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                                                                   EXHIBIT 10.11

                          UNITED INDUSTRIES CORPORATION

                              CHAIRMAN'S AGREEMENT

         THIS CHAIRMAN'S AGREEMENT (this " Agreement"), dated as of July __,
1999, is entered into by and among United Industries Corporation, a Delaware
corporation (the " Company") and David Jones (" Executive"). Certain capitalized
terms used but not otherwise defined herein are defined in Section 9.

             Executive and the Company are parties to that certain Consulting
Agreement (the " Consulting Agreement") and that certain Stock Option Agreement
(the " January Option Agreement"), both dated as of January 20, 1999.

             The Company and Executive desire to enter into an agreement
relating to Executive's engagement by the Company in the positions of board
member and chairman. Simultaneously with the execution of this Agreement, the
parties hereto have entered into a Stock Option Agreement (the " Stock Option
Agreement").

             The parties hereto, in exchange for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, hereby agree as follows:

         PART I.  BOARD MEMBERSHIP TERMS

1.       Board Membership and Duties.

             a. The Company hereby engages Executive, and Executive hereby
accepts such engagement with the Company, as a member of the Board and as the
Company's Chairman on the terms and conditions specified herein.

             b. Executive shall devote his best efforts to the interests of the
Company, which interests may change from time to time, and shall devote such
time to his position as the duties and responsibilities of his position
reasonably require.

         Executive shall perform such duties and functions commensurate with his
position as may be reasonably assigned or delegated to him from time to time by
the Board. Executive acknowledges that such duties and functions may or may not
involve performance of services for or on behalf of affiliates of the Company.

2.       Term and Termination.

         a. Term. The " Term" of Executive's engagement by the Company is from
the date hereof until the " Termination Date", which is defined as the earlier
of (i) the date of termination of Executive's engagement pursuant to any one or
more of Sections 2(b), 2(c) or 2(d) of this

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Agreement and (ii) the " Payout Date", which shall be the later of (x) the
one-year anniversary hereof and (y) the date which is six months after the date
that a new chief executive officer is hired by the Company (provided that if
such chief executive officer is not still employed by the Company at the end of
such six-month period, this clause (y) shall apply to his successor). Executive
is an independent contractor and not an employee of the Company and his
engagement by the Company may be terminated by Executive, in his sole and
arbitrary discretion, at any time with or without good reason, or by the
Company, in the Company's sole and arbitrary discretion, at any time with or
without cause, by delivery of a written termination notice to the other party,
in each case subject to the consequences in Section 4.

         (b). Death. If Executive dies during the Term, the Termination Date
shall be the date of his death.

         (c). Termination By Executive. If Executive terminates his engagement
by the Company, the Termination Date shall be the date on which Executive's
termination notice is given to the Company, or such later date indicated on such
termination notice, which may not be more than thirty (30) days nor less than
fourteen (14) days from its receipt by the Company; provided that upon receipt
of Executive's termination notice, the Company may, in its sole discretion,
request that Executive cease some or all of his services prior to the date
referenced in such notice and Executive shall promptly comply with such request,
it being understood that such request will not change the Termination Date
specified in this Section 2(c).

         (d). Termination by the Company. If the Company terminates Executive's
engagement (or if until Executive is removed by a vote of the directors or
stockholders of the Company in accordance with the Company's constituent
documents), the Termination Date shall be the date on which the Company's notice
is given to Executive, or such later date indicated in such termination notice,
which may not be more than thirty (30) days from its receipt by Executive. The
Company may, in its sole discretion, elect to remove Executive from the position
of Chairman without removing him from his position as a member of the Board, in
which case the Term shall continue until later terminated pursuant to this
Section 2.

3.       Compensation.

         a. During the Term, Executive's compensation for his services hereunder
shall consist of (a) Base Salary plus (b) Incentive Compensation, if any.

         b. " Base Salary" shall be paid by the Company to Executive at an
annual rate of $300,000, payable in arrears in equal monthly installments,
subject to periodic review by the compensation committee of the Board for
increase only, any such increased salary thereafter constituting "Base Salary."

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         c. " Incentive Compensation," if any, is equal to the sum of the
following three amounts, up to a maximum of 60% of Base Salary in any given
year, it being understood that no Incentive Compensation is required to be paid
in any year in which the Company's actual EBITDA for the year in question is not
at least 90% of Target EBITDA for such year:

             i.   If the Company's actual EBITDA for the year in question equals
                  or exceeds 90% of Target EBITDA for such year, Incentive
                  Compensation will equal the product of (A) Base Salary
                  multiplied by (B) 25%; plus

             ii.  Incentive Compensation will increase by an amount equal to the
                  product of (A) Base Salary multiplied by (B) 2.5% multiplied
                  by (C) the number of percentage points by which the Company's
                  actual EBITDA for the year in question exceeds 90% of Target
                  EBITDA for such year (for example, if the Company's actual
                  EBITDA was 93% of Target EBITDA for the year in question, the
                  number derived in clause (C) would be 3 (i.e., 93%-90% = 3)),
                  up to a maximum of 25% of Base Salary in any year; plus

             iii. Incentive Compensation will increase by an amount equal to the
                  product of (A) Base Salary multiplied by (B) 2% multiplied by
                  (C) the number of percentage points by which the Company's
                  actual EBITDA for the year in question exceeds 100% of the
                  Target EBITDA for such year (for example, if the Company's
                  actual EBITDA was 103% of Target EBITDA for the year in
                  question, the number derived in clause (C) would be 3 (i.e.,
                  103%-100% = 3)).

All Incentive Compensation due hereunder shall be payable promptly after the
Company has received audited financial statements from its independent
accountants for the year in question which set forth such accountant's
determination of actual EBITDA for such year and not later than at or about the
time bonuses are paid to the Company's other senior executives whose bonuses are
determined based on the receipt of the Company's audited financial statements..
The formula for determining Incentive Compensation provided for in this Section
3 shall not be changed during the Term without Executive's consent.

         d. Stock Options. The Company shall grant Executive options to purchase
300,000 shares of Common Stock, all on the terms and conditions contained in the
Company's 1999 Stock Option Plan approved by the Board and in the Stock Option
Agreement.

4.       Termination Provisions.

         a.       If Executive terminates his engagement by the Company, then:

                  i.    Executive shall be entitled to Base Salary for the
                        period ending on the Termination Date; and

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                  ii. Executive shall be entitled to any unpaid Incentive
Compensation for any calendar year ending prior to the year in which the
Termination Date occurs, as well as any Incentive Compensation for the calendar
year in which the Termination Date occurs pro-rated based on the portion of Base
Salary paid to Executive by the Company in such year.

         b. If the Company terminates Executive's engagement or if Executive's
services terminate by reason of his death, then in either such case:

                  i. Executive shall be entitled to Base Salary for the period
                  ending on the Payout Date; and

                  ii. Executive shall be entitled to any unpaid Incentive
                  Compensation for any calendar year ending prior to the year in
                  which Executive is last entitled to receive his Base Salary
                  pursuant to Section 4(b)(i), as well as Incentive Compensation
                  for the calendar year in which Executive is last entitled to
                  receive his Base Salary pursuant to Section 4(b)(i) pro-rated
                  based on the portion of Base Salary paid to Executive the
                  Company in such year.

                  c. Any amounts owed by the Company to Executive pursuant to
Section 4(b) shall be paid at such times and in such manner as if the
termination giving rise to such payments had not occurred (with the Company
retaining the right to prepay all or any portion of such amount at any time in
its sole discretion). The Company's obligation to make any payments pursuant to
Section 4(b) shall be conditioned upon Executive's continued and continuing
compliance with the terms and conditions of this Agreement.

5.       Expenses. The Company shall reimburse Executive for all reasonable
expenses incurred in the performance of his duties in accordance with the
expense reimbursement policy of the Company with respect to members of the Board
in effect at the time.

6.       Confidential Information. Executive acknowledges that the information,
observations and data relating to the business of the Company and its
subsidiaries which Executive shall obtain during the course of his association
with the Company and its subsidiaries and his performance under this Agreement
are the property of the Company and its subsidiaries. Executive agrees that he
shall not use for his own purposes or disclose to any third party any of such
information, observations or data without the prior written consent of the
Board, unless and to the extent that (i) the aforementioned matters become
generally known to or generally available for use by the public, in each case
other than as a result of Executive's acts or omissions, (ii) disclosure is
compelled by law or judicial, administrative or regulatory action or proceeding
or (iii) disclosure is reasonably necessary in order for Executive to enforce
his rights under this Agreement or to defend himself in any judicial,
administrative or regulatory action or proceeding to which the Company or its
affiliates are directly or indirectly a party.

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7.       Special Bonus. Promptly after the Payout Date, the Compensation
Committee of the Board shall consider and grant the payment of a one-time
special bonus for Executive if and only if a new chief executive officer has
been hired by the Company and has been employed by the Company for at least six
months as of the Payout Date. Such bonus shall be a minimum of $300,000 and may,
in the Compensation Committee's sole discretion, be increased to a maximum of
$500,000. The Compensation Committee shall use its reasonable discretion in
determining the appropriateness and magnitude of such bonus based upon the
Company's performance during the Term and the success of the transition to the
new chief executive officer of the Company.

8.       Status of Consulting Agreement. Executive and the Company acknowledge
and agree that beginning on the date hereof and ending on the Payout Date, all
of Executive's and the Company's rights and obligations under the Consulting
Agreement shall be suspended, including, without limitation, the rendering of
services by Executive and the payment of compensation by the Company. Beginning
on the first day after the Payout Date, the Consulting Agreement shall be
reinstated and shall continue in full force and effect for the remainder of the
Consulting Period (as defined therein), if any, in accordance with its terms.

9.       Survival. Section 4 and Sections 6 through 13 shall survive and
continue in full force in accordance with their terms notwithstanding the
termination of the Term.

10.      Definitions. The following definitions shall be applied to the
capitalized terms used in this Agreement for all purposes, unless otherwise
clearly indicated:

         a.  Defined Terms.

             "Board" means the Company's board of directors.

             "Business" means the business conducted by the Company including,
without limitation, (a) the production and sale of termiticide products and (b)
the business conducted by the Company's Spectrum and Chemsico Divisions.

             "EBITDA" means, for a given period, the consolidated Company's
accounting earnings of the Company and its consolidated Subsidiaries before
taking into account any interest expense, provision for income taxes or
depreciation or amortization expense, excluding for this purpose extraordinary
gains and losses unless included in the determination of Target EBITDA.

             "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

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                  "Target EBITDA" means the annual performance goal for the
Company approved by the Board in its reasonable discretion with the input of
Executive, with Target EBITDA for fiscal 1999 being $85,400,000 or such lower
target as the Board (or a committee thereof) may determine in its reasonable
discretion. The Board shall use reasonable efforts to determine Target EBITDA
for any fiscal year after 1999 no later than the 90th day of the fiscal year of
the Company to which it relates.

             b. Other Definitions. The terms set forth below are defined on the
following pages of this Agreement:

Agreement:
Base Salary:
Company:
Consulting Agreement:
Executive:
Incentive Compensation:
January Option Agreement:
Payout Date:
Stock Option Agreement:
Term:
Termination Date:

Indemnification. Without prejudice to (or enlargement or other modification of)
any existing rights of indemnification as an officer or director enjoyed by
Executive, the Company will defend and indemnify and hold Executive harmless for
serving as a director and Chairman to the same extent as the Company indemnifies
its officers and directors under the Company's articles of incorporation and
bylaws as in effect on the date hereof, and Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors or officers (and to the extent the Company
maintains such an insurance policy or policies, Executive shall be covered by
such policy or policies, in accordance with its or their terms to the maximum
extent of the coverage provided for any other Company officer or director). No
amendment to the Company's Certificate of Incorporation or bylaws after the date
of this Agreement which reduces the scope of indemnification of officers and
directors shall affect the rights of Executive under this Agreement.

11.      Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:

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                           To the Company

                           United Industries Corporation
                           8825 Page Boulevard
                           St. Louis, MO 63114
                           Telecopy: (314) 253-5941
                           Attention:       Chief Financial Officer

                           with a copy to

                           Thomas H. Lee Equity Fund IV, L.P.
                           c/o Thomas H. Lee Company
                           75 State Street
                           Boston, MA  02109
                           Telecopy: (617) 227-3514
                           Attention:       C. Hunter Boll
                                            Scott Schoen

                           To Executive

                           David Jones
                           4596 Signature Drive
                           Middleton, WI 53562
                           Telecopy: (608) 828-9721

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.

12.  General Provisions.

         a. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

         b. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete

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agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way,
other than the Consulting Agreement and the January Option Agreement.

         c. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

         d. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors and assigns; provided
that the rights and obligations of Executive under this Agreement shall not be
assignable.

         e. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Delaware, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.

         f. Remedies. Each of the parties to this Agreement shall be entitled to
enforce its rights under this Agreement specifically, to recover damages and
costs (including reasonable attorney's fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages would not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.

         g. Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.

         h. Third-Party Beneficiary. There are no beneficiaries to this
Agreement other than the signatories hereto.

         i. Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or legal holiday in the
state in which the Company's chief executive office is located, the time period
shall be automatically extended to the business day immediately following such
Saturday, Sunday or legal holiday.

         j. Assignment. Nothing in this Agreement shall preclude the Company
from consolidating or merging into or with, or transferring all or substantially
all of its assets to, another corporation; provided that the Company will
require any successor

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(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company to assume this
Agreement. As used in this Agreement, "Company" shall mean the Company, as
defined above, and any successor to its business and/or assets as aforesaid
which assumes this Agreement by operation of law or otherwise.

         k. Tax Returns. It is intended that the fees paid to Executive
hereunder shall constitute revenues to Executive and (unless otherwise required
by law) the Company will not withhold any amounts therefrom as federal income
tax withholding from wages or as employee contributions under the Federal
Insurance Contribution Act or any other state or federal law. Executive shall
file all tax returns and reports required to be filed by him on the basis that
Executive is an independent contractor, rather than an employee, as defined in
Treasury Regulation ss.31.3121(d)_1(c)(2).

         l. Mitigation by Executive. In no event shall Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement and
such amounts shall not be reduced whether or not Executive obtains other
employment.

                                     * * * *

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.

UNITED INDUSTRIES CORPORATION

By:
     ------------------------
Its:
     ------------------------

-----------------------------
DAVID JONES

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                                                                   EXHIBIT 10.21
                                                                   -------------
                                      CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
                                      ------------------------------------------
                                 PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
                                 -----------------------------------------------
                           UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
                           -----------------------------------------------------

                          Dated 2/nd/ February, 2000

                              ENDOREX NEWCO, LTD.

                                      AND

                     SCHEIN PHARMACEUTICAL (BERMUDA), LTD.

