate. Upon
Lessee's execution of each Schedule, Lessee will pay Lessor the Advance
specified on the Schedule. The Advance will be credited towards the final Rent
payment if Lessee is not then in default. No interest will be paid on the
Advance.

4.   Selection; Warranty and Disclaimer of Warranties.

     4.1  Selection. Lessee acknowledges that it has selected the Equipment and
disclaims any reliance upon statements made by the Lessor.

     4.2  Warranty and Disclaimer or Warranties. Lessor warrants to Lessee that,
so long as Lessee is not in default, Lessor will not disturb Lessee's quiet and
peaceful possession, and unrestricted use of the Equipment. To the extent
permitted by the manufacturer, Lessor assigns to Lessee during the term of the
Schedule an manufacturer's warranties for the
<PAGE>

Equipment. LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT
OR ITS FITNESS FOR A PARTICULAR PURPOSE. Lessor is not responsible for any
liability, claim, loss, damage or expense of any kind (including strict
liability in tort) caused by the Equipment except for any loss or damage caused
by the negligent acts of Lessor. In no event is Lessor responsible for special,
incidental or consequential damages.

5.   Title; Relocation or Sublease; and Assignment.

     5.1  Title. Lessee holds the Equipment subject and subordinate to the
rights of the Owner, Lessor, any Assignee and any Secured Party. Lessee
authorizes Lessor, as Lessee's agent, to prepare, execute and file in Lessee's
name precautionary Uniform Commercial Code financing statements showing the
interest of the Owner, Lessor, and any Assignee or Secured Party in the
Equipment and to insert serial numbers in Schedules as appropriate. Lessee will,
at its expense, keep the Equipment free and clear from any liens or encumbrances
of any kind (except any caused by Lessor) and will indemnify and hold Lessor,
Owner, any Assignee and Secured Party harmless from and against any loss caused
by Lessee's failure to do so.

     5.2  Relocation or Sublease. Upon prior written consent, Lessee may
relocate Equipment to any location within the continental United States provided
(i) the Equipment will not be used by an entity exempt from federal income tax,
(ii) all additional costs (including any administrative fees, additional taxes
and insurance coverage) are reconciled and promptly paid by Lessee.

     Lessee may sublease the Equipment upon the reasonable consent of the Lessor
and the Secured Party. Such consent to sublease will be granted if: (i) Lessee
meets the relocation requirement s set out above, (ii) the sublease is expressly
subject and subordinate to the terms of the Schedule, (iii) Lessee assignees its
rights in the sublease to Lessor and the Secured Party as additional collateral
and security, (iv) Lessee's obligation to maintain and insure the Equipment is
not altered, (v) all financing statements required to continue the Secured
Party's prior perfected security interest rate filed, and (vi) the sublease is
not to a leasing entity affiliated with the manufacturer of the Equipment
described on the Schedule. Lessor acknowledges Lessee's right to sublease for a
term which extends beyond the expiration of the Initial Term. If Lessee
subleases the Equipment for a term extending beyond the expiration of such
Initial Term of the applicable Schedule, Lessee will remain obligated upon the
expiration of the Initial Term to return such Equipment, or, at Lessor's sole
discretion to (i) return Like Equipment or (ii) negotiate a mutually acceptable
lease extension or purchase. If the parties cannot mutually agree upon the terms
of an extension or purchase, the term of the Schedule will extend upon the
original terms and conditions until terminated pursuant to Section 2.
<PAGE>

     No relocation or sublease will relieve Lessee from any of its obligations
under this Master Lease and the relevant Schedule.

     5.3  Assignment by Lessor. The term and conditions of each Schedule have
been fixed by Lessor in order to permit Lessor to sell and/or assign or transfer
its interest or grant a security interest in each Schedule and/or the Equipment
to a Secured Party or Assignee. In that event, the term Lessor will mean the
Assignee and any Secured Party. However, any assignment, sale, or other transfer
by Lessor will not relieve Lessor of its obligations to Lessee and will not
materially change Lessee's duties or materially increase the burdens or risks
imposed of Lessee. The Lessee consents to and will acknowledge such assignments
in a written notice given to Lessee. Lessee also agrees that:

         (a)   The Secured Party will be entitled to exercise all of Lessor's
               rights, but will not be obligated to perform any of the
               obligations of Lessor. The Secured Party will not disturb
               Lessee's quiet and peaceful possession and unrestricted use of
               the Equipment so long as Lessee is not in default and the Secured
               Party continues to receive all Rent payable under the Schedule;
               and

         (b)   Lessee will pay all Rent and all other amounts payable to the
               Secured Party, despite any defense or claim which it has against
               Lessor. Lessee reserves its right to have recourse directly
               against Lessor for any defense or claim;

         (c)   Subject to and without impairment of Lessee's leasehold rights in
               the Equipment, Lessee hold the Equipment for the Secured Party to
               the extent of the Secured Party's rights in that Equipment.

6.   New Lease; Taxes and Fees.

     6.1  Net Lease. Each Schedule constitutes a net lease. Lessee's obligations
to pay Rent and all other amounts is absolute and unconditional and is not
subject to any abatement, reduction, set-off, defense, counterclaim,
interruption, deferment or recoupment for any reason whatsoever.

     6.2  Taxes and Fees. Lessee will pay when due or reimburse Lessor for all
taxes, fees or any other charges (together with any related interest or
penalties not arising from the negligence of Lessor) accrued for or arising
during the term of each Schedule against Lessor, Lessee of the Equipment by any
governmental authority (except only Federal, state and local taxes on the
capital or the net income of Lessor). Lessor will file all personal property tax
returns for the Equipment and pay all property taxes due. Lessee will reimburse
Lessor for property taxes within thirty (30) days of receipt of an invoice.
<PAGE>

7.   Care, Use and Maintenance; Attachments and Reconfigurations; and Inspection
by Lessor.

     7.1  Care, Use and Maintenance. Lessee will maintain the Equipment in good
operating order and appearance, protect the Equipment from deterioration, other
than normal war and tear, and will not use the Equipment for any purpose other
than that for which it was designed. IF commercially available, Lessee will
maintain in force a standard maintenance contract with the manufacturer of the
Equipment, or another party acceptable to Lessor, and will provide Lessor with a
complete copy of that contract. If Lessee has the Equipment maintained by a
party other than the manufacturer, Lessee agrees to pay any costs necessary for
the manufacturer to bring the Equipment to then current release, revision and
engineering change levels, and to re-certify the Equipment as eligible for
manufacturer's maintenance at the expiration of the lease term. The lease term
will continue upon the same term and conditions until recertification has been
obtained.

     7.2  Attachments and Reconfigurations. Upon receiving the prior written
consent of Lessor, Lessee may reconfigure and install Attachments on the
Equipment. In the event of such a Reconfiguration or Attachment, Lessee will,
upon return of the Equipment, at its expense, restore the Equipment to the
original configuration specified on the Schedule in accordance with the
manufacturer"s specifications and in the same operating order, repair and
appearance as when installed (normal wear and tear excluded). IF any parts of
the Equipment are removed during a Reconfiguration or Attachment, Lessor may
require Lessee to provide additional security, satisfactory to the Lessor, in
order to ensure performance of Lessee's obligations set forth in this
subsection. Neither Attachments nor parts installed on Equipment in the course
of Reconfiguration will be accessions to the Equipment.

     7.3  Inspection by Lessor. Upon request, Lessee, during reasonable business
hours and subject to Lessee's security requirements, will make the Equipment and
its related log and maintenance records available to Lessor for inspection.

8.   Representations and Warranties of Lessee. Lessee hereby represents,
warrants and covenants that with respect to the Master Lease and each Schedule
executed hereunder:

         (a)   The Lessee is a corporation duly organized and validly existing
               in good standing under the laws of the jurisdiction of its
               incorporation, is duly qualified to do business in each
               jurisdiction (including the jurisdiction where the Equipment is,
               or is to be, located) where its ownership or lease of property or
               the conduct of its business requires such qualification; and has
               full corporate power and authority to hold property under the
               Master Lease and each Schedule and to enter into and perform its
               obligations under such Lease.
<PAGE>

         (b)   The execution and delivery by the Lessee of the Master Lease and
               each Schedule and its performance thereunder have been duly
               authorized by all necessary corporate action of the part of the
               Lessee, and the Master Lease and each Schedule are not
               inconsistent with the Lessee's Certificate of Incorporation or
               Bylaws, do not contravene any law or governmental rule,
               regulation or order applicable to it, do not and will not
               contravene any provision of, or constitute a default under, any
               indenture, mortgage, contract or other instrument to which it is
               a party or by which it is bound, and the Master Lease and each
               Schedule constitute legal, valid and binding agreements of the
               Lessee, enforceable in accordance with their terms.

         (c)   There are not actions, suits, proceedings or patent claims
               pending or, to the knowledge of the Lessee, threatened against or
               affecting the Lessee in any court or before any governmental
               commission, board or authority which, if adversely determined,
               will have a material adverse effect on the ability of the Lessee
               to perform its obligations under the Master Lease and each
               Schedule.

         (d)   The Equipment is personal property and when subjected to use by
               the Lessee will not be or become fixtures under applicable law.

         (e)   The Lessee has no material liabilities or obligations, absolute
               or contingent (individually or in the aggregate), except the
               liabilities and obligations of the Lessee as set froth in the
               Financial Statements and liabilities and obligations which have
               occurred in the ordinary course of business, and which have not
               been, in any case or in the aggregate, materially adverse to
               Lessee's ongoing business.

         (f)   To the best of the Lessee's knowledge, the Lessee owns,
               possesses, has access to, or can become licensed on reasonable
               terms under all patents, patent applications, trademarks, trade
               names, inventions, franchises, licenses, permits, computer
               software and copyrights necessary for the operations of its
               business as now conducted, with no known infringement of, or
               conflict with, the rights of others.

         (g)   All material contracts, agreements and instruments to which the
               Lessee is a party are in full force and effect in all material
               respects, and are valid, binding and enforceable by the Lessee in
               accordance with their respective terms, subject to the effect of
               applicable bankruptcy and other similar laws affecting the rights
               of creditors generally, and rules of law concerning equitable
               remedies.

9.   Delivery and Return of Equipment.
<PAGE>

     Lessee hereby assumes the full expense of transportation and in-transit
insurance to Lessee's premises and installation thereat of the Equipment. Upon
termination (by expiration or otherwise) of each Schedule, Lessee shall pursuant
to Lessor's instructions and at Lessee's full expense (including, without
limitation, expenses of transportation and in-transit insurance), return the
Equipment to Lessor in the same operating order, repair, condition and
appearance as when received, less normal depreciation and wear and tear. Lessee
shall return the Equipment to Lessor at its address set forth herein or at such
other address within the continental United States as directed by Lessor,
provided, however, that Lessee's expense shall be limited to the cost of
returning the equipment to Lessor's address as set forth herein. During the
period subsequent to receipt of a notice under Section 2, Lessor may demonstrate
the Equipment"s operation in place and Lessee will supply any of its personnel
as may reasonable be required to assist in the demonstrations.

10.  Labeling.

     Upon request, Lessee will mark the Equipment indicating Lessor's interest.
Lessee will keep all Equipment free from any other marking or labeling which
might be interpreted as a claim of ownership.

11.  Indemnity.

     Lessee will indemnify and hold Lessor, any Assignee and any Secured Party
harmless from and against any and all claims, costs, expenses, damages and
liabilities, including reasonable Attorneys' fees, arising out of the ownership
(for strict liability in tort only), selection, possession, leasing, operation,
control, use, maintenance, delivery, return or other disposition of the
Equipment. However, Lessee is not responsible to a party indemnified hereunder
for any claims, costs, expenses, damages and liabilities occasioned by the
negligent acts of such indemnified party. Lessee agrees to carry bodily injury
and property damage liability insurance during the term of the Master Lease in
amounts and against risks customarily insures against by the Lessee on equipment
owned by it. Any amounts received by Lessor under that insurance will be
credited against Lessee's obligations under this Section.

12.  Risk of Loss.

     Effective upon delivery and until the Equipment is returned, Lessee
relieves Lessor of responsibility for all risks of physical damage to or loss or
destruction of the Equipment. Lessee will carry casualty insurance for each item
of Equipment in an amount not less than the Casualty Value. All policies for
such insurance will name the Lessor and any Secured Party as additional insured
and as loss payee, and will provide for at least thirty (30) days prior written
notice to the Lessor of cancellation or expiration, and will insure Lessor's
interests regardless of any breach or violation by Lessee of any representation,
warranty or condition contained in such policies and will be primary without
right of contribution from any insurance affected by Lessor. Upon the
<PAGE>

execution of any Schedule, the Lessee will furnish appropriate evidence of such
insurance acceptable to Lessor.

     Lessee will promptly repair any damaged item of Equipment unless such
Equipment has suffered a Casualty Loss. Within fifteen (15) days of Casualty
Loss, Lessee will provide written notice of that loss to Lessor and Lessee will,
at Lessor's option, either (a) replace the item of Equipment with Like Equipment
and marketable title to the Like Equipment will automatically vest in Lessor or
(b) pay the Casualty Value and after that payment and the payment of all other
amounts due and owing, Lessee's obligation to pay further Rent for the item of
Equipment will cease.

13.  Default, Remedies and Mitigation.

     13.1 Default. The occurrence of any one or more of the following Events of
Default constitutes a default under a Schedule:

         (a)   Lessee's failure to pay Rent or other amounts payable by Lessee
               when due if that failure continues for five (5) days after
               written notice; or

         (b)   Lessee's failure to perform any other term or condition of the
               Schedule or the material inaccuracy of any representation or
               warranty made by the Lessee in the Schedule or in any document or
               certificate furnished to the Lessor hereunder if that failure or
               inaccuracy continues for ten (10) days after written notice; or

         (c)   An assignment by Lessee for the benefit of its creditors, the
               failure by Lessee to pay its debts when due, the insolvency of
               Lessee, the filing by Lessee or the filing against Lessee of any
               petition under any bankruptcy or insolvency law of for the
               appointment of a trustee or other officer with similar powers,
               the adjudication of Lessee as insolvent, the liquidation of
               Lessee, or the taking of any action for the purpose of the
               foregoing; or

         (d)   The occurrence of an Event of Default under any Schedule or other
               agreement between Lessee and Lessor or its Assignee of Secured
               Party.

     13.2 Remedies. Upon the occurrence of any of the above Events of Default,
Lessor, at its option, may:

         (a)   enforce Lessee's performance of the provisions of the applicable
               Schedule by appropriate court action in law or in equity;

         (b)   recover from Lessee any damages and or expenses, including
               Default Costs;
<PAGE>

         (c)   with notice and demand, recover all sums due and accelerate and
               recover the present value of the remaining payment stream of all
               Rent due under the defaulted Schedule (discounted at the same
               rate of interest at which such defaulted Schedule was discounted
               with a Secured Party plus any prepayment fees charged to Lessor
               by the Secured Party or, if there is no Secured Party, then
               discounted at 6%) together will all Rent and other amounts
               currently due as liquidated damages and not as a penalty;

         (d)   with notice and process of law and in compliance with Lessee's
               security requirements, Lessor may enter on Lessee's premises to
               remove and repossess the Equipment without being liable to Lessee
               for damages due to the repossession, except those resulting from
               Lessor's, its assignees', agents' or representatives' negligence;
               and

         (e)   pursue any other remedy permitted by law or equity.

          The above remedies, in Lessor's discretion and to the extent permitted
by law, are cumulative and may be exercised successively or concurrently.

     13.3 Mitigation. Upon return of the Equipment pursuant to the terms of
Section 13.2, Lessor will use its best efforts in accordance with its normal
business procedures (and without obligation to give any priority to such
Equipment) to mitigate Lessor's damages as described below. EXCEPT AS SET FORTH
IN THIS SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY
STATUTE OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS DAMAGES OR MODIFY
ANY OF LESSOR"S RIGHTS OR REMEDIES STATED HEREIN. Lessor may sell, lease or
otherwise dispose of all or any part of the Equipment at a public or private
sale for cash or credit with the privilege of purchasing the Equipment. The
proceeds from any sale, lease or other disposition of the Equipment are defined
as either:

         (a)   if sold or otherwise disposed of, the cash proceeds less the Fair
               Market Value of the Equipment at the expiration of the Initial
               Term less the Default Costs; or

         (b)   if leased, the present value (discounted at three points over the
               prime rate as referenced in the Wall Street Journal at the time
               of the mitigation) of the rentals for a term not to exceed the
               Initial Term, less the Default Costs.

     Any proceeds will be applied against liquidate damages and any other sums
due to Lessor from Lessee. However, Lessee is liable to Lessor for, and Lessor
may recover, the amount by which the proceeds are less than the liquidated
damages and other sum due to Lessor from Lessee.
<PAGE>

14.  Additional Provisions.

     14.1 Board Attendance. Lessor or its duly appointed representative will
have the right to attend Lessee's corporate Board of Directors meetings and
Lessee will give Lessor reasonable notice in advance of any special Board of
Directors meeting, which notice will provide an agenda of the subject matter to
be discussed at such board meeting. Lessee will provided Lessor with a certified
copy of the minutes of each Board of Directors meeting within thirty (30) days
following the date of such meeting held during the term of this Lease.

     14.2 Financial Statements. Lessee will provide to Lessor the financial
statements specified in this Section, prepared in accordance with generally
accepted accounting principles, consistently applied (the "Financial
Statements"); provided, however, after the effective date of the initial
registration statement covering a public offering of Lessee's securities, the
term "Financial Statements" will be deemed to refer to only those statements
required by the Securities and Exchange Commission, to be provided no less
frequently than quarterly. Lessee will provide to Lessor (i) as soon as
practicable (within thirty (30) days) after the end of each month, the same
information which Lessee provides to its Board of Directors, but which will
include not less than a monthly income statement, balance sheet and statement of
cash flows, certified by Lessee's Chief Executive or Financial Officer to be
true and correct; and (ii) as soon as practicable (and in any event within
ninety (90) days) after the end of each fiscal year, audited balance sheets as
of the end of such year (consolidated if applicable), and related statements of
income or loss, retained earnings or deficit and changes in the financial
position and capital structure of Lessee for such year, setting forth in
comparative form the corresponding figures for the preceding fiscal year, and
accompanied by an audit report and opinion of the independent certified public
accountants selected by Lessee. Lessee will promptly furnish to Lessor any
additional information (including but not limited to tax returns, income
statements, balance sheets, and names of principal creditors) as Lessor
reasonably believes necessary to evaluate Lessee's continuing ability to meet
financial obligations.

     14.3 Obligations to Lease Additional Equipment. Upon notice to Lessee,
Lessor will not be obligated to lease any Equipment which would have a
Commencement Date after said notice if: (i) Lessee is in default under this
Master Lease or any Schedule; (ii) Lessee is in default under any loan
agreement, the result of which would allow the lender or any secured party to
demand immediate payment of the indebtedness; (iii) there is a material adverse
change in Lessee's credit standing; or (iv) Lessor determines (in reasonable
good faith) that Lessee will be unable to perform its obligations under this
Master Lease.

     14.4 Merger and Sale Provisions. Lessee will notify Lessor of any
proposed Merger at least sixty (60) days prior to the closing date. Lessor may,
in its discretion, either (i) consent to the assignment of the Master Lease and
all relevant Schedules to the successor entity, or (ii) terminate the Master
Lease and all relevant Schedules. If Lessor elects to consent to the
<PAGE>

assignment, Lessee and its successor will sign the assignment documentation
provided by Lessor. If Lessor elects to terminate the Master Lease and all
relevant Schedules, then Lessee will pay Lessor all amounts then due and owning
and a termination fee equal to the present value (discounted at 6%) of the
remaining Rent for the balance of the Initial Term(s) of all Schedules, and will
return the Equipment in accordance with Section 9.

     14.5  Entire Agreement. This Master Lease and associated Schedules
supersede all other oral or written agreements or understandings between the
parties concerning the Equipment including, for example, purchase orders. ANY
AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY ONLY BE ACCOMPLISHED BY A
WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT IS SOUGHT TO BE ENFORCED.

     14.6  No Waiver. No action taken by Lessor or Lessee will be deemed to
constitute a waiver of compliance with any representation, warranty or covenant
contained in this Master Lease or a Schedule. The waiver by Lessor or Lessee of
a breach of any provision of this Master Lease or a Schedule will not operate or
be construed as a waiver of any subsequent breach.

     14.7  Binding Nature. Each Schedule is binding upon, and inure to the
benefit of Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS RIGHT OR
OBLIGATIONS.

     14.8  Survival of Obligation. All agreements, obligations including, but
not limited to those arising under Section 6.2, representations and warranties
contained in this Master Lease, any Schedule or in any document delivered in
connection with those agreements are for the benefit of Lessor and any Assignee
or Secured Party and survive the execution, delivery, expiration or termination
of this Master Lease.

     14.9  Notices. Any notice, request or other communication to either party
by the other will be given in writing and deemed received upon the earlier of
actual receipt of three days after mailing if mailed postage prepaid by regular
or airmail or Lessor (to the attention of "Lease Administration") or Lessee, at
the address set out in the Schedule or, one day after it is sent by courier or
on the same day as sent via facsimile transmission, provided that the original
is sent by personal delivery or mail by the receiving party.

     14.10 Applicable Law. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE
WILL HAVE BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS AND WILL BE
GOVERNED AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS OF THE STATE
OF ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO RIGHTS OR
REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE
CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A SCHEDULE.
<PAGE>

     14.11 Severability. If any one or more of the provisions of this Master
Lease or any Schedule is for any reason held invalid, illegal or unenforceable,
the remaining provisions of his Master Lease and any such Schedule will be
unimpaired, and the invalid, illegal or unenforceable provision replaced by a
mutually acceptable valid, legal and enforceable provision that is closest to
the original intention of the parties.

     14.12 Counterparts. This Master Lease and any Schedule may be executed in
any number of counterparts, each of which will be deemed an original, but all
such counterparts together constitute one and the same instrument. If Lessor
grants a security interest in all or any part of a Schedule, the Equipment or
sum payable thereunder, only that counterpart Schedule marked "Secure Party's
Original" can transfer Lessor's rights and all other counterparts will be marked
"Duplicate".

     14.13 Nonspecified Features and Licensed Products. If the Equipment is
supplied from Lessor's inventory and contains any features not specified in the
Schedule, Lessee grants Lessor the right to remove any such features. Any
removal will be performed by the manufacturer or another party acceptable to
Lessee, upon the request or Lessor, at a time convenient to Lessee, provided
that Lessee will not unreasonably delay the removal of such features.

     Lessee will obtain no title to Licensed Products which will at all times
remain the property of the owner of the Licensed Products. A license from the
owner may be required and it is Lessee"s responsibility to obtain any required
license before the use of the Licensed Products. Lessee agrees to treat the
Licensed Products as confidential information of the owner, to observe all
copyright restrictions, and not to reproduce or sell the Licensed Products.

     14.14 Additional Documents. Lessee will, upon execution of this Master
Lease and as may be requested thereafter, provide Lessor with a secretary's
certificate of incumbency and authority and any other documents reasonably
requested by Lessor. Upon the execution of each Schedule with a purchase price
in excess of $1,000,000, Lessee will provide Lessor with an opinion from
Lessee"s counsel in a form acceptable to Lessor regarding the representations
and warranties in Section 8.

     14.15 Electronic Communications. Each of the parties may communicate with
the other by electronic means under mutually agreeable terms.

     14.16 Lessor's Right to Match. Lessee's rights under Section 5.2 and 7.2
are subject to Lessor's right to match any sublease or upgrade proposed by a
third party. Lessee will provide Lessor with the terms of the third party offer
and Lessor will have three (3) business days to match the offer. Lessee will
obtain such upgrade from or sublease the Equipment to Lessor if Lessor has
timely matched the third party offer.
<PAGE>

     14.17 Landlord/Mortgagor Waiver. Lessee agrees to provide Lessor with a
Landlord/Mortgagor Waiver with respect to the Equipment. Such waiver shall be in
a form satisfactory to Lessor.

     14.18 Equipment Procurement Charges/Progress Payments. Lessee hereby agrees
that Lessor shall not, by virtue of its entering into this Lease, be required to
remit any payments to any manufacturer or other third party until Lessee accepts
the Equipment subject to this Lease.

     14.19 Definitions.

Advance - means the amount due to Lessor by Lessee upon Lessee's execution of
-------
each Schedule.

Assignee - means an entity to whom Lessor has sold or assigned its rights as
--------
owner and Lessor of Equipment.

Attachment - means any accessory, equipment or device and the installation
----------
thereof that does not impair the original function or use of the Equipment and
is capable of being removed without causing material damage to the Equipment and
is not an accession to the Equipment.

Casualty Loss - means the irreparable loss or destruction of Equipment.
-------------

Casualty Value - means the greater of the aggregate Rent remaining to be paid
--------------
for the balance of the lease term or the Fair Market Value of the Equipment
immediately prior to the Casualty Loss. However, if a Casualty Value Table is
attached to the relevant Schedule its terms will control.

Commencement Certificate - means the Lessor provided certificate which must be
------------------------
signed by Lessee within ten (10) days of the Commencement Date as requested by
Lessor.

Commencement Date - is defined in each Schedule.
-----------------

Default Costs - means reasonable attorney's fees and remarketing costs resulting
-------------
from a Lessee default or Lessor's enforcement of its remedies.

Equipment - means the property described on a Schedule and any replacement for
---------
that property required or permitted by this Master Lease or a Schedule but not
including any Attachment.

Event of Default - means the events described in Subsection 13.1.
----------------
<PAGE>

Fair Market Value - means the aggregate amount which would be obtainable in an
-----------------
arm's-length transaction between an informed and willing buyer/user and an
informed and willing seller under no compulsion to sell.

Initial Term - means the period of time beginning on the first day of the first
------------
full Rent Interval following the Commencement Date for all items of Equipment
and continuing for the number of Rent Intervals indicated on a Schedule.

Installation Date - means the day on which Equipment is installed and qualified
-----------------
for a commercially available manufacturer's standard maintenance contract or
warranty coverage, if available.

Interim Rent - means the pro-rata portion of Rent due for the period from the
------------
Commencement Date through but not including the first day of the first full Rent
Interval included in the Initial Term.

Licensed Products - means the software or the license products attached to the
-----------------
Equipment.

Like Equipment - means replacement Equipment which it lien free and of the same
--------------
model, type, configuration and manufacture as Equipment.

Like Part - means a substituted part which is lien free and of the same
---------
manufacturer and part number as the removed part, and which when installed on
the Equipment will be eligible for maintenance coverage with the manufacturer of
the Equipment.

Merger - means any consolidation or merger of the Lessee with or into any other
------
corporation or entity, any sale or conveyance of all or substantially all of the
assets of the Lessee to any other person or entity or any stock acquisition of
the Lessee by any other person or entity.

Notice Period - means the time period described in a Schedule during which
-------------
Lessee may give Lessor notice of the termination of the term of that Schedule.

Overdue Rate - means the Lesser of five percent (5%) of the payment due of the
------------
maximum rate permitted by the law of the state where the Equipment is located.

Owner - means the owner of Equipment.
-----

Reconfiguration - means any change to Equipment that would upgrade or downgrade
---------------
the performance capabilities of the Equipment in any way.
<PAGE>

Rent - means the rent, including Interim Rent, Lessee will pay for each item of
----
Equipment expressed in a Schedule wither as a specific amount or an amount equal
to the amount which Lessor pays for an item of Equipment multiplied by a lease
rate factor plus all other amounts due to Lessor under this Master Lease or a
Schedule.

Rent Interval - means a full calendar month or quarter as indicated on a
-------------
Schedule.

Schedule - means an Equipment Schedule which incorporates all of the terms and
--------
conditions of this Master Lease and, for purposes of Section 14.12, its
associated Commencement Certificate(s).

Secured Party - means an entity to whom Lessor has granted a security interest
-------------
in a Schedule and related Equipment for the purpose of securing a loan.

     IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on
or as of the day and year first above written.

3-DIMENSIONAL PHARMACEUTICALS, INC.          COMDISCO, INC.
as Lessee                                    as Lessor
By: /s/ F. Raymond Salemme                   By:/s/ Jill C. Hanses
    ----------------------------------         -----------------------------
Title:  President & CEO                      Title: AVP / Venture Lease
       -------------------------------              ------------------------
<PAGE>

                                   EXHIBIT A

                          (MULTIPLE QUARTER DELIVERY)

SCHEDULE NO.  VL-1                                 DATED AS OF  March 7, 1994
              ----                                            -----------------

     MASTER LEASE AGREEMENT DATED AS OF  March 7, 1994  ("MASTER LEASE")
                                       -----------------

LESSEE: 3-DIMENSIONAL PHARMACEUTICALS, INC.       LESSOR: COMDISCO, INC.

