RESEARCH AND DEVELOPMENT SERVICES AGREEMENT

                  AGREEMENT NUMBER CP036763

                  LABOR AND MATERIALS TYPE

Battelle Memorial Institute, through its Columbus Operations (BATTELLE) agrees
to provide to Sanguine Corporation (CLIENT) technical/research services
substantially in accordance with BATTELLE's Proposal No. CP036763, (the
Project) incorporated herein by reference, under the following terms and
conditions:

                    1. ACCEPTANCE AND COMMENCEMENT

BATTELLE's Proposal may be accepted within sixty (60) days from the date of
BATTELLE's signature below. BATTELLE will begin work within thirty (30) days
of receipt of this Agreement executed by CLIENT. The Project period is
estimated as six (6) months from commencement

                              2. PAYMENT

CLIENT agrees to pay BATTELLE's charges for labor services and for other
expenses for performance of the Project, estimated at Three Hundred Thousand
Dollars and No Cents ($300,000.00), without set-off, payable in advance as
follows:

    A.
      Initial payment of Sixty Thousand Dollars and No Cents ($60,000.00), due
    prior to commencement of Project activities.

    B.
      Thereafter in Four (4 ) payments of Sixty Thousand Dollars and No Cents
    ($60,000.00), due within thirty (30) days of presentation of invoice.

CLIENT will not be required to reimburse, and BATTELLE shall not be required
to incur, any charges for performance in excess of the estimate stated above,
unless mutually agreed upon in writing. The balance of the advance payment, if
in excess of One Thousand Dollars and No Cents ($1000.00), shall be refunded
to CLIENT upon termination of the Project. Invoices not paid within thirty
(30) days of the date of invoice shall accrue interest at the rate of two (2)
percent per month, compounded daily.

3. INTELLECTUAL PROPERTY

The terms of ownership of Intellectual Property are provided in the separate
Option Agreement between Client and Battelle.

                      4. NO ENDORSEMENT/LITIGATION

BATTELLE does not endorse products or services. Therefore, CLIENT agrees that
it will not use or imply BATTELLE's name, or use BATTELLE's reports, for
advertising, promotional purposes, raising of capital, recommending
investments, or any way that implies endorsement by BATTELLE, except with
prior written approval of an officer of BATTELLE.

BATTELLE does not undertake Projects for the purposes of litigation or to
assign fault or blame and does not provide expert witness services. Therefore,
CLIENT agrees not to use any Project results in any dispute, litigation, or
other legal action.

In any event, if, at any time, BATTELLE or its employees are required to
respond to any subpoenas, orders for attendance at depositions, hearings or
trials, document requests, or other legal proceedings as a result of or
relating to BATTELLE's work on the Project, CLIENT agrees to reimburse
BATTELLE, in addition to any other amounts payable under this Agreement,
BATTELLE's labor charges, attorney time and/or fees, travel, photocopying and
other miscellaneous expenses.

                       5. LIMITATION OF LIABILITY

BATTELLE will provide a high standard of professional service on a best
efforts basis. However, BATTELLE, as a provider of such services, cannot
guarantee success, thus BATTELLE NUKES NO WARRANTY OR GUARANTEE, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE OR MERCHANTABILITY, FOR ANY REPORT, DESIGN, ITEM, SERVICE OR OTHER
RESULT TO BE DELIVERED UNDER TIHS AGREEMENT.

CLIENT assumes responsibility for its use, misuse, or inability to use the
Project results and in no event shall BATTELLE have any liability for damages,
including but not limited to any indirect, incidental, or consequential
damages, arising from or in connection with this Agreement.

CLIENT agrees to indemnify and hold BATTELLE harmless from any and all
liabilities, suits, claims, demands, and damages, and all costs and expenses
in connection therewith, in any manner relating to this Agreement or its
performance, asserted by third parties from any cause whatsoever, except for
injury or damage occurring during performance of a Task under this Agreement
on BATTELLE-owned premises where fault of CLIENT is not a contributing cause.

