<PAGE>

                                                                  EXHIBIT 10.42

                               SUBSCRIPTION AGREEMENT


          SUBSCRIPTION AGREEMENT (this "Agreement") made as of the date set
forth on the signature page hereof between B-G Development Corporation ("BGDC")
Pacific Pharmaceuticals, Inc. ("Pacific" and collectively with BGDC sometimes
referred to as the "Companies"), and the undersigned (the "Subscriber").

                                W I T N E S S E T H:

          WHEREAS, the Companies have retained Paramount Capital, Inc. (the
"Placement Agent") to act as Placement Agent, on a "best efforts" basis, in a
private offering (the "Offering") of units (the "Units") of BGDC and Pacific;

          WHEREAS, the Companies desire to issue a minimum of 10 Units (the
"Minimum Offering") and a maximum of 60 Units (the "Maximum Offering") with an
option in favor of the Placement Agent to offer up to an additional 40 Units to
cover over-allotments (the "Over-allotment"), each Unit consisting of 50,000
shares of Series A Convertible Preferred Stock (the "Preferred Stock") of BGDC,
par value $.001 per share, stated value $2.00 per share as more fully described
in the Term Sheet (terms used herein but not defined herein shall have the
meanings set forth in the Term Sheet).  Each share of Preferred Stock is
convertible at the option of the holder thereof into one share of common stock
of BGDC, par value $.001 per share (the "BGDC Common Stock"), initially at a
conversion price (the "Conversion Price") equal to $2.00 per share of Common
Stock.  In addition, the Preferred Stock will automatically convert into BGDC
Common Stock upon the occurrence of a Qualified IPO or a Trading Event (each as
defined below). To the extent that any shares of Preferred Stock are outstanding
on the date that is two years following the Final Closing Date (the "Exchange
Date"), then, for the 60-day period thereafter, the holders of Preferred Stock
will have the right (the "Exchange Right") to put their shares of Preferred
Stock, if any, to Pacific for $3.99 per share (the "Exchange Purchase Price"). 
The Exchange Purchase Price may be paid in cash, shares of common stock of
Pacific, par value $.02 per share ("Pacific Common Stock") or any combination
thereof, at Pacific's sole discretion, within 60 days after the exercise of the
Exchange Right (the Preferred Stock, BGDC Common Stock issuable upon conversion
of the Preferred Stock and the Pacific Common Stock receivable upon exercise of
the Exchange Right are sometimes hereinafter referred to as the "Securities"). 
The Companies expect the closing of the Offering to occur on or before June 1,
1998 subject to subject to an extension of this Offering for up to an additional
60 days at the option of BGDC, with the consent of the Placement Agent and the
Placement Agent, in its sole discretion (such date, as may be extended, the
"Final Closing Date");

          WHEREAS, the Subscriber desires to purchase that number of Units set
forth on the signature page hereof on the terms and conditions hereinafter set
forth;

                                       1

<PAGE>

          NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:


I.   SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY SUBSCRIBER

          1.1  Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Companies such
number of Units, or fractions thereof, and the Companies agree to sell such
Units to the Subscriber as is set forth on the signature page hereof at a price
equal to $100,000 per Unit (the "Initial Offering Price").  The purchase price
is payable by personal or business check, wire transfer of immediately available
funds or money order made payable to "Fleet Bank, N.A., Escrow Agent, F/B/O B-G
Development Corp. and Pacific Pharmaceuticals, Inc." contemporaneously with the
execution and delivery of this Agreement by the Subscriber.  The certificates
representing the shares of Preferred Stock shall be delivered by the BGDC within
10 business days following the consummation of the Offering.  The Subscriber
understands, however, that this purchase of Units is contingent upon the
Companies making sales of the Minimum Offering amount prior to the Final Closing
Date of the Offering.

          1.2  The Subscriber recognizes that the purchase of Units involves a
high degree of risk including, but not limited to, the following: (a) each of
the Companies remains a development stage business with limited operating
history and requires substantial funds in addition to the proceeds of the
Offering; (b) an investment, each of in the Companies is highly speculative, and
only investors who can afford the loss of their entire investment should
consider purchasing Units; (c) the Subscriber may not be able to liquidate its
investment; (d) transferability of the Securities is extremely limited; (e) in
the event of a disposition, the Subscriber could sustain the loss of its entire
investment; and (f) neither of the Companies have paid any dividends since their
respective inceptions and neither of the Companies anticipates paying any
dividends, even if declared by the Companies' respective Board of Directors. 
Such risks are more fully set forth in the Confidential Term Sheet dated April
22, 1998 as supplemented and amended, and the attachments and exhibits thereto,
all of which constitute an integral part thereof furnished by the Company to the
Subscriber (the "Term Sheet").

          1.3  The Subscriber represents that the Subscriber is an "accredited
investor" as such term is defined in Rule 501 of Regulation D ("Regulation D")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
as indicated by the Subscriber's responses to the questions contained in Article
VIII hereof, and that the Subscriber is able to bear the economic risk of an
investment in the Units.

          1.4  The Subscriber hereby acknowledges and represents that (a) the
Subscriber has knowledge and experience in business and financial matters, prior

<PAGE>

investment experience, including investment in securities that are non-listed,
unregistered and/or not traded on a national securities exchange nor on the
National Association of Securities Dealers (the "NASD") automated quotation
system, or the Subscriber has employed the services of a "purchaser
representative" (as defined in Rule 501 of Regulation D) to read all of the
documents furnished or made available by each of the Companies both to the
Subscriber and to all other prospective investors in the Units and to evaluate
the merits and risks of such an investment on the Subscriber's behalf; (b) the
Subscriber recognizes the highly speculative nature of this investment; and (c)
the Subscriber is able to bear the economic risk that the Subscriber hereby
assumes.

          1.5  The Subscriber hereby acknowledges receipt and careful review of
the Term Sheet and all attachments thereto, including, without limitation,
Exhibit A entitled "Risk Factors" and this Agreement, (collectively referred to
as the "Offering Materials") and hereby represents that it has been furnished by
each of BGDC and Pacific during the course of the Offering with all information
regarding the respective Companies that the Subscriber has requested or desired
to know, has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers or other representatives of each of BGDC
and Pacific, respectively, concerning the terms and conditions of the Offering
and has received any additional information that the Subscriber has requested.

          1.6  (a)  In making the decision to invest in the Units the Subscriber
has relied solely upon the information provided by the Companies in the Term
Sheet and all attachments thereto and in this Agreement.  To the extent
necessary, the Subscriber has retained, at its own expense, and relied upon
appropriate professional advice regarding the investment, tax and legal merits
and consequences of this Agreement and its purchase of the Units hereunder.  The
Subscriber disclaims reliance on any statements made or information provided by
any person or entity in the course of Subscriber's consideration of an
investment in the Units other than the Offering Materials.  The Subscriber
acknowledges and agrees that (i) the Companies have prepared the Term Sheet and
that no other person, including without limitation, the Placement Agent, has
supplied any information for inclusion in the Term Sheet other than information
furnished in writing to the Companies by the Placement Agent specifically for
inclusion in the Term Sheet relating to the Placement Agent, (ii) the Placement
Agent has no responsibility for the accuracy or completeness of the Term Sheet
and (iii) the Subscriber has not relied upon the independent investigation or
verification, if any, that may have been undertaken by the Placement Agent.

          (b)  The Subscriber represents that (i) the Subscriber was 
contacted regarding  the sale of the Units by the Placement Agent (or an 
authorized agent or representative thereof) with whom the Subscriber had a 
prior substantial pre-existing relationship and (ii) no Units were offered or 
sold to it by means of any form of general solicitation or general 
advertising, and in connection therewith the Subscriber did not (A) receive 
or review any advertisement, article, notice or other communication


<PAGE>

published in a newspaper or magazine or similar media or broadcast over 
television or radio, whether closed circuit, or generally available; or (B) 
attend any seminar meeting or industry investor conference whose attendees 
were invited by any general solicitation or general advertising.

          1.7  The Subscriber hereby represents that the Subscriber, either by
reason of the Subscriber's business or financial experience or the business or
financial experience of the Subscriber's professional advisors (who are
unaffiliated with and not compensated by BGDC, Pacific or any affiliate or
selling agent of BGDC or Pacific, including the Placement Agent, directly or
indirectly), has the capacity to protect the Subscriber's own interests in
connection with the transaction contemplated hereby.  

