March 30, 2000

Dr. Ilan Hofmann, PhD
President
IMED Pharma, Inc.
216 Brunswick Blvd.
Pointe Claire. Quebec
Canada,  H9R 1A6

Dear Ilan:

Please find the stand still Agreement with the terms and conditions discussed in
our previous meetings and phone conversations. If you are in agreement please
sign in the area indicated and return a copy to me. We look forward to working
together towards a mutually beneficial goal.

BACKGROUND

IMED would like HYDROMER to refrain from entering into any negotiations for the
purpose of licensing the patent rights under US Patent 5,420,197 and all other
foreign counterparts (which can be found in the Exhibits) for the scope of
products, defined in Exhibits 1 and 2 under their respective section 1.1 (the
"RIGHTS"). Since the typical life of a patent is 20 years, refraining from
negotiations ("Stand Still"), cause Hydromer to lose part of this patent life.
IMED would like to perform scientific tests to investigate the suitability of
the RIGHTS as to the regulatory and medical requirements (the "TESTS"). As part
of the consideration for HYDROMER entering into this Stand Still Agreement I-MED
hereby agrees that it shall provide HYDROMER with a copy of all the test
protocol, test results and other documentation produced as a result of the
Agreement, in order for HYDROMER to use the same. This right to use shall be
deemed to be an fully paid irrevocable royalty-free license granted by I-MED,
its employees, vendors and contractors to the extent allowed by law, with
respect to such test results and documentation without any limitations.

Hydromer is willing to be induced into this Stand Still agreement by among other
things, the promise by IMED by this license.

SCHEDULE/ADDITIONAL IMED's PROMISES and Rights

When this letter is signed by an authorized representative of IMED, the 1st day
of the next month will be considered the start of the process. (it starts the
first month). Thereafter:

a. during the first three months ending on the last day of the third month, IMED
and Hydromer will cooperatively work toward the development of a finished
product using the RIGHTS. All intellectual discoveries to the extent not within
the RIGHTS will inure to the benefit of Hydromer. (the subsequent licenses
attached, form the mechanism whereby IMED can exclusively practice the RIGHTS
and subsequent discoveries). All Copyrights or proprietary interests shall be
the subject matter of a fully paid, irrevocably royalty free license from IMED
to Hydromer to use the data without limitations. IMED will execute or cause to
be executed, any documents (under Canadian or US Law as the case may be)
reasonably requested by Hydromer, in this regard.

b. after the third month (starting on the first day of the forth month) IMED at
its own expense and effort will perform any and all tests (including those tests
described under ISO 10993 standards) that IMED needs to make a decision to enter
into one or both of the licenses attached as Exhibit 1 or Exhibit 2. These
licenses:

     1.   Must be executed on or before the last day of the seventh month and
          delivered to Hydromer (time being of the essence).

     2.   Along and included with such delivery, IMED would tender the non
          refundable sums set forth in section 3.1 of each license. (US $50,000
          or US $100,000 as the case may be).



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<PAGE>

c. it is clearly understood and agreed that the right to enter into the licenses
in Exhibits 1 and/or 2, expire on the first day of the eighth month. It is
further understood and agreed that the assignment of all Copyrights to the
documents produced under this Agreement (test protocols, test results,
conclusions and the like) inure to the benefit of Hydromer as this was the
consideration that induced Hydromer into "standing still".

IMED's ability to refrain Hydromer from using the Copyrights and the content for
the PRODUCTS defined in Sections 1.1 of each agreement can be accomplished by
entering into the LICENSES and keeping them in effect pursuant to their terms.
In the event IMED does not enter into the LICENSES either because of an
conscious decision or the passing of time, Hydromer may use the Copyrights and
the contents (including any proprietary information) without restriction.

STAND STILL

As long as this agreement is in effect Hydromer will refrain from entering into
any negotiations or agreements with any third party for the RIGHTS.

IMED's OPTION

While this Agreement is in effect IMED may enter into either or both licenses
which are attached, as noted earlier, up to and excluding the first day of the
eight month.

IMED'S OBLIGATION:

IMED promises without qualification or restrictions to make any and all
documents, containing test protocols, test results, interpretive reports of
employees, reports of third parties to which IMED has rights and any other
document authored, copied or devised as a result of this Agreement, either
directly or indirectly. Any intentional holding back of documents is a material
breach of this Agreement.

While the development of the finished product(s) during the first three months
is done in a cooperative process by both IMED and HYDROMER, the four month
testing is solely the responsibility of IMED except for HYDROMER's obligation to
supply bulk hydrogel samples of the solid levels and viscosity reasonably
specified by IMED.

LICENSES

Two licenses are attached as Exhibit 1 and 2.

SECRECY

IMED and Hydromer, each, are in possession or control of certain technical
information ("Information") relating to the subject matter of this Agreement
which each considers confidential and of proprietary value. Each party is
willing to provide such Information to the other in order to perform the
obligations of defining finished products and the process or method to make
them.

IMED and Hydromer agrees to accept the Information from the other during the
term of this Agreement on the following basis:

     1.   Each party agrees to hold in confidence any and all Information
          provided to it under this Agreement except:

                                       2

<PAGE>

          (a)  Information which at the time of disclosure is in the public
               domain,

          (b)  Information which, after disclosure, becomes part of the public
               domain by publication or otherwise, except by breach of this
               Agreement by the recipient,

          (c)  Information which a recipient can establish by competent
               documentation, was in its possession at the time of disclosure
               and,

          (d)  Information which recipient receives without any secrecy
               commitment from third parties having the right to disclose to
               same provided however that such Information was not obtained by
               said third party, directly or indirectly from the other.

     2.   Disclosure of such Information within an organization will be only to
          employees having a need to know such Information, for the limited
          purpose set forth herein.

     3.   Each party further agrees that it will not use Information which it is
          required hereunder to keep confidential for any purpose other than the
          purpose explicitly set forth herein.

     4.   The obligations as contained in this Agreement shall remain in effect
          for a period of five (5) years from the last disclosure.