                   DEVELOPMENT, LICENCE AND SUPPLY AGREEMENT

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                                   CONTENTS

CLAUSE 1       PRELIMINARY

CLAUSE 2       THE LICENCE

CLAUSE 3       INTELLECTUAL PROPERTY

CLAUSE 4       COMPETING PRODUCTS

CLAUSE 6       PROJECT TEAM AND MANAGEMENT COMMITTEE

CLAUSE 5       DEVELOPMENT OF THE SYSTEM, COMPOUND AND PRODUCT

CLAUSE 7       REGISTRATION OF THE PRODUCT

CLAUSE 8       MARKETING AND PROMOTION OF THE PRODUCT

CLAUSE 9       SUPPLY OF THE PRODUCT

CLAUSE 10      SUPPLY OF THE COMPOUND

CLAUSE 11      FINANCIAL PROVISIONS

CLAUSE 12      PAYMENTS, REPORTS AND AUDITS

CLAUSE 13      DURATION AND TERMINATION

CLAUSE 14      CONSEQUENCES OF TERMINATION

CLAUSE 15      WARRANTY AND INDEMNITY

CLAUSE 16      CUSTOMER COMPLAINTS AND PRODUCT RECALL

CLAUSE 17      MISCELLANEOUS PROVISIONS

SCHEDULE 1     ENDOREX JV PATENTS

SCHEDULE 2     SCHEIN COMPOUND PATENTS

SCHEDULE 3     THE PROJECT

SCHEDULE 4     PROJECT SYSTEM SPECIFICATIONS

SCHEDULE 5     PRODUCT SPECIFICATIONS

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THIS AGREEMENT is made on /2nd/ February, 2000.

BETWEEN:
-------

(1)  ENDOREX NEWCO, LTD., a company incorporated in Bermuda with offices at
     Clarendon House, 2 Church Street, Hamilton, Bermuda; and

(2)  SCHEIN PHARMACEUTICAL (BERMUDA), LTD., a company incorporated in Bermuda,
     with offices at Grosvenor Trust LTD, 33 Church Street, Hamilton, Bermuda.

RECITALS:
--------

A.   ENDOREX JV is a joint venture company of ELAN and ENDOREX and is
     beneficially entitled to the ENDOREX JV PATENTS under a licence from ELAN
     for use in the research, development and commercialisation of iron
     chelating agents.

B.   SCHEIN wishes ENDOREX JV to develop the SYSTEM for SCHEIN as a method of
     drug delivery incorporating the COMPOUND for the FIELD.

C.   ENDOREX JV is willing to use its technology to do so and to grant SCHEIN an
     exclusive sublicence of the ENDOREX JV PATENTS and ENDOREX JV KNOW-HOW to
     package, import, use, offer for sale, distribute and sell the PRODUCT in
     the TERRITORY.

D.   ENDOREX JV and SCHEIN are desirous of entering into an agreement to give
     effect to the arrangements described at Recitals B and C.

NOW IT IS HEREBY AGREED AS FOLLOWS:

                             CLAUSE 1 - PRELIMINARY

1.1  Definitions:  In this Agreement unless the context otherwise requires:
     -----------

     AFFILIATE shall mean any corporation or entity controlling or controlled or
     under common control with ENDOREX JV or SCHEIN, as the case may be. For the
     purposes of this Agreement, "control" shall mean the direct or indirect
     ownership of more than 50% of the issued voting shares or other voting
     rights of the subject entity to elect directors, or if not meeting the
     preceding criteria, any entity owned or controlled by or owning or
     controlling at the maximum control or ownership right permitted in the
     country where such entity exists.

     ANDA shall mean the new drug application, abbreviated new drug application,
     or any other application acceptable to an RHA for marketing approval for
     the COMPOUND, which SCHEIN will file with an RHA in a country of the
     TERRITORY, including any supplements or amendments thereto.

     ANDA APPROVAL shall mean the final approval of an ANDA by an RHA to market
     the COMPOUND in a country in the TERRITORY.

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     CFR shall mean the US Code of Federal Regulations 21, as amended from time
     to time.

     cGCP, cGMP, cGLP shall mean respectively current Good Clinical Practice,
     current Good Manufacturing Practice and current Good Laboratory Practice,
     respectively, as defined in the FFDCA.

     COMPETING PRODUCT shall have the meaning assigned to it in Clause 4.1.

     COMPOUND shall mean any formulations of [*****] and any of its analogues,
     isomers or derivatives.

     COMPOUND SPECIFICATIONS shall have the meaning assigned to it in Clause
     10.5.

     DEVELOPMENT COST shall mean [*****]

     DEVICE REGULATORY APPLICATION shall mean 510(K) Kit or equivalent
     applications for approval to market the SYSTEM with the COMPOUND which
     SCHEIN will file with the RHA in any country of the TERRITORY as the
     parties may from time to time determine hereunder, including any
     supplements or amendments thereto.

     DEVICE REGULATORY APPROVAL shall mean the final approval by the RHA to
     market the SYSTEM with the COMPOUND in any country of the TERRITORY,
     including any governmental pricing and reimbursement approval and any other
     approval which is required to launch the SYSTEM with the COMPOUND in the
     normal course of business.

     MAF shall mean a Master File for the SYSTEM, as defined in the CFR Sections
     814.3(d) and 814.20(c) and/or its equivalent in the other countries of the
     TERRITORY.

     EFFECTIVE DATE shall mean 2nd February, 2000.

     ELAN shall mean Elan Corporation, plc and any of its AFFILIATES.

     ENDOREX shall mean Endorex Corporation and any of its AFFILIATES (including
     ENDOREX JV but excluding ELAN).

     ENDOREX JV shall mean Endorex Newco, Ltd.

     ENDOREX JV BACKGROUND TECHNOLOGY shall mean ENDOREX JV PATENTS, and/or
     ENDOREX JV KNOW HOW.

___________________________
      [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

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     ENDOREX JV IMPROVEMENTS shall mean any and all improvements or
     enhancements, patentable or otherwise, that have been conceived, created or
     developed during the TERM which can be usefully applied to the SYSTEM
     and/or the PRODUCT, including the manufacture thereof, except for [*****]

     ENDOREX JV KNOW-HOW shall mean all knowledge, information, trade secrets,
     data and expertise which is not generally known to the public, owned by
     ENDOREX JV, or to which ENDOREX JV has rights under the terms of a licence
     or licences in force on the EFFECTIVE DATE, which permit(s) disclosure of
     same to SCHEIN, relating to the SYSTEM and/or the PRODUCT, whether or not
     covered by any patent, copyright, design patent, trademark, trade secret or
     other industrial or any intellectual property rights.

     ENDOREX JV PATENTS shall mean the patents and patent applications as set
     forth in Schedule 1, that are owned or licensed by or on behalf of ENDOREX
     JV as of the EFFECTIVE DATE. ENDOREX JV PATENTS shall also include all
     extensions, continuations, continuations-in-part, divisionals, patents-of-
     additions, re-examinations, re-issues, supplementary protection
     certificates and foreign counterparts of such patents and patent
     applications and any patents issuing thereon and extensions of any patents
     licensed hereunder.

     ENDOREX JV TRADEMARK shall mean one or more trademarks, trade names, or
     service marks that are owned or licensed by or on behalf of ENDOREX JV that
     ENDOREX JV may nominate and approve in writing from time to time for use in
     connection with the sale or promotion of the PRODUCT by SCHEIN. For the
     purposes of this Agreement, the trademark "Medipad"* which has been
     licensed by ENDOREX JV from ELAN shall be deemed to be an ENDOREX JV
     TRADEMARK hereunder.

     ENFORCEMENT PROCEEDINGS shall mean the proceedings referred to in Clause
     3.4.2.

     EX WORKS shall have the meaning as such term is defined in the ICC
     Incoterms, 1990, International Rules for the Interpretation of Trade Terms,
     ICC Publication No. 460.

     FCA shall have the meaning as such term is defined in the ICC Incoterms,
     1990, International Rules for the Interpretation of Trade Terms, ICC
     Publication No. 460.

     FFDCA shall mean the US Federal Food, Drug and Cosmetic Act of 1934, and
     the regulations promulgated thereunder, as the same may be amended from
     time to time.

     FIELD shall mean the [*****].

____________________
      [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       5
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     IN MARKET shall mean the sale of the PRODUCT by SCHEIN or its AFFILIATES or
     SUBLICENSEES to an unaffiliated third party such as (i) an end-user
     consumer of the PRODUCT or (ii) a wholesaler, distributor, managed care
     organisation, hospital or pharmacy or other third party payor for final
     commercial sale by such party to the consumer, and shall exclude in any
     event the transfer pricing of the PRODUCT by SCHEIN to an AFFILIATE or a
     SUBLICENSEE.

     INITIAL PERIOD shall mean the initial period of this Agreement, as more
     fully described in Clause 13.

     LAUNCH STOCKS shall mean the quantities of stocks of the PRODUCT required
     by SCHEIN in relation to the launch of the PRODUCT following DEVICE
     REGULATORY APPROVAL in the USA, as more fully described in Clause 9.7.

     LICENSE FEES shall mean [*****]

     MANAGEMENT COMMITTEE shall mean the group to be established pursuant to
     Clause 5.

     MANUFACTURING COST shall mean [*****]

     MARKETING AND SELLING EXPENSES shall mean dedicated marketing and selling
     expenses for the PRODUCT which have been agreed in advance by the
     MANAGEMENT COMMITTEE in accordance with Clause 8.2.

     NSP shall, subject to the provisions of Clauses 11.4.5, mean [*****]

     Party shall mean ENDOREX JV or SCHEIN as the case may be.  Parties shall
     mean ENDOREX JV and SCHEIN.

     PRODUCT shall mean the SYSTEM containing, or packaged with, the COMPOUND.

     PRODUCT SPECIFICATIONS shall mean the specifications for the PRODUCT set by
     the Parties for the DEVICE REGULATORY APPLICATIONS and which shall be
     attached as Schedule 5, as well as such other specifications such as
     interim specifications which may be required during the PROJECT and such
     additional specifications for the PRODUCT as may be agreed by the parties
     in writing.

     PROFIT shall mean [*****]

     PROJECT shall mean all activity in order to develop the SYSTEM and the
     PRODUCT for commercialisation in the USA in accordance with the plan shown
     in Schedule 3, as may be amended from time to time as agreed by the parties
     in writing.

_____________________
      [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       6
<PAGE>

     PROJECT SYSTEM SPECIFICATIONS shall mean the specifications for the SYSTEM
     which shall be set by the parties for the DEVICE REGULATORY APPLICATIONS
     and which shall be attached as Schedule 4, as well as such other
     specifications such as interim specifications which may be required during
     the PROJECT and such additional specifications for the SYSTEM as may be
     agreed by the parties in writing.

     PROJECT TEAM shall mean the group to be established pursuant to Clause 6.

     RHA shall mean any relevant government health authority (or successor
     agency thereof) in any country of the TERRITORY whose approval is necessary
     to market the SYSTEM, COMPOUND and/or PRODUCT, as applicable, in the
     relevant country of the TERRITORY, including, without limitation, the
     United States Food and Drug Administration.

     ROYALTY shall mean [*****]

     SCHEIN shall mean Schein Pharmaceutical (Bermuda) Ltd. and any of its
     AFFILIATES.

     SCHEIN COMPOUND IMPROVEMENTS shall mean any and all improvements or
     enhancements, patentable or otherwise, relating exclusively to the COMPOUND
     which are owned or licensed by SCHEIN and which can be usefully applied to
     the PRODUCT including the manufacture or use thereof which were first
     conceived, developed, invented or reduced to practice by SCHEIN or ENDOREX
     JV during the TERM except for [*****]

     SCHEIN COMPOUND KNOW-HOW shall mean all knowledge, information, trade
     secrets, data and expertise which is not generally known to the public,
     owned or licensed by SCHEIN or to be developed or licensed by SCHEIN as of
     the EFFECTIVE DATE relating exclusively to the COMPOUND, whether or not
     covered by any patent, copyright, design, trademark or other industrial or
     intellectual property rights.

     SCHEIN COMPOUND PATENTS shall mean all patents and patent applications as
     set forth in Schedule 2, that are owned by, or licensed to SCHEIN as of the
     EFFECTIVE DATE relating exclusively to the COMPOUND.  SCHEIN PATENTS shall
     also include all extensions, continuations, continuations-in-part,
     divisionals, patents-of-additions, re-examinations, re-issues,
     supplementary protection certificates and foreign counterparts of such
     patents and patent applications and any patents issuing thereon and
     extensions of any patents licensed hereunder.

____________________
      [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       7
<PAGE>

     SCHEIN COMPOUND TECHNOLOGY shall mean SCHEIN COMPOUND PATENTS and SCHEIN
     COMPOUND KNOW HOW.

     SUBLICENSEE shall mean any independent third party appointed by SCHEIN,
     with the unanimous approval of the MANAGEMENT COMMITTEE, pursuant to Clause
     2.2, to market, distribute and sell the PRODUCT in any country of the
     TERRITORY outside of the USA.

     SYSTEM shall mean the ambulatory subcutaneous infusion drug delivery system
     for direct attachment to the body of a patient having a flexible diaphragm
     drug reservoir, which is capable of delivering factory pre-programmed
     continuous amounts of drug upon activation as disclosed and described in
     the ENDOREX JV PATENTS set forth in Schedule 1 attached hereto.

     TECHNOLOGICAL COMPETITOR shall mean [*****]

     TERM shall mean the term of this Agreement, as set out in Clause 14.

     TERRITORY shall mean all of the countries of the world.

     $ shall mean United States Dollars.

     "US" or "USA" shall mean the United States of America, its territories and
     possessions

1.2  Interpretation:  In this Agreement:
     --------------

     1.2.1 the singular includes the plural and vice versa, the masculine
           includes the feminine and vice versa and references to natural
           persons include corporate bodies, partnerships and vice versa.

     1.2.2 any reference to a Clause or Schedule, unless otherwise specifically
           provided, shall be respectively to a Clause or Schedule of this
           Agreement.

     1.2.3 the headings of this Agreement are for ease of reference only and
           shall not affect its construction or interpretation.

                            CLAUSE 2 - THE LICENCE

2.1  Licence to SCHEIN:
     -----------------

     2.1.1 Subject to the terms of this Agreement, ENDOREX JV hereby grants to
           SCHEIN, and SCHEIN hereby accepts for the TERM, an exclusive licence
           to the ENDOREX JV BACKGROUND TECHNOLOGY and ENDOREX JV

_________________
      [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
     FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
     EXCHANGE ACT OF 1934, AS AMENDED

                                       8
<PAGE>

            IMPROVEMENTS to package, import, use, offer for sale and sell and
            otherwise distribute the PRODUCT for the FIELD in the TERRITORY.

2.2  Sub-licensing by SCHEIN:
     -----------------------

     2.2.1  Any appointment of a SUBLICENSEE for the PRODUCT in any country of
            the TERRITORY outside of [*****] shall be determined by the
            MANAGEMENT COMMITTEE and shall require the prior unanimous consent
            of the MANAGEMENT COMMITTEE. In the event that such unanimous
            decision is made by the MANAGEMENT COMMITTEE, SCHEIN shall grant
            such SUBLICENSEE a sub-license to package, import, use, offer for
            sale and sell the PRODUCT for the FIELD in such country of the
            TERRITORY. [*****]SUBLICENSEE only shall be appointed per country
            and no sub-licence shall be granted to a TECHNOLOGICAL COMPETITOR of
            ENDOREX JV.

     2.2.2  The MANAGEMENT COMMITTEE shall be responsible for deciding by
            unanimous vote upon the commercial terms of any sub-licence granted
            hereunder. Any such sub-licence shall be on terms mutatis mutandis
            as the terms of this Agreement insofar as they are applicable, but
            excluding the right to grant a sub-licence or a production licence.

     2.2.3  For the avoidance of doubt, ENDOREX JV shall have the same rights of
            audit and inspection vis-a-vis a SUBLICENSEE, as ENDOREX JV has
            pursuant to this Agreement concerning SCHEIN. SCHEIN shall also
            provide copies of all sublicense agreements to ENDOREX JV.