          1.8  The Subscriber hereby acknowledges that the Offering has not been
reviewed by the United States Securities and Exchange Commission (the "SEC") nor
any state regulatory authority since the Offering is intended to be exempt from
the registration requirements of Section 5 of the Securities Act pursuant to
Regulation D promulgated thereunder.  The Subscriber understands that the
Securities have not been registered under the Securities Act and agrees not to
sell or otherwise transfer the Securities unless they are registered under the
Securities Act or unless an exemption from such registration is available.

          1.9  The Subscriber understands that the Securities comprising the
Units have not been registered under the Securities Act by reason of a claimed
exemption thereunder that depends, in part, upon the Subscriber's investment
intention.  In this connection, the Subscriber hereby represents that the
Subscriber is purchasing the Securities comprising the Units for the
Subscriber's own account for investment and not with a view toward the resale or
distribution to others.  The Subscriber, if an entity, further represents that
it was not formed for the purpose of purchasing the Securities.

          1.10 The Subscriber understands that there is no public market for the
Units or the Securities comprising the Units and that no market may develop for
any of such Securities.  The Subscriber understands that even if a public market
develops for such securities Rule 144 ("Rule 144") promulgated under the
Securities Act requires for non-affiliates, among other conditions, a one-year
holding period prior to the resale (in limited amounts) of securities acquired
in a non-public offering without having to satisfy the registration requirements
under the Securities Act.  The Subscriber understands and hereby acknowledges
that neither BGDC nor Pacific is under any obligation to register any of the
Units or any of the Securities comprising the Units under the Securities Act or
any state securities or "blue sky" laws other than as set forth in Article V
hereof.  The Subscriber agrees to hold BGDC, Pacific and their respective
directors, officers, employees, affiliates, controlling persons and agents
(including the Placement Agent and its officers, directors, employees, counsel,
controlling persons and agents) and their respective heirs, representatives,
successors and assigns harmless and to indemnify them against all liabilities,
costs and expenses incurred by them as a result of, (a) any misrepresentation
made by the Subscriber contained in this Agreement


<PAGE>

(including the Confidential Investor Questionnaire contained in Article VIII 
herein), (b) any sale or distribution by the Subscriber in violation of the 
Securities Act or any applicable state securities or "blue sky" laws or (c) 
any untrue statement of a material fact made by the Subscriber and contained 
herein.

          1.11 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities that such Securities
have not been registered under the Securities Act or any state securities or
"blue sky" laws and setting forth or referring to the restrictions on
transferability and sale thereof contained in this Agreement.  The Subscriber is
aware that BGDC will make a notation in its appropriate records with respect to
the restrictions on the transferability of the Preferred Stock and BGDC Common
Stock issued or issuable upon conversion of the Preferred Stock (the "Conversion
Shares") and that Pacific will make a notation in its appropriate records with
respect to the restrictions on the transferability of the Pacific Common Stock
issuable upon exercise of the Exchange Right (the "Exchange Shares").

          1.12 The Subscriber understands that each of the Companies will review
this Agreement and are hereby given authority by the Subscriber to call
Subscriber's bank or place of employment or otherwise review the financial
standing of the Subscriber; and it is further agreed that each of the Companies
(with the consent of the Placement Agent) and the Placement Agent, at its sole
discretion, reserves the unrestricted right, without further documentation or
agreement on the part of the Subscriber, to reject or limit any subscription, to
accept subscriptions for fractional Units and to close the Offering to the
Subscriber at any time and will issue stop transfer instructions to its transfer
agent with respect to such Securities.

          1.13 The Subscriber hereby represents that the address of the
Subscriber furnished by Subscriber on the signature page hereof is the
Subscriber's principal residence if Subscriber is an individual or its principal
business address if it is a corporation or other entity.

          1.14 The Subscriber represents that the Subscriber has full power and
authority (corporate, statutory and otherwise) to execute and deliver this
Agreement and to purchase the Units and the Securities underlying the Units. 
This Agreement constitutes the legal, valid and binding obligation of the
Subscriber, enforceable against the Subscriber in accordance with its terms.

          1.15 If the Subscriber is a corporation, partnership, limited
liability company, trust, employee benefit plan, individual retirement account,
Keogh Plan, or other tax-exempt entity, it is authorized and qualified to become
an investor in each of the Companies and the person signing this Agreement on
behalf of such entity has been duly authorized by such entity to do so.

          1.16 The Subscriber acknowledges that if he or she is a Registered
Representative of an NASD member firm, he or she must give such firm the notice


<PAGE>


required by the NASDs Rules of Fair Practice, receipt of which must be 
acknowledged by such firm in Section 8.4 below.

          1.17 The Subscriber acknowledges that at such time, if ever, as the
Securities are registered, sales of the Securities will be subject to state
securities laws.

          1.18 The Subscriber acknowledges that it has received all reports
filed by Pacific with the SEC under the Exchange Act of 1934 during the 1998
fiscal year or which are incorporated by reference in the Term Sheet.

          1.19 (a)  Subscriber agrees that:

                    (i)   from the earlier to occur of (A) the initial public
offering of BGDC Common Stock (the "IPO") and (B) the first date (the "Trading
Date") on which BGDC Common Stock (or securities received by all holders of BGDC
Common Stock in exchange for BGDC Common Stock) trades a national securities
exchange or on the National Association of Securities Dealers, Inc. Automated
Quotation System (collectively "NASDAQ") (a "Trading Event"), and continuing for
a period of nine months thereafter, Subscriber will not, without the prior
written consent of the Placement Agent, offer, pledge, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, 75% of the Conversion Shares held by each Subscriber; provided,
however, that, following each three month period after the Trading Date, an
amount of Conversion Shares equal to 25% of the number of Conversion Shares held
by the Subscriber shall become exempt from the lock-up provisions contained in
this sentence.  For the sake of clarity, 25% of the Conversion Shares will not
be subject to any lock-up.  In addition, the Subscriber agrees that while it
holds any Preferred Stock, Conversion Shares or Exchange Shares, it will not
directly or indirectly, through related parties, affiliates or otherwise sell
any of the Companies' securities "short" or "short against the box" (as those
terms are generally understood).  In addition, in connection with the IPO, the
Subscriber agrees to be subject to a lock-up for a period of 180 days following
the IPO or such longer period as may be required by the underwriter or
underwriters of such IPO.

                    (ii)  in the event that the Initial Exchange Right (as
defined below) is exercised by Subscriber, 50% of Subscriber's Initial Exchange
Shares shall be subject to a "lock-up" for the first 90 days following the
effective date of a Pacific Registration Statement that includes such Initial
Exchange Shares.  For the sake of clarity, 50% percent of Subscriber's Initial
Exchange Shares will not be subject to any contractual lock-up. 

                    (iii) in the event that the Exchange Right is exercised by
Subscriber, 50% of each Subscriber's Exchange Shares, shall be subject to a
"lock-up" for the first 90 days following the Effective Date (as defined below)
of a Pacific Registration Statement (as defined below) that includes such
Exchange Shares of


<PAGE>

the Subscriber.  For the sake of clarity, 50% percent of the Exchange 
Shares will not be subject to any contractual lock-up.

                    (iv)  in connection with any public offering of Pacific
Common Stock, Subscriber, if a holder of Exchange Shares at such time, agrees to
be subject to a lock-up for a period of 60 days following such public offering
or such longer period as may be required by the underwriter or underwriters of
such public offering.

               (b)  In order to enforce the foregoing covenant, the Companies
may impose stop-transfer instructions with respect to the Registrable Securities
(as defined below) of each Holder (as defined below) (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.

          1.20 (a)  The Subscriber agrees not to issue any public statement with
respect to the Subscriber's investment or proposed investment in the Companies
or the terms of any agreement or covenant between them and each of the Companies
without each of the Companies' prior written consent, except such disclosures as
may be required under applicable law or under any applicable order, rule or
regulation.

               (b)  The Companies agree not to disclose the names, addresses or
any other information about the Subscribers, except as required by law;
provided, that the Companies may use the name (but not the address) of the
Subscriber in any registration statement filed pursuant to Article V in which
the Subscriber's shares are included and may disclose the names on a
confidential basis to the American Stock Exchange ("AMEX"), if requested.