Admin. Contact/Phone No.:                         Address for all Notices:
------------------------                          -----------------------
Scott Horvitz
(215) 222-8950                                    6111 North River Road
                                                  Rosemont, Illinois 60018
                                                  Attn: Capital Equipment Lease
                                                        Administration
Address for Notices:
-------------------
3700 Market Street
Philadelphia, PA  19104
Attn: Scott Horvitz

Central Billing Location:                         PAYING AGENT:
------------------------                          ------------
Same as above
                                                  Comdisco, Inc.
                                                  P.O. Box 91744
Attn:                                             Chicago, Illinois  60693

Lessee Reference No.: ---------------------
                       (24 digits maximum)

Location of Equipment:   After Notice to Lessor:       Initial Term:  48 months
---------------------    ----------------------        ------------   ---------
Same as above            Eagleview Corporate Center
                         Route 100
                         Exton, PA                     Lease Rate Factor: 2.424%
                                                       -----------------  ------

EQUIPMENT (as defined below):                          Advance: $36,375.00
                                                       -------  ----------

Item                          Machine Type/                     Serial
No.     Qty.    Manufacturer     Feature       Description      Number     Rent
---     ----    ------------     -------       -----------      ------     ----



     Equipment specifically approved by Lessor, which shall be delivered to and
     accepted by Lessee during the period April 18, 1994 through October 18,
     1995, for which Lessor receives vendor invoices approved for payment, up to
     an aggregate purchase price of
<PAGE>

     $1,500,000.00; not including upgrades thereto and further excluding custom
     use equipment, leasehold improvements, installation costs and delivery
     costs, rolling stock, special tooling, custom equipment, hand held items,
     molds and fungible items. In no event shall any furniture exceed ten
     percent (10%) of Lessor's aggregate cost hereunder. In no event shall the
     total software exceed $100,000.00.

1.   Notice Period: Not less than one hundred and twenty (120) days nor more
than twelve (12) months prior to the expiration of the lease term.

2.   Equipment Purchase

     Lessee acknowledges that it has either received or approved Lessor's
purchase documentation for the Equipment. The aggregate purchase price referred
to on the face of this Schedule shall include all Equipment purchase by Lessor,
consisting of amounts financed under Section (i), (ii) and (iii) below.

     (i)    NEW EQUIPMENT. Lessor will purchase new Equipment which is
            specifically approved by Lessor.

     (ii)   SALE-LEASEBACK EQUIPMENT. Any in "place Equipment installed at
            Lessee's site and to which Lessee has clear title and ownership may
            be considered by Lessor for inclusion under this Lease (the "Sale-
            Leaseback Transaction"). Any request for a Sale-Leaseback
            Transaction must be submitted to Lessor in writing (along with
            accompanying evidence of Lessee's Equipment ownership satisfactory
            to Lessor for all Equipment submitted) no later than May 18, 1994*.
            Lessor will not perform a Sale-Leaseback Transaction for any request
            or accompanying Equipment ownership documents which arrive after the
            date marked above by an asterisk (*). Further, any sale-leaseback
            Equipment will be placed on lease subject to: (1) Lessor prior
            approval of the Equipment; and (2) if approved, at Lessor's actual
            net appraised Equipment value pursuant to the schedule below:

          ORIGINAL EQUIPMENT MANUFACTURER'S   PERCENT OF ORIGINAL MANUFACTURER'S
                      SHIP DATE                NET EQUIPMENT COST PAID BY LESSOR
          ---------------------------------   ----------------------------------

          Between 2/19/94 and 5/18/94                         100%
          Between 12/19/93 and 2/18/94                         80%
          Between 9/19/93 and 12/18/93                         70%
          Between 6/19/93 and 9/18/93                          65%
          Between 3/19/93 and 6/18/93                          60%

     (iii)  USED EQUIPMENT. Lessor will purchase "used" Equipment which is
            obtained from a third party by Lessee for its use subject to: (1)
            Lessor's prior
<PAGE>

            approval of the Equipment; and (2) at the request of Lessor, at
            Lessor's appraised value for such used Equipment.

3.   Commencement Date

     The Commencement Date for each item of Equipment will be its installation
Date. Lessee agrees to confirm the Commencement Date by providing Lessor with
invoices containing the Equipment location, description, serial number and cost,
the Installation Date and Lessee's signature. Lessor will summarize all invoices
and/or IAFs received in the same calendar quarter into a Commencement
Certificate in the form attached to this Schedule as Exhibit 1 and the Initial
Term will begin the first day of the calendar quarter thereafter. Each
Commencement Certificate will incorporate the terms and conditions of the Master
Lease and this Schedule and will constitute a separate Schedule. Notwithstanding
the foregoing, if the Equipment pertains to Sale-Leaseback Equipment, the
Commencement Date will be the date Lessor tenders the purchase price for the
Equipment.

4.   Option to Extend

     So long as no Event of Default shall have occurred and be continuing,
Lessee will have the right to extend the Initial Term of this Schedule for a
period of one (1) year by giving Lessor at least one hundred and twenty (120)
days written notice prior to the expiration of the Initial Term. In such event,
the rent to be paid during said extended period shall be mutually agreed upon
and if the parties cannot mutually agree, then the Lease shall continue in full
force and effect pursuant to the existing terms and conditions until terminated
in accordance with its terms. This Schedule will continue in effect following
said extended period until terminated by either party upon not less than one
hundred and twenty (120) days prior written notice, which notice shall be
effective as of the Rent Interval next following receipt. Alternatively, at the
expiration of the Initial Term Lessee will have the right to extend the Initial
Term of this Schedule for a one year period at the same lease rate factor as set
forth on the face of this Schedule, by giving Lessor at least 120 days written
notice prior to the expiration of the Initial Term, and at the end of the one
year period, provided all lease payments have been made, title to the Equipment
shall automatically pass to Lessee.

5.   Purchase Option

So long as no Event of Default has occurred and is continuing hereunder, and
upon written notice no earlier than twelve (12) months and no later than one
hundred and twenty (120) days prior to the expiration of the Initial Term of
this Schedule, Lessee will have the option at the expiration of the Initial Term
of this Schedule to purchase all, but not less than all, of the Equipment listed
herein for a purchase price and upon terms and conditions to be mutually agreed
upon by the parties following Lessee's written notice, plus any taxes applicable
at the
<PAGE>

time of purchase. Said purchase price shall be paid to Lessor at least thirty
(30) days before the expiration date of the Initial Term. Title to the Equipment
shall automatically pass to Lessee upon payment in full of the purchase price
but, in no event, earlier than the expiration of the fixed Initial Term. If the
parties are unable to agree on the purchase price or the terms and conditions
with respect to said purchase, then the Lease with respect to this Equipment
shall remain in full force and effect. It is agreed and understood that Lessor
is retaining a purchase money security interest in the Equipment listed herein
and this Schedule shall constitute a Security Agreement under the Uniform
Commercial Code of the state in which the Equipment is located. Lessor and
Lessee agree that for purposes of this paragraph, any licensed software will not
be considered part of the Equipment.

6.   Special Terms

The terms and conditions of the Master Lease Agreement as they pertain to this
Schedule are hereby modified and amended as follows:

     (a)  Section 3, "Rent and Payment"
                      ----------------

          Delete the third sentence of this Section and replace with the
following:

          "Upon Lessee's execution of this Schedule, Lessee will pay Lessor one-
half of the Advance specified on the face of this Schedule ($18,187.50), minus
the commitment fee of $12,000 previously paid by Lessee for a net payment of
$6,187.50. The remainder of the Advance is payable after the first $750,000 of
the lease line has been used, upon the date Lessee submits to Lessor for payment
any invoice(s) requesting any drawdown beyond the initial $750,000 of this lease
line."

     (b)  Section 5.2, "Relocation or Sublease"
                        ----------------------

     To the end of this Section, add the following:

     ", provided that Lessee may relocate Equipment to the premises of academic
researchers working on joint projects with the Lessee, at Lessee's sole expense,
without the prior written consent of the Lessor if the Lessee provides the
Lessor with prior written notice."

     Make a new second paragraph as follows:

     "Lessor hereby consents to the relocation of the Equipment by Lessee to
     Eagleview Corporate Center, Route 100, Exton, Pennsylvania pursuant to the
     terms of the Lease for Combination Office/Laboratory Space dated hereof
     between Lessee and The Hankin
<PAGE>

     Group, provided that Lessee gives five (5) days prior written notice to
     Lessor of such relocation."

(c)  Section 6.2, "Taxes and Fees"
                   --------------

     In line 4 after the word "capital", add the words "net worth"; before the
word "income", delete the word "net".

(d)  Section 7.1, "Care, Use and Maintenance"
                   -------------------------

     Delete this Section in its entirety and replace with the following:

     "Lessee shall, at its sole expense, at all times during the term of each
     Equipment Schedule, maintain the Equipment in good operating order, repair,
     condition and appearance and protect the Equipment for deterioration, other
     than normal wear and tear. Lessee shall not use the Equipment for any
     purpose other than that for which it was designed. Lessee shall, at its
     sole expense and at its sole discretion, either (i) enter into and maintain
     in force, for the term of each Equipment Schedule, an appropriate
     maintenance contract with the manufacturer of the Equipment, or such other
     of each Equipment Schedule, an appropriate maintenance contract with the
     manufacturer of the Equipment, or such other party as shall be acceptable
     to Lessor, and shall provide Lessor with a copy of such contract and all
     supplements thereto which are applicable to the Equipment; or (ii) self
     maintain the Equipment at acceptable standards. If Lessee returns the
     Equipment to Lessor at the end of the Initial Term of this Lease, or any
     extension thereof, and upon audit of the Equipment Lessor determines that
     the Equipment has not been maintained properly or will not be eligible for
     a manufacturer's maintenance contract, then Lessee hereby agrees to assume
     any costs or expenses necessary to ensure that the Equipment is in good
     working order, which may include but need not include, recertification by
     the manufacturer. For the purpose of this Section, any reference to
     "Equipment" shall include any software included in any such Equipment
     Schedule, and any reference to "manufacturer" shall mean the licensor
     thereof."

(e)  Section 7.2, "Attachments and Reconfigurations"
                   --------------------------------

     In Line 1 before the word "prior", insert the word "after"; after the word
     "written", delete the word "consent" and replace with the words "notice
     to".

     In line 3 before the word "restore" insert the words "have the option to".

     In line 5 after the word "excluded", add the words "or else such
     Reconfigurations or Attachments shall become the property of the Lessor."
<PAGE>

(f)  Section 8, "Representations and Warranties of Lessee"
                 ----------------------------------------

     To the end of subsection (e), add the words ", and except in connection
     with the transactions contemplated with the Lessor and The Hankin Group."

(g)  Section 9, "Delivery and Return of Equipment"
                 --------------------------------

     In line 9, delete the words "and Lessee will supply any of its personnel";
     to the end of the last sentence, add the phrase", subject to Lessee"s
     normal security procedures and during reasonable hours upon reasonable
     advance notice."

(h)  Section 13.1, "Default"
                    -------

     In line 3 of subsection (b), delete the word "ten (10)" and replace with
     the word "fifteen (15)".

(i)  Section 14.1, "Board Attendance"
                    ----------------

     Delete this section in its entirety and replace with the following:

     "Section 14.1, Board Information.

     Lessee agrees to provide to Lessor on a monthly basis: Profit and Loss
     Statement, Balance Sheet, Cash Flow Statement and Proforma Operating Plan
     (as developed)."

(j)  Section 14.2, "Financial Statements"
                    --------------------

     In line 5 after the word "required", delete the word "by" and replace with
     the words "to be filed with":

     In lines 7 and 8, delete the words "the same information which Lessee
     provides to its Board of Directors, but which will include not less than".

     In line 10, delete the word "ninety (90)" and replace with the words "one
     hundred twenty (120)".

     In line 12, delete the words "the financial position" and replace with the
     words "cash flows".

     In line 15, delete the words "additional information (including but not
     limited to".
<PAGE>

     In line 16 before the word "Lessor", insert the words "requesting by Lessor
     that".

(k)  Section 14.3, "Obligation to Lease Additional Equipment"
                    ----------------------------------------

     To the end of this Section, add the following:

     "Notwithstanding the foregoing, Lessor shall not withhold its consent if
     the acquiring entity has a Moody's bond rating of BA3 or better, or the
     equivalent if no bond rating is available."

(l)  Section 14.4, "Merger and Sale Revisions"
                    -------------------------

     In Line 1, delete the word "sixty (60)" and replace with the word "thirty
     (30)".

(m)  Section 14.14, "Additional Documents"
                     --------------------

     To the end of this Section, add the words "in a form mutually acceptable to
     the parties."

Master Lease: This Schedule is issued pursuant to the Master Lease identified on
page 1 on this Schedule. All of the terms and conditions of the Master Lease are
incorporated in and made a party of this Schedule as if they were expressly set
forth in this Schedule. The parties hereby reaffirm all of the terms and
conditions of the Master Lease (including, without limitation, the
representations and warranties set forth in Section 8) except as modified herein
by this Schedule. This Schedule may not be amended or rescinded except by a
writing signed by both parties.

3-DIMENSIONAL PHARMACEUTICALS,            COMDISCO, INC.
INC. as Lessee
                                          As Lessor

By: /s/ F. Raymond Salemme                By: Jill C. Hanses
   -------------------------------            --------------------------------
Title: President & CEO                    Title: AVP / Venture Lease
       ---------------------------               -----------------------------
Date: 4/27/94                             Date: 5/4/94
      ----------------------------              ------------------------------
<PAGE>

                                   EXHIBIT 1

                           COMMENCEMENT CERTIFICATE
                           ------------------------

This Certificate dated is executed pursuant to Schedule No. VL-1 to the Master
Lease Agreement dated March 7, 1994 between Comdisco, Inc. ("Lessor") and
3-Dimensional Pharmaceuticals, Inc. ("Lessee"). All of the terms, conditions,
representations and __________ of the Master Lease and Schedule No. VL-1 are
incorporated herein and made a part hereof and this Commencement Certificate
constitutes a Schedule for the Equipment described below.

1.   Equipment:
     ---------


                                 Equipment
       Qty      Mfgr            Type/Model          Serial #     Location

     (See attached Invoices)


2.   Installation date:      (See attached Invoices)
     -----------------

3.   Initial Term Starts on:
     ----------------------

4.   Total Equipment Cost:
     --------------------

5.   Rent:
     ----

6.   Representations of Lessee:
     -------------------------

     Each item of Equipment has been delivered to the location indicated above,
tested, inspected, found to be in good working order and accepted by the Lessee
on its Installation Date.
<PAGE>

                                LOAN AGREEMENT

     THIS AGREEMENT (the "Agreement"), dated as of April ___, 1994, is entered
into by and between 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation
(the "Borrower"), and Comdisco, Inc, a Delaware corporation (the "Lender" or
sometimes, "Comdisco"). In consideration of the mutual agreements contained
herein, the parties hereto agree as follows:

     WHEREAS, on the date hereof, the Borrower and the Lender are entering into
a Master Lease Agreement (including the Schedules thereto) the ("Equipment
Lease") whereby the Lender agrees to lease to the Borrower equipment (the
"Equipment") with an aggregate purchase price of up to $1,500,000;

     WHEREAS, on the date hereof, the Borrower and the Lender are entering into
a Warrant Agreement whereby the Borrower will grant to the Lender warrants to
purchase 179,350 shares of the Borrower"s Series A Preferred Stock;

     WHEREAS, Borrower desires to borrow from the Lender hereunder the amount to
$610,000 to finance improvements at a new facility, and Lender is willing to
lend said amount to Borrower on the date hereof;

     NOW, THEREFORE, it is agreed:

1. THE LOAN

     1.1  Subject to the terms and conditions set forth herein, Lender shall
lend to Borrower the aggregate original principal amount of $610,000 (the
"Loan") on the date hereof (the "Funding Date") with interest at the rate
reflected in the promissory note (the "Note") in the form attached hereto and
made a part hereof as Exhibit A, dated April __, 1994 and payable by Borrower to
the Lender in monthly installments as set forth in the Amortization Schedule
attached to such note as Exhibit B.

     1.2  Borrower shall have the option to prepay the principal of each Note,
in whole or in part, at any time after the date hereof by paying the "Prepayment
Amount" which shall mean such principal amount being prepaid together with all
accrued and unpaid interest with respect to such principal amount, as of the
date of such prepayment and a repayment premium equal to the difference, if any,
between A) the amount being prepaid and B) the present value, discounted at the
Treasury Rate of each installment of principal and interest being prepaid
discounted to the date of prepayment. If the amount in subsection 1.2A above is
greater than the amount in subsection 1.2B above, no prepayment premium shall be
due.

     The "Treasury Rate" shall mean the then prevailing yield on U.S. Treasury
Constant Maturities for the most recent business day, as quoted in the Federal
Reserve Statistical Release H.15 (519) on the date of prepayment for a Treasury
Obligation with a maturity date closest to the maturity date of the Note.
<PAGE>

2.   USE OF PROCEEDS

     2.1  The Borrower agrees to use the proceeds of the Loan to pay The Hankin
Group (the "Landlord") for improvements (the "Tenant Improvements") to the
premises located at Eagleview Corporate Center, Route 100, Exton, Uwchlan
Township, Chester County, Pennsylvania (the "New Facility") to be rented by the
Borrower from the Landlord, all of which is pursuant to the Lease for
Combination Office/Laboratory Space dated April ___, 1994 between the Landlord
and the Borrower (the "Lease").

     2.2  So long as any amount payable under this Agreement or the Note (the
"Obligations") remains outstanding, then upon the occurrence of an Event of
Default (as defined in Section 8 hereof) under this Agreement or the Note,
Section 9 hereof provides that the Lender will have the right, among other
things, to have the Lease assigned by the Borrower to the Lender.

3.   REPRESENTATIONS AND WARRANTIES OF BORROWER

     The Borrower represents, warrants and agrees that;

     3.1  It has the full power and authority to assign to the Lender the
interest it possesses in the Lease Agreement upon an Event of Default, and
Borrower shall execute such assignment in connection therewith as the Lender may
reasonably request. Except as set forth in the Lease, no lien, security
interest, adverse claim or encumbrance has been created by Borrower or is known
by Borrower to exist with respect to any Tenant Improvements;

     3.2  It is a corporation duly organized, legally existing and in good
standing under the laws of the State of Delaware, and is duly qualified as a
foreign corporation in all jurisdictions where the property owned of the
business transacted by it make such qualifications necessary.

     3.3  The execution, delivery and performance of the Note, this Agreement,
and all certificates and other documents required to be delivered or executed in
connection herewith (collectively the "Documents") have been duly authorized by
all necessary corporate action of Borrower, the individual or individuals
executing the Documents were duly authorized to do so, and the Documents
constitute legal, valid and binding obligations of the Borrower enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization or other similar laws generally affecting the
enforcement of the rights of creditors;

     3.4  The Documents do not and will not violate any provisions of its
article or certificate of incorporation, bylaws or any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which the Borrower is
subject, or result in the creation or imposition of any lien, security interest
or other encumbrance upon the Tenant Improvements.

     3.5  The execution, delivery and performance of the Documents do not
require the consent or approval of any other person or entity including, without
limitation, any regulatory authority or governmental body of the United States
or any state thereof or any political subdivision of the United States or any
state thereof, except the consent of the holders of the Company"s outstanding
Series A Preferred Stock, which consent has been obtained.
<PAGE>

4.   INSURANCE AND RISK OF LOSS

     4.1  Risk of loss of, damage to or destruction of the Tenant Improvements
shall be borne by the Borrower.

     4.2  Effective upon the Funding Date and while there are any obligations
outstanding, Borrower shall cause to be carried and maintained comprehensive
general liability insurance against risks customarily insured against in the
Borrower"s business. Such risks shall include, without limitation, the risks of
death, bodily injury and property damage associated with the Tenant
Improvements. All policies evidencing such insurance shall provide for at least
thirty (30) days prior written notice by the underwriter or insurance company to
the Lender in the event of cancellation or expiration.

     4.3  Borrower shall and does hereby indemnify and hold Lender harmless from
and against any and all claims, costs, expenses, damages and liabilities based
on liability in tort including without limitation strict liability in tort)
including reasonable attorneys" fees, arising out of the ownership, possession,
operation, control, use, maintenance, or other disposition of the Tenant
Improvements. Notwithstanding the foregoing, Borrower shall not be responsible
under the terms of this Subsection to a party indemnified hereunder for any
claims, costs, expenses, damages and liabilities occasioned by the negligence or
willful misconduct of such indemnified party.

5.   COVENANTS OF BORROWER

     Borrower covenants and agrees as follows at all times while any of the
Obligations remain outstanding:.

     5.1  Borrower shall maintain the Tenant Improvements in good operating
condition, repair, and appearance and protect same from deterioration, other
than normal wear and tear. Borrower shall not use the Tenant Improvements or
permit its use for any purpose other than for which it was designed.

     5.2  Borrower covenants and agrees to pay when due, all taxes, fees or
other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Tenant Improvements or upon the ownership, possession, use operating or
disposition thereof or upon the rents, receipts or earnings arising therefrom or
upon or with respect to the amounts payable to the Lender pursuant to the Note
and this Agreement (excluding any taxes based solely upon Lender"s net income
relating thereto).

     5.3  Borrower shall furnish to Lender the financial statements listed
hereinafter, prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):

      (a)   As soon as practicable (and in any event within thirty (30) days)
            after the end of each month, a monthly income statement, balance
            sheet and statement of cash flows, certified by Borrower"s Chief
            Executive or Financial Officer to be true and correct; and
<PAGE>

      (b)   As soon as practicable (and in any event within one hundred twenty
            (120) days) after the end of each fiscal year, audited balance
            sheets as of the end of such year (consolidated if applicable), and
            related statement of income of loss, retained earnings or deficit
            and changes in cash flows of Borrower for such year, setting forth
            in comparative form the corresponding figures for the preceding
            fiscal year, and accompanied by any audit report and opinion of the
            independent certified public accountants selected by Borrower.

      (c)   Promptly any additional information, including but not limited to,
            tax returns, income statements, balance sheets, and names of
            principal creditors as requested by Lender that Lender reasonably
            believes necessary to evaluate Borrower"s continuing ability to meet
            financial obligations.

     5.4  Notwithstanding the foregoing, after the effective date of the initial
registration statement covering a public offering of Borrower"s securities, the
term "Financial Statements" shall be deemed to refer to only those statements
required to be filed with the Securities and Exchange Commission, to be provided
no less frequently than quarterly.

6.   CONDITIONS PRECEDENT TO LOAN

     On or prior to the Funding Date, Borrower will provide to Lender the
following, in form and substance satisfactory to Lender:

     6.1  An opinion of counsel substantially in the form of Exhibit C attached
hereto and made a part hereof from counsel for Borrower;

     6.2  A certified resolution or other certificate of corporate authority for
the execution and the delivery of, and the performance of all Obligations under
the Documents and all related documentation;

     6.3  Incumbency certificate evidencing the authority and facsimile
signatures of the individuals executing the Documents;

     6.4  Insurance certificates as required by Section 4 hereof.

     6.5  True and correct copies of the leases and mortgage(s), if any, on the
real property occupied by Borrower.

7.   DEFAULT

     The occurrence of any one or more of the following events shall constitute
an Event of Default hereunder and under the Note;

     7.1  The Borrower defaults in the payment of any principal or interest
payable under the Note for more than five (5) days after the due date thereof;
<PAGE>

     7.2  The Borrower defaults in the payment or performance of any other
obligation of the Borrower hereunder or under the Note for more than fifteen
(15) days after the Lender has given notice of such default to the Borrower;

     7.3  Any representation or warranty made herein by the Borrower shall prove
to have been false or misleading in any material respect;

     7.4  The making of an assignment by Borrower for the benefit of its
creditors or the admission by borrower in writing of its inability to pay its
debts as they become due, or in insolvency of Borrower, or the filing by
Borrower of a voluntary petition in bankruptcy, or the adjudication of Borrower
as a bankrupt, or the filing by Borrower of any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, or the filing of any answer by Borrower admitting, or the failure by
Borrower to deny, the material allegations of a petition filed against it for
any such relief, or the seeking of consenting by Borrower to, or acquiescence by
Borrower in, the appointment of any true, receiver or liquidator of Borrower or
of all or any substantial part of the properties of Borrower, or the failure of
Borrower to pay its debts when due, or the commission by Borrower of any act of
bankruptcy as defined in the Federal Bankruptcy Act, as amended;

     7.5  The failure by Borrower, with sixty (60) days after the commencement
of any proceeding against Borrower seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, to obtain the dismissal of such
proceeding or, within sixty (60) days after the appointment, without the written
consent or acquiescence of Lender, of any trustee, receiver of liquidator of
Borrower or of all of nay substantial part of the properties of Borrower, to
vacate such appointment;

     7.6  An "Event of Default" as defined in the Equipment Lease shall happen
and be continued.

     7.7  An "Event of Default" as defined in the Lease or in any instrument or
instruments evidencing or under which the Borrower has outstanding an aggregate
of at least $1,000,000 principal amount of indebtedness for borrowed money,
shall happen and be continuing, and any payment due thereunder shall become or
be declared to be due and payable prior to its stated payment or maturity date.

8.   REMEDIES

     8.1  Upon the occurrence of any one or more Events of Default, Lender, at
its option, may declare the Note to be accelerated and due and payable,
whereupon the unpaid principal of and accrued interest on such Note shall become
immediately due and payable, and the Lender may exercise all rights and remedies
available to it under applicable law. The Lender shall be entitled to receive,
as additional Indebtedness hereunder (a) interest at the maximum interest rate
per annum permitted by law on all amounts not paid when due under the Note or
this Agreement, for the period such amounts are overdue, and (b) reimbursement
for all reasonable costs, attorneys" fees and legal expenses incurred by it in
exercising such rights and remedies.
<PAGE>

     8.2  Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, have the right
to lease and receive from a subsequent sub-lessee of said Lease that portion of
rentals under the Lease up to the maximum excess permitted for a sublease under
the Lease. If the Lender exercises its right to assume the Lease hereunder, then
the Borrower shall immediately enter into an assignment of the Lease attached
hereto and shall immediately take all such action necessary to obtain the
consent of the Landlord of such assignment.

9.   MISCELLANEOUS

     9.1  Borrower shall remain personally liable to Lender for any unpaid
Obligations, advances, costs, charges and expenses, together with interest
thereon and shall pay the same immediately to Lender at Lender"s offices.

     9.2  The powers conferred upon Lender by this Agreement are solely to
protect its rights hereunder and shall not impose any duty upon Lender to
exercise any such powers.

     9.3  This is a continuing Agreement and the rights granted hereunder shall
remain in force and effect and all the rights, powers and remedies of Lender
hereunder shall continue to exist until the Note is paid in full as the same
become due and payable. The rights, powers and remedies given by statute or rule
of law and are cumulative. The exercise of any one or more of the rights, powers
and remedies provided herein shall not be construed as a waiver of any other
rights, powers and remedies of Lender.

     9.4  Upon payment in full of all Obligations, the Lender shall cancel the
Note, and this Agreement shall promptly deliver all such cancelled documents to
the Borrower.

     9.5  This Agreement and the Note shall be contracts made under and governed
by the laws of the State of Illinois, excluding conflicts of law rules or
principles thereof. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or invalidity, without invalidating the remainder or such provision or
the remaining provision of this Agreement. Any notice required or given
hereunder shall be deemed properly given upon hand delivery of the addressee or
three (3) days after mailed, postage prepaid, in each case, addressed to the
designated recipient at its address set forth herein or such other address as
such party may advise the other party by notice given in accordance with this
provision.

     9.6  Lender and Borrower acknowledge that there are no agreements or
understandings, written or oral, between Lender and Borrower with respect to the
Loan, other than as set forth herein and in the Note and that this Agreement and
the Notes contain the entire agreement between Lender and Borrower with respect
thereto. Neither this Agreement or the Note may be altered, modified, terminated
or discharged except by a writing signed by the party against whom such
alteration, modification, termination or discharge is sought.

     9.7  No omission, or delay, by Lender at any time to enforce any right or
remedy reserved to it, or to require performance of any of the terms, covenants
or provisions hereof by
<PAGE>

Borrower at any time designated, shall be a waiver of any such right or remedy
to which Lender is entitled, nor shall it in any way affect the right of Lender
to enforce such provision thereafter.