     2.2.4  SCHEIN shall be liable to ENDOREX JV for all acts and omissions of
            any SUBLICENSEE as though such acts and omissions were by SCHEIN and
            SCHEIN shall provide the indemnity to ENDOREX JV outlined in Clause
            15.9.

     2.2.5  Where a sub-licence has been granted under Clause 2.2.1, such sub-
            licence shall automatically terminate if this Agreement terminates
            for the country or countries covered by the sub-licence.

     2.2.6  SCHEIN shall undertake to protect the confidentiality of ENDOREX
            JV's engineering and manufacturing processes for the SYSTEM and/or
            PRODUCT in its dealings with SUBLICENSEES.

     2.2.7  For the avoidance of doubt:-

_______________________
      [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED

                                       9
<PAGE>

          (1)  the parties agree that any sub-licence granted pursuant to this
               Clause 2.2 shall not be capable of surviving the termination of
               this Agreement; and

          (2)  IN MARKET sales of the PRODUCT by SUBLICENSEES or other agreed
               upon arrangements shall be included in calculating NSP for the
               purposes of this Agreement.

                       CLAUSE 3 - INTELLECTUAL PROPERTY

3.1  Ownership of ENDOREX JV PATENT RIGHTS/KNOW-HOW:
     ----------------------------------------------

     3.1.1  ENDOREX JV shall be and remain the sole beneficial owner or licensee
            of the ENDOREX JV BACKGROUND TECHNOLOGY and ENDOREX JV IMPROVEMENTS.

     3.1.2  ENDOREX JV shall be entitled to use the ENDOREX JV BACKGROUND
            TECHNOLOGY and ENDOREX JV IMPROVEMENTS, and all technical and
            clinical data, generated by ENDOREX JV, SCHEIN, its AFFILIATES or
            any SUBLICENSEE pursuant to this Agreement in connection with
            ENDOREX JV's commercial arrangements otherwise than in relation to
            the PRODUCT for the FIELD, and in connection with the PRODUCT for
            the FIELD in any countries which cease to be part of the TERRITORY;
            and in the TERRITORY following termination of this Agreement. SCHEIN
            hereby makes any assignment or license to the extent necessary to
            achieve the foregoing and shall execute such further documents to
            confirm the same as ENDOREX JV may reasonably request from time to
            time. In addition, SCHEIN agrees to promptly disclose to ENDOREX JV
            any ENDOREX JV IMPROVEMENTS and all related technical and clinical
            data that are generated by SCHEIN, its AFFILIATES or SUBLICENSEES.

3.2  Ownership of SCHEIN PATENT RIGHTS/KNOW-HOW:
     ------------------------------------------

     3.2.1  SCHEIN shall be and remain the sole owner of the SCHEIN COMPOUND
            TECHNOLOGY and SCHEIN COMPOUND IMPROVEMENTS.

3.3  Filing and maintenance of patents:
     ---------------------------------

     3.3.1  Subject to licensing agreements pre-existing as of the EFFECTIVE
            DATE, by and between ENDOREX JV and any third party having ownership
            or controlling interest in ENDOREX JV PATENTS and ENDOREX JV
            IMPROVEMENTS, ENDOREX JV will be entitled, at its own expense, to
            file or have filed and prosecute or have prosecuted ENDOREX JV
            PATENTS and patentable ENDOREX JV IMPROVEMENTS; to determine or have
            determined the patent filing strategy in relation to same at its
            sole discretion; to assert or have asserted and defend or have
            defended the foregoing patent

                                       10
<PAGE>

            applications against third party oppositions; and upon grant of any
            letters patent, to maintain or have maintained such letters patent
            in force.

     3.3.2  SCHEIN will be entitled, at its own expense, to file and prosecute
            any SCHEIN COMPOUND PATENTS and patentable SCHEIN COMPOUND
            IMPROVEMENTS; to determine the patent filing strategy in relation to
            same at its sole discretion; to assert and defend the foregoing
            patent applications against third party oppositions; and upon grant
            of any letters patent, to maintain such letters patent in force
            subject to the following conditions:-

            (1)  SCHEIN shall promptly notify ENDOREX JV in writing in relation
                 to the existence of SCHEIN COMPOUND IMPROVEMENTS and upon
                 request by ENDOREX JV, SCHEIN shall provide ENDOREX JV with
                 copies of any documents relating to the SCHEIN COMPOUND
                 IMPROVEMENTS.

            (2)  SCHEIN shall promptly notify ENDOREX JV in writing of any
                 patent applications filed by SCHEIN under this Clause 3.3.2 and
                 upon request by ENDOREX JV shall provide copies to ENDOREX JV
                 to such patent applications and any patents issuing thereon, to
                 the extent reasonably required in order for ENDOREX JV to
                 fulfil its obligations under this Agreement.

     3.3.3  If SCHEIN does not intend to make an application for patents or
            continue prosecution of a pending application in respect of SCHEIN
            COMPOUND TECHNOLOGY or SCHEIN COMPOUND IMPROVEMENTS, or continue to
            maintain the SCHEIN COMPOUND PATENTS in any or some countries of the
            TERRITORY, ENDOREX JV, subject to the prior written consent of
            SCHEIN, not to be unreasonably withheld or delayed, will be entitled
            to file, prosecute and maintain patent applications and patents in
            respect thereof, at its own expense, in accordance with the
            following terms:-

            (1)  ENDOREX JV shall consult with SCHEIN on a regular basis in
                 relation to the status of its activities under this Clause
                 3.3.3;

            (2)  SCHEIN shall execute all documents, forms and declarations,
                 provide all necessary information and data, and do all such
                 things as shall be necessary to enable ENDOREX JV to exercise
                 the foregoing right;

            (3)  ENDOREX JV shall promptly notify SCHEIN in writing of any
                 patent applications filed by ENDOREX JV hereunder and shall
                 provide all reasonable access to SCHEIN to such patent
                 applications and any patents issuing thereon.

3.4  Enforcement:
     -----------

     3.4.1  SCHEIN and ENDOREX JV shall promptly inform the other in writing of
            any alleged infringement of which it shall become aware by a third
            party of any patents within the SCHEIN COMPOUND PATENTS, SCHEIN

                                       11
<PAGE>

            COMPOUND IMPROVEMENTS, ENDOREX JV PATENTS or ENDOREX JV IMPROVEMENTS
            and provide such other with any available evidence of infringement.

     3.4.2  ENDOREX JV, at its option and subject to its preexisting licensing
            agreements by and between ENDOREX JV and any third party having
            ownership or controlling interest in ENDOREX JV PATENTS and ENDOREX
            JV IMPROVEMENTS, shall be entitled to institute or have instituted
            any administrative, judicial or other proceeding to prevent or stop
            any infringement or unauthorised use ("ENFORCEMENT PROCEEDINGS") of
            the ENDOREX JV PATENTS or ENDOREX JV IMPROVEMENTS.

     3.4.3  SCHEIN agrees to provide all reasonable co-operation and assistance
            in relation to any such ENFORCEMENT PROCEEDINGS and agrees to be
            named as a party in any ENFORCEMENT PROCEEDINGS, as necessary, that
            may be instituted hereunder. ENDOREX JV shall reimburse SCHEIN, its
            reasonable costs and expense for such cooperation.

     3.4.4  SCHEIN, at its option, shall be entitled to institute ENFORCEMENT
            PROCEEDINGS in respect of any infringement or unauthorised use of
            the SCHEIN COMPOUND TECHNOLOGY or SCHEIN COMPOUND IMPROVEMENTS at
            its own expense and for its own benefit. ENDOREX JV agrees to
            provide all reasonable co-operation and assistance to SCHEIN in
            relation to any such ENFORCEMENT PROCEEDINGS and agrees to be named
            as a party in any ENFORCEMENT PROCEEDINGS, as necessary, instituted
            by SCHEIN hereunder. SCHEIN shall reimburse ENDOREX JV its
            reasonable costs and expense for such cooperation.

     3.4.5  In the event that ENDOREX JV does not want to institute ENFORCEMENT
            PROCEEDINGS relating to ENDOREX JV BACKGROUND TECHNOLOGY or ENDOREX
            JV IMPROVEMENTS, then SCHEIN may enforce such rights at its own
            expense. ENDOREX JV shall cooperate with SCHEIN and provide all
            reasonable assistance in relation to any such ENFORCEMENT
            PROCEEDINGS. SCHEIN must seek written approval from ENDOREX JV,
            which may not be unreasonably withheld or delayed, prior to taking
            action and must keep ENDOREX JV informed of the action and may not
            enter into any settlement agreement without ENDOREX JV's consent,
            which may not be unreasonably withheld or delayed. Any reasonable
            fees and costs borne by ENDOREX JV shall be reimbursed by SCHEIN. In
            the event that SCHEIN decides to enforce the ENDOREX JV BACKGROUND
            TECHNOLOGY or ENDOREX JV IMPROVEMENTS in accordance with this
            paragraph, any recovery remaining after the deduction of reasonable
            expenses (including attorney's fees and expenses) incurred in
            relation to such ENFORCEMENT PROCEEDINGS shall [*****].

___________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       12
<PAGE>

     3.4.6  In the event that SCHEIN does not want to institute ENFORCEMENT
            PROCEEDINGS relating to SCHEIN COMPOUND TECHNOLOGY or SCHEIN
            COMPOUND IMPROVEMENTS, then ENDOREX JV may enforce such rights at
            its own expense. SCHEIN shall cooperate with ENDOREX JV and provide
            all reasonable assistance in relation to any such ENFORCEMENT
            PROCEEDINGS. ENDOREX JV must seek written approval from SCHEIN,
            which may not be unreasonably withheld or delayed, prior to taking
            action and must keep SCHEIN informed of the action and may not enter
            into any settlement agreement without SCHEIN's consent, which may
            not be unreasonably withheld or delayed. Any reasonable fees and
            costs borne by SCHEIN shall be reimbursed by ENDOREX JV. In the
            event that ENDOREX JV decides to enforce the SCHEIN COMPOUND
            TECHNOLOGY or SCHEIN COMPOUND IMPROVEMENTS in accordance with this
            paragraph, any recovery remaining after the deduction of reasonable
            expenses (including attorney's fees and expenses) incurred in
            relation to such ENFORCEMENT PROCEEDINGS shall [*****].

3.5  Defence:
     -------

     3.5.1  In the event that a claim or proceeding is brought against SCHEIN by
            a third party alleging that the manufacture, sale, use or offer for
            sale of the SYSTEM and/or the PRODUCT as claimed exclusively in the
            ENDOREX JV PATENTS or a patented ENDOREX JV IMPROVEMENT, infringes
            the patent rights of such a third party in the TERRITORY, SCHEIN
            shall promptly advise ENDOREX JV of such threat or suit.

     3.5.2  [*****]

     3.5.3  [*****]

     3.5.4  [*****]

     3.5.5  Neither party shall have any liability to the other party whatsoever
            or howsoever arising for any losses incurred as a result of SCHEIN
            having to cease selling the PRODUCT or having to defer the launch of
            selling the PRODUCT as a result of an infringement claim. Neither
            ENDOREX JV nor SCHEIN shall have any liability to the other for any
            enhanced or punitive damages awarded as a result of any willful
            patent infringement

     3.5.6  [*****] At its option, SCHEIN may elect to take over the conduct of
            such proceedings from ENDOREX JV with counsel of SCHEIN's choice. In
            such event SCHEIN shall keep ENDOREX JV advised of all material
            developments in the said proceedings and shall not settle or
            compromise

__________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       13
<PAGE>

            such proceedings without the consent of ENDOREX JV which shall not
            be unreasonably withheld or delayed.

3.6  Trademarks:
     ----------

     3.6.1  SCHEIN shall market the PRODUCT in the TERRITORY under the ENDOREX
            JV TRADEMARK and such other trademarks as may be authorized under
            Clause 3.6.5 below.

     3.6.2  ENDOREX JV hereby grants to SCHEIN a non-exclusive royalty free
            licence in the TERRITORY for the TERM to use the ENDOREX JV
            TRADEMARK solely for the purposes of exercising its rights and
            performing its obligations under this Agreement and the following
            provisions shall apply as regards the use of the ENDOREX JV
            TRADEMARK by SCHEIN:

            (1)  SCHEIN shall ensure that each reference to and use of the
                 ENDOREX JV TRADEMARK by SCHEIN is in a manner from time to time
                 approved by ENDOREX JV and accompanied by an acknowledgement,
                 in a form approved by ENDOREX JV, that the same is a trademark
                 licensed from ENDOREX JV, such approvals not to be unreasonably
                 withheld or delayed.

            (2)  SCHEIN undertakes that all related advertising, promotional and
                 other related uses of the ENDOREX JV TRADEMARK by SCHEIN, shall
                 conform to standards set by, ENDOREX JV. Such standards shall
                 be agreed between the parties in advance of SCHEIN's first use
                 of the ENDOREX JV TRADEMARK, negotiating in good faith.

            (3)  SCHEIN shall use the ENDOREX JV TRADEMARK for the benefit of
                 ENDOREX JV and any third parties having an ownership interest
                 in the same and upon termination of the Agreement, all of the
                 goodwill associated with the ENDOREX JV TRADEMARK shall
                 transfer without charge to ENDOREX JV and any such third
                 parties.

            (4)  Subject to any obligations from any third party licenses
                 entered into between ENDOREX JV and any third party having an
                 ownership interest in ENDOREX JV TRADEMARK, ENDOREX JV shall
                 file or have filed, prosecute or have prosecuted, maintain or
                 have maintained the registrations for the ENDOREX JV TRADEMARK
                 in the MAJOR MARKETS. SCHEIN shall provide upon request all
                 reasonable assistance to ENDOREX JV in performing such
                 activities.

            (5)  SCHEIN shall not use the ENDOREX JV TRADEMARK in any way which
                 might prejudice its distinctiveness or validity or the goodwill
                 associated therewith.

            (6)  SCHEIN shall not use in relation to the PRODUCT any trademarks
                 other than the ENDOREX JV TRADEMARK without obtaining the prior
                 consent in writing of ENDOREX JV.

                                       14
<PAGE>

            (7)  SCHEIN shall not use in the TERRITORY any trademarks or trade
                 names so resembling the ENDOREX JV TRADEMARK as to be likely to
                 cause confusion, deception or dissolution.

            (8)  SCHEIN shall promptly notify ENDOREX JV in writing of any
                 alleged infringement of which it becomes aware by a third party
                 of the ENDOREX JV TRADEMARK and provide ENDOREX JV with any
                 applicable evidence of infringement.

     3.6.3  Subject to any obligations from any third party licenses entered
            into between ENDOREX JV and any third party having an ownership
            interest in ENDOREX JV TRADEMARK, ENDOREX JV will be entitled to
            conduct or have conducted all proceedings relating to the ENDOREX JV
            TRADEMARK and shall at its sole discretion decide what action, if
            any, to take in respect of any infringement or alleged infringement
            of the ENDOREX JV TRADEMARK or passing-off or any other claim or
            counter-claim brought or threatened in respect of the use or
            registration of the ENDOREX JV TRADEMARK. Any such proceedings shall
            be conducted at [*****].

            In the event that ENDOREX JV fails to take action in respect of any
            infringement or alleged infringement of the ENDOREX JV TRADEMARK or
            passing-off or any other claim or counter-claim brought or
            threatened in respect of the use or registration of the ENDOREX JV
            TRADEMARK, SCHEIN may request ENDOREX JV to take such action at
            [*****].

