CREDIT AND SECURITY AGREEMENT



         THIS CREDIT AND SECURITY AGREEMENT (the "Security Agreement") is made
and entered into as of December 31, 1998 by FOUNTAIN PHARMACEUTICALS, INC., a
Delaware corporation, having its principal place of business at 7279 Bryan Dairy
Road, Largo, Florida 33777 (the "Borrower"), in favor of JOSEPH SCHUCHERT
("Schuchert" or "Lender") whose address for the sole purpose of this notice is
c/o Eaglestone Capital Corporation, 1949 Sugarland Drive, Suite 250, Sheridan,
Wyoming 82801.

         WHEREAS, the Borrower has obtained credit directly from Schuchert,
specifically, (I) working capital and other advances to pay third party lenders,
or advances to such third-party lenders or vendors as Schuchert elects to pay
upon request of Borrower, including advances made pursuant to that certain
Secured Promissory Note of even date herewith (the "Note"), and (ii) the
Borrower will be the beneficiary of other loans, guaranties or advances made by
Schuchert. All such obligations (including by way of example those represented
by the Note) shall be referred to herein, together with any and all other
obligations owing by the Borrower to the Lender, as the "Obligations;" and

         WHEREAS, as a condition to the ongoing extension of credit and to the
provision of credit by the Lender to the Borrower under the Note and on the
terms hereof, and specifically, by way of example, to clarify the Obligations of
Borrower to the Lender and Lender's interest in the items of collateral
described in this Security Agreement, the Borrower has agreed to (I) grant to
the Lender a security interest in and to the "Collateral" (as defined herein)
and (ii) execute and deliver this Security Agreement and all other necessary
documents in order to secure and perfect the payment and performance by the
Borrower of the Obligations.

                                    AGREEMENT
                                    ---------

         NOW THEREFORE, in consideration of the promises and in order to induce
the Lender to extend credit under the Note and to continue or make other
extensions of credit and to secure those Obligations, the Borrower hereby agrees
with the Lender as follows:

         SECTION 1. ADVANCES OF FUNDS AND CREATION OF SECURITY INTEREST.
Following the date hereof and continuing until September, 1999 (the Initial
Period"), the Borrower may request that the Lender make advances to Borrower in
order to fund capital shortfalls from the revenue and expense budget attached
hereto as Exhibit "A" and incorporated by reference herein (the "Initial
Budget"). Upon such request, Lender shall advance the funds (as debt owing under
the Note and only up to the full face amount of the Note) to enable the Borrower
to discharge Borrower's then current obligations, to the extent revenues from
operations are inadequate to pay the costs and expenses reflected by the Initial
Budget. Lender shall also advance under the Note other amounts during the
Initial Period reflected on the "Schedule of Anticipated Capital and Litigation
Expenses" attached hereto as Exhibit "B" and incorporated by reference herein
(the "Litigation/Capital Schedule") if and when requested by Borrower during the

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Initial Period. Following the Initial Period and until December 31, 2000, Lender
may advance other amounts, in Lender's sole discretion, as requested by the
Borrower to fund reasonable working capital needs.

         The Borrower shall not request any such advance more frequently than
once monthly and the total of all advances shall not exceed One Million Five
Hundred Thousand Dollars ($1,500,000). Advances shall be funded only on the last
day of any given month, unless Lender agrees otherwise. Each request for an
advance under the Note shall be preceded by a current unaudited monthly and
year-to-date income statement, balance sheet and cash flow statement together
with an updated twelve month projected cash flow statement of Borrower
(presented on a month-to-month basis) and such other financial and other
information as Borrower may reasonably request to provide satisfactory
assurances of Borrower's capacity to repay prior to maturity the advance and all
other advances out of Borrower's operating income. The provisions of the Note
and this Security Agreement in no way obligate the Lender directly to any
third-party creditor or vendor of Borrower or any of its affiliates. Borrower
may request that the Lender advance funds to pay when due any obligation for
existing funded indebtedness of the Borrower or for trade payables. Each dollar
advanced to any creditor or vendor of the Borrower by Lender (whether requested
by Borrower or otherwise) shall be deemed an extension of credit to Borrower in
a corresponding dollar for dollar amount and shall be subject to this Security
Agreement and repayment of all amounts advanced shall be the unconditional
obligation of the Borrower payable in accordance with this Security Agreement
and the Note.

                  Any and all such advances described in this Section 1, and all
other obligations owing under the Note shall be referred to from time to time
herein as the "Obligations."

                  The Borrower hereby grants to the Lender a continuing first
priority, perfected security interest (subject to currently existing liens of
record) in all of the Borrower's right, title and interest in and to the
Collateral described in Section 2 hereof (the "Collateral") in order to secure
the payment and performance of all of the Obligations.