     9.8  All agreements, representations and warranties contained in this
Agreement or the Note, or in any document delivered pursuant hereto or in
connection herewith shall be for the benefit of Lender and shall survive the
execution and delivery of this Agreement or the Note and the expiration or other
termination of this Agreement or the Note.

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

     9.10  This Agreement shall be binding upon, and shall inure to the benefit
of, the successors and assigns of the Borrower and the Lender. The Lender agrees
that, in the event of any transfer by it of the Note, it will endorse thereon a
notation as to the portion of the principal of the Note which shall have been
paid at the time of such transfer and as to the date to which interest shall
have been last paid thereon.

     9.11  Borrower will notify Lender of any proposed Merger at least sixty
(60) days prior to the closing date. Lender may, in its discretion, either (i)
consent to the assignment of the Loan Agreement and the Note to the successor
entity, or (ii) terminate the Loan Agreement and the Note. If Lender elects to
consent to the assignment, Borrower and its successor will sign the assignment
documentation provided by Lender. If lender elects to terminate the Loan
Agreement and Note, then Borrower will pay Lender on the date of closing of such
Merger all amounts then due and owing together with the Prepayment Amount.

     IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Loan Agreement as of the day and year first above written.


                                          3-Dimensional Pharmaceuticals, Inc.


                                          By:/s/ F. Raymond Salemme
                                             -----------------------------------

                                          Title: President & CEO
                                                 -------------------------------
                                          COMDISCO, INC.


                                          By: /s/ Jill C. Hanses
                                          --------------------------------------

                                          Titled: AVP / Venture Lease
                                          --------------------------------------
<PAGE>

EXHIBIT A

PROMISSORY NOTE

$610,000                                                Date:  April ___, 1994
                                                        Due:   January 1, 1998


     For value received, 3-Dimensional Pharmaceuticals Inc. (the "Borrower")
promises to pay to the order of Comdisco, Inc. (the "Lender") at P.O. Box 91744,
Chicago, IL 60693 (or such other address as the Lender shall designate to
Borrower) the principal amount of Six Hundred Ten Thousand Dollars ($610,000)
together with interest at the rate per annum reflected in the amortization
schedule attached hereto, from the date of this Note to maturity of each
installment on the principal hereof remaining from time to time unpaid, such
principal and interest to be paid in 42 equal monthly installments of $17,128
each, commencing June 1, 1994 and on the same of each month thereafter to and
including December 1, 1997 and a last installment of $91,500 to be paid on
January 1, 1998 such installments to be applied to accrued and unpaid interest
and the balance to unpaid principal. Because the Amortization Schedule reflects
the interest payable beginning June 1, 1994, Borrower shall pay Lender at
closing the interest in the amount of $570.96 per day for the number of days
beginning on the date Lender disburses the funds, through and including May 30,
1994. Interest shall be computed on the basis of a year consisting of twelve
months of thirty days each. Past due installments of principal and interest
shall bear interest at the maximum interest rate per annum permitted by law,
until paid.

     This Note is the Note referred to in, and is entitled to the benefits of,
the Loan Agreement dated as of April ___, 1994 (as from time to time amended,
the "Loan Agreement"), between the Borrower and the Lender, to which Loan
Agreement reference is made as to the rights of the Lender, the Borrower and any
holder of this Note with respect to the acceleration of the maturity of the
Note. The Borrower may prepay this Note, in whole or in part, at any time but
only in accordance with the provisions of the Loan Agreement.

     Upon the occurrence of any one or more Events of default (as defined in the
Loan Agreement), the owner and holder of this Note shall have the rights and
remedies set forth in the Loan Agreement, including the right, without notice or
demand except as otherwise provided in the Loan Agreement (both of which are
expressly waived by Borrower), to declare all sums owing hereon at once due and
payable.

     The Borrower expressly waives demand and presentment for payment, notice of
nonpayment, protest, notice of protest, notice of dishonor, notice of intent to
accelerate the maturity hereof, notice of the acceleration of the maturity
hereof, brining of suit and diligence in taking any action to collect amounts
called for hereunder and in the handling of securities at any time existing in
connection herewith; and is and shall be directly and primarily liable for any
payment of all sums owing and to be owing hereon, regardless of and without any
amount called for hereunder or in connection with any right, lien, interest or
property at any and all times and or existing as security for any amount called
for hereunder.
<PAGE>

     This Note and the right of the holders hereof shall be governed by and
construed in accordance with the laws of the State of Illinois, excluding any
conflicts of law rules or principles thereof, and applicable laws of the United
States of America.

                                          3-Dimensional Pharmaceuticals, Inc.


                                          By: /s/ Scott Horvitz
                                              ----------------------------------

                                          Title: Vice President -- Finance
                                                 -------------------------------
<PAGE>

EXHIBIT B

3-DIMENSIONAL PHARMACEUTICALS
Amortization Schedule
Filename:35 dimat.wk4

Principal;        610,000           Payment:         17,128.80
Interest Rate:    15.1244815%

Payment Number          Principal           Interest         Balance
--------------          ---------           --------         -------
        0                                                   610,000.00
        1                9,440.52            7,688.28       600,559.48
        2                9,559.51            7,569.29       590,999.97
        3                9,679.99            7,448.81       581,319.98
        4                9,802.00            7,326.80       571,517.98
        5                9,925.65            7,203.26       561,592.44
        6               10,050.64            7,078.16       551,541.80
        7               10,177.31            6,951.49       541,364.49
        8               10,305.59            6,823.21       531,058.90
        9               10,435.47            6,693.33       520,623.43
       10               10,567.00            6,561.80       510,056.43
       11               10,700.18            6,428.62       499,356.24
       12               10,835.05            6,293.75       488,521.20
       13               10,971.61            6,157.19       477,549.59
       14               11,109.89            6,018.91       466,439.70
       15               11,249.92            5,878.88       455,189.78
       16               11,391.71            5,737.09       443,798.07
       17               11,535.29            5,593.51       432,262.78
       18               11,680.67            5,488.13       420,582.11
       19               11,827.89            5,300.91       408,754.21
       20               11,976.97            5,151.83       396,777.24
       21               12,127.92            5,000.88       384,649.32
       22               12,280.78            4,848.02       372,368.54
       23               12,435.57            4,693.23       359,932.97
       24               12,592.30            4,536.50       347,340.67
       25               12,751.01            4,377.79       334,589.66
       26               12,911.72            4,217.08       321,677.94
       27               13,074.46            4,054.34       308,603.48
       28               13,239.24            3,889.56       295,364.24
       29               13,406.11            3,722.69       281,958.13
       30               13,575.07            3,553.73       268,383.06
       31               13,746.17            3,382.63       254,636.89
       32               13,919.42            3,209.38       240,717.46
       33               14,094.86            3,033.94       226,622.60
       34               14,272.51            2,856.29       212,350.09
       35               14,452.40            2,676.40       197,897.70
<PAGE>

       36               14,634.55            2,494.25       183,263.14
       37               14,819.00            2,309.80       168,444.15
       38               15,005.77            2,123.03       153,438.37
       39               15,194.90            1,933.90       138,243.47
       40               15,386.42            1,742.38       122,857.05
       41               15,580.34            1,548.46       107,276.71
       42               15,776.71            1,352.09        91,500.00
       43               91,500.00            1,153.24            (0.00)
<PAGE>

                            SUBORDINATION AGREEMENT

         THIS SUBORDINATION AGREEMENT (this "Agreement") is made this 28th day
of April, 1994, by and among Comdisco, Inc., a ______________ corporation (the
"Comdisco"), the Hankin Group, a Pennsylvania partnership (the "Hankin") and
3-Dimensional Pharmaceuticals Inc., a Delaware corporation (the "Debtor").

                              B A C K G R O U N D

Hankin has made or intends to enter into a lease agreement ("Lease") with the
Debtor for premises to be constructed by Hankin at Lot 28, Eagleview Corporate
Center, Uwchlan Township, Chester County, Pennsylvania (the premises which are
or will be the subject of the Lease being hereinafter called the "Leased
Space"). Pursuant to the Lease, Debtor has granted to Hankin a security interest
under the Pennsylvania Uniform Commercial Code, in all personal property owned
by Debtor and now or hereafter located at the Leased Space, to further secure
all obligations of Debtor to Hankin under the Lease. The personal property
encumbered by Hankin"s security interest includes, without limitation, those
items of personal property defined as "Trade Fixtures" in the Lease, which are
more fully listed in Exhibit "A" attached hereto (if such list has not been
prepared as of the date hereof, Hankin and Debtor shall prepare and initial such
list, which shall then become part of this Agreement as Exhibit A). The "Trade
Fixtures" as defined in the Lease are referred to herein as "Trade Fixtures."

         Comdisco has executed, or intends to execute, or intends to execute, an
equipment lease or leases (collectively the "Equipment Lease") with Debtor, for
a total rental of ___________ ($1,500,000.00) dollars. The property which is the
subject of the Equipment Lease is or will be located at the Leased Space, and is
collectively called the "Non-Trade Fixture Personally". The Non-Trade Fixture
Personally is more fully listed in Exhibit "B" attached hereto (if such list has
not been prepared as of the date hereof, Comdisco and Debtor shall prepare and
initial such list, which shall then become part of this Agreement as Exhibit B).
In the event of any inconsistency between Exhibits A and B such that any
personal property would appear to be both Trade Fixtures and Non-Trade Fixture
Personally, such personal property shall be deemed part of trade Fixtures only,
except that the parties agree that the total cost of Trade Fixtures shall not
exceed $100,000.00. In addition, Comdisco has made, or intends to make an
unsecured loan to Debtor in the stated principal amount of $610,000.00 (the
"Comdisco Loan"). The documents evidencing the Comdisco Loan are hereinafter
called the Loan Documents.

         Debtor, Hankin and Comdisco acknowledge and agree that Hankin would not
enter into the Lease with Debtor, and Comdisco would not enter into the
Equipment Lease to Debtor, but for the covenants of as set forth in this
Agreement; it being agreed that the Lease benefits Comdisco, and the Equipment
Lease benefits Hankin.

                                       1
<PAGE>

         The parties desire to evidence their agreements as to the subordination
of some of the rights of Comdisco to the rights of Hankin, the subordination of
some of the rights of Hankin to the rights of Comdisco as more fully set forth
below.

         NOW, THEREFORE, the parties hereto, each intending to be legally bound
hereby, agree as follows:

                                  AGREEMENTS

         NOW, THEREFORE, in consideration of the premises, One Dollar ($1.00)
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged, the parties agree as follows:

         1. Priority of Hankin as to Trade Fixtures. Hankin shall have the first
            ---------------------------------------
priority lien on and security interest in the Trade Fixtures. Comdisco shall
have no property rights in, lien on or security interest in the Trade Fixtures,
and hereby waives the right to levy, execute upon or assert any right in the
Trade Fixtures pursuant to any judgment obtained against Debtor or otherwise, it
being intended that any and all interest of Hankin in the Trade Fixtures shall
be free and clear of any interest of Comdisco therein. Hankin"s rights shall
apply regardless of the perfection, nonperfection, cessation of perfection or
order of perfection of the parties, respective interests. Comdisco agrees that
it shall give actual notice of the limitations on Comdisco"s right to levy upon
or execute against Trade Fixtures, upon any default under the Equipment Lease or
Loan Documents, to any assignee or third party acquiring any subsequent assignee
of the lessor"s or lender"s interest in the Equipment Lease or Loan Documents
respectively. Rankin hereby consents to the performance by Comdisco of any of
Debtor"s obligations under the Lease, and the assistant by Debtor to Comdisco of
its interest in the Lease, provided-that Comdisco"s financial statement is
reasonably judged by Hankin to be equal or superior to Debtor, s as of the date
of the assignment, and Comdisco agrees to assume and be bound by the provisions
of the Lease.

         2. Priority of Comdisco as to Non-Trade Fixture Personalty. Any and all
            -------------------------------------------------------
right, title and interest of Hankin in the Non-Trade Fixture Personalty is
under, subject and subordinate to rights of Comdisco therein pursuant to the
Equipment Lease. Hankin shall have a lien on and security interest in the rights
of Debtor in the Non-Trade Fixture Personalty pursuant to the Equipment Lease,
subject and subordinate to Comdisco"s rights therein. This priority shall apply
regardless of the perfection, nonperfection, cessation of perfection or order of
perfection of the parties" respective interests. Nothing contained herein shall
be deemed to limit any rights obtained by Comdisco as a permitted assignee of
Debtor"s rights under the Lease (in accordance with Section 12 (c) thereof), to
retain sublease rentals to which the "Tenant" under the Lease is entitled.

                                       2
<PAGE>

         3. Control of Property. Until all of the Debtor"s obligations (whether
            -------------------
pre-existing or hereafter incurred) to Hankin have been performed or paid in
full (including, but not limited to, the payment of all Minimum Annual Rent and
Additional Rent which the Debtor is obligated to pay to Hankin) , Hankin shall
control the disposition of and the exercise of remedies with respect to the
Trade Fixtures in the event of a default by the Debtor in any of its obligations
to Hankin. Debtor and Comdisco hereby waive any and all claims against Hankin
which it may now or hereafter have on account of the Hankin"s action in using or
disposing of all or any of the Trade Fixtures. Comdisco waives any right to
control to timing, nature or extent of Hankin"s collection efforts against the
Debtor, including disposition of the Trade Fixtures. Hankin may exercise or
refrain from exercising its rights against the Debtor or the Trade Fixtures as
it may elect in its sale and absolute subjective discretion. Hankin hereby
consents to the installation of the Non-Trade Fixture Personalty within the
Leased Space, and shall permit Comdisco to enter the Leased Space upon
reasonable prior notice to Hankin for the purpose of exercising its rights under
the Equipment Lease. The Non-Trade Fixture Personalty shall not be considered
part of real property or a fixture, regardless of whether or by what means it is
or may become affixed to real property. In exercising its rights to remove the
Non-Trade Fixture Personalty pursuant to the Equipment Lease, Comdisco shall, at
its sole cost and expense, repair any damage to the Leased Space or the building
of which it is a part caused by Comdisco's negligence or failure to observe
reasonable precautions as Hankin may require, in the removal of the Non-Trade
Fixture Personalty.

         4. Miscellaneous. No waiver of any of its rights and remedies hereunder
            -------------
and no modification or amendment of this Agreement shall be deemed to be made
unless the same shall be in writing, duly by the parties hereto, and each such
waiver, if any, shall apply only with respect to the specific instance involved
and shall in no way impair the rights and remedies of the parties hereunder in
other respects at any other time. This Agreement shall be binding upon and
benefit the parties and their respective successors and assigns. Comdisco
irrevocably consents and submits to the jurisdiction and venue of the Court of
Common Pleas of Chester County, Pennsylvania, and of any other state or federal
court sitting in the Commonwealth of Pennsylvania over any suit, action or
proceeding arising out of or relating to this Agreement. Comdisco irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. The section
headings of this Agreement are for convenience only and shall not limit or
otherwise affect any of the terms hereof. This Agreement shall be deemed
executed and delivered in and shall be construed, governed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania in effect from time
to time.

         IN WITNESS OF, the parties have caused this Agreement to be executed,
under seal, on the date and year first above written.

                                       3
<PAGE>

WITNESS/ATTEST:                             COMDISCO, INC.


___________________________                 BY: /s/ Jill C. Hanses
                                                ------------------
                                            NAME: AVP / Venture Lease
                                            TITLE:


                                            THE HANKIN GROUP


/s/ John C. Purcell, Jr.                    BY: /s/ Robert S. Hankin
---------------------------                     --------------------
                                            NAME: Robert S. Hankin
                                            TITLE: General Partner


WITNESS/ATTEST:                             3-DIMENSIONAL PHARMACEUTICALS, INC.


 /s/ Scott Horvitz                          BY: /s/ F. Raymond Salemme
---------------------------                     ----------------------
                                            NAME: F. Raymond Salemme
                                            TITLE: President & CEO





27875SUB.BNK
04/28/94 3:14pm

                                       4
<PAGE>

STATE OF                            :
                                            SS:
COUNTY OF                           :


                  On this _________ day of _______________ 1994, before me, the
undersigned, a Notary Public of the State of __________________________,
personally appeared ____________ who acknowledged himself/herself to be the
__________ of COMDISCO, INC., a being duly authorized to do so, executed the
foregoing agreement for the purposes therein contained by signing the name of
the said entity by himself/herself as _________________.

                  As witness-my hand and Notary Public.



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


my commission expires: _________________________________


STATE OF PENNSYLVANIA               :
                                                     SS:
COUNTY OF CHESTER                   :

                  On this the 25th day of April 1994, before me, the
undersigned, a Notary Public of the State of Pennsylvania,(personally appeared
Robert S. Hankin, who acknowledged himself to be a partner of THE HANKIN GROUP,
a Pennsylvania partnership, and that he/she as such partner, being duly
authorized to do so, executed the foregoing agreement for the purposes therein
contained by signing the name of the said entity by himself /herself as partner.



                                           /s/ Kathleen A. Urban
                                           -------------------------------------


My Commission expires: April 1, 1996

                                       5
<PAGE>

STATE OF ILLINOIS          :
                                                     SS:
COUNTY OF COSH             :


                  On this 7th day of July 1994, before me, the
undersigned, a Notary Public of state of Illinois, personally appeared Jill C.
Hanses, who acknowledged himself/herself to be the Assistant Vice President of
COMDISCO, INC., a corporation and that he/she as being duly authorized to do so,
executed the foregoing agreement for the purposes therein contained by signing
the name of the said entity by himself/herself as Assistant Vice President.

                  As witness my hand and Notary Public.


                                                 /s/ Eileen M. Bagarella
                                                 -----------------------
My commission expires: 7/11/97


STATE OF PENNSYLVANIA      :
                                                     SS:
COUNTY OF CHESTER          :

                  On this the 28th day of April 1994, before me, the
undersigned, a Notary Public of the State of Pennsylvania,(personally appeared
Robert S. Hankin, who acknowledged himself to be a partner of THE HANKIN GROUP,
a Pennsylvania partnership, and that he/she as such partner, being duly
authorized to do so, executed the foregoing agreement for the purposes therein
contained by signing the name of the said entity by himself /herself as partner.



                                               /s/ Kathleen A. Urban
                                               ---------------------------------


My Commission expires: April 1, 1996

                                       6
<PAGE>

STATE OF                            :
                                                     SS:
COUNTY OF                           :


                  On this 28th day of April, 1994 before me, the undersigned, a
Notary Public of the State of Pennsylvania, personally appeared F. Raymond
Salemme who acknowledged himself to be the President of 3-DIMENSIONAL
PHARMACEUTICAL, INC., a Delaware corporation, and that he/she as such officer,
being duly authorized to do so, executed the foregoing agreement for the
purposes therein contained by signing the name of the said entity by
himself/herself as officer.

                  As witness my hand and Notary Public.


                                                     /s/ Kathleen A. Urban
                                                     ---------------------------

My commission expires:  April 1, 1996




27875sub/bnk

                                       7
<PAGE>

                                   EXHIBIT A

                          (MULTIPLE QUARTER DELIVERY)


SCHEDULE No. VL-2                           DATED AS OF      April 25, 1995
             ----                                            --------------

TO MASTER LEASE AGREEMENT DATED AS OF March 7, 1994 ("MASTER LEASE")
                                      -------------


LESSEE:  3-DIMENSIONAL                                  LESSOR: COMDISCO, INC,
         PHARMACEUTICALS, INC.

Admin.contact/Phone No.:                        Address for all Notices:
-----------------------                         -----------------------
Scott Horvitz
(610) 458-6043                                  6111 North River Road
                                                Rosemont, Illinois  60018
                                                Attn.:  Capital Equipment Lease
                                                        Administration

Address for Notices:
-------------------
Eagleview Corporate Center
665 Stockton Drive, Suite 104
Exton, PA  19341
Attn.:  Scott Horvitz

Central Billing Location:                               PAYING AGENT:
Same as Above                                           Comdisco, Inc.
                                                        P.O. Box 91744
                                                        Chicago, Illinois  60693
Attn.:

Lessee Reference No.: _______________________
                         (24 digits maximum)

Location of Equipment:                                  Initial Term:  48 months
---------------------                                   ------------   ---------
Same as Above

                                       1
<PAGE>

<TABLE>
Attn.:                                                                 Lease Rate Factor:  2.493%

EQUIPMENT (as defined below);                          Advance:        $2,493.00-due upon execution
                                                                       $9,972.00-due at release of
                                                                       Phase II funds
                                                                       $12,465.00-due at the time
                                                                       Lessee has expended the first
                                                                       $500,000 of this lease
                                                                       financing
                                                                       $12,465.00-due at release of
                                                                       Phase III funds

Item                                            Machine Type/                             Serial
No.           Qty.         Manufacturer            Feature             Description        Number         Rent
------        -----        ------------         ---------------        -----------        ------         ----
<S>           <C>          <C>                  <C>                    <C>                <C>            <C>
</TABLE>

Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period April 26, 1995 through April 26, 1996 (the
"Acceptance Period"), for which Lessor receives vendor invoices approved for
payment, up to an aggregate purchase price of:

Phase I:   $200,000.00  Available immediately

Phase II:  $800,000.00  The release of Phase II shall be wholly contingent upon
           the completion of the current round of equity financing and $4
           million being raised.

Phase III: $500,000.00  The release of Phase III shall be wholly contingent upon
           Lessor's review of Lessee's progress.

Equipment shall not include upgrades, leasehold improvements, installation costs
and delivery Costs, rolling stock, special tooling, custom equipment, hand held
items, molds and fungible items. In addition, the Acceptance Period shall be
extended an additional six (6) months until October 26, 1996 at Lessor's
discretion after Lessor's independent review of Lessee's performance. In the
event Lessee requests and Lessor releases Phase II of this lease financing, the
total software financed under Phase II shall not exceed $100,000.00. Software
shall not be financeable under Phase I and Phase III of this lease financing.

                                       2
<PAGE>

1.    Notice Period: Not less than one hundred and twenty (120) days nor more
than twelve (12) months prior to the expiration of the lease term.

2.    Equipment Purchase

      Lessee acknowledges that it has either received or approved Lessor's
purchase documentation for the Equipment. The aggregate purchase price referred
to on the face of this Schedule shall include all Equipment purchased by Lessor,
consisting of amounts financed under Sections (1), (it) and (iii) below.

      (i)  NEW EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.

      (ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may be
considered by Lessor for Inclusion under this Loss (the "Sale-Leaseback
Transaction"). Any request for a Sale-Lease Transaction must be submitted to
Lessor in writing (along with accompanying evidence of Lessee's Equipment
ownership satisfactory to Lessor for all Equipment submitted) no Later than May
26, 1995 *. Lessor will not perform a Sale-Leaseback Transaction for any request
or accompanying Equipment ownership documents which arrive after the date marked
above by an asterisk (*). Further, any sale-leaseback Equipment will be placed
on loss* subject to: (1) Lessor prior approval of the Equipment; and (2) if
approved, at Lessor's actual not appraised Equipment value pursuant to the
schedule below:

Between 2/27/95 and 5/26/95                       100%

Between 12/27/94 and 2/26/95                       80%

Between 9/27/94 and 12/26/94                       70%

Between 6/27/94 and 9/26/94                        65%

Between 3/27/94 and 6/26/94                        60%

(iii) USED EQUIPMENT. Lessor will purchase "used" Equipment which is obtained
      from a third party by Lessee for its use Subject to: (1) Lessor's prior
      approval of the Equipment; and (2) at the request of Lessor, at Lessor's
      appraised value for such used Equipment.

3.    Commencement Date

      The Commencement Date for each item of Equipment will be its Installation
Date. Lessee agrees to confirm the Commencement Date providing Lessor with
Invoices containing the Equipment location, description, serial number and cost,
the Installation Date and Lessee's signature. Lessor will summarize all Invoices
and/or IAFs received in the same calendar quarter

                                       3
<PAGE>

into a Commencement Certificate in the form attached to this Schedule as Exhibit
I and the Initial Term will begin the first day of the calendar quarter
thereafter. Each Commencement Certificate will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
Schedule. Notwithstanding the foregoing, if the Equipment pertains to Sale-
Leaseback Equipment, the Commencement Date will be the date Lessor tenders the
purchase price for the Equipment.

4.   Option to Extend

     So long as no Event of Default shall have occurred and be continuing,
Lessee will have the right to extend the Initial Term of this Schedule for a
period of one (1) year by giving Lessor at least one hundred and twenty (120)
days written notice prior to the expiration of the Initial Term. In such event,
the rent to be paid during said extended period shall be mutually agreed upon
and if the parties cannot mutually agree, then the Lease shall continue in full
force and effect pursuant to the existing term and conditions until terminated
in accordance with its terms. This Schedule will continue in effect following
said extended period until terminated by either party upon not less than one
hundred and twenty (120) days prior written notice, which notice shall be
effective as of the Rent Interval next following receipt. Alternatively, at the
expiration of the Initial Term Losses will have the right to extend the Initial
Term of this Schedule for a on* year period at the same tense rate factor as set
forth on the face of this Schedule, by giving Lessor at least 120 days written
notice prior to the expiration of the Initial Term, and at the end of the one
year period, provided all lease payments have been made, title to the Equipment
shall automatically pass to Lessee.

5.   Purchase Option

     So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than one
hundred and twenty (120) days prior to the expiration of the initial Term of
this Schedule, Lessee wilt have the option at the expiration of the Initial Term
of this Schedule to purchase all but not less than sit, of the Equipment listed
herein for a purchase price and upon terms and conditions to be mutually agreed
upon by the parties following Lessee's written notice, plus any taxes applicable
at time of purchase. Said purchase price shall be paid to Lessor at least thirty
(30) days before the expiration date of the Initial Term. Title to the Equipment
shall automatically pass to Lessee upon payment in full of the purchase price
but, in no event, earlier then the expiration of the fixed initial Term. If the
parties are unable to agree on the purchase price or the terms and conditions
with respect to said purchase, then the Lease with respect to this Equipment
shall remain in full force and affect. It is agreed and understood that Lessor
is retaining a purchase money security interest in the Equipment Listed herein
and this Schedule shall constitute a Security Agreement under the Uniform
Commercial Code of the state in which the Equipment is located. Lessor and
Lessee agree that for purposes of this paragraph, any Licensed software will not
be considered part of the equipment.

6.   Special Term

                                       4
<PAGE>

The terms and conditions of the Master Lease Agreement as they pertain to this
Schedule are hereby modified and amended as follows:

(a)  Section 5.2, "Relocation or Sublease"
                   ----------------------

     To the end of this Section, add the following:

", provided that Lessee may relocate Equipment to the premises of academic
researchers working on joint projects with the Lessee, at Lessee's sole expense,
without the prior written consent of the Lessor if the Lessee provides the
Lessor with prior written notice."

(b)  Section 6.2, "Taxes and Fees,

     In line 4 after the word "capital", add the words "not worth"; before the
word "income", delete the word "not",

(c)  Section 7.1, "Care, Use and Maintenance"

     Delete this Section in its entirety and replace with the following:

     "Lessee shall, at its sole expense, at all times during the term of each
Equipment Schedule, maintain the Equipment in good operating order, repair,
condition and appearance and protect the Equipment from deterioration, other
than normal wear and tear. Lessee shall not use the Equipment for any purpose
other then that for which it was designed Lessee shall, at its sole expense and
at its sole discretion, either (I) enter into and maintain in force, for the
term of each Equipment Schedule, an appropriate maintenance contract with the
manufacturer of the Equipment, or such other party as shall be acceptable to
Lessor, and shall provide Lessor with a copy of such contract and all
supplements thereto which are applicable to the Equipment; or (ii) self maintain
the Equipment at acceptable standards. If Lessee returns the Equipment to Lessor
at the end of the Initial Term of this Lease or any extension thereof, and upon
mail of the Equipment Lessor determines that the Equipment has not been
maintained property or will not be eligible for a manufacturer's maintenance
contract, then Lessee hereby agrees to assume any costs or expenses necessary to
ensure that the Equipment is in good working order, which may include but need
not include, recertification by the manufacturer. For the purposes of this
Section, any reference to "Equipment" shall include any software included in any
such Equipment Schedule, and any reference to "manufacturer" shall mean the
Licensor thereof."

(d)  Section 7.2, "Attachments and Reconfigurations"

     In line 1 before the word "prior", insert the word "after"; after the word
     "written", delete the word "consent" and replace with the words "notice
     to".