     5.   Upon receiving a party's request, the other shall return to the
          requestor, completely and immediately, all Information and will not
          retain any copy of such Information.

In the event Information is discovered by either party in performing its
obligations under this Agreement, such Information shall inure to the benefit of
Hydromer.

MISCELLANEOUS INFORMATION REQUIRED BY OUR LAWYERS

This Agreement and the licenses attached (once executed and the amounts
tendered) form the complete Agreement between Hydromer and Imed except for
previous secrecy agreements which remain in effect. IMED and Hydromer have
entered into this Agreement in the State of New Jersey and any disputes will be
resolved by arbitration in Somerville, NJ pursuant to the American Arbitration
Association rules. The arbitrator may award costs against either party or
proportion them in their sole discretion. IMED and Hydromer agree to be bound by
the decision and jurisdiction of New Jersey and the arbitrator(s).

MODIFICATION

No modification of this Agreement is effective until one document containing the
modification is signed by both parties and in the case of Hydromer, only the
President can hereafter authorize a modification. This is included to avoid
memos, letters, faxes etc from being misinterpreted as modifications.

AGREEMENT

If IMED agrees with these terms please sign and return a copy with your original
signature to me.

Best regards,

Joseph A. Ehrhard, Jr.

AGREED:
        ----------------------
            Ilan Hofmann

Dated:  -----------------------                                     *imed_ss010


                                       3

<PAGE>


EXHIBIT 1 (HEAD and NECK)

     THIS AGREEMENT, made by and between:

HYDROMER, INC., a New Jersey Corporation with its office located at 35
Industrial Parkway, Somerville, New Jersey 08876 ("HYDROMER");

and

IMED Pharma Inc. a Canadian Corporation with its office located at 216 Brunswick
Blvd, Pointe Claire, Quebec, Canada H9R 1A6 ("LICENSEE").

     WHEREAS, HYDROMER owns patent rights and possesses know-how relating to the
production of articles based on the art taught in certain patents, hereinafter
defined; and

WHEREAS, LICENSEE desires to obtain an exclusive license from HYDROMER under
HYDROMER's patent rights and access to the know-how to enable LICENSEE to
utilize HYDROMER's know-how to, make, use, sell, offer for sale or import the
PRODUCTS 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 "PRODUCTS" means the collective set of CLASS I and CLASS II PRODUCTS:

          CLASS I PRODUCTS: implantable, and/or injectable products
          commercialized by LICENSEE specifically for the head and neck
          excluding all topical epidermal, hair or trans-epidermal applications.
          Specifically for the following certain structures, the scope is
          defined as follows, "Eye structures" being defined as the eye ball,
          cornea, conjunctiva and tear ducts EXCLUDING the epidermis and
          external eye lid. "Ears"- Including solutions for topical application
          inside the ear canal at the tympanic membrane and inward,"Nose" and
          "sinus" - including solutions for topical application from the nostril
          to the oral cavity BUT EXCLUDING dental and oral cavity drug delivery
          applications such as but not limited to: transmucosal tranquilizers,
          anti-infectious, sedatives, analgesics and like delivery mechanisms,
          in humans or animals. CLASS II PRODUCTS: Products used for the topical
          transmucosal delivery of bio-effective materials in only the oral
          cavity such as analgesics, anti-inflamatories, anti-infectives, wound
          healers and the like, excluding ingestible delivery forms such as but
          not limited to tablets and capsules.

          Product(s) will be commercialized, incorporating the PATENT RIGHTS
          and/or KNOW-HOW licensed pursuant to the terms of this AGREEMENT.

     1.2 "PATENT RIGHTS" means United States Patent No. 5,420,197 and foreign
patents and patent applications (set forth in Schedule C) based thereon and any
division, continuation, continuation-in-part, patent of addition, confirmation
or reissue of said patents and applications, and any improvements thereto, as
provided in Section 5.0 hereinbelow.

     1.3 "KNOW-HOW" means all of HYDROMER's trade secrets, technical data and
information, and other technical 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 LICENSEE incorporate into and sell PRODUCTS, all of which HYDROMER hereby
warrants that it is free to disclose.

     1.4 "COMMERCIALIZATION" means the date on which PRODUCTS are first billed
to a third party, including any limited market release of PRODUCTS, in the
"TERRITORY"



                                       4
<PAGE>


     1.5 "NET SALES PRICE" shall mean the gross invoice price at which PRODUCTS
are sold, less discounts allowed to distributors, discounts allowed dealers,
refunds, replacements or credits allowed to purchasers for return of PRODUCT or
as reimbursement for damaged PRODUCT, freight, postage, insurance and other
shipping charges, sales and use taxes, customs duties and any other governmental
charges imposed on the production, importation, use or sale of PRODUCT except
income taxes. Should LICENSEE sell PRODUCT in combination with other components
or products, then the net sales price computation shall be based on the average
net sales price charged during the applicable quarter by LICENSEE for the
PRODUCT when separately invoiced or priced. In the event the PRODUCT has not
been separately invoiced or priced during the applicable quarterly period, net
sales computation shall be based on the fair market price which the seller would
charge for the PRODUCT to an unrelated purchaser in an arms length transaction,
FOB plant of manufacture thereof.

     1.6 "TERRITORY" means world wide.

     2.0 Grant.

     2.1 HYDROMER hereby grants LICENSEE an exclusive license (even to the
exclusion of HYDROMER) to incorporate the PATENT RIGHTS and KNOW-HOW into CLASS
I PRODUCTS and to sell or offer for sale, PRODUCTS in the TERRITORY under the
PATENT RIGHTS and KNOW-HOW. HYDROMER also hereby grants LICENSEE a non-exclusive
license to incorporate the PATENT RIGHTS and KNOW-HOW into CLASS II PRODUCTS and
to sell or offer for sale, PRODUCTS in the TERRITORY under the PATENT RIGHTS and
KNOW-HOW.