         SECTION 2.  COLLATERAL.   The Collateral is:

                  (a) Accounts. All of the Borrower's accounts, whether now
existing or existing in the future, including, without limitation (I) all
accounts receivable, including, without limitation, all accounts created by or
arising from all of the Borrower's sales of goods or rendition of services made
under any of the Borrower's trade names, or through any of its divisions, (ii)
all unpaid seller's rights (including rescission, replevin, reclamation and
stopping in transit) relating to the foregoing or arising therefrom, (iii) all
rights to any goods represented by any of the foregoing, including returned or
repossessed goods, (iv) all reserves and credit balances held by the Borrower
with respect to any such accounts receivable or account debtors, (v) all letters
of credit, guaranties or collateral for any of the foregoing, and (vi) all
insurance policies or rights relating to any of the foregoing (all of the
foregoing property and similar property included as Collateral under Section
2(f) below being hereinafter referred to as "Accounts");

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<PAGE>

                  (b) Inventory. All of the Borrower's presently existing or
hereafter acquired inventory including, without limitation: (I) all raw
materials, work in process, parts, components, assemblies, supplies and
materials used or consumed in the Borrower's business, wherever located and
whether in the possession of the Borrower or any other Person; (ii) all goods,
wares and merchandise, finished or unfinished, held for sale or lease or leased
or furnished or to be furnished under contracts of service, wherever located and
whether in the possession of the Borrower or any other Person; and (iii) all
goods returned to or repossessed by the Borrower (all of the foregoing property
and similar property included as Collateral under Section 2(f) below being
hereinafter referred to as "Inventory");

                  (c) Intangibles. All of the Borrower's presently existing and
future general intangibles and all other intangible or proprietary rights
(including, without limitation, any and all choses or things in action, patents,
patent applications, trademarks, trademark applications, trade names, trade
secrets, business names, service marks, licenses, copyrights, copyright
applications, literary and intellectual property rights, computer programs,
software, registration and franchise rights, and, in each case, all goodwill
associated therewith), instruments, securities, credits, claims, demands,
documents, letters of credit and letter of credit proceeds, chattel paper,
documents of title, certificates of title, certificates of deposit, warehouse
receipts, bills of lading, books and records, leases, deposit accounts, money,
tax refunds, tax refund claims, rents, contract rights, and other rights
(including all rights to the payment of money) (all of the foregoing property
and similar property included as Collateral under Section 2(f) below being
hereinafter referred to as "Intangibles"). In furtherance and not limitation of
the foregoing pledged Intangibles, simultaneously with the execution of this
Security Agreement, the Borrower is executing that certain Patent, Trademark and
License Mortgage in order to fully perfect in favor of the Lender, Lender's
security interest in any and all patents, trademarks and licenses owned by the
Borrower or in which the Borrower asserts any interest.

                  (d) Equipment. All of the Borrower's presently existing and
hereafter acquired equipment, including, without limitation, machinery,
equipment, office equipment and supplies, computers (including mainframe
processors and remote terminals) and related equipment, furniture, furnishings,
fixtures, parts, tools, tooling, jigs, dies, manufacturing implements, motors,
fork lifts, trucks, trailers, motor vehicles, and other equipment (all of the
foregoing property and similar property included as Collateral under Section
2(f) below being hereinafter referred to as "Equipment");

                  (e) Fixtures. All of the Borrower's fixtures which are now or
hereafter located on or affixed to real property or used or useful in the
operation or use of real property or any use or occupancy thereof or the
construction of any improvements thereon, including, without limitation, any and
all phone, heating, lighting, plumbing, ventilation, air conditioning,
refrigerating, incinerating and/or compacting plants, systems, fixtures and
equipment, elevators, escalators, stoves, ranges, vacuums, window washing and
other cleaning and building service systems, call systems, sprinkler systems and
other fire prevention and extinguishing apparatus and materials, motors,
machinery, pipes, ducts, conduits, dynamos, engines, compressors, generators,
boilers, stokers, furnaces, pumps, tanks, appliances and garbage and pest

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control systems (all of the foregoing property and similar property included as
Collateral under Section 2(f) below);