     3.6.4  Except as provided in this Clause 3.6, SCHEIN will have no rights in
            respect of the ENDOREX JV TRADEMARK or any trade names or trademarks
            used by ENDOREX JV in relation to the PRODUCT or of the goodwill
            associated therewith, and SCHEIN hereby acknowledges that, except as
            expressly provided in this Agreement, it shall not acquire any
            rights in respect thereof.

            SCHEIN shall not, at any time during or after the TERM, challenge or
            assist others to challenge the ENDOREX JV TRADEMARK, or the
            registration thereof or attempt to register any trademarks, marks,
            or trade names confusingly similar to the ENDOREX JV TRADEMARK.

     3.6.5  In conjunction with the ENDOREX JV TRADEMARK, SCHEIN shall be also
            entitled to market the PRODUCT in the TERRITORY under such
            trademarks as are designated by SCHEIN provided that such trademarks
            have been agreed in advance with ENDOREX JV.

                         CLAUSE 4 - COMPETING PRODUCTS

4.1  [*****]

________________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       15
<PAGE>

4.2  [*****]

4.3. In addition and subject to Clauses 4.1 and 4.2 and to its obligations under
     Clause 8, (i), SCHEIN agrees that, prior to receipt of the DEVICE
     REGULATORY APPROVAL of the PRODUCT, SCHEIN shall not take any actions to
     fundamentally damage the market for the PRODUCT in the TERRITORY and (ii)
     prior to and after the launch of the PRODUCT in each country of the
     TERRITORY, SCHEIN shall not take any actions that would be detrimental to
     the market for the PRODUCT in such country of the TERRITORY.

4.4. In the event that SCHEIN wishes to manufacture or sell any pharmaceutical
     product containing any compound other than the COMPOUND ("Alternative
     Compound") for the treatment of iron overloading disorder by subcutaneous
     delivery and the SYSTEM is a suitable, competitive delivery system for such
     Alternative Compound, SCHEIN shall notify ENDOREX JV and ENDOREX JV shall
     have the right of first negotiation to develop the SYSTEM to deliver such
     Alternative Compound on terms to be negotiated by the parties in good
     faith.

4.5. [*****].

               CLAUSE 5 - PROJECT TEAM AND MANAGEMENT COMMITTEE

5.1  It is recognised by the parties that a significant resource shall be
     required from each party to accomplish successful DEVICE REGULATORY
     APPROVAL in the TERRITORY and launch of the PRODUCT, particularly in the
     co-ordination of logistics, finalisation of various specifications,
     preparation and agreement of clinical study designs and protocols,
     methodologies transfer, supply and packaging configurations, shipping and
     handling procedures and for this purpose, the parties will establish a
     PROJECT TEAM.

5.2  The PROJECT TEAM shall consist of a chief representative from each party
     together with such additional business and development personnel from each
     party who are appropriately skilled and knowledgeable in relation to the
     PROJECT and who are deemed necessary to accomplish the work of the PROJECT.

5.3  Unless otherwise agreed by the parties, the PROJECT TEAM shall meet as
     needed, such meetings to continue until the time of launch or such later
     time as may be agreed.  The PROJECT TEAM may meet in person or by means of
     such telephone, video or other communication facilities as permit all
     members of the PROJECT TEAM to communicate with each other simultaneously
     and instantaneously.  If the PROJECT TEAM decides to meet in person, such
     meetings shall be held alternatively at the offices of ENDOREX JV and
     SCHEIN or as otherwise agreed by the parties.  Meetings shall be co-chaired
     by the chief representatives of the parties.  At and

______________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       16
<PAGE>

     between meetings of the PROJECT TEAM, each party shall keep the other fully
     and regularly informed as to its progress with its respective obligations.

5.4  The Parties shall also establish a MANAGEMENT COMMITTEE which shall consist
     of a senior executive of ENDOREX JV and a senior executive of SCHEIN along
     with up to two observers from each of ENDOREX JV and SCHEIN.  The
     MANAGEMENT COMMITTEE shall have overall responsibility for the development
     and commercialisation of the PRODUCT in the TERRITORY including but not
     limited to:

          (i)   supervising the PROJECT TEAM,

          (ii)  approving and implementing all project plans, including the
                project development timetable and schedules, timing of launch of
                the PRODUCT, and budgets for the development of the PRODUCT,

          (iii) agreeing with SCHEIN that all direct marketing and selling
                expenses for the PRODUCT are in accordance with Clause 8.2, and

          (iv)  deciding upon the appointment of any SUBLICENSEES for the
                PRODUCT in any country of the TERRITORY outside of the USA,
                including approving the commercial terms for any such
                appointment.

5.5  Unless otherwise agreed by the Parties, the MANAGEMENT COMMITTEE shall meet
     at least quarterly.  Such meeting may be held in person or by means of such
     telephone, video or other communication facilities as permit all members of
     the MANAGEMENT COMMITTEE to communicate with each other simultaneously and
     instantaneously.

5.6  In the event of a dispute between the project managers of each Party on the
     PROJECT TEAM, the project managers shall refer the dispute to the
     MANAGEMENT COMMITTEE, who shall discuss the matter and attempt to reach an
     amicable solution. In the event that the MANAGEMENT COMMITTEE cannot
     resolve the dispute amicably, the said officers shall refer the dispute to
     the Chairman of ENDOREX JV and the Chief Executive Officer of SCHEIN who
     shall discuss the matter and attempt to reach an amicable solution. The
     provisions of this Clause 5.6 shall be without prejudice to the Parties'
     other rights and remedies.

5.7  The Chairman of ENDOREX JV and the Chief Executive Officer of SCHEIN shall,
     if they are unable to resolve a dispute or difference when it is referred
     to them under Clause 5.6, refer the matter to an independent expert who is
     knowledgeable of the medical device/drug delivery industry (the "Expert").
     The selection of the Expert shall be mutually agreed upon by the Chairman
     of ENDOREX JV and the Chief Executive Officer of SCHEIN.  The Expert shall
     be selected having regard to his suitability to determine the particular
     dispute or difference on which he is being requested to determine.  Unless
     otherwise agreed between the Chief Executive Officers, the following rules
     shall apply to the appointment of the Expert.  The fees of the Expert shall
     be shared equally between the Parties in dispute.  The Expert shall be
     entitled to inspect and examine all documentation and any other material
     which he

                                       17
<PAGE>

     may consider to be relevant to the dispute. He shall afford each Party a
     reasonable opportunity (in writing or orally) of stating reasons in support
     of such contentions as each Party may wish to make relative to the matters
     under consideration. The Expert shall give notice in writing of his
     determination to the Parties within such time as may be stipulated in his
     terms of appointment or in the absence of such stipulation as soon as
     practicable. The Parties shall request that the Expert in any event
     complete and deliver his findings within four (4) weeks from the reference
     of the dispute or difference to him. Any determination by the Expert of a
     dispute or difference shall not be final and binding on the Parties.

5.8  The PROJECT TEAM and MANAGEMENT COMMITTEE shall not have the authority to
     amend or vary any of the terms of this Agreement unless in accordance with
     the provisions of Clause 17.7.

          CLAUSE 6 - DEVELOPMENT OF THE SYSTEM, COMPOUND AND PRODUCT

6.1  SCHEIN wishes ENDOREX JV to develop the SYSTEM to deliver the COMPOUND, and
     ENDOREX JV shall diligently pursue the same in a commercially reasonable
     manner in accordance with the PROJECT pursuant to the terms of this
     Agreement. However, it is acknowledged that device development incorporates
     inherent risk in terms of outcomes and ENDOREX JV does not guarantee the
     further development of the SYSTEM, the ability of the SYSTEM to achieve the
     PROJECT SYSTEM SPECIFICATIONS or PRODUCT SPECIFICATIONS, and/or to obtain
     the MAF or DEVICE REGULATORY APPROVAL in one or more of the countries of
     the TERRITORY.

6.2  Within [*****]of the execution of this Agreement, ENDOREX JV and SCHEIN
     shall agree upon the PRODUCT SPECIFICATIONS for the PRODUCT for the USA.
     The Parties acknowledge that their primary purpose shall be to develop the
     PRODUCT for commercialisation in the USA in accordance with the PROJECT.

6.3  ENDOREX JV and SCHEIN shall undertake their respective obligations under
     the PROJECT on a collaborative basis. Accordingly, the parties shall co-
     operate in good faith particularly with respect to unknown problems or
     contingencies and shall perform their respective obligations in good faith
     and in a commercially reasonable, diligent and workmanlike manner.

6.4  ENDOREX JV shall be responsible for all reasonable activities and costs
     associated with the development of the SYSTEM for the USA in accordance
     with the PROJECT to meet the PROJECT SYSTEM SPECIFICATIONS up to a maximum
     cost of [*****], as calculated in accordance with Clause 11.2.1 below. In
     the event that additional expenditure in excess of such [*****] is required
     to develop the SYSTEM to meet the PROJECT SYSTEM SPECIFICATIONS, the
     parties shall meet to discuss the matter in good faith.

____________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       18
<PAGE>

6.5  The Parties recognise that the SYSTEM may require additional development
     after achieving the PROJECT SYSTEM SPECIFICATIONS in order to meet the
     PRODUCT SPECIFICATIONS for the USA. Such additional development work may
     include, but is not limited to:

     6.5.1  modifying or qualifying the adhesive system for use with children;
            and

     6.5.2  modifying or qualifying the integral needle for use with children.

     6.5.3  designing and manufacturing the drug vial which will contain the
            COMPOUND and will be made in connection with the SYSTEM (beyond the
            work described in Clause 6.6.2 below) in accordance with
            specifications to be mutually agreed within [*****] of the EFFECTIVE
            DATE. The design and manufacture of the drug cartridge shall be
            performed to a development plan and budget set by the PROJECT TEAM.
            The PROJECT TEAM shall also decide which Party shall perform such
            development work.

     The Parties agree that the cost of any such additional development work
     shall [*****]. In the event that additional expenditure in excess of the
     [*****], the Parties shall meet to discuss the matter in good faith.

6.6  SCHEIN shall be responsible for all activities and costs associated with,
     the development of the COMPOUND for delivery with the SYSTEM in the USA,
     and the development of the PRODUCT in accordance with the PROJECT, pursuant
     to the terms of this Agreement and in particular, but not limited to
     sourcing, supplying and, if necessary, formulating, all COMPOUND for
     delivery with the SYSTEM.

6.7  Subject to the maximum cost set forth in Clause 6.4 and 6.5, SCHEIN and
     ENDOREX JV shall be responsible for determining the scope and nature and
     paying in equal shares the costs associated with carrying out all clinical
     studies program in human patients, including for the avoidance of doubt any
     pharmacokinetic/pharmacodynamic studies.  Such studies shall be performed
     by the Parties for the USA in accordance with the following:

     6.7.1  the primary objectives of the program so conducted shall be to
            complete the DEVICE REGULATORY APPLICATION and DEVICE REGULATORY
            APPROVAL in the USA and it is the Parties' expectation that the body
            of data so generated in the PROJECT will also support such
            applications for DEVICE REGULATORY APPROVAL which SCHEIN or its
            AFFILIATES or SUBLICENSEES shall make in the other countries of the
            TERRITORY in accordance with the terms of this Agreement. SCHEIN
            shall carry out and complete the clinical program in the USA to a
            standard and timeframe which it would otherwise find appropriate for
            one of their major branded products;

___________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       19
<PAGE>

     6.7.3  SCHEIN shall keep ENDOREX JV informed as to the progress and
            completion of the studies and, shall provide to ENDOREX JV summary
            study reports thereon;

     6.7.4  SCHEIN undertakes that it shall carry out all such clinical studies
            to prevailing cGCP and cGLP and most specifically in accordance with
            the applicable RHA standards and guidelines;

     6.7.5  SCHEIN shall be responsible at its cost for the preparation and
            filing of appropriate regulatory applications (to the extent deemed
            appropriate by the PROJECT TEAM and subject to the provisions of
            Clause 7.) to the extent required to allow it to undertake such
            clinical studies. ENDOREX JV shall co-operate with SCHEIN as
            reasonably necessary in the preparation and filing of such
            regulatory applications. The parties agree that ENDOREX JV's charges
            to SCHEIN for any such work shall be as set out in Clause 11.2 of
            the Agreement.

6.8  SCHEIN may conduct any pharmacokinetic, clinical, pharmacoeconomic, and any
     other market analysis, study or test on the PRODUCT which SCHEIN deems
     appropriate, at SCHEIN's sole cost. In the event that SCHEIN does conduct
     such analysis, study or test and pay all such costs, SCHEIN shall own the
     said data and information. SCHEIN shall provide ENDOREX JV with a summary
     report of any such material analysis, study or test performed by SCHEIN as
     soon as is reasonably possible following its completion. ENDOREX JV shall
     be entitled to use any such data and information in connection with ENDOREX
     JV's commercial arrangements for the SYSTEM otherwise than in relation to
     the PRODUCT for the FIELD, and in connection with the PRODUCT for the FIELD
     in any countries which cease to be part of the TERRITORY; and in the
     TERRITORY following termination of this Agreement.

6.9  The PROJECT TEAM shall be responsible for identifying any additional
     development work outside of the PROJECT which may be required to
     commercialise the PRODUCT in any country of the TERRITORY outside of
     [*****]("[*****] Development Work"). [*****]. The Parties agree that
     ENDOREX JV's charges to SCHEIN for any such work shall be as set out in
     Clause 11.2 of the Agreement.

6.10 In the event that SCHEIN wishes ENDOREX JV to develop any other
     configurations of the SYSTEM apart from the PROJECT SYSTEM SPECIFICATIONS,
     the Parties shall negotiate in good faith as to the costs to be paid to
     ENDOREX JV for such development of the SYSTEM and/or PRODUCT. The Parties
     agree that ENDOREX JV's charges to SCHEIN for any such work shall be as set
     out in Clause 11.2 of the Agreement.

6.11 SCHEIN shall supply to ENDOREX JV such quantities of COMPOUND [*****] as
     ENDOREX JV reasonably requires for the development of the SYSTEM in

___________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       20
<PAGE>

     accordance with the PROJECT. The quantity and delivery dates of such
     quantities of COMPOUND shall be agreed upon by the Parties during the
     PROJECT.

                    CLAUSE 7 - REGISTRATION OF THE PRODUCT

7.1  The PROJECT TEAM shall establish the regulatory procedure to be followed by
     ENDOREX JV and SCHEIN in order to secure all necessary regulatory approvals
     to market the PRODUCT in the TERRITORY as swiftly as practicable.

7.2  If determined by the PROJECT TEAM, ENDOREX JV shall be responsible for
     filing and maintaining a MAF (or equivalent) for the SYSTEM with the RHA
     (or equivalent) in such countries in the TERRITORY as the MANAGEMENT
     COMMITTEE shall select from time to time. ENDOREX JV shall use reasonable
     endeavours in filing and maintaining each MAF with the RHA in the TERRITORY
     as swiftly as practicable. The cost of filing and maintaining such MAF for
     the SYSTEM shall be shared equally between ENDOREX JV and SCHEIN.

7.3  At its expense, SCHEIN shall be responsible for the filing and maintaining
     all required ANDAs and DEVICE REGULATORY APPLICATIONS in respect of the
     COMPOUND and PRODUCT respectively, with the RHAs in the TERRITORY. SCHEIN
     shall use reasonable endeavours in prosecuting each required ANDA and
     DEVICE REGULATORY APPLICATION to approval by the RHA as swiftly as
     practicable.