     In line 3 before the word "restore" insert the words "have the option to".

     In line 5 after the word "excluded", add the words "or else such
     Reconfigurations or Attachments shall become the property of the Lessor."

                                       5
<PAGE>

(e)  Section 8, "Representations and warranties of Lessee"
                 ----------------------------------------

     To the end of subsection (e), add the words 11, and except in connection
with the transactions contemplated with the Lessor and The Hankin Group."

(f)  Section 9, "Delivery and Return of Equipment"

     In line 9, delete the words "and Lessee will supply any of its personnel";
to the end of the last sentence, add the phrase, "subject to Lessee's normal
security procedures and during reasonable hours upon reasonable advance notice."

(g)  Section 13.1, "Default"
                    -------

     In line 3 of subsection (b), delete the word "ten (10)" and replace with
     the word "fifteen (15)".

(h)  Section 14.1, "Board Attendance"
                    ----------------

     Delete this section in its entirety and replace with the following:

     "Section 14.1, Board information.
                    -----------------

     Lessee agrees to provide to Lessor on a monthly basis: Profit and Loss
     Statement, Balance Sheet, Cash Flow Statement and Proforma Operating Plan
     (as developed)."

(i)  Section 14.2, "Financial Statements"
                    --------------------

     In line 5 after the word "required", delete the word "by" and replace with
the words "to be filed with:.

     In lines 7 and 8, delete the words "the same information which Losses
     provides to its Board of Directors, but which will include not less than".

     In line 10, delete the word "ninety (90)" and replace with the words
"one hundred twenty (120)".

     In line 12, delete the words "the financial position" and replace with the
words "cash flows".

     In line 15, delete the words "additional information (including but not
limited to".

     In line 16 before the word "Lessor", insert the words "requested by Lessor
that".

(j)  Section 14.3, "Obligation to Lease Additional Equipment"
                    ----------------------------------------

                                       6
<PAGE>

     To the end of this Section, add the following:

     "Notwithstanding the foregoing, Lessor shall not withhold its consent if
the acquiring entity has a Moody's bond rating of BA3 or better, or the
equivalent if no bond rating is available."

(k)  Section 14.4, "Merger and Sale Revisions"
                    -------------------------

     In line 1, delete the word "sixty (60)," and replace with the word "thirty
(30)".

(l)  Section 14.14, "Additional Documents"
                     --------------------

     To the end of this Section, add the words "in a form mutually acceptable to
the parties."

Register Lease: This Schedule is issued pursuant to the Master Lease identified
on page 1 of this Schedule. All of the terms and conditions of the Master Lease
are incorporated in and made a part of this Schedule as if they were expressly
set forth in this Schedule. The parties hereby reaffirm all of the terms and
conditions of the Master Lease (including, without limitation, the
representations and warranties set forth in Section 8) except as modified herein
by this Schedule.

3-DIMENSIONAL PHARMACEUTICALS, INC.        COMDISCO, INC.
as Lessee                                  as Lessor
By: /s/ Scott Horvitz                      By: /s/  James P. Labe
   ---------------------------------          ----------------------------------
Title: Vice President and CFO              Title: Pres. - Venture Lease
      ------------------------------             -------------------------------
Date: 5/3/95                               Date: 5/30/95
     -------------------------------            --------------------------------

DRS; 4/26/95

                                       7
<PAGE>

                                   EXHIBIT 1

                           COMMENCEMENT CERTIFICATE
                           ------------------------

     This Certificate dated is "executed pursuant to Schedule No. VL-2 to the
Master Lease Agreement dated March 7, 1994 between Comdisco, Inc. ("Lessor") and
3-Dimensional Pharmaceuticals, Inc. ("Lessee"). All of the term, conditions,
representatives and warranties of the Master Lease and Schedule No. VL-2 are
incorporated herein and made a part hereof and this Commencement Certificate
constitutes a Schedule for the Equipment described below.

1.   Equipment:
                               Equipment
     Qty          Mfgr         Type/Model          Serial #         Location
     ---          ----         ----------          --------         --------

     (See attached Invoices)


2.   Installation Date:        (See attached Invoices)
     -----------------

3.   Initial Term Starts on:
     ----------------------

4.   Total Equipment Cost:
     --------------------

5.   Rent:
     ----

6.   Representations of Lessee:
     -------------------------

     Each item of Equipment has been delivered to the location indicated above,
     tested, inspected, found to be in good working order and accepted by the
     Lessee on its Installation Date.

                                       8
<PAGE>

August 23, 1995


Mr. Scott Horvitz
Vice President and Chief Financial Officer
3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center
665 Stockton Drive, Suite 104
Exton, PA 19341

Re:  Equipment Schedule VL-2 dated as of April 25, 1995 to the Master Lease
     Agreement dated as of March 7, 1994 by and between Comdisco, Inc.
     ("Lessee") and 3-Dimensional Pharmaceuticals, Inc. ("Lessee") collectively,
     the "Lease".

Dear Scott:

This letter is to confirm our agreement whereby Comdisco, as Lessor, hereby
agrees to release up to $200,000.00 of the Phase II equipment financing pursuant
to the terms and conditions of the above mentioned Lease.

Please indicate your acceptance of the above agreement by signing in the space
provided below and returning this letter and a check for the Advance Rent in the
amount of $2,493.00 to my attention at your earliest convenience. Please do not
hesitate to call me if you have any questions.

Sincerely,

/s/ Deborah R. Smith

Deborah R. Smith

                                             Agreed and Accepted:

cc:  Lisa DiSilvio                           By: /s/ Scott Horvitz
     Comdisco Ventures
                                             Title: VP and CFO

                                             Date: 8/25/95

                                       9
<PAGE>

September 4, 1996

Mr. Scott Horvitz
3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center
665 Stockton Drive, Suite 104
Exton, PA 19341

Re:  Equipment Schedule No. VL-2 dated as of April 25, 1995 to the Master Lease
     Agreement dated as of March 7, 1994 by and between Comdisco, Inc.
     ("Lessee") and 3-Dimensional Pharmaceuticals, Inc. ("Lessee") collectively,
     the "Lease".

Dear Scott:

This letter is to confirm our agreement with respect to the above mentioned
Lease whereby Lessor will release an additional $250,000.00 of equipment
financing. In addition, Lessee shall be allowed to lease such equipment until
November 30, 1996 in accordance with the terms and conditions of such Lease.
Also, please note that per the terms of Equipment Schedule VL-2, once Lessee has
utilized a total of $500,000.00 of lease financing an additional Advance Rent in
the amount of $12,465.00 will be due. Prior to the release of this $250,000.00,
Lessee has expended $329,771.03 towards this $500,000.00 Advance Rent milestone.

Please indicate your acceptance of the above agreement by signing in the space
provided below and returning this letter and a check for the Advance Rent in the
amount of $3,116.25 to my attention at your earliest convenience. If you have
any questions or comments-please do not hesitate to call me at (617) 630-5515.

Sincerely,
/s/ Deborah R. Smith

Deborah R. Smith
Regional Portfolio Manager

Agreed and Accepted:

By: /s/ Scott Horvitz

Title: Vice President & CFO

Date: September 4, 1996

cc:  Carrie Loepke; Comdisco Ventures

                                      10
<PAGE>

November 22, 1996

Mr. Steven O'Brien
3-Dimensional Pharmaceuticals, Inc.
665 Stockton Drive, Suite 104
Exton, PA 19341

Dear Steven:

RE:  Equipment Schedule No. VL-2 dated as of April 25, 1995 to the Master Lease
     Agreement dated as of March 7, 1994

     This letter is to confirm our agreement with respect to the above
referenced Equipment Schedule whereby 3-Dimensional Pharmaceuticals, Inc. as
Lessee, shall be allowed to lease equipment from November 30, 1996 to January
31, 1997 in accordance with the terms and conditions of such schedule.

     If you are in agreement with the above, please so indicate by signing this
letter and returning to my attention.

Sincerely,

/s/ Carrie Loepke

Carrie Loepke
Sr. Account Specialist
Comdisco Ventures

AGREED AND ACCEPTED TO THIS 26th DAY OF NOVEMBER, 1996

3-DIMENSIONAL PHARMACEUTICALS            COMDISCO, INC.

By:    /s/ Scott Horvitz                 By:    /s/ James P. Labe
   ----------------------------------       ------------------------------------

Title: VP & CFO                          Title: President, Venture Lease Div.
      -------------------------------          ---------------------------------

Date:      11/26/96                      Date:    11/26/96
     --------------------------------         ----------------------------------

                                      11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>16
<FILENAME>0016.txt
<DESCRIPTION>WARRANT TO PURCHASE SERIES A STOCK DATED 7/21/98
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.29
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH
MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.


                               WARRANT AGREEMENT

                 To Purchase Shares of the Preferred Stock of

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

          Originally Dated as of March 7, 1994 (the "Effective Date")
                         Re-Issued as of July 21, 1998


     WHEREAS, 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation (the
"Company") has entered into a Master Lease Agreement dated as of March 7, 1994,
Equipment Schedule No. VL-1, and related Schedules (the "Leases") and a Loan
Agreement and associated Promissory Note dated as of March 7, 1994 (the "Loan")
with CDC Realty Inc., an Illinois corporation (the "Warrantholder"); and

     WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Leases and the Loan, the right to purchase shares of its Series A
Preferred Stock;

     NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.   GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
     ----------------------------------------------

The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company, 161,415 fully paid and
non-assessable shares of the Company"s Series A Preferred Stock ("Preferred
Stock") at a purchase price of $1.00 per share (the "Exercise Price"). The
number and purchase price of such shares are subject to adjustment as provided
in Section 8 hereof;

2.   TERM OF THE WARRANT AGREEMENT.
     -----------------------------

Except as otherwise provided for herein, the term of this Warrant Agreement and
the right to purchase Preferred Stock as granted herein shall commence on the
Effective Date and shall be exercisable for a period of (i) ten (10) years or
(ii) five (5) years from the effective date of the Company"s initial public
offering, whichever is longer.
<PAGE>

3.   EXERCISE OF THE PURCHASE RIGHTS.
     -------------------------------

     The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, and in no event later than twenty-one
(21) days thereafter, the Company shall issue to the Warrantholder a certificate
for the number of shares of Preferred Stock purchased and shall execute the
Notice of Exercise indicating the number of shares which remain subject to
future Purchases, if any.

     The Exercise Price may be paid at the Warrantholder"s election either (i)
by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:

                  X        = Y(A-B)
                             ------
                                A

Where:            X = the number of shares of Preferred Stock to be issued to
                      the Warrantholder.

                  Y = the number of shares of Preferred Stock requested to be
                      exercised under this Warrant Agreement.

                  A = the fair market value of one (1) share of Common Stock.

                  B = the Exercise Price.

     As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock:

     (i)       if the exercise is in connection with an initial public offering,
and if the Company"s Registration Statement relating to such public offering has
been declared effective by the SEC, then the initial "Price to Public" specified
in the final prospectus with respect to the offering;

     (ii)      if this Warrant is exercised after, and not in connection with
the Company"s initial public offering, and:

               (a) if traded on a securities exchange, the fair market value
shall be deemed to be the average of the closing prices on the principal
securities exchange over a twenty"one (21) day period ending three days before
the day the current fair market value of the securities is being determined; or

                                       2
<PAGE>

               (b) if actively traded over-the-counter, the fair market value
shall be deemed to be the average of the closing bid and asked prices quoted on
the NASDAQ system (or similar system) over the twenty-one (21) day period ending
three days before the day the current fair market value of the securities is
being determined;

     (iii)     if at any time the Common Stock is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
current fair market value of Common Stock shall be the highest price per share
which the Company could obtain from a willing buyer (not a current employee or
director)~ for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by its Board of Directors, unless
the Company shall become subject to a merger, acquisition or other consolidation
pursuant to which the Company is not the surviving party, in which case the fair
market value of Common Stock shall be deemed to be the value received by the
holders of the Company's Preferred Stock on a common equivalent basis pursuant
to such merger or acquisition.

     Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. AU other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.   RESERVATION OF SHARES.
     ---------------------

     (a)  Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.

     (b)  Registration or Listing. If any shares of Preferred Stock required
to be reserved hereunder require registration with or approval of any
governmental authority under any Federal or State law (other than any
registration under the 1933 Act, as then in effect, or any similar Federal
statute then enforced, or any state securities law, required by reason of any
transfer involved in such conversion), or listing on any domestic securities
exchange, before such shares may be issued upon conversion, the Company will, at
its expense and as expeditiously as possible, use its best efforts to cause such
shares to be duly registered, listed or approved for listing on such domestic
securities exchange, as the case may be.

5.   NO FRACTIONAL SHARES OR SCRIP.
     -----------------------------

     No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.   NO RIGHTS AS SHAREHOLDER.
     ------------------------

     This Warrant Agreement does not entitle the Warrantholder to any voting
rights, the right to receive cash dividends or other rights as a shareholder of
the Company prior to the exercise of the Warrant.

                                       3
<PAGE>

7.   WARRANTHOLDER REGISTRY.
     ----------------------

     The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.

8.   ADJUSTMENT RIGHTS.
     -----------------

     The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:

     (a)  Merger and Sale of Assets. If at any time there shall be a capital
reorganization, of the shares of the Company's Preferred Stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation when the Company is not the surviving corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person (hereinafter referred to as a "Merger Event"), then, as a part of
such Merger Event, lawful provision shall be made 50 that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of Preferred Stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been. issuable if Warrantholder had exercised this Warrant
immediately prior to the Merger Event. In any such case, appropriate adjustment
(as determined in good faith by the Company's Board of Directors) shall be made
in the application of the provisions of this Warrant Agreement with respect to
the rights and interest of the Warrantholder after the Merger Event to the end
that the provisions of this Warrant Agreement (including adjustments of the
Exercise Price and number of shares of Preferred Stock purchasable) shall be
applicable to the greatest extent possible.

     (b)  Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.

     (c)  Subdivision or Combination of Shares. If the Company at any time shall
combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

     (d)  Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's stock,
then the Exercise Price shall be adjusted, from and after the record date of
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction (i)
the numerator of which shall be the total number of all shares of the Company's
stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately

                                       4
<PAGE>

after such dividend or distribution. The Warrantholder shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment, the
number of shares of Preferred Stock (calculated to the nearest whole share)
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Preferred Stock issuable upon the exercise
hereof immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment. Notwithstanding the
foregoing, no adjustment shall be made for a dividend payable in the Company's
Common Stock if adjustment hereunder would compound an adjustment made upon
conversion of the Preferred Stock issuable upon exercise of this Warrant into
Common Stock, which would result in double adjustment for a single Common Stock
dividend.

     (e)  Right to Purchase Additional Stock. If, the Warrantholder's total
          ----------------------------------
cost of equipment leased pursuant to the Leases exceeds $2,110,000.00,
Warrantholder shall have the right to purchase from the Company, at the Exercise
Price (adjusted as set forth herein), an additional number of shares, which
number shall be determined by (i) multiplying the amount by which the
Warrantholder's total equipment cost exceeds $2,110,000.00 by 8.5%, and (ii)
dividing the product thereof by the Exercise Price per share referenced above.

     (f)  Antidilution Rights; Notice of Stock Issuance. Additional antidilution
          ---------------------------------------------
rights applicable to the Preferred Stock purchasable hereunder are as set forth
in the Company's Restated Certificate of Incorporation, as amended through the
Effective Date, a true and complete copy of which is attached hereto as Exhibit
III(the "Charter"). The Company shall promptly provide the. Warrantholder with
any restatement, amendment, modification or waiver of the Charter. The Company
shall provide Warrantholder with prior written notice of any issuance of its
stock or other equity security to occur after the Effective Date of this
Warrant, other than Excluded Stock, as defined in the Charter, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

     (g)  Notice of Adjustments. If: (i) the Company shall declare any dividend
          ---------------------
or distribution upon its stock, whether in cash (except for regular cash
dividends as set forth in the terms of the Preferred Stock Section 4 A(1) (ci)
of the Charter), property, stock or other securities; (ii) the Company shall
offer for subscription prorata to the holders of any class of its Preferred or
other convertible stock any additional shares of stock of any class or other
rights; (iii) there shall be any Merger Event; or (iv) there shall be any
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then, in connection with each such event, the Company shall send to the
Warrantholder: (A) at least twenty (20) days' prior written notice of the date
on which the books of the Company shall close or a record shall be taken for
such dividend, distribution, subscription rights (specifying the date on which
the holders of Preferred Stock shall be entitled thereto) or for determining
rights to vote in respect of such Merger Event, dissolution, liquidation or
winding up; and (B) in the case of any such Merger Event, dissolution,
liquidation or winding up, at least twenty (20) days' prior written notice of
the date when the same shall take place (and specifying the date on which the
holders of Preferred Stock shall be entitled to exchange their Preferred Stock
for securities or other property deliverable upon such Merger Event,
dissolution, liquidation or winding up). In the case of a public offering, the

                                       5
<PAGE>

Company shall give Warrantholder at least twenty (20) days written notice prior
to the effective date thereof.

     Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

     (h)  Timely Notice. Failure to timely provide such notice required by
subsection (g) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.

9.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
     --------------------------------------------------------

     (a)  Reservation of Preferred Stock. The Preferred Stock issuable upon
          ------------------------------
exercise of the Warrantholder's rights, except with respect to Section 8(e)
hereof, has been duly and validly reserved and, when issued in accordance with
the provisions of this Warrant Agreement, will be validly issued, fully paid and
non-assessable, and will be free of any taxes, liens, charges or encumbrances of
any nature whatsoever; provided, however, that the Preferred Stock issuable
pursuant to this Warrant Agreement may be subject to restrictions on transfer
under state and/or Federal securities laws. The Company has made available to
the Warrantholder true, correct and complete copies of its Charter and Bylaws,
as amended, and minutes of all Board of Directors (including all committees of
the Board of Directors, if any) and Shareholder meetings from March 11, 1993
through April __, 1994. The issuance of certificates for shares of Preferred
Stock upon exercise of the Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Preferred Stock. The Company shall not be required to pay any tax which may
be payable in respect of any transfer involved and the issuance and delivery of
any certificate in a name other than that of the Warrantholder.

     (b)  Due Authority. The execution and delivery by the Company of this
          -------------
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and the Leases and this Warrant Agreement are
not inconsistent with the Company's Charter or Bylaws, do not contravene any law
or governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Leases and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.

     (c)  Consents and Approvals. No consent or approval of, giving of notice
          ----------------------
to, registration with, or taking of any other action in respect of any state,
Federal or other

                                       6
<PAGE>

governmental authority or agency is required with respect to the execution,
delivery and performance by the Company of its obligations under this Warrant
Agreement.

     (d)  Issued Securities. All issued and outstanding shares of Common Stock,
          -----------------
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws. In addition :

          (i)       The authorized capital of the Company consists of (A)
4,599,350 shares of Common Stock, of which 450,000 shares are issued and
outstanding, and (B) 3,789,350 shares of preferred stock, of which 3,610,000
shares are issued and outstanding and are convertible into 3,610,000 shares of
Common Stock at $1.00 per share.

          (ii)      The Company has reserved 810,000 shares of Common Stock for
issuance under its Equity Compensation Plan, under which 112,200 options are
outstanding, and 450,000 shares of restricted stock are outstanding. There are
no other options, warrants, conversion privileges or other rights presently
outstanding to purchase or otherwise acquire any authorized but unissued shares
of the Company's capital stock or other securities of the Company.

          (iii)     Except as set forth in Section 4 of the Company's
Stockholders' Agreement dated October 15, 1993, as amended (the "Stockholders'
Agreement"), no shareholder of the Company has preemptive rights to purchase new
issuances of the Company's capital stock.

     (e)  Insurance. The Company has in full force and effect insurance
          ---------
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

     (f)  Other Commitments to Register Securities. Except as set forth in this
          ----------------------------------------
Stockholders' Agreement, the Company is not, pursuant to the terms of any other
agreement currently in existence, under any obligation to register under the
1933 Act any of its presently outstanding securities or any of its securities
which may hereafter be issued.

     (g)  Exempt Transaction. Subject to the accuracy of the Warrantholder's
          ------------------
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the Illinois Securities
Law of 1953, in reliance upon Section 4(c) thereof.

     (h)  Compliance with Rule 144. At the written request of the Warrantholder,
          ------------------------
who proposes to sell Preferred Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and

                                       7
<PAGE>

Exchange Commission as set forth in such Rule, as such Rule may be amended from
time to time .

10.  REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
     --------------------------------------------------

     This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

     (a) Investment Purpose. The right to acquire Preferred Stock or the
         ------------------
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein and the Common Stock issuable upon conversion of the Preferred Stock will
be acquired for investment and not with a view to the sale or distribution of
any part thereof, and the Warrantholder has no present intention of selling or
engaging in any public distribution of the same except pursuant to a
registration or exemption.

     (b) Private Issue. The Warrantholder understands (i) that the Preferred
         -------------
Stock issuable upon exercise of this Warrant and the Common Stock issuable upon
conversion of the Preferred Stock are not registered under the 1933 Act or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Warrant Agreement will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company's reliance on
such exemption is predicated on the representations set forth in this Section
10.

     (c)  Disposition of Warrantholder's Rights. In no event will the
          -------------------------------------
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights of or the Common Stock issuable
upon conversion of the Preferred Stock do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock or Common Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Preferred Stock
or Common Stock then outstanding as to which such restrictions have terminated
shall be entitled to receive from the

                                       8
<PAGE>

Company, without expense to such holder, one or more new certificates for the
Warrant or for such shares of Preferred Stock or Common Stock not bearing any
restrictive legend.

     (d)  Financial Risk. The Warrantholder has such knowledge and experience
          --------------
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.

     (e)  Risk of No Registration. The Warrantholder understands that if the
          -----------------------
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1934 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Preferred Stock pursuant to this Warrant
Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
The Warrantholder also Understands that any sale of its rights of the
Warrantholder to purchase Preferred Stock or Preferred Stock which might be made
by it in reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and conditions of that Rule.

11.  TRANSFERS. Subject to the terms and conditions contained in Section 10
     ---------
hereof, this Warrant Agreement and all rights hereunder are transferable in
whole or in part by the Warrantholder and any successor transferee, provided,
however, in no event shall the number of transfers of the rights and interests
in all of the Warrants exceed three (3) transfers. The transfer shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer..

12.  MISCELLANEOUS.
     -------------

     (a)  Effective Date. The provisions of this Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.

     (b)  Attorney's Fees. In any litigation, arbitration or- court proceeding
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.

     (c)  Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Illinois.

     (d)  Counterparts. This Warrant Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     (e)  Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal. delivery, facsimile
transmission (provided that

                                       9
<PAGE>

the original is sent by personal delivery or mail as hereinafter set forth) or
seven (7) days after deposit in the United States mail, by registered or
certified mail, addressed (i) to the Warrantholder at 6111 North River Road,
Resonant, Illinois 60018, attention: James Labe, Venture Leasing Director, cc:
Legal Department, (and/or, if by facsimile, (847) 518-5465) and (ii) to the
Company at Eagleview Corporate Center, 655 Stockton Drive, Suite 104, Exton,
Pennsylvania 19341, (and/or if by facsimile, (610) 458-8249) or at such other
address as any such party may subsequently designate by written notice to the
other party.

     (f)  Remedies. In the event of any default hereunder, the non" defaulting
          --------
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.

     (g)  No Impairment of Rights. The Company will not, by amendment of its
          -----------------------
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

     (h)  Survival. The representations, warranties, covenants and conditions of
          --------
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.

     (i)  Severability. In the event any one or more of the provisions of
          ------------
this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

     (j)  Amendments. Any provision of this Warrant Agreement may be amended
          ----------
by a written instrument signed by the Company and by the Warrantholder.

     (k)  Additional Documents. The Company, upon execution of this Warrant
          --------------------
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (d), (f) and (g) of Section 9 above. If the purchase
price for the Leases referenced in the preamble of this Warrant Agreement
exceeds $1,000,000, the Company will also provide Warrantholder with an opinion
from the Company's counsel with respect to those same representations,
warranties and covenants. The Company shall also supply such other documents as
the Warrantholder may from time to time reasonably request.

                                       10
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.

                          Company:    3-DIMENSIONAL PHARMACEUTICALS, INC.

                          By:         /s/ Scott Horvitz
                                      ------------------------------------------

                          Title:      Vice President Finance and Administration
                                      ------------------------------------------

                          Warrantholder:   CDC REALTY, INC.

                          By:         /s/ John J. Vosichy
                                      ------------------------------------------

                          Title:      Executive Vice President and CFO
                                      ------------------------------------------

                                       11
<PAGE>

                                   EXHIBIT I

                              NOTICE OF EXERCISE

To: ____________________________

(1)  The undersigned Warrantholder hereby elects to purchase _______ shares of
the Series A Preferred Stock of 3-Dimensional Pharmaceuticals, Inc., pursuant to
the terms of the Warrant Agreement dated the 7th day of March, 1994 (the
"Warrant Agreement") between 3-Dimensional Pharmaceuticals, Inc. and the
Warrantholder, and tenders herewith payment of the purchase price for such
shares in full, together with all applicable transfer taxes, if any.

(2)  In exercising its rights to purchase the Series A Preferred Stock of
3-Dimensional Pharmaceuticals, Inc., the undersigned hereby confirms and
acknowledges the investment representations and warranties made in Section 10 of
the Warrant Agreement.

(3)  Please issue a certificate or certificates representing said shares of
Series A Preferred Stock in the name of the under-signed or in such other name
as is specified below.


--------------------------------------
(Name)

--------------------------------------
(Address)


Warrantholder:    CDC REALTY, INC.

By:    _______________________________

Title: _______________________________

Date:  _______________________________

                                       12
<PAGE>

                          ACKNOWLEDGEMENT OF EXERCISE

     The undersigned 3-Dimensional Pharmaceuticals, Inc., hereby acknowledge
receipt of the "Notice of Exercise" from CDC Realty, Inc., to purchase ____
shares of the Series A Preferred Stock of 3-Dimensional Pharmaceuticals, Inc.,
pursuant to the terms of the Warrant Agreement, and further acknowledges that
______ shares remain subject to purchase under the terms of the Warrant
Agreement.


                                  Company: 3-Dimensional Pharmaceuticals, Inc.

                                           By: _______________________________

                                           Title:  ___________________________

                                           Date:  ____________________________

                                       13
<PAGE>

                                  EXHIBIT II

                                TRANSFER NOTICE


(To transfer or assign the foregoing Warrant Agreement execute this form and
supply required information. Do not use this form to purchase shares.)

     FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to

_______________________________________________________________________________
(Please Print)

whose address is_______________________________________________________________

                  Dated _______________________________________________________

                  Holder's Signature __________________________________________

                  Holder's Address ____________________________________________

                  ______________________________________________________________

Signature Guaranteed: _________________________________


NOTE:             The signature to this Transfer Notice must correspond with the
                  name as it appears on the face of the Warrant Agreement,
                  without alteration or enlargement or any change whatever.
                  Officers of corporations and those acting in a fiduciary or
                  other representative capacity should file proper evidence of
                  authority to assign the foregoing Warrant Agreement.

                                       14
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.30
<SEQUENCE>17
<FILENAME>0017.txt
<DESCRIPTION>WARRANT TO PURCHASE SERIES A STOCK (STENTO) 7/21/98
<TEXT>

<PAGE>

                                                         EXHIBIT 10.30

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
     ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
     HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
     STATEMENT RELKTED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE
     COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
     REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                               WARRANT AGREEMENT

                 To Purchase Shares of the Preferred Stock of

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

          originally Dated as of March 7, 1994 (the "Effective Date")
                         Re-Issued as of July 21, 1998


     WHEREAS, 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation (the
"Company") has entered into this Warrant Agreement dated as of March 7, 1994,
with Gregory Stento (the "Warrantholder"); and

     WHEREAS, the Company desires to grant to Warrantholder, the right to
purchase shares of its Series A Preferred Stock;

     NOW, THEREFORE, in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.   GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
     ----------------------------------------------

     The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company, 17,935 fully paid and nonassessable
shares of the Company's Series A Preferred Stock ("Preferred Stock") at a
purchase price of $1.00 per share (the "Exercise Price"). The number and
purchase price of such shares are subject to adjustment as provided in Section 8
hereof.

2.   TERM OF THE WARRANT AGREEMENT.
     -----------------------------

     Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Preferred Stock as granted herein shall commence on
the Effective Date and shall be
<PAGE>

exercisable for a period of (i) ten (10) years or (ii) five (5) years from the
effective date of the Company's initial public offering, whichever is longer.