     2.2 HYDROMER hereby reserves unto itself all rights to make, have made, and
use the PATENT RIGHTS licensed hereunder to manufacture products which are a
component part of the PRODUCTS ("reserved products"). In the event HYDROMER is
unable or unwilling, to supply or caused to be supplied, reserved products to
LICENSEE at a price set forth in Exhibit B, then LICENSEE shall be free to USE
the PATENT RIGHTS to make the reserved products, subject to the payment of
royalties set forth in Exhibit A. and HYDROMER shall transfer the KNOW-HOW,
procedures, technology, tests and all other information required in order for
LICENSEE to produce the PRODUCTS.

     HYDROMER may increase the unit price once each year at a rate not to exceed
the increase in the Cost of Living ("COL") indicator for Northern New Jersey.
Provided however if any raw material prices are increase greater then the COL,
HYDROMER may pass this greater increase to the LICENSEE

     HYDROMER agrees that the reserved products will be manufactured pursuant to
specifications and a quality system that meets the requirements of ISO 9002 and
the guidelines set forth in the Good Manufacturing Procedures promulgated by the
U.S. Food and Drug Administration. LICENSEE upon reasonable notice, and subject
to the secrecy provisions elsewhere in this AGREEMENT, may audit the books and
records of HYDROMER pertaining to the manufacturing of the reserved products

     2.3 On or before a date computed by adding thirty six (36) months to the
effective date of this agreement, LICENSEE shall have commercialized the
PRODUCT(S). If PRODUCT(S) are not commercialized on or before said date, then
HYDROMER may elect to cancel this AGREEMENT upon thirty (30) days advance
written notice to LICENSEE.. If HYDROMER elects not to cancel this AGREEMENT
LICENSEE is still obligated to make royalty payments pursuant to Exhibit A.

     2.4 HYDROMER hereby grants to LICENSEE a fully paid license and right to
use the HYDROMER and AQUATRIX trademarks within the territory, on PRODUCTS and
in association with the marketing and promotion thereof. The following credit
must appear on all advertisements, packaging and literature for PRODUCTS which
use the HYDROMER trademark -- "HYDROMER (or AQUATRIX) is a trademark of
Hydromer, Inc.".

     3.0 Royalties.

     3.1. As consideration for this grant of exclusive rights to CLASS I
PRODUCTS and the twenty four months with no fixed quarterly royalty, LICENSEE
will pay to HYDROMER the non-refundable sum of US$50,000 payable along with the
execution of this AGREEMENT by LICENSEE.

     3.2 In addition to the payment provided in Paragraph 3.1 hereof ,a running
royalty payable quarterly will accrue from LICENSEE to HYDROMER for each PRODUCT
sold during each quarter in which this AGREEMENT is in effect (or the fixed
amount whichever is greater), as set forth in Schedule A.

The obligation to pay royalties to HYDROMER is imposed only once with respect to
the same unit of PRODUCTS. There shall be no obligation to pay HYDROMER under
this Section, on sales of PRODUCTS between LICENSEE and its subsidiaries but in
such instances the obligation to pay royalties shall arise upon the sale by
LICENSEE or its subsidiaries to unrelated third parties. Payments due under this
Section shall be deemed to accrue when PRODUCT is shipped or billed, whichever
event shall first occur or at the end of each quarter if the royalty calculated
on the PRODUCTS shipped or billed is less then the quarterly fixed amount.

     3.3 The grant of rights under this AGREEMENT shall be dependent on
COMMERCIALIZATION of PRODUCTS and the payment by LICENSEE to HYDROMER of
quarterly royalties for each calendar quarter. If LICENSEE fails to pay or
report the computations of royalties in respect of any calendar quarter, then
HYDROMER may terminate this AGREEMENT, upon sixty (60) days' written notice to
LICENSEE. LICENSEE may render such notice ineffective by payment of an amount
which when added to royalties actually paid, equals the fixed quarterly royalty
due or an amount computed by using the actual amount of PRODUCTS shipped or
billed, which ever is greater.

     3.4 If the quarterly royalties computed hereunder with respect to PRODUCTS
shipped or billed by LICENSEE during any quarter aggregate less than the fixed
amount due in respect of that quarter, then LICENSEE, together with its royalty
payment in respect of such quarter, may pay to HYDROMER that additional amount
which, when added to the computed amount of royalties with respect to PRODUCTS
shipped or billed during such quarter, will equal the quarterly fixed amount
(the "ADDITIONAL AMOUNT"). In the event that LICENSEE, for eight (8) consecutive
quarters, has paid an ADDITIONAL AMOUNT equal to or greater than fifty (50%)
percent of the fixed amount for each of such calendar quarters, then HYDROMER,
at its sole option, may terminate this AGREEMENT upon thirty (30) days' written
notice to LICENSEE.



                                       5
<PAGE>


     4.0 Accounting. For accounting purposes, quarters will start on the first
day of each January, April, July, and October, following the date of execution
of this AGREEMENT and end on the last day of the next succeeding March, June,
September, and December, respectively. The first quarter in which royalties are
due and payable shall be prorated on a 90 day quarter. Within forty-five (45)
days after the close of each quarter hereof, LICENSEE shall render to HYDROMER a
written accounting with respect to all royalty payments due hereunder, and with
such accounting, pay in full in United States dollars all amounts due in respect
of such quarter. The rate of exchange to be used in computing the amount of
local currency equivalent to the United States Dollars due to HYDROMER as
royalty shall be the commercial exchange rate in effect at the Bank of America
in, New York, New York, on the date on which payment is due. Such report shall
indicate for such quarter the number of units, the NET SALES PRICE, and the
amount of sales by LICENSEE product code of PRODUCTS sold by LICENSEE with
respect to which royalty payments are due. In case no payment is due for any
quarter, LICENSEE shall so report. LICENSEE shall keep accurate records in
sufficient detail to enable the aforesaid payments to be determined. At
HYDROMER's request, LICENSEE, shall permit an independent certified public
account acceptable to LICENSEE to have access once in each calendar year, during
regular business hours and upon reasonable notice to LICENSEE, to such of the
records of LICENSEE as may be necessary to verify the accuracy of the reports
required under this AGREEMENT; provided, however said accountant shall keep all
information of LICENSEE confidential and shall disclose to HYDROMER only the
amount of any deficiency found. In the event the deficiency exceeds 5 % of
royalty payments audited, LICENSEE shall bear the full costs of the audit.

