AGREEMENT



                  THIS AGREEMENT (this "Agreement") is made, entered into and

effective as of September 25, 2000 (the "Retirement Date"), by and between

Gliatech Inc. (the "Company"), located at 23420 Commerce Park Road, Cleveland,

Ohio 44122 and Thomas O. Oesterling, Ph.D. ("Executive"), residing at 16940

Catsden Road, Chagrin Falls, Ohio 44023.



                                   WITNESSETH:



                  WHEREAS, prior to the Retirement Date Executive was a director

of and the President and Chief Executive Officer of the Company;



                  WHEREAS, effective on the Retirement Date, Executive retired

and resigned as a director and an employee of the Company, and from any and all

offices of the Company, and any other position, office or directorship of any

other entity for which Executive was serving at the request of the Company; and



                  WHEREAS, the Company accepts Executive's retirement and

resignation as of the date referenced above; and



                  WHEREAS, the Company and Executive desire to set forth the

payments and benefits that Executive will be entitled to receive from the

Company in connection with his retirement and resignation from employment with

the Company; and



                  WHEREAS, the Company and Executive wish to resolve, settle

and/or compromise certain matters, claims and issues between them, including,

without limitation, Executive's retirement and resignation from the offices he

held and from his employment with the Company.



                  NOW, THEREFORE, in consideration of the promises and

agreements contained herein and other good and valuable consideration, the

sufficiency and receipt of which are hereby acknowledged, and intending to be

legally bound, the Company and Executive hereby agree as follows:



         1. RETIREMENT AND RESIGNATION. Executive hereby retires from and

resigns, effective on the Retirement Date, his employment with the Company and

its subsidiaries and related or affiliated companies, and his position as

President and Chief Executive Officer of the Company. Executive further resigns,

effective on the Retirement Date: (a) as a director of the Company, (b) from all

other offices of the Company to which he has been elected by the Board of

Directors of the Company (or to which he has otherwise been appointed), (c) from

all offices of any entity that is a subsidiary of, or is otherwise related to or

affiliated with, the Company, (d) from all administrative, fiduciary or other

positions he may hold with respect to arrangements or plans for, of or relating

to the Company, and (e) from any other directorship, office, or position of any

corporation, partnership, joint venture, trust or other enterprise (each, an

"Other Entity")





{PAGE}   2



insofar as Executive is serving in the directorship, office, or position of the

Other Entity at the request of the Company. The Company hereby consents to and

accepts said resignations.



         2. COMPENSATION AND BENEFITS. Subject to the conditions hereof, the

Company and Executive agree to the following:



                  a. SEVERANCE COMPENSATION. As severance compensation, the

Company shall pay Executive an amount equal to $870,000, which represents three

times Executive's base salary in effect immediately before the Retirement Date.

Such amount shall be paid as follows:



                           (i) $200,000 shall be paid to Executive on the day

                  after which Executive's right of revocation under Paragraph

                  5.c.(iv) of this Agreement expires; and



                           (ii) the remaining $670,000 shall be paid in 36

                  installments as follows: (A) the first installment, in the

                  amount of $18,611.15, shall be paid on the day after the

                  Executive's right of revocation under Paragraph 5.c.(iv) of

                  this Agreement expires; and (B) the remaining 35 installments

                  shall each be in the amount of $18,611.11 and shall be paid on

                  a monthly basis on the last business day of each month

                  commencing on the last business day of November 2000 and

                  ending on the last business day of September 2003.



                  Notwithstanding anything herein to the contrary, any amounts

payable to Executive under this Paragraph 2 shall be reduced by an amount equal

to any remuneration paid to Executive (whether such remuneration is paid

directly to Executive or to another person or entity on Executive's behalf) for

services performed by Executive as an employee of, or consultant or advisor to,

any entity.



                  b. STOCK OPTIONS. Executive has certain stock options that

were granted to Executive prior to the Retirement Date. Except as otherwise

provided in this Paragraph 2.b., Executive's eligibility to exercise such

options is governed and will continue to be governed by the terms and conditions

of the Company's Amended and Restated 1989 Stock Option Plan and the agreements

previously entered into between the Company and Executive with respect to such

stock options. Notwithstanding the foregoing, (i) any stock options that were

granted to Executive as of the Retirement Date that are not vested shall

continue to vest pursuant to the vesting schedule set forth in the agreements

governing such stock options for a period of three years after the Retirement

Date (the "Vesting Date"), and (ii), with respect to any stock options granted

on or after July 21, 1992, Executive shall have until the earlier of (A)

September 24, 2003 or (B) the expiration date of such stock option (as

identified in the agreement evidencing such stock option) to exercise or forfeit

these vested options, and each agreement evidencing any such stock option is

hereby amended accordingly. Executive agrees and acknowledges that he is

ineligible for any other stock options, grants or awards, and that he forfeits

upon the Retirement Date any rights in or to any other stock option grants,

including, without limitation, any right to vest after the Vesting Date in any

stock options that are not already vested as of the Vesting Date.



                  c. MEDICAL COVERAGE. Executive and his eligible dependents

shall be allowed to continue as a plan participant in the Company's group health

plan (medical, dental and vision coverage) (the "Health Plan") for a period of

three years following the Retirement







                                       2

{PAGE}   3



Date (the "Benefit Period") on the same basis that the Company's active

employees participate in such plan during that period. Executive agrees that

such continued participation in the Health Plan will satisfy the Health Plan's

obligation to provide Executive the right to continuation coverage under the

Health Plan pursuant to federal law and that, as a result, Executive's (and his

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