                  (f) After-acquired Collateral and Proceeds. The Collateral
includes all right, title and interest of the Borrower in all items described in
this Section 2, whether now owned or hereafter at any time acquired by the
Borrower and wherever located, or as to which the Borrower may have any right or
power, and includes all replacements, additions, accessions, improvements,
substitutions, repairs, proceeds and products relating thereto or therefrom, and
all documents, ledger sheets, computer programs, disc or tape files, printouts
and files of the Borrower relating thereto. Proceeds hereunder include (I)
whatever is now or hereafter received by the Borrower upon the sale, exchange,
collection or other disposition of any item of Collateral, whether such proceeds
constitute inventory, accounts, accounts receivable, general intangibles,
instruments, securities (including, without limitation, United States of America
Treasury Bills), credits, claims, demands, documents, letters of credit and
letter of credit proceeds, chattel paper, documents of title, certificates of
title, certificates of deposit, warehouse receipts, bills of lading, leases,
deposit accounts, money, tax refund claims, contract rights, goods or equipment,
(ii) any such items which are now or hereafter acquired by the Borrower with any
proceeds of Collateral hereunder and (iii) any insurance now or hereafter
payable by reason of loss or damage to any item of Collateral or any proceeds
thereof.

         SECTION 3.  THE BORROWER'S REPRESENTATIONS AND WARRANTIES.
         ----------  ----------------------------------------------

                  (a) The Borrower owns the Collateral free and clear of any and
all Liens in favor of third parties. Upon the proper filing of UCC financing
statements, notices with the Patent and Trademark Office (the "PTO"), and notice
to Borrower's account holders identified on Schedule 3(a) (which represent every
bank, brokerage firm or other depository with which funds or other intangible
property are held for the Borrower), the security interests granted pursuant to
this Security Agreement constitute valid and enforceable first, prior and
perfected Liens in the Collateral (other than liens identified on Schedule
3(a)(1).

                  (b) The address of the principal place of business and chief
executive office of the Borrower is set forth beneath Borrower's signature
below. The Borrower's Federal Employer Identification Number is 62-1386759. The
inventory, books and records of the Borrower, and all its chattel paper and
records of Accounts, are maintained exclusively at such location. There is no
jurisdiction in which the Borrower has any Collateral of a material nature
(except for vehicles and Inventory in transit for processing) other than the
jurisdiction where the principal place of business is located. None of the
receipts received by the Borrower from any warehouseman states that the goods
covered thereby are to be delivered to bearer or to the order of a named person
or to a named person and such named person's assigns.


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<PAGE>

                  (c) None of the Collateral is subject to contractual
obligations that may restrict or inhibit the Lender's rights or abilities to
sell or dispose of the Collateral, or any part thereof, after the occurrence and
during the continuance of an Event of Default.

                  (d) The Borrower has not used any corporate or fictitious name
during the three (3) years preceding the date hereof, other than the corporate
name under which it has executed this Security Agreement.

                  (e) Each Account is based on an actual and bona fide sale and
delivery of goods or rendition of services to customers, made by the Borrower in
the ordinary course of its businesses; the Inventory being sold and the Accounts
created are its exclusive property and are not and shall not be subject to any
lien, consignment arrangement, encumbrance, security interest or financing
statement whatsoever; and the Borrower's customers have accepted the goods or
services, owe and are obligated to pay the full amounts stated in the invoices
according to their terms, without any dispute (other than non-material disputes
involving de minimis amounts arising in the ordinary course of business and
claims for returns of merchandise deemed by such customers to be unsalable or
defective), offset, defense, counterclaim or contra.

                  (f) The Intangibles are owned exclusively by Borrower and are
not subject to any claim of infringement or improper use.

                  (g) The Initial Budget is an accurate good faith estimate of
the anticipated revenue and expenses of the Borrower for the Initial Period.


         SECTION 4.  COVENANTS OF THE BORROWER.
                     -------------------------

                  (a) The Borrower will defend the Collateral against all claims
and demands of all persons at any time claiming the same or any interest
therein. The Borrower agrees to comply with the requirements of all state and
federal laws in order to grant to the Lender valid and perfected first priority
security interests in the Collateral. The Lender is hereby authorized by the
Borrower to file any financing statements or other notices covering the
Collateral whether or not the Borrower's signatures appear thereon. The Borrower
will not permit any notice of any lien with respect to the Collateral or any
portion thereof to exist or be on file in any public offices or any other
person, which is not removed or discharged within thirty (30) days.

                  (b) The Borrower will not (I) change the location of its chief
executive office and principal place of business or establish any place of
business, (ii) move or permit movement of the Collateral from the locations
specified in Section 3(b) (except inventory in transit from one such location to
another such location) or (iii) voluntarily or involuntarily change its identity
or corporate structure, unless in each case the Borrower shall have given the
Lender 30 days prior written notice thereof and shall have in advance executed
and caused to be filed and/or delivered to the Agent any financing statements or
other documents (including, without limitation, collateral access agreements)


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<PAGE>

required by the Lender in accordance with Section 4(c) hereof, all in form and
substance satisfactory to the Lender.