     5.0 Improvement/New Technology.

     5.1 During the term of this AGREEMENT, HYDROMER shall promptly and fully
disclose to LICENSEE any development or improvement relating to the use or
practicing of the PATENT RIGHTS or related KNOW-HOW as applied to PRODUCTS
conceived and/or reduced to practice by an officer, director, employee, agent,
consultant, contractor etc. of HYDROMER which HYDROMER is free to disclose
("HYDROMER IMPROVEMENT"). HYDROMER shall automatically add such HYDROMER
IMPROVEMENT to this AGREEMENT.

     LICENSEE shall promptly and fully disclose to HYDROMER any development or
improvement relating to the PRODUCTS conceived and/or reduced to practice by an
officer, director, employee, agent, consultant, etc. of LICENSEE ("LICENSEE
IMPROVEMENT"). LICENSEE IMPROVEMENTS, shall automatically become the
intellectual property and know-how of HYDROMER and shall be added to this
AGREEMENT.

     5.2 In the event HYDROMER develops new technology suitable for use with the
PRODUCTS which is understood to be any technology, not under any patents now
held or owned by HYDROMER, LICENSEE shall be given a 90 day advanced disclosure
at no additional cost. During this period "the EXCLUSIVE DISCLOSURE PERIOD" the
parties will negotiate, in good faith, for a license, in a form and providing
conditions and Royalties similar to this AGREEMENT. ("DEFINITIVE LICENSE") If
the parties are unable to agree to a DEFINITIVE LICENSE for PRODUCTS with the
EXCLUSIVE DISCLOSURE PERIOD then HYDROMER is free to offer the new technology to
any third party on terms no more favorable then the terms in this AGREEMENT.
LICENSEE may extend the EXCLUSIVE DISCLOSURE PERIOD for additional 6 month
periods by the payment of US$50,000 received by HYDROMER no later then two days
before the EXCLUSIVE DISCLOSE PERIOD would terminate. TIME IS OF THE ESSENCE.
LICENSEE may extend the EXCLUSIVE DISCLOSURE PERIOD for no more than four 6
month periods.



                                       6
<PAGE>

     6.0 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:

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

     6.2 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;

     6.3 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

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

     BOTH PARTIES AGREE TO MARK OR STAMP "CONFIDENTIAL", AT LEAST ON THE COVER
PAGE, ALL DOCUMENTS WHICH ARE DISCLOSED WHICH CONTAIN PROPRIETARY OR
CONFIDENTIAL INFORMATION. IN THE EVENT CONFIDENTIAL INFORMATION IS DISCLOSED IN
A FORM OTHER THEN BY DOCUMENTS, BOTH PARTIES AGREE TO CONFIRM THE DISCLOSURE IN
A DOCUMENT SENT TO THE OTHER PARTY WITHIN 10 DAYS.

     7.0 Technical Assistance. With regard to the PRODUCTS defined herein,
promptly following the execution of this AGREEMENT and on a continuing basis
during the term of this AGREEMENT, HYDROMER shall:

     7.1 Furnish to LICENSEE all KNOW-HOW in the form that exists as of April 1,
2000.

     7.2 Furnish the services of HYDROMER employees having knowledge of the
KNOW-HOW as may be necessary or appropriate, in order to fully (1) disclose to
LICENSEE all details and particulars of the KNOW-HOW, and in particular, but
without limitation, the manufacturing methods contained therein subject to the
provisions of Section 2.2, (2) consult with LICENSEE's technical personnel
concerning the manufacture, assembly, raw material purchase and other tasks
required for the production and applications of PRODUCTS covered by the PATENT
RIGHTS, including subsequent improvements thereto for the PRODUCTS; provided
LICENSEE shall reimburse HYDROMER for the reasonable travel and living expenses,
, incurred by such technical personnel for travel requested by LICENSEE
hereunder, a written estimate shall be pre-approved by Licensee in advance of
such travel.

     8.0 Warranty.

     8.1 HYDROMER warrants that it is the owner of all right, title and interest
in and to the PATENT RIGHTS and has the unrestricted power and authority to
grant the licenses 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.

     8.2 HYDROMER declares that it has previously licensed the KNOW-HOW to third
parties for different Products than detailed in Section 1.1 and agrees to
prevent the KNOW-HOW from being utilized by third parties to the detriment of
LICENSEE for the PRODUCTS stipulated in Section 1.1.

     9.0 Effective Date and Term.

     9.1 This AGREEMENT will become effective on the day and year that HYDROMER
receives the payment set forth in Section 3.1 and a fully executed copy of this
AGREEMENT and it expires upon the expiration of the last to expire of the PATENT
RIGHTS, except that after expiration of the U.S. PATENT RIGHTS, royalties will
continue to be paid only on sales of PRODUCTS in countries in which unexpired
patents are in effect. After such expiration of this AGREEMENT, LICENSEE shall
have the right to make, use, sell, offer for sale or import PRODUCT without the
further payment of royalty or otherwise accounting to HYDROMER and HYDROMER
shall have no further obligations to LICENSEE.



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<PAGE>

     9.2 If either party hereto shall commit any material breach of the
provisions of this AGREEMENT, and shall not, within sixty (60) days' written
notice of such breach by the other party hereto, correct such breach or in the
sole discretion of the other party, acting in good faith, take sufficient action
or refrain from further action as the case maybe, to correct the 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.

     9.3 If either party should exercise its right to terminate this AGREEMENT,
under any applicable provision of this AGREEMENT, then LICENSEE'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 LICENSEE is obliged to hold in confidence pursuant to
Section 6.0 of this AGREEMENT. Termination of this AGREEMENT shall not relieve
either party of obligations incurred prior to termination.