          1.21 The Subscriber represents and warrants that it has not engaged,
consented to or authorized any broker, finder or intermediary to act on its
behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement.  The Subscriber
hereby agrees to indemnify and hold harmless BGDC and Pacific from and against
all fees, commissions or other payments owing to any such person or firm acting
on behalf of such Subscriber hereunder.


II.  REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

     Each of BGDC and Pacific hereby represents, warrants and covenants to the
Subscriber that:

          2.1  ORGANIZATION, GOOD STANDING AND QUALIFICATION.  

               (a)  Pacific is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate

<PAGE>

power and authority to conduct its business as described in the Exhibits to 
the Term Sheet.  Pacific is duly qualified to do business as a foreign 
corporation and is in good standing in the State of California and Pacific 
and its subsidiaries are duly qualified and authorized to do business as a 
foreign corporation and are in good standing in each jurisdiction in which 
the laws require the Pacific or its subsidiaries to be so qualified and/or 
authorized to do business.  If required, prior to the any closing, BGDC will 
be duly qualified to and authorized to do business as a foreign corporation 
in California.

               (b)  BGDC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full corporate
power and authority to conduct its business as described in the Term Sheet.

          2.2  CAPITALIZATION AND VOTING RIGHTS.  The authorized, issued and
outstanding capital stock of BGDC is as set forth in the Term Sheet; all issued
and outstanding shares of BGDC are validly issued, fully paid and nonassessable.
The authorized, issued and outstanding capital stock of Pacific is as set forth
in the Exhibits to the Term Sheet; all issued and outstanding shares of Pacific
are validly issued, fully paid and nonassessable. The Preferred Stock underlying
the Units (including the Preferred Stock issuable upon exercise of the Placement
and Advisory Warrants (as defined in the Term Sheet)), when issued and paid for
in accordance with the terms of this Agreement, will be validly issued, fully
paid and nonassessable.  BGDC shall at all times during the period that any of
the shares of Preferred Stock remain outstanding and unexercised have authorized
and reserved for issuance a sufficient number of shares of BGDC Common Stock to
provide for conversion of the Preferred Stock.  Pacific shall at all times
during the period that any of the shares of Preferred Stock remain outstanding
and unexercised have authorized and reserved for issuance a sufficient number of
shares of Pacific Common Stock to provide for the Exchange Right. Except as set
forth in the Term Sheet, there are no outstanding options, warrants, agreements,
convertible securities, preemptive rights or other rights to subscribe for or to
purchase any shares of capital stock of BGDC.  Except as set forth in the Term
Sheet, in this Agreement and as otherwise required by law, there are no
restrictions upon the voting or transfer of any of the shares of capital stock
of BGDC pursuant to BGDC's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), By-Laws or other governing documents or any
agreement or other instruments to which BGDC is a party or by which BGDC is
bound.

          2.3  AUTHORIZATION; ENFORCEABILITY. BGDC and Pacific each have
corporate right, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.  All corporate action on the
part of BGDC or Pacific and their respective directors and stockholders that is
necessary for the authorization, execution, delivery and performance of this
Agreement by the Companies, the authorization, sale, issuance and delivery of
the Securities contemplated hereby and the performance of the Companies'
respective obligations hereunder has been taken.  This Agreement has been duly
executed and delivered by each of the Companies and constitutes a legal, valid
and binding obligation of both BGDC and


<PAGE>

Pacific, enforceable against each Company in accordance with its terms, 
subject to laws of general application relating to bankruptcy, insolvency and 
the relief of debtors and rules of law governing specific performance, 
injunctive relief or other equitable remedies, and to limitations of public 
policy.  Upon the issuance and delivery of the Preferred Stock as 
contemplated by this Agreement, such Securities will be validly issued, fully 
paid and nonassessable.  Upon the issuance and delivery of the Conversion 
Shares or Exchange Shares, if applicable (including the Conversion Shares or 
Exchange Shares issuable upon conversion of the Preferred Stock underlying 
the Placement and Advisory Warrants (as defined in the Term Sheet)), and upon 
compliance by the Subscriber with the terms hereof, the Conversion Shares or 
Exchange Shares will be validly issued, fully paid and nonassessable.  The 
issuance and sale of the Preferred Stock contemplated hereby and the issuance 
and sale of the Conversion Shares or Exchange Shares (including the Preferred 
Stock issuable upon exercise of the Placement and Advisory Warrants and the 
Conversion Shares or Exchange Shares issuable upon conversion or exchange of 
the Preferred Stock underlying the Placement and Advisory Warrants), will not 
give rise to any preemptive rights or rights of first refusal on behalf of 
any person.

          2.4  CERTIFICATE OF DESIGNATIONS OF PREFERRED STOCK.  The Preferred
Stock shall have all of the rights, preferences and privileges substantially as
set forth in the Form of Certificate of Designations attached as Exhibit B to
the Term Sheet.

          2.5  NO CONFLICT; GOVERNMENTAL CONSENTS.     

          (a)  The execution and delivery by the Companies of this Agreement 
and the consummation of the transactions contemplated hereby will not result 
in the violation of any law, statute, rule, regulation, order, writ, 
injunction, judgment or decree of any court or governmental authority to or 
by which BGDC or Pacific is bound, or of any provision of the Certificate of 
Incorporation or By-Laws of BGDC or Pacific, and will not conflict with, or 
result in a breach or violation of, any of the terms or provisions of, or 
constitute (with due notice or lapse of time or both) a default under, any 
lease, loan agreement, mortgage, security agreement, trust indenture or other 
agreement or instrument to which BGDC or Pacific is a party or by which it is 
bound or to which any of its properties or assets is subject, nor result in 
the creation or imposition of any lien upon any of the properties or assets 
of BGDC or Pacific.

          (b)  No consent, approval, authorization or other order of any
governmental authority is required to be obtained by the Companies in connection
with the authorization, execution and delivery of this Agreement or with the
authorization, issue and sale of the Units or the Securities comprising the
Units, except such filings as may be required to be made with the SEC, the AMEX,
the NASD and/or NASDAQ and with any state or foreign blue sky or securities
regulatory authority.

          2.6  LICENSES.  Except as otherwise set forth in the Term Sheet, each
of the Companies has sufficient licenses, permits and other governmental
authorizations


<PAGE>

currently required for the conduct of its business or ownership of properties 
and is in all material respects complying therewith.

          2.7  EXCHANGE RIGHT.  (a) If necessary, Pacific covenants and 
agrees to use its best efforts in all respects to cause the approval of the 
Exchange Right described in Article VI hereof.

               (b)  Pacific covenants and agrees not to enter into any agreement
that would interfere with or otherwise adversely affect the rights granted to
the Subscriber in Article VI.

          2.8  LITIGATION.  BGDC knows of no pending or threatened legal or
governmental proceedings against BGDC that would materially adversely affect the
business, property, financial condition or operations of BGDC.  Similarly,
Pacific knows of no pending or threatened legal or governmental proceedings
against Pacific that would materially adversely affect the business, property,
financial condition or operations of Pacific.

          2.9  TERM SHEET; DISCLOSURE.  The information set forth in the Term
Sheet contains no untrue statement of a material fact nor omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.

          2.10 INVESTMENT COMPANY.  Neither of the Companies is an "investment
company" within the meaning of such term under the Investment Company Act of
1940, as amended,  and the rules and regulations of the SEC thereunder.

          2.11 PLACEMENT AGENT.  The Companies have engaged, consented to and
authorized the Placement Agent to act as placement agent in connection with the
transactions contemplated by this Agreement.  The Companies hereby agree to pay
the Placement Agent a commission as set forth in the Term Sheet and to reimburse
expenses, and the Companies agree to indemnify and hold harmless the Subscribers
from and against all fees, commissions or other payments owing by the Companies
to the Placement Agent or any other person or firm acting on behalf of the
Companies hereunder.