                  (c) The Borrower will, promptly upon request by the Lender,
execute and deliver or use its best efforts to procure any document (including,
without limitation, collateral access agreements), give any notices, execute and
file any financing statements, mortgages or other documents, all in form and
substance satisfactory to the Lender, mark any chattel paper, deliver any
chattel paper or instruments to the Lender and take any other actions that are
necessary or, in the opinion of Lender, desirable to perfect or continue the
perfection and the first priority of the Lender's security interest in the
Collateral, to protect the Collateral against the rights, claims, or interests
of third persons or to effect the purposes of this Security Agreement. The
Borrower will pay all costs incurred in connection with any of the foregoing.

                  (d) Without the prior written consent of the Lender, the
Borrower will not in any way hypothecate or create or permit to exist any lien,
security interest, charge or encumbrance on or other interest in the Collateral,
and the Borrower will not sell, transfer, lease, assign, pledge, collaterally
assign, exchange or otherwise dispose of the Collateral other than the
disposition of obsolete and/or worn-out equipment that is replaced by equipment
of at least equivalent value and function, or otherwise in connection with the
normal operations of its business. If the proceeds of any such sale are notes,
instruments, documents of title, letters of credit or chattel paper, such
proceeds shall be promptly delivered to the Lender, to be held as Collateral
hereunder. If the Collateral, or any part thereof, is sold, transferred,
assigned, exchanged, or otherwise disposed of in violation of these provisions,
the security interests of the Lender shall continue in such Collateral or part
thereof notwithstanding such sale, transfer, assignment, exchange or other
disposition, and the Borrower will hold the proceeds thereof in a separate
account for the benefit of the Lender. Following such a sale, the Borrower will,
in accordance with the Credit Agreement, transfer such proceeds to the Lender in
kind.

                  (e) The Borrower will not enter into any contractual
obligations which may restrict or inhibit the Lender's rights or ability to sell
or otherwise dispose of the Collateral or any part thereof after the occurrence
and during the continuance of an Event of Default.

                  (f) Upon the occurrence and during the continuance of an Event
of Default, the Lender shall have the right at any time to make any payments and
do any other acts the Lender may deem necessary to protect their security
interests in the Collateral, including, without limitation, the rights to pay,
purchase, contest or compromise any encumbrance, charge or Lien which, in the
judgment of the Lender, appears to be prior to or superior to the security
interests granted hereunder, and appear in and defend any action or proceeding
purporting to affect its security interests in, and/or the value of, the
Collateral. The Borrower hereby agrees to reimburse the Lender for all payments
made and expenses incurred under this Security Agreement including fees,
expenses and disbursements of attorneys and paralegals (including the allocated
costs of inside counsel) acting for the Lender, including any of the foregoing
payments under or acts taken to protect its security interests in the
Collateral, which amounts shall be secured under this Security Agreement, and

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<PAGE>

agrees it shall be bound by any payment made or act taken by the Lender
hereunder absent Lender's gross negligence or willful misconduct. The Lender
shall have no obligation to make any of the foregoing payments or perform any of
the foregoing acts.

                  (g) The Borrower shall promptly (but in no event later than
five (5) Business Days) after its receipt thereof, offer to deliver to the
Lender any documents or certificates of title issued with respect to any
property included in the Collateral, and any promissory notes, letters of credit
or instruments related to or otherwise in connection with any property included
in the Collateral, which in any such case came into the possession of the
Borrower, or shall cause the issuer thereof to deliver any of the same directly
to the Lender, in each case with any necessary endorsements in favor of the
Lender.

                  (h) In furtherance of the continuing assignment and security
interest in the Accounts of the Borrower granted pursuant to this Security
Agreement, upon the creation of Accounts and demand of the Lender, the Borrower
will execute and deliver to the Lender in such form and manner as the Lender may
reasonably require, solely for its convenience in maintaining records of
Collateral, such confirmatory schedules of Accounts, and other appropriate
reports (including, without limitation, valuations and appraisals) designating,
identifying and describing the Accounts as the Lender may require. In addition,
upon the Lender's reasonable request, the Borrower shall make available to the
Lender copies of agreements with, or purchase orders from, the customers of the
Borrower and copies of invoices to customers, proof of shipment or delivery and
such other documentation and information relating to said Accounts and other
Collateral as the Lender may require.