     10.0 Infringement.

     10.1 In the event HYDROMER shall fail, within thirty (30) days of notice by
LICENSEE of any material infringement, direct or contributory, by a third party
of rights granted to LICENSEE in Section 2.0 hereunder, to institute legal
action to end such infringement, LICENSEE shall have the right to suspend 50% of
the payment of running royalties in the country where such infringement is
occurring for the period of such infringement. LICENSEE shall also have the
right, at that time, and at its option, to initiate and prosecute such action in
its own or HYDROMER's name, but at LICENSEE's sole cost and expense. HYDROMER
shall cooperate fully with LICENSEE in the initiation and prosecution of such
action.

In the event the infringing activity should cease for any reason, LICENSEE shall
resume paying 100% of the running royalties.

     10.2 Should any patent, trademark, copyright, trade secret, or other
intellectual property right infringement action be brought against LICENSEE in
any country of the TERRITORY as a result of LICENSEE's exercising of rights
granted to it hereunder, then in respect of such country, LICENSEE shall have
the right to suspend payment of royalties due to HYDROMER until such time as the
action is resolved, although such royalties shall continue to accrue. If the
action is resolved favorably to LICENSEE, all accrued royalties shall
immediately be paid to HYDROMER. If the action is resolved unfavorably to
LICENSEE, then accrued royalties shall be applied to costs of litigation and
damages, if any, incurred by LICENSEE. Any excess shall be paid to HYDROMER. The
foregoing shall be HYDROMER's sole and exclusive liability to LICENSE in the
event of such an infringement suit.

     11.0 General.

     11.1 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 LICENSEE. Neither LICENSEE 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, which consent
shall not unreasonably be withheld.

     11.2 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.

     11.3 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.



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<PAGE>

     11.4 Collection. In the event a collection agency and/or an attorney to aid
in the collection of royalties, LICENSEE agrees to compensate HYDROMER for any
fees/costs paid to such party.

     11.5 Governing Law. This AGREEMENT shall be construed and interpreted in
accordance with the laws of the State of New Jersey and the United States of
America. The courts of the State of New Jersey or the United States shall have
jurisdiction over the parties hereto and all matters arising hereunder. The
United Nations Conventions on Contracts for the International Sale of Goods is
specifically disclaimed.

     11.6 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.

     11.7 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
                           Branchburg, New Jersey  08876

                           Attn:  Manfred F. Dyck, President

                   IF TO LICENSEE:

                           I-MED Pharma, Inc.
                           216 Brunswick Blvd
                           Pointe Claire, Canada  H9R 1A6

                           Att: Ilan Hofmann, President

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



I-MED Pharma, Inc.



By:______________________________________
     Ilan Hofmann

Title: President

Date:______________________



HYDROMER, Inc.

By:________________________________________
     Manfred F. Dyck

Title: President

Date:____________________



                                       9
<PAGE>


Schedule A:

Royalty payments are to be computed based on the greater of the fixed amount or
the percentage times the NET SALES PRICE.

Quarter                             Royalty %                 Fixed amount

Each quarter
for the first 8 quarters
that this agreement
is in effect (prorated
for the first quarter)                5.0                          0

For the next 4 quarters               5.0                      US$6,250
For the next 4 quarters               5.0                      US$12,500
For the next 4 quarters               5.0                      US$18,250
For the remaining quarters            5.0                      US$25,000


Exhibit B:

Supply prices for first year.

US$100.00 per kg. on a 1:1 ratio basis at 11% solids using a 2% solution of
chitosan and a 20% solution of PVP.



                                       10
<PAGE>


Exhibit C.

Patent and Patent applications

Country                             Patent/Application        Date Granted

USA                                 5,420,197                 May 30, 1995
Australia                           682,415                   Jan 13, 1994
Austria                             App
Belgium                             663,212                   Dec 12, 1995
Canada                              App
Denmark                             663,212app
France                              663,212app
Germany                             69502029.3                Jan 12, 1995
Greece                              3000000                   Jan 13, 1995
Ireland                             App
Italy                               663,212app
Japan                               App
Korea                               App
Luxemburg                           663,212app
Mexico                              184,762                   May 26, 1997
Monoco                              663,212                   Jan 12, 1995
Netherlands                         663,212                   Apr 15, 1998
Portugal                            663,212                   Jul 7, 1998
South Korea                         App
Spain                               663,212app (published)
Sweden                              663,212                   Apr 15, 1998
Switzerland                         663,212app
Taiwan                              Allowed                   Feb 23, 2000
UK                                  0663212                   Jan 17, 1994

EXHIBIT 2 (BREAST)

     THIS AGREEMENT, made by and between:

HYDROMER, INC., a New Jersey Corporation with its office located at 35
Industrial Parkway, Somerville, New Jersey 08876 ("HYDROMER");

and

IMED Pharma Inc. a Canadian Corporation with its office located at 216 Brunswick
Blvd, Pointe Claire, Quebec, Canada H9R 1A6 ("LICENSEE").

     WHEREAS, HYDROMER owns patent rights and possesses know-how relating to the
production of articles based on the art taught in certain patents, hereinafter
defined; and

WHEREAS, LICENSEE desires to obtain an exclusive license from HYDROMER under
HYDROMER's patent rights and access to the know-how to enable LICENSEE to
utilize HYDROMER's know-how to, make, use, sell, offer for sale or import the
PRODUCTS 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 "PRODUCTS" means breast implants used for the purpose of reconstruction
oraugmentation of the female breast. Product(s) will be commercialized,
incorporating the PATENT RIGHTS and/or KNOW-HOW licensed pursuant to the terms
of this AGREEMENT.

     1.2 "PATENT RIGHTS" means United States Patent No. 5,420,197 and foreign
patents and patent applications (set forth in Schedule C) based thereon and any
division, continuation, continuation-in-part, patent of addition, confirmation
or reissue of said patents and applications, and any improvements thereto, as
provided in Section 5.0 hereinbelow.

     1.3 "KNOW-HOW" means all of HYDROMER's trade secrets, technical data and
information, and other technical 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 LICENSEE incorporate into and sell PRODUCTS, all of which HYDROMER hereby
warrants that it is free to disclose.