III. TERMS OF SUBSCRIPTION

          3.1  The Companies shall issue a minimum of 10 Units (the "Minimum
Offering") and a maximum of 60 Units (the "Maximum Offering") with an option in
favor of the Placement Agent to offer up to an additional 40 Units to cover
over-allotments (the "Over-allotment"), each Unit consisting of 50,000 shares of
Preferred Stock.  Each share of Preferred Stock is convertible at the option of
the holder thereof into one share of BGDC Common Stock, initially at a
Conversion Price


<PAGE>

equal to $2.00 per share of Preferred Stock and is exchangeable for Pacific 
Common Stock as provided in Article VI.  The Units will be offered on a "best 
efforts" basis.  The purchase price is payable by personal or business check, 
wire transfer of immediately available funds or money order made payable to 
"Fleet Bank, N.A., Escrow Agent, F/B/O B-G Development Corporation and 
Pacific Pharmaceuticals, Inc." as set forth in section 1.1 hereof.  

          3.2  Placement of the Units will be made by the Placement Agent, who
will receive certain compensation as described in the Term Sheet.

          3.3  Pending the sale of the Units, all funds paid hereunder shall be
deposited in escrow with Fleet Bank, N.A., having a branch at 345 Park Avenue,
New York, New York, 10022.  If the Companies shall not have obtained
subscriptions (including this subscription) for purchases of the Minimum
Offering amount on or before the Final Closing Date, then this subscription
shall be void and all funds paid hereunder by the Subscriber shall be promptly
returned to the Subscriber, with interest, subject to Section 3.5 hereof. 

          3.4  The Subscriber hereby authorizes and directs BGDC to deliver the
certificates representing the shares of Preferred Stock to be issued to the
Subscriber pursuant to this Agreement directly to the Subscriber's account
maintained by the Placement Agent, if any, or, if no such account exists, to the
residential or business address indicated on the signature page hereto.

          3.5  The Subscriber hereby authorizes and directs the Companies to
return any funds for unaccepted subscriptions to the same account from which the
funds were drawn, including any customer account maintained with the Placement
Agent.


IV.  CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS

          4.1  The Subscriber's obligation to purchase the Units at the closings
(each, a "Closing") is subject to the fulfillment on or prior to each Closing of
the following conditions,  which conditions may be waived at the option of each
Subscriber to the extent permitted by law:

               (a)  REPRESENTATIONS AND WARRANTIES CORRECT.  The representations
and warranties made by each of the Companies in Article II hereof shall be true
and correct in all material respects when made, and shall be true and correct in
all material respects on each Closing with the same force and effect as if they
had been made on and as of said date.

               (b)  COVENANTS.  All covenants, agreements and conditions
contained in this Agreement to be performed by each of the Companies on or prior
to such purchase shall have been performed or complied with in all material
respects.
<PAGE>

               (c)  NO LEGAL ORDER PENDING.  There shall not then be in 
effect any legal or other order enjoining or restraining the transactions 
contemplated by this Agreement.

               (d)  NO LAW PROHIBITING OR RESTRICTING SUCH SALE.  There shall 
not be in effect any law, rule or regulation prohibiting or restricting such 
sale or requiring any consent or approval of any person, which shall not have 
been obtained, to issue the Securities (except as otherwise provided in this 
Agreement).

               (e)  MINIMUM SUBSCRIPTIONS.  The Companies shall have received 
binding subscriptions for at least the Minimum Offering amount.


V.   REGISTRATION RIGHTS

     5.1  As used in this Agreement, the following terms shall have the 
following meanings:

          (a)  The term "Holder" shall mean any person owning or having the 
right to acquire Registrable Securities or any permitted transferee of a 
Holder.

          (b)  The terms "register", "registered" and "registration" shall 
refer to a registration effected by preparing and filing a registration 
statement or similar document in compliance with the Securities Act, and the 
declaration or order of effectiveness of such registration statement or 
document.

          (c)  The term "REGISTRABLE SECURITIES" shall mean (i) the 
Conversion Shares (including the Conversion Shares issuable upon conversion 
of the Preferred Stock underlying the Placement and Advisory Warrants), (ii) 
any Exchange Shares and (iii) any shares of BGDC or Pacific Common Stock 
issued as (or issuable upon the conversion or exercise of any warrant, right 
or other security that is issued as) a dividend or other distribution with 
respect to or in replacement of the Preferred Stock or BGDC Common Stock; 
provided, however, that securities shall only be treated as Registrable 
Securities if and only for so long as they (A) have not been disposed of 
pursuant to a registration statement declared effective by the SEC, (B) have 
not been sold in a transaction exempt from the registration and prospectus 
delivery requirements of the Securities Act so that all transfer restrictions 
and restrictive legends with respect thereto are removed upon the 
consummation of such sale and (C) are held by a Holder or a permitted 
transferee of a Holder pursuant to Section 5.10.

     5.2  "PIGGY-BACK" REGISTRATION RIGHTS.  Subject to Section 5.7 hereof, 
BGDC agrees that if, at any time, and from time to time, after the earliest 
to occur of (i) the IPO and (ii) a Trading Event, and ending on the date that 
is five (5) years from the Final Closing Date, the Board of Directors of BGDC 
shall authorize the filing of a

<PAGE>


registration statement (a "BGDC Registration Statement") under the Securities 
Act (other than the initial public offering of the BGDC Common Stock, or 
other than a registration statement on Form S-8, Form S-4 or any other form 
that does not include substantially the same information as would be required 
in a form for the general registration of securities) in connection with the 
proposed offer of any of its securities by it or any of its stockholders, 
BGDC will (A) promptly notify each holder of Preferred Stock and/or 
Conversion Shares that such registration statement will be filed and that the 
Conversion Shares then held by such holder of Preferred Stock will be 
included in such registration statement at such holder's request, (B) cause 
such BGDC Registration Statement to cover all of such Conversion Shares owned 
by the holder requesting inclusion, (C) use its reasonable best efforts to 
cause such BGDC Registration Statement to become effective as soon as 
practicable and (D) take all other action necessary under any Federal or 
state law or regulation of any governmental authority to permit all such 
Conversion Shares owned by the Holder to be sold or otherwise disposed of, 
and will maintain such compliance with each such Federal and state law and 
regulation of any governmental authority for the period necessary for the 
Holder to effect the proposed sale or other disposition.

          Notwithstanding the foregoing, BGDC may at any time, abandon or 
delay any BGDC Registration Statement commenced by BGDC.  In the event of 
such an abandonment by BGDC, BGDC shall not be required to continue 
registration of shares requested by the Holder for inclusion and the Holder 
shall retain the right to request inclusion of shares as set forth above.

          Each Subscriber shall have the right to request inclusion of any of 
their Conversion Shares in a registration statement pursuant to this section 
5.2(a) up to three times.  In the event any BGDC Registration Statement is 
stopped or delayed prior to the completion of the distribution contemplated 
by said BGDC Registration Statement, then the Holder shall retain the right 
to request inclusion of shares as set forth above in subsequent BGDC 
Registration Statements.

          5.3  PACIFIC REGISTRATION STATEMENT.  (a)  Pacific agrees that in 
the event that the Initial Exchange Right is exercised by holders of more 
than 20% of the Preferred Stock then outstanding and elects to pay all or a 
portion of the Initial Exchange Price through the issuance of shares of 
Initial Exchange Shares, then within 15 days from the expiration of the 
Initial Exchange Period, Pacific shall file a shelf-registration statement (a 
"Pacific Registration Statement") including the Initial Exchange Shares and 
use its best efforts to effect the registration, qualifications or 
compliances (including, without limitation, the execution of any required 
undertaking to file post-effective amendments, appropriate qualifications or 
exemptions under applicable blue sky or other state securities laws and 
appropriate compliance with applicable securities laws, requirements or 
regulations) as may be so reasonably requested and as would permit or 
facilitate the sale and distribution of all of the Initial Exchange Shares 
and will maintain such compliance with each such Federal and state law and 
regulation of any governmental authority for the period necessary for the

<PAGE>


holder to effect the proposed sale or other disposition. Notwithstanding the 
foregoing, the Company will not be obligated to enter into any underwriting 
agreement for the sale of any of the Initial Exchange Shares.