3.   ERCISE OF THE PURCHASE RIGHTS.
     -----------------------------

     The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, and in no event later than twenty-one
(21) days thereafter, the Company shall issue to the Warrantholder a certificate
for the number of shares of Preferred Stock purchased and shall execute the
Notice of Exercise indicating the number of shares which remain subject to
future purchases, if any.

     The Exercise Price may be paid at the Warrantholder's election either (i)
by cash or check, or (ii) by surrender of Warrants (,Net Issuance') as
determined below. If the Warrantholder elects the Net Issuance method, the
company will issue Preferred Stock in accordance with the following formula:

          X    =    Y(A-B)
                    ------
                       A

Where:    X    =    the number of shares of Preferred Stock to be issued to the
                    Warrantholder.

          Y    =    the number of shares of Preferred Stock requested to be
                    exercised under this Warrant Agreement.

          A    =    the fair market value of one (1) share of Common Stock.

          B    =    the Exercise Price.

     As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock:

          (i)    if the exercise is in connection with an initial public
          offering, and if the Company's Registration Statement relating to such
          public offering has been declared effective by the SEC, then the
          initial "Price to Public" specified in the final prospectus with
          respect to the offering;

          (ii)   if this warrant is exercised after, and not in connection with
          the Company's initial public offering, and:

                    (a)  if traded on a securities exchange, the fair market
                    value shall be deemed to be the average of the closing
                    prices on the

                                       2
<PAGE>

                    principal securities exchange over twenty-one (21) day
                    period ending three days before the day the current fair
                    market value of the securities is being determined; or

                    (b) if actively traded over-the-counter, the fair market
                    value shall be deemed to be the average of the closing bid
                    and asked prices quoted on the NASDAQ system (or similar
                    system) over the twenty-one (21) day period ending three
                    days before the day the current fair market value of the
                    securities is being determined;

          (iii)  if at any time the Common Stock is not listed on any securities
          exchange or quoted in the NASDAQ System or the over-the-counter
          market, the current fair market value of Common Stock shall be the
          highest price per share which the Company could obtain from a willing
          buyer (not a current employee or director) for shares of Common Stock
          sold by the Company, from authorized but unissued shares, as
          determined in good faith by its Board of Directors, unless the Company
          shall become subject to a merger, acquisition or other consolidation
          pursuant to which the Company is not the surviving party, in which
          case the fair market value of Common Stock shall be deemed to be the
          value received by the holders of the Company's Preferred Stock on a
          common equivalent basis pursuant to such merger or acquisition.

     Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an Amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.   RESERVATION OF SHARES.
     ---------------------

     (a) Authorization and Reservation of Shares. During the term of this
         ---------------------------------------
Warrant Agreement,, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.

     (b)  Registration or Listing. If any shares of Preferred Stock required to
          -----------------------
be reserved hereunder require registration with or approval of any governmental
authority under any Federal or State law (other than any registration under the
1933 Act, as then in effect, or any similar Federal statute then enforced, or
any state securities law, required by reason of any transfer involved in such
conversion) , or listing on any domestic securities exchange, before such shares
may be issued upon conversion, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered, listed or approved for listing on such domestic securities exchange,
as the case may be.

5.   NO FRACTIONAL SHARES OR SCRIP.
     -----------------------------

                                       3
<PAGE>

     No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.   NO RIGHTS AS SHAREHOLDER.
     ------------------------

     This Warrant Agreement does not entitle the Warrantholder to any voting
rights, the right to receive cash dividends or other rights as a shareholder of
the Company prior to the exercise of the Warrant.

7.   WARRANTHOLDER REGISTRY.
     ----------------------

     The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.

8.   ADJUSTMENT RIGHTS.
     -----------------

     The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:

     (a)  Merger and Sale of Assets. If at any time there shall be a capital
          -------------------------
reorganization of the shares of the Company's Preferred Stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation when the Company is not the surviving corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person (hereinafter referred to as a "Merger Event"), then, as a part of
such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of Preferred Stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Preferred Stock purchasable) shall be applicable
to the greatest extent possible.

     (b)  Reclassification of Shares. If the Company at any time shall, by
          --------------------------
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.

                                       4
<PAGE>

     (c)  Subdivision or Combination of Shares. If the Company at any time shall
          ------------------------------------
combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

     (d)  Stock Dividends. If the Company at any time shall pay a dividend
          ---------------
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's stock,
then the Exercise Price shall be adjusted, from and after the record date of
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction (i)
the numerator of which shall be the total number of all shares of the Company's
stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately after such dividend or distribution. The
Warrantholder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment. Notwithstanding the foregoing, no adjustment shall be made for
a dividend payable in the Company's Common Stock if adjustment hereunder would
compound an adjustment made upon conversion of the Preferred Stock issuable upon
exercise of this Warrant into Common Stock, which would result in double
adjustment for a single Common Stock dividend.

     (e)  Antidilution Rights; Notice of Stock Issuance. Additional antidilution
          ---------------------------------------------
rights applicable to the Preferred Stock purchasable hereunder are as set forth
in the Company's Restated Certificate of Incorporation, as amended through the
Effective Date, a true and complete copy of which is attached hereto as Exhibit
III(the "Charter"). The Company shall promptly provide the Warrantholder with
any restatement, amendment, modification or waiver of the Charter. The Company
shall provide Warrantholder with prior written notice of any issuance of its
stock or other equity security to Occur after the Effective Date of this
Warrant, other than Excluded Stock, as defined in the Charter, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

     (f)  Notice of Adjustments. If: (i) the company shall declare any dividend
          ---------------------
or distribution upon its stock, whether in cash (except for regular cash
dividends as set forth in the terms of the Preferred Stock Section 4 A(l)(d) of
the Charter), property, stock or other securities; (ii) the Company shall offer
for subscription prorata to the holders of any class of its Preferred or other
convertible stock any additional shares of stock of any class or other rights;
(iii) there shall be any Merger Event; or (iv) there shall be any voluntary or
involuntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Preferred Stock shall be entitled thereto) or for determining rights to vote in
respect of such Merger Event, dissolution, liquidation or winding up; and (B) in
the case of any such Merger Event, dissolution, liquidation or winding

                                       5
<PAGE>

up, at least twenty (20) days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Preferred
Stock shall be entitled to exchange their Preferred Stock for securities or
other property deliverable upon such Merger Event, dissolution, liquidation or
winding up) . In the case of a public offering, the Company shall give
Warrantholder at least twenty (20) days written notice prior to the effective
date thereof.

     Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (V)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

     (g)  Timely Notice. Failure to timely provide such notice required by
          -------------
subsection (f) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.

9.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
     --------------------------------------------------------

     (a)  Reservation of Preferred Stock. The Preferred Stock issuable upon
          ------------------------------
exercise of the Warrantholder's rights, except with respect to Section 8(e)
hereof, has been duly and validly reserved and, when issued in accordance with
the provisions of this Warrant Agreement, will be validly issued, fully paid and
non-assessable, and will be free of any taxes, liens, charges or encumbrances of
any nature whatsoever; provided, however, that the Preferred Stock issuable
pursuant to this Warrant Agreement may be subject to restrictions on transfer
under state and/or Federal securities laws. The company has made available to
the Warrantholder true, correct and complete copies of its Charter and Bylaws,
as amended, and minutes of all Board of Directors (including all committees of
the Board of Directors, if any) and Shareholder meetings from March 11, 1993
through April 1994. The issuance of certificates for shares of Preferred Stock
upon exercise of the Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Preferred Stock. The Company shall not be required to pay any tax which may
be payable in respect of any transfer involved and the issuance and delivery of
any certificate in a name other than that of the Warrantholder.

     (b)  Due Authority. The execution and delivery by the Company of this
          -------------
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and this Warrant Agreement is not
inconsistent with the Company's Charter or Bylaws, does not contravene any law
or governmental rule, regulation or order applicable to it, does not and will
not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and this Warrant Agreement constitutes a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms.

                                       6
<PAGE>

     (c)    Consents and Approvals. No consent or approval of, giving of notice
            ----------------------
to, registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement.

     (d)    Issued Securities. All issued and outstanding shares of Common Stock
            -----------------
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws. In addition:

     (i)    The authorized capital of the Company consists of (A) 4,599,350
shares of Common Stock, of which 450,000 shares are issued and outstanding, and
(B) 3,789,350 shares of preferred stock, of which 3,610,000 shares are issued
and outstanding and are convertible" into 3,610,000 shares of Common Stock at
$1.00 per share.

     (ii)   The Company has reserved 810,000 shares of Common Stock for issuance
under its Equity Compensation Plan, under which 112,200 options are outstanding,
and 450,000 shares of restricted stock are outstanding. There are no other
options, warrants, conversion privileges or other rights presently outstanding
to purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company.

     (iii)  Except as set forth in Section 4 of the Company's Stockholders'
Agreement dated October 15, 1993, as amended (the "Stockholders' Agreement"), no
shareholder of the Company has preemptive rights to purchase new issuances of
the Company's capital stock.

     (e)    Insurance. The Company has in full force and effect insurance
            ---------
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

     (f)    Other Commitments to Register Securities. Except as set forth in
            ----------------------------------------
this Stockholders' Agreement, the Company is not, pursuant to the terms of any
other agreement currently in existence, under any obligation to register under
the 1933 Act any of its presently outstanding securities or any of its
securities which may hereafter be issued.

     (g)    Exempt Transaction. Subject to the accuracy of the Warrantholder's
            ------------------
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the Illinois Securities
Law of 1953, in reliance upon Section 4(c) thereof.

     (h)    Compliance with Rule 144. At the written request of the
            ------------------------
Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise
of the Warrant in compliance with Rule 144 promulgated by the Securities and
Exchange Commission, the Company shall furnish

                                       7
<PAGE>

to the Warrantholder, within ten days after receipt of such request, a written
statement confirming the Company's compliance with the filing requirements of
the Securities and Exchange Commission as set forth in such Rule, as such Rule
may be amended from time to time.

10.  REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
     --------------------------------------------------

     This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

     (a)  Investment Purpose. The right to acquire Preferred Stock or the
          ------------------
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein and the Common Stock issuable upon conversion of the Preferred Stock will
be acquired for investment and not with a view to the sale or distribution of
any part thereof, and the Warrantholder has no present intention of selling or
engaging in any public distribution of the same except pursuant to a
registration or exemption.

     (b)  Private Issue. The Warrantholder understands (i) that the Preferred
          -------------
Stock issuable upon exercise of this Warrant and the Common Stock issuable upon
conversion of the Preferred Stock are not registered under the 1933 Act or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Warrant Agreement will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company'3 reliance on
such exemption is predicated on the representations set forth in this Section
10.

     Disposition of Warrantholder's Rights. In no event will the Warrantholder
     -------------------------------------
make a disposition of any of its rights to acquire Preferred Stock or Preferred
Stock issuable upon exercise of such rights unless and until (i) it shall have
notified the Company of the proposed disposition, and (ii) if requested by the
Company, it shall have furnished the Company with an opinion of counsel (which
counsel may either be inside or outside counsel to the Warrantholder)
satisfactory to the Company and its counsel to the effect that (A) appropriate
action necessary for compliance with the 1933 Act has been taken, or (B) an
exemption from the registration requirements of the 1933 Act is available.
Notwithstanding the foregoing, the restrictions imposed upon the transferability
of any of its rights to acquire Preferred Stock or Preferred Stock issuable on
the exercise of such rights of or the Common Stock issuable upon conversion of
the Preferred Stock do not apply to transfers from the beneficial owner of any
of the aforementioned securities to its nominee or from such nominee to its
beneficial owner, and shall terminate as to any particular share of Preferred
Stock or Common Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been
issued to the Warrantholder at its request by the staff of the Securities and
Exchange Commission or a ruling shall have been issued to the Warrantholder at
its request by such Commission stating that no action shall be recommended by
such staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that-; no subsequent restrictions on transfer are required. Whenever
the restrictions imposed hereunder shall terminate, as hereinabove

                                       8
<PAGE>

provided, the Warrantholder or holder of a share of Preferred Stock or Common
Stock then outstanding as to which such restrictions have terminated shall be
entitled to receive from the Company, without expense to such holder, one or
more new certificates for the Warrant or for such shares of Preferred Stock or
Common Stock not bearing any restrictive legend.

     (c)  Financial Risk. The Warrantholder has such knowledge and experience
          --------------
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.

     (d)  Risk of No Registration. The Warrantholder understands that if the
          -----------------------
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1934 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the "1934 Act") , or if a registration
statement covering the securities under the 1933 Act is not in effect when it
desires to sell (i) the rights to purchase Preferred Stock pursuant to this
Warrant Agreement, or (ii) the Preferred Stock issuable upon exercise of the
right to purchase, it may be required to hold such securities for an indefinite
period. The Warrantholder also understands that any sale of its rights of the
Warrantholder to purchase Preferred Stock or Preferred Stock which might be made
by it in reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and conditions of that Rule.

11.  TRANSFERS. Subject to the terms and conditions contained in Section 10
     ---------
hereof, this Warrant Agreement and all rights hereunder are transferable in
whole or in part by the Warrantholder and any successor transferee, provided,
however, in no event shall the number of transfers of the rights and interests
in all of the Warrants exceed three (3) transfers. The transfer shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at
its principal Offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer.

12.  MISCELLANEOUS.

     (a)  Effective Date. The provisions of this Warrant Agreement shall be
          --------------
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.

     (b)  Attorney's Fees. In any litigation, arbitration or court proceeding
          ---------------
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.

     (c)  Governing Law. This Warrant Agreement shall be governed by and
          -------------
construed for all purposes under and in accordance with the laws of the State of
Illinois.

                                       9
<PAGE>

     (d)  Counterparts. This Warrant Agreement may be executed in two or more
          ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     (e)  Notices. Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery, facsimile
transmission (provided that the original is sent by personal delivery or mail as
hereinafter set forth) or seven (7) days after deposit in the United States
mail, by registered or certified mail, addressed (i) to the Warrantholder at 49
Tanglewood Road, Wellesley, MA 02481, attention: Gregory Stento, and (ii) to the
Company at Eagleview Corporate Center, 655 Stockton Drive, Suite 104, Exton,
Pennsylvania 19341, (and/or if by facsimile, (610) 458-8249) or at such other
address as any such party may subsequently designate by written notice to the
other party.

     (f)  Remedies. In the event of any default hereunder, the non-defaulting
          --------
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.

     (g)  No Impairment of Rights. The Company will not, by amendment of its
          -----------------------
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

     (h)  Survival. The representations, warranties, covenants and conditions of
          --------
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.

     (i)  Severability. In the event any one or more of the provisions of this
          ------------
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining Provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

     (j)  Amendments. Any provision of this Warrant Agreement may be amended by
          ----------
a written instrument signed by the Company and by the Warrantholder.

     (k)  Additional Documents. The Company, upon execution of this Warrant
          --------------------
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (f) of Section 9

                                       10
<PAGE>

above. The Company shall also supply such other documents as the Warrantholder
may from time to time reasonably request.

     IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized as of the Effective
Date.

                               Company:  3-DIMENSIONAL PHARMACEUTICALS, INC.



                               By: /s/ Scott Horvitz
                                   ---------------------------------------------

                               Title: Vice President, Finance and Administration
                                     -------------------------------------------


                               Warrantholder: GREGORY STENTO



                               By: /s/ Gregory Stento
                                   ---------------------------------------------

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

                                       11
<PAGE>

                                   EXHIBIT I

                              NOTICE OF EXERCISE

     TO:
          -----------------------

     (1)  The undersigned Warrantholder hereby elects to purchase shares of the
Series A Preferred Stock of 3Dimensional Pharmaceuticals, Inc "pursuant to the
terms of the Warrant Agreement originally dated the 7th day of March, 1994 (the
"Warrant Agreement") between 3-Dimensional Pharmaceuticals, Inc. and the
Warrantholder, and tenders herewith payment of the purchase price for such
shares in full, together with all applicable transfer taxes, if any.

     (2)  In exercising its rights to purchase the Series A Preferred Stock of
3-Dimensional Pharmaceuticals, Inc., the undersigned hereby confirms and
acknowledges the", investment representations and warranties made in Section 10
of the Warrant Agreement.

     (3)  Please issue a certificate or certificates representing said shares of
Series A Preferred Stock in the name of the undersigned or in such other name as
is specified below.


(Name)



(Address)


Warrantholder: GREGORY STENTO

By:_________________________

Title:______________________

Date:_______________________


                                       12
<PAGE>

                          ACKNOWLEDGEMENT OF EXERCISE

     The undersigned 3-Dimensional Pharmaceuticals, Inc., hereby acknowledge
receipt of the "Notice of Exercise" Gregory Stento, to purchase _____ shares of
the Series' A Preferred Stock of 3Dimensional Pharmaceuticals, Inc., pursuant to
the terms of the Warrant Agreement, and further acknowledges that _______ shares
remain subject to purchase under the terms of the Warrant Agreement.

               Company:  3-DIMENSIONAL PHARMACEUTICALS, INC.



               By:______________________________

               Title:___________________________

               Date:_____________

                                       13
<PAGE>

                                  EXHIBIT II

                                TRANSFER NOTICE

     (To transfer or assign the foregoing Warrant Agreement execute this form
     and supply required information. Do not use this form to purchase shares.)

     FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to



_________________________________________
     (Please Print)

     whose address is_____________________________

     ___________________________________

               Dated____________________________________

               Holder's Signature______________________

               Holder's Address________________________

               ________________________________________


     NOTE:     The signature to this Transfer Notice must correspond with the
               name as it appears on the face of the Warrant Agreement, without
               alteration or enlargement or any change whatever. Officers of
               corporations and those acting in a fiduciary or other
               representative capacity should file proper evidence of authority
               to assign the foregoing Warrant Agreement.

                                       14
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>18
<FILENAME>0018.txt
<DESCRIPTION>WARRANT AGREEMENT DATED JULY 21, 1998
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.31

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
     ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
     HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
     STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE
     COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
     REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                               WARRANT AGREEMENT

                 To Purchase Shares of the Preferred Stock of

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

         Originally Dated as of April 25, 1995 (the "Effective Date")

                         Reissued as of July 21, 1998

     WHEREAS, 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation (the
"Company") - has entered into a Master Lease Agreement dated as of March 7, 1994
and Equipment Schedule No. VL-2 dated as of April 25, 1995, and related
Schedules (the "Leases") with Comdisco, Inc., a Delaware corporation (the
"Warrantholder") and

     WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Leases, the right to purchase shares of its Series A Preferred Stock;

     NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.   GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
     ----------------------------------------------

     The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company, 54,113 fully paid and non-
assessable shares of the Company's Series A Preferred Stock ("Preferred Stock")
at a purchase price of $1.00 per share (the "Exercise Price"). The number and
purchase price of such shares are subject to adjustment as provided in Section 8
hereof.

                                       1
<PAGE>

2.   TERM OF THE WARRANT AGREEMENT.
     -----------------------------

     Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Preferred Stock as granted herein shall commence on
the Effective Date and shall be exercisable for a period of (i) ten (10) years
or (ii) five (5) years from the effective date of the Company's initial public
offering, whichever is longer.

3.   EXERCISE OF THE PURCHASE RIGHTS.
     -------------------------------

     The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, and in no event later than twenty-one
(21) days thereafter, the company shall issue to the Warrantholder a certificate
for the number of shares of Preferred Stock purchased and shall execute the
Notice of Exercise indicating the number of shares which remain subject to
future purchases, if any.

The Exercise Price may be paid at the Warrantholder's election either (i) by
cash or check, or (ii) by surrender of Warrants ("Net Issuance") as determined
below. If the Warrantholder elects the Net Issuance method, the Company will
issue Preferred Stock in accordance with the following formula:

          X   =    Y(A-B)
                   ------

                      A

Where:    X   =    the number of shares of Preferred Stock to be issued to the
                   warrantholder.

          Y   =    the number of shares of Preferred Stock requested to be
                   exercised under this Warrant Agreement.

          A   =    the fair market value of one (1) share of Common Stock.

          B   =    the Exercise Price.

     As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock:

     (i)  if the exercise is in connection with an initial public offering, and
     if the Company's Registration Statement relating to such public offering
     has been declared effective by the SEC, then the initial "Price to Public"
     specified in the final prospectus with respect to the offering;

                                       2
<PAGE>

      (ii) if this Warrant is exercised after, and not in connection with the
      Company's initial public offering, and:

           (a)  if traded on a securities exchange, the fair market value shall
be deemed to be the average of the closing prices on the principal securities
exchange over a twenty-one (21) day period ending three days before the day the
current fair market value of the securities is being determined; or

           (b)  if actively traded over-the-counter, the fair market value shall
be deemed to be the average of the closing bid and asked prices quoted on the
NASDAQ system (or similar system) over the twenty-one (21) day period ending
three days before the day the current fair market value of the securities is
being determined;

(iii) if at any time the Common Stock is not listed on any securities exchange
      or quoted in the NASDAQ System or the over-the-counter market, the current
      fair market value of Common Stock shall be the highest price per share
      which the Company could obtain from a willing buyer (not a current
      employee or director) for shares of Common Stock sold by the Company, from
      authorized but unissued shares, as determined in good faith by its Board
      of Directors, unless the Company shall become subject to a merger,
      acquisition or other consolidation pursuant to which the company is not
      the surviving party, in which case the fair market value of Common Stock
      shall be deemed to be the value received by the holders of the Company's
      Preferred Stock on a common equivalent basis pursuant to such merger or
      acquisition.

      Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.    RESERVATION OF SHARES.
      ---------------------

      (a) Authorization and Reservation of Shares. During the term of this
          ---------------------------------------
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.

      (b) Registration or List. If any shares of Preferred Stock required to
          --------------------
be reserved hereunder require registration with or approval of any governmental
authority under any Federal or State law (other than any registration under the
1933 Act, as then in effect, or any similar Federal statute then enforced, or
any state securities law, required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, before such shares
may be issued upon conversion, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered, listed or approved for listing on such domestic securities exchange,
as the case may be.

                                       3
<PAGE>

5.   NO FRACTIONAL SHARES OR SCRIP.
     -----------------------------

     No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.   NO RIGHTS AS SHAREHOLDER.
     ------------------------

     This Warrant Agreement does not entitle the Warrantholder to any voting
rights, the right to receive cash dividends or other rights as a shareholder of
the Company prior to the exercise of the Warrant.

7.   WARRANTHOLDER REGISTRY.
     ----------------------

     The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.

8.   ADJUSTMENT RIGHTS.
     -----------------

     The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:

     (a)  Merger and Sale of Assets. If at any time there shall be a capital
reorganization of the shares of the Company's Preferred Stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation when the Company is not the surviving corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person (hereinafter referred to as a "Merger Event"), then, as a part of
such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of Preferred Stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Preferred Stock purchasable) shall be applicable
to the greatest extent possible.

                                       4
<PAGE>

     (b)  Reclassification of Shares. If the Company at any time shall, by
          --------------------------
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.

     (c)  Subdivision or Combination of Shares. If the Company at any time shall
          ------------------------------------
combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

     (d)  Stock Dividends. If the Company at any time shall pay a dividend
          ---------------
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's stock,
then the Exercise Price shall be adjusted, from and after the record date of
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction (i)
the numerator of which shall be the total number of all shares of the Company's
stock out-standing immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately after such dividend or distribution. The
Warrantholder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment. Notwithstanding the foregoing, no adjustment shall be made for
a dividend payable in the Company's Common Stock if adjustment hereunder would
compound an adjustment made upon conversion of the Preferred Stock issuable upon
exercise of this Warrant into Common Stock, which would result in double
adjustment for a single Common Stock dividend.

     (e)  Right to Purchase Additional Stock.If, the Warrantholder's total cost
          ----------------------------------
of equipment leased pursuant to the Leases exceeds $1,500,000.00, Warrantholder
shall have the right to purchase from the Company, at the Exercise Price
(adjusted as set forth herein), an additional number of shares, which number
shall be determined by (i) multiplying the amount by which the Warrantholder's
total equipment cost exceeds $1,500,000.00 by 9.25%, and (ii) dividing the
product thereof by the Exercise Price per share referenced above.

     (f)  Antidilution Rights; Notice of Stock Issuance. Additional antidilution
          ---------------------------------------------
rights applicable to the Preferred Stock purchasable hereunder are as set forth
in the Company's Restated certificate of Incorporation, as amended through the
Effective Date, a true and complete copy of which is attached hereto as Exhibit
III(the "Charter"). The Company shall promptly provide the Warrantholder with
any restatement, amendment, modification or waiver of the Charter. The Company
shall provide Warrantholder with prior written notice of any issuance of

                                       5
<PAGE>

its stock or other equity security to occur after the Effective Date of this
Warrant, other than Excluded Stock, as defined in the Charter, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

     (g)  Notice of Adjustments. If: (i) the Company shall declare any dividend
          ---------------------
or distribution upon its stock, whether in cash (except for regular cash
dividends as set forth in the terms of the Preferred Stock Section 4 A(l) (d) of
the Charter), property, stock or other securities; (ii) the Company shall offer
for subscription prorata to the holders of any class of its Preferred or other
convertible stock any additional shares of stock of any class or other rights;
(iii) there shall be any Merger Event; or (iv) there shall be any voluntary or
involuntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days" prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Preferred Stock shall be entitled thereto) or for determining rights to vote in
respect of such Merger Event, dissolution, liquidation or winding up, and (B) in
the case of any such Merger Event, dissolution, liquidation or winding up, at
least twenty (20) days" prior written notice of the date when the same shall
take place (and specifying the date on which the holders of Preferred Stock
shall be entitled to exchange their Preferred Stock for securities or other
property deliverable upon such Merger Event, dissolution, liquidation or winding
up). In the case of a public offering, the Company shall give Warrantholder at
least twenty (20) days written notice prior to the effective date thereof.

     Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

     (h)  Timely Notice. Failure to timely provide such notice required by
          -------------
subsection (g) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.

9.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
     --------------------------------------------------------

     (a)  Reservation of Preferred Stock. The Preferred Stock issuable upon
          ------------------------------
exercise of the Warrantholder's rights, except with respect to Section e(e)
hereof, has been duly and validly reserved and, when issued in accordance with
the provisions of this Warrant Agreement, will be validly issued, fully paid and
non-assessable, and will be free of any taxes, liens, charges or encumbrances of
any nature whatsoever; provided, however, that the Preferred Stock issuable
pursuant to this Warrant Agreement may be subject to restrictions on transfer
under state and/or Federal securities laws. The Company has made available to
the Warrantholder true, correct

                                       6
<PAGE>

and complete copies of its Charter and Bylaws, as amended, and minutes of all
Board of Directors (including all committees of the Board of Directors, if any)
and Shareholder meetings from March 11, 1993 through February 15, 1995. The
issuance of certificates for shares of Preferred Stock upon exercise of the
Warrant Agreement shall be made without charge to the Warrantholder for any
issuance tax in respect thereof, or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Preferred
Stock. The Company shall not be required to pay any tax which may be payable in
respect of any transfer involved and the issuance and delivery of any
certificate in a name other than that of the Warrantholder.

     (b)  Due Authority. The execution and delivery by the Company of this
          -------------
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and the Leases and this Warrant Agreement are
not inconsistent with the Company's Charter or Bylaws, do not contravene any law
or governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Leases and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.

     (c)  Consents and Approvals. No consent or approval of, giving of notice
          ----------------------
to, registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement.

     (d)  Issued Securities. All issued and outstanding shares of Common Stock,
          -----------------
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws. In addition:

          (i)  The authorized capital of the Company consists of (A) 5,038,100
shares of Common Stock, of which 405,000 shares are issued and outstanding, and
(B) 3,928,100 shares of preferred stock, of which 3,610,000 shares are issued
and outstanding and are convertible into 3,610,000 shares of Common Stock at
$1.00 per share.

          (ii) The Company has reserved 810,000 shares of Common Stock for
issuance under its Equity Compensation Plan, under which 280,950 options are
outstanding, and 405,000 shares of restricted stock are outstanding. With the
exception of: (A) the Warrant Agreement dated March 7, 1994, issued to Comdisco,
Inc. for 179,350 shares of the Company's Series A Preferred Stock and (B) a
Warrant Agreement to be issued pursuant to a Loan Agreement dated as of December
15, 1994 between the Company and their Venture Capital investors for a maximum
of 300,000 shares of the Company's Common Stock; there are no other options,

                                       7
<PAGE>

warrants, conversion privileges or other rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company.