     1.4 "COMMERCIALIZATION" means the date on which PRODUCTS are first billed
to a third party, including any limited market release of PRODUCTS, in the
"TERRITORY"


                                       11
<PAGE>

     1.5 "NET SALES PRICE" shall mean the gross invoice price at which PRODUCTS
are sold, less discounts allowed to distributors, discounts allowed dealers,
refunds, replacements or credits allowed to purchasers for return of PRODUCT or
as reimbursement for damaged PRODUCT, freight, postage, insurance and other
shipping charges, sales and use taxes, customs duties and any other governmental
charges imposed on the production, importation, use or sale of PRODUCT except
income taxes. Should LICENSEE sell PRODUCT in combination with other components
or products, then the net sales price computation shall be based on the average
net sales price charged during the applicable quarter by LICENSEE for the
PRODUCT when separately invoiced or priced. In the event the PRODUCT has not
been separately invoiced or priced during the applicable quarterly period, net
sales computation shall be based on the fair market price which the seller would
charge for the PRODUCT to an unrelated purchaser in an arms length transaction,
FOB plant of manufacture thereof.

     1.6 "TERRITORY" means world wide.

     2.0 Grant.

     2.1 HYDROMER hereby grants LICENSEE an exclusive license (even to the
exclusion of HYDROMER) to incorporate the PATENT RIGHTS and KNOW-HOW into
PRODUCTS and to sell or offer for sale, PRODUCTS in the TERRITORY under the
PATENT RIGHTS and KNOW-HOW.

     2.2 HYDROMER hereby reserves unto itself all rights to make, have made, and
use the PATENT RIGHTS licensed hereunder to manufacture products which are a
component part of the PRODUCTS ("reserved products"). In the event HYDROMER is
unable or unwilling, to supply or caused to be supplied, reserved products to
LICENSEE at a price set forth in Exhibit B, then LICENSEE shall be free to USE
the PATENT RIGHTS to make the reserved products, subject to the payment of
royalties set forth in Exhibit A. and HYDROMER shall transfer the KNOW-HOW,
procedures, technology, tests and all other information required in order for
LICENSEE to produce the PRODUCTS.

     HYDROMER may increase the unit price once each year at a rate not to exceed
the increase in the Cost of Living ("COL") indicator for Northern New Jersey.
Provided however if any raw material prices are increase greater then the COL,
HYDROMER may pass this greater increase to the LICENSEE

     HYDROMER agrees that the reserved products will be manufactured pursuant to
specifications and a quality system that meets the requirements of ISO 9002 and
the guidelines set forth in the Good Manufacturing Procedures promulgated by the
U.S. Food and Drug Administration. LICENSEE upon reasonable notice, and subject
to the secrecy provisions elsewhere in this AGREEMENT, may audit the books and
records of HYDROMER pertaining to the manufacturing of the reserved products

     2.3 On or before a date computed by adding thirty six (36) months to the
effective date of this agreement, LICENSEE shall have commercialized the
PRODUCT(S). If PRODUCT(S) are not commercialized on or before said date, then
HYDROMER may elect to cancel this AGREEMENT upon thirty (30) days advance
written notice to LICENSEE.. If HYDROMER elects not to cancel this AGREEMENT
LICENSEE is still obligated to make royalty payments pursuant to Exhibit A.

     2.4 HYDROMER hereby grants to LICENSEE a fully paid license and right to
use the HYDROMER and AQUATRIX trademarks within the territory, on PRODUCTS and
in association with the marketing and promotion thereof. The following credit
must appear on all advertisements, packaging and literature for PRODUCTS which
use the HYDROMER trademark -- "HYDROMER (or AQUATRIX) is a trademark of
Hydromer, Inc.".

     3.0 Royalties.

     3.1. As consideration for this grant of exclusive rights to the PRODUCTS
and the twenty four months with no fixed quarterly royalty, LICENSEE will pay to
HYDROMER the non-refundable sum of US$50,000 payable along with the execution of
this AGREEMENT by LICENSEE.

     3.2 In addition to the payment provided in Paragraph 3.1 hereof ,a running
royalty payable quarterly will accrue from LICENSEE to HYDROMER for each PRODUCT
sold during each quarter in which this AGREEMENT is in effect (or the fixed
amount whichever is greater), as set forth in Schedule A.



                                       12
<PAGE>




The obligation to pay royalties to HYDROMER is imposed only once with respect to
the same unit of PRODUCTS. There shall be no obligation to pay HYDROMER under
this Section, on sales of PRODUCTS between LICENSEE and its subsidiaries but in
such instances the obligation to pay royalties shall arise upon the sale by
LICENSEE or its subsidiaries to unrelated third parties. Payments due under this
Section shall be deemed to accrue when PRODUCT is shipped or billed, whichever
event shall first occur or at the end of each quarter if the royalty calculated
on the PRODUCTS shipped or billed is less then the quarterly fixed amount.

     3.3 The grant of rights under this AGREEMENT shall be dependent on
COMMERCIALIZATION of PRODUCTS and the payment by LICENSEE to HYDROMER of
quarterly royalties for each calendar quarter. If LICENSEE fails to pay or
report the computations of royalties in respect of any calendar quarter, then
HYDROMER may terminate this AGREEMENT, upon sixty (60) days' written notice to
LICENSEE. LICENSEE may render such notice ineffective by payment of an amount
which when added to royalties actually paid, equals the fixed quarterly royalty
due or an amount computed by using the actual amount of PRODUCTS shipped or
billed, which ever is greater.

     3.4 If the quarterly royalties computed hereunder with respect to PRODUCTS
shipped or billed by LICENSEE during any quarter aggregate less than the fixed
amount due in respect of that quarter, then LICENSEE, together with its royalty
payment in respect of such quarter, may pay to HYDROMER that additional amount
which, when added to the computed amount of royalties with respect to PRODUCTS
shipped or billed during such quarter, will equal the quarterly fixed amount
(the "ADDITIONAL AMOUNT"). In the event that LICENSEE, for eight (8) consecutive
quarters, has paid an ADDITIONAL AMOUNT equal to or greater than fifty (50%)
percent of the fixed amount for each of such calendar quarters, then HYDROMER,
at its sole option, may terminate this AGREEMENT upon thirty (30) days' written
notice to LICENSEE.