               (b)  Pacific agrees that in the event that the Exchange Right 
is exercised, Pacific receives shareholder approval, if necessary, and elects 
to pay all or a portion of the Exchange Purchase Price (as defined below) 
through the issuance of shares of Pacific Common Stock, Pacific shall file a 
Pacific Registration Statement within 15 days from the expiration of the 
Exchange Period (as defined below) of the Exchange Date (as defined below) 
including the Exchange Shares then held by the Holder and use its best 
efforts to effect the registration, qualifications or compliances (including, 
without limitation, the execution of any required undertaking to file 
post-effective amendments, appropriate qualifications or exemptions under 
applicable blue sky or other state securities laws and appropriate compliance 
with applicable securities laws, requirements or regulations) as may be so 
reasonably requested and as would permit or facilitate the sale and 
distribution of all Exchange Shares and will maintain such compliance with 
each such Federal and state law and regulation of any governmental authority 
for the period necessary for the holder to effect the proposed sale or other 
disposition.  Notwithstanding the foregoing, Pacific will not be obligated to 
enter into any underwriting agreement for the sale of any of the Exchange 
Shares.

     5.4  OBLIGATIONS OF THE COMPANIES.  Whenever required under this Article 
V to include Registrable Securities in a registration statement, BGDC or 
Pacific, as the case may be, shall, as expeditiously as reasonably possible:

          (a)  Use its reasonable best efforts to cause any such BGDC 
Registration Statement or Pacific Registration Statement to become effective, 
and, upon the request of the Holders of a majority of the Registrable 
Securities registered thereunder, keep such BGDC Registration Statement or 
Pacific Registration Statement effective for a period necessary for the 
Subscriber to effect the proposed sale or other distribution contemplated in 
the respective registration statement, during the period that such 
registration statement is required to be maintained hereunder, file such 
post-effective amendments and supplements thereto as may be required by the 
Securities Act and the rules and regulations thereunder or otherwise to 
ensure that the prospectus included therein does not contain any untrue 
statement of material fact or omit to state a fact required to be stated 
therein or necessary in order to make the statements contained therein, in 
light of the circumstances under which they are made, not misleading; 
provided, however, that such period shall be extended for a period of time 
equal to the period that the Holder refrains from selling any securities 
included in such registration at the request of an underwriter of Common 
Stock (or other securities) of BGDC or Pacific, respectively, and provided 
further that if applicable rules under the Securities Act governing the 
obligation to file a post-effective amendment permits, in lieu of filing a 
post-effective amendment that (i) includes any prospectus required by Section 
10(a)(3) of the Securities Act or (ii) reflects facts or events representing 
a material or fundamental change in the information set forth in the 
respective registration statement,

<PAGE>


BGDC or Pacific, as the case may be, may incorporate by reference information 
required to be included in (i) and (ii) above to the extent such information 
is contained in periodic reports filed pursuant to Section 13 or 15(d) of the 
Exchange Act in the registration statement.

          (b)  Prepare and file with the SEC such amendments and supplements 
to such BGDC Registration Statement or Pacific Registration Statement, and 
the respective prospectus used in connection with such registration 
statement, as may be necessary to comply with the provisions of the 
Securities Act with respect to the disposition of all securities covered by 
such registration statement.

          (c)  Furnish to the Holders such numbers of copies of a prospectus, 
including a preliminary prospectus as amended or supplemented from time to 
time, in conformity with the requirements of the Securities Act, and such 
other documents as they may reasonably request in order to facilitate the 
disposition of Registrable Securities owned by them.

          (d)  Use its reasonable best efforts to register and qualify the 
securities covered by such BGDC Registration Statement or Pacific 
Registration Statement, as applicable, under such other federal or state 
securities laws of such jurisdictions as shall be reasonably requested by the 
Holders; provided, however, that BGDC or Pacific, as the case may be, shall 
not be required in connection therewith or as a condition thereto to qualify 
to do business or to file a general consent to service of process in any such 
states or jurisdictions, unless BGDC or Pacific, as applicable, is already 
subject to service in such jurisdiction and except as may be required by the 
Securities Act.

          (e)  In the event of any underwritten public offering by BGDC, 
enter into and perform its obligations under an underwriting agreement, in 
usual and customary form, with the managing underwriter of such offering.  
Each Holder participating in such underwriting shall also enter into and 
perform its obligations under such an agreement.

          (f)  Notify each Holder of Registrable Securities covered by such 
BGDC Registration Statement or Pacific Registration Statement, as applicable, 
at any time when a prospectus relating thereto is required to be delivered 
under the Securities Act, (i) when the registration statement or any 
post-effective amendment and supplement thereto has become effective; (ii) of 
the issuance by the SEC of any stop order or the initiation of proceedings 
for that purpose (in which event BGDC or Pacific, as the case may be, shall 
make every effort to obtain the withdrawal of any order suspending 
effectiveness of the registration statement at the earliest possible time or 
prevent the entry thereof); of the receipt by BGDC or Pacific, as applicable, 
of any notification with respect to the suspension of the qualification of 
the Registrable Securities for sale in any jurisdiction or the initiation of 
any proceeding for such purpose; and (iv) of the happening of any event as a 
result of which the prospectus

<PAGE>


included in such BGDC Registration Statement or Pacific Registration 
Statement, as then in effect, includes an untrue statement of a material fact 
or omits to state a material fact required to be stated therein or necessary 
to make the statements therein not misleading in the light of the 
circumstances then existing.

          (g)  Cause all such Registrable Securities registered pursuant to 
section 5.2 and/or 5.3 hereof to be listed on each securities exchange or 
quotation service on which similar securities issued by BGDC or Pacific are 
then listed or quoted.

          (h)  Provide a transfer agent and registrar for all Registrable 
Securities registered pursuant hereunder and CUSIP number for all such 
Registrable Securities, in each case not later than the effective date of 
such registration.

     5.5  FURNISH INFORMATION.  It shall be a condition precedent to the 
obligation of each of the Companies to take any action pursuant to this 
Article V with respect to the Registrable Securities of any selling Holder 
that such Holder shall furnish to each of the Companies such information 
regarding the Holder, the Registrable Securities held by the Holder, and the 
intended method of disposition of such securities as shall be reasonably 
required by each of the Companies to effect the registration of such Holder's 
Registrable Securities.

     5.6  EXPENSES OF REGISTRATION.  BGDC and Pacific shall bear and pay all 
expenses incurred in connection with any respective registration, filing or 
qualification of Registrable Securities with respect to the registrations 
pursuant to Article 5.2 and/or 5.3 for each Holder, including (without 
limitation) all registration, filing, and qualification fees, printers and 
accounting fees relating or apportionable thereto, but excluding underwriting 
discounts and commissions relating to Registrable Securities; provided, 
however, that neither of the Companies shall bear the cost of any 
professional fees or costs of accounting, financial or legal advisors to any 
of the Holders. Notwithstanding the foregoing, each Holder shall pay all 
registration expenses that such Holder is required to pay under applicable 
law.

     5.7  UNDERWRITING REQUIREMENTS.  In connection with any offering 
involving an underwriting of shares of the capital stock of BGDC, BGDC shall 
not be required under Section 5.2 to include any of the Holders' Registrable 
Securities in such underwriting unless they accept the terms of the 
underwriting as agreed upon between BGDC and the underwriters selected (or by 
other persons entitled to select the underwriters), and then only in such 
quantity as the underwriters determine in their sole discretion will not 
jeopardize the success of the offering by BGDC.  If the total amount of 
securities, including Registrable Securities, requested by stockholders to be 
included in such offering exceeds the amount of securities that, when added 
to the amount of securities to be sold on the issuer's behalf, the 
underwriters determine in their sole discretion is compatible with the 
success of the offering then BGDC shall be required to include in the 
offering only that number of such securities, including Registrable 
Securities, which the underwriters determine in their sole discretion will 
not jeopardize

<PAGE>

the success of the offering (the securities so included to be apportioned pro 
rata among the selling stockholders according to the total amount of 
securities entitled to be included therein owned by each selling stockholder 
or in such other proportions as shall mutually be agreed to by such selling 
stockholders, it being understood that BGDC will be entitled to include all 
shares it desires to sell on its own behalf in a primary registration without 
cutback).  For purposes of the preceding parenthetical concerning 
apportionment, for any selling stockholder who is a holder of Registrable 
Securities and is a partnership or corporation, the partners, retired 
partners and stockholders of such holder, or the estates and family members 
of any such partners and retired partners and any trusts for the benefit of 
any of the foregoing persons shall be deemed to be a single "selling 
stockholder", and any pro-rata reduction with respect to such "selling 
stockholder" shall be based upon the aggregate amount of shares carrying 
registration rights owned by all entities and individuals included in such 
"selling stockholder", as defined in this sentence.