7.4  SCHEIN shall notify ENDOREX JV of the date of submission of any ANDA or
     DEVICE REGULATORY APPLICATION in any country of the TERRITORY and shall
     also notify ENDOREX JV of any ANDA APPROVAL or DEVICE REGULATORY APPROVAL
     as soon as is reasonably possible following said approval.

7.5  SCHEIN will be the holder of the ANDA APPROVAL and DEVICE REGULATORY
     APPROVAL for the COMPOUND and PRODUCT respectively, in the TERRITORY,
     provided however, that in the event that a DEVICE REGULATORY APPROVAL is
     granted for the SYSTEM alone, such DEVICE REGULATORY APPROVAL shall be the
     property of ENDOREX JV. In such event, ENDOREX JV shall provide SCHEIN with
     reference rights to such DEVICE REGULATORY APPROVAL mutatis mutandis with
     the provisions of Clause 7.6 below.

7.6  SCHEIN will permit ENDOREX JV, or ENDOREX JV's licensees, without charge,
     to have access to, to photocopy and to cross reference all DEVICE
     REGULATORY APPROVALS or DEVICE REGULATORY APPLICATIONS for the PRODUCT for
     the purpose of obtaining DEVICE REGULATORY APPROVALS for the SYSTEM in
     connection with ENDOREX JV's commercial arrangements otherwise than in
     relation to the PRODUCT for the FIELD, and in connection with the PRODUCT
     for the FIELD in any countries which cease to be part of the TERRITORY; and
     in the TERRITORY following termination of this Agreement.

                                       21
<PAGE>

7.7  SCHEIN shall submit to ENDOREX JV a quarterly report, for every calendar
     quarter prior to the marketing of the PRODUCT within [*****]of the end of
     the relevant quarter fully outlining the regulatory status of the PRODUCT
     in the TERRITORY, including an overview of any material communications with
     the RHAs in the TERRITORY.

7.8  SCHEIN shall be responsible for obtaining and maintaining all applicable
     state and local regulatory approvals for the distribution of the PRODUCT in
     the TERRITORY. ENDOREX JV shall co-operate with SCHEIN in obtaining such
     approvals.

7.9  SCHEIN shall provide ENDOREX JV with access to all DEVICE REGULATORY
     APPROVALS to enable ENDOREX JV to exercise its rights and fulfil its
     obligations hereunder.

7.10  [*****].

7.11  Subject to the express representations and warranties set out in this
      Agreement, it is hereby acknowledged that there are inherent uncertainties
      involved in the registration of pharmaceutical products and medical
      devices with the RHA in relation to achieving the PROJECT SYSTEM
      SPECIFICATIONS and/or PRODUCT SPECIFICATIONS, filing and maintaining the
      MAF, and obtaining the ANDA APPROVAL and/or DEVICE REGULATORY APPROVAL and
      such uncertainties form part of the business risk involved in undertaking
      the form of commercial collaboration outlined in this Agreement.
      Accordingly, ENDOREX JV and SCHEIN shall have no liability to the other as
      a result of any failure of the PRODUCT to successfully achieve the PROJECT
      SYSTEM SPECIFICATIONS or PRODUCT SPECIFICATIONS, or the MAF, ANDA APPROVAL
      or DEVICE REGULATORY APPROVAL of the RHA, unless such failure is due to a
      Party's gross negligence or intentional misconduct.

               CLAUSE 8 - MARKETING AND PROMOTION OF THE PRODUCT

8.1  SCHEIN shall be responsible for the marketing, sale and distribution of the
     PRODUCT in the USA. The PRODUCT may be marketed, sold and distributed in
     all other countries of the TERRITORY by SUBLICENSEES appointed in
     accordance with Clause 2.2. SCHEIN shall keep the MANAGEMENT COMMITTEE up
     to date on the prevailing market conditions and SCHEIN's efforts at
     marketing and selling the PRODUCT in the TERRITORY.

8.2  In general and consistently with the overall goals of optimizing PRODUCT
     sales, profits and return on investments, SCHEIN shall employ all
     commercially reasonable efforts to develop and maintain sales of the
     PRODUCT in the TERRITORY and for a period of [*****] years from approval of
     the PRODUCT shall employ a level of advertising, sales, marketing, and
     promotion efforts in the TERRITORY which is: (1)

_________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       22
<PAGE>

     commensurate with that put forth by other pharmaceutical companies of
     similar size to SCHEIN for prescription products of similar market
     potential for similar audience size/type in the TERRITORY, and (2)
     sufficient with respect to the potential for the TERRITORY to fully exploit
     the market potential for the PRODUCT with the understanding that
     advertising, sales, marketing and promotional expenses in the [*****] after
     launch shall not, without the MANAGEMENT COMMITTEE's consent, exceed
     [*****] of the forecasted NSP, as determined by the MANAGEMENT COMMITTEE.
     After the initial [*****] year period all dedicated direct marketing and
     selling expenses for the PRODUCT shall be decided upon by the MANAGEMENT
     COMMITTEE at least 6 months in advance. At least 3 months prior to the
     planned launch of the PRODUCT in the USA, SCHEIN will outline to the
     MANAGEMENT COMMITTEE the structure of the promotional activities to be
     carried out by SCHEIN for the period up to the first commercial sale of the
     PRODUCT and for a period of [*****] thereafter. SCHEIN shall both prior to
     and subsequent to the launch of a PRODUCT communicate with the MANAGEMENT
     COMMITTEE regarding its objectives for and performance of such PRODUCT in
     the USA and in all of the other countries of the TERRITORY. At meetings of
     the MANAGEMENT COMMITTEE, SCHEIN shall report on the ongoing sales
     performance of the PRODUCT in the TERRITORY, including marketing
     approaches, educational campaigns, promotional and advertising materials
     and campaigns, sales plans, pricing and results, performance against
     competitors, its objectives for the PRODUCT and its plans for the next year
     of the Agreement. In addition the MANAGEMENT COMMITTEE shall review the
     quarterly PROFIT statements and in particular the calculation of PROFIT,
     NSP and the deductible items listed in the definition of NSP.

8.3  Subject to the trademark licensing procedures set forth in Clause 3.6
     above, SCHEIN shall control and be responsible for the content and format
     of the promotional campaign to be submitted to the RHA, but shall inform
     ENDOREX JV thereof and provide to ENDOREX JV a copy of such submissions,
     which shall be subject to the confidentiality obligations herein. To the
     extent required by the laws, rules and regulations of the RHA in the
     applicable country of the TERRITORY, SCHEIN shall use reasonable efforts to
     obtain approval by the RHA of the promotional campaign for the PRODUCT.

8.4  Within [*****] of the EFFECTIVE DATE, the MANAGEMENT COMMITTEE shall agree
     in good faith upon a schedule for the commercialisation of the PRODUCT in
     such countries of the TERRITORY outside of the USA as the MANAGEMENT
     COMMITTEE shall determine. Such schedule shall include but not be limited
     to the target dates for appointing a SUBLICENSEE, filing the DEVICE
     REGULATORY APPLICATION and for securing DEVICE REGULATORY APPROVAL for the
     PRODUCT in such countries of the TERRITORY.

8.5  SCHEIN shall diligently pursue the commercialisation of the PRODUCT and
     shall use commercially reasonable efforts, including reasonable IN MARKET
     prices, to

_________________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       23
<PAGE>

     market and promote the PRODUCT in the USA, and in doing so, shall use the
     same level of effort as with other similar products of similar sales
     potential which it markets. SCHEIN covenants that it shall not use the
     PRODUCT as a "loss leader" in its marketing programs and shall at all times
     use its reasonable efforts in marketing the PRODUCT.

8.6  SCHEIN shall submit to ENDOREX JV for ENDOREX JV's information, copies of
     all trade packaging, cartons and labels and other printed materials
     (Materials") which SCHEIN proposes at any time to use in relation to the
     sale of the PRODUCT provided always that the provisions of this Clause 8.6
     shall be without prejudice to the obligations and responsibilities of
     SCHEIN under Clauses 8.3 and 15.7 and SCHEIN shall indemnify and hold
     harmless ENDOREX JV from and against all claims, damages, losses,
     liabilities and expenses to which ENDOREX JV may become liable relating to
     such Materials, provided however that SCHEIN shall have no liability to the
     extent that such claims, damages, losses, liabilities and expenses arise
     from information which was provided to SCHEIN by ENDOREX JV in accordance
     with the terms of this Agreement. Unless ENDOREX JV reasonably objects to
     the use of any such materials within 14 days of receipt for information
     purposes, SCHEIN shall be entitled to proceed to use such trade packaging,
     cartons and labels and other printed materials in connection with the sale
     of the PRODUCT provided however, that in no event shall such materials
     contain any statement which may have a damaging or harmful effect on the
     commercialisation of the PRODUCT and/or the goodwill of ENDOREX JV in the
     TERRITORY.

8.7  To the extent permitted by law, the materials referred to in Clause 8.6
     shall include due acknowledgement that the PRODUCT is licensed from ENDOREX
     JV.

8.8  To the extent permitted by law, ENDOREX JV shall be entitled to mark or
     have marked all patent number(s) in respect of the ENDOREX JV PATENTS or
     patentable ENDOREX JV IMPROVEMENTS on all PRODUCT or PRODUCT packaging, or
     otherwise reasonably communicate to the trade the existence of any ENDOREX
     JV PATENTS for the countries within the TERRITORY in such a manner as to
     ensure compliance with, and enforceability under, applicable laws.

8.9  SCHEIN shall effect the first full scale commercial launch of the PRODUCT
     in the USA as soon as reasonably practicable but in any event within
     [*****] in the USA, provided that ENDOREX JV has supplied SCHEIN with
     LAUNCH STOCKS ordered in accordance with the terms of this Agreement.  With
     respect to each of the other countries of the TERRITORY, SCHEIN or its
     SUBLICENSEES will effect a national commercial launch of the PRODUCT as
     soon as reasonably practicable but in any event within [*****], provided
     that ENDOREX JV has supplied SCHEIN with LAUNCH STOCKS ordered in
     accordance with the terms of this Agreement.

__________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       24
<PAGE>

                       CLAUSE 9 - SUPPLY OF THE PRODUCT

9.1  Save as otherwise provided in this Agreement, ENDOREX JV's designee shall
     produce and supply to SCHEIN its entire requirements of the PRODUCT.
     ENDOREX JV shall supply the PRODUCT  solely and exclusively  to SCHEIN in
     the TERRITORY and SCHEIN will purchase the PRODUCT exclusively from ENDOREX
     JV in the TERRITORY.

9.2  The PRODUCT shall be supplied to SCHEIN by ENDOREX JV in such form as may
     be agreed by the Parties during the PROJECT.  ENDOREX JV shall deliver the
     PRODUCT to SCHEIN and/or any party designated by SCHEIN in proper packaging
     so as to permit safe storage and transport and to maintain the
     sterilisation of the PRODUCT. ENDOREX JV shall be responsible at its sole
     expense, for furnishing all operations, labour, supervision, equipment,
     tools, machinery, and facilities necessary to manufacture the PRODUCT in
     accordance with the SYSTEM SPECIFICATIONS, PRODUCT SPECIFICATIONS and
     DEVICE REGULATORY APPROVALS; provided however, that in all events, SCHEIN
     shall be responsible for the supply of the COMPOUND for the PRODUCT in
     accordance with Clause 10.

9.3  ENDOREX JV shall deliver the PRODUCT within 120 days of the receipt of a
     firm purchase order therefor (120 days in the case of LAUNCH STOCKS).  The
     delivery time for the PRODUCT shall be agreed upon by the Parties.

9.4  No later than 12 months prior to the filing of the first REGULATORY
     APPLICATION in the TERRITORY, SCHEIN shall provide ENDOREX JV with a
     forecast of SCHEIN's requirements for the PRODUCT for the 18 month period
     following the first anticipated REGULATORY APPROVAL in the TERRITORY.  The
     said forecast will be updated quarterly until the first REGULATORY APPROVAL
     in the TERRITORY.  Except as otherwise provided herein, all forecasts made
     hereunder shall be made to assist ENDOREX JV in planning its production and
     SCHEIN in planning marketing and sales.  Such forecasts shall not be
     binding purchase orders, and shall be without prejudice to SCHEIN's
     subsequent firm purchase orders for the PRODUCT in accordance with the
     terms of this Agreement.

9.5  Prior to the commencement of commercial manufacture of the PRODUCT, SCHEIN
     shall provide a rolling 18 months forecast for the period beginning on the
     first day of the relevant calendar month.  The format of such 18 months
     forecasts shall be comprised of a 12 monthly forecast together with 2
     quarterly forecasts.  The first calendar quarter of such 18 months forecast
     shall be a binding purchase commitment of SCHEIN.  In addition to the
     obligation of SCHEIN regarding rolling 18 month forecasts outlined herein,
     SCHEIN shall provide ENDOREX JV with rolling 3 years' forecasts on 1 August
     of each year of this Agreement.

     Subject to the agreement of the PROJECT TEAM, the calendar quarterly
     forecasts (other than for LAUNCH STOCKS) shall not increase or decrease
     from one quarter to

__________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       25
<PAGE>

     the next by more than [*****] in terms of volume of the PRODUCT ordered.
     Notwithstanding the foregoing, ENDOREX JV will use its reasonable efforts
     to fulfil SCHEIN's requirements in excess of forecasted amounts, but shall
     not be obliged to meet such requirements if it is not reasonably
     practicable to do so provided that ENDOREX JV shall supply the units of
     PRODUCT so ordered but not immediately available as soon thereafter as
     reasonably practicable.

9.6  The PROJECT TEAM shall agree upon a minimum batch for each form of the
     PRODUCT which shall be manufactured by ENDOREX JV for SCHEIN pursuant to
     the terms of this Agreement.

     ENDOREX JV shall have the right to refuse to fulfil orders which do not
     conform with the provisions of this Clause 9.6.  Where ENDOREX JV in its
     absolute discretion, fulfils any order which does not conform with the
     provisions of this Clause 9.6, the fulfilment of such order by ENDOREX JV
     shall not affect ENDOREX JV's right to refuse to fulfil any subsequent
     order which does not conform with the provisions hereof.

9.7  In advance of the REGULATORY APPROVAL in the USA, the Parties shall discuss
     and agree upon the manufacture and purchase of specific quantities of
     LAUNCH STOCKS; however, for the avoidance of doubt, the parties hereby
     confirm that ENDOREX JV's manufacturing obligations shall only arise on
     receipt of firm purchase orders.  For the avoidance of doubt, ENDOREX JV
     shall only accept orders for LAUNCH STOCKS in respect of the launch of the
     PRODUCT in the USA.

9.8  SCHEIN will notify ENDOREX JV within [*****] of its receipt of an approval
     letter, or a pre-approval letter in respect of a REGULATORY APPLICATION
     from an RHA. SCHEIN shall within [*****] of such notification place a firm
     purchase order with ENDOREX JV for LAUNCH STOCKS, unless such a purchase
     order has already been submitted to ENDOREX JV prior to that date. In
     addition, SCHEIN will use its reasonable efforts to provide forecasts for
     deliveries in addition to the LAUNCH STOCKS for the balance of the year in
     which the REGULATORY APPROVAL is obtained.

9.9  Save as otherwise agreed between the Parties, delivery of consignments of
     PRODUCT shall be effected to SCHEIN or SCHEIN's designee by ENDOREX JV's
     designee EX-WORKS the applicable facility.  Risk of loss of or damage to
     any consignment of the PRODUCT shall pass to SCHEIN or it's designee when
     each such consignment of the PRODUCT is loaded onto the vehicle of SCHEIN
     or SCHEIN's designee's agent on which it is to be despatched from the
     applicable facility.  SCHEIN or it's designee shall fully insure or procure
     the insurance of all consignments of the PRODUCT from the time when risk
     passes as aforesaid and shall produce the supporting insurance when
     requested by ENDOREX JV.