     4.0 Accounting. For accounting purposes, quarters will start on the first
day of each January, April, July, and October, following the date of execution
of this AGREEMENT and end on the last day of the next succeeding March, June,
September, and December, respectively. The first quarter in which royalties are
due and payable shall be prorated on a 90 day quarter. Within forty-five (45)
days after the close of each quarter hereof, LICENSEE shall render to HYDROMER a
written accounting with respect to all royalty payments due hereunder, and with
such accounting, pay in full in United States dollars all amounts due in respect
of such quarter. The rate of exchange to be used in computing the amount of
local currency equivalent to the United States Dollars due to HYDROMER as
royalty shall be the commercial exchange rate in effect at the Bank of America
in, New York, New York, on the date on which payment is due. Such report shall
indicate for such quarter the number of units, the NET SALES PRICE, and the
amount of sales by LICENSEE product code of PRODUCTS sold by LICENSEE with
respect to which royalty payments are due. In case no payment is due for any
quarter, LICENSEE shall so report. LICENSEE shall keep accurate records in
sufficient detail to enable the aforesaid payments to be determined. At
HYDROMER's request, LICENSEE, shall permit an independent certified public
account acceptable to LICENSEE to have access once in each calendar year, during
regular business hours and upon reasonable notice to LICENSEE, to such of the
records of LICENSEE as may be necessary to verify the accuracy of the reports
required under this AGREEMENT; provided, however said accountant shall keep all
information of LICENSEE confidential and shall disclose to HYDROMER only the
amount of any deficiency found. In the event the deficiency exceeds 5 % of
royalty payments audited, LICENSEE shall bear the full costs of the audit.

     5.0 Improvement/New Technology.

     5.1 During the term of this AGREEMENT, HYDROMER shall promptly and fully
disclose to LICENSEE any development or improvement relating to the use or
practicing of the PATENT RIGHTS or related KNOW-HOW as applied to PRODUCTS
conceived and/or reduced to practice by an officer, director, employee, agent,
consultant, contractor etc. of HYDROMER which HYDROMER is free to disclose
("HYDROMER IMPROVEMENT"). HYDROMER shall automatically add such HYDROMER
IMPROVEMENT to this AGREEMENT.



                                       13
<PAGE>

     LICENSEE shall promptly and fully disclose to HYDROMER any development or
improvement relating to the PRODUCTS conceived and/or reduced to practice by an
officer, director, employee, agent, consultant, etc. of LICENSEE ("LICENSEE
IMPROVEMENT"). LICENSEE IMPROVEMENTS, shall automatically become the
intellectual property and know-how of HYDROMER and shall be added to this
AGREEMENT.

     5.2 In the event HYDROMER develops new technology suitable for use with the
PRODUCTS which is understood to be any technology, not under any patents now
held or owned by HYDROMER, LICENSEE shall be given a 90 day advanced disclosure
at no additional cost. During this period "the EXCLUSIVE DISCLOSURE PERIOD" the
parties will negotiate, in good faith, for a license, in a form and providing
conditions and Royalties similar to this AGREEMENT. ("DEFINITIVE LICENSE") If
the parties are unable to agree to a DEFINITIVE LICENSE for PRODUCTS with the
EXCLUSIVE DISCLOSURE PERIOD then HYDROMER is free to offer the new technology to
any third party on terms no more favorable then the terms in this AGREEMENT.
LICENSEE may extend the EXCLUSIVE DISCLOSURE PERIOD for additional 6 month
periods by the payment of US$50,000 received by HYDROMER no later then two days
before the EXCLUSIVE DISCLOSE PERIOD would terminate. TIME IS OF THE ESSENCE.
LICENSEE may extend the EXCLUSIVE DISCLOSURE PERIOD for no more than four 6
month periods.

     6.0 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:

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

     6.2 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;

     6.3 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

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



                                       14
<PAGE>



     BOTH PARTIES AGREE TO MARK OR STAMP "CONFIDENTIAL", AT LEAST ON THE COVER
PAGE, ALL DOCUMENTS WHICH ARE DISCLOSED WHICH CONTAIN PROPRIETARY OR
CONFIDENTIAL INFORMATION. IN THE EVENT CONFIDENTIAL INFORMATION IS DISCLOSED IN
A FORM OTHER THEN BY DOCUMENTS, BOTH PARTIES AGREE TO CONFIRM THE DISCLOSURE IN
A DOCUMENT SENT TO THE OTHER PARTY WITHIN 10 DAYS.

     7.0 Technical Assistance. With regard to the PRODUCTS defined herein,
promptly following the execution of this AGREEMENT and on a continuing basis
during the term of this AGREEMENT, HYDROMER shall:

     7.1 Furnish to LICENSEE all KNOW-HOW in the form that exists as of April 1,
2000.

     7.2 Furnish the services of HYDROMER employees having knowledge of the
KNOW-HOW as may be necessary or appropriate, in order to fully (1) disclose to
LICENSEE all details and particulars of the KNOW-HOW, and in particular, but
without limitation, the manufacturing methods contained therein subject to the
provisions of Section 2.2, (2) consult with LICENSEE's technical personnel
concerning the manufacture, assembly, raw material purchase and other tasks
required for the production and applications of PRODUCTS covered by the PATENT
RIGHTS, including subsequent improvements thereto for the PRODUCTS; provided
LICENSEE shall reimburse HYDROMER for the reasonable travel and living expenses,
incurred by such technical personnel for travel requested by LICENSEE
hereunder, a written estimate shall be pre-approved by Licensee in advance of
such travel.

     8.0 Warranty.

     8.1 HYDROMER warrants that it is the owner of all right, title and interest
in and to the PATENT RIGHTS and has the unrestricted power and authority to
grant the licenses 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.

