SECURED PROMISSORY NOTE



$1,500,000                                                    December 31, 1998



         FOR VALUE RECEIVED, the undersigned, FOUNTAIN PHARMACEUTICALS, INC., a
Delaware corporation ("Maker"), promises to pay to the order of Joseph Schuchert
(the "Payee"); (Payee and any subsequent holder[s] hereof are hereinafter
individually and collectively referred to as "Holder"), the principal sum of ONE
MILLION FIVE HUNDRED THOUSAND AND NO/100THS DOLLARS ($1,500,000), or such lesser
amount as may be advanced by Payee to Maker hereunder, together with interest on
the outstanding principal balance from time to time outstanding at a rate equal
to the greater of the "Adjusted Accrual Rate" (as defined below) or 9% per
annum. This Note represents a series of obligations of the Maker to the Payee
for cash and other advances made to the Payee and interest earned (as set forth
in Schedule A, attached hereto and all of which is now principal owing under
this Note), and all further extensions of credit up to the full face amount of
principal identified hereon each of which advances shall at the discretion of
Payee also be set forth on Schedule A as and when funds are advanced.

         Interest shall accrue daily on the outstanding principal balance owing.
For purposes of this Note, the "Adjusted Accrual Rate" shall be determined by
reference to the Prime Rate as quoted by the Wall Street Journal. Specifically,
interest shall be adjusted monthly and accrue during each successive calendar
month at the Prime Rate most recently quoted by the Wall Street Journal as of
the last business day of each immediately prior month (the "Adjusted Prime
Rate"), plus one and one-half percent (the "Adjusted Accrual Rate").

         The entire outstanding principal balance, together with all accrued and
unpaid interest hereon, shall be immediately due and payable in full on the
earlier of (i) December 31, 2000, (ii) one hundred eighty (180) days following
written demand, or (iii) upon any Event of Default herein or in the Credit and
Security Agreement of even date herewith (the "Security Agreement"). All accrued
interest shall be paid monthly on or before the tenth day of each calendar
month, or if not so paid when due, shall be added to the principal owing on this
Note. Following default, unpaid principal and interest shall bear interest at a
default rate equal to the Adjusted Prime Rate plus four percent. All payments
hereunder are to be made to the office of Payee at 1949 Sugarland Drive, Suite
250, Sheridan, Wyoming 82801, or such other location as Payee identifies to
Maker, in writing.

         The indebtedness evidenced hereby may be prepaid in whole or in part,
at any time and from time to time, without premium or penalty. All payments made
hereunder shall be applied first to any costs incurred by Maker in enforcing or
administering this Note, then to accrued interest, then to principal.

                                       1
<PAGE>
         Any advances hereafter made by Payee to Maker that are not evidenced by
another instrument or agreement between the parties shall be conclusively
presumed to have been made hereunder when such advance is made. The entire
balance of all advances hereunder that may be outstanding from time to time
shall constitute a single indebtedness, and no single advance increasing the
outstanding balance hereof shall itself be considered a separate loan, but
rather an increase in the aggregate outstanding balance of the indebtedness
evidenced hereby.

         If any payment hereunder is not paid when due (other than monthly
interest payments which may accrue as principal if unpaid when due as provided
above), the entire indebtedness evidenced by this Note may be declared to be
immediately due and payable in full without notice at the option of Holder.
Holder may waive any default before or after the same has been declared and
restore this Note to full force and effect without impairing the right to
declare the indebtedness evidenced hereby due for a subsequent default, this
right being a continuing one.

         In the event that this Note is placed in the hands of an attorney for
collection, or if Holder incurs any costs incident to the collection of the
indebtedness evidenced hereby, the undersigned and any other parties hereto
agree to pay a reasonable attorneys' fee, all court and other costs and the
reasonable costs of any collection efforts.

         Jurisdiction and venue in any action arising hereunder shall be in a
court of competent subject matter jurisdiction in Sheridan County, Wyoming. All
parties hereto waive demand, notice, presentment and protest.

         The obligations represented by this Note are secured by a pledge of
substantially all of the assets of the Maker pursuant to the terms and
conditions of the Security Agreement of even date herewith.

         To the extent any payment of interest or other consideration owing by
reason of the credit extended hereunder is determined by a court of competent
jurisdiction to exceed the amount permissible under any usury law of any
applicable state or other jurisdiction, this Note shall be automatically
reformed to allow the payment of the maximum amount of consideration permitted
under such law, and the Note shall otherwise remain in full force and effect.

                                             "MAKER"
                                             -------

                                             FOUNTAIN PHARMACEUTICALS, INC.



                                             By: /s/ Gerald T. Simmons
                                                --------------------------------
                                             Title:   President/CEO
                                                --------------------------------


                                       2
<PAGE>

                                  SCHEDULE "A"

                                CURRENT PRINCIPAL
                                -----------------

                  $0.00 total amount owing as of December 31, 1998, as principal
under the Note for advances made to date or for which forbearance and
consolidation into this Note are provided.

                               ADDITIONAL ADVANCES
                               -------------------


FOUNTAIN PHARMACEUTICALS, INC. OPERATING EXPENSES
-------------------------------------------------
<TABLE>
<CAPTION>

                                                                              Total Principal Owing as
         Amount                        Date                                      of Date of Advance
         ------                        ----                                      ------------------
<S>       <C>                                       <C>                                <C>     
          $400,000                          January 99                                 $400,000
          $      0                          February 99                                $400,000
          $200,000                          March 99                                   $600,000
          $150,000                          April 99                                   $750,000
          $ 50,000                          May 99                                     $800,000
          $ 50,000                          June 99                                    $850,000
          $ 50,000                          July 99                                    $900,000
          $ 50,000                          August 99                                  $950,000
          $ 50,000                          September 99                             $1,000,000
         ---------

        $1,000,000  Total

</TABLE>

DERMIK LEGAL FEES
-----------------
<TABLE>
<CAPTION>
                                                                              Total Principal Owing as
         Amount                        Date                                      of Date of Advance
         ------                        ----                                      ------------------
<S>      <C>                                        <C>                                <C>     
         $ 300,000                          January 99                                 $300,000
         $  50,000                          February 99                                $350,000
         $  50,000                          March 99                                   $400,000
         $  50,000                          April 99                                   $450,000
         $  50,000                          May 99                                     $500,000
         ---------

          $500,000  Total

</TABLE>