                          6. NATURE OF SERVICES

CLIENT agrees that BATTELLE is an independent contractor and specifically
acknowledges that BATTELLE is a service provider, not a manufacturer or
supplier. CLIENT retains all final decision making authority and all
responsibility for the formulation, design, manufacture, assembly, packaging,
marketing and sale of CLIENT's products, including, without limitation,
product labeling, warnings, instructions to users, and for obtaining any
governmental or other pre- or postmarket approvals, certifications,
registrations, licenses, or permits.

                      7. PRODUCT LIABILITY INSURANCE

CLIENT shall maintain adequate product liability insurance coverage in amounts
customary and prudent for a responsible entity in its industry in light of the
nature of its product(s). Such insurance shall specifically cover any CLIENT
products that may be developed in whole or in part based on BATTELLE's work
under this Agreement, and CLIENT shall provide evidence of such insurance upon
request.

                              8. FORCE MAJEURE

Neither CLIENT nor BATTELLE shall be liable in any way for failure to perform
any provision of this Agreement (except payment of monetary obligations) if
such failure is caused by any law, rule, or regulation, or any cause beyond
the control of the party in default.

                             9. EARLY TERMINATION

Either party shall have the right to terminate this Agreement upon thirty (30)
days' written notice for any good-faith basis. In the event of early
termination, BATTELLE agrees to provide CLIENT with all reports, materials, or
other deliverable items available as of the date of the termination, provided
that CLIENT is not in default of its obligations under this Agreement. In any
event, CLIENT agrees to pay all charges incurred or committed by BATTELLE,
including costs of termination, within thirty (30) days of receipt of a final
invoice.

                             10. ENTIRE AGREEMENT

This Agreement, including the Proposal incorporated herein, represents the
entire Agreement of the parties and supersedes any prior discussions or
understandings, whether written or oral, relating to the subject matter
hereof. This Agreement may be modified or amended only by mutual agreement in
writing. No course of dealing, usage of trade, waiver, or non-enforcement
shall be construed to modify or otherwise alter the terms and conditions of
this Agreement. In the event of any conflict or inconsistency between these
terms and conditions and the Proposal, these terms and conditions shall
control.

                              11. APPLICABLE LAW

This Agreement shall be governed and construed in accordance with the laws of
and enforced within the jurisdiction of the State of Ohio.

                       12. MISCELLANEOUS

This Agreement may not be assigned in whole or in part without the prior
written approval of both parties. In any event, however, this Agreement shall
be binding upon, inure to the benefit of, and be enforceable by and against
the successors, assigns and transferees of the parties. If any part of this
Agreement shall be held invalid or unenforceable, such invalidity and
unenforceability shall not affect any other part of this Agreement. Captions
used as headings in this Agreement are for convenience only and are not to be
construed as a substantive part of this Agreement.

              Sanguine Corporation          BATTELLE MEMORIAL INSTITUTE
                                               Columbus Operations

By/s/Thomas C. Drees                        By/s/Christina L. Rotunda
                                            Christina L. Rotunda
Title  Chairman/CEO                         Title     Contracting Officer
Date   June 17, 1998                        Date      May 21, 1998
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<PAGE>
                        Prepared for
                        Dr. Thomas Dress
                        Chairman
                        Sanguine Corporation

                        Preparation and Evaluation of
                        Fluorocarbon- Emulsion for Use as
                        Oxygen-Carrying Blood Substitutes


                        Proposal/Agreement No. CP030763

                        Battelle Polymer Center

                        February 27,1998

                        For more Information regarding this proposal,
                        please contact:

                        Dr. Herman P. Benecke
                        Senior Research Scientist
                        Telephone (614) 424-4457; Facsimile (614) 424-7479

<PAGE>
Proprietary Statement

The Information contained In this proposal is proprietary.  Please do not
circulate to other's not directly responsible for making a decision regarding
this proposal.