____________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       26
<PAGE>

9.10  All claims for failure of any delivery of the PRODUCT to conform in all
      material respects to PRODUCT SPECIFICATIONS under Clause 9 shall be made
      by SCHEIN to ENDOREX JV in writing as soon as possible but in any event
      within 30 days following delivery except in the case of latent defects.
      Claims for latent defects, which could not have been reasonably discovered
      during the routine testing protocol (to be agreed by SCHEIN and ENDOREX
      JV), shall be made by SCHEIN to ENDOREX JV in writing as soon as possible
      but in any event within 30 days of discovery. Failure to make timely
      claims in the manner prescribed shall constitute acceptance of the
      delivery. Where possible, SCHEIN shall return the defective PRODUCT to
      ENDOREX JV, in such amount as is agreed by the Parties, in support of any
      claim pursuant to this Clause 9.10.

9.11  PRODUCT which has been delivered and which has been shown within the
      period designated in Clause 9.10 not to conform in all material respects
      to PRODUCT SPECIFICATIONS where such non-conformity is attributable to
      negligent acts or omissions of ENDOREX JV shall be replaced at ENDOREX
      JV's cost within 90 days of the receipt by ENDOREX JV of the failed SYSTEM
      except where such non-conformity is attributable to negligent acts or
      omissions of SCHEIN.

9.12  In the event of an unresolved dispute as to conformity of the PRODUCT with
      the PRODUCT SPECIFICATIONS, the Parties shall within 30 days appoint an
      independent first class laboratory to undertake the relevant testing and
      its findings shall be conclusive and binding upon the Parties. All costs
      relating to this process shall be borne solely by the unsuccessful Party.

9.13  The Parties shall negotiate in good faith to conclude a detailed technical
      agreement(s) regulating the Parties' respective obligations from a
      technical and quality perspective for the supply of the PRODUCT by ENDOREX
      JV to SCHEIN or to any SUBLICENSEES.

9.14  [*****]

9.15  In manufacturing the PRODUCT under Clause 9.14, SCHEIN or its AFFILIATES
      shall be responsible for all process and equipment validation required by
      the RHA and the regulations thereunder and shall take all steps reasonably
      necessary to pass government inspection by the RHA.

                      CLAUSE 10 - SUPPLY OF THE COMPOUND

10.1. Subject to the terms of this Agreement, SCHEIN hereby grants to ENDOREX
      JV, and ENDOREX JV hereby accepts for the TERM, a royalty-free sub-
      licensable licence to the SCHEIN COMPOUND TECHNOLOGY and SCHEIN COMPOUND
      IMPROVEMENTS to develop, manufacture, use, offer for sale and sell the
      PRODUCT to SCHEIN in accordance with the terms of this Agreement.

______________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       27
<PAGE>

10.2  SCHEIN shall be responsible at its sole expense, for furnishing all
      operations, labour, supervision, equipment, tools, machinery, COMPOUND and
      facilities necessary to ensure a reliable and continuous supply of the
      COMPOUND for the PRODUCT in accordance with the SYSTEM SPECIFICATIONS,
      PRODUCT SPECIFICATIONS and DEVICE REGULATORY APPROVALS.

10.3  SCHEIN shall be responsible for, and shall ensure that, all of the
      suppliers of the COMPOUND and raw materials necessary for the COMPOUND,
      shall hold all necessary licenses and registrations appropriate and
      necessary for the inclusion of such materials in the PRODUCT. All COMPOUND
      to be supplied by SCHEIN to ENDOREX JV shall be freeze dried, in a vial
      with a stopper, and in proper packaging

10.4. SCHEIN shall supply to ENDOREX JV such quantities of COMPOUND [*****] as
      ENDOREX JV requires for the manufacture and supply of PRODUCT to SCHEIN
      and any SUBLICENSEES for commercial sale or promotional samples in all of
      the countries of the TERRITORY. COMPOUND shall be supplied by SCHEIN in
      accordance with orders placed by ENDOREX JV. At the placement of such
      orders, ENDOREX JV shall notify SCHEIN of then remaining amount of stocks
      of COMPOUND held by ENDOREX JV. SCHEIN shall be responsible for ensuring
      that ENDOREX JV receives delivery of COMPOUND in such quantities and at
      such times so as to ensure that ENDOREX JV has sufficient stocks of the
      COMPOUND to meet SCHEIN's firm purchase orders and supply the PRODUCT to
      SCHEIN. SCHEIN shall furnish the appropriate certificate of analysis with
      each delivery of COMPOUND. ENDOREX JV shall be entitled to rely upon such
      certificates of analysis without the necessity of additional testing. As
      of the date of this Agreement, the Parties agree that adequate quantities
      of COMPOUND shall be delivered by SCHEIN to ENDOREX JV at least [*****] in
      advance of the date on which the delivery of PRODUCT is scheduled to be
      made to SCHEIN or such longer period as may be agreed by the PROJECT TEAM.
      During the period in which ENDOREX JV is manufacturing LAUNCH STOCKS, the
      foregoing period of [*****] shall be increased to [*****].

10.5. Prior to the launch of the PRODUCT, the Parties shall negotiate in good
      faith to conclude a technical agreement regulating the Parties' respective
      obligations from a technical and quality perspective for the supply of the
      COMPOUND by SCHEIN to ENDOREX JV and the supply of the PRODUCT by ENDOREX
      to SCHEIN. In any event all quantities of the COMPOUND delivered by SCHEIN
      hereunder shall conform with the specifications as approved by the RHA
      under SCHEIN's ANDA APPROVAL and any further specifications as may be set
      out or agreed to in the technical agreement referred to above (defined
      herein as the "COMPOUND SPECIFICATIONS").

10.6. All quantities of the COMPOUND delivered by SCHEIN hereunder shall conform
      to the COMPOUND SPECIFICATIONS and all prevailing laws and regulatory

______________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                      28
<PAGE>

       requirements of the country where the COMPOUND is manufactured and
       intended to be sold.

10.7.  Save as otherwise agreed between the Parties, delivery of consignments of
       COMPOUND shall be effected by SCHEIN, FCA the manufacturing facility
       designated by ENDOREX JV, and all risks therein shall pass to ENDOREX JV
       when each such consignment of the COMPOUND is delivered to ENDOREX JV's
       designated facility. ENDOREX JV shall fully insure or procure the
       insurance of all consignments of the COMPOUND when risk passes as
       aforesaid and shall produce such insurance documentation supporting same
       as and when requested by SCHEIN. ENDOREX JV shall furnish the appropriate
       certificate of analysis with each delivery of PRODUCT.

10.8.  Title to the COMPOUND supplied to ENDOREX JV by SCHEIN shall at all times
       remain in SCHEIN. ENDOREX JV shall clearly mark such COMPOUND as the
       property of SCHEIN. At the termination of this Agreement, ENDOREX JV
       shall surrender to SCHEIN all useable COMPOUND in ENDOREX JV's
       possession.

10.9.  All claims for failure of any shipment of the COMPOUND to conform to the
       COMPOUND SPECIFICATIONS must be made by ENDOREX JV to SCHEIN in writing
       within 30 days following delivery except in the case of latent defects.
       Claims for latent defects shall be made by ENDOREX JV to SCHEIN in
       writing as soon as possible but in any event within 30 days of discovery.
       Failure to make timely claims in the manner prescribed shall constitute
       acceptance of the shipment. COMPOUND which has been delivered and which
       has been shown within the designated period not to conform to COMPOUND
       SPECIFICATIONS shall be replaced at SCHEIN's cost within 90 days of the
       receipt by SCHEIN of the failed COMPOUND.

10.10. In the event that the COMPOUND supplied by SCHEIN is not in compliance
       with the COMPOUND SPECIFICATIONS, or is otherwise adulterated, misbranded
       or defective, ENDOREX JV shall notify SCHEIN and shall follow all
       reasonable written instructions of SCHEIN regarding, and be responsible,
       at the sole cost and expense of SCHEIN, for re-analysis, sampling,
       processing, return, disposal or destruction, including certification of
       destruction, of such non-conforming bulk COMPOUND. In addition, SCHEIN
       shall be responsible for all costs borne by ENDOREX JV in the use of such
       non-conforming bulk COMPOUND, unless such non-compliance with the
       COMPOUND SPECIFICATIONS was solely due to a failure by ENDOREX JV to
       follow SCHEIN'S reasonable written instructions regarding such non-
       conforming bulk COMPOUND.

10.11. In the event of an unresolved dispute as to conformity of the COMPOUND
       with the COMPOUND SPECIFICATIONS, the Parties shall within 30 days
       appoint an independent first class laboratory to undertake the relevant
       testing and its findings shall be conclusive and binding upon the
       Parties. All costs relating to this process shall be borne solely by the
       unsuccessful Party.

10.12  SCHEIN shall indemnify ENDOREX JV against any claims, actions or losses
       arising from any failure, inability or delay in supplying the PRODUCT to
       customers arising out of any failure inability or delay by SCHEIN in
       supplying the COMPOUND to

                                       29
<PAGE>

       ENDOREX JV or ENDOREX JV's designee in accordance with the provisions of
       this Clause 10.

10.13  ENDOREX JV shall be responsible for, and shall ensure that, all of the
       suppliers of equipment, tools, machinery and materials shall hold all
       necessary licenses and registrations appropriate and necessary for the
       inclusion of such materials in the PRODUCT.

10.14  Notwithstanding the foregoing provisions of Article 10, ENDOREX JV shall
       be entitled, at its sole discretion, to take over some or all of the
       activities associated with the manufacture of the drug vial containing
       the COMPOUND which will be supplied by SCHEIN to ENDOREX JV; provided,
       however, that there may be a transition period of up to 60 days during
       which SCHEIN continues to perform the subject activities but only because
       of commitments to third party suppliers that SCHEIN had agreed to prior
       to the exercise of such right to take over by ENDOREX JV. Any such
       manufacture of the drug vial by ENDOREX JV or ENDOREX JV's designee shall
       be in a competitive manner.

10.15  In the event that any royalty, licence fees or other compensation
       obligations related to the COMPOUND and/or the bulk substance which is
       used to formulate the COMPOUND ("Bulk Substance") are payable to any
       third parties as a result of the use of the COMPOUND in the PRODUCT,
       SCHEIN shall be solely responsible for the payment of any such royalty,
       licence fee or other compensation obligations. For the avoidance of
       doubt, any such royalty, licence fee or other compensation obligations
       relating to the COMPOUND and/or the Bulk Substance shall not be included
       in the calculation of the MANUFACTURING COST of the COMPOUND and shall
       not be deducted from the PROFIT.

10.16. [*****]. SCHEIN shall use its best commercial efforts to ensure a
       continuous and uninterrupted supply of the Bulk Substance for the
       COMPOUND throughout the TERM of this Agreement. ENDOREX JV shall be
       entitled, at its sole discretion, to forthwith terminate this Agreement,
       in the event that SCHEIN:

       10.16.1  at any time during the TERM of this Agreement, (i) fails to
                supply a shipment of the COMPOUND which has been ordered by
                ENDOREX JV for a period exceeding [*****] from the receipt of an
                order from ENDOREX JV or (ii) there are delays in filling each
                of [*****] successive orders which delays cumulatively exceed
                [*****] when each delay is measured beginning on the [*****] day
                from receipt of the corresponding orders or (iii) there is a
                shortfall in [*****] successive shipments delivered by SCHEIN
                which on a cumulative basis, exceeds [*****] of the total amount
                of said [*****] orders; or

       10.16.2  fails to, within [*****] from the EFFECTIVE DATE, enter into a
                supply arrangement with [*****], or enter into any other
                arrangement which secures

_____________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       30
<PAGE>

          SCHEIN supply rights to the Bulk Substance for the TERM of this
          Agreement.

                       CLAUSE 11 - FINANCIAL PROVISIONS

11.1  Licence Royalties:
      -----------------

      11.1.1  In consideration of the licence of the ENDOREX JV PATENTS and
              patentable ENDOREX JV IMPROVEMENTS granted to SCHEIN under this
              Agreement, SCHEIN shall pay to ENDOREX JV [*****] of any LICENCE
              FEES which are received from SUBLICENSEES.

11.2  Development Royalties:
      ---------------------

      11.2.1  All work that ENDOREX JV shall perform pursuant to the PROJECT in
              order to meet the PROJECT SYSTEM SPECIFICATIONS in accordance with
              Clause 6.4 hereof, shall be charged [*****]. Except as otherwise
              provided in this Agreement, all development or other technical
              assistance which ENDOREX JV shall perform pursuant to the PROJECT
              or the terms of this Agreement which is outside of the scope of
              the PROJECT SYSTEM SPECIFICATIONS, or which is otherwise requested
              by SCHEIN or any SUBLICENSEES and agreed to by ENDOREX JV, shall
              be charged [*****]. Any such work shall be mutually agreed upon by
              in writing in advance of the commencement of such work, which
              agreement shall include an agreed upon budget.

     11.2.2   All development and other work agreed upon by ENDOREX JV pursuant
              to Clause 11.2.1. and carried out by ENDOREX JV hereunder, shall
              be invoiced by ENDOREX JV to SCHEIN at the end of each calendar
              quarter. Payment shall be effected in US Dollars within [*****] of
              the date of receipt of the relevant invoice.

     11.2.3   For the avoidance of doubt, the Parties acknowledge that in the
              event that a SUBLICENSEE requests that ENDOREX JV perform
              development work or that SCHEIN perform development, trial,
              regulatory applications or other work for such SUBLICENSEE:

              (i)  [*****]

              (ii) [*****].

______________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       31
<PAGE>

11.3  Price of Product:
      ----------------

      11.3.1  ENDOREX JV shall supply the PRODUCT to SCHEIN [*****] in
              accordance with the terms of this Agreement.

      11.3.2  At the end of each quarter, [*****], there shall be a payment
              either by ENDOREX JV to SCHEIN or by SCHEIN to ENDOREX JV to
              [******].

      11.3.3  Payment for all PRODUCT delivered from ENDOREX JV designee's
              manufacturing facility to SCHEIN shall be effected in U.S. Dollars
              ($) within [*****] of the date of the delivery of the PRODUCT EX
              WORKS the applicable facility.

11.4  Allocation:
      ----------

      11.4.1  In consideration of the license of the ENDOREX JV PATENTS and
              patentable ENDOREX JV IMPROVEMENTS to SCHEIN hereunder, SCHEIN
              shall pay a royalty [*****] to ENDOREX JV.

      11.4.2  Within four weeks of the end of each calendar quarter, SCHEIN
              shall notify ENDOREX JV of the NSP of PRODUCT for that previous
              calendar quarter. Payments shown by each calendar quarter report
              to have accrued but which have not yet been paid shall be included
              in calculating the NSP for that quarter.

      11.4.3  Payment [*****] shall be made once in each calendar quarter within
              45 days after the expiry of the relevant calendar quarter.