                  (I) The Borrower may and will, consistent with prior business
practices, enforce and collect all amounts owing on the Accounts, for the
benefit of the Lender, such privilege shall terminate automatically, however,
upon the occurrence of an Event of Default which has not been waived by the
Lender. Upon an Event of Default, any checks, cash, notes or other instruments
or property received by the Borrower with respect to any Accounts shall be held
by the Borrower in trust for the benefit of the Lender, separate from the
Borrower's own property and funds, and immediately (I) deposited as directed by
Lender, or (ii) if such property is not suitable for deposit, turned over to the
Lender, without proper assignments or endorsements. No checks, drafts or other
instruments received by the Lender shall constitute final payment unless and
until such instruments have actually been collected, and the Lender shall
promptly make presentment for payment.

                  (j) The Borrower agrees to promptly notify the Lender in
writing of any matters materially and adversely affecting the Borrower's
business or the value, enforceability or collectibility of any of the
Collateral.

                  (k) The Borrower will at all times keep the Collateral insured
against all insurable hazards in amounts equal to the full insurable value of
the Collateral. Such insurance shall be in such companies as may be acceptable
to Lender, with provisions satisfactory to Lender for payment of all losses
thereunder to Lender as its interests may appear. If required by Lender,
Borrower shall deposit the policies with Lender. Any money received by Lender

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<PAGE>

under said policies may be applied to the payment of the Loans, whether or not
due and payable, or at Lender's option may be delivered by Lender to Borrower
for the purpose of repairing or restoring the Collateral. Borrower hereby
assigns to Lender all right to receive proceeds of insurance not exceeding the
aggregate amount of the Loans.

                  (l) The Borrower shall, at the Borrower's own expense, keep
the Equipment in good working order, repair, and operating condition, subject to
normal wear and tear. Borrower will pay and discharge all taxes, levies, and
other impositions levied thereon as well as the cost of repairs to or
maintenance of same, and will not permit anything to be done that may impair the
value of any such Collateral.

                  (m) The Borrower will not allow the Collateral to be attached
to real estate in such a manner as to become a fixture or a part of any real
estate (other than any real estate on which Lender have a first and prior
perfected fixture filing).

                  (n) The Borrower shall (I) use, store and maintain the
Inventory and the Equipment with all reasonable care and caution which is
consistent with good business practice, and (ii) use the Inventory and Equipment
for lawful purposes only and in conformity with applicable laws, ordinances and
regulations.

                  (o) The Borrower agrees to maintain books and records
pertaining to the Collateral in such detail, form and scope as is consistent
with good business practice, and agrees that such books and records will reflect
the Lender's interest in its Accounts. The Borrower agrees that the Lender or
its agents may enter upon the premises of the Borrower at any time and from time
to time, during normal business hours and upon reasonable notice under the
circumstances, and at any time at all on and after the occurrence of a Default
which continues beyond the expiration of any grace or cure period applicable
thereto, and which has not otherwise been waived by the Lender, for the purposes
of (I) inspecting and verifying the Collateral, (ii) inspecting and/or copying
any and all records pertaining thereto, and (iii) discussing the affairs,
finances and business of the Borrower with any officers, employees and directors
of the Borrower or with the auditors of Borrower.

                  (p) The Borrower agrees to execute and deliver to the Lender,
from time to time, solely for the Lender's convenience in maintaining a record
of the Collateral, such written statements and schedules as the Lender may
require, including all financial and other reports the Lender may from time to
time request. The Borrower's failure, however, to promptly give the Lender such
statements or schedules shall not affect, diminish, modify or otherwise limit
the Lender's security interests in the Collateral.

         SECTION 5.  REMEDIES UPON AN EVENT OF DEFAULT.
                     ---------------------------------

         For purposes of this Security Agreement and the related Note an "Event
of Default" shall include all of the following:

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<PAGE>

                  (I) The failure to pay timely any monetary obligation of the
Borrower owing to the Lender (including the obligations represented by the
Note);

                  (ii) The filing of any bankruptcy petition or pursuit of any
other relief from creditors through any formal proceeding;

                  (iii) The failure to timely report any material event
adversely affecting the business, franchise or financial condition of the
Borrower;

                  (iv) The failure to timely satisfy any of the Obligations;

                  (v) The breach of or failure to fully perform any provision of
this Security Agreement, the Note or any document or instrument entered in
connection with the granting, attachment or perfection of the interest in the
Collateral created hereby;

                  (vi) Any material variance from any quarterly projected
revenue or expense item represented in the forecasted financial information
provided to Lender in connection with any request for an advance (any variance
of greater than (a) 20 percent from projected revenues; (b) 15 percent from
projected expenses; or (c) 25 percent from projected cash flow shall be deemed
material); or

                  (vii) The default in any other obligation of any kind or
character of the Borrower to the Lender not cured to Lender's reasonable
satisfaction within five (5) days of default.