<PAGE>

                                   Overview

            Our Proposal                                           2

            Introduction                                           2

            Background                                             2

            The Objective                                          3

            Approach                                               4

                    Figure 1. Project Schedule                     5

            Description of Work                                    4
                    Task 1: Develop Product Criteria               4
                    Task 2: Concept Evaluation and Selection       6
                    Task 3: Synthesis of Candidate Surfactants     7
                    Task 4: Emulsion Development and Testing       8
                    Task 5: Toxicological and Biological Testing   8
                    Task 6: Program Reporting                      9

            Program Management                                     9

            Benefits                                               9

            Intellectual Property Statement                       10


            Risk                                                 11

            Schedule and Cost                                    11
<PAGE>
                                 OUR PROPOSAL

                         Preparation and Evaluation of
                       Fluorocarbon Emulsions for Use as

                       Oxygen-Carrying Blood Substitutes
                       (Proposal/Agreement No. CP03673)

Introduction
A market opportunity exists for a blood substitute that is safe and
efficacious since the world blood transfusion market is expected to rise and
concerns about AIDS have contributed to a rising demand for blood substitutes.
Sanguine has estimated that the blood substitute market will reach $1 billion
in five years and this market will grow $20-$30 billion in 10-15 years.

Blood substitutes are currently categorized as (a) oxygen-carrying emulsified
fluorocarbons, or (b) hemoglobin based; The former approach based on the
fact that fluorocarbons have a very high solubility for oxygen and carbon
dioxide but fluorocarbons must be emulsified since they have negligible
solubility in water or blood. With respect to the letter approach, concerns
have been raised recently regarding the safety, high-manufacturing costs, and
availability of hemoglobin derived products. Thus oxygen-carrying emulsified
fluorocarbon products may represent the preferred approach.

Background
The present day interest in liquid fluorocarbon emulsions as human blood
stream oxygen carriers dates from the discovery in 1965 by Dr. Leland Clark
that rodents could "breathe" for hours submerged in an oxygen-saturated
fluorocarbon liquid.  This startling discovery was based on the chemical and
physiological inertness of fluorocarbon liquids as wall as the extremely high
solubility and diffusibility of oxygen and carbon~dioxide in these materials.
This class of liquids is unique among chemicals due to the fact that they can
rapidly dissolve about fifty volume percent of oxygen and carbon dioxide and
quickly release these gases on demand due to the extremely high gaseous
diffusion rates.

Even though fluorocarbons are very insoluble in water (or blood), it was
quickly recognized that these materials could be used to aid mammalian
breathing if they could be safely dispersed in the bloodstream as emulsions.
Emulsions are stabilized dispersions of water insoluble materials in which the
particle size is 0.1-1.0 microns. Emulsion particles are maintained as stable
dispersions by the presence of small amounts of surfactants. Surfactants are
molecules with at least two discrete and unlike components, one of which is
very soluble in aqueous phase compositions while the other component is
insoluble in aqueous phases but is soluble in non-polar materials such as fats
or fluorocarbons. Surfactant molecules will align themselves at the interface
between two insoluble materials such as water and a fluorocarbon

<PAGE>

liquid. If such mixtures are mechanically broken into small droplets (with a
high shear mixture) in the presence of an appropriate surfactant, the
surfactant molecules will become distributed over the surface of the droplet
with the fluorocarbon soluble end dissolved in the surface of the fluorocarbon
droplet, while the water soluble ends are dissolved in the continuous water
phase to form a dispersed emulsion. This surface layer of oriented surfactants
molecules can also help keep separate emulsion particles from fusing
(coalescing) into larger particles.

Fluosol-DA (developed by Alpha Therapeutics, which later became Green Cross
Corporation of Japan) is an emulsion of perfluorodecalin and is the only blood
substitute, which has been approved by the FDA (on a limited basis). This
product has been used successfully in human blood transfusions. Oxygent is
another emulsified fluorocarbon blood substitute candidate, which is being
developed by Alliance Pharmaceutical and is currently undergoing clinical
trials. However, serious deficiencies exist in both of these products, both of
which employ lecithin as their primary surfactant. Fluosol-DA has a very short
shelf-life which requires that this material be stored frozen, which is a
serious disadvantage of this material.  A major cause of this short shelf-life
is the fact that the non-polar hydrocarbon tails of lecithin have a relatively
low solubility in the perfluorodecalin comprising Fluosol-DA.
In addition, both Fluosol and Oxygent have half-lives in the bloodstream of
only about 4-8 hours which is caused primarily by phagocytosis (engulfing) of
the emulsified fluorocarbon particles by macrophage cells of the Immune
system. These limited half-lives significantly restrict the type surgical
procedures for which these products can be used.