          (iii)  Except as set forth in Section 4 of the Company's Stockholders'
Agreement dated October 15, 1993, as amended (the 'Stockholders' Agreement"), no
shareholder of the Company has preemptive rights to purchase new issuances of
the Company's capital stock.

     (e)  Insurance. The Company has in full force and effect insurance
          ---------
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

     (f)  Other Commitments to Register Securities. Except as set forth in this
          ----------------------------------------
Stockholders" Agreement, the Company is not, pursuant to the terms of any other
agreement currently in existence, under any obligation to register under the
1933 Act any of its presently outstanding securities or any of its securities
which may hereafter be issued.

     (g)  Exempt Transaction. Subject to the accuracy of the Warrantholder's
          ------------------
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the Illinois Securities
Law of 1953, in reliance upon Section 4(c) thereof.

     (h)  Compliance with Rule 144. At the written request of the Warrantholder,
          ------------------------
who proposes to sell Preferred Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.

10.  REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
     --------------------------------------------------

     This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

     (a)  Investment Purpose. The right to acquire Preferred Stock or the
          ------------------
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein and the Common Stock issuable upon conversion of the Preferred Stock will
be acquired for investment and not with a view to the sale or distribution of
any part thereof, and the Warrantholder has no present

                                       8
<PAGE>

intention of selling or engaging in any public distribution of the same except
pursuant to a registration or exemption.

     (b)  Private Issue. The Warrantholder understands (i) that the Preferred
          -------------
Stock issuable upon exercise of this Warrant and the Common Stock issuable upon
conversion of the Preferred Stock are not registered under the 1933 Act or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Warrant Agreement will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company's reliance on
such exemption is predicated on the representations set forth in this Section
10.

     (c)  Disposition of Warrantholder's Rights. In no event will the
          -------------------------------------
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights of or the Common Stock issuable
upon conversion of the Preferred Stock do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock or Common Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Preferred Stock
or Common Stock then outstanding as to which such restrictions have terminated
shall be entitled to receive from the Company, without expense to such holder,
one or more new certificates for the Warrant or for such shares of Preferred
Stock or Common Stock not bearing any restrictive legend.

     (d)  Financial Risk. The Warrantholder has such knowledge and experience
          --------------
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.

     (e)  Risk of No Registration. The Warrantholder understands that if the
          -----------------------
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1934 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the

                                       9
<PAGE>

"1934 Act"), or if a registration statement covering the securities under the
1933 Act is not in effect when it desires to sell (i) the rights to purchase
Preferred Stock pursuant to this Warrant Agreement, or (ii) the Preferred Stock
issuable upon exercise of the right to purchase, it may be required to hold such
securities for an indefinite period. The Warrantholder also understands that any
sale of its rights of the Warrantholder to purchase Preferred Stock or Preferred
Stock which might be made by it in reliance upon Rule 144 under the 1933 Act may
be made only in accordance with the terms and conditions of that Rule.

11.  TRANSFERS. Subject to the terms and conditions contained in Section 10
     ---------
hereof, this Warrant Agreement and all rights hereunder are transferable in
whole or in part by the Warrantholder and any successor transferee, provided,
however, in no event shall the number of transfers of the rights and interests
in all of the Warrants exceed three (3) transfers. The transfer shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer.

12.  MISCELLANEOUS.
     -------------

     (a)  Effective Date. The provisions of this Warrant Agreement shall be
          --------------
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.

     (b)  Attorney's Fees. In any litigation, arbitration or court proceeding
          ---------------
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys" fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.

     (c)  Governing Law. This Warrant Agreement shall be governed by and
          -------------
construed for all purposes under and in accordance with the laws of the State of
Illinois.

     (d)  Counterparts. This Warrant Agreement may be executed in two or more
          ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     (e)  Notices. Any notice required or permitted hereunder shall be given in
          -------
writing and shall be deemed effectively given upon personal delivery, facsimile
transmission (provided that the original is sent by personal delivery or mail as
hereinafter set forth) or seven (7) days after deposit in the United States
mail, by registered or certified mail, addressed (i) to the Warrantholder at
6111 North River Road, Rosemont, Illinois 60018, attention: James Labe, Venture
Leasing Director, cc: Legal Department, (and/or, if by facsimile, (847) 518-
5465) and (ii) to the Company at Eagleview Corporate Center, 665 Stockton Drive,
Suite 104 Exton,

                                       10
<PAGE>

Pennsylvania 19341, (and/or, if by facsimile, (610) 458-8249) or at such other
address as any such party may subsequently designate by written notice to the
other party.

     (f)  Remedies. In the event of any default hereunder, the non-defaulting
          --------
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.

     (g)  No Impairment of Rights. The Company will not, by amendment of its
          -----------------------
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

     (h)  Survival. The representations, warranties, covenants and conditions of
          --------
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.

     (i)  Severability. In the event any one or more of the provisions of this
          ------------
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

     (j)  Amendments. Any provision of this Warrant Agreement may be amended by
          ----------
a  written instrument signed by the Company and by the Warrantholder.

     (k)  Additional Documents. The Company, upon execution of this Warrant
          --------------------
Agreement, shall provide the Warrantholder with certified resolutions with
           -----
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (d), (f) and (g) of Section 9 above. If the purchase
price for the Leases referenced in the preamble of this Warrant Agreement
exceeds $1,000,000, the Company will also provide Warrantholder with an opinion
from the Company's counsel with respect to those same representations,
warranties and covenants. The Company shall also supply such other documents as
the Warrantholder may from time to time reasonably request.

                                       11
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be
executed by its officers thereunto duly authorized as of the Effective Date.



                                    Company: 3-DIMENSIONAL PHARMACEUTICALS, INC.




                                    By:/s/ Scott Horvitz
                                       -----------------------------

                                    Title: V.P. Finance and Adminstration
                                          -------------------------------

                                    Warrantholder: COMDISCO, INC.

                                    By:/s/ John J. Vosichy
                                       -----------------------------

                                    Title: Executive Vice President and CFO
                                           --------------------------------

DRS; 4/26/95

                                       12
<PAGE>

                                   EXHIBIT I

                              NOTICE OF EXERCISE

To:

(1)  The undersigned Warrantholder hereby elects to purchase shares of the
     Series A Preferred Stock of 3-Dimensional Pharmaceuticals, Inc., pursuant
     to the terms of the Warrant Agreement originally dated the 25th day of
     April, 1995 (the "Warrant Agreement") between 3-Dimensional
     Pharmaceuticals, Inc. and the Warrantholder, and tenders herewith payment
     of the purchase price for such shares in full, together with all applicable
     transfer taxes, if any.

(2)  In exercising its rights to purchase the Series A Preferred Stock of 3-
     Dimensional Pharmaceuticals, Inc., the undersigned hereby confirms and
     acknowledges the investment representations and warranties made in Section
     10 of the Warrant Agreement.

(3)  Please issue a certificate or certificates representing said shares of
     Series A Preferred Stock in the name of the undersigned or in such other
     name as is specified below.



_________________________________
(Name)

_________________________________
(Address)

Warrantholder: COMDISCO, INC.


By:______________________________

Title:___________________________

Date:____________________________

                                       13
<PAGE>

                          ACKNOWLEDGMENT OF EXERCISE

     The undersigned 3-Dimensional Pharmaceuticals, Inc., hereby acknowledge
receipt of the "Notice of Exercise" from Comdisco, Inc., to purchase ______
shares of the Series A Preferred Stock of 3-Dimensional Pharmaceuticals, Inc.,
pursuant to the terms of the Warrant Agreement, and further acknowledges that
________ shares remain subject to purchase under the terms of the Warrant
Agreement.



                                    Company: 3-Dimensional Pharmaceuticals, Inc.

                                             By:_______________________________

                                             Title:____________________________

                                             Date:_____________________________

                                       14
<PAGE>

                                  EXHIBIT II

                               TRANSFERS NOTICE

          (To transfer or assign the foregoing Warrant Agreement
          execute this form and supply required information. Do not
          use this form to purchase shares.)

     FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to _______________________

________________________________________________________________________________

whose address is _______________________________________________________________

________________________________________________________________________________

                    Dated ______________________________________________________

                    Holder's Signature _________________________________________

                    Holder's Address ___________________________________________

                    ____________________________________________________________

Signature Guaranteed: __________________________________________________________

NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the face of the Warrant Agreement, without alteration or enlargement
or any change whatever. officers of c

                                       15
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.32
<SEQUENCE>19
<FILENAME>0019.txt
<DESCRIPTION>WARRANT AGREEMENT WITH STENTO DATED JULY 21, 1998
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.32

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
     ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
     HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
     STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE
     COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
     REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                          WARRANT AGREEMENT

            To Purchase Shares of the Preferred Stock of

                 3-DIMENSIONAL PHARMACEUTICALS, INC.

    Originally Dated as of April 25, 1995 (the "Effective Date")

                    Re-issued as of July 21, 1998

     WHEREAS, 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation (the
"Company") has entered into this Warrant Agreement dated as April 25, 1995 with
Gregory Stento (the "Warrantholder"); and

     WHEREAS, the Company desires to grant to Warrantholder the right to
purchase shares of its Series A Preferred Stock;

     NOW, THEREFORE, in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.   GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
     ----------------------------------------------

     The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company, 6,012 fully paid and non-assessable
shares of the Company's Series A Preferred Stock ("Preferred Stock") at a
purchase price of $1.00 per share (the "Exercise Price"). The number and
purchase price of such shares are subject to adjustment as provided in Section 8
hereof.

2.   TERM OF THE WARRANT AGREEMENT.
     -----------------------------

     Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Preferred Stock as granted herein shall commence on
the Effective Date and shall be exercisable for a period of (i) ten (10) years
or (ii) five (5) years from the effective date of the Company's initial public
offering, whichever is longer.

                                       1

<PAGE>

3.   EXERCISE OF THE PURCHASE RIGHTS.
     -------------------------------

     The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, and in no event later than twenty-one
(21) days thereafter, the Company shall issue to the Warrantholder a certificate
for the number of shares of Preferred Stock purchased and shall execute the
Notice of Exercise indicating the number of shares which remain subject to
future purchases, if any.

     The Exercise Price may be paid at the Warrantholder's election either (i)
by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:

          X = Y(A-B)

Where:    X = the number of shares of Preferred Stock to be issued to the
          Warrantholder.

          Y = the number of shares of Preferred Stock requested to be exercised
          under this Warrant Agreement.

          A = the fair market value of one (1) share of Common Stock.

          B = the Exercise Price.

     As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock:

     (i)  if the exercise is in connection with an initial public offering, and
     if the Company's Registration Statement relating to such public offering
     has been declared effective by the SEC, then the initial "Price to Public"
     specified in the final prospectus with respect to the offering;

     (ii) if this Warrant is exercised after, and not in connection with the
     Company's initial public offering, and:

          (a)  if traded on a securities exchange, the fair market value shall
          be deemed to be the average of the closing prices on the principal
          securities exchange over a twenty-one (21) day period ending three
          days before the day the current fair market value of the securities is
          being determined; or
<PAGE>

               (b)  if actively traded over-the-counter, the fair market value
               shall be deemed to be the average of the closing bid and asked
               prices quoted on the NASDAQ system (or similar system) over the
               twenty-one (21) day period ending three days before the day the
               current fair market value of the securities is being determined;

     (iii) if at any time the Common Stock is not listed on any securities
     exchange or quoted in the NASDAQ System or the over-the-counter market, the
     current fair market value of Common Stock shall be the highest price per
     share which the Company could obtain from a willing buyer (not a current
     employee or director) for shares of Common Stock sold by the Company, from
     authorized but unissued shares, as determined in good faith by its Board of
     Directors, unless the Company shall become subject to a merger, acquisition
     or other consolidation pursuant to which the Company is not the surviving
     party, in which case the fair market value of Common Stock shall be deemed
     to be the value received by the holders of the Compan's Preferred Stock on
     a common equivalent basis pursuant to such merger or acquisition.

     Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.   RESERVATION OF SHARES.
     ---------------------

     (a)  Authorization and Reservation of Shares. During the term of this
          ---------------------------------------
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.

     (b)  Registration or Listing. If any shares of Preferred Stock required to
          -----------------------
be reserved hereunder require registration with or approval of any governmental
authority under any Federal or State law (other than any registration under the
1933 Act, as then in effect, or any similar Federal statute then enforced, or
any state securities law, required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, before such shares
may be issued upon conversion, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered, listed or approved for listing on such domestic securities exchange,
as the case may be.

5.   NO FRACTIONAL SHARES OR SCRIP.
     -----------------------------

     No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
<PAGE>

6.   NO RIGHTS AS SHAREHOLDER.
     ------------------------

     This Warrant Agreement does not entitle the Warrantholder to any voting
rights, the right to receive cash dividends or other rights as a shareholder of
the Company prior to the exercise of the Warrant.

7.   WARRANTHOLDER REGISTRY.
     ----------------------

     The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.

8.   ADJUSTMENT RIGHTS.
     -----------------

     The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:

     (a)  Merger and Sale of Assets. If at any time there shall be a capital
          -------------------------
reorganization of the shares of the Company's Preferred Stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation when the Company is not the surviving corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person (hereinafter referred to as a "Merger Event"), then, as a part of
such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of Preferred Stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Preferred Stock purchasable) shall be applicable
to the greatest extent possible.

     (b)  Reclassification of Shares. If the Company at any time shall, by
          --------------------------
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.

     (c)  Subdivision or Combination of, Shares. If the Company at any time
          -------------------------------------
shall combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
<PAGE>

     (d)  Stock Dividends. If the Company at any time shall pay a dividend
          ---------------
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's stock,
then the Exercise Price shall be adjusted, from and after the record date of
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction (i)
the numerator of which shall be the total number of all shares of the Company's
stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately after such dividend or distribution. The
Warrantholder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment. Notwithstanding the foregoing, no adjustment shall be made for
a dividend payable in the Company's Common Stock if adjustment hereunder would
compound an adjustment made upon conversion of the Preferred Stock issuable upon

     (e)  Antidilution Rights; Notice of Stock Issuance. Additional antidulution
          ---------------------------------------------
rights applicable to the preferred Stock purchasable hereunder are as set forth
in the Company's Restated Certificate of Incorporation, as amended through the
Effective Date, a true and complete copy of which is attached hereto as Exhibit
III (the "Charter"). The Company shall promptly provide the Warrantholder with
any restatement, amendment, modification or waiver of the Charter. The Company
shall provide Warrantholder with prior written notice of any issuance of its
stock or other equity security to occur after the Effective Date of this
Warrant, other than Excluded Stock, as defined in the Charter, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

     (f)  Notice of Adjustments.  If: (i) the Company shall declare any dividend
          ---------------------
or distribution upon its stock, whether in, cash (except for regular cash
dividends as set forth in the terms of the Preferred Stock Section 4 A(1) (d) of
the Charter), property, stock or other securities; (ii) the Company shall offer
for subscription prorata to the holders of any class of its Preferred or other
convertible stock any additional shares of stock of any class or other rights;
(iii) there shall be any Merger Event; or (iv) there shall be any voluntary or
involuntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Preferred Stock shall be entitled thereto) or for determining rights to vote in
respect of such Merger Event, dissolution, liquidation or winding up; and (B) in
the case of any such Merger Event, dissolution, liquidation or winding up, at
least twenty (20) days' prior written notice of the date when the same shall
take place (and specifying the date on which the holders of Preferred Stock
shall be entitled to exchange their Preferred Stock for securities or other
property deliverable upon such Merger Event, dissolution, liquidation or winding
up). In the case of a public offering, the Company shall give Warrantholder at
least twenty (20) days written notice prior to the effective date thereof.
<PAGE>

     Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

     (g)  Timely Notice. Failure to timely provide such notice required by
          -------------
subsection (f) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.

9.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
     --------------------------------------------------------

     (a)  Reservation of Preferred Stock. The Preferred Stock issuable upon
          ------------------------------
exercise of the Warrantholder's rights, except with respect to Section 8(e)
hereof, has been duly and validly reserved and, when issued in accordance with
the provisions of this Warrant Agreement, will be validly issued, fully paid and
non-assessable, and will be free of any taxes, liens, charges or encumbrances of
any nature whatsoever; provided, however, that the Preferred Stock issuable
pursuant to this Warrant Agreement may be subject to restrictions on transfer
under state and/or Federal securities laws. The Company has made available to
the Warrantholder true, correct and complete copies of its Charter and Bylaws,
as amended, and minutes of all Board of Directors (including all committees of
the Board of Directors, if any) and Shareholder meetings from March 11, 1993
through February 15, 1995. The issuance of certificates for shares of Preferred
Stock upon exercise of the Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Preferred Stock. The Company shall not be required to pay any tax which may
be payable in respect of any transfer involved and the issuance and delivery of
any certificate in a name other than that of the Warrantholder.

     (b)  Due Authority. The execution and delivery by the Company of this
          -------------
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and this Warrant Agreement is not
inconsistent with the Company's Charter or Bylaws, does not contravene any law
or governmental rule, regulation or order applicable to it, does not and will
not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and this Warrant Agreement constitutes a legal, valid and binding
agreement of the Company, enforceable in accordance with their respective terms.

     (c)  Consents and Approvals. No consent or approval of, giving of notice
          ----------------------
to, registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement.
<PAGE>

     (d)  Issued Securities. All issued and outstanding shares of Common Stock,
          -----------------
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws. In addition:

          (i)   The authorized capital of the Company consists of (A) 5,038,100
shares of Common Stock, of which 405,000 shares are issued and outstanding, and
(B) 3,928,100 shares of preferred stock, of which 3,610,000 shares are issued
and outstanding and are convertible into 3,610,000 shares of Common Stock at
$1.00 per share.

          (ii)  The Company has reserved 810,000 shares of Common Stock for
issuance under its Equity Compensation Plan, under which 280,950 options are
outstanding, and 405,000 shares of restricted stock are outstanding. There are
no other options, warrants, Conversion privileges or other rights presently
outstanding to purchase or otherwise acquire any authorized but unissued shares
of the Company's capital stock or other securities of the Company.

          (iii) Except as set forth in Section 4 of the Company's Stockholders'
Agreement dated October 15, 1993, as amended (the "Stockholders' Agreement"), no
shareholder of the Company has preemptive rights to purchase new issuances of
the Company's capital stock.

     (e)  Insurance. The Company has in full force and effect insurance
          ---------
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

     (f)  Other Commitments to Register Securities. Except as set forth in this
          ----------------------------------------
Stockholders' Agreement, the Company is not, pursuant to the terms of any other
agreement currently in existence, under any obligation to register under the
1933 Act any of its presently outstanding securities or any of its securities
which may hereafter be issued.

     (g)  Exempt Transaction. Subject to the accuracy of the Warrantholder's
          ------------------
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the Illinois Securities
Law of 1953, in reliance upon Section 4(c) thereof.

     (h)  Compliance with Rule 144. At the written request of the Warrantholder,
          ------------------------
who proposes to sell Preferred Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.
<PAGE>

10.  REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
     --------------------------------------------------

     This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

     (a)  Investment Purpose. The right to acquire Preferred Stock or the
          ------------------
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein and the Common Stock issuable upon conversion of the Preferred Stock will
be acquired for investment and not with a view to the sale or distribution of
any part thereof, and the Warrantholder has no present intention of selling or
engaging in any public distribution of the same except pursuant to a
registration or exemption.

     (b)  Private Issue. The Warrantholder understands (i) that the Preferred
          -------------
Stock issuable upon exercise of this Warrant and the Common Stock issuable upon
conversion of the Preferred Stock are not registered under the 1933 Act or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Warrant Agreement will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company's reliance on
such exemption is predicated on the representations set forth in this Section
10.

     (c)  Disposition of Warrantholder's Rights. In no event will the
          -------------------------------------
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights of or the Common Stock issuable
upon conversion of the Preferred Stock do not apply to transfers from the
beneficial. owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock or Common Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with. Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall. terminate, as
hereinabove provided, the Warrantholder or holder of a share of Preferred Stock
or Common Stock then outstanding as to which such restrictions have terminated
shall be entitled to receive from the Company, without expense to such holder,
one or more new certificates for the Warrant or for such shares of Preferred
Stock, or Common Stock not bearing any restrictive legend.
<PAGE>

     (d)  Financial Risk. The Warrantholder has such knowledge and experience in
          --------------
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.

     (e)  Risk of No Registration. The Warrantholder understands that if the
          -----------------------
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1934 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Preferred Stock pursuant to this Warrant
Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
The Warrantholder also understands that any sale of its rights of the
Warrantholder to purchase Preferred Stock or Preferred Stock which might be made
by it in reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and Conditions of that Rule.

11.  TRANSFERS. Subject to the terms and conditions contained in Section 10
     ---------
hereof, this Warrant Agreement and all rights hereunder are transferable in
whole or in part by the Warrantholder and any successor transferee, provided,
however, in no event shall the number of transfers of the rights and interests
in all of the Warrants exceed three (3) transfers. The transfer shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer.

12.  MISCELLANEOUS.
     -------------

     (a)  Effective Date. The provisions of this Warrant Agreement shall be
          --------------
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.

     (b)  Attorney's Fees. In any litigation, arbitration or court proceeding
          ---------------
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.

     (c)  Governing Law. This Warrant Agreement shall be governed by and
          -------------
construed for all purposes under and in accordance with the laws of the State of
Illinois.

     (d)  Counterparts. This Warrant Agreement may be executed in two or more
          ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     (e)  Notices. Any notice required or permitted hereunder shall. be given in
          -------
writing and shall be deemed effectively given upon personal delivery, facsimile
transmission (provided that the original is sent by personal delivery or mail as
hereinafter set forth) or seven (7) days after deposit in the United States
mail, by registered or certified mail, addressed (i) to the
<PAGE>

Warrantholder 49 Tanglewood Road, Wellesley, MA 02481, attention: Gregory
Stento, and (ii) to the Company at Eagleview Corporate Center, 665 Stockton
Drive, Suite 104 Exton, Pennsylvania 19341,(and/or, if by facsimile,(610)458-
8249) or at such other address as any such party may subsequently designate by
written, notice to the other party.

     (f)  Remedies. In the event of any default hereunder, the non-defaulting
          --------
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.

     (g)  No Impairment of Rights. The Company will, not, by amendment of its
          -----------------------
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

     (h)  Survival. The representations, warranties, Covenants and conditions of
          --------
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.

     (i)  Severability. In the event any one or more of the provisions of this
          ------------
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

     (j)  Amendments. Any provision of this Warrant Agreement may be amended by
          ----------
a written instrument signed by the Company and by the Warrantholder.

     (k)  Additional Documents. The Company, upon execution of this Warrant
          --------------------
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (f) of Section 9 above. The Company shall also supply
such other documents as the Warrantholder may from time to time reasonably
request.
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized as of the Effective
Date.

                         Company:  3-DIMENSIONAL PHARMACEUTICALS, INC.

                         By: /s/ Scott Horvitz
                             ---------------------------------

                         Title: VP, Finance and Administration
                                ------------------------------

                         Warrantholder:  GREGORY STENTO

                         By: /s/ Gregory Stento
                            ----------------------------------

                         Title:_______________________________
<PAGE>

                                   EXHIBIT I

                              NOTICE OF EXERCISE

To: ______________________________

(1)  The undersigned warrantholder hereby elects to purchase _______ shares of
     the Series' A Preferred Stock of 3-Dimensional Pharmaceuticals, Inc.,
     pursuant to the terms of the Warrant Agreement originally dated the 25/th/
     day of April, 1995 (the "Warrant Agreement") between 3-Dimensional
     Pharmaceuticals, Inc. and the Warrantholder, and tenders herewith payment
     of the purchase price for such shares in full, together with all applicable
     transfer taxes, if any.

(2)  In exercising its rights to purchase the Series A Preferred Stock of
     3-Dimensional Pharmaceuticals, Inc., the undersigned hereby confirms and
     acknowledges the investment representations and warranties made in Section
     10 of the Warrant Agreement.

(3)  Please issue a certificate or certificates representing said shares of
     Series A Preferred Stock in the name of the under-signed or in such other
     name as is specified below.



__________________________
(Name)

__________________________
(Address)

Warrantholder:  GREGORY STENTO


By:_______________________

Date:_____________________
<PAGE>

                                   EXHIBIT I

                           ACKNOWLEDGMENT OF EXERCISE

     The undersigned 3-Dimensional Pharmaceuticals, Inc., hereby acknowledge
receipt of the "Notice of Exercise" from Comdisco, Inc., to purchase ____ shares
of the Series A Preferred Stock of 3-Dimensional Pharmaceuticals, Inc., pursuant
to the terms of the Warrant Agreement, and further acknowledges that - shares
remain subject to purchase under the terms of the Warrant Agreement.

                         Company:   3-Dimensional Pharmaceuticals, Inc.

                                    By:_______________________________

                                    Title:____________________________

                                    Date:_____________________________
<PAGE>

                                  EXHIBIT II

                                TRANSFER NOTICE

          (To transfer or assign the foregoing Warrant Agreement
          execute this form and supply required information. Do not
          use this form to purchase shares.)

     FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to _______________________
________________________________________________________________________________
whose address is _______________________________________________________________
________________________________________________________________________________


                                               Dated____________________________

                                               Holder's Signature_______________

                                               Holder's Address_________________

                                               _________________________________

Signature Guaranteed:___________________________________________________________

NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the face of the Warrant Agreement, without alteration or enlargement
or any change whatever. Officers of corporations and those acting in a fiduciary
or other representative capacity should file proper evidence of authority to
assign the foregoing Warrant Agreement.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.33
<SEQUENCE>20
<FILENAME>0020.txt
<DESCRIPTION>FORM OF WARRANT TO PURCHASE COMMON STOCK
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.33

                                                                       EXHIBIT B

            Void after 5:00 p.m. New York Time, on [________, ______]
         Warrant to Purchase __________ Shares of Common Stock or such
            additional shares as this Warrant may entitle the holder
               to purchase pursuant to provisions of this Warrant.


                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                       3-DIMENSIONAL PHARMACEUTICALS, INC.