         Upon the occurrence and during the continuance of an Event of Default,
the Lender may, in addition to all other rights and remedies available under
applicable law, without notice to or demand upon the Borrower, do any one or
more of the following:

                  (a) Exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code, specifically including, without
limitation, the right to possession of the Collateral and to recover the fees
and expenses incurred by the Lender in the enforcement of this Security
Agreement or in connection with the Borrower's redemption of the Collateral,
including reasonable fees, expenses and the disbursements of attorneys and
paralegals (including the allocated costs of inside counsel);

                  (b) Require the Borrower to assemble the Collateral or any
part thereof and make it available at one or more places as the Lender may
designate and to deliver possession of the Collateral or any part thereof to the
Lender, who shall have full right to enter upon any or all of the Borrower's
premises and property to exercise the Lender's rights hereunder and to notify
all account holders of Lender's superior entitlement to the Collateral;

                  (c) Use, manage, operate and control the Collateral and the
Borrower's business and property to preserve the Collateral or its value,
including, without limitation, the rights to take possession of all of the
Collateral, to exclude any third parties, whether or not claiming under the


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Borrower, from the Borrower's premises and property, to complete any unfinished
Inventory, to make repairs, replacements, alterations, additions and
improvements to the Collateral, and to dispose of all or any portion of the
Collateral in the ordinary course of the Borrower's business;

                  (d) Use, in connection with any assembly, use or disposition
of the Collateral, any intellectual property, Intangibles or other technical
knowledge or process used or utilized from time to time by the Borrower;

                  (e) Enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent the Lender
from pursuing any other or further remedy which it may have, and any
repossession or retaking or sale of the Collateral pursuant to the terms hereof
shall not operate to release the Borrower from its obligations hereunder;

                  (f) In connection with any public or private sale under the
applicable Uniform Commercial Code, the Lender shall give the Borrower at least
ten days' prior written notice of the time and place of any public sale of the
Collateral or of the time after which any private sale or other intended
disposition thereof may be made, which shall be deemed to be reasonable notice
of such sale or other disposition. Such notice may be given to the Borrower in
accordance with the provisions of Section 6.1 hereof;

                  (g) Proceed by an action or actions at law or in equity, or
without such action if permitted by applicable law, to foreclose this Security
Agreement and sell the Collateral, or any portion thereof, pursuant to a
judgment or decree of a court or courts of competent jurisdiction or without
such order if permitted by applicable law; and

                  (h) If the Lender recovers possession of all or any part of
the Collateral pursuant to a writ of possession or other judicial process,
whether prejudgment or otherwise, the Lender may thereafter retain, sell or
otherwise dispose of such Collateral in accordance with this Security Agreement
or the applicable Uniform Commercial code, and following such retention, sale or
other disposition, the Lender may voluntarily dismiss without prejudice the
judicial action in which such writ of possession or other judicial process was
issued. The Borrower hereby consents to the voluntary dismissal by the Lender of
such judicial action, and the Borrower further consents to the exoneration of
any bond that the Lender file in such action.

         SECTION 6.  MISCELLANEOUS PROVISIONS.
                     ------------------------

                  SECTION 6.1. Notices. All notices, approvals, consents or
other communications required or desired to be given hereunder shall be
delivered to each of the parties hereto at their respective addresses set forth
beneath their signatures below. Such notices shall be effective (I) when
delivered, if personally delivered, or (ii) two days after deposit in the United
States mail, certified mail, return receipt requested.

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<PAGE>

                  SECTION 6.2. Headings. The headings in this Security Agreement
are for purposes of reference only and shall not affect the meaning or
construction of any provision of this Security Agreement.

                  SECTION 6.3. Severability. The provisions of this Security
Agreement are severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner affect such
clause or provision in any other jurisdiction or any other clause or provision
of this Security Agreement in any jurisdiction.

                  SECTION 6.4. Amendments, Waivers and Consents. Any amendment
or waiver of any provision of this Security Agreement and any consent to any
departure by the Borrower from any provision of this Security Agreement shall be
effective only if made or given in writing.

                  SECTION 6.5. Interpretation of Agreement. Time is of the
essence in each provision of this Security Agreement of which time is an
element. All terms not defined herein shall have the meaning set forth in the
applicable Uniform Commercial Code, except where the context otherwise requires.
Acceptance of or acquiescence in a course of performance rendered under this
Security Agreement shall not be relevant in determining the meaning of this
Security Agreement even though the accepting or acquiescing party had knowledge
of the nature of the performance and opportunity for objection.