      11.4.4  All payments due hereunder shall be made in U.S. Dollars.

      11.4.5  In the event that SCHEIN or any AFFILIATE of SCHEIN shall sell the
              PRODUCT together with other products of SCHEIN to third parties
              (by the method commonly known in the pharmaceutical industry as
              "bundling") and the price attributable to the PRODUCT is less than
              the average price of "arms length" sales to similar customers for
              the reporting period in which sales occur (such sales to be
              excluded from the calculation of the average price of "arms
              length" sales), [*****]

11.5 Method of calculation of royalties and other payments:
     -----------------------------------------------------

     The parties acknowledge and agree that the methods for calculating the
     royalties and other payments hereunder are for the purposes of the
     convenience of the parties, are freely chosen and not coerced.

________________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       32
<PAGE>

                   CLAUSE 12 - PAYMENTS, REPORTS AND AUDITS

12.1  SCHEIN shall keep true and accurate records of gross sales of the PRODUCT,
      the number of units of PRODUCT sold, the items deducted from the gross
      amount in calculating the NSP, the NSP, the PROFIT and the royalties
      payable to ENDOREX JV under Clause 11. SCHEIN shall deliver to ENDOREX JV
      a written statement ("the STATEMENT") thereof within 30 days following the
      end of each calendar quarter, (or any part thereof in the first or last
      calendar quarter of this Agreement) for such calendar quarter. The
      STATEMENT shall outline on a country-by-country basis, the calculation of
      the NSP from gross revenues during that calendar quarter, the applicable
      percentage rate, and a computation of the sums due to ENDOREX JV. The
      parties' financial officers shall agree upon the precise format of the
      STATEMENT.

12.2  Unless otherwise notified in writing by ENDOREX JV, payments due on PROFIT
      of the PRODUCT based on sales amounts in a currency other than US Dollars
      shall first be calculated in the foreign currency and then converted to US
      Dollars on the basis of the exchange rate in effect for the purchase of US
      Dollars with such foreign currency quoted in the Wall Street Journal (or
      comparable publication if not quoted in the Wall Street Journal) with
      respect to the sale of currency of the country of origin of such payment
      for the day prior to the date on which the payment by SCHEIN is being
      made.

12.3  Any income or other taxes which SCHEIN is required by law to pay or
      withhold on behalf of ENDOREX JV with respect to royalties and any other
      monies payable to ENDOREX JV under this Agreement shall be deducted from
      the amount of such PROFIT payments, royalties and other monies due. SCHEIN
      shall furnish ENDOREX JV with proof of such payments. Any such tax
      required to be paid or withheld shall be an expense of and borne solely by
      ENDOREX JV. SCHEIN shall promptly provide ENDOREX JV with a certificate or
      other documentary evidence to enable ENDOREX JV to support a claim for a
      refund or a foreign tax credit with respect to any such tax so withheld or
      deducted by SCHEIN. The parties will reasonably cooperate in completing
      and filing documents required under the provisions of any applicable tax
      treaty or under any other applicable law, in order to enable SCHEIN to
      make such payments to ENDOREX JV without any deduction or withholding.

12.4  All payments due hereunder shall be made to the designated bank account of
      ENDOREX JV in accordance with such timely written instructions as ENDOREX
      JV shall from time to time provide.

12.5  SCHEIN shall pay interest to ENDOREX JV at the Prime Rate publicly
      announced by Morgan Guaranty Trust Company of New York at its principal
      office on the date (or next to occur business day, if such date is not a
      business day) on which payment should have been made pursuant to the
      applicable provisions of this Agreement plus [*****] on all late payments
      under this Agreement applicable from the date on which

__________________
          [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

                                       33
<PAGE>

      payment should have been made pursuant to the applicable provisions of
      this Agreement until the date of payment.

12.6  For the 180 day period following the close of each calendar year of the
      Agreement, ENDOREX JV and SCHEIN will, in the event that the other party
      reasonably requests such access, provide each other's independent
      certified accountants (reasonably acceptable to the other party) with
      access, during regular business hours and subject to the confidentiality
      provisions as contained in this Agreement, to such party's books and
      records relating to the PRODUCT, solely for the purpose of verifying the
      accuracy and reasonable composition of the calculations hereunder for the
      calendar year then ended.

12.7  In the event of a discovery of a discrepancy which exceeds [*****] of the
      amount due or charged by a party for any period, the cost of such
      accountants shall be borne by the audited party; otherwise, such cost
      shall be borne by the auditing party.

                     CLAUSE 13 - DURATION AND TERMINATION

13.1  This Agreement shall be deemed to have come into force on the EFFECTIVE
      DATE and, subject to the rights of termination outlined in this Clause 13
      will expire on a country by country basis on the [*****] ("the INITIAL
      PERIOD").

13.2  At the end of the INITIAL PERIOD, the Agreement shall continue
      automatically for rolling [*****] periods thereafter, unless the Agreement
      has been terminated by either of the parties by serving [*****] written
      notice on the other immediately prior to the end of the INITIAL PERIOD or
      any additional [*****] period provided for herein.

13.3  In addition to the rights of termination provided for elsewhere in this
      Agreement, either party will be entitled forthwith to terminate this
      Agreement by written notice to the other party if:

      13.3.1  that other party commits any breach of any of the provisions of
              this Agreement, and in the case of a breach capable of remedy,
              fails to remedy the same within [*****] after receipt of a written
              notice giving full particulars of the breach and requiring it to
              be remedied;

      13.3.2  that other party goes into liquidation (except for the purposes of
              amalgamation or reconstruction and in such manner that the company
              resulting therefrom effectively agrees to be bound by or assume
              the obligations imposed on that other party under this Agreement);

      13.3.3  an encumbrancer takes possession or a receiver is appointed over
              any of the property or assets of that other party; or

UNDER THE SECURITIES EXCHANGE ACT OF 1934 AS AMENDED

                                       34
<PAGE>

      13.3.4  any proceedings are filed or commenced by that other party under
              bankruptcy, insolvency or debtor relief laws or anything analogous
              to any of the foregoing under the laws of any jurisdiction occurs
              in relation to that other party.

13.4  For the purposes of Clause 13.3.1, a breach will be considered capable of
      remedy if the party in breach can comply with the provision in question in
      all respects other than as to the time of performance (provided that time
      of performance is not of the essence).

13.5  In further addition to the rights and termination provided for elsewhere
      in this Agreement, ENDOREX JV shall be entitled to forthwith terminate the
      licence granted to SCHEIN under this Agreement for any country or
      countries of the TERRITORY, in accordance with the terms set out below, in
      the event that SCHEIN:-

      13.5.1  fails to file a DEVICE REGULATORY APPLICATION for the PRODUCT in
              the USA within 6 months from the completion of the PROJECT; or

      13.5.2  fails to effect the commercial launch of the PRODUCT in the USA as
              required by Clause 8 in accordance with the provisions thereof; or

      13.5.3  notifies ENDOREX JV that it does not wish to commercialise the
              PRODUCT in any country of the TERRITORY; or

      13.5.4  a TECHNOLOGICAL COMPETITOR of ENDOREX JV, [*****] acquires
              [*****].

                    CLAUSE 14 - CONSEQUENCES OF TERMINATION

14.1  Upon exercise of those rights of termination specified in Clauses 13 or
      elsewhere in this Agreement, this Agreement and all licenses to SCHEIN of
      ENDOREX JV BACKGROUND TECHNOLOGY and ENDOREX JV IMPROVEMENTS shall,
      subject to the provisions of the Agreement which survive the termination
      of the Agreement and Clause 14.2, automatically terminate forthwith and be
      of no further legal force or effect.

14.2  Upon termination of the Agreement by either party, or upon termination by
      ENDOREX JV of a licence for a particular country under Clause 14.5, the
      following shall be the consequences relating to the TERRITORY or the
      particular country, as applicable:-

      14.2.1  any sums that were due from SCHEIN to ENDOREX JV under the
              provisions of Clause 11 or otherwise howsoever prior to the
              exercise of the right to terminate this Agreement as set forth
              herein shall be paid in full within 30 days of termination of this
              Agreement and receipt of the invoice in respect

_______________________
     [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       35
<PAGE>

               thereto, and ENDOREX JV shall not be liable to repay to SCHEIN
               any amount of money paid or payable by SCHEIN to ENDOREX JV up to
               the date of the termination of this Agreement;

     14.2.2    all confidentiality provisions set out herein shall remain in
               full force and effect for a period of [*****] from the date of
               termination of this Agreement;

     14.2.3    all representations and warranties contained herein, including,
               without limitation, those contained in Clause 15 hereof, shall
               survive termination of this Agreement and all obligations of the
               Parties intended to be performed after termination as provided
               herein shall remain in full force and effect;

     14.2.4    the rights of inspection and audit shall continue in force for
               the period referred to in the relevant provisions of this
               Agreement;

     14.2.5    ENDOREX JV shall be entitled to research, develop, manufacture
               and commercialise the SYSTEM in the FIELD for its own benefit in
               the relevant country or countries of the TERRITORY or in all of
               the TERRITORY, as appropriate, and either Party shall be entitled
               to manufacture, market, sell, or assist in the distribution or
               sale of a COMPETING PRODUCT;

     14.2.6    ENDOREX JV shall be entitled to file for DEVICE REGULATORY
               APPROVAL for the SYSTEM with any [*****] compound otherwise
               available to ENDOREX JV, in any country which ceases to be a part
               of the TERRITORY, or in any country of the TERRITORY in the event
               of termination of this Agreement,;

     14.2.7    SCHEIN shall transfer to ENDOREX JV or ENDOREX JV's designee
               without charge (but at ENDOREX JV's expense, if any), and/or
               permit ENDOREX JV or ENDOREX JV's designee without charge to
               conduct sufficient cross-referencing to, and have sufficient
               access to any and all pending DEVICE REGULATORY APPLICATIONS or
               granted DEVICE REGULATORY APPROVALS for the PRODUCT for the
               relevant country or countries of the TERRITORY; and

     14.2.8    SCHEIN shall be entitled to research, develop, manufacture and
               commercialise the COMPOUND in the FIELD for its own benefit in
               the TERRITORY or in the relevant country or countries of the
               TERRITORY and either party shall be entitled to manufacture,
               market, sell, or assist in the distribution or sale of a
               COMPETING PRODUCT.

                      CLAUSE 15 - WARRANTY AND INDEMNITY

15.1 ENDOREX JV represents and warrants that

_________________
     [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       36
<PAGE>

       15.1.1  it has the sole, exclusive and unencumbered right to grant the
               licences and rights herein granted to SCHEIN, and that it has not
               granted any option, licence, right or interest in or to the
               ENDOREX JV PATENTS or ENDOREX JV KNOW-HOW to any third party
               which would conflict with the rights granted by this Agreement.
               ENDOREX JV agrees to hold SCHEIN harmless from any and all costs,
               expenses and damages (including reasonable attorneys' fees)
               incurred or sustained by SCHEIN as the result of any third
               party's challenges to ENDOREX JV's right to grant the rights and
               licences herein granted to SCHEIN,

       15.1.2  the execution of this Agreement and the full performance of its
               obligations and rights under this Agreement will not breach or in
               any way be inconsistent with the terms and conditions of any
               licence, contract, understanding or agreement, whether express,
               implied, written or oral between ENDOREX JV and any third party.

15.2   SCHEIN represents and warrants that

               the execution of this Agreement and the full performance of its
               obligations and rights under this Agreement will not breach or in
               any way be inconsistent with the terms and conditions of any
               licence, contract, understanding or agreement, whether express,
               implied, written or oral between SCHEIN and any third party.

15.3   Except as expressly stated in this Clause 15 or otherwise in this
       Agreement, all other warranties, conditions and representations, express
       or implied, statutory or otherwise, including a warranty as to the
       quality or fitness for any particular purpose of the SYSTEM are hereby
       excluded and except as expressly stated in this Agreement, ENDOREX JV
       shall not be liable in contract, tort or otherwise for any loss, damage,
       expense or injury, arising out of or in connection with the PRODUCT or
       any defect in the SYSTEM or from any other cause.

15.4   ENDOREX JV represents and warrants that, in performing the development
       activities and manufacturing of the SYSTEM pursuant to this Agreement,
       ENDOREX JV will exercise all due skill, care and diligence in conducting
       such activities as are commercially reasonable and comply with all
       applicable laws and regulations..

15.5.1 SCHEIN represents and warrants that the COMPOUND provided by SCHEIN under
       this Agreement will conform and perform in all material respects to:-

       15.5.1(a) the COMPOUND SPECIFICATIONS; and

       15.5.2(b) all applicable regulations and requirements of the relevant RHA
              including the then cGMP regulations which apply to the manufacture
              and supply of the COMPOUND and the PRODUCT.

                                       37
<PAGE>

15.5.2 ENDOREX JV represents and warrants that, once successfully assembled, the
       PRODUCT under this Agreement will conform and perform in all material
       respects to:-

       15.5.2(a) the PRODUCT SPECIFICATIONS and DEVICE REGULATORY APPROVALS; and

       15.5.2(b) all applicable regulations and requirements of the relevant RHA
             including the then cGMP regulations which apply to the manufacture
             and supply of the PRODUCT;

       provided, however, that such representation and warranty shall not apply
       to with respect to the manufacture and supply of the COMPOUND.

15.6   SCHEIN further represents and warrants to ENDOREX JV that in
       transporting, storing, handling, distributing, marketing and selling the
       PRODUCT hereunder:-

       15.6.1  it will exercise all due skill, care and diligence in conducting
               such activities as are commercially reasonable; and

       15.6.2  it will comply with the provisions of this Agreement, all RHA and
               other approvals, all applicable state and local regulatory
               approvals and all applicable laws, ordinances and regulations.

15.7.1 ENDOREX JV shall indemnify, defend and hold SCHEIN harmless from all
       actions, losses, claims, demands, damages, costs and liabilities
       (including reasonable attorneys' fees) to which SCHEIN is or may become
       liable insofar as they arise out of [*****]

15.7.2 SCHEIN shall indemnify, defend and hold harmless ENDOREX JV from all
       actions, losses, claims, demands, damages, costs and liabilities
       (including reasonable attorneys' fees) to which ENDOREX JV is or may
       become liable insofar as they arise out of [*****]

15.8   With reference to Clause 2.3.4, SCHEIN shall indemnify and hold harmless
       ENDOREX JV to the extent that any claims, damages, liabilities, claims,
       costs or expenses arise out of any such acts or omissions of any
       SUBLICENSEE.

15.9   As a condition of obtaining an indemnity in the circumstances set out in
       Clauses 15.4, 15.5, 15.6, 15.7, 15.8 and 15.9, the party seeking an
       indemnity shall:

       15.9.1  fully and promptly notify the other party of any claim or
               proceedings, or threatened claim or proceedings;

       15.9.2  permit the indemnifying party to take full control of such claim
               or proceedings;

_________________
     [*****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       38
<PAGE>

      15.9.3 assist in the investigation and defence of such claim or
             proceedings;

      15.9.4 not compromise or otherwise settle any such claim or proceedings
             without the prior written consent of the other party, which consent
             shall not be unreasonably withheld; and

      15.9.5 take all reasonable steps to mitigate any loss or liability in
             respect of any such claim or proceedings.

15.10 Notwithstanding anything to the contrary in this Agreement, ENDOREX JV and
      SCHEIN shall not be liable to the other by reason of any representation or
      warranty, condition or other term or any duty of common law, or under the
      express terms of this Agreement, for any consequential or incidental or
      punitive loss or damage (whether for loss of profits or otherwise) and
      whether occasioned by the negligence of the respective parties, their
      employees or agents or otherwise.