The Objective
The overall~objective of Battelle's involvement in the blood substitute arena
is to develop a technically advanced oxygen-carrying fluorocarbon emulsion
which overcomes the problems associated with the above emulsified blood
fluorocarbon systems.

The recent scientific literature indicates that efficient emulsification of
fluorocarbons requires that the surfactant contain appropriate fluorocarbon
containing functionality.  Whereas the surfactants used in either Fluosol-DA
or Oxygent do not incorporate fluorinated surfactants, Battelle chemists have
developed specialty surfactant concepts which are based on positioning
fluorinated functionality within the surfactant to enhance the attractive
interaction between that component of the suractant and the emulsified
fluorocarbon droplets, potentially allow use of a one package emulsification
system, significantly increase the storage stability of concentrated
emulsified fluorocarbons, and increase the emulsion lifetimes when dispersed
in aqueous media or blood.

Another very important feature of specific Battelle surfactant candidates is
they will contain specific functionality expected to camouflage emulsified
fluorocarbon droplets from the immune system (impart "stealth"
characteristics) and slow the phagocytosis process.  This feature is expected

<PAGE>

to provide increased lifetimes of the emulsified fluorocarbon in the
bloodstream to allow the obvious benefit of prolonged oxygen delivery to the
patient.

The specific objective of this program is to synthesize and purify at least
two and potentially three fluorocarbon surfactants on a relatively fast track
schedule.  These surfactant candidates will undergo appropriate preliminary
physical and toxicological testing to evaluate their potential to prepare
fluorocarbon emulsions as blood substitutes.  With this data in hand, U.S.
Patent applications will be filed for all appropriate surfactant candidates to
establish dates of invention and provide intellectual property protection
provided by patent law.  It is anticipated that filing these patent
applications will be an important factor in focusing Sanguine's efforts in
pursuing a follow-on development program.  (Filing patent applications related
to the performance of this program is considered outside of the scope of this
proposal and will be funded separately.)

It is important to stress that this important program represents the
initiation of the overall process of delivering an FDA approved blood
substitute to the market.  Follow-on work includes continued preparation and
testing of surfactant candidates, pharmacology and exploratory toxicology,
preparation of the "winning" candidate surfactant as well as preparation of
fluorocarbon emulsions with this surfactant under Good Manufacturing Practices
(GMP) regulations, preclinical trials, and clinical trials.  Battelle
previously provided a prospectus to Sanguine (January 17, 1996) in which the
estimated cost at the time to complete the program through preclinical trials
(not including clinical trials) was $5 million.

Approach
The components of the proposed research for this start-up program are
described below.  The time intervals required for each activity are shown in a
Gantt chart shown in Figure 1 (see page 5).

Description of Work

Task 1: Develop Product Criteria
The initial task in this program will be to specify the product criteria which
reflect the specific intended medical uses and required use criteria.
Sanguine and Battelle staff will jointly determine these product criteria to
utilize the significant experience of Sanguine management concerning the
technical and business issues concerning artificial blood.

Following are product criteria which are envisioned to be of prime importance:
thermal stability (including sterilization requirements), Oxygen carrying
capacity, in-vivo half-life, and production costs.  In addition, the identity
of the fluorocarbon to be used as the oxygen carrier needs to be specified.
Other product criteria may be specified during joint Battelle and Sanguine
discussions are also possible.  These issues can be mainly resolved during a
planned program kick-off meeting at Battelle.

<PAGE>

<EXIBIT>

<PAGE>

Task 2: Concept Evaluation and Selection
Under an earlier contract which started in early 1994, Battelle scientists
generated and delivered to Sanguine specific intellectual property concerning
new and improved surfactant concepts for fluorocarbon emulsification.  In late
1995, long after completion of this original program with Sanguine, Battelle
information retrieval specialists (at Battelle's expense) performed up-to-date
computerized literature reviews on this topic.  Based on this input and
Battelle chemists' personal review of the literature at that time, new classes
of surfactant candidates were conceived for the emulsification of
fluorocarbons as oxygen-carrying blood substitutes.  Battelle surfactant
concepts which embody these concepts are described in detail "Intellectual
Property Disclosure Records" (IPDRs) on file in Battelle's legal department.