                  SECTION 6.6. Continuing Security Interest; Transfer of Notes.
This Security Agreement shall create a continuing security interest in the
Collateral and shall (I) remain in full force and effect until payment in full
of the Obligations, (ii) be binding upon the Borrower, its successors and
assigns, and (iii) inure, together with the rights and remedies of the Lender
hereunder, to the benefit of the Lender and its respective successors,
transferees and assigns. Without limiting the generality of clause (iii) above,
the Lender may assign or otherwise transfer any Note or other evidence of the
Obligations held by it to any other person, and such other person shall
thereupon become vested with all the benefits in respect thereof granted to the
Lender herein or otherwise.

                  SECTION 6.7. Reinstatement. To the extent permitted by law,
this Security Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any amount received by the Lender in respect of the
Obligations is rescinded or must otherwise be restored or returned by the Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for the Borrower or any substantial part of its
assets, or otherwise, all as though such payments had not been made.

                  SECTION 6.8. Survival of Provisions. All representations,
warranties and covenants of the Borrower contained herein shall survive the
execution and delivery of this Security Agreement, and shall terminate only upon
the full and final payment and performance by the Borrower of the Obligations
secured hereby.

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<PAGE>

                  SECTION 6.9. Setoff. The Lender shall have the right of setoff
dollar for dollar against any amount owing by Lender to Borrower amounts
necessary to pay all or any part of the Obligations. The setoff right is in
addition to all other rights and remedies set forth herein.

                  SECTION 6.10.  Power of Attorney.

                  (a) The Borrower hereby irrevocably authorizes and appoints
Schuchert, or any Person or agent Schuchert may designate, as the Borrower's
attorney-in-fact, at the Borrower's cost and expense, to exercise, subject to
the limitations set forth below, all of the following powers, which being
coupled with an interest, shall be irrevocable until all of the Obligations have
been paid and satisfied in full:

                  (1) To receive, take, endorse, sign, assign and deliver, all
         in the name of the Lender or the Borrower, any and all checks, notes,
         drafts, and other documents or instruments relating to the Collateral;

                  (2) To request, following notice to Debtor, at any time from
         customers indebted on Accounts, verification of information concerning
         the Accounts and the amounts owing thereon;

                  (3) Upon the occurrence and during the continuance of a
         Default or an Event of Default, to receive, open and dispose of all
         mail addressed to the Borrower and to notify postal authorities to
         change the address for delivery thereof to such address as the Lender
         may designate;

                  (4) Upon the occurrence and during the continuance of a
         Default or an Event of Default, to give customers indebted on Accounts
         notice of the Lender's interest therein, and/or to instruct such
         customers to make payment directly to the Lender for the Borrower's
         account; and

                                       12

<PAGE>

                  (5) Upon the occurrence and during the continuance of a
         Default or an Event of Default, to take or bring, in the name of the
         Lender or the Borrower, all steps, actions, suits or proceedings deemed
         by the Lender necessary or desirable to enforce or effect collection of
         the Accounts.

                  (b) In addition to all of the powers granted to Schuchert
pursuant to subsection (a) above, the Borrower hereby appoints and constitutes
Schuchert as the Borrower's attorney-in-fact to exercise all of the following
powers upon and at any time after the occurrence and during the continuance of
an Event of Default: (I) collection of Accounts or proceeds of any Collateral,
(ii) conveyance of any item of Collateral to any purchaser thereof, (iii) giving
of any notices or recording any Liens under Section 4(c) hereof, and (iv) making
of any payments or taking any acts under Section 4(f) hereof. Schuchert's
authority hereunder shall include, without limitation, the authority to endorse
and negotiate, for the Lender' own account, any checks or instruments in the
name of the Borrower, execute and give receipt for any certificate of ownership
or any document, transfer title to any item of Collateral, send verifications of
Accounts to any customer, sign the Borrower's name on all financing statements
or any other documents deemed necessary or appropriate to preserve, protect or
perfect the security interest in the Collateral and to file the same, prepare,
file and sign the Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with any Account and
prepare, file and sign the Borrower's name on a proof of claim in bankruptcy or
similar document against any customer of the Borrower, and to take any other
actions arising from or incident to the powers granted to the Lender in this
Security Agreement. This power of attorney is coupled with an interest and is
irrevocable by the Borrower, The Borrower hereby ratifies all that Schuchert
shall lawfully do or cause to be done by virtue of this Section 6.10.

