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                                                                   EXHIBIT 10.3



Date:     January 7, 1998

To:       Linda Paradiso, DVM

From:     John Longenecker

Subject:  Confidential Separation Agreement



Dear Linda:

Consistent with our discussions concerning your voluntary termination of
employment and separation from DepoTech (the "Company") this letter will
constitute the Confidential Separation Agreement (the "Agreement") setting forth
the terms of your employment and separation of employment from the Company. By
signing this Agreement, you will be agreeing to these terms. It is important
that you understand clearly both what your benefits are and what is expected of
you by the Company.

1.   Transition Period: Commencing on January 7, 1998 and continuing until
     January 30, 1998 (hereinafter referred to as the "transition period"), you
     and the Company will be on notice of the discontinuance of your employment
     with the Company. During this transition period, you shall remain a regular
     full-time employee of the Company. The parties may mutually agree in
     writing to extend this transition period, but neither is under any
     obligation to do so (hereinafter referred to as the "extended transition
     period"). Any written extension of the transition period will effectively
     change the date on which employment with the company will terminate.

2.   Duties: You will make yourself available to the Company for the purpose of
     transitioning your work to other employees and to answer any questions
     regarding matters assigned to you before the effective date of Separation,
     as defined below.

3.   Salary: During the transition period the Company agrees to pay you your
     full monthly base salary of $14,583.33 less applicable deductions for taxes
     and health and other benefits. All salary payments during this transition
     period shall be made on or about the time of the Company's normal
     bi-monthly pay cycle.

4.   Benefits: During the transition period the Company will continue your
     current health benefits, Long Term Disability, Life Insurance, and
     participation in the Company's 401(k) and ESPP plans.

5.   Expiration of Transition Period/Separation of Employment: Your employment
     with the Company will terminate on January 30, 1998, unless sooner
     terminated pursuant to paragraph 6, the "Termination", or extended pursuant
     to paragraph 1, the "Transition Period". As part of your Separation, the
     Company agrees to provide you with the following additional compensation
     and benefits package:

          a.   Severance Payment: The Company agrees to provide a lump sum
               severance payment equal to six (6) months base salary ($87,500),
               less applicable taxes, on the date the transition period ends, as
               defined in paragraph 5, above.



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Linda Paradiso                                                                 2
03/24/98


          b.   Accelerated Stock Option Grant Vesting: The Company agrees to
               accelerate the vesting of all remaining unvested Stock Option
               Grants awarded in these quantities and on the following dates:

                 ISO GRANT        2,050 SHARES      GRANTED 02-26-97
                 ISO GRANT        8,000 SHARES      GRANTED 04-28-97

               The exercise period for all vested shares will be 90 days
               following the date the transition period ends.

          c.   Management Incentive Bonus: You will be eligible for 1997
               Management Incentive Bonus consideration to be paid out in 1998,
               based on the combination of your performance and that of the
               Company during the 1997 fiscal year. The Management Incentive
               Bonus target for 1997 is twenty percent (20%) of base salary,
               however it can be as little as 0% or as high as 33% of base
               salary depending on overall company and individual performance.
               This bonus shall be no less than the average bonus granted to all
               other Vice Presidents.

          d.   Outplacement: The Company further agrees to provide you with up
               to one hundred eighty (180) days job search
               preparation/assistance with the firm of Lee Hecht Harrison
               following the date the transition period ends.

          e.   Extended Benefits: You and your eligible dependents will be
               entitled to continue your medical coverage, pursuant to COBRA,
               for an additional 18 months from the date the transition period
               ends, at your own expense. It is understood that the Company
               reserves the right to change health plans at any time. All other
               employee benefits, including Long Term Disability, Life
               Insurance, 401(k) and ESPP plan participation will expire on the
               date the transition period ends.

          f.   FTO Balance: The Company further agrees to pay you all earned but
               unused FTO pay as of the date the transition period ends.