Even though an extensive literature review and intensive surfactant concept
generation was performed in late 1995, an up-to-date extensive review of the
literature on this topic must be performed at the start of this project.  This
information will allow Battelle to determine if the concepts already described
in IPDRs infringe on previously published work or whether we can cleanly
proceed to develop previously described concepts.  If necessary, a Battelle
patent lawyer will be retained to provide internal legal opinions on earlier
published work, which presents infringement questions.  Of course, we cannot
guarantee that the surfactant concepts will be patentable or will not infringe
on earlier work, but we intend to use our best professional judgement to focus
on approaches that are unencumbered.  Sanguine should retain their own legal
advice to determine the probability that the individual concepts represent
unencumbered inventions and takes full responsibility for these decisions.
The literature review may also uncover information, which triggers further
concept generation.  We believe that a prior art review phase is one of the
most important activities in this program since we wish to develop surfactant
concepts that do not infringe upon the prior art and thus enhance the
probability of patenting these developments.

Battelle chemists will apply their considerable experience in emulsion
technology to the evaluation and preliminary rank ordering of all classes of
surfactants, which are described in Battelle IPDRs and are not encumbered by
the prior art.  To the extent possible, surfactant structures will incorporate
the substantive improvements, which are described in Battelle IPDRs.  These
anticipated structural features include use of strategically located fluorine
functionality to impart "stealth" properties to these candidates.

We wish to mention that many flurosurfactants are toxic and (or) cause
hemolysis, or rupture of red blood cells, whereas other flurosurfactants are
essentially non-toxic and non-hemolytic.  Tactics to avid these undesirable
properties have been and will continue to be incorporated in the design of
Battelle's fluorosurfactants.  In general it has been shown that incorporating
fragments of naturally occurring materials (such as sugars) in
fluorosurfactants result in relatively non-toxic fluorosurfactants.  Another
approach to minimize or avoid toxicity is to use molecular components in
candidate fluorosurfactants (when possible) which have been previously shown

<PAGE>

to be non-toxic and non-hemolytic in the vascular system in other
applications.  Those surfactant concepts, which re currently the highest
ranked, employ at least one of these principles described above to minimize or
avoid vascular toxicity.  Task 5 (described below)will provide preliminary
toxicology data for fluorosurfactants prepared on this program.

To the extent possible, the structural design of Battelle's surfactant
candidates as fluorocarbon emulsifiers will be aided by using appropriate
molecular modeling methodologies.  Currently, a molecular modeling program
titled CODESSA is available which predicts the critical micelle concentration
(cmc) of surfactants, which is an indicator of the inherent ability of a
surfactant to participate in the necessary self-assembly effect to form
micelles.  Thus, before we initiated the synthesis of any surfactant, we would
first determine the predicted cmc of that surfactant and related surfactants
to determine that we were preparing the better candidate.  Battelle also has a
high-end molecular modeling system by Molecular Simulations, Inc. which may
also be used to help rank the surfactant concepts and evaluate potential
structural improvements before such improvements are implemented in the
laboratory.

Task 3: Synthesis of Candidate Surfactants
Battelle organic and polymer chemists have extensive experience in using new
synthetic methods to prepare a wide range of monomeric, oligomeric and
polymeric compounds for a variety of uses and have received many patents
related to these developments.  The lead surfactant candidates form the

<PAGE>

highest ranked classes of surfactants will be synthesized first in a
controlled and documented manner in anticipation of potentially preparing this
compound under the auspices of Good Manufacturing Practices.  As soon as these
surfactant candidates are purified and characterized, they will be submitted
for emulsion, pharmacology and toxicology testing.