     8.2 HYDROMER declares that it has previously licensed the KNOW-HOW to third
parties for different Products than detailed in Section 1.1 and agrees to
prevent the KNOW-HOW from being utilized by third parties to the detriment of
LICENSEE for the PRODUCTS stipulated in Section 1.1.

     9.0 Effective Date and Term.

     9.1 This AGREEMENT will become effective on the day and year that HYDROMER
receives the payment set forth in Section 3.1 and a fully executed copy of this
AGREEMENT and it expires upon the expiration of the last to expire of the PATENT
RIGHTS, except that after expiration of the U.S. PATENT RIGHTS, royalties will
continue to be paid only on sales of PRODUCTS in countries in which unexpired
patents are in effect. After such expiration of this AGREEMENT, LICENSEE shall
have the right to make, use, sell, offer for sale or import PRODUCT without the
further payment of royalty or otherwise accounting to HYDROMER and HYDROMER
shall have no further obligations to LICENSEE.



                                       15
<PAGE>



     9.2 If either party hereto shall commit any material breach of the
provisions of this AGREEMENT, and shall not, within sixty (60) days' written
notice of such breach by the other party hereto, correct such breach or in the
sole discretion of the other party, acting in good faith, take sufficient action
or refrain from further action as the case maybe, to correct the 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.

     9.3 If either party should exercise its right to terminate this AGREEMENT,
under any applicable provision of this AGREEMENT, then LICENSEE'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 LICENSEE is obliged to hold in confidence pursuant to
Section 6.0 of this AGREEMENT. Termination of this AGREEMENT shall not relieve
either party of obligations incurred prior to termination.

     10.0 Infringement.

     10.1 In the event HYDROMER shall fail, within thirty (30) days of notice by
LICENSEE of any material infringement, direct or contributory, by a third party
of rights granted to LICENSEE in Section 2.0 hereunder, to institute legal
action to end such infringement, LICENSEE shall have the right to suspend 50% of
the payment of running royalties in the country where such infringement is
occurring for the period of such infringement. LICENSEE shall also have the
right, at that time, and at its option, to initiate and prosecute such action in
its own or HYDROMER's name, but at LICENSEE's sole cost and expense. HYDROMER
shall cooperate fully with LICENSEE in the initiation and prosecution of such
action.

In the event the infringing activity should cease for any reason, LICENSEE shall
resume paying 100% of the running royalties.

     10.2 Should any patent, trademark, copyright, trade secret, or other
intellectual property right infringement action be brought against LICENSEE in
any country of the TERRITORY as a result of LICENSEE's exercising of rights
granted to it hereunder, then in respect of such country, LICENSEE shall have
the right to suspend payment of royalties due to HYDROMER until such time as the
action is resolved, although such royalties shall continue to accrue. If the
action is resolved favorably to LICENSEE, all accrued royalties shall
immediately be paid to HYDROMER. If the action is resolved unfavorably to
LICENSEE, then accrued royalties shall be applied to costs of litigation and
damages, if any, incurred by LICENSEE. Any excess shall be paid to HYDROMER. The
foregoing shall be HYDROMER's sole and exclusive liability to LICENSE in the
event of such an infringement suit.

     11.0 General.

     11.1 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 LICENSEE. Neither LICENSEE 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, which consent
shall not unreasonably be withheld.

     11.2 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.

     11.3 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.




                                       16
<PAGE>

     11.4 Collection. In the event a collection agency and/or an attorney to aid
in the collection of royalties, LICENSEE agrees to compensate HYDROMER for any
fees/costs paid to such party.

     11.5 Governing Law. This AGREEMENT shall be construed and interpreted in
accordance with the laws of the State of New Jersey and the United States of
America. The courts of the State of New Jersey or the United States shall have
jurisdiction over the parties hereto and all matters arising hereunder. The
United Nations Conventions on Contracts for the International Sale of Goods is
specifically disclaimed.

     11.6 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.

     11.7 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
                           Branchburg, New Jersey  08876
                           Attn:  Manfred F. Dyck, President

                   IF TO LICENSEE:

                           I-MED Pharma, Inc.
                           216 Brunswick Blvd
                           Pointe Claire, Canada  H9R 1A6

                           Att: Ilan Hofmann, President

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


I-MED Pharma, Inc.

By:______________________________________
     Ilan Hofmann

Title: President

Date:______________________



HYDROMER, Inc.

By:________________________________________
     Manfred F. Dyck

Title: President

Date:____________________




                                       17
<PAGE>

Schedule A:

Royalty payments are to be computed based on the greater of the fixed amount or
the percentage times the NET SALES PRICE.

Quarter                             Royalty %                 Fixed amount

Each quarter
for the first 8 quarters
that this agreement
is in effect (prorated
for the first quarter)                 5.0                      0

For the next 4 quarters                5.0                      US$6,250
For the next 4 quarters                5.0                      US$25,000
For the next 4 quarters                5.0                      US$37,500
For the remaining quarters 5.0                                  US$62,500

Exhibit B:

Supply prices for first year.

US$100.00 per kg. on a 1:1 ratio basis at 11% solids using a 2% solution of
chitosan and a 20% solution of PVP.

Exhibit C.

Patent and Patent applications

Country                             Patent/Application        Date Granted

USA                                 5,420,197                  May 30, 1995
Australia                           682,415                    Jan 13, 1994
Austria                             App
Belgium                             663,212                    Dec 12, 1995
Canada                              App
Denmark                             663,212app
France                              663,212app
Germany                             69502029.3                 Jan 12, 1995
Greece                              3000000                    Jan 13, 1995
Ireland                             App
Italy                               663,212app
Japan                               App
Korea                               App
Luxemburg                           663,212app
Mexico                              184,762                    May 26, 1997
Monoco                              663,212                    Jan 12, 1995
Netherlands                         663,212                    Apr 15, 1998
Portugal                            663,212                    Jul 7, 1998
South Korea                         App
Spain                               663,212app (published)
Sweden                              663,212                    Apr 15, 1998
Switzerland                         663,212app
Taiwan                              Allowed                    Feb 23, 2000
UK                                  0663212                    Jan 17, 1994



                                       18