     5.8  DELAY OF REGISTRATION.  No Holder shall have any right to obtain or 
seek an injunction restraining or otherwise delaying any such registration as 
the result of any controversy that might arise with respect to the 
interpretation or implementation of this Article V.

     5.9  INDEMNIFICATION.  In the event that any Registrable Securities are 
included in a registration statement under this Article V:

          (a)  To the extent permitted by law, BGDC or Pacific, as 
applicable, will indemnify and hold harmless each Holder, any underwriter (as 
defined in the Securities Act) for such Holder and each person, if any, who 
controls such Holder or underwriter within the meaning of the Securities Act 
or the Exchange Act, against any losses, claims, damages, or liabilities 
(joint or several) to which they may become subject under the Securities Act, 
or the Exchange Act, insofar as such losses, claims, damages, or liabilities 
(or actions in respect thereof) arise out of or are based upon any of the 
following statements, omissions or violations (collectively a "Violation"):  
(i) any untrue statement or alleged untrue statement of a material fact 
contained in such registration statement, including any preliminary 
prospectus or final prospectus contained therein or any amendments or 
supplements thereto, (ii) the omission or alleged omission to state therein a 
material fact required to be stated therein, or necessary to make the 
statements therein not misleading, or (iii) any violation or alleged 
violation by BGDC or Pacific, as the case may be, of the Securities Act, the 
Exchange Act, or any rule or regulation promulgated under the Securities Act, 
or the Exchange Act, and BGDC or Pacific, as the case may be, will pay to 
each such Holder, underwriter or controlling person, as incurred, any legal 
or other expenses reasonably incurred by them in connection with 
investigating or defending any such loss, claim, damage, liability, or 
action; provided, however, that the indemnity agreement contained in this 
Section 5.9(a) shall not apply to amounts paid in settlement of any such 
loss, claim, damage, liability, or action if such settlement is effected 
without the consent of BGDC or Pacific, as applicable, (which consent shall 
not be unreasonably withheld),

<PAGE>

nor shall BGDC or Pacific, as applicable, be liable in any such case for any 
such loss, claim, damage, liability, or action to the extent that it arises 
out of or is based upon a Violation that occurs in reliance upon and in 
conformity with written information furnished expressly for use in connection 
with such registration by any such Holder, underwriter or controlling person; 
and provided further, that the indemnity contained in this Section 5.9(a) 
with respect to any prospectus that shall be subsequently amended prior to 
the written confirmation of the sale of any such Registrable Securities shall 
not inure to the benefit of any Holder or underwriter or other person from 
whom the person asserting any such loss, claim  damage or liability purchased 
the Registrable Securities that are the subject thereof, if such Holder or 
underwriter or other person failed to provide a copy of the prospectus as 
amended to such person at or prior to the written confirmation of the sale.

          (b)  To the extent permitted by law, each selling Holder will 
indemnify and hold harmless BGDC or Pacific, as the case may be, each of its 
directors, each of its officers who has signed the registration statement, 
each person, if any, who controls BGDC or Pacific, as the case may be, within 
the meaning of the Securities Act, any underwriter, any other Holder selling 
securities in such registration statement and any controlling person of any 
such underwriter or other Holder, against any losses, claims, damages, or 
liabilities (joint or several) to which any of the foregoing persons may 
become subject, under the Securities Act, or the Exchange Act, insofar as 
such losses, claims, damages, or liabilities (or actions in respect thereto) 
arise out of or are based upon any Violation, in each case to the extent (and 
only to the extent) that such Violation occurs in reliance upon and in 
conformity with written information furnished by such Holder expressly for 
use in connection with such registration; and each such Holder will pay, as 
incurred, any legal or other expenses reasonably incurred by any person 
intended to be indemnified pursuant to this Section 5.9(b), in connection 
with investigating or defending any such loss, claim, damage, liability, or 
action; provided, however, that the indemnity agreement contained in this 
Section 5.9(b) shall not apply to amounts paid in settlement of any such 
loss, claim, damage, liability or action if such settlement is effected 
without the consent of the Holder, which consent shall not be unreasonably 
withheld; provided, that, in no event shall any indemnity under this Section 
5.9(b) exceed the gross proceeds from the offering received by such Holder.

          (c)  Promptly after receipt by an indemnified party under this 
Section 5.9 of notice of the commencement of any action (including any 
governmental action), such indemnified party shall, if a claim in respect 
thereof is to be made against any indemnifying party under this Article 5.9, 
deliver to the indemnifying party a written notice of the commencement 
thereof and the indemnifying party shall have the right to participate in, 
and, to the extent the indemnifying party so desires, jointly with any other 
indemnifying party similarly notified, to assume the defense thereof with 
counsel selected by the indemnifying party and approved by the indemnified 
party (whose approval shall not be unreasonably withheld); provided, however, 
that an indemnified party (together with all other indemnified parties which 
may be represented without 

<PAGE>

conflict by one counsel) shall have the right to retain one separate counsel, 
with the fees and expenses to be paid by the indemnifying party, if 
representation of such indemnified party by the counsel retained by the 
indemnifying party would be inappropriate due to actual or potential 
differing interests between such indemnified party and any other party 
represented by such counsel in such proceeding.  The failure to deliver 
written notice to the indemnifying party within a reasonable time of the 
commencement of any such action, if prejudicial to its ability to defend such 
action, shall relieve such indemnifying party of any liability to the 
indemnified party under this Article 5.9, but the omission so to deliver 
written notice to the indemnifying party will not relieve it of any liability 
that it may have to any indemnified party otherwise than under this Section 
5.9.

          (d)  If the indemnification provided for in this Section 5.9 is 
held by a court of competent jurisdiction to be unavailable to an indemnified 
party with respect to any loss, liability, claim, damage, or expense referred 
to therein, 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.

          (e)  Notwithstanding the foregoing, to the extent that the 
provisions on indemnification and contribution contained in the underwriting 
agreement entered into in connection with the underwritten public offering 
are in conflict with the foregoing provisions, the provisions in the 
underwriting agreement shall control.

          (f)  The obligations of BGDC or Pacific, as applicable, and Holders 
under this Section 5.9 shall survive the completion of any offering of 
Registrable Securities in a registration statement under this Article V, and 
otherwise.

     5.10 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934.  With a view towards 
making available to the Holders the benefits of Rule 144 and any other rule 
or regulation of the SEC that may at any time permit a Holder to sell 
securities of BGDC or Pacific, as the case may be, to the public without 
registration, each of the Companies agrees to:

          (a)  make and keep public information available, as those terms are 
understood and defined in Rule 144, at all times in the case of Pacific and 
at all times

<PAGE>

from the effective date of the registration statement filed in connection 
with an IPO of BGDC Common Stock;

          (b)  file with the SEC in a timely manner all reports and other 
documents required of the Company under the Securities Act and the Exchange 
Act; and

          (c)  furnish to any Holder, so long as the Holder owns any 
Registrable Securities, forthwith upon request (i) a copy of the most recent 
annual or quarterly report of the BGDC or Pacific, as the case may be, and 
such other reports and documents so filed by the BGDC or Pacific, as the case 
may be, and (ii) such other information as may be reasonably requested in 
availing any Holder of any rule or regulation of the SEC which permits the 
selling of any such securities without registration or pursuant to such form.

     5.11 PERMITTED TRANSFEREES.  The rights to cause BGDC and Pacific to 
register Registrable Securities granted to the Holders by BGDC and Pacific 
under this Article V may be assigned in full by a Holder in connection with a 
transfer by such Holder of its Registrable Securities if: (a) such Holder 
gives prior written notice to BGDC or Pacific, as applicable; (b) such 
transferee agrees to comply with the terms and provisions of this Agreement; 
(c) such transfer is otherwise in compliance with this Agreement and (d) such 
transfer is otherwise effected in accordance with applicable securities laws. 
Except as specifically permitted by this Section 5.11, the rights of a Holder 
with respect to Registrable Securities as set out herein shall not be 
transferable to any other person, and any attempted transfer shall cause all 
rights of such Holder therein to be forfeited.

     5.12 TERMINATION OF REGISTRATION RIGHTS.  In addition, the right of any 
Holder to request inclusion in any registration pursuant to Section 5.2 
and/or 5.3 shall terminate if all shares of Registrable Securities held by 
such Holder may immediately be sold under Rule 144.