Battelle's extensive synthesis and analytical facilities within Battelle's
Polymer Product Group will be used to prepare and fully characterize the
physical and chemical properties of each surfactant candidate as well as
precursor compounds.  This analytical equipment includes proton and carbon
nuclear magnetic resonance (NMR) spectroscopy, infrared (IR) spectroscopy, in
high performance liquid chromatography (HPLC), gas chromatography (GC) and
potentially mass spectroscopy.  It is anticipated that preparative scales HPLC
will also be used for purification purposes.

Task 4: Emulsion Development and Testing
Emulsion preparation using synthesized surfactants and the selected
fluorocarbon oxygen carrier will be performed using laboratory ultrasonic
dispersion techniques to prepare small quantities (10-100 ml) for preliminary
physical testing.  A few of the parameters that will be tested or evaluated
are particle size and distribution, surface and interfacial tension, flow and
rheology characteristics, stability to accelerated test conditions such as
heating, cooling, and centrifugation, and methods to sterilize these
emulsions.  Battelle has the equipment required to prepare candidate emulsions
at a wide range of scales for emulsion testing.  Those surfactant candidates
which pass the Emulsion Development and Testing stage will be further tested
in toxicological and biological testing.

Task 5: Toxicological and Biological Testing
Toxicological and biological testing will be an integrated part of emulsion
development, characterization and evaluation of emulsions prepared from
synthesized surfactants and the selected fluorocarbon.  These studies will be
non-GLP model designs.  The following tests will be performed:

     Effect on Cell Cultures.  A Namalva lyphoblastoid strain with stable and
reproducible growth parameters will be chosen to assess direct cell
toxicities.  Cells will be counted after four day exposures to determine their
viability and potential inhibition of cell growth.

     Hemolysis.  The hemolytic effect of surfactant dispersions will be
assayed using human red blood cells and will be expressed as the percentage of
cells undergoing hemolysis.

     Acute Toxicology.  An indication of the acute toxicology of emulsion
particles will be obtained by injection of these materials into the tail veins
of mice.  Their symptoms, behavior, mortality will be observed throughout 15
day studies and complete gross necropsies will also be performed on euthanized
animals to determine potential changes in organ weights.

Depending on the timing of these studies relative to synthesis tasks, it is
possible that some toxicological results will be available during the course
of the surfactant synthesis program, which may be used as feedback in
suggesting specific structural modifications of candidates undergoing
synthesis.

Task 6: Program Reporting
We recommend that bymonthly reports be prepared at months 2 and 4 of this
program and a comprehensive Final Report be prepared at the end of this 6-
month program.  As needed, telephone calls will be used to transmit
information we believe should be conveyed to Sanguine before the next
scheduled reporting period.

Program Management
Responsibility for this program will be centered in Battelle's Polymer Center.
Consistent with Battelle's normal mode of operation, the program will be
managed to assure that it proceeds along a predesigned schedule toward meeting
the defined deliverables.  Any problems encountered will be quickly reported
to Sanguine.  Dr. Benjamin Maiden, Vice President of the Chemical Market
Sector, will provide executive management overview.  Line management for
conducting the program will reside with the Manager of the Polymer Center, Mr.
Joseph A. Jacomet.  Dr. Herman Benecke, a synthetic organic chemist, will
serve as Program Manager and will also serve as Principal Investigator in
directing surfactant synthesis, and emulsion preparation and evaluation.  Dr.
Benecke has previously directed a large government GMP program for the
production of the pharmaceutical material.  Mr. Richard Markie, Polymer
Specialist and Principal Investigator on the prior Sanguine program, will
participate in concept generation and surfactant synthesis, and will codirect
the emulsion preparation and testing.  Dr. Bhima Vijayendran, an industrial
chemist well versed in emulsion technology, will codirect the emulsion
preparation and testing task.  Dr. Joyce Durnford will oversee the cell
toxicology studies and Dr. Merrill Osheroff will oversee the hemolysis and
acute toxicology studies.