                  SECTION 6.11. Authority of the Lender; Indemnification. The
Lender shall have and be entitled to exercise all powers hereunder which are
specifically granted to the Lender by the terms hereof, together with such
powers as are incident thereto. The Lender may perform any of its duties
hereunder or in connection with the Collateral by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the advice
of counsel concerning all such matters. Neither the Lender nor any director,
officer, employee, attorney or agent of the Lender shall be liable to the
Borrower for any action taken or omitted to be taken by it or them hereunder,
except for its or their own gross negligence or willful misconduct, nor shall
the Lender be responsible for the validity, effectiveness or sufficiency of this
Security Agreement or of any document or security furnished pursuant hereto. The
Lender and its directors, officers, employees, attorneys and agents shall be
entitled to rely on any communication, instrument or document reasonably
believed by it or them to be genuine and correct and to have been signed or sent
by the proper person or persons. The Borrower agrees to indemnify and hold
harmless the Lender and any director, officer, employee, attorney or agent of
the Lender from and against any and all costs, expenses (including reasonable
fees, expenses and agent of the Lender from and against any and all costs,
expenses (including reasonable fees, expenses and disbursement of attorneys and
paralegals (including, without duplication, charges of inside counsel)), claims
and liabilities incurred by the Lender or such person hereunder, unless such
claim or liability shall be due to willful misconduct or gross negligence on the
part of the Lender or such persons.

                                       13
<PAGE>

                  SECTION 6.12. Release; Termination of Agreement. Subject to
the provisions of Section 6.7 hereof, this Security Agreement shall terminate
upon full and final payment and performance of all the Obligations. At such
time, the Lender shall, at the request and expense of the Borrower, reassign and
redeliver to the Borrower all of the Collateral hereunder which has not been
sold, disposed of, retained or applied by the Lender in accordance with the
terms hereof. Such reassignment and redelivery shall be without warranty by or
recourse to the Lender, except as to the absence of any prior assignments by the
Lender of its interest in the Collateral, and shall be at the expense of the
Borrower.

                  SECTION 6.13. Counterparts. This Security Agreement may be
executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which, when so executed and delivered, shall be
an original, but all of which shall together constitute one and the same
agreement.

                  SECTION 6.14. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND ANY
DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS SECURITY AGREEMENT OR ANY OF
THE OTHER CREDIT DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS
OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF WYOMING.

                  SECTION 6.15. SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG
THE BORROWER AND THE LENDER (OR THE LENDER ACTING ON THEIR BEHALF), WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE
AND FEDERAL COURTS LOCATED IN SHERIDAN COUNTY, WYOMING, AND THE COURTS TO WHICH
AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE LENDER SHALL HAVE
THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
BORROWER OR ITS PROPERTY IN ANY LOCATION REASONABLY SELECTED BY THE LENDER IN
GOOD FAITH TO ENABLE THE LENDER TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE LENDER. THE BORROWER WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE LENDER HAS
COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.


                                       14
<PAGE>

                  SECTION 6.16. SERVICE OF PROCESS. THE BORROWER HEREBY
IRREVOCABLY AGREES THAT SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY
BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS
ADDRESS SET FORTH BENEATH ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE LENDER SHALL HAVE BEEN NOTIFIED PURSUANT THERETO.

                  SECTION 6.17. JURY TRIAL. THE BORROWER AND THE LENDER EACH
HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES WILL BE
RESOLVED IN A BENCH TRIAL.

                  SECTION 6.18. LIMITATION OF LIABILITY. THE LENDER SHALL NOT
HAVE ANY LIABILITY TO THE BORROWER (WHETHER SOUNDING IN TORT, CONTRACT, OR
OTHERWISE) FOR LOSSES SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT
OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY
THIS SECURITY AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR
COURT ORDER BINDING ON THE LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILFUL MISCONDUCT OR SUCH LOSSES OR
DAMAGES ARE THE RESULT OF BREACH OF CONTRACT CLAIMS SUCCESSFULLY PROSECUTED BY
THE BORROWER.

         IN WITNESS WHEREOF, the undersigned has caused this Security Agreement
to be duly executed and delivered as of the day and year first above written.

                             BORROWER
                             --------

                             FOUNTAIN PHARMACEUTICALS, INC., a 
                             Delaware corporation


                             By: /s/ Gerald T. Simmons
                                 ----------------------------------------------
                                      Name:  Gerald T. Simmons
                                      Title:    President/CEO
                             Address for Notice and Principal Place of Business:
                                      7279 Bryan Dairy Road
                                      Largo, Florida 33777
  

                                       15

<PAGE>


         By its acceptance hereof, as of the day and year first above written,
the Lender agrees to be bound by the provisions hereof.

                             LENDER
                             ------


                                      /s/ Joseph Schuchert
                                     -------------------------------------------
                                      JOSEPH SCHUCHERT

                                      Address for Notice:
                                            c/o Joseph S. Schuchert
                                            1949 Sugarland Drive, Suite 250
                                            Sheridan, Wyoming 82801


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