          This is to Certify That, FOR VALUE RECEIVED, __________ or assigns
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), _______ fully paid, validly issued and nonassessable shares of
Common Stock, par value $.001 per share, of the Company ("Common Stock") at a
price of $____ per share during the Exercise Period (as defined below). The
number of shares of Common Stock to be received upon the exercise of this
Warrant and the price to be paid for each share of Common Stock may be adjusted
from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares" and the exercise price of
a share of Common Stock in effect at any time and as adjusted from time to time
is hereinafter sometimes referred to as the "Exercise Price". This Warrant is
being issued in connection with the issuance by the Company of Warrants to
purchase shares of Common Stock and promissory notes in the aggregate principal
amount of up to $______________ (the "Notes"), pursuant to a Loan Agreement
dated as of _________________ (the "Agreement").


    a.    EXERCISE OF WARRANT.

          i.        This Warrant may be exercised in whole or in part at any
               time or from time to time on or after _____, _____ until 5 p.m.
               New York City Time on _____, _____ (the "Exercise Period");
               provided, however, that if such day is a day on which banking
               institutions in the State of New York are authorized by law to
               close, then on the next succeeding day which shall not be such a
               day. This Warrant may be exercised by presentation and surrender
               hereof to the Company at its principal office, or at the office
               of its stock transfer agent, if any, with the Purchase Form
               annexed hereto duly executed and accompanied by payment of the
               Exercise Price for the number of Warrant Shares specified in such
               form. As soon as practicable after each such exercise of the
               warrants, but not later than seven (7) days from the date of such
               exercise, the Company shall issue and deliver to the Holder a
               certificate or certificate for the Warrant Shares issuable upon
               such exercise, registered in the name of the
<PAGE>

               Holder or its designee. If this Warrant should be exercised in
               part only, the Company shall, upon surrender of this Warrant for
               cancellation, execute and deliver a new Warrant evidencing the
               rights of the Holder thereof to purchase the balance of the
               Warrant Shares purchasable thereunder. Upon receipt by the
               Company of this Warrant at its office, or by the stock transfer
               agent of the Company at its office, in proper form for exercise,
               the Holder shall be deemed to be the holder of record of the
               shares of Common Stock issuable upon such exercise,
               notwithstanding that the stock transfer books of the Company
               shall then be closed or that certificates representing such
               shares of Common Stock shall not then be physically delivered to
               the Holder.

          ii.       At any time during the Exercise Period, the Holder may, at
               its option, exchange this Warrant, in whole or in part (a
               "Warrant Exchange") into the number of Warrant Shares determined
               in accordance with this Section (a)(2), by surrendering this
               Warrant at the principal office of the Company or at the office
               of its stock transfer agent, accompanied by a notice stating such
               Holder's intent to effect such exchange, the number of Warrant
               Shares to be exchanged and the date on which the Holder requests
               that such Warrant Exchange occur (the "Notice of Exchange"). The
               Warrant Exchange shall take place on the date specified in the
               Notice of Exchange or, if later, the date the Notice of Exchange
               is received by the Company (the "Exchange Date"). Certificates
               for the shares issuable upon such Warrant Exchange and, if
               applicable, a new warrant of like tenor evidencing the balance of
               the shares remaining subject to this Warrant, shall be issued as
               of the Exchange Date and delivered to the Holder within seven (7)
               days following the Exchange Date. In connection with any Warrant
               Exchange, this Warrant shall represent the right to subscribe for
               and acquire the number of Warrant Shares (rounded to the next
               highest integer) equal to (i) the number of Warrant Shares
               specified by the Holder in its Notice of Exchange (the "Total
               Number") less (ii) the number of Warrant Shares equal to the
               quotient obtained by dividing (A) the product of the Total Number
               and the existing Exercise Price by (B) the Fair Market Value.
               "Fair Market Value" shall mean: (1) if the Common Stock is listed
               on a National Securities Exchange or admitted to unlisted trading
               privileges on such exchange or listed for trading on the NASDAQ
               system, the average of the last reported sale prices of the
               Common Stock on such exchange or system for the twenty (20)
               business days ending on the last business day prior to the date
               for which the determination is being made; or (2) if the Common
               Stock is not so listed or admitted to unlisted trading
               privileges, the average of the means of the last reported bid and
               asked prices reported by the National Quotation Bureau, Inc. for
               the twenty (20) business days ending on the last business day
               prior to the date for which the determination is being made; or
               (3) if the Common Stock is not so listed or admitted to unlisted
               trading privileges and bid and asked prices are not so reported,
               an amount, not less than book value thereof as at the
<PAGE>

               end of the most recent fiscal year of the Company ending prior to
               the Exchange Date, determined in such reasonable manner as may be
               prescribed by the Board of Directors of the Company.

   b.          RESERVATION OF SHARES. The Company shall at all times reserve for
          issuance and/or delivery upon exercise of this Warrant such number of
          shares of its Common Stock as shall be required for issuance and
          delivery upon exercise of the Warrants.

   c.          FRACTIONAL SHARES. No fractional shares or script representing
          fractional shares shall be issued upon the exercise of this Warrant.
          With respect to any fraction of a share called for upon any exercise
          hereof, the Company shall pay to the Holder an amount in cash equal to
          such fraction multiplied by the Fair Market Value of a share.

   d.          EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.

               (1)        This Warrant is exchangeable, without expense, at the
                    option of the Holder, upon presentation and surrender hereof
                    to the Company or at the office of its stock transfer agent,
                    if any, for other warrants of different denominations
                    entitling the holder thereof to purchase in the aggregate
                    the same number of shares of Common Stock purchasable
                    hereunder. Subject to the restrictions set forth in
                    subparagraph (ii) below, upon surrender of this Warrant to
                    the Company at its principal office or at the office of its
                    stock transfer agent, if any, with the Assignment Form
                    annexed hereto duly executed and funds sufficient to pay any
                    transfer tax, the Company shall, without charge, execute and
                    deliver a new Warrant in the name of the assignee named in
                    such instrument of assignment and this Warrant shall
                    promptly be canceled. This Warrant may be divided or
                    combined with other warrants which carry the same rights
                    upon presentation hereof at the principal office of the
                    Company or at the office of its stock transfer agent, if
                    any, together with a written notice specifying the names and
                    denominations in which new Warrants are to be issued and
                    signed by the Holder hereof. The term "Warrant" as used
                    herein includes any Warrants into which this Warrant may be
                    divided or exchanged. Upon receipt by the Company of
                    evidence satisfactory to it of the loss, theft, destruction
                    or mutilation of this Warrant, and (in the case of loss,
                    theft or destruction) of reasonably satisfactory
                    indemnification, and upon surrender and cancellation of this
                    Warrant, if mutilated, the Company will execute and deliver
                    a new Warrant of like tenor and date. Any such new Warrant
                    executed and delivered shall constitute an additional
                    contractual obligation on the part of the Company, whether
                    or not this Warrant so lost, stolen, destroyed, or mutilated
                    shall be at any time enforceable by
<PAGE>

                    anyone.

               (2)        This Warrant and the shares of Common Stock issuable
                    upon exercise hereof have not been registered under the
                    Securities Act of 1933, as amended, or state securities laws
                    by reason of an exemption therefrom. The shares of Common
                    Stock issuable upon exercise of this Warrant are not
                    transferable except as provided in the Agreement and the
                    Stockholders' Agreement dated as of ____________, as amended
                    from time to time ("Stockholders' Agreement"). Shares of
                    Common Stock issuable upon exercise of this Warrant will
                    bear an appropriate legend to this effect. The restrictions
                    contained herein shall be binding on any transferee of the
                    Common Stock issuable upon exercise of this Warrant and the
                    Company may require any such transferee to execute an
                    instrument agreeing in writing to be bound by these
                    restrictions as a condition to transfer.

   e.          RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
          entitled to any rights of a shareholder in the Company, either at law
          or equity, and the rights of the Holder are limited to those expressed
          in the Warrant and are not enforceable against the Company except to
          the extent set forth herein.

   f.          ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any
          time and the number and kind of securities purchasable upon the
          exercise of the Warrants shall be subject to adjustment from time to
          time upon the happening of certain events as follows:

          i.   In case the Company shall (i) declare a dividend or make a
          distribution on its outstanding shares of Common Stock in shares of
          Common Stock, (ii) subdivide or reclassify its outstanding shares of
          Common Stock into a greater number of shares, or (iii) combine or
          reclassify its outstanding shares of Common Stock into a smaller
          number of shares, the Exercise Price in effect at the time of the
          record date for such dividend or distribution or of the effective date
          of such subdivision, combination or reclassification shall be adjusted
          so that it shall equal the price determined by multiplying the
          Exercise Price by a fraction, the denominator of which shall be the
          number of shares of Common Stock outstanding after giving effect to
          such action, and the numerator of which shall be the number of shares
          of Common Stock outstanding immediately prior to such action. Such
          adjustment shall be made successively whenever any event listed above
          shall occur.

ii.            In case the Company shall fix a record date for the issuance of
          rights or warrants to all holders of its Common Stock entitling them
          to subscribe for or purchase shares of Common Stock (or securities
          convertible into Common Stock) at a price (the "Subscription Price")
          (or
<PAGE>

          having a conversion price per share) less than the Exercise Price on
          the record date mentioned below, the Exercise Price shall be adjusted
          so that the same shall equal the price determined by multiplying the
          Exercise Price in effect immediately prior to the date of issuance by
          a fraction, the numerator of which shall be the sum of the number of
          shares outstanding on the record date mentioned below and the number
          of additional shares of Common Stock which the aggregate offering
          price of the total number of shares of Common Stock so offered (or the
          aggregate conversion price of the convertible securities so offered)
          would purchase at the Exercise Price in effect immediately prior to
          the date of such issuance, and the denominator of which shall be the
          sum of the number of shares of Common Stock outstanding on the record
          date mentioned below and the number of additional shares of Common
          Stock offered for subscription or purchase (or into which the
          convertible securities so offered are convertible). Such adjustment
          shall be made successively whenever such rights or warrants are issued
          and shall become effective immediately after the record date for the
          determination of shareholders entitled to receive such rights or
          warrants; and to the extent that shares of Common Stock are not
          delivered (or securities convertible into Common Stock are not
          delivered) after the expiration of such rights or warrants the
          Exercise Price shall be readjusted to the Exercise Price which would
          then be in effect had the adjustments made upon the issuance of such
          rights or warrants been made upon the basis of delivery of only the
          number of shares of Common Stock (or securities convertible into
          Common Stock) actually delivered.

 iii.          In case the Company shall hereafter distribute to the holders of
          its Common Stock evidences of its indebtedness or assets (excluding
          cash dividends or distributions and dividends or distributions
          referred to in Subsection (1) above) or subscription rights or
          warrants (excluding those referred to in Subsection (2) above), then
          in each such case the Exercise Price in effect thereafter shall be
          determined by multiplying the Exercise Price in effect immediately
          prior thereto by a fraction, the numerator of which shall be the total
          number of shares of Common Stock outstanding multiplied by the Fair
          Market Value per share of Common Stock, less the fair market value (as
          determined by the Company's Board of Directors) of said assets or
          evidences of indebtedness so distributed or of such rights or
          warrants, and the denominator of which shall be the total number of
          shares of Common Stock outstanding multiplied by the Fair Market Value
          per share of Common Stock. Such adjustment shall be made successively
          whenever such a record date is fixed. Such adjustment shall be made
          whenever any such distribution is made and shall become effective
          immediately after the record date for the determination of
          shareholders entitled to receive such distribution.
<PAGE>

  iv.          Whenever the Exercise Price payable upon exercise of each Warrant
          is adjusted pursuant to Subsections (1), (2) or (3) above, the number
          of Shares purchasable upon exercise of this Warrant shall
          simultaneously be adjusted by multiplying the number of Shares
          initially issuable upon exercise of this Warrant by the Exercise Price
          in effect on the date hereof and dividing the product so obtained by
          the Exercise Price, as adjusted.

   v.          No adjustment in the Exercise Price shall be required unless such
          adjustment would require an increase or decrease of at least 5% in
          such price; provided, however, that any adjustments which by reason of
          this Subsection (5) are not required to be made shall be carried
          forward and taken into account in any subsequent adjustment required
          to be made hereunder. All calculations under this Section (f) shall be
          made to the nearest cent or to the nearest one-hundredth of a share,
          as the case may be. Anything in this Section (f) to the contrary
          notwithstanding, the Company shall be entitled, but shall not be
          required, to make such changes in the Exercise Price, in addition to
          those required by this Section (f), as it shall determine, in its sole
          discretion, to be advisable in order that any dividend or distribution
          in shares of Common Stock, or any subdivision, reclassification or
          combination of Common Stock, hereafter made by the Company shall not
          result in any Federal Income tax liability to the holders of Common
          Stock or securities convertible into Common Stock (including
          Warrants).

  vi.          Whenever the Exercise Price is adjusted, as herein provided, the
          Company shall promptly but no later than 10 days after any request for
          such an adjustment by the Holder, cause a notice setting forth the
          adjusted Exercise Price and adjusted number of Shares issuable upon
          exercise of each Warrant, and, if requested, information describing
          the transactions giving rise to such adjustments, to be mailed to the
          Holders at their last addresses appearing in the Warrant Register, and
          shall cause a certified copy thereof to be mailed to its transfer
          agent, if any. The Company may retain a firm of independent certified
          public accountants selected by the Board of Directors (who may be the
          regular accountants employed by the Company) to make any computation
          required by this Section (f), and a certificate signed by such firm
          shall be conclusive evidence of the correctness of such adjustment.


 vii.          In the event that at any time, as a result of an adjustment made
          pursuant to Subsection (1) above, the Holder of this Warrant
          thereafter shall become entitled to receive any shares of the Company,
          other than Common Stock, thereafter the number of such other shares so
          receivable upon exercise of this Warrant shall be subject to
          adjustment from time to time in a manner and on terms as nearly
          equivalent as practicable to the
<PAGE>

               provisions with respect to the Common Stock contained in
               Subsections (1) to (6), inclusive above.

     viii.         Irrespective of any adjustments in the Exercise Price or the
               number or kind of shares purchasable upon exercise of this
               Warrant, Warrants theretofore or thereafter issued may continue
               to express the same price and number and kind of shares as are
               stated in the similar Warrants initially issuable pursuant to the
               Agreement.

g.             OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
     adjusted as required by the provisions of the foregoing Section, the
     Company shall forthwith file in the custody of its Secretary or an
     Assistant Secretary at its principal office and with its stock transfer
     agent, if any, an officer's certificate showing the adjusted Exercise Price
     determined as herein provided, setting forth in reasonable detail the facts
     requiring such adjustment, including a statement of the number of
     additional shares of Common Stock, if any, and such other facts as shall be
     necessary to show the reason for and the manner of computing such
     adjustment. Each such officer's certificate shall be made available at all
     reasonable times for inspection by the holder or any holder of a Warrant
     executed and delivered pursuant to Section (a) and the Company shall,
     forthwith after each such adjustment, mail a copy by certified mail of such
     certificate to the Holder or any such holder.

h.             NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
     outstanding, (i) if the Company shall pay any dividend or make any
     distribution upon the Common Stock or (ii) if the Company shall offer to
     the holders of Common Stock for subscription or purchase by them any share
     of any class or any other rights or (iii) if any capital reorganization of
     the Company, reclassification of the capital stock of the Company,
     consolidation or merger of the Company with or into another corporation,
     sale, lease or transfer of all or substantially all of the property and
     assets of the Company to another corporation, or voluntary or involuntary
     dissolution, liquidation or winding up of the Company shall be effected,
     then in any such case, the Company shall cause to be mailed by certified
     mail to the Holder, at least fifteen days prior to the date specified in
     (x) or (y) below, as the case may be, a notice containing a brief
     description of the proposed action and stating the date on which (x) a
     record is to be taken for the purpose of such dividend, distribution or
     rights, or (y) such reclassification, reorganization, consolidation,
     merger, conveyance, lease, dissolution, liquidation or winding up is to
     take place and the date, if any is to be fixed, as of which the holders of
     Common Stock or other securities shall receive cash or other property
     deliverable upon such reclassification, reorganization, consolidation,
     merger, conveyance, dissolution, liquidation or winding up.

i.             RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
     reclassification, capital reorganization or other change of outstanding
     shares of Common Stock of the Company, or in case of any consolidation or
     merger of
<PAGE>

     the Company with or into another corporation (other than a merger with a
     subsidiary in which merger the Company is the continuing corporation and
     which does not result in any reclassification, capital reorganization or
     other change of outstanding shares of Common Stock of the class issuable
     upon exercise of this Warrant) or in case of any sale, lease or conveyance
     to another corporation of the property of the Company as an entirety, the
     Company shall, as a condition precedent to such transaction, cause
     effective provisions to be made so that the Holder shall have the right
     thereafter by exercising this Warrant at any time prior to the expiration
     of the Warrant, to purchase the kind and amount of shares of stock and
     other securities and property receivable upon such reclassification,
     capital reorganization and other change, consolidation, merger, sale or
     conveyance by a holder of the number of shares of Common Stock which might
     have been purchased upon exercise of this Warrant immediately prior to such
     reclassification, change, consolidation, merger, sale or conveyance. Any
     such provision shall include provision for adjustments which shall be as
     nearly equivalent as may be practicable to the adjustments provided for in
     this Warrant. The foregoing provisions of this Section (i) shall similarly
     apply to successive reclassifications, capital reorganizations and changes
     of shares of Common Stock and to successive consolidations, mergers, sales
     or conveyances. In the event that in connection with any such capital
     reorganization or reclassification, consolidation, merger, sale or
     conveyance, additional shares of Common Stock shall be issued in exchange,
     conversion, substitution or payment, in whole or in part, for a security of
     the Company other than Common Stock, any such issue shall be treated as an
     issue of Common Stock covered by the provisions of Subsection (1) of
     Section (f) hereof.

j.        REGISTRATION UNDER THE SECURITIES ACT OF 1933. Pursuant to the
     Stockholders' Agreement, the Warrant Shares are deemed to be Registrable
     Securities for purposes of Section 6 of the Stockholders' Agreement which
     grants certain registration rights to Holders (as defined in the
     Stockholders' Agreement) of Registrable Securities.


                                             3-DIMENSIONAL PHARMACEUTICALS, INC.


                                             By
                                               -----------------------------
[SEAL]

Dated: [_______________, _______]


Attest:


------------------------------
Secretary
<PAGE>

                                  PURCHASE FORM
                                  -------------

                                                 Dated _________________,  _____

     The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing ________ shares of Common Stock and hereby makes
payment of in payment of the actual exercise price thereof

                                    ------

                     INSTRUCTIONS FOR REGISTRATION OF STOCK
                     --------------------------------------


Name
     --------------------------------------------
     (Please typewrite or print in block letters)

Address
        -----------------------------------------

Signature
         ----------------------------------------


                                    ---------


                                 ASSIGNMENT FORM
                                 ---------------

     FOR VALUE RECEIVED, ______________________hereby sells, assigns and
transfers unto

Name
     --------------------------------------------
     (Please typewrite or print in block letters)


Address
       -----------------------------------------

the right to purchase Common Stock represented by this Warrant to the extent of
________shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint ________________ Attorney, to transfer the same on the
books of the Company with full power of substitution in the premises.

Date ___________, ______

Signature
         ----------------------------------------
<PAGE>

                                                                   EXHIBIT 10.33

                      3-Dimensional Pharmaceuticals, Inc.
       Schedule of Holders of Certain Warrants to Purchase Common Stock

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                         Shares        Date
           Warrant Holder              Entitled to    Warrant     Exercise   Expiration
                                       Purchase (1)   Issued      Price (1)      Date
---------------------------------------------------------------------------------------
<S>                                  <C>             <C>          <C>        <C>
Abingworth Bioventures                    309,656    11/18/99        1.25      11/17/09
                                     -------------
Abingworth Bioventures Total              309,656

Aetna Life Insurance                       89,797    11/18/99        1.25      11/17/09
                                     -------------
Aetna Life Insurance Total                 89,797

American Stock Transfer                    20,000    09/20/96        0.01      09/20/06
American Stock Transfer                    20,001    05/12/96        0.01      05/12/06
American Stock Transfer                    10,521    03/12/96        0.01      03/12/06
                                     -------------
American Stock Transfer Total              50,522

BB Biotech                                552,547    11/18/99        1.25      11/17/09
                                     -------------
BB Biotech Total                          552,547

Comdisco                                   54,113    04/25/95        1.00      04/24/05
                                     -------------
Comdisco Total                             54,113

Comdisco (CDC Realty, Inc.)               161,415    03/07/94        1.00      03/06/04
                                     -------------
Comdisco (CDC Realty, Inc.) Total         161,415

Gregory Stento                             17,935    03/07/94        1.00      03/06/04
Gregory Stento                              6,012    04/25/95        1.00      04/24/05
                                     -------------
Gregory Stento Total                       23,947

H Rothman                                   1,000    03/12/97        0.01      03/12/07
H Rothman                                   4,200    09/20/96        0.01      09/20/06
H Rothman                                   3,999    05/12/96        0.01      05/12/06
H Rothman                                   1,273    03/12/96        0.01      03/12/06
H Rothman                                  10,500    11/18/99        1.25      11/17/09
                                     -------------
H Rothman Total                            20,972

HCV III                                    63,257    03/12/97        0.01      03/12/07
HCV III                                   161,839    09/20/96        0.01      09/20/06
HCV III                                   101,922    05/12/96        0.01      05/12/06
HCV III                                   118,682    03/12/96        0.01      03/12/06
HCV III                                   134,900    02/15/96        0.01      02/14/06
HCV III                                   190,585    07/14/95        0.01      07/13/05
HCV III                                 1,082,200    11/18/99        1.25      11/17/09
                                     -------------
HCV III Total                           1,853,385

HCV IV                                     18,577    03/12/97        0.01      03/12/07
HCV IV                                     47,526    09/20/96        0.01      09/20/06
HCV IV                                     29,934    05/12/96        0.01      05/12/06
HCV IV                                     34,852    03/12/96        0.01      03/12/06
HCV IV                                     39,615    02/15/96        0.01      02/14/06
HCV IV                                     55,966    07/14/95        0.01      07/13/05
HCV IV                                    317,800    11/18/99        1.25      11/17/09
                                     -------------
HCV IV Total                              544,270

Hudson Trust                                2,225    03/12/97        0.01      03/12/07
Hudson Trust                                6,684    09/20/96        0.01      09/20/06
Hudson Trust                                6,684    05/12/96        0.01      05/12/06
Hudson Trust                                4,902    03/12/96        0.01      03/12/06
                                     -------------
Hudson Trust Total                         20,495

PVI                                        29,332    07/14/95        0.01      07/13/05
                                     -------------
PVI Total                                  29,332

Rho Management Trust II                    14,941    03/12/97        0.01      03/12/07
Rho Management Trust II                    59,751    09/20/96        0.01      09/20/06
Rho Management Trust II                   131,853    05/12/96        0.01      05/12/06
Rho Management Trust II                    43,403    03/12/96        0.01      03/12/06
Rho Management Trust II                    25,485    02/15/96        0.01      02/14/06
Rho Management Trust II                    10,002    07/14/95        0.01      07/13/05
Rho Management Trust II                    14,115    07/14/95        0.01      07/13/05
Rho Management Trust II                 1,050,000    11/18/99        1.25      11/17/09
                                     -------------
Rho Management Trust II Total           1,349,550

Senmed Medical Ventures                    87,500    11/18/99        1.25      11/17/09
                                     -------------
Senmed Medical Ventures Total              87,500

Transamerica Business Credit               12,600    06/12/97        2.50      06/12/07
                                     -------------
Transamerica Business Credit Total         12,600
                                     -------------
Grand Total                             5,160,101
                                     =============
</TABLE>

(1) Subject to adjustment in accordance with the terms of each such warrant.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.34
<SEQUENCE>21
<FILENAME>0021.txt
<DESCRIPTION>3-D PHARMACEUTICLES 2000 EQUITY COMPENSATION PLAN
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.34

                      3-DIMENSIONAL PHARMACEUTICALS, INC.

                         2000 EQUITY COMPENSATION PLAN
                         -----------------------------


     The purpose of the 3-Dimensional Pharmaceuticals, Inc. 2000 Equity
Compensation Plan (the "Plan") is to provide (i) designated employees of 3-
Dimensional Pharmaceuticals, Inc. (the "Company") and its subsidiaries, (ii)
certain consultants and advisors who perform services for the Company or its
subsidiaries (including without limitation members of the Company's Scientific
Advisory Board) and (iii) non-employee members of the Board of Directors of the
Company (the "Board") with the opportunity to receive grants of incentive stock
options, nonqualified stock options, stock awards and performance units. The
Company believes that the Plan will encourage the participants to contribute
materially to the growth of the Company, thereby benefitting the Company's
stockholders, and will align the economic interests of the participants with
those of the stockholders.

     1.   Administration
          --------------

     (a)  Committee. The Plan shall be administered by a committee appointed by
          ---------
the Board (the "Committee"), which may consist of two or more persons who are
"outside directors" as defined under section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), and related Treasury regulations and "non-
employee directors" as defined under Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). However, the Board may ratify or
approve any grants as it deems appropriate.

     (b)  Committee Authority. The Committee shall have the sole authority to
          -------------------
(i) determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms of any previously issued grant, and (v) deal with any other matters
arising under the Plan.

     (c)  Committee Determinations. The Committee shall have full power and
          ------------------------
authority to administer and interpret the Plan, to make factual determinations
and to adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Company, not as a fiduciary, and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated individuals.
<PAGE>

     2.   Grants
          ------

     Awards under the Plan may consist of grants of incentive stock options as
described in Section 5 ("Incentive Stock Options"), nonqualified stock options
as described in Section 5 "Nonqualified Stock Options") (Incentive Stock Options
and Nonqualified Stock Options are collectively referred to as "Options"), stock
awards as described in Section 6 ("Stock Awards"), and performance units as
described in Section 7 ("Performance Units") (hereinafter collectively referred
to as "Grants"). All Grants shall be subject to the terms and conditions set
forth herein and to such other terms and conditions consistent with this Plan as
the Committee deems appropriate and as are specified in writing by the Committee
to the individual in a grant instrument or an amendment to the grant instrument
(the "Grant Instrument"). The Committee shall approve the form and provisions of
each Grant Instrument. Grants under a particular Section of the Plan need not be
uniform as among the grantees.

     3.   Shares Subject to the Plan
          --------------------------

     (a)  Shares Authorized. Subject to adjustment as described below, the
          -----------------
aggregate number of shares of common stock of the Company ("Company Stock") that
may be issued or transferred under the Plan is 6,000,000 shares. The maximum
aggregate number of shares of Company Stock that shall be subject to Grants made
under the Plan to any individual during any calendar year shall be 2,000,000
shares, subject to adjustment as described below. The shares may be authorized
but unissued shares of Company Stock or reacquired shares of Company Stock,
including shares purchased by the Company on the open market for purposes of the
Plan. If and to the extent Options granted under the Plan terminate, expire, or
are canceled, forfeited, exchanged or surrendered without having been exercised
or if any Stock Awards or Performance Units are forfeited, the shares subject to
such Grants shall again be available for purposes of the Plan.

     (b)  Adjustments. If there is any change in the number or kind of shares of
          -----------
Company Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share or the applicable market value of such Grants may
be appropriately adjusted by the Committee to reflect any increase or decrease
in the number of, or change in the kind or value of, issued shares of Company
Stock to preclude, to the extent practicable, the enlargement or dilution of
rights and benefits under such Grants; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated. Any adjustments
determined by the Committee shall be final, binding and conclusive.

                                      -2-
<PAGE>

     4.  Eligibility for Participation
         -----------------------------

     (a)  Eligible Persons. All employees of the Company and its subsidiaries
          ----------------
("Employees"), including Employees who are officers or members of the Board, and
members of the Board who are not Employees ("Non-Employee Directors") shall be
eligible to participate in the Plan. Consultants and advisors who perform
services for the Company or any of its subsidiaries, including without
limitation members of the Company's Scientific Advisory Board ("Key Advisors"),
shall be eligible to participate in the Plan if the Key Advisors render bona
fide services to the Company or its subsidiaries, the services are not in
connection with the offer and sale of securities in a capital-raising
transaction and the Key Advisors do not directly or indirectly promote or
maintain a market for the Company's securities.

     (b)  Selection of Grantees. The Committee shall select the Employees, Non-
          ---------------------
Employee Directors and Key Advisors to receive Grants and shall determine the
number of shares of Company Stock subject to a particular Grant in such manner
as the Committee determines. Employees, Key Advisors and Non-Employee Directors
who receive Grants under this Plan shall hereinafter be referred to as
"Grantees".

     5.   Granting of Options
          -------------------

     (a)  Number of Shares. The Committee shall determine the number of shares
          ----------------
of Company Stock that will be subject to each Grant of Options to Employees,
Non-Employee Directors and Key Advisors.

     (b)  Type of Option and Price.
          ------------------------

          (i)    The Committee may grant Incentive Stock Options that are
intended to qualify as "incentive stock options" within the meaning of section
422 of the Code or Nonqualified Stock Options that are not intended so to
qualify or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein.
Incentive Stock Options may be granted only to Employees. Nonqualified Stock
Options may be granted to Employees, Non-Employee Directors and Key Advisors.

          (ii)   The purchase price (the "Exercise Price") of Company Stock
subject to an Option shall be determined by the Committee and may be equal to or
greater than the Fair Market Value (as defined below) of a share of Company
Stock on the date the Option is granted; provided, however, that an Incentive
Stock Option may not be granted to an Employee who, at the time of grant, owns
stock possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary of the Company,
unless the Exercise Price per share is not less than 110% of the Fair Market
Value of Company Stock on the date of grant.

          (iii)  If the Company Stock is publicly traded, then the Fair Market
Value per share shall be determined as follows: (x) if the principal trading
market for the Company Stock is

                                      -3-
<PAGE>

a national securities exchange or the Nasdaq National Market, the last reported
sale price thereof on the relevant date or (if there were no trades on that
date) the latest preceding date upon which a sale was reported, or (y) if the
Company Stock is not principally traded on such exchange or market, the mean
between the last reported "bid" and "asked" prices of Company Stock on the
relevant date, as reported on Nasdaq or, if not so reported, as reported by the
National Daily Quotation Bureau, Inc. or as reported in a customary financial
reporting service, as applicable and as the Committee determines. If the Company
Stock is not publicly traded or, if publicly traded, is not subject to reported
transactions or "bid" or "asked" quotations as set forth above, the Fair Market
Value per share shall be as determined by the Committee.

     (c)  Option Term. The Committee shall determine the term of each Option.
          -----------
The term of any Option shall not exceed ten years from the date of grant.
However, an Incentive Stock Option that is granted to an Employee who, at the
time of grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or any parent or subsidiary
of the Company, may not have a term that exceeds five years from the date of
grant.