Benefits
Interest in synthetic blood substitutes, based on fluorocarbons, has increased
significantly as concerns have been raised over the safety and high
manufacturing costs for hemoglobin-based products.  A huge market opportunity
appears to exist for a synthetic blood product that is safe and efficacious
for human use.  Sanguine has estimated the market for blood substitutes to be
in the $1 billion range.  Further, opportunities for product differentiation
exist through improvement of shelf-life, development of user friendly systems
(e.g. products that do not have to be mixed or frozen), and development of
products which can be manufactured at a reasonable cost in order to meet
required pharmaceutical margins.

Companies offering products that meet these criteria and who are first to
reach the market may realize enormous gains.  However, we believe that second
generation blood substitute products which reach the market after initial
market entry can still capture a significant or major portion of the market if
their product is technologically advanced over the initial entry.  We believe

>PAGE>

that the surfactant features, which we have generally described, offer
potential advantages over the emulsified fluorocarbon systems currently
undergoing clinical trials.

Intellectual Property Statement
Three groups of inventions have been or will be created by Battelle which
relate to Sanguine's Field of interest (the Field being "oxygen-carrying
fluorocarbon emulsions for use as blood substitutes") which can be categorized
as follows:

Group 1 - Inventions created on Sanguine's earlier project.
These inventions were documented in Intellectual Property Disclosure Records
(IPDRs listed below)

a) Flourosurfactants Based on Phosphatidyl Choline or Glycerophosphorylcholine
(GPC), Accession No. 94012

b) Stable Amide Bond-Linked Perfluoro Phosphatidyl Choline Surfactants,
Accession No. 94013

c) New Polyvinylpyrrolidone Oligomer-Based Flurosurfactants, Accesssion No.
94014

Group 2 - Proprietary, inventive surfactant materials created by Battelle on
its own internally funded projects.
All rights to these inventions are currently owned by Battelle.  The
inventions have been documented in IPDRs which will be delivered to Sanguine
under terms of confidentiality.  Titles of these IPDRs are:

a) Self-Aggregating Extended Lifetime Hydrophilic Fluorocarbon Ampiphiles for
Blood Oxygen or Drug Delivery.

b) Perfluorosurfactants with Enhanced Prevention of Volatile Fluorocarbon
Diffusion for Preparation of Fluorocarbon Emulsions with Improved Stability

c) Highly Branched (e.g. Dendritic) Hydrophilic Oligomers/Polymers with
Covalently Attached Fluorocarbon-philic or Lipophilic Components for
Preparation of Human Blood Circulatory System Extended Lifetime
Perfluorocarbon Emulsions, or Very Small Particle Lipid Dispersions, for
Prolonged (>1 week) Oxygen or Drug Delivery

d) Method to Prepare Branched Water and Blood Soluble Oligomers with
Monoprimary End Groups and their Use to Prepare New Perfluoro or Fatty Group-
Based Surfactants.

Group 3 - Inventions.
These inventions will be those conceived and developed while performing the
program described in this proposal.

<PAGE>

An Option Agreement will be provided within one to two weeks, which is to be
entered between Sanguine and Battelle simultaneously with the acceptance of
the Proposal by Sanguine.  The Option Agreement provides the terms for
ownership of the inventions of Groups 1, 2 and 3 and includes the terms under
which the parties will cooperate in commercialization of the inventions.

Risk
Battelle believes that this program is likely to result in an improved
fluorocarbon emulsion.  This belief is based on prior work for Sanguine and
internally-funded work at Battelle.  However, this is a research and
development program with a need to engage in "discovery" of an adequate
surfactant and emulsification approach to arrive at a product suitable for use
in humans.  Therefor, Battelle is unable to make any guarantees regarding the
ultimate outcome of the program or the ultimate safety or usefulness of the
research results.  We believe that a well-managed research approach will allow
Sanguine to minimize the ultimate financial risk and maximize the probability
of success.

Schedule and Cost
This program is expected to require 6 months to synthesize up to three target
surfactants, produce and test emulsions containing a chosen fluorocarbon
oxygen carrier, and perform preliminary biological and acute toxicology
testing of the emulsions employing these materials.  The estimated cost to
complete this program is $300,000.  All work conducted on this program will be
on a cost-plus-fee, best efforts arrangement.  Invoicing will be on a partial
advanced-pay basis in accordance with the terms of the Research Agreement.

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