HYDROMER  TO GALLINI                                                      PAGE-1
LICENSE AGREEMENT
--------------------------------------------------------------------------------

                          LICENSE and SUPPLY AGREEMENT

     THIS AGREEMENT, made this 22nd day of June, 2000, by and between:

               HYDROMER, INC., a New Jersey Corporation with its office located
               at 35 Industrial Parkway, Somerville, New Jersey 08888
               ("HYDROMER");

                                       and

               GALLINI SRL, a Corporation organized under the laws of the Italy,
               with its office located at Via Frattini; 15-46100 Mantova,
               Italy("GALLINI").

     WHEREAS, HYDROMER possesses know-how relating to the coating of articles
with polyvinyl-pyrrolidone-polyurethane interpolymers to produce COATED
PRODUCTS, hereinafter defined; and

     WHEREAS, GALLINI desires to obtain an non-exclusive license from HYDROMER
for access to the know-how to enable GALLINI to use and sell (but not make) the
COATINGS as defined herein below.

     NOW, THEREFORE, in consideration of the premises and the performance of the
mutual covenants herein contained, the parties hereto agree to as follows:

     1.0 Definitions. For the purpose of this AGREEMENT, the following shall
apply:

          1.1 "COATINGS" means hydrophilic coatings consisting of Hydromer
     coating Product 20M-2 with blue pigment for the application only to
     PRODUCTS.

          1.2 "PRODUCTS" means only intermittent, disposable urinary catheters
     for use in the field of urology.

          1.3 "COATED PRODUCTS" means PRODUCTS to which COATINGS are applied
     pursuant to the terms of this AGREEMENT.

          1.4 "KNOW-HOW" means all of HYDROMER'S trade secrets, technical data
     and information, and other accumulated information, including, but not
     limited to, any devices, processes, methods, control procedures, formulas,
     clinical tests, and use intelligence, drawings, specifications, research
     and development reports, processed data or special equipment which are
     useful to assist GALLINI to use COATINGS and to manufacture and sell COATED
     PRODUCTS, which HYDROMER is free to disclose. The parties agree that
     KNOW-HOW includes the design, manufacturer and operations of any machine
     build by HYDROMER for GALLINI under a previous or subsequent contract or
     purchase order.

          1.5 "TERRITORY" means Europe.


                                       1
<PAGE>

HYDROMER  TO GALLINI                                                      PAGE-2
LICENSE AGREEMENT
--------------------------------------------------------------------------------

     2.0 Grant.

          2.1 HYDROMER hereby grants GALLINI a non-exclusive license to use and
     sell COATED PRODUCTS in the TERRITORY under the KNOW-HOW.

          2.2 HYDROMER hereby reserves unto itself all rights to make, have
     made, use and sell all other products using hydrophilic coatings consisting
     of polyvinyl-pyrrolidone-polyurethane interpolymers, including the COATED
     PRODUCTS licensed hereunder.

          2.3 HYDROMER hereby grants to GALLINI a fully paid right to use the
     HYDROMER trademark on COATED PRODUCTS and in association with the marketing
     and promotion thereof. The following credit must appear on all
     advertisements, packaging and literature for COATED PRODUCTS which use the
     HYDROMER trademark -- "HYDROMER is a trademark of Hydromer, Inc., USA".

     3.0 Technology Transfer Fee.

          3.1. As consideration for the transfer of the KNOW-HOW and the grant
     of non-exclusive rights, GALLINI will pay to HYDROMER the non-refundable
     sum of US $100,000.00 to be paid upon execution of this AGREEMENT.

     4.0 Improvement. During the term of this AGREEMENT, GALLINI shall promptly
and fully disclose to HYDROMER any development or improvement relating to the
use or practicing of the related KNOW-HOW as applied to the COATINGS conceived
and/or reduced to practice by an officer, director, employee, agent, consultant,
etc. of GALLINI ("GALLINI IMPROVEMENT"). GALLINI IMPROVEMENTS shall
automatically become the property of HYDROMER and shall be added to this
AGREEMENT.

     5.0 Secrecy. Each party undertakes to keep secret and confidential and not
to disclose to any third party, except as it is necessary in carrying out the
purposes of this AGREEMENT, during the term of this AGREEMENT and for a period
of five (5) years thereafter any information, data or KNOW-HOW disclosed to it
by the other party except:

          5.1 Information, data and KNOW-HOW which at the time of disclosure is
     in the public domain or publicly known or available;

          5.2 Information, data or KNOW-HOW which, after disclosure, becomes
     part of the public domain or publicly known or available by publication or
     otherwise, except by breach of this AGREEMENT by the receiving party;

          5.3 Information, data or KNOW-HOW which the receiver receives from a
     third party; provided, however, that such information was not obtained by
     said third party from the other party; and

          5.4 Information, data and KNOW-HOW which the receiver derives
     independently of such disclosure.


                                       2
<PAGE>

HYDROMER  TO GALLINI                                                      PAGE-3
LICENSE AGREEMENT
--------------------------------------------------------------------------------

     6.0 Technical Assistance. With regard to the COATINGS defined in Article
1.1 herein above, promptly following the execution of this AGREEMENT and on a
continuing basis during the term of this AGREEMENT, HYDROMER shall:

          6.1 furnish to GALLINI all KNOW-HOW;

          6.2 furnish the services of HYDROMER employees having knowledge of the
     KNOW-HOW as may be necessary or appropriate in order to fully (1) to
     disclose to GALLINI all details and particulars of the KNOW-HOW, and in
     particular, but without limitation, the coating methods contained therein,
     (2) to consult with GALLINI technical personnel concerning the manufacture,
     assembly, raw material purchase and other tasks required for the
     application of COATINGS covered by the KNOW-HOW, including subsequent
     improvements thereto for the COATINGS; provided GALLINI shall reimburse
     HYDROMER for the reasonable travel and living expenses incurred by such
     technical personnel for travel requested by GALLINI hereunder.