     (d)  Exercisability of Options. Options shall become exercisable in
          -------------------------
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee and specified in the Grant Instrument. The Committee
may accelerate the exercisability of any or all outstanding Options at any time
for any reason.

     (e)  Grants to Non-Exempt Employees. Notwithstanding the foregoing, Options
          ------------------------------
granted to persons who are non-exempt employees under the Fair Labor Standards
Act of 1938, as amended, shall have an Exercise Price not less than 85% of the
Fair Market Value of the Company Stock on the date of grant, and may not be
exercisable for at least six months after the date of grant (except that such
Options may become exercisable, as determined by the Committee, upon the
Grantee's death, Disability or retirement, or upon a change of control or other
circumstances permitted by applicable regulations).

     (f)  Termination of Employment, Disability or Death.
          ----------------------------------------------

          (i)  Except as provided below, an Option may only be exercised while
the Grantee is employed by, or providing service to, the Company as an Employee,
Key Advisor or member of the Board. In the event that a Grantee ceases to be
employed by, or provide service to, the Company for any reason other than
Disability, death, or termination for Cause (as defined below), any Option which
is otherwise exercisable by the Grantee shall terminate unless exercised within
90 days after the date on which the Grantee ceases to be employed by, or provide
service to, the Company (or within such other period of time as may be specified
by the Committee), but in any event no later than the date of expiration of the
Option term. Except as otherwise provided by the Committee, any of the Grantee's
Options that are not otherwise exercisable as of the date on which the Grantee
ceases to be employed by, or provide service to, the Company shall terminate as
of such date.

                                      -4-
<PAGE>

          (ii)   In the event the Grantee ceases to be employed by, or provide
service to, the Company on account of a termination for Cause by the Company,
any Option held by the Grantee shall terminate as of the date the Grantee ceases
to be employed by, or provide service to, the Company. In addition,
notwithstanding any other provisions of this Section 5, if the Committee
determines that the Grantee has engaged in conduct that constitutes Cause at any
time while the Grantee is employed by, or providing service to, the Company or
after the Grantee's termination of employment or service, any Option held by the
Grantee shall immediately terminate and the Grantee shall automatically forfeit
all shares underlying any exercised portion of an Option for which the Company
has not yet delivered the share certificates, upon refund by the Company of the
Exercise Price paid by the Grantee for such shares. Upon any exercise of an
Option, the Company may withhold delivery of share certificates pending
resolution of an inquiry that could lead to a finding resulting in a forfeiture.

          (iii)  In the event the Grantee ceases to be employed by, or provide
service to, the Company because the Grantee is Disabled, any Option which is
otherwise exercisable by the Grantee shall terminate unless exercised within one
year after the date on which the Grantee ceases to be employed by, or provide
service to, the Company (or within such other period of time as may be specified
by the Committee), but in any event no later than the date of expiration of the
Option term. Except as otherwise provided by the Committee, any of the Grantee's
Options which are not otherwise exercisable as of the date on which the Grantee
ceases to be employed by, or provide service to, the Company shall terminate as
of such date.

          (iv)  If the Grantee dies while employed by, or providing service to,
the Company or within 90 days after the date on which the Grantee ceases to be
employed or provide service on account of a termination specified in Section
5(e)(i) above (or within such other period of time as may be specified by the
Committee), any Option that is otherwise exercisable by the Grantee shall
terminate unless exercised within one year after the date on which the Grantee
ceases to be employed by, or provide service to, the Company (or within such
other period of time as may be specified by the Committee), but in any event no
later than the date of expiration of the Option term. Except as otherwise
provided by the Committee, any of the Grantee's Options that are not otherwise
exercisable as of the date on which the Grantee ceases to be employed by, or
provide service to, the Company shall terminate as of such date.

          (v)    For purposes of this Section 5(e), and Sections 6 and 7:

          (A)    The term "Company" shall mean the Company and its parent and
     subsidiary corporations or other entities, as determined by the Committee.
          (B)    "Employed by, or provide service to, the Company" shall mean
     employment or service as an Employee, Key Advisor or member of the Board
     (so that, for purposes of exercising Options and satisfying conditions with
     respect to Stock Awards and Performance Units, a Grantee shall not be
     considered to have terminated employment or service until the Grantee
     ceases to be an Employee, Key Advisor and member of the Board), unless the
     Committee determines otherwise.

                                      -5-
<PAGE>

          (C)  "Disability" shall mean a Grantee's becoming disabled within the
     meaning of section 22(e)(3) of the Code or the Grantee becomes entitled to
     receive long-term disability benefits under the Company's long-term
     disability plan.

          (D)  "Cause" shall mean, except to the extent specified otherwise by
     the Committee, a finding by the Committee that the Grantee (i) has breached
     his or her employment or service contract with the Company, (ii) has
     engaged in disloyalty to the Company, including, without limitation, fraud,
     embezzlement, theft, commission of a felony or proven dishonesty in the
     course of his or her employment or service, (iii) has disclosed trade
     secrets or confidential information of the Company to persons not entitled
     to receive such information, (iv) has breached a written non-competition,
     non-solicitation or confidentiality agreement between the Company and the
     Grantee, or (v) has engaged in such other behavior detrimental to the
     interests of the Company as the Committee determines.

     (e)  Exercise of Options. A Grantee may exercise an Option that has become
          -------------------
exercisable, in whole or in part, by delivering a notice of exercise to the
Company with payment of the Exercise Price. The Grantee shall pay the Exercise
Price for an Option as specified by the Committee (w) in cash, (x) with the
approval of the Committee, by delivering shares of Company Stock owned by the
Grantee (including Company Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Committee deems appropriate) and
having a Fair Market Value on the date of exercise equal to the Exercise Price
or by attestation (on a form prescribed by the Committee) to ownership of shares
of Company Stock having a Fair Market Value on the date of exercise equal to the
Exercise Price, (y) payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board, or (z) by such other
method as the Committee may approve. The Committee may authorize loans by the
Company to Grantees in connection with the exercise of an Option, upon such
terms and conditions as the Committee, in its sole discretion, deems
appropriate. Shares of Company Stock used to exercise an Option shall have been
held by the Grantee for the requisite period of time to avoid adverse accounting
consequences to the Company with respect to the Option. The Grantee shall pay
the Exercise Price and the amount of any withholding tax due at the time of
exercise.

     (f)  Limits on Incentive Stock Options. Each Incentive Stock Option shall
          ---------------------------------
provide that, if the aggregate Fair Market Value of the stock on the date of the
grant with respect to which Incentive Stock Options are exercisable for the
first time by a Grantee during any calendar year, under the Plan or any other
stock option plan of the Company or a parent or subsidiary, exceeds $100,000,
then the Option, as to the excess, shall be treated as a Nonqualified Stock
Option. An Incentive Stock Option shall not be granted to any person who is not
an Employee of the Company or a parent or subsidiary (within the meaning of
section 424(f) of the Code).

     6.   Stock Awards
          ------------

     The Committee may issue or transfer shares of Company Stock to an Employee,
Non-Employee Director or Key Advisor under a Stock Award, upon such terms as the
Committee deems appropriate. The following provisions are applicable to Stock
Awards:

                                      -6-
<PAGE>

     (a)  General Requirements. Shares of Company Stock issued or transferred
          --------------------
pursuant to Stock Awards may be issued or transferred for consideration or for
no consideration, and subject to restrictions or no restrictions, as determined
by the Committee. The Committee may, but shall not be required to, establish
conditions under which restrictions on Stock Awards shall lapse over a period of
time or according to such other criteria as the Committee deems appropriate,
including, without limitation, restrictions based upon the achievement of
specific performance goals. The period of time during which the Stock Awards
will remain subject to restrictions will be designated in the Grant Instrument
as the "Restriction Period."

     (b)  Number of Shares. The Committee shall determine the number of shares
          ----------------
of Company Stock to be issued or transferred pursuant to a Stock Award and the
restrictions applicable to such shares.

     (c)  Requirement of Employment or Service. If the Grantee ceases to be
          ------------------------------------
employed by, or provide service to, the Company (as defined in Section 5(f))
during a period designated in the Grant Instrument as the Restriction Period, or
if other specified conditions are not met, the Stock Award shall terminate as to
all shares covered by the Grant as to which the restrictions have not lapsed,
and those shares of Company Stock must be immediately returned to the Company.
The Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.

     (d)  Restrictions on Transfer and Legend on Stock Certificate. During the
          --------------------------------------------------------
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of a Stock Award except to a Successor Grantee
under Section 11(a). Each certificate for a share of a Stock Award shall contain
a legend giving appropriate notice of the restrictions in the Grant. The Grantee
shall be entitled to have the legend removed from the stock certificate covering
the shares subject to restrictions when all restrictions on such shares have
lapsed. The Committee may determine that the Company will not issue certificates
for Stock Awards until all restrictions on such shares have lapsed, or that the
Company will retain possession of certificates for shares of Stock Awards until
all restrictions on such shares have lapsed.



     (e)  Right to Vote and to Receive Dividends. Unless the Committee
          --------------------------------------
determines otherwise, during the Restriction Period, the Grantee shall have the
right to vote shares of Stock Awards and to receive any dividends or other
distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee, including, without limitation, the achievement of
specific performance goals.

     (f)  Lapse of Restrictions. All restrictions imposed on Stock Awards shall
          ---------------------
lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions imposed by the Committee. The Committee may
determine, as to any or all Stock Awards, that the restrictions shall lapse
without regard to any Restriction Period.

                                      -7-
<PAGE>

     7.   Performance Units
          -----------------

     (a)  General Requirements. The Committee may grant performance units
          --------------------
("Performance Units") to an Employee, Non-Employee Director or Key Advisor. Each
Performance Unit shall represent the right of the Grantee to receive an amount
based on the value of the Performance Unit, if performance goals established by
the Committee are met. The value of a Performance Unit shall equal the Fair
Market Value of a share of Company Stock. The Committee shall determine the
number of Performance Units to be granted and the requirements applicable to
such Units.

     (b)  Performance Period and Performance Goals. When Performance Units are
          ----------------------------------------
granted, the Committee shall establish the performance period during which
performance shall be measured (the "Performance Period"), performance goals
applicable to the Units ("Performance Goals") and such other conditions of the
Grant as the Committee deems appropriate. Performance Goals may relate to the
financial performance of the Company or its operating units, the performance of
Company Stock, individual performance, or such other criteria as the Committee
deems appropriate.

     (c)  Payment with respect to Performance Units. At the end of each
          -----------------------------------------
Performance Period, the Committee shall determine to what extent the Performance
Goals and other conditions of the Performance Units are met, the value of the
Performance Units (if applicable), and the amount, if any, to be paid with
respect to the Performance Units. Payments with respect to Performance Units
shall be made partly in cash, in Company Stock, or in a combination of the two,
as determined by the Committee, provided that the cash portion does not exceed
50% of the amount to be distributed.

     (d)  Requirement of Employment or Service. If the Grantee ceases to be
          ------------------------------------
employed by, or provide service to, the Company (as defined in Section 5(f))
during a Performance Period, or if other conditions established by the Committee
are not met, the Grantee's Performance Units shall be forfeited. The Committee
may, however, provide for complete or partial exceptions to this requirement as
it deems appropriate.

     8.   Qualified Performance-Based Compensation.
          ----------------------------------------

     (a)  Designation as Qualified Performance-Based Compensation. The committee
          -------------------------------------------------------
may determine that Performance Units or Stock Awards granted to an Employee
shall be considered "qualified performance-based compensation" under Section
162(m) of the Code. The provisions of this Section 8 shall apply to Grants of
Performance Units and Stock Awards that are to be considered "qualified
performance-based compensation" under section 162(m) of the Code.

     (b)  Performance Goals. When Performance Units or Stock Awards that are to
          -----------------
be considered "qualified performance-based compensation" are granted, the
Committee shall establish in writing (i) the objective performance goals that
must be met, (ii) the Performance Period during which the performance goals must
be met, (iii) the threshold, target and maximum

                                      -8-
<PAGE>

amounts that may be paid if the performance goals are met, and (iv) any other
conditions that the Committee deems appropriate and consistent with the Plan and
section 162(m) of the Code. The performance goals may relate to the Employee's
business unit or the performance of the Company and its subsidiaries as a whole,
or any combination of the foregoing. The Committee shall use objectively
determinable performance goals based on one or more of the following criteria:
stock price, earnings per share, net earnings, operating earnings, return on
assets, stockholder return, return on equity, growth in assets, unit volume,
sales, market share, scientific goals, pre-clinical or clinical goals,
regulatory approvals, or strategic business criteria consisting of one or more
objectives based on meeting specified revenue goals, market penetration goals,
geographic business expansion goals, cost targets, goals relating to
acquisitions or divestitures, or strategic partnerships.

     (c)  Establishment of Goals. The Committee shall establish the performance
          ----------------------
goals in writing either before the beginning of the Performance Period or during
a period ending no later than the earlier of (i) 90 days after the beginning of
the Performance Period or (ii) the date on which 25% of the Performance Period
has been completed, or such other date as may be required or permitted under
applicable regulations under section 162(m) of the Code. The performance goals
shall satisfy the requirements for "qualified performance-based compensation,"
including the requirement that the achievement of the goals be substantially
uncertain at the time they are established and that the goals be established in
such a way that a third party with knowledge of the relevant facts could
determine whether and to what extent the performance goals have been met. The
Committee shall not have discretion to increase the amount of compensation that
is payable upon achievement of the designated performance goals.

     (d)  Maximum Payment. Performance Units and Stock Awards under this
          ---------------
Section 8 may be granted to an Employee with respect to not more than 2,000,000
shares of Company Stock for any year in a Performance Period.



     (e)  Announcement of Grants. The Committee shall certify and announce the
          ----------------------
results for each Performance Period to all Grantees immediately following the
announcement of the Company's financial results for the Performance Period. If
and to the extent that the Committee does not certify that the performance goals
have been met, the grants of Stock Awards or Performance Units for the
Performance Period shall be forfeited or shall not be made, as applicable.

     (f)  Death, Disability or Other Circumstances. The Committee may provide
          ----------------------------------------
that Performance Units or Stock Awards shall be payable or restrictions shall
lapse, in whole or in part, in the event of the Grantee's death or Disability
(as defined in Section 5(f) above) during the Performance Period, or under other
circumstances consistent with the regulations and rulings under section 162(m).

     9.   Deferrals
          ---------

                                      -9-
<PAGE>

     The Committee may permit or require a Grantee to defer receipt of the
payment of cash or the delivery of shares that would otherwise be due to such
Grantee in connection with any Option, the lapse or waiver of restrictions
applicable to Stock Awards, or the satisfaction of any requirements or
objectives with respect to Performance Units. If any such deferral election is
permitted or required, the Committee shall, in its sole discretion, establish
rules and procedures for such deferrals.

     10.  Withholding of Taxes
          --------------------

     (a)  Required Withholding. All Grants under the Plan shall be subject to
          --------------------
applicable federal (including FICA), state and local tax withholding
requirements. The Company shall have the right to deduct from all Grants paid in
cash, or from other wages paid to the Grantee, any federal, state or local taxes
required by law to be withheld with respect to such Grants. In the case of
Options, Stock Awards and other Grants paid in Company Stock, the Company may
require that the Grantee or other person receiving or exercising Grants pay to
the Company the amount of any federal, state or local taxes that the Company is
required to withhold with respect to such Grants, or the Company may deduct from
other wages paid by the Company the amount of any withholding taxes due with
respect to such Grants.

     (b)  Election to Withhold Shares. If the Committee so permits, a Grantee
          ---------------------------
may elect to satisfy the Company's income tax withholding obligation with
respect to Options, Stock Awards or Performance Units paid in Company Stock by
having shares withheld up to an amount that does not exceed the Grantee's
minimum applicable withholding tax rate for federal (including FICA), state and
local tax liabilities. The election must be in a form and manner prescribed by
the Committee and may be subject to the prior approval of the Committee.



     11.  Transferability of Grants
          -------------------------

     (a)  Nontransferability of Grants. Except as provided below, only the
          ----------------------------
Grantee may exercise rights under a Grant during the Grantee's lifetime. A
Grantee may not transfer those rights except by will or by the laws of descent
and distribution or, with respect to Nonqualified Stock Options, if permitted in
any specific case by the Committee pursuant to a domestic relations order. When
a Grantee dies, the personal representative or other person entitled to succeed
to the rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee must furnish proof satisfactory to the Company of his or her
right to receive the Grant under the Grantee's will or under the applicable laws
of descent and distribution.

     (b)  Transfer of Nonqualified Stock Options. Notwithstanding the foregoing,
the Committee may provide, in a Grant Instrument, that a Grantee may transfer
Nonqualified Stock Options to family members, or one or more trusts or other
entities for the benefit of or owned by family members, consistent with the
applicable securities laws, according to such terms as the Committee may
determine; provided that the Grantee receives no consideration for the transfer
of

                                      -10-
<PAGE>

an Option and the transferred Option shall continue to be subject to the same
terms and conditions as were applicable to the Option immediately before the
transfer.

     12.  Corporate Events
          ----------------

     (a)  Sale or Exchange of Assets, Dissolution or Liquidation, or Merger or
          --------------------------------------------------------------------
Consolidation Where the Company Does Not Survive. If all or substantially all of
------------------------------------------------
the assets of the Company are to be sold or exchanged, the Company is to be
dissolved or liquidated, or the Company is a party to a merger or consolidation
with another corporation in which the Company will not be the surviving
corporation, then, at least ten days prior to the effective date of such event,
the Company shall give each Grantee with any outstanding Grants written notice
of such event. Unless the Committee provides otherwise in the Grant Instrument,
(i) each such Grantee shall thereupon have the right to exercise in full any
installments of outstanding Options not previously exercised (whether or not the
right to exercise such installments has accrued pursuant to such Options),
within ten days after such written notice is sent by the Company, and any
installments of such Options not so exercised shall thereafter lapse and be of
no further force or effect, (ii) restrictions and conditions on outstanding
Stock Awards shall immediately lapse and (iii) payment shall be made in
settlement of outstanding Performance Units in an amount determined by the
Committee.

     (b)  Merger or Consolidation Where the Company Survives. If the Company is
          --------------------------------------------------
a party to a merger or consolidation in which the Company will be the surviving
corporation, then the Committee may, in its sole discretion, elect to give each
Grantee with any outstanding Grants written notice of such event. If such notice
is given, unless the Committee provides otherwise in the Grant Instrument, (i)
each such Grantee shall thereupon have the right to exercise in full any
installments of outstanding Options not previously exercised (whether or not the
right to exercise such installments has accrued pursuant to such Options),
within ten days after such written notice is sent by the Company, and any
installments of Options not so exercised shall thereafter lapse and be of no
further force or effect, (ii) restrictions and conditions on outstanding Stock
Awards shall immediately lapse and (iii) payment shall be made in settlement of
outstanding Performance Units in an amount determined by the Committee.

     (c)  Committee Discretion. Notwithstanding the foregoing, (i) the Committee
          --------------------
may provide in a Grant Instrument specific provisions that are applicable to a
Grant in the event of a corporate transaction, and (ii) the Committee may
accelerate the exercisability or vesting of Grants in the event of any corporate
transaction, allow the assumption or substitution of Grants by a surviving
corporation and the continuation of such assumed or substituted Grants, or take
other actions with respect to outstanding Grants, as the Committee deems
appropriate.

     13.  Requirements for Issuance or Transfer of Shares
          -----------------------------------------------

     (a)  Limitations on Issuance or Transfer of Shares. No Company Stock shall
          ---------------------------------------------
be issued or transferred in connection with any Grant hereunder unless and until
all legal requirements applicable to the issuance or transfer of such Company
Stock have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition any Grant made

                                      -11-
<PAGE>

to any Grantee hereunder on such Grantee's undertaking in writing to comply with
such restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be required by applicable laws, regulations and interpretations, including
any requirement that a legend be placed thereon.

     (b)  Lock-Up Period. If so requested by the Company or any representative
          --------------
of the underwriters (the "Managing Underwriter") in connection with any
underwritten offering of securities of the Company under the Securities Act of
1933, as amended (the "Securities Act"), a Grantee (including any successors or
assigns) shall not sell or otherwise transfer any shares or other securities of
the Company during the 30-day period preceding and the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act for such underwriting (or such shorter period as may be requested
by the Managing Underwriter and agreed to by the Company) (the "Market Standoff
Period"). The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market
Standoff Period.

     14.  Amendment and Termination of the Plan
          -------------------------------------

     (a)  Amendment. The Board may amend or terminate the Plan at any time;
          ---------
provided, however, that the Board shall not amend the Plan without stockholder
approval if (i) such approval is required in order for Incentive Stock Options
granted or to be granted under the Plan to meet the requirements of section 422
of the Code, (ii) such approval is required in order to exempt compensation
under the Plan from the deduction limit under section 162(m) of the Code, or
(iii) such approval is required by applicable stock exchange requirements.

     (b)  Stockholder Approval for "Qualified Performance-Based Compensation".
          -------------------------------------------------------------------
If Performance Units or Stock Awards are granted as "qualified performance-based
compensation" under Section 8 above, the Plan must be reapproved by the
stockholders no later than the first stockholders meeting that occurs in the
fifth year following the year in which the stockholders previously approved the
provisions of Section 8, if required by section 162(m) of the Code or the
regulations thereunder.

     (c)  Termination of Plan. The Plan shall terminate on the day immediately
          -------------------
preceding the tenth anniversary of its effective date, unless the Plan is
terminated earlier by the Board or is extended by the Board with the approval of
the stockholders.

     (d)  Termination and Amendment of Outstanding Grants. A termination or
          -----------------------------------------------
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 21(c). The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Grant.
Whether or not the Plan has terminated, an outstanding Grant may be terminated
or amended under Section 21(c) or may be amended by agreement of the Company

                                      -12-
<PAGE>

and the Grantee consistent with the Plan.

     (e)  Governing Document. The Plan shall be the controlling document. No
          ------------------
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.

     15.  Funding of the Plan
          -------------------

     This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any Grants under this Plan. In no event shall interest be
paid or accrued on any Grant, including unpaid installments of Grants.

     16.  Rights of Participants
          ----------------------

     Nothing in this Plan shall entitle any Employee, Key Advisor, Non-Employee
Director or other person to any claim or right to be granted a Grant under this
Plan. Neither this Plan nor any action taken hereunder shall be construed as
giving any individual any rights to be retained by or in the employ of the
Company or any other employment rights.



     17.  No Fractional Shares
          --------------------

     No fractional shares of Company Stock shall be issued or delivered pursuant
to the Plan or any Grant. The Committee shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.

     18.  Headings
          --------

     Section headings are for reference only. In the event of a conflict between
a title and the content of a Section, the content of the Section shall control.

     19.  Effective Date of the Plan.
          --------------------------

     Subject to approval by the Company's stockholders, the Plan shall be
effective upon an initial registration of Company Stock under Section 12(g) of
the Exchange Act, pursuant to an initial public offering of the Company Stock.

     20.  Miscellaneous
          -------------

     (a)  Grants in Connection with Corporate Transactions and Otherwise.
          --------------------------------------------------------------
Nothing contained in this Plan shall be construed to (i) limit the right of the
Committee to make Grants

                                      -13-
<PAGE>

under this Plan in connection with the acquisition, by purchase, lease, merger,
consolidation or otherwise, of the business or assets of any corporation, firm
or association, including Grants to employees thereof who become Employees of
the Company, or for other proper corporate purposes, or (ii) limit the right of
the Company to grant stock options or make other awards outside of this Plan.
Without limiting the foregoing, the Committee may make a Grant to an employee of
another corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or stock awards grant made by such corporation. The terms and conditions
of the substitute grants may vary from the terms and conditions required by the
Plan and from those of the substituted stock incentives. The Committee shall
prescribe the provisions of the substitute grants.

     (b)  Employees Subject to Taxation Outside the United States. With respect
          -------------------------------------------------------
Grantees who are subject to taxation in countries other than the United States,
the Committee may make Grants on such terms and conditions as the Committee
deems appropriate to comply with the laws of the applicable countries, and the
Committee may create such procedures, addenda and subplans and make such
modifications as may be necessary or advisable to comply with such laws.



     (c)  Compliance with Law. The Plan, the exercise of Options and the
          -------------------
obligations of the Company to issue or transfer shares of Company Stock under
Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. In addition,
it is the intent of the Company that the Plan and applicable Grants under the
Plan comply with the applicable provisions of section 162(m) of the Code and
section 422 of the Code. To the extent that any legal requirement of section 16
of the Exchange Act or section 162(m) or 422 of the Code as set forth in the
Plan ceases to be required under section 16 of the Exchange Act or section
162(m) or 422 of the Code, that Plan provision shall cease to apply. The
Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government regulation. The
Committee may also adopt rules regarding the withholding of taxes on payments to
Grantees. The Committee may, in its sole discretion, agree to limit its
authority under this Section.

     (d)  Governing Law. The validity, construction, interpretation and effect
          -------------
of the Plan and Grant Instruments issued under the Plan shall be governed and
construed by and determined in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the conflict of laws provisions thereof.

                                      -14-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>22
<FILENAME>0022.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>

<PAGE>

                                                                    EXHIBIT 21.1

                        Subsidiaries of the Registrant

          The Company currently has three subsidiaries:

 .    3-Dimensional Pharmaceuticals GMBH, incorporated in Germany;

 .    3DP Investments, Inc., incorporated in Delaware; and

 .    3DP Technologies, Inc., incorporated in Delaware.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>23
<FILENAME>0023.txt
<DESCRIPTION>CONSENT OF RICHARD A. EISNER & COMPANY LLP
<TEXT>

<PAGE>

                                                                    EXHIBIT 23.1

                         INDEPENDENT AUDITORS' CONSENT

  We consent to the inclusion in Amendment No. 1 to the Registration Statement
on Form S-1 of our reports dated February 25, 2000 (with respect to last
paragraph of Note G[1] March 31, 2000, with respect to Note B(12) July  ,
2000), on our audits of the financial statements and Schedule II of 3-
Dimensional Pharmaceuticals, Inc. as of December 31, 1999 (consolidated) and
1998 and for each of the years in the three year period ended December 31,
1999, and to the reference to our firm under the captions "Selected Financial
Information" and "Experts" included in the Prospectus.

                                          Richard A. Eisner & Company, LLP

New York, New York

July  , 2000

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

  The foregoing consent is in the form that will be signed upon completion of
the 1-for-2.8 reverse stock split and the change in authorized shares described
in note B[12] to the financial statements.

                                          Richard A Eisner & Company, LLP

New York, New York

July 11, 2000
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>24
<FILENAME>0024.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5
<MULTIPLIER> 1,000

<S>                             <C>                     <C>
<PERIOD-TYPE>                   3-MOS                   YEAR
<FISCAL-YEAR-END>                          DEC-31-2000             DEC-31-1999
<PERIOD-START>                             JAN-01-2000             JAN-01-1999
<PERIOD-END>                               MAR-31-2000             DEC-31-1999
<CASH>                                          22,063                   7,645
<SECURITIES>                                         0                       0
<RECEIVABLES>                                      257                      94
<ALLOWANCES>                                         0                       0
<INVENTORY>                                          0                       0
<CURRENT-ASSETS>                                22,618                   7,982
<PP&E>                                           9,462                   9,415
<DEPRECIATION>                                 (5,465)                 (5,101)
<TOTAL-ASSETS>                                  26,805                  12,480
<CURRENT-LIABILITIES>                            5,896                   5,764
<BONDS>                                              0                       0
<PREFERRED-MANDATORY>                           63,550                  34,834
<PREFERRED>                                          1                       1
<COMMON>                                             1                       1
<OTHER-SE>                                    (45,364)                (41,750)
<TOTAL-LIABILITY-AND-EQUITY>                    26,805                  12,480
<SALES>                                              0                       0
<TOTAL-REVENUES>                                 1,484                   4,489
<CGS>                                                0                       0
<TOTAL-COSTS>                                    4,962                  20,161
<OTHER-EXPENSES>                                     0                       0
<LOSS-PROVISION>                                     0                       0
<INTEREST-EXPENSE>                                 351                     625
<INCOME-PRETAX>                                (3,742)                (15,969)
<INCOME-TAX>                                         0                       0
<INCOME-CONTINUING>                            (3,742)                (15,969)
<DISCONTINUED>                                       0                       0
<EXTRAORDINARY>                                      0                       0
<CHANGES>                                            0                       0
<NET-INCOME>                                   (3,742)                (15,969)
<EPS-BASIC>                                     (5.92)                 (27.37)
<EPS-DILUTED>                                   (5.92)                 (27.37)


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