VI.  ADDITIONAL CONTRACTUAL RIGHT

     6.1  INITIAL EXCHANGE RIGHT.  (a)  To the extent that any shares of 
Preferred Stock are outstanding on the date that is one year following the 
Final Closing Date (the "Initial Exchange Date"), then for the 60-day period 
thereafter (the "Initial Exchange Period"), the holders of Preferred Stock 
will have the right (the "Initial Exchange Right") to put their shares of 
Preferred Stock, if any, to Pacific for $2.00 per share (subject to 
adjustments for stock splits dividends and other similar adjustments) (the 
"Initial Exchange Price").

          (b)  The Initial Exchange Price may be paid in cash, Pacific Common 
Stock or any combination thereof, at Pacific's sole discretion, within 60 
days after the exercise of the Initial Exchange Right.  If necessary, Pacific 
will seek shareholder

<PAGE>


approval for the use of Pacific Common Stock at its next annual meeting of 
stockholders.

          (c)  In the event that Pacific elects to pay the Initial Exchange 
Price in shares of Pacific Common Stock (the "Initial Exchange Shares"), the 
number of shares of Pacific Common Stock to be delivered will be determined 
by dividing (a) that portion of the Initial Exchange Price to be paid in 
Pacific Common Stock by (b) the average closing price of the Pacific Common 
Stock for the 30 consecutive trading days immediately preceding the Initial 
Exchange Date on the principal national securities exchange on which the 
Pacific Common Stock is admitted to trading or listed, or if not listed or 
admitted to trading on any such exchange, the closing bid price of the 
Pacific Common Stock as reported by the NASDAQ, or other similar organization 
if NASDAQ is no longer reporting such information, or, if the Pacific Common 
Stock is not reported on NASDAQ, the closing bid price for the Pacific Common 
Stock in the over-the-counter market as reported by the National Quotation 
Bureau or similar organization, or if not so available, the fair market value 
of the Pacific Common Stock as determined in good faith between the Board of 
Directors of Pacific and the holders of a majority of the Preferred Stock 
then outstanding.

          (d)  In addition, in order for the holders of Preferred Stock to 
exercise the Initial Exchange Right, each such holder will be required to 
represent to Pacific that, at the time of such exercise, it is an "accredited 
investor" as that term is defined in Regulation D under the Securities Act.

     6.2  EXCHANGE RIGHT.  (a)  To the extent that any shares of Preferred 
Stock are outstanding on the date that is two years following the Final 
Closing Date (the "Exchange Date"), then for the 60-day period thereafter 
(the "Exchange Period"), the holders of Preferred Stock will have the right 
(the "Exchange Right") to put their shares of Preferred Stock, if any, to 
Pacific for $3.99 per share (subject to adjustments for stock splits, 
dividends and other similar adjustments) (the "Exchange Purchase Price").

          (b)  The Exchange Purchase Price may be paid in cash, Pacific 
Common Stock (subject to shareholder approval, if necessary) or any 
combination thereof, at Pacific's sole discretion, generally within 60 days 
after the exercise of the Exchange Right.

          (c)  In the event that Pacific elects to pay the Exchange Purchase 
Price in shares of Pacific Common Stock ("Exchange Shares"), the number of 
Exchange Shares to be delivered will be determined by dividing (a) that 
portion of the Exchange Purchase Price to be paid in Exchange Shares by (b) 
the average closing price of the Pacific Common Stock for the 30 consecutive 
trading days immediately preceding the Exchange Date on the principal 
national securities exchange on which the Pacific Common Stock is admitted to 
trading or listed, or if not listed or admitted to trading on any such 
exchange, the closing bid price of the Pacific Common Stock as

<PAGE>

reported by the NASDAQ, or other similar organization if NASDAQ is no longer 
reporting such information, or, if the Pacific Common Stock is not reported 
on NASDAQ, the closing bid price for the Pacific Common Stock in the 
over-the-counter market as reported by the National Quotation Bureau or 
similar organization, or if not so available, the fair market value of the 
Pacific Common Stock as determined in good faith between the Board of 
Directors of Pacific and the holders of a majority of the Preferred Stock 
then outstanding.  

          (d)  In addition, in order for the holders of Preferred Stock to 
exercise the Exchange Right, each such holder will be required to represent 
to Pacific that, at the time of such exercise, it is an "accredited investor" 
as that term is defined in Regulation D under the Securities Act.


VII. MISCELLANEOUS

          7.1  Any notice or other communication given hereunder shall be 
deemed sufficient if in writing and sent by registered or certified mail, 
return receipt requested, or delivered by hand against written receipt 
therefor, addressed to: B-G Development Corporation and/or Pacific 
Pharmaceuticals, Inc., 6730 Mesa Ridge Road, San Diego, CA, 92121, Attn: Dr. 
H. Laurence Shaw, with a copy to c/o Paramount Capital, Inc., 787 Seventh 
Avenue, 48th Floor, New York, New York 10019, Attn: Michael S. Weiss, and to 
the Subscriber at the Subscriber's address indicated on the signature page of 
this Agreement.  Notices shall be deemed to have been given or delivered on 
the date of mailing, except notices of change of address, which shall be 
deemed to have been given or delivered when received.

          7.2  Except as otherwise provided herein, this Agreement shall not 
be changed, modified or amended except by a writing signed by the parties to 
be charged, and this Agreement may not be discharged except by performance in 
accordance with its terms or by a writing signed by the party to be charged.

          7.3  Subject to the provisions of Section 5.11, this Agreement 
shall be binding upon and inure to the benefit of the parties hereto and to 
their respective heirs, legal representatives, successors and assigns.  This 
Agreement sets forth the entire agreement and understanding between the 
parties as to the subject matter hereof and merges and supersedes all prior 
discussions, agreements and understandings of any and every nature among them.

          7.4  Upon the execution and delivery of this Agreement by the 
Subscriber, this Agreement shall become a binding obligation of the 
Subscriber with respect to the purchase of Units as herein provided, subject, 
however, to the right hereby reserved by BGDC and Pacific to enter into the 
same agreements with other subscribers and to add and/or delete other persons 
as subscribers. 

<PAGE>

          7.5  NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED 
BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS 
AND PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY 
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS 
OF LAW.  IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM 
FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE 
SUPREME COURT OF THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR 
THE FEDERAL COURTS FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE 
COURTS, THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH 
COURTS AND AGREE TO SAID VENUE. 

          7.6  In order to discourage frivolous claims the parties agree that 
unless a claimant in any proceeding arising out of this Agreement succeeds in 
establishing his claim and recovering a judgment against another party 
(regardless of whether such claimant succeeds against one of the other 
parties to the action), then the other party shall be entitled to recover 
from such claimant all of its/their reasonable legal costs and expenses 
relating to such proceeding and/or incurred in preparation therefor.

          7.7  The holding of any provision of this Agreement to be invalid 
or unenforceable by a court of competent jurisdiction shall not affect any 
other provision of this Agreement, which shall remain in full force and 
effect.  If any provision of this Agreement shall be declared by a court of 
competent jurisdiction to be invalid, illegal or incapable of being enforced 
in whole or in part, such provision shall be interpreted so as to remain 
enforceable to the maximum extent permissible consistent with applicable law 
and the remaining conditions and provisions or portions thereof shall 
nevertheless remain in full force and effect and enforceable to the extent 
they are valid, legal and enforceable, and no provisions shall be deemed 
dependent upon any other covenant or provision unless so expressed herein.

          7.8  It is agreed that a waiver by either party of a breach of any 
provision of this Agreement shall not operate, or be construed, as a waiver 
of any subsequent breach by that same party.

          7.9  The parties agree to execute and deliver all such further 
documents, agreements and instruments and take such other and further action 
as may be necessary or appropriate to carry out the purposes and intent of 
this Agreement.

          7.10 This Agreement may be executed in two or more counterparts 
each of which shall be deemed an original, but all of which shall together 
constitute one and the same instrument.

          7.12 Nothing in this Agreement shall create or be deemed to create 
any rights in any person or entity not a party to this Agreement, except (a) 
for the holders of Registrable Securities and (b) for the Placement Agent 
pursuant to Sections 1.6(a) and 2.11 hereof.