15.11 ENDOREX JV and SCHEIN shall maintain comprehensive general liability
      insurance, including product liability insurance on the SYSTEM and PRODUCT
      respectively, in such prudent amount as shall be determined by the PROJECT
      TEAM. Each party shall provide the other party with a certificate from the
      insurance company verifying the above and undertakes to notify such party
      directly at least 30 days prior to the expiration or termination of such
      coverage.

15.12 The representations and warranties of the Parties, including those set
      forth in Clause 15, shall survive execution of the AGREEMENT.

              CLAUSE 16 - CUSTOMER COMPLAINTS AND PRODUCT RECALL

16.1  SCHEIN shall notify ENDOREX JV promptly:-

      16.1.1  of any complaints from third parties reported to SCHEIN involving
              any serious and unexpected adverse reactions resulting from the
              use of the PRODUCT; and

      16.1.2  of any potential recall of the PRODUCT by any governmental
              authority.

16.2  ENDOREX JV shall notify SCHEIN promptly:-.

      16.2.1  of any complaints from third parties reported to ENDOREX JV
              involving any serious and unexpected adverse device events or
              incident reports resulting from the use of the SYSTEM; and

      16.2.2  of any potential recall of the SYSTEM by any governmental
              authority.

16.3  SCHEIN and ENDOREX JV shall establish a procedure for formal adverse event
      handling, customer complaints and reporting. It is envisaged that SCHEIN
      shall be responsible for furnishing post-marketing reports to the
      applicable RHA's and other relevant regulatory agencies. SCHEIN and
      ENDOREX JV shall keep each other

                                       39
<PAGE>

      informed and shall copy the other party with all communications with the
      RHA's and other relevant regulatory agencies with respect to the PRODUCT
      and such events.

16.4  In the event of any recall of the PRODUCT, as suggested or requested by
      any governmental authority:

      16.4.1   SCHEIN shall perform the recall of the PRODUCT in the TERRITORY
               and save as provided in Clause 16.4.2, in all events the recall
               costs shall be borne by SCHEIN.

      16.4.2   If the recall arises from ENDOREX JV's acts or omissions in
               manufacturing the SYSTEM or any failure to conform to the PROJECT
               SYSTEM SPECIFICATIONS, the recall costs shall be borne by ENDOREX
               JV provided that SCHEIN should not have discovered the said act
               or omission prior to the sale of the PRODUCT by exercising the
               quality procedures to be agreed upon by the parties for the
               release of the PRODUCT.

               In the event that ENDOREX JV should bear the costs of any recall
               hereunder, ENDOREX JV shall be entitled but not obliged to take
               over and perform the recall of the PRODUCT described in Clause
               16.4.1 and SCHEIN shall provide ENDOREX JV with all such
               reasonable assistance as may be required by ENDOREX JV, with
               ENDOREX JV reimbursing SCHEIN for reasonable costs incurred.

      16.4.3   Neither party shall be liable to the other party or to any third
               party for consequential or incidental damages which may arise as
               a result of the recall of the PRODUCT.

      16.4.4   For the avoidance of doubt, in no event shall SCHEIN be
               responsible under this Agreement for performing any recall of the
               PRODUCT in any country of the TERRITORY for which SCHEIN's
               license to the ENDOREX JV BACKGROUND TECHNOLOGY and ENDOREX JV
               IMPROVEMENTS has been terminated in accordance with the terms of
               this Agreement.

                     CLAUSE 17 - MISCELLANEOUS PROVISIONS

17.1  Secrecy:
      -------

      17.1.1  Any information, whether written or oral (oral information shall
              be reduced to writing within one month by the party giving the
              oral information and the written form shall be furnished to the
              other party) pertaining to the PRODUCT that has been or will be
              communicated or delivered by ENDOREX JV to SCHEIN, or by SCHEIN to
              ENDOREX JV, including, without limitation, trade secrets, business
              methods, and cost, supplier, manufacturing and customer
              information, shall be treated by SCHEIN and ENDOREX JV,
              respectively, as confidential information, and shall not be
              disclosed or revealed to any third party whatsoever or used in any
              manner except as expressly provided for herein; provided, however,
              that such confidential information

                                       40
<PAGE>

              shall not be subject to the restrictions and prohibitions set
              forth herein to the extent that such confidential information:-

              (1)  is available to the public in public literature or otherwise,
                   or after disclosure by one party to the other becomes public
                   knowledge through no default of the party receiving such
                   confidential information; or

              (2)  was known to the party receiving such confidential
                   information prior to the receipt of such confidential
                   information by such party, whether received before or after
                   the date of this Agreement; or

              (3)  is obtained by the party receiving such confidential
                   information from a third party not subject to a requirement
                   of confidentiality with respect to such confidential
                   information; or

              (4)  is required to be disclosed pursuant to: (A) any order of a
                   court having competent jurisdiction and power to order such
                   information to be released or made public; or (B) any lawful
                   action of a governmental or regulatory agency or stock
                   exchange provided that each party shall notify the other in
                   writing of any disclosure of information required hereunder
                   prior to such disclosure.

      17.1.2   Each party shall take in relation to the confidential information
               of the other party all such precautions as it normally takes with
               its own confidential information to prevent any improper
               disclosure of such confidential information to any third party;
               provided, however, that such confidential information may be
               disclosed within the limits required to obtain any authorisation
               from the applicable RHA or any governmental or regulatory agency
               or, with the prior written consent of the other party, which
               shall not be unreasonably withheld, or as may otherwise be
               required in connection with the purposes of this Agreement.

      17.1.3   Each of the parties agrees that it will not use, directly or
               indirectly, any know-how of the other party (ENDOREX JV KNOW-HOW
               or SCHEIN KNOW-HOW, as the case may be), or other confidential
               information disclosed to it by the other party or obtained by it
               from the other party pursuant to this Agreement, other than as
               expressly provided herein.

      17.1.4   Neither party will publicise the existence of this Agreement in
               any way without the prior written consent of the other party
               subject to the disclosure requirements of applicable laws and
               regulations. In the event that either party wishes to make an
               announcement concerning the Agreement, that party will seek the
               consent of the other party. The terms of any such announcement
               shall be agreed in good faith. ENDOREX JV and SCHEIN shall also
               co-operate in good faith with respect to any stock exchange
               filings, public announcements, or filings with the United States
               Securities and Exchange Commission which may be necessary
               following execution of this Agreement.

                                       41
<PAGE>

     17.2  Assignments/ Sub-contracting:
           ----------------------------

           This Agreement may not be assigned by SCHEIN or ENDOREX JV without
           the prior written consent of the other party, save that either party
           may assign this Agreement in whole or in part and delegate its duties
           hereunder to its AFFILIATE or AFFILIATES without such consent
           provided that such assignment or delegation has no material adverse
           tax implications for the other party hereto. ENDOREX JV shall be
           entitled to subcontract any of its obligations under this Agreement.
           Each party shall be responsible for the acts and/or omissions of its
           respective AFFILIATES or subcontractors.

     17.3  Parties bound:
           -------------

           This Agreement shall be binding upon and enure for the benefit of
           parties hereto, their successors and permitted assigns.

     17.4  Severability:
           ------------

           If any provision in this Agreement is agreed by the parties to be, or
           is deemed to be, or becomes invalid, illegal, void or unenforceable
           under any law that is applicable hereto:-

           17.4.1  such provision will be deemed amended to conform to
                   applicable laws so as to be valid and enforceable or, if it
                   cannot be so amended without materially altering the
                   intention of the parties, it will be deleted, with effect
                   from the date of such agreement or such earlier date as the
                   parties may agree; and

           17.4.2  the validity, legality and enforceability of the remaining
                   provisions of this Agreement shall not be impaired or
                   affected in any way.

     17.5  Force Majeure:
           -------------

           Neither party to this Agreement shall be liable for delay in the
           performance of any of its obligations hereunder if such delay results
           from causes beyond its reasonable control, including, without
           limitation, acts of God, fires, earthquakes, strikes, acts of war, or
           intervention of a government authority, non-availability of raw
           materials, but any such delay or failure shall be remedied by such
           party as soon as practicable.

     17.6  Relationship of the parties:
           ---------------------------

           Nothing contained in this Agreement is intended or is to be construed
           to constitute ENDOREX JV and SCHEIN as partners or members of a joint
           venture or either party as an employee of the other. Neither party
           hereto shall have any express or implied right or authority to assume
           or create any obligations on behalf of or in the name of the other
           party or to bind the other party to any contract, agreement or
           undertaking with any third party.

                                       42
<PAGE>

     17.7  Amendments:
           ----------

           No amendment, modification or addition hereto shall be effective or
           binding on either party unless set forth in writing and executed by a
           duly authorised representative of both parties.

     17.8  Waiver:
           ------

           No waiver of any right under this Agreement shall be deemed effective
           unless contained in a written document signed by the party charged
           with such waiver, and no waiver of any breach or failure to perform
           shall be deemed to be a waiver of any future breach or failure to
           perform or of any other right arising under this Agreement.

     17.9  No effect on other agreements:
           -----------------------------

           No provision of this Agreement shall be construed so as to negate,
           modify or affect in any way the provisions of any other agreement
           between the parties unless specifically referred to, and solely to
           the extent provided, in any such other agreement.

     17.10 Governing law and jurisdiction:
           ------------------------------

           This Agreement shall be governed by the laws of the State of New
           York, without regard to principles of conflicts of law. Each of the
           Parties hereby irrevocably submits to the jurisdiction of any New
           York State or United States Federal court sitting in the County, City
           and State of New York over any action or proceeding arising out of or
           relating to this Agreement, and each hereby waives the defence of any
           inconvenient forum for the maintenance of such action.

     17.11 Notice:
           ------

           17.11.1  Any notice to be given under this Agreement shall be sent in
                    writing in English by registered airmail or telecopied to:

                    ENDOREX JV at:

                    Clarendon House
                    2 Church Street
                    Hamilton, Bermuda

                    Attention: Chairman
                    Telefax    1 441 292 4720

                    With a copy to:

                    Elan Corporation, plc
                    Lincoln House
                    Lincoln Place
                    Dublin 2
                    Ireland

                                       43
<PAGE>

               Attention: Vice President & General Counsel
                          Elan Pharmaceutical Technologies
               Telefax:   353 1 7094124

               SCHEIN at:

               Schein Pharmaceutical (Bermuda) Ltd.
               C/o Grosvenor Trust LTD
               33 Church Street
               Hamilton, Bermuda

               Attention:  Chairman
               Telefax:    1 441 292 5152

               With a copy to:

               Schein Pharmaceutical Inc.
               100 Campus Drive
               Florham Park
               New Jersey 07932

               Attention: General Counsel
               Telefax:   973 593 5152

               or to such other address(es) and telecopier numbers as may from
               time to time be notified by either party to the other hereunder.

     17.11.2   Any notice sent by mail shall be deemed to have been delivered
               within 10 working days after despatch and any notice sent by
               telex or telecopy shall be deemed to have been delivered within
               24 hours of the time of the despatch. Notice of change of address
               shall be effective upon receipt.

17.12.  Patent Due Diligence
----------------------------

     The obligations of SCHEIN under this Agreement are expressly [*****]
     SCHEIN's PATENT DUE DILIGENCE REVIEW (as defined below) of the SYSTEM, the
     PRODUCT and the ENDOREX JV PATENTS, and relevent third party patents with
     results satisfactory to SCHEIN, under the following terms and conditions:

17.12.1  During the period commencing on the date hereof and ending on [*****]
         (the "REVIEW PERIOD"), SCHEIN will promptly conduct or have conducted a
         due

     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       44
<PAGE>

          diligence review of (1) [*****], (2) [*****], and (3) [*****] (the
          "PATENT DUE DILIGENCE REVIEW"). [*****]. The PATENT DUE DILIGENCE
          REVIEW shall be for the entire TERRITORY or any portion thereof that
          SCHEIN, in its sole discretion, determines is necessary. Each Party
          shall provide reasonable cooperation to the other Party during the
          PATENT DUE DILIGENCE REVIEW.

17.12.2   Upon expiration of the REVIEW PERIOD, SCHEIN shall confirm its
          acceptance of this AGREEMENT, in which event the conditions contained
          in this Clause 17.12 shall be deemed fulfilled and the AGREEMENT and
          its provisions shall remain in full force and effect unless [*****].

IN WITNESS of which the parties have executed this Agreement.

__________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       45
<PAGE>

                                  SCHEDULE 1

                              ENDOREX JV PATENTS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
File Number      Brief Description                               Country                Status
------------------------------------------------------------------------------------------------------------
<S>              <C>                                             <C>                    <C>
EMT 13           Original Medipad                                Australia              Granted (693136)
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 Israel                 Granted (111685)
                                                                 [*****]                [*****]
                                                                 New Zealand            Granted (276485)
                                                                 Taiwan                 Granted (079227)
                                                                 United States          2 Granted (5,527,288;
                                                                                        5,848,991), [*****]
                                                                 South Africa           Granted (94/9185)
------------------------------------------------------------------------------------------------------------
EMT 19           Medipad-Vial on board, needle on the            [*****]                [*****]
                 periphery                                       [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 Ireland                Granted (77523)
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 United States          Granted (5,814,020)
                                                                 [*****]                [*****]
                                                                 South Africa           Granted (96/7502)
------------------------------------------------------------------------------------------------------------
EMT 24           Delivery Needle                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 Ireland                Granted (80772)
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 South Africa           Granted (97/5065)
                                                                 [*****]                [*****]
                                                                 Taiwan                 Issued (096579)
                                                                 [*****]                [*****]
------------------------------------------------------------------------------------------------------------
[*****]          [*****]                                         [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]

------------------------------------------------------------------------------------------------------------
</TABLE>

______________________
     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

                                       46
<PAGE>

<TABLE>
------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                    <C>
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
------------------------------------------------------------------------------------------------------------
[*****]          [*****]                                         [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
------------------------------------------------------------------------------------------------------------
EMT 33           Improved Method of Packaging a Drug             [*****]                [*****]
                 Delivery Kit                                    [*****]                [*****]
                                                                 South Africa           Issued (98/5188)
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
------------------------------------------------------------------------------------------------------------
[*****]          [*****]                                         [*****]                [*****]
                                                                 [*****]                [*****]
                                                                 [*****]                [*****]
------------------------------------------------------------------------------------------------------------
EMT41DES         Design of Medipad Housing (3ml)                 United States          Granted (D404482)
------------------------------------------------------------------------------------------------------------
[*****]          [*****]                                         [*****]                [*****]
------------------------------------------------------------------------------------------------------------
</TABLE>

All countries are initially designated when filing in the European Patent Office
or the Patent Cooperation Treaty, and are then selected during the regional or
national phase.

     [*****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED

                                       47
<PAGE>

                                  SCHEDULE 2

                               COMPOUND PATENTS

NONE.

                                       48
<PAGE>

                                  SCHEDULE 3

                                    PROJECT

                       To be agreed upon by the Parties.

                                       49
<PAGE>

                                  SCHEDULE 4

                         PROJECT SYSTEM SPECIFICATIONS

                       To be agreed upon by the Parties

                                       50
<PAGE>

                                  SCHEDULE 5

                            PRODUCT SPECIFICATIONS

                       To be agreed upon by the Parties.

                                       51
<PAGE>

Executed by SCHEIN PHARMACEUTICAL (BERMUDA), LTD. on 2/nd/ February, 2000

By : /s/ Peter Dickson

Name:  Peter Dickson

Title:  Director

Executed by ENDOREX NEWCO, LTD. on 2/nd/ February, 2000

By : /s/ Kevin Insley

Name:  Kevin Insley

Title:  Director

                                       52

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