6.   Termination: Either party may terminate your employment during the
     transition period or any extended transition period, under the following
     terms and conditions:

          a.   You may terminate your employment with the Company during the
               transition period, for any reason, upon five (5) days written
               notice to the Company. Upon such a termination, your employment
               will be terminated and all compensation and benefits pursuant to
               paragraphs 3 and 4 will end. In addition, you will not be
               entitled to any compensation or benefits described in paragraph 5
               subsections (a-d).

          b.   The Company reserves the right to terminate your employment
               during the transition period or any extended transition period
               for cause. Cause for termination includes: (a) a material breach
               of the terms of this Agreement; (b ) major infractions of the
               Company's standards of conduct as set forth in Company policies;
               or (c) your acceptance of employment with another entity or
               person such that you can no longer devote your full energies to
               employment with the Company. Upon termination for cause, all
               compensation and benefits pursuant to paragraphs 3 and 4 will
               end.

               In addition, you will not be entitled to any compensation or
               benefits described in paragraph 5 subsections (a -d).



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Linda Paradiso                                                                 3
03/24/98


7.   Confidentiality: You agree that as a specific condition to the performance
     of this Agreement by the Company, you will not disclose for any purpose,
     the existence of this Agreement, the terms of this Agreement or the
     negotiations leading up to this Agreement to any person, except to your
     immediate family or as may be necessary for purposes of securing legal or
     tax advice or as otherwise may be required by law.

8.   Inventions/Confidential Information: You agree that the Employee
     Proprietary Information and Inventions Agreement signed by you shall remain
     in full force and effect following the date of separation. In addition, we
     wish to remind you of your obligations regarding the confidentiality of the
     Company's commercial and technical proprietary information. You understand
     and agree that all confidential and proprietary information that you may
     have received during your employment or may receive during the transition
     period with the Company shall remain strictly confidential and held by you
     in confidence.

9.   Goodwill and Compliance with Company Policies: You agree that you shall not
     make, encourage or otherwise cause to be made any negative or disparaging
     comments or statements (whether verbal or written) about the Company or
     take any action which will place the Company in a bad light or false light.
     You further agree that during the transition period you will abide by and
     comply with the policies and procedures of the Company. The Company further
     agrees that it will not hinder Linda J. Paradiso in her efforts to obtain
     alternative employment by encouraging or otherwise causing to be made any
     negative or disparaging comments or statements (whether verbal or written)
     regarding her employment with the Company. Nor will the Company place Linda
     J. Paradiso in a bad light or false light during or after the transition
     period.

10.  No Admission: This severance package or Agreement shall not be construed or
     used as an admission of liability or wrongdoing by either you or the
     Company.

11.  General Release: In consideration of the above promises and payments to be
     made to you, you fully and forever release and discharge the Company and
     each of its current, former and future parents, subsidiaries, related
     entities, employee benefit plans and their fiduciaries, predecessors,
     successors, officers, directors, shareholders, agents, employees and
     assigns (collectively, "Releasees"), with respect to any and all claims,
     liabilities and causes of action, of every nature, kind and description, in
     law, equity or otherwise, which have arisen, occurred or existed at any
     time prior to the signing of this Agreement, including, without limitation,
     any and all claims, liabilities and causes of action arising out of or
     relating to your employment with the Company or the cessation of that
     employment.

12.  Knowing Waiver of Employment - Related Claims: You acknowledge that you
     understand and agree that you are waiving any and all rights you may have
     had or now have, to pursue against any of the Releasees any and all
     remedies available to you under any employment - related causes of action,
     including without limitation, claims of wrongful discharge, breach of
     contract, breach of the covenant of good faith and fair dealing, fraud,
     violation of public policy, defamation, discrimination, personal injury,
     physical injury, emotional distress, claims under Title VII of the Civil
     Rights Act of 1964, as amended, the Age Discrimination in employment Act,
     the Americans With Disabilities Act, the Federal Rehabilitation Act, the
     Family and Medical Leave Act, the California Fair Employment and Housing
     Act, the California Family Rights Act, the Equal Pay Act of 1963, the
     provisions of the California Labor Code and any other federal, state or
     local laws and regulations relating to employment, conditions of employment
     (including wage and hour lows) and/or employment discrimination. You
     specifically acknowledge and agree that you waive any claim against the
     Company arising out of the termination of your employment with the Company
     which the parties have agreed will become effective on or before January
     30, 1998.