<PAGE>

                                                                  EXHIBIT 10.42

VIII CONFIDENTIAL INVESTOR QUESTIONNAIRE

          8.1  The Subscriber represents and warrants that he, she or it 
comes within one category marked below, and that for any category marked, he, 
she or it has truthfully set forth, where applicable, the factual basis or 
reason the Subscriber comes within that category.  ALL INFORMATION IN 
RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL.  The undersigned 
agrees to furnish any additional information which the Company deems 
necessary in order to verify the answers set forth below.

Category A _____    The undersigned is an individual (not a partnership,
                    corporation, etc.) whose individual net worth, or joint net
                    worth with his or her spouse, presently exceeds $1,000,000.

                              Explanation.  In calculating net worth you may
                              include equity in personal property and real
                              estate, including your principal residence, cash,
                              short-term investments, stock and securities. 
                              Equity in personal property and real estate should
                              be based on the fair market value of such property
                              less debt secured by such property.

Category B _____    The undersigned is an individual (not a partnership,
                    corporation, etc.) who had an individual income in excess of
                    $200,000 in each of the two most recent years, or joint
                    income with his or her spouse in excess of $300,000 in each
                    of those years (in each case including foreign income, tax
                    exempt income and full amount of capital gains and losses
                    but excluding any income of other family members and any
                    unrealized capital appreciation) and has a reasonable
                    expectation of reaching the same income level in the current
                    year.

Category C _____    The undersigned is a director or executive officer of the
                    Company which is issuing and selling the Units.

Category D _____    The undersigned is a bank; a savings and loan association;
                    insurance company; registered investment company; registered
                    business development company; licensed small business
                    investment company ("SBIC"); or employee benefit plan within
                    the meaning of Title 1 of ERISA and (a) the investment
                    decision is made by a plan fiduciary which is either a bank,
                    savings and loan association, insurance company or
                    registered investment advisor, or (b) the plan has total
                    assets in excess of $5,000,000 or is a self

                                       25

<PAGE>


                    directed plan with investment decisions made solely by 
                    persons that are accredited investors.


---------------------------------
                                   (describe entity)

Category E _____    The undersigned is a private business development company as
                    defined in section 202(a)(22) of the Investment Advisors Act
                    of 1940.


---------------------------------
                                   (describe entity)

Category F _____    The undersigned is either a corporation, partnership,
                    Massachusetts business trust, or non-profit organization
                    within the meaning of Section 501(c)(3) of the Internal
                    Revenue Code, in each case not formed for the specific
                    purpose of acquiring the Units and with total assets in
                    excess of $5,000,000.


---------------------------------
                                   (describe entity)

Category G _____    The undersigned is a trust with total assets in excess of
                    $5,000,000, not formed for the specific purpose of acquiring
                    the Units, where the purchase is directed by a
                    "sophisticated person" as defined in Regulation 
                    506(b)(2)(ii) under the Securities Act.

Category H _____    The undersigned is an entity (other than a trust) all the
                    equity owners of which are "accredited investors" within one
                    or more of the above categories.  If relying upon this
                    Category alone, each equity owner must complete a separate
                    copy of this Agreement.


---------------------------------
                                   (describe entity)

Category I _____    The undersigned is not within any of the categories above
                    and is therefore not an accredited investor.

The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Final Closing Date in the event that the representations and
warranties in this Agreement shall cease to be true, accurate and complete.

<PAGE>

     8.2  SUITABILITY (please answer each question)

(a)  For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:

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

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

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

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

(b)  For an individual Subscriber, please describe any college or graduate
degrees held by you:

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

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

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

(c) For all Subscribers, please list types of prior investments:

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

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

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

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

(d)  For all Subscribers, please state whether you have participated in other
PRIVATE PLACEMENTS before:

                   YES_______                  NO_______

(e) If your answer to question (d) above was "YES", please indicate frequency of
such prior participation in PRIVATE PLACEMENTS of:

                    Public           Private           Public or Private
                    Companies        Companies         Biotechnology Companies 
                    ---------        ---------         -----------------------

     Frequently      _________________________________

     Occasionally    _________________________________

     Never           _________________________________

     
(f) For individual Subscribers, do you expect your current level of income to 
significantly decrease in the foreseeable future:

<PAGE>

          YES_______               NO_______

(g)  For trust, corporate, partnership and other institutional Subscribers, 
do you expect your total assets to significantly decrease in the foreseeable 
future: 

          YES_______               NO_______

(h)  For all Subscribers, do you have any other investments or contingent 
liabilities which you reasonably anticipate could cause you to need sudden 
cash requirements in excess of cash readily available to you: 

          YES_______               NO_______

(i)  For all Subscribers, are you familiar with the risk aspects and the 
non-liquidity of investments such as the securities for which you seek to 
subscribe?

          YES_______               NO_______

(j)  For all Subscribers, do you understand that there is no guarantee of 
financial return on this investment and that you run the risk of losing your 
entire investment?

          YES_______               NO_______


     8.3  MANNER IN WHICH TITLE IS TO BE HELD. (circle one)

                 (a)      Individual Ownership
                 (b)      Community Property
                 (c)      Joint Tenant with Right of 
                          Survivorship (both parties
                          must sign)
                 (d)      Partnership*
                 (e)      Tenants in Common
                 (f)      Company*
                 (g)      Trust*
                 (h)      Other

     *If Units are being subscribed for by an entity, the attached 
Certificate of Signatory must also be completed.

<PAGE>

          8.4  NASD AFFILIATION.

Are you affiliated or associated with an NASD member firm (please check one):

Yes _________       No __________

If Yes, please describe:
_________________________________________________________
_________________________________________________________
_________________________________________________________

*If Subscriber is a Registered Representative with an NASD member firm, have 
the following acknowledgment signed by the appropriate party:

The undersigned NASD member firm acknowledges receipt of the notice required 
by Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.

_________________________________
Name of NASD Member Firm

By: ______________________________
     Authorized Officer

Date: ____________________________




          8.5  The undersigned is informed of the significance to the 
Companies of the foregoing representations and answers contained in the 
Confidential Investor Questionnaire contained in this Section 8 and such 
answers have been provided under the assumption that the Companies will rely 
on them.

<PAGE>


                                                                  EXHIBIT 10.42

[SIGNATURE PAGE]

NUMBER OF UNITS _________  X $100,000 = __________  (THE "PURCHASE PRICE")


Signature                          Signature (if purchasing jointly)

Name Typed or Printed              Name Typed or Printed


Entity Name                        Entity Name


Address                            Address


City, State and Zip Code           City, State and Zip Code


Telephone-Business                 Telephone--Business


Telephone-Residence                Telephone--Residence


Facsimile-Business                 Facsimile--Business


Facsimile-Residence                Facsimile--Residence

                                                              
Tax ID # or Social Security #      Tax ID # or Social Security # 

Name in which securities should be issued:

CHECK THE BOX MARKED YES IF YOU WOULD LIKE THE SECURITIES   
TO BE DELIVERED TO YOUR ACCOUNT WITH PARAMOUNT CAPITAL, INC.  YES ___    NO ___
(IF YOU CHECK "NO", SECURITIES WILL BE DELIVERED TO YOU AT THE ADDRESS
PROVIDED ABOVE)

Dated:                    , 1998

This Subscription Agreement is agreed to and accepted as of
___________________________ , 1998.          

B-G DEVELOPMENT CORPORATION                  PACIFIC PHARMACEUTICALS, INC.


By:  /s/ Dr. H. Laurence Shaw                By:   /s/ Dr. H. Laurence Shaw
     ------------------------------               ------------------------------
Name:  Dr. H. Laurence Shaw                  Name:  Dr. H. Laurence Shaw
Title: Chief Executive Officer               Title: Chief Executive Officer


                                       31

<PAGE>

                              CERTIFICATE OF SIGNATORY

                           (To be completed if Units are
                         being subscribed for by an entity)


          I,______________________________, am the______________________________

of _____________________________________________ (the "Entity").

     I certify that I am empowered and duly authorized by the Entity to 
execute and carry out the terms of the Subscription Agreement and to purchase 
and hold the Units, and certify further that the Subscription Agreement has 
been duly and validly executed on behalf of the Entity and constitutes a 
legal and binding obligation of the Entity.

     IN WITNESS WHEREOF, I have set my hand this________day of
_________________,   1998.


                                   _______________________________________ 
                                             (Signature)