     7.0 Warranty.

          7.1 HYDROMER warrants that it has the unrestricted power and authority
     to grant this license and give access to the KNOW-HOW as provided herein.
     HYDROMER represents that as of the date of this AGREEMENT it has no
     knowledge of any pending or threatened litigation against HYDROMER which
     might impair the rights licensed hereunder.

          7.2 GALLINI warrants, guarantees and agrees that any COATED PRODUCTS
     will be made in accordance with the laws, rules and regulations of all
     governments in the TERRITORY and will indemnify and hold HYDROMER harmless
     as against the claims of any third parties to the contrary. GALLINI will
     obtain general liability insurance in the amount of at least US$5,000,000
     and name HYDROMER as an additional insured. The policy shall have a 30 days
     notice period to HYDROMER before termination or cancellation.

     8.0 Effective Date and Term.

          8.1 This AGREEMENT will become effective on the day and year first
     written above and expire December 31, 2020.

          8.2 If either party hereto shall commit any breach of the provisions
     of this AGREEMENT, and shall not, within ninety (90) days' written notice
     of such breach by the other party hereto, correct such breach then such
     other party may, by written notice to the breaching party, immediately
     terminate this AGREEMENT. The right of either party to take such action
     shall not be affected in any way by its failure to take any action with
     respect to any previous breach.

          8.3 If either party should exercise its right to terminate this
     AGREEMENT, under any applicable provision of this AGREEMENT, then GALLINI'S
     rights and licenses under Section 2.0 hereof shall immediately terminate,
     including its right to make further use of the KNOW-HOW acquired from
     HYDROMER under this AGREEMENT, and which GALLINI is obliged to hold in
     confidence pursuant to Section 5.0 of this AGREEMENT. Termination of this
     AGREEMENT shall not relieve either party of obligations incurred prior to
     termination.

     9.0 Purchase of Hydromer Product.

          9.1 Gallini shall purchase and Hydromer agrees to sell Hydromer
     coating solution 20M-2 for the limited purpose of applying this product on
     the PRODUCTS at a price of US$175.00 per gallon in 55 gallon drums, FOB
     Somerville, NJ. Hydromer may raise the price of this product once per year
     limited by the cost of living increase in Northern NJ. Provided however, if
     raw materials increase greater then the increase in the cost of living then
     Hydromer may pass this additional increase on to GALLINI. GALLINI
     recognizes and Agrees that it will use Product 20M-2 to coat only the
     PRODUCTS and no other product.

          9.2 As long as this Agreement is in effect, Hydromer agrees not to
     sell Product 20M-2 with blue pigment to any other person in the territory
     for use on PRODUCTS.

     10.0 General.

          10.1 Assignment. This AGREEMENT and all rights and obligations
     hereunder shall be binding upon and shall inure to the benefit of the
     respective successors of HYDROMER and GALLINI. Neither GALLINI nor HYDROMER
     shall have the right to assign any or all of its rights and obligations
     under this AGREEMENT without the prior written consent of the other party,
     except that HYDROMER'S consent shall not be required in the event of an
     assignment or transfer of the AGREEMENT by GALLINI to an affiliate of
     GALLINI, who undertakes to accept all terms and conditions hereof and carry
     out all obligations of GALLINI hereunder.

          10.2 Entire Agreement. This AGREEMENT contains the entire agreement
     between the parties hereto in respect of the subject matter hereof. This
     AGREEMENT may not be released, discharged, abandoned, changed or modified
     in any manner except by an instrument in writing signed by a duly
     authorized officer or representative of each of the parties hereto.


                                       3
<PAGE>
HYDROMER  TO GALLINI                                                      PAGE-4
LICENSE AGREEMENT
--------------------------------------------------------------------------------


          10.3 Waiver and Severability. The waiver by either of the parties of
     any breach of any provision hereof by the other party shall not be
     construed to be a waiver of any succeeding breach of such provision of a
     waiver of the provision itself.

          10.4 Governing Law. This AGREEMENT shall be construed and interpreted
     in accordance with the laws of the State of New Jersey and the courts of
     the State of New Jersey shall have jurisdiction over the parties hereto and
     all matters arising hereunder. The United Nations Convention on Contracts
     for the International Sale of Goods is hereby disclaimed by both parties.

          10.5 Invalidity. If any of the provisions of this AGREEMENT, or part
     thereof, is held to be invalid or unenforceable, such invalidity or
     unenforceability shall not affect any other provision of this AGREEMENT.

          10.6 Notice. Any notice required or to be given hereunder shall be
     considered delivered when deposited, postage prepaid, in the United States
     mail, registered mail, to the address of the other party as specified below
     or as subsequently modified in writing by the parties.


                   IF TO HYDROMER:

                           Hydromer, Inc.
                           35 Industrial Parkway
                           Somerville, New Jersey  08876
                           Attn:  Manfred F. Dyck, President


                   IF TO GALLINI:

                           Via Frattini; 15-46100 Mantova,
                           Italy


                                       4

<PAGE>
HYDROMER  TO GALLINI                                                      PAGE-5
LICENSE AGREEMENT
--------------------------------------------------------------------------------


IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed
effective the day and year set forth above.

GALLINI SRL                         HYDROMER, INC.


By:____________________________             By:_________________________________
                  Signature                                   Signature

_______________________________             ____________________________________
               Print Signature                             Print Signature


Title:_________________________             Title:______________________________
                  Print Title                                Print Title


                                       5