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Linda Paradiso                                                                 4
03/24/98



13.  Waiver of Civil Code Section 1542: You expressly waive any and all rights
     and benefits conferred upon you by Section 1542 of the Civil Code of the
     State of California, which states as follows:

          "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
          NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
          RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
          SETTLEMENT WITH THE DEBTOR."

     You expressly agree and understand that the Release given by you pursuant
     to this Agreement applies to all unknown, unsuspected and unanticipated
     claims, liabilities and causes of action which you may have against the
     Company or any of the other Releasees, as of the date this agreement is
     executed.

14.  Severability of Release Provisions: You agree that if any provision of the
     release given by you under this Agreement is found to be unenforceable, it
     will not affect the enforceability of the remaining provisions and the
     courts may enforce all remaining provisions to the extent permitted by law.

15.  Promise to Refrain from Suit or Administrative Action: You promise and
     agree that you will never sue the Company or any of the other Releasees, or
     otherwise institute or participate in any legal or administrative
     proceedings against the Company or any of the other Releasees, with respect
     to any claim covered by the release provisions of this Agreement, including
     but not limited to claims arising out of your employment with Company or
     the cessation of that employment, unless you are compelled by legal process
     to do so.

16.  Indemnification: Not withstanding Linda Paradiso's departure from the
     Company, in the event that a claim is made against Linda Paradiso in
     connection with her performance of her job duties while employed by
     DepoTech Corporation, the Company will indemnify Linda Paradiso under the
     conditions and to the extent required by California Labor Code Section
     2802. Nothing in this Agreement shall constitute a waiver of any objections
     or defenses available to the Company, which are expressly reserved.

17.  Entire Understanding: This Agreement contains the entire understanding
     between you and the Company relating to your Separation and severance
     package, superseding all prior understandings and agreements between the
     parties, if any.

18.  Arbitration: In the event of a dispute over the performance, interpretation
     or validity of this Agreement, the parties agree to submit any and all
     disputes relating to this Agreement to binding arbitration before
     JAMS/Endispute, Southern California. Any arbitration award shall be final
     and binding on the parties and may be entered in any court having
     jurisdiction.

19.  Applicable Law: This Agreement will be governed by California Law.

Linda, you are entitled by law to review this Agreement for a period of 21 days.
The Company encourages you to use this opportunity to review the Agreement with
an attorney. Should you decide not to use the full 21 days, then you knowingly
and voluntarily waive any claims that you were not in fact given 21 days to
consult an attorney and/or review the Agreement.

In addition, for a period of seven (7) days following your execution of this
Separation Agreement, you may revoke this Separation Agreement, and the
Separation Agreement shall not become effective or enforceable until the
revocation period has expired. Any revocation within the seven days must be in
writing, addressed to Thomas Swedberg, SPHR at DepoTech Corporation's address.
If you revoke this Separation Agreement, it shall not be affective or
enforceable and you will not receive the benefits described in paragraphs 3, 4
and 5 (a-d).



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Linda Paradiso                                                                 5
03/24/98


If you agree with the foregoing package and release, please sign below. You
agree that you have read and understand this Separation Agreement, and that you
have signed it freely and voluntarily.

Sincerely,

/s/ John P. Longenecker

John P. Longenecker
Senior Vice President and COO



Agreed:

                  /s/ Linda Paradiso                        1/12/98
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                  Linda Paradiso, DVM                         Date